Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_18-cv-06113/USCOURTS-cand-3_18-cv-06113-0/pdf.json

Nature of Suit Code: 370
Nature of Suit: Other Fraud
Cause of Action: 28:1332 Diversity-(Citizenship)

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United States District Court

For the Northern District of California

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

HOWARD CLARK, TODD HALL,

ANGELA PIRRONE, individually and

on behalf of all others similarly situated,

Plaintiffs,

 v.

THE HERSHEY COMPANY, a Delaware

corporation,

Defendant. /

No. C 18-06113 WHA

ORDER RE MOTION TO

DISMISS AND CONVERT

MOTION TO DISMISS INTO

MOTION FOR SUMMARY

JUDGMENT ALLOWING

IMMEDIATE DISCOVERY

INTRODUCTION

Malic acid stars in this food case. The issue concerns its alleged use as an artificial

flavoring agent. Defendant’s motion to dismiss for failure to state a claim is GRANTED IN PART

AND DENIED IN PART. For the following reasons, this order converts the FRCP 12(b)(6) motion

to dismiss into a motion for summary judgment and allows immediate discovery.

STATEMENT

 The Hershey Company has a product line of Brookside Dark Chocolate candy balls

filled with fruit-flavored gel. These chocolate balls are sold in bag-shaped packaging, with

photos of the predominant fruit flavors on the front. Some of the packages have banners across

the top of the front stating “NO ARTIFICIAL FLAVORS, NO ARTIFICIAL COLORS.” 

Other packages do not have that banner but do say “with other Natural Flavors,” underneath the

named fruit flavors.

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Plaintiffs allege that Brookside Dark Chocolate candy products violate California,

New York, and federal statutes. First, each of the products contain malic acid as an additional

flavoring ingredient that simulates and reinforces the characterizing flavor, so the front label

allegedly should disclose that malic acid serves the function of adding flavor rather than

misleadingly suggesting that the product is flavored only by natural fruit juices. Second, the

back-of-the-package list of ingredients identifies malic acid flavoring only as “malic acid,”

which implies the natural form of malic acid instead of “d-l malic acid,” which is allegedly

actually used, thereby concealing that the products contain a synthetic artificial flavor (First

Amd. Compl. ¶¶ 29–31). 

Plaintiff Howard Clark purchased a Brookside Dark Chocolate — Acai and Blueberry

Flavor — product for personal consumption in July 2018. Plaintiff Todd Hall purchased

Brookside Dark Chocolate products for personal consumption several times since 2014, most

recently in early 2018. Plaintiff Angela Pirrone purchased Brookside Dark Chocolate products

for personal consumption several times since 2012, most recently in August 2018 (First Amd.

Compl. ¶¶ 62–63, 65, 67).

In purchasing the products, plaintiffs allege that they relied on and were deceived by the

labeling and advertising on the Brookside front packaging. Each package at issue showed color

photographs of large chunks of chocolate, the actual named fruit that predominantly flavors the

candy balls in the package, and two candy balls, one cut open to show a fruit-flavored gel

interior surrounded by a chocolate shell. Plaintiffs allege that Hershey warrants that its

Brookside Products contain “No Artificial Flavors” (First Amd. Compl. ¶ 25). 

As required by the FDA, the products contain a “Nutrition Facts” panel on the back of

the packaging that list all ingredients, in descending order of predominance. According to the

plaintiffs, the Acai and Blueberry label lists the following ingredients: “Dark Chocolate, Sugar

. . . Malic Acid, Tapioca Dextrin, Canola Oil, Acai Puree Concentrate, Sodium Bicarbonate,

Ascorbic Acid, Sodium Citrate, Citric Acid (To Maintain Freshness), Resinous Glaze” (First

Amd. Compl. ¶ 27).

