Gedalia v. Whole Foods Mkt. Servs., Inc.
| Decision Date | 30 September 2014 |
| Docket Number | Civil Action No. 4:13–CV–3517. |
| Citation | 53 F.Supp.3d 943 |
| Parties | Uri GEDALIA, et al, Plaintiffs, v. WHOLE FOODS MARKET SERVICES, INC., et al, Defendants. |
| Court | U.S. District Court — Southern District of Texas |
Michael R. Reese, Reese Richman LLP, New York, NY, Yvette Y. Golan, The Golan Law Firm, Houston, TX, for Plaintiffs.
Misty Ann Cabaniss Blair, Seyfarth Shaw LLP, Houston, TX, John Henry Hempfling, II, Whole Foods Market, Austin, TX, Giovanna A. Ferrari, Jay William Connolly, Joseph J. Orzano, Seyfarth Shaw LLP, San Francisco, CA, for Defendants.
Pending before the Court is Plaintiffs Uri Gedalia (“Gedalia”) and Kira Lewis's (“Lewis”) (collectively “Plaintiffs”) Motion to Certify (Doc. 17) and Defendants Whole Foods Market Services, Inc., et al. response (Doc. 36) and Whole Foods's reply (Doc. 42). Having considered the motion, the response, the reply, the facts in the record and the applicable law, the Court concludes Whole Food's Motion to Dismiss (Doc. 18) should be granted. Plaintiff's Motion to Certify (Doc. 17) is denied as moot.
Plaintiffs filed this class action suit against Whole Foods individually and on behalf of all persons who have purchased Whole Foods's private-label 365 Organic and 365 Everyday Value (collectively “365 Brands”) products that are allegedly falsely labelled as being organic, natural, and/or GMO-free. (Doc. 1). Plaintiffs seek certification as a nationwide class, or, in the alternative, as either state statutory sub-classes, or as Texas and California sub-classes. (Id. ¶¶ 137–39). The Complaint asserts violations of California's Organic Products Act (“COPA”, Cal. Health & Safety Code §§ 110810 –110959 ), Consumers Legal Remedies Act (“CLRA”, Cal. Civ.Code § 1750 et seq. ), False Advertising Law (“FAL”, Cal. Bus. & Prof.Code § 17500 et seq. ), and Unfair Competition Law (“UCL”, Cal. Bus. & Prof.Code § 17200 et seq. ). Plaintiffs also allege breaches of express and implied warranties, fraud, unjust enrichment, and negligence and negligent misrepresentation. Plaintiffs Gedalia and Lewis are residents of Houston, Texas and Encino, California, respectively. They claim to have purchased 365 Brands products1 in reliance on false representations that the products did not contain non-organic, artificial, or genetically modified (“GMO”) ingredients. (Orig. Class Action Pet., Doc. 1 ¶¶ 26–35).
In its motion to dismiss (Doc. 18), Whole Foods contends: (1) the complaint violates the Federal Rules of Civil Procedure Rule 8(a) ; (2) the Plaintiffs lack standing to sue for products they did not personally purchase and for representations that they never alleged they saw; (3) the claims about “organic” and “natural” representations are preempted by federal statutes; (4) the doctrine of primary jurisdiction should be invoked; (5) the Plaintiffs failed to allege plausible, actual, or reasonable reliance on Whole Foods's representations; (6) the complaint violates the Federal Rule of Civil Procedure 9(b) ; and (7) the warranty and unjust enrichment claims fail as a matter of law.
“To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ ” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). Factual matter is limited to “documents attached to or incorporated in the complaint and matters of which judicial notice may be taken.” U.S. ex rel. Willard v. Humana Health Plan of Texas Inc., 336 F.3d 375, 379 (5th Cir.2003).
Whole Foods argues the complaint's length (74 pages) runs afoul of the requirement for “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. Pro. 8(a). However, “verbosity or length is not by itself a basis for dismissing a complaint based on Rule 8(a).” Hearns v. San Bernardino Police Dep't, 530 F.3d 1124, 1131–32 (9th Cir.2008) (citing Wynder v. McMahon, 360 F.3d 73, 80 (2d Cir.2004) ); see also Atwood v. Humble Oil & Ref. Co., 243 F.2d 885, 888 (5th Cir.1957).
Plaintiffs' claims extend beyond the nine allegedly purchased items to all 365 Brands products that are allegedly falsely labelled as being organic, natural, and/or GMO-free. (Doc. 1.) Whole Foods argues Plaintiffs lack standing in regard to unpurchased products for which they arguably have not suffered any injury. Standing under Article III requires that plaintiffs suffer an injury-in-fact. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). The UCL, FAL, and CLRA have an “economic injury” standing requirement that is met if the plaintiff “can truthfully allege [he was] deceived by a product's label into spending money to purchase the product, and would not have purchased it otherwise.” Kwikset Corp. v. Superior Court, 51 Cal.4th 310, 120 Cal.Rptr.3d 741, 246 P.3d 877, 881 (2011).
