Delacruz v. Cytosport, Inc.

Filing 34

ORDER GRANTING IN PART AND DENYING IN PART CYTOSPORTS 14 MOTION TO DISMISS PLAINTIFFS FIRST AMENDED COMPLAINT. Admissions due by 4/18/2012. Signed by Judge Claudia Wilken on 4/11/2012. (ndr, COURT STAFF) (Filed on 4/11/2012)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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CLAIRE DELACRUZ, individually,
and on behalf of other members of
the general public similarly
situated,
Plaintiff,

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United States District Court
For the Northern District of California

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v.
CYTOSPORT, INC., a California
Corporation,

No. C 11-3532 CW
ORDER GRANTING IN
PART AND DENYING
IN PART
CYTOSPORT’S MOTION
TO DISMISS
PLAINTIFF’S FIRST
AMENDED COMPLAINT
(Docket No. 14)

Defendant.
________________________________/
Plaintiff Claire Delacruz alleges a putative consumer class
action based on certain representations made regarding Defendant

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Cytosport’s products, “Muscle Milk® Ready-To-Drink” (RTD) and
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“Muscle Milk® Bars.”

Plaintiff alleges claims under the

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California Consumer Legal Remedies Act (CLRA), the Unfair

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Competition Law (UCL), and the False Advertising Law (FAL), as

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well as common law claims for fraud, negligent misrepresentation

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and unjust enrichment.

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First Amended Complaint (1AC) under Federal Rules of Civil

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Defendant moves to dismiss Plaintiff’s

Procedure 8(a), 9(b), 12(b)(1), and 12(b)(6).

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Having considered all of the parties’ submissions and oral
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argument, the Court grants in part Defendant’s motion to dismiss
and denies it in part.

Docket No. 14.

BACKGROUND

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Plaintiff’s 1AC alleges the following.

Defendant

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manufactures and markets Muscle Milk® products, including the RTD

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and the bars.

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claims,

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United States District Court
For the Northern District of California

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The 1AC refers to both as the Products.

Plaintiff

In connection with its marketing of the Products, as
part of an extensive and long-term advertising
campaign, including communications through product
packaging, television, print, outdoor, and other
media, Cytosport makes representations and omissions
that are intended to mislead consumers to believe that
the Products are healthy, and nutritious, and should
be regularly consumed to help them diet and live a
healthy lifestyle.
Contrary to Defendant’s representations and omissions,
however, with almost 50% of their caloric content
coming from fats, the Products are equivalent to fatladen junk food. Defendant tells consumers “there’s
no question you’re getting a nutritious snack,” and
that the Products “take[] the guess work out of high
performance nutrition,” yet a standard-size container
of Cytosport’s “Muscle Milk® Ready-To-Drink (RTD)”
contains the same number of calories and almost as
much total fat and saturated fat as a “Glazed Kreme
Filling” Krispy Kreme® doughnut, and more fat and
saturated fat than other varieties of Krispy Kreme®
doughnuts. Similarly, Cytosport’s 73 gram “Muscle
Milk® Bars” contain more calories, more saturated fat,
and the same amount of total fat as a roughly equalsized 72 gram “Chocolate Iced Glazed” Krispy Kreme®
doughnut.
Defendant expressly represents that the Products are
“premium,” “healthy,” “nutritional” products that
should be consumed as part of a “healthy lifestyle,”
before workouts, after workouts, and as a “meal
replacement” to provide “healthy sustained energy.”

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1AC at ¶¶ 2-4.

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The 1AC includes photographs of two RTD containers, a

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seventeen ounce RTD and a fourteen ounce RTD, as well as other
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advertisements for the drink.

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The fourteen ounce container

states,
MUSCLE MILK IS AN IDEAL BLEND
OF PROTEIN, HEALTHY FATS,
GOOD CARBOHYDRATES
AND 20 VITAMINS AND MINERALS
TO PROVIDE SUSTAINED ENERGY,
SPUR LEAN MUSCLE GROWTH AND HELP PROVIDE RECOVERY
FROM TOUGH DAYS
AND TOUGHER WORKOUTS.

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1AC at ¶ 17.
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Plaintiff alleges that “healthy fats” and “good

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United States District Court
For the Northern District of California

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carbohydrates” are false and misleading terms.

1AC at ¶ 18.

The misrepresentations on the container are compounded by

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misrepresentations on the product website, Plaintiff claims.

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website states, “No matter if you are a performance athlete,

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exercise enthusiast, or just trying to live a healthy lifestyle,

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The

Muscle Milk is an ideal [product] for your nutritional needs.”

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1AC at ¶ 19.

In addition, the website claims that the RTD is a

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“functional beverage that promotes recovery from exercise, lean

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muscle growth, and healthy, sustained energy.”

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website also states, “Ready-to-Drink is an ideal nutritional

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choice [if] you are . . . on a diet.”

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includes an image from the website.

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1AC at ¶ 19.

1AC at ¶ 19.

The

The 1AC

Defendant also conducted a transit media campaign for the

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RTD.

The advertisements appeared on buses, on top of taxis and in

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trains, stating, “Go from cover it up to take it off,” “From
invisible to OMG!” and “From frumpy to fabulous.”

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1AC at ¶ 22.

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They led consumers to believe that the RTD is healthy and would

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help them lose weight.

