Harris v. R.J. Reynolds Vapor Company

Filing 69

ORDER by Judge James Donato granting 62 Motion to Dismiss. Amended complaint due by 9/22/2017. (jdlc1S, COURT STAFF) (Filed on 8/23/2017)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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JEROD HARRIS,
Plaintiff,

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Case No. 15-cv-04075-JD
ORDER RE MOTION TO DISMISS
SECOND AMENDED COMPLAINT

v.
R.J. REYNOLDS VAPOR COMPANY,

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United States District Court
Northern District of California

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Defendant.

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This motion challenges under Federal Rule of Civil Procedure 12(b)(6) the second

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amended complaint (“SAC”) by plaintiff Jerod Harris against defendant R.J. Reynolds Vapor

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Company (“RJRV”) for deceptive and unfair practices in the marketing and sale of VUSE

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electronic cigarettes in California. Dkt. No. 61. The prior complaint was dismissed with leave to

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amend for failure to comply with the presuit notice requirements of California’s Proposition 65.

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RJRV seeks dismissal of the SAC on a number of grounds. The Court took oral argument on the

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motion, Dkt. No. 65, and now dismisses the SAC with leave to amend.

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BACKGROUND
As detailed in the Court’s prior dismissal order, Dkt. No. 60, Harris filed an initial

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complaint on September 8, 2015, alleging violations of the Consumers Legal Remedies Act,

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California Civil Code Section 1750, et seq. (“CLRA”) and the fraudulent and unfair prongs of

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California’s Unfair Competition Law, Business and Professions Code Section 17200, et seq.

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(“UCL”). The gravamen of the complaint was that RJRV failed to disclose or warn of the

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presence of carcinogenic chemicals in aerosols produced by its VUSE electronic cigarettes,

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particularly formaldehyde and acetaldehyde. Dkt. No. 1 ¶¶ 18, 53-80. On the same day that the

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complaint was filed, Harris sent out Proposition 65 notices in compliance with California Health

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and Safety Code Section 25249.7(d) and California Code of Regulations, Title 27, Section

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25903(b). Dkt. No. 25 ¶ 28. The parties later stipulated to the filing of an amended complaint,

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which Harris filed on November 20, 2015, adding a new claim under the unlawful prong of the

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UCL for violation of Proposition 65. Dkt. No. 15; Dkt. No. 25 ¶¶ 61-67.

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RJRV moved to dismiss that complaint because Harris had not satisfied Proposition 65’s

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presuit notice requirement. Dkt. No. 44; see CAL. HEALTH & SAFETY CODE § 25249.7(d)(1). The

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Court granted the motion with leave to amend. Dkt. No. 60. In the pending SAC, Harris alleges

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two claims for deceptive and unfair business practices under the UCL and one claim for violation

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of the CLRA. Dkt. No. 61. These claims state that RJRV knew but did not disclose to consumers
that the vapor from the VUSE products contains formaldehyde, acetaldehyde, ultrafine particles

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United States District Court
Northern District of California

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and other harmful substances. Id. ¶¶ 1, 77, 84; Dkt. No. 63 at 1.

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RJRV moves to dismiss the SAC on the grounds that (1) the claims predicated on a duty to

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disclose or alleged misrepresentation are not adequately pleaded; (2) the non-disclosure claims are

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preempted by the Tobacco Control Act and the FDA’s regulation of e-cigarettes; and (3) Harris

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lacks standing to simultaneously pursue reliance-based claims and claims for injunctive relief.

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Dkt. No. 62. The first ground is enough to dismiss, and the Court does not reach the other two.
DISCUSSION

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As an initial matter, UCL and CLRA claims that sound in fraud, as these do here, must

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meet the heightened pleading requirements of Federal Rule of Civil Procedure 9(b). See Kearns v.

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Ford Motor Co., 567 F.3d 1120, 1125 (9th Cir. 2009). The parties have chosen to debate the

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sufficiency of the complaint under the more forgiving standards of Rule 8 and the plausibility tests

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in Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007) and Ashcroft v. Iqbal, 556 U.S. 662, 678

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(2009). Because the SAC does not meet even this lenient standard, Rule 9(b) need not be

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addressed. Plaintiffs are advised to have an eye on it should they amend again, as they will be

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allowed to do.

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For the UCL and CLRA, Harris says RJRV should have but failed to disclose the presence

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of carcinogens and other toxins, including ultrafine particles, in the aerosol consumers inhale

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when using the VUSE products. Dkt. No. 61 ¶¶ 27-35. Harris does not allege a statutory duty to
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disclose, and so the existence of a duty on RJRV’s part turns on several circumstances under

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California law, namely whether the defendant: (1) has a fiduciary relationship with the plaintiff;

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(2) has exclusive knowledge of material facts not known to the plaintiff; (3) actively conceals a

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material fact from the plaintiff; or (4) makes partial representations but also suppresses some

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material facts. See Smith v. Ford Motor Co., 749 F. Supp. 2d. 980, 987 (N.D. Cal. 2010) (citing

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LiMandri v. Judkins, 60 Cal. Rptr. 2d 539, 543 (Cal. Ct. App. 1997)).

