Grausz v. The Hershey Company

[7] 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA [10] 11 EVA GRAUSZ, on behalf of herself, all Case No.: 23-cv-00028-AJB-SBC others similarly situated, and the general [12] public, ORDER GRANTING IN PART AND 13 DENYING IN PART DEFENDANT’S Plaintiff, MOTION TO DISMISS PLAINTIFF’S [14] FIRST AMENDED COMPLAINT 15 v. (Doc. No. 35) [16] THE HERSHEY COMPANY, [17] Defendant. [19] Presently pending before the Court is Defendant the Hershey Company’s motion to [20] dismiss Plaintiff Eva Grausz’s Second Amended Complaint (“SAC”) pursuant to Federal [21] Rule of Civil Procedure 12(b)(6). (Doc. No. 35.) Plaintiff filed an opposition to the motion [22] to dismiss, (Doc. No. 37), to which Hershey replied, (Doc. No. 38). Pursuant to Civil Local [23] Rule 7.1.d.1, the Court finds the instant matter suitable for determination on the papers and [24] without oral argument. For the reasons stated herein, the Court GRANTS IN PART and [25] DENIES IN PART Hershey’s motion to dismiss Plaintiff’s SAC. [26] /// [27] /// [28] 1 I. BACKGROUND 2 Defendant Hershey manufactures and sells various dark chocolate products under 3 the Hershey’s and Lily’s brand names. (SAC, Doc. No. 34, ¶ 1.) In this putative class 4 action, Plaintiff alleges recent independent lab testing found that several of Hershey’s and 5 Lily’s chocolate products contain lead and cadmium, including Hershey’s Special Dark 6 Mildly Sweet Chocolate, Lily’s Extremely Dark Chocolate 85% Cocoa, Lily’s Extra Dark 7 Chocolate 70% Cocoa, Lily’s Original Dark Chocolate Stevia Sweetened 55% Cocoa Non 8 GMO, and Lily’s Sea Salt Extra Dark Chocolate 70% - Stevia Sweetened (the “Products”), 9 and that those metals are unsafe at any level. (Id. ¶¶ 3–4.) Plaintiff further alleges Hershey 10 has been on notice that its Products contain high levels of heavy metals since 2014, but that 11 Hershey has failed to effectively reduce or remove heavy metals from the Products. (Id. 12 ¶ 16.) Plaintiff’s allegations are based on a December 2022 article from Consumer Reports 13 and a March 2023 article by As You Sow (“AYS”). (Id. ¶¶ 13–15.) 14 Plaintiff states she “regularly purchased Lily’s Extremely Dark Chocolate 85% 15 Cocoa[,]” “often making her purchase” in San Diego, California. (Id. ¶ 58.) Plaintiff 16 contends Hershey’s advertising did not feature warnings that the Products contained toxic 17 amounts of heavy metals. (Id. ¶¶ 55–57.) Rather, Hershey “touts its safety standards and 18 how it vets its ingredient sources, and highlights the public trust that it has garnered as a 19 result . . . .” (Id. ¶ 41.) 20 Plaintiff asserts she and the purported class were exposed to, saw, read, and 21 understood the labels of the products, which omitted the presence of heavy metals, and that 22 they relied upon the omission of warnings about the potential dangers of the Products 23 containing heavy metals when making the decision to purchase the Products. (Id. ¶ 48.) 24 Had she known the Products contained heavy metals, Plaintiff claims she and the purported 25 class would not have purchased the Products or would have paid less for them. (Id. ¶ 50.) 26 While she wishes to purchase the Products in the future, she “may not be able to reasonably 27 determine whether the lead or cadmium in the Products has been addressed” without an [28] 1 injunction because she cannot rely on the false representations in Hershey’s current 2 advertising and marketing scheme. (Id. ¶ 66.) 3 Based on the foregoing, Plaintiff initiated this action on behalf of herself and as a 4 representative of all those similarly situated for: (1) Violation of California’s Unfair 5 Competition Law (“UCL”), Cal. Bus. & Prof. Code § 17200 et seq. (Count I); Violation of 6 California’s False Advertising Law (“FAL”), Cal. Bus. & Prof. Code § 17500 et seq. 7 (Count II); Violation of California’s Consumer Legal Remedies Act (“CLRA”), Cal. Bus. 8 & Prof. Code § 1750 et seq. (Count III); Breach of Implied Warranty of Merchantability, [9] Cal. Commercial Code § 2314 (Count IV); and Unjust Enrichment (Count V). (See 10 generally SAC.) 11 In 2015, AYS sent California’s Proposition 65 notices to various chocolate 12 manufacturers, including Hershey, asserting their products contained lead and cadmium at 13 levels exceeding California’s MADLs. (Doc. No. 35 at 12.) In February 2018, the 14 California Superior Court entered a consent judgment among AYS, Hershey, and others 15 (the “Consent Judgment”), after finding the proposed judgment “me[t] the requirements of 16 [California law] and [was] in the public interest,” and the Consent Judgment was thereafter 17 endorsed by California’s Attorney General. (Id. (quoting Consent Judgment, Case No. 18 CGC-15-548791 (Cal. Super. Ct. San Francisco Cnty. Feb. 15, 2018) at 2–20).) The 19 Consent Judgment raised the MADL thresholds to Hershey’s products and specified that 20 compliance with the new limits would constitute compliance with Proposition 65 regarding 21 lead and/or cadmium in chocolate. (Id.) The Consent Judgment operated as a “full, final, 22 and binding resolution” of AYS’s claims on behalf of itself and of the general public. (Id. 23 at 13 (internal citation omitted).) 24 II. LEGAL STANDARD 25 A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) tests the 26 pleadings’ legal sufficiency and allows a court to dismiss a complaint if the court finds the 27 plaintiff has failed to state a claim upon which relief may be granted. Navarro v. Block, [28] 250 F.3d 729, 732 (9th Cir. 2001). As a matter of law, the court may dismiss the complaint 1 for either a lack of a cognizable legal theory, or insufficient facts under a cognizable legal 2 claim. SmileCare Dental Grp. v. Delta Dental Plan of Cal., 88 F.3d 780, 783 (9th Cir. 3 1996) (citation omitted). However, a complaint survives a motion to dismiss if it contains 4 “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. 5 Twombly, 550 U.S. 544, 570 (2007). Notwithstanding such deference, the reviewing court 6 need not accept legal conclusions as true. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). 7 Furthermore, it is improper for the court to assume “the [plaintiff] can prove facts that [he 8 or she] has not alleged . . . .” Associated Gen. Contractors of Cal., Inc. v. Cal. State Council 9 of Carpenters, 459 U.S. 519, 526 (1983). However, “[w]hen there are well-pleaded factual 10 allegations, a court should assume their veracity and then determine whether they plausibly 11 give rise to an entitlement to relief.” Iqbal, 556 U.S. at 679 . The court only reviews the 12 complaint’s contents and accepts all factual allegations as true, while drawing all 13 reasonable inferences in favor of the nonmoving party. Thompson v. Davis, 295 F.3d 890 , 14 895 (9th Cir. 2002). 15 III. REQUEST FOR JUDICIAL NOTICE 16 While the review scope on a motion to dismiss for failure to state a claim is limited 17 to the complaint, a court may consider evidence on which the complaint necessarily relies 18 if: “(1) the complaint refers to the document; (2) the document is central to the plaintiff[’s] 19 claim; and (3) no party questions the authenticity of the copy attached to the 12(b)(6) 20 motion.” Daniels-Hall v. Nat’l Educ. Ass’n, 629 F.3d 992, 998 (9th Cir. 2010) (internal 21 quotation marks and citations omitted). Furthermore, Federal Rule of Evidence 201 permits 22 judicial notice of a fact when it is “not subject to reasonable dispute because it: (1) is 23 generally known within the trial court’s territorial jurisdiction; or (2) can be accurately and 24 readily determined from sources whose accuracy cannot reasonably be questioned.” Welk 25 v. Beam Suntory Imp. Co., 124 F. Supp. 3d 1039, 1041-42 (S.D. Cal. 2015). 26 Here, Hershey requests the Court to take judicial notice of twelve exhibits in support 27 of its Motion to Dismiss. (Doc. No. 35-1.) 28 /// 1 First, Hershey requests judicial notice of the Consent Judgment, Case No. CGC-152 548791 (Cal. Super. Ct. San Francisco Cnty. Feb. 15, 2018). (Id. at 2.) The Court may take 3 judicial notice of court filings. See Rowland v. Paris Las Vegas, No. 3:13-CV-02630-GPC4 DHB, 2014 WL 769 .93, at *2 (S.D. Cal. Feb. 25, 2014). However, “[w]hile the authenticity 5 and existence of a particular order, motion, pleading or judicial proceeding, which is a 6 matter of public record, is judicially noticeable, veracity and validity of its contents . . . are 7 not.” United States v. S. Cal. Edison Co., 300 F. Supp. 2d 964, 974 (E.D. Cal. 2004). 8 Therefore, the Court GRANTS Hershey’s request for judicial notice of the state court 9 Consent Judgment. 