Summary
In Boswell v. Costco Wholesale Corp., 2016 WL 3360701 (C.D. Cal. June 6, 2016), a district court in the Central District of California denied a motion to dismiss an express warranty claim where "[t]he label states the Coconut Oil is a 'healthful and delicious oil,' and that the product provides 'health benefits.' "
Summary of this case from Hadley v. Kellogg Sales Co.Opinion
Case No. SA CV 16-0278-DOC (DFMx)
06-06-2016
JAMES BOSWELL, ET AL. v. COSTCO WHOLESALE CORPORATION
CIVIL MINUTES - GENERAL PRESENT: Deborah Goltz
Courtroom Clerk Not Present
Court Reporter ATTORNEYS PRESENT FOR PLAINTIFF:
None Present ATTORNEYS PRESENT FOR DEFENDANT:
None Present
PROCEEDINGS (IN CHAMBERS): ORDER DENYING MOTION TO DISMISS CASE AND/OR STRIKE PORTIONS OF COMPLAINT [15]
Before the Court is Defendant Costco Wholesale Corporation's ("Costco" or "Defendant") Motion to Dismiss Case and/or Strike Portions of Complaint ("Motion") (Dkt. 15). The Court finds this matter appropriate for resolution without oral argument. Fed. R. Civ. P. 78; L.R. 7-15. Having reviewed the moving papers and considered the parties' arguments, the Court hereby DENIES the Motion.
I. Facts
The following facts are drawn from Plaintiffs James Boswell ("Boswell") and Michelle Salazar-Navarro's ("Salazar-Navarro") (collectively, "Plaintiffs") First Amended Complaint ("FAC") (Dkt. 21).
Plaintiffs filed a Notice of Dismissal as to Plaintiff Malia Levin (Dkt. 23) on May 3, 2016, which the Court granted on May 4, 2016 (Dkt. 29). The Court notes Plaintiffs also added Michelle Salazar-Navarro as a Plaintiff without the Court's permission. The Court finds adding Salazar-Navarro on its motion is appropriate pursuant to Rule 21. See Flintkoke Co. v. Aviva PLC, Case No. 15-cv-01638-SI, 2015 WL 9269761, at *3. However, the Court clarifies that if Plaintiffs seek to add additional parties or claims in the future, they must seek leave of the Court.
Plaintiffs bring a putative consumer class action based on representations made by Defendant Costco Wholesale Corporation ("Costco" or "Defendant") in connection with Costco's Kirkland Signature Organic Coconut Oil product ("Coconut Oil"). See generally FAC. Costco is the manufacturer, distributor, and/or marketer of the Coconut Oil product. Id. ¶ 12.
Plaintiffs Boswell and Salazar-Navarro are residents of Mission Viejo, California, and Van Nuys, California, respectively. FAC ¶¶ 9-10. Boswell and his girlfriend Lauren Sebesta ("Sebesta") share a joint Costco membership. Id. ¶ 93. Boswell alleges he purchased the Coconut Oil "approximately three times between August of 2014 and July of 2015." Id. ¶ 94. He first purchased the product at a Costco located in Irvine, California; he also purchased the product from a Costco located in Tustin, California. Id. On these occasions, Boswell was accompanied by Sebesta. Id. ¶ 95. While "Ms. Sebesta presented her joint membership card to the cashier, Mr. Boswell either directly paid for the Kirkland Coconut Oil and the rest of the couples' items, or reimbursed Ms. Sebesta for the Kirkland Coconut Oil and the other items he decided to purchase." Id.
Salazar-Navarro personally maintains a Costco Membership. Id. ¶ 99. She purchased the Kirkland Coconut Oil in or around May 2014 from the Coscto in Van Nuys, California after reading and relying on the product description. Id.
Plaintiffs allege "Costco deceptively markets Kirkland Coconut Oil with a variety of labeling claims intended to convince consumers that the product is healthy, and to conceal or distract from the fact Kirkland Coconut Oil is pure fat, almost all of which is saturated fat." Id. ¶ 65. When deciding to purchase the Coconut Oil, Plaintiffs relied on the following claims on the product label:
1. "For centuries the coconut tree has been called 'the tree of life;'"FAC ¶ 100(a)-(f). The packaging of the product also contains a number of comparisons to butters and other oils. For instance, the label states "[u]se as a substitute for butter on toast or in your favorite baking recipes. See id. ¶ 69.
2. "In Sanskrit it is called kalpavriksha or 'tree of heaven;'"
3. "[W]hether in a solid or liquid state it remains a healthful and delicious oil;"
4. "Because it is process[ed] in this gentle manner . . . all . . . health benefits are retained;"
5. "Use as a substitute for butter;" and
6. "CONVERSION CHART" displaying "1 CUP OF BUTTER = 1 CUP OF COCONUT OIL" and "1 CUP OF OIL = 1 CUP of COCONUT OIL."
Based on these representations, Plaintiffs "believed Kirkland Coconut Oil was healthy, healthier than butter and other oils, and would not raise or otherwise detriment their blood cholesterol or cause increased risk of CHD, stroke, or other morbidity." Id. ¶ 101. Plaintiffs are "not nutritionists, food experts, or food scientists, but rather lay consumers" who were seeking out "a healthy oil that was healthier than butter and other cooking oils." Id. ¶¶ 102, 104.
