Smith v. Cabot Creamery Cooperative, Inc. et al

Filing 38

Order by Hon. Samuel Conti granting 22 Motion to Dismiss with prejudice.(sclc2, COURT STAFF) (Filed on 2/25/2013)

Download PDF
1 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE NORTHERN DISTRICT OF CALIFORNIA 8 9 United States District Court For the Northern District of California 10 11 12 13 14 15 16 17 ) Case No. 12-4591 SC ) TIMOTHY SMITH, ROHIT FEDANE, ) ORDER GRANTING and MISTY JOHNSON, individually ) MOTION TO DISMISS and on behalf of all others ) similarly situated, ) ) Plaintiffs, ) v. ) ) CABOT CREAMERY COOPERATIVE, INC. ) and AGRI-MARK, INC., ) ) Defendants. ) ) ) 18 19 20 I. INTRODUCTION Plaintiffs Timothy Smith, Rohit Fedane, and Misty Johnson 21 ("Plaintiffs") filed a putative class action lawsuit against 22 Defendants Cabot Creamery Cooperative, Inc. ("Cabot") and its 23 parent Agri-Mark, Inc. ("Defendants"), asserting a variety of 24 statutory and common law claims. 25 claims are all based on the core allegation that Defendants' yogurt 26 product, which Plaintiffs purchased, was misbranded under federal 27 food regulations. 28 Defendants' motion to dismiss Plaintiffs' FAC. See id. ¶¶ 1-6. ECF No. 16 ("FAC"). Plaintiffs' Now before the Court is ECF No. 22 ("MTD"). 1 The motion is fully briefed, ECF Nos. 27 ("Opp'n"), 32 ("Reply"), 2 and suitable for decision without oral argument, Civ. L.R. 7-1(b). 3 For the reasons discussed below, Defendants' motion is GRANTED, and 4 Plaintiffs' claims are DISMISSED WITH PREJUDICE. 5 6 II. BACKGROUND Yogurt is a dairy product made by combining milk with certain 7 8 food-grade bacteria. FAC ¶¶ 16-18. The bacteria ferment the 9 milk's lactose to produce lactic acid. Id. This fermentation United States District Court For the Northern District of California 10 process causes the milk to coagulate and thicken into a liquid- 11 solid mixture. 12 solid portions of the yogurt manufacturing process, while Greek 13 yogurt keeps only the solid. 14 thicker, higher in protein, and lower in sugar than regular yogurt. 15 Id. ¶ 20. 16 Id. ¶ 5. Id. "Regular" yogurt maintains both the liquid and Id. ¶¶ 19-20. As a result it is It also tends to be more expensive than regular yogurt. Cabot markets "Cabot Greek," the product at issue in the 17 18 instant matter, as "Greek-Style YOGURT." 19 contains whey protein concentrate ("WPC") and milk protein 20 concentrate ("MPC"). 21 protein powders that are essentially byproducts of cheese 22 manufacturing. 23 whey protein, it is WPC. 24 proteins in the same proportion as they appear in cow's milk, it is 25 MPC. 26 material" to thicken Cabot Greek and increase its protein content, 27 instead of making Greek yogurt the "authentic" way, which involves 28 filtering the liquid whey byproduct during the manufacturing Id. Id. ¶ 26. Id. ¶ 28. Id. ¶ 22. Cabot Greek WPC and MPC are concentrated If the protein powder contains mostly Id. ¶ 29. If it contains whey and casein Plaintiffs allege that Cabot uses WPC and MPC as "filler 2 1 process and keeping only the protein-rich solid portion. 2 2, 20-21, 27-29, 32. 3 Id. ¶¶ 1- Plaintiffs are all consumers who purchased Cabot Greek 4 believing it to be yogurt. FAC ¶ 6. 5 problem with Cabot Greek's manufacturing process arises from the 6 Food and Drug Administration's ("FDA") strict guidelines, called 7 Standards of Identity ("SOI(s)"), which define what may legally be 8 called "yogurt." 9 is not "yogurt" under FDA regulations and the Food, Drug, and Id. ¶¶ 37-40. According to Plaintiffs, the Plaintiffs allege that Cabot Greek United States District Court For the Northern District of California 10 Cosmetic Act ("FDCA"), 21 U.S.C. § 341, because it contains MPC and 11 WPC, which Plaintiffs claims the FDA forbids as ingredients in 12 yogurt. 13 branding misled them into believing that they were purchasing 14 genuine Greek yogurt and thereby paying a premium for it, which 15 they would not have done if it were not so branded. 16 6, 36. 