Salazar v. Walmart, Inc.

83 Cal.App.5th 561

299 Cal.Rptr.3d 627

David SALAZAR, Plaintiff and Appellant,

v.WALMART, INC., Defendant and Respondent.

E076006

Court of Appeal, Fourth District, Division 2, California.

Filed September 19, 2022

Robins Kaplan, Glenn A. Danas, Los Angeles and Samia S. Young ; Clarkson Law and Ryan J. Clarkson, Los Angeles, for Plaintiff and Appellant.

Greenberg Traurig, Gregory A. Nylen, Irvine, Robert J. Herrington, Los Angeles and Dominic E. Draye, for Defendant and Respondent.

OPINION

CODRINGTON, Acting P. J.

I.INTRODUCTION

After David Salazar bought Walmart, Inc.'s "Great Value White Baking Chips" incorrectly thinking they contained white chocolate, he filed this class action against Walmart for false advertising under various consumer protection statutes. The trial court sustained Walmart's demurrers without leave to amend, finding as a matter of law that no reasonable consumer would believe Walmart's White Baking Chips contain white chocolate. We disagree and reverse.

II.FACTUAL AND PROCEDURAL BACKGROUND

Salazar went to Walmart to buy white chocolate chips. He bought some Great Value (Walmart's store-brand name) White Baking Chips, which come in bags like this:.

The bags are sold at Walmart on a shelf like this:.

The chips are sold next to other chocolate chip products that contain milk chocolate or semi-sweet chocolate.

Salazar thought the White Baking Chips contain white chocolate because (1) their label describes them as "white," (2) their label depicts the product, which look like white chocolate chips, and (3) the product is sold next to other chocolate products. Because Salazar thought the White Baking Chips had real white chocolate, he bought some. He later learned, however, that they contain no white chocolate.

Salazar brought a class action against Walmart alleging claims under the Unfair Competition Law (UCL; Bus. & Prof. Code, § 17200 et seq. ), the False Advertising Law (FAL; Bus. & Prof. Code, § 17500 et seq. ), and the Consumers Legal Remedies Act (CLRA; Civil Code, § 1750 et seq. ). After Walmart successfully demurred to all three claims, Salazar filed his operative Third Amended Complaint (TAC), again alleging claims under the UCL, FAL, and CLRA.

The thrust of all three claims is that Salazar was reasonably misled to believe the White Baking Chips had real white chocolate because of the product's label and its placement near products with real chocolate. Salazar also alleges that the results of a survey he conducted show that 90 percent of consumers are deceived by the White Baking Chips' advertising and incorrectly believe they contain white chocolate.¹

Walmart demurred to all three claims on the ground that no reasonable consumer would believe the White Baking Chips contain real white chocolate. The trial court agreed, sustained Walmart's demurrer without leave to amend, and entered judgment for Walmart. Salazar timely appealed.

III.DISCUSSION

Salazar argues the trial court erred because he stated viable claims under the UCL, FAL, and CLRA. We agree.

1. Standard of Review

We "liberally construe[ ]" a complaint's allegations. ( CLD Construction, Inc. v. City of San Ramon (2004) 120 Cal.App.4th 1141, 1146, 16 Cal.Rptr.3d 555.) " ‘On appeal from a judgment dismissing an action after sustaining a demurrer without leave to amend, the standard of review is well settled. The reviewing court gives the complaint a reasonable interpretation, and treats the demurrer as admitting all material facts properly pleaded. [Citations.] The court does not, however, assume the truth of contentions, deductions or conclusions of law. [Citation.] The judgment must be affirmed "if any one of the several grounds of demurrer is well taken. [Citations.]" [Citation.] However, it is error for a trial court to sustain a demurrer when the plaintiff has stated a cause of action under any possible legal theory. [Citation.]’ " ( McAllister v. Los Angeles Unified School Dist. (2013) 216 Cal.App.4th 1198, 1206, 157 Cal.Rptr.3d 720.)

2. Analysis

The parties correctly agree that Salazar's claims are governed by the "reasonable consumer" test. ( Skinner v. Ken's Foods, Inc. (2020) 53 Cal.App.5th 938, 948, 267 Cal.Rptr.3d 869 ( Skinner ) [reasonable consumer test applies to false advertising claims brought under the UCL, FAL, and CLRA].) As applied here, that test asks whether a reasonable consumer would likely be deceived into incorrectly believing that Walmart's White Baking Chips contain real white chocolate for the reasons Salazar advances. ( Ibid. )

" ‘A "reasonable consumer" is "[an] ordinary consumer acting reasonably under the circumstances" [citation] ....’ [Citation.] Such a consumer ‘need not be "exceptionally acute and sophisticated," ’ nor must they ‘necessarily be wary or suspicious of advertising claims.’ [Citation.] Rather, to meet the ‘reasonable consumer’ standard, ‘a plaintiff need only show that members of the public are likely to be deceived’ by the defendant's advertising. [Citation.] Members of the public are likely to be deceived by advertising that is false and by advertising that, ‘ "although true, is either actually misleading or ... has a capacity, likelihood, or tendency to deceive or confuse the public." [Citation.]’ [Citation.]" ( Skinner, supra , 53 Cal.App.5th at p. 948, 267 Cal.Rptr.3d 869.)

