Guttmann v. Nissin Foods (U.S.A.) COMPANY, INC., No. 3:2015cv00567 - Document 53 (N.D. Cal. 2015)

Court Description: ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO DISMISS re 38 First MOTION to Dismiss filed by Nissin Foods (U.S.A.) COMPANY, INC. Deadlines re standing remain in place.. Signed by Judge Alsup on 7/15/15. (whalc1, COURT STAFF) (Filed on 7/15/2015)

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Guttmann v. Nissin Foods (U.S.A.) COMPANY, INC. Doc. 53 1 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE NORTHERN DISTRICT OF CALIFORNIA 8 9 11 For the Northern District of California United States District Court 10 VICTOR GUTTMANN, on behalf of himself and all others similarly situated, 12 Plaintiff, 13 No. C 15-00567 WHA v. 14 NISSIN FOODS (U.S.A.) COMPANY, INC., 15 Defendant. ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION TO DISMISS / 16 17 18 INTRODUCTION In this putative class action involving instant noodles, defendant manufacturer moves to 19 dismiss the complaint pursuant to Rules 12(b)(1) and 12(b)(6). For the reasons stated herein, 20 defendant’s motion is GRANTED IN PART AND DENIED IN PART. 21 22 STATEMENT Our plaintiff, Victor Guttmann, seeks to eradicate artificial trans-fat from food. Since 23 2008, Guttmann has purchased and consumed a variety of instant noodle products manufactured 24 and sold by defendant Nissin Foods (U.S.A.) Company, Inc. Nissin’s noodle products contained 25 partially-hydrogenated oil, a food additive derived from low-cost oils. The manufacturing 26 process for partially-hydrogenated oils produces artificial trans-fat with a chemical structure 27 different from most naturally-occurring fat. The chemical properties of artificial trans-fat give 28 partially-hydrogenated oil a longer shelf life as compared to other additives derived from low-cost oils (Amd. Compl. ¶¶ 10–15, 58). 1 Guttmann’s complaint cites numerous studies that purportedly link the consumption of 2 artificial trans-fat to increased risk of certain medical conditions such as cardiovascular heart 3 disease, diabetes, breast, prostate, and colorectal cancer, Alzheimer’s disease, and organ damage. 4 In particular, the complaint alleges “[t]here is ‘no safe level’ of artificial trans fat intake” and 5 “any incremental increase in trans fat increases risk of [cardiovascular heart disease]” (id. ¶¶ 6 16–56). The use of partially-hydrogenated oils is not required by law, and while this motion 7 was pending, the Food and Drug Administration issued a final determination that partially- 8 hydrogenated oils are no longer “generally recognized as safe.” 80 Fed. Reg. 34650 (June 17, 9 2015). Pursuant to that determination, manufacturers have three years to remove partiallyhydrogenated oils from their products. 11 For the Northern District of California United States District Court 10 Although all of Nissin’s noodle products contained partially-hydrogenated oils (and 12 listed those oils among the ingredients of those products), the nutrition-facts panel on each of the 13 product labels included the indication “Trans Fat: 0g.” Additionally, five of those products 14 included icons on the front of the product labels that described the product as containing 15 “0g Trans Fat” (Def.’s Request for Judicial Notice, Exhs. 1–13).1 16 FDA regulations do not require trans-fat content to be declared in the nutrition-facts 17 panel on a product label; however, “[i]f the serving contains less than 0.5 gram[s of trans-fat], 18 the content, when declared, shall be expressed as zero.” 21 C.F.R. 101.9(c)(2)(ii). 19 Guttmann claims that he relied on the “0g Trans Fat” icon when purchasing the five 20 products so labeled, because he was seeking products “that did not negatively affect blood 21 cholesterol levels or the health of his cardiovascular system, and products made with natural, 22 healthy ingredients.” He also claims he assumed that all of Nissin’s noodle products were safe 23 24 1 25 26 27 28 In support of this motion, Nissin has requested judicial notice of the contents of the labels on the products referenced but not thoroughly described in Guttman’s complaint. Documents that are appropriate for judicial notice may be considered on a motion to dismiss if they are referred to in the complaint and the parties do not dispute their authenticity. Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005). The authenticity of the product labels was established by Nissin’s vice president of marketing, and Guttmann does not dispute authenticity (Chung Decl. ¶ 3). Guttmann’s complaint specifically alleges that he purchased the products to which these labels were affixed within this jurisdiction (Amd. Compl. ¶ 2). Accordingly, the contents of the product labels may be considered for the purpose of adjudicating this motion. 2 1 to consume. Guttmann’s complaint also includes a list of several products similar to Nissin’s 2 noodles that do not contain artificial trans-fat (Amd. Compl. ¶¶ 3, 76–84; Appendix B). 3 This is not Guttmann’s first foray into litigation regarding artificial trans-fat. Guttmann 4 has filed three prior lawsuits regarding artificial trans-fat and food labeling. Chacanaca v. The 5 Quaker Oats Company, No. 10-0502 (N.D. Cal.) (Judge Richard Seeborg); Eileen Peviani, et al. 6 v. Hostess Brands, Inc., No. 10-02303 (C.D. Cal.) (Judge Consuelo Marshall); Guttmann v. Ole 7 Mexican Foods, Inc., No. 14-04845 (N.D. Cal.) (Judge Haywood Gilliam). 8 9 two nation-wide classes, the particulars of which are not yet in play (Amd. Compl. ¶ 85). Guttmann’s complaint alleges eight claims for relief: (1) the unfair prong of the California 11 For the Northern District of California United States District Court 10 In February 2015, Guttmann commenced this action against Nissin and seeks to represent Unfair Competition Law, California Business & Professions Code Sections 17200, et seq., (2) 12 nuisance under California Civil Code Sections 3749, et seq., (3) breach of the implied warranty 13 of merchantability, (4) the unlawful prong of the California Unfair Competition Law, (5) the 14 fraudulent prong of the California Unfair Competition Law, (6) the California False Advertising 15 Law, California Business & Professions Code Sections 17500, et seq., (7) California Consumer 16 Legal Remedies Act, California Civil Code Sections 1750, et seq., and (8) breach of the express 17 warranty that the noodles contained 0g trans-fat. Guttmann seeks, among other things, 18 restitution, disgorgement, punitive damages, injunctive relief, and attorney’s fees. 19 20 Nissin now moves to dismiss Guttmann’s complaint pursuant to Rules 12(b)(1) and 12(b)(6). This order follows full briefing and oral argument. ANALYSIS 21 22 1. 23 With respect to the labels, which pertain to claims four through eight, federal law provides 24 25 GUTTMANN’S MISLABELING CLAIMS. an extensive scheme governing labels on food products. “Nutrient-content claims,” which are statements about the nutrient contents of a food 26 product outside of the nutrition-facts panel, are governed by Section 343(r) of Title 21 of the 27 United States Code. The FDA has promulgated regulations regarding nutrient-content claims. 28 21 C.F.R. 101.13. An “express” nutrient-content claim, which does not implicitly characterize 3 1 the level of the nutrient in the food, may be included on a product label, provided “it is not 2 false or misleading in any respect.” Id. at 101.13(i)(3). States are expressly preempted from 3 establishing requirements for food labeling that are inconsistent with those requirements. 4 21 U.S.C. 343-1(a)(1)(5). 5 On the other hand, “nutrition facts,” which are statements about nutrient contents in the 6 nutrition-facts panel, are governed by Section 343(q) of Title 21 of the United States Code. The 7 FDA has also promulgated regulations regarding nutrition facts. 21 C.F.R. 101.9. Specifically, 8 as noted above, regulation requires the use of a “rounded value” for nutrition facts relating to 9 trans-fat content: “If the serving contains less than 0.5 gram[s of trans-fat], the content, when 11 For the Northern District of California United States District Court 10 declared, shall be expressed as zero.” 21 C.F.R. 101.9(c)(2)(ii). Guttmann’s complaint alleges five California state-law claims based on Nissin’s use of the 12 “0g Trans Fat” icon on the front of Nissin’s product labels. Guttmann argues that his claims 13 based on Nissin’s labels are not preempted by federal regulation because the “0g Trans Fat” 14 nutrient-content claim is misleading. 