Gross v. Vilore Foods Company, Inc. ( 2020 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 WARREN GROSS, DEBORAH LEVIN, Case No.: 20cv0894 DMS (JLB) SHELBY COOPER and EDWARD 12 BUCHANNAN, on behalf of themselves ORDER GRANTING IN PART AND 13 and all others similarly situated, DENYING IN PART DEFENDANT VILORE FOODS COMPANY, INC.’S 14 Plaintiffs, MOTION TO DISMISS AND 15 v. DENYING MOTION FOR A MORE DEFINITE STATEMENT 16 VILORE FOODS COMPANY, INC., et al., 17 Defendants. 18 19 20 This case comes before the Court on Defendant Vilore Foods Company, Inc.’s 21 motion to dismiss and motion for a more definite statement. Plaintiffs filed an opposition 22 to the motion, and Vilore filed a reply. For the reasons set out below, the Court grants in 23 part and denies in part Vilore’s motion to dismiss and denies the motion for a more definite 24 statement. 25 I. 26 BACKGROUND 27 On May 13, 2020, Plaintiffs Warren Gross and Deborah Levin filed a Class Action 28 Complaint against Vilore alleging claims under California’s Consumers Legal Remedies 1 Act, Cal. Civ. Code §§ 1750 et seq. (“CLRA”), California’s Unfair Competition Law, Cal. 2 Bus. & Prof. Code §§ 17200 et seq. (“UCL”), and California’s False Advertising Law, Cal. 3 Bus. & Prof. Code §§ 17500 et seq. (“FAL”), as well as claims for breach of express 4 warranty, breach of implied warranty and negligent misrepresentation. In their Complaint, 5 Plaintiffs allege they purchased certain “juices and juice-based beverage products, 6 including juice-based products labeled ‘Guava Nectar’, ‘Apricot Nectar’, and ‘Peach 7 Nectar’ (the ‘Products’)[,]” (Compl. ¶8), which Vilore had distributed. (Id. ¶13.) 8 After a status conference between counsel and the Court, Plaintiffs filed a First 9 Amended Complaint (“FAC”) adding two new Plaintiffs, Shelby Cooper and Edward 10 Buchannan, and a new Defendant Arizona Canning Company, LLC (“ACC”). Like Vilore, 11 ACC is alleged to have distributed the Products. (FAC ¶14.) In the FAC, Plaintiffs seek 12 to represent a nationwide class of consumers and a California subclass of consumers who 13 purchased the Products on or after July 1, 2014. (Id. ¶¶94-95.) Plaintiffs allege the Product 14 labels, which include the names, “Mango,” “Apricot,” and “Peach,” along with “pictorial 15 representations of various fruits” mislead consumers by suggesting “that the Products 16 consist exclusively of and are flavored only with natural juices.” (Id. ¶35.) Indeed, 17 Plaintiffs allege that some of the labels included the phrase “100% Natural.” (Id. ¶¶33 n.2, 18 36.) Plaintiffs allege these labels are misleading and deceptive as the Products contain 19 artificial flavoring, specifically, dl-malic acid. (Id. ¶¶37-42.) Finally, Plaintiffs allege 20 Vilore acted fraudulently by failing to provide an “artificially flavored” disclosure on the 21 front-label as required by federal and state law. (Opp’n at 5 (citing FAC ¶¶ 47-51)). 22 In the FAC, Plaintiffs reallege all of the claims in the original Complaint: (1) 23 violation of the CLRA, (2) violation of the UCL “Unlawful Prong,” (3) violation of the 24 UCL, “Unfair Prong,” (4) violation of the FAL, (5) breach of express warranty, (6) breach 25 of implied warranty, and (7) negligent misrepresentation. Through these claims, Plaintiffs 26 seek declaratory and injunctive relief, disgorgement, restitution, compensatory and 27 punitive damages, attorneys’ fees, costs and interest. In response to the FAC, Vilore filed 28 the present motion. 1 II. 2 DISCUSSION 3 Vilore moves to dismiss the FAC in its entirety. It raises several arguments. First, 4 it argues Plaintiffs have failed to provide it with adequate notice of the facts supporting 5 their claims. Second, Vilore asserts the claims based on the listing of malic acid as an 6 ingredient are preempted. Third, Vilore argues the UCL, CLRA and FAL claims for 7 equitable relief should be dismissed because Plaintiffs have an adequate remedy at law. 8 Fourth, Vilore contends all of Plaintiffs’ claims are partially time-barred. 