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John W. Fowler (Bar No. 037463) jfowler@be-law.com BERGESON LLP 303 Almaden Boulevard, Suite 500 San Jose, CA 95110-2712 Telephone: (408) 291-6200 Facsimile: (408) 297-6000 Steven A. Zalesin (admitted pro hac vice) sazalesin@pbwt.com Travis J. Tu (admitted pro hac vice) tjtu@pbwt.com James L. Kerwin (admitted pro hac vice) jkerwin@pbwt.com Jennifer A. Dixon (admitted pro hac vice) jdixon@pbwt.com PATTERSON BELKNAP WEBB & TYLER LLP 1133 Avenue of the Americas New York, New York 10036 Telephone: (212) 336-2000 Facsimile: (212) 336-2222 Attorneys for Defendant THE HERSHEY COMPANY UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA

CASE NO. 12-cv-01862 EJD LEON KHASIN, on Behalf of Himself and All Others Similarly Situated, plaintiff, v. THE HERSHEY COMPANY, Defendant. NOTICE OF MOTION AND MOTION FOR PARTIAL SUMMARY JUDGMENT AND FOR A PROTECTIVE ORDER; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF Judge: Honorable Edward J. Davila Date: July 19, 2013 Time: 9:00 a.m. Room: Courtroom 4, 5th Floor Trial Date: No date set

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TO ALL PARTIES AND THEIR COUNSEL OF RECORD: PLEASE TAKE NOTICE THAT on July 19, 2013 at 9:00 a.m. or as soon thereafter as counsel may be heard, in Courtroom 4, 5th Floor of the United States District Court, Northern District of California, San Jose Division, located at 280 South 1st Street, San Jose, CA 95113, before The Honorable Edward J. Davila, Defendant The Hershey Company (Hershey) will and hereby does move this Court for partial summary judgment on claims pled in the Amended Class Action and Representative Action Complaint (AC) of Plaintiff Leon Khasin (Khasin) [Dkt. No. 27] and for a protective order. Hershey brings this motion for partial summary judgment pursuant to Federal Rule of Civil Procedure 56 and on the following grounds, which are discussed more fully in the attached Memorandum of Points and Authorities: Khasin has admitted that, contrary to the allegations in the AC, he did not actually rely on Hersheys website, advertising, or most of the disputed aspects of Hersheys labeling. Because actual reliance is an essential element of each of Khasins claims, Hershey is entitled to partial summary judgment as a matter of law. In addition, Hershey brings this motion for a protective order pursuant to Federal Rule of Civil Procedure 26 and on the following grounds, which are discussed more fully in the attached Memorandum of Points and Authorities: Khasin should be barred from pursuing his burdensome discovery demands relating to statements in Hersheys website, advertising and labeling that he has conceded played no role in his purchasing decisions. Such discovery has no probative value to any claims properly remaining in the case. This motion is based on this Notice of Motion, the Memorandum of Points and Authorities attached hereto, the declarations and exhibits submitted herewith, any reply papers submitted in support of this motion, oral argument of counsel, the complete files and records in this matter, and such additional matters as the Court may consider.

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PATTERSON BELKNAP WEBB & TYLER LLP By: /s/ Steven A. Zalesin Steven A. Zalesin

1133 Avenue of the Americas New York, New York 10036 Telephone: (212) 336-2000 John W. Fowler (Bar No. 037463) BERGESON LLP 303 Almaden Boulevard, Suite 500 San Jose, CA 95110-2712 Telephone: (408) 291-6200 Facsimile: (408) 297-6000 Attorneys for Defendant

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 II. I. B. C. D.

TABLE OF CONTENTS Page TABLE OF AUTHORITIES ......................................................................................................... iii STATEMENT OF THE ISSUES TO BE DECIDED.................................................................... vi PRELIMINARY STATEMENT..................................................................................................... 1 BACKGROUND ............................................................................................................................ 2 A. Khasins Allegations ............................................................................................... 2 1. 2. Hersheys Website and Advertising............................................................ 3 Hersheys Product Labeling........................................................................ 3 a. b. c. Milk Chocolate Products................................................................. 3 Mint Products .................................................................................. 3 Dark Chocolate and Cocoa Products............................................... 4

The Courts Motion to Dismiss Ruling................................................................... 4 Khasins Deposition Testimony.............................................................................. 5 Khasins Pursuit of His Defective Claims .............................................................. 7

ARGUMENT .................................................................................................................................. 8 SUMMARY JUDGMENT SHOULD BE ENTERED AS TO KHASINS CLAIMS AGAINST STATEMENTS ON WHICH HE DID NOT RELY........................ 9 A. B. Actual Reliance Is a Necessary Element of Khasins Claims................................. 9 Khasin Did Not Actually Rely On Most of the Disputed Statements................... 10 1. 2. Hersheys Website and Advertising.......................................................... 10 Hersheys Product Labeling...................................................................... 12 a. b. c. Milk Chocolate Products............................................................... 12 Mint Products ................................................................................ 14 Dark Chocolate and Cocoa Products............................................. 16

KHASIN CANNOT PURSUE HIS DEFECTIVE CLAIMS UNDER THE UNLAWFUL PRONG OF THE UCL .......................................................................... 17 A. Californias UCL Requires Actual Reliance Even Under the Unlawful Prong ..................................................................................................................... 18

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 III.

B.

Absent Proof of Actual Reliance, State-Law Claims to Enforce FDCA Requirements Are Impliedly Preempted............................................................... 20

HERSHEY IS ENTITLED TO A PROTECTIVE ORDER ............................................. 23

CONCLUSION ............................................................................................................................. 25

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TABLE OF AUTHORITIES Page(s) CASES Alliance Mort. Co. v. Rothwell, 10 Cal. 4th 1226 (1995) .......................................................................................................... 10 Animal Legal Def. Fund v. Provimi Veal Corp., 626 F. Supp. 278 (D. Mass. 1986) .......................................................................................... 21 Baghdasarian v. Amazon.com, Inc., No. CV-05-8060-AG, 2009 U.S. Dist. LEXIS 115265 (C.D. Cal. Dec. 9, 2009) .................. 11 Bailey v. Johnson, 48 F.3d 965 (6th Cir. 1995)..................................................................................................... 22 Bronson v. Johnson & Johnson, Inc., No. C-12-04184-CRB, 2013 U.S. Dist. LEXIS 54029 (N.D. Cal. Apr. 16, 2013)........... 10, 12 Buckman Co. v. Plaintiffs Legal Comm., 531 U.S. 341 (2001) ................................................................................................................ 21 Celotex Corp. v. Catrett, 477 U.S. 317 (1986) .................................................................................................................. 9 Durell v. Sharp Healthcare, 183 Cal. App. 4th 1350 (Cal. App. 4th Dist. 2010) .......................................................... 19, 20 Dvora v. Gen. Mills, No. CV-11-1074-GW(PLAx), 2011 U.S. Dist. LEXIS 55513 (C.D. Cal. May 16, 2011) ....................................................................................................................................... 12 Fox v. Good Samaritan L.P., 801 F. Supp. 2d 883 (N.D. Cal. 2010) .................................................................................... 20 Fraker v. KFC Corp., No. 06-CV-01284-JM (WMC), 2007 U.S. Dist. LEXIS 32041 (S.D. Cal. Apr. 30, 2007) ....................................................................................................................................... 21 Ginena v. Alaska Airlines, Inc., No. 2:04-cv-01304-RCJ-CWH, 2011 U.S. Dist. LEXIS 116656 (D. Nev. Oct. 6, 2011) ........ 9 Groce v. Claudat, No. 09cv01630-BTM, 2012 U.S. Dist. LEXIS 69870 (S.D. Cal. May 18, 2012) .................. 25 Heckler v. Chaney, 470 U.S. 821 (1985) ................................................................................................................ 22 Herrington v. Johnson & Johnson Consumer Co., 2010 U.S. Dist. LEXIS 90505 (N.D. Cal. Sept. 1, 2010)........................................................ 10

