Mccausland v. PepsiCo, Inc.

Background

Ian McCausland, Carlo Garcia, and Michael Zurl brought a class action alleging that PepsiCo, Inc. deceptively advertised and labeled its Gatorade Protein Bars. PepsiCo moved to dismiss the first amended complaint under Federal Rule of Civil Procedure 12(b)(1), which concerns subject-matter jurisdiction, and Rule 12(b)(6), which concerns whether a complaint states a legally sufficient claim.

The court had previously granted PepsiCo’s earlier motion in part and denied it in part. The court had rejected PepsiCo’s arguments that the claims were entirely preempted by the federal Food, Drug, and Cosmetic Act or that the plaintiffs had failed to plausibly allege deceptive labeling and marketing. It had dismissed the plaintiffs’ requests for equitable restitution and injunctive relief. The plaintiffs then filed the first amended complaint, making limited changes to those requests.

Rulings on PepsiCo’s Motion

The court granted PepsiCo’s request for judicial notice of the complete packaging and labels for the Gatorade Protein Bars because the complaint discussed those materials extensively and relied on them.

The court denied PepsiCo’s motion to dismiss the consumer-deception claims. It explained that its earlier order had not found all of the identified allegations preempted by federal law. In particular, whether certain protein-related allegations were preempted presented factual issues that could not be resolved on a motion to dismiss. The court also stated that the sugar-labeling allegations remained relevant to what a reasonable consumer might understand about the bars’ sugar content and whether PepsiCo’s other statements were misleading, even though some requested labeling requirements were preempted. Because the amended complaint’s allegations supporting the deception claims had not changed, the court denied dismissal for the reasons stated in its earlier order.

The court also denied PepsiCo’s motion to dismiss the plaintiffs’ claims under the “unlawful” and “unfair” prongs of California’s Unfair Competition Law. Those claims were derivative of the consumer-deception claims, which the court found plausible.

Injunctive Relief

The court dismissed the plaintiffs’ request for injunctive relief for lack of Article III standing. The plaintiffs added allegations that they usually buy food without researching fine-print labels and intended to buy the product again if its representations were consistent with its attributes or composition. The court held that these allegations did not establish a concrete threat of future harm.

According to the court, the plaintiffs knew from the litigation that they could review the bars’ labels to determine their sugar content. Because they had access to accurate sugar information on the back label, they could not claim that PepsiCo’s advertising would continue to mislead them. The court stated that the plaintiffs could not create a future injury simply by alleging that they did not read labels. The dismissal of the injunctive-relief request was without prejudice and without leave to amend.

Equitable Monetary Relief

The court dismissed the plaintiffs’ claims for monetary relief under the Unfair Competition Law and the Consumer Legal Remedies Act. The plaintiffs sought disgorgement and restitution of money PepsiCo allegedly obtained from selling the bars. To obtain equitable relief, however, they had to plausibly allege that they lacked an adequate legal remedy. The court found that the amended complaint’s conclusory statement that the plaintiffs lacked an adequate remedy at law was unsupported by facts.

The court dismissed those monetary-relief claims without leave to amend. It stated that the dismissal was without prejudice to reasserting the claims in a state court not subject to the same restrictions on equitable relief.

Disposition

The court granted PepsiCo’s motion to dismiss in part and denied it in part. The consumer-deception claims and the related Unfair Competition Law claims survived the motion. The requests for injunctive relief and monetary equitable relief were dismissed as described above.