Thomas-v-Costco Wholesale Corporation

Filing 83

Order granting in part and denying in part 70 Motion to Dismiss. Signed by Hon. Edward J. Davila on 3/31/2014.(ejdlc3, COURT STAFF) (Filed on 3/31/2014)

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1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT 8 9 NORTHERN DISTRICT OF CALIFORNIA SAN JOSE DIVISION United States District Court For the Northern District of California 10 11 12 13 14 15 16 17 18 KAREN THOMAS and LISA LIDDLE, ) individually and on behalf of all others similarly ) situated ) ) Plaintiffs, ) ) v. ) ) COSTCO WHOLSALE CORPORATION, ) ) ) Defendant. ) ) Case No. 5:12-CV-02908-EJD ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION TO DISMISS [Re: Docket No. 70] Presently before the Court is Defendant Costco Wholesale Corporation’s (“Costco” or 19 “Defendant”) Motion to Dismiss and Strike Plaintiffs’ Second Amended Class Action Complaint 20 (“SAC”). Dkt. No. 70. Plaintiffs Karen Thomas (“Thomas”) and Lisa Liddle (“Liddle”) filed this 21 putative class action against Defendant alleging that several of Defendant’s food products have 22 been improperly labeled so as to amount to misbranding and deception in violation of several 23 California and federal laws. 24 Per Civ. L.R. 7-1(b), the motion was taken under submission without oral argument. 25 Having fully reviewed the parties’ papers, the Court grants in part and denies in part Defendant’s 26 motion to dismiss for the reasons explained below. 27 28 1 Case No. 5:12-CV-02908-EJD ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION TO DISMISS 1 I. BACKGROUND 2 Plaintiffs filed their original Complaint in this case on June 5, 2012. Dkt. No. 1. On 3 September 28, 2012, Plaintiffs filed the Amended Class Action Complaint on behalf of themselves 4 and a putative class of all persons in the United States who have purchased the same or similar 5 products or other of Defendant’s food products that were allegedly mislabeled. Dkt. No. 24. 6 Plaintiffs’ First Amended Complaint was dismissed by this Court on April 9, 2013 based on 7 Plaintiff Thomas’ lack of standing and failure to comply with Rule 9. Dkt. No. 58. 8 9 United States District Court For the Northern District of California 10 11 Plaintiffs filed their SAC on April 24, 2013. Dkt. No. 60. Defendant filed a Motion to Dismiss on June 6, 2013 and an Amended Motion to Dismiss and Strike on July 26, 2013. Dkt. No. 68 and Dkt. No. 70. Plaintiffs are two California consumers who purchased a variety of Defendant’s food 12 products from June 5, 2008. Plaintiff Thomas alleges that she purchased Defendant’s Kirkland 13 Signature Kettle Chips. Dkt. No. 60 ¶ 22. Plaintiff Liddle alleges that she purchased Defendant’s 14 products including Kirkland Signature Cashew Clusters with Almonds and Pumpkin Seeds, 15 Kirkland Signature Whole Dried Blueberries, Kirkland Signature Newman’s Own 100% Grape 16 Juice, Kirkland Signature Organic Chocolate Reduced Fat Milk, Kirkland Signature Bolthouse 17 Farms Organic 100% Carrot Juice, Kirkland Signature Real Sliced Fruit (Fuji Apple, Strawberry 18 Banana, and Fuji Apple with Cinnamon), Kirkland Signature Nature’s Path Organic Ancient 19 Grains Granola with Almonds, and Kirkland Signature Canola Oil Cooking Spray. Id. ¶ 23. 20 Plaintiffs argue that the following representations on the packaging of these and other of 21 Defendant’s food products were unlawful and/or misleading: (1) nutrient content claims; (2) claims 22 about antioxidant content; (3) “no sugar added” claims; (4) health claims; (5) “0 grams trans fat” or 23 “no trans fat” claims; (6) “evaporated cane juice” (“ECJ”) claims; (7) synthetic chemical content 24 omissions; (8) “preservative free” claims and omissions about preservative content; and (9) slack- 25 filled packaging. Id. ¶¶ 55-200. They also allege that they “read the unlawful and misleading 26 statements . . . on the labels of Defendant’s Purchased Products before purchasing them” and that 27 they “relied on Defendant’s label statements . . . and based and justified the decision to purchase 28 2 Case No. 5:12-CV-02908-EJD ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION TO DISMISS 1 Defendant’s Purchased Products, in substantial part, on Defendant’s label statements . . . .” Id. ¶¶ 2 219-20. 3 Plaintiffs allege the following causes of actions: violation of California’s Unfair 4 Competition Law (“UCL”), Cal. Bus. & Prof. Code § 17200 et seq., (counts 1-3); violation of the 5 False Advertising Law (“FAL”), Cal. Bus. & Prof. Code § 17500 et seq., (counts 4-5); and 6 violation of the Consumers Legal Remedies Act (“CLRA”), Cal. Civ. Code § 1750 et seq., (count 7 6). 8 II. LEGAL STANDARD 9 A. Rule 8(a) United States District Court For the Northern District of California 10 Federal Rule of Civil Procedure 8(a) requires a plaintiff to plead each claim with sufficient 11 specificity to “give the defendant fair notice of what the . . . claim is and the grounds upon which it 12 rests.