Ang et al v. Whitewave Foods Company et al

Filing 38

Order by Hon. Samuel Conti granting 17 Motion to Dismiss.(sclc1, COURT STAFF) (Filed on 12/10/2013)

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1 2 3 4 5 IN THE UNITED STATES DISTRICT COURT 6 NORTHERN DISTRICT OF CALIFORNIA 7 8 10 Northern District of California United States District Court 9 ALEX ANG and KEVIN AVOY, individually and on behalf of all others similarly situated Plaintiffs, 11 12 13 14 15 v. WHITEWAVE FOODS COMPANY, DEAN FOODS COMPANY, WWF OPERATING COMPANY, and HORIZON ORGANIC DAIRY LLC, 16 Defendants. 17 ) Case No. 13-cv-1953 ) ) ORDER GRANTING MOTION TO ) DISMISS ) ) ) ) ) ) ) ) ) ) ) ) 18 19 I. INTRODUCTION Plaintiffs bring this putative class action in connection with 20 21 Defendants' alleged misbranding of various products containing 22 evaporated cane juice, including soymilk, almond milk, lowfat milk, 23 and yogurt products. 24 dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). 25 No. 17 ("MTD"). 26 ("Opp'n"), 28 ("Reply"), 1 and appropriate for determination without ECF No. 1 ("Compl."). Defendants now move to ECF The motion is fully briefed, ECF Nos. 31 27 28 1 Plaintiffs filed a "corrected" opposition brief after Defendants filed their reply. 1 oral argument per Civil Local Rule 7-1(b). For the reasons set 2 forth below, Defendants' motion is GRANTED and this action is 3 DISMISSED WITH PREJUDICE. 4 5 II. BACKGROUND Plaintiffs target two types of products sold by Defendants: 6 7 the "Silk Products" and the "Horizon Products" (collectively, the 8 "Products"). 9 beverages, including "Silk Vanilla Soymilk," "Silk Pure Almond All The Silk Products are a variety of plant-based United States District Court For the Northern District of California 10 Natural Original Almond Milk," and "Silk Pure Coconut Original 11 Coconut Milk" (hereinafter, the "Silk Products"). 12 95. 13 products, including Organic Whole Vanilla Yogurt, Tuberz yogurt 14 tubes (collectively, the "Horizon Yogurt Products"), and Horizon 15 Organic Vanilla Lowfat Milk. 16 list "All Natural Evaporated Cane Juice" or "Organic Evaporated 17 Cane Juice" (hereinafter, "evaporated cane juice" or "EJC") as an 18 ingredient. See Compl. ¶¶ 6, The Horizon Products are a variety of yogurt and milk The labels of all of the Products Id. Plaintiffs allege that the Products were misbranded in three 19 20 ways. First, Plaintiffs claim that, pursuant to US Food and Drug 21 Administration ("FDA") guidelines, Defendants should have used the 22 terms "sugar" or "dried cane syrup" instead of EJC on the Products' 23 labels (the "ECJ Claims"). 24 Defendants misbranded the Silk Products by using names like 25 "soymilk," "almond milk," and "coconut milk," since the Silk 26 Products are plant-based, and the FDA defines "milk" as a substance 27 coming from lactating cows (the "Milk Claims"). 28 allege that, pursuant to FDA guidelines, the Horizon Yogurt Second, Plaintiffs claim that 2 Third, Plaintiffs 1 Products are mislabeled as yogurt because they contain evaporated 2 cane juice, which is allegedly nothing more than sugar. Plaintiffs filed this suit on April 29, 2013, and assert 3 4 claims for (1)-(3) unfair, unlawful, and fraudulent practices in 5 violation of the California Unfair Competition Law ("UCL"), Cal. 6 Bus. & Prof. Code § 17200, et seq.; (4) & (5) misleading and 7 deceptive advertising and untrue advertising in violation of the 8 California False Advertising Law ("FAL"), Cal. Bus. & Prof. Code 9 17500, et seq.; (6) violation of the California Consumers Legal United States District Court For the Northern District of California 10 Remedies Act ("CLRA"), Cal. Civ. Code § 1750, et seq.; and (7) 11 restitution based on unjust enrichment/quasi-contract. 12 bring this action on behalf of themselves and, pursuant to Rules 13 23(b)(2) and 23(b)(3), all persons in the United States who 14 purchased the Products. Plaintiffs 15 On April 8, 2013, before Plaintiffs filed the instant action, 16 another food-labeling class action was filed against Defendants in 17 U.S. District Court for the Southern District of Florida. 2 18 18 ("Defs.' RJN") Ex. 14 ("Singer Compl."). 19 Florida action, Barbara Singer ("Singer"), targeted many of the 20 same products as Plaintiffs. 21 ¶ 13. 22 misbranded because EJC "is nothing more than sugar, cleverly 23 disguised." 24 same FDA guidelines as Plaintiffs. 25 Singer Compl. ¶¶ 16-19. ECF No. The plaintiff in the Compare Compl.¶ 95 with Singer Compl. Like Plaintiffs, Singer alleged that these products were Singer Compl. ¶ 2. Singer also relied on many of the Compare Compl. 48, 57-61 with The parties to the Florida action subsequently reached a class 26 27 28 2 That action is captioned Singer v. WW Operating Company, Case No. 13-cv-2132 (S.D. Fla.) (hereinafter, the "Florida action"). 