EVA GRAUSZ v. THE HERSHEY COMPANY (2023)

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO DISMISS PLAINTIFF'S FIRST AMENDED COMPLAINT

Presently pending before the Court is Defendant the Hershey Company's motion to dismiss Plaintiff Eva Grausz's First Amended Complaint (“FAC”) pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). (Doc. No. 17.) Plaintiff filed an opposition to the motion to dismiss, (Doc. No. 24), to which Hershey replied, (Doc. No. 26). Pursuant to Civil Local Rule 7.1.d.1, the Court finds the instant matter suitable for determination on the papers and without oral argument. For the reasons stated herein, the Court GRANTS IN PART and DENIES IN PART Hershey's motion to dismiss Plaintiff's FAC.

I. BACKGROUND

A. First Amended Complaint 1

Defendant Hershey manufactures and sells various dark chocolate products under the Hershey's and Lily's brand names. (FAC, Doc. No. 9, ¶ 1.) In this putative class action, Plaintiff alleges recent independent lab testing found that several of Hershey's and Lily's chocolate products contain lead and cadmium, including Hershey's Special Dark Mildly Sweet Chocolate, Lily's Extremely Dark Chocolate 85% Cocoa, Lily's Extra Dark Chocolate 70% Cocoa, Lily's Original Dark Chocolate Stevia Sweetened 55% Cocoa Non GMO, and Lily's Sea Salt Extra Dark Chocolate 70% -Stevia Sweetened (the “Products”), and that those metals are unsafe at any level. (Id. ¶¶ 2–4.) These laboratory tests found the Products exceeded California's Maximum Allowable Daily Level (“MADL”) for each of these elements. (Id. ¶¶ 15–17, 19.) Plaintiff further alleges Hershey has been on notice that its Products contain high levels of heavy metals since 2014, but that Hershey has failed to effectively reduce or remove heavy metals from the Products. (Id. ¶ 18.) Plaintiff's allegations are based on a December 2022 article from Consumer Reports and a March 2023 article by As You Sow (“AYS”). (Id. ¶¶ 15–19.)

Plaintiff states she “regularly purchased Lily's Extremely Dark Chocolate 85% Cocoa[,]” “often making her purchase” in San Diego, California. (Id. ¶ 55.) Plaintiff contends Hershey's advertising did not feature warnings that the Products contained toxic amounts of heavy metals. (Id. ¶¶ 40, 41.) Rather, Hershey “touts its safety standards and how it vets its ingredient sources, and highlights the public trust that it has garnered as a result ․” (Id. ¶ 39.)

Plaintiff asserts she and the purported class were exposed to, saw, read, and understood the labels of the products, which omitted the presence of heavy metals, and that they relied upon the omission of warnings about the potential dangers of the Products containing heavy metals when making the decision to purchase the Products. (Id. ¶¶ 46, 47, 56, 57.) Had she known the Products contained heavy metals, Plaintiff claims she and the purported class would not have purchased the Products or would have paid less for them. (Id. ¶¶ 48–50, 59, 60.) While she wishes to purchase the Products in the future, she “may not be able to reasonably determine whether the lead or cadmium in the Products has been addressed” without an injunction because she cannot rely on the false representations in Hershey's current advertising and marketing scheme. (Id. ¶¶ 63–65.)

Based on the foregoing, Plaintiff initiated this action on behalf of herself and as a representative of all those similarly situated for: (1) Violation of California's Unfair Competition Law (“UCL”), Cal. Bus. & Prof. Code § 17200 et seq. (Count I); Violation of California's False Advertising Law (“FAL”), Cal. Bus. & Prof. Code § 17500 et seq. (Count II); Violation of California's Consumer Legal Remedies Act (“CLRA”), Cal. Bus. & Prof. Code § 1750 et seq. (Count III); Breach of Implied Warranty of Merchantability, Cal. Commercial Code § 2314 (Count IV); and Unjust Enrichment (Count V). (See generally FAC.)

B. Consent Judgment

In 2015, AYS sent California's Proposition 65 notices to various chocolate manufacturers, including Hershey, asserting their products contained lead and cadmium at levels exceeding California's MADLs. (Doc. No. 17 at 16.)² In February 2018, the California Superior Court entered a consent judgment among AYS, Hershey, and others (the “Consent Judgment”), after finding the proposed judgment “me[t] the requirements of [California law] and [was] in the public interest,” and the Consent Judgment was thereafter endorsed by California's Attorney General. (Id. at 16–17 (quoting Consent Judgment, Case No. CGC-15-548791 (Cal. Super. Ct. San Francisco Cnty. Feb. 15, 2018) at 2–20).) The Consent Judgment remains in effect until at least December 2024. (Id.) The Consent Judgment raised the MADL thresholds to Hershey's products and specified that compliance with the new limits would constitute compliance with Proposition 65 regarding lead and/or cadmium in chocolate. (Id. at 17.) The Consent Judgment operated as a “full, final, and binding resolution” of AYS's claims on behalf of itself and of the general public. (Id. (internal citation omitted).)

II. LEGAL STANDARDS

A. Federal Rule of Civil Procedure 12(b)(1)

A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(1) tests whether the court has subject matter jurisdiction. While lack of “statutory standing” requires dismissal for failure to state a claim under Rule 12(b)(6), lack of Article III standing requires dismissal for want of subject matter jurisdiction under Rule 12(b)(1). See Nw. Requirements Utilities v. F.E.R.C., 798 F.3d 796, 808 (9th Cir. 2015) (“Unlike Article III standing, however, ‘statutory standing’ does not implicate our subject-matter jurisdiction.”) (citing Lexmark Int'l, Inc. v. Static Control Components, Inc., 572 U.S. 118, 128 n.4 (2014)); Maya v. Centex Corp., 658 F.3d 1060, 1067 (9th Cir. 2011).

