Allred et al v. Frito-Lay North America, Inc. et al

Filing 26

ORDER Denying Defendants' 8 Motion to Dismiss. Signed by Judge Janis L. Sammartino on 3/7/2018. (mpl)

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1 2 3 4 5 6 UNITED STATES DISTRICT COURT 7 SOUTHERN DISTRICT OF CALIFORNIA 8 9 10 11 BARRY ALLRED and MANDY C. ALLRED, on behalf of themselves, all others similarly situated, and the general public, Case No.: 17-CV-1345 JLS (BGS) ORDER DENYING DEFENDANTS’ MOTION TO DISMISS (ECF No. 8) Plaintiffs, 12 13 v. 14 FRITO-LAY NORTH AMERICA, INC. and FRITO-LAY, INC., 15 16 Defendants. 17 18 19 Presently before the Court is Defendants Frito-Lay North America, Inc. and Frito- 20 Lay, Inc.’s Motion to Dismiss, (“MTN,” ECF No. 8). Also before the Court is Plaintiffs 21 Barry Allred and Mandy C. Allred’s Opposition to the Motion, (“Opp’n,” ECF No. 17), 22 and Defendants’ Reply in Support of the Motion, (“Reply,” ECF No. 19). Having 23 considered the Parties’ arguments and the law, the Court rules as follows. 24 25 BACKGROUND Plaintiffs filed a class action complaint in state court. (See “Compl.,” ECF No. 1-2, 26 27 28 1 17-CV-1345 JLS (BGS) 1 at 3–32.)1 Defendants removed the case to federal court. (ECF No. 1).2 Plaintiffs bring 2 causes of action under: (1) the Consumer Legal Remedies Act; (2) Unfair Competition Law 3 (unlawful prong); (3) Unfair Competition Law (unfair prong); (4) False Advertising Law; 4 (5) Breach of Express Warranties; and (6) Breach of Implied Warranties. (See generally 5 Compl.) In broad summary, Plaintiffs allege Defendants manufacture and sell “Salt and 6 Vinegar Flavored Potato Chips” (hereinafter, “the Product”). Plaintiffs seek to litigate on 7 behalf of all consumers who purchased the Product in California during the period six years 8 prior to the filing of the Complaint and continuing until the class is certified. (Id. ¶ 82.) 9 Plaintiffs allege the label of the Product violates California law in various ways. (Id. 10 ¶¶ 23–26.) Plaintiffs argue the Product is labeled as only containing natural ingredients, 11 but is in fact flavored with a chemical called malic acid. (Id. ¶¶ 10, 11, 31). 12 LEGAL STANDARD 13 Federal Rule of Civil Procedure 12(b)(6) permits a party to raise by motion the 14 defense that the complaint “fail[s] to state a claim upon which relief can be granted,” 15 generally referred to as a motion to dismiss. The Court evaluates whether a complaint 16 states a cognizable legal theory and sufficient facts in light of Federal Rule of Civil 17 Procedure 8(a), which requires a “short and plain statement of the claim showing that the 18 pleader is entitled to relief.” 19 allegations,’ . . . it [does] demand more than an unadorned, the-defendant-unlawfully- 20 harmed-me accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. 21 Corp. v. Twombly, 550 U.S. 544, 555 (2007)). In other words, “a plaintiff’s obligation to 22 provide the ‘grounds’ of his ‘entitle[ment] to relief’ requires more than labels and 23 conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Although Rule 8 “does not require ‘detailed factual 24 25 26 1 2 Pin citations refer to the CM/ECF page numbers electronically stamped at the top of each page. Plaintiffs have filed a Motion to Remand, which will be addressed under separate order. 27 28 2 17-CV-1345 JLS (BGS) 1 Twombly, 550 U.S. at 555 (citing Papasan v. Allain, 478 U.S. 265, 286 (1986)). A 2 complaint will not suffice “if it tenders ‘naked assertion[s]’ devoid of ‘further factual 3 enhancement.’ ” Iqbal, 556 U.S. at 677 (citing Twombly, 550 U.S. at 557). 4 In order to survive a motion to dismiss, “a complaint must contain sufficient factual 5 matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Id. (quoting 6 Twombly, 550 U.S. at 570); see also Fed. R. Civ. P. 12(b)(6). A claim is facially plausible 7 when the facts pled “allow the court to draw the reasonable inference that the defendant is 8 liable for the misconduct alleged.” Iqbal, 556 U.S. at 677 (citing Twombly, 550 U.S. at 9 556). That is not to say that the claim must be probable, but there must be “more than a 10 sheer possibility that a defendant has acted unlawfully.” Id. Facts “‘merely consistent 11 with’ a defendant’s liability” fall short of a plausible entitlement to relief. Id. (quoting 12 Twombly, 550 U.S. at 557). Further, the Court need not accept as true “legal conclusions” 13 contained in the complaint. Id. This review requires context-specific analysis involving 14 the Court’s “judicial experience and common sense.” 15 “[W]here the well-pleaded facts do not permit the court to infer more than the mere 16 possibility of misconduct, the complaint has alleged—but it has not ‘show[n]’—‘that the 17 pleader is entitled to relief.’” Id. 18 Id. at 678 (citation omitted). ANALYSIS Defendants move to dismiss each of Plaintiffs’ claims. The Court will address each 19 20 claim after addressing both Parties’ requests for judicial notice. 