DiGiacinto v. RB Health (US) LLC

— 1 — — 2 — — 3 — 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA — 6 — 7 JOSEPH DIGIACINTO, Case No. 22-cv-04690-DMR 8 Plaintiff, ORDER ON MOTION TO DISMISS 9 v. FIRST AMENDED COMPLAINT 10 RB HEALTH (US) LLC, Re: Dkt. No. 32 11 Defendant. 12 Plaintiff Joseph DiGiacinto filed this putative class action against Defendant RB Health 13 (US) LLC (“RB Health”) alleging false, misleading, and deceptive marketing practices with 14 respect to the labeling of its “Children’s Delsym Cough Relief” product. RB Health moves 15 pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6) to dismiss the first amended 16 complaint. [Docket No. 32.] This matter is suitable for determination without oral argument. 17 Civ. L.R. 7-1(b). For the following reasons, the motion is denied. 18 I. BACKGROUND 19 Plaintiffs make the following allegations in the amended complaint, all of which are taken 20 as true for purposes of the motion to dismiss.1 RB Health makes, labels, distributes, sells, and 21 markets two separate Delsym Cough Relief products: one advertised and marketed for adults, 22 “Delsym Cough Relief” (the “adults’ product”), and one marketed and advertised for children, 23 “Children’s Delsym Cough Relief” (the “children’s product”). [Docket No. 24 (First Am. Class 24 Action Complaint, “FAC”) ¶¶ 1, 10.] The front of the packaging for the children’s product 25 contains a cartoon image of a child. It states “Ages 4+” at the top of the package and “For — 26 — 1 When reviewing a motion to dismiss for failure to state a claim, the court must “accept as true all — 27 — of the factual allegations contained in the complaint.” Erickson v. Pardus, 551 U.S. 89, 94 (2007) 1 Children & Adults” at the bottom. The front of the packaging for the adults’ product contains no 2 statement about the suitability of the product for any ages. The front of the packaging for both 3 products is reproduced below. 4 Gta 5 _ — 6 — UU ae Lan Cad OMe □□ 7 uate Tenet UE (HUT iu gece 1] Secale sre isha (EU ii □□ 1 — 8 — esol UTE] | bosol tte] 9 3 Ss =a 10 oy | 4 Q 11 y 7 = & 12 . 2° & B HOURS Ss are “Gicou EF 13 a i Se ee | aes ; eS pay 6 al 130) f=) aera a Ul 3 15 aera Ml tele en bed 16 |] G13. 17 The side labels for both products contain an identical dosing chart that includes dosing Zz 18 || amounts for children and adults along with the statement “Dosing Cup Included” below an image 19 || of acup containing liquid. Jd. at § 14. The “Drug Facts” labels on the back of the packaging for 20 || both products are identical. Both products contain the same amount of the active ingredient, 21 dextromethorphan polistirex equivalent to 30 mg dextromethorphan hydrobromide, and the same 22 || inactive ingredients. Id. at Jj 15-20. 23 DiGiacinto alleges that RB Health “created and marketed one Product as specially 24 || formulated for children and that Product was sold at a premium,” even though both products are 25 identical in terms of the “form and quantity” of ingredients. Jd. at 4 15. 26 DiGiacinto alleges that the labeling on the front of both products’ packaging is misleading 27 || because “reasonable consumers believe that there is something different about the adults’ Delsym 28 || Cough Relief product and the Children’s Delsym Cough Relief product that makes the Children’s 1 Product better suited or more appropriate for children.” Id. at ¶ 21. However, “[t]he Children’s 2 Delsym Cough Relief product is not specially formulated for children” and is “identical to the 3 adult’s Delsym Cough Relief product,” but RB Health and retailers charge more for the children’s 4 product. Id. at ¶¶ 24-26. He alleges that “[i]n short, [RB Health] tricks consumers into thinking 5 they are buying cough relief product specially formulated for children, when in reality, consumers 6 are just buying [RB Health’s] cough relief product for adults in a different packaging marketed for 7 children.” Id. at ¶ 26. DiGiacinto further alleges that “[c]onsumers buy the Children’s Delsym 8 Product based on the belief that it is specially formulated for children and is safer for children to 9 consume” and that “[n]o reasonable consumer who understood that the Children’s Delsym Cough 10 Relief product was formulated identically to the adult’s Delsym Cough Relief product would 11 choose to pay more for it.” Id. at ¶¶ 27, 28. 12 DiGiacinto alleges that he purchased the children’s product “several times throughout the 13 class period . . . in reliance on the Product’s claims that the Product was formulated specifically 14 for children.” DiGiacinto “read and relied on the advertisement that the Children’s Delsym Cough 15 Relief product was ‘for children,’ as well as the additional children-specific representations, which 16 appear directly on the front label of the Product’s label and packaging.” Id. at ¶¶ 29, 30. Based on 17 these representations, DiGiacinto “believed that the Product was specially formulated for children 18 and bought it specifically for this reason.” Id. at ¶ 31. He alleges that he would not have bought 19 the children’s product had he known that it was identical to the adults’ product, and that he “paid a 20 premium for [the children’s product] due to the misleading labelling on [its] packaging.” Id. at ¶ 21 32. Had he known the truth, he alleges, he “could have purchased the same Product for less per 22 ounce than [he] paid.” Id. 23 Based on these allegations, DiGiacinto asserts the following claims for relief: 1) violation 24 of the Unfair Competition Law (“UCL”), California Business & Professions Code section 17200 25 et seq.; 2) violation of the False Advertising Law (“FAL), California Business & Professions Code 26 section 17500 et seq.; 3) violation of the Consumers Legal Remedies Act (“CLRA”), California 27 Civil Code section 1750 et seq.; 4) breach of express warranties under California Commercial 1 2314; 6) negligent misrepresentation; 7) intentional misrepresentation/fraud; and 8) quasi2 contract/unjust enrichment. 