Case 5:19-cv-07471-BLF Document 49 Filed 06/04/20 Page 1 of 10
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`UNITED STATES DISTRICT COURT
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`NORTHERN DISTRICT OF CALIFORNIA
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`SAN JOSE DIVISION
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`STEVEN PRESCOTT and LINDA
`CHESLOW, individually and on behalf of
`all others similarly situated,
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`Plaintiffs,
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`v.
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`NESTLE USA, INC,
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`Defendant.
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`Case No. 19-cv-07471-BLF
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`ORDER GRANTING MOTION TO
`DISMISS FIRST AMENDED
`COMPLAINT WITH LEAVE TO
`AMEND
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`[Re: ECF 27]
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`Plaintiffs Steven Prescott and Linda Cheslow bring this putative class action against
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`Defendant Nestle USA, Inc., seeking to assert state law consumer claims on behalf of persons who
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`purchased “Nestle Toll House’s Premier White Morsels” (the “Product”). Plaintiffs claim that
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`Nestle’s labeling and advertising misleads consumers into believing that the Product contains
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`white chocolate when in fact it does not.
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`Nestle moves to dismiss the operative first amended complaint (“FAC”) for failure to state
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`a claim upon which relief may be granted, pursuant to Federal Rule of Civil Procedure 12(b)(6).
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`The Court has considered the briefing of the parties and the oral argument of counsel presented at
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`the hearing on May 7, 2020.
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`For the reasons discussed below, the motion is GRANTED WITH LEAVE TO AMEND.
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` I.
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`BACKGROUND
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`Plaintiffs filed this action in the Santa Cruz County Superior Court on September 19, 2019.
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`See Notice of Removal Exh. 1, ECF 1-1. Nestle removed the action to federal district court
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`pursuant to the Class Action Fairness Act, 18 U.S.C. § 1332(d). See Notice of Removal, ECF 1.
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`Nestle moved to dismiss the complaint under Rule 12(b)(6), and Plaintiffs responded by filing the
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`operative FAC. See Motion to Dismiss, ECF 10; FAC, ECF 13. After the FAC was filed, the
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`Case 5:19-cv-07471-BLF Document 49 Filed 06/04/20 Page 2 of 10
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`Court terminated the motion to dismiss the original complaint. See Order, ECF 22.
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`Plaintiffs devote many paragraphs of the FAC to the history of chocolate production from
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`1400 B.C. to the present; the introduction of white chocolate by Nestle in the 1930s; and
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`regulations issued by the Food and Drug Administration (“FDA”) defining white chocolate. See
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`FAC ¶¶ 5-16. Plaintiffs do not allege that they were aware of any of these facts at the time they
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`purchased the Product, other than to allege generally that they “understand that ‘white chocolate’
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`contains chocolate derived from cocoa or cacao.” FAC ¶ 14.
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`Plaintiffs claim that they purchased the Product in the belief that it was white chocolate,
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`and that in making their purchases they “reasonably relied upon the labeling, advertising, and
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`placement of the Product.” FAC ¶¶ 50-51. Specifically, Plaintiffs allege they “believed the
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`Product contained real white chocolate because the name of the Product included the term
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`‘White.’” FAC ¶¶ 50-51. Plaintiffs also allege that the word “premier” misleads “consumers into
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`thinking that the Product contains premier ingredients, not fake white chocolate.” FAC ¶ 19. In
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`addition, Plaintiffs claim that they “reasonably believed the Product was white chocolate because
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`it was displayed side-by-side next to other chocolate morsel products.” FAC ¶¶ 50-51. “Had
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`Plaintiffs known the Product did not contain white chocolate, then they would not have purchased
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`it.” FAC ¶ 64.
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`Plaintiffs seek to represent a nationwide class or, alternatively, a California class of
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`persons who purchased the Product. FAC ¶ 67. The FAC contains three state law claims: (1)
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`unfair competition under California’s Unfair Competition Law (“UCL”), Cal. Bus. & Prof. Code §
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`17200 et seq.; false advertising under California’s False Advertising Law (“FAL”), Cal. Bus. &
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`Prof. Code § 17500 et seq.; and violation of California’s Consumers Legal Remedies Act
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`(“CLRA”), Cal. Civ. Code § 1750 et seq. Plaintiffs seek an injunction prohibiting Nestle from
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`labeling or advertising its Product as white chocolate1; reasonable attorneys’ fees; costs of suit;
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`and such other relief as the Court may deem appropriate. FAC Prayer, ECF 13.
