James Colucci and Kimberly Sethavanish sued ZonePerfect on
behalf of a putative class, alleging that its “All–Natural Nutrition Bars,” were
not in fact all-natural, in violation of the Magnuson-Moss Warranty Act and the
usual California statutes, and also claiming common-law fraud and restitution
based on quasi-contract. They alleged
that all of ZonePerfect’s nutrition bars contained at least one of ten
allegedly non-natural ingredients, including ascorbic acid, cocoa processed
with alkali, and xanthan gum.
Sethavanish is engaged to Colucci, and while he was deployed
in the military, she sent him a monthly care package, which at his request
included two multi-bar packs per month, including the Chocolate Peanut Butter
flavor. Colucci allegedly believed and
relied on the “all-natural” representation on the label when he asked
Sethavanish to buy them for him; Sethavanish allegedly wouldn’t have agreed to
buy the bars had they known the bars weren’t all-natural.
The court held that Sethavanish had standing as to all
twenty bar flavors, but that Colucci lacked standing. Even if she didn’t purchase each flavor, the
key question for purposes of a class action was whether there was sufficient
similarity between the products purchased and not purchased. Though one court denied standing as to
products that “differed from the purchased product in only minor, arguably
trivial ways,” Dysthe v. Basic Research LLC, CV 09–8013 AG SSX, 2011 WL 5868307
(C.D. Cal. June 13, 2011) (denying standing as to an unbought weight-loss pill
marketed as “Relacore” where plaintiff bought only “Relacore Extra,” which had
only minor differences in packaging and ingredients; “[J]ust because an Old
Fashioned and a Manhattan both have bourbon doesn't mean they're the same
drink.”), other courts found standing as to “unbought products that differed
only trivially from the purchased product, as well as to unbought products that
differed fairly substantially,” such as Koh v. S.C. Johnson & Son, Inc.,
C–09–00927 RMW, 2010 WL 94265 (N.D. Cal. Jan. 6, 2010) (two cleaning sprays,
one a window cleaner and the other carpet stain remover, both with the same
allegedly false badge of eco-friendliness).
The court didn’t resolve the tension between the cases
because “the challenged products here are sufficiently similar under any
test—more similar than the weight-loss pills in Dysthe and at least as similar
as the ice cream brands in Dreyer's Grand. The different flavors of Defendant's
nutrition bars are more or less fungible when viewed from the perspective of a
consumer considering buying one or the other; any preference for one flavor
versus another could rest only on personal idiosyncrasies of taste, diet, or
allergy.” Here, the products were all of
the same kind: nutrition bars. They had
a uniform size and shape. There were
some differences in ingredients, but “the similarities are more striking: six
of the nine challenged ingredients appear in all twenty nutrition bar flavors.
Most importantly, all twenty flavors bear the same challenged label: ‘All–Natural
Nutrition Bars.’” Thus, Sethavanish had
standing for both Article III and UCL purposes to sue for alleged mislabeling
of all twenty nutrition bar flavors.
Colucci, however, did not.
He didn’t buy the products, nor were they purchased with money in which
he had a legal interest. He may have
been the “beneficiary” of the purchases in a colloquial sense, but he wasn’t a
third-party beneficiary as a matter of law.
“While it is not required for both parties to intend to benefit the
third party, it is required that the promisor understand the promisee—here, Ms.
Sethavanish—to have such intent. Even assuming that Defendant was the promisor
(as compared to the retailer who actually Ms. Sethavanish the bars), nothing
suggests that Defendant knew Ms. Sethavanish intended to benefit Mr. Colucci
when she bought the bars or, indeed, knew of Mr. Colucci's existence.”
