Gasser v. Kiss My Face, LLC

Filing 54

ORDER by Magistrate Judge Jacqueline Scott Corley granting 36 Motion to Appoint Counsel ; granting in part and denying in part 27 Motion to Dismiss; denying 31 Motion to Stay. Joint Case Management Statement due by 1/11/2018. Further Case Management Conference set for 1/18/2018 at 01:30 PM in Courtroom F, 15th Floor, San Francisco. (ahm, COURT STAFF) (Filed on 10/23/2017)

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1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 ANDREW GASSER, et al., Plaintiffs, 8 9 10 United States District Court Northern District of California 11 Case No.17-cv-01675-JSC v. KISS MY FACE, LLC, Defendant. ORDER RE DEFENDANT’S MOTION TO DISMISS AND MOTION TO STAY; PLAINTIFFS’ MOTION TO APPOINT COUNSEL Re: Dkt. Nos. 27, 28, 31, 35, 36 12 13 Plaintiffs allege the labeling of Defendant Kiss My Face LLC’s (“KMF”) cosmetic 14 products as “naturally nourishing with our botanical blends,” “obsessively natural kids,” “100% 15 natural mineral advanced protection,” and “100% natural mineral hydrating defense” is false and 16 misleading because the products contain phenoxyethanol and/or ethylhexylglycerin. Now pending 17 before the Court is KMF’s 12(b)(1) and 12(b)(6) motion to dismiss, KMF’s motion to stay, and 18 Plaintiffs’ motion to appoint counsel. Having carefully considered the parties’ briefing, and 19 having had the benefit of oral argument on August 31, 2017, the Court grants in part and denies in 20 part KMF’s motion to dismiss, denies KMF’s motion to stay, and grants Plaintiffs’ motion to 21 appoint counsel. 22 23 FIRST AMENDED COMPLAINT ALLEGATIONS Kiss My Face is a brand of skin care and hygiene products manufactured and marketed by 24 Defendant and sold in drug and grocery stores nationwide. (First Amended Complaint “FAC” ¶ 25 21.) The FAC discusses the labeling of four KMF products: body moisturizer (“Lotion”), shower 26 gel (“Body Wash”), kids sunscreen (“Sunscreen”), and sun spray lotion (“Sun Spray”) (together, 27 the “Products”). (Id. ¶ 17.) The front label of every KMF Lotion and Body Wash states 28 “nourish naturally with our botanical blends.” (Id. ¶ 24.) Some of the KMF Lotion and Body 1 Wash products are labeled with the alternative phrase “naturally nourishing.” (Id. ¶ 25.) The 2 KMF Lotion has also been labeled “naturally effective.” (Id. ¶ 26.) 3 The front label of KMF Sunscreen states “obsessively natural kids” and provides “100% 4 natural mineral advanced protection.” The Sun Spray advertises a “100% natural mineral 5 hydrating defense.” (Id. ¶ 29.) The Sunscreen and Sun Spray contain a blue and orange 6 background with a green background underneath the statements “100% natural mineral advanced 7 protection” and “100% natural mineral hydrating defense.” (Id. ¶ 29.) 8 9 Based on the front label of each product, Plaintiffs reasonably believed the Products contained only natural ingredients. (Id. ¶¶ 27, 30, 32.) Plaintiffs assert the labels are false and misleading to a reasonable consumer because the Products actually contain unnatural ingredients - 11 United States District Court Northern District of California 10 phenoxyethanol and/or ethylhexylglycerin. (Id. ¶¶ 17, 22, 23, 28.) Plaintiffs lost money or 12 property as a result of KMF’s violations because: (a) they would not have purchased the Products 13 on the same terms if they knew the Products were made with unnatural and synthetic ingredients; 14 (b) they paid a substantial price premium compared to other skin care and hygiene products due to 15 KMF’s misrepresentations; and (c) the Products do not have the characteristics, uses, or benefits 16 as promised. (Id. ¶¶ 5, 59, 71, 78, 85.) Plaintiffs would purchase the Products again in the future 17 if KMF changed the composition of the Products so that they conformed to their “natural” labeling 18 and marketing. (Id. ¶¶ 11, 13, 15.) 19 Plaintiffs seek to represent a class defined as all persons in the United States who 20 purchased the Products during the class period (the “Class”). (Id. ¶ 34.) Plaintiffs Gasser and 21 Ikeda also seek to represent a subclass of all persons in California who purchased the Products 22 during the class period (the “California Subclass”). (Id. ¶ 35.) Plaintiff Kelly also seeks to 23 represent a subclass of all persons in New York who purchased the Products during the class 24 period (the “New York Subclass”). (Id. ¶ 36.) 25 26 27 DISCUSSION KMF moves to dismiss pursuant to Rule 12(b)(1) on standing grounds and pursuant to 12(b)(6) for failure to state a claim. 28 2 1 2 3 4 I. Standing For the court to exercise proper subject matter jurisdiction over an action, the parties must have standing. See White v. Lee, 227 F.3d 1214, 1242 (9th Cir. 2000). KMF argues Plaintiffs lack standing because: (1) the FDA is charged with the oversight of 5 cosmetics and is pursuing rulemaking efforts regarding the term “natural” and as such the suit 6 raises a political question; (2) there is no private right of action for lack of substantiation claims 7 and Plaintiffs’ complaint is a lack of substantiation claim in disguise; and (3) Plaintiffs cannot 8 establish the likelihood of future injury because they would not purchase the Products again if the 9 offensive unnatural ingredients remain. A. 11 United States District Court Northern District of California 10 Political Question “’Political questions’ are controversies which revolve around policy choices and value 12 determinations constitutionally committed to the Congress of the Executive Branch, and are not 13 subject to judicial review.” United States v. Mandel, 914 F.2d 1215, 1222 (9th Cir. 1990). The 14 doctrine is “a jurisdictional limitation imposed on the courts by the Constitution, and not by the 15 judiciary itself.” Corrie v. Caterpillar, Inc., 503 F.3d 974, 981 (9th Cir. 2007). Thus, “if a case 16 presents a political question, [the court] lack[s] subject matter jurisdiction to decide that question.” 