Holt v. Noble House Hotels & Resort, LTD et al
Filing
14
ORDER Denying 8 Plaintiff's Motion to Remand; and Denying 6 Defendant's Motion to Dismiss. The Court denies Plaintiff's motion to remand and request for fees and costs and denies Defendant Noble House's motion to dismiss. Signed by Judge Michael M. Anello on 1/23/2018. (rmc)
1
2
3
4
5
6
7
8
UNITED STATES DISTRICT COURT
9
SOUTHERN DISTRICT OF CALIFORNIA
10
11
12
KATHLEEN HOLT, individually and on
behalf of all others similarly situated
15
16
ORDER:
Plaintiff,
13
14
Case No.: 17cv2246-MMA (BLM)
v.
DENYING PLAINTIFF'S MOTION
TO REMAND; AND
NOBLE HOUSE HOTELS & RESORT,
LTD; and DOES 1 TO 25,
[Doc. No. 8]
DENYING DEFENDANT’S MOTION
TO DISMISS
Defendants.
17
[Doc. No. 6]
18
19
On November 3, 2017, Defendant Noble House Hotels & Resort, LTD (“Noble
20
House”) removed this action to this Court from the Superior Court of California, County
21
of San Diego. Doc. No. 1. Noble House filed a motion to dismiss Plaintiff’s Complaint
22
pursuant to Federal Rule of Civil Procedure 12(b)(6). Doc. No. 6-1 (“MTD”). Plaintiff
23
opposes dismissal [Doc. No. 9 (“MTD Oppo.”)] and Noble House replied [Doc. No. 11
24
(“MTD Reply”)]. Additionally, Plaintiff moves to remand this case to state court [Doc.
25
No. 8-1 (“Remand”)], which Noble House opposes [Doc. No. 10 (“Remand Oppo.”)].
26
The Court found the matters suitable for determination on the papers and without oral
27
argument pursuant to Civil Local Rule 7.1.d.1. Doc. No. 13. For the following reasons,
28
1
17cv2246-MMA (BLM)
1
the Court DENIES both Plaintiff’s motion to remand [Doc. No. 8] and Defendant’s
2
motion to dismiss [Doc. No. 6].
BACKGROUND1
3
On September 20, 2017, Plaintiff Kathleen Holt (“Plaintiff”), individually and on
4
5
behalf of all others similarly situated, filed this putative class action against Noble House
6
and Doe Defendants 1 to 25 alleging causes of action for violations of California’s False
7
Advertising Law (“FAL”), California Business and Professions Code sections 17500, et
8
seq.; California’s Unfair Competition law (“UCL”), California Business and Professions
9
Code sections 17200, et seq.; and California’s Consumers Legal Remedy Act (“CLRA”)
10
California Business and Professions Code sections 1750, et seq.. Doc. No. 1-3
11
(“Compl.”). Plaintiff seeks to represent a class defined as “[a]ll consumers who ate or
12
drank at a restaurant in California, owned by Noble House Hotels & Resort, LTD. d/b/a/
13
Noble House Hotels & Resort, LTD. LP, who were charged a surcharge on their bill in
14
addition to the costs of the food and drinks since four years prior to the filing of this
15
Complaint.” Compl., ¶ 87.
Plaintiff’s claims arise out of a 3.5% surcharge of $1.38, which was added to the
16
17
balance of her bill on August 6, 2017, at Acqua California Bistro (“Bistro”)2 in San
18
Diego, California which is owned by Noble House. Compl., ¶¶ 17-23. Plaintiff alleges
19
that Noble House is misleading the public by advertising prices for food and drinks in its
20
menus and then adding the surcharge to the balance of the bill total at checkout after the
21
consumer is finished eating and drinking “when it is too late to make an informed
22
decision about the increased total bill.” Compl., ¶¶ 17, 26. Plaintiff alleges Noble House
23
“purposely added this ‘surcharge’ instead of raising the prices on its menu in order to
24
mislead [and deceive] consumers into thinking that their meal would cost less than it
25
26
1
27
28
Because this matter is partially before the Court on a motion to dismiss, the Court must accept as true
the allegations set forth in the complaint. See Hosp. Bldg. Co. v. Trs. of Rex Hosp., 425 U.S. 738, 740
(1976).
