van Mourik v. Big Heart Pet Brands, Inc.

Filing 59

ORDER re 23 Motion to Dismiss. Amended Pleadings due by 3/23/2018. Signed by Judge James Donato on 3/1/2018. (jdlc3S, COURT STAFF) (Filed on 3/1/2018)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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NANCY VAN MOURIK,
Plaintiff,

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United States District Court
Northern District of California

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Case No. 3:17-cv-03889-JD
ORDER RE MOTION TO DISMISS

v.

Re: Dkt. No. 23
BIG HEART PET BRANDS, INC.,
Defendant.
In this putative class action, plaintiff Nancy van Mourik brings the dispute over the use of

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the word “natural” to pet food. She challenges representations by defendant Big Heart Pet Brands,

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Inc. (“Big Heart”) that its pet food products are “All Natural With Added Vitamins, Minerals, &

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Nutrients.” Dkt. No. 1-1. Van Mourik alleges that these statements are false and deceptive

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because the foods contain synthetic or artificial ingredients. Dkt. No. 1 at 5-6; Dkt. No. 43 at 8.

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She sues on behalf of putative classes of California and nationwide consumers under the

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California Consumer Legal Remedies Act (“CLRA”), the Unfair Competition Law (“UCL”), the

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False Advertising Law (“FAL”), breach of express and implied warranties, common law fraud,

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intentional misrepresentation, and unjust enrichment. Dkt. No. 1 at 15.

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Big Heart moves to dismiss the complaint under Federal Rules of Civil Procedure 12(b)(6),

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8(a), and 9(b). Its main contentions are that van Mourik may not sue under California consumer

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protection law, and that the allegations of false and deceptive advertising are implausible under

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Rule 8(a) and lack the particularity required by Rule 9(b). Dkt. No. 23.

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DISCUSSION
Straightforward standards govern the application of Rule 12(b)(6). To meet the pleading

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requirements of Rule 8(a) and to survive a Rule 12(b)(6) motion to dismiss, a claim must provide

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“a short and plain statement . . . showing that the pleader is entitled to relief,” Fed. R. Civ. P.

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8(a)(2), including “enough facts to state a claim . . . that is plausible on its face.” Bell Atl. Corp. v.

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Twombly, 550 U.S. 544, 570 (2007). A claim is plausible on its face if, accepting all factual

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allegations as true and construing them in the light most favorable to the plaintiff, the Court can

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reasonably infer that the defendant is liable for the misconduct alleged. Ashcroft v. Iqbal, 556

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U.S. 662, 678 (2009). The plausibility analysis is “context-specific” and not only invites but

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“requires the reviewing court to draw on its judicial experience and common sense.” Id. at 679.

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Rule 9(b)’s specificity standards apply because Van Mourik alleges false and misleading

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product representations that sound in fraud. Kearns v. Ford Motor Co., 567 F.3d 1120, 1125 (9th

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Cir. 2009); Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1103-04 (9th Cir. 2003).
I.

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United States District Court
Northern District of California

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The Putative California Class Claims

Van Mourik divides her claims into a set for a putative California class under California

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law, and a set for a putative nationwide class. Big Heart challenges the plausibility of the

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California claims but the first question is whether van Mourik is properly situated to invoke

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California law on behalf of California residents.

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She is not. Van Mourik is a resident of Texas who saw the challenged advertisements in

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Texas and bought the defendant’s dog food there. She has no personal connection whatsoever to

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California, and is not herself a member of the putative California class. While this at first blush

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might seem to be only a question of her adequacy as a class representative under Rule 23(a), it

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raises more fundamental concerns of standing. See Gratz v. Bollinger, 539 U.S. 244, 263 (noting

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cases where significant differences between the named plaintiff and unnamed class have been

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analyzed under the rubric of standing); E. Texas Motor Freight Sys. Inc. v. Rodriguez, 431 U.S.

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395, 403 (1977) (“As this Court has repeatedly held, a class representative must be part of the

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class and possess the same interest and suffer the same injury as the class members”) (listing

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cases) (internal quotations omitted). District courts in our circuit have dismissed state law class

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claims for lack of standing before the class certification stage where no named plaintiff resides in

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or otherwise interacted with the state. See, e.g., In re Carrier IQ, Inc., 78 F. Supp. 3d 1051, 1075

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(N.D. Cal. 2015) (“the named Plaintiffs do not have standing to assert claims from states in which

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they do not reside or did not purchase their mobile device”); Mollicone v. Universal Handicraft,
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Inc., No. 216CV07322CASMRWX, 2017 WL 440257, at *9 (C.D. Cal. Jan. 30, 2017) (finding

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that “the majority of courts . . . have concluded that when a representative plaintiff is lacking for a

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particular state, all claims based on that state’s laws are subject to dismissal” and listing cases)

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(internal citation omitted). That is the right outcome here, too.

