ANN BELL, et al., Plaintiffs-Appellants, v. PUBLIX SUPER MARKETS, INC., et al., Defendants-Appellees. ANN BELL, et al., Plaintiffs-Appellants, v. ALBERTSON COMPANIES, INC., et al., Defendants-Appellees.
Nos. 19-2581 & 19-2741
United States Court of Appeals For the Seventh Circuit
ARGUED SEPTEMBER 17, 2020 — DECIDED DECEMBER 7, 2020
Gary Feinerman, Judge.
Appeals from the United States District Court for the Northern District of Illinois, Eastern Division. No. 1:16-cv-05802
Before KANNE and HAMILTON,
HAMILTON, Circuit Judge. This case is about Parmesan cheese—specifically the kind sold in familiar shaker tubes in grocery stores across the country. The defendants sell these products with labels advertising them as “100% Grated Parmesan Cheese.” The plaintiffs say these products are not 100 percent cheese, but rather contain between four and nine percent added cellulose powder and potassium sorbate, as is evident to a consumer who takes the time to read the fine print of an ingredient list on the back of the package. Plaintiffs claim that these ingredient lists show that the prominent “100%” labeling is deceptive under state consumer-protection laws.
The Judicial Panel on Multidistrict Litigation transferred numerous similar actions to the Northern District of Illinois for consolidated pretrial proceedings under
With respect to three of the plaintiffs’ consolidated complaints, the 100% claims should have survived the defendants’ motion to dismiss. Plaintiffs have plausibly alleged that the prominent “100%” labeling
I. The 100% Claims
A. The Defendants’ Products and Plaintiffs’ Claims
The defendants are manufacturers of cheese and major food retailers: Kraft Heinz, the ICCO-Cheese Company, Target, Wal-Mart, SuperValu, Albertson‘s, and Publix Supermarkets. All sell grated cheese products that are sold from the grocery aisles rather than from refrigerated dairy cases. The cheese products are prominently labeled on the front “100% Grated Parmesan Cheese.” (Plaintiffs also complain about a few products labeled “100% Grated Parmesan & Romano Cheese” or “100% Grated Three Cheese Blend,” but those variations do not matter for our analysis.) On the back or side, the products include the required list of ingredients in fine print. Those lists show that they contain cellulose powder and potassium sorbate to prevent the grated cheese from caking and getting moldy, respectively.
Plaintiffs bought the defendants’ products with the “100%” labels and allege they were deceived. Plaintiffs contend that defendants’ prominent claims that their products are “100% Grated Parmesan Cheese” are deceptive because they are likely to mislead a significant portion of reasonable consumers, who will focus on the prominent “100%” on the front labels without checking the fine print on the back showing that the products are not 100% cheese.
Plaintiffs assert these claims under fourteen state consumer protection statutes spanning ten states.1 These statutes are known as “Little-FTC Acts” because they are patterned on the Federal Trade Commission Act (FTCA). See Henry N. Butler & Joshua D. Wright, Are State Consumer Protection Acts Really Little-FTC Acts?, 63 Fla. L. Rev. 163, 165 (2011). The Little-FTC Acts broadly prohibit unfair business practices, including deceptive advertising. Unlike the federal act, however, these state statutes provide private rights of action to complement enforcement by the government.
These statutes “all require plaintiffs to prove that the relevant labels are likely to deceive reasonable consumers,” which “requires a probability that a significant portion
CVS Pharmacy, Inc., 953 F.3d 969, 972−73 (7th Cir. 2020), quoting Ebner v. Fresh, Inc., 838 F.3d 958, 965 (9th Cir. 2016); Suchanek v. Sturm Foods, Inc., 764 F.3d 750, 756−57 (7th Cir. 2014). While these are all state statutes, the federal Class Action Fairness Act of 2005 has pushed many class actions under them into federal courts. See
B. The District Court‘s Decision
The district court dismissed the plaintiffs’ 100% claims on two grounds. First, the court found that the prominent “100%” claims on the front labels are ambiguous and that a consumer who seeks clarity can find it by reading the ingredient list on the back label. Second, the court found that common sense would tell a reasonable consumer that, despite the 100% claims, these cheese products must contain added ingredients because they are sold unrefrigerated in the main grocery aisles, alongside dried pastas and canned sauces.
As to the first ground, the district court applied a new ambiguity rule that it derived from some cases, discussed below, that applied the reasonable consumer test. The court wrote: “Where a plaintiff contends that certain aspects of a product‘s packaging are misleading in isolation, but an ingredient label … would dispel any confusion, the crucial issue is whether the misleading content is ambiguous; if so, context can cure the ambiguity and defeat the claim.” In re 100% Grated Parmesan Cheese Marketing and Sales Practices Litig., 275 F. Supp. 3d 910, 922 (N.D. Ill. 2017). The court examined the “100% Grated Parmesan Cheese” label and deemed it ambiguous. In the court‘s view, the phrase could denote that the product is 100% grated, 100% Parmesan, or 100% cheese (or perhaps any two of those). Id. at 923. This ambiguity, the court said, could be cleared up by reading the ingredient list, which would show that the defendants’ products are not 100% cheese, let alone 100% Parmesan cheese. The court thus held that defendants’ “100% Grated Parmesan Cheese” labels are not deceptive as a matter of law. Id.
As to the second ground, the court said that common sense dictates that the defendants’ products must contain ingredients other than cheese because they are shelf-stable without refrigeration. Courts have used similar common-sense arguments to dismiss labeling claims when no reasonable consumer could actually believe the plaintiffs’ alleged interpretation. The California breakfast cereal cases are good examples of this, where courts dismissed claims that the colorful rings and balls of cereal shown on “Froot Loops” and “Cap‘n Crunch” boxes promised real fruit within. See Werbel v. Pepsico, Inc., 2010 WL 2673860, at *6 (N.D. Cal. July 2, 2010); McKinnis v. Kellogg USA, 2007 WL 4766060, at *6 (C.D. Cal. Sept. 19, 2007). Here, the district court thought common sense similarly should defeat plaintiffs’ nothing-but-cheese belief: “Cheese is a dairy product, after all, and reasonable consumers are well aware that pure dairy products spoil, grow blue, green, or black fuzz, or otherwise become inedible if left unrefrigerated for an extended period of time.” 100% Grated Parmesan Cheese, 275 F. Supp. 3d at 923.
