McGarity v. Sun-Maid Growers of California

• Court: District Court, S.D. California
• Decided: October 1, 2024
• Docket: 3:24-cv-00714
• Status: Unknown

Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 MARGARET MCGARITY, on behalf of Case No. 24-cv-0714-BAS-DEB herself and all others similarly situated, 12

Plaintiff, 13 ORDER GRANTING DEFENDANT’S v. MOTION TO DISMISS (ECF No. 12) 14

SUN-MAID GROWERS OF 15 CALIFORNIA and DOES 1 through 10, 16 inclusive, 17 Defendants. 18 This case concerns whether Defendant Sun-Maid Growers of California (“Sun- 19 Maid” or “Defendant”) violates California consumer protection laws by using the term 20 “yogurt-covered” on the packages of its “Vanilla Yogurt Covered Raisins” and 21 “Strawberry & Vanilla Yogurt Covered Raisins” (collectively, “the Products”). Defendant 22 moves to dismiss Plaintiff Margaret McGarity’s (“Plaintiff” or “McGarity”) Complaint, 23 primarily on the grounds that federal law preempts Plaintiff’s state-law claims. (ECF No. 24 12 or “Mot.”) Plaintiff opposes. (ECF No. 13 or “Opp’n.”) Defendant replies. (ECF No. 25 14.) 26 The Court finds the motions suitable for determination on the papers submitted and 27 without oral argument. Fed. R. Civ. P. 78(b); CivLR 7.1(d)(1). For the reasons set forth 28 below, the Court GRANTS Defendant’s Motion to Dismiss. (ECF No. 12.) 1 I. BACKGROUND 2 Plaintiff brings this putative class action alleging that Sun-Maid’s “yogurt-covered 3 raisins” violate California false advertising and consumer protection law because the 4 Products are, in fact, not coated in yogurt as defined by federal regulations and as 5 understood by a reasonable consumer. 6 Specifically, Plaintiff challenges Sun-Maid’s labeling of the Products called 7 “Vanilla Yogurt Covered Raisins” and “Strawberry and Vanilla Yogurt Covered Raisins.” 8 Plaintiff alleges the Products are not coated with yogurt, but with a “highly-processed 9 candy coating.” (Compl. ¶ 28.) Plaintiff derives this allegation from the lists of ingredients 10 for the Products, which include “yogurt powder.” (Id. ¶¶ 29–30.) 11 The Food and Drug Administration (“FDA”), acting under the federal Food, Drug 12 & Cosmetic Act (“FDCA”), promulgated regulations defining yogurt as “the food 13 produced by culturing one or more of the basic dairy ingredients . . . with a characterizing 14 bacterial culture that contains the lactic acid-producing bacteria, Lactobacillus delbrueckii 15 subsp. bulgaricus and Streptococcus thermophilus.” 21 C.F.R. § 131.200(a). 16 Plaintiff tested the yogurt powder contained in the Products and found it does not 17 contain the requisite bacteria or any live cultures as specified by the FDA’s regulations. 18 (Compl. ¶ 39.) Plaintiff asserts that the yogurt powder “does not offer any of the expected 19 nutritional benefits of bona fide yogurt” and “does not contain any viable [yogurt] 20 cultures,” and therefore Sun-Maid’s labeling misrepresents the Products. (Id. ¶¶ 32–33.) 21 Over ten years ago, Sun-Maid received an informational letter from the FDA advising Sun- 22 Maid to more appropriately identify one of the Products as “Vanilla Yogurt-Flavored 23 Covered Raisins” rather than “Vanilla Yogurt Covered Raisins.” (Id. ¶ 43.) Sun-Maid 24 received this letter in 2014 but did not revise its label. (Id.; see also Compl., Ex. A.) 25 In 2021, the FDA issued a Yogurt Final Rule where it clarified that “yogurt-covered” 26 products, such as cereal or pretzels, need not be covered in “yogurt,” as defined by the 27 standard of identity above. Rather, such nonstandardized products with “yogurt” in the 28 1 product name must contain yogurt powder that derives from yogurt. See Yogurt Final Rule, 2 86 Fed. Reg. 31117-01, 31124 (June 11, 2021) (to be codified at 21 C.F.R. pts. 130–131). 