Cheslow v. Ghirardelli Chocolate Co.

472 F.Supp.3d 686

Linda CHESLOW, et al., Plaintiffs,

v.GHIRARDELLI CHOCOLATE COMPANY, Defendant.

Case No. 19-cv-07467-PJH

United States District Court, N.D. California.

Signed July 17, 2020

Ryan J. Clarkson, Bahar Sodaify, Matthew Thomas Theriault, Shireen M. Clarkson, Zachary T. Chrzan, Clarkson Law Firm, P.C., Los Angeles, CA, for Plaintiffs.

Dale Joseph Giali, Keri Elizabeth Borders, Mayer Brown LLP, Los Angeles, CA, for Defendant.

ORDER GRANTING MOTION TO DISMISS

Re: Dkt. No. 43

PHYLLIS J. HAMILTON, United States District Judge

Before the court is defendant Ghirardelli Chocolate Co.’s ("Ghirardelli" or "defendant") motion to dismiss. The matter is fully briefed and suitable for decision without oral argument. Having read the parties’ papers and carefully considered their arguments and the relevant legal authority, and good cause appearing, the court hereby GRANTS defendant's motion for the following reasons.

BACKGROUND

On September 19, 2019, plaintiffs Linda Cheslow and Steven Prescott ("plaintiffs") filed a complaint in Sonoma County Superior Court, which defendant removed to federal court on November 13, 2019. Dkt. 1. The complaint asserted three causes of action: (1) violation of California Unfair Competition Law Business & Professions Code § 17200 et seq. ; (2) False and Misleading Advertising in violation of Business & Professions Code § 17500 et seq. ; and (3) violation of California Consumer Legal Remedies Act, Civil Code § 1750 et seq. Dkt. 1-1. On April 8, 2020, this court granted defendant's motion to dismiss and dismissed the complaint with leave to amend. See Dkt. 34. On April 29, 2020, plaintiffs filed their First Amended Complaint ("FAC") alleging the same three causes of action as the original complaint. Dkt. 36. Plaintiffs seek to certify a class action of all persons who purchased Ghirardelli's "Premium Baking Chips Classic White Chips" (the "product") in the United States or, alternatively, in California.

The court's April 8th order contains a more thorough discussion of the factual background of this case. Dkt. 34 at 2–4. For purposes of the FAC, plaintiffs have pled the following new allegations. Plaintiffs cite and attach to the FAC a consumer study commissioned by plaintiffs to determine whether and to what extent defendant's labeling misleads consumers into believing that the product contains white chocolate. FAC ¶ 4. The survey's sample size was 1,278 respondents; respondents were equally allocated to respond to questions concerning one of the following four products: Ghirardelli's Classic White Chips, Nestle Toll House's Premier White Morsels, Target's Market Pantry White Baking Morsels, and Walmart's White Baking Chips. Id., Ex. A at 3. Respondents were asked demographic questions and then shown the front panel of one of the four products. Id. at 20–21. They were then asked questions such as "Based on your review of this package, do you think that this product contains white chocolate." Id. at 22.

According to the survey results, 91.88 percent of respondents indicated that they believed the product contained white chocolate while 8.12 percent did not think the product contained white chocolate. Id. ¶ 4. The respondents were asked "If, after purchasing this Product, you learned that the Product contained no white chocolate or chocolate of any kind, would you be less or more satisfied with you purchase?" Id. 64.69 percent of respondents answered that they would either be "much less satisfied" or "somewhat less satisfied." Id. 35.31 percent of respondents would be "neither less nor more satisfied," "somewhat more satisfied," or "much more satisfied." Id. Similar percentages responded that they would be much or somewhat less likely to purchase the product again (65.32 percent) as compared to more likely to purchase the product again (34.68 percent). Id.

Additionally, each plaintiff alleges with greater specificity the reasons why they were deceived by the packaging and why they relied on the product's package. For example, Cheslow desired white chocolate chips to bake holiday cookies, bars, and brownies and found the product in a section of a Target store labeled "chocolate chips." Id. ¶ 43. Cheslow saw the picture of white chocolate chips on the label, as well as the references to "Premium" and "Classic White Chips," and she believed that the product contained white chocolate. Id. She did not spend "minutes and minutes" comparing the product's front and back label to determine whether it contained chocolate because she assumed it contained chocolate based on the front panel. Id. Prescott alleges that he relied upon the labeling and advertising of the product, which he reasonably believed to be white chocolate. Id. ¶ 44.

Plaintiffs also discuss at length the history of chocolate, how chocolate is made, and the attributes of white chocolate. See id. ¶¶ 10–21. This discussion is relevant because, according to plaintiffs, chocolate is perceived to be a unique, irreplaceable product and reasonable consumers do not think they are purchasing a "cheap knock-off pretending to be chocolate." Id. ¶ 18.