17 Id. Six factors are relevant to whether a case is a non-justiciable political question: 18 19 20 21 22 23 24 25 26 27 [1] a textually demonstrable constitutional commitment of the issue to a coordinate political department; or [2] a lack of judicially discoverable and manageable standards for resolving it; or [3] the impossibility of deciding without an initial policy determination of a kind clearly for nonjudicial discretion; or [4] the impossibility of a court’s undertaking independent resolution without expressing lack of the respect due coordinate branches of government; or [5] an unusual need for unquestioning adherence to a political decision already made; or [6] the potentiality of embarrassment from multifarious pronouncements by various departments on one question[.] Mandel, 914 F.2d at 1222. A case “[i]mplicating any one of these factors renders a question ‘political’ and thus nonjusticiable.” Id. None of the factors are present. There is no “constitutional commitment” to the FDA regarding what is misleading in the context of consumer products. Instead, several courts in this district have adjudicated false advertising claims of “natural” products. See, e.g., Ries v. Arizona 28 3 1 Beverages USA LLC, 287 F.R.D. 523 (N.D. Cal. Nov. 12, 2007) (plaintiffs’ allegation that 2 Arizona Iced Tea is “all natural” survived summary judgment); Tsan v. Seventh Generation, Inc., 3 2015 WL 6694104, at *5-6 (N.D. Cal. Nov. 3, 2015) (denying motion to dismiss challenging the 4 plaintiffs’ allegation that they would not have bought Seventh Generation’s products labeled 5 “natural” if they had known they were not natural); Larsen v. Rader Joes’ Co., 917 F.Supp.2d 6 1019, 1023-25 (N.D. Cal. Jan. 9, 2013) (denying motion for judgment on the pleadings on claims 7 based on the plaintiffs’ allegation that Trader Joe’s alleged labeling, marketing and sale of “All 8 Natural” and “100% Natural” products was false because they contained one or more synthetic 9 ingredients as defined by the FDA). And last year the Ninth Circuit weighed in on whether a “natural” label is misleading because the product contained unnatural ingredients. See Brazil v. 11 United States District Court Northern District of California 10 Dole Packaged Foods, LLC, 660 Fed.Appx. 531, 533 (9th Cir. Sep. 30, 2016) (ruling that a trier of 12 fact could conclude “all natural fruit” is misleading to the reasonable consumer). It is thus 13 unsurprising that KMF does not cite a single case where the political question doctrine was 14 applied to false advertising or fraud. 15 KMF nonetheless argues that the FDA is charged with the oversight of cosmetics and is 16 pursuing rulemaking efforts regarding the term “natural.” However, the FDA requested 17 information and public comment on the use of the term “natural” in the labeling of food products, 18 not cosmetics. (Dkt. No. 29-5 at 1.) Further, public comment closed on February 10, 2016, and 19 the FDA has yet to issue any new rules regarding the use of the term natural. (Id.) The FDA has 20 not stated that it is pursuing rulemaking efforts, and even if it were, there is no assurance that the 21 FDA would revoke its current definition of natural or that any rulemaking would apply to the 22 allegations here. (Dkt. No. 35 at 36) (“even if we were to embark on a public process to define 23 “natural” in the context of food labeling, there is no assurance that we would revoke, amend, or 24 add to the current policy, or develop any definition at all.”) Accordingly, KMF’s motion to 25 dismiss pursuant to the political question doctrine is denied. 26 B. 27 KMF next argues there is no private right of action for lack of substantiation claims and 28 Lack of Substantiation Claim that Plaintiffs’ complaint is a lack of substantiation claim in disguise. “[B]oth private persons and 4 1 prosecuting authorities may sue to enjoin false advertising and obtain restitution.” National 2 Council Against Health Fraud, Inc. v. King Bio Pharmeceuticals, Inc., (“King Bio”), 107 3 Cal.App.4th 1336, 1344 (2003). “When they bring such actions, both private persons and 4 prosecuting authorities bear the burden of proving the advertising claims to be false or 5 misleading.” Id. “Prosecuting authorities, but not private plaintiffs, have the administrative power 6 to request advertisers to substantiate advertising claims before bringing actions for false 7 advertisement, but the prosecuting authorities retain the burden of proof in the false advertising 8 actions.” Id.: see also Kwan v. SanMedica International, 854 F.3d 1088, 1094-1095 (9th Cir. 9 2017) (holding that California law does not recognize a private cause of action for lack of substantiation claims); Chavez v. Nestle U.S.A, Inc., 511 Fed.Appx. 606, 607 (9th Cir. 2013) 11 United States District Court Northern District of California 10 (“[P]rivate plaintiffs are not authorized to demand substantiation for advertising claims.”). 12 KMF’s lack of substantiation argument fails for two reasons. First, it is brought as a 13 12(b)(1) motion for lack of subject matter jurisdiction because KMF relies on documents outside 14 the complaint. However, the argument has nothing to do with this Court’s constitutional authority 15 to hear this case. For this reason alone the motion on this ground must be denied. 16 Second, Plaintiffs’ claim is not based on a lack of substantiation. They do not allege the 17 terms “naturally nourishing with our botanical blends,” “obsessively natural kids,” “100% natural 18 mineral advanced protection,” and “100% natural mineral hydrating defense” are misleading 19 because KMF failed to conducts tests before marketing their products; instead, Plaintiffs’ false 20 advertising claim is premised on the allegation that the statements are false because KMF’s 21 ingredients are not natural. See Eckler v. Wal-Mart Stores, Inc., 2012 WL 5382218, at *3 (N.D. 22 Cal. Nov. 1, 2012) (there is “a distinction between a claim about a product that has been disproved 23 (which is closer to an affirmative misrepresentation) and a claim about a product for which there’s 24 no proof at all (which is closer an unsubstantiated claim”)). 