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`1 The Court notes that Plaintiffs do not allege that Nestle currently labels its Product as “white
`chocolate,” and thus it does not appear on the face of the FAC that such injunctive relief would be
`a reasonable remedy. However, Nestle does not raise that issue in this motion.
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`Northern District of California
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`Case 5:19-cv-07471-BLF Document 49 Filed 06/04/20 Page 3 of 10
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` II. LEGAL STANDARD
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`“A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) for failure to state a
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`claim upon which relief can be granted tests the legal sufficiency of a claim.” Conservation Force
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`v. Salazar, 646 F.3d 1240, 1241-42 (9th Cir. 2011) (quotation marks and citation omitted). While
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`a complaint need not contain detailed factual allegations, it “must contain sufficient factual matter,
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`accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556
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`U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is
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`facially plausible when it “allows the court to draw the reasonable inference that the defendant is
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`liable for the misconduct alleged.” Id.
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`When evaluating a Rule 12(b)(6) motion, the district court must consider the allegations of
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`the complaint, documents incorporated into the complaint by reference, and matters which are
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`subject to judicial notice. Louisiana Mun. Police Employees’ Ret. Sys. v. Wynn, 829 F.3d 1048,
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`1063 (9th Cir. 2016) (citing Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322
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`(2007)).
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` III. DISCUSSION
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`Nestle seeks dismissal of all claims in the FAC on the grounds that: (1) Plaintiffs have not
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`plausibly alleged that the Product’s labeling is false or misleading; (2) Plaintiffs lack statutory
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`standing under the UCL, FAL, and CLRA because they have not plausibly alleged reliance; (3) the
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`FAC does not meet the heightened pleading requirements of Federal Rule of Civil Procedure 9(b);
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`(4) Plaintiffs’ claim that the Product is falsely labeled as “Premier” fails because the word
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`“Premier” is non-actionable puffery; and (5) Plaintiffs lack standing to pursue injunctive relief. In
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`opposition, Plaintiffs contend that they plausibly have alleged the false and misleading nature of
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`Nestle’s labeling and advertising of the Product, they have statutory standing to pursue their
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`claims, they have satisfied the heightened pleading requirements of Rule 9(b), and they have
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`standing to seek injunctive relief.
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`Before addressing these arguments, the Court takes up Nestle’s request for judicial notice
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`as well as its contention that these Plaintiffs have brought similar cases against other companies.
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`The Court then addresses Nestle’s asserted grounds for dismissal.
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`Case 5:19-cv-07471-BLF Document 49 Filed 06/04/20 Page 4 of 10
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`A.
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`Nestle’s Request for Judicial Notice
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`Nestle requests that the Court take judicial notice of high-resolution images of the front of
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`the Product package and the ingredient list on the back of the Product package. See Giali Decl.
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`Exh. A, ECF 27-2. Nestle asserts that these images show the Product package more clearly and
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`more completely than the image included in the FAC at paragraph 18. See FAC ¶ 18, ECF 13.
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`While Plaintiffs state in their opposition brief’s table of contents that the request for judicial notice
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`should be denied, they do not address the request for judicial notice in the body of their brief. See
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`Opp. at i, 22-23, ECF 29.
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`Under Federal Rule of Evidence 201, a “court may judicially notice a fact that is not
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`subject to reasonable dispute.” Fed. R. Evid. 201. Other Courts in this district have taken judicial
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`notice of images that better display the packaging in question, on the ground that “the packaging
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`of defendant’s product is publicly available and not subject to reasonable dispute.” Cheslow v.
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`Ghirardelli Chocolate Co., No. 19-CV-07467-PJH, 2020 WL 1701840, at *3 (N.D. Cal. Apr. 8,
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`2020). That reasoning applies here. Nestle’s request for judicial notice is GRANTED.2
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`B.
