Opinion
Case No.: 3:22-cv-01765-BEN-MSB
2023-07-10
Jacob SCHEIBE, on behalf of all those similarly situated, Plaintiff, v. ESUPPLEMENTS, LLC, a Utah limited liability company doing business as Nutricost, Defendant.
Charles C. Weller, San Diego, CA, for Plaintiff. Matthew Orr, Amin Talati Wasserman, LLP, Los Angeles, CA, William Paul Cole, Amin Talati Wasserman LLP, San Diego, CA, for Defendant.
Charles C. Weller, San Diego, CA, for Plaintiff. Matthew Orr, Amin Talati Wasserman, LLP, Los Angeles, CA, William Paul Cole, Amin Talati Wasserman LLP, San Diego, CA, for Defendant.
ORDER GRANTING-IN-PART DEFENDANT'S MOTION TO DISMISS
[ECF No. 3]
ROGER T. BENITEZ, United States District Judge
I. INTRODUCTION
Plaintiff Jacob Scheibe ("Plaintiff"), on behalf of himself and all those similarly situated, brings this action against Defendant Esupplements, LLC d/b/a Nutricost ("Defendant") alleging the misrepresentation and false advertising of certain products. Before the Court is Defendant's Motion to Dismiss Plaintiff's Complaint. ECF No. 3. The Motion was submitted on the papers without oral argument pursuant to Civil Local Rule 7.1(d)(1) and Rule 78(b) of the Federal Rules of Civil Procedure. ECF No. 7. After considering the papers submitted and applicable law, the Court GRANTS-IN-PART Defendant's Motion to Dismiss.
II. BACKGROUND
This case arises from Defendant's alleged misrepresentation of nutritional labels on certain products that Plaintiff purchased.
The majority of the facts set forth are taken from the FAC and for purposes of ruling on the Defendant's Motion to Dismiss, the Court assumes the truth of all plausible non-conclusory allegations in the complaint. Grabowski v. Ariz. Bd. of Regents, 69 F. 4th 1110 (9th Cir. 2023).
Plaintiff "is a student who has recently sought to lose weight and add muscle mass, and to do so has begun to eat with intentionality and take dietary supplements." ECF No. 1 ("Compl.") at 2, ¶ 2. Defendant's "Products are dietary supplements that contain an amino acid blend that purportedly support endurance during workouts and aid in muscle repair when taken after workouts. They are used to increase muscle mass and lose weight associated with fat." Id. at 2, ¶ 3. On July 28, 2022, Plaintiff purchased Defendant's "EAA (blue raspberry flavor) and Pre-Workout (grape flavor) powders (the "Products") from third-party retailer Amazon.com (Order Nos. 114-9257336-4449848 and 114-1333444-3793004)." Id. at 1-2, ¶ 1.
Plaintiff "carefully reviews labels, including the Products' labels, to track calories in order to maintain progress toward his weight loss goals." Id. at 2, ¶ 2. Plaintiff alleges that:
Consumers including Plaintiff viewed and reasonably relied on Defendant's statements on the Products' labels, as described herein, and would not have purchased the Products from Defendant if the truth about the Products were known, or would have only been willing to pay a substantially reduced price for the Products had they known that Defendant's representations were false and misleading.Compl. at 12, ¶ 63. "Consumers including Plaintiff especially rely on calories-per-serving and flavoring label claims made by food product manufacturers such as [Defendant], as they cannot confirm or disprove those claims simply by viewing or even consuming the Product." Id. at 13, ¶ 65. Plaintiff reasonably expected "that a dietary supplement that reports 5 calories per serving contains only 5 calories per serving," and "[h]ere, the explicit representation that the EAA powder contains only 5 calories per serving is false and deceptive." Id. at 7, ¶ 26. Plaintiff reasonably expected "that a dietary supplement that reports no calories per serving contains zero calories per serving," and "[h]ere, the implied representation that the Pre-Workout powder contains zero calories per serving is false and deceptive." Id. at 7, ¶ 27. "Plaintiff suffered economic injury by Defendant's fraudulent and deceptive conduct as stated herein, and there is a causal nexus between Defendant's deceptive conduct and Plaintiff's injury." Id. at 13, ¶ 67.
Plaintiff further alleges that the EAA "Product contains an ingredient identified as 'malic acid.' " Id. at 9, ¶ 38. "While there is a naturally occurring form of malic acid, it is extremely expensive to formulate in large quantities and is almost never used in mass-produced food products." Id. at 9, ¶ 39. Defendant uses "DL malic acid"—which is a synthetic petrochemical—in these Products. Id. "This type of malic acid is manufactured in petrochemical plants from benzene or butane—components of gasoline and lighter fluid, respectively—through a series of chemical reactions, some of which involve highly toxic chemical precursors and byproducts." Id. at 9, ¶ 40. Sugars, acids, lipids, and various volatile compounds interact to impart fruit flavors in food, and "[t]he sweetness or tartness of fruit flavor is determined by the ratio between the sugars (mainly glucose and fructose) and acids, such as malic acid." Id. at 9, ¶ 41. "The DL malic acid used in the Products is used to create, enhance, simulate, and/or reinforce the sweet and tart taste that consumers associate with the characterizing fruit flavors such as lemons, limes, and acai berries" (which have their own natural ratio of sugars and acids). Id. at 9, ¶ 42-43. "It does so by changing the ratio between acids and sugars in the Products." Id. at 9, ¶ 43.
