Clevenger vs. Welch Foods Inc

applies with equal force to the claims of both employer and employee, so there is no lack of mutuality. ROA 38 Ex. 1 at 2. Second, it is well settled that class action waivers are enforceable, as here, in arbitration agreements governed by the FAA. Epic Systems Corp. v. Lewis (2018) 138 S. Ct. 1612, 1616; Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal. 4th 348, 364. Contrary to plaintiff’s assertion, under the FAA, when an arbitration agreement does not authorize class arbitration of disputes, case law provides for the dismissal without prejudice of the class claims.

Epic Systems Corp. v. Lewis (2018) 138 S.Ct. 1612; Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp. (2010) 559 U.S. 662, 686; Kinecta Alternative Financial Solutions, Inc. v. Superior Court (2012) 205 Cal.App.4th 506, 510-511. Both the FAA and California law provide for a stay of proceedings pending arbitration. 9 U.S.C. § 3; Code Civ. Proc., § 1281.4.

Accordingly, because the court does not find the Agreement substantively unconscionable, the Agreement is enforceable without regard to the negligible amount of procedural unconscionability and the petition is granted.

Moving party is ordered to give notice of this ruling.

12 30-2022-01298406 Defendant Welch Foods Inc.’s (“Defendant” or “Welch”) Motion Clevenger vs. for Summary Judgment is DENIED. Welch Foods Inc The court SUSTAINS Plaintiff’s Objection No. 12 to the declaration of Matthew Aufman, Vice President, General Counsel and Secretary of Welch, with respect to his improper legal opinion that “PIM is not an agent of Welch’s.” (Aufman Dec. ¶ 22.) The court OVERRULES Plaintiffs’ remaining objections Aufman Declaration as his statements are admissible and Plaintiffs essentially dispute the merits of his claims.

Standards of Law

“A party may move for summary judgment in an action or proceeding if it is contended that the action has no merit or that there is no defense to the action or proceeding.” (CCP § 437c(a)(1).) “The motion for summary judgment shall be granted if all the papers submitted show that there is no triable issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” (CCP § 437c(c).) “[S]ummary judgment shall not be granted by the court based on inferences reasonably deducible from the evidence if contradicted by other

inferences or evidence that raise a triable issue as to any material fact.” (Id.)

“[T]here is no such creature as ‘partial summary judgment’ in California[.]” (Paramount Petroleum Corp. v. Superior Ct. (2014) 227 Cal. App. 4th 226, 243.) Further, motions for summary judgment or adjudication must “completely dispose of the cause of action.” (Id. at 242.) “If ... the plaintiff pleads several theories,” the moving defendant must “affirmatively react to each theory . . . if the motion is to be successful.” (Pultz v. Holgerson (1986) 184 Cal. App. 3d 1110, 1114.) In other words, “to obtain a summary judgment, it [is defendant’s] burden to negative all of the theories of liability tendered by the complaint by a showing that, as to each theory, dispositive material facts are not in dispute.” (Id. at 1115.)

Motion for Summary Judgment

“A container that does not allow the consumer to fully view its contents shall be considered to be filled as to be misleading if it contains nonfunctional slack fill.” (Cal. Bus. & Prof. Code § 12606.2(a).) “Nonfunctional slack fill is the empty space in a package that is filled to substantially less than its capacity,” for reasons other than the enumerated exceptions, such as to protect the contents of the package, due to product settling, or because of machinery requirements used to package the product. Other exceptions include features that make clear the actual fill level to the consumer. (Id.)

In this action, Plaintiffs allege that Defendants have a “practice of ‘slack-filling’ boxes of their Welch’s® Reduced Sugar Fruit Snacks, Fruit ‘n YogurtTM Snacks, and certain boxes of Welch’s® Fruit Snacks.” (SAC ¶ 2.) Plaintiffs contend that these products are sold in “oversized containers with substantial, nonfunctional, empty space inside them.” (Id.) Plaintiffs allege that “Defendant Welch’s is liable both as a direct (primary) participant in the violations of the UCL and under four doctrines of secondary liability: (i) ostensible agency, (ii) aiding and abetting, (iii) furnishing the means for the unlawful conduct, and (iv) conspiracy.” (SAC ¶ 10.)

