Sebastian v. One Brands, LLC et al, No. 3:2020cv00009 - Document 26 (S.D. Cal. 2020)
Court Description: ORDER denying 9 Defendant's Motion to Dismiss. Signed by Judge M. James Lorenz on 9/10/2020. (jpp)
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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 12 BRITTANY SEBASTIAN, individually, and on behalf of others similarly situated, 15 CLASS ACTION Plaintiff, 13 14 Case No.: 3:20-CV-00009-L-MDD v. ORDER DENYING DEFENDANT’S MOTION TO DISMISS ONE BRANDS LLC, Defendant. 16 17 18 In this putative class action alleging deceptive food labeling, Defendant ONE Brands 19 LLC filed a motion to dismiss under Rules 12(b)(1) and 12(b)(6) of the Federal Rules of 20 Civil Procedure. Plaintiff opposed, and Defendant replied. The Court decides this matter 21 on the briefs without oral argument. See Civ. L. R. 7.1.d.1. For the reasons stated below, 22 Defendant’s motion is denied. 23 I. BACKGROUND 24 Plaintiff Brittany Sebastian, a consumer who purchased Defendant’s ONE protein 25 bars (“Products”) multiple times, brought this putative class action alleging that the product 26 label was misleading to consumers because it falsely claimed the Products contained 1 27 gram of sugar, 5 milligrams of cholesterol, and 9 grams of dietary fiber. (Compl. (doc. no. 28 1) ¶ 1). According to the complaint, independent laboratory testing determined the Products 1 3:20-CV-00009-L-MDD 1 contain on average more sugar and cholesterol, and less dietary fiber than represented on 2 the labels. (See id. ¶ 2). Furthermore, Plaintiff contends the Product brand name “ONE,” 3 coupled with the statement on the front of the package that the Products contain just “1g 4 sugar” is independently misleading to consumers. (See id. ¶ 3). 5 The complaint alleges violations of California Unfair Competition Law (“UCL”), 6 California False Advertising Law (“FAL”), and California Consumer Legal Remedies Act 7 (“CLRA”), as well as breach of express warranty and quasi-contract. Plaintiff filed this 8 action in this court on January 2, 2020. The Court has subject-matter jurisdiction pursuant 9 to 28 U.S.C. § 1332(d). Defendant filed the pending motion to dismiss all claims and 10 provided supplemental authority in support thereof. 11 II. DISCUSSION 12 In part Defendant contends this action should be dismissed for lack of Article III 13 standing. A motion to dismiss for lack of Article III standing challenges the subject-matter 14 jurisdiction of the Court. Fed. R. Civ. P. 12(b)(1); Maya v. Centex Corp., 658 F.3d 1060, 15 1067 (9th Cir. 2011).1 “Each element of standing must be supported with the manner and 16 degree of evidence required at the successive stages of the litigation.” Id. at 1068. For 17 purposes of ruling on a motion to dismiss for want of standing, the court must accept as 18 true all material allegations of the complaint and construe it in plaintiff’s favor. Id. “[A] 19 nonfrivolous allegation of jurisdiction generally suffices to establish jurisdiction upon 20 initiation of a case.” Perry v. Merit Systems Protection Bd., 137 S. Ct. 1975, 1984 (2017). 21 “When a federal court concludes that it lacks subject-matter jurisdiction, the court must 22 dismiss the complaint in its entirety.” Arbaugh v. Y&H Corp., 546 U.S. 500, 514 (2006). 23 A motion under Rule 12(b)(6) tests the sufficiency of the complaint. Navarro v. 24 Block, 250 F.3d 729, 732 (9th Cir. 2001). Dismissal is warranted where the complaint lacks 25 a cognizable legal theory. Shroyer v. New Cingular Wireless Serv., Inc., 622 F.3d 1035, 26 27 1 28 Unless otherwise noted internal quotation marks, ellipses, brackets, citations and footnotes are omitted from all citations. 2 3:20-CV-00009-L-MDD 1 1041 (9th Cir. 2010). Further, a pleading must contain “a short and plain statement of the 2 claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). A complaint 3 may be dismissed, however, where it presents a cognizable legal theory yet fails to plead 4 essential facts under that theory. Robertson v. Dean Witter Reynolds, Inc., 749 F.2d 530, 5 534 (9th Cir. 1984). 