Gross v. Vilore Foods Company, Inc. ( 2021 )

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 (1) GRANTING IN PART 13 and all others similarly situated, AND DENYING IN PART DEFENDANT VILORE FOODS 14 Plaintiffs, COMPANY, INC.’S MOTION TO 15 v. DISMISS AND (2) GRANTING IN PART AND DENYING IN PART 16 VILORE FOODS COMPANY, INC., et DEFENDANT ARIZONA CANNING al., 17 COMPANY, LLC’S MOTION TO Defendants. DISMISS 18 19 20 This case returns to the Court on the motions to dismiss filed by Defendant Vilore 21 Foods Company, Inc. (“Vilore”) and Arizona Canning Company, LLC (“ACC”). Plaintiffs 22 filed oppositions to each motion, and each Defendant filed a reply brief. For the reasons 23 set out below, the Court grants in part and denies in part Vilore’s motion and grants in part 24 and denies in part ACC’s motion. 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 alleged 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 ACC as a Defendant. Like Vilore, ACC was alleged to have distributed 11 the Products. (FAC ¶14.) In the FAC, Plaintiffs sought to represent a nationwide class of 12 consumers and a California subclass of consumers who purchased the Products on or after 13 July 1, 2014. (Id. ¶¶94-95.) Plaintiffs alleged the Product labels, which include the names, 14 “Mango,” “Apricot,” and “Peach,” along with “pictorial representations of various fruits” 15 mislead consumers by suggesting “that the Products consist exclusively of and are flavored 16 only with natural juices.” (Id. ¶35.) Indeed, Plaintiffs alleged that some of the labels 17 included the phrase “100% Natural.” (Id. ¶¶33 n.2, 36.) Plaintiffs alleged these labels 18 were misleading and deceptive as the Products contain artificial flavoring, specifically, dl- 19 malic acid. (Id. ¶¶37-42.) Finally, Plaintiffs alleged Vilore acted fraudulently by failing 20 to provide an “artificially flavored” disclosure on the front-label as required by federal and 21 state law. (Opp’n at 5 (citing FAC ¶¶ 47-51)). 22 In response to the FAC, Vilore filed a motion to dismiss, which the Court granted in 23 part and denied in part. Specifically, the Court granted the motion to dismiss Plaintiffs’ 24 claims under the UCL and the CLRA and their claim for negligent misrepresentation for 25 failure to comply with Rule 9(b), granted the motion to dismiss Plaintiffs’ claims to the 26 extent they relied on Defendants’ failure to identify the specific form of malic acid used in 27 the Products, and granted the motion to dismiss Plaintiffs’ negligent misrepresentation 28 claims based on purchases pre-dating May 13, 2018, CLRA and FAL claims based on 1 purchases pre-dating May 13, 2017, and breach of warranty and UCL claims based on 2 purchases pre-dating May 13, 2016. The remainder of the motion was denied. 3 In accordance with the Court’s Order, Plaintiffs filed a Second Amended Complaint 4 (“SAC”). In response, Defendants filed the present motions. 5 II. 6 DISCUSSION 7 Each Defendant raises a number of arguments in support of its motion to dismiss. 8 The Court addresses these arguments below. 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. Federal Rules of Civil Procedure 8 and 9 26 In the Order on Vilore’s first motion to dismiss, the Court found Plaintiffs had failed 27 to satisfy the pleading requirements of Federal Rule of Civil Procedure 9(b) with respect 28 to their claims under the CLRA, the UCL, and their claim for negligent misrepresentation. 1 ACC raises a similar argument in its motion. Specifically, it argues Plaintiffs have (1) 2 failed to identify the Products at issue with the requisite specificity, (2) failed to specify 3 which Defendants are alleged to have committed what conduct, and (3) failed to identify 4 which Plaintiffs purchased which Products, and where are when those purchases were 5 made. Plaintiffs assert their allegations satisfy the requisite pleading standards. 6 On the issue of the Products, the Court agrees with Plaintiffs that they have 7 sufficiently alleged which Products are at issue. In Paragraph 8 of the SAC, Plaintiffs 8 allege “Defendants, during the proposed Class Period, distributed, advertised, marketed, 9 and sold a variety of Kern’s juices and juice-based beverage products, including juice- 10 based beverage products labeled ‘Guava Nectar’, ‘Apricot Nectar’, ‘Mango Nectar,’ and 11 ‘Peach Nectar’ (the ‘Products’).” (SAC ¶8.) ACC argues, based on the word “including”, 12 that it is unclear from this allegation whether the four listed Products are the only ones at 13 issue or if there are others. But in their opposition to ACC’s motion, Plaintiffs clarify that 14 the only Products at issue are the four Products listed. With this clarification, the Court 15 finds Plaintiffs’ allegations about the Products at issue satisfy the requisite pleading 16 standards. 