Corcoran et al v. CVS Health Corporation

Filing 96

ORDER by Judge Yvonne Gonzalez Rogers granting in part 56 Motion to Dismiss; granting 57 Motion to Dismiss; granting 85 Motion to Appoint the Firms as Interim Class Counsel ; denying 88 Motion to Transfer Case. The April 5, 2016 hearing on the motion to transfer is VACATED..(fs, COURT STAFF) (Filed on 3/14/2016)

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1 2 3 4 5 UNITED STATES DISTRICT COURT 6 NORTHERN DISTRICT OF CALIFORNIA 7 8 CHRISTOPHER CORCORAN, et al., 9 10 United States District Court Northern District of California 11 12 13 14 Plaintiffs, vs. CVS HEALTH CORPORATION AND CVS PHARMACY, INC., Case No.: 15-CV-3504 YGR ORDER ON MOTIONS TO DISMISS; MOTION TO APPOINT INTERIM CLASS COUNSEL; MOTION TO TRANSFER Re: Dkt. Nos. 56, 57, 58, 85, 88 Defendants. Plaintiffs Christopher Corcoran, Robert Garber, Toni Odorisio, Robert Guarnieri, Onnolee 15 Samuelson, Irma Pacheco, Michael Norkus, Vincent Gargiulo, Zulema Avis, Ken Bolin, Robert 16 Jenks, Tyler Clark, Carolyn Caine, Linda Krone, Elizabeth Gardener, Carl Washington, Zachary 17 Hagert, Debbie Barrett, Robert Podgorny, Kevin Cauley, and Walter Wulff (collectively, 18 “Plaintiffs”) bring this action on behalf of themselves and all others similarly situated against 19 defendants CVS Health Corporation (“CVS Health”) and CVS Pharmacy, Inc. (“CVS Pharmacy”) 20 (collectively, “Defendants” or “CVS”) for allegedly overcharging them for generic prescription 21 drugs. In their Second Amended Complaint Plaintiffs bring nineteen causes of action for: fraud, 22 constructive fraud, negligent misrepresentation, unjust enrichment, and violation of consumer 23 protection laws in twelve states and the District of Columbia. (Dkt. No. 49, “SAC.”) Based 24 thereon, Plaintiffs seek damages, injunctive and declaratory relief, and attorney fees on behalf of a 25 national class as well as state-specific subclasses. 26 27 28 Currently pending before the Court is CVS Health’s motion to dismiss for lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2) and CVS Pharmacy’s motion to 1 dismiss for failure to state a claim pursuant to Rule 12(b)(6) in which CVS Health joins.1 Also 2 pending before the Court is Plaintiffs’ motion to appoint interim class counsel pursuant to Rule 3 23(g), which Defendants do not substantively oppose. (Dkt. No. 85.) Finally, Defendants filed a 4 motion to transfer this action to the District of Rhode Island. (Dkt. No. 88.) 5 Having carefully considered the papers and evidence submitted, the pleadings in this action, 6 and for the reasons set forth on the record at oral argument held March 8, 2016 and more fully 7 below, the Court hereby GRANTS CVS Health’s motion on jurisdictional grounds, GRANTS IN 8 PART CVS Pharmacy’s motion as described herein, GRANTS Plaintiffs’ motion to appoint interim 9 class counsel, and DENIES Defendants’ motion to transfer. I. 10 United States District Court Northern District of California 11 BACKGROUND CVS is a national retail pharmacy chain with over seven thousand pharmacies operating 12 under its trade name in the United States and Puerto Rico, managing more than one billion 13 prescriptions annually. (SAC ¶ 39.) In 2014, CVS earned net revenue of nearly one-hundred and 14 forty billion dollars, approximately sixty-seven billion dollars of which is attributed to its retail 15 pharmacy division. (Id.) CVS operates one of the largest retail pharmacy chains in the United 16 States. (Id. ¶ 4.) Since 2008, CVS has captured more than one third of total prescription growth in 17 the United States. (Id.) 18 CVS pharmacies dispense prescription medications. (Id. ¶ 6.) Approximately ninety 19 percent of Americans – including Plaintiffs – are enrolled in a private or public health care plan that 20 shares prescription drug costs. (Id. ¶ 8.) When plan beneficiaries (insureds) fill a prescription, they 21 pay a portion of the cost (copayment or copay) and the plan (third-party payor) pays the remainder 22 of the cost. (Id. ¶ 43.) When an insured fills a prescription at CVS, the pharmacist generates a 23 claim by transmitting patient, prescription, and insurance information electronically to the 24 customer’s insurer or its claims processor. (Id. ¶¶ 47-48.) The electronic CVS claims process 25 utilizes standardized data fields developed by the National Council for Prescription Drug Programs 26 (“NCPDP”), a standard-setting organization in the healthcare industry. (Id. ¶¶ 49, 51.) One data 27 28 1 The Court resolves the two administrative motions to seal documents submitted in connection with the motions to dismiss (Dkt. Nos. 73, 76) via separate order entered this date. 2 1 field on NCPDP’s standard layout is Field No. 426-DQ, the usual and customary (“U&C”) price. 2 (Id. ¶ 52.) The U&C price is “generally defined as the cash price to the general public, which is the 3 amount charged [to] cash customers for the prescription, exclusive of sales tax or other amounts 4 claimed.” (Id.) The copayment a customer must pay is calculated in part based on the U&C price 5 CVS transmits to the insurer. (Id. ¶¶ 53-54.) A copayment must be equal to or less than the drug’s 6 U&C price. (Id. ¶ 54.) 7 This case involves the Health Savings Pass (“HSP”) program CVS introduced in 2008. (Id. 8 ¶ 59.) The HSP program provides discounted pricing on hundreds of generic prescription 9 medications (“HSP generics”). (Id. ¶ 61.) A generic drug is a copy of a brand-named drug that has the same active ingredients as the brands they copy but are typically offered at lower prices. (Id.) 11 United States District Court Northern District of California 10 The HSP generics include some of the most commonly prescribed generic drugs for cardiovascular, 12 allergy, and diabetes conditions, among others. (Id. ¶ 62.) From November 9, 2008 through 2010, 13 cash paying customers could join the HSP program for a $10 fee. (Id. ¶ 61.) During this time, 14 CVS charged HSP members $9.99 for a ninety-day supply of an HSP generic. (Id.) Beginning in 15 2011, CVS raised the HSP enrollment fee to $15 a year and the cost of a ninety-day supply of an 16 HSP generic rose to $11.00 for a ninety-day supply. (Id.) 17 Plaintiffs allege that CVS created the HSP program to compete with similar discounts 18 introduced by its competitors while continuing to receive full reimbursement from third-party 19 payors. (Id. ¶¶ 56-60.) Specifically, following implementation of the HSP program, CVS 20 continued to report the full retail price of all HSP generics (rather than the HSP program price) as 21 the U&C price to third-party payors. (Id. ¶ 64.) Plaintiffs allege that these U&C prices CVS 22 reported for HSP generics were false because they did not reflect the price paid by the biggest 23 group of cash paying customers: HSP program members. (Id. ¶¶ 77-80.) As a result of CVS 24 reporting artificially inflated U&C prices to third-party payors for the same HSP generics CVS 25 offers at lower prices under the HSP program, its insured customers in some instances paid 26 copayments that exceeded the true U&C price, i.e. the HSP program price. (Id. ¶ 75.) Plaintiffs 27 allege that CVS knowingly created the HSP program to report false U&C prices with the intent to 28 deceive both third-party payors and insured customers into paying higher prices based on inflated 3 1 U&C prices improperly higher than the HSP program prices. (Id. ¶¶ 9, 13-14, 64-81.) By contrast, 2 four of CVS’s major market competitors – Shoprite, Wal-Mart, Target, and Costco – report 3 significantly lower U&C’s to reflect the amounts charged under their respective discount programs. 4 (Id. ¶¶ 76-77.) 5 Plaintiffs and class members are individuals who participate in third-party health care plans 6 and purchased HSP generics from CVS retail pharmacies between 2008 and the filing of the SAC. 7 (Id. ¶¶ 10, 16-36.) CVS charged Plaintiffs for copayments on the HSP generics in excess of the 8 amount HSP program member price for the same drug. (Id. ¶¶ 16-36.) For these sales, Plaintiffs 9 allege that CVS knowingly submitted to Plaintiffs’ third-party payors a U&C price fraudulently inflated above CVS’s true U&C price – the price CVS offered to HSP members. (Id.) Based 11 United States District Court Northern District of California 10 thereon, Plaintiffs allege they were all overcharged by varying amounts in inflated copayments. 12 (Id.) For example, with respect to Plaintiff Corcoran, the SAC alleges: 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Plaintiff Christopher Corcoran is domiciled in the State of California. Mr. Corcoran has purchased generic versions of four monthly maintenance medications from CVS in California between February 2009 and the present. Mr. Corcoran carries private health insurance and carried private health insurance during the time that he purchased generic medications from CVS. All four medications prescribed to Mr. Corcoran are on the CVS HSP generic medication list (attached hereto as Exhibit A). CVS charged its cash-paying customers a usual and customary price of $3.33 for a 30-day supply of the same prescription that Mr. Corcoran purchased from 2008 to 2010, and $3.99 from 2011 to the present. CVS is required to charge Mr. Corcoran a copay that does not exceed the usual and customary price CVS charges for the prescription drug. For these sales, CVS knowingly submitted to Mr. Corcoran’s third-party payor a purported usual and customary price fraudulently inflated above CVS’s true usual and customary price – the price CVS offers under its HSP program. As a result of CVS’s fraudulent scheme, Mr. Corcoran has paid copays substantially higher than $3.33 from 2008 to 2010 and $3.99 from 2011 to the present per 30-day supply when he purchased his generic prescriptions from CVS and has, thereby, been injured. CVS has overcharged Mr. Corcoran at least $284.79 in inflated copays. Mr. Corcoran anticipates filling future prescriptions for these generic drugs at a CVS pharmacy, and thus faces the prospect of paying additional inflated copays in the future if CVS continues its wrongful conduct. 