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`Plaintiffs’ Participation in Similar Lawsuits
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`Nestle points out that Plaintiffs have participated in similar, earlier-filed lawsuits. Both
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`Cheslow and Prescott are named plaintiffs in another action pending in this district before Chief
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`Judge Phyllis J. Hamilton, in which they assert putative class claims under California’s UCL,
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`FAL, and CLRA based on allegations that Ghirardelli misleads consumers into believing that its
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`“Premium Baking Chips Classic White Chips” product contains white chocolate when it does not.
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`See Cheslow v. Ghirardelli Chocolate Co., No. 19-cv-07467 (N.D. Cal.). Cheslow also submitted
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`a claim in an earlier class action suit against Ghirardelli based on its alleged deceptive labeling of
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`white baking chips. See Miller v. Girardelli Chocolate Co., 12-cv-04936-LB (N.D. Cal.).
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`Prescott previously sued the Kroger Company, alleging that its ChipMates white-chip cookie
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`product is falsely advertised to contain white chocolate. See Prescott v. The Kroger Co., No.
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`2 Having granted Nestle’s request for judicial notice, the Court need not address Nestle’s
`alternative argument that the images may be considered under the incorporation by reference
`doctrine.
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`Case 5:19-cv-07471-BLF Document 49 Filed 06/04/20 Page 5 of 10
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`19CV004055 (Monterey County Superior Court).
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`While Plaintiffs’ suitability as class representatives may be impacted by their participation
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`in earlier lawsuits alleging false labeling of white chip products, that is an issue for another day.
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`Nestle does not assert that the prior lawsuits give rise to a defense suitable for determination at the
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`motion to dismiss stage. Accordingly, Plaintiffs’ participation in the earlier-filed lawsuits is
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`irrelevant to the present motion, except insofar as rulings in those lawsuits constitute persuasive
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`authority. The complaint in Cheslow alleged facts similar to those alleged in the FAC here, and
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`Judge Hamilton dismissed the Cheslow complaint with leave to amend based on the identical
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`grounds argued by Nestle here. See Cheslow v. Ghirardelli Chocolate Co., No. 19-CV-07467-
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`PJH, 2020 WL 1701840, at *9 (N.D. Cal. Apr. 8, 2020). As discussed below, this Court finds the
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`Cheslow decision to be highly persuasive.
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`C.
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`Allegations that Product’s Labeling and Advertising is False or Misleading
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`Plaintiffs’ claims under the UCL (Claim 1), FAL (Claim 2), and CLRA (Claim 3) are
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`grounded in Plaintiffs’ assertion that Nestle’s labeling, advertising, and placement of the Product
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`in grocery stores deceived them into believing that the Product contains white chocolate. See FAC
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`¶¶ 50-51, 81-85, 93-96, 106-07. Plaintiffs’ “claims under these California statutes are governed
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`by the ‘reasonable consumer’ test.” Williams v. Gerber Prod. Co., 552 F.3d 934, 938 (9th Cir.
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`2008) (citing Freeman v. Time, Inc., 68 F.3d 285, 289 (9th Cir. 1995)). “Under the reasonable
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`consumer standard, [Plaintiffs] must show that members of the public are likely to be deceived.”
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`Id. Moreover, the “false advertising violations must be premised on some statement or
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`representation by the defendant about the product.” Boris v. Wal-Mart Stores, Inc., 35 F. Supp. 3d
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`1163, 1169 (C.D. Cal. 2014), aff’d, 649 F. App’x 424 (9th Cir. 2016). A plaintiff’s mistaken
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`belief about the product, untethered to a statement or representation by the defendant, is
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`insufficient to state a claim under the UCL, FAL, or CLRA. See id.
