The People of the State of California, acting through San Francisco City Attorney David Chiu, filed suit against nine food manufacturers alleging they designed ultra-processed foods to be addictive and marketed them aggressively to children despite knowing the products cause chronic diseases. The complaint seeks a permanent injunction requiring defendants to cease these practices statewide, abate a public nuisance in San Francisco, and pay civil penalties under the California Unfair Competition Law.
Defendants removed the action to federal court on diversity grounds, arguing that San Francisco was the real party in interest because the alleged public health crisis and healthcare costs were specific to that city. They contended that California’s interest was merely a general governmental interest insufficient to defeat diversity jurisdiction under Ninth Circuit precedent.
Judge Tigar rejected this argument, holding that the state’s interest in protecting consumers and ending a public health crisis is substantial and specific. He held that the complaint’s allegations of nationwide production and marketing practices necessarily pertain to California generally, with San Francisco-specific claims serving as evidence of the state’s particular grievous harm.
The court also determined that the primary relief sought is a statewide injunction requiring defendants to cease and ameliorate their harmful practices, rather than local relief. While civil penalties would flow to San Francisco’s treasury, the court noted they must be used exclusively for enforcing consumer protection laws, thereby advancing state interests.
Tigar emphasized that the Unfair Competition Law authorizes municipal authorities to bring suit in the name of the People of the State of California, exercising the state’s sovereign authority. This statutory framework supports holding that the essential nature and effect of the proceeding benefits state interests.
The judge distinguished earlier Ninth Circuit precedent, noting that while general governmental interests are insufficient to make a state the real party in interest, California’s specific interest in enforcing consumer protection laws and abating widespread public health risks satisfies the requirement. He followed recent district court decisions in this circuit that have reached similar conclusions.
The motion to remand is granted, sending the case back to state court.