25 Accordingly, KMF’s lack of substantiation argument fails. 26 C. 27 KMF also argues Plaintiffs lack standing to pursue injunctive relief because Plaintiffs 28 Standing to Pursue Injunctive Relief cannot establish a likelihood of future injury as they would not purchase the Products again if the 5 1 2 unnatural ingredients remain. The Court agrees. To establish standing, a plaintiff must show that “(1) he suffered an injury in fact; (2) the 3 injury is ‘fairly traceable’ to the challenged conduct; and (3) the injury is ‘likely’ to be ‘redressed 4 by a favorable decision.’” Lujan v. Defenders of Wildlife, 504 U.S. 555, 560–61 (1992). In 5 addition, to establish standing for prospective injunctive relief, a plaintiff must demonstrate that he 6 not only “suffered or is threatened with a ‘concrete and particularized’ legal harm” but also that 7 there is “a sufficient likelihood that he will again be wronged in a similar way.” Bates v. United 8 Parcel Service, Inc., 511 F.3d 974, 985 (9th Cir. 2007) (quoting City of Los Angeles v. Lyons, 461 9 U.S. 95, 111 (1983)). A plaintiff must establish a “real and immediate threat of repeated injury.” Bates, 511 F.3d at 985. Plaintiff bears the burden of establishing Article III standing. D’Lil v. 11 United States District Court Northern District of California 10 Best Western Encina Lodge & Suites, 538 F.3d 1031, 1036 (9th Cir. 2008). 12 Plaintiffs have not shown they face a risk of future harm. Plaintiffs are now aware the 13 Products contain phenoxyethanol and/or ethylhexylglycerin and as such cannot allege that they 14 would be fraudulently induced to purchase the same Products again in the future. Plaintiffs allege 15 that they would purchase the Products again if KMF changed the composition so that they 16 conformed to their “natural” labeling and marketing (FAC ¶¶ 11, 13, 15); however, this Court 17 cannot force KMF to change the composition of its products. Instead, the injunctive relief is 18 limited to having the label “accurately reflect the product’s contents.” Coe, 2017 WL 476407 at 19 *2 (internal citations omitted); see also Anderson v. Hain Celestial Grp., Inc., 87 F. Supp. 3d 20 1226, 1235 (N.D. Cal. 2015) (the plaintiff’s allegation “that ‘she would purchase the product in 21 the future if it were properly labeled and did not contain non-natural ingredients’ is completely 22 inconsistent with her theory of liability, and with any injunctive relief that could actually issue in 23 this case. Based on this lawsuit, Defendant could not be ordered to modify its manufacturing 24 process to remove all unnatural ingredients from its products because Plaintiff has not alleged an 25 injury from ingesting those ingredients.”). 26 Plaintiffs’ insistence that the FAC allegations meet the requirements adopted in Jou v. 27 Kimberly Corp., 2013 WL 6491158, (N.D. Cal. Dec. 10, 2013) is unpersuasive. In Jou, the 28 plaintiffs did not meet their burden to plead injunctive relief because they “did not identify any 6 1 allegation that suggests they will purchase the same products again.” Jou, 2013 WL 6491158 at 2 *4. The same applies here. Plaintiffs do not allege that they would purchase the same Products 3 again; instead, they allege they would purchase a different product—one without the synthetic 4 ingredients. Similar to Jou, Plaintiffs have failed to allege they would purchase the same Products 5 with the same synthetic ingredients even if properly labeled; thus, they have not established 6 standing for injunctive relief. However, a recent Ninth Circuit case suggests they may be able to 7 do so. Davidson v. Kimberly-Clark, Corp., 2017 WL 4700093 * 7-10 (9th Cir. Oct. 20, 2017). 8 Accordingly, KFM’s motion to dismiss the injunctive relief claim is granted with leave to amend. 9 II. Failure to State a Claim 12(b)(6) A complaint fails to state a claim upon which relief may be granted if the plaintiff fails to 11 United States District Court Northern District of California 10 allege the “grounds” of his “entitlement to relief.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 12 555 (2007). A plaintiff must plead “factual content that allows the court to draw the reasonable 13 inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 14 678 (2009). 15 Plaintiffs bring eight claims: (1) California’s Consumers Legal Remedies Act (“CLRA”); 16 (2) California’s Unfair Competition Law (“UCL”); (3) California’s False Advertising Law 17 (“FAL”); (4) Deceptive Acts Or Practices, New York Gen. Bus. Law (“GBL”) § 349; (5) False 18 Advertising, GBL § 350; (6) breach of express warranty; (7) unjust enrichment; and (8) fraud. (Id. 19 ¶¶ 43-94.) KMF moves to dismiss all eight claims. 20 KFM argues Plaintiffs’ CLRA, UCL, FAL, and GBL claims must be dismissed because: 21 (a) Plaintiffs failed to allege a plausible deception under the reasonable consumer standard; (b) the 22 statements are mere puffery; and (c) the claims lack the specificity required under Rule 9. 23 A. Reasonable Consumer Standard 24 KMF argues Plaintiffs have failed to identify a plausible misrepresentation because 25 Plaintiffs unreasonably interpret the terms “nourish naturally with our botanical blends,” 26 “obsessively natural kids,” and “100% natural mineral advanced protection” as representations 27 that the Products contain entirely natural ingredients. 