17 Next, ACC argues Plaintiffs have failed to identify what specific conduct gives rise 18 to the claims against each Defendant. Plaintiffs dispute this argument, and assert their 19 allegations are sufficient. Here, again, the Court agrees with Plaintiffs. In Paragraphs 13 20 and 14 of the SAC, Plaintiffs allege Vilore has been the U.S. Distributor of the Products 21 since 2018, (id. ¶13), and ACC was the U.S. Distributor from May 13, 2016 (the beginning 22 of the earliest Class Period), through December 31, 2017. (Id. ¶14.) Plaintiffs also identify 23 an exemplar of the Products at issue in Paragraph 33 of the SAC, and explain why those 24 exemplars are false and misleading. (See id. ¶¶17, 36) (stating pictures of fresh fruit 25 combined with names of fresh fruit represented that Products were “flavored only with 26 natural ingredients when the Products in fact contain an undisclosed artificial flavor”). 27 Plaintiffs go on to identify another set of exemplars that they allege were distributed by 28 ACC only, (id. ¶37), and explain that those exemplars were false and misleading for the 1 reasons set out above and because they stated “100% Natural” on the front of the Products. 2 (Id. ¶¶37-41.) Contrary to the allegations in the FAC, these allegations satisfy the “who, 3 what, when, where and how” of Rule 9(b), and necessarily, the notice requirements of Rule 4 8. Accordingly, ACC’s request to dismiss Plaintiffs’ claims based on these Rules is denied. 5 C. Constitutional Standing 6 ACC also argues Plaintiffs failed to plead with specificity what Products they 7 purchased and when those purchases were made, therefore they lack constitutional 8 standing. Although ACC fails to fully explain this argument, ACC appears to be arguing 9 that Plaintiffs have failed to plead Defendants caused their injuries because it is unclear 10 whether Plaintiffs purchased Products that were distributed by Vilore, ACC, or both. 11 Plaintiffs respond that they have identified the Products they purchased and when those 12 purchases were made, which is sufficient to satisfy the standing requirements. 13 Plaintiffs’ allegations about their individual purchases are as follows: 14 (1) Plaintiff Gross purchased the Products in 2018 and 2019, (id. ¶92); 15 (2) Plaintiff Levin purchased the Products “multiple times” between 2014 and 2018, 16 (id. ¶¶93-94); 17 (3) Plaintiff Cooper purchased the Products “multiple times” between 2012 and 18 2020, (id. ¶96); and 19 (4) Plaintiff Buchannan purchased the Products “multiple times” between 1999 and 20 2020. (Id. ¶98.) 21 Contrary to ACC’s argument, these allegations are sufficient to satisfy the causation 22 element of standing for Plaintiffs’ claims against both Defendants because the purchases 23 were made over the course of both Defendants’ distribution of the Products. 24 ACC takes particular aim at the allegations surrounding Plaintiff Gross because his 25 purchases were made after ACC stopped distributing the Products. However, Plaintiffs 26 allege that although ACC ceased being the distributor on December 31, 2017, it may still 27 be held liable because “Products identifying ACC as the distributor and therefore the liable 28 party likely continued to be sold in the U.S. during at least a substantial part of 2018.” (Id. 1 ¶14 n.1.) ACC asserts this allegation is nothing more than an “implausible, speculative, 2 and fact-devoid hypothesis[,]” (Reply at 4), but on this motion, the Court must construe 3 Plaintiffs’ factual allegations as true, and as so construed, it is plausible that ACC caused 4 injury to Plaintiff Gross. Therefore, ACC’s challenge to his standing is rejected.1 5 D. CLRA, UCL and FAL Claims 6 Having resolved the threshold issues, the Court now turns to Defendants’ arguments 7 on the individual claims. On the CLRA, UCL, and FAL claims, Vilore raises two 8 arguments. First, it argues the claims are implausible because no reasonable consumer is 9 likely to be deceived by the Product labels. Second, Vilore asserts Plaintiffs lack statutory 10 standing to pursue these claims. ACC also raises arguments as to