9 A. Legal Standard 10 In Ashcroft v. Iqbal, 556 U.S. 662 (2009), and Bell Atlantic Corp. v. Twombly, 550 11 U.S. 544 (2007), the Supreme Court established a more stringent standard of review for 12 12(b)(6) motions. To survive a motion to dismiss under this new standard, “a complaint 13 must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is 14 plausible on its face.’” Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 570). “A claim 15 has facial plausibility when the plaintiff pleads factual content that allows the court to draw 16 the reasonable inference that the defendant is liable for the misconduct alleged.” Id. (citing 17 Twombly, 550 U.S. at 556). 18 “Determining whether a complaint states a plausible claim for relief will ... be a 19 context-specific task that requires the reviewing court to draw on its judicial experience 20 and common sense.” Id. at 679 (citing Iqbal v. Hasty, 490 F.3d 143, 157-58 (2d Cir. 2007)). 21 In Iqbal, the Court began this task “by identifying the allegations in the complaint that are 22 not entitled to the assumption of truth.” Id. at 680. It then considered “the factual 23 allegations in respondent’s complaint to determine if they plausibly suggest an entitlement 24 to relief.” Id. at 681. 25 B. Failure to Provide Adequate Notice of Claims 26 Vilore’s first argument in support of its motion to dismiss is that Plaintiffs have 27 failed to provide adequate notice of the claims being asserted. Specifically, Vilore argues 28 Plaintiffs have failed to specify the facts underlying their claims against Vilore as opposed 1 to their claims against ACC. In support of this argument, Vilore relies on Federal Rules of 2 Civil Procedure 8 and 9(b). 3 Rule 8(a)(2) requires that a complaint include “a short and plain statement of the 4 claim showing that the pleader is entitled to relief[.]” Fed. R. Civ. P. 8(a)(2). To satisfy 5 this Rule, “a complaint must ‘give the defendant fair notice of what the claim is and the 6 grounds upon which it rests.’” Tivoli LLC v. Sankey, No. SACV141285DOCJCGX, 2015 7 WL 12683801, at *3 (C.D. Cal. Feb. 3, 2015) (quoting Twombly, 550 U.S. at 555). This 8 “is a functional standard that ensures that the opposing party can properly defend itself in 9 court.” Cree, Inc. v. Tarr Inc., No. 317CV00506GPCNLS, 2017 WL 3219974, at *5 (S.D. 10 Cal. July 28, 2017). Rule 9(b), by contrast, “requires that, when fraud is alleged, ‘a party 11 must state with particularity the circumstances constituting fraud....’” Kearns v. Ford 12 Motor Co., 567 F.3d 1120, 1124 (9th Cir. 2009) (quoting Fed. R. Civ. P. 9(b)). A pleading 13 satisfies Rule 9(b) if it identifies “the who, what, when, where, and how” of the misconduct 14 charged. Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003). 15 Plaintiffs do not dispute that their claims under the UCL, CLRA and negligent 16 misrepresentation are subject to the heightened pleading requirements of Rule 9(b). 17 Kearns, 567 F.3d at 1125 (applying Rule 9(b)’s pleading requirements to claims under the 18 UCL and CLRA); Zetz v. Bos. Sci. Corp., 398 F.Supp.3d 700, 713 (E.D. Cal. 2019) 19 (applying Rule 9(b) to negligent misrepresentation claim). 