Hohenberg v. Ferrero USA, Inc

Filing 69

ORDER denying 48 Motion to Dismiss. Signed by Judge Marilyn L. Huff on 08/29/2011. (ag)(jrd)

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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. 11-CV-205 H (CAB)
ORDER DENYING MOTION
TO DISMISS

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On July 18, 2011, Defendant Ferrero U.S.A., Inc. (“Ferrero”) filed a motion to dismiss

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Plaintiffs’ first amended consolidated complaint. (Doc. No. 48.) On August 15, 2011,

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Plaintiffs filed a response in opposition to Defendant’s motion to dismiss. (Doc. No. 61.) On

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August 22, 2011, Defendant filed a reply in support of its motion. (Doc. No. 67.) A hearing

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on the matter is currently scheduled for August 29, 2011 at 10:30 a.m. The Court held a

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hearing on the matter on August 29, 2011. Ronald Marron, Melanie Rae Persinger, and

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Gregory S. Weston appeared on behalf of the Plaintiff. Colleen Bal appeared on behalf of the

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Defendant. For the following reasons, the Court DENIES Defendant’s motion to dismiss.

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Background

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This is a consolidated consumer class action lawsuit brought on behalf of people who

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have purchased Ferrero’s Nutella® spread after relying on allegedly deceptive and misleading

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labeling and advertisements. (Doc. No. 14, Cons. Compl.) Specifically, Plaintiffs allege that

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Ferrero misleadingly promotes its Nutella® spread as healthy and beneficial to children when

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in fact it contains dangerous levels of fat and sugar. (Id. ¶ 99-102.) Based on these

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representations, Plaintiffs bring causes of action alleging (1) violations of California’s Unfair

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Competition Law (“UCL”), Cal. Bus. & Prof. Code §§ 17200 et seq.; (2) violations of
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California’s False Advertising Law, (“FAL”), Cal. Bus. & Prof. Code §§ 17500 et seq.; (3)

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violations of California’s Consumer Legal Remedies Act (“CLRA”), Cal. Civ. Code §§ 1770

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et seq.; (4) breach of express warranty; and (5) breach of implied warranty of merchantability.

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(Id.)

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On April 18, 2011, Ferrero filed a motion to dismiss Plaintiff’s consolidated complaint.

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(Doc. No. 30.) On June 30, 2011, the Court granted in part and denied in part Ferrero’s

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motion, and gave Plaintiffs leave to file an amended consolidated complaint. (Doc. No. 43.)

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On July 3, 2011, Plaintiffs filed a first amended consolidated complaint (“FACC”). (Doc. No.

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48.)
Discussion

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I. Motion to Dismiss Pursuant to Fed. R. Civ. P. 12(b)(6)

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A motion to dismiss a complaint under Federal Rule of Civil Procedure 12(b)(6) tests

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the legal sufficiency of the claims asserted in the complaint. Navarro v. Black, 250 F.3d 729,

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732 (9th Cir. 2001). Rule 8(a)(2) requires that a pleading stating a claim for relief contain “a

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short and plain statement of the claim showing that the pleader is entitled to relief.” The

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function of this pleading requirement is to “give the defendant fair notice of what the . . . claim

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is and the grounds upon which it rests.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555

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(2007). “While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need

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detailed factual allegations, a plaintiff’s obligation to provide the ‘grounds’ of his ‘entitlement

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to relief’ requires more than labels and conclusions, and a formulaic recitation of the elements

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of a cause of action will not do.” Id. A complaint does not “suffice if it tenders ‘naked

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assertion[s]’ devoid of ‘further factual enhancement.’” Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949

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(2009) (quoting Twombly, 550 U.S. at 557). “Factual allegations must be enough to raise a

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right to relief above the speculative level.” Twombly, 550 U.S. at 555 (citing 5 C. Wright &

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A. Miller, Federal Practice and Procedure § 1216, pp. 235-36 (3d ed. 2004)).

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II. Plaintiff’s Complaint

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A. Standing under UCL, FAL, and CLRA

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Ferrero argues that Plaintiffs lack standing under the UCL, FAL, and CLRA to pursue
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claims based on statements that appear on Nutella®’s website. (Doc. No. 48-1 at 1-5.) Ferrero

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argues that Plaintiffs have not sufficiently plead that Ferrero engaged in a long-term

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advertising campaign. (Id.) Plaintiffs argue that they have standing to challenge statements

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on Nutella®’s website because they properly allege that they were exposed to a long-term

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advertising campaign. (Doc. No. 61.)

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In order to assert a claim under the UCL or FAL, a person must have “suffered injury

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in fact and ha[ve] lost money or property as a result of such unfair competition.” Cal. Bus. &

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Prof. Code §§ 17204, 17535. Therefore, actual reliance is required to have standing to sue

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under the UCL or FAL. Kwikset Corp. v. Sup. Ct., 51 Cal. 4th 310, 326-27 (2011); In re

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Tobacco II Cases, 46 Cal. 4th 298, 306 (2009) (A plaintiff “proceeding on a claim of

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misrepresentation as the basis of his or her UCL action must demonstrate actual reliance on

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the allegedly deceptive or misleading statements, in accordance with well-settled principles

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regarding the element of reliance in ordinary fraud actions.”). In addition, actual reliance is

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required to have standing to sue under the CLRA. See Cohen v. DirecTV, Inc., 178 Cal. App.

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4th 966, 973 (Ct. App. 2007).