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Plaintiff alleges,

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To increase sales and profits from [the above-mentioned]
misrepresentations, Cytosport also instructs consumers
on “How to use Muscle Milk,” telling them to use it to
meet their “nutritional goals” and to use it multiple
times a day, including “1.5-2 hours prior to training,”
“30-45 minutes after workouts,” as a “meal replacement,”
and “in between meals as a protein-enhanced snack,” and
even “in conjunction with meals.”

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United States District Court
For the Northern District of California

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1AC at ¶ 23.

The 1AC does not allege where these particular

statements are made.
In addition to claims regarding the RTD, the 1AC contains

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specific allegations related to the bars, including an image of

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the product packaging.

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Sustained Energy” and “0g Trans Fat” language on the front of the

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Plaintiff claims that the “Healthy,

package is misleading, 1AC at ¶¶ 25, 32, and that, as with the

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RTD, misrepresentations regarding the bars are compounded by the
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representations Defendant makes about them on its website, 1AC

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¶ 34.

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the bars “there’s no question [they are] getting a nutritious

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snack,” and that “Muscle Milk Bars deliver . . . healthy sustained

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energy.”

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The website allegedly states that when customers consume

1AC ¶ 34.

According to Plaintiff, this is misleading

because the bars contain “11 grams of total fat (one third of the

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total caloric content), 8 grams of saturated fat and almost no
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vitamins and minerals.”

1AC at ¶ 26.

Further, the bars “actually

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contain unhealthy ingredients like fractionated palm kernel oil,

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and partially hydrogenated palm oil.”
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1AC at ¶ 28.

Plaintiff

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states that palm oil is high in saturated fat and is often used as

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a substitute for partially hydrogenated vegetable oil (i.e. trans

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fat).

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that palm oil may be just as unhealthy as trans fats, 1AC at ¶ 29,

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and claims that fractionated palm kernel oil is the least healthy

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1AC at ¶ 29.

Plaintiff alleges that studies have suggested

variety of palm oil and that the healthful aspects of palm oil are

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largely lost in the processing of palm kernel oil and fractionated
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palm kernel oil, 1AC at ¶ 30.

Plaintiff also claims that “the

United States District Court
For the Northern District of California

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World Health Organization has convincingly linked palmitic acid,

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which is present in palm oil, to increased risk of cardiovascular

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disease,” 1AC at ¶ 29.

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palm oil and palm kernel oil “contain primarily saturated fats,”

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and recommends limiting saturated fat intake to less than seven

The American Heart Association states that

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percent of one’s total daily calories 1AC at ¶¶ 27 and 31.
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Plaintiff alleges that “the consumption of saturated fats has been
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shown to cause heart disease and other serious health problems.”

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1AC at ¶ 27.

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of saturated fat renders a product unhealthy.

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However, Plaintiff does not allege that any amount

Plaintiff claims that she “regularly purchased and consumed”
Muscle Milk® RTD and the bars during the six months prior to
filing the initial complaint.

1AC at ¶ 36.

Plaintiff alleges

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that she “was exposed” to Defendant’s long-term advertising
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campaign concerning the products, including the product packaging.

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1AC ¶ 38.

She alleges that “but for” Defendant’s

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misrepresentations and omissions, she would not have purchased and
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consumed the products.

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denied the benefit of her bargain when she decided to purchase the

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products over competitor products, which are less expensive or

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contain healthier ingredients.

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not have paid as much as she did for the products, or she would

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1AC ¶ 38.

She further claims that she was

Plaintiff claims that she would

not have purchased the products at all, had she been aware of the

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misrepresentations.

1AC at ¶¶ 66, 76, 84, 95, 101, 110 and 112.

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Other factual assertions discussed by the parties in their

United States District Court
For the Northern District of California

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briefing are not plead in the 1AC.

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out that Defendant has represented in other litigation that it has

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spent millions of dollars promoting and advertising Muscle Milk®

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RTD and the Muscle Milk® brand generally.1

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Specifically, Plaintiff points

Plaintiff also notes

that, on June 29, 2011, the FDA sent a Warning Letter to Defendant

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after having reviewed the labels for Defendant’s “Chocolate Muscle
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Milk Protein Nutrition Shake,” (fourteen ounce) and the webpage
for Muscle Milk® Bars.

Declaration of G. Charles Nierlich in

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The Court grants Plaintiff’s Request for Judicial Notice of
Exhibit A, a declaration by Roberta White, Defendant’s Vice
President of Corporate Development, submitted in a different
action, because it is not subject to reasonable dispute, under
Federal Rule of Evidence 201(b). In ruling on a motion to
dismiss, the court may consider matters which may be judicially
noticed pursuant to Federal Rule of Evidence 201, including
records from other proceedings. See Mir v. Little Co. of Mary
Hosp., 844 F.2d 646, 649 (9th Cir. 1988). Here, the
representations as to the amount of advertising are Defendant’s
own. White Dec. at ¶ 23. The statement may support Plaintiff’s
allegations about Defendant’s long-term advertising campaign, even
if the representations are not specific to the precise
misrepresentations alleged here. However, this information is not
in the complaint and so does not contribute to the complaint’s
sufficiency.
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Support of Defendant’s Motion to Dismiss, Exhibit A.

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stated that, among other violations of the Federal Food, Drug and

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Cosmetic Act and applicable regulations, the label for the shake

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and its webpage impermissibly included the claim “Healthy,

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Sustained Energy” without meeting the requirements for the use of

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the nutrient content claim, “healthy.”

