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Kane v. Chobani, Inc.

United States District Court, N.D. California, San Jose Division

February 20, 2014

KATIE KANE, et al., individuals, on behalf of themselves and all others similarly situated, Plaintiffs,
v.
CHOBANI, INC., Defendant

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[Copyrighted Material Omitted]

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For Katie Kane, individually and on behalf of all others similarly situated, Plaintiff: Ben F. Pierce Gore, LEAD ATTORNEY, Pratt & Associates, San Jose, CA; Colin Harvey Dunn, Robert Anthony Clifford, LEAD ATTORNEYS, Clifford Law Offices, P.C., Chicago, IL; Darren Lee Brown, LEAD ATTORNEY, PRO HAC VICE, Beaumont, TX; Keith M. Fleischman, LEAD ATTORNEY, PRO HAC VICE, The Fleischman Law Firm, New York, NY; Michael Sean Krzak, LEAD ATTORNEY, Clifford Law Offices, Chicago, IL; Don Barrett, PRO HAC VICE, Barrett Law Group, Lexington, MS.

For Darla Booth, Arianna Rosales, Plaintiffs: Colin Harvey Dunn, Robert Anthony Clifford, LEAD ATTORNEYS, Clifford Law Offices, P.C., Chicago, IL; Darren Lee Brown, LEAD ATTORNEY, Beaumont, TX; Keith M. Fleischman, LEAD ATTORNEY, PRO HAC VICE, The Fleischman Law Firm, New York, NY; Michael Sean Krzak, LEAD ATTORNEY, Clifford Law Offices, Chicago, IL; Don Barrett, PRO HAC VICE, Barrett Law Group, Lexington, MS; Ben F. Pierce Gore, Pratt & Associates, San Jose, CA.

For Chobani, Inc, formerly known as Agro-Farma, Inc, Defendant: Dale Joseph Giali, LEAD ATTORNEY, Andrew Zachary Edelstein, Barrett Lee Schreiner, Michael Langer Resch, Steven Edward Rich, Mayer Brown LLP, Los Angeles, CA.

OPINION

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ORDER GRANTING DEFENDANT'S MOTION TO DISMISS PLAINTIFFS' THIRD AMENDED COMPLAINT WITH PREJUDICE

LUCY H. KOH, United States District Judge.

Before the Court is Defendant Chobani, Inc.'s (" Defendant" or " Chobani" ) Motion to Dismiss Plaintiffs' Third Amended Complaint. ECF No. 158. Plaintiffs Katie Kane, Arianna Rosales, and Darla Booth (collectively " Plaintiffs" ) oppose the motion, ECF No. 160. Defendant has replied. ECF No. 161. Having considered the submissions of the parties, the relevant law, and the record in this case, the Court GRANTS Defendant's Motion to Dismiss the Third Amended Complaint with prejudice.

I. BACKGROUND

A. Plaintiffs' Factual Allegations

Plaintiffs allege that they purchased Defendant's yogurt products. ECF No. 154, ¶ 2 (Third Amended Complaint, hereinafter " TAC" ). Specifically, Plaintiffs allege that they purchased the pomegranate, lemon, peach, vanilla, strawberry, and blueberry flavors of Defendant's Chobani Greek Yogurt. TAC ¶ 2. Plaintiffs contend that Defendant's " Chobani Greek Yogurt" and " Chobani Greek Yogurt Champions" (collectively, " Yogurts" ) are mislabeled. TAC ¶ ¶ 3-5. Plaintiffs do not allege that they purchased any flavor of Chobani Greek Yogurt Champions.[1] Plaintiffs' mislabeling allegations fall into two categories:

Evaporated Cane Juice (" ECJ" ) Allegations - Plaintiffs allege that Defendant's labels refer to the sweetener in Defendant's Yogurts as " evaporated cane juice" (" ECJ" ). TAC ¶ 19. Plaintiffs contend that ECJ is essentially just " sugar" or " dried cane syrup." TAC ¶ ¶ 26-27. Plaintiffs allege that the use of the term ECJ to describe this ingredient is false and misleading and conceals the fact that

