Caldwell v. Nordic Naturals, Inc.

Background

Cheryl Caldwell filed a putative nationwide class action against Nordic Naturals, Inc. concerning the labeling of its dietary supplement, “Ultimate® Omega 2X.” Caldwell alleged that the “2X” wording on the front of the package would lead a reasonable consumer to believe the product contained twice the omega-3 found in Nordic Naturals’ regular “Ultimate® Omega” product.

The regular product contained 1,280 milligrams of omega-3 per serving, while the “Ultimate Omega 2X” product contained 2,150 milligrams. Twice 1,280 milligrams is 2,560 milligrams. Caldwell alleged that the “2X” product therefore contained 16% less omega-3 than the label suggested. She alleged that she bought the product at a San Francisco Whole Foods Market in or around July 2022 because she believed it contained twice the amount of omega-3 per serving as the regular product, and that she would not have bought it had she known otherwise.

Motion to dismiss and consumer-protection claims

Nordic Naturals moved under Federal Rule of Civil Procedure 12(b)(6), which permits dismissal when a complaint does not state a legally sufficient claim. Nordic Naturals argued that the front label expressly stated that the product contained 2,150 milligrams of omega-3 and also used phrases such as “Next Generation Fish Oil” and “More Powerful. Naturally.” According to Nordic Naturals, this information would prevent a reasonable consumer from interpreting “2X” to mean twice the potency of the regular product.

The court denied dismissal of Caldwell’s claims under the California Consumer Legal Remedies Act, False Advertising Law, and Unfair Competition Law. Those laws generally ask whether the product’s marketing was likely to mislead a reasonable consumer. The court concluded that “2X” commonly means “two times” and that Caldwell plausibly alleged that a reasonable consumer could understand the label to promise twice the omega-3 in the regular product.

The court explained that the 2,150-milligram statement did not resolve the alleged deception because it did not disclose whether that amount was twice the amount in the separate regular product. The additional phrases on the front of the package were also consistent with Caldwell’s interpretation. The court further concluded that the label was not merely ambiguous in a way that would require consumers to investigate further. A consumer should not be expected to compare the ingredient information on two different products and perform arithmetic to determine whether the “2X” product actually contained twice the amount in the regular product.

The court also held that Caldwell’s allegations were sufficiently specific under Federal Rule of Civil Procedure 9(b), which can require fraud-based claims to identify details such as who made the statement, what it said, and when and where it was made. The court explained that the Ninth Circuit does not apply that heightened requirement to California consumer-protection claims based on a misleading product-label statement rather than a broader fraudulent course of conduct. In any event, the court found the allegations specific enough.

Warranty claims

The court denied dismissal of Caldwell’s express- and implied-warranty claims. An express warranty is a seller’s promise or factual description that becomes part of the sales agreement. The court held that “2X” could plausibly be understood as a promise that the product contained twice the omega-3 of the regular product. Because 2,150 milligrams was not twice 1,280 milligrams, Caldwell adequately alleged a breach of that promise at the pleading stage.

The court also found that Caldwell adequately alleged breach of the implied warranty of merchantability. Under the California law discussed by the court, goods must conform to promises or factual statements made on their container or label. Because the implied-warranty claim and express-warranty claim both depended on the alleged representation on the label, the court allowed both claims to proceed.

Injunctive relief

The court granted dismissal of Caldwell’s claims for injunctive relief without leave to amend. Injunctive relief is a court order requiring or prohibiting conduct in the future. To seek that remedy, Caldwell had to show a real and immediate threat that she would suffer similar harm again.

The court concluded that Caldwell could now compare the “Ultimate Omega 2X” product with the regular product and determine that twice the regular product’s amount was 2,560 milligrams. Because she could learn the relevant information without buying the product again, the court found that she did not face a sufficient future threat of being misled in the same way. The court stated that additional allegations could not change this feature of the products, so it denied leave to amend this part of the case.

Quasi-contract, unjust enrichment, and restitution

The court granted dismissal of Caldwell’s quasi-contract, unjust-enrichment, and restitution claims with leave to amend. These claims were treated together as equitable claims seeking recovery of a benefit Nordic Naturals allegedly received and unjustly retained.

The court held that Caldwell could plead contract and quasi-contract theories in the alternative at this stage. But to proceed with the quasi-contract theory despite the alleged warranty agreement, she needed to allege that the contract was void or unenforceable. Because the complaint did not make that allegation, the court dismissed these claims while allowing Caldwell an opportunity to amend them.

Claims for absent non-California class members

The court denied Nordic Naturals’ motion to dismiss Caldwell’s claims asserted on behalf of absent class members who do not live in California. Caldwell alleged that Nordic Naturals maintained its principal place of business in California. Applying the analysis discussed in the opinion, the court held that this allegation was enough at this stage to shift the burden to Nordic Naturals to explain why the laws of other states, rather than California law, should apply to the nationwide claims. Nordic Naturals had not made that showing in its motion.

Disposition

The court granted in part and denied in part Nordic Naturals’ motion to dismiss. It denied the motion as to Caldwell’s California consumer-protection claims, warranty claims, and claims asserted on behalf of absent non-California class members. It granted the motion as to the injunctive-relief claims without leave to amend and granted it as to the quasi-contract, unjust-enrichment, and restitution claims with leave to amend.