Bishop v. 7-Eleven, Inc
Filing
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Order granting 52 Motion to Dismiss. Signed by Hon. Edward J. Davila on 4/21/2014.(ejdlc3, COURT STAFF) (Filed on 4/21/2014)
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UNITED STATES DISTRICT COURT
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NORTHERN DISTRICT OF CALIFORNIA
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SAN JOSE DIVISION
United States District Court
For the Northern District of California
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SCOTT BISHOP, individually and on behalf of )
all others similarly situated
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Plaintiff,
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v.
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7-ELEVEN, INC.,
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Defendant.
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Case No. 5:12-CV-02621-EJD
ORDER GRANTING DEFENDANT’S
MOTION TO DISMISS
[Re: Docket No. 52]
Presently before the Court is Defendant 7-Eleven’s (“Defendant” or “7-Eleven”) Motion to
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Dismiss Plaintiff Scott Bishop’s (“Plaintiff” or “Bishop”) Second Amended Complaint (“SAC”).
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Plaintiff filed this putative class action against Defendant alleging that several of Defendant’s
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products have been improperly labeled so as to amount to misbranding and deception in violation
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of several California and federal laws.
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Per Civ. L.R. 7-1(b), the motion was taken under submission without oral argument.
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Having fully reviewed the parties’ papers, the Court grants Defendant’s Motion to Dismiss for the
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reasons explained below.
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I. BACKGROUND
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Plaintiff filed his original Complaint in this case on May 21, 2012. Dkt. No. 1. Plaintiff’s
First Amended Complaint (“FAC”) was filed on September 17, 2012. Dkt. No. 17. Defendant
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Case No. 5:12-CV-02621-EJD
ORDER GRANTING DEFENDANT’S MOTION TO DISMISS
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filed a Motion to Dismiss, which was granted per this Court’s order on August 5, 2013. Dkt. No.
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46. The Court dismissed Plaintiff’s claims based on violations of the Song-Beverly Consumer
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Warranty Act and the Magnuson-Moss Warranty Act. Further, the Court concluded that Plaintiff’s
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claims did not meet the Rule 9 pleading standard because Plaintiff did not provide a clear and
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particular account of the allegedly fraudulent, deceptive, misrepresentative, or otherwise unlawful
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statements.
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Plaintiff filed the SAC on August 20, 2013 on behalf of himself and a putative class of all
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persons in the United States who have purchased the same product or other of Defendant’s similar
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food products that were allegedly mislabeled. Dkt. No. 47. Defendant filed its Motion to Dismiss
United States District Court
For the Northern District of California
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on September 24, 2013. Dkt. No. 52.
Plaintiff is a California consumer who, since May 21, 2008, purchased 7-Select Cheddar &
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Sour Cream Chips. Dkt. No. 47 ¶¶ 2-3. Plaintiff argues that the following representations on the
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packaging of this and other of Defendant’s food products were unlawful and/or misleading: (1) “0g
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trans fat” and (2) “no cholesterol.” Plaintiff argues that the following “substantially similar”
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products bear the identical unlawful and/or misleading statements and should be included in the
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“class products”: 7-Select Kettle Style Chips in barbeque, jalapeno, original, salt & vinegar, and
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sour cream & onion flavors; 7-Select barbeque potato chips; 7-Select big bite hot dog chips; 7-
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Select original potato chips; and 7-Select sour cream & onion chips. Id. at ¶ 4.
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Plaintiff alleges the following causes of actions: violation of California’s Unfair
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Competition Law (“UCL”), Cal. Bus. & Prof. Code § 17200 et seq., (counts 1-3); violation of the
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False Advertising Law (“FAL”), Cal. Bus. & Prof. Code § 17500 et seq., (counts 4-5); and
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violation of the Consumers Legal Remedies Act (“CLRA”), Cal. Civ. Code § 1750 et seq., (count
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6). Id. ¶¶ 109-66.
