Wright v. Costco Wholesale Corporation

Filing 38

Order by Judge William H. Orrick denying 26 Motion to Dismiss. (jmd, COURT STAFF) (Filed on 1/17/2023)

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Case 3:22-cv-04343-WHO Document 38 Filed 01/17/23 Page 1 of 13 1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 MELINDA WRIGHT, Plaintiff, 8 9 10 United States District Court Northern District of California 11 Case No. 22-cv-04343-WHO ORDER DENYING MOTION TO DISMISS v. COSTCO WHOLESALE CORPORATION, Re: Dkt. No. 26 Defendant. 12 13 Defendant Costco Wholesale Corp. (“Costco”) moves to dismiss a class action complaint 14 filed by plaintiff Melinda Wright alleging that Costco’s representations that its canned tuna is 15 “dolphin safe” are false, deceptive, and misleading. Wright has adequately alleged a heightened 16 promise by Costco that its product is dolphin-safe, above what the Dolphin Protection Consumer 17 Information Act (“DPCIA”) requires. Her claims are not preempted and the doctrine of primary 18 jurisdiction does not apply. She has satisfied Federal Rule of Civil Procedure 9(b)’s pleading 19 requirement for fraud and adequately alleged that a reasonable consumer would be deceived by 20 Costco’s representations. The motion is DENIED. BACKGROUND 21 22 The 58-page First Amended Complaint (“FAC”) includes a host of background 23 information about fishing practices and legislation, along with allegations more specific to 24 Wright’s claims. See generally FAC [Dkt. No. 21]. I will focus on the allegations most relevant 25 to the motion at hand. 26 In 2021, Wright purchased a package of eight cans of Kirkland Signature White Albacore 27 Tuna in Water (“the product” or “the products”) from a Costco store in Ukiah, California. FAC ¶¶ 28 1, 9. In doing so, the FAC alleges, she relied upon promises and representations by Costco on the Case 3:22-cv-04343-WHO Document 38 Filed 01/17/23 Page 2 of 13 1 product’s labeling, packaging, and advertising that the product was “dolphin safe.” Id. ¶ 9. 2 Because of those representations, Wright believed that the tuna “were caught using fishing 3 methods that do not kill or harm dolphins.” Id. 4 The FAC describes an “extensive marketing campaign” by Costco “premised on its 5 dolphin safety and sustainability promises and representations.” Id. ¶ 36. Those alleged promises 6 and representations include: 7 • Costco’s unique “dolphin safe” logo on the product label and packaging, along with the product listing on its website; • Statements that the products are “dolphin safe” on the product packaging and Costco’s website; • Statements on the product packaging that it is “100% Traceable from Sea to Shelf” and uses “100% Monofilament Leaders & Circle Hooks”; • Costco’s promises, “via its tuna supplier,” that it “[does] not and will not utilize tuna caught in a manner that harms dolphins” and that “[p]roviding consumers with sustainable and dolphin safe tuna remains a top priority”; • Costco’s emphasis on its participation in the International Seafood Sustainability Foundation (“ISSF”), “which promises to prioritize the long-term conservation and sustainable use of tuna stocks, illegal fishing prevention, reducing bycatch and promoting ecosystem health”; • Costco’s indication that it is a founding member of the Seafood Taskforce, “which promises to focus on Illegal, Unreported, and Unregulated Fishing (‘IUU’) and specific and measurable work plans for addressing supply chain traceability”; • Costco’s statement on its “Sustainable Fisheries & Aquaculture” webpage that the “primary objectives of its seafood sourcing policy are to ‘continue to improve sustainably sourced seafood from either wild fisheries or farmed aquaculture in ways that meet current standards without compromising the availability of scarce resources for future generations”; • Costco’s statement that “in sourcing its seafood, it considers ‘the protection of and respect of the marine, coastal, and freshwater ecosystems; and practices that will mitigate or limit environmental impacts associated with aquaculture and fishing practices.” 