Welch seeks summary judgment on the grounds that Plaintiffs purportedly cannot show direct or secondary liability because the subject fruit snack products are developed, manufactured, packaged, marketed, and distributed by Defendant Promotion in Motion Companies, Inc. (“PIM”), with purportedly no

involvement by Welch. Welch claims that it is merely a trademark licensor to PIM, and that Welch played no role in selecting the box size, the number of pouches to go into the boxes, or the pouch size or ounce count per pouch. Welch claims that its review of the product packaging was limited to the artwork on the packaging.

The court finds that Plaintiffs have identified evidence that raises several triable issues of fact as to Welch’s claims as to lack of involvement, lack of knowledge, and lack of control over the product packaging at issue.

The License Agreement between Welch and PIM granted Welch significant control over PIM’s manufacture and packaging of the subject fruit snack products: • PIM covenants that it shall “expeditiously and economically cooperate with Welch in the furtherance of the business contemplated by this Agreement.” (Def.’s Evid., Ex. A § 6.4.) • Under a section captioned “Quality Control with Respect to the Licensed Product,” the License Agreement states that PIM “shall produce, package, handle, distribute and sell the Licensed Products only in strict accordance with . . . the product specifications, quality specifications and samples established by or approved by Welch from time to time.” (Def.’s Evid., Ex.

A § 7.1 [emphasis added].) If PIM “wishes to make any change in the Licensed Products, it may only do so after first having received the prior written approval of Welch.” (Id.) • Further, “Welch shall have the right . . . to inspect and review the premises, facilities, quality control procedures, and inventories to be used or in use by [PIM] or its subcontractors for the storage, production, packaging, handling and distribution of the Licensed Products.” (Def.’s Evid., Ex. A § 7.2 [emphasis added].) “Production of Licensed Products at any particular plant or facility may not be commenced unless and until Welch has approved such plant or facility in writing.” (Id.) • PIM shall “deliver to Welch samples of finished Licensed Products from the first production run of the Licensed Products accompanied by all analytical data on such production run.” (Def.’s Evid., Ex.

A § 7.3.) “[PIM] shall not release the first production run of any Licensed Products for distribution or sale until approved by Welch.” (Id.) “When Welch has approved the first production run, approval as to subsequent runs shall be

presumed if produced in compliance with the Welch Specifications, unless and until [PIM] is notified in writing to the contrary by Welch.” (Id.) “However, if any Licensed Product is at any time reformulated or modified, the first commercial production run in connection therewith shall be deemed also to be a first production run.” (Id.) • “On request, [PIM] shall make reasonably prompt and specific responses to inquiries by Welch concerning its inventories of the Licensed Products and its and its subcontractors' quality assurance practices and procedures in connection with this Agreement.” (Def.’s Evid., Ex.

A § 7.5.) • “If Welch determines, on the basis of the analysis of samples, inspections or otherwise, that any Licensed Product is not in conformity with the Welch Specifications or any other requirements established by or pursuant to this Agreement ("Nonconforming Product") and in the opinion of Welch said Nonconforming Product is misbranded or adulterated within the meaning of the Federal Food, Drug and Cosmetic Act of June 25, 1938, as amended (the "Act") or is a threat to public health, then Promotion In Motion shall, at its expense, immediately recall such Licensed Product indicated by Welch from all channels of distribution and/or if the same cannot be determined by Welch to be recoverable, reconditionable or usable for any purpose, then [PIM], shall, at its expense, destroy such Licensed Product.” (Def.’s Evid., Ex.

