Choice of Law Decision Leads to Dismissal of State False Advertising Claims in Class Action Against General Mills

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“Wow, I can help lower my cholesterol 10 percent in one month?” This and other statements on Cheerios boxes led the FDA to issue a warning letter to General Mills. Without commenting on the accuracy of the health claims in the Cheerios marketing, the FDA noted that if the cereal is intended for use in lowering cholesterol, then it’s a drug within the agency’s regulatory supervision.

Cheerios boxes were relabeled, but that didn’t stop the class action plaintiffs. Smelling blood in the . . . cereal bowl? . . . six complaints were filed by plaintiffs in California, New Jersey and New York. Apparently, all were filed in state court seeking state law remedies. The U.S. Judicial Panel on Multidistrict Litigation Committee consolidated the actions into one multidistrict litigation.

The Claims

Plaintiffs brought their consolidated amended class action complaint on behalf of all similarly situated consumers in the U.S. They alleged a mixture of Minnesota statutory and common law claims against General Mills for allegedly misrepresenting Cheerios’ ability to reduce cholesterol.

The court's opinion in In re Cheerios Mktg. & Sales Practices Litig., No. 09-cv-2413 (U.S. Dist. Ct., D.N.J., decided September 10, 2012) (unpublished) does not tell us why plaintiffs elected not to bring any false advertising claims under the federal Lanham Act, which provides another cause of action for the same allegations as plaintiffs’ state statutory claims. The Lanham Act also provides concurrent jurisdiction, which means the claims were available even if plaintiffs desired a state court forum.

Presumably, the original complaints were limited to the territorial boundaries of the state of each plaintiff in hopes of avoiding removal to federal court at all costs. Among the perceived advantages of a state court forum, plaintiffs may have believed that the state court would be less demanding in the class certification process. What is odd here is that at least by the time of the amended consolidated complaint, plaintiffs sought a nationwide class based on state law claims from a single state. As we will see, plaintiffs’ decision to put all their eggs in one basket opened the door for a choice of law argument.

The Choice of Law Strategy

General Mills might have been expected to accept Minnesota as the appropriate choice of law to resolve all claims. After all, General Mills maintains a principal place of business in Minnesota and this is the location in which it markets, distributes, produces and sells Cheerios throughout the United States. General Mills even included a choice of law provision on its website in favor of Minnesota law. Presumably, if Minnesota law was generally adverse to cereal makers, the headquarters and choice of law provisions would have been changed long ago.

But General Mills didn’t accept the convenience of a single source of law to resolve all claims in this multidistrict litigation. Instead, it successfully argued that the conflicts of law standard of each state where each plaintiff resides should be used to determine which law to apply. General Mills was able to avoid the choice of law provision on its own website by gathering the necessary facts to demonstrate that none of the named plaintiffs actually read the provision.

Therefore the “most significant relationship” test was used for the New Jersey plaintiffs, while the “government interest” test applied to the California and New York plaintiffs. Under each conflicts standard, General Mills further argued, again successfully, that the law of the consumer’s home jurisdiction should control, rather than Minnesota law.

The Result

All of the Minnesota statutory claims were dismissed, leaving the relatively weaker and harder to prove breach of warranty and unjust enrichment claims. Plaintiffs failed to demonstrate their entitlement to relief under any of these theories. The deposition testimony established the obvious — consumers eat Cheerios, at least in part, for all sorts of reasons other than lowering their cholesterol. Reasons such as keeping ones “belly full,” “convenience,” “crunchiness” and “simple ingredients” were cited. It also did not help that most of the named plaintiffs continued to eat Cheerios even after the “deception” was revealed, some on the very morning of their deposition — likely a practice pointer in there somewhere about preparing a witness.

The Lesson

This decision illustrates why nationwide classes based purely on state law claims can be ill-suited for aggregated treatment. Commonality and predominance are the sine qua non of class certification under Rule 23(b)(3). Rule 23 is merely a rule of procedural joinder that permits the trial of many claims through a single representative whose claims — and damages — are representative of other class members. But when choice of law principles mandate the application of different laws, the class representative no longer has a claim that resembles those of each class member.