Instead of receiving a product with healthful qualities, Plaintiffs allege they received a product with "high total fat and saturated fat content." Id. ¶ 107. Plaintiffs extensively allege the relationship between saturated fat consumption on the one hand, and high cholesterol, increased risk of cardiovascular heart disease, and other morbidity on the other. See id. ¶¶ 13-47. Indeed, in comparison to butter and other cooking oils, the Coconut Oil is "higher in saturated fat, lower in monosaturated fat, and lower in polyunsaturated fat." Id. ¶ 57.
In short, Plaintiffs allege the claims on the product label "taken individually, and especially in context of the label as a whole, [are] false and misleading because Kirkland Coconut Oil is not healthy, and is not a healthy alternative to butter or other cooking oils." Id. ¶ 72. Boswell and Salazar-Navarro state they would have paid less, or would have been unwilling to purchase the product at all, absent the false and misleading labeling. Id. ¶ 106.
Based on the purported misrepresentations, Plaintiffs allege violations of the: (1) Unfair Competition Law ("UCL"), California Business and Professions Code § 17200, et seq., (2) False Advertising Law ("FAL"), California Business and Professions Code § 17500, et seq., (3) Consumer Legal Remedies Act ("CLRA"), California Civil Code § 1750, et seq., (4) breach of express wararanty, California Commercial Code § 2313(1), and (5) breach of implied warranty of merchantability, California Commercial Code § 2314. See Compl. ¶¶ 118-160. Plaintiffs seek to certify a class of similarly situated individuals to pursue these claims. See id. ¶¶ 117-125.
II. Procedural History
Plaintiffs filed suit in Orange County Superior Court on January 20, 2016. Notice of Removal (Dkt. 1) at 1. The case was removed to this Court on February 18, 2016. Id.
Defendant filed the instant Motion on May 3, 2016 (Dkt. 24). Plaintiffs opposed on May 16, 2016 (Dkt. 30).
III. Legal Standard
A. Motion to Dismiss
Under Federal Rule of Civil Procedure 12(b)(6), a complaint must be dismissed when a plaintiff's allegations fail to set forth a set of facts which, if true, would entitle the complainant to relief. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007); Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009) (holding that a claim must be facially plausible in order to survive a motion to dismiss). The pleadings must raise the right to relief beyond the speculative level; a plaintiff must provide "more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555 (citing Papasan v. Allain, 478 U.S. 265, 286 (1986)). On a motion to dismiss, the court accepts as true a plaintiff's well-pleaded factual allegations and construes all factual inferences in the light most favorable to the plaintiff. See Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008). However, the court is not required to accept as true legal conclusions couched as factual allegations. Iqbal, 556 U.S. at 678.
For claims sounding in fraud, a complaint must be dismissed when a plaintiff fails to meet the heightened pleading requirements of Federal Rule of Civil Procedure 9(b). Kearns v. Ford Motor Co., 567 F.3d 1120, 1124 (9th Cir. 2009); see Fed. R. Civ. P. 9(b). Rule 9(b) requires a plaintiff alleging such claims to "state with particularity the circumstances constituting fraud." Id. The "circumstances" required by Rule 9(b) are the "who, what, when, where, and how" of the fraudulent activity. United States ex rel Cafasso v. Gen. Dynamics C4 Sys., Inc., 637 F.3d 1047, 1055 (9th Cir. 2011). Further, if the plaintiff claims a statement is false or misleading, "[t]he plaintiff must set forth what is false or misleading about a statement, and why it is false." Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003) (quoting In re Glenfed, Inc. Secs. Litig., 42 F.3d 1541, 1548 (9th Cir. 1994)). In other words, the plaintiff "must set forth an explanation as to why the statement or omission complained of was false or misleading." Cooper v. Pickett, 137 F.3d 616, 625 (9th Cir. 1997). This heightened pleading standard ensures that "allegations of fraud are specific enough to give defendants notice of the particular misconduct which is alleged to constitute the fraud charged so that they can defend against the charge and not just deny that they have done anything wrong." Semegen v. Weidner, 780 F.2d 727, 731 (9th Cir. 1985). However, "intent, knowledge, and other conditions of a person's mind may be alleged generally." Fed. R. Civ. P. 9(b); see Neubronner v. Milken, 6 F.3d 666, 672 (9th Cir. 1993).
Although review of a motion to dismiss is ordinarily limited to the contents of the complaint and material properly submitted with the complaint, Van Buskirk v. Cable News Network, Inc., 284 F.3d 977, 980 (9th Cir. 2002), the court may also consider documents "whose contents are alleged in a complaint and whose authenticity no party questions, but which are not physically attached to the pleading." Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir. 1994), overruled on other grounds by Gilbraith v. Cty. of Santa Clara, 307 F.3d 1119, 1121 (9th Cir. 2002). This includes "internet pages as it does . . . printed material." In re iPhone 4S Consumer Litigation, Case No. 12-cv-1127, 2013 WL 3829653, at *6 (N.D. Cal. July 23, 2013) (citing Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005)). The court may treat such referenced documents as "part of the complaint, and thus may assume that its contents are true for purposes of a motion to dismiss under Rule 12(b)(6)." United States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003).
In granting a motion to dismiss, dismissal with leave to amend should be freely given "when justice so requires." Fed. R. Civ. P. 15(a)(2). This policy is applied with "extreme liberality." Morongo Band of Mission Indians v. Rose, 893 F.2d 1074, 1079 (9th Cir. 1990); Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000) (holding that dismissal with leave to amend should be granted even if no request to amend was made). Dismissal without leave to amend is appropriate when the court is satisfied that the deficiencies in the complaint could not possibly be cured by amendment. Jackson v. Carey, 353 F.3d 750, 758 (9th Cir. 2003).
