Kane v. Chobani, Inc

Filing 125

Order by Hon. Lucy H. Koh granting in part and denying in part 38 Motion to Dismiss.(lhklc1, COURT STAFF) (Filed on 7/12/2013)

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UNITED STATES DISTRICT COURT

United States District Court
For the Northern District of California

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NORTHERN DISTRICT OF CALIFORNIA

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SAN JOSE DIVISION

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Case No.: 12-CV-02425-LHK

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Before the Court is Defendant Chobani, Inc.’s (“Defendant” or “Chobani”) Motion to

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Dismiss Plaintiffs Katie Kane, Arriana Rosales, and Darla Booth’s (collectively “Plaintiffs”)

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Second Amended Complaint. ECF No. 38 (“Mot.” or “Motion to Dismiss”). Having considered

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the submissions of the parties, the relevant law, and the arguments of the parties at the motion

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hearing, the Court GRANTS IN PART AND DENIES IN PART Defendant’s Motion.

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I.

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KATIE KANE, et al., individuals, on behalf
of themselves and all others similarly situated,

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Plaintiffs,

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v.
CHOBANI, INC.,

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Defendant.

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ORDER GRANTING-IN-PART AND
DENYING-IN-PART MOTION TO
DISMISS THE FIRST AMENDED
COMPLAINT

BACKGROUND
A.

Plaintiffs’ Factual Allegations

Plaintiffs allege that they purchased Defendant’s yogurt products. See ECF No. 35 (“SAC”
or “Second Amended Complaint”) ¶¶ 93-95. Specifically, Plaintiffs allege that they purchased the
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Case No.: 12-CV-02425-LHK
ORDER GRANTING-IN-PART AND DENYING-IN-PART MOTION TO DISMISS THE SECOND AMENDED
COMPLAINT

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pomegranate, lemon, peach, vanilla, strawberry, and blueberry flavors of Defendant’s Chobani

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Greek Yogurt. See id. ¶¶ 93-95. Plaintiffs contend that Defendant’s “Chobani Greek Yogurt” and

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“Chobani Greek Yogurt Champions”1 (collectively, “Yogurts”) are mislabeled. Plaintiffs’

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mislabeling allegations fall into three categories:
Evaporated Cane Juice (“ECJ”) Allegations - Plaintiffs allege that Defendant’s labels refer

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to the sweetener in Defendant’s Yogurts as “evaporated cane juice” (“ECJ”). Id. ¶ 10. Plaintiffs

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contend that ECJ is essentially just “sugar” or “dried cane syrup.” Id. ¶¶ 10, 12. Plaintiffs allege

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that the use of the term ECJ to describe this ingredient is false and misleading and conceals the fact

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that the sweetening ingredient is “sugar” or “dried cane syrup.” Id. Plaintiffs further allege that

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Defendant’s use of the term ECJ violates various Food and Drug Administration (“FDA”)

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regulations requiring manufacturers to refer to ingredients in food products by their “common and

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usual names.” See id. ¶ 56 (citing 21 C.F.R. §§ 101.2, 101.4, and 102.5); id. ¶ 58; id., Ex. C (FDA

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Draft Guidance for Industry: Ingredients Declared as Evaporated Cane Juice) (“FDA Guidance re:

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ECJ”) (stating that it is the “FDA’s view that the term ‘evaporated cane juice’ is not the common or

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usual name of any type of sweetener”) (citing 21 C.F.R. § 101.4). Plaintiffs further allege that

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because the Standard of Identity for Yogurt, which governs when a product may be called a

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“yogurt,” does not list ECJ as an authorized sweetener, Defendant was prohibited from marketing

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its products as a yogurt. Id. ¶¶ 53-55 (citing 21 C.F.R. § 131.200 (“Standard of Identity for

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Yogurt”)). To the extent Plaintiffs’ claims are based on Defendant’s use of the term ECJ on

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Defendant’s labeling, the Court refers to these claims generally as the “ECJ Claims.”
No Sugar Added Allegations - Plaintiffs also allege that Defendant claims that its Yogurts

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do not include any added sugar. Id. ¶ 66. Specifically, Plaintiffs cite to two statements on

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Defendant’s website. The first statement is as follows:

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Sugar isn’t listed as an ingredient in your 0% Plain. Where do the 7g come from?

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The 7g of sugar listed on the nutrition facts panels of our Plain 0% and 2% Chobani
comes from a naturally occurring type of sugar found in all dairy products called
“lactose.”

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As will be discussed infra, Plaintiffs do not allege that they purchased the Chobani Greek Yogurt
Champions product.
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ORDER GRANTING-IN-PART AND DENYING-IN-PART MOTION TO DISMISS THE SECOND AMENDED
COMPLAINT

This lactose often called “milk sugar,” is the only sugar you’ll find as we don’t add
sugar to our yogurt.

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Id. (emphasis added by Plaintiffs). Additionally, Defendant states:

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Does Chobani Champions contain extra sugar?

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No way! Just because Champions is made for kids doesn’t mean that we need to
add extra sugar.

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You won’t find any high fructose corn syrup or artificial ingredients, flavors, or
colors in our yogurt. Just low-fat milk sourced from local-area farms; real fruit,
lightly sweetened with evaporated cane juice; pure clover honey (in our HoneyNana flavor); life and active cultures; and probiotics.

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We believe in delicious, healthy products that are made with only natural
ingredients.

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Id. ¶ 67 (emphasis added by Plaintiffs). The Court refers to the italicized representations -- “Just
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because Champions is made for kids doesn’t mean that we need to add extra sugar” and “we don’t
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add sugar to our yogurt” -- as the “No Sugar Added Representations.” Plaintiffs also allege,
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without citing any specific statement or source, that Defendant “utilizes various media to
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disseminate claims that… its yogurt has ‘no sugar added.’” Id. ¶ 68. Plaintiffs contend that,
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because Defendant’s Yogurts include ECJ, these statements are false and misleading and violate
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FDA labeling requirements pertaining to the use of the phrases “no sugar added,” “no added
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sugar,” and “without added sugar.” Id. ¶¶ 69. The Court refers to Plaintiffs’ claims based on the
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No Sugar Added Representations as the “No Sugar Added Claims.”
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All Natural Allegations - Finally, Plaintiffs allege that Defendant has falsely stated that its
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Yogurts contain “[o]nly natural ingredients” and are “all natural.” Id. ¶¶ 5-6, 12. The Court refers
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to Defendant’s representations regarding the Yogurts’ natural quality and use of natural ingredients
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as the “All Natural Representations.” Plaintiffs allege that these representations appeared on the
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labeling for Defendant’s Yogurts and on Defendant’s website. Id.2 Plaintiffs allege that these

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representations were false and misleading because the Yogurts include artificial ingredients,
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flavorings, and colorings as well as chemical preservatives. Id. ¶¶ 80-81. While the SAC is not
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The Court notes that based on the images of the Yogurts provided in the SAC, see id. ¶¶ 5-6, it
does not appear that the “all natural” claim appears on the label. Rather, the label states only that
Defendant’s Yogurts contain “[o]nly natural ingredients.” See id.
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entirely clear as to the specific ingredient Plaintiffs contend was unnatural, it appears that Plaintiffs

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are concerned with Defendant’s inclusion of “fruit or vegetable juice” “for color.” Id. ¶¶ 14, 22,

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81. Because fruit for color is the only unnatural ingredient that Plaintiffs have specifically

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identified, Plaintiffs’ claims alleging that the Yogurts included unnatural ingredients are limited to

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this ingredient. The Court refers to Plaintiffs’ claims based on the All Natural Representations as

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the “All Natural Claims.”

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Plaintiffs allege that they each “read the labels on Defendant’s [Yogurts], including the

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[i]ngredient, ‘evaporated cane juice’ and the ‘[a]ll [n]atural [i]ngredients’ and/or ‘[o]nly [n]atural

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[i]ngredients’ claims on the labels, before purchasing them.” Id. ¶¶ 93-95. Plaintiffs allege that

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they “believed Defendant’s [Yogurts] contained only natural sugars from milk and fruit and did not

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contain added sugars or syrups” and that the Yogurts “contained only natural ingredients.” Id.

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Plaintiffs also allege that, “[h]ad Plaintiff[s] known Defendant’s [Yogurts] contained added dried

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cane syrup and unnatural ingredients, [they] would not have purchased” them. Id. Plaintiffs also

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allege that they “would not have purchased Defendant’s [Yogurts] had they known they were not

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capable of being legally sold or held.” Id. ¶ 97.

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Plaintiffs allege nine causes of action. Plaintiffs’ first cause of action is for violation of the

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unlawful prong of the Unfair Competition Law, Cal. Bus. & Prof. Code § 17200 et seq. (“UCL”),

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predicated on violations of: (1) the False Advertising Law, Cal. Bus. & Prof. Code § 17500

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(“FAL”); (2) the Consumer Legal Remedies Act, Cal. Civ. Code § 1750 et seq. (“CLRA”); and (3)

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California’s Sherman Food, Drug, and Cosmetic Act (“Sherman Law”), Cal. Health & Safety Code

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§§ 109875 et seq. The Sherman Law incorporates “[a]ll [federal] food labeling regulations and any

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amendments to those regulations….” Cal. Health & Safety Code § 110100(a). Plaintiffs also

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allege causes of action for: (1) violation of the UCL’s unfair prong; (2) violation of the UCL’s

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fraud prong; (4) violation of the FAL because Defendant’s labeling and advertising are “false and

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misleading”; (5) violation of the FAL because Defendant’s advertising is “untrue”; (6) violation of

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the CLRA; (7) unjust enrichment; (8) violation of the Song-Beverly Consumer Warranty Act; and

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(9) violation of the Magnuson-Moss Warranty Act.

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ORDER GRANTING-IN-PART AND DENYING-IN-PART MOTION TO DISMISS THE SECOND AMENDED
COMPLAINT

B.

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Plaintiffs filed their Complaint on May 14, 2012. ECF No. 1. Plaintiffs filed their First

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Amended Complaint on August 30, 2012. ECF No. 14. Plaintiffs filed a Second Amended
Complaint on October 10, 2012. ECF No. 35. Defendant moved to dismiss the SAC on November
12, 2012. ECF No. 38 (“Mot.”). Plaintiffs filed an Opposition to this Motion on January 14, 2013.
ECF No. 42 (“Opp’n”). Defendant filed a Reply on February 11, 2013. ECF No. 46 (“Reply”).
The Court held a hearing on the Motion to Dismiss on March 28, 2013.
On April 24, 2013, the Court granted the parties leave to file briefs to address the Ninth

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For the Northern District of California

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Circuit’s decision in Perez v. Nidek Co., 711 F.3d 1109 (9th Cir. 2013). Both parties filed their
supplemental briefs on May 1, 2013. ECF No. 97 (“Def. Sur-Reply”); ECF No. 96 (“Pls. SurReply”).
II.

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Procedural Background

LEGAL STANDARD
A.

Rule 12(b)(6)

Pursuant to Federal Rule of Civil Procedure 12(b)(6), a defendant may move to dismiss an

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action for failure to allege “enough facts to state a claim to relief that is plausible on its face.” Bell

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Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “A claim has facial plausibility when the

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plaintiff pleads factual content that allows the court to draw the reasonable inference that the

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defendant is liable for the misconduct alleged. The plausibility standard is not akin to a

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‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted

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unlawfully.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal citation omitted). For purposes

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of ruling on a Rule 12(b)(6) motion, the court “accept[s] factual allegations in the complaint as true

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and construe[s] the pleadings in the light most favorable to the nonmoving party.” Manzarek v. St.