"Defendant uses the artificial petrochemically derived DL malic acid in its Products to create this sweet and tart flavor but pretends otherwise, conflating natural and artificial flavorings, misbranding the Products and deceiving consumers." Id. at 10, ¶ 44. Testing by independent third-party laboratories confirms the use of DL malic acid in the Products. Id. at 10. ¶ 46. Plaintiff alleges that "[t]he ingredients on the Products' label are declared in a way that is misleading and contrary to law, because Defendant designates the ingredients by its generic name, 'malic acid,' instead of by its specific name, 'DL malic acid.' " Id. at 10, ¶ 45.
Plaintiff further alleges that "[i]f a food product's characterizing flavor is not created exclusively by the named flavor ingredient, the product's front label must state that the product's flavor was simulated or reinforced with either natural or artificial flavorings or both." Id. at 11, ¶ 52. "If any artificial flavor is present that 'simulates, resembles or reinforces' the characterizing flavor, the front label must prominently inform consumers that the product is 'Artificially Flavored.' " Id. "Here, the Products' labels state the characterizing flavors and also use depictions of fruits to identify the characterizing flavor." Id. at 11, ¶ 51. "DL malic acid is not a "natural flavor" as this term is defined by federal and state regulations and is not derived from a fruit or vegetable or any other natural source." Id. at 11, ¶ 56. Because it is derived from petroleum products, the Products contain artificial flavorings. Id. However, the "Products have none of the required disclosures regarding the use of artificial flavors." Id. at 12, ¶ 58.
B. Procedural History
On November 10, 2022, Plaintiff filed his Complaint against Defendant alleging: (1) unfair conduct in violation of California Business & Professions Code sections 17200, et seq. (the "UCL"); (2) fraudulent conduct in violation of California Business & Professions Code sections 17200, et seq.; (3) unlawful conduct in violation of California Business & Professions Code sections 17200, et seq.; (4) violations of California Business & Professions Code sections 17500, et seq. (the "FAL"); (5) violation of the Consumer Legal Remedies Act, Cal. Civ. Code sections 1750, et seq. (the "CLRA"); and (6) unjust enrichment. See generally Compl. On December 5, 2022, Defendant filed the instant Motion to Dismiss. ECF No. 3 ("Motion"). Plaintiff filed an Opposition, see ECF No. 5 ("Oppo."), and Defendant filed a Reply, see ECF No. 6 ("Reply"). Defendant has subsequently filed three separate Notices of Supplemental Authority, and Plaintiff filed responses to two of those Notices. ECF Nos. 8-11. The Court has reviewed the requisite legal authority including the authority cited in Defendant's Notices.
III. LEGAL STANDARDS
Under Federal Rule of Civil Procedure 12(b)(6), a complaint may be dismissed when a plaintiffs allegations fail to set forth a set of facts which, if true, would entitle the complainant to relief. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007); Ashcroft v. Iqbal, 556 U.S. 662, 679, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (holding that a claim must be facially plausible to survive a motion to dismiss). The pleadings must raise the right to relief beyond the speculative level; a plaintiff must provide "more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555, 127 S.Ct. 1955 (citing Papasan v. Allain, 478 U.S. 265, 286, 106 S.Ct. 2932, 92 L.Ed.2d 209 (1986)). On a motion to dismiss, a court assumes the truth of all plausible non-conclusory allegations in the complaint. Grabowski, 69 F. 4th 1110. A court is not required to accept as true legal conclusions couched as factual allegations. Iqbal, 556 U.S. at 678, 129 S.Ct. 1937.
"Generally, unless the court converts the Rule 12(b)(6) motion into a summary judgment motion, it cannot consider material outside the complaint (e.g., facts presented in briefs, affidavits or discovery materials)." Phillips & Stevenson, California Practice Guide: Federal Civil Procedure Before Trial § 9:211 (The Rutter Group April 2020). Thus, in evaluating a Rule 12(b)(6) motion, review is ordinarily limited to the contents of the complaint and material properly submitted with it. 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). Courts may also consider any statements made in a pleading or motion, including concessions made in plaintiff's response to the motion to dismiss as well as in response to any other pleading or motion. Fed. R. Civ. P. 10(c).
Where a motion to dismiss is granted, leave to amend should be liberally allowed "unless the court determines that the allegation of other facts consistent with the challenged pleading could not possibly cure the deficiency." Schreiber Distrib. Co. v. Serv-Well Furniture Co., 806 F.2d 1393, 1401 (9th Cir. 1986). IV. DISCUSSION
Defendant argues that: (1) Plaintiff lacks standing to pursue injunctive relief; (2) Plaintiff fails to allege any claims for equitable relief because there are no allegations establishing his inadequacy of legal remedies; (3) federal law preempts Plaintiff's calorie claims; (4) federal law preempts Plaintiff's theory that malic acid must be designated as DL malic acid; (5) Plaintiff fails to state a claim supporting an artificial theory flavor; and (6) Plaintiff fails to plead actual reliance with the required particularity. See generally Motion. As set forth below, the Court agrees with Defendant, except as to Plaintiff's allegations concerning malic acid's use as an artificial flavor.
