Licorice labeling suit against Minnesota firm revived

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In Brief

• The 9th U.S. Circuit Court of Appeals revived a proposed class action against Minnesota-based licorice maker.
• Plaintiff Mark Trammell alleged the candy falsely claimed to be free of artificial flavors despite containing synthetic malic acid.
• The appeals court found consumers could reasonably be misled by packaging stating the product was “Free of … Artificial Colors & Flavors.”
• The case was reversed and remanded after the district court previously dismissed the lawsuit.

A Minnesota company that owns Wiley Wallaby licorice will face a putative class action. The 9th U.S. Circuit Court of Appeals reversed the dismissal of the lawsuit alleging that the product contains artificial ingredients.

Perham-based KLN Enterprises Inc. manufactures Wiley Wallaby Very Berry Licorice.

Plaintiff Mark Trammell said he purchased the licorice after seeing that the label said “Naturally Flavored” and “Free of … Artificial Colors & Flavors.” After laboratory testing, the plaintiff alleged that it turned out that the licorice’s flavoring came from an artificial petroleum substrate.

Trammell alleged that the product’s packaging falsely claims it is free of artificial colors and flavors, even though it contains malic acid used as a flavoring. He asserted that the malic acid in the product is artificial. There are two types of malic acid — one which is naturally derived (“L malic acid”) and one which is synthetically derived (“DL malic acid”). Trammell said that laboratory testing confirmed that it was DL malic acid.

Subsequently, Trammell filed a putative class action. He brought claims for violations of the California Consumers Legal Remedies Act (CLRA), unjust enrichment, and breach of express warranty. Trammel asserted these claims individually and on behalf of a proposed California class.

However, the district court dismissed the putative class action. It found that Trammell failed to plead with particularity that the product contained artificial malic acid under Federal Rule 9(b), failed to plausibly allege that reasonable consumers would be misled by either the front or back labels, and failed to identify any representation that the product was “all natural,” “100% natural,” or free of artificial ingredients.

The panel reversed. “Trammell plausibly pleaded that a reasonable consumer is likely to be deceived by a product that claims to be free of artificial flavors when that claim is (allegedly) not true,” wrote Judge Eric Tung. “Pleading the presence of an artificial flavor in the Product — namely, artificial DL malic acid, as disclosed by laboratory tests, the details of which have been alleged — is enough to satisfy the reasonable-consumer standard on a motion to dismiss.”

The district court suggested that the product’s front label statements stating that they are “Naturally Flavored” are not false or misleading. However, the panel focused on the back label, which separately claims the Product is “Free of . . . Artificial Colors & Flavors.” The ingredients list does not explicitly identify which ingredients are artificial, and has an ingredient called “natural flavor.” The panel found that a reasonable consumer would be deceived by the claim that there were no artificial flavors.

The district court, with Judge Marilyn Huff presiding, concluded that the public could not be deceived by the packaging because “nothing about this product — a brightly colored, shelf-stable licorice candy — would lead a reasonable consumer to conclude that Wiley Wallaby Very Berry Licorice is free of artificial ingredients when the product makes no affirmative representations saying as such.”

The panel disagreed. “Color and stability may go to the artificiality of the coloring and preservative; they do not necessarily bear on the artificiality of the flavors,” Tung remarked.

“Trammell has plausibly alleged that a reasonable consumer expects the Product to be free of artificial flavors and that it would be misleading to that consumer if the Product contained an artificial petroleum substrate as a flavoring — whether as a flavor itself or as a flavor enhancement,” Tung determined. The case has been reversed and remanded.