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Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008).

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Nonetheless, the court need not accept as true allegations contradicted by judicially

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noticeable facts, Shwarz v. United States, 234 F.3d 428, 435 (9th Cir. 2000), and the “[C]ourt may

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look beyond the plaintiff’s complaint to matters of public record” without converting the Rule

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12(b)(6) motion into one for summary judgment, Shaw v. Hahn, 56 F.3d 1128, 1129 n.1 (9th Cir.

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1995). Nor is the court required to “‘assume the truth of legal conclusions merely because they are

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cast in the form of factual allegations.’” Fayer v. Vaughn, 649 F.3d 1061, 1064 (9th Cir. 2011)

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(per curiam) (quoting W. Min. Council v. Watt, 643 F.2d 618, 624 (9th Cir. 1981)). Mere

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“conclusory allegations of law and unwarranted inferences are insufficient to defeat a motion to

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dismiss.” Adams v. Johnson, 355 F.3d 1179, 1183 (9th Cir. 2004); accord Iqbal, 556 U.S. at 678.

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Furthermore, “‘a plaintiff may plead [him]self out of court’” if he “plead[s] facts which establish

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that he cannot prevail on his . . . claim.” Weisbuch v. Cnty. of L.A., 119 F.3d 778, 783 n.1 (9th Cir.

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1997) (quoting Warzon v. Drew, 60 F.3d 1234, 1239 (7th Cir. 1995)).
B.

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Claims sounding in fraud or mistake are subject to the heightened pleading requirements of

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Rule 9(b)

Federal Rule of Civil Procedure 9(b), which requires that a plaintiff alleging fraud “must state with

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particularity the circumstances constituting fraud.” Fed. R. Civ. P. 9(b); see Kearns v. Ford Motor

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Co., 567 F.3d 1120, 1124 (9th Cir. 2009). Courts in the Ninth Circuit have held that claims for

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both fraud and negligent misrepresentation are subject to Rule 9(b). See Meridian Project Sys.,

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Inc. v. Hardin Const. Co., LLC, 404 F. Supp. 2d 1214, 1219 (E.D. Cal. 2005); Neilson v. Union

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Bank of Cal., N.A., 290 F. Supp. 2d 1101, 1141 (C.D. Cal. 2003); Glen Holly Entm’t, Inc. v.

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Tektronix, Inc., 100 F. Supp. 2d 1086, 1093 (C.D. Cal. 1999). To satisfy the heightened standard

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under Rule 9(b), the allegations must be “specific enough to give defendants notice of the

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particular misconduct which is alleged to constitute the fraud charged so that they can defend

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against the charge and not just deny that they have done anything wrong.” Semegen v. Weidner,

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780 F.2d 727, 731 (9th Cir. 1985). Thus, claims sounding in fraud must allege “an account of the

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‘time, place, and specific content of the false representations as well as the identities of the parties

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to the misrepresentations.’” Swartz v. KPMG LLP, 476 F.3d 756, 764 (9th Cir. 2007) (per curiam).

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The plaintiff must set forth what is false or misleading about a statement, and why it is false.”

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Decker v. Glenfed, Inc. (In re Glenfed, Inc. Sec. Litig.), 42 F.3d 1541, 1548 (9th Cir. 1994) (en

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banc), superseded by statute on other grounds as stated in Marksman Partners, L.P. v. Chantal

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Pharmaceutical Corp., 927 F. Supp. 1297, 1309 (C.D. Cal. 1996).

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C.

Leave to Amend

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Under Rule 15(a) of the Federal Rules of Civil Procedure, leave to amend “should be freely
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COMPLAINT

granted when justice so requires,” bearing in mind “the underlying purpose of Rule 15… [is] to

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facilitate decision[s] on the merits, rather than on the pleadings or technicalities.” Lopez v. Smith,

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203 F.3d 1122, 1127 (9th Cir. 2000) (en banc) (internal citations, quotation marks, and alterations

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omitted). Nonetheless, a court “may exercise its discretion to deny leave to amend due to ‘undue

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delay, bad faith or dilatory motive on part of the movant, repeated failure to cure deficiencies by

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amendments previously allowed, undue prejudice to the opposing party ..., [and] futility of

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amendment.’” Carvalho v. Equifax Info. Servs., LLC, 629 F.3d 876, 892-93 (9th Cir. 2010)

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(quoting Foman v. Davis, 371 U.S. 178, 182 (1962)) (alterations in original). “[W]here the

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plaintiff has previously been granted leave to amend and has subsequently failed to add the

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requisite particularity to its claims, ‘[t]he district court’s discretion to deny leave to amend is

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particularly broad.’” Zucco Partners, LLC v. Digimarc Corp., 552 F.3d 981, 1007 (9th Cir. 2009)

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(quoting In re Read-Rite Corp., 335 F.3d 843, 845 (9th Cir. 2003)). Indeed, repeated failure to

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cure a complaint’s deficiencies by previous amendment is reason enough to deny leave to amend.

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Abagninin v. AMVAC Chem. Corp., 545 F.3d 733, 742 (9th Cir. 2008) (citing Foman, 371 U.S. at

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182; Allen v. City of Beverly Hills, 911 F.2d 367, 373 (9th Cir. 1990)).

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III.

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DISCUSSION
Defendant seeks to dismiss Plaintiffs’ Second Amended Complaint (“SAC”) for the

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following reasons: (1) Plaintiffs have not alleged facts showing that a “reasonable consumer” is

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likely to be deceived by the challenged advertising and a reasonable consumer would not be

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deceived by the challenged statements; (2) Plaintiffs lack standing to pursue their claims; (3)

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Defendant has not violated any labeling regulations; (4) Plaintiffs’ claims are preempted; (5)

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Plaintiffs’ claims fall under the primary jurisdiction of the FDA; (6) Plaintiffs have failed to

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comply with Rule 9(b); (7) unjust enrichment is not an independent cause of action; and (8)

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Plaintiffs fail to state a claim under the Song-Beverly Consumer Warranty Act and the Magnuson-

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Moss Warranty Act, 15 U.S.C. §§ 2301 (“MMWA”). See Mot. at 5-25. The Court addresses each

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of these issues below.

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A.

Standing

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At the outset, the Court addresses Defendant’s arguments that Plaintiffs lack standing under
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ORDER GRANTING-IN-PART AND DENYING-IN-PART MOTION TO DISMISS THE SECOND AMENDED
COMPLAINT

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Article III, the UCL, the FAL, and the CLRA. Mot. at 9. The Court sets forth the standards for

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standing first then addresses Defendant’s arguments.

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1.

Standards
a.

Article III Standing

An Article III federal court must ask whether a plaintiff has suffered sufficient injury to
satisfy the “case or controversy” requirement of Article III of the U.S. Constitution. See Clapper v.
Amnesty Int’l USA, 133 S. Ct. 1138, 1146 (2013) (“‘One element of the case-or-controversy
requirement’ is that plaintiffs ‘must establish that they have standing to sue.’”) (quoting Raines v.
Byrd, 521 U.S. 811, 818 (1997)). To satisfy Article III standing, a plaintiff must allege: (1) an
injury-in-fact that is concrete and particularized, as well as actual and imminent; (2) that the injury
is fairly traceable to the challenged action of the defendant; and (3) and that the injury is
redressable by a favorable ruling. Monsanto Co. v. Geertson Seed Farms, 130 S.Ct. 2743, 2752
(2010); Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167, 180-81
(2000). Article III’s standing requirements may be satisfied by allegations that a plaintiff
purchased a product he otherwise would not have purchased, or spent more on such product, in
reliance on the defendant’s misrepresentations. See, e.g., Brazil v. Dole Food Co., Inc., --- F. Supp.
2d ---, 2013 WL 1209955, at *11-13 (N.D. Cal. Mar. 25, 2013) (holding that “Brazil suffered a
concrete and particularized injury… [because] he allegedly was deceived, and then paid money that
he would not otherwise have paid had he known about the true nature of Defendants' products”).
“The party invoking federal jurisdiction bears the burden of establishing these elements.” Lujan v.
Defenders of Wildlife, 504 U.S. 555, 561 (1992).
b.

UCL, FAL, and CLRA Standing

Plaintiffs also must demonstrate standing under the UCL’s unlawful, unfair, and fraudulent
prongs, the FAL, and the CLRA. The standards for standing under these statutes are similar to the
requirements for Article III standing. In order to have standing under the FAL and the CLRA, a
plaintiff must allege reliance on the alleged misrepresentation and economic injury. See e.g. Cal.
Bus. & Prof. Code § 17535 (providing that a plaintiff must have “suffered injury in fact and has
lost money or property as a result of a violation of this chapter”); Durell v. Sharp Healthcare, 183
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Cal. App. 4th 1350, 1367 (2010) (finding plaintiff’s CLRA claim failed because plaintiff failed to

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allege facts showing that he “relied on any representation by” defendant).

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Turning to the UCL, the UCL prohibits business practices that are unlawful, unfair, or

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fraudulent. Courts have held that, in order to have standing under the UCL’s fraud prong, a

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plaintiff must demonstrate that he or she actually relied upon the allegedly fraudulent

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misrepresentation. See In re Tobacco II Cases, 46 Cal. 4th 298, 326 (2009). Courts have extended

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this actual reliance requirement to claims under the UCL’s unlawful prong to the extent “the

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predicate unlawful conduct is based on misrepresentations.” Durell, 183 Cal. App. 4th at 1363.

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Moreover, in Kwikset Corp. v. Superior Court, the California Supreme Court suggested that the

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actual reliance requirement applies whenever the underlying misconduct in a UCL action is

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fraudulent conduct. See id., 51 Cal. 4th 310, 326 (2011) (holding that plaintiff was required to

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demonstrate actual reliance to establish standing to pursue claims under the UCL unlawful prong

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because his claims were “based on a fraud theory involving false advertising and

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misrepresentations to consumers”). Thus, this Court concludes that the actual reliance requirement

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also applies to claims under the UCL’s unfair prong to the extent such claims are based on

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fraudulent conduct. See, e.g., In re Actimmune Mktg. Litig., No. C 08-02376 MHP, 2010 WL

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3463491, at *8 (N.D. Cal. Sept. 1, 2010) aff'd, 464 F. App'x 651 (9th Cir. 2011) (holding “that a

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plaintiff must plead ‘actual reliance,’ even if their claim arises under the unlawful or unfair prongs,

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so long as the pleadings assert a cause of action grounded in… deception.”) (citations omitted).

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Here, the gravamen of Plaintiffs’ claims under the UCL’s unlawful, unfair, and fraud prong

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is that Defendant’s labeling was deceptive. See, e.g., SAC ¶¶ 71 (alleging that “the term

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‘evaporated cane juice’ misleads consumers”); id. ¶¶ 84-85 (alleging that Defendant’s uses of the

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word “natural” were likely to deceive reasonable consumers); id. ¶ 109 (alleging claim under the

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UCL’s unlawful prong based on Defendant’s violations of the advertising and misbranding

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provisions of the Sherman Law, as well as the FAL, which “forbids untrue and misleading

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advertising,” and CLRA); ¶ 124 (alleging that Defendant’s marketing, advertising, and labeling

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violated the unfair prong of the UCL because it was “deceptive”); ¶ 132 (alleging that Defendant’s

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labeling violated the fraud prong of the UCL because it contained “misrepresentations and material

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omissions”). Accordingly, Plaintiffs must demonstrate actual reliance and economic injury.
2.