“A Rule 12(b)(1) jurisdictional attack may be facial or factual.” Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004). “In a facial attack, the challenger asserts that the allegations contained in a complaint are insufficient on their face to invoke federal jurisdiction.” Id. The court “resolves a facial attack as it would a motion to dismiss under Rule 12(b)(6): accepting the plaintiff's allegations as true and drawing all reasonable inferences in the plaintiff's favor, the court determines whether the allegations are sufficient as a legal matter to invoke the court's jurisdiction.” Leite v. Crane Co., 749 F.3d 1117, 1121 (9th Cir. 2014).

“[I]n a factual attack,” on the other hand, “the challenger disputes the truth of the allegations that, by themselves, would otherwise invoke federal jurisdiction.” Safe Air for Everyone, 373 F.3d at 1039. In resolving such an attack, unlike with a motion to dismiss under Rule 12(b)(6), a court “may review evidence beyond the complaint without converting the motion to dismiss into a motion for summary judgment.” Id. Moreover, the court “need not presume the truthfulness of the plaintiff's allegations.” Id. Once the defendant has moved to dismiss for lack of subject matter jurisdiction under Rule 12(b)(1), the plaintiff bears the burden of establishing the court's jurisdiction. See Chandler v. State Farm Mut. Auto Ins. Co., 598 F.3d 1115, 1122 (9th Cir. 2010).

B. Federal Rule of Civil Procedure 12(b)(6)

A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) tests the pleadings' legal sufficiency and allows a court to dismiss a complaint if the court finds the plaintiff has failed to state a claim upon which relief may be granted. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). As a matter of law, the court may dismiss the complaint for either a lack of a cognizable legal theory, or insufficient facts under a cognizable legal claim. SmileCare Dental Grp. v. Delta Dental Plan of Cal., 88 F.3d 780, 783 (9th Cir. 1996) (citation omitted). However, a complaint survives a motion to dismiss if it contains “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). Notwithstanding such deference, the reviewing court need not accept legal conclusions as true. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Furthermore, it is improper for the court to assume “the [plaintiff] can prove facts that [he or she] has not alleged․” Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 526 (1983). However, “[w]hen there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief.” Iqbal, 556 U.S. at 679. The court only reviews the complaint's contents and accepts all factual allegations as true, while drawing all reasonable inferences in favor of the nonmoving party. Thompson v. Davis, 295 F.3d 890, 895 (9th Cir. 2002).

III. REQUEST FOR JUDICIAL NOTICE

While the review scope on a motion to dismiss for failure to state a claim is limited to the complaint, a court may consider evidence on which the complaint necessarily relies if: “(1) the complaint refers to the document; (2) the document is central to the plaintiff['s] claim; and (3) no party questions the authenticity of the copy attached to the 12(b)(6) motion.” Daniels-Hall v. Nat'l Educ. Ass'n, 629 F.3d 992, 998 (9th Cir. 2010) (internal quotation marks and citations omitted). Furthermore, Federal Rule of Evidence 201 permits judicial notice of a fact when it is “not subject to reasonable dispute because it: (1) is generally known within the trial court's territorial jurisdiction; or (2) can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned.” Welk v. Beam Suntory Imp. Co., 124 F. Supp. 3d 1039, 1041-42 (S.D. Cal. 2015).

Here, Hershey requests the Court to take judicial notice of several exhibits in support of its Motion to Dismiss. (Doc. No. 17-1.)³

First, Hershey requests judicial notice of the Consent Judgment, Case No. CGC-15-548791 (Cal. Super. Ct. San Francisco Cnty. Feb. 15, 2018). (Id.) The Court may take judicial notice of court filings. See Rowland v. Paris Las Vegas, No. 3:13-CV-02630-GPC-DHB, 2014 WL 769.93, at *2 (S.D. Cal. Feb. 25, 2014) (citing Reyn's Pasta Bella, LLC v. Visa USA, Inc., 442 F.3d 741, 746 n.6 (9th Cir. 2006)). However, “[w]hile the authenticity and existence of a particular order, motion, pleading or judicial proceeding, which is a matter of public record, is judicially noticeable, veracity and validity of its contents ․ are not.” United States v. S. Cal. Edison Co., 300 F. Supp. 2d 964, 974 (E.D. Cal. 2004). Therefore, the Court GRANTS Hershey's request for judicial notice of the state court Consent Judgment.

Next, Hershey requests judicial notice of a California Office of Environmental Health Hazard Assessment (“OEHHA”) report entitled Proposition 65 Maximum Allowable Daily Level (MADL) for Reproductive Toxicity for Cadmium, published in May 2001; a publicly available letter the Supervising Deputy Attorney General, Harrison M. Pollak, wrote to Danielle Fugere of the “As You Sow” organization on December 4, 2019; several FDA-written articles and one public FDA meeting transcript; and a publicly available letter the Deputy Attorney General, Susan S. Fiering, wrote to Jake Shulte, Esq., of “Nicholas and Tomacevic LLP,” and Noam Glick. Esq. of “Glick Law Group,” on February 1, 2021. (Doc. No. 17-1 at 1.) However, the Court does not rely on these documents in reaching its conclusion below. Accordingly, the Court DENIES AS MOOT Hershey's requests for judicial notice as to these exhibits.