10 Next, Hershey requests judicial notice of a California Office of Environmental 11 Health Hazard Assessment (“OEHHA”) report entitled Proposition 65 Maximum 12 Allowable Daily Level (MADL) for Reproductive Toxicity for Cadmium, published in May 13 2001; a publicly available letter the Supervising Deputy Attorney General, Harrison M. 14 Pollak, wrote to Danielle Fugere of the “As You Sow” organization on December 4, 2019; 15 several FDA-written articles and one public FDA meeting transcript; a publicly available 16 letter the Deputy Attorney General, Susan S. Fiering, wrote to Jake Shulte, Esq., of 17 “Nicholas and Tomacevic LLP,” and Noam Glick. Esq. of “Glick Law Group,” on 18 February 1, 2021; and a U.S. Department of Health & Human Services report entitled 19 Toxicological Profile for Cadmium, dated September 2012. (Doc. No. 35-1 at 2–3.) 20 However, the Court does not rely on these documents in reaching its conclusion below. 21 Accordingly, the Court DENIES AS MOOT Hershey’s requests for judicial notice as to 22 these exhibits. 23 IV. DISCUSSION 24 In its motion to dismiss, Hershey asserts that each of Plaintiff’s claims fail to state a 25 claim under Rule 12(b)(6). (Doc. No. 35.) 26 /// 27 /// 28 /// 1 A. UCL, FAL, and CLRA 2 Plaintiff asserts claims for violations of the UCL, the FAL, and the CLRA based on 3 Hershey’s alleged fraudulent and unlawful omissions, and violations of the UCL based on 4 unfair conduct. (SAC ¶¶ 83–96.) 5 The UCL [proscribes] business practices that are ‘unlawful, unfair or fraudulent,’ Cal. Bus. & Prof. Code § 17200 [;] the FAL prohibits the [6] dissemination of any advertising ‘which is untrue or misleading,’ Cal. Bus. & 7 Prof. Code § 17500[;] and the CLRA declares specific acts and practices in the sale of goods or services to be unlawful, including making affirmative [8] misrepresentations or omissions regarding the ‘standard, quality, or grade’ of 9 a particular good or service, Cal. Civ. Code § 1770 (a). [10] In re Sony Gaming Networks & Customer Data Sec. Breach Litig., 996 F. Supp. 2d 942 , [11] 985 (S.D. Cal. 2014). To state a fraudulent omission or misrepresentation claim under the [12] CLRA, FAL, or UCL, a plaintiff must plead (1) misrepresentation or omission, (2) reliance, [13] and (3) damages. See Hammerling v. Google LLC, 615 F. Supp. 3d 1069 , 1081 (N.D. Cal. [14] 2022) (citing Kwikset Corp. v. Superior Ct., 51 Cal. 4th 310, 326 (2011)). [15] Plaintiff’s CLRA, FAL, and UCL claims are largely based on overlapping theories [16] of liability. First, Plaintiff pleads fraudulent and unlawful omission theories—Hershey’s [17] failure to disclose the presence of lead and cadmium in its Products induced consumers to [18] purchase the chocolate bars when they otherwise would not have, and that Hershey’s [19] unlawful omissions violate the FAL; the CLRA; the Song-Beverly Act, Cal. Civ. Code [20] § 1790, et seq.; the Federal Food, Drug, and Cosmetic Act (“FDCA”), 21 U.S.C. § 301 , et [21] seq.; and the California Sherman Food, Drug, and Cosmetic Law, Cal. Health & Safety [22] Code § 110100, et seq. (SAC ¶¶ 84, 85.) Plaintiff also pleads that Hershey’s conduct, [23] including during the harvesting, post-harvesting, processing, storing, and ultimate sale of [24] the Products, is unfair because it unnecessarily introduced additional amounts of lead and [25] cadmium into the Products. (Id. ¶ 88.) Moreover, Plaintiff alleges Hershey’s conduct with [26] respect to labeling, advertising, and the sale of the Products was unfair because “it violates [27] public policy as declared by specific constitutional, statutory, or regulatory provisions[.]” [28] 1 (Id. ¶ 89.) Because the omissions theories of liability for the CLRA, FAL, and UCL claims 2 overlap, the Court considers them in tandem. See Gutierrez v. Johnson & Johnson 3 Consumer, Inc., No. 19-CV-1345-DMS-AGS, 2020 WL 6106813 , at *5 (S.D. Cal. Apr. 4 27, 2020) (“Consumer protection claims under the CLRA, FAL and UCL are often 5 analyzed together because they share similar attributes.”). 6 1. Fraudulent and Unlawful Omissions Theories 7 Hershey first argues Plaintiff’s omission claims again fail because it did not have 8 any duty to disclose and because the trace metals do not pose an unreasonable safety risk. 9 (Doc. No. 35 at 19.) Plaintiff responds Hershey had a duty to disclose because the omitted 10 information concerned an unreasonable safety hazard, and because FDA regulations 11 require Hershey to disclose the presence of lead and cadmium. (Doc. No. 37 at 7.) 12 To plausibly allege a fraudulent omission, the omission must either (1) “be contrary 13 to a representation actually made by the defendant,” or (2) “an omission of a fact the 14 defendant was obliged to disclose.” Hodsdon v. Mars, Inc., 891 F.3d 857, 865 (9th Cir. 15 2018) (quoting Daugherty v. Am. Honda Motor Co., 144 Cal. App. 4th 824, 835 (2006)). 