Chavez v. Blue Sky Natural Beverage Co.

340 F. App'x 359
Court of Appeals for the Ninth Circuit·Decided June 23, 2009·No. No. 07-16154·Published·Cited by 2 cases

Opinion

MEMORANDUM **

Appellant Chris Chavez challenges the district court’s dismissal with prejudice of his class-action complaint, which contains allegations that Blue Sky Natural Beverage Co., Hansen Natural Corp., and Hansen Beverage Company (collectively “ap-pellees”) violated various California laws by misrepresenting the origins of their beverage products. Having jurisdiction under 28 U.S.C. § 1291, we conclude that Chavez’s complaint is sufficient to state a claim on the question of injury-in-fact. Accordingly, we reverse and remand.

[360] Appellees develop, market, sell, and distribute a variety of beverage products, including natural sodas, fruit juices, and sports drinks1. In September 2000, appel-lees acquired the “Blue Sky” product line from Blue Sky Natural Beverage Co., a company that had been based in and operated from Santa Fe, New Mexico since 1980. From September 2000 until mid-2006, the following information appeared on the labels of Blue Sky beverage containers: “SANTA FE, NEW MEXICO” or “SANTA FE, NM.” Moreover, the label on each container included the words: “CANNED FOR THE BLUE SKY NATURAL BEVERAGE COMPANY SANTA FE, NM 87501” or “CANNED UNDER THE AUTHORITY OF BLUE SKY NATURAL BEVERAGE CO., SANTA FE, NM USA.” Blue Sky containers also presented a Southwestern look and feel, which included stylized Southwestern Native American tribal bands and pictures of what appear to be the Sangre de Cristo mountains, which border Santa Fe. Until May 2006, appellees’ website featured the notation “Santa Fe, New Mexico, U.S.A.” and a phone number with a Santa Fe area code. Appellees allegedly use forwarding services to route mail and telephone calls from Santa Fe to their headquarters in Corona, California.

In October 2006, Chavez brought this purported class action on behalf of himself and others similarly situated, contending that, in contrast with appellees’ representations, Blue Sky products are not manufactured or bottled in New Mexico. Chavez’s complaint asserts four causes of action: (1) false advertising under California Business and Professions Code § 17500 et seq. (“FAL”); (2) unfair trade practices under California Business and Professions Code § 17200 et seq. (“UCL”); (3) violation of the Consumers Legal Remedies Act, California Civil Code § 1750 et seq. (“CLRA”); and (4) common-law fraud, deceit, and misrepresentation. Appellees moved to dismiss the statutory claims under Fed.R.Civ.P. 12(b)(6), arguing that Chavez failed to adequately allege that he had sustained any injury-in-fact by their alleged misrepresentations. The district court granted the motion and dismissed all of Chavez’s claims with prejudice. This timely appeal follows.

“A dismissal for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6) is reviewed de novo. All allegations of material fact in the complaint are taken as true and construed in the light most favorable to the plaintiff.” Stoner v. Santa Clara County Office of Educ., 502 F.3d 1116, 1120 (9th Cir.2007) (internal citations and quotation marks omitted). A district court should grant a motion to dismiss when plaintiffs have not pleaded “enough facts to state a claim to relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). “Factual allegations must be enough to raise a right to relief above the speculative level.” Id. at 555, 127 S.Ct. 1955. Even so, “the motion [to dismiss] is not a procedure for resolving a contest between the parties about the facts or the substantive merits of the plaintiffs case.” 5B Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1356, p. 354 (3d ed.2004).

Appellees argue that “Chavez’s utter failure to allege any fact demonstrating personal harm is fatal” to his claims. We disagree with appellees’ characterization of Chavez’s complaint. To state a claim, [361] Chavez must allege, among other things2, that he personally suffered a cognizable injury-in-fact as a result of the false advertising, unfair trade practice, CLRA violation, and common-law fraud. See Cal. Bus. & Prof.Code § 17535 (allowing suits by “any person who has suffered injury in fact and has lost money or property as a result of a violation of’ the FAL); id. § 17204 (allowing suits by “a person who has suffered injury in fact and has lost money or property as a result of a violation of’ the UCL); Cal. Civ.Code § 1780(a) (allowing suits only by a “consumer who suffers any damage as a result of the use or employment by any person of a method, act, or practice declared to be unlawful by [CLRA]”); R.D. Reeder Lathing Co. v. Cypress Ins. Co., 3 Cal.App.3d 995, 999, 84 Cal.Rptr. 98 (Cal.CtApp.1970) (noting that a common-law-fraud suit must contain allegations that “by reason of a defendant’s misrepresentations[, the plaintiff] has sustained some pecuniary damage or injury by reason of having been put in a position worse than he would have occupied had there been no fraud”).

The complaint contains the following allegations, which are sufficient to allege that Chavez has been injured-in-fact— however slightly — by appellees’ conduct. First, Chavez purchased Blue Sky soda instead of other brands based on the representations that Blue Sky was a New Mexico company. See Complaint ¶¶ 28, 36, 52, 61, 95. Second, Blue Sky is not, in fact, bottled or produced in New Mexico, and, therefore, appellees misrepresented the origin and nature of their products. See Complaint ¶¶ 30, 31, 33. Third, and most importantly, Chavez incurred personal monetary loss as a result of appellees’ purported misrepresentations. For example, Chavez “lost money as a result [of appellees’ deception] in that he did not receive what he had paid for.” Complaint ¶ 36. Chavez “lost money or property when he purchased a Blue Sky Beverage.... In particular, he lost the full value of the price he paid ... which he would not have paid had he known the truth about the geographic origin of the products.” Complaint ¶ 52. Chavez “lost money as a result in that [he] did not receive what [he] had paid for.” Complaint ¶ 61. As a final example, we note that Chavez “alter[ed his] position to [his] detriment” and “suffered damages in an amount equal to the amount that [he] paid for the Blue Sky Beverages that [he] purchased.” Complaint ¶¶ 97, 99.

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Chavez v. Blue Sky Natural Beverage Co., 340 F. App'x 359 (9th Cir. 2009).

340 F. App'x 359 (Chavez v. Blue Sky Natural Beverage Co.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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