IV. DISCUSSION

In its motion to dismiss, Hershey asserts Plaintiff lacks Article III standing, fails to comply with Proposition 65's notice prerequisites, the Consent Judgment bars Plaintiff's claims, the FAC should be dismissed under the primary jurisdiction doctrine, and that each of Plaintiff's claims fail to state a claim under Rule 12(b)(6). (Doc. No. 17.) The Court discusses each argument in turn.

A. Article III Standing

Hershey first argues Plaintiff lacks standing because she fails to plead an injury-in-fact. (Doc. No. 17 at 20.) “To establish standing, a ‘[p]laintiff must have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision.’ ” In re Facebook, Inc. Internet Tracking Litig., 956 F.3d 589, 597 (9th Cir. 2020) (quoting Spokeo Inc. v. Robins, 578 U.S. 330, 338 (2016)).

As a preliminary matter, Plaintiff clarifies she invokes an overpayment theory of Article III standing, rather than on a benefit-of-the-bargain theory. (Doc. No. 24 at 15 n.1.) The Ninth Circuit recognizes a plaintiff can successfully plead an economic injury when she alleges “she paid more for a product than she otherwise would have due to a defendant's false representations about the product.” McGee v. S-L Snacks Nat'l, 982 F.3d 700, 706 (9th Cir. 2020). “Under California law, the economic injury of paying a premium for a falsely advertised product is sufficient harm to maintain a cause of action.” Davidson v. Kimberly-Clark Corp., 889 F.3d 956, 965 (9th Cir. 2018). “Thus, a consumer's allegation that ‘she would not have bought the product but for the misrepresentation ․ is sufficient to allege causation ․ [and] to allege economic injury.’ ” Id. at 965–66 (quoting Kwikset Corp. v. Superior Court, 51 Cal. 4th 310 (2011)). “To properly plead an economic injury, a consumer must allege that she was exposed to false information about the product purchased, which caused the product to be sold at a higher price, and that she would not have purchased the goods in question absent this misrepresentation.” Id. at 966 (quotation marks omitted).

First, Hershey argues Plaintiff fails to plead she personally purchased a Product containing any detectible lead or cadmium, in that she fails to allege that she tested the particular Lily's bar she purchased. (Doc. No. 17 at 21.) However, Hershey does not cite any Ninth Circuit decision which states Plaintiff “must, as a matter of law, proffer a formulaic recitation that the specific unit of Product she purchased contains [heavy metals][,]” and the Court finds none. Solis v. Coty, Inc., No. 22-cv-0400-BAS-NLS, 2023 WL 2394640, at *11 (S.D. Cal. Mar. 7, 2023). Moreover, the cases cited by Hershey are distinguishable. For example, in Pels v. Keurig Dr. Pepper, Inc., No. 19-CV-03052-SI, 2019 WL 5813422, at *5 (N.D. Cal. Nov. 7, 2019), the plaintiff alleged he suffered injury from elevated levels of arsenic in bottled water and that he purchased the water. However, the court found the plaintiff did not have standing because he did not allege the bottled water he drank contained arsenic, and so the court dismissed with leave to amend. Id. Here, Plaintiff's theory of injury is that she bought a product that she otherwise would not have purchased, or would have only purchased at a lower price, had she known it contained heavy metals. (See FAC ¶¶ 7, 48, 49, 50, 59, 60.) As such, the Court is unpersuaded by this line of Hershey's Rule 12(b)(1) argument.

Next, Hershey asserts Plaintiff lacks standing because she fails to allege that Hershey made any statements about lead or cadmium content in its products. (Doc. No. 17 at 23.) The Court finds Plaintiff adequately pleads reliance on Hershey's omission of a heavy metals disclosure and resulting economic injury. Plaintiff alleges she was unaware the Products contained heavy metals when she purchased them because neither the packaging nor advertising disclosed the presence of heavy metals. (FAC ¶¶ 56–60.) When purchasing the Products, Plaintiff was seeking chocolate bars she believed were of a higher quality and would not have purchased them if she knew they contained heavy metals. (Id. ¶¶ 56, 60.) Accordingly, Plaintiff alleges she lost money in the amount of the price premium she paid for the Products. (Id. ¶ 62.) Plaintiff further alleges she would not have purchased the Products in the absence of the misleading packaging. (Id. ¶ 60.) As such, the FAC plausibly alleges a reasonable consumer would be misled by Hershey's failure to disclose that the Products may contain heavy metals. Accordingly, the FAC sufficiently pleads reliance on the Products' misleading labeling and resulting economic harm.

Finally, Hershey argues Plaintiff lacks Article III standing to seek injunctive relief because “it is not possible to prevent or remove [heavy metals] entirely from foods” and thus suggesting this can be done in the imminent future is “conjectural or hypothetical” at best. (Doc. No. 17 at 26 (quoting Summers v. Earth Island Inst., 555 U.S. 488, 493 (2009)).)

To establish standing for injunctive relief, a plaintiff must plead a “threat of injury” that is “actual and imminent, not conjectural or hypothetical.” Davidson, 889 F.3d at 967 (quoting Summers, 555 U.S. at 493). Once plaintiffs have been wronged, they are entitled to injunctive relief only if they can show they face a “real or immediate threat that [they] will again be wronged in a similar way.” Mayfield v. United States, 599 F.3d 964, 970 (9th Cir. 2010) (citations and internal punctuation omitted). “[A] previously deceived customer may have standing to seek an injunction against false advertising or labeling” based on “inability to rely on the advertising in the future,” “even though the consumer now knows or suspects that the advertising was false at the time of the original purchase, because the consumer may suffer an ‘actual and imminent, not conjectural or hypothetical’ threat of future harm.” Davidson, 889 F.3d at 967, 969 (quoting Summers, 555 U.S. at 493).