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the sweetening ingredient is " sugar" or " dried cane syrup." TAC ¶ ¶ 54-60. Plaintiffs further allege that Defendant's use of the term ECJ violates various Food and Drug Administration (" FDA" ) regulations requiring manufacturers to refer to ingredients in food products by their " common and usual names." TAC ¶ 71 (citing 21 C.F.R. § § 101.3, 101.4, 102.5); id. ¶ 61 (FDA Draft Guidance for Industry: Ingredients Declared as Evaporated Cane Juice) (stating that it is the " FDA's view that the term 'evaporated cane juice' is not the common or usual name of any type of sweetener" ). Plaintiffs further allege that because the Standard of Identity for Yogurt, which governs when a product may be called a " yogurt," does not list ECJ as an authorized sweetener, Defendant was prohibited fro marketing its products as yogurt. TAC ¶ ¶ 136-137 (citing 21 C.F.R. § 131.200 (" Standard of Identity for Yogurt" )). To the extent Plaintiffs' claims are based on Defendant's use of the term ECJ on the Yogurts' labeling, the Court refers to these claims generally as the " ECJ Claims."

All Natural Claims - Plaintiffs also allege that Defendant has falsely stated that its Yogurts contain " [o]nly natural ingredients" and are " all natural." TAC ¶ ¶ 5, 9. The Court refers to Defendant's representations regarding the Yogurts' natural quality and use of natural ingredients as the " All Natural Representations." Plaintiffs allege that these representations appeared on the labeling for Defendant's Yogurts and on Defendant's website. TAC ¶ 22. Plaintiffs allege that these representations were false and misleading because the Yogurts include artificial colors. TAC ¶ 140. Because " fruit and vegetable juice (for color)" and " turmeric (for color)" are the only unnatural ingredients that Plaintiffs have specifically identified from Defendant's labels, see id. ¶ ¶ 149, 167, Plaintiffs' claims alleging that the Yogurts included unnatural ingredients are limited to these ingredients. Plaintiffs further allege that the All Natural Representations were " false and misleading" because " the fruit and vegetable juices . . . were highly processed unnatural substances far removed from the fruits or vegetables they were supposedly derived from and in fact were more akin to synthetic dyes like coal tar dyes." TAC ¶ 161. The Court refers to Plaintiffs' claims based on the All Natural Representations as the " All Natural Claims."

Plaintiffs allege that they each " read the labels on Defendant's [Yogurts], including the [i]ngredient, 'evaporated cane juice' and the '[a]ll [n]atural,' '[a]ll [n]atural [i]ngredients' and/or '[o]nly [n]atural [i]ngredients' claims on the labels, before purchasing them." TAC ¶ ¶ 187, 189, 191. Plaintiffs allege that they " believed Defendant's [Yogurts] contained only natural sugars from milk and fruit and did not contain added sugars or syrups" and that the Yogurts " contained only natural ingredients." Id. Plaintiffs also allege that, " [h]ad Plaintiff[s] known Defendant's [Yogurts] that [they] purchased contained added sugar or syrup and unnatural and artificial ingredients, [they] would not have purchased" them. Id. Plaintiffs further allege that they " would not have purchased Defendant's [Yogurts] had they known they were not capable of being legally sold or held." TAC ¶ 195.

Plaintiffs allege six causes of action. Plaintiffs' first cause of action is for violation of the unlawful prong of the Unfair Competition Law (" UCL" ), Cal. Bus. & Prof. Code § § 17200 et seq., predicated on violations of: (1) the False Advertising Law (" FAL" ), Cal. Bus. & Prof. Code § § 17500 et seq. ; (2) the Consumer Legal Remedies Act (" CLRA" ), Cal. Civ. Code § § 1750 et seq. ; and (3) California's Sherman Food, Drug, and Cosmetic Act

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(" Sherman Law" ), Cal. Health & Safety Code § § 109875 et seq. TAC ¶ ¶ 213-215. The Sherman Law incorporates " [a]ll [federal] food labeling regulations and any amendments to those regulations." Cal. Health & Safety Code § 110100(a). Plaintiffs also allege causes of action for: (1) violation of the UCL's unfair prong, TAC ¶ ¶ 220-228; (2) violation of the UCL's fraud prong, TAC ¶ ¶ 229-235; (3) violation of the FAL because Defendant's labeling and advertising are " misleading and deceptive," TAC ¶ ¶ 236-243; (4) violation of the FAL because Defendant's advertising is " untrue," TAC ¶ ¶ 244-251; and (5) violation of the CLRA, TAC ¶ ¶ 252-264.

