Stewart v. Kodiak Cakes, LLC

• Citation: 537 F.Supp.3d 1103
• Decision Date: 28 April 2021
• Docket Number: Case No. 19-cv-2454-MMA (MSB)
• Parties: Ty STEWART, et al., Plaintiffs, v. KODIAK CAKES, LLC, Defendant.
• Court: U.S. District Court — Southern District of California

537 F.Supp.3d 1103

Ty STEWART, et al., Plaintiffs,

v.KODIAK CAKES, LLC, Defendant.

Case No. 19-cv-2454-MMA (MSB)

United States District Court, S.D. California.

Signed April 28, 2021

Filed April 29, 2021

Courtney M. Vasquez, David Adam Fox, Joanna Fox, Fox Law, A.P.C., Solana Beach, CA, for Plaintiffs.

Courtney M. Vasquez, Fox Law, A.P.C., Solana Beach, CA, for Plaintiffs Vicki Siverling, Tracy Hall, Mary McLeroy, Chad Humphrey, Victoria Johnson, Michael Smith, Harry Malakoff, Alyson Martin, Robin Curless, Jennifer Jenkins, Mary Hillary Pfeiffer, Suzanne Dagesse, Julie Lussier, Julie Stocker, Ivan Blanco, Eliza Reid, Evelyn Hernandez, Danielle Arno.

Danielle Stierna, Eric Y. Kizirian, Michael Grimaldi, Lewis Brisbois Bisgaard & Smith LLP, Los Angeles, CA, for Defendant.

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

MICHAEL M. ANELLO, United States District Judge

Ty Stewart and twenty-two other Plaintiffs (collectively, "Plaintiffs") bring this putative class action against Kodiak Cakes, LLC ("Defendant"). See Doc. No. 37 ("FAC"). Plaintiffs assert six causes of action premised on two main issues with Defendant's products: "(1) non-functional slack fill and (2) deceptive marketing practices." Id. ¶ 3. Defendant moves to dismiss each cause of action for lack of standing and failure to state a claim pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6) and moves to strike several allegations from the First Amended Complaint ("FAC") pursuant to Federal Rule of Civil Procedure 12(f). See Doc. No. 44. Plaintiffs filed an opposition to Defendant's motion, and Defendant replied. See Doc. Nos. 62, 65. The Court found the matter suitable for determination on the papers and without oral argument pursuant to Federal Rule of Civil Procedure 78(b) and Civil Local Rule 7.1.d.1. See Doc. No. 66. For the reasons set forth below, the Court GRANTS IN PART and DENIES IN PART Defendant's motion to dismiss and DENIES Defendant's motion to strike.

I. BACKGROUND ¹

Defendant "manufactures, markets, advertises, and sells a line of packaged breakfast and snack products," including pancake and waffle mixes. FAC ¶ 1. Plaintiffs’ action arises from two overarching issues with Defendant's products: (1) "nonfunctional slack fill," which is the empty space in a package that serves no purpose, and (2) deceptive marketing statements. See id. 3, 5–6, 10.

As to nonfunctional slack fill, Plaintiffs allege Defendant packages its products in a manner that "conceals the amount of the product actually contained in the package and misleads consumers into believing there is more product inside the packaging than there actually is." Id. ¶ 6. In particular, Plaintiffs claim less than half of the packaging is full and thus misrepresents the amount of product within each package. Id. ¶¶ 7, 83, 85.

As to deceptive marketing statements, Plaintiffs allege Defendant makes five types of misleading statements in advertising its products. Id. ¶ 10. Plaintiffs allege that Defendant misleadingly labels and advertises its products as having "no preservatives" as well as being "free of artificial additives," "non-GMO," "healthy," and "protein-packed." See FAC ¶¶ 10, 63, 97–126, 127–31, 132–48. Plaintiffs aver that Defendant's marketing strategy is designed to lure consumers to purchase their products because of these deceptive statements. Id. ¶ 13.

Plaintiffs allege that they relied on Defendant's misleading packaging and advertising when purchasing Defendant's products. Id. ¶ 14. Plaintiffs seek to rectify these problems. In doing so, Plaintiffs bring six causes of action against Defendant: (1) "violation of the consumer protection acts of all 50 states (and the District of Columbia)" on behalf of the nationwide class; (2) violation of the California Consumers Legal Remedies Act ("CLRA"), Cal Civ. Code §§ 1750 – 1784, on behalf of the California class; (3) violations of the California Unfair Competition Law ("UCL"), Cal. Bus. & Prof. Code §§ 17200 – 17210, on behalf of the California class; (4) violation of the California False Advertising Law ("FAL"), Cal. Bus. & Prof. Code §§ 17500 – 17606 ; (5) breach of express warranty on behalf of the nationwide class; and (6) "restation based on quasi-contract and unjust enrichment" on behalf of the nationwide class. Id. ¶¶ 161–222.