Here, Plaintiff alleges she would like to purchase Hershey's Products in the future, but that absent an injunction, “she may not be able to reasonably determine whether the lead or cadmium in the Products has been addressed by correcting it's [sic] unfair business practices, or whether the Products continue to contain high levels of lead and/or cadmium.” (FAC ¶ 63.) At this stage of the proceedings, the Court must presume the truth of Plaintiff's allegations and construe the allegations in her favor. See Davidson, 889 F.3d at 971 (citing Daniels-Hall, 629 F.3d at 998). Plaintiff's allegations are more concrete than claiming she would merely “consider” buying Hershey's Products at a later date. See Lanovaz v. Twinings N. Am., Inc., 726 F. App'x 590, 591 (9th Cir. 2018) (holding that the plaintiff's “would ‘consider buying’ ” allegations and a mere intent to purchase the defendant's products in the future were insufficient to sustain Article III standing); Loomis v. Slendertone Distrib., Inc., 420 F. Supp. 3d 1046, 1077 (S.D. Cal. Nov. 6, 2019) (finding that vague “would consider purchasing” allegations coupled with the speculative nature of the at-issue product ever achieving its claimed representations was insufficient to sustain Article III standing). Therefore, Plaintiff has plausibly pled a threat of future injury sufficient to demonstrate Article III standing to seek injunctive relief.

B. Proposition 65

Hershey next argues that although she does not plead so explicitly, Plaintiff brings a Proposition 65 case in substance and that in doing so, she failed to comply with Proposition 65's prerequisites to suit pursuant to California Health & Safety Code § 25249.7(d)(1). (Doc. No. 17 at 16–17.) Because Plaintiff expressly disclaims relief under Proposition 65, she must comply with the pre-filing notice requirement only if her asserted claims under the CLRA, FAL, and UCL are attempts to “plead around” Proposition 65's requirements.

Lead and cadmium are the subject of the Safe Drinking Water and Toxic Enforcement Act of 1986 (“Proposition 65”). Cal. Health & Safety Code § 25249.6 et seq. Under Proposition 65, “no person in the course of doing business shall knowingly and intentionally expose any individual to a chemical known to [California] to cause cancer or reproductive toxicity without first giving clear and reasonable warning to such individual where the amount exceeds the no significant risk level established by the California Environmental Protection Agency.” Sciortino v. Pepsico, Inc., 108 F. Supp. 3d 780, 787 (N.D. Cal. 2015). Proposition 65 allows private parties to bring civil actions in the public interest if “the private action is commenced more than 60 days from the date that the person has given notice of the alleged violation” to the defendant, the California Attorney General, and the “district attorney, city attorney, or prosecutor in the jurisdiction in which the violation is alleged to have occurred.” Cal. Health & Safety Code § 25249.7(d)(1). The regulations implementing this law include a safe harbor provision which provides language “deemed to be clear and reasonable” for the purposes of Proposition 65. See 27 Cal. Code Regs. §§ 25600, 25607.2.

In light of the legislative purposes behind Proposition 65, “California cases strictly enforce the notice requirements and hold that pre-filing notice is mandatory.” Sciortino, 108 F. Supp 3d at 790 (discussing cases). Thus, “if a Plaintiff commenced an action under Proposition 65 without providing suitable statutory notice, the Plaintiff should not be able to maintain that action.” Id. “Dismissal with prejudice would be proper, because improper notice cannot be retroactively cured.” Id. (listing cases).

To be sure, the Ninth Circuit has characterized the rule against using the UCL to plead around an absolute bar to relief as “rather narrow.” Chabner v. United of Omaha Life Ins. Co., 225 F.3d 1042, 1048 (9th Cir. 2000); cf. Yanting Zhang v. Superior Court, 57 Cal. 4th 364, 369 (2001) (concluding UCL claims were not barred by lack of available private action under the Unfair Insurance Practices Act, because “plaintiff alleges causes of action for false advertising and insurance bad faith, both of which provide grounds for a UCL claim independent from the UIPA” even where conduct violated the UIPA).

Plaintiff asserts her “claims are based on the duties to disclose imposed by California's consumer protection statutes including, inter alia, Defendant's superior knowledge, partial representations, active concealment, and the safety risk posed by the Products, making [Plaintiff's] claims independent of any duty to warn under Proposition 65.” (Doc. No. 24 at 22.) Plaintiff further argues lead and cadmium in the Products can cause health complications in addition to those that are the focus of Proposition 65. (Id. at 23.) Because Plaintiff contends her claims in the FAC should not be interpreted as Proposition 65 claims, the Court must look at whether the claims are “entirely derivative of an unspoken Proposition 65 violation, or whether ․ claims independent of Proposition 65” are asserted. Sciortino, 108 F. Supp. 3d at 792.

In Sciortino, the court dismissed some, but not all, claims relating to Proposition 65 chemicals. The court differentiated between claims that were “entirely derivative of an unspoken Proposition 65 violation” and those that were independent of the statute. Id. at 792. Ultimately, the court refused to dismiss claims where the only relevance of Proposition 65 was to “provide[ ] guidance as to a reasonable consumer's purchasing decisions in California.” Id. at 794. The court further noted these claims were “not literally based upon a violation of Proposition 65” but rather relied upon an independent duty to disclose the presence of certain chemicals in its advertising and public statements irrespective of this statute. Id.