B. Motion to Strike
Federal Rule of Civil Procedure 12(f) provides that a court "may strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter." Motions to strike are disfavored and "will usually be denied unless the allegations have no possible relation to the controversy and may cause prejudice to one of the parties." Friedman v. 24 Hour Fitness USA, Inc., 580 F. Supp. 2d 985, 990 (C.D. Cal. 2008) (internal quotation marks and citation omitted); RDF Media Ltd. v. Fox Broad. Co., 372 F. Supp. 2d 556, 566 (C.D. Cal. 2005) ("Motions to strike are generally disfavored because of the limited importance of pleadings in federal practice and because it is usually used as a delaying tactic."). The Ninth Circuit has defined "immaterial" matter as "that which has no essential or important relationship to the claim for relief or the defenses being pleaded" and "impertinent" matter as "statements that do not pertain, and are not necessary, to the issues in question." Fantasy, Inc. v. Fogerty, 984 F.2d 1524, 1527 (9th Cir. 1993) (citation and internal quotation marks omitted), overruled on other grounds, 510 U.S. 517 (1994).
IV. Discussion
Costco moves to dismiss Plaintiffs' claims on several grounds. Specifically, Costco argues: (1) Plaintiff Boswell lacks standing to assert any of his claims; (2) Plaintiffs fail to identify any cognizable injury; (3) Plaintiffs cannot plausibly claim they reasonably relied upon the product's label; (4) Plaintiffs cannot explain how a reasonable consumer would be misled by the label; (5) the label is neither "unlawful" or "unfair" within the meaning of the UCL; (6) Plaintiffs fail to state a claim for breach of express warranty; (7) Plaintiffs fail to state a claim for breach of implied warranty of merchantability; and (8) Plaintiffs' request for injunctive relief must be stricken. Mot. at 2-3. The Court will address these arguments in turn.
A. Plaintiff Boswell's Purchase
Costco first argues Plaintiff Boswell does not have standing to assert claims for products he did not purchase. Mot. at 5. Costco's records indicate Boswell's girlfriend Lauren Sebesta made the purchases on her membership account; thus, Costco urges the Court to find Boswell lacks standing to assert his claims.
The Court declines to do so. Boswell alleges that while his girlfriend purchased the Coconut Oil, he either directly paid for the Coconut Oil and the rest of the couples' items, or reimbursed her for the Coconut Oil. FAC ¶ 93. Further, the FAC alleges Plaintiffs, including Boswell, were the ones who read the label on the Coconut Oil product. Id. ¶ 100. These allegations are sufficient. See Waller v. Hewlett-Packard Co., No. 11cv0454-LAB (RBB), 2011 WL 6325972, at *6 n.4 (S.D. Cal. Dec. 16, 2011) ("Waller simply explains . . . that he and his wife were shopping together at Costco, where they have a family membership, and that he made the decision to buy the SimpleSave while she actually executed the purchase with their money. On these facts, the Court finds that Waller has standing to sue under the UCL and CLRA.") (citations omitted).
As such, the Court DENIES Defendant's Motion to dismiss Plaintiff Boswell's claim on this ground.
B. Injury Requirement
Costco next argues "Plaintiffs do not identify any injury that satisfies the standing requirements of Article III and/or California law either." Mot. at 12. Costco adds Plaintiffs "do not claim that they actually experienced any adverse health effects, but instead merely claim that the coconut oil 'subject[ed] plaintiffs to increased risk of CHD, stroke and other morbidity." Mot. at 12 (citation omitted). In response, Plaintiffs argue Costco fundamentally misunderstands their alleged injury. See Opp'n at 8-9 ("Costco's assertion that plaintiffs do not claim that they actually experienced any adverse health effects . . . is both incorrect and beside the point.") (citation and internal quotation marks omitted). Specifically, Plaintiffs allege they suffered economic damages as a result of Costco's false advertisements. Id. at 8.
Similar to Article III standing, to show standing under the UCL and FAL, Plaintiffs must aver facts establishing they "suffered injury in fact and have lost money or property as a result of the unfair competition." Cal. Bus & Prof. Code §§ 17204, 17536; Henderson v. Gruma Corp., Case No. 10-cv-04173-AHM, 2011 WL 1362188 at *3 (C.D. Cal. Apr. 11, 2011) ("To satisfy the narrower standing requirements imposed by Proposition 64, a party must now (1) establish a loss or deprivation of money or property sufficient to qualify as injury in fact, i.e. economic injury, and (2) show that economic injury was the result of, i.e., caused by, the unfair business practice or false advertising that is the gravamen of the claim. The first is an injury-in-fact requirement, and the second is a causation requirement.") (citation and internal quotation marks omitted).
Because Plaintiffs claim pecuniary (economic) damages as their "injury in fact," the Court will collapse the Article III standing and statutory standing analyses. See Kwikset, 51 Cal. 4th at 325) ("Because the lost money or property requirement [for statutory standing under UCL] is more difficult to satisfy than that of injury in fact [for Article III standing] . . . . [i]f [lost money has been sufficiently alleged], the same allegations or proof that suffice to establish economic injury will generally show injury in fact as well, and thus it will again often be the case that no further inquiry is needed.") (citation omitted); see also Henderson, 2011 WL 1362188 at *3 ("The injury in fact requirement of UCL and FAL standing overlaps with Article III standing requirements. . . . Here, Plaintiffs have met the injury-in-fact requirement for standing under Proposition 64 and therefore, in addition, under that prong of Article III standing.").
