Winans v. Emeritus Corporation

Filing 53

ORDER granting in part and denying in part 32 Motion to Dismiss; denying 34 Motion to Strike ; granting 49 Motion for Leave to File Surreply (sclc1, COURT STAFF) (Filed on 3/5/2014)

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1 2 3 4 5 6 7 IN THE UNITED STATES DISTRICT COURT 8 NORTHERN DISTRICT OF CALIFORNIA 10 Northern District of California United States District Court 9 11 12 13 ARVILLE WINANS, his guardian ad MOULTON, on his behalf of other situated, 14 15 by and through litem, RENEE own behalf and on similarly Plaintiff, v. 16 17 EMERITUS CORPORATION and DOES 1 through 100, 18 Defendants. 19 20 21 I. ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) Case No. 13-cv-03962-SC ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS; DENYING MOTION TO STRIKE INTRODUCTION Plaintiff Arville Winans ("Plaintiff") brings this action for 22 declaratory and injunctive relief and damages against Defendant 23 Emeritus Corporation ("Defendant") by and through his guardian ad 24 litem Renee Moulton. 25 assisted living facilities in Tracy, California. 26 Defendant has engaged in a scheme to defraud seniors by falsely 27 representing that it will provide sufficient staff to care for all 28 of its residents based on the residents' evaluations, "when in Plaintiff is a resident of one of Defendant's He alleges that 1 truth [Defendant] determines facility staffing based on labor 2 budgets set to meet profit margins established by corporate 3 headquarters." 4 Defendant now moves to dismiss and strike Plaintiff's FAC. 5 Nos. 32 ("MTD"), 34 ("MTS"). 6 Nos. 43 ("MTS Opp'n"), 44 ("MTD Opp'n"), 46 ("MTS Reply"), 47 ("MTD 7 Reply"). 1 8 without oral argument per Civil Local Rule 7-1(b). 9 below, Defendant's motion to dismiss is GRANTED in part and DENIED United States District Court For the Northern District of California 10 ECF No. 24 (First Amended Complaint ("FAC")) ¶ 2. ECF Both motions are fully briefed. ECF The Court finds the matter appropriate for resolution As explained in part, and Defendant's motion to strike is DENIED. 11 12 II. BACKGROUND Defendant is the largest provider of assisted living for 13 14 senior citizens in the nation. 15 facilities in California alone, which have an aggregate of 5,000 16 residents. 17 room, board, and assistance for seniors in certain activities of 18 daily living. 19 units," which serve individuals with dementia and other cognitive 20 disorders. 21 resident of one of Defendant's facilities since October 2009. 22 ¶ 8. 23 power of attorney in September 2009. Id. ¶ 10. It operates 72 Defendant's assisted living facilities offer Id. ¶ 16. Id. ¶ 17. FAC ¶ 15. These facilities also have "memory care Plaintiff is a senior citizen and has been a Id. Ms. Moulton, his niece, is his agent, having been granted his Id. In its uniform contract with each resident, Defendant 24 25 26 27 28 1 Plaintiff has also filed an administrative motion for leave to file a surreply to address new choice-of-law arguments raised in Defendant's reply brief. ECF No. 49 ("Admin. Mot."), 49-1 ("Surreply"). Defendant has opposed the administrative motion. ECF No. 52. The Court GRANTS the motion, but the surreply does not change the ultimate disposition of the motion to dismiss. 2 1 represents that it will evaluate the resident prior to admission 2 and assign the resident a "Level of Care" from 1 to 7, with higher 3 monthly charges imposed for higher levels of care. 2 4 The uniform contract also represents that Defendant will 5 periodically re-evaluate each resident to determine if he or she 6 requires additional assistance. 7 assign the resident a higher Level of Care and collect additional 8 monthly charges. 9 evaluations using its "wE Care" system, which was previously called United States District Court For the Northern District of California 10 "Vigilan." Id. Id. ¶ 23. Id. ¶¶ 21-22. If so, Defendant may Defendant conducts these periodic re- Id. Using the wE Care system, Defendant has repeatedly increased 11 12 Plaintiff's Level of Care, along with his monthly rate. 13 September 2010, Defendant assigned Plaintiff a Level of Care of "3" 14 and placed him in the Alzheimer's and Memory Care Unit. 15 Defendant increased Plaintiff's Level of Care to "4" in September 16 2012, and then to a "5" in May 2013. 17 Plaintiff's Level of Care has resulted in a new agreement, signed 18 by Ms. Moulton on behalf of Plaintiff, and a higher monthly rate. 19 Id. ¶¶ 55-58. 20 Plaintiff's monthly rate has increased from approximately $1,200 to 21 $2,800. Id. ¶¶ 56-57. In Id. ¶ 55. Each change to Since his arrival at Defendant's facility in 2009, Id. ¶ 58. Defendant touts the wE Care system through its marketing 22 23 materials. 24 "[t]he ability to provide the most comprehensive and consistent 25 2 26 27 28 See id. ¶ 27-32. Defendant's website states that Defendant argues that its contracts are not uniform, MTD at 1, but at the pleading stage, the Court must take all well-pleaded allegations as true. Defendant also contends that Plaintiff concedes that the contracts are not uniform by alleging that each resident negotiates an individual care plan. Id. However, this does not preclude the possibility that Defendant makes uniform representations in each of its contracts. 3 1 personal care services begins with the resident evaluation 2 process," that wE Care allows Defendant "to accurately evaluate and 3 monitor the personal care services of your loved one," and that wE 4 Care is used to determine the "staff required to deliver the 5 services." 6 states that Defendant's resident evaluation system will: "address 7 the time needed to complete care activities, how often those care 8 activities need to be done, any personal preferences that you . . . 