16 a. Unreasonable Safety Hazard 17 The Court must first determine whether Hershey had a duty to disclose the presence 18 of lead and cadmium in the Products. “[A] defendant only has a duty to disclose when 19 either (1) the defect at issue relates to an unreasonable safety hazard or (2) the defect is 20 material, ‘central to the product’s function,’ and the plaintiff alleges one of the four 21 LiMandri factors.” Hammerling, 615 F. Supp. 3d at 1085 (quoting In re Toyota RAV4 22 Hybrid Fuel Tank Litig., 534 F. Supp. 3d 1067 , 1101–02 (N.D. Cal. 2021)). “The LiMandri 23 factors are (1) the defendant is in a fiduciary relationship with the plaintiff; (2) the 24 defendant had exclusive knowledge of material facts not known to the plaintiff; (3) the 25 defendant actively conceals a material fact from the plaintiff; or (4) the defendant makes 26 partial representations but also suppresses some material facts.” Id. at 1085 (citing 27 LiMandri v. Judkins, 52 Cal. App. 4th 326, 336 (1997)). 28 /// 1 Here, Plaintiff asserts Hershey’s failure to disclose the presence of lead and 2 cadmium in its Products, even at low levels, creates an unreasonable safety hazard. (Doc. 3 No. 37 at 8–9.) “Where a plaintiff alleges a sufficiently close nexus between the claimed 4 defect and the alleged safety issue, the injury risk need not have come to fruition.” Williams 5 v. Yamaha Motor Co., 851 F.3d 1015, 1028 (9th Cir. 2017). However, the alleged 6 “unreasonable safety hazard must describe more than merely ‘conjectural and hypothetical’ 7 injuries.” Id. at 1028 (quoting Birdsong v. Apple, Inc., 590 F.3d 955, 961 (9th Cir. 2009)). 8 Plaintiff first argues the “SAC no longer relies on the MADLs to allege that the lead 9 and cadmium content of the Products creases [sic] an unreasonable safety risk, instead 10 detailing specific harms at specific levels.” (Doc. No. 37 at 8.) Rather, she asserts, she has 11 pled a “sufficiently close nexus between the claimed defect (unsafe amounts of lead and 12 cadmium) and the alleged safety issue (deleterious health effects of consuming lead and 13 cadmium in the amounts found in the Products).” (Id.) Hershey counters that although 14 Plaintiff has removed all mention of the MADLs, this “does not mean that her Complaint 15 no longer relies on those thresholds.” (Doc. No. 38 at 6.) Specifically, Plaintiff relies upon 16 the December 2022 Consumer Reports article for the amounts of lead and cadmium in the 17 Products, and the article, in turn, used the MADLs to determine which products contained 18 purportedly excessive levels of lead or cadmium. (Id.) Hershey further argues Plaintiff 19 cannot allege that the levels of lead or cadmium in the Products creates an unreasonable 20 safety hazard because those levels are well below the Consent Judgment thresholds. (Id. at 21 19.) Plaintiff responds that Proposition 65 and the MADLs (even as modified by the 22 Consent Judgment) “concern only at what levels those substances might result in 23 reproductive harm or some forms of cancer.” (Doc. No. 37 at 11.) Plaintiff further states 24 that “while the levels established by the Consent Judgment may be probative as to whether 25 the amounts in the Products present health risks for cancer or reproductive harm, they are 26 irrelevant for all of the other risks of harm alleged in the SAC.” (Id. at 12.) The Court 27 agrees. As held previously by the Court, Plaintiff’s claims are independent of Proposition 28 65 and the Consent Judgment, and these factual challenges are not typically adjudicated at 1 this stage of litigation. See Barnes v. Nat. Organics, Inc., No. EDCV 22-314 JGB (PLAx), [2] 2022 WL 4283779 , at *6 (C.D. Cal. Sept. 13, 2022). 3 With respect to allegations of an unreasonable safety hazard, Plaintiff asserts “[n]o 4 amount of lead is known to be safe” and may lead “to severe health risks and toxicity, 5 including inhibiting neurological function, anemia, kidney damage, seizures, and in 6 extreme cases, coma and death.” (SAC ¶ 21 (internal quotation marks omitted).) Similarly, 7 the SAC pleads cadmium “likewise, poses a serious safety risk to consumers because it can 8 cause cancer and is a known teratogen, an agent which causes malformation of an embryo.” 