Clarisha Benson v. Fannie May Confections Brands ( 2019 )

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 19-1032
CLARISHA BENSON, et al.,
Plaintiffs-Appellants,
v.
FANNIE MAY CONFECTIONS BRANDS, INC.,
Defendant-Appellee.
____________________
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 17 C 3519 — Sara L. Ellis, Judge.
____________________
ARGUED SEPTEMBER 4, 2019 — DECIDED DECEMBER 9, 2019
____________________
Before WOOD, Chief Judge, and BAUER and HAMILTON, Cir-
cuit Judges.
WOOD, Chief Judge. Proving that almost anything can give
rise to litigation, this case concerns chocolates that Clarisha
Benson and Lorenzo Smith purchased at their local Fannie
May stores in Chicago. Upon opening their boxes of candy,
Benson and Smith were dismayed to find that the boxes were
not brimming with goodies. Far from it: the boxes appeared
to be only about half full. Believing that they had been duped,
2 No. 19-1032
they sued Fannie May on behalf of themselves and a putative
class, alleging violations of the Illinois Consumer Fraud and
Deceptive Business Practices Act (“ICFA”), 815 ILCS 505/1–
505/12, and asserting claims for unjust enrichment and breach
of implied contract. The plaintiffs contend that Fannie May’s
boxes of chocolate contain needless empty space, and that this
practice misleads consumers. After allowing Benson and
Smith to amend their complaint, the district court granted
Fannie May’s motion under Federal Rule of Civil Procedure
12(b)(6) to dismiss the complaint with prejudice. The court
found that the plaintiffs had not adequately pleaded a viola-
tion of the Food, Drug, and Cosmetic Act (“FDCA”), 21 U.S.C.
§§ 301–399, and that the FDCA preempted their state-law
claims. We affirm the judgment, though on other grounds.
I
Each plaintiff purchased an opaque, seven-ounce box of
Fannie May’s chocolate for $9.99 plus tax. Benson purchased
Fannie May’s Mint Meltaways, and Smith purchased Fannie
May’s Pixies. (Since their assertions are otherwise identical,
we generally refer in the remainder of this opinion only to
Benson, understanding that Smith is also a putative named
plaintiff and that there are class allegations.) Although the
boxes accurately disclosed the weight of the chocolate within
(seven ounces) and the number of pieces in each box (ascer-
tainable by multiplying the serving size times the number of
servings per container), the boxes were emptier than each one
had expected. The box of Mint Meltaways contained approx-
imately 33% empty space, and the box of Pixies contained ap-
proximately 38% empty space. The cognoscenti call this empty
space “slack-fill.”
No. 19-1032 3
In the amended complaint, Benson alleges that some of the
empty space serves no functional purpose and instead mis-
leads consumers into believing that they are purchasing more
chocolate than they actually receive. The complaint notes that
Fannie May’s fourteen-ounce boxes contain a smaller percent-
age of slack-fill. Benson insists that she would not have pur-
chased the chocolate if she had known that there was so much
empty space inside the box. She seeks compensation based on
the percentage of nonfunctional slack-fill in each box.
II
We consider the dismissal of a complaint for failure to
state a claim de novo. Camasta v. Jos. A. Bank Clothiers, Inc., 761
F.3d 732, 736 (7th Cir. 2014). To survive a motion to dismiss, a
complaint must allege “enough facts to state a claim to relief
that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S.
544, 570 (2007). “A claim has facial plausibility when the
plaintiff pleads factual content that allows the court to draw
the reasonable inference that the defendant is liable for the
misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
A
At the outset, there was some question whether diversity
jurisdiction existed pursuant to the Class Action Fairness Act
(CAFA), 28 U.S.C. § 1332(d), because the complaint identified
Fannie May as an Illinois corporation and the named plain-
tiffs as Illinois citizens, and alleged only that at least one (un-
identified) class member was a citizen of a state other than Il-
linois. As the district court recognized, the latter allegation
was insufficient. But another filing then revealed that Fannie
May is a Delaware corporation. The amount in controversy
exceeds $5,000,000, and so CAFA supports jurisdiction.
4 No. 19-1032
Benson first attacks the district court’s conclusion that her
state-law claims were preempted by the FDCA and so had to
be dismissed as a matter of law. Under the FDCA, a food
“shall be deemed to be misbranded” if “its container is so
made, formed, or filled as to be misleading.” 21 U.S.C.
