Fried v. Snapple Beverage Company

[7] 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA [10] 11 Case No.: 24-cv-653-DMS-DDL ALBERT FRIED on behalf of himself, all 12 others similarly situated, and the general ORDER DENYING DEFENDANT’S public, 13 MOTION TO DISMISS Plaintiff, [14] v. [15] SNAPPLE BEVERAGE CORP., [16] Defendant. [18] Pending before the Court is Defendant’s Motion to Dismiss Plaintiff’s Complaint. [19] (ECF No. 5). Plaintiff filed an Opposition, (ECF No. 8), and Defendant filed a Reply, [20] (ECF No. 11). For the following reasons, Defendant’s Motion to Dismiss is DENIED. [21] I. [22] BACKGROUND [23] Plaintiff brings this class action on behalf of himself, all others similarly situated, [24] and the public. (Plaintiff’s Complaint (“Compl.”), ECF No. 1, Exhibit 2). Plaintiff is a [25] consumer of Defendant’s juice, tea, and element beverages (“Products”). (Id. at 6). [26] Specifically, he claims to have regularly drank Defendant’s Apple Juice, Peach Tea, and [27] Lemon Tea. (Id. at 9). Plaintiff alleges that Defendant’s labeling of its Products as “ALL [28] NATURAL” is false and misleading because Defendant’s Products contain manufactured 1 citric acid (“MCA”) and coloring agents. (Id. at 3). His Complaint asserts six causes of 2 action: (1) violation of the Unfair Competition Law (“UCL”), Cal. Bus. & Prof. Code §§ 3 17200, et seq.; (2) violation of the False Advertising Law (“FAL”), Cal. Bus. & Prof. Code 4 §§ 17500, et seq.; (3) violation of the Consumers Legal Remedies Act (“CLRA”), Cal. Civ. 5 Code §§ 1750, et seq.; (4) breach of express warranties under Cal. Com. Code § 2313 (1); 6 (5) breach of the implied warranty of merchantability under Cal. Com. Code § 2314 ; and 7 (6) unjust enrichment. (Id. at 13–19). 8 II. 9 LEGAL STANDARD 10 Under Federal Rule of Civil Procedure 12(b)(6), a party may file a motion to dismiss 11 on the grounds that a complaint “fail[s] to state a claim upon which relief can be granted”. 12 Fed. R. Civ. P. 12(b)(6). A motion to dismiss under Rule 12(b)(6) “tests the legal 13 sufficiency of a claim.” Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). To survive 14 a motion to dismiss, “a complaint must contain sufficient factual matter, accepted as true, 15 to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662 , 16 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “A claim 17 has facial plausibility when the plaintiff pleads factual content that allows the court to draw 18 the reasonable inference that the defendant is liable for the misconduct alleged.” Id. 19 “Determining whether a complaint states a plausible claim for relief will . . . be a context20 specific task that requires the reviewing court to draw on its judicial experience and 21 common sense.” Id. at 679 . “Factual allegations must be enough to raise a right to relief 22 above the speculative level.” Twombly, 550 U.S. at 555 . If Plaintiff “ha[s] not nudged 23 [his] claims across the line from conceivable to plausible,” the complaint “must be 24 dismissed.” Id. at 570 . 25 In reviewing the plausibility of a complaint on a motion to dismiss, a court must 26 “accept factual allegations in the complaint as true and construe the pleadings in the light 27 most favorable to the nonmoving party.” Manzarek v. St. Paul Fire & Marine Ins. Co., [28] 519 F.3d 1025, 1031 (9th Cir. 2008). But courts are not “required to accept as true 1 allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable 2 inferences.” In re Gilead Scis. Secs. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008) (quoting 3 Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001)). 