REYES v. JUST BORN INC (2024)

ORDER DENYING DEFENDANT JUST BORN, INC.’S MOTION TO DISMISS PLAINTIFF'S COMPLAINT [8]

I. INTRODUCTION

This case arises out of the purchase by Plaintiff (a consumer tester) of a box of Defendant's “Hot Tamales” candy. The principal allegation underlying this action—often referred to colloquially as “slack fill” litigation—is that the labeling and packaging of the well-known brand falsely represents the amount of candy contained in the package and therefore dupes consumers into purchasing the item without realizing the package is significantly underfilled. Plaintiff brings claims for common law fraud and violation of California's Consumer Legal Remedies Act.

Pending before the Court is Defendant's Motion to Dismiss Plaintiff's Complaint, (“Motion”) [Dkt. No. 8], which the Court deemed appropriate for decision without oral argument. See Fed. R. Civ. P. 78; Local Rule 7-15. Defendant's factual and legal response is that a reasonable consumer “cannot be misled” because she can calculate (based on the number of servings disclosed on the packaging) the total amount of candy in the box. Defendant further argues that the California Fair Packaging and Labeling Act (CFPLA) creates a “safe harbor” for this conduct because the consumer product includes an image of the “actual size” of an individual piece of candy.

For the reasons discussed more fully below, Defendant's Motion is denied. The Court finds almost absurd the assumption that even a math major could rapidly (in a candy aisle of a supermarket) multiply the number of servings to come up with a total candy count and then estimate the three-dimensional volume of each piece based on an image to calculate the total ratio of candy volume to box volume. The fact remains that the box is almost half empty. Barring a consumer's exceptional skill in the party game of guess-how-many-marbles-are-in-the-bowl, it is difficult to imagine how a consumer could generate an accurate estimate of how much candy she is buying. At a minimum, the Court is not prepared at this pleading stage to find that no reasonable consumer could be deceived. And the CFPLA is inoperative here because its terms are not coextensive with federal regulations. There is no safe harbor for Plaintiff's state law claims.

II. BACKGROUND

Defendant Just Born, Inc. manufactures and sells a popular line of candy called “Hot Tamales.” Complaint ¶ 1. Plaintiff is a consumer law tester, id. ¶ 17, who purchased the product within the statute of limitations period. Plaintiff alleges that, in a bid to increase profits, Defendant intentionally deceives customers with oversized packaging relative to the volume of candy inside the box. Id. ¶ 1.

More specifically, Plaintiff contends that Hot Tamales boxes are only 60% filled with candy. Id. ¶ 3. The 40% of the box not filled with candy is called “slack fill.” Id. ¶¶ 3, 11. Because, according to Plaintiff, the slack fill in the Hot Tamales box serves no functional or lawful purpose, it is “non-functional slack fill” that harms consumers and runs afoul of California law. Id. ¶¶ 20-29. Purchasers of Hot Tamales are unable to see the slack fill due to the opaque packaging and purportedly rely instead on the size of the package to accurately represent the amount of candy they are purchasing. Id. ¶¶ 12, 14. According to Plaintiff, the information that Defendant provides about the quantity of product on the front and back labels of the Product does not enable reasonable consumers to form any meaningful understanding about how to gauge the quantity of contents of the Product as compared to the size of the package itself. Id. ¶ 15.

III. LEGAL STANDARDS

Just Born brings this Motion pursuant to Federal Rule of Civil Procedure 12(b)(6) (“Rule 12(b)(6)”). Rule 12(b)(6) allows a party to seek to dismiss a complaint for “failure to state a claim upon which relief can be granted.” “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ ” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). “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, 556 U.S. at 678, 129 S.Ct. 1937.

Ultimately, a court may not dismiss a complaint in which the plaintiff has alleged “enough facts to state a claim to relief that is plausible on its face.” Iqbal, 556 U.S. at 697, 129 S.Ct. 1937 (quoting Twombly, 550 U.S. at 570, 127 S.Ct. 1955). Only where a plaintiff fails to “nudge[ ] [his or her] claims ․ across the line from conceivable to plausible,” is the complaint properly dismissed. Iqbal, 556 U.S. at 680, 129 S.Ct. 1937. While the plausibility requirement is not akin to a probability requirement, it demands more than “a sheer possibility that a defendant has acted unlawfully.” Id. at 678, 129 S.Ct. 1937. The determination of whether a complaint satisfies the plausibility standard is a “context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Id. at 679, 129 S.Ct. 1937.