§ 343(d). Containers that include slack-fill—“the difference
between the actual capacity of a container and the volume of
product contained therein”—are misleading if consumers
cannot fully view the contents and if the slack-fill is nonfunc-
tional. 21 C.F.R. § 100.100(a). Slack-fill is nonfunctional if it
cannot be justified by any of the following reasons: (1) protec-
tion of the contents of the package; (2) the requirements of the
machines used to enclose the contents in such package; (3) un-
avoidable product settling during shipping and handling; (4)
the need for the package to perform a specific function; (5) the
container is reusable, part of the presentation of food, and has
value that is significant and independent of its function to
hold food; or (6) the inability to increase the level of fill or re-
duce the package size because, for example, the size is neces-
sary to meet food labeling requirements or discourage theft.
See id. § 100.100(a)(1)–(6).
The FDCA does not create a private right of action. Turek
v. Gen. Mills, Inc., 662 F.3d 423, 426 (7th Cir. 2011). Even so,
plaintiffs are entitled to seek relief pursuant to related state-
law causes of action. See id. The latter right, however, is tightly
circumscribed by the FDCA’s express preemption of state-law
theories that impose requirements “not identical” to its own
requirements. See 21 U.S.C. § 343-1.
The district court determined that Benson could avoid dis-
missal of her state claims on the basis of preemption only if
she pleaded that the slack-fill in the Mint Meltaway and Pixie
No. 19-1032 5
boxes was nonfunctional under 21 C.F.R. § 100.100(a)(1)–(6).
Preemption, however, is “an affirmative defense upon which
the defendants bear the burden of proof.” Fifth Third Bank ex
rel. Tr. Officer v. CSX Corp., 415 F.3d 741, 745 (7th Cir. 2005).
“Affirmative defenses do not justify dismissal under Rule
12(b)(6).” Doe v. GTE Corp., 347 F.3d 655, 657 (7th Cir. 2003).
Moving for judgment on the pleadings under Rule 12(c) is the
more appropriate way to address an affirmative defense.
Bausch v. Stryker Corp., 630 F.3d 546, 561 (7th Cir. 2010). This
is not one of those cases in which the plaintiff has pleaded
herself out of court, and so the difference between Rules
12(b)(6) and 12(c) cannot be disregarded. See, e.g., Logan v.
Wilkins, 644 F.3d 577, 582–83 (7th Cir. 2011); Brooks v. Ross, 578
F.3d 574, 579 (7th Cir. 2009). The district court thus erred by
penalizing Benson for failing to anticipate an affirmative de-
fense in her complaint and dismissing the action based on
FDCA preemption.
B
With that much established, the question remains whether
Benson sufficiently pleaded the elements of her state-law the-
ories, starting with the contention that Fannie May violated
the ICFA. The ICFA is “a regulatory and remedial statute in-
tended to protect consumers … against fraud, unfair methods
of competition, and other unfair and deceptive business prac-
tices.” Robinson v. Toyota Motor Credit Corp., 201 Ill. 2d 403,
416–17 (2002). To prevail on a claim under the ICFA, “a plain-
tiff must plead and prove that the defendant committed a de-
ceptive or unfair act with the intent that others rely on the de-
ception, that the act occurred in the course of trade or com-
merce, and that it caused actual damages.” Vanzant v. Hill’s
Pet Nutrition, Inc., 934 F.3d 730, 736 (7th Cir. 2019).
6 No. 19-1032
The statute allows a plaintiff to premise her claim on either
deceptive conduct or unfair conduct (or both), but “the two
categories have different pleading standards.” Id. at 738. “If
the claim rests on allegations of deceptive conduct, then [Fed-
eral Rule of Civil Procedure] 9(b) applies and the plaintiff
must plead with particularity the circumstances constituting
fraud.” Id. This means as a practical matter that she must iden-
tify the “who, what, when, where, and how” of the alleged
fraud. Id. On the other hand, Rule 9(b)’s heightened pleading
standard does not apply to an allegation of unfair conduct,
because fraud is not a required element under that branch of
the statute. Id. at 739.
