Cortina v. Wal-Mart, Inc.

Filing 42

ORDER granting in part and denying in part Defendant's 32 Motion to Dismiss; terminating in part and denying in part Defendant's 33 Motion to Strike. The ADTPA claim is dismissed without leave to amend. Dft is held to answer to the First Amended Complaint within 21 days. Signed by Judge Cynthia Bashant on 1/20/2015. (jah). Modified on 1/21/2015 - Corrected spelling. Regenerated NEF (jah).

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1 2 3 4 5 6 7 8 9 10 11 UNITED STATES DISTRICT COURT 12 SOUTHERN DISTRICT OF CALIFORNIA 13 15 THAMAR SANTISTEBAN CORTINA, on behalf of herself, all others similarly situated, and the general public, 16 Case No. 13-cv-2054 BAS (DHB) Plaintiff, 14 ORDER: (1) GRANTING IN PART AND DEYING IN PART DEFENDANT’S MOTION TO DISMISS; AND (2) TERMINATING IN PART AND DENYING IN PART DEFENDANT’S MOTION TO STRIKE 17 18 19 20 v. WAL-MART, INC., Defendant. [ECFs 32, 33] 21 22 This class action lawsuit against Defendant Wal-Mart, Inc. began on 23 September 3, 2013. ECF 1. Plaintiff Thamar Cortina alleged that Defendant’s 24 coenzyme Q10 supplement, sold under its “Equate” brand, was deceptively 25 advertised under various common law and statutory provisions. Defendant moved 26 to dismiss, and the Court granted that motion without prejudice. ECF 26. 27 28 In response, Plaintiff filed a First Amended Complaint (“FAC”). ECF 29. Defendant moved to dismiss the First Amended Complaint. ECF 32. –1– 13-cv-2054 BAS (DHB) 1 The Court finds the motion suitable for determination on the papers 2 submitted and without oral argument. See Civ. L.R. 7.1(d.1). For the following 3 reasons, the Court GRANTS IN PART Defendant’s motion to dismiss (ECF 32). 4 I. LEGAL STANDARD 5 A motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil 6 Procedure tests the legal sufficiency of the claims asserted in the complaint. Fed. 7 R. Civ. P. 12(b)(6); Navarro v. Block, 250 F.3d 729, 731 (9th Cir. 2001). The court 8 must accept all factual allegations pleaded in the complaint as true and must 9 construe them and draw all reasonable inferences from them in favor of the 10 nonmoving party. Cahill v. Liberty Mutual Ins. Co., 80 F.3d 336, 337–38 (9th Cir. 11 1996). To avoid a Rule 12(b)(6) dismissal, a complaint need not contain detailed 12 factual allegations, rather, it must plead “enough facts to state a claim to relief that 13 is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A 14 claim has “facial plausibility when the plaintiff pleads factual content that allows 15 the court to draw the reasonable inference that the defendant is liable for the 16 misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 17 550 U.S. at 556). “Where a complaint pleads facts that are ‘merely consistent with’ 18 a defendant’s liability, it stops short of the line between possibility and plausibility 19 of ‘entitlement to relief.’” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 20 557). 21 “[A] plaintiff’s obligation to provide the ‘grounds’ of his ‘entitle[ment] to 22 relief’ requires more than labels and conclusions, and a formulaic recitation of the 23 elements of a cause of action will not do.” Twombly, 550 U.S. at 555 (quoting 24 Papasan v. Allain, 478 U.S. 265, 286 (1986)) (alteration in original). A court need 25 not accept “legal conclusions” as true. Iqbal, 556 U.S. at 678. Despite the 26 deference the court must pay to the plaintiff’s allegations, it is not proper for the 27 court to assume that “the [plaintiff] can prove facts that [he or she] has not alleged 28 or that defendants have violated the . . . laws in ways that have not been alleged.” –2– 13-cv-2054 BAS (DHB) 1 Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters, 459 2 U.S. 519, 526 (1983). 3 Generally, courts may not consider material outside the complaint when 4 ruling on a motion to dismiss. Hal Roach Studios, Inc. v. Richard Feiner & Co., 5 896 F.2d 1542, 1555 n.19 (9th Cir. 1990). However, documents specifically 6 identified in the complaint whose authenticity is not questioned by parties may also 7 be considered. Fecht v. Price Co., 70 F.3d 1078, 1080 n.1 (9th Cir. 1995) 8 (superceded by statutes on other grounds). Moreover, the court may consider the 9 full text of those documents, even when the complaint quotes only selected 10 portions. Id. It may also consider material properly subject to judicial notice 11 without converting the motion into one for summary judgment. Barron v. Reich, 13 12 F.3d 1370, 1377 (9th Cir. 1994). 