McGee v. Diamond Foods, Inc.

Filing 35

ORDER granting 27 Defendant Diamond Foods, Inc.'s Motion to Dismiss Plaintiff's First Amended Complaint. The entire action is dismissed with prejudice.Signed by Judge John A. Houston on 3/27/2017. (jpp)

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 JACQUELYN MCGEE, Case No.: 14cv2446 JAH (DHB) Plaintiff, 12 13 v. 14 ORDER GRANTING DEFENDANT DIAMOND FOODS, INC.’S MOTION TO DISMISS PLAINTIFF’S FIRST AMENDED COMPLAINT [Doc. No. 27] DIAMOND FOODS, INC., Defendant. 15 16 17 INTRODUCTION 18 Presently before the Court is Defendant Diamond Foods, Inc.’s (“Defendant”) 19 motion to dismiss Plaintiff Jacquelyn McGee’s (“Plaintiff”) First Amended Complaint 20 (“FAC”) for failure to state a claim, [doc. no. 27], following this Court’s March 1, 2016 21 order dismissing Plaintiff’s original Complaint, [doc. no. 26]. Defendant’s motion has 22 been fully briefed by the parties. Doc. Nos. 28, 29. After careful consideration of the 23 pleadings, relevant exhibits, and the entire record in this case, the Court exercised its 24 discretion pursuant to CivLR 7.1(d.1) and took Defendant’s motion under submission 25 without oral argument. Doc. No. 30. For the reasons set forth below, the Court GRANTS 26 Defendant’s motion and DISMISSES the FAC WITH PREJUDICE. 27 // 28 // 1 14cv2446 JAH (DHB) BACKGROUND1 1 2 On October 14, 2014, Plaintiff filed a class action against Defendant, asserting 3 claims for unfair and unlawful business practices under California Unfair Competition 4 Law, Cal. Bus. & Prof. Code §§ 17200 et seq., public nuisance under Cal. Civ. Code §§ 5 3479-3493, and breach of the implied warranty of merchantability. See Doc. No. 1. Plaintiff 6 alleged that Defendant manufactures and sells a variety of popcorn products (“the Trans 7 Fat Popcorns”) containing partially hydrogenated vegetable oil (“PHVO”), the only dietary 8 source of artificial Trans Fat (“TFA”), in the Pop Secret brand, which Plaintiff purchased 9 and consumed. Doc. No. 1 at 4. Plaintiff alleged that, since there is “no safe level” of TFA 10 intake and there are safe, low-cost, and commercially acceptable alternatives to TFA, 11 Defendant unfairly elected not to use substitutes in the Trans Fat Popcorns. Doc. No. 1 at 12 4, 7. Plaintiff further alleged that consumption of TFAs is extremely harmful [Id. at 7], 13 contributes to the development of cardiovascular disease [Id. at 10], type-2 diabetes [Id. at 14 12], breast, prostate, and colorectal cancer [Id. at 14], Alzheimer’s disease and cognitive 15 decline [Id.], and organ damage [Id. at 15]. 16 On November 12, 2014, Defendant filed a motion to dismiss, arguing, inter alia, that 17 Plaintiff lacks Article III standing because she suffered no “injury in fact” and, 18 notwithstanding its standing argument, Plaintiff fails to state a claim upon which relief can 19 be granted. See Doc. No. 7. On December 8, 2014, Plaintiff filed a response in opposition 20 to Defendant’s motion. Doc. No. 8. On December 15, 2014, Defendant filed a reply and 21 objection to Gregory S. Weston’s Declaration in support of Plaintiff’s opposition. Doc. 22 Nos. 9, 10. On August 10, 2015, Plaintiff filed as supplemental authority: (1) 80 Fed. Reg. 23 34650 (the Food and Drug Administration’s (“FDA”) June 17, 2015 final determination 24 regarding PHVO); and (2) Guttmann v. Nissin Foods Co., 2015 U.S. Dist. LEXIS 92756 25 26 27 28 1 The background section facts included herein have been entirely taken from Plaintiff’s FAC, the operative document in the motion to dismiss analysis. See Doc. No. 26. 2 14cv2446 JAH (DHB) 1 (N.D. Cal.) (finding that the plaintiff’s claims for violation of the unfair prong of the Unfair 2 Competition Law and breach of the implied warranty of merchantability survive; while all 3 other claims are dismissed without leave to amend. However, that Court made no 4 determination as to whether the plaintiff had standing). See Doc. No. 17. On August 18, 5 2015, Defendant filed a response to Plaintiff’s notice of supplemental authority supporting 6 her opposition to Defendant’s motion to dismiss. See Doc. No. 18. On August 21, 2015, 7 Defendant provided notice of supplemental authority to the Court regarding Backus v. 8 General Mills, Inc., 2015 WL 4932687 (N.D. Cal.). See Doc. No. 19. 