3 1 settlement. On April 19, 2013, the Florida court preliminarily 2 approved a settlement, defining the settlement class as all persons 3 who, from January 1, 2005 to the present, purchased Defendants' 4 ECJ-labeled products throughout the United States. 5 The Court required class notice to be published in USA Today and on 6 a website established for the purpose of providing notice, finding 7 this notice to be the best practicable under the circumstances and 8 to be fully compliant with the requirements of Federal Rule of 9 Civil Procedure 23 and of due process. Id. RJN Ex. 16. Plaintiffs, absent United States District Court For the Northern District of California 10 class members in the Florida action, did not object to the 11 settlement within the timeline set forth by the Florida court. 12 June 28, 2013, the Florida court granted final approval of the 13 settlement (hereinafter, the "Singer Settlement"). On 14 Plaintiffs subsequently filed a motion to intervene in the 15 Florida action and a motion to set aside the Singer Settlement. 16 Those motions were denied on October 8, 2013. 17 8 Order"). 18 Plaintiffs were provided with adequate notice of the Florida action 19 and that Plaintiffs' interests were adequately represented in that 20 action. ECF No. 35-1 ("Oct. Among other things, the Florida court found that 21 22 23 III. LEGAL STANDARD A motion to dismiss under Federal Rule of Civil Procedure 24 12(b)(6) "tests the legal sufficiency of a claim." 25 Block, 250 F.3d 729, 732 (9th Cir. 2001). 26 on the lack of a cognizable legal theory or the absence of 27 sufficient facts alleged under a cognizable legal theory." 28 Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 4 Navarro v. "Dismissal can be based 1 1988). "When there are well-pleaded factual allegations, a court 2 should assume their veracity and then determine whether they 3 plausibly give rise to an entitlement to relief." 4 Iqbal, 556 U.S. 662, 679 (2009). 5 must accept as true all of the allegations contained in a complaint 6 is inapplicable to legal conclusions. 7 elements of a cause of action, supported by mere conclusory 8 statements, do not suffice." 9 Twombly, 550 U.S. 544, 555 (2007)). Ashcroft v. However, "the tenet that a court Threadbare recitals of the Id. (citing Bell Atl. Corp. v. United States District Court For the Northern District of California 10 11 IV. DISCUSSION Defendants now move to dismiss the instant action on the 12 13 grounds that it is barred by res judicata. Alternatively, 14 Defendants argue that Plaintiffs' claims are preempted or are 15 implausible. 16 judgment in the Florida action precludes Plaintiffs from bringing 17 their EJC and Yogurt Claims. 18 Plaintiffs' Milk Claims are either preempted or implausible. As set forth below, the Court finds that the final Further, the Court finds that 19 A. Res Judicata 20 Defendants argue that the Singer settlement is res judicata 21 with respect to Plaintiffs' EJC, Milk, and Yogurt claims. 22 8. 23 could have been raised in a prior action. 24 Health Plan, Inc., 244 F.3d 708, 713 (9th Cir. 2001). 25 is applicable whenever there is (1) identity or privity between the 26 parties in the first and second action, (2) a final judgment on the 27 merits, and (3) an identity of claims. 28 MTD at Res judicata bars relitigation of claims that were raised or Owens v. Kaiser Found. The doctrine Id. As to the first requirement, Plaintiffs do not dispute that 5 1 they were class members in the Florida action. 2 argue that their interests were inadequately represented in that 3 action and that they were provided with inadequate notice of the 4 proceedings. 5 the Florida court when it denied Plaintiffs motions to intervene 6 and set aside the Singer Settlement. 7 those issues now and finds that the first requirement of res 8 judicata has been met. 9 Opp'n at 6. However, Plaintiffs Both of these arguments were rejected by The Court declines to revisit With respect to the second requirement, Plaintiffs argue that United States District Court For the Northern District of California 10 there was no final judgment in the Florida action because the 11 Florida court did not issue a separate document setting out a final 12 judgment. 13 approving the class settlement expressly states Defendants may 14 "file the Settlement Agreement and/or this Judgment in any action . 15 . . based on principles of res judicata . . . or any theory of 16 claim preclusion." 17 a judgment four other times and also uses the phrase "IT IS HEREBY 18 ORDERED, ADJUDGED AND DECREED." 19 essentially conceded the finality of the order by appealing it to 20 the Eleventh Circuit. 