Grausz v. Hershey Co.

691 F.Supp.3d 1178

Eva GRAUSZ, on behalf of herself,all others similarly situated, and the general public, Plaintiff, v. The HERSHEY COMPANY, Defendant.

Case No.: 23-cv-00028-AJB-SBC

United States District Court, S.D. California

Filed September 11, 2023

Signed September 9, 2023

Andrew Sacks, Pro Hac Vice, John Weston, Pro Hac Vice, Sacks Weston LLC, Philadelphia, PA, Caroline S. Emhardt, Jack Fitzgerald, Melanie Rae Persinger, Paul K. Joseph, Trevor Matthew Flynn, Fitzgerald Joseph LLP, San Diego, CA, for Plaintiff.

Jonah M. Knobler, Pro Hac Vice, Steven A. Zalesin, Pro Hac Vice, Patterson Belknap Webb & Tyler LLP, New York, NY, Robert Kenneth Dixon, Sanders Roberts LLP, Los Angeles, CA, for Defendant.

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO DISMISS PLAINTIFF'S FIRST AMENDED COMPLAINT

Anthony J. Battaglia, United States District Judge

Presently pending before the Court is Defendant the Hershey Company's motion to dismiss Plaintiff Eva Grausz's First Amended Complaint ("FAC") pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). (Doc. No. 17.) Plaintiff filed an opposition to the motion to dismiss, (Doc. No. 24), to which Hershey replied, (Doc. No. 26). Pursuant to Civil Local Rule 7.1.d.1, the Court finds the instant matter suitable for determination on the papers and without oral argument. For the reasons stated herein, the Court GRANTS IN PART and DENIES IN PART Hershey's motion to dismiss Plaintiff's FAC.

I. BACKGROUND

A. First Amended Complaint¹

Defendant Hershey manufactures and sells various dark chocolate products under the Hershey's and Lily's brand names. (FAC, Doc. No. 9, ¶ 1.) In this putative class action, Plaintiff alleges recent independent lab testing found that several of Hershey's and Lily's chocolate products contain lead and cadmium, including Hershey's Special Dark Mildly Sweet Chocolate, Lily's Extremely Dark Chocolate 85% Cocoa, Lily's Extra Dark Chocolate 70% Cocoa, Lily's Original Dark Chocolate Stevia Sweetened 55% Cocoa Non GMO, and Lily's Sea Salt Extra Dark Chocolate 70% - Stevia Sweetened (the "Products"), and that those metals are unsafe at any level. (Id. ¶¶ 2-4.) These laboratory tests found the Products exceeded California's Maximum Allowable Daily Level ("MADL") for each of these elements. (Id. ¶¶ 15-17, 19.) Plaintiff further alleges Hershey has been on notice that its Products contain high levels of heavy metals since 2014, but that Hershey has failed to effectively reduce or remove heavy metals from the Products. (Id. ¶ 18.) Plaintiff's allegations are based on a December 2022 article from Consumer Reports and a March 2023 article by As You Sow ("AYS"). (Id. ¶¶ 15-19.)

Plaintiff states she "regularly purchased Lily's Extremely Dark Chocolate 85% Cocoa[,]" "often making her purchase" in San Diego, California. (Id. ¶ 55.) Plaintiff contends Hershey's advertising did not feature warnings that the Products contained toxic amounts of heavy metals. (Id. ¶¶ 40, 41.) Rather, Hershey "touts its safety standards and how it vets its ingredient sources, and highlights the public trust that it has garnered as a result . . . ." (Id. ¶ 39.)

Plaintiff asserts she and the purported class were exposed to, saw, read, and understood the labels of the products, which omitted the presence of heavy metals, and that they relied upon the omission of warnings about the potential dangers of the Products containing heavy metals when making the decision to purchase the Products. (Id. ¶¶ 46, 47, 56, 57.) Had she known the Products contained heavy metals, Plaintiff claims she and the purported class would not have purchased the Products or would have paid less for them. (Id. ¶¶ 48-50, 59, 60.) While she wishes to purchase the Products in the future, she "may not be able to reasonably determine whether the lead or cadmium in the Products has been addressed" without an injunction because she cannot rely on the false representations in Hershey's current advertising and marketing scheme. (Id. ¶¶ 63-65.)

Based on the foregoing, Plaintiff initiated this action on behalf of herself and as a representative of all those similarly situated for: (1) Violation of California's Unfair Competition Law ("UCL"), Cal. Bus. & Prof. Code § 17200 et seq. (Count I); Violation of California's False Advertising Law ("FAL"), Cal. Bus. & Prof. Code § 17500 et seq. (Count II); Violation of California's Consumer Legal Remedies Act ("CLRA"), Cal. Bus. & Prof. Code § 1750 et seq. (Count III); Breach of Implied Warranty of Merchantability, Cal. Commercial Code § 2314 (Count IV); and Unjust Enrichment (Count V). (See generally FAC.)

