Reed v. Dynamic Pet Products et al
Filing
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ORDER: Plaintiff's requests for restitution and disgorgement pursuant to the CLRA are dismissed without prejudice. Plaintiff's CLRA, UCL, and implied warranty claims are dismissed without prejudice to the extent Plaintiff brings them on beh alf of non-California residents. Plaintiff's implied warranty claim is dismissed without prejudice. Plaintiff's requests for injunctive and declaratory relief are dismissed without prejudice. Defendants' motion to dismiss (Dkt # 8 ) i s denied in all other respects. Defendants' motion to strike (Dkt # 9 ) is denied as moot. No later than thirty (30) days from the date of this Order, Plaintiff may file a motion for leave to amend the Complaint, accompanied by a proposed first amended complaint. Signed by Judge William Q. Hayes on 7/30/2015. (mdc)
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UNITED STATES DISTRICT COURT
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SOUTHERN DISTRICT OF CALIFORNIA
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KHRISTIE REED, on Behalf of
Herself and All Others Similarly
Situated,
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ORDER
Plaintiff,
vs.
DYNAMIC PET PRODUCTS; and
FRICK’S MEAT PRODUCTS, INC.,
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CASE NO. 15cv0987-WQH-DHB
Defendant.
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HAYES, Judge:
The matters before the Court are the motion to dismiss pursuant to Federal Rule
of Civil Procedure 12(b)(6) (ECF No. 8) and the motion to strike pursuant to Federal
Rule of Civil Procedure 12(f) (ECF No. 9) filed by Defendants Dynamic Pet Products
and Frick’s Meat Products, Inc.
I. Background
On May 1, 2015, Plaintiff Khristie Reed commenced this action on behalf of
herself and others similarly situated by filing the Class Action Complaint in this Court.
(ECF No. 1). On June 16, 2015, Defendants Dynamic Pet Products (“Dynamic”) and
Frick’s Meat Products, Inc. (“Frick’s”) filed the motion to dismiss pursuant to Federal
Rule of Civil Procedure 12(b)(6)1 and the motion to strike pursuant to Federal Rule of
Civil Procedure 12(f). (ECF Nos. 8, 9). On July 6, 2015, Plaintiff filed oppositions to
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The motion to dismiss is accompanied by a request for judicial notice. (ECF
No. 8-3).
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1 both motions. (ECF Nos. 11, 12). On July 13, 2015, Defendants filed replies in support
2 of both motions. (ECF Nos. 13, 14).
3 II. Allegations of the Complaint
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This is a consumer protection class action arising out of
misrepresentations and omissions made by Defendant Dynamic Pet
Products and Frick’s Meat Products, Inc. Frick’s is a meat processor. In
an effort to profit from the waste resulting from the manufacture of its
products, Frick’s or its principals created Dynamic to sell waste ham bones
to pet owners. Through Dynamic, a wholly owned subsidiary of Frick’s,
Defendants manufacture, market and sell the Dynamic Pet Products Real
Ham Bone For Dogs, an 8” hickory-smoked pork femur, as an appropriate
and safe chew toy for dogs. Indeed, on each product label Defendants
clearly state that this is a “Dynamic Pet Products Real Ham Bone For
Dogs.”
10 (ECF No. 1 at 2). “In an effort to profit from the waste resulting from the manufacture
11 of its products, Frick’s knowingly and intentionally supplies Dynamic with bones for
12 the purpose of selling them as the Real Ham Bone For Dogs.” Id. at 6. “Dynamic and
13 Frick’s share the same ownership, management and headquarters and are the alter egos
14 of one another.” Id. “Frick’s and Dynamic work in concert with each other to profit
15 off the sale of waste ham bones, marketing them to pet owners as safe and appropriate
16 chew toys for dogs, when they are not.” Id.
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“The Real Ham Bone For Dogs is not appropriate for dogs and is not safe for its
18 intended purpose, despite Defendants’ contrary representations.” (ECF No. 1 at 2).
19 “When chewed, Real Ham Bones For Dogs are prone to splintering into shards, which
20 then slice through dogs’ digestive systems. Thousands of dogs have suffered a terrible
21 array of illnesses, including stomach, intestinal and rectal bleeding, vomiting, diarrhea,
22 constipation and seizures, and have died gruesome, bloody deaths as a result of chewing
23 Defendants’ Real Ham Bone For Dogs.” Id.
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The Complaint alleges that the Food and Drug Administration stated that bones
25 such as the Real Ham Bone For Dogs are not safe for dogs. The Complaint also alleges
26 that the Missouri Better Business Bureau “specifically warned Defendants about the
27 dangers posed by their Real Ham Bone For Dogs product[,]” but “Defendants ignored
28 this notice.” Id. at 9. The Complaint quotes thirteen complaints made by pet owners
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1 online or to Dynamic directly. For example, the Complaint alleges that one pet owner
2 complained that her dog suffered “shock and couldn’t move ... puked and had Diarrhea
3 and couldn’t stand up ... [and] spent 3 days in the hospital on iv’s [sic]....” as a result of
4 ingesting the Real Ham Bone for Dogs. Id. at 7.
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“Despite having knowledge that Real Ham Bones For Dogs is inherently
6 dangerous for dogs, Defendants represent the opposite.”
Id. at 10.
“None of
7 instructions [sic] on the product’s packaging or in other marketing informed Plaintiff
8 or other consumers that allowing dogs to chew on the Real Ham Bone For Dogs as
9 instructed on the labeling nonetheless poses a significant risk of serious illness or death.