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Hillman v. Maretta, No. 11-1221, 2013 U.S. Lexis 4167 (U.S. June 3, 2013) ....................................................... 21 Hinojos v. Kohls Corp., 2013 U.S. App. LEXIS 10185 (9th Cir. May 21, 2013) ......................................................... 10 In re Actimmune Mktg. Litig., No. C 08-02376 MHP, 2010 U.S. Dist. LEXIS 90480 (N.D. Cal. Aug., 31, 2010) ............... 20 In re Epogen & Aranesp Off-Label Mktg. & Sales Practices Litig., 590 F. Supp. 2d 1282 (C.D. Cal. 2008)............................................................................. 22, 23 In re Farm Raised Salmon Cases, 42 Cal. 4th 1077 (2008) .................................................................................................... 23, 24 In re Ferrero Litig., 794 F. Supp. 2d 1107 (S.D. Cal. 2011) ................................................................................... 10 In re Sears, Roebuck & Co. Tools Mktg & Sales Practices Litig., 2007 U.S. Dist. LEXIS 89349 (N.D. Ill. 2007)....................................................................... 10 In re Tobacco II Cases, 46 Cal. 4th 298 (2009) ............................................................................................................ 10 Kwikset Corp. v. Superior Ct., 51 Cal. 4th 310 (Cal. 2011)................................................................................... 10, 19, 20, 21 Loreto v. Procter & Gamble, No. 10-4274, 2013 U.S. App. LEXIS 3813 (6th Cir. Feb. 22, 2013) ..................................... 22 Medrazo v. Honda of N. Hollywood, 205 Cal. App. 4th 1 (Cal. App. 2d Dist. 2012) ....................................................................... 20 People ex rel. Lockyer v. Brar, 115 Cal. App. 4th 1315 (2004)................................................................................................ 19 Perez v. Nidek Co., 711 F.3d 1109 (9th Cir. 2013)............................................................................... 21, 22, 23, 24 Pfizer, Inc. v. Superior Ct., 182 Cal. App. 4th 622 (2010).................................................................................................. 12 PhotoMedex, Inc. v. Irwin, 601 F.3d 919 (9th Cir. 2010)............................................................................................. 22, 24 POM Wonderful LLC v. Coca-Cola Co., 679 F.3d 1170 (9th Cir. 2012)................................................................................................. 22 Price v. Cunningham, No. 1:08-cv-00425-AWI-BAM PC, 2012 U.S. Dist. LEXIS 157142 (E.D. Cal. Nov. 1, 2012) ....................................................................................................................................... 24 Princess Cruise Lines, Ltd. v. Superior Ct., 179 Cal. App. 4th 36 (Cal. App. 2d Dist. 2009) ..................................................................... 11
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Riley v. Cordis Corp., 625 F. Supp. 2d 769 (D. Minn. 2009) ..................................................................................... 23 Sateriale v. R.J. Reynolds Tobacco Co., 687 F.3d 1132 (9th Cir. 2012)................................................................................................. 10 Seattle Times Co. v. Rhinehart, 467 U.S. 20 (1984) .................................................................................................................... 9 Sprint PCS Assets, L.L.C. v. City of Palos Verdes Estates, 583 F.3d 716 (9th Cir. 2009)..................................................................................................... 9 Summit Tech. v. High-Line Med. Instruments, Co., 933 F. Supp. 918 (C.D. Cal. 1996) ......................................................................................... 22 Surfvivor Media, Inc. v. Survivor Prods., 406 F.3d 625 (9th Cir. 2005)............................................................................................... 9, 24 Travers v. Shalala, 20 F.3d 993 (9th Cir. 1994)..................................................................................................... 24 STATUTES

12 Cal. Bus. & Prof. Code 17200, et seq. ......................................................................................... 3 13 Cal. Bus. & Prof. Code 17204 ................................................................................................. 19 14 Cal. Bus. & Prof. Code 17500, et seq. ......................................................................................... 3 15 Cal. Civ. Code 1750, et seq.......................................................................................................... 3 16 OTHER AUTHORITIES 17 Fed. R. Civ. P. 26(b)(1)................................................................................................................. 24 18 Fed. R. Civ. P. 26(b)(2)(C)(iii) ..................................................................................................... 24 19 Fed. R. Civ. P. 56(c)........................................................................................................................ 9 20 21 22 23 24 25 26 27 28 -v6302738v.1
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STATEMENT OF THE ISSUES TO BE DECIDED Is the Hershey Company entitled to partial summary judgment on Plaintiff Leon

Khasins claims under California law when he admitted at his deposition that, contrary to the allegations in the Amended Complaint, he did not actually rely on Hersheys website, advertising, or most of the disputed aspects of Hersheys labeling? 2. Should a protective order be entered barring Khasin from seeking further

discovery concerning allegations in the Amended Complaint that Khasin contradicted and affirmatively disavowed at his deposition?

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Defendant the Hershey Company (Hershey) submits this memorandum in support of its motion for partial summary judgment pursuant to Federal Rule of Civil Procedure 56, and for a protective order pursuant to Federal Rule of Civil Procedure 26. PRELIMINARY STATEMENT Plaintiff Leon Khasin (Khasin) commenced this action on April 23, 2012 alleging that he was deceived into purchasing Hersheys dark chocolate and cocoa products by statements in Hersheys website, advertising, and labeling that purportedly violate the federal Food Drug and Cosmetic Act (FDCA) and California law. Khasin subsequently filed an Amended Complaint (AC) alleging that Hershey has also made false and misleading statements in advertising and labeling for its milk chocolate and mint products. At the outset of the case, Hershey moved to dismiss and strike portions of the AC on several grounds, including that Khasin could not plausibly have read and relied on the litany of website, advertising, and labeling statements that the AC sought to attack. The Court denied Hersheys motion in large part, finding that whether Khasin relied on all of the statements disputed in the AC was a question of fact. Following the Courts ruling, Hershey noticed Khasins deposition, and counsel for Hershey questioned Khasin at length about the allegations in the AC and the actual reasons he purchased Hersheys products. Under oath, Khasin revealed thatas Hershey had suspected all alongHersheys website, advertising, and most of the disputed labeling statements played no role whatsoever in Khasins purchasing decisions. In fact, Khasin purchased Hersheys products because he likes the way they taste; he rarely, if ever, looked at the products labels; and he has never once visited Hersheys website in his entire life. Moreover, whereas the AC cites chapter and verse from FDA regulations concerning the serving sizes of mints, sugar-free claims, and the labeling of ingredients such as PGPR, vanillin, and cocoa processed with alkali, Khasin testified that he personally has no concerns about any of these aspects of Hersheys labeling. It is well-established that, under each of the consumer protection statutes that Khasin asserts, a plaintiff must plead and prove actual reliance on the defendants alleged misrepresentations in order to establish a cause of action. Khasin has now admitted that he did -16302738v.1
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not actually rely on the bulk of the alleged misrepresentations identified in the AC. Yet in spite of his crippling testimony, Khasin has rebuffed Hersheys demands that he amend the AC to conform his allegations to the actual facts. Instead, Khasins lawyers have asserted that, notwithstanding Khasins lack of reliance on the disputed statements, they intend to pursue all of the allegations in the AC, and have served Hershey with burdensome discovery demands pertaining to claims that, according to Khasins own testimony, he does not actually possess. This charade should not be allowed to continue. Because he cannot prove actual reliance, Khasin cannot recover on the majority of his claims. California law does not permit Khasin or his lawyers to act as private attorneys general when Khasin was not actually misled. And Hershey should not have to shoulder the substantial burden and expense of discovery concerning allegations that Khasin has affirmatively disavowed, and that never had any basis in fact. Rather, to streamline this litigation and protect Hershey from further harassment and expense, the Court should enter partial summary judgment on Khasins claims against Hersheys website, advertising, and labeling statements on which he did not actually rely. In addition, a protective order should be entered barring Khasin from seeking further discovery on these defective claims. BACKGROUND A. Khasins Allegations

Khasin filed the AC on July 23, 2012. The AC asserts that Hersheys website, advertising and product labels contain statements that allegedly violate the FDCA and provisions of California law that purport to make the FDCA and FDAs implementing regulations the law of the state. Based on these allegations, Khasin asserts claims under Californias UCL, see Cal. Bus. & Prof. Code 17200, et seq., False Advertising Law (FAL), see Cal. Bus. & Prof. Code 17500, et seq., the Consumer Legal Remedies Act (CLRA), see Cal. Civ. Code 1750, et seq., and for unjust enrichment. The Court is already familiar with the ACs allegations from adjudicating Hersheys motion to dismiss. For that reason, we have briefly summarized only the key allegations below.

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1.