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In October 2018, Howard Clark filed a putative class action complaint in state court

against Hershey that stated its Brookside Dark Chocolate fruit-filled candy was fraudulently

mislabeled and that he had purchased the products, relying on the package labeling that

claimed there were no artificial flavors. Plaintiff alleged that he would not have paid the

“premium” purchase price for the products if he had been aware of the products’ true

ingredients. The action was removed here. In November 2018, Hershey filed a motion to

dismiss the complaint. Instead of responding to the motion to dismiss, plaintiff filed a first

amended complaint wherein he added two additional plaintiffs, Tod Hall and Angela Pirrone,

along with making other changes. In December, Hershey filed its motion to dismiss the first

amended complaint, which we now consider (Dkt. No. 18).

In this putative class action, plaintiffs allege twelve separate claims, including: 

(1) fraud by omission, Cal. Civ. Code §§ 1709–1710, (2) negligent misrepresentation, Cal. Civ.

Code §§ 1709–1710, (3) violation of California’s Consumers Legal Remedies Act (CLRA),

Cal. Civ. Code §§ 1750, et seq., (4) violation of California’s Unfair Competition Law, Cal. Bus.

& Prof. Code §§ 17200, et seq., unfair and unlawful prongs, (5) violation of California’s False

Advertising Law, Cal. Bus. & Prof. Code §§ 17500, et seq., (6) breach of express and implied

warranties, Cal. Com. Code §§ 2313 and 2314, (7) violations of §§ 349 and 350 of New York

General Business Laws, and (8) claims for breach of express and implied warranties under

New York U.C.C. §§ 2-313 and 2-314. 

ANALYSIS

1. MOTION TO DISMISS UNDER FRCP 12(B)(1).

Hershey argues that plaintiffs do not have standing and lack a justiciable injury,

contending that plaintiffs’ counsel recruited clients through a fishing website,

www.classactionrebates.com, which promises people that they can cash in on class settlements. 

After signing up, registrants receive email solicitations from plaintiffs’ counsel asking if

registrants had purchased specific products and offering the opportunity to “join new class

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actions” (Dkt. No. 18 at 2). Hershey alleges that plaintiffs’ counsel’s misleading solicitation

campaign fabricated this lawsuit through pre-August 2018 internet postings that stated: 

Brookside Dark Chocolate Class Action Investigation, Have you

purchased Brookside Dark Chocolate products? If so, then you

may be able to join a free class action lawsuit investigation. 

To see if you qualify to join this free class action lawsuit

investigation, please contact The Law Offices of Ronald A.

Marron” (Dkt. No. 18, Exh. 4 at 2–3). 

Hershey has had previous interactions with counsel’s use of the website to solicit clients. 

In 2015, plaintiffs’ counsel responded to Hershey, “I agree that the email blast was a one time

event and I (sic) no further email blasts or advertising is forthcoming from my office or

classactionrebates.com” (Dkt. No. 18, Exh. 4 at 4). Hershey alleges that plaintiffs decided to

purchase the products at some point after publication of counsel’s Brookside advertisements on

August 1, 2018. Clark filed his first amended complaint in November 2018, adding plaintiffs

Hall and Pirrone. Hershey argues that because plaintiffs appear to have known about the

products’ supposed mislabeling prior to purchasing them, they cannot have suffered any

justiciable injury for purposes of Article III standing and their claims should be dismissed. 

Hershey cites Guttman v. Nissin Foods, Co., Inc., No. 15-cv-00567 WHA, 2015

WL 4881073, *2–3 (N.D. Cal. Aug. 14, 2015), where the district court dismissed a complaint

after plaintiff was found to have express prior knowledge of the alleged product mislabeling. 

In Guttman, the plaintiff had filed three prior lawsuits regarding the same ingredient, trans fats,

and food labeling. Here, Hershey only offers speculation of a direct connection between an

email solicitation and the supposed enrollment of plaintiffs in this case. Hershey submits

evidence in counsel’s declaration and in exhibits requesting judicial notice. These questions are

more appropriate for a summary judgment motion, after discovery on the way in which plaintiffs

came to counsel. This motion is DENIED without prejudice to renewal of the issue on a motion

for summary judgment.

