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Dismissing claims related to certain products in putative class action for lack of standing because the named plaintiff did not buy the alleged products at issue
Summary of this case from Richmond v. Home Partners Holdings LLCOpinion
Case No.: 2:20-cv-06754-SB-RAO
04-02-2021
Amy LORENTZEN v. The KROGER CO., et al.
Attorney(s) Present for Plaintiff(s): Sara D. Avila. Attorney(s) Present for Defendant(s): Jacob Harper.
Attorney(s) Present for Plaintiff(s): Sara D. Avila.
Attorney(s) Present for Defendant(s): Jacob Harper.
Proceedings: ORDER ON DEFENDANT'S MOTION TO DISMISS
STANLEY BLUMENFELD, JR., U.S. District Judge
Defendant The Kroger Co. moves to dismiss Plaintiff's Second Amended Complaint (Dkt. No. 19) (SAC) on the grounds that Plaintiff lacks standing and fails to plead her claims to the standards set forth in the Federal Rules of Civil Procedure. Dkt. No. 20 (Motion). The Court DENIES the Motion in part as set forth below.
DISCUSSION
A. Factual Background
Defendant "is the largest supermarket chain in the United States and operates various grocery stores throughout the country." SAC ¶ 11. In addition to its grocery operations, Defendant is "responsible for the development, manufacturing, packaging, advertising, distribution, and sale" of various types of ground coffee "sold under [Defendant]'s private label brand" (the Products). Id. ¶¶ 11, 13. On the front of the packaging of each Product is a statement that the Product "makes about" a specified number of cups of coffee (e.g., "Makes About 225 Cups"). Id. ¶¶ 14-16. The number varies depending on the size of the Product. Id. ¶ 16. Instructions on the back of the packaging direct consumers "to use the following measurements: ‘[o]ne rounded tablespoon of coffee for each 6 fl oz. of cold water’ or ‘1/2 cup of coffee for every 10 servings.’ " Id. ¶ 17.
"The Products include ... the following [eight] varieties: Kroger Medium Roast Special Roast Ground Coffee 29oz, Kroger Medium Roast Supreme Blend Ground Coffee 29oz, Kroger Medium Roast Secret Blend Ground Coffee 30.5oz, Kroger Dark Roast French Roast Ground Coffee 24oz, Kroger Mild Roast Breakfast Blend Ground Coffee 24oz, Kroger Medium Dark Roast 100% Columbian Ground Coffee 24oz, Kroger Medium Dark Roast 100% Columbian Ground Coffee 11.5oz, and Kroger Medium Roast Decaf Classic Ground Coffee 25 oz." SAC ¶ 13.
But Defendant—to credit Plaintiff's allegations—has deceived the coffee-consuming public. Plaintiff alleges that the Products "do not produce the number of servings of coffee prominently advertised" and actually yield "a 47-54% deficiency in the total number of servings per canister when following the single serving instructions." Id. ¶¶ 18, 22. On this basis, Plaintiff contends Defendant is liable for violations of: (1) the Consumer Legal Remedies Act (CLRA) ( Cal. Civ. Code §§ 1750, et seq. ); (2) False Advertising Law (FAL) ( Cal. Bus. & Prof. Code §§ 17500, et seq. ); (3) the "unfair" and "fraudulent" prongs of California's Unfair Competition Law (UCL) ( Cal. Bus. & Prof. Code §§ 17200, et seq. ); and (4) the "unlawful" prong of the UCL (id. ). Plaintiff brings these four claims in a putative class action complaint; the proposed class includes "[a]ll persons in the State of California who purchased one or more of the Products since July 28, 2016 for personal use and not for resale." SAC ¶ 32. As detailed in the SAC, Plaintiff's own experience with the Products is limited. She purchased "at least one" of Defendant's ground coffee products since July 28, 2016: the Medium Roast Supreme Blend Ground Coffee 29 oz. (Supreme Blend). Id. ¶ 9. In so doing, Plaintiff relied on the representation on the packaging that her purchased canister of ground coffee would yield 225 servings of coffee. Id. Though Plaintiff contends that "the canister did not contain enough coffee grounds to produce the number of servings promised on the Product's front label," id. , the SAC does not specifically allege that she attempted to make herself 225 cups of coffee. Plaintiff states that if the instructions on the Supreme Blend were to be followed, the Product would not yield the promised number of servings, as confirmed by a third-party laboratory. Id. ¶¶ 17-19, 21-22.
