Ninth Circuit Upholds Rejection of Lip Balm Class

The Ninth Circuit last week rejected a putative class action accusing a defendant of deceiving consumers about the quantity of product accessible in a lip balm tube.  See EBNER V. FRESH, INC., No. Case: 13-56644 (9th Cir. 03/17/2016).

Plaintiff alleged that cosmetics and skin care products manufacturer Fresh, Inc. deceived consumers about the quantity of lip balm in its Sugar Lip Treatment product line. Although Sugar’s label accurately indicates the net weight of included lip product, the tube design uses a screw mechanism that allegedly allows only most of the product to advance up the tube. A plastic stop device allegedly prevents the remaining portion from advancing past the tube opening. Each Sugar tube contains a weighted metallic bottom and is wrapped in oversized packaging. Plaintiff brought a putative consumer class action against Fresh, alleging that Fresh’s label, tube design, and packaging were deceptive and misleading. The complaint asserted four state-law causes of action: (1) violation of California’s False Advertising Law (“FAL”), (2) violation of the California Consumers Legal Remedies Act (“CLRA”),  (3) violation of California’s UnfairCompetition Law (“UCL”), (4) unjust enrichment. The district court granted Fresh’s Rule 12(b)(6) motion to dismiss Plaintiff’s First Amended Complaint with prejudice. And the Ninth Circuit affirmed on appeal.

The district court divided plaintiff’s claims into two categories: (1) claims based on Sugar’s labeling; and
(2) claims based on Sugar’s tube design and packaging. In dismissing the label-based claims, the district court relied, inter alia, on California’s safe harbor doctrine.  As for the design and packaging claims, the district court concluded that neither Sugar’s tube design nor packaging were deceptive or misleading to the reasonable consumer.

The UCL, CLRA, and FAL, under which plaintiff’s deceptive labeling claims were brought, all prohibit unlawful,unfair, or fraudulent business practices. In California, unfair competition claims are subject to the safe harbor doctrine, which precludes plaintiffs from bringing claims based on “actions the Legislature permits.” Cel-Tech Commc’ns, Inc. v. L.A. Cellular Tel. Co., 973 P.2d 527, 542 (Cal. 1999). To fall within the safe harbor, the challenged conduct must be affirmatively permitted by statute – the doctrine does not immunize from liability conduct that is merely not unlawful. Plaintiff here alleged that, although the Sugar label accurately states the net weight of lip product in the tube, only 75% of that product is reasonably accessible. To the extent this challenged the Sugar label’s accurate net weight statement, this claim was barred by the safe harbor doctrine. Both federal and California law affirmatively require cosmetics manufacturers to include an accurate statement of the net weight of the cosmetic product. 21 C.F.R. § 701.13(g); Cal. Bus. & Prof. Code § 12603(b).  Because Fresh complied with federal and state law requiring a net weight statement on Sugar’s label, this conduct cannot form the basis of an unfair competition claim. 

Plaintiff’s other label claim was based on Fresh’s omission of any supplemental or clarifying statement about product accessibility. This omission, plaintiff argued, renders the existing net weight label deceptive and misleading. Although the panel concluded that neither the safe harbor doctrine nor FDCA preemption barred this supplemental statement claim, this label claim ultimately failed anyway because plaintiff could not  plausibly allege that the omission of supplemental disclosures about product weight rendered Sugar’s label “false or misleading” to the reasonable consumer. Plaintiff’s claims under the California consumer protection statutes are governed by the “reasonable
consumer” test. Williams v. Gerber Prods. Co., 552 F.3d 934, 938 (9th Cir. 2008). Under this standard, a plaintiff must “show that ‘members of the public are likely to be deceived.’” Id.; Freeman v. Time, Inc., 68 F.3d 285, 289 (9th Cir. 1995). This requires more than a mere possibility that Sugar’s label “might conceivably be misunderstood by some few consumers viewing it in an unreasonable manner.” Lavie v. Procter & Gamble Co., 129 Cal. Rptr. 2d 486, 495 (Ct. App. 2003). Rather, the reasonable consumer standard requires a probability “that a significant portion of the general consuming public or of targeted consumers, acting reasonably in the circumstances, could be misled.” Id.