The Court concludes Plaintiffs have sufficiently alleged injury in fact. Plaintiffs allege they "paid more for Kirkland Coconut Oil, and would only have been willing to pay less, or unwilling to purchase it at all, absent the false and misleading label." FAC ¶ 106; see also id. ¶ 111 ("Plaintiffs lost money as a result of Costco's deceptive claims and practices in that they did not receive what they paid for when purchasing Kirkland Coconut Oil."). The "alleged purchase of a product a plaintiff would not otherwise have purchased but for the alleged unlawful label is sufficient to establish an economic injury-in-fact." Racies v. Quincy Bioscience, LLC., Case No. 15-cv-00292-HSG, 2015 WL 2398268 at *5 (N.D. Cal. May 19, 2015) (quoting Lanovaz v. Twinings N. Am., Inc., Case No. 12-cv-02646, 2013 WL 675929 at *6 (N.D. Cal. Feb. 25, 2013)). Further, even if Plaintiffs still would have purchased the product, but would not have paid as much, "the extra money paid . . . is economic injury and affords the consumer standing to sue." Hinojos v. Kohl's Corp., 718 F.3d 1098, 1104 (9th Cir. 2013).
Accordingly, the Court DENIES Defendant's Motion to dismiss Plaintiffs' claims based on a lack of adequate injury.
C. Plaintiffs' Reasonable Reliance & Reasonable Consumer Test
1. Plaintiffs' Reliance
Costco next contends Plaintiffs "cannot establish that they reasonably relied upon the statements on the label that they challenge." Mot. at 6 (citation omitted). From what the Court can glean, it appears Costco is requesting the Court dismiss all of Plaintiffs' claims on this basis. See Mot. at 6-7 (discussing reliance requirement in context of various claims) .
In addition to arguing Plaintiffs cannot establish they reasonably relied on the Coconut Oil label, Costco argues Plaintiffs cannot establish a reasonable consumer would be misled by the label. Costco, however, conflates these arguments at various points. See, e.g., Mot. at 8 (discussing "reasonable consumer" test in reasonable reliance section); id. at 11 (same); see also Romero v. Flowers Bakeries, LLC, Case No. 14-cv-05189-BLF, 2016 WL 469370, at *8 (N.D. Cal. Feb. 8, 2016) ("The parties essentially collapse the reliance inquiry with the 'reasonable consumer' standard discussed above."). Thus, the Court will consider both arguments in this section, beginning with arguments concerning the Plaintiffs' individual reliance.
"To have standing to bring a UCL, FAL, or CLRA claim, Plaintiffs must plead that they relied on the misleading materials." Bronson v. Johnson & Johnson, Inc., No. C 12-04184 CRB, 2013 WL 1629191, at *2 (N.D. Cal. Apr. 16, 2013). A plaintiff may prove reliance "'by showing the defendant's misrepresentation or nondisclosure was an immediate cause of the plaintiff's injury-producing conduct.'" Hodsdon v. Mars, 2016 Dist. LEXIS 19268, Case No. 15-cv-04450-RS (N.D. Cal. Feb. 17, 2016), at *10 (quoting In re Tobacco II Cases, 46 Cal. 4th 298, 326 (2009)). "[T]he Ninth Circuit in Hinojos found that "[p]leading that one would not have otherwise purchased the product but for the misleading advertising also satisfies the consumer's obligation to plead a causal link between the advertising and the alleged economic injury." Branca v. Nordstrom, Inc., No. 14cv2062-MMA (JMA), 2015 WL 1841231, at *4 (S.D. Cal. Mar. 20, 2015) (quoting Hinojos, 718 F.3d at 1107 n.5). As the Ninth Circuit explained, "as a practical matter, in cases such as these, Proposition 64's causation requirement . . . and the economic injury requirement are coextensive." Hinojos, 718 F.3d at 1107 n.5.
Here, Plaintiffs allege they relied on the label prior to purchasing the Coconut Oil. See FAC ¶¶ 2, 95, 99, 100. Plaintiffs specifically allege reliance on six specific statements on the Coconut Oil, including claims that the Coconut Oil is a "healthful and delicious oil;" Coconut Oil can be used as "a substitute for butter;" the label's reference to "health benefits;" and the label's conversion chart including butter, coconut oil, and oil. Id. ¶ 100(a)-(f). Further, as noted above, Plaintiffs allege they would not have otherwise purchased or would have paid less for the product absent the misleading labeling. Id. ¶ 106. The Court finds these allegations to be sufficient regarding the Plaintiffs' individual reliance.
Costco does contend that since Plaintiffs admit they would consider purchasing Coconut Oil in the future, they have undermined their claim for reliance. Mot. at 11. Similarly, Defendant argues Plaintiffs do not allege they have "stopped cooking with coconut oil, eating products containing coconut oil, and/or cooking with or eating products that are high in saturated fat either." Id. Defendant provides little support for these arguments, and as Plaintiffs note, the fact Plaintiffs may consciously choose to purchase an unhealthy product in the future does not undermine their claim for reliance at the time of the purchases in question. See Opp'n at 8. Further, Defendant provide no authority for the bold proposition that Plaintiffs must affirmatively allege they have "stopped cooking with any coconut oil, stopped eating all products containing coconut oil, and/or cooking with or eating products that are high in saturated fat" in order to maintain this action.
