Castillo v. Walmart, Inc.

Background

Rebeca Castillo brought a proposed class action against Walmart, Inc. concerning Parent’s Choice Yogurt Bites Freeze-Dried & Yogurt Fruit Snacks. She alleged that Walmart advertised and labeled the products as containing “No Preservatives,” even though the ingredient list included ascorbic acid. Castillo alleged that ascorbic acid functions as a preservative in the products and that she paid more because of the allegedly misleading label.

Castillo asserted claims for breach of express warranty, violations of California’s Unfair Competition Law and False Advertising Law, a violation of the Consumers Legal Remedies Act, and unjust enrichment. The complaint defined the proposed class as people in California who bought the products in California, but it also mentioned a nationwide class in one paragraph.

Standing and Rule 12(b)(1)

Walmart argued that Castillo lacked standing—the constitutional requirement that a plaintiff show a concrete injury connected to the defendant’s conduct—because she had not adequately shown that the ascorbic acid functioned as a preservative, that she paid a price premium, or that she would buy the products again. Walmart also challenged Castillo’s ability to pursue claims involving products she did not purchase.

The court rejected Walmart’s argument that the ascorbic acid’s function could be resolved at the pleading stage, finding that the issue presented a factual dispute that might require expert testimony. The court found that Castillo adequately alleged an economic injury from purchasing a product with allegedly misleading labeling and adequately alleged an interest in buying the products again for purposes of seeking an injunction.

The court nevertheless found that Castillo had not supported her price-premium allegation with enough facts. It also found that she had not adequately alleged that the products she did not purchase were substantially similar to the Banana Yogurt Bites she identified as her purchase. Because amendment might not be futile, the court granted Walmart’s Rule 12(b)(1) motion with leave to amend as to standing for price-premium damages, standing concerning unpurchased products, and claims related to dl-alpha tocopheryl acetate. The motion was otherwise denied.

Rule 12(b)(6) Claims

A Rule 12(b)(6) motion tests whether a complaint states a legally sufficient claim. The court found that Castillo adequately described the alleged misrepresentation involving ascorbic acid, including who made it, what the label said, when and where she encountered it, and why she believed it was misleading. The court also found that a reasonable consumer would not necessarily be expected to understand that ascorbic acid is a preservative merely from seeing it in the ingredient list, particularly where the label suggested that it was a vitamin.

The court found the allegations about dl-alpha tocopheryl acetate insufficient because Castillo did not allege the ingredient’s concentration in the products or whether it was present at a concentration that functioned as a preservative. The court allowed her to amend those allegations.

The court denied Walmart’s Rule 12(b)(6) motion as to Castillo’s breach-of-express-warranty claim. It also denied the motion as to the unjust-enrichment claim, reasoning that Castillo could plead unjust enrichment as an alternative theory of liability.

As to the Unfair Competition Law and False Advertising Law claims, the court granted in part and denied in part Walmart’s motion. The court dismissed Castillo’s claims for equitable relief in the form of restitution or disgorgement because she had not shown that monetary damages were an inadequate remedy for past purchases. The court allowed her claims for injunctive relief to proceed because damages for past harm would not address alleged future harm. The court also denied Walmart’s motion to dismiss the Consumers Legal Remedies Act claim, based on counsel’s representation at the hearing that the pre-suit notice issue had been cured.

Motion to Strike and Order

The court granted Walmart’s motion to strike the allegations concerning a nationwide class. It found those allegations immaterial because the complaint’s actual class definition covered only people in California who purchased the products in California. Because amendment to allege a nationwide class might not be futile, the court allowed Castillo to amend.

The order granted in part and denied in part Walmart’s motion to dismiss and motion to strike, with leave to amend. Castillo’s allegation concerning a nationwide class was stricken. Castillo may file an amended complaint by July 31, 2025.