3 Plaintiff brings seven claims under (1) California’s Consumers Legal Remedies Act, 4 California Civil Code §§ 1750, et seq.; (2) California’s False Advertising Law, California 5 Business & Professions Code §§ 17500, et seq.; (3) California’s Unfair Competition Law, 6 California Business & Professions Code §§ 17200, et seq.; (4) breach of express warranty, 7 California Commercial Code § 2313; (5) breach of the implied warranty of 8 merchantability, California Commercial Code § 2314(2)(f); and (6) intentional 9 misrepresentation under California common law. Plaintiff seeks various forms of 10 declaratory, injunctive, and monetary relief, as well as attorney’s fees and costs 11 Defendant moves to dismiss this action pursuant to Federal Rules of Civil Procedure 12 (“Rules”) 9(b), 12(b)(1), and 12(b)(6). Defendant argues Plaintiff’s claims are preempted 13 and that Plaintiff fails to state a claim for breach of express or implied warranty, or of 14 intentional misrepresentation. Defendant also argues the economic loss rule bars Plaintiff’s 15 claim for intentional misrepresentation. Further, Defendant claims a reasonable consumer 16 could not believe the raisins would be covered with yogurt. Finally, Defendant argues that 17 Plaintiff has no standing to pursue the injunctive relief she seeks. 18 II. LEGAL STANDARD 19 Pursuant to Rule 12(b)(6), a defendant may move to dismiss an action for failure to 20 make sufficient factual allegations to “state a claim to relief that is plausible on its face.” 21 Bell Atlantic v. Twombly, 550 U.S. 544, 570 (2007) (citations omitted). In evaluating the 22 sufficiency of these factual allegations, the court “accept[s] factual allegations in the 23 complaint as true and construe[s] the pleadings in the light most favorable to the 24 nonmoving party.” Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 25 (9th Cir. 2008). 26 In ruling on a motion to dismiss, a court may consider only “the complaint, materials 27 incorporated into the complaint by reference, and matters [subject to] judicial notice.” 28 UFCW Loc. 1500 Pension Fund v. Mayer, 895 F.3d 695, 698 (9th Cir. 2018) (citation 1 omitted). Mere “conclusory allegations of law and unwarranted inferences are insufficient 2 to defeat a motion to dismiss.” Adams v. Johnson, 355 F.3d 1179, 1183 (9th Cir. 2004) 3 (citations omitted); accord Ashcroft v. Iqbal, 556 U.S. 662, 663 (2009) (“[T]he tenet that a 4 court must accept a complaint’s allegations as true is inapplicable to threadbare recitals of 5 a cause of action’s elements, supported by mere conclusory statements.”). A district court 6 may also dismiss a complaint when its allegations “give rise to an affirmative defense that 7 clearly appears on the face of the pleading.” Boquist v. Courtney, 32 F.4th 764, 774 (9th 8 Cir. 2022). “Preemption, on which the defendant bears the burden, . . . can be such a 9 defense.” Pardini v. Unilever U.S., Inc., 65 F.4th 1081, 1084 (9th Cir. 2023) (citation 10 omitted). 11 If a court grants a motion to dismiss, it may exercise discretion to grant or deny leave 12 to amend the complaint, and it “acts within its discretion to deny leave to amend when 13 amendment would be futile, when it would cause undue prejudice to the defendant, or when 14 it is sought in bad faith.” Nat’l Funding, Inc. v. Com. Credit Counseling Servs., Inc., 817 15 F. App’x 380, 383 (9th Cir. 2020) (citation omitted). 16 III. ANALYSIS 17 The concept of federal preemption of state laws is grounded in the Supremacy Clause 18 of the Constitution. Article VI of the Constitution provides that the laws of the United 19 States “shall be the supreme Law of the Land; . . . any Thing in the Constitution or Laws 20 of any State to the Contrary notwithstanding.” U.S. Const. art. VI, cl. 2. Thus, since 21 M’Culloch v. Maryland, 17 U.S. 316 (1819), the federal judicial system has held “that state 22 law that conflicts with federal law is ‘without effect,’” Cipollone v. Liggett Grp., Inc., 505 23 U.S. 504, 516 (1992) (citing Maryland v. Louisiana, 451 U.S. 725, 746 (1981)). 