Courts in the Fifth Circuit have not directly considered standing for unpurchased product claims. In the Ninth Circuit, courts have considered the issue and are in disagreement. See Miller v. Ghirardelli Chocolate Co., 912 F.Supp.2d 861, 868–70 (N.D.Cal.2012) (). Some courts hold there is no standing because there is no injury-in-fact. See Id. at 869 (citing Granfield v. NVIDIA Corp., No. C 11–05403 JW, 2012 WL 2847575, at *6 (N.D.Cal. July 11, 2012) ; Carrea v. Dreyer's Grand Ice Cream, Inc., No. C 10–01044 JSW, 2011 WL 159380, at *3 (N.D.Cal. Jan. 10, 2011) ); see also Larsen v. Trader Joe's Co., C 11–05188 SI, 2012 WL 5458396, at *5 (N.D.Cal. June 14, 2012). Others hold there is standing if plaintiffs can show unpurchased products “substantially similar” to products actually purchased by the plaintiff. Id. at 869 (citing Anderson v. Jamba Juice, 888 F.Supp.2d 1000, 1005–06 (N.D.Cal.2012) ; Stephenson v. Neutrogena Corp., C 12 –0426 PJH, 2012 WL 8527784, at *1 (N.D.Cal. July 27, 2012) ; Astiana v. Dreyer's Grand Ice Cream, Inc., No. C–11–2910 EMC, 2012 WL 2990766, at *11 (N.D.Cal. July 20, 2012) ). A final group holds that the issue should be addressed not in a motion to dismiss but in a motion for certification. See Miller, 912 F.Supp.2d at 869 (citing Cardenas v. NBTY, Inc., 870 F.Supp.2d 984, 992–93 (E.D.Cal.2012) ; Forcellati v. Hyland's, Inc., 876 F.Supp.2d 1155, 1161 (C.D.Cal.2012) ); Clancy v. The Bromley Tea Co., 12–CV–03003–JST, 2013 WL 4081632, at *5 (N.D.Cal. Aug. 9, 2013) (citations and internal quotation marks omitted); accord Cardenas, 870 F.Supp.2d at 992 ; see also In re Frito–Lay N. Am., Inc. All Natural Litig., 12–MD–2413 RRM RLM, 2013 WL 4647512, at *13 (E.D.N.Y. Aug. 29, 2013). Here, Plaintiffs' claims encompass hundreds of different products. Some claims involve local in-store representations that are not on actual product labels. Plaintiffs likely do not meet the substantially similar test or requirements for class certification on many of their claims. However, it is not necessary to resolve this issue since Plaintiffs' claims are dismissed for lack of plausible reliance (see below).
Whole Foods argues Plaintiffs failed to plead they actually viewed false representations before purchasing the products and the representations were a reason for making the purchases. See Cattie v. Wal–Mart Stores, Inc., 504 F.Supp.2d 939, 947 (S.D.Cal.2007) (); Brazil v. Dole Food Co., Inc., 12–CV01831–LHK, 2013 WL 5312418, at *9 (N.D.Cal. Sept. 23, 2013) (). The complaint in this case includes allegations that Plaintiffs “saw the false, misleading, and deceptive representations detailed.” (Doc. 1 ¶ 126). The complaint further alleges:
[Plaintiffs] reasonably believed the 365 Organic products were organic, as labeled and the ‘ORGANIC’ representation was a significant reason for purchase. [Plaintiffs] also relied upon Whole Foods' representations that all these products do not contain artificial additives and ingredients listed in Whole Foods' Unacceptable Ingredient List, and that all these products do not contain GMOs.
(Id. ¶¶ 26, 30). Some of the claims involve online and in-store representations not present on the actual packaging of purchased products. See, e.g., Doc. 1 ¶ 33 (in-store signage at Whole Foods Market, 701 Waugh Dr., Houston, Texas). Plaintiffs do not allege they saw the Unacceptable Ingredient List or “nothing artificial” representations. Doc. 1 ¶¶ 26–35. Since this case is dismissed on plausibility grounds, it is not necessary to resolve this issue.
The doctrine of implied preemption applies where “ ‘Congressional intent to preempt is inferred from the existence of a pervasive regulatory scheme’ or where ‘state law conflicts with federal law or interferes with the achievement of federal objectives.’ ” Witty v. Delta Air Lines, Inc., 366 F.3d 380, 384 (5th Cir.2004). A court begins with a presumption against preemption, based on an “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.” Medtronic, Inc. v. Lohr, 518 U.S. 470, 485, 116 S.Ct. 2240, 135 L.Ed.2d 700 (1996). The Supreme Court has recognized “States have always possessed a legitimate interest in ‘the protection of (their) people against fraud and deception in the sale of food products' at retail markets within their...
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