In the present case, the “alleged wrong is not a failure to warn under Proposition 65, but rather a separate misrepresentation to consumers regarding” the presence of potentially dangerous chemicals in Hershey's Products. Sciortino, 108 F. Supp. 3d at 794. The FAC alleges at various points that Hershey's failure to disclose the lead and cadmium content in its Products was unlawful and misleading because it “touts its safety standards and how it vets its ingredient sources,” and because the Products posed a hidden health risk. (FAC ¶ 39.) Furthermore, Plaintiff alleges that any amount of lead and cadmium consumption can cause an array of health complications in addition to cancer and reproductive harm. (Id. ¶¶ 23–31.)

Ultimately, these pleadings are sufficient to support an independent duty to disclose irrespective of Proposition 65. In other words, even if all mention of Proposition 65 were removed from the FAC, Plaintiff's claims would still survive because the FAC alleges Hershey should have disclosed the presence of lead and cadmium in the Products irrespective of Proposition 65, including risks that fall outside the scope of Proposition 65. See Bland v. Sequel Nat. Ltd., No. 18-cv-04767-RS, 2019 WL 4658361, at *4 (N.D. Cal. Jan. 18, 2019) (finding the plaintiff's claims arising from the defendant's partial representations and from the alleged concealment of health risks fell outside the scope of Proposition 65); Barnes v. Nat. Organics, Inc., No. EDCV 22-314 JGB (PLAx), 2022 WL 4283779, at *5 (C.D. Cal. Sept. 13, 2022) (holding that plaintiff's allegations of misrepresentation to consumers regarding the presence of heavy metals in the defendant's products, in addition to allegations that heavy metal consumption may contribute to health complications outside the focus of Proposition 65, supported an independent duty to disclose); Gutierrez v. Johnson & Johnson Consumer, Inc., No. 19-cv-1345 DMS (AGS), 2020 WL 6106813, at *6 (S.D. Cal. Apr. 27, 2020) (holding the plaintiff's allegations regarding misleading statements and “concealment of the presence of carcinogenic substances” were separate of Proposition 65 claims). Indeed, Plaintiff's claims arise from allegedly misleading and fraudulent advertising and failure “to adequately test for lead, cadmium, and other heavy metals” in its Products. (FAC ¶ 43.)

Additionally, Hershey's argument that the Consent Judgment bars Plaintiff's claims under the doctrine of res judicata is unavailing, as the Consent Judgment is a “full, final, and binding resolution” “of any alleged violation of Proposition 65” and as discussed above, Plaintiff's claims are independent of Proposition 65. Similarly, Hershey's argument that the alleged levels of heavy metals fall within Proposition 65's safe harbor provision is unavailing. Hershey further provides a sampling of calculations to show that Plaintiff's testing results do not violate the relevant MADLs under Proposition 65 and the Consent Judgment. (See Doc. No. 17 at 19.) However, factual challenges are not typically adjudicated at this stage of litigation. See Barnes, 2022 WL 4283779, at *6.

C. Whether the Primary Jurisdiction Doctrine Applies

Hershey next argues the FAC should be dismissed under the primary jurisdiction doctrine. (Doc. No. 17 at 30.) Hershey specifically argues the appropriateness of Hershey's product labeling has been placed within the jurisdiction of the Food and Drug Administration's (“FDA”) regulatory scheme, requiring FDA's special expertise, and that there is a strong need for uniformity in administration. (Id. at 31.) Plaintiff responds the primary issue here is whether a reasonable consumer would be misled by Hershey's failure to disclose the presence of lead and cadmium in the Products, and that this question can be answered without the FDA's expertise. (Doc. No. 24 at 28.)

“[T]he [primary jurisdiction] doctrine applies where there is (1) the need to resolve an issue that (2) has been placed by Congress within the jurisdiction of an administrative body having regulatory authority (3) pursuant to a statute that subjects an industry or activity to a comprehensive regulatory scheme that (4) requires expertise or uniformity in administration.” Davel Comm'ns, Inc. v. Qwest Corp., 460 F.3d 1075, 1086 (9th Cir. 2006). At the motion to dismiss stage, when analyzing whether to defer jurisdiction, courts must “apply a standard derived from Rule 12(b)(6) jurisprudence: whether the complaint plausibly asserts a claim that would not implicate the [primary jurisdiction] doctrine.” Cnty. of Santa Clara v. Astra U.S., 588 F.3d 1237, 1251–52 (9th Cir. 2009) (denying request to invoke primary jurisdiction where without the relevant agency's expertise, the court could plausibly adjudicate the action).

Here, Plaintiff's FAC presents a typical consumer protection case within this Court's province because “allegations of deceptive labeling do not require the expertise of the FDA to be resolved in the courts, as every day courts decide whether conduct is misleading.” Jones v. ConAgra Foods, Inc., 912 F. Supp. 2d 889, 899 (N.D. Cal. 2012). Furthermore, none of Plaintiff's claims require such FDA expertise, offer “an issue of first impression,” or offer an issue outside “the conventional experience of judges.” Brown v. MCI WorldCom Network Servs., Inc., 277 F.3d 1166, 1172 (9th Cir. 2002). Accordingly, the Court declines to apply the doctrine of primary jurisdiction. Hershey's motion to dismiss Plaintiff's claims on this basis is DENIED.

