Gagetta v. Walmart, Inc.

Background

Susan Gagetta and Tracie Gomez brought a putative class action against Walmart, Inc. They alleged that Walmart sold Great Value herbs and spices that contained, or risked containing, unsafe toxic heavy metals, including lead, arsenic, and cadmium. The complaint relied in part on a November 2021 Consumer Reports article reporting that one-third of tested herbs and spices contained unsafe levels of arsenic, lead, and cadmium, and that tested Walmart products contained levels of at least “some concern.”

The plaintiffs alleged that the product labels did not warn about the presence or risk of heavy metals. They said they read and relied on the labels, and that they would not have purchased the products or would have paid less had they known about the alleged risk. They also alleged that they wanted to buy the products again but could not determine whether they were safe because they could not rely on the labels.

The complaint asserted ten causes of action under California’s Unfair Competition Law, False Advertising Law, Consumer Legal Remedies Act, Song-Beverly Act, common-law fraud, unjust enrichment, and negligent-failure-to-warn law. Walmart moved to dismiss, challenging Article III standing, statutory standing, standing to seek an injunction, and several individual claims under Federal Rule of Civil Procedure 12(b)(6), which allows dismissal for failure to state a legally sufficient claim.

Standing and judicial notice

The court took judicial notice of the existence of websites maintained by the Food and Drug Administration and the United States Department of Agriculture, but not of the truth of factual assertions Walmart sought to establish through those websites. The court said the websites did not conclusively establish that the heavy-metal levels at issue were safe.

The court denied Walmart’s challenge to Article III standing. It concluded that the plaintiffs plausibly alleged economic injury because they claimed they purchased products they otherwise would not have bought, or would have bought only for a lower price, if they had known the products risked containing heavy metals. The court said whether the metal levels were actually safe was a disputed factual issue that was inappropriate to resolve on a motion to dismiss.

The court also concluded that the plaintiffs plausibly alleged statutory standing for their California Unfair Competition Law, Consumer Legal Remedies Act, and False Advertising Law claims. The plaintiffs alleged that they saw, read, and understood the labels; relied on the omission of heavy-metal warnings; and would have made different purchasing decisions if the warnings had appeared.

The court rejected Walmart’s challenge to standing for injunctive relief. The plaintiffs alleged that they wanted to purchase the products in the future but could not do so in an informed manner because they could not rely on the labels. The court held that these allegations were sufficient at the pleading stage.

Claims under the Rule 12(b)(6) standard

The court held that the plaintiffs adequately pleaded the unlawful-practices theory under California’s Unfair Competition Law. The complaint alleged that Walmart violated the Consumer Legal Remedies Act and the Song-Beverly Act. Although the court dismissed the Song-Beverly Act claim, it concluded that the Consumer Legal Remedies Act claim remained viable and could serve as the alleged underlying violation for the Unfair Competition Law claim.

The court dismissed the implied-warranty-of-merchantability claim and the Song-Beverly Act implied-warranty claim. It found that the plaintiffs had not plausibly alleged that the purchased herbs and spices were unfit for their ordinary purpose, failed to meet the standard performance of similar products, or lacked even the basic degree of fitness for ordinary use. The court said the conclusory allegation that the products were unsafe for human consumption was insufficient without supporting facts showing that the purchased products were distinct from safe herbs and spices. The court dismissed causes of action 6 and 7 with leave to amend because the plaintiffs said at the hearing that they might be able to plead additional facts.

The court rejected Walmart’s request to dismiss the unjust-enrichment claim. It explained that, under California law, an unjust-enrichment claim may be construed as a quasi-contract claim seeking restitution. Federal pleading rules also allow plaintiffs to assert alternative and inconsistent theories, so the plaintiffs could pursue unjust enrichment while also asserting tort and statutory claims at this stage.

Disposition

The court’s conclusion stated that causes of action 6 and 7 were dismissed with leave to amend, all claims based on ground ginger were dismissed with leave to amend, and the rest of Walmart’s motion to dismiss was denied. The plaintiffs were permitted to file an amended complaint within 21 days after the order was filed. The opinion text does not identify the judge by full name; the case number includes “WHO,” but that does not establish the judge’s name.