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All claims on behalf of the California classes are dismissed without prejudice. Van

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Mourik may seek to cure these standing defects by adding a named plaintiff who is a California

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resident.

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II.

The Putative Nationwide Class Claims

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Van Mourik sues on behalf of a putative nationwide class under common law fraud,
intentional misrepresentation, and quasi-contract/unjust enrichment. Dkt. No. 1 at 24-26. It is

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United States District Court
Northern District of California

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well-established that these common law actions vary materially among the states. See, e.g., Mazza

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v. Am. Honda Motor Co., 666 F.3d 581, 591 (9th Cir. 2012). But van Mourik does not specify

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which state’s laws she means to sue under, nor does she clearly address the elements of any of

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these claims. These claims are all inadequately pleaded and fail to advise the defendant of what it

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is called to answer for legally. They are dismissed with leave to amend.
Choice Of Law For van Mourik’s Individual UCL, CLRA and FAL Claims

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III.

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The next issue is whether van Mourik may sue as an individual under California’s main

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consumer protection statutes. This triggers the need for a determination of whether the laws of

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California or van Mourik’s home state of Texas should govern her claims.

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The threshold inquiry is whether California law encompasses van Mourik’s Texas

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purchase. The “presumption against extraterritoriality applies to the UCL in full force” because

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neither “the language of the UCL nor its legislative history provides any basis for concluding the

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Legislature intended the UCL to operate extraterritorially.” Sullivan v. Oracle Corp., 51 Cal. 4th

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1191, 1207 (Cal. 2011). That presumption also applies to the CLRA. Ehret v. Uber Techs., Inc.,

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68 F. Supp. 3d 1121, 1130 (N.D. Cal. 2014) (listing cases). However, California law might still

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apply to the claims of foreign residents if “the unlawful conduct that formed the basis of the out-

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of-state plaintiffs’ claims (i.e., fraudulent misrepresentations made to induce consumer

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transactions) . . . occurred in California.” Sullivan, 51 Cal. 4th at 1208 n.10. Here, van Mourik
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alleges that “the marketing and advertising of the Products emanates from the pet food business

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headquarters in San Francisco, California.” Dkt. No. 1 at 4. At the pleading stage, these

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allegations are enough to connect Big Heart’s allegedly unlawful conduct (creating false or

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misleading advertising) with the state of California. Consequently, van Mourik’s invocation of

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California law is permissible as a first step.

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But that is not the end of the inquiry. This case is before the Court under CAFA, a species

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of diversity jurisdiction, and so California law governs the choice of law determination. In re

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Facebook Biometric Info. Privacy Litig., 185 F. Supp. 3d 1155, 1167-68 (N.D. Cal. 2016). Absent

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an effective choice of law agreement, California applies a three-step test to decide what law
applies. Washington Mut. Bank, FA v. Superior Court, 24 Cal. 4th 906, 919 (Cal. 2001). This test

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United States District Court
Northern District of California

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requires the proponent of the foreign law to (1) identify material differences between foreign law

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and California law, and (2) establish that the foreign state is interested in having its own law

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apply. For step (3), the Court applies “the law of the state whose interests would be ‘more

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impaired’ if its law were not applied.” Id. at 919-20.

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Differences are material when they “spell the difference between the success and failure of

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a claim” or determine availability of remedies. Mazza, 666 F.3d at 591. Big Heart has identified a

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number of differences between Texas and California consumer protection law that are material to

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van Mourik’s consumer protection claims. For example, van Mourik alleges that Big Heart’s

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conduct was unlawful under the “unfair” prong of the UCL, but the Texas Deceptive Trade

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Practice-Consumer Protection Act (“DTP-CPA”) targets “false, misleading or deceptive acts or

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practices” and does not on its face target “unfair” acts. Tex. Bus. & Com. Code Ann. § 17.46.