9 (Id. ¶ 30.) Ultimately, Plaintiff contends the Products pose an unreasonable safety hazard 10 based on the serious health repercussions associated with the heavy metals contained 11 therein. Hershey argues Plaintiff fails to plead “whether the trace amounts at issue here are 12 actually enough to cause the health effects that Plaintiff . . . reiterates in the SAC.” (Doc. 13 No. 38 at 7.) The Court agrees. Plaintiff does not plead the amounts of the substances in 14 Hershey’s Products have created an unreasonable safety hazard. Plaintiff merely asserts 15 that lead and cadmium are carcinogens, that “[t]here may be no safe level of exposure to a 16 carcinogen,” and that Hershey’s products contain some amount of these substances. (SAC 17 ¶ 32.) 18 Plaintiff newly alleges that the Center for Disease Control Agency for Toxic 19 Substances and Disease Registry has established minimal risk levels for various toxins, 20 including cadmium, “and has determined that cadmium may only be ingested ‘without risk 21 of adverse health effects’ to the kidneys if the amount consumed is ‘less than 0.0002 mg,’ 22 or 0.2µg per kg per day.” (Doc. No. 37 at 8–9 (quoting SAC ¶ 31).) However, Plaintiff fails 23 to provide a pin cite to this claim, and the report by the U.S. Department of Health and 24 Human Services to which Plaintiff cites is nearly 500 pages. As the courts have often 25 admonished litigants, “[j]udges are not like pigs, hunting for truffles buried in briefs.” 26 Greenwood v. F.A.A., 28 F.3d 971, 977 (9th Cir. 1994) (quoting United States v. Dunkel, [27] 927 F.2d 955, 956 (7th Cir. 1991) (per curiam)) (alternation in original). It is not the task 28 of the court “to scour the record in search of a . . . fact,” Keenan v. Allan, 91 F.3d 1275 , 1 1279 (9th Cir. 1996) (internal quotation marks and citation omitted), nor to “excavate 2 masses of papers in search of revealing tidbits—not only because the rules of procedure 3 place the burden on the litigants, but also because [its] time is scarce.” Nw. Nat’l Ins. Co. 4 v. Baltes, 15 F.3d 660 , 662–63 (7th Cir. 1994). “It is absurdly difficult for a judge to 5 perform a search, unassisted by counsel, through the entire record, to look for such 6 evidence.” Carmen v. San Francisco Unified Sch. Dist., 237 F.3d 1026 , 1030 (9th Cir. 7 2001). For these reasons, the Court will not entertain or undertake an examination of the 8 merits here. 9 Thus, the Court GRANTS Hershey’s motion to dismiss as to Plaintiff’s claims on 10 this basis under the UCL (under the fraudulent and unlawful omissions prongs), CLRA, 11 and FAL WITH LEAVE TO AMEND. 12 b. Misbranding 13 Plaintiff next asserts that food regulations require Hershey to list lead and cadmium 14 in the ingredient list of the Products. (Doc. No. 37 at 13 (citing 21 U.S.C. § 343 ).) Hershey 15 argues it is not required to list lead or cadmium as separate ingredients in the ingredient list 16 because those metals were already present in the cocoa beans when Hershey “incorporated 17 [those beans] into” the Products. (Doc. No. 35 at 29 (citing 21 C.F.R. § 101.100 (a)(3)(i)).) 18 The FDA has issued a regulation exempting manufacturers from the obligation to 19 disclose “[i]ncidental additives that are present in a food at insignificant levels and do not 20 have any technical or functional effect in that food.” 21 C.F.R. § 101.100 (a)(3). “Incidental 21 additives” include “[s]ubstances migrating to food from equipment or packaging or 22 otherwise affecting food” so long as they are “not food additives,” or, if they are food 23 additives, “are used in conformity with regulations established pursuant to section 409 of 24 the act.” 21 C.F.R. § 101.100 (a)(3)(iii). According to Plaintiff’s own allegations, lead 25 “seems to get into cacao after beans are harvested” and that lead contamination occurs 26 “during post-harvest processing[.]” (SAC ¶ 17.) Accordingly, lead and cadmium in the 27 Products are incidental additives. See Stuve v. Kraft Heinz Co., No. 21-CV-1845, 2023 WL 28 184235, at *7 (N.D. Ill. Jan. 12, 2023). 