Smoked Gouda Label Gives Rise to Unfair Trade Practices Claim

In Castle v. Kroger Co., No. 21-cv-1171-pp, 2022 WL 4776319 (E.D. Wis. Oct. 3, 2022), the district court ruled that the plaintiff stated a claim that "Smoked Gouda," "Distinctive, Smoky Flavor" and "smoked on hardwoods" labeling was deceptive, confusing or misleading when the flavor was actually the result of a liquid additive.

The court found that the plaintiff has a private right of action under Wis. Stat. § 100.20, requiring that "[m]ethods of competition in business and trade practices in business [] be fair" and prohibiting "unfair trade practices in business." In furtherance of this right of action, the court decided that a reasonable consumer could believe smoked referred to a process, rather than a flavor, so the court denied the defendant's motion to dismiss the claim arising under Wis. Admin. Code § ATCP 90.02(3). The court also allowed the plaintiff's claim that the defendant violated Wis. Admin. Code § ATCP 90.10(1) because it has not labeled the cheese in compliance with federal regulations; i.e., 21 C.F.R. §§ 101.22(i)(l)(i), 133.193(b).

The district court ruled that the defendant failed to prove the defense of preemption and also denied the defendant's motion to dismiss the plaintiff's class claim as premature. But the court did dismiss the plaintiff's claim for a violation of Wis. Admin. Code § ATCP 90.02(1) because the package clearly and conspicuously identified the commodity contained therein using the common or usual name, "Gouda cheese."

The court also dismissed the plaintiff's negligent misrepresentation and fraud claims as barred by the economic loss rule; claim for violation of Wis. Stat. § 402.607(3)(a) because plaintiff failed to give pre-suit notice about a breach of implied and express warranty; the Magnuson Moss Warranty Act claim because the label did not meet the definition of a "warranty"; unjust enrichment claim because the claim has statutory remedies available; and request for injunctive relief for lack of any real or immediate threat of future injury.