21 I. Requests for Judicial Notice 22 Both Parties have requested the Court take judicial notice of various documents. 23 (See “Def. RJN,” ECF No. 9; “Pl. RJN,” ECF No. 17-1.) The Court may take judicial 24 notice of matters that are either “generally known within the trial court’s territorial 25 jurisdiction” or “can be accurately and readily determined from sources whose accuracy 26 cannot reasonably be questioned.” Fed. R. Evid. 201(b). Courts do not take judicial notice 27 28 3 17-CV-1345 JLS (BGS) 1 of a fact that is subject to reasonable dispute. Lee v. City of Los Angeles, 250 F.3d 668, 2 689 (9th Cir. 2001). 3 Plaintiffs request the Court take judicial notice of the Complaint in this matter filed 4 in state court and of an image of the packaging of Wise Potato Chips. (ECF No. 17-1, at 5 2.) As to the Complaint, it is unnecessary for the Court to take judicial notice of documents 6 already filed in the docket for this matter. See Patoc v. Lexington Ins. Co., No. 08–01893 7 RMW (PVT), 2008 WL 3244079, at *1 n.3 (N.D. Cal. Aug. 5, 2008) (“Because this 8 complaint is already before the Court as an exhibit to the Notice of Removal, the Court 9 does not need to take judicial notice of this complaint.”). Therefore, the Court DENIES 10 in part Plaintiffs’ request. As to the image of the chips, “[c]ourts addressing motions to 11 dismiss product-labeling claims routinely take judicial notice of images of the product 12 packaging.” Kanfer v. Pharmacare US, Inc., 142 F .Supp. 3d 1091, 1098–99 (S.D. Cal. 13 2015). Although the image is not one of the packaging of the product in question, the Court 14 GRANTS Plaintiffs’ request for judicial notice of the image. 15 Defendants request the Court take judicial notice of a page from a website and of 16 two FDA warning letters sent to two companies. (“Def. RJN,” ECF No. 9, at 2–3.) As to 17 the website, Plaintiffs refer to this website in their Complaint. (See Compl. ¶ 32 n4.) 18 Plaintiffs have not opposed Defendants’ request for judicial notice nor do they dispute the 19 authenticity of the web page. The Court takes judicial notice of the web page without 20 assuming its contents are true. Parrino v. FHP, Inc., 146 F.3d 699, 705–06 (9th Cir. 1998) 21 (“A district court ruling on a motion to dismiss may consider documents whose contents 22 are alleged in a complaint and whose authenticity no party questions, but which are not 23 physically attached to the plaintiff's pleading.” (citation omitted)); see also Kenneally v. 24 Bank of Nova Scotia, 711 F. Supp. 2d 1174, 1183 (S.D. Cal. 2010) (taking judicial notice 25 of a webpage). As to the FDA letters, “FDA warning letters available on the FDA’s website 26 are also appropriate subjects of judicial notice.” Kanfer, 142 F. Supp. 3d at 1099. 27 28 4 17-CV-1345 JLS (BGS) 1 Defendants have provided the links to access the letters on the FDA’s website. (Def. RJN 2 2–3). The Court GRANTS Defendants’ request for judicial notice. 3 II. Preemption 4 Defendants first argue Plaintiffs’ claims are preempted by the federal Food Drug, 5 and Cosmetic Act (“FDCA”) because the Product’s labels are in compliance with FDCA 6 regulations. (MTN 9–10.) Defendants argue Plaintiffs’ claims fail because they “seek to 7 impose labeling requirements that are inconsistent with federal law.” (Id. at 11.) 8 Pursuant to the Supremacy Clause, federal law preempts state law when: (1) 9 Congress enacts a statute that explicitly preempts state law; (2) federal law occupies a 10 legislative field to such an extent that it is reasonable to conclude that Congress left no 11 room for state regulation in that field; or (3) state law actually conflicts with federal law. 12 Chae v. SLM Corp., 593 F.3d 936, 941 (9th Cir. 2010). As relevant here, the FDCA, as 13 amended by the Nutrition Labeling and Education Act (“NLEA”), contains an express 14 preemption provision, making clear that state laws imposing labeling requirements not 15 identical to FDA mandates are preempted. See 21 U.S.C. § 343–1(a). But, “[w]here a 16 requirement imposed by state law effectively parallels or mirrors the relevant sections of 17 the NLEA, courts have repeatedly refused to find preemption.” Chacanaca v. Quaker Oats 18 Co., 752 F. Supp. 2d 1111, 1118 (N.D. Cal. 2010) (citing N.Y. State Restaurant Ass’n v. 19 N.Y.C. Bd. of Health, 556 F.3d 114, 123 (2d Cir. 2009); and Chavez v. Blue Sky Natural 20 Beverage Co., 268 F.R.D. 365, 370 (N.D. Cal. 2010)). “This means that plaintiffs’ claims 21 need not fail on preemption grounds if the requirements they seek to impose are either 22 identical to those imposed by the FDCA and the NLEA amendments or do not involve 23 claims or labeling information of the sort described in [the federal regulations].” Id. at 24 1119; see also Stengel v. Medtronic Inc., 704 F.3d 1224, 1233 (9th Cir. 2013) (en banc) 25 (state law claims that parallel federal law duties under FDCA are not preempted either 26 expressly or impliedly). 