24 “The party contending that a claim is preempted bears the burden of establishing 25 preemption.” Corbett v. PharmaCare U.S., Inc., 567 F. Supp. 3d 1172, 1193 (S.D. Cal. 26 2021) (citation omitted). “Express preemption exists when a statute explicitly addresses 27 preemption.” Kroessler v. CVS Health Corp., 977 F.3d 803, 808 (9th Cir. 2020). Courts 28 apply a presumption against preemption because the “historic police powers of the States 1 were not to be superseded by [a] Federal Act unless that was the clear and manifest purpose 2 of Congress.” United States v. Locke, 529 U.S. 89, 107 (2000) (citation omitted). In the 3 area of proper marketing and labeling of food products, the presumption against 4 preemption is “strong.” Gustavson v. Wrigley Sales Co., 961 F. Supp. 2d 1100, 1117 (N.D. 5 Cal. 2013) (citing Fla. Lime & Avocado Growers v. Paul, 373 U.S. 132, 144 (1963) 6 (“States have always possessed a legitimate interest in ‘the protection of (their) people 7 against fraud and deception in the sale of food products’ at retail markets within their 8 borders.” (citation omitted))). 9 To escape FDCA preemption, private plaintiff claims must fit through a narrow 10 window. The claims may neither be brought because they violate the FDCA, nor may they 11 be brought for acts that the FDCA permits. In other words, “[t]he plaintiff must be suing 12 for conduct that violates the FDCA (or else his claim is expressly preempted by § 360k(a)), 13 but the plaintiff must not be suing because the conduct violates the FDCA.” Perez v. Nidek 14 Co., 711 F.3d 1109, 1120 (9th Cir. 2013). Private plaintiffs may only bring a state-law 15 claim where that state requirement “effectively parallels or mirrors the relevant sections of 16 the [Nutrition Labeling and Education Act].” Chacanaca v. Quaker Oats Co., 752 F. Supp. 17 2d 1111, 1118 (N.D. Cal. 2010). Here, Plaintiff’s claims fail to squeak through this 18 window because Plaintiff brings claims for something that does not violate the FDCA. 19 The Secretary of Health and Human Services has authority to promulgate regulations 20 to enforce the FDCA, 21 U.S.C. § 371(a), and has delegated this authority to the FDA, see 21 FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 126 (2000). With this 22 authority, the FDA has created a standard of identity for yogurt. See 21 C.F.R. § 131.200. 23 When it published this standard of identity, the FDA clarified that the standard does not 24 apply to products identified as “yogurt-covered.” See Yogurt Final Rule, 86 Fed. Reg. at 25 26 27 28 1 31124 (listing “frozen yogurt, yogurt-coated cereal, and dried yogurt powder” as 2 “nonstandardized products”).1 3 As held in Kisor v. Wilkie, courts defer to an agency’s reasonable interpretation of 4 its own regulation, such as this, only when the regulation is “genuinely ambiguous” or 5 “susceptible to more than one reasonable reading.” 588 U.S. 558, 566 (2019). Here, 6 whether products claiming to be “yogurt-covered” must conform that yogurt coating with 7 the standard of identity for yogurt is ambiguous. On the one hand, something that is 8 “yogurt-covered” may be required to be covered with standardized yogurt. On the other, 9 there is a long history of “yogurt-covered” products being covered not with fresh yogurt, 10 but with a hardened shell coating.2 That such products need not be covered with “yogurt,” 11 comporting with the standard of identity laid out by the FDA, is a reasonable interpretation 12 of the FDA’s regulations. Applying this deference, the Court defers to the FDA’s 13 reasonable interpretation of its own genuinely ambiguous regulation regarding what must 14 comply with the “yogurt” standard of identity. Yogurt-covered raisins need not comply. 15 Each claim in Plaintiff’s Complaint rests on Defendant’s raisins being coated by a 16 product that does not conform with the standard of identity for yogurt. However, as 17 described above, the FDA, in interpreting its own regulations under the FDCA, does not 18 require “yogurt-coated” products to conform with that standard of identity. Yogurt Final 19 Rule, 86 Fed. Reg. at 31124. Therefore, requiring Defendant’s Products to conform with 20 21 22 1 The Court GRANTS Defendant’s request for judicial notice of this guidance. (Mot. at 3 n.3) As a 23 matter of public record, it is judicially noticeable because the underlying facts are not subject to reasonable dispute and are not disputed here. See MGIC Indem. Corp. v. Weisman, 803 F.2d 500, 504 (9th Cir. 1986). 