Case4:10-cv-04387-PJH Document62 Filed05/26/11 Page1 of 22 1 2 3 4 5 6 UNITED STATES DISTRICT COURT 7 NORTHERN DISTRICT OF CALIFORNIA 8 9 10 ttt rrr 11 uuu ooo SKYE ASTIANA, CCC nianiania 12 ict ict ict CaliforCaliforCalifor 13 Plaintiff, No. C 10-4387 PJH trtrtr of of of v. ORDER DENYING MOTIONS TO DisDisDis strict strict strict 14 DISMISS AND MOTIONS TO STRIKE DiDiDi BEN & JERRY’S HOMEMADE, INC. eseses ern ern ern 15 Stat Stat Stat he Northhe Northhe North 16 ___________D__e_fe_n_d_a_n_t_.___________ RELATED CASES ededed or tor tor t 17 CHANEE THURSTON, et al., FFF ttt iii nnn 18 Plaintiff, No. C 10-4937 PJH UUU 19 v. 20 CONOPCO, INC., 21 Defendant. _______________________________/ 22 23 Defendants’ motions for an order dismissing the first amended complaint in each of 24 the above-entitled related actions, and motions to strike the class averments, came on for 25 hearing before this court on April 6, 2011. Plaintiffs appeared by their counsel Janet Linder 26 Spielberg and Joseph Kravec, Jr., and defendants appeared by their counsel Janelle 27 Sahouria and William Stern. Having read the parties’ papers and carefully considered their 28 arguments and the relevant legal authority, the court hereby DENIES the motions. Case4:10-cv-04387-PJH Document62 Filed05/26/11 Page2 of 22 1 BACKGROUND 2 Plaintiffs allege that defendants Ben & Jerry’s Homemade, Inc. (“Ben & Jerry’s”) and 3 Conopco, Inc., d/b/a Unilever (formerly Good Humor-Breyers) d/b/a Breyers (“Breyers”) 4 misrepresented ice cream containing “Dutch” or “alkalized” cocoa as “all natural.” Plaintiffs 5 assert that the alkalized cocoa used in Ben & Jerry’s and Breyers’ ice cream is processed 6 with potassium carbonate, a man-made ingredient that is “synthetic,” not “natural.” 7 The cocoa bean is a seed that grows on trees native to South America. The 8 fermented and dried cocoa seed produces “chocolate,” which is a product that is derived 9 from cocoa mixed with some sort of fat (cocoa butter, oil) and finely powdered sugar. 10 Cocoa powder is the end product from a pressing or extraction process that removes a t r 11 significant portion of the fat or cocoa butter from the cocoa bean. u o C nia 12 Unsweetened cocoa powder is typically rendered in two forms – unalkalized cocoa, ict Califor 13 or Dutch-process/alkalized cocoa. Unalkalized cocoa results from pressing cocoa beans tr of Dis strict 14 with no additional modifications. The resulting natural cocoa powder is usually a light Di es ern 15 brown color. It is somewhat acidic, with a strong chocolate flavor. t h Sta e Nort 16 Alkalized cocoa powders, sometimes referred to as “Dutched,” come from cocoa h ed or t 17 nibs and/or chocolate liquor that has been treated with mild alkali solutions in order to raise F t i n 18 the pH (to make it less acidic). This alkalizing or dutching process is considered a safe U 19 process for cocoa, used to modify the color, taste, and functionality of cocoa powder in 20 food products. 21 Alkalization can be used to create a range of dark brown and red-brown colors that 22 add desirable appearances to some food products that contain cocoa powders. While 23 alkalization can improve taste by reducing some of the sourness and bitterness associated 24 with natural cocoa powders, and can also improve the solubility of cocoa powder in certain 25 beverage applications, it also destroys many of the flavonols (water-soluble pigments that 26 are believed to contribute health benefits). 27 On August 12, 2010, the Center for Science in the Public Interest (“CSPI”) sent a 28 letter to Unilever, the parent company of Ben & Jerry’s and Breyers, identifying 2 Case4:10-cv-04387-PJH Document62 Filed05/26/11 Page3 of 22 1 approximately 50 products it claimed were improperly labeled. One category of products 2 was chocolate ice cream and frozen yogurt containing alkalized cocoa, labeled “all natural.” 3 In September 2010, Ben & Jerry’s agreed to phase out the use of “all natural” on ice 4 creams and frozen yogurts containing “processed” or “artificial” ingredients – including 5 alkalized cocoa.1 CSPI issued a press release to that effect on September 27, 2010. 