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal quotations omitted). A 13 complaint which falls short of the Rule 8(a) standard may be dismissed if it fails to state a claim 14 upon which relief can be granted. Fed. R. Civ. P. 12(b)(6). “Dismissal under Rule 12(b)(6) is 15 appropriate only where the complaint lacks a cognizable legal theory or sufficient facts to support a 16 cognizable legal theory.” Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th Cir. 17 2008). Moreover, the factual allegations “must be enough to raise a right to relief above the 18 speculative level” such that the claim “is plausible on its face.” Twombly, 550 U.S. at 556-57. 19 When deciding whether to grant a motion to dismiss, the court generally “may not consider 20 any material beyond the pleadings.” Hal Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d 21 1542, 1555 n.19 (9th Cir. 1990). The court must accept as true all “well-pleaded factual 22 allegations.” Ashcroft v. Iqbal, 556 U.S. 662,679 (2009). The court must also construe the alleged 23 facts in the light most favorable to the plaintiff. Love v. United States, 915 F.2d 1242, 1245 (9th 24 Cir. 1988). However, the court may consider material submitted as part of the complaint or relied 25 upon in the complaint, and may also consider material subject to judicial notice. See Lee v. City of 26 Los Angeles, 250 F.3d 668, 688-69 (9th Cir. 2001). But “courts are not bound to accept as true a 27 legal conclusion couched as a factual allegation.” Twombly, 550 U.S. at 555. 28 3 Case No. 5:12-CV-02908-EJD ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION TO DISMISS 1 B. Rule 9(b) 2 Fraud-based claims are subject to heightened pleading requirements under Federal Rule of 3 Civil Procedure 9(b). In that regard, a plaintiff alleging fraud “must state with particularity the 4 circumstances constituting fraud.” Fed. R. Civ. P. 9(b). The allegations must be “specific enough 5 to give defendants notice of the particular misconduct which is alleged to constitute the fraud 6 charged so that they can defend against the charge and not just deny that they have done anything 7 wrong.” Semegen v. Weidner, 780 F.2d 727, 731 (9th Cir. 1985). To that end, the allegations 8 must contain “an account of the time, place, and specific content of the false representations as well 9 as the identities of the parties to the misrepresentations.” Swartz v. KPMG LLP, 476 F.3d 756, 764 United States District Court For the Northern District of California 10 (9th Cir. 2007). Averments of fraud must be accompanied by the “who, what, when, where, and 11 how” of the misconduct charged. Vess v. Ciba–Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 12 2003) (citation omitted). Additionally, “the plaintiff must plead facts explaining why the statement 13 was false when it was made.” Smith v. Allstate Ins. Co., 160 F. Supp. 2d 1150, 1152 (S.D. Cal. 14 2001) (citation omitted); see also In re GlenFed, Inc. Sec. Litig., 42 F.3d 1541, 1549 (9th Cir. 15 1994) (en banc) (superseded by statute on other grounds). 16 C. Rule 12(b)(1) 17 A party may file a motion to dismiss with the Court for lack of subject matter jurisdiction. 18 Fed. R. Civ. P. 12(b)(1). A Rule 12(b)(1) motion may be either facial or factual. Wolfe v. 19 Strankman, 392 F.3d 358, 362 (9th Cir. 2004). A facial 12(b)(1) motion involves an inquiry 20 confined to the allegations in the complaint, whereas a factual 12(b)(1) motion permits the court to 21 look beyond the complaint to extrinsic evidence. Id. When a defendant makes a facial challenge, 22 all material allegations in the complaint are assumed true, and the court must determine whether 23 lack of federal jurisdiction appears from the face of the complaint itself. Wolfe, 392 F.3d at 362. 24 On a factual challenge, the party opposing the motion must produce affidavits or other 25 evidence necessary to satisfy its burden of establishing subject matter jurisdiction. Safe Air For 26 Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004). Under a factual attack, the court need 27 not presume the plaintiff’s allegations as true. White v. Lee, 227 F.3d 1214, 1242 (9th Cir. 2000); 28 4 Case No. 5:12-CV-02908-EJD ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION TO DISMISS 1 accord Augustine v. United States, 704 F.2d 1074, 1077 (9th Cir. 1983). In the absence of a full- 2 fledged evidentiary hearing, however, disputed facts pertinent to subject matter jurisdiction are 3 viewed in the light most favorable to the nonmoving party. Dreier v. United States, 106 F.3d 844, 4 847 (9th Cir. 1996). Federal courts are courts of limited jurisdiction, adjudicating only cases which the 6 Constitution and Congress authorize. Kokkonen v. Guardian Life Ins. Co. of America, 511 U.S. 7 375, 377 (1994). An Article III federal court must ask whether a plaintiff has suffered sufficient 8 injury to satisfy the “case or controversy” requirement of Article III of the U.S. Constitution. To 9 satisfy Article III standing, a plaintiff must allege: (1) an injury in fact that is concrete and 10 United States District Court For the Northern District of California 5 particularized, as well as actual and imminent; (2) that the injury is fairly traceable to the 11 challenged action of the defendant; and (3) that it is likely (not merely speculative) that the injury 12 will be redressed by a favorable decision. Friends of the Earth, Inc. v. Laidlaw Envtl. Servs., Inc., 13 528 U.S. 167, 180-81 (2000); Lujan v. Defenders of Wildlife, 504 U.S. 555, 561-62 (1992). 