Miller v. Ghirardelli Chocolate Company

Filing 84

Order by Magistrate Judge Laurel Beeler granting in part and denying in part 58 Motion to Intervene and Amend.(lblc1S, COURT STAFF) (Filed on 12/20/2013)

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UNITED STATES DISTRICT COURT

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Northern District of California

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San Francisco Division

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For the Northern District of California

UNITED STATES DISTRICT COURT

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SCOTT MILLER, an individual, on behalf of
himself, the general public and those similarly
situated,

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Plaintiff,
v.

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GHIRARDELLI CHOCOLATE COMPANY,
and DOES 1 THROUGH 50,

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No. C 12-04936 LB
ORDER GRANTING STEVE
LEYTON’S MOTION TO
INTERVENE AND DENYING HIS
MOTION TO FILE AN AMENDED
COMPLAINT ON THE ALLNATURAL CLAIMS

Defendants.
_____________________________________/

[ECF No. 59-1]
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In this putative class action, Plaintiff Scott Miller claims that Defendant Ghirardelli Chocolate

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Company violated consumer protection laws and state and federal labeling regulations by labeling

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its “Ghirardelli® Chocolate Premium Baking Chips – Classic White” as containing white chocolate

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when they do not. On October 11, 2013, Steve Leyton, a third-party who is represented by the same

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attorneys as Miller, filed a motion to intervene and to file an amended complaint to add new claims

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that Ghirardelli falsely labeled certain products “all natural.” Motion, ECF No. 59-1.1 Miller joined

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Leyton’s motion. Id. at 5. Leyton argues that he meets the criteria to intervene as a matter of right

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and that if he does not, the court should permit him to intervene. Id. at 6. The court DENIES the

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Citations are to the Electronic Case File (“ECF”) with pin cites to the electronicallygenerated page numbers at the top of the document.

ORDER (C 12-04936 LB)

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motion to intervene as a matter of right, GRANTS the motion to intervene permissively, and

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DENIES the motion to add the new all-natural claims.

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STATEMENT
I. PROCEDURAL HISTORY
On August 17, 2012, Miller filed suit in San Francisco County Superior Court against

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Ghirardelli. See Complaint, ECF No. 1 at 11. In the original complaint, Miller alleged that

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Ghirardelli falsely labeled five of its products as “white” or “white chocolate flavored” when they

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did not contain any white chocolate, and that Ghirardelli thus was liable for violating state consumer

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protection and tort laws. Id. Ghirardelli removed the matter to federal court on September 21, 2012,

Dismiss, ECF No. 7. The undersigned granted Ghirardelli’s motion on the ground that Miller lacked

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For the Northern District of California

and it moved to dismiss several weeks later. See Notice of Removal, ECF No. 1 at 1; Motion to

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standing to sue regarding the four products that he never purchased, and it denied the motion in all

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other respects. See Order, ECF No. 20.

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On January 11, 2013, Miller filed a First Amended Complaint (“FAC”) that alleged similar

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claims, including that Ghirardelli failed to comply with state and federal labeling regulations and

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violated the “unlawful prong” of California’s unfair competition law by using the words “Ghirardelli

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Chocolate” on the logo of five products that did not contain chocolate or white chocolate. FAC,

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ECF No. 24. On April 5, 2013, following Ghirardelli’s motion to dismiss, the undersigned again

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held that Miller lacked standing for the products he did not purchase. See Order, ECF No. 37.

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Miller’s remaining claims are based on labeling violations related to the one product that he did

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purchase – Ghirardelli Chocolate Premium Baking Chips – Classic White (“white baking chips”).

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While the motion to dismiss was pending, the parties entered into a stipulated protective order.

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ECF No. 35. The protective order allows either party to designate material produced in the case as

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confidential or highly confidential (collectively defined as, “Protected Material”). See id. ¶¶ 2.2,

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2.3, 2.15. A “basic principle” of the protective order is that the parties may use Protected Material

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“in connection with this case only for prosecuting, defending, or attempting to settle this litigation.”

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Id. ¶ 7.1. The scope of protection includes:

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(1) any information copied or extracted from Protected Material; (2) all copies, excerpts,

ORDER (C 12-04936 LB)

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summaries, or compilations of Protected Material; and (3) any testimony, conversations, or
presentations by Parties or their Counsel that might reveal Protected Material.

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Id. ¶ 3.
However, the protections conferred by this Stipulation and Order do not cover the following
information: (a) any information that is in the public domain at the time of disclosure to a
Receiving Party or becomes part of the public domain after its disclosure to a Receiving
Party as a result of publication not involving a violation of this Order, including becoming
part of the public record through trial or otherwise; and (b) any information known to the
Receiving Party prior to the disclosure or obtained by the Receiving Party after the disclosure
from a source who obtained the information lawfully and under no obligation of
confidentiality to the Designating Party. Any use of Protected Material at trial shall be
governed by a separate agreement or order.
Id. ¶ 3.

ECF No. 38; 5/3/2013 Joint CMC Statement, ECF No. 39 at 10-12. In their May 3, 2013 Joint Case

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Ghirardelli answered the FAC on April 19, 2013, and the parties began discovery. See Answer,

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Management Conference Statement, Miller stated that he did “not anticipate further amendments to

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the pleading. Plaintiff may, however, seek leave to add or intervene additional plaintiffs.” ECF No.

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39 at 10. At the initial case management conference on May 10, 2013, the court set a pretrial

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schedule based on the dates the parties requested. Compare id. at 2, with CMC Order, ECF No. 42

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at 2. The pretrial schedule set June 10, 2013 as the last day to seek leave to add new parties or

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amend the pleadings and December 11, 2013 as the last day for Miller to file his class certification

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motion.

