Hohenberg v. Ferrero USA, Inc

Filing 39

RESPONSE in Opposition re 30 MOTION to Dismiss Consolidated Complaint filed by Athena Hohenberg, Laura Rude-Barbato. (Attachments: # 1 Exhibit A, # 2 Exhibit B, # 3 Exhibit C)(Fitzgerald, John) (ag).

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1 2 3 4 5 LAW OFFICES OF RONALD A. MARRON, APLC RONALD A. MARRON (175650) 3636 4th Avenue, Suite 202 San Diego, California 92103 Telephone: (619) 696-9006 Facsimile: (619) 564-6665 ron.marron@gmail.com 10 THE WESTON FIRM GREGORY S. WESTON (239944) JACK FITZGERALD (257370) 888 Turquoise Street San Diego, CA 92109 Telephone: (858) 488-1672 Facsimile: (480) 247-4553 greg@westonfirm.com jack@westonfirm.com 11 INTERIM CLASS COUNSEL 6 7 8 9 12 13 UNITED STATES DISTRICT COURT 14 SOUTHERN DISTRICT OF CALIFORNIA 15 16 17 18 IN RE FERRERO LITIGATION CASE NO. 3:11-CV-00205-H-CAB PLAINTIFFS’ OPPOSITION TO FERRERO’S MOTION TO DISMISS Judge: The Honorable Marilyn L. Huff 19 20 21 Hearing Date: June 13, 2011 Time: 10:30 a.m. Location: Courtroom 13 22 23 24 25 26 27 28 In re Ferrero Litigation, No. 11 CV 00205 H (CABx) (S.D. Cal.) OPPOSITION TO FERRERO’S MOTION TO DISMISS 1 TABLE OF CONTENTS 2 TABLE OF AUTHORITIES .................................................................................................................. iii 3 FACTS ..................................................................................................................................................... 1 4 A. Ferrero Claims Nutella is a “Hazelnut Spread” Similar to Peanut Butter with a Nutritional Profile Comparable to Other Popular Breakfast Condiments ...................................................................................................................... 2 B. Ferrero Claims Nutella Contributes to a Balanced Breakfast .......................................... 3 C. Ferrero Claims Nutella is Healthy to Feed Children for Breakfast .................................. 4 5 6 7 8 9 10 11 ARGUMENT ........................................................................................................................................... 6 I. LEGAL STANDARD .................................................................................................................. 6 II. PLAINTIFFS’ CLAIMS ARE NOT PREEMPTED.................................................................... 6 12 A. Statutory Framework........................................................................................................ 6 13 14 1. There is a Strong Presumption Against Federal Preemption .............................. 6 15 2. The FDCA and NLEA .......................................................................................... 7 16 B. Because “Hazelnut Spread with Skim Milk & Cocoa” and “Made with over 50 Hazelnuts per Jar” are not Implied Nutrient Content Claims, Plaintiffs’ Challenges to those Advertisements are not Preempted ................................. 9 C. Because FDA Regulations do not Expressly Permit Ferrero to Represent that Nutella “Contains no Artificial Colors or Preservatives,” Plaintiffs’ Challenges to those Advertisements are Not Preempted ............................................... 11 17 18 19 20 21 III. PLAINTIFFS’ CLAIMS SATISFY THE REASONABLE CONSUMER TEST ..................... 12 22 A. Objectively True Statements are Actionable if Deceptive ............................................. 13 23 B. Ferrero’s Deceptive Advertising Campaign is not Mere Puffery .................................. 14 24 C. Plaintiffs May Challenge Advertising Conveying Ferrero’s Deceptive Message .......................................................................................................................... 17 D. Plaintiffs State Claims Under the UCL and CLRA ....................................................... 19 25 26 27 1. CLRA .................................................................................................................. 19 28 i In re Ferrero Litigation, No. 11 CV 00205 H (CABx) (S.D. Cal.) OPPOSITION TO FERRERO’S MOTION TO DISMISS 1 2. UCL’s “Unlawful” Prong .................................................................................. 21 2 3. UCL’s “Unfair” Prong ...................................................................................... 21 3 4 5 IV. PLAINTIFFS STATE BREACH OF EXPRESS & IMPLIED WARRANTY CLAIMS..................................................................................................................................... 23 CONCLUSION ...................................................................................................................................... 24 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 ii In re Ferrero Litigation, No. 11 CV 00205 H (CABx) (S.D. Cal.) OPPOSITION TO FERRERO’S MOTION TO DISMISS 1 TABLE OF AUTHORITIES 2 Cases 3 Aaronson v. Vital Pharms., Inc., 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 2010 U.S. Dist. LEXIS 14160 (S.D. Cal. Feb. 17, 2010) ............................................................23, 24 Ackerman v. The Coca-Cola Co., 2010 U.S. Dist. LEXIS 73156 (E.D.N.Y. July 21, 2010) ..............................................................8, 10 Altria Group, Inc. v. Good, 129 S. Ct. 538 (2008) ...........................................................................................................................7 Annunziato v. eMachines, Inc., 402 F. Supp. 2d 1133 (C.D. Cal. 2005) .............................................................................................16 Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009) .........................................................................................................................6 Astiana v. Ben & Jerry’s Homemade, Inc., No. C 10-4387 PJH (N.D. Cal. May 26, 2011) .............................................................................8, 12 Baltazar v. Apple, Inc., 2011 U.S. Dist. LEXIS 13187 (N.D. Cal. Feb. 10, 2011) .................................................................22 Bank of West v. Superior Court, 2 Cal. 4th 1254 (1992) .......................................................................................................................12 Bates v. Dow Agrosciences, LLC, 544 U.S. 431 (2005).............................................................................................................................7 Birdsong v. Apple, Inc., 590 F.3d 955 (9th Cir. 2009) .............................................................................................................23 Brockey v. Moore, 107 Cal. App. 4th 86 (2003) ..............................................................................................................12 Cattie v. Wal-Mart Stores, Inc., 504 F. Supp. 2d 939 (S.D. Cal. 2007)................................................................................................17 Cel-Tech Commc’ns, Inc. v. Los Angeles Cellular Tel. Co., 28 iii In re Ferrero Litigation, No. 11 CV 00205 H (CABx) (S.D. Cal.) OPPOSITION TO FERRERO’S MOTION TO DISMISS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 20 Cal. 4th 163 (1999) .......................................................................................................................22 Chacanaca v. Quaker Oats Co., 752 F. Supp. 2d 1111 (N.D. Cal. 2010) ..................................................................................... passim Chae v. SLM Corp., 593 F.3d 936 (9th Cir. 2010) ...............................................................................................................6 Chavez v. Blue Sky, 268 F.R.D. 365 (N.D. Cal. 2010).......................................................................................................21 Cipollone v. Liggett Group, Inc., 505 U.S. 504 (1992).............................................................................................................................7 Consumer Advocates v. Echostar Satellite Corp., 113 Cal. App. 4th 1351 (Cal. Ct. App. 2003) ....................................................................................19 Cook, Perkiss, & Liehe, Inc., v. N. Cal. Collection Serv., 911 F.2d 242 (9th Cir. 1990) .............................................................................................................14 Doyle v. Ill. Cent. R.R. Co., 2009 U.S. Dist. LEXIS 8852 (E.D. Cal. Jan. 29, 2009) ......................................................................5 Fitzpatrick v. General Mills, Inc., 263 F.R.D. 687 (S.D. Fla. 2010) ........................................................................................................18 Fraker v. KFC Corp., 2006 U.S. Dist. LEXIS 79049 (S.D. Cal. Oct. 19, 2006) ..................................................................14 Fraker v. KFC Corp., 2007 U.S. Dist. LEXIS 32041 (S.D. Cal. Apr. 30, 2007) ..................................................................14 Franklin Fueling Sys. v. Veeder-Root Co., 2009 U.S. Dist. LEXIS 72953 (E.D. Cal. Aug. 11, 2009) .....................................................13, 14, 16 Freeman v. Time, Inc., 68 F.3d 285 (9th Cir. 1995) ...............................................................................................................12 Gilligan v. Jamco Dev. Corp., 108 F.3d 246 (9th Cir. 1997) ...............................................................................................................6 28 iv In re Ferrero Litigation, No. 11 CV 00205 H (CABx) (S.D. Cal.) OPPOSITION TO FERRERO’S MOTION TO DISMISS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 Haskell v. Time, Inc., 857 F. Supp. 1392 (E.D. Cal. 1994) ..................................................................................................13 Henderson v. Gruma, 2011 U.S. Dist. LEXIS 41077 (C.D. Cal. Apr. 11, 2011) ...........................................................13, 15 Henderson v. J.M. Smucker Co., 2011 U.S. Dist. LEXIS 27953 (C.D. Cal. Mar. 17, 2011) .................................................6, 11, 13, 16 Hitt v. Ariz. Bev. Co., LLC, 2009 U.S. Dist. LEXIS 16871 (S.D. Cal. Feb. 4, 2009) ....................................................................15 In re Farm Raised Salmon Cases, 42 Cal. 4th 1077 (2008) .............................................................................................................7, 8, 20 In re Tobacco II Cases, 46 Cal. 4th 298 (2009) .......................................................................................................................18 In re Toyota Motor Corp. Unintended Acceleration Mktng., Sales Practices, and Prods. Liab. Litig., 2010 U.S. Dist. LEXIS 131330 (C.D. Cal. Nov. 30, 2010).........................................................15, 23 Johns v. Bayer Corp., 2010 U.S. Dist. LEXIS 10926 (S.D. Cal. Feb. 9, 2010) ..............................................................17, 18 Keith v. Buchanan, 173 Cal. App. 3d 13 (1985) ...............................................................................................................23 Kowalsky v. Hewlett-Packard Co., 2010 U.S. Dist. LEXIS 131711 (N.D. Cal. Dec. 13, 2010) ...............................................................13 Kowalsky