8 9 10 United States District Court Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 See id. (citing Exs. 2-7). According to the FAC, Costco represents to consumers that its products 27 are dolphin-safe “by representing that its tuna is sustainably sourced in a manner than does not 28 2 United States District Court Northern District of California Case 3:22-cv-04343-WHO Document 38 Filed 01/17/23 Page 3 of 13 1 harm or kill dolphins.” Id. ¶ 49. But, it alleges, “these representations are false and deceptive 2 because the manufacturing of the products involve unsustainable fishing practices that are known 3 to kill and harm dolphins and other marine life.” Id. 4 The FAC takes issue with a few of those practices. It alleges that Costco’s representation 5 that the tuna is caught using “100% Monofilament Leaders & Circle Hooks” causes consumers to 6 “reasonably believe that this method of fishing is sustainable and dolphin-safe.” Id. ¶ 61. Instead, 7 it contends, “[m]onofilament leaders . . . are not sustainable or dolphin-safe because they are 8 hazardous to marine mammals like dolphins, sea turtles, sharks, and sea birds which become 9 entangled in or ingest the almost invisible wire, leading to injury and death.” Id. The FAC further 10 alleges that monofilament lines are commonly used in longline fishing, which “is one of the most 11 damaging fishing methods to dolphins and marine ecosystems” and “is known to kill and seriously 12 harm various dolphin species” by attracting and snagging dolphins, among other marine life, as 13 unintentional bycatch. Id. ¶¶ 62-64. And, according to the FAC, although circle hooks “decrease 14 the likelihood that the hooks will be swallowed by fish and cetaceans alike, it is well known that 15 when hooked, dolphins can and do drown if not released in time.” Id. ¶ 61.1 16 The FAC also takes aim at Costco’s “promises that the products are ‘100% Traceable from 17 Sea to Shelf,’” which it contends led Wright and other reasonable consumers “to believe that they 18 can trace the tuna product they purchase all the way back to where it was caught.” Id. ¶ 74. 19 Instead, it alleges, “consumers are unable to access any tracing information on [Costco’s] website 20 or packaging.” Id. Not only does Costco’s tracing system only cover shrimp products and not 21 tuna, the FAC contends, but Costco and its suppliers are “not able to trace their tuna ‘100%’ from 22 sea to shelf because of data issues, supply chain complexities, and even human error.” Id. ¶ 75. Also relevant to this motion are the efforts that federal legislators have made to better 23 24 protect marine life. See id. ¶¶ 15, 22. The DPCIA, part of the Marine Mammal Protection Act, 25 established an official “dolphin safe” label and outlines situations in which that label may or may 26 not lawfully be used. See id. ¶ 22. According to the FAC, the DPCIA was enacted “[i]n response 27 28 1 Dolphins are “small-toothed cetaceans.” FAC ¶ 16. 3 Case 3:22-cv-04343-WHO Document 38 Filed 01/17/23 Page 4 of 13 1 to the increase in consumer demand for dolphin-safe tuna” and in “recognition that consumers 2 wanted to know if the tuna they purchased was dolphin-safe.” Id. The FAC alleges that Costco “deceives consumers by promising a higher dolphin-safe 3 4 standard [than] what the DPCIA requires and then breaks that promise by utilizing fishing 5 methods known to harm and kill dolphins.” Id. ¶ 84. It further alleges that Wright and reasonable 6 consumers “relied and rely on [Costco’s] false labeling and advertising claims that the products 7 are ‘dolphin safe’ in making the decision to purchase the products,” and that had Wright known 8 that the products were not dolphin-safe, she “would not have purchased the products, and certainly 9 would not have paid a ‘premium’ for such a valued perceived benefit.” See id. ¶¶ 9, 91. Wright filed this suit on July 27, 2022. Dkt. No. 1. After Costco moved to dismiss, she United States District Court Northern District of California 10 11 filed the FAC, which alleges six claims: violations of California’s Consumers Legal Remedies Act 12 (“CLRA”), False Advertising Law (“FAL”), and Unfair Competition Law (“UCL”) (on behalf of 13 the California subclass), along with breaches of express and implied warranty, and unjust 14 enrichment (on behalf of the nationwide class). See Dkt. No. 17; see also FAC ¶¶ 96, 112-197. 