Hawkins v. Kroger Co.

• Decision Date: 04 October 2018
• Docket Number: No. 16-55532,16-55532
• Citation: 906 F.3d 763
• Parties: Shavonda HAWKINS, on behalf of herself and all others similarly situated, Plaintiff-Appellant, v. The KROGER COMPANY, Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

906 F.3d 763

Shavonda HAWKINS, on behalf of herself and all others similarly situated, Plaintiff-Appellant,

v.The KROGER COMPANY, Defendant-Appellee.

No. 16-55532

United States Court of Appeals, Ninth Circuit.

Argued and Submitted December 7, 2017 Pasadena, California

Filed October 4, 2018

Gregory S. Weston (argued) and David Elliot, The Weston Firm, San Diego, California, for Plaintiff-Appellant.

Jacob M. Harper (argued) and Nicole S. Phillis, Davis Wright Tremaine LLP, Los Angeles, California, for Defendant-Appellee.

Before: Marsha S. Berzon and Jacqueline H. Nguyen, Circuit Judges, and Frederic Block,^* District Judge.

BLOCK, District Judge:

Trans fat has become increasingly recognized as a dangerous substance and a leading cause of numerous serious ailments, including heart disease and diabetes. Food and Drug Administration ("FDA") regulations govern the information reported within a food product's Nutrition Facts Panel on the product's label.¹

As for trans fat, FDA regulations provided, at all relevant times, that if the product contained "less than 0.5 gram" trans fat, as it did in this case, it was required to tell the consumer on the Nutrition Facts Panel that it contained 0 grams trans fat, even though it contained this dangerous food additive.

We are asked to determine, inter alia , whether these FDA trans fat regulations governing the contents of the Nutrition Facts Panel preempt California's unfair competition laws proscribing false or misleading advertising elsewhere on a food product's label. We hold that they do not; accordingly, the plaintiff can challenge the legitimacy of defendant's product advertising on the face of the label that it contains "0g Trans Fat per serving." In doing so, we take the occasion to reinforce and apply our holding in Reid v. Johnson & Johnson that "a requirement to state certain facts in the nutrition label is not a license to make that statement elsewhere on the product." 780 F.3d 952, 960 (9th Cir. 2015) (emphasis added).

I

Hawkins' complaint alleges the following:² The Kroger Company ("Kroger") sells Kroger Bread Crumbs ("KBCs") in stores in California, including the supermarket chain Ralph's. Hawkins regularly purchased KBCs at several Ralph's locations between 2000 and 2015. In making the purchases, she relied on the information contained on the face of the label that the product contained "0g Trans Fat per serving." In August 2015, she discovered that, contrary to the claim on the label, KBCs "contained artificial trans fat, and caused heart disease, diabetes, cancer, and death."³

In October 2015, Hawkins brought a putative class action against Kroger seeking to represent a class of consumers who were misled by the label ("the labeling claims") and had used the dangerous product ("the use claims"). The complaint alleged violations of the California Unfair Competition Law ("UCL"), Cal. Bus. & Prof. Code § 17200 et seq. , False Advertising Law ("FAL"), Cal. Bus. & Prof. Code § 17500 et seq. , Consumer Legal Remedies Act ("CLRA"), Cal. Civ. Code § 1750 et seq. , and common law claims for breach of implied warranty of merchantability and breach of express warranty. It sought damages, pre-judgment and post-judgment interest, injunctive⁴ and declaratory relief, attorneys' fees, and costs.

The district court granted Kroger's Rule 12(b)(6) motion to dismiss, with prejudice, holding that Hawkins lacked standing to bring these claims, and, alternatively, that the labeling claims were preempted by federal law.

The district court reasoned that plaintiff lacked standing to bring her labeling claims because it believed that she did not allege that she read the "0g Trans Fat per serving" label on the face of the label and therefore could not establish reliance or injury. It alternatively held that the labeling claims were preempted.⁵ The district court dismissed Hawkins's use claims for lack of standing because her alleged injuries were too speculative. The district court did not address whether the use claims would be preempted.

Because we disagree with all of the district court's holdings, we reverse and remand for further proceedings.

II

"We review de novo a district court's order granting a motion to dismiss on preemption grounds, for lack of standing, or for failure to state a claim upon which relief can be granted." Reid , 780 F.3d at 958.

A. Labeling Claims

1. Standing

We turn first to Hawkins's statutory standing to bring her labeling claims. California law requires plaintiffs alleging UCL and FAL claims to show that they "ha[ve] suffered injury in fact and ha[ve] lost money or property as a result of the unfair competition." Cal. Bus. & Prof. Code §§ 17204 (UCL) ; see id. § 17535 (FAL); Hinojos v. Kohl's Corp. , 718 F.3d 1098, 1103 (9th Cir. 2013) (UCL and FAL standing requirement are identical) (citing Kwikset Corp. v. Sup. Ct. , 51 Cal.4th 310, 120 Cal.Rptr.3d 741, 246 P.3d 877, 884 (2011) ). A plaintiff is required to show " ‘some form of economic injury’ as a result of his transactions with the defendant." Hinojos , 718 F.3d at 1104 (quoting Kwikset , 120 Cal.Rptr.3d 741, 246 P.3d at 885 ). However, "the quantum of lost money or property necessary to show standing is only so much as would suffice to establish injury in fact." Kwikset , 120 Cal.Rptr.3d 741, 246 P.3d at 886.