9 may have, and the staff required to complete the activities." United States District Court For the Northern District of California 10 11 Id. ¶¶ 27-28. Another unidentified marketing material Id. ¶ 32. Plaintiff alleges that these representations are false and 12 misleading because Defendant staffs its facilities based on profit 13 margins, without regard for resident need. 14 pleads: "Contrary to the express and implied representations in its 15 form contract and other uniform written statements, [Defendant] 16 does not staff its facilities to meet the aggregate assessed needs 17 of its residents, but instead determines staffing based on labor 18 budgets designed to meet profit objectives." 19 points to deposition testimony of Susan Rotella, Defendant's former 20 Vice President of Operations, who has sued Defendant for wrongful 21 termination. 22 assign residents a Level of Care and corresponding monthly rates, 23 but the portion of the software program that calculated how many 24 minutes per day of care and what number and type of staff were 25 necessary to provide that care were turned off at the facility 26 level. 27 28 Id. ¶ 36. Specifically, Plaintiff Id. ¶ 33. Plaintiff Rotella testified that wE Care was used to Id. ¶ 37. In support of his understaffing allegations, Plaintiff also alleges that, in or around January 2011, he was attacked by another 4 1 resident when they were left unsupervised in a dining area. 2 59. 3 and bruises to his face and head, and the facility was issued a 4 deficiency for inadequate staff and insufficient resident 5 supervision by the Community Care Licensing ("CCL") division of the 6 California Department of Social Services ("CDSS"). 7 information and belief, Plaintiff alleges that a number of 8 Defendant's other facilities have also been cited for inadequate 9 staffing by CDSS. United States District Court As a result of the attack, Plaintiff suffered multiple cuts Id. On Id. ¶ 60. Plaintiff filed this action in state court on July 29, 2013. 10 For the Northern District of California Id. ¶ 11 ECF No. 1 Ex. A. Defendant subsequently removed to federal court 12 on diversity grounds. 13 to dismiss, Plaintiff amended his complaint. 14 FAC asserts claims for (1) violation of the California Consumers 15 Legal Remedies Act ("CLRA"), Cal. Civ. Code § 1750 et seq.; (2) 16 violation of the California Unfair Competition Law ("UCL"), id. § 17 17200 et seq.; and (3) elder financial abuse, Cal. Welf. & Inst. 18 Code § 15610.30. 19 seeks restitution, punitive damages, and an injunction prohibiting 20 Defendant from "promising elders, dependent adults, and their 21 family members that [Defendant] will provide the care and personal 22 services needed by each resident as assessed in their comprehensive 23 evaluation and from charging its residents based on this false 24 promise." 25 "requiring Defendant to budget for and provide adequate aggregate 26 staffing that is sufficient to meet its residents' assessed needs." 27 Id. 28 who resided at one of Defendant's California assisted living ECF No. 1. FAC ¶¶ 73-114. Id. pg. 30. After Defendant filed a motion ECF Nos. 18, 24. The Among other things, Plaintiff Plaintiff also seeks an injunction Plaintiff, through Ms. Moulton, seeks to represent all persons 5 1 2 facilities from July 29, 2009 through the present. Id. ¶ 62. Defendant now moves to dismiss pursuant to Federal Rule of 3 Civil Procedure 12(b)(6), as well as to strike Plaintiff's class 4 action allegations pursuant to Rule 12(f). 5 6 III. MOTION TO DISMISS 7 A. 8 A motion to dismiss under Federal Rule of Civil Procedure 9 Legal Standard 12(b)(6) "tests the legal sufficiency of a claim." Navarro v. United States District Court For the Northern District of California 10 Block, 250 F.3d 729, 732 (9th Cir. 2001). 11 on the lack of a cognizable legal theory or the absence of 12 sufficient facts alleged under a cognizable legal theory." 13 Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 14 1988). 15 should assume their veracity and then determine whether they 16 plausibly give rise to an entitlement to relief." 17 Iqbal, 556 U.S. 662, 679 (2009). 18 must accept as true all of the allegations contained in a complaint 19 is inapplicable to legal conclusions. 20 elements of a cause of action, supported by mere conclusory 21 statements, do not suffice." 22 Twombly, 550 U.S. 544, 555 (2007)). 23 "Dismissal can be based "When there are well-pleaded factual allegations, a court Ashcroft v. However, "the tenet that a court Threadbare recitals of the Id. (citing Bell Atl. Corp. v. Claims sounding in fraud are subject to the heightened 24 pleading requirements of Federal Rule of Civil Procedure 9(b), 25 which requires that a plaintiff alleging fraud "must state with 26 particularity the circumstances constituting fraud." See Kearns v. 27 Ford Motor Co., 567 F.3d 1120, 1124 (9th Cir. 2009). "To satisfy 28 Rule 9(b), a pleading must identify the who, what, when, where, and 6 1 how of the misconduct charged, as well as what is false or 2 misleading about [the purportedly fraudulent] statement, and why it 3 is false." 4 Inc., 637 F.3d 1047, 1055 (9th Cir. 2011) (quotation marks and 5 citations omitted). United States ex rel Cafasso v. Gen. Dynamics C4 Sys., 6 B. Plaintiff's Claims for Equitable Relief 7 Citing to California law, Defendant argues that the Court 8 should abstain from adjudicating Plaintiff's claims for equitable 9 relief because they require the Court to assume the functions of United States District Court For the Northern District of California 10 CDSS. 11 Cal. App. 4th 1292 (Cal. Ct. App. 2007)). 12 courts may abstain from deciding UCL claims where: (1) they 13 implicate complex economic or policy decisions best handled by the 14 legislature or an administrative agency; or (2) granting injunctive 15 relief would impose an undue burden on the trial court. 