TIMOTHY S. BLACK, District Judge.
This civil action is currently before the Court on Defendant's motion to dismiss (Doc. 10) and the parties' responsive memoranda (Docs. 15, 17).
This action arises out of alleged misrepresentations made by Defendant in its marketing and sale of a product known as "Align." Align is a daily food supplement, which Procter & Gamble claims is made of a special formulation of "probiotic" bacteria that builds and maintains a healthy digestive system. P & G states on the product label and in its advertisements that these digestive benefits are clinically and scientifically proven.
Plaintiff alleges that these claims are false and misleading and therefore asserts claims for violation of the Consumers Legal Remedies Act ("CLRA") (California Civil Code Section 1750, et seq.) and the Unfair Competition Law ("UCL") (Bus. & Prof.Code Section 17200, et seq.), and breach of express warranty created by P & Gs advertising.
P & G, through a broad based campaign, advertises that Align contains a "Unique Patented Probiotic" that it calls "Bifantis." (Doc. 9 at ¶ 1). On the Align package, P & G promises that Align will help:
(Id. at ¶ 2).
P & G also advertises that Align's digestive benefits are "clinically proven" and
P & G's claims are made through a broad based advertising campaign. P & G prominently and conspicuously makes these claims on every Align package, and emphasizes and repeats them through a variety of advertising media including television commercials, point of sale displays, and the Internet. (Id. at ¶ 4).
Plaintiff alleges that the Align label makes claims that are false and misleading. For example, P & G's own "clinical trial" concluded that there were no statistically significant differences between the control group and the group ingesting the "Bifantis" bacteria, B. Infantis. (Id. at ¶ 36). As to the "Clinical Data Publications," neither provides proof (clinical or otherwise) of the Align claims. Both studies analyzed patients with irritable bowel syndrome, and not Align's target audience, the general population. (Id. at ¶ 37). A 2006 study tested endpoints irrelevant to P & G's advertised claims and tested amounts of the bacteria materially different from the amount in a serving of Align (which the authors stressed was important to the study findings). (Id.) A 2005 study found that those persons receiving the Align bacteria did not experience any improvement in the bowel movement markers. (Id; see also ¶¶ 38, 39) (allegations concerning "preclinical data publications" and "review articles" identified by P & G as purported substantiation for its Align claims).
Plaintiff alleges that Align is nothing but sugar-filled capsules injected with a small amount of unremarkable bacteria. Nonetheless, customers pay $30 for a 28-count package. (Id. at ¶ 6). Plaintiff read the claims on the Align label, believed they were true, and purchased Align in reliance on P & G's advertised claims, expecting that he was paying for a product that had proven digestive health benefits. (Id. at ¶ 10).
Defendant moves the Court for an order dismissing the amended complaint for lack of subject matter jurisdiction and for failure to state a claim upon which relief may be granted.
Federal Rule of Civil Procedure 12(b)(1) provides that an action maybe dismissed for lack of subject matter jurisdiction. Under the Federal Rules, "[p]laintiffs have the burden of proving jurisdiction in order to survive a Rule 12(b)(1) motion." Weaver v. Univ. of Cincinnati, 758 F.Supp. 446, 448 (S.D.Ohio 1991) (citing Moir v. Greater Cleveland Reg'l. Transit Auth., 895 F.2d 266, 269 (6th Cir.1990)). "The plaintiff bears the burden of establishing, by a preponderance of the evidence, the existence of federal subject matter jurisdiction." Rogers v. Stratton Indus., Inc., 798 F.2d 913, 915 (6th Cir.1986)
A motion to dismiss pursuant to Rule 12(b)(6) operates to test the sufficiency of the complaint.
The first step in testing the sufficiency of the complaint is to identify any conclusory allegations. Ashcroft v. Iqbal, ___ U.S. ___, 129 S.Ct. 1937, 1950, 173
After assuming the veracity of all well-pleaded factual allegations, the second step is for the court to determine whether the complaint pleads "a claim to relief that is plausible on its face." Iqbal, 129 S.Ct. at 1949, 1950 (citing Twombly, 550 U.S. at 556, 570, 127 S.Ct. 1955). A claim is facially plausible when the plaintiff "pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. at 1949 (citing Twombly, 550 U.S. at 556, 127 S.Ct. 1955).
