Weiss v. See's Candy Shops, Inc. et al

Filing 64

PUBLIC/REDACTED ORDER Granting 39 Defendant's Motion to Dismiss. Signed by Judge Edward M. Chen on 8/3/2017. (emcsec, COURT STAFF) (Filed on 8/3/2017)

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1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 Plaintiff, 8 9 10 PUBLIC/REDACTED VERSION v. SEE'S CANDY SHOPS, INC., et al., Defendants. ORDER GRANTING DEFENDANT’S MOTION TO DISMISS Docket No. 39 12 For the Northern District of California United States District Court 11 Case No. 16-cv-00661-EMC AVI WEISS, 13 Plaintiff Avi Weiss has filed a putative class action against Defendants See’s Candy Shops, 14 Inc. and See’s Candies Inc. (collectively, “See’s”), alleging that See’s misrepresented certain 15 products, such as its Classic Red Heart Assorted Chocolates, as being Kosher certified when, in 16 fact, they were not. Although Mr. Weiss has asserted only state law claims, he filed suit in federal 17 court based on diversity jurisdiction. Currently pending before the Court is See’s motion to 18 dismiss. According to See’s, the Court lacks subject matter jurisdiction over the case. Having 19 considered the parties’ briefs and accompanying submissions, as well as the oral argument of 20 counsel, the Court hereby GRANTS See’s motion. I. 21 FACTUAL & PROCEDURAL BACKGROUND 22 In his class action complaint, Mr. Weiss alleges as follows. 23 See’s manufactures, promotes, and distributes chocolates and other candy products. See 24 Compl. ¶ 20. See’s sells its products in retail stores known as See’s Candies Shops throughout the 25 country. See Compl. ¶ 21. In each of the stores, See’s offers a selection of Kosher certified 26 products. See Compl. ¶ 22. Kosher certification indicates that the “processing, preparation, and 27 ingredients of the food meet certain quality and control standards that conform to Jewish dietary 28 laws.” Compl. ¶ 16. To show that a product is Kosher certified, See’s puts a “prominent and commonly known 1 2 symbol for Kosher certification on large signs placed directly above the kosher certified 3 merchandise displayed in [its] stores.” Compl. ¶ 22. “Consumers . . . look for the kosher symbol 4 on these signs to make their purchasing decisions.” Compl. ¶ 24. See’s has represented to its customers that certain candies, including but not limited to the 5 6 “Valentine’s Day Classic Red Heart Box in various sizes and weights,” are Kosher certified. 1 7 Compl. ¶ 25. In fact, they were not. Compl. ¶ 25. According to Mr. Weiss, he and other putative 8 class members “have been harmed because they overpaid for the products (or would not have 9 purchased the products) had they known that the products were not Kosher certified.” Compl. ¶ 10 26. “In addition to monetary damages, [Mr. Weiss] seeks injunctive relief to stop [See’s] from 12 For the Northern District of California United States District Court 11 falsely marketing some of [its] products as Kosher certified and to force [See’s] to warn 13 purchasers that certain candies sold as Kosher certified, are not in fact Kosher certified.” Compl. ¶ 14 36. The class that Mr. Weiss seeks to represent is as follows: “All individuals nationwide who, 15 16 from four years prior to the filing of this Complaint [on February 9, 2016] through [the] date of 17 certification purchased a product from a See’s Candies Shop that was marketed as Kosher certified 18 when the product was not Kosher certified.” Compl. ¶ 37. 19 Based on, inter alia, the above allegations, Mr. Weiss has asserted the following claims: 20 (1) Breach of express warranty in violation of California Commercial Code § 2313; 21 (2) Unlawful, unfair, and fraudulent business acts and practices in violation of 22 California Business & Professions Code § 17200; 23 (3) 24 1750, et seq.; 25 (4) 26 17500; and Violation of the California Consumer Legal Remedies Act, see Cal. Civ. Code § False advertising in violation of the California Business & Professions Code § 27 28 1 Mr. Weiss himself purchased a Valentine’s Day Classic Red Heart Box. See Compl. ¶ 31. 2 1 (5) Fraudulent inducement. 