v. Hewlett-Packard Co., 2011 U.S. Dist. LEXIS 41337 (N.D. Cal. Apr. 15, 2011) ...........................................................13, 19 Lavie v. Proctor & Gamble Co., 105 Cal. App. 4th 496 (2003) ............................................................................................................12 Law v. General Motors Corp., 114 F.3d 908 (9th Cir. 1997) ...............................................................................................................7 Linear Tech. Corp. v. Applied Materials, Inc., 28 v In re Ferrero Litigation, No. 11 CV 00205 H (CABx) (S.D. Cal.) OPPOSITION TO FERRERO’S MOTION TO DISMISS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 152 Cal. App. 4th 115 (2007) ............................................................................................................21 Lozano v. AT&T Wireless Servs., Inc., 504 F.3d 718 (9th Cir. 2007) .............................................................................................................21 Medtronic, Inc. v. Lohr, 518 U.S. 470 (1996).........................................................................................................................6, 7 Mohamed v. Jeppesen Dataplan, Inc., 579 F.3d 943 (9th Cir. 2009) ...............................................................................................................6 Morey v. NextFoods, Inc., 2010 U.S. Dist. LEXIS 67990 (S.D. Cal. June 7, 2010)....................................................................18 Morgan v. AT&T Wireless Services, Inc., 177 Cal. App. 4th 1235 (2009) ..........................................................................................................13 Nat’l Council for Improved Health v. Shalala, 122 F.3d 878 (10th Cir. 1997) .............................................................................................................7 Newcal Indus. v. Ikon Office Solution, 513 F.3d 1038 (9th Cir. 2008) ...........................................................................................................14 People ex rel. Brown v. Tri-Union Seafoods, LLC, 171 Cal. App. 4th 1549 (2009) ..........................................................................................................21 Peviani v. Natural Balance, Inc., 2011 U.S. Dist. LEXIS 18110 (S.D. Cal. Feb. 24, 2011) ............................................................16, 17 Pom Wonderful LLC v. Ocean Spray Cranberries, Inc., 642 F. Supp. 2d 1112, (C.D. Cal. 2009) ............................................................................................20 Red v. Kraft Foods, Inc., 2011 U.S. Dist. LEXIS 26893 (C.D. Cal. Jan. 13, 2011) ..................................................................11 Red v. Kraft Foods, Inc., 754 F. Supp. 2d 1137, 2010 U.S. Dist. LEXIS 122849 (C.D. Cal. 2010) .............................................................8, 10, 11, 13 Red v. Kraft Foods, Inc., No. CV 10-1028-GW(AGRx), Dkt. No. 40, slip op. (C.D. Cal. Sept. 16, 2010) ........................11, 15 28 vi In re Ferrero Litigation, No. 11 CV 00205 H (CABx) (S.D. Cal.) OPPOSITION TO FERRERO’S MOTION TO DISMISS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 Red v. Kraft Foods, Inc., No. CV 10-1028-GW(AGRx), Dkt. No. 59, slip op. (C.D. Cal. Sept. 16, 2010) ..............................11 Retail Clerks v. Schermerhorn, 375 U.S. 96 (1963)...............................................................................................................................6 Rice v. Santa Fe Elevator Corp., 331 U.S. 218 (1947).............................................................................................................................6 Rikos v. P&G, 2011 U.S. Dist. LEXIS 49076 (W.D. Ohio May 4, 2011).................................................................18 Rubio v. Capital One Bank, 613 F.3d 1195 (9th Cir. 2010) ...........................................................................................................21 Safjr v. BBG Communs., Inc., 2011 U.S. Dist. LEXIS 26407, (S.D. Cal. Mar. 15, 2011) ................................................................21 Siracusano v. Matrixx Initiatives, Inc., 585 F.3d 1167 (9th Cir. 2009) .............................................................................................................6 South Bay Chevrolet v. General Motors Acceptance Corp., 72 Cal. App. 4th 861 (1999) ..............................................................................................................21 Sugawara v. Pepsico, Inc., 2009 U.S. Dist. LEXIS 43127 (E.D. Cal. May 21, 2009) .................................................................12 United States v. 45/194 Kg. Drums of Pure Vegetable Oil, 961 F.2d 808 (9th Cir. 1992) .............................................................................................................21 Van Buskirk v. Cable News Network, Inc., 284 F.3d 977 (9th Cir. 2002) ...............................................................................................................1 Von Koenig v. Snapple Bev. Corp., 713 F. Supp. 2d 1066 (E.D. Cal. 2010) .............................................................................................15 Williams v. Beechnut Nutrition Corp., 185 Cal. App. 3d 135 (1986) .......................................................................................................22, 23 Williams v. Gerber Prods. Co., 28 vii In re Ferrero Litigation, No. 11 CV 00205 H (CABx) (S.D. Cal.) OPPOSITION TO FERRERO’S MOTION TO DISMISS 1 2 3 4 5 6 7 8 9 552 F.3d 934 (9th Cir. 2008) .................................................................................................12, 15, 16 Wyeth v. Levine, 555 U.S. 555, 129 S. Ct. 1187 (2009)..................................................................................................6 Yumul v. Smart Balance, Inc., 733 F. Supp. 2d 1117 (C.D. Cal. 2010) .............................................................................................12 Zeisel v. Diamond Foods, Inc., 2010 U.S. Dist. LEXIS 141941 (N.D. Cal. Sept. 3, 2010) ................................................................21 Zupnik v. Tropicana, 2010 U.S. Dist. LEXIS 142060 (C.D. Cal. Feb. 1, 2010) .................................................................21 10 Statutes 11 21 U.S.C. § 343 ....................................................................................................................................7, 8 12 21 U.S.C. § 343(a) .................................................................................................................................20 13 21 U.S.C. § 343(q)(1)...............................................................................................................................9 14 21 U.S.C. § 343(q)(1)(C) .......................................................................................................................10 15 21 U.S.C. § 343(q)(1)(D) .......................................................................................................................10 16 21 U.S.C. § 343(q)(2)...............................................................................................................................9 17 21 U.S.C. § 343(r)(1)(A) ..........................................................................................................................9 18 21 U.S.C. § 392(b)(2)(A) .........................................................................................................................7 19 21 U.S.C. §§ 301 et seq. ...........................................................................................................................7 20 21 U.S.C. §§ 331(a)-(c) ............................................................................................................................7 21 21 U.S.C. §§ 331(g) .................................................................................................................................7 22 21 U.S.C. §§ 331(k) .................................................................................................................................7 23 Cal. Civ. Code § 1770(a)(16) .................................................................................................................20 24 Cal. Civ. Code § 1770(a)(5) ...................................................................................................................20 25 Cal. Civ. Code § 1770(a)(7) ...................................................................................................................20 26 Cal. Civ. Code § 1770(a)(9) ...................................................................................................................20 27 Cal. Civ. Code §§ 1770(a)(5), (7), (9), and (16) ....................................................................................19 28 viii In re Ferrero Litigation, No. 11 CV 00205 H (CABx) (S.D. Cal.) OPPOSITION TO FERRERO’S MOTION TO DISMISS 1 Cal. Com. Code § 2313 ..........................................................................................................................22 2 Cal. Com. Code § 2314(2)(c) .................................................................................................................23 3 Nutrition Labeling and Education Act of 1990, 4 Pub. L. No. 101-535, § 6(a), 104 Stat. 2353 (1990) ........................................................................7, 8 5 Other Authorities 6 Alberto Ascherio et al., Trans Fatty Acids & Coronary Heart Disease, 7 340 New Eng. J. Med. 94 (1999) .........................................................................................................2 8 H.R. Rep. No. 101-538 (1990) .................................................................................................................7 9 Regulations 10 21 C.F.R. § 101.13(b) ........................................................................................................................9, 10 11 21 C.F.R. § 101.13(b)(2)(i)-(ii) ..........................................................................................................9, 10 12 21 C.F.R. § 101.9(c) ...........................................................................................................................9, 10 13 21 C.F.R. § 101.9(c)(8) ..........................................................................................................................10 14 21 C.F.R. §§ 7 et seq. ...............................................................................................................................7 15 16 17 18 19 20 21 22 23 24 25 26 27 28 ix In re Ferrero Litigation, No. 11 CV 00205 H (CABx) (S.D. Cal.) OPPOSITION TO FERRERO’S MOTION TO DISMISS 1 FACTS 2 For more than a decade, on every Nutella label, on the web, in nationally-aired television 3 commercials and in live marketing presentations, Ferrero1 has leveraged a series of “devices, jingles, 4 and turns of phrase”2 precision-designed to convey the specific, unequivocal, and common messages 5 that its sugary treat, Nutella, (1) is a “hazelnut spread” nutritionally similar to peanut butter, (2) is a 6 healthful breakfast food for children, and (3) contributes to a “balanced breakfast.” 