28 The CLRA, FAL, UCL, and GBL utilize a “reasonable consumer standard.” Freeman v. 7 1 Time, Inc., 68 F.3d 285, 289 (9th Cir. 1995); Orlander v. Staples, Inc., 802 F.3d 289, 300 (2nd Cir. 2 2015) (the New York Court of Appeals adopted “an objective definition of misleading” where the 3 alleged act is “likely to mislead a reasonable consumer acting reasonably under the 4 circumstances”). Under the reasonable consumer standard, the plaintiff must “show that members 5 of the public are likely to be deceived.” Freeman, 68 F.3d at 289. Reasonable consumers should 6 not be expected to “look beyond misleading representations on the front of the box to discover the 7 truth from the ingredient list in small print on the side of the box.” Williams, 552 F.3d at 939. The 8 reasonable consumer standard requires a probability “that a significant portion of the general 9 consuming public or of targeted consumers, acting reasonably in the circumstances, could be misled.” Ebner v. Fresh, Inc., 838 F.3d 958, 965 (9th Cir. 2016) (internal quotation marks and 11 United States District Court Northern District of California 10 citation omitted). “[W]hether a business practice is deceptive will usually be a question of fact 12 not appropriate for decision on [a motion to dismiss].” Williams v. Gerber Prods. Co., 552 F.3d 13 934, 938 (9th Cir. 2008) (citing Linear Technology Corp. v. Applied Materials, Inc., 152 Cal. App. 14 4th 115, 134-35 (2007)). 15 It is now well established in the Ninth Circuit that for purposes of a motion to dismiss a 16 reasonable consumer could understand the statements “100% natural” or “all natural” or “natural” 17 together with other terms implying “all natural” to mean that a product does not contain any non- 18 natural ingredients. See Williams, 552 F.3d at 938-939 (“the statement that Fruit Juice Snacks was 19 made with ‘fruit juice and other all natural ingredients’ could easily be interpreted by consumers 20 as a claim that all the ingredients in the product were natural”); Balser v. Hain Celestial Group, 21 Inc., 640 Fed.Appx.694 (9th Cir. 2016) (“the statements that the products were “natural” and 22 “100% vegetarian” could be taken as a claim that no synthetic chemicals were in the products, a 23 claim the complaint alleges, in detail, is false”). 24 In light of this caselaw, the Court cannot conclude as a matter of law that a reasonable 25 consumer would not interpret the “100% natural mineral advanced protection,” and “100% natural 26 mineral hydrating defense” statements as meaning that all the ingredients in the Sunscreen and 27 Sun Spray are natural, a representation which Plaintiffs plausibly allege is false. The term “100% 28 natural mineral advanced protection” could confuse a reasonable consumer in regards to whether 8 1 the “natural mineral” content of the products is the only part that is 100% natural, or whether the 2 entire product is 100% natural. In this context, the reasonableness of Plaintiffs’ understanding of 3 the word “natural” is a question not appropriate for resolution on a motion to dismiss. See 4 Williams, 552 F.3d at 938. 5 The statements “nourish naturally with our botanical blends” and “obsessively natural 6 kids,” on the other hand, are not likely to deceive a reasonable consumer. The Court is unaware of 7 any case which has held that use of the adverb “naturally” is sufficient itself to deceive a 8 reasonable consumer. “Nourish naturally with our botanical blends” is not an affirmative 9 representation that the Body Wash and Body Lotion are entirely natural; instead, a reasonable consumer would interpret the statement as meaning the product contains natural ingredients—a 11 United States District Court Northern District of California 10 true statement. Thus, Plaintiffs have not alleged facts sufficient to plausibly suggest that a 12 reasonable consumer would interpret “naturally nourishing” to mean the product does not contain 13 a single synthetic ingredient. Similarly, “obsessively natural kids,” is displayed with “KIDS” in 14 all capitals and in larger font, referring to kids being natural, not the product itself. This marketing 15 is targeted towards parents who consider their kids “natural” and a reasonable consumer would not 16 interpret the statement to mean that the product itself does not contain any synthetic ingredients. 17 Again, while this statement might be false if the product did not contain any, or even mostly, 18 natural ingredients, the allegations here are that the statements are false because the products 19 contained a synthetic preservative. 20 Accordingly, KMF’s motion to dismiss the CLRA, FAL, UCL, and GBL claims is granted 21 as to the “nourish naturally with our botanical blends” and “obsessively natural kids” statements 22 and denied as to the “100% natural mineral advanced protection” and “100% natural mineral 23 hydrating defense” statements. 24 B. Puffery 25 KMF relatedly argues Plaintiffs’ CLRA, FAL, UCL, and GBL claims fail because the 26 terms “nourish naturally with our botanical blends” and “obsessively natural kids” are 27 nonactionable generalized statements which amount to nonactionable puffery. 28 “Advertisements that amount to mere puffery are not actionable because no reasonable 9 consumer relies on puffery.” Stickrath v. Glbalstar, Inc., 527 F.Supp.2d 992, 998 (N.D. Cal. 2 2007) (internal quotation marks and citation omitted). “The distinguishing characteristics of 3 puffery are ‘vague, highly subjective claims as opposed to specific, detailed factual assertions.’ 4 ” Sanders v. Apple Inc., 672 F. Supp. 2d 978, 987 (N.D. Cal. Jan 21, 2009) (quoting Haskell v. 5 Time, Inc., 857 F. Supp. 1392, 1399 (E.D. Cal. Jun. 13, 1994)). The Ninth Circuit explained 6 in Cook, Perkiss and Liehe, Inc. v. Northern California Collection Service Inc., 911 F.2d 242, 246 7 (9th Cir. 1990) that “[t]he common theme that seems to run through cases considering puffery in a 8 variety of contexts is that consumer reliance will be induced by specific rather than general 9 assertions.” As a result, “[a]dvertising which merely states in general terms that one product is 10 superior is not actionable. However, misdescriptions of specific or absolute characteristics of a 11 United States District Court Northern District of California 1 product are actionable.” Id. The Court is not persuaded that these statements are mere puffery. 