6 Plaintiffs filed the FACs in December 2010, on behalf of a nationwide class and a 7 California sub-class. Each FAC alleges a claim of fraud; three claims under California 8 Business & Professions Code § 17200 (one under the “unlawful” prong – based on violation 9 of California’s Sherman Food, Drug, and Cosmetic Law (“Sherman Law”), Cal. Health & 10 Safety Code §§ 109875-111915, which incorporates all relevant regulations of the federal t r 11 Food and Drug Administration (“FDA”); one under the “unfair” prong; and one under the u o C nia 12 “fraudulent” prong); a claim of false advertising under Business & Professions Code ict Califor 13 § 17500; and a claim for restitution based on a theory of unjust enrichment. Plaintiffs seek tr of Dis strict 14 compensatory and punitive damages, restitution of all amounts class members “paid to Di es ern 15 purchase Ice Cream products,” disgorgement of profits, an accounting, a constructive trust, t h Sta e Nort 16 and declaratory and injunctive relief. h ed or t 17 Defendants now seek an order dismissing the FACs pursuant to Federal Rule of F t i n 18 Civil Procedure 12(b)(6), for failure to state a claim; and an order pursuant to Federal Rule U 19 of Civil Procedure 12(f), striking the class averments. 20 DISCUSSION 21 A. Motion to Dismiss for Failure to State a Claim 22 1. Legal Standard 23 A motion to dismiss under Rule 12(b)(6) tests for the legal sufficiency of the claims 24 alleged in the complaint. Ileto v. Glock, Inc., 349 F.3d 1191, 1199-1200 (9th Cir. 2003). 25 Review is limited to the contents of the complaint. Allarcom Pay Television, Ltd. v. Gen. 26 Instrument Corp., 69 F.3d 381, 385 (9th Cir. 1995). To survive a motion to dismiss for 27 28 1 It appears that Breyers still uses the phrase “all natural” on its ice cream packaging. 3 Case4:10-cv-04387-PJH Document62 Filed05/26/11 Page4 of 22 1 failure to state a claim, a complaint generally must satisfy only the minimal notice pleading 2 requirements of Federal Rule of Civil Procedure 8. 3 Rule 8(a)(2) requires only that the complaint include a “short and plain statement of 4 the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). Specific 5 facts are unnecessary – the statement need only give the defendant “fair notice of the claim 6 and the grounds upon which it rests.” Erickson v. Pardus, 551 U.S. 89, 93 (2007) (citing 7 Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)). 8 All allegations of material fact are taken as true. Id. at 94. However, legally 9 conclusory statements, not supported by actual factual allegations, need not be accepted. 10 See Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949-50 (2009). A plaintiff's obligation to provide the t r 11 grounds of his entitlement to relief “requires more than labels and conclusions, and a u o C nia 12 formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at ict Califor 13 555 (citations and quotations omitted). Rather, the allegations in the complaint “must be tr of Dis strict 14 enough to raise a right to relief above the speculative level.” Id. Di es ern 15 A motion to dismiss should be granted if the complaint does not proffer enough facts t h Sta e Nort 16 to state a claim for relief that is plausible on its face. See id. at 558-59. “[W]here the h ed or t 17 well-pleaded facts do not permit the court to infer more than the mere possibility of F t i n 18 misconduct, the complaint has alleged – but it has not ‘show[n]’ – ‘that the pleader is U 19 entitled to relief.’” Iqbal, 129 S.Ct. at 1950. 20 In addition, when resolving a motion to dismiss for failure to state a claim, the court 21 may not generally consider materials outside the pleadings, although the court may 22 consider a matter that is properly the subject of judicial notice. Lee v. City of Los Angeles, 23 250 F.3d 668, 688-89 (9th Cir. 2001); see also Mack v. South Bay Beer Distributors, Inc., 24 798 F.2d 1279, 1282 (9th Cir. 1986) (on a motion to dismiss, a court may properly look 25 beyond the complaint to matters of public record and doing so does not convert a Rule 26 12(b)(6) motion to one for summary judgment). Additionally, the court may consider 27 exhibits attached to the complaint, see Hal Roach Studios, Inc. V. Richard Feiner & Co., 28 Inc., 896 F.2d 1542, 1555 n.19 (9th Cir. 1989), and documents referenced by the complaint 4 Case4:10-cv-04387-PJH Document62 Filed05/26/11 Page5 of 22 1 and accepted by all parties as authentic. See Van Buskirk v. Cable News Network, Inc., 2 284 F.3d 977, 980 (9th Cir. 2002). 3 Finally, in actions alleging fraud, “the circumstances constituting fraud or mistake 4 shall be stated with particularity.” Fed. R. Civ. P. 9(b). Under Rule 9(b), the complaint 5 must allege specific facts regarding the fraudulent activity, such as the time, date, place, 6 and content of the alleged fraudulent representation, how or why the representation was 7 false or misleading, and in some cases, the identity of the person engaged in the fraud. In 8 re GlenFed Sec. Litig., 42 F.3d 1541, 1547-49 (9th Cir.1994). 