B. Legal Standards
1. Rule 12(b)(1) Requirements for Standing
Rule 12(b)(1) allows a court to dismiss a case for lack of subject-matter jurisdiction where a plaintiff lacks standing to sue. The standing doctrine is derived from Article III's limitation of the judicial power of federal courts to hear only "actual cases or controversies." Spokeo, Inc. v. Robins , 578 U.S. 330, 136 S.Ct. 1540, 1547, 194 L.Ed.2d 635 (2016) (internal citations omitted). "The doctrine limits the category of litigants empowered to maintain a lawsuit in federal court to seek redress for a legal wrong." Id. "[T]he ‘irreducible constitutional minimum’ of standing consists of three elements ... The plaintiff must have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision." Id. (citing Lujan v. Defenders of Wildlife , 504 U.S. 555, 560-61, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992) ). A plaintiff must show that the injury was "an invasion of a legally protected interest" that is "concrete and particularized" and "actual or imminent, not conjectural or hypothetical." Id. at 560, 112 S.Ct. 2130.
For certain claims, including those brought under the UCL, FAL, or CLRA, a plaintiff must sufficiently allege that she both suffered an economic injury and actually relied on a purported material misrepresentation. See In re Ferrero Litig. , 794 F. Supp. 2d 1107, 1111-12 (S.D. Cal. 2011) (citing Kwikset Corp. v. Superior Ct. , 51 Cal. 4th 310, 326-27, 120 Cal.Rptr.3d 741, 246 P.3d 877 (2011) ).
2. Rule 12(b)(6)'s Standard for Dismissal
Under Rule 12(b)(6), a defendant may move to dismiss for failure to state a claim upon which relief can be granted. A plaintiff must state "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). A claim has "facial plausibility" if the plaintiff pleads facts that "allow[ ] the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009).
In resolving a Rule 12(b)(6) motion, a court must accept all well-pleaded factual allegations as true, but "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id. That is, a pleading must set forth allegations that have "factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. Courts " ‘are not bound to accept as true a legal conclusion couched as a factual allegation.’ " Id. (quoting Twombly , 550 U.S. at 555, 127 S.Ct. 1955 ). Assuming the veracity of well-pleaded factual allegations, a court next must "determine whether they plausibly give rise to an entitlement to relief." Id. at 679, 129 S.Ct. 1937. There is no plausibility "where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct." Id.
3. Rule 9(b)'s Heightened Pleading Standard
Rule 9(b) requires a more detailed pleading in cases where fraud is alleged. See Cooper v. Pickett , 137 F.3d 616, 625 (9th Cir. 1997). Even in cases without an explicit claim of fraud, where a plaintiff chooses to allege that defendants have engaged in a unified course of fraudulent conduct, "the claim is said to be ‘grounded in fraud’ or to ‘sound in fraud,’ and the pleading of that claim as a whole must satisfy the particularity requirement of Rule 9(b)." Vess v. Ciba-Geigy Corp. USA , 317 F.3d 1097, 1103-04 (9th Cir. 2003). Or, if a plaintiff asserts a claim based partially on fraud, the alleged fraudulent conduct must satisfy the heightened pleading requirement. Id. A fraud claim must be accompanied by "the who, what, when, where, and how" of the fraudulent conduct charged. Id. at 1106 (quoting Cooper , 137 F.3d at 627 ). "A pleading is sufficient under rule 9(b) if it identifies the circumstances constituting fraud so that a defendant can prepare an adequate answer from the allegations." Moore v. Kayport Package Express, Inc. , 885 F.2d 531, 540 (9th Cir. 1989).
4. Request for Judicial Notice
A court may take judicial notice of a fact if it is "not subject to reasonable dispute." Fed. R. Evid. 201(b) ; see Khoja v. Orexigen Therapeutics, Inc. , 899 F.3d 988, 999 (9th Cir. 2018) ("A fact is ‘not subject to reasonable dispute’ if it is ‘generally known,’ or ‘can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned.’ ").
In support of its Motion, Defendant asks the Court to take judicial notice of two images of the product label for two of the Products, including the Supreme Blend. Dkt. No. 20-1. The Court does so without objection from Plaintiff.
C. Analysis
1. Plaintiff Has Standing to Sue for the Product She Purchased.
As a threshold matter, Plaintiff has standing to sue for the economic injury she suffered. However, she does not have standing to bring claims related to products whose advertising caused her no injury—even if those products are substantially similar to the Supreme Blend.