7 To convince American consumers Nutella is healthy, Ferrero hired Connie Evers, a purported 8 children’s nutrition expert, to lend its claims the appearance of credibility, and to conceive an 9 advertising campaign that would make a compelling case for using Nutella at breakfast. To do this, 10 Evers invented a problem Nutella could supposedly solve—the “battle over breakfast.” According to 11 Ferrero, “families rush around in the morning,” and view breakfast as “yet another distraction.” 12 Ferrero contends without support that “having the time to feed our children a wholesome meal in the 13 morning can be a challenge,” and that breakfast is “a stressful and challenging experience for moms 14 and children.” Master Consol. Compt. (“MCC”) at ¶ 82.3 It repeats these messages in television 15 commercial montages of frenzied mothers, hurried school children, and barking dogs. Id. ¶¶ 91-93. 16 According to Evers, Nutella can help solve this phantom problem because it tastes good and 17 will therefore encourage kids to eat whole grain products. Id. ¶ 83.4 The same could be said of 18 19 20 21 22 23 24 25 26 27 28 1 Ferrero is the U.S. arm of the international conglomerate known as the Ferrero Group, which operates with more than 70 affiliated companies, including 38 business units and 15 production plants. Ferrero Group, “Business,” at http://www.ferrero.com/the-group/business/a-growing-turnover. Ferrero Group is headquartered in Italy and run by its Chief Executive Officers, Pietro and Giovanni Ferrero. In the 1940s, their grandfather turned his pastry shop into a factory and founded Ferrero, whose “values . . . have helped make its confectionary well-known and loved by millions of consumers all over the world.” Ferrero Group, “Mission” (emphasis added), at http://www.ferrero.com/the-group/mission/Ferrero-values. “Ferrero is now the fourth largest confectionary group in the world.” Id. (emphasis added). The Ferrero Group’s “best loved products” include Ferrero Rocher chocolate-covered hazelnuts, Mon Cheri cherry liqueur-filled dark chocolates, Kinder brand chocolates, Tic Tacs, and the product at issue in this case—Nutella “hazelnut spread.” 2 See infra n.19. 3 Incorporating Ferrero “Nutella and Nutrition” website, attached hereto as Exhibit A (Nutella and Nutrition). The Court may consider documents referenced by the Complaint and accepted by all parties as authentic. See Van Buskirk v. Cable News Network, Inc., 284 F.3d 977, 980 (9th Cir. 2002). 4 Incorporating Ferrero “Tips for Moms” website, attached hereto as Exhibit B (Tips for Moms). 1 In re Ferrero Litigation, No. 11 CV 00205 H (CABx) (S.D. Cal.) OPPOSITION TO FERRERO’S MOTION TO DISMISS 1 chocolate syrup or rock candy, but that matters little because Ferrero’s “battle over breakfast” 2 campaign is really aimed at convining consumers eating Nutella is healthy. Thus, as part of this 3 campaign, Ferrero tells consumers that Nutella is wholesome, made with simple, quality ingredients, 4 that mothers who serve Nutella are helping nourish their children, and that Nutella contributes to a 5 balanced breakfast. See, e.g., Id. ¶¶ 79, 82, 92-93. 6 Contrary to Ferrero’s carefully-crafted suggestion, Nutella is not healthy, and is not 7 appropriate to feed children for breakfast, with 92% of its calories coming from fat (50%) and sugar 8 (42%), unsurprising since Nutella is 70% sugar and palm oil by weight. In addition, for the first eight 9 years of the class period, Nutella was made with trans fat, a toxic food additive that, by causing 10 cardiovascular heart disease, type-2 diabetes and cancer, contributes to an estimated 100,000 11 otherwise preventable American deaths each year.5 See generally id. ¶¶ 44-70. 12 13 Ferrero Claims Nutella is a “Hazelnut Spread” Similar to Peanut Butter with a Nutritional Profile Comparable to Other Popular Breakfast Condiments 14 Since before the putative Class Period began on January 1, 2000, Ferrero has been deceptively 15 marketing Nutella as a “hazelnut spread,” claiming it is made with “over 50 hazelnuts per jar,” and 16 deceptively categorizing Nutella as a nut spread, like peanut butter. Id. ¶¶ 2, 24, 75, 77, 81-82, 91-93, 17 98. But unlike peanut butter, Nutella is made mostly of sugar, not nuts,6 and so is far more similar to 18 cake icing7 and candy bars, e.g., id. ¶¶ 75, 100. A 2-tablespoon serving of Nutella has less than half 19 the protein of the two leading American peanut butters, Jif and Skippy (3g compared to 7g), and 700% 20 more sugar (21g compared to 3g). Moreover, traditional nut spreads like peanut butter are typically 21 22 23 24 25 26 27 A. 5 Alberto Ascherio et al., Trans Fatty Acids & Coronary Heart Disease, 340 New Eng. J. Med. 94 (1999) (Removing 2% of daily calories from trans fat from the American diet “would prevent approximately 30,000 premature coronary deaths per year, and epidemiologic evidence suggests this number is closer to 100,000 premature deaths annually.”) 6 Nutella is comprised of approximately 55% sugar, 15% palm oil, 13% hazelnuts, less than 7% each cocoa and skim milk, MCC ¶ 81, and less than 2% each soy lecithin (an emulsifier) and vanillin (an artificial flavoring), id. ¶¶ 74, 79; see also Bish Decl. Ex. A, Dkt. No. 30-3, at 3. See generally Travis Saunders, Nutella – Delicious? Yes! Nutritious? Probably not., Obesity Panacea (Apr. 30, 2009), at http://www.obesitypanacea.com/2009/04/nutella-delicious-yes-nutritious.html (discussing Nutella composition). 7 28 Betty Crocker brand “Rich & Creamy Chocolate Icing,” for example, contains 130 calories, 5g of fat, 2g of saturated fat, and 17g of sugar per 2-Tablespoon serving. 2 In re Ferrero Litigation, No. 11 CV 00205 H (CABx) (S.D. Cal.) OPPOSITION TO FERRERO’S MOTION TO DISMISS 1 comprised of at least 90% nuts, not primarily sugar and oil, like Nutella. Through these messages, 2 Ferrero capitalizes on the perception that peanut and other nut butters like almond butter are healthy, 3 to falsely suggest Nutella is also healthy.8 Ferrero also claims Nutella’s hazelnut content provides 4 “antioxidant compounds that protect your body overall,” id. ¶ 80, and that because it is made with 5 “simple, quality ingredients,” and “contains no artificial flavors or preservatives,” it is healthy. See id. 6 ¶¶ 79, 91-94. 7 B. Ferrero Claims Nutella Contributes to a Balanced Breakfast 8 Ferrero’s Nutella advertising campaign centers around convincing consumers Nutella 9 contributes to a “balanced breakfast,” which misleadingly suggests Nutella itself is nutritious. Id. ¶¶ 4, 10 27, 31, 77, 79, 82, 86, 104, 146, 162, 167. This term has a concrete meaning to consumers. As Ferrero 11 says, “we all know that eating a balanced breakfast is important.” Tips for Moms. On its website, 12 Ferrero, through its nutritionist expert, defines “balanced breakfast”: 13 Q. 14 Connie [Evers]: A balanced breakfast should provide the proper balance of protein, carbohydrates from whole grains, fat and the nutrients provided by either a serving of fruit or vegetables. 15 What is considered a “balanced breakfast?” 16 Id. Ferrero then provides an example of a balanced breakfast by reference to measurable amounts of 17 foods—1/2 cup of sliced strawberries and 1 cup of 1% milk, in addition (Ferrero says) to a “small 18 whole grain bagel with Nutella.” Id. Elsewhere on its website, Ferrero further defines a “balanced 19 breakfast” as “consist[ing] of a variety of foods: whole grain products, protein, low fat dairy, and fruit. 20 Such combinations can delay hunger symptoms for hours.” It then says that “[a] balanced breakfast 21 can include . . . Nutella® . . . .” 9 Although Ferrero does not provide its source, Evers’ reference to 22 exact portions of precisely-identified foods to achieve a “proper balance” of nutrients can only be 23 based on some objective standard, such as United States dietary guidelines. 24 Notably, while discussing a “mix of nutrients” including fat, and identifying measurements of 25 other foods contributing to a balanced breakfast, Ferrero rarely states the amount of Nutella it believes 26 27 28 8 Plaintiffs believe there may be other deceptive Nutella labels or advertising during the putative class period and will seek discovery on that issue. 9 http://nutellausa.com/balanced-breakfast.htm. 3 In re Ferrero Litigation, No. 11 CV 00205 H (CABx) (S.D. Cal.) OPPOSITION TO FERRERO’S MOTION TO DISMISS 1 can be eaten as part of a “balanced breakfast,” and when it does, it equivocates. In the single example 2 of Ferreo providing an amount of Nutella, Evers says that, “for example, just 1 tablespoon is a good 3 amount for moms to serve their children . . . .” Tips for Moms (emphasis added). This is half of 4 Nutella’s standard serving size of 2 tablespoons. MCC ¶ 87. It is also far less than the amount of 5 Nutella depicted on the product’s label and in television commercials. Thus, by using a standard 6 serving size of Nutella, consumers are necessarily violating Ferrero’s proposition of a “balanced 7 breakfast,” i.e., one that provides a proper mix of nutrients according to objective criteria. Tellingly, 8 Ferrero’s identical campaign in Europe was highly criticized, with the United Kingdom’s Advertising 9 Standards Authority determining it “misleadingly implied [Nutella] made a more significant 10 contribution to a balanced breakfast than was the case.” Id. ¶ 4. 11 C. Ferrero Claims Nutella is Healthy to Feed Children for Breakfast 12 Expanding on its balanced breakfast theme, Ferrero then targets children, with Evers saying 13 they “need a variety of nutrients,” and advising that a balanced breakfast for a child would include, “a 14 meal of whole wheat toast or a whole-grain toaster waffle with Nutella® hazelnut spread, a small 15 bowl of sliced strawberries and a glass of 1% milk for a good mix of morning nutrients.” Nutella and 16 Nutrition. Ferrero’s representations are bolstered with depictions of mothers feeding happy, healthy 17 children Nutella, while representing that the mothers are “helping to nourish” with Nutella, and can 18 “feel good about serving” children Nutella because it is “wholesome,” “simple,” made with “quality 19 ingredients” and “no artificial colors or preservatives.” See MCC ¶¶ 3, 27, 31, 77, 78, 90-104, 146, 20 162, 167. 21 D. Plaintiffs Purchased Nutella in Reliance on Ferrero’s False Claims 22 Plaintiffs Athena Hohenberg and Laura Rude-Barbato are both mothers of young children. Id. 23 ¶¶ 26, 29. Both saw Ferrero’s television commercials integrating Ferrero’s “battle over breakfast” 24 marketing campaign, along with Ferrero’s representations on Nutella’s label that it is a “hazelnut 25 spread” and contributes to a “balanced breakfast.” On that basis, Plaintiffs believed Nutella was a 26 nutritious food to feed their households, including feeding their children Nutella for breakfast. Id. ¶¶ 27 26-32, 104-14. 