4 III. 5 DISCUSSION 6 A. Judicial Notice 7 As a preliminary matter, the parties have requested judicial notice. While Plaintiff 8 seeks judicial notice of two FDA warning letters issued in 2001, Defendant seeks judicial 9 notice of labels on its Products. (Plaintiff’s Request for Judicial Notice, ECF No. 9); 10 (Defendant’s Request for Judicial Notice, ECF No. 5, Attachment 4). Because these 11 requests are unopposed, the Court grants them. See, e.g., Rodriguez v. Mondelez Glob. 12 LLC, 703 F.Supp.3d 1191 , 1203 (S.D. Cal. 2023) (“The Court takes judicial notice of 13 Exhibits 1, 3, 9–11, and 14, which are unopposed.”); Salinas v. IA Lodging San Diego, 14 L.L.C., 2021 WL 1578957 , at *2 (S.D. Cal. Apr. 22, 2021) (“Moreover, courts within this 15 District have granted unopposed requests for judicial notice pursuant to Civil Local Rule 16 7.1(f)(3)(c).”); Haddad v. Bank of Am., N.A., 2014 WL 67646 , at *1 n.1 (S.D. Cal. Jan. 8, 17 2014) (“Pursuant to Federal Rule of Evidence 201 and Civil Local Rule 7.1(f)(3)(c), the 18 unopposed Requests for Judicial Notice are granted.”). 19 B. UCL, FAL, and CLRA Claims 20 Plaintiff alleges violations of California’s consumer protection statutes: UCL, FAL, 21 and CLRA. 22 The UCL prescribes business practices that are “unlawful, unfair or fraudulent,” Cal. Bus. & Prof. Code § 17200 , the FAL prohibits the dissemination of any advertising [23] “which is untrue or misleading,” Cal. Bus. & Prof. Code § 17500 , and the CLRA 24 declares specific acts and practices in the sale of goods or services to be unlawful, including making affirmative misrepresentations or omissions regarding the [25] “standard, quality, or grade” of a particular good or service, Cal. Civ. Code § 26 1770(a). In re Sony Gaming Networks & Customer Data Sec. Breach Litig., 996 F.Supp.2d 942 , 985 [27] (S.D. Cal. 2014). “Courts often analyze these statutes together because they share similar [28] 1 attributes.” Id. The UCL, FAL, and CLRA are governed by the “reasonable consumer” 2 test. Ebner v. Fresh, Inc., 838 F.3d 958, 965 (9th Cir. 2016). Under this standard, Plaintiff 3 “must show that members of the public are likely to be deceived.” Moore v. Mars Petcare, 4 US, Inc., 966 F.3d 1007, 1017 (9th Cir. 2020) (citations omitted). This requires more than 5 a “mere possibility” that Defendant’s labeling “might conceivably be misunderstood by 6 some few consumers viewing it in an unreasonable manner.” Id. (internal quotation marks 7 omitted). It must be “probable that a significant portion of the general consuming public 8 or of targeted consumers, acting reasonably in the circumstances, could be misled.” Lavie 9 v. Procter & Gamble Co., 105 Cal.App.4th 496, 508 (2003). 10 At this point in the proceedings, Plaintiff need not prove he can satisfy the reasonable 11 consumer test for this is generally a question of fact “which requires consideration and 12 weighing of evidence from both sides and which usually cannot be made on demurrer.” 13 Linear Tech. Corp. v. Applied Materials, Inc., 152 Cal.App.4th 115 , 134–35 (2007). 14 “However, in certain instances, a court can properly make this determination and resolve 15 such claims based on its review of the product packaging.” Brown v. Starbucks Corp., [16] 2019 WL 996399 , at *3 (S.D. Cal. Mar. 1, 2019) (quoting Pelayo v. Nestle USA, Inc., 989 17 F.Supp.2d 973 , 978 (C.D. Cal. 2013)). “[W]here a Court can conclude as a matter of law 18 that members of the public are not likely to be deceived by the product packaging, dismissal 19 is appropriate.” Pelayo, 989 F.Supp.2d at 978 (collecting cases). 20 Plaintiff makes two arguments as to why Defendant’s “ALL NATURAL” labeling 21 violates California’s consumer protection statutes. First, Plaintiff alleges that the use of 22 juice concentrates “for color” is unnatural. (Compl. 