D. Equitable Remedies

Hershey next moves to dismiss Plaintiff's UCL, FAL, and unjust enrichment claims for Plaintiff's failure to allege a lack of adequate legal remedies which, under Sonner v. Premier Nutrition Corp., 971 F.3d 834 (9th Cir. 2020), is a prerequisite to the pursuit of an equitable claim. (Doc. No. 17 at 32–33, 35.) In the FAC, Plaintiff asserts her legal remedies are inadequate to fully compensate her for all of Hershey's alleged behavior. (FAC ¶¶ 93, 100.) Specifically, Plaintiff asserts the price/value differential is a measure of restitution but is not the only measure of restitution, and thus, “there may be an alternate viable measure of restitution, rendering legal remedies inadequate.” (Doc. No. 24 at 31 (internal quotation marks omitted).) The Court notes Plaintiff's UCL claim under the “unfair” prong is based in part upon separate factual allegations, (FAC ¶ 85), which Hershey does not address in its motion to dismiss. (See generally Doc. No. 17.) As such, the Court analyzes the adequacy of legal remedies as to Plaintiff's UCL claims to the extent they are based upon Hershey's alleged omissions.

As an initial matter, California courts have not been clear on the extent to which unjust enrichment is available as a standalone cause of action. See ESG Cap. Partners, LP v. Stratos, 828 F.3d 1023, 1038 (9th Cir. 2016) (collecting cases). Recent unpublished decisions in the Ninth Circuit reflect the uncertainty. Compare Baiul-Farina v. Lemire, 804 F. App'x 533, 537 (9th Cir. 2020) (“ ‘[U]njust enrichment is not a cause of action’ under California law.” (quoting McBride v. Boughton, 123 Cal. App. 4th 379, 387 (2004))), with Bruton v. Gerber Prod. Co., 703 F. App'x 468, 470 (9th Cir. 2017) (“[T]he California Supreme Court has clarified California law, allowing an independent claim for unjust enrichment to proceed in an insurance dispute.” (citing Hartford Cas. Ins. Co. v. J.R. Mktg., LLC, 61 Cal. 4th 988, 1000 (2015))). Considering the lack of clarity, the Court follows the most recent, published Ninth Circuit case to address the issue and finds the cause of action permissible. ESG Cap. Partners, 828 F.3d at 1038 (“We therefore allow the cause of action, as we believe it states a claim for relief as an independent cause of action or as a quasi-contract claim for restitution.”).

Thus, the Court next examines whether Plaintiff has an adequate damages remedy; if so, it cannot consider Plaintiff's remaining equitable claims for restitution or injunction. Although “[e]quitable jurisdiction is distinct from subject matter jurisdiction ․ both are required for a federal court to hear the merits of an equitable claim.” Guzman v. Polaris Indus. Inc., 49 F.4th 1308, 1314 (9th Cir. 2022); Schlesinger v. Councilman, 420 U.S. 738, 754 (1975). Unlike state courts, federal courts have equitable jurisdiction to award equitable relief only where a plaintiff has no adequate legal remedy based on the same harm. See Sonner, 971 F.3d at 842. Thus, where monetary damages provide an adequate remedy, a federal court may not consider the merits of equitable claims for restitution, disgorgement, or injunctive relief. See Franklin v. Gwinnett Cnty. Pub. Sch., 503 U.S. 60, 75–76; see also, e.g., Feitelberg v. Credit Suisse First Bos., LLC, 134 Cal. App. 4th 997, 1009 (2005) (noting that restitution and injunctive relief are equitable in nature). Moreover, certain claims––such as the UCL, the FAL, and unjust enrichment––only provide for equitable relief and thus, are impermissible where adequate money damages are available. See Guzman, 49 F.4th at 1313 (“[T]he UCL provides only for equitable remedies.”); In re Vioxx Class Cases, 180 Cal. App. 4th 116, 130 (2009) (same as to the FAL); Zapata Fonseca v. Goya Foods Inc., No. 16-CV-02559-LHK, 2016 WL 4698942, at *7 (N.D. Cal. Sept. 8, 2016) (same as to unjust enrichment). Plaintiffs bear the burden to establish that they lack an adequate damages remedy before they can obtain equitable relief. See Sonner, 971 F.3d at 844.

The Court finds Plaintiff has failed to establish she lacks an adequate remedy at law as to her claims for restitution. Plaintiff alleges that she “may lack an adequate remedy at law, if for instance, damages resulting from her purchase of the Products is determined to be in an amount less than the premium price of the Products.” (FAC ¶¶ 100, 102.) However, Plaintiff's allegations do not show how restitution would go beyond the damages available to her. Plaintiff fails to allege any specific facts showing that damages are “inadequate or incomplete.” Sonner, 971 F.3d at 844; see also Nacarino v. Chobani, LLC, No. 20-cv-07437-EMC, 2021 WL 3487117, at *12 (N.D. Cal. Aug. 9, 2021).

However, the Court finds Plaintiff may seek equitable relief in the form of an injunction under the UCL and FAL to the extent that her claims are premised on alleged future harm. “Although Sonner only spoke about restitution for past harms, various district courts have since found that the decision applies to equitable claims for injunctive relief based on future harm as well.” Mier v. CVS Pharmacy, Inc., 2021 WL 1559367, at *13 (C.D. Cal. Mar. 22, 2021). In Mier, the Court denied the defendant's motion to dismiss with respect to equitable relief where the plaintiff sought an injunction as to the defendant's allegedly misleading labels. Id. at *1. Similarly here, Plaintiff has sufficiently pled the likelihood of future harm for which she has no adequate remedy at law, and is not barred from seeking injunctive relief for the same. See also Souter v. Edgewell Personal Care Co., No.: 20-CV-1486 TWR (BLM), 2022 WL 485000, at *13 (S.D. Cal. Feb. 16, 2022).

