Davidson v. Sprout Foods Inc.

Opinion

1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT 8 NORTHERN DISTRICT OF CALIFORNIA 9 GILLIAN DAVIDSON, et al., 10 Case No. 22-cv-01050-RS Plaintiffs, 11 v. ORDER GRANTING MOTION TO 12 DISMISS SPROUT FOODS INC., 13 Defendant. 14

15 16 I. INTRODUCTION 17 Plaintiffs Gillian and Samuel Davidson bring this putative class action against Defendant 18 Sprout Foods Inc. (“Sprout”), which sells baby and toddler food products. The First Amended 19 Complaint (“FAC”) avers violations of California law based on statements made on various 20 Sprout products that tout the nutrients included in them, such as “3g of Protein” or “4g of Fiber.” 21 Defendant moves under Rule 12(b)(6) to dismiss the FAC in its entirety. 22 For the reasons stated below, the motion is granted. Plaintiffs have still not plausibly 23 claimed that Defendant’s labeling is misleading, and thus their claims under the California False 24 Advertising Act (“FAL”), the California Consumer Legal Remedies Act (“CLRA”), common law 25 fraud, and the “fraudulent” prong of the California Unfair Competition Law (“UCL”) are 26 dismissed, though with leave to amend. Further, Plaintiffs’ claim under the “unlawful” prong of 27 the UCL is preempted by federal law and must be dismissed. Without any other viable claims, 1 II. BACKGROUND1 2 Sprout sells branded baby and toddler food products, including (but not limited to) pouches 3 of puréed baby food. Plaintiffs purchased three types of these pouches for their child: “Pumpkin, 4 Apple, Red Lentil, and Cinnamon; Strawberry with Banana & Butternut Squash; and Sweet 5 Potato, White Beans, and Cinnamon.” Dkt. 29 (“FAC”) ¶¶ 11, 69, 75; see id. Exs. B, C.2 These 6 pouches, along with a number of other Sprout products addressed in the FAC (collectively, “the 7 Products”), contained statements about nutrition content in the front panel of the packaging, such 8 as “3g of Protein, 4g of Fiber and 300mg Omega-3 from Chia ALA.” Id. ¶ 18. This same 9 information — along with additional nutrition information — was also included in the Nutrition 10 Facts Panel on the back of the packaging. Plaintiffs argue that these statements constitute “nutrient 11 content claims” and thus violate Food and Drug Administration (“FDA”) regulations that prohibit 12 manufacturers from including such claims on “food intended specifically for use by infants and 13 children less than 2 years of age.” 21 C.F.R. § 101.13(b)(3). They further allege that these 14 statements “deceive and mislead reasonable consumers into believing that the Products provide 15 physical health benefits for their child when in fact, the Products are harmful for children under 16 two both nutritionally and developmentally.” FAC ¶ 20. 17 Defendant moved to dismiss Plaintiffs’ original Complaint, and that motion was granted 18 with respect to the fraud-based claims and otherwise denied. See Dkt. 23. Plaintiffs filed an 19 amended complaint that presents five claims for relief: (1) violation of the CLRA; (2) violation of 20 the FAL; (3) common law fraud; (4) violation of the “unlawful” and “fraudulent” prongs of the 21 UCL; and (5) unjust enrichment. Defendant now moves to dismiss the FAC in its entirety. 22 23