7–8). Second, Plaintiff contends that 23 the use of citric acid renders Defendant’s Products unnatural. (Id. at 6–7). The Court will 24 address each in turn. 25 a. Coloring 26 Plaintiff asserts that adding juice concentrates to Defendant’s Juices for color makes 27 the Juices’ labeling misleading because terms like “natural color” are “erroneously 28 interpreted by reasonable consumers to mean the color is a naturally-occurring constituent 1 in the food.” (Id. at 8). Defendant argues that no reasonable consumer would find its Juices 2 unnatural “simply because they include natural fruit and vegetable juice ingredients for 3 color.” (Def.’s Mot. 9). The Court agrees with Defendant, finding that Plaintiff’s assertion 4 is a “legal conclusion that is not deemed true even on a motion to dismiss.” Harris v. 5 McDonald’s Corp., 2021 WL 2172833 , at *2 (N.D. Cal. Mar. 24, 2021) (citing Twombly, [6] 550 U.S. at 555, 564 ). Plaintiff’s allegation regarding what a reasonable consumer would 7 assume is too conclusory and “lacks a factual foundation to support any determination as 8 to what reasonable consumers do (or do not) believe.” Id. Plaintiff “cannot proceed simply 9 by asserting h[is] own belief and conclusions about consumers’ beliefs without additional 10 facts to ‘nudge’ h[is] claim ‘across the line from conceivable to plausible.’” Id. (quoting 11 Twombly, 550 U.S. at 570 ). “[I]t is not plausible that a reasonable consumer would think 12 that adding a natural product to a natural product renders the latter not natural.” Valencia 13 v. Snapple Beverage Corp., 2024 WL 1158476 , at *4 (S.D.N.Y. Mar. 18, 2024). 14 Plaintiff relies only on an FDA policy defining the term “natural” as “nothing 15 artificial or synthetic (including all color additives regardless of source) has been included 16 in” the food. (Compl. 7–8). Courts in the Ninth Circuit have disagreed about whether 17 FDA statements are relevant in analyzing deceptive labeling claims. Compare Brand v. 18 KSF Acquisition Corp., 2023 WL 3225409 , at *6 (S.D. Cal. Mar. 17, 2023) (“Allegations 19 a product’s label violates an FDA regulation can’t form the basis of a deceptive labeling 20 claim under the reasonable consumer test.”), with Ivie v. Kraft Foods Glob., Inc., 2013 WL 21 685372, at *12 (N.D. Cal. Feb. 25, 2013) (“The FDA’s 2009 industry guidance statement 22 is relevant to the issue of whether these labels could be deceptive or misleading to a 23 reasonable consumer[.]”). Even acknowledging that FDA guidance is relevant to 24 Plaintiff’s allegations,1 the Court finds that the guidance alone is insufficient to show that [26] 27 1 The Court is skeptical in this context, however, because “the FDA has not engaged in rulemaking to establish a formal definition for the term ‘natural’”. Use of the Term Natural on Food Labeling, U.S. [28] 1 “members of the public are likely to be deceived.” Moore, 966 F.3d at 1017 ; Nacarino v. 2 Chobani, LLC, 2021 WL 3487117 , at *10 n.5 (N.D. Cal. Aug. 9, 2021) (“Although Ms. 3 Nacarino has stated a plausible violation of 21 C.F.R. § 101.22 (i), she may not use that 4 violation alone as the basis for her deceptive labeling claims, which implicate the 5 reasonable consumer test.”). Plaintiff’s failure to plead any additional factual evidence of 6 reasonable consumers’ beliefs is fatal to his argument. 