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Oh, Bother! The Sixth Circuit Examines Rule 9(b) and Honey Labels

Summer is winding down, but it’s still a little swarm outside. But even though National Honey Month just ended, we’re sure you’ll still bee dancing on your way to the market to get your hands on your favorite honey brand.  While you’re combing the grocery shelves, mind abuzz at all the brands and descriptions, you spot one bee-witching label: 100% raw, Tennessee honey. But what ex-zzz-actly is that description supposed to mean?

Pots of Hunny

This was the question that the plaintiffs in Greer v. Strange Honey Farm, LLC, a putative class action in the Eastern District of Tennessee, sought to answer. The defendant, Strange Honey Farm, LLC, is a company located in eastern Tennessee that produces and distributes honey (though probably not in a hundred-acre wood). The plaintiffs were consumers who bought jars of that honey in Tennessee, Illinois, North Carolina, Florida, Virginia, and Kentucky. In their complaint, they alleged that the product’s label, “100% raw Tennessee honey,” was fraudulent because the honey was not 100% (because it was diluted with corn syrup), raw (because it was cooked when processed), or from Tennessee (because it was sourced from Vietnam).  

For these grievances, the plaintiffs raised claims for fraudulent misrepresentation and for violation of “little FTC acts” in Illinois, North Carolina, Florida, and Virginia. The district court dismissed the complaint under Rule 12 because the allegations surrounding the fraud claims lacked the specificity required by Rule 9(b) of the Federal Rules of Civil Procedure, and it denied the plaintiffs’ motion for leave to amend the complaint. The plaintiffs appealed to the Sixth Circuit Court of Appeals, which ended up affirming both of these decisions. 

Silly Old Bear? Or Fraudster?

After a discussion of its jurisdiction,[1] the Sixth Circuit examined the complaint under Rule 9(b) to determine if the plaintiffs had adequately alleged fraud. As a reminder, Rule 9(b) requires that “[i]n alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake,” but “[m]alice, intent, knowledge, and other conditions of a person’s mind may be alleged generally.”

The plaintiffs pleaded that the honey they purchased was not raw because it was heated to above 105 degrees Fahrenheit, thus “destroy[ing] many of the beneficial compounds” of raw honey. They also pleaded that a high “HMF value” indicates that raw honey was heated to a high enough temperature to break down the enzymes contained in raw honey and that some of the Strange Honey samples tested had high HMF values. But the court took issue with the fact that the complaint did not adequately explain what this alleged “testing” entailed—how these samples were tested, who did the testing, how many samples were tested, when or where the samples were purchased, whether any (or how many) samples had low HMF values, or any other details that would adequately show why the “raw” label was false. The complaint also did not allege that the honey purchased by the plaintiffs would have failed this testing or that they were among the samples tested at all.

The court also did not buy the plaintiffs’ contentions that the honey was not “100% honey” nor from Tennessee. The court objected to the plaintiffs’ repeated use of the word “some” to qualify their claims—for example, that “[s]ome of the Strange Honey Samples tested . . . test[ed] positive for syrup and with a 100% certainty that the honey was from Vietnam.” This description reprised the Sixth Circuit’s objections about specificity noted above, but the complaint never explained how one can determine honey’s origin or its syrup content.

The complaint further lacked particularity with respect to when the alleged fraudulent statements were made. Without invoking any specific date range, the complaint concluded that the defendants knew that the honey did not comply with its label “[a]t all relevant times.”  To this, the Sixth Circuit noted that “Plaintiffs’ failure to ‘give even one date on which an alleged misrepresentation occurred’ ‘dooms’ their ‘ability to allege fraud with particularity.’” 

Think, Think, Think!

The plaintiffs pushed against the court’s conclusions, arguing that, as shown in other cases, when studies or tests reveal an advertisement to be false, Rule 9(b) does not require that the specific product that the plaintiff purchased be the one used in the study or test.  But the court discounted this argument and distinguished these other cases because they included references to or descriptions of studies refuting the truth of certain representations and marketing claims.  Here, the plaintiffs’ “testing” was more esoteric and lacked any grounding to support the conclusions that it espoused.

