Salazar v. Walmart, Inc. ( 2022 )

Filed 9/19/22
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE DISTRICT
DIVISION TWO
DAVID SALAZAR,
Plaintiff and Appellant, E076006
v. (Super. Ct. No. CIVDS1920757)
WALMART, INC., OPINION
Defendant and Respondent.
APPEAL from the Superior Court of San Bernardino County. David S. Cohn,
Judge. Reversed.
Robins Kaplan, Glenn A. Danas and Samia S. Young; Clarkson Law and Ryan J.
Clarkson, for Plaintiff and Appellant.
Greenberg Traurig, Gregory A. Nylen, Robert J. Herrington and Dominic E.
Draye, for Defendant and Respondent.
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I.
INTRODUCTION
After David Salazar bought Walmart, Inc.’s “Great Value White Baking Chips”
incorrectly thinking they contained white chocolate, he filed this class action against
Walmart for false advertising under various consumer protection statutes. The trial court
sustained Walmart’s demurrers without leave to amend, finding as a matter of law that no
reasonable consumer would believe Walmart’s White Baking Chips contain white
chocolate. We disagree and reverse.
II.
FACTUAL AND PROCEDURAL BACKGROUND
Salazar went to Walmart to buy white chocolate chips. He bought some Great
Value (Walmart’s store-brand name) White Baking Chips,
which come in bags like this:
The bags are sold at Walmart on a shelf like this:
The chips are sold next to other chocolate chip products that contain milk chocolate or
semi-sweet chocolate.
Salazar thought the White Baking Chips contain white chocolate because (1) their
label describes them as “white,” (2) their label depicts the product, which look like white
chocolate chips, and (3) the product is sold next to other chocolate products. Because
Salazar thought the White Baking Chips had real white chocolate, he bought some. He
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later learned, however, that they contain no white chocolate.
Salazar brought a class action against Walmart alleging claims under the Unfair
Competition Law (UCL; Bus. & Prof. Code, § 17200 et seq.), the False Advertising Law
(FAL; Bus. & Prof. Code, § 17500 et seq.), and the Consumers Legal Remedies Act
(CLRA; Civil Code, § 1750 et seq.). After Walmart successfully demurred to all three
claims, Salazar filed his operative Third Amended Complaint (TAC), again alleging
claims under the UCL, FAL, and CLRA.
The thrust of all three claims is that Salazar was reasonably misled to believe the
White Baking Chips had real white chocolate because of the product’s label and its
placement near products with real chocolate. Salazar also alleges that the results of a
survey he conducted show that 90 percent of consumers are deceived by the White
Baking Chips’ advertising and incorrectly believe they contain white chocolate. 1
Walmart demurred to all three claims on the ground that no reasonable consumer
would believe the White Baking Chips contain real white chocolate. The trial court
agreed, sustained Walmart’s demurrer without leave to amend, and entered judgment for
Walmart. Salazar timely appealed.
1
Salazar also alleges in the TAC that Walmart’s website falsely advertised the
White Baking Chips, but we do not consider that argument because Salazar does not raise
it in his opening brief. (Aptos Council v. County of Santa Cruz (2017) 10 Cal.App.5th
266, 296, fn. 7 [“Issues not raised in the appellant’s opening brief are deemed waived or
abandoned.”].) We therefore do not address Walmart’s argument that Salazar lacks
standing to assert claims based on its website.
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III.
DISCUSSION
Salazar argues the trial court erred because he stated viable claims under the UCL,
FAL, and CLRA. We agree.
1. Standard of Review
We “liberally construe[]” a complaint’s allegations. (CLD Construction, Inc. v.
City of San Ramon (2004) 120 Cal.App.4th 1141, 1146.) “‘On appeal from a judgment
dismissing an action after sustaining a demurrer without leave to amend, the standard of
review is well settled. The reviewing court gives the complaint a reasonable
interpretation, and treats the demurrer as admitting all material facts properly pleaded.
[Citations.] The court does not, however, assume the truth of contentions, deductions or
conclusions of law. [Citation.] The judgment must be affirmed “if any one of the several
grounds of demurrer is well taken. [Citations.]” [Citation.] However, it is error for a
trial court to sustain a demurrer when the plaintiff has stated a cause of action under any
possible legal theory. [Citation.]” (McAllister v. Los Angeles Unified School Dist.