21 This argument lacks merit. RJN Ex. 19 ¶ 9. The Florida court's order The order refers to itself as Moreover, Plaintiffs have As to the third requirement of res judicata, Plaintiffs do not 22 dispute that there is an identity of claims as to the EJC and 23 Yogurt Claims. 24 all claims "arising from, or in any way whatsoever relating to the 25 use of the term evaporated cane juice with respect to [Defendants'] 26 Products . . . ." 27 are predicated on Defendants' use of the term EJC. 28 Plaintiffs' EJC claims are practically identical to Singer's. Nor could they. The Singer Settlement discharges RJN Ex. 19 § VI. 6 Both the EJC and Yogurt claims Indeed, 1 While the Yogurt Claims were not raised in the Florida action, they 2 are premised on the same theory -- that EJC is equivalent to sugar 3 -- and thus arise out of the same nucleus of operative facts. 4 Frank v. United Airlines, Inc., 216 F.3d 845, 851 (9th Cir. 2000) 5 (Central criterion in determining whether there is an identity of 6 claims is whether the two suits arise out of the same transactional 7 nucleus of facts.) The parties dispute whether there is an identity of claims 8 9 See with respect to the Milk Claims. Defendants argue that the Milk United States District Court For the Northern District of California 10 Claims are precluded because they only target products that contain 11 EJC. 12 relate to the use of the term EJC, not claims relating to products 13 that contain EJC. 14 Defendants' use of the term EJC. 15 on the theory that a reasonable consumer could confuse soymilk, 16 almond milk, or coconut milk for dairy milk. The Court disagrees. The Singer Settlement bars claims that Plaintiffs' Milk Claims are not predicated on Rather, the Milk Claims are based 17 Accordingly, the Court finds that res judicata bars 18 Plaintiffs' EJC and Yogurt Claims, but not their Milk Claims. 19 Accordingly, the Court proceeds to determine whether the Milk 20 Claims are preempted. 21 B. Preemption 22 The crux of Plaintiffs' Milk Claims is that Defendants' use of 23 terms "soymilk," "almond milk," and "coconut milk" in the names of 24 Silk Products violates the "standard of identity" for milk. 25 standard of identity is a requirement that determines what a food 26 product must contain to be marketed under a certain name. 27 FDCA, as amended, contains a broad preemption provision which 28 prohibits states or other political subdivisions from imposing any 7 A The 1 requirements regarding standard of identity that is not identical 2 to the federal requirements. 3 argue that Plaintiffs' Milk Claims attempt to impose new 4 requirements concerning the standard of identity for milk. 21 U.S.C. § 343–1(a). Defendants The FDCA requires a food to be identified by "the common or 5 6 usual name of the food, if any there be." 21 U.S.C. § 343(i). FDA 7 regulations require that a "statement of identity" must be in terms 8 of: (1) the name prescribed by federal law or regulation, "(2) 9 [t]he common or usual name of the food; or, in the absence thereof, United States District Court For the Northern District of California 10 (3) [a]n appropriately descriptive term, or when the nature of the 11 food is obvious, a fanciful name commonly used by the public for 12 such food." 21. C.F.R. § 101.3(b). Plaintiffs have not pointed to any statutory or regulatory 13 14 provision prescribing how the Silk Products must be labeled. 15 However, Plaintiffs do point to 21 C.F.R. § 131.110, which 16 describes Milk as the "lacteal secretion, practically free from 17 colostrum, obtained by the complete milking of one or more healthy 18 cows." 19 using the name milk in connection with soy-, almond-, coconut-based 20 products since those products do not come from cows. 21 131.110 pertains to what milk is, rather than what it is not, and 22 makes no mention of non-dairy alternatives such as the Silk 23 Products. Plaintiffs reason that this regulation bars Defendant from However, § Plaintiffs also point to FDA warning letters to soymilk 24 25 manufacturers, which are referenced in the Complaint. 26 letters primarily address sanitary conditions at the manufactures' 27 facilities and other labeling issues which are not relevant to this 28 case. See ECF No. 26 ("Pl.'s RJN) Exs. G, H. 8 These However, citing 21 1 C.F.R. § 131.110, the letters also warn two manufacturers that 2 their "soymilk" products are misbranded because they use the term 3 milk. 4 interpretation of its own regulation is entitled to wide deference. 5 Pub. Lands for the People, Inc. v. U.S. Dep't of Agric., 697 F.3d 6 1192, 1199 (9th Cir. 2012). 7 two warning letters cited by Plaintiffs are far from controlling. 