12 As explained above, a reasonable consumer could interpret them to mean that a product is mostly 13 natural. 14 C. Rule 9 15 KMF next argues Plaintiffs’ CLRA, FAL, UCL, and GBL claims fail because they lack 16 specificity as required by Federal Rule of Civil Procedure 9(b). As the Court has determined that 17 as alleged in the FAC a reasonable consumer would not interpret the terms “nourish naturally” or 18 “obsessively natural KIDS” to mean the products are 100% natural, it will address the 9(b) 19 argument in the context of the other representations. 20 “Rule 9(b) demands that the circumstances constituting the alleged fraud must be specific 21 enough to give defendants notice of the particular misconduct ... so that they can defend against 22 the charge and not just deny that they have done anything wrong.” Kearns v. Ford Motor Co., 567 23 F.3d 1120, 1124 (9th Cir. 2009). In particular, the complaint must include specificity regarding 24 the charged conduct, including the “who, what, when, where, and how.” Reed v. Wells Fargo 25 Bank, 2011 WL 4802542, at *3 (N.D. Cal. Oct. 11, 2011). When alleging that fraudulent 26 statements were made, a plaintiff must identify the false statements and indicate why they were 27 false. In re GlenFed, Inc. Sec. Litig., 42 F.3d 1541, 1548 (9th Cir. 1994). 28 KMF repeats its reasonable consumer arguments, arguing Plaintiffs do not allege how or 10 1 why the phrase “100% natural mineral defense” is false or misleading. KMF asserts Plaintiffs 2 have not alleged how or why the preservatives do not make the products natural, why 3 preservatives are not expected to be found in manufactured cosmetic products, what percentage of 4 preservatives are in the products, how KMF’s labeling fails to comply with federal regulations, or 5 how KMF knew its labeling was false given there is no standard for the term “natural.” 6 Plaintiffs meet the heightened Rule 9 pleading standard. Plaintiffs identified KMF as the 7 party that made the allegedly misleading statements. (FAC ¶ 17.) Plaintiffs identified what 8 statements were misleading and where they were located - the statement “100% natural mineral 9 defense” is located on the front label of the products. (FAC ¶¶ 2, 23-25, 29.) Plaintiffs have also established when – “at all times during the last four years,” and how the statements were 11 United States District Court Northern District of California 10 misleading – because the products contain phenoxyethanol and/or ethylhexylglycerin. (FAC ¶¶ 4- 12 5, 26, 28, 30-31.) 13 KMF cannot rehash its reasonable consumer standard arguments. The issue under Rule 9 14 is not whether the pleading’s allegations are reasonable, but whether the pleading’s allegations are 15 made with specificity. Because Plaintiffs identified the “who, what, where, when, and how,” 16 Plaintiffs meet the heightened Rule 9 standard. See Reed, 2011 WL 4802542, at *3. 17 18 19 D. Express Warranty i. California Law “A plaintiff asserting a breach of warranty claim must allege facts sufficient to show that 20 (1) the seller’s statements constitute an affirmation of fact or promise or a description of the 21 goods; (2) the statement was part of the basis of the bargain; and (3) the warranty was 22 breached.” Allen v. ConAgra Foods, Inc., Case No. 13–cv–01279–JST, 2013 WL 4737421, *11 23 (N.D. Cal. Sept. 3, 2013). 24 First, Plaintiffs have pled breach of express warranty for the term “100% natural mineral 25 advanced protection” because the statement constitutes a description of the goods. Other courts in 26 this Circuit have concluded that such “natural” statements can constitute express warranties. See, 27 e.g., Bohac v. General Mills, Inc., 2014 WL 1266848, at *9 (N.D. Cal. Mar. 26, 2014) (“100% 28 natural” was an affirmative representation sufficient to state an express warranty claim); Viggiano 11 1 v. Johnson & Johnson, 2015 WL 12860480, at *4 (C.D. Cal. Jun. 12, 2015) (plaintiff sufficiently 2 pled express warranty because defendants’ packaging represented the product as 100% natural); 3 Vicuna v. Alexia Foods, Inc., 2012 WL 1497507, at *2 (N.D. Cal. Apr. 27, 2012) (plaintiffs 4 adequately stated a claim that the designation “all natural” constituted a description of potato 5 products); Garrison v. Whole Foods Mkt. Grp., Inc., 2014 WL 2451290, at *6 (N.D. Cal. June 2, 6 2014) (“all natural” on Whole Foods’ packaging constituted affirmation of fact). 7 Second, the statement is part of the bargain because Plaintiffs allege that they would not 8 purchase the KMF Sunscreen and Sun Spray on the same terms if they knew the truth about the 9 unnatural ingredients. (FAC ¶ 85.) 10 Finally, the warranty was breached because the KMF Sunscreen and Sun Spray contain United States District Court Northern District of California 11 ingredients that are unnatural and synthetic and “do not have the characteristics, uses, or benefits 12 as promised.” (FAC ¶¶ 80-85.) As such, KMF’s motion to dismiss Plaintiff’s breach of express 13 warranty claim as to the term “100% natural mineral hydrating defense” is denied. However, the 14 express warranty claim as to the other terms, “nourish naturally with our botanical blends” and 15 “obsessively natural kids,” fails for the reasons discussed above –no reasonable consumer would 16 attribute these statements as affirmations that the products are all natural. As such, KMF’s motion 17 is granted as to “nourish naturally” and “obsessively natural kids.” 18 19 ii. New York Law The New York requirements for express warranty are identical to California law. “[A]ny 20 affirmation of fact or promise made by the seller to the buyer which relates to the goods and 21 becomes part of the basis of the bargain,” and “[a]ny description of the goods which is made part 22 of the basis of the bargain creates an express warranty that the goods shall conform to the 23 description.” N.Y. U.C.C. Section 2-313(1)(a)(b). Furthermore, “[a] seller's warranty…extends” 24 to any foreseeable user “who is injured in person by breach of the warranty.” N.Y. U.C.C. Section 25 2-318. As described above, Plaintiffs pled a claim for the term “100% natural mineral hydrating 26 defense” but the terms “nourish naturally with our botanical blends” and “obsessively natural 27 kids” fail because no reasonable consumer would attribute these statements as affirmations that the 28 products are all natural. 