On appeal, defendants offer a third defense, federal preemption, which the district
C. State-Law Deception Under the Reasonable Consumer Standard
The plaintiffs’ 100% claims were dismissed on the pleadings under Rule 12(b)(6), so we accept the plaintiffs’ factual allegations and ask only whether they present “a claim to relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). The plaintiffs need only “nudge[] their claims across the line from conceivable to plausible.” Id. In this case, plaintiffs’ claims survive if they have plausibly alleged that the defendants’ front labels likely lead a significant portion of reasonable consumers to falsely believe something that the back labels belie. We agree with the district court that the context of the entire packaging is relevant. We disagree about applying that principle in this case as a matter of law on the pleadings. What matters most is how real consumers understand and react to the advertising. We therefore join our colleagues in at least three other circuits in holding that an accurate fine-print list of ingredients does not foreclose as a matter of law a claim that an ambiguous front label deceives reasonable consumers. Many reasonable consumers do not instinctively parse every front label or read every back label before placing groceries in their carts.
1. Ambiguity and Fine Print on the Back
The district court‘s dismissal erred by departing from the Rule 12(b)(6) standard and attributing to ordinary supermarket shoppers a mode of interpretation more familiar to judges trying to interpret statutes in the quiet of their chambers. See Dumont v. Reily Foods Co., 934 F.3d 35, 40 (1st Cir. 2019) (reversing dismissal of similar deceptive labeling claim on pleadings: “Our dissenting colleague envisions a more erudite reader of labels, tipped off by the accent grave on the word ‘crème,’ and armed perhaps with several dictionaries, a bit like a federal judge reading a statute.“). Under the district court‘s ambiguity rule, as a matter of law, a front label cannot be deceptive if there is any way to read it that accurately aligned with the back label. And this would be so even if the label actually deceived most consumers, and even if it had been carefully designed to deceive them.
We respectfully part company with the approach of our colleague on the district court. Consumer-protection laws do not impose on average consumers an obligation to question the labels they see and to parse them as lawyers might for ambiguities, especially in the seconds usually spent picking a low-cost product. See, e.g., Danone, US, LLC v. Chobani, LLC, 362 F. Supp. 3d 109, 123 (S.D.N.Y. 2019) (“[A] parent walking down the dairy aisle in a grocery store, possibly with a child or two in tow, is not likely to study with great diligence the contents of a complicated product package, searching for and making sense of fine-print disclosures … . Nor does the law expect this of the reasonable consumer.“).
With the time afforded by litigation, we can see how “100% Grated Parmesan Cheese” might be interpreted as claiming only that whatever it contains is “100% grated,” or perhaps that whatever cheese it contains is “100% Parmesan.” Another reading, though, and certainly a plausible
The district court‘s ambiguity rule conflicts with decisions of the First, Second, and Ninth Circuits in very similar cases also involving food labels. See Dumont, 934 F.3d at 41; Mantikas v. Kellogg Co., 910 F.3d 633, 638−39 (2d Cir. 2018); Williams v. Gerber Products Co., 552 F.3d 934, 939 (9th Cir. 2008). In each case, the defendant argued that its fine-print, back-label ingredient list immunized it from claims that more prominent front-label claims were deceptive because a consumer could read the ingredient list. In each case, a district court had granted a motion to dismiss, and in each case, the appellate court reversed. In each case, there was room to argue about the precise meaning of the front-label claims, such as hazelnuts in coffee beans in Dumont, cheese crackers made with “Whole Grain” in Mantikas, and fruit juice in drinks for young children in Williams. And in reversing each case, our colleagues in the other circuits held that the reasonable consumer standard does not presume, at least as a matter of law, that reasonable consumers will test prominent front-label claims by examining the fine print on the back label.
We agree with that reasoning in Dumont, Mantikas, and Williams. The ambiguity rule for front-label claims would, we fear, encourage deceptive advertising and labeling. Lots of advertising is aimed at creating positive impressions in buyers’ minds, either explicitly or more subtly by implication and indirection. And lots of advertising and labeling is ambiguous. Deceptive advertisements often intentionally use ambiguity to mislead consumers while maintaining some level of deniability about the intended meaning. We agree with the Second Circuit that a rule that immunized any ambiguous label so long as it is susceptible to one non-deceptive interpretation “would validate highly deceptive advertising.” Mantikas, 910 F.3d at 638. Sticking to the reasonable consumer standard avoids this temptation and stays in touch with real consumer behavior.
We stand by the general principle that deceptive advertising claims should take into account all the information available to consumers and the context in which that information is provided and used. See, e.g., Davis v. G.N. Mortgage Corp., 396 F.3d 869, 884 (7th Cir. 2005) (affirming summary judgment for defendants on claims that mortgage terms were not made sufficiently clear); see also Beardsall, 953 F.3d at 977−78 (affirming summary judgment for defendants where plaintiffs testified that they expected products to contain preservatives despite label claiming “100% pure” aloe); Fink v. Time Warner Cable, 714 F.3d 739, 742 (2d Cir. 2013) (affirming dismissal of claims that advertising of internet speeds was deceptive; “under certain circumstances, the presence of a disclaimer or similar clarifying language may defeat a claim of deception“), citing Freeman v. Time, Inc., 68 F.3d 285, 289−90 (9th Cir. 1995) (affirming dismissal of challenge to sweepstakes mailer where mailer explicitly said plaintiff would win only if he had winning number).