1 Hershey contends that because its purported failure to include lead and cadmium in 2 the Products’ ingredient list was not “unlawful” under the FDCA or Sherman law, the UCL 3 cannot provide an independent basis for liability. (Doc. No. 35 at 30.) Hershey further 4 argues the “FDA has provided by regulation that ‘[s]ubstances that have no technical or 5 functional effect’ in a food, ‘but are present in a food by reason of having been incorporated 6 into the food as an ingredient of another food,’ are ‘exempt from compliance’ with the 7 statutory requirement on which Plaintiffs [sic] rely.” (Id. at 29 (quoting 21 C.F.R. 8 § 101.100(a)(3)(i)).) Plaintiff asserts that whether an additive is present at an “insignificant 9 level” in the food depends on whether “consumers care about the amount of [the offending 10 chemical] in [the product],” such that it is possible a substance is not present “at 11 insignificant levels” even when it is present “in very small amounts.” (Doc. No. 37 at 13 12 (quoting Stuve, 2023 WL 184235 , at *7).) The Court agrees. “[W]hether these additives 13 are present in insignificant levels is a question of fact, not suited for dismissal at a 14 preliminary stage in the proceeding.” Holt v. Foodstate, Inc., No.: 15cv78 L (JMA), 2015 15 WL 9592534 , at *4 (S.D. Cal. Dec. 31, 2015); see, e.g., Madrigal v. Hint, Inc., CV 1716 02095-VAP (JCx), 2017 WL 6940534 , at *2 (C.D. Cal. Dec. 14, 2017). Moreover, the 17 Court find’s Hershey’s reliance on Herrington v. Johnson & Johnson Consumer Cos., Inc., 18 No. C 09–1597 CW, 2010 WL 3448531 (N.D. Cal. Sept. 1, 2010), unpersuasive. In 19 Herrington, the Court did not analyze whether the additives at issue in allegedly 20 misbranded cosmetics, which the plaintiff merely alleged “may be carcinogenic for 21 humans,” were present at insignificant levels. See generally id. As such, the Court DENIES 22 Hershey’s motion to dismiss on this basis. 23 2. Unfair Conduct 24 Hershey next argues Plaintiff’s UCL claim under the “unfair” prong also fails 25 because Plaintiff fails to plead the challenged conduct “caus[ed] a substantial injury to 26 consumers.” (Doc. No. 35 at 25 (quoting Clemens v. DaimlerChrysler Corp., 534 F.3d 27 1017 , 1026–27 (9th Cir. 2008)).) Hershey further asserts Plaintiff failed to plead the 28 products she purchased failed to serve their function as chocolate bars. (Id. at 26.) 1 Additionally, Hershey argues the sale of the products with the lead and cadmium levels at 2 issue here are “lawful” under the Consent Judgment, “and thus not unfair.” (Id.) Plaintiff 3 pleads that “Hershey’s conduct, including during the harvesting, post-harvesting, 4 processing, storing, and ultimate sale of the Products to consumers was unfair because it 5 unnecessarily introduced additional amounts of lead and cadmium into the Products.” 6 (SAC ¶ 88.) Plaintiff further alleges Hershey’s Products contain more lead and cadmium 7 than other competing dark chocolate bars, (id. ¶ 19), and while being put on notice of these 8 levels of heavy metals, Hershey “failed to take steps to effectively reduce or remove lead 9 from the Products[,]” (id. ¶ 16). Plaintiff also alleges the consumer injury was substantial 10 because “the increase in profits obtained by Hershey through the misleading labeling does 11 not outweigh the harm to Class Members who were deceived into purchasing the Products 12 . . . .” (Id. ¶ 90.) In reply, Hershey contends it is not involved in the “harvesting” or “post13 harvesting” practices at the heart of this theory. (Doc. No. 38 at 11.) Thus, any unfair 14 conduct occurring in the harvesting or post-harvesting context cannot be attributable to 15 Hershey. (Id.) The Court agrees. Plaintiff’s SAC states Hershey “manufactures and sells” 16 the Products, (SAC ¶ 1), and “sources 100 percent of ingredients from suppliers[,]” (id. 17 ¶ 41.) As such, Plaintiff’s claim as to Hershey’s involvement in the “harvesting” or “post18 harvesting” practices fails. 19 “An ‘unfair’ business practice is actionable under the [UCL] even if it is not 20 ‘deceptive’ or ‘unlawful.’” Buller v. Sutter Health, 160 Cal. App. 4th 981, 990 (2008) 21 (citations omitted). An “unfair” business practice occurs “when it offends an established 22 public policy or when the practice is immoral, unethical, oppressive, unscrupulous or 23 substantially injurious to consumers.” Wilner v. Sunset Life Ins. Co., 78 Cal. App. 4th 952 , 24 965 (2000) (internal quotation marks and citations omitted). “An act or practice is unfair if 25 the consumer injury is substantial, is not outweighed by any countervailing benefits to 26 consumers or to competition, and is not an injury the consumers themselves could 27 reasonably have avoided.” Daugherty, 144 Cal. App. 4th at 839 . 28 /// 1 The Court notes the levels of lead and cadmium in the Products fits within the 2 parameters described in the Consent Judgment, and thus Hershey’s actions were lawful. 