Amanda Sateriale v. R J Reynolds Tobacco Company ( 2012 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
AMANDA SATERIALE; JEFFREY  No. 11-55057
FEINMAN; PAMELA BURNS; DONALD D.C. No.
WILSON; PATRICK GRIFFITHS; JACKIE 2:09-cv-08394-
WARREN; HEATHER POLESE; CAS-SS
RICHARD HOLTER; DAN POLESE;
FRED JAVAHERI, Individually and ORDER
on Behalf of All Others Similarly AMENDING
Situated,
Plaintiffs-Appellants,
 OPINION AND
DENYING
PETITION FOR
v. REHEARING AND
R.J. REYNOLDS TOBACCO COMPANY, PETITION FOR
Defendant-Appellee. REHEARING EN
BANC AND
AMENDED
 OPINION
Appeal from the United States District Court
for the Central District of California
Christina A. Snyder, District Judge, Presiding
Argued and Submitted
May 7, 2012—Pasadena, California
Filed July 13, 2012
Amended October 15, 2012
12285
12286 SATERIALE v. R.J. REYNOLDS TOBACCO CO.
Before: John T. Noonan, Jr., and Raymond C. Fisher,
Circuit Judges, and Kimberly J. Mueller, District Judge.*
Opinion by Judge Fisher
*The Honorable Kimberly J. Mueller, United States District Judge for
the Eastern District of California, sitting by designation.
12288 SATERIALE v. R.J. REYNOLDS TOBACCO CO.
COUNSEL
Jeffrey H. Squire (argued), Lawrence P. Eagel and Raymond
A. Bragar, Bragar Wexler Eagel & Squire, P.C., New York,
New York; Lionel Z. Glancy and Marc L. Godino, Glancy
Binkow & Goldberg LLP, Los Angeles, California, for the
plaintiffs-appellants.
Marc K. Callahan, John A. Vogt (argued) and Corbett H. Wil-
liams, Jones Day, Irvine, California, for the defendant-
appellee.
SATERIALE v. R.J. REYNOLDS TOBACCO CO. 12289
ORDER
The opinion filed July 13, 2012, and reported at 687 F.3d
1132, is amended as follows:
At slip opinion page 8097, 687 F.3d at 1143, after the sen-
tence , insert the following new footnote:

With this amendment, the panel has voted to deny the peti-
tion for rehearing. Judge Fisher has voted to deny the petition
for rehearing en banc and Judges Noonan and Mueller so rec-
ommend.
The full court has been advised of the petition for rehearing
en banc and no active judge has requested a vote on whether
to rehear the matter en banc. Fed. R. App. P. 35.
12290 SATERIALE v. R.J. REYNOLDS TOBACCO CO.
Appellee’s petition for rehearing and petition for rehearing
en banc, filed August 22, 2012, is DENIED.
No future petitions for rehearing or rehearing en banc will
be entertained.
OPINION
FISHER, Circuit Judge:
R.J. Reynolds Tobacco Company (RJR) operated a cus-
tomer rewards program, called Camel Cash, from 1991 to
2007. Under the terms of the program, RJR urged consumers
to purchase Camel cigarettes, to save Camel Cash certificates
included in packages of Camel cigarettes, to enroll in the pro-
gram and, ultimately, to redeem their certificates for merchan-
dise featured in catalogs distributed by RJR. The plaintiffs
allege that, in reliance on RJR’s actions, they purchased
Camel cigarettes, enrolled in the program and saved their cer-
tificates for future redemption. They allege that in 2006 RJR
abruptly ceased accepting certificates for redemption, making
the plaintiffs’ unredeemed certificates worthless. The plain-
tiffs brought this action for breach of contract, promissory
estoppel and violation of two California consumer protection
laws. The district court dismissed the action for failure to state
a claim. We affirm in part, reverse in part and remand. We
hold that the plaintiffs have adequately alleged claims for
breach of contract and promissory estoppel, but affirm dis-
missal of the plaintiffs’ claims under the Unfair Competition
Law and the Consumer Legal Remedies Act.
I. BACKGROUND
The plaintiffs appeal from a dismissal for failure to state a
claim. See Fed. R. Civ. P. 12(b)(6). For purposes of a motion
to dismiss, we accept all well-pleaded allegations of material
SATERIALE v. R.J. REYNOLDS TOBACCO CO. 12291
fact as true and construe them in the light most favorable to
the nonmoving party. See Daniels-Hall v. Nat’l Educ. Ass’n,
629 F.3d 992, 998 (9th Cir. 2010). We thus recite the facts as
they appear in the plaintiffs’ third amended complaint. This
factual background is based on the allegations of the plain-
tiffs’ complaint. Whether the plaintiffs’ allegations are true
has not been decided.
RJR initiated the Camel Cash customer loyalty program in
1991. Compl. ¶ 24. RJR represented on Camel Cash certifi-
cates, packages of Camel cigarettes and in the media that cus-
tomers who saved the certificates — called C-Notes — could
exchange them for merchandise according to terms provided
in a catalog. Id. The C-Notes stated:
USE THIS NEW C-NOTE AND THE C-NOTES
YOU’VE BEEN SAVING TO GET THE BEST
GOODS CAMEL HAS TO OFFER. CALL 1-800-
CAMEL CASH (1800-266-3522) for a free catalog.
Offer restricted to smokers 21 years of age or older.
Value 1/1000 of 1¢. Offer good only in the USA,
and void where restricted or prohibited by law.
Check catalog for expiration date. Limit 5 requests
for a catalog per household.
Id. ¶ 26. According to the complaint, “Certain (but not all) of
the Camel Cash catalogs state[d] that Reynolds could termi-
nate the Camel Cash program without notice.” Id. ¶ 32.