13 As a general rule, a court freely grants leave to amend a complaint which has 14 been dismissed. Fed. R. Civ. P. 15(a). However, leave to amend may be denied 15 when “the court determines that the allegation of other facts consistent with the 16 challenged pleading could not possibly cure the deficiency.” Schreiber Distrib. Co. 17 v. Serv-Well Furniture Co., 806 F.2d 1393, 1401 (9th Cir. 1986). 18 III. DISCUSSION 19 A. Standing 20 For a suit to proceed in Federal courts, the parties must establish U.S. 21 Constitutional standing. U.S. Const. art. III, § 2. In its motion to dismiss, 22 Defendant challenges Plaintiff’s standing because Plaintiff could not allege an 23 injury without alleging she consumed the Equate supplement that she bought in 24 reliance on the claims made on its packaging. However, the sale itself caused an 25 economic injury-in-fact, and therefore this Court has standing to adjudicate the 26 controversy. Steel Co. v. Citizens for a Better Environment, 523 U.S. 83, 103 27 (1998). Accordingly, the Court DENIES IN PART the motions to dismiss insofar 28 as it is based on a challenge to Plaintiff’s standing. –3– 13-cv-2054 BAS (DHB) 1 B. Choice of Law 2 In the previous Order granting Defendant’s motion to dismiss, this Court 3 found “California’s interest in protecting customers in this state outweighs 4 Arkansas’ interests.” Order Granting Mot. to Dismiss 6, ECF 26 (“Order”). 5 Therefore this Court dismissed Plaintiff’s claim for relief under the Arkansas 6 Deceptive Trade Practices Act (“ADTPA”). Id. Undaunted, Plaintiff realleges a 7 claim under the ADTPA in her FAC. 8 Federal courts apply the choice of law doctrine of the state in which they sit. 9 Klaxon v. StentorElec. Mfg. Co., 313 U .S. 487, 496 (1941). California’s choice of 10 law provisions thus apply. California courts apply an interest test to determine 11 which law should apply, focusing on who the conflicting laws were designed to 12 protect and which state’s interests would be more impaired if not applied. Hurtado 13 v. Superior Court, (1974) 11 Cal.3d 574, 580. If the laws in question do not 14 conflict, “[t]here is obviously no problem[.]” Id. 15 The court in Ford Motor Co. Ignition Switch Products Liab. Litig., In re, 16 174 F.R.D. 332, 348 (D.N.J. 1997) applied New Jersey’s similar interest test to 17 determine that injuries caused by Ford Motor Company, headquartered in 18 Michigan, did not override each state’s independent interest in protecting its 19 customers from injurious purchases within the state. Thus, the court “appl[ied] the 20 law of each of the states from which plaintiffs hail.” Id. at 348. 21 Additionally, Arkansas has disclaimed any superior interest “in policing the 22 kinds of disclosures and representations made by persons conducting consumer 23 transactions in their states.” Tyler v. Alltel Corp., 265 F.R.D. 415, 427 (E.D. Ark. 24 2010). As a result, the state in which the consumer transaction took place will have 25 a superior interest compared to Arkansas. 26 Now, Plaintiff again seeks to assert a claim under the ADTPA on behalf of a 27 nationwide class. However, Plaintiff’s injuries occurred in California, and 28 California’s interest in protecting customers in this state outweighs Arkansas’ –4– 13-cv-2054 BAS (DHB) 1 interests. Similarly, all other states have a superior interest in asserting their laws to 2 protect transactions taking place in their state, whether or not their law conflicts 3 with Arkansas’. At this point, Plaintiff cannot possibly allege any facts consistent 4 with the First Amended Complaint that could give rise to a cause of action under 5 Arkansas law for plaintiffs who did not purchase Equate in Arkansas. 6 The Court GRANTS IN PART the motion to dismiss insofar as it is seeks 7 to dismiss the ADTPA claim. Accordingly, the Court DISMISSES this Plaintiff’s 8 second claim for relief under the ADTPA without leave to amend to assert it on 9 behalf of a nationwide class. 