12 1 KFM nonetheless makes three arguments as to why Plaintiffs’ breach of warranty claim 2 fails under New York Law. First, KFM asserts the parties are not in privity. However, “[t]he 3 New York Court of Appeals has dispensed with the requirement of privity in cases involving 4 breach of an express warranty where only economic damages are alleged.” Mahoney v. Endo 5 Health Solutions, Inc., 2016 WL 3951185, at *6 (S.D.N.Y. Jul.20, 2016) (citing Randy Knitwear, 6 Inc. v. Am. Cyanamid Co., 11 N.Y.2d 5, 16 (1962), Jesmer v. Retail Magic, Inc., 863 N.Y.S.2d 7 737, 739 (2d Dep’t 2008), and Murrin v. Ford Motor Co., 756 N.Y.S.2d 596, 597 (2d Dep’t 8 2003)). As the New York Court of Appeals concluded: 13 The policy of protecting the public from injury, physical or pecuniary, resulting from misrepresentations outweighs allegiance to old and out-moded technical rules of law which, if observed, might be productive of great injustice. The manufacturer unquestionably intends and expects that the product will be purchased and used in reliance upon his express assurance of its quality ... [h]aving invited and solicited the use, the manufacturer should not be permitted to avoid responsibility, when the expected use leads to injury and loss, by claiming that he made no contract directly with the user. 14 Codling v. Paglia, 32 N.Y.2d 330, 339 (1973) (citing Randy Knitwear). Moreover, Randy 15 Knitwear remains controlling precedent despite the subsequent enactment of the UCC because the 16 UCC commentary explains “the warranty sections of this Article are not designed in any way to 17 disturb those lines of case law growth which have recognized that warranties need not be confined 18 either to sales contracts or to the direct parties to such a contract.” N.Y. U.C.C. § 2-313, cmt.2 19 (discussing express warranties); see also Mahoney, 2016 WL 3951185 at *6. Thus, privity is not 20 required. 9 10 United States District Court Northern District of California 11 12 21 Second, KMF argues the cases Plaintiffs cite are unpersuasive because the advertising 22 involved not just labeling, but also website and Facebook advertising. However, KMF fails to 23 address Weisblum v. Prophase Labs Inc., where the plaintiffs specifically relied upon the product 24 packaging which stated that the product was “clinically proven” to reduce cold symptoms. 88 25 F.Supp.3d 283, 287, 295 (S.D.N.Y Feb. 20, 2015). Moreover, the Court is unaware of any 26 authority that reliance upon labeling alone is not enough and that additional forms of advertising 27 are required. 28 Third, KMF contends pre-suit notice is required and is not alleged. While New York law 13 1 requires that a “buyer must within a reasonable time after he discovers or should have discovered 2 any breach notify the seller of breach or be barred from any remedy,” N.Y. U.C.C. § 2–607(3)(a), 3 none of the cases cited by KMF discuss this requirement. See Koenig v. Boulder Brands Inc., 995 4 F.Supp.29 274, 290 (S.D.N.Y Jan. 31, 2014); Ebin v. Kangardis Food Inc., 2013 WL 6504547, at 5 *6, (S.D.N.Y. Dec. 11, 2013); Dibartolo v. Abbott Laboratories, 914 F.Supp.2d 601, 625 6 (S.D.N.Y Dec. 21, 2012). 7 8 2–607: 14 The content of the notification need merely be sufficient to let the seller know that the transaction is still troublesome and must be watched. There is no reason to require that the notification which saves the buyer’s rights under this section must include a clear statement of all the objections that will be relied on by the buyer, as under the section covering statements of defects upon rejection (§ 2-605). Nor is there reason for requiring the notification to be a claim for damages or of any threatened litigation or other resort to a remedy. The notification which saves the buyer’s rights under this Article need only be such as informs the seller that the transaction is claimed to involve a breach, and thus opens the way for normal settlement through negotiation. 15 Id. In their opposition to the motion to dismiss, Plaintiffs submit evidence that they sent KMF two 16 demand letters dated February 3, 2017 (Dkt. No. 29-1), and April 25, 2017. (Dkt. No. 20-4.) The 17 February 3 letter was submitted on behalf of Andrew Glasser and “all other persons similarly 18 situated,” and stated that the KMF products were mislabeled as “natural” which “breached an 19 express warranty to those who purchased the products.” (Dkt. No. 29-1 att 1.) The April 25 letter 20 states that “Noriko Ikeda is acting on behalf of a class defined as all persons in the United States 21 who purchased Kiss My Face Products,” that the products were labeled natural but not advertised 22 or sold in a manner consistent with that claim, and that failure to respond would result in a lawsuit 23 for damages pursuant to various California laws and the U.C.C. (Dkt. No. 29-4 at 3-4.) However, 24 because neither letter is alleged or referred to in Plaintiffs’ First Amended Complaint the Court 25 cannot consider them. See Hal Roach Studios, Inc. v. Richard Feiner & Co., Inc., 896 F.2d 1542, 26 1555 n. 19 (9th Cir. 1990) (generally district courts may not consider “any material beyond the 27 pleadings”). Accordingly, KMF’s motion to dismiss Plaintiffs’ breach of express warranty claim 28 is granted with leave to amend. 