Backus v. Biscomerica Corporation

Filing 32

ORDER by Judge Haywood S. Gilliam, Jr. GRANTING DEFENDANTS 9 MOTION TO DISMISS.Amended Pleadings due by 4/17/2017. (ndrS, COURT STAFF) (Filed on 3/27/2017)

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1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 TROY BACKUS, 7 Plaintiff, 8 ORDER GRANTING DEFENDANT’S MOTION TO DISMISS v. 9 BISCOMERICA CORPORATION, 10 Re: Dkt. No. 9 Defendant. 11 United States District Court Northern District of California Case No.16-cv-03916-HSG Pending before the Court is Defendant Biscomerica Corporation’s motion to dismiss the 12 13 Class Action Complaint (“Compl.”).1 Dkt. No. 9. Because the Court finds that Plaintiff Troy 14 Backus’ claims are preempted by federal law, the Court GRANTS the motion to dismiss. 15 I. BACKGROUND Plaintiff brings this purported nationwide class action against Biscomerica for 16 17 manufacturing, distributing, and selling packaged cookies that contain partially hydrogenated oil 18 (“PHO”), an artificial form of trans fat. Compl. ¶¶ 4–6, 97. Plaintiff alleges that “trans fat is a 19 toxic carcinogen” and PHO is consequently an “illegal, dangerous additive.” Id. ¶¶ 6–7. 20 According to Plaintiff, PHO “causes cardiovascular heart disease, diabetes, cancer, and 21 Alzheimer’s disease” and also “accelerates memory damage and cognitive decline.” Id. ¶ 17; see 22 also id. ¶¶ 24–55. Plaintiff cites several medical publications to support his allegation that “[t]here 23 is ‘no safe level’ of artificial trans fat intake.” Compl. ¶ 18. He alleges that because of these 24 negative health effects he consequently “suffered physical injury when he repeatedly consumed 25 Defendant’s [cookies] . . . .” Id. ¶ 89. The Federal Food, Drug, and Cosmetic Act (“FDCA”) prohibits “[t]he introduction or 26 27 1 28 The Court finds that this matter is appropriate for disposition without oral argument. See N.D. Civ. L.R. 7–1(b). 1 delivery for introduction into interstate commerce of any food . . . that is adulterated . . . .” 21 2 U.S.C. § 331(a). This includes food additives that are “not generally recognized, among 3 [qualified] experts . . . to be safe under the conditions of its intended use.” Id. § 321(s); see also 4 21 C.F.R. 170.3(i) (defining “safe” as “a reasonable certainty in the minds of competent scientists 5 that the substance is not harmful under the intended conditions of use.”). Sections 342 and 348 6 further describe the conditions under which food and food additives may be considered “unsafe” 7 or “adulterated.” Id. §§ 342(a)(1), 342(a)(2)(C)(i), 348. 8 On November 8, 2013, the federal Food and Drug Administration (“FDA”) “tentatively 9 determined that there is no longer a consensus among qualified scientific experts that PHOs . . . are safe for human consumption . . . .” Tentative Determination Regarding Partially Hydrogenated 11 United States District Court Northern District of California 10 Oils, 78 Fed. Reg. 67169–01, 67170 (Nov. 8, 2013). The FDA confirmed this determination on 12 June 17, 2015. Final Determination Regarding Partially Hydrogenated Oils (“Final 13 Determination”), 80 Fed. Reg. 34650–01 (June 17, 2015). The President then signed the 14 Consolidated Appropriations Act (“Act”) into law on December 18, 2015, which — consistent 15 with the FDA’s Final Determination — stated that PHO would not be considered unsafe or 16 adulterated under Federal law until the June 18, 2018, compliance date. Consolidated 17 Appropriations Act, 2016, Pub. L. No. 114–113, § 754, 129 Stat 2242, 2284 (2015). Plaintiff faults Defendant for continuing to use PHO in its cookies, even after the FDA’s 18 19 Final Determination in June 2015. Compl. ¶¶ 7–8. Relying on the FDA’s findings, Plaintiff 20 brings several causes of action under state law, including violations of: (1) California’s Unfair 21 Competition Law (“UCL”); (2) Nuisance; and (3) the Implied Warranty of Merchantability. 