20 Vilore’s primary argument here appears to be that the Products at issue were not 21 labeled uniformly throughout the Class Period. For instance, Plaintiffs allege that for some 22 time during the Class Period the Products were labeled as “100% Natural,” (FAC ¶¶33, 23 52), but Plaintiffs fail to allege when those labels were in use, or more importantly, whether 24 those labels were in use during Vilore’s, as opposed to ACC’s, distribution of the Products.1 25 26 27 1 Plaintiffs’ failure to plead with specificity also impacts their breach of express warranty claim, which appears to be premised on the alleged representation that the Products are 28 1 Rule 9(b) requires Plaintiffs to allege the “who, what, when, where and how” of any claims 2 that sound in fraud. As noted, Vilore argues that includes Plaintiffs’ claims under the UCL 3 and CLRA and their claim for negligent misrepresentation. On those claims, the Court 4 agrees with Vilore that Plaintiffs must identify which Defendant is responsible for which 5 label to comply with Rule 9(b). While Plaintiffs identify the Products at issue and set out 6 the allegedly deceptive labeling practices and non-disclosures, they have failed to plead 7 with particularity who engaged in the misbranding, as to which labels, and when and where. 8 Plaintiffs’ failure to allege those facts with more specificity warrants dismissal of these 9 claims.2 10 C. Preemption 11 Vilore’s next argument concerns the use of malic acid on the product labels. In the 12 FAC, Plaintiffs cite 21 C.F.R. §101.4(a)(1) in support of their allegations concerning this 13 issue. (FAC ¶48.) This regulation states: “Ingredients required to be declared on the label 14 or labeling of a food … shall be listed by [their] common or usual name ….” 21 C.F.R. § 15 101.4(a)(1). In their opposition to Vilore’s motion, Plaintiffs also cite 21 C.F.R. § 101.4(b) 16 to support their claims, which states, “[t]he name of an ingredient shall be a specific name 17 and not a collective (generic) name[.]” 21 C.F.R. § 101.4(b). Plaintiffs’ theory in this case 18 appears to be that malic acid is the common, collective name of the ingredient at issue here, 19 not the specific name, as required by § 101.4(b). Vilore asserts the use of malic acid on 20 the labels is consistent with the federal regulations, and thus the claims based on this theory 21 should be dismissed as preempted. 22 Plaintiffs’ counsel is no stranger to this dispute concerning the use of malic acid on 23 product labels. See Hilsley v. Gen. Mills, Inc., 376 F.Supp.3d 1043, 1045 (S.D. Cal. 2019); 24 Branca v. Bai Brands, LLC, No. 318CV00757BENKSC, 2019 WL 1082562, at *1 (S.D. 25 Cal. Mar. 7, 2019); Morris v. Mott's LLP, No. SACV1801799AGADSX, 2019 WL 948750, 26 27 2 The Court declines to address Vilore’s motions to dismiss under Rule 8 and for a more 28 1 at *1 (C.D. Cal. Feb. 26, 2019); Sims v. Campbell Soup Co., No. EDCV18668PSGSPX, 2 2018 WL 7568640, at *1 (C.D. Cal. Sept. 24, 2018); Allred v. Frito-Lay N. Am., Inc., No. 3 17-CV-1345 JLS (BGS), 2018 WL 1185227, at *1 (S.D. Cal. Mar. 7, 2018). Thus far, only 4 one court has sided with Plaintiffs’ counsel. See Allred, 2018 WL 1185227, at *3. The 5 other four courts have sided against Plaintiffs, and dismissed claims similar to the ones 6 alleged here. See Hilsley, 376 F.Supp.3d at 1049 (finding FDA regulations do not require 7 that malic acid be listed in the ingredients by a more specific name); Branca, 2019 WL 8 1082562, at *6; Morris, 2019 WL 948750, at *5; Sims, 2018 WL 7568640, at *7-8 (same). 9 This Court finds the reasoning of the majority of courts more persuasive, particularly 10 the reasoning of Morris. In that case, the court found that § 101.4(b), which requires the 11 use of a “specific name,” did not override § 101.4(a), which requires the use of a “common 12 or usual name.” 2019 WL 948750, at *5 (citing Sims, 2018 WL 7568640, at *8). Instead, 13 the court found § 101.4(b) simply clarified that multiple ingredients must be listed 14 separately rather than as one generic ingredient. Id. (citing Sims, 2018 WL 7568640, at 15 *8). As an example, the court found that “apples, oranges, and grapes can’t be listed 16 collectively as ‘fruit.’” Id. (citing Sims, 2018 WL 7568640, at *8). Vilore relies on this 17 reasoning, along with 21 C.F.R. § 184.1069(a),3 to support its argument that listing malic 18 acid complies with the federal regulations. This Court agrees with Vilore, and the majority 19 of courts that have addressed this issue, and concludes Plaintiffs’ claims based on the malic 20 acid theory are preempted. Accordingly, those claims are dismissed. 