9 2. Defendants’ Motions 10 Defendants argue that plaintiffs have not alleged a plausible legal theory of liability t r 11 or a cognizable injury; that plaintiffs’ claims are preempted; and that the court should u o C nia 12 abstain in deference to the FDA. They also assert that plaintiffs have no claim for unjust ict Califor 13 enrichment and have failed to adequately plead fraud. In addition, with regard to the tr of Dis strict 14 Astiana case only, defendant contends that plaintiffs are not entitled to injunctive relief. Di es ern 15 a. Whether the FACs allege a plausible legal theory t h Sta e Nort 16 First, defendants argue that plaintiffs have not alleged a plausible legal theory of h ed or t 17 liability. Defendants contend that plaintiffs’ claims are entirely based on the premise that F t i n 18 the use of potassium carbonate renders the cocoa-making process “not natural,” and that U 19 the inclusion of this “not natural” ingredient means that defendants’ representation that their 20 ice cream products are “all natural” is false and misleading. Defendants assert, however, 21 that plaintiffs’ definition of “natural” in the FACs differs from the definition they used in the 22 original complaints. Defendants also contend that the FACs fail to establish a violation of 23 FDA policy. 24 In opposition, plaintiffs argue that the FACs are now the operative complaints in 25 each case, and that the fact that the original complaints defined “natural” one way, and that 26 the FACs define “natural” in a somewhat different way, is beside the point. Moreover, 27 plaintiffs assert, they have pursued the same theory of liability since filing the cases – that 28 defendants’ ice cream products are not “natural” because they contain synthetic 5 Case4:10-cv-04387-PJH Document62 Filed05/26/11 Page6 of 22 1 substances, and that the label “all natural” is therefore misleading. 2 Plaintiffs also contend that defendants have willfully misread the FDA’s policy; and 3 assert that their burden in this case is to prove that the use of “all natural” on the ice cream 4 labels was false and misleading in violation of state law – not to prove what FDA policy 5 might or might not say. 6 The court finds that the motion must be DENIED. While defendants’ argument 7 regarding the implausibility of the claim that plaintiffs (including the class) were deceived is 8 somewhat persuasive, the issue as to the named plaintiffs involves questions of fact, and is 9 therefore beyond the scope of this Rule 12(b)(6) motion. Further, as to the members of the 10 proposed class, the issue involves questions that should be considered in a class t r 11 certification motion as part of the discussion of commonality and typicality. u o C nia 12 b. Whether the FACs adequately allege standing ict Califor 13 Defendants contend that the court should dismiss the case for lack of Article III tr of Dis strict 14 standing, for failure to plead injury. In addition, they assert that the § 17200 and § 17500 Di es ern 15 claims should be dismissed because those claims require proof of “injury in fact” and “loss t h Sta e Nort 16 of money or property” and plaintiffs have alleged neither. h ed or t 17 To establish standing under Article III, a plaintiff must allege facts showing an “injury F t i n 18 in fact,” causation, and redressability. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 U 19 (1992). “Injury in fact” requires damage to “a legally protected interest which is both 20 concrete and particularized, and actual or imminent, not conjectural or hypothetical. Id. at 21 560 (citations and quotations omitted). 22 Here, defendants assert that plaintiffs cannot satisfy these requirements. They 23 argue that plaintiffs’ claimed injury appears to be that they overpaid for certain flavors of ice 24 cream labeled “all natural,” but that plaintiffs have not alleged that the products they 25 purchased used potassium carbonate, and they admit that sodium carbonate is another 26 “commonly used” alkali. At best, defendants assert, plaintiffs have pled a contingent or 27 hypothetical injury. 28 Defendants contend that this is fatal to plaintiffs’ case, as even named plaintiffs who 6 Case4:10-cv-04387-PJH Document62 Filed05/26/11 Page7 of 22 1 represent a class must allege and show that they personally have been injured, not that 2 injury has been suffered by other, unidentified members of the class to which they belong 3 and which they purport to represent. Defendants assert further that plaintiffs do not allege 4 that they got something different or that the products were defective or inedible. Rather, 5 they received the benefit of their bargain. 