these claims, but its 11 arguments are directed at the claims individually rather than as a whole. Specifically, ACC 12 argues Plaintiffs’ CLRA claim should be dismissed because Plaintiffs have failed to 13 comply with the procedural requirements for such a claim, and because the labels do not 14 include any affirmative misrepresentations. On the “unlawful” UCL claim, ACC argues 15 Plaintiffs have failed to allege a violation of any law, therefore that claim should be 16 dismissed. On the “unfair” UCL claim, ACC asserts it should be dismissed because 17 Plaintiffs have failed to allege sufficient facts to support any “unfair” conduct. And on the 18 FAL claim, ACC argues it should be dismissed because Plaintiffs have not alleged any 19 untrue or misleading advertising or reliance thereon. 20 Plaintiffs’ response to Vilore’s first argument is that the Court should not consider 21 it because it is inappropriate for resolution on the present motion. There is no hard-and- 22 fast rule against making a reasonable consumer determination on a motion to dismiss. See 23 Davis v. HSBC Bank Nevada, N.A., 691 F.3d 1152, 1161-62 (9th Cir. 2012) (affirming 24 25 1 ACC also raises what it describes as a standing argument directed to Plaintiff Levin. 26 However, that argument is not one of standing. Rather, it sounds in judicial estoppel, and 27 is based on evidence outside the SAC. Considering the latter point, the Court declines to resolve that argument in the context of the present motion. 28 1 |/dismissal of claims because advertising not likely to deceive reasonable consumer). 2 || However, the Ninth Circuit has cautioned that it will be a “rare situation” where granting 3 ||a motion to dismiss on this ground is appropriate. Williams v. Gerber Prod. Co., 552 F.3d 4 || 934, 939 (9th Cir. 2008). 5 This case does not present one of those rare situations. As in Williams, there are a 6 ||number of features on the Product labels that “could likely deceive a reasonable consumer” 7 thinking the Products are naturally flavored. /d. As depicted below, the words “Peach 8 || Nectar” and “Guava Nectar” are featured prominently on the front labels of the respective 9 || Products above images of peaches and guavas: 10 a= ll 14 i a ve. diy ‘ pi alli 16 i i 17 21 Se s«é| 2 — 22 23 ||(SAC 933.) There is also an image of a sticker that says “Made with Whole Fruit,” an 24 ||image of a hummingbird, and an image of a leaf being used as an apostrophe in the word 25 ||“Kern’s”. Considering all of these words and images together, the Court cannot say no 26 ||reasonable consumer is likely to be deceived into thinking the Products are naturally 27 |\flavored. See Allred v. Kellogg Co., No. 17-CV-1354-AJB-BLM, 2018 WL 11588835, at 28 || *3 (S.D. Cal. Feb. 23, 2018) (finding “reasonable consumer could construe the packaging 1 ||as depicting all natural ingredients and flavors” where images on front label “certainly 2 || give[ ] an impression of freshly baked chips where the salt flavoring comes from the 3 || sprinkled salt and the vinegar flavoring comes from the bottles.”)” This is especially so for 4 || Products that also include the phrase “100% Natural” on the front label, as depicted below: 5 6 —<$—_— ———— 7 4 Kerns Kerns | a a 10 Vane nie ul 4 ‘ ee 3 14 ) . 15 16 ||(SAC 937.) See Rojas v. Gen. Mills, Inc., No. 12-CV-05099-WHO, 2014 WL 1248017, at 17 (N.D. Cal. Mar. 26, 2014) (“The front of the Nature Valley products' packaging 18 || prominently displays the term “100% Natural” that could lead a reasonable consumer to 19 || believe that the products contain only natural ingredients.”) Accordingly, this argument 20 || does not warrant dismissal of Plaintiffs’ claims under the CLRA, UCL and FAL. 21 Vilore’s next argument is that Plaintiffs have failed to sufficiently allege reliance, 22 || therefore they lack statutory standing under the CLRA, UCL and FAL. Specifically, Vilore 23 asserts Plaintiffs’ allegations that they relied on the front label are insufficient in light of 24 25 26 ° Kellogg also dispels the argument raised by both Defendants that no reasonable consumer is likely to believe the Products are naturally flavored because there is no affirmative 27 representation to that effect anywhere on the Products it allegedly distributed. In that case, 28 the products did not represent that they were “all natural” or “100% Natural,” but the court still found the products capable of deceiving a reasonable consumer. 