And where plaintiffs base deceptive advertising claims on unreasonable or fanciful interpretations of labels or other advertising, dismissal on the pleadings may well be justified. See, e.g., Carrea v. Dreyer‘s Grand Ice Cream, Inc., 475 F. App‘x 113, 115 (9th Cir. 2012) (“It is implausible that a reasonable consumer would interpret ‘Original Sundae Cone,’ ‘Original Vanilla,’ and ‘Classic,’ to imply that Drumstick
In addition, nothing we say in this opinion is intended to foreclose defendants from offering evidence to show that consumers are not actually misled by their “100% Grated Parmesan Cheese” labels. See Dumont, 934 F.3d at 41 (reversing dismissal on pleadings where label was ambiguous: “None of this is to say that our dissenting colleague‘s reading is by any means unreasonable … . That being said, we think it best that six jurors, rather than three judges, decide.“); Mantikas, 910 F.3d at 638−39 (same where “Whole Grain” cracker label could be reasonably read as promising either predominantly whole grain, or just some whole grain); Williams, 552 F.3d at 939 (same where “packaging picture[d] a number of different fruits, potentially suggesting (falsely) that those fruits or their juices” were included) (emphasis added).
This practical and fact-intensive approach to consumer behavior under deceptive-advertising laws is consistent with the law‘s approach under other consumer-protection laws. The ambiguity rule applied in this case, by contrast, departs dramatically from that generally applicable approach. Under the Federal Trade Commission Act, for example, the kind of ambiguity rule applied in the district court here has long been rejected:
It is well established, and critical to the notion of preventing false advertising, that where an advertisement conveys more than one meaning, one of which is false, the advertiser is liable for the misleading variation. Murray Space Shoe Corp. v. FTC, 304 F.2d 270, 272 (2d Cir. 1963); Rhodes Pharmacal Co. v. Federal Trade Commission, 208 F.2d 382, 387 (7th Cir. 1953), modified by restating the Commission‘s order, 348 U.S. 940 (1953). Nor does our application of that principle in this instance rest upon some mere semantic quibble or strained interpretation of words, since that meaning of respondents’ claim which deceives is one which is likely to be understood, and reasonably so, by consumers. A more appropriate statement of the principle in this case might thus be that an otherwise false advertisement is not rendered acceptable merely because one possible interpretation of it is not untrue.
Nat‘l Comm‘n On Egg Nutrition v. FTC, 570 F.2d 157, 161 n.4 (7th Cir. 1977) (emphasis added, quoting FTC order); accord, e.g., FTC v. Sterling Drug, Inc., 317 F.2d 669, 674−75 (2d Cir. 1963).
Similarly, in trademark and trade-dress claims under the Lanham Act, “likelihood of confusion” is the test, and it is an intensely factual question based on real market conditions and real consumers’ behavior. E.g., AM General Corp. v. DaimlerChrysler Corp., 311 F.3d 796, 812, 825−28 (7th Cir. 2002); Thomas & Betts Corp. v. Panduit Corp., 138 F.3d 277, 296 (7th Cir. 1998); Roulo v. Russ Berrie & Co., 886 F.2d 931, 937 (7th Cir. 1989); James Burrough Ltd. v. Sign of Beefeater, Inc., 540 F.2d 266,275 (7th Cir. 1976) (trademarks “must be compared in the light of what occurs in the marketplace, not in the courtroom“). Under that test, one key factor is the “degree of care likely to be used by consumers.” E.g., AM General, 311 F.3d at 812. In applying that test, we have often stressed that consumers are likely to exhibit a low degree of care when purchasing low-priced, everyday items. Id. at 828; Roulo, 886 F.2d at 937 (“the marketing channels for greeting cards do not promote a careful analysis of the product prior to purchase“). The same holds true with the low-cost groceries here.
Similarly, in false advertising claims under the Lanham Act, the law has long recognized that even literally true claims may deceive, that implied messages in advertising may deceive, and that what matters is how consumers actually understand the advertising. As a district judge, Judge St. Eve summarized these principles using cases from this court:
Federal false advertising claims generally fall into two categories: literal falsity and implied falsity. Where a statement or claim made in advertising is literally false, “the plaintiff need not show that the statement either actually deceived customers or was likely to do so.” Hot Wax, Inc. v. Turtle Wax, Inc., 191 F.3d 813, 819 (7th Cir. 1999); B. Sanfield, [Inc. v. Finlay Fine Jewelry Corp., 168 F.3d 967, 971 (7th Cir. 1999)]. Where a statement or claim is literally true or ambiguous, however, a plaintiff must prove that the statement “implicitly convey[s] a false impression, [is] misleading in context, or likely to deceive consumers.” Hot Wax, 191 F.3d at 819; see also B. Sanfield, 168 F.3d at 971 (plaintiff must show that
statement is “misleading in context, as demonstrated by actual consumer confusion).” (quoting BASF Corp. v. Old World Trading Co., 41 F.3d 1081, 1089 (7th Cir. 1994)). In other words, “[a] statement is misleading when, although literally true, it implies something that is false.” Abbott Labs. v. Mead Johnson & Co., 971 F.2d 6, 13 (7th Cir. 1992).
