United States District Court, N.D. California
ORDER GRANTING IN PART AND DENYING IN PART
DEFENDANT'S MOTION TO DISMISS DOCKET NO. 101
M. CHEN United States District Judge.
Mary Swearingen and Robert Figy filed this class action
complaint against Defendant Late July Snacks challenging
Defendant's practice of labeling its products with the
term "evaporated cane juice" ("ECJ")
which Plaintiffs assert is a misleading term for sugar.
Currently pending before the Court is Defendant's motion
to dismiss Plaintiffs Second Amended Complaint. Docket No.
101 ("Motion"). The Court DENIES the motion.
California and Federal Laws Regulating Food Labeling
manufacturers in California must comply with identical state
and federal laws and regulations that govern the labeling of
food products. Foremost among these is the federal Food Drug
and Cosmetic Act, 21 U.S.C. § 301 et seq.
("FDCA"), including its food labeling regulations.
21 C.F.R § 101 et seq. Pursuant to California
Health & Safety Code § 110100, California's
Sherman Law adopts and incorporates the FDCA, stating that
"[a]ll food labeling regulations and any amendments to
those regulations adopted pursuant to the federal act, in
effect on January 1, 1993, or adopted on or after that date
shall be the food labeling regulations of this state."
Under the FDCA, food is "misbranded" if "its
labeling is false or misleading in any particular, " or
if it does not contain certain information on its label or
its labeling. 21 U.S.C. § 403(a).
FDCA requires that ingredients be listed by their common or
usual names, which are the names established by common usage
or by regulation. 21 C.F.R. § 104(a)(1); 21 C.F.R.
§ 102.5. The position of the Food and Drug
Administration ("FDA") is that "evaporated
cane juice" is not the common or usual name of any
sweetener (e.g., sugar). In 2009, the FDA issued
Guidance for Industry: Ingredients Declared As Evaporated
Cane Juice, Draft Guidance ("Draft Guidance"),
2009 WL 3288507. According to the Draft Guidance, the term
ECJ is "false and misleading" because it
"fails to reveal the basic nature of the food and its
characterizing properties (i.e., that the ingredients are
sugars or syrups) as required by 21 C.F.R. §
102.5." Id. at *3; 21 U.S.C. 343(a)(1). The FDA
did not initially finalize its draft guidance. On March 4,
2014, the FDA reopened the comment period on the Draft
Guidance with the intent to "revise the draft guidance,
if appropriate, and issue it in final form."
See Docket No. 57 (Order on Supp. Briefing); Docket
No. 53-1 (Def Second Request for Judicial Notice, Ex. A,
FDA Notice to Reopen Comment Period). On May 25,
2016, the FDA issued its final guidance on the use of the
term "evaporated cane juice, " titled
"Ingredients Declared as Evaporated Cane Juice: Guidance
for Industry" ("Final Guidance"). Docket No.
92. The Final Guidance states that "the common or usual
name for an ingredient labeled as 'evaporated cane
juice' includes the term 'sugar' and does not
include the term 'juice.'" Id. at 7.
This is because the "basic nature" of ECJ is a
Facts and Procedural History
July is a producer of retail food products. Docket No. 99
(Second Amended Complaint ("SAC")) ¶ 21.
During part of the period covered by the allegations in this
case, Late July manufactured, advertised, marketed, and sold
products, such as Late July's Classic Saltines Crackers,
Classic Rich Crackers, Sea Salt By The Seashore Multigrain
Snack Chips, and other varieties of crackers and snack chips,
labeled using the term "evaporated cane juice" on
their ingredient lists to thousands of consumers nationwide,
including many who reside in California. SAC ¶¶
Mary Swearingen and Robert Figy, citizens of California,
bought and purchased Late July products including a variety
of crackers and snack chips labeled with ECJ during the Class
Period, defined as September 18, 2009 to the present. SAC
¶¶ 2, 19. Plaintiffs are health-conscious consumers
who wish to avoid "added sugars" in the products
they purchase. Id. ¶ 72. As such, they scanned
the ingredient lists of the products at issue for forms of
added sugar and failed to recognize "evaporated cane
juice" as a form of sugar. Id. ¶ 73. They
would not have bought the products had they known that these
products contained "added sugar." Id.
first filed a class action complaint for equitable and
injunctive relief on September 18, 2013. Docket No. 1
(Complaint). On February 3, 2014, Late July moved to dismiss
the First Amended Complaint, arguing, in part, that this
Court should apply the doctrine of primary jurisdiction based
on the FDA's ongoing regulatory proceeding concerning the
use of ECJ on food labels. Docket No. 32. Following the
FDA's notice that it had reopened the comment period on
its draft guidance regarding ECJ, this Court denied in part
the motion to dismiss and stayed the action pursuant to the
doctrine of primary jurisdiction on May 29, 2014. Docket No.
