SAM SPARKS, UNITED STATES DISTRICT JUDGE.
BE IT REMEMBERED on this day the Court reviewed the file in the above-styled cause, and specifically Plaintiffs' Second Amended Consolidated Complaint (SACC) [#29], Defendant Whole Foods Market, Inc.'s Motion to Dismiss [#31];
This Multidistrict Litigation (MDL) involves eleven putative class action lawsuits against various Whole Foods Market corporate entities
The Whole Foods entities own and operate Whole Foods Market grocery stores, in which they sell a line of Whole Foods branded products marketed as a healthier alternative to other brands. Plaintiffs allege WFM Private Label, L.P., contracted
According to the nutrition facts label on the back of the product, the Yogurt contains 2 grams of sugar per one cup serving. Plaintiffs claim this statement was false. According to six tests conducted by Consumer Reports magazine,
The claimed amount of sugar was much lower than that of competitor's brands, which generally ranged between five and ten grams of sugar per serving. Plaintiffs allege Defendants were aware the nutritional information on the Yogurt was false, but marketed and sold the product anyway in order to obtain a competitive advantage in the market. Plaintiffs further allege Defendants sold the Yogurt at a higher price than they would have had they labeled the sugar content accurately. Consequently, Plaintiffs claim they were harmed by the alleged misrepresentation because they chose to purchase the Yogurt at least in part based on its low sugar content, and that they paid more for the Yogurt than they would have had the label been truthful. Plaintiffs also allege they relied on Defendants' representation in purchasing the Yogurt and that they would not have purchased the Yogurt if they had known it actually contained more than 2 grams of sugar per serving.
On December 12, 2014, the Judicial Panel for Multidistrict Litigation (JPML) centralized four of the eleven member cases in this Court pursuant to 28 U.S.C. § 1407 for purposes of coordinated pretrial proceedings. See Transfer Order [# 1]. The remaining seven member cases were filed or received by this Court on or before April 7, 2015. See April 6, 2015 Transfer Order [#4]. After the Court denied remand to state court in two member cases, Plaintiffs collectively filed the SACC, which is the operative pleading for purposes of the Defendants' motion.
Plaintiffs bring claims against Defendants for violations of various state consumer protection and unfair competition statutes
Defendants now ask the Court to dismiss the entirety of the SACC with prejudice on the grounds Plaintiffs' claims are preempted by federal law, fail to state a plausible theory of causation, reliance, or injury, and fail to plead their fraud claims with the particularity required by Rule 9(b). With regard to the equitable claims, Defendants argue Plaintiffs lack standing to seek injunctive relief and their request for declaratory relief should be denied because the issues will be decided in the context of other claims. Finally, Defendants raise additional independent reasons Plaintiffs are not entitled to relief on their warranty, unjust enrichment, and state consumer protection claims.
Each of the eleven member cases have been transferred to this forum by the JPML pursuant to 28 U.S.C. § 1407. Sitting as an MDL transferee court, the Court must apply the law of its own circuit when analyzing questions of federal law. See, e.g., Menowitz v. Brown, 991 F.2d 36, 40 (2d Cir.1993) (citing In re Korean Air Lines Disaster, 829 F.2d 1171, 1175 (D.C.Cir.1987) (other citations omitted)). For example, because pleading standards are matters of federal law, the Court must look to and apply the law of the Fifth Circuit for purposes of Federal Rules of Civil Procedure 12(b).