27 28 5 17-CV-1345 JLS (BGS) 1 2 3 4 The issue is whether Plaintiffs seek to impose requirements stricter than the requirements of the FDCA; if so, the claims will be preempted. A. Plaintiffs’ Assertion That Defendant Must Refer to “Malic Acid” by Its Specific Name 5 One of the ingredients listed on the Product label is “malic acid.” (Compl. ¶ 20.) 6 Plaintiffs allege the label misleadingly identifies “malic acid” by its generic name, when it 7 must refer to “the specific non-generic name of the ingredient.” (Id. ¶ 25.) Plaintiffs argue 8 Defendants flavor the Product “with an industrial chemical called d-l-malic acid” and must 9 disclose this on the Product. (Opp’n 16; Compl. ¶ 31.) Defendants argue “malic acid” is 10 the “common name” for all forms of malic acid, and the label therefore must disclose it as 11 such. (MTN 11.) Defendants argue Plaintiffs’ claims that “more specificity [in the 12 labeling] is somehow necessary or appropriate is contrary to and plainly preempted by 13 federal law.” (Id.) 14 A food is misbranded if its label does not “bear [ ] . . . the common or usual name of 15 the food” or the “common or usual name of each . . . ingredient” that makes up the food. 16 21 U.S.C. § 343(i); see also 21 C.F.R § 101.4(a)(1) (“Ingredients required to be declared 17 on the label or labeling of a food . . . shall be listed by common or usual name . . . .”) This 18 federal regulation also states “[t]he name of an ingredient shall be a specific name and not 19 a collective (generic name).” 21 C.F.R. § 101.4(b). 20 Defendants argue “malic acid” is the common name. (MTN 11.) Defendants cite to 21 21 C.F.R. § 184.1069(a), which states “[m]alic acid . . . is the common name for 1– 22 hydroxy–1, 2–ethanedicarboxylic acid.” The regulation goes on to identify two forms of 23 malic acid: L-malic acid, which “occurs naturally in various foods” and DL-malic acid, 24 which does not. Id. Plaintiffs argue Defendants must refer to the ingredient as the 25 “specific” name “d-l-malic acid.” (Compl. ¶¶ 25, 31.) 26 27 28 6 17-CV-1345 JLS (BGS) 1 The FDA regulations provide that ingredients “shall be listed by common or usual 2 name” and that “[t]he name of the ingredient shall be listed by a specific name and not a 3 collective (generic) name.” 21 C.F.R. §§ 101.4(a)(1) & (b). While Defendants argue malic 4 acid is the “common name of all forms of malic acid,” (MTD 11), this assertion does not 5 find support in the regulations. Indeed, “malic acid” is the common name “for 1–hydroxy– 6 1, 2–ethanedicarboxylic acid.” 21 C.F.R. § 184.1069(a). If Plaintiffs were arguing 7 Defendants should list “1–hydroxy–1, 2–ethanedicarboxylic acid” on the Product’s 8 ingredient list, that would be a different story. But it is clear there are two forms of malic 9 acid, thus, Plaintiffs argue d-l malic acid is the specific name for one type of malic acid. 10 And, 21 C.F.R. § 184.1069(a), the regulation on malic acid, states that the “ingredients” 11 (plural) are used in food, thus, it is plausible that DL-malic and L-malic acid are specific 12 names of the (collective, common) name malic acid. Thus, the Court cannot say at this 13 stage that Plaintiffs’ argument is preempted. The Court DENIES Defendants’ Motion to 14 Dismiss as to this argument. 15 16 B. Plaintiffs’ Assertion That the Product Must Be Labeled as “Artificially Flavored” 17 Plaintiffs allege “malic acid” is an artificial flavor and the Product must therefore be 18 labeled as “Artificially Flavored.” (Compl. ¶ 41 (citing 21 C.F.R. § 101.22(i)(3)–(4)).) 19 The issue is whether malic acid is indeed an “artificial flavor.” 20 Under 21 C.F.R. § 101.22(a)(1): 21 The term artificial flavor or artificial flavoring means any substance, the function of which is to impart flavor, which is not derived from a spice, fruit or fruit juice, vegetable or vegetable juice, edible yeast, herb, bark, bud, root, leaf or similar plant material, meat, fish, poultry, eggs, dairy products, or fermentation products thereof. 22 23 24 25 And under 21 C.F.R. § 101.22(i)(2), if the product contains “any artificial flavor which 26 simulates, resembles or reinforces the characterizing flavor . . . the name of the 27 28 7 17-CV-1345 JLS (BGS) 1 characterizing flavor shall be accompanied by the words ‘artificial’ or ‘artificially 2 flavored.’” See also 21 U.S.C. § 343(k) (requiring any foods that use artificial flavorings 3 “bear [] labeling stating this fact”). 