Hohenberg v. Ferrero USA, Inc

Filing 61

RESPONSE in Opposition re 48 MOTION to Dismiss First Amended Consolidated Complaint filed by Athena Hohenberg, Laura Rude-Barbato. (Fitzgerald, John) (lao).

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LAW OFFICES OF RONALD A.
MARRON, APLC
RONALD A. MARRON (175650)
3636 4th Avenue, Suite 202
San Diego, California 92103
Telephone: [phone]
Facsimile: [phone]
[e-mail]

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THE WESTON FIRM
GREGORY S. WESTON (239944)
JACK FITZGERALD (257370)
MELANIE PERSINGER (275423)
888 Turquoise Street
San Diego, CA 92109
Telephone: [phone]
Facsimile: [phone]
[e-mail]
[e-mail]
[e-mail]

INTERIM CLASS COUNSEL

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UNITED STATES DISTRICT COURT

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SOUTHERN DISTRICT OF CALIFORNIA

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IN RE FERRERO LITIGATION

Case No.: 3:11-CV-00205-H-CAB
PLAINTIFFS’ OPPOSITION TO
DEFENDANT’S MOTION TO DISMISS

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Judge: The Honorable Marilyn L. Huff
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Hearing Date: June 13, 2011
Time: 10:30 a.m.
Location: Courtroom 13

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In re Ferrero Litigation, No. 11 CV 00205 H (CABx) (S.D. Cal.)
PLAINTIFFS’ OPPOSITION TO DEFENDANTS’S MOTION TO DISMISS

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TABLE OF CONTENTS

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TABLE OF AUTHORITIES .................................................................................................................. ii
INTRODUCTION ...................................................................................................................................1

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ARGUMENT ...........................................................................................................................................1

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I.

LEGAL STANDARD ..................................................................................................................1

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II.

PLAINTIFFS MAY CHALLENGE FERRERO’S WEBSITE ...................................................2

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A.

Plaintiffs Allege Facts Sufficient Under Rule 9(b) to Demonstrate Ferrero’s
Advertising Campaign was Long-term and Extensive..................................................... 2

B.

Plaintiffs’ Standing is not Defeated by Allegations in a Prior Complaint ....................... 6

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CONCLUSION ........................................................................................................................................8

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In re Ferrero Litigation, No. 11 CV 00205 H (CABx) (S.D. Cal.)
PLAINTIFFS’ OPPOSITION TO DEFENDANTS’S MOTION TO DISMISS

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TABLE OF AUTHORITIES

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Cases

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Ashcroft v. Iqbal,
129 S. Ct. 1937 (2009) .........................................................................................................................2

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Baas v. Dollar Tree Stores, Inc.,
2007 U.S. Dist. LEXIS 65979 (N.D. Cal. Aug. 29, 2007) ..............................................................4, 5

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Bly-Magee v. California,
236 F.3d 1014 (9th Cir. 2001) .............................................................................................................6
Boeken v. Philip Morris, Inc.,
127 Cal. App. 4th 1640 (2005) ............................................................................................................3
Doyle v. Ill. Cent. R.R. Co.,
2009 U.S. Dist. LEXIS 8852 (E.D. Cal. Jan. 29, 2009) ......................................................................2
Gilligan v. Jamco Dev. Corp.,
108 F.3d 246 (9th Cir. 1997) ...............................................................................................................2
Henderson v. Gruma Corp.,
2011 U.S. Dist. LEXIS 41077 (C.D. Cal. Apr. 11, 2011) ...................................................................6
In re Ferrero Litig.,
2011 U.S. Dist. LEXIS 70629 (S.D. Cal. June 30, 2011)................................................................1, 7
In re Tobacco II Cases,
46 Cal. 4th 298 (2009) .................................................................................................................2, 3, 6

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Kearns v. Ford Motor Co.,
567 F.3d 1120 (9th Cir. 2009) .............................................................................................................5
Loux v. Rhay,
375 F.2d 55 (9th Cir. 1967) .................................................................................................................6
Mohamed v. Jeppesen Dataplan, Inc.,
579 F.3d 943 (9th Cir. 2009) ...............................................................................................................2
Moore v. Kayport Package Express, Inc.,
885 F.2d 531 (9th Cir. 1989) ...............................................................................................................4