28 4 In re Ferrero Litigation, No. 11 CV 00205 H (CABx) (S.D. Cal.) OPPOSITION TO FERRERO’S MOTION TO DISMISS 1 SUMMARY OF ARGUMENT 2 Ferrero perpetrated a multi-faceted, multi-media, long-term, highly-deceptive advertising 3 campaign falsely suggesting Nutella is healthy, and an appropriate breakfast food for children. While 4 Plaintiffs give dozens of examples of Ferrero’s deceptive practices, representations and omissions, the 5 list is not necessarily exhaustive, nor do any of Plaintiffs’ state law claims depend upon the Court 6 finding any particular statement or behavior actionable. Nevertheless, unable to respond to Plaintiffs’ 7 allegations that its cornucopia of health and wellness representations comprises a long-term, highly- 8 deceptive advertising campaign that caused Plaintiffs and the putative class injury by falsely 9 portraying Nutella as a healthy “hazelnut spread,” Ferrero instead attempts to “knock out” certain 10 specific individual phrases. 11 Ferrero asserts, for example, that challenges to statements about Nutella’s ingredients are 12 preempted. But Ferrero’s statements about hazelnuts, skim milk and cocoa are not implied nutrient 13 content claims permitted under federal law, and no regulation permits Ferrero to tout the absence of 14 artificial colors and preservatives in Nutella. Plaintiffs’ claims that the representations are deceptive in 15 context, therefore, are not preempted. Ferrero’s attempt to characterize this case as seeking affirmative 16 disclosures of Nutella’s health hazards, or additional disclosures of its vanillin, are straw men— 17 Plaintiffs merely want to stop Ferrero from marketing Nutella with the deceptive tactics detailed in the 18 Complaint. 19 Similarly, Ferrero’s assertion that some statements Plaintiffs challenge are not likely to 20 deceive a reasonable consumer is unavailing because this is not one of the “rare cases” in which it 21 would be “impossible” for Plaintiffs to show public deception, especially inasmuch as there are 22 several practices and statements here which “contribute to the overall deceptive context as a whole,” 23 and that Plaintiffs allege a long-term, multi-faceted and deceptive overall advertising campaign. 24 Several California district courts have recently held similar claims actionable under the reasonable 25 consumer test. 26 Finally, Plaintiffs state claims for breach of express and implied warranty because Ferrero’s 27 representations about Nutella’s qualities were specific and unequivocal and Plaintiffs relied on them 28 in purchasing Nutella, but the product was actually not as Ferrero described and warranted. 5 In re Ferrero Litigation, No. 11 CV 00205 H (CABx) (S.D. Cal.) OPPOSITION TO FERRERO’S MOTION TO DISMISS 1 2 ARGUMENT I. LEGAL STANDARD 3 Federal pleading requirements are “extremely liberal,” and require only “a short and plain 4 statement of the claim,” so as to “minimize disputes over pleading technicalities.” Doyle v. Ill. Cent. 5 R.R. Co., 2009 U.S. Dist. LEXIS 8852, at *9-10 (E.D. Cal. Jan. 29, 2009). Courts evaluate motions to 6 dismiss with “a powerful presumption against rejecting pleadings for failure to state a claim,” Gilligan 7 v. Jamco Dev. Corp., 108 F.3d 246, 248-49 (9th Cir. 1997) (internal quotation omitted). “When there 8 are well-pleaded allegations, a court should assume their veracity and then determine whether they 9 plausibly give rise to an entitlement for relief.” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1950 (2009). In 10 deciding a motion to dismiss, courts should draw “all reasonable inferences from the complaint in 11 [Plaintiff’s] favor,” Mohamed v. Jeppesen Dataplan, Inc., 579 F.3d 943, 949 (9th Cir. 2009), and 12 “accept the plaintiffs’ allegations as true and construe them in the light most favorable to the 13 plaintiffs.” Siracusano v. Matrixx Initiatives, Inc., 585 F.3d 1167, 1177 (9th Cir. 2009). 14 II. PLAINTIFFS’ CLAIMS ARE NOT PREEMPTED 15 Ferrero asserts that Plaintiffs’ claims over five statements identified in the Complaint as 16 examples of its misleading advertising campaign are preempted: (1) “Hazelnut Spread with Skim Milk 17 & Cocoa,” (2) “Made with over 50 Hazelnuts per Jar,” (3) “contains no artificial colors,” (4) “contains 18 no artificial preservatives,” and (5) “contains no artificial colors or preservatives.” (Mot. at 9, 12.) 19 Ferrero is wrong, but even if those few statements were preempted, because the Complaint alleges 20 dozens of additional misleading statements and practices, that finding would not subject any of 21 Plaintiffs’ claims to dismissal. See Henderson v. J.M. Smucker Co., 2011 U.S. Dist. LEXIS 27953, at 22 *13-14 n.5 (C.D. Cal. Mar. 17, 2011). 23 24 A. Statutory Framework 1. There is a Strong Presumption Against Federal Preemption 25 Pursuant to the Supremacy Clause, federal law preempts state law when Congress enacts a 26 statute that explicitly preempts state law. See Chae v. SLM Corp., 593 F.3d 936, 941 (9th Cir. 2010) 27 (citation omitted). There are two “cornerstones” of preemption jurisprudence. “First, the purpose of 28 Congress is the ultimate touchstone in every pre-emption case. . . . Second, in all pre-emption cases . . 6 In re Ferrero Litigation, No. 11 CV 00205 H (CABx) (S.D. Cal.) OPPOSITION TO FERRERO’S MOTION TO DISMISS 1 . we start with the assumption that the historic police powers of the States were not to be superseded 2 by the Federal Act unless that was the clear and manifest purpose of Congress.” Wyeth v. Levine, 555 3 U.S. 555, 129 S. Ct. 1187, 1194-95 (2009) (internal quotations, citations and alterations omitted) 4 (citing Medtronic, Inc. v. Lohr, 518 U.S. 470, 485 (1996); Retail Clerks v. Schermerhorn, 375 U.S. 5 96, 103 (1963); Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230 (1947)). In short, “Congress does 6 not cavalierly pre-empt state-law causes of action.” Medtronic, 518 U.S. at 485. 7 This presumption demands courts give preemption statutes “narrow reading[s].” Cipollone v. 8 Liggett Group, Inc., 505 U.S. 504, 518 (1992). Thus, where there are “plausible alternative reading[s]” 9 of an express preemption provision, courts “have a duty to accept the reading that disfavors pre- 10 emption.” Bates v. Dow Agrosciences, LLC, 544 U.S. 431, 449 (2005) (emphasis added). The strong 11 presumption against preemption “applies with particular force when Congress has legislated in a field 12 traditionally occupied by the States.” Altria Group, Inc. v. Good, 129 S. Ct. 538, 543 (2008). 13 “[C]onsumer protection laws such as the UCL, false advertising law, and CLRA, are within the states’ 14 historic police powers and are therefore subject to the presumption against preemption. Laws 15 regulating the proper marketing of food, including the prevention of deceptive sales practices, are 16 likewise within states’ historic police powers.” In re Farm Raised Salmon Cases, 42 Cal. 4th 1077, 17 1088 (2008) (internal quotations, citations and alterations omitted); see also Law v. General Motors 18 Corp., 114 F.3d 908, 909 (9th Cir. 1997) (“Given the importance of federalism . . . we entertain a 19 strong presumption that federal statutes do not preempt state laws; particularly those laws directed at 20 subjects—like health and safety—‘traditionally governed’ by the states.” (citations omitted)). 21 2. The FDCA and NLEA 22 The Federal Food, Drug and Cosmetic Act, 21 U.S.C. §§ 301 et seq., empowers the FDA (a) to 23 protect public health by ensuring that “foods are safe, wholesome, sanitary, and properly labeled,” 21 24 U.S.C. § 392(b)(2)(A); (b) to promulgate regulations to implement the statute; and (c) to enforce its 25 regulations through administrative proceedings. See 21 C.F.R. §§ 7 et seq. The Act prohibits the 26 distribution and sale of misbranded foods. See 21 U.S.C. §§ 331(a)-(c), (g), (k). Foods are deemed 27 misbranded when they meet one of the definitions for being misbranded pursuant to 21 U.S.C. § 343. 28 Congress enacted the Nutrition Labeling and Education Act of 1990, Pub. L. No. 101-535, § 7 In re Ferrero Litigation, No. 11 CV 00205 H (CABx) (S.D. Cal.) OPPOSITION TO FERRERO’S MOTION TO DISMISS 1 6(a), 104 Stat. 2353 (1990), to “clarify and to strengthen [the FDA’s] authority to require nutrition 2 labeling on foods, and to establish the circumstances under which claims may be made about the 3 nutrients in foods.” Nat’l Council for Improved Health v. Shalala, 122 F.3d 878, 880 (10th Cir. 1997) 4 (quoting H.R. Rep. No. 101-538, at 7 (1990), reprinted in 1990 U.S.C.C.A.N. 3336, 3337). 5 In passing the Act, Congress sought to “create uniform national standards regarding the 6 labeling of food and to prevent states from adopting inconsistent requirements with respect to the 7 labeling of nutrients.” Farm Raised Salmon Cases, 42 Cal. 4th at 1086 (citing Remarks of Rep. 8 Waxman, 136 Cong. Rec. 5840 (daily ed. July 30, 1990), debate on H.R. No. 3562, 101st Cong., 2d 9 Sess.). Thus Maryland cannot require lactose intolerance warnings on milk labels. Mills v. Giant of 10 Md., LLC, 441 F. Supp. 2d 104 (D.D.C. 2006). Nor may Puerto Rico require the name and address of 11 both a canner and importer on food labels. Goya de P.R., Inc. v. Santiago, 59 F. Supp. 2d 274 (D.P.R. 12 1999). Such requirements impede Congress’s goal of consistent nationwide food labeling. By contrast, 13 “[s]tate-law prohibitions on false statements of material fact do not create diverse, nonuniform, and 14 confusing standards.” Cipollone, 505 U.S. at 529. To meet the goal of consistent nationwide labeling, 15 the NLEA introduced the now-familiar Nutrition Facts panel and amended the FDCA to preempt state 16 labeling requirements not identical to those promulgated under some portions of § 343, see 21 U.S.C. 17 § 343-1. 18 “The NLEA’s rule of construction concerning the scope of preemption excludes implied 19 preemption, providing in relevant part that, ‘[t]he [NLEA] shall not be construed to preempt any 20 provision of State law, unless such provision is expressly preempted under section 403A of the 21 [FDCA].’” Red v. Kraft Foods, Inc., 754 F. Supp. 2d 1137, 2010 U.S. Dist. LEXIS 122849, at *3-4 22 (C.D. Cal. 2010) (citing Pub. L. No. 101-535, § 6(c)(1), 104 Stat. 2353, 2364; In re Farm Raised 23 Salmon Cases, 42 Cal. 4th 1077, 1091 (2008) (“Congress made clear that the preemptive scope of 24 section 343-1 was to sweep no further than the plain language of the statute itself.”)). 