Shaeffer v. Califia Farms, LLC

44 Cal.App.5th 1125

258 Cal.Rptr.3d 270

Michelle SHAEFFER, Plaintiff and Appellant,

v.CALIFIA FARMS, LLC, Defendant and Respondent.

B291085

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

Filed February 6, 2020

Capstone Law, Ryan H. Wu, and Robert K. Friedl, Los Angeles, for Plaintiff and Appellant.

Sheppard Mullin Richter & Hampton, and Sascha Henry, Los Angeles, for Defendant and Respondent.

HOFFSTADT, J.

California’s Unfair Competition Law ( Bus. & Prof. Code, § 17200 et seq. ), false advertising law (id. , § 17500 et seq.), and Consumer Legal Remedies Act (CLRA) ( Civ. Code, § 1770 et seq. ), among other things, prohibit advertisements—including product labels—with statements that are " " ‘likely to ... deceive’ " " " " ‘members of the public.’ " " ( Kasky v. Nike, Inc. (2002) 27 Cal.4th 939, 951, 119 Cal.Rptr.2d 296, 45 P.3d 243 ( Kasky ); Consumer Advocates v. Echostar Satellite Corp. (2003) 113 Cal.App.4th 1351, 1360, 8 Cal.Rptr.3d 22 ( Consumer Advocates ).) This case presents the question: Where a product label accurately states that the product has "no sugar added," is a reasonable consumer likely to view that statement as a representation that competing products do have sugar added, which, if untrue, renders the product label at issue deceptive? We conclude that the answer is "no," and do so as a matter of law. Because the allegations underlying plaintiff’s remaining claims are also deficient, we affirm the trial court’s order sustaining a demurrer without leave to amend.

FACTS AND PROCEDURAL BACKGROUND

I. Facts¹

Califia Farms, LLC (Califia) manufactures and distributes a "100% Tangerine Juice" known as "Cuties Juice." The front label of the juice’s bottle depicts a smiling tangerine coming out of its peel. Above the tangerine, the label prominently displays the word "Cuties"; below the tangerine and on three lines of increasing smaller text, the label reads "100% Tangerine Juice," "No Sugar Added," and "Never From Concentrate."

Michelle Shaeffer (plaintiff) bought a bottle of Cuties Juice in a supermarket in Merced, California. She selected Cuties Juice because "her children enjoy eating fresh tangerines," and she did so over "other, similar tangerine juices" because its label "stated ‘No Sugar Added’ " and because "she is diabetic."

II. Procedural Background

A. The operative complaint

Plaintiff brought suit in March 2017.

In the operative, second amended complaint,² plaintiff alleges that the label on the Cuties Juice violates the Unfair Competition Law ( Bus. & Prof., § 17200 et seq. ), the false advertising law (id. , § 17500 et seq.), and the CLRA ( Civ. Code, § 1770 et seq. ). She seeks to certify a class of "all persons in the United States who purchased one or more containers of Cuties 100% Tangerine Juice with the phrase ‘No Sugar Added’ on its label or outer packaging."

Plaintiff alleges that the Cuties Juice label is fraudulent. Despite the "literal[ ] tru[th]" of the label’s statement that Cuties Juice has "No Sugar Added," plaintiff alleges it is nevertheless fraudulent because it is "likely to deceive reasonable consumers in its implications ." (Italics added.) In particular, plaintiff alleges that the "No Sugar Added" statement on the Cuties Juice label implies that (1) "competing brands" do "contain added sugar[ ]," such that Cuties Juice "contain[s] less sugar than competing brands that did not have sugar-content claims on their front labels," and (2) Cuties Juice is therefore "different and healthier than ... competing brands of tangerine juice." Because the competing brands do not contain added sugar, plaintiff goes on to allege, the Cuties Juice label constitutes (1) a "fraudulent" business practice under the Unfair Competition Law, (2) an "untrue or misleading" advertisement under the false advertising law, and (3) an "unfair method[ ] of competition" under the CLRA because the label misrepresents the "characteristics" of Cuties Juice (under subdivision (a)(5) of Civil Code section 1770 ), misrepresents its "particular standard" or "quality" (under subdivision (a)(7)), and "advertise[s]" the Juice "with the intent not to sell it as advertised" (under subdivision (a)(9)).

Plaintiff alleges that the Cuties Juice label is also "unlawful" under the Unfair Competition Law because it does not comply with two of the five prerequisites that must be satisfied before a label may state "no sugar added" under a federal labeling regulation ( 21 C.F.R. § 101.60(c)(2) ). In particular, plaintiff alleges that the Cuties Juice label did not comply with the federal regulation because (1) "the [product] that [Cuties Juice] resembles and for which it substitutes"—that is, "100% tangerine juice"—does not "normally contain added sugars," and (2) the label does not also "bear[ ] a statement that it is not ‘low calorie’ or ‘calorie reduced’ " and does not "direct[ ] consumers’ attention to the [product’s] nutrition panel."

B. Califia’s demurrer

Califia demurred to the second amended complaint on the ground that (1) the Cuties Juice label was not "fraudulent" because no reasonable consumer was likely to be deceived by the "No Sugar Added" language, (2) plaintiff did not adequately allege a violation of the CLRA, and (3) plaintiff lacked standing.

