Hayden v. Bob's Red Mill Natural Foods, Inc.

Background

Mark Hayden filed a proposed class action concerning Bob’s Red Mill’s Whole Ground Flaxseed Meal and Golden Flaxseed Meal products, including organic and non-organic varieties. The complaint challenged statements on the products’ labels, including “To Your Good Health,” “You Can See Our Quality,” “Non-GMO,” “Gluten Free,” “contain a wealth of nutrients,” “amazing nourishment,” and statements about promoting good health. Hayden alleged that these statements created the overall impression that the products did not contain potentially harmful ingredients such as high levels of cadmium.

The complaint alleged that ConsumerLab.com testing found 6.1 micrograms of cadmium per serving in the non-organic Whole Ground Flaxseed Meal and 5.5 micrograms per serving in the organic Whole Golden Flaxseed Meal. Hayden alleged that cadmium is a known human carcinogen and that the products’ cadmium levels were unsafe and unlawful. He asserted claims under California’s Consumers Legal Remedies Act, California’s Unfair Competition Law, and for breach of implied warranties.

Requests for Judicial Notice

The court granted in part and denied in part Bob’s Red Mill’s request for judicial notice and incorporation by reference. It allowed consideration of Exhibit A, which contained the products’ front and back labels, because the complaint extensively referred to those labels and they formed the basis of the claims. It also allowed consideration of Exhibit B, the ConsumerLab.com article containing the test results, for the same reason. The court took judicial notice of Exhibit C, images of labels for two other Bob’s Red Mill products, because they came from a publicly available and verifiable website.

The court denied the request as to Exhibits D, E, and F, which were opinions and decisions from other courts. Although the accuracy of those public records could not reasonably be disputed, the court found judicial notice unnecessary because it would consider those authorities as it considered other cited legal authorities.

Standing

The court denied the motion to dismiss for lack of Article III standing. First, it held that Hayden adequately alleged an economic injury by claiming that he bought a product he would not have purchased, or would have paid less for, if he had known about the alleged cadmium levels.

Second, the court held that Hayden had standing to pursue claims involving the three products he did not personally purchase. The purchased and unpurchased products all used flaxseed as their sole ingredient, had substantially similar packaging and representations, and allegedly contained high cadmium levels. The court stated that Bob’s Red Mill could raise this issue again at the class-certification stage.

Third, the court held that Hayden adequately alleged standing to seek injunctive relief. Hayden alleged that he wanted to purchase the products again if their cadmium levels were reduced, but could not rely on their labels because of the alleged ongoing misrepresentations and omissions. The court found that this allegation sufficiently alleged a possible future injury under the governing false-labeling precedent.

Failure to State a Claim

The court nevertheless concluded that Hayden had not plausibly pleaded claims for relief under Rule 12(b)(6), which permits dismissal when a complaint does not state a legally sufficient claim. The court also applied Rule 9(b), which requires allegations of fraud to describe the circumstances of the alleged wrongdoing with particularity.

For the Consumers Legal Remedies Act and the fraudulent prong of the Unfair Competition Law, the court granted the motion to dismiss the affirmative-deception claims. It divided the challenged statements into three groups. The statements “Non-GMO,” “Gluten-Free,” and “Organic” were factual statements, but the complaint did not plausibly allege that they were false about those characteristics. “You Can See Our Quality” was non-actionable promotional language. Other statements, including “contain a wealth of nutrients,” “amazing nourishment,” and “To Your Good Health,” could potentially communicate something about general healthiness.

Even assuming the latter statements conveyed that the products were healthy, the court held that the complaint did not plausibly allege that the specific cadmium levels made the products unhealthy or posed a health risk. Hayden did not provide a plausible standard for what “high” cadmium levels meant or connect the amounts in the products to the health risks discussed in the complaint. The court also held that the complaint did not explain why California Proposition 65’s maximum allowable dose levels were an appropriate measure of general healthfulness rather than a standard for determining when a warning label is required.

The court also granted the motion to dismiss the claims based on alleged omissions. It held that Hayden had not plausibly alleged either that the omission contradicted an actual representation or that Bob’s Red Mill had a duty to disclose the cadmium levels. The complaint did not plausibly allege that the cadmium levels created an unreasonable safety hazard or that cadmium made the products incapable of being used as food or flaxseed. The court therefore found no actionable omission on the facts alleged.

The court granted the motion to dismiss the breach-of-implied-warranty claim. Although food may breach the implied warranty of merchantability if it is unsafe, contaminated, or contains foreign objects, the court held that Hayden had not plausibly alleged that the products were unsafe for consumption. Repeatedly describing the cadmium levels as “high,” “unsafe,” or “unlawful” did not replace factual allegations connecting those levels to the alleged health risks.

The court also granted the motion to dismiss the Unfair Competition Law claims under both the unfair and unlawful prongs. For the unfair-prong theory, Hayden argued that Bob’s Red Mill’s alleged failure to test the products for heavy metals was an unfair business practice. The court found that the complaint did not adequately allege that any failure to test was comparable to or the same as a violation of antitrust law or otherwise significantly harmed competition. The court also noted that the complaint appeared to rely on an ambiguous statement that did not establish that Bob’s Red Mill did not test the products.

For the unlawful-prong theory, the court held that several listed statutory violations were not adequately pleaded because the complaint did not allege their elements or explain how Bob’s Red Mill’s conduct violated them. The court also held that the warranty and Consumers Legal Remedies Act claims could not serve as predicates for the unlawful-prong claim because those claims were inadequately pleaded. Finally, the court held that Hayden could not use the Unfair Competition Law to avoid Proposition 65’s pre-suit notice requirements.

Disposition

Judge Haywood S. Gilliam, Jr. granted in part and denied in part Bob’s Red Mill’s motion to dismiss and granted in part and denied in part its associated requests for judicial notice. The court dismissed the challenged claims with leave to amend because it could not conclude that amendment would be futile. Any amended complaint was due within 21 days of the order. The court also set a telephonic case-management conference and directed the parties to submit a joint case-management statement.