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Beasley v. Lucky Stores, Inc.

United States District Court, N.D. California

September 16, 2019

MARK BEASLEY, Plaintiff,
v.
LUCKY STORES, INC., et al., Defendants.

          ORDER GRANTING DEFENDANTS' MOTION TO DISMISS PLAINTIFF'S FIRST AMENDED COMPLAINT; AFFORDING PLAINTIFF LEAVE TO AMEND; GRANTING DEFENDANT NESTLÉ USA'S MOTION TO STRIKE; CONTINUING CASE MANAGEMENT CONFERENCE Re: Dkt. Nos. 36, 38

          Maxine M. Chesney United States District Judge.

         Before the Court are two motions, both filed May 23, 2019: (1) a Motion to Dismiss Plaintiff's First Amended Complaint, filed jointly by all defendants to the instant action, pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure; and (2) a Motion to Strike Portions of the First Amended Complaint, filed by defendant Nestlé USA, Inc. (“Nestlé” or “Nestlé USA”), pursuant to Rule 12(f) of the Federal Rules of Civil Procedure. Plaintiff Mark Beasley (“Beasley”) has filed opposition to each said motion, to which defendants have replied. Having read and considered the papers filed in support of and in opposition to the motions, as well as the parties' respective objections filed in connection therewith, the Court rules as follows.[1]

         BACKGROUND

         The instant case is a putative class action lawsuit brought by Beasley, a California citizen, as a purchaser and consumer of Coffee-mate, a line of coffee-creamer products. Beasley alleges Nestlé “manufactures, markets, and sells” Coffee-mate. (See First Am. Compl. (“FAC”), filed Dec. 19, 2018, ¶ 3.) He also alleges that four retailers, namely, defendants Lucky Stores, Inc. (“Lucky”), Save Mart Super Markets (“Save Mart”), Save Mart Companies, Inc. (“SMCI”), and The Kroger Company (“Kroger”), “sold Coffee-mate at their grocery stores throughout California” (see id. ¶ 4) and that, during the class period, he purchased Coffee-mate from grocery stores owned by said retailers (the “retailers” or “retailer defendants”).

         According to Beasley, Coffee-mate, during the class period, contained partially hydrogenated oil (“PHO”), which is an “[a]rtificial” form of trans fat (see id. ¶ 20) and an “unsafe food additive” (see id. ¶ 3). In addition, Beasley alleges that, for portions of the class period, Coffee-mate's labels bore “unauthorized nutrient content claims” (see Id. ¶ 79), namely, “0g Trans Fat” and/or “IT'S GOOD TO KNOW: 0g TRANS FAT/SERV . . .” (the “‘0g Trans Fat' statements” or “‘0g Trans Fat' claim(s)”) (see id. ¶ 76; see also Id. ¶¶ 8, 79), and that “[t]his language was part of an intentional, long-term campaign to deceptively market Coffee-mate as healthful and free of trans fat” (see id. ¶ 77).

         Based on the above allegations, Beasley, on October 29, 2018, filed his initial complaint in the Superior Court of California, in and for the County of San Francisco.

         On November 26, 2018, defendants removed the case to federal court.[2]

         On December 19, 2018, Beasley filed the FAC, in which he asserts six Causes of Action, brought both individually and on behalf of the following two putative classes: (1) a “Class, ” defined as “[a]ll citizens of California who purchased in California, on or after January 1, 2010, Coffee-mate products containing [PHO]” (see FAC ¶ 149); and (2) a “0g Trans Fat Claim Subclass, ” defined as “[a]ll citizens of California who purchased in California, on or after January 1, 2010, Coffee-mate containing the nutrient content claim ‘0g Trans Fat' and containing [PHO]” (see id.).

         The first two Causes of Action, brought on behalf of Beasley and the “Class, ” challenge defendants' manufacturing and distribution of Coffee-mate on the basis that it contains PHO (collectively, the “use claims”).[3] Said causes of action are predicated on, respectively, the “unfair” and “unlawful” prongs (see id. at 27:16 & 28:1) of California's “Unfair Competition Law” (“UCL”), Cal. Bus. & Prof. Code §§ 17200 et seq., and “Breach of Implied Warranty of Merchantability” (see id. at 29:18).

