Beasley v. Tootsie Roll Indus., Inc.

Citation85 Cal.App.5th 901,301 Cal.Rptr.3d 782
Decision Date30 November 2022
Docket NumberA164199
Parties Maxine BEASLEY, et al., Plaintiffs and Appellants, v. TOOTSIE ROLL INDUSTRIES, INC., Defendant and Respondent.
CourtCalifornia Court of Appeals

The Weston Firm, Gregory S. Weston, San Diego, for Plaintiff and Appellant.

Donahue Fitzgerald, David M. Jolley, Oakland, for Defendant and Respondent.

STREETER, J.

In this putative class action, plaintiff Maxine Beasley sued defendant Tootsie Roll Industries, Inc. (Tootsie Roll), alleging violations of federal and state law arising from the use of partially hydrogenated oils (PHOs) in Tootsie Roll's products between 2010 and 2016. In her operative first amended complaint (FAC), Beasley asserted the use of PHOs was unlawful and unfair under the Unfair Competition Law (UCL) ( Bus. & Prof. Code, § 17200 et seq. ) and breached the implied warranty of merchantability.

The trial court sustained Tootsie Roll's demurrer to the FAC without leave to amend, concluding (1) Beasley failed to allege cognizable injury, (2) her claims were barred by statutes of limitations, and (3) her claims were preempted by federal law (specifically a congressional enactment providing the use of PHOs is not to be deemed violative of food additive standards until June 18, 2018). Beasley appeals, and the parties have joined issue on the grounds for demurrer reached by the trial court—preemption, injury, and the statutes of limitations—as well as the question whether the FAC states a claim for violation of the UCL or breach of the implied warranty of merchantability.

We conclude the FAC does not state a claim under the UCL and that portions of that claim are preempted by federal law. We also conclude the claim for breach of warranty is preempted. We therefore affirm the trial court's judgment in favor of Tootsie Roll.1

I. BACKGROUND
A. The Allegations in the FAC

Since we are reviewing a judgment entered after the trial court sustained Tootsie Roll's demurrer, we assume the truth of all properly pleaded material allegations in the FAC " ‘in evaluating the validity’ of the decision below." ( Lazar v. Superior Court (1996) 12 Cal.4th 631, 635, 49 Cal.Rptr.2d 377, 909 P.2d 981.)

Beasley alleged in the FAC that, during the proposed class period—January 1, 2010 through December 31, 2016—Tootsie Roll manufactured, distributed, and sold products (Tootsie Rolls and Tootsie Pops) that contained artificial trans fats in the form of PHOs. The FAC alleged trans fats are harmful and cause cardiovascular disease

, type 2 diabetes, cancer, Alzheimer's disease, and organ damage.

Beasley alleged she purchased Tootsie Roll products containing PHOs during the class period. She sought to represent a class defined as: "All citizens of California who purchased Tootsie Products containing partially hydrogenated oil in California between January 1, 2010 and December 31, 2016."

As to injury, Beasley alleged she had suffered physical injury in the form of harm to her cells and her cardiovascular and other systems. She also alleged her consumption of Tootsie Roll's products placed her at increased risk of disease and death. Finally, Beasley alleged she sustained economic injury in the amount she paid for Tootsie Roll's products, which she stated "were not fit for human consumption, and had a value of $0 or less." She would not have purchased the products "if she had known of [Tootsie Roll's] conduct." Beasley also stated her economic injury included "medical monitoring costs," but she did not include any details about such costs.

Beasley asserted claims for violation of the UCL (first cause of action) and breach of the implied warranty of merchantability (second cause of action). In her UCL claim, Beasley alleged Tootsie Roll's use of PHOs was both "unfair" and "unlawful" within the meaning of that statute. As to unfairness, Beasley alleged in part that the harmful health effects of PHOs outweigh any utility they may have, and that their use violated public policy as reflected in federal and state statutes. As to the unlawful prong of the UCL, Beasley alleged Tootsie Roll's use of PHOs violated the Federal Food, Drug, and Cosmetic Act (FDCA or federal FDCA) ( 21 U.S.C. § 301 et seq. ) and California's Sherman Food, Drug, and Cosmetic Law ( Health & Saf. Code, § 109875 et seq. ) (Sherman Law).

Finally, in her warranty claim, Beasley alleged Tootsie Roll breached the implied warranty of merchantability because its products containing PHOs "were not fit for their ordinary purpose in that they were not safe, wholesome, and legal food products." Beasley alleged Tootsie Roll's products "were not fit for human consumption and had a value of $0." Beasley and the class "did not receive goods as impliedly warranted by [Tootsie Roll] to be merchantable in that they were not fit for their ordinary purpose of human consumption."