When Plaintiff purchased a product based on the alleged misrepresentation made about its yield, Plaintiff suffered an economic injury. She alleges that she would either have paid less for the product or not bought it at all had she known the truth. SAC ¶ 4. "[I]n the eyes of the law, a buyer forced to pay more than he or she would have is harmed at the moment of purchase ..." Kwikset Corp. , 51 Cal. 4th at 334, 120 Cal.Rptr.3d 741, 246 P.3d 877. The economic harm alleged here is sufficient to confer standing. See Maya v. Centex Corp. , 658 F.3d 1060, 1069 (9th Cir. 2011) (referring to such economic harm as "quintessential injury-in-fact"). She also has standing to seek injunctive relief. SAC ¶ 76 (alleging that "she intends to purchase Defendant's coffee in the future" and seeks injunctive relief to avoid being deterred from purchasing or being deceived again); see Davidson v. Kimberly-Clark Corp. , 889 F.3d 956, 969 (9th Cir. 2018) ("a previously deceived consumer may have standing to seek an injunction against false advertising or labeling, even though the consumer now knows or suspects that the advertising was false at the time of the original purchase").
In claiming a lack of standing for the purchased product, Defendant relies on two purported pleading deficiencies. First, Defendant claims that Plaintiff "does not allege that the third-party testing conducted on the type of product she purchased ... revealed any deficiencies in the number of servings when following the ten-serving method." Mot. at 7. This omission, however, is not fatal. Plaintiff alleges that the instructions for use of the Products provide an alternative formula—i.e., " ‘[o]ne rounded tablespoon of coffee for each 6 fl oz. of cold water’ or ‘1/2 cup of coffee for every 10 servings’ "—and that "these instructions do not produce the number of servings of coffee prominently advertised on the Products." SAC ¶¶ 17-18. Plaintiff specifically alleges that the Product she purchased "only produces approximately 110 servings, 115 short of what is advertised on the front label." Id. ¶ 19. Second, Defendant claims that Plaintiff "fails to plead that she personally experienced that her purchased Product was unable to make the specified number of servings." Mot. at 7 (emphasis omitted). But this omission does not render Plaintiff's allegations "conclusory," as Defendant suggests. Plaintiff has alleged that Defendant is consistently selling the Product she purchased with false information about the number of servings that can be made when used as instructed; and she further alleged that a third-party laboratory verified this fact. Defendant has not shown that the allegations, in their totality, are insufficient. See Lujan , 504 U.S. at 561, 112 S.Ct. 2130 (noting that the requirements of proof to establish standing depend on the stage of the proceedings).
Though not entirely clear, the import of Defendant's argument appears to be that Plaintiff must establish as a matter of standing that the advertising is false as to both the one-cup and ten-cup brewing methods. But Defendant has not shown that any asserted claim or requested remedy depends on proof of complete falsity under California's consumer protection laws.
This is not a case, moreover, in which the magnitude of the alleged difference in what was promised and what was provided is so small that more detail about the specific product purchased arguably might be required. Plaintiff alleges that the difference in the product she purchased is 51%.
Whether Plaintiff can assert claims for substantially similar products she did not purchase is another question, and one on which courts within the Ninth Circuit have split. Some district courts have held that a plaintiff may bring suit for any "substantially similar" products not actually purchased. See Figy v. Frito-Lay N. Am., Inc. , 67 F. Supp. 3d 1075, 1083 (N.D. Cal. 2014) (noting that courts "look to a series of factors including whether the challenged products are of the same kind, comprised of largely the same ingredients, and whether each of the challenged products bears the same alleged mislabeling"). Others have concluded that absent economic injury, a plaintiff's claims for products she did not purchase must be either dismissed for lack of standing or addressed at the class certification phase of the case. See Clancy v. The Bromley Tea Co. , 308 F.R.D. 564, 569 (N.D. Cal. 2013) (discussing the various methods of addressing such claims).