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II. LEGAL STANDARD
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A. Rule 8(a)
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Federal Rule of Civil Procedure 8(a) requires a plaintiff to plead each claim with sufficient
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specificity to “give the defendant fair notice of what the . . . claim is and the grounds upon which it
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rests.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal quotations omitted). A
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Case No. 5:12-CV-02621-EJD
ORDER GRANTING DEFENDANT’S MOTION TO DISMISS
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complaint which falls short of the Rule 8(a) standard may be dismissed if it fails to state a claim
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upon which relief can be granted. Fed. R. Civ. P. 12(b)(6). “Dismissal under Rule 12(b)(6) is
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appropriate only where the complaint lacks a cognizable legal theory or sufficient facts to support a
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cognizable legal theory.” Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th Cir.
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2008). Moreover, the factual allegations “must be enough to raise a right to relief above the
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speculative level” such that the claim “is plausible on its face.” Twombly, 550 U.S. at 556-57.
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When deciding whether to grant a motion to dismiss, the court generally “may not consider
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any material beyond the pleadings.” Hal Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d
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1542, 1555 n.19 (9th Cir. 1990). The court must accept as true all “well-pleaded factual
United States District Court
For the Northern District of California
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allegations.” Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009). The court must also construe the
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alleged facts in the light most favorable to the plaintiff. Love v. United States, 915 F.2d 1242,
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1245 (9th Cir. 1988). However, the court may consider material submitted as part of the complaint
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or relied upon in the complaint, and may also consider material subject to judicial notice. See Lee
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v. City of Los Angeles, 250 F.3d 668, 688-69 (9th Cir. 2001). But “courts are not bound to accept
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as true a legal conclusion couched as a factual allegation.” Twombly, 550 U.S. at 555.
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B. Rule 9(b)
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Fraud-based claims are subject to heightened pleading requirements under Federal Rule of
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Civil Procedure 9(b). In that regard, a plaintiff alleging fraud “must state with particularity the
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circumstances constituting fraud.” Fed. R. Civ. P. 9(b). The allegations must be “specific enough
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to give defendants notice of the particular misconduct which is alleged to constitute the fraud
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charged so that they can defend against the charge and not just deny that they have done anything
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wrong.” Semegen v. Weidner, 780 F.2d 727, 731 (9th Cir. 1985). To that end, the allegations
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must contain “an account of the time, place, and specific content of the false representations as well
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as the identities of the parties to the misrepresentations.” Swartz v. KPMG LLP, 476 F.3d 756, 764
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(9th Cir. 2007) (citation omitted). Averments of fraud must be accompanied by the “who, what,
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when, where, and how” of the misconduct charged. Vess v. Ciba-Geigy Corp. USA, 317 F.3d
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1097, 1106 (9th Cir. 2003) (citation omitted). Additionally, “the plaintiff must plead facts
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explaining why the statement was false when it was made.” Smith v. Allstate Ins. Co., 160
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Case No. 5:12-CV-02621-EJD
ORDER GRANTING DEFENDANT’S MOTION TO DISMISS
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F. Supp. 2d 1150, 1152 (S.D. Cal. 2001); see also In re GlenFed, Inc. Sec. Litig., 42 F.3d 1541,
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1549 (9th Cir. 1994) (en banc) (superseded by statute on other grounds).
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C. Rule 12(b)(1)
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A party may file a motion to dismiss with the Court for lack of subject matter jurisdiction.
Fed. R. Civ. P. 12(b)(1). A Rule 12(b)(1) motion may be either facial or factual. Wolfe v.
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Strankman, 392 F.3d 358, 362 (9th Cir. 2004). A facial 12(b)(1) motion involves an inquiry
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confined to the allegations in the complaint, whereas a factual 12(b)(1) motion permits the court to
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look beyond the complaint to extrinsic evidence. Id. When a defendant makes a facial challenge,
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all material allegations in the complaint are assumed true, and the court must determine whether
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United States District Court
For the Northern District of California
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lack of federal jurisdiction appears from the face of the complaint itself. Wolfe, 392 F.3d at 362.
