1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 RENEE WALKER, Case No.: 3:19-cv-723-L-BGS
12 Plaintiff, CLASS ACTION 13 v. ORDER GRANTING MOTION TO 14 NESTLE USA, INC., DISMISS WITH LEAVE TO AMEND 15 Defendant. [ECF No. 32] 16
17 Pending before the Court in this putative consumer class action alleging deceptive 18 product labeling is Defendant’s motion to dismiss for failure to state a claim. (ECF no. 19 32). Plaintiff filed an opposition, and Defendant replied. (ECF nos. 40 (“Opp’n”), 41.) 20 The Court decides the motion on the briefs without oral argument. See Civ. L. R. 21 7.1(d)(1). For the reasons stated below, Defendant’s motion is granted with leave to 22 amend. 23 I. BACKGROUND 24 According to the operative complaint, Defendant is the world’s largest food 25 company and is best known for its chocolate products. It purchases approximately 26 414,000 tons of cocoa annually. Plaintiff claims that the statements on Defendant’s 27 chocolate product labels are deceptive because they falsely lead consumers to believe that 28 the products were produced in accordance with environmentally and socially responsible 1 standards, when they were not. (ECF no. 15 (“FAC”) at 3.) This includes references to 2 the “Nestle Cocoa Plan,” “UTZ Certified” and “Sustainably Sourced,” and 3 representations that Defendant “Support[s] farmers” and “help[s] improve the lives of 4 []cocoa farmers.” (Id. at 4, 6.) Plaintiff alleges she purchased Defendant’s chocolate 5 products in reliance on the social and environmental benefits prominently featured on the 6 packaging and would not have purchased the products had she known the representations 7 were false. (Id. at 3-4.) According to Plaintiff, the labels are deceptive because 8 Defendant sources its cocoa from West African plantations which rely on child labor and 9 child slave labor, contribute to deforestation, and use other practices harmful to the 10 environment. (Id. at 2, 4-5, 7-16.) 11 Plaintiff alleges violations of the California Consumer Legal Remedies Act, Cal. 12 Civ. Code § 1750 et seq. (“CLRA”), and the Unfair Competition Law, Cal. Bus. & Prof. 13 Code §§ 17200, et seq. (“UCL”), on her own behalf as well as on behalf of a putative 14 nationwide class. She seeks damages, restitution, disgorgement of profits, and injunctive 15 relief. The Court has jurisdiction under the Class Action Fairness Act, 28 U.S.C. § 16 1332(d). Defendant moves for dismissal for failure to state a claim pursuant to Federal 17 Rule of Civil Procedure 12(b)(6). 18 II. DISCUSSION 19 A motion under Rule 12(b)(6) tests the sufficiency of the complaint. Navarro v. 20 Block, 250 F.3d 729, 732 (9th Cir. 2001).2 Dismissal is warranted where the complaint 21 lacks a cognizable legal theory. Shroyer v. New Cingular Wireless Serv., Inc., 622 F.3d 22 1035, 1041 (9th Cir. 2010). Alternatively, a complaint may be dismissed where it 23 / / / 24
25 1 All page citations in this Order refer to those generated by the Court’s CM/ECF 26 system. 27 2 Unless otherwise noted, internal quotation marks, citations, and footnotes are 28 1 presents a cognizable legal theory yet fails to plead essential facts under that theory. 2 Robertson v. Dean Witter Reynolds, Inc., 749 F.2d 530, 534 (9th Cir. 1984). 3 In reviewing a Rule 12(b)(6) motion, the Court must assume the truth of all factual 4 allegations and construe them most favorably to the nonmoving party. Huynh v. Chase 5 Manhattan Bank, 465 F.3d 992, 997, 999 n.3 (9th Cir. 2006). However, legal 6 conclusions need not be taken as true merely because they are couched as factual 7 allegations. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). Similarly, 8 “conclusory allegations of law and unwarranted inferences are not sufficient to defeat a 9 motion to dismiss.” Pareto v. Fed. Deposit Ins. Corp., 139 F.3d 696, 699 (9th Cir. 1998). 10 Generally, a plaintiff must allege only “a short and plain statement of the claim 11 showing that the pleader is entitled to relief.” Fed. R. Civ. Proc. 8(a)(2); see also Bell 12 Atl. Corp., 550 U.S. at 555. However, Rule 9(b) requires that “[i]n alleging fraud . . . a 13 party must state with particularity the circumstances constituting fraud . . .. Malice, 14 intent, knowledge, and other conditions of a person’s mind may be alleged generally.” 