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January 2021

Hartford Team Obtains Dismissal of Class Action Suit in Favor of National Beverage Manufacturer

Gordon Rees Scully Mansukhani Partners Greil Roberts and Peter Siachos along with Associate Nicholas Varney recently obtained a favorable ruling from the Massachusetts Federal District Court dismissing a six-count class action complaint against the firm's client, a beverage manufacturer, facing a large potential exposure.

The plaintiff brought the class action alleging that the client falsely and deceptively labeled, advertised, and marketed the contents of its beverages. The plaintiff alleged that, although the beverage label was somewhat true, a reasonable consumer would interpret the label to mean that it contained an ingredient that would provide consumers health benefits. The plaintiff alleged that she, along with her thousands of class members, were entitled to double damages and attorneys’ fees because of the client’s allegedly deceptive conduct.

The plaintiffs in other states pursued identical claims regarding similar beverages made by the client’s co-competitors. Courts across the country declined to dismiss these lawsuits. The plaintiff relied heavily on these prior decisions in the framing of her claim and her briefing.

Despite the success of plaintiffs in these identical actions, the Hartford team moved to dismiss the action on the grounds that the plaintiff failed to sufficiently plead her claim and that it was barred by the economic loss doctrine. The motion argued that the client made truthful representations on its labels and that the claim was not plead with sufficient particularity. The motion also argued that no reasonable consumer would expect a beverage to provide health benefits from an ingredient not contained therein.

In an artful decision, the Massachusetts Federal District Court granted the motion to dismiss the entirety of the class action complaint. Siding with the reasoning of Roberts and Varney as opposed to prior decisions, the Court held that the client’s labels were true and, therefore, not misleading. The Court characterized the plaintiff’s allegations as both conclusory and erroneous, and outright rejected their interpretation of the label. The Court further held that the plaintiff’s claim for deceptive business practices failed because her interpretation was unreasonable. The Court also noted that this type of deceptive label action only causes damage to the consumer, as it forces food and beverage companies to defend them. In the end, the Court stated plainly that the plaintiff’s claim depended on the likely reaction of a reasonable consumer, and that any reasonable consumer would know the product for what it is.

Peter G. Siachos