22, 2016, following the FDA's issuance of its Final
Guidance, this Court lifted the stay. Docket No. 98.
Plaintiffs filed their Second Amended Complaint shortly
thereafter. Docket No. 99. Based on their allegations in the
Second Amended Complaint, Plaintiffs brought claims for: (1)
violations of California Business & Professions Code
§ 17200 (Unfair Competition Law or UCL); (2) violations
of California Business & Professions Code § 17500
(California False Advertising Law or FAL); (3) violations of
California Civil Code § 1750, et seq. (Consumer
Legal Remedies Act or CLRA); and (4) and unjust enrichment.
SAC ¶¶ 151-212. Late July then filed the instant
motion to dismiss the Second Amended Complaint. Docket No.
July seeks to dismiss Plaintiffs' Second Amended
Complaint for failure to state a claim pursuant to Federal
Rule of Civil Procedure 12(b)(6). Under Rule 12(b)(6), a
party may move to dismiss based on the failure to state a
claim upon which relief may be granted. A motion to dismiss
based on Rule 12(b)(6) challenges the legal sufficiency of
the claims alleged. See Parks Sch. of Bus. v.
Symington, 51 F.3d 1480, 1484 (9th Cir. 1995). In
considering such a motion, a court must take all allegations
of material fact as true and construe them in the light most
favorable to the nonmoving party, although "conclusory
allegations of law and unwarranted inferences are
insufficient to avoid a Rule 12(b)(6) dismissal."
Cousins v. Lockyer, 568 F.3d 1063, 1067 (9th Cir.
2009). While "a complaint need not contain detailed
factual allegations . . . it must plead 'enough facts to
state a claim to relief that is plausible on its
face.'" Id. "A claim has facial
plausibility when the plaintiff pleads factual content that
allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged."
Ashcroft v. Iqbal, 556 U.S. 662 (2009); see also
Bell Atl. Corp. v. Twombly, 550 U.S. at 556. "The
plausibility standard is not akin to a 'probability
requirement, ' but it asks for more than sheer
possibility that a defendant acted unlawfully."
Iqbal, 556 U.S. at 678.
sounding in fraud or mistake are subject to the heightened
pleading requirements of Federal Rule of Civil Procedure
9(b), which requires that a plaintiff alleging fraud
"must state with particularity the circumstances
constituting fraud." Fed.R.Civ.P. 9(b); see Kearns
v. Ford Motor Co., 567 F.3d 1120, 1124 (9th Cir. 2009).
To satisfy the heightened standard under Rule 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). Thus, claims sounding in fraud must allege
"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) (per curiam) (internal
quotation marks omitted). The plaintiff must set forth
"what is false or misleading about a statement, and why
it is false." In re Glenfed, Inc. Sec. Litig.,
42 F.3d 1541, 1548 (9th Cir.1994) (en banc), superseded
by statute on other grounds as stated in Ronconi v.
Larkin, 253 F.3d 423, 429 n. 6 (9th Cir. 2001).
Plaintiffs' UCL, CLRA, and FAL Claims
noted above, Plaintiffs assert fraud-based claims under the
UCL, FAL, and CLRA.
prohibits any "unlawful, unfair or fraudulent business
act or practice." Cal. Bus. & Prof. Code §
17200. Because § 17200 is written in the disjunctive, it
establishes "three varieties of unfair competition:
practices which are unlawful, unfair, or fraudulent."
Cel-Tech Communications, Inc. v. Los Angeles Cellular
Telephone, Co., 20 Cal.4th 163, 180 (1999). Practices
are "unlawful" when they violate other laws: §
17200 "borrows" violations of other laws, treating
them as unlawful practices that are independently actionable
under the UCL. Id. at 179 [citations omitted].
Practices are "unfair" when grounded in "some
legislatively declared policy or proof of some actual or
threatened effect on competition." Id. at
186-87. "Unfair, " under § 17200, refers to
conduct that could violate an antitrust law, that does
violate the policy or spirit of such laws, or that could
otherwise significantly threaten or harm competition.
Id. at 187. Practices are "fraudulent"
when "members of the public are likely to be
deceived"; more specifically, under the fraud prong,
"reliance [on the part of the plaintiff] is an essential
element of fraud." Poldolsky v. First Healthcare
Corp., 50 Cal.App.4th 632, 647-48, as modified
(Nov. 5, 1996), as modified (Nov. 20, 1996); In
re Tobacco II Cases, 46 Cal.4th 298, 326 (2009).
prohibits any "unfair, deceptive, untrue, or misleading
advertising." Cal Bus. & Prof. Code § 17500.
The CLRA prohibits "unfair methods of competition and
unfair or deceptive acts or ...