After briefing and a hearing, the trial court issued a five-page ruling sustaining the demurrer without leave to amend. The court ruled that the inclusion of "No Sugar Added" on the Cuties Juice label was not "fraudulent" or a misrepresentation. Analogizing this case to Rubenstein v. The Gap, Inc. (2017) 14 Cal.App.5th 870, 222 Cal.Rptr.3d 397 ( Rubenstein ), the court reasoned that "[t]he ‘No Sugar Added’ statement on the Cuties Juice makes no representation other than the truthful fact that Cuties juice has no sugar added" and that the representations plaintiff alleges are implied by the "No Sugar Added" statement are "nowhere to be found on the label" and "unreasonabl[e]." The court further ruled that the Cuties Juice label did not violate the federal regulation because (1) the product Cuties Juice "resembles" and "substitutes for" is "all fruit juices," some of which "normally contain added sugars," and (2) plaintiff "cannot show that she relied on" the label’s failure to "include ... ‘low calorie’ or ‘calorie reduced’ " because her purchase decision had nothing to do with calorie content. The court finally ruled that plaintiff lacked standing to pursue any of her claims because she "cannot allege detrimental reliance" on the "No Sugar Added" verbiage on the label because her decision to buy Cuties Juice rested instead on her "own unreasonable inference from the ‘No Sugar Added’ statement that ... Cuties [J]uice was healthier than competing brands of tangerine juice."

Following the entry of judgment dismissing the case, plaintiff filed this timely appeal.

DISCUSSION

Plaintiff argues that the trial court erred in sustaining Califia’s demurrer without leave to amend. In reviewing this argument, we ask two questions: (1) Was the demurrer properly sustained; and (2) Was leave to amend properly denied? "The first question requires us to independently ‘ " ‘determine whether the [operative] complaint states facts sufficient to constitute a cause of action.’ " ’ " ( Schep v. Capital One, N.A. (2017) 12 Cal.App.5th 1331, 1335, 220 Cal.Rptr.3d 408 ( Schep ), quoting Centinela Freeman Emergency Medical Associates v. Health Net of California, Inc. (2016) 1 Cal.5th 994, 1010, 209 Cal.Rptr.3d 280, 382 P.3d 1116 ; Lee v. Hanley (2015) 61 Cal.4th 1225, 1230, 191 Cal.Rptr.3d 536, 354 P.3d 334.) To properly state a cause of action, and as pertinent here, the operative complaint must sufficiently allege (1) "every element of [that] cause of action" and (2) the plaintiff’s standing to sue. ( Rossberg v. Bank of America, N.A. (2013) 219 Cal.App.4th 1481, 1490-1491, 162 Cal.Rptr.3d 525 ; Peterson v. Cellco Partnership (2008) 164 Cal.App.4th 1583, 1589, 80 Cal.Rptr.3d 316.) In undertaking this review, "[w]e must take [the operative complaint’s] allegations ... as true" ( Aryeh v. Canon Business Solutions, Inc. (2013) 55 Cal.4th 1185, 1191, 151 Cal.Rptr.3d 827, 292 P.3d 871 ( Aryeh )), but may "not assume the truth of [any alleged] contentions, deductions or conclusions of law" because "appellate courts must independently decide questions of law" ( City of Dinuba v. County of Tulare (2007) 41 Cal.4th 859, 865, 62 Cal.Rptr.3d 614, 161 P.3d 1168 ; Gutierrez v. Carmax Auto Superstores California (2018) 19 Cal.App.5th 1234, 1242, 248 Cal.Rptr.3d 61 ( Gutierrez )). "The second question ‘requires us to decide whether " ‘there is a reasonable possibility that the defect [in the operative complaint] can be cured by amendment.’ " ’ " ( Schep , at p. 1335, 220 Cal.Rptr.3d 408, quoting McClain v. Sav-On Drugs (2017) 9 Cal.App.5th 684, 695, 215 Cal.Rptr.3d 416, affirmed, 6 Cal.5th 951, 244 Cal.Rptr.3d 138, 435 P.3d 424 (2019).)

I. Was the Demurrer Properly Sustained?

A. Applicable law

1. Causes of action and their elements

a. Unfair Competition Law

As its name suggests, California’s Unfair Competition Law bars "unfair competition" and defines the term as a "business act or practice" that is (1) "fraudulent," (2) "unlawful," or (3) "unfair." ( Bus. & Prof. Code, § 17200 ; Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163, 180, 83 Cal.Rptr.2d 548, 973 P.2d 527 ( Cel-Tech ).) Each is its own independent ground for liability under the Unfair Competition Law ( Aryeh , supra , 55 Cal.4th at p. 1196, 151 Cal.Rptr.3d 827, 292 P.3d 871 [noting independent "prong[s]"), but their unifying and underlying purpose "is to protect both consumers and competitors by promoting fair competition in commercial markets for goods and services" ( Kasky , supra , 27 Cal.4th at p. 949, 119 Cal.Rptr.2d 296, 45 P.3d 243 ).

(i) "Fraudulent" business act or practice

To prevail on a claim under the fraudulent prong of the Unfair Competition Law "based on false advertising or promotional...