154 F. Supp. 3d 954 | C.D. Cal. | 2015
ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS
I. INTRODUCTION
Plaintiffs Melanie Barber, Robert and Esther Malone, and R. Grace Rodriguez bring this action against Nestlé USA, Inc., and Nestlé Purina Petcare Co. (together, “Nestlé”) for violations of the California Unfair Competition Law (“UCL”), Cal. Bus. & Prof.Code § 17200 et seq., violations of the California Legal Remedies Act (“CLRA”), Cal. Civ.Code § 1750 et seq., and violations of the California False Advertising Law (“FAL”), Cal. Bus. & Prof. Code § 17500 et seq. Plaintiffs claim that Nestlé is obligated to inform consumers that some proportion of its cat food products may include seafood which was sourced from forced labor. Before the Court is Nestlé’s motion to dismiss. For the following reasons, Nestlé’s motion is GRANTED.
II. BACKGROUND
Plaintiffs filed their Complaint on August 27, 2015. (Dkt. 1 [“Compl.”].) The Complaint alleges that Nestlé markets and distributes the cat food “Fancy Feast.”
Nestlé does not disclose on its Fancy Feast products that some of the seafood used to make Fancy Feast is likely produced by forced labor. (Id. ¶ 9.) Plaintiffs, purchasers of Fancy Feast, allege that they would not have purchased the product had they realized that some of the seafood contained in Fancy Feast may have been sourced from forced labor in Southeast Asia. They bring causes of action for violations of the California UCL, the CLRA, and the FAL, arguing that Nestlé is required to inform consumers of the likelihood that seafood found in Fancy Feast is produced using forced labor. (Id. ¶¶ 62-99.) They also seek to certify a class of similarly situated individuals. (Id. ¶¶51-61.) On October 19, 2015, Nestlé moved to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). (Dkt.28.)
III. LEGAL STANDARD
A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) tests the legal sufficiency of the claims asserted in the complaint. The issue on a motion to dismiss for failure to state a claim is not whether the claimant will ultimately prevail, but whether the claimant is entitled to offer evidence to Support the claims asserted. Gilligan v. Jamco Dev. Corp., 108 F.3d 246, 249 (9th Cir.1997). Rule 12(b)(6) is read in conjunction with Rule 8(a), which requires only a short and plain statement of the claim showing that the pleader is entitled to relief. Fed.R.Civ.P. 8(a)(2). When evaluating a Rule 12(b)(6) motion, the district court must accept all material allegations in the complaint as true and construe them in the light most favorable to the non-moving party. Moyo v. Gomez, 32 F.3d 1382, 1384 (9th Cir.1994). The district court may also consider additional facts in materials of which the district court may take, judicial notice, Barron v. Reich, 13 F.3d 1370, 1377 (9th Cir.1994), as well as “documents whose contents are alleged.in a complaint and whose authenticity no' party, questions, but which are not physically attached to the pleading,” Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir.1994), overruled in part on other grounds by Galbraith v. Cty. of Santa Clara, 307 F.3d 1119 (9th Cir.2002). However, “the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable, to legal conclusions.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129, S.Ct. 1937, 173 L.Ed.2d 868 (2009); see also Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (stating that while a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, courts “are not bound to accept as true a legal conclusion couched as. a factual 'allegation” (citations and quotes omitted)). Dismissal of a complaint for failure to state a claim is not proper where a plaintiff has alleged “enough facts
IV. ANALYSIS
Nestlé moves to dismiss the Complaint on a number of grounds. It argues that Plaintiffs’ claims are barred by the safe harbor.doctrine, that Nestlé does not have a duty to disclose the desired information, that Plaintiffs’ individual claims should each be dismissed because they fail to adequately allege violations of state consumer protection law, .that Plaintiffs lack standing, that Plaintiffs fail to satisfy the strictures of Rule 9(b), and that Plaintiffs’ desired disclosures violate the First Amendment. The Court concludes that Plaintiffs’ claims are barred' by the safe harbor doctrine and therefore declines to' reach the remainder of Nestlé’s arguments.