A § 7.6.) • “If at any time Welch has reason to believe that the quality of any Licensed Product or the condition of ingredients or packaging materials to be used in connection might be other than in compliance with any applicable rule, law or regulation or there has been a failure of compliance with the quality requirements established by or under this Agreement as referenced in Section 7.1, or if any act or failure to act by [PIM] constitutes a danger to the value and/or validity of the Trademarks, Welch may notify [PIM] in writing.” (Def.’s Evid., Ex.

A § 7.7.) PIM is required to then “promptly cure such noncompliance in the manner reasonably prescribed by Welch or suspend the production, distribution or sale of indicated Licensed Product as requested by Welch.” (Id.) • PIM shall “submit to Welch, prior to use, samples of all materials, including, without limitation, all packaging,

labeling, advertising and promotional materials that utilize or incorporate the Trademarks in any way (the “Material”).” (Def.’s Evid., Ex. A § 9.1.) “The use of unapproved Material is prohibited.” (Id.) “After samples of the Material have been approved [by Welch] . . . [PIM] shall not depart therefrom in any material respect without Welch's prior written consent.” (Id.) • PIM “shall have the right to subcontract for the manufacture and production of the Licensed Products to a third party and at a manufacturing facility approved by Welch in advance, including pursuant to a Welch's quality audit, provided, however, that [PIM] agrees that any such subcontractor shall agree in writing before manufacturing any Licensed Product that it will . . . manufacture the Licensed Products in strict compliance with the Product Formulas and Welch Specifications . . . and (d) provide Welch access to its premises for inspection . . .” (Def.’s Evid., Ex.

A § 6.3.)

As part of the License Agreement, PIM warranted that: • Licensed Products shall not be adulterated or misbranded within the meaning of any local, state or Federal law, regulation, ordinance, rule or procedures and shall not be a product which may not be introduced in interstate commerce pursuant to the Act (Def.’s Evid., Ex. A § 11.3.) • Licensed Products shall be in compliance with all local, state and Federal laws, regulations, ordinances, rules and procedures (Def.’s Evid., Ex. A § 11.4.) • Licensed Products shall be in strict compliance with all Welch Specifications. (Def.’s Evid., Ex. A § 11.4 [sic] [should have been numbered § 11.5].)

The License Agreement also states that Welch shall provide PIM with certain fruit juice and fruit juice concentrate ingredients. (Def.’s Evid., Ex. A § 8.1.) Welch also set forth requirements for packaging in the License Agreement with respect to the use of its trademark and the agreement permits Welch to inspect the packaging for the products. (Id. §§ 7.2, 7.7, 9.1, 10.5.)

Outside of the License Agreement, Welch’s PMK also acknowledged that “if we were aware of legal noncompliance [with respect to packaging], we would bring it to [PIM’s] attention and expect them to rectify the issue,” and that Welch “would have remedies under the [licensing] agreement.” (Lanza Dec., Ex. 10 (Deposition of PMK Matthew Aufman) at p. 22:19-

24:11, 47:17-19 [discussing sections 7.8, 9.2, 11.3 and 11.4 of the License Agreement].) PIM’s PMK also acknowledged that PIM provided Welch with the dimensions of the packaging for the licensed products when obtaining Welch’s approval for the packaging. (Lanza Dec., Ex. 11 (Deposition of PIM PMK Lisa Eustic) at p. 75:11-77:7.) Plaintiffs also identify communications showing that PIM communicated to Welch the dimensions of each box and the number of pouches inside each box. (Lanza Dec., Exs. 1, 3 and 4.) Plaintiffs also identify an e-mail between PIM and Welch regarding the use of the same-sized box despite reduction in weight of the products inside. (Lanza Dec., Ex. 5 at PIM00024841 [for example, one box was reduced from 25.5g per pouch to 22.7g per pouch].)

Plaintiffs also point out that PIM’s welchsfruitsnacks.com website states that “Welch’s® offers four distinct and delicious varieties” of Welch’s® Fruit Snacks and that they are “manufactured and distributed under the authority of Welch Foods, Inc. A Cooperative by the Promotion in Motion Companies.” (Lanza Dec., Ex. 6.)