The FDA

The FDA also stated that

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the website for the bars contained the claim “healthy, sustained
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energy,” although they have more fat and saturated fat than

United States District Court
For the Northern District of California

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permitted by food branding regulations.

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alleged in the complaint and thus cannot be used to argue that the

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complaint is sufficient.

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This information is not

LEGAL STANDARD
I. Subject Matter Jurisdiction

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Subject matter jurisdiction is a threshold issue which goes
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to the power of the court to hear the case.

Federal subject

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matter jurisdiction must exist at the time the action is

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commenced.

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Equalization, 858 F.2d 1376, 1380 (9th Cir. 1988).

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court is presumed to lack subject matter jurisdiction until the

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contrary affirmatively appears.

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Morongo Band of Mission Indians v. Cal. State Bd. of
A federal

Stock W., Inc. v. Confederated

Tribes, 873 F.2d 1221, 1225 (9th Cir. 1989).

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Dismissal is appropriate under Rule 12(b)(1) when the
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district court lacks subject matter jurisdiction over the claim.

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Fed. R. Civ. P. 12(b)(1).

Because challenges to standing

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implicate a federal court’s subject matter jurisdiction under
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Article III of the United States Constitution, they are properly

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raised in a motion to dismiss under Rule

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227 F.3d 1214, 1242 (9th Cir. 2000).

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II. Sufficiency of Claim under Rule 12(b)(6)

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12(b)(1).

White v. Lee,

A complaint must contain a “short and plain statement of the
claim showing that the pleader is entitled to relief.”

Fed. R.

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Civ. P. 8(a).

On a motion under Rule 12(b)(6) for failure to

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state a claim, dismissal is appropriate only when the complaint

United States District Court
For the Northern District of California

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does not give the defendant fair notice of a legally cognizable

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claim and the grounds on which it rests.

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Twombly, 550 U.S. 544, 555 (2007).

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complaint is sufficient to state a claim, the court will take all

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material allegations as true and construe them in the light most

Bell Atl. Corp. v.

In considering whether the

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favorable to the plaintiff.

NL Indus., Inc. v. Kaplan, 792 F.2d

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896, 898 (9th Cir. 1986).

However, this principle is inapplicable

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to legal conclusions; “threadbare recitals of the elements of a

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cause of action, supported by mere conclusory statements,” are not

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taken as true.

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(citing Twombly, 550 U.S. at 555).

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Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949-50 (2009)

When granting a motion to dismiss, the court is generally
required to grant the plaintiff leave to amend, even if no request

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to amend the pleading was made, unless amendment would be futile.
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Cook, Perkiss & Liehe, Inc. v. N. Cal. Collection Serv. Inc., 911

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F.2d 242, 246-47 (9th Cir. 1990).

In determining whether

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amendment would be futile, the court examines whether the
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complaint could be amended to cure the defect requiring dismissal

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“without contradicting any of the allegations of [the] original

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complaint.”

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Cir. 1990).

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III. Federal Rule of Civil Procedure 9(b)

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Reddy v. Litton Indus., Inc., 912 F.2d 291, 296 (9th

“In all averments of fraud or mistake, the circumstances

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constituting fraud or mistake shall be stated with particularity.”
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Fed. R. Civ. P. 9(b).

“It is well-settled that the Federal Rules

United States District Court
For the Northern District of California

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of Civil Procedure apply in federal court, ‘irrespective of the

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source of the subject matter jurisdiction, and irrespective of

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whether the substantive law at issue is state or federal.’“

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Kearns v. Ford Motor Co., 567 F.3d 1120, 1125 (9th Cir. 2009)

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(citing Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1102 (9th

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Cir. 2003).

The allegations must be “specific enough to give

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defendants notice of the particular misconduct which is alleged to
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constitute the fraud charged so that they can defend against the

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charge and not just deny that they have done anything wrong.”

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Semegen v. Weidner, 780 F.2d 727, 731 (9th Cir. 1985).

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of the time, place and nature of the alleged fraudulent activities

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are sufficient, id. at 735, provided the plaintiff sets forth

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Statements

“what is false or misleading about a statement, and why it is

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false.”

In re GlenFed, Inc., Secs. Litig., 42 F.3d 1541, 1548

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(9th Cir. 1994).

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DISCUSSION

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I. Allegations of False and Misleading Statements
While Plaintiff’s standing is necessary to the Court’s

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jurisdiction, and jurisdiction is a threshold question,

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Defendant’s standing arguments merge with its arguments that

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Plaintiff fails to state a claim, so the Court addresses the

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latter first.
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Defendant argues that Plaintiff has failed to allege any

United States District Court
For the Northern District of California

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false or misleading statement under the UCL, CLRA and FAL or her

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common law claims for fraud or negligent misrepresentation.

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Claims of deceptive labeling under these California statutes are

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evaluated by whether a “reasonable consumer” would be likely to be

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deceived.

Williams v. Gerber Prods. Co., 552 F.3d 934, 938 (9th

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Cir. 2008) (citing Freeman v. Time, Inc., 68 F.3d 285, 289 (9th
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Cir. 1995)).

Common law claims for fraud and negligent

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misrepresentation similarly require that the consumer justifiably

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rely on a representation that is false or subject to a misleading

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omission.

