ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION TO DISMISS
I. BACKGROUND
Rebecca Yumul filed this putative class action against defendant Smart Balance, Inc. (“Smart Balance”) on February 8, 2010. 1 Yumul’s complaint alleges that she purchased Nucoa margarine, a product manufactured by Smart Balance, repeatedly during the class period, from January 1, 2000 until the present. 2
Yumul alleges that Nucoa contains artificial trans fat, which raises the risk of coronary heart disease by raising the level of “bad” LDL blood cholesterol and lowering the level of “good” HDL blood cholesterol. 3 Yumul also alleges that trans fat causes cancer and type 2 diabetes. 4 Despite the ill effects of trans fat, Smart Balance markets Nucoa as “cholesterol free.” Yumul alleges that while possibly true, this statement is misleading, since consumption of Nucoa in fact raises the level of LDL blood cholesterol. 5 Yumul contends that use on the product packaging of the word “healthy,” (in Spanish, “saludable”) is also misleading because of the negative health effects of trans fat. 6
Yumul asserts that any statute of limitations that might otherwise bar the action must be tolled because Smart Balance “affirmatively concealed] and publically misrepresent[ed] its violations of law” on the product packaging. Yumul alleges that “[a] reasonable consumer would have relied on the deceptive and false claims on the packaging of Nucoa margarine, and through the exercise of reasonable diligence would not have discovered the violations alleged ... because SBI actively and purposefully concealed the truth.” 7
Yumul pleads three causes of action: (1) violation of California’s unfair competition law (“UCL”), California Business & Professions Code §§ 17200 et seq.; (2) violation of California’s false advertising law (“FAL”), California Business & Professions Code §§ 17500 et seq.; and (3) violation of California’s Consumer Legal Remedies Act (“CLRA”), California Civil Code § 1750 et seq.
II. DISCUSSION
A. Legal Standard Governing Motions To Dismiss Under Rule 12(b)(6)
A Rule 12(b)(6) motion tests the legal sufficiency of the claims asserted in a complaint. A Rule 12(b)(6) dismissal is proper only where there is either a “lack of a cognizable legal theory” or “the absence of sufficient facts alleged under a cognizable legal theory.”
Balistreri v. Pacifica Police Department,
The court must accept all factual allegations pleaded in the complaint as true, and construe them and draw all reasonable inferences from them in favor of the non-moving party.
Cahill v. Liberty Mutual Insurance Co.,
To survive a motion to dismiss, plaintiffs complaint must “contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ ... 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,
B. Legal Standard Governing Rule 9(b) Pleading Requirements
Rule 9(b) requires that, “[i]n all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity.” Fed.R.Civ. Proc. 9(b); see also 5A Charles A. Wright
&
Arthur W. Miller, Federal Practice and Procedure § 1297 (2006) (“[Rule 9(b) ] is a special pleading requirement [that is] contrary to the general approach of the ‘short and plain,’ simplified pleading adopted by the federal rules ... ”). “To avoid dismissal for inadequacy under Rule 9(b),” a “complaint [must] ‘state the time, place, and specific content of the false representations as well as the identities of the parties to the misrepresentation.’ ”
Edwards v. Marin Park, Inc.,
“It is well-settled that the Federal Rules of Civil Procedure apply in federal court, ‘irrespective of the source of the subject matter jurisdiction, and irrespective of whether the substantive law at issue is state or federal.’ ”
Kearns v. Ford Motor Co.,
“The CLRA prohibits ‘unfair methods of competition and unfair or deceptive acts or practices undertaken by any person in a transaction intended to result or which results in the sale ... of goods or services to any consumer.’ Cal. Civ. Code § 1770. The UCL prohibits ‘unlawful, unfair or fraudulent business aet[s] or praetice[s]’ and ‘unfair, deceptive, untrue or misleading advertising.’ Cal. Bus. & Prof.Code § 17200. Rule 9(b)’s particularity requirement applies to these state-law causes of action. Vess,317 F.3d at 1102-05 . In fact, we have specifically ruled that Rule 9(b)’s heightened pleading standards apply to claims for violations of the CLRA and UCL.” Kearns,567 F.3d at 1125 (citing Vess,317 F.3d at 1102-05 ).
