Thomas v. Costco Wholesale Corp.

• Decision Date: 09 April 2013
• Docket Number: Case No.: 5:12-CV-02908 EJD
• Court: U.S. District Court — Northern District of California
• Parties: KAREN THOMAS and LISA LIDDLE, individually and on behalf of all others similarly situated, Plaintiffs, v. COSTCO WHOLESALE CORPORATION, Defendant.

KAREN THOMAS and LISA LIDDLE, individuallyand on behalf of all others similarly situated, Plaintiffs,

v.COSTCO WHOLESALE CORPORATION, Defendant.

Case No.: 5:12-CV-02908 EJD

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN JOSE DIVISION

Dated: April 9, 2013

ORDER GRANTING DEFENDANT'S

MOTION TO DISMISS

[Re: Docket No. 40]

Plaintiffs Karen Thomas ("Thomas") and Lisa Liddle ("Liddle") filed this putative class action against Defendant Costco Wholesale Corporation's ("Costco" or "Defendant"). Plaintiffs allege that several of Defendant's food products have been improperly labeled so as to amount to misbranding and deception in violation of several California and federal laws. Presently before the Court is Defendant's Motion to Dismiss Plaintiffs' Amended Class Action Complaint. Having fully reviewed the parties' papers and having heard oral arguments of counsel, the Court will grant Defendant's Motion.

I. Background

Plaintiff Thomas appears to allege that she purchased at least one of Defendant's products, including Kirkland Signature Kettle Chips. See Am. Compl. ¶ 14, Ex. 1, Docket Item No. 24.Plaintiff Liddle appears to allege that she purchased at least eight of Defendant's products including Kirkland Signature Cashew Clusters, Kirkland Signature Whole Dried Blueberries, Kirkland Signature Newman's Own 100% Grape Juice, Kirkland Signature Organic Chocolate Reduced Fat Milk, Kirkland Bolthouse Farms Organic 100% Carrot Juice, Kirkland Signature Real Sliced Fruit, Kirkland Signature Nature's Path Organic Ancient Grains Granola, and Kirkland Canola Oil Cooking Spray. See id., Exs. 2-9.

Plaintiffs argue that the following representations on the packaging of these and other of Defendant's food products were unlawful and/or misleading: (i) nutrient content claims; (ii) claims about antioxidant content; (iii) "no sugar added" claims; (iv) health claims; (v) "0 grams trans fat" or "no trans fat" claims; (vi) "evaporated cane juice" claims; (vii) synthetic chemical content omissions; (viii) listing of product ingredients not in descending order of predominance by weight; (ix) "preservative free" claims and omissions about preservative content; and (x) slack-filled packaging. They also allege that they "read the labels on Defendant's Misbranded Food Products before purchasing them" and that they "relied on Defendant's package labeling and based and justified the decision to purchase Defendant's products in substantial part on Defendant's package labeling." Id. ¶¶ 166-67.

On September 28, 2012, Plaintiffs filed the Amended Class Action Complaint on behalf of themselves and a putative class of all persons in the United States who have purchased the same or similar products or other of Defendant's food products that were allegedly mislabeled. In the Amended Complaint, Plaintiffs bring forth the following causes of actions: violation of California's Unfair Competition Law ("UCL"), Cal. Bus. & Prof. Code § 17200 et seq. (counts 1-3); violation of the False Advertising Law ("FAL"), Cal. Bus. & Prof. Code §§ 17500 et seq., (counts 4-5); violation of the Consumers Legal Remedies Act ("CLRA"), Cal. Civ. Code § 1750 et seq. (count 6); restitution based on unjust enrichment or quasi-contract (count 7); and breach of warranty in violation of the Song-Beverly Act, Cal. Civ. Code § 1790 et seq. (count 8) and the Magnuson-Moss Act, 15 U.S.C. § 2301 (count 9).

Under California's Sherman Food, Drug, and Cosmetic Laws, the federal labeling requirements are adopted as the food labeling requirements of the state of California. See Cal. Health & Safety Code § 110100 ("All food labeling regulations and any amendments to those regulations adopted pursuant to the federal act, in effect on January 1, 1993, or adopted on or after that date shall be the food regulations of this state."). The state laws also point to the adoption of specific federal provisions as the parallel state labeling requirements. See, e.g., id. § 110665 ("Any food is misbranded if its labeling does not conform with the requirements for nutrition labeling as set forth in Section 403(q) (21 U.S.C. Sec. 343(q)) of the federal act and the regulations adopted pursuant thereto. Any food exempted from those requirements under the federal act shall also be exempt under this section."). As such, Plaintiffs argue that violations of the federal laws and regulations—namely the Food, Drug, and Cosmetic Act ("FDCA"), 21 U.S.C. § 301 et seq. as amended by the Nutrition Labeling and Education Act ("NLEA")—would amount to violations of the identical California state requirements.