2 According to Mr. Weiss, “[t]he Court has original jurisdiction over this action pursuant to 3 28 U.S.C. § 1332(d), because (a) at least one member of the putative class is a citizen of a state 4 different from Defendants, (b) the amount in controversy exceeds $5,000,000, exclusive of interest 5 and costs, and (c) none of the exceptions under that subsection apply to this action.” Compl. ¶ 12. II. 6 7 A. DISCUSSION Legal Standard 8 Federal Rule of Civil Procedure 12(b)(1) provides that a defendant may move for a 9 dismissal based on lack of subject matter jurisdiction. “Rule 12(b)(1) jurisdictional attacks can be facial attack, a court considers only the complaint. See id.; see also Wolfe v. Strankman, 392 F.3d 12 For the Northern District of California either facial or factual.” White v. Lee, 227 F.3d 1214, 1242 (9th Cir. 2000). Where there is a 11 United States District Court 10 358, 362 (9th Cir. 2004) (stating that, “‘[i]n a facial attack, the challenger asserts that the 13 allegations contained in a complaint are insufficient on their face to invoke federal jurisdiction’”). 14 With a factual attack, however, a court “need not presume the truthfulness of the plaintiffs’ 15 allegations” and “may look beyond the complaint.” See White, 227 F.3d at 1242; see also Wolfe, 16 392 F.3d at 362 (noting that, in a factual motion to dismiss, the moving party presents affidavits or 17 other evidence). In the instant case, See’s presents both a facial and a factual attack to subject matter 18 19 jurisdiction. 20 B. 21 Facial Attack According to See’s, as a facial matter, Mr. Weiss has failed to adequately plead diversity 22 jurisdiction because, in his complaint, (1) he has failed to allege his own citizenship and (2) his 23 allegation that the amount in controversy exceeds $5 million is entirely conclusory in nature and 24 does not specify any facts to support the claim. The Court need not dwell on See’s facial attack 25 because, even if there were deficiencies with the complaint, Mr. Weiss would have an opportunity 26 to cure those deficiencies with an amendment. See 28 U.S.C. § 1653 (providing that “[d]efective 27 allegations of jurisdiction may be amended, upon terms, in the trial or appellate courts”); May 28 Dep’t Store v. Graphic Process Co., 637 F.2d 1211, 1216 (9th Cir. 1980) (noting that “an action 3 1 should not be dismissed for lack of jurisdiction without giving the plaintiff an opportunity to be 2 heard unless it is clear the deficiency cannot be overcome by amendment”); Jorio v. Benmansour, 3 No. 15-cv-00063 NC, 2015 U.S. Dist. LEXIS 188743, at *3 (N.D. Cal. Aug. 25, 2015) 4 (“permit[ting] Jorio to amend his complaint to state that he was domiciled in California at the time 5 he filed suit to cure the subject matter jurisdiction defect”). Moreover, as reflected by the parties’ 6 briefs, the crux of the dispute is not the facial challenge to subject matter jurisdiction but rather the 7 factual challenge. The Court thus turns to the factual challenge. 8 C. 9 10 Factual Challenge 1. Legal Certainty v. Preponderance of the Evidence/Prima Facie Case As an initial matter, the Court addresses Mr. Weiss’s contention that, for a defendant to prevail on a factual attack, it must be shown to a legal certainty that there is not subject matter 12 For the Northern District of California United States District Court 11 jurisdiction. See’s responds that the legal certainty standard applies only where there is a facial 13 attack, not a factual one. 14 Neither party’s position is entirely correct. Where there are disputed facts, those facts are 15 resolved by a preponderance of the evidence, but, after that, the predictive legal certainty test does 16 apply. See, e.g., Meridian Sec. Ins. Co. v. Sadowski, 441 F.3d 536, 543 (7th Cir. 2006) (stating 17 that “a proponent of federal jurisdiction must, if material allegations are contested, prove those 18 jurisdictional facts by a preponderance of the evidence” and that, “[o]nce the facts have been 19 established, . . . [o]nly if it is ‘legally certain’ that the recovery (from plaintiff’s perspective) or 20 cost of complying with the judgment (from defendant’s) will be less than the jurisdictional floor 21 may the case be dismissed”); Frederico v. Home Depot, 507 F.3d 188, 194 (3d Cir. 2007) (stating 22 that, “where disputes over factual matters are involved, the . . . preponderance of the evidence 23 standard is appropriate for resolving the dispute”; but “‘when relevant facts are not in dispute or 24 findings have been made,’ the district court should adhere to the ‘legal certainty test’”); cf. Naffe v. 25 Frey, 789 F.3d 1030, 1040 (9th Cir. 