A. The Safe Harbor Doctrine
The California Supreme Court has held that “safe harbors” are created from liability under the UCL when “the Legislature has permitted certain conduct or considered a situation and concluded no action should’ lie.” Cel-Tech Comms., Inc. v. L.A. Cellular Tel. Co., 20 Cal.4th 163, 182, 83 Cal.Rptr.2d 548, 973 P.2d 527 (Cal.1999.) If either of those conditions exists, “plaintiffs may not use the géneral unfair competition law to assault that harbor” by arguing that the permitted conduct (or omission) is unlawful. Id. Cel-Tech applied the safe harbor doctrine only to UCL claims, but other courts have recognized that the doctrine equally applies to claims under the CLRA and FAL. Alvarez v. Chevron Corp., 656 F.3d 925, 933-34 (9th Cir.2011) (applying the safe harbor doctrine to UCL and CLRA claims); Pom Wonderful LLC v. Coca Cola Co., No. CV 08-06237 SJO(FMOx), 2013 WL 543361, at *5 (C.D.Cal. Apr. 16, 2013) (applying the safe harbor doctrine to UCL and FAL claims).
Here, Nestlé argues that a safe harbor from Plaintiffs’ state law claims
Nestlé .points to- a number of cases supporting this- application of the safé harbor doctrine. For example, in Ebner v. Fresh Inc., the plaintiffs alleged' that a lip treatment’product violated the UCL, CLRA, and FAL by only stating its net quantity, and not the quantity of product “reasonably accessible” to -the consumer (the plaintiffs argued that although the product container held 4.3 grams of product, consumers could only get at about 3.3 grams of it). No. SACV 13-00477 JVS(RNBx), 2013 WL 9760035, at *1, *5 (C.D.Cal. Sep. 11, 2013). The district court applied the safe harbor doctrine and dismissed the claims. It noted that California and FDA regulations required only a statement of net quantity, not the statement of “quantity reasonably accessible to consumers” that the plaintiffs desired. The court reasoned that the limited regulations indicated that “both the FDA and the California legislature have decided that consumers will be adequately protected if a cosmetic label provides the net quantity of contents.” Id.' at *5. Accordingly, UCL, CLRA, and FAL claims could not survive. Id. at *6. Similarly, in Alvarez v. Chevron Corp., plaintiffs alleged that the design of a gas pump was such that customers who purchased premium gasoline first received between two-and three-tenths of a gallon of whatever gásoline — potentially lower-grade — the customer before them had ordered, before the pump began to deliver the higher-grade premium gasoline. Plaintiffs argued that this design violated the UCL and CLRA, Alvarez v. Chevron Corp., 656 F.3d 925, 928 (9th Cir.2011). The Ninth, Circuit affirmed the dismissal of the claims, noting that California law “unequivocally permitted]” the design of the gas pump at issue, and that the defendants therefore had safe harbor from UCL and CLRA liability. Id. at 933-34. See also Lopez v. Nissan N. Am., Inc., 201
Plaintiffs respond that these cases are inapposite because they deal with situations where a statute explicitly permitted the conduct alleged to violate California consumer protection law. Here, Plaintiffs contend, the Supply Chains Act does not specifically authorize nondisclosure of the presence of forced labor in a supply chain, so Nestlé has not successfully found a safe harbor. Plaintiffs offer a number of cases in support of this argument. In Aron v. U-Haul Co. of Cal., for example, the plaintiff claimed that a rental truck company violated the UCL and CLRA by charging a fee to customers who returned vehicles with less fuel than they were provided but refusing to refund customers who returned trucks with more fuel than they were originally provided. 143 Cal.App.4th 796, 801, 49 Cal.Rptr.3d 555 (Cal.Ct.App.2006). Defendant U-Haul argued that the safe harbor doctrine barred the claims, pointing to a statute which' permitted rental companies of passenger vehicles to administer'a fee scheme like U-Haul’s. But the court held that the passenger vehicle statute did not provide a safe harbor because, as a rental truck company, the passenger vehicle statute at issue “d[id] not apply to [U-Haul’s] rental operations.” Id. at 804, 49 Cal.Rptr.3d 555. Likewise, in Klein v. Chevron U.S.A., Inc., a California statute that applied to' “transactions involving 5,000 or more gallons of motor fuel” did not provide a safe harbor- for claims relating to transactions involving less than 5,000 gallons because the statute “ha[d] no applications to [those] transactions.” See also Doe v. SuccessfulMatch.com, 70 F.Supp.3d 1066, 1081 (N.D.Cal.2014) (no safe harbor where statute required posting of privacy policy on website and plaintiffs alleged that the website impermissibly made their information viewable on other websites); Torres v. JC Penney Corp., Inc., No. 12-cv-01105 JST, 2013 WL 1915681, at *2-4 (N.D.Cal. May 8, 2013) (no safe harbor where statute imposed purity requirements for gold and silver items, and plaintiffs alleged that the items contained undisclosed rhodium).