2
Plaintiff alleges that the Bistro is located inside the Hilton San Diego Resort and Spa. Compl., ¶ 21.
2
17cv2246-MMA (BLM)
1
actually does.” Compl., ¶¶ 25, 31. According to Plaintiff, the surcharge is added after
2
consumers finished eating and drinking because they “are less likely to notice or object.”
3
Compl., ¶ 33.
MOTION TO REMAND
4
5
Noble House removed this action to this Court on November 3, 2017. Doc. No. 1.
6
In removing the action, Noble House invoked diversity jurisdiction pursuant to Title 28
7
of the United States Code, sections 1332(a), 1441, and 1446.3 Id. at 1. Plaintiff filed the
8
instant motion to remand on December 4, 2017. Remand at 2.
9
1.
Legal Standard
Federal courts are courts of limited jurisdiction. Lowdermilk v. U.S. Bank Nat’l
10
11
Ass’n, 479 F.3d 994, 998 (9th Cir. 2007). Federal courts possess only that power
12
authorized by the Constitution or a statute. See Bender v. Williamsport Area Sch. Dist.,
13
475 U.S. 534, 541 (1986). Pursuant to § 1332(a)(1), a federal district court has
14
jurisdiction over “all actions where the matter in controversy exceeds the sum or value of
15
$75,000, exclusive of interest and costs,” and the dispute is between citizens of different
16
states. 28 U.S.C. § 1332(a). The Supreme Court has interpreted § 1332 to require
17
“complete diversity of citizenship,” meaning each plaintiff must be diverse from each
18
defendant. Caterpillar Inc. v. Lewis, 519 U.S. 61, 67-68 (1996). The Class Action
19
Fairness Act (“CAFA”) also gives district courts original jurisdiction to hear class actions
20
21
22
23
24
25
26
27
28
3
Noble House does not specify which subsection of § 1332 removal is based upon, but indicates
diversity jurisdiction exists because “the amount in controversy exceeds $75,000.” Doc. No. 1 at 2.
Accordingly, the Court construes Defendant’s removal to be based upon § 1332(a). See 28 U.S.C. §
1332(a) (stating that the amount in controversy for diversity jurisdiction is met “where the matter in
controversy exceeds the sum or value of $75,000, exclusive of interest and costs”); see also Evans v.
Bantek West, Inc., No. CIV. 08-2966 WBS GGH, 2009 WL 700426, at *1 n.2 (E.D. Cal. Mar. 12, 2009)
(construing the defendant’s removal to be premised on § 1332(a) and not § 1332(d) because the
defendant asserted that the amount in controversy exceeds $75,000). The Court further finds
Defendant’s citation to Rainero v. Archon Corp., 844 F.3d 832 (9th Cir. 2016), which permits a court to
exercise supplemental jurisdiction over other plaintiff class members where individual diversity
jurisdiction is met with respect to one named plaintiff, inapposite as Defendant need only establish
traditional diversity jurisdiction.
3
17cv2246-MMA (BLM)
1
“in which the matter in controversy exceeds the sum or value of $5,000,000, exclusive of
2
interest and costs,” and “in which . . . any member of a class of plaintiffs is a citizen of a
3
State different from any defendant.” 28 U.S.C. § 1332(d)(2). However, “federal
4
diversity jurisdiction still exists for other class actions that satisfy the general diversity
5
jurisdiction provision of § 1332(a).” Serrano v. 180 Connect, Inc., 478 F.3d 1018, 1021
6
n.4 (9th Cir. 2007) (citing e.g., Snyder v. Harris, 394 U.S. 332, 340 (1969)). That is, “a
7
class action [can] be heard in federal court under diversity jurisdiction only if there [is]
8
complete diversity, i.e., all class representatives [are] diverse from all defendants,” and if
9
all named plaintiffs satisfy the amount in controversy requirement of more than $75,000.