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Defendant’s Arguments

Defendant argues that Plaintiffs lack standing under Article III, the UCL, the FAL, and the

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CLRA because it is not plausible that Plaintiffs relied on Defendant’s allegedly misleading

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advertising and labeling statements and, even if Plaintiffs did rely, Plaintiffs did not suffer any

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injury. Mot. at 9. Defendant also argues that Plaintiffs lack standing to challenge Defendant’s

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representations that Plaintiffs did not see. Mot. at 11. The Court addresses each issue in turn.3
a.

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The Court begins by addressing the issue of reliance. “Reliance is proved by showing that

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Reliance

the defendant’s misrepresentation or nondisclosure was ‘an immediate cause’ of the plaintiff's
injury-producing conduct.” In re Tobacco II, 46 Cal. 4th at 326 (citation and alteration omitted).
“A plaintiff may establish that the defendant’s misrepresentation is an immediate cause of the
plaintiff's conduct by showing that in its absence[,] the plaintiff in all reasonable probability would
not have engaged in the injury-producing conduct.” Id. (citation and quotation marks omitted). As
set forth supra, Plaintiffs’ claims fall into three categories: (1) ECJ Claims; (2) No Sugar Added
Claims; and (3) All Natural Claims. The Court considers in turn whether Plaintiffs have alleged
reliance on the representations relevant to each category of claims.
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ECJ Claims

With respect to Plaintiffs’ ECJ Claims, the Court finds that Plaintiffs have demonstrated
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reliance. In the SAC, Plaintiffs allege that the term ECJ concealed the fact that the ingredient was
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essentially white sugar or dried cane syrup. SAC ¶¶ 10, 12, 53-64. Plaintiffs allege that, based on
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the labels, Plaintiffs believed the Yogurts contained “only natural sugars from milk and fruit and
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did not contain added sugars or syrups.” Id. ¶¶ 93-95. Plaintiffs allege that they would not have
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Before proceeding, the Court notes that its analysis below pertains to standing under the UCL, the
FAL, and the CLRA. To the extent Plaintiffs have demonstrated standing under the UCL, the
FAL, or the CLRA, the Court finds that Plaintiffs have also demonstrated Article III standing. To
the extent Plaintiffs have not demonstrated standing under the UCL, the FAL, and the CLRA, the
Court need not address Article III standing as Plaintiffs’ claims fail for lack of statutory standing.
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purchased the Yogurts had they known that the Yogurts “contained added dried cane syrup….” Id.

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The Court agrees with Defendant that Plaintiffs have not alleged facts sufficient to show,
under Rule 8 or Rule 9(b)4, that Plaintiffs believed the Yogurts contained “only natural sugars from

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milk and fruit and did not contain added sugars or syrups.” SAC ¶¶ 93-95. Significantly,

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Plaintiffs’ allegations suggest that they understood that dried cane syrup was a form of sugar.

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However, Plaintiffs have failed to allege what they believed evaporated cane juice to be if not a

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form of sugar. See id. Indeed, Plaintiffs do not allege that there is some other form of cane besides

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sugar cane.5 Absent some factual allegation concerning what Plaintiffs believed ECJ to be if not a

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form of sugar or a juice containing some form of sugar, Plaintiffs’ allegations that they read the

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label, were aware that the Yogurts contained ECJ, and nevertheless concluded that the Yogurts

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contained “only natural sugars from milk and fruit and did not contain added sugars or syrups” is

12

simply not plausible.

13

Nevertheless, the Court is not persuaded that Plaintiffs’ ECJ Claims must be dismissed.

14

Plaintiffs allege that they would not have purchased Defendant’s Yogurts had they known they

15

“contained added dried cane syrup.” Id. ¶¶ 93-95. Plaintiffs also allege that the use of the term ECJ

16

is deceptive to the extent it conceals the fact that the ingredient is “little different than [ordinary]

17

white sugar” or “dried cane syrup.” Id. ¶¶ 10, 12, 62-64. Plaintiffs allege that the use of the term

18

ECJ to describe the sweetening ingredient suggests that the ingredient is more akin to “[n]atural

19

sugar cane.” Id. ¶¶ 62-64. Plaintiffs allege that, unlike ECJ, white sugar, dried cane syrup, and

20

other refined sugars, natural sugar cane is “healthy and nutritious, containing vitamins, minerals,

21

enzymes, fibers, and phytonutrients….” Id. Moreover, to the extent ECJ suggests that the product

22

is derived from a juice, it may have plausibly suggested that the product is healthier than refined

23

sugars and syrups. Thus, the Court finds that Plaintiffs have established standing because they

24

alleged: (1) facts showing that Defendant’s use of the term ECJ may have concealed the fact that

25
26
27
28

4

As will be discussed infra Section III.E.1, the Court finds that Rule 9(b) applies to Plaintiffs
claims.
5
Indeed, at the July 11, 2013 hearing on Plaintiffs’ Motion for a Preliminary Injunction, ECF No.
44, Plaintiffs’ counsel admitted that there was no other form of cane besides sugar cane.
11
Case No.: 12-CV-02425-LHK
ORDER GRANTING-IN-PART AND DENYING-IN-PART MOTION TO DISMISS THE SECOND AMENDED
COMPLAINT

1

the ingredient was equivalent to white sugar or dried cane syrup (refined forms of sugar with little

2

nutritional value), and (2) Plaintiffs would not have purchased the Yogurts had they known they

3

contained dried cane syrup. See, e.g., Khasin v. Hershey Co., 5:12-CV-01862 EJD, 2012 WL

4

5471153, at *6-7 (N.D. Cal. Nov. 9, 2012) (holding that allegations that plaintiff “would not have

5

purchased [defendant’s] products… had he known the truth about these products and had they been

6

properly labeled in compliance with the labeling regulations” were sufficient to establish Article III

7

and UCL standing).
ii.

8
9

No Sugar Added Claims

The Court finds that Plaintiffs have not sufficiently alleged reliance with respect to the No

United States District Court
For the Northern District of California

10

Sugar Added Claims. As alleged in the SAC, these claims are based on Defendant’s statements on

11

its website that “we don’t add sugar to our yogurt” and that “Just because Champions is made for

12

kids doesn’t mean that we need to add extra sugar.” Id. ¶ 66-67 (emphasis omitted). Under the

13

UCL and the FAL, as modified by Proposition 64, Plaintiffs are typically required to establish

14

reliance by alleging facts showing they “viewed the defendant’s advertising.” Kwikset, 51 Cal. 4th

15

at 321; id. at 326 (Plaintiffs must “demonstrate actual reliance on the allegedly deceptive or

16

misleading statements”). CLRA imposes a similar reliance requirement. See Durell, 183 Cal.

17

App. 4th at 1367. Here, Plaintiffs do not allege that they ever viewed Defendant’s website. Thus,

18

Plaintiffs could not have relied upon Defendant’s No Sugar Added Representations. See Id. at

19

1363 (holding that there was no reliance where “SAC [did] not allege [plaintiff] ever visited

20

[defendant’s] Web site).

21

Plaintiffs argue that, notwithstanding Plaintiffs’ failure to allege that they viewed

22

Defendant’s website, the Court may still find that Plaintiffs relied on Defendant’s statements. See

23

Opp’n at 11. Citing In re Tobacco II, Plaintiffs contend that Plaintiffs need not allege that they

24

viewed Defendant’s website because Defendant’s website statements were part of a “long-term

25

advertising campaign” and “[w]here [a] ‘plaintiff alleges exposure to a long-term advertising

26

campaign, the plaintiff is not required to plead with an unrealistic degree of specificity that the

27
28

12
Case No.: 12-CV-02425-LHK
ORDER GRANTING-IN-PART AND DENYING-IN-PART MOTION TO DISMISS THE SECOND AMENDED
COMPLAINT

1

plaintiff relied on particular advertisements or statements.’” Id. (quoting In re Tobacco II, 46 Cal.

2

4th at 312). Plaintiffs’ reliance on In re Tobacco II is misplaced.

3

In In re Tobacco II, the California Supreme Court held that plaintiffs, who had been

4

exposed to a “decades-long campaign of deceptive advertising” aimed at down-playing the

5

negative health effects of smoking were not required to identify with particularity the particular

6

advertisements upon which the plaintiffs relied. Id., 46 Cal. 4th at 328. However, the In re

7

Tobacco II Court also emphasized that plaintiffs were still required to allege facts showing that

8

defendants’ advertisements “were an immediate cause of the” plaintiffs’ decisions to purchase

9

defendants’ cigarettes. Id. Thus, as explained by the California Court of Appeal in Pfizer Inc. v.

United States District Court
For the Northern District of California

10

Superior Court, In re Tobacco II “does not stand for the proposition that a consumer who was

11

never exposed to an alleged false or misleading advertising or promotional campaign” may bring a

12

claim for relief. Pfizer Inc., 182 Cal. App. 4th 622, 632 (2010). Rather, In re Tobacco II stands for

13

the narrower, and more straight-forward proposition that, where a plaintiff has been exposed to

14

numerous advertisements over a period of decades, the plaintiff is not required to “plead with an

15

unrealistic degree of specificity [the] particular advertisements and statements” the plaintiffs relied

16

upon. Id., 46 Cal. 4th at 328 (emphasis added). It does not appear that In re Tobacco II would

17

permit a plaintiff who has never been exposed to a defendant’s marketing campaign or to the

18

disputed misrepresentations to bring a claim for violation of the UCL, the FAL, or the CLRA.

19

Here, while Plaintiffs allege generally that “Defendant’s misrepresentations and material

20

omissions are part of an extensive labeling, advertising[,] and marketing campaign,” SAC ¶ 96,

21

Plaintiffs have not alleged that they were exposed to this campaign. More importantly, Plaintiffs

22

have not alleged that they were exposed to any advertisements featuring statements similar to the

23

No Sugar Added Representations on Defendant’s website. Furthermore, Plaintiffs have not alleged

24

anything approaching a “decades-long campaign of deceptive advertising….” In re Tobacco II, 46

25

Cal. 4th at 327. Thus, Plaintiffs’ reliance on In re Tobacco II is misplaced.

26

Plaintiffs argue that, because the claims on Defendant’s website would violate FDA

27

labeling requirements, Defendant’s Yogurts were misbranded, and thus, not capable of being sold

28

13
Case No.: 12-CV-02425-LHK
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COMPLAINT

1

legally. Opp’n at 11. Plaintiffs argue that they have alleged that they “would not have purchased

2

Defendant’s [Yogurts] had they known they were not capable of being legally sold or held.” Id.

3

(quoting SAC ¶ 97). These allegations are not sufficient to establish reliance.

