Cheslow v. Ghirardelli Chocolate Company

Background

Linda Cheslow and Steven Prescott sued Ghirardelli Chocolate Company over the labeling and advertising of “Premium Baking Chips Classic White Chips.” The complaint asserted claims under California’s Unfair Competition Law, False Advertising Law, and Consumer Legal Remedies Act. The plaintiffs sought certification of a class consisting of people who purchased the product in the United States or, alternatively, California.

The court had previously dismissed the original complaint with leave to amend. The plaintiffs then filed an amended complaint asserting the same three causes of action. They added allegations describing why they wanted white chocolate chips and why they believed the product contained white chocolate. Cheslow alleged that she saw the product in a store section labeled “chocolate chips,” saw the picture of white chocolate chips and the words “Premium” and “Classic White Chips,” and assumed the product contained chocolate. Prescott alleged that he relied on the product’s labeling and advertising.

The amended complaint also included a consumer survey of 1,278 respondents. Respondents saw the front panel of one of four products, including Ghirardelli’s product. According to the complaint, 91.88 percent said they believed the Ghirardelli product contained white chocolate. The complaint also alleged that 64.69 percent would be less satisfied with their purchase if they learned the product contained no white chocolate or chocolate of any kind.

Legal standard

The court considered the motion under Federal Rule of Civil Procedure 12(b)(6), which tests whether a complaint states a legally sufficient claim. The court generally must accept factual allegations as true but need not accept legal conclusions unsupported by facts. Because the plaintiffs’ claims involved alleged misleading advertising, the court also discussed Rule 9(b), which requires fraud allegations to describe the circumstances of the alleged misconduct in detail, including the who, what, when, where, and how.

The three California statutes apply the “reasonable consumer” test. Under that test, the plaintiffs had to allege facts showing that a significant portion of reasonable consumers could be misled. The court noted that this issue is generally factual, but a court may decide at the motion-to-dismiss stage that alleged violations are not plausible as a matter of law.

Court’s analysis

The court reaffirmed its earlier conclusions about the product’s packaging. It had previously found that “white” in “White Chips” described the color of the chips, not the presence of white chocolate; that “premium” was non-actionable praise; and that the images on the packaging did not make a plausible claim that the product contained white chocolate. It had also found that the ingredient list did not include “chocolate” or “cocoa” and that consumers could not ignore that information because the label did not contain a deceptive affirmative statement requiring correction.

The court also reaffirmed its prior conclusions about allegations outside the label. The plaintiffs did not allege that they relied on Ghirardelli’s website, did not adequately allege a bait-and-switch scheme, and did not plausibly allege that the product’s placement in a grocery aisle was deceptive or controlled by Ghirardelli.

The court rejected the plaintiffs’ reliance on the new survey. Although the court accepted the survey allegations as true for purposes of the motion, it found that the survey showed respondents only the package’s front panel and omitted the back panel containing the ingredient list. In the court’s view, that omission deprived respondents of relevant information. The survey therefore could not transform what the court had already determined was an unreasonable understanding of “white chips” into a reasonable one.

The court distinguished cases in which surveys supported otherwise plausible false-advertising claims. It stated that the issue was not the amount of evidence supplied by the survey, but whether the survey could make reasonable an understanding that the court had determined was unreasonable. The court concluded that the plaintiffs’ new allegations did not substantially change its earlier analysis, so the UCL, FAL, and CLRA claims all failed as a matter of law.

The court did not reach Ghirardelli’s alternative arguments concerning standing or Rule 9(b)’s heightened pleading requirements. It also stated that it was not revisiting a separate order on Ghirardelli’s partial motion for summary judgment.

Disposition

The court denied leave to amend because the plaintiffs had not identified additional facts that could cure the defects, and any further amendment would be futile. Judge Hamilton granted Ghirardelli’s motion to dismiss the plaintiffs’ first through third causes of action, and the plaintiffs’ claims were dismissed with prejudice.