2. Reasonable Consumer Test
Costco focuses the majority of its efforts disputing whether Plaintiffs' purported reliance was reasonable. See Mot. at 7-11. Thus, the Court will turn to the reasonableness of the purported reliance.
Deceptive labeling claims under the UCL, the FAL, and the CLRA are evaluated by whether a "reasonable consumer" would likely be deceived. Williams v. Gerber Prods. Co., 552 F.3d 934, 938 (9th Cir. 2008) (citation omitted). "'Likely to deceive' implies more than a mere possibility that the advertisement might conceivably be misunderstood by some few consumers viewing it in an unreasonable manner. Rather, the phrase indicates that the ad is such that it is probable that a significant portion of the general consuming public or of target consumers, acting reasonably in the circumstances, could be misled." Lavie v. Procter & Gamble Co., 105 Cal. App. 4th 496, 508, (Cal. Ct. App. 2003). "Although reasonableness can, in appropriate circumstances, be decided as a question of law, 'California courts . . . have recognized that whether a business practice is deceptive will usually be a question of fact not appropriate for decision on [a motion to dismiss]." Yumul v. Smart Balance, Inc., 733 F. Supp. 2d 1117, 1125 (C.D. Cal. 2010) (quoting Williams, 552 F.3d at 938) (citation omitted). Indeed, the Ninth Circuit has made clear that granting a motion to dismiss on this ground is a "rare situation," "providing the example that dismissal would be proper if 'the advertisement itself made it impossible for the plaintiff to prove that a reasonable consumer was likely to be deceived." Red v. Kraft Foods, Inc., No. CV 10-1028-GW (AGRx), 2012 WL 5504011, at *2 (C.D. Cal. Oct. 25, 2012) (quoting Williams, 552 F.3d at 939) (citation omitted).
As an initial matter, Costco contends a reasonable consumer could not be misled by the phrases "healthful" and "health benefits" on the label of the Coconut Oil. Costco argues "Plaintiffs do not explain what they believe the term 'healthier' means." Mot. at 10. However, the Court does not find this is a bar to Plaintiffs' claims, especially at this stage. Indeed, several courts have considered food labels extolling the "healthiness" of products. The Court finds the decision in In re Ferrero Litigation, 794 F. Supp. 2d 1107 (S.D. Cal. 2011) to be particularly instructive in this regard. In that case, the court considered plaintiff's argument that "[defendant] Ferrero misleadingly promotes its Nutella® spread as healthy and beneficial to children when in fact it contains dangerous levels of fat and sugar." Id. at 1110; see id. at 1118 ("Plaintiffs allege that . . . Nutella is not in fact an example of a healthy and balanced breakfast and is not a healthy nor nutritious breakfast food, as represented on the product's advertising, packaging, and other means.") (citation and internal quotation marks omitted). The In re Ferrero court concluded "it would not be impossible for Plaintiffs to prove that a reasonable consumer would be deceived by the statements," and thus allowed the claims to proceed. Id. at 1115-16 (citation omitted); see id. at 1116 ("Accordingly, at this time, the Court declines to dismiss Plaintiffs' UCL, FAL, and CLRA claims for failure to satisfy the reasonable consumer test or as non-actionable puffery."). Likewise in Henderson v. J.M. Smucker Co., the court considered "Plaintiff's general allegation [] that Defendant's products contain trans fat, which is unhealthy in any amount, and by suggesting that the products are healthy, Defendant's labeling and packaging is therefore false, misleading, and deceptive." No. CV 10-4524-GHK (VBKx), 2011 WL 1050637, at *1 (C.D. Cal. Mar. 17, 2011). In J.M. Smucker Co., the court ultimately concluded a "reasonable consumer could interpret them to imply [Defendant's statements] to imply that Defendant's products are healthy, when they allegedly are not." Id. at *4.
The same reasoning applies here. Based on the present record, and at this early stage, the Court cannot conclude it is impossible reasonable consumers would be misled by the statements on the Coconut Oil label. See Williams, 552 F.3d at 939. The label states the Coconut Oil is a "healthful and delicious oil," and that the product contains certain "health benefits." FAC ¶ 100(c)-(d). Additionally, Plaintiffs specifically allege they understood "the label's health claims to be directed to the product's purported nutritional health benefits, rather than, or at least in addition to the other potential uses, such as on skin," id. ¶ 101 - an allegation the Court must accept as true at this stage. Further, contrary to cases where plaintiffs simply point to labels in a conclusory manner, Plaintiffs in this case have focused on the nutritional content of the label, see FAC ¶¶ 52, 61, and have alleged why this runs counter to the label's statement that the Coconut is a "healthful" oil, see FAC ¶¶ 13-47.