3 See Churchill Vill., L.L.C. v. Gen. Electric Co., 169 F. Supp. 2d 1119, 1131 (N.D. Cal. 4 2000). However, Plaintiff sufficiently pleads an actionable omission under the FDCA, and 5 thus, Hershey’s motion to dismissed on this basis is denied. See Augustine v. Talking Rain 6 Beverage Co., Inc., 386 F. Supp. 3d 1317 , 1329–30 (S.D. Cal. 2019) (denying motion to 7 dismiss the “unfair” UCL claim where the plaintiffs alleged the misleading labels on the 8 products deceived plaintiffs into paying a premium price for the product). 9 B. Equitable Remedies 10 Hershey again moves to dismiss Plaintiff’s UCL, FAL, and unjust enrichment claims 11 for Plaintiff’s failure to allege a lack of adequate legal remedies which, under Sonner v. 12 Premier Nutrition Corp., 971 F.3d 834 (9th Cir. 2020), is a prerequisite to the pursuit of an 13 equitable claim. (Doc. No. 35 at 23–24.) In the SAC, Plaintiff asserts her legal remedies 14 are inadequate to fully compensate her for all of Hershey’s alleged behavior. (SAC ¶¶ 95– 15 96, 105.) Specifically, Plaintiff asserts that “even if the CLRA and commercial code 16 provide adequate legal relief for Hershey’s false advertising, those statutes do not cover 17 the behavior alleged to form the basis of Plaintiff’s unfair behavior claim under the UCL. 18 (Doc. No. 37 at 21.) 19 Although “[e]quitable jurisdiction is distinct from subject matter jurisdiction . . . both 20 are required for a federal court to hear the merits of an equitable claim.” Guzman v. Polaris 21 Indus. Inc., 49 F.4th 1308 , 1314 (9th Cir. 2022); Schlesinger v. Councilman, 420 U.S. 738 , 22 754 (1975). Unlike state courts, federal courts have equitable jurisdiction to award 23 equitable relief only where a plaintiff has no adequate legal remedy based on the same 24 harm. See Sonner, 971 F.3d at 842 . Thus, where monetary damages provide an adequate 25 remedy, a federal court may not consider the merits of equitable claims for restitution, 26 disgorgement, or injunctive relief. See Franklin v. Gwinnett Cnty. Pub. Sch., 503 U.S. 60 , 27 75–76 (1992); see, e.g., Feitelberg v. Credit Suisse First Bos., LLC, 134 Cal. App. 4th 997 , 28 1009 (2005) (noting restitution and injunctive relief are equitable in nature). Moreover, 1 certain claims––such as the UCL, the FAL, and unjust enrichment––only provide for 2 equitable relief and thus, are impermissible where adequate money damages are available. 3 See Guzman, 49 F.4th at 1313 (“[T]he UCL provides only for equitable remedies.”); In re 4 Vioxx Class Cases, 180 Cal. App. 4th 116, 130 (2009) (same as to the FAL); Zapata 5 Fonseca v. Goya Foods Inc., No. 16-CV-02559-LHK, 2016 WL 4698942 , at *7 (N.D. Cal. 6 Sept. 8, 2016) (same as to unjust enrichment). Plaintiffs bear the burden to establish they 7 lack an adequate damages remedy before they can obtain equitable relief. See Sonner, 971 8 F.3d at 844. 9 The Court finds Plaintiff has failed to establish she lacks an adequate remedy at law 10 as to her claims for restitution. Plaintiff first asserts her claims under the “unfair” prong of 11 the UCL “sweep more broadly” than her claims under the UCL, FAL, or CLRA’s 12 omissions theories, and thus her legal remedies are inadequate. (SAC ¶ 96.) Plaintiff further 13 alleges that she “may lack an adequate remedy at law, if for instance, damages resulting 14 from their purchase of the Products is determined to be in an amount less than the premium 15 price of the Products.” (Id. ¶¶ 103, 105.) However, Plaintiff’s allegations do not show how 16 restitution would go beyond the damages available to her. Plaintiff fails to allege any 17 specific facts showing that damages are “inadequate or incomplete.” Sonner, 971 F.3d at 18 844; see also Nacarino v. Chobani, LLC, No. 20-cv-07437-EMC, 2021 WL 3487117 , at 19 *12 (N.D. Cal. Aug. 9, 2021) (finding the plaintiff failed to allege any specific facts 20 showing that damages were “inadequate or incomplete”). 21 However, the Court finds Plaintiff may seek equitable relief in the form of an 22 injunction under the UCL and FAL to the extent her claims are premised on alleged future 23 harm. “Although Sonner only spoke about restitution for past harms, various district courts 24 have since found that the decision applies to equitable claims for injunctive relief based on 25 future harm as well.” Mier v. CVS Pharmacy, Inc., No. SA CV 20-01979-DOC-ADS, 2021 26 WL 1559367 , at *13 (C.D. Cal. Mar. 22, 2021), abrogated on other grounds by No. 8:2027 cv-01979-DOC-ADS, 2023 WL 6985706 (C.D. Cal. Oct. 20, 2023). Here, Plaintiff has 28 sufficiently pled the likelihood of future harm for which she has no adequate remedy at 1 law, and is not barred from seeking injunctive relief for the same. See Souter v. Edgewell 2 Personal Care Co., No.: 20-CV-1486 TWR (BLM), 2022 WL 485000 , at *13 (S.D. Cal. 3 Feb. 16, 2022). 