But the "substantial similarity" analysis appears to be inconsistent with the basic concept of standing. The standing requirement extends to each claim and each remedy sought. Davis v. Fed. Election Comm'n , 554 U.S. 724, 734, 128 S.Ct. 2759, 171 L.Ed.2d 737 (2008). The similarity of a product, by itself, says nothing about whether a party suffered an injury traceable to the allegedly wrongful conduct of another. A plaintiff who is falsely led to buy a product may claim injury resulting from that purchase; the same plaintiff, however, cannot claim injury from similarly false advertising upon which he or she did not injuriously rely (by buying a similar product or otherwise). Article III "standing is not dispensed in gross." Lewis v. Casey , 518 U.S. 343, 358 n.6, 116 S.Ct. 2174, 135 L.Ed.2d 606 (1996) ; see also Blum v. Yaretsky , 457 U.S. 991, 999, 102 S.Ct. 2777, 73 L.Ed.2d 534 (1982) ("Nor does a plaintiff who has been subject to injurious conduct of one kind possess by virtue of that injury the necessary stake in litigating conduct of another kind, although similar, to which he has not been subject."). Importing a "substantial similarity" test into the principle of standing overlooks this point and invites an analysis that is both difficult to apply and unrelated to its objective.
The test is also at odds with the statutory standing requirement. To establish standing under the UCL, FAL, and CLRA, a plaintiff must allege that he or she suffered an "injury in fact" and "has lost money or property" as a result of a defendant's alleged conduct. See Cal. Bus. & Prof. Code §§ 17204, 17535 ; Cal. Civ. Code § 1780(a). A plaintiff "cannot expand the scope of his claims to include a product he did not purchase or advertisements relating to a product that he did not rely upon." Johns v. Bayer Corp. , 2010 WL 476688, *5 (S.D. Cal. Feb. 9, 2010).
"That a suit may be a class action ... adds nothing to the question of standing, for even named plaintiffs who represent a class ‘must allege and show that they personally have been injured, not that injury has been suffered by other, unidentified members of the class to which they belong and which they purport to represent.’ " Lewis , 518 U.S. at 357, 116 S.Ct. 2174 (internal citations omitted). Plaintiff bought only one of the eight Products named in the SAC. She therefore did not suffer any injury—economic or otherwise—related to the other seven Products. Because there is no injury, Plaintiff lacks standing to assert these unrelated claims.
The Court need not decide at this point the implications of its ruling on the scope of products that may be included in any potential class action in this case.
In sum, Plaintiff has standing to bring claims related to the Supreme Blend but not to the seven other Products she did not purchase. Consequently, Defendant's Motion under Rule 12(b)(1) is denied in part and granted in part.
2. Plaintiff's Claims Survive Rule 12(b)(6) and 9(b).
The Court next turns to the question whether the claims in the SAC can survive a motion to dismiss under Rule 12(b)(6) —and concludes they can.
Defendant's chief argument is that Plaintiff has failed to establish that she relied on the allegedly false statements in purchasing the Supreme Blend by neglecting to allege that she read the back of the packaging (where the brewing instructions are located). This argument, however, overlooks the nature of the claim and the reasonable inferences that can be drawn from the pleading. See Fazaga v. Fed. Bureau of Investig. , 965 F.3d 1015, 1025 (9th Cir. 2020) (noting that all reasonable inferences must be considered). Plaintiff alleges that she relied on the statement "that one canister would produce 225 servings of coffee before purchasing the Product." SAC ¶ 9. One could reasonably assume—without reading the brewing instructions—that the canister would yield about 225 servings if prepared in accordance with the standard instructions. Plaintiff has so alleged. SAC ¶ 24 (alleging false advertising because she expected "that if the Product's back-panel brewing instructions are followed, the canister will yield the number of servings prominently displayed on the front panel"); see also id. ¶¶ 9, 25. Taking these allegations as true and drawing reasonable inferences in Plaintiff's favor, the SAC adequately states reliance and a claim under Rule 12(b)(6).
Defendant also challenges Plaintiff's claims under Rule 9(b). However, Plaintiff's SAC meets the standard for claims sounding in fraud. She alleges the who (Defendant), what (made false statements on the Products' packaging), when (in the Class Period ), where (in the state of California), and how (by overstating the number of servings per canister). She has also alleged in detail "what is false or misleading about [the purportedly fraudulent] statement, and why it is false." Cafasso, U.S. ex rel. v. Gen. Dynamics C4 Sys., Inc. , 637 F.3d 1047, 1055 (9th Cir. 2011) (internal citations omitted); see SAC ¶¶ 14-26 (detailing why the statements on the Products are false or misleading). The purpose of Rule 9(b) is to put Defendant on notice "of the specific fraudulent conduct against which they must defend." Cafasso , 637 F.3d at 1057. The SAC accomplishes that; and the Motion fails on this point.