A. Standing
"Article III of the U.S. Constitution authorizes the judiciary to adjudicate only 'cases' and 'controversies.' " Davidson v. Kimberly-Clark Corp., 889 F.3d 956, 967 (9th Cir. 2018). "One of the essential elements of a legal case or controversy is that the plaintiff have standing to sue." Trump v. Hawaii, 585 U.S. 667, 138 S. Ct. 2392, 2416, 201 L.Ed.2d 775 (2018). To demonstrate Article III standing, a plaintiff must show a "concrete and particularized" injury that is "fairly traceable" to the defendant's conduct and "that is likely to be redressed by a favorable decision." Spokeo, Inc. v. Robins, 578 U.S. 330, 136 S. Ct. 1540, 1547-48, 194 L.Ed.2d 635 (2016). "Where, as here, a case is at the pleading stage, the plaintiff must clearly allege facts demonstrating each element." Id. at 1547 (internal quotation marks and citations omitted).
Defendant argues that Plaintiff fails to meet his burden of establishing standing to pursue injunctive relief for two reasons. First, the "Complaint does not include any allegation that Plaintiff intends to, or even desires to, purchase the Products in the future." Motion at 17. Second, Plaintiff alleges his awareness "that the EAA product and the Pre-Workout product each contain (according to him) over 50 calories per serving," and because Plaintiff has learned the information necessary to evaluate product claims, injunctive relief would serve no meaningful purpose with respect to him. Id.
Plaintiff relies on Davidson, which resolved a circuit split as to whether "a previously deceived consumer who brings a false advertising claim can allege that her inability to rely on the advertising in the future is an injury sufficient to grant her Article III standing to seek injunctive relief." 889 F.3d at 968-72. Davidson is distinguishable. There, the plaintiff purchased wipes marketed as "flushable" and brought suit alleging that the wipes "were not in fact appropriate for disposal by flushing down a toilet." Id. at 962. After learning the true non-flushable nature of the wipes, the plaintiff did not purchase them again. Id. at 963. However, the plaintiff did allege her continued "desire to purchase wipes that are suitable for disposal in a household toilet, and [that she] would purchase truly flushable wipes manufactured by" the defendant "if it were possible to determine prior to purchase if the wipes were suitable to be flushed." Id. (internal quotation marks omitted). This allegation was central to the Ninth Circuit finding standing in that case. The Davidson Court stated:
We are required at this stage of the proceedings to presume the truth of Davidson's allegations and to construe all of the allegations in her favor. Though we recognize it is a close question, based on the FAC's allegations, we hold that Davidson adequately alleged that she faces an imminent or actual threat of future harm due to Kimberly-Clark's false advertising. Davidson has
alleged that she desires to purchase Kimberly-Clark's flushable wipes. Her desire is based on her belief that "it would be easier and more sanitary to flush the wipes than to dispose of them in the garbage."Id. at 971 (citations omitted). Here, there are no such allegations. Plaintiff is correct that he stated his reliance on Defendant's representations when purchasing the Products, but the Complaint lacks any allegation indicating Plaintiff's continued desire or intent to purchase the Products in the future. Accordingly, the Court finds that Plaintiff lacks standing to pursue injunctive relief. See also Ketayi v. Health Enrollment Grp., No. 20-cv-01198-GPC-KSC, 2021 WL 5761712, at *8 (S.D. Cal. Dec. 3, 2021) (finding no standing for failure to allege a current desire or plan to purchase health insurance in the future); Scheibe v. Performance Enhancing Supplements, LLC, No. 3:23-cv-00219-H-DDL, 2023 WL 3829694, at *4 (S.D. Cal. June 5, 2023) (finding no standing because the plaintiff failed to allege his intent to purchase the products again).
The Court notes that based on the type of misrepresentation here—the labeling of nutritional information—an amendment to the Complaint may not cure the deficiency. See Vitiosus v. Alani Nutrition, LLC, No. 21-cv-02048-MMA-MDD, 2022 WL 2441303, at *7 (S.D. Cal. July 5, 2022) ("Unlike the plaintiff in Davidson, Plaintiffs can ascertain whether Defendant's representation is true: Plaintiffs can check the nutritional facts to see if the Bars were improved. As such, Plaintiffs cannot plausibly allege they will be misled in the future."). However, this issue is not currently before the Court and therefore, will not be addressed.
B. Equitable Relief
Defendant argues that Plaintiffs UCL and FAL claims fail, because they are equitable relief claims, and Plaintiff has not alleged facts establishing his inadequacy of legal remedies. Motion at 23-25. Defendant explains that here, "Plaintiff seeks to recover actual damages under the CLRA," and that Plaintiff's CLRA claim "is based on the same alleged conduct as all of Plaintiff's claims for restitution and injunctive relief." Id. at 24. Defendant requests that the Court dismiss Plaintiff's UCL, FAL, and unjust enrichment claims entirely, and dismiss Plaintiff's claim for equitable relief under the CLRA. Id. at 25. Plaintiff responds that he is pleading equitable relief under the UCL and FAL in the alternative—if the Court finds no adequate remedy at law—which is permissible under current precedent. Oppo. at 22-24. Defendant has the better argument.