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Ghirardelli deposed Miller on May 29, 2013. See Motion at 9 n.3. At end of the deposition,

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with more than seven hours on the record, Ghirardelli’s counsel asked Miller, “Do you remember

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being influenced in any way in your purchase decision by the words All Natural ingredients on June

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24th, 2012?” See Safier Decl. Ex. B. Miller answered, “No, I don’t recall.” Id.2

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Before Leyton’s purchase, and without knowing of it, Miller’s counsel had been investigating

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whether the products were “natural.” See Safier Decl. ¶ 3. He engaged in discovery-related meet-

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and-confers directed at the ingredients and their sources, but Ghirardelli said that there was no need

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Miller later corrected the transcript to change his answer to “Yes, but I don’t specifically
recall.” See Safier Decl. Ex. C. Miller’s counsel currently does not propose Miller as a
representative on the “all natural” claims. Motion at 9.

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to provide documents because all ingredients are listed on the packages. Safier Decl., ¶ 4.
On June 21, 2013, 11 days after the cut-off date to amend the pleadings, Ghirardelli produced a

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document with an email chain that showed changes in packaging in response to this lawsuit,

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including removing references to “chocolate”3 and an email from Ghirardelli’s CEO asking staff to

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remove the words “All Natural.” Motion at 9; see Safier Decl. ¶ 6, Ex. D. On July 12, 2013,

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Ghirardelli produced a copy of a May 14, 2013 e-mail that Leyton sent Ghirardelli, saying that he

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was dissatisfied with the white baking chips he purchased. See Safier Decl. ¶ 9, Ex. A.

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On July 20, 2013, less than a month after the cut-off to amend the pleadings, Miller’s counsel

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sent Ghirardelli another CLRA letter on behalf of Miller and all similarly-situated persons, alleging

2013, Ghirardelli responded to the CLRA letter and said that it was willing to discuss the new claims

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that the “all natural” claim was improper. Motion at 9; Safier Decl. ¶ 8 & Ex. E.4 On August 9,

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in the context of mediation. See Safier Decl. ¶ 10, Ex. F.

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On August 12, 2013, Miller’s counsel contacted Leyton “to investigate his experience and

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inform him of the status of the litigation.” Safier Decl. ¶ 11. Leyton expressed a desire to join the

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litigation. Id. Because of the upcoming September mediation and Ghirardelli’s August 9 letter,

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Plaintiff’s counsel decided to delay filing the motion to intervene until after the mediation. Id. ¶ 11.

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In August, Miller’s counsel deposed two Ghirardelli witnesses: Vicki Wong (who was the

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30(b)(6) witness designee on the topic of “Defendant’s manufacturing of Classic White baking

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chips, including the ingredients and recipes used”) and Steve Genzoli (Ms. Wong’s supervisor and

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the vice-president of quality assurance and research development). See Safier Decl. ¶¶ 12-14, Exs.

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G, I. Their testimony, which Ghirardelli designated as “highly confidential - attorneys’ eyes only”

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provided additional detail about the source and provenance of the products’ ingredients that are

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relevant to Leyton’s proposed “all natural” claims. See Safier Decl. ¶¶ 12-15, Ex. G ¶¶ 276-77;

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Ghirardelli’s counsel acknowledged this during one of the hearings in this case.

In their motion, Miller and Leyton’s counsel state that when they sent the CLRA letter,
“Plaintiff still did not have complete information about the ingredients or their sources,” and “Miller
is likely not an appropriate representative for an ‘all natural’ claim,” in part because of his
deposition testimony. Motion at 9.

ORDER (C 12-04936 LB)

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Gutride Decl. Ex. I at 20.

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On September 4, 2013, Miller’s counsel shared its mediation statement with Ghirardelli. Safier

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Decl. ¶ 16. In it, counsel told Ghirardelli “that one or more class members were prepared to join as

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named plaintiffs regarding both the existing allegations and additional ‘all natural’ allegations.” Id.

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At the September 11 mediation, the parties were unable to resolve either Mr. Miller’s claim or

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the proposed “all natural” claims. Id. ¶ 17. Leyton formally retained Miller’s counsel after the

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mediation. Safier Decl. ¶ 18.

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On October 1, 2013, Miller and Leyton’s counsel gave Ghirardelli a copy of his Proposed
Consolidated Amended Complaint (“PCAC”) and asked them to stipulate to add Leyton and his all

intervene. Safier Decl. ¶ 19; see PCAC, ECF No. 59-2. Ghirardelli would not agree. Safier Decl.

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natural claims into the lawsuit, either by filing an amended complaint or permitting Leyton to

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¶ 19. Then on October 9, Miller and Leyton’s counsel sent Ghirardelli another CLRA letter

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regarding Leyton’s claims. Id. ¶ 20.

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II. THE NEW ALLEGATIONS IN LEYTON’S PROPOSED COMPLAINT5

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In the PCAC, Leyton and Miller allege that Ghirardelli markets and sells numerous products as

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“All Natural,” “100% All Natural,” and containing “All Natural Ingredients” even though they are

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not natural. See PCAC ¶¶ 14, 42-48. The PCAC specifically alleges the ingredients that Leyton

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contends are unnatural and the products that contain those ingredients. Id.

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Steve Leyton is a resident of San Diego, California. See id. ¶ 1. During the proposed class

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period, including in approximately April 2013, Leyton purchased several different Ghirardelli

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products. Id. ¶ 59. Ghirardelli advertised and marketed all of these products as “All Natural.” Id.

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Leyton reviewed the front packaging of these products before he purchased them, including the

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words “All Natural.” Id. He did not see anything stating that the products were not natural, and

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The following factual allegations are taken from Leyton’s Proposed Consolidated
Amended Complaint, ECF No. 59-2. The “white chocolate” allegations in the PCAC are largely
identical to those in the operative complaint. The court’s previous orders detailed the “white
chocolate” allegations, so this order restates allegations relevant only to Leyton’s new “all natural”
claims. See, e.g., ECF No. 37.