2. MOTION TO DISMISS UNDER FRCP 12(B)(6).

In the context of a motion to dismiss under Rule 12(b)(6), the district court cannot

consider extrinsic evidence (such as the declarations offered by Hershey in support of the motion

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under Rule 12(b)(1)). Our gaze focuses on whether plaintiffs have sufficiently pleaded the

elements of their claims. 

The standard for the California statutes claimed here is the “reasonable consumer” test,

which requires a plaintiff to show that members of the public are likely to be deceived by the

business practice or advertising at issue. See Williams v. Gerber Products, 552 F.3d 934, 938

(9th Cir. 2008). The California Supreme Court has recognized that those laws prohibit not only

advertising which is false, but also advertising which, although true, is either actually misleading

or which has a capacity, likelihood or tendency to deceive or confuse the public. Leoni v. State

Bar, 39 Cal.3d 609, 626 (1985).

Under FDA regulations, malic acid has three prescribed uses in food: as a flavor, a flavor

enhancer, or to help control pH. 21 C.F.R. § 184.1069(c). Hershey argues that (1) malic acid is

used with pectin in order to balance the pH and therefore to properly gel the fruit flavors at the

center of the candy, (2) malic acid is not used as a flavor, and (3) only the Brookside Dark

Chocolates with gelled fruit centers have malic acid in their ingredient list. Hershey further

argues that plaintiffs fail to allege having done any testing or otherwise provided any facts to

support the assertion that Brookside’s malic acid is used as a flavor.

In the presence of labeling banners that state “NO ARTIFICIAL FLAVORING, NO

ARTIFICIAL COLORING,” it is at least plausible that a reasonable consumer seeing the Acai &

Blueberry Flavor or Pomegranate packages (First Amd. Compl. ¶ 20) at issue would believe that

the candy was made with flavoring from the fruits shown and that there would be no artificial

flavoring. 

Hershey argues that it properly disclosed malic acid on its nutrition list of ingredients

because Hershey used malic acid for an FDA-approved function, pH balancing, and not as a

flavor or flavor enhancer. Given the importance of this factual dispute and because "matters

outside the pleading are presented to and not excluded by the court," the motion to dismiss must

be treated as one for summary judgment under Rule 12(d). In turn, Rule 56(d), which authorizes

a court to allow time for discovery during a motion for summary judgment when facts are

unavailable to the nonmovant, parties must be given reasonable opportunity to present all

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material pertinent to the motion. Immediate discovery into these issues is now allowed and

supplements on this motion will be filed by NOON ON APRIL 10, 2019.

A. Motion to Dismiss Under FRCP 9(b).

While plaintiffs’ claims are not so implausible as to warrant granting Hershey’s motion

to dismiss on that basis, a number of plaintiffs’ claims lack sufficient particularity. 

In a similar labeling action, Davidson v. Kimberly-Clark Corp., 889 F.3d 956 (9th Cir.

2017), our court of appeals held that when the plaintiff’s claims for relief are all grounded in

fraud, the complaint must satisfy the traditional plausibility standard of Rules 8(a) and 12(b)(6),

as well as the heightened pleading requirements of Rule 9(b). Under Rule 9(b), a party must

“state with particularity the circumstances constituting fraud or mistake,” including “the who,

what, when, where, and how of the misconduct charged.” Vess v. Ciba-Geigy Cor. USA,

317 F.3d 1097, 1106 (9th Cir. 2003). The purpose of Rule 9(b) is to give notice to defendants

of the specific fraudulent conduct against which they must defend. Bly-Magee v. California,

236 F.3d 1014, 1018 (9th Cir. 2001). 

Plaintiffs’ claims under California’s Unfair Competition Law, False Advertising Law,