4

Plaintiffs’ theory would eviscerate the enhanced standing requirements imposed by

5

Proposition 64 and the California Supreme Court’s decision in Kwikset. Proposition 64 imposed a

6

requirement that UCL plaintiffs have suffered economic injury “‘as a result of’ the unfair

7

competition….” Kwikset, 51 Cal. 4th at 326. As explained in Kwikset, the voters enacted

8

Proposition 64 in 2004 as a means of “confin[ing] standing to those actually injured by a

9

defendant’s business practices and… curtail[ing] the prior practice of filing suits on behalf of

United States District Court
For the Northern District of California

10

‘clients who have not used the defendant’s product or service, viewed the defendant’s advertising,

11

or had any other business dealing with the defendant....’” Id. at 321 (emphasis added). Under

12

Kwikset, Plaintiffs are required to “demonstrate actual reliance on the allegedly deceptive or

13

misleading statements.” Id., 51 Cal. 4th at 326. If the Court were to hold that Plaintiffs, who never

14

viewed the No Sugar Added Representations, have standing to bring claims based upon allegations

15

that they would not have purchased a product that was misbranded, purchasers who never “viewed

16

the defendant’s advertising” or misleading labeling would have standing to sue. Id. Such a

17

holding is inconsistent with Proposition 64 and Kwikset.6

18

Accordingly, the Court finds that Plaintiffs have not sufficiently established reliance and

19

thus standing with respect to the No Sugar Added Claims and therefore dismisses these claims.

20

However, because Plaintiffs may be able to correct the aforementioned deficiencies, Plaintiffs’

21

claims are dismissed without prejudice. See Lopez, 203 F.3d at 1127 (holding that “a district court

22

should grant leave to amend… unless it determines that the pleading could not possibly be cured by

23

the allegation of other facts.”).

24

6

25
26
27
28

Moreover, Plaintiffs’ allegations seem to be suggesting that Defendant failed to disclose the fact
of Defendant’s alleged non-compliance with labeling laws. In order for Defendant to be liable for
failing to disclose this fact, Defendant must have a duty to disclose. See Berryman v. Merit Prop.
Mgmt., Inc., 152 Cal. App. 4th 1544, 1557 (2007) (holding that plaintiff’s UCL claim based on
defendant’s failure to disclose fees it charged to sellers failed where plaintiff failed to “allege any
affirmative duty to disclose” such fees). Here, Plaintiffs have not alleged that Defendant had a
duty to disclose or identified the basis for this duty (e.g., fiduciary duty, duty as a seller, etc…).
14
Case No.: 12-CV-02425-LHK
ORDER GRANTING-IN-PART AND DENYING-IN-PART MOTION TO DISMISS THE SECOND AMENDED
COMPLAINT

iii.

1

The Court finds that Plaintiffs have failed to allege facts showing reliance upon

2
3
4
5
6
7
8

Defendants’ All Natural Representations. Plaintiffs allege that Defendant stated, on the Yogurts’
labeling and on Defendant’s website, that the Yogurts contain “[o]nly natural ingredients” and are
“all natural.” SAC ¶¶ 5-6, 12. Plaintiffs allege that these statements were misleading because
some of Defendant’s Yogurts, specifically the pomegranate flavor, are colored “artificially” using
“fruit or vegetable juice concentrate.” Id. ¶¶ 12, 81. Plaintiffs allege that they would not have
purchased the Yogurts had they known the Yogurts “contained… unnatural ingredients.” Id.
These allegations will not suffice to establish reliance with respect to Plaintiffs’ All Natural

9
United States District Court
For the Northern District of California

10
11
12
13
14
15
16
17
18
19
20
21

Claims. As noted by Defendant, Defendant’s labeling explicitly discloses that Defendant adds
“fruit or vegetable juice concentrate [for color].” See id. ¶ 13 (quoting label). Plaintiffs purport to
have read the label, including the ingredient list. See id. ¶¶ 93-95 (stating that each Plaintiff read
“the labels on Defendant’s [Yogurts] including the [i]ngredient” ECJ and that each Plaintiff read
the “evaporated cane juice” representation, which is contained in the ingredient list). Because the
labels clearly disclosed the presence of fruit or vegetable juice concentrate in the Yogurts, it is not
plausible that Plaintiffs believed, based on Defendant’s “[o]nly natural ingredients” or “all natural”
representations, that the Yogurts did not contain added fruit juice. Consequently, Plaintiffs’
allegations of reliance fail and Plaintiffs’ All Natural Claims are dismissed.7 However, because
Plaintiffs may be able to cure the deficiencies, Plaintiffs claims are dismissed without prejudice.
See Lopez, 203 F.3d at 1127 (holding that “a district court should grant leave to amend… unless it
determines that the pleading could not possibly be cured by the allegation of other facts.”).
iv.

22
23
24
25

All Natural Claims

Conclusions Regarding Reliance

In sum, the Court finds that Plaintiffs have demonstrated reliance with respect to Plaintiffs’
ECJ claims. Plaintiffs have not, however, demonstrated reliance with respect to Plaintiffs’ No
Sugar Added and All Natural Claims. Accordingly, Plaintiffs’ UCL, FAL, and CLRA claims
based on the No Sugar Added and All Natural Representations are dismissed without prejudice.

26
7

27
28

For the reasons set forth above, Plaintiffs also cannot establish standing to pursue the All Natural
Claims based on Plaintiffs’ allegation that they would not have purchased a product that was
misbranded and therefore “not capable of being legally sold or held.” SAC ¶ 97.
15
Case No.: 12-CV-02425-LHK
ORDER GRANTING-IN-PART AND DENYING-IN-PART MOTION TO DISMISS THE SECOND AMENDED
COMPLAINT

1

The Courts’ remaining analysis in Sections III.A.2-III.E will therefore focus on Plaintiffs’ ECJ

2

Claims.

3
4

b.

Injury

Defendant argues that Plaintiffs’ claims must be dismissed because Plaintiffs cannot

5

plausibly allege that they were injured. See Mot. at 10. Defendant argues that, in order to show

6

injury, Plaintiffs must allege facts showing that they did not receive the product that was

7

advertised. See id. (citing Kwikset, 51 Cal. 4th at 330). Defendant argues that, because the

8

Yogurts’ labels disclose that an ingredient has been added for color and that the Yogurts contain

9

evaporated cane juice, Plaintiffs received the product that was advertised and, accordingly, suffered

United States District Court
For the Northern District of California

10
11

no injury. Id. The Court is not persuaded by this argument.
The question of injury in these types of cases is generally heavily intertwined with

12

questions of reliance. As observed by the California Supreme Court in Kwikset, a plaintiff’s

13

allegation that “he or she would not have bought the product but for the misrepresentation… is

14

[generally] sufficient to allege economic injury.” Kwikset, 51 Cal. 4th at 330. Here, Plaintiffs have

15

alleged facts showing that Defendant’s use of the term ECJ concealed the ingredient’s true nature

16

as a refined sugar and that they would not have purchased the Yogurts had they known the truth.

17

Thus, Plaintiffs have established that they were injured by Defendant’s use of the term ECJ.

18
19
20
21
22
23
24
25
26
27
28

c.

Products Plaintiffs Did Not Purchase

Plaintiffs allege that they purchased only the pomegranate, lemon, peach, vanilla,
strawberry, and blueberry flavored Chobani Greek Yogurt. See SAC ¶¶ 93-95. Nevertheless,
Plaintiffs’ claims in the SAC include within their scope other products, specifically the Chobani
Greek Yogurt Champions Yogurts (“Chobani Champions”) and other flavors of Chobani Greek
Yogurt. See id. ¶ 6. Defendant argues that Plaintiffs’ claims based on products Plaintiffs did not
purchase must be dismissed. See Mot. at 11-12. As recognized in Miller v. Ghirardelli Chocolate
Co., “[t]he majority of the courts that have carefully analyzed the question hold that a plaintiff may
have standing to assert claims for unnamed class members based on products he or she did not
purchase so long as the products and alleged misrepresentations are substantially similar.” Id., No.
12-04936 LB, 2012 WL 6096593, at *6 (N.D. Cal. Dec. 7, 2012) (collecting cases).
16
Case No.: 12-CV-02425-LHK
ORDER GRANTING-IN-PART AND DENYING-IN-PART MOTION TO DISMISS THE SECOND AMENDED
COMPLAINT

1

With respect to the instant case, the Court notes at the outset that it is difficult to discern in

2

the SAC which products Plaintiffs are contending contained each representation and for which

3

products these representations were false. In any amended complaint, Plaintiffs are ORDERED to

4

include a list or a table specifically setting forth: (1) which products, including specific flavors,

5

Plaintiffs are including within this lawsuit; (2) which and where representations appeared on each

6

product; and (3) which representations were false, misleading, or unlawful with respect to each

7

product.

8
9

Regarding the ECJ Claims, Plaintiffs allege that, like the products purchased by Plaintiffs,
the Chobani Champions Yogurts and the other Chobani Greek Yogurt flavors’ labeling uses the

United States District Court
For the Northern District of California

10

term ECJ. SAC ¶ 14. Thus, the allegedly deceptive language, “evaporated cane juice,” was

11

“substantially similar” across Defendant’s Yogurts. Miller, 2012 WL 6096593 at *6. However,

12

Plaintiffs do not allege facts sufficient to show that the Chobani Champions and Chobani Greek

13

Yogurts Plaintiffs did not purchase are “substantially similar” to the Chobani Greek Yogurts

14

Plaintiffs did purchase such that Plaintiffs may be permitted to pursue claims based on the products

15

they did not purchase. Id. Accordingly, the Court dismisses Plaintiffs’ ECJ Claims based on

16

products Plaintiffs did not purchase. However, because Plaintiffs may be able to amend the

17

complaint to address these deficiencies, the Court’s dismissal is without prejudice. See Lopez, 203

18

F.3d at 1127.

19

B.

Reasonable Consumer

20

In order to prevail on Plaintiffs’ FAL, CLRA, UCL fraud prong claims, and Plaintiffs’ UCL

21

unlawful prong claim predicated on FAL and CLRA violations, Plaintiffs must satisfy the

22

“reasonable consumer” test, which requires Plaintiffs to show that members of the public are likely

23

to be deceived by Defendant’s labeling statements. See Williams, 552 F.3d at 938. Whether a

24

given statement is likely to deceive is “usually… a question of fact not appropriate for decision on

25

demurrer.” Id.; see also Colucci v. ZonePerfect Nutrition Co., No. 12-2907, 2012 WL 6737800, at

26

*7 (N.D. Cal. Dec. 28, 2012) (rejecting Defendant’s argument that it was not plausible that the

27

“reasonable consumer [was] likely [to] be deceived by the labeling of its nutrition bars” because

28

17
Case No.: 12-CV-02425-LHK
ORDER GRANTING-IN-PART AND DENYING-IN-PART MOTION TO DISMISS THE SECOND AMENDED
COMPLAINT

1

this question “is generally not amenable to resolution on the pleadings”). Here, Defendant argues

2

that Plaintiffs’ claims must be dismissed because it is not plausible that a “reasonable consumer”

3

would be deceived by any of the alleged misstatements. Mot. at 6.

4

The Court has already dismissed the No Sugar Added and All Natural Claims.
Accordingly, the Court does not address the reasonable consumer issue as to these claims. With

6

respect to Plaintiffs’ ECJ Claims, the Court has already found above that it is plausible that

7

Defendant’s use of the term ECJ suggests that ECJ is a healthier alternative to refined sugar and

8

may conceal the fact that ECJ is “little different than [ordinary] white sugar” or “dried cane syrup.”

9

SAC ¶¶ 10, 12, 62, 64. Accordingly, the Court declines to dismiss Plaintiffs’ ECJ Claims on the

10
United States District Court
For the Northern District of California

5

grounds that reasonable consumers would not have been deceived. See Williams, 552 F.3d at 938

11

(holding that whether consumers are likely to be deceived is “usually… a question of fact not

12

appropriate for decision on demurrer”).