8 This is especially true since the FDA regularly uses the term 9 soymilk in its public statements, see, e.g., FDA Enforcement ECF No. 26 ("Pl.'s RJN) Exs. G, H. An agency's reasonable However, the brief statements in the United States District Court For the Northern District of California 10 Report, 2011 WL 6304352 (Dec. 14, 2011); FDA Enforcement Report, 11 2007 WL 4340281 (Dec. 12, 2007), suggesting that the agency has yet 12 to arrive at a consistent interpretation of § 131.110 with respect 13 to milk substitutes. 14 As the FDA has yet to prescribe a name for the Silk Products, 15 the Court considers the "common or usual name[s]" for those foods. 16 See 21 U.S.C. § 343(i). 17 usual name of a food "shall accurately identify or describe, in as 18 simple terms as possible, the basic nature of the food or its 19 characterizing properties or ingredients." 20 "Each class or subclass of food shall be given its own common or 21 usual name that states, in clear terms, what it is in a way that 22 distinguishes it from different foods." 23 or usual name may be established by common usage. 24 FDA regulations provide that the common or Id. 21 C.F.R. § 102.5(a). Moreover, the common Id. § 102.5(d). Here, the Court agrees with Defendants that the names 25 "soymilk," "almond milk," and "coconut milk" accurately describe 26 Defendants' products. 27 clearly convey the basic nature and content of the beverages, while 28 clearly distinguishing them from milk that is derived from dairy As set forth in the regulations, these names 9 1 cows. Moreover, it is simply implausible that a reasonable 2 consumer would mistake a product like soymilk or almond milk with 3 dairy milk from a cow. 4 should be obvious enough to even the least discerning of consumers. 5 And adopting Plaintiffs' position might lead to more confusion, not 6 less, especially with respect to other non-dairy alternatives such 7 as goat milk or sheep milk. Accordingly, the Court finds that Plaintiffs' Milk Claims are 8 9 The first words in the products' names preempted. United States District Court For the Northern District of California 10 C. Plausibility 11 Plaintiffs' Milk Claims fail for the additional reason that 12 they are simply not plausible. False advertising claims under the 13 UCL, FAL, and CLRA are governed by the reasonable consumer 14 standard, whereby a plaintiff must show that members of the public 15 are likely to be deceived. 16 F.3d 934, 938 (9th Cir. 2008). 17 practice is deceptive is generally a question of fact not amenable 18 to determination on a motion to dismiss. Williams v. Gerber Products Co., 552 The question of whether a business Id. 19 However, in certain situations a court may assess, as a matter 20 of law, the plausibility of alleged violations of the UCL, FAL, and 21 CLRA. 22 SBA, 2010 WL 2673860, at *3 (N.D. Cal. July 2, 2010), the plaintiff 23 alleged that he believed "Cap'n Crunch's Crunch Berry" cereal 24 derived its nutrition from actual fruit because of its label's 25 reference to berries and because its cereal balls were shaped like 26 berries. 27 The court reasoned that the word "berries" was always preceded by 28 the word "crunch" to form the term "crunch berries," and that the For example, in Werbel ex rel. v. Pepsico, Inc., C 09-04456 The Court found such allegations to be "[n]onsense." 10 Id. 1 image of crunch berries on the label did not even remotely resemble 2 any naturally occurring fruit of any kind. Id. Plaintiffs' Milk Claims fail for similar reasons. 3 The crux of 4 the claims is that a reasonable consumer might confuse plant-based 5 beverages such as soymilk or almond milk for dairy milk, because of 6 the use of the word "milk." 7 improbable because of the use of the words "soy" and "almond." 8 Plaintiffs essentially allege that a reasonable consumer would view 9 the terms "soymilk" and "almond milk," disregard the first words in The Court finds such confusion highly United States District Court For the Northern District of California 10 the names, and assume that the beverages came from cows. The claim 11 stretches the bounds of credulity. 12 reasonable consumer might also believe that veggie bacon contains 13 pork, that flourless chocolate cake contains flour, or that e-books 14 are made out of paper. Under Plaintiffs' logic, a Thus, even if Plaintiffs Milk Claims were not preempted, they 15 16 would still fail under the reasonable consumer test, as well as 17 plausibility standard set forth in Iqbal and Twombly. 18 19 20 V. CONCLUSION For the reasons set forth above, Defendants' motion to dismiss 21 is GRANTED, and Plaintiffs Alex Ang and Kevin Avoy's claims are 22 DISMISSED WITH PREJUDICE. 23 24 IT IS SO ORDERED. 25 26 27 December 10, 2013 UNITED STATES DISTRICT JUDGE 28 11

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