1 the back label, which accurately lists all of the ingredients. The Ninth Circuit, however, 2 rejected a similar argument in Williams. There, the court “disagree[d] with the district 3 court that reasonable consumers should be expected to look beyond misleading 4 representations on the front of the box to discover the truth from the ingredient list in small 5 print on the side of the box.” Williams, 552 F.3d at 939. The court stated that although the 6 ingredient list certainly served some purpose, 7 [w]e do not think that the FDA requires an ingredient list so that manufacturers can mislead consumers and then rely on the ingredient list to 8 correct those misinterpretations and provide a shield for liability for the 9 deception. Instead, reasonable consumers expect that the ingredient list contains more detailed information about the product that confirms other 10 representations on the packaging. 11 12 Id. at 939-40. See also Lam v. Gen. Mills, Inc., 859 F.Supp.2d 1097, 1104 (N.D. Cal. 2012) 13 (“at the pleading stage, the Court cannot conclude that a reasonable consumer should be 14 expected to look beyond “made with real fruit” in order to discover the truth in the small 15 print.”); Tucker v. Post Consumer Brands, LLC, No. 19-CV-03993-YGR, 2020 WL 16 1929368, at *5 (N.D. Cal. Apr. 21, 2020) (stating that if reasonable consumer is misled by 17 front of packaging, they are “not expected to pick up the product and examine the fine print 18 on the ingredient list.”) Accordingly, Vilore’s reliance argument does not warrant 19 dismissal of the CLRA, UCL and FAL claims. 20 Turning to ACC’s arguments, the first is that the CLRA claim should be dismissed 21 because Plaintiffs failed to comply with California Civil Code § 1780(d). This statute 22 provides: 23 24 25 3 Vilore also suggests Plaintiffs’ allegations regarding reliance are insufficient because they rely on Defendants’ failure to disclose explicitly that the Products are artificially flavored. 26 (Mem. of P. & A. in Supp. of Vilore’s Mot. at 12.) However, and as discussed above, 27 Plaintiffs do not rely solely on the omission of an “artificially flavored” disclosure on the Products. Plaintiffs also rely on the front labels, independent of any omission, to support 28 1 In any action subject to this section, concurrently with the filing of the complaint, the plaintiff shall file an affidavit stating facts showing that the 2 action has been commenced in a county described in this section as a proper 3 place for the trial of the action. If a plaintiff fails to file the affidavit required by this section, the court shall, upon its own motion or upon motion of any 4 party, dismiss the action without prejudice. 5 6 Cal. Civ. Code § 1780(d). The statute defines the “proper place for trial of the action” as 7 “the county in which the person against whom it is brought resides, has his or her principal 8 place of business, or is doing business, or in the county where the transaction or any 9 substantial portion thereof occurred.” Id. Plaintiffs do not dispute that they failed to file 10 this affidavit. Instead, they contend the affidavit requirement is a procedural rule, and thus 11 it does not apply to federal court proceedings. In support of this argument, Plaintiffs cite 12 Evans v. Linden Research, Inc., 763 F.Supp.2d 735, 737 n.1 (E.D. Pa. 2011). However, 13 the majority of California federal courts do not agree with Evans. See McCoy v. Alphabet, 14 Inc., No. 20-CV-05427-SVK, 2021 WL 405816, at *11 (N.D. Cal. Feb. 2, 2021) (finding 15 plaintiff lacked standing to pursue CLRA claim because he failed to file affidavit under § 16 1780(d) and citing cases); Ruszecki v. Nelson Bach USA Ltd., No. 12-CV-495-L(NLS), 17 2015 WL 13344859, at *5 (S.D. Cal. Jan. 12, 2015) (citing McVicar v. Goodman Global, 18 Inc., 1 F. Supp. 3d 1044, 1055 (C.D. Cal. 2014)) (disagreeing with Evans and stating, “even 19 in federal courts, plaintiffs must file an affidavit pursuant to section 1780(d) in order to 20 assert a CLRA claim.”) This Court is persuaded by the reasoning of the majority of 21 California district courts, and adopts that same conclusion here. Because Plaintiffs failed 22 to file the required affidavit, their CLRA claim must be dismissed. 