Appeal No IN THE UNTED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT CHAD BRAZIL, DOLE PACKAGED FOODS, LLC,

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1 Case: , 03/27/2015, ID: , DktEntry: 4-1, Page 1 of 70 Appeal No IN THE UNTED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT CHAD BRAZIL, v. Plaintiff - Appellant DOLE PACKAGED FOODS, LLC, Defendant - Appellee ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA CASE NO. C BRIEF OF APPELLANT Charles Barrett CHARLES BARRETT, P.C Hwy. 100, Suite 210 Nashville, TN (615) Ben F. Pierce Gore PRATT & ASSOCIATES 1871 The Alameda, Suite 425 San Jose, CA (408) Counsel for Plaintiff - Appellant Chad Brazil

2 Case: , 03/27/2015, ID: , DktEntry: 4-1, Page 2 of 70 TABLE OF CONTENTS TABLE OF AUTHORITIES... iv STATEMENT OF JURISDICTION... xi STATEMENT OF THE ISSUES PRESENTED FOR REVIEW... xii STATEMENT OF THE CASE... 1 SUMMARY OF THE ARGUMENT...10 ARGUMENT...12 I. Standards Of Review...12 II. The District Court Made Errors Dismissing Certain Claims...13 A. The District Court Erred In Dismissing Plaintiff s Unjust Enrichment Claim Unjust Enrichment Is A Stand-Alone Claim Under California Law Plaintiff Is The Master Of His Complaint Unjust Enrichment Would Not Be Duplicative Because California Statutes Allow Cumulative Recovery Unjust Enrichment Is Not Duplicative Because Unlike The UCL Its Remedy Can Be Disgorgement Of Profits The Remedy For Unjust Enrichment Is Not Limited To A Price Premium B. The District Court Erred By Dismissing Plaintiff s Illegal Product Theory The Sale Of Misbranded Food Is Not Grounded In Fraud And Gives Rise To A UCL Unlawful Prong Claim An Economic Injury Results When A Consumer Purchases A Misbranded Product ii

3 Case: , 03/27/2015, ID: , DktEntry: 4-1, Page 3 of 70 III. The District Court Made Errors At Class Certification...33 A. The District Court Abused Its Discretion By Holding The Only Possible Measure Of Restitution In A Food Labeling Case Is The Price Premium The District Court Misreads Colgan A Refund Of The Money Spent By The Class Is Also An Appropriate Form Of Restitution B. The District Court Erred When It Decertified The Rule 23(b)(3) Class Because Of Damage Calculations IV. The District Court Erred In Granting Summary Judgment To Dole A. California Law Does Not Require Extrinsic Evidence To Show Dole s Labels Are Deceptive To Reasonable Consumers B. The Primary Evidence To Establish A Label Is Misleading Is The Advertising Itself...45 C. Plaintiff Offered Additional Evidence Demonstrating Dole s Labels Are Deceptive To Reasonable Consumers D. The District Court Completely Ignored Plaintiff s Evidence The Labels Were Also False CONCLUSION AND PRAYER...55 CERTIFICATE OF SERVICE...56 STATEMENT OF RELATED CASES...57 CERTIFICATE OF COMPLIANCE WITH RULE 32(a)...58 iii

4 Case: , 03/27/2015, ID: , DktEntry: 4-1, Page 4 of 70 TABLE OF AUTHORITIES Cases American Master Lease LLC v. Idanta Partners, Ltd., 225 Cal. App. 4th 1451 (Cal. App. 2d Dist. 2014)... 17, 18 Apple In-App Purchase Litig., 855 F. Supp. 2d 1030 (N.D. Cal. March 31, 2012)...19 Bank One, Dearborn, N.A. v. Maisel, 2004 U.S. Dist. LEXIS 2406 (N.D. Cal. 2004)...22 Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007)...12 Berger v. Home Depot USA, Inc., 741 F.3d 1061 (9th Cir. 2014)... 13, 14 Bescos v. Bank of Am., 105 Cal. App. 4th 378 (Cal. App. 2d Dist. 2003)...16 Blue Cross of California, Inc. v. Superior Court, 180 Cal. App. 4th 1237 (Cal. App. 2d Dist. 2009)...15 Brockey v. Moore, 107 Cal. App. 4th 86 (2003)... 45, 46 Butler v. Sears, Roebuck and Co., 727 F.3d 796 (7th Cir. 2013)...41 Chavez v. Blue Sky Natural Bev. Co., 340 Fed. Appx. 359 (9th Cir. 2009)...31 Colgan v. Leatherman Tool Grp., Inc., 135 Cal. App. 4th 663 (2006)... passim Consumer Advocates v. Echostar Satellite Corp., 113 Cal. App. 4th 1351 (2003)... 44, 45, 46, 50 County of San Bernardino v. Walsh, 158 Cal. App. 4th 533 (2007)...19 iv

5 Case: , 03/27/2015, ID: , DktEntry: 4-1, Page 5 of 70 Cummings v. Connell, 402 F.3d 936, 2005 U.S. App. LEXIS 4954 (9th Cir. 2005)...44 E.J. Franks Construction, Inc. v. Sohota, 226 Cal. App. 4th 1123 (Cal. Ct. App. 2014)...14 Eid v. Alaska Airlines, Inc., 621 F.3d 858 (9th Cir. 2010)...44 Ellsworth v. U.S. Bank, N.A., 2014 U.S. Dist. LEXIS (N.D. Cal. June 13, 2014)...19 Ellsworth v. U.S. Bank, N.A., 908 F. Supp. 2d 1063 (N.D. Cal. Dec. 11, 2012)...19 Foster Poultry Farms, Inc. v. SunTrust Bank, 2008 U.S. Dist. LEXIS (E.D. Cal. May 2, 2008)...17 Gabriel v. Alaska Elec. Pension Fund, 755 F.3d 647 (9th Cir. 2014)...14 Galope v. Deutsche Bank Nat'l Trust Co., No , 2014 U.S. App. LEXIS 5686 (9th Cir. Mar. 27, 2014)...31 Gasperini v. Ctr. for Humanities, Inc., 518 U.S. 415 (1996)...45 Glazer v. Whirlpool Corp., 722 F.3d 838 (6th Cir. 2013)...41 Guido v. L Oreal, 2013 U.S. Dist. LEXIS (C.D. Cal. 2013)... 34, 48 Gutierrez v. Wells Fargo Bank, NA, 2014 U.S. App. LEXIS (9th Cir. 2014)...43 Gutierrez v. Wells Fargo Bank, NA, 589 Fed. Appx. 824 (9th Cir. 2014)...30 Imber-Gluck v. Google, Inc., 2014 U.S. Dist. LEXIS (N.D. Cal. July 21, 2014)... 14, 18 v