3 DiGiacinto seeks to represent a nationwide class of allegedly similarly situated persons, 4 defined as: All U.S. citizens who purchased the Product in their respective state 5 of citizenship for personal and household use and not for resale during the Class Period. — 6 — 7 FAC ¶ 45. He also seeks to represent the following California subclass: 8 All California citizens who purchased the Product in California for personal and household use and not for resale during the Class Period. — 9 — 10 Id. DiGiacinto brings claims one through three on behalf of himself and the California subclass. 11 He brings claims four through eight on behalf of himself, the nationwide class, and the California 12 subclass. 13 RB Health now moves to dismiss the FAC. 14 II. LEGAL STANDARDS 15 RB Health moves to dismiss the FAC pursuant to Federal Rules of Civil Procedure 16 12(b)(1) and 12(b)(6). 17 A. Rule 12(b)(1) 18 The question of standing is “an essential and unchanging part of the case-or-controversy 19 requirement of Article III [of the U.S. Constitution].” Lujan v. Defenders of Wildlife, 504 U.S. 20 555, 560 (1992). Because standing is a jurisdictional issue, it is properly addressed under a Rule 21 12(b)(1) motion. Cetacean Cmty. v. Bush, 386 F.3d 1169, 1174 (9th Cir. 2004). A court will 22 dismiss a party’s claim for lack of subject matter jurisdiction “only when the claim is so 23 insubstantial, implausible, foreclosed by prior decisions of th[e Supreme] Court, or otherwise 24 completely devoid of merit as not to involve a federal controversy.” Steel Co. v. Citizens for a 25 Better Env’t, 523 U.S. 83, 89 (1998) (citation and quotation marks omitted); see Fed. R. Civ. P. 12(b)(1). The challenging party may make a facial or factual attack challenging subject matter — 26 — jurisdiction. White v. Lee, 227 F.3d 1214, 1242 (9th Cir. 2000). A facial challenge asserts that — 27 — 1 jurisdiction.” Safe Air for Everyone, 373 F.3d at 1039. In contrast, a factual attack disputes “the 2 truth of the allegations that, by themselves, would otherwise invoke federal jurisdiction.” Id. at 3 1039. A factual challenge permits the court to look beyond the complaint, without “presum[ing] 4 the truthfulness of the plaintiff’s allegations.” White, 227 F.3d at 1242 (citation omitted). Even 5 the presence of disputed material facts “will not preclude the trial court from evaluating for itself 6 the merits of jurisdictional claims.” Roberts v. Corrothers, 812 F.2d 1173, 1177 (9th Cir. 1987) 7 (citations omitted). 8 B. Rule 12(b)(6) 9 A motion to dismiss under Rule 12(b)(6) tests the legal sufficiency of the claims alleged in 10 the complaint. See Parks Sch. of Bus., Inc. v. Symington, 51 F.3d 1480, 1484 (9th Cir. 1995). 11 When reviewing a motion to dismiss for failure to state a claim, the court must “accept as true all 12 of the factual allegations contained in the complaint,” Erickson, 551 U.S. at 94 (2007) (citation 13 omitted), and may dismiss a claim “only where there is no cognizable legal theory” or there is an 14 absence of “sufficient factual matter to state a facially plausible claim to relief.” Shroyer v. New 15 Cingular Wireless Servs., Inc., 622 F.3d 1035, 1041 (9th Cir. 2010) (citing Ashcroft v. Iqbal, 556 16 U.S. 662 , 677-78 (2009); Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001)) (quotation marks 17 omitted). A claim has facial plausibility when a plaintiff “pleads factual content that allows the 18 court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” 19 Iqbal, 556 U.S. at 678 (citation omitted). In other words, the facts alleged must demonstrate 20 “more than labels and conclusions, and a formulaic recitation of the elements of a cause of action 21 will not do.” Bell Atl. Corp. v. Twombly, 550 U.S. 554, 555 (2007) (citing Papasan v. Allain, 478 22 U.S. 265, 286 (1986)); see Lee v. City of L.A., 250 F.3d 668 , 679 (9th Cir. 2001), overruled on 23 other grounds by Galbraith v. Cty. of Santa Clara, 307 F.3d 1119 (9th Cir. 2002). 24 As a general rule, a court may not consider “any material beyond the pleadings” when 25 ruling on a Rule 12(b)(6) motion. Lee, 250 F.3d at 688 (citation and quotation marks omitted). 26 However, “a court may take judicial notice of ‘matters of public record,’” id. at 689 (citing Mack 27 v. S. Bay Beer Distrib., 798 F.2d 1279, 1282 (9th Cir. 1986)), and may also consider “documents 1 are not physically attached to the pleading,” without converting a motion to dismiss under Rule 2 12(b)(6) into a motion for summary judgment. Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir. 3 1994), overruled on other grounds by Galbraith, 307 F.3d at 1125-26. The court need not accept 4 as true allegations that contradict facts which may be judicially noticed. See Mullis v. U.S. Bankr. 5 Court, 828 F.2d 1385, 1388 (9th Cir. 1987). 6 III. DISCUSSION 7 RB Health argues that the FAC fails to state a claim under Rule 12(b)(6). It also asserts 8 that DiGiacinto lacks Article III standing to pursue his claims. As Article III standing is a 9 jurisdictional issue, the court must first address that argument before reaching the merits of any 10 12(b)(6) challenges to the sufficiency of pleading. See Steel Co. v. Citizens for a Better Env’t, 523 11 U.S. 83 , 94-95 (1998). 