Brown v. NATURES PATH FOODS, INC.

[3] 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA [6] 7 MOLLY BROWN, et al., Case No. 21-cv-05132-HSG 8 Plaintiffs, ORDER GRANTING MOTION FOR LEAVE TO FILE SECOND AMENDED 9 v. COMPLAINT 10 NATURES PATH FOODS, INC., Re: Dkt. No. 60 11 Defendant. [12] 13 Before the Court is Plaintiffs’ motion for leave to file a second amended complaint. Dkt. 14 No. 60 (“Mot.”).1 Defendant Nature’s Path Foods, Inc. (“Defendant” or “Nature’s Path”) opposes 15 the motion. Dkt. No. 65 (“Opp.”). The Court finds this matter appropriate for disposition without 16 oral argument and the matter is deemed submitted. See Civil L.R. 7-1(b). For the reasons below, 17 Plaintiffs’ motion is GRANTED. 18 I. BACKGROUND 19 Plaintiffs filed their original complaint in July 2021, alleging that the protein 20 representations on the labels of more than fifty Nature’s Path products (the “Products”) are false 21 and misleading because they overstate the amount of protein provided and fail to include the 22 legally required “daily value” percentage for protein on the nutrition facts panels located on the 23 side or back labels of the Products. Dkt. No. 1. Nature’s Path argued in its first Motion to 24 Dismiss that Plaintiffs’ claims fail because the Complaint did not allege that any of the plaintiffs 25 read or relied on the nutrition facts panels when making their purchasing decisions. Dkt. No. 18. 26 The Court agreed that Plaintiffs’ claims suffered from “a reliance problem” and granted Plaintiffs [27] 1 leave to amend to cure the defect. Dkt. No. 50 at 6-7. 2 The First Amended Complaint (FAC) attempted to do so by alleging that Plaintiffs 3 “regularly check[] the NFP [Nutrition Facts Panel] before purchasing any product.” Dkt. No. 53 4 ¶¶ 59, 64, 69. In response, Nature’s Path filed its second motion to dismiss, which argues that the 5 FAC still fails to plead that any plaintiff reviewed and actually relied on the Products’ Nutrition 6 Facts Panel prior to purchase. Dkt. No. 57 at 9. Plaintiffs now seek leave to file a second 7 amended complaint, which would more specifically allege that Plaintiffs “looked at and read the 8 NFP [Nutrition Facts Panel] on the Hemp Hearts Granola before purchasing it for the first time.” 9 Dkt. No. 60-3 (“Proposed SAC”), ¶¶ 63, 68, 73. 10 II. LEGAL STANDARD 11 Rule 15(a) of the Federal Rules of Civil Procedure allows a plaintiff to amend the 12 complaint once, as a matter of right, prior to the filing of a responsive pleading. See Fed. R. Civ. 13 P. 15 (a). Once the complaint has been amended, a plaintiff must then seek leave of court or 14 written consent of the adverse party before further amendment may be made. See id. The Court 15 shall grant leave to amend “when justice so requires.” Id. The Court must be guided by Rule 15’s 16 underlying purpose: to facilitate decision on the merits, rather than on the pleadings or 17 technicalities. See Roth v. Garcia Marquez, 942 F.2d 617, 628 (9th Cir. 1991). Thus, requests for 18 leave to amend should be granted with “extreme liberality.” Brown v. Stored Value Cards, Inc., [19] 953 F.3d 567, 574 (9th Cir. 2020). When considering whether to grant leave to amend, district 20 courts consider several factors including undue delay, the movant’s bad faith or dilatory motive, 21 repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the 22 opposing party, and futility. Foman v. Davis, 371 U.S. 178, 182 , 83 S. Ct. 227 (1962). Of the 23 Foman factors, prejudice to the opposing party carries the most weight. Eminence Capital, LLC v. 24 Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003). 25 III. DISCUSSION 26 Nature’s Path essentially argues that Plaintiffs should not be given leave because (1) 27 Plaintiffs’ proposed allegations are not credible; (2) Nature’s Path would be prejudiced by having 1 Proposed SAC. See generally Opp. In light of Rule 15’s extremely deferential standard, the Court 2 grants Plaintiffs leave to file the Proposed SAC. 3 First, and most importantly, the Proposed SAC is not futile and would likely “facilitate 4 decision on the merits, rather than on the pleadings or technicalities.” Lopez v. Smith, 203 F.3d 5 1122, 1127 (9th Cir. 2000) (en banc). The Proposed SAC seeks to allege that Plaintiffs “looked at 6 and read the NFP [Nutrition Facts Panel] on the Hemp Hearts Granola before purchasing it for the 7 first time.” Dkt. No. 60-3 (“Proposed SAC”), ¶¶ 63, 68, 73. That allegation would plainly support 8 Plaintiffs’ argument that they have Article III standing to challenge the Products’ nutrition facts 9 panels because they actually reviewed and relied on them before buying the Products. While the 10 Court “will defer consideration of challenges to the merits of a proposed amended pleading until 11 after leave to amend is granted and the amended pleading is filed,” Netbula, LLC v. Distinct 12 Corp., 212 F.R.D. 534, 539 (N.D. Cal. 2003), it notes that the Proposed SAC’s allegation would 13 appear to address the “reliance problem” that the Court previously highlighted. See Dkt. No. 50 at 14 6 (“What is missing are facts allowing the Court to reasonably infer that Plaintiffs made their 15 purchasing decisions based on anything other than the Products’ front labels.”). 