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relied on Ghirardelli’s omissions and the “all natural” claim on the packaging. Id.
In May 2013, he visited a grocery store in San Diego and perused the baking chips and chocolate

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products. Id. ¶ 56. He read the front of a package of the white baking chips, including the words

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“All Natural.” Id. ¶ 56. He believed the white baking chips contained natural ingredients and would

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be white chocolate and decided to purchase them. Id. He purchased the white baking chips for

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approximately $4.29. Id.

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On May 19, 2013, Leyton tried to melt some of the white baking chips, but they did not melt

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properly and gave off a bad odor. Id. ¶ 57. He tried again with the same results. Then he read the

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package and discovered that the white baking chips were “not a ‘premium,’ ‘natural,’ or ‘chocolate’

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Leyton complained to Ghirardelli the next day. Id. ¶ 58. He “informed Ghirardelli that he had

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product at all.” Id.

been misle[]d by the company’s branding, and did not believe defendant should market the chips as

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white chocolate or as natural.” Id. Ghirardelli responded by mailing Leyton a coupon, which he

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threw away. Id. ¶ 58. If Ghirardelli had not misrepresented (by omission and commission) the true

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nature of the white chocolate chips and the other products that Leyton purchased, he would not have

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purchased them or would have paid less for them. Id. ¶ 61.

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In the PCAC, Leyton seeks to join Miller as a class representative for a “White Chips Class”

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comprised of “all persons who, between August 17, 2008 and the present, purchased in the United

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States, Ghirardelli® Chocolate Premium Baking Chips – Classic White.” Id. ¶ 62. In addition,

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Leyton (but not Miller) seeks to represent an “All Natural Class,” defined as “[a]ll persons who,

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between August 17, 2008 and the present, purchased, in the United States, any Ghirardelli products

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that bore the words ‘All Natural’ on the primary display panel.” Id.

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Leyton seeks to bring the same claims on behalf of the proposed “all natural class” as Miller is

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already bringing on behalf of the “white chips class.” See id. ¶¶ 71-117. These are claims for: (1)

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violation of the Consumers Legal Remedies Act, California Civil Code § 1750, et seq.; (2) violation

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of the False Advertising Law, California Business and Professions Code § 17500, et seq.; (3) fraud,

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deceit, and/or misrepresentation; and (4) “unfair, unlawful, and deceptive” trade practices in

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violation of California Business and Professions Code § 17200, et seq. Id.

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ANALYSIS

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Leyton, who bought a bag of the white chips and thus is a class member, moves to intervene as

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an additional class representative to “address the adequacy and typicality challenges that Ghirardelli

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has raised with respect to Mr. Miller.” Motion at 2. These include Ghirardelli’s arguments that

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California law does not apply to Miller because he purchased the white baking chips in Florida. See

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Motion at 6. Ghirardelli has argued that Miller is atypical because (1) he purchased the chips to

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blend into his coffee and not for baking, (2) he did not complain directly to Ghirardelli and instead

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hired lawyers to do so, and (3) his focus was on cocoa butter and not other ingredients. Id. Leyton,

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by contrast, bought the chips for baking and other products (all in reliance on the claim that they

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The issue is whether under these circumstances, Leyton may intervene under Rule 24 (either as a

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were all natural), is a California resident, and complained directly to Ghirardelli. Id.

matter of right or permissively) and also amend the complaint to add the “all natural” claims.6

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I. INTERVENTION

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The first issue is whether Leyton may intervene, either as of right or permissively, with regard to

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the white-chip claims. (The court considers the appropriateness of adding the “all natural” claims in

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a stand-alone section.)

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Courts in this district also apply Federal Rule of Civil Procedure 16(b) when intervention
comes after the deadline to add new parties or claims and requires the court to modify its scheduling
order. See Harris v. Vector Marketing Corp., No. C-08-5198 EMC, 2010 WL 3743532, at *1-2
(N.D. Cal. Sept. 17, 2010) (applying Rule 16(b) to motion to intervene in putative class action and
denying motion, in part, for failure to demonstrate good cause); Briggs v. United States, No. C 0705760 WHA, 2009 WL 1560005 (N.D. Cal. June 1, 2009) (same). “Rule 16(b)’s ‘good cause’
standard primarily considers the diligence of the party seeking the amendment.” Johnson v.
Mammoth Recreations, Inc., 975 F.2d 604, 610 (9th Cir. 1992); see also Noyes v. Kelly Servs., 488
F.3d 1163, 1174 n.6 (9th Cir. 2007) (same). Unlike timeliness under Rule 24(a) (discussed below),
the focus of the good cause inquiry “is upon the moving party’s reasons for seeking modification”
and prejudice to the opposing party is less important. See Johnson, 975 F.2d at 609. As discussed
below in the section on timeliness, the court’s view is that the delay is not significant. It was close
to the cut-off time for aiding parties and claims, discovery was modest (limited to documents and
two Ghirardelli witnesses to keep costs down before mediation), and the parties agreed to include
Leyton’s claims – including the all natural claims – in the mediation. And given discovery issues,
the schedule (including the class certification deadline) will need to be moved anyway, regardless of
Leyton’s participation in the litigation. The court finds good cause.

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A. Intervention As of Right

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Under Federal Rule of Civil Procedure 24(a), a non-party has the right to intervene in any action

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if either a federal statute gives the non-party an unconditional right to intervene, Rule 24(a)(1), or

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the non-party:

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claims an interest relating to the property or transaction that is the subject of the action, and
is so situated that disposing of the action may as a practical matter impair or impede the
movant’s ability to protect its interest, unless existing parties adequately represent that
interest.