22 Plaintiff has brought similar actions in this district against other manufacturers of products that 23 contain PHO. Several district courts have dismissed such claims. See, e.g., Backus v. Conagra 24 Foods, Inc., No. C 16-00454 WHA, 2016 WL 3844331, at *1 (N.D. Cal. July 15, 2016); Backus v. 25 Nestlé USA, Inc., 167 F. Supp. 3d 1068, 1069 (N.D. Cal. 2016). 26 II. 27 28 LEGAL STANDARD Under Federal Rule of Civil Procedure 12(b)(6), the Court must dismiss a complaint if it fails to state a claim upon which relief can be granted. To survive a Rule 12(b)(6) motion to 2 1 dismiss, the plaintiff must allege “enough facts to state a claim to relief that is plausible on its 2 face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). This “facial plausibility” standard 3 requires the plaintiff to allege facts that add up to “more than a sheer possibility that a defendant 4 has acted unlawfully.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). The Court accepts as true a 5 plaintiff’s well-pleaded factual allegations and construes all factual inferences in the light most 6 favorable to the plaintiff. Id. However, a plaintiff must provide “more than labels and 7 conclusions.” Twombly, 550 U.S. at 555. The Court does not credit allegations that are “merely 8 conclusory, unwarranted deductions of fact, or unreasonable inferences.” Wilson v. Hewlett- 9 Packard Co., 668 F.3d 1136, 1145 n.4 (9th Cir. 2012) (quotation omitted). 10 III. ANALYSIS United States District Court Northern District of California 11 A. 12 California’s UCL prohibits any “unlawful, unfair or fraudulent business act or practice and UCL Claims 13 unfair, deceptive, untrue or misleading advertising.” Cal. Bus. & Prof. Code § 17200. The three 14 “prongs” of the UCL are independent of each other and may be asserted as separate claims. Cel- 15 Tech Commc’ns, Inc. v. Los Angeles Cellular Tel. Co., 20 Cal. 4th 163, 180 (Cal. 1999). The 16 “unlawful” prong of the UCL incorporates other laws and treats violations of those laws as 17 unlawful business practices independently actionable under state law. McKell v. Washington 18 Mut., Inc., 142 Cal. App. 4th 1457, 1474 (Cal. Ct. App. 2006). The “unfair” prong treats as 19 actionable conduct that “violates established public policy or . . . is immoral, unethical, oppressive 20 or unscrupulous and causes injury to consumers which outweighs its benefits.” Id. at 1473. The 21 UCL cannot, however, be used to proscribe otherwise permitted conducted. Cel-Tech, 20 Cal. 4th 22 at 182 (“If the Legislature has permitted certain conduct or considered a situation and concluded 23 no action should lie, courts may not override that determination.”). Plaintiff brings UCL claims 24 under both the “unlawful” and the “unfair” prongs. 25 Defendant argues that both of Plaintiff’s UCL claims are nonetheless preempted by the 26 FDCA because under federal law there is a grace period for discontinuing the use of PHO in food 27 products. A federal statute has preemptive effect if it conflicts with state law. Ting v. AT&T, 319 28 F.3d 1126, 1135 (9th Cir. 2003). This can occur when “compliance with both federal and state 3 1 regulations is a physical impossibility” or when “state law stands as an obstacle to the 2 accomplishment and execution of the full purposes and objectives of Congress.” Id. The Court 3 must look to the language of the statute and the overall statutory purpose to determine whether it is 4 preempted. Id. at 1136. 