13

C.

14

Defendant argues that Plaintiffs’ claims should also be dismissed because they are

15

expressly and impliedly preempted by the Food Drug & Cosmetics Act, 21 U.S.C. § 301, et seq.

16

(“FDCA”), as amended by the Nutritional Label & Education Act (“NLEA”). Mot. at 16, 19. For

17

the reasons set forth below, the Court disagrees.

18
19
20
21
22
23
24
25
26
27
28

Preemption

1.

Implied Preemption

The Court first addresses the issue of implied preemption. As explained by the Ninth
Circuit in Stengel v. Medtronic Inc., “[t]here are three categories of preemption: express, field, and
conflict.” Id., 704 F.3d 1224, 1230 (9th Cir. 2013) (en banc) (citation omitted). “Field and conflict
preemption are subcategories of implied preemption.” Id. The latter form of preemption, conflict
preemption, “exists when a state requirement actually conflicts with a federal requirement, making
impossible compliance with both requirements.” Id. at 1231. The former form of preemption,
“[f]ield preemption… may be understood as a species of conflict pre-emption: A state law that falls
within a pre-empted field conflicts with Congress’ intent (either express or plainly implied) to
exclude state regulations.” Indus. Truck Ass'n, Inc. v. Henry, 125 F.3d 1305, 1309 (9th Cir. 1997)
(citation and internal quotation marks omitted). “It is, however, a more potent species, for under
18
Case No.: 12-CV-02425-LHK
ORDER GRANTING-IN-PART AND DENYING-IN-PART MOTION TO DISMISS THE SECOND AMENDED
COMPLAINT

1

field preemption the state regulation is preempted whether or not it actually conflicts with the

2

federal scheme.” Id. (citations omitted).

3

This Court previously addressed the issue of implied preemption in Brazil. In Brazil, as in

4

this case, the plaintiff, Chad Brazil, raised claims under the UCL, the FAL, and the CLRA based on

5

Dole Food Company, Inc. and Dole Packaged Foods, LLC’s misbranding of certain food products.

6

Id., 2013 WL 1209955, at *1. Dole argued that Brazil’s claims were expressly and impliedly

7

preempted by the FDCA. After considering Dole’s arguments (which largely mirror Defendant’s

8

arguments in the instant Motion to Dismiss) and analyzing the relevant case law and authorities,

9

this Court found that the FDCA did not impliedly preempt Brazil’s claims. See Brazil, 2013 WL

United States District Court
For the Northern District of California

10
11

1209955, at *5-8.
As explained in Brazil, “[w]hen analyzing the scope of a preemption statute, a court’s

12

analysis must ‘start with the assumption that the historic police powers of the States [are] not to be

13

superseded by the Federal Act unless that was the clear and manifest purpose of Congress.’”

14

Brazil, 2013 WL 1209955, at *6 (quoting Medtronic, Inc. v. Lohr, 518 U.S. 470, 485 (1996))

15

(alteration in original). “There is a strong presumption against federal preemption” in cases

16

involving food labeling regulations because “the regulation of health and safety, including laws

17

regulating the proper marketing of food, are traditionally within states’ historic police powers.” Id.

18

(citing Florida Lime & Avocado Growers v. Paul, 373 U.S. 132, 144 (1963)).

19

Defendant argues that a finding of implied preemption is warranted in this case because 21

20

U.S.C. § 337(a) provides that only the United States may bring proceedings to enforce the FDCA.

21

See 21 U.S.C. § 337(a) (providing that “proceedings for the enforcement, or to restrain violations,

22

of [the FDCA] shall be by and in the name of the United States” (emphasis added)). In light of this

23

provision, Defendant argues that permitting a private person to prosecute a state law private right

24

of action based on a violation of the FDCA would conflict with Congress’s intent. See Mot. at 16-

25

17. The Court is not persuaded.

26

As the Court observed in Brazil, while the FDCA prohibits individuals from bringing

27

causes of action under the FDCA, “there is no indication from the text of the NLEA,” which

28

19
Case No.: 12-CV-02425-LHK
ORDER GRANTING-IN-PART AND DENYING-IN-PART MOTION TO DISMISS THE SECOND AMENDED
COMPLAINT

1

amended the FDCA, “or its legislative history that Congress ‘intended a sweeping preemption of

2

private actions predicated on [identical labeling] requirements contained in state laws.’” Id. at *7

3

(quoting In re Farm Raised Salmon Cases, 42 Cal. 4th 1077, 1090 (2008)). Indeed,

4

“Representative Henry Waxman—who introduced the NLEA in the House of Representatives—

5

stated specifically that the NLEA ‘recognizes the importance of the State role: by allowing States

6

to adopt standards that are identical to the Federal standard, which may be enforced in State court;

7

by allowing the States to enforce the Federal Standard in Federal court.’” In re Farm Raised

8

Salmon Cases, 42 Cal. 4th at 1090 (quoting Remarks of Rep. Waxman, 136 Cong. Rec. 1539 (daily

9

ed. July 30, 1990)).

United States District Court
For the Northern District of California

10

Moreover, as recognized by the Third Circuit in Holk v. Snapple Beverage Corp., NLEA

11

states that it “shall not be construed to preempt any provision of State law, unless such provision is

12

expressly preempted under [21 U.S.C. § 343-1] of the Federal Food, Drug, and Cosmetic Act.” Id.,

13

575 F.3d 329, 336 (3d Cir. 2009) (emphasis added) (alteration in original) (quoting Pub. L. No.

14

101-535, § 6(c)(1), 104 Stat. 2353, 2364 (Nov. 8, 1990)). “NLEA declares that its express

15

preemption provision,” Section 343-1 (which will be discussed infra in Section III.C.2), “‘shall not

16

be construed to apply to any requirement respecting a statement in the labeling of food that

17

provides for a warning concerning the safety of the food or component of the food,’ thereby

18

preserving state warning laws.” Id. at 338 (quoting 104 Stat. 2353, 2364). This language

19

undermines any conclusion that the FDCA or NLEA were intended to impliedly preempt state law

20

claims seeking to enforce labeling standards that are identical to the federal standards.

21

Defendant also contends that a finding of implied preemption is warranted in light of the

22

Ninth Circuit’s decision in Pom Wonderful LLC v. Coca-Cola Co, 679 F.3d 1170, 1175-76 (9th

23

Cir. 2012). See Mot. at 18. In Pom Wonderful, the Ninth Circuit found that “the FDCA and its

24

regulations bar[red]” the plaintiff’s claims under the federal Lanham Act alleging that Coca-Cola’s

25

labeling for its ‘Pomegranate Blueberry’ juice was false and misleading. Id., 679 F.3d at 1174,

26

1176. This Court thoroughly reviewed the Pom Wonderful decision in Brazil and found that it did

27

not support the conclusion that the FDCA impliedly preempts state law claims. The Court will not

28

20
Case No.: 12-CV-02425-LHK
ORDER GRANTING-IN-PART AND DENYING-IN-PART MOTION TO DISMISS THE SECOND AMENDED
COMPLAINT

1

recount its analysis in full, but, in short, the Court found that Pom Wonderful is inapposite for two

2

reasons. “First, the Court in Pom Wonderful limited its ruling to the federal Lanham Act and

3

explicitly declined to address whether plaintiff's state law claims were also preempted.” Brazil,

4

2013 WL 1209955, at *7 (citing Pom Wonderful, 679 F.3d at 1179 (“remand[ing] so that the

5

district court can rule on the state claims”)). Pom Wonderful therefore “did [not] grapple with the

6

presumption that Congress did not intend to supplant state law,” and accordingly “is not binding

7

authority.” Id. (citations omitted). Second, as discussed supra, there is no indication in the NLEA

8

“that Congress ‘intended a sweeping preemption of private actions predicated on requirements

9

contained in state laws.’” Id. (quoting In re Farm Raised Salmon Cases, 42 Cal. 4th at 1090).

United States District Court
For the Northern District of California

10

Thus, the Court finds that Pom Wonderful does not support the conclusion that the FDCA

11

impliedly preempts Plaintiffs’ claims.

12

Notably, after Brazil was decided and after the Motion to Dismiss was fully briefed, the

13

Ninth Circuit issued its decision in Perez v. Nidek Co., 711 F.3d 1109 (9th Cir. 2013), wherein the

14

Ninth Circuit addressed the issue of preemption in the FDCA context. The parties requested and

15

were granted the opportunity to submit supplemental briefing regarding the impact of Perez. ECF

16

Nos. 93, 95. In Defendant’s supplemental brief, Defendant argues that, in light of Perez, the Court

17

must find that Plaintiffs’ claims are impliedly preempted. See ECF No. 97 (“Def. Sur-Reply”) at 1.

18

Plaintiffs take the opposite position. See ECF No. 96 (“Pls. Sur-Reply”). For the reasons set forth

19

below, the Court finds that Perez does not require the Court to find that Plaintiffs’ claims are

20

impliedly preempted.

21

In Perez, the plaintiff brought a common-law fraud-by-omission claim predicated on

22

allegations that Nidek, a manufacturer of medical devices, and certain physicians failed to disclose

23

the fact that Nidek’s laser system, which defendants used to perform plaintiff’s eye surgery, had

24

not been approved for that use by the FDA. Id., 711 F.3d at 1112-13, 1117. The laser at issue was

25

a Class III medical device under the FDCA, as amended by the Medical Device Amendments of

26

1976 (“MDA”), 21 U.S.C. § 360c. Id. at 1112. Accordingly, “Nidek was required to get

27

premarket approval (‘PMA’) from the FDA” prior to distributing the laser. Id. Nidek had not

28

21
Case No.: 12-CV-02425-LHK
ORDER GRANTING-IN-PART AND DENYING-IN-PART MOTION TO DISMISS THE SECOND AMENDED
COMPLAINT

1

received approval to use the laser for the type of surgery plaintiff received. Id. The Perez Court

2

held that the plaintiff’s fraud-by-omission claim was impliedly preempted. The Perez Court relied

3

heavily on the Supreme Court’s decision in Buckman Co. v. Plaintiffs’ Legal Comm., 531 U.S. 341

4

(2001). See id. at 1119.

5

In Buckman, the Supreme Court held that the FDCA impliedly preempted a claim alleging
that a consulting company had made fraudulent representations to the FDA regarding a bone screw

7

in the course of obtaining approval to market the screw. Id., 531 U.S. at 353. As explained by the

8

Perez Court, the Buckman Court’s implied preemption finding was premised upon the conclusion

9

that the plaintiff’s claims alleging fraud on the FDA “conflicted with the federal statutory scheme,

10
United States District Court
For the Northern District of California

6

which ‘amply empowers the FDA to punish and deter fraud against the Administration.’” Perez,

11

711 F.3d at 1119 (quoting Buckman, 531 U.S. at 348). Because the Buckman plaintiff’s fraud on

12

the FDA claim “‘exist[ed] solely by virtue of the FDCA disclosure requirements,’” it was

13

preempted. Id. (quoting Buckman, 531 U.S. at 353).