16 Alvarado, 153 Cal. App. 4th at 1298. 17 federal law controls here, not California law. 18 Specifically, Plaintiff contends that the Court should apply the 19 abstention doctrine set forth in Colorado River Water Conservation 20 District v. United States, 424 U.S. 800, 813, 817 (1976), which 21 provides that federal courts have a "virtually unflagging 22 obligation to exercise jurisdiction," and that courts should only 23 abstain in extraordinary and narrow circumstances. 24 Plaintiff further argues that, even under California law, the Court 25 should decline from abstaining. 26 MTD at 4 (citing Alvarado v. Selma Convalescent Hosp., 153 Under California law, See Plaintiff contends that MTD Opp'n at 5. Id. at 5-6. Id. at 7-8. As set forth below, the Court finds that (1) choice of law 27 principles require it to consider the California abstention 28 doctrine, and (2) the California abstention doctrine bars 7 1 Plaintiff's claims for equitable relief. 1. 2 3 Choice of Law Under Erie R.R. Co. v. Tompkins, 304 U.S. 64 (1938), a federal 4 court sitting in diversity jurisdiction applies state substantive 5 law and federal procedural law. 6 "concerned with judicial administration, such as the methods of 7 presenting facts to a court or the way a jury operates." 8 Snowboards, Inc. v. Kelly, 863 F.2d 643, 645 (9th Cir. 1988). 9 issue is substantive if it is "concerned with the legal rights of Sims An United States District Court For the Northern District of California 10 the parties." 11 procedural law is not always clear, the intent of Erie is to ensure 12 that, in diversity cases, "the outcome of the litigation in the 13 federal court should be substantially the same, so far as legal 14 rules determine the outcome of a litigation, as it would be if 15 tried in a State court." 16 (1945). 17 Id. An issue is procedural if it is While the distinction between substantive and Guar. Trust Co. v. York, 326 U.S. 99, 109 In Sims, the Ninth Circuit addressed the issue of whether a 18 California anti-injunction statute was procedural or substantive. 19 863 F.2d at 645. 20 bars an injunction to prevent the breach of a personal service 21 contract, unless the contract guarantees annual payments of at 22 least $6,000. 23 were applicable, Federal Rule of Civil Procedure 65 allowed the 24 grant of temporary injunctive relief. 25 Circuit reversed. 26 did not conflict because the former "merely sets out the procedural 27 requirements for injunctions and restraining orders," while the 28 latter "expressly prohibits the issuance of injunctions in this The statute, California Civil Code section 3423, The district court found that, even if section 3423 Id. at 646. The Ninth The court found that Rule 65 and section 3423 8 1 type of contract dispute." 2 of lack of conflict, Erie "require[d] the application of state law 3 over federal law if the state law is outcome-determinative." 4 The Court concluded that section 3423 was outcome-determinative 5 because an injunction would accomplish what California law 6 prohibited, and that California policy should be respected by 7 federal courts sitting in diversity. 8 9 Id. The court then held that because Id. Id. at 647. Plaintiff argues that Sims is inapposite because the Ninth Circuit did not "consider generally whether injunctive relief is a United States District Court For the Northern District of California 10 substantive or procedural issue." 11 so, but Sims does hold that federal courts sitting in diversity 12 must defer to state law on issues of injunctive relief where the 13 state law is outcome-determinative. 14 doctrine has the potential to determine the outcome of Plaintiff's 15 claims for equitable relief. 16 federal court applying California law could grant an injunction, 17 where a California court applying California law could not. 18 is plainly contrary to Sims, as well as Erie. 19 Defendant removed to federal court should not affect the remedies 20 available to Plaintiff. 21 MTD Surreply at 2. That may be Here, California's abstention Moreover, under Plaintiff's theory, a This The fact that Plaintiff further argues that, unlike the anti-injunction 22 statute in Sims, the California judicial abstention doctrine does 23 not mandate that the Court abstain from granting equitable relief. 24 This argument is also unavailing. 25 the application of the abstention doctrine is discretionary, see 26 Alvarado, 153 Cal. App. 4th at 1298, that does not mean the 27 doctrine is not substantive or outcome-determinative. 28 Ninth Circuit nor the Supreme Court has enunciated the rule While Plaintiff is correct that 9 Neither the 1 Plaintiff is advocating here: that an issue is necessarily 2 procedural where it turns on the application of a discretionary 3 rule. 4 Plaintiff's reliance on Travelers Casualty v. W.P. Rowland Ariz. May 15, 2012), is also misplaced. 7 case is not binding on this court and, in any event, it is 8 distinguishable. 9 rather than state law because the issue presented was purely 10 United States District Court Constructors Corp., No. CV 12–00390–PHX–FJM, 2012 WL 1718630 (D. 6 For the Northern District of California 5 procedural: should the court apply Rule 65 or Arizona law to 11 determine the appropriate standard for granting a preliminary 12 injunction. 13 distinguished Sims because both federal and Arizona law permitted 14 it to issue the type of injunctive relief requested by the 15 plaintiff. 16 abstention doctrine imposes limits on equitable relief not present 17 in the federal Colorado River abstention doctrine. 