14 At least one named plaintiff must have suffered an injury in fact. See Lierboe v. State Farm 15 Mut. Auto. Ins. Co., 350 F.3d 1018, 1022 (9th Cir. 2003) (“if none of the named plaintiffs 16 purporting to represent a class establishes the requisite of a case or controversy with the 17 defendants, none may seek relief on behalf of himself or any other member of the class”). 18 A suit brought by a plaintiff without Article III standing is not a “case or controversy,” and 19 an Article III federal court therefore lacks subject matter jurisdiction over the suit. Steel Co. v. 20 Citizens for a Better Env’t, 523 U.S. 83, 101 (1998). “A party invoking the federal court’s 21 jurisdiction has the burden of proving the actual existence of subject matter jurisdiction.” 22 Thompson v. McCombe, 99 F.3d 352, 353 (9th Cir. 1996). If a court determines that it lacks 23 subject matter jurisdiction, the court must dismiss the action. Fed. R. Civ. P. 12(h)(3). 24 III. DISCUSSION 25 Plaintiffs contend that their case essentially has two facets: (1) Defendant’s packages and 26 labels render the products “misbranded” and therefore unlawful; (2) Defendant’s labels are 27 “fraudulent” and “misleading.” Dkt. No. 60 ¶¶ 3-7. First, Plaintiffs allege that Defendant’s 28 5 Case No. 5:12-CV-02908-EJD ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION TO DISMISS 1 packages and labels do not comply with certain sections of state and federal laws, thereby 2 “misbranding” the product, creating a product that is unlawful and legally worthless. This 3 misbranding gives rise to Plaintiffs’ first cause of action under the “unlawful” prong of the UCL. 4 Second, Plaintiffs claim that Defendant’s labels are misleading, deceptive, unfair, and 5 fraudulent. Plaintiffs contend that they “reasonably relied in substantial part on the unlawful label 6 statements, and were thereby deceived, in deciding to purchase these products.” 7 8 9 United States District Court For the Northern District of California 10 Defendant challenges the SAC on a number of grounds including: lack of constitutional and statutory standing; failure to state a claim; and the doctrine of primary jurisdiction. A. Statutory Framework The operative statute in this matter is the Food, Drug, and Cosmetic Act (“FDCA”), 21 11 U.S.C. § 301 et seq., as amended by the Nutrition Labeling and Education Act of 1990 (“NLEA”), 12 21 U.S.C. § 343 et seq. 21 U.S.C. § 343 establishes the conditions under which food is considered 13 “misbranded.” Generally, food is misbranded under 21 U.S.C. § 343(a)(1) if “its labeling is false 14 or misleading in any particular.” 15 The California Sherman Food, Drug, and Cosmetic Law, Cal. Health & Safety Code § 16 109875 et seq., incorporates the requirements of the FDCA as the food labeling requirements of the 17 state of California. Plaintiffs bring claims for relief under the UCL, FAL, and CLRA based on 18 Defendant’s alleged violations of the Sherman Law. The UCL prohibits business practices that are 19 unlawful, unfair, or fraudulent. The “fraudulent” prong of the UCL “requires a showing [that] 20 members of the public are likely to be deceived.” Wang v. Massey Chevrolet, 97 Cal. App. 4th 21 856, 871 (2002). The “unlawful” prong of the UCL “borrows violations of other laws and treats 22 them as independently actionable.” Daugherty v. Am. Honda Motor Co., Inc., 144 Cal. App. 4th 23 824, 837 (2006). As for the “unfair” prong, “California appellate courts disagree on how to define 24 an ‘unfair’ act or practice in the context of a UCL consumer action.” Morgan v. Wallaby Yogurt 25 Co., Inc., No. 13-CV-00296-WHO, 2014 WL 1017879, at *11 (N.D. Cal. March 13, 2014); (citing 26 Davis v. Ford Motor Credit Co., 179 Cal. App. 4th 581, 594 (2009)). Some courts have held that 27 the “unfair” prong requires alleging a practice that “offends an established public policy or . . . is 28 6 Case No. 5:12-CV-02908-EJD ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION TO DISMISS 1 immoral, unethical, oppressive, unscrupulous or substantially injurious to consumers,” and the 2 policy must be “tethered to specific constitutional, statutory or regulatory provisions.” Bardin v. 3 Daimlerchrysler Corp., 136 Cal. App. 4th 1255, 1263, 1266 (2006) (quotations omitted). Other 4 courts have held that the court must apply a balancing test that “weigh[s] the utility of the 5 defendant’s conduct against the gravity of the harm to the alleged victim.” Schnall v. Hertz Corp., 6 78 Cal. App. 4th 1144, 1167 (2000). 