Sciortino v. Pepsico, Inc.

Decision Date05 June 2015
Docket NumberC–14–1192 EMC,No. C–14–0478 EMC,C–14–1105 EMC,C–14–0713 EMC,C–14–2023 EMC,C–14–1193 EMC,C–14–1099 EMC,C–14–1316 EMC,C–14–0478 EMC
Citation108 F.Supp.3d 780
Parties Stacy Sciortino, et al., Plaintiffs, v. Pepsico, Inc., Defendant.
CourtU.S. District Court — Northern District of California

Marc Lawrence Godino, Glancy Prongay & Murray LLP, Los Angeles, CA, Kiley Lynn Grombacher, Stanley Donald Saltzman, William Anthony Baird, Marlin & Saltzman LLP, Marcus Joseph Bradley, Schwartz, Daniels & Bradley, Agoura Hills, CA, Daniel L. Warshaw, Alexander Robert Safyan, Pearson, Simon & Warshaw, LLP, Sherman Oaks, CA, Melissa Weiner Wolchansky, Halunen and Associates, Minneapolis, MN, Alyson Oliver, Oliver Law Group P.C., Troy, MI, Nick Suciu, III, Barbat, Mansour & Suciu PLLC, Detroit, MI, for Plaintiffs.

Christopher Chorba, Lauren Margaret Blas, Gibson, Dunn and Crutcher LLP, Los Angeles, CA, Sarah Esmaili, Trenton Herbert Norris, Arnold & Porter LLP, San Francisco, CA, for Defendant.

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO DISMISS

EDWARD M. CHEN, United States District Judge

Pending before the Court is Defendant Pepsico, Inc.'s ("Pepsi's") Motion to Dismiss Plaintiffs' Consolidated Amended Complaint. Docket No. 82 ("Motion"). The operative complaint is the Consolidated Amended Complaint ("CAC"). Docket No. 68. For the reasons discussed herein, the Court GRANTS in part and DENIES in part Pepsi's Motion to Dismiss.

I. FACTUAL & PROCEDURAL BACKGROUND

Nine putative class actions were filed against Defendant PepsiCo, Inc. ("Pepsi"). The Court appointed counsel for Plaintiffs Hall and Ree as interim lead counsel and consolidated the actions.1 Docket No. 65. Pending before the Court is a motion to dismiss the CAC in the consolidated actions, which Plaintiffs Mary Hall, Kent Ibusuki, and Kelly Ree ("Plaintiffs") have brought on behalf of themselves and a putative class of California consumers who purchased Pepsi, Diet Pepsi, or Pepsi One (the "Pepsi Beverages") at any time after January 23, 2010 ("Class").

The CAC concerns Pepsi's alleged "intentional concealment and/or failure to warn consumers in California that [the Pepsi Beverages] contain a harmful and carcinogenic chemical called 4–Methylimidazole("4–MeI") at levels above the safety threshold set by the State of California in Proposition 65." CAC ¶ 1. The Pepsi Beverages contain caramel coloring, which makes the cola products brown. Id. at ¶ 16. Only the Class III and Class IV types of caramel coloring are created using a process that produces 4–MeI as a byproduct. Id. ¶¶ 18–19. Pepsi uses Class IV caramel coloring in the Pepsi Beverages. Id. ¶ 19.

In January of 2014, Consumer Reports published the results of tests it conducted in 2013 on a number of soft drinks, including the Pepsi Beverages. Id. ¶¶ 34–35. Consumer Reports found that the amounts of 4–MeI in the Pepsi Beverages were higher than in other soft drinks tested. Id. ¶ 37. The Consumer Reports testing revealed amounts of 4–MeI in a can or bottle of Pepsi Beverages that exceeded 29 micrograms—the safe harbor for daily exposure established by Proposition 65 below which the Proposition deems there is "no significant risk." Id. ¶¶ 2; 26, 37–38. Consumer Reports's findings as to the levels of 4–MeI in a single can or bottle were significant, because studies have concluded that soda consumers typically drink more than one twelve-ounce serving per day. Id.

According to the CAC, Pepsi made statements in its Annual Reports from 2010 to 2013 that suggested that it knew that it was subject to Proposition 65. Id. ¶ 30. Additionally, in a public statement, Pepsi said:

[W]hen the regulatory requirements on 4–MEI changed in California, PepsiCo moved immediately to meet the new requirements and in order to maintain a harmonized supply chain globally committed to rolling out the changes across the rest of the U.S. and internationally. The work has been completed in California and several other U.S. states, and we are on track to complete the roll out by February 2014.

Id. ¶ 31 (emphasis in original). The CAC alleges that, contrary to its stated position, Pepsi did not comply with Proposition 65 and continued selling Pepsi Beverages with levels of 4–MeI in excess of Proposition 65's safe harbor. Id. ¶¶ 32–33. The CAC charges that this public statement, among others, misled consumers into thinking the Pepsi Beverages were safe and complied with all relevant California regulations. Id. ; see also ¶¶ 5–6, 41–42, 44–49.