10 C. California Legal Remedies Act 11 Plaintiff asserts that Defendant violated the California Legal Remedies Act 12 (“CLRA”). Cal. Civ. Code §§ 1750 et seq. California Civil Code § 1782(a) 13 requires suits for damages under the CLRA to provide notice at least thirty days in 14 advance. However, this notice provision only applies to “the commencement of an 15 action for damages[.]” Id. 16 Here, Plaintiff sent a notice letter on August 23, 2013. FAC ¶ 134. Plaintiff 17 did not bring a suit for damages until the First Amended Complaint, filed on July 18 28, 2014. More than thirty days passed between notice and the commencement of 19 the damages suit. Amendment of CLRA suits to later allege damages after thirty 20 days have passed is a widely accepted practice.1 21 While Defendant points to Plaintiff’s prayer in her initial Complaint for “An 22 Order requiring WAL-MART to pay all actual and statutory damages permitted 23 under the causes of action alleged herein” (Compl. ¶ 137(E); Def.’s Reply 6:7–8, 24 ECF 37) as commencing an action for damages, Plaintiff also stated she “does not 25 currently seek damages for her claims under the CLRA” (Compl. ¶ 97). It is 26 27 28 1 Defendant need look no further than Rosales v. FitFlop USA, LLC, 882 F. Supp. 2d 1168, 1177 (S.D. Cal. 2012) for an on-point decision by the Court’s esteemed colleague, Judge Thomas J. Whelan. –5– 13-cv-2054 BAS (DHB) 1 therefore clear that the CLRA action for injunctive relief only is a cause of action 2 that does not permit the recovery of damages. Accordingly, Defendant’s motion to 3 dismiss the CLRA claim is DENIED. 4 D. Federal Pleading Standards 5 Defendant reasserts its arguments that the FAC relies on the U.S. 6 Pharmacopeial Convention’s (“USP”) standards to assert its implied and express 7 warranty claims, and that the USP’s standards do not alone create a warranty, 8 implied or express. Def.’s Mot. to Dismiss 9:11–24. 9 When a claim is “grounded in fraud and its allegations fail to satisfy the 10 heightened pleading requirements of Rule 9(b), a district court may dismiss the . . . 11 claim.” Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1107 (9th Cir. 2003). To 12 satisfy the particularity requirement of Rule 9(b), “[a]verments of fraud must be 13 accompanied by ‘the who, what, when, where, and how’ of the misconduct 14 charged.” Vess, 317 F.3d at 1106 (quoting Cooper v. Pickett, 137 F.3d 616, 627 15 (9th Cir. 1997)). Plaintiffs must plead enough facts to give defendants notice of 16 the time, place, and nature of the alleged fraud together with an explanation of the 17 statement and why it was false or misleading. See id. at 1107. Averments of fraud 18 must be pled with sufficient particularity so as to give the defendants notice of the 19 circumstances surrounding an allegedly fraudulent statement. See In re GlenFed, 20 Inc. Sec. Litig., 42 F.3d 1541, 1547 (9th Cir. 1994) (superceded by statute on other 21 grounds as stated in Ronconi v. Larkin, 253 F.3d 423, 429 n.6 (9th Cir. 2001)). The 22 circumstances constituting the alleged fraud must “be specific enough to give 23 defendants notice of the particular misconduct . . . so that they can defend against 24 the charge and not just deny that they have done anything wrong.” Vess, 317 F.3d 25 at 1106 (quoting Bly-Magee v. California, 236 F.3d 1014, 1019 (9th Cir. 2001)) 26 (internal quotation marks omitted). 27 conditions of a person’s mind may be alleged generally.” Fed. R. Civ. P. 9(b). 28 “Malice, intent, knowledge, and other In this case, Plaintiff’s purchase and injury-in-fact establish many of the –6– 13-cv-2054 BAS (DHB) 1 prerequisites for both standing and Rule 9(b)—the “who, what, when, where, and 2 how” of the misconduct. Vess, 317 F.3d at 1106. The FAC gives a reasonably 3 specific recitation of the facts of the purchase and includes facts supporting fraud 4 allegations. 5 While the Court agrees that Equate is not required to meet or exceed USP 6 standards, the FAC asserts that USP testing provides “objective and scientifically- 7 valid industry standards . . . for comparing two or more products[.]” FAC ¶ 20. 