7 B. Standing 8 As noted, to establish Article III standing, a plaintiff must allege facts showing an “injury- 9 in-fact,” causation, and redressability such that the injury will be likely redressed by a decision in United States District Court For the Northern District of California 10 the plaintiff’s favor. Lujan, 504 U.S. at 561-62. An “injury in fact” requires showing “an invasion 11 of a legally protected interest which is concrete and particularized and actual or imminent, not 12 conjectural or hypothetical.” Id. at 560 (citations and internal quotation marks omitted). 13 The UCL and FAL incorporate the Article III standing requirements, but additionally 14 require that the plaintiff plead an economic injury. Kwikset Corp. v. Superior Court, 51 Cal. 4th 15 310, 322-23 (2011); see also TrafficSchool.com, Inc. v. Edriver Inc., 653 F.3d 820, 825 n.1 (9th 16 Cir. 2011) (“Plaintiffs filing an unfair competition suit must prove a pecuniary injury . . . and 17 ‘immediate’ causation. . . . Neither is required for Article III standing.” (internal citations 18 omitted)). Proposition 64 was enacted in 2004 as a means of “confin[ing] [UCL] standing to those 19 actually injured by a defendant’s business practices and [ ] curtail[ing] the prior practice of filing 20 suits on behalf of clients who have not used the defendant’s product or service, viewed the 21 defendant’s advertising, or had any other business dealing with the defendant.” Kwikset, 51 Cal. 22 4th at 321 (internal citations omitted). Under the UCL and FAL, a plaintiff suffers an injury-in-fact 23 when he or she has “(1) expended money due to the defendants’ acts of unfair competition; (2) lost 24 money or property; or (3) been denied money to which he or she has a cognizable claim.” 25 Chacanaca v. Quaker Oats Co., 752 F. Supp. 2d 1111, 1125 (N.D. Cal. 2010). 26 To satisfy the injury-in-fact requirement for unfair competition claims, “courts in California 27 require that plaintiffs demonstrate the purchase of products as a result of deceptive advertising.” 28 7 Case No. 5:12-CV-02908-EJD ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION TO DISMISS 1 Id. To plead actual reliance, the “plaintiff must allege that the defendant’s misrepresentations 2 were an immediate cause of the injury-causing conduct.” In re Tobacco II Cases, 46 Cal. 4th 298, 3 328 (2009). However, “the plaintiff is not required to allege that those misrepresentations were the 4 sole or even the decisive cause of the injury-producing conduct.” Id. A plaintiff can satisfy the 5 UCL’s standing requirement by alleging that he or she would not have bought the product but for 6 the alleged misrepresentation. Kwikset, 51 Cal. 4th at 330. 7 The California Supreme Court has held that the phrase “as a result of” in UCL section 17204 “imposes an actual reliance requirement on plaintiffs prosecuting a private enforcement 9 action under the UCL’s fraud prong.” Tobacco II, 46 Cal. 4th at 326. This also applies under the 10 United States District Court For the Northern District of California 8 UCL’s “unlawful” and “unfair” prong, where the predicate unlawfulness is misrepresentation and 11 deception. Hale v. Sharp Healthcare, 183 Cal. App. 4th 1373, 1385 (2010); see also Kwikset, 51 12 Cal. 4th 310; In re Actimmune Mkt. Litig., No. 08-2376, 2010 WL 3463491, at *8 (N.D. Cal. Sept. 13 1, 2010), aff’d, 464 F. App’x 651 (9th Cir. 2011); Brazil v. Dole Food Co., 935 F. Supp. 2d 947 14 (N.D. Cal. 2013); Kane v. Chobani, No. 12-CV-02425-LHK, 2014 WL 6573000, at *5 (N.D. Cal. 15 Feb. 20, 2014). 16 The federal and state statutes relied on by Plaintiffs prohibit a particular type of consumer 17 deception, the mislabeling of food products. As such, the actual reliance requirement applies to 18 Plaintiffs’ claims under all prongs of the UCL. See Figy v. Amy’s Kitchen, No. 13-CV-03816-SI, 19 2013 WL 6169503 (N.D. Cal. Nov. 25, 2013); Kwikset, 51 Cal. 4th 310; Wilson v. Frito-Lay N. 20 Am., 961 F. Supp. 2d 1134 (N.D. Cal. 2013). 21 1. Plaintiff Thomas 22 In the Order Granting the Motion to Dismiss Plaintiffs’ FAC, this Court found that Plaintiff 23 Thomas lacked standing because she failed to sufficiently allege that the “no trans fat” or “0 grams 24 trans fat” representations were untruthful or misleading, or that the product in question actually 25 contained any amount of trans fat. Because she did not assert that she received a product different 26 from the one as labeled, she did not met the injury-in-fact requirement for standing and she did not 27 meet the causation prong because she admitted to having “read the labels on the [Kettle Chips] . . . 28 8 Case No. 5:12-CV-02908-EJD ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION TO DISMISS 1 before purchasing them.” Dkt. No. 58 at 7. Defendant argues that Plaintiff Thomas has not cured 2 the standing defects in the SAC and thus her claims must be dismissed with prejudice. 3 In support of her claim, Plaintiff Thomas asserts that she purchased Defendant’s Kettle 4 Chips in reliance on the “no trans fat” representation on the label. Dkt. No. 60 ¶¶ 116-17. Plaintiff 5 Thomas, however, does not claim that the product contained any trans fat, only alleging that she 6 was misled into believing that the product only made positive contributions to her diet and did not 7 contain total fat levels that may increase risk of disease or health related condition. Id. ¶ 133. 