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Van Mourik concedes this point by failing to address it in her opposition. In addition, the CLRA

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permits van Mourik to “recover actual damages (at least $1000), an injunction, restitution,

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punitive damages and ‘any other relief that the court deems proper.’” Mazza, 666 F.3d at 591

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(citing Cal. Civ. Code § 1780(a)(1)-(5)); Dkt. No. 1 at 18 (CLRA claim). In contrast, the DTP-

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CPA contemplates economic damages with no minimum and treble damages for knowing or

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intentional violations. Tex. Bus. & Com. Code Ann. § 17.50.

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In addition, Texas has a clear interest in applying its own consumer protection laws in this
case. “Each of our states has an interest in balancing the range of products and prices offered to

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consumers with the legal protections afforded to them.” Mazza, 666 F.3d at 592-93 (citing

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McCann v. Foster Wheeler, LLC, 48 Cal. 4th 68, 97-98 (Cal. 2010)). California specifically

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“recognizes that with respect to regulating or affecting conduct within its borders, the place of the

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wrong has the predominant interest. California considers the ‘place of the wrong’ to be the state

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where the last event necessary to make the actor liable occurred.” Mazza, 666 F.3d at 593

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(citations and quotations omitted). As in Mazza, “the last events necessary for liability as to the

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foreign class members -- communication of the advertisements to the claimants and their reliance

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thereon . . . -- took place in the various foreign states, not in California.” Id. at 594. Texas has a

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United States District Court
Northern District of California

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strong interest in regulating false or deceptive advertising seen by its residents, while California’s

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interest in applying its laws on behalf of non-residents is “attenuated.” Id.

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Consequently, under California’s choice of law principles, and in the facts and

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circumstances of this case, Texas law governs van Mourik’s claims. Failure to apply it would

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impair Texas’s greater interest in overseeing the consumer protection of its residents.

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This may seem an odd result in that Texas law is arguably less protective of consumers

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like van Mourik, but the comparative benefits of two states’ laws does not drive the analysis here.

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California deems the state with the greater interest to be the state where the wrong occurred (in

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this case, where the allegedly fraudulent advertisements were seen rather than where they were

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created). In other choice of law contexts, the fact that one state has more protective laws than

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another may be relevant to the analysis. For example, the contractual choice of law inquiry

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focuses on whether the contractually chosen state’s law will frustrate another state’s fundamental

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policy, and in that context it may be appropriate to favor application of broader consumer

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protection laws. See In re Facebook Biometric Info. Privacy Litig., 185 F. Supp. 3d 1155, 1170

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(N.D. Cal. 2016). But that is not the situation here, where no bargained-for choice of law

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provision exists between the parties.

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Van Mourik devotes much of her opposition to arguing that “California has sufficiently
significant contact with Plaintiff’s claims that application of California’s consumer protection laws
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would not be arbitrary or unfair.” Dkt. No. 43 at 4. That “significant contacts” inquiry is not part

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of the choice of law analysis; rather, it is relevant to the threshold question of whether California

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law may constitutionally bind foreign unnamed class members. In re Capacitors Antitrust Litig.,

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106 F. Supp. 3d 1051, 1073 (N.D. Cal. 2015). Those due process issues are not implicated here

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for van Mourik’s individual claims.

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Van Mourik cannot sue individually under the CLRA, FAL, or UCL. Those individual
claims are dismissed with prejudice.

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IV.

The Individual Implied And Express Warranty Claims

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A different result is reached for van Mourik’s individual express and implied warranty
claims. As an initial matter, and contrary to Big Heart’s contention, the complaint plausibly

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United States District Court
Northern District of California

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alleges that a reasonable consumer could be misled by the challenged representations. A

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consumer might reasonably understand “All Natural Dog Food With Added Vitamins, Minerals,

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& Nutrients” to mean that the food is free of synthetic additives apart from the added vitamins,

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minerals, and nutrients. But the complaint alleges that the foods contain synthetic and artificial

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ingredients that are not vitamins, minerals, or nutrients, including sodium tripolyphosphate, citric

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acid, and lactic acid. Dkt. No. 1 at 2, 5-6. A consumer could also reasonably understand Big

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Heart’s label to mean that the added vitamins, minerals, and nutrients are themselves naturally

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derived rather than synthetically produced. Dkt. No. 1 at 6-9. These allegations of deception and

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confusion are well within the bounds of Rule 8. See also Gregorio v. The Clorox Co., No. 17-CV-

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03824-PJH, 2018 WL 732673, at *4-5 (N.D. Cal. Feb. 6, 2018) (same for “naturally derived”

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detergent); Organic Consumers Ass’n v. Sanderson Farms, Inc., No. 17-CV-03592-RS, 2018 WL

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922247, at *6 (N.D. Cal. Feb. 9, 2018) (same for “natural” poultry).