IV. DISCUSSION

Defendant challenges Plaintiff's Complaint on several grounds. The Court addresses each in turn, and finds that Plaintiff has stated a plausible claim for relief under both her CLRA and fraud causes of action.

A. Injunctive Relief

At the outset, the Court must determine whether Plaintiff has shown she has Article III standing for the relief she seeks. Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC) Inc., 528 U.S. 167, 185, 120 S.Ct. 693, 145 L.Ed.2d 610 (2000). Plaintiff seeks injunctive relief under her CLRA claim. See Complaint ¶ 47. “For injunctive relief, which is a prospective remedy, the threat of injury must be ‘actual and imminent, not conjectural or hypothetical.’ ” Davidson v. Kimberly-Clark Corp., 889 F.3d 956, 967 (9th Cir. 2018) (citation omitted). Injunctive relief based on past conduct is appropriate where there is “a sufficient likelihood” of future harm from the same conduct. L.A. v. Lyons, 461 U.S. 95, 111, 103 S.Ct. 1660, 75 L.Ed.2d 675 (1983).

In the context of deceptive packaging, the Ninth Circuit has explained standing to seek injunctive relief turns on whether the plaintiff is able to determine whether the package remains deceptive. Davidson, 889 F.3d at 969-71 (finding the plaintiff had standing to seek injunctive relief because plaintiff had no way of knowing whether defendant corrected the misrepresentation in the future until purchasing and using the product). Defendant contends that Plaintiff is now on notice that there is significant slack-fill in the box and knows how to read the label to determine the amount of product she is purchasing. Motion at 16-17.

This argument assumes too much—the most problematic part being the assumption that Plaintiff will recall the exact details of the label and the size and feel of the box during handling such that she could accurately compare the allegedly deceptive box against any new Hot Tamales box she encounters in the future. The Court finds that Plaintiff has plausibly alleged she is unable, without first purchasing and opening the product, to determine whether Defendant has cured the alleged violation and thus has standing to seek injunctive relief.¹

Defendant also protests that Plaintiff fails to allege an inadequate remedy at law, which is required to seek equitable relief. Sonner v. Premier Nutrition Corp., 971 F.3d 834, 843-44 (9th Cir. 2020) (holding Federal courts sitting in diversity may only award equitable relief when there is no adequate remedy at law). Not so. The Court finds Plaintiff has adequately alleged at this early stage that monetary damages compensate her only for past harm. Complaint ¶ 4. That is enough. Zeiger v. WellPet LLC, 526 F. Supp. 3d 652, 687 (N.D. Cal. 2021) (“[M]onetary damages for past harm are an inadequate remedy for the future harm that an injunction under California consumer protection law is aimed at. [Plaintiff's] remedy at law, damages, is retrospective. An injunction is prospective. Damages would compensate [Plaintiff] for his past purchases. An injunction would ensure that he (and other consumers) can rely on [Defendant's] representations in the future.”).

The Court finds Plaintiff has standing to seek the injunctive relief requested.

B. CLRA

To state a claim for deceptive packaging under the CLRA, Plaintiff must allege that a “reasonable consumer” is likely to be deceived. Williams v. Gerber Prods. Co., 552 F.3d 934, 938 (9th Cir. 2008). Plaintiff satisfies the reasonable consumer test if she shows “a probability that a significant portion of the general consuming public or of targeted consumers, acting reasonably in the circumstances, could be misled” by the product's packaging. Ebner v. Fresh, 838 F.3d 958, 965 (9th Cir. 2016) (internal quotation marks and citation omitted). Typically, “whether a business practice is deceptive will usually be a question of fact not appropriate for decision on [a motion to dismiss],” but dismissal is appropriate where the packaging “itself made it impossible for the plaintiff to prove that a reasonable consumer was likely to be deceived.” Williams, 552 F.3d at 938-39.