The Ninth Circuit conceded that “fraud [was] not a necessary element of a claim under the CLRA and UCL,” but noted that when a plaintiff alleges “fraudulent conduct and reifies] entirely on that course of conduct as the basis of that claim,” then “the claim [can be] said to be ‘grounded in fraud’ or to ‘sound in fraud,’ and the pleading ... as a whole must satisfy the particularity requirement of Rule 9(b).”
Id.
District courts in California have consistently held in addition that claims under California’s FAL are grounded in fraud. See,
Yumul does not dispute that Rule 9(b) governs the pleading of her claims, as each alleges false advertising and false representations regarding the properties of the Nucoa product.
C. Whether Plaintiffs First, Second, and Third Claims Meet Rule 9(b)’s Pleading Requirements
Smart Balance’s motion emphasizes the Ninth Circuit’s mandate that, to satisfy the pleading requirements of Rule 9(b), a complaint must plead “ ‘the who, what, when, where, and how^ of the misconduct charged,”
Vess,
In
Kearns,
the Ninth Circuit applied these standards to CLRA and UCL claims alleging fraud in the sale of certified pre-owned (“CPO”) vehicles. Ford represented that it put the vehicles through a rigorous inspection process in order to certify that their safety, reliability, and road-worthiness surpassed those of non-certified used vehicles.
Kearns,
“Kearns fails to allege in any of his complaints the particular circumstances surrounding such representations. Nowhere in the [complaint] does Kearns specify what the television advertisements or other sales material specifically stated. Nor [does] Kearns specify when he was exposed to them or which ones he found material. Kearns also fail[s] to specify which sales material he relied upon in making his decision to buy a CPO vehicle. Kearns does allege that he was specifically told ‘CPO vehicles were the best used vehicles available as they were individually hand-picked and rigorously inspected used vehicles with a Ford-backed extended warranty.’ Kearns does not, however, specify who made this statement or when this statement was made. Kearns fail[s] to articulate the who, what, when, where, and how of the misconduct alleged. The pleading of these neutral facts fails to give Ford the opportunity to respond to the alleged misconduct. Accordingly, these pleadings do not satisfy the requirement of Rule 9(b) that ‘a party must state with particularity the circumstances constituting fraud.... ’ Because Kearns failed to plead his averments of fraud with particularity, we affirm the district court’s dismissal of his [complaint].” Id. at 1126.
Second, although the plaintiff in Kearns identified a particular dealership at which he purchased his vehicle, he also identified three types of media through which Ford communicated the allegedly false representations, i.e., television advertisements, sales materials in the dealership, and oral representations by sales personnel. As a consequence, the Ninth Circuit held that he had not sufficiently alleged how the misrepresentations were communicated to him so as to give Ford an adequate opportunity to respond. Here, Yumul has failed to allege at what retailer or retailers in the state of California she purchased Nucoa. 9 Moreover, because the Nucoa packaging may have changed over the course of ten and a half years, the complaint does not adequately identify the packaging that Yumul saw and on which she relied. Applying the standard set forth in Kearns, therefore, the court concludes that Yumul has not alleged with particularity when, where, and how the alleged misrepresentations were communicated. 10
Consequently, defendant’s motion to dismiss each plaintiffs three causes of action
D. Whether Plaintiffs Complaint Should Be Dismissed with Prejudice Because the Packaging Is Not Misleading
California courts have held that reasonable reliance is not an element of claims under the UCL, FAL, and CLRA.