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On a factual challenge, the party opposing the motion must produce affidavits or other
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evidence necessary to satisfy its burden of establishing subject matter jurisdiction. Safe Air For
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Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004). Under a factual attack, the court need
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not presume the plaintiff’s allegations are true. White v. Lee, 227 F.3d 1214, 1242 (9th Cir. 2000);
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accord Augustine v. United States, 704 F.2d 1074, 1077 (9th Cir. 1983). In the absence of a full-
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fledged evidentiary hearing, however, disputed facts pertinent to subject matter jurisdiction are
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viewed in the light most favorable to the nonmoving party. Dreier v. United States, 106 F.3d 844,
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847 (9th Cir. 1996).
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Federal courts are courts of limited jurisdiction, adjudicating only cases which the
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Constitution and Congress authorize. Kokkonen v. Guardian Life Ins. Co. of America, 511 U.S.
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375, 377 (1994). An Article III federal court must ask whether a plaintiff has suffered sufficient
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injury to satisfy the “case or controversy” requirement of Article III of the U.S. Constitution. To
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satisfy Article III standing, a plaintiff must allege: (1) an injury in fact that is concrete and
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particularized, as well as actual and imminent; (2) that the injury is fairly traceable to the
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challenged action of the defendant; and (3) that it is likely (not merely speculative) that the injury
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will be redressed by a favorable decision. Friends of the Earth, Inc. v. Laidlaw Envtl. Servs., Inc.,
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528 U.S. 167, 180-81 (2000); Lujan v. Defenders of Wildlife, 504 U.S. 555, 561-62 (1992).
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Case No. 5:12-CV-02621-EJD
ORDER GRANTING DEFENDANT’S MOTION TO DISMISS
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At least one named plaintiff must have suffered an injury in fact. See Lierboe v. State Farm
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Mut. Auto. Ins. Co., 350 F.3d 1018, 1022 (9th Cir. 2003) (“if none of the named plaintiffs
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purporting to represent a class establishes the requisite of a case or controversy with the
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defendants, none may seek relief on behalf of himself or any other member of the class”).
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A suit brought by a plaintiff without Article III standing is not a “case or controversy,” and
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an Article III federal court therefore lacks subject matter jurisdiction over the suit. Steel Co. v.
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Citizens for a Better Env’t, 523 U.S. 83, 101 (1998). “A party invoking the federal court’s
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jurisdiction has the burden of proving the actual existence of subject matter jurisdiction.”
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Thompson v. McCombe, 99 F.3d 352, 353 (9th Cir. 1996). If a court determines that it lacks
United States District Court
For the Northern District of California
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subject matter jurisdiction, the court must dismiss the action. Fed. R. Civ. P. 12(h)(3).
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III. DISCUSSION
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Plaintiff alleges that Defendant violated state and federal labeling laws because foods
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labeled with the “0g trans fat” and “no cholesterol” labels failed to include required disclosure
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statements. Plaintiff frames his case as consisting of two facets: (1) the “unlawful” part, claiming
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that Defendant’s packaging and labels violate state and federal laws, making the products
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“misbranded” and therefore illegal to sell or possess, lacking economic value, and legally
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worthless; and (2) the “fraudulent” part, claiming that the labels are misleading, deceptive, unfair,
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and fraudulent. Dkt. No. 47 ¶ 5.
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A. Statutory Framework
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The operative statute in this matter is the Food, Drug, and Cosmetic Act (“FDCA”), 21
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U.S.C. § 301 et seq., as amended by the Nutrition Labeling and Education Act of 1990 (“NLEA”),
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21 U.S.C. § 343 et seq. 21 U.S.C. § 343 establishes the conditions under which food is considered
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“misbranded.” Generally, food is misbranded under 21 U.S.C. § 343(a)(1) if “its labeling is false
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or misleading in any particular.”