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4th 979, 990 (2004) (common law fraud); Century Sur. Co. v. Crosby

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Ins., Inc., 124 Cal. App. 4th 116, 129 (2004) (negligent

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Robinson Helicopter Co., Inc. v. Dana Corp., 34 Cal.

misrepresentation).

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Federal Rule of Civil Procedure 9(b) applies to claims
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sounding in fraud under the common law and statutory law,

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requiring particularized pleading of alleged false statements, and

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the basis for the claim of falsity.
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Plaintiff claims that the

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product labels include misrepresentations.

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which Plaintiff relies, the Ninth Circuit reversed the district

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court’s dismissal of a consumer class action under the UCL, CLRA

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and FAL for failure to allege cognizable misrepresentations.

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F.3d at 934.

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In Williams, upon

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The action arose from allegedly deceptive packaging

for “Fruit Juice Snacks,” a food product developed for toddlers.

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The district court dismissed the claim after reviewing an example
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of the packaging and finding that “no reasonable consumer upon

United States District Court
For the Northern District of California

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review of the package as a whole would conclude that Snacks

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contains juice from the actual and fruit-like substances displayed

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on the packaging particularly where the ingredients are

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specifically identified.”

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Id. at 939.

The Ninth Circuit, however, found a number of features on the

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packaging that would likely deceive a reasonable consumer.
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Specifically, the product was called “Fruit Juice Snacks” and the
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packaging depicted a number of different fruits, “potentially

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suggesting (falsely) that those fruits or their juices are

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contained in the product.”

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easily interpret the statement that Fruit Juice Snacks were made

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with “fruit juice and other all natural ingredients” to mean “that

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Id.

In addition, consumers could

all the ingredients in the product were natural,” which was

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alleged to be false.

Id.

Finally, the claim that the product is

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“just one of a variety of nutritious Gerber Graduates foods and

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juices that have been specifically designed to help toddlers grow

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up strong and healthy” added to the potential deception.
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Id.

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The court acknowledged that “nutritiousness” is “difficult to

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measure concretely,” but because the statement that the product

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was “nutritious” contributed “to the deceptive context of the

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packaging as a whole,” the court declined to give the defendant

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“the benefit of the doubt by dismissing the statement as puffery.”

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Id. at 939 n.3.

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Plaintiff and Defendant both rely on Yumul v. Smart Balance,
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Inc., 733 F. Supp. 2d 1117 (C.D. Cal. 2010).

There, the plaintiff

United States District Court
For the Northern District of California

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claimed that the defendant’s margarine packaging violated the UCL,

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CLRA and FAL because it stated that the product was “healthy” and

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“cholesterol free,” although it contained artificial trans fat

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raising the level of “bad” LDL blood cholesterol and lowering the

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level of “good” HDL blood cholesterol.

The court found that the

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plaintiff could prove that the packaging, including the “no
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cholesterol” statement, “could lead a reasonable consumer to
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conclude that the product contained no trans fat, i.e., that it

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would not increase LDL blood cholesterol levels.”

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at 1129.

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“nutritious” in Williams, was “difficult, if not impossible, to

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measure concretely,” but refused to dismiss the claim for lack of

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733 F. Supp. 2d

The court noted that the term “healthy,” like the term

an alleged misrepresentation.

Id. at 1129-30.

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Of the words and phrases on the product labels to which
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Plaintiff points, the only one that is particularly claimed to be

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false, analogous to the “fruit juice” statements in Williams, is

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the term “healthy fats” on the fourteen ounce Muscle Milk® RTD
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label.

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product is healthy.

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fats, the latter is the healthy fat.

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be likely to believe that the drink contains unsaturated, not

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saturated, fats.

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This representation is more specific than simply that the
As between saturated fats and unsaturated
A reasonable consumer would

The drink container also states that it is a

“nutritional shake.”

This representation, while “difficult to

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measure concretely” like a similar claim in Williams, contributes
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to a sufficient claim of deceptive product labeling.
Defendant contends that no reasonable consumer could be

United States District Court
For the Northern District of California

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misled in light of the nutrient label on the package.

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argument is not persuasive.

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As the Williams court said,

We do not think that the FDA requires an ingredient
list so that manufacturers can mislead consumers and
then rely on the ingredient list to correct those
misinterpretations and provide a shield for liability
for the deception. Instead, reasonable consumers
expect that the ingredient list contains more detailed
information about the product that confirms other
representations on the packaging.

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This

552 F.3d at 939-40.

Yumul similarly ruled that “where product

packaging contains an affirmative misrepresentation, the

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manufacturer cannot rely on the small-print nutritional label to
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contradict and cure that misrepresentation.”

733 F. Supp. 2d at

1129.
Plaintiff alleges that the “Healthy, Sustained Energy” claim

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on the RTD seventeen ounce container is false and misleading.

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However, the term “healthy” is difficult to define and Plaintiff

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has not alleged that the drink contains unhealthy amounts of fat,

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saturated fat or calories from fat, compared to its protein

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content, based on any objective criteria.

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that Muscle Milk® RTD contains unspecified amounts of saturated

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fat that are equal to or exceed that in certain Krispy Kreme

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doughnuts, this analogy is not helpful.