18 The In Travelers, the court applied federal law 2012 WL 1718630, at *2. Id. See Surreply at 3. Indeed, the court In contrast, in this action, California's Plaintiff's final argument conflates federal and state 19 abstention doctrines. Plaintiff cites to AXA Corporate Solutions 20 v. Underwriters Reinsurance Corp., where the Seventh Circuit 21 addressed whether the trial court had erred in applying an Illinois 22 statute allowing a Defendant to move to dismiss if there is another 23 action pending between the same parties for the same cause. 24 F.3d 272, 276 (7th Cir. 2003) (citing 735 Ill. Comp. Stat. § 5/2- 25 619(a)(3)). 26 the Colorado River abstention doctrine and the Illinois statute 27 were sufficient to require the court to follow the state law. 28 at 276. 347 The trial court reasoned that the differences between The Seventh Circuit reversed, finding that the state 10 Id. problem addressed by the state law was closely akin to topics such 3 as forum non conveniens and venue statutes, which were matters of 4 judicial organization. 5 abstention doctrine is significantly different from the Illinois 6 and federal abstention doctrines. 7 require the Court to abstain from exercising jurisdiction or 8 hearing a case altogether. 9 that a Plaintiff may assert based on a balancing of the equities. 10 United States District Court statute was procedural. 2 For the Northern District of California 1 Id. at 278. See Acosta v. Brown, 213 Cal. App. 4th 234, 246-47 (Cal. Ct. App. 11 2013). 12 procedural in nature. 3 Id. The court reasoned that the AXA is inapposite because California's The California doctrine does not It merely limits the types of claims Accordingly, the California abstention doctrine is not For these reasons, the Court finds that California law 13 14 controls the issue of whether Plaintiff is entitled to the 15 equitable relief it seeks. 2. 16 Abstention As California law controls, the Court must determine to what 17 18 extent, if any, the California judicial abstention doctrine bars 19 Plaintiff's claims. 20 abstain from deciding UCL claims and other claims for equitable 21 relief. 22 applies to UCL claims); see also Acosta v. Brown, 213 Cal. App. 4th 23 at 249 ("The absence of [a UCL] claim does not diminish the force 24 of the principles upon which Alvarado rests because . . . the 25 relief sought in this case . . . is in the nature of equitable The doctrine gives courts the discretion to See Alvarado, 153 Cal. App. 4th at 1297 (abstention 26 27 28 3 Plaintiff's position is also contrary to its own authority. See Wehlage v. EmRes Healthcare, Inc., 791 F. Supp. 2d 774 (N.D. Cal. 2011) (considering the merits of the defendant's California abstention argument). 11 1 relief."). However, the abstention doctrine may not be used to 2 refrain from adjudicating legal claims. 3 Healthcare, 798 F. Supp. 2d 1073, 1085 (N.D. Cal. 2011). 4 Accordingly, the doctrine only implicates Plaintiff's UCL claim, as 5 well as the equitable remedies sought in connection with 6 Plaintiff's CLRA claim. 4 7 money damages. See Walsh v. Kindred It does not affect Plaintiff's claims for 8 Judicial abstention is appropriate where (1) "the lawsuit 9 involves determining complex economic policy, which is best handled United States District Court For the Northern District of California 10 by the Legislature or an administrative agency," or (2) "granting 11 injunctive relief would be unnecessarily burdensome for the trial 12 court to monitor and enforce given the availability of more 13 effective means of redress." 5 14 Abstention is warranted under the first ground when "granting the 15 requested relief would require a trial court to assume the 16 functions of an administrative agency, or to interfere with the 17 functions of an administrative agency." 18 on the second ground when the equitable relief requested would 19 result in a network of injunctions that "would have the cumulative 20 effect of a statutory regulation, administered by the . . . courts 21 through the medium of contempt hearings." 22 Cal. App. 3d 588, 599 (Cal. Ct. App. 1970). Alvarado, 153 Cal. App. 4th at 1298. Id. Courts have abstained Diaz v. Kay-Dix Ranch, 9 23 24 25 26 27 28 4 Plaintiff argues that the abstention doctrine does not reach its claims under the CLRA and the Elder Abuse Act because those claims are legal causes of action. MTD Opp'n at 7. However, Plaintiff fails to mention that he is seeking both legal and equitable remedies through his CLRA claim. 5 California courts may also abstain "when federal enforcement of the subject law would be more orderly, more effectual, [or] less burdensome to the affected interests," Alvarado, 153 Cal. App. 4th at 1298; however, that scenario is not relevant here. 12 a. 1 Complex economic policy As to the first prong of the abstention doctrine, Defendant 2 3 argues that Plaintiff is asking the Court to assume the functions 4 of CDSS. 5 understaffing allegations are predicated on a California 6 regulation, 22 Cal. Code Regs. § 87411(a), that requires 7 residential care facilities for the elderly ("RCFE") to employ 8 staff in sufficient numbers, "and competent to provide the services 9 necessary to meet resident needs." MTD at 5. Defendant argues that Plaintiff's Id. Defendant contends that United States District Court For the Northern District of California 10 determining whether its facilities comply with section 87411(a) 11 requires expertise and case-by-case evaluation that are better left 12 to CDSS. 13 changing requirements of the residents served by [Defendant's] 14 communities would mean virtually continuous court scrutiny over 15 potentially tens of thousands of staffing decisions each and every 16 day." 17 Id. Moreover, according to Defendant, "[t]he constantly Id. at 7. In support, Defendant cites to the California Court of 18 Appeal's decision in Alvarado. In that case, the plaintiff 19 asserted a UCL claim based on the defendant's alleged failure to 20 provide sufficient direct nursing care for the residents of its 21 skilled nursing facilities ("SNF") in violation of California 22 Health & Safety Code section 1276.5(a). 