Regardless of the theory advanced by the plaintiff, “whether a claim is either ‘false’ or ‘misleading’ is an issue of fact rather than law.” Mead Johnson & Co. v. Abbott Labs., 209 F.3d 1032, 1034 (7th Cir. 2000); Abbott Labs., 971 F.2d at 13–15; Castrol, Inc. v. Pennzoil Co., 987 F.2d 939, 943–45 (3d Cir. 1993); Johnson & Johnson * Merck Consumer Pharma. Co. v. Smithkline Beecham Corp., 960 F.2d 294, 298 (2d Cir. 1992); see also Walker v. Nat‘l Recovery, Inc., 200 F.3d 500, 503 (7th Cir. 1999) (discussing confusion in the context of the FDCA, citing Lanham Act precedent and holding that “[w]hether a given message is confusing is … a question of fact, not of law or logic.“). Similarly, “[w]hether consumers are likely to be confused … is ultimately a question of fact” that “may be resolved on summary judgment only ‘if the evidence is so one-sided that there can be no doubt about how the question should be answered.‘” AutoZone[, Inc. v. Strick, 543 F.3d 923, 929 (7th Cir. 2008)] (quoting Packman v. Chicago Tribune Co., 267 F.3d 628, 642 (7th Cir. 2001); Door Sys., Inc. v. Pro–Line Door Sys., Inc., 83 F.3d 169, 171 (7th Cir. 1996)). “It is not for the judge
to determine, based solely upon his or her own intuitive reaction, whether the advertisement is deceptive.” Johnson & Johnson * Merck, 960 F.2d at 297–98
. Rather, the question is “what does the person to whom the advertisement is addressed find to be the message? That is, what does the public perceive the message to be?” Id. (internal citations omitted).
LG Electronics U.S.A., Inc. v. Whirlpool Corp., 661 F. Supp. 2d 940, 948 (N.D. Ill. 2009).
Similarly, courts often encounter questions about consumers’ responses to ambiguity under the
More generally under that act, courts try to take care to avoid confusing a consumer‘s understanding of a dunning letter with a federal judge‘s understanding: “The intended recipients of dunning letters are not federal judges, and judges are not experts in the knowledge and understanding of unsophisticated consumers facing demands by debt collectors. We are no more entitled to rely on our intuitions in this context than we are in deciding issues of consumer confusion in trademark cases, where the use of survey evidence is routine.” Evory v. RJM Acquisitions Funding LLC, 505 F.3d 769, 776 (7th Cir. 2007) (reversing summary judgment for debt collector in relevant part). While the “unsophisticated consumer” standard that we apply under the debt collection law, see id. at 774, is not identical to the “reasonable consumer” standard under the deceptive advertising statutes, in both arenas courts focus on how real consumers understand the carefully crafted messages aimed at them. See also Chuway, 362 F.3d at 948 (reversing summary judgment for defendant where ambiguous language could mislead “significant fraction” of consumers).
Our comparisons to other consumer-protection laws are intended to show that there is nothing out of the ordinary about applying the state consumer-protection laws in this case based on how consumers actually understand defendants’ labels. These questions may not be answered as a matter of law simply because lawyers can construe an ambiguous claim in a way that would not be deceptive. Plaintiffs are entitled to present evidence on how consumers actually understand these labels.
Plaintiffs allege in their complaints that they have actually conducted consumer surveys showing that 85 to 95 percent of consumers understood “100% Grated Parmesan Cheese” to mean that the product contains only cheese, without additives like those defendants use in the challenged products. In opposing dismissal, plaintiffs have also offered affidavits from linguists offering opinions that the most natural and plausible reading of defendants’ labels is entirely Parmesan cheese that is grated, rather than the district court‘s suggested “100% grated” meaning.2
Defendants also argue that even the “100% cheese” meaning is not misleading, despite the presence of the added cellulose and potassium sorbate. They contend that the FDA‘s definition of “grated cheese” allows them to call their products “grated cheese” because that designation allows addition of cellulose and potassium sorbate. See
We address the preemption implications of this argument below in Part I-D, but average consumers are not likely to be aware of the nuances of the FDA‘s regulations defining “grated cheese.” When consumers read “100% Grated Parmesan Cheese,” plaintiffs plausibly allege, they are not likely to understand that the phrase really means that the product is a blend of cheese and other substances that regulations allow to be called “cheese.” Rather, both plain meaning and the plaintiffs’ surveys and linguists plausibly indicate that a significant portion of consumers read the labels as promising pure cheese without added ingredients.
2. Common Sense Does Not Solve the Problem
“Common sense” does not render plaintiffs’ reading unreasonable. The district court found that no reasonable consumer who read the label as promising pure cheese could actually believe it because common sense tells us that pure cheese cannot be shelf stable without refrigeration. That reasoning strayed from the standard for dismissal for failure to state a claim under Rule 12(b)(6).
First, as plaintiffs point out, pure grated Parmesan cheese can be shelf-stable for a long time without refrigeration. See U.S. Dep‘t of Agriculture, Does all cheese need to be refrigerated? (July 17, 2019), https://ask.usda.gov/s/article/Does-all-cheese-need-to-be-refrigerated (“[H]ard cheeses such as … grated Parmesan do not require refrigeration for safety, but they will last longer if kept refrigerated.“). One of Kraft‘s own patents claims: “Fully cured Parmesan cheese is very hard and keeps almost indefinitely.” U.S. Patent No. 6,242,016 B1, 1. For millennia, people have been making cheese to preserve milk for later consumption, all without modern refrigeration. See, e.g., Casey Quakenbush, Archaeologists Have Discovered the World‘s Oldest Cheese Inside an Ancient Egyptian Tomb, TIME (Aug. 20, 2018), https://time.com/5371503/ancient-egypt-tomb-old-cheese/.
Moreover, today‘s grocery shoppers can often spot unrefrigerated cartons of pure grated Parmesan sold beside the cheese wheels that source them. It is true the defendants’ products are not displayed in that way but are instead shelved in the main grocery aisles. But since pure grated Parmesan can be and sometimes is sold unrefrigerated, common sense is not a substitute here for evidence, and certainly not as a matter of law. Reasonable consumers’ expectations about the need to
use either additives or refrigeration cannot be decided as a matter of law.
A comparison to our recent opinion in Beardsall may help illustrate the point. Plaintiffs there complained of labels on aloe vera gels proclaiming “100% aloe vera gel” despite the use of added preservatives that were disclosed in the fine-print lists of ingredients. Beardsall, 953 F.3d at 977. We affirmed summary judgment for the defendants because the plaintiffs failed to offer evidence of actual deception. The Beardsall plaintiffs failed to offer any consumer surveys showing the 100% claim was misleading, and the named plaintiffs admitted in their depositions that they actually expected that the products would include preservatives. Id.
