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In re 100% Grated Parmesan Cheese Marketing and Sales Practices Litigation

United States District Court, N.D. Illinois, Eastern Division

July 16, 2019




         Defendants in this multidistrict litigation are purveyors of grated parmesan cheese products with labels stating “100% Grated Parmesan Cheese” or some variation thereof. After the Judicial Panel on Multidistrict Litigation assigned these suits to the undersigned judge, Doc. 1, Plaintiffs filed five consolidated class action complaints, Docs. 120-123, 143, which alleged that they were misled by the “100% Grated Parmesan Cheese” labels because the products contained non-cheese ingredients such as cellulose. Defendants moved to dismiss the complaints under Civil Rules 12(b)(1) and 12(b)(6). The court denied the Rule 12(b)(1) motions but granted the Rule 12(b)(6) motions without prejudice to repleading. Docs. 215-216 (reported at 275 F.Supp.3d 910 (N.D. Ill. 2017)).

         Plaintiffs then filed five amended consolidated class action complaints. Doc. 225 (against Kraft Heinz Company); Doc. 226 (against Publix Super Markets, Inc.); Doc. 227 (against Albertsons Companies, Inc., Albertsons LLC, and SuperValu, Inc.); Doc. 228 (against Target Corp. and ICCO-Cheese Company, Inc.); Doc. 229 (against Wal-Mart Stores, Inc. and ICCO-Cheese Company, Inc.). Like the initial complaints, the amended complaints allege that Plaintiffs were misled by the “100% Grated Parmesan Cheese” labels because the products in fact contained cellulose. In addition, the amended complaints except for the one against Publix allege that the products' ingredient lists were misleading because they represented that the cellulose was added to prevent caking, when in fact the cellulose also acted as filler.

         Defendants moved to dismiss the amended complaints under Rule 12(b)(6). Docs. 237, 238, 243, 246, 249. Those motions were granted as to the claims based on the “100% Grated Parmesan Cheese” label (the “100% claims”) and granted in part and denied in part as to the claims based on the ingredient lists' representation that cellulose was added to prevent caking (the “Anticaking claims”), and Publix and Target/ICCO were dismissed as defendants. Docs. 296-297 (reported at 348 F.Supp.3d 797 (N.D. Ill. 2018)). Plaintiffs now move under Rule 15(a)(2) to amend their complaints to allege an Anticaking claim against Publix and to cure the defects in their Anticaking claim against Target/ICCO, Doc. 306; Albertsons/SuperValu moves under Rule 56 for partial summary judgment and under Rule 12(c) for partial judgment on the pleadings, Doc. 309; and Kraft moves under Rule 12(c) for judgment on the pleadings, Doc. 314. Plaintiffs' motion is denied, and Albertsons/SuperValu's and Kraft's respective motions are granted in part and denied in part.


         When considering Albertsons/SuperValu's motion for partial summary judgment, the facts are construed as favorably to Plaintiffs, the non-movants, as the record and local Rule 56.1 permit. See Johnson v. Advocate Health & Hosps. Corp., 892 F.3d 887, 893 (7th Cir. 2018). When considering Albertsons/SuperValu's and Kraft's Rule 12(c) motions, the court assumes the truth of the operative complaints' well-pleaded factual allegations, though not their legal conclusions. See Bishop v. Air Line Pilots Ass'n, Int'l, 900 F.3d 388, 397 (7th Cir. 2018). The court must also consider “documents attached to the complaint[s], documents that are critical to the complaint[s] and referred to in [them], and information that is subject to proper judicial notice, ” along with additional facts set forth in Plaintiffs' opposition briefs, so long as those additional facts “are consistent with the pleadings.” Phillips v. Prudential Ins. Co. of Am., 714 F.3d 1017, 1019-20 (7th Cir. 2013) (internal quotation marks omitted); see also N. Ind. Gun & Outdoor Shows, Inc. v. City of S. Bend, 163 F.3d 449, 452 (7th Cir. 1998). The facts are set forth as favorably to Plaintiffs as those materials allow. See Brown v. Dart, 876 F.3d 939, 940 (7th Cir. 2017). The court must assume the truth of the facts relevant to each motion, but does not vouch for them. See Donley v. Stryker Sales Corp., 906 F.3d 635, 636 (7th Cir. 2018); Goldberg v. United States, 881 F.3d 529, 531 (7th Cir. 2018).

