Gardner v. Starkist Co.

Background

Purchasers of StarKist Co. tuna from various states brought a class action alleging that StarKist’s statements that its tuna was “100% dolphin-safe” and sustainably sourced were false and misleading. The plaintiffs alleged that StarKist used fishing methods—including purse seine nets, longlines, and fish aggregating devices—that were known to harm or kill dolphins. They also sought to hold Dongwon Industries, StarKist’s South Korean parent company, responsible.

In an earlier order, the court found that the plaintiffs had adequately pleaded state-law fraud claims against StarKist, dismissed their claims against Dongwon for lack of personal jurisdiction, and allowed them to amend certain claims and theories. In the second amended complaint, the plaintiffs dropped their Racketeer Influenced and Corrupt Organizations Act claim but continued to assert the fraud claims against StarKist and theories that Dongwon was StarKist’s alter ego or agent.

StarKist’s Motion to Dismiss

StarKist moved to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). It argued that the plaintiffs had not plausibly alleged that a reasonable consumer would understand StarKist’s dolphin-safe representations to promise that tuna fishing would cause no possible harm or injury to dolphins.

The court first ruled that StarKist’s argument violated Rule 12(g)(2), which generally bars a party from bringing a later motion raising an objection that was available but omitted from an earlier motion. The court found that the factual allegations in the second amended complaint were not materially different from those in the first amended complaint. The added allegations clarified, rather than created, the plaintiffs’ theory that StarKist promised a level of dolphin safety higher than federal labeling requirements. StarKist could therefore have raised its argument in its earlier motion.

The court also considered the argument on its merits and rejected it. The plaintiffs were not alleging that StarKist promised an absolute guarantee that no dolphin would ever be accidentally injured or killed. Instead, they alleged that StarKist promised a heightened level of dolphin safety while using fishing methods widely known to harm or kill substantial numbers of dolphins. The court held that this theory was plausible and denied StarKist’s motion to dismiss the fraud claims.

Dongwon’s Motion to Dismiss

Dongwon moved to dismiss for lack of personal jurisdiction. Personal jurisdiction is the court’s authority to exercise power over a particular defendant. The plaintiffs argued that jurisdiction existed because StarKist and Dongwon were alter egos or agents of one another.

For an alter-ego theory, the plaintiffs had to plausibly allege both a unity of interest and ownership between the entities and that respecting their separate corporate identities would produce fraud or injustice. The court accepted that the unity-of-interest factors were sufficiently pleaded, but found that the plaintiffs still failed to plead the required second part: facts showing bad faith or an inequitable result if Dongwon’s separate corporate identity were respected.

The court rejected the plaintiffs’ assertions that Dongwon had directly participated in StarKist’s advertising campaign, that respecting the corporate form would frustrate a meritorious claim, or that transactions involving Techpack Solutions Co. Ltd. showed bad faith or inadequate capitalization. The court also noted that the plaintiffs’ opposition did not address their agency theory and that, even if considered, the complaint contained the same conclusory allegation previously found inadequate.

The court denied the plaintiffs’ request for jurisdictional discovery because their jurisdictional allegations were attenuated and bare, and they had twice failed to allege sufficient facts supporting jurisdiction. It granted Dongwon’s motion to dismiss with prejudice for lack of personal jurisdiction.

Disposition

Judge William Orrick denied StarKist’s motion to dismiss the fraud claims for failure to state a claim. He granted Dongwon’s motion to dismiss with prejudice for lack of personal jurisdiction. The opinion therefore left the claims against StarKist in the case while ending the claims against Dongwon under the stated disposition.