17 Id. ¶¶ 35-36, 43-44. Plaintiffs allege that Cabot's See id. ¶¶ 5- Per these allegations, Plaintiffs bring the following causes 18 of action against Cabot: (1) breach of express warranty; (2) breach 19 of the implied warranty of merchantability; (3) breach of the 20 implied warranty of fitness for a particular purpose; (4) unjust 21 enrichment; (5) violation of California's Consumer Legal Remedies 22 Act ("CLRA"), Cal. Civ. Code sections 1751 et seq.; (6) violation 23 of California's Unfair Competition Law ("UCL"), Cal. Bus. & Prof. 24 Code sections 17200 et seq.; (7) violation of California's False 25 Advertising Law ("FAL"), Cal. Bus. & Prof. Code sections 17500 et 26 seq.; (8) negligent misrepresentation; and (9) fraud. 27 28 Defendants now move to dismiss Plaintiffs' FAC, arguing primarily that the FDA permits the addition of MPC and WPC to 3 1 yogurt, thereby rendering all of Plaintiffs' claims baseless 2 because they are predicated on the FDA's purported prohibition of 3 those ingredients. MTD at 6-15.1 4 5 III. LEGAL STANDARD A motion to dismiss under Federal Rule of Civil Procedure 6 Block, 250 F.3d 729, 732 (9th Cir. 2001). 9 on the lack of a cognizable legal theory or the absence of 10 United States District Court 12(b)(6) "tests the legal sufficiency of a claim." 8 For the Northern District of California 7 Navarro v. sufficient facts alleged under a cognizable legal theory." 11 Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 12 1988). 13 should assume their veracity and then determine whether they 14 plausibly give rise to an entitlement to relief." 15 Iqbal, 556 U.S. 662, 679 (2009). 16 must accept as true all of the allegations contained in a complaint 17 is inapplicable to legal conclusions. 18 elements of a cause of action, supported by mere conclusory 19 statements, do not suffice." 20 Twombly, 550 U.S. 544, 555 (2007)). 21 "limited to the complaint, materials incorporated into the 22 complaint by reference, and matters of which the court may take 23 judicial notice." 24 (9th Cir. 2005). 25 /// "Dismissal can be based "When there are well-pleaded factual allegations, a court Ashcroft v. However, "the tenet that a court Threadbare recitals of the Id. (citing Bell Atl. Corp. v. A court's review is generally See Kourtis v. Cameron, 419 F.3d 989, 994 n.2 26 27 28 1 Defendants assert a variety of other grounds for the FAC's dismissal, MTD at 15-18, but since the Court resolves the instant matter on Defendants' main argument, the Court need not and does not address Defendants' remaining arguments. 4 1 IV. DISCUSSION The parties' dispute is ultimately based on one predicate 2 3 issue: whether FDA regulations forbid cultured dairy products 4 containing WPC and MPC from being called "yogurt." 5 they do. 6 all of Plaintiffs' claims are premised on the FDA forbidding the 7 addition of WPC and MPC to yogurt, all of Plaintiffs' claims fail. 8 Defendants say they do not. A. Plaintiffs say Defendants are right. The Relevant FDA Regulations The FDA promulgated its first SOIs for yogurt in 1981. 9 10 United States District Court For the Northern District of California Since C.F.R. §§ 131.200 (yogurt), 131.203 (lowfat yogurt), 131.206 11 (nonfat yogurt). 12 Fed. Reg. 9924; 47 Fed. Reg. 41519. 21 46 The yogurt SOI specifies: Yogurt is the food produced by culturing one or more of the optional dairy ingredients specified in paragraph (c) of this section with a characterizing bacterial culture that contains the lactic acid-producing bacteria, Lactobacillus bulgaricus and Streptococcus thermophilus. One or more of the other optional ingredients specified in paragraphs (b) and (d) of this section may also be added. When one or more of the ingredients specified in paragraph (d)(1) of this section are used, they shall be included in the culturing process. All ingredients used are safe and suitable. 13 14 15 16 17 18 19 20 21 These SOIs became effective July 1, 1983. 21 C.F.R. § 131.200(a). 22 The "optional dairy ingredients" that may be cultured per 23 paragraph (c) of the yogurt SOI are "cream, milk, partially skimmed 24 milk, or skim milk, used alone or in combination." 