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The California Sherman Food, Drug, and Cosmetic Law (“Sherman Law”), Cal. Health &
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Safety Code § 109875 et seq., incorporates the requirements of the FDCA as the food labeling
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requirements of the state of California. Plaintiff brings claims for relief under the UCL, FAL, and
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CLRA based on Defendant’s alleged violations of the Sherman Law. The UCL prohibits business
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Case No. 5:12-CV-02621-EJD
ORDER GRANTING DEFENDANT’S MOTION TO DISMISS
practices that are unlawful, unfair, or fraudulent. The “fraudulent” prong of the UCL “requires a
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showing [that] members of the public are likely to be deceived.” Wang v. Massey Chevrolet, 97
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Cal. App. 4th 856, 871 (2002). The “unlawful” prong of the UCL “borrows violations of other
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laws and treats them as independently actionable.” Daugherty v. Am. Honda Motor Co., Inc., 144
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Cal. App. 4th 824, 837 (2006). As for the “unfair” prong, “California appellate courts disagree on
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how to define an ‘unfair’ act or practice in the context of a UCL consumer action.” Morgan v.
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Wallaby Yogurt Co., Inc., No. 13-CV-00296-WHO, 2014 WL 1017879, at *11 (N.D. Cal. March
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13, 2014) (citing Davis v. Ford Motor Credit Co., 179 Cal. App. 4th 581, 594 (2009)). Some
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courts have held that the “unfair” prong requires alleging a practice that “offends an established
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United States District Court
For the Northern District of California
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public policy or . . . is immoral, unethical, oppressive, unscrupulous or substantially injurious to
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consumers,” and the policy must be “tethered to specific constitutional, statutory or regulatory
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provision.” Bardin v. Daimlerchrysler Corp., 136 Cal. App. 4th 1255, 1263, 1266 (2006) (citations
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omitted). Other courts have held that the court must apply a balancing test that “weigh[s] the
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utility of the defendant’s conduct against the gravity of the harm to the alleged victim.” Schnall v.
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Hertz Corp., 78 Cal. App. 4th 1144, 1167 (2000).
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B. Standing
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As noted, to establish Article III standing, a plaintiff must allege facts showing an injury-in-
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fact, causation, and redressability such that the injury will be likely redressed by a decision in the
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plaintiff’s favor. Lujan, 504 U.S. at 561-62. An injury-in-fact requires showing “an invasion of a
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legally protected interest which is concrete and particularized and actual or imminent, not
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conjectural or hypothetical.” Id. at 560 (citations and internal quotation marks omitted).
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The UCL and FAL incorporate the Article III standing requirements, but additionally
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require that the plaintiff plead an economic injury. Kwikset Corp. v. Superior Court, 51 Cal. 4th
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310, 322-23 (2011); see also TrafficSchool.com, Inc. v. Edriver Inc., 653 F.3d 820, 825 n.1 (9th
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Cir. 2011) (“Plaintiffs filing an unfair competition suit must prove a pecuniary injury . . . and
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‘immediate’ causation. . . . Neither is required for Article III standing.” (internal citations
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omitted)). Proposition 64 was enacted in 2004 as a means of “confin[ing] [UCL] standing to those
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actually injured by a defendant’s business practices and [ ] curtail[ing] the prior practice of filing
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Case No. 5:12-CV-02621-EJD
ORDER GRANTING DEFENDANT’S MOTION TO DISMISS
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suits on behalf of clients who have not used the defendant’s product or service, viewed the
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defendant’s advertising, or had any other business dealing with the defendant.” Kwikset, 51 Cal.
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4th at 321 (internal citations omitted). Under the UCL and FAL, a plaintiff suffers an injury-in-fact
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when he or she has “(1) expended money due to the defendants’ acts of unfair competition; (2) lost
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money or property; or (3) been denied money to which he or she has a cognizable claim.”