         A detailed description of Plaintiffs' allegations appears in the court's prior opinions, familiarity with which is assumed. In brief, Defendants Kraft Heinz Company, Albertsons Companies, Inc., Albertsons LLC (the two Albertsons entities will be referred to together as “Albertsons”), SuperValu, Inc., Target Corporation, Wal-Mart Stores, Inc., ICCO-Cheese Company, Inc., and Publix Super Markets, Inc. design, develop, manufacture, sell, test, package, label, distribute, promote, market, and/or advertise grated parmesan cheese products. Doc. 225 at ¶ 19; Doc. 226 at ¶ 10; Doc. 227 at ¶ 16; Doc. 228 at ¶¶ 13-14; Doc. 229 at ¶¶ 15, 29. (Albertsons and SuperValu, close corporate relatives, are named in one complaint. Doc. 227. ICCO manufactures the products for both Target and Wal-Mart, and is named as a defendant in both the Target and Wal-Mart complaints. Docs. 228-229.) At all relevant times, Defendants' products bore labels stating “100% Grated Parmesan Cheese, ” Doc. 225 at ¶ 21; Doc. 227 at ¶ 18; Doc. 228 at ¶ 18; Doc. 229 at ¶ 18, or some variation thereof, Doc. 225 at ¶ 21; Doc. 226 at ¶ 12; Doc. 227 at ¶ 18; Doc. 228 at ¶ 18; Doc. 229 at ¶ 18.

         Defendants' products are comprised largely of cured, dried hard Italian cheeses, Doc. 225 at ¶ 26; Doc. 226 at ¶ 15; Doc. 227 at ¶ 22; Doc. 228 at ¶ 21; Doc. 229 at ¶ 22, but also include a small but nontrivial percentage of cellulose, an organic polymer with no nutritional value that is “often used as a filler.” Doc. 225 at ¶¶ 23-24 (Kraft, 3.8%); Doc. 226 at ¶ 13 (Publix, “a significant portion”); Doc. 227 at ¶¶ 19-20 (Albertsons/SuperValu, 8.8%); Doc. 228 at ¶ 19 (Target/ICCO, no percentage specified); Doc. 229 at ¶¶ 19-20 (Wal-Mart/ICCO, 7.8%). Each product's ingredient list, located on the rear label, lists cellulose and asserts that the cellulose is used to prevent “caking.” Doc. 225 at ¶ 4; Doc. 227 at ¶ 4; Doc. 228 at ¶ 4; Doc. 229 at ¶ 4. However, grated parmesan “usually available in the marketplace” is cured and dried in such a way that there is “little problem of clumping or agglomeration, ” so there in fact is little need to ensure that grated parmesan does not clump or “cake.” Doc. 225 at ¶ 26; Doc. 227 at ¶ 22; Doc. 228 at ¶ 21; Doc. 229 at ¶ 22. According to the U.S. Food and Drug Administration (“FDA”), dried cheese products should be, at most, 2% cellulose. Grated Cheeses; Amendment of the Standard of Identity, 51 Fed. Reg. 30, 210, 30, 210 (Aug. 25, 1986). After commissioning an independent laboratory to test several cured, dried cheese products, Bloomberg reported that many such products contained significantly more than 2% cellulose and specified the percentage of cellulose found in the Albertsons/SuperValu, Wal-Mart/ICCO, and Kraft products. See Lydia Mulvaney, The Parmesan Cheese You Sprinkle on Your Penne Could Be Wood, Bloomberg (Feb. 16, 2016, 4:00 AM),