10 Nowhere do Defendants state the truth – that the Real Ham Bone For Dogs is a
11 dangerous product that should not be given to dogs.” Id. at 10. The Complaint alleges
12 that the label of each Real Ham Bone For Dogs falsely represents that it is “safe for
13 your pet” and is “meant to be chewed.” Id. at 3
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The Complaint alleges that Plaintiff purchased the Real Ham Bone For Dogs
15 from Wal-Mart in Oceanside, California, on March 1, 2015.
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When Plaintiff returned home from Wal-Mart, she gave the Real Ham
Bone For Dogs to Fred, her healthy nine-year-old basset hound. Plaintiff
watched Fred chew on the Real Ham Bone For Dogs for approximately
one hour, after which point Fred walked away and did not chew on it
again. The next day, Monday March 2, 2015, Fred was lethargic and
vomiting blood. Plaintiff immediately rushed Fred to California
Veterinary Specialists in Carlsbad, California. The veterinarian told
Plaintiff that Fred was gravely ill and there was no guarantee that surgery
would save him. According to the veterinarian, the only way to alleviate
Fred’s suffering was to put him to sleep. Plaintiff took the veterinarian’s
advice and Fred was euthanized that evening.
22 Id. at 5.
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The Complaint defines the proposed class as “[a]ll persons who purchased one
24 or more Real Ham Bone For Dogs other than for purpose of resale.” Id. at 11. Attached
25 to the Complaint as Exhibit A is a May 1, 2015 letter from Plaintiff’s counsel to David
26 S. Frick, owner of Dynamic Pet Products, requesting that “Defendants immediately
27 correct and rectify these violations by ceasing dissemination of false and misleading
28 information as described in the enclosed Complaint....” (ECF No. 1-2 at 3).
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The Complaint asserts the following claims for relief: (1) violation of the
2 California Consumers Legal Remedies Act (“CLRA”), California Civil Code section
3 1750, et seq.; (2) violation of California Business and Professions Code section 17200,
4 et seq. (“UCL”); (3) breach of implied warranty; (4) fraud; and (5) negligent
5 misrepresentation. Plaintiff requests general damages, punitive damages, restitution,
6 disgorgement, declaratory and injunctive relief, corrective advertising; and attorneys’
7 fees and costs.
8 III. Motion to Dismiss (ECF No. 8)
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Defendants move to dismiss Plaintiff’s CLRA, UCL, fraud, and negligent
10 misrepresentation claims for failure to allege fraud with the particularity required by
11 Rule 9(b). Defendants move to dismiss Plaintiff’s CLRA and UCL claims on the
12 ground that Defendants’ alleged misrepresentations are not likely to deceive a
13 reasonable consumer. Defendants move to dismiss Plaintiff’s CLRA claim for failure
14 to comply with its 30-day notice requirement. Defendants move to dismiss Plaintiff’s
15 proposed class, with respect to Plaintiff’s CLRA, UCL, and implied warranty claims,
16 to the extent the class includes members who reside outside of California. Defendants
17 move to dismiss Plaintiff’s implied warranty claim on the ground that there is no
18 vertical privity between Plaintiff and Defendants. Defendants move to dismiss
19 Plaintiff’s declaratory and injunctive relief requests on the ground that Plaintiff lacks
20 Article III standing to request declaratory and injunctive relief.
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Plaintiff opposes the motion to dismiss and requests leave to amend should
22 Defendants’ motion be granted in any respect.
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A. 12(b)(6) Standard
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Federal Rule of Civil Procedure 12(b)(6) permits dismissal for “failure to state
25 a claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). Federal Rule of
26 Civil Procedure 8(a) provides that “[a] pleading that states a claim for relief must
27 contain ... a short and plain statement of the claim showing that the pleader is entitled
28 to relief.” Fed. R. Civ. P. 8(a)(2). “A district court’s dismissal for failure to state a
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1 claim under Federal Rule of Civil Procedure 12(b)(6) is proper if there is a ‘lack of a
2 cognizable legal theory or the absence of sufficient facts alleged under a cognizable
3 legal theory.’” Conservation Force v. Salazar, 646 F.3d 1240, 1242 (9th Cir. 2011)
4 (quoting Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1990)).
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“[A] plaintiff’s obligation to provide the ‘grounds’ of his ‘entitle[ment] to relief’
6 requires more than labels and conclusions, and a formulaic recitation of the elements
7 of a cause of action will not do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)
8 (quoting Fed. R. Civ. P. 8(a)). “To survive a motion to dismiss, a complaint must
9 contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is
10 plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly,
11 550 U.S. at 570). “A claim has facial plausibility when the plaintiff pleads factual
12 content that allows the court to draw the reasonable inference that the defendant is liable
13 for the misconduct alleged.” Id. (citation omitted). “[T]he tenet that a court must
14 accept as true all of the allegations contained in a complaint is inapplicable to legal
15 conclusions. Threadbare recitals of the elements of a cause of action, supported by
16 mere conclusory statements, do not suffice.” Id. (citation omitted). “When there are
17 well-pleaded factual allegations, a court should assume their veracity and then
18 determine whether they plausibly give rise to an entitlement to relief.” Id. at 679. “In
19 sum, for a complaint to survive a motion to dismiss, the non-conclusory factual content,
20 and reasonable inferences from that content, must be plausibly suggestive of a claim
21 entitling the plaintiff to relief.” Moss v. U.S. Secret Serv., 572 F.3d 962, 969 (9th Cir.
22 2009) (quotations and citation omitted).
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Claims sounding in fraud or mistake must additionally comply with the
24 heightened pleading requirements of Federal Rule of Civil Procedure 9(b), which
25 requires that a complaint “must state with particularity the circumstances constituting
26 fraud or mistake.” Fed. R. Civ. P. 9(b). Rule 9(b) “requires ... an account of the time,
27 place, and specific content of the false representations as well as the identities of the
28 parties to the misrepresentations.” Swartz v. KPMG LLP, 476 F.3d 756, 764 (9th Cir.