Here, there is substantial evidence that the License Agreement afforded Welch far more control over the manufacture, advertising and packaging of the subject fruit snack products well beyond simply protecting Welch’s trademark. Thus, Plaintiffs have demonstrated triable issues of fact as to the level of control Welch had over the product packaging for the subject fruit snack products, actual involvement in the packaging approval for the products, and knowledge as to the size of the packaging and the weight of the products contained therein. There are also triable issues of fact as Welch’s general control over PIM’s manufacturing, packaging and subcontracting with relation to the subject fruit snack products. There are also triable issues of fact as to the public’s perception of who manufactures and packages the subject fruit snack products.

To refute direct liability, Welch relies on one case that held that “[t]he concept of vicarious liability has no application to actions brought under the unfair business practices act.” (Emery v. Visa Internat. Serv. Ass'n (2002) 95 Cal. App. 4th 952, 960.) That case stated that “[a] defendant's liability must be based on his personal ‘participation in the unlawful practices’ and ‘unbridled control’ over the practices that are found to violate section 17200 or 17500.” (Id.) “A trademark owner's grant of permission to another to use the owner's mark, combined with efforts to ‘police’ such use, do not make the user the agent or intermediary of the

owner.” (Id. at 961.) “The owner may retain sufficient control to protect and maintain its interest in the mark without establishing an agency relationship.” (Id.) “The mere display of the [defendant’s] logo, trade name, or trademark is simply not enough to establish an agency by ratification.” (Id. at 961-962.)

However, the Emery case has since been limited to its facts as courts have noted that the case should be interpreted only to mean that a defendant cannot be “held liable for the acts of merchants with which it had no relationship and over which it had no control.” (People v. Adir Int'l, LLC (2025) 114 Cal. App. 5th 275, 310.) Liability may still be extended to a party that has “‘control over the operations of the business,’ were ‘informed’ about the practices at issue, and permitted those practices to continue.” (Id. at 309.) “Liability under the UCL ... must be based on the defendant's participation in or control over the unlawful practices[.]” (Id. at 310 [emphasis in original].)

The cases cited by Welch are clearly distinguishable as they involve trademark licensors who only had control over trademark placement, and had no involvement with the labeling or product packaging, or any other activity involving an unfair business practice.

Here, Welch’s control over PIM with respect to product packaging involves several disputes of fact based on the terms of the License Agreement, the claims on PIM’s website, the deposition testimony of each Defendant’s PMK, and communications between Welch and PIM identified by Plaintiffs. As such, the court denies Welch’s Motion for Summary Judgment as there are triable issues of fact as to Welch’s direct liability for the UCL claims.

As to ostensible agency, Welch contends it cannot be liable under any ostensible agency theory of liability since Plaintiffs did not have any dealings with PIM, and therefore could not have reasonably believed that PIM had authority to act on behalf of Welch. However, Plaintiffs bought products made and packaged by PIM using Welch’s trademark and ingredients and thus did interact with PIM even if Plaintiffs may not have known that PIM was the actual entity involved with the manufacturing and packaging of the product they purchased.

It was the very fact that Plaintiffs believed they were purchasing Welch’s products that demonstrates, rather than negates, the agency relationship. (Kuchta v. Allied Builders Corp. (1971) 21 Cal. App. 3d 541, 548 [finding ostensible agency when “there was ample evidence that Allied Builders either intentionally, or by want of ordinary care, led third persons, including plaintiffs, to believe that the

franchisee and Allied Builders were part of the same business operation.”].)