6 Case: , 03/27/2015, ID: , DktEntry: 4-1, Page 6 of 70 In re Brazilian Blowout Litig., 2011 U.S. Dist. LEXIS (C.D. Cal. Apr. 12, 2011)...19 In re Google Android Consumer Privacy Litig., 2014 U.S. Dist. LEXIS (N.D. Cal. Mar. 10, 2014)...17 In re Nexium Antitrust Litig., 777 F.3d 9 (1st Cir. 2015)...42 In re Tobacco II Cases, 46 Cal. 4th 298 (2009)... 29, 30, 36, 37 In re Verduzco, 2015 Cal. App. Unpub. LEXIS 829 (Cal. App. 4th Dist. Feb., 5, 2015)...20 Jones v. Blanas, 393 F.3d 918 (9th Cir. 2004)...13 Korea Supply Co. v. Lockheed Martin Corp., 29 Cal.4th 1134 (2003)...17 Kosta v. Del Monte Corp., 2013 U.S. Dist. LEXIS (N.D. Cal. May 15, 2013)...18 Krouch v. Wal-Mart Stores, Inc., 2014 U.S. Dist. LEXIS (N.D. Cal. Oct. 28, 2014)...14 Kwikset Corp. v. Superior Ct., 51 Cal. 4th 310 (2011)... 29, 37 Lavie v. Procter & Gamble Co., 105 Cal. App. 4th 496 (2003)...46 Lectrodryer v. SeoulBank, 77 Cal. App. 4th 723 (2000)...21 Leyva v. Medline Indus. Inc., 716 F.3d 510 (9th Cir. 2013)... 12, 41 Maya v. Centex Corp., 658 F.3d 1060 (9th Cir. 2011)... 31, 32 vi

7 Case: , 03/27/2015, ID: , DktEntry: 4-1, Page 7 of 70 Medrazo v. Honda of N. Hollywood, 205 Cal. App. 4th 1 (2012)...28 Meister v. Mensinger, 230 Cal. App. 4th 381 (Cal. App. 6th Dist. 2014)... 19, 20, 25 Myers v. Malone & Hyde, Inc., 173 F.2d 291 (8th Cir. 1949)...40 Ohno v. Yasuma, 723 F.3d 984 (9th Cir. 2013)...14 Owens v. Haslett, 98 Cal. App. 2d 829 (1950)...32 Park v. Welch Foods, Inc., 2014 U.S. Dist. LEXIS (N.D. Cal. Mar. 21, 2014)...40 People v. Wahl, 100 P.2d 550 (1940)...46 Porter v. Craddock, 84 F. Supp. 704 (D. Ky. 1949)...40 Pride v. Correa, 719 F.3d 1130 (9th Cir. 2013)...12 ProMex, LLC v. Hernandez, 781 F. Supp. 2d 1013 (C.D. Cal. 2011)...44 Reid v. Johnson & Johnson, No , 2015 WL (9th Cir. Mar. 13, 2015)...49 Ries v. Ariz. Beverages USA LLC, No , 2013 WL (N.D. Cal. Mar. 28, 2013)...45 Rivera v. Bio Engineered Supplements & Nutrition, Inc., 2008 U.S. Dist. LEXIS (C.D. Cal. Nov. 13, 2008)...19 Roach v. T.L. Cannon Corp., --- F.3d ----, 2015 WL (2d Cir. Feb. 10, 2015)...42 vii

8 Case: , 03/27/2015, ID: , DktEntry: 4-1, Page 8 of 70 Rose v. Bank of America, N.A., 57 Cal. 4th 390 (Cal. 2013)...15 Rosetta Stone Ltd. v. Google, Inc., 76 F.3d 144 (4th Cir. 2012)...52 Rubio v. Capital One Bank, 613 F.3d 1195 (9th Cir. 2010)... 49, 50 Sanders v. Kennedy, 94 F.2d 478 (9th Cir. 1986)...14 Sateriale v. R.J. Reynolds Tobacco Co., 697 F.3d 777 (9th Cir. 2012)... 12, 14 Silicon Image, Inc. v. Analogix Semiconductor, Inc., 642 F. Supp. 2d 957 (N.D. Cal. 2008)...45 Stearns v. Ticketmaster Corp., 655 F.3d 1013 (9th Cir. 2011)... 38, 43 Stearns v. Ticketmaster Corp., 655 F.3d 1013 (9th Cir. 2011)...42 Steroid Hormone Product Cases, 181 Cal. App. 4th 145 (2010)...41 United States v. Gonzalez-Alvarez, 277 F.3d 73 (1st Cir. 2002)...32 Valdez v. Saxon Mortg. Servs., 2015 U.S. Dist. LEXIS 2173 (C.D. Cal. Jan. 6, 2015)...18 Vicuña v. Alexia Foods, Inc., 2012 U.S. Dist. LEXIS (N.D. Cal. Apr. 27, 2012)... 12, 15 Williams v. Caterpillar Tractor Co., 1986 U.S. App. LEXIS (9th Cir. June 12, 1986)...15 Williams v. Gerber Prods. Co., 552 F.3d 934 (9th Cir. 2008)...46 viii

9 Case: , 03/27/2015, ID: , DktEntry: 4-1, Page 9 of 70 Zeisel v. Diamond Foods, Inc., 2011 U.S. Dist. LEXIS (N.D. Cal. June 7, 2011)...19 Statutes 21 U.S.C U.S.C U.S.C xi 28 U.S.C xi CAL. BUS. & PROF. CODE CAL. BUS. & PROF. CODE CAL. BUS. & PROF. CODE CAL. BUS. & PROF. CODE CAL. BUS. & PROF. CODE CAL. CIV. CODE CAL. CIV. CODE CAL. HEALTH & SAF. CODE CAL. HEALTH & SAF. CODE CAL. HEALTH & SAF. CODE CAL. HEALTH & SAF. CODE passim CAL. HEALTH & SAF. CODE , 26 CAL. HEALTH & SAF. CODE CAL. HEALTH & SAF. Code Rules Fed. R. Civ. P. 12(b)(6)...1, 14 ix