The FAC sought damages, restitution, and other relief.

B. Procedural Background

Beasley filed her initial complaint in this matter on January 25, 2021.2 Tootsie Roll demurred, arguing (1) Beasley had not pleaded a cognizable injury, (2) her claims were preempted by federal law, (3) her claims were barred by the applicable statutes of limitations, and (4) she failed to state a claim under the UCL or for breach of the implied warranty of merchantability.

In June 2021, the trial court sustained the demurrer to the initial complaint with leave to amend. The court based its ruling on three grounds—lack of injury, the statutes of limitations, and federal preemption. First, the court concluded Beasley's allegations of economic and physical injury "do[ ] not establish standing under the UCL or resulting harm under the breach of warranty cause of action." Beasley's alleged economic injury (money she spent on Tootsie Roll products based on her " ‘assumption[s] " about their content) was not cognizable because her assumptions did not result from any alleged action by Tootsie Roll. As to physical injury, the court stated: "A product that increases the risk of bad health outcomes has not caused an injury until those health outcomes eventualize."

Second, the court found the limitations periods applicable to Beasley's claims were no longer than four years, so those claims—asserted in a complaint filed in January 2021 but seeking compensation for sales of products from 2010 through December 31, 2016—were "facially barred" unless an exception such as delayed discovery applied. The court concluded Beasley's allegations of delayed discovery were conclusory and insufficient, as they did not explain what factual information she learned that put her on notice of her potential claims.

Finally, in the section of its order entitled "Preemption," the court noted a congressional enactment, section 754 of the Consolidated Appropriations Act of 2016 ( Pub.L. No. 114–113, div. A, tit. VII, § 754 (Dec. 18, 2015) 129 Stat. 2242, 2284) (section 754), specifies PHOs are not to be deemed violative of applicable provisions of the FDCA until June 18, 2018. The court also noted a provision of California's Sherman Law, Health and Safety Code section 110085, incorporates federal food additive regulations as California's regulations. The court stated that, "[a]lthough California might have adopted stricter or different regulations on the use of partially hydrogenated oil as a food additive, [Beasley] has not alleged that it has done so. [Beasley's] claims must therefore rely on the federal standard as incorporated into state law."

The court continued by stating section 754 reflected Congress's intent to prevent a "determination" that had been made by the federal Food and Drug Administration (FDA)—that PHOs are "not ‘generally recognized as safe’ ""from having legal effect or being relied on until June 18, 2018." The court concluded Beasley's claims based on PHO use from 2010 to 2016 could not proceed. "It would conflict with Section 754, and would be inconsistent with Health and Safety Code section 110085, if California were to give earlier effect to that particular FDA regulation than the FDA itself."

After Beasley filed the FAC, Tootsie Roll again demurred. The court sustained the demurrer in October 2021, this time without leave to amend. Incorporating the analysis from its prior order sustaining the demurrer to the initial complaint, the court stated the FAC had failed to cure the deficiencies identified in that order.

The court entered judgment for Tootsie Roll in December 2021. Beasley appealed.

II. DISCUSSION
A. Standard of Review

" ‘In reviewing an order sustaining a demurrer, we examine the operative complaint de novo to determine whether it alleges facts sufficient to state a cause of action under any legal theory.’ [Citation.] " "We treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law.... We also consider matters which may be judicially noticed." ... Further, we give the complaint a reasonable interpretation, reading it as a whole and its parts in their context.’ " " ( Mathews v. Becerra (2019) 8 Cal.5th 756, 768, 257 Cal.Rptr.3d 2, 455 P.3d 277.) " ‘In considering a trial court's order sustaining a demurrer without leave to amend, " we review the trial court's result for error, and not its legal reasoning.’ " [Citation.] We "affirm the judgment if it is correct on any theory." " ( Munoz v. Patel (2022) 81 Cal.App.5th 761, 771, 297 Cal.Rptr.3d 574.)

We review the court's denial of leave to amend for abuse of discretion. ( Schifando v. City of Los Angeles (2003) 31 Cal.4th 1074, 1081, 6 Cal.Rptr.3d 457, 79 P.3d 569.) "[W]e must decide whether there is a reasonable possibility the plaintiff could cure the defect with an amendment. [Citation.] If we find that an amendment could cure the defect, we conclude that the trial court abused its discretion and we reverse; if not, no abuse of discretion has occurred. [Citation.] The plaintiff has the burden of proving that an amendment...

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