5 6 7 8 1. Unlawful Business Practices Plaintiff alleges that Defendant’s use of PHO in its cookies was unlawful under both federal and state law. The Court disagrees. Plaintiff first argues that the use of PHO violated the FDCA because PHO is not generally recognized as safe and its use rendered Defendant’s cookies “adulterated,” as defined by 21 U.S.C. 10 § 342(a)(2)(C). This squarely conflicts with the FDA’s Final Determination and the Consolidated 11 United States District Court Northern District of California 9 Appropriations Act. The Act explicitly stated that PHO would not be considered unsafe or 12 adulterated under the FDCA until June 18, 2018: 13 14 15 16 17 No partially hydrogenated oils . . . shall be deemed unsafe within the meaning of [21 U.S.C. § 348(a)] and no food that is introduced or delivered for introduction into interstate commerce that bears or contains a partially hydrogenated oil shall be deemed adulterated under [21 U.S.C. § 342(a)(1) or § 342(a)(2)(C)(i) by virtue of bearing or containing a partially hydrogenated oil until the compliance date . . . (June 18, 2018). 18 Consolidated Appropriations Act, 2016, PL 114–113, December 18, 2015, 129 Stat 2242 (2015). 19 This is not an exercise of “prosecutorial discretion,” by merely delaying enforcement, as Plaintiff 20 urges. See Dkt. No. 11 at 1, 3, 9. Instead, Congress declared that food containing PHO will not 21 22 even be considered unsafe or adulterated until June 2018. This is in keeping with the FDA’s acknowledgment that ongoing scrutiny of the health effects of PHO is appropriate as “knowledge 23 advances and evolves over time.” Final Determination, 80 Fed. Reg. 34650–01, 34653. The FDA 24 25 26 27 specifically solicited additional “scientific evidence,” noting that the compliance date would “allow time for such petitions and their review.” Id. Plaintiff next argues that Defendant’s use of PHO violated California’s Sherman Food, Drug and Cosmetics law (“Sherman Law”). Yet California’s Sherman Law does not specifically 28 4 1 prohibit the use of PHO. Nor does it completely ban the use of trans fats. Instead the Sherman 2 Law largely tracks federal law, prohibiting the sale or advertisement of “adulterated” food and 3 food additives. See, e.g., Cal. Health & Safety Code §§ 110398, 110545, 110620. Far from 4 contradicting federal law, the Sherman Law actually adopts all FDA regulations as state 5 regulations. See Cal. Health & Safety Code §§ 110085, 110115. Regardless, to interpret the 6 Sherman Law’s broad prohibition of “adulterated” food as covering PHO would effectively negate 7 Congress’ decision to set the compliance date in June 2018. Yet the June 2018 date was not arbitrary. Rather, the FDA chose a compliance date that 8 9 would serve the interests of both consumers and the industry. During this compliance period, the FDA could engage in further information gathering about PHO, its health implications, and its 11 United States District Court Northern District of California 10 possible ongoing uses. Final Determination, 80 Fed. Reg. 34650–01, 34653, 34668–69. The FDA 12 also understood that there were market limitations preventing the immediate “transition to new 13 oils.” Id. at 34669. With this additional time, the FDA reasoned, the industry could identify, 14 grow, harvest, and process suitable replacement ingredients for PHO. Id. The industry could also 15 “exhaust existing product inventories, and [] reformulate and modify labeling of affected 16 products.” Id. at 34668–69. Plaintiff’s interpretation of the Sherman Law would render the use of 17 PHO immediately unlawful. The FDA would not have additional time to assess the scientific 18 evidence on PHO nor could the industry research and vet replacement oils. The Supreme Court 19 has previously acknowledged that providing time to phase in new standards is a legitimate 20 objective. See, e.g., Geier v. Am. Honda Motor Co., 529 U.S. 861, 875, 881–82 (2000) 21 (recognizing that the Department of Transportation’s passive restraint standard “would bring about 22 a mix of different devices introduced gradually over time . . . [and] would thereby lower costs, 23 overcome technical safety problems, encourage technological development, and win widespread 24 consumer acceptance.”).2 Plaintiff’s interpretation of California law, however, would “stand[] as 25 2 26 27 28 Plaintiff’s reliance on Reid v. Johnson & Johnson, 780 F.3d 952 (9th Cir. 2015), is misplaced. It does not stand for the broad proposition that federal law cannot preempt state law food regulations. There, the Ninth Circuit considered whether the FDA’s labeling requirements permitted companies to claim a product was “trans fat free,” even if it contained low levels of trans fats. Id. at 962–63. The Ninth Circuit also found that an FDA letter did not have the force of law necessary to raise preemption concerns. Id. at 963–65. 