There is no dispute that each of Plaintiffs' various claims for relief arise under state law, see Erie R. Co. v. Tompkins, 304 U.S. 64, 78, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), and as to matters of state law, the Court must apply the law of the transferor forum. See Hildebrandt v. Indianapolis Life Ins. Co., No. 3:08-cv-1815-B, 2009 WL 804123, at *2 (N.D.Tex. Mar. 26, 2009) (citing 15 CHARLES ALAN WRIGHT, ARTHUR R. MILLER & EDWARD H. COOPER, FEDERAL PRACTICE AND PROCEDURE § 3866 (2007)). Thus, the Court must apply the state law choice-of-law rules that each transferor court would have applied in order to determine which state's substantive law governs each Plaintiff's claims. See In re Enron Corp. Sec., Derivative & "ERISA" Litig., 511 F.Supp.2d 742, 791 (S.D.Tex.2005). Because this is a diversity case, each transferor forum would have applied the choice-of-law principles of the state in which it sits. See Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941). Here, the various cases transferred as part of this multidistrict litigation were brought in Arizona, California, Florida, Massachusetts,
As the parties apparently agree,
Federal Rule of Civil Procedure 8(a)(2) requires a complaint to contain "a short and plain statement of the claim showing that the pleader is entitled to relief." FED. R. CIV. P. 8(a)(2). A motion under Federal Rule of Civil Procedure 12(b)(6) asks a court to dismiss a complaint for "failure to state a claim upon which relief can be granted." FED. R. CIV. P. 12(b)(6). The plaintiff must plead sufficient facts to state a claim for relief that is facially plausible. Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). "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, 556 U.S. at 678, 129 S.Ct. 1937. Although a plaintiff's factual allegations need not establish that the defendant is probably liable, they must establish more than a "sheer possibility" that a defendant has acted unlawfully. Id. Determining plausibility is a "context-specific task," and must be performed in light of a
In deciding a motion to dismiss under Rule 12(b)(6), a court generally accepts as true all factual allegations contained within the complaint. Leatherman v. Tarrant Cnty. Narcotics Intelligence & Coordination Unit, 507 U.S. 163, 164, 113 S.Ct. 1160, 122 L.Ed.2d 517 (1993). However, a court is not bound to accept legal conclusions couched as factual allegations. Papasan v. Allain, 478 U.S. 265, 286, 106 S.Ct. 2932, 92 L.Ed.2d 209 (1986). Although all reasonable inferences will be resolved in favor of the plaintiff, the plaintiff must plead "specific facts, not mere conclusory allegations." Tuchman v. DSC Commc'ns Corp., 14 F.3d 1061, 1067 (5th Cir.1994). In deciding a motion to dismiss, courts may consider the complaint, as well as other sources such as documents incorporated into the complaint by reference, and matters of which a court may take judicial notice. Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322, 127 S.Ct. 2499, 168 L.Ed.2d 179 (2007).
Defendants argue Plaintiffs state law claims are preempted by the Food, Drug & Cosmetic Act (FDCA) and FDA regulations because they seek to impose more stringent labeling requirements than those imposed by federal law. See Mot. Dismiss [#32] at 11-12; Reply [#46] at 4.
In determining whether federal law preempts state law, Congressional intent is the paramount consideration. Cal. Fed. Say. & Loan Ass'n v. Guerra, 479 U.S. 272, 280, 107 S.Ct. 683, 93 L.Ed.2d 613 (1987). Preemption occurs when (1) Congress enacts a federal law that explicitly preempts state law, (2) federal law is so comprehensive it occupies the legislative field leaving no room for supplementary state law, and (3) state law actually conflicts with federal law. See id. at 280-81, 107 S.Ct. 683. In considering preemption, the Court "start[s] with the assumption that the historic police powers of the States were not meant to be superseded by the Federal Act unless that was the clear and manifest purpose of Congress." Medtronic, Inc. v. Lohr, 518 U.S. 470 485, 116 S.Ct. 2240, 135 L.Ed.2d 700 (1996) (internal quotations omitted). Accordingly, "[p]arties seeking to invalidate a state law based on preemption bear the considerable burden of overcoming the starting presumption that Congress does not intend to supplant state law." Stengel v. Medtronic, Inc., 704 F.3d 1224, 1227 (9th Cir.2013). This approach "is consistent with both federalism concerns and the historic primacy of state regulation of matters of health and safety." Lohr, 518 U.S. at 485, 116 S.Ct. 2240.
The FDCA empowers the FDA "to protect the public health by ensuring that `foods are safe, wholesome, sanitary, and properly labeled.'" Lockwood v. Conagra Foods, Inc., 597 F.Supp.2d 1028, 1030 (N.D.Cal.2009) (quoting 21 U.S.C. § 393(b)(2)(A)). The FDCA also explicitly prohibits the "misbranding" of food in interstate commerce. 21 U.S.C. § 331(a). Section 343 enumerates under what conditions food is deemed to be misbranded. Id. § 343. For example, a food is considered misbranded if its labeling is "false or misleading in any particular." Id. § 343(a)(1). In 1990, Congress enacted the Nutrition Labeling and Education Act (NLEA), which amended the FDCA and aimed to "clarify and ... strengthen the [FDA's] legal authority to require nutrition labeling on foods, and to establish the circumstances under which claims may be made
The NLEA included a provision that expressly preempts any state or local "requirement for nutrition labeling of food that is not identical" to the requirements under the statute and its accompanying regulations. 21 U.S.C. § 343-1(a)(4)-(5). "[I]n the context of express preemption provisions, `the term "requirements" ... reaches beyond positive enactments like statutes and regulations, to embrace common-law duties and judge-made rules." In re PepsiCo, Inc., Bottled Water Mktg. & Sales Practices, 588 F.Supp.2d 527, 532 (S.D.N.Y.2008) (citing Bates v. Dow Agrosciences L.L.C., 544 U.S. 431, 443, 125 S.Ct. 1788, 161 L.Ed.2d 687 (2005)).
