United States District Court, S.D. California
GRANTING PLAINTIFF'S MOTION FOR LEAVE TO FILE A SECOND AMENDED COMPLAINT, and
GRANTING PLAINTIFF'S MOTION FOR LEAVE TO FURTHER AMEND THE PROPOSED SECOND
BARRY TED MOSKOWITZ, Chief District Judge.
Plaintiff Maria Aguilar brought this consumer class action alleging that Defendants have engaged in false and misleading advertising by marketing butter with labels stating that "100mg Plant Sterols Helps Block Cholesterol in the Butter" and that the plant sterols "help block the absorption of dietary cholesterol in the butter."
Plaintiff has now moved for leave to file a second amended complaint. (Docs. 43, 45). Plaintiff subsequently moved for leave to further amend the proposed second amended complaint by substituting a new proposed class representative. (Doc. 62). Defendants oppose both motions. (Docs. 49, 64).
I. Motion for Leave to File a Second Amended Complaint
Fed. R. Civ. P. 15(a)(2) provides that "a party may amend its pleading only with the opposing party's written consent or the court's leave. The court should freely give leave when justice so requires." The Ninth Circuit has held that "Rule 15's policy of favoring amendments to pleadings should be applied with extreme liberality." DCD Programs, LTD. v. Leighton , 833 F.2d 183, 186 (9th Cir. 1987) (internal quotation marks and citations omitted).
This liberality in granting leave to amend is not dependent on whether the amendment will add causes of action or parties. It is, however, subject to the qualification that amendment of the complaint does not cause the opposing party undue prejudice, is not sought in bad faith, and does not constitute an exercise in futility.
Four factors are commonly used to determine the propriety of a motion for leave to amend. These are: bad faith, undue delay, prejudice to the opposing party, and futility of amendment. These factors, however, are not of equal weight in that delay, by itself, is insufficient to justify denial of leave to amend.
Id. (internal citations omitted). The party opposing an amendment has the burden of establishing why leave to amend should not be granted. Senza-Gel Corp. v. Seiffhart , 803 F.2d 661, 666 (Fed. Cir. 1986); Larios v. Nike Retail Services, Inc., 2013 WL 4046680, at *3 (S.D. Cal. Aug. 9, 2013); Genetech, Inc. v. Abbot Laboratories , 127 F.R.D. 529, 530-31 (N.D. Cal. 1989).
Defendants argue that the Court should deny leave to amend because the proposed amendment (1) would be futile, (2) is made in bad faith and after undue delay, and (3) would prejudice the defendants.
To prevail on a California Unfair Competition Law (UCL) claim for deceptive advertising, the plaintiff must establish that the defendant used "unfair, deceptive, untrue or misleading advertising, " Cal. Bus. & Prof. Code § 17200. Similarly, to make out a claim under California's Consumer Legal Remedies Act (CLRA), the plaintiff must show that the defendant engaged in "unfair methods of competition" or "unfair or deceptive acts or practices, " which includes representations "that goods or services have sponsorship, approval, characteristics, ingredients, uses, benefits, or quantities which they do not have." Cal. Civ. Code § 1770(a)(5).
Plaintiff's First Amended Complaint explained that the basis for her misrepresentation claim was that "Smart Balance Spreadable Butter... does not have sufficient levels of plant sterols to block the absorption and thus reduce cholesterol in the body." (FAC ¶ 2). Plaintiff's proposed Second Amended Complaint modifies the claim, stating that
[E]ach and every consumer of Defendants' Smart Balance Spreadable Butter is exposed to the promise that consumption of Defendants' Smart Balance Spreadable Butter will "actually help block the absorption of the dietary cholesterol in the butter" and this benefit is the result of "100mg Plant Sterols." Taken individually and as a whole these statements, if not expressly, imply that there is there is a health benefit being provided by the 100mg of Plant Sterols contained in these butters and that there is a health benefit in eating one of these butters.
[T]he 100mg of plant sterols contained in Smart Balance Spreadable Butter is not an amount sufficient to provide consumers with a clinically meaningful cholesterol blocking effect and, as such, there is no clinically meaningful health benefit that can be derived from the 100mg of plant sterols contained in a serving of these butters.
