966 F.3d 1007
9th Cir.2020Background
- Six California residents sued major pet-food manufacturers (Mars, Hill’s), clinic chains (Banfield, BluePearl) and retailer PetSmart, alleging labeling and prescription requirements for "prescription" pet food misled consumers into thinking the products were drugs or FDA‑regulated and caused them to pay premium prices.
- Defendant manufacturers collectively control over 90% of the U.S. prescription pet‑food market; retailers and clinics require a veterinarian prescription before sale and market the products to consumers.
- The FDA published a Draft Compliance Policy Guide in 2012 and a substantially similar Final CPG in 2016 noting concerns about disease claims on pet‑food labels and that veterinarian supervision mitigates some risk; FDA did not take enforcement action against defendants.
- Plaintiffs alleged the prescription label and related marketing (including an Rx symbol) (1) implied the foods were drugs or FDA‑evaluated, (2) were medically necessary, and (3) justified higher prices; they sought class certification, damages, and injunctive relief under California’s UCL, FAL, and CLRA.
- The district court dismissed the Second Amended Complaint for failure to state claims (and for lack of particularity and standing); the Ninth Circuit reversed as to the California consumer‑protection claims and remanded; a separate memorandum affirmed dismissal of the Sherman Act claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether labeling/ prescription requirement is deceptive under California UCL/FAL/CLRA (reasonable consumer test) | "Prescription" labeling and Rx branding lead reasonable consumers to believe products are drugs, FDA‑evaluated, or medically necessary, causing higher payments | Prescription distribution through vets and the CPG’s vet‑supervision focus mean consumers are not misled; marketing is not inherently deceptive | Reversed: plausible deceptive practice; reasonable consumers could be misled and dismissal at pleading stage improper |
| Whether fraud‑based claims satisfied Rule 9(b) particularity | Plaintiffs identified specific products, ingredient overlap with non‑prescription foods, and that non‑overlapping ingredients were not drugs, alleging why premium was unjustified | Allegations are too generalized to meet the who/what/when/where/how of fraud | Plaintiffs pleaded sufficient detail to place defendants on notice; Rule 9(b) satisfied at pleading stage |
| Whether plaintiffs pleaded actual reliance and standing under Tobacco II/Kwikset | Plaintiffs alleged they paid more or would not have purchased but for the prescription requirement/labeling; reliance may be inferred where misrepresentation is material | Plaintiffs relied on veterinarians’ prescriptions (not labels), so they lack individual reliance and standing | Reversed: alleged reliance is plausible and may be inferred; prescription by vets does not defeat standing at motion to dismiss stage |
| Whether FDCA preempts plaintiffs’ state claims (argument raised by dissent) | Plaintiffs did not principally press preemption; assert state consumer laws protect against deceptive labeling | FDA has exclusive enforcement over drug/approval matters and CPG is non‑binding; claims rest on implication of FDA approval and thus are preempted | Majority did not find preemption dispositive; dissent argued preemption (citing Perez and Mylan) but court remanded for further proceedings on state claims |
Key Cases Cited
- Williams v. Gerber Prods. Co., 552 F.3d 934 (9th Cir. 2008) (applies reasonable‑consumer test to label claims; literal truth can still mislead)
- Kwikset Corp. v. Superior Court, 246 P.3d 877 (Cal. 2011) (actual reliance required for UCL/FAL standing; labels matter for consumer decisions)
- Ebner v. Fresh, Inc., 838 F.3d 958 (9th Cir. 2016) (reasonable‑consumer standard requires a probability that a significant portion of targeted consumers could be misled)
- Vanzant v. Hill’s Pet Nutrition, Inc., 934 F.3d 730 (7th Cir. 2019) (FDA CPG did not authorize or preempt consumer deceptive‑practice claims; complaint survived pleading challenge under Illinois law)
- Reid v. Johnson & Johnson, 780 F.3d 952 (9th Cir. 2015) (reasonable‑consumer standard is distinct from individual standing/reliance requirements)
- Davidson v. Kimberly–Clark Corp., 889 F.3d 956 (9th Cir. 2018) (Rule 9(b) pleading requirements and consumer reliance analysis; prior deceived consumers may have standing for injunctive relief)
- Perez v. Nidek Co., Ltd., 711 F.3d 1109 (9th Cir. 2013) (state fraud-by-omission claims tied solely to FDA approval may be impliedly preempted by FDCA enforcement scheme)
- Mylan Laboratories, Inc. v. Matkari, 7 F.3d 1130 (4th Cir. 1993) (private claims asserting implied FDA approval are generally untenable)
- Bell Atlantic v. Twombly, 550 U.S. 544 (2007) (pleading must state plausible claim above speculative level)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (complaints must contain factual enhancement to plausibly state a claim)