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`Application of the reasonable consumer standard involves “questions of fact that are
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`appropriate for resolution on a motion to dismiss only in rare situations.” Reid v. Johnson &
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`Johnson, 780 F.3d 952, 958 (9th Cir. 2015) (quotation marks, citation, and alteration omitted); see
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`also Ham v. Hain Celestial Grp., Inc., 70 F. Supp. 3d 1188, 1193 (N.D. Cal. 2014) (“Whether a
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`Case 5:19-cv-07471-BLF Document 49 Filed 06/04/20 Page 6 of 10
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`reasonable consumer would be deceived by a product label is generally a question of fact not
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`amenable to determination on a motion to dismiss.”). “However, in rare situations a court may
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`determine, as a matter of law, that the alleged violations of the UCL, FAL, and CLRA are simply
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`not plausible.” Ham, 70 F. Supp. 3d at 1193.
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`Applying these standards, this Court concludes that Plaintiffs have not alleged facts
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`showing that Nestle’s labeling, advertising, and product placement would deceive a reasonable
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`consumer into believing that the Product contains white chocolate. Plaintiffs allege that the words
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`“white” and “premier” and are misleading, as they imply that the product contains white
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`chocolate, and that the placement of the Product next to chocolate baking chips in grocery stores is
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`misleading. See FAC ¶¶ 50-51, 81-85, 93-96, 106-07. But the Product’s label does not state that
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`it contains white chocolate or even use the word “chocolate.” As discussed below, Plaintiffs’
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`allegations are insufficient to state a claim.
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`1.
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`The Word “White” on the Product Label
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`Plaintiffs allege that the word “white” on the label of Nestle’s “Toll House’s Premier
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`White Morsels” suggests that the product contains white chocolate. Nestle asserts that the use of
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`the adjective “white” does not suggest that its Product contains white chocolate.
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`In Cheslow, Judge Hamilton dismissed nearly identical claims based on use of the word
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`“white” on the packaging of Ghirardelli’s “Premium Baking Chips Classic White Chips.” See
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`Cheslow, 2020 WL 1701840, at *5. Judge Hamilton relied on Becerra v. Dr. Pepper/Seven Up,
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`Inc., 945 F.3d 1225, 1229 (9th Cir. 2019), for guidance in evaluating claims of deception based on
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`use of modifying adjectives on food labels. In Becerra, the Ninth Circuit addressed claims that
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`the word “diet” on the product “Diet Dr. Pepper” meant that drinking Diet Dr. Pepper assisted in
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`weight loss or healthy weight management. Becerra, 945 F.3d at 1227. After considering the
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`commonly understood definition of the word “diet” when used as an adjective – “reduced in or
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`free from calories” – the Ninth Circuit concluded that “no reasonable consumer would assume that
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`Diet Dr Pepper’s use of the term ‘diet’ promises weight loss or management.” Id. at 1229. The
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`Court went on to state that, “In context, the use of ‘diet’ in a soft drink’s brand name is understood
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`as a relative claim about the calorie content of that soft drink compared to the same brand’s
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`‘regular’ (full-caloric) option.” Id. Applying this reasoning to the facts alleged in Cheslow, Judge
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`Hamilton concluded that no reasonable consumer would assume that use of the word “white” on
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`the package of Ghirardelli’s “Premium Baking Chips Classic White Chips” means that the product
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`contains white chocolate. Cheslow, 2020 WL 1701840, at *5. Judge Hamilton observed that
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`“[s]imply because some consumers unreasonably assumed that ‘white’ in the term ‘white chips’
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`meant white chocolate chips does not make it so.” Id.
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`This Court agrees with the reasoning of Cheslow and, in particular, its application of
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`Becerra to claims based on use of the word “white” on the packaging of baking chips. No
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`reasonable consumer could believe that a package of baking chips contains white chocolate simply
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`because the product includes the word “white” in its name or label. Plaintiffs’ argument to the
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`contrary based on their allegations regarding other consumers’ posts to the “Top Class Actions”
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`website is unpersuasive. See FAC ¶¶ 22-32. Those consumers’ subjective opinions that Nestle’s
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`labeling is misleading, posted in the context of asking to join this lawsuit, are irrelevant to this
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`Court’s application of the reasonable consumer standard as discussed in Becerra and Cheslow.
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`2.