Without question, the best case for Plaintiffs position is Davis v. HSBC Bank Nevada, N.A., 691 F.3d 1152 (9th Cir.2012). There, a consumer saw an advertisement for a credit card. The advertisement did not mention that the card came with an annual fee. After" successfully opening the card and paying the annual fee, the consumer sued, alleging that the advertisement’s failure to advertise the annual fee violated the UCL. The defendant argued that it was protected by a safe harbor' under a regulation' called Regulation Z.
As an initial matter, almost all of Plaintiffs’ cases are easily distinguishable from the- facts currently before the Court. In Aron and Klein, the defendants were attempting to claim a safe harbor under a law that did not even apply to them or to the transactions they had engaged in. Here, by contrast, the statute under which Nestlé seeks a safe harbor — § 1714.43— undoubtedly applies to it. And Torres and Doe are distinguishable as well: there, the defendants alleged a safe harbor under laws that did not even speak to the conduct at issue. Only Davis is analogous to the facts here, but even the. Daws Court was presented with a situation where a legislature had not spoken to the question of whether annual fee disclosures should be required on all credit card advertisements. Davis, 691 F.3d at 1167 (Regulation Z only discussed disclosure of an annual fee in the event of a “trigger[ ]” that required disclosure, and not otherwise). In the present case, California has spoken directly to the issue of what disclosures companies must make to customers about potential forced labor in their supply chains. As a result, Davis is not on all fours with these facts either.
At bottom, Plaintiffs argue that because the Legislature has not specifically permitted nondisclosure of the facts they would like, nondisclosure cannot possibly find a safe harbor.
This conclusion is supported both by the text of § 1714.43 and its legislative history. By its own- terms, § 1714.43 requires disclosure ‘to' consumers — exactly the remedy Plaintiffs seek here. And the section carefully notes that it requires only the limited disclosures, and not even affirmative actions to combat human trafficking. See § 1714.43(c) (requiring companies only to
Plaintiffs may wish — understandably— that the Legislature had required disclo-süres beyond the minimal ones required by § 1714.43. But that is precisely the sort of legislative second-guessing that the safe harbor doctrine guards against. Cel-Tech, 20 Cal.4th at 182, 83 Cal.Rptr.2d 548, 973 P.2d 527. California considered the very problem Plaintiffs identify, determining that businesses’responsibilities to-inform consumers about the presence of forced labor in supply chains begin and end' with- the required - disclosures in § 1714.43. I-t is not the place of this Court to permit that determination to be disturbed by a novel application of California consumer protection law.
B. Misrepresentations
At the hearing On this motion, apart from their claims that Nestlé is required to provide additional disclosures about the presence of forced labor in its supply chain, Plaintiffs also alleged that certain representations made by Nestlé on its website are false or misleading. Seeing no- reason why false statements would be protected by the safe harbor doctrine, the Court will briefly review the allegedly misleading statements to determine whether Plaintiffs can plead a' misrepresentation claim that does not depend -on alleging that Nestlé is required to provide additional disclosures'
The thrust of Plaintiffs’ misrepresentation allegations is that Nestlé makes a number of statements online which would persuade a reasonable consumer that forced labor is not present in -Nestlé’s supply chains. Because Nestlé cannot actually verify that its supply chain is free of forced labor, Plaintiffs contend, Nestlé’s online representations are misleading, at a minimum, or false. Plaintiffs specifically point to eight statements, sourced from four separate documents, which they believe mislead consumers as to the presence of forced labor in Nestlé’s supply chain. The statements are:
• “[Nestlé] fully supports] the United Nations Global Compact’s guiding*963 principles on human rights and lab-our and aim[s] to provide an example of good human rights and labour practices throughout [its] business activities.” (Dkt. 29 Exh. G [“Corporate Business Principles”] at 177.)
• “[Nestlé] require[s] [its] supplies, agents, subcontractors and their employees to demonstrate honesty, integrity and fairness, and to adhere to [the Nestlé Supplier Code of Conduct].” (Corporate Business Principles at 175.)
• “[Nestlé] expects the Supplier to adhere to. all applicable laws and regulations ... and strive to comply with international and industry standards and best practices.” (Dkt. 29 Exh. H [“Supplier Code”] at 185.)
• “[Nestlé] reserves the right to verify compliance with the [Supplier] Code.” (Supplier Code at 185.)'
• “The Supplier must under no circumstances use, or in any other way benefit, from forced labour.” (Supplier Code at 186.)4
• “The [S]upplier shall be capable to disclose all the potential sources of primary origins (country of origin) associated with deliveries made. Nestlé reserves the right to ask the supplier to create ... full supply chain mapping back to origin to facil- . itate assessment of upstream supply chain compliance.” (Supplier Code at 188.)
