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Maeda v. Kennedy Endeavors, Inc.

United States District Court, D. Hawaii

September 19, 2019

MICHAEL MAEDA and RICK SMITH, individually and on behalf of all others similarly situated, Plaintiffs,
v.
KENNEDY ENDEAVORS, INC.; DOES 1 THROUGH 50, Defendants.

          ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION TO DISMISS PLAINTIFFS’ SECOND AMENDED CLASS ACTION COMPLAINT FILED ON JULY 17, 2019

          Jill A. Otake United States District Judge.

         This putative consumer class action arises out of the sale and marketing of Defendant Kennedy Endeavors, Inc.’s (“Defendant”) Hawaiian brand snacks, including: Hawaiian Kettle Style Potato Chips, Original; Hawaiian Kettle Style Potato Chips, Luau BBQ; Hawaiian Kettle Style Potato Chips, Sweet Maui Onion; Hawaiian Kettle Style Potato Chips, Ginger Wasabi; Hawaiian Kettle Style Potato Chips, Hulapeno; Hawaiian Kettle Style Potato Chips, Mango Habanero; Hawaiian Luau Barbeque Rings; and Hawaiian Sweet Maui Onion Rings (collectively “Hawaiian Snacks”). Plaintiffs Michael Maeda and Rick Smith (collectively “Plaintiffs”) allege that they purchased certain varieties of these snacks due to false and deceptive labeling, packaging, and advertising, which misled them into believing that the snacks are made in Hawai'i from local ingredients.

         Defendant moves to dismiss this action on the following grounds: (1) its brand name and trade dress are at most puffery; (2) Plaintiffs’ fraud-based claims continue to be deficient; and (3) the Court lacks subject matter jurisdiction over any claims related to the six varieties of chips that Plaintiffs did not purchase. For the reasons articulated below, the Court GRANTS IN PART AND DENIES IN PART Defendant’s Motion to Dismiss Plaintiffs’ Second Amended Class Action Complaint Filed on July 17, 2019. ECF No. 55.

         BACKGROUND

         Plaintiffs commenced this action on October 12, 2018 in the Circuit Court of the First Circuit, State of Hawai'i. Defendant removed the action on November 23, 2018.

         On May 10, 2019, the Court issued an Order Granting in Part and Denying in Part Defendant Pinnacle Foods Inc.’s[1] Motion to Dismiss Plaintiffs’ Class Action Complaint (“Order”), which (1) dismissed formerly named Plaintiff Iliana Sanchez’s claims for lack of personal jurisdiction; (2) dismissed with prejudice the “made in Hawaii” claim; (3) dismissed with leave to amend the Hawai'i Revised Statutes (“HRS”) Chapter 480, California consumer protection, breach of warranty, and fraud/intentional misrepresentation claims; (4) denied the Motion to Dismiss as to the jurisdictional challenges to the unnamed non-resident class members; and (5) denied the Motion to Dismiss as to the Hawai'i false advertising, negligent misrepresentation, quasi-contract/unjust enrichment/restitution claims, and the request for injunctive relief. ECF No. 32. The Court granted Plaintiffs until June 10, 2019 to file an amended pleading in conformance with the Order. Id. at 50.

         Plaintiffs timely filed a First Amended Complaint, adding Plaintiff Smith[2]and a Hawai'i Uniform Deceptive Trade Practices Act (“UDTPA”) claim. ECF No. 39. The Court struck the First Amended Complaint for violating the Order but allowed Plaintiffs to file another First Amended Complaint that conformed with the Order. ECF No. 46. The Court admonished Plaintiffs that they must seek leave of court for any amendments not authorized by the Order. Id.

         Plaintiffs subsequently filed their corrected First Amended Complaint (“FAC”). ECF No. 47. They then filed a Motion for Leave to File Second Amended Class Action Complaint. ECF No. 50. Due to Defendant’s lack of opposition, ECF No. 52, the Magistrate Judge granted the Motion for Leave to File Second Amended Class Action Complaint. ECF No. 53. On July 17, 2019, Plaintiffs filed their Second Amended Complaint (“SAC”). ECF No. 54.