In re Tobacco II Cases,
Although CLRA claims need not plead reasonable or actual reliance, a CLRA plaintiff must allege that consumers are likely to be deceived under a standard “sometimes called the ‘reasonable consumer’ standard.”
Buckland,
The reasonable consumer standard is similar to the reasonable reliance element of common law fraud. Although reasonableness can, in appropriate circumstances, be decided as a question of law, “California courts ... have recognized that whether a business practice is deceptive will usually be a question of fact not appropriate for decision on [a motion to dismiss].”
Williams v. Gerber Products Co.,
The conclusion that a complaint should be dismissed because the reasonable consumer standard could not be met as a matter of law have occasionally been upheld by the Ninth Circuit. In
Freeman,
for instance, the Ninth Circuit affirmed the dismissal of UCL, FAL, and CLRA claims challenging a mailer that suggested plaintiff had won a million dollar sweepstakes. The district court had taken judicial notice of the mailer in question, and the Ninth Circuit relied on the fact that the mailer explicitly stated multiple times that plaintiff would only win the prize if he had the winning sweepstakes number. In
Freeman,
therefore, it was not necessary to evaluate additional evidence to determine whether the advertising was deceptive, since the advertisement itself made it impossible for plaintiff to prove that a reasonable consumer was likely to have been deceived.
Freeman,
A handful of recent district court decisions addressing the reasonable consumer standard in the context of allegedly deceptive packaging also warrant analysis. In
Sugawara v. Pepsico, Inc.,
No. 2:08-cv-01335-MCE-JFM,
The court noted that, in general, whether a business practice is deceptive will usually be a question of fact not appropriate for decision on a motion to dismiss.
Id.
at *3 (quoting
Brockey v. Moore,
Similarly, in
McKinnis v. Kellogg USA,
No. CV 07-2611 ABC (RCx),
“Even taking Plaintiffs’ allegations as true, as the Court is required to do, Plaintiffs have failed to state any claim. First, the product’s name is spelled FR-O-O-T, and while this might be a fanciful take on the word F-R-U-I-T, it appears in the trademarked name of the cereal, not on its own or as a description of the actual ingredients of the cereal itself. No reasonable consumer would view the trademark ‘FROOT LOOPS’ name as describing the ingredients of the cereal. Second, Plaintiffs’ allegation that the cereal pieces themselves resemble fruit is not rational, let alone reasonable. The cereal pieces are brightly colored rings, which in no way resemble any currently known fruit. As a matter of law, no reasonable consumer would view them as depicting any fruit. Third, the small ‘vignettes’ of fruit surrounding the ‘NATURAL FRUIT FLAVORS’ banner could not mislead the reasonable consumer. For one, the depiction of fruit on a product label is not a specific affirmation that a product[] contains any fruit at all. FDA regulations permit illustrations of fruit on product labels to indicate that product’s ‘characterizing flavor,’ even where the product contains no ingredients derived from the depicted fruit. See 21 C.F.R. § 101.22(i)(i) (i-iii). Froot Loops contains the ‘NATURAL FRUIT FLAVORS’ of lime, orange, lemon, cherry, raspberry, and blueberry, as disclosed in the ingredients panel, rendering any depiction of fruit ‘vignettes’ on the box entirely accurate and permissible under FDA regulations.” Id. at *4. 11
In arguing that no reasonable consumer could be misled by its packaging as a matter of law, Smart Balance relies principally on
McKinniss v. Sunny Delight Beverages Co.,
No. CV 07-02034-RGK (JCx),
Based on his examination of the label as a whole, Judge Klausner found that no reasonable consumer could have concluded that Sunny Delight “contain[ed] significant quantities of fruit or fruit juice, particularly when the label identified] the product as fruit ‘flavored’ and indicated] the exact fruit content of each product.” Id. at *4. In particular, Judge Klausner noted that federally mandated nutritional labels “have long been required on food products and are familiar to almost every reasonable consumer,” and that “[w]here a consumer can readily and accurately determine the composition and nutritional value of a product (here, by reading the front and back of the label), no reasonable consumer would be misled or deceived by depictions of fruit on a label.” Id.
