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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IN THE UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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Northern District of California

United States District Court

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ARVILLE WINANS,
his guardian ad
MOULTON, on his
behalf of other
situated,

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by and through
litem, RENEE
own behalf and on
similarly

Plaintiff,
v.

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EMERITUS CORPORATION and DOES 1
through 100,

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Defendants.

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I.

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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

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declaratory and injunctive relief and damages against Defendant

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Emeritus Corporation ("Defendant") by and through his guardian ad

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litem Renee Moulton.

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assisted living facilities in Tracy, California.

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Defendant has engaged in a scheme to defraud seniors by falsely

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representing that it will provide sufficient staff to care for all

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of its residents based on the residents' evaluations, "when in

Plaintiff is a resident of one of Defendant's
He alleges that

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truth [Defendant] determines facility staffing based on labor

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budgets set to meet profit margins established by corporate

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headquarters."

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Defendant now moves to dismiss and strike Plaintiff's FAC.

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Nos. 32 ("MTD"), 34 ("MTS").

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Nos. 43 ("MTS Opp'n"), 44 ("MTD Opp'n"), 46 ("MTS Reply"), 47 ("MTD

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Reply"). 1

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without oral argument per Civil Local Rule 7-1(b).

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below, Defendant's motion to dismiss is GRANTED in part and DENIED

United States District Court

For the Northern District of California

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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.

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II.

BACKGROUND
Defendant is the largest provider of assisted living for

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senior citizens in the nation.

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facilities in California alone, which have an aggregate of 5,000

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residents.

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room, board, and assistance for seniors in certain activities of

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daily living.

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units," which serve individuals with dementia and other cognitive

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disorders.

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resident of one of Defendant's facilities since October 2009.

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¶ 8.

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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

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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.

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represents that it will evaluate the resident prior to admission

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and assign the resident a "Level of Care" from 1 to 7, with higher

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monthly charges imposed for higher levels of care. 2

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The uniform contract also represents that Defendant will

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periodically re-evaluate each resident to determine if he or she

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requires additional assistance.

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assign the resident a higher Level of Care and collect additional

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monthly charges.

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evaluations using its "wE Care" system, which was previously called

United States District Court

For the Northern District of California

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"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

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Plaintiff's Level of Care, along with his monthly rate.

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September 2010, Defendant assigned Plaintiff a Level of Care of "3"

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and placed him in the Alzheimer's and Memory Care Unit.

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Defendant increased Plaintiff's Level of Care to "4" in September

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2012, and then to a "5" in May 2013.

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Plaintiff's Level of Care has resulted in a new agreement, signed

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by Ms. Moulton on behalf of Plaintiff, and a higher monthly rate.

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Id. ¶¶ 55-58.

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Plaintiff's monthly rate has increased from approximately $1,200 to

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$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

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materials.

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"[t]he ability to provide the most comprehensive and consistent

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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.

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personal care services begins with the resident evaluation

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process," that wE Care allows Defendant "to accurately evaluate and

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monitor the personal care services of your loved one," and that wE

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Care is used to determine the "staff required to deliver the

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services."

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states that Defendant's resident evaluation system will: "address

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the time needed to complete care activities, how often those care

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activities need to be done, any personal preferences that you . . .

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may have, and the staff required to complete the activities."

United States District Court

For the Northern District of California

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Id. ¶¶ 27-28.

Another unidentified marketing material

Id.

¶ 32.
Plaintiff alleges that these representations are false and

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misleading because Defendant staffs its facilities based on profit

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margins, without regard for resident need.

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pleads: "Contrary to the express and implied representations in its

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form contract and other uniform written statements, [Defendant]

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does not staff its facilities to meet the aggregate assessed needs

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of its residents, but instead determines staffing based on labor

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budgets designed to meet profit objectives."

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points to deposition testimony of Susan Rotella, Defendant's former

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Vice President of Operations, who has sued Defendant for wrongful

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termination.

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assign residents a Level of Care and corresponding monthly rates,

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but the portion of the software program that calculated how many

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minutes per day of care and what number and type of staff were

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necessary to provide that care were turned off at the facility

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level.

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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

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resident when they were left unsupervised in a dining area.

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59.

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and bruises to his face and head, and the facility was issued a

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deficiency for inadequate staff and insufficient resident

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supervision by the Community Care Licensing ("CCL") division of the

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California Department of Social Services ("CDSS").

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information and belief, Plaintiff alleges that a number of

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Defendant's other facilities have also been cited for inadequate

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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.