4 which simulates the characterizing flavor, the name of the food “shall be accompanied by 5 the common name” of the characterizing flavor and the name of the characterizing flavor 6 “shall be accompanied by the word(s) ‘artificial’ or ‘artificially flavored’” for example 7 “artificial vanilla,” “artificially flavored strawberry”, or “grape artificially flavored.” 21 8 C.F.R. § 101.22(i)(2). Plaintiffs argue Defendants used malic acid to flavor the Product, 9 and use it to reinforce the “characterizing flavor” of vinegar. Specifically, if a food contains an artificial flavor (Compl. ¶¶ 38–41.) 10 Therefore, it appears Plaintiffs believe the Product should be labeled as “artificially 11 flavored vinegar.” 12 Defendants argue malic acid is not an artificial flavor. Defendants first argue malic 13 acid does not appear on the list of artificial flavors promulgated by the FDA. (MTN 13 14 (citing 21 C.F.R. §§ 172.515(b) and 182.60 (both titled “Synthetic flavoring substances 15 and adjuvants”)).) But, 21 C.F.R. § 101.22 states these lists are not exhaustive. See 21 16 C.F.R. § 101.22 (“Artificial flavor includes the substances listed in §§ 172.515(b) and 17 182.60 of this chapter . . . .” (emphasis added)). Therefore, simply because malic acid is 18 not on these lists does not mean that the FDA has determined malic acid is not an artificial 19 flavor. See Engurasoff v. Coca-Cola Co., No. C 13-3990 JSW, 2014 WL 4145409, at *3 20 (N.D. Cal. Aug. 21, 2014) (finding the same regarding phosphoric acid). 21 Plaintiffs agree the Product does contain vinegar. (Compl. ¶ 21.) The issue is 22 therefore whether malic acid is an “artificial characterizing flavor” that reinforces or 23 resembles the natural vinegar flavor. (Id. ¶¶ 34, 41.) Defendants argue malic acid is not a 24 “flavor,” but it instead amplifies the characterizing flavor of vinegar, like a sweetener. 25 (MTN 13–14 (citing Viggiano v. Hansen Nat. Corp., 944 F. Supp. 2d 877, 889 (C.D. Cal. 26 2013)).) Defendants argue the FDA distinguishes between “flavors” and “flavor 27 28 8 17-CV-1345 JLS (BGS) 1 enhancers.” (Id. at 14.) A “flavor enhancer” is a “[s]ubstance[ ] added to supplement, 2 enhance, or modify the original taste and/or aroma of a food, without imparting a 3 characteristic taste or aroma of its own.” 21 C.F.R. § 170.3(o)(11) (emphasis added); see 4 Viggiano, 944 F. Supp. 2d at 889 (finding sucralose and ace-k are not “flavors” because 5 they do not give the product an original taste, but “sweeten or amplify whatever 6 characterizing flavor it has from another source.”). Defendants argue malic acid cannot 7 be a “flavor” because malic acid does not impart the vinegar taste, as it is used in gum, 8 candy, fruit and fruit juices, etc., none of which taste like vinegar. (MTN 15.) But, 9 Plaintiffs allege malic acid simulates the sour flavor of vinegar. (Compl. ¶ 33.) And, the 10 federal regulations provide malic acid is used “as a flavor enhancer as defined in 11 § 170.3(o)(11) of this chapter, flavoring agent and adjuvant as defined in § 170.3(o)(12) of 12 this chapter, and pH control agent as defined in § 170.3(o)(23) of this chapter.” 21 C.F.R. 13 § 184.1069(c). 14 The distinction between an artificial flavor that “simulates, resembles or reinforces” 15 the characterizing flavor, 21 C.F.R. § 101.22(i)(2), and a “flavor enhancer” that does not 16 impart its own taste, 21 C.F.R. § 170.3(o)(11), in this instance is a factual determination. 17 Whether malic acid falls into one of these categories is also a factual determination that 18 would be inappropriately resolved on a motion to dismiss. See Engurasoff, 2014 WL 19 4145409, at *3–4 (finding that the federal regulations “are insufficient to insert a 20 requirement that all artificial flavors, by definition, must impart a characteristic taste and/or 21 aroma” and finding “it cannot make a factual determination upon a motion to dismiss as to 22 whether phosphoric acid qualifies as an artificial flavor”); Gitson v. Trader Joe’s Co., No. 23 13-CV-01333-WHO, 2014 WL 1048640, at *4 (N.D. Cal. Mar. 14, 2014) (“At the pleading 24 stage I cannot second guess the truth of the plaintiffs’ allegations that the identified 25 ingredients function as artificial flavors . . . .”); Ivie v. Kraft Foods Global, Inc., No. 12– 26 cv–2554 RMW, 2013 WL 685372, at *10 (N.D. Cal. Feb. 25, 2013) (“[T]he factual 27 28 9 17-CV-1345 JLS (BGS) 1 determinations of whether [the ingredients are] used as a sweetener and/or . . . a flavoring 2 agent in this particular product, and whether a reasonable consumer would have thus been 3 misled by the ‘no artificial sweeteners or preservatives’ label, are inappropriate for 4 determination on a motion to dismiss.”). The Court agrees with the reasoning of these 5 district courts and cannot make a factual determination at this stage as to whether malic 6 acid is an artificial flavor. Therefore, the Court cannot find at this stage that Plaintiffs’ 7 claims are preempted. The Court DENIES the Motion to Dismiss as to these claims. 