Castle v. The Kroger Co.
| Decision Date | 03 October 2022 |
| Docket Number | 21-cv-1171-pp |
| Parties | STACEY CASTLE, Plaintiff, v. THE KROGER CO., Defendant. |
| Court | U.S. District Court — Eastern District of Wisconsin |
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO DISMISS (DKT. NO. 12)
On October 8, 2021, the plaintiff filed a complaint individually and on behalf of all others similarly situated regarding representations about cheese products sold by the defendant's grocery chain. Dkt. No. 1. The plaintiff brought the following claims: (1) violation of Wis.Stat §100.20; (2) violation of the consumer fraud act statutes of five other states (the class claim); (3) breaches of express warranty, implied warranty of merchantability and the Magnuson Moss Warranty Act, 15 U.S.C. §§2201 et seq.; (4) negligent misrepresentation; (5) fraud and (6) unjust enrichment. Id. at 14-18.
The defendant has moved to dismiss the complaint under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). Dkt. No. 12. The court will grant in part and deny in part the motion.
The plaintiff is a citizen of Wisconsin. Dkt. No. 1 at ¶68. The defendant is an Ohio corporation with a principal place of business in Cincinnati, Ohio. Id. at ¶69.
The plaintiff asserts that the defendant operates various grocery store chains throughout Georgia, Kentucky, Michigan, Tennessee, West Virginia and Wisconsin, including non-Kroger branded stores such as Metro Market and Pick 'n Save (which the plaintiff alleges are wholly-owned subsidiaries of the defendant), all of which sell the Private Selection brand. Id. at ¶¶71-73. She says that the Private Selection brand “is typically equivalent to, and usually exceeds, its national brand competitors in quality.” Id. at ¶74. The plaintiff alleges that the defendant manufactures, labels, markets and sells under its Private Selection brand “slices of Gouda cheese purporting to get its smoked attributes-including taste and color-entirely from being smoked.” Id. at ¶1.
The plaintiff alleges that on one or more occasions, she bought the sliced Gouda cheese at Kroger-owned supermarkets, including the Metro Market at 12735 W. Capitol Drive in Brookfield, Wisconsin, between June and September 2021, as well as at other times. Id. at ¶75. She says that the cheese sells for “no less than approximately” $3.99 for an eight-once package of ten slices; she said that she purchased the cheese for at or more than that price and expected that the cheese “was subject to at least some actual smoking to provide its smoked taste,” based on the label on the front of the package. Id. at ¶¶59, 7677. She says she relied on the representations “Smoked Gouda” and “Distinctive, Smoky Flavor” on the front label as a reference to the cheese having been smoked “over hardwoods” and having its taste as a result of “being smoked on hardwoods.” Id. at ¶¶78-79. She says she had no reason to know that the cheese “was not subject to any smoking,” and that she wanted not just a “smokey” taste but “a product that was smoked over hardwood, so that its taste and color did not need so much, or any, added ‘smoke flavor.'” Id. at ¶¶80-81. The plaintiff asserts that she would not have purchased the cheese if she had known “the representations were false and misleading,” saying that she chose the defendant's cheese over similar products “which were represented similarly, but which did not misrepresent their attributes and/or lower-priced products which did not make the statements and claims made by Defendant.” Id. at ¶¶82-83. She claims that the product “was worth less than what [she] paid,” and that she would not have paid as much “absent Defendant's false and misleading statements and omissions.” Id. at ¶84. The plaintiff says that she will purchase the cheese again “when she can do so with the assurance that Product's representations are consistent with its composition.” Id. at ¶85.
The plaintiff asserts that smoking is used to preserve food or improve its flavor by exposing the food to smoke, typically from burning wood; she says the “drying action of the smoke and the different phenol compounds help to preserve protein-rich foods such as meat, cheese, almonds, and fish.” Id. at ¶¶2-3. The plaintiff says that the type of wood used affects the taste of the cheese. Id. at ¶¶6-9. She alleges that while convenient, “smoke flavor”-“which is smoke condensed into a liquid form”-does not “supply the rich, layered combination of phenols and other odor-active compounds compared to where a food's taste is derived entirely from being smoked over wood.” Id. at ¶¶10-11.
The plaintiff maintains that consumer demand for smoked foods has increased over the past two decades, a trend recognized by the cheese industry. Id. at ¶¶12-13.
