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Wilson v. Frito-Lay North America, Inc.

United States District Court, N.D. California

October 24, 2013

MARKUS WILSON and DOUG CAMPEN, individually and on behalf of all others similarly situated, Plaintiffs,
v.
FRITO-LAY NORTH AMERICA, INC., Defendant

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[Copyrighted Material Omitted]

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For Markus Wilson, Doug Campen, individually and on behalf of all others similarly situated, Plaintiffs: Ben F. Pierce Gore, LEAD ATTORNEY, Pratt & Associates, San Jose, CA; David Malcolm McMullan, Jr., Don Barrett, P.A., Lexington, MS; Dewitt Marshall Lovelace, Sr., Lovelace Law Firm, P.A., Miramar Beach, FL.

For Frito-Lay North America, Inc., Defendant: Christopher Chorba, LEAD ATTORNEY, Gibson, Dunn & Crutcher LLP, Los Angeles, CA; Andrew Santo Tulumello, Gibson Dunn & Crutcher LLP, Washington, DC; Geoffrey M. Sigler, Jason Robert Meltzer, PRO HAC VICE, Gibson Dunn Crutcher LLP, Washington, DC; Jenna Musselman Yott, Gibson Dunn and Crutcher, San Francisco, CA.

OPINION

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SAMUEL CONTI, UNITED STATES DISTRICT JUDGE.

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO DISMISS PLAINTIFFS' SECOND AMENDED COMPLAINT

I. INTRODUCTION

Now before the Court is Defendant Frito-Lay North America, Inc.'s (" Defendant" ) motion to dismiss Plaintiffs Markus Wilson and Doug Campen's (" Plaintiffs" ) second amended complaint. ECF Nos. 47 (" SAC" ), 59 (" MTD" ). The motion is fully briefed, ECF Nos. 64 (" Opp'n" ), 68 (" Reply" ), and suitable for decision without oral argument, Civ. L.R. 7-1(b). For the reasons explained below, the Court GRANTS in part and DENIES in part Defendant's motion.

II. BACKGROUND

A. Factual Background

The parties are familiar with this case's basic facts, as summarized below. Defendant makes snack food products, including " Lay's Classic Potato Chips," " Lay's Classic Potato Chips," " Lay's Honey Barbeque Potato Chips," " Lay's Kettle Cooked Mesquite BBQ Potato Chips," " Cheetos Puffs," and " Fritos Original Corn Chips" (collectively the " Purchased Products" ). Plaintiffs bought the Purchased Products, and claim to have been misled by their labels, between March 29, 2008 and March 29, 2012 (the " Class Period" ). In their SAC, they also bring claims on behalf of a putative class of people in California and elsewhere who bought a variety of Defendant's other Products that the named Plaintiffs did not buy. [1]

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Plaintiffs allege that Defendant's marketing of the Products is misleading because: (1) some Products are labeled " All Natural" despite containing artificial or unnatural ingredients, flavoring, coloring, or preservatives; (2) some Products are labeled as containing " 0 Grams Trans Fat" despite having total fat levels that render such a claim misleading; (3) some Products contain MSG but are labeled as having " No MSG" ; and (4) Defendant's website, whose address appears on some Products' labels, is a " label" subject to FDA regulations, and it makes claims about the Products that are misleading and unlawful.

Plaintiffs claim that they care about buying healthy foods, e.g., foods with artificial ingredients or high levels of fat, and that they would not have bought any of the Products if they knew that Defendant's claims about such ingredients were not true. See, e.g., SAC ¶ ¶ 46-47, 60, 64-65, 80, 82, 86-87, 104, 128, 141, 154.

B. Procedural Background

In their FAC, Plaintiffs asserted nine causes of action against Defendant: (1-3) violations of the " unlawful," " unfair," and " fraudulent" prongs of California's Unfair Competition Law's (" UCL" ), Cal. Bus. & Prof. Code § 17200, et seq.; (4-5) violations of the " misleading and deceptive" and " untrue" prongs of California's False Advertising Law (" FAL" ), Cal. Bus. & Prof. Code § 17500, et seq.; (6) violations of California's Consumers Legal Remedies Act (" CLRA" ), Cal. Civ. Code § 1750, et seq.; (7) restitution based on unjust enrichment or quasi-contract; (8) breach of warranty under California's Song-Beverly Act, Cal. Civ. Code § 1790, et seq.; and (9) breach of warranty under the federal Magnuson-Moss Act, 15 U.S.C. § 2301, et seq.

