Jason Franco v. Chobani, LLC

Opinion

In the

United States Court of Appeals For the Seventh Circuit ____________________ No. 25-2087 JASON FRANCO and ABIGAIL FRANCO, Plaintiffs-Appellants, v.

CHOBANI, LLC, Defendant-Appellee. ____________________

Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 1:23-cv-03047 — John J. Tharp, Jr., Judge. ____________________

ARGUED FEBRUARY 20, 2026 — DECIDED JULY 27, 2026 ____________________

Before ROVNER, KIRSCH, and MALDONADO, Circuit Judges. KIRSCH, Circuit Judge. A federal regulation requires that foods advertised as sugar free contain less than a half gram of sugar. 21 C.F.R. § 101.9(c)(1), (6)(ii). Chobani, LLC sold a yo- gurt that it advertised as sugar free—Chobani Zero Yogurt Sugar—but the yogurt included four grams per serving of al- lulose, a naturally occurring sweetener. Jason and Abigail Franco bought Chobani’s product, and (hoping to represent a class of similarly situated consumers) want to hold the com- 2 No. 25-2087

pany liable for deceptive marketing under dozens of state consumer protection laws. Whether they can pursue those claims depends on if allulose is a sugar under federal law. If allulose qualifies, the Francos’ state-law claims may proceed; if not, then the Federal Food, Drug, and Cosmetic Act of 1938 expressly preempts this action. Chobani moved to dismiss the Francos’ claims under Fed- eral Rule of Civil Procedure 12(b)(6) and argued that the suit was preempted. Because the complaint alleged everything necessary to evaluate the affirmative defense, see Sidney Hill- man Health Ctr. of Rochester v. Abbott Lab’ys, Inc., 782 F.3d 922, 928 (7th Cir. 2015), the district court ruled on the motion. The court deferred to enforcement guidance from the United States Food and Drug Administration, found that the Francos’ claims were preempted, and dismissed the case. We reverse. Allulose is a sugar under the relevant federal regulation and the Francos plausibly alleged consumer deception, which means their suit may proceed in the district court. We review a district court’s dismissal for failure to state a claim de novo. Fosnight v. Jones, 41 F.4th 916, 921 (7th Cir. 2022). To withstand dismissal, a complaint must “state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). We accept all well-pleaded allegations of fact as true and draw all reasonable inferences in favor of the Fran- cos. Alarm Detection Sys., Inc. v. Village of Schaumburg, 930 F.3d 812, 819 (7th Cir. 2019). Chobani argues that dismissal was appropriate both be- cause the Francos’ claims are preempted and because the de- ception alleged is based on unreasonable or fanciful interpre- tations of Chobani’s labels. While the district court did not ad- dress whether the Francos had plausibly alleged deception, No. 25-2087 3

we may affirm the judgment below on any ground supported by the record. Bradley Hotel Corp. v. Aspen Specialty Ins. Co., 19 F.4th 1002, 1006 (7th Cir. 2021). We consider both arguments in turn. I A The Supremacy Clause of the United States Constitution says that, where federal and state law conflict, federal law prevails and state law is preempted. U.S. Const., Art. VI, cl. 2; McHenry County v. Kwame Raoul, 44 F.4th 581, 587 (7th Cir. 2022). While preemption is an affirmative defense that a com- plaint does not need to anticipate, see Bausch v. Stryker Corp., 630 F.3d 546, 561 (7th Cir. 2010), the district court found (and the Francos do not dispute) that the allegations in the com- plaint set forth everything necessary to decide the preemption question. Congress did not want to allow states to impose disclosure requirements on packaged food products that were distinct from federal standards (which would have meant manufac- turers having to print many types of labels). See Turek v. Gen. Mills. Inc., 662 F.3d 423, 426 (7th Cir. 2011). To prevent that outcome, the Federal Food, Drug, and Cosmetic Act of 1938 (FDCA), 21 U.S.C. § 301 et seq., includes an express preemp- tion provision. See id. at § 343-1(a). This part of the statute al- lows states to impose food labeling requirements that are identical to federal requirements but preempts other stand- ards. See Bell v. Publix Super Markets, Inc., 982 F.3d 468, 484 (7th Cir. 2020). The FDCA authorizes the FDA to establish rules for the labeling of food. Relevant here, the FDA may regulate the 4 No. 25-2087