         Plaintiffs are consumers who purchased Defendants' products at grocery stores in Alabama (Kraft, Albertsons/SuperValu, Wal-Mart/ICCO), California (Kraft, Target/ICCO, Wal-Mart/ICCO), Connecticut (Kraft), Florida (Kraft, Publix, Target/ICCO, Wal-Mart/ICCO), Illinois (Kraft, Albertsons/SuperValu, Target/ICCO), Michigan (Kraft), Minnesota (Kraft, Wal-Mart/ICCO), Missouri (Target/ICCO), New Jersey (Wal-Mart/ICCO), and New York (Kraft, Wal-Mart/ICCO). Doc. 225 at ¶¶ 9-17; Doc. 226 at ¶¶ 8-9; Doc. 227 at ¶¶ 9-11; Doc. 228 at ¶¶ 9-12; Doc. 229 at ¶¶ 9-14. Plaintiffs purchased the products believing that they contained only cheese. Doc. 225 at ¶¶ 9-17; Doc. 226 at ¶¶ 8-9; Doc. 227 at ¶¶ 9-11; Doc. 228 at ¶¶ 9-12; Doc. 229 at ¶¶ 9-14. In addition, in every amended complaint except the one against Publix, Plaintiffs allege that the products' ingredient lists stated that cellulose was added “to prevent caking, ” Doc. 225 at ¶ 46; Doc. 227 at ¶ 39; Doc. 228 at ¶ 40; Doc. 229 at ¶ 4, but that the amount of cellulose exceeded what was necessary to prevent caking, Doc. 225 at ¶ 27; Doc. 227 at ¶ 23; Doc. 228 at ¶ 22; Doc. 229 at ¶ 23, and therefore that the cellulose must also serve the undisclosed purpose of acting as filler, Doc. 225 at ¶ 4; Doc. 227 at ¶ 4; Doc. 228 at ¶ 2; Doc. 229 at ¶ 4.


         I. Standing

         As noted, Plaintiffs' 100% claims have been dismissed, leaving only their Anticaking claims. Kraft argues that Plaintiffs cannot bring those claims in federal court because their allegations do not satisfy the causation requirement of Article III standing. Doc. 316 at 19-21. As the court explained in its more recent opinion in this case-and as reiterated below- Plaintiffs by necessary implication allege in the operative complaints that they did not see the Anticaking representation on the products' ingredient labels before purchase. 348 F.Supp.3d at 810. Kraft reasons that because Plaintiffs never saw the Anticaking representation, they cannot have sustained an injury that is “fairly traceable to” that statement and thus do not have standing. Spokeo, Inc. v. Robins, 136 S.Ct. 1540, 1547 (2016).

         Kraft's argument fails for the reasons given in the court's first opinion in this case. 275 F.Supp.3d at 918-19. As the court explained, under In re Aqua Dots Products Liability Litigation, 654 F.3d 748, 750-51 (7th Cir. 2011), a plaintiff has standing to bring a consumer protection claim if the allegedly deceptive practice caused her to pay more for the product than she otherwise would have paid. That test is satisfied here: If Defendants had disclosed on their labels that cellulose was added in part as filler, at least some consumers would not have purchased the products or would not have been willing to pay as much for them, which- applying basic supply-and-demand principles-would have driven down the price for all consumers, even those who did not read the labels. Indeed, that Defendants included the Anticaking representation on the products' ingredient labels-even though, as they conceded at the motion hearing, the representation is not required by law, Doc. 341-strongly suggests that the representation helped Defendants sell more cheese at higher prices, thereby driving up the price for all consumers. Plaintiffs therefore have Article III standing to pursue the Anticaking claims.