10
See Lewis v. Verizon Commc’ns, Inc., 627 F.3d 395, 398 (9th Cir. 2010) (citing Exxon
11
Mobile Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 549-51 (2005)); see also Gibson v.
12
Chrysler Corp., 261 F.3d 927, 938 (9th Cir. 2001).
13
2.
14
Analysis
As an initial matter, CAFA does not supplant traditional diversity jurisdiction; it
15
supplements it. See Serrano, 478 F.3d at 1021 n.4. Accordingly, the Court need not
16
analyze whether removal is appropriate under CAFA because Noble House removed the
17
case pursuant to § 1332(a). See Remand at 4-7 (arguing the case should be remanded
18
because Noble House has not met its burden to prove subject matter jurisdiction pursuant
19
to CAFA).
20
Plaintiff argues that Defendant has failed to establish both complete diversity and
21
the amount in controversy under the traditional diversity requirements. Remand at 4-7.
22
With respect to complete diversity, the requirement “in class actions is based on the
23
citizenship of the named plaintiffs at the time the action is filed.” Gibson, 261 F.3d at
24
931 n.2. The citizenship of unnamed class members and unidentified Doe defendants are
25
disregarded. Id. (citing Supreme Tribe of Ben-Hur v. Cauble, 255 U.S. 356, 366-67
26
(1921)); 28 U.S.C. § 1441(b)(1) (stating that for purposes of removal “the citizenship of
27
defendants sued under fictitious names shall be disregarded”); see Bryant v. Ford Motor
28
Co., 886 F.2d 1526, 1528 (9th Cir. 1989), cert. denied, 493 U.S. 1076 (1990); see also
4
17cv2246-MMA (BLM)
1
Ogamba v. Wells Fargo Bank, N.A., No. 2:17-cv-01754-KJM-AC, 2017 WL 4251124, at
2
*3 (E.D. Cal. Sept. 26, 2017) (stating doe defendants are disregarded because the plaintiff
3
included no information as to “who they are, where they live or their relationship to the
4
action”). “A corporation shall be deemed a citizen of every State and foreign state by
5
which it has been incorporated and of the State or foreign state where it has its principal
6
place of business[.]” 28 U.S.C. § 1332(c)(1).
7
Here, Plaintiff declares that she is a citizen of California and the Noble House Vice
8
President of Food and Beverage declares that Noble House “is a Texas corporation with
9
its principal place of business in Washington State.” Doc. No. 1-17, Declaration of
10
Kathleen Holt in Support of Venue for Class Action Pursuant to Civil Code Section
11
1780(d) (“Holt Decl.”), ¶ 2; Doc. No. 1 at 3; Doc. No. 1-4, Declaration of Thomas Haas
12
In Support of Notice of Removal to Federal Court (“Haas Decl.”) at ¶ 2; Haas Decl,
13
Exhibits A-B. Accordingly, complete diversity exists.
14
Plaintiff next argues that Plaintiff’s damages do not “equal[] or exceed[]” $75,000
15
because her compensatory damages are $1.38. Remand at 5. Defendant counters that
16
Plaintiff’s prayer for disgorgement of all surcharge funds and injunctive relief exceeds
17
the jurisdictional minimum. Remand Oppo. at 4; see Doc. No. 1 at 3. In the Complaint,
18
Plaintiff prays for injunctive relief “requiring Noble House to cease adding a ‘surcharge’
19
to consumers’ bills,” and “a constructive trust and and/or [sic] disgorgement of Noble
20
House’s ill-gotten gains and to pay restitution.” See Compl. at p. 19.
21
Removal jurisdiction exists under § 1332(a) only where “the matter in controversy
22
exceeds the sum or value of $75,000.” 28 U.S.C. § 1332(a) (emphasis added). In a
23
putative class action each named plaintiff must have “claims with an amount in
24
controversy in excess of $75,000.” See Gibson, 261 F.3d at 938. “In actions seeking
25
declaratory or injunctive relief, it is well established that the amount in controversy is
26
measured by the value of the object of the litigation.” Cohn v. Petsmart, Inc., 281 F.3d
27
837, 840 (9th Cir. 2002) (citing Hunt v. Wash. State Apple Adver. Comm’n, 432 U.S. 333,
28
347 (1977), superseded by statute on other grounds as stated in United Food & Commer.