9 On March 1, 2016, this Court granted Defendant’s motion to dismiss the original 10 complaint, finding that Plaintiff lacked Article III standing. Doc. No. 25 at 12. Indeed, the 11 Court expressed apprehension with respect to reaching the merits of Plaintiff’s substantive 12 claims, on the record before it, because Plaintiff failed to demonstrate an injury in fact. Id. 13 The Court underscored defects with respect to economic injury and physical harm suffered. 14 Id. at 11-12. First, with respect to Plaintiff’s failure to demonstrate economic injury, the 15 Court found that Plaintiff did “not allege an economic injury which satisfies Article III 16 standing by alleging that she purchased a product that was less healthy than expected. Also, 17 the Court [found] that Plaintiff received the benefit of her bargain when she consumed 18 Defendant’s popcorn.” Doc. No. 25 at 11. With respect to Plaintiff’s failure to demonstrate 19 injury in fact, as to some physical harm suffered, the Court found that “Plaintiff did not 20 allege a credible threat of harm and that the injury alleged does not ‘affect the plaintiff in 21 a personal and individual way.’” Id. (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 22 560 (1992)). Accordingly, the Court dismissed the original complaint without prejudice 23 and granted Plaintiff fourteen days to file an amended complaint. Id. at 16. 24 On March 16, 2016, Plaintiff filed the instant FAC re-alleging the same causes of 25 action asserted in the original complaint. See Doc. No. 26 (alleging the following causes 26 of action: (1) injunctive relief; (2) unfair and unlawful business practices under California 27 Unfair Competition Law, Cal. Bus. & Prof. Code §§ 17200 et seq.; (3) public nuisance 28 under Cal. Civ. Code §§ 3479-3493; and (4) breach of implied warranty of 3 14cv2446 JAH (DHB) 1 merchantability); cf. Doc. No. 1 (alleging claims for (1) injunctive relief; (2) unfair and 2 unlawful business practices under California Unfair Competition Law, Cal. Bus. & Prof. 3 Code §§ 17200 et seq.; (3) public nuisance under Cal. Civ. Code §§ 3479-3493; and (4) 4 breach of implied warranty of merchantability). However, the FAC now includes additional 5 facts pled in support of (1) Plaintiff’s UCL claim; and (2) Plaintiff’s burden to demonstrate 6 standing. Id. at 19, 21. On April 4, 2016, Defendant moved to dismiss the FAC. See Doc. 7 No. 27. On May 17, 2016, Plaintiff filed an opposition to Defendant’s motion. See Doc. 8 No. 28. On May 24, 2016, Defendant replied. See Doc. No. 29. 9 10 DISCUSSION I. Legal Standard 11 A motion to dismiss under Rule 12(b)(6) tests the sufficiency of the complaint. 12 Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). Dismissal is warranted under Rule 13 12(b)(6) where the complaint lacks a cognizable legal theory or fails to allege sufficient 14 facts to support a cognizable legal theory. Li v. Kerry, 710 F.3d 995, 999 (9th Cir. 2013). 15 “To survive a motion to dismiss, a complaint must contain sufficient factual matter, 16 accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 17 556 U.S. 662, 678 (2009) (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 18 (2007)). A claim is facially plausible when the factual allegations permit “the court to draw 19 the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 20 U.S. at 678. In other words, “the non-conclusory ‘factual content,’ and reasonable 21 inferences from that content, must be plausibly suggestive of a claim entitling the plaintiff 22 to relief.” Moss v. U.S. Secret Serv., 572 F.3d 962, 969 (9th Cir. 2009) (citing Iqbal, 556 23 U.S. at 678). “Determining whether a complaint states a plausible claim for relief will . . . 