Squeo v. Campbell Soup Co.

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JOE SQUEO, et al., Plaintiffs, v. CAMPBELL SOUP COMPANY, et al., Defendants.

No. 24-cv-02235-SVK

United States District Court, N.D. California

October 22, 2024

ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS WITHOUT LEAVE TO AMEND

Re: Dkt. No. 21

SUSAN VAN KEULEN UNITED STATES MAGISTRATE JUDGE

Plaintiffs Joe Squeo and Tiffany Taylor allege that Defendants Campbell Soup Company (“Campbell”) and Snyder's-Lance Inc. (“SL”) deceived them by including the artificial preservative citric acid among the ingredients in chips that Defendants advertised as containing no artificial preservatives. See Dkt. 16 (the “FAC”). Defendants now move to dismiss. See Dkt. 21 (the “Motion”). Plaintiffs oppose the Motion. See Dkt 26 (the “Opposition”). Defendants filed a reply. See Dkt. 27 (the “Reply”). All Parties have consented to the jurisdiction of a magistrate judge. See Dkts. 13, 24-25. The Court has determined that the Motion is suitable for resolution without oral argument. See Civil Local Rule 7-1(b). After considering the Parties' briefing, relevant law and the record in this action, and for the reasons that follow, the Court GRANTS IN PART and DENIES IN PART the Motion WITHOUT LEAVE TO AMEND.

I. BACKGROUND

The following discussion of background facts is based on the allegations contained in the FAC, the truth of which the Court accepts for purposes of resolving the Motion. See Boquist v. Courtney, 32 F.4th 764, 772 (9th Cir. 2022); Queen v. Mooney, No. 24-cv-02161-SVK, 2024 WL 3363572, at *1 n.2 (N.D. Cal. July 9, 2024). “Defendants manufacture, distribute, advertise, and sell” potato chips under the “Cape Cod” brand. See FAC ¶ 2. The packaging for several flavors of Cape Cod chips “prominently displays” that the chips contain “No Artificial Colors, Flavors or Preservatives.” See Id. ¶¶ 2, 20-22. In reliance on this representation, Plaintiffs purchased Cape Cod chips over a three-year period before commencing this action-Plaintiff Squeo in California and Plaintiff Taylor in New York. See Id. ¶¶ 16-18.

It turns out, however, that the purchased Cape Cod chips contained citric acid.^[1] See Id. ¶ 20; see also Id. ¶ 21 (label on back of package lists citric acid among ingredients). While citric acid can form naturally in fruit, “it is not the naturally occurring citric acid, but the manufactured citric acid . . . that is used extensively as a food and beverage additive,” and “it is not commercially feasible to use natural citric acid extracted from fruits.” See Id. ¶¶ 23-24 (emphasis omitted). Citric acid also functions as a preservative “when added to food products.” See Id. ¶¶ 41-49.

Therefore, according to Plaintiffs, the presence of citric acid in the Cape Cod chips renders the no-artificial-preservative representation false. See Id. ¶¶ 2-3. Had Plaintiffs “known that the [Cape Cod chips] contain[ed] an artificial preservative ingredient in direct contradiction to the ‘No Artificial Colors, Flavors or Preservatives' statement on the label,” they “would not have purchased the [chips], or would have paid less for the[m].” See Id. ¶ 18. They commenced this putative class action to recover for the harm Defendants inflicted through this alleged deception. See Id. ¶¶ 5, 57.

II. LEGAL STANDARD

Defendants move to dismiss under both Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6).

Rule 12(b)(1). Under Rule 12(b)(1), a court must dismiss a complaint if it lacks subject-matter jurisdiction over the claims asserted. A defendant can challenge a court's subject-matter jurisdiction by mounting either: (1) a facial attack based solely on the allegations of the complaint; or (2) a factual attack based on evidence outside the pleadings. See Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004). Whether a plaintiff has standing to proceed in federal court implicates Rule 12(b)(1). See Meland v. Weber, 2 F.4th 838, 843 (9th Cir. 2021).

Rule 12(b)(6). Under Rule 12(b)(6), a court must dismiss a complaint if it “fail[s] to state a claim upon which relief can be granted.” To survive a Rule 12(b)(6) motion, a plaintiff must allege “enough facts to state a claim to relief that is plausible on its face.” See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). This facial-plausibility standard requires a plaintiff to allege facts resulting in “more than a sheer possibility that a defendant has acted unlawfully.” See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citation omitted).