Plaintiffs Hall and Ibusuki have alleged a violation of Proposition 65. The Plaintiffs and the Class have also alleged a violation of the Consumer Legal Remedies Act, Cal. Civ.Code § 1750, et seq., based on Pepsi's alleged active concealment and failure to warn that Pepsi Beverages contain 4–MeI in excess of the levels permitted by Proposition 65. Finally, the Plaintiffs and the Class have also alleged that Pepsi engaged in unfair, unlawful, and fraudulent business practices in violation of Cal. Bus. & Prof.Code § 17200, et seq. (the "UCL"). The Plaintiffs and Class seek an order certifying the Class, civil penalties pursuant to California Health & Safety Code § 25249.7(b), damages, restitution, and injunctive relief.

Pepsi moves to dismiss on the grounds that (1) Plaintiffs failed to comply with Proposition 65's mandatory notice provisions before filing suit, (2) the federal Food, Drug, and Cosmetic Act ("FDCA") and the Food and Drug Administration's ("FDA") regulations preempt Plaintiffs' state law claims, and (3) the Court should not adjudicate this action because (a) the FDA has primary jurisdiction over the subject matter of this lawsuit and (b) there is a pending Proposition 65 action in state court.

II. DISCUSSION
A. Legal Standard

Federal Rule of Civil Procedure 8(a) requires a plaintiff to plead a claim with enough specificity to "give the defendant fair notice of what the ... claim is and the grounds upon which it rests." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 545, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (quotation omitted). A Rule 12(b)(6) motion tests the sufficiency of the pleading. Navarro v. Block, 250 F.3d 729, 732 (9th Cir.2001). Dismissal under Rule 12(b)(6) is "proper only where there is no cognizable legal theory or an absence of sufficient facts alleged to support a cognizable legal theory." Id.

To survive a motion to dismiss under Rule 12(b)(6), 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 Twombly, 550 U.S. at 570, 127 S.Ct. 1955 ). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. ; see also Twombly, 550 U.S. at 556, 127 S.Ct. 1955. A plaintiff need not plead "detailed factual allegations" to survive a motion to dismiss, but the allegations must be "enough to raise a right to relief above the speculative level." Twombly, 550 U.S. at 555, 127 S.Ct. 1955. In deciding a motion to dismiss, the Court "accept[s] the plaintiffs' allegations as true and construe[s] them in the light most favorable to the plaintiffs." See Siracusano v. Matrixx Initiatives, Inc., 585 F.3d 1167, 1177 (9th Cir.2009).

B. Proposition 65 Notice Requirements

California voters approved an initiative measure in November of 1986, enacting the Safe Drinking Water and Toxic Enforcement Act of 1986, which is now set forth in Health and Safety Code section 25249.5 et seq . and is commonly known as Proposition 65. Cal. Chamber of Commerce v. Brown, 196 Cal.App.4th 233, 238, 126 Cal.Rptr.3d 214 (2011). Under Proposition 65, "[n]o person in the course of doing business shall knowingly and intentionally expose any individual to a chemical known to the state to cause cancer or reproductive toxicity without first giving clear and reasonable warning to such individual" where the amount of exposure exceeds the "no significant risk level" established by the California Environmental Protection Agency's Office of Environmental Health Hazard Assessment ("OEHHA"). Cal. Health & Saf.Code §§ 25249.6 ; 25249.10(c); CAC ¶¶ 24–26. The OEHHA listed 4–MeI as a chemical known to the state to cause cancer on January 7, 2011. CAC ¶ 24. The OEHHA determined that the "no significant risk level" for 4–MeI is 29 micrograms per day. Id. ¶ 29; see also Cal.Code Regs. tit. 27, § 25705(b)(1).

Proposition 65's warning requirement can be enforced by a public or private enforcement action and carries the possibility of both injunctive relief and civil penalties. Cal. Chamber of Commerce, 196 Cal.App.4th at 239, 126 Cal.Rptr.3d 214 (citing Cal. Health & Saf.Code § 25249.7, subds. (a), (b) ). Private enforcement of Proposition 65's warning requirement is permitted only if a plaintiff has provided notice to the Attorney General (and the district attorney, city attorney, or prosecutor in whose jurisdiction the violation is alleged to have occurred) and to the alleged violator. Cal. Health & Safety Code § 25249.7(d)(1). In other words, "[s]tatutory notice is a mandatory condition precedent to establishing a citizen's right to commence a Proposition 65 enforcement action in the public interest."

Ctr. for Self–Improvement & Cmty. Dev. v. Lennar Corp., 173 Cal.App.4th 1543, 1551, 94 Cal.Rptr.3d 74 (2009).

In a Proposition 65 warning case, pursuant to an amendment that took effect in 2002, statutory notice must include a certificate of merit that states that the "person executing the certificate has consulted with one or more persons with relevant and appropriate experience or expertise who has reviewed facts, studies, or other data regarding the exposure to the listed chemical that is the subject of the action, and that, based on that information, the person executing the certificate believes there is a reasonable and meritorious case for the private action." DiPirro v. Am. Isuzu Motors,...

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