Benson’s complaint alleges that the slack-fill in Fannie
May’s chocolate boxes is both deceptive and unfair. We there-
fore consider both possibilities. Starting with the first cate-
gory, a practice is deceptive “if it creates a likelihood of de-
ception or has the capacity to deceive.” See Bober v. Glaxo Well-
come PLC, 246 F.3d 934, 938 (7th Cir. 2001). Courts apply a
“reasonable consumer” standard to analyze the likelihood of
deception. See Mullins v. Direct Digital, LLC, 795 F.3d 654, 673
(7th Cir. 2015). “[W]hen analyzing a claim under the ICFA, the
allegedly deceptive act must be looked upon in light of the
totality of the information made available to the plaintiff.” Da-
vis v. G.N. Mortg. Corp., 396 F.3d 869, 884 (7th Cir. 2005).
Benson asserts that the nonfunctional slack-fill in Fannie
May’s opaque packaging is deceptive because it causes con-
sumers to believe that the boxes contain more chocolate than
they actually do. The complaint describes the percentage of
slack-fill in each seven-ounce box and contrasts Fannie May’s
fourteen-ounce boxes, which contain a smaller percentage of
slack-fill, to show that unused capacity in the smaller box is
No. 19-1032 7
not entirely functional. The complaint asserts that reasonable
consumers rely on the size of packaging to infer the quantity
of product that they are purchasing, so any extra slack-fill
misleads consumers. Someone might think, for instance, that
a box of a certain size would contain enough candy for the
whole office group, only to be chagrined when it is opened
and half the people leave empty-handed. These allegations
describe the “who,” “what,” and “how” of the alleged fraud
with particularity. The complaint also alleges the “where”
and “when” of the fraud. The “when” is May 10, 2014, to the
present, and the “where” is in Illinois stores and online.
Fannie May complains that Benson left out information
that would have shown that no deception was possible. The
information on the outside of the boxes, which as we said dis-
closes the net weight and number of pieces inside the boxes,
eliminates the possibility that a reasonable consumer would
be deceived. (The person treating her office group, it says, has
no one but herself to blame if she thought the box would be
enough for everyone; she should have paid attention to the
number of pieces it held.) Fannie May also points out that the
receipts Benson and Smith received disclosed the weight and
price of each box of chocolate.
This is another argument that cries out for an answer and
a Rule 12(c) motion rather than a motion to dismiss, but in any
event, at this stage of the litigation, we cannot conclude that
the information on the boxes is enough as a matter of law to
avoid a finding of deception. The Food and Drug Administra-
tion takes the position that “the presence of an accurate net
weight statement does not eliminate the misbranding that oc-
curs when a container is made, formed, or filled so as to be
misleading.” Misleading Containers; Nonfunctional Slack-
8 No. 19-1032
Fill, 58 Fed. Reg. 64123-01, 64128 (Dec. 6, 1993) (codified at 21
C.F.R. pt. 100). Moreover, Benson’s assertion that she and oth-
ers attach importance to the size of a package is enough for
now to indicate that a “reasonable consumer” does so too. She
therefore did enough to plead a deceptive act.
Benson also asserted that the packaging of the Mint Melt-
aways and Pixies is covered by the ICFA’s “unfair acts” pro-
hibition. Illinois courts look to three considerations to ascer-
tain whether conduct is unfair under the ICFA: “(1) whether
the practice offends public policy; (2) whether it is immoral,
unethical, oppressive, or unscrupulous; [and] (3) whether it
causes substantial injury to consumers.” Robinson, 201 Ill. 2d
at 417–18. A court may find unfairness even if the claim does
not satisfy all three criteria. Id. at 418. A practice might be un-
fair “because of the degree to which it meets one of the criteria
or because to a lesser extent it meets all three.” Id.
In the complaint, Benson alleges that Fannie May engaged
in unfair acts or practices by including needless slack-fill in its
chocolate boxes, and that this amounted to a misrepresenta-
tion of the quantity of chocolate within. This practice, she con-
tends, constitutes false advertising, which is unethical and of-
fends public policy. Benson also asserts that the unfair prac-
tice seriously injures consumers by making them believe that
they are receiving more chocolate than the actual amount
within each box. As we have observed before, “an unfair-
practices claim has no fraud element and therefore is not sub-
ject to a heightened pleading standard.” Vanzant, 934 F.3d at
739. Benson’s allegations of unfair practices meet the federal
notice-pleading standards because they claim that Fannie
May “engaged in unfair conduct and aver[] facts that, if
proven, make relief more than merely speculative.” See Windy
No. 19-1032 9
City Metal Fabricators & Supply, Inc. v. CIT Tech. Fin. Servs., Inc.,
536 F.3d 663, 672 (7th Cir. 2008).
C
So far, so good. But Benson has one more hurdle: a private
plaintiff suing under the ICFA must show that she “suffered
‘actual damage’ as a result of the defendant’s violation of the
act.” Camasta, 761 F.3d at 739. In other words, she must plau-
sibly plead that the deceptive or unfair act caused her to suffer
actual damages, meaning pecuniary loss. Kim v. Carter’s Inc.,
598 F.3d 362, 365 (7th Cir. 2010). Actual loss may occur “if the
seller’s deception deprives the plaintiff of ‘the benefit of her
bargain’ by causing her to pay ‘more than the actual value of
the property.’” Id.