Based on the foregoing, the Court GRANTS Hershey's motion to dismiss Plaintiff's claims—to the extent they are based upon Hershey's alleged omission—for equitable relief in the form of restitution, and DENIES the motion as to Plaintiff's claims for injunctive relief.

E. Fraudulent Omission

Next, Hershey argues Plaintiff's fraudulent omission claims fails because it did not have any duty to disclose. (Doc. No. 17 at 33.) Specifically, it asserts a “duty to disclose exists only where the information concerns ‘an unreasonable safety hazard,’ or renders the product unable to perform its central function.” (Id.) Plaintiff responds that Hershey had a duty to disclose based on Hershey's exclusive knowledge of material facts, that Hershey actively concealed material facts, and that Hershey made partial representations but also suppressed some material fact. (Doc. No. 24 at 17.) Plaintiff does not allege Hershey had a duty to disclose based on any fiduciary duty.

Plaintiff pleads claims for violations of California's FAL, CLRA,⁴ and UCL on a theory of fraud by omission. The law about a defendant's duty to disclose in fraudulent omission cases is “marked by general disarray,” largely because there are at least two tests to determine whether a defendant has a duty to disclose. Hammerling v. Google LLC, 615 F. Supp. 3d 1069, 1085 (N.D. Cal. 2022) (quoting In re Toyota RAV4 Hybrid Fuel Tank Litig., 534 F. Supp. 3d 1067, 1101–02 (N.D. Cal. 2021)). The Court agrees with the recent Hammerling decision as to the appropriate test. See id. (collecting cases adopting this test); Klaehn v. Cali Bamboo, LLC, 2021 WL 3044166, at *10–11 (S.D. Cal. June 14, 2021). Plaintiff must allege Hershey's omission “either (1) relates to an unreasonable safety hazard or (2) is material, ‘central to the product's function,’ and meets one of the four LiMandri factors.” Id. at 1086 (quoting Hodson, 891 F.3d at 863). “The LiMandri factors are (1) the defendant is in a fiduciary relationship with the plaintiff; (2) the defendant had exclusive knowledge of material facts not known to the plaintiff; (3) the defendant actively conceals a material fact from the plaintiff; or (4) the defendant makes partial representations but also suppresses some material facts.” Id. at 1085 (citing LiMandri v. Judkins, 52 Cal. App. 4th 326, 336 (1997)).

Here, Plaintiff asserts that she sufficiently alleges a safety hazard, but makes no mention of whether the omission is central to the product's function. (See generally FAC; Doc. No. 24 at 17–20.) With respect to allegations of a safety hazard, the FAC asserts “[n]o amount of lead is known to be safe” and may lead “to severe health risks and toxicity, including inhibiting neurological function, anemia, kidney damage, seizures, and in extreme cases, coma and death.” (FAC ¶ 23 (internal quotation marks omitted).) Similarly, the FAC pleads that cadmium “likewise, poses a serious safety risk to consumers because it can cause cancer and is a known teratogen, an agent which causes malformation of an embryo.” (Id. ¶ 29.) Plaintiff further contends a single unit of Hershey's Products exceeds the toxicity limit for lead and cadmium set by Proposition 65. (Id. ¶¶ 15–17.) Ultimately, Plaintiff contends Hershey's Products pose an unreasonable safety hazard based on the serious health repercussions associated with the heavy metals contained therein.

Hershey counters that the MADLs with respect to lead and cadmium in chocolate have been superseded by the Consent Judgment, and irrespective of the Consent Judgment, “MADLs are not cutoffs indicating the point where lead or cadmium content becomes a health risk.” (Doc. No. 17 at 23–24.) The Court agrees. Plaintiff does not plead that the amounts of the substances in Hershey's Products have caused harm or create an unreasonable safety hazard. Moreover, the Consent Judgment displaced the default MADLs for lead and cadmium and substituted new limits applicable to Hershey's Products:

For products with cacao content less than or equal to 65% (e.g., Special Dark), the maximum lead level is 0.1 ppm (100 ppb), and the maximum cadmium level is 0.4 ppm (400 ppb). For products with cacao content greater than 65% and up to 95% (e.g., the Lily's Products), the maximum lead level is 0.15 ppm (150 ppb) and the maximum cadmium level is 0.45 ppm (450 ppb). The Consent Judgment specifies that “compliance with [these limits] ․ shall be deemed to constitute compliance ․ with Proposition 65 regarding ․ lead and/or cadmium” in chocolate.

(Doc. No. 17 at 16; Consent Judgment, Doc. No. 17-1, at 33.) Indeed, under the new levels set by the Consent Judgment, Plaintiff has not shown the levels of lead or cadmium in the Products create an unreasonable safety hazard. (See Doc. No. 17 at 19.)

Thus, because Plaintiff has failed to plead a duty to disclose, the Court GRANTS Hershey's motion to dismiss as to Plaintiff's claims under the UCL (to the extent they are based upon omissions), CLRA, and FAL with leave to amend.⁵

F. The Implied Warranty of Merchantability

Hershey next argues Plaintiff fails to state a claim for breach of implied warranty because she cannot plausibly allege that the bars she purchased were unfit for consumption. (Doc. No. 17 at 35.) Plaintiff counters that she plausibly pleads that the Products are unfit for consumption because they contain lead and cadmium at levels that are unsafe for human consumption. (Doc. No. 24 at 30–31.)