25 Plaintiffs “escape [the NLEA’s] preemptive force” here because “the requirements [they] seek 26 to impose are not with respect to the claims of the sort described in” sections of the FDCA preempted 27 by the NLEA. Ackerman v. The Coca-Cola Co., 2010 U.S. Dist. LEXIS 73156, at *21 (E.D.N.Y. July 28 21, 2010); see also Chacanaca v. Quaker Oats Co., 752 F. Supp. 2d 1111, 1119 (N.D. Cal. 2010) 8 In re Ferrero Litigation, No. 11 CV 00205 H (CABx) (S.D. Cal.) OPPOSITION TO FERRERO’S MOTION TO DISMISS 1 (“plaintiffs’ claims need not fail on preemption grounds if the requirements they seek to impose . . . do 2 not involve claims or labeling information of the sort described in” the FDCA); Astiana v. Ben & 3 Jerry’s Homemade, Inc., No. C 10-4387 PJH, slip op. at 9-15 (N.D. Cal. May 26, 2011), attached 4 hereto as Exhibit C. 6 Because “Hazelnut Spread with Skim Milk & Cocoa” and “Made with over 50 Hazelnuts per Jar” are not Implied Nutrient Content Claims, Plaintiffs’ Challenges to those Advertisements are not Preempted 7 Ferrero asserts the phrases “Hazelnut Spread with Skim Milk & Cocoa,” and “Made with over 8 50 Hazelnuts per Jar,” are preempted because they are “nutrient content claims under the federal 9 regulatory scheme.” Mot. at 9. Not so. Nutrient content claims “characterize[] the level of any nutrient 10 which is of the type required by paragraph (q)(1) or (q)(2) to be in the label or labeling of the food,” 11 21 U.S.C. § 343(r)(1)(A) (emphasis added). Accord 21 C.F.R. § 101.13(b) (a nutrient content claim 12 “expressly or implicitly characterizes the level of a nutrient of the type required to be in nutrition 13 labeling under 101.9” (emphasis added)). Section 343(q) deems any packaged food misbranded 14 unless it contains a Nutrition Facts panel disclosing the amounts of nine specific nutrients in a food: 15 (1) total fat, (2) saturated fat, (3) cholesterol, (4) sodium, (5) total carbohydrates, (6) complex 16 carbohydrates, (7) sugars, (8) dietary fiber, and (9) total protein, 21 U.S.C. § 343(q)(1), or any other 17 nutrient the FDA determines should be disclosed, see id. § 343(q)(2). See also 21 C.F.R. § 101.9(c) 18 (implementing regulations). Hazelnuts, Skim Milk, and Cocoa are not “required to be in nutrition 19 labeling under [21 C.F.R. §] 101.9.” They are ingredients, not nutrients. 5 B. 20 Nevertheless, while “a simple statement of an ingredient need not necessarily count as a 21 nutrient content claim. . . . [t]he FDA has instructed . . . that it may function as such a claim under 22 some circumstances.” Chacanaca, 752 F. Supp. 2d at 1121. There are, however, only two 23 “circumstances” in which a description of the ingredients in a food acts as an implied nutrient content 24 claim: (1) where the manner of describing the ingredient “suggests that a nutrient is absent or present 25 in a certain amount (e.g., ‘high in oat bran’),” or (2) where the claim “[s]uggests that the food, because 26 of its nutrient content, may be useful in maintaining healthy dietary practices and is made in 27 association with an explicit claim or statement about a nutrient (e.g., ‘healthy, contains 3 grams (g) of 28 fat’).” 21 C.F.R. § 101.13(b)(2)(i)-(ii) (emphases added). 9 In re Ferrero Litigation, No. 11 CV 00205 H (CABx) (S.D. Cal.) OPPOSITION TO FERRERO’S MOTION TO DISMISS 1 Despite this limitation on when an ingredient description is an implied nutrient content claim, 2 the court in Chacanaca held preempted a challenge to the statement, “contains whole gain oats,” 3 because plaintiffs there alleged the statement was “intended to convey that Chewy Bars are part of a 4 healthful diet, notwithstanding that they contain [trans fat].” 752 F. Supp. 2d at 1121. Because it 5 exceeded the limitations of 21 C.F.R. § 101.13(b)(2), this conclusion was clearly erroneous. See Red 6 v. Kraft, 754 F. Supp. 2d 1137, 2010 U.S. Dist. LEXIS 122849, at *13 (distinguishing Chacanaca and 7 holding that phrases like “Made with Real Vegetables” and “Made with Real Ginger and Molasses” 8 “do not meet the definition of implied nutrient content claims because they do not suggest ‘that a 9 nutrient is absent or present in a certain amount’ or make an explicit claim like that in the ‘healthy, 10 contains 3 grams (g) of fat’ example given in § 101.13(b)(2)(ii)).”). Based on this conclusion, the 11 Chacanaca court held that because the food labeled “contains whole grain oats” satisfied the FDA’s 12 disqualifying criteria for total fat, saturated fat, cholesterol and sodium, plaintiffs’ challenges to that 13 statement were preempted, 752 F. Supp. 2d at 1122, the same argument Ferrero makes. Mot. at 9-12. 14 Because Ferrero’s representations that Nutella is a “hazelnut spread with skim milk & cocoa,” 15 and is “made with over 50 hazelnuts per jar,” are not “made in association with an explicit claim or 16 statement about a nutrient,” they are not implied nutrient content claims under 21 C.F.R. § 17 101.13(b)(2)(ii). Thus, the statements are only implied nutrient content claims if both (1) the 18 ingredients in the statements are associated with a nutrient identified in 21 U.S.C. § 343(q)(1)(D) or 19 21 C.F.R. § 101.9(c), and (2) the statement “suggests [the] nutrient is absent or present in a certain 20 amount,” 21 C.F.R. § 101.13(b)(2)(i). Unlike the phrase “‘high in oat bran,’ [which] suggest[s] a high 21 dietary fiber content,”10 Ackerman, 2010 U.S. Dist. LEXIS 73156, at *10, Ferrero has not 22 demonstrated hazelnuts, skim milk,11 or cocoa are associated with any nutrient, so neither statement is 23 an implied nutrient content claim. Moreover, the statement that Nutella is a “hazelnut spread with 24 25 10 26 11 27 28 21 U.S.C. § 343(q)(1)(D) requires the disclosure of the nutrient, dietary fiber. Even if the reference to skim milk implied the presence of calcium, that is a “vitamin and mineral,” see 21 C.F.R. § 101.9(c)(8), not a nutrient like those identified in 21 U.S.C. § 343(q)(1)(D). Moreover, despite that 21 C.F.R. § 101.13(b) references § 101.9, and § 101.9 prescribes the disclosure of calcium, other non-nutrients are also discussed in § 101.9, like calories, id. § 101.9(c)(1), which is not a “nutrient,” see 21 U.S.C. § 343(q)(1)(C). 10 In re Ferrero Litigation, No. 11 CV 00205 H (CABx) (S.D. Cal.) OPPOSITION TO FERRERO’S MOTION TO DISMISS 1 skim milk & cocoa” does not suggest any nutrient is “absent or present in a certain amount,” and is 2 not an implied nutrient content claim for that additional reason.12 As such, because “they are not 3 subject to the ‘disqualifying nutrient’ levels discussed in Chacanaca[,] . . . there [is] no obvious 4 argument for express preemption.” Red v. Kraft, 754 F. Supp. 2d 1137, 2010 U.S. Dist. LEXIS 5 122849, at *13. C. 7 Because FDA Regulations do not Expressly Permit Ferrero to Represent that Nutella “Contains no Artificial Colors or Preservatives,” Plaintiffs’ Challenges to those Advertisements are Not Preempted 8 Ferrero’s argument that these statements are preempted by the FDCA relies upon a straw 9 man—that Plaintiffs “claim these statements are deceptive because they are not accompanied by a 10 statement that Nutella® contains the artificial flavoring vanillin.” Mot. at 12.13 But Plaintiffs do not 11 challenge the adequacy of Ferrero’s vanillin disclosure; rather, Plaintiffs merely allege Ferrero 12 deceptively “implies Nutella is healthful because it ‘contains no artificial colors or preservatives.’” 13 MCC ¶ 79; see id. ¶ 97 (Ferrero “widely advertis[es] that Nutella® is healthy because it does not have 14 ‘artificial colors or preservatives’”). 6 15 “While requiring disclosures of [artificial flavoring in addition to those already prescribed by 16 FDA regulations] would certainly conflict with federal regulations, Plaintiffs are not, with this 17 lawsuit, necessarily trying to force such disclosures, but, rather, are simply trying to prevent [Ferrero] 18 from making certain other claims.” Red v. Kraft Foods, Inc., No. CV 10-1028-GW(AGRx), Dkt. No. 19 59, slip op. at 2 (C.D. Cal. Sept. 16, 2010)14; id., Dkt. No. 40, slip op. at 215 ( 20 21 22 23 24 25 26 27 28 12 If hazelnuts were associated with a nutrient, the statement that Nutella is “made with over 50 hazelnuts per jar” (but only that statement regarding hazelnuts) might arguably be an implied nutrient content claim pursuant to 21 C.F.R. § 101.13(b)(2)(i), but Ferrero would have to show reasonable consumers would take “50 hazelnuts” to imply something about the absence or presence of a nutrient—not the hazelnuts themselves. For its part, Ferrero associates hazelnuts with antioxidants, MCC ¶ 80, which are not one of the ascribed nutrients. 13 Ferrero weaves a similar straw man throughout its memorandum, that Plaintiffs supposedly seek to impose affirmative disclosures about the amount or unhealthy nature of the sugar and oil in Nutella. See Mot. at 1:8-9, 15-16, 19; 6:12-13; 9:17-20; 11:7-10; 19:23-25, 20:8-9. Not so. Plaintiffs merely seek to prevent Ferrero from using misleading advertisements to market Nutella. 14 Integrated into Red v. Kraft, 754 F. Supp. 2d 1137, 2010 U.S. Dist. LEXIS 122849, at *3; see id. at *19-20 (“Once again, the Court will resist Defendants’ attempt to characterize Plaintiffs’ claims as being based on a failure to disclose [information FDA regulations do not require].”). 11 In re Ferrero Litigation, No. 11 CV 00205 H (CABx) (S.D. Cal.) OPPOSITION TO FERRERO’S MOTION TO DISMISS Defendants commit a logical fallacy. They write: [“A]s a logical matter, Kraft Foods could not have ‘deceptively omitted the fact that the product contains artificial trans fat’ because federal law prevents it from declaring the very statement Plaintiffs seek.” This is not a preemption argument. Plaintiffs are not, with these claims, seeking to impose any requirement that is “not identical” to federal labeling standards.) 1 2 3 4 Accord Henderson v. J.M. Smucker Co., 2011 U.S. Dist. LEXIS 27953, at *12 (“This reasoning 5 suggests a false choice which the FAC’s prayer for relief does not require. Plaintiff seeks to enjoin 6 Defendant from using the particular statements at issue; the FAC does not pray for an injunction 7 requiring Defendant to disclose [additional information FDA regulations do not require] on its product 8 labels.”). Compare MCC at 38-39 (Prayer for Relief). 9 In the cases Ferrero relies on, courts held challenges to statements like “0g trans fat” and “no 10 cholesterol” preempted because, those courts determined, FDA regulations specifically permitted 11 manufactures to make those claims. See Astiana, supra, slip op. at 13-14. Here, there are no FDA 12 regulations permitting Ferrero’s advertisements, “contains no artificial colors,” “contains no artificial 13 preservatives,” or “contains no artificial colors or preservatives.” Thus, even Ferrero concedes 14 Plaintiffs claims are only “preempted to the extent they seek to hold Ferrero liable under state law for 15 not having additional disclosures,” or if they are “based on the absence of additional disclosures,” 16 Mot. at 13, which they are not. 17 III. PLAINTIFFS’ CLAIMS SATISFY THE REASONABLE CONSUMER TEST 18 Claims under the UCL, FAL and CLRA are governed by the “reasonable consumer” test, see 19 Williams v. Gerber Prods. Co., 552 F.3d 934, 938 (9th Cir. 2008). This requires that a plaintiff “show 20 that ‘members of the public are likely to be deceived.’” Freeman v. Time, Inc., 68 F.3d 285, 289 (9th 21 Cir. 1995) (quoting Bank of West v. Superior Court, 2 Cal. 4th 1254, 1267 (1992)). See also Lavie v. 22 Proctor & Gamble Co., 105 Cal. App. 4th 496, 510 (2003) (A “reasonable consumer” is defined as an 23 ordinary member of the consuming public who acts reasonably under all the circumstances). At the 24 pleading stage, the focus is on whether a plaintiff alleging deceptive advertising could possibly show 25 likelihood of deception. See Williams, 552 F.3d at 939 (a deceptive advertising claim should only be 26 dismissed where it is “impossible” for plaintiff to prevail if allowed to offer evidence under the 27 15 28 Integrated by reference into Red v. Kraft Foods, Inc., 2011 U.S. Dist. LEXIS 26893, at *13 (C.D. Cal. Jan. 13, 2011). 