5
17cv2246-MMA (BLM)
1
Workers Union Local 751 v. Brown Group, 517 U.S. 544 (1996)). In such cases, federal
2
courts employ the “either viewpoint” rule, which permits the “object of the litigation” to
3
be valued either from the plaintiff’s viewpoint or the defendant’s viewpoint. See In re
4
Ford Motor Co./Citibank (S.D.) N.A., 264 F.3d 952, 958 (9th Cir. 2001) (“[u]nder the
5
‘either viewpoint’ rule, the test for determining the amount in controversy is the
6
pecuniary result to either party which the judgment would directly produce”).
Noble House asserts that its “aggregate food and beverage revenue at [the relevant]
7
8
restaurants . . . annually exceeds $5,000,000” and that enjoining the 3.5% surcharge
9
would thereby “prevent Noble House from collecting more than $100,000 per year.”
10
Doc. No. 1 at 3; Haas Decl., ¶¶ 6-8. In addition, Noble House claims the funds
11
attributable to the surcharge since its inception in early 2017 amount to more than
12
$75,000. Doc. No. 1 at 4; Haas Decl., ¶ 8. Thus, the Court is satisfied that the amount in
13
controversy requirement has been met because the pecuniary result to Noble House is
14
valued at roughly $100,000 per year based upon Plaintiff’s requested injunctive relief,
15
and more than $75,000 for Plaintiff’s requested constructive trust or disgorgement of
16
Noble House’s gains from the surcharge.
17
3.
Conclusion
Accordingly, the Court DENIES Plaintiff’s motion to remand.4
18
MOTION TO DISMISS
19
Noble House moves to dismiss Plaintiff’s Complaint without leave to amend on
20
21
the grounds that Plaintiff’s FAL, CLRA, and UCL claims each fail to state a claim upon
22
which relief can be granted. MTD at 8. Plaintiff opposes dismissal of any claims. See
23
MTD Oppo.
24
25
26
27
28
In addition to remand, Plaintiff asks this Court to award “payment of just costs and attorney fees by
Defendant, for time spent on this motion.” Remand at 8. “An order remanding the case may require
payment of just costs and any actual expenses, including attorney fees, incurred as a result of the
removal.” 28 U.S.C. § 1447(c). Since the Court has denied the motion to remand the case, it also
DENIES Plaintiff’s request for attorney fees and costs.
4
6
17cv2246-MMA (BLM)
1
2
1.
Request for Judicial Notice
Noble House requests the Court consider a copy of the menu used at the restaurant
3
where the surcharge was imposed upon Plaintiff, and a bill issued by that restaurant in
4
August 2017. MTD at 7 n.1. Plaintiff objects, contending that considering the exhibits
5
would require the Court to make findings of fact, which are inappropriate at this stage of
6
the proceedings. MTD Oppo. at 8.
7
In determining the propriety of a Rule 12(b)(6) dismissal, courts generally may not
8
look beyond the complaint for additional facts. See United States v. Ritchie, 342 F.3d
9
903, 907-08 (9th Cir. 2003). “A court may, however, consider certain materials—
10
documents attached to the complaint, documents incorporated by reference in the
11
complaint, or matters of judicial notice—without converting the motion to dismiss into a
12
motion for summary judgment.” Id. at 908; see also Fed. R. Evid. 201; see also Lee v.
13
City of Los Angeles, 250 F.3d 668, 688 (9th Cir. 2001), overruled on other grounds by
14
Galbraith v. Cnty. of Santa Clara, 307 F.3d 936, 942 (9th Cir. 2009). Courts can take
15
judicial notice of facts that are not subject to reasonable dispute because they are either
16
generally known or can be readily determined by reference to sources whose accuracy
17
cannot be reasonably questioned. Fed. R. Evid. 201. A document “may be incorporated
18
by reference into a complaint if the plaintiff refers extensively to the document or the
19
document forms the basis of the plaintiff’s claim.” Ritchie, 342 F.3d at 908 (internal
20
citations omitted). In other words, a court “may consider a document the authenticity of
21
which is not contested, and upon which the plaintiff’s complaint necessarily relies.”