Defendant moves to dismiss the causes of action on the grounds that Plaintiffs lack standing under Rule 12(b)(1) and fail to state a claim under Rule 12(b)(6) as well as moves to strike allegations from the FAC under Rule 12(f). See Doc. No. 44 at 2.²

II. REQUEST FOR JUDICIAL NOTICE AND INCORPORATION-BY-REFERENCE

As an initial matter, Defendant requests the Court to consider fifty-eight exhibits—comprising various product packaging labels and high-resolution "proofs" of the labels—pursuant to the judicial notice and incorporation-by-reference doctrines. See Doc. Nos. 44-2, 65-1. Plaintiffs object to Defendant's request. See Doc. No. 62-1. Before delving into the substance of the motion to dismiss, the Court addresses the request and objection.

Defendant argues that the Court should take judicial notice of the product labels because Plaintiffs’ claims are based on them. See Doc. No. 44-2 at 5. Defendant reasons that all six causes of action "rely on product labeling and marketing [Plaintiffs] allege is misleading." Id. Noting that Plaintiffs allege five misleading terms and pursue claims against most of Defendant's products, Defendant asserts that all of the proffered product labels "are at issue and effectively incorporated by reference." Id. Plaintiffs respond that judicial notice is improper for two main reasons: the labels are not generally known in this district and are subject to dispute. See Doc. No. 62-1 at 4. As to the latter point, Plaintiffs argue that the labels are subject to dispute because the labels are unauthenticated; the high-resolution images are from unknown sources, appear to be internal documents, and distort what consumers actually see; Defendant failed to explain the labels’ relevancy; and the labels inappropriately dispute Plaintiffs’ allegations. See id. at 4–7. Additionally, Plaintiffs respond that incorporation-by-reference is improper because they challenge the labels’ authenticity. Id. at 9.

The Court proceeds by determining whether it can consider the exhibits under the separate doctrines of judicial notice and incorporation-by-reference. See Khoja v. Orexigen Therapeutics, Inc. , 899 F.3d 988, 998 (9th Cir. 2018) ("Both of these procedures permit district courts to consider materials outside a complaint, but each does so for different reasons and in different ways.").

A. Request for Judicial Notice

1. Legal Standard

"Generally, district courts may not consider material outside the pleadings when assessing the sufficiency of a complaint under Rule 12(b)(6) ...." Khoja , 899 F.3d at 998 (citing Lee v. City of Los Angeles , 250 F.3d 668, 688 (9th Cir. 2001), overruled on other grounds by Galbraith v. County of Santa Clara , 307 F.3d 1119, 1125–26 (9th Cir. 2002) ). However, "a court may take judicial notice of matters of public record," id. at 999 (quoting Lee , 250 F.3d at 689 ), and of "documents whose contents are alleged in a complaint and whose authenticity no party questions, but which are not physically attached to the pleading," Branch v. Tunnell , 14 F.3d 449, 454 (9th Cir. 1994), overruled on other grounds by Galbraith , 307 F.3d at 1125–26 ; see also Fed. R. Evid. 201. A judicially noticed fact must be one not subject to reasonable dispute in that it is either (1) generally known within the territorial jurisdiction of the trial court or (2) capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned. Fed. R. Evid. 201(b) ; see also Khoja , 899 F.3d at 999 (quoting Fed. R. Evid. 201(b) ).

2. Discussion

Plaintiffs raise the specter of an authenticity dispute as to the labeling and high-resolution "proof" specifications. See Doc. No. 62-1 at 4–6. However, Plaintiffs do not detail how they are inauthentic, inaccurate, or disputed; instead, they merely question the manner in which they are presented before the Court. See Brown v. Hain Celestial Grp., Inc. , 913 F. Supp. 2d 881, 893 (N.D. Cal. 2012) (noting that authenticity objections to judicial notice usually can be surmounted). Therefore, Plaintiffs do not genuinely question the authenticity of the exhibits.

As to the proofs specifically, Plaintiffs submit a declaration in support of their objection that attaches an exhibit containing a spreadsheet. Vasquez Decl., Doc. No. 62-2 ¶¶ 2–4. The attached spreadsheet "contains links to images of the revisions to product labels for products at issue from 2015 through 2020." Id. ¶ 3. The signed declaration states that the documents were produced by Defendant in response to Plaintiffs’ request for "all versions of the packaging and product labels for the products at issue in this case." Id. ¶ 2. The links reveal high-resolution proof images, which appear to have overlap with Defendant's attached exhibits. See Vasquez Decl., Exh. 1, Doc. No. 62-3 at 2. Thus, to the extent there is any genuine authenticity dispute over the high-resolution "proof" specifications, Plaintiffs resolve it.

However, Plaintiffs’ objections to the high-resolution proof specifications have some merit. These two-dimensional, flattened proofs distort what consumers see when viewing the three-dimensional products and do not represent how the products are advertised in their final product. See Tsan v. Seventh Generation, Inc. , No. 15-cv-00205-JST, 2015 WL 6694104, at *3 (N.D. Cal. Nov. 3, 2015) ; Brown , 913 F. Supp. 2d at 893. Moreover, these proofs do not appear to fall under Plaintiffs’ false or misleading advertising allegations, and the Court did not need to rely on these exhibits to rule on the instant motion. Additionally, there are instances where the proofs do not match the...