4 1 (Id. ¶ 16.) Similar allegations are made as to all named Plaintiffs. (Id. ¶¶ 17-36.) 2 Plaintiffs assert nineteen claims sounding in fraud based on the allegations in the SAC. 3 Defendants move to dismiss all claims for lack of personal jurisdiction over CVS Health under 4 Rule 12(b)(2), and for failure to state a claim against both CVS Health and CVS Pharmacy under 5 Rule 12(b)(6). The Court addresses these arguments in turn. 6 II. CVS HEALTH’S MOTION TO DISMISS PURSUANT TO RULE 12(b)(2) 7 CVS Health seeks dismissal with prejudice on grounds that the Court does not have 8 personal jurisdiction over it as to Plaintiffs’ claims. CVS Health contends that it has no meaningful 9 connection to California such that the Court cannot exercise jurisdiction over it. 10 United States District Court Northern District of California 11 A. Legal Standard A motion under Federal Rule of Civil Procedure 12(b)(2) challenges a court’s exercise of 12 personal jurisdiction over a defendant. Fed. R. Civ. P. 12(b)(2). Where no federal statute governs 13 personal jurisdiction, the Court applies the law of the state in which it sits; here, California law 14 applies. Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 800 (9th Cir. 2004). California 15 law allows for the exercise of “jurisdiction on any basis not inconsistent with the Constitution of 16 [California] or of the United States.” Cal. Civ. Proc. Code § 410.10. Due process requires that the 17 non-resident defendant have “minimum contacts with [the forum state] such that the maintenance 18 of the suit does not offend traditional notions of fair play and substantial justice,” Int’l Shoe Co. v. 19 Washington, 326 U.S. 310, 316 (1945) (internal quotations omitted). “In judging minimum 20 contacts, a court properly focuses on ‘the relationship among the defendant, the forum, and the 21 litigation.’” Calder v. Jones, 465 U.S. 783, 788 (1984) (quoting Shaffer v. Heitner, 433 U.S. 186, 22 204 (1977)). Personal jurisdiction may be either general or specific. Bancroft & Masters, Inc. v. 23 Augusta Nat’l, Inc., 223 F.3d 1082, 1086 (9th Cir. 2000). 24 General jurisdiction allows a court to assert jurisdiction over out of state corporations “to 25 hear any and all claims against them” and attaches to a defendant only if its “affiliations with the 26 State are so continuous and systemic as to render it essentially at home in the forum State.” 27 Daimler AG v. Bauman, -- U.S. --, 134 S.Ct. 746, 749 (2014) (internal quotations and alterations 28 omitted); Goodyear Dunlop Tires Operations, S.A. v. Brown, -- U.S. --, 131 S.Ct. 2846, 2851 5 1 (2011). It would be the “exceptional case” where “a corporation’s operations in a forum other than 2 its formal place of incorporation or principal place of business may be so substantial and of such a 3 nature as to render the corporation at home in that State.” Daimler, 134 S.Ct. at 761, n.19. 4 By contrast, specific jurisdiction “depends on an affiliation[n] between the forum and the 5 underlying controversy, principally, activity or an occurrence that takes place in the forum State 6 and is therefore subject to the State’s regulation.” Goodyear, 131 S.Ct. at 2851 (internal quotations 7 omitted). Said otherwise, personal jurisdiction requires the Court evaluate whether the specific 8 activity giving rise to the plaintiff’s causes of action is sufficiently related to the forum state. See 9 Perkins v. Benguet Consol. Mining Co., 342 U.S. 437, 446 (1952); Hanson v. Denckla, 357 U.S. 235, 250-53 (1958). The Ninth Circuit applies a three-prong test to determine whether a non- 11 United States District Court Northern District of California 10 resident defendant’s activities are sufficiently related to the forum state to establish specific 12 personal jurisdiction: 13 (1) The non-resident defendant must purposefully direct his activities or consummate some transaction with the forum or resident thereof; or perform some act by which he purposefully avails himself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections of its laws; (2) the claim must be one which arises out of or relates to the defendant’s forum-related activities; and (3) the exercise of jurisdiction must comport with fair play and substantial justice, i.e. it must be reasonable. 14 15 16 17 18 19 20 Schwarzenegger, 374 F.3d at 802 (citing Lake v. Lake, 817 F.2d 1416, 1421 (9th Cir. 1987)). The 21 plaintiff bears the burden of demonstrating the first two prongs. Id.; Boschetto v. Hansing, 539 22 F.3d 1011, 1016 (9th Cir. 2008). If the plaintiff fails to satisfy either of these prongs, then personal 23 jurisdiction is not established in the forum state. Pebble Beach Co. v. Caddy, 453 F.3d 1151, 1555 24 (9th Cir. 2006). If the plaintiff carries this burden, then “the defendant must come forward with a 25 ‘compelling case’ that the exercise of jurisdiction would not be reasonable.” Boschetto, 539 F.3d at 26 1016. (citing Schwarzenegger, 374 F.3d at 802). 27 Where, as here, the motion to dismiss is based on written submissions—rather than an 28 evidentiary hearing—the plaintiff need only make a prima facie showing of jurisdiction. 6 1 Schwarzenneger, 374 F.3d at 800. A plaintiff makes a “prima facie” showing by producing 2 admissible evidence which, if believed, would be sufficient to establish the existence of personal 3 jurisdiction. Ballard v. Savage, 65 F.3d 1495, 1498 (9th Cir. 1995). In deciding whether such a 4 showing has been made, a district court must accept as true the uncontroverted allegations in the 5 complaint and conflicts between facts contained in the parties’ affidavits must be resolved in a 6 plaintiff’s favor. AT&T v. Compagnie Bruxelles Lambert, 94 F.3d 586, 588 (9th Cir. 1996). B. Analysis 7 8 9 The only jurisdictional allegations in the SAC group CVS Health together with CVS Pharmacy, referring to Defendants collectively as “CVS,” and stating: 10 This Court has jurisdiction over CVS because CVS intentionally avails itself of the California consumer market through the promotion, sale, marketing, and distribution of their products to California residents. As a result, jurisdiction in this Court is proper and necessary. Moreover, CVS’s wrongful conduct, as described herein, foreseeably affects consumers in California and nationwide. United States District Court Northern District of California 11 12 13 14 (SAC ¶ 41.) Plaintiffs further allege that CVS Pharmacy “may be deemed the agent of” CVS 15 Health. (Id. ¶ 38.) The SAC is otherwise devoid of allegations tending to show personal 16 jurisdiction over Defendants in California.2 17 In support of its motion to dismiss, CVS Health submitted declarations of Thomas S. 18 Moffatt, the vice president, corporate secretary and assistant general counsel-corporate services for 19 CVS Pharmacy. (Dkt. No. 57-1, “Moffatt Decl.” ¶ 2; Dkt. No. 77-1, “2d Moffat Decl.” ¶ 2.) 20 Moffatt states that he is familiar with the corporate structure of CVS Health “and its wholly-owned 21 subsidiary,” CVS Pharmacy. (Moffatt Decl. ¶ 3.) Moffatt further asserts that CVS Health: is 22 nothing more than a holding company whose primary functions are to issue stock and file reports 23 with the Securities and Exchange Commission; is not authorized to transact business in nor does it 24 have a registered agent in California; and has no direct involvement in directing, managing, or 25 supervising the operations or the employees of CVS Pharmacy. (Id. ¶¶ 4-6.) 26 27 28 In opposition, Plaintiffs submitted an attorney declaration attaching exhibits tending to show CVS Health’s presence in California, as well as the relationship between CVS Health and 2 CVS Pharmacy does not contest personal jurisdiction for purposes of this case only. 7 1 CVS Pharmacy. (Dkt. No. 72-1, “Levine Decl.”) Plaintiffs argue their submissions make a prima 2 facie showing that CVS Health is itself subject to the jurisdiction of this Court, both general and 3 specific. Plaintiffs alternatively contend this Court has jurisdiction over CVS Health as the 4 principal and alter-ego of CVS Pharmacy. CVS Health disagrees, arguing Plaintiffs have not met 5 their prima facie burden to show personal jurisdiction in this Court on any grounds. The Court 6 addresses the parties’ arguments in turn below. 