15 Costco again moved to dismiss. Dkt. No. 26. LEGAL STANDARD 16 17 18 I. RULE 12(B)(1) Under Federal Rule of Civil Procedure 12(b)(1), a district court must dismiss a complaint 19 if it lacks subject matter jurisdiction over the claims alleged within. “Standing is a threshold 20 matter central to our subject matter jurisdiction.” Bates v. United Parcel Serv., Inc., 511 F.3d 974, 21 985 (9th Cir. 2007). To establish standing, a plaintiff must demonstrate that she has “suffered a 22 concrete and particularized injury that is either actual or imminent” (an injury-in-fact), that “the 23 injury is fairly traceable to the defendant” (causation), and that “it is likely that a favorable 24 decision will redress that injury” (redressability). See Massachusetts v. EPA, 549 U.S. 497, 517 25 (2007). “The Supreme Court has made clear that when considering whether a plaintiff has Article 26 III standing, a federal court must assume arguendo the merits of his or her legal claim.” Zeiger v. 27 WellPet LLC, 304 F. Supp. 3d 837, 843 (N.D. Cal. 2018) (citation omitted). 28 4 Case 3:22-cv-04343-WHO Document 38 Filed 01/17/23 Page 5 of 13 1 II. Under Federal Rule of Civil Procedure 12(b)(6), a district court must dismiss a complaint 2 3 if it fails to state a claim upon which relief can be granted. To survive a Rule 12(b)(6) motion, the 4 plaintiff must allege “enough facts to state a claim to relief that is plausible on its face.” See Bell 5 Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim is facially plausible when the plaintiff 6 pleads facts that allow the court to “draw the reasonable inference that the defendant is liable for 7 the misconduct alleged.” See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citation omitted). 8 There must be “more than a sheer possibility that a defendant has acted unlawfully.” Id. While 9 courts do not require “heightened fact pleading of specifics,” a plaintiff must allege facts sufficient 10 to “raise a right to relief above the speculative level.” See Twombly, 550 U.S. at 555, 570. In deciding whether the plaintiff has stated a claim upon which relief can be granted, the 11 United States District Court Northern District of California RULE 12(B)(6) 12 court accepts her allegations as true and draws all reasonable inferences in her favor. Usher v. 13 City of Los Angeles, 828 F.2d 556, 561 (9th Cir. 1987). However, the court is not required to 14 accept as true “allegations that are merely conclusory, unwarranted deductions of fact, or 15 unreasonable inferences.” In re Gilead Scis. Sec. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008). 16 III. RULE 9(B) Claims sounding in fraud are subject to the heightened pleading standard of Federal Rule 17 18 of Civil Procedure 9(b), which requires that such claims “state with particularity the circumstances 19 constituting fraud or mistake,” including the “who, what, when, where, and how of the misconduct 20 charged.” Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003) (citation and 21 quotation marks omitted). “The plaintiff must set forth what is false or misleading about a 22 statement, and why it is false.” Id. (same). The allegations must be “specific enough to give 23 defendants notice of the particular misconduct” which is alleged to constitute the fraud charged 24 “so that they can defend against the charge and not just deny that they have done anything wrong.” 