Under California law, “a warranty that the goods shall be merchantable is implied in a contract for their sale.” Cal. Com. Code § 2314(1). California recognizes an exception to the privity requirement in breach of warranty claims pertaining to food or drug products. Wendell v. Johnson & Johnson, 2010 WL 271423, *5 (N.D. Cal. Jan 20, 2010) (citing Gottsdanker v. Cutter Labs., 182 Cal. App. 2d 602 (1960)). The California Supreme Court has explained that “[m]erchantability has several meanings, two of which are relevant to the instant case: the product must ‘[conform] to the promises or affirmations of fact made on the container or label,’ and must be ‘fit for the ordinary purposes for which such goods are used.’ ” Hauter v. Zogarts, 14 Cal.3d 104, 117 (Cal. 1975). In cases involving human food, a party can plead that a product violates the implied warranty of merchantability through allegations that the product was unsafe for consumption, contaminated, or contained foreign objects. Thomas v. Costco Wholesale Corp., 2014 WL 5872808, *3 (N.D. Cal. Nov. 12, 2014) (citation omitted).

Here, as discussed above, at this stage Plaintiff's theory of injury is sufficient for standing in that she was economically harmed because she would not have purchased the Products or would have paid less had she known the Products risked containing heavy metals. The theory survives in part because Hershey does not contest that its Products risk containing these metals; rather, Hershey says that most food products, including chocolates, have similar levels of metal and those levels are safe. Though this is a question of fact that cannot be resolved on a motion to dismiss, it is relevant to the implied warranty claims because it is unaddressed by the FAC and shows Plaintiff has not alleged facts showing the Products failed to “conform[ ] to the standard performance of like products used in the trade.” Viggiano v. Hansen Nat. Corp., 944 F. Supp. 2d 877, 896 (C.D. Cal. 2013). Nor does Plaintiff plead sufficient facts that the chocolates she purchased were unfit for their “ordinary purpose” as food products, Birdsong v. Apple, Inc., 590 F.3d 955, 958 n.2 (9th Cir. 2009); Liou v. Organifi, LLC, 491 F. Supp. 3d 740, 749 (S.D. Cal. 2020), or were “unfit for consumption,” Strumlauf v. Starbucks Corp., 192 F. Supp. 3d 1025, 1028, 1032 (N.D. Cal. 2016), or were “not merchantable or fit for use as” chocolates, see Viggiano, 944 F. Supp. 2d at 896. Plaintiff's conclusory assertion that the Products were “unsafe for human consumption,” (see FAC ¶¶ 113, 115), is not plausible unless she can plead supporting facts showing that the chocolates purchased by Plaintiff were somehow distinct from those that are safe. As such, the Court GRANTS Hershey's motion as to Plaintiff's implied warranty claim.

V. CONCLUSION

For the reasons stated herein, pursuant to Rules 12(b)(1) and 12(b)(6), the Court GRANTS IN PART AND DENIES IN PART Hershey's motion to dismiss Plaintiff Eva Grausz's FAC. (Doc. No. 17.) Should Plaintiff desire to amend her complaint, she must file a second amended complaint no later than September 25, 2023. Defendant must file a responsive pleading no later than October 9, 2023.

IT IS SO ORDERED.

FOOTNOTES

2.   Citations refer to the pagination assigned by the CM/ECF system.

3.   Plaintiff filed an objection to Hershey's request for judicial notice. However, it was submitted as a separate document in violation of the Court's Chambers Rules, and thus was stricken. Hon. Anthony J. Battaglia Civ. Chambers R. at II.A, Hearing Dates (June 4, 2021), https://www.casd.uscourts.gov/judges/chambers-rules.aspx (“Objections relating to the motion should be set forth in the parties' opposition or reply. Separate statement of objections will NOT be allowed. The inclusion of objections does not expand the page limits set.”).

4.   Hershey further argues Plaintiff failed to comply with the pre-notice provisions of the CLRA and the claim must be dismissed. (Doc. No. 17 at 32.) Here, the original complaint sought only injunctive relief and restitution. (Doc. No. 1, ¶ 88.) Thereafter, the FAC, filed on March 27, 2023, asserts that “more than 30 days before filing [the FAC], Plaintiff sent written notice of her claims and of Hershey's particular violations” of the CLRA, which now seeks damages. (FAC ¶ 109.) Hershey does not contest this argument in its reply, and thus concedes this point to Plaintiff. (See generally Doc. No. 26.)

5.   As discussed in Section IV.D, Plaintiff notes her claim under the “unfair” prong of the UCL is not solely based upon the same conduct (an omission) as under the “fraudulent” and “unlawful” prongs, but rather that “during post-harvesting, processing, and storing, Hershey was responsible for unnecessarily introducing additional amounts of lead and cadmium into the bars.” (Doc. No. 24 at 20–21 (internal quotation marks omitted).) Because Hershey does not address the conduct at issue for this prong in its Motion to Dismiss, (see generally Doc. No. 17), and because “[t]he district court need not consider arguments raised for the first time in a reply brief[,]” Zamani v. Carnes, 491 F.3d 990, 997 (9th Cir. 2007), the Court DENIES Hershey's motion to dismiss as to this prong.

Hon. Anthony J. Battaglia United States District Judge