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Morgan v. AT&T Wireless Services, Inc.,
177 Cal. App. 4th 1235 (Cal. App. 2d Dist. 2009) ..............................................................................4
Neubronner v. Milken,
6 F.3d 666 (9th Cir. 1993) ...................................................................................................................5
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In re Ferrero Litigation, No. 11 CV 00205 H (CABx) (S.D. Cal.)
PLAINTIFFS’ OPPOSITION TO DEFENDANTS’S MOTION TO DISMISS

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Reddy v. Litton Indus., Inc.,
912 F.2d 291 (9th Cir. 1990) ...............................................................................................................6
Rhodes v. Robinson,
621 F.3d 1002 (9th Cir. 2010) .............................................................................................................6
Semegen v. Weidner,
780 F.2d 727 (9th Cir. 1985) ...............................................................................................................4
Siracusano v. Matrixx Initiatives, Inc.,
585 F.3d 1167 (9th Cir. 2009) ............................................................................................................2
United States ex rel. Lee v. Corinthian Colleges,
2011 U.S. App. LEXIS 16618 (9th Cir. Aug. 12, 2011) .....................................................................6

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Vess v. Ciba-Geigy Corp. USA,
317 F.3d 1097 (9th Cir. 2003) .............................................................................................................4
Walter v. Hughes Communs., Inc.,
682 F. Supp. 2d 1031 (N.D. Cal. 2010) ...........................................................................................5, 6

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Rules
Fed. R. Civ. P. 9(b) ..................................................................................................................................4

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In re Ferrero Litigation, No. 11 CV 00205 H (CABx) (S.D. Cal.)
PLAINTIFFS’ OPPOSITION TO DEFENDANTS’S MOTION TO DISMISS

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INTRODUCTION

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This action challenges the consistent deceptive messaging Ferrero has conveyed to the public

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in multiple forms and media over the past decade: that Nutella is a healthy “hazelnut spread,” like

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peanut butter, and a good breakfast food, especially for children.

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In its June 30, 2011 Order on Ferrero’s Motion to Dismiss the prior Master Consolidated

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Complaint (“MCC”), the Court held Plaintiffs lacked standing to challenge statements made on the

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Nutella website “because although Plaintiffs argue that they were exposed to a long-term advertising

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campaign in their opposition, Plaintiffs never allege this in their consolidated complaint.” In re

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Ferrero Litig., 2011 U.S. Dist. LEXIS 70629, at *6 (S.D. Cal. June 30, 2011). The Court, however,

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granted Plaintiffs leave “to amend or cure any deficiencies—if they can—in an amended consolidated

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complaint.” Id. at *25. That is just what Plaintiffs did. In their First Amended Consolidated Complaint

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(“FACC”), filed July 3, 2011 (Dkt. No. 45), Plaintiffs allege that:

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Throughout the Class Period, Ferrero engaged in, and Plaintiffs and members of the
class were exposed to, a long-term advertising campaign in which Ferrero utilized
various forms of media, including, but not limited to, print advertising on the Nutella
label and elsewhere, websites, television commercials, physicians, and unpaid press
coverage, to consistently convey the deceptive and misleading message that Nutella is
healthy, nutritious, part of a healthy meal, part of a balanced meal, and/or beneficial for
developing and growing children.

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FACC at ¶ 76. See also id. at ¶¶ 9, 99, 104-106.

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Ferrero nevertheless filed a five-page Motion limited to the sole question of whether Plaintiffs

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have standing to challenge directly the Defendant’s web advertisements for Nutella. Ferrero asserts

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that these amendments do not give Plaintiffs standing to challenge the website statements “because (1)

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plaintiffs have not alleged any facts demonstrating Ferrero’s advertising campaign was ‘long-term and

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extensive,’ and (2) unlike plaintiffs in Tobacco II, these plaintiffs can (and did) identify the specific

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statements that they allegedly relied on in making their purchasing decision.” Mot. at 2. Ferrero is

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wrong on both counts.

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ARGUMENT
I.

LEGAL STANDARD
Federal pleading requirements are “extremely liberal,” and require only “a short and plain
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In re Ferrero Litigation, No. 11 CV 00205 H (CABx) (S.D. Cal.)
PLAINTIFFS’ OPPOSITION TO DEFENDANTS’S MOTION TO DISMISS

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statement of the claim,” so as to “minimize disputes over pleading technicalities.” Doyle v. Ill. Cent.