         The last four Causes of Action, brought on behalf of Beasley and the “Subclass, ” challenge defendants' manufacturing and distribution of Coffee-mate on the basis of the “0g Trans Fat” statements (collectively, the “labeling claims”).[4] Said causes of action are predicated on, respectively, the “unlawful, ” “fraudulent, ” and “unfair” prongs (see id. at 30:12, 32:18, & 33:3) of the UCL, violation of California's “False Advertising Law” (“FAL”), Cal. Bus. & Prof. Code §§ 17500 et seq. (see id. at 33:23), “Breach of Express Warranty” (see id. at 34:6), and California's “Consumer Legal Remedies Act” (“CLRA”), Cal. Civ. Code §§ 1750 et seq. (see id. at 34:20).

         By the instant motion to dismiss, defendants seek an order dismissing the above-titled action. By the instant motion to strike, Nestlé seeks an order striking paragraphs of the FAC alleging it has a “pattern and practice” of misconduct toward consumers. (See Def. Nestlé's Mot. to Strike (“Nestlé Mot.”) at 2:21; see also FAC ¶ 82.)

         DISCUSSION

         As noted, defendants bring two separate motions. The Court will begin with defendants' joint motion to dismiss, then turn to Nestlé's motion to strike.

         A. Motion to Dismiss

         Defendants challenge Beasley's claims on a number of grounds, some of which apply to a subset of such claims and/or defendants. In particular, defendants contend the use claims are both preempted and fail on their merits, that all of the labeling claims are barred by statutes of limitations and equitable principles, and that some of the labeling claims fail for lack of a showing of reliance. In addition, defendants contend the FAC, as a whole, fails to meet the heightened pleading requirements for fraud and that, as to the retailers, Beasley has failed to allege any actionable wrongdoing.

         Dismissal under Rule 12(b)(6) of the Federal Rules of Civil Procedure “can be based on the lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory.” See Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990). Rule 8(a)(2), however, “requires only 'a short and plain statement of the claim showing that the pleader is entitled to relief.'” See Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Fed.R.Civ.P. 8(a)(2)). Consequently, “a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations.” See id. Nonetheless, “a plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” See id. (internal quotation, citation, and alteration omitted).

         In analyzing a motion to dismiss, a district court must accept as true all material allegations in the complaint and construe them in the light most favorable to the nonmoving party. See NL Indus., Inc. v. Kaplan, 792 F.2d 896, 898 (9th Cir. 1986). “To survive a motion to dismiss, a complaint must contain sufficient factual material, 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 Twombly, 550 U.S. at 570). “Factual allegations must be enough to raise a right to relief above the speculative level[.]” Twombly, 550 U.S. at 555. Courts “are not bound to accept as true a legal conclusion couched as a factual allegation.” See Iqbal, 556 U.S. at 678 (internal quotation and citation omitted).

         Given that defendants challenge the FAC on numerous grounds, and that the parties' objections pertain not only to such grounds but to the motion to dismiss more generally, the Court begins by addressing the objections.

         1. Parties' Objections

         As noted, both parties have filed objections in connection with the instant motion. In that regard, Beasley objects to defendants' reply brief on multiple grounds, namely, that defendants: (1) have “evaded their page limit” of 15 pages, by including “nearly five pages” of footnotes (see Pl.'s Objs. to Defs.' Reply, filed Jun. 17, 2019, at 1:3-4); (2) “make new arguments on reply” (see id. at 1:12), with respect to preemption and tolling; and (3) “misstate” a decision cited therein (see id. at 2:10). Defendants, in turn, object to Beasley's objection, and ask that it be stricken, on the basis that it “makes numerous legal arguments” and, consequently, is “an improper sur-reply.” (See Defs.' Obj. to Pl.'s Obj., filed Jun. 18, 2019, at 1:4-5.)