23 4th at 1296. 24 that section 1276.5(a) was a regulatory statute that the 25 legislature intended the Department of Health Services ("DHS") to 26 enforce. 27 equipped to evaluate compliance with the statute's 3.2 nursing- 28 hours-per-patient-per-day ("NHPPD") requirement, which implicated a Alvarado, 153 Cal. App. The court held that abstention was proper, reasoning Id. at 1304. The court also found that DHS was better 13 1 host of specialized determinations, including whether the facility 2 at issue was a special treatment program service unit, whether 3 certain employees' hours counted toward the requirement, and what 4 formula should be used to calculate nursing hours. 5 Defendant contends that Plaintiff's claims would require an even 6 higher level of agency expertise since section 87411(a) does not 7 set forth objective standards, such as staff per resident per hour, 8 but merely requires a "sufficient number[]" of "competent" staff. 9 MTD at 6-7. United States District Court For the Northern District of California 10 Id. at 1305-06. Plaintiff responds that Alvarado's holding was subsequently 11 limited by Shuts v. Covenant Holdco LLC, 208 Cal. App. 4th 609 12 (Cal. Ct. App. 2012). 13 relied on Alvarado in sustaining the defendant's demurrer to the 14 plaintiff's claims for violations of section 1276.5(a)'s NHPPD 15 requirement. 16 reversed because the plaintiff's claims were based on California 17 Health and Safety Code section 1430, a statute which was never 18 invoked by the plaintiff in Alvarado. 19 that section 1430(b) conferred a private right of action for the 20 violation of a SNF resident's right to reside in a facility with an 21 adequate number of qualified personnel. 22 also found that Alvarado's concern with rendering complex economic 23 policy decisions was no longer pertinent. 24 Alvarado was decided, DHS's successor agency "ha[d] made 25 significant progress in providing administrative guidance on the 26 3.2 NHPPD standard, and how it should be calculated." 27 Plaintiff's reliance on Shuts is misplaced. 28 MTD Opp'n at 8. In Shuts, the trial court 208 Cal. App. 4th at 618-19. The court of appeal Id. at 619. The court found Id. at 619-20. The court Id. at 622. Since Id. Shuts's outcome turned on the court's interpretation of section 1430(b), which 14 1 provides a private right of action for residents of SNFs, but not 2 for residents of the RCFEs at issue here. 3 California may have provided significant administrative guidance 4 with respect to section 1276.5(a)'s NHPPD requirement, no such 5 guidance exists as to section 87411(a). 6 CDSS determines whether a RCFE is sufficiently staffed in 7 accordance with the statute, and the Court is ill-equipped to 8 develop its own framework for making such a determination. 9 Further, while It is entirely unclear how Plaintiff suggests that the Court can use Defendant's wE Care United States District Court For the Northern District of California 10 system to determine compliance with section 87411(a)'s staffing 11 requirements. 12 injunction by blindly relying on the outputs of the wE Care system. 13 It would need to make an independent determination of whether the 14 staffing levels provided by wE Care were sufficient to meet the 15 needs of Defendant's residents. 16 Court's expertise. 17 MTD Opp'n at 9. But the Court could not enforce an Such a determination is beyond the Accordingly, the Court abstains from Plaintiff's claims for 18 equitable relief to the extent that they are predicated on alleged 19 violations of section 87411(a). 20 his UCL and CLRA claims are not predicated on section 87411(a), and 21 that the Court should not abstain from deciding those aspects of 22 his claims. 23 case is that Defendant represents that it staffs its facilities to 24 meet the aggregate needs of its residents, but it actually 25 determines staffing levels based on profit objections. 26 Plaintiff reasons that establishing liability for these 27 misrepresentation claims does not require regulatory interpretation 28 or proof that Defendant violated section 87411(a). MTD Opp'n at 7. Plaintiff argues some aspects of He contends that the gravamen of this 15 Id. Id. Thus, Defendant 1 responds that the abstention doctrine "addresses whether the remedy 2 for a violation should be devised, monitored[,] and enforced 3 administratively by [an agency] or judicially by the courts, not 4 whether the applicable regulations determine liability in the first 5 place." 6 further argues that the Court could not administer the remedy 7 without assuming CDSS's role in determining whether staffing is 8 sufficient to meet resident needs. 9 Reply at 4 (internal quotations omitted). The Court agrees with Defendant. Defendant As Plaintiff concedes in his United States District Court For the Northern District of California 10 opposition brief, his claims stem from the allegation that 11 Defendant fails to staff its facilities to meet the aggregate 12 assessed needs of its residents. 13 is no way for the Court to craft an equitable remedy without first 14 establishing what those aggregate assessed needs are. 15 question necessarily requires an analysis of section 87411(a). 16 put it another way, Plaintiff essentially alleges that Defendant 17 represented that it would comply with 87411(a) by staffing its 18 facilities to meet the aggregate needs of its residents, but has 19 failed to do so. 20 by Defendant's standard contracts -- that residents "will receive[] 21 the services appropriate to [their] individual needs" -- is 22 identical to the requirements of section 87411(a) -- that 23 "[f]acility personnel shall at all times be sufficient in numbers, 24 and competent to provide the services necessary to meet resident 25 needs." 