Defendant argues Plaintiff's claims fail as a matter of law because no reasonable consumer would be deceived by the Hot Tamales packaging and expect the box to contain more candy. Motion at 9-12. Defendant cites to cases finding that a reasonable consumer cannot be misled where, as here,² the product packing accurately discloses the product's net weight, the number of pieces per serving, and the approximate number of servings per container. See Buso v. ACH Food Companies, Inc., 445 F. Supp. 3d 1033, 1038 (S.D. Cal. 2020) (“[I]t is unreasonable for a customer to be deceived as to the amount of product contained in the cornbread mix box [where the] package discloses the product's net weight and the approximate number of servings per container.”); Bush v. Mondelez Int'l, Inc., No. 16-cv-02460-RS, 2016 WL 7324990 (N.D. Cal. Dec. 16, 2016) (finding no reasonable consumer would be deceived because the packaging disclosed the net weight and approximate number of cookies in each container). But courts come out both ways on these facts. See, e.g., Gordon v. Tootsie Roll Indus., Inc., No. CV 17-2664-DSF (MRWx), 2017 WL 8292777, at *4 (C.D. Cal. July 31, 2017) (“[A] reasonable consumer purchasing candy may not necessarily be aware of how the weight of product or number of pieces correlates to the physical amount of product.”); Escobar v. Just Born Inc., No. CV 17-01826 BRO (PJWx), 2017 WL 5125740, at *9 (C.D. Cal. June 12, 2017) (“In the Court's view, a reasonable consumer is not necessarily aware of a product's weight or volume and how that weight or volume correlates to the product's size.”); Padilla v. Whitewave Foods Co., No. LA CV 18-09327-JAK (JCx), 2019 WL 4640399, at *11 (C.D. Cal. July 26, 2019) (finding that there was “not a sufficient basis to decide, as a matter of law, that reasonable consumers would not be misled by the Products’ packaging” even where the packaging listed the “weight and approximate number of servings in each container”).

In reviewing this emerging body of law, the divergence in outcome appears largely driven by highly fact-specific analysis, which is exactly why the Court finds this question inappropriate for decision here. That a product's label enables consumers to calculate the number of pieces in a package does not show, as a matter of law, that no reasonable consumers could be deceived.

Nor does the inclusion of an “actual size” depiction of each piece of candy materially change the calculus at this stage. Just like labels that allow a reasonable consumer to calculate the volume of each serving and number of servings in a package, the usefulness of such information to a consumer changes drastically by context. See Barrett v. Optimum Nutrition, No. CV 21-4398-DMG (SKX), 2022 WL 2035959, at *3 (C.D. Cal. Jan. 12, 2022) (“While ‘one 8-in square loaf of cornbread’ leaves no room for confusion, ‘29 scoops’ [of protein powder] does.”). In many circumstances—for example, where candy pieces are unusually small or oddly shaped or where a package is quite bulky—it may be more rational for a consumer to rely on the size of the container in assessing their purchase than their own ability to imagine the volume of 12.5 servings of 17 pieces of candy. Whitewave Foods Co., 2019 WL 4640399, at *11-12 (“Although the packaging lists the weight and approximate number of servings in each container, the containers’ size may provide consumers with a more salient means by which to assess the quantity of product they are purchasing and its value.”). This is true even where there is an image depicting the size of each piece of candy on the label.

Defendant further asserts that no reasonable consumers would expect the Product to be full because they inevitably feel the candy moving in the packaging when handling the product. Motion at 12; see Buso, 445 F. Supp. 3d at 1039 (finding “a reasonable consumer would not expect a package container to be full or even nearly full when they can feel the product in the packaging”). The Court is unconvinced that this settles the question as a matter of law because “while consumers might be aware of some empty space in the container when they handle the Product, they cannot be expected to accurately determine the amount of empty space through the Product's rigid, opaque container.” See Barrett, 2022 WL 2035959, at *3.

Defendant also argues that Plaintiff's claims are barred by the “safe harbor” provisions of the federal regulations at 21 C.F.R. 100.100 and the California Fair Packaging and Labeling Act (CFPLA), including the exemptions for:

 i. slack fill caused by unavoidable product settling during shipping and handling, 21 C.F.R. 100.100(a)(3), Cal. Bus. & Prof. Code § 12606.2(c)(3);

 ii. slack fill needed for the package to perform a specific function, 21 C.F.R. 100.100(a)(3), Cal. Bus. & Prof. Code § 12606.2(c)(4); and

iii. packages on which the actual size of the product is clearly and conspicuously depicted accompanied by a clear and conspicuous disclosure that the depiction is the “actual size,” Cal. Bus. & Prof. Code § 12606.2(c)(7)(B).

