Swearingen et al v. Late July Snacks Llc

MOTION to Dismiss for Lack of Jurisdiction and Failure to State a Claim

N.D. Cal.October 31, 2016

DEFENDANT’S MOTION TO DISMISS AMENDED COMPLAINT; MPA IN SUPPORT THEREOF Case No. 13-cv-4324-EMC 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 POLLACK SOLOMON DUFFY LLP JOSHUA L. SOLOMON (admitted pro hac vice) 133 Federal Street Boston, MA 02110 Telephone: (617) 439-9800 Email: jsolomon@psdfirm.com ROPES & GRAY LLP ROCKY C. TSAI (CA Bar No. 221452) Three Embarcadero Center, Ste. 300 San Francisco, CA 94111-4006 Telephone: (415) 315-6300 Facsimile: (415) 315-6350 Email: rocky.tsai@ropesgray.com Attorneys for Defendant Late July Snacks LLC UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION MARY SWEARINGEN and ROBERT FIGY, individually and on behalf of all others similarly situated, Plaintiffs, v. LATE JULY SNACKS LLC, Defendant. Case No. 13-cv-4324-EMC DEFENDANT’S NOTICE OF MOTION AND MOTION TO DISMISS SECOND AMENDED COMPLAINT PURSUANT TO FEDERAL RULES OF CIVIL PROCEDURE 12(B)(1), 12(B)(6), AND 12(F); MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF Hearing Date: February 16, 2017 Time: 1:30 pm Place: Courtroom 5 Judge: The Hon. Edward M. Chen Case 3:13-cv-04324-EMC Document 101 Filed 10/31/16 Page 1 of 30 DEFENDANT’S MOTION TO DISMISS AMENDED COMPLAINT; MPA IN SUPPORT THEREOF Case No. 13-cv-4324-EMC 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 TABLE OF CONTENTS NOTICE OF MOTION AND MOTION TO DISMISS ...............................................................1 MEMORANDUM OF POINTS AND AUTHORITIES ..............................................................1 STATEMENT OF ISSUES TO BE DECIDED ...........................................................................1 RELEVANT FACTUAL ALLEGATIONS .................................................................................1 ARGUMENT................................................................................................................................2 I. Plaintiffs Assert No Viable Claim to the Extent They Pursue a “Strict Liability” Theory Not Dependent on Their Actual Reliance on the Term ECJ on Labels ...............2 II. Plaintiffs’ Claims of Actual Reliance Fail to State any Plausible Causes of Action........5 A. Plaintiffs Fail to Plead a Plausible and Internally Consistent Theory of Reliance.................................................................................................................6 B. Plaintiffs Have Not Pleaded a Factual Basis for Their Conclusory Assertion that a Reasonable Consumer Would Have Been Misled ....................................14 III. Plaintiffs Fail to Plead a Valid Claim for Unjust Enrichment ........................................17 IV. Plaintiffs’ Claims Are Preempted by Federal Law and Due Process Concerns .............18 A. Plaintiffs’ Efforts to Impose an “Added Sugar” Labeling Requirement Through California Law Are Preempted ............................................................18 B. Federal Preemption and Due Process Prohibit States From Banning Labeling Terms Prior to the FDA’s Clarification of Whether a Term Is Permissible .......20 V. Plaintiffs State No Valid Claims and Lack Standing to Pursue Claims for Sales Outside of California or Products They Did Not Purchase.............................................22 VI. Plaintiffs Do Not Have Standing to Seek Injunctive Relief ...........................................24 CONCLUSION...........................................................................................................................25 Case 3:13-cv-04324-EMC Document 101 Filed 10/31/16 Page 2 of 30 DEFENDANT’S MOTION TO DISMISS AMENDED COMPLAINT; MPA IN SUPPORT THEREOF Case No. 13-cv-4324-EMC -ii- 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 TABLE OF AUTHORITIES Cases Actimmune Mktg. Litig., 08-02376 MHP, 2010 WL 3463491 (N.D. Cal. Sept. 1, 2010), aff’d, 464 Fed. App’x. 651 (9th Cir. 2011) ......................................................................................... 4 Ashcroft v. Iqbal, 556 U.S. 662 (2009) .......................................................................................... 6 Astiana v. Hain Celestial Grp., Inc., 783 F.3d 753 (9th Cir. 2015)............................................. 17 Bell Atlantic v. Twombly, 550 U.S. 544 (2007) ............................................................................. 6 Brazil v. Dole Food Co., Inc., 12-01831-LHK, 2013 WL 5312418 (N.D. Cal. Sept. 23, 2013) ....................................................................................................................... 4, 5 Brod v. Sioux Honey Ass’n, 927 F.Supp.2d 811 (N.D. Cal. 2013) .................................. 14, 15, 16 Bronson v. Johnson & Johnson, Inc., No. 12-04184 CRB, 2013 WL 1629191 (N.D. Cal. Apr. 16, 2013) .......................................................................................................................... 25 Bruton v. Gerber Prods. Co., 12-02412-LHK, 2014 WL 172111 (N.D. Cal. Jan. 15, 2014) ... 3, 5 Carrea v. Dreyer’s Grand Ice Cream, Inc., 10-01044 JSW, 2011 WL 159380 (N.D. Cal. Jan. 10, 2011), aff’d, 475 F. App’x 113 (9th Cir. 2012) .......................................................... 14 Davidson v. Kimberly-Clark Corp., No. 14-01783-PJH, 2014 WL 7247398 (N.D. Cal. Dec. 19, 2014).......................................................................................................................... 25 Durell v. Sharp Healthcare, 183 Cal. App. 4th 1350 (2010)......................................................... 4 Ebner v. Fresh, Inc., 818 F.3d 799 (9th Cir. 2016) ..................................................................... 14 Fid. Nat. Title Ins. Co. v. Intercounty Nat. Title Ins. Co., 412 F.3d 745 (7th Cir. 2005) ............ 12 Figy v. Amy’s Kitchen, Inc., 13-3816 SI, 2013 WL 6169503 (N.D. Cal. Nov. 25, 2013)............. 3 Figy v. Frito-Lay N. Am., Inc., 67 F. Supp. 3d 1075 (N.D. Cal. 2014) ............................. 3, 22, 23 Freeman v. Time, Inc., 68 F.3d 285 (9th Cir. 1995) .................................................................... 14 Garrison v. Whole Foods Mkt. Grp., Inc., No. 13-05222-VC, 2014 WL 2451290 (N.D. Cal. June 2, 2014) .................................................................................................................................... 24 Ham v. Hain Celestial Grp., Inc., No. 14-02044-WHO, 2014 WL 4965959 (N.D. Cal. Oct. 3, 2014) ............................................................................................................................ 24 Hodgers-Durgin v. de la Vina, 199 F.3d 1037 (9th Cir.1999)..................................................... 24 Case 3:13-cv-04324-EMC Document 101 Filed 10/31/16 Page 3 of 30 DEFENDANT’S MOTION TO DISMISS AMENDED COMPLAINT; MPA IN SUPPORT THEREOF Case No. 13-cv-4324-EMC -iii- 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 Ibarrola v. Kind, LLC, 83 F. Supp. 3d 751 (N.D. Ill. 2015).......................................................... 8 In re Countrywide Fin. Corp. Sec. Litig., 588 F. Supp. 2d 1132 (C.D. Cal. 2008) ....................... 6 In re Tobacco II Cases, 46 Cal.4th 298 (2009)............................................................................ 16 Kane v. Chobani, Inc., 12-02425-LHK, 2013 WL 5289253 (N.D. Cal. Sept. 19, 2013) ..........................................................................3, 4, 6, 7-8, 9, 12, 23 Kane v. Chobani, LLC, 645 F. App’x 593 (9th Cir. 2016) ............................................................ 8 Kearns v. Ford Motor Co., 567 F.3d 1120 (9th Cir. 2009) ................................................... 11, 12 Khasin v. R. C. Bigelow, Inc., No. 12-02204-WHO, 2016 WL 1213767 (N.D. Cal. Mar. 29, 2016).......................................................................................................................... 24 Kwikset Corp. v. Superior Court, 51 Cal. 4th 310 (2011) ......................................................... 3, 4 Lanovaz v. Twinings N. Am., Inc, No. 12-02646-RMW, 2016 WL 4585819 (N.D. Cal. Sept. 2, 2016) ........................................................................................................................... 25 Lavie v. Procter & Gamble Co., 105 Cal. App. 4th 496 (2003) .................................................. 14 Leonhart v. Nature’s Path Foods, Inc, No. 13-00492-BLF, 2014 WL 6657809 (N.D. Cal. Nov. 21, 2014) ..................................................................................................................... 3, 23 Levitt v. Yelp! Inc., 765 F.3d 1123 (9th Cir. 2014) ........................................................................ 9 Mayfield v. United States, 599 F.3d 964 (9th Cir.2010).............................................................. 24 O’Shea v. Littleton, 414 U.S. 488 (1974) .................................................................................... 24 Ogden v. Bumble Bee Foods, LLC, 12-01828-LHK, 2014 WL 27527 (N.D. Cal. Jan. 2, 2014) .. 3 Pardini v. Unilever, 13-1675 SC, 2013 WL 3456872 (N.D. Cal. July 9, 2013) ......................... 22 Park v. Welch Foods, Inc., No. 12-06449-PSG, 2013 WL 5405318 (N.D. Cal. Sept. 26, 2013) ....................................................................................................................10-11 Peterson v. ConAgra Foods, Inc., No. 13-CV-3158-L NLS, 2014 WL 3741853 (S.D. Cal. July 29, 2014)..................................................................................................................... 21, 22 Pratt v. Whole Foods Market Cal., Inc., No. 13-3158-L, 2015 WL 5770799 (N.D. Cal. Sept. 30, 2015) ............................................................................................................... 3, 5, 8, 9 Racies v. Quincy Bioscience, LLC, No. 15-00292-HSG, 2015 WL 2398268 (N.D. Cal. May 19, 2015).......................................................................................................................... 25 Rojas-Lozano v. Google, Inc., 159 F. Supp. 3d 1101 (N.D. Cal. 2016) ...................................... 18 Case 3:13-cv-04324-EMC Document 101 Filed 10/31/16 Page 4 of 30 DEFENDANT’S MOTION TO DISMISS AMENDED COMPLAINT; MPA IN SUPPORT THEREOF Case No. 13-cv-4324-EMC -iv- 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 Romero v. Flowers Bakeries, LLC, No. 14-05189-BLF, 2015 WL 2125004 (N.D. Cal. May 6, 2015)...................................................................................................................... 24, 25 Shaker v. Nature’s Path Foods, Inc., 13-1138-GW, 2013 WL 6729802 (C.D. Cal. Dec. 16, 2013).......................................................................................................................... 14 Sullivan v. Oracle Corp., 51 Cal. 4th 1191 (2011) ...................................................................... 22 Swearingen v. Amazon Pres. Partners, Inc., No. 13-04402-WHO, 2014 WL 1100944 (N.D. Cal. Mar. 18, 2014) ................................................................................................................... 3 Swearingen v. Pac. Foods of Oregon, Inc., No. 13-04157-JD, 2014 WL 3767052 (N.D. Cal. July 31, 2014)............................................................................................................................. 3 Thomas v. Costco Wholesale Corp., No. 12-02908-BLF, 2014 WL 5872808 (N.D. Cal. \ Nov. 12, 2014) ........................................................................................................................... 9 Thomas v. Costco Wholsale Corp., No. 12-02908-EJD, 2014 WL 1323192 (N.D. Cal. Mar. 31, 2014)............................................................................................................................ 8 Trazo v. Nestle USA, Inc., 113 F. Supp. 3d 1047 (N.D. Cal. 2015) ............................................ 18 U. S. ex rel. Joseph v. Cannon, 642 F.2d 1373 (D.C. Cir. 1981)................................................. 12 United States v. AMC Entm’t, Inc., 549 F.3d 760 (9th Cir. 2008)............................................... 22 Victor v. R.C. Bigelow, Inc., No. 13-02976-WHO, 2016 WL 4502528 (N.D. Cal. Aug. 29, 2016) ......................................................................................................................... 24 Wilson v. Frito-Lay N. Am., Inc., 961 F. Supp. 2d 1134 (N.D. Cal. 2013)...................... 21, 22, 23 Statutes 21 U.S.C. § 343................................................................................................................ 18, 19, 20 21 U.S.C. § 343-1(a) ........................................................................................................ 18, 19, 20 Cal. Bus. & Prof. Code § 17204 .................................................................................................... 3 Rules and Regulations 21 C.F.R. § 10.115(c)(1).............................................................................................................. 17 21 C.F.R. § 101.9(c)........................................................................................................... 6, 18, 19 21 C.F. R. § 101.60(c).................................................................................................................. 19 Fed. R. Civ. P. 8............................................................................................................................. 6 Fed. R. Civ. P. 9(b) .........................................................................................................6, 7, 10-12 Fed. R. Civ. P. 12......................................................................................................................... 23 Case 3:13-cv-04324-EMC Document 101 Filed 10/31/16 Page 5 of 30 DEFENDANT’S MOTION TO DISMISS AMENDED COMPLAINT; MPA IN SUPPORT THEREOF Case No. 13-cv-4324-EMC 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 DISMISS NOTICE IS HEREBY GIVEN that Defendant Late July Snacks LLC respectfully moves for an order dismissing this action. The hearing on this motion shall take place on February 16, 2017 at 1:30 p.m., or as soon thereafter as the matter may be heard, in Courtroom 5, 17th Floor, of the above-entitled Court located at 450 Golden Gate Avenue, San Francisco, CA 94102. MEMORANDUM OF POINTS AND AUTHORITIES STATEMENT OF ISSUES TO BE DECIDED This action concerns use of the term “evaporated cane juice” (“ECJ”) on food labels. Plaintiffs allege that products with such labels are “misbranded” because ECJ is not an appropriate name. This motion raises the following issues: (1) should Plaintiffs’ strict-liability claims, which assert no need for actual reliance on the labels, be dismissed; (2) have Plaintiffs failed to plausibly plead their own reliance or that a reasonable consumer would be deceived; (3) does federal law preempt Plaintiffs’ claims; (4) are Plaintiffs limited to claims for sales in California and claims based on products they actually purchased; and (5) do Plaintiffs lack standing to seek injunctive relief. RELEVANT FACTUAL ALLEGATIONS Plaintiffs allege that Late July sells snack foods whose labels use the term ECJ in their ingredients lists. Plaintiffs allege they purchased some, but not all, of these products, and that they did so only in California. (Compl. ¶ 19.1) They claim that the term ECJ is misleading, making the products “misbranded,” because the ingredient is actually sugar or “dried cane syrup,” which contains sugar. (Id. ¶ 30.) Plaintiffs do not allege, however, that they sought to avoid sugar. In fact, they expressly allege that they knew Late July’s products contained sugars. (Id. ¶ 72.) Instead, they assert that the term ECJ hid the presence of “added sugars.” (Id.) 1 All references to the Complaint are to the currently operative Second Amended Complaint. Case 3:13-cv-04324-EMC Document 101 Filed 10/31/16 Page 6 of 30 DEFENDANT’S MOTION TO DISMISS AMENDED COMPLAINT; MPA IN SUPPORT THEREOF Case No. 13-cv-4324-EMC -2- 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 The complaint relies heavily on a draft FDA guidance from October 2009, entitled “Guidance for Industry: Ingredients Declared as Evaporated Cane Juice, Draft Guidance” (“Draft Guidance”). (See id. ¶¶ 51, 55-56.)2 The Draft Guidance addressed the term ECJ’s compliance with the common-or-usual-name rule, which requires most ingredients to be identified on labels by their common or usual names. On March 5, 2014, the FDA issued a notice that it was re- opening the comment period on the Draft Guidance. (RJN Ex. B.) As a result, this Court stayed this matter. On May 25, 2016, the FDA released its final guidance (the “Final Guidance”). (RJN C.) In doing so, the FDA noted that the Final Guidance “do[es] not establish legally enforceable responsibilities,” but rather “describe[s] [the FDA’s] current thinking on a topic and should be viewed only as recommendations.” (Id. at 3). By the time the FDA issued the Final Guidance, Late July was no longer using the term ECJ. (See Decl. of Paul Drakeford, filed herewith.) ARGUMENT I. Plaintiffs Assert No Viable Claim to the Extent They Pursue a “Strict Liability” Theory Not Dependent on Their Actual Reliance on the Term ECJ on Labels. The complaint describes Plaintiffs’ case as having “two facets,” the first of which it refers to as “the ‘UCL unlawful’ part” and brings in Count I. (Compl. ¶ 5.) Plaintiffs assert that one need not allege deception, or even review of the labels, that they claim are illegal. (Id.) The complaint refers to this as a “strict liability” theory. (Id. ¶ 68.)3 The UCL, however, is not available to those who do not claim to have suffered losses as a result of actual reliance on labels. As another Judge 2 A copy of the Draft Guidance is attached as Exhibit A to the accompanying Request for Judicial Notice (“RJN”). 