Consumer Class Actions Alleging Deception—Dismissal is Possible

In Ebner v. Fresh, Inc., Case No. 13-56644 (9th Cir. Sept. 27, 2016), the plaintiff alleged false, deceptive and misleading labeling, design, and packaging of a consumer product.  The product was a Sugar Lip Treatment product, a high-end lip balm sold in cosmetics departments.

Plaintiff alleged the labeling of the product, though accurate, was deceptive and misleading because of certain omissions.  The Complaint also contended that the packaging and tube design were deceptive regarding the quantity of product in the package, giving the impression that there was more actual product than, in fact, there was. 

The Complaint alleged the product violated three California consumer statutes:  (1) California False Advertising Law, (Bus. & Prof. Code § 17500, et seq.); (2) California Consumers Legal Remedies Act (Civ. Code § 1750 et seq.); and (3) California Unfair Competition Law (Bus. & Prof. Code § 17200 et seq.).

In effect, the Complaint alleged that consumers were defrauded or deceived.  Such allegations raise factual issues, often precluding an early dismissal.  Yet the Ninth Circuit threw out the case on a Rule 12(b)(6) motion, which is unusual because the standard on a 12(b)(6) motion is so favorable to the plaintiff.  On a 12(b)(6) motion, the Court is required to accept the factual allegations in the Complaint as true.  Yet in this case, the Ninth Circuit outright rejected the plaintiff’s theories.

The Court dismissed certain claims on the basis of the California “safe harbor” doctrine, which basically precludes claims based on conduct that the legislature has affirmatively permitted by statute.

The more interesting aspect of the case is that most claims were dismissed under the concept of what the “reasonable consumer” would understand.  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.”

The Ninth Circuit reached its own conclusions about what a “reasonable consumer” would believe.  It held that the reasonable consumer could not be deceived, either about the amount of product in the tube, or that some of the product would be left in the tube, or that the container would include some non-functional slack fill.

The Ninth Circuit further denied leave to amend, concluding that, given its determination that a “reasonable consumer” could not be misled, the plaintiff could not amend the Complaint to allege a viable claim and therefore amendment would be futile.

As the Ebner v. Fresh, Inc. case teaches, an early motion to dismiss in consumer putative class actions is worth considering.

Topics: Consumer Fraud

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