(2013) 216 Cal.App.4th 1198, 1206.)
2. Analysis
The parties correctly agree that Salazar’s claims are governed by the “reasonable
consumer” test. (Skinner v. Ken’s Foods, Inc. (2020) 53 Cal.App.5th 938, 948 (Skinner)
[reasonable consumer test applies to false advertising claims brought under the UCL,
FAL, and CLRA].) As applied here, that test asks whether a reasonable consumer would
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likely be deceived into incorrectly believing that Walmart’s White Baking Chips contain
real white chocolate for the reasons Salazar advances. (Ibid.)
“‘A “reasonable consumer” is “[an] ordinary consumer acting reasonably under
the circumstances” [citation] . . . .’ [Citation.] Such a consumer ‘need not be
“exceptionally acute and sophisticated,”’ nor must they ‘necessarily be wary or
suspicious of advertising claims.’ [Citation.] Rather, to meet the ‘reasonable consumer’
standard, ‘a plaintiff need only show that members of the public are likely to be deceived’
by the defendant’s advertising. [Citation.] Members of the public are likely to be
deceived by advertising that is false and by advertising that, ‘“although true, is either
actually misleading or . . . has a capacity, likelihood, or tendency to deceive or confuse
the public.” [Citation.]’ [Citation.]” (Skinner, supra, 53 Cal.App.5th at p. 948.)
“‘“Likely to deceive” implies more than a mere possibility that the advertisement
might conceivably be misunderstood by some few consumers viewing it in an
unreasonable manner. Rather, the phrase indicates that the ad is such that it is probable
that a significant portion of the general consuming public or of targeted consumers,
acting reasonably in the circumstances, could be misled.’” (Chapman v. Skype, Inc.
(2013) 220 Cal.App.4th 217, 226.)
“California courts . . . have recognized that whether a business practice is
deceptive will usually be a question of fact not appropriate for decision on demurrer.”
(Williams v. Gerber Products Co. (9th Cir. 2008) 523 F.3d 934, 939; Committee On
Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 214 [noting
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that “[t]he unsuitability of a demurrer to test the accuracy of a complaint is particularly
marked” in false advertising cases].) Thus, whether a reasonable consumer is likely to be
deceived as a matter of law may be decided “only in ‘rare situation[s].’” (Reid v.
Johnson & Johnson (9th Cir. 2015) 780 F.3d 952, 958.) This is because “[w]hat
matters . . . is how consumers actually behave—how they perceive advertising and how
they make decisions. These are matters of fact, subject to proof that can be tested at trial,
even if as judges we might be tempted to debate and speculate further about them.” (Bell
v. Publix Super Markets, Inc. (7th Cir. 2020) 982 F.3d 468, 481 (Bell); see also Beardsall
v. CVS Pharmacy, Inc., 953 F.3d 969, 973 (7th Cir. 2020) [“[The] determination of the
likelihood of deception ‘is an impressionistic one more closely akin to a finding of fact
than a conclusion of law.’”].)
Salazar argues the White Baking Chips misleadingly suggest they are made with
white chocolate. He points to the “white” in the product’s name, the label’s depiction of
the product, the fact that it is sold near other chocolate products, and the results of a
survey he conducted. Walmart contends that these allegations cannot support a claim
under the UCL, FAL, or CLRA as a matter of law. We disagree.
Walmart emphasizes that the White Baking Chips label does not state “chocolate”
anywhere and that the product’s ingredient list confirms the chips have no white
chocolate. Walmart thus argues that the label is not misleading because it contains no
false statements.
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Although the White Baking Chips’ packaging may not have any false statements,
literally true statements “‘“couched in such a manner that [are] likely to mislead or
deceive the consumer . . . [are] actionable.”’” (Skinner, supra, 53 Cal.App.5th at p. 949.)