8 Plaintiff claims that she would not have purchased the product had she “known the truth” about the 9 product, without indicating what “the truth” is about the product. Id. ¶ 117. These allegations are United States District Court For the Northern District of California 10 the same as those previously dismissed by this Court for lack of standing and similar to claims 11 dismissed by this district in Delacruz v. Cytosport, No. C-11-3532-CW, 2012 WL 3563857, at *8 12 (N.D. Cal. June 28, 2012). Plaintiff still fails to allege that the chips she purchased included any 13 amount of trans fat or that she received a product different from the one as labelled. As such, the 14 injury-in-fact requirement for standing has not been met. 15 Next, to show injury-in-fact, Plaintiff Thomas claims that the “no trans fat” claims were 16 improper and misleading because Defendant failed to include disclosure statements required by 21 17 C.F.R. § 101.13(h)(1) and Plaintiff would not have purchased the product had she known it was 18 illegal to purchase and possess. This argument fails for two reasons. First, this district has already 19 held that a similar “0g trans fat” statement was not actionable. Cytosport, 2012 WL 3563857, at 20 *8. Furthermore, Plaintiff does not demonstrate that the label is in violation of the regulation. 21 21 C.F.R. § 101.13 (h)(l) provides that: 22 If a food . . . contains more than 13.0 g of fat, 4.0 g of saturated fat, 60 milligrams (mg) of 23 cholesterol, or 480 mg of sodium per reference amount customarily consumed, per labeled 24 serving, or, for a food with a reference amount customarily consumed of 30 g or less . . . per 25 50 g . . . then that food must bear a statement disclosing that the nutrient exceeding the 26 specified level is present in the food as follows: “See nutrition information for __ content” 27 28 9 Case No. 5:12-CV-02908-EJD ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION TO DISMISS 1 with the blank filled in with the identity of the nutrient exceeding the specified level, e.g., 2 “See nutrition information for fat content.” 3 Plaintiffs claim that Defendant violates this provision because the product allegedly 4 contains more than 13 grams of fat.1 In Cytosport, as discussed supra, this district dismissed a similar “0 grams trans fat” claim, 5 6 holding that even though the statement was not accompanied by a 21 C.F.R. §101.13(h)(1) 7 disclosure, the statement about trans fat was true and the “alleged distraction” posed relative to fat 8 and saturated fat was neither a false statement nor a misrepresentation and therefore, not an 9 actionable claim. Cytosport, 2012 WL 3563857, at *8-10. United States District Court For the Northern District of California 10 In Frito-Lay, the court found that the plaintiffs sufficiently alleged that a “0 grams trans fat” 11 statement was deceptive because, accompanied by a disclosure of at least one of the ingredients 12 that 21 C.F.R. §101.13(h)(1) requires to be disclosed (saturated fat), they and other consumers 13 would think that the statements on the labels made accurate claims about the product’s nutritional 14 content, when they did not. Id. at *14. In Frito-Lay, unlike in Cytosport, the “0 grams trans fat” 15 statement was accompanied by a disclosure directing consumers to see nutrition facts for saturated 16 fat information, without telling them to look at the total fat level, which was higher than 13 grams 17 of fact. The Frito-Lay court noted Cytosport’s opposite holding, concluding that it was based on a 18 distinct fact pattern. The facts in the present case are identical to those in Cytosport and distinct 19 from Frito-Lay, as no incomplete disclosure was included in the labeling. 20 In Samet v. Procter & Gamble, No. 12-CV-01891-PSG, 2013 WL 3124647 (N.D. Cal. June 21 18, 2013), plaintiffs brought a similar claim that “0g trans fat” statements must be accompanied by 22 disclosures. The court noted that Frito-Lay found that a “0g trans fat” statement could be 23 misleading to a consumer, but declined to decide whether that was true in the Samet case because 24 1 25 26 27 28 On a Motion to Dismiss, Plaintiff’s allegations in the complaint must be taken as true. Plaintiff alleges that the product contains more than 13 grams of fat and therefore the label is in violation of 21 C.F.R. § 101.13 (h)(l). However, attached to the SAC is a copy of the Kirkland Signature Kettle Brand Krinkle Cut Potato Chips (sea salt) packaging (both front and back). The nutrition panel indicates that none of the levels of total fat, saturated fat, cholesterol or potassium per serving reach the levels indicated in 21 C.F.R. § 101.13 (h)(l) (9g total fat, 1g saturated fat, 0mg cholesterol, and 430mg potassium) and therefore Plaintiff has not demonstrated a requirement for a disclosure to be included. Dkt. No. 60-1. 