24 2 Indeed, the guidance accompanying the Yogurt Final Rule is not the only time the FDA has noted this. 25 In the FDA’s 2014 letter to Defendant attached to Plaintiff’s Complaint, the FDA specifically notes that “If the ingredient that you have identified as ‘yogurt powder’ . . . . is yogurt that has been dried, then we 26 do not object to the inclusion of the term ‘yogurt’ in the statement of identity for each product.’” (Compl., Ex. A at 1.) While the letter goes on to state that a “more appropriate statement of identity for each product 27 appears to be ‘Vanilla Yogurt-Flavored Covered Raisins,’” it does not state than any particular provision of the FDCA requires the change and there is no indication the FDA later sought to enforce that 28 1 that standard of identity in California, but not anywhere else, would impose the exact kind 2 of regulatory asymmetry preempted by the FDCA. 21 U.S.C. § 343-1. 3 The Court notes that the FDA also requires that yogurt-covered products be coated 4 with a product containing yogurt powder derived from dried yogurt that conforms with the 5 standard of identity for yogurt. Yogurt Final Rule, 86 Fed. Reg. at 31124. Plaintiff states 6 that the dried yogurt powder used in the Products’ coating does not contain the live cultures 7 or bacteria required by the standard of identity.3 (Compl. ¶ 39.) However, the Complaint 8 is vague as to whether that means the yogurt the powder derived from did not contain those 9 cultures or bacteria, or if the processing of yogurt into yogurt powder deprives the yogurt 10 of these cultures or bacteria.4 (See, e.g., id. ¶ 33 (describing the yogurt powder process as 11 one that is “highly processed and heat-treated”).) Because Plaintiff’s claims are predicated 12 upon the idea that the coating does not comply with the standard definition of yogurt, rather 13 than that the yogurt powder in the coating did not derive from standardized yogurt, the 14 claims as pled must be preempted. 15 IV. CONCLUSION 16 Because each of Plaintiff’s claims is based on the allegation that Defendant violates 17 state law because the Products are not covered with yogurt that conforms with the FDA’s 18 standard of identity for yogurt, the Complaint in its entirety is preempted by the FDA’s 19 guidance that yogurt-covered products are nonstandardized foods that need not be covered 20 with conforming yogurt. Therefore, the Court need not reach the parties’ remaining 21

22 3 The Court GRANTS Defendant’s request for judicial notice as to the backside of the Products’ packaging, which includes “yogurt powder” listed with the other ingredients. (Mot. at 2 n.1.) The 23 Complaint refers to the ingredients list, it is central to Plaintiff’s claim, and no party questions the authenticity of the version included in Defendant’s Motion to Dismiss. See Marder v. Lopez, 450 F.3d 24 445, 448 (9th Cir. 2006). 25 4 Plaintiff’s opposition to Defendant’s motion explicitly states the yogurt powder is not derived from standardized yogurt (Opp’n at 5–6), but her Complaint does not (see generally Compl.). Motions to 26 dismiss are measured against the operative complaints and not the arguments. UFCW Loc. 1500 Pension Fund v. Mayer, 895 F.3d 695, 698 (9th Cir. 2018) (In ruling on a motion to dismiss, a court may consider 27 only “the complaint, materials incorporated into the complaint by reference, and matters [subject to] judicial notice.” (citation omitted)). Plaintiff may not amend her Complaint through briefing to insert 28 1 ||arguments. The motion to dismiss is GRANTED. (ECF No. 12.) However, Plaintiff may 2 a claim where the yogurt powder used in the Products’ coating does not derive from 3 || yogurt. Accordingly, amendment is not futile and Plaintiff shall be granted leave to amend. 4 || Nat’l Funding, Inc., 817 F. App’x at 383. If Plaintiff wishes to amend her Complaint, she 5 do so on or before October 22, 2024. 6 IT IS SO ORDERED. 7 A , 8 || DATED: October 1, 2024 Lin A (Lyohaa 6 9 United States District Judge 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28