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While Plaintiff alleges

Plaintiff does not

explain how much protein, vitamins and minerals are in such a

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doughnut or posit an objectively healthy ratio of protein to fat.
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United States District Court
For the Northern District of California

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Plaintiff has not alleged sufficiently that representing the drink
as “healthy” on the RTD label was false and misleading.
Plaintiff also challenges the “Healthy, Sustained Energy”

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language on the label for the bars.

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“25g PROTEIN FOR HEALTHY, SUSTAINED ENERGY.”

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claim that the bars do not contain twenty-five grams of protein.

However, that label reads,
Plaintiff does not

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Plaintiff alleges that the bars label is misleading because it
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contains the claim “0g Trans Fat” while the bars actually contain
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saturated fat, fractionated palm kernel oil and partially

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hydrogenated palm oil.

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fats are trans fats.

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However, she does not allege that these

Plaintiff also alleges misrepresentations made as part of
Defendant’s advertising.
she refers to.

It is not clear what misrepresentations

To the extent that the claim is based on

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statements included in transit advertising, namely, “Go from cover
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it up to take it off,” “From invisible to OMG!” and “From frumpy

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to fabulous,” these statements are non-actionable puffery.

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Haskell v. Time, Inc., 857 F. Supp. 1392, 1399 (E.D. Cal. 1994)
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(“The distinguishing characteristics of puffery are vague, highly

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subjective claims as opposed to specific, detailed factual

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assertions.”).

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Finally, Plaintiff complains of statements on Defendant’s
website, such as “Ready-to-Drink is an ideal nutritional choice
[if] you are . . . on a diet.”

The word “ideal” is vague, highly

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subjective, and non-actionable, like “superb, uncompromising
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quality,” addressed in Oesteicher v. Alienware Corp., 544 F. Supp.

United States District Court
For the Northern District of California

10

2d 964, 973 (N.D. Cal. 2008), and “high-performance” and “top of

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the line,” addressed in Brothers v. Hewlett-Packard Co., 2006 WL

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3093685, at *4-*5 (N.D. Cal. 2006).

13

alleges that the website description of Muscle Milk® Bars contains

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the same misleading claims that it is a “nutritious snack” that

In addition, Plaintiff

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delivers “healthy, sustained energy.”

These statements are

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addressed above.
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Plaintiff alleges that Defendant has concealed material facts

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about its products, but does not specify what has been concealed

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and why it is material.

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In sum, the sole cognizable misrepresentation that Plaintiff
has plead is the “healthy fats” statement on the fourteen ounce
Muscle Milk® RTD container, buttressed by the “nutritious snack”

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statement.
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II. Injury
To assert a claim under the UCL and FAL, a private plaintiff
must have lost money or property as a result of the violations.
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1

Kwikset v. Superior Court, 51 Cal. 4th 310, 321-22 (2011) (citing

2

the UCL, Cal. Bus. & Prof. Code § 17204, and “materially identical

3

language” in the FAL, § 17535).

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the CLRA must allege damage, although the damage need not be

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economic.

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Likewise, a plaintiff suing under

See Meyer v. Sprint Spectrum, L.P., 45 Cal. 4th 634,

641 (2009).

To state a claim for fraud at common law, the alleged

7
victim must have incurred damage as a result of the fraudulent
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9

United States District Court
For the Northern District of California

10

deception.

In re Tobacco II Cases, 46 Cal. 4th 298, 312 (2009).

Plaintiff’s complaint alleges an economic injury.

She claims

11

that she was denied the benefit of her bargain.

She asserts

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economic harm based on the purchase of the products over less

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expensive, healthier competitive products, and claims that she

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would not have paid as much as she did, or would not have

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purchased the products at all, had she been aware of the
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misrepresentations.
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Kwikset, 51 Cal. 4th at 323-25, 329-31, supports the adequacy

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of Plaintiff’s allegations of injury.

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Supreme Court stated, “A consumer who relies on a product label

21

and challenges a misrepresentation contained therein can satisfy

22

the standing requirement of [the UCL] by alleging . . . that he or

23

In Kwikset, the California

she would not have bought the product but for the

24
misrepresentation.”

Id. at 330.

The court further explained that

25
26
27

the allegation that the consumer paid more than he or she actually
valued the product was such that the “extra money paid” amounted

28
16

1

to an economic injury.

2

Advanced Med. Optics Inc., 659 F.3d 835, 839-840 (9th Cir. 2011).

3

Id. at 331.

See also, Degelmann v.

Plaintiff’s allegations of injury are sufficient to claim

4

that she lost money based on the alleged misrepresentations.

5

III. Reliance

6

A plaintiff seeking to prosecute a UCL and FAL claim is

7
required to demonstrate actual reliance on the allegedly deceptive
8
9

or misleading statements.

Kwikset, 51 Cal. 4th at 326.

The CLRA

United States District Court
For the Northern District of California

10

imposes a requirement that a violation “caus[e] or result[] in

11

some sort of damage.”

12

fraud requires that the victim show reasonable reliance on the

13

allegedly deceptive representation.

14

at 312.

Meyer, 45 Cal. 4th at 641.

Common law

Tobacco II Cases, 46 Cal. 4th

15
In Kwikset, the plaintiffs alleged UCL and FAL claims that
16
Kwikset falsely labeled certain locksets as “Made in the USA” or a
17
18

similar designation.

19

relied on the labels for their truth in purchasing the Kwikset

20

locksets, and would not have purchased the locksets otherwise,

21

were adequate to claim causation.

