In re Trader Joe's Tuna Litig.

• Decision Date: 03 October 2017
• Docket Number: Case No. 2:16–cv–01371–ODW(AJWx)
• Citation: 289 F.Supp.3d 1074
• Court: U.S. District Court — Central District of California
• Parties: IN RE TRADER JOE'S TUNA LITIGATION

289 F.Supp.3d 1074

IN RE TRADER JOE'S TUNA LITIGATION

Case No. 2:16–cv–01371–ODW(AJWx)

United States District Court, C.D. California.

Signed October 3, 2017

ORDER GRANTING, IN PART, DEFENDANTS' MOTION TO DISMISS CASE [62]

OTIS D. WRIGHT, II, UNITED STATES DISTRICT JUDGE

I. INTRODUCTION

Defendants Trader Joe's Company and Trader Joe's East Inc. (collectively, "Trader Joe's") move to dismiss Plaintiffs' Second Amended Complaint ("SAC") on several bases. (ECF No. 55.) On June 2, 2017, the Court granted Trader Joe's Motion to Dismiss Plaintiffs' First Amended Complaint ("FAC"), with leave to amend. (ECF No. 54.) For the reasons discussed below, the Court GRANTS, IN PART, and DENIES, IN PART, Trader Joe's Motion.

II. FACTUAL BACKGROUND

Plaintiffs allege a consumer class action relating to Trader Joe's allegedly illegal and deceptive practices of under filling cans of tuna, despite consumers' expectations that the cans would contain an "adequate amount." (SAC ¶¶ 1, 12–13, ECF No. 55.) Plaintiff Sarah Magier is a citizen of New York who purchased Trader Joe's Albacore Tuna in Water No Salt Added in New York, through the end of 2013, and wishes to represent a subclass of all class members who purchased Trader Joe's tuna in New York. (Id. ¶¶ 12, 20.) Plaintiff Atzimba Reyes is a citizen of California, and purchased 5–ounce canned Trader Joe's Albacore Tuna in Water Salt Added. (Id. ¶ 13.) Reyes wishes to represent a subclass of all Californians who purchased Trader Joe's tuna. (Id. ¶ 21.)

As described in detail in the Court's prior order, (ECF No. 54), Plaintiffs determined that the Trader Joe's tuna cans were underfilled and underweight by commissioning testing with the U.S. National Oceanic and Atmospheric Administration ("NOAA") on December 1, 2015. (See SAC ¶¶ 2–7.) NOAA conducted this testing by evaluating the pressed cake weight ("Pressed Weight Standard"). See 21 C.F.R. § 161.190(c). The Pressed Weight Standard is measured by using a complex process requiring specific machinery, and was promulgated by the FDA in 1957. Id. ; (Mot. 3.) The NOAA tests based on this method determined that several varieties of Trader Joe's tuna fell 19.2%, 24.8%, 24.8%, 11.1%, 9.9%, and 13.9% below the Pressed Weight Standard. (See SAC ¶¶ 2–7.)

Trader Joe's canned tuna labels do not contain any statements regarding the "pressed weight," but do contain representations as to the "net weight" (5 oz.), and the "drained weight" (4 oz.).¹ (Defendants' Request for Judicial Notice ("RJN"), Ex. 1, ECF Nos. 62–2, 62–4.) NOAA also tested the "net weight" and the "drained weight" of the tuna. (RJN, Ex. 2, ECF Nos. 62–2, 62–5.) Trader Joe's contends that, according to the NOAA tests, neither the average "net weight" nor average "drained weight" ever tested below 5 oz. or 4 oz., respectively. (Mot. 3.) Plaintiffs do not dispute this. As discussed at length in the Court's prior Order, (ECF No. 54), Trader Joe's criticizes the Pressed Weight Standard, which is currently under reconsideration by the FDA, as being outdated and inaccurate. (Mot. 3–4.) Trader Joe's also claims that its alleged failure to follow the Pressed Weight Standard did not deceive consumers because the temporary marketing permit ("TMP") the FDA granted to Chicken of the Sea International, Bumble Bee Foods, LLC, and StarKist Co. (collectively, "Major Tuna Producers") allows them to market tuna without having to comply with the labeling requirements associated with the Pressed Weight Standard. (Mot. 3–4; ECF No. 54.) Federal Regulations require producers of tuna to state, "Below Standard in Fill," on cans of tuna that do not comply with the Pressed Weight Standard, unless the FDA granted the manufacturer a TMP. See 21 C.F.R. § 161.190(c)(4) ; 21 C.F.R. § 130.14(b). The FDA extended TMP for the Major Tuna Producers indefinitely on March 7, 2016. 81 Fed. Reg. 11813 (RJN, Ex. 7.) Trader Joe's does not allege that they are currently included in the TMP, but maintain that they applied in February 2017. (RJN, Ex. 8, ECF No. 62–11.)

