Unreported / Non-Citable
Background
Victoria Rosado bought Project 7’s Joyride Crunchy Candy Gummy Busters Berry Mix at a San Jose Target after relying on the package statement “naturally flavored.” Her proposed class complaint alleges that the candy instead contains manufactured citric acid produced from Aspergillus niger using synthetic chemical solvents. She says she would not have purchased the product, or would have paid less, if she had known.
Rosado sued under California’s Unfair Competition Law (UCL), False Advertising Law (FAL), and Consumers Legal Remedies Act (CLRA), and asserted express warranty, restitution, intentional misrepresentation, and negligent misrepresentation claims. Project 7 removed the case and sought dismissal, arguing in part that federal food-labeling rules treat the ingredient as a natural flavor and that the fraud theories did not satisfy Rule 9(b). At this stage, the court accepted well-pleaded factual allegations as true; it did not determine how the citric acid is actually made or whether the label is ultimately deceptive.
The Court’s Holding
Judge Noël Wise denied dismissal of the UCL, FAL, and CLRA counts. Rosado plausibly alleged that Project 7 uses citric acid for flavoring, that the citric acid comes from an artificial source or contains artificial additives, and that a reasonable consumer could be misled by the package. Whether the ingredient is derived from a qualifying natural source and whether solvent residue is fully removed may eventually favor Project 7, but those factual questions could not be resolved from the complaint.
The same reasonable-consumer allegations supported an express warranty theory. The restitution claim also survived as a quasi-contract theory: Rosado alleged that she conferred the purchase price through deceptive advertising, and federal pleading rules allow restitution to be pursued in the alternative even though she cannot recover both damages and restitution for the same injury.
The two misrepresentation counts divided over mental state. The court dismissed intentional misrepresentation without leave to amend because alleging that Project 7 “knew or should have known” was misleading did not plead actual knowledge of falsity with Rule 9(b) particularity. The court found amendment futile on the pleaded facts. Negligent misrepresentation survived because it requires no intent to defraud. Allegations about FDA warning letters and decisions treating manufactured citric acid as plausibly artificial supported an inference that Project 7 lacked reasonable grounds for believing its statement was true.
Counts 1 through 5 and 7 therefore remain; only count 6 was dismissed, without leave to amend. Project 7 must answer the complaint within 14 days. The court also declined to take judicial notice of EPA and USDA publications because it did not need them to decide the motion.
Key Takeaways
- Whether a “natural” label would mislead a reasonable consumer is usually fact-intensive and may survive the pleading stage when the alleged production process is described.
- A viable California consumer-deception theory can also support express warranty at the motion-to-dismiss stage.
- Restitution may be pleaded in the alternative to damages, although double recovery for the same harm is unavailable.
- Intentional misrepresentation requires particular facts supporting actual knowledge; “knew or should have known” generally describes negligence, not scienter.
- Regulatory warnings and prior cases can help plead that a seller lacked reasonable grounds for a representation, even if they do not establish ultimate liability.
Why It Matters
The order keeps most of a California natural-labeling class action alive and illustrates why businesses should substantiate front-label claims against both the ingredient’s source and its industrial processing. A regulatory definition may provide a strong defense, but factual disputes over the actual manufacturing process may prevent early dismissal.
For plaintiffs, the decision shows the importance of matching facts to the required mental state. The same labeling allegations supported negligence but not intentional fraud. For defendants, count-by-count challenges can still narrow exposure significantly, even when the core consumer statutes survive.