6 In reviewing a Rule 12(b)(6) motion, the Court must assume the truth of all factual 7 allegations and construe them most favorably to the nonmoving party. Huynh v. Chase 8 Manhattan Bank, 465 F.3d 992, 997, 999 n.3 (9th Cir. 2006). However, legal conclusions 9 need not be taken as true merely because they are couched as factual allegations. Bell 10 Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). Similarly, “conclusory allegations 11 of law and unwarranted inferences are not sufficient to defeat a motion to dismiss.” Pareto 12 v. Fed. Deposit Ins. Corp., 139 F.3d 696, 699 (9th Cir. 1998). When ruling on a motion to 13 dismiss, the Court may consider the facts alleged in the complaint, documents relied upon 14 but not attached to the complaint when authenticity is not contested, and matters of which 15 the Court takes judicial notice. Lee v. City of Los Angeles, 250 F.3d 668, 688-89 (9th Cir. 16 2001). 17 A. 18 Defendant argues Plaintiff lacks constitutional and statutory standing. (Doc. no. 9 at 19 18-22). To satisfy the constitutional Article III requirement, a plaintiff must adequately 20 allege (1) an injury in fact, (2) causation, and (3) redressability. Maya, 658 F.3d at 1067. 21 Notably, “the threshold question of whether plaintiff has standing (and the court has 22 jurisdiction) is distinct from the merits of his claim. Rather, the jurisdictional question of 23 standing precedes, and does not require, analysis of the merits.” Id. at 1068. To stablish 24 standing for purposes of the UCL, a plaintiff must also allege she suffered an economic 25 injury and that the injury was caused by the unfair business practice. Kwikset Corp. v. 26 Superior Court, 51 Cal. 4th 310, 322-323 (2011). At the pleading stage, general factual 27 allegations of injury in fact or economic injury suffice. See Maya, 658 F.3d at 1068; 28 Hinojos v. Kohl's Corp., 718 F.3d 1098, 1104 n.4 (9th Cir. 2013). Standing 3 3:20-CV-00009-L-MDD 1 Defendant contends Plaintiff fails to sufficiently allege reliance, injury in fact, and 2 economic harm. (Doc. no. 9 at 18-22). The Court disagrees. First, Plaintiff alleges that she 3 “relied on the Product labels and [Defendant’s] Representations in making the decision to 4 purchase the Products.” (Compl. ¶ 60). Second, Plaintiff alleges she “purchased the 5 Products to [her] detriment” (Compl. ¶ 55) and that she has “been directly and proximately 6 injured by [Defendant’s] conduct in ways including monies paid to [Defendant] for the 7 Products.” (Compl. ¶ 91). Because Plaintiff adequately alleges economic loss, she also 8 sufficiently alleges injury in fact for purposes of Article III and UCL standing. See Maya 9 658 F.3d at 1069 (“Allegedly, plaintiffs spent money that, absent defendants’ actions, they 10 would not have spent. This is a quintessential injury-in-fact”); Kwikset, 51 Cal. 4th at 323 11 (“Notably, lost money or property—economic injury—is itself a classic form of injury in 12 fact.”). 13 More specifically, Defendant also argues that “because Plaintiff does not allege that 14 she purchased a Birthday Cake ONE Bar, she has not plausibly pled that she was deceived.” 15 (Doc. no. 9 at 21). This assertion relies on the premise that Plaintiff’s claims are limited to 16 the Birthday Cake Flavor of the Product, the subject of the independent laboratory testing 17 referenced in the complaint. (See Compl. ¶¶ 2, 21, 23, 25, 27). Plaintiff expressly alleges, 18 however, that the misrepresentations are “uniform” and therefore apply to all Products. 19 (See Compl. ¶ 1). Thus, Plaintiff has sufficiently alleged constitutional and statutory 20 standing. 