Plaintiff's CLRA claim seeks money damages, as well as injunctive and equitable relief. Compl. at 22, ¶¶ 122, 124-25. The Ninth Circuit recently ruled that a federal court must apply traditional equitable principles before awarding restitution under California's UCL. Sonner v. Premier Nutrition Corp., 971 F.3d 834, 841 (9th Cir. 2020). "[W]e hold that the traditional principles governing equitable remedies in federal courts, including the requisite inadequacy of legal remedies, apply when a party requests restitution under the UCL . . . ." Sonner, 971 F.3d at 844 (emphasis added). In Sonner, the Court analyzed whether a plaintiff could pursue restitution under the UCL after intentionally amending her complaint to no longer pursue a claim under the CLRA, which originally included an identical award for damages. Id. at 837. The Court in Sonner agreed with the district court that the plaintiff had an adequate remedy at law and was therefore precluded from seeking equitable relief under the UCL. Id. at 844.
Even prior to the Sonner decision, district courts consistently used this line of reasoning, based on the California Appellate decision, Prudential Home Mortgage Co. v. Superior Court, 66 Cal.App.4th 1236, 78 Cal.Rptr.2d 566 (1998). See Moss v. Infinity Ins. Co., 197 F. Supp. 3d 1191 (N.D. Cal. 2016); Stewart v. Life Ins. Co. of N. Am., 388 F. Supp. 2d 1138 (E.D. Cal. 2005); see also Benn v. Allstate Ins. Co., 569 F. Supp. 3d 1029 (C.D. Cal. 2021) (decided post-Sonner but based on Prudential). Furthermore, in Sonner, the issue was "not whether a pleading may seek distinct forms of relief in the alternative, but rather whether a prayer for equitable relief states a claim if the pleading does not demonstrate the inadequacy of a legal remedy. On that point, Sonner holds that it does not." Sharma v. Volkswagen AG, 524 F. Supp. 3d 891, 907 (N.D. Cal. 2021); see also Rivera v. Jeld-Wen, Inc., No. 21-CV-01816-AJB-AHG, 2022 WL 3702934, at *13 (S.D. Cal. Feb. 4, 2022) (quoting the same in dismissing a UCL claim pleaded in the alternative). The same is true for Plaintiffs FAL and unjust enrichment claims—pleading in the alternative is insufficient. See, e.g., Brand v. KSF Acquisition Corp., No. 22-cv-00392-LAB-JLB, 2023 WL 3225409, at *4 (S.D. Cal. Mar. 17, 2023) (dismissing FAL and UCL claims for equitable relief for failure to plead inadequate legal remedies).
The Complaint alleges claims for equitable relief in the alternative but does not plead inadequate legal remedies as required by Sonner. Accordingly, the Court GRANTS Defendant's Motion to Dismiss Plaintiff's claims for equitable relief.
C. Preemption
Defendant sets forth two separate theories of preemption. First, Plaintiff's calorie claims are preempted for failure to plead all five methods for calculating calories set forth by various regulations. And second, Plaintiff's malic acid theory is preempted, because Defendant was only required to use the common name, malic acid, and not the more specific name, DL malic acid. As set forth below, the Court agrees with Defendant that both theories are preempted.
i. Calorie Calculation
The FDA comprehensively regulates dietary supplement labeling, including the quantitative amounts of nutrients listed on a supplement's label, pursuant to the Food, Drug and Cosmetic Act ("FDCA"), 21 U.S.C. §§ 301, et seq., as amended by the Nutrition Labeling and Education Act ("NLEA"), P.L. 101-535, 104 Stat. 2353. "The FDCA, as amended by the NLEA, contains an express preemption provision making clear that state laws imposing labeling requirements not identical to FDA mandates are preempted." Gallagher v. Bayer AG, No. 14-cv-04601-WHO, 2015 WL 1056480, at *4 (N.D. Cal. Mar. 10, 2015); see also 21 U.S.C. § 343-1(a)(4)-(5).
The FDA sets forth six specific methods for calculating calories to ensure the accurate labeling of nutritional information. See 21 C.F.R. § 101.9 (c)(1)(i)(A)-(F). As a general matter, calories must be "expressed to the nearest 5-calorie increment up to and including 50 calories, and 10-calorie increment above 50 calories, except that amounts less than 5 calories may be expressed as zero." Id. § 101.9(c)(1). There is also a safe-harbor provision stating that the product is considered misbranded "if the nutrient content of the composite is greater than 20 percent in excess of the value for that nutrient declared on the label." Id. § 101.9(g)(5).
The parties refer to five methods, which the Court reiterates for purposes of conveying the parties' arguments. However, the Court counts six methods with overlap between subsections (B) and (C). See 21 C.F.R. § 101.9 (c)(1)(i)(A)-(F).
Defendant argues that Plaintiff makes only a conclusory allegation regarding the FDA's calorie calculation methods, which is insufficient to overcome the instant Motion to Dismiss. Motion at 20-21. Defendant argues that although the Complaint alleges the specifics of one method—that a bomb calorimetry analysis was performed on the Products—there are other methods for calculation approved by the FDA, and none of the allegations plausibly establish the calories per serving using those remaining methods. Id. at 21. Essentially, Defendant is arguing that to avoid preemption, Plaintiff must sufficiently plead all methods set forth by FDA regulations. The Court agrees.