Hersheys Website and Advertising

Most of the AC is devoted to Hersheys website. Specifically, Khasin alleged that statements regarding the nutritional benefits of dark chocolate and cocoa that appeared on Hersheys website were unlawful health claims that falsely implied that Hersheys products treat or prevent disease. (AC 103). The AC also alleged that Hershey has made false and misleading statements in its advertising. (AC 129, 146, 203). Contrary to the facts adduced at Khasins deposition, the AC alleged that Khasin read and relied on Hersheys website and advertising when he made his purchasing decisions. (AC 16, 17, 67, 97, 98, 99, 116). 2. Hersheys Product Labeling

The remainder of the AC attacks Hersheys labeling for its milk chocolate, mint, dark chocolate and cocoa products. Again, contrary to the actual facts, the AC alleged that Khasin read each and every one of the labeling statements disputed in the AC, and that he relied on these statements when he made his purchasing decisions. (AC 198, 199). a. Milk Chocolate Products

The AC alleged that the labeling of Hersheys milk chocolate products is false and misleading in two respects. First, the AC alleged that it is deceptive for Hershey to abbreviate the ingredient PGPR on product labels because the common and usual name for this ingredient purportedly is polyglycerol polyricineolate. (AC 159, 160, 162, 163, 166, 167). Second, the AC alleged that it is false and misleading for Hershey to identify vanillin only in the ingredients list on its products back labels because FDA regulations purportedly require vanillin to be listed on the front of the labels. (AC 162, 163, 166, 167, 171-173, 178). b. Mint Products

The AC alleged that two aspects of Hersheys Ice Breakers Mints labels are false and misleading. First, the AC alleged that Hersheys mints are deceptively labeled with a one-mint serving size when FDA regulations purportedly specify that the correct serving size is two mints. (AC 142, 148, 149, 150). Second, the AC alleged that it is false and misleading for Hershey to label its mints as sugar free without an accompanying disclosure that the mints are not a low calorie food. (AC 119, 123-128). -36302738v.1
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c.

Dark Chocolate and Cocoa Products

The AC alleged that the labeling of Hersheys dark chocolate and cocoa products is false and misleading in four respects. First, as with Hersheys milk chocolate labels, the AC alleged that PGPR should not be abbreviated on dark chocolate labels. (AC 162, 163). Second, the AC objected to the fact that vanillin is listed only on the products back labels. (AC 171, 175).1 Third, the AC alleged that it is false and misleading for Hershey to include the statement cocoa processed with alkali on the back labels of its dark chocolate and cocoa products because FDA regulations purportedly require this information to appear on the front.2 (AC 162, 171, 175). Fourth, the AC alleged that the antioxidant seal on Hersheys dark chocolate and cocoa labels, which states that dark chocolate and cocoa are each a natural source of flavanol antioxidants, is false and misleading because the phrase natural source is purportedly a nutrient content claim defined by FDA regulations and cannot be used to describe antioxidants like flavanols for which FDA has not yet established a Recommended Daily Allowance. (AC 53-58, 65, 66). B. The Courts Motion to Dismiss Ruling

On August 23, 2012, Hershey filed a motion to dismiss the AC on multiple grounds. Chief among them, Hershey argued that the ACs allegations that Khasin read and relied on all of the allegedly false and misleading statements in Hersheys website, advertising and labeling were facially implausible. (Hershey Mot. to Dismiss [Dkt. # 30], pp. 16-20). Hershey also moved to strike the ACs allegations concerning Hersheys website because, in Hersheys view, the AC did not specifically allege that Khasin read and relied on the websites purported health claims for dark chocolate and cocoa. Id. at 15. Khasin successfully opposed dismissal. To overcome Hersheys motion, however, Khasins lawyers represented to the Court that Khasin had in fact read the labels, including the The AC makes the PGPR and vanillin allegations only as to Hersheys dark chocolate products. Hersheys cocoa products do not contain PGPR or vanillin. The AC makes this allegation only as to Hersheys dark chocolate and blended cocoa products. Hersheys other cocoa products do not contain cocoa processed with alkali. -46302738v.1
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serving sizes, ingredients, antioxidant, nutrient content, sugar free and health claims, and that Khasin had relied upon these misrepresentations, and was thereby deceived, in deciding to purchase [Hersheys] products. (Khasin Opp. To Mot. to Dismiss [Dkt. #32], p. 1; see also id. at p. 18-19). Khasins attorneys deployed the same tactic in opposing Hersheys motion to strike. Indeed, in their opposition brief, Khasins lawyers accused Hershey of turning a blind eye to allegations in the AC that purportedly corroborated the fact that Khasin actually saw and relied on all of the disputed health related claims on Hersheys website. Id. at p. 13. Because courts must accept a plaintiffs factual allegations as true at the motion to dismiss stage, the Court denied Hersheys motions. Khasin v. Hershey Co., No. 12-CV-161300, 2012 U.S. Dist. LEXIS 161300, *21 (N.D. Cal. Nov. 9, 2012) (hereinafter MTD Order). But in doing so, the Court noted that the many questions of fact as to whether [Khasin] was or was not deceived, as the AC alleged, would be answered through discovery. Id.at *26. C. Khasins Deposition Testimony

Following the Courts dismissal ruling, the parties submitted a joint Case Management Statement to the Court, and Hershey indicated that it intended to notice Khasins deposition early in discovery. Hershey anticipated that Khasins deposition testimony may establish that this case [is] ripe for summary adjudication on one or more grounds prior to the close of the discovery period, potentially saving the Court and the parties significant resources and effort. [Dkt. # 55, p. 5]. As it turned out, Khasins case began to unravel even before Hershey had the opportunity to depose him. On March 20, 2013, Hershey received an unprompted e-mail from Khasins attorney Richard Barrett in which Mr. Barrett acknowledged that certain allegations in the AC were incorrect.3 (Tu Decl., Ex. B). Mr. Barrett explained that while he and his co-counsel, Pierce Gore, were preparing Khasin for his upcoming deposition, Khasin told them that he did not, in fact, visit the Hershey websites at any time. Id. (emphasis added). Mr. Barrett recognized that Copies of all cited correspondence and Khasins deposition transcript are attached to the accompanying declaration of Travis J. Tu, Esq. (hereinafter Tu Decl.).
3

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this directly contradicted allegations in the AC and wrote that he and Mr. Gore felt obliged to notify Hershey of this fact for your deposition preparation. Id. Khasin was deposed on March 26, 2013. At his deposition, Khasin confirmed under oath that what Mr. Barrett had said in his e-mail was correct. Khasin testified that he never visited Hersheys website; he never viewed any of the health claims that the AC attributed to Hersheys website; and Hersheys website played no role whatsoever in his decision to purchase any of Hersheys products.4 This testimony, however, was just the tip of an iceberg worth of devastating admissions. Contrary to the allegations in the AC and his counsels representations to the Court in opposing Hersheys motion to dismiss, Khasin further testified that: He never relied on any of Hersheys advertisements; He never reviewed the ingredients list on any of Hersheys products; He purchased Hersheys mint products because he likes the way they taste, not because of their serving size or anything else on the products labels; He never noticed, let alone actually relied upon, the fact that PGPR is abbreviated on the labeling of Hersheys products; and He has no concerns whatsoever about Hersheys labeling of vanillin or cocoa processed with alkali.

Indeed, out of the numerous website, advertising and labeling statements referenced in the AC, Khasin testified that he actually noticed just one before he purchased Hersheys productsthe antioxidant seal on the labeling of Hersheys dark chocolate and cocoa.5 Khasin offered no explanation why the allegations in the AC bore no resemblance to the

Relevant excerpts from Khasins deposition, along with page and line number citations to the transcript, are reproduced in Section I.B below. Khasins testimony concerning the importance of the antioxidant seal to his purchasing decisions was self-contradictory, and there is no evidence that the sealwhich merely states that the products are natural sources of flavanol antioxidantsis false or misleading in any respect. Nevertheless, because Khasin testified that he noticed the antioxidant seal prior to purchasing Hersheys dark chocolate and cocoa products, Hershey is not moving for summary judgment on that aspect of the AC at this time. No amount of discovery, however, can salvage Khasins claims against aspects of Hersheys website, advertising and labeling that Khasin admitted played no role in his purchasing decisions, and those claims are now ripe for dismissal. -66302738v.1
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actual facts, but the reason nonetheless became obvious. Khasin testified that prior to being enlisted for this lawsuit, he had been purchasing Hersheys products his entire life without complaints. (Tu Decl., Ex. A (hereinafter Dep. Tr.) 28:9-29:3, 60:9-17, 64:8-16, 131:16-19). He had never considered filing a lawsuit against Hershey or anyone else until his wife told him that her bossPierce Gorewas looking for people to help with his class action stuff. (Dep. Tr. 23:9-24:7; 92:4-14). Khasin then went to his wifes office to meet with Mr. Gore. But even when he went into that meeting, Khasin had no reason or desire to sue Hershey. (Dep. Tr. 17:1718; 23:21-29:14). The case was entirely Mr. Gores idea. (Dep. Tr. 34:6-8, 9:25-40:23). Indeed, according to Khasin, he was never even asked to review the complaint (or the AC for that matter) before it was filed in his name. (Dep. Tr. 254:10-19, 255:24-256:24). D. Khasins Pursuit of His Defective Claims