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1 2007) (quotation omitted); see also Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097,
2 1106 (9th Cir. 2003) (averments of fraud must be accompanied by “the who, what,
3 when, where, and how of the misconduct charged”) (quotation omitted). “To comply
4 with Rule 9(b), allegations of fraud must be specific enough to give defendants notice
5 of the particular misconduct which is alleged to constitute the fraud charged so that they
6 can defend against the charge and not just deny that they have done anything wrong.”
7 Bly-Magee v. California, 236 F.3d 1014, 1019 (9th Cir. 2001) (citation and internal
8 quotations omitted).
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In a suit involving multiple defendants, “there is no absolute requirement that ...
10 the complaint must identify false statements made by each and every defendant.”
11 Swartz, 476 F.3d at 764 (emphasis in original). “On the other hand, Rule 9(b) does not
12 allow a complaint to merely lump multiple defendants together but requires plaintiffs
13 to differentiate their allegations when suing more than one defendant and inform each
14 defendant separately of the allegations surrounding his alleged participation in the
15 fraud.” Id. at 764-65 (citation, internal quotations, and alterations omitted). “[A]
16 plaintiff must, at a minimum, identify the role of each defendant in the alleged
17 fraudulent scheme.” Id. at 765 (citation, internal quotations, and alterations omitted).
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B. Request for Judicial Notice (ECF No. 8-3)
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Defendants request judicial notice of the product label for the Real Ham Bone
20 For Dogs as a document whose contents are discussed in the complaint. (ECF No. 8-3).
21 The docket reflects that Plaintiff has not responded to Defendants’ request for judicial
22 notice.
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Federal Rule of Evidence 201 provides that “[t]he court may judicially notice a
24 fact that is not subject to reasonable dispute because it ... is generally known within the
25 trial court’s territorial jurisdiction; or ... can be accurately and readily determined from
26 sources whose accuracy cannot reasonably be questioned.” Fed R. Evid. 210(b). In
27 ruling on a motion to dismiss, a court may consider “materials incorporated into the
28 complaint by reference....” Metzler Inv. GMBH v. Corinthian Colls., Inc., 540 F.3d
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1 1049, 1061 (9th Cir. 2008). Furthermore, courts may take judicial notice of documents
2 discussed in but not attached to a complaint, when the documents’ authenticity is not
3 subject to dispute. Davis v. HSBC Bank Nev., N.A., 691 F.3d 1152, 1160-61 (9th Cir.
4 2012).
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The Real Ham Bone For Dogs label is discussed in the Complaint. Plaintiff’s
6 claims are based on representations made on the label and communications omitted
7 from the label. Plaintiff does not dispute the authenticity of the Real Ham Bone For
8 Dogs label. Defendants’ request for judicial notice is granted. The Court takes judicial
9 notice of the Real Ham Bone For Dogs label for the purposes of this motion to dismiss:
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C. Compliance with Rule 9(b) (CLRA, UCL, Fraud, and Negligent
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Misrepresentation Claims)
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Defendants contend that Plaintiff’s CLRA, UCL, fraud, and negligent
3 misrepresentation claims must be dismissed because Plaintiff has failed to comply with
4 Rule 9(b). Specifically, Defendants contend that Plaintiff has failed to specify which
5 Defendant is responsible for the alleged misrepresentation. Defendants contend that
6 Plaintiff has not alleged that Frick’s has made any misrepresentation at all.
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Plaintiff contends that she has adequately alleged the role of each defendant in
8 the fraudulent scheme and need not identify false statements made by each defendant.
9 Plaintiff contends that Defendant Frick’s may be liable for Defendant Dynamic’s
10 misrepresentations under an alter ego theory.
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The Complaint alleges that Dynamic and Frick’s worked in concert as parent and
12 subsidiary entities in the marketing and selling the Real Ham Bone For Dogs. Plaintiff
13 has adequately “identif[ied] the role of each defendant in the alleged fraudulent
14 scheme[,]” Swartz, 476 F.3d at 765, and the Court is able to draw the reasonable
15 inference that “Defendants” means Defendants Dynamic and Frick’s, the only two
16 Defendants named in the Complaint, working in concert. The Court concludes that the
17 allegations of each defendant’s involvement are “specific enough to give defendants
18 notice of the particular misconduct which is alleged to constitute the fraud charged so
19 that they can defend against the charge and not just deny that they have done anything
20 wrong.” Bly-Magee, 236 F.3d at 1019.
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Defendants’ motion to dismiss Plaintiff’s CLRA, UCL, fraud, and negligent
22 misrepresentation claims on the ground that Plaintiff has failed to comply with Rule
23 9(b) is denied.
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D. Statements Likely to Deceive a Reasonable Consumer (UCL and
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CLRA Claims)
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Defendants contend that “no reasonable consumer could have been deceived by
27 the label on the Real Ham Bone For Dogs.” (ECF No. 8-1 at 9). “On the contrary, the
28 label specifically discloses the risks that Reed claims were omitted, and it advises the
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1 customer how to minimize those risks.” Id. at 10. Defendant asserts that the label
2 “warns specifically that pet owners should not let their dog eat the bone, and to make
3 sure the bone does not splinter while it is being chewed.” Id. “It is hard to imagine
4 how this label could be part of an alleged scheme to defraud customers by hiding the
5 risk to their pets from these bones splintering.” Id. at 10.
