MARGARET M. MORROW, District Judge.
Rebecca Yumul filed this putative class action against defendant Smart Balance, Inc. on February 8, 2010.
Yumul alleges that Nucoa contains artificial trans fat, which increases the risk of coronary heart disease by raising the level of "bad" LDL blood cholesterol and lowering the level of "good" HDL blood cholesterol.
Yumul asserts that any statute of limitations that might otherwise bar the action is tolled because she "did not discovery that SBI's labeling of Nucoa Real Margarine was false, deceptive, or misleading until late January 2010, when she learned of the causal links between Nucoa Real Margarine and coronary heart disease, type-2 diabetes, and cancer."
Yumul pleads three causes of action: (1) violation of California's unfair competition law ("UCL"), California Business & Professions Code §§ 17200 et seq.; (2) violation of California's false advertising law ("FAL"), California Business & Professions Code §§ 17500 et seq.; and (3) violation of California's Consumer Legal Remedies Act ("CLRA"), California Civil Code § 1750 et seq.
She seeks (1) an injunction requiring Smart Balance to cease its misleading advertising practices; (2) a mandatory injunction requiring Smart Balance to conduct a corrective advertising campaign; (3) restitution of the amount by which Smart Balance has been unjustly enriched by its false advertising; and (4) a mandatory injunction requiring that Smart Balance destroy all misleading and deceptive materials and products.
A Rule 12(b)(6) motion tests the legal sufficiency of the claims asserted in a complaint. A Rule 12(b)(6) dismissal is proper only where there is either a "lack of a
The court must accept all factual allegations pleaded in the complaint as true, and construe them and draw all reasonable inferences from them in favor of the nonmoving party. Cahill v. Liberty Mutual Insurance Co., 80 F.3d 336, 337-38 (9th Cir.1996); Mier v. Owens, 57 F.3d 747, 750 (9th Cir.1995). It need not, however, accept as true unreasonable inferences or legal conclusions cast in the form of factual allegations. See Ashcroft v. Iqbal, ___ U.S. ___, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) ("[B]are assertions ... amount[ing] to nothing more than a `formulaic recitation of the elements' of a constitutional discrimination claim" are not entitled to an assumption of truth, quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)); see also Moss v. U.S. Secret Service, 572 F.3d 962, 969 (9th Cir.2009) ("Such allegations are not to be discounted because they are `unrealistic or nonsensical,' but rather because they do nothing more than state a legal conclusion—even if that conclusion is cast in the form of a factual allegation").
To survive a motion to dismiss, plaintiff's complaint must "contain sufficient factual matter, accepted as true, to `state a claim to relief that is plausible on its face.' ... A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 129 S.Ct. at 1949. See also id. ("The plausibility standard is not akin to a `probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully.... Where a complaint pleads facts that are `merely consistent with' a defendant's liability, it `stops short of the line between possibility and plausibility of "entitlement to relief,"'" quoting Twombly, 550 U.S. at 557, 127 S.Ct. 1955); Twombly, 550 U.S. at 545, 127 S.Ct. 1955 ("While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the `grounds' of his `entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do. Factual allegations must be enough to raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true (even if doubtful in fact)" (citations omitted)). See also, e.g., Moss, 572 F.3d at 969 ("[F]or a complaint to survive a motion to dismiss, the non-conclusory `factual content,' and reasonable inferences from that content, must be plausibly suggestive of a claim entitling the plaintiff to relief," citing Iqbal and Twombly).
In deciding a Rule 12(b)(6) motion, the court generally looks only to the face of the complaint and the documents attached thereto. Van Buskirk v. Cable News Network, Inc., 284 F.3d 977, 980 (9th Cir.2002); Hal Roach Studios, Inc. v. Richard Feiner & Co., Inc., 896 F.2d 1542, 1555 n. 19 (9th Cir.1990). It may, however, consider documents that are incorporated by reference but not physically attached to the complaint if they are central to plaintiff's claim and no party questions their authenticity. See Marder v. Lopez,
Defendant cites a number of cases in which district courts have considered exemplars of purportedly false advertising in deciding motions to dismiss. In Haskell v. Time, Inc., 857 F.Supp. 1392 (E.D.Cal. 1994), the district court considered certain mailings that formed the basis for claims of false advertising and unfair competition:
Defendant submits the declaration of an executive at a Smart Balance subsidiary, GFA Brands, Inc ("GFA"), which attaches three labels for Nucoa that were in use during the class period. The declaration also attaches "all advertising for Nucoa Real Margarine circulated from January 1, 2000 to January 1, 2004 that could be located at this time."