25 See Kearns v. Ford Motor Co., 567 F.3d 1120, 1124 (9th Cir. 2009) (citation omitted). DISCUSSION 26 27 28 I. REQUEST FOR JUDICIAL NOTICE Costco requests judicial notice of portions of a Federal Trade Commission (“FTC”) 5 United States District Court Northern District of California Case 3:22-cv-04343-WHO Document 38 Filed 01/17/23 Page 6 of 13 1 response to a Freedom of Information Act dated September 15, 2020. Dkt. No. 26-1. The 2 attached exhibit includes nearly 60 pages of documents of varying types, including the FTC’s 3 response letter, the receipt for the documents, a copy of a regulation on dolphin-safe labeling 4 standards, a press release from the Animal Legal Defense Fund, and an FTC complaint filed by the 5 Animal Legal Defense Fund. See RJN, Ex. 1. Wright objects to the request, describing the 6 material as “irrelevant, misleading, and/or disputed ‘evidence’ and facts.” Dkt. No. 32. 7 Costco’s request is DENIED. Of the exhibit’s nearly 60 pages, Costco cites excerpts from 8 a single paragraph in its motion to dismiss. See Mot. to Dismiss (“MTD”) [Dkt. No. 26] 10:12-17, 9 18:23-19:2. Moreover, Costco overstates the source of those excerpts, which it portrays as an 10 FTC decision “rejecting” an “enforcement action based on a hypothetical ‘gap between what 11 consumers understand “dolphin-safe” to mean and what “dolphin-safe” means as defined in the 12 relevant statutes.’” See, e.g., id. at 10:12-17 (citing RJN, Ex. 1 at 009-010).2 The source is 13 actually a letter from an FTC staff member responding to a petition from the Animal Legal 14 Defense Fund that expressly states that the “views expressed in this letter are those of the staff 15 assigned to the matter,” that the letter “has not been reviewed or approved by the Commission or 16 by an individual Commissioner,” and that it “is not binding.” See RJN, Ex. 1 at 010. I may only judicially notice a fact that is not subject to reasonable dispute because it is 17 18 either generally known within this court’s territorial jurisdiction or “can be accurately and readily 19 determined from sources whose accuracy cannot reasonably be questioned.” See Fed. R. Evid. 20 201(b). Neither reason applies here. II. 21 STANDING 22 Of the three standing requirements, Costco challenges only one: injury. See MTD at 23 21:17-23:1. To establish an injury for the purposes of standing, a plaintiff must show “an invasion 24 of a legally protected interest which is (a) concrete and particularized and (b) actual or imminent, 25 not conjectural or hypothetical.” Lujan v. Defs. of Wildlife, 504 U.S. 555, 560 (1992) (citations 26 and quotation marks omitted). “Central to assessing concreteness is whether the asserted harm has 27 28 2 The page numbers reference the last three digits of the numbers stamped at the bottom right of each page of the exhibit. 6 Case 3:22-cv-04343-WHO Document 38 Filed 01/17/23 Page 7 of 13 1 a close relationship to a harm traditionally recognized as providing a basis for a lawsuit in 2 American courts—such as a physical harm, monetary harm, or various intangible harms.” 3 TransUnion LLC v. Ramirez, 141 S. Ct. 2190, 2200 (2021) (citation omitted). 4 Costco argues that Wright has not alleged a concrete injury because the FAC “does not 5 allege that any tuna [she] purchased from Costco came from a vessel that either deployed a net 6 that encircled any dolphin or that killed or seriously injured any dolphin.” MTD at 22:2-4. And, it 7 contends, “[t]here is no concrete injury to [Wright] that arises from the mere speculative 8 possibility that dolphins could have been harmed or seriously injured through use of longline 9 fishing methods.” Id. at 22:15-16 (emphasis in original). Costco misses the crux of Wright’s complaint. The FAC alleges that, had Wright known United States District Court Northern District of California 10 11 that Costco’s canned tuna was not dolphin-safe, she would not have bought it, “and certainly 12 would not have paid a ‘premium’ for such a valued perceived benefit.” FAC ¶ 9. As alleged, 13 Wright was harmed by paying for a product that she would not have purchased but for Costco’s 14 deceptive statements, and/or by paying a premium price for that product. See id. The same type 15 of injury was enough to establish standing in Gardner