67 F. Supp. 3d 1075
N.D. Cal.2014Background
- Plaintiffs Figy and Swearingen (California consumers) sued Frito‑Lay, alleging Rold Gold pretzel labels ("Made with All Natural Ingredients", "LOW FAT", "FAT FREE") were misleading because products contain certain added ingredients and high sodium.
- Plaintiffs sued on behalf of themselves and a putative nationwide class; they purchased three pretzel SKUs and challenged two additional SKUs they did not buy.
- Causes of action: violations of California UCL (unlawful, unfair, fraudulent), FAL (misleading/deceptive, untrue), and CLRA; remedies sought include monetary and injunctive relief.
- Defendant moved to dismiss for lack of standing (non‑purchased products; injunctive relief), improper extraterritorial application of California law, failure to plead reliance/injury for a "misbranding" theory, and insufficiently pleaded deception/reliance on labeling.
- Court applied Ninth Circuit Rule 12(b)(1)/(6) standards and Rule 9(b) for fraud‑sounding claims; adopted a "substantial similarity" test for standing to sue over non‑purchased products and analyzed other standing and pleading defects.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to challenge non‑purchased products | Plaintiffs: products are substantially similar to purchased SKUs so Plaintiffs have Article III standing | Frito‑Lay: plaintiffs never bought those SKUs so lack standing | Court: denied dismissal — adopted "substantial similarity" test and found products sufficiently similar |
| Standing for injunctive relief | Plaintiffs: still face ongoing injury from sales of mislabeled inventory; seek injunction | Frito‑Lay: discontinued challenged labels before suit; submitted declarations showing no ongoing printing | Court: dismissed injunctive claims for lack of jurisdiction for failure to rebut factual showing, but allowed amendment; claims to enjoin continued sale of existing mislabeled stock survive |
| Extraterritorial application of California consumer laws / class claims | Plaintiffs: choice‑of‑law/class issues should await class certification | Frito‑Lay: California statutes should not apply to out‑of‑state purchases where misconduct/injury did not occur in CA | Court: dismissed class claims for out‑of‑state purchases (claims by non‑California residents) with prejudice; allowed amendment limited to a California class |
| Sufficiency of pleading re: misbranding, "All Natural", and fat‑claims (deception/reliance) | Plaintiffs: labels violated federal/state regs so products are misbranded/legally worthless; reliance may be presumed or pleaded | Frito‑Lay: plaintiffs failed to plead actual reliance or explain why ingredients are "unnatural"; regulatory violation alone insufficient to show consumer deception | Court: dismissed misbranding theory with prejudice; dismissed "All Natural" and fat‑related claims for failure to plead specifics (All Natural under Rule 9(b); fat claims implausible that "FAT FREE" implies low sodium), but gave leave to amend (except misbranding and out‑of‑state class claims) |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (plausibility standard for Rule 12(b)(6) pleadings)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (pleading standard requiring more than labels and conclusions)
- Colwell v. Dep’t of Health & Human Servs., 558 F.3d 1112 (9th Cir. 2009) (on burdens when challenging jurisdiction with extrinsic evidence)
- City of Los Angeles v. Lyons, 461 U.S. 95 (1983) (injunctive‑relief standing requires a real and immediate threat of future injury)
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) (Article III standing elements and burden of proof)
- Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83 (1998) (limitations on presuming future injury when defendant ceases conduct)
- Williams v. Gerber Prods. Co., 552 F.3d 934 (9th Cir. 2008) (reasonable‑consumer standard for deception under UCL/FAL)
- Kwikset Corp. v. Superior Court, 51 Cal.4th 310 (2011) (California law requires reliance showing for UCL standing)