24 1 Unless noted otherwise, all facts recited are from the FAC and must be taken as true for the purposes of a Rule 12(b)(6) motion to dismiss. See Knievel v. ESPN, 393 F.3d 1068, 1072 (9th 25 Cir. 2005). 26 2 The FAC states that Plaintiffs purchased all three types of pouches, but their declarations do not state that either purchased the Strawberry with Banana & Butternut Squash pouch. See FAC, Exs. 27 B, C. 1 III. LEGAL STANDARD 2 A. Rule 12(b)(6) Standard 3 Federal Rule of Civil Procedure 12(b)(6) governs motions to dismiss for failure to state a 4 claim. A complaint must contain a short and plain statement of the claim showing the pleader is 5 entitled to relief. Fed. R. Civ. P. 8(a). While “detailed factual allegations” are not required, a 6 complaint must have sufficient factual allegations to “state a claim to relief that is plausible on its 7 face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic v. Twombly, 550 U.S. 8 544, 570 (2007)). However, “[t]hreadbare recitals of the elements of a cause of action, supported 9 by mere conclusory statements, do not suffice.” Id. Dismissal under Rule 12(b)(6) may be based 10 on either the “lack of a cognizable legal theory” or on “the absence of sufficient facts alleged” 11 under a cognizable legal theory. UMG Recordings, Inc. v. Shelter Capital Partners LLC, 718 F.3d 12 1006, 1014 (9th Cir. 2013) (internal quotation marks and citation omitted). When evaluating such 13 a motion, courts “accept all factual allegations in the complaint as true and construe the pleadings 14 in the light most favorable to the nonmoving party.” Knievel v. ESPN, 393 F.3d 1068, 1072 (9th 15 Cir. 2005). 16 When a claim is “grounded in fraud,” the pleading as a whole “must satisfy the 17 particularity requirement of Rule 9(b).” Kearns v. Ford Motor Co., 567 F.3d 1120, 1125 (9th Cir. 18 2009). “In alleging fraud or mistake, a party must state with particularity the circumstances 19 constituting fraud or mistake.” Fed. R. Civ. P. 9(b). “Averments of fraud must be accompanied by 20 ‘the who, what, when, where, and how’ of the misconduct charged.” Kearns, 567 F.3d at 1124 21 (quoting Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097 (9th Cir. 2003)). 22 B. California Statutes 23 Plaintiffs aver violations of the UCL, FAL, and CLRA. The UCL “bars ‘unfair 24 competition’ and defines the term as a ‘business act or practice’ that is (1) ‘fraudulent,’ (2) 25 ‘unlawful,’ or (3) ‘unfair.’” Shaeffer v. Califia Farms, LLC, 44 Cal. App. 5th 1125, 1135 (2020). 26 “Each is its own independent ground for liability under the unfair competition law, but their 27 unifying and underlying purpose is to protect both consumers and competitors by promoting fair 1 competition in commercial markets for goods and services.” Id. (internal quotation marks and 2 citations omitted). 3 The FAL “bars ‘any advertising device . . . which is untrue or misleading.’” Id. (quoting 4 Cal. Bus. & Prof. Code § 17500). “[T]his law and the fraudulent prong of the unfair competition 5 law substantively overlap,” and thus “plaintiff’s burden under these provisions is the same.” Id. at 6 1136. “[T]o state a claim under either the UCL or the [FAL], based on false advertising or 7 promotional practices, it is necessary only to show that members of the public are likely to be 8 deceived.” Kasky v. Nike, Inc., 27 Cal. 4th 939, 951 (2002) (internal quotation marks omitted). 9 The CLRA defines various “unfair methods of competition and unfair or deceptive acts or 10 practices.” Cal. Civ. Code § 1770. Some of these unfair methods or acts include representing that 11 goods have characteristics or benefits they do not have, and representing that goods are “of a 12 particular standard, quality, or grade” when they actually are not. Id. The UCL, FAL, and CLRA, 13 along with common law fraud, all utilize the reasonable consumer standard, “which requires a 14 plaintiff to show potential deception of consumers acting reasonably in the circumstances — not 15 just any consumers.” Hill v. Roll Int’l Corp., 195 Cal. App. 4th 1295, 1304 (2011); see Ham v. 16 Hain Celestial Group, Inc., 70 F. Supp. 3d 1188, 1193 (N.D. Cal. 2014). 17 IV. DISCUSSION 18 A. Fraud Claims 19 In their original Complaint, Plaintiffs argued that Defendant had “misle[d] reasonable 20 consumers into believing that the Products will provide more benefits than its competitors and 21 induce[d] parents to purchase the Products despite a lack of evidence that an increased intake for 22 the nutrients advertised are appropriate or recommended for [children].” Complaint, Dkt. 1 ¶ 13. 23 Their fraud claims (also brought under the FAL, CLRA, UCL “fraudulent” prong, and common 24 law fraud) were dismissed because “no reasonable consumer would be misled by the inclusion of 25 truthful statements about nutrient contents on the front of the challenged labels.” Dkt. 23, at 8. 26 Plaintiffs’ new argument, as presented in the FAC, is still too mushy. They claim to make 27 two showings: first, that the labels communicate a message that the Products provide physical 1 health benefits for children; and second, that the Products are “harmful both nutritionally and 2 developmentally.” FAC ¶ 20. As to the first showing, Plaintiffs do not argue that the Products 3 explicitly claim to provide physical health benefits, either by using words like “healthy,” see 4 Hadley v. Kellogg Sales Co., 273 F. Supp. 3d 1052, 1094 (N.D. Cal. 2017), or more general 5 phrases tying the nutrients to a healthy lifestyle, see Coe v. General Mills, Inc., 2016 WL 6 4208287, at *1 (N.D. Cal. 2016) (label on cereal box claimed to provide “a great start to your 7 day”). Plaintiffs thus argue that the labels implicitly tout the Products’ health benefits. This theory 8 has at least some limited support. See Marek v. Molson Coors Beverage Co., 580 F. Supp. 3d 848, 9 853, 861–62 (N.D. Cal. 2022) (plaintiffs adequately pleaded that hard seltzer with label touting it 10 contained “antioxidant Vitamin C” could mislead reasonable consumers into believing product 11 was “healthy or healthier than other hard seltzers”); Howard v. Hain Celestial Group, Inc., No. 12 22-cv-00527-VC (N.D. Cal. Oct. 19, 2022). For the purposes of surviving a motion to dismiss, 13 Plaintiffs plausibly aver the Products’ nutrient content claims imply they provide physical health 14 benefits. 15 The second required showing, however, is harder to swallow. Plaintiffs suggest that the 16 Products are harmful for children because they contain “high amounts of free sugars,” FAC ¶ 50,3 17 but they do not place this averment in context by describing at what point “high” sugar content 18 crosses into harmful levels (or even why, in particular, these sugar levels are harmful). Cf. 19 Krommenhock v. Post Foods, LLC, 255 F. Supp. 3d 938, 945 (N.D. Cal. 2017) (noting plaintiffs 20 cited studies tying excess sugar intake to numerous adverse health conditions). Plaintiffs also 21 argue that pouch-based foods may be unhealthy for developing children, id. ¶¶ 49–58, but they 22 rely for support on speculative research conclusions and hypothetical scenarios to argue these 23 products are harmful — for instance, that pouches “may lead to long term health risks,” id. ¶ 51 24 (emphasis added), or may be harmful if overly relied on by parents, see id. ¶ 55–57, or “can be a 25