3 In their original complaint, Plaintiffs based their entire action on this theory, eschewing any allegations of actual reliance. Following Late July’s first motion to dismiss, and several Judges of this Court expressly rejecting the strict-liability theory, Plaintiffs apparently recalled that they actually read and relied on the term ECJ. Case 3:13-cv-04324-EMC Document 101 Filed 10/31/16 Page 7 of 30 DEFENDANT’S MOTION TO DISMISS AMENDED COMPLAINT; MPA IN SUPPORT THEREOF Case No. 13-cv-4324-EMC -3- 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 of this Court recently held, “[a]t this point it appears settled that a plaintiff must plead actual reliance under each prong of the UCL, including the unlawful prong.” Pratt v. Whole Foods Market Cal., Inc., No. 13-3158-L, 2015 WL 5770799, at * 4 (N.D. Cal. Sept. 30, 2015). Numerous other recent decisions from this Court, all involving food labeling, including those involving ECJ and these same Plaintiffs, have rejected this strict-liability theory.4 For the same reason, Plaintiffs fail to state any valid claim based on Late July’s website, which they refer to in their complaint, but never allege they saw or relied on prior to making their purchases. See Leonhart v. Nature’s Path Foods, Inc, No. 13-00492-BLF, 2014 WL 6657809, at *4 (N.D. Cal. Nov. 21, 2014) (“The [complaint] does not allege that Plaintiff navigated to those websites or that she read any information thereon. Absent such allegations, Plaintiff fails to state a claim based upon information contained on the websites.”). These opinions rely primarily on Kwikset Corp. v. Superior Court, 51 Cal. 4th 310 (2011), which addressed the effects of California’s Proposition 64 on UCL “unlawful” claims. As Kwikset noted, Proposition 64 amended the UCL (and the FAL) to require that a plaintiff demonstrate that he or she “has suffered injury in fact and has lost money or property as a result of the unfair competition.” Cal. Bus. & Prof. Code § 17204, cited in Kwikset, 51 Cal. 4th at 320-22. Kwikset 4 Bruton v. Gerber Prods. Co., 12-02412-LHK, 2014 WL 172111, at *9 (N.D. Cal. Jan. 15, 2014) (“[T]he Court takes this opportunity to reiterate its position, stated in numerous other food misbranding cases, that actual reliance and injury are required to establish statutory standing under the UCL’s unlawful prong whenever the underlying alleged misconduct is deceptive or fraudulent. . . . Here, the essence of Bruton’s UCL claim is that Gerber’s labeling practices are misleading and deceptive.”); Pratt, 2015 WL 5770799, at * 4-5 (same, ECJ claim); Figy v. Frito- Lay N. Am., Inc., 67 F. Supp. 3d 1075, 1088 (N.D. Cal. 2014) (same, with same Plaintiffs); Swearingen v. Pac. Foods of Oregon, Inc., No. 13-04157-JD, 2014 WL 3767052, at *2 (N.D. Cal. July 31, 2014) (same, ECJ claim, same Plaintiffs); Swearingen v. Amazon Pres. Partners, Inc., No. 13-04402-WHO, 2014 WL 1100944, at *1 (N.D. Cal. Mar. 18, 2014) (same, ECJ claim, Plaintiff Swearingen); Ogden v. Bumble Bee Foods, LLC, 12-01828-LHK, 2014 WL 27527, at *7 (N.D. Cal. Jan. 2, 2014) (same); Figy v. Amy’s Kitchen, Inc., 13-3816 SI, 2013 WL 6169503, at *3-4 (N.D. Cal. Nov. 25, 2013) (same, ECJ claim, Plaintiff Figy); Kane v. Chobani, Inc., 12- 02425-LHK, 2013 WL 5289253, at *9 n.7 (N.D. Cal. Sept. 19, 2013) (same, ECJ claim). Case 3:13-cv-04324-EMC Document 101 Filed 10/31/16 Page 8 of 30 DEFENDANT’S MOTION TO DISMISS AMENDED COMPLAINT; MPA IN SUPPORT THEREOF Case No. 13-cv-4324-EMC -4- 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 held that this addition required a plaintiff to demonstrate a causal link between the harm complained of and the defendant’s unlawful conduct, which in the context of allegedly untrue statements on product labels meant actual reliance. Id. at 327-31. Applying Kwikset’s holding, Chobani held that “Plaintiffs’ ‘illegal product’ theory would eviscerate the enhanced standing requirements imposed by Proposition 64 and . . . Kwikset.” 2013 WL 5289253, at *9; see also Brazil v. Dole Food Co., Inc., 12-01831-LHK, 2013 WL 5312418, at *9 (N.D. Cal. Sept. 23, 2013) (“[Plaintiff’s] ‘illegal product’ theory is inconsistent with the enhanced standing requirements for UCL claims imposed by Proposition 64. . . .”). As these decisions recognized, cases alleging mislabeling of products necessarily involve claimed misrepresentations, thus falling within the caselaw that requires reliance as the mechanism of harm. See Actimmune Mktg. Litig., 08-02376 MHP, 2010 WL 3463491, at *8 (N.D. Cal. Sept. 1, 2010), aff’d, 464 Fed. App’x. 651 (9th Cir. 2011). Similarly here, Plaintiffs do not claim that something about the product itself made it unlawful and then harmed them, as might be the case if, for example, the actual use of the ingredient ECJ were illegal. The claimed wrongdoing involves not use of the ingredient, but the alleged conveying of false information about it through the term ECJ. The complaint is filled with express allegations of misrepresentations, even while it takes the position that Plaintiffs need not have relied on those misrepresentations. (See, e.g., Compl. ¶¶ 7, 11, 30.) In short, Plaintiffs’ theory puts this action squarely in the category of cases where the underlying “unlawfulness” requires actual reliance.5 5 While the complaint does not make clear whether Plaintiffs pursue a strict-liability theory under the CLRA and FAL, and states that it is only Count I through which Plaintiffs pursue this “facet” of their case, the same principles that undermine the UCL strict-liability claim would also require dismissal of the CLRA and FAL claims, which are subject to the same requirement. See, e.g., Kwikset, 51 Cal.4th at 326; Durell v. Sharp Healthcare, 183 Cal. App. 4th 1350, 1366- 67 (2010); Chobani, 2013 WL 5289253, at *5. Case 3:13-cv-04324-EMC Document 101 Filed 10/31/16 Page 9 of 30 DEFENDANT’S MOTION TO DISMISS AMENDED COMPLAINT; MPA IN SUPPORT THEREOF Case No. 13-cv-4324-EMC -5- 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 Clearly uneasy about their assertion that no reliance is required, Plaintiffs allege they “relied upon the Defendant’s implied representation that Defendant’s products were legal,” and that “[b]ecause these products are illegal to possess, they have no economic value.” (Id. ¶ 67.) These allegations are just another way of alleging that because the products were misbranded, they were illegal, which alone gives rise to a claim. In any event, shortly after Plaintiffs filed their Second Amended Complaint, the Ninth Circuit eviscerated this “outlandish” theory: [Plaintiff]’s pleadings could also be interpreted to assert that the allegedly deceptive labels rendered [defendant]’s fruit illegal to sell, to receive, and to possess under California law. In this sense, [plaintiff] seems to be suggesting that [defendant]’s website statements about certain fruit products subject him to risk of fine or prosecution if he is found in possession of that fruit product. We are unable to find support for this outlandish theory in the decisions of the California courts. Brazil v. Dole Packaged Foods, LLC, No. 14-17480, 2016 WL 5539863, at *1 (9th Cir. Sept. 30, 2016). The Ninth Circuit has thus held that the suggestion of legal risk for possessing items such as chips and crackers is absurd on its face. If Plaintiffs could satisfy the reliance requirement merely by alleging they “relied” on the products being legal, unlawful sales would make for strict liability, contrary to binding caselaw interpreting the California statutes on which Plaintiffs rely.6 II. Plaintiffs’ Claims of Actual Reliance Fail to State any Plausible Causes of Action. The second “facet” of the complaint is based on Plaintiffs’ assertion that they relied on and were deceived by Late July’s labels. This theory depends on a contention that the term ECJ deceived them into buying the products, and would also deceive reasonable consumers. But 6 Even if the Court were to credit this form of claimed “reliance,” Plaintiffs’ claims would run headlong into federal preemption. To the extent the implied-representation-of-illegality theory equates to a theory that Late July was required to label products with a notice that they were “misbranded,” such a theory would impose a labeling requirement beyond what the FDCA requires, and is thus expressly preempted. Pratt, 2015 WL 5770799, at *5 (“This theory constitutes nothing more than attempting to impose a requirement not identical to those imposed by federal law, and on that basis is expressly preempted by the FDCA.” (quotation marks omitted)); Bruton, 2014 WL 172111, at *13; Brazil, 2013 WL 5312418, at *10. Case 3:13-cv-04324-EMC Document 101 Filed 10/31/16 Page 10 of 30 DEFENDANT’S MOTION TO DISMISS AMENDED COMPLAINT; MPA IN SUPPORT THEREOF Case No. 13-cv-4324-EMC -6- 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 fail to plead any “plausible” theory of reliance and deception. Because these reliance-based claims are grounded in allegations of deception in labeling, Fed. R. Civ. P. 9(b) requires pleading with particularity. Chobani, 2013 WL 5289253, at *7 n.4 (applying Rule 9(b) to similar ECJ claims). Reliance is among the elements that must be pled with particularity. In re Countrywide Fin. Corp. Sec. Litig., 588 F. Supp. 2d 1132, 1198 (C.D. Cal. 2008). But even if Rule 8 governed, Plaintiffs’ obligation was at least to plead the necessary facts to make their claims “plausible,” without resort to conclusory assertions. “[L]abels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Bell Atlantic v. Twombly, 550 U.S. 544, 555 (2007). If the plaintiff “pleads facts that are merely consistent with a defendant’s liability, it stops short of the line between possibility and plausibility of entitlement to relief.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quotation marks omitted). A. Plaintiffs Fail to Plead a Plausible and Internally Consistent Theory of Reliance. Because some of the labels attached to the complaint disclose the presence of sugar, (e.g., Compl. Ex. 4), Plaintiffs could not allege that ECJ misled them into believing there was no sugar. The complaint expressly concedes Plaintiffs’ awareness of sugar in the products. (Id. ¶ 72.) Nor does it allege any violation of regulations concerning what labels must say about sugar content. Those regulations (1) require the disclosure of total sugar content only if it exceeds one gram, and (2) permit labels to state “zero sugar” if total sugar is below 0.5 grams. 21 C.F.R. § 101.9(c)(6)(ii). Thus unable to allege either a desire to avoid sugar or any violation of sugar-labeling regulations, Plaintiffs concoct an implausible theory: they claim not that they cared about total sugar, but about whether there was any “added sugar,” and that use of the term ECJ hid the latter. They put forth this theory despite the fact that at the time of the alleged purchases, no FDA regulation required Case 3:13-cv-04324-EMC Document 101 Filed 10/31/16 Page 11 of 30 DEFENDANT’S MOTION TO DISMISS AMENDED COMPLAINT; MPA IN SUPPORT THEREOF Case No. 13-cv-4324-EMC -7- 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 labels to differentiate between “naturally occurring” and “added” sugar content.7 In furtherance of this reliance theory, Plaintiffs allege that they “were health-conscious consumers who wished to avoid ‘added sugars,’” and that they “scanned the ingredient lists . . . for forms of added sugar,” as they were apparently savvy enough to know that “added sugar” can go by other names, and can be seen only by reviewing ingredients. (Compl. ¶¶ 72, 73.) Despite these claims, and despite knowing that there was sugar in the products – and despite their obligation to plead with particularity – Plaintiffs fail to allege what they understood “evaporated cane juice” to be when they (allegedly) read it on the labels. Their reliance theory thus begs the question, what did they believe this ingredient, which included the word “cane,” to be when they read it, if not a form of sugar? If they did not know anything about its meaning, why were they able to make the purchases confident that the products contained no “added sugar,” as they now claim in conclusory fashion? Aware of the presence of sugars in the products, as they expressly allege, why did they conclude that all sugar was naturally occurring in, for example, Late July’s peanut butter crackers? If, alternatively, they believed “cane juice” to be something other than a form of sugar or a substance containing sugar, what was it that they believed it to be? The complaint never says. Without providing factual allegations that answer these questions, Plaintiffs’ allegation that they were misled by the term ECJ because it “hid” the presence of “added sugar” does not state a plausible theory. And it certainly cannot satisfy Rule 9(b). This Court reached that exact conclusion in Chobani, where the plaintiffs’ claims were the same as those at issue here: “Plaintiffs allege that the term ECJ concealed the fact that the ingredient was essentially white sugar or dried cane syrup.” 2013 WL 5289253, at *6. The Court 7 Effective in 2018, the FDA will require that labels include “added sugar.” This regulation, still not effective, post-dates the sales of products alleged here. Case 3:13-cv-04324-EMC Document 101 Filed 10/31/16 Page 12 of 30 DEFENDANT’S MOTION TO DISMISS AMENDED COMPLAINT; MPA IN SUPPORT THEREOF Case No. 13-cv-4324-EMC -8- 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 held that these allegations were “simply not plausible”: Absent some factual allegation concerning what Plaintiffs believed ECJ to be if not a form of sugar or a juice containing some form of sugar, Plaintiffs’ allegations that they read the label, were aware that the Yogurts contained ECJ, and nevertheless concluded that the Yogurts contained “only natural sugars from milk and fruit and did not contain added sugars or syrups” is simply not plausible. Id. at *7 (footnote omitted).8 Similarly, with respect to Plaintiffs’ assertion that they assumed ECJ was some ingredient that was healthier than sugar, “it is just a restatement of the theory that Plaintiffs believed the [products] contained only ‘natural sugars from milk and fruit,’ which the Court has already concluded is not plausible.” Id. at *8. Other Judges of this Court have agreed: Plaintiff Liddle included the label of the purchased product, which lists “sugar” as an included nutrient and clearly show how much sugar is contained in the product. As in Chobani, Plaintiff Liddle indicates in the SAC that she knows that ECJ is the same as “sugar” and “dried cane syrup.” Further, the SAC fails to allege what Plaintiff Liddle believed ECJ to be if not sugar and does not explain what a reasonable person would believe ECJ to be. Thomas v. Costco Wholesale Corp., No. 12-02908-EJD, 2014 WL 1323192, at *9 (N.D. Cal. Mar. 31, 2014). In yet another ECJ case, the Court explained: Plaintiff must allege what he believed ECJ to be if not a sweetener for that theory to be plausible. Without that allegation, Plaintiff cannot reasonably state that he relied on the ECJ statement. . . . Similarly, it is implausible that Plaintiff believed ECJ was something healthy merely because it contains the word ‘juice’ in its name. A[] sugar conscious consumer like Plaintiff would not have been misled by the inclusion of the word ‘juice’ on the label because it is a word used to describe another popular and widely-recognized form of added sugar, namely ‘fruit juice concentrate.’ . . . Plaintiff cannot purport to be looking for sugar in ingredient lists but at the same time feign ignorance of common phrases that refer to sugar. Pratt, 2015 WL 5770799, at *6-7 (emphasis added); see also Ibarrola v. Kind, LLC, 83 F. Supp. 3d 751 (N.D. Ill. 2015). 8 The Chobani decision was eventually vacated, but solely on the ground that the Court should have applied the primary jurisdiction doctrine and stayed the case before ruling on the motion to dismiss. Kane v. Chobani, LLC, 645 F. App’x 593, 594 (9th Cir. 2016). Nothing in the vacatur decision addressed the merits of the District Court’s analysis, which remains persuasive. Case 3:13-cv-04324-EMC Document 101 Filed 10/31/16 Page 13 of 30 DEFENDANT’S MOTION TO DISMISS AMENDED COMPLAINT; MPA IN SUPPORT THEREOF Case No. 13-cv-4324-EMC -9- 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 have added an allegation that there are types of “cane” other than sugar cane, and thus could have been deceived by the term ECJ for that reason. But they offer no explanation for how they could have concluded – despite purposefully looking for ingredients that might be sugar by another name – that the word “cane” referred to one of the other types of cane, rather than the far more common sugar cane. In fact, in Chobani, the Court asked whether there was any type of cane other than sugar cane. Counsel, who is part of the same group of Plaintiffs’ counsel behind this and other ECJ actions, responded that there was not. 2013 WL 5289253, at *7 n.5. Plaintiffs’ lawyers have apparently since discovered that other substances are technically forms of “cane,” and thus the complaint here pleads that bamboo, sorghum, and corn are forms of “cane,” and that certain berries grow on “canes.” (Compl. ¶ 110.) Absent from the complaint, however, is any factual allegation from which one could conclude that the term “cane” is regularly used on food labels to refer to such things as bamboo, sorghum, corn, or the things on which berries grow, or that evaporated cane juice could plausibly have been confused with any of those things in the context of the specific snack foods at issue here, which Plaintiffs allege they knew to contain sugar. “[I]t simply cannot be that Plaintiff[s] thought ECJ referred to bamboo cane, sorghum cane, corn, or cane berries….” Pratt, 2015 WL 5770799 at *6 (citing Levitt v. Yelp! Inc., 765 F.3d 1123, 1135 (9th Cir. 2014), for the proposition that “[i]n all cases, evaluating a complaint’s plausibility is a ‘context-specific’ endeavor that requires courts to ‘draw on . . . judicial experience and common sense”); see also Thomas v. Costco Wholesale Corp., No. 12-02908- BLF, 2014 WL 5872808, at *5 (N.D. Cal. Nov. 12, 2014) (noting that plaintiff’s claims that she did not believe ECJ constituted “added sugar” “seem[ed] implausible”). Most importantly, while alleging that “cane” can refer to these other things, Plaintiffs never allege that at the time they purchased Late July’s products and read the term ECJ on them, they Case 3:13-cv-04324-EMC Document 101 Filed 10/31/16 Page 14 of 30 DEFENDANT’S MOTION TO DISMISS AMENDED COMPLAINT; MPA IN SUPPORT THEREOF Case No. 13-cv-4324-EMC -10- 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 in fact believed “cane” referred to one of these other items, rather than to the more common use of cane as sugar cane. Plaintiffs do not even allege that at the time of the purchases they were aware that “cane” could refer to something other than sugar cane (just as their counsel was not aware when arguing before the Chobani Court). The omission of any allegation as to what Plaintiffs thought “cane” meant, and their effort to suggest that it could have been confused with something other than sugar cane, are particularly suspect given Plaintiffs’ express allegation that they “were aware that the products contained some sugars.” (Compl. ¶ 72.) Late July pointed out this very pleading deficiency in its motion to dismiss the first amended complaint. Having now had an opportunity to amend again, Plaintiffs still have not added any allegation as to what they believed “cane” referred to in this context. Moreover, these Plaintiffs have brought at least nine putative class actions concerning use of ECJ on food labels. Through these actions, Plaintiffs make clear that they have purchased nine companies’ products – totaling at least 37 different products – including such items as sodas, energy drinks, and chocolate probiotic bars, all of which used the term ECJ on their labels. (RJN Exs. D-K.) Despite claiming to have purchased so many different products labeled with ECJ, thus claiming to have repeatedly read the term, and despite claiming to be sensitive to the presence of “added sugars” to the point of reading ingredients specifically in search of them, Plaintiffs implausibly contend that they did not know what ECJ was. Plaintiffs purchasing so many ECJ-containing products and filing so many lawsuits about them spotlight yet another pleading flaw. Despite the requirement that they plead with particularity under Rule 9(b), Plaintiffs never allege when they bought Late July’s products. They merely assert that they did so “during the Class Period.” (Compl. ¶¶ 19, 133.) That is insufficient. See Park v. Welch Foods, Inc., No. 12-06449-PSG, 2013 WL 5405318, at *4 (N.D. Cal. Sept. 26, Case 3:13-cv-04324-EMC Document 101 Filed 10/31/16 Page 15 of 30 DEFENDANT’S MOTION TO DISMISS AMENDED COMPLAINT; MPA IN SUPPORT THEREOF Case No. 13-cv-4324-EMC -11- 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 2013) (holding that plaintiffs “fall short of Rule 9(b)” where they did not allege “‘when during the class period, where, how many, or how many times’ they purchased the products.”). This omission is especially significant as Plaintiffs were repeatedly exposed to the term ECJ and necessarily realized at some point what ECJ actually was. When their purchases were made, in relation to all their other purchases of ECJ-containing products, and to their realizing that they were deceived, is an essential fact of the type that Rule 9(b) required them to plead. In fact, with respect to Late July products alone, the complaint alleges that Plaintiff Swearingen bought five different Late July products, and Plaintiff Figy four different products. (Compl. ¶ 2.) Yet the complaint never alleges when they made these purchases, how many of each product each plaintiff bought, and thus when and how often they read the term ECJ in their alleged searching of ingredients lists for added sugars. Such facts, required when pleading with particularity, speak directly to the plausibility of Plaintiffs’ claim of having actually read the labels and been deceived by them. But Plaintiffs allege only vaguely that they made the purchases “during the class period” and each spent more than $25.00. (Id. ¶¶ 19, 113.) Not only does Plaintiffs’ failure to plead with the necessary particularity prevent them from satisfying the reliance element specifically, but it is also a fatal flaw in its own right. By failing to plead when they purchased Late July products, how many times, and where, Plaintiffs have failed to satisfy Rule 9(b)’s requirement that their allegations “must be accompanied by ‘the who, what, when, where, and how’ of the misconduct charged.” Kearns v. Ford Motor Co., 567 F.3d 1120, 1124 (9th Cir. 2009). This is no mere technical failure that this Court can overlook. The failure not only prevents Plaintiffs from satisfying their obligation to plead a plausible claim as described above, but also prevents Rule 9(b) from serving its more general function “to prohibit plaintiffs from unilaterally imposing upon the court, the parties and society enormous social and Case 3:13-cv-04324-EMC Document 101 Filed 10/31/16 Page 16 of 30 DEFENDANT’S MOTION TO DISMISS AMENDED COMPLAINT; MPA IN SUPPORT THEREOF Case No. 13-cv-4324-EMC -12- 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 costs absent some factual basis.” Id. at 1125 (internal quotation marks and editing omitted). The rule also “serves to discourage the initiation of suits brought solely for their nuisance value,” U. S. ex rel. Joseph v. Cannon, 642 F.2d 1373, 1385 (D.C. Cir. 1981), and “to minimize the extortionate impact that a baseless claim of fraud can have on a firm or an individual.” Fid. Nat. Title Ins. Co. v. Intercounty Nat. Title Ins. Co., 412 F.3d 745, 748 (7th Cir. 2005). Rule 9(b) cannot function as designed if Plaintiffs’ approach to pleading is permitted. In addition, Plaintiffs’ complaint cites to and quotes extensively from an American Heart Association publication, which is therefore available on this motion. (Compl. ¶¶ 83-84.) That publication states, “Keep in mind that if the product has no fruit or milk products in the ingredients, all of the sugars in the food are from added sugars.” (RJN Ex. L (emphasis added).) As the labels that Plaintiffs included as exhibits demonstrate, most contain no fruit or milk. Thus, any sugar (and, again, Plaintiffs concede they were aware of the presence of sugar) presumptively came from added sources, making their deception claim even less plausible. Just as Plaintiffs fail to plead what they thought ECJ was when they read it, they also fail to plead what they understood the source of sugars to be in these particular products if not from “added” sources. And there’s more still. In an attempt to plead their claims consistent with the Draft Guidance, Plaintiffs allege that proper alternatives to the term ECJ would include “dried cane syrup.” They never explain, or allege facts that could explain by inference, how they could have been deceived by the term “evaporated cane juice,” while knowing that the term “dried cane syrup” referred to sugar. As the Chobani decision noted in rejecting Plaintiffs’ claims as implausible, “the [complaint] suggests that Plaintiffs understood that dried cane syrup was a form of sugar, since Plaintiffs refer to sugar and dried cane syrup interchangeably throughout the [complaint].” 2013 WL 5289253, at *7. Without factual allegations that could explain how the difference in these Case 3:13-cv-04324-EMC Document 101 Filed 10/31/16 Page 17 of 30 DEFENDANT’S MOTION TO DISMISS AMENDED COMPLAINT; MPA IN SUPPORT THEREOF Case No. 13-cv-4324-EMC -13- 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 two terms containing “cane” would have changed their buying decisions, and how one hid the presence of sugars while the other would have revealed it, Plaintiffs’ claims are implausible. Finally, Plaintiffs fail to allege the amount of ECJ in Late July’s products, and thus, according to their allegations, the amount of “added sugar.” This omission is significant in light of the recognized importance of the quantities of particular substances in food products. If products contain less than one gram of total sugar per serving, FDA regulations do not require disclosure of any sugar, regardless of source, and permit labels to state affirmatively “zero” grams if they contain less than 0.5 grams. In exercising its authority to regulate food labels, the FDA has thus determined that below certain thresholds, sugar content is so de minimis as not to require labels to disclose sugar at all, or even to permit labels to state “zero” grams of sugar. In addition, the complaint’s own cited sources identify “added sugars” not as something more inherently harmful than naturally occurring sugars, but as problematic because they add calories without providing nutritional value, and thus, to the extent eaten in excess, make it more difficult to get necessary nutrients while staying within caloric limits. See, e.g., NIH Website (cited in complaint ¶¶ 81-82; RJN Ex. M); Dietary Guidelines, at 14, 28 (cited in complaint ¶¶ 75-80; RJN Ex. N). Here, most of the products’ labels disclose no sugar in their nutrient content panels. (Compl. Exs. 1-9; RJN P.) Thus, the products here mostly contained amounts of sugar, from all sources, that fall below the FDA’s de minimis thresholds (Plaintiffs do not allege that Late July violated FDA regulations regarding disclosure of total sugar content). With no allegations as to the amount of “added sugars” in Late July Products – indeed, with labels that reveal de minimis amounts – and thus no factual allegations that speak to whether Late July products could contribute meaningfully to a diet containing “excessive amounts” of added sugars, Plaintiffs have failed to make plausible their assertion that the supposed hiding of added sugars could have deceived them Case 3:13-cv-04324-EMC Document 101 Filed 10/31/16 Page 18 of 30 DEFENDANT’S MOTION TO DISMISS AMENDED COMPLAINT; MPA IN SUPPORT THEREOF Case No. 13-cv-4324-EMC -14- 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 into buying products that they otherwise would not have purchased. Plaintiffs’ obligation was to state plausible claims, not just conclusory assertions that they would not have purchased the products had they known they contained “added sugars.” B. Plaintiffs Have Not Pleaded a Factual Basis for Their Conclusory Assertion that a Reasonable Consumer Would Have Been Misled. Plaintiffs’ claims become even less plausible when one moves from the allegation that they were deceived, to the allegation that a “reasonable consumer” would be. The UCL, CLRA, and FAL all require not just that Plaintiffs were deceived, or that some consumers would be, or even that most consumers might be. Rather, they must plead facts to support a claim that an ordinary and reasonable consumer would likely have been deceived. Freeman v. Time, Inc., 68 F.3d 285, 289 (9th Cir. 1995); Brod v. Sioux Honey Ass’n, 927 F.Supp.2d 811, 832 (N.D. Cal. 2013); Shaker v. Nature’s Path Foods, Inc., 13-1138-GW, 2013 WL 6729802, at *3 (C.D. Cal. Dec. 16, 2013). Plaintiffs are thus required to plead sufficient facts to demonstrate “that it is probable that a significant portion of the general consuming public or of targeted consumers, acting reasonably in the circumstances, could be misled.” Lavie v. Procter & Gamble Co., 105 Cal. App. 4th 496, 508 (2003) (emphasis added). “This requires more than a mere possibility that [a] label ‘might conceivably be misunderstood by some few consumers viewing it in an unreasonable manner.’” Ebner v. Fresh, Inc., 818 F.3d 799 (9th Cir. 2016) (quoting Lavie, 105 Cal. App. 4th at 495). The “reasonable consumer” standard also applies to whether an alleged misrepresentation is material. Brod, 927 F.Supp.2d at 831. While deceptiveness is often a fact issue, “dismissal of such claims is appropriate where the plaintiff fails to show the likelihood that a reasonable consumer would be deceived.” Carrea v. Dreyer’s Grand Ice Cream, Inc., 10-01044 JSW, 2011 WL 159380, at *5 (N.D. Cal. Jan. 10, 2011), aff’d, 475 F. App’x 113 (9th Cir. 2012). Thus, even if Plaintiffs themselves were sensitive to “added sugar” and susceptible to the Case 3:13-cv-04324-EMC Document 101 Filed 10/31/16 Page 19 of 30 DEFENDANT’S MOTION TO DISMISS AMENDED COMPLAINT; MPA IN SUPPORT THEREOF Case No. 13-cv-4324-EMC -15- 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 deception they allege, there are