Consumer Legal Remedies Act, and plaintiffs’ common law claims for fraud by omission

and negligent misrepresentation (collectively, Claims (1)-(8)) should be analyzed within the

heightened pleading standard of Rule 9(b), as plaintiffs allege deception and fraud throughout

their complaint. When a plaintiff “allege[s] a unified course of fraudulent conduct and rel[ies]

entirely on that course of conduct as the basis of a claim . . . the claim is said to be ‘grounded

in fraud’ . . . and the pleading of that claim as a whole must satisfy the particularity requirement

of Rule 9(b).” Vess, 317 F.3d at 1103–04. Plaintiffs argue that they have satisfied the Rule 9(b)

requirements. While this order agrees that plaintiffs have sufficiently pled the “who” and

“where” of the charged misconduct for purposes of avoiding a motion to dismiss, this order finds

the rest of plaintiffs’ averments fail to satisfy Rule 9(b).

The first amended complaint states where plaintiffs purchased their products, but the

dates and products purchased are not specific (First Amd. Compl. ¶¶ 62–67), nor is the “why”

of plaintiffs’ reliance on alleged advertising on products whose labels are shown changing in

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plaintiffs’ own pleadings. The first amended complaint does state which Brookside products

are at issue in this case, but not specifically which products were purchased by plaintiffs, nor

what was present on the allegedly offending packaging chosen by plaintiffs. 

In the first amended complaint, plaintiffs present photos of product labels that do not

specifically support their claim. The first photo shows Brookside “Vineyard Inspired” candy,

“Chardonnay Grape & Peach Flavors with other Natural Flavors.” Significantly, there is no

advertising statement on the front of this package that the product has “No Artificial Flavors.” 

The second photo shows “Vineyard Inspired Merlot Grape & Black Currant Flavors with other

Natural Flavors.” Significantly, once again there is no advertising statement on the front of the

package claiming that this product has “No Artificial Flavors.” The third photo, “Acai &

Blueberry Flavors” allegedly purchased by Plaintiff Clark (First Amd. Compl. ¶ 12), does show

a banner at the top of the package that states “No Artificial Flavors.” The fourth photo,

“Pomegranate Flavor” also shows the banner at the top of the package that states “No Artificial

Flavors.” The fifth and final photo shows four products; plaintiffs allege this is an example of

Hershey’s advertisement for Brookside products, but none of the packages state “No Artificial

Flavors, and the label photographs are different from the photos listed above. (First Amd.

Compl. ¶¶ 20–21.) 

Plaintiffs argue, without reference to any well-pled factual allegations in the complaint,

that the violations and misrepresentations are similar across product labels (First Amd. Compl.

¶ 25). 

Therefore, plaintiffs’ claims do not give notice to Hershey of which labels and which

packages upon which plaintiffs allegedly relied when making their purchases. Thus, plaintiffs

do not “give defendants notice of the particular misconduct which is alleged to constitute the

fraud charged so that they can defend against the charge and not just deny that they have done

anything wrong.” Semegen v. Weidner, 780 F.2d 727, 731 (9th Cir. 1985). Plaintiffs here have

failed to meet the heightened pleading standard of Rule 9(b).

Consequently, pursuant to Rule 9(b), Hershey’s motion to dismiss, without prejudice,

plaintiffs’ claims (1) through (8) based on violations of the Unfair Competition Law, False

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Advertising Law, Consumer Legal Remedies Act and the common law claims for fraud of

omission and negligent misrepresentation which do not meet the heightened pleading standard

of Rule 9(b) is GRANTED.

B. Express Warranties.

To plead a claim for breach of express warranty, plaintiffs must allege the terms of the

warranty, reasonable reliance, and that the breach of that warranty proximately caused their

injury. “Any description of the goods which is made part of the basis of the bargain creates

an express warranty that the goods shall conform to the description.” Cal. U. Com. Code

§ 2313(1)b). Plaintiffs allege that the packaging’s banner “NO ARTIFICIAL FLAVORS”

was part of the basis of the bargain between the parties (Dkt. No. 16 at 25). However, as stated

above, plaintiffs have failed to differentiate which fruit flavors made this assertion and also

which products they purchased based on those assertions. Brookside products that do not carry

the banner affirmatively representing “NO ARTIFICIAL FLAVORS” do not make the warranty

that plaintiffs claim. These other Brookside products state only “also with other Natural

Flavors,” which is not an express warranty of “no artificial flavors.” 