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Fed. R. Civ. P. 24(a)(2).
In Wilderness Society v. United States Forest Service, the Ninth Circuit provided a four-part test

applicant must claim a “significantly protectable” interest relating to the property or transaction

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for analyzing motions to intervene under Rule 24(a)(2): (1) The motion must be timely; (2) the

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which is the subject of the action; (3) the applicant must be so situated that the disposition of the

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action may as a practical matter impair or impeded its ability to protect that interest; and (4) the

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applicant’s interest must be inadequately represented by the parties to the action. 630 F.3d 1173,

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1177 (9th Cir. 2011) (en banc) (citing Sierra Club v. EPA, 995 F.2d 1478, 1484 (9th Cir. 1993)).

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“Failure to satisfy any one of the requirements is fatal to the application, and [the court] need not

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reach the remaining elements if one of the elements is not satisfied.” Perry v. Proposition 8 Official

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Proponents, 587 F.3d 947, 950 (9th Cir. 2009). The Ninth Circuit directs district courts to follow

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“practical and equitable considerations” and to construe the Rule “broadly in favor of proposed

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intervenors.” United States v. City of Los Angeles, 288 F.3d 391, 397 (9th Cir. 2002) (internal

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quotation marks omitted); see also Sw. Ctr. for Biological Diversity v. Berg, 268 F.3d 810, 818 (9th

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Cir. 2001). A district court must “take all well-pleaded, nonconclusory allegations in the motion . . .

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as true absent sham, frivolity or other objections.” Berg, 268 F.3d at 820.

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Ghirardelli opposes the motion to intervene on two grounds: (1) Leyton’s motion is not timely,
and (2) Miller adequately represents Leyton’s interests.
1. Whether Leyton’s Motion to Intervene is Timely

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Leyton may intervene as or right only if his motion is timely. “Timeliness is a ‘threshold

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requirement’ for intervention as of right.” United States v. California, No. 11-57098, 2013 WL

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4367595, at *1 (9th Cir. Aug. 16, 2013) (quoting League of United Latin Am. Citizens v. Wilson, 131

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F.3d 1297, 1302 (9th Cir. 1997) (“LULAC”)). If a motion to intervene is untimely, the court need

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not consider other Rule 24(a) elements. LULAC, 131 F.3d at 1302. “Timeliness is a flexible

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concept; its determination is left to the district court’s discretion.” U.S. v. Alisal Water Corp., 370

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F.3d 915, 921 (9th Cir. 2004) (citing Dilks v. Aloha Airlines, 642 F.2d 1155, 1156 (9th Cir. 1981)).

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Still, the court must consider whether a motion to intervene is timely based on all relevant

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circumstances, not just the length of time that the case has been pending. See United States v. State

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of Oregon, 745 F.2d 550, 552 (9th Cir. 1984) (“Mere lapse of time alone is not determinative.”).

consider the following three factors: “1) the stage of the proceeding at which an applicant seeks to

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intervene; 2) the prejudice to other parties; and 3) the reason for and length of the delay.” California

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To determine whether an intervention motion under Rule 24(a)(2) is timely, the court must

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Dept. of Toxic Substances Control et al. v. Commercial Realty Projects et al., 309 F.3d 1113, 1119

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(9th Cir. 2002). In considering whether the stage of the proceedings supports intervention, courts

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consider the party’s interest in a specific phase of a proceeding. Alisal, 370 F.3d at 921. “Although

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delay can strongly weigh against intervention, the mere lapse of time, without more, is not

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necessarily a bar to intervention.” U.S. v. Oregon, 745 F.2d at 552. Prejudice is the most important

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consideration in deciding whether a motion to intervene is timely. Id.

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a. Stage of the Proceeding; Reason for and Length of the Delay
Ghirardelli argues that counsel was not diligent7 or timely by waiting until this stage in the

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The parties dispute whether the diligence inquiry is limited to a party’s diligence or may
consider the diligence of counsel. See Opp’n at 14-15; Reply at 4. In class actions where the same
counsel represent the original class representatives and the proposed intervenors, courts in this
district have considered the attorney’s diligence, and the court’s view is that result is appropriate
here given the nature of the surviving claims, the context of the litigation, and Ghirardelli’s ongoing
dialogue with Miller’s counsel about Miller’s appropriateness as a class representative. See Harris,
2010 WL 3743532, at *3 (“the diligence of counsel for the proposed intervenors, even before the
proposed intervenors learned of the lawsuit, should be taken into consideration because counsel for
the proposed intervenors has represented [the named plaintiff] from the inception of this case”);
Briggs, 2009 WL 1560005, at *2 (denying motion to intervene in class action to revive dismissed
claims based, in part, on lack of diligence by named plaintiff’s counsel). Leyton nonetheless argues
that the controlling test in the Ninth Circuit does not consider counsel’s diligence and instead

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litigation to add a new class representative designed to counter an argument that Ghirardelli raised

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by September 2012 and repeated “early and often”: that Miller – who lives in Florida and bought

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the chips there – cannot serve as a class representative for claims brought under California consumer

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protection laws. Opp’n at 16 (issue was raised by September 2012 and repeated in discovery; the

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answer pleads the choice of law and typicality issues; Miller said in the May 3, 2013 joint case

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management statement that he did not anticipate further amendments to the pleadings “at this point”

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but might seek leave to add additional plaintiffs); 5 & n.2 (discussing effect of Mazza v. American

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Honda Co., Inc., 666 F.3d 581 (9th Cir. 2012)).8 Plaintiff had their chance to add a California

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plaintiff before, and they did not do, and thus their motion is untimely. Opp’n at 14-16.

