Becerra v. Dr Pepper/Seven Up, Inc.

• Decision Date: 30 December 2019
• Docket Number: No. 18-16721,18-16721
• Citation: 945 F.3d 1225
• Parties: Shana BECERRA, on behalf of herself, all others similarly situated, and the general public, Plaintiff-Appellant, v. DR PEPPER/SEVEN UP, INC., Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

945 F.3d 1225

Shana BECERRA, on behalf of herself, all others similarly situated, and the general public, Plaintiff-Appellant,

v.DR PEPPER/SEVEN UP, INC., Defendant-Appellee.

No. 18-16721

United States Court of Appeals, Ninth Circuit.

Argued and Submitted December 4, 2019 San Francisco, California

Filed December 30, 2019

Jack Fitzgerald (argued), Trevor M. Flynn, and Melanie Persinger, The Law Office of Jack Fitzgerald PC, San Diego, California; Andrew Sacks and John Weston, Sacks Weston Diamond LLC, Philadelphia, Pennsylvania; for Plaintiff-Appellant.

Evan A. Young (argued), Baker Botts L.L.P., Austin, Texas; Van H. Beckwith, Baker Botts L.L.P., Dallas, Texas; Ariel D. House, Baker Botts L.L.P., San Francisco, California; for Defendant-Appellee.

Before: Eugene E. Siler,^* Jay S. Bybee, and Ryan D. Nelson, Circuit Judges.

BYBEE, Circuit Judge:

Appellant Shana Becerra sued appellee Dr Pepper/Seven Up, Inc. (Dr Pepper), alleging that Dr Pepper violated various California consumer-fraud laws by branding Diet Dr Pepper using the word "diet." After the district court dismissed her third amended complaint with prejudice, Becerra appealed. We affirm the judgment.

I

In October 2017, Becerra filed her initial complaint, alleging that Dr Pepper’s naming and marketing of Diet Dr Pepper violated various provisions of California state law. She then amended the initial complaint to correct the name of the defendant, and Dr Pepper moved to dismiss the amended complaint. Becerra again amended her complaint in response to the motion to dismiss. Becerra’s second amended complaint alleged that the label "diet" misled Diet Dr Pepper consumers by promising that the product would "assist in weight loss" or at least "not cause weight gain." Becerra relied on several studies to allege that aspartame, the artificial sweetener used in Diet Dr Pepper, "is likely to cause weight gain" and "poses no benefit for weight loss," rendering the promise allegedly inherent in the word "diet" false and misleading. The second amended complaint raised five causes of action: (1) violations of the California False Advertising Law, Cal. Bus. & Prof. Code §§ 17500 et seq. ; (2) violations of the California Consumers Legal Remedies Act, Cal. Civ. Code §§ 1750 et seq. ; (3) violations of the California Unfair Competition Law, Cal. Bus. & Prof. Code §§ 17200 et seq. ; (4) breach of express warranty in violation of Cal. Com. Code § 2313(1) ; and (5) breach of the implied warranty of merchantability in violation of Cal. Com. Code § 2314.

Dr Pepper moved to dismiss the second-amended complaint and the district court granted the motion without prejudice, concluding that Becerra failed to sufficiently allege that reasonable consumers would understand "diet" in a soft drink’s brand name to promise weight loss and that, even if she had, the scientific studies she cited failed to support her allegations that this promise was false. Becerra amended her complaint and Dr Pepper again moved to dismiss.

Becerra’s third amended complaint—the operative complaint in this case—contains the same general allegations as her second amended complaint, but adds several categories of allegations in an attempt to correct deficiencies the district court identified. First, she cited dictionary definitions to support her allegation that reasonable consumers understand the word "diet" to promise assistance in weight loss. Second, she included references to print and television advertisements as further support of the allegation that consumers understand "diet" soft drinks to offer certain health benefits. Third, she cited two online articles from the American Beverage Association (ABA) to further reinforce her reading of the word "diet." Finally, she summarized the results of a survey of California and national consumers, which she contends is proof that the majority of soft-drink consumers believe "diet" soft drinks will help them lose or maintain their weight.

After a hearing, the district court granted Dr Pepper’s third motion to dismiss. The district court found that no reasonable consumer would believe that the word "diet" in a soft drink’s brand name promises weight loss or healthy weight management and, even if a reasonable consumer would believe that, Becerra had not sufficiently alleged that any such promise was false because of insufficient allegations that aspartame consumption causes weight gain. The district court dismissed Becerra’s breach-of-warranty claims for the same reasons.¹ Finally, because Becerra’s counsel agreed at the hearing that there was nothing to add to the complaint, the district court dismissed the complaint without leave to amend.² Becerra filed a timely appeal.