Defendant argues that Plaintiff fails to meet the plausibility pleading requirement expressed in Twombly and Iqbal. The Sixth Circuit has held that courts "cannot dismiss for factual implausibility `even if it [would] strike [ ] a savvy judge that recovery is very remote and unlikely.'" Courie v. Alcoa Wheel & Forged Prods., 577 F.3d 625, 630 (6th Cir. 2009) (citing Twombly, 550 U.S. at 556, 127 S.Ct. 1955). At the motion to dismiss stage, the court is not concerned with a challenge to a plaintiff's factual allegations. Golden v. City of Columbus, 404 F.3d 950, 958-59 (6th Cir.2005). Rather, the court looks to whether the complaint states a claim upon which relief can be granted. Id.
Defendant alleges that Plaintiffs complaint is premised entirely on allegations that P & G's labeling and advertising claims for Align are not adequately substantiated. (Doc. 9 at ¶¶ 1, 3, 13, 17, 18, 20, 22, 23, 25, 28, 29-41). Defendant maintains that, in a false advertising action, a plaintiff must plead and prove that the advertising statements at issue are false or misleading, not merely that they lack adequate scientific substantiation. Fraker v. Bayer Corp., No. CV F 08-1564, 2009 WL 5865687, at *8, 2009 U.S. Dist. LEXIS 125633, at *20-21 (E.D.Cal. Oct. 2, 2009).
Defendant alleges that, in a false advertising case, plaintiff must plead and prove that the advertising statements are "false or misleading"
Alternatively, Defendant argues that Plaintiff's claims should be dismissed under the primary jurisdiction doctrine. Primary jurisdiction is a "prudential doctrine under which courts may, under appropriate circumstances, determine that the initial decisionmaking responsibility should be performed by the relevant agency rather than the courts." Syntek Semiconductor Co., Ltd. v. Microchip Tech., Inc., 307 F.3d 775, 780 (9th Cir.2002).
Dismissal on primary jurisdiction grounds "does not speak to the jurisdictional power of the federal courts," but rather "structures the proceedings as a matter of judicial discretion, so as to engender an orderly and sensible coordination of the work of agencies and courts." United States v. Bessemer & L.E.R.R., 717 F.2d 593, 599 (D.C.Cir.1983). The doctrine applies when a court's jurisdiction over a matter overlaps with the jurisdiction of an administrative agency. United States v. Western Pac. R.R. Co., 352 U.S. 59, 63-64, 77 S.Ct. 161, 1 L.Ed.2d 126 (1956). To justify application of the primary jurisdiction doctrine, "[t]he particular agency deferred to must be one that Congress has vested with the authority to regulate an industry or activity such that it would be inconsistent with the statutory scheme to deny the agency's power to resolve the issues in question." United States v. Gen. Dynamics Corp., 828 F.2d 1356, 1363 (9th Cir.1987).
Plaintiff claims that the doctrine is not properly invoked in this case because the Court does not need an agency's expertise to resolve his UCL, CLRA, or warranty claims. The doctrine "is not designed to secure expert advice from agencies every time a court is presented with an issue conceivably within the agency's ambit" but instead "is to be used only if a claim requires resolution of an issue of first impression, or of a particularly complicated issue that Congress has committed to a regulatory agency." Clark v. Time Warner Cable, 523 F.3d 1110, 1114 (9th Cir.2008). Plaintiff's claims rest on
Defendant argues that Plaintiff has alleged that the advertising claims for Align lack adequate scientific substantiation, and it is this issue—the substantiation of dietary supplement advertising claims—that falls within the primary jurisdiction of the FDA and FTC. Again, as this Court discussed supra at Section III.A, that is not the issue before the Court. Additionally, courts have declined to apply the primary jurisdiction doctrine when the party seeking agency referral does not provide evidence that "the FDA has actually taken any interest in investigating the claims or issues presented here." Pom Wonderful v. Ocean Spray Cranberries, Inc., 642 F.Supp.2d 1112, 1123 (C.D.Cal.2009). Courts have also declined to apply the doctrine where the case is based on state law or legal questions that would not be finally resolved by the agency. Id. at 1123 (plaintiff's state law false advertising claims "would not necessarily be resolved in the event of an FDA ruling"); Lockwood, 597 F.Supp.2d at 1035 ("even if the FDA were to formally define `natural,' federal law would not dispose of plaintiff's state law claims").