Hershey’s motion to dismiss the claim of breach of express warranty for the products

that do not warrant “NO ARTIFICIAL FLAVORS” is GRANTED. Hershey’s motion to dismiss

the claim of breach of express warranty for the products that do warrant “NO ARTIFICIAL

FLAVORS” is DENIED.

C. Implied Warranties.

Plaintiffs bring their claim for breach of implied warranty under Cal. Com. Code § 2314

(First Amd. Compl. ¶¶ 158–175). Hershey relies on the “ordinary use” definition in that statute,

“Goods to be merchantable must be at least such as are fit for the ordinary purposes for which

such goods are used” but that is only § 2314(2)(a). Hershey ignores § 2314(2)(f), which also

must be met and upon which plaintiffs rely: “Goods to be merchantable must conform to

the promises or affirmations of fact made on the container or label if any.” Cal. Com. Code

§ 2314(2)(f). 

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Hershey’s motion to dismiss, without prejudice, the claim of breach of implied warranty

for the products that do not warrant “NO ARTIFICIAL FLAVORS” is GRANTED. Hershey’s

motion to dismiss the claim of breach of implied warranty for the products that do warrant

“NO ARTIFICIAL FLAVORS” is DENIED.

D. New York General Business Law Claims.

Plaintiffs allege violations of New York General Business Laws § 349, Unfair Trade

Practices, and § 350, False Advertising. 

General Business Law § 349 prohibits deceptive acts or practices in the conduct of

any business, trade or commerce, or in the furnishing of any service in the state of New York. 

To assert a claim under § 349, “a plaintiff must allege that a defendant has engaged in

(1) consumer-oriented conduct that is (2) materially misleading and that (3) plaintiff suffered

injury as a result of the allegedly deceptive act or practice.” Koch v. Acker, Merral & Condit

Co., 18 N.Y.3d 940, 967 (2012). The New York Court of Appeals has adopted an objective

definition of “misleading,” under which the alleged act must be “likely to mislead a reasonable

consumer acting reasonably under the circumstances.” Cohen v. JPMorgan Chase & Co.,

498 F.3d 111,126 (2d Cir. 2007). Plaintiffs do not need to prove that a defendant intended to

mislead the plaintiff or even that the consumer relied on the act or practice in an unfair trade

practice claim. Prevailing plaintiffs may recover actual damages or fifty dollars, whichever is

greater, or both, three times the actual damages up to one thousand dollars, and reasonable

attorney’s fees. N.Y. Gen. Bus. § 349(g–h).

General Business Law § 350 governs deceptive advertisements and product labels. 

The elements of a claim for relief under this section are that “the advertisement: (1) had an

impact on consumers at large, (2) was deceptive or misleading in a material way, and (3) resulted

in an injury.” Andre Strishak & Assocs., P.C. v. Hewlett Packard Co., 300 A.D.2d, 608, 609

(2002). “Similarly, the test is whether the advertisement is likely to mislead a reasonable

consumer acting reasonably under the circumstances.” Ibid. Prevailing plaintiffs may recover

actual damages or five hundred dollars, whichever is greater, three times actual damages, and

reasonable attorneys’ fees and costs. 

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Claims under New York General Business Law § 349 and § 350 are not subject

to the pleading-with-particularity requirements of FRCP 9(b), and thus are subject to the

notice-pleading requirements of FRCP 8(a). Ackerman v. Coca-Cola Co., 2010 U.S. Dist.

LEXIS 73156, at *87 (E.D.N.Y. 2010). Plaintiffs must plead with requisite “plausibility” that

any of the defendant’s claims were materially misleading. Bell Atl. Corp. v. Twombly, 550 U.S.