The plaintiffs are 10 individuals who joined the Camel
Cash program by purchasing RJR’s products and filling out
and submitting signed registration forms to RJR. Id. ¶¶ 27, 48.
RJR sent each plaintiff a unique enrollment number that was
used in communications between the parties. Id. ¶ 27. These
communications included catalogs RJR distributed to the
plaintiffs containing merchandise that could be obtained by
redeeming Camel Cash certificates. Id.
12292 SATERIALE v. R.J. REYNOLDS TOBACCO CO.
From time to time, RJR issued a new catalog with mer-
chandise offered in exchange for Camel Cash, either upon
request, or by mailing catalogs to consumers enrolled in the
program. Id. ¶ 28. The number of Camel Cash certificates
needed to obtain merchandise varied from as little as 100 to
many thousands. Id. ¶ 29. This encouraged consumers to buy
more packages of cigarettes together with Camel Cash and
also to save or obtain Camel Cash certificates to redeem them
for more valuable items. Id.
RJR honored the program from 1991 to 2006, and during
that time Camel’s share of the cigarette market nearly dou-
bled, from approximately 4 percent to more than 7 percent. Id.
¶¶ 3, 34. In October 2006, however, RJR mailed a notice to
program members announcing that the program would termi-
nate as of March 31, 2007. Id. ¶ 32. The termination notice
stated:
As a loyal Camel smoker, we [sic] wanted to tell you
our Camel Cash program is expiring. C-Notes will
no longer be included on packs, which means what-
ever Camel Cash you have is among the last of its
kind.
Now this isn’t happening overnight — there’ll be
plenty of time to redeem your C-Notes before the
program ends. In fact, you’ll have from OCTOBER
‘06 though MARCH ‘07 to go to camelsmokes.com
to redeem your C-Notes. Supplies will be limited, so
it won’t hurt to get there before the rush.
Id. ¶ 33 & ex. A.
The announcement advised members that they could con-
tinue to redeem their C-Notes until March 2007. Beginning in
October 2006, however, RJR allegedly stopped printing and
issuing catalogs and told consumers that it did not have any
merchandise available for redemption. Id. ¶¶ 34, 48. Several
SATERIALE v. R.J. REYNOLDS TOBACCO CO. 12293
of the plaintiffs attempted, without success, to redeem C-
Notes or obtain a catalog during the final six months of the
program. Id. ¶ 49. The plaintiffs had saved hundreds or thou-
sands of Camel Cash certificates that they were unable to
redeem. Id. ¶ 11.
In November 2009, the plaintiffs filed a class action com-
plaint against RJR. They allege breach of contract, promissory
estoppel and violations of two California consumer protection
laws, the Unfair Competition Law (UCL), Cal. Bus. & Prof.
Code § 17200 et seq., and the Consumer Legal Remedies Act
(CLRA), Cal. Civ. Code § 1750 et seq. The district court dis-
missed the action under Rule 12(b)(6), and the plaintiffs
timely appealed.
II. JURISDICTION AND STANDARD OF REVIEW
We have jurisdiction under 28 U.S.C. § 1291. We review
de novo a district court’s order granting a Rule 12(b)(6)
motion to dismiss. See Cook v. Brewer, 637 F.3d 1002, 1004
(9th Cir. 2011). To survive a motion to dismiss, a complaint
must contain sufficient factual matter 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)) (internal quotation marks omitted)).
“We accept as true all well-pleaded allegations of material
fact, and construe them in the light most favorable to the non-
moving party.” Daniels-Hall, 629 F.3d at 998. The parties
agree that the plaintiffs’ claims are governed by California
law.
III. BREACH OF CONTRACT
We begin by addressing whether the plaintiffs have stated
a claim for breach of contract. The plaintiffs do not dispute
that RJR had the right to terminate the Camel Cash program
effective March 31, 2007, but allege that RJR breached a con-
tract by refusing to redeem C-Notes during the six months
12294 SATERIALE v. R.J. REYNOLDS TOBACCO CO.
preceding program termination. Compl. ¶¶ 6-7. RJR chal-
lenges the plaintiffs’ contract claim on four grounds: the
absence of an offer, indefiniteness, lack of mutuality of obli-
gation (premised on RJR’s right to terminate its contractual
obligations) and untimeliness. We address RJR’s contentions
in turn.
A. Existence of an Offer
[1] “An offer is the manifestation of willingness to enter
into a bargain, so made as to justify another person in under-
standing that his assent to that bargain is invited and will con-
clude it.” Donovan v. RRL Corp., 27 P.3d 702, 709 (Cal.
2001) (quoting City of Moorpark v. Moorpark Unified Sch.
Dist., 819 P.2d 854, 860 (Cal. 1991)) (internal quotation
marks omitted). “The determination of whether a particular
communication constitutes an operative offer, rather than an
inoperative step in the preliminary negotiation of a contract,
depends upon all the surrounding circumstances.” Id. “[T]he
pertinent inquiry is whether the individual to whom the com-
munication was made had reason to believe that it was
intended as an offer.” Id. The issue here is whether the C-
Notes, read in isolation or in combination with the catalogs,
may have constituted an offer.
1. Bilateral Contract
[2] As an initial matter, we are not persuaded that the
plaintiffs have alleged the existence of an offer to enter into
a bilateral contract. “A bilateral contract consists of mutual
promises made in exchange for each other by each of the two
contracting parties.” Sully-Miller Contracting Co. v. Gled-
son/Cashman Constr., Inc., 126 Cal. Rptr. 2d 400, 403 (Ct.
App. 2002) (quoting Corbin on Contracts § 1.23 (rev. ed.