Accordingly, the Court finds that the primary jurisdiction doctrine is not applicable in the instant case.
Next, Defendant claims that Plaintiff fails to establish Article III standing because there are no factual allegations of either personal injury or economic harm. Article III standing requires that a party demonstrate that it: (1) has suffered an injury in fact that is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical; (2) the injury is fairly traceable to the challenged action of the defendant; and (3) it is likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision. Fieger v. Michigan Supreme Court, 553 F.3d 955, 962 (6th Cir.2009).
Plaintiff, as a purchaser of Align, alleges "injury in fact" in the form of economic injury. Plaintiff purchased Align in reliance on P & G's claims that the product provides defined health benefits, when these advertisements were allegedly false and deceptive. (Doc. 9 at ¶ 10). Accordingly, Plaintiff maintains that its purchase of the product is the economic harm, because it was not provided as advertised. (Id.)
There is a considerable body of case law that holds that economic injury confers Article III standing. Linton v. Comm'n of Health & Env't, 973 F.2d 1311,
Accordingly, this Court finds that Plaintiff has alleged a sufficient economic injury to confer standing.
Defendant also claims that Plaintiff lacks standing to seek injunctive relief,
Plaintiff argues that injunctive relief is the primary form of relief provided by California's consumer protection statutes and should therefore survive the motion to dismiss.
While this Court grapples with this analysis based on the express language of the California statute, the case law appears clear on its face, and Plaintiff fails to produce any authority to the contrary.
In addition to Article III standing, when stating a claim for violation of a statute, a plaintiff must plead that the statute in question also grants plaintiff the right to sue. Just because a plaintiff satisfies Article III jurisdiction, does not mean that he has statutory standing. Laster v. T-Mobile USA, Inc., No. 05cv1167, 2009 WL 4842801, at *4-5, 2009 U.S. Dist. LEXIS 116228, at *12 (S.D.Cal. Dec. 14, 2009).
The Unfair Competition Law ("UCL") prohibits "any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising." Cal. Bus. & Prof.Code § 17200. "Any violation of the false advertising law" necessarily violates the UCL. Williams v. Gerber Prod. Co., 552 F.3d 934 (9th Cir.2008). A private action for relief under the UCL may be maintained only if the person bringing the action "has suffered injury in fact and has lost money or property as a result of the unfair competition." Cal. Bus. & Prof.Code § 17204. In 2004, the UCL standing requirements were amended by Proposition 64. "[W]here once private suits could be brought by `any person acting for the interests of itself, its members or the general public,' now private standing is limited to any `person who has suffered injury in fact and has lost money or property' as a result of unfair competition." Kwikset Corp. v. Superior Court, 51 Cal.4th 310, 120 Cal.Rptr.3d 741, 246 P.3d 877 (2011).
"To satisfy the narrower standing requirements imposed by Proposition 64, a party must now (1) establish a loss or deprivation of money or property sufficient to qualify as injury in fact, i.e., economic injury, and (2) show that the economic injury was the result of, i.e., caused by, the
"[P]laintiffs who can truthfully allege they were deceived by a product's label into spending money to purchase the product, and would not have purchased it otherwise, have `lost money or property' within the meaning of Proposition 64 and have standing to sue." Kwikset, 120 Cal.Rptr.3d 741, 246 P.3d at 881. The injury in fact requirement of UCL standing overlaps with Article III standing requirements.
Id., 120 Cal.Rptr.3d 741, 246 P.3d at 887.
Defendant argues that Plaintiff's payment of money is not "lost money" if he received the "benefit of the bargain," i.e., he got what he paid for. (Doc. 15 at 16). However, the "benefit of the bargain" reasoning has been criticized and rejected by other courts in determining UCL standing. See, e.g., Troyk v. Farmers Group, Inc., 171 Cal.App.4th 1305, 1348, fn. 30, 90 Cal.Rptr.3d 589 (2009) (rejecting the "benefit of the bargain" reasoning); Aron v. U-Haul Co. of California, 143 Cal.App.4th 796, 802-03, 49 Cal.Rptr.3d 555 (2006) (payment of money due to the defendant's acts of unfair competition establishes UCL standing).