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The complaint also satisfies Rule 9(b). “A pleading is sufficient under rule 9(b) if it

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identifies the circumstances constituting fraud so that a defendant can prepare an adequate answer

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from the allegations.” Moore v. Kayport Package Exp., Inc., 885 F.2d 531, 540 (9th Cir. 1989).

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That rule “may be relaxed as to matters within the opposing party’s knowledge.” Id. While

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conclusory allegations with no “particularized supporting detail” do not suffice, the 9(b) “standard

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does not require absolute particularity or a recital of the evidence . . . . [A] complaint need not
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allege ‘a precise time frame,’ ‘describe in detail a single specific transaction’ or identify the

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‘precise method’ used to carry out the fraud.” United States v. United Healthcare Ins. Co., 848

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F.3d 1161, 1180 (9th Cir. 2016) (citing Cooper v. Pickett, 137 F.3d 616, 627 (9th Cir. 1997))

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(other citations omitted).

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Exhibit 1 to the complaint attaches a spreadsheet containing images and ingredient lists for
all the challenged products. For all of the challenged products, van Mourik identifies the

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representations at issue with sufficient particularity by reproducing the labels and product images

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along with a full list of ingredients with allegedly non-natural ingredients in bold typeface. Dkt.

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No. 1 at 9-10; Dkt. No. 1-1. The complaint explains in full detail why these statements are

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deceptive and misleading and alleges that the statements were all reproduced on Big Heart’s

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United States District Court
Northern District of California

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website as of July 5, 2017. Id. at ECF p.2.

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Consequently, the complaint plausibly alleges individual claims for breach of express and

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implied warranty. Dkt. No. 23 at 10. An express warranty claim “must allege the exact terms of

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the warranty, plaintiff’s reasonable reliance thereon, and a breach of that warranty which

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proximately causes plaintiff injury.” Williams v. Beechnut Nutrition Corp., 185 Cal. App. 3d 135,

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142 (Cal. Ct. App. 1986). Reliance “can be reasonably inferred from the tenor and totality of the

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allegations in the complaint.” Id. Here, the complaint identifies the purported warranties in full,

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see Dkt. No. 1-1, and plausibly alleges breach, reliance, and injury. Dkt. No. 1 at 3 (alleging that

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van Mourik paid a premium price for Big Heart’s pet food based on the identified representations).

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Similarly, van Mourik plausibly alleges an implied warranty claim.

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California law is cited here because Big Heart has not shown that Texas law should apply

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to the warranty claims. Big Heart says that California and Texas differ materially because

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California requires privity of contract for an implied warranty claim but Texas does not. It is true

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that California implied warranty claims generally require vertical contractual privity, and

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consumers who purchase from retailers do not stand in vertical contractual privity with a

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manufacturer. Clemens v. DaimlerChrysler Corp., 534 F.3d 1017, 1023 (9th Cir. 2008). But the

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vertical privity rule may be relaxed “when the plaintiff relies on written labels or advertisements

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of a manufacturer,” id., or when an express warranty is extended by the manufacturer, Atkinson v.
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Elk Corp. of Texas, 142 Cal. App. 4th 212, 229 (Cal. Ct. App. 2006). Because the representations

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at issue are written advertisements and because van Mourik has stated a plausible claim for breach

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of express warranty, the vertical privity rule does not bar an implied warranty claim under

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California law.
CONCLUSION

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All claims on behalf of California or nationwide classes are dismissed with leave to amend.

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Van Mourik’s individual UCL, CLRA, and FAL claims are dismissed with prejudice. Van

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Mourik’s individual common law fraud, intentional misrepresentation, and quasi-contract/unjust

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enrichment claims are dismissed with leave to amend. Van Mourik may proceed on her individual

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United States District Court
Northern District of California

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express and implied warranty claims. An amended complaint is due by March 23, 2018.
IT IS SO ORDERED.
Dated: March 1, 2018

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JAMES DONATO
United States District Judge

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