22

court reasoned, “The marketing industry is based on the premise

23

Allegations that the plaintiffs saw and

51 Cal. 4th at 327-28.

The

that labels matter, that consumers will choose one product over

24
another similar product based on its label and various tangible
25
26

and intangible qualities they may come to associate with a

27

particular source.”

Id. at 328.

Accordingly, the court held that

28

a consumer who alleges that she would not have purchased a
17

1

product, but for a misrepresentation contained on the product’s

2

label, has sufficiently alleged reliance for purposes of a claim

3

under section 17204 of the UCL.

4
5
6

Id. at 330.

Defendant contends that Plaintiff has failed to allege that
she relied on, or even read, misrepresentations or omissions made
on the product labels or elsewhere.

Plaintiff alleges that she

7
was “exposed to” the product labels.

1AC ¶ 38.

The quoted phrase

8
9

is suspiciously vague, but because Plaintiff had to have had the

United States District Court
For the Northern District of California

10

labels in hand to consume the products, the Court construes this

11

to imply that she read them.

12

she did for the products, or purchased them at all, based on

13

specific, purported misrepresentations.

14

claimed that she read and relied on the misleading label on the

She alleges that she paid the amount

Plaintiff has adequately

15
RTD containers, resulting in her economic harm.
16
On the other hand, Plaintiff has inadequately plead reliance
17
18

on Defendant’s long-term advertising campaign.

19

plead that she actually saw and relied upon any particular

20

statements in Defendant’s advertising.

21

Tobacco II, 46 Cal. 4th at 327, which held that, in the context of

22

a decades-long advertising campaign, a plaintiff need not

23

Plaintiff does not

Plaintiff relies on

demonstrate individualized reliance on the specific

24
misrepresentations.

However, Plaintiff has failed to allege that

25
26
27

Defendant’s advertising campaign approached the longevity and
pervasiveness of the marketing at issue in Tobacco II.

28
18

1

Plaintiff’s claims of reliance on misrepresentations on the

2

website also fail.

3

any statements on the website.

4

Cal. App. 4th 1350, 1363 (2010), the plaintiff likewise did not

5

claim that he ever visited the defendant’s website, containing the

6

She does not plead that she read or relied on

purported misrepresentations.

In Durell v. Sharp Healthcare, 183

Instead, the complaint merely

7
alleged that as a “proximate result of [the defendant’s] unlawful
8
9

business practices,” the plaintiff and putative class suffered

United States District Court
For the Northern District of California

10

economic damage.

11

1363-64.

12

Id.

The court found this insufficient.

Id. at

Similarly, in Kearns, 567 F.3d at 1125-26, upon which

13

Defendant relies, the plaintiff did not allege what the television

14

advertisements or sales material at issue specifically stated, and

15
did not allege when he was exposed to them or which he found
16
material.

Id. at 1126.

17
18

In sum, Plaintiff’s claim that the “healthy fats” and

19

“nutritious snacks” statements on the label for fourteen ounce

20

Muscle Milk® RTD were misleading, her implication that she read

21

the label and her claim that she relied on the label in deciding

22

to buy the drink, when she otherwise would not have, is sufficient

23

to state her claims.

The other representations she complains of

24
are not sufficiently plead.
25
26
27
28

IV. Unlawful and Unfair Business Practice
Defendant argues that Plaintiff has inadequately alleged
unlawful and unfair business practices under the UCL.
19

A

1

“violation of another law is a predicate for stating a cause of

2

action under the UCL’s unlawful prong.”

3

Mgmt., 152 Cal. App. 4th 1544, 1554 (2007).

4

explained above, Plaintiff has successfully alleged actionable

5

misrepresentation under the UCL, FAL and CLRA, as well as

6

California common law.

Berryman v. Merit Prop.
For the reasons

Dismissal of Plaintiff’s claim under the

7
unlawful prong of the UCL is not warranted.
8
The California Supreme Court has not established a definitive

9

United States District Court
For the Northern District of California

10

test to determine whether a business practice is unfair under the

11

UCL.

12

Telephone Co., 20 Cal. 4th 163, 187 n.12 (1999) (stating that the

13

test for unfairness in cases involving business competitors is

14

“limited to that context” and does not “relate[] to actions by

See Cel-Tech Communications, Inc. v. Los Angeles Cellular

15
consumers.”).
16
California courts of appeal have applied three different
17
18

tests to evaluate claims by consumers under the UCL’s unfair

19

practices prong.

20

504 F.3d 718, 735–736 (9th Cir. 2007); Drum v. San Fernando Valley

21

Bar Ass’n, 182 Cal. App. 4th 247, 256 (2010).

22

consumer must allege a “violation or incipient violation of any

23

See, e.g., Lozano v. AT&T Wireless Servs., Inc.,

Under one test, a

statutory or regulatory provision, or any significant harm to

24
competition.”

Drum, 182 Cal. App. 4th at 256.

The “public policy

25
26

which is a predicate to a consumer unfair competition action under

27

the ‘unfair prong’ of the UCL must be tethered to specific

28

constitutional, statutory, or regulatory provisions.”
20

Id.

1

Under the second test, the “unfair prong” requires a consumer

2

to plead that (1) a defendant’s conduct “is immoral, unethical,

3

oppressive, unscrupulous or substantially injurious to consumers”

4

and (2) ”the utility of the defendant’s conduct” is outweighed by

5

“the gravity of the harm to the alleged victim.”

