Chavez v. Nestlé: Ninth Circuit Reverses Class Action Dismissal, Sends “Juicy Juice” Case Back to Trial Court

Nestlé USA, Inc., facing allegations that its “Juicy Juice Brain Development” beverage deceived consumers into believing the product provided special cerebral health benefits, appeared to have dodged a class action when Judge George H. Wu granted its motion to dismiss in May of 2011, employing heightened and controversial pleading standards. See Chavez v. Nestlé USA, Inc., No. 09-9192, 2011 WL 2150128 (C.D. Cal. May 19, 2011). However, a three-judge Ninth Circuit panel recently reversed Wu’s ruling, holding that the plaintiffs’ “allegations regarding Juicy Juice Brain Development will support viable FAL and UCL fraudulent business practices claims,” concluding that the plaintiffs sufficiently alleged that Nestlé had not substantiated the benefit by scientific proof, and that a child would have to drink more than a quart a day of Juicy Juice to get the recommended daily allowance of DHA. Memorandum at 2, Chavez v. Nestlé, No 11-56066 (9th Cir. Mar. 8, 2013).

Though designated as unpublished, the ruling is notable not only in reviving what might prove to be a substantial consumer class action, but also in confirming that the Ninth Circuit remains reluctant to supplant the long-standing and familiar notice pleading standard articulated in the landmark Conley v. Gibson, 355 U.S. 41 (1957), with the heightened standards applied in Bell Atlantic v. Twombly, 550 U.S. 544 (2007), and Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009) (an antitrust case and a domestic terrorism case, respectively).

Only the dissent directly broaches the Twombly/Iqbal controversy. See Memo. at 4 (“They plead that the advertisements suggesting that the additives in Juicy Juice are good for children are ‘likely to deceive’ the public. Under Twombly and Iqbal, . . . more than that conclusory claim is necessary. The complaint does not suggest that anything in Juicy Juice is bad for children’s brain development, just that ‘the scientific evidence is mixed’ as to whether DHA (an omega-3 fatty acid, and one of the nutrients in fish oil capsules) is beneficial to children.”) (Kleinfeld, J., dissenting) (footnote omitted).

However, without acknowledging the controversy around Twombly and Iqbal, the majority engaged the permissive analysis commonly associated with motions on the pleadings, concluding that the plaintiffs “have adequately pled that ‘members of the public are likely to be deceived’ by the Juicy Juice Brain Development labeling and advertisements,” since their complaint, which “must be taken as true,” contains “the product name; the product labels and advertisements that induced Appellants’ reliance; and the allegation that the product actually contains very small amounts of the touted ingredient, DHA.” Memo. at 2.