1993)) (internal quotation marks omitted). Both sides of the
bargain must have made promises. Here, the plaintiffs have
identified an alleged promise by RJR (to allow customers to
redeem Camel Cash certificates for rewards), but they have
SATERIALE v. R.J. REYNOLDS TOBACCO CO. 12295
not pointed to any promise they made to RJR. Nor do they
argue that RJR sought a return promise in exchange for its
own promise to allow consumers to exchange C-Notes for
merchandise. They argue instead the requirements for a bilat-
eral contract are met because they agreed to certain terms and
conditions when they enrolled in the Camel Cash program.
See Appellants’ Reply Brief at 9; Compl. ¶ 26. Nothing in the
complaint, however, suggests that these terms were anything
more than conditions that the plaintiffs were required to sat-
isfy to trigger RJR’s duty to perform, as opposed to promises
that the plaintiffs were bound to perform to avoid incurring
their own contractual liability. “A condition is an event . . .
which must occur . . . before performance under a contract
becomes due.” Restatement (Second) of Contracts (hereinaf-
ter Restatement) § 224 (1981). A promise, by contrast, “is an
express or implied declaration in a contract that raises a duty
to perform and subjects the promisor to liability for breach for
failure to do so.” 13 Richard A. Lord, Williston on Contracts
(hereinafter Williston) § 38:5 (4th ed. 2012). The plaintiffs
have not alleged that they were bound to do anything. They
therefore have not alleged the existence of an offer to enter
into a bilateral contract.1
2. Unilateral Contract
[3] We reach a different conclusion as to the plaintiffs’
theory that RJR made an offer to enter into a unilateral con-
tract. In contrast to a bilateral contract, a unilateral contract
involves the exchange of a promise for a performance. See
1
It is, of course, possible for a consumer rewards program to involve a
bilateral contract. Frequent flyer programs, for example, may be governed
by membership agreements that impose contractual duties on both sides of
the bargain, exposing airlines and travelers alike to potential contractual
liability. See, e.g., Ginsberg v. Northwest, Inc., 653 F.3d 1033, 1035, 1040
(9th Cir. 2011); Am. Airlines, Inc. v. Am. Coupon Exch., Inc., 721 F. Supp.
61, 63 (S.D.N.Y. 1989). Here, however, the plaintiffs have not alleged an
offer or contract involving reciprocal duties, and therefore they have not
alleged a bilateral contract.
12296 SATERIALE v. R.J. REYNOLDS TOBACCO CO.
Harris v. Time, Inc., 237 Cal. Rptr. 584, 587 (Ct. App. 1987).
The offer is accepted by rendering a performance rather than
providing a promise. See Restatement § 45 cmt. a. “Typical
illustrations are found in offers of rewards or prizes . . . .” Id.
[4] RJR argues that its C-Notes, whether read in isolation
or in combination with the catalogs, were not offers, but invi-
tations to make an offer. RJR relies on the common law’s
general rule that “[a]dvertisements of goods by display, sign,
handbill, newspaper, radio or television are not ordinarily
intended or understood as offers to sell.” Id. § 26 cmt. b. RJR
emphasizes that two judicial decisions have applied this gen-
eral rule to customer rewards programs similar to the Camel
Cash program, see Leonard v. Pepsico, Inc., 88 F. Supp. 2d
116, 122-27 (S.D.N.Y. 1999); Alligood v. Procter & Gamble
Co., 594 N.E.2d 668, 668-70 (Ohio Ct. App. 1991) (per
curiam), and urges us to apply the rule here as well. We
decline to do so.
First, it is not clear that the common law rule upon which
RJR relies applies under California law. See Donovan, 27
P.3d at 710 (stating that “[t]his court has not previously
applied the common law rules upon which defendant relies,
including the rule that advertisements generally constitute
invitations to negotiate rather than offers,” observing that
“such rules . . . have been criticized on the ground that they
are inconsistent with the reasonable expectations of consum-
ers and lead to haphazard results,” citing Melvin Aron Eisen-
berg, Expression Rules in Contract Law and Problems of
Offer and Acceptance, 82 Cal. L. Rev. 1127, 1166-72 (1994),
and concluding that “[i]n the present case . . . we need not
consider the viability of the black-letter rule regarding the
interpretation of advertisements”).
[5] Second, even assuming California law incorporates the
common law rule, that rule includes an exception for offers of
a reward, including offers of a reward for the redemption of
coupons. As a leading contract law treatise explains,
SATERIALE v. R.J. REYNOLDS TOBACCO CO. 12297
It is very common, where one desires to induce
many people to action, to offer a reward for such
action by general publication in some form. A state-
ment that plausibly makes an offer of this kind must
be reasonably interpreted according to its terms and
the surrounding circumstances. If the statement,
properly interpreted, calls for the performance or
commencement of performance of specific acts,
action in accordance with such an interpretation will
close a contract or make the offer irrevocable. There
are many cases of an offer of a reward for the cap-
ture of a person charged with crime, for desired
information, for the return of a lost article, for the
winning of a contest, or for the redemption of cou-
pons. In addition, advertisements placed by buyers
inviting sellers to ship goods without prior commu-
nication are clear cases of offers. The contracts so
made are almost always unilateral.
Corbin on Contracts (hereinafter Corbin) § 2.4 (2012)
(emphasis added) (footnotes omitted). RJR does not discuss
this exception, relying instead on Leonard and Alligood. Sev-
eral courts, however, have applied the exception to customer
rewards programs. See, e.g., Payne v. Lautz Bros., 166 N.Y.S.
844, 845-46, 848 (N.Y. City Ct. 1916) (reward coupons
included with packages of soap wrappers), aff’d without opin-
ion, 168 N.Y.S. 369 (N.Y. Sup.), aff’d without opinion, 171
N.Y.S. 1094 (N.Y. App. Div. 1918), cited with approval in
Corbin § 2.4 n.14; Reynolds v. Philip Morris U.S.A., Inc., No.