         Plaintiffs continue to allege that although the Hawaiian Snacks are manufactured in Algona, Washington, Defendant markets them in such a manner as to mislead consumers into believing that they were manufactured in Hawai'i. The SAC asserts the following claims: (1) violation of Hawai'i’s Unfair Deceptive Acts or Practices Statute (“UDAP”), HRS Chapter 480 (Count 1); (2) violation of Hawai'i’s false advertising law, HRS § 708-871 (Count 2); (3) violation of UDTPA, HRS Chapter 481A (Count 3); (4) violation of California’s Consumers Legal Remedies Act (“CLRA”), Cal. Civil Code § 1750 (Count 4); (5) violation of California’s unfair competition law (“UCL”), Cal. Business & Professions Code § 17200 (Count 5); (6) violation of California’s false advertising law (“FAL”), Cal. Business & Professions Code § 17500 (Count 6) ; (7) common law fraud/intentional misrepresentation (Count 7); (8) negligent misrepresentation (Count 8); and (9) quasi-contract/unjust enrichment/restitution (Count 9).

         The three proposed classes identified by Plaintiffs are as follows:

Hawai'i Class: All persons, who, within the relevant statute of limitations period, purchased any of the Hawaiian Snacks, in the State of Hawai'i.
California Class: All persons, who, within the relevant statute of limitations period, purchased any of the Hawaiian Snacks, in the State of California.
California Consumer Subclass: All persons, who, within the relevant statute of limitations period, purchased any of the Hawaiian Snacks for personal, family, or household purpose, in the State of California.

SAC, ECF No. 54 at ¶ 54.

         In their prayer for relief, Plaintiffs request a declaration that Defendant’s conduct violates the law; injunctive and other equitable relief; restitution; damages; punitive damages; treble damages; attorneys’ fees and costs; and pre and post judgment interest. Id. at 64-65.

         LEGAL STANDARDS

         A. Rule 12(b)(1)

         Under Federal Rule of Procedure (“FRCP”) 12(b)(1), a district court must dismiss a complaint if it lacks subject matter jurisdiction to hear the claims alleged in the complaint. Fed.R.Civ.P. 12(b)(1). “Standing is a threshold matter central to our subject matter jurisdiction.” Bates v. United Parcel Serv., Inc., 511 F.3d 974, 985 (9th Cir. 2007). “[L]ack of Article III standing requires dismissal for lack of subject matter jurisdiction under [FRCP] 12(b)(1).” Maya v. Centex Corp., 658 F.3d 1060, 1067 (9th Cir. 2011) (citations omitted). In determining constitutional standing, the trial court has the authority “to allow or to require the plaintiff to supply, by amendment to the complaint or by affidavits, further particularized allegations of fact deemed supportive of plaintiff’s standing.” Id. (citation and quotations omitted). The court “must accept as true all material allegations of the complaint, and must construe the complaint in favor of the complaining party” when “ruling on a motion to dismiss for want of standing.” Warth v. Seldin, 422 U.S. 490, 501 (1975).

         B. Rule 12(b)(6)

         FRCP 12(b)(6) authorizes dismissal of a complaint that fails “to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). On a Rule 12(b)(6) motion to dismiss, “‘the court accepts the facts alleged in the complaint as true,’ and ‘[d]ismissal can be based on the lack of a cognizable legal theory or the absence of sufficient facts alleged.’” UMG Recordings, Inc. v. Shelter Capital Partners LLC, 718 F.3d 1006, 1014 (9th Cir. 2013) (quoting Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1988)) (alteration in original). However, conclusory allegations of law, unwarranted deductions of fact, and unreasonable inferences are insufficient to defeat a motion to dismiss. Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001); Nat’l Ass’n for the Advancement of Psychoanalysis v. Cal. Bd. of Psychology, 228 F.3d 1043, 1049 (9th Cir. 2000). Furthermore, the court need not accept as true allegations that contradict matters properly subject to judicial notice. Sprewell, 266 F.3d at 988.

         “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 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). Facial plausibility exists “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. (citing Twombly, 550 U.S. at 556). The tenet that the court must accept as true all of the allegations contained in the complaint does not apply to legal conclusions. Id. As such, “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id. (citing Twombly, 550 U.S. at 555). “[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged-but it has not ‘show[n]’-‘that the pleader is entitled to relief.’” Id. at 679 (citing Fed.R.Civ.P. 8(a)(2)) (some alterations in original). If dismissal is ordered, the plaintiff should be granted leave to amend unless it is clear that the claims could not be saved by amendment. Swartz v. KPMG LLP, 476 F.3d 756, 760 (9th Cir. 2007).