15 This precise issue was addressed in Chacanaca v. Quaker Oats Co., 752 F. Supp. 2d 1111 16 (N.D. Cal. 2010) (Judge Richard Seeborg), one of Guttmann’s prior challenges to the use of 17 artificial trans-fat in food products. There, Judge Seeborg looked to FDA comments on a 18 separate regulatory provision regarding “reference” claims, which are nutrient-content claims 19 that compare the contents of one product to those of another. The FDA had been asked to 20 resolve a dispute as to whether reference claims were required to use “rounded” values or 21 “unrounded” values and determined, “because there is no nutritional difference between rounded 22 and unrounded values of a nutrient in a food, the agency does not see a need to specify which 23 value should be used in determining whether or not a food qualifies to make a nutrient content 24 claim.” 58 Fed. Reg. 44020-01 at 44024 (Aug. 18, 1993). Judge Seeborg reasoned that if the 25 FDA had decided there was “no nutritional difference” between the rounded and unrounded 26 values in the context of reference claims, use of the unrounded value could not be misleading 27 when used as an express nutrient-content claim. Because that label was not misleading, any 28 state-law claim based on that label would establish requirements that were inconsistent with 4 1 343(r) and its regulations. Such claims were expressly preempted by Section 343-1(a)(5). So 2 too here. 3 Our court of appeals reached the same conclusion in an unpublished decision, Carrea v. addressed concerns that discrepancies between a nutrient-content claim on a product label and 6 a statement in the nutrition-facts panel would be confusing to consumers. The FDA adjusted its 7 requirements for product labels to avoid such discrepancies. 58 Fed. Reg. 44020, 44024–25 8 (Aug 18, 1993). To permit state-law claims based on a “0g Trans Fat” nutrient-content claim 9 while the FDA required trans-fat to be declared as zero in the nutrition-facts panel would compel 10 such a discrepancy, which would impose a burden relating to product labeling not identical to the 11 For the Northern District of California Dreyer’s Grand Ice Cream, Inc., 475 F. Appx. 113, 115 (9th Cir. 2012). The FDA had 5 United States District Court 4 requirements of federal law, which was expressly preempted. Carrea, 475 F. Appx. at 115–16. 12 The decision in Reid v. Johnson & Johnson, 780 F.3d 952, 962–963 (9th Cir. 2015), is not 13 to the contrary. There, the product label at issue included a nutrient-content claim of “No Trans 14 Fat.” The state-law claims based on that nutrient-content claim were not preempted by federal 15 law because the FDA had issued two warning letters to manufacturers stating that “No Trans 16 Fat” and “trans fat-free” were both “unauthorized nutrient-content claims.” No such letter has 17 been issued regarding “0g Trans Fat.” Reid does not control. 18 Accordingly, Guttmann’s fourth through eighth claims, namely, for violations of the 19 fraudulent and unlawful prongs of the Unfair Competition Law, the False Advertising Law, the 20 Consumer Legal Remedies Act, and for breach of express warranty, are DISMISSED. Leave to 21 amend will not be allowed due to futility. 22 2. GUTTMANN’S USE CLAIMS. 23 Apart from the mislabeling claims (held preempted above), Guttmann alleges that Nissin 24 violated California law by including such a poisonous ingredient as artificial trans-fat in its 25 noodles. This goes to use, not labeling, and is not preempted. 26 27 28 5 1 2 A. Guttmann’s Claim Under the Unfair Competition Law, Unfair Prong. Guttmann argues that Nissin’s use of artificial trans-fat in its noodle products constitutes 3 an unfair business practice under California’s Unfair Competition Law. Nissin contends that 4 Guttmann’s claim is preempted by federal law. 5 No decision has addressed whether the lawful use of a dangerous substance in a food 6 product can constitute an unfair business practice within the context of the Unfair Competition 7 Law. While California appellate courts are not completely settled on what constitutes an 8 “unfair” business practice, unfairness is generally determined by either the “balancing test” or 9 the “tethering test.” See Lozano v. AT & T Wireless Services, Inc., 504 F.3d 718, 736 (9th Cir. 2007). Unfairness under the balancing test “involves balancing the harm to the consumer against 11 For the Northern District of California United States District Court 10 the utility of the defendant’s practice.” Id. at 735. Under the tethering test, “unfairness must be 12 tethered to some legislatively declared policy or proof of some actual or threatened impact on 13 competition.” Ibid. (citing Cel-Tech Communications v. Los Angeles Cellular Telephone Co., 14 20 Cal. 4th 163, 186–87 (1999)). “[A] practice may be deemed unfair even if not specifically 15 proscribed by some other law.” Cel-Tech, 20 Cal. 4th at 180. 