7-Eleven May Be Liable for Mislabeling Food Packages9 Aug, 2016 By: Jeffrey Richter, Arthur Yoon
Scott Bishop (plaintiff), a consumer of 7-Eleven brand potato chips, initiated a class action lawsuit against 7-Eleven Inc. alleging that 7-Eleven mislabeled its “7-Select” potato chips and other 7-Eleven branded food products in violation of California’s false advertising law. California regulates advertising through a false advertising statute. Through its false advertising statute, California generally prohibits any statement that is untrue or misleading made in connection with the disposition of property or services. Any violation of that prohibition is a misdemeanor punishable by imprisonment for up to six months, by a fine of up to $2,500, or by both. Injured consumers or competitors may also bring a civil action to enforce certain sections of the false advertising statute.
The plaintiff alleged that 7-Eleven failed to comply with state and federal regulations by misstating the nutrient contents and nutritional values, using “all natural,” and “fresh” claims, and failing to disclose the presence of artificial colors and flavors. A federal district court dismissed the false advertising claims, concluding that the plaintiff failed to specify the particular products that violated particular labeling requirements, the allegedly unlawful representations that were on the products, and the particular statements the plaintiff allegedly relied on when making his purchases. Bishop appealed the dismissal of his claims to the U.S. Court of Appeals, which reversed the lower court’s decision.
The appellate court found that the plaintiff adequately alleged reliance on 7-Eleven’s potato chips’ packaging representations, and that he would not have purchased the chips had 7-Eleven included, on the front of the package, the disclosure statement required by the U.S. Food and Drug Administration (FDA) that calls the consumer’s attention to one or more nutrients in the food that may increase the risk of a disease or health-related condition that is diet related. The disclosure statement is required when a nutrient content claim is made and when a nutrient in that food exceeds certain prescribed levels. The disclosure statement identifies that nutrient (e.g., “See nutrition information for fat content”).
Specifically, the plaintiff adequately alleged that he relied on the “0g trans fat” and “no cholesterol” representations made on the front of 7-Eleven’s potato chips’ package, and that he would not have purchased the chips had 7-Eleven included on the front of the package the “See nutrition information for fat content” disclosure required by the FDA. According to the appellate court, California’s false advertising law renders statements actionable that, although not technically false, have a tendency to mislead consumers because the statements fail to disclose or direct the consumer’s attention to other relevant information.
This case illustrates how an innocuous omission by an advertiser can result in potential liability under a state’s consumer protection laws. Even though 7-Eleven did not make a false statement on the front of its potato chips’ package, 7-Eleven’s failure to include the nutritional disclosure statement required by the FDA was legally actionable under California’s false advertising law and resulted in Bishop’s class action lawsuit being permitted to proceed. In order to reduce the legal and financial risks associated with such consumer protection lawsuits, advertisers need to ensure that the packaging of their products is properly labeled in accordance with applicable state and federal regulations.