14

The Perez Court reasoned that Perez’s claim, which sought to hold the defendants

15

responsible for failing to disclose that the laser had not been approved by the FDA, similarly failed

16

because it “exist[ed] solely by virtue of the FDCA disclosure requirements.” Id. (quoting

17

Buckman, 531 U.S. at 353). The Perez Court held that, in order “to escape preemption by the

18

FDCA,” “a state-law claim must fit” through the following “narrow gap”: “The plaintiff must be

19

suing for conduct that violates the FDCA (or else his claim is expressly preempted by § 360k(a)),

20

but the plaintiff must not be suing because the conduct violates the FDCA (such a claim would be

21

impliedly preempted under Buckman).” Id. at 1120 (quoting In re Medtronic, Inc., Sprint Fidelis

22

Leads Products Liab. Litig., 623 F.3d 1200, 1204 (8th Cir. 2010)). This latter statement mirrored a

23

statement by Judge Watford in his concurrence in Stengel, 704 F.3d at 1235. The Court finds that

24

Defendant’s reliance on Perez is misplaced for several reasons.

25

As an initial matter, Buckman, Perez, and Stengel arose in the context of Class III medical

26

devices governed by the MDA. As the Supreme Court explained in Buckman, the MDA governs

27

the regulation of medical devices, which it separates into three categories. Id., 531 U.S. at 344.

28

22
Case No.: 12-CV-02425-LHK
ORDER GRANTING-IN-PART AND DENYING-IN-PART MOTION TO DISMISS THE SECOND AMENDED
COMPLAINT

1

While Class I devices require only general manufacturing controls because they “present no

2

unreasonable risk of illness or injury,” and Class II devices require more stringent controls because

3

they possess “a greater potential dangerousness,” Class III devices “‘presen[t] a potential

4

unreasonable risk of illness or injury’ and therefore incur the FDA’s strictest regulation.” Id.

5

(quoting 21 U.S.C. § 360c(a)(1)(C)(ii)(II)). Consequently, before a Class III device may be

6

marketed, it must complete a thorough premarket approval process with the FDA, which requires

7

an applicant to “demonstrate a ‘reasonable assurance’ that the device is both ‘safe . . . [and]

8

effective under the conditions of use… [described] in the proposed labeling….’” Id. (citing §§

9

360e(d)(2)(A), (B)).8

United States District Court
For the Northern District of California

10

Here, while mislabeled food undoubtedly presents risks to consumers, there is not

11

necessarily the same substantial “unreasonable risk of illness or injury” present in the Class III

12

medical device context. Importantly, there is no comparably rigorous review process that requires

13

premarket approval. Thus, while the Court finds that the broad principles regarding preemption, as

14

espoused in Stengel v. Medtronic and Perez v. Nidek, are relevant to the Court’s analysis in this

15

case, the Court declines to rely too heavily on these cases due to the important distinction between

16

the way the FDA extensively regulates Class III medical devices and the FDA’s substantial, but

17

more limited oversight of food labeling requirements.

18

Furthermore, Buckman is distinguishable from this case because it involved “fraud-on-the-

19

FDA” claims to which the Supreme Court held that no presumption against preemption applied.

20

Id. at 347-348. In so doing, the Supreme Court emphasized that, because “the federal statutory

21

scheme amply empowers the FDA to punish and deter fraud against the Administration,” the

22

“balance of statutory objections . . . sought by the Administration [could] be skewed by allowing

23

fraud-on-the-FDA claims under state tort law.” Id. at 348. Here, as noted previously, the

24

presumption against preemption does apply absent a “‘clear and manifest purpose of Congress.’”

25

Chae v. SLM Corp., 593 F.3d 936, 944 (9th Cir. 2010) (quoting Wyeth, 555 U.S. at 565). Congress

26
8

27
28

“The PMA process is ordinarily quite time consuming because the FDA’s review requires an
average of 1,2000 hours [for] each submission.” Id. at 344-345 (internal quotation marks and
citation omitted).
23
Case No.: 12-CV-02425-LHK
ORDER GRANTING-IN-PART AND DENYING-IN-PART MOTION TO DISMISS THE SECOND AMENDED
COMPLAINT

1

has not set forth a “clear and manifest” statement indicating that it intended state food labeling

2

claims to be subject to implied preemption, and the NLEA explicitly states that the Act “shall not

3

be construed to preempt any provision of State law, unless such provision is expressly preempted

4

under [21 U.S.C. § 343-1] of the Federal Food, Drug, and Cosmetic Act.” Pub. L. No. 101-535, §

5

6(c)(1), 104 Stat. 2353, 2364 (Nov. 8, 1990) (emphasis added).

6

Finally, the Court finds that Perez, Buckman, and Stengel are distinguishable from the
instant case because the claims in this case are not being brought “because the conduct violates the

8

FDCA.” Perez, 711 F.3d at 1120 (quoting In re Medtronic, 623 F.3d at 1204). As set forth supra,

9

Plaintiffs bring claims for violations of: (1) the FAL; (2) the CLRA; (3) the UCL’s fraud prong; (4)

10
United States District Court
For the Northern District of California

7

the UCL’s unfair prong; and (5) the UCL’s unlawful prong predicated on violations of the Sherman

11

Law, the FAL, and the CLRA.9

12

The Court first addresses Plaintiffs’ UCL unlawful prong claim predicated on the Sherman

13

Law. Like the FDCA, California’s “Sherman Law broadly prohibits the misbranding of food.” In

14

re Farm Raised Salmon Cases, 42 Cal. 4th at 1086 (citing Cal. Health & Safety Code § 110765).

15

Defendant argues that Plaintiffs’ Sherman Law claim is preempted because the Sherman Law

16

incorporates “[a]ll food labeling regulations and any amendments to those regulations adopted

17

pursuant to the [FDCA].” Def. Sur-reply at 3 (quoting Cal. Health & Safety Code § 110100(a)).

18

Thus, Defendant contends that Plaintiffs are suing because Defendant’s labeling violates the

19

FDCA. See id. The Court is not persuaded.

20

Although the Sherman Law incorporates the regulations set forth in the FDCA, the

21

Sherman Law expressly states that it is incorporating the federal regulations as “the food labeling

22

regulations of this state.” Cal. Health & Safety Code § 110100(a) (emphasis added). Accordingly,

23

when a plaintiff sues under the Sherman Law, he is not “suing because [Defendant’s labeling]

24

violates the FDCA,” Perez, 711 F.3d at 1120, but rather because Defendant’s labeling violates

25
26
27
28

9

Plaintiffs also allege a claim for unjust enrichment and claims for violations of the Song-Beverly
Consumer Warranty Act and the Magnuson-Moss Warranty Act. The Court need not decide
whether these claims are preempted because, as will be set forth infra, these claims fail for other
reasons.
24
Case No.: 12-CV-02425-LHK
ORDER GRANTING-IN-PART AND DENYING-IN-PART MOTION TO DISMISS THE SECOND AMENDED
COMPLAINT

1

California’s labeling laws. This factor distinguishes Plaintiffs’ Sherman Law claim from the

2

fraud-by-omission claim at issue in Perez. As recognized by the Perez Court, there was no

3

independent California law imposing a duty on manufacturers of medical devices to “affirmatively

4

tell patients when medical devices have not been approved for a certain use.” Id., 711 F.3d at

5

1118-19. Thus, Perez’s fraud-by-omission claim alleging that the defendants failed to disclose the

6

lack of FDA approval “exist[ed] solely by virtue of the FDCA disclosure requirements” and was

7

preempted. Id. at 1119. Here, while Plaintiffs’ Sherman Law claim draws its standards from

8

federal labeling requirements, it is rooted in and “exist[s] by virtue” of California law.

9

Similarly, the Court finds that Plaintiff’s FAL, CLRA, and UCL fraud and unfair prong

United States District Court
For the Northern District of California

10

claims, and UCL unlawful prong claim predicated on FAL and the CLRA violations are not

11

impliedly preempted. The gravamen of these claims is that Defendant’s use of the term ECJ and

12

No Sugar Added and All Natural Representations are likely to deceive reasonable consumers. See,

13

e.g., Elias v. Hewlett-Packard Co., 903 F. Supp. 2d 843, 854 (N.D. Cal. 2012) (holding that “[t]he

14

standard for” the FAL, the CLRA, and the UCL’s fraud prong “is the ‘reasonable consumer’ test,

15

which… [turns on whether] members of the public are likely to be deceived”) (citing Williams, 552

16

F.3d at 938); SAC ¶ 141 (alleging that “Defendant’s conduct in disseminating misleading and

17

deceptive statements in California and nationwide… was and is likely to deceive reasonable

18

consumers”); id. ¶ 124 (alleging that Defendant’s labeling was “deceptive”); id. ¶¶ 132, 148, and

19

160-163. Thus, with respect to these claims, Plaintiffs are not “suing because [Defendant’s

20

labeling] violates the FDCA,” Perez, 711 F.3d at 1120, but rather because Defendant’s labeling is

21

allegedly deceptive and misleading in violation of California law.

22

2.

Express Preemption

23

Defendant also argues that the FDCA expressly preempts Plaintiffs’ claims. The FDCA, as

24

amended by NLEA, includes an express preemption clause, 21 U.S.C. § 343-1, which provides that

25

“no state ... may directly or indirectly establish”: (1) a requirement “for a food which is the subject

26

of a standard of identity established under section 341 of this title that is not identical to such

27

standard of identity or that is not identical to the requirement of section 343(g) of this title,” 21

28

25
Case No.: 12-CV-02425-LHK
ORDER GRANTING-IN-PART AND DENYING-IN-PART MOTION TO DISMISS THE SECOND AMENDED
COMPLAINT

1

U.S.C. § 343-1(a)(1); and (2) “[non-]identical” labeling requirements for nutrition information or

2

nutrient levels, see 21 U.S.C. § 343-1(a)(4)-(5). Section 343-1 also prohibits a state from

3

establishing non-identical labeling requirements which are “of the type required by” Sections

4

343(b), (c), (d), (e), (f), (h), (i), (k), (w), or (x), see 21 U.S.C. § 343-1(a)(2)-(3). The referenced

5

subsections of Section 343 address a range of topics. For example, Section 343(i) requires that

6

foods and ingredients be referred to by their “common or usual name[s].” See 21 U.S.C. § 343-

7

1(a)(4)-(5); 21 U.S.C. § 343(i). Thus, pursuant to Section 343-1’s express preemption provision, a

8

state would be prohibited from establishing a non-identical requirement relating to the names by

9

which food and ingredients must be referred. Similarly, private plaintiffs are prohibited from

United States District Court
For the Northern District of California

10

pursuing claims based on state law where the defendant’s labeling meets the relevant FDA labeling

11

requirements. See, e.g., Lam v. Gen. Mills, Inc., 859 F. Supp. 2d 1097, 1103 (N.D. Cal. 2012)

12

(finding that claims based on defendant’s labeling of its products as “fruit flavored” and “naturally

13

flavored” were preempted where defendant’s labeling was “permitted by FDA regulations”).10

14

Plaintiffs’ ECJ Claims are the only remaining claims at this stage. Plaintiffs allege that ECJ

15

violates the FDA’s requirements that ingredients be referred to by their “common and usual name.”

16

See id. ¶ 56 (citing 21 C.F.R. §§ 101.2, 101.4, and 102.5). Defendant argues that there is no FDA

17

requirement that the ingredient to which Defendant refers as ECJ be described using another name.