v. Starkist Co., 418 F. Supp. 3d 443, 458-59 16 (N.D. Cal. 2019)—a case that will continue to guide my analysis of the one at hand—where the 17 plaintiffs alleged that they would not have purchased StarKist tuna “but for the dolphin-safe 18 promise.” This also aligns with the well-established principle that a monetary harm is a 19 sufficiently concrete injury. See, e.g. TransUnion, 141 S. Ct. at 2200; Maya v. Centex Corp., 658 20 F.3d 1060, 1069 (9th Cir. 2011) (describing the allegation that “plaintiffs spent money that, absent 21 defendants’ actions, they would not have spent” as a “quintessential injury-in-fact”). The FAC 22 clearly alleges a monetary harm in the $15 that Wright paid for the product. See FAC ¶ 9. Costco’s motion to dismiss the FAC for lack of standing is DENIED. 23 24 25 III. THE MERITS OF THE CLAIMS Costco’s remaining arguments flow from its apparent understanding of the case as 26 “essentially an attack on Costco’s use of a dolphin safe logo, authorized by the DPCIA” and “a 27 direct challenge to the DPCIA uniform ‘dolphin safe’ labeling standard.” See MTD at 2:20-23, 28 11:26-12:3. Yet Costco also notes that the FAC does not allege that “Costco violated the DPCIA 7 Case 3:22-cv-04343-WHO Document 38 Filed 01/17/23 Page 8 of 13 1 in any way.” Id. at 5:16-19. This makes sense; Wright’s claims focus not on whether Costco 2 complied with the DPCIA’s labeling requirements but on Costco’s own representations that the 3 product is dolphin-safe and whether those representations were false and misleading in violation 4 of California law, or constituted a breach of warranty or unjust enrichment. See generally FAC. 5 The question is whether Costco violates its own promises to consumers, not the DPCIA. I made 6 the same distinction in Gardner, which both parties rely on heavily in their briefing. See 418 F. 7 Supp. 3d at 454-55. 8 United States District Court Northern District of California 9 Costco’s core argument is essentially this: Wright has not adequately alleged that Costco set its own dolphin-safe standard higher than that required by the DPCIA, as the plaintiff did in 10 Gardner. See MTD at 12:6-13:27. It attacks the statements and representations cited in the FAC, 11 arguing that only one—Costco’s “dolphin safe” logo on the product label—“is both about dolphin 12 safe[ty] and attributed to Costco.” See id. at 13:28-14:9. Costco further contends that the use of 13 that logo alone does not amount to a heightened promise that the product is dolphin-safe. See id. 14 at 14:8-9. This underlies Costco’s arguments that: (1) Wright’s claims are preempted by the 15 DPCIA; and (2) the case should be dismissed or stayed under the doctrine of primary jurisdiction. 16 See id. at 15:25-21:15. Costco argues that the FAC does not sufficiently allege any heightened 17 promise by Costco that the product is dolphin-safe, beyond what is required by the DPCIA, 18 relying on a distinction between the allegations at hand and those made in Gardner. See id. at 19 12:15-13:27. 20 To be sure, Gardner is distinguishable on certain facts. There, the plaintiffs sufficiently 21 alleged that they believed that StarKist “set itself to a high dolphin-safe standard” because they 22 alleged a “long-term, pervasive advertising campaign” that “led consumers to believe no dolphins 23 were harmed in the making of their tuna products.” See Gardner, 418 F. Supp. 3d at 456-57. 24 More specifically, the plaintiffs alleged that: (1) StarKist was the first major tuna company to 25 adopt a dolphin-safe policy in 1990, which one executive said would “save dolphin lives”; (2) 26 StarKist products included a dolphin-safe logo and directed consumers to visit its website for more 27 information on its policy; (3) StarKist made a statement after a 2012 World Trade Organization 28 (“WTO”) ruling on fishing methods, in which it “emphasized that ‘[p]roviding consumers with 8 Case 3:22-cv-04343-WHO Document 38 Filed 01/17/23 Page 9 of 13 1 sustainable and dolphin safe tuna remains a top priority’” and that it did not