12 A. Standing 13 1. Causation 14 RB Health argues that DiGiacinto cannot establish Article III standing because he has not 15 alleged a causal nexus between his alleged harm and RB Health’s conduct. 16 Article III standing requires three elements: “[t]he plaintiff must have (1) suffered an 17 injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is 18 likely to be redressed by a favorable judicial decision.” Spokeo, Inc. v. Robins, 578 U.S. 330 , 338 19 (2016) (citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992)). As the party 20 asserting federal jurisdiction, DiGiacinto bears the burden of establishing these elements. Id. at 21 561. 22 The parties dispute whether DiGiacinto has alleged causation; injury in fact and 23 redressability are not at issue. To establish “a causal connection between the injury and the 24 conduct complained of—the injury has to be fairly . . . trace[able] to the challenged action of the 25 defendant, and not . . . th[e] result [of] the independent action of some third party not before the 26 court.” Lujan, 504 U.S. at 560 (internal quotation marks and citation omitted). 27 According to RB Health, DiGiacinto’s “claimed injury” is as follows: Relief] if Plaintiff had known that the Product was, in fact, identical 1 to Delsym Cough Relief product marketed for adults, which costs less than the Children’s Delsym Cough Relief product. Plaintiff paid a 2 premium for this Product due to the misleading labelling on the Product’s packaging. Had Plaintiff known the truth, Plaintiff could 3 have purchased the same Product for less per ounce than Plaintiff paid. — 4 — 5 Mot. 7 (quoting FAC ¶ 32). RB Health submits a declaration by its Trade Marketing Director 6 James Hunt, who states that RB Health does not sell the Delsym Cough Relief and Children’s 7 Delsym Cough Relief products “directly to consumers, but, instead, sells the Products to retailers 8 and to distributors who in turn sell to retailers.” [Docket No. 26-2 (Hunt Decl. Nov. 16, 2022) ¶ 9 2.] According to Hunt, since 2018, RB Health has sold both products “to the same distributors 10 and retailers at the same price. The price the consumer pays for the Products is not set by RB 11 Health.” Id. at ¶¶ 3, 4. Based on this evidence, RB Health argues that DiGiacinto’s “alleged harm 12 is the result of legally and factually independent pricing decisions by third parties and cannot be 13 attributed to actions by RB Health.” Mot. 7. Therefore, it argues, DiGiacinto has not established 14 causation between his injury and RB Health’s actions and lacks standing to bring this action. 15 “To survive a motion to dismiss for lack of constitutional standing, plaintiffs must 16 establish a line of causation between defendants’ action and their alleged harm that is more than 17 attenuated.” Maya v. Centex, 658 F.3d 1060, 1070 (9th Cir. 2011) (quotation marks and citation 18 omitted). This does not “require plaintiffs to demonstrate that defendants’ actions are the 19 ‘proximate cause’ of plaintiffs’ injuries. Plaintiffs do not bear so heavy a burden.” Id. Here, 20 DiGiacinto has adequately pleaded the requisite “line of causation” that is “more than attenuated” 21 between the harm he suffered and RB Health’s actions. Specifically, DiGiacinto alleges that the 22 packaging of the children’s product is deceptive because it leads reasonable consumers to believe 23 that the product is specially formulated for children even though it is identical to the adults’ 24 product and that RB Health makes, labels, and markets the products at issue. He further alleges 25 that he purchased the children’s product based on his belief that it was “specially formulated for 26 children” and that he would not have bought the children’s product had he known that it was 27 identical to the adults’ product. FAC ¶¶ 10, 11, 21, 23, 30-32. RB Health argues that Plaintiff’s 1 that he “paid a premium” for the children’s product and “could have purchased the same Product 2 for less per ounce than [he] paid.” See id. at ¶ 34. To begin with, this argument ignores the 3 allegation that DiGiacinto was induced to purchase the product by RB Health’s allegedly 4 misleading representations on the packaging. Id. Moreover, the difference in price between the 5 children’s product and the adults’ product for which third parties may be responsible is just one 6 measure of “the economic injury suffered as a result of Defendant’s misleading advertising.” See 7 Opp’n 5 (emphasis in original); see FAC ¶ 38 (“Plaintiff paid more for the [children’s] Product, 8 and would only have been willing to pay less, or unwilling to purchase it at all, absent the false 9 and misleading statements complained of herein.” (emphasis added)). “A causation chain does not 10 fail simply because it has several links, provided those links are not hypothetical or tenuous and 11 remain plausible.” Maya, 658 F.3d at 1070 (cleaned up). The court finds that the FAC alleges a 12 plausible, non-hypothetical causation chain between RB Health’s allegedly misleading packaging 13 and DiGiacinto’s injury. Accordingly, DiGiacinto has established causation for purposes of 14 pleading Article III standing.2 15 2. Risk of Future Harm 16 DiGiacinto seeks injunctive relief in connection with his UCL, FAL, and CLRA claims. 