As one court recently recognized, “[d]eceptive advertisements often intentionally use
ambiguity to mislead consumers while maintaining some level of deniability about the
intended meaning.” (Bell, supra, 982 F.3d at p. 477.) California law thus does not
require reasonable consumers “‘to look beyond misleading representations on the front of
[a product] to discover the truth from the ingredient list in small print on the [back of a
product].’” . . . “‘The ingredient list must confirm the expectations raised on the front [of
the product], not contradict them.’ [Citations.]” (Skinner, supra, at p. 949.) So if “the
defendant commits an act of deception, the presence of fine print revealing the truth is
insufficient to dispel that deception.” (Ebner v. Fresh, Inc. (9th Cir. 2016) 838 F.3d 958,
966.)
The question, then, is whether a reasonable consumer could find the White Baking
Chips’ truthful label to be deceptive or misleading. Walmart argues the label is not
misleading as a matter of law because no reasonable consumer would believe the White
Baking Chips are made of white chocolate. To support its position, Walmart relies
mostly on Cheslow v. Ghirardelli Chocolate Company (N.D. Cal. 2020) 445 F.Supp.3d 8(Cheslow). 2 We find Cheslow unpersuasive.
2
Walmart also cites Red v. Kraft Foods, Inc. (C.D. Cal. Oct. 25, 2012, No. CV
10-1028-GWAGRX), 2012 WL 5504011, but that case has no relevance here. The
plaintiffs’ claim that the defendants’ packaging was misleading because it stated the
[footnote continued on next page]
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In that case, the district court found that no reasonable consumer would believe the
defendant’s “‘Premium Baking Chips Classic White Chips’” contained white chocolate. 3
(Cheslow, supra, 445 F.Supp.3d at p. 12.) Relying on the Ninth Circuit’s analysis in
Becerra v. Dr Pepper/Seven Up, Inc. (9th Cir. 2019) 945 F.3d 1125 (Becerra), of how
“diet” is usually an adjective in the context of “diet soda,” the Cheslow court found that
“the adjective ‘white’ in ‘White Chips’ does not define the food itself but rather defines
the color of the food.” (Cheslow, supra, at p. 17.)
To reach this conclusion, the district court relied on two dictionary definitions of
“white” to conclude that “the use of the term ‘white’ does not lend itself to defining the
quality of the [White Chips].” (Cheslow, supra, 445 F.Supp.3d at p. 17.) One of those
dictionary definitions defines “white” as an adjective “‘used in the names of various food
crackers were “Made with Real Vegetables” failed because the crackers were, in fact,
made with real vegetables. (Id. at *2 [“[T]he challenged phrase ‘Made with Real
Vegetables’ is, as Plaintiffs concede, a true representation.”].) Walmart next cites Werbel
ex rel.v. Pepsico, Inc. (N.D. Cal. July 2, 2010, No. C 09-04456 SBA) 2010 WL 2673860,
but that case is easily distinguishable. The plaintiffs there alleged that the packaging of
“Cap’n Crunch’s Crunch Berries” misled consumers into believing that the cereal
contained real fruit. In our view, the district court correctly concluded that no reasonable
consumer would “believe that the brightly-colored cereal balls depicted on the product
cover and described as Crunch Berries are, in fact, made or derived from real berries or
fruit.” (Id. at *p. 4; see also Bell, supra, 982 F.3d at p. 493 (Kanne, J., concurring)
[“Courts have used similar common-sense arguments to dismiss labeling claims when no
reasonable consumer could actually believe the plaintiffs’ alleged interpretation. The
California breakfast cereal cases are good examples of this, where courts dismissed
claims that the colorful rings and balls of cereal shown on ‘Froot Loops’ and ‘Cap’n
Crunch’ boxes promised real fruit within.”]
3
The Cheslow court relied on this analysis to later dismiss the plaintiff’s claims
without leave to amend. (Cheslow v. Ghirardelli Chocolate Company (N.D.Cal. 2020)
472 F.Supp.3d 686, 693.)
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and drink products, many of which are not pure white but slightly cream, yellow, gray, or
transparent.’” (Id., quoting Cambridge Dictionary, https://dictionary.cambridge.org/us/
dictionary/english/white.) That same definition then lists examples of “white” foods,
such as “white chocolate,” “white bread,” and “white wine,” but does not define the
foods further. (Ibid.) This highlights an ambiguity in the term “white chocolate”: it
could mean chocolate that is white-colored or white chocolate itself. This shows that
“white” can sometimes describe the quality of the food, not just its color. We therefore
disagree with Cheslow’s holding that “white” in the context of baking chips could only be
reasonably understood as “defin[ing] the color of the food” as a matter of law. (Cheslow,
supra, at p. 17; see also Mantikas v. Kellogg Company (2d Cir. 2018) 910 F.3d 633, 638
[reversing dismissal on the pleadings because “Whole Grain” cracker label could be
reasonably read as promising either predominantly whole grain or only some whole
grain].)