and would not “utilize 2 tuna caught in a manner that harms dolphins”; and (4) StarKist reiterated its “dolphin-safe pledge” 3 in various social media posts. See id. at 456. United States District Court Northern District of California 4 There is some overlap between these and the instant allegations but there are differences as 5 well. For example, although Costco also uses its own dolphin-safe logo on the products, as 6 alleged, there is nothing on the cans that direct consumers to visit Costco’s website for additional 7 information. See FAC ¶ 37. The FAC also identifes similar statements made after the 2012 WTO 8 ruling but attributes them to Costco’s tuna supplier, not Costco itself. See id. ¶ 41. And aside 9 from the dolphin-safe logo on the packaging, the FAC does not allege any specific statements by 10 Costco that its tuna is dolphin-safe—whether made by Costco executives, on social media, or 11 elsewhere. See generally id. Instead, the FAC alleges more generalized statements by Costco 12 about sustainable seafood sourcing and related practices. See id. ¶¶ 42-43. 13 That said, the FAC plausibly alleges a heightened promise by Costco that its canned tuna is 14 dolphin-safe. The product label and packaging both state that the tuna is “dolphin safe,” as does 15 the product listing on Costco’s website. See id. ¶ 37. The packaging further states that the product 16 is “100% Traceable from Sea to Shelf” and uses “100% Monofilament Leaders & Circle Hooks.” 17 Id. ¶ 38. Costco also touts on its website sustainable seafood sourcing efforts and highlights its 18 participation in the ISSF. See id. ¶ 36. Although the latter statements and representations are not 19 as specific to dolphin safety as some of those made in Gardner, the alleged statements encompass 20 “the protection of and respect for the marine, coastal, and freshwater ecosystems”; “practices that 21 will mitigate or limit environmental impacts associated with aquaculture and fishing practices”; 22 and efforts aimed at “the long-term conservation and sustainable use of tuna stocks, reducing 23 bycatch and promoting ecosystem health.” See id. ¶ 42. Along with the “dolphin safe” label on 24 the product and its packaging, the “dolphin safe” assertion on the online product listing, and the 25 statements about traceability and fishing practices on the product labels, this is enough—at least at 26 this stage of the litigation—to show that Costco has made its own, heightened promise that the 27 product is dolphin-safe. 28 Accordingly, Wright’s claims are not preempted by the DPCIA. See MTD at 11:13-20:15. 9 United States District Court Northern District of California Case 3:22-cv-04343-WHO Document 38 Filed 01/17/23 Page 10 of 13 1 Again, my analysis in Gardner applies. StarKist argued that the plaintiffs’ state law claims were 2 preempted by the DPCIA, missing two critical points: (1) that the claims were “not premised on 3 DPCIA violations, but on how StarKist fraudulently advertised its own heightened dolphin-safe 4 standard”; and (2) that “[e]ven the DPCIA itself recognizes that falsely labeled dolphin-safe tuna 5 is a violation of the Federal Trade Commission Act [“FTCA”], not a violation of the DPCIA.” See 6 Gardner, 418 F. Supp. 3d at 459 (citing 16 U.S.C. § 1385(d)(3)(C), (E)). I reasoned that “[w]here 7 the FTC has been given authority to police violations of federal advertising regulations, as it has 8 under the DPCIA, its enforcement does not preempt similar state law claims” unless the state laws 9 conflicted with an express FTC rule. See id. “For example,” I wrote, “claims that are based on a 10 defendant’s alleged fraud on a federal agency are preempted because each agency has the 11 authority to police such claims.” Id. But in Gardner, the alleged fraud was “about the 12 misrepresentations StarKist made to consumers, not to another federal agency,” so the state law 13 claims were not preempted. See id. 14 My thinking on this has not changed since Gardner, nor has Costco proffered any 15 argument that persuades