On April 3, 2013, Hersheys counsel wrote to Khasins lawyers and asked whether, in light of the numerous admissions Khasin made at his deposition, Khasin would be dropping certain of his claims. Specifically, counsel for Hershey noted that Khasin had given testimony that makes clear that certain allegations in the Amended Complaint are inaccurate and at odds with Mr. Khasins own experience, and that Hershey did not believe that Khasin could in good faith maintain the allegations in the Amended Complaint any longer. (Tu Decl., Ex. C). Khasins counsel Mr. Barrett responded by e-mail on April 9, 2013. Mr. Barrett asserted that under California law, it is not necessary to prove that anyone was actually misled by the statements challenged in the AC. (Tu Decl., Ex. D (emphasis added)). Nevertheless, with an eye toward streaming this case for the Court, Mr. Barrett stated that Khasin will drop his claim under the misleading prong of the UCL, at least as to Hersheys website and Hersheys labeling of vanillin, alkali, and mints serving sizes. Id. Mr. Barrett went on to state, however, that notwithstanding his lack of reliance, Khasin planned to pursue all of the allegations in the AC on the theory that Hersheys website, advertising and labeling are unlawful as differentiated from misleading. Id. On April 17, 2013, Hersheys counsel wrote to Mr. Barrett and disputed his position that Khasin could continue to litigate his unlawful claims without proof of reliance. (Tu Decl., Ex. -76302738v.1
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E). Hershey also suggested that Khasin file a second amended complaint and remove those factual allegations from the AC that Khasin had affirmatively contradicted at his deposition. Id. Mr. Barrett never wrote back. Rather, on April 19 and May 2, 2013, Khasin served Hershey with document demands and requests for admissions seeking broad discovery on all of the allegations in the AC, including statements in Hersheys website, advertising and labeling on which Khasin never actually relied. (Tu Decl., Exs. F & G). Among other things, Khasin has demanded that Hershey produce all documents concerning its website; substantiation for every purported health claim that ever appeared on Hersheys website; all documents concerning Hersheys advertising; all documents concerning PGPR, vanillin, and cocoa processed with alkali; and all market research, sales, and pricing information for Hersheys milk chocolate, mints, dark chocolate and cocoa products. Despite Hersheys objections to these improper discovery requests, Khasin has refused to withdraw his demands. Rather, in a meet-and-confer session held on June 14, 2013, Khasin threatened Hershey with a motion to compel. (Tu Decl. 9). Hershey now moves for partial summary judgment and a protective order to preclude Khasin from continuing to litigate those claims and allegations in the AC that Khasin has affirmatively disavowed. ARGUMENT Summary judgment is appropriate when the evidence adduced in discovery reveals the absence of a genuine dispute as to any material fact. Fed. R. Civ. P. 56(c); see Sprint PCS Assets, L.L.C. v. City of Palos Verdes Estates, 583 F.3d 716, 720 (9th Cir. 2009). A defendant may carry its burden by pointing to a lack of evidence supporting any necessary element of the plaintiffs claims. See Celotex Corp. v. Catrett, 477 U.S. 317 (1986). Courts have broad discretion to decide when a protective order is appropriate. See Seattle Times Co. v. Rhinehart, 467 U.S. 20, 36 (1984). Because [p]roduction of information that is not relevant is an inherently undue burden, Ginena v. Alaska Airlines, Inc., No. 2:04-cv01304-RCJ-CWH, 2011 U.S. Dist. LEXIS 116656, *4-5 (D. Nev. Oct. 6, 2011), protective orders are routinely entered to bar discovery concerning claims or allegations on which the plaintiff cannot recover. See Surfvivor Media, Inc. v. Survivor Prods., 406 F.3d 625, 635 (9th Cir. 2005). -86302738v.1
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I.

SUMMARY JUDGMENT SHOULD BE ENTERED AS TO KHASINS CLAIMS AGAINST STATEMENTS ON WHICH HE DID NOT RELY A. Actual Reliance Is a Necessary Element of Khasins Claims

The AC asserts claims under Californias UCL, FAL, and CLRA. California law is clear that actual reliance is required to prevail on any of these statutory claims. In re Ferrero Litig., 794 F. Supp. 2d 1107, 1111 (S.D. Cal. 2011); see also Sateriale v. R.J. Reynolds Tobacco Co., 687 F.3d 1132 (9th Cir. 2012) (affirming dismissal of UCL and CLRA claims where plaintiffs had not relied on the defendants alleged misrepresentations).6 Reliance exists when the misrepresentation or nondisclosure was an immediate cause of the plaintiffs conduct and when without such misrepresentation or nondisclosure he or she would not, in all reasonable probability, have entered into the contract or other transaction. Alliance Mort. Co. v. Rothwell, 10 Cal. 4th 1226, 1239 (1995); see also In re Tobacco II Cases, 46 Cal. 4th 298, 306 (2009) (plaintiff must demonstrate actual reliance on the allegedly deceptive or misleading statements, in accordance with well-settled principles regarding the element of reliance in ordinary fraud actions). To establish actual reliance in a case based on alleged misrepresentations in labeling or advertising, it is not enough for a plaintiff to show that he was exposed to the defendants advertising or purchased an allegedly mislabeled product. See Bronson v. Johnson & Johnson, Inc., No. C-12-04184-CRB, 2013 U.S. Dist. LEXIS 54029, *8-9 (N.D. Cal. Apr. 16, 2013). Plaintiff must prove that the alleged misrepresentations actually motivated his purchasing decision. See Kwikset Corp. v. Superior Ct., 51 Cal. 4th 310, 330 (Cal. 2011) (plaintiff establishes reliance by showing that he or she would not have bought the product but for the misrepresentation); see also Hinojos v. Kohls Corp., 2013 U.S. App. LEXIS 10185, *26 (9th The AC also includes a redundant claim for unjust enrichment. However, courts have held that a plaintiff cannot maintain a stand-alone claim for unjust enrichment if his statutory claims are defective. See Herrington v. Johnson & Johnson Consumer Co., 2010 U.S. Dist. LEXIS 90505, *42 (N.D. Cal. Sept. 1, 2010). In other words, a plaintiffs unjust enrichment claim rises or falls with his UCL, FAL, or CLRA claims. Id.; see also In re Sears, Roebuck & Co. Tools Mktg & Sales Practices Litig., 2007 U.S. Dist. LEXIS 89349, *7 (N.D. Ill. 2007) (recognizing that when plaintiffs unjust enrichment claims are premised on allegedly false or misleading advertising, plaintiffs still have to demonstrate that they were deceived). -96302738v.1
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Cir. May 21, 2013) (actual reliance means the plaintiff would not have purchased the product otherwise). B. Khasin Did Not Actually Rely On Most of the Disputed Statements

To be clear, Hershey maintains that all of the disputed statements in its website, advertising and labeling are true and accurate, and do not violate the FDCA, FDA regulations, or California law in any respect. The Court, however, need not resolve whether Khasins novel interpretations of federal and state food labeling requirements are correct because Khasins claims suffer from a more fundamental defect: Khasin did not actually rely on the allegedly false and misleading statements in Hersheys promotions. Summary judgment is appropriate for this reason alone. See Baghdasarian v. Amazon.com, Inc., No. CV-05-8060-AG, 2009 U.S. Dist. LEXIS 115265, *12-17 (C.D. Cal. Dec. 9, 2009) (summary judgment is required when the [p]laintiffs own deposition testimony establishes that [he] cannot show actual reliance); Princess Cruise Lines, Ltd. v. Superior Ct., 179 Cal. App. 4th 36 (Cal. App. 2d Dist. 2009) (same). 1. Hersheys Website and Advertising

Khasins deposition testimony establishes beyond doubt that Hersheys website played no role in Khasins purchasing decisions. As noted above, Khasins counsel conceded even in advance of the deposition that Khasin did not, in fact, visit the Hershey websites at any time. (Tu Decl., Ex. B). Khasin confirmed this under oath: Q: A: Q: A: Q: A: . . . Prior to purchasing any of the Hersheys products that you purchased, did you ever visit a Hershey branded website? No, I did not. Since the filing of this lawsuit, have you ever visited a Hershey branded website? No, I did not. Is it fair to say that the Hershey websites played no role in your decision about which Hershey products to purchase? That is correct.

(Dep. Tr. 148:22-149:7).

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Indeed, at the time of his deposition, Khasin was not even aware that the AC disputed statements from Hersheys website: Q: A: Q: Are you aware that there are quotations from Hershey website in the complaint that was filed in your name in this action? No, I [am] not. Let me represent to you that there are quotations in the complaint from various Hersheys websites. Will you accept my representation to you that those quotations exist? Yes. Fair to say since you havent been to a Hersheys website, you personally havent viewed any of those quotations; correct? Correct. And fair to say that since you didnt visit a Hershey website, none of those quotations played a role in your decision to purchase a Hershey product; correct? Correct.

