Sateriale v. R.J. Reynolds Tobacco Co.

• Decision Date: 15 October 2012
• Docket Number: No. 11–55057.,11–55057.
• Citation: 697 F.3d 777
• Parties: Amanda SATERIALE; Jeffrey Feinman; Pamela Burns; Donald Wilson; Patrick Griffiths; Jackie Warren; Heather Polese; Richard Holter; Dan Polese; Fred Javaheri, Individually and on Behalf of All Others Similarly Situated, Plaintiffs–Appellants, v. R.J. REYNOLDS TOBACCO COMPANY, Defendant–Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

697 F.3d 777

2012 Daily Journal D.A.R. 14,219

Amanda SATERIALE; Jeffrey Feinman; Pamela Burns; Donald Wilson; Patrick Griffiths; Jackie Warren; Heather Polese; Richard Holter; Dan Polese; Fred Javaheri, Individually and on Behalf of All Others Similarly Situated, Plaintiffs–Appellants,

v.R.J. REYNOLDS TOBACCO COMPANY, Defendant–Appellee.

No. 11–55057.

United States Court of Appeals,Ninth Circuit.

Argued and Submitted May 7, 2012.

Filed July 13, 2012.

Amended Oct. 15, 2012.

Jeffrey H. Squire (argued), Lawrence P. Eagel and Raymond A. Bragar, Bragar Wexler Eagel & Squire, P.C., New York, NY; Lionel Z. Glancy and Marc L. Godino, Glancy Binkow & Goldberg LLP, Los Angeles, CA, for the plaintiffs-appellants.

Marc K. Callahan, John A. Vogt (argued) and Corbett H. Williams, Jones Day, Irvine, CA, for the defendant-appellee.

Appeal from the United States District Court for the Central District of California, Christina A. Snyder, District Judge, Presiding. D.C. No. 2:09–cv–08394–CAS–SS.

Before: JOHN T. NOONAN, JR., and RAYMOND C. FISHER, Circuit Judges, and KIMBERLY J. MUELLER, District Judge.^*

ORDER

The opinion filed July 13, 2012, and reported at 687 F.3d 1132, is amended as follows:

At slip opinion page 8097, 687 F.3d at 1143, after the sentence , insert the following new footnote:

petition for rehearing, RJR argues that the plaintiffs have asserted only a bilateral contract and not a unilateral contract. There is no question, however, that the plaintiffs—in their complaint, as well as in the district court and on appeal—have consistently alleged acceptance by performance, which is the essence of a unilateral contract. See Appellants' Opening Brief at 14, 19, 22, 26, 30 n.2 (asserting that the plaintiffs accepted RJR's offer by filling out applications, enrolling in the program, buying cigarettes, acquiring and saving C–Notes and complying with the program's terms and conditions). RJR thus had fair notice of the plaintiffs' theory that contractual liability arose from these acts of performance, and the issue was fairly presented to this court. We focus on the substance of the plaintiffs' claims, not the plaintiffs' labels. See Farnsworth § 3.4, at 112 (explaining that “[t]he dichotomy between bilateral and unilateral plays a less important role in the contemporary analysis of contracts” and noting that the “Restatement Second abandons the use of the terms because of ‘doubt as to the utility of the distinction’ ” (quoting Reporter's Note to Rest. § 1)).>

With this amendment, the panel has voted to deny the petition for rehearing. Judge Fisher has voted to deny the petition for rehearing en banc and Judges Noonan and Mueller so recommend.

The full court has been advised of the petition for rehearing en banc and no active judge has requested a vote on whether to rehear the matter en banc. Fed. R.App. P. 35.

Appellee's petition for rehearing and petition for rehearing en banc, filed August 22, 2012, is DENIED.

No future petitions for rehearing or rehearing en banc will be entertained.

OPINION

FISHER, Circuit Judge:

R.J. Reynolds Tobacco Company (RJR) operated a customer rewards program, called Camel Cash, from 1991 to 2007. Under the terms of the program, RJR urged consumers to purchase Camel cigarettes, to save Camel Cash certificates included in packages of Camel cigarettes, to enroll in the program and, ultimately, to redeem their certificates for merchandise featured in catalogs distributed by RJR. The plaintiffs allege that, in reliance on RJR's actions, they purchased Camel cigarettes, enrolled in the program and saved their certificates for future redemption. They allege that in 2006 RJR abruptly ceased accepting certificates for redemption, making the plaintiffs' unredeemed certificates worthless. The plaintiffs brought this action for breach of contract, promissory estoppel and violation of two California consumer protection laws. The district court dismissed the action for failure to state a claim. We affirm in part, reverse in part and remand. We hold that the plaintiffs have adequately alleged claims for breach of contract and promissory estoppel, but affirm dismissal of the plaintiffs' claims under the Unfair Competition Law and the Consumer Legal Remedies Act.