7 Further, the Juices’ ingredient lists clarify any misunderstanding a reasonable 8 consumer would have. According to the Ninth Circuit, “qualifiers in packaging, usually 9 on the back of a label or in ingredient lists, ‘can ameliorate any tendency of the label to 10 mislead.’” Moore, 966 F.3d at 1017 (quoting Brady v. Bayer Corp., 26 Cal.App.5th 1156 , 11 1167 (2018)). “[T]he front label must be unambiguously deceptive for a defendant to be 12 precluded from insisting that the back label be considered together with the front label”, 13 which is not the case here. McGinity v. Procter & Gamble Co., 69 F.4th 1093, 1098 (9th 14 Cir. 2023). The back labels of Defendant’s Apple Juice and Mango Madness Juice clarify 15 that vegetable and fruit concentrates were added for color and that the color is not “a 16 naturally-occurring constituent in the food”. (Def.’s Mot. Exhibit A) (showing that 17 ingredient list of Snapple Apple includes “vegetable and fruit juice concentrates (for 18 color)” and ingredient list of Mango Madness includes “vegetable juice concentrate and 19 beta carotene (for color)”); (Compl. 8). As such, Plaintiff has not plausibly alleged that 20 reasonable consumers would be deceived by the “ALL NATURAL” label on Defendant’s 21 Products simply because they contain juice concentrates for color. 22 b. Citric Acid 23 Plaintiff next contends that Defendant’s Products are unnatural because they contain 24 MCA. (Id. at 6). To support this contention, Plaintiff cites Defendant’s website, which [26] 27 Food & Drug Administration, available at https://www.fda.gov/food/food-labeling-nutrition/use-termnatural-food-labeling. [28] 1 states both that citric acid is “a food ingredient derived from starch” and “is present in 2 citrus fruits”. (Id. at 7). In response, Defendant argues that Plaintiff has failed to allege 3 that the type of citric acid used by Defendant is artificial and that MCA is “derived from 4 natural sources”. (Def.’s Mot. 9). Here, the Court agrees with Plaintiff. 5 Defendant is incorrect that Plaintiff fails to “allege—anywhere—that the citric acid 6 in Snapple Juice Drinks is artificial or synthetic.” (Id. at 9). Plaintiff’s Complaint links 7 MCA to Defendant’s Products three times. First, Plaintiff states that “[m]anufactured citric 8 acid (“MCA”), which is in the Products, is an industrial chemical derived, not from fruit 9 or vegetables, but from the fermentation of crude sugars (e.g., molasses and corn starch) 10 by the mold, Aspergillus niger.” (Compl. 3) (emphasis added). Second, Plaintiff asserts 11 “each of the Products contain MCAs”. (Id.). Third, farther down in his Complaint, Plaintiff 12 alleges again that Defendant’s “Products contain MCA, an industrial chemical”. (Id. at 6). 13 These are factual allegations that, at this stage, the Court is required to accept. Iqbal, 556 14 U.S. at 678; Noohi v. Kraft Heinz Co., 2020 WL 5554255 , at *2 (C.D. Cal. July 20, 2020) 15 (designating Plaintiff’s statement that “[a]ll of the Products contain artificial DL-Malic 16 Acid” as an “unequivoca[l] alleg[ation]” of fact). Even if, as Defendant points out, citric 17 acid can “be made naturally, here [P]laintiff alleges that th[is] ingredient[] w[as] not 18 produced naturally, and the [C]ourt must accept th[is] non-conclusory factual allegation[] 19 of the [C]omplaint in the light most favorable to [P]laintiff.” Roper v. Big Heart Pet 20 Brands, Inc., 510 F.Supp.3d 903 , 914 (E.D. Cal. 2020); Branca v. Bai Brands, LLC, 2019 21 WL 1082562 , at *3 (S.D. Cal. Mar. 7, 2019) (“While Branca’s assumption as to the type 22 of malic acid contained in Defendants’ Products ultimately may be incorrect, at the 23 pleading stage, this Court ‘does not operate as a fact-finder,’ but, instead, must ‘presume 24 all facts plead as true.’”). The main cases relied on by Defendant, Tarzian and Valencia, [28] 1 are out-of-Circuit decisions that are less persuasive to the Court on this matter. 