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Amanda Sateriale v. R.J. Reynolds Tobacco

July 13, 2012

AMANDA SATERIALE; JEFFREY FEINMAN; PAMELA BURNS; DONALD WILSON; PATRICK GRIFFITHS; JACKIE WARREN; HEATHER POLESE; RICHARD HOLTER; DAN POLESE; FRED JAVAHERI, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, PLAINTIFFS-APPELLANTS,
v.
R.J. REYNOLDS TOBACCO COMPANY, DEFENDANT-APPELLEE.



Appeal from the United States District Court for the Central District of California Christina A. Snyder, District Judge, Presiding D.C. No. 2:09-cv-08394-CAS-SS

The opinion of the court was delivered by: Fisher, Circuit Judge:

FOR PUBLICATION

OPINION

Argued and Submitted May 7, 2012-Pasadena, California

Before: John T. Noonan, Jr., and Raymond C. Fisher, Circuit Judges, and Kimberly J. Mueller, District Judge.*fn1

Opinion by Judge Fisher

OPINION

R.J. Reynolds Tobacco Company (RJR) operated a customer rewards program, called Camel Cash, from 1991 to 2007. Under the terms of the program, RJR urged consumers to purchase Camel cigarettes, to save Camel Cash certificates included in packages of Camel cigarettes, to enroll in the program and, ultimately, to redeem their certificates for merchandise featured in catalogs distributed by RJR. The plaintiffs allege that, in reliance on RJR's actions, they purchased Camel cigarettes, enrolled in the program and saved their certificates for future redemption. They allege that in 2006 RJR abruptly ceased accepting certificates for redemption, making the plaintiffs' unredeemed certificates worthless. The plaintiffs brought this action for breach of contract, promissory estoppel and violation of two California consumer protection laws. The district court dismissed the action for failure to state a claim. We affirm in part, reverse in part and remand. We hold that the plaintiffs have adequately alleged claims for breach of contract and promissory estoppel, but affirm dismissal of the plaintiffs' claims under the Unfair Competition Law and the Consumer Legal Remedies Act.

I. BACKGROUND

The plaintiffs appeal from a dismissal for failure to state a claim. See Fed. R. Civ. P. 12(b)(6). For purposes of a motion to dismiss, we accept all well-pleaded allegations of material fact as true and construe them in the light most favorable to the nonmoving party. See Daniels-Hall v. Nat'l Educ. Ass'n, 629 F.3d 992, 998 (9th Cir. 2010). We thus recite the facts as they appear in the plaintiffs' third amended complaint. This factual background is based on the allegations of the plaintiffs' complaint. Whether the plaintiffs' allegations are true has not been decided.

RJR initiated the Camel Cash customer loyalty program in 1991. Compl. ¶ 24. RJR represented on Camel Cash certificates, packages of Camel cigarettes and in the media that customers who saved the certificates - called C-Notes - could exchange them for merchandise according to terms provided in a catalog. Id. The C-Notes stated:

USE THIS NEW C-NOTE AND THE C-NOTES YOU'VE BEEN SAVING TO GET THE BEST GOODS CAMEL HAS TO OFFER. CALL 1-800-CAMEL CASH (1800-266-3522) for a free catalog. Offer restricted to smokers 21 years of age or older. Value 1/1000 of 1ó. Offer good only in the USA, and void where restricted or prohibited by law. Check catalog for expiration date. Limit 5 requests for a catalog per household.

Id. ¶ 26. According to the complaint, "Certain (but not all) of the Camel Cash catalogs state[d] that Reynolds could terminate the Camel Cash program without notice." Id. ¶ 32.

The plaintiffs are 10 individuals who joined the Camel Cash program by purchasing RJR's products and filling out and submitting signed registration forms to RJR. Id. ¶¶ 27, 48. RJR sent each plaintiff a unique enrollment number that was used in communications between the parties. Id. ¶ 27. These communications included catalogs RJR distributed to the plaintiffs containing merchandise that could be obtained by redeeming Camel Cash certificates. Id.

From time to time, RJR issued a new catalog with merchandise offered in exchange for Camel Cash, either upon request, or by mailing catalogs to consumers enrolled in the program. Id. ¶ 28. The number of Camel Cash certificates needed to obtain merchandise varied from as little as 100 to many thousands. Id. ¶ 29. This encouraged consumers to buy more packages of cigarettes together with Camel Cash and also to save or obtain Camel Cash certificates to redeem them for more valuable items. Id.

RJR honored the program from 1991 to 2006, and during that time Camel's share of the cigarette market nearly doubled, from approximately 4 percent to more than 7 percent. Id.

¶¶ 3, 34. In October 2006, however, RJR mailed a notice to program members announcing that the program would terminate as of March 31, 2007. Id. ¶ 32. The termination notice stated:

As a loyal Camel smoker, we [sic] wanted to tell you our Camel Cash program is expiring. C-Notes will no longer be included on packs, which means whatever Camel Cash you have is among the last of its kind.

Now this isn't happening overnight - there'll be plenty of time to redeem your C-Notes before the program ends. In fact, you'll have from OCTOBER '06 though MARCH '07 to go to camelsmokes.com to redeem your C-Notes. Supplies will be limited, so it won't hurt to get there before the rush.

Id. ¶ 33 & ex. A.

The announcement advised members that they could continue to redeem their C-Notes until March 2007. Beginning in October 2006, however, RJR allegedly stopped printing and issuing catalogs and told consumers that it did not have any merchandise available for redemption. Id. ¶¶ 34, 48. Several of the plaintiffs attempted, without success, to redeem C-Notes or obtain a catalog during the final six months of the program. Id. ¶ 49. The plaintiffs had saved hundreds or thousands of Camel Cash certificates that they were unable to redeem. Id. ¶ 11.

In November 2009, the plaintiffs filed a class action complaint against RJR. They allege breach of contract, promissory estoppel and violations of two California consumer protection laws, the Unfair Competition Law (UCL), Cal. Bus. & Prof. Code § 17200 et seq., and the Consumer Legal Remedies Act (CLRA), Cal. Civ. Code § 1750 et seq. The district court dismissed the action under Rule 12(b)(6), and the plaintiffs timely appealed.

II. JURISDICTION AND STANDARD OF REVIEW

We have jurisdiction under 28 U.S.C. ยง 1291. We review de novo a district court's order granting a Rule 12(b)(6) motion to dismiss. See Cook v. Brewer, 637 F.3d 1002, 1004 (9th Cir. 2011). To survive a motion to dismiss, a complaint must contain sufficient factual matter to "state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)) (internal quotation marks omitted)). "We accept as true all well-pleaded allegations of material fact, and construe them in the light ...


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