We also find the Cheslow court’s reliance on Becerra misguided because Becerra
is distinguishable. In Becerra, the Ninth Circuit considered whether “the word ‘diet’ in
Diet Dr Pepper’s brand name promises that the product will assist in weight loss or
healthy weight management.” (Becerra, supra, 945 F.3d at p. 1229.) Becerra thus
turned only on the meaning of the word “diet” on a soda can’s label. This case, however,
concerns the White Baking Chips’ packaging as a whole, which includes a descriptor of
the chips as “white” and a picture of what appears to be a white-colored chocolate chip.
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Salazar also contends Walmart’s placement of the chips near other real-chocolate-
containing chips is misleading while the Becerra plaintiff made no similar allegations.
Whether “white” as an adjective describes a food’s color or “defin[es] the quality
of the product” depends on the context. (Cheslow, supra, 445 F.Supp.3d at p. 17.) As for
Walmart’s White Baking Chips, “white” could reasonably be interpreted as an adjective
describing the color of the chips. But the White Baking Chips’ label cannot “only be
read” in one way that “eliminates any possibility of deception.” (Bober v. Glaxo
Wellcome PLC (7th Cir. 2001) 246 F.3d 934, 940.)
Rather, “white” also could reasonably be interpreted as shorthand for “white
chocolate.” The White Baking Chips look like chocolate chips, they are sold next to
other real chocolate chip products, and their label depicts them on cookies to show they
can be used for baking like chocolate chips. A reasonable consumer might know there
are white chocolate chips used for baking while not knowing that white-colored baking
chips that do not contain white chocolate exist. When viewed in that context, a
reasonable consumer could reasonably be misled to believe that the chips are white
chocolate chips, because the consumer would not be aware that the chips could be
something else. (See Bell, supra, 982 F.3d at p. 481 [noting that “many grocery shoppers
make quick decisions that do not involve careful consideration of all information
available to them”]; Fink v. Time Warner Cable (2d Cir. 2013) 714 F.3d 739, 742 [“[I]n
determining whether a reasonable consumer would have been misled by a particular
advertisement, context is crucial.”].)
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Salazar thus plausibly alleges that “a significant portion of the general consuming
public or of targeted consumers, acting reasonably in the circumstances, could be misled”
by the White Baking Chips’ advertising. (Chapman v. Skype Inc., supra, 220
Cal.App.4th at p. 226; see also Skinner, supra, 53 Cal.App.5th at p. 948.) This is not one
of those “rare situations” where we can decide on a demurrer that Walmart’s White
Baking Chips are not deceptive or misleading as a matter of law. Whether a reasonable
consumer is deceived or misled into believing that the chips contain white chocolate is
not properly resolved at the pleading stage. (See Brady v. Bayer Corp. (2018) 26
Cal.App.5th 1156, 1164-1165 [holding demurrer was “improvidently granted” because
whether a product’s advertising is deceptive is a fact determination that “‘usually cannot
be made on demurrer’”]; Linear Technology Corp. v. Applied Materials, Inc. (2007) 152
Cal.App.4th 115, 134-135 [“Whether a practice is deceptive, fraudulent, or unfair is
generally a question of fact which requires ‘consideration and weighing of evidence from
both sides’ and which usually cannot be made on demurrer.”].) Because Salazar stated
viable claims under the UCL, FAL, and CLRA, we reverse the judgment.
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IV.
DISPOSITION
The judgment is reversed. Salazar may recover his costs on appeal.
CERTIFIED FOR PUBLICATION
CODRINGTON
Acting P. J.
We concur:
RAPHAEL
J.
MENETREZ
J.
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