23 Next, ACC argues Plaintiffs’ “unlawful” claim under the UCL should be dismissed 24 because Plaintiffs have failed to plead sufficient facts to support their claim that Defendants 25 engaged in unlawful conduct. Plaintiffs identify the laws at issue here as “FDA regulations 26 and California’s Sherman Law.” (SAC ¶139.) Specifically, Plaintiffs allege Defendants 27 failed to disclose the Products “contain synthetic artificial flavoring in violation of 21 CFR 28 § 101.22 and California’s Sherman Law and are therefore misbranded.” (Id. ¶141.) 1 Clearly, Defendants disagree with Plaintiffs’ allegation that their Products are misbranded. 2 However, Plaintiffs have alleged sufficient facts to support that allegation. Plaintiffs allege 3 the Products contain malic acid, (id. ¶42), that the malic acid “is a synthetical chemical 4 added to the Products to simulate and reinforce the Products’ characterizing fruit flavors[,]” 5 (id. ¶45), i.e., it is an artificial flavoring, and that Defendants “failed to properly disclose 6 this artificial flavor on the Products’ ‘principle display panel’ or ‘panels’ of the label, 7 violating federal, California, and other states’ laws in multiple ways.” (Id. ¶50.)4 On this 8 motion, the Court must assume these factual allegations are true, and as so construed, 9 Plaintiffs have alleged a violation of at least, 21 C.F.R. § 101.22(i). Accordingly, ACC’s 10 request to dismiss this claim is denied. 11 The next claim is the “unfair” claim under the UCL. ACC argues Plaintiffs have 12 failed to set forth facts to support a claim under either the “public policy” test for 13 unfairness, or the “balancing test” for unfairness. Plaintiffs disagree. 14 “A business practice is unfair within the meaning of the UCL if it violates established 15 public policy or if it is immoral, unethical, oppressive or unscrupulous and causes injury 16 to consumers which outweighs its benefits.” McKell v. Washington Mut., Inc., 142 Cal. 17 App. 4th 1457, 1473, 49 Cal. Rptr. 3d 227, 240 (2006) (citations omitted). Here, as 18 discussed above, Plaintiffs have set forth sufficient facts to support their claim that 19 Defendants’ conduct violates FDA regulations and the Sherman Act, and thereby violates 20 21 22 4 Vilore asserts Plaintiffs’ allegation that malic acid is used as an artificial flavor is not a 23 factual allegation, but is a legal conclusion couched as a factual allegation. (Mem. of P. & A. in Supp. of Vilore’s Mot. at 16.) The Court disagrees with that assessment. Vilore also 24 disputes that the malic acid in the Products is used as an artificial flavor, insisting “the 25 Products use malic acid as a pH control agent as permitted by the FDA.” (Id. at 5.) This dispute, however, is not amenable to resolution on the present motion, see Allred v. Frito- 26 Lay N. Am., Inc., No. 17-CV-1345 JLS (BGS), 2018 WL 1185227, at *5 (S.D. Cal. Mar. 27 7, 2018) (stating “[w]hether malic acid falls into one of these categories is also a factual determination that would be inappropriately resolved on a motion to dismiss.”), and it does 28 1 public policy. Plaintiffs have also set forth facts to support a claim under the “balancing 2 test.” (See, e.g., SAC ¶157) (setting out facts to support “unscrupulous conduct”); (id. 3 ¶151) (setting out benefits to Defendants from alleged misbranding); (id. ¶¶161-62) (setting 4 out harm and injury to consumers as a result of misbranding). Accordingly, ACC’s request 5 to dismiss the “unfair” claim under the UCL is also denied.5 6 E. Breach of Express Warranty 7 Turning to Plaintiffs’ breach of express warranty claim, Vilore argues that claim 8 fails as a matter of law and thus should be dismissed. Specifically, Vilore asserts “this 9 claim fails because the front label contains no affirmative representation regarding the lack 10 of artificial flavoring, and the backside label accurately discloses the ingredients included 11 in the Products.” (Mem. of P. & A. in Supp. of Vilore’s Mot. at 13.) ACC adds that this 12 claim should be dismissed because Plaintiffs failed to “allege any facts to support that they 13 read and relied on the Products’ labels in this regard.” (Mem. of P. & A. in Supp. of ACC’s 14 Mot. at 19.) Plaintiffs maintain that their allegations are sufficient. 