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Plaintiff contends that “whether a representation is likely to deceive a reasonable
7 consumer in violation of the UCL and CLRA ‘will usually be a question of fact not
8 appropriate for decision on demurrer.’” (ECF No. 11 at 12) (citing Williams v. Gerber
9 Prods. Co., 552 F.3d 934, 938 (9th Cir. 2008) and Cel-Tech Commc’ns, Inc. v. L.A.
10 Cellular Tel. Co., 20 Cal. 4th 163, 195 (1999)). Plaintiff contends that Defendants
11 “miscast plaintiff’s allegations.” Id. at 14. Plaintiff contends that the Complaint alleges
12 that “the Real Ham Bone for Dogs is not fit for its intended purpose.” Id. Plaintiff
13 contends that whether a reasonable consumer would be misled is a question of fact,
14 even when there are disclaimers on a product.
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“[T]o state a claim under ... the UCL ..., based on false advertising or promotional
16 practices, it is necessary only to show that members of the public are likely to be
17 deceived.”
Kasky v. Nike, Inc., 27 Cal. 4th 939, 951 (2002).
“[U]nless the
18 advertisement targets a particular disadvantaged or vulnerable group, it is judged by the
19 effect it would have on a reasonable consumer.” Lavie v. Procter & Gamble Co., 105
20 Cal. App. 4th 496, 506-07 (2003).
“[T]he standard applied in UCL and false
21 advertising cases is that of the ordinary consumer acting reasonably under the
22 circumstances.” Id. at 498. This “reasonable consumer” test applies to claims
23 advertising claims brought under the CLRA. Williams v. Gerber Prods. Co., 552 F.3d
24 934, 938 (9th Cir. 2008).
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Plaintiff alleges that the Real Ham Bone For Dogs is “not appropriate for dogs”
26 and “inherently dangerous for dogs.” (ECF No. 1 at 2, 10). The label advertises the
27 Real Ham Bone For Dogs as “Real Ham Bone For Dogs.” (ECF No. 8-2 at 5)
28 (emphasis added). The label also contains the following language: “Bone is to be
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1 chewed over several sittings, not eaten.... Not recommended for dogs with digestive
2 problems or aggressive chewers. Remove bone immediately if splintering occurs or
3 small fragments break off.” Id. Accepting as true the allegation that the Real Ham
4 Bone For Dogs is “not appropriate for dogs,” it is a question of fact whether a
5 reasonable consumer would be misled into believing that the Real Ham Bone For Dogs
6 is appropriate for dogs after reading the label.
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The Court does not conclude as a matter of law that the Real Ham Bone For Dogs
8 label would not mislead a reasonable consumer. Defendants’ motion to dismiss
9 Plaintiff’s CLRA and UCL claims on the ground that no reasonable consumer would
10 be misled by the Real Ham Bone For Dogs label is denied.
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E. 30-Day Notice Requirement (CLRA Claim)
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Defendants contend that the CLRA “requires a plaintiff to give the defendant
13 notice of the alleged violations and provide an opportunity to cure, at least 30 days
14 before commencing an action for damages.” (ECF No. 8-1 at 7). Defendants contend
15 that strict compliance with the notice requirement is required to state a claim under the
16 CLRA. Defendants contend that failure to comply with the notice requirement can
17 never be cured, so dismissal with prejudice is required. Defendants contend that
18 Plaintiff has failed to comply with the notice requirement because the notice was sent
19 on the same day the Complaint was filed, and the Complaint requests restitution and
20 disgorgement, two types of damages.
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Plaintiff asserts that she has complied with the notice requirements of the CLRA.
22 Plaintiff contends that she is only required to provide a pre-filing notice before seeking
23 “legal damages.” (ECF No. 11 at 11). Plaintiff contends that the Complaint only seeks
24 equitable relief, restitution, and disgorgement, not “legal damages.” Id.
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The CLRA provides for the following remedies: (1) “[a]ctual damages”; (2)
26 injunctive relief; (3) “[r]estitution of property”; (4) “[p]unitive damages”; and (5) “[a]ny
27 other relief that the court deems proper.” Cal. Civ. Code § 1780(a). Section 1782(a)
28 of the CLRA provides a thirty-day pre-filing notice requirement for “an action for
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1 damages.” Cal. Civ. Code § 1782(a). Sections 1782(b) and (c) provide that an “action
2 for damages” may not be maintained if the potential defendant takes certain corrective
3 action in response to the notice. Id. §§ 1782(b), (c). Section 1782(d) provides:
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An action for injunctive relief brought under the specific provisions of
Section 1770 may be commenced without compliance with subdivision
(a). Not less than 30 days after the commencement of an action for
injunctive relief, and after compliance with subdivision (a), the consumer
may amend his or her complaint without leave of court to include a request
for damages. The appropriate provisions of subdivision (b) or (c) shall be
applicable if the complaint for injunctive relief is amended to request
damages.
Id. § 1782(d).
The Complaint alleges:
Pursuant to § 1782(d) of the Act, Plaintiff and the Class seek a court
order enjoining Defendants’ above-described wrongful acts and practices
for restitution and disgorgement.
Pursuant to § 1782 of the Act, Plaintiff notified Defendants in writing
by certified mail of the particular violations of § 1770 of the Act and
demanded that Defendants rectify the problems associated with the actions
detailed above and give notice to all affected consumers of Defendants’
intent to so act. Copies of the letters are attached as Exhibit A. If
Defendants fail to rectify or agree to rectify the problems associated with
the actions detailed above and give notice to all affected consumers within
30 days of the date of the written notice pursuant to § 1782 of the Act,
Plaintiff will amend this complaint to add claims for damages, as
appropriate.”