21 D. Adequate Remedy at Law 22 Vilore next argues that Plaintiffs’ UCL, CLRA and FAL claims are equitable in 23 nature, and they should be dismissed because Plaintiffs have adequate remedies at law by 24 virtue of their warranty claims and their claim for negligent misrepresentation. 25 26 27 3 This regulation states “[m]alic acid (C4H605, CAS Reg. No. of L-form 97-67-6, CAS Reg. No. of DL-form 617-48-1) is the common name for 1-hydroxy-1, 2-ethanedicarboxylic 28 1 In support of this argument, Vilore relies primarily on Sonner v. Premier Nutrition 2 Corp., 962 F.3d 1072, superseded by 971 F.3d 834 (9th Cir. 2020). Plaintiffs respond that 3 Sonner is distinguishable because it involved only a request for restitution, not a request 4 for injunctive relief, which is part of the remedy Plaintiffs request here. The Court agrees 5 with Plaintiffs that Sonner is distinguishable, for that reason and others. Furthermore, the 6 cases Plaintiffs cite contradict Vilore’s argument that Plaintiffs’ claims are subject to 7 dismissal because Plaintiffs have an adequate remedy at law. See Deras v. Volkswagen 8 Grp. of Am., Inc., No. 17-CV-05452-JST, 2018 WL 2267448, at *6 (N.D. Cal. May 17, 9 2018) (declining to dismiss claims because plaintiff could pursue alternative remedies at 10 pleading stage); Spirtos v. Allstate Inc., Co., No. CV 02-8798-RGK AJWX, 2003 WL 11 25900368, at *4 (C.D. Cal. Jan. 10, 2003) (stating plaintiffs’ “continual injuries, if proven 12 to exist,” may warrant injunction). Accordingly, this argument does not warrant dismissal. 13 E. Statutes of Limitations 14 Vilore’s final argument in support of its motion to dismiss is that all of Plaintiffs’ 15 claims are partially time-barred. Vilore points out that Plaintiffs allege they first purchased 16 the Products, as follows: Buchanan in 1999, Cooper in 2012, Levin in 2014, and Gross in 17 2018. (See Mot. at 14 (citing FAC ¶¶ 84-86)). Yet, Plaintiffs seek to represent two classes 18 of consumers with purchases dating back to July 1, 2014, (FAC ¶¶94-95), nearly six years 19 before the complaint was filed in this matter. Accordingly, based on the face of the FAC, 20 Vilore argues Plaintiffs’ negligent misrepresentation claims for purchases made before 21 May 13, 2018, CLRA and FAL claims for purchases made before May 13, 2017, and 22 warranty and UCL claims for purchases made before May 13, 2016, are time-barred and 23 must be dismissed. Vilore also asserts that Plaintiffs’ reliance on the delayed discovery 24 rule and allegations of fraudulent concealment to toll the statutes of limitation as to these 25 claims fails because Plaintiffs have not pled sufficient facts to support either of those tolling 26 theories. 27 To invoke the delayed discovery rule, the plaintiff must plead facts that show (1) the 28 time and manner of discovery, and (2) the inability to have made earlier discovery despite 1 reasonable diligence. See Yumul v. Smart Balance, Inc., 733 F.Supp.2d 1134, 1141 (C.D. 2 Cal. 2010). Similarly, to toll the statute of limitations based on fraudulent concealment, 3 the plaintiff “must plead with particularity the facts which give rise to the claim of 4 fraudulent concealment,” including the “facts showing [their] diligence in trying to uncover 5 the facts.” Conerly v. Westinghouse Corp., 623 F.2d 117, 120 (9th Cir. 1980). Plaintiffs 6 have failed to meet these requirements. 