05-cv-1876 (S.D. Cal. June 5, 2007) (order denying defen-
dant’s motion for summary judgment) (reward points
obtained by purchasing Marlboro cigarettes), rev’d on other
grounds, 332 F. App’x 397 (9th Cir. June 2, 2009); Wolens
v. Am. Airlines, Inc., 626 N.E.2d 205, 208 (Ill. 1993) (reward
miles awarded for flying on American Airlines), rev’d on
other grounds, 513 U.S. 219 (1995).2
2
Payne found an enforceable unilateral contract where the defendant
advertised that it would give a round-trip train ticket to consumers who
12298 SATERIALE v. R.J. REYNOLDS TOBACCO CO.
[6] Like these courts, we see no justification for applying
the general common law rule, rather than the common law
exception, to circumstances such as those presented here. The
common law rule that advertisements ordinarily do not consti-
tute offers arose to address a specific problem — the potential
for over-acceptance — not applicable here. Professor Farns-
worth explains that an offer ordinarily does not exist
when a proposal for a limited quantity has been sent
to more persons than its maker could accommodate.
. . . Otherwise, supposing a shopkeeper were sold out
of a particular class of goods, thousands of members
of the public might crowd into the shop and demand
to be served, and each one would have a right of
action against the proprietor for not performing his
contract. A customer would not usually have reason
to believe that the shopkeeper intended exposure to
the risk of a multitude of acceptances resulting in a
number of contracts exceeding the shopkeeper’s
inventory.
E. Allan Farnsworth, Contracts (hereinafter Farnsworth)
§ 3.10, at 134 (4th ed. 2004) (footnote and internal quotation
marks omitted). This problem arises in the case of ordinary
collected 25 coupons from the defendant’s soap packages and redeemed
them for the train tickets (or other merchandise in the defendant’s rewards
catalogs) at the defendant’s stores. See 166 N.Y.S. at 844-48. In Reynolds,
the court held that a genuine issue of material fact existed regarding
whether the plaintiff accepted an offer to enter into a unilateral contract
by purchasing Marlboro cigarettes, clipping Marlboro Miles certificates,
saving the certificates and eventually mailing a sufficient number of certif-
icates to Philip Morris to exchange for products. See Reynolds v. Philip
Morris U.S.A., supra, at 8. In Wolens, the Illinois Supreme Court recog-
nized a contractual relationship between American Airlines and members
of its frequent flyer program, stating, “When a member earns frequent
flyer miles by flying on American or by doing business with American
affiliates, a contractual relationship is formed which vests the frequent
flyer with the right to earn specific travel awards.” 626 N.E.2d at 208.
SATERIALE v. R.J. REYNOLDS TOBACCO CO. 12299
advertisements for the sale of goods or services, but not here.
First, RJR’s ostensible purpose in promoting the Camel Cash
program was not to sell a limited inventory, but to induce as
many consumers as possible to purchase Camel cigarettes.
Second, RJR could not have been trapped into a situation in
which acceptances exceeded inventory. RJR alone decided
how many C-Notes to distribute, so it exercised absolute con-
trol over the number of acceptances. As Farnsworth explains,
“if the very nature of a proposal restricts its maker’s potential
liability to a reasonable number of people, there is no reason
why it cannot be an offer.” Id. at 135.
[7] For these reasons, we find no reason to presume that
RJR’s communications did not constitute an offer merely
because they were addressed to the general public in the form
of advertisements. The operative question under California
law, therefore, is simply “whether the advertiser, in clear and
positive terms, promised to render performance in exchange
for something requested by the advertiser, and whether the
recipient of the advertisement reasonably might have con-
cluded that by acting in accordance with the request a contract
would be formed.” Donovan, 27 P.3d at 710. Construing the
complaint in the light most favorable to the plaintiffs, and
drawing all reasonable inferences from the complaint in the
plaintiffs’ favor, see Moss v. U.S. Secret Serv., 572 F.3d 962,
969 (9th Cir. 2009); Doe v. United States, 419 F.3d 1058,
1062 (9th Cir. 2005), we conclude that the plaintiffs have ade-
quately alleged the existence of an offer to enter into a unilat-
eral contract, whereby RJR promised to provide rewards to
customers who purchased Camel cigarettes, saved Camel
Cash certificates and redeemed their certificates in accordance
with the catalogs’ terms.
We reach this conclusion in light of the totality of the cir-
cumstances surrounding RJR’s communications to consum-
ers: the repeated use of the word “offer” in the C-Notes; the
absence of any language disclaiming the intent to be bound;
the inclusion of specific restrictions in the C-Notes (“Offer
12300 SATERIALE v. R.J. REYNOLDS TOBACCO CO.
restricted to smokers 21 years of age or older”; “Offer good
only in the USA, and void where restricted or prohibited by
law”; “Check catalog for expiration date”; “Limit 5 requests
for a catalog per household”); the formal enrollment process,
through which consumers submitted registration forms and
RJR issued enrollment numbers; and the substantial reliance
expected from consumers.3 Donovan explains that under the
common law “advertisements have been held to constitute
offers where they invite the performance of a specific act
without further communication and leave nothing for negotia-
tion.” 27 P.3d at 710. These requirements are satisfied here.
RJR’s alleged offer invited the performance of specific acts
(saving C-Notes and redeeming them for rewards in accor-
dance with the catalog) without further communication, and
leaving nothing for negotiation.