To start, Plaintiff has plausibly alleged that the product settling and specific function exemptions do not apply factually here. Complaint ¶ 24 (“Given the Product's density, shape, and composition, any settling occurs immediately at the point of fill. No measurable product settling occurs during subsequent shipping and handling.”); id. ¶¶ 3, 25 (alleging 40% slack fill space and that packages neither perform a function that is inherent to the nature of the food nor communicate a specific function to consumers). Despite Defendant's arguments to the contrary, the Push Here to Open slot and minimal product settling cannot explain as a matter of law the 40% slack fill in the Hot Tamales box. See Reid v. Johnson & Johnson, 780 F.3d 952, 958 (9th Cir. 2015) (“[T]he reasonable consumer standard ․ raises questions of fact that are appropriate for resolution on a motion to dismiss only in ‘rare situation[s].’ ”).

Lastly, the exemption for “actual size” depictions upon which Defendant relies is non-operative. By its own language, the CFPLA makes any of its provisions inapplicable to the extent that they impose requirements that differ from those in federal law.

If the requirements of this section do not impose the same requirements as are imposed by Section 403(d) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. Sec. 343(d)), or any regulation promulgated pursuant thereto, then this section is not operative to the extent that it is not identical to the federal requirements, and for this purpose those federal requirements are incorporated into this section and shall apply as if they were set forth in this section.

Cal. Bus. & Prof. Code § 12606.2(f). Neither the Federal Food, Drug, and Cosmetic Act (FDCA) nor the corresponding federal regulations exempt containers depicting the actual size of the product on the packaging from federal requirements. Thus, the actual size exemption in the CLRA is not identical to the federal requirements and is therefore not operative. Stewart v. Kodiak Cakes, LLC, 537 F. Supp. 3d 1103, 1154-56 (S.D. Cal. 2021) (finding the “mode of commerce” exclusion added in 2018 was not operative because it was a “requirement” not identical to federal requirements).

The Court therefore denies the Motion with respect to Plaintiff's CLRA ³ claim.

C. Fraud

In California, a plaintiff alleging fraud must establish the following elements: “(a) misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of falsity (or ‘scienter’); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage.” Lovejoy v. AT&T Corp., 92 Cal. App. 4th 85, 93, 92 Cal. App. 4th 1016F, 93, 111 Cal.Rptr.2d 711 (2001). Plaintiff's fraud allegations are of course governed by Rule 9(b). “Rule 9(b) demands that, when averments of fraud are made, the circumstances constituting the alleged fraud be specific enough to give defendants notice of the particular misconduct so that they can defend against the charge[.]” Vess v. Ciba–Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003) (internal citations omitted). Under Rule 9(b), fraud allegations must include the “time, place, and specific content of the false representations as well as the identities of the parties to the misrepresentations.” Swartz v. KPMG LLP, 476 F.3d 756, 764 (9th Cir. 2007) (citing Edwards v. Marin Park, Inc., 356 F.3d 1058, 1066 (9th Cir. 2004)). In other words, “[a]verments of fraud must be accompanied by ‘the who, what, when, where, and how’ of the misconduct charged.” Vess, 317 F.3d at 1106. Such averments must be specific enough to “give defendants notice of the particular misconduct ․ so that they can defend against the charge and not just deny that they have done anything wrong.” Id. (quoting Bly–Magee v. California, 236 F.3d 1014, 1019 (9th Cir. 2001)).

Plaintiff has alleged a misrepresentation—namely, that Defendant falsely represents the quantity of product in the Hot Tamales opaque package. Complaint ¶ 12; see Stewart, 537 F. Supp. 3d at 1144 (agreeing that “exaggerated box size is a representation” in the context of Plaintiff's CLRA claim). She has alleged that “Defendant knows that the packaging is half empty, knows that consumers will purchase the product based upon the belief that it is full, and knows that it is deceiving consumers.” Complaint ¶ 35; United States v. United Healthcare Ins. Co., 848 F.3d 1161, 1180 (9th Cir. 2016) (“Knowledge ․ may be pled generally.”). Plaintiff has also adequately pled that Defendant had an intent to defraud. See Complaint ¶ 36 (“Defendant intends for consumers to purchase the product under the mistaken belief that the package is full so that Defendant can capture sales it would not have otherwise received and can increase profits.”); id. ¶ 10 (“Defendant chose a certain size package for its Product to convey to consumers that they are receiving an amount of product commensurate with the size of the package.”). And Plaintiff alleged she was “damaged by paying more for a product than Plaintiff would have paid and receiving less product than Plaintiff expected to receive.” Id. ¶ 38.

Defendant argues that, as a consumer rights tester, Plaintiff's motives for purchasing the Hot Tamales nullify any justifiable reliance on the size of the package in making her purchasing decision. Motion at 14-15. In other words, because Plaintiff has filed other slack fill suits in the past, she cannot credibly claim to have expected to open the Hot Tamales box and find a full container of candy. Id. The Court rejects this reasoning and finds that Plaintiff's reliance on the size of the container was justified. “[W]hile Plaintiff's allegation that he purchased the Product in part to determine whether it was lawfully filled suggests that he may have suspected that the package contained a significant amount of slack-fill, it does not demonstrate that he knew for certain about the amount of slack-fill before he purchased and opened the product.” Cordes v. Boulder Brands USA, Inc., No. CV 18-6534 PSG (JCx), 2018 WL 6714323, at *2 (C.D. Cal. Oct. 17, 2018) (emphasis in original) (finding “tester” Plaintiff alleged an injury in fact for standing purposes because Plaintiff would have purchased the product or paid the same price for it had he known in advance the package contained forty percent slack fill). This reasoning applies just as forcefully to Plaintiff's burden on justifiable reliance. Although Plaintiff purchased the Hot Tamales in part to determine Defendant's compliance with the law, “Plaintiff would not have purchased the Product had plaintiff known that the Product contained slack-fill that serves no functional or lawful purpose, and would have consumed the entirety of the contents if the package was filled to plaintiff's expectations.” Complaint ¶ 19.

Plaintiff's allegations are therefore sufficient to meet the pleading standard for a fraud claim.

V. CONCLUSION

For the reasons stated herein, Defendant Just Born, Inc.’s Motion to Dismiss is denied.

FOOTNOTES

1.   Were it otherwise, every consumer tester would lack standing to seek injunctive relief, even where it is unclear the alleged defect was addressed—a rule the Ninth Circuit has for good reason not adopted.

2.   The Court takes judicial notice of four pictures depicting the sides of the Hot Tamales box. Request for Judicial Notice in Support of Defendant Just Born, Inc.’s Motion to Dismiss (“RJN”) [Dkt. No. 8-2]; see Kanfer v. Pharmacare US, Inc., 142 F. Supp. 3d 1091, 1098-99 (S.D. Cal. 2015) (“Courts addressing motions to dismiss product-labeling claims routinely take judicial notice of images of the product packaging.”); Rooney v. Cumberland Packing Corp., No. 12-CV-0033-H-DHB, 2012 WL 1512106, at *2 (S.D. Cal. Apr. 16, 2012) (taking judicial notice of “four color reproductions” of product packaging at issue where the plaintiff did “not dispute the accuracy” of the reproductions “and bases her claims on them”).

3.   Defendant cavils that Plaintiff failed to file an affidavit showing venue is proper as required by the CLRA and such failure warrants dismissal of Plaintiff's CLRA claim without prejudice. Cal. Civ. Code § 1780(d) (“In any action subject to this section, concurrently with the filing of the complaint, the plaintiff shall file an affidavit stating facts showing that the action has been commenced in a county described in this section as a proper place for the trial of the action. If a plaintiff fails to file the affidavit required by this section, the court shall, upon its own motion or upon motion of any party, dismiss the action without prejudice.”). But Plaintiff has since filed a declaration satisfying the venue affidavit requirement. See Declaration of April Reyes [Dkt. No. 13-2] ¶¶ 2-3. Thus, the Court sees no reason to waste judicial resources by dismissing the action without prejudice.

Hernán D. Vera, United States District Judge