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For the Northern District of California

Id. ¶

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ECF No. 1 Ex. A.

Defendant subsequently removed to federal court

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on diversity grounds.

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to dismiss, Plaintiff amended his complaint.

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FAC asserts claims for (1) violation of the California Consumers

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Legal Remedies Act ("CLRA"), Cal. Civ. Code § 1750 et seq.; (2)

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violation of the California Unfair Competition Law ("UCL"), id. §

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17200 et seq.; and (3) elder financial abuse, Cal. Welf. & Inst.

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Code § 15610.30.

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seeks restitution, punitive damages, and an injunction prohibiting

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Defendant from "promising elders, dependent adults, and their

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family members that [Defendant] will provide the care and personal

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services needed by each resident as assessed in their comprehensive

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evaluation and from charging its residents based on this false

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promise."

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"requiring Defendant to budget for and provide adequate aggregate

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staffing that is sufficient to meet its residents' assessed needs."

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Id.

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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

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facilities from July 29, 2009 through the present.

Id. ¶ 62.

Defendant now moves to dismiss pursuant to Federal Rule of

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Civil Procedure 12(b)(6), as well as to strike Plaintiff's class

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action allegations pursuant to Rule 12(f).

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III. MOTION TO DISMISS

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A.

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A motion to dismiss under Federal Rule of Civil Procedure

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Legal Standard

12(b)(6) "tests the legal sufficiency of a claim."

Navarro v.

United States District Court

For the Northern District of California

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Block, 250 F.3d 729, 732 (9th Cir. 2001).

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on the lack of a cognizable legal theory or the absence of

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sufficient facts alleged under a cognizable legal theory."

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Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir.

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1988).

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should assume their veracity and then determine whether they

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plausibly give rise to an entitlement to relief."

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Iqbal, 556 U.S. 662, 679 (2009).

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must accept as true all of the allegations contained in a complaint

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is inapplicable to legal conclusions.

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elements of a cause of action, supported by mere conclusory

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statements, do not suffice."

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Twombly, 550 U.S. 544, 555 (2007)).

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"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

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pleading requirements of Federal Rule of Civil Procedure 9(b),

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which requires that a plaintiff alleging fraud "must state with

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particularity the circumstances constituting fraud."

See Kearns v.

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Ford Motor Co., 567 F.3d 1120, 1124 (9th Cir. 2009).

"To satisfy

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Rule 9(b), a pleading must identify the who, what, when, where, and

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how of the misconduct charged, as well as what is false or

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misleading about [the purportedly fraudulent] statement, and why it

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is false."

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Inc., 637 F.3d 1047, 1055 (9th Cir. 2011) (quotation marks and

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citations omitted).

United States ex rel Cafasso v. Gen. Dynamics C4 Sys.,

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B.

Plaintiff's Claims for Equitable Relief

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Citing to California law, Defendant argues that the Court

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should abstain from adjudicating Plaintiff's claims for equitable

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relief because they require the Court to assume the functions of

United States District Court

For the Northern District of California

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CDSS.

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Cal. App. 4th 1292 (Cal. Ct. App. 2007)).

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courts may abstain from deciding UCL claims where: (1) they

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implicate complex economic or policy decisions best handled by the

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legislature or an administrative agency; or (2) granting injunctive

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relief would impose an undue burden on the trial court.

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Alvarado, 153 Cal. App. 4th at 1298.

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federal law controls here, not California law.

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Specifically, Plaintiff contends that the Court should apply the

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abstention doctrine set forth in Colorado River Water Conservation

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District v. United States, 424 U.S. 800, 813, 817 (1976), which

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provides that federal courts have a "virtually unflagging

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obligation to exercise jurisdiction," and that courts should only

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abstain in extraordinary and narrow circumstances.

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Plaintiff further argues that, even under California law, the Court

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should decline from abstaining.

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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

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principles require it to consider the California abstention

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doctrine, and (2) the California abstention doctrine bars

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Plaintiff's claims for equitable relief.
1.

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Choice of Law

Under Erie R.R. Co. v. Tompkins, 304 U.S. 64 (1938), a federal

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court sitting in diversity jurisdiction applies state substantive

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law and federal procedural law.

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"concerned with judicial administration, such as the methods of

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presenting facts to a court or the way a jury operates."

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Snowboards, Inc. v. Kelly, 863 F.2d 643, 645 (9th Cir. 1988).

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issue is substantive if it is "concerned with the legal rights of

Sims
An

United States District Court

For the Northern District of California

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the parties."