544, 570 (2007). 

“The plausibility standard is not akin to a probability requirement.” Ashcroft v. Iqbal,

556 U.S. 662, 678 (2009). Moreover, whether a practice is “deceptive, fraudulent, or unfair” is

generally a question of fact that is not appropriate for resolution on the pleadings. See Williams,

552 F.3d at 938–940. This argument is therefore beyond the scope of this Rule 8(a) motion. 

On this basis, Hershey’s motion to dismiss New York General Business Laws § 349 and

§ 350 causes of action is DENIED.

E. New York Claims for Breach of Express

And Implied Warranties.

Under New York U.C.C. § 2-313, an express warranty will be found where the seller

has made an affirmation of fact or promise relating to the goods, the natural tendency of which

was to induce the buyer to purchase the goods. Schimmenti v. Ply Gem Indus., Inc., 156 A.D.2d

658, 659 (2d Dept., 1989). Express warranty exists under New York Law when a plaintiff

shows “that the statement falls within the definition of a warranty, that she relied on it, and that

it became the basis of the bargain.” Daley v. McNeil Consumer Prod., Co., 164 F.Supp.2d 367,

377 (S.D.N.Y. 2001). Plaintiffs allege that the packaging’s banner “NO ARTIFICIAL

FLAVORS” was part of the basis of the bargain between the parties (Dkt. No. 16 at 25). 

However, as before, plaintiffs have failed to differentiate which fruit flavors made this assertion

and also which products they purchased based on those assertions. Brookside products that do

not carry the banner affirmatively representing “NO ARTIFICIAL FLAVORS” do not make

the warranty that plaintiffs claim. These other Brookside products state only “also with other

Natural Flavors,” which is not an express warranty of “no artificial flavors.” 

Hershey’s motion to dismiss, without prejudice, the New York claim of breach of express

warranty for the products that do not warrant “NO ARTIFICIAL FLAVORS” is GRANTED. 

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Hershey’s motion to dismiss the claim of breach of express warranty for the products that do

warrant “NO ARTIFICIAL FLAVORS” is DENIED. 

Under New York U.C.C. § 2-314, a warranty that goods are merchantable is implied in a

contract for their sale if the seller is a merchant with respect to goods of that kind. Hershey

relies on the “ordinary use” definition in that statute, “Goods to be merchantable must be at least

such as are fit for the ordinary purposes for which such goods are used,” but that is only one part

of the N.Y. U.C.C., § 2314(2)(c). Hershey ignores § 2314(2)(f), which also must be met and

upon which plaintiffs rely: Goods to be merchantable must “conform to the promises or

affirmations of fact made on the container or label if any.” N.Y. U.C.C. § 2314(2)(f). 

Hershey’s motion to dismiss, without prejudice, the claim of breach of implied warranty

for the products that do not warrant “NO ARTIFICIAL FLAVORS” is GRANTED. Hershey’s

motion to dismiss the claim of breach of implied warranty for the products that do warrant

“NO ARTIFICIAL FLAVORS” is DENIED.

F. Tolling of Statute of Limitations.

Plaintiffs Pirrone and Hall allege claims for purchases dating back to 2012 and 2014,

respectively (First Amd. Compl. ¶¶ 64, 66). Plaintiffs’ claims, however, are subject to a threeor four-year statute of limitations — significantly shorter than the approximately seven and five

years, respectively, that have passed since their alleged purchases. 

(1) Delayed discovery.

Plaintiffs allege that they did not discover that the labeling was “false and misleading

until November 2018” (Dkt. No. 28 at 24). Plaintiffs have provided no allegations detailing

how they discovered the alleged unlawful labeling. See Keiholtz v. Lennox Hearth Prods. Inc.,

2009 WL 2906960, at *3 (N.D. Cal. Sept. 8, 2009) (“To invoke the delayed discovery rule, the

plaintiff must plead facts showing . . . [h]ow and when he did actually discover the [facts

underlying the claim].”). Thus, plaintiffs have not sufficiently pleaded that the delayed discovery

rule applies. 