15 “Fraud can be averred by specifically alleging fraud, or by alleging facts that necessarily 16 constitute fraud (even if the word ‘fraud’ is not used.)” Vess v. Ciba-Geigy, Corp. USA, 17 317 F.3d 1097, 1105 (9th Cir. 2003). “Where fraud is not an essential element of a claim, 18 only those allegations of a complaint which aver fraud are subject to Rule 9(b)’s 19 heightened standard.” Kearns v. Ford Motor Co., 567 F.3d 1120, 1124 (9th Cir. 2009). 20 “To the extent a party does not aver fraud, the party’s allegations need only satisfy 21 requirements of Rule 8(a)(2).” Kearns, 567 F.3d at 1124. 22 Defendant moves to dismiss the complaint for failure to allege Plaintiff’s claims 23 with the specificity required by Rule 9(b). The rule applies to Plaintiff’s consumer 24 protection claims because they are grounded in fraud. See Kearns, 567 F.3d at 1125, 25 1127 (applying Rule 9(b) to UCL and CLRA claims). Plaintiff’s claims are premised on 26 Defendant’s alleged deceptive labeling of chocolate products. (See FAC at 29 (violations 27 of Cal. Civ. Code § 1770(a)(5), (7), (9) (together “CLRA Violations”)); id. at 31 (UCL 28 violations based on CLRA Violations and violation of Cal. Bus. & Prof. Code § 17580.5 1 (prohibiting deceptive environmental marketing claims)); id. at 33 (fraudulent business 2 practices in violation of UCL); id. at 34 (unfair business practice by fraudulent marketing 3 in violation of UCL).) Accordingly, Plaintiff’s claims are “grounded in fraud.” See 4 Kearns, 567 F.3d at 1125. Rule 9(b) therefore applies to Plaintiff’s pleading as a whole. 5 See id. Plaintiff does not dispute this. (See Opp’n at 11-14.) 6 Under Rule 9(b), fraud allegations must be “specific enough to give defendants 7 notice of the particular misconduct . . . so that they can defend against the charge and not 8 just deny that they have done anything wrong.” Vess, 317 F.3d at 1106. Therefore, a 9 complaint must include “the who, what, when, where, and how of the misconduct 10 charged.” Id. In this regard, a plaintiff “must set forth more than the neutral facts 11 necessary to identify the transaction.” Kearns, 567 F.3d at 1124 (emphasis in orig.). 12 Defendant claims that Plaintiff has not alleged which products she purchased and 13 when, what label statements she saw, and why she relied on them. In Kearns, the 14 plaintiff alleged Ford Motor Company “knowingly misrepresent[ed] to the public that 15 [the certified pre-owned] vehicles [were] safer and more reliable, with an intent to induce 16 reliance and defraud consumers.” Kearns, 567 F.3d at 1127. However, he did not allege 17 what the television advertisements or other sales material specifically stated.
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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 RENEE WALKER, Case No.: 3:19-cv-723-L-BGS
12 Plaintiff, CLASS ACTION 13 v. ORDER GRANTING MOTION TO 14 NESTLE USA, INC., DISMISS WITH LEAVE TO AMEND 15 Defendant. [ECF No. 32] 16
17 Pending before the Court in this putative consumer class action alleging deceptive 18 product labeling is Defendant’s motion to dismiss for failure to state a claim. (ECF no. 19 32). Plaintiff filed an opposition, and Defendant replied. (ECF nos. 40 (“Opp’n”), 41.) 20 The Court decides the motion on the briefs without oral argument. See Civ. L. R. 21 7.1(d)(1). For the reasons stated below, Defendant’s motion is granted with leave to 22 amend. 23 I. BACKGROUND 24 According to the operative complaint, Defendant is the world’s largest food 25 company and is best known for its chocolate products. It purchases approximately 26 414,000 tons of cocoa annually. Plaintiff claims that the statements on Defendant’s 27 chocolate product labels are deceptive because they falsely lead consumers to believe that 28 the products were produced in accordance with environmentally and socially responsible 1 standards, when they were not. (ECF no. 15 (“FAC”) at 3.) This includes references to 2 the “Nestle Cocoa Plan,” “UTZ Certified” and “Sustainably Sourced,” and 3 representations that Defendant “Support[s] farmers” and “help[s] improve the lives of 4 []cocoa farmers.” (Id. at 4, 6.) Plaintiff alleges she purchased Defendant’s chocolate 5 products in reliance on the social and environmental benefits prominently featured on the 6 packaging and would not have purchased the products had she known the representations 7 were false. (Id. at 3-4.) According to Plaintiff, the labels are deceptive because 8 Defendant sources its cocoa from West African plantations which rely on child labor and 9 child slave labor, contribute to deforestation, and use other practices harmful to the 10 environment. (Id. at 2, 4-5, 7-16.) 