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Leyton responds that his counsel acted diligently in moving to intervene despite being hampered
by Ghirardelli’s discovery tactics. Motion at 13-15; Reply at 5-6. They sought to “identify new

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potential plaintiffs even before the pleadings were settled.” Reply at 5-6. They sought “customer

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complaints and a list of purchasers through the Ghirardelli website.” Id. at 6. Counsel learned of

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Leyton’s complaint right after the cut-off to amend the pleadings. Id. As to Leyton’s diligence, he

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purchased the white baking chips in May 2013 (one month before the deadline to add parties in this

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matter) and promptly complained to Ghirardelli. He filed a motion to intervene shortly after

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mediation in this case failed.

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considers only whether “the person attempting to intervene should have been aware that his
‘interest[s] would no longer be protected adequately by the parties.’” Reply at 4-5 (emphasis
omitted) (citing Officers for Justice v. Civil Serv. Comm’n of City & Cnty. of San Francisco, 934
F.2d 1092, 1095 (9th Cir. 1991)). In Officers for Justice, the Ninth Circuit reversed the district
court’s denial of a motion to intervene where the district court considered the wrong time period in
finding a motion to intervene untimely, but counsel’s diligence was not an issue. The case thus is
not dispositive here.
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Ghirardelli argues that Mazza v. Am. Honda Motor Co., 666 F.3d 581 (9th Cir. 2012),
holds that a nationwide class cannot be certified under California consumer protection laws,
including Cal. Bus. & Prof. Code § 17200 and the Consumer Legal Remedies Act. Opp’n at 5 n 2.
Miller cites post-Mazza cases and argues that California law can apply to a nationwide class. Reply
at 7 (citing In re POM Wonderful LLC Mktg. & Sales Practices Litig., No. ML 10-02199 DDP
(Rzx), 2012 WL 4490860 (C.D. Cal. Sept. 28, 2012); Bruno v. Eckhart Corp., 280 F.R.D. 540 (C.D.
Cal. 2012) (certifying nationwide class of dietary supplement purchasers)). As the court said
previously, this is an issue for class certification.

ORDER (C 12-04936 LB)

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The court previously found that these facts established good cause under Rule 16(b). See supra

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at n.6. At this point, discovery has been fairly modest. The deadlines will be continued anyway. At

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this stage of the proceedings, these facts do not establish timeliness, but they do not bar intervention,

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either.

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b. Prejudice to Ghirardelli

it faced only a Florida class and now it could face a California class. Opp’n at 18.9 In support of its

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argument, Ghirardelli cites In re Motor Fuel Temperature Sales Practices Litig., No. 07-MD-1840-

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KHV, 2009 WL 1208073 (D. Kan. May 1, 2009). In re Motor Fuel was an MDL case challenging

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the practice of selling motor fuel at a specified price per gallon and failing to disclose or adjust for

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temperature expansion. The plaintiffs asked to amend the complaint to add 23 new parties who

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Ghirardelli also argues prejudice from adding Leyton to the white chips case because previously

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previously were not named in any case in the MDL. Id. at *3. In denying permissive intervention,

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the district court noted that six months previously, it had issued an order addressing the effect that

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adding new parties would have on the complex litigation, and had determined that the new parties

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would assert liability for fuel sales not at issue and substantially expand the number of jurisdictions

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at issue. Id.

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Expanding the liability for fuel sales in an MDL litigation is different than adding a Plaintiff with

18

the same white-chip claim and the same nationwide class. As discussed above, the court cannot see

19

any real impact on the case deadlines by Leyton’s intervention on the white-chip claim because the

20

deadlines are being extended anyway. The additional discovery attributable to Leyton on the chip

21

claims is modest. As discussed above, the parties disagree about the impact of Mazza, and that is an

22

issue for class certification. The court resolves doubts in favor of permitting intervention. See

23

United States v. City of Los Angeles, 288 F.3d at 397.

24
25
26

2. Adequacy of Miller’s Representation of Leyton’s Interest
Ghirardelli argues that Leyton has not shown that Miller does not adequately represent Leyton’s
interests in the litigation. Opp’n at 11-13.

27
28

9

The prejudice from adding the “all natural” claims is discussed below.

ORDER (C 12-04936 LB)

11

1

An intervenor as a matter of right must establish that he has “significant protectable interest” in

2

the action, meaning, “the interest is protectable under some law and that there is a relationship

3

between the legally protected interest and the claims at issue.” Citizens for Balanced Use v.

4

Montana Wilderness Ass’n, 647 F.3d 893, 897 (9th Cir. 2011) (internal citations omitted). Putative

5

intervenors also must show that “disposition of [the] action may, as a practical matter, impair or

6

impede [the intervenors’] ability to protect their interest.” Id. at 898 (citing Fed. R. Civ. P. 24

7

advisory committee’s note).

8
9

Leyton establishes his interest. See In re Cmty. Bank of N. Virginia, 418 F.3d 277, 314 (3rd Cir.
2005) (“In the class action context, the second and third prongs of the Rule 24(a)(2) inquiry are

and instead argues that Leyton has not established that his interest is not represented adequately by

12
For the Northern District of California

satisfied by the very nature of Rule 23 representative litigation.”). Ghirardelli does not dispute this

11
UNITED STATES DISTRICT COURT

10

Miller. Opp’n at 10.

13

In determining adequacy, the court examines the following three factors:

14

(1) whether the interest of a present party is such that it will undoubtedly make all of a
proposed intervenor’s arguments; (2) whether the present party is capable and willing to
make such arguments; and (3) whether a proposed intervenor would offer any necessary
elements to the proceeding that other parties would neglect.

