United States District Court, N.D. California
ORDER GRANTING DEFENDANT'S MOTION TO DISMISS
WILLIAM H. ORRICK, District Judge.
Plaintiffs Mary Swearingen and Robert Figy allege that defendant Amazon Preservation Partners, Inc., d/b/a Zola ACAI ("Zola or "defendant"), uses the term evaporated cane juice on its beverages, instead of sugar, in violation of the California Unfair Competition Law ("UCL") and Consumer Legal Remedies Act ("CLRA"). Because the plaintiffs have not pleaded that they actually relied on the alleged misrepresentation, a standing requirement under the UCL and the CLRA, I GRANT Zola's motion to dismiss WITHOUT PREJUDICE.
The plaintiffs purchased Zola's Açai with Pomegranate juice. Compl. ¶ 5 [Dkt. No. 1], Exhs. 1-3. They allege that Zola lists Organic Evaporated Cane Juice as an ingredient in Açai with Pomegranate in violation of Food and Drug Administration ("FDA") regulations and California's Sherman Law, which require that evaporated cane juice be identified as sugar. They assert that Zola uses the term evaporated cane juice ("ECJ") rather than sugar "to make its products appear healthier than a product that contains sugar' as an ingredient." Compl. ¶ 14.
The plaintiffs do not contend that they purchased Açai with Pomegranate in reliance on the alleged misrepresentation that ECJ is not sugar, or that they would not have purchased it if they knew that it contained sugar. Rather, they state that they "would not have bought the misbranded food product if Defendant had disclosed the material fact that the misbranded food product was illegal to sell and possess." Compl. ¶ 52. The plaintiffs allege violations of the unlawful prong of UCL,  Cal. Bus. & Prof. Code § 17200, and of the CLRA, Cal. Civ. Code § 1750, et seq. based on Zola's allegedly illegal use of the term ECJ.
According to the plaintiffs, three other Zola products, which the plaintiffs have not purchased, have the same illegal labels: Açai Original Juice, Açai with Blueberry, and Coconut Water Espresso. Compl. ¶ 15, Exhs 4-6. The plaintiffs seek to represent a class of all persons in the United States who purchased Açai with Pomegranate, Açai Original Juice, Açai with Blueberry, or Coconut Water Espresso from September 23, 2009 to the present. Compl. ¶¶ 4, 53.
Zola has moved to dismiss, arguing that (i) the plaintiffs lack of standing because they do not allege causation or reliance; (ii) the plaintiffs lack standing because they do not allege a cognizable legal injury; (iii) the plaintiffs' claims should be dismissed under the primary jurisdiction doctrine; (iv) the plaintiffs' claims are partially preempted; and (v) the plaintiffs have not pleaded their claims with the requisite particularity.
I. THE PLAINTIFFS HAVE NOT PLEADED ACTUAL RELIANCE AND THEREFORE LACK STANDING TO BRING THEIR UCL AND CLRA CLAIMS.
A. The UCL claim
In Kwikset Corp. v. Superior Court, 51 Cal.4th 310 (2011), the California Supreme Court held that actual reliance is required under the UCL where a plaintiff alleges misrepresentations on product labels. This actual reliance requirement "applies equally to the unlawful' prong of the UCL when... the predicate unlawfulness is misrepresentation and deception. Id. at 327 n.9.
The plaintiffs attempt to avoid the reach of Kwikset by framing their claims as grounded purely in statutory and regulatory labeling violations rather than in misrepresentations. The plaintiffs assert that
The unlawful sale of misbranded food products that are illegal to sell or possess-standing alone without any allegations of deception by Defendant other than the implicit misrepresentation that its products are legal to sell or possess, or any review of or reliance on the particular labeling claims by Plaintiffs-gives rise to Plaintiffs' cause of action under the UCL and the CLRA. In short, Defendant's injury causing unlawful conduct is the only necessary element needed for UCL liability. All Plaintiffs need to show is that they bought an unlawful product that they would not have otherwise purchased absent the Defendant's failure to disclose the material fact that the product was unlawful to ...