Where a plaintiff alleges that a defendant engaged in fraudulent conduct, Rule 9(b) imposes a greater burden than does Rule 12(b)(6) and requires that the plaintiff “state with particularity the circumstances constituting fraud.” To satisfy this heightened pleading standard, a plaintiff must allege facts “specific enough to [notify the defendants] of the particular misconduct [constituting fraud] so that they can defend against the charge and not just deny that they have done anything wrong.” See Kearns v. Ford Motor Co., 567 F.3d 1120, 1124 (9th Cir. 2009) (citation omitted). Thus, claims sounding in fraud must allege “an account of the ‘time, place, and specific content of the false representations as well as the identities of the parties to the misrepresentations.'” See Swartz v. KPMG LLP, 476 F.3d 756, 764 (9th Cir. 2007) (citation omitted). In other words, “[a]verments of fraud must be accompanied by ‘the who, what, when, where, and how' of the misconduct charged.” See Kearns, 567 F.3d at 1124 (citation omitted). A plaintiff “must [also] set forth what is false or misleading about a statement, and why it is false.” See Ebeid ex rel United States v. Lungwitz, 616 F.3d 993, 998 (9th Cir. 2010) (citation omitted).

In ruling on a motion to dismiss, a court may consider only “the complaint, materials incorporated into the complaint by reference, and matters [subject to] judicial notice.” See UFCW Loc. 1500 Pension Fund v. Mayer, 895 F.3d 695, 698 (9th Cir. 2018) (citation omitted). A court must also presume the truth of a plaintiff s allegations and draw all reasonable inferences in their favor. See Boquist, 32 F.4th at 773. However, a court need not accept as true “allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences.” See Khoja v. Orexigen Therapeutics, Inc., 899 F.3d 988, 1008 (9th Cir. 2018) (citation omitted).

If a court grants a motion to dismiss, it may exercise discretion to grant or deny leave to amend the complaint, and it “acts within its discretion to deny leave to amend when amendment would be futile, when it would cause undue prejudice to the defendant, or when it is sought in bad faith.” Nat'l Funding, Inc. v. Com. Credit Counseling Servs, Inc., 817 Fed.Appx. 380, 383 (9th Cir. 2020) (citation omitted).

III. DISCUSSION

Plaintiffs bring five claims under California and New York law (see FAC ¶¶ 69-118):

. Violation of the California Consumers Legal Remedies Act (the “CLRA”).

. Violation of the California Unfair Competition Law (the “UCL”).

. Breach of express warranty under California law.

. Violation of Section 349 of the New York General Business Law.

. Violation of Section 350 of the New York General Business Law.

They seek to obtain, inter alia, damages and equitable relief on a classwide basis. See Id. ¶¶ 119-26. As discussed below, Plaintiffs' five claims survive the Motion, but their request for injunctive relief does not.

A. Defendants' Request For Judicial Notice Is Moot

Defendants request that the Court judicially notice several documents cited in the Motion. See Motion at 3 n.1; see also Dkts. 21-1 through 21-4. Having reviewed the Motion and the documents in question, the Court concludes that its resolution of the Motion would not change even if it granted the request for judicial notice and considered the documents in its analysis. The Court, therefore, DENIES the request for judicial notice as moot. See, e.g., Sylabs, Inc. v. Rose, No. 23-cv-00849-SVK, 2023 WL 8813517, at *4 (N.D. Cal. Dec. 19, 2023) (denying as moot request for judicial notice where court's analysis “would not change even if it . . . considered the documents in question”).

B. Plaintiffs Sufficiently Allege That Defendants Engaged In False And Misleading Advertising

The CLRA prohibits engaging in certain enumerated categories of “unfair methods of competition and unfair or deceptive acts or practices” in connection with selling goods and services, including misrepresenting the characteristics of those goods and services. See Cal. Civ. Code §§ 1770(a)(5), (7), (9), (16). Likewise, the UCL prohibits engaging in “unlawful, unfair or fraudulent business act[s] or practice[s] and [disseminating] unfair, deceptive, untrue or misleading advertising.” See Cal. Bus. & Prof. Code § 17200. Similarly, Sections 349 and 350 of the New York General Business Law prohibit engaging in “[d]eceptive acts or practices” and “[f]alse advertising” in connection with conducting “any business, trade or commerce or in the furnishing of any service.” See N.Y. Gen. Bus. Law §§ 349(a), 350.

Courts analyze claims under these four statutes together when predicated on allegedly false and misleading advertising (see, e.g., Amado v. Procter & Gamble Co., No 22-cv-05427-MMC, 2023 WL 3898984, at *7-10 (N.D. Cal. June 8, 2023); Vitiosus v. Alani Nutrition, LLC, No. 21-cv-02048-MMA, 2022 WL 2441303, at *11-14 (S.D. Cal. July 5, 2022)), and the Parties do not dispute the propriety of the Court performing a combined analysis here. The Parties also do not dispute that Plaintiffs' California claims sound in fraud, thereby requiring Plaintiffs to satisfy the heightened pleading standard of Rule 9(b).^[2] See, e.g., In re iPhone 4s Consumer Litig., 637 Fed.Appx. 414, 415 (9th Cir. 2016) (applying Rule 9(b) to CLRA and UCL...