1. CVS Health’s Contacts with California 7 8 Turning first to general jurisdiction based on CVS Health’s contacts with California, 9 Plaintiffs must make a prima facie showing that CVS Health is “essentially at home” in this forum. Daimler, 134 S.Ct. at 749. In Daimler, the Supreme Court affirmed that a corporation’s place of 11 United States District Court Northern District of California 10 incorporation and its principal place of business are “paradigm all-purpose forums,” but did not 12 “foreclose the possibility that in an exceptional case” a foreign corporation may be at home in a 13 different state. Id. at 760-61, n. 19 (citing Goodyear, 131 S.Ct. at 2853-54; Perkins v. Benguet 14 Consol. Mining Co., 342 U.S. 413 (1952)). The paradigmatic bases for general jurisdiction do not 15 apply here, as Plaintiffs correctly allege that CVS Health is a Delaware corporation and is 16 headquartered in Rhode Island. (SAC ¶ 37; see also Moffatt Decl. ¶ 5.) Nor do Plaintiffs explicitly 17 contend the exceptional case standard applies.3 18 Plaintiffs instead rely on pre-Daimler cases applying the less stringent “substantial, 19 continuous, and systematic course of business” standard, which the Daimler court held was 20 “unacceptably grasping.” Daimler, 134 S.Ct. at 761. In that regard, Plaintiffs’ contention that CVS 21 Health has a substantial number of pharmacies, maintains two distribution centers, and solicits 22 23 24 25 26 27 28 3 Any such argument would necessarily fail. The Daimler court pointed to Perkins, supra, a case involving wartime temporary relocation of defendant’s headquarters as an exemplar of an exceptional case. An exception similar to the one granted in Perkins plainly does not apply here. See Amiri v. DynCorp Int’l, Inc., 2015 WL 166910, at *3 (N.D.Cal. Jan. 13, 2015) (noting that “in the overwhelming majority of cases there will be no occasion to explore whether a Perkins-type exception might apply”). Plaintiffs allege no facts that would allow the Court to find that California is CVS Health’s surrogate home state as in Perkins. 8 1 employees in California is not persuasive.4 Cahen v. Toyota Motor Corp., 2015 WL 7566806, at 2 *6-7 (N.D.Cal. Nov. 25, 2015) (plaintiffs’ comparable analysis was “undercut by Daimler”). In 3 Daimler, the Supreme Court rejected plaintiffs’ arguments that a foreign manufacturer was at home 4 in California due to its “multiple offices, continuous operations, and billions of dollars’ worth of 5 sales” in the forum. Daimler, 134 S.Ct. at 772 (Sotomayor, J., concurring). Other post-Daimler 6 plaintiffs have attempted similarly ill-fated arguments for general jurisdiction based on the old 7 standard. See, e.g., Martinez v. Aero Caribbean, 764 F.3d 1062, 1070 (9th Cir. 2014) cert. denied, 8 -- U.S. --, 135 S.Ct. 2310 (2015) (affirming district court finding of no general jurisdiction over 9 defendant who had contracts with California companies worth between $225 and $450 million, sent employees to California, and advertised in trade publications with distribution in California); 11 United States District Court Northern District of California 10 Cahen, 2015 WL 7566806, at *6-7 (same, with respect to defendant car manufacturer who had 302 12 employees in California and over one hundred thousand cars registered in California in the past 13 year). Even taking all of Plaintiffs’ jurisdictional allegations as true, CVS Health’s contacts do not 14 rise to the level that it is “essentially at home in the forum State.” Daimler, 134 S.Ct. at 761.5 15 As for specific personal jurisdiction, Plaintiffs utterly fail to address the Ninth Circuit’s 16 three-prong analysis. Plaintiffs’ conclusory statement that CVS Health “itself…purposefully 17 directs its business activities, including the pricing and sale of generic prescription drugs, to 18 customers in California,” (Dkt. No. 72 at 11:4-6) alone cannot suffice. Plaintiffs provide no 19 allegations or evidence to support an assertion that CVS Health had any “direct involvement in the 20 scheme alleged in the [SAC]” (id. at 4:22-24) as would be required for a finding that CVS Health is 21 subject to the specific jurisdiction of this Court. See Callum v. CVS Health Corp., -- F.Supp.3d --, 22 2015 WL 5782077 (D.S.C. Sept. 29, 2015) (finding that CVS Health was not subject to specific 23 4 24 25 26 27 28 Defendants present evidence in reply showing that Plaintiffs’ allegations with regard to CVS Health’s presence in California are false, and that all of these contacts with California are attributable to CVS Health’s subsidiaries, including CVS Pharmacy. (See, e.g., 2d Moffatt Decl. ¶ 10.) Regardless, the Court accepts Plaintiffs’ allegations as true as it must, but ultimately finds they are legally insufficient to establish that CVS Health is “essentially at home” in California. Daimler, 134 S.Ct. at 749. 5 Indeed, at oral argument, Plaintiffs’ Counsel essentially conceded they could not establish a prima facie showing of general jurisdiction post-Daimler. 9 1 jurisdiction in South Carolina given the plaintiff’s failure to show CVS Health’s contact with the 2 state was related to the causes of action in that case). To the extent Plaintiffs attempt to conflate 3 this argument with its agency and/or alter ego arguments by alleging CVS Pharmacy officers and 4 employees involved in the implementation of the HSP program are also employees of CVS Health 5 (see id. at 4-6), the Court addresses those arguments below. See Section II.B.2, infra. CVS Health 6 is ostensibly a separate entity from CVS Pharmacy and Plaintiffs’ attempts to show otherwise are 7 properly addressed on theories of agency and alter ego. 8 9 Accordingly, Plaintiffs have not met their burden to make a prima facie case of general or specific jurisdiction over CVS Health based on its contacts alone. 2. Imputing CVS Pharmacy’s Contacts with California 10 United States District Court Northern District of California 11 Having failed to show that CVS Health – without regard to CVS Pharmacy – is subject to 12 the jurisdiction of this Court, Plaintiffs endeavor to show CVS Pharmacy’s conduct may be 13 imputed to CVS Health through the agency or alter ego theories.6 Before Daimler, the Ninth 14 Circuit “permitted a plaintiff to pierce the corporate veil for jurisdictional purposes and attribute a 15 local entity’s contacts to its out-of-state affiliate under one of two separate tests: the ‘agency’ test 16 and the ‘alter ego’ test.” Ranza v. Nike, Inc., 793 F.3d 1059, 1071 (9th Cir. 2015). The Daimler 17 decision invalidated the Ninth Circuit’s agency test for purposes of general jurisdiction, holding it 18 “stacks the deck, for it will always yield a pro-jurisdiction answer.” Id. (quoting Daimler, 134 19 S.Ct. at 759). Thus, a foreign parent corporation cannot be subject to general jurisdiction based 20 solely on an agency relationship through its subsidiary’s contacts with the forum. Id. 21 The Daimler court left open the possibility that an agency analysis may be relevant in the 22 specific jurisdiction context. Daimler, 134 S.Ct. at 759 n.13 (“Agency relationships, we have 23 recognized, may be relevant to the existence of specific jurisdiction”) (emphasis in original). At 24 least one court in this District has opined that Daimler’s disapproval of the Ninth Circuit’s agency 25 test likely applies in the context of specific jurisdiction as well. See Los Gatos Mercantile, Inc. v. 26 E.I. DuPont De Nemours and Co., 2015 WL 4755335, at *5 (N.D.Cal. Aug. 11, 2015) (“the 27 28 6 For purposes of this analysis, the court assumes that Plaintiffs established personal jurisdiction over CVS Pharmacy such that the agency and alter ego analyses are applicable. 10 1 rationale set forth in Daimler—that the Ninth Circuit’s agency test inappropriately ‘stacks the 2 deck’—would seem to undermine application of the [Ninth Circuit’s agency test] even in specific 3 jurisdiction cases”). The Court agrees, but in the face of post-Daimler uncertainty, nevertheless 4 engages in the analysis. 5 Assuming the Ninth Circuit’s agency test remains viable as to specific personal jurisdiction, 6 the relevant question for the agency inquiry is “whether, in the truest sense, the subsidiar[y’s] 7 presence substitutes for the presence of the parent.” Doe v. Unocal Corp., 248 F.3d 915, 928-29 8 (9th Cir. 2000). To establish jurisdiction over CVS Health on an agency theory, Plaintiffs must 9 establish that CVS Pharmacy is CVS Health’s agent by showing: (1) CVS Pharmacy “functions as [CVS Health’s] representative in that it performs services that are sufficiently important to the 11 United States District Court Northern District of California 10 foreign corporation that if it did not have a representative to perform them, [CVS Health’s] own 12 officials would undertake to perform substantially similar services,” and (2) CVS Health “exercises 13 a measure of control over” CVS Pharmacy’s activities. United States v. Pangang Group Co., Ltd., 14 879 F.Supp.2d 1052, 1058 (N.D.Cal. 2012) (internal citations omitted); Stewart v. Screen Gems- 15 EMI Music, Inc., 81 F.Supp.3d 938, 957 (N.D.Cal. 2015). Plaintiffs do not plead any facts going to 16 the first requirement, or that CVS Health would undertake to perform the functions of CVS in 17 California absent having the subsidiary. This alone warrants a finding of no agency relationship. 