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R.R. Co., 2009 U.S. Dist. LEXIS 8852, at *9-10 (E.D. Cal. Jan. 29, 2009). Courts evaluate motions to

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dismiss with “a powerful presumption against rejecting pleadings for failure to state a claim,” Gilligan

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v. Jamco Dev. Corp., 108 F.3d 246, 248-49 (9th Cir. 1997) (internal quotation omitted). “When there

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are well-pleaded allegations, a court should assume their veracity and then determine whether they

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plausibly give rise to an entitlement for relief.” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1950 (2009). In

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deciding a motion to dismiss, courts should draw “all reasonable inferences from the complaint in

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[Plaintiff’s] favor,” Mohamed v. Jeppesen Dataplan, Inc., 579 F.3d 943, 949 (9th Cir. 2009), and

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“accept the plaintiffs’ allegations as true and construe them in the light most favorable to the

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plaintiffs.” Siracusano v. Matrixx Initiatives, Inc., 585 F.3d 1167, 1177 (9th Cir. 2009).

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II.

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PLAINTIFFS MAY CHALLENGE FERRERO’S WEBSITE
A.

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Plaintiffs Allege Facts Sufficient Under Rule 9(b) to Demonstrate Ferrero’s
Advertising Campaign was Long-term and Extensive

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Contrary to Defendant’s assertion that Plaintiffs’ allegations “contain no details about the

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alleged ‘long-term advertising campaign,’” Mot. at 3, Plaintiffs’ FACC, under the heading

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“FERRERO’S LONG-TERM, MULTI-MEDIA, DECEPTIVE ADVERTISING CAMPAIGN,”

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contains no less than 23 paragraphs dedicated to detailing it. FACC at ¶¶ 76-98. The FACC discusses

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in detail how Ferrero used the label of Nutella, id. at ¶¶ 77-78, its website, id. at ¶¶ 78-89, television

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commercials, id. at ¶¶ 90-96, word-of-mouth, id. at ¶¶ 82-88, and product categorization, id. at ¶¶ 98,

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to convey the deceptive and misleading message that Nutella is healthy and nutritious, including

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touting Nutella as part of a balanced meal and beneficial for developing and growing children. 1

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It is axiomatic that, “where, as here, a plaintiff alleges exposure to a long-term advertising

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

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plaintiff relied on particular advertisements or statements.” In re Tobacco II Cases, 46 Cal. 4th 298,

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328 (2009). Here, Plaintiffs allege that “throughout the [more than ten-year] Class Period, Ferrero

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engaged in, and Plaintiffs and members of the class were exposed to, a long-term advertising

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Incidentally, as detailed in Plaintiffs’ Motion for Class Certification (Dkt. No. 51 & 56 (Corrected
Brief)), the extensive nature of this campaign has been borne out in discovery and actually shown to
be even more extensive than pled.
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PLAINTIFFS’ OPPOSITION TO DEFENDANTS’S MOTION TO DISMISS

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campaign in which Ferrero utilized various forms of media . . . to consistently convey the deceptive

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and misleading message that Nutella is healthy, nutritious, part of a healthy meal, part of a balanced

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meal, and/or beneficial for developing and growing children.” FACC at ¶ 76. Accordingly, the Court

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should likewise hold that Plaintiffs do not have to plead specific reliance on statements from the

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Nutella website in order to have standing to challenge them. That conclusion would not only be in

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accord with the language of Tobacco II, but also its putative purpose.

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In arriving at that conclusion, the California Supreme Court relied on earlier tobacco decisions

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that were allowed to proceed with a Plaintiff challenging a manufacturer’s entire advertising campaign

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despite not pleading reliance on specific statements. In Boeken v. Philip Morris, Inc., 127 Cal. App.

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4th 1640 (2005), for example, the Court explained, “there was substantial evidence that Boeken began

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to smoke ‘for reasons that track Philip Morris’s advertising at the time’,” Tobacco II, 46 Cal. 4th at

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327 (quoting Boeken, 127 Cal. App. 4th at 1663).