Welch also argues that PIM and Welch did not have an agency relationship. Welch asserts that they never agreed to have an agency relationship as stated in the License Agreement. Welch claims that PIM does not act on behalf of Welch or have the authority to assume or create obligations on behalf of Welch. Welch claims it does not have the right to control PIM’s day-today operations and does not make the decisions necessary to run PIM’s business. Welch contends that only PIM made the packaging decisions relevant to the alleged slack fill. However, as stated above, there are triable issues of fact as to Welch’s control over PIM and its conduct with respect to the product packaging.

Contrary to the statements in the Emery case, “persons can be found liable for misleading advertising and unfair business practices under normal agency theory.” (People v. JTH Tax, Inc. (2013) 212 Cal. App. 4th 1219, 1242 [emphasis in original].) “[I]t is the right to control the means and manner in which the result is achieved that is significant in determining whether a principalagency relationship exists.” (Id. [emphasis in original].)

“An agent is one who represents another, called the principal, in dealings with third persons.” (Michelson v. Hamada (1994) 29 Cal. App. 4th 1566, 1579.) “Whether a person performing work for another is an agent ... depends primarily upon whether the one for whom the work is done has the legal right to control the activities of the alleged agent.” (Id.) “Agency may be implied from the circumstances and conduct of the parties.” (Id.) “A defendant may be held liable as a ‘principal’ for the acts of the defendant's ostensible agent (that is, the third party who is not actually his agent) only if (1) the plaintiff, when dealing with the agent, did so ‘with [a reasonable] belief in the agent's authority,’ (2) that ‘belief [was] generated by some act or neglect by the principal,’ and (3) the plaintiff was not negligent in relying on the agent's apparent authority.” (Hughes v.

Farmers Ins. Exch. (2024) 107 Cal. App. 5th 73, 85.)

“Actual agency typically arises by express agreement.” (Secci v. United Independent Taxi Drivers, Inc. (2017) 8 Cal. App. 5th 846, 855.) “An agency is proved by evidence that the person for whom the work was performed had the right to control the activities of the alleged agent.” (Id.) Whether parties intend to create an agency relationship is only one factor to consider. (Id.)

“[T]he primary right of control is particularly persuasive [to demonstrate an agency relationship].” (Id.)

As stated above, there are several issues of fact with respect to the level of control Welch had over PIM regarding product packaging, and whether PIM was authorized to act on Welch’s behalf, especially with respect to making and packaging the subject fruit snack products and hiring subcontractors. Welch’s denial as to an agency relationship is but one factor in determining the agency relationship between Welch and PIM. Welch also contends that Plaintiffs lack standing to assert claims against Welch because Welch allegedly had nothing to do with the allegedly unlawful slack fill in the products that Plaintiffs purchased, but that is clearly a disputed issue of fact. Accordingly, the court denies Welch’s Motion for Summary Judgment on the additional ground that there are triable issues of fact as to Welch’s ostensible agency liability.

While Welch may argue that “the mere licensing of trade names does not create agency relationships either ostensible or actual,” courts have stated that such findings are “often on the grounds that in those particular businesses, it was ‘common knowledge’ that those businesses were run by independent dealers.” (Beck v. Arthur Murray, Inc. (1966) 245 Cal. App. 2d 976, 981.) “However, just because it is ‘common knowledge’ that certain businesses are independently owned, this is not a matter of ‘common knowledge’ for all businesses.” (Id.) “On the contrary, it is equally ‘common knowledge’ that certain nationwide businesses are not independently owned but are owned by a single organization which operates by chains or branches.” (Id.) Here, there is no evidence that it is common knowledge that the subject products are produced by trademark licensees.

Welch also argues that Plaintiffs did not purchase in reliance on PIM’s apparent authority as Welch’s agent, but fails to cite any authority requiring such reliance in order to assert a claim for UCL liability based on ostensible agency.

The court declines to reach the additional alternative theories of secondary liability (aiding and abetting, conspiracy, furnishing the means) as they are not necessary to resolve this Motion for Summary Judgment. The court will discuss these theories with counsel pretrial as all appear of doubtful application.

Defendant is ordered to give notice of this ruling.

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