Under California’s Consumer Legal Remedies Act (CLRA), claims of consumer fraud are judged by the “reasonable consumer standard,” i.e., whether a hypothetical reasonable consumer would likely be deceived by the defendant’s conduct. In some instances, this standard can protect defendants from plaintiffs seeking to prosecute implausible or unreasonable claims of deception. In Trammell v. KLN Enterprises, Inc., however, the Ninth Circuit applied the test to reverse a district court’s dismissal of consumer fraud claims and reject numerous defense arguments—including defenses grounded in FDA regulations.

Trammell focused on the packaging of Wiley Wallaby Very Berry Licorice, which stated the product was “Natural Strawberry & Raspberry Flavored Licorice,” “Naturally Flavored,” and “Free of . . . Artificial Colors & Flavors.” The plaintiff filed a class action alleging this packaging was deceptive under the CLRA and other laws because laboratory testing showed the product included a type of malic acid (“DL” malic acid) that was not naturally occurring but instead made from an artificial petroleum substrate. However, the district court dismissed the complaint, finding the packaging did not claim an absence of artificial ingredients, that no reasonable consumer would believe a brightly colored, shelf-stable candy is free of artificial ingredients, and that malic acid was disclosed in the ingredients list on the back label. 

The Ninth Circuit reversed and remanded, distinguishing representations about artificial ingredients and representations about artificial flavors and finding the plaintiff’s allegations targeted the absence of artificial flavors. Accordingly, per the Court, it was “irrelevant” whether a reasonable consumer would understand the product contained artificial ingredients (e.g., coloring or preservatives) because the plaintiff plausibly alleged consumers were likely to be misled that the product was free of artificial flavoring. The Court also found the plaintiff satisfied the heightened pleading requirements for fraud-based claims. 

Notably, the Court rejected defense arguments that the labeling was not deceptive because “malic acid” was a listed ingredient and because FDA regulations categorized malic acid as a “flavor enhancer” and not a “flavoring agent.” The Court reasoned the ingredients list failed to cure the alleged flavoring misrepresentation because it did not specify which ingredients were flavors or whether the malic acid was artificial, and because it listed “natural flavor” as a distinct ingredient. As to the FDA regulations, the Court framed the question as one of “regulatory expert[ise]” versus reasonable consumers and held the plaintiff plausibly alleged a reasonable consumer would expect the product to be free of synthetic flavors or enhancers, irrespective of FDA regulations. 

The Ninth Circuit’s decision is problematic in that it concludes reasonable consumers distinguish artificial flavors from artificial ingredients in the context of packaged candy purchases but do not distinguish flavors from flavoring agents or “malic acid” from “natural flavor.” Moreover, the Court’s suggestion that consumers would need to be “chemist[s]” or “regulatory expert[s] in the food-and-beverage industry” to avoid deception seems hyperbolic. In any event, Trammell illustrates the potential risks companies face when making “free of” claims on product packaging. While allegations of consumer fraud like those in Trammell remain subject to challenge through various other means – including survey evidence and attacks on the plaintiff’s damage modeling – attempts at early exits on the pleadings will continue to be hotly contested in many cases.