18

See Mot. at 13. Defendant notes that Plaintiffs’ contention that ECJ is not the common and usual

19

name of an ingredient and violates FDA regulations is premised on an FDA draft guidance

20

document regarding the use of the term ECJ. See FDA Guidance re: ECJ (stating that it is the

21

“FDA’s view that the term ‘evaporated cane juice’ is not the common or usual name of any type of

22

sweetener”) (citing 21 C.F.R. § 101.4). However, Defendant argues, this document explicitly

23

states that it is non-binding and that it does nto establish any requirements. See id. (stating that the

24

guidance is a “draft,” has not been “finalized,” is “[n]onbinding,” and “do[es] not establish legally

25
26
27
28

10

In the Motion to Dismiss, Defendant included a section that was separate from Defendant’s
express preemption section in which Defendant argued that its labeling complied with applicable
labeling regulations. Because this issue and the issue of express preemption are interrelated (i.e., a
finding that Defendant complied with labeling requirements would support a finding of express
preemption), the Court considers these issues together.
26
Case No.: 12-CV-02425-LHK
ORDER GRANTING-IN-PART AND DENYING-IN-PART MOTION TO DISMISS THE SECOND AMENDED
COMPLAINT

1

enforceable responsibilities”). Thus, Defendant contends, to the extent Plaintiffs are seeking,

2

through their claims, to require Defendant to use a term other than the term ECJ, Plaintiffs are

3

seeking to establish a “non-identical” labeling requirement and Plaintiffs’ claims are preempted.

4

See id. at 20-21; 21 U.S.C. § 343-1. The Court is not persuaded.

5

The FDA Guidance document upon which Plaintiffs rely sets forth the FDA’s view on
whether the use of the term ECJ is consistent with 21 C.F.R. § 101.4, which is the FDA’s

7

regulation requiring that ingredients be referred to by their common and usual name. See FDA

8

Guidance re: ECJ (stating that it is the “FDA’s view that the term ‘evaporated cane juice’ is not the

9

common or usual name of any type of sweetener”) (citing 21 C.F.R. § 101.4). As set forth by the

10
United States District Court
For the Northern District of California

6

Supreme Court in Auer v Robbins, an agency’s interpretation of its “own regulation[],” even if set

11

forth in an informal document, is “controlling unless plainly erroneous or inconsistent with the

12

regulation.” Id., 519 U.S. 452, 461 (1997) (internal quotation marks and citations omitted)

13

(holding that Secretary of Labor’s views on proper interpretation of labor regulation set forth in

14

amicus brief were controlling).

15

While the Court is somewhat reluctant to rely on the FDA guidance document in the

16

present case because it is explicitly labeled as “[n]onbinding,” id., the Court observes that the FDA

17

has expressed the same view regarding the impropriety of the term ECJ in several Warning

18

Letters.11 See Warning Letter to Hail Merry, LLC (October 23, 2012) (“[Y]our product lists,

19

‘Evaporated Cane Juice’ in the ingredient statement; however, evaporated cane juice is not the

20

common or usual name of any type of sweetener”); Warning Letter to Bob’s Red Mill Natural

21

Foods (July 31, 2012) (same); Warning Letter to Hato Portrero Farm, Inc. (April 3, 2008) (same).12

22
11

23
24
25
26
27
28

Plaintiffs have requested that the Court take judicial notice of various warning letters. See ECF
No. 43. Defendant objects to the Court’s taking judicial notice of these documents on the grounds
that they are informal and non-final and thus their contents are subject to reasonable dispute. See
ECF No. 47. The warning letters are publicly available documents and thus the relevant facts, i.e.
that the FDA issued them and that the FDA took a particular position in them, are not reasonably in
dispute. See Von Koenig v. Snapple Beverage Corp., 713 F. Supp. 2d 1066, 1073 (E.D. Cal. 2010)
(taking judicial notice of warning letters because they “are matters of public record, available on
the FDA website”). Accordingly, Defendant’s objections are overruled.
12
The FDA Warning Letters are available at: http://www.fda.gov/ICECI/EnforcementActions/
WarningLetters /default.htm.
27
Case No.: 12-CV-02425-LHK
ORDER GRANTING-IN-PART AND DENYING-IN-PART MOTION TO DISMISS THE SECOND AMENDED
COMPLAINT

1

While these warning letters are “informal and advisory” and do “not commit FDA to taking

2

enforcement action,” they do “communicate[] the agency’s position on a matter….” FDA Website,

3

Inspections, Compliance, Enforcement, and Criminal Investigations.13

4

Thus, in light of the FDA’s Guidance and Warning Letters, the Court finds, for the purposes

5

of this Motion to Dismiss, that Plaintiffs have shown that it is the FDA’s position that the use of the

6

term ECJ violates the FDA’s regulations requiring that ingredients be declared by their common

7

and usual name and that this view is controlling. Accordingly, to the extent Plaintiffs’ claims seek

8

to hold Defendant liable for using the term ECJ, Plaintiffs are not seeking to establish a

9

requirement which is not identical to the FDA’s requirements. Consequently, Plaintiffs’ claims are

United States District Court
For the Northern District of California

10

not expressly preempted. See Wilson v. Frito-Lay N. Am., Inc., No. 12-1586 SC, 2013 WL

11

1320468, at *10-11 (N.D. Cal. Apr. 1, 2013) (holding that plaintiff’s claims, which alleged that the

12

defendant’s labeling violated “nonbinding, informal [FDA] guidance,” were not expressly

13

preempted because such guidance was owed deference under Auer); Ivie v. Kraft Foods Global,

14

Inc., No. C-12-02554-RMW, 2013 WL 685372, at *9, *12 (N.D. Cal. Feb. 25, 2013) (holding that

15

ECJ claims were not expressly preempted even though “[t]here are no federal laws or regulations…

16

governing [ECJ] claims… [because] the FDA has nevertheless articulated a policy position”).

17

In the SAC, in addition to alleging that Defendant’s use of the term ECJ was misleading

18

and violated 21 C.F.R. § 101.4’s common and usual name requirement, Plaintiffs have alleged that

19

Defendant’s use of ECJ in its products violates the Standard of Identity for Yogurt, 21 C.F.R. §

20

131.200. SAC ¶¶ 54-55. The Standard of Identity for Yogurt sets forth a list of approved

21

“[n]utritive carbohydrate sweeteners” that may be included in a product designated as a yogurt.

22

See 21 C.F.R. § 131.200(d)(2).14 While the list of sweeteners includes “[s]ugar (sucrose), beet or

23
13

24
25
26
27
28

Available at http://www.fda.gov/ICECI/ComplianceManuals/RegulatoryProceduresManual/
ucm176870.htm.
14
The Standard of Identity for Yogurt lists the following sweeteners as sweeteners that may be
included in yogurt: “Sugar (sucrose), beet or cane; invert sugar (in paste or sirup form); brown
sugar; refiner’s sirup; molasses (other than blackstrap); high fructose corn sirup; fructose; fructose
sirup; maltose; maltose sirup, dried maltose sirup; malt extract, dried malt extract; malt sirup, dried
malt sirup; honey; maple sugar; or any of the sweeteners listed in part 168 of this chapter, except
table sirup.” 21 C.F.R. § 131.200(d)(2).
28
Case No.: 12-CV-02425-LHK
ORDER GRANTING-IN-PART AND DENYING-IN-PART MOTION TO DISMISS THE SECOND AMENDED
COMPLAINT

1

cane,” it is not entirely clear that ECJ is permitted. The Standard of Identity for Yogurt also

2

requires that “[e]ach of the ingredients used in the [yogurt] shall be declared on the label as

3

required by the applicable sections of parts 101 and 130 of this chapter,” i.e., by their common and

4

usual name. 21 C.F.R. § 131.200(g). Defendant argues that Plaintiffs’ claims based on the

5

Standard of Identity for Yogurt are expressly preempted and must be dismissed. The Court agrees

6

that Plaintiffs’ claims should be dismissed, although not on the grounds of express preemption.

7

First, to the extent Plaintiffs are claiming that Defendant violated the Standard of Identity

8

for Yogurt by not referring to ECJ by its common and usual name, Plaintiffs’ claim is duplicative

9

of Plaintiffs’ other claims alleging that Defendant failed to comply with the common and usual

United States District Court
For the Northern District of California

10

name requirements of the Sherman Law and the FDCA. Accordingly, the Court dismisses

11

Plaintiffs’ Standard of Identity claims as duplicative. See M.M. v. Lafayette Sch. Dist., 681 F.3d

12

1082, 1091 (9th Cir. 2012) (“It is well established that a district court has broad discretion to

13

control its own docket, and that includes the power to dismiss duplicative claims”). Moreover, to

14

the extent Plaintiffs’ Standard of Identity claims are alleging that Defendant violated the Standard

15

of Identity for Yogurt because ECJ is not an approved nutritive sweetener, Plaintiffs’ claims fail for

16

primary jurisdiction reasons which will be discussed infra.

17

D.

18

Defendant argues that, even if the Court finds that Plaintiffs’ claims are not preempted, the

19

Court should abstain and either dismiss or stay the case under the doctrine of primary jurisdiction.

20

See Mot. at 21-22. The primary jurisdiction doctrine “allows courts to stay proceedings or to

21

dismiss a complaint without prejudice pending the resolution of an issue within the special

22

competence of an administrative agency.” Clark v. Time Warner Cable, 523 F.3d 1110, 1114 (9th

23

Cir. 2008). The primary jurisdiction doctrine applies when: “(1) [there is] need to resolve an issue

24

that (2) has been placed by Congress within the jurisdiction of an administrative body having

25

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

26

comprehensive regulatory authority that (4) requires expertise or uniformity in

27

administration.” Syntek Semiconductor Co. v. Microchip Tech., Inc., 307 F.3d 775, 781 (9th Cir.

28

Primary Jurisdiction Doctrine

29
Case No.: 12-CV-02425-LHK
ORDER GRANTING-IN-PART AND DENYING-IN-PART MOTION TO DISMISS THE SECOND AMENDED
COMPLAINT

1

2002) (amended). “Primary jurisdiction is properly invoked when a claim is cognizable in federal

2

court but requires resolution of an issue of first impression, or of a particularly complicated issue

3

that Congress has committed to a regulatory agency.” Id. at 780 (internal citation and alterations

4

omitted); Clark, 523 F.3d at 1114 (same).

5

Defendant argues that the Court should dismiss this case because “[i]f every court in the 25

6

recent cases filed by plaintiffs’ counsel adjudicates the alleged false advertising claims, there is a

7

clear danger that inconsistent rulings will leave the food and beverage industry in a state of

8

confusion.” Mot. at 21-22. As to Plaintiffs’ ECJ Claims generally, the Court is not persuaded that

9

these claims should be dismissed or stayed on primary jurisdiction grounds. Significantly, the

United States District Court
For the Northern District of California

10

FDA has issued guidance (albeit informal guidance) regarding whether ECJ is consistent with FDA

11

requirement. Thus, at this stage, the Court is not persuaded that the Court will be required to

12

resolve an issue of “first impression” without the benefit of the FDA’s opinion. Syntek

13

Semiconductor Co., 307 F.3d at 780. Accordingly, the Court rejects Defendant’s primary

14

jurisdiction argument as to the ECJ Claims.

15

However, the Court GRANTS Defendant’s Motion to Dismiss on primary jurisdiction

16

grounds with respect to Plaintiffs’ claims that Defendant’s use of ECJ in its Yogurts violates the

17

Standard of Identity for Yogurt. See 21 C.F.R. § 131.200. Significantly, the FDA has proposed a

18

new Standard of Identity for Yogurt that allows any “safe and suitable sweetening ingredients.”