A: Q: A: Q:

A:

(Dep. Tr. 150:16-151:7).7 Plainly, Khasin cannot prove actual reliance on Hersheys website. As other courts have

15 recognized, one who was not exposed to the alleged misrepresentations . . . could not possibly 16 have relied on them. Pfizer, Inc. v. Superior Ct., 182 Cal. App. 4th 622, 631 (2010). Khasins 17 claims challenging statements from Hersheys website must, therefore, be dismissed. See Dvora 18 v. Gen. Mills, No. CV-11-1074-GW(PLAx), 2011 U.S. Dist. LEXIS 55513, *21 (C.D. Cal. May 19 16, 2011) (dismissing plaintiffs challenge to statements on the defendants website because he 20 never read or relied upon such statements in making his purchase); Bronson, 2013 U.S. Dist. 21 LEXIS 54029, at *8-9 (same). 22 Khasins testimony also dooms his claims against Hersheys advertisements. Although he 23 testified that he probably has seen ads for Hersheys products, Khasin was adamant that 24 Hersheys advertising played no role in his purchasing decisions: 25 26 27 28 Counsel for Khasin made numerous speaking objections throughout the deposition. Those objections are reflected in the official transcript but have been omitted from the quotations excerpted here due to space contraints. - 11 6302738v.1
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1 Q: 2 3 4 5 6 7 8 A: 9 Q: 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 A: Fair to say that advertising for Hersheys mint and gum products played no role in your decision to purchase those products; correct? Correct. [. . .] Correct. [. . .] A: Q: A: Q: Were there any statements in advertisements for Hersheys Milk Chocolate that played a role in your decision to buy the product? No. [. . .] And fair to say that no advertising for Hersheys Dark Chocolate played a role in your decision purchase any Hersheys Dark Chocolate products; correct? Correct. [. . .] Did any -- fair to say that no advertising for Hersheys regular cocoa played a role to purchase that product; correct?

(Dep. Tr. 216:4-7, 16-20, 217:3-6, 218:3-6). In light of these admissions, Khasin cannot meet his burden of proving actual reliance on any of Hersheys advertisements. Khasins claims premised on Hersheys advertising also must be dismissed. 2. Hersheys Product Labeling

Khasin testified that he has purchased Hersheys milk chocolate, mint, cocoa, and dark chocolate products, but most of the allegedly false and misleading statements on Hersheys labels had no effect whatsoever on his purchasing decisions. Contrary to the allegations in the AC, Khasin was not deceived into purchasing Hersheys products based on statements on the products labels. He bought Hersheys products because he likes the way they taste, for his wifes baking needs, or to add to his childrens milk. (Dep. Tr. 67:5-6, 125:5-11, 144:14-25, 154:12-15, 203:21-24). a. Milk Chocolate Products

Khasin testified that he first purchased Hersheys milk chocolate as a child because I thought it would taste good. (Dep. Tr. 123:22). He continued to purchase Hersheys milk chocolate products as an adult [b]ecause they tasted good. (Dep. Tr. 125:11). Over those many years, Khasin could not recall a single instance when he actually reviewed the label for Hersheys milk chocolate or inspected the ingredients list: - 12 6302738v.1
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1 2

Q: A:

At any point over the years when you have purchased Hersheys milk chocolate bars, can you recall looking at the label? I cant recall specifically looking at a Hersheys label. . . . But in all of the times that you purchased Hersheys milk chocolate bars, did you ever read the ingredients list on a Hersheys milk chocolate bar? I cant recall at this time. Did the ingredients list on the Hersheys milk chocolate bar ever factor into your decision about whether to buy Hersheys milk chocolate or not? I dont remember.

3 Q: 4 5 A: 6 Q: 7 8 9 10 11 12 13 14 A: 15 16 17 18 Q: 19 20 21 22 23 24 25 26 27 28 - 13 6302738v.1
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A:

(Dep. Tr. 128:4-23). Given Khasins inattention to the labels, it is not surprising that their disclosures with respect to PGPR and vanillin played no role in Khasins purchasing decisions. Regarding PGPR, Khasin testified: Q: If the labels for Hersheys milk chocolate bars had said on them Polyglycerol Polyricinoleic Acid instead of PGPR, would you have still purchased Hersheys milk chocolate bars? If I looked at the Hersheys labels, then it would not have made a difference to me.

(Dep. Tr. 140:3-11). Similarly, Khasin testified that he had no objection to the way vanillin is currently identified on Hersheys labels: Other than PGPR, is there anything sitting here today that concerns you about the labeling of Hersheys milk chocolate bars? No, there is not. [. . .] We've talked about the Hersheys brand name. No concerns; correct? Correct. Weve talked about the fact that it says milk chocolate. No concerns; correct? Correct. [. . .] No concerns about Vanillin; correct? Correct.

A: Q: A: Q: A: Q: A:

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(Dep. Tr. 141:20-25, 143:7-21).8 Khasins testimony establishes that he did not actually rely on the labeling of PGPR or vanillin when he made his purchasing decisions. Khasins claims regarding Hersheys milk chocolate products must be dismissed. b. Mint Products

Khasin admitted that he purchased Hersheys mint products for the sole reason that he liked the way they taste. Specifically, when asked why he first purchased Hersheys IceBreakers mints, Khasin testified: A: Q: A: Q: A: Because I wanted some mints. Why did you want mints? Because most of the time they taste good. Any other reason you bought IceBreakers Mints that first time? No.

(Depo Tr. 88:5-10). Khasin then was asked about the reasons why he continued to buy IceBreakers mints, and he gave a similar answer: Q: A: Q: A: And you bought IceBreakers again after the first time again; right? I believe so. And why did you buy it again? I enjoyed the flavor.

(Dep. Tr. 89:5-9). With respect to the allegation that Hersheys mints should be labeled with a two-mint serving size, Khasin testified that he personally consumes one mint at a time, and one mint (not two) is the most appropriate serving size for him: Q: A:
8

And when you [eat] those IceBreakers Mints, do you pop them one at a time, two at a time, three at a time? How many do you eat at a time? One.

Khasin testified that he purchased HERSHEYS Milk Chocolate Bars and HERSHEYS KISSES Brand Milk Chocolate. In the deposition excerpts quoted here, Khasin was discussing milk chocolate bars, but Khasin gave virtually identical answers when questioned about Hersheys Kisses milk chocolate. (Dep. Tr. 146:12-147:6). - 14 6302738v.1
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[. . .] Q: A: So for you, the serving size that was appropriate was one mint; correct? Yes.

(Dep. Tr. 90:16-91:3). Indeed, when Khasin was asked specifically what his objections were to the serving size on labels for Hersheys mints, he denied having any concerns. (Dep. Tr. 98:1115) (Q: And do you have any concerns about the serving size printed on the IceBreakers Mints label? A: Not that Im aware of.). Khasin also was questioned about the ACs allegation that the phrase sugar free is false and misleading in the absence of a disclosure that Hersheys mints are not a low calorie food. Although Khasin tried to parrot back the ACs allegations, he made clear that he personally was not deceived in any way by the statement sugar free. Specifically, when asked whether he believed that sugar free on the IceBreakers mints label is false or in any way inaccurate, Khasin answered, Not that I know of. (Dep. Tr. 97:16-19). And, when asked whether he even looked at the label for IceBreakers mints before he purchased the product, Khasin testified, Im not sure if I looked at it or not. (Dep. Tr. 88:25-89:4). Moreover, when Khasin tried to explain in his own words how, if at all, Hersheys mints are mislabeled, he told an entirely different story from the one alleged in the AC. Khasin testified that the disclosure that he personally would like to see added to Hersheys mints labels is shouldnt be substituted as an entre or as a lunch. (Dep. Tr. 94:10-18). This disclosure is purportedly necessary, according to Khasin, because, You know, it may be seen that if you have a lot of these mints, it could replace a meal. (Dep. Tr. 96:2-3).9 Putting aside whether Khasins desired disclosure makes any sense (and it clearly does not), Khasin did not purchase IceBreakers mints on the mistaken belief that he could have a lot of them as a meal replacement. On the contrary, Khasin testified that he purchased the mints After Khasin stated multiple times on the record that Hersheys mints labels should disclose that the mints are not a substitute for an entre or lunch, Khasins attorney requested that questioning be suspended so that he and his client could take a break. Fifteen minutes later Khasin returned and miraculously remembered that what he meant to say was not a low calorie food. (Dep. Tr. 111:9-112:16). - 15 6302738v.1
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because he liked their taste, and that the most mints he ever consumed at any one time was one. Khasin did not rely on any purported misrepresentation about the serving size of Hersheys mints, and he did not purchase Hersheys mints on the mistaken belief that they are a low-calorie food. Khasins claims against the labeling for Hersheys mint products must be dismissed.10 c. Dark Chocolate and Cocoa Products

The AC identified four purported labeling defects with Hersheys dark chocolate and cocoa products: PGPR, vanillin, cocoa processed with alkali, and the antioxidant seal. According to Khasin, the only one he considered prior making his purchasing decisions was the antioxidant seal. Khasin testified that PGPR had no impact on his decision to purchase Hersheys dark chocolate: Q: A: So is it fair to say that PGPR played no role in your decision whether to purchase Hersheys dark chocolate? Correct. If I had looked and seen PGPR, it would not have affected my decision.