Defendant moved to dismiss the FAC. The Court granted Defendant's motion in part and denied it in part, dismissing Plaintiffs' breach of warranty claim with prejudice but granting Plaintiffs leave to amend their other claims. ECF No. 46 (" Apr. 1 Order" ) at 31-32. Specifically, the Court allowed Plaintiffs to plead more specific facts about the Non-Purchased Products and about how Defendant's website could constitute " labeling" such that claims asserted on it could predicate Plaintiffs' various causes of action.

In their SAC, Plaintiffs include more facts about the Non-Purchased Products and Defendant's website. With their breach of warranty claim having been dismissed with prejudice, and with Plaintiffs having chosen not to re-plead their restitution claim, the only causes of action remaining in the case are Plaintiffs' UCL, FAL, and CLRA claims. The SAC elaborates on Plaintiffs' theories for their UCL, FAL, and CLRA claims, and also alleges new violations based on the Non-Purchased Products. Defendant now moves to dismiss the SAC.

III. LEGAL STANDARD

A. Motions to Dismiss

A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) " tests the legal sufficiency of a claim." Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). " Dismissal can be based on the lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory." Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1988). " When there are well-pleaded factual allegations,

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a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief." Ashcroft v. Iqbal, 556 U.S. 662, 679, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). However, " the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions. Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id. (citing Bell A. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). The court's review is generally " limited to the complaint, materials incorporated into the complaint by reference, and matters of which the court may take judicial notice." Metzler Inv. GMBH v. Corinthian Colls., Inc., 540 F.3d 1049, 1061 (9th Cir. 2008) (citing Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322, 127 S.Ct. 2499, 168 L.Ed.2d 179 (2007)).

B. Rule 9(b)

Claims sounding in fraud are subject to the heightened pleading requirements of Federal Rule of Civil Procedure 9(b), which requires that a plaintiff alleging fraud " must state with particularity the circumstances constituting fraud." See Kearns v. Ford Motor Co., 567 F. 3d 1120, 1124 (9th Cir. 2009). " To satisfy Rule 9(b), a pleading must identify the who, what, when, where, and how of the misconduct charged, as well as what is false or misleading about [the purportedly fraudulent] statement, and why it is false." United States ex rel Cafasso v. Gen. Dynamics C4 Sys., Inc., 637 F.3d 1047, 1055 (9th Cir. 2011) (internal quotation marks and citations omitted).

C. Leave to Amend

Under Federal Rule of Civil Procedure 15(a), leave to amend " should be freely granted when justice so requires," bearing in mind that " the underlying purpose of Rule 15 . . . [is] to facilitate decision[s] on the merits, rather than on the pleadings or technicalities." Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000) (en banc) (internal citations, quotation marks, and alterations omitted). However, a court " may exercise its discretion to deny leave to amend due to 'undue delay, bad faith or dilatory motive on [the] part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party . . ., [and] futility of amendment.'" Carvalho v. Equifax Info. Servs., LLC, 629 F.3d 876, 892-93 (9th Cir. 2010) (quoting Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 9 L.Ed.2d 222 (1962)) (alterations in original).

" [W]here the plaintiff has previously been granted leave to amend and has subsequently failed to add the requisite particularity to its claims, the district court's discretion to deny leave to amend is particularly broad." Zucco Partners, LLC v. Digimarc Corp., 552 F.3d 981, 1007 (9th Cir. 2009) (internal quotations, citations, and alterations omitted). Indeed, repeated failure to cure a complaint's deficiencies by previous amendment is reason enough to deny leave to amend. Abagninin v. AMVAC Chem. Corp., 545 F.3d 733, 742 (9th Cir. 2008) (citing Foman, 371 U.S. at 182); Allen v. City of Beverly Hills, 911 F.2d 367, 373 (9th Cir. 1990)).

IV. DISCUSSION

A. The Statutory Framework


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