2015) (stating that where “the plaintiff files suit originally in 26 federal court . . . and the complaint affirmatively alleges that the amount in controversy exceeds 27 the [§ 1332] jurisdictional threshold[,] . . . the legal certainty test applies”; but one situation where 28 the legal certainty standard is met is “when independent facts show that the amount of damages 4 1 was claimed merely to obtain federal court jurisdiction”). That legal certainty test which applies 2 to complaint filed in federal (in contrast to cases removed from state to federal court) has been 3 stated variously – for example, “‘[i]n cases brought in the federal court . . . it must appear to a 4 legal certainty that the [plaintiff’s] claim is really for less than the jurisdictional amount to justify 5 dismissal.’” Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992) (quoting St. Paul Mercury 6 Indem. Co. v. Red Cab Co., 303 U.S. 283, 288-90 (1938); adding that “‘[a] different situation is 7 presented in the case of a suit instituted in a state court and thence removed [–] [t]here is a strong 8 presumption that the plaintiff has not claimed a large amount in order to confer jurisdiction on a 9 federal court or that the parties have colluded to that end’”). Stated differently, the legal certainty U.S. at 289 (stating that, “if from the face of the pleadings, it is apparent to a legal certainty, that 12 For the Northern District of California standard is met where the plaintiff has established a colorable claim. See St. Paul Mercury, 303 11 United States District Court 10 the plaintiff cannot recover the amount claimed or if, from the proofs, the court is satisfied to a 13 like certainty, that the plaintiff never was entitled to recover that amount, and that his claim was 14 therefore colorable for the purpose of conferring jurisdiction, the suit will be dismissed”). 15 In the Ninth Circuit, where there are disputed facts, a plaintiff is permitted to make only a 16 prima facie showing of subject matter jurisdiction (i.e., the plaintiff is not held to the higher 17 preponderance-of-the-evidence standard) if only written materials are submitted for the court’s 18 consideration. See Societe de Conditionnement en Aluminum v. Hunter Eng'g Co., 655 F.2d 938, 19 942 (9th Cir. 1985); see also Data Disc, Inc. v. Sys. Tech. Assocs., Inc., 557 F.2d 1280, 1285 (9th 20 Cir. 1977) (explaining that, “[i]f the court determines that it will receive only affidavits or 21 affidavits plus written materials, these very limitations dictate that a plaintiff must make only a 22 prima facie showing of jurisdictional facts through the submitted materials in order to avoid a 23 defendant’s motion to dismiss”). 24 In the case at hand, there are relevant facts in dispute (i.e., the extent of the mislabeling 25 problem), and, as the parties have submitted only written materials to the Court, Mr. Weiss is 26 required to make only a prima facie showing of jurisdiction. For the reasons discussed below, Mr. 27 Weiss has failed to satisfy that low standard – that is, he has failed to make a prima facie case that 28 the amount-in-controversy exceeds $5 million. 5 1 2. Economic Damages 2 In its factual challenge, See’s focuses on the amount-in-controversy requirement. As noted 3 above, Mr. Weiss seeks on his own behalf, and on the behalf of a putative class, economic 4 damages, attorney’s fees, and injunctive relief. The main relief sought is economic damages. 2 5 According to See’s, the economic damages of the putative class amount to $0 because 6 See’s did not and does not charge more for its Kosher products compared to its non-Kosher 7 products. This argument, however, is not compelling because it glosses over the fact that, for a 8 person who is Kosher adherent, a Kosher-certified product is not simply a dietary preference but 9 rather a dietary restriction. Ivie v. Kraft Foods Global, Inc., No. C-12-02554-RMW, 2015 U.S. WHO, 2016 U.S. Dist. LEXIS 42735 (N.D. Cal. Mar. 29, 2016), are both distinguishable because 12 For the Northern District of California Dist. LEXIS 5196 (N.D. Cal. Jan. 14, 2015), and Khasin v. R.C. Bigelow, Inc., No. 12-cv-02204- 11 United States District Court 10 they deal with dietary preferences. In the instant case, the mislabeled product is arguably 13 worthless to the Kosher adherent individual who may be entitled to a refund. Even if damages were to