" ‘ "Likely to deceive" implies more than a mere possibility that the advertisement might conceivably be misunderstood by some few consumers viewing it in an unreasonable manner. Rather, the phrase indicates that the ad is such that it is probable that a significant portion of the general consuming public or of targeted consumers, acting reasonably in the circumstances, could be misled.’ " ( Chapman v. Skype, Inc. (2013) 220 Cal.App.4th 217, 226, 162 Cal.Rptr.3d 864.)

"California courts ... have recognized that whether a business practice is deceptive will usually be a question of fact not appropriate for decision on demurrer." ( Williams v. Gerber Products Co. (9th Cir. 2008) 523 F.3d 934, 939 ; Committee On Children's Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 214, 197 Cal.Rptr. 783, 673 P.2d 660 [noting that "[t]he unsuitability of a demurrer to test the accuracy of a complaint is particularly marked" in false advertising cases].) Thus, whether a reasonable consumer is likely to be deceived as a matter of law may be decided "only in ‘rare situation[s].’ " ( Reid v. Johnson & Johnson (9th Cir. 2015) 780 F.3d 952, 958.) This is because "[w]hat matters ... is how consumers actually behave—how they perceive advertising and how they make decisions. These are matters of fact, subject to proof that can be tested at trial, even if as judges we might be tempted to debate and speculate further about them." ( Bell v. Publix Super Markets, Inc. (7th Cir. 2020) 982 F.3d 468, 481 ( Bell ); see also Beardsall v. CVS Pharmacy, Inc. , 953 F.3d 969, 973 (7th Cir. 2020) ["[The] determination of the likelihood of deception ‘is an impressionistic one more closely akin to a finding of fact than a conclusion of law.’ "].)

Salazar argues the White Baking Chips misleadingly suggest they are made with white chocolate. He points to the "white" in the product's name, the label's depiction of the product, the fact that it is sold near other chocolate products, and the results of a survey he conducted. Walmart contends that these allegations cannot support a claim under the UCL, FAL, or CLRA as a matter of law. We disagree.

Walmart emphasizes that the White Baking Chips label does not state "chocolate" anywhere and that the product's ingredient list confirms the chips have no white chocolate. Walmart thus argues that the label is not misleading because it contains no false statements.

Although the White Baking Chips' packaging may not have any false statements, literally true statements " ‘ "couched in such a manner that [are] likely to mislead or deceive the consumer ... [are] actionable." ’ " ( Skinner, supra , 53 Cal.App.5th at p. 949, 267 Cal.Rptr.3d 869.) As one court recently recognized, "[d]eceptive advertisements often intentionally use ambiguity to mislead consumers while maintaining some level of deniability about the intended meaning." ( Bell, supra , 982 F.3d at p. 477.) California law thus does not require reasonable consumers " ‘to look beyond misleading representations on the front of [a product] to discover the truth from the ingredient list in small print on the [back of a product].’ " ... " ‘The ingredient list must confirm the expectations raised on the front [of the product], not contradict them.’ [Citations.]" ( Skinner, supra , at p. 949, 267 Cal.Rptr.3d 869.) So if "the defendant commits an act of deception, the presence of fine print revealing the truth is insufficient to dispel that deception." ( Ebner v. Fresh, Inc. (9th Cir. 2016) 838 F.3d 958, 966.)

The question, then, is whether a reasonable consumer could find the White Baking Chips' truthful label to be deceptive or misleading. Walmart argues the label is not misleading as a matter of law because no reasonable consumer would believe the White Baking Chips are made of white chocolate. To support its position, Walmart relies mostly on Cheslow v. Ghirardelli Chocolate Company (N.D. Cal. 2020) 445 F.Supp.3d 8 ( Cheslow ).² We find Cheslow unpersuasive.

In that case, the district court found that no reasonable consumer would believe the defendant's " ‘Premium Baking Chips Classic White Chips’ " contained white chocolate.³ (Cheslow, supra , 445 F.Supp.3d at p. 12.) Relying on the Ninth Circuit's analysis in Becerra v. Dr Pepper/Seven Up, Inc. (9th Cir. 2019) 945 F.3d 1225 ( Becerra ), of how "diet" is usually an adjective in the context of "diet soda," the Cheslow court found that "the adjective ‘white’ in ‘White Chips’ does not define the food itself but rather defines the color of the food." ( Cheslow, supra , at p. 17.)

To reach this conclusion, the district court relied on two dictionary definitions of "white" to conclude that "the use of the term ‘w...