contents of the Nutrition Facts panel on product packaging, 21 U.S.C. § 343(q), and the agency may also set standards for labels characterizing the amount of certain nutrients, includ- ing sugar, id. § 343(r). Using this authority, the FDA issued two regulations about how products must inform and adver- tise to consumers about sugar content. First, 21 C.F.R. § 101.9(c)(6)(ii) requires that the Nutrition Facts panel include “[a] statement of the number of grams of sugars in a serving, except that the label declaration of sugars content is not required for products that contain less than 1 gram of sugars in a serving if no claims are made about sweet- eners, sugars, or sugar alcohol content.” Section 101.9(c)(6)(ii) defines “[t]otal sugars” as “the sum of all free mono- and di- saccharides (such as glucose, fructose, lactose, and sucrose).” Second, the FDA regulates when food may be labeled sugar free. See id. § 101.60(c)(1). This regulation says that a food may not be labeled “sugar free” or “zero sugar” (or sim- ilar terms) unless it “contains less than 0.5 g of sugars, as de- fined by § 101.9(c)(6)(ii),” and meets other requirements. Id. The Francos sued Chobani under state law, alleging that by labeling its products sugar free yet including allulose in the recipe, Chobani deceived them and violated various state consumer protection laws. Whether those claims run afoul of the FDCA’s express preemption provision depends on if allu- lose is a sugar within the meaning of § 101.9(c)(6)(ii). If it is, then Chobani’s sugar free labels were likely prohibited by the FDA’s labeling requirements and the Francos’ state-law claims (seeking to enforce identical requirements) may pro- ceed. If, however, allulose isn’t a sugar under federal law, then the suit goes beyond federal food labeling requirements and is preempted. No. 25-2087 5

Interpreting the law is a job for the court. See Kisor v. Wilkie, 588 U.S. 558, 574–75 (2019); Loper Bright Enters. v. Rai- mondo, 603 U.S. 369, 387 (2024). But we are not required to ig- nore the FDA’s perspective about the meaning of a regulation the agency drafted, see Loper Bright, 603 U.S. at 388 (discuss- ing Skidmore v. Swift & Co., 323 U.S. 134 (1944)), and at times deference to an agency’s interpretation of an ambiguous rule can be appropriate. See Kisor, 588 U.S. at 573–80 (discussing Auer v. Robbins, 519 U.S. 452 (1997)). On several occasions, the FDA has expressed a view about whether allulose is a sugar under § 101.9(c)(6)(ii). In its 2016 rulemaking, the agency observed that “the final rule does not reach a decision as to whether Allulose should be excluded from the [definition] of sugar[] … , and Allulose, as a mono- saccharide, must be included in the [Total Sugars] declara- tion … pending any future rulemaking that would otherwise exclude this substance from the declaration.” Food Labeling: Revision of the Nutrition and Supplement Facts Labels, 81 Fed. Reg. 33,742, 33,795–96 (May 27, 2016). Four years later, the FDA issued industry guidance on the topic (the Allulose Guidance). The agency provided its “cur- rent view on the declaration of allulose on Nutrition and Sup- plement Facts labels” and advised “manufacturers of [FDA’s] intent to exercise enforcement discretion for the exclusion of allulose from the amount of ‘Total Sugars’ and ‘Added Sug- ars’ declared on the label … pending review of the issues in a rulemaking.” United States FDA, The Declaration of Allulose and Calories from Allulose on Nutrition and Supplement Facts Labels: Guidance for Industry 1 (Oct. 2020). The FDA wrote that it had “traditionally determined what is captured under the ‘Total Sugars’ declaration on [food labels] by chem- 6 No. 25-2087