be measured by the refund of full amounts paid for Kosher- 14 15 mislabeled products, however, See’s contends economic damages would still be well below the $5 16 million threshold required by § 1332. In support of this claim, See’s conducted an internal 17 investigation into the mislabeled price cards and determined that economic damages amounted to See Reply at 10 (“See’s . . . calculated the amount in 18 19 controversy if every purchaser . . . of a mistakenly labeled product received a full refund, and still 20 the theoretical maximum award would be only 21 were to include sales of Maple Cashew Brittle in the amount in controversy, See’s sold .”); Reply at 11 (“[E]ven if the Court of the product while the kosher insignia mistakenly appeared on the website . . . .”). 22 Mr. Weiss contends that the amount in controversy has been met because See’s has 23 24 conceded that its total sales of Kosher products for the relevant period is However, 25 the total sales of Kosher products do not establish the amount in controversy because Mr. Weiss is 26 27 28 2 See’s argues that the value of any injunctive relief is minimal at best, and Mr. Weiss does not dispute such. Similarly, the parties agree that attorney’s fees would likely be a limited percentage of the economic damages awarded (e.g., 25 percent). 6 1 suing only for products marketed as Kosher certified when the products were not in fact Kosher 2 certified. See Compl. ¶ 37 (defining the class as “[a]ll individuals nationwide who. . . purchased a 3 product from a See’s Candies Shop that was marketed as Kosher certified when the product was 4 not Kosher certified”). Mislabeled products are only a subset of the total sales of Kosher products 5 and the only evidence presented (even after Mr. Weiss was afforded discovery) indicate that 6 subset is an extremely small proportion of those sales. Contrary to what Mr. Weiss argues, Lewis v. Verizon Communications, Inc., 627 F.3d 400 7 8 (9th Cir. 201), does not support his position. In Lewis, the plaintiff filed a class action in state 9 court after Verizon billed her for services that she never ordered. “Describing these charges as California who have been billed for such services that they never expressly agreed to or 12 For the Northern District of California ‘unauthorized,’” the plaintiff sought “to represent a class of landline Verizon customers in 11 United States District Court 10 requested.” Id. at 397. Verizon removed the case to federal court, arguing that the amount in 13 controversy exceeded $5 million. In support of this claim, Verizon submitted evidence that 14 members of the putative class were billed more than $5 million during the relevant period. In 15 evaluating the propriety of Verizon’s removal, the Ninth Circuit took note of the district court’s 16 refusal 17 18 19 20 21 to accept the total billings as representing the amount in controversy. Instead, looking to the allegations of the complaint, it held that the total billings could not represent the amount in controversy because the complaint was claiming liability only for charges that were “unauthorized.” The district court thus assumed total billings would include both authorized and unauthorized charges and held that the Defendant had failed to meet its burden under our case law to show the amount in controversy, i.e., unauthorized charges, exceeded the jurisdictional amount. 22 Id. at 400. The Ninth Circuit, however, disagreed with the district court’s analysis. It explained 23 that “[t]here is no evidence or allegation to support [the district court’s] assumption” that total 24 billings included both authorized and unauthorized charges. Id. “[T]he Defendant has put in 25 evidence of the total billings and the Plaintiff has not attempted to demonstrate, or even argue, 26 that the claimed damages are less than the total billed. . . . Hence, on this record, the entire 27 amount of the billings is ‘in controversy.’” Id. (emphasis added). 28 Here, See’s did provide evidence to show that the amount in controversy is less than the 7 1 total sales of its Kosher products – i.e., that any mislabeling constituted only a tiny subset of the 2 total sales of Kosher products. Mr. Weiss, despite having discovery, has failed to show that 3 portion exceeds $5 million. 