United States District Court, N.D. California, San Jose Division
ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS, WITH LEAVE TO AMEND [Re: ECF 13]
BETH LABSON FREEMAN, District Judge.
This is a case about bread labeling and what a reasonable consumer would expect to be in her dough-based foodstuff when she purchases, among other things, Nature's Own brand Honey Wheat Bread. Before the Court is the Motion to Dismiss by defendant Flowers Bakeries, LLC ("Defendant") challenging the smorgasbord of claims that plaintiff Kelly Romero ("Plaintiff") asserts on behalf of herself and a putative class of consumers who have purchased Defendant's Nature's Own bread products. The Court heard oral argument on April 16, 2015 and thereafter took the matter under submission. Having carefully considered the parties' respective written submissions, the oral argument of counsel, and the ever growing body of case authority (particularly in this judicial district) surrounding food labeling, the Court hereby GRANTS IN PART and DENIES IN PART Defendant's Motion to Dismiss, with leave to amend.
Defendant, doing business as "Nature's Own, " produces numerous bread products ranging from sliced bread and hot dog rolls to "sandwich rounds" and reduced calorie breads. See Compl. ¶ 1 (listing six categories and identifying 27 specific products). Plaintiff alleges that these bread products are "misbranded" because their labels "suggest" a variety of false things to consumers.
Specifically, Plaintiff asserts that through the brand name "Nature's Own, " coupled with "representations which appear on the front labels that the breads contain no artificial preservatives, colors and flavors" and product labels that "depict stalks of wheat and pots of honey, " Defendant "suggests" to consumers that its bread products are "a natural food product, therefore connoting that [the products] are somehow more healthy and wholesome." Id. ¶¶ 10-11, 15. Defendant allegedly "reinforces this theme by boasting on the front labels of the [bread products] about the healthful qualities of its bread, " such as the aforementioned lack of artificial preservatives, as well as "no high fructose corn syrup." Id. ¶ 12. Plaintiff alleges that despite "suggesting" that the bread products are natural and healthy, they contain, among other things, the chemical azodicarbonamide ("ADA"), which is known as the "yoga mat' chemical" and is used in many rubber products. Id. ¶¶ 27-28. ADA is used as a whitening agent in bread, though alternative ingredients are approved by the Food and Drug Administration ("FDA"). Id. ¶ 30.
Secondarily, Plaintiff alleges that some of Defendant's bread products are also explicitly labeled "all natural." Id. ¶ 15. These "all natural" products, Plaintiff alleges, are deceptively labeled because they contain flour "enriched" with a number of synthetically produced ingredients such as thiamin mononitrate, riboflavin, folic acid, niacin, and reduced iron, as well as excessively processed soybean oil, soy lecithin, calcium sulfate, and enzymes. Id. ¶¶ 32-39. Plaintiff asserts that a consumer's concept of "all natural" would not include such synthetic ingredients or food additives. Id. ¶ 18.
Separate from the "natural" representations, Plaintiff alleges that Defendant's Honey Wheat and Whitewheat breads are mislabeled to "suggest that the products are whole wheat breads and therefore healthier when in fact they are merely white breads." Id. ¶¶ 40, 45. Plaintiff alleges that Defendant "capitalize[s] on consumer confusion through the use of the word wheat' in the product, " even though neither "Honey Wheat nor  Whitewheat bread are whole wheat bread or anything other than enriched white bread." Id. ¶¶ 49-50. Plaintiff moreover asserts that this use of the term "wheat" is contrary to governing regulations promulgated by the FDA. Id. ¶¶ 51-62.
Plaintiff purchased four of Defendant's products: Nature's Own Honey Wheat Bread, Nature's Own Whitewheat Bread, Nature's Own 100% Whole Wheat Bread, and Nature's Own 100% Whole Wheat with Honey. Id. ¶ 65. She alleges that before purchasing each product, she "read the labeling representations identified [throughout the complaint]" and "relied on these representations and believed that she was purchasing products that were free of synthetic, chemical, artificial, and highly processed ingredients, and she believed, when purchasing Nature's Own Honey Wheat Bread and Nature's Own Whitewheat® Bread, that these were wheat and not white breads." Id. ¶ 66.