The Haskell court emphasized that the plaintiff there had notice at an early status conference of defendant's intent to present exemplars and move to dismiss on that basis. In this case, there is no record that Yumul had notice of Smart Balance's intent to use exemplars until the present motion was filed on June 21, 2010. By that time, defendant had requested and the court had granted a stay of all discovery. Although the court lifted the stay with respect to discovery concerning the labels on June 28, 2010, it is not reasonable to conclude that plaintiff had adequate time to complete discovery regarding the labels before July 6, 2010, the day on which her opposition to the motion to dismiss was due. Smart Balance seeks to take advantage of the rule articulated in Haskell— which is dependent on plaintiff's notice of defendant's intent to rely on exemplars and ability to investigate and discover the documents defendant intends to proffer to the court—while simultaneously asking the court to enter orders that prevent plaintiff from conducting discovery regarding these documents. It is unclear whether Haskell
The court therefore declines to consider the Dray declaration and the documents attached thereto. As a result, defendant's arguments that plaintiff cannot prove there was fraudulent advertising prior to 2009 because in earlier years its labels did not include the word "healthy," and that plaintiff cannot establish reasonable reliance after late 2009 because she purchased margarine both when the label did and did not include the word "healthy" fail because they rely on facts not alleged in the complaint and not contained in any document that can be judicially noticed or that is properly considered under the incorporation by reference doctrine.
Yumul alleges a class period commencing January 1, 2000 and continuing to the present. CLRA and FAL claims are subject to a three-year statute of limitations, while UCL claims are subject to a four-year statute of limitations. CAL. CIV. CODE § 1783 (establishing a three-year limitations period for CLRA actions); CAL. BUS. & PROF. CODE § 17208 (setting a four-year statute of limitations for actions under the UCL); CAL. C.C.P. § 338(a) (providing a default three-year statute of limitations for actions created by statute); County of Fresno v. Lehman, 229 Cal.App.3d 340, 346, 280 Cal.Rptr. 310 (1991) (applying § 338's three-year limitations period to an FAL claim).
"In a federal diversity action based on alleged violations of state law, the state statute of limitations controls." Adams v. I-Flow Corp., No. CV09-09550 R(SSx), 2010 WL 1339948, *3 (C.D.Cal. Mar. 30, 2010) (citing Bancorp Leasing and Financial Corp. v. Agusta Aviation Corp., 813 F.2d 272, 274 (9th Cir.1987)). As noted, plaintiff's complaint contains the following allegations regarding the tolling of the statutes of limitations on her respective claims:
Smart Balance argues that this allegation is factually insufficient to support tolling of the statute of limitations. It asserts that Yumul must allege sufficient facts to invoke either the delayed discovery or fraudulent concealment rules.