4 Faced with this problem, Mr. Weiss suggested for the first time at the hearing that, at the 5 very least, it would be reasonable to assume that total sales of mislabeled products would likely 6 exceed $5 million given the large total sales of Kosher products. But this argument is based on 7 sheer speculation. Mr. Weiss argues that See’s internal investigation (in which it determined that the amount 8 9 in controversy was, at best, approximately or less) did not account for all mislabeling and not other kinds of mislabeling (e.g., package mislabeling). Mr. Weiss also points out that 12 For the Northern District of California by See’s. Mr. Weiss contends, for example, that See’s only investigated price card mislabeling 11 United States District Court 10 See’s internal study did not include mislabeling on products such as See’s Christmas Totes and 13 Maple Cashew Brittle and argues that, as a result, there is a systemic problem with mislabeling on 14 the part of See’s that is larger than what the internal study suggests. 15 But even if See’s internal investigation did not account for, e.g., package mislabeling or 16 mislabeling on the Christmas Totes and Maple Cashew Brittle, 3 Mr. Weiss has failed to provide 17 any evidence about the dollar value of this mislabeling. 4 He has not demonstrated there is 18 evidence of mislabeling sufficient in magnitude to be material. Nor does the purported 19 mislabeling of the Christmas Totes and Maple Cashew Brittle establish the existence of a wide 20 systemic problem. See’s declaration stating that it had to correct “its master data concerning 21 22 23 24 25 26 27 3 The Court notes that the alleged mislabeling of the Maple Cashew Brittle took place on See’s website. Because Mr. Weiss did not include website mislabeling within the definition of the class, see Compl. ¶ 37 (defining the class as “[a]ll individuals nationwide who, from four years prior to the filing of this Complaint [on February 9, 2016] through [the] date of certification purchased a product from a See’s Candies Shop that was marketed as Kosher certified when the product was not Kosher certified”) (emphasis added), the Court could well ignore the alleged mislabeling of the Maple Cashew Brittle on See’s website – i.e., it would not count towards the dollar threshold applicable to this case. However, even if the product could count toward the dollar threshold, See’s has provided evidence that sales of the product were not that significant. See Millington Reply Decl. ¶ 6. 4 28 The only evidence in the record is that the sales of Brittle was February 2017. See Millington Reply Decl. ¶ 6. 8 from 2013 through 1 Maple Cashew Brittle to ensure the website would not include a kosher certification insignia in the 2 future,” Millington Reply Decl. ¶ 4, does not indicate there was a problem with See’s master data 3 for other products. 4 The Court underscores that Mr. Weiss’s failure to quantify in some way the dollar value of 5 package mislabeling or mislabeling on the Christmas Totes or find any evidence suggesting a 6 wider systemic labeling problem is especially problematic because it gave Mr. Weiss the 7 opportunity to conduct jurisdictional discovery. Indeed, Mr. Weiss had the opportunity to take 8 jurisdictional discovery after See’s filed its motion to dismiss for lack of subject matter 9 jurisdiction in which it explained that it had conducted an internal investigation to see what the 10 Because Mr. Weiss had the opportunity to take jurisdictional discovery and yet still failed 12 For the Northern District of California United States District Court 11 monetary value of the mislabeling was (assuming a full refund on mislabeled products). to make a prima facie case that the amount in controversy exceeds $5 million, he has failed to 13 establish subject matter jurisdiction in this Court. And given he was afforded an opportunity to 14 take discovery, dismissal without leave to amend is warranted. III. 15 16 CONCLUSION Accordingly, See’s motion to dismiss for lack of subject matter jurisdiction is granted, and 17 with prejudice as to the jurisdictional question. The Clerk of the Court is ordered to enter 18 judgment in accordance with the above and close the file in this case. 19 This order disposes of Docket No. 39. 20 21 IT IS SO ORDERED. 22 23 24 25 Dated: August 3, 2017 ______________________________________ EDWARD M. CHEN United States District Judge 26 27 28 9

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