26 cannot enforce the contractual promise through an injunction 27 without assuming the role of a state regulatory agency. 28 See FAC ¶ 33. See MTD Opp'n at 7. Thus, there This To The promise allegedly encompassed Cal. Code Regs. tit. 22, § 87411(a). Thus, the Court In short, the Court is ill-equipped to make complex policy 16 1 determinations about the aggregate assessed needs of Defendant's 2 residents. 3 determinations, and the Court declines to second-guess its 4 judgment. CDSS has already been tasked with making such b. 5 Undue burden on the trial court Abstention is also warranted here because "injunctive relief 6 7 would place an unnecessary burden on the court because of the 8 existence of other, more effective remedies." 9 App. 4th at 1302. Alvarado, 153 Cal. As Defendant points out, CDSS already has the United States District Court For the Northern District of California 10 tools and authority necessary to address what Plaintiff asks the 11 Court to regulate by injunction. 12 request an inspection of an RCFE. 13 1569.35. 14 exists and the deficiency is not corrected by the date specified by 15 CDSS, the RCFE may be fined up to $150 per day until the deficiency 16 is corrected. 17 certain instances, CDSS may also revoke the license of a RCFE if a 18 deficiency is not corrected. 6 Id. By statute, any person may Cal. Health & Safety Code § If a state investigator determines that a deficiency Cal. Code Regs. tit. 22, §§ 87759, 87761. In Id. § 87775. By comparison, it would be unduly burdensome for the Court to 19 20 establish a system for regulating Defendant's seventy-two 21 California facilities. 22 dwarf that of any monitor the Court could appoint. 23 appointed monitor might need to respond to resident complaints, as 24 well as set aggregate staffing levels for each individual facility, 25 levels which change constantly. 26 6 27 28 The staff and resources of CDSS presumably The court- Such regulatory activities are This process has already been invoked at the facility where Plaintiff currently resides. After Plaintiff was attacked by another resident in January 2011, CDSS investigated and issued a deficiency for understaffing. FAC ¶ 59. 17 1 beyond the scope of the Court's expertise. 2 prepared to assume responsibility for ensuring that the needs of 3 Defendant's 5,000 California residents are being met on a daily 4 basis. 3. 5 The Court is not Conclusion For these reasons, and the reasons set forth above, the Court 6 7 abstains from adjudicating Plaintiff's UCL claim. 8 abstains from adjudicating Plaintiff's CLRA claim, but only to the 9 extent that Plaintiff seeks equitable relief in connection with United States District Court For the Northern District of California 10 that claim. 11 The Court also The Court does not abstain from adjudicating Plaintiff's claims for legal relief. 7 12 C. CLRA 13 Defendant argues that the Court should dismiss the remainder 14 of Plaintiff's CLRA claim because: (1) Plaintiff cannot couch a 15 routine breach of contract claim as a CLRA claim to obtain extra- 16 contractual remedies, (2) the misrepresentations identified by 17 Plaintiff are non-actionable puffery, and (3) Plaintiff has failed 18 to plead affirmative misrepresentations or omissions with 19 sufficient particularity. 20 Defendant's first argument is predicated on principles 21 developed in the UCL context that are sometimes applied to CLRA 22 claims. 23 form the predicate for a UCL claim, but only if the breach also 24 constitutes conduct that is unlawful, unfair, or fraudulent. 25 v. Kaiser Found. Health Plan, Inc., 181 Cal. App. 4th 471, 489 26 7 27 28 California courts have held that a breach of contract may Arce The Court recognizes that Plaintiff's CRLA claim, to the extent that it seeks legal relief, is also based understaffing allegations that may implicate issues of complex economic policy. However, as set forth above, California's judicial abstention doctrine does not allow the Court to abstain from hearing such a claim. 18 1 (Cal. Ct. App. 2010). With respect to the unfairness prong of the 2 UCL, "a systematic breach of certain types of contracts (e.g., 3 breaches of standard consumer or producer contracts involved in a 4 class action) can constitute an unfair business practice under the 5 UCL." 6 CLRA prohibits "unfair methods of competition and unfair or 7 deceptive acts or practices undertaken by any person in a 8 transaction intended to result or which results in the sale or 9 lease of goods or services to any consumer." Id. (internal quotations omitted). Similar to the UCL, the Cal. Civ. Code § United States District Court For the Northern District of California 10 1770(a). 11 of contract is not actionable under the CLRA without proof of more, 12 for example, where a defendant knowingly sells a defective product. 13 Baba v. Hewlett-Packard Co., C 09-05946 RS, 2010 WL 2486353 (N.D. 14 Cal. June 16, 2010). 15 Applying UCL principles, Courts have held that a breach The Court finds that Plaintiff has alleged something more than 16 a breach of contract here. Specifically, Plaintiff has alleged 17 that Defendant publicly touted its ability to meet the individual 18 needs of its residents, even though staffing decisions were based 19 on profit margins. 20 of Defendant's standard resident contracts. 21 Defendant's allegedly standardized contracts, the compromised 22 capacities of many of Defendant's residents, the fact that many of 23 these residents are dependent on Defendant for basic services and 24 may not be in a position to complain once they are under 25 Defendant's care, and the difficulties associated with 26 transitioning to a different RCFE, the Court finds that Plaintiff 27 has alleged sufficient facts to state a claim for a violation of 28 the CLRA. Plaintiff has also alleged a systematic breach In light of In short, Plaintiff has sufficiently alleged that 19 1 Defendant engaged in unfair competition by making 2 misrepresentations to a vulnerable class of consumers. As to its second argument, Defendant contends that the alleged 3 4 misrepresentations underlying Plaintiff's CLRA claim are non- 5 actionable puffery. 