9 10 11 United States District Court Northern District of California The requirements regarding notice are, however, discussed in note four of N.Y. U.C.C. § 12 13 14 1 E. Unjust Enrichment 2 The Ninth Circuit has recognized that while “there is not a standalone cause of action for 3 ‘unjust enrichment’” in California, the term “describe[s] the theory underlying a claim that a 4 defendant has been unjustly conferred a benefit ‘through mistake, fraud, coercion, or 5 request.” Astiana v. Hain Celestial Group, Inc., 783 F.3d 753, 762 (9th Cir. 2015). As such, 6 “[w]hen a plaintiff alleges unjust enrichment, a court may construe the cause of action as a quasi- 7 contract claim seeking restitution.” Id. (internal quotations and citations omitted). Plaintiffs 8 allege that they are entitled to relief because KMF made “misrepresentations about the Products, 9 which caused injuries to Plaintiffs” and that KMF was “unjustly enriched” as a result. FAC ¶ 89. “This straightforward statement is sufficient to state a quasi-contract cause of action.” Astiana, 11 United States District Court Northern District of California 10 783 F.3d at 762. KMF’s argues that an underlying contract claim is necessary to bring an unjust enrichment 12 13 claim. Not so. The Ninth Circuit recently held in an unpublished but citable decision that under 14 California law unjust enrichment may be pled as an “independent claim” and applied this holding 15 to the labeling of nutrient content in Gerber baby food products. See Burton v. Gerber Products 16 Company, 2017 WL 3016740 (9th Cir. Jul. 17, 2017) (“the California Supreme Court has clarified 17 California law, allowing an independent claim for unjust enrichment”) (citing Hartford Cas. 18 Insurance Co. v. J.R. Mktg., L.L.C., 61 Cal. 4th 998, 1000 (2015)). KMF’s motion to dismiss 19 Plaintiffs’ unjust enrichment claim is therefore denied. KMF’s reliance on Goldman v. Bayer AG, 2017 WL 3168525 (N.D. Cal. July 26, 2017) is 20 21 misplaced. There the court dismissed because the defendant had not engaged in any deceptive 22 conduct and therefore did not do anything unjust. Id. at *9. Here, in contrast, Plaintiffs have 23 alleged an actionable misrepresentation and thus that it would be unjust for KMF to retain the 24 profits from the sale. 25 III. 26 Punitive Damages Defendants argue that to recover punitive damages Plaintiffs must plead facts sufficient to 27 show that a defendant acted with oppression, fraud or malice. Defendants apply the wrong 28 standard for evaluating the sufficiency of Plaintiffs’ pleadings in federal court. In California state 15 1 court, a plaintiff must plead facts to support the conclusion that the defendant acted with malice, 2 fraud, or oppression in order to state a claim for punitive damages. Cal. Civ. Code § 3294(a). In 3 federal court, the Federal Rules of Civil Procedure provide the pleading standard for cases. 4 Pursuant to Rule 9(b), “malice, intent, knowledge, and other conditions of the mind may be 5 alleged generally.” Thus, plaintiffs need not plead “any particularity in connection with an averment of intent, 6 7 knowledge or condition of the mind.” In re GlenFed Sec. Litig., 42 F.3d 1541, 1547 (9th Cir. 8 1994) (en banc), superseded by statute on other grounds as stated in SEC v. Todd, 642 F.3d 1207, 9 1216 (9th Cir.2011). Accordingly, “in federal court, a plaintiff may include a ‘short and plain’ prayer for punitive damages that relies entirely on unsupported and conclusory averments of 11 United States District Court Northern District of California 10 malice or fraudulent intent.” Clark v. Allstate Ins. Co., 106 F.Supp.2d 1016, 1019 (S.D. Cal. July. 12 27, 2000). Here, the complaint states: “[d]efendant knew that consumers will pay more for a 13 product labeled “natural,” and intended to deceive Plaintiffs and putative class members by 14 labeling KMF Lotion, Body Wash, and Sunscreen as purportedly natural products.” FAC ¶ 33. 15 This short and plain statement of fraudulent intent is sufficient to support Plaintiffs’ pleading of 16 punitive damages. 17 IV. 18 Motion to Stay Finally, KMF moves to stay this case pursuant to the primary jurisdiction doctrine arguing 19 that the FDA will issue regulations governing “natural” food labeling that will also govern 20 cosmetics. A district court has the discretion to stay or dismiss a case under the doctrine of 21 primary jurisdiction. Reiter v. Cooper, 507 U.S. 258, 268–69 (1993). Primary jurisdiction is a 22 prudential doctrine that permits courts to determine “that an otherwise cognizable claim implicates 23 technical and policy questions that should be addressed in the first instance by the agency with 24 regulatory authority over the relevant industry rather than by the judicial branch.” Clark v. Time 25 Warner Cable, 523 F.3d 1110, 1114 (9th Cir. 2008). In evaluating primary jurisdiction, courts 26 consider “(1) the need to resolve an issue that (2) has been placed by Congress within the 27 jurisdiction of an administrative body having regulatory authority (3) pursuant to a statute that 28 subjects an industry or activity to a comprehensive regulatory authority that (4) requires expertise 16 1 or uniformity in administration.” Syntek Semiconductor Co., Ltd. v, Microchip Technology 2 Inc., 307 F.3d 775, 781 (9th Cir. 2002). “Efficiency” is the “deciding factor” in the primary 3 jurisdiction analysis. Rhoades v. Avon Prods., Inc., 504 F.3d 1151, 1165 (9th Cir. 2007). KMF’s motion to stay is denied. The FDA’s November 12, 2015 Request for Comments 4 5 concerns “the use of the term ‘natural’ in the labeling of human food products” but makes no 6 reference to cosmetics. (Dkt. No. 35 at 6-7.) Further, although the FDA asked for comment on 7 whether it should define the term “natural” through rulemaking, there is no certainty that the FDA 8 will indeed define the term, or that it will apply to cosmetics in addition to food products. (Id. at 9 9.) 