simply no facts alleged from which one could conclude that (1) a reasonable consumer would care about being able to identify how much “added sugar,” as opposed to total sugar, is in a product, at a time when the FDA required disclosure of only total sugar; and (2) even if a reasonable consumer shared Plaintiffs’ sensitivity, to the point of reading ingredients with an eye specifically to identifying “added sugar,” the reasonable consumer would see the term “evaporated cane juice” and conclude that it must not contain sugar; and (3) a reasonable consumer would associate the word “cane” with something other than sugar cane; and (4) a reasonable consumer, searching specifically for ingredients containing sugars, would react differently to the terms “evaporated cane juice” and “dried cane syrup”; and (5) the amount of “added sugar” in Late July’s products exceeds a level at which a reasonable consumer, not just Plaintiffs personally, would choose not to purchase them – despite most of the products having total sugar below the FDA’s disclosure threshold. When one adds to all of this that the reasonable consumer at issue would necessarily be one in the process of purchasing not health food or meals, but snack foods – because those are the only products that Late July is alleged to have sold – the claims become not just implausible, but outright fanciful. This Court dismissed claims on the pleadings in an analogous situation, involving allegations that failure of a product’s label to reveal that pollen had been removed from honey constituted an actionable misrepresentation. As this Court held: It is certainly possible that a particularly sophisticated consumer might consider pollen to be a valuable component of honey, such that the non-disclosure of its removal from Sue Bee Honey would likely result in deception to him or her. This, however, does not establish that the reasonable consumer would expect honey to contain pollen. Plaintiff’s complaint is silent on this point . . . . Brod, 927 F.Supp.2d at 828. For the same reasons, the Court found that the complaint failed to plausibly plead that “pollen (and its removal from honey) is of material concern to the ordinary Case 3:13-cv-04324-EMC Document 101 Filed 10/31/16 Page 20 of 30 DEFENDANT’S MOTION TO DISMISS AMENDED COMPLAINT; MPA IN SUPPORT THEREOF Case No. 13-cv-4324-EMC -16- 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 consumer.” Id. at 831. The Court so concluded despite California having prohibited use of the name honey if pollen had been removed (which the Court found was preempted). As in Brod, Plaintiffs have not pled a factual basis for concluding that a reasonable consumer buying snack food would likely share Plaintiffs’ sensitivity. And even if they had, Plaintiffs’ pleading would still fall short with respect to how such a reasonable consumer could be deceived by the specific term “evaporated cane juice.” Particularly without any allegations as to how much “added sugar” was supposedly “hidden” by the term ECJ, Plaintiffs also inadequately allege that using a different term, such as “dried cane syrup,” would “‘play[] a substantial part’ in the reasonable consumer’s decision” whether to purchase Late July’s products. Brod, 927 F.Supp.2d at 831 (quoting In re Tobacco II Cases, 46 Cal.4th 298, 326 (2009)). Nor does the FDA’s Final Guidance assist Plaintiffs’ effort to plead the necessary elements. The complaint mentions the Final Guidance in only one of its 212 paragraphs. (Compl. ¶ 57.) Plaintiffs include no allegations to connect the Final Guidance to the manner in which reasonable consumers would perceive the term. At most, the Final Guidance reflects that the “current” thinking of FDA staff is that the term ECJ is not compliant with the common-and-usual-name rule. While Late July respectfully disagrees with that position, given the thousands of products that have used the term on their labels over decades, it is undisputed that the Final Guidance is not binding and was not in place when the sales at issue were made. Most importantly for present purposes, the Final Guidance speaks only to the FDA staff’s “current” thinking – it says nothing whatsoever about how reasonable consumers would perceive the term, or, for that matter, whether reasonable consumers would have any perception. Nothing in the complaint alleges otherwise. Far from suggesting anything about the manner in which a reasonable consumer would perceive the term, the FDA’s guidance process indicates that even the FDA viewed the matter as Case 3:13-cv-04324-EMC Document 101 Filed 10/31/16 Page 21 of 30 DEFENDANT’S MOTION TO DISMISS AMENDED COMPLAINT; MPA IN SUPPORT THEREOF Case No. 13-cv-4324-EMC -17- 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 technical and highly unsettled one. When issuing the Draft Guidance in 2009, the FDA designated it as Level 1. (See RJN Ex. O.) That designation signifies that the guidance was to set forth an initial interpretation of a statutory or regulatory requirement, set forth a change in interpretation that is more than minor, address complex scientific issues, or cover highly controversial issues. 21 C.F.R. § 10.115(c)(1). Consistent with that designation, the FDA itself has still been unable to settle on a specific name. Had it been finalized, the 2009 Draft Guidance would have approved of the name “dried cane syrup.” (RJN Ex. A.) In the Final Guidance, however, the FDA expressly disavowed that name and opted not to choose one specific name. (RJN Ex. C.) In between those two documents, the FDA reopened the comment period, writing that “[w]e have not reached a final decision on the common or usual name for this ingredient.” (RJN Ex. B.) And this Court already concluded when staying this action that “[r]esolution of this issue requires the FDA’s expertise because it involves analysis of the method of manufacturing ECJ and whether that method differs from the manufacturing of sugar, understanding of the characterizing properties of ECJ ingredients, and the difference between ECJ and other sweeteners.” (Dkt. No. 65, at 5.) In short, the Final Guidance involves technical matters that were, until very recently, unsettled. It says nothing about how an ordinary, reasonable consumer would perceive the term. III. Plaintiffs Fail to Plead a Valid Claim for Unjust Enrichment. It is now established that “there is not a standalone cause of action for ‘unjust enrichment.’” Astiana v. Hain Celestial Grp., Inc., 783 F.3d 753, 762 (9th Cir. 2015). This claim can, however, be “construe[d]” “as a quasi-contract claim seeking restitution.” Id. Accordingly, “nonrestitutionary disgorgement is not the appropriate remedy for a quasi-contract claim based on alleged mislabeling of a consumer product.” Trazo v. Nestle USA, Inc., 113 F. Supp. 3d 1047, Case 3:13-cv-04324-EMC Document 101 Filed 10/31/16 Page 22 of 30 DEFENDANT’S MOTION TO DISMISS AMENDED COMPLAINT; MPA IN SUPPORT THEREOF Case No. 13-cv-4324-EMC -18- 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 1051 (N.D. Cal. 2015) (emphasis added). Claims for the full purchase price are thus generally not available. Id. at 1051-52. Further, “when a plaintiff fails to sufficiently plead an actionable misrepresentation or omission, his restitution claim must be dismissed.” Rojas-Lozano v. Google, Inc., 159 F. Supp. 3d 1101, 1120 (N.D. Cal. 2016) (quotation marks omitted). Here, Plaintiffs appear to base their “unjust enrichment” claim at least in part on claimed illegality alone, rather than a theory of misrepresentation. (Compl. ¶ 211 (“[T]he Class Products purchased by Plaintiffs and the Class were illegal products and were not what Defendant represented them to be.”).) They also expressly demand disgorgement of the full purchase price. (Id.) To that extent, Plaintiffs fail to plead a legally viable cause of action. And to the extent Plaintiffs seek restitution under a quasi-contract theory, they have failed to plead a plausible theory of misrepresentation, for the reasons discussed above. IV. Plaintiffs’ Claims Are Preempted by Federal Law and Due Process Concerns. A. Plaintiffs’ Efforts to Impose an “Added Sugar” Labeling Requirement Through California Law Are Preempted. The FDCA expressly preempts efforts by states to impose labeling requirements that are not identical to certain federal requirements. As discussed above, 21 C.F.R. § 101.9(c) regulates how sugar content is to be disclosed on labels, and imposed no requirement that a label separately disclose naturally occurring and added sugars. The FDA issued this regulation pursuant to 21 U.S.C. § 343, including § 343(q). The preemption provision of the FDCA makes clear that “no State . . . may directly or indirectly establish . . . any requirement for nutrition labeling of food that is not identical to the requirement of section 343(q).” 21 U.S.C. § 343-1(a)(4). Yet what Plaintiffs’ reliance-based claims actually amount to in the end are a lamentation that the FDA at the time required disclosure of only total sugar content, without distinction between naturally occurring and added sugars. And even with respect to disclosure of total sugar content, Case 3:13-cv-04324-EMC Document 101 Filed 10/31/16 Page 23 of 30 DEFENDANT’S MOTION TO DISMISS AMENDED COMPLAINT; MPA IN SUPPORT THEREOF Case No. 13-cv-4324-EMC -19- 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 FDA regulations required disclosure only if certain thresholds of total sugar are reached. To the extent Plaintiffs’ claims rely on an assertion that Late July’s labels “hide” the presence of added sugar, they seek to impose on food labels a requirement to make clear not just the presence of sugar – including in situations, as presented here, where the sugar content falls below the threshold for which no sugar disclosure is required – but also whether a portion of the sugars is “added,” rather than “naturally occurring.” Such a requirement would constitute a labeling requirement that is “not identical to” federal law, and thus is expressly preempted. Nor would any state law requiring disclosure of added sugar be a permissible “supplemental” requirement. The applicable regulation concerning sugar disclosure not only requires labels to disclose total sugar (except where the amounts fall below thresholds), but also specifies the exact words to be used and the way in which such disclosure must be made. 21 C.F.R. § 101.9(c). With respect to ingredients lists specifically, federal law imposes sugar-related requirements not whenever ingredients add sugar, but only in limited circumstances. Specifically, only if a label makes “sugar free” or similar claims do FDA regulations require an asterisk and specified language with respect to any ingredients that add sugar. Id. § 101.60(c)(1). Federal regulations also address “added sugar” by specifying when a label may use the term “no added sugar,” id. § 101.60(c)(2), which Plaintiffs have not accused Late July of violating. More generally, “nutrient content claims” are not only a matter of FDA regulations. A federal statute, 21 U.S.C. § 343(r)(1)(A), prohibits the making of any nutrient content claims characterizing the level of sugar, other than in the specific manner prescribed by federal law. The express-preemption provision of the FDCA, cited above, prohibits states from imposing “any requirement respecting any claim of the type described in section 343(r)(1) of this title, made in the label or labeling of food that is not identical to the requirement of section 343(r).” Id. § 343-1(a)(5). Case 3:13-cv-04324-EMC Document 101 Filed 10/31/16 Page 24 of 30 DEFENDANT’S MOTION TO DISMISS AMENDED COMPLAINT; MPA IN SUPPORT THEREOF Case No. 13-cv-4324-EMC -20- 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 B. Federal Preemption and Due Process Prohibit States From Banning Labeling Terms Prior to the FDA’s Clarification of Whether a Term Is Permissible. After a two-year stay through which the Court awaited FDA action on ECJ, Plaintiffs Second Amended complaint dedicates just one of its 212 paragraphs to the FDA’s Final Guidance. The reason for this scant attention is that the FDA’s decision to finalize the Guidance, and the process that brought it about, are fatal to Plaintiffs’ state-law claims. As the Court is aware from the earlier briefing and arguments regarding the stay of this case, the Draft Guidance was not only expressly non-binding, but as a draft, did not even yet represent FDA’s views – it was solely for comment purposes. Were there any doubt about that fact, the FDA re-opened the comment period on the Draft Guidance in March 2014, expressly stating that “[w]e have not reached a final decision on the common or usual name for this ingredient.” (RJN Ex. B.) When the FDA then finalized the guidance, it did not simply convert that earlier draft to final, but significantly overhauled it, reversing itself in a critical respect by expressly disavowing the name “dried cane syrup.” (RJN Ex. C.) In short, through its Final Guidance, and the process that led to it, the FDA declared that it was not at all clear how the common-or-usual-name rule applied to ECJ, at least until it issued its Final Guidance in May 2016. Federal law prohibits states from applying any prohibition on the term ECJ to the extent it was used before the issuance of the clarifying Final Guidance. Federal law requires manufacturers to use the common or usual name of ingredients on their labels. 21 U.S.C. § 343(i). The FDCA, in turn, preempts state labeling regulation that is not identical to what federal law requires in this regard. Id. § 343-1(a)(3). In a situation where the FDA determines that a particular provision of the FDCA or regulations issued under it is ambiguous, such that the FDA determines it must issue a clarification, this preemption provision allows for claims based on conduct contrary to the clarification only if that conduct occurs after the FDA has resolved its clarifying position. Case 3:13-cv-04324-EMC Document 101 Filed 10/31/16 Page 25 of 30 DEFENDANT’S MOTION TO DISMISS AMENDED COMPLAINT; MPA IN SUPPORT THEREOF Case No. 13-cv-4324-EMC -21- 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 Courts have so held recently in an analogous situation involving labeling treatment of MSG. In both Wilson v. Frito-Lay N. Am., Inc., 961 F. Supp. 2d 1134 (N.D. Cal. 2013), and Peterson v. ConAgra Foods, Inc., No. 13-CV-3158-L NLS, 2014 WL 3741853, at *3 (S.D. Cal. July 29, 2014), this Court and the Southern District of California addressed a federal regulation that required MSG to be listed as an ingredient only where MSG was a stand-alone ingredient. Where another ingredient contained MSG, the name of the MSG-containing ingredient, not MSG itself, was to be listed. Id. at 3; see also Wilson, 961 F. Supp. 2d at 1146. Under this regime, plaintiffs claimed that it was misleading for defendant’s product labels to assert “No MSG” in the latter situation, where MSG was not itself an ingredient (and thus was not to be listed as an ingredient), but where other ingredients that comprise the product did contain MSG. Id. at 1146; Peterson, 2014 WL 3741853, at *1. In November 2012, without issuing any new regulation, the FDA clarified its position that the MSG-labeling regulations prohibited “no MSG” assertions in those situations, thus agreeing with plaintiffs. Id. at *3. Plaintiffs relied on this clarification, as well as on earlier indications that the FDA was heading in that direction, such as warning letters. Id. at *3; Wilson, 961 F. Supp.2d at 1146. The Wilson and Peterson courts both held, however, that plaintiffs could not use state law to bring claims based on defendants’ use of the term “no MSG” before the FDA issued its clarification – even though the FDA was merely interpreting a regulation that existed at the time of the “no MSG” use, as opposed to issuing a new regulation. Id. at 1146-47; Peterson, 2014 WL 3741853, at *4. The Courts reasoned that the claims, by effectively giving content to an ambiguous regulation before the FDA clarified it, amounted to using state law to impose a requirement that was not identical to what federal law required at the time of the conduct. While