25 131.200(c). 26 D. 27 optional ingredients," including (1) "[c]oncentrated skim milk, 28 nonfat dry milk, buttermilk, whey, lactose, lactalbumins, Id. § Paragraph (b) permits the addition of Vitamins A and Id. § 131.200(b). Paragraph (d) permits the addition of "other 5 1 lactoglobulins, or whey modified by partial or complete removal of 2 lactose and/or minerals . . . ," as well as (2) nutritive 3 carbohydrate sweeteners, (3) flavoring ingredients, (4) color 4 additives, and (5) stabilizers. 5 this list of other ingredients does not include MPC or WPC. 6 id. § 131.200(d)(1)-5). 7 (d)(1) of the SOI, and so despite being published that portion is 8 not in effect. 9 Fed. Reg. 41519-01 (Sept. 21, 1982) ("1982 Stay"). Id. § 131.200(d)(1)-(5). Notably, See However, in 1982, the FDA stayed paragraph Stay of Effective Date of Certain Provisions, 47 United States District Court For the Northern District of California 10 Plaintiffs allege that the SOI for yogurt, absent the stayed 11 provision, "is an exclusive list of ingredients that may be added 12 to yogurt," and that "if 'yogurt' contains any ingredient not on 13 that list, as a matter of federal law it is not yogurt . . . ." 14 FAC ¶ 43. 15 not include WPC or MPC, those ingredients are prohibited. 16 44. 17 and is misbranded per FDA regulations and the FDCA. 18 36, 43-44. 19 claims. 20 116-120, 123-28, 131-33. Plaintiffs further claim that since the yogurt SOI does Id. ¶ Therefore, Plaintiffs aver, Cabot Greek is not yogurt at all See id. ¶¶ 35- This allegation is the basis for all of Plaintiffs' See id. ¶¶ 68-70, 76-83, 86-89, 92-94, 97-102, 109-113, 21 Defendants' primary argument in moving to dismiss the FAC is 22 that Plaintiffs' claims all fail because the FDA actually permits 23 WPC and MPC as optional ingredients in yogurt. 24 argument, Defendants point to several FDA statements, made 25 consistently over the last thirty years, in which the agency has 26 interpreted the effect of the stay and the remaining parts of the 27 yogurt SOI. 28 In support of this MTD at 6-11. In 1982, the FDA stated, "[The FDA] is staying the effective 6 1 date of the provision[] of [§ 131.200(d)(1)] that restricts the 2 kinds of safe and suitable milk-derived ingredients that may be 3 used as optional ingredients to increase the nonfat solid contents 4 of [yogurts] . . . ." 5 this was the earliest date on which the FDA explained the effect of 6 the 1982 Stay, which was not -- as Plaintiffs allege -- to render 7 the remaining provisions of the yogurt SOI exclusive lists of 8 ingredients, but rather to remove a restriction on what could be 9 added to yogurt. United States District Court For the Northern District of California Id.; see Reply at 2-3. website, which included the following question and answer: Q: May whey protein concentrate (WPC) and/or milk protein concentrate (MPC) be used as ingredients in yogurt to increase the nonfat solids content? 12 13 14 A: Yes. 21 C.F.R. 131.200(d), which would have precluded WPC or MPC use, was one of several provisions of the standard of identity for yogurt that were stayed in 1982, 47 F.R. 41519, September 21, 1982. 15 16 17 NOTE: If WPC and MPC are used in Grade "A" yogurt product, they must be Grade "A" and come from an IMS Listed Source. 18 19 20 Defendants note that In 2004, the FDA published a Memorandum of Information on its 10 11 1982 Stay at 41519. ECF No. 33, ("RJN") Ex. A ("2004 Interpretation").2 21 In 2009, the FDA proposed amendments to the yogurt SOI. 22 Proposal to Revoke the Standards for Lowfat and Nonfat Yogurt and 23 to Amend the Standard for Yogurt, 74 Fed. Reg. 2443-02 (Jan. 15, 24 2009) ("2009 Proposal"). 25 it had stayed parts of the yogurt SOI that "restricted the type of In the 2009 Proposal, the FDA noted that 26 27 28 2 Defendants submitted a Request for Judicial Notice ("RJN"), ECF No. 33, in support of their motion to dismiss. Plaintiffs do not oppose the request and the documents contained in the RJN are public records. The Court GRANTS Defendants' request and takes judicial notice of the documents. 