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procedural law is not always clear, the intent of Erie is to ensure

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that, in diversity cases, "the outcome of the litigation in the

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federal court should be substantially the same, so far as legal

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rules determine the outcome of a litigation, as it would be if

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tried in a State court."

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(1945).

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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

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California anti-injunction statute was procedural or substantive.

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863 F.2d at 645.

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bars an injunction to prevent the breach of a personal service

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contract, unless the contract guarantees annual payments of at

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least $6,000.

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were applicable, Federal Rule of Civil Procedure 65 allowed the

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grant of temporary injunctive relief.

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Circuit reversed.

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did not conflict because the former "merely sets out the procedural

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requirements for injunctions and restraining orders," while the

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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

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type of contract dispute."

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of lack of conflict, Erie "require[d] the application of state law

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over federal law if the state law is outcome-determinative."

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The Court concluded that section 3423 was outcome-determinative

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because an injunction would accomplish what California law

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prohibited, and that California policy should be respected by

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federal courts sitting in diversity.

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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

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substantive or procedural issue."

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so, but Sims does hold that federal courts sitting in diversity

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must defer to state law on issues of injunctive relief where the

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state law is outcome-determinative.

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doctrine has the potential to determine the outcome of Plaintiff's

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claims for equitable relief.

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federal court applying California law could grant an injunction,

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where a California court applying California law could not.

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is plainly contrary to Sims, as well as Erie.

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Defendant removed to federal court should not affect the remedies

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available to Plaintiff.

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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

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statute in Sims, the California judicial abstention doctrine does

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not mandate that the Court abstain from granting equitable relief.

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This argument is also unavailing.

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the application of the abstention doctrine is discretionary, see

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Alvarado, 153 Cal. App. 4th at 1298, that does not mean the

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doctrine is not substantive or outcome-determinative.

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Ninth Circuit nor the Supreme Court has enunciated the rule

While Plaintiff is correct that

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Neither the

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Plaintiff is advocating here: that an issue is necessarily

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procedural where it turns on the application of a discretionary

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rule.

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Plaintiff's reliance on Travelers Casualty v. W.P. Rowland

Ariz. May 15, 2012), is also misplaced.

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case is not binding on this court and, in any event, it is

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distinguishable.

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rather than state law because the issue presented was purely

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United States District Court

Constructors Corp., No. CV 12–00390–PHX–FJM, 2012 WL 1718630 (D.

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For the Northern District of California

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procedural: should the court apply Rule 65 or Arizona law to

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determine the appropriate standard for granting a preliminary

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injunction.

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distinguished Sims because both federal and Arizona law permitted

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it to issue the type of injunctive relief requested by the

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plaintiff.

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abstention doctrine imposes limits on equitable relief not present

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in the federal Colorado River abstention doctrine.

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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

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abstention doctrines.

Plaintiff cites to AXA Corporate Solutions

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v. Underwriters Reinsurance Corp., where the Seventh Circuit

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addressed whether the trial court had erred in applying an Illinois

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statute allowing a Defendant to move to dismiss if there is another

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action pending between the same parties for the same cause.

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F.3d 272, 276 (7th Cir. 2003) (citing 735 Ill. Comp. Stat. § 5/2-

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619(a)(3)).

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the Colorado River abstention doctrine and the Illinois statute

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were sufficient to require the court to follow the state law.

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at 276.

347

The trial court reasoned that the differences between

The Seventh Circuit reversed, finding that the state

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Id.

problem addressed by the state law was closely akin to topics such

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as forum non conveniens and venue statutes, which were matters of

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judicial organization.

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abstention doctrine is significantly different from the Illinois

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and federal abstention doctrines.

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require the Court to abstain from exercising jurisdiction or

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hearing a case altogether.

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that a Plaintiff may assert based on a balancing of the equities.

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United States District Court

statute was procedural.

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For the Northern District of California

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Id. at 278.

See Acosta v. Brown, 213 Cal. App. 4th 234, 246-47 (Cal. Ct. App.

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2013).

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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

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controls the issue of whether Plaintiff is entitled to the

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equitable relief it seeks.
2.

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Abstention

As California law controls, the Court must determine to what

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extent, if any, the California judicial abstention doctrine bars

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Plaintiff's claims.

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abstain from deciding UCL claims and other claims for equitable

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relief.

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applies to UCL claims); see also Acosta v. Brown, 213 Cal. App. 4th

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at 249 ("The absence of [a UCL] claim does not diminish the force

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of the principles upon which Alvarado rests because . . . the

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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

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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).