12 In re Ferrero Litigation, No. 11 CV 00205 H (CABx) (S.D. Cal.) OPPOSITION TO FERRERO’S MOTION TO DISMISS 1 reasonable consumer standard). “Although reasonableness can, in appropriate circumstances, be 2 decided as a question of law, ‘California courts . . . have recognized that whether a business practice is 3 deceptive will usually be a question of fact not appropriate for decision on [a motion to dismiss].’” 4 Yumul v. Smart Balance, Inc., 733 F. Supp. 2d 1117, 1125 (C.D. Cal. 2010) (quoting Williams, 552 5 F.3d at 938); see also Brockey v. Moore, 107 Cal. App. 4th 86, 100 (2003) (same); Sugawara v. 6 Pepsico, Inc., 2009 U.S. Dist. LEXIS 43127 (E.D. Cal. May 21, 2009) (same); accord Haskell v. 7 Time, Inc., 857 F. Supp. 1392, 1399 (E.D. Cal. 1994) (allegations should only be dismissed where an 8 “alleged misrepresentation, in context, is such that no reasonable consumer could be misled.”) 9 By contrast, “[w]here a defendant’s representations generate reasonable expectations that a 10 product will have qualities or capabilities it does not have, courts have found that those 11 representations may be likely to deceive.” Kowalsky v. Hewlett-Packard Co., 2010 U.S. Dist. LEXIS 12 131711, at *30 (N.D. Cal. Dec. 13, 2010), vacated in part, 2011 U.S. Dist. LEXIS 41337 (N.D. Cal. 13 Apr. 15, 2011). 14 A. 15 The purported truth of a claim is not determinative of whether it is actionable under the UCL, 16 FAL and CLRA. See Morgan v. AT&T Wireless Services, Inc., 177 Cal. App. 4th 1235, 1255 (2009) 17 (“A perfectly true statement couched in such a manner that it is likely to mislead or deceive the 18 consumer, such as by failure to disclose other relevant information, is actionable under the UCL.”); 19 Franklin Fueling Sys. v. Veeder-Root Co., 2009 U.S. Dist. LEXIS 72953, at *21-22 (E.D. Cal. Aug. 20 11, 2009) (the FAL prohibits “not only advertising which is false, but also advertising which although 21 true, is either actually misleading or which has a capacity, likelihood, or tendency to deceive or 22 confuse the public”). Objectively True Statements are Actionable if Deceptive 23 Nevertheless, Ferrero argues some of its statements cannot be deceptive, and therefore are not 24 actionable, because they are supposedly “true.” For example, Ferrero asserts “there is nothing 25 deceptive about telling consumers what is in the product” or “using ‘happy, healthy children’ in 26 television advertisements.” Mot. at 17-18. Other courts have found similar arguments unpersuasive.16 27 16 28 In a heading (only), Ferrero asserts that the omissions discussed in the Complaint “are not contrary to an affirmative representation or omission of material fact that Ferrero was obligated to 13 In re Ferrero Litigation, No. 11 CV 00205 H (CABx) (S.D. Cal.) OPPOSITION TO FERRERO’S MOTION TO DISMISS 1 See, e.g., Red v. Kraft, 754 F. Supp. 2d 1137, 2010 U.S. Dist. LEXIS 122849, at *19-20; Henderson v. 2 Gruma, 2011 U.S. Dist. LEXIS 41077, at *30-31 (C.D. Cal. Apr. 11, 2011); Henderson v. Smucker, 3 2011 U.S. Dist. LEXIS 27953, at *10-12; Chacanaca, 752 F. Supp. 2d at 1126 (“photographic 4 depictions of . . . children in soccer uniforms” which suggested “that active, healthy children are 5 fueled with Chewy Bars” were actionable). 6 In addition, Ferrero’s assertion that its “balanced breakfast” statement “stands for Ferrero’s 7 unremarkable view that consumers can spread Nutella® on whole wheat bread to improve its taste 8 while ensuring they receive a mix of nutrients at breakfast when taken with other nutritional elements 9 such as fruit and skim milk,” Mot. at 15 (emphasis added), ignores that Ferrero hired a children’s 10 nutritionist to convey this message to the public, which is anything but “unremarkable.” But while 11 Ferrero’s “view” of what “balanced breakfast” means admits reference to objective criteria (a “mix of 12 nutrients . . . such as fruit and skim milk”), it’s view is ultimately irrelevant, since Plaintiffs only need 13 show the public was likely to be deceived. 14 B. 15 Unlike the statements at issue here, puffery involves “outrageous generalized statements . . . 16 that are so exaggerated as to preclude reliance by consumers.” Franklin Fueling, 2009 U.S. Dist. 17 LEXIS 72953, at *14 (quoting Cook, Perkiss, & Liehe, Inc., v. N. Cal. Collection Serv., 911 F.2d 242, 18 246 (9th Cir. 1990)). “Conversely, ‘misdescriptions of specific or absolute characteristics of a product 19 are actionable.’” Id. A statement is mere puffery where it is “extremely unlikely to induce consumer 20 reliance.” Newcal Indus. v. Ikon Office Solution, 513 F.3d 1038, 1053 (9th Cir. 2008) (emphasis 21 added). This is untrue of the challenged Ferrero statements, that Nutella is nutritionally similar to 22 peanut butter and contributes to a balanced breakfast, and that Nutella is healthful to feed children for 23 breakfast. 24 25 26 27 28 Ferrero’s Deceptive Advertising Campaign is not Mere Puffery Ferrero relies heavily on Fraker v. KFC Corp., 2007 U.S. Dist. LEXIS 32041 (S.D. Cal. Apr. disclose.” Mot. at 19. But Ferrero’s implicit argument, that certain of its “‘objectively true’ statements cannot be challenged as misleading unless there was additional relevant information that [Ferrero] was obligated to mention” is contrary to “[t]he binding standard for stating a claim for false statements on packaged foods under the UCL and CLRA . . . in Williams v. Gerber Prods. . . . [in which t]he Ninth Circuit did not suggest Plaintiffs must also plead that ‘other relevant information has been omitted.’” Red v. Kraft, 2011 U.S. Dist. LEXIS 26893, at *4. 14 In re Ferrero Litigation, No. 11 CV 00205 H (CABx) (S.D. Cal.) OPPOSITION TO FERRERO’S MOTION TO DISMISS 1 30, 2007), but takes liberties with alteration, Mot. at 15:19, to change its meaning. Fraker did not 2 hold, as Ferrero suggests, that the statement that KFC’s food “can fit into a balanced eating plan” was 3 puffery, but rather the statement that “all foods can fit into a balanced diet plan” was puffery, and 4 similarly that “[y]ou can enjoy fast food as part of a sensible balanced diet” was puffery. Fraker v. 5 KFC Corp., 2006 U.S. Dist. LEXIS 79049, at *10 (S.D. Cal. Oct. 19, 2006) (emphases added). 6 Emphasizing that “context is important,” the Fraker court reasoned that when “viewed in context, . . . 7 . [n]o reasonable consumer would rely upon the statements as specific representations as to health, 8 quality or safety.” Id. at *11. 9 But Fraker is distinguishable in “context” because it involved restaurant food, not packaged 10 food, so there was no label implicated. Instead, the Fraker’s claims depended entirely on statements 11 made on a website owned by KFC’s parent, which discussed health and wellness generally, without 12 any particular connection to KFC’s food. See Fraker Second Amended Complaint ¶ 23 & Ex. A, No. 13 3:06-cv-01284-JM-WMC (S.D. Cal.), Dkt. No. 18. Paradoxically, Fraker alleged “[m]any consumers 14 do not have ready access to the Internet or know how to access defendants’ nutritional data on the 15 Internet.” Id. ¶ 22. Unlike general health and wellness statements seen by few consumers and not 16 connected with the food at issue in Fraker, the statement here that Nutella is part of a “balanced 17 breakfast,” is specific to Nutella, was seen by every consumer who purchased it, and was reinforced 18 through a consistent and disciplined advertising campaign. Thus, unlike in Fraker, Ferrero’s 19 representations “constitute a campaign by [Ferrero] in which it represented itself as prioritizing (even 20 ‘obsessing over’)” providing a healthy breakfast. See In re Toyota Motor Corp. Unintended 21 Acceleration Mktng., Sales Practices, and Prods. Liab. Litig., 2010 U.S. Dist. LEXIS 131330, at *153 22 (C.D. Cal. Nov. 30, 2010) (distinguishing Fraker). 23 Moreover, while the Fraker court decided five years ago that representations like “sensible 24 balanced diet” were puffery in the context of that case, several recent decisions hold that because 25 consumers may take words like “sensible,” “smart,” “wholesome,” “nutritious,” and “natural” to mean 26 healthy, the use of such claims on the labels of products containing allegedly objectionable ingredients 27 is not puffery. Williams, 552 F.3d at 939 (“nutritious”); Chacanaca, 752 F. Supp. 2d at 1125-26 28 (“wholesome” and “smart choices”); Red v. Kraft Foods, Inc., No. CV 10-1028-GW(AGRx), Dkt. No. 15 In re Ferrero Litigation, No. 11 CV 00205 H (CABx) (S.D. Cal.) OPPOSITION TO FERRERO’S MOTION TO DISMISS 1 4017 (“sensible solutions” and “sensible snacking”); Henderson v. Gruma, 2011 U.S. Dist. LEXIS 2 41077, at *30-31 (“all natural”); Von Koenig v. Snapple Bev. Corp., 713 F. Supp. 2d 1066, 1080 (E.D. 3 Cal. 2010) (same); Hitt v. Ariz. Bev. Co., LLC, 2009 U.S. Dist. LEXIS 16871 (S.D. Cal. Feb. 4, 2009) 4 (same). 5 Ferrero’s own words show “balanced breakfast” is a concrete, specific factual assertion that 6 can be evaluated by reference to objective, measurable facts and standards, and can be proven or 7 disproven through discovery. See Annunziato v. eMachines, Inc., 402 F. Supp. 2d 1133, 1140-41 8 (C.D. Cal. 2005). Thus, while Ferrero’s contention that a jury may consider a meal “‘balanced’ if it 9 contains 3.5 grams of saturated fat . . . or 21 grams of sugar” (Mot. at 15-16) is well beyond the scope 10 of a pleadings motion, it demonstrates that a jury could refer to Nutella’s nutrients and composition, 11 and compare it to measurable criteria, to determine if Ferrero’s representations that it is part of a 12 “balanced breakfast” are misleading. And, as discussed above, Ferrero believes consumers know a 13 “balanced breakfast” is important, and that it is definable and concrete. In context, Ferrero’s 14 representations touting Nutella as part of a “balanced breakfast” are not the type of “outrageous 15 generalized statements . . . so exaggerated as to preclude reliance by consumers,” Franklin Fueling, 16 2009 U.S. Dist. LEXIS 72953, at *14, that constitute puffery. 17 But even if, standing alone, the “balanced breakfast” representations were not actionable, 18 where a series of statements “contribute[s] to the deceptive context of the packaging as a whole,” the 19 court should not dismiss the statements as “mere puffery.” See Williams, 552 F.3d at 939 n.3; see also 20 Peviani v. Natural Balance, Inc., 2011 U.S. Dist. LEXIS 18110, at *12 (S.D. Cal. Feb. 24, 2011) 21 (Huff, J.) (“[W]hile the other statements relied on by Plaintiff standing on their own may constitute 22 puffery, those statements contribute ‘to the deceptive context of the packaging as a whole.’ Given 23 their context, the Court declines to dismiss these statements as well.” (citation omitted); Henderson, 24 2011 U.S. Dist. LEXIS 27953, at *12-13 (“[E]ven if certain statements would be non-actionable on 25 their own, where there are multiple statements at issue, we must consider the packaging as a whole. . . 26 . Therefore, at this time, we decline to strike individual statements as mere puffery.”). 27 28 17 Integrated by reference into Red v. Kraft, 2011 U.S. Dist. LEXIS 26893, at *13. 16 In re Ferrero Litigation, No. 11 CV 00205 H (CABx) (S.D. Cal.) OPPOSITION TO FERRERO’S MOTION TO DISMISS 1 Plaintiffs here allege dozens of statements, including several on the Nutella’s label, which, as 2 part of Nutella’s long-term, multi-media advertising campaign, contributed to the deceptive health 3 message conveyed by Nutella’s packaging as a whole. Thus, Plaintiffs’ claims should not be 4 dismissed as challenging representations that are merely puffery. 