Plaintiff’s claim that the reasonable consumer would be deceived as to the amount of lip product in a tube of Sugar was found not plausible. It is undisputed that the Sugar label discloses the correct weight of included lip product. Dispenser tubes that use a screw mechanism to push up a solid bullet of lip product are commonplace in the market. The reasonable consumer understands the general mechanics of these dispenser tubes and further understands that some product may be left in the tube to anchor the bullet in place.  The complaint admitted that even after the plastic stop device prevents more product from advancing up the tube, the consumer can still see the surface of the remaining bullet. Although the consumer may not know precisely how much product remains, the consumer’s knowledge that some additional product lies below the tube’s opening is sufficient to dispel any deception; at that point, it is up to the consumer to decide whether it is worth the effort to extract any remaining product, such as with a finger or a small tool. A rational consumer could not simply assume that the tube contained no further product when he or she can plainly see there is remaining material. And so the Sugar tube is not false and deceptive merely because the remaining product quantity may be “‘unreasonably misunderstood by an insignificant and unrepresentative segment of the class of persons. . .’” that may purchase the product. Davis, 691 F.3d at 1162 (quoting Lavie, 129 Cal. Rptr. 2d at 494).

Because plaintiff had not alleged facts to state a plausible claim that the Sugar label is false, deceptive, or misleading, the district court did not err in dismissing the label-based claims. 

While packaging can sometimes form part of an FAL claim, the FAL claim ultimately failed because plaintiff had not alleged a plausible claim for relief. Sugar sells for approximately $22.50 to $25.00 a unit. When viewed in the proper context of the high-end cosmetics market, Sugar’s elaborate packaging and the weighty feel of the tube is commonplace and even expected by a significant portion of Fresh’s “targeted consumers.”  Because of the widespread nature of this practice, no reasonable consumer expects the weight or overall size of the packaging to reflect directly the quantity of usable product contained therein. Because the plaintiff could not plausibly allege that Sugar’s design and packaging is deceptive, the district court did not err in dismissing the packaging-based claims.

Finally, plaintiff claimed that the Sugar tube violated a prohibition on containers that contain non-functional slack fill. Cal. Bus. & Prof. Code § 12606(b). Slack fill is defined as “the difference between the actual capacity of a container and the volume of product contained therein.” Nonfunctional slack fill is the empty space in a package that is filled to substantially less than its capacity for reasons other than” one or more of the enumerated reasons listed in the statute. Here, the complaint was not about empty space but about product that wasn't automatically accessible.  This cannot constitute “slack fill”
because under the plain language of the statute, slack fill means the portion of the container without product, i.e., empty space. 

Dismissal affirmed.

Ninth Circuit "Strikes" a Blow for Proper Motion Procedure

Phillies' slugger Ryan Howard was ejected from a game this week in extra innings, leaving his team (which had no more position players) to insert ace pitcher Roy Oswalt into the outfield and to use him at the plate. First time the Phils used a pitcher in the field in decades. Howard argued a mistakenly called third strike on a check swing.

Today's post relates to a different kind of mistaken strike. The Ninth Circuit has explained that trial courts cannot strike a claim for damages on the ground that the damages are precluded as a matter of law.  Whittlestone Inc. v. Handi-Craft Co., No. 09-16353 (9th Cir. Aug. 17, 2010).  Specifically, Rule 12(f) of the Federal Rules of Civil Procedure does not authorize the court to strike the claim for damages on the basis that such damages are legally not recoverable.

Here, the defendant field a Rule 12 motion to strike the paragraphs of the complaint that sought the recovery of lost profits and consequential damages, in alleged violation of the plain language of the parties' contract.  The trial court granted the motion, and plaintiff appealed.

Rule 12(f) states that a district court “may strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.” The function of a 12(f) motion
to strike is to avoid the expenditure of time and money that would arise from litigating spurious issues by dispensing with those issues prior to trial.  While the motion here seemed to fit the purpose of the rule, it didn't fit the language. The court found that the damages allegations met none of those listed categories. 

Handi-Craft argued that Whittlestone’s claim for lost profits and consequential damages should be stricken from the complaint, because such damages were precluded as a matter of law.  But that meant that Handi-Craft’s 12(f) motion was really an attempt to have certain portions of  Whittlestone’s complaint dismissed or to obtain summary judgment against Whittlestone as to those portions of the suit, which attempt was better suited for a Rule 12(b)(6) motion or a Rule 56
motion, not a Rule 12(f) motion. 

And this was not harmless error, said the 9th, because the standard for review of the different motions is not the same, and there was some question whether a 12(b)(6) motion would be granted, had it been filed.

The court concluded that Rule 12(f) of the Federal Rules of Civil Procedure does not authorize a district court to dismiss a claim for damages on the basis it is precluded as a matter of
law.