The Complaint states that "[u]nder the FDA's relevant Five Methods, the Products are mislabelled." Compl. at 7, ¶ 28. The Complaint provides specific factual allegations that the Products were tested using the bomb calorimetry method, but do not provide specifics regarding the remaining methods—only that the Products are mislabeled under all five methods. Id. at 6, ¶ 25; 7, ¶ 28. The Court agrees with Defendant that Plaintiff's allegation regarding the remaining methods of caloric testing is conclusory. The allegation simply states that the Products are mislabeled under all "Five Methods," without indicating how the Products are mislabeled or specifying the five methods (aside from bomb calorimetry). In addition, there are no specific figures or allegations concerning the remaining methods to further determine whether any alleged excess calorie count falls outside the 20 percent safe harbor provision.
Although plaintiffs are generally not required to submit evidence to support allegations in a complaint, the allegations must at least be plausible to survive a motion to dismiss. The allegations regarding the bomb calorimetry method are arguably, more than plausible. But the conclusory statement that the Products are mislabeled under all "Five Methods" (without even specifying calories) is insufficient under Iqbal. Contrary to Plaintiff's argument, the Complaint fails to state if these tests were ever performed and simply asks the Court to assume that the products are "mislabeled" under the methods.
Plaintiff's reliance on Metague v. Woodbolt Distribution, LLC is also misguided. No. 8:20-cv-02186-PX, 2021 WL 2457153, at *1 (D. Md. June 16, 2021). First, Woodbolt is a decision from the United States District Court for the District of Maryland and not binding authority on this Court. Second, the allegations in Woodbolt were more extensive than the single allegation at issue here. There, the plaintiff alleged:
Independent testing, however, revealed that XTEND contained roughly forty-two calories per serving, well in excess of the five-calorie cutoff applicable to those products labeled as "zero calories" per serving. Tests using each of the five FDA methods applicable to measuring caloric content of XTEND also revealed that XTEND exceeds the value represented on the product label by greater than 20%, thus rendering it "misbranded." Woodbolt's own internal emails, reports, analyses, and assessments, corroborate these findings and further demonstrate that Woodbolt has known for some time the true caloric content of XTEND to be substantially higher than as labeled.Id. at *2. In this case, Plaintiff has provided no such allegations and again, simply states that under the "Five Methods," the Products are mislabeled. Furthermore, the defendant in Woodbolt based its preemption argument on a distinguishable case, not applicable here. See id. at *4. As a result, the Woodbolt Court did not dwell on what constitutes a plausible allegation concerning application of the approved methods for purposes of stating a claim. But here, as explained above, Plaintiff's allegations fall short by failing to plausibly allege that the approved methods resulted in calorie counts outside the safe harbor provision. Accordingly, the Court GRANTS Defendant's Motion to Dismiss Plaintiffs misrepresentation claims with respect to any alleged mislabeling of the Products' calories.
Because the Court finds the Plaintiff's calorie theory has not been pleaded with sufficiency, it does not reach Defendant's alternative arguments.
ii. Malic Acid Theory
Defendant argues Plaintiff's allegation that "it was misleading for the EAA Blue Raspberry label to identify the ingredient as 'malic acid' rather than 'DL malic acid' is preempted." Motion at 30. Defendant contends that "[e]ven assuming the malic acid contained in the EAA product is DL-malic acid, federal law requires only that a defendant list the ingredient as 'malic acid,' which is 'the common and usual name for d-1 malic acid.' " Id. (quoting Branca v. Bai Brands, LLC, No. 3:18-cv-00757-BEN-KSC, 2019 WL 1082562, at *8 (S.D. Cal. Mar. 7, 2019)). Plaintiff argues that his theory concerning the use of the term malic acid versus DL malic acid is not preempted, because FDA regulations make clear that there are two separate forms of malic acid, and each has a specific name. Id. at 21-22. Defendant's argument is more persuasive.
The Court uses "d-1 malic acid" and "DL malic acid" interchangeably.
The FDA regulations provide that ingredients "shall be listed by common or usual name." 21 C.F.R. §§ 101.4(a)(1). The regulations further state that "[t]he names of the ingredient shall be a specific name and not a collective (generic) name, except that: (1) Spices, flavorings, colorings, and chemical preservatives shall be declared according to the provisions of § 101.22." 21 C.F.R. § 101.4(b). But if the ingredient is a flavoring, the provisions of 21 C.F.R. § 101.22 apply. See 21 C.F.R. 101.4(b).
Section 101.22(c) provides that statements "of artificial flavoring, artificial coloring, or chemical preservative shall be placed on the food or on its container or wrapper, or on any two or all three of these, as may be necessary to render such statement likely to be read by the ordinary person under customary conditions of purchase and use of such food." "The label of a food to which flavor is added shall declare the flavor in the statement of ingredients in the following way: (1) Spice, natural flavor, and artificial flavor may be declared as "spice", "natural flavor", or any combination thereof, as the case may be." 21 C.F.R. § 101.22(h).