18 (ECF No. 1 at 15). Because Plaintiff’s pre-filing notice was sent to Defendants on the
19 same day that the Complaint was filed, Plaintiff’s compliance with section 1782(a)
20 depends on whether Plaintiff’s requests for restitution and disgorgement qualifies this
21 action as an “action for damages.” Cal. Civ. Code § 1782(a).
22
“There is some disagreement as to whether pre-suit notice is required when the
23 only monetary relief sought is restitution.” In re Ford Tailgate Litig., No. 11-CV-295324 RS, 2014 WL 1007066, at *9 (N.D. Cal. Mar. 11, 2014) (citations omitted). This Court
25 agrees with the district courts that have held that Section 1782(a)’s pre-filing notice
26 requirement applies to requests for restitution and/or disgorgement. See Laster v.
27 T–Mobile USA, Inc., No. 5–1167, 2008 WL 5216255, at *17 (S.D. Cal. Aug. 11, 2008),
28 aff’d sub nom., Laster v. AT & T Mobility LLC, 584 F.3d 849 (9th Cir. 2009), rev’d on
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1 other grounds, 131 S.Ct. 1740 (2011) (“To interpret Section 1782’s notice requirement
2 for “damages” to be limited to “actual damages” would render the word “actual” in
3 Section 1780 redundant. In addition, if the Legislature intended Section 1782’s
4 reference to “damages” to include only “actual damages,” it is unclear why it would
5 specifically exempt only injunctive relief from the notice requirement in Section
6 1782(d).”); Cuevas v. United Brands Co., Inc., No. 11cv991, 2012 WL 760403, at *4
7 (S.D. Cal. Mar. 8, 2012) (finding that a “claim for the equitable relief of disgorgement
8 or restitution was still a claim for damages”). Accordingly, Plaintiff’s requests for
9 restitution and disgorgement pursuant to the CLRA are subject to dismissal.
10
The California Court of Appeal has held that a failure to comply with the
11 CLRA’s thirty-day notice requirement may be cured by amendment.
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[The CLRA’s notice requirement] exists in order to allow a defendant to
avoid liability for damages if the defendant corrects the alleded wrongs
within 30 days after notice, or indicates within that 30-day period that it
will correct those wrongs within a reasonable time. A dismissal with
prejudice of a damages claim filed without the requisite notice is not
required to satisfy this purpose. Instead, the claim must simply be
dismissed until 30 days or more after the plaintiff complies with the notice
requirements. If, before that 30-day period expires the defendant corrects
the alleged wrongs or indicates it will correct the wrongs, the defendant
cannot be held liable for damages.
Morgan v. AT & T Wireless Servs., Inc., 177 Cal. App. 4th 1235, 1261 (2009)
(emphasis in original) (citations omitted). This Court will follow Morgan. See
Carvalho v. Equifax Info. Servs., LLC, 629 F.3d 876, 889 (9th Cir. 2010) (“We are
bound by pronouncements of the California Supreme Court on applicable state law, but
in the absence of such pronouncements, we follow decisions of the California Court of
Appeal unless there is convincing evidence that the California Supreme Court would
hold otherwise.”). Plaintiff’s requests for restitution and disgorgement pursuant to the
CLRA are dismissed without prejudice.
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E. Class Members Outside of California (CLRA, UCL, and Implied
Warranty Claims)
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1
Defendants move to dismiss Plaintiff’s proposed class, with respect to Plaintiff’s
2 CLRA, UCL, and implied warranty claims, to the extent the class includes members
3 who reside outside of California. Defendants contend that extraterritorial application
4 of the CLRA, UCL, and California Consumer Code section 2314 (implied warranty) is
5 unwarranted because “the Complaint fails to allege any conduct occurred in California,
6 other than in connection with plaintiff’s own purchase of the dog bone product.” (ECF
7 No. 8-1 at 13).
8
Plaintiff contends that extraterritorial application of California law involves a
9 “fact intensive” choice-of-law analysis, “typically deferred until class certification.”
10 (ECF No. 11 at 17). Plaintiff contends that a choice-of-law analysis would be
11 premature at this stage because there is no factual record in this case.
12
“However far the Legislature’s power may theoretically extend, we presume the
13 Legislature did not intend a statute to be operative, with respect to occurrences outside
14 the state, ... unless such intention is clearly expressed or reasonably to be inferred from
15 the language of the act or from its purpose, subject matter or history.” Sullivan v.
16 Oracle Corp., 51 Cal. 4th 1191, 1207 (2011) (citation and internal quotations omitted).
17 “Neither the language of the UCL nor its legislative history provides any basis for
18 concluding the Legislature intended the UCL to operate extraterritorially. Accordingly,
19 the presumption against extraterritoriality applies to the UCL in full force.” Id. (citation
20 omitted). Plaintiff does not contend that the presumption does not apply to the CLRA
21 or Section 2314.
Accordingly, the Court will apply the presumption against
22 extraterritorial application of California statutes to Plaintiff’s CLRA and Section 2314
23 claims in addition to Plaintiff’s UCL claim.
24
In Sullivan, a class of non-resident plaintiffs sought restitution from a California-
25 based employer pursuant to the UCL “in the amount of overtime compensation due
26 under the [Fair Labor Standards Act (29 U.S.C. § 207(a)) for weeks longer than 40
27 hours worked entirely in states other than California.” Sullivan, 51 Cal. 4th at 1195.
28 The non-resident plaintiffs alleged that their California-based employer improperly
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1 categorized them as exempt from overtime requirements. The Ninth Circuit Court of
2 Appeals requested that the California Supreme Court answer, inter alia, the following
3 certified question: “[D]oes [the UCL] apply to overtime work performed outside
4 California for a California-based employer by out-of-state plaintiffs in the
5 circumstances of this case if the employer failed to comply with the overtime provisions
6 of the FLSA?” Id. at 1195 (internal quotations omitted).
