Steven Prescott v. Nestle USA, Inc. ( 2023 )

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS AUG 21 2023
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
STEVEN PRESCOTT; LINDA CHESLOW, No. 22-15706
individually and on behalf of all others
similarly situated, D.C. No. 5:19-cv-07471-BLF
Plaintiffs-Appellants,
MEMORANDUM*
v.
NESTLE USA, INC.,
Defendant-Appellee.
Appeal from the United States District Court
for the Northern District of California
Beth Labson Freeman, District Judge, Presiding
Submitted August 15, 2023**
San Francisco, California
Before: CALLAHAN and BADE, Circuit Judges, and ANTOON,*** District
Judge.
Steven Prescott and Linda Cheslow, individually and on behalf of all others
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
***
The Honorable John Antoon II, United States District Judge for the
Middle District of Florida, sitting by designation.
similarly situated, (collectively, “Plaintiffs”) appeal the district court’s dismissal
under Federal Rule of Civil Procedure 12(b)(6) of their putative consumer class
action against Nestlé USA, Inc. (“Nestlé”). Plaintiffs allege that Nestlé violated
California’s Unfair Competition Law (“UCL”), False and Misleading Advertising
Law (“FAL”), and Consumer Legal Remedies Act (“CLRA”) by misleading
consumers into believing its “Premier White Morsels” product contains white
chocolate. The district court concluded that Plaintiffs (1) failed to state a plausible
claim under California’s reasonable consumer test as a matter of law and (2) failed
to allege standing to seek injunctive relief. We have jurisdiction under 28 U.S.C. §
1291. Reviewing the district court’s dismissal order de novo, see Tingley v.
Ferguson, 47 F.4th 1055, 1066 (9th Cir. 2022), we vacate and remand.
The district court correctly concluded that as a federal court sitting in
diversity over Plaintiffs’ California state law claims, it must apply California
substantive law. See Moore v. Mars Petcare US, Inc., 966 F.3d 1007, 1016 (9th
Cir. 2020). Shortly after Plaintiffs filed their opening brief in this appeal, the
California Court of Appeal decided Salazar v. Walmart, Inc., 83 Cal. App. 5th 561(2022) (“Walmart”), a case involving materially identical facts, claims, and
arguments. In Walmart, the court concluded that the trial court erred in sustaining
Walmart’s demurrer without leave to amend as to plaintiffs’ claims for implied
misrepresentations regarding white chocolate in baking products under the UCL,
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FAL, and CLRA. Walmart, 83 Cal. App. 5th at 570. The trial court had dismissed
plaintiffs’ claims without leave to amend, finding as a matter of law that no
reasonable consumer would believe Walmart’s “Great Value White Baking Chips”
contain white chocolate. Id. at 564. The California Supreme Court denied the
petition for review and request to depublish the Walmart decision. Salazar v.
Walmart, Inc., 2023 Cal. LEXIS 45 (Jan. 11, 2023).
Although the Walmart decision is not binding, its application of California
law is persuasive and should be followed unless we are “convinced that the
California Supreme Court would reject it.” Tompkins v. 23andMe, Inc., 840 F.3d
1016, 1023 (9th Cir. 2016) (quoting Muniz v. United Parcel Serv., Inc., 738 F.3d
214, 219 (9th Cir. 2013)); see also Owen ex rel. Owen v. United States, 713 F.2d
1461, 1464–65 (9th Cir. 1983) (“In the absence of a pronouncement by the highest
court of a state, the federal courts must follow the decision of the intermediate
appellate courts of the state unless there is convincing evidence that the highest
court of the state would decide differently.” (internal quotation marks omitted)
(quoting Andrade v. City of Phoenix, 692 F.2d 557, 559 (9th Cir. 1982) (per
curiam))).
However, because Walmart was decided after the district court issued its
order, the district court has not had the opportunity to consider the impact of the
case—specifically, whether there is any convincing evidence that the California
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Supreme Court would decide the issue differently than the California Court of
Appeal did in Walmart. Accordingly, we vacate the district court’s order granting
Nestlé’s motion to dismiss and remand for the district court to consider the
Walmart decision in the first instance.
To the extent that the Walmart decision may inform the district court’s
analysis on the issue of standing under Davidson v. Kimberly-Clark Corp., 889
F.3d 956 (9th Cir. 2018), we vacate and remand as to the conclusion that Plaintiffs
failed to allege standing to seek injunctive relief as well.
VACATED AND REMANDED for further proceedings consistent with
this memorandum disposition.
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