5 C. 6 Ferrero contends Plaintiffs cannot challenge statements made on Nutella’s website because 7 neither alleges she visited the website (Mot. at 16), despite that a website is “labeling for [a] . . . 8 product” if “the website address appears on the product label,” FDA Warning Letter to General Mills 9 (May 5, 2009),18 and despite that the commercials incorporate the “battle of breakfast” campaign 10 defined and discussed on the website. In support of its argument, however, Ferrero relies on two 11 distinguishable cases. Mot. at 16. Plaintiffs May Challenge Advertising Conveying Ferrero’s Deceptive Message 12 Cattie involved the question of whether bed sheets were falsely advertised as having a higher 13 than actual thread count. Cattie v. Wal-Mart Stores, Inc., 504 F. Supp. 2d 939, 941-42 (S.D. Cal. 14 2007). The plaintiff there “bought one set of sheets eleven days before filing suit, and . . . there was no 15 evidence Plaintiff was dissatisfied with the sheets . . . , or used them, or even opened them. . . . The 16 possibility that Plaintiff did not rely on the allegedly false advertising when making her purchase is 17 thus more than purely theoretical.” Id., at 946-947. But the real problem in Cattie was that while 18 “Plaintiff does allege that the advertising resulted in the sale of goods, [she] does not allege that false 19 statements or claims had anything to do with her decision not purchase the linens.” Id. at 947 20 (emphasis added). Cattie’s general statements about damage to the class, the court held, “are 21 conclusory and do not adequately allege reliance.” By contrast, Plaintiffs allege their reliance on 22 Ferrero’s deceptive advertising campaign in detail. MCC ¶¶ 26-27, 30-31, 103-114. Such allegations 23 have repeatedly been upheld at the pleading stage, including by this Court. See Peviani, 2011 U.S. 24 Dist. LEXIS 18110, at *8-9; Red v. Kraft, 2010 U.S. Dist. LEXIS 122849, at *21 (citing Chavez v. 25 Blue Sky Natural Bev. Co., 340 Fed. Appx. 359, 361 (9th Cir. 2009); Von Koenig v. Snapple Bev. 26 Corp., 713 F. Supp. 2d 1066 (E.D. Cal. 2010); Chacanaca, 2010 U.S. Dist. LEXIS 11981, at *34-35). 27 18 28 Available at http://www.fda.gov/iceci/enforcementactions/warningletters/ucm162943.htm. See Mot. at 12 n.7, citing letter. 17 In re Ferrero Litigation, No. 11 CV 00205 H (CABx) (S.D. Cal.) OPPOSITION TO FERRERO’S MOTION TO DISMISS 1 Johns is also distinguishable. In that case, the plaintiff purchased a vitamin he alleged was 2 promoted with deceptive claims about an ingredient, selenium. Johns v. Bayer Corp., 2010 U.S. Dist. 3 LEXIS 10926, at *1-4 (S.D. Cal. Feb. 9, 2010). On that basis he sought to represent a class of 4 consumers who purchased a different product that he never “even considered purchasing,” id. at *12. 5 Because “the plaintiff in Johns did not allege that he saw any advertisements for the product, 6 that he read the packaging on the product, that he even considered purchasing the product, or that he 7 relied upon any radio, television, or internet advertisement in connection with his purchase of the 8 product,” the case is distinguishable where, as here, the “Plaintiff expressly alleges that he was 9 exposed to and saw [defendant’s] claims by reading the [product] label, purchased [the product] in this 10 District in reliance on these claims, and suffered injury in fact.” Rikos v. P&G, 2011 U.S. Dist. LEXIS 11 49076, at *28 (W.D. Ohio May 4, 2011) (allegation that all advertising statements carried the same 12 message sufficient to state a claim under UCL without plaintiff identifying the specific advertising 13 statements on which he relied). See also Morey v. NextFoods, Inc., 2010 U.S. Dist. LEXIS 67990, at 14 *5 (S.D. Cal. June 7, 2010) ( 15 NextFoods argues that Plaintiff cannot challenge advertisements that she was not exposed to and therefore could not have relied upon in purchasing GoodBelly products. At the pleading stage, however, a plaintiff is ‘not required to plead with an unrealistic degree of specificity that the plaintiff relied on particular advertisements or statements.’ Therefore, Plaintiff’s allegations that she purchased GoodBelly products in reliance on NextFoods’s advertising is sufficient to create standing under both federal and California law.) 16 17 18 19 Accord Fitzpatrick v. General Mills, Inc., 263 F.R.D. 687, 693 (S.D. Fla. 2010) (“[A] plaintiff seeking 20 to prove that [a defendant’s] health message is ‘deceptive’ may rely on any evidence concerning that 21 message, including advertisements to which he or she was not personally exposed.”).19 22 23 24 25 26 27 28 19 The court in Fitzpatrick was concerned that if it were to adopt the defendant’s “restrictive approach [that] would mean the putative class is disharmonious because each plaintiff was likely exposed to a unique array of advertising statements, and would therefore be forced to rely on a slightly divergent pool of evidence to establish that [defendant] engaged in the same deceptive act.” 263 F.R.D. at 693. This would be troubling because “there are many ways to skin a cat” and the defendant employed a number of devices, jingles, and turns of phrase to convey the common message that eating [defendant’s product] aids in the promotion of digestive health . . . . It is this precise claim—communicated in one way or another to every purchaser of [defendant’s product]—that Plaintiff alleges is deceptive. Just as “a brick is not a wall,” whether a defendant’s representation, omission, or practice—which inevitably includes, for example, 18 In re Ferrero Litigation, No. 11 CV 00205 H (CABx) (S.D. Cal.) OPPOSITION TO FERRERO’S MOTION TO DISMISS 1 Finally, the court in Johns based its ruling in part on the plaintiff’s failure to allege exposure to 2 a long-term advertising campaign, since his claims were based upon a single, specific 3 misrepresentation. 2010 U.S. Dist. LEXIS 10926, at *12-13. By contrast, because Plaintiffs here allege 4 such a long-term, multi-faceted advertising campaign, they are “not required to plead with an 5 unrealistic degree of specificity that the[y] relied on particular advertisements or statements.” Id., at 6 *13, quoting In re Tobacco II Cases, 46 Cal. 4th 298, 328 (2009). 7 Moreover, while Plaintiffs may not have personally visited the Nutella website, they were 8 nevertheless exposed to the representations there, because they underlie Ferrero’s “balanced breakfast” 9 message. Ferrero relies on a nutritionist to “substantiate” this claim. Since Plaintiffs would not have 10 seen the “balanced breakfast” representation but for Evers’ “signing off” on it, her opinions, which are 11 embodied on the Nutella website, contributed to Plaintiffs’ and the putative class’s injuries. Indeed, the 12 website—whose URL is prominently featured on Nutella’s label—is both labeling for Nutella and 13 evidence of its deceptive practice of employing a purported children’s nutrition expert to render phony 14 and inapplicable “scientific” advice about feeding Nutella to children as part of a “balanced breakfast.” 15 16 D. Plaintiffs State Claims Under the UCL and CLRA 1. CLRA 17 Ferrero casts its “reasonable consumer” argument as addressing only Plaintiffs’ UCL 18 “fraudulent” prong claim (Mot. at 20), but because the CLRA prohibits “unfair methods of 19 competition and unfair or deceptive acts or practices undertaken by any person in a transaction 20 intended to result or which results in the sale of goods or services to any consumer,” Cal. Civ. Code § 21 1770(a), “[g]enerally, the standard for deceptive practices under the fraudulent prong of the UCL 22 applies equally to claims for misrepresentation under the CLRA.” Kowalsky, 2011 U.S. Dist. LEXIS 23 41337, at *16 (citing Consumer Advocates v. Echostar Satellite Corp., 113 Cal. App. 4th 1351, 1360 24 (Cal. Ct. App. 2003)). “For this reason, courts often analyze the two statutes together. This suggests 25 26 27 28 other related representations, omissions, or practices of the defendant—is often relevant to determine whether the specific act is likely to mislead an objective reasonable consumer. Accordingly, . . . each plaintiff would [only] need to prove he or she was exposed to [defendant’s] allegedly deceptive message that eating [its product] promotes digestive health. Id. at 693-94 (emphasis added, internal citations and alterations omitted). 19 In re Ferrero Litigation, No. 11 CV 00205 H (CABx) (S.D. Cal.) OPPOSITION TO FERRERO’S MOTION TO DISMISS 1 that the court’s above analysis of the fraudulent prong of the UCL applies equally to claims brought 2 under the CLRA . . . .” Id. (citations omitted). In sum, if the Court determines Plaintiffs’ claim under 3 the UCL’s fraudulent prong should not be dismissed under Rule 12, then neither should Plaintiffs’ 4 CLRA claim. 5 Citing the CLRA count in the Complaint, Mot. at 23 (citing MCC ¶ 156), Ferrero nevertheless 6 asserts Plaintiffs’ CLRA claim “merely provide[s] ‘labels and conclusions’ along with a bare 7 statement of entitlement to relief” and therefore is “properly dismissed.” Id. (citation omitted). 8 Contrary to Ferrero’s assertion that “Plaintiffs do not allege any conduct that would violate” the 9 CLRA, Mot. at 23 n.11, the Complaint details Ferrero’s behavior with respect to each CLRA section it 10 violated. 11 Plaintiffs allege Ferrero’s conduct violates Cal. Civ. Code §§ 1770(a)(5), (7), (9), and (16). 12 MCC ¶ 156. These sections prohibit Ferrero from advertising Nutella with the “intent not to sell [it] as 13 advertised” (§ 1770(a)(9)), and from representing that Nutella “ha[s] sponsorship, approval, 14 characteristics, ingredients, uses, [or] benefits” that it does not have (§ 1770(a)(5)), that Nutella is “of 15 a particular standard, quality, or grade . . . if [it is] of another” (§ 1770(a)(7), or that Nutella “has been 16 supplied in accordance with a previous representation when it has not” (§ 1770(a)(16)). 17 Contrary to Ferrero’s suggesting that identifying these sections in their CLRA count is 18 tantamount to the type of conclusory allegations insufficient under Twombly, the MCC details 19 Ferrero’s violations of these sections. For example, by employing a nutritionist to “spread the word” 20 about Nutella, Ferrero’s advertisements and business practices suggest Nutella has the sponsorship or 21 approval of nutrition science, which it does not. Ferrero also represents that Nutella is primarily 22 comprised of hazelnuts, rather than sugar and oil, by calling it a “hazelnut spread” and implying that 23 because it has “over 50 hazelnuts per jar” that is the primary ingredient. Ferrero’s advertising 24 campaign also represents that Nutella is an appropriate breakfast food for children, which it is not, and 25 that Ferrero is characteristically similar to peanut butter, jelly, and syrup, which it is not. This and 26 other behavior detailed in the Complaint and discussed above is conduct that, if proven, would render 27 Ferrero liable under these statutes. 