me that it should. Costco accuses Wright of “attempting to use state law 16 to impose dolphin safe labeling requirements that are more strict or vary from the federal 17 requirements,” thereby encroaching “into each and every policy that Congress carefully balanced 18 in creating a federal regulatory framework that fully and comprehensively set the standards for 19 dolphin safe labeling in the tuna industry and for consumers.” MTD at 17:4-8. But the “mere 20 existence of a federal regulatory or enforcement scheme,” even a detailed one, “does not by itself 21 imply preemption of state remedies.” English v. Gen. Elec. Co., 496 U.S. 72, 87 (1990). And, to 22 repeat, this case is not about whether Costco complied with DPCIA’s labeling requirements. It is 23 about Costco’s own promise to consumers that the product was dolphin-safe, and whether that 24 statement was false, deceptive, or misleading. Field preemption does not apply. 25 Nor am I swayed by Costco’s argument that Wright’s claims are conflict preempted. 26 Conflict preemption occurs “where compliance with both federal and state regulations is a 27 physical impossibility and those instances where the challenged state law stands as an obstacle to 28 the accomplishment and execution of the full purposes and objectives of Congress.” Arizona v. 10 Case 3:22-cv-04343-WHO Document 38 Filed 01/17/23 Page 11 of 13 1 United States, 567 U.S. 387, 399-400 (2012) (citations and quotation marks omitted). Costco 2 contends that Wright’s state law claims “stand[] as an obstacle to the DPCIA’s objectives of (a) 3 setting a uniform definition of dolphin safe in tuna labeling, and (b) creating a specific regime to 4 monitor and enforce labeling to ensure consistency with that definition.” MTD at 18:5-8. But 5 Wright’s state law claims do not impose another definition of what is dolphin-safe, create any 6 enforcement scheme, or otherwise seek to enforce the DPCIA. Instead, she seeks “to hold 7 [Costco] accountable under California’s consumer protection laws for the false and misleading 8 advertising of its own heightened ‘dolphin safe’ representations.” Oppo. [Dkt. No. 31] 9:16-19. 9 Whether that promise was false or misleading is central to this case, not whether Costco followed 10 the DPCIA. As in Gardner, conflict preemption does not apply. And applying the doctrine of primary jurisdiction would be improper for the same reason. United States District Court Northern District of California 11 12 “Primary jurisdiction is a prudential doctrine that permits courts to determine that an otherwise 13 cognizable claim implicates technical and policy questions that should be addressed in the first 14 instance by the agency with regulatory authority over the relevant industry rather than by the 15 judicial branch.” Astiana v. Hain Celestial Grp., Inc., 783 F.3d 753, 760 (9th Cir. 2015) (citation 16 omitted). Costco argues that Wright’s claims should be dismissed or stayed “because the 17 enforcement authorities for the relevant statutes are the FTC and NOAA, not the courts.” MTD at 18 20:18-19.3 But the relevant statutes are California’s consumer protection laws, not the DPCIA or 19 FTCA. Even if Wright’s claims implicated the expertise of these federal agencies, invocation of 20 primary jurisdiction is not automatic. See Astiana, 783 F.3d at 760 (“Not every case that 21 implicates the expertise of federal agencies warrants invocation of primary jurisdiction. Rather, 22 the doctrine is reserved for a limited set of circumstance that requires resolution of an issue of first 23 impression, or of a particularly complicated issue that Congress has committed to a regulatory 24 agency.”) (citation and quotation marks omitted). This case does not present an issue of first 25 impression (as evidenced by Gardner), nor a particularly complicated issue congressionally 26 27 28 The National Oceanic and Atmospheric Administration (“NOAA”) has authority to “assess civil penalties, impose permit sanctions, issue written warnings, and/or seize and forfeit property” in response to violations of the DPCIA. See 15 C.F.R. § 904.1(c). 