ical structure,” but that based on novel sugars like allulose, “we should consider not only the chemical structure of sug- ars, but also other evidence, including their association with dental caries and how they are metabolized in the body … when determining whether a sugar should be in- cluded” on the label. Id. at 6. The FDA concluded that it would not enforce labeling requirements if manufacturers excluded allulose from the amount of total sugars “pending future rule- making.” And, as the FDA observes, the agency has not yet engaged in further rulemaking relevant to its definition of to- tal sugars. At oral argument, both parties agreed that seeking the FDA’s perspective in this case would be helpful. Because we believed the FDA’s “body of experience and informed judg- ment” could be useful in understanding the regulations at is- sue, we asked the FDA to weigh in on this appeal. Skidmore, 323 U.S. at 140; Loper Bright, 603 U.S. at 402 (“Although an agency’s interpretation … cannot bind a court, it may be es- pecially informative to the extent it rests on factual premises within the agency’s expertise.”) (citation modified). The agency filed an amicus brief and took the position that the text of § 101.9(c)(6)(ii) is unambiguous, and that total sugars as de- fined in that regulation include all monosaccharides, includ- ing allulose. Brief for the United States as Amicus Curiae at 11–12, Franco v. Chobani, Inc. (No. 25-2087). The FDA reasoned that the “such as” parenthetical at the end of § 101.9(c)(6)(ii) was merely a list of non-exhaustive, illustrative examples, and not (as the district court found) a limitation on sugars based on the physiological characteristics that the listed sub- stances shared. Id. at 15–20. The agency also noted that the Allulose Guidance (to which the district court deferred under Auer) was not an interpretation of § 101.9(c)(6)(ii) but was in- No. 25-2087 7

stead an announcement of the agency’s enforcement position. Id. at 20–22. B We find the FDA’s reading of § 101.9(c)(6)(ii) persuasive. See Skidmore, 323 U.S. at 139–40; Loper Bright, 603 U.S. at 402. The agency’s brief is thorough, its reasoning is valid, and its position is consistent with earlier FDA statements about allu- lose and § 101.9(c)(6)(ii). See Skidmore, 323 U.S. at 140. The reg- ulation defines “Total Sugars” as “the sum of all free mono- and disaccharides (such as glucose, fructose, lactose, and su- crose).” There’s no dispute that allulose is a monosaccharide. Because the definition includes every monosaccharide and the following parenthetical is merely a list of examples, allu- lose is a sugar under § 101.9(c)(6)(ii). Chobani’s alternative interpretation makes much of the parenthetical “(such as glucose, fructose, lactose, and su- crose).” Relying on the surplusage and noscitur a sociis can- ons, Chobani contends that this parenthetical must be some- thing more than a list of examples, and is best understood as a limitation on the definition of total sugars. See also Freeman v. Quicken Loans, Inc., 566 U.S. 624, 635 (2012) (stating that the canon against surplusage favors the interpretation which avoids making some part of a law meaningless); Yates v. United States, 574 U.S. 528, 543 (2015) (explaining that noscitur a sociis is the principle that “a word is known by the company it keeps”). To count as a sugar under § 101.9(c)(6)(ii), Chobani posits, a substance must present the same nutritional charac- teristics as glucose, fructose, lactose, and sucrose. It’s true, as Chobani argues, that we must read the whole of § 101.9(c)(6)(ii)—we cannot simply stop at “all free mono- 8 No. 25-2087

and disaccharides.” See Bria Health Servs., LLC v. Eagleson, 950 F.3d 378, 382–83 (7th Cir. 2020) (noting that the same rules ap- ply to the interpretation of statutes and regulations, and courts should consider the entire text of a regulation). And the surplusage canon suggests that the “such as” parenthetical should have some meaning. See Bufkin v. Collins, 604 U.S. 369, 386 (2025). But redundancy is common in the law, see Rimini St., Inc. v. Oracle USA, Inc., 586 U.S. 334, 346 (2019), and “such as” doesn’t always mean “of the same kind” (the definition Chobani stresses)—sometimes it merely introduces “exam- ples of a class.” Such, Oxford English Dictionary, https://perma.cc/96E9-GKYM (last visited July 23, 2026); see Such as, Merriam-Webster Dictionary, https://perma.cc/M5XP-VNMV (last visited July 23, 2026). The “such as” parenthetical, in other words, doesn’t have to do as much work as Chobani wants it to (it doesn’t have to restrict the definition of total sugars to substances that have similar physiological effects as glucose, fructose, lactose, and sucrose). Instead, understood merely as a list of examples, the parenthetical still has meaning. The FDA defined a class by way of chemistry; it reinforced that definition through exam- ples, all of which share the same chemical structure. The cases Chobani cites are distinguishable. Some of these involve laws that do not define a term, define a term only by way of a list, or where a term appears only in a list. See, e.g., Gustafson v. Alloyd Co., 513 U.S. 561, 573–74 (1995); Yates, 574 U.S. at 543; Easom v. US Well Servs., Inc., 37 F.4th 238, 242 (5th Cir. 2022). Section 101.9(c)(6)(ii) doesn’t present the same in- terpretive problems, because this regulation defines a term and follows it with examples, which means there’s no need to derive a definition from the listed examples. Similarly, cases involving concerns about overbreadth aren’t on point because No. 25-2087 9

