Prescott v. Nestle USA, Inc

Background

Steven Prescott and Linda Cheslow filed a proposed class action against Nestle USA, Inc. concerning Nestle Toll House’s Premier White Morsels. They asserted California claims for unfair competition, false advertising, and violations of the Consumers Legal Remedies Act. The plaintiffs alleged that the product’s name, advertising, and placement near chocolate baking chips led them to believe that it contained white chocolate, although it did not. They sought an injunction, attorney’s fees, costs, and other relief.

Nestle removed the case from California state court under the Class Action Fairness Act and moved to dismiss the first amended complaint under Federal Rule of Civil Procedure 12(b)(6). That rule tests whether a complaint alleges enough facts to state a legally plausible claim. Nestle argued that the plaintiffs had not plausibly alleged misleading labeling, lacked statutory standing, failed to meet the heightened pleading standard for fraud-based claims, improperly based their claims on the word “premier,” and lacked standing to seek an injunction.

Judicial Notice and Earlier Lawsuits

The court granted Nestle’s request to take judicial notice of clearer images of the product’s packaging and ingredient list. Judicial notice permits a court to accept certain facts that are not reasonably disputed without requiring formal proof.

The court also discussed the plaintiffs’ participation in earlier lawsuits involving alleged deception about white baking-chip products. It concluded that those matters did not provide a basis to decide the current motion, although rulings in related proceedings could be persuasive.

Misleading-Labeling Claims

The court applied the “reasonable consumer” test governing the plaintiffs’ claims under California’s Unfair Competition Law, False Advertising Law, and Consumers Legal Remedies Act. Under that test, the plaintiffs had to allege facts showing that members of the public were likely to be deceived by a statement or representation from Nestle. A consumer’s mistaken belief, without a misleading statement or representation by the defendant, was not enough.

The court concluded that the plaintiffs had not alleged enough facts to make their claims plausible. The product label did not state that the product contained white chocolate and did not use the word “chocolate.” The court held that no reasonable consumer could believe that the product contained white chocolate simply because the word “white” appeared in its name or on its label.

The court also held that “premier” was non-actionable puffery. Puffery means a vague, generalized promotional statement on which a reasonable consumer cannot rely as a specific factual representation. Because the court found “premier” to be puffery, that word could not support claims under the California statutes.

Finally, the court held that the product’s placement near chocolate-containing baking chips could not support claims against Nestle because the plaintiffs had not alleged that Nestle controlled the retailer’s placement decisions.

The court therefore granted the motion to dismiss Claims 1, 2, and 3—the claims under the Unfair Competition Law, False Advertising Law, and Consumers Legal Remedies Act.

Statutory Standing

Nestle argued that the plaintiffs lacked statutory standing because they had not plausibly alleged an economic injury caused by false advertising. The court rejected that argument. It held that the plaintiffs’ allegations that they would not have bought the product if they had known it did not contain white chocolate were sufficient to allege the required injury under the Unfair Competition Law, False Advertising Law, and Consumers Legal Remedies Act.

The court therefore denied the motion to dismiss to the extent it was based on lack of statutory standing. The court said that Nestle’s arguments about the plaintiffs’ knowledge of the Food and Drug Administration’s definition of white chocolate, and about the amount of any refund, did not defeat the claims at the pleading stage.

Injunctive Relief

The court separately considered whether the plaintiffs had standing to seek an injunction, which is a court order requiring or prohibiting future conduct. To seek that type of relief, the plaintiffs had to allege an actual and imminent threat of future injury.

The court found that they had not done so. The plaintiffs alleged that they would not have purchased the product if they had known it did not contain white chocolate, and they stated that they did not want “fake” white chocolate. The court concluded that, after learning the product’s contents, they had not shown how they could be misled into buying it in the future. Their allegation that they would buy the product again if they could be sure it was white chocolate did not change the court’s conclusion, and the court stated that it lacked authority to require Nestle to make a particular product through an injunction.

The court granted the motion to dismiss on the additional ground that the plaintiffs had not alleged standing to seek injunctive relief.

Disposition

Judge Beth Labson Freeman granted Nestle’s motion to dismiss the first amended complaint with leave to amend as to all claims. The court gave the plaintiffs 45 days from the order, or until July 20, 2020, to file an amended pleading. The order terminated the motion identified as ECF 27.