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The SAC does not state enough facts to plausibly allege a duty to disclose. In an apparent

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response to the prior dismissal order, Harris insists that the SAC does not rely in any way on

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Proposition 65 for the existence of the duty, but the allegations continue to highlight the lack of
carcinogen warnings on RJRV’s products. See Dkt. No. 61 ¶¶ 39-55. This effectively recasts

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United States District Court
Northern District of California

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violations of Proposition 65 as violations of the UCL or CLRA, which the Court has already

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determined will not do. Dkt. No. 60 at 3-4. The basis of RJRV’s duty must be independent of

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Proposition 65.

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Harris suggests that an independent basis can be found in RJRV’s exclusive knowledge of

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the negative health effects of its vaping products. Dkt. No. 61 ¶¶ 33, 76, 87, 97. But the second

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amended complaint cites published studies that identify and discuss potential health risks.

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Id. ¶¶ 21, 26 n.18. This undercuts any claim of exclusive knowledge. See In re NJOY, Inc.

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Consumer Class Action Litigation, 14-cv-00428-MMM, Dkt. No. 119 at *31 (publication of an

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FDA study on the presence of harmful toxins in NJOY’s e-cigarettes defeats allegation of

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exclusive knowledge.). In addition, as the SAC acknowledges, RJRV expressly disclosed to

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consumers that VUSE products are tobacco products, and that “no tobacco product is safe or

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without risk.” Dkt. No. 61 ¶ 37.

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Harris’s reliance on active concealment to state a plausible claim is also unpersuasive. He

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says that “it can be inferred from [RJRV’s] membership in the industry group CORRESTA that

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RJRV actively concealed and failed to disclose the presence of toxic chemicals and ultrafine

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particles . . . contained in the aerosol inhaled by its Products’ users” because the purpose of this

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group was to conduct rigorous product testing. Dkt. No. 63 at 5; see also Dkt. No. 61 ¶ 24. That

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inference is not at all obvious or unavoidable, and in any event a “mere nondisclosure does not
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constitute active concealment.” Herron v. Best Buy Co. Inc., 924 F. Supp. 2d 1161, 1176 (E.D.

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Cal. 2013) (and cases cited therein). The SAC does not offer any facts showing that RJRV

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actively or affirmatively hid or suppressed any risks associated with the VUSE products.

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Harris suggests that RJRV made a misleading partial disclosure by warning consumers

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only of nicotine risks. See Dkt. No. 63 at 5. But as the SAC itself acknowledges, RJRV also

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made the broader disclosure that VUSE products are a “tobacco product, and no tobacco product is

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safe or without risk.” Dkt. No. 61 ¶ 37. While it is true that RJRV did not spell out all the

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chemicals in VUSE vapor, RJRV’s identification of VUSE as a tobacco product that was neither

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safe nor risk free hardly amounts to a misleading partial statement. The diseases and health
injuries caused by tobacco consumption have been widely disseminated for decades in public

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United States District Court
Northern District of California

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health campaigns. An exhaustive disclosure of all the chemicals and risks associated with tobacco

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products is not necessary to ensure that a consumer was on notice that the VUSE products were

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unsafe and risky. It is simply not plausible to contend that RJRV partially concealed anything in

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disclosing that its VUSE products are tobacco products.

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This same point undermines the plausibility of Harris’s express misrepresentation claims.

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Harris says that RJRV’s representation that its products involve “vapor, not smoke” could mislead

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a reasonable consumer into believing they were safe. See Dkt. No. 61 ¶ 37. Specifically, Harris

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alleges:

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Some of Defendant’s marketing materials state that the Products

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are a “tobacco product, and no tobacco product is safe or without

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risk.” However, Defendant simultaneously makes representations

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regarding the Products that make it appear to reasonable

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consumers that the Products do not in fact qualify as “tobacco

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products,” including:

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“VUSE products produce vapor, not smoke. They do not

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burn tobacco, but rather, heat liquid containing nicotine

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derived from tobacco.”

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

“VUSE products do not produce tobacco smoke. ‘Smoking’
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or ‘smoke’ specifically means the burning of a lighted

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cigarette, cigar, pipe, or any other matter or substance that

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contains a tobacco product.”

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“VUSE products do not contain actual tobacco. However,
the nicotine in VUSE is derived from tobacco.”

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Dkt. No. 61 ¶ 37 (citations omitted).

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These allegations are insufficient for the same reasons the partial representation allegations

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fail. RJRV disclosed that VUSE produces nicotine and is a tobacco product. A consumer cannot

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plausibly claim that RJRV misrepresented VUSE to consumers as risk free and safe.
CONCLUSION

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United States District Court
Northern District of California

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The motion to dismiss is granted. Harris may file an amended complaint by September

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22, 2017, that is consistent with this and the prior dismissal order. Because that will be Harris’s

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third amended complaint, further amendment is highly unlikely to be permitted.

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IT IS SO ORDERED.
Dated: August 23, 2017

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JAMES DONATO
United States District Judge

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