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The same is true here. For over a decade, Ferrero has been trying to convince American

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consumers—like European consumers before them—that Nutella is a “hazelnut spread,” like peanut

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butter, despite that it is mostly sugar and oil, and that Nutella is healthy, and an appropriate breakfast

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food. As detailed in the FACC, this included conveying messages through a variety of media, with the

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hope and purpose of “spreading the word” about Nutella’s purported healthful qualities. And as

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argued in their Opposition and now pled, Plaintiffs were exposed to the representations that appeared

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on the Nutella website by virtue of their incorporation into Ferrero’s overall deceptive advertising

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campaign. See Opp. at 19 (Dkt. No. 39). Construing the allegations in the best light to Plaintiffs, they

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have sufficiently alleged a Tobacco II-like campaign at this stage to have standing to challenge

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Ferrero’s full campaign without pleading reliance to an unrealistic degree.

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Ignoring its deceptive advertising and unlawful conduct before 2008, Ferrero nevertheless

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asserts that because the majority of the challenged advertising took place beginning in 2008 as part of

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a “ramped-up” campaign to better spread the same healthful messaging, Plaintiffs have not shown a

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“long-term” campaign. But even if the Court limited its analysis to the period starting in 2008,

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Plaintiffs have still shown a multi-faceted campaign that is more than three years long, and

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continuing. Given the putative purposes of the rule, other California courts have found long-term
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PLAINTIFFS’ OPPOSITION TO DEFENDANTS’S MOTION TO DISMISS

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campaigns entitling a plaintiff to challenge a defendant’s full advertising campaign, even when the

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time period was shorter. In Morgan v. AT&T Wireless Services, Inc., 177 Cal. App. 4th 1235 (Cal.

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App. 2d Dist. 2009), for example, the court held that “[a]lthough the advertising campaign alleged in

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this case was not as long-term a campaign as the tobacco companies’ campaign discussed in Tobacco

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II, it is alleged to have taken place over many months, in several different media, in which [Defendant]

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consistently promoted its GSM/GPRS network as reliable, improving, and expanding.” Id. at 1258

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(emphasis added). Thus, each individual statement need not have been present throughout the entire

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advertising campaign, as long as Defendant “consistently promoted” the same deceptive and

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misleading message throughout. See id.

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Despite the great detail in the FACC, Ferrero nevertheless argues that Plaintiffs have not met

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the pleading requirements of Federal Rule of Civil Procedure 9(b), despite that it did not raise Rule

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9(b) in its motion to dismiss the original complaint. Rule 9(b) requires that “[i]n alleging fraud or

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mistake, a party must state with particularity the circumstances constituting fraud or mistake.” Fed. R.

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Civ. P. 9(b). The heightened pleading standard set by Rule 9(b) applies to claims for violation of the

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UCL, FAL, or CLRA that are “grounded in fraud.” See Vess v. Ciba-Geigy Corp. USA, 317 F.3d

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1097, 1103-06 (9th Cir. 2003). The purpose of Rule 9(b) is to ensure the allegations are “specific

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enough 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). And while averments of fraud must

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be particularized, the “Rule 9(b) particularity requirements must be read in harmony with Fedral Rule

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of Civil Procedure 8’s requirement of a ‘short and plain’ statement of the claim.” Baas v. Dollar Tree

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Stores, Inc., 2007 U.S. Dist. LEXIS 65979, at *5 (N.D. Cal. Aug. 29, 2007). The particularity

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requirement is satisfied “if the complaint ‘identifies the circumstances constituting fraud so that a

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defendant can prepare an adequate answer from the allegations.’” Id. (quoting Moore v. Kayport

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Package Express, Inc., 885 F.2d 531, 540 (9th Cir. 1989)). Simply put, “[a]verments of fraud must be

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accompanied by ‘the who, what, when, where, and how’ of the misconduct charged.” Vess, 317 F.3d

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at 1106. However, the requirements of Rule 9(b) “may be relaxed with respect to matters within the

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PLAINTIFFS’ OPPOSITION TO DEFENDANTS’S MOTION TO DISMISS

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opposing party’s knowledge. In such situations, plaintiffs cannot be expected to have personal

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knowledge of the relevant facts.” Neubronner v. Milken, 6 F.3d 666, 672 (9th Cir. 1993).