28 20 In re Ferrero Litigation, No. 11 CV 00205 H (CABx) (S.D. Cal.) OPPOSITION TO FERRERO’S MOTION TO DISMISS 1 2. UCL’s “Unlawful” Prong 2 Ferrero’s argument that Plaintiffs do not state a claim under the UCL’s “unlawful” prong 3 depends on the Court holding Plaintiffs entirely fail to state claims under the FAL and CLRA. For the 4 reasons discussed, the Court should, respectfully, uphold Plaintiffs’ FAL and CLRA claims, and 5 therefore decline to dismiss their UCL “unlawful” claim prong on those grounds. In addition, 6 Ferrero’s conduct violates the FDCA, which prohibits labeling that is “false or misleading in any 7 particular,” 21 U.S.C. § 343(a), and the Sherman Law, which incorporates all the requirements of the 8 FDCA and its implementing regulations. Complaint ¶¶ 132-33. See Farm Raised Salmon Cases, 42 9 Cal. 4th at 1086-90; Pom Wonderful LLC v. Ocean Spray Cranberries, Inc., 642 F. Supp. 2d 1112, 10 1121-22 (C.D. Cal. 2009). Several California district courts have recently held similar claims 11 actionable under the UCL as borrowed FDCA or Sherman Law violations. See Zupnik v. Tropicana, 12 2010 U.S. Dist. LEXIS 142060 (C.D. Cal. Feb. 1, 2010)20 (claim that Tropicana’s Pomegranate 13 Blueberry Flavored Blend misleadingly suggested the product primarily consisted of pomegranate and 14 blueberry juice when it was actually mostly pear juice); Chavez v. Blue Sky, 268 F.R.D. 365, 372 15 (N.D. Cal. 2010); Zeisel v. Diamond Foods, Inc., 2010 U.S. Dist. LEXIS 141941, *6-9 (N.D. Cal. 16 Sept. 3, 2010) (designated Not for Publication). Accord People ex rel. Brown v. Tri-Union Seafoods, 17 LLC, 171 Cal. App. 4th 1549, 1558 (2009) (The FDA has “authority to regulate food labeling, with 18 jurisdiction over labeling of food that is false or misleading in any particular. . . [under] 343(a).”). 19 3. UCL’s “Unfair” Prong 20 Under the balancing test21 for the UCL’s “unfair” prong invoked in the Complaint, see MCC ¶ 21 142, Plaintiffs “may be able to prove facts showing that ‘the harm to the consumer’ from [Ferrero’s 22 advertising] outweighed the [advertising’s] ‘utility.’ [They] may, for example, be able to show that 23 removing the term ‘[balanced breakfast],’ an action that would have cost [Ferrero] nothing, could have 24 25 26 27 28 20 “[T]he authority strongly suggests” that the FDA could sue under § 343(a) “for a ‘false and misleading’ label where the label does not violate another, more specific, food labeling statute or regulation.” Zupnik, 2010 U.S. Dist. LEXIS 142060, at *5 (citing United States v. 45/194 Kg. Drums of Pure Vegetable Oil, 961 F.2d 808, 811 (9th Cir. 1992) (“The statute condemns every statement, design, and device which may mislead or deceive.”) (citation omitted)). 21 South Bay Chevrolet v. General Motors Acceptance Corp., 72 Cal. App. 4th 861, 886 (1999). 21 In re Ferrero Litigation, No. 11 CV 00205 H (CABx) (S.D. Cal.) OPPOSITION TO FERRERO’S MOTION TO DISMISS 1 prevented consumer confusion.” Rubio v. Capital One Bank, 613 F.3d 1195, 1205 (9th Cir. 2010) 2 (citing Lozano v. AT&T Wireless Servs., Inc., 504 F.3d 718, 735 (9th Cir. 2007)). See also Safjr v. 3 BBG Communs., Inc., 2011 U.S. Dist. LEXIS 26407, at *12-13 (S.D. Cal. Mar. 15, 2011) (Huff, J.) 4 (concluding plaintiffs’ allegations were sufficient to withstand a motion to dismiss where they 5 plausibly alleged the utility of the defendant’s practice is outweighed by the harm suffered), quoting 6 Linear Tech. Corp. v. Applied Materials, Inc., 152 Cal. App. 4th 115, 134-35 (2007) (“Whether a 7 practice is deceptive, fraudulent, or unfair is generally a question of fact which requires consideration 8 and weighing of evidence from both sides and which usually cannot be made on demurrer.”) (internal 9 citations omitted). 10 Here, Plaintiffs allege that Ferrero’s “false and misleading labeling of Nutella® . . . outweighs 11 any conceivable benefit,” and that Ferrero “placed Nutella® into the stream of commerce with 12 knowledge that, through the intended use22 of [Nutella], individuals, including young children, will be 13 exposed to high and dangerous levels of saturated fat, trans fat, highly-refined sugars, and other 14 objectionable ingredients.” MCC ¶¶ 142-43 (emphasis added). Seizing on the “stream of commerce” 15 language in paragraph 143 and ignoring the thrust of the Complaint and the language discussing how 16 Ferrero’s “false and misleading labeling” is “unfair” in paragraph 142, Ferrero re-invokes field 17 preemption expressly excluded under the NLEA’s savings clause, cites an inapplicable case that only 18 begs the question,23 and invokes the U.S. Constitution’s dormant commerce clause without providing 19 any real analysis. Mot. at 22. These arguments are inapt, though, because they rely on Ferrero’s 20 erroneous assertion that “plaintiffs are asking the Court to effectively prohibit the sale of” Nutella. 21 Mot. at 22. As discussed above, that is simply not true. 22 23 22 24 25 26 27 28 i.e., the use promoted by Ferrero, children eating Nutella for breakfast 23 Cel-Tech Commc’ns, Inc. v. Los Angeles Cellular Tel. Co., 20 Cal. 4th 163, 182 (1999), provides state law should not punish behavior that other statutes or regulations permit, but Ferrero has not shown any statutes or regulations permitting any of the statements Plaintiffs challenge. See Chacanaca, 752 F. Supp. 2d at 1125 n.8 (in light of preemption principles, “defendant’s safe harbor argument is moot”). In any event, Cel-Tech is expressly limited to competitor actions. 20 Cal. 4th at 187 n.12 (1999) (“Nothing we say relates to actions by consumers or by competitors alleging other kinds of violations of the unfair competition law . . . .”). 22 In re Ferrero Litigation, No. 11 CV 00205 H (CABx) (S.D. Cal.) OPPOSITION TO FERRERO’S MOTION TO DISMISS 1 PLAINTIFFS STATE BREACH OF EXPRESS & IMPLIED WARRANTY CLAIMS24 IV. 2 Ferrero created an express warranty with (a) any affirmation of fact or promise relating to 3 Nutella that became part of the basis of the bargain, which created an express warranty that the 4 Nutella shall conform to the affirmation or promise; or (b) any description of Nutella that was made 5 part of the basis of the bargain, which created an express warranty that the Nutella shall conform to 6 the description. See Cal. Com. Code § 2313. To plead a cause of action for breach of express 7 warranty, a plaintiff must allege (1) the exact terms of the warranty, (2) reasonable reliance thereon, 8 and (3) proximate injury. See Baltazar v. Apple, Inc., 2011 U.S. Dist. LEXIS 13187, at *5 (N.D. Cal. 9 Feb. 10, 2011), citing Williams v. Beechnut Nutrition Corp., 185 Cal. App. 3d 135, 142 (1986). 10 A complaint states an express warranty claim where it “alleges [defendant] utilized the 11 advertising media to urge the use and application of [the subject product] and expressly warranted to 12 the general public including plaintiff herein, that said product was effective, proper and safe for its 13 intended use.” Williams, 185 Cal. App. 3d at 142. (internal quotations omitted, second alteration 14 original); see also Aaronson, 2010 U.S. Dist. LEXIS 14160, at *17 (“Statements made by a 15 manufacturer through its advertising efforts can be construed as warranty statements.” (citing Keith v. 16 Buchanan, 173 Cal. App. 3d 13 (1985))). Thus, a court in this District recently held allegations that a 17 plaintiff relied on a manufacturer’s safety representations in purchasing a dietary supplement were 18 “adequate . . . to establish a warranty that was a ‘basis of the bargain.’ Accordingly [plaintiff] has 19 sufficiently stated a breach of express warranty claim.” Id. at *18-19. 20 Here, through a coordinated, multi-media advertising campaign spearheaded by a purported 21 children’s nutrition expert, Ferrero intentionally conveyed the specific and unequivocal messages that 22 Nutella itself is part of a “balanced breakfast,” that Nutella is a healthful food to serve children at 23 breakfast, and that Nutella is nutritionally comparable to peanut butter. The challenged Ferrero 24 statements, 25 26 27 28 24 Although Ferrero does not raise the issues in its Motion, for the sake of completeness it is worth noting that while the plaintiff must ordinarily be in privity with the seller to state a warranty claim, there is a well-recognized exception in transactions involving the sale of foods. See Aaronson v. Vital Pharms., Inc., 2010 U.S. Dist. LEXIS 14160, at *13-15 (S.D. Cal. Feb. 17, 2010) (citations omitted). Similarly, “[i]n claims against a manufacturer [rather than a seller] of goods…California law does not require notice.” Id. at *15 (citations omitted). 23 In re Ferrero Litigation, No. 11 CV 00205 H (CABx) (S.D. Cal.) OPPOSITION TO FERRERO’S MOTION TO DISMISS 1 2 3 4 5 when inferences are viewed in favor of Plaintiffs, are sufficiently specific and unequivocal. The thrust of [Ferrero’s] statement is that [Nutella is wholesome and healthy]; more specifically, [Ferrero’s] statements convey that [Nutella is part of a balanced breakfast, nutritionally comparable to peanut butter, jelly and syrup, and healthy for children to eat for breakfast]. Plaintiffs’ allegations, if proven, represent the antithesis of these statements . . . . In re Toyota Unintended Acceleration Cases, 2010 U.S. Dist. LEXIS 131330, at *168-69. 6 Plaintiffs also state a claim for breach of the implied warranty. The California Commercial 7 Code implies a warranty of merchantability that goods “[a]re fit for ordinary purposes for which such 8 goods are used.” Cal. Com. Code § 2314(2)(c). A plaintiff also states a claim for breach of the implied 9 warranty of merchantability if she alleges the good does not “conform to the promises or affirmation 10 of fact made on the container or label.” See Birdsong v. Apple, Inc., 590 F.3d 955, 958 n.2 (9th Cir. 11 2009). Here, Ferrero represented that Nutella is part of a “balanced breakfast,” a term which Ferrero 12 concedes is measurable and which makes reference to objective criteria. As with Plaintiffs’ express 13 warranty claim, the Aaronson court recently upheld a similar breach of implied warranty claim. 2010 14 U.S. Dist. LEXIS 14160, at *13-17. CONCLUSION 15 16 Plaintiffs respectfully request the Court deny Ferrero’s Motion to Dismiss. If the Court is, 17 however, inclined to grant any portion of Ferrero’s Motion, Plaintiffs respectfully request it be 18 without prejudice and that they be permitted to amend their Complaint, including in order to allege 19 new facts learned through additional investigation and discovery that would support their claims. 20 Dated: May 31, 2011 21 22 23 24 25 By: /s/ Jack Fitzgerald Jack Fitzgerald THE WESTON FIRM GREGORY S. WESTON JACK FITZGERALD 888 Turquoise Street San Diego, CA 92109 Telephone: 858 488 1672 Facsimile: 480 247 4553 26 27 28 LAW OFFICES OF RONALD A. MARRON, APLC RONALD A. MARRON 3636 4th Avenue, Suite 202 24 In re Ferrero Litigation, No. 11 CV 00205 H (CABx) (S.D. Cal.) OPPOSITION TO FERRERO’S MOTION TO DISMISS 2 San Diego, CA 92103 Telephone: (619) 696-9006 Facsimile: (619) 564-6665 3 INTERIM CLASS COUNSEL 1 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 25 In re Ferrero Litigation, No. 11 CV 00205 H (CABx) (S.D. Cal.) OPPOSITION TO FERRERO’S MOTION TO DISMISS