2 Assuming Defendant’s Products contain MCA, it is plausible that a reasonable 3 consumer is “likely to be deceived” by Defendant’s “ALL NATURAL” labeling on its 4 Products. Moore, 966 F.3d at 1017 . Unlike the juice concentrates that Defendant 5 designates as added “for color” on its labels, citric acid is a standalone ingredient that lacks 6 further clarification in Defendant’s ingredient lists. (Def.’s Mot. Exhibit A). Even if 7 reasonable consumers looked to the back label of one of Defendant’s Products to learn 8 about the ingredients, they “could not know that the ‘citric acid’ listed among the 9 ingredients was an artificial, industrially-manufactured chemical,” especially because citric 10 acid occurs naturally in fruits as well. (Plaintiff’s Opposition (“Opp’n”) 18). In any event, 11 “questions regarding how consumers interpret terms or phrases on product labels are 12 factual inquiries best suited for resolution at a later stage of the litigation and not on a 13 motion to dismiss.” Roper, 510 F.Supp.3d at 914. The same goes for Defendant’s second 14 argument—that MCA is natural because it “can be derived from natural sources and 15 manufactured using natural processes”—which the Court finds more suitable for 16 evaluation after more evidence comes to light in discovery. (Def.’s Mot. 9). Accordingly, 17 because Plaintiff states plausible claims under the UCL, FAL, and CLRA, the Motion to 18 Dismiss is DENIED. [24] 2 The complaints in Tarzian and Valencia were also more generalized. In Tarzian, for instance, “the 25 plaintiff had not alleged that Capri Sun contained artificial citric acid. Rather, it said that industrial citric acid is ‘usually’ artificial because it is more economically viable. Here, Plaintiff[] ha[s] explicitly alleged 26 that [Defendant’s Products] contain[] [MCA].” Noohi, 2020 WL 5554255 , at *3; Tarzian v. Kraft Heinz Foods Co., 2019 WL 5064732 , at *4 (N.D. Ill. Oct. 9, 2019) (“Plaintiffs need to draw a connection 27 between the common industry practice and the actual practice used by Kraft. Even drawing all reasonable inferences in the Plaintiffs’ favor, the complaint fails to draw this nexus, and the Court cannot draw it for [28] 1 C. Common Law Claims 2 Aside from California’s consumer protection statutes, Plaintiff alleges breach of 3 express warranties, breach of the implied warranty of merchantability, and unjust 4 enrichment. The Court will address each below. 5 a. Breach of Express Warranties 6 A seller of goods creates an express warranty by making “[a]ny affirmation of fact 7 or promise . . . to the buyer which relates to the goods and becomes part of the basis of the 8 bargain.” Cal. Com. Code § 2313 (1)(a). To prevail on a theory of breach of express 9 warranties, Plaintiff must prove that Defendant “made affirmations of fact or promises” 10 that “became part of the basis of the bargain.” Maneely v. Gen. Motors Corp., 108 F.3d 11 1176, 1181 (9th Cir. 1997). 12 Defendant contends that this claim fails because Plaintiff has not plausibly alleged 13 that there is an “underlying misrepresentation”. (Def.’s Mot. 11). This argument is 14 unpersuasive. For the reasons explained above, Plaintiff has sufficiently alleged at this 15 stage that (1) the Product labels convey to reasonable consumers that the Products are 16 “ALL NATURAL,” and that (2) the Products nonetheless contain MCA, an industrial 17 chemical, contrary to Defendant’s representations. Accordingly, the Court DENIES 18 Defendant’s Motion to Dismiss the breach of express warranties claim. 