Michael Stiles et al v. Trader Joe S Company, et al

NOTICE OF MOTION AND MOTION to Dismiss Plaintiffs' First Amended Complaint

C.D. Cal.September 16, 2016

TJ’S NOTICE AND MOT. TO DISMISS FAC; MEM. OF P. & A. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DAWN SESTITO (S.B. #214011) dsestito@omm.com KATE IDES (S.B. #274820) kides@omm.com O’MELVENY & MYERS LLP 400 South Hope Street Los Angeles, California 90071-2899 Telephone: (213) 430-6000 Facsimile: (213) 430-6407 RANDALL W. EDWARDS (S.B. #179053) redwards@omm.com O’MELVENY & MYERS LLP Two Embarcadero Center, 28th Floor San Francisco, CA 94111-3823 Telephone: (415) 984-8700 Facsimile: (415) 984-8701 Attorneys for Defendant Trader Joe’s Company UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA MICHAEL STILES and ALEXANDER VUCKOVIC, individually and on behalf of classes of similarly situated individuals, Plaintiffs, v. TRADER JOE’S COMPANY, a California Corporation; and DOES 1 through 5, Defendant. Case No. 2:16-cv-04318-TJH-KS DEFENDANT TRADER JOE’S COMPANY’S NOTICE OF MOTION AND MOTION TO DISMISS PLAINTIFFS’ FIRST AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF Hon. Terry J. Hatter, Jr. Hearing Date: November 7, 2016 Hearing Time: Under Submission Courtroom: 17 FAC Filed: August 26, 2016 Complaint Served: June 23, 2016 Case 2:16-cv-04318-TJH-KS Document 31 Filed 09/16/16 Page 1 of 32 Page ID #:128 1 TJ’S NOTICE AND MOT. TO DISMISS FAC; MEM. OF P. & A. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 NOTICE OF MOTION AND MOTION TO ALL PARTIES AND THEIR ATTORNEYS OF RECORD: PLEASE TAKE NOTICE that on November 7, 2016, or as soon thereafter as may please the Court, on papers submitted to the Honorable Terry J. Hatter in Courtroom 17 of the United States District Court located at 312 North Spring Street, Los Angeles, California 90012, Defendant Trader Joe’s Company will and hereby does move the Court for an order dismissing, and striking in part, the First Amended Complaint (“FAC”) filed by Plaintiffs Michael Stiles and Alexander Vuckovic. In the FAC, Plaintiffs assert that the labeling of two Trader Joe’s products— Oatmeal Complete Maple & Brown Sugar (the “Oatmeal”) and Frosted Maple & Brown Sugar Shredded Bite Size Wheats (“Shredded Wheats”) (collectively, the “Products”)—are misbranded because they lead customers to believe that the Products contain maple syrup or maple sugar, when in fact they do not. Trader Joe’s moves to dismiss, and strike in part, the FAC, pursuant to Federal Rules of Civil Procedure 12(b)(6) and 12(f), on the following grounds: 1. Plaintiffs’ claims should be dismissed for failure to plead factual allegations demonstrating a plausible theory of injury resulting from the alleged absence of maple syrup or maple sugar in the Products; 2. Plaintiffs’ claims under the consumer protection statutes of California and Massachusetts—i.e., California’s Unfair Competition Law, Cal. Bus. & Prof. Code § 17200 et seq.; False Advertising Law, id., § 17500 et seq.; Consumers Legal Remedies Act , Cal. Civ. Code § 1750 et seq.; Massachusetts Consumer Protection Act, Mass. Gen. Laws. ch. 93A, § 2; and Mass. Gen. Laws ch. 266, § 91—should be dismissed because Plaintiffs fail to allege facts demonstrating that reasonable consumers would be misled by the labels at issue; 3. Plaintiffs’ claims are foreclosed by the preemption doctrine because Case 2:16-cv-04318-TJH-KS Document 31 Filed 09/16/16 Page 2 of 32 Page ID #:129 2 TJ’S NOTICE AND MOT. TO DISMISS FAC; MEM. OF P. & A. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Plaintiffs seek to impose food labeling standards different from, and in conflict with, those of the Food and Drug Administration (“FDA”); 4. In the alternative, Plaintiffs’ claims should be stayed under the primary jurisdiction doctrine because, as indicated by the FDA’s recent response to the Vermont Sugar Makers’ Association, the FDA intends to issue further guidance regarding the term “maple”; 5. Plaintiffs’ nationwide class allegations should be stricken because Plaintiffs impermissibly seek to apply California law to the claims of a putative nationwide class for purchases made in stores nationwide; 6. Plaintiffs’ claims for injunctive relief should be dismissed because Plaintiffs do not allege that they intend to purchase the Products again in the future; and 7. Plaintiffs references to punitive damages should be stricken from the FAC because Plaintiffs do not allege any allegations of oppression or malice on the part of Trader Joe’s, and their claim for fraudulent inducement fails because Plaintiffs do not allege a plausible injury. This motion is based on this Notice of Motion and Motion, the attached Memorandum of Points and Authorities, the concurrently filed [Proposed] Order and Request for Judicial Notice (and all papers submitted in support thereof), all of the pleadings, files, and records in this proceeding, all matters of which a court may take judicial notice, and any argument or evidence that may be presented to or considered by the Court prior to its ruling. // // Case 2:16-cv-04318-TJH-KS Document 31 Filed 09/16/16 Page 3 of 32 Page ID #:130 3 TJ’S NOTICE AND MOT. TO DISMISS FAC; MEM. OF P. & A. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 This motion is made following the conference of counsel, pursuant to L.R. 7-3, which took place on September 9, 2016. Dated: September 16, 2016 O’MELVENY & MYERS LLP By: s/ Kate Ides Kate Ides Attorneys for Defendant Trader Joe’s Company Case 2:16-cv-04318-TJH-KS Document 31 Filed 09/16/16 Page 4 of 32 Page ID #:131 TABLE OF CONTENTS Page i TJ’S NOTICE AND MOT. TO DISMISS FAC; MEM. OF P. & A. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 I. INTRODUCTION ............................................................................................ 1 II. BACKGROUND .............................................................................................. 3 A. Procedural History ................................................................................. 3 B. Factual Allegations ................................................................................ 3 III. ARGUMENT ................................................................................................... 5 A. Legal Standard ....................................................................................... 5 B. Plaintiffs Plead No Plausible Theory of Injury ...................................... 6 C. A Reasonable Consumer Would Not Believe the Term “Maple” Necessarily Promises “Maple Syrup” or “Maple Sugar” ...................... 9 D. Plaintiffs’ Claims Are Preempted ........................................................ 13 E. The Primary Jurisdiction Doctrine Warrants a Stay of Plaintiffs’ Claims .................................................................................................. 14 F. Plaintiffs’ Nationwide Class Allegations Should Be Stricken Under Mazza ........................................................................................ 17 G. Plaintiffs Plead No Entitlement to Injunctive Relief ........................... 20 H. References to Punitive Damages Should Be Stricken from the FAC ...................................................................................................... 21 IV. CONCLUSION .............................................................................................. 22 Case 2:16-cv-04318-TJH-KS Document 31 Filed 09/16/16 Page 5 of 32 Page ID #:132 TABLE OF AUTHORITIES Page ii TJ’S NOTICE AND MOT. TO DISMISS FAC; MEM. OF P. & A. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 CASES Ashcroft v. Iqbal, 556 U.S. 662 (2009) .......................................................................................... 6, 9 Aspinall v. Philip Morris Cos., 442 Mass. 381 (2004) .......................................................................................... 10 Backus v. Gen. Mills, Inc. ("Backus II"), 122 F. Supp. 3d 909 (N.D. Cal. 2015) ................................................................. 15 Backus v. Nestle USA, Inc. ("Backus I"), No. C-15-1963 MMC, 2016 WL 879673 (N.D. Cal. Mar. 8, 2016) ............. 13, 14 Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) .................................................................................. 5, 6, 7, 9 Bezdek v. Vibram USA Inc., No. 12-10513-DPW, 2013 WL 639145 (D. Mass. Feb. 20, 2013) ................. 7, 10 Bor Pha v. Yia Yang, No. 2:12-cv-01580-TLN, 2013 WL 4546362 (E.D. Cal. Aug. 27, 2013) .................................................................................................................... 21 Bruton v. Gerber Prods. Co., 961 F. Supp. 2d 1062 (N.D. Cal. 2013) ............................................................... 