15 To the extent Vilore is asserting that this claim fails because Plaintiffs have failed to 16 allege an affirmative representation, the Court declines to find that failure warrants 17 dismissal of the express warranty claim. Although Vilore cites cases supporting its 18 position, see, e.g., Lam, 859 F. Supp. 2d at 1106, other cases have allowed these kinds of 19 claims to proceed. See Kellogg, 2018 WL 1158885, at *5 (denying motion to dismiss 20 express warranty claim in light of plaintiff’s allegations that “the product's label contains 21 the express warranty that the ingredient is natural, and Kellogg breached that warranty 22 through its unlabeled use of artificial ingredients instead.”); Sims v. Campbell Soup Co., 23 24 25 5 ACC also moves to dismiss Plaintiffs’ FAL claim on the grounds Plaintiffs have failed to allege facts to support their allegation that the Products contain “any untrue or 26 misleading advertising by ACC, nor reliance thereon.” (Mem. of P. & A. in Supp. of 27 ACC’s Mot. at 18.) For the reasons set out above and below, the Court rejects these arguments as applied to the FAL claim. Accordingly, Defendants’ request to dismiss the 28 1 No. EDCV18668PSGSPX, 2018 WL 7568640, at *9 (C.D. Cal. Sept. 24, 2018) (following 2 Kellogg and noting that statement at issue “could still potentially be misleading depending 3 on how it was interpreted by the reader[,]” and that resolving that issue on a motion to 4 dismiss was not appropriate). Thus, this argument does not warrant dismissal of the 5 express warranty claim. 6 ACC’s argument that Plaintiffs failed to plead sufficient facts to support the reliance 7 element of this claim also fails. Although Plaintiffs did not plead any facts about reliance 8 under the heading of their express warranty claim, they did plead sufficient facts elsewhere 9 in the SAC, (see SAC ¶ 104) (“Plaintiffs relied upon and were deceived by the Products’ 10 deceptive labeling, and specifically the omission of the legally required notice that it 11 contained artificial flavorings. Plaintiffs purchased the Products believing they were 12 naturally flavored, based on the Products’ deceptive labeling and failure to disclose that 13 they were artificially flavored.”), and incorporated those allegations into their express 14 warranty claim. (Id. ¶174.) Thus, this argument also does not warrant dismissal of 15 Plaintiffs’ express warranty claim.6 16 F. Breach of Implied Warranty 17 On the breach of implied warranty claim, Vilore raises the same arguments raised in 18 response to Plaintiffs’ other claims, which arguments the Court has addressed above. ACC 19 raises one new argument on this claim, namely that it fails because Plaintiffs did not allege 20 21 22 23 6 Defendants also suggests this claim (and others) should be dismissed because their Product labels are accurate. (Mem. of P. & A. in Supp. of Vilore’s Mot. at 13.) This theme 24 runs throughout Defendants’ motions, but it ignores the relevant inquiry on a motion to 25 dismiss, which is whether Plaintiffs have alleged sufficient facts and a cognizable legal theory in support of their claims. It also ignores that in ruling on a motion to dismiss, the 26 Court is obligated to construe Plaintiffs’ factual allegations as true. Clearly, Defendants 27 dispute that their Product labels were false or misleading, but that is a question for another day. It does not provide a ground for dismissal of Plaintiffs’ claims at this stage of the 28 1 they entered into any “contract for … sale” with ACC. Notably, ACC fails to cite any 2 case law to support its apparent position that Plaintiffs’ purchase of the Products would not 3 constitute a “contract for sale.” There is case law suggesting, however, that these kinds of 4 implied warranty claims “rise[ ] and fall[ ] with express warranty claims brought for the 5 same product.” Hadley v. Kellogg Sales Co., 273 F.Supp.3d 1052, 1096 (N.D. Cal. 2017). 6 There is also case law allowing implied warranty claims to proceed on facts similar to those 7 alleged in this case. See Augustine v. Talking Rain Beverage Co., Inc., 386 F.Supp.3d 8 1317, 1332-33 (S.D. Cal. 2019) (denying motion to dismiss implied warranty claim based 9 on allegation that “Products misrepresent that they are ‘naturally flavored’ sparkling water 10 when the Products in fact contain the artificial flavor d-l malic acid, which is not 11 disclosed.”) This Court takes the latter approach and declines to dismiss this claim at this 12 stage. 13 G. Negligent Misrepresentation 14 The final claim at issue is for negligent misrepresentation. Vilore argues, as it did 15 with other claims, that this claim must be dismissed because Plaintiffs have failed to allege 16 an affirmative misrepresentation. Plaintiffs do not address this legal argument, but instead 17 assert that their allegations are sufficient. 