We did not suggest, however, that the 100% claim could have been deemed not deceptive on the pleadings. To the contrary, we cast doubt on the defendants’ argument that such 100% claims were not
D. Federal Preemption
The defendants argue that we should affirm on an alternative ground even if their 100% labels could be deemed misleading under state law. Defendants contend that such state- law claims are preempted because federal law permits their labeling. The district court did not reach this issue, but it was briefed fully in the district court and on appeal. We find it prudent to resolve this issue of law now and perhaps head off another round of appeals in the multidistrict litigation.
Defendants’ argument has two distinct branches. First, they point out that the federal
1. Express Preemption
The
The express preemption provision of the
Defendants point out that the standard of identity does not explicitly prohibit them from labeling their products as “100%” cheese. From this silence, they argue that any state-law ruling that prohibited them from using the phrase “100% cheese” would establish a requirement not identical to those set out in the FDA‘s standard of identity.
The conclusion does not follow from the statute because defendants read the express
In Turek v. General Mills, Inc., 662 F.3d 423 (7th Cir. 2011), we held that the
In this case, however, it is defendants’ labels, not plaintiffs’ claims, that depart from the standard of identity. Plaintiffs are not seeking to add labeling requirements. They seek only to stop defendants from voluntarily adding deceptive language to the federally permitted labels. The federal standard of identity does not address that language, the “100%.” If state law prevents such deception, it will not establish any new requirement different from the standard of identity. In fact, the
By the logic of these decisions, state-law claims challenging defendants’ voluntary addition of “100%” to their labels are not preempted. A simple example illustrates this limit for express preemption. If an
Closer to this case, as in our hypothetical standard for a vegetable, the actual standard for grated cheese says nothing about a cheese‘s country of origin. Suppose a defendant here labeled its product “Grated Parmesan Cheese, 100% from Italy.” If the cheese did not actually come from Italy, state-law claims for deceptive advertising would not be preempted simply because the federal standard of identity does not explicitly ban such a statement. Such a result would stretch the
The
2. Conflict Preemption and Safe Harbors
This brings us to the defendants’ last line of defense in these appeals. They contend that the FDA actually approved Kraft‘s use of the “100% Grated Parmesan Cheese” label in 1999 and 2000. The argument distorts the facts. The FDA‘s standard of identity for Parmesan cheese requires that the cheese have been aged for at least ten months. In 1999, the FDA issued Kraft a temporary permit “to market test a product designated as ‘100% Grated Parmesan Cheese’ that deviates from the U.S. standards of identity for Parmesan cheese and grated cheeses” in
Kraft needed these permits to experiment with a six-month curing period. And that was what the FDA approved. There is no indication in these permits that the FDA assessed whether Kraft‘s proposed “100% Grated Parmesan Cheese” label was nondeceptive under federal law, and certainly not that it approved the 100% claim. The FDA only noted in passing that Kraft‘s “products will bear the name ‘100% Grated Parmesan Cheese‘.” 65 F.R. 83040-01. The FDA‘s approval of Kraft‘s shorter six-month curing period therefore poses no conflict with the plaintiffs’ state-law labeling claims: “Conflict preemption applies when there is an actual conflict between state and federal law such that it is impossible for a person to obey both.” Nelson v. Great Lakes Educational Loan Servs., Inc., 928 F.3d 639, 646 (7th Cir. 2019).
Likewise, the plaintiffs’ claims are not barred by state-law safe harbor provisions embedded in the Little-FTC Acts. These safe harbor provisions prevent federal-state conflicts by protecting business practices that the federal government has specifically approved. The
For these reasons, plaintiffs’ state-law claims are not preempted to the extent that they would require the defendants to remove “100%” from their labels—leaving only “Grated Parmesan Cheese.” The
II. Appellate Jurisdiction
We have jurisdiction over the appeals addressing the 100% claims within three of the plaintiffs’ consolidated complaints, but not over the appeals arising from the remaining two. The district court dismissed the plaintiffs’ 100% claims in three consolidated complaints, those against Kraft Heinz Co., Albertsons Co., Albertsons LLC, SuperValu Inc., Wal-Mart Stores, Inc. and ICCO-Cheese Co. Other claims remain pending in the district court in those cases, but the district court invoked
Ironically, however, we encounter problems with our appellate jurisdiction in the two cases in which all claims were dismissed as to all parties: the cases against
A. Procedural History
In an order issued August 24, 2017, the district court first dismissed all the plaintiffs’ 100% labeling claims, but without prejudice to filing amended complaints. See 100% Grated Parmesan Cheese Marketing and Sales Practices Litig., 275 F. Supp. 3d 910, 927 (N.D. Ill. 2017). Plaintiffs then filed five amended consolidated class action complaints, which were organized around the defendants. See Dkt. 225 against Kraft Heinz Co.; Dkt. 226 against Publix Super Markets, Inc.; Dkt. 227 against Albertsons Co., Albertsons LLC, and SuperValu Inc.; Dkt. 228 against Target Corp. and ICCO-Cheese Co.; Dkt. 229 against Wal-Mart Stores, Inc. and ICCO-Cheese Co. Defendants responded to those consolidated complaints with a fresh round of motions to dismiss on the pleadings, setting off a new round of briefing on the merits.