16 Nature’s Path chief argument in opposition is that Plaintiffs’ newly proposed allegations of 17 reliance are “not credible.” Opp. at 6. But that argument is brought at the wrong stage of this 18 lawsuit. Whether Plaintiffs reviewed the Products’ nutrition facts panels clearly raises a question 19 of fact that cannot be resolved on a motion to file an amended complaint or even a substantive 20 motion to dismiss that complaint, since at the pleading stage the Court must accept as true all 21 factual allegations in the complaint and must draw all reasonable inferences from those allegations 22 in the light most favorable to Plaintiffs. See Manzarek v. St. Paul Fire & Marine Ins. Co., 519 23 F.3d 1025, 1031 (9th Cir. 2008). 24 That said, the Court acknowledges that Nature’s Path would suffer prejudice by having to 25 respond to a third complaint, since they have already briefed two motions to dismiss, the last of 26 which is ready to be decided. See McGovney v. Aerohive Networks, Inc., No. 18-CV-00435-LHK, [27] 2019 WL 8137143 , at *18 (N.D. Cal. Aug. 7, 2019) (finding that “leave to amend would be 1 have already briefed two motions to dismiss.”); Franczak v. Suntrust Mortg. Inc., No. 5:12-CV2 01453 EJD, 2013 WL 4764327 , at *4 (N.D. Cal. Sept. 5, 2013) (finding amendment prejudicial 3 where “Plaintiff has created a situation whereby Defendant’s second, fully-briefed motion to 4 dismiss could be rendered moot just at the point when it is ready to be decided.”). And the Court 5 also agrees that some undue delay may be present here. Ultimately, Plaintiffs have not offered a 6 coherent explanation as to why it took almost one year for them to simply allege that they read the 7 nutrition facts panels before buying the Products. That prejudice and unexplained delay weigh in 8 favor of denying leave. See Jackson v. Bank of Hawaii, 902 F.2d 1385, 1388 (9th Cir. 1990) 9 (holding that an unexplained delay of just eight months from the time the facts underlying a cause 10 of action were known until the time of filing for leave to amend constituted an undue delay); 11 Utterkar v. Ebix, Inc., No. 14-CV-02250-LHK, 2015 WL 5027986 , at *7 (N.D. Cal. Aug. 25, 12 2015) (finding undue delay and rejecting leave to file another amended complaint where the 13 plaintiff knew of the facts underlying the causes of action for over ten months but offered no 14 explanation for why the new causes of action were not brought earlier). 15 But in the end, the Court finds it dispositive that the Proposed SAC would facilitate a 16 decision of Plaintiffs’ remaining claims on the merits, rather than on the pleadings or 17 technicalities. Lopez, 203 F.3d at 1127 . Any skepticism as to the veracity of Plaintiffs’ proposed 18 allegations “is best reserved for later stages of the proceedings when the plaintiff’s case can be 19 rejected on evidentiary grounds.” In re Gilead Scis. Sec. Litig., 536 F.3d 1049, 1057 (9th Cir. 20 2008). Since requests for leave to amend should be granted with “extreme liberality,” the Court 21 GRANTS Plaintiffs’ motion. See Brown, 953 F.3d at 574 . 22 Plaintiffs shall file the proposed Second Amended Complaint attached as Exhibit 2 to the 23 Declaration of Kali Backer ISO Plaintiffs’ Motion For Leave by August 19, 2022.2 24 In light of the similarities between the First and Second Amended Complaints, the Court is [25] 2 The Proposed SAC would also allege that Nature’s Path failed to comply with § 101.9(c)(7)(i) [26] and state the “corrected amount of protein” in the nutrition facts panel in the form of a percentage of daily value, which in turn rendered the front label nutrient content claims unlawful under 21 27 C.F.R. §§ 101.13 (n) & (b). Dkt. No. 66 at 4. It may allege this theory but may not add any new 1 of the view that the issues raised in the pending Motion to Dismiss the First Amended Complaint 2 are ripe for decision. A third round of elongated briefing is unnecessary. To the extent either 3 party wishes to file a supplemental brief addressing the impact of the Second Amended 4 || Complaint’s new allegations on Nature’s Path’s pending motion, they may do so by August 26, 5 2022. The supplemental brief may not exceed ten pages. The motion hearing currently set for 6 August 25, 2022 is CONTINUED to September 15, 2022, at 2:00 PM in Oakland, Courtroom 2, 7 || 4th Floor before the undersigned. This Order TERMINATES Dkt. No. 63. 8 IT IS SO ORDERED. 9 |} Dated: 8/15/2022 10 7 Haspareod Ld, □ HAYWOOD S. GILLIAM, JR. I United States District Judge [16] = 17 Z 18