10 Case No. 5:12-CV-02908-EJD ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION TO DISMISS 1 plaintiffs had not alleged in detail required by Rule 9(b) how they were misled, other than offering 2 legal conclusions that they were “unaware” that the products were “misbranded.” Samet, 2013 WL 3 3124647, at * 8. 4 As such, the Court finds that Plaintiff Thomas has not pled an injury-in-fact and therefore 5 has no standing to bring a claim. Plaintiff Thomas was given two opportunities to cure the 6 deficiencies in her claim and the claim is now dismissed without leave to amend. 7 8 9 2. Plaintiff Liddle As discussed in the Court’s previous Order, Plaintiff Liddle has met the Article III and statutory standing requirements of her claims. United States District Court For the Northern District of California 10 C. Sufficiency of Pleadings 11 Plaintiffs allege two different facets of their argument against Defendant. First, 12 Defendant’s packages and labels render the products “misbranded” and therefore unlawful; second, 13 Defendant’s labels are “fraudulent” and “misleading.” 14 For all claims under the UCL that arise from deceptive advertising, as all of Plaintiff’s 15 claims here do, Plaintiff must plead reliance in accordance with Rule 9(b) and show that “members 16 of the public are likely to be deceived.” Williams v. Gerber Products Co., 552 F.3d 934, 938 (9th 17 Cir. 2008); Kwikset, 51 Cal. 4th 310. Whether a practice is “deceptive, fraudulent, or unfair” is 18 generally a question of fact that is not appropriate for resolution on the pleadings. Williams, 552 19 F.3d at 938-39; Bruton v. Gerber Prods. Co., 961 F. Supp. 2d 1062, 1089 (N.D. Cal. 2013). Where 20 there are food packaging features that could likely deceive a reasonable consumer, the Ninth 21 Circuit has found that granting a motion to dismiss is inappropriate. Williams, 552 F.3d at 939. 22 However, where a court can conclude as a matter of law that alleged misrepresentations are 23 not likely to deceive a reasonable consumer, courts have dismissed claims under the UCL, FAL, 24 and CLRA. Jones v. ConAgra Foods, Inc., 912 F. Supp. 2d 889, 899 (N.D. Cal. 2012); see Red v. 25 Kraft Foods, Inc., No. 10-CV-1028-GW, 2012 WL 5504011, at *4 (C.D. Cal. Oct. 25, 2012) 26 (“where . . . the claim alleges that a consumer will read a true statement on a package and then 27 disregard ‘well-known facts of life’ . . .,” the court granted a motion to dismiss because a 28 11 Case No. 5:12-CV-02908-EJD ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION TO DISMISS 1 reasonable consumer would not be deceived by pictures of vegetables and the true phrase “Made 2 with Real Vegetables”); Carrea v. Dreyer’s Grand Ice Cream, Inc., 475 Fed. Appx. 113 (9th Cir. 3 2012) (unpublished Ninth Circuit case determined that a reasonable consumer would not think the 4 terms “original” or “classic” indicate a wholesome or nutritious product). 5 6 1. “Unlawful” Claims As discussed supra, under the “unlawful” prong of the UCL, Plaintiffs must plead reliance 7 when claims are premised on allegedly deceptive advertising. See Kwikset, 51 Cal. 4th 310; 8 Chobani, No. 12-CV-02425-LHK, 2014 WL 657300, at *5 (N.D. Cal. Feb. 20, 2014); Brazil, 2013 9 WL 5312418, at *8-9. Defendant argues that Plaintiffs cannot avoid the UCL’s pleading United States District Court For the Northern District of California 10 11 requirement under the “unlawful” prong. Plaintiffs argue that their claims are not based on misrepresentation, rather on the illegality 12 of the products themselves as their misbranding violates the Sherman Law, and therefore there is 13 no need for Plaintiffs to prove reliance. Plaintiffs rely on Medrazo v. Honda of N. Hollywood, 205 14 Cal. App. 4th 1 (2012), and Steroid Hormone Product Cases, 181 Cal. App. 4th 145 (2010), for the 15 proposition that no showing of reliance is required where a defendant sells a product that is illegal 16 to sell. However, as discussed in Chobani, 2014 WL 657300, at *7, these cases are unavailing 17 because Steroid Hormone was decided prior to the California Supreme Court’s decision in Kwikset 18 and the alleged unlawful conduct in that case was not based on a statute prohibiting specific types 19 of misrepresentations. Similarly, Medrazo does not discuss Kwikset’s finding that actual reliance 20 applies to claims under the unlawful prong of the UCL. Plaintiffs cannot circumvent the reliance 21 requirement by simply pointing to a regulation or code provision that was violated by the alleged 22 label misrepresentation, summarily claiming that the product is illegal to sell and therefore 23 negating the need to plead reliance. As this district pointed out in Brazil, if the court held that a 24 plaintiff “has standing to bring claims based solely upon allegations that he would not have 25 purchased a product that was misbranded, purchasers who never ‘viewed the defendant’s 26 advertising’ or misleading labeling would have standing to sue. Such a holding is inconsistent with 27 Proposition 64 and Kwikset.” Brazil, 2013 WL 5312418, at *9. 