11 Plaintiff alleges violations of the California Consumer Legal Remedies Act, Cal. 12 Civ. Code § 1750 et seq. (“CLRA”), and the Unfair Competition Law, Cal. Bus. & Prof. 13 Code §§ 17200, et seq. (“UCL”), on her own behalf as well as on behalf of a putative 14 nationwide class. She seeks damages, restitution, disgorgement of profits, and injunctive 15 relief. The Court has jurisdiction under the Class Action Fairness Act, 28 U.S.C. § 16 1332(d). Defendant moves for dismissal for failure to state a claim pursuant to Federal 17 Rule of Civil Procedure 12(b)(6). 18 II. DISCUSSION 19 A motion under Rule 12(b)(6) tests the sufficiency of the complaint. Navarro v. 20 Block, 250 F.3d 729, 732 (9th Cir. 2001).2 Dismissal is warranted where the complaint 21 lacks a cognizable legal theory. Shroyer v. New Cingular Wireless Serv., Inc., 622 F.3d 22 1035, 1041 (9th Cir. 2010). Alternatively, a complaint may be dismissed where it 23 / / / 24
25 1 All page citations in this Order refer to those generated by the Court’s CM/ECF 26 system. 27 2 Unless otherwise noted, internal quotation marks, citations, and footnotes are 28 1 presents a cognizable legal theory yet fails to plead essential facts under that theory. 2 Robertson v. Dean Witter Reynolds, Inc., 749 F.2d 530, 534 (9th Cir. 1984). 3 In reviewing a Rule 12(b)(6) motion, the Court must assume the truth of all factual 4 allegations and construe them most favorably to the nonmoving party. Huynh v. Chase 5 Manhattan Bank, 465 F.3d 992, 997, 999 n.3 (9th Cir. 2006). However, legal 6 conclusions need not be taken as true merely because they are couched as factual 7 allegations. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). Similarly, 8 “conclusory allegations of law and unwarranted inferences are not sufficient to defeat a 9 motion to dismiss.” Pareto v. Fed. Deposit Ins. Corp., 139 F.3d 696, 699 (9th Cir. 1998). 10 Generally, a plaintiff must allege only “a short and plain statement of the claim 11 showing that the pleader is entitled to relief.” Fed. R. Civ. Proc. 8(a)(2); see also Bell 12 Atl. Corp., 550 U.S. at 555. However, Rule 9(b) requires that “[i]n alleging fraud . . . a 13 party must state with particularity the circumstances constituting fraud . . .. Malice, 14 intent, knowledge, and other conditions of a person’s mind may be alleged generally.” 15 “Fraud can be averred by specifically alleging fraud, or by alleging facts that necessarily 16 constitute fraud (even if the word ‘fraud’ is not used.)” Vess v. Ciba-Geigy, Corp. USA, 17 317 F.3d 1097, 1105 (9th Cir. 2003). “Where fraud is not an essential element of a claim, 18 only those allegations of a complaint which aver fraud are subject to Rule 9(b)’s 19 heightened standard.” Kearns v. Ford Motor Co., 567 F.3d 1120, 1124 (9th Cir. 2009). 20 “To the extent a party does not aver fraud, the party’s allegations need only satisfy 21 requirements of Rule 8(a)(2).” Kearns, 567 F.3d at 1124. 22 Defendant moves to dismiss the complaint for failure to allege Plaintiff’s claims 23 with the specificity required by Rule 9(b). The rule applies to Plaintiff’s consumer 24 protection claims because they are grounded in fraud. See Kearns, 567 F.3d at 1125, 25 1127 (applying Rule 9(b) to UCL and CLRA claims). Plaintiff’s claims are premised on 26 Defendant’s alleged deceptive labeling of chocolate products. (See FAC at 29 (violations 27 of Cal. Civ. Code § 1770(a)(5), (7), (9) (together “CLRA Violations”)); id. at 31 (UCL 28 violations based on CLRA Violations and violation of Cal. Bus. & Prof. Code § 17580.5 1 (prohibiting deceptive environmental marketing claims)); id. at 33 (fraudulent business 2 practices in violation of UCL); id. at 34 (unfair business practice by fraudulent marketing 3 in violation of UCL).) Accordingly, Plaintiff’s claims are “grounded in fraud.” See 4 Kearns, 567 F.3d at 1125. Rule 9(b) therefore applies to Plaintiff’s pleading as a whole. 5 See id. Plaintiff does not dispute this. (See Opp’n at 11-14.) 6 Under Rule 9(b), fraud allegations must be “specific enough to give defendants 7 notice of the particular misconduct . . . so that they can defend against the charge and not 8 just deny that they have done anything wrong.” Vess, 317 F.3d at 1106. Therefore, a 9 complaint must include “the who, what, when, where, and how of the misconduct 10 charged.” Id. In this regard, a plaintiff “must set forth more than the neutral facts 11 necessary to identify the transaction.” Kearns, 567 F.3d at 1124 (emphasis in orig.). 