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Chacanaca v. Quaker Oats Co., 752 F. Supp. 2d 1111, 1125 (N.D. Cal. 2010).
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To satisfy the injury-in-fact requirement for unfair competition claims, “courts in California
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require that plaintiffs demonstrate the purchase of products as a result of deceptive advertising.”
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Id. To plead actual reliance, the “plaintiff must allege that the defendant’s misrepresentations were
United States District Court
For the Northern District of California
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an immediate cause of the injury-causing conduct.” In re Tobacco II Cases, 46 Cal. 4th 298, 328
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(2009). However, “the plaintiff is not required to allege that those misrepresentations were the sole
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or even the decisive cause of the injury-producing conduct.” Id. A plaintiff can satisfy the UCL’s
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standing requirement by alleging that he or she would not have bought the product but for the
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alleged misrepresentation. Kwikset, 51 Cal. 4th at 330.
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The California Supreme Court has held that the phrase “as a result of” in UCL section
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17204 “imposes an actual reliance requirement on plaintiffs prosecuting a private enforcement
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action under the UCL’s fraud prong.” Tobacco II, 46 Cal. 4th at 326. This also applies under the
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UCL’s “unlawful” and “unfair” prongs, where the predicate unlawfulness is misrepresentation and
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deception. Hale v. Sharp Healthcare, 183 Cal. App. 4th 1373, 1385 (2010); see also Kwikset, 51
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Cal. 4th 310; In re Actimmune Mkt. Litig., No. 08-2376, 2010 WL 3463491, at *8 (N.D. Cal. Sept.
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1, 2010), aff’d, 464 F. App’x 651 (9th Cir. 2011); Brazil v. Dole Food Co., 935 F. Supp. 2d 947
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(N.D. Cal. 2013); Kane v. Chobani, No. 12-CV-02425-LHK, 2014 WL 657300, at *5 (N.D. Cal.
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Feb. 20, 2014).
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The federal and state statutes relied on by Plaintiff prohibit a particular type of consumer
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deception, the mislabeling of food products. As such, the actual reliance requirement applies to
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Plaintiff’s claims under all prongs of the UCL. See Figy v. Amy’s Kitchen, No. 13-CV-03816-SI,
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2013 WL 6169503 (N.D. Cal. Nov. 25, 2013); Kwikset, 51 Cal. 4th 310; Wilson v. Frito-Lay N.
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Am., 961 F. Supp. 2d 1134 (N.D. Cal. 2013).
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Case No. 5:12-CV-02621-EJD
ORDER GRANTING DEFENDANT’S MOTION TO DISMISS
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Defendant argues that Plaintiff cannot establish standing because Plaintiff cannot
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demonstrate that he was deceived by Defendant’s alleged conduct. However, Plaintiff counters
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that he purchased Defendant’s products in reliance on the “no trans fat” and “no cholesterol”
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representations. Dkt. No. 47 ¶¶ 10 n.1, 13, 27, 56, 76. Plaintiff notes that he relied “1) on the
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Defendant’s explicit representations that its products contained ‘0g Trans Fat’ and ‘No Cholesterol’
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and were thus healthier than other potato chips lacking such statements and 2) the Defendant’s
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implicit representation based on Defendant’s material omission of material facts that the
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Defendant’s Cheddar & Sour Cream Chips purchased by the Plaintiff were legal to sell and
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possess.” Id. ¶ 13. Plaintiff does not argue that the labels were misleading because the food
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For the Northern District of California
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product actually contained trans fat or cholesterol, rather that the product labels did not include
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disclosures mandated by 21 C.F.R. § 101.13(h) and § 101.62(d)(1)(ii).
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21 C.F.R. § 101.13(h)(l) provides that:
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If a food . . . contains more than 13.0 g of fat, 4.0 g of saturated fat, 60 milligrams (mg) of
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cholesterol, or 480 mg of sodium per reference amount customarily consumed, per labeled
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serving, or, for a food with a reference amount customarily consumed of 30 g or less . . . per
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50 g . . . then that food must bear a statement disclosing that the nutrient exceeding the
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specified level is present in the food as follows: “See nutrition information for __ content”
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with the blank filled in with the identity of the nutrient exceeding the specified level, e.g.,
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“See nutrition information for fat content.”
