Marcie Hamilton v. JUUL Labs, Inc.

Filing 54

ORDER - Supplemental Order Granting Defendant's Motion to Dismiss Plaintiff's Cartwright Act Claims 45 . Signed by Judge Edward M. Chen on 4/27/2021. (emcsec, COURT STAFF) (Filed on 4/27/2021)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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MARCIE HAMILTON,

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Plaintiff,
v.

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JUUL LABS, INC.,
Defendant.

United States District Court
Northern District of California

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Case No. 20-cv-03710-EMC
SUPPLEMENTAL ORDER GRANTING
DEFENDANT’S MOTION TO DISMISS
PLAINTIFF’S CARTWRIGHT ACT
CLAIMS
Docket No. 45

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The parties seek clarification on whether the portions of Plaintiff’s Fifth Claim for Relief

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under Labor Code § 432.5 predicated on the Cartwright Act remain alive. Docket No. 45 at 10.

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See FAC ¶¶ 143-47. California Labor Code § 432.5 provides that “[n]o employer, or agent,

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manager, superintendent, or officer thereof, shall require any employee or applicant for

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employment to agree, in writing, to any term or condition which is known by such employer, or

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agent, manager, superintendent, or officer thereof to be prohibited by law.” Cal. Lab. Code §

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432.5.

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In ruling on the first Motion to Dismiss, this Court found that Plaintiff’s Fifth Claim for a

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PAGA violation under Labor Code § 432.5 survives with Government Code § 12964.5 as the

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predicate. Docket No. 23 at 16. It found that the other theories on which the Fifth Claim was

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based (Business & Professions Code § 17200; California’s Cartwright Act; Rule 21F-17 of the

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Securities and Exchange Commission; and the Defend Trade Secrets Act) did not plausibly state a

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PAGA claim. Id. at 11-15. However, the parties have informed the Court that its order analyzed

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the plausibility of Plaintiff’s claim based on California Business & Professions Code § 16600,

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which is distinct from the Cartwright Act. Accordingly, the Court now analyzes Plaintiff’s Fifth

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Claim under the provisions of the Cartwright Act, Cal Bus. & Prof. Code, § 16700 et seq.
The Cartwright Act “generally outlaws any combinations or agreements which restrain
trade or competition or which fix or control prices … and declares that, with certain exceptions,

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every trust is unlawful, against public policy and void.” In re Cipro Cases I & II, 61 Cal. 4th 116,

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136, 187 Cal. Rptr. 3d 632, 644, 348 P.3d 845, 855 (2015) (internal quotation marks omitted). See

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also Cal. Bus. & Prof. Code § 16726 (“[e]xcept as provided in this chapter, every trust is unlawful,

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against public policy and void”). A trust is defined as “a combination of capital, skill or acts by

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two or more persons” that is used for certain anticompetitive purposes. See Cal. Bus. & Prof.

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Code § 16720. Cf. Asahi Kasei Pharma Corp. v. CoTherix, Inc., 204 Cal. App. 4th 1, 8, 138 Cal.

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Rptr. 3d 620, 626 (2012) (“[a] Cartwright Act violation requires a combination of capital, skill or

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United States District Court
Northern District of California

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acts by two or more persons that seeks to achieve an anticompetitive end”) (internal quotation

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marks omitted).

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In order to maintain a cause of action under the Cartwright Act, the following elements

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must be established: “(1) the formation and operation of the conspiracy; (2) illegal acts done

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pursuant thereto; and (3) damage proximately caused by such acts.” Kolling v. Dow Jones & Co.,

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137 Cal. App. 3d 709, 718, 187 Cal. Rptr. 797, 803 (1982). Cf. Shajar Abid v. Google LLC, No.

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18-cv-00981-MEJ, 2018 U.S. Dist. LEXIS 93649, at *18 (N.D. Cal. June 4, 2018) (same). Some

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California appellate courts have held that “single firm monopolization is not cognizable under the

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Cartwright Act.” Asahi Kasei Pharma Corp., 204 Cal. App. 4th at 8; Freeman v. San Diego Ass'n

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of Realtors, 77 Cal. App. 4th 171, 200 n.32, 91 Cal. Rptr. 2d 534, 556 (1999) (“[t]he Cartwright

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Act bans combinations but does not have any parallel to Sherman Act section 2's antimonopoly

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provisions”). But see Lowell v. Mother's Cake & Cookie Co., 79 Cal. App. 3d 13, 23, 144 Cal.

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Rptr. 664, 671 (1978) (“[t]hough not specifically listed, monopoly is a prohibited restraint of

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trade” under the Cartwright Act”). Monopolization means “the willful acquisition of the power to

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control prices or exclude competition from commerce in a particular geographic area with respect

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to a specific product.” Lowell, 79 Cal. App. 3d at 23 (citing United States v. Grinnell Corp., 384

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U.S. 563, 570-71, 86 S. Ct. 1698, 1704 (1966)).

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Plaintiff brings suit solely against JLI and does not allege that it conspired with another to
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create a trust for an anticompetitive purpose. Further, even if a single firm monopolization theory

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is cognizable under the Cartwright Act, the FAC is devoid of any detail regarding JLI’s price

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fixing or willful exclusion of competition within a particular geographic area. See FAC ¶¶ 143-47.

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It contains a simple recitation of the Cartwright Act’s purpose and does not provide any detail

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regarding the legal theory on which the Cartwright Act claim is based. See id. Plaintiff does not

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describe how JLI creates an unlawful trust in restraint of trade through its conduct. The Court

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therefore finds that Plaintiff’s Cartwright Act claim is not a plausible theory on which Plaintiff’s

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Fifth Claim for relief, under Labor Code § 432.5, may rest.

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In sum, the Court clarifies that Plaintiff’s Fifth Claim is dismissed to the extent it rests on
the Cartwright Act. This order does not alter the Court’s previous holding that Plaintiff

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United States District Court
Northern District of California

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sufficiently states a claim for a PAGA violation under Labor Code §432.5 with Government Code

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§ 12964.5 as the predicate.

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IT IS SO ORDERED.

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Dated: April 27, 2021

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______________________________________
EDWARD M. CHEN
United States District Judge

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