By: Alexander M. Smith

On February 9, 2021, the Ninth Circuit—in a split decision with a spirited dissent—reversed the dismissal of a consumer class action challenging P.F. Chang’s’s use of the phrase “krab mix” to describe sushi rolls that contain no real crab. Although Kang is an unpublished case and breaks little new legal ground, the two opinions offer a useful glimpse into how both defendants and plaintiffs frame their positions in false advertising lawsuits, and they highlight how easily judges can come to radically different conclusions in consumer class actions, even when faced with the same facts and law.

In Kang, the plaintiff alleged that P.F. Chang’s’s sushi rolls were deceptively labeled because they purported to contain “krab mix,” but did not include any crab at all. Judge Anderson of the Central District of California dismissed the plaintiff’s lawsuit, holding that no reasonable consumer would be deceived into believing that “krab mix” contained crab. The Ninth Circuit reversed. Judge Friedland and Judge Watford—writing for the panel majority—emphasized that “determining whether reasonable consumers are likely to be deceived will usually be a question of fact not appropriate on a motion to dismiss.” Applying this standard, the panel majority concluded that the plaintiff had plausibly alleged that the “inclusion of the term ‘krab mix’ in the ingredient list for certain of its sushi rolls is likely to deceive reasonable consumers into thinking that the sushi rolls contain at least some real crab meat when in fact they contain none.” Although P.F. Chang’s offered several reasons that this interpretation was implausible, the panel majority rejected them all:

• The panel majority rejected P.F. Chang’s’s argument that the “fanciful” term “krab mix” suggested the absence of real crab. Although the panel majority agreed that “reasonable consumers confronted with the fanciful spelling of ‘krab’ on the menu would not assume they were purchasing a sushi roll with 100% real crab meat,” it nonetheless concluded that the plaintiff had plausibly alleged that the term “krab mix” suggests that the product contains “a mixture of imitation and real crab.” In contrast to cases where the challenged term has a specific, widely-understood meaning (such as “diet” soft drinks), the panel majority held that “there is no prevailing understanding that listing ‘krab mix’ as an ingredient in a sushi roll signifies that the item contains no real crab meat.” And in contrast to a case where the “fanciful” term appears in the name of the product (such as “Froot Loops”), the panel majority concluded that the term was at least plausibly misleading because it appeared in the ingredient list.

By: Kali Bracey and Erica S. Turret

President Biden has nominated Federal Trade Commission (FTC) Commissioner Rohit Chopra to serve as Director of the Consumer Financial Protection Bureau (CFPB). Commissioner Chopra served as the agency’s Assistant Director and first Student Loan Ombudsman prior to his appointment to the FTC in 2018. The CFPB under his leadership will shift to the more aggressive posture of the Obama administration and return the agency to its consumer watchdog mission.[1] His vision is aligned with that of Senator Elizabeth Warren whom he helped to set up the agency after the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010.[2]  

Because of the Supreme Court’s decision in Seila Law holding that the President has the power to fire the CFPB Director, the CFPB more closely carries out the current administration’s agenda than was intended in the Dodd-Frank Act which had sought to structure the bureau as an independent agency.[3] Thus, Commissioner Chopra, once in office, will be able to quickly chart the agency on a new, more muscular course.

Regulated entities can expect enforcement to ramp up as the agency reverses efforts by the Trump administration to reduce the agency’s impact. CFPB enforcement activity decreased by 54 percent under the leadership of Trump appointees.[4] Focus areas for a reinvigorated CFPB are likely to include: