REESE v. PAYLESS DRUG STORES NORTHWEST INC (1995)

The trial court sustained the general demurrer of respondent Payless Drug Stores Northwest, Inc., and dismissed an action brought by appellant Sharon Reese seeking to compel the store to display signs advising customers that some of its products contained saccharin.   Reese appeals from the judgment contending that (1) her complaint alleges facts sufficient to state a cause of action;  (2) she has standing to sue under the state unfair competition law;  and (3) the action is not preempted by federal law.   We reverse the judgment.

I. FACTS 1

Appellant Sharon Reese filed an action against respondent Payless Drug Stores Northwest, Inc., seeking an injunction against false advertising and unfair business practices.   The complaint alleged that Payless engaged in unfair competition.  (See Bus. & Prof.Code, §§ 17200–17204.)   It alleged that this unfair competition took the form of failure to prominently display a federally required notice stating that stores sell products containing saccharin.  (See 21 U.S.C. § 343(p) [Food, Drug and Cosmetic Act];  21 C.F.R. § 101.11.)   According to the complaint, Payless sells products containing saccharin without disclosing that fact to its customers;  fails to disclose in its point-of-sale advertising the presence of saccharin in some of its products;  does so in violation of federal law;  fails to disclose its violation of federal law;  and engages in unfair business practices.

Reese sought an injunction to preclude Payless from selling products containing saccharin without the notices required by law.   In the alternative, Reese sought to enjoin Payless from selling products containing saccharin without disclosing that it does so in violation of federal law or from advertising products containing saccharin at the point of sale unless it complies with federal law.   Reese also sought restitution to purchasers of products containing saccharin, costs and attorney fees.

Payless demurred to the complaint.   The trial court sustained a general demurrer without leave to amend and the complaint was dismissed.²  Judgment was entered accordingly.

II. DEMURRER

 First, Reese contends that her complaint alleged facts sufficient to state a cause of action for unfair competition.  (See Bus. & Prof.Code, §§ 17200, 17204.) ³  The trial court disagreed, sustaining Payless's general demurrer for failure to state a cause of action.   A demurrer tests the pleading alone, not the evidence or other extrinsic matters.  (Ascherman v. General Reinsurance Corp. (1986) 183 Cal.App.3d 307, 310–311, 228 Cal.Rptr. 1;  see Code Civ.Proc., § 430.30, subd. (a).)  A trial court's ruling sustaining a demurrer is deemed erroneous when a plaintiff has stated a cause of action under any possible legal theory.  (Pollack v. Lytle (1981) 120 Cal.App.3d 931, 939, 175 Cal.Rptr. 81.)

The state unfair competition statute (UCS) defines unfair competition to “mean and include any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising․”  (Bus. & Prof.Code, § 17200.)  “The Supreme Court has repeatedly given the broadest possible definition to the term ‘unfair competition.’ ”  (Consumers Union of United States, Inc. v. Fisher Development, Inc. (1989) 208 Cal.App.3d 1433, 1438, 257 Cal.Rptr. 151.)  “An unlawful business activity includes anything that can properly be called a business practice and that at the same time is forbidden by law.”  (People v. McKale (1979) 25 Cal.3d 626, 632, 159 Cal.Rptr. 811, 602 P.2d 731, internal quotation marks omitted.)

Reese urges that Payless's failure to advertise and post signs about the saccharin content of some of its products in violation of the Federal Food, Drug and Cosmetic Act (FDCA) forms the basis of the UCS action.   Her complaint alleged that Payless violated the FDCA and that this violation constitutes an unfair business practice within the meaning of the UCS.   It also alleges that Payless's conduct constitutes unfair competition within the meaning of that statute.