5 1 an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.” 2 Ting, 319F.3d at 1136. 3 Plaintiff points out that the FDA left open the door for states to specifically legislate in this 4 area by stating, “[t]here is no statutory provision in the [FDCA] providing for express preemption 5 of any state or local law prohibiting or limiting use of PHOs in food, including state or local 6 legislative requirements or common law duties” and that it “believes” such laws “are not likely to 7 be in conflict with federal law, or to frustrate federal objectives.” Final, 80 FR 34650–01, 34655. 8 The Court agrees with the analysis of the court in Backus v. Nestlé USA, Inc. finding that this 9 language is not dispositive. 167 F. Supp. 3d 1068, 1073 (N.D. Cal. 2016) (citing Wyeth v. Levine, 555 U.S. 555, 577 (2009)). The FDA actually asserted it was not “tak[ing] a position regarding 11 United States District Court Northern District of California 10 the potential for implied preemptive effect of this order on any specific state or local law” and 12 noted it would require a case-by-case analysis. See Final Determination, 80 Fed. Reg. 34650–01, 13 34655. The Act, for its part, is silent as to preemption. The Court finds that Plaintiff’s 14 interpretation of California’s Sherman Law — as requiring an immediate ban on PHO — would 15 conflict with the FDA and Congress’s decision not to deem foods containing PHO unsafe or 16 adulterated until June 18, 2018. 17 2. 18 Unfair Business Practices Plaintiff’s claim that Defendant’s conduct was “unfair” similarly fails as it is preempted by 19 the FDCA. As discussed above, Congress established a compliance date, before which time 20 companies can still use PHO in their products. Plaintiff cannot sidestep this by “relabel[ing] the 21 nature of the action as one brought under the unfair competition statute.” Cel-Tech, 20 Cal. 4th at 22 182 (quotation omitted). Plaintiff has not identified any action that Defendant took independent 23 from the use of PHO in its cookies to support this claim. Plaintiff’s Nuisance Claim Fails 24 B. 25 In addition to his UCL claims, Plaintiff also alleges that Defendant’s sale of the cookies 26 constitutes a public nuisance under California law. This makes an end-run around federal law, as 27 28 6 1 explained above, and regardless is unsupported by California law. A public nuisance is broadly 2 defined as “[a]nything which is injurious to health . . . so as to interfere with the comfortable 3 enjoyment of life or property . . . which affects at the same time an entire community or 4 neighborhood, or any considerable number of persons.” Cal. Civ. Code §§ 3479–80. Yet an 5 individual can only maintain such suits if the conduct is “specially injurious to himself, but not 6 otherwise.” Cal. Civ. Code § 3493. California courts have interpreted this to require an injury 7 that is “different in kind — not merely in degree — from that suffered by the general public.” 8 Institoris v. City of Los Angeles, 210 Cal. App. 3d 10, 20 (Cal. Ct. App. 1989). 