RJR properly emphasizes that the alleged offer left aspects
of RJR’s performance to RJR’s discretion. The offer did not
specify when future catalogs would be issued, what rewards
merchandise they would include, what quantities of merchan-
dise would be available or how many C-Notes would be
required to exchange for particular items. The plaintiffs, how-
3
The plaintiffs’ substantial reliance distinguishes this case from cases
involving garden-variety advertisements. To take advantage of the Camel
Cash program, consumers were expected to purchase Camel cigarettes and
accumulate Camel Cash certificates for a period of weeks, months or even
years. See Compl. ¶ 29 (alleging that “[t]he number of Camel Cash certifi-
cates needed to obtain merchandise . . . varied from as little as one hun-
dred to many thousands,” and noting that RJR “further encouraged
plaintiffs and other Class members to collect their Camel Cash (as
opposed to redeeming them as soon as possible) because merchandise
listed in defendant’s catalogs for redemption by a greater number of cou-
pons was disproportionately more valuable than the merchandise which
could be redeemed by fewer coupons”). Citing an offer for a reward as an
example, Corbin explains that “a proposal is likely to be deemed to be an
offer if it is foreseeable that the addressee of the proposal will rely upon
it.” Corbin § 2.2. This is so because a member of the public is unlikely to
undertake substantial reliance in the absence of a binding commitment
from the offeror — i.e., on the mere chance that the offeror will perform.
SATERIALE v. R.J. REYNOLDS TOBACCO CO. 12301
ever, do not allege that these were essential terms. See Compl.
¶ 31 (“[I]t was not a contract to obtain a specific item or good,
such as a ‘Joe Camel’ jacket or ashtray.”). Instead, they allege
a contract the essence of which was their general right to
redeem their Camel Cash certificates, during the life of the
program, for whatever rewards merchandise RJR made avail-
able, with RJR’s discretion limited only by the implied duty
of good faith performance. The presence of discretion thus
does not preclude the existence of an offer.4
B. Definiteness
[8] RJR argues that, even if there was an offer, any con-
tract arising from it would be too indefinite to be enforced. To
be enforceable under California law, a contract must be suffi-
ciently definite “for the court to ascertain the parties’ obliga-
tions and to determine whether those obligations have been
performed or breached.” Bustamante v. Intuit, Inc., 45 Cal.
Rptr. 3d 692, 699 (Ct. App. 2006) (quoting Ersa Grae Corp.
v. Fluor Corp., 2 Cal. Rptr. 2d 288, 294 (Ct. App. 1991))
(internal quotation marks omitted). “The terms of a contract
are reasonably certain if they provide a basis for determining
4
In its petition for rehearing, RJR argues that the plaintiffs have asserted
only a bilateral contract and not a unilateral contract. There is no question,
however, that the plaintiffs — in their complaint, as well as in the district
court and on appeal — have consistently alleged acceptance by perfor-
mance, which is the essence of a unilateral contract. See Appellants’
Opening Brief at 14, 19, 22, 26, 30 n.2 (asserting that the plaintiffs
accepted RJR’s offer by filling out applications, enrolling in the program,
buying cigarettes, acquiring and saving C-Notes and complying with the
program’s terms and conditions). RJR thus had fair notice of the plaintiffs’
theory that contractual liability arose from these acts of performance, and
the issue was fairly presented to this court. We focus on the substance of
the plaintiffs’ claims, not the plaintiffs’ labels. See Farnsworth § 3.4, at
112 (explaining that “[t]he dichotomy between bilateral and unilateral
plays a less important role in the contemporary analysis of contracts” and
noting that the “Restatement Second abandons the use of the terms
because of ‘doubt as to the utility of the distinction’ ” (quoting Reporter’s
Note to Rest. § 1)).
12302 SATERIALE v. R.J. REYNOLDS TOBACCO CO.
the existence of a breach and for giving an appropriate reme-
dy.” Id. (quoting Restatement § 33(2)) (internal quotation
marks omitted).
1. Existence of a Breach
[9] The first of these requirements is satisfied here. The
plaintiffs do not claim that they were entitled to particular
merchandise, but that RJR was required to make reasonable
quantities of rewards merchandise available during the life of
the Camel Cash program — a duty RJR allegedly breached by
failing to make any merchandise available after October 1,
2006. This alleged breach is readily discernible. See Restate-
ment § 33 cmt. b (“[T]he degree of certainty required may be
affected by the dispute which arises and by the remedy
sought. Courts decide the disputes before them, not other
hypothetical disputes which might have arisen.”).5
2. Giving an Appropriate Remedy
The second requirement — that the contract provide a basis
for giving an appropriate remedy — presents a closer ques-
tion. As noted, RJR exercised considerable discretion in
deciding what rewards would be offered. We cannot know
precisely what merchandise the plaintiffs might have received
had RJR fully performed its obligations, an uncertainty that
5
That the alleged contract afforded RJR some discretion in performing
does not compel the conclusion that the alleged contract is too indefinite
to be enforced. See Restatement § 34 cmt. a (“If the agreement is other-
wise sufficiently definite to be a contract, it is not made invalid by the fact
that it leaves particulars of performance to be specified by one of the par-
ties.”); Corbin § 4.4 (“[T]he fact that one of the parties reserves the power
of fixing or varying the price or other performance is not fatal if the exer-
cise of this power is subject to prescribed or implied limitations, as that
the variation . . . must be reasonable or in good faith.” (footnote omitted));
Cal. Lettuce Growers, Inc. v. Union Sugar Co., 289 P.2d 785, 791 (Cal.
1955) (“[W]here a contract confers on one party a discretionary power
affecting the rights of the other, a duty is imposed to exercise that discre-
tion in good faith and in accordance with fair dealing.”).
SATERIALE v. R.J. REYNOLDS TOBACCO CO. 12303
could inhibit the process of determining a remedy. See Busta-
mante, 45 Cal. Rptr. 3d at 699 (“[T]he limits of performance
must be sufficiently defined to provide a rational basis for the
assessment of damages.” (quoting Ladas v. Cal. State Auto.
Ass’n, 23 Cal. Rptr. 2d 810, 814 (Ct. App. 1993)) (internal
quotation marks omitted)).