18 Although this argument did not carry the day for the other claims, case law supports 19 Vilore’s legal position that an affirmative or “positive” assertion is required to state a claim 20 for negligent misrepresentation. See Wilson v. Century 21 Great Western Realty, 15 Cal. 21 App. 4th 298, 306 (1993) (stating negligent misrepresentation claim requires “positive 22 assertion,” and that “’implied’ assertion or representation is not enough.”); Brownfield v. 23 Bayer Corp., No. 2:09-cv-00444-JAM-GGH, 2009 WL 1953035, at *6 (E.D. Cal. July 6, 24 2009) (citing Wilson and dismissing negligent misrepresentation claim); McKinnis v. 25 26 27 7 California Commercial Code § 2314(1) states “a warranty that the goods shall be merchantable is implied in a contract for their sale if the seller is a merchant with respect 28 1 General Mills, Inc., No. CV 07-2521 GAF (FMOx), 2007 WL 4762172, at *5 (C.D. Cal. 2 Sept. 18, 2007) (same). Here, Plaintiffs have not identified a specific, affirmative, positive 3 representation in support of their claim against Vilore. Rather, this claim, along with the 4 others, is based on a combination of words and images on the Product labels, coupled with 5 Defendants’ alleged failure to disclose the addition of artificial flavoring. In the absence 6 of any allegation of a “positive” assertion on the Vilore Products, the negligent 7 misrepresentation claim against Vilore is dismissed. 8 As for ACC, it argues it cannot be held liable on this claim because it is based on 9 purchases made on or after May 13, 2018, (SAC ¶207), and ACC stopped distributing 10 Products on December 31, 2017. (Id. ¶14.) Plaintiffs respond that ACC may still be held 11 liable because “Products identifying ACC as the distributor and therefore the liable party 12 likely continued to be sold in the U.S. during at least a substantial part of 2018.” (Id. ¶14 13 n.1.) Given that factual allegation, ACC is not entitled to dismissal at this stage based on 14 any time bar. 15 ACC raises other arguments in support of dismissal of this claim, but those 16 arguments also do not warrant dismissal. As explained above, Plaintiffs have satisfied Rule 17 9(b) with respect to the claims, and unlike with Vilore, Plaintiffs have alleged a “positive” 18 assertion on Products distributed by ACC, namely, that the Products are “100% Natural.” 19 Accordingly, the motion to dismiss this claim as against ACC is denied. 20 H. Venue 21 The last argument on these motions is ACC’s argument that the case should be 22 dismissed for improper venue. Specifically, ACC argues it is not a resident of this District 23 and a substantial part of the events giving rise to the claim did not occur in this District, 24 therefore the case should be dismissed. ACC acknowledges, however, that Plaintiff Gross 25 “purchased the Products multiple times during the proposed Class Period in San Diego 26 County, California”, (id. ¶29), and as explained above, some of the purchases may have 27 been Products distributed by ACC. Accordingly, the Court denies ACC’s request to 28 dismiss the case based on improper venue. 1 Il. 2 CONCLUSION AND ORDER 3 For the reasons discussed above, both Defendants’ motions to dismiss are granted in 4 ||part and denied in part. Specifically, the Court grants the motion to dismiss Plaintiffs’ 5 ||CLRA claim for failure to comply with California Civil Code § 1780(d), and grants the 6 || motion to dismiss Plaintiffs’ negligent misrepresentation claim against Defendant Vilore. 7 || The motions to dismiss all other claims are denied, as is ACC’s request to dismiss the claim 8 lack of improper venue. Because these bases for dismissal were not raised in Vilore’s 9 || previous motion to dismiss, the Court grants Plaintiffs leave to file a Third Amended 10 |}Complaint that cures the pleading deficiencies set out above. Plaintiffs are cautioned that 11 their Third Amended Complaint does not cure these deficiencies, their claims will be 12 dismissed with prejudice and without leave to amend. Plaintiffs shall file their Third 13 || Amended Complaint on or before April 23, 2021. Because at least some claims will 14 ||survive any future motion to dismiss, the Court refers the parties to the Magistrate Judge 15 || for an Early Neutral Evaluation conference, at which time all dates, including a trial date, 16 be set. 17 IT IS SO ORDERED. 18 ||Dated: April 15, 2021 » gf, p 19 a Yn: 50 Hon. Dana M. Sabraw, Chief Judge United States District Court 21 22 23 24 25 26 27 28