16 Chacanaca v. Quaker Oats Co., 752 F. Supp. 2d 1111 (N.D. Cal. 2011) ............................................................... 14 Clark v. Time Warner Cable, 523 F.3d 1110 (9th Cir. 2008) ............................................................................. 15 Commonwealth v. AmCan Enters., Inc., 47 Mass. App. Ct. 330 (1999) ............................................................................. 13 Dabish v. Infinitelabs, LLC, No. 13-cv-2048 BTM, 2014 WL 4658754 (S.D. Cal. Sept. 17, 2014) .................................................................................................................... 20 Davidson v. Kimberly-Clark Corp., 76 F. Supp. 3d 964 (N.D. Cal. 2014) ................................................................... 21 Freeman v. Time, Inc., 68 F.3d 285 (9th Cir. 1995) ........................................................................... 10, 12 Frenzel v. Aliphcom, 76 F. Supp. 3d 999 (N.D. Cal. Dec. 29, 2014) .................................................... 20 Case 2:16-cv-04318-TJH-KS Document 31 Filed 09/16/16 Page 6 of 32 Page ID #:133 TABLE OF AUTHORITIES (continued) Page iii TJ’S NOTICE AND MOT. TO DISMISS FAC; MEM. OF P. & A. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Frezza v. Google, Inc., No. 5:12-cv-00237, 2013 WL 1736788 (N.D. Cal. Apr. 22, 2013) .................... 20 Hair Excitement v. L’Oreal U.S.A., Inc., 965 A.2d 1032 (N.H. 2009) ................................................................................. 19 Hangman Ridge Training Stables, Inc. v. Safeco Title Ins. Co., 719 P.2d 531 (Wash. 1986) ................................................................................. 18 Hill v. Roll Int’l Corp., 195 Cal. App. 4th 1295 (2011) ............................................................................ 10 Hodgers-Durgin v. De la Vina, 199 F.3d 1037 (9th Cir. 1999) ............................................................................. 21 Impress Commc’ns v. Unumprovident Corp., 335 F. Supp. 2d 1053 (C.D. Cal. 2003) ................................................................. 6 Ivie v. Kraft Foods Global, Inc., No. C-12-02554-RMW, 2013 WL 685372 (N.D. Cal. Feb. 25, 2013) .................................................................................................................... 13 Kane v. Chobani LLC, 645 F. App’x 593 (9th Cir. 2016) .................................................................. 16, 17 Kanfer v. Pharmacare US, Inc., 142 F. Supp. 3d 1091 (S.D. Cal. 2015) ................................................................. 6 Keegan v. Am. Honda Motor Co., No. CV 10-09508 MMM, 2012 WL 2250040 (C.D. Cal. June 12, 2012) .................................................................................................................... 19 Leardi v. Brown, 394 Mass. 151 (1985), disapproved on other grounds by Tyler v. Michaels Stores, Inc., 464 Mass. 492 (2013) ................................................ 10, 11 Leonhart v. Nature’s Path Foods, Inc., No. 13-cv-00492-BLF, 2014 WL 6657809 (N.D. Cal. Nov. 21, 2014) .............................................................................................................. 16, 17 Lilly v. ConAgra Foods, 743 F.3d 662 (9th Cir. 2014) ............................................................................... 13 Liodas v. Sahadi, 19 Cal. 3d 278 (1977) .......................................................................................... 19 Case 2:16-cv-04318-TJH-KS Document 31 Filed 09/16/16 Page 7 of 32 Page ID #:134 TABLE OF AUTHORITIES (continued) Page iv TJ’S NOTICE AND MOT. TO DISMISS FAC; MEM. OF P. & A. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Mannington Wood Floors, Inc. v. Port Epes Transp., Inc., 669 So. 2d 817 (Ala. 1995) ................................................................................. 19 Mazza v. Am. Honda Motor Co., 666 F.3d 581 (9th Cir. 2012) ..................................................................... 3, 17, 19 McKinnis v. Kellogg USA, No. CV 07-2611 ABC, 2007 WL 4766060 (C.D. Cal. Sept. 19, 2007) .................................................................................................................... 11 McKinniss v. Sunny Delight Beverages Co., No. CV 07-02034-RGK, 2007 WL 4766525 (C.D. Cal. Sept. 4, 2007) .................................................................................................................... 10 Morgan v. Wallaby Yogurt Co., No. 13-cv-00296-WHO, 2014 WL 1017879 (N.D. Cal. Mar. 13, 2014) .................................................................................................................... 20 Pub. Lands for the People, Inc. v. U.S. Dep’t of Agric., 697 F.3d 1192 (9th Cir. 2012) ....................................................................... 13, 14 Rahman v. Mott’s LLP, No. CV 13-3482 SI, 2014 WL 325241 (N.D. Cal. Jan. 29, 2014) ...................... 20 Reese v. Odwalla, Inc., 30 F. Supp. 3d 935 (N.D. Cal. 2014) ............................................................. 15, 17 Reid v. Johnson & Johnson, 780 F.3d 952 (9th Cir. 2015) ............................................................................... 14 Ries v. Ariz. Beverages USA LLC, 287 F.R.D. 523 (N.D. Cal. 2012) ........................................................................ 21 Rojas v. Gen. Mills, Inc., No. 12-cv-05099-WHO, 2013 WL 5568389 (N.D. Cal. Oct. 9, 2013) .................................................................................................................... 13 Route v. Mead Johnson Nutrition Co., No. CV 12-7350-GW, 2013 WL 658251 (C.D. Cal. Feb. 21, 2013) .................. 20 RRTM Rest. Corp. v. Keeping, 766 S.W.2d 804 (Tex. App. 1988) ...................................................................... 18 S.F. Bay Area Rapid Transit Dist. v. Spencer, 358 F. App’x 793 (9th Cir. 2009) .......................................................................... 7 Case 2:16-cv-04318-TJH-KS Document 31 Filed 09/16/16 Page 8 of 32 Page ID #:135 TABLE OF AUTHORITIES (continued) Page v TJ’S NOTICE AND MOT. TO DISMISS FAC; MEM. OF P. & A. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Stiley v. Block, 925 P.2d 194 (Wash. 1996) ................................................................................. 19 Swearingen v. Yucatan Foods, L.P., 59 F. Supp. 3d 961 (N.D. Cal. 2014) ................................................................... 16 Syntek Semiconductor Co. v. Microchip Tech. Inc., 307 F.3d 775 (9th Cir. 2002) ............................................................................... 15 Thomas v. Costco Wholesale Corp., No. 12-cv-02908-BLF, 2014 WL 5872808 (N.D. Cal. Nov. 12, 2014) .................................................................................................................... 16 Tyler v. Michaels Stores, Inc., 464 Mass. 492 (2013) ............................................................................................ 7 Wright v. Gen. Mills, Inc., No. 08cv1532 L, 2009 WL 3247148 (S.D. Cal. Sept. 30, 2009) .......................... 8 STATUTES 21 U.S.C. § 343(a) .................................................................................................... 12 21 U.S.C. § 343-1 ..................................................................................................... 13 21 U.S.C. § 393(b)(2) ............................................................................................... 15 Ala. Code § 8-19-10(a) ............................................................................................. 18 Ala. Code § 8-19-5 ................................................................................................... 18 Cal. Bus. & Prof. Code § 17200 ............................................................................... 17 Cal. Bus. & Prof. Code § 17200, et seq. ..................................................................... 4 Cal. Bus. & Prof. Code § 17203 ............................................................................... 18 Cal. Bus. & Prof. Code § 17204 ................................................................................. 6 Cal. Bus. & Prof. Code § 17500 ............................................................................... 17 Cal. Bus. & Prof. Code § 17500, et seq. ..................................................................... 5 Cal. Bus. & Prof. Code § 17535 ........................................................................... 6, 18 Cal. Civ. Code § 1750 et seq. ..................................................................................... 5 Cal. Civ. Code § 1780(a) ...................................................................................... 