B. Consent Judgment

In 2015, AYS sent California's Proposition 65 notices to various chocolate manufacturers, including Hershey, asserting their products contained lead and cadmium at levels exceeding California's MADLs. (Doc. No. 17 at 16.)² In February 2018, the California Superior Court entered a consent judgment among AYS, Hershey, and others (the "Consent Judgment"), after finding the proposed judgment "me[t] the requirements of [California law] and [was] in the public interest," and the Consent Judgment was thereafter endorsed by California's Attorney General. (Id. at 16-17 (quoting Consent Judgment, Case No. CGC-15-548791 (Cal. Super. Ct. San Francisco Cnty. Feb. 15, 2018) at 2-20).) The Consent Judgment remains in effect until at least December 2024. (Id.) The Consent Judgment raised the MADL thresholds to Hershey's products and specified that compliance with the new limits would constitute compliance with Proposition 65 regarding lead and/or cadmium in chocolate. (Id. at 17.) The Consent Judgment operated as a "full, final, and binding resolution" of AYS's claims on behalf of itself and of the general public. (Id. (internal citation omitted).)

II. LEGAL STANDARDS

A. Federal Rule of Civil Procedure 12(b)(1)

A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(1) tests whether the court has subject matter jurisdiction. While lack of "statutory standing" requires dismissal for failure to state a claim under Rule 12(b)(6), lack of Article III standing requires dismissal for want of subject matter jurisdiction under Rule 12(b)(1). See Nw. Requirements Utilities v. F.E.R.C., 798 F.3d 796, 808 (9th Cir. 2015) ("Unlike Article III standing, however, 'statutory standing' does not implicate our subject-matter jurisdiction.") (citing Lexmark Int'l, Inc. v. Static Control Components, Inc., 572 U.S. 118, 128 n.4, 134 S.Ct. 1377, 188 L.Ed.2d 392 (2014)); Maya v. Centex Corp., 658 F.3d 1060, 1067 (9th Cir. 2011).

"A Rule 12(b)(1) jurisdictional attack may be facial or factual." Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004). "In a facial attack, the challenger asserts that the allegations contained in a complaint are insufficient on their face to invoke federal jurisdiction." Id. The court "resolves a facial attack as it would a motion to dismiss under Rule 12(b)(6): accepting the plaintiff's allegations as true and drawing all reasonable inferences in the plaintiff's favor, the court determines whether the allegations are sufficient as a legal matter to invoke the court's jurisdiction." Leite v. Crane Co., 749 F.3d 1117, 1121 (9th Cir. 2014).

"[I]n a factual attack," on the other hand, "the challenger disputes the truth of the allegations that, by themselves, would otherwise invoke federal jurisdiction." Safe Air for Everyone, 373 F.3d at 1039. In resolving such an attack, unlike with a motion to dismiss under Rule 12(b)(6), a court "may review evidence beyond the complaint without converting the motion to dismiss into a motion for summary judgment." Id. Moreover, the court "need not presume the truthfulness of the plaintiff's allegations." Id. Once the defendant has moved to dismiss for lack of subject matter jurisdiction under Rule 12(b)(1), the plaintiff bears the burden of establishing the court's jurisdiction. See Chandler v. State Farm Mut. Auto Ins. Co., 598 F.3d 1115, 1122 (9th Cir. 2010).

B. Federal Rule of Civil Procedure 12(b)(6)

A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) tests the pleadings' legal sufficiency and allows a court to dismiss a complaint if the court finds the plaintiff has failed to state a claim upon which relief may be granted. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). As a matter of law, the court may dismiss the complaint for either a lack of a cognizable legal theory, or insufficient facts under a cognizable legal claim. SmileCare Dental Grp. v. Delta Dental Plan of Cal., 88 F.3d 780, 783 (9th Cir. 1996) (citation omitted). However, a complaint survives a motion to dismiss if it contains "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). Notwithstanding such deference, the reviewing court need not accept legal conclusions as true. Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). Furthermore, it is improper for the court to assume "the [plaintiff] can prove facts that [he or she] has not alleged . . . ." Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 526, 103 S.Ct. 897, 74 L.Ed.2d 723 (1983). However, "[w]hen there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief." Iqbal, 556 U.S. at 679, 129 S.Ct. 1937. The court only reviews the complaint's contents and accepts all factual allegations as true, while drawing all reasonable inferences in favor of the nonmoving party. Thompson v. Davis, 295 F.3d 890, 895 (9th Cir. 2002).

III. REQUEST FOR JUDICIAL NOTICE

While the review scope on a motion to dismiss for failure to state a claim is limited to the complaint, a court may consider evidence on which the complaint necessarily relies if: "(1) the complaint refers to the document; (2) the document is...