Under the FDCA, a food is deemed misbranded if "it is intended for human consumption and offered for sale, unless its label bears nutrition information that provides ... the amount of ... sugars ... in each serving size or other unit of measure." 21 U.S.C. § 343(q)(1)(D). Federal regulations promulgated by the FDA further require "[t]he declaration of nutrition information on the label" include "[a] statement of the number of grams of sugar in a serving ... expressed to the nearest gram." 21 C.F.R. § 101.9(c)(6)(h).
In sum, the sugar content statements on the Yogurt's nutrition label violate the FDCA if they exceed that actual sugar content by more than 20 percent as determined using the twelve-sample testing methodology set forth in § 101.9(g)(2).
Defendants argue Plaintiffs' state law claims are preempted because they fail to allege the scientific testing conducted by Consumer Reports complied with the prescribed FDA testing methodology set forth in 21 C.F.R. § 101.9(g)(2). The Court agrees.
Every district court considering this issue has found "where, as here, an FDA regulation provides that the question of compliance must be determined using the method specified therein, a state law claim that seeks to establish a violation of such regulation by a different methodology is preempted." Mee v. I A Nutrition, Inc., No. C-14-5006 MMC, 2015 WL 2251303, at *4 (N.D.Cal. May 13, 2015) (granting motion to dismiss claims based on alleged misrepresentation of protein content on product's Supplemental Facts section where laboratory reports attached the pleadings established the 12-sample method required by § 101.9(g)(2) was not followed); see also Smith v. Allmax Nutrition, Inc., No. 1:15-cv-00744-SAB, 2015 WL 9434768, at *7-8 (E.D.Cal. Dec. 24, 2015) (denying motion to dismiss but holding "any adjudication of the claims on the merits other than by the 12-sample methodology as set forth in section 101.9(g) would be preempted by the FDA"); Durnford v. Musclepharm Corp., No. 14-cv-413-HSG, 2015 WL 9258079, at *4 (N.D.Cal. Dec. 18, 2015) (granting motion to dismiss false labeling claims on grounds the plaintiff failed to allege that testing conducted in accordance with FDA-mandated methodology showed the defendant's nutrient content claims were false); Clay v. Cytosport Inc., No. 15-cv-165 L (DHB), 2015 U.S. Dist. LEXIS 110447, at *9, 2015 WL 5007884 (S.D.Cal. Aug. 19, 2015) (denying motion to dismiss but holding that "in order to prevail on these [nutrient content] claims, Plaintiffs will have to prove that Defendant did not comply with the FDCA provisions" contained in § 101.9(g)(2)); Bruaner v. MusclePharm Corp., No. 14-cv-8869-FMO, 2015 WL 4747941, at *9 (C.D.Cal. Aug. 11, 2015) (granting motion to dismiss claims based on a defendants failure to list all of the ingredients on a product's label where the plaintiff failed to allege that the testing upon which he relied was conducted in accordance with the FDA's 12-sample method); Salazar v. Honest Tea, Inc., 74 F.Supp.3d 1304, 1313-14 (E.D.Cal.2014) (granting motion to dismiss claims claim defendant's Honey Green Tea bottles did not contain the amount of antioxidants represented on their labels where plaintiff failed to allege the "independent testing by a laboratory retained by plaintiff's counsel" complied with FDA testing protocols); Burke v. Weight Watchers Int'l, Inc., 983 F.Supp.2d 478, 480, 483 (D.N.J.2013) (granting motion to dismiss claims defendant overstated the calorie count on the label of its diet ice cream bars where plaintiff failed to allege the "independent laboratory tests" complied with the proper methodology); Vital v. One World Co., No. SACV 12-00314-CJC(MLGx), 2012 U.S. Dist. LEXIS 186203, at *15-16(C.D. Cal. Nov. 30, 2013) (granting summary judgment for defendant on claim defendant overstated the magnesium and sodium content on labels of its coconut water product where plaintiffs did not provide evidence the report on which they relied was
Plaintiffs rely solely on the article published by Consumer Reports to substantiate their allegation the Yogurt contained "11.4 grams of sugar per serving on average," which they claim is nearly six times the amount stated on the Yogurt's nutritional label. SACC ¶ 1. However, Plaintiffs do not allege the Consumer Reports testing was conducted in accordance with the methodology set forth in 21 C.F.R. § 101.9(g)(2), but instead expressly plead that Consumer Reports used a different testing methodology. See SACC [#1] ¶ 1 ("in six tests conducted by the venerable consumer publication Consumer Reports") (emphasis added). Indeed, the article on which Plaintiffs rely affirmatively states Consumer Reports "analyzed six samples of the [Y]ogurt from six different lots for sugar content." Mot. Dismiss [#32-6] Ex. B (Consumer Reports Article). This is a far cry from the FDA protocol requiring a composite of twelve subsamples taken from twelve randomly chosen shipping cases. Consequently, by their own allegations, Plaintiffs seek to impose liability on the Defendants based on a testing methodology that is more burdensome than
In response, Plaintiffs argue the testing methodology used to support the false labeling allegation is not a pleading requirement, and the Court must accept as true allegations the Yogurt's label understated the sugar content for purposes of Rule 12(b) and decide whether the evidence supporting this claim is sufficient at a later stage in the proceeding. See Clay, 2015 U.S. Dist. LEXIS 110447, at * 7, 2015 WL 5007884 (finding defendant's argument plaintiff was required to plead the precise type of testing conducted "not appropriate for a motion to dismiss"). To hold otherwise, Plaintiffs argue, would create an "impossible-to-meet pleading requirement" because they could not obtain test results in compliance with FDA protocol absent formal discovery.