18 Plaintiffs next support their personal jurisdiction claim by arguing that CVS Health is the 19 alter ego of CVS Pharmacy. Plaintiffs point to the following evidence to support their argument 20 that the Court should disregard corporate formalities and impute CVS Pharmacy’s contacts to its 21 parent CVS Health: (i) members of CVS Pharmacy’s senior management team all also hold titles 22 and senior positions with CVS Health; (ii) CVS Health and CVS Pharmacy “share” certain 23 executives, including the head of human resources and chief legal officer; (iii) the lone two 24 members of CVS Pharmacy’s board are also senior executives for CVS Health; (iv) CVS Health’s 25 public filings show that CVS Health provides management and administrative services to support 26 the overall operations of all segments of CVS Health; (v) CVS Health’s website presents itself as 27 one integrated company, including its pharmacy division; (vi) CVS Health selected CVS 28 Pharmacy’s new president in 2013; (vii) CVS Pharmacy identified persons associated with CVS 11 1 Health as having discoverable information in its Rule 26 initial disclosures; and (viii) persons who 2 allegedly identify themselves as “employees” of CVS Health exchanged emails about the HSP 3 program at issue in the litigation. (Levine Decl. ¶¶ 6-7, 14, 16, 23-25, and associated exhibits).7 4 In narrow circumstances federal courts will find that a corporation is the alter ego of another 5 by “‘pierc[ing] the corporate veil’ and attribut[ing] a subsidiary’s [contacts with] the forum state to 6 its parent company for jurisdictional purposes.” Calvert v. Huckins, 875 F.Supp. 674, 678 7 (E.D.Cal. 1995). To survive a Rule 12(b)(2) motion on an alter ego theory a plaintiff must make a 8 prima facie showing that both: (1) there is a unity of interest and ownership between the 9 corporations such that their separate personalities do not actually exist, and (2) treating the corporations as separate entities would result in injustice. Ranza, 793 F.3d at 1073 (quoting 11 United States District Court Northern District of California 10 Unocal, 248 F.3d at 926). The first prong of the alter ego test requires “a showing that the parent 12 controls the subsidiary to such a degree as to render the latter the mere instrumentality of the 13 former.” Id. (quoting AT&T Co., 94 F.3d at 591). It requires such “pervasive control” that it can 14 only be met where a parent corporation “dictates every facet of the subsidiary’s business—from 15 broad policy decisions to routine matters of day-to-day operation.” Id. Importantly, the Ninth 16 Circuit has emphasized that “[t]otal ownership and shared management personnel are alone 17 insufficient to establish the requisite level of control.” Id. (citing Harris Rutsky & Co. Ins. Servs. v. 18 Bell & Clements Ltd., 328 F.3d 1122, 1135 (9th Cir. 2003)). Nor can the first prong be met by only 19 showing “an active parent corporation involved directly in decision-making about its subsidiaries’ 20 holdings” where the corporations “observe all of the corporate formalities necessary to maintain 21 corporate separateness.” Unocal, 248 F.3d at 928. Courts consider nine factors when assessing the 22 first prong of the alter ego test: 23 [1] the commingling of funds and other assets of the entities, [2] the holding out by one entity that it is liable for the debts of the other, [3] identical equitable ownership of the entities, [4] use of the same offices and employees, [5] use of one as a mere shell or conduit for 24 25 26 7 27 28 Additionally, at oral argument, Plaintiffs pointed to CVS Health’s February 10, 2015 Form 10-K filing (Dkt. No. 72-10), in which CVS Health does not represent itself as a “holding company,” as Mr. Moffat attests. While this indicates a factual dispute, Plaintiffs have not shown that CVS Health’s status as a “holding company” could be dispositive of the alter ego analysis. 12 the affairs of the other, [6] inadequate capitalization, [7] disregard of corporate formalities, [8] lack of segregation of corporate records, and [9] identical directors and officers. 1 2 3 4 Stewart, 81 F.Supp.3d at 954 (quoting Sandoval v. Ali, 34 F.Supp.3d 1031, 1040 (N.D.Cal. 2014)). Here, Plaintiffs’ evidence goes only to the third, fourth, and ninth factors.8 Accepted as 5 true, and taken it in a light most favorable to Plaintiffs, the evidence shows only that CVS Health 6 wholly owns CVS Pharmacy, the two entities have overlapping officers and directors, CVS Health 7 presents itself as one integrated company on its website and in government filings for marketing 8 purposes, and CVS Health has been involved in discrete business decisions of CVS Pharmacy. 9 However, “it is considered a normal attribute of ownership that officers and directors of the parent serve as officers and directors of the subsidiary.” Gerritsen v. Warner Bros. Ent., Inc., 116 11 United States District Court Northern District of California 10 F.Supp.3d 1104, 1138-39 (C.D.Cal. 2015) (alteration omitted) (quoting Sonora Diamond Corp., 83 12 Cal.App.4th 523, 548-49 (2000)). And courts recognize that separate corporate entities presenting 13 themselves as one online does not rise to the level of unity of interest required to show companies 14 are alter egos. See Moody v. Charming Shoppes of Delaware, Inc., 2008 WL 2128955, at *3 15 (N.D.Cal. May 20, 2008) (“[g]eneric language on [company’s] website and in its press releases 16 simply do not rise to the day-to-day control required to impute the subsidiary’s contacts to the 17 parent”); Payoda, Inc. v. Photon Infotech, Inc., 2015 WL 4593911, at *3 (N.D.Cal. July 30, 2015) 18 (website “marketing puffery carries no weight in establishing whether a parent and its subsidiary 19 are in fact alter egos”). Thus, the Court concludes that this evidence is legally insufficient to satisfy 20 the unity of interest prong of the alter ego test. Rutsky, 328 F.3d at 1135 (facts showing that parent 21 wholly owned subsidiary, parent and subsidiary shared the same officers and directors, co- 22 employed staff, and shared physical office space did not satisfy first prong of alter ego test); 23 Stewart, 81 F.Supp.3d at 956 (finding that a showing of the third, fourth, and ninth factors “even 24 when considered together, are not sufficient to support a finding of unity of interest among” the 25 corporate entities). Moreover, Plaintiffs’ failure to address the other six factors strongly weighs 26 8 27 28 At oral argument, Plaintiffs’ counsel represented that CVS Health’s Form 10-K (Dkt. No. 72-10) reveals that CVS Health acted as the guarantor on long-term leases for CVS Pharmacy, going to the second factor. Review of the Form 10-K Plaintiffs submitted shows otherwise. (Id. at 23.) 13 1 against a finding that CVS Pharmacy’s contacts should be imputed to CVS Health. See, e.g., 2 Stewart, 81 F.Supp.3d at 955 (unaddressed factors weigh against finding of alter ego status). 3 Having found that Plaintiffs failed to establish the first prong, the Court need not address 4 the second prong of the alter ego test.9 Plaintiffs have not made a prima facie showing that the 5 Court can impute CVS Pharmacy’s contacts with California to CVS Health. 6 *** 7 Based upon the foregoing, the Court finds Plaintiffs have failed to make a prima facie 8 showing of personal jurisdiction over CVS Health. The claims against CVS Health are DISMISSED 9 on this basis. III. 10 United States District Court Northern District of California 11 12 CVS moves to dismiss the SAC’s nineteen causes of action, arguing Plaintiffs fail to plead any plausible claims for relief properly.10 Plaintiffs oppose. A. Legal Standard 13 14 CVS PHARMACY’S MOTION TO DISMISS PURSUANT TO RULE 12(b)(6) “Federal Rule of Civil Procedure 8(a)(2) requires only a ‘short and plain statement of the 15 claim showing that the pleader is entitled to relief,’ in order to ‘give the defendant fair notice of 16 what the . . . claim is and the grounds upon which it rests.’” Bell Atlantic Corp. v. Twombly, 550 17 U.S. 544, 554-55 (2007) (quoting Fed. R. Civ. P. 8(a)(2)) (alteration in original). Even under the 18 liberal pleading standard of Rule 8(a)(2), “a plaintiff’s obligation to provide the grounds of his 19 entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the 20 elements of a cause of action will not do.” Twombly, 550 U.S. at 555 (citing Papasan v. Allain, 21 478 U.S. 265, 286 (1986) (internal brackets and quotation marks omitted)). The Court will not 22 assume facts not alleged, nor will it draw unwarranted inferences. Ashcroft v. Iqbal, 556 U.S. 662, 23 679 (2009) (“Determining whether a complaint states a plausible claim for relief [is] a context- 24 specific task that requires the reviewing court to draw on its judicial experience and common 25 26 27 28 9 Plaintiffs conceded at oral argument they are without evidence going to the second prong, or injustice that would result from the Court’s decision to respect the corporate form here. 10 CVS Health joins in CVS Pharmacy’s motion, and moves on the additional grounds that the SAC does not allege facts as to CVS Health in particular. 14 1 2 sense”). Pursuant to Rule 12(b)(6), a complaint may be dismissed for failure to state a claim upon 3 which relief may be granted. Dismissal for failure to state a claim under Federal Rule of Civil 4 Procedure 12(b)(6) is proper if there is a “lack of a cognizable legal theory or the absence of 5 sufficient facts alleged under a cognizable legal theory.” Conservation Force v. Salazar, 646 F.3d 6 1240, 1242 (9th Cir. 2011) (citing Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 7 1988)). The complaint must plead “enough facts to state a claim [for] relief that is plausible on its 8 face.” Twombly, 550 U.S. at 570. A claim is plausible on its face “when the plaintiff pleads factual 9 content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678. If the facts alleged do not support a reasonable 11 United States District Court Northern District of California 10 inference of liability, stronger than a mere possibility, the claim must be dismissed. Id. at 678-79; 12 see also In re Gilead Scis. Sec. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008) (a court is not required 13 to accept as true “allegations that are merely conclusory, unwarranted deductions of fact, or 14 unreasonable inferences”). 15 Additionally, Rule 9 establishes a heightened pleading standard for allegations of fraud. 