         Under the applicable local rule, “[u]nless the Court expressly orders otherwise pursuant to a party's request . . ., the reply brief or memorandum may not exceed 15 pages of text.” See Civ. L. R. 7-4(b). “Text . . . must be double-spaced with no more than 28 lines per page, except for” specified elements, including “footnotes.” See id. 3-4(c)(2). In addition, “[o]nce a reply is filed, ” absent an applicable exception, “no additional memoranda, papers or letters may be filed without prior Court approval.” See id. 7-3(d) (setting forth, as exceptions, “new evidence . . . submitted in the reply” and “a relevant judicial opinion published after the date the opposition or reply was filed”).

         At the outset, the Court notes that Beasley's response to the reply is, although titled “Objections, ” more properly characterized as a sur-reply, as it primarily consists of substantive legal arguments, and, as defendants point out, Beasley neither sought nor obtained permission to file a sur-reply. Further, as such sur-reply includes no objection to newly submitted evidence or any notice of newly decided legal authority, neither exception to Civil Local Rule 7-3(d) applies. Nevertheless, the Court declines to strike said submission, particularly when, as discussed below, defendants' own filing is not fully in accordance with the local rules.

         Although defendants' reply may technically comply with Civil Local Rule 7-4(b), as it contains 15 pages of text, exclusive of the signature page, it contains 19 footnotes totaling 132 lines, which, at 28 lines per page, comes to 4.7 pages. Moreover, nearly all of the footnotes contain substantive legal argument, many at great length. (See, e.g., Reply at 2 n.1, 10 n.14.) Under such circumstances, defendants' use of footnotes in the reply is inappropriate, and, to the extent defendants have raised arguments in the reply either for the first time or only in footnotes, the Court has not considered them. See Estate of Saunders v. Comm'r of Internal Revenue, 745 F.3d 953, 962 n.8 (9th Cir. 2014) (holding “[a]rguments raised only in footnotes, or only on reply, are generally deemed waived”). Lastly, to the extent Beasley asserts defendants have mischaracterized any cases, the Court, having read those cases, can assess for itself the accuracy of defendants' description without need of further filings.

         The Court next considers Beasley's use and labeling claims.

         2. Use Claims: First and Second Causes of Action

         Defendants contend Beasley's use claims, which arise under state law, are barred by the doctrine of conflict preemption. In support thereof, defendants cite to this Court's decision in Backus v. Nestlé USA, Inc., a related case in which the Court found the use claims alleged therein, which likewise challenged the use of PHO in Coffee-mate, preempted. See Backus, 167 F.Supp.3d 1068, 1074 (N.D. Cal. 2016).

         Conflict preemption applies where “compliance with both federal and state regulations is a physical impossibility” or where state law “stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress, ” see Ting v. AT&T, 319 F.3d 1126, 1136 (9th Cir. 2003) (internal quotations and citations omitted); see also Geier v. American Honda Motor Co., Inc., 529 U.S. 861, 873-75 (2000) (holding conflict preemption applies to lawsuits that “prevent or frustrate the accomplishment of a federal objective”; finding “common-law ‘no airbag'” claim preempted where, based on various objectives, Department of Transportation (“DOT”) regulation provided vehicle manufacturers with range of choices among different passive restraint devices). “Parties seeking to invalidate a state law based on preemption bear the considerable burden of overcoming the starting presumption that Congress does not intend to supplant state law.” See Stengel v. Medtronic, Inc., 704 F.3d 1224, 1227 (9th Cir. 2013) (en banc) (internal quotation and citation omitted).

         Here, as noted, Beasley's use claims are predicated on the “unfair” and “unlawful” prongs of the UCL (see FAC at 27:16 & 28:1)[5] and on breach of the implied warranty of merchantability (see id. at 29:18), [6] the same theories on which the use claims in Backus were predicated (see Case No. C 15-1963, First Am. Compl., filed June 26, 2015, at 29:6 (alleging use of PHO violated “unfair prong” of UCL); id. at 30:2 (alleging use of PHO violated “unlawful prong” of UCL); id. at 31:9 (alleging use of PHO violated “implied warranty of merchantability”)). As also noted, the Court, in Backus, determined the use claims were preempted, see Backus, 167 F.Supp.3d at 1074, and, as discussed below, Beasley has provided the Court with no reason to alter its prior determination.