7 1 milk-derived ingredients that may be used to increase the nonfat 2 solids content of cultured milk and yogurts." 3 1982 Stay at 41523). 4 construction -- removal of a restriction rather than the narrowing 5 of an exclusive list -- that the FDA offered in 1982. 6 with 1982 Stay at 41519. 7 competing priorities and limited resources, FDA has not held a 8 public hearing to resolve these issues and the effective date for 9 these provisions remains stayed. Therefore, these provisions were United States District Court For the Northern District of California 10 never in effect." 12 13 14 15 16 18 Id. As Defendants note, this was the same Compare id. The FDA elaborated, "To date, due to Thus, the FDA concluded: [C]ultured milk and yogurts may deviate from the relevant standards in the previously mentioned respects. For example, although the current standards do not permit the use of certain ingredients such as preservatives or a reconstituted dairy ingredient as a basic ingredient, because of the stayed provisions, FDA has not taken enforcement action against the use of these ingredients in yogurt, lowfat yogurt, or nonfat yogurt. 11 17 Id. at 2444 (citing Id. Defendants claim that these express statements are controlling 19 interpretations of the FDA's own regulations, thereby clarifying 20 that WPC and MPC may lawfully be used as optional ingredients to 21 increase the nonfat solid content of yogurt, as Cabot did. 22 at 7-8, 10. 23 cases: PLIVA, Inc. v. Mensing, 131 S. Ct. 2567, 2575, reh'g denied, 24 132 S. Ct. 55 (2011), and Bassiri v. Xerox Corp., 463 F.3d 927, 930 25 (9th Cir. 2006). 26 See MTD To support this point, Defendants rely mainly on two In PLIVA, the parties disputed whether and to what extent 27 generic drug manufacturers could change their drugs' labels after 28 FDA approval. 131 S. Ct. at 2575. 8 The defendants argued that FDA 1 regulations allowed them to change their drugs' labels without 2 waiting for preapproval, which is ordinarily necessary when a drug 3 company changes a label, but the FDA interpreted its regulations to 4 bar changes without preapproval. 5 this issue that "[t]he FDA's views are 'controlling unless plainly 6 erroneous or inconsistent with the regulation[s] or there is any 7 other reason to doubt that they reflect the FDA's fair and 8 considered judgment.'" 9 452, 461, 462, (1997)). United States District Court For the Northern District of California 10 Id. Id. The Supreme Court held on (quoting Auer v. Robbins, 519 U.S. In Bassiri, the Ninth Circuit reviewed a district court's 11 decision to give deference to several Department of Labor letters 12 defining the term "normal compensation." 13 district court had given those letters deference under Skidmore v. 14 Swift & Co., 323 U.S. 134, 140 (1944), which sets the standard for 15 courts' deference to agency interpretations of statutes. 16 463 F.3d at 930. 17 Department of Labor was interpreting regulations, not statutes, the 18 district court should have applied the Supreme Court's rule from 19 Auer (the same rule the Supreme Court applied in PLIVA, 132 S. Ct. 20 at 2575), which is that "where an agency interprets its own 21 regulation, even if through an informal process, its interpretation 22 of an ambiguous regulation is controlling under Auer unless 23 'plainly erroneous or inconsistent with the regulation.'" 24 (quoting Auer, 519 U.S. at 461). 25 463 F.3d at 930. The Bassiri, The Ninth Circuit held that because the Id. Plaintiffs do not grapple with these cases, but they attempt 26 to dull the effect of the FDA's 2004 Interpretation by arguing that 27 the source of the 2004 Interpretation -- a Q&A session at the 2004 28 Regional Milk Seminar -- renders the 2004 Interpretation merely 9 1 informal and, under Supreme Court precedent, "at most, informal 2 statements of policy," which Plaintiffs claim would not be binding 3 in the way a formal regulation would be. 4 Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 5 467 U.S. 837 (1984)). 