The district court ruled on those motions on November 1, 2018, dismissing all of the 100% labeling claims within these consolidated complaints, as well as all other claims in the Target/ICCO complaint. See 100% Grated Parmesan Cheese, 348 F. Supp. 3d 797, 818 (N.D. Ill. 2018) (“The 100% claims are dismissed in their entirety, as are all Anticaking claims against Target/ICCO.“). The November 1, 2018 order denied dismissal of some “anticaking” claims against several defendants. Because the Publix complaint brought only 100% labeling claims, the November 1, 2018 order dismissed all claims against all parties in both the Publix and Target/ICCO complaints. The November 1, 2018 order did not say explicitly that these dismissals were with prejudice, but it ended: “No Anticaking claims may proceed against Publix and Target, which are dismissed from this litigation.” Id. Despite this language, the district court did not at that time enter a separate written judgment in favor of Publix or Target.
The plaintiffs tried to treat the November 1, 2018 order as if it had been a dismissal without prejudice by filing a motion under
On July 16, 2019, the district court denied plaintiffs’ motion to file amended complaints against Publix and Target/ICCO. 100% Grated Parmesan Cheese Marketing and Sales Practices Litig., 393 F. Supp. 3d 745, 756 (N.D. Ill. 2019). In the July 16, 2019 order, the district court did not address
After the July 16, 2019 order, the court still did not enter any separate
As we explain in Part II-D below, the problem for plaintiffs’ appeals against Publix and Target/ICCO is that, despite the absence of separate Rule 58 judgments accompanying the November 1, 2018 order that said those defendants were “dismissed from this litigation,” more than 150 days had passed. In 2002,
B. Final Judgments in Multidistrict Litigation
The problem of appellate jurisdiction has an additional wrinkle here because these appeals arise from multidistrict litigation in which a district court and parties may use specialized procedures to manage the pretrial proceedings in the related cases.
Congress enacted
Coordinated or consolidated pretrial proceedings can be used to streamline litigation, to manage discovery to avoid duplication and waste, and to narrow issues by agreement or by motions to dismiss or for summary judgment, and especially by settlement. The default rule is that separate actions transferred for those pretrial proceedings retain their separate identities, especially for purposes of entering final judgments and pursuing appeals. Yet transferee courts and parties may choose to manage those cases in ways that can change that default rule and give up the separate identities of the original suits transferred to the MDL litigation. See, e.g., In re Refrigerant Compressors Antitrust Litig., 731 F.3d 586, 588 (6th Cir. 2013) (one category of antitrust plaintiffs—indirect purchasers—filed a single “consolidated amended complaint” that combined all of their allegations; dismissal of some indirect purchasers’ claims were not final judgments while other claims asserted in the consolidated amended complaint remained pending).
A related issue reached the Supreme Court in Gelboim v. Bank of America Corp., 574 U.S. 405 (2015). In Gelboim, the district judge dismissed just one of the many individual actions transferred and consolidated under the MDL‘s umbrella. The plaintiffs in that case appealed, but the Second Circuit dismissed their appeal for lack of a final judgment because other cases transferred to the MDL remained pending in the district court. The Supreme Court reversed the dismissal of the appeal. It held that the dismissal of the single complaint had been an appealable final judgment. The Court explained: “Cases consolidated for MDL pretrial proceedings ordinarily retain their separate identities, so an order disposing of one of the discrete cases in its entirety should qualify under
In footnote 3, however, Gelboim flagged a case-management choice that can change that default rule so that many transferred cases are fused together for purposes of final judgment and appeal:
Parties may elect to file a “master complaint” and a corresponding “consolidated answer,” which supersede prior individual pleadings. In such a case, the transferee court may treat the master pleadings as merging the discrete actions for the duration of the MDL pretrial proceedings. In re Refrigerant Compressors Antitrust Litigation, 731 F.3d 586, 590-592 (C.A.6 2013). No
merger occurs, however, when “the master complaint is not meant to be a pleading with legal effect but only an administrative summary of the claims brought by all the plaintiffs.” Id., at 590.
574 U.S. at 413 n.3. This separate rule may apply to a tool that transferee judges and parties often use to manage multidistrict litigation. As noted during oral argument in Gelboim, district courts often direct plaintiffs to file “a consolidated complaint ... [a]nd then ... simply resolve one of the claims in the master complaint without entering judgment in the individual action ... . The district court uses this administrative complaint to manage the litigation.” Tr. of Oral Arg. at 56, Gelboim, 574 U.S. 405 (2014) (No. 13-1174).
We read note 3 in Gelboim as endorsing the Sixth Circuit‘s approach in Refrigerant Compressors to ascertaining the legal effect of a consolidated complaint in multidistrict litigation, though the Sixth Circuit approach would persuade us even without the Supreme Court‘s endorsement. That approach focuses pragmatically on the behavior of the district court and the parties to determine whether they treated the consolidated complaint as the “operative pleading” or merely “an administrative summary.” 731 F.3d at 591. This approach holds the court and the parties to their actions to prevent them from springing traps by treating a consolidated complaint as the real complaint in the district court but then denying its importance and effect once a party tries to appeal. The test also avoids odd results that would flow from a contrary rule. As the Sixth Circuit posited:
What at any rate would be the alternative? The [plaintiffs] suggest looking at their original individual complaints rather than at the new consolidated complaint. But the new complaint superseded the old ones, and it makes little sense to ascertain appellate jurisdiction by looking at the ghosts of departed pleadings. Besides, when deciding whether the district court properly granted a motion to dismiss, we would have to look at the new complaint anyway. How odd it would be to write an opinion that talks about one complaint in the jurisdiction section and another in the merits section.
Under Refrigerant Compressors’ pragmatic inquiry, relevant signals include (1) how the plaintiffs labeled the new complaint, (2) whether the plaintiffs served the defendants with the new complaint instead of the original pleadings, (3) whether key deadlines were set in relation to the new complaint, (4) whether the court entertained motions to dismiss the consolidated complaint, and (5) whether the parties and the court looked solely to the allegations in the consolidated complaint when arguing and deciding such motions. See 731 F.3d at 590-91. This last factor is “perhaps most important[].” Id. at 591. We agree, especially with the emphasis on the parties’ and the district court‘s focus on the allegations in the consolidated complaint in arguing and deciding
But as the Sixth Circuit also explained, the dangers of ambiguity can be avoided if the court and the parties decide explicitly, from the beginning, the legal status of the consolidated complaint(s). At the outset of a multidistrict litigation, all parties have an interest in knowing when and how appellate rights may be triggered or lost. We urge district judges and MDL plaintiffs to indicate clearly whether a consolidated MDL complaint is to be treated as the operative pleading for purposes of judgment and appeal or instead as merely an administrative convenience.