17 RB Health argues that DiGiacinto lacks standing to seek injunctive relief because he “is now 18 aware that Children’s Delsym Cough Relief and Delsym Cough Relief are pharmacologically 19 identical” and can read the labels on the products in the future, which he concedes disclose that the 20 products are pharmacologically identical. Mot. 7-8. 21 “A plaintiff must demonstrate constitutional standing separately for each form of relief 22 sought.” Davidson v. Kimberly Clark, 889 F.3d 956, 967 (9th Cir. 2018) (citing Friends of the 23 Earth, Inc. v. Laidlaw Envtl. Servs., Inc., 528 U.S. 167, 185 (2000)). A plaintiff seeking — 24 — — 25 — 2 DiGiacinto argues in his opposition that “whether or not Defendant sets the products’ retail pricing is irrelevant to” his claims and legal theory, and that RB Health’s standing argument “was — 26 — rejected in” Burchfield v. Prestige Consumer Healthcare, Inc., 534 F. Supp. 3d 1192 , 1202-03 (C.D. Cal. 2021). Opp’n 5. Not so. The Burchfield defendant argued that the plaintiffs failed to — 27 — state claims based on misleading product labels because their “claims come down to a 1 injunctive relief must demonstrate a “real or immediate threat that they will be wronged again—a 2 likelihood of substantial and immediate irreparable injury.” City of Los Angeles v. Lyons, 461 3 U.S. 95 , 111 (1982) (quotation omitted). “[T]he injury or threat of injury must be both ‘real and 4 immediate,’ not ‘conjectural’ or ‘hypothetical.’” Id. at 102 (citations omitted). “A plaintiff 5 threatened with future injury has standing to sue ‘if the threatened injury is certainly impending, or 6 there is a substantial risk the harm will occur.’” In re Zappos.com, Inc., 888 F.3d 1020, 1024 (9th 7 Cir. 2018) (quotation marks omitted) (quoting Susan B. Anthony List v. Driehaus, 573 U.S. 149 , 8 158 (2014) (quoting Clapper v. Amnesty Int'l, 568 U.S. 398, 409 (2013))). 9 The FAC alleges that DiGiacinto “would like to, and would consider, purchasing the 10 [children’s] Product again when he can do so with the assurance that the Product’s label is truthful 11 and consistent with the Product’s ingredients,” and that he “will be unable to rely on the Product’s 12 advertising and labeling in the future, and so will not purchase the Product again although he 13 would like to.” FAC ¶¶ 40, 41. He argues that these allegations are sufficient to confer standing 14 to pursue injunctive relief under Davidson. Opp’n 6. 15 In Davidson, the plaintiff brought FAL, CLRA, UCL, and fraud claims against the 16 manufacturer of pre-moistened wipes. The manufacturer labeled and marketed the wipes as 17 “flushable,” meaning “suitable for being flushed [down a toilet],” and the plaintiff paid a premium 18 for the “flushable” wipes, as compared to non-flushable wipes. 889 F.3d at 961, 964 . The 19 plaintiff later learned that the products were not truly “flushable.” Id. at 962 . The district court 20 dismissed the injunctive relief claim, finding that the plaintiff lacked standing because she had no 21 intention of purchasing the same product in the future and therefore had no risk of future injury. — 22 — Id. at 963, 967 . 23 The Ninth Circuit reversed, finding that the plaintiff had “properly alleged that she faces a 24 threat of imminent or actual harm by not being able to rely on [the defendant’s] labels in the 25 future, and that this harm is sufficient to confer standing to seek injunctive relief.” Id. at 967 . The 26 court recognized that its decision resolved a district court split regarding the extent to which “a 27 previously deceived consumer who brings a false advertising claim can allege that her inability to 1 injunctive relief,” resolving the split “in favor of plaintiffs seeking injunctive relief.” Id. at 9672 69. Davidson held that plaintiffs have standing to pursue injunctive relief in at least two 3 circumstances: 4 In some cases, the threat of future harm may be the consumer's plausible allegations that she will be unable to rely on the product's 5 advertising or labeling in the future, and so will not purchase the product although she would like to. In other cases, the threat of future 6 harm may be the consumer’s plausible allegations that she might purchase the product in the future, despite the fact it was once marred 7 by false advertising or labeling, as she may reasonably, but incorrectly, assume the product was improved. — 8 — — 9 — Id. at 969-70 (citations omitted). The plaintiff in Davidson alleged that she continued to desire to 10 purchase wipes suitable for disposal in a toilet, would purchase “truly flushable wipes” 11 manufactured by the defendant if it were possible, and was continually presented with the 12 defendant’s flushable wipes packaging, but had “no way of determining whether the 13 representation ‘flushable’ [was] in fact true.” Id. at 970-71 . The Ninth Circuit found these 14 allegations sufficient for standing purposes: — 15 — We therefore hold that Davidson’s allegation that she has no way of 16 determining whether the representation “flushable” is in fact true when she regularly visits stores . . . where Defendants’ “flushable” 17 wipes are sold constitutes a threatened injury [that is] certainly impending, thereby establishing Article III standing to assert a claim 18 for injunctive relief. — 19 — Id. at 972 (citation and internal quotation marks omitted). 