8 III. 9 Motion to Dismiss Pursuant to Rule 12(b)(6) Defendants argue Plaintiffs’ claims should be dismissed for failure to state a claim. The “Reasonable Consumer” Test 10 A. 11 Plaintiffs bring claims under California’s Unfair Competition Law (“UCL”), False 12 Advertising Law (“FAL”), and Consumers Legal Remedies Act (“CLRA”). Claims under 13 these three statutes are “governed by the ‘reasonable consumer’ test.” Williams v. Gerber 14 Prods. Co., 552 F.3d 934, 938 (9th Cir. 2008) (quoting Freeman v. Time, Inc., 68 F.3d 285, 15 289 (9th Cir. 1995)). “[T]he false or misleading advertising and unfair business practices 16 claim must be evaluated from the vantage of a reasonable consumer.” Freeman, 68 F.3d 17 at 289 (citation omitted). The reasonable consumer standard requires a probability “that a 18 significant portion of the general consuming public or of targeted consumers, acting 19 reasonably under the circumstances, could be misled.” Lavie v. Procter & Gamble Co., 20 105 Cal. App. 4th 496, 508 (Ct. App. 2003). The plaintiff must allege “more than a mere 21 possibility that the advertisement might conceivably be misunderstood by some few 22 consumers viewing it in an unreasonable manner.” Brod v. Sioux Honey Ass’n, Co-op, 927 23 F. Supp. 2d 811, 828 (N.D. Cal. 2013) (citing Lavie, 105 Cal. App. 4th at 508). 24 In general, “[t]he question of whether a business practice is deceptive in most cases 25 presents a question of fact not amenable to resolution on a motion to dismiss.” Hairston v. 26 S. Beach Beverage Co., No. 12-1429-JFW (DTBx), 2012 WL 1893818, at *4 (C.D. Cal. 27 28 10 17-CV-1345 JLS (BGS) 1 May 18, 2012) (citing Williams, 552 F.3d at 938). “However, in certain instances, the 2 Court can properly make this determination and resolve such claims based on its review of 3 the product packaging.” Id. 4 Defendants argue Plaintiffs have failed to plausibly allege that a reasonable 5 consumer would be deceived by the Product’s label. (MTN 15.) Plaintiffs argue that had 6 Defendant disclosed all material information regarding the Product, Plaintiffs would not 7 have purchased the Product or would have paid less for the Product. (Compl. ¶ 140.) 8 As held above, the Court cannot determine at this stage whether the Product’s 9 advertising was false or misleading. And if it is determined that the Product should have 10 disclosed an “artificial flavor,” then a reasonable consumer would be deceived by the 11 Product’s packaging, which clearly states “No artificial flavors.” (See Compl. ¶ 20 (image 12 of product packaging)); see also Kanfer, 142 F. Supp. 3d at 1103 (“What a reasonable 13 consumer would believe is rarely an appropriate subject for a motion to dismiss, but leaves 14 the defendant free to file a motion for summary judgment if there are no triable issues of 15 material fact on the issue.”); cf Jones v. ConAgra Foods, Inc., 912 F. Supp. 2d 889, 899 16 (N.D. Cal. 2012) (“[W]here a court can conclude as a matter of law that members of the 17 public are not likely to be deceived by the product packaging, dismissal is appropriate.”). 18 The Court cannot conclude as a matter of law that a reasonable consumer would not be 19 deceived by the packaging and ingredient list. 20 (“[R]easonable consumers expect that the ingredient list contains more detailed 21 information about the product that confirms other representations on the packaging.”). The 22 Court DENIES Defendants’ Motion to Dismiss the claims for this reason. See Williams, 552 F.3d at 939–40 “Unfair” Claim Under the UCL 23 B. 24 Plaintiffs allege Defendants’ business practices are unfair under the UCL. (Compl. 25 ¶¶ 126–144.) “Under the UCL, ‘[a]n act or practice is unfair if the consumer injury is 26 substantial, is not outweighed by any countervailing benefits to consumers or to 27 28 11 17-CV-1345 JLS (BGS) 1 competition, and is not an injury the consumers themselves could reasonably have 2 avoided.’” Simpson v. Cal. Pizza Kitchen, Inc., 989 F. Supp. 2d 1015, 1026 (S.D. Cal. 3 2013) (quoting Daugherty v. Am. Honda Motor Co., 144 Cal. App. 4th 824, 839 (Ct. App. 4 2006)). Defendants argue Plaintiffs have not alleged that there was any consumer injury 5 or that any injury suffered was not reasonably avoidable. (MTN 19.) Defendants argue 6 Plaintiffs could have avoided the injury by reading the Product label. (Id.) Plaintiffs have 7 alleged there is an impact to the proposed class members because class members “would 8 not have purchased the Product or would have paid less for the Product” had Defendant 9 disclosed the alleged artificial flavors. (Compl. ¶ 140.) Plaintiffs have also alleged there 10 is no benefit to the competition because Defendants’ conduct hurts the competition who 11 “do not engage in the same unlawful, unfair and unethical conduct.” (Id. ¶ 132.) 