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(2) Fraudulent concealment.

“When a plaintiff relies on a theory of fraudulent concealment . . . to save a cause of

action that otherwise appears on its face to be time-barred, he or she must specifically plead

facts which, if proved, would support the theory.” Mills v. Forestex Co., 108 Cal. App. 4th 625,

641 (2003). “In order to establish fraudulent concealment, the complaint must show: 

(1) when the fraud was discovered; (2) the circumstances under which it was discovered; and

(3) that the plaintiff was not at fault for failing to discover it or had no actual or presumptive

knowledge of facts sufficient to put him on inquiry.” Ibid. Claims relying on fraudulent

concealment must meet the heightened pleading requirements of [Rule] 9(b). Rambus Inc. v.

Samsung Electronics Co., 2007 WL 39374, at *6 (N.D. Cal. Jan. 4, 2007). Plaintiffs have

provided no facts as to the circumstances under which the fraud was discovered. This order

finds plaintiffs have not met their “heavy burden” to plead fraudulent concealment with

particularity and, thus, have not adequately pleaded fraudulent concealment to toll the statute of

limitations.

(3) Continuing Violation.

Finally, plaintiffs allege that “because defendant’s deception continues up to the present,

the continuing violation exception tolls all applicable statute of limitations for plaintiffs and all

members of the putative Class until defendant’s unlawful advertising and labeling is corrected”

(Dkt. No. 28 at 26). According to the California Supreme Court, the continuing violation

doctrine serves equitable purposes: assuming that plaintiffs’ allegations of misbranding are true,

it would be inequitable to allow Hershey immunity from this violation. Aryeh v. Canon Bus.

Sols., Inc., 55 Cal. 4th, 1185, 1197 (2013). In Hunter v. Nature’s Way Prods., LLC, 2016 WL

4262188 (S.D. Cal. Aug. 12, 2016), that court found the plaintiff had adequately pleaded the

continuing violation doctrine as an exception to the statute of limitations, but there, plaintiff

alleged she purchased the product once a month for the past five years. Id. at *12. She alleged

that the defendants continued their misrepresentations over the course of five years. Here, again,

plaintiffs do not allege they made particularized purchases of products. 

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Plaintiffs do not allege sufficient grounds for tolling the statute of limitations, so

therefore their claims are dismissed, without prejudice, to the extent that they are based on

conduct that took place prior to the applicable limitations period. Additionally, California and

New York statute of limitations and tolling rules apply to plaintiffs’ claims brought under each

state’s respective laws. Bancorp Leasing & Fin. Corp. v. Agusta Aviation, 813 F.2d 272, 274

(9th Cir. 1987) (“In a federal diversity action brought under state law, the state statute of

limitations controls”). A claim under New York General Business Law § 349 or § 350 is subject

to a three-year statute of limitations and “runs from the time when the plaintiff was injured,” not

from when plaintiff learns they have been deceived. Corsello v. Verizon NY, Inc., 18 N.Y.3d

777, 789-90 (2012). In addition, a claim for relief for breach of express or implied warranty is

subject to a four-year statute of limitations. Ito v. Dryvit Systems, Inc., 16 AD 3d 554, 555 (2d

Dept. 2005). The beginning of the limitation period “does not depend on a plaintiff’s knowledge

of a defect.” Catalano v. BMW of N. Am., LLC, 167 F. Supp. 3d 540, 558 (S.D.N.Y. 2016). 

3. JUDICIAL NOTICE. 

The parties have each submitted documents for judicial notice in connection with the

motion and opposition. When reviewing a motion to dismiss for failure to state a claim, a court

considers only allegations contained in the pleadings, exhibits attached to the complaint, and

matters properly subject to judicial notice. Swartz v. KPMG LLP, 476 F.3d 756, 763 (9th Cir.