16 Fed. R. Civ. P. 9(b) (“In alleging fraud or mistake, a party must state with particularity the 17 circumstances constituting fraud or mistake. Malice, intent, knowledge, and other conditions of a 18 person’s mind may be alleged generally”); Cooper v. Pickett, 137 F.3d 616, 627 (9th Cir. 1997) (to 19 be alleged with particularity under Rule 9(b), a plaintiff must allege “the ‘who, what, when, where, 20 and how’” of the alleged fraudulent conduct); see also Tatung Co. v. Shu Tze Hsu, 43 F.Supp.3d 21 1036, 1060 (C.D. Cal. 2014) (applying Rule 9(b)’s heightened pleading standard to state law claims 22 brought in federal court). Moreover, where a plaintiff alleges “a unified course of fraudulent 23 conduct and rel[ies] entirely on that course of conduct as the basis of a claim[,] . . . the claim is said 24 to be ‘grounded in fraud’ or to ‘sound in fraud,’ and the pleading of that claim as a whole must 25 satisfy the particularity requirement of Rule 9(b).” Vess v. Ciba–Geigy Corp. USA, 317 F.3d 1097, 26 1103-04, 1106 (9th Cir. 2003) (holding “the circumstances constituting the alleged fraud [must] be 27 specific enough to give defendants notice of the particular misconduct [alleged] so that they can 28 defend against the charge and not just deny that they have done anything wrong”) (internal 15 1 2 3 quotations and citations omitted). B. Analysis Defendants move to dismiss the SAC on myriad grounds, namely that it does not: (1) plead 4 all causes of action with the requisite particularity required under Rule 9(b); (2) properly allege 5 intent to defraud; (3) plausibly allege deceptive practices; (4) plausibly allege any material 6 misrepresentations; (5) state claims that do not sound in contract, running afoul of the economic 7 loss doctrine; (6) allege that any misrepresentations were communicated to Plaintiffs; (7) state a 8 claim for constructive fraud; (8) state a cognizable claim for unjust enrichment; (9) plead that any 9 of the Plaintiffs has standing to bring a claim under the Rhode Island Deceptive Trade Practices Act; (10) state a cognizable claim under the California Legal Remedies Act; (11) state a cognizable 11 United States District Court Northern District of California 10 claim under the Ohio Consumer Sales Practices Act; (12) state a cognizable claim under the Texas 12 Deceptive Trade Practices Act; (13) state a cognizable claim under the Georgia Fair Businesses 13 Practices Act; or (14) allege deceptive and unfair conduct to allow any of the remaining statutory 14 claims to survive. The Court addresses Defendants’ arguments in turn. 15 16 1. Rule 9(b) Particularity (All Counts) Defendants move to dismiss on the grounds that the SAC fails to meet the heightened 17 pleading standard of Rule 9(b). In particular, they argue the SAC is deficient because it does not 18 allege (i) the names of the drugs Plaintiffs purchased, (ii) on what dates such drugs were purchased, 19 (iii) the specific pharmacy location, (iv) the specific copayment amount per purchase, or (v) the 20 specific U&C that CVS reported to (vi) the particular insurers. Given the amount of detail alleged 21 by Plaintiffs in the SAC regarding the “who, what, when, where, and how” of the alleged fraud, the 22 Court finds Defendants’ argument unpersuasive. Cooper, 137 F.3d at 627. Simply put, the SAC 23 meets the Rule 9(b) particularity standard by alleging detailed information regarding Plaintiffs’ 24 claims, including for each of them: the number of generic drugs purchased, a time frame in which 25 such purchases were made, the state in which the purchases were made, and the total inflated 26 amount they were charged as a result of inflated U&C prices. (SAC ¶¶ 16-36.) Plaintiffs need not 27 allege more. Id. (“[w]e decline to require that a compliant must allege specific [transactions] to 28 specific customers at specific times with a specific dollar amount of improperly recognized 16 1 revenue”). The SAC additionally includes, with particularity, the manner in which CVS allegedly 2 perpetrated the fraud. (See, e.g., SAC ¶¶ 64-81.) This level of specificity enables Defendants to 3 “prepare an adequate answer from the allegations.” Schreiber Distributing Co. v. Serv-Well 4 Furniture Co., Inc., 806 F.2d 1393, 1400 (9th Cir. 1986); see Fecht v. Price Co., 70 F.3d 1078, 5 1083 (9th Cir. 1995) (“a complaint alleging that the plaintiff bought a house from the defendant, 6 that the defendant assured the plaintiff that the house was in perfect shape, and that the house was 7 in fact built on landfill, would satisfy rule 9(b)”). Moreover, all of the missing details are likely in 8 the possession of CVS. Defendants’ motion on Rule 9(b) grounds is DENIED. 2. Intent (Counts 1, 14, and 15) 9 10 Defendants move to dismiss on grounds that the SAC does not sufficiently allege their United States District Court Northern District of California 11 “intent to deceive” CVS customers. Intent is an element of Plaintiffs’ common law fraud claim 12 (Count 1) as well as the statutory claims under the laws of Illinois (Count 14) and New Jersey 13 (Count 15). Rule 9(b) does not subject intent to the particularity standard, but rather intent need 14 only “be averred generally.” Fed.R.Civ.P. 9(b); Odom v. Microsoft Corp., 486 F.3d 541, 553-54 15 (9th Cir. 2007) (“the state of mind—or scienter—of the defendants may be alleged generally”). In 16 opposition, Plaintiffs argue that three key circumstances plausibly suggest intent here, namely: (i) 17 Defendants’ practice not to report the HSP price as the U&C price contravened the industry 18 standard (SAC ¶ 69); (ii) other major industry players reported their discount program prices as 19 their U&C prices (id. ¶¶ 76-77); and (iii) CVS created the HSP program to stay competitive in the 20 market’s new discounted pricing norm while fraudulently charging third-party payors and their 21 members a higher price (id. ¶¶ 14, 71). The Court agrees. Defendants’ argument that intent is not 22 plausibly alleged because the SAC “names no CVS employees, no internal conversations, no 23 meetings, etc., supporting an inference that CVS designed HSP” (Dkt. No. 56 at 12:7-10) to 24 deceive Plaintiffs intentionally does not persuade. Such specificity is not required for intent. See 25 Fed.R.Civ.P. 9(b). The Court further rejects Defendants’ argument that the Department of Health 26 and Human Services’ 2009 report alters the analysis. (Dkt. No. 58, Exh. 2, “DHS Report.”)11 At 27 28 11 Defendants request the Court take judicial notice of two documents: (1) CVS’s 2014 annual report, as referenced in the SAC; and (2) the DHS Report. (Dkt. No. 58, “RJN.”) Plaintiffs do not oppose. Defendants’ RJN is GRANTED as to both documents. See Lee v. City of Los 17 1 most, the DHS Report shows the agency was unwilling to take a position on the issue – not that it 2 endorsed Defendants’ view. (Id.) Accordingly, Defendants’ motion to dismiss for lack of intent 3 allegations is DENIED. 3. Deceptive Practices (All Counts) 4 5 CVS argues that the SAC contains no plausible allegation that its practices are deceptive 6 because the HSP program is public knowledge and has been publicized in-store and on its website. 7 This argument ignores Plaintiffs’ theory. The gravamen of the SAC is not that CVS concealed the 8 existence of the of the HSP program.12 Rather, it is that CVS deceived Plaintiffs by reporting U&C 9 prices significantly above the prices available to members of the HSP program, and then charged Plaintiffs inflated copays of a result of their deceitful practice. In that regard, the SAC states a 11 United States District Court Northern District of California 10 plausible claim that CVS engaged in deceptive practices. The motion on this basis is DENIED. 4. Material Misrepresentations (All Counts) 12 13 CVS contends that Plaintiffs’ theory is implausible because each of them “anticipates filling 14 future prescriptions for those generic drugs at a CVS pharmacy, and thus faces the prospect of 15 paying additional inflated copays.” (SAC ¶¶ 16-36.) Thus, CVS contends, Plaintiffs’ willingness 16 to return removes any likelihood that the alleged misrepresentations were material to their earlier 17 purchases. Plaintiffs oppose, stating that modest considerations such as access and continuity of 18 care explain their continued patronage of CVS. The Court agrees. While Plaintiffs’ continued 19 patronage may later be evidence relevant to materiality, it does not render Plaintiffs’ claims 20 implausible at this juncture. See Red v. Kraft Foods, Inc., 2011 WL 4599833, at *12 (C.D.Cal. 21 Sept. 29, 2011) (noting that named plaintiffs’ continued purchase of the product at issue would 22 have “almost certainly destroyed the ability of the class to ever establish reliance and/or materiality 23 of the alleged misrepresentations”). The motion to dismiss on these grounds is DENIED. 24 25 26 27 28 Angeles, 250 F.3d 668, 689 (9th Cir. 2001) (“a court may take judicial notice of ‘matters of public record’”). 12 Regardless, the SAC alleges CVS deceived them in this respect as well: “CVS either wrongly conceals or omits such information by failing to tell insured customers about the HSP program, or by misrepresenting to insured customers that the HSP program would not apply to their purchases.” (SAC ¶ 80.) 18 5. Economic Loss Doctrine (Counts 1 and 3)13 1 2 The economic loss doctrine operates to prohibit contract claims from being disguised as tort 3 claims. “Broadly speaking, the economic loss doctrine is designed to maintain a distinction 4 between damage remedies for breach of contract and for tort.” Giles v. Gen. Motors Acceptance 5 Corp., 494 F.3d 865, 873 (9th Cir. 2007). In that regard, CVS argues that Plaintiffs’ fraud and 6 negligent misrepresentation claims are nothing more than disguised breach of contract claims, 7 which should be dismissed under the economic loss doctrine. The Court rejects the very premise of 8 Defendants’ argument. To support dismissal, Defendants contend the SAC does not allege any 9 wrongdoing independent of its contractual obligation to report an accurate U&C price to third-party payors. Not so. The gravamen of Plaintiffs’ allegations is that CVS created the HSP program to 11 United States District Court Northern District of California 10 report misleading U&C prices in a manner that contravened industry standards with the intent to 12 deceive Plaintiffs and class members. Plaintiffs additionally allege that CVS misrepresented the 13 availability of the HSP program and their ability to participate therein. These allegations 14 undoubtedly fall outside of CVS’s contractual obligations to third party payors. Defendants’ 15 motion on this ground is DENIED. 