On November 15, 2012, Defendant filed the present Motion to Dismiss the Amended Class Action Complaint. See Docket Item No. 40. The Court heard arguments of counsel at a hearing on January 25, 2013. See Minute Entry, Docket Item No. 52.

II. Legal Standards

A. Article III Standing

An Article III federal court must ask whether a plaintiff has suffered sufficient injury to satisfy the "case or controversy" requirement of Article III of the U.S. Constitution. To satisfy Article III standing, plaintiff must allege: (1) an injury in fact that is concrete and particularized, as well as actual and imminent; (2) that the injury is fairly traceable to the challenged action of the defendant; and (3) that it is likely (not merely speculative) that injury will be redressed by a favorable decision. Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167, 180-81 (2000); Lujan v. Defenders of Wildlife, 504 U.S. 555, 561-62 (1992). A suit brought by a plaintiff without Article III standing is not a "case or controversy," and an Article III federal courttherefore lacks subject matter jurisdiction over the suit. Steel Co. v. Citizens for a Better Environment, 523 U.S. 83, 101 (1998). In that event, the suit should be dismissed under Rule 12(b)(1). See id. at 109-10. A defendant may challenge standing through a Federal Rule of Civil Procedure 12(b)(1) motion and may either attack the complaint on its face or the existence of jurisdiction in fact. Thornhill Publ'g Co. v. Gen. Tel. & Elecs. Corp., 594 F.2d 730, 732-33 (9th Cir. 1979). At least one named plaintiff must have suffered an injury in fact. See Lierboe v. State Farm Mut. Auto. Ins. Co., 350 F.3d 1018, 1022 (9th Cir. 2003) ("[I]f none of the named plaintiffs purporting to represent a class establishes the requisite of a case or controversy with the defendants, none may seek relief on behalf of himself or any other member of the class."). The party seeking to invoke federal court jurisdiction has the burden of establishing the constitutional elements of standing. See Lujan, 504 U.S. at 561.

B. Motion to Dismiss for Failure to State a Claim

Federal Rule of Civil Procedure 8(a) requires a plaintiff to plead each claim with sufficient specificity to "give the defendant fair notice of what the . . . claim is and the grounds upon which it rests." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal quotations omitted). A complaint which falls short of the Rule 8(a) standard may be dismissed if it fails to state a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6). "Dismissal under Rule 12(b)(6) is appropriate only where the complaint lacks a cognizable legal theory or sufficient facts to support a cognizable legal theory." Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th Cir. 2008). Moreover, the factual allegations "must be enough to raise a right to relief above the speculative level" such that the claim "is plausible on its face." Twombly, 550 U.S. at 556-57.

When deciding whether to grant a motion to dismiss, the court generally "may not consider any material beyond the pleadings." Hal Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d 1542, 1555 n.19 (9th Cir. 1990). The court must accept as true all "well-pleaded factual allegations." Ashcroft v. Iqbal, 556 U.S. 662 (2009). The court must also construe the alleged facts in the light most favorable to the plaintiff. Love v. United States, 915 F.2d 1242, 1245 (9th Cir.1988). "[M]aterial which is properly submitted as part of the complaint may be considered." Twombly, 550 U.S. at 555. But "courts are not bound to accept as true a legal conclusion couched as a factual allegation." Id.

Fraud-based claims are subject to heightened pleading requirements under Federal Rule of Civil Procedure 9(b). In that regard, a plaintiff alleging fraud "must state with particularity the circumstances constituting fraud." Fed. R. Civ. Proc. 9(b). The allegations must be "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). To that end, the allegations must contain "an account of the time, place, and specific content of the false representations as well as the identities of the parties to the misrepresentations." Swartz v. KPMG LLP, 476 F.3d 756, 764 (9th Cir. 2007). Averments of fraud must be accompanied by the "who, what, when, where, and how" of the misconduct charged. Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003) (citation omitted). Additionally, "the plaintiff must plead facts explaining why the statement was false when it was made." Smith v. Allstate Ins. Co., 160 F. Supp. 2d 1150, 1152 (S.D. Cal. 2001) (citation omitted); see also In re GlenFed, Inc. Sec. Litig., 42 F.3d 1541, 1549 (9th Cir. 1994) (en banc) (superseded by statute on other grounds).

III. Discussion

A. Standing

Defendant argues that Plaintiffs' claims must be dismissed because they do not have standing to sue. As noted, to establish Article III standing, a plaintiff must allege facts showing an "injury-in-fact," causation, and redressability such that the injury will be likely redressed by a decision in the plaintiff's favor. Lujan, 504 U.S. at 561-62. An "injury...