20 Here, the FAC alleges that the packaging of the children’s product is misleading because it 21 “tricks consumers into thinking they are buying cough relief product specially formulated for 22 children.” See FAC ¶ 26. Like the plaintiff in Davidson, DiGiacinto has sufficiently alleged that 23 he will be unable to rely on the advertising or labeling of the children’s product in the future. This 24 is because DiGiacinto cannot discover whether RB Health’s misrepresentations have been cured 25 simply by looking at the children’s product front label since it does not disclose that it is 26 pharmacologically identical to the adults’ product. Instead, he would have to inspect and compare 27 the ingredient labels on two separate products, including the active and inactive ingredients listed, 1 Ninth Circuit has held that “reasonable consumers” should not “be expected to look beyond 2 misleading representations on the front of [packaging] to discover the truth from the ingredient list 3 in small print on the side of the [packaging],” Williams v. Gerber Prods. Co., 552 F.3d 934 , 939 4 (9th Cir. 2008), and RB Health does not cite any cases holding that a reasonable consumer is 5 expected to compare labels on more than one product in order to determine whether a label is 6 accurate. The allegations in the FAC are sufficient as a matter of pleading to confer standing to 7 seek injunctive relief because DiGiacinto alleges that he will not be able to trust RB Health’s 8 claims about the children’s product in the future. See Davidson, 889 F.3d at 972 . The court 9 concludes that DiGiacinto has sufficiently alleged standing to seek injunctive relief. 10 B. Sufficiency of the FAC 11 1. UCL, FAL, and CLRA Claims 12 RB Health argues that DiGiacinto’s UCL, FAL, and CLRA claims must be dismissed 13 because the FAC does not plausibly allege that the packaging and labeling of the children’s 14 product would mislead a reasonable consumer. Mot. 9. 15 False advertising claims under the CLRA, FAL, and the fraudulent prong of the UCL are 16 governed by the reasonable consumer standard. Williams, 552 F.3d at 938 ; Freeman v. Time, Inc., — 17 — 68 F.3d 285, 289 (9th Cir. 1995) (courts must evaluate whether a label is misleading “from the 18 vantage of a reasonable consumer” (quotation omitted)). Under the reasonable consumer standard, 19 a plaintiff must show that members of the public are likely to be deceived. Id. (citation omitted). 20 “This requires more than a mere possibility that [a defendant’s] label might conceivably be 21 misunderstood by some few consumers viewing it in an unreasonable manner.” Ebner v. Fresh, 22 Inc., 838 F.3d 958, 965 (9th Cir. 2016) (quotation omitted). “Rather, the reasonable consumer 23 standard requires a probability that a significant portion of the general consuming public or of 24 targeted consumers, acting reasonably in the circumstances, could be misled.” Id. (quotation 25 omitted). “[T]he primary evidence in a false advertising case is the advertising itself.” Williams, — 26 — 552 F.3d at 938 (quoting Brockey v. Moore, 107 Cal. App. 4th 86, 100 (2003). The question of 27 whether a business practice is deceptive is generally a question of fact not amenable to 1 it is “impossible for the plaintiff to prove that a reasonable consumer was likely to be deceived.” 2 Id. at 939. 3 DiGiacinto alleges that reasonable consumers are likely to be deceived into believing that 4 the children’s product is “better suited or more appropriate for children” than the adults’ product 5 based on the labeling on the front of the packaging for the children’s product. FAC ¶ 21. 6 According to DiGiacinto, the children’s product’s packaging leads a reasonable consumer to 7 believe there is a difference between the products because it has an image of a cartoon child and 8 the word “children” written on the front label. Id. at ¶ 13. In comparison, the front of the 9 packaging for the adults’ product does not contain an image of a child or the word “children.” Id. 10 at ¶¶ 1, 13. Further, the packaging does not disclose that “the Children’s Product is simply the 11 Adult’s Product sold at a higher price,” i.e., that the products are identical. Id. at ¶ 22. 12 RB Health argues that the FAC does not identify any representation or omission on the 13 packaging of the children’s product that could lead a reasonable consumer to believe that it is 14 “specially formulated” for children. It contends that the court in Boris v. Wal-Mart Stores, Inc., 35 15 F. Supp. 3d 1163 , 1168 (C.D. Cal. 2014), “addressed the exact issue presented here.” Id. at 10. 16 Boris is distinguishable. In Boris, the plaintiffs alleged that a retailer “deceptively market[ed]” an 17 over-the-counter migraine medicine. They alleged that Equate Migraine and Equate Extra 18 Strength Headache Relief (“Equate ES”) contained the same active ingredients in the same 19 amounts but that the defendant retailer charged two to three times more for Equate Migraine than 20 Equate ES. Additionally, Equate Migraine’s packaging had a red background instead of Equate 21 ES’s green background. 35 F. Supp. 3d at 1166. The plaintiffs expressly asserted that the 22 packaging for the two products did not contain any affirmative misrepresentations. Instead, the 23 “gravamen” of their claim was that Defendant deceived Plaintiffs by “charging more for Equate 24 Migraine and using the color red on its packaging.” Id. at 1168. After noting that the plaintiffs 25 did not allege that the packaging for either product “contained any affirmative 26 misrepresentations,” the court dismissed with prejudice the plaintiffs’ deception claims under the 27 FAL, CLRA, and UCL’s unlawful prong based on Equate Migraine’s price and red packaging for 1 1168-70. In contrast, DiGiacinto does not contend that the price of the children’s product “is the 2 source of [RB Health’s] deception”; rather, he alleges that statements and images on the children’s 3 product packaging are misleading. See, e.g., Burchfield v. Prestige Consumer Healthcare, Inc., — 4 — 534 F. Supp. 3d 1192 , 1203 (C.D. Cal. 2021) (rejecting defendant’s argument that plaintiffs’ 5 claims amounted to a non-justiciable challenge to retailer’s pricing decisions; “[u]nlike in Boris, 6 Plaintiffs here ‘are not contending that the price is the source of [defendant’s] deception.’” 