6 does not bar the Court from giving the FDA's clarifications 7 deference, and agencies are not bound to limit their pronouncements 8 to formal rulemaking, as the Supreme Court has made clear: 9 "[B]ecause agencies normally address problems in a detailed manner Opp'n at 12-13 (citing This distinction is not relevant. Chevron United States District Court For the Northern District of California 10 and can speak through a variety of means, including regulations, 11 preambles, interpretative statements, and responses to comments, we 12 can expect that they will make their intentions clear if they 13 intend for their regulations to be exclusive." 14 v. Automated Med. Labs., 471 U.S. 707, 718 (1984). 15 further guidance: "Where an agency interprets its own regulation, 16 even if through an informal process, its interpretation of an 17 ambiguous regulation is controlling under Auer unless 'plainly 18 erroneous or inconsistent with the regulation.'" 19 2575 (quoting Auer, 519 U.S. at 461). 20 Hillsborough County PLIVA provides 132 S. Ct. at Defendants correctly note that the "informal comments" from 21 the meeting Plaintiffs mention were indeed formalized into a 22 Memorandum of Information from the FDA, directed to "All Regional 23 Food and Drug Directors." 24 comments far more compelling than Plaintiffs would suggest. 25 event, the FDA is permitted to clarify its regulations as it did in 26 the 2004 Interpretation, and those clarifications are entitled to 27 deference. 28 guidance from the 2004 Interpretation indicates that the FDA 2004 Interpretation. See Hillsborough, 471 U.S. at 718. 10 This renders those In any Further, the FDA's 1 understands its own guidelines to allow WPC and MPC as optional 2 ingredients in yogurt. 3 Further, per Auer, the FDA's statements in 2004 and 2009 show 4 that it was interpreting its own ambiguous regulation regarding the 5 yogurt SOI. 6 completely unambiguous," Opp'n at 12, is plainly false given the 7 posture of this case. 8 such heated argument over the effects of the yogurt SOIs and the 9 FDA's interpretation of them if the yogurt SOIs on their own were Plaintiffs' contention that "the regulations are The parties would likely not be engaged in United States District Court For the Northern District of California 10 as easy to interpret as Plaintiffs claim. 11 is ambiguous by definition because the FDA's stay of the "optional 12 ingredients" provision could suggest either that "optional 13 ingredients" are excluded entirely from the yogurt SOI, or 14 potentially included by virtue of the stay. 15 Moreover, the regulation The FDA clarified in the 2004 Interpretation and the 2009 16 Proposal that though it has not made a definitive ruling on the 17 subject, it considers WPC and MPC acceptable optional ingredients 18 in yogurt. 19 statements from the FDA about its own regulations. 20 therefore finds that MPC and WPC are permissible optional 21 ingredients in yogurt under FDA regulations. 22 all fail because they are premised on the argument that those 23 ingredients are impermissible. 24 GRANTED for these reasons. 25 26 These interpretations are entitled to deference, being B. The Court Plaintiffs' claims Defendants' motion to dismiss is Plaintiffs' Other Arguments Plaintiffs provide four additional arguments for why the FDA 27 regulations do not actually allow WPC or MPC in yogurt. 28 arguments are all unconvincing on their own. 11 These First, Plaintiffs argue that the FDA has unambiguously stated 1 2 that WPC and MPC are forbidden in yogurt. 3 statements to which Plaintiffs refer actually concern the FDA's 4 clarification that WPC and MPC are not allowed as basic ingredients 5 in yogurt. 6 Defendants' argument is that the FDA permits WPC and MPC as 7 optional ingredients, which is how they are used in Cabot Greek. 8 The two categories of ingredients, basic and optional, are 9 factually and legally different and should not be conflated.3 United States District Court The This is irrelevant. Second, Plaintiffs' argument that the 1982 Stay renders the 10 For the Northern District of California See 2009 Proposal at 2452-53. Opp'n at 10-13. 