Chobani hasn’t asserted that a definition of sugars that in- cludes all monosaccharides will lead to absurd results. See Andrus v. Charlestone Stone Prods. Co., 436 U.S. 604, 610–11 (1978); Oracle Int’l Corp. v. Rimini St., Inc., 123 F.4th 986, 994 (9th Cir. 2024). And in defining total sugars, the FDA specifi- cally invoked the language of chemistry, which means deci- sions favoring common parlance meanings aren’t persuasive, either. See Robertson v. Salomon, 130 U.S. 412, 414 (1889); Nix v. Hedden, 149 U.S. 304, 307 (1893). Chobani correctly observes that other parts of the FDA regulations discuss the physiological impact of sugars, see, e.g., 21 C.F.R. § 101.80, and the agency’s broader mandate in this area is to ensure that labeling facilitates informed con- sumer decision-making, 21 U.S.C. § 343(q)–(r). But this con- textual evidence cannot override the plain language of § 101.9(c)(6)(ii). The agency could have defined total sugars based on physiological factors (rather than chemical makeup). It did not do so in § 101.9(c)(6)(ii). Endorsing Chobani’s interpretation, the district court found § 101.9(c)(6)(ii) ambiguous and deferred under Auer to the FDA’s Allulose Guidance. That was error for two reasons. First, (as discussed above) the regulation isn’t ambiguous, and in the absence of uncertainty about what the regulation means “there is no plausible reason for deference.” Kisor, 588 U.S. at 574–75. Second, the Allulose Guidance wasn’t entitled to controlling weight because it wasn’t the FDA’s official po- sition. See id. at 576–77. The Allulose Guidance isn’t an inter- pretation of § 101.9(c)(6)(ii)—it’s an announcement of a change in enforcement policy. See Heckler v. Chaney, 470 U.S. 821, 831–32 (1985) (noting that an agency decision not to en- force involves several factors, only one of which is whether a 10 No. 25-2087

violation has occurred); United States v. Mead Corp., 533 U.S. 218, 234 (2001) (observing that courts generally do not defer to agency interpretations in enforcement guidance). And even if the Allulose Guidance had interpreted § 101.9(c)(6)(ii) to ex- clude allulose, deference would have likely been inappropri- ate because such an interpretation would have conflicted with the agency’s prior position. See Kisor, 588 U.S. at 579; Food Labeling: Revision of the Nutrition and Supplement Facts La- bels, 81 Fed. Reg. 33,742, 33,795–96 (May 27, 2016). Chobani contends that it relied on the Allulose Guidance in deciding how to label its products. And Chobani says that it even secured a marketing permit from the FDA, after the agency approved Chobani’s zero sugar labeling. But the Allu- lose Guidance was a statement about enforcement discretion, and the agency hasn’t engaged in further rulemaking, which means its original definition of sugar remains in force. And the fact that one sovereign (the United States) indicated that it would not enforce its labeling requirements with respect to allulose should not have led Chobani to believe that the states would take a similar approach. Similarly, while it’s reasona- ble that Chobani believed it was safe from federal enforce- ment action based on the labels that the FDA approved, the agency’s marketing permit said nothing about state law con- sumer protection suits. Chobani is a sophisticated actor and should have been aware that the FDA’s decisions about its en- forcement priorities would not immunize the company from suits based on state law. The federal requirements at issue are plain—food prod- ucts cannot be labeled sugar free unless they have less than half a gram of sugar, and sugars include every monosaccha- ride, including allulose. See 21 C.F.R. § 101.60(c)(1), (6)(ii). The No. 25-2087 11