7 (quoting Youngblood v. CVS Pharmacy, No. 2:20-CV-06251-MCS-MRW, 2020 WL 8991698 , at 8 *3 (C.D. Cal. Oct. 15, 2020))). 9 RB Health next asserts that “[j]udges in this District have consistently rejected claims like 10 the one presented by Plaintiff,” citing Lokey v. CVS Pharmacy, Inc., No. 20-CV-04782-LB, 2021 11 WL 633808 , at *4 (N.D. Cal. Feb. 18, 2021), appeal dismissed, No. 21-15475, 2021 WL 2456822 12 (9th Cir. May 21, 2021); Eidmann v. Walgreen Co., 522 F. Supp. 3d 634 , 645 (N.D. Cal. 2021), 13 appeal dismissed, No. 21-15659, 2021 WL 4785889 (9th Cir. May 17, 2021); and Frost v. 14 Safeway, No. 21-cv-02137-SK, Order Granting Motion to Dismiss (Docket No. 24) (N.D. Cal. 15 July 19, 2021). In each of those cases, the plaintiffs challenged as deceptive acetaminophen 16 products marketed for infants that were “identical compositionally” to acetaminophen products 17 marketed for children but priced higher than the children’s products. See Lokey, 2021 WL 18 633808, at *1-2; Eidmann, 522 F. Supp. 3d at 639-40; Frost, Order Granting Motion to Dismiss at 19 2-4. The courts found that the packaging of the infants’ products at issue was not deceptive as a 20 matter of law in part because the front labels for each set of products expressly stated the 21 acetaminophen concentration information. See Lokey, 2021 WL 633808 , at *4 (“the labels are not 22 deceptive. The front labels for both products show their concentrations of 160 milligrams per 5 23 milliliters (the 160 mg/5 ml reflected on the labels) . . . nothing about the labels is misleading 24 about the products or their composition. To the contrary, the labels are accurate.”); Eidmann, 522 25 F. Supp. 3d at 645 (“[n]o reasonable consumer would understand Infants’ Product to be specially 26 formulated, in light of the numerous express statements [on the front label] regarding the 27 acetaminophen concentration, overlapping age ranges, and the infant-specific dosing 1 the [front of the] packages regarding the active ingredient and dosage instructions, the mere fact 2 that one is called ‘Infants’ and one is called ‘Children’s’ is insufficient to deceive customers into 3 thinking that the Infant Product is formulated differently or contains a different active ingredient 4 than the Children’s Product.”). Thus, as the court in Lokey observed, “Defendant tells the 5 consumer exactly what she is getting: the [front of the] package actually discloses the fact that 6 Plaintiff complains it omits.” Lokey, 2021 WL 633808 , at *5 (quoting Dinan v. Sandisk LLC, No. 7 18-CV-05420-BLF, 2019 WL 2327923 , at *7 (N.D. Cal. May 31, 2019)). 8 Lokey, Eidmann, and Frost are distinguishable because in this case, the front of the 9 packaging of both the children’s and the adults’ products identifies the active ingredient 10 dextromethorphan polistirex but not its concentration. See FAC ¶ 13. The concentration 11 information appears only on the back of the packaging in the ingredient lists. Id. at ¶ 16. See, e.g., 12 Elkies v. Johnson & Johnson Servs., Inc., No. 17-cv-07320-GW, 2018 WL 11328613 , at *5 (C.D. 13 Cal. Feb. 22, 2018) (“[a] picture of mother-and-baby, along with the word ‘Infants,’ but without 14 any express disclosure that the medicine in the bottle is exactly the same, and provided at the exact 15 same concentration, as Children’s, could lead a significant portion of the general consuming 16 public . . . to conclude that Infants’ is unique or specially formulated for children under two.”). 17 RB Health also argues that the labels of the products “reveal that the Products are exactly 18 the same.” Mot. 9. First, it claims that the front of the packaging for both products 19 “conspicuously disclose, in the same area on the front labels, the same concentration of 20 dextromethorphan polistirex.” Mot. 9 (emphasis in original). Not so. As noted above, the front 21 of the packaging for both products do not state the concentration of the active ingredient. This 22 information appears only on the back of the packaging. Next, RB Health notes that the children’s 23 product states on the front of the packaging that it is for “Ages 4+” and “For Children and Adults,” 24 “thus disclosing (not concealing) that both Products can be used by anyone over four years of 25 age.” Id. It also asserts that both products include identical dosage charts and ingredient lists 26 “that convey to consumers that the Products can be used by anyone above four years of age.” Id. 27 at 9-10. RB Health’s argument is not persuasive. While the front of the children’s product 1 adults’ product is silent as to age. This could lead a reasonable consumer to believe that the 2 adults’ product is not suitable for children to consume and to purchase the children’s product 3 instead. See Opp’n 11. As to the identical dosage charts and ingredient lists, reasonable 4 consumers should not “be expected to look beyond misleading representations on the front of 5 [packaging] to discover the truth from the ingredient list in small print on the side of the 6 [packaging].” Williams, 552 F.3d at 939 ; see also Balser v. Hain Celestial Grp., Inc., 640 Fed. 7 Appx. 694, 696 (9th Cir. 2016) (“an ingredient list does not correct, as a matter of law, 8 misrepresentations on the product’s label. Rather, the likely impact of such a list on a reasonable 9 consumer is a factual issue, not determinable on the pleadings.”). 