In Kim, the plaintiffs purchased clothing from several
stores that advertised their wares as being discounted from
“Suggested Prices.” Id. at 363. The “Suggested Prices,” how-
ever, were fictitious and much higher than anything custom-
ers actually paid. Id. Nevertheless, we found that the plaintiffs
had suffered no concrete harm because they had not alleged
that the clothing “was defective or worth less than what they
actually paid” or that “they could have shopped around and
obtained a better price in the marketplace.” Id. at 365–66.
The same is true here. Neither Benson nor Smith has al-
leged that the seven ounces of chocolate in the box were worth
less than the $9.99 that they paid. They do not claim that the
Mint Meltaways or Pixies were defective or that they could
have acquired them for a better price. Instead, both plaintiffs
assert that they would not have purchased the candy if they
had known the amount of slack-fill, and they seek damages in
10 No. 19-1032
the amount of the percentage of the purchase price equal to
the percentage of nonfunctional slack-fill.
But this assumes that they were injured, and that assump-
tion is inconsistent with Camasta. There the plaintiff’s allega-
tion of actual damages fell short, even though he said that he
“would not have purchased” shirts absent deceptive advertis-
ing, because he had not alleged that he paid more than “the
actual value of the merchandise he received.” Camasta, 761
F.3d at 735, 740. In our case, Benson and Smith never said that
the chocolates they received were worth less than the $9.99
they paid for them, or that they could have obtained a better
price elsewhere. That is fatal to their effort to show pecuniary
loss. Moreover, their request for damages based on the per-
centage of nonfunctional slack-fill is quite vague. They do not
explain how a percentage refund of the purchase price based
on the percentage of nonfunctional slack-fill corresponds to
their alleged harm. They thus failed to raise a plausible theory
of actual damage, and so their allegations that Fannie May vi-
olated the ICFA were properly dismissed on the pleadings.
III
Benson also seeks restitution for unjust enrichment. Under
Illinois law, there is no stand-alone claim for unjust enrich-
ment. See Alliance Acceptance Co. v. Yale Ins. Agency, Inc., 271
Ill. App. 3d 483, 492 (1995), relying on Charles Hester Enter-
prises, Inc. v. Illinois Founders Ins. Co., 137 Ill. App. 3d 84, 90–
91 (1985). Instead, Illinois courts describe it as “a condition
that may be brought about by unlawful or improper conduct
as defined by law, such as fraud, duress or undue influence
… .” Charles Hester, 137 Ill. App. 3d at 90–91. The request for
relief based on unjust enrichment is therefore “tied to the fate
of the claim under the [ICFA].” Vanzant, 934 F.3d at 740.
No. 19-1032 11
Because Benson failed to state a claim under the ICFA, she
also failed to state a claim for unjust enrichment.
Lastly, Benson alleges that Fannie May breached an im-
plied contract for the sale of the chocolate boxes by violating
the duty of good faith and fair dealing. But “there can be no
contract implied in law where an express contract or a con-
tract implied in fact exists between the parties and concerns
the same subject matter.” Marcatante v. City of Chicago, Ill., 657
F.3d 433, 443 (7th Cir. 2011). Here, the parties entered into a
“straightforward, everyday sales contract” in which the buy-
ers “selected the [chocolate] and offered to purchase it at the
advertised price, at which point [Fannie May] accepted by
taking the plaintiffs’ money in exchange for possession of the
[chocolate].” See Kim, 598 F.3d at 364. The “contract terms
were memorialized in the sales receipt[s] that [Benson and
Smith] received at the cash register.” See id. The receipts show
the specific products (Mint Meltaways and Pixies), the quan-
tity (seven ounces), and the price ($9.99). The receipts embody
the contract between the parties, and it concerns the identical
subject-matter of the alleged implied contract. State law does
not recognize an implied contract in this situation, and so that
part of the case was also properly dismissed.
We AFFIRM the judgment of the district court.