4 Based on the foregoing, the Court GRANTS Hershey’s motion to dismiss Plaintiff’s 5 claims—to the extent they are based upon Hershey’s alleged omission—for equitable relief 6 in the form of restitution, and DENIES the motion as to Plaintiff’s claims for injunctive 7 relief. 8 C. The Implied Warranty of Merchantability 9 Hershey next argues Plaintiff’s SAC fails to state a claim for breach of implied 10 warranty because she cannot plausibly allege the Products she purchased were unfit for 11 consumption. (Doc. No. 35 at 24.) Plaintiff counters she has added allegations that “many 12 brands of dark chocolate bars test at levels far below that of the Hershey Products.” (Doc. 13 No. 37 at 20 (citing SAC ¶ 19).) In her SAC, Plaintiff further asserts that the Products 14 “would not pass without objection in the trade or industry . . . .” (SAC ¶ 118.) 15 Under California law, “a warranty that the goods shall be merchantable is implied in 16 a contract for their sale.” Cal. Com. Code § 2314 (1). California recognizes an exception to 17 the privity requirement in breach of warranty claims pertaining to food or drug products. 18 Wendell v. Johnson & Johnson, No. C 09–04124 CW, 2010 WL 271423 , *5 (N.D. Cal. 19 Jan. 20, 2010) (citing Gottsdanker v. Cutter Labs., 182 Cal. App. 2d 602 (1960)). 20 Plaintiff contends she has stated a claim for breach of the implied warranty because 21 in addition to a product being suitable for its intended use—to eat—the implied warranty 22 provides that the product “pass without objection in the trade under the contract 23 description[.]” (Doc. No. 37 at 21 (quoting Arabian v. Organic Candy Factory, No. 2:17– 24 cv–05410–ODW–PLA, 2018 WL 1406608 , at *8 (C.D. Cal. Mar. 19, 2018)).) 25 “In analyzing the ‘passing without objection in the trade’ requirement, ‘[c]rucial to 26 the inquiry is whether the product conformed to the standard performance of like products 27 used in the trade. This determination may depend on testimony of persons familiar with 28 the industry standards and local practices and is a question of fact.’” Arabian, 2018 WL 1 || 1406608, at *8 (quoting Pisano v. Am. Leasing, 146 Cal. App. 3d 194, 198 (1983)). In the 2 || SAC, Plaintiff alleges the Products both (1) do not pass without objection in the trade under 3 || the contract description, and (2) are not fit for the ordinary purposes for which the Products 4 ||are used. Regarding the second allegation, Plaintiff fails to plead sufficient facts that the 5 ||chocolates she purchased were unfit for their “ordinary purpose” as food products, 6 || Birdsong, 590 F.3d at 958 n.2; Liou v. Organifi, LLC, 491 F. Supp. 3d 740 , 749 (S.D. Cal. 7 2020), or were “unfit for consumption,” Strumlauf v. Starbucks Corp., 192 F. Supp. 3d 8 || 1025, 1028, 1032 (N.D. Cal. 2016), or were “not merchantable or fit for use as” chocolates, 9 Viggiano v. Hansen Natural Corp., 944 F. Supp. 2d 877, 896 (C.D. Cal. 2013). 10 However, Plaintiff pleads that “many brands of dark chocolate bars test at levels far 11 || below that of the Hershey Products.” (SAC § 19.) Thus, on this basis, Plaintiff adequately 12 || alleges that Hershey’s Products do not comply with the standards of quality, so as to pass 13 || without objection in the trade under the contract description. 14 CONCLUSION 15 For the reasons stated herein, the Court GRANTS IN PART AND DENIES IN 16 ||PART Hershey’s motion to dismiss Plaintiff Eva Grausz’s SAC. (Doc. No. 35.) No later 17 ||than Thursday, February 8, 2024, Plaintiff may file a third amended complaint which 18 |/cures the pleading deficiencies identified in this Order. Hershey must file a responsive 19 || pleading no later than February 22, 2024. Plaintiff is cautioned that if the third amended 20 ||complaint fails to cure these deficiencies, the Court will dismiss the defective claims 21 || without further leave to amend. [22] 23 IT IS SO ORDERED. 24 || Dated: January 25, 2024 © ¢ 25 Hon. Anthony J. attaglia 26 United States District Judge [28] 16 An ARANnKAO □□□□□□□□□