         The relevant federal law is the Food, Drug, and Cosmetic Act (“FDCA”), which prohibits, inter alia, “[t]he introduction or delivery for introduction into interstate commerce of any food . . . that is adulterated, ” see 21 U.S.C. § 331(a), and “[t]he receipt in interstate commerce of any food . . . that is adulterated . . ., and the delivery or proffered delivery thereof, ” see id. § 331(c). A food is deemed adulterated “if it is or if it bears or contains . . . any food additive that is unsafe within the meaning of section 348 of this title [21 U.S.C. § 348], ” see id. § 342(a)(2)(C)(i). A food additive, in turn, is deemed unsafe unless, in pertinent part, it complies with “a regulation issued under this section [21 U.S.C. § 348] prescribing the conditions under which such additive may be safely used.” See id. § 348(a)(2).

         On June 17, 2015, the FDA published a final determination and declaratory order, finding “there is no longer a consensus among qualified experts” that PHOs “are generally recognized as safe (GRAS) for any use in human food, ” see Final Determination Regarding Partially Hydrogenated Oils (“Final Determination”), 80 Fed. Reg. 34650-01, 34650 (June 17, 2018), and that, as a result, PHOs “are food additives subject to” 21 U.S.C. § 348, see id. Pursuant to said order, the FDA “require[d] discontinuation of the use of” PHOs, see id. at 34656, and set a “compliance date” of June 18, 2018, see id. at 35653, 34668-69 (explaining three-year compliance deadline would provide time for “submission and review of food additive petitions” for PHOs and time to address challenges in “reformulat[ing] products to remove PHOs”).[7]

         Thereafter, Congress passed the Consolidated Appropriations Act for 2016, which provides that “[n]o [PHOs] as defined in the [Final Determination] shall be deemed unsafe within the meaning of section 409(a) [21 U.S.C. § 348(a)] and no food that is introduced or delivered for introduction into interstate commerce that bears or contains a [PHO] shall be deemed adulterated under section[] . . . 402(a)(2)(C)(i) [21 U.S.C. § 342(a)(2)(C)(i)] by virtue of bearing or containing a [PHO] until the compliance date as specified in such order (June 18, 2018).” Consol. Appropriations Act, 2016, Pub. L. 114-113 § 754, 129 Stat. 2242 (Dec. 18, 2015) (“§ 754”).[8]

         Here Beasley's use claims challenge the sale of PHO-containing Coffee-mate, “on or after January 1, 2010.” (See FAC ¶ 149.) As in Backus, such claims “would effectively negate the FDA's order setting a compliance date in 2018, ” see Backus, 167 F.Supp.3d at 1072, and “conflict with Congress's decision not to deem PHOs unsafe, or the food containing them adulterated, pending the June 18, 2018, compliance date set by the FDA, ” see id. at 1074. Beasley's arguments to the contrary are not persuasive.

         At the outset, as defendants point out, Beasley reiterates a number of arguments made in Backus. In particular, Beasley relies on the “presumption against preemption” (see Opp'n at 12:7) and contends that: (1) the FDA, in the Final Determination, “disclaimed preemption of state prohibitions or limits on PHO use” (see id. at 13:4-5); (2) the FDA, having determined PHO is not GRAS, “lack[ed] the statutory authority to . . . authorize the sale of PHO” (see id. at 13:12) (emphasis omitted) and, consequently, the compliance period entailed “a question of enforcement discretion, not legality” (see id. at 13:11); (3) § 754 merely “regulate[s] what the FDA may do between the date of its passage, December 15, 2015[, ] and June 18, 2018” (see id. at 11:2-3); and (4) § 754 does not “apply retroactively, ” i.e., prior to the Final Determination (see id. at 11:12). In Backus, the Court, while acknowledging the presumption against preemption, see Backus, 167 F.Supp.3d at 1070-71, nonetheless found the use claims preempted. In reaching such conclusion, the Court expressly rejected the first two arguments set forth above, as to the FDA's asserted disclaimer and lack of authority, see id. at 1073 (noting FDA “‘declined to take a position'” as to preemptive effect of Final Determination; finding argument FDA lacked authority to authorize use of PHO “mooted” by enactment of § 754, “by which Congress essentially ratified” Final Determination), and implicitly rejected the latter two arguments, as to the scope of § 754.