26 3 As the FAC describes, puréeing food creates “free sugars” by breaking down the cell walls 27 within fruits and vegetables, thus “liberating” the “intrinsic sugar” in those foods. FAC ¶ 49. 1 gateway to bad long-term snacking habits and routine overeating,” id. ¶ 58 (emphasis added) 2 (quotation marks omitted).4 It is unclear from these averments why the Products are per se 3 harmful, rather than harmful only after a series of contingencies outside the scope of this case. 4 Finally, Plaintiffs do little to explain why, even if these averred harms exist, they outweigh any 5 potential benefits of the Products — such as protein or fiber intake — such that the Products no 6 longer provide any physical health benefits. Cf. Williams v. Gerber Prods. Co., 552 F.3d 934, 939 7 n.3 (“[N]utritiousness can be difficult to measure concretely.”). 8 The California Court of Appeal has cautioned against permitting food labeling claims that 9 rely on inferential leaps and which could ultimately “place almost any advertisement truthfully 10 touting a product’s attributes at issue for litigation.” Dkt. 23, at 9 (citing Califia, 44 Cal. App. 5th at 11 1139). Rule 9(b)’s heightened pleading standard, noted above, further requires plaintiffs to explain 12 adequately why challenged statements are misleading. See, e.g., Clorox Co. v. Reckitt Benckiser 13 Group PLC, 398 F. Supp. 3d 623, 636 (N.D. Cal. 2019). These background principles, as well as a 14 review of the face of the FAC, all lead to the conclusion that Plaintiffs have not provided enough to 15 state plausibly that the Product labels are misleading. Therefore, the FAL claim, CLRA claim, UCL 16 “fraudulent” prong claim, and common law fraud claim are dismissed, with leave to amend. 17 B. Preemption of UCL “Unlawful” Prong Claim 18 Defendant argues that Plaintiffs’ claim under the “unlawful” prong of the UCL is 19 preempted by federal law and must therefore be dismissed. Plaintiffs counter that this argument is 20 both procedurally erroneous and substantively incorrect. On the former point, they point out that 21 Federal Rule of Civil Procedure 12(g)(2) prohibits parties from raising, in a second Rule 12(b) 22 motion, an argument that could have been raised in the first motion. Because preemption could 23 have been raised in Defendant’s first motion to dismiss, Plaintiffs argue that Defendant has waived 24 its right to raise preemption now. 25