California law also requires causation—namely, that the plaintiff relied on the misrepresentation on the label. "A consumer who relies on a product label and challenges a misrepresentation contained therein can satisfy the standing requirement of section 17204 by alleging ... that he or she would not have bought the product but for the misrepresentation." Id. , 120 Cal.Rptr.3d 741, 246 P.3d at 890. "That assertion is sufficient to allege causation [and it] is also sufficient to allege economic injury." Id. ; see also Davidson v. Kimberly-Clark Corp. , 889 F.3d 956, 965 (9th Cir. 2018).

Hawkins alleges that she relied upon the label and would not have bought the product without the misrepresentation. For example, paragraph 76 of the complaint states: "Plaintiff relied on Defendant's ‘0g trans fat’ claim as a substantial factor in her purchases"; paragraph 101 states: "Plaintiff purchased the Kroger Bread Crumbs believing they had the qualities she sought based on the Products' deceptive labeling"; and paragraph 107 states: "Plaintiff, on at least one occasion, would not have purchased the Kroger Bread Crumbs absent Defendant's misrepresentation."

In holding that Hawkins did not plead reliance, the district court misread Hawkins's complaint. It interpreted the complaint as alleging that she did not read the "0g Trans Fat per serving" product label until August 2015, fifteen years after she began purchasing the product. However, the paragraph cited by the district court to support its conclusion reads, "Plaintiff first discovered Defendant's unlawful acts described herein in August 2015, when she learned that Kroger Bread Crumbs contained artificial trans fat ...." Compl. ¶ 74 (emphases added). This paragraph does not allege that she first read the label in August 2015; it alleges she first discovered the label was misleading on that date. The district court did not address the three paragraphs where Hawkins concretely alleged that she relied on the label.

Because Hawkins adequately alleged that she relied on the label's misrepresentations and would not have purchased the product without those misrepresentations, she has adequately alleged standing for her labeling claim.

2. Preemption

We next turn to whether Hawkins's state law mislabeling claim challenging the statement "0g Trans Fat per serving" is preempted by federal regulations.

a. Preemption Generally

Preemption is guided by two principles: first, "the purpose of Congress is the ultimate touchstone in every preemption case," and second, "[i]n all pre-emption cases, and particularly in those in which Congress has ‘legislated ... in a field which the States have traditionally occupied,’ ... we ‘start with the assumption that the historic police powers of the States were not to be superseded by the Federal Act unless that was the clear and manifest purpose of Congress.’ " Wyeth v. Levine , 555 U.S. 555, 565, 129 S.Ct. 1187, 173 L.Ed.2d 51 (2009) (alterations in original) (quoting Medtronic, Inc. v. Lohr , 518 U.S. 470, 485, 116 S.Ct. 2240, 135 L.Ed.2d 700 (1996) ).

b. The NLEA

"The Nutritional Labeling and Education Act (‘NLEA’) amended the Food, Drug, and Cosmetic Act (‘FDCA’) to ‘establish[ ] uniform food labeling requirements, including the familiar and ubiquitous Nutrition Facts Panel found on most food packages.’ " Reid , 780 F.3d at 959 (alterations in original) (quoting Lilly , 743 F.3d at 664 ). "The ‘NLEA also provides that no state may "directly or indirectly establish any requirement for the labeling of food that is not identical" to the federal requirements.’ " Id. (quoting Lilly , 743 F.3d at 664–65 ); see also 21 U.S.C. § 343-1(a)(5).

"The phrase ‘not identical to’ means ‘that the State requirement directly or indirectly imposes obligations or contains provisions concerning the composition or labeling of food that are not imposed by or contained in the applicable federal regulation or differ from those specifically imposed by or contained in the applicable federal regulation.’ " Reid , 780 F.3d at 959 (quoting, with alterations, Lilly , 743 F.3d at 665 ); see also 21 C.F.R. § 100.1(c)(4). However, the NLEA "does not preempt any state law unless the law is ‘expressly preempted.’ " Id. (quoting Holk v. Snapple Beverage Corp. , 575 F.3d 329, 337–38 (3d Cir. 2009) ); nor does it "preempt state law-based causes of action that are identical to the federal labeling requirements," id. (citing POM Wonderful LLC v. Coca-Cola Co. , ––– U.S. ––––, 134 S.Ct. 2228, 2238, 189 L.Ed.2d 141 (2014) ).

Therefore, if FDA regulations expressly permit the claim "0g Trans Fat per serving" on the face of a product's packaging, any state law claim to the contrary would be...