12 Because the Court has found it is plausible that malic acid is an artificial ingredient, 13 there is plausible consumer injury that would have not have been avoided by reading the 14 Product label. The Court DENIES Defendants’ Motion to Dismiss this claim. “Unlawful” Claim Under the UCL 15 C. 16 Plaintiffs have also alleged Defendants’ business practices are unlawful under the 17 UCL. (Compl. ¶¶ 113–125.) Defendants move to dismiss this cause of action because 18 Plaintiffs have not pled any violation of FDA flavor regulations. (MTN 20.) Because the 19 Court has held otherwise, see supra pg. 8, it DENIES Defendants’ Motion to Dismiss this 20 claim. 21 D. Breach of Express Warranty 22 To plead a claim for breach of express warranty, the plaintiff must allege the terms 23 of the warranty, reasonable reliance, and that a breach of the warranty proximately caused 24 his or her injury. See Williams v. Beechnut Nutrition Corp., 185 Cal. App. 3d 135, 142 25 (Ct. App. 1986). “Any description of the goods which is made part of the basis of the 26 bargain creates an express warranty that the goods shall conform to the description.” Cal. 27 28 12 17-CV-1345 JLS (BGS) 1 Com. Code § 2313(1)(b). 2 Plaintiffs have alleged the “written promises” on the Product’s label “became part 3 of the basis of the bargain between the parties and thus constituted an express warranty, 4 which Defendants breached.” (Compl. ¶ 157.) Defendants argue the label stating “no 5 artificial flavors” was lawful and truthful. (MTN 21.) 6 Plaintiffs have pled the elements of their claim for breach of express warranty 7 because they have alleged the statements made on the Product packaging promised there 8 were “no artificial flavors;” they have alleged they reasonably relied on these statements; 9 and they have alleged that the Product did not provide what was promised. (Compl. 10 ¶¶ 155–62.) The Court DENIES Defendants’ Motion to Dismiss the claim of express 11 warranty. 12 E. 13 Plaintiffs bring the claim under California Commercial Code § 2314. (Compl. 14 ¶¶ 174–77.) Pursuant to this statute, “[u]nless excluded or modified [ ], a warranty that 15 goods shall be merchantable is implied in a contract for their sale if the seller is a merchant 16 with respect to goods of that kind.” Cal. Com. Code § 2314(1). The implied warranty of 17 merchantability “is breached when the goods do not conform to the promises or 18 affirmations contained on the container or label or are not fit for the ordinary purposes for 19 which the goods are used.” Martinez v. Metabolife Int’l, Inc., 113 Cal. App. 4th 181, 189 20 (Ct. App. 2003). “These are two separate definitions of merchantability.” Kanfer, 142 F. 21 Supp. 3d at 1104 (citing Hauter v. Zogarts, 534 P.2d 377 (1975)). 22 Plaintiffs have not pled that the Product is not fit for ordinary use. (MTN 22.) Defendants 23 rely on the “ordinary use” definition, but Plaintiffs rely on the other definition, alleging 24 that the Product “did not conform to the promises or affirmations of fact made on the 25 container or label.” (Compl. ¶ 177.) Defendants have not shown that Plaintiffs’ claim 26 fails, so the Court DENIES the Motion to Dismiss it. Breach of Implied Warranty Defendants argue 27 28 13 17-CV-1345 JLS (BGS) 1 IV. Statute of Limitations 2 Defendant argues Plaintiffs claims are in part barred by the statute of limitations. 3 (MTN 23.) See Cal. Civ. Code § 1783 (setting a three-year statute of limitations for actions 4 under the CLRA); Cal. Bus. & Prof. Code § 17208 (setting a four-year statute of limitations 5 for actions under the UCL); Cal. Civ. Proc. Code § 338(a) (providing a default three-year 6 statute of limitations for actions created by statute); Cnty. of Fresno v. Lehman, 229 Cal. 7 App. 3d 340, 346 (Ct. App. 1991) (applying the three-year statute in § 338 to a FAL claim). 8 Indeed, Plaintiffs state they purchased the Product “since at least 2012 or earlier.” (Compl. 9 ¶ 69; see also id. ¶ 82 (stating the proposed class period is six years prior to the filing of 10 the Complaint).) But, Plaintiffs argue delayed discovery, fraudulent concealment, and the 11 continuing violation doctrine apply and thus toll the statute of limitations. (Opp’n 27–30.) 