10 Ultimately, the court must take the FAC’s allegations about the packaging of the children’s 11 product as true and construe all reasonable inferences in DiGiacinto’s favor. The court concludes 12 that the FAC plausibly alleges that the packaging of the children’s product, which contains the 13 word “children” and a cartoon of a child but no express disclosure that the medicine in the bottle 14 contains the same concentration of the active ingredient as the adult’s product, could mislead a 15 reasonable consumer into believing that the children’s product is specially formulated for children. 16 Accordingly, the motion to dismiss the UCL, FAL, and CLRA claims is denied. 17 2. Breach of Express Warranties Claim 18 RB Health moves to dismiss the breach of express warranties claim, arguing that 19 DiGiacinto “has not identified any material statement about the Products that is inaccurate, nor has 20 he pointed to any unfulfilled promises on the Products’ labels.” Mot. 15. It argues that the 21 children’s product states that it is suitable for “Ages 4+” and is “For Children & Adults” on the 22 front of the packaging and that information on the side and back of the packaging conveys to 23 consumers that the product can be used by anyone above four years old. Therefore, it argues, the 24 FAC fails to state a claim for breach of express warranties. Id. Notably, RB Health does not set 25 forth the language of California Commercial Code section 2313 or discuss the elements of a claim 26 under that statute. 27 “[T]o prevail on a breach of express warranty claim, the plaintiff must prove (1) the 1 the statement was part of the basis of the bargain; and (3) the warranty was breached.” Weinstat v. 2 Dentsply Int’l., Inc., 180 Cal. App. 4th 1213, 1227 (2010) (internal quotation marks and citation 3 omitted). “[C]ourts in this district regularly hold that stating a claim under California consumer 4 protection statutes is sufficient to state a claim for express warranty” under California Commercial 5 Code section 2313. Hadley v. Kellogg Sales Co., 273 F. Supp. 3d 1052, 1095 (N.D. Cal. 2017) 6 (citing Tsan v. Seventh Generation, Inc., No. 15-cv-00205-JST, 2015 WL 6694104 , at *7 (N.D. 7 Cal. Nov. 3, 2015) (finding that allegations about products’ labels that plausibly met the 8 reasonable consumer standard were sufficient to state a claim for breach of express warranty under 9 California law)). DiGiacinto alleges that the use of the word “children” and the image of a cartoon 10 child on the front of the children’s product’s packaging lead reasonable consumers to believe that 11 the children’s product is specially formulated for children, even though it is identical to the adults’ 12 product. As the court has already found that these allegations “are sufficient to state a claim under 13 the reasonable consumer standard, they are likewise sufficient to state a claim for breach of 14 express warranty.” LeGrand v. Abbott Lab’ys, No. 22-CV-05815-TSH, 2023 WL 1819159 , at *13 15 (N.D. Cal. Feb. 8, 2023) (quoting Cooper v. Curallux LLC, No. 20-cv-02455-PJH, 2020 WL 16 4732193, at *7 (N.D. Cal. Aug. 14, 2020)). RB Health’s motion to dismiss the express warranty 17 claim is denied. 18 3. Breach of Implied Warranties Claim 19 RB Health moves to dismiss the breach of implied warranties claim on the ground that “the 20 Products are fit for their ordinary use and conform to any promises or affirmations included on the 21 labels.” Mot. 15. Further, it contends that the FAC does not allege that the products are not fit for 22 their purpose as cough medicine for anyone over the age of four. Id. at 16. RB Health does not 23 set forth the language of California Commercial Code section 2314 or the elements of a claim 24 under that statute. 25 DiGiacinto responds that his claim is based on the children’s product’s failure to conform 26 to promises or affirmations of fact on the labels; specifically, that the product was specially 27 formulated for children. Opp’n 19; see FAC ¶¶ 103, 106. “The implied warranty of 1 ordinary purposes for which such good [is] used,’ or that it does not ‘[c]onform to the promises or 2 affirmations of fact made on the container or label if any.’” LeGrand, 2023 WL 1819159 , at *14 3 (quoting Cal. Com. Code § 2314 (2)). Accordingly, DiGiacinto “does not have to allege that the 4 [challenged product is] unfit for [its purpose] in order to make out an implied warranty of 5 merchantability claim.” Id. Further, “[w]hen an implied warranty of merchantability cause of 6 action is based solely on whether the product in dispute ‘[c]onforms to the promises or 7 affirmations of fact’ on the packaging of the product, the implied warranty of merchantability 8 claim rises and falls with express warranty claims brought for the same product.” Hadley, 273 F. 9 Supp. 3d at 1096. Therefore, since the breach of express warranties claim is sufficiently pleaded, 10 the court denies the motion to dismiss the breach of implied warranties claim. 