If you sell "sprouted grain" bagels, does this mean that the grains in those bagels are all (or at least mostly) sprouted grains?  That was the issue in a recent decision in federal court in New York.

Being more of a New York bagel traditionalist myself, sticking mostly to the "poppy seed" and "everything" bagels available at my local bagel place, I had to look up exactly what to expect when you're getting a "sprouted grain" bagel.  Apparently, sprouted grains are whole grains that are just starting to sprout.  And, the Starbucks "sprouted grain" bagel, which is the subject of this lawsuit, is, according to the company's website, a "flavorful, aged bagel dough made with wholesome sprouted wheat and rye, then topped with brown and golden flax, oats and sunflower seeds."  

In the lawsuit against Starbucks, asserting false advertising claims under both New York and California law, a consumer alleged that he purchased a "sprouted grain" bagel believing that the bagel's primary grain ingredient is sprouted grain when, in fact, the bagel's primary grain source is traditional, unsprouted grain.  

In order to successfully assert a claim for false advertising under New York law, the plaintiff must establish that the advertiser engaged in acts that were "likely to mislead a reasonable consumer acting reasonably under the circumstances."  The key question, then, is whether a "significant portion of the general consuming public or of targeted consumers, acting reasonably in the circumstances, could be misled."  

Starbucks moved to dismiss, but the court allowed the false advertising claims to continue, holding that the consumer had plausibly alleged that a reasonable consumer would likely be misled into believing that the bagel's primary grain source is sprouted grain.  Noting that it is "materially misleading to imply that a product contains a greater proportion of a preferred ingredient than it really does," the court held that, "the 'sprouted grain' label falsely implies that the bagels' grain content is entirely or at least predominantly sprouted grain when, taking the allegations in the complaint as true, its primary grain source is unsprouted grain." 

Starbucks argued that the claim is not misleading because the bagels do, in fact, contain at least four sprouted grain ingredients.  The court rejected that argument, saying that "a statement can be misleading even if the product does, in fact, contain the specified ingredient."  The court explained, "it could be materially misleading to label a bagel 'sprouted grain' if it contained a large portion of unsprouted grain and only trace amounts of sprouted grain."  

In addition, Starbucks argued that any potential ambiguity about the composition of the bagel was cleared up by the ingredient list for the product.  The court rejected this argument as well, saying that "a product's ingredient list does not overcome misleading labeling."  Citing the Second Circuit, the court explained that, "reasonable consumers should not be expected to look beyond misleading representations on the front of the box to discover the truth from the ingredient list in small print on the side of the box."  The court also questioned whether consumers would even have access to an ingredient list when purchasing a loose bagel in a store.  

Finally, Starbucks argued that the "sprouted bagel" claim was not misleading because the company did not make any positive representations about the bagel's ingredients.  The court didn't buy this argument either, holding that the name of the bagel itself "may mislead a reasonable consumer to believe they contain a higher proportion of sprouted grains than they actually do."  

The court allowed the advertising claims asserted under California law to continue as well, based on similar reasoning. 

Schleyer v. Starbucks, No. 22-CV-10932 (S.D.N.Y. September 12, 2023).