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However, a plaintiff does not “need to demonstrate individualized reliance on specific

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misrepresentations to satisfy the reliance requirement.” Tobacco II, 46 Cal. 4th at 327.

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“[W]here . . . a plaintiff alleges exposure to a long-term advertising campaign, the plaintiff is

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not required to plead with an unrealistic degree of specificity that the plaintiff relied on

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particular advertisements or statements.” Id. at 328.

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In its motion to dismiss the FACC, Ferrero argues that its advertising campaign was not

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“long-term,” because Ferrero only began to engage in nationwide television commercials in

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2009. (Doc. No. 48-1 at 3.) Ferrero also argues that Plaintiffs conceded in their papers that

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they have not visited the Nutella® website, and thus cannot allege reliance on the website. (Id.

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at 5.)

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The Court notes that the parties disagree as to the duration of Ferrero’s campaign, and

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whether the named Plaintiff actually visited the website. While Defendant’s motion raises

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valid issues for a motion for summary judgment or class certification, all reasonable inferences
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from the FACC must be drawn in Plaintiff’s favor. Mohamed v. Jeppesen Dataplan, Inc., 579

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F.3d 943, 949 (9th Cir. 2009). In the FACC, Plaintiffs allege that throughout the more than

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ten-year Class Period Ferrero has engaged in a long term extensive advertising campaign in

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which Ferrero used various forms of media to consistently convey the deceptive and

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misleading message that Nutella® is healthy and nutritious. (Doc. No. 45 ¶ 76.) Plaintiffs also

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list the specific statements on Nutella®’s labeling (Id. ¶¶ 77-78), website (Id. ¶¶ 78-89),

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television advertising (Id. ¶¶ 90-96), word-of-mouth (Id. ¶¶ 82-89), and product categorization

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(Id. ¶ 98) that Plaintiffs challenge. Plaintiffs further specifically allege that they were exposed

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to Ferrero’s long-term advertising campaign and relied on various statements from that

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campaign in making their decision to purchase Nutella®. (Id. ¶¶ 104-06.) Plaintiff’s

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allegations satisfy the pleading requirements for showing reliance as set forth in the Tobacco

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II case. See Tobacco II, 46 Cal. 4th at 328.

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Additionally, to the extent Defendant argues that Plaintiff conceded not having visited

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the website, the Court notes that there is no sworn testimony under oath from the named

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Plaintiff regarding this issue. “When there are well-pleaded allegations, a court should assume

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their veracity and then determine whether they plausibly give rise to an entitlement for relief.”

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Iqbal, 129 S. Ct. at 1950. Defendant will be able to raise these issues by challenging Plaintiff’s

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allegations with supporting evidence at the class certification or summary judgment stage.

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Ferrero also argues that Plaintiffs’ allegations do not meet Rule 9(b)’s pleading

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standards. (Doc. No. 48-1 at 2-3.) Federal Rule of Civil Procedure 9(b)’s heightened pleading

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standards apply to claims for violation of the UCL that are grounded in fraud. Kearns v. Ford

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Motor Co., 567 F.3d 1120, 1125 (9th Cir. 2009). Under Federal Rule of Civil Procedure 9, a

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plaintiff must plead fraud with particularity. “Rule 9(b)’s particularity requirement applies to

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state-law causes of action.” Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1103 (9th Cir.

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2003). “Averments of fraud must be accompanied by ‘the who, what, when, where, and how’

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of the misconduct charged.” Id. at 1106 (quoting Cooper v. Pickett, 137 F.3d 616, 627 (9th

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Cir. 1997)). Specifically, Ferrero argues that Plaintiffs do not provide sufficient details about

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the “long-term advertising campaign.” (Doc. No. 48-1 at 2-3.) However, Plaintiffs’ FACC
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provides each of the specific statements from the advertising campaign that they challenge and

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how they are deceptive. (Doc. No. 45 ¶¶ 77-102.) Plaintiffs also provide the “when” by

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stating that the long term advertising campaign occurred during the Class Period. (Id. ¶ 76.)

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These allegations are sufficient to meet Rule 9(b)’s pleading standards. See Von Koenig v.

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Snapple Beverage Corp., 713 F. Supp. 2d 1066, 1077 (E.D. Cal. 2010) (holding that plaintiff

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satisfied Rule 9(b) pleading requirements where plaintiff submitted examples of the product’s

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labeling and provided explanations of its deceptiveness).

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Finally, Ferrero argues that Tobacco II is distinguishable because, unlike in that case,

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here it is not unrealistic for the Plaintiffs to plead and prove actual reliance on the specific

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statements that influenced their purchasing decision. (Doc. No. 48-1 at 4.) However, Ferrero

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does not cite to any case law showing that this distinction matters. Tobacco II only states that

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“where . . . a plaintiff alleges exposure to a long-term advertising campaign, the plaintiff is not

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required to plead with an unrealistic degree of specificity that the plaintiff relied on particular

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advertisements or statements.” Id. at 328. Accordingly, the Court concludes that Plaintiffs

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have sufficiently plead reliance in the FACC to confer standing on them to bring their UCL,

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FAL, and CLRA claims, and the Court DENIES Ferrero’s motion to dismiss the FACC.
Conclusion

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For the reasons above, the Court DENIES Defendant Ferrero’s motion to dismiss the

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first amended consolidated complaint.

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IT IS SO ORDERED.

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DATED: August 29, 2011
________________________________
MARILYN L. HUFF, District Judge
UNITED STATES DISTRICT COURT

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