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Thomas v. Costco Wholsale Corporation

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

March 31, 2014

KAREN THOMAS and LISA LIDDLE, individually and on behalf of all others similarly situated Plaintiffs,
v.
COSTCO WHOLSALE CORPORATION, Defendant.

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO DISMISS [Re: Docket No. 70]

EDWARD J. DAVILA, District Judge.

Presently before the Court is Defendant Costco Wholesale Corporation's ("Costco" or "Defendant") Motion to Dismiss and Strike Plaintiffs' Second Amended Class Action Complaint ("SAC"). Dkt. No. 70. Plaintiffs Karen Thomas ("Thomas") and Lisa Liddle ("Liddle") filed this putative class action against Defendant alleging that several of Defendant's food products have been improperly labeled so as to amount to misbranding and deception in violation of several California and federal laws.

Per Civ. L.R. 7-1(b), the motion was taken under submission without oral argument. Having fully reviewed the parties' papers, the Court grants in part and denies in part Defendant's motion to dismiss for the reasons explained below.

I. BACKGROUND

Plaintiffs filed their original Complaint in this case on June 5, 2012. Dkt. No. 1. On September 28, 2012, Plaintiffs filed the Amended Class Action Complaint on behalf of themselves and a putative class of all persons in the United States who have purchased the same or similar products or other of Defendant's food products that were allegedly mislabeled. Dkt. No. 24. Plaintiffs' First Amended Complaint was dismissed by this Court on April 9, 2013 based on Plaintiff Thomas' lack of standing and failure to comply with Rule 9. Dkt. No. 58.

Plaintiffs filed their SAC on April 24, 2013. Dkt. No. 60. Defendant filed a Motion to Dismiss on June 6, 2013 and an Amended Motion to Dismiss and Strike on July 26, 2013. Dkt. No. 68 and Dkt. No. 70.

Plaintiffs are two California consumers who purchased a variety of Defendant's food products from June 5, 2008. Plaintiff Thomas alleges that she purchased Defendant's Kirkland Signature Kettle Chips. Dkt. No. 60 ¶ 22. Plaintiff Liddle alleges that she purchased Defendant's products including Kirkland Signature Cashew Clusters with Almonds and Pumpkin Seeds, Kirkland Signature Whole Dried Blueberries, Kirkland Signature Newman's Own 100% Grape Juice, Kirkland Signature Organic Chocolate Reduced Fat Milk, Kirkland Signature Bolthouse Farms Organic 100% Carrot Juice, Kirkland Signature Real Sliced Fruit (Fuji Apple, Strawberry Banana, and Fuji Apple with Cinnamon), Kirkland Signature Nature's Path Organic Ancient Grains Granola with Almonds, and Kirkland Signature Canola Oil Cooking Spray. Id . ¶ 23.

Plaintiffs argue that the following representations on the packaging of these and other of Defendant's food products were unlawful and/or misleading: (1) nutrient content claims; (2) claims about antioxidant content; (3) "no sugar added" claims; (4) health claims; (5) "0 grams trans fat" or "no trans fat" claims; (6) "evaporated cane juice" ("ECJ") claims; (7) synthetic chemical content omissions; (8) "preservative free" claims and omissions about preservative content; and (9) slack-filled packaging. Id . ¶¶ 55-200. They also allege that they "read the unlawful and misleading statements... on the labels of Defendant's Purchased Products before purchasing them" and that they "relied on Defendant's label statements... and based and justified the decision to purchase Defendant's Purchased Products, in substantial part, on Defendant's label statements...." Id . ¶¶ 219-20.

Plaintiffs allege the following causes of actions: violation of California's Unfair Competition Law ("UCL"), Cal. Bus. & Prof. Code § 17200 et seq., (counts 1-3); violation of the False Advertising Law ("FAL"), Cal. Bus. & Prof. Code § 17500 et seq., (counts 4-5); and violation of the Consumers Legal Remedies Act ("CLRA"), Cal. Civ. Code § 1750 et seq., (count 6).

II. LEGAL STANDARD

A. Rule 8(a)

Federal Rule of Civil Procedure 8(a) requires a plaintiff to plead each claim with sufficient specificity to "give the defendant fair notice of what the... claim is and the grounds upon which it rests." Bell Atlantic Corp. v. Twombly , 550 U.S. 544, 555 (2007) (internal quotations omitted). A complaint which falls short of the Rule 8(a) standard may be dismissed if it fails to state a claim upon which relief can be granted. Fed.R.Civ.P. 12(b)(6). "Dismissal under Rule 12(b)(6) is appropriate only where the complaint lacks a cognizable legal theory or sufficient facts to support a cognizable legal theory." Mendiondo v. Centinela Hosp. Med. Ctr. , 521 F.3d 1097, 1104 (9th Cir. 2008). Moreover, the factual allegations "must be enough to raise a right to relief above the speculative level" such that the claim "is plausible on its face." Twombly , 550 U.S. at 556-57.