Smart Balance notes that the front of the Nucoa package states that the product has “NO CHOLESTEROL” while the back of the package states that
“[o]ur special formula has been designed with you and your family in mind. Nucoa’s Real Margarine is great for cooking and baking. Because it’s Lactose Free and Cholesterol Free, it’s the healthy and delicious way to make your favorite dishes come to life”
It asserts that plaintiff has not articulated why a reasonable consumer, reading this information, would conclude that the product contains no trans fat. Smart Balance also notes that the nutritional label states: “Trans Fat/Grasas Trans 1.5g.”
Smart Balance’s last point runs afoul of the Ninth Circuit’s decision in Williams. There, defendant advanced an argument identical to the one that Sunny Delight made before Judge Klausner and that Smart Balance makes here — i.e., that the federally regulated nutritional label revealed the truth of the product’s contents. The court stated:
“We disagree with the district court that reasonable consumers should be expected to look beyond misleading representations on the front of the box to discover the truth from the ingredient list in small print on the side of the box. The ingredient list on the side of the box appears to comply with FDA regulations and certainly serves some purpose. We do not think that the FDA requires an ingredient list so that manufacturers can mislead consumers and then rely on the ingredient list to correct those misinterpretations and provide a shield for liability for the deception. Instead, reasonable consumers expect that the ingredient list contains more detailed information about the product that confirms other representations on the packaging.” Williams,552 F.3d at 939 . 12
In a footnote, the Ninth Circuit noted that, “standing on its own,” the statement that the product was “nutritious” “could arguably constitute puffery, since nutritiousness can be difficult to measure concretely.”
Id.
at n. 3. As a result, it emphasized that it relied on this statement
Williams
stands for the proposition that where product packaging contains an affirmative misrepresentation, the manufacturer cannot rely on the small-print nutritional label to contradict and cure that misrepresentation. It is not clear whether or not a statement that a product contains no cholesterol would cause a reasonable consumer to conclude that the product does not increase LDL blood cholesterol levels.
13
Viewing the facts in the light most favorable to plaintiff, however, the court cannot find that this case presents “the rare situation in which granting a motion to dismiss is appropriate.”
Williams,
For this reason, although the court dismisses Yumul’s complaint without prejudice for failure to plead fraud with particu
E. Whether Plaintiffs Complaint Should Be Dismissed Because It Is Based on Conduct Outside the Applicable Limitations Period
Yumul alleges a class period commencing January 1, 2000 and continuing to the present. CLRA and FAL claims are subject to a three-year statute of limitations and UCL claims are subject to a four-year statute of limitations. Cal. Civ.Code § 1783 (setting a three-year statute of limitations for actions under the CLRA); Cal. Bus. & Prof.Code § 17208 (setting a four-year statute of limitations for actions under the UCL); Cal. C.C.P. § 338(a) (providing a default three-year statute of limitations for actions created by statute);
County of Fresno v. Lehman,
“In a federal diversity action based on alleged violations of state law, the state statute of limitations controls.”
Adams v. I-Flow Corp.,
No. CV09-09550 R(SSx),
“SBI has tolled any applicable statute of limitations by affirmatively concealing and publically misrepresenting its violations of law [on the packaging itself]. A reasonable consumer would have relied on the deceptive and false claims on the packaging of Nucoa margarine, and through the exercise of reasonable diligence would not have discovered the violations alleged herein because SBI actively and purposefully concealed the truth.” 15
Smart Balance argues that this allegation is factually insufficient to support tolling of the statute of limitations. It asserts that Yumul must allege sufficient facts to invoke either the delayed discovery or fraudulent concealment rules.
“In order to invoke [the delayed discovery exception] to the statute of limitations, the plaintiff must specifically plead facts which show (1) the time and manner of discovery and (2) the inability to have made earlier discovery despite reasonable diligence.”