Such clarity was not reached in this case, so we must decide whether the consolidated complaints superseded the individual pleadings to become the operative units for entry of judgments and appeals. Just as in Refrigerant Compressors, the relevant factors show that the five consolidated complaints here became the legally operative pleadings in the district court.
The plaintiffs did not fashion this set of complaints as mere administrative summaries. Rather, they filed them as “amended consolidated” complaints. Dkt. 225-229. The court then held a status hearing to ask whether defendants “intend[ed] to answer or move to dismiss the amended complaints.” Dkt. 230. The defendants said they would move to dismiss, and the court set motions deadlines. Dkt. 232. The court invited and expected
D. Untimeliness of Publix and Target/ICCO Appeals
Pulling these threads together, the consolidated Publix and Target/ICCO complaints were legally operative pleadings in two distinct cases under the umbrella of the larger MDL. The district court‘s November 1, 2018 order “had the hallmarks of a final decision.” See Gelboim, 574 U.S. at 414. That order effectively resolved all claims asserted in those two consolidated complaints. Unlike the court‘s August 2017 order, the November 1, 2018 order did not expressly grant leave to amend. Most important, it said Publix and Target/ICCO were “dismissed from this litigation.” 100% Grated Parmesan Cheese, 348 F. Supp. 3d at 818. The order therefore qualified under
Unfortunately, the district court did not enter separate Rule 58 judgments in those cases then. The failure to enter separate judgments means that the entry of judgment is determined, for purposes of the time to appeal, under the 150-day provision of
So we treat these judgments as if they were entered on Monday, April 1, 2019, the first business day after the 150th day. See
Plaintiffs argue that we should not enforce the 150-day provision because defendants waived their right to insist on it. See Hamer v. Neighborhood Housing Servs. of Chicago, 897 F.3d 835, 839-40 (7th Cir. 2018) (enforcing waiver against defendants who admitted appeal was timely, then argued otherwise). There was no waiver here. As soon as plaintiffs filed their
Because plaintiffs did not file their notices of appeal until August 2019, their appeals against Publix and Target/ICCO are untimely, and we lack appellate jurisdiction over the district court‘s dismissal of the claims in the consolidated complaints against Publix and Target/ICCO.5
Conclusion
In Appeal No. 19-2741, the partial final judgments dismissing the 100% claims alleged in the consolidated Kraft, Albertsons, and Walmart/ICCO complaints are REVERSED and those cases are REMANDED for further proceedings consistent with this opinion. Appeal No. 19-2581, involving the consolidated complaints against Publix and Target/ICCO, is DISMISSED for lack of appellate jurisdiction.
KANNE, Circuit Judge, concurring. I join in Judge Hamilton‘s opinion reversing the district court‘s dismissal of Plaintiffs’ deceptive-advertising claims. And I emphasize at the outset my agreement with Judge Hamilton‘s well-articulated reasons for why we lack jurisdiction over the appeals against Publix and Target/ICCO and why Defendants’ various preemption arguments are unavailing. I have nothing to add with respect to those conclusions.
I write separately only to further address today‘s primary holding: that the district court erred in concluding that Defendants’ “100% Grated Parmesan Cheese” labels cannot deceive a reasonable consumer as a matter of law. Although I agree with that holding, too, I think it worthwhile to further discuss its basis and contours for the benefit of district courts.
The district court‘s reasoned analysis thoroughly synthesized a mass of cases to come to an understandable, even if incorrect, rule: that ambiguity on a product‘s front label can be cured by clarity on its back. But ultimately, I believe this rule is
It‘s impractical because, while lawyers and judges can find ambiguity in just about anything, that‘s not what we expect of the reasonable consumer. Under the district court‘s approach, defendants could often proffer some alternative, non-deceptive reading of the front label—or fashion the label precisely so that it can bear one plausibly non-deceptive reading—regardless of whether the reasonable consumer (or some significant portion of reasonable consumers) would read it that way. And the court might admit some degree of ambiguity, in which case the ingredient list dictates the outcome—all while reasonable consumers are actually deceived by the label without ever even noticing any ambiguity.
That, at bottom, is the flaw in the district court‘s rule: a court could decide as a matter of law that a statement is not deceptive even where it could deceive reasonable consumers as a matter of fact. It assumes reasonable consumers not only notice ambiguities but then investigate to resolve them, either by scouring the fine print or, even less likely, reading up on the shelf life of Parmesan cheese. It assumes too much.
Moreover, the district court‘s ambiguity rule conflicts with the weight of authority. It‘s well settled that a label is not deceptive as a matter of law when the plaintiff‘s interpretation is so facially illogical, implausible, or fanciful that no reasonable consumer would think it—and that dismissal is warranted in those circumstances. See, e.g., Bober v. Glaxo Wellcome PLC, 246 F.3d 934, 940 (7th Cir. 2001) (“As a matter of law, none of the three statements ... is deceptive” because the label “eliminates any possibility of deception” and “can only be read” in a nondeceptive way.); see also Forouzesh v. Starbucks Corp., 714 F. App‘x 776, 777 (9th Cir. 2018) (“The statutory claims fail as a matter of law because no reasonable consumer would think ... that a 12-ounce ‘iced’ drink, such as iced coffee or iced tea, contains 12 ounces of coffee or tea and no ice.“); Fink v. Time Warner Cable, 714 F.3d 739, 741 (2d Cir. 2013). I consider this principle to stem directly from the motion to dismiss standard, which requires that a claim to relief be “plausible on its face” to survive dismissal. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007).
