Nutrition Distribution, LLC v. S. Sarms, Inc.
20 Cal. App. 5th 117
| Cal. Ct. App. 5th | 2018Background
- Nutrition Distribution sued Southern SARMs (Apr 2016) for unfair competition and false advertising, alleging Southern SARMs marketed Ostarine (a SARM) as a dietary supplement with steroid-like benefits.
- Nutrition Distribution sought restitution, disgorgement of profits, and broad injunctive relief; amended complaint removed compensatory damages and attorney fees.
- Southern SARMs demurred; court sustained the demurrer without leave to amend and entered judgment of dismissal (Sept 15, 2016). Nutrition Distribution appealed and the dismissal was affirmed.
- After judgment, Southern SARMs filed a postjudgment motion for sanctions under Code Civ. Proc. § 128.5, but did not serve a pre-filing 21-day § 128.7 safe-harbor notice. The trial court denied the motion under the safe-harbor rule; Southern SARMs appealed.
- Central legal question: whether former § 128.5(f) (in effect Jan 1, 2015–Aug 7, 2017), which cross-referenced § 128.7(c),(d),(h), required compliance with § 128.7(c)(1)’s 21-day safe-harbor notice-and-waiting period for sanctions motions under § 128.5.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether former § 128.5(f) incorporated § 128.7(c)(1)’s 21‑day safe‑harbor before filing a sanctions motion under § 128.5 | Nutrition Distribution argued motions under § 128.5 need not follow § 128.7(c)(1) safe‑harbor (relied on San Diegans) | Southern SARMs argued former § 128.5(f) required compliance with § 128.7’s standards and procedures, including the safe‑harbor | Court held former § 128.5(f) did incorporate § 128.7(c)(1)’s safe‑harbor where compatible with § 128.5, so a 21‑day waiting period applied when the challenged conduct could be withdrawn or corrected |
| Whether the motion for sanctions was properly denied because Southern SARMs failed to provide the safe‑harbor notice | Nutrition Distribution: lack of notice made the motion procedurally defective and untimely | Southern SARMs: safe‑harbor not required for § 128.5 motions; relied on San Diegans | Court affirmed denial of sanctions because Southern SARMs did not give Nutrition Distribution the required safe‑harbor opportunity to withdraw/correct the pleading |
| Effect of San Diegans for Open Government decision | Nutrition Distribution relied on San Diegans to argue no safe‑harbor applied | Southern SARMs argued San Diegans was distinguishable/incorrect | Court disagreed with San Diegans on the safe‑harbor point, analyzing plain language and legislative history and noting 2017 amendment confirming legislative intent |
Key Cases Cited
- San Diegans for Open Government v. San Diego, 247 Cal.App.4th 1306 (Cal. Ct. App. 2016) (held § 128.5 motions did not require § 128.7 safe‑harbor; court here disagreed)
- Li v. Majestic Industry Hills, LLC, 177 Cal.App.4th 585 (Cal. Ct. App. 2009) (explains mandatory nature of § 128.7 safe‑harbor and 21/30‑day wait)
- Olmstead v. Arthur J. Gallagher & Co., 32 Cal.4th 804 (Cal. 2004) (discusses interplay of earlier § 128.5 and § 128.7 statutory scheme)
- Voices of the Wetlands v. State Water Resources Control Bd., 52 Cal.4th 499 (Cal. 2011) (statutory interpretation principle: plain meaning controls)
- Musaelian v. Adams, 45 Cal.4th 512 (Cal. 2009) (describes origin and scope of § 128.7)