10 Case: , 03/27/2015, ID: , DktEntry: 4-1, Page 10 of 70 Fed. R. Civ. P. 9(b)... 3 Treatises Restatement (Third) of Restitution & Unjust Enrichment, 3 (2011)...22 Restatement (Third) of Restitution & Unjust Enrichment, 49 (2011)...23 Restatement (Third) of Restitution & Unjust Enrichment, 49(4) (2011)...23 Restatement (Third) of Restitution & Unjust Enrichment, 51 (2011)...25 Restatement (Third) of Restitution & Unjust Enrichment, 51 cmt. i (2011)...26 Restatement (Third) of Restitution & Unjust Enrichment, 51(4) (2011)...24 Restatement (Third) of Restitution & Unjust Enrichment, 51(5) (2011)...24 Restatement (Third) of Restitution & Unjust Enrichment, 51(5)(d) (2011)...24 x

11 Case: , 03/27/2015, ID: , DktEntry: 4-1, Page 11 of 70 STATEMENT OF JURISDICTION The district court had jurisdiction under 28 U.S.C. 1332(d) because Defendant Dole Packaged Foods, LLC ( Dole ) is a California limited liability corporation with its principal place of business in California, and Plaintiff Chad Brazil ( Plaintiff ) alleged a nationwide class of over 100 members with different citizenship than Dole. The requisite amount in controversy exists because the claims of the class members exceed $5,000,000 in the aggregate. ER , This Court has jurisdiction under 28 U.S.C because the district court entered a final judgment on December 8, 2014, ER 127 and Plaintiff filed his notice of appeal on December 17, ER xi

12 Case: , 03/27/2015, ID: , DktEntry: 4-1, Page 12 of 70 STATEMENT OF THE ISSUES PRESENTED FOR REVIEW 1. Did the district court err in dismissing Plaintiff s unjust enrichment claim as duplicative of Plaintiff s statutory claims? 2. Did the district court err in dismissing Plaintiff s UCL unlawful claims predicated on Dole s sale to Plaintiff of products that cannot legally be sold, held, or received in commerce? 3. Did the district court err at class certification in ruling that the only possible model of restitution in a food labeling case was to show the so-called price premium impact on the Plaintiff and the class, i.e., the difference in value between a product as labeled and the product as received? 4. Did the district court err by decertifying the Rule 23(b)(3) class because class-wide damage calculations prevented the predominance requirement from being satisfied? 5. Did the district court err at summary judgment in ruling Plaintiff failed to provide sufficient evidence of how reasonable consumers would be deceived by Dole s all natural labels? xii

13 Case: , 03/27/2015, ID: , DktEntry: 4-1, Page 13 of 70 STATEMENT OF THE CASE This is a food misbranding case. This case is about Dole s illegal, false or misleading all natural food labels. Dole sold Plaintiff and the class food products that were labeled on the front as containing only all natural fruit but which actually contained two artificial and synthetic ingredients, citric acid and ascorbic acid. This appeal arises out of a series of orders by the district court including (i) the dismissal under Fed. R. Civ. P. 12(b)(6) of certain claims including the unjust enrichment claim, (ii) the district court s orders granting class certification and then subsequently decertifying the Rule 23(b)(3) class, and (iii) the district court s grant of summary judgment to Dole. On April 11, 2012, Plaintiff filed his Class Action Complaint ( Complaint ) on behalf of a nationwide class. ER 818, 835, 836. Plaintiff brought this action against Dole for its food products that contained the label all natural fruit. ER Plaintiff s claims are predicated on violations of California s Sherman Food, Drug, and Cosmetic Law, CAL. HEALTH & SAF. CODE , et seq. ( Sherman Law ), which prohibits the sale of false, misleading and/or misbranded food. Under the Sherman Law, a food is misbranded if its labeling (1) is false or misleading in any particular, and (2) violates the labeling 1

14 Case: , 03/27/2015, ID: , DktEntry: 4-1, Page 14 of 70 requirements of the Sherman Law or the Food Drug & Cosmetic Act, 21 U.S.C. 301 et seq. 1 It is also unlawful for any person to manufacture, sell, deliver, hold, or offer for sale any food that is misbranded, and to receive in commerce any food that is misbranded or to deliver or proffer for delivery any such food. CAL. HEALTH & SAF. CODE and CAL. HEALTH & SAF. CODE Any Sherman Law violation is punishable up to a year in jail or a fine of up to $1000, or both. CAL. HEALTH & SAF. Code Plaintiff alleged causes of action under the unlawful, unfair, and fraudulent prongs of California s Unfair Competition Law, CAL. BUS. & PROF. CODE 17200, et seq. ( UCL ); False Advertising Law, CAL. BUS. & PROF. CODE 17500, et seq. ( FAL ); California Legal Remedies Act, CAL. BUS. & PROF. CODE 1750, et seq ( CLRA ); a common law cause of action for unjust enrichment; and breach of warranty claims. ER Plaintiff s Complaint alleged that Dole s label statements were not only unlawful by being misbranded via violations of both the Sherman Law and the FDCA and being sold as such, but also unfair and/or misleading. California law provides that such misbranded products cannot legally be manufactured, advertised, distributed, held or sold. Importantly, Plaintiff alleged that he was 1 The Sherman Law adopts all food labeling regulations promulgated under the FDCA as the law of California. CAL. HEALTH & SAF. CODE

15 Case: , 03/27/2015, ID: , DktEntry: 4-1, Page 15 of 70 harmed because he purchased products that he would not have purchased had he known that the sale was illegal. ER 835. Although reliance is immaterial to his unlawful claim under the UCL, Plaintiff did allege that he relied upon and was misled by Dole s All Natural Fruit label statements (among others). ER 835, 842. On July 23, 2012, Plaintiff filed a First Amended Complaint ( FAC ) that expanded the scope of his claims. ER In addition to the all natural claims, Plaintiff alleged various Dole food products labels made deceptive fresh, sugar free, low calorie, nutrient content, and health claims. ER On August 13, 2012, Dole moved to dismiss the FAC. On March 25, 2013, the district court entered the first order relevant to this appeal. ER The court granted in part and denied in part Dole s motion to dismiss the FAC. The district court rejected Dole s arguments regarding preemption, primary jurisdiction, Article III injury, and plausibility, but granted the motion under Fed. R. Civ. P. 9(b) as to the UCL, FAL and CLRA claims. The district court found that all three claims sounded in fraud, including Plaintiff s unlawful count, so it held the heightened pleadings standards of Rule 9(b) applied. ER 21. The district court granted Plaintiff leave to file another amended complaint on those three statutory claims. ER 6-22,