22
Parrino v. FHP, Inc., 146 F.3d 699, 706 (9th Cir. 1998), superseded by statute on other
23
grounds in Abrego v. Dow Chem. Co., 443 F.3d 676 (9th Cir. 2006); Swartz v. KPMG
24
LLP, 476 F.3d 756, 763 (9th Cir. 2007); Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir.
25
2005).
26
Both the menu’s and bill’s accuracy can be reasonably questioned. Noble House
27
has not submitted a declaration certifying their authenticity and the allegations in the
28
Complaint contradict the content of these exhibits. See Compl., ¶¶ 19, 23; see also MTD.
7
17cv2246-MMA (BLM)
1
Accordingly, Noble House’s exhibits are inappropriate for both incorporation by
2
reference and judicial notice. Therefore, Noble House’s request is DENIED.
3
2.
4
Legal Standard
A Rule 12(b)(6) motion to dismiss tests the sufficiency of the complaint. Navarro
5
v. Block, 250 F.3d 729, 732 (9th Cir. 2001). A pleading must contain “a short and plain
6
statement of the claim showing that the pleader is entitled to relief. . . .” Fed. R. Civ. P.
7
8(a)(2). However, plaintiffs must also plead “enough facts to state a claim to relief that is
8
plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007); Fed. R. Civ.
9
P. 12(b)(6). The plausibility standard demands more than “a formulaic recitation of the
10
elements of a cause of action,” or “naked assertions devoid of further factual
11
enhancement.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal quotations and
12
alterations omitted). Instead, the complaint “must contain sufficient allegations of
13
underlying facts to give fair notice and to enable the opposing party to defend itself
14
effectively.” Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011).
15
In reviewing a motion to dismiss under Rule 12(b)(6), courts must assume the truth
16
of all factual allegations and must construe them in the light most favorable to the
17
nonmoving party. Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337-38 (9th Cir. 1996).
18
The court need not take legal conclusions as true merely because they are cast in the form
19
of factual allegations. Roberts v. Corrothers, 812 F.2d 1173, 1177 (9th Cir. 1987).
20
Similarly, “conclusory allegations of law and unwarranted inferences are not sufficient to
21
defeat a motion to dismiss.” Pareto v. FDIC, 139 F.3d 696, 699 (9th Cir. 1998).
22
In alleging fraud or mistake, the plaintiff must “state with particularity the
23
circumstances constituting fraud or mistake.” Fed. R. Civ. P. 9(b). Failure to satisfy this
24
heightened pleading requirement can result in dismissal of the claim. Vess v. Ciba-Geigy
25
Corp. USA, 317 F.3d 1097, 1107 (9th Cir. 2003). In general, the plaintiff’s allegations of
26
fraud or mistake must be “specific enough to give defendants notice of the particular
27
misconduct . . . so that they can defend against the charge and not just deny that they
28
have done anything wrong.” Id. at 1106. This heightened pleading standard requires the
8
17cv2246-MMA (BLM)
1
plaintiff to allege fraud or mistake by detailing “the who, what, when, where, and how”
2
of the misconduct charged. Id. at 1106-07. In other words, the plaintiff must specify the
3
time, place, and content of the alleged fraudulent or mistaken misconduct. See id.
4
3.
5
Analysis
Defendant asserts that Plaintiff has failed to state a claim upon which relief may be
6
granted because mandatory surcharges do not violate the UCL, FAL, or CLRA, Plaintiff
7
insufficiently pleads that the surcharge is misleading, and the UCL claim fails because
8
the surcharge is protected by a legislative safe harbor. MTD at 11-17. Each of these
9
arguments is dependent upon the Court considering the menu and bill attached to Noble
10
House’s motion to dismiss. See id.
11
a.