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relief.").

However, the abstention doctrine may not be used to

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refrain from adjudicating legal claims.

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Healthcare, 798 F. Supp. 2d 1073, 1085 (N.D. Cal. 2011).

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Accordingly, the doctrine only implicates Plaintiff's UCL claim, as

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well as the equitable remedies sought in connection with

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Plaintiff's CLRA claim. 4

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money damages.

See Walsh v. Kindred

It does not affect Plaintiff's claims for

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Judicial abstention is appropriate where (1) "the lawsuit

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involves determining complex economic policy, which is best handled

United States District Court

For the Northern District of California

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by the Legislature or an administrative agency," or (2) "granting

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injunctive relief would be unnecessarily burdensome for the trial

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court to monitor and enforce given the availability of more

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effective means of redress." 5

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Abstention is warranted under the first ground when "granting the

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requested relief would require a trial court to assume the

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functions of an administrative agency, or to interfere with the

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functions of an administrative agency."

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on the second ground when the equitable relief requested would

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result in a network of injunctions that "would have the cumulative

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effect of a statutory regulation, administered by the . . . courts

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through the medium of contempt hearings."

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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

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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.

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a.

1

Complex economic policy

As to the first prong of the abstention doctrine, Defendant

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3

argues that Plaintiff is asking the Court to assume the functions

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of CDSS.

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understaffing allegations are predicated on a California

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regulation, 22 Cal. Code Regs. § 87411(a), that requires

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residential care facilities for the elderly ("RCFE") to employ

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staff in sufficient numbers, "and competent to provide the services

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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)

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requires expertise and case-by-case evaluation that are better left

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to CDSS.

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changing requirements of the residents served by [Defendant's]

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communities would mean virtually continuous court scrutiny over

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potentially tens of thousands of staffing decisions each and every

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day."

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Id.

Moreover, according to Defendant, "[t]he constantly

Id. at 7.
In support, Defendant cites to the California Court of

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Appeal's decision in Alvarado.

In that case, the plaintiff

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asserted a UCL claim based on the defendant's alleged failure to

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provide sufficient direct nursing care for the residents of its

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skilled nursing facilities ("SNF") in violation of California

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Health & Safety Code section 1276.5(a).

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4th at 1296.

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that section 1276.5(a) was a regulatory statute that the

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legislature intended the Department of Health Services ("DHS") to

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enforce.

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equipped to evaluate compliance with the statute's 3.2 nursing-

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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

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1

host of specialized determinations, including whether the facility

2

at issue was a special treatment program service unit, whether

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certain employees' hours counted toward the requirement, and what

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formula should be used to calculate nursing hours.

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Defendant contends that Plaintiff's claims would require an even

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higher level of agency expertise since section 87411(a) does not

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set forth objective standards, such as staff per resident per hour,

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but merely requires a "sufficient number[]" of "competent" staff.

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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

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limited by Shuts v. Covenant Holdco LLC, 208 Cal. App. 4th 609

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(Cal. Ct. App. 2012).

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relied on Alvarado in sustaining the defendant's demurrer to the

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plaintiff's claims for violations of section 1276.5(a)'s NHPPD

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requirement.

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reversed because the plaintiff's claims were based on California

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Health and Safety Code section 1430, a statute which was never

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invoked by the plaintiff in Alvarado.

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that section 1430(b) conferred a private right of action for the

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violation of a SNF resident's right to reside in a facility with an

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adequate number of qualified personnel.

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also found that Alvarado's concern with rendering complex economic

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policy decisions was no longer pertinent.

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Alvarado was decided, DHS's successor agency "ha[d] made

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significant progress in providing administrative guidance on the

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3.2 NHPPD standard, and how it should be calculated."

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Plaintiff's reliance on Shuts is misplaced.

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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

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provides a private right of action for residents of SNFs, but not

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for residents of the RCFEs at issue here.

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California may have provided significant administrative guidance

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with respect to section 1276.5(a)'s NHPPD requirement, no such

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guidance exists as to section 87411(a).

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CDSS determines whether a RCFE is sufficiently staffed in

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accordance with the statute, and the Court is ill-equipped to

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develop its own framework for making such a determination.

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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

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requirements.

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injunction by blindly relying on the outputs of the wE Care system.

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It would need to make an independent determination of whether the

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staffing levels provided by wE Care were sufficient to meet the

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needs of Defendant's residents.

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Court's expertise.

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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