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Plaintiff claims that Defendant violates this provision because the purchased product
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allegedly contains more than 13 grams of fat and does not include the required disclosure. Dkt.
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No. 47 ¶ 18. However, 21 C.F.R. § 101.13(h)(l) does not reference the amount of total fat found in
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a food product, and Plaintiff does not allege that the product contains more than 13g of fat per
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amount customarily consumed, per serving, or per 50g such that a disclosure would be required.
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Furthermore, 21 C.F.R. § 101.62(d)(1)(ii)(D) provides that:
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The terms “cholesterol free” . . . may be used on the label . . . provided that . . . for foods
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that contain more than 13 g of total fat per reference amount customarily consumed, per
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labeling serving, or per 50 g if the reference amount customarily consumed is 30 g or less . .
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Case No. 5:12-CV-02621-EJD
ORDER GRANTING DEFENDANT’S MOTION TO DISMISS
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. [t]he label or labeling discloses the level of total fat in a serving . . . such disclosure shall
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appear in immediate proximity to such claim preceding any disclosure statement required
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under § 101.13(h) . . .
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Plaintiff alleges that Defendant’s labels fail to meet this requirement as the food product
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contains more than 13 grams of fat per 50 grams and does not include disclosure statement about
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the total fat per serving size on the panel. As opposed to Plaintiff’s allegation about Defendant’s
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violation of 21 C.F.R. § 101.13(h)(l), Plaintiff demonstrates how the label may violate 21 C.F.R. §
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101.62(d)(1)(ii) by alleging that per 50 grams of product, the product contains more than 13 grams
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of fat. This alleged violation is mentioned once in a footnote of the SAC and never brought up
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For the Northern District of California
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again in the SAC. Dkt. No. 47 ¶ 10 n.1.
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In Delacruz v. Cytosport, No. C-11-3532-CW, 2012 WL 2563857 (N.D. Cal. June 28,
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2012), this district dismissed a similar “0 grams trans fat” claim, holding that even though the
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statement was not accompanied by a 21 C.F.R. §101.13(h)(1) disclosure, the statement about trans
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fat was true and the “alleged distraction” posed relative to fat and saturated fat was neither a false
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statement nor a misrepresentation and therefore, not an actionable claim. Id. at *8-10. Similarly,
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this Court dismissed a “0g trans fat” claim in Thomas v. Costco, No. 12-CV-02908-EJD, 2014 WL
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1323192 (N.D. Cal. Mar. 31, 2014), finding that under similar facts the plaintiff had not pled an
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injury-in-fact and therefore had no standing to bring such a claim.
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Plaintiff points to Wilson v. Frito-Lay, 2013 WL 1320468 (N.D. Cal. April 1, 2013), and
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Samet v. Procter & Gamble, No. 12-CV-01891-PSG, 2013 WL 3124647 (N.D. Cal. June 18,
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2013), to support his argument, but those cases are distinguishable from both Cytosport and
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Thomas. In Frito-Lay, unlike in Cytosport and Thomas, the “0 grams trans fat” statement was
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accompanied by a disclosure directing consumers to see nutrition facts for saturated fat
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information, without telling them to look at the total fat level, which was higher than 13 grams of
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fact. The court found that the plaintiffs sufficiently alleged that the statement was deceptive
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because, accompanied by a disclosure of at least one of the ingredients that 21 C.F.R.
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§101.13(h)(1) requires to be disclosed (saturated fat), they and other consumers would think that
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the statements on the labels made accurate claims about the product’s nutritional content, when
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Case No. 5:12-CV-02621-EJD
ORDER GRANTING DEFENDANT’S MOTION TO DISMISS
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