The plaintiffs also argued that Rule 9(b) does not require specific dates, and that broad temporal statements like the ones in their complaint would suffice. The plaintiffs again cited cases to support their point, and the Sixth Circuit again distinguished them, noting that those cases dealt with ongoing representations made over discrete timeframes (e.g., fraudulent statements made to students between the date of graduation and the deadline to trigger a tuition refund; fraudulent statements about data speed made while providing Internet service). Here, the court concluded that the complaint did not anchor the alleged labeling fraud to any timeframe at all. 

But the court went further and concluded that even if the plaintiffs had provided an applicable time period, the circumstances of the alleged fraud required more particularity, since their case dealt with specific, labeled products. Specific dates for when the plaintiffs purchased their honey, for example, would show both when the alleged fraudulent statements were made to the plaintiffs and why those statements could be proven false by later testing. “Unlike repeated promises of accreditation or ongoing Internet service, a jar of honey is a single, discrete product purchased on a particular date. That jar of honey, on the date it is purchased, either complies with the claims on the label or it does not.” 

The plaintiffs submitted a proposed amended complaint to include the dates on which the plaintiffs purchased honey and to allege more narrowly that it was the honey that the plaintiffs purchased that failed to meet the criteria for its label. The court, like Eeyore on a gloomy day, found these additions unavailing. Even though the proposed amendments would have added dates, the dates were not linked to the testing performed. For example, some of the plaintiffs purchased honey in 2018 and 2019, but only samples in 2020 and 2022 were tested. The proposed amendments further did not specify whether, among the plaintiffs who purchased honey during 2020 and 2022, the honey that they purchased was among those tested. Because the dates of testing were untethered to the plaintiffs’ purchases, the proposed amended complaint still failed to show that they were defrauded. And like before, the proposed amendments still failed to elaborate on the nature of the testing or its conclusions. Because of this, the Sixth Circuit affirmed the district court’s denial of the plaintiffs’ motion for leave to amend the complaint.

The Most Wonderful Thing About Rule 9(b)

This case gives us a better understanding of Rule 9(b)’s particularity requirement and reminds us of a few things to include in a complaint to meet Rule 9(b)’s standard. A plaintiff who intends to raise a mislabeling-based fraud claim must include enough detail surrounding the alleged fraud to make clear (1) when the fraud occurred (dates of purchase), (2) what makes the statement fraudulent (elaboration on testing), and (3) that the plaintiff was defrauded (tethering the fraudulent statement to when it occurred and to related testing).  

The court’s opinion also suggests that even if a plaintiff alleges all of these things, they might also want to allege why the defendants would want to mislabel in the first place. Fraud contains an intention requirement—that is, the alleged fraudster must intend to deceive the victim. The plaintiffs in Greer failed to plead this requirement because they did not allege that Strange Honey intended to mislead customers by mislabeling its jars. In the court’s own words, “[a]lthough the complaint alleges Strange Honey’s motives for sourcing non-Tennessee honey (to meet consumer demand) and for adding filler (to cut costs), alleging potential motives for mislabeling is different from alleging facts that adequately show that Strange Honey mislabeled its products. Thus, the complaint does not particularly allege why the statements were fraudulent.” 

[1] The plaintiffs initially filed their complaint against (i) Strange Honey and its owners, (ii) certain supermarkets from which the plaintiffs purchased their honey, and (iii) Carol Hagen, Strange Honey’s distributor.  Hagen was the only defendant who did not move to dismiss, so after the district court’s rulings, the plaintiffs did not have a “final decision” from which they could appeal. To get around this hurdle, the plaintiffs voluntarily dismissed Hagen and appealed within 30 days after that dismissal. In light of this posture, the Sixth Circuit spent time at the beginning of its opinion discussing whether the appeal was properly taken considering Rule 41 of the Federal Rules of Civil Procedure and 28 U.S.C. § 1291.

October 3, 2024 Suraj Vege