• “Suppliers will ensure [that] [t]here is no known sourcing from. Illegal, Unreported and Unregulated (IUU) fisheries and vessels.” (Dkt. 29 Exh; I [“Responsible =Sourcing Guidelines”] at 206.) • :
• “Having the right policies, procedures and management systems is good and necessary,' but it is not ' enough. It is the implementation) how you behave on the ground and the relationships you' establish with different stakeholdérs, which create the trust necessary to be successful ‘ over time, as a company and as a sociéty.” (Dkt. 29 Exh. J [“Nestle in Society Full Report”] at 420.)
Nestlé responds by arguing that these statements are aspirationaí and that when read in context, Nestlé’s' statements are actually a nuanced and correct summary of its efforts to combat forced labor. For example, the Responsible Sourcing Guidelines acknowledge that not all suppliers will meet Nestlé’s requirements immediately, and that “Nestlé will provide support to suppliers that are not yet able to comply” but who are “committed to becoming compliant over time and demonstrate continuous and tangible progress.” (Responsible Sourcing Guidelines at 195.) This is consistent with Néstlé’s stated aim for the Responsible Sourcing Guidelines themselves: “to guide Nestlé’s suppliers to improve their practices where necessary.” (Id. at 194.) Similarly, Nestlé’s Supplier Code is replete with evidence that its requirements represent an ideal, and not necessarily a reality. The Supplier Code makes clear that Nestlé ‘‘ask [s ] [its] suppliers and their sub-tiqr suppliers” to comply with its requirements and that the “standards of the Code set forth expectations ” for suppliers. (Supplier Code at 185 (emphasis added).) There is little question that at times, Ñestlé’s online doe-
IV. CONCLUSION
For the foregoing reasons, Plaintiffs’ claims are each barred by the safe harbor doctrine. Accordingly, Nestlé’s motion to dismiss is GRANTED, and because amendment would be futile, the claims are DISMISSED WITH PREJUDICE.
. Both parties have submitted requests for judicial notice. (Dkt. 29; Dkt. 35.) Federal Rule of Evidence 201(b) authorizes courts to " take judicial notice of facts that aré' ‘‘not subject to reasonable dispute” and that are "capable of accurate and ready determination by resort to sources whose accuracy cannot be reasonably questioned.” A document to which a complaint "refers extensively" or that . “forms the basis of a plaintiff’s claim” may be incorporated by reference. United States v. Ritchie, 342 F.3d 903, 908 (9th Cir.2003). A court may "treat such document as part of the complaint, and thus may assume that its contents are true for puiposes of a motion to dismiss.” Id, Defendants request that the Court take judicial notice of a number of • news articles and other publications, including Nestlé documents, referenced in and incorporated by Plaintiffs’ Complaint. Plaintiffs believe that the documents establish that seafood in. Nestlé’s Fancy Feast product does in fact come from forced labor, and that Nestle represents in online documents that it does not. Such documents are incorporated by Plaintiffs’ complaint and are -appropriate for judicial notice. Additionally, Defendants request that the Court take judicial notice of portions of the legislative history of Cal. Civ. Code § 1714.43. Legislative history is an appropriate subject of judicial notice. See Chacker v. Crogan, 428 F.3d 1215, 1223 n. 8 (9th Cir.2005). Plaintiffs request that the Court take judicial notice of two documents published by the United Nations. Such documents áre published by a governmental entity and are not subject to reasonable dispute,1 and accordingly, they are appropriate for judicial notice. The parties’ respective requests for judicial notice, (Dkt. 29; Dkt. 35), are therefore GRANTED.
. 12 C.F.R. § 226.1 et seq.
. Plaintiffs put much weight on the California 'Supreme Court’s statement that "[t]here is a difference between (1) not making an activity unlawful, and (2) making that activity lawful.” Cel-Tech, 20 Cal.4th at 183, 83 Cal.Rptr.2d 548, 973 P.2d 527. But as an example of this principle, the California Supreme Court noted that "Penal Code section 211, which defines robbery, does not make murder unlawful. Most assuredly, however, that section does not also make murder lawful.” Id. This is not a situation where Nestlé is pointing to one statute, which regulates one matter, in an effort to claim that it has safe harbor from liability on an entirely different matter. Instead, this is a situation where the Legislature specifically considered the question here — how much disclosure .should companies with forced labor in their supply chains make to consumers, and how — and reached an answer contrary to the remedy Plaintiffs seek here.
. Nestlé defines "forced labour” as '-‘any form of indentured servitude such as the use of physical punishment, confinement, threats of violence as a method of discipline or control such as retaining employees' identification, passports, work permits or deposits as a condition of employment.” (Supplier Code at 186.)