11 yogurt SOI an "exclusive list" of acceptable ingredients fails 12 because the FDA, as discussed in Section IV.A supra, has stated 13 otherwise, and its interpretation of its regulation is binding. 14 Further, Plaintiffs' authority here is inapposite. 15 on the following language from the Supreme Court's decision in 16 Federal Security Administrator v. Quaker Oats Co., 318 U.S. 218, 17 232 (1943): "The announcements promulgating [the SOIs in question] 18 stated that they were so framed as to exclude substances not 19 mentioned in the definition." 20 actually undermines Plaintiffs' position. 21 that substances not mentioned in the yogurt SOIs were excluded from Opp'n at 6. Plaintiffs rely But this language The FDA never stated 22 23 24 25 26 27 28 3 In support of their argument on this point, Plaintiffs also cite FDA statements regarding "cheese food" products, in which the FDA stated clearly that MPC cannot be added to "cheese foods" as an optional ingredient. FAC ¶ 45. These statements are irrelevant to the instant matter. Cheese foods and yogurt have different SOIs, and the FDA's statements on one should not be taken to apply to the other. Plaintiffs disagree, claiming that the FDA explained that its findings on WPC and yogurt were "consistent with the agency's recent tentative decision not to permit [MPC] as a basic ingredient in standardized cheese," but that quotation concerned basic ingredients, not optional ingredients, and as the Court has noted, the two categories are not to be conflated. See Opp'n at 12 (citing 2009 Proposal at 2452-53). 12 1 yogurt. As discussed in Section IV.A supra, it did the opposite. 2 Further, the SOIs in question in Quaker Oats specifically forbade 3 the food producer in that case from using the certain ingredients 4 in the product it produced. 5 That is not the issue here. See Quaker Oats, 318 U.S. at 220-23. Third, Plaintiffs argue that the FDA's failure to enact any 6 7 rules explicitly permitting WPC and MPC in yogurt from the 2009 8 Proposal means that the FDA meant to indicate that WPC and MPC had 9 always been prohibited in yogurt. See Opp'n at 11. This is United States District Court For the Northern District of California 10 unconvincing. The FDA had interpreted its regulations to permit 11 WPC and MPC in yogurt in 1982 and 2004, and even in the 2009 12 Proposal itself. 13 supra (discussing the 2009 Proposal). 14 a section of the 2009 Proposal in which the FDA clarifies that WPC 15 and MPC are forbidden as basic ingredients, an argument the Court 16 rejected above. 17 Association] requested that FDA revise the yogurt standards to 18 allow the use of [WPC] as a basic ingredient . . . .") (citing 2009 19 Proposal at 2452-53) (emphasis added). 20 nothing at all about optional ingredients. See 2009 Proposal at 2444; see also Section IV.A, Plaintiffs misleadingly cite See Opp'n at 11 ("[The National Yogurt But this section says Finally, Plaintiffs allege that WPC and MPC render Cabot Greek 21 22 "adulterated" because they are food additives, and moreover, are 23 not Generally Recognized as Safe ("GRAS"), thereby violating the 24 FDCA. 25 has stated specifically that MPC and WPC are permissible optional 26 ingredients in yogurt. 27 clearly if that same permissible addition would render the yogurt 28 illegally adulterated. FAC ¶¶ 46-51. This argument is also unavailing. The FDA It would not have made this statement so 13 1 2 V. CONCLUSION For the reasons discussed above, the Court GRANTS Defendants 3 Cabot Creamery Cooperative, Inc. and Agri-Mark, Inc.'s motion to 4 dismiss Plaintiffs Timothy Smith, Rohit Fedane, and Misty Johnson's 5 first amended complaint. 6 PREJUDICE. Plaintiffs' complaint is DISMISSED WITH 7 8 IT IS SO ORDERED. 9 United States District Court For the Northern District of California 10 25 Dated: February ___, 2013 11 UNITED STATES DISTRICT JUDGE 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 14

Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.

Why Is My Information Online?