6. Reliance (Counts 1 and 3) 16 17 Defendants argue that Plaintiffs’ fraud (Count 1) and negligent misrepresentation (Count 3) 18 claims fail because the SAC does not adequately plead reliance. The parties agree that both claims 19 require, inter alia, a defendant’s misrepresentation of a material fact and a plaintiff’s reliance 20 thereon. Defendants argue the SAC does not plead reliance insofar as it is missing an allegation 21 that the misrepresentation – the inflated U&C price – was communicated to Plaintiffs, and thus 22 reliance is necessarily lacking. In opposition, Plaintiffs contend that not only was the false U&C 23 price directly communicated to them every time they paid inflated copayments, but it was also 24 indirectly communicated to them through their insurers (third-party payors) every time their claims 25 were adjudicated and copayments were calculated. 26 27 28 13 CVS argues the economic loss doctrine also bars Plaintiffs’ constructive fraud claim (Count 2). For the reasons discussed in Section III.B.7, infra, the Court otherwise dismisses the constructive fraud claim. Therefore, the Court need not address it here. 19 1 Plaintiffs’ fraud and negligent misrepresentation claims are actionable under both direct and 2 indirect theories of communication and reliance. First, the Court agrees with Plaintiffs that the 3 SAC alleges CVS made a false representation every time it charged Plaintiffs for copays that were 4 calculated based on inflated U&C prices. (SAC ¶ 75.) Second, a theory premised on 5 misrepresentations made to Plaintiffs through a third party (here, the insurer) is recognized in the 6 common law. See Bridge v. Phoenix Bond & Indem. Co., 553 U.S. 639, 653 (2008) (“the common 7 law has long recognized that plaintiffs can recover in a variety of circumstances where, as here, 8 their injuries result directly from the defendant’s fraudulent misrepresentations to a third party”). 9 The Court finds plausible Plaintiffs’ theory that CVS reported fraudulent U&C prices to third-party payors, who in turn used that price to calculate inflated copays for Plaintiffs to pay CVS.14 The 11 United States District Court Northern District of California 10 motion is DENIED with respect to allegations of reliance. 7. Duty to Disclose (Count 2) 12 13 In contrast to a claim for actual fraud, a claim for constructive fraud exists where persons in 14 a fiduciary, special, or confidential relationship violate their duty to disclose, even in the absence of 15 intent to deceive. See, e.g., Hubbard v. Shankle, 138 S.W.3d 474, 483 (Tex.App. 2004) (applying 16 Texas common law). CVS and Plaintiffs agree a constructive fraud claim requires a fiduciary, 17 special, or confidential relationship between the parties that imposes a duty to disclose on the 18 defendant. Plaintiffs contend they have adequately pled a duty on the part of CVS to disclose 19 information relevant to drug pricing. Defendants do not argue that the SAC fails to plead a duty 20 sufficiently. Rather, they claim that no such duty exists as a matter of law. See, e.g., Huggins v. 21 Longs Drug Stores California, Inc., 6 Cal.4th 124, 129 (1993) (the existence of a duty is a question 22 of law). The Court agrees. 23 Plaintiffs summarily contend that, for purposes of a constructive fraud claim, a duty may be 24 established through a defendant’s superior or specialized knowledge. This may be so, but Plaintiffs 25 26 27 28 14 The Court rejects Defendants’ argument that the terms or substance of the fraudulent misrepresentations were not conveyed to Plaintiffs. By way of simple math, the full U&C price is communicated to an insured responsible for 10% of the retail price of a generic drug every time their co-insurance obligation is calculated. Similarly, every time an insured pays a flat-rate copay, they implicitly are told that CVS reported a U&C above their copay to the third party payor. 20 1 cite no authority for the proposition that pharmacists have superior or specialized knowledge of the 2 nature of drug pricing such that a duty arose in this case. Pharmacists have a duty of care to 3 accurately fill a prescription. See, e.g., Morgan v. Wal-Mart Stores, Inc., 30 S.W.3d 455, 461 4 (Tex.App. 2000); Huggins, 6 Cal.4th at 132; Frye v. Medicare-Glaser Corp., 153 Ill.2d 26, 31 5 (1992). A pharmacist’s duty arises out of her status as a health care provider. This duty has been 6 construed narrowly, and absent special circumstances, courts refuse to extend it to encompass a 7 duty to warn or an affirmative duty to counsel customers on the side effects of prescription drugs. 8 See, e.g., Morgan, 30 S.W.3d at 467; Frye, 153 Ill.2d at 31; Pysz v. Henry’s Drug Store, 457 So.2d 9 561 (Fla.Dist.Ct.App. 1984). As such, the Court declines Plaintiffs’ invitation to impose a duty on pharmacists as a matter of law which encompasses matters of drug pricing. The Court similarly 11 United States District Court Northern District of California 10 declines Plaintiffs’ invitation to impose a special, confidential, or fiduciary duty on institutions in 12 all commercial transactions, where they will necessarily be in a position of greater knowledge 13 regarding pricing. Defendants’ motion to dismiss the constructive fraud claim is GRANTED. 8. Unjust Enrichment (Count 4) 14 CVS contends that Plaintiffs’ claim for unjust enrichment should be dismissed as 15 16 duplicative. More particularly, CVS contends that a remedy of restitution is duplicative of both the 17 compensatory damages Plaintiffs seek under their common law claims and the restitution 18 recoverable under their statutory claims. Defendants’ argument is no longer viable at the motion to 19 dismiss stage in this Circuit. In Astiana v. Hain Celestial Group, Inc., 783 F.3d 753, 762 (9th Cir. 20 2015), the Ninth Circuit reversed a district court’s dismissal of an unjust enrichment as “duplicative 21 of or superfluous to” the other claims in the complaint. Id. Such an argument “is not grounds for 22 dismissal.” Id. Rule 8 plainly entitles Plaintiffs to plead a claim in the alternative. Fed. R. Civ. P. 23 8(d)(2) (“A party may set out 2 or more statements of a claim or defense alternatively or 24 hypothetically, either in a single count or defense or in separate ones”). Defendants’ motion to 25 dismiss the unjust enrichment claim is DENIED. 26 /// 27 /// 28 /// 21 9. Rhode Island Deceptive Trade Practices Act (Count 5) 1 2 Defendants move to dismiss the Rhode Island Deceptive Trade Practices Act (“RIDTPA”) 3 claim on grounds that no named plaintiff has Article III standing to assert such a claim.15 A named 4 plaintiff who seeks to represent a class “must allege and show that they” have Article III standing to 5 bring suit. Lewis v. Casey, 518 U.S. 343, 357 (1996). Where “the source of the plaintiff’s claim to 6 relief” is a statute, “the standing question … is whether the … statutory provision on which the 7 claim rests properly can be understood as granting persons in the plaintiff’s position a right to 8 judicial relief.” Warth v. Seldin, 422 U.S. 490, 500 (1975). “In cases involving statutory rights, the 9 particular statute and the rights it conveys guide the standing determination. “ Tourgeman v. Collins Fin. Servs., Inc., 755 F.3d 1109, 1114 (9th Cir. 2014) (internal quotations and alterations 11 United States District Court Northern District of California 10 omitted). This means that, at a minimum, a “plaintiff must be among the injured, in the sense that 12 she alleges the defendants violated her statutory rights.” Robins v. Spokeo, Inc., 742 F.3d 409, 413 13 (9th Cir. 2014) (emphasis in original) (internal quotations omitted). 14 Here, Plaintiffs do not reside in Rhode Island nor do they allege that any of the relevant 15 transactions occurred in Rhode Island. The critical inquiry, therefore, is whether nonresidents are 16 entitled to bring claims against a Rhode Island corporation under RIDTPA. “Courts routinely 17 dismiss claims where no plaintiff is alleged to reside in a state whose laws the class seeks to 18 enforce.” In re Aftermarket Auto. Lighting Products Antitrust Litig., 2009 WL 9502003, at *6 19 (C.D.Cal. July 6, 2009); accord In re Carrier IQ, Inc., 78 F.Supp.3d 1051, 1075 (N.D.Cal. 2015) 20 (finding that “named Plaintiffs do not have standing to assert claims from states in which they do 21 not reside or did not purchase their mobile device”); Fenerjian v. Nongshim Co., Ltd., 72 F.Supp.3d 22 1058, 1082-83 (N.D.Cal. 2014) (finding that named plaintiffs “lack standing to assert claims based 23 on” states’ laws where they neither resided nor suffered an injury); Pardini v. Unilever United 24 25 26 27 28 15 Defendants improperly bring this attack under Rule 12(b)(6). Standing is a jurisdictional question and this issue is therefore properly addressed under Rule 12(b)(1). Lee v. State of Oregon, 107 F.3d 1382, 1390 (9th Cir. 1997) (“Standing is a jurisdictional element that must be satisfied prior to class certification”). Where, as here, the challenge is to the SAC on its face, the Court’s inquiry is substantially similar as under Rule 12(b)(6): the Court looks only to allegations in the complaint and assumes the allegations in the complaint are true. Wolfe v. Strankman, 392 F.3d 358, 362 (9th Cir. 2004). 