12
Noble House first argues that mandatory surcharges do not violate the UCL, FAL,
Mandatory Surcharges
13
or CLRA. MTD at 11-13. Specifically, Noble House contends that “California Courts
14
have unanimously held that mandatory surcharges do not violate the UCL or FAL if
15
disclosed” and the menu and bill evince the surcharge was disclosed. Id. at 11-12
16
(emphasis added). Noble House further asserts that the surcharge does not violate the
17
CLRA because it “is not an addition to the price of the ‘product’ (i.e., the food or
18
beverage), as the statute prohibits; rather it is a separate charge for service.” Id. at 11.
19
Noble House’s argument fails because “at this stage, a court does not make factual
20
findings.” Browne v. McCain, 612 F. Supp. 2d 1125, 1130 (C.D. Cal. 2009). With
21
respect to the UCL and FAL claims, Plaintiff alleges that the surcharge “is not reflected
22
in the prices listed in the restaurant’s menus” and that the surcharge is “surreptitiously
23
add[ed] . . . to the balance of the bill total at check out [sic] time,” which she contends
24
was “hidden.” Compl., ¶¶ 17, 19, 23. Plaintiff does not allege that Noble House
25
disclosed the surcharge. See Compl. With respect to Plaintiff’s CLRA claim, Plaintiff
26
alleges that the surcharge is added “instead of raising the prices on its menu” and that it is
27
“not a gratuity for the server or bartender, but is, instead a charge that goes directly to
28
Noble House.” Compl., ¶¶ 25, 27. Thus, construing Plaintiff’s factual allegations in the
9
17cv2246-MMA (BLM)
1
light most favorable to her, the surcharge was not disclosed and is not a separate charge
2
for service. See Compl.; ¶¶ 17-27; see Cahill, 80 F.3d at 337-38.
Noble House’s argument would require the Court to make factual findings and/or
3
4
construe them in favor of the moving party, which it cannot do in determining the
5
propriety of a Rule 12(b)(6) motion to dismiss. See MTD at 11-13 (urging the Court to
6
find that the surcharge was disclosed and is an additional charge for service); see also
7
Cahill, 80 F.3d at 337-38; Browne, 612 F. Supp. 2d at 1130. Accordingly, the Court
8
DENIES Noble House’s motion to dismiss on the grounds that the surcharge does not
9
violate the UCL, FAL, and CLRA based on factual allegations not presently before the
10
Court. See Branch v. Tunnell, 14 F.3d 449, 453 (9th Cir. 1994) (excluding material
11
outside the pleadings from consideration on a Rule 12(b)(6) motion to dismiss).
12
b.
13
Noble House also asserts that Plaintiff has not adequately or plausibly pleaded that
14
the surcharge is misleading because the bill and menu prove the surcharge was disclosed,
15
Again, the Court does not make factual findings in determining the propriety of a Rule
16
12(b)(6) motion to dismiss. See Browne, 612 F. Supp. 2d at 1130. Plaintiff alleges the
17
surcharge is added to the balance of the bill at checkout, is “hidden” and “hard to find”
18
and is “not reflected in the prices listed in the restaurants’ menus.” Compl., ¶¶ 17-23.
19
Moreover, Plaintiff alleges that “the surcharge was added in such a way that a consumer
20
could easily miss it” and “deceive[s customers] into thinking their meal will cost less.”
21
Compl., ¶¶ 24, 31. Plaintiff’s allegations are sufficient to survive a Rule 12(b)(6) motion
22
to dismiss. 5 See MTD Oppo. at 13 (stating that a reasonable consumer would be misled
Misleading Surcharge
23
24
25
26
27
28
5
The cases cited by Noble House are distinguishable because the operative complaint stated that the
allegedly misleading information was disclosed. See Dimond v. Darden Restaraounts, Inc., No. 13 Civ.
5244 (KPF), 2014 WL 3377105, at *1 (S.D.N.Y. July 9, 2014) (stating that the first amended complaint
alleged the menus state that an 18% gratuity is automatically added and calculated to the bill); Searle v.