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`The Word “Premier” on the Product Label
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`Plaintiffs allege that the word “premier” misleads “consumers into thinking that the
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`Product contains premier ingredients, not fake white chocolate.” FAC ¶ 19. Plaintiffs assert in the
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`FAC that “premier” is defined as “first in position, rank, or importance,” and that “[r]easonable
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`consumers do not expect that the Product contains fake white chocolate, or inferior ingredients
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`such as hydrogenated oils.” FAC ¶ 19. Nestle argues that use of the term “premier” is non-
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`actionable puffery.
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`The Court agrees with Nestle. Fraud-based claims cannot be based on statements that are
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`“generalized, vague and unspecific assertions, constituting mere ‘puffery’ upon which a
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`reasonable consumer could not rely.” Glen Holly Entm’t, Inc. v. Tektronix Inc., 343 F.3d 1000,
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`1015 (9th Cir. 2003), opinion amended on denial of reh’g, 352 F.3d 367 (9th Cir. 2003).
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`Applying this rule, Judge Hamilton concluded in Cheslow that Ghirardelli’s use of “premium” in
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`the context of “Premium Baking Chips” and “premium ingredients” constitutes puffery upon
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`which no reasonable consumer could rely to conclude that the product contains white chocolate.
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`See Cheslow, 2020 WL 1701840, at *6. Similarly, in the present case this Court concludes that
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`Nestle’s use of the word “premier” on the label of its “Toll House’s Premier White Morsels” is
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`mere puffery that cannot form the basis of a claim under the reasonable consumer standard
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`applicable to the UCL, FAL, and CLRA.
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`3.
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`Product Placement
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`Plaintiffs’ claims are based in part on the Product’s placement near baking chips
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`containing chocolate in the grocery store. See FAC ¶¶ 50-51, 81, 95. Nestle correctly asserts that
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`a third-party retailer’s placement of a product cannot support a claim against the manufacturer.
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`See Parent v. Millercoors LLC, No. 3:15-CV-1204-GPC-WVG, 2016 WL 3348818, at *7 (S.D.
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`Cal. June 16, 2016) (defendant beer manufacture could not be held liable based on retailer’s
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`decision to stock Blue Moon beer among craft beers). Plaintiffs have not alleged that Nestle
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`controls the placement of its Product in retail grocery stores.
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`4.
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`Conclusion
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`Based on the foregoing, the Court concludes that Plaintiffs have failed to allege facts
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`sufficient to make out a plausible claim against Nestle under the UCL, FAL, or CLRA. The
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`motion to dismiss therefore is GRANTED as to Claims 1 (UCL), 2 (FAL), and 3 (CLRA).3
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`D.
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`Statutory Standing under UCL, FAL, and CLRA
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`Nestle argues that Plaintiffs have failed to allege facts establishing statutory standing under
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`the UCL, FAL, and CLRA because they have not plausibly alleged that they suffered economic
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`injury caused by Nestle’s false advertising. To assert a claim under the UCL or FAL, the plaintiff
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`must allege economic injury. See Hinojos v. Kohl’s Corp., 718 F.3d 1098, 1103 (9th Cir. 2013).
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`To assert a claim under the CLRA, a plaintiff must plead “any damage.” See Davidson v.
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`Kimberly-Clark Corp., 889 F.3d 956, 965 (9th Cir. 2018). An allegation that the consumer would
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`not have bought the product but for the alleged misrepresentation is sufficient to allege the
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`requisite injury under the UCL, FAL, or CLRA. See id. The FAC alleges that “[h]ad Plaintiffs
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`3 Having concluded that Plaintiffs have failed to state a claim for relief under the standards discuss
`above, the Court need not and does not separately address Nestle’s argument that Plaintiffs have
`failed to satisfy the heightened pleading requirements of Rule 9(b).
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`known the Product did not contain white chocolate, then they would not have purchased it,” FAC
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`¶ 64, and that “Plaintiffs would not have purchased the Product but for the representations by
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`Defendant about the Product,” FAC ¶ 73. Those allegations are sufficient to establish statutory
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`standing.
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`Nestle’s arguments grounded in Plaintiffs’ knowledge, or lack of knowledge, regarding the
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`FDA’s definition of white chocolate do not alter this analysis. Moreover, Nestle’s argument that
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`Plaintiffs improperly seek a full refund of the price paid for the product goes to the amount of
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`damages they would be entitled to recover in the event they prevail, not the viability of their
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`claims.