6

Id. at 257

(citation and internal quotation marks omitted).

7
Finally, the third test, which is based on the Federal Trade
8
9

Commission’s definition of unfair business practices, requires

United States District Court
For the Northern District of California

10

that “(1) the consumer injury must be substantial; (2) the injury

11

must not be outweighed by any countervailing benefits to consumers

12

or competition; and (3) it must be an injury that consumers

13

themselves could not reasonably have avoided.”

14

internal quotation marks omitted).

Id. (citation and

15
In Camacho v. Automobile Club of Southern California, 142
16
Cal. App. 4th 1394, 1402-03 (2006), the court declined to apply to
17
18

consumer cases the first approach, which CelTech adopted for use

19

in antitrust cases.

20

different from antitrust cases and that defining unfairness in

21

connection with a public policy that is tethered to specific

22

constitutional, statutory or regulatory provisions did not comport

23

Camacho reasoned that consumer cases are

with the broad scope of the UCL.

Id. at 1403.

Camacho found that

24
this approach did not recognize that a practice can be unfair even
25
26

if it is not unlawful.

Id.

Camacho also concluded that Cel–Tech

27

disapproved the second approach to unfairness because

28

“[d]efinitions that are too amorphous in the context of
21

1

anticompetitive practices are not converted into satisfactorily

2

precise tests in consumer cases.”

3

that the key to the definition of unfairness was provided in Cel–

4

Tech itself, which indicated that the Federal Trade Commission Act

5

could be used as guidance.

6

4th at 185).

Id. at 1202.

Camacho posited

Id. at 1403 (citing Cel–Tech, 20 Cal.

Thus, Camacho adopted the third approach described

7
above, reasoning that this definition of unfairness was relevant
8
9

United States District Court
For the Northern District of California

10

to consumers and comported with the broad scope of the UCL.

Id.

Several appellate courts and federal district courts have

11

adopted Camacho’s reasoning and applied the third test for

12

unfairness in UCL consumer actions.

13

Credit Co., 179 Cal. App. 4th 581, 596–97 (2009); Daugherty v.

14

American Honda Motor Co., Inc., 144 Cal. App. 4th 824, 839 (2006);

See e.g., Davis v. Ford Motor

15
Kilgore v. Keybank, 712 F. Supp. 2d 939, 951–52 (N.D. Cal. 2010),
16
overruled on other grounds, 2012 WL 718344 (9th Cir. 2012);
17
18

Barriga v. JPMorgan Chase Bank, N.A., 2010 WL 1037870, *3 (N.D.

19

Cal.).

20

would adopt the Camacho approach to unfairness in UCL consumer

21

cases, and thus applies it in this case.

22
23

The Court is persuaded that the California Supreme Court

In this action, if the product labeling is determined to be
false or misleading, the injury to the consumer class as a whole

24
could be substantial, even if the injury to individual consumers
25
26

is minimal.

No benefit is served by false and misleading

27

advertising that outweighs injury to either the class or an

28

individual consumer.

While consumers could arguably avoid the
22

1

injury by reading the product label in full, misleading labels

2

would appear to qualify as an unfair business practice.

3

Plaintiff has plead an unfair business practice under the UCL.

4

IV. Unjust Enrichment

5
6

Thus,

Defendant seeks dismissal of Plaintiff’s cause of action for
unjust enrichment, asserting, “There is no cause of action in

7
California for unjust enrichment.”

Durell, 183 Cal. App. 4th at

8
9

United States District Court
For the Northern District of California

10

1370 (alterations omitted).
California courts appear to be split on whether there is an

11

independent cause of action for unjust enrichment.

Baggett v.

12

Hewlett–Packard Co., 582 F. Supp. 2d 1261, 1270–71 (C.D. Cal.

13

2007) (applying California law).

14

enrichment is not a cause of action, or even a remedy, but rather

One view is that unjust

15
a general principle underlying various legal doctrines and
16
remedies.

McBride v. Boughton, 123 Cal. App. 4th 379, 387 (2004).

17
18

In McBride, the court construed a “purported” unjust enrichment

19

claim as a cause of action seeking restitution.

20

least two potential bases for a cause of action seeking

21

restitution: (1) an alternative to breach of contract damages when

22

the parties had a contract which was procured by fraud or is

23

Id.

There are at

unenforceable for some reason; and (2) where the defendant

24
obtained a benefit from the plaintiff by fraud, duress,
25
26

conversion, or similar conduct and the plaintiff chooses not to

27

sue in tort but to seek restitution on a quasi-contract theory.

28

Id. at 388.

In the latter case, the law implies a contract, or
23

1

quasi-contract, without regard to the parties’ intent, to avoid

2

unjust enrichment.

Id.

3

Another view is that there is a cause of action for unjust

4

enrichment and its elements are receipt of a benefit and unjust

5

retention of the benefit at the expense of another.

6

Lectrodryer

v. SeoulBank, 77 Cal. App. 4th 723, 726 (2000); First Nationwide

7
Sav. v. Perry, 11 Cal. App. 4th 1657, 1662–63 (1992).
8
9

Here Plaintiff alleges that Defendant fraudulently induced

United States District Court
For the Northern District of California

10

her to purchase its Muscle Milk® products and retained a benefit

11

at her expense, entitling her to restitution.

