Scott v. Saraya USA, Inc.
- William Orrick
- 3:22-cv-05232
- U.S. District Court · Northern District of California
- 14
In Scott v. Saraya USA, Inc., Judge Orrick denied Saraya’s motion to dismiss claims alleging Lakanto labels falsely portrayed products as predominantly sweetened with monk fruit.
Laquisha Scott’s claims against Saraya USA, Inc.; the court allowed the claims to proceed as pleaded.
What happened
In Scott v. Saraya USA, Inc., Laquisha Scott alleged that Saraya’s Lakanto products were falsely labeled “sweetened with monk fruit” even though they were predominantly sweetened with erythritol. Scott said she would not have bought the granola, or would have paid less, if she had known.
Saraya argued that the labels did not promise the products were entirely or mostly sweetened with monk fruit and that the ingredient list disclosed erythritol. The court ruled that, when the front-label statements were read together with “sugar free,” “no sugar added,” or “zero sugar,” Scott had plausibly alleged that a reasonable consumer could be misled. The back-label ingredient list did not defeat her claims at this stage.
Judge Orrick denied Saraya’s motion to dismiss. Scott’s claims under California’s consumer-protection laws, common-law fraud, express and implied warranty, and unjust enrichment may proceed as pleaded.
The detailed version
- Scott v. Saraya USA, Inc. · No. 3:22-cv-05232
- William Orrick
- June 5, 2023
Background
Saraya USA, Inc. manufactures, markets, and sells Lakanto-branded products. Laquisha Scott purchased Lakanto’s “No Sugar Added Keto Granola Cinnamon Almond Crunch” in August 2022. The front label stated “no sugar added” and “sweetened with monk fruit.” Scott alleged that consumers would understand those statements to mean that the product was entirely or predominantly sweetened with monk fruit, a premium sweetener, but that the products were instead predominantly sweetened with erythritol.
Scott’s amended class action complaint asserted seven claims: violations of California’s Consumers Legal Remedies Act, False Advertising Law, and Unfair Competition Law; breach of express warranty; breach of implied warranty; unjust enrichment; and common-law fraud. Saraya moved to dismiss the amended complaint under Federal Rule of Civil Procedure 12(b)(6), which requires dismissal when a complaint does not plausibly state a claim for relief.
Reasonable Consumer Claims
The court applied California’s reasonable-consumer test. Under that test, the plaintiff must plausibly allege that a significant portion of reasonable consumers, or targeted consumers, could be misled.
The court held that Scott’s amended allegations were sufficient. Although “sweetened with monk fruit” might not, by itself, necessarily promise that monk fruit was the sole or predominant sweetener, the court considered the product packaging as a whole. The front label also stated “sugar free,” “no sugar added,” or “zero sugar,” and did not identify another sweetener there. The court found it plausible that consumers could read those statements together and believe monk fruit was the product’s sole or predominant sweetener.
The ingredient list on the back of the label identified “Non GMO Lakanto Monkfruit Sweetener (Erythritol and Monk Fruit Extract).” The court nevertheless concluded that this disclosure did not defeat Scott’s claims at the motion-to-dismiss stage because an ingredient list does not necessarily cure an allegedly misleading front-label representation.
The court therefore denied the motion to dismiss Scott’s claims under the Unfair Competition Law, Consumers Legal Remedies Act, and False Advertising Law.
Fraud
The court held that Scott also plausibly alleged common-law fraud. She alleged that Saraya’s monk-fruit representations were false because the products were predominantly sweetened with erythritol, that Saraya knew or should have known the representations were false or misleading, and that Scott relied on the representations when purchasing the product.
The court rejected Saraya’s argument that the back-label ingredient list prevented reasonable reliance. At this stage, consumers were not required to look beyond allegedly misleading front-label statements to discover contrary information in the ingredient list.
Warranties and Unjust Enrichment
The court allowed Scott’s express-warranty claim to proceed because the alleged labeling could plausibly constitute an affirmation of fact, promise, or description that the products were entirely or predominantly sweetened with monk fruit.
The implied-warranty claim also could proceed. Scott alleged that the products did not conform to promises or affirmations of fact made on their labels, rather than alleging that the products were unfit for human consumption. The court explained that this type of implied-warranty claim rises or falls with the express-warranty claim, which it had found adequately pleaded.
The court also allowed the unjust-enrichment claim to proceed because Scott had sufficiently pleaded the related consumer-protection claims and Saraya offered no separate persuasive argument against unjust enrichment.
Consumers Legal Remedies Act Notice
The court previously dismissed Scott’s Consumers Legal Remedies Act claim because her earlier notice did not adequately identify the relevant products and was sent before the alleged purchase. After receiving leave to amend, Scott sent Saraya a January 26, 2023 letter addressing those issues and filed the amended complaint more than 30 days later. The court ruled that notice was no longer an issue.
Disposition
The court denied Saraya’s motion to dismiss. Scott’s claims may proceed as pleaded. The order was a ruling on whether the amended complaint plausibly stated claims, not a final determination of whether Scott will ultimately prove those claims.
Read the full 14-page opinion on CourtListener, the free public archive maintained by the Free Law Project.