         Significantly, Beasley has not provided the Court with any authority or other reason to suggest its conclusion in Backus was incorrect or that it should reach a different conclusion in the instant case. First, to the extent Beasley now argues the existence of federal regulations “permitting a food is not grounds for conflict preempting a state law that imposes heavier regulations or prohibits the same food” (see Opp'n at 8:2- 3), the cases he cites in support of such proposition are inapposite, as each said case considered whether a broadly applicable federal law governing an industry preempted a narrower state law prohibiting specific conduct not encompassed by the broader statute. See, e.g., Ass'n des Éleveurs de Canards et d'Oies du Québec v. Becerra, 870 F.3d 1140, 1153 (9th Cir. 2017) (finding no conflict between federal poultry law regulating establishments where slaughter and processing occur and state law prohibiting force-feeding ducks and geese); Chinatown Neighborhood Ass'n v. Harris, 794 F.3d 1136, 1139-43 (9th Cir. 2015) (finding no conflict between federal law vesting “exclusive fishery management authority” in federal government and state law making it a misdemeanor to sell detached shark fins within state). The instant case, by contrast, presents the inverse of such circumstances, a situation where the plaintiff relies on a broadly applicable state law to challenge specific conduct expressly permitted under federal law.

         Next, Beasley's reliance on Hawkins v. Kroger Co., 2019 WL 1506845 (S.D. Cal. 2019), is misplaced. In Hawkins, as in the instant case, the plaintiff brought both use and labeling claims, challenging the use of PHO in a food product and the “0g Trans Fat” statement on the packaging. See id. at *1. Although, as Beasley points out, the Ninth Circuit found the plaintiff's “label claims are not preempted, ” and instructed the district court to consider, on remand, “whether the use claims are preempted, ” see Hawkins v. Kroger Co., 906 F.3d 763, 773 (9th Cir. 2018) (noting “[t]he preemption issue was not fully briefed on appeal”), the district court's decision on remand appears to address preemption only with respect to the labeling claims, see Hawkins, 2019 WL 1506845, at *4 (holding “0g Trans Fat” statement “made outside the nutrition label[] is not preempted”; distinguishing, as a “line of authority address[ing] a different issue than that before the court, ” cases holding use claims preempted). In any event, even assuming the district court did conclude the use claims were not preempted, this Court, for the reasons stated above, disagrees. Moreover, numerous other district courts, faced with similar arguments as those presented here, have likewise found claims challenging the use of PHO preempted. See, e.g., Beasley v. Conagra Brands, Inc., 374 F.Supp.3d 869, 874- 78 (N.D. Cal. 2019) (holding conflict preemption barred UCL and implied warranty of merchantability claims challenging use of PHOs in popcorn snack prior to June 18, 2018; rejecting plaintiff's arguments as to presumption, enforcement discretion, and scope of § 754); Backus v. General Mills, Inc., 2018 WL 6460441, at *3-6 (N.D. Cal. 2018) (holding conflict preemption barred UCL claims challenging use of PHO in baking mix products; rejecting plaintiff's arguments as to presumption and scope of § 754); Backus v. Biscomerica Corp., 2017 WL 1133406, at *2-4 (N.D. Cal. 2017) (holding conflict preemption barred UCL claims challenging use of PHO in packaged cookies; rejecting plaintiff's arguments as to enforcement discretion and FDA's view regarding preemptive effect of Final Determination).

         In sum, faced with the same type of use claims, the same regulatory and statutory framework, and, by and large, the same arguments, the Court concludes Beasley's use claims, like those in ...


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