The Magnuson-Moss Warranty Act claim was also
dismissed. The court initially rejected
ZonePerfect’s argument that plaintiffs failed to meet the jurisdictional
requirements of the law, which provide that there’s no federal jurisdiction
over actions brought on behalf of a class if the number of named plaintiffs is
less than one hundred. But that was
irrelevant, since the court had federal jurisdiction as a result of CAFA (and
of course this makes sense; ZonePerfect had actually removed the case from
state court). On the merits, though, the
claim failed. There was no alleged warranty
of a “defect free” product: plaintiffs allged that “All-Natural” was a written
representation that the bars were free of the defect of being synthetic or
artificial. “The identical argument has
been rejected in many other cases…. Plaintiffs fail to marshal any persuasive
authority that artificial or synthetic ingredients in otherwise unobjectionable
food products amount to an actionable defect under the MMWA.”
ZonePerfect also argued that the state-law claims were
conflict preempted, but the only authority it relied on had been vacated. (Degelmann v. Advanced Med. Optics, Inc., 659
F.3d 835 (9th Cir.2011), vacated, 699 F.3d 1103 (9th Cir.2012)). In the absence
of clear authority, the court declined to resolve the preemption argument at
this time, though ZonePerfect could raise preemption arguments later.
The court also rejected ZonePerfect’s Iqbal/Rule 9(b) challenge.
As to plausibility, the statutory claims turned on how a reasonable consumer
would react to the label. That issue is
generally not resolvable on the pleadings.
As for the allegations subject to Rule 9(b), ZonePerfect argued that
plaintiffs didn’t allege with particularity “how the purchased nutrition bars
fell short of their advertised qualities, in other words, how the advertising
was false. The suggestion is unavailing. Plaintiffs allege that the bars were
labeled ‘All–Natural’ but in fact were not.”
ZonePerfect argued that the central premise of the complaint
was false—the “synthetic” ingredients were not in fact “unnatural” in the sense
of not being found “in nature.”
Plaintiffs admitted that certain of the challenged ingredients are
naturally occurring compounds (for instance, vitamins) or “common and normally
expected to be in foods.” This allegedly
made the ingredients, “if not quite ‘natural,’ then not unnatural.” This was a factual dispute not amenable to resolution
at the pleading stage, despite ZonePerfect’s request for judicial notice of
screenshots from the websites of purportedly health-conscious grocery stores
mentioning ingredients used in ZonePerfect’s bars. Though these allegedly showed that it was
implausible that any reasonable consumer would be deceived by the “All-Natural”
claim, that determination wasn’t appropriate on a motion to dismiss. Plausibility is not probability.
The court also rejected ZonePerfect’s challenge to the CLRA
claim. ZonePerfect argued that the
30-day notice required prior to the commencement of a CLRA action for damages
came too late because plaintiffs sent a demand letter on August 30, 2011 but
then filed suit in California Superior Court on September 14, 2011. But the action now before the court was filed
on April 26, 2012, after a voluntary dismissal that had no preclusive effect;
it was filed long after the 30-day notice period. And the letter had sufficient detail to “give
the manufacturer or vendor sufficient notice of alleged defects to permit
appropriate corrections or replacements,” as required.
The court also declined to dismiss the claim for restitution
based on quasi-contract, in the alternative to the tort claims. Courts have been all over the map on whether
a restitution claim is available in these circumstances. Some say that restitution/unjust enrichment
is not a cause of action but a remedy. Others say that it’s neither a claim nor
a remedy, but a principle. Still others
say that it’s a cause of action, but one that can’t be pled alongside claims
for breach of contract or tort. Others
disagree and find that it can be pled in those circumstances, but only as an
alternative or fallback. Others ignore
the issue entirely and look at the elements of the claim. “The outcome of some motions appears to have
turned on the words used in the caption to describe the cause of action.” (Heh.
I love restrained judicial annoyance.
Hmm, that came out wrong. I don’t
like annoyed judges as such!) After its
review of the cases, this court was persuaded that restitution/unjust
enrichment claims can be pled as an alternative avenue of relief, but cannot
afford relief if other claims do.
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