(Dep. Tr. 162:20-163:2). Khasin admitted that he had no concerns about the labeling of vanillin on dark chocolate: Q: A: Any concerns about Vanillin [on Hersheys dark chocolate labels]? No. [. . .]

(Dep. Tr. 169:4-5). Nor did Khasin rely to his detriment on the presence or absence of cocoa processed with alkali on Hersheys labels:

The meal-replacement theory of deception espoused by Khasin at his deposition is actually inconsistent with the ACs allegations. In explaining why he believes that Hersheys mints should disclose that they are not a substitute for an entre or lunch, Khasin testified that someone could think that Hersheys mints can be substituted for a meal and mistakenly consume too few calories. (Dep. Tr. 96:14-18 (Q: Well, what if one of your kids said, Dad, Im skipping lunch, and Im having mints instead. What would you say in response? A: Well, I would say, Eat something else too.). The AC, however, alleges the opposite. According to the AC, Hersheys mints labels should disclose that they are not a low calorie food because a consumer might think that Hersheys mints are low calorie and consume more calories than they intend to. (AC 123-126). - 16 6302738v.1
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1 Q: 2 A: 3 Q: 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 A: Did the presence or absence of [alkalized] cocoa have any role in your decision to purchase Hersheys Dark Cocoa? No, it did not. No. [ . . . ] Any concerns about the use of alkalized cocoa in the product?

(Dep. Tr. 169:1-3, 198:3-6). Thus, with respect to Hersheys labeling for its dark chocolate and cocoa products, Khasin cannot establish that he actually relied on any statements regarding PGPR, vanillin, or alkalized cocoa. * * *

At the motion to dismiss stage, Hershey argued that Khasins case was premised on a legal fiction that he was somehow injured as a result of the numerous website, advertising and labeling statements disputed in the AC. Now that he has testified under oath, it is readily apparent that Khasins allegations were not merely a legal fiction, they were an actual fiction. Khasins admissions leave no genuine issue of material fact to be decided. With the possible exception of the antioxidant seal on Hersheys dark chocolate and cocoa products, none of the statements challenged in the AC played any role in Khasins purchasing decisions. Hershey is entitled to partial summary judgment on Khasins claims against its website and advertising, and its labeling statements concerning PGPR, vanillin, cocoa processed with alkali, serving sizes and sugar-free mints. II. KHASIN CANNOT PURSUE HIS DEFECTIVE CLAIMS UNDER THE UNLAWFUL PRONG OF THE UCL Notwithstanding their clients meltdown at deposition, Khasins lawyers have insisted that they intend to pursue all of his existing claims, including those that concern statements that caused him no injury. In particular, Khasins attorneys have assertedand will likely argue herethat they need not prove that Khasin or anyone else was actually misled by Hersheys alleged misrepresentations, and that Khasin can pursue all of the allegations in the AC under the unlawful prong of the UCL.11
11

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This argument must be rejected for at least two reasons. First, California law does not permit private plaintiffs to proceed under the unlawful prong of the UCL without proof of actual reliance. Second, now that he has admitted that he was never misled or deceived by most of the disputed statements, Khasins claims are nothing more than a naked attempt by a private plaintiff to enforce the FDCA through state law. Such claims are absolutely barred by the doctrine of implied preemption. A. Californias UCL Requires Actual Reliance Even Under the Unlawful Prong

Khasins theory that he can maintain a claim under the unlawful prong of the UCL against statements on which he did not actually rely is contradicted by the plain language of the UCL itself. The statute expressly limits standing to plaintiffs who have lost money or property as a result of the defendants alleged misconduct. Cal. Bus. & Prof. Code 17204. This as a result of language was added to the UCL in 2004 by the Proposition 64 ballot initiative, and in its plain and ordinary sense means caused by and requires plaintiffs to show a causal connection between the alleged misrepresentations and their purchasing decisions. Kwikset Corp. v. Superior Ct., 51 Cal. 4th 310, 326 (Cal. 2011). This voter-initiated reliance requirement dooms Khasins unlawful theory. Proposition 64 was enacted specifically to address the abuses that can result when a so-called private attorney general uses the UCL to challenge labeling and advertising on which he did not actually rely. See People ex rel. Lockyer v. Brar, 115 Cal. App. 4th 1315, 1317 (2004) (explaining that Proposition 64 was enacted to stop attorneys from scour[ing] public records on the Internet for what are often ridiculously minor violations of some regulation or law and then finding a consumer to serve as a front). Thus, in the years since Proposition 64 was passed, California courts have recognized that omitting an actual reliance requirement when the defendants alleged misrepresentation has not deceived the plaintiff would blunt Proposition 64s intended reforms. Durell v. Sharp Healthcare, 183 Cal. App. 4th 1350, 1363 (Cal. App. 4th Dist. 2010) claims. Unlike the UCL, these statutes do not have multiple prongs, and Khasins admission that he was not misled by Hersheys statements is clearly fatal to these claims. - 18 6302738v.1
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(internal quotation marks omitted). In fact, Khasins position that the unlawful prong of Californias UCL authorizes him to challenge statements that did not deceive him has been squarely rejected. It is the nature of the alleged wrongdoing that determines whether actual reliance is required, not the specific prong of the UCL the consumer invokes. Durell, 183 Cal. App. 4th at 1355, 1363. Thus, when the alleged wrongdoing concerns misrepresentations in labeling or advertising, a plaintiff is required to prove actual relianceeven under the UCLs unlawful prong. See id. at 1355 (to bring a claim under the unlawful prong of the UCL, in which the predicate unlawful conduct is based on misrepresentations, . . . actual reliance is an element of the claim); see also Kwikset Corp. v. Superior Ct., 51 Cal. 4th 310, 326 n.9 (2011) (because the theory of the [unlawfulness] case is that Kwikset engaged in misrepresentations and deceived consumers, plaintiff must prove the element of reliance). This is true whether the predicate unlawful act alleged is based on Californias Sherman Law or some other statute. See In re Actimmune Mktg. Litig., No. C 0802376 MHP, 2010 U.S. Dist. LEXIS 90480, *26 (N.D. Cal. Aug., 31, 2010) (finding that plaintiffs reliance on the Sherman Law did not change the fact that the alleged wrong involved representations intended to persuade a consumer to purchase a product,such that actual reliance is necessary). At the motion to dismiss stage, Khasin asserted that reliance may not be required for his UCL claim. The cases that Khasin cited at that time, however, suggest only that actual reliance may not be required in UCL actions that are not based upon a fraud theory. Medrazo v. Honda of N. Hollywood, 205 Cal. App. 4th 1, 12 (Cal. App. 2d Dist. 2012). Khasins case, in contrast, is predicated on a fraud theory because the AC alleges that he was deceived by purported misrepresentations. See, e.g. Fox v. Good Samaritan L.P., 801 F. Supp. 2d 883, 896 (N.D. Cal. 2010) (recognizing that the allegations in the pleadings serve to frameand limitthe issues to be decided on summary judgment). In fact, the Court recognized that Khasins claims sound in fraud when it decided that the heightened pleading requirements of Rule 9(b) applied at the motion to dismiss stage. MTD Order at 12-13. California law is clear that in cases such as this one, where plaintiffs claims are rooted in allegations of fraud and misrepresentations, actual - 19 6302738v.1
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reliance is an indispensable requirement. See Kwikset Corp. v. Superior Ct., 51 Cal. 4th 310, 326 (Cal. 2011) (imposing a reliance requirement in a case brought under all three prongs of the UCL based on alleged misrepresentations on product labeling concerning the products country of origin). B. Absent Proof of Actual Reliance, State-Law Claims to Enforce FDCA Requirements Are Impliedly Preempted