21 B. 22 Next, Defendant argues that Plaintiff cannot state any of her state law claims because 23 they are preempted by the Federal Food, Drug, and Cosmetic Act, 21 U.S.C. §§ 301 et seq., 24 (“FDCA”). For the reasons stated below, the argument is rejected. Federal Preemption 25 All of Plaintiff's claims are based on two theories of liability. First, Plaintiff claims 26 the Product’s nutrition panel falsely represents that the Product contains 1 gram of sugar, 27 5 milligrams of cholesterol and 9 grams of dietary fiber. (Compl. ¶ 18). Plaintiff alleges 28 the Products contain substantially more sugar and cholesterol and “virtually no dietary 4 3:20-CV-00009-L-MDD 1 fiber.” (Id. ¶ 3). Second, Plaintiff claims the Products were mislabeled because the front 2 label of the Product displays the brand name “ONE” with the statement “1g sugar.” (Id. ¶ 3 17). Defendant moves to dismiss all claims as preempted by federal law, arguing that 4 Plaintiff fails to allege Defendant’s representations are contrary to the requirements 5 imposed by the FDCA. (Doc. no. 9 at 15-18). 6 The FDCA, as amended by the Nutrition, Labeling and Education Act (“NLEA”), 7 expressly preempts any state law requirement that is “not identical” to the NLEA’s labeling 8 requirements. 21 U.S.C. § 343-1(a)(5). "The phrase ‘not identical to’ means that ‘the State 9 requirement directly or indirectly imposes obligations or contains provisions concerning 10 the composition or labeling of food that are not imposed by or contained in the applicable 11 federal regulation or differ from those specifically imposed by or contained in the 12 applicable federal regulation.’” Lilly v. ConAgra Foods, 743 F.3d 662, 664-65 (9th Cir. 13 2014) (quoting 21 C.F.R. § 100.1(c)(4)). Accordingly, whether Plaintiff's claims are 14 preempted "turns on whether the challenged statements are authorized by the FDA's 15 regulations." Reid v. Johnson & Johnson, 780 F.3d 952, 959 (9th Cir. 2015). 16 Plaintiff relies upon independent laboratory testing that allegedly proves 17 Defendant’s representations false. (See Compl. ¶¶ 19-27). Defendant counters that 18 Plaintiff’s claims are preempted because she fails to allege that the independent laboratory 19 testing was conducted pursuant to FDA-prescribed methodology. (Doc. no. 9 at 16). The 20 relevant FDA regulations fall into two categories: (1) mandatory nutrient content 21 disclosures within the nutrition panel, see 21 C.F.R. § 101.9, and (2) voluntary nutrient 22 content claims separate from the nutrition panel, see 21 C.F.R. § 101.13(b). The prescribed 23 testing methodology applies to both categories. See 21 C.F.R. §§ 101.9(g)(2), 101.13(o). 24 In calculating the amount of each nutrient in a single serving, the FDA requires testing be 25 conducted as follows: 26 27 28 The sample for nutrient analysis shall consist of a composite of 12 subsamples (consumer units), taken 1 from each of 12 different randomly chosen shipping cases, to be representative of a lot. Unless a particular method of analysis is specified in paragraph (c) of this section, composites shall be analyzed by 5 3:20-CV-00009-L-MDD appropriate methods as given in the “Official Methods of Analysis of the AOAC International,” or, if no AOAC method is available or appropriate, by other reliable and appropriate analytical procedures. 1 2 3 4 21 C.F.R. § 101.9(g)(2). 5 Plaintiff does not specify whether the independent laboratory tests followed the 6 FDA's 12-sample testing methodology. (See, e.g., Compl. ¶¶ 2, 19, 21, 23, 25, 26-27). The 7 Court is aware of no binding authority requiring a plaintiff to allege in the complaint that 8 he or she had conducted testing in accordance with FDA regulations. “Plaintiffs are 9 generally not expected to provide evidence in support of their claims at the pleading stage.” 10 Durnford v. MusclePharm Corp., 907 F.3d 595, 604 n.8 (9th Cir. 2018). Accordingly, for 11 purposes of pleading, Defendant’s preemption argument is rejected. 12 C. 13 Defendant next argues Plaintiff’s deceit claims2 fail to meet the heightened pleading 14 standard under Rule 9(b). (Doc. no. 9 at 20-22). Claims “grounded in fraud ... must satisfy 15 the particularity requirement of Rule 9(b).” Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 16 1103-04 (9th Cir. 2003). In alleging deceit, a plaintiff “must state with particularity the 17 circumstances constituting fraud.” Fed. R. Civ. P. 9(b). Fraud allegations must be “specific 18 enough to give defendants notice of the particular misconduct so that they can defend 19 against the charge and not just deny that they have done anything wrong.” Vess, 317 F.3d 20 at 1106. Therefore, a complaint must include “the who, what, when, where, and how of the 21 misconduct charged.” Id. Accordingly, Rule 9(b) applies to the extent Plaintiff’s deceit 22 claims are based on fraudulent conduct, deception or misrepresentation. See Kearns v. Ford 23 Motor Co., 567 F.3d 1120, 1124-25 (9th Cir. 2009). Sufficient Particularity 24 Defendant maintains Plaintiff fails to satisfy Rule 9(b) because she does not specify 25 the flavor or variety of the Product she purchased on November 23, 2018, or which 26 27 “Deceit claims” refers collectively to Plaintiff’s First, Second, Third and Fifth causes of action based on the UCL, FAL, CLRA, and quasi-contract. See doc. no. 9 at 21. 2 28 6 3:20-CV-00009-L-MDD 1 statements Plaintiff saw on the particular Product she purchased. (Doc. no. 9 at 20). 2 Contrary to Defendant’s assertions, Plaintiff’s allegations sufficiently identify the 3 circumstances constituting fraud to provide Defendant notice of its role. See United States 4 v. United Healthcare Ins. Co., 848 F. 3d 1161, 1167 (9th Cir. 2016). The complaint is not 5 limited to any specific flavor of Defendant’s Products. It maintains that the material 6 misrepresentations are “uniform.” (Compl. ¶ 1). The Product flavor Plaintiff purchased is 7 therefore not relevant at the pleading stage. Further, Plaintiff alleges she relied on the sugar, 8 cholesterol and fiber representations on the package. (See, e.g., Compl. ¶¶ 1-3, 5, 9-13, 15- 9 27, 44-64, 76-135). Plaintiff’s deceit claims therefore satisfy the heightened pleading 10 standard of Rule 9(b). 11 D. 12 Further, Defendant asserts Plaintiff does not satisfy the CLRA’s notice requirement. 13 (Doc. no. 9 at 23). Under California Civil Code § 1782, a plaintiff must “notify the 14 prospective defendant of the alleged violations of the CLRA and demand that such person 15 correct, repair, replace or otherwise rectify the goods or services alleged to be in violation 16 thereof” at least 30 days before filing a claim for damages under the CLRA. Morgan v. 17 AT&T Wireless Servs., Inc., 177 Cal. App. 4th 1235, 1259 (2009). The purpose of the notice 18 requirement is to “give the manufacturer or vendor sufficient notice of alleged defects to 19 permit appropriate corrections or replacements.” Outboard Marine Corp. v. Superior 20 Court, 52 Cal. App. 3d 30, 41 (1975). Its “clear intent is to provide and facilitate pre- 21 complaint settlements of consumer actions wherever possible and to establish a limited 22 period during which such settlement may be accomplished.” Id. Sufficient Notice 23 Plaintiff provided a notice letter to Defendant on November 26, 2018. (See doc. no. 24 9-2 at 4-8). Defendant argues the letter did not meet the notice requirement because it does 25 not mention dietary fiber. Accordingly, Defendant asks for dismissal for Plaintiff’s CLRA 26 claim for damages related to dietary fiber. (See doc. no. 9 at 23). 27 Although Plaintiff concedes the notice letter did not expressly identify the dietary 28 fiber representations, she argues Defendant received notice in compliance with California 7 3:20-CV-00009-L-MDD 1 Civil Code § 1782. (Doc. no. 16 at 26). The letter did not present a comprehensive list of 2 alleged misrepresentations and demanded a negotiated resolution. (See doc. no. 9-2 at 4-5 3 (“[A]mong other label misrepresentations, [Defendant] state[s] that the Products contain 4 only 1g of sugar, 210 calories, 7g fat and 5mg cholesterol.”). Furthermore, it “precipitated 5 more than a year of settlement discussions.” (Doc. no. 16 at 26). Defendant does not contest 6 the veracity of this representation and cites no binding authority mandating dismissal under 7 the circumstances present here. (See doc. no. 21 at 9-10). Plaintiff’s letter fulfilled the 8 purpose of CLRA’s notice requirement to facilitate settlement and provide an opportunity 9 for Defendant to remedy the alleged defects. (See doc. no. 9-2 at 4-8; doc. no. 16 at 26.) 