"In order to invoke [the delayed discovery exception] to the statute of limitations, the plaintiff must specifically plead facts which show (1) the time and manner of discovery and (2) the inability to have made earlier discovery despite reasonable diligence." In re Conseco Insurance Co. Annuity Marketing & Sales Practices Litigation, No. C-05-04726 RMW, 2008 WL 4544441, *8 (N.D.Cal. Sept. 30, 2008) (quoting Saliter v. Pierce Bros. Mortuaries, 81 Cal.App.3d 292, 296, 146 Cal.Rptr.271 (1978)). See also E-Fab, Inc. v. Accountants, Inc. Services, 153 Cal.App.4th 1308, 1319, 64 Cal.Rptr.3d 9 (2007) ("A plaintiff whose complaint shows on its face that his claim would be barred without the benefit of the discovery rule must specifically plead facts to show (1) the time and manner of discovery and (2) the inability to have made earlier discovery despite reasonable diligence. The burden is on the plaintiff to show diligence, and conclusory allegations will not withstand demurrer," quoting McKelvey v. Boeing North American, Inc., 74 Cal.App.4th 151, 160, 86 Cal.Rptr.2d 645 (1999)). See also Keilholtz v. Lennox Hearth Products Inc., No. C 08-00836 CW, 2009 WL 2905960, *3 (N.D.Cal. Sept. 8, 2009) ("To invoke the delayed discovery rule, the plaintiff must plead facts showing: `(a) Lack of knowledge. (b) Lack of means of obtaining knowledge (in the exercise of reasonable diligence the facts could not have been discovered at an earlier date). (c) How and when he did actually discover the [facts underlying the claim],'" quoting General Bedding Corp. v. Echevarria, 947 F.2d 1395, 1397 (9th Cir. 1991)). As the McKelvey court recognized, this rule applies even where plaintiff is prosecuting a class action. See McKelvey, 74 Cal.App.4th at 160-61, 86 Cal.Rptr.2d 645 (applying the standard to a class action).
Yumul alleges that in late January 2010 she learned of a causal link between Nucoa and coronary heart disease, type-2 diabetes, and cancer. She asserts that the connection between the ingredients in Nucoa and these purported negative health effects is not known to the general public, that she did not have access to scholarly publications that detailed scientific information suggesting such a link, and that the statements on the Smart Balance packaging did not put her on notice that she should make inquiry.
Defendant asserts, inter alia, that allegations of delayed discovery are subject to the particularity requirement of Rule 9(b) of the Federal Rules of Civil Procedure. The court's order on the first motion to dismiss held only that Rule 9(b) applies to the pleading of fraudulent concealment. Given that the rule concerns no allegations of "fraud or mistake," and given that neither fraud nor mistake is required to prove delayed discovery, the court concludes that Rule 9(b) does not apply. Indeed, the court has found no decision applying Rule 9(b) to the pleading of delayed discovery. Rather, in a thoughtful and lengthy opinion, Judge Oliver Wanger of the Eastern District of California considered whether a heightened pleading standard applied to allegations of delayed discovery and concluded that it did not. Bonds v. Nicoletti Oil, Inc., No. CV-F-07-1600 OWW/DLB, 2008 WL 2233511, *5-6 (E.D.Cal. May 28, 2008).
Plaintiff's complaint contains a "short and plain statement" that she is a
A plaintiff seeking to take advantage of the delayed discovery rule must plead "the time and manner of discovery." E-Fab, 153 Cal.App.4th at 1319, 64 Cal.Rptr.3d 9 (emphasis supplied). In other words plaintiff must allege "[h]ow and when [s]he did actually discover the fraud or mistake." Keilholtz, 2009 WL 2905960 at *3. Because Yumul has not alleged in any form the manner of her discovery, her
For the reasons stated, the court grants defendant's motion to dismiss without prejudice insofar as it seeks to dismiss claims that predate the limitations period. Plaintiff is directed to file no later than fourteen days after the date of this order an amended complaint that alleges the manner in which plaintiff discovered the facts underlying her claims. Defendant's motion to dismiss is otherwise denied.
The court notes, moreover, that defendant's contention was recently rejected in Unruh-Haxton v. Regents of University of California, 162 Cal.App.4th 343, 76 Cal.Rptr.3d 146 (2008). There, the court held that "public awareness of a problem through media coverage alone [cannot] create[] constructive suspicion for purposes of [the delayed] discovery [rule]." Id. at 364, 76 Cal.Rptr.3d 146. Thus, "[t]he statute of limitations does not begin to run when some members of the public have a suspicion of wrongdoing, but only `once the plaintiff has a suspicion of wrongdoing.'" Nelson v. Indevus Pharmaceuticals, Inc., 142 Cal.App.4th 1202, 1206, 48 Cal.Rptr.3d 668 (2006) (quoting Jolly v. Eli Lilly & Co., 44 Cal.3d 1103, 1111, 245 Cal.Rptr. 658, 751 P.2d 923 (1988) (emphasis original))