6 Defendants contend that claims of “economic injury” are especially suspect where, 7 as here, the plaintiffs have already consumed the product. Defendants note that the label 8 says, “Your satisfaction guaranteed or your money back,” and argue that if plaintiffs were 9 unhappy, they could have availed themselves of this remedy. However, they do not allege 10 that they did, despite the multiple occasions on which they purchased defendants’ ice t r 11 cream. u o C nia 12 In opposition, plaintiffs assert that they have sufficiently met the test for standing ict Califor 13 under existing case law. They contend that they have adequately alleged that the ice tr of Dis strict 14 cream products they purchased contained potassium carbonate, and have also adequately Di es ern 15 alleged “actual particularized injury” to themselves, by asserting that defendants sold t h Sta e Nort 16 numerous flavors of ice cream that were labeled “all natural,” but which contained what h ed or t 17 plaintiffs assert were “undisclosed synthetic ingredients.” They contend that over the past F t i n 18 several years, the named plaintiffs have purchased many pints of this ice cream each year, U 19 and that had they known that this ice cream contained cocoa that was not “natural,” they 20 would not have purchased it. Plaintiffs argue that allegations that plaintiffs did not receive 21 what was advertised and what they paid for have routinely been found to have established 22 injury. 23 As for UCL standing, plaintiffs assert that under Kwikset Corp. v. Superior Court, 51 24 Cal. 4th 310 (2011), they have sufficiently alleged injury-in-fact under the UCL simply by 25 asserting that they spent money on the allegedly mislabeled product. With regard to the 26 argument that they could simply have asked for their money back when they realized that 27 the cocoa was alkalized, plaintiffs respond that they have clearly registered a complaint 28 about the ice cream products by filing the present actions, and defendants have not offered 7 Case4:10-cv-04387-PJH Document62 Filed05/26/11 Page8 of 22 1 to return their money to them and instead are defending the lawsuits. 2 The court finds that the motion must be DENIED. Plaintiffs have adequately alleged 3 standing. Assuming all facts alleged in the FACs to be true, the court must accept that at 4 least the named plaintiffs suffered a concrete and particularized injury because they bought 5 ice cream labeled “all natural” which contained some allegedly synthetic substance. The 6 injury alleged is that they were deceived, and paid money they would not otherwise have 7 paid had they known about the potassium carbonate in the cocoa. 8 It may ultimately prove true, as defendants claim, that plaintiffs have no actionable 9 claims. However, that is not the same as finding no standing. If the plaintiffs did indeed 10 purchase the ice cream based on the representation that it was “all natural” and if that t r 11 representation proves to be false, then they arguably have suffered an injury in fact. u o C nia 12 c. Whether the FACs allege the UCL and fraud claims with particularity ict Califor 13 Defendants assert further that plaintiffs have not alleged the elements of injury or tr of Dis strict 14 deception with sufficient particularity. Under Rule 9(b), claims of fraud, as well as claims of Di es ern 15 deceptive advertising brought under the UCL and the false advertising law must be pled t h Sta e Nort 16 with particularity. Kearns v. Ford Motor Co., 567 F.3d 1120, 1125-26 (9th Cir. 2009). h ed or t 17 Thus, a plaintiff must “articulate the who, what, when, where, and how of the misconduct F t i n 18 alleged.” Id. U 19 Defendants note that plaintiffs assert that they are “willing to and ha[ve] paid a 20 premium for foods that are all natural and ha[ve] refrained from buying their counterparts 21 that were not all natural,” that they “relied” on the representation that Breyers ice cream 22 was “all natural,” and that products using cocoa processed with potassium carbonate are 23 not “natural.” 24 However, defendants argue, under this theory, the words “all natural” on the product 25 label constitute a term of art. Thus, defendants contend, to be deceived, a consumer 26 would have to be someone who is (i) intimately familiar with the FDA’s “natural” policy and 27 the USDA regulations about what constitutes a “synthetic,” (ii) saw the words “all natural,” 28 (iii) concluded that those words amounted to a representation by the manufacturer that the 8 Case4:10-cv-04387-PJH Document62 Filed05/26/11 Page9 of 22 1 alkali used in the Dutch cocoa process is “not synthetic” as defined by the USDA 2 regulations (i.e., it is sodium carbonate), and (iv) made his or her purchase decision in 3 reliance on that belief 4 Defendants note further that plaintiffs allege that all class members shared their 5 belief. Defendants contend, however, that the law of false advertising focuses on a 6 reasonable consumer who