In re Conseco Insurance Co. Annuity Marketing & Sales Practices Litigation,
No. C-05-04726 RMW,
Yumul has not alleged the time and manner of her discovery of the facts giving rise to her claims, nor does she argue that the delayed discovery doctrine provides a basis for tolling the statute of limitations in her opposition brief. The court therefore concludes that the complaint does not plead sufficient facts to invoke the delayed discovery rule. 16
It appears, in fact, that Yumul seeks to toll the statute of limitations under the doctrine of fraudulent concealment. “[W]hen the defendant is guilty of fraudulent concealment of the cause of action the statute [of limitations] is deemed not to become operative until the aggrieved party discovers the existence of the cause of action.”
Unruh-Haxton v. Regents of University of California,
“Absent a fiduciary relationship, nondisclosure is not fraudulent eoncealment—affirmative deceptive conduct is required.”
Long v. Walt Disney Co.,
“When a plaintiff relies on a theory of fraudulent concealment ... to save a cause of action that otherwise appears on its face to be time-barred, he or she must specifically plead facts which, if proved, would support the theory.”
Mills v. Forestex Co.,
“Plaintiffs’ [complaint] fails to allege when the fraud was discovered by class members who have time-barred claims, the circumstances under which it was discovered,, and that they were not at fault for failing to discover it or had no actual or presumptive knowledge of facts sufficient to put them on inquiry. Plaintiffs therefore fail to allege sufficient facts to invoke tolling based on fraudulent concealment.” Keilholtz,2009 WL 2905960 at *5. 17
As a consequence, Judge Wilken held that the class plaintiffs had failed to allege sufficient facts to survive a motion to dismiss and that any claims arising outside the relevant statute of limitations had to be dismissed. 18
The Ninth Circuit has previously held that a claim that fraudulent concealment tolls an applicable state statute of limitations must be pled with particularity under Rule 9(b) of the Federal Rules of
Just as plaintiff failed adequately to plead the substance of her UCL, CLRA, and FAL claims under Rule 9(b), she also failed adequately to allege fraudulent concealment sufficient to establish tolling. Plaintiff has not pled the who, what, when, where, and how of the alleged fraudulent concealment. Furthermore, as in Judge Wilken’s case, Yumul has failed to allege when the fraud was discovered, the circumstances under which it was discovered, the circumstances indicating that she was not at fault for failing to discover it earlier, and the fact that she had no actual or constructive knowledge of facts sufficient to put her on inquiry.
Because Yumul has failed to plead facts sufficient to establish tolling under the delayed discovery rule or the fraudulent concealment rule, and further because she has not stated with particularity the basis on which she contends that SBI fraudulently concealed the claims, the court dismisses Yumul’s complaint to the extent it alleges conduct occurring outside the relevant statutes of limitations. Yumul may re-plead her tolling theory/theories if she can truthfully allege facts that would support a finding of delayed discovery of the CLRA and FAL claims, or if she can truthfully and with particularity allege facts that would support a finding that SBI fraudulently concealed the existence of the claims.
III. CONCLUSION
For the reasons stated, the court grants defendant’s motion to dismiss plaintiffs first, second, and third causes of action with leave to amend for failure to allege with particularity the facts on which the claims are based. Similarly, the court grants defendant’s motion to dismiss the
Notes
. Complaint for Violations of Unfair Competition Law, False Advertising Law, and Consumer Legal Remedies Act ("Complaint"), Docket No. 1 (Feb. 8, 2010).
. Id. A 3.
. Id., ¶¶ 4-5.
. Id., V 6. Much of the complaint contains a recitation of scientific research establishing that trans fat causes adverse physical health effects. {Id., ¶¶ 16-57.)