22 1 States, Inc., 961 F.Supp.2d 1048, 1061 (N.D.Cal. 2013) (finding plaintiff did “not have standing to 2 assert a claim under the consumer protection laws of the other states named in [her] Complaint”). 3 The parties present two unpublished district court cases in support of their arguments – each 4 of which come to opposite conclusions. First, Defendants rely on Harris v. CVS Pharmacy, Inc., 5 for the proposition that a non-Rhode Island plaintiff does not have standing to bring a claim under 6 RIDTPA. 2015 WL 4694047, at *5 (C.D.Cal. Aug. 6, 2015). In Harris, a resident of California 7 brought a claim under the RIDTPA against CVS Pharmacy for a CVS-branded product purchased 8 in California. Based thereon, the district court found that the plaintiff “failed to establish any basis 9 for applying Rhode Island law to him,” and therefore lacked standing to bring a claim under its laws. Id. In particular, the district court found that the plaintiff did not show any plausible basis 11 United States District Court Northern District of California 10 for invoking the foreign law of Rhode Island for two reasons. First, the court looked to the law of 12 the highest court in the State, which unequivocally holds: “Rhode Island law is clear that, absent 13 some indication to the contrary ‘extraterritorial force cannot be given to a [Rhode Island] statute.” 14 Id. (alteration in original) (quoting Farrell v. Employers’ Liab. Assur. Corp., 54 R.I. 18 (1993)); 15 accord Grinnell v. Wilkinson, 39 R.I. 447 (1916) (absent contrary intent, “the presumption is that 16 the statute is intended to have no extraterritorial effect”). Second, the district court found the 17 Harris plaintiff did not establish that the law of Rhode Island should apply to him under choice-of- 18 law principles. Id. at 5. Applying California choice-of-law principles, as this Court must in the 19 instant diversity action, the district court found CVS Pharmacy’s status as Rhode Island corporation 20 did not outweigh the plaintiff’s home state’s interest in applying its own consumer protection laws. 21 Id. (citing Mazza v. American Honda Motor Co., Inc., 666 F.3d 581, 590 (9th Cir. 2012)). “Absent 22 any standing to invoke Rhode Island law,” the Harris court found it was without jurisdiction to 23 entertain the California resident’s claims under the RIDTPA. Id. 24 Plaintiffs, by contrast, rely on Faherty v. CVS Pharmacy, Inc., for the contrary proposition. 25 2010 WL 1930573 (D.Mass. May 12, 2010). In Faherty, residents of Massachusetts brought 26 RIDTPA claims against CVS Pharmacy for allegedly fraudulent misrepresentations made in 27 connection with purchases in Massachusetts. CVS Pharmacy moved to dismiss the claims, arguing 28 RIDPTA cannot apply to non-residents’ claims arising out of purchases made at stores outside of 23 1 Rhode Island. The district court found that the complaint alleged CVS Pharmacy was 2 headquartered in Rhode Island, and, citing Park v. Motor Co., 844 A.2d 687, 690 (R.I. 2004), found 3 that the “Rhode Island Supreme Court has allowed a putative nationwide class to maintain claims 4 under [the RIDPTA] … regardless of where a customer resided or suffered injury…” Id. at *1. 5 Park is readily distinguishable for reasons not recognized in Faherty. As Defendants argue, the Rhode Island Supreme Court in Park did not even address the issue of standing. And, on 7 remand, the trial court in Park addressed the choice-of-law issue, holding that “contracts executed 8 outside of Rhode Island would not be governed by [RIDPTA].” Park v. Ford Motor Co., 2004 WL 9 2821312, at *5 (R.I. Super. Ct. Oct. 7, 2004). Because the claim of the named plaintiff was not 10 governed by Rhode Island law, the Rhode Island trial court on remand found there was no class 11 United States District Court Northern District of California 6 representative for the RIDPTA claim, and certification was denied. Id. On the other hand, the 12 Court finds the district court’s reasoning in Harris persuasive. There, the district court engaged in 13 an exhaustive analysis of standing and the impact of California choice-of-law jurisprudence 14 thereon, rejected the notion that Rhode Island case law would support the extraterritorial 15 application of RIDPTA, and dismissed the non-Rhode Island plaintiff’s RIDPTA claim for lack of 16 standing. The same result is appropriate here. Plaintiffs have “failed to establish any basis for 17 applying Rhode Island law to [them].” Harris, 2015 WL 4694047, at *5. Defendants’ motion to 18 dismiss the RIDPTA claim for lack of standing is GRANTED. 19 20 10. California Consumer Legal Remedies Act (Count 7) To state a claim under the California Consumer Legal Remedies Act (“CLRA”) a plaintiff 21 must allege, inter alia, that a defendant engaged in “unfair or deceptive acts or practices … 22 intended to result or which results in the sale or lease of goods or services” which the statute 23 defines as unlawful. Cal. Civ. Code § 1770(a). The CLRA prohibits twenty-six delineated 24 categories of behavior. See id. CVS moves to dismiss, complaining that the SAC does not specify 25 which of the twenty-six categories under which Plaintiffs make their claim. CVS does not provide 26 any authority requiring Plaintiffs to do so. Indeed, the CLRA is to be “liberally construed and 27 applied to promote its underlying purposes, which are to protect consumers against unfair and 28 deceptive business practices and to provide efficient and economical procedures to secure such 24 1 protection.” Id. § 1760. Plaintiffs’ detailed allegations include that CVS violated the CLRA by: (a) 2 “reporting … fraudulent U&C prices,” (b) “misrepresenting to [Plaintiffs] that the U&C price was 3 greater than their copayments,” (c) “concealing from [Plaintiffs] the true U&C prices,” and (d) 4 “wrongfully obtaining money from [Plaintiffs] as a result of its deception.” (SAC ¶ 158.) The 5 Court finds these allegations sufficiently detailed to render their claim plausible under CLRA §§ 6 1770(a)(13) and (a)(16). The motion to dismiss the CLRA claim is DENIED. 7 8 9 11. Ohio Consumer Sales Practices Act (Count 11) Count 11 proceeds under the Ohio Consumer Sales Protection Act (“OCSPA”). The OCSPA is more restrictive than other consumer protection laws, and only allows class claims to proceed where “the defendant was sufficiently on notice that its conduct was deceptive or 11 United States District Court Northern District of California 10 unconscionable.” In re Porsche Cars N. Am., Inc. Plastic Coolant Tubes Prods. Liab. Litig., 880 12 F.Supp.2d 801, 868 (S.D.Ohio 2012). A defendant is “sufficiently on notice” where either: “(1) a 13 specific rule or regulation has been promulgated [by the Ohio Attorney General] that specifically 14 characterizes the challenged practice as unfair or deceptive, or (2) an Ohio state court has found the 15 specific practice either unconscionable or deceptive in a decision open to public inspection.” 16 Volbers-Klarich v. Middletown Mgt., Inc., 929 N.E.2d 434, 441 (Ohio 2010). Plaintiffs argue 17 Defendants were on notice by virtue of the Ohio Revenue Code, which prohibits an 18 “unconscionable act or practice in connection with a consumer transaction,” defined as occurring 19 when “the supplier knew at the time the consumer transaction was entered into that the price was 20 substantially in excess of the price at which similar property or services were readily obtainable in 21 similar consumer transactions by like consumers.” Ohio Rev. Code §§ 1345.03(A), 1345.03(B)(2). 22 The Ohio Supreme Court has consistently affirmed its disapproval of Plaintiffs’ argument. 23 “A general rule is not sufficient to put a reasonable person on notice of the prohibition against a 24 specific act or practice. To permit a generic rule to constitute prior notice for purposes of R.C. 25 1345.09(B) would allow any previous determination of a deceptive act or practice to qualify as 26 prior notice for any subsequent alleged deceptive act or practice.” Volbers-Klarich, 929 N.E.2d at 27 441 (emphasis in original) (quoting Marrone v. Philip Morris USA, Inc., 850 N.E.2d 31, 36 (Ohio 28 2006)). So too here. Plaintiffs have not pointed to any rule or case that prohibits the specific 25 1 practices of CVS alleged to be unconscionable in the SAC. Defendants’ motion to dismiss the class 2 OCSPA claims in Count 11 is GRANTED. 