California law does not authorize plaintiffs to challenge unlawful conduct that did not actually mislead them or cause them harm. But even if such claims were permitted as a matter of state law, the U.S. Supreme Court and the Ninth Circuit have held that such claims are impliedly preempted by the FDCA. This Court addressed the issue of implied preemption in its ruling on Hersheys motion to dismiss. In the months since the Court issued its MTD Order, however, a number of important rulings have been handed down that clarify that the doctrine of implied preemption is distinct from express preemption and serves an entirely different purpose.12 See Hillman v. Maretta, No. 11-1221, 2013 U.S. Lexis 4167, *26 (U.S. June 3, 2013) (the existence of a separate [express] pre-emption provision does not bar the ordinary working of [implied] preemption principles (internal citations, quotation marks omitted)); Perez v. Nidek Co., 711 F.3d 1109, 1119-20 (9th Cir. 2013) (same). The doctrine of implied preemption under the FDCA is rooted in Congresss intent. In enacting the FDCA, Congress manifested a clear intent that the statutes enforcement be entrusted solely to the FDA. See Buckman Co. v. Plaintiffs Legal Comm., 531 U.S. 341, 349 n.4 (2001) (the FDCA leaves no doubt that it is the Federal Government rather than private litigants who are authorized to file suit for noncompliance). This legislative policy decision to give FDA

To the extent that the Courts MTD Order can be read to suggest that Khasins claims cannot be impliedly preempted because he is suing under California state law, rather than the FDCA itself, Hershey respectfully disagrees that is an accurate statement of the law. See Fraker v. KFC Corp., No. 06-CV-01284-JM (WMC), 2007 U.S. Dist. LEXIS 32041, at *11 (S.D. Cal. Apr. 30, 2007) (to the extent Plaintiff contends that alleged violations of the FDCA and Sherman Law give rise to viable state law claims, such claims are impliedly preempted by the FDCA); Animal Legal Def. Fund v. Provimi Veal Corp., 626 F. Supp. 278, 283 (D. Mass. 1986) (same under Massachusetts parallel food-and-drug statute). - 20 6302738v.1
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exclusive enforcement authority has major advantages. Bailey v. Johnson, 48 F.3d 965, 968 (6th Cir. 1995). FDA has substantial expertise that it brings to bear; has the ability to solicit comment from appropriate sources; provides direct representation of the public interest; and can maintain a unitary enforcement policy for the country as a whole.13 Id. Out of deference to Congresss intent and FDAs authority, courts have held that private parties cannot use state unfair competition laws as a vehicle to bring a private cause of action that is based on violations of the FDCA. In re Epogen & Aranesp Off-Label Mktg. & Sales Practices Litig., 590 F. Supp. 2d 1282, 1290-91 (C.D. Cal. 2008). Thus, even when a plaintiff asserts claims exclusively under state law, those state-law claims are impliedly preempted if they are in substance (even if not in form) a claim for violating the FDCA. Loreto v. Procter & Gamble, No. 10-4274, 2013 U.S. App. LEXIS 3813, at *5 (6th Cir. Feb. 22, 2013) (internal quotation marks, citations, and alterations omitted). Courts in the Ninth Circuit have repeatedly barred state-law claims premised wholly on noncompliance with the FDCA or its implementing regulations, including claims under Californias UCL. See, e.g., See Perez v. Nidek Co., 711 F.3d 1109, 1119-20 (9th Cir. 2013); PhotoMedex, Inc. v. Irwin, 601 F.3d 919, 928 (9th Cir. 2010)14; Epogen, 590 F. Supp. 2d at 1290-91 (plaintiffs may not use the UCL as a vehicle to bring a private cause of action that is based on violations of the FDCA); Summit Tech. v. High-Line Med. Instruments, Co., 933 F. Supp. 918, 943 n.21 (C.D. Cal. 1996) (Plaintiff may not bring a [UCL] claim that is, in fact, an attempt to state a claim under the federal FDCA.).15 FDA also has broad discretion to fashion remedies that best serve the public interest. See Heckler v. Chaney, 470 U.S. 821, 835 (1985) (FDCA commit[s] complete discretion to [FDA] to decide how and when its enforcement powers should be exercised). The PhotoMedex opinion referred chiefly to PhotoMedexs federal Lanham Act claim. However, the courts holding affirmed the dismissal of the UCL claim on the same grounds, 601 F.3d at 930-31 & n.7, and the Ninth Circuit relied heavily on U.S. Supreme Court precedent addressing implied preemption of state-law claims. The Ninth Circuits decision in Pom Wonderful v. Coca-Cola used a similar rationale to hold that a private partys claims under the federal Lanham Act were precluded by the FDCA. See POM Wonderful LLC v. Coca-Cola Co., 679 F.3d 1170, 1175-76 (9th Cir. 2012) (plaintiff may not undermine Congresss decision to limit enforcement of the FDCA to the federal government by using federal Lanham Act as a vehicle to usurp, preempt, or undermine FDA authority to enforce the FDCA). - 21 6302738v.1
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The Ninth Circuits recent decision in Perez v. Nidek is instructive. There, the plaintiffs were patients who sued their physicians under California law for failing to warn them that the laser that was used to treat their farsightedness was not FDA-approved for that condition. See Perez, 711 F.3d at 1112. The plaintiffs did not allege that they had been injured, or even that their surgeries were unsuccessful. Rather, plaintiffs alleged that the physicians had violated the FDCA by using the lasers for an unapproved purpose, and that they would not have had their surgeries but for the physicians misleading omissions. Id. at 1117. The Ninth Circuit held that plaintiffs claims were impliedly preempted, reasoning that the claims sought to improperly usurp the FDAs authority to enforce the FDCA and its implementing regulations. Id. at 1119. As the Ninth Circuit explained, the FDCA does not impliedly preempt traditional state-law torts such as failure to exercise reasonable care because those duties imposed by tort law predate, and exist independently of, the FDCA. But state-law claims that exist solely by virtue of the FDCA requirements are impliedly preempted. Id. (internal citation, quotation marks, and alterations omitted). Because Khasins claims are no longer tethered to the traditional tort principles of deception, reliance and injury, Khasins unlawful claims under the UCL are indistinguishable from the claims that the Ninth Circuit held preempted in Perez. Traditional state-law principles do not prohibit Hersheys label statements concerning PGPR, vanillin, cocoa processed with alkali, serving sizes or sugar-free mints. Nor does conventional state tort law bar Hershey from making health claims that FDA supposedly has not authorized or approved. Rather, the duties that Khasin seeks to impose under state law would not exist absent the federal regulatory scheme established by the FDCA. See Riley v. Cordis Corp., 625 F. Supp. 2d 769, 777 (D. Minn. 2009) (technical non-compliance with the FDCA is not the type of conduct that would traditionally give rise to liability under state tort law). Khasins claims are therefore impliedly preempted. Id.; see also Epogen, 590 F. Supp. 2d at 1290 (describing the crucial distinction between pureFDCA-violation claims and claims involving inherently deceptive conduct).16
16

Plaintiff will undoubtedly invoke the California Supreme Courts decision in In re Farm Raised Salmon Cases, which rejected an implied-preemption defense to a UCL action - 22 6302738v.1
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By attempting to proceed under the UCLs unlawful prong without any proof of reliance or deception, Khasin is seeking to stand in the shoes of the FDA and enforce FDCA requirements through the backdoor of state law. That is precisely what Congress has forbidden. Khasins claims are thus preempted. III. HERSHEY IS ENTITLED TO A PROTECTIVE ORDER Not only has Khasin insisted upon proceeding with a liability theory that is not recognized by California law (and, in any event, is preempted by federal law), he has refused to withdraw his numerous discovery demands relevant to his defective claims. To avoid the significant burdens and costs that compliance with these demands would impose upon Hershey, the Court should issue a protective order prohibiting Khasin from pursuing discovery on the claims he has admitted under oath he does not possess. The scope of discovery is properly limited to matters that are relevant to any partys claim or defense. Fed. R. Civ. P. 26(b)(1). As such, courts must limit the extent of discovery otherwise allowed whenever the burden or expense of the proposed discovery outweighs its likely benefit. Id. 26(b)(2)(C)(iii). This is especially true when a party is seeking discovery that is not relevant to any claim in the case. See Surfvivor Media, Inc. v. Survivor Prods., 406 F.3d 625, 635 (9th Cir. 2005); Travers v. Shalala, 20 F.3d 993, 999 (9th Cir. 1994); Price v. Cunningham, No. 1:08-cv-00425-AWI-BAM PC, 2012 U.S. Dist. LEXIS 157142, *4-5 (E.D. Cal. Nov. 1, 2012). Most of the documents and information that Khasin seeks relate to website, advertising, and labeling statements on which Khasin did not rely. For example, Khasin has requested that