7
The California Supreme Court first concluded that the “presumption against
8 extraterritoriality applies to the UCL in full force.” Id. at 1207. Applying the
9 presumption, the court looked for “relevant conduct occurring in California....” Id. at
10 1208. Reasoning that it is not “unlawful in the abstract” for an employer to “adopt an
11 erroneous classification policy[,]” the court concluded that the employer’s “decision to
12 classify its Instructors as exempt was made in California does not, standing alone,
13 justify applying the UCL to the nonresident plaintiffs’ FLSA claims for overtime
14 worked in other states.” Id. Reasoning that “the failure to pay legally required
15 overtime compensation certainly is an unlawful business act or practice for purposes of
16 the UCL[,]” the court noted that “the UCL might conceivably apply to plaintiffs’ claims
17 if their wages were paid (or underpaid) in California....” Id. However, the stipulated
18 facts did “not speak to the location of payment.” Id. The court concluded that the UCL
19 “does not apply to overtime work performed outside California for a California-based
20 employer by out-of-state plaintiffs in the circumstances of this case based solely on the
21 employer’s failure to comply with the overtime provisions of the FLSA.” Id. at 1209.
22
23
In order to overcome the presumption against extraterritorial application of a
24 California statute, non-resident plaintiffs, who are not injured in California, must
25 establish that the unlawful conduct giving rise to their claims occurred in California.
26 See id. at 1208 n.10 (distinguishing prior cases permitting nationwide classes of
27 plaintiffs to sue under California law on the ground that “the unlawful conduct that
28 formed the basis of the out-of-state plaintiffs’ claims .... occurred in California”).
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1
The Complaint alleges that Defendants are Missouri Corporations with their
2 headquarters in Washington, Missouri. The Complaint alleges that “Dynamic has
3 marketed, distributed, and sold the Real Ham Bone For Dogs to many thousands of
4 consumers in the United States through nationwide retailers such as Wal-Mart, Sam’s
5 Club, H.E.B., and Dollar General.” (ECF No. 1 at 5). “Dynamic also sells the Real
6 Ham Bone For Dogs directly to consumers nationwide through direct sales websites
7 such
as
www.walmart.com
and
www.heb.com,
and
its
own
website,
8 www.dynamicpet.net.” Id. The Complaint alleges:
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
Frick’s Meat Products Inc. is a major meat product manufacturer and
supplies sausages and other prepared meats to food retailers nationwide.
As a nationwide distributor, Frick’s generates considerable slaughter
house waste, i.e., the bones and trimmings of a slaughtered animal that
cannot be sold as meat or used in meat-products. In an effort to profit from
the waste resulting from the manufacture of its products, Frick’s
knowingly and intentionally supplies Dynamic with bones for the purpose
of selling them as the Real Ham Bone For Dogs. Dynamic and Frick’s
share the same ownership, management and headquarters and are the alter
egos of one another. Frick’s and Dynamic work in concert with each other
to profit off the sale of waste ham bones, marketing them to pet owners as
safe and appropriate chew toys for dogs, when they are not.
Id. at 6. The Complaint alleges that Plaintiff purchased the Real Ham Bone For Dogs
from Wal-Mart in Oceanside, California, that Fred, Plaintiff’s basset hound, chewed on
the Real Ham Bone For Dogs in Vista, California, and that Fred was euthanized in
Carlsbad, California.
The Complaint alleges no facts plausibly demonstrating that non-California
plaintiffs were injured in California or injured by unlawful conduct occurring in
California. Plaintiff’s CLRA, UCL, and implied warranty claims are dismissed to the
extent Plaintiff brings them on behalf of non-California residents.2
2
A complex choice-of-law analysis, which might require delaying resolution of
25 this issue to the class certification stage, is not required to reach this conclusion. See
Figy v. Frito-Lay N. Am., Inc., 67 F. Supp. 3d 1075, 1086-87 (N.D. Cal. 2014) (stating
26 that the plaintiffs “mistakenly conflate” the question of extraterritorial application of
a California statute with the “choice of law inquiry often required at the class
27 certification stage”). Because Plaintiff fails to plausibly allege that California law can
be applied to the claims of non-California plaintiffs, and neither party advocates for
28 application of an alternative state’s laws, the Court is left with no laws to choose from
at this stage in the proceedings. Dismissal is therefore appropriate.
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1
F. Vertical Privity (Implied Warranty Claim)
2
Defendants move to dismiss Plaintiff’s implied warranty claim on the ground that
3 there is no vertical privity between Plaintiff and Defendants because Plaintiff purchased
4 the Real Ham Bone For Dogs from Wal-Mart. Plaintiff contends that an exception to
5 the vertical privity requirement applies in this case because Plaintiff is an intended
6 third-party beneficiary of the sale between Defendants and Wal-Mart. Plaintiff
7 contends that another exception to the vertical privity requirement applies in this case
8 because the Real Ham Bone For Dogs is an “unknowingly dangerous” product. (ECF
9 No. 11 at 21).
10
“Under California Commercial Code section 2314, ... a plaintiff asserting breach
11 of warranty claims must stand in vertical contractual privity with the defendant.”
12 Clemens v. DaimlerChrysler Corp., 534 F.3d 1017, 1023 (9th Cir. 2008) (citation
13 omitted). “A buyer and seller stand in privity if they are in adjoining links of the
14 distribution chain.” Id. “Some particularized exceptions to the rule exist.” Id.