B. Procedural History

1. Plaintiff's Amendment of Complaints

Plaintiffs filed their original Complaint in this case on May 14, 2012. ECF No. 1. On August 3, 2012, the parties stipulated that Plaintiffs would file a First Amended Complaint. ECF No. 12. Plaintiffs filed their First Amended Complaint on August 30, 2012. ECF No. 14. On October 2, 2012, the Court granted the parties' stipulation to allow Plaintiffs to file a Second Amended Complaint (" SAC" ). ECF No. 34. Plaintiffs filed their SAC on October 10, 2012. ECF No. 35. Plaintiffs filed their Third Amended Complaint (" TAC" ) on October 10, 2013. ECF No. 154.

2. Plaintiffs' Motion for a Preliminary Injunction

On September 10, 2012, Plaintiffs filed a Motion for a Preliminary Injunction. ECF No. 16. Plaintiffs withdrew this motion on November 1, 2012. ECF No. 37. Three months later, on February 5, 2013, Plaintiffs filed another Motion for a Preliminary Injunction. ECF No. 44. Plaintiffs sought to: (1) enjoin Defendant " from selling, advertising or distributing Chobani Greek Yogurt Products as currently labeled and formulated," and (2) require Defendant " to remove and recall all Chobani Greek Yogurt products, as currently labeled and formulated, from its distributors and retailers." ECF No. 44-25 at 1. On April 15, 2013, Defendant filed an Opposition. ECF No. 86. On June 14, 2013, Plaintiffs filed a Reply. ECF No. 103. The Court held a hearing on the motion on July 11, 2013. ECF No. 127. The Court issued an Order denying the motion on July 15, 2013. ECF No. 126.

3. Defendant's Motion to Disqualify Plaintiffs' Counsel and Expert

On March 5, 2013, Defendant filed a motion to: (1) Disqualify Plaintiffs' Counsel; (2) Bar Plaintiffs' Counsel from Discussing Issues in this Case with Replacement Counsel; and (3) Bar EAS Consulting Group LLC from Discussing Issues in this Case with Plaintiffs' Counsel or Replacement Counsel. ECF No. 64. On April 15, 2013, Plaintiffs' Counsel filed an Opposition. ECF No. 84. On June 14, 2013, Chobani filed a Reply. ECF No. 110. A hearing was held on the motion on July 25, 2013. ECF No. 143. On July 29, 2013, Plaintiffs filed a Motion to Stay Decision on the Motion to Disqualify and for Leave to Conduct Discovery. ECF No. 133. On July 30, 2013, counsel for Chobani sent an e-mail to the Courtroom Deputy, objecting to the Motion to Stay, and on July 31, 2013, Plaintiffs' Counsel sent a reply by e-mail to the Courtroom Deputy. On August 1, 2013, Plaintiffs' Counsel filed a Notice of Withdrawal of the Motion to Stay. ECF No. 139. Also on August 1, 2013, Plaintiffs filed another Motion to Stay Decision and for Leave to Conduct Discovery. ECF No. 140. On August 2, 2013, the Court issued an Order granting in part and denying in part Chobani's Motion to Disqualify, and denying as

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moot Plaintiffs' Second Motion to Stay. ECF No. 141.

4. Defendants' Motions to Dismiss

The Court held a hearing on Defendant's Motion to Dismiss the SAC on March 28, 2013. ECF No. 79. On July 12, 2013, this Court issued an Order granting in part and denying in part Defendant's Motion to Dismiss the SAC. ECF No. 125 (" July 12 Order" ). Defendant filed a Motion for Leave to file a Motion for Reconsideration of that Order on July 22, 2013. ECF No. 128. Following a Case Management Conference on July 25, 2013, at which the parties addressed Defendant's pending Motion for Leave to file a Motion for Reconsideration and stipulated to allowing Defendant to file a Motion for Reconsideration limited to " (1) the Court's characterization of Plaintiffs' ECJ theory, and (2) whether the doctrine of primary jurisdiction should apply to preclude Plaintiffs' ECJ claims," the Court granted Defendant's Motion for Leave and VACATED the July 12 Order. ECF No. 131, at 1-2. Plaintiffs thereafter filed a Motion for Leave to file their own Motion for Reconsideration, ECF No. 137, which the Court denied on August 14, 2013, ECF No. 144.

Defendant filed its Motion to Reconsider the July 12 Order on Defendant's Motion to Dismiss the SAC on August 21, 2013. ECF No. 146. The Court granted the Motion for Reconsideration and dismissed the SAC on September 19, 2013. ECF No. 153 (" September 19 Order" ). However, the Court granted Plaintiffs leave to amend the pleading deficiencies with ...


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