         DISCUSSION

         Defendant seeks dismissal of the SAC because: (1) the Hawaiian brand name and trade dress accurately reflect the Hawaiian Snacks’ heritage, and are puffery, at most;[3] (2) Plaintiffs’ fraud-based claims are facially deficient pursuant to FRCP 9(b); and (3) the Court lacks subject matter jurisdiction over any claims pertaining to the six varieties of Hawaiian snacks not purchased by Plaintiffs. The Court addresses each of Defendant’s arguments in turn.

         I. Consumer Protection Claims

         Plaintiffs’ Hawai'i and California consumer protection claims are premised on the same underlying facts: Plaintiffs reasonably believed that the Hawaiian Snacks were made in Hawai'i based on Defendant’s deceptive “Hawaiian” reference and packaging and they would not have purchased, or would have paid less for the Hawaiian Snacks, had they known that the snacks are not manufactured in Hawai'i. Defendant argues that Plaintiffs’ claims are subject to dismissal because its use of “Hawaiian” and Hawai'i imagery are mere puffery, and do not amount to actionable misrepresentations. Mem. in Supp. of Mot., ECF No. 55-1 at 7. Plaintiffs characterize this argument as an attempt by Defendant to seek reconsideration of the Court’s prior ruling that it could not conclude as a matter of law that a reasonable consumer would not be deceived by the Hawaiian Snacks’ packaging and marketing. Opp’n, ECF No. 58 at 4. Plaintiffs urge the Court not to revisit and reverse its prior holding under the law of the case doctrine. Id.

         A. Law of the Case Doctrine

         The law of the case doctrine “generally provides that ‘when a court decides upon a rule of law, that decision should continue to govern the same issues in subsequent stages in the same case,’” Askins v. U.S. Dep’t of Homeland Sec., 899 F.3d 1035, 1042 (9th Cir. 2018) (quoting Musacchio v. United States, __ U.S. __, 136 S.Ct. 709, 716 (2016) (citation omitted)), and “applies most clearly where an issue has been decided by a higher court; in that case, the lower court is precluded from reconsidering the issue and abuses its discretion in doing so except in the limited circumstances the district court identified.” Id. (citations omitted). The doctrine “does not preclude a court from reassessing its own legal rulings in the same case,” however. Id. Indeed, a court may reconsider “its own orders before judgment is entered or the court is otherwise divested of jurisdiction over the order.” Id. (citations omitted).

         Where, as here, a plaintiff files an amended complaint, the law of the case doctrine is inapplicable:

Once the plaintiff elects to file an amended complaint, the new complaint is the only operative complaint before the district court. Ferdik v. Bonzelet, 963 F.2d 1258, 1262 (9th Cir. 1992) (“[A]fter amendment the original pleading no longer performs any function and is treated thereafter as non-existent[.]” (internal quotation marks omitted)). Thus, when an original complaint is dismissed without prejudice, the filing of an amended complaint does not ask the court to reconsider its analysis of the initial complaint. The amended complaint is a new complaint, entitling the plaintiff to judgment on the complaint’s own merits; we do not ask whether the plaintiff is “precluded” or “barred” by the prior ruling. When the defendant files a motion to dismiss the amended complaint, it may urge the district court to determine that the plaintiff’s amended complaint did not cure the deficiencies of the initial complaint. If the district court determines the amended complaint is substantially the same as the initial complaint, the district court is free to follow the same reasoning and hold that the amended claims suffer from the same legal insufficiencies. The district court is not, however, bound by any law of the case. The district court may decide the second motion to dismiss in the same way it decided the first, but permitting the filing of an amended complaint requires a new determination. That leaves the district court free to correct any errors or misunderstandings without having to find that its prior decision was “clearly erroneous.” [United States v.] Cuddy, 147 F.3d [1111,] 1114 [(9th Cir. 1998)]. By contrast, where a final legal determination has been made by a higher court, or by the district court in the same or a related case, the law of the case doctrine allows the court to impose a heightened burden on the plaintiff-to show clear error, changed law, new evidence, changed circumstances, or manifest injustice. Id.

Id. (emphasis added). In this case, the Court dismissed the claims at issue with leave to amend. The Court must therefore consider the SAC on its merits and it is not constrained by statements its prior Order. Id.