6, 18 Case 2:16-cv-04318-TJH-KS Document 31 Filed 09/16/16 Page 9 of 32 Page ID #:136 TABLE OF AUTHORITIES (continued) Page vi TJ’S NOTICE AND MOT. TO DISMISS FAC; MEM. OF P. & A. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Cal. Civ. Code § 3294 ............................................................................................... 21 Cal. Com. Code § 2313 ..................................................................................... 5, 6, 19 Mass. Gen. Laws ch. 106, § 2-313 ......................................................................... 5, 7 Mass. Gen. Laws ch. 106, § 2-714 ............................................................................. 7 Mass. Gen. Laws ch. 266, § 91 ..................................................................... 5, 7, 9, 10 Mass. Gen. Laws ch. 93A, § 2 .................................................................. 5, 6, 7, 9, 10 N.H. Rev. Stat. § 358-A:10(I) .................................................................................. 18 Tex. Bus. & Com. Code Ann. § 17.46 ..................................................................... 18 Tex. Bus. & Com. Code Ann. § 17.50(b) ................................................................. 19 RULES Fed. R. Civ. P. 12 ...................................................................................................... 14 Fed. R. Civ. P. 12(b)(6) .............................................................................................. 5 Fed. R. Civ. P. 12(f) .......................................................................................... 3, 6, 21 REGULATIONS 21 C.F.R. § 101.22(a) (2011) .................................................................................. 4, 8 21 C.F.R. § 101.22(h) (2011) ................................................................................. 4, 8 21 C.F.R. § 101.22(i) (2011) ...................................................................................... 4 Case 2:16-cv-04318-TJH-KS Document 31 Filed 09/16/16 Page 10 of 32 Page ID #:137 1 TJ’S NOTICE AND MOT. TO DISMISS FAC; MEM. OF P. & A. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MEMORANDUM I. INTRODUCTION Plaintiffs claim that Trader Joe’s misled consumers by using the term “maple” in the name of two products, but they do not plead any facts upon which they base their conclusory assertion that maple syrup or maple sugar are either missing from, or reasonably expected to be in, the products. Plaintiffs also ignore that the federal Food and Drug Administration (the “FDA”) disagrees with their interpretation of when it is permitted to use the word “maple.” Accordingly, the First Amended Complaint (“FAC”) not only fails as a deficient pleading, but it is also preempted in its entirety. Plaintiffs purport to bring a class action on behalf of Trader Joe’s customers, claiming customers were misled by references to “maple” on two products: Oatmeal Complete Maple & Brown Sugar (the “Oatmeal”) and Frosted Maple & Brown Sugar Shredded Bite Size Wheats (the “Shredded Wheats”) (collectively, the “Products”). The reference to “maple,” Plaintiffs argue, leads customers to believe that the Products contain either maple syrup or maple sugar when, Plaintiffs contend, the Products do not. And Plaintiffs say they would not have bought the Products had they known this. Plaintiffs’ claims are predicated on two assumptions unsupported by the necessary factual allegations to state a claim: (i) the Products do not contain maple syrup or maple sugar, and (ii) customers reasonably believe references to “maple” on the Products promises the Products contain either maple syrup or maple sugar. The factual allegations in the FAC fail to support either assumption. The FAC fails to provide any factual underpinnings regarding the assumption that the Products do not contain either maple syrup or maple sugar. Plaintiffs do not claim to have tested either Product. They do not claim to know the ingredient composition of either Product. And they do not claim to have read the ingredient list of either Product (or to know what the “natural flavor” listed on the ingredient Case 2:16-cv-04318-TJH-KS Document 31 Filed 09/16/16 Page 11 of 32 Page ID #:138 2 TJ’S NOTICE AND MOT. TO DISMISS FAC; MEM. OF P. & A. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 list includes or does not include). Thus, the allegation that the Products do not contain either maple syrup or maple sugar is a bald conclusion unsupported by any factual allegations and appears to be based on speculation only. This ground alone is a sufficient basis for dismissal. The FAC also ignores that a reasonable consumer would not conclude that the references to “maple” on the Products guarantee that maple syrup (or maple sugar) is an ingredient. A reasonable consumer would instead conclude that the product tastes like maple. (Just like the reference to “fruit” in Fruity Pebbles does not promise chunks of fruit, but instead that the cereal tastes like fruit.) The FDA agrees. Even if the Court should conclude that the FAC, or any of the claims set forth therein, should not be dismissed on the foregoing grounds, dismissal of all or portions of Plaintiffs’ claims also is appropriate on the following bases. First, all of Plaintiffs’ claims are preempted because Plaintiffs’ theory seeks to impose food labeling standards different from and in conflict with those pronounced by the FDA. As recently as July 26, 2016, the FDA instructed that the terms “maple” and “maple syrup” are not synonymous under the FDCA and its implementing regulations and that the term “maple” thus does not connote “maple syrup.” Plaintiffs’ proffered interpretation of the “maple,” however, directly conflicts with that pronouncement. In the alternative, Plaintiffs’ claims should be stayed on primary jurisdiction grounds because the FDA is still evaluating the very subject matter raised by the FAC: whether the term “maple” is synonymous with “maple syrup” such that the use of “maple” is likely to cause consumer confusion. And litigation of Plaintiffs’ claims would undermine the FDA’s deliberative process. Second, the FAC is deficient in that it impermissibly seeks to apply California law to the claims of a putative nationwide class. Plaintiffs’ nationwide class allegations should be stricken because a nationwide class seeking relief under California’s consumer protection laws is contrary to controlling Ninth Circuit law: Case 2:16-cv-04318-TJH-KS Document 31 Filed 09/16/16 Page 12 of 32 Page ID #:139 3 TJ’S NOTICE AND MOT. TO DISMISS FAC; MEM. OF P. & A. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Mazza v. Am. Honda Motor Co., 666 F.3d 581 (9th Cir. 2012). Third, Plaintiffs’ claims for injunctive relief should be dismissed on the separate ground that Plaintiffs do not allege that they intend to purchase the Products in the future. Instead, Plaintiffs allege that they overpaid for the Products and would not have purchased them had they known the Products “did not contain any maple syrup or maple sugars.” Now that Plaintiffs believe the Products do not contain maple sugar or maple syrup, they will not purchase the Products again. This allegation forecloses any entitlement to injunctive relief. Finally, Plaintiffs’ cursory references to punitive damages should be stricken from the FAC under Rule 12(f). Punitive damages are available where a plaintiff pleads fraud, oppression, or malice on the part of the defendant. Plaintiffs plead no such allegations as to Trader Joe’s. II. BACKGROUND A. Procedural History Plaintiffs Michael Stiles and Alexander Vuckovic filed the original complaint in this action on June 16, 2016. Doc. 1. The parties subsequently agreed that Plaintiffs would file an amended complaint on or before August 26, 2016, and that Trader Joe’s deadline to respond would be continued until 21 days after service of the amended complaint. Doc. 24. On August 26, 2016, Plaintiffs filed the FAC against Trader Joe’s. 1 Doc. 30. As set forth in the Notice of Motion, the parties met and conferred on September 9, 2016, regarding Trader Joe’s positions in this motion to dismiss but were unable to resolve their differences. B. Factual Allegations The thrust of the FAC is that the labels of the Products falsely represent to Trader Joe’s customers that they contain maple syrup or maple sugar, when 1 Around the same time, the parties agreed that Trader Joe’s East would be dismissed as a party to the litigation. Thus, Trader Joe’s East is not included as a defendant in the FAC. See FAC at 1. Case 2:16-cv-04318-TJH-KS Document 31 Filed 09/16/16 Page 13 of 32 Page ID #:140 4 TJ’S NOTICE AND MOT. TO DISMISS FAC; MEM. OF P. & A. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Plaintiffs say they do not. FAC ¶¶ 23-26. Plaintiffs allege that they reasonably relied on the word “maple” in the product names, as well as images on the front labels, to conclude that the Products actually contain maple syrup or maple sugar as ingredients. Id. ¶ 28. Plaintiffs allege that they have suffered harm because they would not have purchased the Products in the first place—or would not have paid as much for them—had they known that the Products did not contain these ingredients. Id. ¶ 36. Plaintiffs often recite the conclusory assertion that the Products do not contain maple syrup or maple sugar. E.g., id. ¶¶ 1, 26, 53, 74, 99, 100. Plaintiffs, do not, however, plead any facts in support. They do not allege any investigation, any testing, any knowledge of the ingredients, or any other reason even to suspect the absence of maple syrup or maple sugar in the Products. Thus, the only reasonable inference, viewing the FAC in light most favorable to Plaintiffs, is the absence of an express listing of maple syrup and maple sugar in the ingredient list. See Declaration of Matt Sloan in Support of Trader Joe’s Request for Judicial Notice (“Sloan Decl.”), Exs. 1, 2.2 But as a matter of law, this is not a sufficient basis to give rise to the inference that the Products lack maple syrup or maple sugar. Federal law expressly contemplates that a flavor extracted from plant material, like maple, may be listed as an ingredient as “natural flavor.” 21 C.F.R. § 101.22(a), (h), & (i) (2011). The labels of both Products list “natural flavor” as an ingredient. Plaintiffs provide no factual allegations to conclude the Products lack both maple syrup and maple sugar. Plaintiffs nonetheless bring claims on behalf of themselves and a nationwide class for: • violations of California’s Unfair Competition Law, Cal. Bus. & Prof. Code § 17200, et seq. (“UCL”); 2 Concurrent with this Motion, Trader Joe’s filed a Request for Judicial Notice, along with the supporting declarations of Matt Sloan and Kate Ides. Case 2:16-cv-04318-TJH-KS Document 31 Filed 09/16/16 Page 14 of 32 Page ID #:141 5 TJ’S NOTICE AND MOT. TO DISMISS FAC; MEM. OF P. & A. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 • violations of California’s False Advertising Law, Cal. Bus. & Prof. Code § 17500, et seq. (“FAL”); • violations of California’s Consumers Legal Remedies Act, Cal. Civ. Code § 1750 et seq. (“CLRA”); • breach of express warranty under Cal. Com. Code § 2313; • fraudulent inducement; and • unjust enrichment. FAC at 12-27. Additionally, Plaintiff Vuckovic brings claims on behalf of himself and a Massachusetts subclass for: • violations of Massachusetts’ Consumer Protection Act, Mass. Gen. Laws ch. 93A, § 2 (“93A”); • for false advertising under Mass. Gen. Laws ch. 266, § 91; and • breach of express warranty under Mass. Gen. Laws ch. 106, § 2-313. Id. at 24-27. Plaintiffs, on behalf of themselves and putative class members, seek monetary damages (actual and statutory damages where applicable), restitution, disgorgement of profits, and reasonable attorneys’ fees and costs, as well as injunctive relief. Id. at 28-29. Plaintiffs also make a cursory reference to punitive damages, see id. ¶ 78, but it is unclear whether they intend to pursue such damages given the absence of allegations pleading conduct that could give rise to such entitlement. III. ARGUMENT A. Legal Standard Under Rule 12(b)(6), a court should dismiss a complaint that does not set forth sufficient facts to “state a claim for relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007) (a plaintiff must state a claim that is “plausible,” not just “conceivable”). The court need not accept conclusory Case 2:16-cv-04318-TJH-KS Document 31 Filed 09/16/16 Page 15 of 32 Page ID #:142 6 TJ’S NOTICE AND MOT. TO DISMISS FAC; MEM. OF P. & A. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 allegations, unreasonable inferences, or legal conclusions set out in the form of factual allegations. Ashcroft v. Iqbal, 556 U.S. 662, 681 (2009); see also Twombly, 550 U.S. at 555 (“plaintiff’s obligation to provide the ‘grounds’ of his ‘entitlement to relief’ requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do”) (citation omitted). Thus, a plaintiff must plead factual allegations sufficient “to raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555 (citation omitted). And under Rule 12(f), the court “may strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.” B. Plaintiffs Plead No Plausible Theory of Injury. Plaintiffs lack a plausible theory of injury under Twombly and Iqbal because they allege no factual basis to establish the necessary predicate for their injury—the absence of maple syrup or maple sugar in each Product. On this basis alone, dismissal of the entire FAC is warranted, as injury is a requisite element of each cause of action pled: • Fraudulent inducement: requires injury as a result of fraudulent misrepresentations. See Impress Commc’ns v. Unumprovident Corp., 335 F. Supp. 2d 1053, 1061 (C.D. Cal. 2003) (citation omitted). • Breach of express warranty under Cal. Com. Code § 2313: requires injury as a proximate result of breach of warranty. See Kanfer v. Pharmacare US, Inc., 142 F. Supp. 3d 1091, 1104 (S.D. Cal. 2015). • CLRA: requires that consumer suffer “damage” as result of challenged conduct. See Cal. Civ. Code § 1780(a). • FAL: requires loss of money or property as a result of challenged conduct. See Cal. Bus. & Prof. Code § 17535. • UCL: requires loss of money or property as a result of challenged conduct. See Cal. Bus. & Prof. Code § 17204. • Mass. Gen. Laws ch. 93A, § 2: requires “distinct injury or harm that Case 2:16-cv-04318-TJH-KS Document 31 Filed 09/16/16 Page 16 of 32 Page ID #:143 7 TJ’S NOTICE AND MOT. TO DISMISS FAC; MEM. OF P. & A. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 arises from the claimed unfair or deceptive act itself.” See Tyler v. Michaels Stores, Inc., 464 Mass. 492, 503 (2013). • Mass. Gen. Laws ch. 266, § 91: provides equitable remedy for any “aggrieved” party and has same injury requirement as 93A claim. Mass. Gen. Laws. ch. 266, § 91; Bezdek v. Vibram USA Inc., No. 12- 10513-DPW, 2013 WL 639145, at *5 n.5 (D. Mass. Feb. 20, 2013) (treating “injury cognizable under chapter 93A ... [as] cognizable under false advertising statute,” i.e., § 91). • Breach of express warranty under Mass. Gen. Laws ch. 106, § 2-313: requires injury as a result of breach of warranty. See Mass. Gen. Laws ch. 106, § 2-714 (a buyer who seeks damages for breach of Section 2- 313 can recover for “the loss resulting ... from the seller’s breach”). • Unjust enrichment: requires loss as a result of challenged conduct. S.F. Bay Area Rapid Transit Dist. v. Spencer, 358 F. App’x 793, 795 (9th Cir. 2009) (non-precedential). The thrust of the FAC is that Plaintiffs were led to believe that the Products contain maple syrup or maple sugar when they do not, see FAC ¶¶ 1, 26, and that Plaintiffs were injured because they spent money on Products they would not have purchased had they known the Products did not contain maple syrup or maple sugar, id. ¶¶ 36, 59, 82, 114, 121. The claimed “injury” necessarily depends on the purported absence of these ingredients. Thus, Plaintiffs’ claims cannot survive absent some factual allegations giving rise to the assertion—beyond mere speculation—that the Products lack maple syrup or maple sugar. Twombly, 550 U.S. at 555 (a plaintiff must plead factual allegations sufficient “to raise a right to relief above the speculative level”). But Plaintiffs only speculate as to the content of the Products. They do not plead any facts in support of their bald assertion that the ingredients lack maple syrup (and maple sugar). Plaintiffs do not claim to have tested either Product or Case 2:16-cv-04318-TJH-KS Document 31 Filed 09/16/16 Page 17 of 32 Page ID #:144 8 TJ’S NOTICE AND MOT. TO DISMISS FAC; MEM. OF P. & A. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 done any other investigation. And they do not claim to know the actual ingredient composition of either Product. The only ostensible basis for their conclusion, which not even Plaintiffs assert, is that maple syrup and maple sugar do not appear separately by name in the ingredient list of either Product. See Sloan Decl., Exs. 1, 2. While true, this fact is irrelevant. The FDA expressly allows flavors, like maple, to be identified in the ingredient list as “natural flavor,” rather than by their common or usual name. First, 21 C.F.R. § 101.22(a)(3) (2011) provides that an extract of plant material, such as maple syrup, is a “natural flavor.” And pursuant to 21 C.F.R. § 101.22(h)(1) (2011), any ingredient qualifying as a “natural flavor” may be identified as such in the product’s ingredient list: “[t]he label of food to which flavor is added shall declare the flavor in the statement of ingredients … as ‘natural flavor.’” No more is required. The import of this cannot be ignored: the FDA contemplates that a manufacturer could use maple syrup in a product but not list maple syrup as an ingredient. Listing “natural flavor” is enough. And the term “natural flavor” is precisely what is declared in both Products’ ingredient lists. See Sloan Decl., Exs. 1, 2. Entirely absent from the FAC, however, are any allegations that the “natural flavors” displayed on the Products’ ingredient lists are not maple syrup or maple sugar, nor is there any allegation that maple is not a “natural flavor.” In light of what the FDA expressly permits, Plaintiffs’ conclusory allegations that the Products lack maple syrup or maple sugar are not sufficient to raise a plausible claim of injury above the speculative level, as demanded by Twombly and Iqbal. Wright v. General Mills, Inc., No. 08cv1532 L, 2009 WL 3247148 (S.D. Cal. Sept. 30, 2009), is instructive and supports dismissal. There the plaintiff brought claims under the UCL, FAL, and CLRA, alleging that granola bars labeled “100% Natural” were misleading purchasers because they did not, in fact, contain completely natural ingredients. Id. at *1. Just as Plaintiffs do here, the plaintiff in Case 2:16-cv-04318-TJH-KS Document 31 Filed 09/16/16 Page 18 of 32 Page ID #:145 9 TJ’S NOTICE AND MOT. TO DISMISS FAC; MEM. OF P. & A. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Wright claimed that she purchased the products—and may even have paid a higher price for them—because the allegedly misleading representation on the front label led her to believe that the product was superior to comparative products. Id. In particular, the plaintiff claimed that “[a]s a direct result [of the deceptive advertising], Defendant caused Plaintiff and other members of the Class to purchase, purchase more of, or pay more for, these ... products.” Id. at *5. The court rejected this statement as a “sparse allegation of injury-in-fact” that “does not meet the Twombly and Iqbal pleading standard ... [F]actual allegations must provide more than ‘labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.’” Id. (citing Twombly, 550 U.S. at 555). The case for dismissal is even stronger here where Plaintiffs have also failed to plead any factual basis for the necessary predicate of their claims—the absence of maple syrup and maple sugar—and where there are no facts alleged to give rise to the inference that the Products do not comport with what the FDA expressly permits. C. A Reasonable Consumer Would Not Believe the Term “Maple” Necessarily Promises “Maple Syrup” or “Maple Sugar.” Plaintiffs’ claims under the UCL, FAL, CLRA, Mass. Gen. Laws ch. 93A, and Mass. Gen. Laws ch. 266, § 91 also fail for the independent reason that Plaintiffs allege no facts that could establish that any reasonable consumer, having reviewed the Products’ labels, would conclude that either Product necessarily contains maple syrup or maple sugar. This is so even if one were to accept, for pleading purposes only, Plaintiffs’ speculative and conclusory allegation that the Products did not contain those ingredients. Instead, a reasonable consumer would conclude only that the use of the term “maple” promises the Products are maple flavored. (Just like the reference to “fruit” in Fruity Pebbles suggests the cereals are fruit flavored.) Plaintiffs’ allegations do not and cannot overcome this straightforward conclusion that follows from a review of the Products’ labels and the FDA’s position that the term “maple” differs from the term “maple syrup.” Case 2:16-cv-04318-TJH-KS Document 31 Filed 09/16/16 Page 19 of 32 Page ID #:146 10 TJ’S NOTICE AND MOT. TO DISMISS FAC; MEM. OF P. & A. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Under the UCL, FAL, and CLRA, courts use the “reasonable consumer” test to determine whether product labels or advertisements are deceptive. Hill v. Roll Int’l Corp., 195 Cal. App. 4th 1295, 1304 (2011) (CLRA); Freeman v. Time, Inc., 68 F.3d 285, 289 (9th Cir. 1995) (UCL and FAL). The same standard governs Plaintiff Vuckovic’s claims under Chapter 93A and Chapter 266, § 91 of Massachusetts law. See, e.g., Aspinall v. Philip Morris Cos., 442 Mass. 381, 396 (2004) (under Mass. Gen. Laws ch. 93A, “an advertisement is deceptive when it has the capacity to mislead consumers, acting reasonably under the circumstances, to act differently from the way they otherwise would have acted”), called into doubt on other grounds by Hershenow v. Enterprise Rent-A-Car Company of Boston, Inc., 445 Mass. 790, 809 (2006).3 The “reasonable consumer” test focuses not on the “least sophisticated” or “unwary” consumer, but instead on the “ordinary consumer within the larger population.” Freeman, 68 F. 3d at 289-90; see Aspinall, 442 Mass. at 394 (“In determining whether an act or practice is deceptive ... [courts consider] the effect which [the act or practice] might reasonably be expected to have upon the general public.”) (citation and internal quotations omitted) (emphasis added). The key inquiry is whether it is “likely” that a consumer would be deceived by the product packaging at issue. McKinniss v. Sunny Delight Beverages Co., No. CV 07-02034- RGK, 2007 WL 4766525, at *3 (C.D. Cal. Sept. 4, 2007) (UCL, FAL, and CLRA claims); see Aspinall, 442 Mass. at 394 (act is deceptive under 93A where it “possesses ‘a tendency to deceive’”) (citation omitted). The deception must be “probable, not just possible.” McKinniss, 2007 WL 4766525, at *3 (UCL, FAL, and CLRA claims); see Aspinall, 442 Mass. at 394. 3 Courts analyzing claims under both Mass. Gen. Laws ch. 93A and Mass. Gen. Laws ch. 266, § 91 have assumed that similar elements apply to both. See, e.g., Bezdek, 2013 WL 639145, at *4 n.5 (noting that the court “will assume that an injury cognizable under chapter 93A is also cognizable under the false advertising statute”). Case 2:16-cv-04318-TJH-KS Document 31 Filed 09/16/16 Page 20 of 32 Page ID #:147 11 TJ’S NOTICE AND MOT. TO DISMISS FAC; MEM. OF P. & A. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 A lack of probability that consumers were deceived by product packaging is a basis for rejecting false-labeling claims at the pleading stage. McKinnis v. Kellogg USA, No. CV 07-2611 ABC, 2007 WL 4766060, at *3 (C.D. Cal. Sept. 19, 2007). That is the case here. Plaintiffs’ factual allegations do not establish that it is “probable” that a reasonable consumer would be misled into believing the Products contain maple syrup or maple sugar. Rather, the plain import of the reference to “maple” on the front panel of each Product is that both Products are maple flavored. First, nothing on the Products’ labels leads a reasonable consumer to believe that either Product contains maple syrup or maple sugar (although Trader Joe’s expects that discovery will demonstrate that both Products actually do contain maple syrup). Neither Product actually claims that it contains either maple syrup or maple sugar (or even references the terms “maple syrup” or “maple sugar”). Sloan Decl., Exs. 1, 2. And entirely absent from either Product label is any reference to the supposed health benefits Plaintiffs allege are associated with maple syrup and maple sugar. Compare id. with FAC ¶¶ 16-18. Instead, the back panel of the Oatmeal label actually heralds the health benefits of several other nutrients and ingredients (e.g., soy protein, calcium, B12, folic acid, and fiber) but says nothing about any supposed health benefits of maple syrup or maple sugar. Sloan Decl., Ex. 1. And the romance language included on the side panel of the Shredded Wheats label actually refers to the addition of “natural maple flavor,” not maple syrup or maple sugar. Id. Ex. 2. Plaintiffs’ claims hinge on a reference to “maple” on the front panel of each Product, and as to the Oatmeal, a photograph of a bowl of oatmeal topped with a brown substance that Plaintiffs contend represents the Oatmeal is sweetened with maple syrup or maple sugar.4 FAC ¶¶ 24, 25. But the reference to “maple” on the 4 This image demonstrates nothing. Plaintiffs assert that the label of the Oatmeal “prominently depicts” a picture of the Product sweetened with maple syrup or maple sugar. FAC ¶¶ 24, 25. But this image more probably depicts the Product sweetened with brown sugar, which is another ingredient in the Product. Id. Case 2:16-cv-04318-TJH-KS Document 31 Filed 09/16/16 Page 21 of 32 Page ID #:148 12 TJ’S NOTICE AND MOT. TO DISMISS FAC; MEM. OF P. & A. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 front panel of each Product is no more than a reference to a flavor in each Product. Id. It is not a promise of any particular ingredient. Moreover, Plaintiffs may not premise their claims on merely portions of the Products’ labels. The labels must be read as a whole. The Ninth Circuit’s opinion in Freeman v. Time, Inc. is instructive. There the court affirmed the dismissal of UCL, FAL, and CLRA claims on the grounds that, as a matter of law, a reasonable consumer would not have been led to believe she won the “Million Dollar Dream Sweepstakes” because the mailer “expressly and repeatedly state[d] the conditions which must be met [first] in order to win.” 68 F.3d at 289-90. Here, like in Freeman, statements on the Products’ labels make plain to any reasonable consumer, especially those who say they have read the labels, that the Products do not promise maple syrup or maple sugar as ingredients. The FDA—the very agency tasked with ensuring food products are not misbranded, see 21 U.S.C. § 343(a)—agrees. As recently as July 26, 2016, the FDA responded to the Vermont Maple Sugar Makers’ Association’s request that the FDA take enforcement action against manufacturers of products using the term “maple” on products that do not contain “maple syrup.” Declaration of Kate Ides in Support of Trader Joe’s Request for Judicial Notice (“Ides Decl.”), Ex. A. The Association asserted the very same claim made by Plaintiffs here, pleading with the FDA that labeling claims akin to those challenged here deceive consumers. FAC ¶ 30. The FDA disagreed, stating that “the term ‘maple’ is not synonymous with ‘maple syrup.’”5 Ides Decl., Ex. A. The FDA then stated that conflating the terms “maple” and “maple syrup” would “require, among other things, evidence that consumers perceive the terms to be synonymous and a change in FDA’s regulations.” Id. (emphasis added). Plaintiffs’ claims are at odds with the FDA’s position, which may inform whether a reasonable consumer would be misled by the 5 While Plaintiffs cite the Association’s letter in the FAC, the FAC does not mention the FDA’s response rejecting the letter. See FAC ¶ 30. Case 2:16-cv-04318-TJH-KS Document 31 Filed 09/16/16 Page 22 of 32 Page ID #:149 13 TJ’S NOTICE AND MOT. TO DISMISS FAC; MEM. OF P. & A. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 use of the term “maple.” See Rojas v. Gen. Mills, Inc., No. 12-cv-05099-WHO, 2013 WL 5568389, at *5 (N.D. Cal. Oct. 9, 2013) (informal FDA guidance backed by “the FDA’s expert judgments and authority” is “highly relevant to the Court’s determinations”); Ivie v. Kraft Foods Global, Inc., No. C-12-02554-RMW, 2013 WL 685372, at *12 (N.D. Cal. Feb. 25, 2013) (FDA’s guidance on “evaporated cane juice” was “relevant to the issue of whether [food] labels could be deceptive or misleading to a reasonable consumer”); see also Commonwealth v. AmCan Enters., Inc., 47 Mass. App. Ct. 330, 336 (1999) (extrinsic evidence may be considered to determine whether a reasonable consumer would interpret an implied claim in a certain way). D. Plaintiffs’ Claims Are Preempted. In any event, the FAC is preempted because Plaintiffs’ claims seek to impose food labeling standards different from and in conflict with those pronounced by the FDA. See, e.g., Backus v. Nestle USA, Inc. (“Backus I”), No. C-15-1963 MMC, 2016 WL 879673, at *3-8 (N.D. Cal. Mar. 8, 2016) (food adulteration and misbranding claims preempted where they sought to impose standards different from those developed by the FDA); see Pub. Lands for the People, Inc. v. U.S. Dep’t of Agric., 697 F.3d 1192, 1199 (9th Cir. 2012) (“Where an agency interprets its own regulation, even if through an informal process, its interpretation of an ambiguous regulation is controlling . . . unless plainly erroneous or inconsistent with the regulation.”) (internal citations and quotations omitted). The FDCA, as amended by the Nutrition Labeling and Education Act, sets forth uniform standards for food labeling and expressly preempts any food labeling requirement that is not identical to federal law. 21 U.S.C. § 343-1; Lilly v. ConAgra Foods, 743 F.3d 662, 664 (9th Cir. 2014). Additionally, any enforcement of state law that thwarts compliance with or frustrates the objectives of federal law is barred by the doctrine of conflict preemption. Backus I, 2016 WL 879673, at *2. The FDA’s opinion regarding the use of the term “maple” is in direct conflict Case 2:16-cv-04318-TJH-KS Document 31 Filed 09/16/16 Page 23 of 32 Page ID #:150 14 TJ’S NOTICE AND MOT. TO DISMISS FAC; MEM. OF P. & A. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 with Plaintiffs’ theory. As discussed above, the FDA’s July 26, 2016 letter to the Vermont Maple Sugar Makers’ Association clarified the meaning of its food labeling regulations—an act known as regulatory “gap-filling”—and, in so doing, set forth an interpretation of such regulations entitled to preemptive effect. Pub. Lands, 697 F.3d at 1199 (an agency’s interpretation of its own regulations, even if through an informal process, is controlling); cf. Reid v. Johnson & Johnson, 780 F.3d 952, 964-66 (9th Cir. 2015) (an agency decision to decline prosecuting a violation of a regulation is not entitled to preemptive effect due to absence of intent to clarify regulation). Because Plaintiffs’ proffered interpretation of the FDCA differs from that of the FDA, the FAC is preempted in its entirety. See Backus I, 2016 WL 879673, at *3-8 (claims that there is no safe amount of partially hydrogenated oils (“PHOs”) in food preempted where in conflict with FDA’s pronouncement discontinuing the use of PHOs, allowing a three year period for food manufacturers to come into compliance, and seeking more evidence in support of safe uses of PHOs, and where the President had signed into law a bill that prohibited any determinations by the FDA that PHOs are unsafe for use in foods before 2018). The result reached in Backus I is warranted here. If the Court were to accept Plaintiffs’ interpretation, it would be making a finding—that “maple” is synonymous with “maple syrup” (or “maple sugar”)—which the FDA already declined to make.6 E. The Primary Jurisdiction Doctrine Warrants a Stay of Plaintiffs’ Claims. In the alternative, this action should be stayed on primary jurisdiction grounds because the FDA is still evaluating the precise issue raised by the FAC. 6 Although Trader Joe’s does not believe the FAC can survive a Rule 12 motion, Trader Joe’s anticipates that fact discovery will only reveal further grounds to dismiss the FAC as preempted. Chacanaca v. Quaker Oats Co., 752 F. Supp. 2d 1111, 1119-23 (N.D. Cal. 2011) (food labeling claims preempted where defendant’s labeling practices complied with federal regulations). Case 2:16-cv-04318-TJH-KS Document 31 Filed 09/16/16 Page 24 of 32 Page ID #:151 15 TJ’S NOTICE AND MOT. TO DISMISS FAC; MEM. OF P. & A. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 See, e.g., Backus v. Gen. Mills, Inc. (“Backus II”), 122 F. Supp. 3d 909, 933-35 (N.D. Cal. 2015) (staying claims regarding use of PHOs where FDA was actively considering the issue); Reese v. Odwalla, Inc., 30 F. Supp. 3d 935, 940-42 (N.D. Cal. 2014) (staying claims regarding the use of the term “evaporated cane juice” following FDA’s announcement that it was considering the issue). When the FDA responded to a letter from the Vermont Maple Sugar Makers’ Association, as discussed above, the agency stated that it was in the process of creating a consumer update that will inform the public regarding the use of the term “maple” on food labels to help educate consumers about products the agency regulates. Ides Decl., Ex. A. In other words, the agency sees the use of the term “maple” as an issue within its regulatory purview and is already in the process of providing further guidance. Preventing private litigation from undermining the FDA’s deliberative process is exactly what the primary jurisdiction doctrine is set up to do. The doctrine allows a court to stay an otherwise cognizable claim that “implicates technical and policy questions that should be addressed in the first instance by the agency with regulatory authority over the relevant industry rather than by the judicial branch.” Clark v. Time Warner Cable, 523 F.3d 1110, 1114 (9th Cir. 2008) (citing Syntek Semiconductor Co. v. Microchip Tech. Inc., 307 F.3d 775, 780 (9th Cir. 2002)). And it applies “where there is: (1) [a] need to resolve an issue that (2) has been placed by Congress within the jurisdiction of an administrative body having regulatory authority (3) pursuant to a statute that subjects an industry or activity to a comprehensive regulatory authority that (4) requires expertise or uniformity in administration.” Syntek, 307 F.3d at 781. All of these factors are satisfied here. Through the FDCA, Congress gave the FDA exclusive authority to develop uniform standards for food and beverage labeling. 