Since the Court's prior Order dismissing the FAC on preemption grounds, Plaintiffs' SAC alleges three new categories of fact. First, instead of only violating the "federally mandated minimum standard of fill" set forth in title 21, sections 130.14(b) and 161.190 of the Code of Federal Regulations (SAC ¶ 1), Trader Joe's also violates California's Sherman Food, Drug and Cosmetic Law ("Sherman Law"), which prescribes labeling requirements for certain foods. (Id. ¶ 9.) Plaintiffs also allege that Trader Joe's "conduct runs contrary to the standard practices and procedures of other tuna manufacturers." (Id. ¶ 10.) Finally, Plaintiffs allege they relied on the statements on the label in making their purchases, and would not have purchased the tuna "if the labels had properly contained the statement ‘Below Standard in Fill,’ " as required by title 21, section 130.14 of the Code of Federal Regulations . (Id. ¶¶ 12–13.)

Plaintiffs' SAC alleges claims for: breach of express warranty (Count I), breach of implied warranty of merchantability (Count II), unjust enrichment (Count III), negligent misrepresentation (Count VI), and fraud (Count VII). (See generally SAC.) Plaintiff Magier also brings claims on behalf of herself and the New York subclass for violation of New York General Business Law sections 349, 350. (Id. Counts IV & V.) Plaintiff Reyes also brings claims on behalf of herself and the California subclass for violation of California's Consumer Legal Remedies Act ("CLRA"), Unfair Competition Law ("UCL"), and False Advertising Law ("FAL"). (Id. Counts VIII–X.)

Trader Joe's moves to dismiss Plaintiffs' SAC on several grounds, including, as before, an implied preemption theory. (Mot. 5–8.)

III. LEGAL STANDARD

A motion to dismiss under either Rule 12(c) or 12(b)(6) is proper where the plaintiff fails to allege a cognizable legal theory or where there is an absence of sufficient facts alleged under a cognizable legal theory. Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ; see also Shroyer v. New Cingular Wireless Serv., Inc. , 622 F.3d 1035, 1041 (9th Cir. 2010). That is, the 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) (internal quotation marks omitted).

Accusations of fraud require a heightened particularity in pleading. See Fed. R. Civ. P. 9(b). Federal Rule of Civil Procedure 9(b) establishes that an allegation of "fraud or mistake must state with particularity the circumstances constituting fraud." The "circumstances" required by Rule 9(b) are the "who, what, when, when, where, and how" of the fraudulent activity. Cafasso, ex rel. U.S. v. Gen. Dynamics C4 Sys., Inc. , 637 F.3d 1047, 1055 (9th Cir. 2011). In addition, the allegation "must set forth what is false or misleading about a statement, and why it is false." Id. This heightened pleading standard ensures that "allegations of fraud are specific enough to give defendants notice of the particular misconduct which is alleged to constitute the fraud charged so that they can defend against the charge and not just deny that they have done anything wrong." Semegen v. Weidner , 780 F.2d 727, 731 (9th Cir. 1985).

Generally, a court should freely give leave to amend a complaint that has been dismissed, even if not requested by the party. See Fed. R. Civ. P. 15(a) ; Lopez v. Smith , 203 F.3d 1122, 1130 (9th Cir. 2000) (en banc). However, a court may deny leave to amend when it "determines that the allegation of other facts consistent with the challenged pleading could not possibly cure the deficiency." Schreiber Distrib. Co. v. Serv–Well Furniture Co. , 806 F.2d 1393, 1401 (9th Cir. 1986).

IV. DISCUSSION

Trader Joe's moves to dismiss Plaintiffs' SAC on several different grounds: (1) implied preemption; (2) the doctrine of primary jurisdiction; (3) equitable abstention; and (4) a failure to state a viable claim. (See generally Mot.)

A. Implied Preemption

Preemption may be express or implied. Medtronic, Inc. v. Lohr , 518 U.S. 470, 484–85, 116 S.Ct. 2240, 135 L.Ed.2d 700 (1996). Express preemption occurs where Congress explicitly preempts state law. Chae v. SLM Corp. , 593 F.3d 936, 941 (9th Cir. 2010). Implied preemption occurs where: 1) "state law actually conflicts with federal law;" or 2) "federal law occupies a legislative field to such an extent that it is reasonable to conclude that Congress left no room for state regulation in that field." Id. While, at times, the parties' briefing blurs the lines between these two distinct types of preemption, at issue here, is whether Plaintiffs' claims are impliedly preempted by the FDCA's mandate that all actions to enforce the FDCA are brought in the name of the United States, or, in limited circumstances, the states. 21 U.S.C. § 337. In the prior Order, the Court held that Plaintiffs' claims were impliedly preempted because Plaintiffs' purported state-law claims did not sufficiently "thread the gap" within the Ninth Circuit's rule in Perez v. Nidek Co. and were actually an attempt to improperly enforce the FDCA. (June 2, 2017 Order, ECF No. 54.) Now, Plaintiffs assert claims under California's Sherman Law, which they claim provides an independent basis for relief, and precludes a finding of preemption. (Opp'n Part II.A, ECF No. 63.) Plaintiffs also maintain that the claims based on New York law also provide a right of action that is not an attempt to enforce the FDCA. (Opp'n 2–6.)

There is some tension in the law when it comes to courts' application of Supreme Court preemption precedent because the opinions, as well as the parties, often rely on express preemption cases, in an implied preemption scenario, and vice versa. The Court is guided by "the assumption that the historic police powers of the States [are] not to be superseded by the Federal Act unless that was the clear and manifest...