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Plaintiffs’ FACC satisfies the pleading requirements of Rule 9(b). Unlike the complaint

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dismissed in Kearns v. Ford Motor Co., 567 F.3d 1120 (9th Cir. 2009), which failed to even state the

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wording of the allegedly deceptive statements, id. at 1126, Plaintiffs’ FACC specifies the exact

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wording of each deceptive and misleading statement and even includes images of each of the claims

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on the product label and website, and transcripts of the television commercials. FAC at ¶¶ 76-98. The

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FACC also explains in detail how each statement or image is deceptive and misleading. Id. Thus,

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Plaintiffs have clearly identified the “what,” “where,” and “how” of their allegations. Nor can

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Defendant challenge Plaintiffs identification of the “who,” since the FACC clearly identifies all

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parties involved in this case. FACC at ¶¶ 10-20.

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The only Rule 9(b) requirement Ferrero really challenges is the “when” of Plaintiffs’

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allegations. Mot. at 3-4. As discussed above, Plaintiffs have alleged that Defendant’s extensive and

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long-term advertising campaign took place throughout the entire class period (as defined in the

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FACC), during which Ferrero utilized the forms of media discussed above to consistently convey the

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deceptive and misleading message that Nutella is healthy and nutritious. FACC at ¶¶ 76-98. While

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Plaintiffs have not identified the exact date that each individual statement was in effect, Ferrero is in

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the best position to know this information and the requirements of 9(b) “may be relaxed with respect

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to matters within the opposing party’s knowledge.” Neubronner, 6 F.3d at 672. But Plaintiffs have

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certainly identified the challenged statements with enough specificity to allow Defendants to “prepare

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an adequate answer from the allegations.” Baas, 2007 U.S. Dist. LEXIS 65979, at *5.

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That the Court should permit the FACC to proceed under the Rule 9(b) standard is

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dramatically illustrated in the case of Walter v. Hughes Communs., Inc., 682 F. Supp. 2d 1031 (N.D.

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Cal. 2010), which involved similar circumstances to those here. There, the Court held a much less

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detailed complaint met Rule 9(b)’s pleading requirement under the “long-term advertising” rule:

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The Court is satisfied that the pleadings in the Amended Complaint are sufficiently
particular to plead reliance. Although Plaintiffs have not cited specific advertisements
that predate their use of Hughes’ services, each Plaintiff alleges that they subscribed to
Hughes’ services based on Hughes’ representations, which (although roughly described)
are comparable to the more recent representations, which are alleged with greater
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PLAINTIFFS’ OPPOSITION TO DEFENDANTS’S MOTION TO DISMISS

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particularity. Plaintiffs are, in essence, asking this Court to make an inference that
Hughes’ representations have been consistent over time in certain material respects,
dating back for the last several years. The Court finds this to be a reasonable inference.
Because Plaintiffs have identified recent, particular representations from Hughes’
marketing campaign, and alleged that they relied on similar or identical representations
made at earlier times, Plaintiffs have adequately notified Hughes of the claims against it.

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Id. at 1045 (citations to record omitted) (citing Bly-Magee v. California, 236 F.3d 1014, 1019 (9th Cir.

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2001); Tobacco II, 46 Cal. 4th at 328).

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B.

Plaintiffs’ Standing is not Defeated by Allegations in a Prior Complaint

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Ferrero alternatively argues that Plaintiffs insufficiently allege a long-term campaign because

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Plaintiffs specified some advertisements on which they relied in a prior complaint. But “when a

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plaintiff files an amended complaint, ‘[t]he amended complaint supercedes the original, the latter

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being treated thereafter as non-existent.’” Rhodes v. Robinson, 621 F.3d 1002, 1005 (9th Cir. 2010)

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(quoting Loux v. Rhay, 375 F.2d 55, 57 (9th Cir. 1967)); accord Henderson v. Gruma Corp., 2011

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U.S. Dist. LEXIS 41077, at *15-16 (C.D. Cal. Apr. 11, 2011) (“Defendant’s argument that Plaintiffs

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lack standing relies entirely on a contrast between Plaintiffs’ original complaint . . . and the First

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Amended Complaint. . . . Defendant is incorrect. . . . While prior pleadings may be admissible in

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evidence against the pleader, the Court is bound to accept as true allegations in the Plaintiffs’ pending

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pleadings . . . .” (citations omitted)). Accordingly, the determination of whether Plaintiffs have

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standing to assert their claims against Ferrero’s entire Nutella advertising campaign, including its

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website advertising, must be determined on the basis of the allegations in the currently-operative