It is not clear, however, that damages could not be ratio-
nally assessed here. RJR’s internal documents assigned C-
Notes values, such as 15 cents per $1 note, that might afford
a basis for assessing damages. In the alternative, RJR’s final
rewards catalog and pre-breach performance might provide a
basis for giving an appropriate remedy.6
[10] We should not lightly conclude, especially at this
early stage in the proceedings, that there is no basis for deter-
mining an appropriate remedy where, as here, the allegations
suggest that the parties intended to contract. See Cal. Lettuce
Growers, 289 P.2d at 790 (“The law does not favor, but leans
against, the destruction of contracts because of uncertainty;
and it will, if feasible, so construe agreements as to carry into
effect the reasonable intentions of the parties if that can be
ascertained.” (quoting McIllmoil v. Frawley Motor Co., 213
P. 971, 972 (Cal. 1923))); Corbin § 4.1 (“If the parties have
concluded a transaction in which it appears that they intend to
make a contract, the court should not frustrate their intention
if it is possible to reach a fair and just result, even though this
requires a choice among conflicting meanings and the filling
of some gaps that the parties have left.”). Here, the allegations
of the complaint support the inference that the parties
intended to contract. The plaintiffs enrolled in the Camel Cash
program, purchased Camel cigarettes and collected Camel
Cash certificates. RJR accepted the plaintiffs’ registration
forms, issued them enrollment numbers, performed under the
program for 15 years and, according to internal RJR docu-
6
Neither side has suggested that the value printed on the face of the C-
Notes — “1/1000 of 1¢” — reflects their actual value.
12304 SATERIALE v. R.J. REYNOLDS TOBACCO CO.
ments, treated outstanding C-Notes as a binding obligation
and an outstanding financial liability. According to the docu-
ments, RJR closely monitored its exposure under the program,
and even went so far as to create a financial reserve to cover
that exposure — actions consistent with a legally binding com-
mitment.7
[11] We also consider the plaintiffs’ substantial reliance on
RJR’s promises, as well as the substantial benefits RJR
accrued by virtue of consumers’ reliance on the Camel Cash
program. Corbin explains that, “[i]f one party has greatly ben-
efited by part performance or if one party has relied exten-
sively on the agreement, the court should go to great lengths
to find a construction of the agreement that will salvage it.”
Corbin § 4.3 (footnotes omitted). For these reasons, dismissal
for indefiniteness is unwarranted.
C. Mutuality of Obligation &
RJR’s Right to Terminate
RJR argues that the plaintiffs’ contract claim must be dis-
missed for lack of mutuality of obligation because RJR had an
unrestricted right to terminate the Camel Cash program at
will, and without notice. The complaint discusses RJR’s right
to terminate the Camel Cash program in three paragraphs:
6. Plaintiffs do not dispute that defendant had
the right to terminate the Camel Cash program.
However, defendant made a deliberate and calcu-
7
RJR argues that the internal documents are irrelevant because the exis-
tence of a contract turns on the objective intentions of the parties, not their
unexpressed subjective understandings. RJR is correct that questions of
mutual assent and interpretation turn in large part, though not always, on
the parties’ objective manifestations. See 1 Witkin, Summary of Cal. Law,
Contracts § 116 (10th ed. 2008); 1 Williston § 3:5. We are not aware of
any authority, however, extending that principle to an assessment of
whether, for the purposes of applying the definiteness requirement, the
parties in fact intended to contract.
SATERIALE v. R.J. REYNOLDS TOBACCO CO. 12305
lated choice to waive any right to terminate the pro-
gram “without notice” and instead provided six
months prior notice. Thus, during that six-month
period, from approximately October 2006 through
March 2007, defendant was obligated to comply
with the terms of its contract with plaintiffs. . . .
32. Also, the breach of contract alleged is not
that Reynolds was prohibited from terminating the
program but that, during the program’s duration,
Reynolds had the obligation to perform through the
program’s termination date. Certain (but not all) of
the Camel Cash catalogs state that Reynolds could
terminate the Camel Cash program without notice.
Defendant, however, waived any right to terminate
without notice when, on or about October 1, 2006,
it announced by mailing a notice to program mem-
bers, that the program would terminate as of March
31, 2007. Namely, defendant gave notice of termina-
tion and represented that plaintiffs could redeem
their Camel Cash certificates for six months. . . .
54. In or about October 2006, defendant
announced that it was terminating the Camel Cash
program as of March 31, 2007. Thus, the contract
was in effect until March 31, 2007 when defendant
terminated the program.
Compl. ¶¶ 6, 32, 54.
[12] Given our conclusion that the plaintiffs have alleged
an offer to enter into a unilateral rather than a bilateral con-
tract, RJR’s reliance on mutuality of obligation necessarily
fails: that doctrine does not apply to unilateral contracts. See,
e.g., Asmus v. Pac. Bell, 999 P.2d 71, 78 (Cal. 2000) (“In the
unilateral contract context, there is no mutuality of obliga-
tion.”). RJR’s argument nonetheless raises important ques-
tions about the viability of the plaintiffs’ contract claim. If, in
12306 SATERIALE v. R.J. REYNOLDS TOBACCO CO.
fact, RJR reserved an unrestricted right to terminate the
Camel Cash program, without notice, then the plaintiffs’ con-
tract claim may well be untenable.
First, a reservation of an unrestricted right to terminate
could have precluded RJR’s communications from constitut-
ing an offer. As Corbin explains, if an offeror expressly
reserves not only the right to revoke the offer at will and with-
out notice, but also the unrestricted right not to perform, then
the offer is not legally effective as an offer at all: “A pur-
ported offer that reserves the power to withdraw at will even
after an acceptance should not be described as an offer at all,
but as an invitation to submit an offer.” Corbin § 2.19.8
Second, if RJR reserved an unrestricted right to terminate
the Camel Cash program at any time and without notice, then
RJR’s promise to perform could be deemed illusory, and
hence unenforceable. As Farnsworth explains, when a prom-
ise “appears on its face to be so insubstantial as to impose no
obligation at all on the promisor — who says, in effect, ‘I will
if I want to’ ” — the promise is not enforceable. Farnsworth
§ 2.13, at 75. Accordingly, an enforceable termination clause
that gives a promisor an unrestricted power to terminate a
contract at any time, without notice, renders the promise illu-
sory and unenforceable, at least so long as the purported con-
tract remains wholly executory.