As a result, Plaintiff and Class members were deceived into purchasing what they believed to be Products with meaningful health benefits based on Defendants' promise that the plant sterols in the Products will "actually help block the absorption of the dietary cholesterol in the butter, " when, in fact, the blockage effect from the plant sterols in Defendants' Products is so insignificant that it is clinically meaningless.
(SAC ¶¶ 1-3).
Defendant argues that Plaintiff's proposed amendment would be futile because California law does not recognize Plaintiff's amended claim as actionable. First, Defendant contends that its product labels do not expressly state or imply that plant sterols in the butter will "provide consumers with a clinically meaningful cholesterol blocking effect." Defendants cannot be held liable for statements they did not make or imply. See, e.g., Videtto v. Kellogg USA , 2009 WL 1439086, at *3 (E.D. Cal. May 21, 2009) (dismissing UCL and CLRA claims because Froot Loops cereal "packaging makes no claim that the Product is particularly nutritious or designed specifically to meet the nutritional needs of toddlers or children."); Rooney v. Cumberland Packing Corp. , 2012 WL 1512106, at *4 (S.D. Cal. April 16, 2012) (dismissing UCL claim because "Sugar in the Raw" box did not state that it was "unprocessed" or "unrefined, " and "turbinado sugar is widely marketed in the industry as raw cane sugar.").
Plaintiff argues in response that reasonable consumers will read Defendant's statements that "100mg Plant Sterols Helps Block Cholesterol in the Butter" and that the plant sterols "help block the absorption of dietary cholesterol in the butter" and understand them to mean that they will derive a meaningful cholesterol blocking benefit from consuming the butter.
The Court finds that Plaintiff's reading of Defendant's labels is plausible. Moreover, whether or not the label's implication is deceptive is a dispute of material fact and inappropriate for resolution at this early stage in the litigation. See Williams v. Gerber Prods. Co. , 552 F.3d 934, 938 (9th Cir. 2008) ("California courts... have recognized that whether a business practice is deceptive will usually be a question of fact not appropriate for decision on demurrer.").
Second, Defendants argue that even their label can be read to imply the existence of a clinically meaningful cholesterol blocking effect, that representation is too vague and ambiguous to be actionable. Vitt v. Apple Computer, Inc. , 469 Fed.Appx. 605, 607 (9th Cir. 2012) ("[T]o be actionable as an affirmative misrepresentation, a statement must make a specific and measurable claim, capable of being proved false or of being reasonably interpreted as a statement of objective fact.'" (quoting Coastal Abstract Serv. v. First Am. Title Ins. Co. , 173 F.3d 725, 731 (9th Cir. 1999))); Rooney , 2012 WL 1512106, at *3 ("Generalized, vague, and unspecified assertions constitute "mere puffery" upon which a reasonable consumer could not rely, and hence are not actionable' under the UCL... or CLRA." (quoting Anunziato v. eMachines, Inc. , 402 F.Supp.2d 1133, 1139 (C.D. Cal. 2005))).
Plaintiff argues that Defendant's implied promise of a meaningful health benefit is sufficiently specific and measurable and can be proven false. To this end, Plaintiff has submitted the Class Action Expert Report of Dr. Joseph M. Keenan ("Keenan Report"). Dr. Keenan acknowledges that "plant sterols in certain quantities do have the ability to help block absorption of cholesterol, " and that "consumption of a minimum of 0.8 grams of plant sterols daily, and preferably 2 grams (almost an entire container of Smart Balance Spreadable Butter), is required to meaningfully lower LDL cholesterol levels." (Keenan Report ¶ 10). The report goes on to note that
using the finding of the Racette Study read in the most positive light possible for the Smart Balance Spreadable Butters' cholesterol blocking representation, one can extrapolate that there is a 1.8% cholesterol absorption reduction for each additional 100mg of plant sterols that a person consumes over what is found in the average American diet. Based on this 1.8% cholesterol absorption reduction rate, the addition of the 100mg of plant sterols contained in one serving of the Smart Balance Spreadable Butter products to an average American diet would "block" approximately 0.27mg of the 15mg of cholesterol contained in a serving of the Smart Balance Butter & Canola Oil Blend and Butter & Canola and EVOO blends (or 0.018 percent of the cholesterol in a ...