Assuming Plaintiff's allegations are true, Defendants were not required to list "DL malic acid" by its particular isomer on the ingredient list. "The statute and regulations specifically instruct that ingredients should be listed by their 'common or usual name.' " Sims v. Campbell Soup Co., No. ED CV 18668-PSG-SPX, 2018 WL 7568640, at *8 (C.D. Cal. Sept. 24, 2018) (internal citations omitted). "The provision instructing that the name 'shall be a specific name and not a collective (generic name)' does not override the 'common or usual name' requirement." Id. Rather, it "clarifies that ingredients must be listed separately" instead of as a "single generic category." Id.; see also Branca, No. 3:18-cv-00757-BEN-KSC, 2019 WL 1082562, at *5 ("[F]or example, apples, oranges and grapes can't be listed collectively as 'fruit.' But, at the same time, sugar need not be listed by its scientific name, sucrose.") (citations omitted).
Because Defendant is not required to list "malic acid" by its specific isomer "DL malic acid" on the ingredient list, Defendant's use of "malic acid"—which is the common or usual name for DL malic acid—is sufficient. See Campbell Soup Co., No. ED CV 18668-PSG-SPX, 2018 WL 7568640, at *8 ("The regulations require labels to list ingredients by their common and usual names, and the Court is convinced that the common and usual name for the ingredient in V8 Splash is 'malic acid,' rather than the scientific name of 'd-1 malic acid.' Because Defendants complied with federal regulations by listing 'malic acid' on the V8 Splash ingredient list, any claim based on the failure to include the scientific name on the ingredient list is preempted."); Scheibe v. Performance Enhancing Supplements, LLC, No. 3:23-cv-00219-H-DDL, 2023 WL 3829694, at *6 (S.D. Cal. June 5, 2023) ("[T]o the extent Plaintiff's claims are based on the assertion that the Products' labels should specifically list DL malic acid instead of malic acid, those claims are preempted."). Accordingly, the Court GRANTS Defendant's Motion to Dismiss Plaintiff's malic acid theory on the basis of preemption, to the extent Plaintiff alleges that Defendant was required to label malic acid as DL malic acid on the ingredient list.
D. Malic Acid as Artificial Flavoring
Defendant next argues that Plaintiff alleges no more than the possibility of malic acid functioning as a flavoring agent, and that this possible liability is insufficient to state a claim under Iqbal/Twombly. Motion at 27. Defendant further argues that Plaintiff "contradicts even that mere possibility with his own affirmative allegation that the malic acid functions in the Products as a pH balancer, not a flavoring agent." Id. Defendant explains that even if "the Products contain artificial malic acid, that would not mean the Products are not naturally flavored" and instead, Plaintiff must state "facts plausibly alleging the Products contain artificial malic acid that functions as a flavoring agent." Id. Defendant contends that the FDA distinguishes between ingredients that serve as pH control agents, flavor enhancers, and flavoring agents, depending on the function of the ingredient. Id. As such, Defendant argues that it "may truthfully state that the Products are 'Naturally Flavored' even if they have some artificial ingredients, so long as the function of those ingredients is not 'to impart flavor' in the product." Id. at 28 (citations omitted).
Defendant also contends that Plaintiff fails to allege facts "establishing that any malic acid in the Products functions as a flavoring agent" and instead, "alleges only that the 'malic acid used in the Products is used to create, enhance, simulate, and/or reinforce the sweet and tart taste that consumers associate with the characterizing fruit flavors[.]" Id. (citing Complaint at ¶ 43). Defendant thus argues that Plaintiff alleges only "the possibility that the malic acid may be serving as a flavoring agent, while simultaneously admitting the malic acid may be serving as a flavoring enhancer instead." Id. Finally, Defendant argues that "the Complaint contradicts even the insufficient possibility that the malic acid functions as a flavoring agent," given Plaintiff's allegation that "the malic acid's function in the Products is to 'chang[e] the ration between acids and sugars." Id. at 29. Defendant contends that as such, "Plaintiff affirmatively alleges the malic acid functions in the Products as a pH control agent by changing acidity." Id. Defendant cites Branca and argues there is no factual dispute to resolve because Plaintiff has not plausibly alleged the Products are artificially flavored. Id. at 30.
Plaintiff counters that "[u]nder federal labelling requirements . . . any recognizable primary flavor identified directly or indirectly on the front of the label of a food Product, whether by word, vignette, depiction of a fruit, or other means, is referred to as a 'characterizing flavor.' " Oppo. at 18 (citing 21 C.F.R. § 101.22). Plaintiff explains that here, "[t]he front label of the EAA powder employs depictions of raspberries to identify the characterizing flavor and states that it is 'Naturally Flavored With Other Natural Flavors.' " Id. at 18-19. Plaintiff argues that the Complaint alleges how third-party testing confirmed the use of DL malic acid in the EAA Blue Raspberry Product, and that FDA regulations are explicit in that DL malic acid does not naturally occur. Id. at 19-20. Plaintiff argues that Defendant "tries to sidestep this plain and sufficient allegation by asserting that is uses the DL malic acid in the EAA Powder as a flavor enhancer and not as a flavor." Id. at 20. Plaintiff argues that the question of "whether malic acid is used as flavor or for some other reason is not one that can be determined without discovery . . . ." Id. Plaintiff contends that the functional purpose of malic acid in a product presents a factual issue not to be resolved on a motion to dismiss. Id.