framing them in preemption terms, the Courts also recognized that their holdings were grounded Case 3:13-cv-04324-EMC Document 101 Filed 10/31/16 Page 26 of 30 DEFENDANT’S MOTION TO DISMISS AMENDED COMPLAINT; MPA IN SUPPORT THEREOF Case No. 13-cv-4324-EMC -22- 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 in due process concerns about fair notice, which necessarily arise when a regulation needs clarity from the relevant agency. Id. at *4 (citing United States v. AMC Entm’t, Inc., 549 F.3d 760, 770 (9th Cir. 2008)); Wilson, 961 F. Supp.2d at 1147 (same). Here, Plaintiffs seek to do the same thing with ECJ. Sugar regulations strictly control when and the manner in which sugar disclosures are made, including when a label may assert “no added sugar.” By ultimately issuing the Final Guidance, the FDA indicated a need for clarification on how the common-or-usual-name rule applied to ECJ. Until the FDA issued its Final Guidance, that uncertainty remained. Indeed, the FDA said so explicitly as late as March 2014, and even reversed course in important ways. Yet Plaintiffs seek to hold Late July liable for using the term before the FDA issued the Final Guidance. Preemption and due process do not allow such claims. V. Plaintiffs State No Valid Claims and Lack Standing to Pursue Claims for Sales Outside of California or Products They Did Not Purchase. The complaint contains no allegations that would make the California laws on which it relies applicable to sales in other states. The complaint alleges that Plaintiffs purchased products only in California. Yet Plaintiffs improperly purport to represent a nationwide class, based on claims under only California law. The California Supreme Court has recognized a general “presumption against extraterritorial application,” and applied that presumption to the UCL. Sullivan v. Oracle Corp., 51 Cal. 4th 1191, 1207 (2011). The same is true for Plaintiffs’ other claims, including under the CLRA and FAL, “where none of the alleged misconduct or injuries occurred in California.” Wilson, 961 F. Supp. 2d at 1147; see also Figy, 67 F. Supp.3d at 1086-87. Here, there is no pleaded nexus between California and sales in other states. Conversely, even were Plaintiffs to invoke other states’ laws for sales outside California (which they have not done), they would have no standing to assert claims under those laws because they did not buy products there. Pardini v. Unilever, 13-1675 SC, 2013 WL 3456872, at *9 (N.D. Cal. July 9, 2013). Whether Case 3:13-cv-04324-EMC Document 101 Filed 10/31/16 Page 27 of 30 DEFENDANT’S MOTION TO DISMISS AMENDED COMPLAINT; MPA IN SUPPORT THEREOF Case No. 13-cv-4324-EMC -23- 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 viewed as subject to dismissal for lack of standing to sue based on transactions under other states’ laws (Rule 12(b)(1)) or for a failure to state viable claims for non-California sales (Rule 12(b)(6)), or as instead subject to being stricken under Rule 12(f), the complaint’s effort to represent non- California consumers is improper. See id.; Wilson, 961 F. Sup. 2d at 148. Furthermore, in earlier complaints, Plaintiffs recited an intention to represent a California- only class as an alternative to their proposed nationwide class. (Dkt. No. 26 ¶ 132.) For whatever tactical reason, Plaintiffs opted in their Second Amended Complaint to abandon the smaller, alternative class, and to seek only a nationwide class. Because their nationwide class is not viable, Plaintiffs’ class allegations should be dismissed or stricken in their entirety: “[U]nlike the Plaintiffs in Wilson, Plaintiffs here have not pleaded an alternative California-specific subclass. . . . As a result, all of Plaintiffs’ class claims must be DISMISSED.” Figy, 67 F. Sup. 3d at 1087. Similarly, while there is conflicting authority as to whether plaintiffs can ever maintain claims based on products they did not purchase, those courts finding it possible require plaintiffs to plead “sufficient similarity” among products, even where the alleged misrepresentations are the same. See, e.g., Chobani, 2013 WL 5289253, at *11. Here, the complaint alleges only that the non- purchased products “are packaged identically” and “vary only in flavor” from the purchased products. (Compl. ¶ 141). The conclusory allegation that the other products are “packaged identically” is illogical in light of the purchased products themselves not all having identical packaging, such as with respect to total sugar content. Plaintiffs thus do not allege, for example, whether the non-purchased products’ labels disclose any total sugar content, or whether total sugar content from all sources is meaningful or de minimis. Plaintiffs’ conclusory allegations are insufficient to bestow on themselves standing to bring claims based on products they did not purchase. See Leonhart, 2014 WL 6657809, at *3. Case 3:13-cv-04324-EMC Document 101 Filed 10/31/16 Page 28 of 30 DEFENDANT’S MOTION TO DISMISS AMENDED COMPLAINT; MPA IN SUPPORT THEREOF Case No. 13-cv-4324-EMC -24- 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 VI. Plaintiffs Do Not Have Standing to Seek Injunctive Relief. Plaintiffs lack standing to seek injunctive relief as there is no “real and immediate threat” that they could be harmed in the future0. Even had Plaintiffs adequately pled that they were deceived, “[p]ast exposure to illegal conduct does not in itself show a present case or controversy regarding injunctive relief.” O’Shea v. Littleton, 414 U.S. 488, 495-96 (1974); see also Mayfield v. United States, 599 F.3d 964, 970 (9th Cir.2010). “Instead, to establish Article III standing, a plaintiff must show inter alia that he faces imminent injury . . . .” Id. (internal quotation marks and editing omitted). “Furthermore, in the context of a class action, ‘[u]nless the named plaintiffs are themselves entitled to seek injunctive relief, they may not represent a class seeking that relief.’” Id. (quoting Hodgers-Durgin v. de la Vina, 199 F.3d 1037, 1045 (9th Cir.1999)). In this case, Plaintiffs do not have standing for injunctive relief for at least three reasons. First, as they claim to know now that ECJ adds sugar, Plaintiffs cannot plausibly allege they will be misled in the future. This Court has repeatedly held that “[p]laintiffs . . . who were previously misled by deceptive food labels and now claim to be better informed, lack standing for injunctive relief because there is no danger that they will be misled in the future.” Khasin v. R. C. Bigelow, Inc., No. 12-02204-WHO, 2016 WL 1213767, at *5 (N.D. Cal. Mar. 29, 2016).9 Second, Plaintiffs have not pled an intent to buy these products again. To the contrary, they repeatedly allege, given their “desir[e] to purchase healthy food products, free of added or excessive sugar,” that they would not have purchased the products if they had realized from reading the labels that the products contained added sugar. (Compl. ¶¶ 34, 97-8, 139.) This lack 9 See also Ham v. Hain Celestial Grp., Inc., No. 14-02044-WHO, 2014 WL 4965959, at *6 (N.D. Cal. Oct. 3, 2014); Garrison v. Whole Foods Mkt. Grp., Inc., No. 13-05222-VC, 2014 WL 2451290, at *5 (N.D. Cal. June 2, 2014); Victor v. R.C. Bigelow, Inc., No. 13-02976-WHO, 2016 WL 4502528, at *6 (N.D. Cal. Aug. 29, 2016); Romero v. Flowers Bakeries, LLC, No. 14- 05189-BLF, 2015 WL 2125004, at *7 (N.D. Cal. May 6, 2015). Case 3:13-cv-04324-EMC Document 101 Filed 10/31/16 Page 29 of 30 DEFENDANT’S MOTION TO DISMISS AMENDED COMPLAINT; MPA IN SUPPORT THEREOF Case No. 13-cv-4324-EMC -25- 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 of intent to make future purchases is fatal to Plaintiffs’ standing to seek an injunction. Racies v. Quincy Bioscience, LLC, No. 15-00292-HSG, 2015 WL 2398268, at *5 (N.D. Cal. May 19, 2015) (“In false advertising cases, ‘where a plaintiff has no intention of purchasing the product in the future, a majority of district courts have held that the plaintiff has no standing to seek prospective injunctive relief. . . .’” (quoting Davidson v. Kimberly-Clark Corp., No. 14-01783-PJH, 2014 WL 7247398, at *4 (N.D. Cal. Dec. 19, 2014))); Lanovaz v. Twinings N. Am., Inc, No. 12-02646- RMW, 2016 WL 4585819, at *4-5 (N.D. Cal. Sept. 2, 2016) (“[a]dopt[ing] the majority view that a plaintiff must intend to purchase a product in the future in order to have standing to seek injunctive relief”). If a plaintiff does not state that she intends to purchase the products in the future, she does not have standing to seek injunctive relief. Romero, 2015 WL 2125004 at *7.10 Finally, Late July no longer uses the term ECJ on labels, and has not done so since 2014. (See Decl. of Paul Drakeford ¶ 3.) Where a company has ceased using the challenged labeling practice, a plaintiff’s request for injunctive relief is “render[ed] moot.” Bronson v. Johnson & Johnson, Inc., No. 12-04184 CRB, 2013 WL 1629191, at *1 n. 2 (N.D. Cal. Apr. 16, 2013); Lanovaz, 2016 WL 4585819, at *3 (N.D. Cal. Sept. 2, 2016). CONCLUSION For the foregoing reasons, Late July respectfully requests that the Court dismiss this action in its entirety. Dated: October 31, 2016 By: /s/ Rocky C. Tsai Rocky C. Tsai Attorney for Defendant 10 See also Anderson v. The Hain Celestial Grp., Inc., 87 F. Supp. 3d 1226, 1234 (N.D. Cal. 2015); Gershman v. Bayer HealthCare LLC, No. 14-05332-HSG, 2015 WL 2170214, at *8 (N.D. Cal. May 8, 2015); Victor, 2016 WL 4502528, at *6; Gallagher v. Chipotle Mexican Grill, Inc., No. 15-03952-HSG, 2016 WL 454083, at *3 (N.D. Cal. Feb. 5, 2016) Case 3:13-cv-04324-EMC Document 101 Filed 10/31/16 Page 30 of 30 [PROPOSED] ORDER GRANTING DEFENDANT’S MOTION TO DISMISS Case No. 13-cv-4324-EMC 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 POLLACK SOLOMON DUFFY LLP JOSHUA L. SOLOMON (admitted pro hac vice) 133 Federal Street Boston, MA 02110 Telephone: (617) 439-9800 Email: jsolomon@psdfirm.com ROPES & GRAY LLP ROCKY C. TSAI (CA Bar No. 221452) Three Embarcadero Center, Ste. 300 San Francisco, CA 94111-4006 Telephone: (415) 315-6300 Facsimile: (415) 315-6350 Email: rocky.tsai@ropesgray.com Attorneys for Defendant Late July Snacks LLC UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION MARY SWEARINGEN and ROBERT FIGY, individually and on behalf of all others similarly situated, Plaintiffs, v. LATE JULY SNACKS LLC, Defendant. Case No. 13-cv-4324-EMC [PROPOSED] ORDER GRANTING DEFENDANT’S MOTION TO DISMISS Case 3:13-cv-04324-EMC Document 101-1 Filed 10/31/16 Page 1 of 21 [PROPOSED] ORDER GRANTING DEFENDANT’S MOTION TO DISMISS Case No. 13-cv-4324-EMC 1 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 Having considered Defendant Late July Snacks LLC’s (“Defendant”) motion pursuant to Federal Rules of Civil Procedure 12(b)(1), 12(b)(6), and 12(f) (“Motion”) to dismiss all claims alleged in the Second Amended Complaint (“Complaint”) of plaintiffs Robert Figy and Mary Swearingen (“Plaintiffs”), and good cause appearing, IT IS HEREBY ORDERED that Defendant’s Motion is GRANTED. Plaintiffs’ Complaint against Defendant is hereby dismissed. I. STATEMENT OF ISSUES TO BE DECIDED This action concerns Defendant’s use of the term “evaporated cane juice” (“ECJ”) on certain food labels. Plaintiffs allege that products containing such labels are “misbranded,” as ECJ is allegedly not an appropriate name for the ingredient to which it refers. Plaintiffs rely for this contention primarily on a 2009 draft guidance document from the federal Food and Drug Administration (the “FDA”) addressing the term ECJ’s compliance with the common-or-usual- name rule, which requires most ingredients to be identified on labels by their common or usual names. After the FDA announced that it would re-open the comment period on its draft guidance, this action was stayed from March 2014 to May 2016, pending finalization of the guidance. The FDA’s final guidance published on May 25, 2016 (the “Final Guidance”) states that it reflects the agency’s “current thinking” but “do[es] not establish legally enforceable responsibilities.”1 The Motion raises five general issues for decision: (1) should Plaintiffs’ “strict liability” claims be dismissed; (2) have Plaintiffs plausibly pleaded their own reliance on the alleged mislabeling or that a reasonable consumer would have been deceived; (3) does federal law preempt Plaintiffs’ state-law claims; (4) must Plaintiffs be limited to claims for sales in California and claims based on those products they have actually purchased; and (5) do 1 Defendant’s request for judicial notice regarding the draft guidance, the notice of reopening and the Final Guidance (Exhibits A–C to Defendant’s Request for Judicial Notice) is granted. See United States v. 14.02 Acres of Land More or Less in Fresno Cnty., 547 F.3d 943, 955 (9th Cir. 2008) (noting that appropriate materials for judicial notice include “records and reports of administrative bodies”); see also Glenbrook Homeowners’ Ass’n v. Scottsdale Ins. Co., 858 F. Supp. 986, 987 (N.D. Cal. 1994) (“While generally the court is confined to consideration of the allegations in the complaint, documents referred to in the complaint may also be considered.”). Case 3:13-cv-04324-EMC Document 101-1 Filed 10/31/16 Page 2 of 21 [PROPOSED] ORDER GRANTING DEFENDANT’S MOTION TO DISMISS Case No. 13-cv-4324-EMC 2 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 have standing to seek injunctive relief. Plaintiffs have failed to plead any legally cognizable claims, including failing to plead prerequisites to their standing. Specifically, Plaintiffs’ “strict liability” theory that reliance is unnecessary cannot support a viable claim; Plaintiffs have failed to plausibly plead that they relied, or that a reasonable consumer would rely, upon the alleged mislabeling; Plaintiffs’ claims are preempted by federal law to the extent they attempt to impose labeling requirements different from those imposed by federal statute and by the FDA; Plaintiffs are not permitted to proceed on their claims under the UCL and CLRA for extraterritorial sales of products outside California; Plaintiffs lack standing to assert claims based on Defendant’s products that Plaintiffs did not themselves purchase; and Plaintiffs lack standing to seek injunctive relief. II. STATEMENT OF RELEVANT FACTS Plaintiffs allege that Late July sells snack foods, whose labels use the term ECJ in their ingredients lists. Plaintiffs allege they purchased some, but not all, of these products, and that they did so only in California. (Compl. ¶ 19.) They claim that the term ECJ is misleading, making the products “misbranded,” because the ingredient is actually sugar or “dried cane syrup,” which contains sugar. (Id. ¶ 30.) Plaintiffs do not allege, however, that they sought to avoid sugar and they concede that they knew Late July’s products contained sugars. (Id. ¶ 72.) Instead, they assert only that the term ECJ hid the presence of “added sugars.” (Id.) Like Plaintiffs’ original complaint, the Second Amended Complaint relies heavily on the draft FDA guidance from October 2009, entitled “Guidance for Industry: Ingredients Declared as Evaporated Cane Juice, Draft Guidance” (“Draft Guidance”). (See id. ¶¶ 51, 55-56.) Following an extended notice-and-comment period, the FDA released its Final Guidance on May 25, 2016. In doing so, the FDA noted that the Final Guidance “do[es] not establish legally enforceable responsibilities,” but rather “describe[s] [the FDA’s] current thinking on a topic and should be viewed only as recommendations.” (Final Guidance at 3). By the time the FDA issued the Final Guidance, Late July was no longer using the term ECJ. III. DISCUSSION Under Federal Rule of Civil Procedure 12(b)(6), a party may move to dismiss based on Case 3:13-cv-04324-EMC Document 101-1 Filed 10/31/16 Page 3 of 21 [PROPOSED] ORDER GRANTING DEFENDANT’S MOTION TO DISMISS Case No. 13-cv-4324-EMC 3 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 the failure to state a claim upon which relief may be granted. A motion to dismiss based on Rule 12(b)(6) challenges the legal sufficiency of the claims alleged. See Parks Sch. of Bus. v. Symington, 51 F.3d 1480, 1484 (9th Cir. 