26 4 Defendant also notes that some of the Products do not contain “free sugars,” are not pouches, or 27 both. See Dkt. 38, at 5–6. 1 Plaintiffs are technically correct. Ninth Circuit courts have interpreted Rule 12(g)(2) to bar 2 successive arguments that could have been raised in an initial motion to dismiss, even where 3 plaintiffs file an amended complaint. E.g., Gardner v. Starkist Co., 2020 WL 1531346, at *3 (N.D. 4 Cal. Mar. 31, 2020) (“Because the allegations are not substantively different in the [second 5 amended complaint], Starkist’s argument could have been raised in its first motion to dismiss and 6 its motion violates Rule 12(g)(2)’s ban on successive Rule 12(b) motions.”); see also Fed. Agr. 7 Mortg. Corp. v. It’s A Jungle Out There, Inc., 2005 WL 3325051, at *5 (N.D. Cal. Dec. 7, 2005) 8 (discussing legal commentary and the practices of other federal circuits). However, “courts faced 9 with a successive motion often exercise their discretion to consider the new arguments in the 10 interests of judicial economy.” Banko v. Apple, Inc., 2013 WL 6623913, at *2 (N.D. Cal. Dec. 16, 11 2013). Here, Defendant notes that it will simply reraise preemption in a Rule 12(c) motion for 12 judgment on the pleadings if it is barred from raising the issue here. The interests of judicial 13 economy weigh in favor of deciding the preemption question now, and therefore Defendant’s 14 motion to dismiss the UCL “unlawful” claim should be reached. 15 Substantively, Defendant argues that Plaintiffs’ UCL “unlawful” claim is preempted 16 because it is premised on a violation California’s Sherman Food, Drug, and Cosmetic Law 17 (“Sherman Law”), Cal. Health & Safety Code § 110100(a), which “expressly adopted the Federal 18 Food, Drug, and Cosmetic Act (‘FDCA’) regulations” that Plaintiffs aver have been violated by 19 the Products’ labeling. Dkt. 33, at 8. Defendant argues that because a violation of the Sherman 20 Law requires a finding that the FDCA has been violated, and the FDCA, in turn, can be enforced 21 only by the United States, Plaintiffs’ claim is preempted. This is the same argument that was 22 confronted in Chong v. Kind LLC, 2022 WL 464149 (N.D. Cal. Feb. 15, 2022), which concluded a 23 plaintiff could not bring suit under the Sherman Law because it “post-dates and is entirely 24 dependent upon the FDCA, in that it expressly adopts the FDCA and regulations as state law.” Id. 25 at *4. Thus, the claims were impliedly preempted by the FDCA insofar as they “originate[d] from, 26 [were] governed by, and terminate[d] according to federal law.” Id. (quoting Stengel v. Medtronic, 27 Inc., 704 F.3d 1224, 1230 (9th Cir. 2013)). 1 Plaintiffs present valid arguments for why their claim should not be preempted, but they do 2 || not explain adequately why Chong should not be controlling here. Notwithstanding the contrary 3 conclusions reached by others on this Court, without controlling guidance from the Ninth Circuit 4 || or the Supreme Court on the nature of preemption under the FDCA, there is no reason to depart 5 || from Chong’s earlier holding. The motion is therefore granted as to Plaintiffs’ UCL “unlawful” 6 || prong claim. Because the defect is one of legal theory, not factual insufficiency, Plaintiffs are not 7 || granted leave to amend this claim. 8 C. Unjust Enrichment 9 Defendant argues that Plaintiffs’ claim for unjust enrichment must fail as a matter of law 10 || because there is no underlying basis for recovery. See Dkt. 33, at 12. Given that the first four 11 claims have now been dismissed, there is no longer an underlying basis for recovery. Defendant is 12 || thus correct, and Plaintiffs’ claim for unjust enrichment is dismissed as well, with leave to amend. 5 13 V. CONCLUSION 14 For the foregoing reasons, the motion is granted, and the FAC is dismissed in its entirety. 3 15 || Plaintiffs are granted leave to amend with respect to their UCL “fraudulent” prong claim, FAL 16 claim, CLRA claim, and common law fraud claim, as additional facts could render their claims 3 17 plausible. Claim 5 is also dismissed with leave to amend. Claim 4 is dismissed without leave to 18 || amend. Any amended complaint must be filed within 21 days of the filing of this Order. 19 20 || ITISSO ORDERED. 21 22 Dated: October 21, 2022

RICHARD SEEBORG _ Chief United States District Judge 25 26 27 98 ORDER GRANTING MOTION TO DISMISS CASE No. 22-cv-01050-RS