Based on the above, the Court finds "at the very least, there appears to be a question of fact regarding whether a reasonable consumer would be likely to be misled by the meaning of the word 'healthy' on a food label." Bruton v. Gerber Prods. Co., 961 F. Supp. 2d 1062, 1096 (N.D. Cal. 2013); see id. ("[T]he Court finds that 'As Healthy As Fresh' do not fall into the category of non-actionable puffery. Bruton has alleged a plausible claim for the purpose of surviving this motion to dismiss."). In addition to the above, the Court cannot conclude as a matter of law it is impossible a reasonable consumer, viewing all the claims on the label, would not be misled into believing the Coconut Oil product was a healthier alternative to butter and other cooking oils. See Williams, 552 F.3d at 939. Specifically, the use of the phrases "healthful and delicious oil" and "health benefits," coupled with comparisons to butter and other cooking oils, may have given Plaintiffs and reasonable consumers the impression the Coconut Oil was a healthier alternative to those other products. It would premature to dismiss Plaintiffs' claims at this point. See Hansen Beverage Co. v. Innovation Ventures, LLC, No. 08-CV-1166-IEG (POR), 2009 WL 6597891, at *7 (S.D. Cal. Dec. 23, 2009) ("At this point in the proceedings, the Court declines to determine whether the statements constitute puffery, because it is a question of fact whether the level of 'buzz' or energy can be scientifically quantified or whether it is a subjective feeling.").
Costco's other arguments to the contrary are unconvincing at this stage. Costco first contends Plaintiffs could not have reasonably relied on the label given the disclosure of the saturated fat content on the label. Mot. at 7. Relatedly, it argues "Plaintiffs do not dispute that they knew that there might be health consequences associated with the consumption of saturated fats." Mot. at 8. Later in its brief, Costco similarly argues "the public is well-aware that there might be issues concerning the consumption of saturated fat and cardiovascular health." Mot. at 18 (citation omitted).
These arguments are all premised on the notion that disclosure of the saturated fat content on the label necessarily means a reasonable consumer could not have been deceived. The Court disagrees. As discussed above, the In re Ferrero Litigation court considered plaintiff's argument that "[defendant] Ferrero misleadingly promotes its Nutella® spread as healthy and beneficial to children when in fact it contains dangerous levels of fat and sugar." Id. at 1110. Thus, even though the fat and sugar levels were presumably provided on the product's label, the court concluded "it would not be impossible for Plaintiffs to prove that a reasonable consumer would be deceived by the statements." Id. at 1115 (citation omitted). Additionally, even if the "label 'cured' the allegedly misleading representation on the []the package, whether the packaging as a whole was deceptive is a question of fact that cannot be resolved on a motion to dismiss." Zakaria v. Gerber Prods. Co., No. LA CV15-00200 JAK (Ex), No. LA CV 15-00200 JAK (Ex), 2015 WL 3827654 (C.D. Cal. June 18, 2015), at *9 (citing Williams, 552 F.3d at 939). Further, Costco does not clearly explain why, at this stage, Plaintiffs would be required to dispute they knew there might be health consequences associated with saturated fats. And finally, as Plaintiffs explain, they are not arguing the label deceived them of the true saturated fat content; rather, "they allege Kirkland Coconut Oil's labeling claims mislead [sic] them into believing the product was healthy notwithstanding its saturated fat content." Opp'n at 5.
Throughout its Motion, Costco confusingly argues Plaintiffs or the FAC do not dispute certain arguments. See, e.g., Mot. at 7 ("[T]he FAC does not dispute that Plaintiffs knew . . . ."); id. at 8 ("Plaintiffs do not dispute that they knew that there might be health consequences associated with the consumption of saturated fats."). However, as Plaintiffs note, "complaints allege facts, they do not 'dispute' unalleged facts.").
Costco next argues "Plaintiffs never explain why they believe any of the statements are false or misleading." Mot. at 9. In support of this argument, Costco relies on Cortina v. Wal-Mart, Case No. 13-cv-2054 BAS (DHB), 2014 U.S. Dist. LEXIS 85941, (S.D. Cal. June 23, 2014) at *12. Id. In that case, plaintiff's "assertion that Defendant's representations [were] false or misleading [was] not supported by the facts in this Complaint." Id. Here, by contrast, Plaintiffs have extensively alleged why they believe the claim that the Coconut Oil is a "healthful and delicious oil" claim is misleading. See, e.g., FAC ¶¶ 13-37. Plaintiffs allege it was misleading to describe the product as "healthful" when the product is unhealthy. See J.M. Smucker Co., 2011 WL 1050637, at *4 (noting a "reasonable consumer could interpret [Defendant's statements] to imply that Defendant's products are healthy, when they allegedly are not"). Along the same lines, Plaintiffs allege it was misleading to convey the impression Coconut Oil is healthier than butter and other cooking oils. See, e.g., FAC ¶ 69. That is all required at this stage. Drawing all inferences in Plaintiffs' favor, the Court finds their allegations to be sufficient.
On page 18 of its Motion, Costco cites to the Carea decision for the proposition that a plaintiff cannot make claims inconsistent with "terms that the FDA has defined or permitted." Mot. at 18 (citing Carea v. Dreyer's Grand Ice Cream, Inc., No. C 10-01044 JSW, 2011 U.S. Dist. LEXIS 6371, at *9). It is unclear to the Court whether Costco is attempting to make a preemption argument because this citation is contained in the "reasonable consumer" section, and because Costco does not provide a legal standard for this claim. Given this lack of clarity, the Court finds it prudent not to consider this issue at this time. If Costco seeks to make a preemption argument, it should do so clearly in future filings.
Costco further argues that because the Coconut Oil has a multitude of uses - including as a skin moisturizer - it is unreasonable for consumers would assume the descriptive terms apply to the coconut's nutritional value. This argument is unpersuasive. First, Plaintiffs expressly allege they "understood the label's health claims to be directed to the product's purported nutritional health benefits, rather than, or at least in addition to relating to other potential uses, such as on skin." Id. ¶ 110. Second, given the label's use of the phrase "healthful and delicious oil," it is not unreasonable to assume consumers would associate the term "healthful" with the use of the product as a food. Third, the Court is required to draw all inferences in Plaintiffs' favor at this stage.