1995). “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 554, 570 (2007)). “[T]hreadbare recitals of a cause of action’s elements, supported by mere conclusory statements,” are “not entitled to the assumption of truth.” Iqbal, 556 U.S. at 678. In resolving a motion to dismiss, “a court may take judicial notice of facts outside the pleading,” and “doing so does not convert a Rule 12(b)(6) motion to one for summary judgment.” Mack v. South Bay Beer Distributors, 798 F.2d 1279, 1282 (9th Cir. 1986). When a cause of action relates to alleged misrepresentations or deception, Federal Rule of Civil Procedure 9(b) requires that the elements of that claim – including reliance – be pleaded with particularity. In re Countrywide Fin. Corp. Sec. Litig., 588 F. Supp. 2d 1132, 1198 (C.D. Cal. 2008); see also Kane v. Chobani, Inc., 12-02425-LHK, 2013 WL 5289253, at *7 n.4 (N.D. Cal. Sept. 19, 2013). A. Plaintiffs’ First “Strict Liability” Count Asserts No Viable Claim. Count I of the Second Amended Complaint asserts a claim under the California Unfair Competition Law (“UCL”), expressly referred to as a “strict liability” theory, that has been repeatedly rejected in cases like these. Plaintiffs assert that one need not allege deception, or even review of the labels in question, but may instead just claim they are illegal. (Compl. ¶ 5.) However, the UCL is not available to those who do not claim to have suffered losses as a result of actual reliance on labels. As another Judge of this Court has recently held, “[a]t this point it appears settled that a plaintiff must plead actual reliance under each prong of the UCL, including the unlawful prong.” Pratt v. Whole Foods Market Cal., Inc., No. 13-3158-L, 2015 WL 5770799 at * 4 (N.D. Cal. Sept. 30, 2015). Numerous other recent decisions from this Case 3:13-cv-04324-EMC Document 101-1 Filed 10/31/16 Page 4 of 21 [PROPOSED] ORDER GRANTING DEFENDANT’S MOTION TO DISMISS Case No. 13-cv-4324-EMC 4 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 Court, all involving food labeling, and many involving ECJ specifically and also involving these same plaintiffs, have addressed this issue and rejected the strict-liability theory.2 For the same reason, Plaintiffs fail to state any valid claim based on Late July’s website, which they refer to in the Complaint but never allege that they saw or relied on prior to making their purchases. See Leonhart v. Nature’s Path Foods, Inc., No. 13-00492-BLF, 2014 WL 6657809, at *4 (N.D. Cal. Nov. 21, 2014) (“The [complaint] does not allege that Plaintiff navigated to those websites or that she read any information thereon. Absent such allegations, Plaintiff fails to state a claim based upon information contained on the websites.”). These opinions rely primarily on Kwikset Corp. v. Superior Court, 51 Cal. 4th 310 (2011), which addressed the effects of California’s Proposition 64 on UCL “unlawful” claims. As Kwikset noted, Proposition 64 amended the UCL (and the FAL) to require that a plaintiff demonstrate that he or she “has suffered injury in fact and has lost money or property as a result of the unfair competition.” Cal. Bus. & Prof. Code § 17204, cited in Kwikset, 51 Cal. 4th at 320-22. Kwikset held that this addition required a plaintiff to demonstrate a causal link between the harm complained of and the defendant’s unlawful conduct, which in the context of allegedly untrue statements on product labels meant actual reliance. Id. at 327–31. Applying Kwikset’s holding, the Court held in Chobani that “Plaintiffs’ ‘illegal product’ theory would eviscerate the enhanced standing requirements imposed by Proposition 64 and . . . Kwikset.” 2013 WL 5289253, at *9; see also Brazil v. Dole Food Co., Inc., 12-01831-LHK, 2013 WL 5312418, at 2 Bruton v. Gerber Prods. Co., 12-02412-LHK, 2014 WL 172111, at *9 (N.D. Cal. Jan. 15, 2014) (“[T]he Court takes this opportunity to reiterate its position, stated in numerous other food misbranding cases, that actual reliance and injury are required to establish statutory standing under the UCL’s unlawful prong whenever the underlying alleged misconduct is deceptive or fraudulent. . . . Here, the essence of Bruton’s UCL claim is that Gerber’s labeling practices are misleading and deceptive.”); Pratt, 2015 WL 5770799, at * 4-5 (same, ECJ claim); Figy v. Frito-Lay N. Am., Inc., 67 F. Supp. 3d 1075, 1088 (N.D. Cal. 2014) (same, with same Plaintiffs); Swearingen v. Pac. Foods of Oregon, Inc., No. 13-04157-JD, 2014 WL 3767052, at *2 (N.D. Cal. July 31, 2014) (same, ECJ claim, same Plaintiffs); Swearingen v. Amazon Pres. Partners, Inc., No. 13-04402-WHO, 2014 WL 1100944, at *1 (N.D. Cal. Mar. 18, 2014) (same, ECJ claim, Plaintiff Swearingen); Ogden v. Bumble Bee Foods, LLC, 12-01828-LHK, 2014 WL 27527, at *7 (N.D. Cal. Jan. 2, 2014) (same); Figy v. Amy’s Kitchen, Inc., 13-3816 SI, 2013 WL 6169503, at *3-4 (N.D. Cal. Nov. 25, 2013) (same, ECJ claim, Plaintiff Figy); Kane v. Chobani, Inc., 12-02425-LHK, 2013 WL 5289253, at *9 n.7 (N.D. Cal. Sept. 19, 2013) (same, ECJ claim). Case 3:13-cv-04324-EMC Document 101-1 Filed 10/31/16 Page 5 of 21 [PROPOSED] ORDER GRANTING DEFENDANT’S MOTION TO DISMISS Case No. 13-cv-4324-EMC 5 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 *9 (N.D. Cal. Sept. 23, 2013) (“[Plaintiff’s] ‘illegal product’ theory is inconsistent with the enhanced standing requirements for UCL claims imposed by Proposition 64. . . .”). As these decisions recognized, cases alleging mislabeling of products necessarily involve claimed misrepresentations, thus falling within the caselaw requiring reliance as the mechanism of harm. See Actimmune Mktg. Litig., 08-02376 MHP, 2010 WL 3463491, at *8 (N.D. Cal. Sept. 1, 2010), aff’d, 464 Fed. App’x. 651 (9th Cir. 2011). Similarly here, Plaintiffs do not claim that something about the product itself made it unlawful and then harmed them, as might be the case if, for example, the actual use of the ingredient ECJ were illegal. The claimed wrongdoing involves not use of the ingredient, but the alleged conveying of false information about it through the term ECJ, although Plaintiffs assert that they need not plead reliance. (See, e.g., Compl. ¶¶ 7, 11, 30.) However, as in the cases discussed above, the underlying “unlawfulness” alleged by Plaintiffs requires actual reliance. Plaintiffs allege that they “relied upon the Defendant’s implied representation that Defendant’s products were legal,” and that “[b]ecause these products are illegal to possess, they have no economic value.” (Id. ¶ 67.) These allegations are just another way of alleging that because the products were misbranded, they were illegal, regardless of whether Plaintiffs relied on the “misbranding.” Shortly after the filing of the Second Amended Complaint, the Ninth Circuit rejected a similar argument: [Plaintiff]’s pleadings could also be interpreted to assert that the allegedly deceptive labels rendered [defendant]’s fruit illegal to sell, to receive, and to possess under California law. In this sense, [plaintiff] seems to be suggesting that [defendant]’s website statements about certain fruit products subject him to risk of fine or prosecution if he is found in possession of that fruit product. We are unable to find support for this outlandish theory in the decisions of the California courts. Brazil v. Dole Packaged Foods, LLC, No. 14-17480, 2016 WL 5539863, at *1 (9th Cir. Sept. 30, 2016). If Plaintiffs could satisfy the reliance requirement merely by alleging that they “relied” on the products being legal, unlawful sales would make for strict liability, contrary to binding caselaw interpreting the very California statutes on which Plaintiffs rely.3 3 If the Court were to accept Plaintiffs’ argument on this Count, Plaintiffs would be barred from pursuing the claim based on federal preemption. To the extent this theory would impose a labeling requirement beyond what the FDCA requires, Plaintiffs’ claim would be preempted. Case 3:13-cv-04324-EMC Document 101-1 Filed 10/31/16 Page 6 of 21 [PROPOSED] ORDER GRANTING DEFENDANT’S MOTION TO DISMISS Case No. 13-cv-4324-EMC 6 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 B. Plaintiffs Have Failed to Plausibly Plead the Reliance Required for the Second Amended Complaint’s Remaining Counts. The second set of claims made by Plaintiffs center on the allegation that they relied on and were deceived by Late July’s labels. (Compl. ¶ 6). This theory depends on a contention that the term ECJ both deceived them into buying the products, and would similarly deceive reasonable consumers. However, Plaintiffs fail to sufficiently plead any “plausible” theory of reliance and deception. Because these reliance-based claims are grounded in allegations of deception in labeling, Fed. R. Civ. P. 9(b) requires pleading with particularity. Chobani, 2013 WL 5289253, at *7 n.4 (applying Rule 9(b) to similar ECJ claims). Reliance is among the elements that must be pled with particularity. In re Countrywide Fin. Corp. Sec. Litig., 588 F. Supp. 2d 1132, 1198 (C.D. Cal. 2008). Even without the heightened pleading standard of Rule 9(b). “labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Bell Atlantic v. Twombly, 550 U.S. 544, 555 (2007). If a plaintiff “pleads facts that are merely consistent with a defendant’s liability, it stops short of the line between possibility and plausibility of entitlement to relief.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quotation marks omitted). 1. Plaintiffs Fail to Plausibly Plead Their Own Reliance. Because some of the labels attached to the Complaint disclose the presence of sugar, (See, e.g., Compl. Ex. 4), Plaintiffs could not allege that ECJ’s presence misled them into believing there was no sugar, and the Complaint in fact concedes Plaintiffs’ awareness of the presence of some sugar in the products. (Id. ¶ 72.) Plaintiffs also do not make any allegation that Late July violated federal regulations concerning what labels must say about sugar content.4 Plaintiffs claim, then, that their concern was not about total sugar, but rather whether the Pratt, 2015 WL 5770799, at *5 (“This theory constitutes nothing more than attempting to impose a requirement not identical to those imposed by federal law, and on that basis is expressly preempted by the FDCA.” (quotation marks omitted)); Bruton, 2014 WL 172111, at *13; Brazil, 2013 WL 5312418, at *10. 4 Those regulations (1) require the disclosure of total sugar content only if it exceeds one gram, and (2) permit labels to state “zero sugar” if total sugar is below 0.5 grams. 21 C.F.R. § 101.9(c)(6)(ii). Case 3:13-cv-04324-EMC Document 101-1 Filed 10/31/16 Page 7 of 21 [PROPOSED] ORDER GRANTING DEFENDANT’S MOTION TO DISMISS Case No. 13-cv-4324-EMC 7 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 products contained “added sugar,” asserting that use of the term ECJ hid the latter.5 However, Plaintiffs fail to allege what they understood “evaporated cane juice” to be when they read it on the labels. Plaintiffs assert that they “were health-conscious consumers” who read the labels, at least in part, to identify forms of sugar in the ingredients lists. (Compl. ¶ 72.) They further allege that they read “evaporated cane juice” in those ingredient lists. They do not allege, though, what they understood “evaporated cane juice” to mean if not “added sugar.” They have therefore failed to allege how they were misled by the term ECJ. This Court reached the same conclusion in Chobani, where the plaintiffs’ claims were the same as those at issue here: “Plaintiffs allege that the term ECJ concealed the fact that the ingredient was essentially white sugar or dried cane syrup.” 2013 WL 5289253, at *6. The Court held that those allegations were “simply not plausible”: Absent some factual allegation concerning what Plaintiffs believed ECJ to be if not a form of sugar or a juice containing some form of sugar, Plaintiffs’ allegations that they read the label, were aware that the Yogurts contained ECJ, and nevertheless concluded that the Yogurts contained “only natural sugars from milk and fruit and did not contain added sugars or syrups” is simply not plausible. Id. at *7 (footnote omitted).6 Similarly, with respect to Plaintiffs’ assertion that they assumed ECJ was some ingredient that was healthier than sugar, “it is just a restatement of the theory that Plaintiffs believed the [products] contained only ‘natural sugars from milk and fruit,’ which the Court has already concluded is not plausible.” Id. at *8. Other Judges of this Court have agreed: Plaintiff Liddle included the label of the purchased product, which lists “sugar” as an included nutrient and clearly show how much sugar is contained in the product. As in Chobani, Plaintiff Liddle indicates in the SAC that she knows that ECJ is the same as “sugar” and “dried cane syrup.” Further, the SAC fails to allege what Plaintiff Liddle believed ECJ to be if not sugar and does not explain 5 At the time of Plaintiffs’ alleged purchases of Late July products, the FDA did not require labels to differentiate between “naturally occurring” and “added” sugars. Effective in 2018, the FDA will require that labels include “added sugar.” This regulation, still not yet effective today, post-dates the sales of products alleged here. 6 The Chobani decision was eventually vacated, but solely on the ground that the Court should have applied the primary jurisdiction doctrine and stayed the case before ruling on the motion to dismiss. Kane v. Chobani, LLC, 645 F. App’x 593, 594 (9th Cir. 2016). Nothing in the vacatur decision addressed the merits of the District Court’s analysis, which remains persuasive. Case 3:13-cv-04324-EMC Document 101-1 Filed 10/31/16 Page 8 of 21 [PROPOSED] ORDER GRANTING DEFENDANT’S MOTION TO DISMISS Case No. 13-cv-4324-EMC 8 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 what a reasonable person would believe ECJ to be. Thomas v. Costco Wholesale Corp., No. 12-02908-EJD, 2014 WL 1323192, at *9 (N.D. Cal. Mar. 31, 2014). In yet another ECJ case, the Court explained, Plaintiff must allege what he believed ECJ to be if not a sweetener for that theory to be plausible. Without that allegation, Plaintiff cannot reasonably state that he relied on the ECJ statement. . . . Similarly, it is implausible that Plaintiff believed ECJ was something healthy merely because it contains the word ‘juice’ in its name. A[] sugar conscious consumer like Plaintiff would not have been misled by the inclusion of the word ‘juice’ on the label because it is a word used to describe another popular and widely-recognized form of added sugar, namely ‘fruit juice concentrate.’ . . . Plaintiff cannot purport to be looking for sugar in ingredient lists but at the same time feign ignorance of common phrases that refer to sugar. Pratt, 2015 WL 5770799, at *6-7 (emphasis added); see also Ibarrola v. Kind, LLC, 83 F. Supp. 3d 751 (N.D. Ill. 2015). Plaintiffs have added an allegation that there are types of “cane” other than sugar cane, and they thus could have been deceived by the term ECJ. However, they offer no explanation for why they believed, or reasonably could believe, that the word “cane” referred to one of the other types of cane, rather than the far more common sugar cane. The Complaint contains no factual allegation from which one could conclude that the term “cane” is regularly used on food labels to refer to such things as bamboo, sorghum, corn, or the things on which berries grow, or that evaporated cane juice could plausibly have been confused with any of those things in the context of the specific snack foods at issue here, which Plaintiffs allege they knew to contain sugar. “[I]t simply cannot be that Plaintiff[s] thought ECJ referred to bamboo cane, sorghum cane, corn, or cane berries . . . .” Pratt, 2015 WL 5770799 at *6 (citing Levitt v. Yelp! Inc., 765 F.3d 1123, 1135 (9th Cir. 2014), for the proposition that “[i]n all cases, evaluating a complaint’s plausibility is a ‘context-specific’ endeavor that requires courts to ‘draw on . . . judicial experience and common sense”); see also Thomas v. Costco Wholesale Corp., No. 12-02908- BLF, 2014 WL 5872808, at *5 (N.D. Cal. Nov. 12, 2014) (noting that plaintiff’s claims that she did not believe ECJ constituted “added sugar” “seem[ed] implausible”). Most importantly, while alleging that “cane” could refer to these other things, Plaintiffs do not allege that at the time they purchased Late July’s products and read the term ECJ on Case 3:13-cv-04324-EMC Document 101-1 Filed 10/31/16 Page 9 of 21 [PROPOSED] ORDER GRANTING DEFENDANT’S MOTION TO DISMISS Case No. 13-cv-4324-EMC 9 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 them, they in fact believed “cane” referred to one of these other items, rather than to the more common use of cane as sugar cane. “Plaintiff[s] must allege what [they] believed ECJ to be if not a sweetener. . . .” Pratt, 2015 WL 5770799, at * 6. The omission of any allegation as to what Plaintiffs actually thought is fatal to these claims.7 Moreover, these Plaintiffs have brought at least nine putative class actions concerning use of ECJ on food labels on at least thirty-seven different products. Plaintiffs’ contention that they did not know what ECJ, despite claiming to have purchased so many different products labeled with ECJ and having repeatedly read the term on those labels, is implausible. Plaintiffs’ pleadings are additionally insufficient in that they fail to specify when Plaintiffs claim to have purchased Late July products. They merely assert that they did so “during the Class Period.” (Compl. ¶¶ 19, 133.) That is insufficient. See Park v. Welch Foods, Inc., No. 12-06449-PSG, 2013 WL 5405318, at *4 (N.D. Cal. Sept. 26, 2013) (holding that plaintiffs “fall short of Rule 9(b)” where they did not allege “‘when during the class period, where, how many, or how many times’ they purchased the products.”). Where Plaintiffs have filed a series of similar lawsuits, the timing of the purchases is significant – clearly, at some point Plaintiffs learned what evaporated cane juice is. When the Late July purchases occurred in relation to their awareness of the nature of ECJ is essential to an assessment of whether their alleged unawareness is plausible. The Complaint alleges that Plaintiff Swearingen bought five different Late July products and Plaintiff Figy four different products. (Compl. ¶ 2.) Yet the Complaint never alleges when they made these purchases or how many of each product each Plaintiff bought, thus failing to plead when and how often they read the term ECJ in their alleged searching of ingredients lists for added sugars. Plaintiffs allege only vaguely that they made the purchases “during the Class Period” and that each spent over $25.00. (Id. ¶¶ 19, 113.) By failing to plead when they purchased Late July products, how many times, and where, Plaintiffs have failed to satisfy Rule 9(b)’s requirement that their allegations “must be 7 Late July pointed out this very pleading deficiency in its motion to dismiss the First Amended Complaint. Having now had an opportunity to amend again, Plaintiffs still have not added any allegation as to what they believed “cane” referred to in this context. Case 3:13-cv-04324-EMC Document 101-1 Filed 10/31/16 Page 10 of 21 [PROPOSED] ORDER GRANTING DEFENDANT’S MOTION TO DISMISS Case No. 13-cv-4324-EMC 10 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 accompanied by ‘the who, what, when, where, and how’ of the misconduct charged.” Kearns v. Ford Motor Co., 567 F.3d 1120, 1124 (9th Cir. 2009). In addition, the Complaint cites and quotes an American Heart Association publication8 that states, “Keep in mind that if the product has no fruit or milk products in the ingredients, all of the sugars in the food are from added sugars.” As the labels that Plaintiffs included as exhibits to their Complaint demonstrate, most of the products contain no fruit or milk products, so that any sugar content is presumptively added, further undercutting the plausibility of Plaintiffs’ reliance claim.9 Finally, Plaintiffs fail to allege the amount of ECJ in Late July’s products, and thus the amount of “added sugar.” This omission is significant in light of the recognized importance of the quantities of particular substances in food products.10 The Complaint itself identifies “added sugars” not as something more inherently harmful than naturally occurring sugars, but as problematic because they add calories without providing nutritional value, and thus, to the extent eaten in excess, make it more difficult to get necessary nutrients while staying within caloric limits. See, e.g., NIH Website; Dietary Guidelines, at 14, 28.11 With no allegations as to 8 Defendant’s request for judicial notice regarding the American Heart Association publication (Exhibit L to Defendant’s Request for Judicial Notice) is granted. See Glenbrook Homeowners’ Ass’n, 858 F. Supp. at 987 (“While generally the court is confined to consideration of the allegations in the complaint, documents referred to in the complaint may also be considered.”). 9 Plaintiffs allege that proper alternatives to the term ECJ would include “dried cane syrup.” However, they offer not explanation for “evaporated cane juice” being a deceptive term while “dried cane syrup” would be understood as referring to sugar. Without factual allegations that could explain how the difference in these two terms containing “cane” would have changed their buying decisions, and how one hid the presence of sugars while the other would have revealed it, Plaintiffs’ claims are implausible. 10 If products contain less than one gram of total sugar per serving, FDA regulations do not require disclosure of any sugar, regardless of source, and permit labels to state affirmatively “zero” grams if they contain less than 0.5 grams. In exercising its authority to regulate food labels, the FDA has thus determined that below certain thresholds, sugar content is so de minimis as not to require labels to disclose sugar at all, or even to permit labels to state “zero” grams of sugar. Here, most of the products’ labels disclose no sugar in their nutrient content panels. (Compl. Exs. 1-9) Thus, the products here mostly contained amounts of sugar, from all sources combined, that fall below the FDA’s de minimis thresholds. 11 Defendant’s request for judicial notice regarding these sources cited in the Complaint (Exhibits M and N to Defendant’s Request for Judicial Notice) is granted. See Glenbrook Homeowners’ Ass’n, 858 F. Supp. at 987 (“While generally the court is confined to Case 3:13-cv-04324-EMC Document 101-1 Filed 10/31/16 Page 11 of 21 [PROPOSED] ORDER GRANTING DEFENDANT’S MOTION TO DISMISS Case No. 13-cv-4324-EMC 11 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 the amount of added sugars in Late July Products and thus no factual allegations that speak to whether Late July products could contribute meaningfully to a diet containing “excessive amounts” of added sugars, Plaintiffs have failed to make plausible their assertion that the alleged hiding of added sugars could have deceived them into buying products that they otherwise would not have purchased. To survive a motion to dismiss, Plaintiffs must state plausible claims supported by factual allegations, not merely conclusory assertions that they would not have purchased Late July’s products had they known they contained “added sugars.” These omissions constitute fatal pleading failures. 2. Plaintiffs Fail to Plausibly Plead That a Reasonable Consumer Would Have Been Misled. For many of the same reasons, Plaintiffs’ claims that a “reasonable consumer” would have been deceived by the alleged mislabeling fail. The UCL, CLRA, and FAL all require not just that Plaintiffs were deceived, or that some consumers might be, but that an ordinary and reasonable consumer likely would have been. Freeman v. Time, Inc., 68 F.3d 285, 289 (9th Cir. 1995); Brod v. Sioux Honey Ass’n, 927 F.Supp.2d 811, 832 (N.D. Cal. 2013); Shaker v. Nature’s Path Foods, Inc., 13-1138-GW, 2013 WL 6729802, at *3 (C.D. Cal. Dec. 16, 2013). Plaintiffs are thus required to plead sufficient facts to demonstrate “that it is probable that a significant portion of the general consuming public or of targeted consumers, acting reasonably in the circumstances, could be misled.” Lavie v. Procter & Gamble Co., 105 Cal. App. 4th 496, 508 (2003) (emphasis added). “This requires more than a mere possibility that [a] label ‘might conceivably be misunderstood by some few consumers viewing it in an unreasonable manner.’” Ebner v. Fresh, Inc., 818 F.3d 799 (9th Cir. 2016) (quoting Lavie, 105 Cal. App. 4th at 495). The “reasonable consumer” standard also applies to whether an alleged misrepresentation is material. Brod, 927 F.Supp.2d at 831. While deceptiveness is often a fact issue, “dismissal of such claims is appropriate where the plaintiff fails to show the likelihood that a reasonable consideration of the allegations in the complaint, documents referred to in the complaint may also be considered.”) Case 3:13-cv-04324-EMC Document 101-1 Filed 10/31/16 Page 12 of 21 [PROPOSED] ORDER GRANTING DEFENDANT’S MOTION TO DISMISS Case No. 13-cv-4324-EMC 12 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 consumer would be deceived.” Carrea v. Dreyer’s Grand Ice Cream, Inc., 10-01044 JSW, 2011 WL 159380, at *5 (N.D. Cal. Jan. 10, 2011), aff’d, 475 F. App’x 113 (9th Cir. 2012). Even if Plaintiffs themselves were sensitive to “added sugar” and susceptible to the deception they allege, they do not allege facts to support a conclusion that a reasonable consumer would share their concern, would read and understand – or misunderstand – “evaporated cane juice” on the label in the same way, and would be deceived into purchasing a product that he or she would not otherwise have purchased.12 This Court dismissed claims on the pleadings in an analogous situation, involving allegations that failure of a product’s label to reveal that pollen had been removed from honey constituted an actionable misrepresentation. As this Court held: It is certainly possible that a particularly sophisticated consumer might consider pollen to be a valuable component of honey, such that the non-disclosure of its removal from Sue Bee Honey would likely result in deception to him or her. This, however, does not establish that the reasonable consumer would expect honey to contain pollen. Plaintiff’s complaint is silent on this point . . . . Brod, 927 F.Supp.2d at 828. For the same reasons, the Court found that the complaint failed to plausibly plead that “pollen (and its removal from honey) is of material concern to the ordinary consumer.” Id. at 831. The Court so concluded despite California’s having prohibited use of the name honey if pollen had been removed (which prohibition the court found preempted). As in Brod, Plaintiffs have not pled a factual basis for concluding that a reasonable consumer buying snack food would likely share Plaintiffs’ sensitivity and would likely be deceived by the specific term “evaporated cane juice.” Particularly without any allegations as to how much “added sugar” was supposedly “hidden” by the term ECJ, Plaintiffs also inadequately allege that using a different term, such as “dried cane syrup,” would “‘play[] a substantial part’ in the reasonable consumer’s decision” whether to purchase Late July’s products. Brod, 927 F.Supp.2d at 831 (quoting In re Tobacco II Cases, 46 Cal.4th 298, 326 (2009)). The FDA’s Guidance – which expressly represents the “current thinking” of the agency in 2016 and not any binding legal requirement – shows little about the manner in which a 12 It bears noting that this reasonable consumer would not be seeking out health food or meals, but rather snack foods. Case 3:13-cv-04324-EMC Document 101-1 Filed 10/31/16 Page 13 of 21 [PROPOSED] ORDER GRANTING DEFENDANT’S MOTION TO DISMISS Case No. 13-cv-4324-EMC 13 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 reasonable consumer would perceive the term ECJ, and indeed indicates that the FDA has viewed the matter as a technical and highly unsettled one.13 This Court has already concluded, when staying this action under the primary jurisdiction doctrine in 2014, that “[r]esolution of this issue requires the FDA’s expertise because it involves analysis of the method of manufacturing ECJ and whether that method differs from the manufacturing of sugar, understanding of the characterizing properties of ECJ ingredients, and the difference between ECJ and other sweeteners.” (Dkt. No. 65, at 5.) In short, the Final Guidance involves highly technical matters that were, until very recently, unsettled, belying the assertion that the hypothetical reasonable consumer would likely reach any specific conclusion and would have at the time when Plaintiffs were purchasing Late July products with ECJ on the labels.14 C. Plaintiffs Fail to Plead a Valid Claim for Unjust Enrichment. It is now established law that “there is not a standalone cause of action for ‘unjust enrichment.’” Astiana v. Hain Celestial Grp., Inc., 783 F.3d 753, 762 (9th Cir. 2015). This claim can, however, be “construe[d]” “as a quasi-contract claim seeking restitution.” Id. Accordingly, “nonrestitutionary disgorgement is not the appropriate remedy for a quasi-contract claim based on alleged mislabeling of a consumer product.” Trazo v. Nestle USA, Inc., 113 F. Supp. 3d 1047, 1051 (N.D. Cal. 2015) (emphasis added). Claims for the full purchase price of a product are thus generally not available. Id. at 1051-52. And “when a plaintiff fails to sufficiently plead an actionable misrepresentation or omission, his [or her] restitution claim must be dismissed.” Rojas-Lozano v. Google, Inc., 159 F. Supp. 3d 1101, 1120 (N.D. Cal. 2016) (quotation marks omitted). 13 When issuing the Draft Guidance in 2009, the FDA designated it as “Level 1.” That designation signifies that the guidance was to set forth an initial interpretation of a statutory or regulatory requirement, set forth a change in interpretation that is more than minor, address complex scientific issues, or cover highly controversial issues. 21 C.F.R. § 10.115(c)(1). Consistent with that designation, the FDA itself has still been unable to settle on a specific name. Had it been finalized, the 2009 Draft Guidance would have approved of the name “dried cane syrup.” In the Final Guidance, however, the FDA expressly disavowed that name and opted not to prescribe any specific name. In the interim, the FDA reopened the comment period, writing in March 2014 that “[w]e have not reached a final decision on the common or usual name for this ingredient.” 14 As previously noted, Late July labels have not used ECJ in approximately three years. Case 3:13-cv-04324-EMC Document 101-1 Filed 10/31/16 Page 14 of 21 [PROPOSED] ORDER GRANTING DEFENDANT’S MOTION TO DISMISS Case No. 13-cv-4324-EMC 14 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 Here, Plaintiffs appear to base their “unjust enrichment” claim at least in part on claimed illegality alone, rather than a theory of misrepresentation. (Compl. ¶ 211 (“[T]he Class Products purchased by Plaintiffs and the Class were illegal products and were not what Defendant represented them to be.”).) They also expressly demand disgorgement of the full purchase price. (Id.) To that extent, Plaintiffs fail to plead a legally viable cause of action. To the extent Plaintiffs seek restitution under a quasi-contract theory, they have failed to plead a plausible theory of misrepresentation, for the reasons discussed above. D. Plaintiffs’ Claims Are Preempted by Federal Law and Due Process Concerns. 1. Plaintiffs’ Efforts to Impose an “Added Sugar” Labeling Requirement Through California Law Are Preempted. The FDCA expressly preempts efforts by states to impose labeling requirements that are not identical to certain federal requirements. Federal regulations at 21 C.F.R. § 101.9(c) control how sugar content is to be disclosed on labels, and currently impose no requirement that a label separately disclose naturally occurring and added sugars. The FDA issued this regulation pursuant to 21 U.S.C. § 343, including § 343(q). The preemption provision of the FDCA makes clear that “no State . . . may directly or indirectly establish . . . any requirement for nutrition labeling of food that is not identical to the requirement of section 343(q).” 