12

may be imposed to prevent Defendant’s unjust enrichment.

13

Plaintiff’s claim for unjust enrichment, construed as a cause of

14

action for restitution, does not warrant dismissal.

A quasi-contract

15
V. Standing
16
Defendant moves to dismiss Plaintiff’s claims under the UCL,
17
18

FAL and CLRA for failure to allege standing as required under

19

those statutes, and to dismiss all claims for lack of Article III

20

standing.

21

Article III standing in that standing under those statutes

22

“requires a particular kind of injury in fact--loss of ‘money or

23

Standing under the UCL and the FAL is narrower than

property,’“ as well as a “causal connection” between the alleged

24
UCL violation and the purported injury in fact.

Rubio v. Capital

25
26

One Bank, 613 F.3d 1195, 1204 n.3 (9th Cir. 2010).

Accordingly,

27

“a UCL plaintiff must always have Article III standing in the form

28

of economic injury.”

Degelmann, 659 F.3d at 839.
24

1

As discussed above, Plaintiff has sufficiently alleged a

2

misrepresentation, economic injury in the form of her unwarranted

3

purchase of the RTD product, and reliance on the misrepresentation

4

in doing so.

5

UCL and FAL claims under California law.

6

This is sufficient to confer standing to pursue her

The CLRA’s standing requirement is more easily satisfied than

7
that under the UCL and the FAL, in that the allegedly unlawful
8
9

practice must only have caused damage to the plaintiff.

See

United States District Court
For the Northern District of California

10

Meyer, 45 Cal. 4th at 641 (“[I]n order to bring a CLRA action, not

11

only must a consumer be exposed to an unlawful practice, but some

12

kind of damage must result.”).

13

statutory language of the CLRA does not on its face require

14

economic damage.

Unlike the UCL and FAL, the

Plaintiff’s allegations are sufficient.

15
Article III standing is also more easily satisfied.

A

16
plaintiff must show: “(1) he or she has suffered an injury in fact
17
18

that is concrete and particularized, and actual or imminent;

19

(2) the injury is fairly traceable to the challenged conduct; and

20

(3) the injury is likely to be redressed by a favorable court

21

decision.”

22

F.3d 1220, 1225 (9th Cir. 2008).

23

Salmon Spawning & Recovery Alliance v. Gutierrez, 545

Defendant’s sole argument that Plaintiff lacks Article III

24
standing is that Plaintiff has not alleged an injury.

But a

25
26

plaintiff who has standing under the UCL, as Plaintiff has, will

27

also satisfy Article III standing.

28

839.
25

See Degelmann, 659 F.3d at

1

In sum, Plaintiff has standing to assert all of her claims

2

that are adequately stated.

3

VI. Preemption

4
5
6

Defendant seeks dismissal of this action, or, in the
alternative, a stay of the proceedings based on the primary
jurisdiction doctrine.

“The primary jurisdiction doctrine allows

7
courts to stay proceedings or to dismiss a complaint without
8
9

prejudice pending the resolution of an issue within the special

United States District Court
For the Northern District of California

10

competence of an administrative agency.”

11

Cable, 523 F.3d 1110, 1114 (9th Cir. 2008).

12

‘prudential’ one,” rather than one that indicates that the court

13

lacks jurisdiction.

14

the doctrine of primary jurisdiction.

Id.

Clark v. Time Warner
“[T]he doctrine is a

No “fixed formula” exists for applying
Id. at 1115.

However, the

15
Ninth Circuit has traditionally examined the following factors:
16
“(1) a need to resolve an issue that (2) has been placed by
17
18

Congress within the jurisdiction of an administrative body having

19

regulatory authority (3) pursuant to a statute that subjects an

20

industry or activity to a comprehensive regulatory authority that

21

(4) requires expertise or uniformity in administration.”

22

(internal alteration and quotation marks omitted).

23

Id.

Dismissal and a stay are unwarranted in this case because

24
Defendant has failed to demonstrate that Plaintiff’s claims under
25
26

California law require the FDA’s scientific or technical

27

expertise.

Plaintiff’s complaint is not based on the FDA’s

28

warning that the product labels violate its regulations.
26

Rather,

1

the reasonable consumer test will be used to resolve Plaintiff’s

2

claims alleging false and misleading representations on the

3

products’ packaging.

4

other issues involved in Plaintiff’s lawsuit are within the

5

expertise of the courts to resolve.

The reasonable consumer determination and

6

CONCLUSION

7
Defendant’s motion to dismiss is granted, except to the
8
9

extent that it challenges Plaintiff’s claims based on the

United States District Court
For the Northern District of California

10

misrepresentations on the fourteen ounce Muscle Milk® RTD

11

packaging.

12

an amended complaint within seven days, remedying the defects

13

addressed above if she is able truthfully to do so without

14

contradicting the allegations in her original complaint.

Dismissal is with leave to amend.

Plaintiff may file

15
Plaintiff may not add any additional causes of action without
16
leave of the Court.

Defendant’s request to dismiss or stay the

17
18
19
20
21

proceedings based on the primary jurisdiction doctrine is denied.
IT IS SO ORDERED.
Dated: 4/11/2012

CLAUDIA WILKEN
United States District Judge

22
23
24
25
26
27
28
27