. Id., ¶ 8. See also id., ¶ 60 ("SBI's 'cholesterol free' claims further insinuate that consumption of Nucoa margarine is useful for the maintenance of healthy serum cholesterol levels when in fact the consumption of SBI’s trans-i&t laden Nucoa margarine negatively impacts serum cholesterol levels. SBI thus deceives consumers concerned about cardiovascular health into purchasing a product harmful to their hearts”).
. Id., ¶ 62.
. Id., ¶ 74.
. The complaint contains a partial depiction of Nucoa packaging between paragraphs 60 and 61. The pleading contains no allegations, however, stating that the packaging depicted is packaging Yumul saw or relied on in purchasing the product. Nor does it allege when, during the past decade, Smart Balance used the packaging depicted.
. California is the third largest state in terms of area in the United States; it spans 163,696 square miles. Alleging only that the fraud occurred in California does not meet the Ninth Circuit's requirement that plaintiff identify "where” the fraud occurred.
. In
Marolda
v.
Symantec Corp.,
"In this case, to plead the circumstances of omission with specificity, plaintiff must describe the content of the omission and where the omitted information should or could have been revealed, as well as provide representative samples of advertisements, offers, or other representations that plaintiff relied on to make her purchase and that failed to include the allegedly omitted information. Plaintiff's complaint should also include samples of materials documenting both her 2006 and 2007 purchases that leave out the essential information.” Id. at 1001.
See also id. at 1005 ("[P]laintiff must first identify with some specificity what the allegedly false representations contained, who made them, where, and whether plaintiff had even seen them”). The plaintiff in Marolda alleged a precise date on which the product was purchased; as a result, omission of this information was not a subject on which Judge Patel touched.
. The court in
Videtto v. Kellogg USA,
No. 2:08-cv-01324-MCE-DAD,
. There are some distinctions between Judge Klausner's decision in
McKinniss
and that in
Williams.
In
Williams,
the Ninth Circuit emphasized that the product was called "Fruit Juice Snacks," and that the package represented that product was made with "fruit juice and other all natural ingredients.”
Williams,
. At oral argument, defense counsel asserted that in order for plaintiff to succeed, she would have to show a link between the statement on the package that the product was “cholesterol free” and the statement that it contained "no trans fat.” This would be one way for plaintiff to prevail on her claims. Plaintiff could also, however, show that a reasonable consumer would have read the reference to "cholesterol free” in the context of the statement on the back of the packaging that linked the fact that the product was cholesterol free to its being "healthy,” and have concluded that the product would not raise cholesterol levels. The court cannot conclude based on the packaging alone that the latter reading is so unreasonable that the case can be resolved on a motion to dismiss.
. At the hearing, defense counsel attempted to distinguish
Williams,
asserting that the court there was concerned with a class of consumers who were "especially susceptible” to false advertising, i.e., children. This characterization is not supported by the text of the opinion. At no point did the Ninth Circuit denominate children the relevant consumer group; in fact, it defined the class of consumers involved as the
"parents
of small children.”
Williams,
. This analysis applies only to Yumul’s CLRA and FAL claims. UCL claims "are subject to a four-year statute of limitations which begfins] to run on the date the cause of action accrued, not on the date of discovery.”
Karl Storz Endoscopy America, Inc. v. Surgical Technologies, Inc.,
. Complaint, ¶ 71.
. In
Keilholtz,
plaintiffs sought to represent a class of person who purchased and installed gas fireplaces that defendants represented were "safe, of mercantile quality, and fit for their intended and reasonably foreseeable uses, and [that they had] sufficient protections and warnings regarding potential dangers and hazards [of the type] reasonable consumers would expect and assume to be provided in order to make a decision whether to purchase a home installed with [the fireplace] or purchase [a fireplace].”
Keilholtz,
. Much of Yumul’s opposition discusses a dichotomy between self-concealing fraud and affirmative concealment. This distinction is endorsed by federal courts outside this circuit, but has not been adopted by any California state court. See, e.g.,
Hobson v. Wilson,