10 See also Outboard Marine Corp., 52 Cal. App. 3d at 41. The Court thus rejects Defendant’s 11 CLRA notice argument. 12 E. 13 Defendant also moves to dismiss Plaintiff’s warranty claim, arguing that she fails to 14 allege the existence of an express warranty. (Doc. no. 9 at 23-24). In a commercial action, 15 “[a]ny affirmation of fact or promise made by the seller to the buyer which relates to the 16 goods and becomes part of the basis of the bargain creates an express warranty that the 17 goods shall conform to the affirmation or promise.” Cal. Com. Code. § 2313(1)(a). A 18 defendant is liable for express warranties contained in labels or advertising materials upon 19 which the plaintiff relied. See, e.g., Lane v. C.A. Swanson & Sons, 130 Cal. App. 2d 210, 20 278 (1955) (express warranty involving chicken that was labeled and advertised as 21 boneless but was sold with bones). Express Warranty 22 Plaintiff adequately alleges that Defendant, through its advertising and labeling, 23 created express warranties that the Products contain the represented amount of sugar, 24 cholesterol, and dietary fiber. (See, e.g., Compl. ¶¶ 122-126). Defendant’s motion to 25 dismiss Plaintiff’s breach of express warranty claim is denied. 26 //// 27 28 8 3:20-CV-00009-L-MDD 1 F. 2 Plaintiff asserts a quasi-contract claim under the theory of unjust enrichment and 3 seeks restitution.3 (Compl. ¶¶ 134-135). “A quasi-contract action, in the form of a common 4 count for money had and received, to recover money obtained by fraud (waiver of tort) or 5 mistake, is governed by the fraud statute.” First Nationwide Savings v. Perry, 11 Cal. App. 6 4th 1657, 1670 (1992). To bring an action based on a quasi-contract, a plaintiff must allege 7 “that a defendant has been unjustly conferred a benefit through mistake, fraud, coercion, 8 or request.” Astiana v. Hain Celestial Grp., Inc., 783 F.3d 753, 762 (9th Cir. 2015). Quasi-Contract 9 Defendant argues that Plaintiff fails to allege unjust benefit, asserting “Plaintiff 10 obtained the bar that she purchased” and that Plaintiff made “no allegation that [the 11 Product] did not perform as expected or advertised.” (Doc. no. 9 at 24). The Court is 12 unpersuaded. 13 Plaintiff alleges that Defendant received the benefit of the purchase price when she 14 purchased the Products. (See Compl. ¶ 131). Defendant’s retention of the benefit was 15 inequitable because it was based on Plaintiff’s unwitting reliance on Defendant’s false 16 representations. Plaintiff would not have made the purchase on the same terms, or at all, 17 had she known the truth. (See Compl. ¶¶ 57-61, 131). This is sufficient to allege unjust 18 enrichment based on quasi-contract. See Astiana, 783 F.3d 753 (consumer sufficiently 19 stated quasi-contract claim against manufacturer that used word “natural” on its products 20 by alleging manufacturer was unjustly enriched by consumer reliance on false and 21 misleading labeling). The Court denies Defendant’s motion to dismiss Plaintiff’s quasi- 22 contract claim. 23 ///// 24 25 26 27 28 3 Although Plaintiff is alleging a nationwide class, she does not specify which state laws she is relying on. (See Compl. ¶¶ 131-135). She cites only to California law in her opposition. (See doc. no. 16 at 28-29). The Court’s analysis of Defendant’s argument for purposes of the pending motion is therefore limited to California law. 9 3:20-CV-00009-L-MDD 1 2 III. CONCLUSION For the foregoing reasons, Defendant’s motion to dismiss is denied. 3 4 5 IT IS SO ORDERED. Dated: September 10, 2020 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 10 3:20-CV-00009-L-MDD
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