Accordingly, Plaintiff has alleged sufficient facts to establish a loss of money,
To plead reliance, plaintiff must allege a causal connection between her exposure to the false claims and her purchase of the products. Laster v. T-Mobile USA, Inc., 407 F.Supp.2d 1181, 1194 (S.D.Cal.2005). "Actual reliance" is evaluated "in accordance with well-settled principles regarding the element of reliance in ordinary fraud actions." Tobacco II Cases, 46 Cal.4th at 306, 328, 93 Cal.Rptr.3d 559, 207 P.3d 20. An inference of reliance arises
Plaintiff alleges that he read and relied on the statement on the Align label prior to his purchase.
Plaintiff argues that individualized reliance on specific misrepresentations is not required to satisfy the reliance requirement. For example, in Morey, plaintiff alleged that she "was exposed to and saw NextFood's claims by reading the product label, purchased GoodBelly products in reliance on these claims, and suffered injury in fact and lost money as result of the unfair competition." 2010 WL 2473314 at *2, 2010 U.S. Dist. LEXIS 67990 at *4. The court found that although "Plaintiff's allegations regarding reliance and injury are indeed short and plain, ... they nonetheless give NextFoods sufficient notice of the claim" and lay "out the required causal connection between reading the product label and purchasing the product in reliance on these claims." Id.
Based on the case law, it is unclear whether Plaintiff is required to plead reliance with specificity. Moreover, even if the Court finds that pleading with specificity is required—Plaintiff having attached the actual label upon which he relied, appears to meet such a standard. Given that the holding in Morey is most recent (June 7, 2010), and alleges identical violations (CLRA, UCL, and breach of an express warranty), the Court finds that Plaintiff
Next, Defendant contends that if Plaintiff in fact has standing to challenge P & G's alleged false advertising, such claim is limited to the advertisements made on the product's label and does not extend to other forms of advertisements. (Doc. 15 at 17). This same argument was recently alleged in Morey, where the court held that at the pleading stage, a plaintiff is "not required to plead with an unrealistic degree of specificity that the plaintiff relied on particular advertisements or statements." Morey, 2010 WL 2473314 at *2, 2010 U.S. Dist. LEXIS 67990 at *5.
Applying Defendant's reasoning, every class action would need a representative for every type of advertisement— radio, television, labeling, internet, newspaper, etc. In the instant case, Plaintiff alleged that all of the advertisements for Align carried the same message and misrepresentations.
Defendant argues that given the fact that the product packaging for Align has changed over time, Plaintiff's identification of the specific advertising statements on which he relied is essential. For example, in Johns v. Bayer Corp, No. 09CV1935, 2010 WL 476688, 2010 U.S. Dist. LEXIS 10926 (S.D.Cal. Feb. 9, 2010), the court found that the plaintiff lacked standing to pursue claims based on advertisements other than those on the product packaging since he "cannot expand the scope of his claims to include ... advertisements relating to a product that they did not rely upon." Id. at *6, 2010 U.S. Dist. LEXIS 10926 at *13. However, the plaintiff in Johns did not allege that he saw any advertisements for the product, that he read the packaging on the product, that he even considered purchasing the product, or that he relied upon any radio, television, or internet advertisement in connection with his purchase of the product. Therefore, Johns is distinguishable from the instant case, in that Plaintiff "expressly alleges that he "was exposed to and saw Procter & Gamble's claims by reading the Align label, purchased Align in this District in reliance on these claims, and suffered injury in fact." (Doc. 9 at ¶ 10). Moreover, Plaintiff alleges that all of the advertising statements carried the same message, which is sufficient to state a claim at this stage. See, e.g., Fitzpatrick, 263 F.R.D. at 693.