28 12 Case No. 5:12-CV-02908-EJD ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION TO DISMISS 1 Plaintiffs argue that even if reliance is required, reliance has been adequately pled because 2 Plaintiffs relied on Defendant not to sell them illegal products (i.e. products misbranded under state 3 law). Here again, Plaintiffs rely on the reasoning in Medrazo and Steroid Hormone for the 4 proposition that the sale of an illegal product in and of itself leads to a presumption of reliance 5 because the representation made was material. However, as explained above, the cases Plaintiffs 6 cite are inapposite and actual reliance on the representation must be pled in order to satisfy the 7 requirements of the UCL. Therefore, the Court addresses all of Plaintiff’s claims together and 8 analyzes sufficiency under Rule 9(b), as all claims stem from the allegedly misleading labels. 9 2. “Fraudulent” Claims United States District Court For the Northern District of California 10 In the SAC, Plaintiffs list products purchased and their alleged Sherman Law violations. 11 Plaintiffs specifically assert that Defendants make misbranded content claims that fall into nine 12 categories: (a) “nutrient content” (including “naturally rich in antioxidants,” “excellent source of 13 antioxidants,” “good source of fiber,” “good source of protein,” and “contain oleic acid”); (b) 14 “antioxidant nutrient content”; (c) “no sugar added”; (d) health claims (such as “promotes good 15 cardiovascular health” and “being healthy too”); (e) “no trans fat”; (f) “evaporated cane juice” 16 (“ECJ”); (g) failure to label ingredients by their common names and concealing high levels of 17 synthetic chemicals and petrochemicals in cooking spray; (h) “preservative free”; and (i) use of 18 slack-filled containers. 19 Defendant argues that claims a-d do not allege that anything Defendant represented was 20 misleading nor did Plaintiffs rely on any representation made by Costco. Defendant further argues 21 that in Plaintiffs’ claims e-i, Plaintiffs fall short of alleging actionable misrepresentations under the 22 UCL, FAL, or CLRA, because the statements are not likely to deceive a reasonable consumer. As 23 discussed supra, under the UCL, FAL, and CLRA, “fraud” claims are governed by a “reasonable 24 consumer” test. Williams, 552 F.3d at 938. 25 For the nutrient content and antioxidant nutrient content claims, Plaintiff Liddle alleges 26 reliance on “implicit misrepresentation that [the] product she was purchasing met the minimum 27 nutritional threshold to make such claims.” Dkt. No. 60 ¶¶ 57, 61, 65, and 72. However, Plaintiff 28 13 Case No. 5:12-CV-02908-EJD ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION TO DISMISS 1 does not allege that the claims are false, or that the products do not contain antioxidants, fiber, 2 protein, or oleic acid. Instead, Plaintiff simply states that the product did not satisfy minimum 3 nutritional requirements with regard to the claimed nutrient as set out in 21 C.F.R. § 101.54(b) and 4 (c), without explaining how they reached that conclusion. For the antioxidant nutrient content 5 claims, Plaintiffs allege Defendant is in violation of 21 C.F.R. § 101.54(g) because the names of 6 antioxidants are not disclosed on the product labels; there are no RDIs for the antioxidants 7 advertised; the antioxidants fail to meet the required levels for claims such as “high,” “good 8 source,” and “more”; and Defendant lacks adequate scientific evidence concerning antioxidants. 9 For the “no sugar added” claim, Plaintiff alleges that the product is misbranded because it United States District Court For the Northern District of California 10 does not satisfy 21 C.F.R. §101.60(c)(2)(v), which requires that if the term “no sugar added” is 11 used, the product must include a statement that the food is not “low calorie” or “calorie reduced,” 12 unless the food meets the requirements for a low or reduced calorie food, and direct consumers’ to 13 the nutrition panel for further information about sugar and calorie content, and further disregards 14 21 C.F.R. § 101.60(c)(1). Plaintiff does not allege that the products did in fact contain added 15 sugar, only that the products were falsely represented and misbranded under California and federal 16 law because they did not include a disclaimer although they have a high caloric value. Plaintiff 17 alleges that she “did not know, and had no reason to know, that this product was misbranded. . .” 18 Dkt. No. 60 ¶ 90. 19 For the health claims, Plaintiff alleges that Defendant violated California and federal law by 20 making unapproved health claims in products which had disqualifying levels of fat. Plaintiff 21 alleges reliance “on these label representations . . . and was misled because she erroneously 22 believed the two phrases (‘promotes good cardiovascular health’ and ‘being healthy too’).” Id. ¶ 23 97. 24 As discussed above, the no trans fat claims are dismissed for lack of standing. 25 In the ECJ claims, Plaintiffs argue that ECJ is an unlawful term for an ingredient that has a 26 common name. Plaintiff Liddle alleges that she “read and relied on the listing of evaporated cane 27 28 14 Case No. 5:12-CV-02908-EJD ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION TO DISMISS 1 juice,” she “would not have bought [the product] had the ingredients been listed by their common . 