         Even if the law of the case doctrine applied, the Court did not “decide” the puffery issue, as Plaintiffs claim. Rather, without addressing puffery and in reviewing the sufficiency of Plaintiff Maeda’s California consumer protection claims, the Court merely stated that it “cannot at this stage conclude as a matter of law that a reasonable consumer would not be deceived by the Hawaiian Snacks’ packaging and marketing.” Order, ECF No. 32 at 31. The Court instead dismissed Plaintiff Maeda’s California consumer protection claims for failure to sufficiently plead fraud and granted Plaintiff Maeda leave to amend those claims. Id. Because Plaintiffs should be given leave to amend claims that could be saved by amendment, the Court properly allowed Plaintiff Maeda to cure his defective California consumer protection claims before considering whether dismissal is appropriate on puffery grounds and/or for failure to satisfy the reasonable consumer test.

         B. Puffery

         Defendant contends that Plaintiffs’ claims are subject to dismissal because the Hawaiian Snacks’ trade names and trade dress are mere puffery; that is, they are “an accurate homage to their history and heritage . . . and not a concrete statement of geographic origin.” Mem. in Supp. of Mot., ECF No. 55-1 at 10. Now that Plaintiffs are on the fourth iteration of their pleading, the Court finds it appropriate to evaluate whether certain claims are subject to dismissal as a matter of law based on puffery grounds.

         Statements that are “generalized, vague and unspecific assertions [] constitu[te] mere ‘puffery’ upon which a reasonable consumer could not rely” and are not actionable under the California consumer protection statutes. Glen Holly Entm’t, Inc. v. Tektronix Inc., 343 F.3d 1000, 1015 (9th Cir. 2003); Hadley v. Kellogg Sales Co., 273 F.Supp. 3d 1052, 1081 (N.D. Cal. 2017). Put another way, a “statement is considered puffery if the claim is extremely unlikely to induce consumer reliance.” Newcal Indus., Inc. v. Ikon Office Sol., 513 F.3d 1038, 1053 (9th Cir. 2008); Cook, Perkiss & Liehe, Inc. v. N. Cal. Collection Serv. Inc., 911 F.2d 242, 246 (9th Cir. 1990) (affirming district court’s dismissal of false advertising claim under the Lanham Act because the statement-“we’re the low cost commercial collection experts”-was mere puffery and holding that “it is beyond the realm of reason to assert . . . that a reasonable consumer would interpret this as a factual claim upon which he or she could rely”).

         “California consumer protection law distinguishes between concrete statements about a product and generalized boasts or statements of opinion, and only the former is actionable under the [consumer protection statutes].” Bruton v. Gerber Prod. Co., No. 12-CV-02412-LHK, 2014 WL 172111, at *11 (N.D. Cal. Jan. 15, 2014) (citing Consumer Advocates v. Echostar Satellite Corp., 113 Cal.App.4th 1351, 1360-62 (2003)); Newcal Indus., 513 F.3d at 1053 (“Ultimately, the difference between a statement of fact and mere puffery rests in the specificity or generality of the claim.”). “If an alleged misrepresentation would not deceive a reasonable consumer or amounts to mere puffery, then the claim may be dismissed as a matter of law.” In re Yahoo! Inc. Customer Data Sec. Breach Litig., No. 16- MD-02752-LHK, 2017 WL 3727318, at *26 (N.D. Cal. Aug. 30, 2017) (quoting Baltazar v. Apple Inc., 2011 WL 6747884, at *4 (N.D. Cal. Dec. 22, 2014)).

         When considering a motion to dismiss pursuant to FRCP 12(b)(6), “[d]istrict courts often resolve whether a statement is puffery.” Cook, 911 F.2d at 245. However, “whether a business practice is deceptive will usually be a question of fact not appropriate for decision on demurrer.” Williams v. Gerber Prod. Co., 552 F.3d 934, 938 (9th Cir. 2008). Only in a “rare situation” is a motion to dismiss granted on this ground. Id. at 939.

         Both Hawai'i and California employ the reasonable consumer standard in evaluating consumer protection claims. Yokoyama v. Midland Nat’l Life Ins. Co., 594 F.3d 1087, 1092 (9th Cir. 2010) (“Hawaii’s consumer protection laws look to a reasonable consumer, not the particular consumer.”); Williams, 552 F.3d at 938 (explaining that the California consumer protection statutes are governed by the reasonable consumer test). However, only the California courts apply the puffery defense in the manner urged by Defendant.[4] Therefore, although the parties conflate the Hawai’i and California claims and their related analyses, the Court evaluates the Hawai’i and California consumer protection claims as they are conventionally addressed by the respective state appellate courts and federal district courts.

         C. Hawai'i Consumer ...


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