Based on these allegations, Plaintiff asserts claims against Defendant on behalf of a putative nationwide class of consumers as well as a subclass of California consumers. Specifically, Plaintiff seeks to represent California consumers on claims against Defendant for: unlawful, unfair, and fraudulent business practices in violation of California's Unfair Competition Law ("UCL"), Cal. Bus. & Prof. Code § 17200, et seq. (First, Second, and Third Causes of Action, or "COA"); false and misleading advertising in violation of California's False Advertising Law ("FAL"), Cal. Bus. & Prof. Code § 17500, et seq. (Fourth and Fifth COAs); violation of California's Consumer Legal Remedies Act ("CLRA"), Cal. Civ. Code §§ 1750, et seq. (Sixth COA). Plaintiff seeks to represent a broader nationwide class of consumers on claims for: restitution based on quasi-contract/unjust enrichment (Seventh COA); common law fraud (Eighth COA); negligent misrepresentation (Ninth COA); and breach of contract (Tenth COA). This Court has jurisdiction pursuant to 28 U.S.C. § 1332(d).
II. REQUESTS FOR JUDICIAL NOTICE
Both parties have requested that the Court take judicial notice of myriad documents in support of their respective briefing. Def.'s Request for Judicial Notice ("RJN"), ECF 14; Pl.'s RJN, ECF 23; Pl.'s Supp. RJN, ECF 27.
Defendant's RJN Exhibits 1-3 and Plaintiff's RJN Exhibit 6 shall be considered because they are incorporated by reference into the Complaint. See Knievel v. ESPN, 393 F.3d 1068, 1076 (2005). Defendant's RJN Exhibits 4-8, as well as Plaintiff's RJN Exhibits 1-5 and Supplemental RJN Exhibit 7 are all properly subject to judicial notice. Dictionary meanings, guidance from and public records of the FDA, and court filings are all matters not subject to reasonable dispute. Fed.R.Evid. 201(b). Because the parties have requested that the Court take notice of these documents, it must take notice, though the documents may be immaterial to the issues addressed in this Order. Id. 201(c)(2). Additionally, though the Court may take judicial notice of public records, Defendant's RJN Exhibits 5-8 and Plaintiff's RJN Exhibits 2-5 and Supplemental RJN Exhibit 7 will not be noticed "for the truth of the matter asserted therein." In re Bare Escentuals, Inc. Sec. Litig., 745 F.Supp.2d 1052, 1067 (N.D. Cal. 2010); see also M/V Am. Queen v. San Diego Marine Const. Corp., 708 F.2d 1483, 1491 (9th Cir. 1983).
III. SUFFICIENCY OF THE PLEADINGS
A. Legal Standards
Federal Rule of Civil Procedure 8(a)(2) requires a plaintiff to set forth "a short and plain statement of the claim showing that the pleader is entitled to relief." A motion to dismiss under Rule 12(b)(6) tests the legal sufficiency of that statement. Conservation Force v. Salazar, 646 F.3d 1240, 1241-42 (9th Cir. 2011). When determining whether a claim has been stated, the Court accepts as true all well-pled factual allegations and construes them in the light most favorable to the plaintiff. Reese v. BP Exploration (Alaska) Inc., 643 F.3d 681, 690 (9th Cir. 2011). However, the Court need not "accept as true allegations that contradict matters properly subject to judicial notice" or "allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences." In re Gilead Scis. Sec. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008) (internal quotation marks and citations omitted). While a complaint need not contain detailed factual allegations, it "must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is facially plausible when it "allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id.
A claim alleging fraud is subject to a heightened pleading standard wherein the plaintiff "must state with particularity the circumstances constituting fraud or mistake." Fed.R.Civ.P. 9(b). To satisfy this requirement, the pleader must generally set forth the "who, what, when, where, and how of the misconduct charged." Ebeid ex rel. U.S. v. Lungwitz, 616 F.3d 993, 998 (9th Cir. 2010); Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003).
If a motion to dismiss is granted, a court should normally grant leave to amend, "even if no request to amend the pleading was made, " unless amendment would be futile. Lopez v. Smith, 203 F.3d 1122, 1130 (9th ...