19

See Milk and Cream Products and Yogurt Products; Proposal to Revoke the Standards for Lowfat

20

Yogurt and Nonfat Yogurt and to Amend the Standard for Yogurt, 74 FR 2443-02, 2455 (Jan. 15,

21

2009). There is no allegation that evaporated cane juice is not a “safe and suitable sweetening

22

ingredient.” Id. The FDA has also suggested that it will not enforce violations of the current

23

Standard of Identity if companies comply with the proposed one. Id. at 2456 (“Pending issuance of

24

a final rule amending the existing standard of identity for yogurt . . . FDA intends to consider the

25

exercise of its enforcement discretion on a case-by-case basis when yogurt products are in

26

compliance with the standard of identity proposed in this proposed rule”). Given the possibility

27

that the FDA will soon change the Standard of Identity for Yogurt to permit the use of ECJ and the

28

30
Case No.: 12-CV-02425-LHK
ORDER GRANTING-IN-PART AND DENYING-IN-PART MOTION TO DISMISS THE SECOND AMENDED
COMPLAINT

1

indications that the FDA will not bring claims against manufacturers who comply with the

2

proposed revised Standard of Identity, Plaintiffs’ claims based on the Standard of Identity for

3

Yogurt are dismissed on primary jurisdiction grounds. See Taradejna v. Gen. Mills, Inc., 909 F.

4

Supp. 2d 1128, 1135 (D. Minn. 2012) (dismissing plaintiff’s claims that defendant’s yogurt

5

violated the Standard of Identity for Yogurt by including milk protein concentrate since the

6

Proposed 2009 Rule would permit the use of MPC); Ivie, 2013 WL 685372, at *7 (dismissing

7

“‘one mint’ serving size claims” on primary jurisdiction grounds because “the FDA is currently

8

engaged in rulemaking procedures to change its existing requirements”). However, because the

9

FDA may announce that it is not amending the Standard of Identity for Yogurt, the Court’s

United States District Court
For the Northern District of California

10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

dismissal is without prejudice. See Lopez, 203 F.3d at 1127.
E.

Rule 9(b)
1.

Applicability of Rule 9(b)

Next, the Court addresses Defendant’s arguments that Plaintiffs’ allegations fail to satisfy
Rule 9(b). See Mot. at 22. At the outset, the Court determines whether Rule 9(b)’s heightened
pleading standard applies to Plaintiffs’ claims. See Fed. R. Civ. P. 9(b) (a plaintiff alleging fraud
“must state with particularity the circumstances constituting fraud”). Plaintiffs do not dispute the
applicability of Rule 9(b) to the majority of Plaintiffs’ causes of action. However, Plaintiffs argue
that Rule 9(b) does not apply to Plaintiffs’ UCL unlawful prong claim. Opp’n at 22 n.25.
“Rule 9(b) applies to ‘averments of fraud’ in all civil cases in federal district court.” Vess v.
Ciba-Geigy Corp. USA, 317 F.3d 1097, 1103 (9th Cir. 2003). Even if “fraud is not a necessary
element of a [particular] claim,” Rule 9(b) will apply if the plaintiff has “allege[d] a unified course
of fraudulent conduct and rel[ied] entirely on that course of conduct as the basis of [the] claim.”
Id. at 1103. In such a case, the claim “is said to be ‘grounded in fraud.” Id. If a claim is grounded
in fraud, it must be pled with particularity. See Kearns v. Ford Motor Co., 567 F.3d 1120, 1127
(9th Cir. 2009) (holding that, where “TAC allege[d] a unified fraudulent course of conduct,” claims
were “grounded in fraud” and the “entire complaint” had to be pled “with particularity”).
Here, Rule 9(b) applies to Plaintiffs’ UCL unlawful claims based on the FAL and the
CLRA because Plaintiffs’ FAL and CLRA claims allege that Defendant’s representations on its
31
Case No.: 12-CV-02425-LHK
ORDER GRANTING-IN-PART AND DENYING-IN-PART MOTION TO DISMISS THE SECOND AMENDED
COMPLAINT

1

labeling and in its advertising were “misleading and deceptive,” SAC ¶ 137, “untrue,” id. ¶ 145,

2

“misrepresented” the truth, id. ¶¶ 139, 147, and “constitut[ed]… fraud[],” id. ¶¶ 161-63. Plaintiffs

3

UCL unlawful prong claim predicated on the Sherman Law is premised on the same allegations of

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false and misleading labeling representations as Plaintiffs’ other claims. Because the alleged

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violations of the Sherman Law are premised on the same “unified course of fraudulent conduct” as

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Plaintiffs’ other claims, Plaintiffs’ UCL unlawful prong claim predicated on the Sherman Law is

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subject to Rule 9(b). See Brazil, 2013 WL 1209955, at *14 (holding that Rule 9(b) applied to

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cause of action alleging “violation of the UCL for unlawful business acts and practices” where it

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was “predicated on the same course of conduct as his other UCL, FAL, and CLRA claims”).
2.

United States District Court
For the Northern District of California

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Application of Rule 9(b) to Plaintiffs’ Claims

Defendant makes several arguments concerning why Plaintiffs’ allegations do not comply

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with Rule 9(b). With respect to the ECJ Claims, Defendant’s arguments reiterate Defendant’s

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arguments regarding reliance and lack of standing. The Court addressed these arguments above.

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The only argument not addressed above is Defendant’s argument that Plaintiffs’ allegations fail to

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satisfy Rule 9(b)’s particularity requirement because Plaintiffs do not identify with specificity

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when Plaintiffs purchased the products. See Mot. at 23. This argument fails. Plaintiffs allege that

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they purchased Defendant’s Yogurts “starting approximately one year ago until shortly before this

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complaint was filed,” SAC ¶ 93 (Kane), and “[s]tarting approximately two years ago until shortly

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before this complaint was filed,” SAC ¶¶ 94-95 (Booth and Rosales). Defendant has not shown

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that Defendant used a term other than ECJ during the period in which Plaintiffs purchased the

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Yogurts. Accordingly, the Court is not persuaded that, in this case, Plaintiffs should be required to

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allege with more specificity each time they went to the grocery store and purchased a cup of

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Defendant’s Yogurt. See Astiana, 2011 WL 2111796, at *6 (holding that allegations that the

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plaintiffs purchased ice cream “since at least 2006,” and “throughout the class period” were

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sufficient to satisfy Rule 9(b)). For the reasons set forth above, the Court DENIES Defendant’s

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motion to dismiss the ECJ Claims on Rule 9(b) grounds.

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F.

Plaintiffs’ Unjust Enrichment and Warranty Claims Fail

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Defendant argues that Plaintiffs’ seventh cause of action for unjust enrichment must be
32
Case No.: 12-CV-02425-LHK
ORDER GRANTING-IN-PART AND DENYING-IN-PART MOTION TO DISMISS THE SECOND AMENDED
COMPLAINT

1

dismissed. See Mot. at 24. The Court agrees. As recognized by this Court in Brazil, “there is no

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cause of action for unjust enrichment under California law.” Id., 2013 WL 1209955, at *18; see,

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e.g., Low v. LinkedIn Corp., 900 F. Supp. 2d 1010, 1031 (N.D. Cal. 2012) (collecting cases).

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Accordingly, Plaintiffs’ unjust enrichment claim is dismissed.

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The Court also finds that Plaintiffs’ eighth cause of action under the Song-Beverly

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Consumer Warranty Act (“Song-Beverly Act”) and ninth cause of action under the Magnuson-

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Moss Warranty Act (“MMWA”) must be dismissed. Plaintiffs’ claim under the Song-Beverly Act

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fails because this act does not cover warranties made with respect to “consumables,” Cal. Civ.

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Code § 1791(a), and Defendant’s Yogurts are consumables.

United States District Court
For the Northern District of California

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Plaintiffs’ claim under the MMWA, which creates a civil cause of action for consumers to

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enforce the terms of implied or express warranties, see 15 U.S.C. § 2310(d), similarly fails. The

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MMWA applies only to products that cost more than five dollars. 15 U.S.C. § 2302(e). Here,

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Plaintiffs allege that they paid less than five dollars for their yogurt. See SAC ¶¶ 93-95 (alleging

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that Plaintiffs paid between $1.69 and $1.89 for their yogurt); 15 U.S.C. § 2302(e); 15 U.S.C. §

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2310(d)(3)(A). Moreover, the MMWA applies to “written warrant[ies],” 15 U.S.C. § 2301(6)(A),

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and, as recognized by this Court in Brazil, “‘product descriptions [such as ‘all natural’] do not

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constitute warranties against a product defect’ for the purposes of a MMWA claim[].” See Brazil,

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2013 WL 1209955, at *17 (quoting Astiana, 2012 WL 2990766, at *3).

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Thus, for the reasons set forth above, Plaintiffs’ unjust enrichment, Song-Beverly Act, and

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MMWA claims are dismissed. Moreover, because Plaintiffs cannot show that: (1) unjust

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enrichment is a separate cause of action; (2) the Yogurts were not consumable; or (3) the Yogurts

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cost $5 or more, these claims are dismissed with prejudice. See Carvalho, 629 F.3d at 892-93

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(holding that a court “may… deny leave to amend due to… futility of amendment.”).

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G.

Conclusion

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For the reasons set forth above, the Court:

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1. GRANTS with leave to amend Defendant’s Motion to Dismiss Plaintiffs’ ECJ

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claims to the extent they are based on products Plaintiffs did not purchase;

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Case No.: 12-CV-02425-LHK
ORDER GRANTING-IN-PART AND DENYING-IN-PART MOTION TO DISMISS THE SECOND AMENDED
COMPLAINT

1

2. GRANTS with leave to amend Defendant’s Motion to Dismiss Plaintiffs’ UCL,

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FAL, and CLRA claims based on the No Sugar Added and the All Natural

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Representations;

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3. GRANTS Defendant’s Motion to Dismiss Plaintiffs’ UCL, FAL, and CLRA claims

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based on Defendant’s purported violation of the Standard of Identity for Yogurt. If

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the FDA retracts its previous notice that it intends to amend the Standard of Identity

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for Yogurt, Plaintiffs may seek leave to amend.

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United States District Court
For the Northern District of California

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4. GRANTS with prejudice Defendant’s Motion to Dismiss Plaintiffs’ unjust
enrichment, Song-Beverly Act, and MMWA claims.
5. DENIES Defendant’s Motion to Dismiss in all other respects.

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If Plaintiffs wish to file an amended complaint addressing the deficiencies identified with

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respect to Plaintiffs’ SAC, Plaintiffs must do so within 30 days of this Order. Plaintiffs may not

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add new claims or parties without seeking Defendant’s consent or leave of the Court pursuant to

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Federal Rule of Civil Procedure 15. If Plaintiffs fail to file an amended complaint within 30 days

15

of this Order or to cure the deficiencies addressed in this Order, the deficient claims shall be

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considered dismissed with prejudice.

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IT IS SO ORDERED.

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Dated: July 12, 2013

________________________________
LUCY H. KOH
United States District Judge

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Case No.: 12-CV-02425-LHK
ORDER GRANTING-IN-PART AND DENYING-IN-PART MOTION TO DISMISS THE SECOND AMENDED
COMPLAINT