Wyndham Int’l, Inc., 102 Cal. App. 4th 1327, (Cal. Ct. App. 2002) (indicating that the complaint alleged
the plaintiff’s room service menu stated that a 17% service charge would be added to the bill); Italian
Colors Rest. v. Harris, 99 F. Supp. 3d 1199, 1202 (E.D. Cal. Mar. 26, 2015) (stating that plaintiffs allege
10
17cv2246-MMA (BLM)
1
where “notice is not given of [sic] the real prices of the menu items, and in fact, incorrect
2
prices are listed in the menus”). Accordingly, the Court DENIES dismissal based on
3
Noble House’s argument that disclosure of the surcharge on the menu and bill prove that
4
the surcharge is not misleading. See Browne, 612 F. Supp. 2d at 1130 (“At this stage, a
5
court does not make factual findings, nor deem material facts undisputed or admitted.”).
6
c.
7
Noble House also argues that Plaintiff’s UCL claim fails because the surcharge is
Safe Harbor
8
protected by a legislative safe harbor. MTD at 15. Noble House contends that
9
California’s State Board of Equalization (“BOE”) enacted a regulation “providing that
10
when a restaurant’s ‘menu, brochures, advertisements or other printed materials contain
11
statements that notify customers that . . . service charges will or may be added’ that
12
‘amount automatically added by the [restaurant] to the bill’ is subject to tax.” Id. at 16
13
(citing 18 CCR § 1603(h)(3)) (emphasis in original).
14
“The California Supreme Court has explained . . . that conduct affirmatively
15
authorized by another statute may provide a defendant with a safe harbor from UCL
16
liability: ‘Although the unfair competition law’s scope is sweeping, it is not unlimited . . .
17
. When specific legislation provides a ‘safe harbor,’ plaintiffs may not use the general
18
unfair competition law to assault the harbor.’” Hauk v JP Morgan Chase Bank United
19
States, 552 F.3d 1114, 1122 (9th Cir. 2009) (citing Cal-Tech Commc’ns, Inc. v. L.A.
20
Cellular Tel. Co., 20 Cal. 4th 163, 182 (Cal. 1999)). However, the safe harbor rule does
21
not “prohibit an action under the unfair competition law merely because some other
22
statute on the subject does not, itself, provide for the action or prohibit the challenged
23
24
25
26
27
28
that California Civil Code section 1748.1(a), which prohibits retailers from imposing a surcharge on
customers who make payments with credit cards, but permits discounts for payments by cash or other
means), affirmed on appeal as applied to plaintiffs only by Italian Colors Rest. v. Becerra, -- F.3d – ,
No. 15-15873, 2018 WL 266332 (9th Cir. 2018); Freeman v. Time, Inc., 68 F.3d 285, 287 (9th Cir.
1995) (indicating that plaintiff alleged receiving mailers indicating he had won a $1,666,675 which also
had qualifying language “indicating that Freeman would win only if he returned a winning prize
number”).
11
17cv2246-MMA (BLM)
1
conduct. To forestall an action under the unfair competition law, another provision must
2
actually ‘bar’ the action or clearly permit the conduct.” Cal-Tech Commc’ns, Inc., 20
3
Cal. 4th at 183.
4
As stated throughout this order, the Court does not make factual findings in
5
determining the propriety of a Rule 12(b)(6) motion to dismiss. Plaintiff has not alleged
6
that the surcharge is disclosed in the menu, and the Court declines to make a factual
7
finding based on factual allegations not included in Plaintiff’s Complaint. See Browne,
8
612 F. Supp. 2d at 1130. Accordingly, the Court DENIES Noble House’s motion to
9
dismiss Plaintiff’s UCL claim on the grounds that disclosed surcharges are protected by
10
the safe harbor rule.
11
4.
12
Conclusion
Because Noble House depends upon the Court considering material outside the
13
pleadings, whose accuracy can be reasonably questioned, the Court DENIES Noble
14
House’s motion to dismiss. See Branch, 14 F.3d at 453.
15
CONCLUSION
16
Based on the foregoing, the Court DENIES Plaintiff’s motion to remand and
17
request for fees and costs [Doc. No. 8] and DENIES Defendant Noble House’s motion to
18
dismiss [Doc. No. 6].
19
20
IT IS SO ORDERED.
Dated: January 23, 2018
21
22
23
24
25
26
27
28
12
17cv2246-MMA (BLM)
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?