16 Case: , 03/27/2015, ID: , DktEntry: 4-1, Page 16 of 70 Importantly, the district court dismissed with prejudice Plaintiff s cause of action for unjust enrichment. The district court ruled there was no cause of action for unjust enrichment in California and such a claim was superfluous of Plaintiff s UCL claim. ER On April 12, 2013, Plaintiff filed his Second Amended Complaint ( SAC ). ER This complaint specifically named the thirty-eight Dole products at issue in the case. ER Plaintiff made the same all natural, fresh, sugar free, low calorie, nutrient content, and health claims. ER Plaintiff alleged he was damaged by purchasing Dole s products in that he was misled by Dole s unlawful labels into purchasing products he would not have otherwise purchased had he known the truth about those products, including whether the products were misbranded. ER 911, 921, 924, 930. Dole moved to dismiss the SAC. On September 23, 2013, the district court largely denied Dole s motion to dismiss the SAC. ER As part of this order, however, the district court held that Plaintiff s UCL unlawful misbranding claim (referred to by the district court as the illegal product theory) must be dismissed with prejudice to the extent it seeks restitution for Dole s illegal sale under the Sherman Law of a food product that was misbranded. ER 43. The district court held, in relevant part, that Plaintiff s illegal sale of a misbranded product theory under the UCL is 4

17 Case: , 03/27/2015, ID: , DktEntry: 4-1, Page 17 of 70 inconsistent with the enhanced standing requirements for UCL claims imposed by Proposition 64 and the California Supreme Court s decision in Kwikset. Id. On January 1, 2014, Plaintiff moved for certification of a smaller class than defined in the SAC. ER The proposed class consisted of consumers in the United States that bought a Dole fruit product boasting on the front of its packages that it was nothing but All Natural Fruit but actually contained citric acid and ascorbic acid, both synthetic, artificial ingredients. Plaintiff included ten Dole products in this definition: Tropical Fruit (can), Mixed Fruit (cup), Mixed Fruit (bag), Diced Peaches, Diced Apples, Diced Pears, Mandarin Oranges, Pineapple Tidbits, Red Grapefruit Sunrise, and Tropical Fruit cup. ER 204. All of these products are substantially similar because they are the same type of food (packaged fruit), make the same front-of-the-label representation (all natural fruit) and contain the same artificial and synthetic ingredients (ascorbic acid and citric acid). ER 196. Plaintiff s expert on damages offered different methods of calculating restitution: the purchase price paid by class members, the net profit made by Dole as restitutionary disgorgement, the average wholesale price of the products paid by the class, a benefit of the bargain analysis comparing Dole products to non-dole products, and a regression analysis model. ER 231, On May 30, 2014, the district court granted Plaintiff s motion and certified the following classes: 5

18 Case: , 03/27/2015, ID: , DktEntry: 4-1, Page 18 of 70 Rule 23(b)(2): All persons in the United States who, from April 11, 2008, until the date of notice, purchased a Dole fruit product bearing the front panel label statement All Natural Fruit but which contained citric acid and ascorbic acid. Rule 23(b)(3): All persons in California who, from April 11, 2008, until the date of notice, purchased a Dole fruit product bearing the front panel label statement All Natural Fruit but which contained citric acid and ascorbic acid. ER 83. The district court found the classes were ascertainable ER and that the four requirements of Rule 23(a) numerosity, commonality, typicality and adequacy of representation were satisfied. ER The district court found an injunctive class appropriate under Rule 23(b)(2). ER The district court also found that the superiority requirement of Rule 23(b)(3) was not contested by Dole and was therefore satisfied. ER Much of the district court s class certification opinion focused on the predominance element of Rule 23(b)(3). First, the court found a nationwide class inappropriate due to choice of law issues, but it did certify the California-only class and allowed it to proceed. ER Second, the district court held wrongly, as discussed below that the proper measure of restitution in a mislabeling case is the amount necessary to compensate the purchaser for the difference between a product as labeled and the product as received. ER 74. Using this statement as its 6

19 Case: , 03/27/2015, ID: , DktEntry: 4-1, Page 19 of 70 basis, the district court rejected four of Plaintiff s five restitution models for (i) the amount the class paid for the misbranded products at issue, (ii) the disgorgement of Dole s net profits from the sales of the misbranded products, (iii) the value of the average wholesale price of the products, and (iv) the differences in price between the misbranded Dole products and similar competitive products without the misbranding. ER 235, The district court held Plaintiff s final model, a regression analysis, satisfied the court s requirement that any restitution model trace damages solely to the impact of the all natural fruit misbranded label on changes in price or sales. ER , 78. On June 12, 2014, Plaintiff filed a Third Amended Complaint ( TAC ) which simply limited the products and claims in the case to mirror the class certification decision. ER Again, there was no claim for unjust enrichment since the district court previously dismissed that claim with prejudice. On August 21, 2014, Dole filed a motion for summary judgment and a motion to decertify the classes. ER The motion to decertify only attacked Plaintiff s regression analysis because the district court had forbidden the use of any other measure of restitution. Dole argued Rule 23(b)(3) s predominance requirement was not satisfied. Plaintiff opposed both motions. ER In the opposition to the motion for summary judgment, Plaintiff submitted evidence, 7

