Hawkins v. The Kroger Co.

          Argued and Submitted December 7, 2017 Pasadena, California

          Appeal from the United States District Court for the Southern District of California D.C. No. 3:15-cv-02320-JM-BLM Jeffrey T. Miller, Senior District Judge, Presiding

          Gregory S. Weston (argued) and David Elliot, The Weston Firm, San Diego, California, for Plaintiff-Appellant.

          Jacob M. Harper (argued) and Nicole S. Phillis, Davis Wright Tremaine LLP, Los Angeles, California, for Defendant-Appellee.

          Before: Marsha S. Berzon and Jacqueline H. Nguyen, Circuit Judges, and Frederic Block, ^[*] District Judge.

         SUMMARY^[**]

         Preemption / Standing / Product Labels

         The panel reversed the district court's Fed.R.Civ.P. 12(b)(6) dismissal of plaintiff's putative consumer class action alleging that The Kroger Company sold Kroger Bread Crumbs that included misleading labels in violation of California law.

         Plaintiff alleged that she purchased the bread crumbs by relying on information contained on the face of the label that the product contained "0g Trans Fat per serving." Plaintiff further alleged that contrary to the claim on the label, the bread crumbs "contained artificial trans fats, and caused heart disease, diabetes, cancer, and death."

         Concerning plaintiff's claim under California law of reliance on misleading labels, the panel held that plaintiff had standing because she adequately alleged that she relied on the label's misrepresentations and would not have purchased the product without those misrepresentations. The panel also held that the label statement "0g Trans Fat per serving" was not preempted by federal regulations. Specifically, the panel noted that the federal Food and Drug Administration ("FDA") regulations at issue involved two categories: rules contained in 21 C.F.R. § 101.9 governing what must be stated within the Nutrition Facts Panel; and rules governing "nutrient content claims." The panel applied the holding in Reid v. Johnson & Johnson, 780 F.3d 952, 960 (9th Cir. 2015) (holding that the statement "No Trans Fat" was not allowed outside the Nutrition Facts Panel since the product did contain trans fat, notwithstanding that the Panel reported it contained 0g trans fat), and held that a consumer reading the label in this case could be misled, similarly, into believing that the product was free of trans fat. The panel further held that the federal regulations also bolstered their conclusion in this case. The panel concluded that because the FDA regulations did not authorize the contested statement, plaintiff's labeling claims were not preempted.

         Concerning plaintiff's "use claims" under California law - that it was illegal to include trans fat in products since it was not for human consumption and an unlawful food additive - the panel held that plaintiff had statutory standing for the same reason she had statutory standing to bring her labeling claims. The panel further held that the issue of whether the claim was federally preempted by a Food and Drug Administration 2015 Final Determination on the subject was not addressed by the district court and not fully briefed on appeal. The panel declined to exercise its discretion to consider the issue, and remanded to the district court to decide in the first instance to what extent, if at all, the state law use claims were federally preempted.

          OPINION

          BLOCK, DISTRICT JUDGE

         Trans fat has become increasingly recognized as a dangerous substance and a leading cause of numerous serious ailments, including heart disease and diabetes. Food and Drug Administration ("FDA") regulations govern the information reported within a food product's Nutrition Facts Panel on the product's label.^[1] As for trans fat, FDA regulations provided, at all relevant times, that if the product contained "less than 0.5 gram" trans fat, as it did in this case, it was required to tell the consumer on the Nutrition Facts Panel that it contained 0 grams trans fat, even though it contained this dangerous food additive.

         We are asked to determine, inter alia, whether these FDA trans fat regulations governing the contents of the Nutrition Facts Panel preempt California's unfair competition laws proscribing false or misleading advertising elsewhere on a food product's label. We hold that they do not; accordingly, the plaintiff can challenge the legitimacy of defendant's product advertising on the face of the label that it contains "0g Trans Fat per serving." In doing so, we take the occasion to reinforce and apply our holding in Reid v. Johnson & Johnson that "a requirement to state certain facts in the nutrition label is not a license to make that statement elsewhere on the product." 780 F.3d 952, 960 (9th Cir. 2015) (emphasis added).

         I

         Hawkins' complaint alleges the following:^[2] The Kroger Company ("Kroger") sells Kroger Bread Crumbs ("KBCs") in stores in California, including the supermarket chain Ralph's. Hawkins regularly purchased KBCs at several Ralph's locations between 2000 and 2015. In making the purchases, she relied on the information contained on the face of the label that the product contained "0g Trans Fat per serving." In August 2015, she discovered that, contrary to the claim on the label, KBCs "contained artificial trans fat, and caused heart disease, diabetes, cancer, and death."^[3]

         In October 2015, Hawkins brought a putative class action against Kroger seeking to represent a class of consumers who were misled by the label ("the labeling claims") and had used the dangerous product ("the use claims"). The complaint alleged violations of the California Unfair Competition Law ("UCL"), Cal. Bus. & Prof. Code § 17200 et seq., False Advertising Law ("FAL"), Cal. Bus. & Prof. Code § 17500 et seq., Consumer Legal Remedies Act ("CLRA"), Cal. Civ. Code § 1750 et seq., and common law claims for breach of implied warranty of merchantability and breach of express warranty. It sought damages, pre-judgment and post-judgment interest, injunctive^[4] and declaratory relief, attorneys' fees, and costs.

         The district court granted Kroger's Rule 12(b)(6) motion to dismiss, with prejudice, holding that Hawkins lacked standing to bring these claims, and, alternatively, that the labeling claims were preempted by federal law.

         The district court reasoned that plaintiff lacked standing to bring her labeling claims because it believed that she did not allege that she read the "0g Trans Fat per serving" label on the face of the label and therefore could not establish reliance or injury. It alternatively held that the labeling claims were preempted.^[5] The district court dismissed Hawkins's use claims for lack of standing because her alleged injuries were too speculative. The district court did not address whether the use claims would be preempted.

         Because we disagree with all of the district court's holdings, we reverse and remand for further proceedings.

         II

         "We review de novo a district court's order granting a motion to dismiss on preemption grounds, for lack of standing, or for failure to state a claim upon which relief can be granted." Reid, 780 F.3d at 958.

         A. Labeling Claims

         1. ...