DISCUSSION

A. Legal Standard

A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) tests for the legal sufficiency of the claims alleged in the complaint. Ileto v. Glock Inc., 349 F.3d 1191, 1199–1200 (9th Cir. 2003). Under Federal Rule of Civil Procedure 8, which requires that a complaint include a "short and plain statement of the claim showing that the pleader is entitled to relief," Fed. R. Civ. P. 8(a)(2), a complaint may be dismissed under Rule 12(b)(6) if the plaintiff fails to state a cognizable legal theory, or has not alleged sufficient facts to support a cognizable legal theory. Somers v. Apple, Inc., 729 F.3d 953, 959 (9th Cir. 2013).

While the court is to accept as true all the factual allegations in the complaint, legally conclusory statements, not supported by actual factual allegations, need not be accepted. Ashcroft v. Iqbal, 556 U.S. 662, 678–79, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). The complaint must proffer sufficient facts to state a claim for relief that is plausible on its face. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 558–59, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007).

"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." Iqbal, 556 U.S. at 678, 129 S.Ct. 1937. "[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged—but it has not ‘show[n]’—‘that the pleader is entitled to relief.’ " Id. at 679, 129 S.Ct. 1937 (quoting Fed. R. Civ. P. 8(a)(2) ). Where dismissal is warranted, it is generally without prejudice, unless it is clear the complaint cannot be saved by any amendment.

In re Daou Sys., Inc., 411 F.3d 1006, 1013 (9th Cir. 2005).

Review is generally limited to the contents of the complaint, although the court can also consider documents "whose contents are alleged in a complaint and whose authenticity no party questions, but which are not physically attached to the plaintiff's pleading." Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005) (quoting In re Silicon Graphics Inc. Sec. Litig., 183 F.3d 970, 986 (9th Cir. 1999), superseded by statute on other grounds as stated in In re Quality Sys., Inc. Sec. Litig., 865 F.3d 1130 (9th Cir. 2017) ); see also Sanders v. Brown, 504 F.3d 903, 910 (9th Cir. 2007) ("[A] court can consider a document on which the complaint relies if the document is central to the plaintiff's claim, and no party questions the authenticity of the document." (citation omitted)). The court may also consider matters that are properly the subject of judicial notice ( Lee v. City of Los Angeles, 250 F.3d 668, 688–89 (9th Cir. 2001) ), and exhibits attached to the complaint ( Hal Roach Studios, Inc. v. Richard Feiner & Co., Inc., 896 F.2d 1542, 1555 n.19 (9th Cir. 1989) ).

For plaintiffs’ claims that sound in fraud, the complaint must also meet the heightened pleading standard of Federal Rule of Civil Procedure 9(b). See Kearns v. Ford Motor Co., 567 F.3d 1120, 1125 (9th Cir. 2009). Rule 9(b) requires a party alleging fraud or mistake to state with particularity the circumstances constituting fraud or mistake. "To satisfy Rule 9(b) ’s particularity requirement, the complaint must include an account of the time, place, and specific content of the false representations as well as the identities of the parties to the misrepresentations." Depot, Inc. v. Caring for Montanans, Inc., 915 F.3d 643, 668 (9th Cir. 2019) (internal quotation marks omitted). In other words, "[a]verments of fraud must be accompanied by ‘the who, what, when, where, and how’ of the misconduct charged." Kearns, 567 F.3d at 1124. Plaintiffs must also offer "an explanation as to why the statement or omission complained of was false or misleading." In re GlenFed, Inc. Sec. Litig., 42 F.3d 1541, 1548 (9th Cir. 1994) (en banc), superseded by statute on other grounds as stated in SEC v. Todd, 642 F.3d 1207, 1216 (9th Cir. 2011).

Finally, if dismissal is warranted, it is generally without prejudice, unless it is clear that the complaint cannot be saved by any amendment. Sparling, 411 F.3d at 1013. "Leave to amend may also be denied for repeated failure to cure deficiencies by previous amendment." Abagninin v. AMVAC Chem. Corp., 545 F.3d 733, 742 (9th Cir. 2008).

B. Analysis

1. Whether the Product Would Deceive a Reasonable Consumer

Plaintiffs bring three claims under three different California statutes: the Unfair Competition Law ("UCL"), False Advertising Law ("FAL"), and the Consumer Legal Remedies Act ("CLRA"). The UCL prohibits any "unlawful, unfair or fraudulent business act or practice." Cal. Bus. & Prof. Code § 17200. "The false advertising law prohibits any unfair, deceptive, untrue, or misleading advertising." Williams v. Gerber Prod. Co., 552 F.3d 934, 938 (9th Cir. 2...