Either of the foregoing principles could possibly serve to
defeat the plaintiffs’ contract claim here. The complaint, how-
ever, does not definitively allege that RJR reserved an unre-
8
It does not appear that the plaintiffs’ beginning of performance (by
purchasing Camel cigarettes and saving C-Notes) would alter that result.
It is true as a general matter that an offeree’s part performance may render
an offer to enter into a unilateral contract irrevocable. See Steiner v. Thex-
ton, 226 P.3d 359, 368 (Cal. 2010); Restatement § 45(1). That default
principle, however, does not apply when the offer expressly reserves the
right to revoke notwithstanding the offeror’s beginning of performance.
See Restatement § 45 cmt. b.
SATERIALE v. R.J. REYNOLDS TOBACCO CO. 12307
stricted right to terminate its duty to perform. The complaint
alleges only that “[c]ertain (but not all) of the Camel Cash
catalogs state that Reynolds could terminate the Camel Cash
program without notice.” Compl. ¶ 32 (emphasis added). The
complaint, moreover, alleges that RJR “waived any right to
terminate without notice when, on or about October 1, 2006,
it announced by mailing a notice to program members, that
the program would terminate as of March 31, 2007.” Id. Dis-
missal is therefore unwarranted on the current record.
D. Statute of Limitations
[13] RJR’s argument that the plaintiffs filed their contract
claim outside the statute of limitations is unpersuasive. At this
stage of the pleadings, the plaintiffs have plausibly alleged a
written contract. A four-year limitations period applies to
“[a]n action upon any contract, obligation or liability founded
upon an instrument in writing.” Cal. Civ. Proc. Code
§ 337(1); see Ryer v. Stockwell, 14 Cal. 134, 138 (Cal. 1859)
(holding that acceptance of a unilateral “reward” contract
through performance is a contract on a written instrument for
purposes of the statute of limitations); see also 3 Witkin, Cal.
Proc., Actions § 510 (5th ed. 2008) (“[I]f the contract is writ-
ten, the action is on that contract, and the 4-year statute
applies, even though the cause of action is based not on an
express covenant but on a promise implied from the con-
tract.”); Century Indem. Co. v. Superior Court, 58 Cal. Rptr.
2d 69, 72-73 (Ct. App. 1996) (“[W]hen the parties to the
agreement sue for breach of good faith, the action is one
directly founded on the written instrument.” (emphasis omit-
ted)). The plaintiffs filed this action in 2009, within four years
of RJR’s alleged breach.
IV. PROMISSORY ESTOPPEL
Under California law, the elements of promissory estoppel
are (1) a promise clear and unambiguous in its terms; (2) reli-
ance by the party to whom the promise is made; (3) the reli-
12308 SATERIALE v. R.J. REYNOLDS TOBACCO CO.
ance must be both reasonable and foreseeable; and (4) the
party asserting the estoppel must be injured by his reliance.
See US Ecology, Inc. v. State, 28 Cal. Rptr. 3d 894, 905 (Ct.
App. 2005).
Here, the parties chiefly dispute the first element —
whether the plaintiffs have adequately alleged that RJR made
a promise clear and unambiguous in its terms. We conclude
this element is satisfied: the C-Notes promised consumers that
if they saved C-Notes and redeemed them for rewards mer-
chandise in accordance with the catalog, RJR would provide
the merchandise. These terms are neither unclear nor ambigu-
ous. See Aceves v. U.S. Bank, N.A., 120 Cal. Rptr. 3d 507,
514-15 (Ct. App. 2011) (holding that a bank’s promise — to
work with the plaintiff on a mortgage reinstatement and loan
modification if the plaintiff no longer pursued relief in bank-
ruptcy court — was a clear and unambiguous promise to
negotiate, even though it left open the terms of any loan modi-
fication agreement that might be discussed). RJR correctly
points out that its communications were unspecific as to pre-
cisely what merchandise would be offered in future catalogs.
The plaintiffs, however, do not rest their promissory estoppel
claim on an alleged promise to provide particular merchan-
dise.
[14] The plaintiffs’ promissory estoppel claim, though, is
subject to the same definiteness requirement as their breach of
contract claim. See id. at 514. This claim therefore rises or
falls with the contract claim. Given that we have concluded
that the alleged contract is sufficiently definite to survive a
motion to dismiss, we vacate dismissal of the promissory
estoppel claim as well. If further proceedings demonstrate that
the contract claim fails for indefiniteness, the promissory
estoppel claim will likely fail for the same reason.9
9
RJR’s argument that an implied promise — such as an implied promise
to maintain reasonable quantities of merchandise — cannot support a
claim for promissory estoppel is contrary to California law. See Copeland
v. Baskin Robbins U.S.A., 117 Cal. Rptr. 2d 875, 885 (Ct. App. 2002) (cit-
ing Drennan v. Star Paving Co., 333 P.2d 757, 759-60 (Cal. 1958) (apply-
ing promissory estoppel to an implied promise not to revoke a bid)).
SATERIALE v. R.J. REYNOLDS TOBACCO CO. 12309
V. UCL
The UCL prohibits unfair competition, including “any
unlawful, unfair or fraudulent business act or practice and
unfair, deceptive, untrue or misleading advertising.” Cal. Bus.