15
16
17

Arakaki v. Cayetano, 324 F.3d 1078, 1086 (9th Cir. 2003). Generally, the applicant’s “burden of

18

showing inadequacy of representation is ‘minimal’ and satisfied if the applicant can demonstrate that

19

representation of its interests ‘may be’ inadequate.” Id. That being said, “[i]f an applicant for

20

intervention and an existing party share the same ultimate objective, a presumption of adequacy of

21

representation arises.” Id. (citing LULAC, 131 F.3d at 1305). “To rebut the presumption, an

22

applicant must make a compelling showing of inadequacy of representation.” Id. (quotation

23

omitted). The presumption may be overcome by evidence of collusion, adversity of interest,

24

nonfeasance, incompetence, or lack of financial resources. See Farmland Irr. Co. v. Dopplmaier,

25

220 F.2d 248, 248-49 (9th Cir. 1955); see also Moosehead San. Dist. v. S.G. Phillips Corp., 610

26

F.2d 49, 54 (1st Cir. 1979) (same), cited with approval in LULA, 131 F.3d at 1305 n.4; Clark v.

27

Putnam County. 168 F.3d 458, 461 (11th Cir. 1999) (presumption is weak and requires the proposed

28

intervenor to come forward with only some evidence); cf. Arakaki, 324 F.2d at 1086 (very

ORDER (C 12-04936 LB)

12

1

compelling showing required when government entity shares interest of intervenor).

2

Here, Leyton concedes that he and Miller share the same objective: their “claims with respect to

3

the lack of cocoa butter in the white chips are identical,” they seek to represent the same nationwide

4

class for white-chip consumers, and they seek identical remedies. See Motion at 9. The reason that

5

Miller is potentially inadequate is not the ordinary collusion or adverse interest. Instead, he seeks to

6

intervene to counter Ghirardelli’s challenges to Miller as a class representative (including Miller’s

7

purchase of the chips in Florida, his use of them for his coffee instead of baking, his focus on cocoa

8

butter and not other ingredients, and his use of lawyers to complain instead of complaining directly).

9

Id. at 2. Leyton, a California resident, addresses all of these deficiencies in a case that involves

10

Ghirardelli responds that these justifications do not address adequacy (whether Miller is

12
For the Northern District of California

UNITED STATES DISTRICT COURT

11

California’s consumer protection laws. See id., Opp’n at 11 n.2.

motivated to pursue the case). Instead, they are a means to counter Ghirardelli’s arguments about

13

Miller’s typicality. Opp’n at 12. In other words, Leyton’s desire to intervene is about whether

14

Miller has the best personal fact pattern to recover on the class’s behalf (or whether anyone could

15

represent a nationwide class). Id. That, Ghirardelli concludes, is not a basis for intervention as a

16

matter of right. Id.

17

Leyton’s best argument is that as a California resident, his interests are not protected if the court

18

cannot certify a national class for a violation of California’s consumer rights laws and instead can

19

certify only a California subclass that Miller cannot represent because he lives in Florida.10 This

20

does not support intervention as a matter of right before class certification. As Ghirardelli argues,

21

Leyton’s interests are protected if a class is certified, and he will be able to file an independent

22

action of the case is not certified. Ghirardelli points to cases allowing replacement of the named

23

plaintiff after class certification if the plaintiff can no longer represent the certified class. Opp’n at

24

12 n. 5 (citing cases where the named plaintiff’s claim becomes moot, the named plaintiff dies, and

25

the entity plaintiff went bankrupt); see also Palmer v. Stassinos, 236 F.R.D. 460, 464-66 (N.D. Cal.

26
27
28

10

At least on this record, the other issues (such as how Miller consumed the chips) are less
consequential and more obviously about typicality.

ORDER (C 12-04936 LB)

13

1

2006) (newly-named plaintiffs in Fair Debt Collection Practices Act case were the named plaintiffs

2

in a separate action against defendants); Morgan v. Laborers Pension Trust Fund, 81 F.R.D. 669,

3

673-75 (N.D. Cal. 1979). And again, right now, Leyton and Miller would make the same arguments

4

about the claim. Cf. Sw. Ctr. for Biological Diversity, 268 F.3d at 820 (intervenor defendants in

5

environmental case against state and federal government defendants had different interests and

6

would make different arguments). The court cannot see intervention as a matter of right when

7

Leyton’s and Miller’s interests and arguments in the case are identical. If Miller can no longer

8

represent the class, the outcome might be different.

9
10

B. Permissive Intervention
Under Federal Rule of Civil Procedure 24(b), “[o]n timely motion, the court may permit anyone
to intervene who . . . has a claim or defense that shares with the main action a common question of

12
For the Northern District of California

UNITED STATES DISTRICT COURT

11

law or fact.” Fed. R. Civ. P. 24(b). When making this discretionary determination, a district court

13

“must consider whether the intervention will unduly delay or prejudice the adjudication of the

14

original parties’ rights.” Fed. R. Civ. P. 24(b)(3). In determining whether a motion for permissive

15

intervention is timely, the court looks to the same factors considered in determining intervention as

16

or right. See LULAC, 131 F.3d at 1308. “In the context of permissive intervention, however,

17

[courts] analyze the timeliness element more strictly than . . . with intervention as of right.” Id.

18

“The district court’s discretion under Rule 24(b), to grant or deny an application for permissive

19

intervention includes discretion to limit intervention to particular issues.” Dep’t of Fair Employment

20

& Hous. v. Lucent Technologies, Inc., 642 F.3d 728, 741 (9th Cir. 2011) (internal alterations

21

omitted) (quoting Van Hoomissen v. Xerox Corp., 497 F.2d 180, 181 (9th Cir. 1974)).