II

We have jurisdiction under 28 U.S.C. § 1291. Dismissal of a complaint for failure to state a claim is reviewed de novo. Ebner v. Fresh, Inc. , 838 F.3d 958, 962 (9th Cir. 2016). We accept "all factual allegations in the complaint as true and constru[e] them in the light most favorable to the nonmoving party." Id. (quoting Skilstaf, Inc. v. CVS Caremark Corp. , 669 F.3d 1005, 1014 (9th Cir. 2012) ) (internal quotation marks omitted). Dismissal is appropriate if the plaintiff has not "allege[d] enough facts to state a claim to relief that is plausible on its face." Turner v. City & Cty. of San Francisco , 788 F.3d 1206, 1210 (9th Cir. 2015) (internal quotation marks and citation omitted). Determining whether a complaint states a plausible claim for relief is "a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Ashcroft v. Iqbal , 556 U.S. 662, 679, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009).

Claims sounding in fraud or mistake are subject to the heightened pleading standard of Federal Rule of Civil Procedure 9(b), which requires that such claims "state with particularity the circumstances constituting fraud or mistake." This includes "the who, what, when, where, and how of the misconduct charged." Vess v. Ciba-Geigy Corp. USA , 317 F.3d 1097, 1106 (9th Cir. 2003) (internal quotation marks and citation omitted). In fraud cases, plaintiffs "must set forth what is false or misleading about a statement, and why it is false." Decker v. GlenFed, Inc. , 42 F.3d 1541, 1548 (9th Cir. 1994). The allegations of fraud "must be specific enough to give defendants notice of the particular misconduct which is alleged to constitute the fraud charged." Swartz v. KPMG LLP , 476 F.3d 756, 764 (9th Cir. 2007).

III

Becerra’s claims under the California consumer-protection statutes are governed by the "reasonable consumer" test. Williams v. Gerber Prods. Co. , 552 F.3d 934, 938 (9th Cir. 2008). Under this standard, Becerra must "show that members of the public are likely to be deceived." Id. (internal quotation marks and citation omitted); see also Bank of West v. Superior Court , 2 Cal.4th 1254, 10 Cal.Rptr.2d 538, 833 P.2d 545, 553 (1992). This requires more than a mere possibility that Diet Dr Pepper’s label "might conceivably be misunderstood by some few consumers viewing it in an unreasonable manner." Lavie v. Procter & Gamble Co. , 105 Cal.App.4th 496, 129 Cal. Rptr. 2d 486, 495 (2003) ; see id. at 492 (rejecting a "least sophisticated consumer" standard). Rather, the reasonable consumer standard requires a probability "that a significant portion of the general consuming public or of targeted consumers, acting reasonably in the circumstances, could be misled." Id.

Becerra’s consumer-fraud claims center on two primary allegations: first, the word "diet" in Diet Dr Pepper’s brand name promises that the product will assist in weight loss or healthy weight management and, second, that promise is false because aspartame causes weight gain. Because Becerra’s claims depend on both allegations being true, she must sufficiently allege both for her claims to survive. We will affirm the judgment on the basis of Becerra’s first allegation and not reach the second.

Becerra alleges that, based on Diet Dr Pepper’s use of the term "diet," "consumers reasonably believe that drinking Diet Dr Pepper will assist in weight loss or healthy weight management." She contends that the use of "diet" in Diet Dr Pepper’s brand name contains an "implicit promise [ ] that, because Diet Dr Pepper does not contain sugar or calories, it will assist in weight loss, or at least healthy weight management ... and that it is useful for those who must limit their sugar intakes."

We will begin with the observation that Becerra’s citations to dictionary definitions of the word "diet" are citations to the word when used as a verb or noun, as in "he is dieting" or "she is starting a diet." But, as Dr Pepper and the district court noted, "diet" in Diet Dr Pepper is either an adjective or a proper noun, and that puts the word in a different light. Becerra’s selective quotations omit the definitions of "diet" as an adjective and the frequent usage of "diet soft drinks" as the primary example of the word’s usage in that context. For example, the Merriam Webster Dictionary defines the adjective "diet" as "reduced in or free from calories[—]a diet soft drink." Diet, MERRIAM-WEBSTER DICTIONARY , https://www.merriam-webster.com/dictionary/diet. The other dictionaries cited by Dr Pepper have the same general definition of "diet" in this context. See , e.g. , Diet, AMERICAN HERITAGE DICTIONARY , https://www.ahdictionary.com/word/search.html?q=diet ("Having fewer calories ... Sweetened with a noncaloric sugar substitute"); Diet, CAMBRIDGE DICTIONARY , https://dictionary.cambridge.org/us/dictionary/english/diet ("(of food or drink) containing much less sugar than usual and often sweetened artificially, or containing less fat than usual: diet soda"); Diet, COLLINS DICTIONARY , https://www.collinsdictionary.com/us/dictionary/english/diet ("Diet drinks or foods have been specially produced so that they do not contain many calories ... sugar-free diet drinks").

When considering the term in its proper context, no...