2 . . names,” and a reasonable consumer would have been misled. Id. ¶¶ 138, 147. 3 Plaintiffs further claim that Defendant unlawfully identified an ingredient as “propellant” 4 instead of using the common names of the petrochemicals in the product. Plaintiff Liddle alleges 5 that she was misled and had she been aware of the chemical components of the product, she would 6 not have purchased it. Id. ¶ 167. 7 Next, Plaintiffs allege that Defendant’s “preservative free” product was misbranded 8 because the product contained tocopherols, which functioned as an undisclosed chemical 9 preservative. Defendant points out that the product contains natural tocopherols, which Plaintiffs United States District Court For the Northern District of California 10 11 12 13 cannot allege function as preservatives. Plaintiffs’ last claim is that particular products purchased were unjustifiably slack-filled, which Plaintiff Liddle relied on and was misled as a result of her reliance. The Court finds that claims for nutrient content, antioxidant content, health, no sugar added, 14 preservative free, propellant and slack-fill claims are properly pled, may deceive a reasonable 15 consumer, and are inappropriate to resolve at the motion to dismiss stage. See Jones, 912 F. Supp. 16 2d at 901; Ivie, 2013 WL 685372, at *12. 17 However, the ECJ claim will be dismissed with leave to amend based on the reasoning of 18 two recent cases, Avoy v. Turtle Mountain, No. 13-CV-0236-LHK, 2014 WL 587173 (N.D. Cal. 19 Feb. 14, 2014) and Chobani, No. 12-CV-02425-LHK, 2013 WL 5289253 (N.D. Cal., Sept. 19, 20 2013). Like the plaintiff in Avoy, Plaintiff Liddle included the label of the purchased product, 21 which lists “sugar” as an included nutrient and clearly show how much sugar is contained in the 22 product. As in Chobani, Plaintiff Liddle indicates in the SAC that she knows that ECJ is the same 23 as “sugar” and “dried cane syrup.” Further, the SAC fails to allege what Plaintiff Liddle believed 24 ECJ to be if not sugar and does not explain what a reasonable person would believe ECJ to be. 25 D. Primary Jurisdiction 26 The primary jurisdiction doctrine allows courts to “stay proceedings or to dismiss a 27 complaint without prejudice pending the resolution of an issue within the special competence of an 28 15 Case No. 5:12-CV-02908-EJD ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION TO DISMISS 1 administrative agency.” Ivie, 2013 WL 685372, at *5 (quoting Clark v. Time Warner Cable, 523 2 F. 3d 1110, 1114 (9th Cir. 2008)). Courts consider the following factors in deciding whether the 3 doctrine of primary jurisdiction applies: “(1) the need to resolve an issue that (2) has been placed 4 by Congress within the jurisdiction of an administrative body having regulatory authority (3) 5 pursuant to a statute that subjects an industry or activity to a comprehensive regulatory authority 6 that (4) requires expertise or uniformity in administration.” Ivie, 2013 WL 685372, at *5. 7 Where determination of a plaintiff’s claim would require a court to decide an issue 8 committed to the FDA’s expertise without a clear indication of how the FDA would view the issue, 9 courts of this district have found that dismissal or stay under the primary jurisdiction doctrine is United States District Court For the Northern District of California 10 appropriate. See Hood v. Wholesoy & Co., Modesto Wholesoy Co. LLC, No. 12-CV-5550-YGR, 11 2013 WL 3553979, at *5-6 (N.D. Cal. July 12, 2013) (ECJ and soy yogurt claims dismissed 12 because the FDA’s position is unsettled); Astiana v. Hain Celestial, 905 F. Supp. 2d 1013, 1016-17 13 (N.D. Cal. 2012) (holding that “[i]n absence of any FDA rules or regulations (or even informal 14 policy statements) . . . the court declines to make any independent determination of whether [the 15 label] was false or misleading” and the claims were barred under the primary jurisdiction doctrine). 16 In contrast, however, where FDA policy is clearly established with respect to what 17 constitutes an unlawful or misleading label, the primary jurisdiction doctrine is inapplicable 18 because there is little risk that the courts will undermine the FDA’s expertise. See Brazil, 935 F. 19 Supp. 2d at 959 (where the FDA has established requirements applicable to the violations, there is 20 no risk of undercutting the FDA’s judgment and authority, thus a stay is not necessary). 21 With regard to ECJ claims, the majority of courts in this district have decided that such 22 claims are not barred by the doctrine of primary jurisdiction. However, since this Court has 23 already decided that the ECJ claims are dismissed for failure to state a claim, it finds no need to 24 address this argument at this time. 25 26 27 28 16 Case No. 5:12-CV-02908-EJD ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION TO DISMISS

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