15
The Complaint alleges that Defendant Dynamic markets, distributes, and directly
16 sells the Real Ham Bone For Dogs. The Complaint alleges that Defendant Frick’s
17 supplies Dynamic with bones “for the purpose of selling them as the Real Ham Bone
18 For Dogs.” (ECF No. 1 at 6). The Complaint alleges that Plaintiff purchased the Real
19 Ham Bone For Dogs from Wal-Mart in Oceanside, California. Plaintiff’s third claim
20 asserts that Defendants violated California Commercial Code section 2314.
21
Because Plaintiff does not allege that she purchased the Real Ham Bone For
22 Dogs directly from either Defendant, Plaintiff must establish that an exception to the
23 vertical privity requirement applies. Plaintiff contends that two exceptions apply: (1)
24 intended third-party beneficiary; and (2) unknowingly dangerous product. Defendant
25 contends that neither the intended third-party beneficiary exception nor the
26 unknowingly dangerous product exceptions exist.
27
28
i. Intended Third-Party Beneficiary
In Gilbert Fin. Corp. v. Steelform Contracting Co., 82 Cal. App. 3d 65 (1978),
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15cv0987-WQH-DHB
1 the plaintiff contracted for the construction of a bank records storage building. The
2 plaintiff sued the subcontractor for breach of “an implied warranty for failure to furnish
3 proper materials and workmanship.” Id. at 69. The court stated, “[u]nder the facts of
4 this case we do not need to decide the issue of privity, per se.” Id. “Under Civil Code
5 section 1559 and the cases interpreting it, we conclude [the plaintiff] is a third-party
6 beneficiary of the contract between [the contractor] and [subcontractor] and therefore
7 can sue for breach of the implied warranty of fitness.” Id. In so holding, the court
8 noted that “[s]ome jurisdictions use the third party beneficiary concept to find
9 ‘privity[,]’” but stated that “[w]e do not believe this fiction is necessary.” Id. at 70 n.5.
10 There do not appear to be any reported California cases extending Gilbert to the
11 consumer products context. District courts are in disagreement on this issue. See In re
12 MyFord Touch Consumer Litig., 46 F. Supp. 3d 936, 983 (N.D. Cal. 2014) (collecting
13 cases).
14
Assuming, without deciding, that a product purchaser may assert a claim under
15 Section 2314 against a product distributor on a third-party beneficiary theory, the
16 Complaint alleges no facts plausibly demonstrating that Plaintiff was the intended
17 beneficiary of any contracts between Wal-Mart and Defendants.
18
19
ii. Unknowingly Dangerous Product
In support of the unknowingly dangerous product exception, Plaintiff relies on
20 two California Court of Appeal cases: Alvarez v. Felker Mfg. Co., 230 Cal. App. 2d 987
21 (1964) and Barth v. B.F. Goodrich Tire Co., 265 Cal. App. 2d 228 (1968). Barth cites
22 Alavarez for the proposition that there is no privity requirement for implied warranty
23 claims where the product contains dangerous, latent defects, but Barth does not apply
24 this stated exception to the case. Alvarez, in turn, cites Peterson v. Lamb Rubber Co.,
25 54 Cal. 2d 339 (1960) for this same broad proposition. However, Peterson did not
26 create such a broad exception. In Peterson, the California Supreme Court held that an
27 employee may “stand in the shoes of the employer” when the employer purchases a
28 dangerous product directly from the manufacturer. Id. at 347-48; see also Windham at
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15cv0987-WQH-DHB
1 Carmel Mountain Ranch Assn. v. Superior Court, 109 Cal. App. 4th 1162, 1169 (2003)
2 (“[A]n expansion of the privity concept has been established for certain employees who
3 are injured while using dangerous products purchased by their employers.”) (emphasis
4 added) (citing Peterson, 54 Cal. 2d at 347-48).
5
The Court concludes that the California courts have not created a general
6 exception to Section 2314’s privity requirement for unknowingly dangerous products.
7 See Clemens v. DaimlerChrysler Corp., 534 F.3d 1017, 1024 (9th Cir. 2008)
8 (“California courts have painstakingly established the scope of the privity requirement
9 under California Commercial Code section 2314, and a federal court sitting in diversity
10 is not free to create new exceptions to it.”). Plaintiff’s implied warranty claim is
11 dismissed without prejudice.
12
G. Injunctive and Declaratory Relief
13
Defendants move to dismiss Plaintiff’s requests for injunctive and declaratory
14 relief on the ground that Plaintiff lacks standing under Article III of the United States
15 Constitution. Defendants contend that Plaintiff “cannot establish that she realistically
16 is threatened by a repetition of the alleged misconduct....” (ECF No. 8-1 at 15).
17 Defendants contend that Plaintiff “undisputedly is now aware of defendants’ conduct
18 that she claims constitutes misrepresentations and omissions, and she is aware of the
19 alleged danger posed by he Real Ham Bone for Dogs product.” Id.
20
Plaintiff contends that she can establish a realistic threat of future injury because
21 Defendants may cure the alleged misrepresentations or the Real Ham Bone For Dogs’
22 defects in the future.
Plaintiff contends that if Defendants cure the alleged
23 misrepresentations or the Real Ham Bone For Dogs without a court order, she will be
24 injured because she will suspect continuing misrepresentations and probably will not
25 purchase the Real Ham Bone For Dogs. Conversely, “Plaintiff attests she would
26 consider purchasing a Dynamic product as a chew toy for her dog, if the product was
27 reconstituted to be safe and she felt confident the labeling and/or representations of
28 safety were accurate.” (ECF No. 11 at 23). Plaintiff contends that the only way she
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15cv0987-WQH-DHB
1 will be confident that the Real Ham Bone For Dogs is safe and that its label is accurate
2 is if injunctive relief is granted. Plaintiff submits a declaration stating:
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
I have not purchased a Real Ham Bone for Dogs since my dog died
after chewing on a Real Ham Bone for Dogs. However, if the product was
reconstituted into an appropriate and safe chew toy for dogs and if I felt
assured the reconstituted product was honestly labeled so I could make an
informed decision, I would consider purchasing the product again,
provided it was safe and appropriate for dogs.