12 A. 13 “In order to invoke [the delayed discovery exception] to the statute of limitations, 14 the plaintiff must specifically plead facts which show (1) the time and manner of discovery 15 and (2) the inability to have made earlier discovery despite reasonable diligence.” In re 16 Conseco Ins. Co. Annuity Mktg. & Sales Practices Litig., No. C–05–04726 RMW, 2008 17 WL 4544441, *8 (N.D. Cal. Sept. 30, 2008) (quoting Saliter v. Pierce Bros. Mortuaries, 18 81 Cal. App. 3d 292, 296 (Ct. App. 1978)). “The delayed discovery rule is available to toll 19 the statute of limitations under the CLRA, UCL, and FAL.” Plumlee v. Pfizer, Inc., No. 20 13-CV-414-LHK, 2014 WL 695024, at *8 (N.D. Cal. Feb. 21, 2014). “This rule applies 21 even where plaintiff is prosecuting a class action.” Yumul v. Smart Balance, Inc., 733 F. 22 Supp. 2d 1117, 1131 (N.D. Cal. 2010) (citing McKelvey v. Boeing N. Am., Inc., 74 Cal. 23 App. 4th 141, 160–61 (Ct. App. 1999) (applying the standard to a class action)). Delayed Discovery 24 Plaintiffs argue they did not discover that the labeling “was false and misleading 25 until December 2016, when they learned the Product contained undisclosed artificial 26 flavoring.” (Compl. ¶ 77.) In Henderson v. J.M. Smucker Co., No. CV-10-4524-GHK- 27 28 14 17-CV-1345 JLS (BGS) 1 VBK, 2011 WL 1050637 (C.D. Cal. Mar. 17, 2011), the plaintiff pled that she did not 2 discover the product label was false until she was provided information by a friend. Id. at 3 *2. The plaintiff had pled she was a “reasonably diligent consumer who exercised 4 reasonable diligence in her purchasing, use, and consumption.” Id. The court found this 5 was sufficient to toll the statute of limitations and what plaintiff “know[s] or reasonably 6 should have known” is a factual question that goes beyond the pleadings. Id. Similarly, 7 here, Plaintiffs have pled they “are reasonably diligent consumers who exercised 8 reasonable diligence in their purchase and consumption of the Product” and relied on 9 Defendants’ obligation to label the Product in compliance with federal and state 10 regulations. (Compl. ¶ 78.) Plaintiffs alleged they first discovered the “unlawful” labeling 11 in December 2016 “when they learned the Product’s characterizing flavor was deceptively 12 created or reinforced using artificial labeling, even though Defendants failed to disclose 13 that fact on the Product’s label.” (Id. ¶ 70.) 14 However, Plaintiffs have provided no allegations detailing how they discovered the 15 alleged unlawful labeling. Although Plaintiffs contend they are diligent consumers, they 16 present no facts as to why or how they discovered the labeling issues in December 2016. 17 Thus, Plaintiffs have not sufficiently pled that the delayed discovery rule applies. See 18 Keiholtz v. Lennox Hearth Prods. Inc., No. C 08-00836 CW, 2009 WL 2906960, at *3 19 (N.D. Cal. Sept. 8, 2009) (“To invoke the delayed discovery rule, the plaintiff must plead 20 facts showing . . . [h]ow and when he did actually discover the [facts underlying the 21 claim].” (quoting General Bedding Corp. v. Echevarria, 947 F.2d 1395, 1397 (9th Cir. 22 1991)); see also Yumul, 733 F. Supp. 2d at 1131 (finding the plaintiff had not adequately 23 pled delayed discovery when she had not alleged “the time and manner of her discovery of 24 the facts giving rise to her claims”). The Court next turns to fraudulent concealment as a 25 26 27 28 15 17-CV-1345 JLS (BGS) 1 means to toll the statute of limitations.3 2 B. 3 “When a plaintiff relies on a theory of fraudulent concealment . . . to save a cause of 4 action that otherwise appears on its face to be time-barred, he or she must specifically plead 5 facts which, if proved, would support the theory.” Mills v. Forestex Co., 108 Cal. App. 4th 6 625, 641 (Ct. App. 2003). “In order to establish fraudulent concealment, the complaint 7 must show: (1) when the fraud was discovered; (2) the circumstances under which it was 8 discovered; and (3) that the plaintiff was not at fault for failing to discover it or had no 9 actual or presumptive knowledge of facts sufficient to put him on inquiry.” Id. (quoting 10 Baker v. Beech Aircraft Corp., 39 Cal. App. 3d 315, 321 (Ct. App. 1974)). To plead that 11 a statute of limitations is tolled under the doctrine of fraudulent concealment, the plaintiff 12 “must plead with particularity the circumstances surrounding the concealment and state 13 facts showing his due diligence in trying to uncover the facts.” Deirmenjian v. Deutsche 14 Bank, A.G., No. CV 06–00774 MMM, 2006 WL 4749756, at *43 (C.D. Cal. Sept. 25, 15 2006); see also Rambus Inc. v. Samsung Electronics Co., Nos. C–05–02298 RMW, C–05– 16 00334 RMW, 2007 WL 39374, at *6 (N.D. Cal. Jan. 4, 2007) (“[B]ecause fraud is the 17 underlying theory of the doctrine of fraudulent concealment, the heightened pleading 18 requirements of [Rule] 9(b) applies.”). Fraudulent Concealment 19 20 21 22 23 24 25 