11 4. Negligent Misrepresentation Claim 12 RB Health moves to dismiss the negligent misrepresentation claim on the ground that it is 13 barred by the economic loss rule. 14 “The California Supreme Court has recognized that ‘[t]he economic loss rule requires a 15 purchaser to recover in contract for purely economic loss due to disappointed expectations, unless 16 he can demonstrate harm above and beyond a broken contractual promise.’” In re Safeway Tuna 17 Cases, No. 15-CV-05078-EMC, 2016 WL 3743364 , at *2 (N.D. Cal. July 13, 2016) (quoting 18 Robinson Helicopter Co., Inc. v. Dana Corp., 34 Cal. 4th 979, 988 (2004)). “Thus, if a purchaser 19 seeks damages for economic loss, without any claim of personal injury or damages to other 20 property, he must recover in contract.” Id. (dismissing negligent misrepresentation claim based on 21 claim that tuna cans were underfilled and underweight where the plaintiffs alleged only economic 22 loss damages). In short, “the economic loss rule prevent[s] the law of contract and the law of tort 23 from dissolving one into the other.” Robinson Helicopter, 34 Cal. 4th at 988 (internal quotation 24 omitted). 25 DiGiacinto does not dispute that he seeks only monetary damages but contends that the 26 economic loss rule does not apply to claims of negligent misrepresentation that are grounded in 27 fraud. Opp’n 20; see Hannibal Pictures, Inc. v. Sonja Prods. LLC, 432 F. App’x 700, 701 (9th 1 rule to fraud and misrepresentation claims where, as here, one party has lied to the other.” (citing 2 Robinson Helicopter, 34 Cal. 4th at 992-93 )). 3 District courts in the Ninth Circuit are split on the issue of whether the economic loss rule 4 bars negligent misrepresentation claims. See Broomfield v. Craft Brew All., Inc., No. 17-CV5 01027-BLF, 2017 WL 3838453 , at *9 (N.D. Cal. Sept. 1, 2017) (discussing split at length). 6 However, the Ninth Circuit has held “that California law classifies negligent misrepresentation as 7 a species of fraud for which economic loss is recoverable.” Kalitta Air, L.L.C. v. Cent. Texas 8 Airborne Sys., Inc., 315 Fed. App’x. 603, 607 (9th Cir. 2008) (citing Robinson Helicopter, 34 Cal. 9 4th at 991). Based on that Circuit opinion, the court denies RB Health’s motion to dismiss the 10 negligent misrepresentation claim. See Broomfield, 2017 WL 3838453 , at *9 (denying motion to 11 dismiss negligent misrepresentation claim based on economic loss rule, relying on Kalitta Air); 12 Gregorio v. Clorox Co., No. 17-CV-03824-PJH, 2018 WL 732673 , at *5 (N.D. Cal. Feb. 6, 2018) 13 (same). 14 5. Intentional Misrepresentation/Fraud Claim 15 RB Health moves to dismiss the intentional misrepresentation/fraud claim on the ground 16 that the packaging of the children’s product “cannot be found to mislead the reasonable 17 consumer.” Mot. 16. As discussed above, the court has found that the FAC plausibly alleges that 18 the packaging of the children’s product could mislead a reasonable consumer into believing that 19 the children’s product is specially formulated for children. 20 RB Health also argues that the FAC does not allege that “RB Health acted with the 21 requisite intent to deceive.” Id. at 17. The elements of a claim for intentional 22 misrepresentation/fraud are: (1) a misrepresentation or omission of a fact that should have been 23 disclosed; (2) knowledge of falsity; (3) intent to induce reliance; (4) justifiable reliance; and (4) 24 resulting damage. Lazar v. Superior Court, 12 Cal. 4th 631, 638 (1996). The FAC adequately 25 alleges these elements. It alleges that the packaging of the children’s product is false and 26 misleading, as set forth above; that RB Health knew that its packaging was false and misleading; 27 that RB Health intended to induce consumers to purchase the product at a premium price; that 1 the children’s product was specially formulated for children; and that DiGiacinto and the putative 2 || class members were damaged. See FAC $f 118-124.° Accordingly, the motion to dismiss the 3 || intentional misrepresentation/fraud claim is denied. 4 6. Unjust Enrichment Claim 5 Finally, RB Health moves to dismiss the claim for unjust enrichment. “[I]n California, 6 || there is not a standalone cause of action for “unjust enrichment,’ which is synonymous with 7 ‘restitution.’” Astiana v. Hain Celestial Grp., Inc., 783 F.3d 753, 762 (9th Cir. 2015) (citations 8 || omitted). “When a plaintiff alleges unjust enrichment, a court may construe the cause of action as 9 || a quasi-contract claim seeking restitution.” Jd. (quotation marks and citation omitted). 10 Here, the FAC alleges that RB Health’s “false and misleading labelling caused” 11 DiGiacinto and the putative class members to purchase the children’s product at a premium and = 12 || that RB Health “received a direct and unjust benefit” at their expense. FAC 9] 128-129. These 13 allegations are sufficient to state a quasi-contract claim for relief. See Astiana, 783 F.3d at 762 . v 14 || Accordingly, the motion to dismiss the unjust enrichment claim, which the court construes as a O 15 quasi-contract claim seeking restitution, is denied. A 16 || Iv. CONCLUSION 17 For the foregoing reasons, RB Health’s motion to dismiss the FAC is denied. RB Health 5 I fq 18 || shall file an answer by May 2, 2023. Kes DISLRIGS KD □ © 19 © 20 IT IS SO ORDERED. □□ ORDERED 2[Vir 1s SC 21 || Dated: April 11, 2023 ~ < 22 2 LP? Rau \ 23 CN Liew ffite Judge “~y □□ — 24 — VORTRIC 25 ISTRIC — 26 — 07 3 On reply, RB Health argues that it did not yield higher profits by marketing and advertising the children’s product as specially formulated for children, citing Hunt’s statement that RB Health 28 sells the products at the same price to retailers. Reply 10 n.4. This raises a factual issue that is inappropriate to resolve on a Rule 12(b)(6) motion to dismiss.