(ECF No. 11-1 at 2).3
“Federal courts are courts of limited jurisdiction. They possess only that power
authorized by Constitution and statute, which is not to be expanded by judicial decree.
It is to be presumed that a cause lies outside this limited jurisdiction, and the burden of
establishing the contrary rests upon the party asserting jurisdiction.” Kokkonen v.
Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994) (citations omitted). The party
invoking federal jurisdiction bears the burden of establishing Article III standing. Lujan
v. Defenders of Wildlife, 504 U.S. 555, 561 (1992). This party must establish (1) an
“‘injury in fact’—an invasion of a legally protected interest which is (a) concrete and
particularized . . . and (b) ‘actual or imminent, not conjectural or hypothetical,’” (2) a
causal connection between the injury and the conduct complained of, and (3) a
likelihood that the injury will be redressed by a favorable decision. Id. at 560-61
(citations omitted). For claims for “declaratory and injunctive relief,” the plaintiff must
demonstrate that he or she is “realistically threatened by a repetition of the violation.”
Gest v. Bradbury, 443 F.3d 1177, 1181 (9th Cir. 2006) (emphasis in original) (citations
and quotation marks omitted). “[A] plaintiff must demonstrate standing for each claim
3
Plaintiff contends that she may introduce evidence because Defendant attacks
24 the Court’s jurisdiction. “A Rule 12(b)(1) jurisdictional attack may be facial or
factual.” Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004). In a
25 factual attack, “[o]nce the moving party has converted the motion to dismiss into a
factual motion by presenting affidavits or other evidence properly brought before the
26 court, the party opposing the motion must furnish affidavits or other evidence necessary
to satisfy its burden of establishing subject matter jurisdiction.” Savage v. Glendale
27 Union High Sch., 343 F.3d 1036, 1039 n.2 (9th Cir. 2003). Defendants have not
introduced evidence disputing the Court’s jurisdiction. Defendants do not bring a
28 factual attack. Accordingly, Plaintiff may not introduce evidence, and the Court will
not consider Plaintiff’s declaration.
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15cv0987-WQH-DHB
1 he seeks to press.” DaimlerChrysler Corp. v. Cuno, 547 U.S. 332, 352 (2006). In the
2 absence of a plaintiff’s Article III standing, a court lacks subject matter jurisdiction to
3 entertain the lawsuit. Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 109-110
4 (1998).
5
“When ... the plaintiff defends against a motion to dismiss at the pleading stage,
6 general factual allegations of injury resulting from the defendant’s conduct may suffice
7 because we presume that general allegations embrace those specific facts that are
8 necessary to support the claim.” Oregon v. Legal Servs. Corp., 552 F.3d 965, 969 (9th
9 Cir. 2009) (citations and internal quotations omitted); see also Carrico v. City and Cnty.
10 of S.F., 656 F.3d 1002, 1006 (9th Cir. 2011) (noting that, at the pleading stage, standing
11 analysis is based “on the allegations of the ... complaint, which we accept as true”).
12 However, a complaint must allege a “plausible injury in fact” in order to establish
13 Article III standing. Id. at 1007.
14
The Complaint requests an injunction that prevents Defendants from continuing
15 to market the Real Ham Bone For Dogs as a bone that is safe for dogs. The Complaint
16 alleges no facts showing that Plaintiff is “realistically threatened by a repetition of the
17 violation....” Gest, 443 F.3d at 1181. Plaintiff’s requests for injunctive and declaratory
18 relief are dismissed without prejudice.
19 IV. Motion to Strike (ECF No. 9)
20
Defendants move to strike non-California residents from Plaintiff’s proposed
21 nationwide class with respect to Plaintiff’s UCL, CLRA, and implied warranty claims
22 and to strike Plaintiff’s request for injunctive and declaratory relief. Defendants raise
23 the same contentions that they raised in requesting dismissal of these claims.
24
Because the Court granted Defendants’ motion to dismiss Plaintiff’s UCL,
25 CLRA, and implied warranty claims to the extent that they are brought on behalf of
26 non-California residents and Plaintiff’s requests for declaratory and injunctive relief,
27 Defendants’ motion to strike is denied as moot.
28 V. Conclusion
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15cv0987-WQH-DHB
1
IT IS HEREBY ORDERED that Defendants’ motion to dismiss (ECF No. 8) is
2 GRANTED as follows:
3
1. Plaintiff’s requests for restitution and disgorgement pursuant to the
4
CLRA are DISMISSED without prejudice;
5
2. Plaintiff’s CLRA, UCL, and implied warranty claims are DISMISSED
6
without prejudice to the extent Plaintiff brings them on behalf of non-
7
California residents;
8
3. Plaintiff’s implied warranty claim is DISMISSED without prejudice;
9
and
10
4.
Plaintiff’s requests for injunctive and declaratory relief are
11
DISMISSED without prejudice.
12 Defendants’ motion to dismiss (ECF No. 8) is DENIED in all other respects.
13
IT IS FURTHER ORDERED that Defendants’ motion to strike (ECF No. 9) is
14 DENIED AS MOOT.
15
No later than thirty (30) days from the date of this Order, Plaintiff may file a
16 motion for leave to amend the Complaint, accompanied by a proposed first amended
17 complaint.
18 DATED: July 30, 2015
19
20
WILLIAM Q. HAYES
United States District Judge
21
22
23
24
25
26
27
28
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15cv0987-WQH-DHB
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