Just as important, however, is the corollary to this principle: that if a plaintiff‘s interpretation of a challenged statement is not facially illogical, implausible, or fanciful, then a court may not conclude that it is nondeceptive as a matter of law. The ” ‘determination of the likelihood of deception ‘is an impressionistic one more closely akin to a finding of fact than a conclusion of law.’ ” Beardsall v. CVS Pharmacy, Inc., 953 F.3d 969, 973 (7th Cir. 2020) (Hamilton, J.) (quoting Suchanek v. Sturm Foods, Inc., 764 F.3d 750, 762 (7th Cir. 2014)). So unless the plaintiff‘s reading is implausible on its face, it is for a panel of “jurors, rather than three judges, [to] decide on a full record whether the challenged label ‘has the capacity to mislead’ reasonably acting ... consumers.” Dumont v. Reily Foods Co., 934 F.3d 35, 41 (1st Cir. 2019) (quoting Aspinall v. Philip Morris Cos., Inc., 813 N.E.2d 476, 488 (Mass. 2004)).
The district court here did not conclude that Plaintiffs’ interpretation of the “100% Grated Parmesan Cheese” statement is illogical, implausible, or fanciful. Rather, in concluding that the statement is ambiguous, it necessarily found the opposite: that
Thus, whether the 100% statement is likely to deceive a reasonable consumer is a question of fact that cannot be determined on the pleadings. And Judge Hamilton thoroughly explains how the weight of authority suggests that the presence of an ingredient label does not transform this question of fact into a question of law. Beardsall, 953 F.3d at 978 (“[D]isclosure in an ingredient list cannot cure a clearly misleading statement.” (citing Williams v. Gerber Prods. Co., 552 F.3d 934, 939 (9th Cir. 2008))).
This is not news to many courts, including those within this circuit. “Although there are situations where the determination of the possibility for deception can [be] made as a matter of law,” one court recently explained, “the relevant questions in this case—whether a reasonable consumer would be deceived by the products’ name and label and a reasonable consumer‘s understanding of the [label]—are not so clear-cut.” Korte v. Pinnacle Foods Grp., LLC., No. 17-CV-199-SMY-SCW, 2018 WL 1508855, at *4 (S.D. Ill. Mar. 27, 2018). That court therefore declined to conclude as a matter of law that the label was not deceptive, even though “the ingredient list on the back of the bottle discloses that it contains ... other ingredients.” Id. at *3. “[T]he allegedly deceptive act must be looked upon in light of the totality of the information made available to the plaintiff,” id. at *4 (quoting Davis v. G.N. Mortg. Corp., 396 F.3d 869, 884 (7th Cir. 2005)), and “whether listing other ingredients on the back would be sufficient to dispel any misunderstanding ... the front of the package might cause is a question of fact,” id. Our opinion approves this approach.
Defendants make much of the word “clearly” in Beardsall and Williams, which they argue suggests that an ingredient label can cure a misleading statement so long as the statement is not clearly misleading. That one word is simply too weak a basis to depart from the signals projected by cases from the First, Second, and Ninth Circuits—cases in which, as Judge Hamilton correctly notes, “there was room to argue about the precise meaning of the front-label claims.” Determining that a statement is not “clearly misleading” on the pleadings robs the jury of the opportunity to determine, as a matter of fact, whether the statement is “clearly misleading,” just “misleading,” or “not misleading at all.” It also it flips the proper motion to dismiss inquiry on its head; courts should ask whether the plaintiff‘s interpretation of a statement is facially implausible, not whether the statement is “clearly” enough misleading. And it‘s simply a stretch to say that a consumer‘s reading of a statement is implausible as a matter of law just because fine print elsewhere on the label could clarify an ambiguity that a reasonable consumer might not have even noticed in the first place.
Ultimately, a jury might conclude that the 100% statement is unlikely to deceive a reasonable consumer. Take the below example, which is representative of Defendants’ products (though, to be sure, they vary in content and layout). Coupled with other evidence, this label might lead a jury to conclude that a reasonable consumer would interpret the statement to assert only that whatever is in the canister is 100% grated, not 100% Parmesan and not 100% cheese:
Notes
In opposing a motion to dismiss for failure to state a claim, a plaintiff may describe the evidence she expects to offer to support factual allegations, and nothing prevents a plaintiff from including such allegations in the complaint or from tendering affidavits or other documents to show that those expectations about evidence are realistic. E.g., Geinosky v. City of Chicago, 675 F.3d 743, 745–46 n.1 (7th Cir. 2012); Thomas v. Guardsmark, Inc., 381 F.3d 701, 704 (7th Cir. 2004) (denying motion to strike new materials submitted on appeal); Hrubec v. Nat‘l R.R. Passenger Corp., 981 F.2d 962, 963–64 (7th Cir. 1992) (“A plaintiff need not put all of the essential facts in the complaint. He may add them by affidavit or brief—even a brief on appeal.“); Early v. Bankers Life & Cas. Co., 959 F.2d 75, 79 (7th Cir. 1992) (reversing dismissal; plaintiff is free to assert new facts in brief opposing motion to dismiss); Derfus v. City of Chicago, 42 F. Supp. 3d 888, 893 n.1 (N.D. Ill. 2014); Roe I v. Bridgestone Corp., 492 F. Supp. 2d 988, 1007 (S.D. Ind. 2007) (documents submitted in opposing motion to dismiss “are not evidence, but they provide a way for a plaintiff to show a court that there is likely to be some evidentiary weight behind the pleadings the court must evaluate“). It would often be prudent to accompany such evidentiary materials with a clear statement that they are offered not to convert the motion to one for summary judgment under Rule 12(d) but only to illustrate the allegations that are the proper focus of the Rule 12(b)(6) motion. Geinosky, 675 F.3d at 745–46 n.1.