12. Texas Deceptive Trade Practices Act (Count 12) 3 4 Defendants move to dismiss Plaintiffs’ claim under the Texas Deceptive Trade Practices 5 Act (“TDTPA”), arguing Plaintiffs do not allege unlawful conduct under that act properly. The 6 TDTPA provides a cause of action to a consumer based on either (1) unlawful practices specifically 7 enumerated in the TDTPA, or (2) any “[u]nconsionable action or course of action by any person,” 8 Tex. Bus. & Com. Code § 1750(a), defined as “an act or practice which, to a consumer’s detriment, 9 takes advantage of the lack of knowledge, ability, experience, or capacity of the consumer to a grossly unfair degree,” id. § 17.45(5) (emphasis supplied). The Texas Supreme Court has 11 United States District Court Northern District of California 10 interpreted the term “grossly unfair” to mean “glaringly noticeable, flagrant, complete and 12 unmitigated,” a standard that cannot be met with allegations that a defendant’s conduct was 13 “unfair.” Chastain v. Koonce, 700 S.W.2d 579, 584 (Tex. 1985). Plaintiffs argue in opposition that they have alleged both a specifically enumerated unlawful 14 15 practice under the TDTPA as well as unconscionable, grossly unfair action by Defendants. With 16 respect to the first, Plaintiffs contend their allegations fall within the TDTPA’s prohibition on 17 actions “failing to disclose information concerning information [that] was intended to induce the 18 consumer into a transaction into which the consumer would not have entered had the information 19 been disclosed.” Tex. Bus. & Com. Code § 17.46(b)(24). The SAC, however, fails to allege that 20 Plaintiff Pacheco (the only Texas plaintiff) would not have entered into the transactions absent the 21 failure to disclose. In fact to the contrary, Pacheco alleges she plans to purchase generic drugs from 22 CVS in the future. (SAC ¶ 25.) Second, with respect to unconscionability, the SAC similarly fails 23 to allege actions that amount to practices that took advantage of Pacheco and similarly situated 24 class members “to a grossly unfair degree.” Id. § 1745(5). Although the SAC alleges knowledge 25 and intent (see SAC ¶ 199), “[k]nowledge or intent alone cannot…be the distinguishing factor of 26 unconsionability” under the TDCPA. Chastain, 700 S.W.2d at 582. Consequently, Defendants’ 27 motion to dismiss the TDTPA claim is GRANTED. 28 /// 26 1 13. Georgia Fair Business Practices Act (Count 19) 2 CVS raises several deficiencies with respect to Plaintiffs’ claim under the Georgia Fair 3 Business Practices Act (“GFBPA”). Principally, CVS argues the GFBPA explicitly bars class 4 actions. The Court agrees. The GFBPA indisputably forecloses claims brought “in a representative 5 capacity.” Ga. Code. Ann. § 10-1-399(a). Plaintiffs submit no argument in opposition as to the 6 class claim. CVS’s motion to dismiss Plaintiffs’ class claim under the GFBPA is GRANTED. 7 CVS also seeks dismissal of Plaintiff Caine’s individual GFBPA claim. To state a claim 8 under the GFBPA, a claimant must allege she provided pre-suit notice to the defendant pursuant to 9 GFBPA’s ante litem requirement. Ga. Code. Ann. § 10-1-399(b); Alvear v. Sandy Springs Toyota, Inc., 332 Ga.App. 798, 803-04 (2015) (in addition to the three elements of a GFBPA claim, a 11 United States District Court Northern District of California 10 plaintiff must also satisfy the ante litem requirement). Plaintiff admits she did not serve CVS with 12 the requisite notice “prior to…filing” her GFBPA claim. Id. § 10-1-399(b). Nor does Plaintiff 13 Caine provide any authority for the Court to excuse the pre-suit notice. Plaintiff’s only argument is 14 that CVS had notice of her claims by virtue of earlier versions of the complaint that did not include 15 the GFBPA claim. The Georgia Court of Appeals disavowed this so-called constructive notice 16 argument, warning that it would render the anti-litem requirement “meaningless” were it accepted. 17 Alvear, 332 Ga.App. at 803. On those grounds, CVS’s motion to dismiss the individual GFBPA 18 claim is likewise GRANTED. 19 Plaintiff Cain next argues that she sent the requisite notice in connection with her opposition 20 to the instant motion, and that the Court should now grant her leave to so allege. The question thus 21 becomes whether Plaintiff Cain’s failure to provide pre-suit notice is curable by amendment. That 22 is, can her individual GFBPA claim be saved by provision of notice after the SAC was filed? It 23 cannot. Courts to address this issue agree that, once a plaintiff asserts a GFBPA claim in a 24 complaint, the anti litem (meaning, “before litigation”) requirement cannot be cured by amendment. 25 Bowers v. Branch Banking and Trust Co., 2015 WL 4131915, at * 9 (M.D.Ga. July 8, 2015) (citing 26 Gibbs v. Abbot Labs, Inc., 2001 WL 1558279, at *3-4 (N.D.Ill. Dec. 5, 2001)). 27 28 Consequently, the Court finds it appropriate to dismiss the GFBPA claims WITHOUT LEAVE TO AMEND. 27 14. Remaining Statutory Claims (Counts 5, 6, 8-11, 13-18) 1 2 Finally, Defendants argue that the remaining statutory claims should be dismissed because 3 Plaintiffs do not allege facts showing their practices were “deceptive” or “unfair,” as is required 4 under the respective states’ acts. A cursory reading of the SAC shows otherwise. For the reasons 5 discussed in Section III.B.3, supra, the Court finds that Plaintiffs sufficiently allege deceptive 6 practices. The Court also finds sufficient allegations of a practice plausibly construed as unfair, i.e. 7 a practice that offends public policy. See, e.g., Lozano v. AT&T Wireless Svcs., Inc., 504 F.3d 718, 8 736 (9th Cir. 2007) (discussing the meaning of “unfair” under California’s Unfair Competition 9 Law, Cal. Bus. & Prof. Code § 17200 et seq.). The motion to dismiss on these grounds is DENIED. 10 United States District Court Northern District of California 11 IV. LEAVE TO AMEND DISMISSED CLAIMS Leave to amend is liberally granted. Foman v. Davis, 371 U.S. 178, 182 (1962); Chodos v. 12 West Pub. Co., 292 F.3d 992, 1003 (9th Cir. 2002). One exception to this general rule of 13 permissiveness is where amendment would be futile. Foman, 371 U.S. at 182; Smith v. Pac. Props. 14 & Dev. Corp., 358 F.3d 1097, 1101 (9th Cir. 2004). As such, the Court gave Plaintiffs an 15 opportunity to argue the existence of additional facts such that amendment of the claims dismissed 16 would not be futile. Plaintiffs were only able to do so with respect to Count 12. 17 Accordingly, the Court grants Plaintiffs Leave to amend Count 12 only. Plaintiffs shall file 18 a Third Amended Complaint by no later than twenty (20) days from the date of this Order. The 19 Third Amended Complaint must comport with the guidelines set forth in this Order. Counsel is 20 reminded of their Rule 11 obligations in making any such amendments. 21 22 PLAINTIFFS’ MOTION TO APPOINT INTERIM CLASS COUNSEL PURSUANT TO RULE 23(g) 23 Plaintiffs move the Court to appoint the law firms representing Plaintiffs as interim class V. 24 counsel pursuant to Rule 23(g). Namely, Plaintiffs request appointment of the following firms: 25 Hausfeld, LLP; Pritzker Levine LLP; and Stein, Mitchell, Muse, Cipollone, Beato LLP 26 (collectively, the “Firms”). Defendants opposed only to the extent they contend the Court should 27 first resolve their motion to transfer. (Dkt. No. 90.) The Court having denied the motion to 28 transfer, Defendants conceded at oral argument they have no substantive opposition to Plaintiffs’ 28 1 motion to appoint the Firms as interim class counsel. Accordingly, and good cause shown pursuant 2 to Rule 23(g), Plaintiffs’ motion is GRANTED. The Firms shall be responsible for the overall 3 prosecution of the litigation on behalf of Plaintiffs and the putative class. 4 5 VI. DEFENDANTS’ MOTION TO TRANSFER PURSUANT TO 28 U.S.C. § 1404(a) Nearly five months following the commencement of litigation, Defendants filed a motion to transfer this action to the District of Rhode Island. Transfer under 28 U.S.C. section 1404(a) to a 7 venue where the case could have been brought is up to the discretion of the Court after an 8 “individualized, case-by-case consideration of convenience and fairness.” Stewart Org., Inc. v. 9 Ricoh Corp., 487 U.S. 22, 29 (1988) (quoting Van Dusen v. Barrack, 376 U.S. 612, 622 (1964)). 10 The Ninth Circuit has recognized at least eight factors a district court may consider in its analysis 11 United States District Court Northern District of California 6 under Section 1404(a). Jones v. GNC Franchising, Inc., 211 F.3d 495, 498-99 (9th Cir. 2000). The 12 Court has carefully reviewed Defendants’ motion and considered the issues of convenience and 13 fairness, and for the reasons set forth on the record on March 8, 2016, finds that transfer to the 14 District of Rhode Island is not appropriate. Assuming without deciding that the case could have 15 been brought in the District of Rhode Island, Defendants failed to show that transfer would serve 16 the interests of justice. Consequently, Defendants’ motion to transfer is DENIED and the hearing 17 scheduled for April 5, 2016, is hereby VACATED. 18 19 20 21 22 23 VII. CONCLUSION For the foregoing reasons, the Court GRANTS CVS Health’s Rule 12(b)(2) motion for lack of personal jurisdiction, and GRANTS IN PART Defendants’ Rule 12(b)(6) motion as follows: 1. The motion to dismiss the claim for constructive fraud (Count 2) is GRANTED and such claim is DISMISSED WITHOUT LEAVE TO AMEND. 2. The motion to dismiss the claim for violation of the Rhode Island Deceptive Trade 24 Practices Act (Count 5) is GRANTED and such claim is DISMISSED WITHOUT 25 LEAVE TO AMEND. 26 3. The motion to dismiss the class claim for violation of the Ohio Consumer Sales 27 Practices Act (Count 11) is GRANTED and such claim is DISMISSED WITHOUT 28 LEAVE TO AMEND. 29 1 4. The motion to dismiss the claim for violation of the Texas Deceptive Trade Practices 2 Act (Count 12) is GRANTED and such claim is DISMISSED WITH LEAVE TO AMEND. 3 5. The motion to dismiss the individual and class claims for violation of the Georgia 4 Fair Business Practices Act is GRANTED and such claims are DISMISSED WITHOUT 5 LEAVE TO AMEND. 6 Except as otherwise noted, the Rule 12(b)(6) motion is DENIED. 7 Plaintiffs’ motion to appoint the Firms as interim class counsel is GRANTED. 8 Defendants’ motion to transfer to the District of Rhode Island is DENIED. The April 5, 2016 9 hearing on the motion to transfer is VACATED. This Order terminates Docket Numbers 56, 57, 58, 85 and 88. 11 United States District Court Northern District of California 10 IT IS SO ORDERED. 12 13 14 Date: March 14, 2016 _______________________________________ YVONNE GONZALEZ ROGERS UNITED STATES DISTRICT COURT JUDGE 15 16 17 18 19 20 21 22 23 24 25 26 27 28 30

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