21 U.S.C. § 393(b)(2); Reese, 30 F. Supp. at 941. Further, the question of how, based on its particular characteristics and nature, a particular ingredient should Case 2:16-cv-04318-TJH-KS Document 31 Filed 09/16/16 Page 25 of 32 Page ID #:152 16 TJ’S NOTICE AND MOT. TO DISMISS FAC; MEM. OF P. & A. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 be declared on food labels is a technical issue requiring uniform standards. Id.; Swearingen v. Yucatan Foods, L.P., 59 F. Supp. 3d 961, 964 (N.D. Cal. 2014) (dismissing claims regarding the use of the term “evaporated cane juice” so that the FDA could continue considering how the ingredient should be declared). Application of the primary jurisdiction doctrine is particularly appropriate where, as here, the agency is actively considering an issue raised by private litigation. See, e.g., Kane v. Chobani LLC, 645 F. App’x 593, 594 (9th Cir. 2016) (non-precedential) (stay of proceedings regarding use of the terms “natural” and “evaporated cane juice” necessary to prevent waste of judicial resources where agency was actively considering both issues); Leonhart v. Nature’s Path Foods, Inc., No. 13-cv-00492-BLF, 2014 WL 6657809, at *5 (N.D. Cal. Nov. 21, 2014) (FDA announcement that it would provide further guidance on the term “evaporated cane juice” weighed in favor of stay); cf. Bruton v. Gerber Prods. Co., 961 F. Supp. 2d 1062, 1086 n.13 (N.D. Cal. 2013) (primary jurisdiction doctrine inapplicable where FDA expresses no interest in addressing an issue). The numerous cases regarding the use of the term “evaporated cane juice” filed in the Northern District of California are directly analogous to the present case. Those cases raised the question whether the use of the term “evaporated cane juice” violates the FDA’s common and usual name regulations and whether the ingredient “evaporated cane juice” should instead be declared as “sugar.” See, e.g., Thomas v. Costco Wholesale Corp., No. 12-cv-02908-BLF, 2014 WL 5872808, at *5 (N.D. Cal. Nov. 12, 2014). The vast majority of these cases were either dismissed or stayed on primary jurisdiction grounds after the FDA announced that it was reopening its consideration of the issue and intended to issue further guidance. Id.; see also Swearingen, 59 F. Supp. 3d at 963-64 (citing cases).7 7 The fact that the FDA has not set a date certain for its upcoming guidance is not dispositive. The important inquiry for a court, when determining whether to rule on an issue within the regulatory purview of a federal agency, is whether the agency in Case 2:16-cv-04318-TJH-KS Document 31 Filed 09/16/16 Page 26 of 32 Page ID #:153 17 TJ’S NOTICE AND MOT. TO DISMISS FAC; MEM. OF P. & A. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 F. Plaintiffs’ Nationwide Class Allegations Should Be Stricken Under Mazza. The FAC also is deficient in that it impermissibly seeks to apply California law to the claims of a putative nationwide class. FAC at 12-23, 28-29. Plaintiffs’ nationwide class allegations should be stricken because a nationwide class seeking relief under California’s consumer protection laws is contrary to controlling Ninth Circuit law. In Mazza v. American Honda Motor Co., 666 F.3d 581 (9th Cir. 2012), the plaintiffs—just like Plaintiffs here—asserted claims under the UCL, FAL, and CLRA, and a claim for unjust enrichment, and sought to certify a nationwide class as to all of these claims. Id. at 587. Applying California’s choice-of-law rules, the Ninth Circuit rejected class certification because it found that “each class member’s consumer protection claim should be governed by the consumer protection laws of the jurisdiction in which the transaction took place,” which precluded certification of a nationwide class. Id. at 594, 596. The Ninth Circuit found that there were material differences between California’s consumer protection laws (the UCL, FAL, and CLRA)8 and the consumer protection laws of other states, including whether proof of scienter is required, whether proof of reliance is required, and the remedies afforded under the various state statutes. Id. at 591. Material differences also exist here: • Actionable Conduct: The consumer protection statutes, state to state, materially differ in the conduct they proscribe. The UCL prohibits “unlawful, unfair or fraudulent” business practices. Cal. Bus. & Prof. Code § 17200. And the FAL prohibits dissemination of “untrue or misleading” statements. Id. § 17500. But neither the Alabama DPTA question has expressed an interest in addressing the issue). See, e.g., Kane, 645 F. App’x at 594; Reese, 30 F. Supp. 3d at 940-42; Leonhart, 2014 WL 6657809, at *5. 8 As to the unjust enrichment claim, the Ninth Circuit found that “the elements necessary to establish a claim for unjust enrichment also vary materially from state to state. Mazza, 666 F.3d at 591 (citation omitted). Case 2:16-cv-04318-TJH-KS Document 31 Filed 09/16/16 Page 27 of 32 Page ID #:154 18 TJ’S NOTICE AND MOT. TO DISMISS FAC; MEM. OF P. & A. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 nor the Texas DTP-CPA prohibits “unfair” business practices that are not grounded in deception or misrepresentation, nor can an Alabama or Texas plaintiff simply incorporate a violation of another statute as an “unlawful” practice as is the case under the UCL.9 And unlike the UCL, FAL, or CLRA, the Washington CPA requires plaintiffs to demonstrate that the alleged deceptive act affected a public interest. Hangman Ridge Training Stables, Inc. v. Safeco Title Ins. Co., 719 P.2d 531, 533 (Wash. 1986). • Remedies: The remedies available under the relevant statutes also vary considerably (and materially). Remedies under the UCL and FAL are limited to injunctive relief and restitution. Cal. Bus. & Prof. Code §§ 17203, 17535. The CLRA provides a wide array of remedies, including: (i) actual damages, with a minimum of $1,000 for class actions (but no minimum otherwise); (ii) injunctive relief; (iii) restitution; (iv) punitive damages with no statutory limit; and (v) “any other relief that the court deems proper.” Cal. Civ. Code § 1780(a). Under the Alabama DTPA and New Hampshire CPA, in contrast, plaintiffs can recover actual damages (with a minimum of $100 and $1,000, respectively), and under certain circumstances, courts may award up to three times the actual damages. Ala. Code § 8-19-10(a); N.H. Rev. Stat. § 358-A:10(I). And under the Texas DTP-CPA, plaintiffs can recover (i) “economic” damages (with no minimum), (ii) damages for “mental anguish” and up to three times the 9 The Alabama DPTA prohibits 26 specific acts and has one catchall category for “unconscionable, false, misleading, or deceptive acts.” Ala. Code § 8-19-5. The Texas DTP-CPA prohibits “false, misleading, or deceptive acts,” which is determined by “whether the statement has a tendency to deceive the ignorant, the unthinking, and the credulous who do not stop to analyze but are governed by appearances and general impressions.” Tex. Bus. & Com. Code Ann. § 17.46; RRTM Rest. Corp. v. Keeping, 766 S.W.2d 804, 808 (Tex. App. 1988). Case 2:16-cv-04318-TJH-KS Document 31 Filed 09/16/16 Page 28 of 32 Page ID #:155 19 TJ’S NOTICE AND MOT. TO DISMISS FAC; MEM. OF P. & A. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 economic damages for knowing or intentional violations, (iii) injunctive relief, (iv) restitution, and (v) “any other relief which the court deems proper.” Tex. Bus. & Com. Code Ann. § 17.50(b). These differences also are material. See Mazza, 666 F.3d at 591 (finding differences in available remedies material).10 The Ninth Circuit then concluded that each state “has a strong interest in applying its own consumer protection laws to [sales]” that take place within its boundaries. Id. at 592. In contrast, “California’s interest in applying its law to residents of foreign states is attenuated.” Id. at 593-94. The same is true here. Indeed, Plaintiffs’ proposed nationwide class is analogous to the nationwide class rejected in Mazza. Plaintiffs here seek to represent a nationwide class of purchasers, see FAC ¶ 39, not just California residents and not just those who purchased the Products in California. And so just as in Mazza, this nationwide class cannot be maintained because (i) there are material differences between the consumer protection laws of the various states; (ii) each state has a strong interest in applying its own laws to transactions within its boundaries; and (iii) California’s interest in applying the California law to foreign transactions is attenuated. Mazza 10 Plaintiffs here also seek to certify a nationwide class as to their first cause of action for fraudulent inducement and as to their second cause of action for beach of express warranty under Cal. Com. Code § 2313. FAC at 12-15. The inclusion of these claims does not change the ultimate result. As with the claims addressed in Mazza, there are material differences between fraudulent inducement claims from state to state. The burden of proof, for instance, varies from state to state: for California fraud claims, the burden is a preponderance of the evidence, see Liodas v. Sahadi, 19 Cal. 3d 278, 291 (1977), whereas under Alabama, New Hampshire, and Washington law, fraud claims must be proved by clear and convincing evidence, see Mannington Wood Floors, Inc. v. Port Epes Transp., Inc., 669 So. 2d 817, 824 (Ala. 1995); Hair Excitement v. L’Oreal U.S.A., Inc., 965 A.2d 1032, 1038 (N.H. 2009); Stiley v. Block, 925 P.2d 194, 204 (Wash. 1996). Material differences also exist state to state for breach of express warranty claims. See, e.g., Keegan v. Am. Honda Motor Co., No. CV 10-09508 MMM, 2012 WL 2250040, at *37-41 (C.D. Cal. June 12, 2012) (material differences in New York, California, and North Carolina express warranty laws). Case 2:16-cv-04318-TJH-KS Document 31 Filed 09/16/16 Page 29 of 32 Page ID #:156 20 TJ’S NOTICE AND MOT. TO DISMISS FAC; MEM. OF P. & A. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 therefore requires that Plaintiffs’ nationwide class allegations be stricken from the FAC, including from paragraphs 38-40, 42-49, 52, 54, 58-62, 67-70, 72, 76-79, 81- 83, 85-86, 88-90, 108, 110, 112-16, 139-41, & 144. While Mazza itself was decided at class certification, “the principle articulated in Mazza applies generally and is instructive even when addressing a motion to dismiss.” Frezza v. Google, Inc., No. 5:12-cv-00237, 2013 WL 1736788, at *6 (N.D. Cal. Apr. 22, 2013). Numerous district courts have followed Mazza in dismissing or striking nationwide class actions at the pleading stage where plaintiffs have improperly sought to apply California laws to injuries occurring in other states. See, e.g., Frenzel v. Aliphcom, 76 F. Supp. 3d 999, 1010 (N.D. Cal. Dec. 29, 2014); Route v. Mead Johnson Nutrition Co., No. CV 12-7350-GW, 2013 WL 658251, at *9 (C.D. Cal. Feb. 21, 2013); Frezza, 2013 WL 1736788, at *6. G. Plaintiffs Plead No Entitlement to Injunctive Relief. All claims for injunctive relief should be dismissed on the separate and additional ground that Plaintiffs do not allege they intend to purchase the Products in the future. Instead, Plaintiffs allege they overpaid for the Products and would not have purchased them had they known the Products “did not contain any maple syrup or maple sugars.” FAC ¶ 82. Now that Plaintiffs believe the Products do not contain maple sugar or maple syrup, they will not purchase the Products in the future. This allegation forecloses any entitlement to injunctive relief for Plaintiffs. Dabish v. Infinitelabs, LLC, No. 13-cv-2048 BTM, 2014 WL 4658754, at *6 (S.D. Cal. Sept. 17, 2014) (dismissing CLRA, UCL, and FAL claims where plaintiff did not show intent to purchase accused supplements again); Morgan v. Wallaby Yogurt Co., No. 13-cv-00296-WHO, 2014 WL 1017879, at *6 (N.D. Cal. Mar. 13, 2014) (dismissing claims for injunctive relief where plaintiffs failed to plausibly allege that they would purchase misbranded yogurt products again); Rahman v. Mott’s LLP, No. CV 13-3482 SI, 2014 WL 325241, at *10 (N.D. Cal. Jan. 29, 2014) (dismissing claims for injunctive relief where plaintiff failed to allege an intent to Case 2:16-cv-04318-TJH-KS Document 31 Filed 09/16/16 Page 30 of 32 Page ID #:157 21 TJ’S NOTICE AND MOT. TO DISMISS FAC; MEM. OF P. & A. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 purchase allegedly misbranded food products again in the future). It also forecloses any entitlement to injunctive relief as to the putative class. Hodgers-Durgin v. De la Vina, 199 F.3d 1037, 1045 (9th Cir. 1999) (“Unless the named plaintiffs are themselves entitled to seek injunctive relief, they may not represent a class seeking that relief.”). Some courts have found that plaintiffs may assert claims for injunctive relief where it is possible that they may purchase a product again if it is correctly advertised. See, e.g., Ries v. Ariz. Beverages USA LLC, 287 F.R.D. 523, 533-34 (N.D. Cal. 2012). However, that is not the case here. Plaintiffs object to a characteristic of the Products themselves—their alleged lack of maple syrup or maple sugar—and not just the labeling or advertising. Thus, their future purchase decisions of the Products would be unaffected by any corrective action. See, e.g., Davidson v. Kimberly-Clark Corp., 76 F. Supp. 3d 964, 970 (N.D. Cal. 2014) (no injunctive relief where product could never perform as desired). H. References to Punitive Damages Should Be Stricken from the FAC. Finally, Plaintiffs’ cursory reference to punitive damages, FAC ¶ 78, should be stricken from the FAC under Rule 12(f). Punitive damages are available where plaintiffs plead fraud, oppression, or malice on the part of the defendant. E.g., Cal. Civ. Code § 3294 (California law); Bor Pha v. Yia Yang, No. 2:12-cv-01580-TLN, 2013 WL 4546362, at *4 (E.D. Cal. Aug. 27, 2013). Plaintiffs plead nothing of the sort as to Trader Joe’s. The FAC lacks any allegations of oppression or malice on the part of Trader Joe’s. And while Plaintiffs assert a claim for fraudulent inducement, as set forth supra, Plaintiffs fail to allege a plausible injury as to that claim and thus have not pled any actionable fraudulent conduct. Trader Joe’s therefore requests that the Court strike the reference to punitive damages in the FAC as immaterial and impertinent under Rule 12(f). Case 2:16-cv-04318-TJH-KS Document 31 Filed 09/16/16 Page 31 of 32 Page ID #:158 22 TJ’S NOTICE AND MOT. TO DISMISS FAC; MEM. OF P. & A. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 IV. CONCLUSION Trader Joe’s respectfully seeks an order dismissing the FAC in its entirety. In the alternative, Trader Joe’s seeks an order staying the proceedings until further guidance is provided by the FDA. Finally, if the case is not dismissed or stayed in its entirety, Trader Joe’s seeks an order dismissing Plaintiffs’ claims for injunctive relief and striking all of the following paragraphs of the FAC: 38-40, 42-49, 52, 54, 58-62, 67-70, 72, 76-79, 81-83, 85-86, 88-90, 108, 110, 112-16, 139-41, & 144. Dated: September 16, 2016 O’MELVENY & MYERS LLP By: s/ Kate Ides Kate Ides Attorneys for Defendant Trader Joe’s Company Case 2:16-cv-04318-TJH-KS Document 31 Filed 09/16/16 Page 32 of 32 Page ID #:159 [PROPOSED] ORDER RE TJ’S MOT. TO DISMISS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DAWN SESTITO (S.B. #214011) dsestito@omm.com KATE IDES (S.B. #274820) kides@omm.com O’MELVENY & MYERS LLP 400 South Hope Street Los Angeles, California 90071-2899 Telephone: (213) 430-6000 Facsimile: (213) 430-6407 RANDALL W. EDWARDS (S.B. #179053) redwards@omm.com O’MELVENY & MYERS LLP Two Embarcadero Center, 28th Floor San Francisco, CA 94111-3823 Telephone: (415) 984-8700 Facsimile: (415) 984-8701 Attorneys for Defendant Trader Joe’s Company UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA MICHAEL STILES and ALEXANDER VUCKOVIC, individually and on behalf of classes of similarly situated individuals, Plaintiffs, v. TRADER JOE’S COMPANY, a California Corporation; and DOES 1 through 5, Defendant. Case No. 2:16-cv-04318-TJH-KS [PROPOSED] ORDER GRANTING DEFENDANT TRADER JOE’S COMPANY’S MOTION TO DISMISS PLAINTIFFS’ FIRST AMENDED COMPLAINT Hon. Terry J. Hatter, Jr. Hearing Date: November 7, 2016 Hearing Time: Under Submission Courtroom: 17 FAC Filed: August 26, 2016 Complaint Served: June 23, 2016 Case 2:16-cv-04318-TJH-KS Document 31-1 Filed 09/16/16 Page 1 of 2 Page ID #:160 1 [PROPOSED] ORDER RE TJ’S MOT. TO DISMISS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 On November 7, 2016, Defendant Trader Joe’s Company’s Motion to Dismiss Plaintiffs’ First Amended Complaint Pursuant to Federal Rules of Civil Procedure 12(b)(6) and 12(f) came on regularly for hearing before the Court, the Honorable Terry J. Hatter, Jr. presiding. Having considered Defendants’ Motion to Dismiss and all other supporting and opposing papers filed and arguments made, and good cause appearing: IT IS HEREBY ORDERED that Trader Joe’s Company’s Motion to Dismiss is GRANTED on the ground that Plaintiffs have failed to plead a plausible theory of injury as to all causes of action pled, and on the separate ground that all of Plaintiffs’ claims are foreclosed by the preemption doctrine because Plaintiffs seek to impose food labeling standards different from, and in conflict with, those of the Food and Drug Administration. IT IS SO ORDERED. DATED: THE HONORABLE TERRY J. HATTER, JR. UNITED STATES DISTRICT JUDGE Case 2:16-cv-04318-TJH-KS Document 31-1 Filed 09/16/16 Page 2 of 2 Page ID #:161