Plaintiff also rebuts Defendant's argument that the Complaint is ambiguous. Plaintiff argues "[t]he Complaint is quite clear in alleging that the EAA powder is 'artificially flavored,' and then explains the mechanism by which malic acid works as a flavor, by changing the ratio between sugars and acids that define certain fruit flavors such as raspberries." Id. Plaintiff contends that "[c]onstruing the Complaint liberally and with inferences in his favor, as the Court must, it is clear that [he] adequately alleged the use of artificial DL malic acid as a flavor . . ." for the purpose of alleging the product's label failed to disclose that it is artificially flavored. Id.
The Court agrees with Plaintiff. Pursuant to 21 C.F.R. § 101.22(i)(2), products containing "any artificial flavor which simulates, resembles or reinforces the characterizing flavor . . . the name of the characterizing flavor shall be accompanied by the words 'artificial' or 'artificially flavored.' " See also 21 U.S.C. § 343(k) (requiring any foods that use artificial flavorings "bear [ ] labeling stating this fact"). Specifically, if a food contains an artificial flavor which simulates the characterizing flavor, the name of the food "shall be accompanied by the common name" of the characterizing flavor and the name of the characterizing flavor "shall be accompanied by the word(s) 'artificial' or 'artificially flavored' " for example "artificial vanilla," "artificially flavored strawberry", or "grape artificially flavored." 21 C.F.R. § 101.22(i)(2). Although there are distinctions between flavoring agents, flavoring enhancers, and pH control agents, at this stage in the proceedings, the Court must liberally construe all facts in favor of Plaintiff and cannot resolve factual disputes.
Plaintiff sufficiently pleads how malic acid is produced, formulated, and used to allege that the Products are artificially flavored. See Compl. at 9-10, ¶¶ 38-46. For example, Plaintiff states that "Defendant uses the artificial petrochemically derived DL malic acid in its Products to create this sweet tart flavor but pretends otherwise, conflating natural and artificial flavorings, misbranding the Products and deceiving consumers." Id. at 10, ¶ 44. Although the allegations discuss the ratio of sugars to acids—a ratio that is central to a product's acidity or pH—the allegations describe how changing the acidity imparts fruity flavors. Construing these allegations liberally and in favor of Plaintiff, the Court finds no contradictions. The ultimate function of the alleged DL malic acid in the Products at issue is a question of fact. In ruling on Defendant's Motion to Dismiss, the Court will not determine whether Plaintiff's alleged function of the DL malic acid is accurate. See Branca, No. 3:18-cv-00757-BEN-KSC, 2019 WL 1082562, at *3; Tapia v. Coca-Cola Co., No. 22-CV-01362-HSG, 2023 WL 2621346, at *3 (N.D. Cal. Mar. 23, 2023) ("[T]he Court finds that whether malic acid functions as a flavor or a flavor enhancer in the soda at issue is a factual dispute not appropriate for resolution at the motion to dismiss stage."). Accordingly, the Court DENIES Defendant's Motion to Dismiss with respect to Plaintiff's artificial flavoring theory.
E. Actual Reliance
A claim sounds in fraud when the plaintiff "allege[s] a unified course of fraudulent conduct and rel[ies] entirely on that course of conduct as the basis of a claim." Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1104 (9th Cir. 2003). "[C]laims sounding in fraud are subject to the heightened pleading requirements of Rule 9(b)." Goldstein v. Gen. Motors LLC, 445 F. Supp. 3d 1000, 1010 (S.D. Cal. Apr. 13, 2020). An entire complaint, or an entire claim within a complaint, can sound in fraud, see Vess, 317 F.3d at 1107, but fraud does not suddenly become an element of such claims. Mallen v. Alphatec Holdings, Inc., 861 F. Supp. 2d 1111, 1125 (S.D. Cal. Mar. 22, 2012), aff'd sub nom., Fresno Cty. Employees' Ret. Ass'n v. Alphatec Holdings, Inc., 607 F. App'x 694 (9th Cir. 2015) (citing In re Daou Sys., Inc., 411 F.3d 1006, 1027 (9th Cir. 2005)). Instead, " '[w]here averments of fraud are made in a claim in which fraud is not an element, . . . [t]he proper route is to disregard [the] averments . . . not meeting Rule (9)(b)'s standard and then ask whether a claim has been stated.' " Mallen, 861 F. Supp. 2d at 1125 (quoting Lone Star Ladies Inv. Club v. Schlotzsky's Inc., 238 F.3d 363, 368 (5th Cir. 2001)). "Fraud can be averred by specifically alleging fraud, or by alleging facts that necessarily constitute fraud . . ." but "[a]verments of fraud must be accompanied by 'the who, what, when, where, and how' of the misconduct charged." Vess, 317 F.3d at 1105 (citations omitted).
Defendant argues that Plaintiff's CLRA, FAL, UCL, and unjust enrichment claims fail because Plaintiff did not allege actual reliance with the particularity required by Federal Rule of Civil Procedure 9(b). Oppo. at 25-26. Defendant argues that "because Plaintiff's claims under the CLRA, FAL, and UCL sound in fraud, they must" satisfy Rule 9(b). Id. at 25. Defendant contends "Plaintiff has not alleged specific facts establishing he actually relied on the absence of any calorie statement on the EAA product before he made his alleged purchase." Id. at 26. Defendant argues "[t]he Complaint is devoid of any specific factual allegations that he looked for a calorie statement on the EAA product label before making a purchase, found no such statement, and for that reason believed the EAA product contained no calories per serving." Id. Plaintiff does not oppose Defendant's argument that these claims sound in fraud, subjecting any allegations of reliance to Rule 9(b)'s heightened pleading requirements. Plaintiff does, however, point to various paragraphs throughout the Complaint to argue that he adequately pleads reliance.
