Bell v. Publix Super Mkts., Inc.

• Citation: 982 F.3d 468
• Decision Date: 07 December 2020
• Docket Number: Nos. 19-2581 & 19-2741,s. 19-2581 & 19-2741
• Parties: 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.
• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)

982 F.3d 468

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, Seventh Circuit.

Argued September 17, 2020

Decided December 7, 2020

Ben Barnow, Attorney, Barnow & Associates, P.C., Chicago, IL, Leslie E. Hurst, Attorney, Blood Hurst & O'Reardon, LLP, San Diego, CA, for Plaintiffs-Appellants.

Joseph E. Collins, Attorney, Fox Rothschild LLP, Chicago, IL, for Defendants-Appellees Albertson Companies, Inc., Albertsons, LLC, SuperValu Incorporated, Publix Super Markets, Inc.

Francis Anthony Citera, Attorney, Greenberg Traurig, LLP, Chicago, IL, for Defendant-Appellee Wal-Mart Stores, Inc.

Dean N. Panos, Attorney, Michael T. Brody, Attorney, Jenner & Block LLP, Chicago, IL, for Defendant-Appellee Kraft Heinz Company.

Joshua A. Glikin, Attorney, Bowie & Jensen, LLC, Towson, MD, for Defendants-Appellees Target Corporation, ICCO-Cheese Company, Inc.

Before Kanne and Hamilton, Circuit Judges.^*

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 28 U.S.C. § 1407. Plaintiffs then reorganized their claims into five amended consolidated complaints, organized by defendant. In a series of orders, the transferee district court ultimately dismissed the plaintiffs’ deceptive labeling claims ("the 100% claims") with prejudice for failure to state a claim. Plaintiffs appeal those dismissals.

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 deceives a substantial portion of reasonable consumers, and their claims are not preempted by federal law. For reasons specific to the management of the multidistrict litigation, however, we lack appellate jurisdiction to review the district court's dismissal of the 100% claims in two of the plaintiffs’ consolidated complaints (against Publix and Target/ICCO) because the appeals were filed too late. In Part I, we address the merits of the 100% claims. In Part II, we explain why we lack appellate jurisdiction over the district court's dismissal of the latter two complaints.

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 of the general consuming public or of targeted consumers, acting reasonably in the circumstances, could be misled." Beardsall v. 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 28 U.S.C. § 1332(d). The core prohibitions of these laws are interpreted for the most part interchangeably, and the parties have not identified any differences relevant to these appeals. We concentrate on the general prohibition against advertising that is likely to deceive a substantial proportion of reasonable consumers.

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 court did not reach. We disagree with all three grounds for dismissal. The plaintiffs’ 100% labeling claims survive the defendants’ motion to dismiss. Part I-C explains our disagreement with the district court's reasons for dismissal. Part I-D then explains why plaintiffs’ claims are not preempted by federal law.

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, 127 S.Ct. 1955, 167 L.Ed.2d 929 (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...