20 Case: , 03/27/2015, ID: , DktEntry: 4-1, Page 20 of 70 including Dole s own internal survey conducted for this litigation as support for how reasonable consumers would be deceived by Dole s labels. ER On November 6, 2014, the district court granted in part and denied in part the motion to decertify. ER The court decertified the California damages class, but allowed the nationwide injunctive class to remain certified. ER 109. The district court held Brazil has satisfied the requirements of Rule 23(a) and (b)(2), but he has failed to satisfy the predominance requirement of Rule 23(b)(3). Id. The district court rejected Plaintiff s regression model. ER The district court repeated itself from its earlier motion to dismiss ruling and held there was only a single way for Plaintiff to present evidence of restitution: The proper measure of restitution in a mislabeling case is the amount necessary to compensate the purchaser for the difference between a product as labeled and the product as received. This calculation contemplates the production of evidence that attaches a dollar value to the consumer impact caused by the unlawful business practices. Restitution is then determined by taking the difference between the market price actually paid by consumers and the true market price that reflects the impact of the unlawful, unfair, or fraudulent business practices. Accordingly, Brazil must present a damages methodology that can determine the price premium attributable to Dole s use of the All Natural Fruit label statements. ER 92 (citations omitted). On November 19, 2014, Plaintiff sought leave to file a motion for reconsideration of the Court s decertification order and the March 25, 2013 order granting in part the motion to dismiss the FAC. ER There, Plaintiff 8

21 Case: , 03/27/2015, ID: , DktEntry: 4-1, Page 21 of 70 asked the court, among other things, to allow Plaintiff s unjust enrichment claim to be reinstated because the law in the Ninth Circuit had changed since the order dismissing the claim. On December 8, 2014, the district court denied Plaintiff s motion for reconsideration regarding the unjust enrichment claim. ER That same day, the district court granted Dole s motion for summary judgment. ER In its summary judgment opinion, the district court found there was insufficient evidence that the All Natural Fruit label statement on the challenged Dole products was likely to mislead reasonable consumers and that the label statements were therefore unlawful on that basis. ER 115. On December 17, 2014, Plaintiff filed his Notice of Appeal. 9

22 Case: , 03/27/2015, ID: , DktEntry: 4-1, Page 22 of 70 SUMMARY OF THE ARGUMENT The district court made five reversible errors. First, the district court dismissed Plaintiff s unjust enrichment claim at the onset as duplicative of Plaintiff s statutory claims. This is simply wrong for multiple reasons. Unjust enrichment is a separate cause of action in California, its elements are different, and its remedy is measured differently than restitution under the UCL, FAL or CLRA. Also, California statute, ignored by the district court, allows cumulative recovery. Finally, the district court essentially picked one of Plaintiff s claims over another. A party is entitled to allege all claims, even if deemed inconsistent, that are adequately pleaded. Second, the district court erred in dismissing Plaintiff s illegal product theory based on Dole s sales of misbranded products. The district court mistakenly held that this particular claim was essentially based in fraud so Plaintiff would not have standing simply because they purchased misbranded products. This claim is different than the other parts of Plaintiff s case, however, in that Plaintiff alleges Dole sold illegal products that were misbranded under the Sherman Law. By doing so, Dole violated the Sherman Law. Plaintiff properly borrows these statutory violations and brings a claim pursuant to the UCL. 10

23 Case: , 03/27/2015, ID: , DktEntry: 4-1, Page 23 of 70 Third, the district court erred at class certification in ruling that the only possible model of restitution in a food labeling case was to show the so-called price premium impact on the Plaintiff and the class, i.e., the difference in value between a product as labeled and the product as received. The district court limited Plaintiff s ability to prove the impact of the misbranded label on the consumer to a regression analysis. Restitution is not so limited and the district court should have allowed Plaintiff, instead, to offer proof of the advantage gained by Dole. Fourth, the district court erred by decertifying the Rule 23(b)(3) class because individual issues predominated over class-wide damage calculations. Under California law, individual damage calculations do not defeat certification. Fifth, the district court erred in granting summary judgment against Plaintiff. Contrary to the district court s finding, Plaintiff provided more than sufficient evidence of how reasonable consumers would be deceived by Dole s all natural labels. 11

24 Case: , 03/27/2015, ID: , DktEntry: 4-1, Page 24 of 70 ARGUMENT I. Standards Of Review This Court s review of a dismissal pursuant to Fed. R. Civ. P. 12(b)(6) is de novo. Pride v. Correa, 719 F.3d 1130, 1133 (9th Cir. 2013). In considering a motion to dismiss under Rule 12(b)(6), all allegations in the complaint must be taken as true and construed in the light most favorable to the plaintiff. Sateriale v. R.J. Reynolds Tobacco Co., 697 F.3d 777, 783 (9th Cir. 2012). A complaint need only allege sufficient facts to show a claim to relief that is plausible on its face. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). At the pleading stage, a plaintiff is allowed to assert inconsistent or alternative theories of recovery. Vicuña v. Alexia Foods, Inc., 2012 U.S. Dist. LEXIS 59408, at *8 (N.D. Cal. Apr. 27, 2012). This Court reviews the denial of class certification for an abuse of discretion, a determination that entails a two-step process. See Leyva v. Medline Indus. Inc., 716 F.3d 510, 513 (9th Cir. 2013). First, this Court look[s] to whether the trial court identified and applied the correct legal rule to the relief requested. Id. (quotation omitted). The Court secondly looks to whether the trial court s resolution of the motion resulted from a factual finding that was illogical, implausible, or without support in inferences that may be drawn from facts in the record. Id. 12

25 Case: , 03/27/2015, ID: , DktEntry: 4-1, Page 25 of 70 A district court s summary judgment decision is reviewed de novo. Jones v. Blanas, 393 F.3d 918, 926 (9th Cir. 2004). On appeal, the court must determine, viewing the evidence in the light most favorable to the nonmoving party, whether there are any genuine issues of material fact and whether the district court correctly applied the relevant substantive law. Id. II. The District Court Made Errors Dismissing Certain Claims A. The District Court Erred In Dismissing Plaintiff s Unjust Enrichment Claim. The district court initially held that there was no cause of action for unjust enrichment in California, and unjust enrichment was duplicative of Plaintiff s UCL claim. ER In its December 8, 2014 order denying reconsideration, however, the district court seemingly acknowledged that California law does, in fact, recognize a stand-alone cause of action for unjust enrichment, ER 124, but that Plaintiff still had made no showing that, in this particular case, the damages figures for restitution and unjust enrichment would be any different. Id. The district court called the injury to Plaintiff a corresponding loss to the benefit received by Dole and thus prohibited. Id. The district court s analysis was wrong. 1. Unjust Enrichment Is A Stand-Alone Claim Under California Law. In Berger v. Home Depot USA, Inc., 741 F.3d 1061 (9th Cir. 2014), the Ninth Circuit unequivocally held unjust enrichment is a separate cause of action under California law. The court held the elements of unjust enrichment are 13