22

At least as to the current claim, and for the reasons stated in the previous section, the timing does

23

not unduly delay or prejudice the adjudication of Ghirardelli’s rights. Ghirardelli’s other arguments

24

do not change the outcome either.11

25

First, Ghirardelli says that Miller could have timely amended his complaint to add a co-plaintiff.

26
27
28

11

Some of these arguments were raised in the context of intervention as a matter of right.
The court considers them here because it did not need to in the previous section.

ORDER (C 12-04936 LB)

14

1

Opp’n at 13. As the court said in the previous section, it is not persuaded by Ghirardelli’s arguments

2

about timeliness, even in the context of permissive intervention. Also, Miller joins Leyton’s motion.

3

Second, Ghirardelli argues that this is a back-door attempt to begin the action anew. Id. at 12.

4

In support of this conclusion, it cites Lidie v. State of California, 478 F.3d 552, 555 (9th Cir. 1973).

5

In that case, plaintiffs challenged the state government’s processing of food stamp applications, but

6

the named plaintiffs either were not eligible for food stamps at all or had been dropped from the food

7

stamp rolls for failure to use food stamps and were complaining of delay in their recertification. The

8

Ninth Circuit denied a motion by new plaintiffs to intervene on appeal, in part because the new

9

parties “could not enhance the common cause, and would add to the idiosyncratic problems
presented by the original plaintiffs”). Lidie is about a case with plaintiffs with no claims at all in the

11

context of a putative class with fact issues peculiar to individual plaintiffs. See id.

12
For the Northern District of California

UNITED STATES DISTRICT COURT

10

Velazquez v. GMAC Mortgage Corporation, which was a TILA and state-law case involving the

13

sales and servicing of mortgages, similarly is a case where the named plaintiffs apparently had no

14

substantive claims. 2009 WL 295838, at *3 (C.D. Cal. Sept. 10, 2009). They elected to withdraw,

15

and the court denied a motion to amend to substitute similarly-situated plaintiffs, noting that

16

Defendants would have to redo all the discovery and explore the same issues. Id. (“The Ninth

17

Circuit has affirmed denial of leave to amend where, as here, ‘[t]he proposed amendment was not

18

based upon any facts which were not known or readily available’ and prior extensive discovery was

19

‘not directed’ to the factual issues raised by the proposed amendment.”) (quoting Komie v. Buehler

20

Corp., 449 F.2d 644, 648 (9th Cir. 1971).

21

Ghirardelli also quotes Ho v. Ernst & Young LLP, a wage-and-hour case: “[i]ntervention

22

shouldn’t be allowed just to give class action lawyers multiple bites at the certification apple when

23

they have chosen, as should have been obvious from the start, patently inappropriate candidates to

24

be the class representatives.” No. C-05-04867 RMW, 2012 WL 95342, at *3 (N.D. Cal. Jan. 11,

25

2012) (quotation omitted). Ho is distinguishable because it of the timing issues presented. Ho was

26

first filed in 2005. In 2007, the court permitted amendment to add three new representative

27

plaintiffs. See id. at *1. In 2008, the court granted summary judgment against two of the plaintiffs’

28

claims, but was unable to determine whether defendant’s arguments (which implicated typicality)

ORDER (C 12-04936 LB)

15

1

defeated the remaining plaintiffs’ claims. Id. In 2011, the court certified a narrower class than the

2

plaintiff wanted because she was not typical for the reasons the defendant asserted years earlier. Id.

3

Then, in 2012, the plaintiff moved to add a new representative plaintiff to overcome the typicality

4

problems. The court found that Plaintiffs were reasonable in putting forth the previous

5

representative but deficient in exploring whether other plaintiffs should be added to the case given

6

that they “should have realized that [the motion for class certification] was likely their only

7

opportunity to ensure that all of their positions were put forward.” Id. at *3. As this procedural

8

history shows, Ho involves a complicated timeline that shows much more evidence of undue delay

9

and prejudice than the facts at issue in this case.

10

In sum, as discussed in the previous sections, and in the context of only the white-chip claim, the
court’s view is that adding a new plaintiff is not inappropriate at this stage. The court grants

12
For the Northern District of California

UNITED STATES DISTRICT COURT

11

permissive intervention on the white-chip claim.

13

II. AMENDMENT TO ADD THE ALL-NATURAL CLAIMS

14
15

What really is at stake is Leyton’s request to add new claims that Ghirardelli falsely labeled
many additional products as “all natural.”

16

Because the court found good cause, the court examines the appropriateness of amendment

17

under Rule 15. See Johnson, 975 F.2d at 608. A court considers five factors to determine whether

18

to grant leave to amend: (1) bad faith; (2) undue delay; (3) prejudice to the opposing party; (4)

19

futility of amendment; and (5) whether the plaintiff previously amended his complaint. See Nunes v.

20

Ashcroft, 375 F.3d 805, 808 (9th Cir. 2004). Delay alone is insufficient to justify denial of leave to

21

amend. Jones v. Bates, 127 F.3d 839, 847 n.8 (9th Cir. 1997).

22

Of the factors, prejudice to the opposing party is the “touchstone of the inquiry under rule 15(a)”

23

and “carries the greatest weight.” See Eminence Capital, 316 F.3d at 1052. Absent prejudice or a

24

strong showing on other factors, a presumption exists under Rule 15(a) favoring granting leave to

25

amend. See id. The party opposing a motion to amend bears the burden of showing prejudice.

26

DCD Programs, Ltd. v. Leighton, 833 F.2d 183, 187 (9th Cir. 1987).