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Complaint alone. 2

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Plaintiffs’ allege they “were exposed [to] Ferrero’s long-term advertising campaign concerning

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the purported healthfulness of Nutella . . . [and] understood and relied upon Ferrero’s

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misrepresentations for each purchase of Nutella® made during the Class Period, including, for

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While not directly on point, “[l]eave to amend is warranted if the deficiencies can be cured with
additional allegations that are ‘consistent with the challenged pleading’ and do not contradict the
allegations in the original complaint. United States ex rel. Lee v. Corinthian Colleges, 2011 U.S. App.
LEXIS 16618, at *22 (9th Cir. Aug. 12, 2011) (citing Reddy v. Litton Indus., Inc., 912 F.2d 291, 29697 (9th Cir. 1990)). Here, as in United States ex rel. Lee v. Corinthian Colleges, Plaintiffs’ allegations
of exposure to a long-term advertising campaign are entirely consistent with their identifying in the
original complaint some specific advertisements to which they were exposed. Compare MCC ¶¶ 104106 with FACC ¶¶ 104-106.
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example, “moms are helping nourish their children with whole grains,” “A balanced breakfast is key

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to a great start each morning for the entire family, especially for children,” “An example of a tasty yet

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balanced breakfast,” and “Nutella® can form a part of a balanced meal.” FACC ¶ 104. Plaintiffs

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further allege they were “exposed to, saw, read, understood, and relied upon Nutella’s® label . . . [and

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were] further exposed to, saw, heard, understood, and relied upon various statements made about

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Nutella’s® purported healthful qualities as part of Ferrero’s long-term advertising campaign.” Id. ¶¶

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105-106. These allegations, when construed in the light most favorable to Plaintiffs, are sufficient to

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allege exposure to a long-term advertising campaign at this juncture.

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Notably, in amending their Complaint to adequately allege exposure to a long-term campaign,

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Plaintiffs did not dramatically alter the pleading, but merely “shored it up,” just as the Court invited.

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See In re Ferrero Litig., 2011 U.S. Dist. LEXIS 70629, at *6 (Noting that “Plaintiffs argue that they

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did not have to rely on the individual misrepresentations on the website because they were part of a

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long-term, multifaceted advertising campaign,” and distinguishing this case “because although

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Plaintiffs argue that they were exposed to a long-term advertising campaign in their opposition,

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Plaintiffs never allege this in their consolidated complaint.” (emphasis added)). That is because the

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seeds of sufficient allegations were already in the Complaint—details about the many ways and means

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Ferrero has deceptively promoted Nutella as healthy throughout the years.

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In sum, the Court effectively invited Plaintiffs to amend their Complaint to incorporate the

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argument from their opposition into their allegations. That is just what Plaintiffs did. In their

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Opposition, Plaintiffs argued they “allege dozens of statements, including several on Nutella’s label,

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which, as part of Nutella’s long-term, multi-media advertising campaign, contributed to the deceptive

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context of Nutella’s packaging as a whole.” Opp. at 17. That statement referenced the many

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statements about Nutella and forms of media discussed in the original complaint, and argued that

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Plaintiffs were indirectly exposed to elements of the campaign, like the advice of Ferrero’s child

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nutrition expert, Connie Evers. Id. at 19. The FACC now properly alleges that the many statements

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Plaintiffs were exposed to were elements of a long-term campaign, such that Plaintiffs may challenge

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the entirety of the campaign.

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CONCLUSION
Plaintiffs respectfully request the Court deny Ferrero’s Motion to Dismiss. Should the Court
grant any portion of Ferrero’s Motion, Plaintiffs respectfully request it be without prejudice.

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Dated: August 15, 2011

By: /s/ Jack Fitzgerald
Jack Fitzgerald
THE WESTON FIRM
GREGORY S. WESTON
JACK FITZGERALD
MELANIE PERSINGER
888 Turquoise Street
San Diego, CA 92109
Telephone:
858 488 1672
Facsimile:
480 247 4553

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LAW OFFICES OF RONALD A. MARRON, APLC
RONALD A. MARRON
3636 4th Avenue, Suite 202
San Diego, CA 92103
Telephone:
[phone]
Facsimile:
[phone]

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INTERIM CLASS COUNSEL

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PLAINTIFFS’ OPPOSITION TO DEFENDANTS’S MOTION TO DISMISS