is a member of the target population, which requires that 7 plaintiffs show that members of the public are “likely to be deceived.” Defendants contend 8 that plaintiffs have failed to allege a plausible claim that a reasonable consumer would 9 assume the words “all natural” on the label meant “alkalized with sodium carbonate and not 10 potassium carbonate.” t r 11 In opposition, plaintiffs argue that they have pled facts with sufficient particularity, as u o C nia 12 they have alleged the “who, what, when, where, and how” of the alleged deception. The ict Califor 13 “who” is Ben & Jerry’s, Breyers, and Unilever. The “what” is the statement that ice cream tr of Dis strict 14 containing alkalized cocoa is “all natural.” The “when” is alleged as “since at least 2006,” Di es ern 15 and “throughout the class period.” The “where” is on the ice cream package labels. The t h Sta e Nort 16 “how the statements were misleading” is the allegation that defendants did not disclose that h ed or t 17 the alkalizing agent in the alkalized cocoa was potassium carbonate, which plaintiffs allege F t i n 18 is a “synthetic.” U 19 As for defendants’ argument that the FACs fail to establish a plausible claim that 20 reasonable consumers would be deceived, plaintiffs respond that the FACs assert that the 21 effect of mislabeling the ice cream cartons would be to mislead consumers into believing 22 that they were getting something that they were not. 23 The court finds that the motion must be DENIED. As with the arguments in subparts 24 (a) and (b), above, the presence of factual disputes does not render the claims 25 inadequately pled for purposes of the present motion. 26 d. Whether plaintiffs’ claims are preempted 27 Defendants argue that plaintiffs’ claims are preempted by the Federal Food, Drug, 28 and Cosmetic Act, 21 U.S.C. § 301 (“FDCA”). The FDCA governs labeling and related 9 Case4:10-cv-04387-PJH Document62 Filed05/26/11 Page10 of 22 1 claims that can be made with respect to food, drugs, cosmetic products, and medical 2 devices. In enacting the FDCA, Congress established a comprehensive federal scheme of 3 food regulation to ensure that food is safe and is labeled in a manner that does not mislead 4 consumers. 21 U.S.C. § 341, et seq. 5 In 1990, Congress enacted the Nutrition Labeling and Education Act (“NLEA”) to 6 amend the FDCA to require uniform food labeling and require the now familiar “Nutrition 7 Facts” box that appears on food labels. See 21 U.S.C. § 343(q)(1)(A)-(D).2 Pursuant to 8 the NLEA, the Food and Drug Administration (“FDA”) promulgated regulations with respect 9 to food labeling. See, e.g., 21 C.F.R. § 101.1-101.18. 10 Generally, a food is misbranded if “its labeling is false or misleading in any t r 11 particular.” 21 U.S.C. § 343(a)(1). But the NLEA Amendments include a broad express u o C nia 12 preemption provision that governs product labeling. 21 U.S.C. § 343-1(a)(3); see Mills v. ict Califor 13 Giant of Md., LLC, 441 F. Supp. 2d 104, 106-09 (D.D.C. 2006) (noting the breadth of NLEA tr of Dis strict 14 preemption clause), aff’d on other grounds, 508 F.3d 11 (D.C. Cir. 2007). The NLEA Di es ern 15 provides that no state may “directly or indirectly establish . . . any requirement for the t h Sta e Nort 16 labeling of food that is not identical to the requirement of section 403(q) [21 U.S.C. h ed or t 17 § 343(q)].” See 21 U.S.C. § 343-1(a)(4). A similar provision applies to section 403(r), 21 F t i n 18 U.S.C. § 343(r). See 21 U.S.C. § 343-1(a)(5). U 19 Defendants argue that the “not identical” provision (above) is plaintiffs’ “undoing,” 20 because a court may impose labeling requirements only if “identical to” the FDA’s 21 requirements. Defendants contend that plaintiffs’ claims here are “indistinguishable” from 22 the claims made in Chacanaca v. The Quaker Oats Co., 752 F.Supp. 2d 1111 (N.D. Cal., 23 2010), where the court found that the plaintiffs’ UCL and other state law claims sought to 24 2 Under 21 U.S.C. § 343(q), “[a] food shall be deemed to be misbranded . . . “if it is a 25 food intended for human consumption and is offered for sale, unless its label or labeling bears nutrition information that provides” the serving size or the common household unit of measure 26 that expresses the serving size; the number of servings per container; the total number of calories derived from any source and derived from total fat, in each serving size or other unit 27 of measure of the food; and the amount of total fat, saturated fat, cholesterol, sodium, total carbohydrates, complex carbohydrates, sugars, dietary fiber, and total protein contained in 28 each serving size or other unit of measure. 21 U.S.C. § 343(q)(1)(A)-(D). 10