9 Plaintiff has failed to explain how his injury differs from that of any other member of the public. Plaintiff suggests that it is enough that he alleged “physical and emotional harm” and “lost 11 United States District Court Northern District of California 10 money” from consuming products that contain PHO. Compl. ¶ 89, 134. He contrasts that injury 12 with the general public’s concern for the “right to a safe food supply” and “interest in ensuring 13 that only safe, uncontaminated foods [are] available for purchase.” Compl. ¶¶ 129–135. Yet PHO 14 constitutes a general health hazard to anyone who consumes it. Both Plaintiff and the public 15 consequently face the same risk of harm due to the consumption of PHO and the cost of 16 purchasing products containing it. Plaintiff cannot artificially limit the public’s injury in order to 17 evade the law’s special injury requirement. Plaintiff’s Breach of the Implied Warranty of Merchantability Fails 18 C. 19 Plaintiff’s last claim is a breach of the implied warranty of merchantability. This claim 20 similarly fails. In California, “a warranty that the goods shall be merchantable is implied in a 21 contract for their sale if the seller is a merchant with respect to goods of that kind.” Cal. Com. 22 Code § 2314(1). This implied warranty requires that goods “[a]re fit for the ordinary purposes for 23 which such goods are used.” Id. § 2314(2)(c). The implied warranty, however only provides for a 24 minimum level of quality. To breach the implied warranty, a product must lack “even the most 25 basic degree of fitness for ordinary use.” Mocek v. Alfa Leisure, Inc., 114 Cal. App. 4th 402, 406 26 (Cal. Ct. App. 2003) (citing Cal. Comm. Code § 2314(2)). Moreover, “there is no implied 27 warranty with regard to defects which an examination ought in the circumstances to have revealed 28 to [a consumer].” Cal. Com. Code § 2316. 7 Here, as explained above, the FDA did not determine that products that contain PHO are 1 2 unfit for human consumption. Instead they provided a three-year window for further investigation 3 and phasing out. The FDA recognized that people would continue to consume products 4 containing PHO up until the compliance date as companies “exhaust[ed] existing product 5 inventories.” Final Determination, 80 Fed. Reg. 34650–01, 34669. Additionally, Plaintiff does 6 not suggest that the products did not disclose the presence of PHO on their labels or that 7 Defendant otherwise hid their presence. Plaintiff simply alleges that he “is a busy person and 8 cannot reasonably inspect every ingredient of every food that he purchases for himself and others, 9 and he was unaware that [Defendant’s Products] were dangerous when he purchased them.” Compl. ¶¶ 92–93, 96. On this basis, Plaintiff suggests that including PHO in the products was a 11 United States District Court Northern District of California 10 “latent defect.” Although the implied warranty is designed to protect consumers against 12 undisclosed defects, Plaintiff does not provide any authority to support a claim where the 13 consumer is simply too busy to read the ingredients. Cf. Mexia v. Rinker Boat Co., 174 Cal. App. 14 4th 1297, 1305 (Cal. Ct. App. 2009) (“Undisclosed latent defects . . . are the very evil that the 15 implied warranty of merchantability was designed to remedy.”). 16 /// 17 /// 18 /// 19 /// 20 /// 21 /// 22 /// 23 /// 24 /// 25 /// 26 /// 27 /// 28 /// 8 1 IV. CONCLUSION For the reasons set forth above, the Court GRANTS WITH LEAVE TO AMEND 2 Defendant’s motion to dismiss. Plaintiff may file an amended complaint within 21 days of the 3 date of this Order if he is able to allege claims against Defendant that are not preempted by the 4 June 2018 compliance date. See Consolidated Appropriations Act, 2016, Pub. L. No. 114–113, 5 § 754, 129 Stat 2242, 2284 (2015). As explained above, Plaintiff’s entire theory as to each cause 6 of action currently pled is deficient as a matter of law, so Plaintiff must either (1) plead a different 7 and sufficient basis for these claims if he can do so consistent with his obligations under Rule 11; 8 or (2) confirm that he does not wish to amend and request dismissal with prejudice, see Edwards 9 v. Marin Park, Inc., 356 F.3d 1058, 1063–66 (9th Cir. 2004). 10 IT IS SO ORDERED. 11 United States District Court Northern District of California Dated: 3/27/2017 12 13 14 HAYWOOD S. GILLIAM, JR. United States District Judge 15 16 17 18 19 20 21 22 23 24 25 26 27 28 9

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