16 Here, Guttmann has plausibly alleged that Nissin’s conduct violates the Unfair 17 Competition Law under the balancing test. His complaint alleges in great detail the serious harm 18 artificial trans-fat poses to public health, including that it causes “inflammation and damage to 19 vital organs and an increased risk of heart disease, diabetes, cancer, and death.” He further 20 alleges that the only utility in the use of partially-hydrogenated oils, as opposed to oils that do 21 not contain artificial trans-fat, is that partially-hydrogenated oils are less expensive (Amd. 22 Compl. ¶¶ 71, 81, Appendix B). Accordingly, Guttmann has stated a claim under the unfair 23 prong of the Unfair Competition Law. 24 25 26 27 28 Nissin argues that Guttmann’s claim is preempted by federal law. [A] plaintiff may not bring an action under the unfair competition law if some other provision bars it. That other provision must actually bar it, however, and not merely fail to allow it. In other words, courts may not use the unfair competition law to condemn actions the Legislature permits. Conversely, the Legislature’s mere failure to prohibit an activity does not prevent a court from finding it unfair. Plaintiffs may not “plead around” a “safe harbor,” but the safety must be more than the absence of danger. 6 1 Cel-Tech, 20 Cal. 4th at 182. Until recently, certain partially-hydrogenated oils, namely 2 low euric acid rapeseed oil and menhaden oil, were expressly designated “generally recognized 3 as safe” by the FDA. See 21 C.F.R. 184.1555(c)(2), 184.1472(b). Nissin uses soybean oil and 4 cottonseed oil and does not argue that those regulations directly apply (Def.’s Request for 5 Judicial Notice, Exhs. 1–13). The FDA declined to prohibit or expressly permit the use of other 6 partially-hydrogenated oils and artificial trans-fat, until June 17, when it determined that no form 7 of partially-hydrogenated oil was “generally recognized as safe.” 80 Fed. Reg. 34650 (June 17, 8 2015). The FDA’s prior declination to issue a regulation pertaining to all artificial trans-fats did 9 not establish a safe harbor protecting use of that ingredient from the reach of California law. In fact, the California legislature has prohibited the use of artificial trans-fat in restaurants, although 11 For the Northern District of California United States District Court 10 that statute does not apply to packaged goods. See Cal. Health & Safety Code § 114377. 12 Guttmann has stated a plausible claim under the unfair prong of the Unfair Competition 13 Law, and Nissin has failed to show that claim is preempted by federal law. Accordingly, 14 Nission’s motion to dismiss that claim is DENIED. 15 16 B. Guttmann’s Claim for Breach Implied Warranty of Merchantibility. In every contract for the sale of goods there is an implied warranty of merchantability that 17 the goods are “fit for the ordinary purposes for which such goods are sold.” Cal. Com. Code 18 § 2314(2)(c). Guttmann argues that because Nissin’s noodles contained artificial trans-fat, they 19 were “not fit for human consumption,” which is the ordinary purpose for which a food product is 20 sold (Amd. Compl. ¶ 111). No decision has addressed whether the use of a dangerous food 21 additive can render a product “not fit for human consumption” for the purposes of the implied 22 warranty of fitness under California law. 23 Nissin argues that Guttmann has not alleged the kind of injury that generally gives rise to a 24 claim for breach of the implied warranty of merchantability, but that goes to standing, which this 25 order does not address. For the purposes of Rule 12(b)(6), Guttmann’s complaint has plausibly 26 alleged that foods containing artificial trans-fat are not fit for human consumption, due to the 27 myriad medical conditions to which they are linked. 