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`Accordingly, the motion to dismiss is DENIED to the extent it is based on lack of statutory
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`standing.
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`E.
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`Standing to Seek Injunctive Relief
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`Finally, Nestle argues that Plaintiffs have failed to allege facts demonstrating that they
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`have standing to seek injunctive relief. “A plaintiff must demonstrate constitutional standing
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`separately for each form of relief requested.” Davidson v. Kimberly-Clark Corp., 889 F.3d 956,
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`967 (9th Cir. 2018). “To establish standing to seek injunctive relief or declaratory relief, a
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`plaintiff must show he is under threat of suffering ‘injury in fact that is concrete and particularized
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`and that the threat must be actual and imminent, not conjectural or hypothetical.’” N.Y. v. San
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`Ramon Valley Unified Sch. Dist., No. 17-CV-03906-MMC, 2018 WL 2463243, at *2 (N.D. Cal.
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`June 1, 2018) (quotation marks, citation, and alterations omitted).
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`Under certain circumstances, a previously deceived consumer who brings a false
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`advertising claim can allege that her inability to rely on the defendant’s future advertising
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`constitutes an injury sufficient to grant Article III standing to seek prospective relief. Davidson,
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`889 F.3d at 967. In Davidson, the Court found that the plaintiff, who had brought suit based on
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`the defendant’s allegedly false representations that its bathroom wipes were “flushable,” had
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`standing to seek injunctive relief where she alleged that she: continued to desire to purchase wipes
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`suitable for disposal in a household toilet; would purchase truly flushable wipes manufactured by
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`the defendant if it were possible; regularly visited stores where the defendant’s flushable wipes
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`9
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`Northern District of California
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`United States District Court
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`

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`Case 5:19-cv-07471-BLF Document 49 Filed 06/04/20 Page 10 of 10
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`were sold; and continually saw the defendant’s flushable wipes packaging but had no way of
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`determining the truth of the representation that the wipes were “flushable.” Id. at 970-71.
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`In the present case, Plaintiffs have not alleged that they would purchase the Product absent
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`the alleged misleading labeling. To the contrary, Plaintiffs make clear that they do not wish to
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`purchase “fake” white chocolate. See FAC ¶¶ 42 (“There is nothing premier about fake white
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`chocolate.”); 64 (“Had Plaintiffs known the Product did not contain white chocolate, then they
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`would not have purchased it.”). Now that Plaintiffs know the Product does not contain white
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`chocolate, it is difficult to see how Plaintiffs could be misled into purchasing it in the future. See
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`Joslin v. Clif Bar & Co., No. 4:18-CV-04941-JSW, 2019 WL 5690632, at *4 (N.D. Cal. Aug. 26,
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`2019) (“If Plaintiffs do not want products that do not contain real white chocolate, the Court is
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`hard pressed to see how Plaintiffs would be able to allege the requisite future harm.”).
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`Plaintiffs allege that they “would purchase the Product again in the future if they could be
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`sure that the Product was white chocolate.” FAC ¶ 52. However, the Court lacks authority to
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`compel Nestle to make any particular product by way of an injunction.
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`The motion to dismiss is GRANTED on the additional basis that Plaintiffs have failed to
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`allege facts demonstrating standing to seek injunctive relief.
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`E.
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`Leave to Amend
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`Nestle asks that its motion to dismiss be granted without leave to amend. However, this
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`order represents the first guidance offered by the Court regarding Plaintiffs’ claims. Accordingly,
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`the Court finds that leave to amend is appropriate.
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` IV. ORDER
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`(1)
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`Nestle’s motion to dismiss the FAC is GRANTED WITH LEAVE TO AMEND as
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`to all claims;
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`(2)
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`Any amended pleading shall be filed within forty-five days of this order, or by
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`July 20, 2020;
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`(3)
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`This order terminates ECF 27.
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`Dated: June 4, 2020
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`
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` ______________________________________
`BETH LABSON FREEMAN
`United States District Judge
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`10
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`Northern District of California
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`United States District Court
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`