Next, Costco argues "Plaintiffs' FAC repeatedly relies upon articles that fatally undermine Plaintiffs' contention that coconut oil presents any risks in the first place." Mot. at 13. Plaintiffs respond that Costco selectively quotes from the attached articles, and that Costco "incorrectly suggests [it is] plaintiff's burden in this false advertising case to demonstrate a direct cause/effect relationship with scientific certainty." Opp'n at 11 (internal quotation marks omitted). In essence, Costco is asking for inferences to be drawn in its favor; however, the Court is mindful that it must interpret accept well-pleaded allegations as true and draw all inferences in Plaintiffs' favor. After reviewing the attached articles, the Court finds Plaintiffs have adduced some factual support for the proposition that coconut oil might have a deleterious effect on an individual' s health. See, e.g., Request for Judicial Notice Ex. B (Dkt. 27-2) at 10 ("[T]here are peer-reviewed controlled interventional studies on the addition of coconut oil supplementation to one's diet and the resultant effect on a person's blood markers associated with cardiovascular disease. These data indicate a potential increase in risk for heart disease."). That is all that is required at this stage.
In short, the Court "cannot say at this stage that the statements at issue are not deceptive under the reasonable consumer test as a matter of law. Even if they are literally true, a reasonable consumer could interpret to imply that Defendant's products are healthy, when they allegedly are not." J.M. Smucker Co., 2011 WL 1050637, at *4.
Accordingly, the Court DENIES Defendant's Motion to request dismiss Plaintiffs' claims on these grounds.
D. Plaintiffs' UCL Claim
Costco argues Plaintiffs cannot state a claim under the UCL. Mot. at 18. Specifically, Costco argues Plaintiffs have not sufficiently alleged the Coconut Oil label is either "unlawful" or "unfair." Id. at 18-21.
A business act or practice may violate the UCL if it is either unlawful, unfair, or fraudulent. Each of these three adjectives captures a separate and distinct theory of liability." Rubio v. Capital One Bank, 613 F.3d 1195, 1203 (9th Cir. 2010) (citations and internal quotation marks omitted). "Whether a practice is deceptive, fraudulent, or unfair is generally a question of fact which requires consideration and weighing of evidence from both sides and which usually cannot be made on a [motion to dismiss]." Linear Tech. Corp. v. Applied Materials, Inc., 152 Cal. App. 4th 115, 135 (2007) (internal quotation marks omitted).
The FAC alleges Costco's conduct violated the Federal Food, Drug, and Cosmetic Act ("FDCA"), California's Sherman Food, Drug, and Cosmetic Law ("Sherman Law"), the FAL, and the CLRA. FAC ¶ 131. Because the Court finds Plaintiffs have stated valid claims under the FAL and CLRA, the UCL claim also stands. See In re Ferrero Litig., 794 F. Supp. 2d at 1116. "In addition, at this time and giving all inferences to the Plaintiffs, the Court cannot conclude as a matter of law that Ferrero has not violated the FDCA or the Sherman Law." Id. (citations omitted). "Accordingly, Plaintiffs can rely on these statutes in bringing their claim under the 'unlawful' prong of the UCL, and the Court declines to dismiss the claim." Id.
As such, Defendants' Motion to dismiss Plaintiffs' UCL claim is DENIED.
As an alternative argument, Costco asks the Court to "strike (1) any allegations claiming that Kirkland Label contains an 'implied nutrient content claim,' which are demonstrably false; and (2) any claims that the Kirkland Label is 'unfair,' as these claims are duplicative of Plaintiffs' other contentions and/or otherwise unsupported." Mot. at 21. With respect to the "unfair" claim, Costco provides the Court with no authority suggesting it should strike Plaintiffs' claims because they overlap with its unlawful contentions. Further, at this stage, "Plaintiffs have plausibly alleged that the utility of [Costco's] advertising and labeling is outweighed by the harm they have suffered." In re Ferrero Litig., 794 F. Supp. 2d at 1117. Additionally, the Court is confused by Costco's request to "strike" any allegations concerning "implied nutrient content claim." See Fed. R. Civ. P. 12(f) (authorizing courts to strike "any insufficient defense or any redundant, immaterial, impertinent, or scandalous matter"). Costco neither explains to the Court why striking pursuant to Rule 12(f) is appropriate under these circumstances, nor does Costco identify the specific allegations it seeks to strike. If Costco seeks to strike these allegations, it should do so clearly in future filings. --------
E. Plaintiffs' Express Warranty Claim
Costco argues "Plaintiffs' fourth cause of action must be dismissed because the Kirkland Label does not contain any 'specific or unequivocal' warranties on the label, let alone statements that are false." Mot. at 20. Plaintiffs respond the statements on the label are specific and unequivocal, and "can be tested based on the product's nutritional composition." Opp'n at 21.
California Code § 2313 states an express warranty is created by: "(a) Any affirmation of fact or promise made by the seller to the buyer which relates to the goods and becomes part of the basis of the bargain creates an express warranty that the goods shall conform to the affirmation or promise," and "(b) Any description of the goods which is made part of the basis of the bargain creates an express warranty that the goods shall conform to the description."