& Prof. Code § 17200. The plaintiffs allege RJR violated the
UCL when, in October 2006, it “announced that it was termi-
nating the Camel Cash program as of March 31, 2007” and
“represented that holders of the Camel Cash certificates could
redeem their coupons for another six months.” Compl. ¶ 67.
They allege that “[t]hese representations were unfair and
deceptive . . . in that they stated that defendant would provide
merchandise redeemable by Camel Cash from at least October
2006 through March 2007 when defendant had no intention of
honoring any requests to redeem Camel Cash certificates.” Id.[15] Because the plaintiffs’ UCL claim sounds in fraud,
they are required to prove “actual reliance on the allegedly
deceptive or misleading statements,” Kwikset Corp. v. Supe-
rior Court, 246 P.3d 877, 888 (Cal. 2011) (quoting In re
Tobacco II Cases, 207 P.3d 20, 26 (Cal. 2009)) (internal quo-
tation marks omitted), and that “the misrepresentation was an
immediate cause of [their] injury-producing conduct,” In re
Tobacco II Cases, 207 P.3d at 39. The complaint does not sat-
isfy these requirements.
[16] In particular, the plaintiffs do not allege reliance.
They do not allege that they purchased additional Camel ciga-
rettes in reliance on the October 1 announcement. They also
do not allege that they delayed redeeming their saved Camel
Cash certificates in reliance on the announcement. Even if
they had alleged delay, they do not explain how this delay
could have caused their injury: under the allegations of the
complaint, RJR ceased accepting C-Notes for redemption as
soon as it delivered the October 1 announcement, so delay
could not have caused the plaintiffs’ loss. Given the absence
of an alleged causal connection between the alleged misrepre-
12310 SATERIALE v. R.J. REYNOLDS TOBACCO CO.
sentations and the plaintiffs’ injuries, the district court prop-
erly dismissed the UCL claim.10
VI. CLRA
“The CLRA prohibits ‘unfair methods of competition and
unfair or deceptive acts or practices undertaken by any person
in a transaction intended to result or which results in the sale
or lease of goods or services to any consumer.’ ” Wilson v.
Hewlett-Packard Co., 668 F.3d 1136, 1140 (9th Cir. 2012)
(quoting Cal. Civ. Code § 1770(a)). Among the practices
made unlawful by the CLRA are three pled by the plaintiffs
here: “[r]epresenting that goods or services have sponsorship,
approval, characteristics, ingredients, uses, benefits, or quanti-
ties which they do not have”; “[a]dvertising goods or services
with intent not to supply reasonably expectable demand,
unless the advertisement discloses a limitation of quantity”;
and “[r]epresenting that a transaction confers or involves
rights, remedies, or obligations which it does not have or
involve, or which are prohibited by law.” Cal. Civ. Code
§ 1770(a)(5), (10), (14). See Compl. ¶¶ 80-82.
As with the UCL, consumers seeking to recover damages
under the CLRA based on a fraud theory must prove “actual
reliance on the misrepresentation and harm.” Nelson v. Pear-
son Ford Co., 112 Cal. Rptr. 3d 607, 638 (Ct. App. 2010);
accord Durell v. Sharp Healthcare, 108 Cal. Rptr. 3d 682,
697 (Ct. App. 2010); In re Vioxx Class Cases, 103 Cal. Rptr.
3d 83, 94 (Ct. App. 2009).
[17] The plaintiffs have not satisfied these requirements
10
The plaintiffs argue for the first time on appeal that their UCL claim
is premised on alleged misrepresentations before the October 2006
announcement. Brief of Appellants at 47. The plaintiffs neither pled this
theory nor presented it to the district court in opposing dismissal, and we
decline to reach it for the first time on appeal. See In re Am. W. Airlines,
Inc., 217 F.3d 1161, 1165 (9th Cir. 2000).
SATERIALE v. R.J. REYNOLDS TOBACCO CO. 12311
here. Before October 1, 2006, RJR represented that consum-
ers could redeem Camel Cash certificates for rewards. The
plaintiffs have adequately alleged that they relied on those
representations and that they were harmed as a consequence.
The plaintiffs do not assert, however, that those representa-
tions were false or deceptive when made. On the contrary,
they allege that RJR intended to be bound by the statements,
that RJR in fact honored the terms of the program for 15 years
and that RJR first “determined to end the Camel Cash pro-
gram” — and hence not to honor its alleged commitments —
on or about October 1, 2006. Compl. ¶ 45. The complaint thus
does not allege misrepresentations prior to October 1, 2006.
With respect to the October 1, 2006 announcement, the plain-
tiffs do assert that RJR made representations that were false
when made. They have not, however, alleged that they relied
on those representations or, if they did rely, that their reliance
caused them harm, as we explained in connection with the
plaintiffs’ UCL claim. We therefore affirm dismissal of the
plaintiffs’ CLRA claim as well.
VII. DISMISSAL WITH PREJUDICE
The district court did not abuse its discretion by dismissing
the plaintiffs’ UCL and CLRA claims with prejudice. See Mil-
ler v. Yokohama Tire Corp., 358 F.3d 616, 622 (9th Cir.
2004) (“Where the plaintiff has previously filed an amended
complaint, . . . the district court’s discretion to deny leave to
amend is ‘particularly broad.’ ” (quoting Chodos v. W. Publ’g
Co., 292 F.3d 992, 1003 (9th Cir. 2002))). Any requests by
the plaintiffs to further amend the pleadings should be
addressed to the district court.
VIII. CONCLUSION
We affirm dismissal of the plaintiffs’ UCL and CLRA
claims. We reverse dismissal of the plaintiffs’ breach of con-
tract and promissory estoppel claims.
12312 SATERIALE v. R.J. REYNOLDS TOBACCO CO.
The parties shall bear their own costs on appeal.
AFFIRMED IN PART, REVERSED IN PART AND
REMANDED.