6 advertising, blustering, and boasting upon which no reasonable 7 buyer would rely." 8 F.3d 1134, 1145 (9th Cir. 1997). 9 characteristics of puffery are vague, highly subjective claims as MTD at 11-12. Puffery is "exaggerated Southland Sod Farms v. Stover Seed Co., 108 "The distinguishing United States District Court For the Northern District of California 10 opposed to specific, detailed factual assertions." 11 Time, Inc., 857 F. Supp. 1392, 1399 (E.D. Cal. 1994). 12 representation "that amounts to 'mere' puffery is not actionable." 13 Id. 14 in the FAC are puffery, including the representations that the wE 15 Care system is "state of the art," and that Defendant's services 16 are "high quality." 17 claim is also based on allegations that Defendant represents that 18 it uses the wE Care system to determine staffing levels, and that 19 Defendant provides "enough staff to care for all of the residents 20 at its facilities based on the residents' evaluations." 21 id. ¶¶ 21, 30. 22 their truth can be objectively determined. 23 declines to dismiss Plaintiff's CLRA claims on puffery grounds. 24 Haskell v. A The Court agrees that a few of the representations mentioned See FAC ¶¶ 26, 27. However, Plaintiff's CLRA See e.g., These statements are not vague or generalized, and Accordingly, the Court Defendant's third argument is that Plaintiff's CLRA claim 25 should be dismissed for failure to comply with the heightened 26 pleading standard of Rule 9(b), which requires that the 27 circumstances constituting fraud be pleaded with particularity. 28 MTD at 17. Defendant considers several allegations in isolation, 20 1 while ignoring others. 2 trees. 3 upon the complaint as a whole. 4 2d 1000, 1007 (C.D. Cal. 2010). 5 whole, the FAC asserts sufficient facts to support a claim under 6 the CLRA. 7 Defendant has lost the forest for the The sufficiency of Plaintiff's allegations must be based Lima v. Gateway, Inc., 710 F. Supp. The Court finds that, taken as a Defendant argues that Plaintiff failed to plead that he saw or 8 relied on Defendant's website and marketing materials. 9 MTD at 21. However, the absence of such allegations is not fatal to United States District Court For the Northern District of California 10 Plaintiff's claim because Plaintiff does allege that he read and 11 relied on Defendant's standard contract. 12 Defendant's argument that Plaintiff has failed to allege that he 13 would have behaved differently had the omitted information been 14 disclosed. 15 have chosen a different assisted living facility had he known about 16 the actual staffing practices at Defendant's facilities. See MTD at 23. Also lacking merit is It is plausible that Plaintiff would Defendant also argues that Plaintiff has not established 17 18 that it had any duty to disclose the manner in which it staffs its 19 facilities. 20 contracts, Defendant represents that it will provide different 21 levels of care depending on a resident's needs, that it will 22 develop a service plan based on the resident's evaluation, and that 23 residents will receive services appropriate to their individual 24 needs. 25 Defendant allegedly failed to disclose: that Defendant does not use 26 evaluations to set staffing levels, but sets them using 27 predetermined corporate labor budgets. 28 allegations are sufficient to support a duty to disclose. Id. at 22. FAC ¶ 21. The Court disagrees. In its form These representations are contradicted by facts 21 Id. ¶ 33. These See 1 Donahue v. Apple, Inc., 871 F. Supp. 2d 913, 925 (N.D. Cal. 2012) 2 (actionable omission must be contrary to the representation made by 3 the defendant). 4 a consistent staffing policy, FAC ¶¶ 33-41, it is also plausible 5 that Defendant was aware of the omitted facts at the time it made 6 the representations. 7 8 9 United States District Court For the Northern District of California 10 Based on Plaintiff's allegation that Defendant had Accordingly, the Court declines to dismiss Plaintiff's CLRA claim to the extent that it does not seek equitable relief. D. Elder Financial Abuse Defendant moves to dismiss Plaintiff's third and final claim 11 for elder financial abuse. 12 a person or entity "takes, secretes, appropriates, obtains, or 13 retains real or personal property of an elder." 14 Code § 15610.30(a)(1). 15 when an elder "is deprived of any property right, . . . regardless 16 of whether the property is held directly or by a representative of 17 an elder or dependent adult." 18 Financial abuse of an elder occurs when Cal. Welf. & Inst. A person or entity engages in elder abuse Id. § 15610.30(c). Defendant argues that Plaintiff's claim fails because Ms. 19 Moulton, who is not an elder, represented Plaintiff as his agent 20 via power of attorney in the relevant transactions. 21 The fundamental problem with this argument is that Ms. Moulton did 22 not have anything to do with Plaintiff's initial contract for 23 services with Defendant. 24 his own. 25 Defendant contends that Plaintiff's claims are not based on his 26 original contract, but the amendments to his service plan signed by 27 Ms. Moulton that increased his Level of Care. 28 aspects of Plaintiff's claims pre-date Ms. Moulton's involvement, MTD at 14-15. Plaintiff entered into that contract on See ECF No. 33 Ex. 1 ("Resident Agreement") at 23. 22 MTD at 15. But many 1 including his general allegation that Defendant does not staff its 2 facilities to meet the aggregate needs of its residents. 