When deciding whether to grant a motion to dismiss, the court generally "may not consider any material beyond the pleadings." Hal Roach Studios, Inc. v. Richard Feiner & Co. , 896 F.2d 1542, 1555 n.19 (9th Cir. 1990). The court must accept as true all "well-pleaded factual allegations." Ashcroft v. Iqbal , 556 U.S. 662, 679 (2009). The court must also construe the alleged facts in the light most favorable to the plaintiff. Love v. United States , 915 F.2d 1242, 1245 (9th Cir. 1988). However, the court may consider material submitted as part of the complaint or relied upon in the complaint, and may also consider material subject to judicial notice. See Lee v. City of Los Angeles , 250 F.3d 668, 688-69 (9th Cir. 2001). But "courts are not bound to accept as true a legal conclusion couched as a factual allegation." Twombly , 550 U.S. at 555.

B. Rule 9(b)

Fraud-based claims are subject to heightened pleading requirements under Federal Rule of Civil Procedure 9(b). In that regard, a plaintiff alleging fraud "must state with particularity the circumstances constituting fraud." Fed.R.Civ.P. 9(b). The allegations must be "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). To that end, the allegations must contain "an account of the time, place, and specific content of the false representations as well as the identities of the parties to the misrepresentations." Swartz v. KPMG LLP , 476 F.3d 756, 764 (9th Cir. 2007). Averments of fraud must be accompanied by the "who, what, when, where, and how" of the misconduct charged. Vess v. Ciba-Geigy Corp. USA , 317 F.3d 1097, 1106 (9th Cir. 2003) (citation omitted). Additionally, "the plaintiff must plead facts explaining why the statement was false when it was made." Smith v. Allstate Ins. Co. , 160 F.Supp.2d 1150, 1152 (S.D. Cal. 2001) (citation omitted); see also In re GlenFed, Inc. Sec. Litig. , 42 F.3d 1541, 1549 (9th Cir. 1994) (en banc) (superseded by statute on other grounds).

C. Rule 12(b)(1)

A party may file a motion to dismiss with the Court for lack of subject matter jurisdiction. Fed.R.Civ.P. 12(b)(1). A Rule 12(b)(1) motion may be either facial or factual. Wolfe v. Strankman , 392 F.3d 358, 362 (9th Cir. 2004). A facial 12(b)(1) motion involves an inquiry confined to the allegations in the complaint, whereas a factual 12(b)(1) motion permits the court to look beyond the complaint to extrinsic evidence. Id . When a defendant makes a facial challenge, all material allegations in the complaint are assumed true, and the court must determine whether lack of federal jurisdiction appears from the face of the complaint itself. Wolfe , 392 F.3d at 362.

On a factual challenge, the party opposing the motion must produce affidavits or other evidence necessary to satisfy its burden of establishing subject matter jurisdiction. Safe Air For Everyone v. Meyer , 373 F.3d 1035, 1039 (9th Cir. 2004). Under a factual attack, the court need not presume the plaintiff's allegations as true. White v. Lee , 227 F.3d 1214, 1242 (9th Cir. 2000); accord Augustine v. United States , 704 F.2d 1074, 1077 (9th Cir. 1983). In the absence of a full-fledged evidentiary hearing, however, disputed facts pertinent to subject matter jurisdiction are viewed in the light most favorable to the nonmoving party. Dreier v. United States , 106 F.3d 844, 847 (9th Cir. 1996).

Federal courts are courts of limited jurisdiction, adjudicating only cases which the Constitution and Congress authorize. Kokkonen v. Guardian Life Ins. Co. of America , 511 U.S. 375, 377 (1994). An Article III federal court must ask whether a plaintiff has suffered sufficient injury to satisfy the "case or controversy" requirement of Article III of the U.S. Constitution. To satisfy Article III standing, a plaintiff must allege: (1) an injury in fact that is concrete and particularized, as well as actual and imminent; (2) that the injury is fairly traceable to the challenged action of the defendant; and (3) that it is likely (not merely speculative) that the injury will be redressed by a favorable decision. Friends of the Earth, Inc. v. Laidlaw Envtl. Servs., Inc. , 528 U.S. 167, 180-81 (2000); Lujan v. Defenders of Wildlife , 504 U.S. 555, 561-62 (1992).

At least one named plaintiff must have suffered an injury in fact. See Lierboe v. State Farm Mut. Auto. Ins. Co. , 350 F.3d 1018, 1022 (9th Cir. 2003) ("if none of the named plaintiffs purporting to represent a class establishes the requisite of a case or controversy with the defendants, none may seek relief on behalf of himself or any other member of the class").

A suit brought by a plaintiff without Article III standing is not a "case or controversy, " and an Article III federal court therefore lacks subject matter jurisdiction over the suit. Steel Co. v. Citizens for a Better Env't , 523 U.S. 83, 101 (1998). "A party invoking the federal court's jurisdiction has the burden of proving the actual existence of subject matter jurisdiction." Thompson v. McCombe , 99 F.3d 352, 353 (9th Cir. 1996). If a ...


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