involving alleged violations of Californias Sherman Law. 42 Cal. 4th 1077 (2008). But the facts of In re Salmon are distinguishable because the plaintiffs in that case alleged that they had been misled by the defendant grocery stores practice of selling farmed salmon as wild salmon by adding undisclosed artificial colorants. Salmon, 42 Cal. 4th at 1083-84. Although that nondisclosure happened to violate the FDCA and parallel provisions of the Sherman Law, the plaintiffs case was based on a traditional state-law tort duty not to deceive. Id. at 1084. By contrast, Khasin has conceded that he was never personally misled by Hersheys website, advertising, and most of the disputed labeling statements. In any event, a California courts holding on an issue of federal law, such as preemption, is not binding on this Court, and the In re Salmon decision predates the Ninth Circuits decisions in PhotoMedex and Perez. - 23 6302738v.1
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Hershey collect and produce all documents relating to Hersheys website (which Khasin admitted he never visited); substantiation for all of Hersheys purported health claims regarding dark chocolate and cocoa (which Khasin conceded he never saw); all documents concerning the labeling of products containing PGPR, vanillin, cocoa processed with alkali (ingredients that Khasin testified played no role in his purchasing decisions); and all documents concerning Hersheys sugar-free mints and their serving sizes (products that Khasin testified he purchased for the sole reason that he liked their taste). The documents and information sought by Khasin have no probative value. Whatever information there is to be gleaned from these documents, it will not change the fact that Khasin cannot recover on his claims. Moreover, given the broad wording of Khasins requests and the sweeping nature of the allegations in the AC, the burden and expense on Hershey to collect, review for privilege, and produce these documents would be enormous. Many of these documents also contain highly valuable and confidential trade secrets that Hershey should not be made to disclose. See Groce v. Claudat, No. 09cv01630-BTM (WMc), 2012 U.S. Dist. LEXIS 69870, *10-11 (S.D. Cal. May 18, 2012) (granting protective order where production of the documents would subject defendant to disclosure of highly private and confidential matters that have little if any probative value to plaintiffs claims). Hershey is a large global company, and Khasins discovery demands concern some of its flagship products that have been sold and marketed for decades. Khasins document requests, therefore, implicate dozens of potential custodians, span many aspects of Hersheys business, and could require Hershey to track down archival information that goes back years. Conservatively, collecting and producing this material could cost Hershey hundreds of thousands of dollars in costs and associated legal fees. All that time, money and effort will have been wasted because, at the end of the day, Khasin cannot prevail on his claims absent proof of actual reliance. Accordingly, the Court should enter a protective order precluding further discovery on Khasins claims regarding Hersheys website and advertising, and Hersheys labeling of PGPR, vanillin, cocoa processed with alkali, serving sizes and sugar-free mints. None of these issues had anything to do with the reasons that Khasin actually purchased Hersheys products, and they - 24 6302738v.1
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do not properly belong in this case. CONCLUSION For the foregoing reasons, the Court should grant Hersheys motion for partial summary judgment and issue the requested protective order. DATED: June 14, 2013 PATTERSON BELKNAP WEBB & TYLER LLP By: /s/ Steven A. Zalesin Steven A. Zalesin

1133 Avenue of the Americas New York, New York 10036 Telephone: (212) 336-2000 John W. Fowler (Bar No. 037463) BERGESON LLP 303 Almaden Boulevard, Suite 500 San Jose, CA 95110-2712 Telephone: (408) 291-6200 Facsimile: (408) 297-6000 Attorneys for Defendant

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John W. Fowler (Bar No. 037463) jfowler@be-law.com BERGESON LLP 303 Almaden Boulevard, Suite 500 San Jose, CA 95110-2712 Telephone: (408) 291-6200 Facsimile: (408) 297-6000 Steven A. Zalesin (admitted pro hac vice) sazalesin@pbwt.com Travis J. Tu (admitted pro hac vice) tjtu@pbwt.com James L. Kerwin (admitted pro hac vice) jkerwin@pbwt.com Jennifer A. Dixon (admitted pro hac vice) jdixon@pbwt.com PATTERSON BELKNAP WEBB & TYLER LLP 1133 Avenue of the Americas New York, New York 10036 Telephone: (212) 336-2000 Facsimile: (212) 336-2222 Attorneys for Defendant THE HERSHEY COMPANY UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA

CASE NO. 12-cv-01862 EJD LEON KHASIN, on Behalf of Himself and All Others Similarly Situated, plaintiff, v. THE HERSHEY COMPANY, Defendant. [PROPOSED] ORDER GRANTING DEFENDANT THE HERSHEY COMPANYS MOTION FOR PARTIAL SUMMARY JUDGMENT AND FOR A PROTECTIVE ORDER Judge: Honorable Edward J. Davila Date: July 19, 2013 Time: 9:00 a.m. Room: Courtroom 4, 5th Floor Trial Date: No date set

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This matter has been brought before the Court on the motion of counsel for Defendant The Hershey Company (Hershey or Defendant) for partial summary judgment pursuant to Federal Rule of Civil Procedure 56, and for a protective order pursuant to Rule 26(b)(2)(C)(iii). Based on the supporting and opposing papers, including the Declaration of Travis J. Tu and attached Exhibits, and the papers and records on file in this action, Defendants motion for partial summary judgment is GRANTED. California law is clear that actual reliance is required for Plaintiff Leon Khasin (Khasin) to prevail on his statutory claims under Californias Unfair Competition Law (UCL), see Cal. Bus. & Prof. Code 17200, et seq., False Advertising Law (FAL), see Cal. Bus. & Prof. Code 17500, et seq., and the Consumer Legal Remedies Act (CLRA), see Cal. Civ. Code 1750, et seq. See In re Ferrero Litig., 794 F. Supp. 2d 1107, 1111 (S.D. Cal. 2011); see also Sateriale v. R.J. Reynolds Tobacco Co., 687 F.3d 1132 (9th Cir. 2012). Moreover, in cases premised on alleged misrepresentations in labeling and advertising, actual reliance is required regardless of the UCL prong that the plaintiff invokes. See Kwikset Corp. v. Superior Ct., 51 Cal. 4th 310, 326 (Cal. 2011); Durell v. Sharp Healthcare, 183 Cal. App. 4th 1350, 1363 (Cal. Ct. App. 4th Dist. 2010). Khasins deposition testimony establishes beyond doubt that he did not actually rely on Hersheys website, advertising or most of the labeling statements disputed in his Amended Complaint. Specifically, with respect to Khasins claims directed to Hersheys labeling, he testified that, contrary to the allegations in the Amended Complaint, he did not rely on Hersheys labeling of PGPR, vanillin, cocoa processed with alkali, sugar free, or the serving sizes of Hersheys mints. Because he cannot establish an essential element of his claims, Khasins claims related to Hersheys website and advertising are DISMISSED without leave to amend. In addition, Khasins claims related to representations on Hersheys product labels concerning PGPR, vanillin and cocoa processed with alkali, sugar free, and the serving sizes of Hersheys mints are DISMISSED without leave to amend. The Amended Complaint also includes a claim for unjust enrichment. In California, however, a plaintiff cannot maintain a claim for unjust enrichment when his statutory claims are -16302737v.1
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otherwise defective. Khasins claim for unjust enrichment is therefore DISMISSED without leave to amend to the same extent as his statutory claims. See Herrington v. Johnson & Johnson Consumer Co., 2010 U.S. Dist. LEXIS 90505, *42 (N.D. Cal. 2010). In light of the Courts entry of partial summary judgment, Hershey is entitled to a protective order barring Khasin from pursuing further discovery on his dismissed claims. See Surfvivor Media, Inc. v. Survivor Prods., 406 F.3d 625, 635 (9th Cir. 2005); Travers v. Shalala, 20 F.3d 993, 999 (9th Cir. 1994); Price v. Cunningham, No. 1:08-cv-00425-AWI-BAM PC, 2012 U.S. Dist. LEXIS 157142, *4-5 (E.D. Cal. 2012). No further discovery is permitted with respect to Hersheys website, Hersheys non-label advertising, the labeling of Hersheys milk chocolate products, or the labeling of Hersheys sugar-free mints. Rather, discovery in this case shall be limited to Khasins claims regarding the antioxidant related representations on labels of Hersheys dark chocolate and cocoa products, if otherwise allowable pursuant to the Federal Rules, any applicable privileges and immunities, or any other applicable law governing the scope of discovery.

IT IS SO ORDERED. DATED:

_____________________________ EDWARD J. DAVILA United States District Court Judge

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