3 event, Plaintiff's allegations support a plausible inference that 4 Plaintiff expected that Defendant's services would increase with 5 his assigned Level of Care when he initially entered Defendant's 6 facility. In any Next, Defendant argues that a standard breach of contract 7 8 claim cannot support a claim for financial elder abuse. 9 This argument is substantially similar to an argument the Court United States District Court For the Northern District of California 10 addressed and rejected regarding Plaintiff's CLRA claim. 11 III.C supra. 12 MTD at 16. unavailing. For the reasons set forth above, the Court finds it Accordingly, the Court declines to dismiss Plaintiff's claim 13 14 See § for financial elder abuse. 15 16 17 IV. MOTION TO STRIKE Defendant moves to strike Plaintiff's class allegations 18 pursuant to Federal Rule of Civil Procedure 12(f). Rule 12(f) 19 provides that a court may, on its own or on a motion, "strike from 20 a pleading an insufficient defense or any redundant, immaterial, 21 impertinent, or scandalous matter." 22 generally disfavored ... [and] are generally not granted unless it 23 is clear that the matter sought to be stricken could have no 24 possible bearing on the subject matter of the litigation." 25 v. Citibank, 133 F.Supp.2d 1177, 1180 (N.D. Cal. 2001). Motions to strike "are Rosales 26 Class allegations typically are tested on a motion for class 27 certification, not at the pleading stage. See Collins v. Gamestop 28 Corp., C10–1210–TEH, 2010 WL 3077671, at *2 (N.D. Cal. Aug. 6, 23 1 2010). 2 pleadings to determine whether the interests of the absent parties 3 are fairly encompassed within the named plaintiff's claim." 4 Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 160 (1982). 5 courts have struck class allegations where it is clear from the 6 pleadings that class claims cannot be maintained. 7 Apple Inc., 672 F. Supp. 2d 978, 991 (N.D. Cal. 2009). 8 9 However, "[s]ometimes the issues are plain enough from the Gen. Thus, some E.g., Sanders v. Defendant's lead argument is that the facts of this case are similar to those in Dennis F. v. Aetna Life Insurance, 12–cv–02819– United States District Court For the Northern District of California 10 SC, 2013 WL 5377144 (N.D. Cal. Sept. 25, 2013), where the 11 undersigned recently denied class certification. 12 F. is distinguishable. 13 represent a class of adolescents who had been denied insurance 14 coverage for care at residential treatment centers. 15 5377144, at *2. 16 that Plaintiff's claims were predicated on medical necessity 17 determinations unique to each individual class member. 18 In contrast, this case turns on whether Defendant misrepresented 19 the staffing levels maintained at its facilities. 20 MTS at 5. Dennis In that case, the plaintiff sought to 2013 WL The Court denied class certification on the ground Id. at *4. Next, Defendant argues that Plaintiff's claim that 21 understaffing endangered or resulted in substantial harm to the 22 class is not appropriate for class adjudication. 23 may be so, but as Defendant concedes, Plaintiff "does not seek 24 recovery for personal injuries, emotional distress or bodily harm 25 that may have been caused by Defendant or by inadequate staffing at 26 Defendant's facilities." 27 Plaintiff is not seeking to recover for the alleged personal 28 injuries, those allegations should be struck from the complaint. FAC ¶ 64. 24 MTS at 10. That Defendant contends that if 1 MTS at 13. However, Defendant cannot credibly contend that these 2 allegations are irrelevant. 3 Defendant's facilities may help support Plaintiff's claims that 4 those facilities are understaffed. 5 properly allege facts that do not directly support a claim for 6 relief where they provide necessary or informative background. Evidence of personal injuries at In any event, pleadings may Defendant further argues that Plaintiff does not and cannot 7 8 satisfy the typicality or adequacy requirements of Rule 23(a). 9 at 13-15. Here, Defendant rehashes a number of arguments from its United States District Court 10 For the Northern District of California Id. motion to dismiss. The Court declines to revisit those arguments 11 again. 12 not appropriate for determination at the pleadings stage. In any event, typicality and adequacy raise factual issues Finally, Defendant argues that the proposed class is not 13 14 ascertainable because it includes every resident of Defendant's 15 California communities, including those who have received all of 16 the services they contracted for with Defendant. 17 Once again, Defendant raises factual questions not appropriate for 18 resolution at the pleading stage. 19 Defendant's argument has merit, the Court need not deny class 20 certification altogether. 21 narrower class than the one proposed by Plaintiff. 22 this is feasible or necessary is a question for another day. Id. at 16-17. Moreover, to the extent that Instead, it could potentially certify a Whether or not In sum, the Court finds that Defendant's motion to strike 23 24 Plaintiff's class allegations is premature. 25 in its entirety. 26 /// 27 /// 28 /// 25 The motion is DENIED 1 2 V. CONCLUSION For the reasons set forth above, Defendant's motion to dismiss 3 is GRANTED in part and DENIED in part. The Court abstains from 4 adjudicating Plaintiff's UCL claim, as well as the equitable 5 remedies sought through his CLRA claim. 6 remain undisturbed. Plaintiff's other claims Defendant's motion to strike is DENIED. 7 8 IT IS SO ORDERED. 9 United States District Court For the Northern District of California 10 March 5, 2014 11 UNITED STATES DISTRICT JUDGE 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 26

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