28 7 1 Nissin’s best authority on point, Hoyte v. Yum! Brands, Inc., 489 F. Supp. 2d 24, 28 2 (D.D.C. 2007) (Judge James Robertson), reached a similar conclusion. That decision did not 3 reach the question of whether the inclusion of artificial trans-fat in a food product could 4 constitute a breach of the implied warranty of fitness because the plaintiff therein had failed to 5 allege an injury. This order does not reach that issue. 6 7 8 9 Guttmann has adequately pled that Nissin’s noodles were not fit for human consumption, so Nissin’s motion to dismiss that claim under Rule 12(b)(6) is DENIED. C. Guttmann’s Public Nuisance Claim. “Anything which is injurious to health . . . so as to interfere with the comfortable enjoyment of life or property” constitutes a nuisance under Section 3479 of the California Civil 11 For the Northern District of California United States District Court 10 Code. A private person may maintain an action for public nuisance if the conduct at issue is 12 “specially injurious to himself,” but not otherwise. Such a special injury must be “of a character 13 different in kind — not merely in degree — from that suffered by the general public.” Institoris 14 v. City of Los Angeles, 210 Cal. App. 3d 10, 20 (1989). 15 Guttmann argues that Nissin’s use of artificial trans-fat in its noodle products interfered 16 with the public’s “right to a safe food supply” and that he has suffered a special injury in the 17 form of alleged health risks associated with consumption of those noodles. No decision applying 18 California law has found that interference with the general public’s right to a safe food supply by 19 selling products with unhealthy ingredients constituted a public nuisance. The only injuries to 20 the general public alleged herein are the risk of harm due to the consumption of artificial trans- 21 fats and the cost of purchasing Nissin’s noodle products. Guttmann has not alleged that he has 22 suffered an injury different in kind from those injuries. 23 Guttmann cites Birke v. Oakwood Worldwide, 169 Cal. App. 4th 1540, 1550 (2009), for the 24 contention that an injury “to the health and comfort of an individual[] is in its nature special and 25 peculiar and does not cause a damage which can properly be said to be common or public.” 26 Guttmann admits, however, that the injury contemplated in that decision was the aggravation of 27 the plaintiff’s asthma due to the alleged nuisance of second-hand smoke, which was a special 28 injury as compared to the general public’s increased risk of lung cancer. Similarly, in Ileto v. 8 1 Glock, Inc., 349 F.3d 1191 (9th Cir. 2003), Guttmann’s other authority on point, the plaintiffs 2 had suffered mental trauma and physical injuries as direct victims of gun violence. The plaintiffs 3 were permitted to bring a nuisance claim based on the defendant’s alleged recklessness in the 4 distribution and sale of firearms, because their injury was different in kind from the injury of 5 danger and fear suffered by the general public. 6 There is no allegation that Guttmann suffered a specific personal injury that is different in 7 kind from the increased risk of harm allegedly suffered by all consumers of Nissin’s noodles. 8 Accordingly, Guttmann’s public nuisance claim is DISMISSED. 9 STANDING. Nissin has also argued that Guttmann lacks standing under Article III and the Unfair 11 For the Northern District of California United States District Court 10 3. Competition Law. The Court has ordered limited discovery as to the dates and quantities of 12 Nissin’s noodles that Guttmann purchased and consumed, the extent to which he was aware that 13 FDA regulation required trans-fat content less than 0.5 grams per serving to be declared as zero 14 in the nutrition-facts panel, and the extent to which he has been medically diagnosed with any of 15 the conditions that the complaint alleges are caused by the consumption of artificial trans-fat 16 (Dkt. No. 50). That issue will be held in abeyance pending the results of that limited discovery. 17 CONCLUSION 18 For the reasons stated above, defendant’s motion to dismiss is GRANTED IN PART AND 19 DENIED IN PART. Guttmann’s claims for violation of the unfair prong of the Unfair Competition 20 Law and breach of the implied warranty of merchantability survive; all other claims are 21 dismissed without leave to amend. 22 23 IT IS SO ORDERED. 24 25 Dated: July 15, 2015. WILLIAM ALSUP UNITED STATES DISTRICT JUDGE 26 27 28 9
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