21 U.S.C. § 343-1(a)(4). To the extent that Plaintiffs’ reliance-based claims focus on the lack of disclosure of added sugars as distinct from naturally occurring sugars, their disagreement is with the FDA’s regulations – with which they have not alleged Late July failed to comply. To the extent Plaintiffs attempt to impose liability because Late July’s labels “hide” the presence of added sugar, they seek to impose on food labels a requirement to make clear not just the presence of sugar – including in situations, as presented here, where the sugar content falls below the threshold for which no sugar disclosure is required – but also whether a portion of the sugars is added, rather than naturally occurring. Such a requirement would constitute a labeling requirement that is “not identical to” federal law, and thus is expressly preempted. Nor would any state law requiring disclosure of added sugar be a permissible Case 3:13-cv-04324-EMC Document 101-1 Filed 10/31/16 Page 15 of 21 [PROPOSED] ORDER GRANTING DEFENDANT’S MOTION TO DISMISS Case No. 13-cv-4324-EMC 15 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 “supplemental” requirement. The applicable regulation concerning sugar disclosure not only requires labels to disclose total sugar (except where the amounts fall below thresholds), but also specifies the exact words to be used and the way in which such disclosure must be made. 21 C.F.R. § 101.9(c). With respect to ingredients lists specifically, federal law imposes sugar- related requirements not whenever ingredients add sugar, but only in limited circumstances. Specifically, only if a label makes “sugar free” or similar claims do the FDA regulations require an asterisk and specified language with respect to any ingredients that add sugar. Id. § 101.60(c)(1).15 More generally, “nutrient content claims” are not only a matter of FDA regulations. A federal statute, 21 U.S.C. § 343(r)(1)(A), prohibits the making of any nutrient content claims characterizing the level of sugar, other than in the specific manner prescribed by federal law. The express-preemption provision of the FDCA, cited above, prohibits states from imposing “any requirement respecting any claim of the type described in section 343(r)(1) of this title, made in the label or labeling of food that is not identical to the requirement of section 343(r).” Id. § 343-1(a)(5). 2. Federal Preemption and Due Process Prohibit States From Banning Labeling Terms Prior to the FDA’s Clarification of Whether a Term Is Permissible. The 2009 Draft Guidance was not only expressly non-binding, but as a draft, did not even yet represent FDA’s views – it was solely for comment purposes. Were there any doubt about that fact, in March 2014, the FDA re-opened the comment period on the draft guidance, expressly stating that “[w]e have not reached a final decision on the common or usual name for this ingredient.” When the FDA then finalized the guidance, it did not simply convert that earlier draft to final, but significantly overhauled it, reversing itself in a critical respect by expressly disavowing the name “dried cane syrup.” In short, throughout the process that led to the Final Guidance issued in May 2016, the FDA declared that it was not at all clear how the common-or-usual-name rule applied to ECJ. Federal law prohibits states from applying any prohibition on the term ECJ to the extent 15 Federal regulations also specify when a product can use the term “no added sugar” on its label, 21 C.F.R. § 101.60(c)(2), which Plaintiffs have not accused Late July of violating. Case 3:13-cv-04324-EMC Document 101-1 Filed 10/31/16 Page 16 of 21 [PROPOSED] ORDER GRANTING DEFENDANT’S MOTION TO DISMISS Case No. 13-cv-4324-EMC 16 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 it was used before the issuance of the clarifying Final Guidance. Federal law requires manufacturers to use the common or usual name of ingredients on their labels. 21 U.S.C. § 343(i). The FDCA, in turn, preempts state labeling regulation that is not identical to what federal law requires in this regard. Id. § 343-1(a)(3). In a situation where the FDA determines that a particular provision of the FDCA or regulations issued under it is ambiguous, such that the FDA determines it must issue a clarification, this preemption provision allows claims based on conduct contrary to the clarification only if that conduct occurs after the FDA has resolved its clarifying position. Courts have so held recently in an analogous situation involving labeling treatment of MSG. In both Wilson v. Frito-Lay N. Am., Inc., 961 F. Supp.2d 1134 (N.D. Cal. 2013), and Peterson v. ConAgra Foods, Inc., No. 13-CV-3158-L NLS, 2014 WL 3741853, at *3 (S.D. Cal. July 29, 2014), this Court and the Southern District of California addressed a federal regulation that required MSG to be listed as an ingredient only where MSG was a stand-alone ingredient. Where another ingredient contained MSG, the name of the MSG-containing ingredient, not MSG itself, was to be listed. Id. at 3; see also Wilson, 961 F. Supp. 2d at 1146. Under this regime, plaintiffs claimed that it was misleading for defendant’s product labels to assert “No MSG” in the latter situation, where MSG was not itself an ingredient (and thus was not to be listed as an ingredient), but where other ingredients that comprise the product did contain MSG. Id. at 1146; Peterson, 2014 WL 3741853, at *1. In November 2012, without issuing any new regulation, the FDA clarified its position that the MSG-labeling regulations prohibited “no MSG” assertions in those situations, thus agreeing with the plaintiffs. Id. at *3. Plaintiffs relied on this clarification, as well as on earlier indications that the FDA was heading in that direction, such as warning letters. Id. at *3; Wilson, 961 F. Supp.2d at 1146. The Wilson and Peterson courts both held, however, that plaintiffs could not use state law to bring claims based on defendants’ use of the term “no MSG” before the FDA issued its clarification – even though the FDA was merely interpreting a regulation that existed at the time of the “no MSG” use, as opposed to issuing a new regulation. Id. at 1146-47; Peterson, 2014 WL 3741853, at *4. The Courts reasoned that the claims, by effectively giving content to an Case 3:13-cv-04324-EMC Document 101-1 Filed 10/31/16 Page 17 of 21 [PROPOSED] ORDER GRANTING DEFENDANT’S MOTION TO DISMISS Case No. 13-cv-4324-EMC 17 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 ambiguous regulation before the FDA clarified it, amounted to using state law to impose a requirement that was not identical to what federal law required at the time of the conduct. While framing them in preemption terms, the Courts also recognized that their holdings were grounded in due process concerns about fair notice, which necessarily arise when a regulation needs clarity from the relevant agency. Id. at *4 (citing United States v. AMC Entm’t, Inc., 549 F.3d 760, 770 (9th Cir. 2008)); Wilson, 961 F. Supp.2d at 1147 (same). Here, Plaintiffs seek to do the same thing with ECJ. Sugar regulations strictly control when and the manner in which sugar disclosures are made, including when a label may assert “no added sugar.” By ultimately issuing the Final Guidance, the FDA indicated a need for clarification on how the common-or-usual-name rule applied to ECJ. Until the FDA issued its Final Guidance, that uncertainty remained. Indeed, the FDA said explicitly that it was uncertain as late as March 2014, and even reversed course in important ways. Preemption and due process do not allow Late July to be held liable for labeling conduct before the FDA itself decided what was permissible and issued the Final Guidance. E. Plaintiffs State No Valid Claims and Lack Standing to Pursue Claims for Sales Outside of California or Products They Did Not Purchase. The Complaint contains no allegations that would make the California laws on which it relies applicable to sales in other states. The Complaint alleges that Plaintiffs purchased Late July products only in California. Nothing in the Complaint provides a basis for applying the laws Plaintiffs invoke to non-California sales. Plaintiffs however seek to represent a nationwide class asserting California-law claims. The California Supreme Court has recognized a general “presumption against extraterritorial application,” and has applied that presumption to the UCL. Sullivan v. Oracle Corp., 51 Cal. 4th 1191, 1207 (2011). The same is true for Plaintiffs’ other claims, including under the CLRA and FAL, “where none of the alleged misconduct or injuries occurred in California.” Wilson, 961 F. Supp. 2d at 1147; see also Figy, 67 F. Supp.3d at 1086- 87. Here, there is no pleaded nexus between California and sales in other states.16 Whether 16 If Plaintiffs had instead invoked other states’ laws for sales outside California, which they have not done, they would lack standing to pursue those claims because they did not purchase Case 3:13-cv-04324-EMC Document 101-1 Filed 10/31/16 Page 18 of 21 [PROPOSED] ORDER GRANTING DEFENDANT’S MOTION TO DISMISS Case No. 13-cv-4324-EMC 18 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 viewed as subject to dismissal for lack of standing to sue based on transactions under other states’ laws (Rule 12(b)(1)) or for a failure to state viable claims for non-California sales (Rule 12(b)(6)), or as instead subject to being stricken under Rule 12(f), the Complaint’s effort to represent non-California consumers is improper. See Pardini v. Unilever, 13-1675 SC, 2013 WL 3456872, at *9 (N.D. Cal. July 9, 2013); Wilson, 961 F. Supp. 2d at 148. To the extent Plaintiffs seek to represent only a nationwide class – and have abandoned the California-only class that appeared in prior pleadings – Plaintiffs’ class allegations may appropriately be stricken in their entirety. See Figy, 67 F. Supp. 3d at 1087 (“[U]nlike the Plaintiffs in Wilson, Plaintiffs here have not pleaded an alternative California-specific subclass. . . . As a result, all of Plaintiffs’ class claims must be DISMISSED.”). Similarly, while there is conflicting authority as to whether plaintiffs can ever maintain claims based on products they did not purchase, those courts finding it permissible require plaintiffs to plead “sufficient similarity” among the products, even if the alleged misrepresentations are the same. See, e.g., Chobani, 2013 WL 5289253, at *11. Here, the Complaint alleges only that the non-purchased products “are packaged identically” and “vary only in flavor” from the purchased products. (Compl. ¶ 141). Plaintiffs offer no basis for the assertion that those products are “packaged identically,” especially given that the products that they do claim to have purchased do not have identical packaging with respect to, e.g., total sugar content. Plaintiffs do not specify, for example, whether the non-purchased products’ labels disclose any total sugar content or whether total sugar content from all sources is meaningful or de minimis. Plaintiffs’ conclusory allegations of “identical packaging” are therefore insufficient to bestow on them standing to bring claims based on products they did not purchase. See Leonhart, 2014 WL 6657809, at *3. F. Plaintiffs Do Not Have Standing to Seek Injunctive Relief. Plaintiffs lack standing to seek injunctive relief as there is no “real and immediate threat” that they could be harmed in the future. Even had Plaintiffs adequately pled that they products in those other states. Pardini v. Unilever, 13-1675 SC, 2013 WL 3456872, at *9 (N.D. Cal. July 9, 2013). Case 3:13-cv-04324-EMC Document 101-1 Filed 10/31/16 Page 19 of 21 [PROPOSED] ORDER GRANTING DEFENDANT’S MOTION TO DISMISS Case No. 13-cv-4324-EMC 19 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 were deceived, “[p]ast exposure to illegal conduct does not in itself show a present case or controversy regarding injunctive relief.” O’Shea v. Littleton, 414 U.S. 488, 495-96 (1974); see also Mayfield v. United States, 599 F.3d 964, 970 (9th Cir.2010). “Instead, to establish Article III standing, a plaintiff must show inter alia that he faces imminent injury . . . .” Id. (internal quotation marks and alteration omitted). “Furthermore, in the context of a class action, ‘[u]nless the named plaintiffs are themselves entitled to seek injunctive relief, they may not represent a class seeking that relief.’” Id. (quoting Hodgers-Durgin v. de la Vina, 199 F.3d 1037, 1045 (9th Cir.1999)). In this case, Plaintiffs do not have standing for injunctive relief. Since Plaintiffs now claim to know that ECJ adds sugar, they cannot plausibly allege that they will misled by the term in the future. This Court has repeatedly held that “[p]laintiffs . . . who were previously misled by deceptive food labels and now claim to be better informed, lack standing for injunctive relief because there is no danger that they will be misled in the future.” Khasin v. R. C. Bigelow, Inc., No. 12-02204-WHO, 2016 WL 1213767, at *5 (N.D. Cal. Mar. 29, 2016).17 Second, Plaintiffs have not pled any intent to buy these products again. To the contrary, they have repeatedly alleged that, given their “desir[e] to purchase healthy food products, free of added or excessive sugar,” they would not have purchased Late July’s products at issue, had they realized from reading the labels that the products contained added sugar. (Compl. ¶¶ 34, 97-8, 139). This lack of intent to make future purchases is fatal to Plaintiffs’ standing to seek an injunction. Racies v. Quincy Bioscience, LLC, No. 15-00292-HSG, 2015 WL 2398268, at *5 (N.D. Cal. May 19, 2015) (“In false advertising cases, ‘where a plaintiff has no intention of purchasing the product in the future, a majority of district courts have held that the plaintiff has no standing to seek prospective injunctive relief. . . .’” (quoting Davidson v. Kimberly-Clark Corp., No. 14-01783-PJH, 2014 WL 7247398, at *4 (N.D. Cal. Dec. 19, 2014)); Lanovaz v. 17 See also Ham v. Hain Celestial Grp., Inc., No. 14-02044-WHO, 2014 WL 4965959, at *6 (N.D. Cal. Oct. 3, 2014); Garrison v. Whole Foods Mkt. Grp., Inc., No. 13-05222-VC, 2014 WL 2451290, at *5 (N.D. Cal. June 2, 2014); Victor v. R.C. Bigelow, Inc., No. 13-02976-WHO, 2016 WL 4502528, at *6 (N.D. Cal. Aug. 29, 2016); Romero v. Flowers Bakeries, LLC, No. 14- CV-05189-BLF, 2015 WL 2125004, at *7 (N.D. Cal. May 6, 2015). Case 3:13-cv-04324-EMC Document 101-1 Filed 10/31/16 Page 20 of 21 [PROPOSED] ORDER GRANTING DEFENDANT’S MOTION TO DISMISS Case No. 13-cv-4324-EMC 20 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 Twinings N. Am., Inc, No. 12-02646-RMW, 2016 WL 4585819, at *4-5 (N.D. Cal. Sept. 2, 2016) (“[a]dopt[ing] the majority view that a plaintiff must intend to purchase a product in the future in order to have standing to seek injunctive relief.”). If a plaintiff does not state that she intends to purchase the products in the future, she does not have standing to seek injunctive relief. Romero, 2015 WL 2125004 at *7.18 Finally, Late July no longer uses the term ECJ on its labels, and has not done so since 2014. (See Decl. of Paul Drakeford, Dkt. No. _, ¶3). Where a company has ceased using the challenged labeling practice, a plaintiff’s request for injunctive relief is “render[ed] moot.” Bronson v. Johnson & Johnson, Inc., No. 12-04184 CRB, 2013 WL 1629191, at *1 n. 2 (N.D. Cal. Apr. 16, 2013); Lanovaz, 2016 WL 4585819, at *3 (N.D. Cal. Sept. 2, 2016). CONCLUSION For all of the foregoing reasons, this Court grants Defendant’s motion to dismiss and hereby orders that the Second Amended Complaint be dismissed. IT IS SO ORDERED. Dated: _______________________ ______________________________ Honorable Edward M. Chen U.S. District Court Judge 18 See also Anderson v. The Hain Celestial Grp., Inc., 87 F. Supp. 3d 1226, 1234 (N.D. Cal. 2015); Gershman v. Bayer HealthCare LLC, No. 14-05332-HSG, 2015 WL 2170214, at *8 (N.D. Cal. May 8, 2015); Victor, 2016 WL 4502528, at *6; Gallagher v. Chipotle Mexican Grill, Inc., No. 15-03952-HSG, 2016 WL 454083, at *3 (N.D. Cal. Feb. 5, 2016). Case 3:13-cv-04324-EMC Document 101-1 Filed 10/31/16 Page 21 of 21