10 Moreover, even if the FDA issues a new rule regarding “natural” labeling in cosmetics, United States District Court Northern District of California 11 there is no evidence regarding when this will occur, nor any showing that such a rule is critical to 12 the Court’s competency in ruling on this case. See Astiana, 783 F.3d at 760–61 (“[P]rimary 13 jurisdiction is not required when a referral to the agency would significantly postpone a ruling that 14 a court is otherwise competent to make.”) Nor are “natural” labels in the context of 15 misrepresentation class actions a limited circumstance that “requires resolution of an issue of first 16 impression, or of a particularly complicated issue that Congress has committed to a regulatory 17 agency.” Clark, 523 F.3d at 1114 (quoting Brown v. MCI WorldCom Network Servs., 277 F.3d 18 1166, 1172 (9th Cir.2002)). And a stay would not contribute to the efficiency of these 19 proceedings because the Court can come to a determination without the issuing of such a rule. 20 Defendant cites Kane v. Chobani LLC, 645 Fed.Appx. 593 (9th Cir. 2016) to argue the 21 “proverbial pendulum” has swung and that courts are now staying matters on the basis of primary 22 jurisdiction. However, Kane concerned the labeling and sale of yogurt, not cosmetics. Id. at 594. 23 Furthermore, in addition to the word “natural,” the yogurt contained the terms “evaporated cane 24 juice,” which the FDA stated it would issue final guidance on by the end of 2016. The Ninth 25 Circuit concluded that staying the case eight months until the FDA issued a definition material to 26 the product would not needlessly delay the case. Here, in contrast, there is no pending proceeding 27 or date in sight, and no evidence that a definition for “natural” is being contemplated for 28 cosmetics. KMF’s motion to stay the action is denied. 17 1 V. 2 Judicial Notice Plaintiffs request that Court take judicial notice of four items related to its opposition to KMF’s motion to stay: the use of the term “natural” in the federal register, four district court 4 cases, the FDA Small Business & Homemade Cosmetics Fact Sheet from the FDA website, and 5 two FDA letters. Plaintiffs’ motion for judicial notice is granted. Judicial notice of the Federal 6 Register is required under 44 U.S.C. § 1507 (“The contents of the Federal Register shall be 7 judicially noticed . . . .”). Courts will take judicial notice of the dockets and records of other cases. 8 Headwaters Inc. v. U.S. Forest Serv., 399 F.3d 1047, 1051 n. 3 (9th Cir. 2005). Government 9 agency websites, and the information contained therein, are matters of public record appropriate 10 for judicial notice under Rule 201. See Satterfield v. Simon & Schuster, Inc., 569 F.3d 946, 952 11 United States District Court Northern District of California 3 n.2 (9th Cir. 2009) (taking judicial notice of consumer fact sheet on FCC website). Official letters 12 from government agencies, including the FDA, are subject to judicial notice and the letters in 13 question are already records of other cases. See Astiana, 783 F.3d at 762 (March 7, 2013 FDA 14 letter was filed per judicial notice). 15 KMF moves to judicially notice exhibits 5-14 to the Disch Declaration. The Court takes 16 judicial notice of exhibit 5 as it is a document from the FDA website concerning the word 17 “natural,” and exhibit 8, a decision from the FTC. The Court also takes judicial notice of Exhibits 18 6, 7, and 14 regarding the USDA’s “BioPreferred Products Preference Program” and the European 19 Union’s phenoxyethanol regulations. Exhibits 9-13 are documents related to private third party 20 labeling programs and standards. Such documents are improper for judicial notice as the Court 21 cannot be certain of their accuracy. See Fed. R. Evid. 201(b)(2). 22 VI. 23 Motion to Appoint Counsel Plaintiffs move to appoint interim class counsel pursuant to Federal Rule of Civil 24 Procedure 23(g)(3). (Dkt. No. 36.) KMF filed a statement of non-opposition, and reserved its 25 right to oppose class certification. (Dkt. No. 45.) Given Bursor & Fisher’s experience 26 representing plaintiffs in class actions and KMF’s non-opposition to their appointment, the Court 27 grants Plaintiffs’ motion. 28 18 1 2 CONCLUSION For the reasons described above, KMF’s 12(b)(1) motion to dismiss Plaintiffs’ claim for 3 injunctive relief is granted with leave to amend. In all other respects the 12(b)(1) motion to 4 dismiss for lack of subject matter jurisdiction is denied. 5 KFM’s 12(b)(6) motion to dismiss is granted with leave to amend as to the terms on the 6 KFM Lotion and Body Wash, “nourish naturally with our botanical blends” and “obsessively 7 natural kids.” KMF’s 12(b)(6) motion to dismiss is denied as to the terms on the Sunscreen and 8 Sun Spray, “100% natural mineral advanced protection” and “100% natural mineral hydrating 9 defense.” Furthermore, KFM’s 12(b)(6) motion to dismiss Plaintiffs’ New York breach of express 10 United States District Court Northern District of California 11 12 13 14 warranty claim is granted with leave to amend to allege the requisite notice. KMF’s motion to stay is denied, and its request for judicial notice is granted and denied in part. Plaintiffs’ motion to appoint counsel and request for judicial notice are granted. An amended complaint, if any, shall be filed on or before November 13, 2017. The parties shall appear for a further case management conference on January 18, 2017 at 1:30 p.m. 15 This Order disposes of Docket Nos. 27, 28, 31, 35, 36. 16 IT IS SO ORDERED. 17 Dated: October 23, 2017 18 JACQUELINE SCOTT CORLEY United States Magistrate Judge 19 20 21 22 23 24 25 26 27 28 19

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