26 Case: , 03/27/2015, ID: , DktEntry: 4-1, Page 26 of 70 receipt of a benefit and unjust retention of the benefit at the expense of another. Id. at See also, Ohno v. Yasuma, 723 F.3d 984, 1006 (9th Cir. 2013). Since Berger, other courts have followed suit. See Krouch v. Wal-Mart Stores, Inc., 2014 U.S. Dist. LEXIS , *14 (N.D. Cal. Oct. 28, 2014); Gabriel v. Alaska Elec. Pension Fund, 755 F.3d 647, 665 (9th Cir. 2014); E.J. Franks Construction, Inc. v. Sohota, 226 Cal. App. 4th 1123, 1128 (Cal. Ct. App. 2014); Imber-Gluck v. Google, Inc., 2014 U.S. Dist. LEXIS 98899, **22-25 (N.D. Cal. July 21, 2014). 2. Plaintiff Is The Master Of His Complaint. The district court s dismissal of Plaintiff s unjust enrichment claim ignores the proper Rule 12(b)(6) standard. A motion to dismiss challenges the legal sufficiency of the claims, and the court must construe the pleading in the light most favorable to the non-moving party taking all material allegations as true. Sateriale, at 783. Rather than apply that standard, the district court posed the improper question of whether the UCL and unjust enrichment claims are duplicative. The district court erred by failing to address the question of whether the unjust enrichment claim was pleaded properly to state a viable claim. Plaintiff pleaded a viable unjust enrichment claim and its dismissal was improper. It is axiomatic that the plaintiff is generally considered the master of his complaint, Williams v. Caterpillar Tractor Co., 1986 U.S. App. LEXIS 33057, at *6 (9th Cir. June 12, 14

27 Case: , 03/27/2015, ID: , DktEntry: 4-1, Page 27 of ), and the district court cannot dismiss properly pleaded claims even if they are deemed inconsistent. Vicuña, 2012 U.S. Dist. LEXIS 59408, **8-9 (allowing an unjust enrichment claim to be pled alternatively). The district court chose to dismiss unjust enrichment, but it could just as easily have dismissed Plaintiff s UCL claim for the same reason that it was duplicative of unjust enrichment. Neither result is justified at the pleading stage. 3. Unjust Enrichment Would Not Be Duplicative Because California Statutes Allow Cumulative Recovery. The district court was incorrect in ruling an unjust enrichment claim would be duplicative. California statutes expressly say remedies under the UCL and FAL and CLRA are independent and cumulative. CAL. BUS. & PROF. CODE ( Unless otherwise expressly provided, the remedies or penalties provided by the chapter are cumulative to each other and to the remedies or penalties available under all other laws of this state. ). See also, CAL. BUS. & PROF. CODE ; CAL. CIV. CODE 1752; Rose v. Bank of America, N.A., 57 Cal. 4th 390, (Cal. 2013) ( the UCL is meant to provide remedies cumulative to those established by other laws ); Blue Cross of California, Inc. v. Superior Court, 180 Cal. App. 4th 1237, 1249 (Cal. App. 2d Dist. 2009) ( The UCL and the FAL also contain the following provision: Unless otherwise expressly provided, the 15

28 Case: , 03/27/2015, ID: , DktEntry: 4-1, Page 28 of 70 remedies or penalties provided by this chapter are cumulative to each other and to the remedies or penalties available under all other laws of this state. (Bus. & Prof. Code, 17205, ) ); Bescos v. Bank of Am., 105 Cal. App. 4th 378, 387 (Cal. App. 2d Dist. 2003) ( The remedies it provides are cumulative to any other procedures or remedies for any violation or conduct provided for in any other law. ). Thus, a party who lost a case with an unjust enrichment claim and a UCL claim could be forced to cumulatively pay restitution for the UCL claim and restitution for any unjust enrichment. See, e.g., Thomas v. Imbriolo, 2012 Cal. App. Unpub. LEXIS 3111 (Cal. App. 1st Dist. Apr. 25, 2012) (awarding $40,000,000 in restitution under the UCL and $36,829,373 in compensatory damages under CLRA for same approximately $40,000,000 in sales). The district court s rulings ignored these California statutes entirely. ER Unjust Enrichment Is Not Duplicative Because Unlike The UCL Its Remedy Can Be Disgorgement Of Profits. The remedy for unjust enrichment is broader than the remedies available under the UCL, FAL and CLRA and includes nonrestitutionary disgorgement. Meister v. Mensinger, 230 Cal. App. 4th 381 (Cal. App. 6th Dist. 2014). As such, the remedy for unjust enrichment would include the disgorgement of Dole s profits from the sale of its misbranded products. 16

29 Case: , 03/27/2015, ID: , DktEntry: 4-1, Page 29 of 70 In Korea Supply Co. v. Lockheed Martin Corp., 29 Cal. 4th 1134 (2003), the California Supreme Court concluded that only restitutionary disgorgement is available under the UCL. Under the UCL, an individual may recover profits unfairly obtained to the extent that these profits represent monies given to the defendant or benefits in which the plaintiff has an ownership interest. Id. at See also, In re Google Android Consumer Privacy Litig., 2014 U.S. Dist. LEXIS 31430, at *21 (N.D. Cal. Mar. 10, 2014) (non-restitutionary disgorgement is not an available remedy under the UCL. ). Non-restitutionary disgorgement, however, under an unjust enrichment theory is different. American Master Lease LLC v. Idanta Partners, Ltd., 225 Cal. App. 4th 1451 (Cal. App. 2d Dist. 2014), expressly held that the restitution resulting from an unjust enrichment claim includes nonrestitutionary disgorgement and goes beyond the restitutionary disgorgement available under the UCL (or FAL or CLRA); Foster Poultry Farms, Inc. v. SunTrust Bank, 2008 U.S. Dist. LEXIS (E.D. Cal. May 2, 2008) (holding that net profit, [is] the generally accepted measure for the equitable remedy of disgorgement damages ). The Court in Idanta stated: The cases cited by defendants that involve restitution under the unfair competition law are inapplicable [b]ecause restitution in a private action brought under the unfair competition law is measured by what was taken from the plaintiff rather than by the defendant s unjust enrichment. 17