The Complaint alleges how Plaintiff "carefully reviews labels, including the Products' labels, to track calories in order to maintain progress toward his weight loss goals." Compl. at 2, ¶ 2. This allegation, assumed as true, establishes that Plaintiff carefully reviewed the labels of the Products at issue. The Complaint further alleges that Plaintiff reasonably expected "that a dietary supplement that reports 5 calories per serving contains only 5 calories per serving," and "[h]ere, the explicit representation that the EAA powder contains only 5 calories per serving is false and deceptive." Id. at 7, ¶ 26. This allegation points to a specific representation and Plaintiff's reliance on that representation. The subsequent allegation states how Plaintiff reasonably expected "that a dietary supplement that reports no calories per serving contains zero calories per serving," and "[h]ere, the implied representation that the Pre-Workout powder contains zero calories per serving is false and deceptive." Id. at 7, ¶ 27. This allegation points to a specific omission—no calories reported per serving—and Plaintiff's reliance on and understanding of that omission. Next, the Complaint alleges:
Consumers including Plaintiff viewed and reasonably relied on Defendant's statements on the Products' labels, as described herein, and would not have purchased the Products from Defendant if the truth about the Products were known, or would have only been willing to pay a substantially reduced price for the Products had they known that Defendant's representations were false and misleading.Id. at 12, ¶ 63. The Complaint further alleges how "Consumers including Plaintiff especially rely on calories-per-serving and flavoring label claims made by food product manufacturers such as [Defendant], as they cannot confirm or disprove those claims simply by viewing or even consuming the Product." Id. at 13, ¶ 65. Finally, the Complaint alleges that "Plaintiff suffered economic injury by Defendant's fraudulent and deceptive conduct as stated herein, and there is a causal nexus between Defendant's deceptive conduct and Plaintiff's injury." Id. at 13, ¶ 67.
Viewing the entirety of the Complaint and the above allegations, Plaintiff falls short of the heightened pleading requirement. Defendant takes issue with the timing of Plaintiff's reliance, arguing that Plaintiff did not specify whether he relied on the alleged statements before purchasing the Products. The Court agrees that the Complaint lacks clarity regarding "when" the actual reliance occurred—specifically, whether it occurred before Plaintiff purchased the Products. Accordingly, the Court GRANTS Defendant's Motion to Dismiss Plaintiff's CLRA, FAL, UCL, and unjust enrichment claims for failure to plead reliance with the specificity required by Rule 9(b).
The Court will not perform a full Rule 9(b) analysis—including the who, when, where, what, and how required—and instead, addresses only those arguments set forth by Defendant.
F. Leave to Amend
When a motion to dismiss is granted, the court decides whether to grant leave to amend. Courts have broad discretion to grant such leave. Nguyen v. Endologix, Inc., 962 F.3d 405, 420 (9th Cir. 2020). The Ninth Circuit has a liberal policy favoring amendments, and thus, leave to amend should be freely granted. See, e.g., DeSoto v. Yellow Freight System, Inc., 957 F.2d 655, 658 (9th Cir. 1992). However, a court need not grant leave to amend when permitting a plaintiff to amend would be an exercise in futility. See, e.g., Rutman Wine Co. v. E. & J. Gallo Winery, 829 F.2d 729, 738 (9th Cir. 1987) ("Denial of leave to amend is not an abuse of discretion where the pleadings before the court demonstrate that further amendment would be futile.").
Plaintiff has made no previous amendments to his Complaint, and the pleadings do not demonstrate that further amendment would be futile. Accordingly, the Court exercises its broad discretion and GRANTS leave to amend the Complaint. Plaintiff has twenty-one (21) days from the date of this Order to file an amended complaint.
V. CONCLUSION
For the foregoing reasons, the Court rules on Defendant's Motion to Dismiss as follows:
1. The Court GRANTS Defendant's Motion to Dismiss Plaintiff's claims for injunctive relief for lack of standing.
2. The Court GRANTS Defendant's Motion to Dismiss Plaintiff's claims for equitable relief.
3. The Court GRANTS Defendant's Motion to Dismiss Plaintiff's calorie theory as preempted.
4. The Court GRANTS Defendant's Motion to Dismiss Plaintiff's malic acid theory as preempted.
5. To the extent Plaintiff's artificial flavor theory claim can survive—given the dismissal of injunctive relief, equitable relief, and Plaintiff's CLRA, UCL, FAL, and unjust enrichment claims—the Court DENIES Defendant's Motion to Dismiss these allegations.
6. The Court GRANTS Defendant's Motion to Dismiss Plaintiff's allegations of actual reliance for failure to plead with particularity.
7. The Court GRANTS Plaintiff leave to amend his Complaint. Plaintiff has twenty-one (21) days from the date of this Order to amend his Complaint.
IT IS SO ORDERED.