I. BACKGROUND

The plaintiffs appeal from a dismissal for failure to state a claim. SeeFed.R.Civ.P. 12(b)(6). For purposes of a motion to dismiss, we accept all well-pleaded allegations of material fact as true and construe them in the light most favorable to the nonmoving party. See Daniels–Hall v. Nat'l Educ. Ass'n, 629 F.3d 992, 998 (9th Cir.2010). We thus recite the facts as they appear in the plaintiffs' third amended complaint. This factual background is based on the allegations of the plaintiffs' complaint. Whether the plaintiffs' allegations are true has not been decided.

RJR initiated the Camel Cash customer loyalty program in 1991. Compl. ¶ 24. RJR represented on Camel Cash certificates, packages of Camel cigarettes and in the media that customers who saved the certificates—called C–Notes—could exchange them for merchandise according to terms provided in a catalog. Id. The C–Notes stated:

USE THIS NEW C–NOTE AND THE C–NOTES YOU'VE BEEN SAVING TO GET THE BEST GOODS CAMEL HAS TO OFFER. CALL 1–800–CAMEL CASH (1800–266–3522) for a free catalog. Offer restricted to smokers 21 years of age or older. Value 1/1000 of 1¢. Offer good only in the USA, and void where restricted or prohibited by law. Check catalog for expiration date. Limit 5 requests for a catalog per household.

Id. ¶ 26. According to the complaint, “Certain (but not all) of the Camel Cash catalogs state[d] that Reynolds could terminate the Camel Cash program without notice.” Id. ¶ 32.

The plaintiffs are 10 individuals who joined the Camel Cash program by purchasing RJR's products and filling out and submitting signed registration forms to RJR. Id. ¶¶ 27, 48. RJR sent each plaintiff a unique enrollment number that was used in communications between the parties. Id. ¶ 27. These communications included catalogs RJR distributed to the plaintiffs containing merchandise that could be obtained by redeeming Camel Cash certificates. Id.

From time to time, RJR issued a new catalog with merchandise offered in exchange for Camel Cash, either upon request, or by mailing catalogs to consumers enrolled in the program. Id. ¶ 28. The number of Camel Cash certificates needed to obtain merchandise varied from as little as 100 to many thousands. Id. ¶ 29. This encouraged consumers to buy more packages of cigarettes together with Camel Cash and also to save or obtain Camel Cash certificates to redeem them for more valuable items. Id.

RJR honored the program from 1991 to 2006, and during that time Camel's share of the cigarette market nearly doubled, from approximately 4 percent to more than 7 percent. Id. ¶¶ 3, 34. In October 2006, however, RJR mailed a notice to program members announcing that the program would terminate as of March 31, 2007. Id. ¶ 32. The termination notice stated:

As a loyal Camel smoker, we [sic] wanted to tell you our Camel Cash program is expiring. C–Notes will no longer be included on packs, which means whatever Camel Cash you have is among the last of its kind.

Now this isn't happening overnight—there'll be plenty of time to redeem your C–Notes before the program ends. In fact, you'll have from OCTOBER '06 though MARCH '07 to go to camelsmokes.com to redeem your C–Notes. Supplies will be limited, so it won't hurt to get there before the rush.

Id. ¶ 33 & ex. A.

The announcement advised members that they could continue to redeem their C–Notes until March 2007. Beginning in October 2006, however, RJR allegedly stopped printing and issuing catalogs and told consumers that it did not have any merchandise available for redemption. Id. ¶¶ 34, 48. Several of the plaintiffs attempted, without success, to redeem C–Notes or obtain a catalog during the final six months of the program. Id. ¶ 49. The plaintiffs had saved hundreds or thousands of Camel Cash certificates that they were unable to redeem. Id. ¶ 11.

In November 2009, the plaintiffs filed a class action complaint against RJR. They allege breach of contract, promissory estoppel and violations of two California consumer protection laws, the Unfair Competition Law (UCL), Cal. Bus. & Prof.Code § 17200 et seq., and the Consumer Legal Remedies Act (CLRA), Cal. Civ.Code § 1750 et seq. The district court dismissed the action under Rule 12(b)(6), and the plaintiffs timely appealed.

II. JURISDICTION AND STANDARD OF REVIEW

We have jurisdiction under 28 U.S.C. § 1291. We review de novo a district court's order granting a Rule 12(b)(6) motion to dismiss. See Cook v. Brewer, 637 F.3d 1002, 1004 (9th Cir.2011). To survive a motion to dismiss, a complaint must contain sufficient factual matter 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) (internal quotation marks omitted)). “We accept as true all well-pleaded allegations of material fact, and construe them in the light most favorable to the non-moving party.” Daniels–Hall, 629 F.3d at 998. The parties agree that the plaintiffs' claims are governed by California law.

III. BREACH OF CONTRACT

We begin by addressing whether the plaintiffs have stated a claim for breach of contract. The plaintiffs do not dispute that RJR had the right to terminate the Camel Cash program effective March 31, 2007, but allege that RJR breached a contract by refusing to redeem C–Notes during the six months preceding program termination. Compl. ¶¶ 6–7. RJR challenges the plaintiffs' contract claim on four grounds: the absence of an offer, indefiniteness, lack of mutuality of obligation (premised on RJR's right to terminate its contractual obligations) and untimeliness. We address RJR's contentions in turn.

A. Existence of an Offer

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