19 b. Breach of Implied Warranty of Merchantability 20 A contract for the sale of goods implies “a warranty that the goods shall be 21 merchantable,” Cal. Com. Code § 2314 (1), meaning that the goods are “fit for the ordinary 22 purposes for which such goods are used”, id. § 2314(2)(c). “A breach of the warranty of 23 merchantability occurs if the product lacks ‘even the most basic degree of fitness for 24 ordinary use.’” Birdsong v. Apple, Inc., 590 F.3d 955, 958 (9th Cir. 2009) (quoting Mocek 25 v. Alfa Leisure, Inc., 114 Cal.App.4th 402, 406 (2003)). Merchantability has also been 26 construed as meaning that the product must “[conform] to the promises or affirmations of 27 fact made on the container or label”. Hauter v. Zogarts, 14 Cal.3d 104, 117 (1975). [28] 1 Defendant argues that this claim is implausible because its Products are “fit for their 2 ordinary purpose—to be consumed as juice.” (Def.’s Mot. 11). Plaintiff does not dispute 3 this argument, but instead contends that Defendant has failed to comply with the second 4 interpretation of merchantability articulated in Hauter. (Opp’n 22). The Court agrees with 5 Plaintiff. At this point in the litigation, Plaintiff has plausibly alleged that Defendant has 6 not conformed with its affirmation that its Products are “ALL NATURAL”. As such, the 7 Court DENIES Defendant’s Motion to Dismiss for this claim. See In re Ferrero Litig., [8] 794 F.Supp.2d 1107, 1118 (S.D. Cal. 2011) (“Although Ferrero argues that Nutella® is fit 9 for its ordinary purpose of consumption, Plaintiffs are bringing their claim under a different 10 definition of merchantability, whether the product conforms with ‘the promises or 11 affirmations of fact made on the container or label.’ Cal. Com. Code § 2314 (2)(f). 12 Accordingly, the Court declines to dismiss Plaintiffs’ claim for breach of the implied 13 warranty of merchantability.”). 14 c. Unjust Enrichment 15 In California, “there is not a standalone cause of action for ‘unjust enrichment,’” but 16 “[w]hen a plaintiff alleges unjust enrichment, a court may ‘construe the cause of action as 17 a quasi-contract claim seeking restitution.’” Astiana v. Hain Celestial Grp., Inc., 783 F.3d 18 753, 762 (9th Cir. 2015) (quoting Rutherford Holdings, LLC v. Plaza Del Rey, 223 19 Cal.App.4th 221 , 231 (2014)). “[T]he theory underlying” an unjust enrichment claim is 20 “that a defendant has been unjustly conferred a benefit ‘through mistake, fraud, coercion, 21 or request.’” Id. (quoting 55 Cal. Jur. 3d Restitution § 2). “The return of that benefit is the 22 remedy ‘typically sought in a quasi-contract cause of action.’” Id. (quoting 55 Cal. Jur. 3d 23 Restitution § 2). 24 Plaintiff alleges he is entitled to restitution because Defendant derived “financial 25 benefits” from the class members’ purchase of the Products. (Compl. 18). He further 26 alleges it “would be inequitable, unconscionable, and unjust” for Defendant to profit from 27 its “wrongful conduct.” (Id. at 19). Plaintiff has sufficiently stated a quasi-contract cause 28 of action: Defendant enticed Plaintiff and class members to purchase their products through 1 || fraudulent misrepresentations and was unjustly enriched as a result. See Astiana, 783 F.3d 2 || at 762 (plaintiff sufficiently states quasi-contract cause of action by alleging defendant had 3 || enticed plaintiffs to purchase its products “through false and misleading labeling” and that 4 ||defendant “was unjustly enriched as a result’). Defendant argues only that the unjust 5 |fenrichment claim should fail because Plaintiff has not sufficiently alleged 6 ||misrepresentations. (Def.’s Mot. 11). The Court rejects this argument because, as stated 7 ||above, Plaintiff has sufficiently alleged fraudulent misrepresentations at this stage. 8 || Accordingly, the Court DENIES Defendant’s Motion to Dismiss with respect to the unjust 9 || enrichment claim. 10 IV. 11 CONCLUSION AND ORDER 12 Based on the foregoing, the Court DENIES Defendant’s Motion to Dismiss. 13 IT IS SO ORDERED. 14 || Dated: October 11, 2024 2» 15 rn Yn « Lh, 16 Hon. Dana M. Sabraw, Chief Judge United States District Court