Collyer v. Catalina Snacks Inc.

Background

This was a proposed consumer-fraud class action concerning Catalina Crunch Keto Friendly Cereals. Catalina sold varieties including Chocolate Banana, Honey Graham, Mint Chocolate, and Apple Cider Donut. Karen Collyer alleged that the packaging deceived reasonable consumers by displaying and referring to characterizing flavors while the cereals did not contain bananas, apples or apple cider, mint, or honey; the complaint alleged that the tastes came from natural flavors. Collyer bought the Chocolate Banana and Honey Graham varieties in 2022 and asserted claims under California’s Unfair Competition Law, False Advertising Law, and Consumer Legal Remedies Act, as well as a claim for breach of the implied warranty of merchantability. She sought damages and equitable restitution.

Standing for Unpurchased Products

Catalina argued under Federal Rule of Civil Procedure 12(b)(1) that Collyer lacked Article III standing to bring claims concerning the Apple Cider Donut and Mint Chocolate varieties because she had not bought them. The court rejected that argument. It found the products substantially similar because their physical form and ingredient lists were nearly identical, the showcased flavors were absent from the ingredient lists, and the alleged labeling defect, claims, and alleged injury were the same. The court therefore allowed the standing-related claims concerning the two unpurchased varieties to proceed at this stage.

California Consumer-Protection Claims

Catalina argued under Rule 12(b)(6) that Collyer had not plausibly alleged that a reasonable consumer would be deceived. The court agreed. It reasoned that the labels included the words “serving suggestion,” did not say that the cereals were made with or made from the pictured flavors, did not state or imply that the flavors came entirely or mainly from those ingredients, and identified the products as keto-friendly cereals with zero grams of sugar. The court also noted Collyer’s acknowledgment that she did not believe the cereals contained whole banana, apple, mint, or honey.

The court dismissed Collyer’s claims under the Unfair Competition Law, False Advertising Law, and Consumer Legal Remedies Act insofar as they relied on the reasonable-consumer theory. It granted leave to amend those claims. The court separately dismissed with prejudice the portion of the Unfair Competition Law’s “unlawful” prong that relied on alleged violations of California’s Sherman Law incorporating federal food-labeling requirements, because the court found that portion preempted by federal law.

Implied Warranty

Collyer alleged that the cereal labels created implied warranties that the products would conform to the advertised flavor representations. Catalina argued that the claim failed for lack of contractual privity, meaning a direct contractual relationship between the buyer and manufacturer. The court held that the foodstuffs exception to privity did not apply because Collyer did not allege that the cereals were unfit for human consumption; she alleged only that they lacked ingredients she expected. The court dismissed the implied-warranty claim with prejudice, finding that amendment could not cure the defect.

Equitable Relief

Catalina argued that Collyer could not seek equitable relief because she had an adequate remedy through damages. The court declined to dismiss the equitable-relief requests at the pleading stage. It held that, at this stage, a plaintiff may pursue alternative legal and equitable remedies. The court therefore denied the motion to dismiss on that basis.

Disposition

The court granted in part and denied in part Catalina’s motion to dismiss. The UCL, FAL, and CLRA claims based on the reasonable-consumer standard were dismissed with leave to amend. The preempted portion of the UCL unlawful-prong claim and the implied-warranty claim were dismissed with prejudice. The motion to dismiss the equitable-relief claims was denied. Any amended pleading was due by February 22, 2024, and no additional parties or claims could be added without court permission or Catalina’s stipulation.