12 Defendant claims that Plaintiff has not alleged which products she purchased and 13 when, what label statements she saw, and why she relied on them. In Kearns, the 14 plaintiff alleged Ford Motor Company “knowingly misrepresent[ed] to the public that 15 [the certified pre-owned] vehicles [were] safer and more reliable, with an intent to induce 16 reliance and defraud consumers.” Kearns, 567 F.3d at 1127. However, he did not allege 17 what the television advertisements or other sales material specifically stated. Nor did Kearns specify when he was exposed to them or which ones he 18 found material. Kearns also failed to specify which sales material he relied 19 upon in making his [purchasing] decision . . .. Kearns [alleged] that he was specifically told ‘[the] vehicles were the best used vehicles available as they 20 were individually hand-picked and rigorously inspected used vehicles with a 21 Ford-backed extended warranty.’ Kearns [did] not, however, specify who made this statement or when this statement was made. Kearns failed to 22 articulate the who, what, when, where, and how of the misconduct alleged. 23 24 Id. at 1126. Based on this analysis, the Court held that the complaint did not comply with 25 Rule 9(b). Id. at 1127-28. 26 Contrary to Plaintiff’s protestations (see Opp’n at 12), the complaint does not 27 identify the products she purchased. Plaintiff alleged the following: 28 / / / 1 Plaintiff purchased Defendant Nestlé’s chocolate products labeled with the “Nestlé Cocoa Plan” “UTZ Certified” “Certified through UTZ” and 2 “Sustainably Sourced” labels on them purporting to, among other things, 3 “Support[] farmers for better chocolate” and “help improve the lives of []cocoa farmers.” Plaintiff relied upon Nestlé’s misrepresentations about the 4 social and environmental benefits of the products in making her decision to 5 purchase the products. Plaintiff suffered injury in that she would not have bought the UTZ/Nestlé Cocoa Plan/Sustainability-labeled products had she 6 known that the products were not sourced from sustainable farming practices 7 but rather off the backs of child and slave labor.
9 (FAC at 4.) Plaintiff also provided four photographs of product packages bearing these 10 labels. (Id. at 7.) However, nowhere in the operative complaint does Plaintiff identify 11 the product she purchased. She does not allege that she purchased any of the products 12 shown in the photographs. Without this information it is impossible to infer what was 13 stated on the labels of the products she purchased, and how the statements were presented 14 on the labels. See Hill v. Roll Int’l Corp., 195 Cal. App. 4th 1295, 1304-05 (2011) 15 (context of the challenged statement is important); see also Williams v. Gerber, 552 F.3d 16 934, 939 & n.3 (9th Cir. 2008). Plaintiff’s allegations are too general to identify the 17 transaction at issue, a fortiori, they are insufficient to meet the heightened pleading 18 standard under Rule 9(b). 19 Plaintiff requests leave to amend. (Opp’n at 12, 14, 25.) Rule 15 advises leave to 20 amend shall be freely given when justice so requires. Fed. R. Civ. P. 15(a)(2). “This 21 policy is to be applied with extreme liberality.” Eminence Capital, LLC v. Aspeon, Inc., 22 316 F.3d 1048, 1051 (9th Cir. 2003). 23 In the absence of any apparent or declared reason – such as undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure 24 deficiencies by amendments previously allowed, undue prejudice to the 25 opposing party by virtue of allowance of the amendment, futility of the amendment, etc. – the leave sought should, as the rules require, be freely 26 given. 27 28 / / / 1 || Foman v. Davis, 371 U.S. 178, 182 (1962). Because Plaintiff may be able to identify the 2 || products she purchased, and when and where she purchased them, leave to amend is 3 || granted. 4 CONCLUSION 5 Defendant’s motion to dismiss is granted with leave to amend. Plaintiff shall file 6 ||an amended complaint, if any, no later than April 19, 2021. Defendant shall file a 7 || response to the amended complaint, if any, no later than the time set forth in Federal Rule 8 || of Civil Procedure 15(a)(3). 9 IT IS SO ORDERED. 10 11 Dated: March 30, 2021 pee ep? 13 H . James Lorenz, 14 United States District Judge
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