The Consumers Legal Remedies Act ("CLRA") contains similar language establishing a standing requirement. California requires a plaintiff suing under the CLRA for misrepresentations in connection with a sale to plead and prove he relied on a material misrepresentation. Caro v. Procter & Gamble Co., 18 Cal.App.4th 644, 668, 22 Cal.Rptr.2d 419 (Cal.App.4th Dist., 1993) (holding no material misrepresentation
Next, Defendant claims that Plaintiff's conclusory allegations fail to state a plausible claim for relief pursuant to Rule 8 or the particularity requirements of Rule 9(b).
Rule 8 provides that in order to state a claim for relief in a pleading it must contain "a short and plain statement of the grounds for the court's jurisdiction" and "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(1) & (2). To survive a motion to dismiss the plaintiff must allege "only enough facts to state a claim to relief that is plausible on its face." Twombly, 550 U.S. at 570, 127 S.Ct. 1955. While this Court acknowledges that vague and conclusory statements are insufficient to state a claim for relief, the Court finds that Plaintiff's claims are neither vague nor conclusory and allege sufficient facts to proceed.
Federal Rule of Civil Procedure 9(b)'s heightened-pleading standards apply to claims for violation of the UCL or CLRA that are grounded in fraud.
Plaintiff maintains that the amended complaint complies with Rule
Accordingly, as required pursuant to Rule 9(b), Plaintiff alleged in the amended complaint when he saw, read, and relied upon Align's material, and what information was false and misleading. Although Plaintiff's allegations could have been more detailed, they do meet Rule 9(b)'s pleading requirement. Additional details are the appropriate subject of discovery, and this is not a case where Defendant will be forced to do discovery in the absence of a plausible claim for relief.
The UCL
Plaintiff claims that Defendant has violated Cal. Civil Code §§ 1572 (actual fraud), 1573 (constructive fraud), 1709 (fraudulent deceit), 1710 (what constituted deceit),
First, Defendant claims that a violation of the Federal Food, Drug and Cosmetic Act ("FDCA") (21 U.S.C. § 343) cannot serve as predicated under the UCL unlawful prong since the FDCA expressly precludes private enforcement. Perez v. Nidek Co., 657 F.Supp.2d 1156, 1164-66 (S.D.Cal.2009) ("Plaintiffs' CLRA and UCL claims are dismissed because they impermissibly seek private enforcement of the FDCA ... The Court will not permit Plaintiffs to privately enforce the FDCA and its regulations under the guise of state law claims.").
Next, Defendant argues that Plaintiff's predicate claims for fraud and deceit (Cal. Civ.Code §§ 1572, 1573, 1709, 1710, and 1711) should be dismissed because they are not plead with particularity. Tietsworth v. Sears, Roebuck & Co., No. 5:09cv00288, 2009 WL 3320486, at *7, 2009 U.S. Dist. LEXIS 98532, at *21 (N.D.Cal. Oct. 13, 2009) (UCL claims predicated on violations of Cal. Civ.Code §§ 1572, 1709, 1710 are not adequately pled where plaintiffs "failed to allege the elements of fraud with the particularity required by Rule 9(b)"). This Court has already held that Plaintiff's claims were plead with particularity (see Section II.D), and accordingly these predicate violations stand.
In order to bring a claim for monetary damages under the CLRA, a plaintiff must comply with the notice requirement of Section 1782. California Civil Code § 1782(a) requires that "[t]hirty days or more prior to the commencement of an action for damages pursuant to [the CLRA], the consumer shall ...: (1) [n]otify the person alleged to have employed or committed methods, acts, or practices declared unlawful ... of the particular alleged violations[; and] (2) [d]emand that the person correct, repair, replace or otherwise rectify the goods or services alleged to be in violation." The notice must be in writing and sent by certified or registered mail, return receipt requested, to the place where the transaction occurred or to the person's principal place of business in California. Von Grabe v. Sprint PCS, 312 F.Supp.2d 1285, 1303 (S.D.Cal.2003). "The purpose of the notice requirement is to give the manufacturer or vendor sufficient notice of alleged defects to permit appropriate corrections or replacements." Outboard Marine Corp. v. Superior Court, 52 Cal.App.3d 30, 40, 124 Cal.Rptr. 852 (1975).
