According to named plaintiffs in a consumer fraud action filed in December in the Southern District of California, size matters when making it comes to making a purchase. In fact, Plaintiffs claim that the average consumer’s purchasing decision is “heavily dependent” on the size of the package.
Plaintiffs have sued Defendant MusclePharm for “intentionally packaging its [protein products] in large, opaque containers that contain more than 45% empty space” or—as Plaintiffs have characterized it—non-functional slack-fill. Plaintiffs argue that consumers paid a higher price for the products because of the large containers, but they would not have purchased those products if they had known the containers were substantially empty.
For manufacturers of consumer products, the best option to avoid these types of slack-fill lawsuits is to follow these guidelines in product packaging:
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Fill containers as much as practically possible;
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In the alternative, design packaging to fit within a safe harbor;
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Maintain documentation that demonstrates a lack of fraudulent or deceptive purposes in package design (e.g., potato chips);
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Make contents fully visible, when possible;
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Consider using a “fill-line” or representation of the actual size if you are using opaque packaging;
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Do not use hidden compartments or unnecessary packaging that cannot be observed by consumers;
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Track consumer complaints so you can spot problems early on.
When manufacturers are nevertheless faced with slack-fill lawsuits, the next line of defense will be a carefully crafted motion to dismiss. In March, MusclePharm filed its motion to dismiss Plaintiffs’ complaint, which alleges violations of:
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California’s Consumer Legal Remedies Act (Cal. Civ. Code §1750, et seq.);
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California’s unfair competition law (Cal. Bus & Prof. Code §17200 seq.);
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California’s false advertising law (Cal. Bus. & Prof. Code § 17500, seq.);
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New York’s Deceptive Trade Practices Act (GBL § 349); and
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Negligent misrepresentation on behalf of a nationwide class and California and New York subclasses.
On behalf of themselves and a nationwide class (with California and New York subclasses), the named plaintiffs allege that they purchased some of the protein products within the past 4 years in San Diego, California and West Nyack, New York. MusclePharm’s motion to dismiss makes the following challenges to the complaint:
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First, the complaint does not contain enough specific allegations to support fraud claims, including, which products were purchased, when, where, or any other details about the purchases. In opposition to the motion, Plaintiffs argue that they need only satisfy a lower pleading standard because the claims are grounded in negligent misrepresentations—not fraud. Although there is currently a Circuit split and the Ninth Circuit has not ruled precisely on the issue, the Ninth Circuit has ruled that negligent misrepresentation claims grounded in fraud must satisfy the higher standard applicable to pleading fraud claims. The court should dismiss the Plaintiffs’ complaint on this basis alone, but courts are often more inclined to grant leave to amend a sloppy pleading.
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Second, Plaintiffs lack standing to request injunctive relief because there is no threat that they will buy the product in the future with the belief that the container is full. Courts are increasingly split on whether consumers have standing to seek injunctive relief even if they are not likely to repurchase the product because they are aware of the defect after the initial purchase. Courts have permitted consumers to allege that they would purchase the product again if it were labeled/packaged/made differently as a sufficient basis for requesting injunctive relief, but MusclePharm distinguishes the wholly conclusory allegations in this slack-fill case from deceptive labeling cases. Greater coherency among cases addressing this issue in CA and NY would be helpful, but for now defendants must simply muster the cases refusing injunctive relief.
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Third, MusclePharm challenges Plaintiffs’ standing to sue based on products that the named plaintiffs did not purchase. Some courts have permitted plaintiffs to pursue claims based on products they did not purchase if the products and the alleged representations are substantially similar. Slack-fill cases may have a competitive advantage here over deceptive labeling and false advertising claims, because consumers often cannot tell from looking at the packaging whether the other unpurchased products contain slack-fill. See Reply. Courts may be more receptive to dismissing those claims early on, but suits are frequently amended to name plaintiffs that did purchase the other products.
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Fourth, MusclePharm argues that Plaintiffs’ cannot make a claim for negligent misrepresentation in a consumer class action that does not involve personal or property damage, unless specific exceptions are met. One such exception is the existence of a “special relationship” between the parties. Plaintiffs try to claim that a special relationship exists between MusclePharm and purchasers of their protein products, but California district courts have clearly held that there is no special relationship between manufacturers and consumers of their products. While unlikely, if the court agrees to extend the “special relationship” exception, it would subject manufacturers to tort liability for nominal economic losses, with potentially devastating consequences for companies.
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