27
28

Ghirardelli argues that the new claims are an attempt to shoehorn new claims by a new plaintiff
into the older and much narrower white chips case. The court agrees. These are new claims

ORDER (C 12-04936 LB)

16

1

involving many new products sold in different grocery store departments, marketed by different

2

departments within Ghirardelli, and sold to different consumers. Opp’n at 21-23. Different legal

3

issues are involved, including whether the court should stay or dismiss the case on primary

4

jurisdiction grounds, and the effect of differing statutes of limitations on the proposed “white

5

chocolate” and “all natural” classes. The “all natural” claims are a larger and more complex case

6

that would require significantly more and different discovery before class certification. Id. at 21-24.

7

In short, Leyton’s new claims would be the primary focus of this litigation, and allowing them into

8

this suit would be akin to starting the litigation from the beginning.

9

Leyton nonetheless argues that the court should allow him to bring the new claims in this case

same action, and (2) the rule against claim-splitting and the doctrine of claim preclusion prevent him

12
For the Northern District of California

because (1) judicial economy favors trying the “all natural” and “white chocolate” claims in the

11
UNITED STATES DISTRICT COURT

10

from bringing the “all natural” claims in a separate lawsuit. Motion at 20-21.

13

The best argument about the first point is that – as Ghirardelli concedes – Miller could have

14

amended his complaint to bring all-natural claims (and for the reasons stated above, the court likely

15

would have granted leave to amend). That being said, Leyton is not Miller and instead is a new

16

plaintiff, and this point does not alter the outcome.

17

Leyton also has a fair second point that if he intervenes in the white chip case, he has to bring the

18

“all natural” and “white chocolate” claims in the same action. Motion at 20-21. Ghirardelli

19

responds that claim-splitting does not apply where the court orders the alleged split. Opp’n at 27-29.

20

“The doctrine of claim splitting bars a party from subsequent litigation when the same

21

controversy has already been sued on.” Pasternak v. Trans Union LLC, No. C 08-02972 CW, 2008

22

WL 4544370 (N.D. Cal. Sept. 30, 2008). The “main purpose behind the rule preventing claim

23

splitting is ‘to protect the defendant from being harassed by repetitive actions based on the same

24

claim.’” Clements v. Airport Authority of Washoe County, 69 F.3d 321, 328 (9th Cir. 1995). To

25

determine if the doctrine of claim splitting bars a subsequent case, the Ninth Circuit uses the

26

transaction test applicable to determine claim preclusion. Adams v. California Dep’t of

27

HealthServs., 487 F.3d 684, 688 (9th Cir. 2007). “Whether two events are part of the same

28

transaction or series depends on whether they are related to the same set of facts and whether they

ORDER (C 12-04936 LB)

17

1

could conveniently be tried together.” Id. (quoting Western Sys., Inc. v. Ulloa, 958 F.2d 864, 871

2

(9th Cir. 1992)). In applying the transaction test, courts examine four criteria:

3
4

(1) whether rights or interests established in the prior judgment would be destroyed or
impaired by prosecution of the second action; (2) whether substantially the same evidence is
presented in the two actions; (3) whether the two suits involve infringement of the same
right; and (4) whether the two suits arise out of the same transactional nucleus of facts.

5
6

Id. (quoting Costantini v. Trans World Airlines, 681 F.2d 1199, 1201–02 (9th Cir. 1982)). “The last

7

of these criteria is the most important.” Id.

8

Here, the parties agree that barring an exception, if Leyton does not assert his “all natural”

9

claims in this action, the claim splitting doctrine would bar him from bringing them in a separate

Leyton to file amended claims in this action and expressly reserve his rights to bring those claims

12
For the Northern District of California

suit. Opp’n at 27-29; Reply at 10-11 n.6. Ghirardelli argues that the court can refuse to permit

11
UNITED STATES DISTRICT COURT

10

later. Opp’n at 65-4; see Central States, SE & SW Areas Pension Fund v. Hunt Truck Lines, Inc.,

13

296 F.3d 624, 629 (7th Cir. 2002); King v. Provident Life and Acc. Ins. Co., 23 F.3d 926 (5th Cir.

14

1994). And as Leyton points out, the Ninth Circuit has held that the rule against claim splitting is

15

inapplicable “where a defendant acquiesces in the split.” Clements, 69 F.3d at 328; see Reply at 10-

16

11 n.6. Leyton asks that if the court denies leave to amend, it should “ensure that Ghirardelli will not

17

be able to successfully raise this affirmative defense in a subsequent lawsuit.” Reply at 11 n.6.

18

At the December 19, 2013 hearing in this matter, Ghirardelli’s counsel acknowledged on the

19

record that it acquiesces in the split and stipulated to not raising this affirmative defense in a future

20

lawsuit brought by Leyton or any one else who might file the lawsuit. The court also expressly

21

declines to allow Leyton to bring the all-natural claims and holds that his intervention does not

22

preclude him from bringing them in a separate lawsuit.

23
24
25

Given this outcome, the court denies leave to amend to bring in the all-natural claims.
III. VIOLATION OF THE PROTECTIVE ORDER
Ghirardelli also asserts that Miller’s attorney obtained discovery that he used to develop the all-

26

natural claims. According to Leyton’s attorney’s, Leyton has “never received information

27

designated confidential.” Reply at 11 (emphasis omitted). Given the court’s holdings in the

28

previous sections, it does not decide the issue in this case.

ORDER (C 12-04936 LB)

18

CONCLUSION

1
2

The court DENIES the motion to intervene as a matter of right, GRANTS the motion to

3

intervene permissively, and DENIES the motion to add the new all-natural claims. Leyton is not

4

precluded from bringing the all-natural claims in a later lawsuit. This disposes of ECF No. 59-1.

5

IT IS SO ORDERED.

6

Dated: December 20, 2013

7

_______________________________
LAUREL BEELER
United States Magistrate Judge

8
9
10

12
For the Northern District of California

UNITED STATES DISTRICT COURT

11

13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

ORDER (C 12-04936 LB)

19