8 Accepting this as true, evidence that Equate is produced in “inconsistent batches” 9 shows that the product compares unfavorably to itself. Based on the allegations in 10 the FAC, in contrast to those in the initial Complaint, USP testing may be relevant 11 for some purposes at trial and may provide evidence supporting the breach of the 12 implied or explicit warranties made by Defendant. 13 Further, the invited comparison to Qunol—the packaging’s exhortation to 14 “Compare to Qunol”—may avail Equate to comparison to the USP monograph 15 because Qunol meets the USP standards. FAC ¶ 44; FAC Ex. 7. Plaintiff has 16 subjected Qunol to the same “objective” testing and found Equate deficient. See 17 FAC ¶ 55. Again, all factual allegations in a complaint are accepted as true at this 18 early stage in the litigation, and Plaintiff has alleged sufficient facts to meet the 19 pleading standard under Iqbal and Twombly. Having met this necessary threshold 20 to state a claim, further challenges to individual allegations are immaterial at this 21 stage. 22 E. Magnuson-Moss Warranty Act 23 The Magnuson-Moss Warranty Act (“MMWA”), on its plain terms, defines 24 a warranty as “any written affirmation of fact [… that] promises that such material 25 is defect free or will meet a specified level of performance over a specified period 26 of time.” 15 U.S.C. 2301(6)(a). Plaintiff claims that “clinical strength,” “high 27 absorption,” and “3 times better absorption” are specific and verifiably false claims 28 such that they create an express warranty under the MMWA. Plaintiff has asserted –7– 13-cv-2054 BAS (DHB) 1 that the “3 times better absorption” claim is designed to link Equate’s claim to 2 Qunol’s, creating an express warranty (FAC ¶¶ 70–71); that clinical strength is 3 understood by consumers to mean the product has been clinically tested, but that 4 no such testing has occurred (FAC ¶¶ 72–73); and that “high absorption” warrants 5 a non-zero amount of absorption, and “Equate frequently fails to time rupture or 6 rupture at all, offering consumers little or no efficacy” (FAC ¶ 64). These 7 allegations are not mere legal conclusions, they set verifiable and reasonable 8 benchmarks, and as a result Plaintiff successfully states an MMWA claim.2 Accordingly, the Court DENIES IN PART Defendant’s motion to dismiss 9 10 as it relates to the MMWA claim. Defendant’s Motion to Strike National Class Allegations 11 F. 12 In a separately-noticed “Motion to Strike” (ECF 33), Defendant moves to 13 dismiss the causes of action Plaintiff has asserted on behalf of a prospective 14 nationwide class. Defendant asserts the Court should “strike” the causes of action 15 both by restating the previously-asserted grounds for dismissal and contending that 16 the MMWA “cannot support certification of a national class[.]” Mot. to Strike 5:9– 17 10, ECF 33. Insofar as this motion seeks to dismiss the ADTPA claim, it is 18 TERMINATED as MOOT because that claim has been dismissed, infra at 4–5. 19 As to the prospective nationwide class, the Court determines they are not 20 “redundant, immaterial, impertinent, or scandalous” such that they may be stricken 21 under Rule 12(f). Further, at this point a motion opposing class certification is 22 premature. For those reasons, the remainder of the motion to strike is DENIED. 23 ECF 33. 24 IV. CONCLUSION & ORDER In light of the foregoing, the Court GRANTS IN PART Defendant’s motion 25 26 27 28 2 Additionally, this Court finds at this time that the MMWA claims are not preempted by the Food, Drug, and Cosmetic Act (“FDCA”) because the FDCA is “an instance of implied nonpreemption.” Consumer Justice Ctr. v. Olympian Labs, Inc., 99 Cal. App. 4th 1056, 1063, 121 Cal. Rptr. 2d 749 (2002) (emphasis in original). This preemption finding is made without prejudice. –8– 13-cv-2054 BAS (DHB) 1 to dismiss. ECF 32. The ADTPA claim is DISMISSED without leave to amend. 2 The Court TERMINATES IN PART and DENIES IN PART Defendant’s 3 motion to strike. ECF 33. Defendant is held to answer the FAC within 21 days. 4 5 IT IS SO ORDERED. Dated: January 20, 2015 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 –9– 13-cv-2054 BAS (DHB)

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