30 Case: , 03/27/2015, ID: , DktEntry: 4-1, Page 30 of 70 Colgan v. Leatherman Tool Group, Inc. involved claims under the false advertising law, Business and Professions Code section 17500, and the unfair competition law, Business and Professions Code section As noted, nonrestitutionary disgorgement is not available for these claims. Idanta, 225 Cal. App. 4th at 1482 n.21, 1492 n.29 (citations omitted). In a food misbranding case, Kosta v. Del Monte Corp., 2013 U.S. Dist. LEXIS (N.D. Cal. May 15, 2013), Judge Gonzalez Rogers allowed Plaintiff s claim for unjust enrichment and its disgorgement and restitution remedies to proceed in a consumer protection case that also sought statutory remedies pursuant to the UCL, CLRA and FAL. Id. at * In Imber-Gluck v. Google, Inc., 2014 U.S. Dist. LEXIS 98899, (N.D. Cal. July 21, 2014), the court allowed the plaintiff to proceed with claims based on the unfair, deceptive, or misleading aspects of the UCL, while simultaneously ruling that the unjust enrichment claim asserted in that case could go forward. Id. at *25. Imber-Gluck allowed the possibility of the plaintiff recovering disgorgement of profits as a result of unjust enrichment in addition to any remedies available under the UCL. Numerous other cases allowed a party seeking a disgorgement remedy for unjust enrichment to proceed while also asserting claims pursuant to consumer protection statutes. See, e.g., Valdez v. Saxon Mortg. Servs., 2015 U.S. Dist. LEXIS 2173 (C.D. Cal. Jan. 6, 2015); Apple In-App Purchase Litig., 855 F. Supp. 18

31 Case: , 03/27/2015, ID: , DktEntry: 4-1, Page 31 of 70 2d 1030, 1042 (N.D. Cal. March 31, 2012); Ellsworth v. U.S. Bank, N.A., 908 F. Supp. 2d 1063, 1088 (N.D. Cal. Dec. 11, 2012). Likewise, California courts have repeatedly certified classes that simultaneously pursued recovery under the UCL and CLRA and the doctrine of unjust enrichment. See, e.g., Zeisel v. Diamond Foods, Inc., 2011 U.S. Dist. LEXIS (N.D. Cal. June 7, 2011); Rivera v. Bio Engineered Supplements & Nutrition, Inc., 2008 U.S. Dist. LEXIS 95083, at **46-47, (C.D. Cal. Nov. 13, 2008); In re Brazilian Blowout Litig., 2011 U.S. Dist. LEXIS 40158, at* 29 (C.D. Cal. Apr. 12, 2011); Beck-Ellman v. Kaz USA, Inc., 2013 U.S. Dist. LEXIS 60182, at *3 (S.D. Cal. Jan. 7, 2013); Ellsworth v. U.S. Bank, N.A., 2014 U.S. Dist. LEXIS 81646, at *118 (N.D. Cal. June 13, 2014). Meister v. Mensinger, 230 Cal. App. 4th 381 (Cal. App. 6th Dist. 2014) is instructive. In Meister, the court confirmed that the remedy for unjust enrichment can be nonrestitutionary disgorgement of a defendant s profits. Id. at *25. The court held [d]isgorgement as a remedy is broader than restitution or restoration of what the plaintiff lost. Id. at 398 (citing County of San Bernardino v. Walsh, 158 Cal. App. 4th 533, 542 (2007)). Importantly, the court stated: [T]he public policy of this state does not permit one to take advantage of his own wrong regardless of whether the other party suffers actual damage. Where a benefit has been received by the defendant but the plaintiff has not suffered a corresponding loss or, in some cases, any loss, but nevertheless the enrichment of the defendant would be unjust the defendant may be under a duty to give to the 19

32 Case: , 03/27/2015, ID: , DktEntry: 4-1, Page 32 of 70 plaintiff the amount by which [the defendant] has been enriched. (citations omitted.) The emphasis is on the wrongdoer s enrichment, not the victim s loss. In particular, a person acting in conscious disregard of the rights of another should be required to disgorge all profit because disgorgement both benefits the injured parties and deters the perpetrator from committing the same unlawful actions again. Disgorgement may include a restitutionary element, but it may compel a defendant to surrender all money obtained through an unfair business practice regardless of whether those profits represent money taken directly from persons who were victims of the unfair practice. Meister, at ** See also, In re Verduzco, 2015 Cal. App. Unpub. LEXIS 829, **34-35 (Cal. App. 4th Dist. Feb., 5, 2015) ( The emphasis is on the wrongdoer s enrichment, not the victim s loss. ). Meister, Idanta and In re Verduzco make clear that the remedy for unjust enrichment can be different than the restitutionary disgorgement required under the California statutes. An unjust enrichment claim for non-restitutionary disgorgement would specifically measure the gains and profits by Dole. Here, the district court assumed that the measure of Plaintiff s loss and the the benefit to Dole would be identical, and therefore, duplicative. The court penalized Plaintiff for not pleading specific facts showing the amount of Dole s net profit or the retail amount spent by the class, or even the price premium that the Court said it wanted. ER 125. To be clear, at the pleading stage and without the benefit of any discovery a plaintiff is not responsible to include those kinds of 20

33 Case: , 03/27/2015, ID: , DktEntry: 4-1, Page 33 of 70 figures. Moreover, the district court admitted those remedies are certainly not automatically the same. [R]estitution does not necessarily equal unjust enrichment. ER 125 (citing Meister). In this case, Dole manufactured the misbranded products and sold them to wholesalers, who in turn, sold to retailers. The loss suffered by Plaintiff (either refund of the purchase price or the price premium) would likely be different than the amount of Dole s profits generated from sales to wholesalers. It is important to note, again, that Plaintiff alleged in the FAC, and in all subsequent complaints, that he was misled by the Defendants unlawful labeling practices and actions into purchasing products he would not have otherwise purchased had he known the truth about those products. ER 878. The district court s error was based on its criticism that Plaintiff had not proven (at the motion to dismiss stage, no less) that the potential recovery for statutory restitution and disgorgement unjust enrichment would be different. Id. They clearly can be very different and the district court should have afforded Plaintiff the opportunity in discovery to prove each potential manner of recovery. 2 2 Unlike the UCL, the amount of disgorgement available to Plaintiff and the class is determined by a jury. Lectrodryer v. SeoulBank, 77 Cal. App. 4th 723, 728 (2000) (plaintiff entitled to a jury trial on claim for unjust enrichment even when equitable principles are applied. ) 21