26 The Court recognizes Plaintiffs’ argument and the line of cases that have found that analyzing the delayed discovery and fraudulent concealment exceptions are premature in a motion to dismiss. (See e.g., Opp’n 29.) It is true that if named Plaintiffs had pled sufficient facts to show the statute of limitations had not run, it would be more appropriate to address the statute of limitations argument for the class members at a later stage. See Henderson, 2011 WL 1050637, at *2. However, here, named Plaintiffs have admitted they purchased the product as early as 2012, thus, the Court finds it appropriate to address the statute of limitations argument at this stage. See Ruhnke v. Skinmedica, Inc., No. CV 14-0420-DOC (RNBx), 2015 WL 12698447, at *2 (C.D. Cal. Jan. 7, 2015) (citing cases and finding courts “dismissed claims as timebarred where the facts pleaded regarding the named plaintiff failed to support tolling”); Yumul, 733 F. Supp. 2d at 1131, 1133 (C.D. Cal. 2010) (in a class-action, holding the named plaintiff failed to allege sufficient facts to support application of the delayed discovery rule or the fraudulent concealment doctrine). 3 27 28 16 17-CV-1345 JLS (BGS) 1 Here, Plaintiffs pled Defendants knowingly concealed and made false 2 representations about the Product’s labeling. (Compl. ¶ 79.) Plaintiffs alleged Defendants 3 issued press releases and gave media interviews announcing the transition to all-natural 4 snack products. 5 “circumstances under which [the fraud] was discovered.” Mills, 108 Cal. App. 4th, at 641. 6 The Court finds Plaintiffs have not met their “heavy burden” to plead fraudulent 7 concealment with particularity. See Conerly v. Westinghouse Elec. Corp., 623 F.2d 117, 8 120 (9th Cir. 1980). Thus, the Court agrees with Defendants that Plaintiffs have not 9 adequately pled fraudulent concealment to toll the statute of limitations. (Id. ¶¶ 54–57.) But, Plaintiffs have provided no facts as to the 10 C. 11 Finally, Plaintiffs allege “because Defendants’ misrepresentations and deception 12 continues up to the present, the continuing violation exception tolls all application statutes 13 of limitations for Plaintiffs [and class members] until Defendants’ unlawful advertising and 14 labeling is corrected.” (Compl. ¶ 80.) 15 Continuing Violation According to the California Supreme Court, the continuing violation doctrine serves 16 equitable purposes. Aryeh v. Canon Bus. Sols., Inc., 292 P.3d 871, 879 (Cal. 2013). 17 19 Some injuries are the product of a series of small harms, any one of which may not be actionable on its own. Those injured in such a fashion should not be handicapped by the inability to identify with certainty when harm has occurred or has risen to a level sufficient to warrant action. 20 Id. The court found the doctrine did not apply in that case, where the complaint identified 21 “a series of discrete, independently actionable alleged wrongs.” Id. at 879–80. But, in 22 Hunter v. Nature’s Way Prods., LLC, No 16cv532 WQH-BLM, 2016 WL 4262188 (S.D. 23 Cal. Aug. 12, 2016), the court found the plaintiff had adequately pled the continuing 24 violation doctrine as an exception to the statutes of limitations. There, plaintiff alleged she 25 purchased the product once a month for the past five years. Id. at *12. She alleged the 26 defendants’ misrepresentations continued over the course of five years. Id. 18 27 28 17 17-CV-1345 JLS (BGS) 1 The Court agrees with the holding in Hunter. It would be inequitable to hold the 2 continuing violation doctrine does not apply to this case. As the California Supreme Court 3 held: 4 5 6 7 8 9 The theory is a response to the inequities that would arise if the expiration of the limitations period following a first breach of duty or instance of misconduct were treated as sufficient to bar suit for any subsequent breach or misconduct; parties engaged in long-standing misfeasance would thereby obtain immunity in perpetuity from suit even for recent and ongoing misfeasance. In addition, where misfeasance is ongoing, a defendant’s claim to repose, the principal justification underlying the limitations defense, is vitiated. 10 Aryeh, 292 P.3d at 880. Here, assuming the allegation of misbranding to be true, it would 11 be inequitable to allow Defendants to “obtain immunity” from this violation “even for 12 recent and ongoing malfeasance.” Thus, because this exception applies to the statute of 13 limitations, the Court DENIES Defendants’ Motion to Dismiss the claims on this ground. 14 CONCLUSION 15 For the foregoing reasons, the Court DENIES Defendants’ Motion to Dismiss. 16 IT IS SO ORDERED. 17 Dated: March 7, 2018 18 19 20 21 22 23 24 25 26 27 28 18 17-CV-1345 JLS (BGS)

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