The plaintiff claims that the liquid smoke flavor contains four hundred flavor compounds, including “pyrazines, aromatic hydrocarbons, alcohols, organic acids, esters, furans, phenols, carbonyl and non-carbonyl compounds, and various oxygen- and nitrogen-containing heterocyclic compounds. Id. at ¶15. The plaintiff insists that the liquid smoke additive fails to match the actual taste of wood-smoked product because it does not have the same balance of phenolic compounds and because smoke generation produces compounds that can't be duplicated synthetically. Id. at ¶¶16-22. She states that the defendant's failure to disclose the addition of the liquid smoke flavor gives consumers a false impression that the cheese “was made similarly to comparably labeled products and smoked over hardwood, when it was not.” Id. at ¶23.
The plaintiff cites to research by Mintel[1] in stating that the demand is increasing for “foods that get their taste only from a characterizing ingredient or a natural processing method.” Id. at ¶24. She says that Mintel reports that consumers “are increasingly aware of the lack of transparency in the flavor industry,” which she says is “regularly highlighted” by non-profits such as the Environmental Working Group (EWG). Id. at ¶25. The plaintiff asserts that the EWG identifies foods with “natural” flavors that also contain additives like emulsifiers and solvents which “may pose health or nutritive risks.” Id. at ¶26. The plaintiff says that the European Food Safety Authority has found that smoke flavorings in foods “contain compounds at levels which may pose a toxic risk when consumed.” Id. at ¶27.
The plaintiff asserts that there are “federal and identical state regulations requir[ing] that a product's front label disclose the source of any characterizing or main flavor.” Id. at ¶30 (citing 21 C.F.R. §101.22(i); Wis. Admin. Code ATCP 90.10(1)[2]). She says that in enacting regulations for flavoring, the FDA considered the term “smoked” to be misleading when “true smoke is absorbed in a liquid or other medium, and that medium is added to food to provide a smoke flavor.” Id. at ¶33 (citing 38 Fed.Reg. 20721, statements of Hon. H.C. Adams). The plaintiff says that in such cases, the front label of the product should contain the description “with added smoke flavor,” “[with] natural smoke flavor,” “flavor added,” or “smoke flavored.” Id. at ¶¶34, 38. She says that there are specific federal regulations addressing cheeses, including Gouda cheese, id. at ¶35 (citing 21 C.F.R. §§133.193(b), 133.142), and that the FDA recently has warned companies regarding product labeling and smoked ingredients, id. at ¶¶36-37.
The plaintiff alleges that the defendant's product label description- “Smoked Gouda”-violates 21 U.S.C. §343(a)(1) and “ch. 97.03 (‘Standards: misbranding')” (although this paragraph does not identify the source of ch. 97.03). Id. at ¶39. She asserts that the statement “Distinct, Smoky Flavor” is misleading, as is the term “Smoked Gouda,” because the flavor is from added smoke flavor and the cheese is not smoked. Id. at ¶¶41-42. She alleges that consumers are misled because the “absence of required, qualifying terms on the front label, i.e., ‘natural smoke flavored Gouda, ‘smoke flavored Gouda,' or ‘Gouda with natural [added] smoke flavor,' gives them the false impression that all the Product's smoked attributes-including taste and color-are imparted by smoking, when none of these attributes are.” Id. at ¶50 (citing 21 C.F.R. §101.22(i)(1)(i)). She also alleges that the smoke flavor darkens the product, further misleading customers, even those who “double check” the ingredients and see “smoke flavor” listed. Id. at ¶¶51-52.
The plaintiff says that whether a food has been smoked or contains liquid smoke is “basic front label information consumers rely on when making quick purchasing decisions at the grocery store.” Id. at ¶43. She says actual smoked Gouda exists in the marketplace and is not rare or an expensive delicacy that would make a reasonable customer scour the label for further information for the source of the smoked flavor. Id. at ¶44-45. The plaintiff alleges that there are actual smoked Gouda products on the market, labeled identically to the defendant's, that get their flavor entirely from being smoked over hardwoods, while the defendant's is not smoked and has added smoke flavor. Id. at ¶¶46-47. She asserts that other companies indicate on the front of their packaging when a smoked Gouda product contains some or all liquid smoke flavoring. Id. at ¶¶48-49. She says the defendant revealed the “smoke flavor” ingredient only on the back of its packaging, in the ingredient list. Id. at ¶49.
Finally the plaintiff alleges that reasonable consumers rely on a company to “honestly identify and describe the components, attributes, and features of a product, relative...
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