         II. Plaintiffs' Motion for Leave to Amend as to Publix and Target/ICCO

         Plaintiffs move for leave to file second amended consolidated complaints against Publix and Target/ICCO. Doc. 306. The court's more recent opinion dismissed Publix and Target as defendants after holding that Plaintiffs did not bring an Anticaking claim against Publix and that their Anticaking claims against Target/ICCO were too vague to satisfy federal pleading standards because they did not allege the percentage of cellulose in the Target/ICCO products. 348 F.Supp.3d at 803, 808, 818. Plaintiffs attempt in their proposed second amended complaints to remedy both defects by bringing Anticaking claims against Publix and by alleging the amount of cellulose in the Publix and Target/ICCO products. Doc. 306 at 2.

         The parties dispute which standard governs Plaintiffs' motion. Plaintiffs contend that the lenient Rule 15(a)(2) standard applies. Doc. 306 at 2; Doc. 327 at 2-4. Publix and Target/ICCO contend that the court's more recent order must be considered a final judgment dismissing all claims against them with prejudice, and therefore that the more demanding standards for amending a judgment under Rule 59(e) or Rule 60(b) govern. Doc. 324 at 5-9; Doc. 325 at 10-11. The court need not resolve the dispute because Plaintiffs' motion fails even under the more lenient Rule 15(a)(2) standard.

         Rule 15(a)(2) provides that leave to amend “shall be freely given when justice so requires.” Fed.R.Civ.P. 15(a)(2). That said, district courts “have broad discretion to deny leave to amend where there is undue delay, bad faith, dilatory motive, repeated failure to cure deficiencies, undue prejudice to the defendants, or where the amendment would be futile.” Right Field Rooftops, LLC v. Chi. Cubs Baseball Club, LLC, 870 F.3d 682, 693 (7th Cir. 2017). Although a plaintiff ordinarily should be given at least one opportunity to amend, see Pension Trust Fund for Operating Eng'rs v. Kohl's Corp., 895 F.3d 933, 941 (7th Cir. 2018), she is not entitled to additional opportunities if she fails to remedy defects apparent at the time of the prior amendment, nor is she entitled to amend if she made a considered, strategic choice not to include information known to her at that time. See Mulvania v. Sheriff of Rock Island Cnty., 850 F.3d 849, 855 (7th Cir. 2017) (affirming the district court's denial of leave to amend to assert an ADA claim where the plaintiff “could have alleged the ADA claim at the beginning of the suit, ” “[t]he lengthy delay could not be justified by newly discovered information, ” and “the [district] court suggested that the delay was strategic”); McCoy v. Iberdrola Renewables, Inc., 760 F.3d 674, 687 (7th Cir. 2014) (“Outland presented no excuse for omitting … three [proposed legal] theories originally, and the unexplained delay looks more like procedural gamesmanship than legitimate ignorance or oversight.”); First Wis. Fin. Corp. v. Yamaguchi, 812 F.2d 370, 373 (7th Cir. 1987) (“By its own account, First Wisconsin did not try to amend the complaint for six months after learning of Yamaguchi's complicity. First Wisconsin explains that it waited because it did not want to risk a postponement of the trial scheduled for May 1986. This damns rather than justifies the delay, however; First Wisconsin concedes that it tried to split this case and, for its own convenience, obtain two trials. District courts are entitled to protect themselves, and other litigants whose cases would be affected, against such strategic conduct.”).

         Here, Plaintiffs were on notice after the court issued its first opinion, which dismissed without prejudice their 100% claims, that those claims suffered from serious and potentially irremediable defects. When Plaintiffs filed their amended complaints, they not only repleaded their 100% claims, but also added Anticaking claims (except against Publix), undoubtedly because they realized that their 100% claims might again be dismissed. Docs. 225 at ¶ 50; Doc. 227 at ¶ 43; Doc. 228 at ¶ 44; Doc. 229 at ¶ 46. To support their Anticaking claims against Kraft, Wal-Mart/ICCO, and Albertsons/SuperValu, Plaintiffs alleged the percentage of cellulose in those Defendants' ...

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