Fitzhenry-Russell v. Dr. Pepper
Motion to dismiss denied – Dr. Pepper allegedly ran TV ads marketing its Canada Dry Ginger Ale products as “Made From Real Ginger,” despite the fact they contained no ginger root (as a reasonable consumer would understand it), and instead used chemical flavor compounds that mimicked the taste of ginger. Plaintiffs claimed these misrepresentations deprived them of the health benefits of real ginger root, and they paid a premium for Canada Dry Ginger Ale products under the mistaken belief they contained real ginger. Had plaintiffs known the true nature of the product, they claimed they would not have purchased them or, at a minimum, paid less. Plaintiffs claimed they would buy Canada Dry Ginger Ale products in the future if they could rely on the ‘Real Ginger’ representations.
In Feb 2017, the case was dismissed shortly after being removed to federal court, based primarily on the fact Canada Dry made no representations about the inclusion of whole or ground ginger root, and it made no representations about health benefits of its ginger ale. However, the court granted plaintiff leave to amend. A second motion to dismiss was denied as moot when the case was consolidated. Dr. Pepper again filed a motion to dismiss the consolidated amended complaint.
This time, the court was more sympathetic to plaintiff’s claims. The court found that fraud allegations were sufficient to survive a motion to dismiss, since dates of TV ads with the allegedly misleading claims could be readily revealed by Dr. Pepper. Since the campaigns ran over the entire five-year class period, the court found plaintiffs did not have specify the dates of commercials viewed. Plaintiff had seen the commercials over the course of the campaigns, included a (now defunct) YouTube link in the complaint, and described the common (allegedly misleading) elements of the commercials, and that was sufficient at the current stage of litigation.
Additionally, the fact that neither plaintiff visited the Canada Dry website did not preclude claims, as representations on the website demonstrated an alleged intent to deceive.
The court declined to dismiss claims as puffery, as voice overs belied the comedy in the ads, and gave a general impression the product contained ginger root (citing the YouTube video below).
Finally, the court determined the state law claims were not preempted by the Federal Food, Drug & Cosmetic Act (FDCA), since the case did not involve federally regulated flavor claims. At issue was that the ginger flavor of Canada Dry came not directly from actual ginger root, but was derived from ginger root. Although Canada Dry labeling may have been FDCA complaint, plaintiffs claimed ginger was not a natural flavor in the product. Claims related to constituent ingredients were not preempted, so the case could proceed.
[N.D. CA; 5:17-cv-00564 (lead) & 5:17-cv-02341(consolidated)]
jbho: interesting turn of events. It appears plaintiff was able to cure deficiencies in the initial complaint. It will be interesting if on closer scrutiny a chemical flavoring compound derived from ginger, can still be called ‘real ginger’
Note that this case may still be trimmed on subject matter jurisdiction. The court ruled it had jurisdiction over a nationwide class action based on state law claims, as the named plaintiffs were California residents who were injured in California. It distinguished the matter at hand from Bristol-Myers Squibb v. Superior Court of California San Francisco County, where the Supreme Court found that a state court couldn’t excise personal jurisdiction over a non-resident defendant in a mass tort action (each party a named plaintiff). The court found SCOTUS expressed no opinion on whether Bristol-Myers reasoning would or would not apply to federal courts. Additionally, SCOTUS did not extend its reasoning to bar unnamed non-resident plaintiffs’ claims, who may or not be ‘parties’ for the purposes of the current litigation. Thus, the court had personal jurisdiction over the matter. The court stated Dr. Pepper failed to present persuasive argument to the contrary.
However, the court did acknowledge a similar case where the result supported Dr. Pepper’s position. In Plumbers’ Local Union No. 690 Health Plan v. Apotex (E.D PA; 2:16-cv-00665) the court dismissed class claims of non-resident plaintiffs because the non-residents didn’t purchase defendant’s drugs in Pennsylvania. I imagine we may see more on this front as the case progresses. Dr. Pepper has already filed a motion for leave to appeal (Doc#92).
Finally, compare this to Fitzhenry-Russell v. Coca-Cola (N.D. CA; 5:17-cv-00603) which involved nearly identical claims that Seagram’s Ginger Ale was “Made With Real Ginger.” The court denied a motion to dismiss (Doc#48) finding “even if the chemical compound used to flavor the Product has trace amounts of ginger in it, the statement ‘Made With Real Ginger’ is actionable because Plaintiff has alleged that the statement is likely to deceive reasonable consumers into believing that the Product is flavored with and contains real ginger.”
Surprisingly the above Dr. Pepper decision was not mentioned in the analysis.
UPDATE: 26Jun2018 – class certified (Doc #199). The court found Dr Pepper’s own marketing research found a significant percentage of its consumers relied on the ‘real ginger’ claims.
UPDATE: 4Jan2019 – preliminary settlement approval (Doc#335). Highlights include:
• up to $11.2 Million in settlement funds
— up to $5.20 for class members without proof of purchase
— up to $40.00 for class members with proof of purchase
• $5,000 for each class representative (requested – 2)
• $2,250,000 for class counsel (requested – )
The settlement also requires changes to the Canada Dry Ginger Ale label so that any claims of ‘ginger,’ ‘real ginger,’ or ‘natural ginger,’ are qualified by – in the same typeface and size (or in the case of audio, same volume and speed) – ‘taste,’ ‘extract,’ or ‘flavor.’ The phrase “Made from Real Ginger” may no longer be used.