7 Essentially, Plaintiffs allege Vilore’s deceptive branding—standing alone—fooled 8 them into believing the Products’ characterizing flavors were natural and not artificially 9 created. Under this logic, the statute of limitations would be tolled for every “reasonable 10 consumer” from the date he or she was deceived into making a purchase. But more is 11 required of the consumer. They must plead facts showing the inability to have discovered 12 the deception at an earlier time (before the limitations period elapsed), despite exercising 13 reasonable diligence. Aside from declaring they are “reasonably diligent consumers who 14 exercised reasonable diligence in their purchase and consumption of the Products[,]” (FAC 15 ¶ 101), Plaintiffs have not alleged any facts to show, for example, how they discovered the 16 alleged misbranding, the efforts they undertook to make the discovery, or why they were 17 not on inquiry notice. 18 Plaintiffs reference the FAC to argue that as “reasonably diligent consumers … they 19 would not have been able to discover Defendants’ deceptive practices … [because] they 20 rely on and are entitled to rely on the manufacturer’s obligation to label its products in 21 compliance with federal regulations and state law.” (Opp’n at 10 (quoting FAC ¶ 101)). 22 Next, Plaintiffs argue, again by reference to Paragraph 101 of the FAC: 23 Defendants’ labeling practices and non-disclosures—in particular, failing to identify the artificial flavor in the ingredient list, or to disclose that the 24 Products contained artificial flavoring, or to accurately identify the kind of 25 malic acid in the Products—impeded Plaintiffs’ and Class members’ abilities to discover the deceptive and unlawful labeling of the Products throughout the 26 Class Period. 27 28 Id. 1 Plaintiffs allegations address in conclusory terms how they were misled, but they do 2 not address the time and manner of discovering the deception, the inability to have made 3 the discovery earlier despite the exercise of reasonable diligence, how Vilore’s labeling 4 practices and non-disclosures “impeded” them from making the discovery or excused them 5 altogether from exercising some level of diligence, or how Vilore (perhaps on information 6 and belief) orchestrated the concealment. Without more specificity, Plaintiffs may not toll 7 the applicable statutes of limitation under the delayed discovery or fraudulent concealment 8 theories. Accordingly, Vilore’s motion to partially dismiss the foregoing claims as time 9 barred is granted. 10 III. 11 CONCLUSION AND ORDER 12 For these reasons, the Court grants in part and denies in part Vilore’s motion to 13 dismiss. Specifically, the Court (1) grants the motion to dismiss Plaintiffs’ claims under 14 the UCL and the CLRA and their claim for negligent misrepresentation for failure to 15 comply with Rule 9(b), (2) grants the motion to dismiss Plaintiffs’ claims to the extent they 16 rely on the malic acid theory, and (3) grants the motion to dismiss Plaintiffs’ (a) negligent 17 misrepresentation claims based on purchases pre-dating May 13, 2018, (b) CLRA and FAL 18 claims based on purchases pre-dating May 13, 2017, and (c) breach of warranty and UCL 19 claims based on purchases pre-dating May 13, 2016. The remainder of the motion is 20 denied. 21 Consistent with Plaintiffs’ request, Plaintiffs are granted leave to file a Second 22 Amended Complaint that cures the pleading deficiencies set out above. Plaintiffs are 23 cautioned that if their Second Amended Complaint does not cure these deficiencies, their 24 claims will be dismissed with prejudice and without leave to amend. The Court also notes 25 that if Plaintiffs choose to amend, the commencement of the Class Period must “be 26 / / / 27 / / / 28 / / / 1 |/congruent with the statute of limitations.” In re Northrup Grumman Corp. ERISA Litig., 2 ||No. CV 06-06213 MMM (JCx), 2011 WL 3505264, at *13 (C.D. Cal. Mar. 29, 2011). 3 || Plaintiffs shall file their Second Amended Complaint on or before November 13, 2020. 4 IT IS SO ORDERED. 5 || Dated: October 28, 2020 6 ns my. L4\ Hon. Dana M. Sabraw 7 United States District Judge 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28