The Court need not decide whether, in all cases, alleging the precise testing methodology is a pleading requirement because
Finally, Plaintiffs appear to request a special exemption from the applicable pleading requirements, arguing that to dismiss the SACC at this juncture would be unfair because they could not properly test the Yogurt themselves without formal discovery or without Defendants' cooperation. This argument has no basis. The parties are already in discovery and have been for months. See Scheduling Order [#16] at 1 ("Fact discovery is to commence on August 25, 2015 and will be completed by May 25, 2016 ...."). Plaintiffs have had ample time to conduct the discovery necessary to determine whether they could in good faith claim the Yogurt had 11.4 grams of sugar per serving based on testing in compliance with the prescribed FDA testing protocols, but instead have relied on the Consumer Reports sampling methodology they have every reason to believe was inconsistent with what they would ultimately be required to prove under the FDCA.
Because Plaintiffs allege the Yogurt's actual sugar content per serving was determined by testing that was not in compliance with the twelve-sample methodology set forth in § 101.9(g)(2), the SACC seeks to impose liability inconsistent with the FDCA. Thus Plaintiffs' state law misbranding claims are preempted. Plaintiffs' state law claims are all based on the allegation Defendants understated the sugar content on the Yogurt's nutrition label, and thus no claim may proceed. However, as have all other courts considering the issue, this Court will dismiss the SACC without prejudice and afford Plaintiffs leave to amend to allege compliance with § 101.9(g)(2). See, e.g., Mee, 2015 WL 2251303, at *4 n. 7; Burke, 983 F.Supp.2d at 483.
By requesting the Court delay an evaluation of this issue until after discovery, Plaintiffs are implying they will be able support their claims with test results that do comply with § 101.9(g)(2). See Cytosport, 2015 U.S. Dist. LEXIS 110447, at *9 ("[I]n order to ultimately prevail on these claims, Plaintiffs will have to prove that Defendant did not comply with the FDCA provisions listed above."). However, in their Response, Plaintiffs accuse Defendants of destroying all existing stock of the Yogurt after this litigation began in violation of their duty to preserve evidence, and as a result, claim "the testing protocol [required to avoid preemption] can no longer be met by anyone." Resp. [#41] at 8. Plaintiffs ask this Court for an order "requiring Defendants to ... produce any test results concerning the Yogurt's sugar content already in Defendants' possession without further delay," and alternatively to "allow Plaintiffs to brief the spoliation issue and the favorable inference to which Plaintiffs are entitled to as a result of the spoliation." Id. at 11.
As to the former request, Defendants are already under an obligation to produce relevant documents requested by Plaintiffs, and the Court fails to see how any test results that were not conducted in compliance with FDA protocols would be relevant on this issue. See Vital, 2012 U.S. Dist. 186203, at *17 ("Because One World's internal testing is not conducted in accordance with the code section, it is not relevant on this point."). As to the latter request, considering the agreed-upon discovery window, the Court finds that it is in the interest of promoting a just and efficient outcome for both parties, see 28 U.S.C. § 1407, to address whether Plaintiffs will ultimately be able to acquire test results in compliance with FDA standards now, rather than waiting until after the parties spend the time and incur the expense of briefing class certification and summary judgment motions.
The Court encourages Plaintiffs to attempt to obtain the test results from a third party or otherwise conduct testing in compliance with FDA regulations themselves
For the reasons stated herein, the Court finds Plaintiffs' state law claims are preempted by federal law and thus subject to dismissal. The Court will grant Plaintiffs leave to amend the SACC to remedy the pleading deficiencies. The Court will address Defendants' remaining arguments pursuant to Rule 12(b) and Rule 12(f) should they choose to re-file these motions.
Accordingly,
IT IS FURTHER ORDERED that Plaintiffs shall file a Third Amended Consolidated Complaint no later than March 4, 2016; and
IT IS FINALLY ORDERED that Defendants' Motion to Strike [#33] is DISMISSED as moot.
SIGNED this the
Id. Testing only six samples from six lots does not account for the potential variation in nutrient content from product to product which is permitted by the FDA, and therefore imposing liability solely based on these tests would hold Defendants to a higher standard than required under federal law.