Cheslow v. Ghirardelli Chocolate Company

Background

Linda Cheslow and Steven Prescott filed a complaint asserting three California-law claims against Ghirardelli Chocolate Company: violation of California’s Unfair Competition Law, false and misleading advertising, and violation of the California Consumer Legal Remedies Act. The court first dismissed the complaint with leave to amend. After plaintiffs filed a First Amended Complaint asserting the same three claims, the court granted Ghirardelli’s second motion to dismiss, dismissed the amended complaint with prejudice, and entered judgment for Ghirardelli.

Plaintiffs moved under Federal Rule of Civil Procedure 59(e) to alter or amend that judgment. They also filed a notice of appeal. Plaintiffs sought to represent a class of people who purchased Ghirardelli’s “Premium Baking Chips Classic White Chips” in the United States or, alternatively, California.

Rule 59(e) standard

The court explained that Rule 59(e) permits a judgment to be altered or amended based on newly discovered evidence, clear error or manifest injustice, or an intervening change in controlling law. Reconsideration after judgment is an extraordinary remedy that should be used sparingly.

Analysis

Plaintiffs primarily argued that the Ninth Circuit’s decision in Moore v. Mars Petcare US, Inc. was new controlling authority requiring the court to change its judgment. The court disagreed. It explained that the applicable California statutes had not changed and that Moore applied established legal principles to the facts before it rather than changing controlling law.

The court nevertheless considered whether its earlier application of California law was clearly erroneous. It rejected plaintiffs’ arguments about the product’s brand name and labeling. The court concluded that “Ghirardelli” was not a descriptive brand name that, by itself, communicated that the product contained chocolate. It also concluded that “classic white chips” described the chips’ color and did not imply that they were white chocolate chips. The image on the package showed white chips, which was consistent with the product.

The court also rejected plaintiffs’ argument that the ingredient list could not dispel possible consumer deception. Under the authorities discussed by the court, an ingredient list cannot cure a front-label statement when it conflicts with that statement. But the court found no affirmative front-label statement that the product was white chocolate or contained chocolate. In that circumstance, the ingredient list could dispel or reduce confusion arising from references to white chips and images of white chips.

The court declined to consider plaintiffs’ argument that consumers could not determine from the ingredient list whether the product met federal requirements for white chocolate. The court found that plaintiffs could reasonably have raised that argument earlier and that Rule 59(e) could not be used to present arguments or evidence for the first time when they could have been raised earlier.

The court also rejected plaintiffs’ challenge to its evaluation of their consumer survey at the pleading stage. Relying on Ninth Circuit authority, the court stated that it could consider whether the survey allegations plausibly supported a claim. The court had assumed the truth of the survey’s allegations but concluded that the survey did not address the ingredient list and could not transform an unreasonable consumer understanding into a reasonable one. The court therefore found no error in its earlier treatment of the survey.

Finally, the court overruled plaintiffs’ objection to Ghirardelli’s supplemental authority. It stated that the state trial court opinions cited by Ghirardelli were not binding and did not affect the ruling.

Disposition

The court concluded that the case did not warrant the extraordinary remedy of reconsideration and DENIED plaintiffs’ motion to alter or amend the judgment.