2007). When a plaintiff has appended various exhibits to the complaint, those exhibits may be

considered in determining whether dismissal is proper without converting the motion to one for

summary judgment. Parks Sch. of Bus., Inc. v. Symington, 51 F.3d 1480, 1484 (9th Cir. 1995).

Hershey requests judicial notice of sixteen exhibits of court documents, most from

putative class actions filed by Howard Clark and/or plaintiffs’ counsel (Dkt. No. 18, Exhs.

1–16). In particular, Exhibit 16 is a transcript, and our appeals court found that it was improper

to judicially notice a transcript when the substance of the transcript “is subject to varying

interpretations, and there is a reasonable dispute as to what the [transcript] establishes.”

Reina-Rodriguez v. United States, 655 F.3d 1182, 1193 (9th Cir. 2011). The exhibits do not

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pertain to whether plaintiffs have stated a plausible claim in the current action and are not

relevant to this motion to dismiss.

Plaintiffs request judicial notice of a webpage that purports to define “malic acid”

(Dkt. No. 28, Exh. 4). Our appeals court has ruled that courts may incorporate a document by

reference “in those rare circumstances” in which a plaintiff refers extensively to the document

or the document forms the basis of the plaintiff’s claim. Khoja v. Orexigen Therapeutics, Inc.,

899 F.3d 988, 1002 (9th Cir. 2018). Here, plaintiffs only mentioned the website (First Amd.

Compl. ¶ 39). Our appeals court has applied the incorporation by reference doctrine to consider

the contents of a website where the defendant filed a CD-ROM containing a digital replica of

the relevant portions of the website in question. Knievel v. ESPN, 393 F.3d 1068, 1076–1077

(9th Cir. 2005). There, the plaintiffs had explicitly referenced the website in question and

attached a picture from one page of the website as the basis for their defamation suit. Ibid.

The additional web contents were provided by the defense to put the picture in context and were

essential to the underlying defamation claim. Ibid. No party questioned the authenticity of the

website. Ibid. Here, plaintiffs allege that the website is “Hershey’s website” (First Amd. Compl.

¶ 39). However, plaintiffs state that the website is www.smartlabel.hersheys.com. Smart Label

is a trade organization website where food manufacturers can upload ingredient information. 

It does not appear to be a Hershey owned-and-operated website. Hershey questions the

authenticity of the information on the website, stating that the Smart Label website’s statement

is not product-specific and refers to use as a flavor enhancer, not an artificial flavor. Plaintiffs’

reliance on the website in their argument does not rise to one of those “rare circumstances”

envisioned by our court of appeals. 

The parties’ requests for judicial notice is DENIED. 

CONCLUSION

For the reasons stated, Hershey’s motion to dismiss is GRANTED IN PART AND DENIED IN

PART. Regarding Hershey's motion to dismiss under FRCP 12(b)(6), the motion to dismiss is to

be treated as one for summary judgment under Rule 12(d). In turn, under Rule 56(d), which

authorizes a court to allow time for discovery during a motion for summary judgment when facts

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are unavailable to the nonmovant, parties must be given reasonable opportunity to present all

material pertinent to that motion. Immediate discovery into the issue regarding purpose of use

of malic acid in the gelled candy is now allowed and supplements on this motion will be filed by

NOON ON APRIL 10, 2019. On all other claims, by MARCH 14, 2019, plaintiffs may seek leave

to amend the dismissed claims by a motion noticed on the normal 35-day calendar. Plaintiffs

must plead their best case. Their motion should affirmatively demonstrate how the proposed

amended complaint corrects the deficiencies identified in this order, as well as any other

deficiencies raised in the Hershey’s motion but not addressed herein. The motion should be

accompanied by a redlined copy of the amended complaint.

IT IS SO ORDERED.

Dated: February 25, 2019. WILLIAM ALSUP

UNITED STATES DISTRICT JUDGE

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