To successfully claim breach of express warranty, "a plaintiff must prove (1) the seller's statements constitute an 'affirmation of fact or promise' [which relates to the goods] or a 'description of the goods'; (2) the statement was 'part of the basis of the bargain'; and (3) the warranty was breached." Arroyo v. TP-Link USA Corp., No. 5:14-CV-04999-EJD, 2015 WL 5698752, at *10 (N.D. Cal. Sept. 29, 2015) (quoting Yastrab v. Apple Inc., No. 5:14-CV-01974-EJD, 2015 WL 1307163, at *7 (N.D. Cal. Mar. 23, 2015)). "To satisfy the first element, Plaintiff must 'identify a specific and unequivocal written statement' about the product that constitutes an 'explicit guarantee [].'" Id. (quoting In re iPhone 4S Consumer Litigation, 2013 WL 3829653, at *10). The unequivocal terms with which the seller describes its wares must form part of the basis for the bargain. Id.
Here, Costco challenges the first element. See Mot. at 21. At the pleading stage in In re Ferrero Litigation, the court considered whether the phrase "healthy and balanced breakfast" could constitute an express warranty. The court held that "[b]ased on the allegations in the complaint and giving all inferences to Plaintiffs, the challenged statements are sufficiently specific and unequivocal to constitute an affirmati[on] of fact or promise." In re Ferrero Litig., 794 F. Supp. 2d at 1118 (citation omitted). The Court finds the same here. Additionally, the Court is mindful that "[t]he determination as to whether a particular statement is an expression of opinion or an affirmation of a fact is often difficult, and frequently is dependent upon the facts and circumstances existing at the time the statement is made." Keith v. Buchanan, 173 Cal. App. 3d 13, 21 (1985) (citation and internal quotation marks omitted).
Accordingly, Defendant's Motion to dismiss Plaintiffs' express warranty claim is DENIED.
F. Plaintiffs' Implied Warranty Claim
Costco argues Plaintiffs' fifth claim - breach of implied warranty of merchantability - should be dismissed with prejudice "because Plaintiffs do not and cannot lead the coconut oil they purchased could not be consumed or used to assist with cooking." Mot. at 22. Boswell and Salazar-Navarro argue "Costco incorrectly assumes plaintiffs challenge Kirkland Coconut Oil's fitness for internal purpose" when in reality they are "bringing their claim under a different definition of merchantability." Opp'n at 22 (citations and internal quotation marks omitted).
California Code § 2314(1) provides, "a warranty that the goods shall be merchantable is implied in a contract for their sale." The California Supreme Court has explained that "[m]erchantability has several meanings, two of which are relevant to the instant case: the product must '[conform] to the promises or affirmations of fact made on the container or label,' and must be 'fit for the ordinary purposes for which such goods are used.'" Hauter v. Zogarts, 14 Cal. 3d 104, 118 (1975) (citing Cal. Com. Code § 2135(2)(c)(f)).
"Although [Costco] argues that [the Coconut Oil] is fit for ordinary purpose of consumption, Plaintiffs are bringing their claim under a different definition of merchantability, whether the product conforms with 'the promises or affirmations of fact made on the container or label.'" See In re Ferrero Litig., 794 F. Supp. 2d at 1118 (citing Cal. Com. Code § 2314(2)(f)).
Accordingly, Defendant's Motion to dismiss Plaintiffs' implied warranty claim is DENIED.
G. Plaintiffs' Request for Injunctive Relief
Finally, Costco asks the Court to strike Plaintiffs' relief for injunctive relief, arguing they do not have standing to seek such relief. Mot. at 22. Plaintiffs respond their substantive rights continue to be violated; they have class standing; and the Court should exercise supplemental jurisdiction over Plaintiffs' injunctive relief claims. Mot. at 22-25.
A plaintiff must satisfy three requirements to have standing for injunctive relief in federal court: (1) an injury in fact that is both (a) concrete and particularized, and (b) actual or imminent; (2) a causal connection between the conduct complained of and the injury; and (3) a favorable decision would likely redress the injury. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992).
Here, the Court declines to strike Plaintiffs' request for injunctive relief. As the Henderson v. Gruma Corporation court articulated,
If the Court were to construe Article III standing for FAL and UCL claims as narrowly as the Defendant advocates, federal courts would be precluded from enjoining false advertising under California consumer protection laws because a plaintiff who had been injured
would always be deemed to avoid the cause of the injury thereafter ("once bitten, twice shy") and would never have Article III standing.Henderson, 2011 WL 1362188, at *7. Thus, the Court finds Plaintiffs need not allege they are willing to subject themselves to future injury to seek injunctive relief on behalf of a class. Shahinian v. Kimberly-Clerk Corp., Case No. CV 14-8390 DMG (SHx), 2015 WL 4264638, at *4 (C.D. Cal. July 10, 2015).
Additionally, the Court notes "there is a likelihood of repeat injury for the class as a whole since some class members do not have the same knowledge" as Plaintiffs. Id. at *5.
Based on the above, the Court concludes Plaintiffs have sufficiently alleged standing to seek injunctive relief. As such, Defendant' Motion to strike Plaintiffs' request for injunctive relief is DENIED.
V. Disposition
For the foregoing reasons, the Court DENIES Defendant's Motion in its entirety.
The Clerk shall serve this minute order on the parties.
Initials of Deputy Clerk: djg MINUTES FORM 11
CIVIL-GEN