24 be a context-specific task that requires the reviewing court to draw on its judicial 25 experience and common sense.” Iqbal, 556 U.S. at 679. 26 In reviewing a motion to dismiss under Rule 12(b)(6), a court must assume the truth 27 of all factual allegations and construe the factual allegations in the light most favorable to 28 the nonmoving party. Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337–38 (9th Cir. 1996). 4 14cv2446 JAH (DHB) 1 However, legal conclusions need not be taken as true merely because they are “cast in the 2 form of factual allegations.” Ileto v. Glock Inc., 349 F.3d 1191, 1200 (9th Cir. 2003). “Nor 3 does a complaint suffice if it tenders ‘naked assertion[s]’ devoid of ‘further factual 4 enhancement.’” Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 557). The court may 5 consider facts alleged in the complaint, documents attached to the complaint, documents 6 relied upon but not attached to the complaint when authenticity is not contested, and 7 matters of which the court takes judicial notice. Lee v. City of Los Angeles, 250 F.3d 668, 8 688–89 (9th Cir. 2001). If a court determines that a complaint fails to state a claim, the 9 court should grant leave to amend unless it determines that the pleading could not possibly 10 be cured by the allegation of other facts. Doe v. United States, 58 F.3d 494, 497 (9th Cir. 11 1995). 12 II. Analysis 13 Defendant contends that the FAC fails to state a claim because Plaintiff has no injury 14 in fact and still lacks Article III standing. Doc. No. 27 at 14-18. Additionally, Defendant 15 argues that the supplemental authority provided to the Court on August 10, 2015, bars 16 Plaintiff’s claims because they are preempted by federal law. Id. at 26. Plaintiff disagrees, 17 arguing in opposition that she has properly pleaded standing because she alleged facts 18 demonstrating physical injury, the risk of harm in the future, and economic injury from 19 purchasing an unlawful product. Doc. No. 28 at 13. In reply, Defendant maintains that (1) 20 Plaintiff has not properly alleged facts demonstrating standing; and (2) given the Plaintiff’s 21 inability to effectively plead her case, and the legal effect of the FDA’s actions, that the 22 Court should dismiss the FAC with prejudice. Doc. No. 29 at 6. 23 Construing all inferences in the light most favorable to Plaintiff, the Court finds that 24 Plaintiff’s FAC fails to cure the Article III standing defects discussed in the Court’s March 25 1, 2016 order. Doc. 25 at 11-12. Defendant points out the same, and argues that this Court 26 should not depart from applying its previous rationale that is applicable here. Doc. No. 27 27 at 12. The Court agrees. Pepper v. United States, 131 S. Ct. 1229, 1250 (2011) (“‘[W]hen 28 a court decides upon a rule of law that decision should continue to govern the same issues 5 14cv2446 JAH (DHB) 1 in subsequent stages in the same case.’” quoting Arizona v. California, 460 U.S. 605, 618 2 (1983)). Accordingly, the Court finds that because identical standing defects as were fatal 3 in the original complaint persist in the FAC, the Court must ADOPT its prior reasoning 4 with respect to the FAC. 5 CONCLUSION AND ORDER 6 After due consideration, and with respect to the prior order granting Defendant 7 Diamond Foods, Inc.’s motion to dismiss for failure to state a claim [Doc. No. 25], the 8 Court (1) ADOPTS the reasoning of its March 1, 2016 order granting Defendant Diamond 9 Foods, Inc.’s motion to dismiss; (2) GRANTS Defendant Diamond Foods, Inc.’s motion; 10 and (3) DISMISSES the entire action WITH PREJUDICE. 11 12 13 14 15 DATED: March 27, 2017 _________________________________ JOHN A. HOUSTON United States District Judge 16 17 18 19 20 21 22 23 24 25 26 27 28 6 14cv2446 JAH (DHB)

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