 We accept the alleged facts as true, as we must when evaluating a demurrer.  (Saliter v. Pierce Brothers Mortuaries (1978) 81 Cal.App.3d 292, 299, 146 Cal.Rptr. 271;  see Hughes v. Western MacArthur Co. (1987) 192 Cal.App.3d 951, 954–955, 237 Cal.Rptr. 738.)   Engaging in the sale of products containing saccharin without also posting a federally required notice constitutes an unlawful business activity—a business practice that is also an act forbidden by law.  (See People v. McKale, supra, 25 Cal.3d at p. 632, 159 Cal.Rptr. 811, 602 P.2d 731.)   Such an unlawful business activity is prohibited by the UCS.  (See Bus. & Prof.Code, § 17200.)   Given the broad reach of “unfair competition” under the UCS, we are satisfied that Reese has stated the elements of a cause of action for unfair competition sufficient to withstand a general demurrer.

III. STANDING

 Regardless of our conclusion that Reese has stated the elements of a cause of action for unfair competition, we cannot find that the trial court erred in dismissing this action unless we also find that Reese had standing to sue under the UCS.   Reese contends that the UCS permits her to file a private cause of action to enforce this statute.   Payless challenged this assertion in its special demurrer, but the trial court did not reach this issue because of its ruling on the general demurrer.  (See fn. 2, ante.)   Determining the question of standing to sue under a statute turns on the construction of the statute and is thus a question of law.  (Dean W. Knight & Sons, Inc. v. State of California ex rel. Dept. of Transportation (1984) 155 Cal.App.3d 300, 305, 202 Cal.Rptr. 44.)   As such, we review this matter anew on appeal.  (See People v. Louis (1986) 42 Cal.3d 969, 985, 232 Cal.Rptr. 110, 728 P.2d 180.)

The UCS provides that enforcement actions may be brought by the state Attorney General, any district attorney, any city attorney, a city prosecutor “or by any person acting for the interests of itself, its members or the general public.”  (Bus. & Prof.Code, § 17204.)   Reese's complaint alleges that she acts on behalf of the general public.   Reese argues that she brought her UCS suit as a person acting “for the interests of the general public․”

 We find that Reese had standing to sue pursuant to the UCS.   Courts have repeatedly permitted persons who were not personally aggrieved to bring suit for injunctive relief under the UCS on behalf of the general public, in order to enforce other statutes under which such parties otherwise lacked standing.  (Consumers Union of United States, Inc. v Fisher Development, Inc., supra, 208 Cal.App.3d at p. 1440, 257 Cal.Rptr. 151 [UCS action to enforce Unruh Act].)  The Supreme Court has held that the lack of express authorization for an official to prosecute a violation of state law did not preclude prosecution of an action pursuant to the UCS.  (People v. McKale, supra, 25 Cal.3d at p. 633, 159 Cal.Rptr. 811, 602 P.2d 731 [district attorney enforcing Mobilehome Parks Act].)  It is irrelevant that the state law allegedly violated did not expressly provide for private enforcement.   When an action to enforce another state law is brought pursuant to the UCS, the operative statute is the UCS, which allows a private action to redress any unfair competition in violation of that statute.  (Committee on Children's Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 210–211, 197 Cal.Rptr. 783, 673 P.2d 660 [enforcement of state Food, Drug and Cosmetics law].)

Payless cites numerous cases to further its argument that there is no private cause of action under the FDCA but, as Consumers Union establishes, that is irrelevant in this UCS action.   In each case Payless cites, private plaintiffs attempted to bring actions under the FDCA in federal court.   Here, Reese is bringing an action in state court under the state UCS.   She has standing to sue under the state UCS to enforce the FDCA.

IV. FEDERAL PREEMPTION

A. Federal Supremacy

 Finally, we must determine whether federal law preempts Reese's cause of action.   The doctrine of preemption arises from the Supremacy Clause of the United States Constitution which provides that federal law “shall be the supreme Law of the Land;  ․ any Thing in the Constitution or Laws of any State to the Contrary notwithstanding.”  (U.S. Const., art. VI, cl. 2.)   State law that conflicts with federal law is “without effect.”  (Maryland v. Louisiana (1981) 451 U.S. 725, 746, 101 S.Ct. 2114, 2129, 68 L.Ed.2d 576;   McCulloch v. Maryland (1819) 17 U.S. (4 Wheat.) 316, 427, 4 L.Ed. 579.)   The central inquiry in a preemption issue is congressional intent.   Consideration of issues arising under the Supremacy Clause starts with the assumption that the historic police powers of the states are not to be superseded by federal act unless that is the clear and manifest purpose of Congress.  (Cipollone v. Liggett Group, Inc. (1992) 505 U.S. 504, –––– [112 S.Ct. 2608, 2617, 120 L.Ed.2d 407] (Cipollone );  Rice v. Santa Fe Elevator Corp. (1947) 331 U.S. 218, 230, 67 S.Ct. 1146, 1152, 91 L.Ed. 1447;  Mangini v. R.J. Reynolds Tobacco Co. (1994) 7 Cal.4th 1057, 1072, 31 Cal.Rptr.2d 358, 875 P.2d 73 (Mangini ).)   This presumption against the preemption of state police power regulations reinforces the appropriateness of a narrow reading of any preemption provision.  (Cipollone, supra, at p. 2608 [112 S.Ct. at p. 2618];  Mangini, supra, at p. 1066, 31 Cal.Rptr.2d 358, 875 P.2d 73.)

 The trial court did not reach the merits of the preemption issue because of its ruling on Payless's general demurrer.  (See fn. 2, ante.)   This issue involves the construction and application of statutes, raising a question of law.  (Estate of Butler (1980) 27 Cal.3d 781, 788, 166 Cal.Rptr. 711, 613 P.2d 1245;  Estate of Madison (1945) 26 Cal.2d 453, 456, 159 P.2d 630.)   We review this issue anew on appeal.  (See People v. Louis, supra, 42 Cal.3d at p. 985, 232 Cal.Rptr. 110, 728 P.2d 180.)

B. Express Preemption

First Reese argues that the FDCA contains no express preemption clause.   Congress's intent may be explicitly stated in statutory language.  (See Pacific Gas & Elec. v. Energy Resources Comm'n (1983) 461 U.S. 190, 203–204, 103 S.Ct. 1713, 1721–22, 75 L.Ed.2d 752.)   Payless asserts that section 337 of the FDCA is intended to preempt Reese from bringing this action.

 We disagree.   An express preemption provision limits the scope of or prohibits any legal requirement beyond that stated in the subject law.  (See, e.g., Cipollone, supra, 505 U.S. at p. –––– [112 S.Ct. at p. 2616] [no statement other than that required by federal law shall be required on any cigarette packaging];  Mangini, supra, 7 Cal.4th at p. 1065, 31 Cal.Rptr.2d 358, 875 P.2d 73 [same as Cipollone ];  Louisiana–Pacific Corp. v. Koppers Co. (1995) 32 Cal.App.4th 599, 604, 38 Cal.Rptr.2d 257 [state regulation of sale or use of pesticides restricted].)  Section 337 does not limit or prohibit state legislation—it specifies those who have standing to sue to enforce the FDCA.  (21 U.S.C. § 337.) ⁴  Section 337 is not an express preemption provision.

C. Implied Preemption

 Reese further contends that her action is not impliedly preempted—that federal law has not so thoroughly occupied the field that her UCS enforcement proceeding is preempted.   A state law is impliedly preempted if federal law so thoroughly occupies a legislative field as to make reasonable the inference that Congress left no room for the states to supplement it.   (Cipollone, supra, 505 U.S. at p. –––– [112 S.Ct. at p. 2617].)  Payless argues that the comprehensive regulatory scheme promulgated pursuant to the FDCA is so pervasive that it impliedly preempts this UCS action.

 We must determine whether federal law so thoroughly occupies the field that it can be inferred that Congress left no room for supplement by the states.  (See Cipollone, supra, 505 U.S. at p. –––– [112 S.Ct. at p. 2617].)  In several cases, the United States Supreme Court has been reluctant to find implied preemption, even in pervasively regulated areas.   Comprehensive regulation by a federal agency is not tantamount to exclusive occupation of the regulated field.  (Hillsborough County v. Automated Medical Labs. (1985) 471 U.S. 707, 717, 105 S.Ct. 2371, 2377, 85 L.Ed.2d 714;  Hurley v. Lederle Lab. Div. of American Cyanamid (5th Cir.1988) 863 F.2d 1173, 1177.)   Even the pervasive and rigid regulation under the Atomic Energy Act has been held insufficient to preempt state tort remedies.  (See Silkwood v. Kerr–McGee Corp. (1984) 464 U.S. 238, 104 S.Ct. 615, 78 L.Ed.2d 443.)   The regulations promulgated under the FDCA (see, e.g., 21 C.F.R. § 101.11) are not nearly as pervasive as those under the Atomic Energy Act.   If state tort remedies are not impliedly preempted by that law, a fortiori, a state UCS action is not impliedly preempted by the FDCA and its less pervasive regulatory scheme.

Payless argues that Animal Legal Defense Fund v. Provimi Veal Corp. (D.Mass.1986) 626 F.Supp. 278 supports a finding of implied preemption.   In Animal Legal Defense Fund, the court found preemption in the field of antibiotic-treated animal feed.  (Id. at p. 286.)   However, that case is distinguishable from Reese's action.   In that case, the regulation of antibiotic drugs operated in conjunction with a comprehensive regulatory scheme implementing the Federal Meat Inspection Act, as amended by the Wholesale Meat Act.  (Id. at p. 285;  see 21 U.S.C. §§ 601–680, 691.)   Only the combination of thorough regulation of both meat production and antibiotic drugs was sufficient to support a finding of implied preemption in the area of antibiotic-treated feed for animals.  (See In Re Tetracycline Cases (W.D.Mo.1989) 747 F.Supp. 543, 548.)   The FDCA regulation is not so pervasive as this.

Our conclusion is consistent with the differing interests served by the two statutes.   The primary objective of the FDCA is the protection of public health.  (Pharmaceutical Mfrs. v. Food & Drug Admin. (1980) 484 F.Supp. 1179, 1183.)   It is not primarily concerned with wrongful business practices or unfair competition.   Reese brings this cause of action under the UCS.   She alleges that Payless engages in unfair competition as defined by the UCS—unlawful, unfair or fraudulent business practice.  (Bus. & Prof.Code, § 17200.)   She also alleges that this unfair business practice gives an unfair advantage to stores that do not post the federally required signs, by making it more likely that unsuspecting consumers will purchase products containing saccharin.   If Payless's alleged violation of the FDCA is found to be unlawful, its business practices fall within the UCS definition of unfair competition.   The two statutes involved in this case—one federal and one state—do not parallel each other.   Under the facts as alleged, the two statutes are intertwined—as occurs whenever a violation of the FDCA forms the basis of a UCS action—but this intertwining does not support the conclusion that the existence of federal regulations to enforce the FDCA implies that an UCS action is federally preempted.   That both statutory violations may be remedied by the same act—here, the posting of a sign—does not support the conclusion that the FDCA impliedly preempts Reese's UCS action.

V. CONCLUSION

The judgment is reversed.

FOOTNOTES

1.   A demurrer assumes that all properly pleaded facts are true.  (See Thompson v. County of Alameda (1980) 27 Cal.3d 741, 746, 167 Cal.Rptr. 70, 614 P.2d 728;  Cutter v. Brownbridge (1986) 183 Cal.App.3d 836, 841, 228 Cal.Rptr. 545.)   It does not admit contentions, deductions or conclusions of law or fact.  (Blank v. Kirwan (1985) 39 Cal.3d 311, 318, 216 Cal.Rptr. 718, 703 P.2d 58;  Building Industry Assn. v. Marin Mun. Water Dist. (1991) 235 Cal.App.3d 1641, 1645, 1 Cal.Rptr.2d 625.)   The facts of this opinion are thus based on the allegation of the complaint.

2.   As the general demurrer was granted, the court did not determine the merits of Payless's special demurrer.

3.   For purposes of this discussion, we assume that other issues—standing and preemption—will not defeat her cause of action.   We consider these issues later in this opinion.  (See pts. III and IV, post.)

4.   21 United States Code section 337(a) provides that “․ all such proceedings for the enforcement, or to restrain violations, of [the Food, Drug and Cosmetic Act] shall be by and in the name of the United States.”

REARDON, Associate Justice.

ANDERSON, P.J., and POCHÉ, J., concur.