In his first complaint, Plaintiff sought "restitution and disgorgement." (Doc. 1, Prayer for Relief at C). Plaintiff did not comply with the CLRA notice requirements, as he alleges that notice was not required because he did not seek "damages" under the CLRA in the original complaint. See, e.g., In Re Mattel, Inc., 588 F.Supp.2d 1111, 1119 (C.D.Cal.2008) ("The Court does not agree that the first amended consolidated class action complaint demands damages under the CLRA. The [complaint] demands restitution and disgorgement ... which do not appear to be `damages' for the purposes of the
Conversely, Defendant alleges that Plaintiff's claims for monetary damages under the CLRA should be dismissed with prejudice because he was required to serve his CLRA notice letter at the time he filed his original complaint, because the CLRA notice requirement also applies to restitution and disgorgement. The court in Laster held that:
Laster v. T-Mobile USA, Inc., 2008 WL 5216255, at *17, 2008 U.S. Dist. LEXIS 103712, at *52 (S.D.Cal. Aug. 11, 2008).
Laster (August 11, 2008) was decided after both Kennedy (August 7, 2007) and Utility Consumer's Action Network (April 25, 2008), and, therefore, Defendant asks that this Court adopt its reasoning.
Defendant claims that Plaintiff fails to properly plead the elements of a claim for breach of express warranty, and, instead, only conclusorily alleged the existence of a warranty. Under California law, to prevail on a breach of express warranty claim a plaintiff must prove: (1) the seller's statement constitutes an affirmation of fact or promise, or a description of the goods; (2) the statement was part of the basis of the bargain; and (3) the warranty was breached. Weinstat v. Dentsply Intern., Inc., 180 Cal.App.4th 1213, 1227, 103 Cal.Rptr.3d 614 (2010); California Uniform Commercial Code § 2313; see also Keith v. Buchanan, 173 Cal.App.3d 13, 20, 220 Cal.Rptr. 392 (1985). Reliance is not an element of a warranty claim. "[B]reach of express warranty arises in the context of contract formation in which reliance plays no role." Weinstat, 180 Cal. App.4th at 1230, 103 Cal.Rptr.3d 614 (plaintiff did not receive product warranties until after the product was purchased and delivered. Nonetheless, "[t]he precise time when the words of description or affirmation are made ... is not material. The sole question is whether the language... i[s] fairly to be regarded as part of the contract.").
Specifically, Defendant argues that Plaintiff has failed to identify the express affirmations of fact in the advertisements that constitute an alleged warranty and because Plaintiff failed to do so, his express warranty claim fails on this basis alone. (Doc. 10 at 24). Moreover, Defendant maintains that Plaintiff has not adequately alleged facts demonstrating how any alleged warranty was breached, that he relied on any alleged warranty, or that he was injured as a result of any such breach. (Id.)
In the amended complaint, Plaintiff alleges that
(Doc. 9 at ¶ 77).
Contrary to Defendant's argument otherwise, the Court finds that Plaintiff's amended complaint clearly alleges what benefits were expected.
Finally, Defendant argues that Plaintiff cannot pursue California state law claims under the UCL and CLRA on behalf of a proposed class that includes out-of-state residents. California statutory remedies may be invoked by out-of-state parties, but only when they are harmed by conduct occurring in California. Diamond Multimedia Sys. v. Superior Court, 19 Cal.4th 1036, 1059, 80 Cal.Rptr.2d 828, 968 P.2d 539 (1999). The complaint does not contain any allegations that P & G's alleged conduct occurred in California, and given the lack of a nexus between California and out-of-state class members who did not suffer an injury within the state, Defendant argues that California law does not apply to their claims.
Despite the sense that Defendant's argument appears meritorious on its face, the Court has not yet been apprised of the members of the prospective class, and it is therefore premature to rule upon a factual issue that is not properly before the Court. See, e.g., Lockwood, 597 F.Supp.2d at 1035 (refusing to strike class allegations on defendant's argument that a class could not be certified as a matter of law. The court would consider the issues "on a fully-briefed and supported motion concerning class certification."). Rather than rule on the issue in the abstract, the Court will withhold a decision until the Court is presented with a motion for class certification and related briefing.
Accordingly, for the reasons stated herein, Defendant's motion to dismiss (Doc. 10) is