11 3 Case 3:22-cv-04343-WHO Document 38 Filed 01/17/23 Page 12 of 13 1 United States District Court Northern District of California 2 committed to a regulatory agency. What remains are Costco’s arguments that Wright failed to meet Rule 9(b)’s heightened 3 pleading standard for fraud or adequately allege that Costco’s statements were likely to deceive a 4 reasonable consumer. See MTD at 23:2-25:15. I disagree. 5 The FAC states with particularly the circumstances constituting the alleged fraud, 6 including the “who, what, when, where, and how of the misconduct charged.” See Vess, 317 F.3d 7 at 1106. Wright alleges that Costco (who) made false, misleading, and deceptive representations 8 that the product is dolphin-safe (what) on the product’s labeling, packaging, and advertising 9 (where) during the four-year class period and, more specifically, in 2021 when Wright purchased 10 the product (when), and that those representations were false because instead of using dolphin-safe 11 and sustainable sourcing practices, Costco uses fishing methods known to kill and injure dolphins 12 (how). See FAC ¶¶ 9, 11, 36, 61-64, 74-75, 98. These allegations are specific enough to provide 13 Costco notice of the particular conduct at issue so that it can defend against the fraud claims. See 14 Kearns, 567 F.3d at 1124. The FAC also alleges that Wright “relied upon [Costco’s] ‘dolphin 15 safe’ promises and representations on the product’s labeling, packaging, and advertising” in 16 purchasing the product. FAC ¶ 9. 17 Wright’s claims under California’s consumer protection laws are governed by the 18 “reasonable consumer” test, under which she must “show that members of the public are likely to 19 be deceived” by Costco’s representation. See Williams v. Gerber Prods. Co., 552 F.3d 934, 938 20 (9th Cir. 2008) (citation and quotation marks omitted). “This requires more than a mere 21 possibility” that Costco’s statement “might conceivably be misunderstood by some few consumers 22 viewing it in an unreasonable manner.” See Becerra v. Dr Pepper/Seven Up, Inc., 945 F.3d 1225, 23 1228 (9th Cir. 2019) (citations omitted). Instead, it “requires a probability that a significant 24 portion of the general consuming public or of targeted consumers, acting reasonably in the 25 circumstances, could be misled.” Id. (citation and quotation marks omitted). 26 Wright has made this showing, at least at this stage of the litigation. As the Ninth Circuit 27 has recognized, “[g]iven the choice of whether to purchase dolphin-safe tuna or to purchase tuna 28 not labeled dolphin-safe, American consumers overwhelmingly chose to purchase tuna that was 12 Case 3:22-cv-04343-WHO Document 38 Filed 01/17/23 Page 13 of 13 1 labeled dolphin-safe.” See Earth Island Inst. v. Hogarth, 494 F.3d 757, 761 (9th Cir. 2007). 2 Wright alleges as much in the FAC. See FAC ¶ 85 (citing the same). Against this backdrop, the 3 dolphin-safe logo on the product label, packaging, and online advertising would lead a reasonable 4 consumer to believe that the product was indeed dolphin-safe and did not result in harm to 5 dolphins. The alleged statements about Costco’s sustainable seafood sourcing and related 6 practices only bolster this already-reasonable belief. United States District Court Northern District of California 7 In sum, Wright has adequately alleged a promise by Costco that the product is dolphin- 8 safe, above what the DPCIA requires. As a result, her claims are not preempted, nor is the 9 doctrine of primary jurisdiction applicable. Moreover, she has satisfied Rule 9(b)’s heightened 10 pleading requirement for fraud and alleged that a reasonable consumer would be deceived by 11 Costco’s representations. Her claims are plausible. CONCLUSION 12 13 Costco’s motion to dismiss is DENIED. 14 IT IS SO ORDERED. 15 Dated: January 17, 2023 16 17 William H. Orrick United States District Judge 18 19 20 21 22 23 24 25 26 27 28 13

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