Francos want to hold Chobani liable under state law for vio- lating identical standards, and so their claims are not preempted. See 21 U.S.C. § 343-1(a)(5); Turek, 662 F.3d at 426; Bell, 982 F.3d at 484. Chobani asserts that it has additional Rule 12(b)(6) argu- ments, including an additional theory of preemption based on the FDA’s approval of its labels and the Supreme Court’s re- cent decision in Monsanto Co. v. Durnell, 609 U.S. ____, 2026 WL 1825691 (June 25, 2026). Chobani correctly recognizes that it has not raised those arguments before us and will raise them instead for the first time in the district court on remand. All we need to decide now is that on this record and given the FDA’s definition of total sugars, dismissal based on this the- ory of express preemption was not appropriate. II In the alternative, Chobani argues that we should affirm the dismissal of the Francos’ claims because the complaint doesn’t plausibly allege consumer deception. To prove their deceptive marketing claims, the Francos will eventually need to show that Chobani’s advertisements were either literally false or likely to mislead reasonable consumers. See Suchanek v. Sturm Foods, Inc., 764 F.3d 750, 756–57 (7th Cir. 2014) (gath- ering cases applying various state laws); Beardsall v. CVS Phar- macy, Inc., 953 F.3d 969, 972–73 (7th Cir. 2020) (same). And, under either theory, the Francos will have to prove that there’s “a probability that a significant portion of the general consuming public or of targeted consumers, acting reasona- bly in the circumstances, could be misled.” Bell, 982 F.3d at 474–75 (citation modified). 12 No. 25-2087

We’re not at the stage of the case where proof is required, and all the Francos must do now is plausibly allege consumer deception. See Iqbal, 556 U.S. at 678. When a plaintiff bases “deceptive advertising claims on unreasonable or fanciful in- terpretations of labels or other advertising, dismissal on the pleadings may well be justified.” Bell, 982 F.3d at 477. But questions about how reasonable consumers understand la- bels “may not be answered as a matter of law simply because lawyers can construe an ambiguous claim in a way that would not be deceptive,” and “plaintiffs are entitled to pre- sent evidence on how consumers actually understand [alleg- edly deceptive] labels.” Id. at 480 (citation modified). According to the complaint, the labels on Chobani’s yo- gurt said the product was sugar free, but it in fact had four grams per serving of sugar in the form of allulose. There’s also an allegation that consumers across the country have been de- ceived into buying Chobani’s products based on the reasona- ble belief that they were, in fact, sugar free. Chobani contends that reasonable consumers would not be deceived by a prod- uct promising no sugar but containing allulose (a sweetener that, according to Chobani, doesn’t have the same harmful ef- fects as other sugars). More specifically, Chobani says con- sumers don’t care about the existence of monosaccharides in their food but are instead concerned with avoiding the ad- verse health consequences associated with traditional sugars. Chobani’s arguments miss the mark. Whether reasonable consumers care about the existence of allulose in their yogurt isn’t the same thing as asking whether reasonable consumers would be deceived by it. The Francos have alleged that con- sumers were fooled by Chobani’s labels, and given the abso- lute promise on Chobani’s products (sugar free), we do not No. 25-2087 13

find that allegation implausible. See Bell, 982 F.3d at 480–81 (finding that a complaint alleged deception where a label promised “100% Grated Parmesan Cheese,” but the product contained additives); Dumont v. Reily Foods Co., 934 F.3d 35, 41 (1st Cir. 2019) (finding it not unreasonable for a consumer to read “Freshly Ground 100% Arabica Coffee” to mean “that the package contains only coffee (and Arabica coffee at that), with no nuts (or anything else)”); Schering-Plough Healthcare Prods., Inc. v. Schwarz Pharma, Inc., 586 F.3d 500, 512–13 (7th Cir. 2009) (discussing the literal falsity doctrine in the context of the Lanham Act and observing that the literal falsity in- volves a “patently false statement that means what it says to any linguistically competent person”). Perhaps consumers aren’t deceived by Chobani’s products because they don’t un- derstand promises about sugars to mean allulose. But how reasonable consumers perceive Chobani’s labels and make decisions about its products are questions of fact that cannot be answered now. After discovery, the Francos must prove that reasonable consumers could be misled by Chobani’s promises. REVERSED