34 Case: , 03/27/2015, ID: , DktEntry: 4-1, Page 34 of The Remedy For Unjust Enrichment Is Not Limited To A Price Premium. Plaintiff s recovery pursuant to an unjust enrichment claim would not be limited to the district court s price premium. The remedy can be something different, including Dole s profits for its misbranded product sales. The Restatement (Third) of Restitution & Unjust Enrichment, 3 (2011), which is followed in California, see Bank One, Dearborn, N.A. v. Maisel, 2004 U.S. Dist. LEXIS 2406, *24 (N.D. Cal. 2004), provides that [a] person is not permitted to profit by his own wrong, and the official notes to this section state: When the defendant has acted in conscious disregard of the claimant s rights, the whole of the resulting gain is treated as unjust enrichment, even though the defendant s gain may exceed both (i) the measurable injury to the claimant, and (ii) the reasonable value of a license authorizing the defendant s conduct. Restitution from a conscious wrongdoer may therefore yield a recovery that is profitable to the claimant Restitution requires full disgorgement of profit by a conscious wrongdoer, not just because of the moral judgment implicit in the rule of this section, but because any lesser liability would provide an inadequate incentive to lawful behavior. If A anticipates (accurately) that unauthorized interference with B s entitlement may yield profits exceeding any damages B could prove, A has a dangerous incentive. The objective of that part of the law of restitution summarized by the rule of 3 is to frustrate any such calculation. The existence of colorable or even plausible justification does not immunize the defendant in such cases from a liability to disgorge gains that are determined--after the fact--to have been realized through interference with another s interests, or in breach of a duty owed to the other. In this respect, a liability to disgorge profits resembles the liability in damages that would result from a breach of 22

35 Case: , 03/27/2015, ID: , DktEntry: 4-1, Page 35 of 70 the same duty: the actor takes the risk that conduct undertaken in good faith may prove to interfere with the protected interests of another. The text of 3 is carried over from Restatement of Restitution 3 (1937), omitting the concluding words at the expense of another. The purpose of this change is to avoid any implication that the defendant s wrongful gain must correspond to a loss on the part of the plaintiff. (On the meaning of the words at the expense of another, see 1, Comment a.) On the contrary, it is clear not only that there can be restitution of wrongful gain exceeding the plaintiff s loss, but that there can be restitution of wrongful gain in cases where the plaintiff has suffered an interference with protected interests but no measurable loss whatsoever. 3, official notes. The official comments to 49 of the Restatement point out that 49 identifies six potentially different standards for measuring enrichment and indicates that the value to the recipient approach which focuses on the benefit of the improper claim to a defendant is usually the most restrictive (and therefore the most favorable to a defendant) of the available measures of enrichment and is thus typically reserved for involving an innocent recipient who obtained unrequested, nonreturnable benefits. To be sure this is not the case with Dole. In stark contrast, 49(4) of the Restatement states: (4) When restitution is intended to strip the defendant of a wrongful gain, the standard of liability is not the value of the benefit conferred but the amount of the profit wrongfully obtained. Unjust enrichment in such cases is measured by the rules of 51(4)-(5). 23

36 Case: , 03/27/2015, ID: , DktEntry: 4-1, Page 36 of 70 Section 51(4) of the Restatement indicates that the appropriate measure in such a context is the net profit attributable to the underlying wrong unless a market value measure would impose greater liability. Section 51(5), in turn, provides: (5) In determining net profit the court may apply such tests of causation and remoteness, may make such apportionments, may recognize such credits or deductions, and may assign such evidentiary burdens, as reason and fairness dictate, consistent with the object of restitution as specified in subsection (4). The following rules apply unless modified to meet the circumstances of a particular case: (a) Profit includes any form of use value, proceeds, or consequential gains ( 53) that is identifiable and measurable and not unduly remote. (b) A conscious wrongdoer or a defaulting fiduciary who makes unauthorized investments of the claimant s assets is accountable for profits and liable for losses. (c) A conscious wrongdoer or a defaulting fiduciary may be allowed a credit for money expended in acquiring or preserving the property or in carrying on the business that is the source of the profit subject to disgorgement. By contrast, such a defendant will ordinarily be denied any credit for contributions in the form of services, or for expenditures incurred directly in the commission of a wrong to the claimant. (d) A claimant who seeks disgorgement of profit has the burden of producing evidence permitting at least a reasonable approximation of the amount of the wrongful gain. Residual risk of uncertainty in calculating net profit is assigned to the defendant. Importantly, California precedent like Meister and 51(5)(d) of the Restatement and its Official Comments make clear that while a plaintiff has the burden of producing evidence permitting a reasonable approximation of the 24

37 Case: , 03/27/2015, ID: , DktEntry: 4-1, Page 37 of 70 amount of the defendant s wrongful gain, much of the burden with respect to calculating the defendant s net profits is actually assigned to the defendant and that once the plaintiff produces a possible minimum and maximum range, the burden to demonstrate the appropriateness of anything less than the maximum falls on the defendant. Once a plaintiff has established the amount, if the damages proven could be reduced proportionately, that burden rests upon the defendant. [W]here it is clear a defendant has been at fault and has caused some part of the plaintiff s damages, the burden of proof should rest on him to show the extent of his contribution, and if he cannot sustain it he should be liable for the entire loss. Meister, 230 Cal. App. 4th at Meister is in accord with the official comment to 51 Restatement which it cites and quotes: This Restatement adopts a more modern and generally useful rule that the claimant has the burden of producing evidence from which the court may make at least a reasonable approximation of the defendant s unjust enrichment. If the claimant has done this much, the defendant is then free (there is no need to speak of burden shifting ) to introduce evidence tending to show that the true extent of unjust enrichment is something less. If the claimant s evidence will not yield even a reasonable approximation, the claim of unjust enrichment is merely speculative, and disgorgement will not be allowed..... Underlying the rules about evidentiary burdens in these cases is the equitable disposition that resolves uncertainty in favor of the claimant against the conscious wrongdoer. Reasonable approximation will suffice to establish the disgorgement liability of a conscious 25