Defendant asserts that Plaintiff's allegation that she bought the Supreme Blend since July 28, 2016 is too vague to satisfy Rule 9(b). However, Plaintiff asserts that the product packaging has been uniform throughout the Class Period (SAC ¶ 41); given the alleged uniformity of the allegedly false statements, the Court does not find that Plaintiff's allegations are too vague to properly give Defendant notice under Rule 9(b).
3. Plaintiff Adequately Alleges Consumer Confusion.
Defendant next contends that Plaintiff "fails to establish reasonable consumers are ‘likely to be deceived’ by" the labels on the Products. Mot. at 12 (citing Ebner v. Fresh, Inc. , 838 F.3d 958, 965-66 (9th Cir. 2016) (affirming grant of motion to dismiss UCL, FAL, and CLRA claims)). Defendant seeks to dismiss Plaintiff's claims under the UCL, FAL, and CLRA on this basis.
To state a claim under the UCL, FAL, or CLRA, a plaintiff must allege the defendant's purported misrepresentations are likely to deceive a reasonable consumer. See Williams v. Gerber Products Co. , 552 F.3d 934, 938 (9th Cir. 2008) (explaining that courts must evaluate claims for false or misleading advertising from the perspective of a reasonable consumer). Plaintiff has pled that "Defendant's labeling, advertising and marketing of the Products are false and misleading because a reasonable consumer, like Plaintiff, expect that if the Product's back-panel brewing instructions are followed, the canister will yield the number of servings prominently displayed on the front panel." SAC ¶ 24. The Court finds this allegation sufficient; a reasonable consumer who viewed the representation that a coffee canister produces "about" a certain number of cups of coffee could expect that—if prepared according to the standard instructions—the Products would do just that. Even with the "qualifying language" about a consumer's preference for his or her "desired strength" of coffee, Mot. at 15, the Court cannot say as a matter of law that a reasonable consumer would expect the yield to be cut in half when brewing coffee as instructed. SAC ¶ 19. Likewise unpersuasive is the contention that Defendant is protected against a claim of deception by disclosing the weight of the coffee on the front label. Once again, the Court cannot say as a matter of law that a reasonable consumer would understand that the statement about the number of approximate servings obtained from instructed use should be discounted by the weight of the product.
This case is distinguishable from Maloney v. Verizon Internet Servs., Inc. , 413 F. App'x 997 (9th Cir. 2011), upon which Defendant relies. In Maloney , the defendant advertised that a subscriber would receive internet speed "up to 3 Mbps" depending on a number of disclosed variables (e.g., network or internet congestion, computer configuration, etc.). Id. at 999. In contrast, the advertised product here provides a fixed formula which—if followed—should consistently yield an approximate number of cups of coffee.
4. Plaintiff's Claims Under the UCL Are Properly Supported by the Allegations in the SAC.
Defendant contends that Plaintiff's claims under the "unlawful" and "unfair"/"fraudulent" prongs of the UCL fail. However, as Plaintiff's allegations are tied to asserted violations of the FAL and CLRA (which survive under both Rule 12(b)(6) and Rule 9(b) as discussed supra ), both of her UCL claims also survive. See Drum v. San Fernando Valley Bar Assn. , 182 Cal. App. 4th 247, 257, 106 Cal.Rptr.3d 46 (2010) (a claim under the UCL's "unfair" prong may be stated when "tethered to specific constitutional, statutory, or regulatory provisions"). What's more, Plaintiff alleges that "Defendant's misrepresentations and omissions" are unfair as they cause a substantial injury to consumers who are misled by those misrepresentations, without offering any countervailing benefit. SAC ¶ 94. This further satisfies the standard for pleading an "unfair" allegation under the UCL. See Kanfer v. Pharmacare US, Inc. , 142 F. Supp. 3d 1091, 1105-06 (S.D. Cal. 2015) (finding sufficient allegations that labeling offends public policy by seeking to profit from consumers' vulnerability to false claims and that any utility of doing so does not outweigh the severity of the harm). Thus, Plaintiff has stated viable claims under the UCL.
CONCLUSION
Defendant's Motion is denied in part and granted in part. Plaintiff has standing to assert claims for harm she allegedly suffered when she purchased a falsely advertised product; however, she lacks standing to assert claims related to products she did not buy, even if the advertising for those products is substantially similar. As to the claims she has standing to pursue, Plaintiff has adequately pleaded them.