The People of the State of Cal v. Intelligender, LLC
2014 U.S. App. LEXIS 21312
9th Cir.2014Background
- IntelliGender sold a urine-based gender prediction test advertised as highly accurate; a nationwide consumer class sued under CAFA alleging false advertising and unfair competition.
- The Gram class action (filed 2010) settled: IntelliGender agreed to $10 per approved claim, product donations, and advertising changes; the district court approved after CAFA §1715 notice to state/federal officials.
- California (through the San Diego City Attorney) later filed a state-law enforcement action seeking injunctions, civil penalties, and restitution on behalf of California consumers; IntelliGender removed the case to federal court and sought venue transfer.
- IntelliGender moved to enjoin the State’s entire enforcement action as conflicting with the final Gram settlement; the district court denied that motion and remanded the State’s action, then also denied a narrower injunction limited to restitution claims.
- On appeal, the Ninth Circuit held that the State’s sovereign enforcement action is not barred in full by the class settlement, but the State is precluded from obtaining restitution for class members who were bound by the Gram settlement terms (to prevent double recovery).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the CAFA class settlement precludes the State from bringing its enforcement action at all | State: its sovereign enforcement can proceed despite prior class settlement | IntelliGender: Gram settlement binds the State; injunction needed to protect finality | Denied — State action generally not enjoined; sovereign enforcement vindicates broader public interests |
| Whether CAFA §1715 notice bars the State from later suing on same claims | State: notice does not waive enforcement rights; §1715 imposes no obligations | IntelliGender: State’s failure to object after notice should preclude later claims | Held for State — §1715 doesn’t obligate or bind the State; failure to object is not dispositive |
| Whether the State may seek restitution for the same individual class members | State: seeks restitution for purchasers (broader remedy) | IntelliGender: restitution claims duplicate class recovery and undermine res judicata/finality | Denied to State — restitution claims on behalf of Gram class members are enjoined to prevent double recovery |
| Whether res judicata/privity applies between the Gram class and the State for restitution claims | State: not in privity because it pursues public remedies and broader class | IntelliGender: privity exists for individual restitution (same parties/interests) | Held for IntelliGender on restitution — privity exists for individual relief; injunction appropriate |
Key Cases Cited
- Miss. ex rel. Hood v. AU Optronics Corp., 134 S. Ct. 736 (2014) (explaining CAFA’s expansion of federal jurisdiction and purpose)
- Smith v. Bayer Corp., 131 S. Ct. 2368 (2011) (warning that injunctions under the relitigation exception are extraordinary and preclusion must be clear)
- EEOC v. Waffle House, Inc., 534 U.S. 279 (2002) (courts should prevent double recovery by individuals)
- Leon v. IDX Sys. Corp., 464 F.3d 951 (9th Cir. 2006) (privity exists when a government action seeks the same individual remedies previously pursued)
- Herman v. S.C. Nat’l Bank, 140 F.3d 1413 (11th Cir. 1998) (government enforcement not bound by private settlements when public interests implicated)
- Montana v. United States, 440 U.S. 147 (1979) (principles of res judicata and collateral estoppel protect finality of judgments)
- Randtron v. California, 284 F.3d 969 (9th Cir. 2002) (Anti-Injunction Act and relitigation exception review standards)
- Chao v. A-One Med. Servs., Inc., 346 F.3d 908 (9th Cir. 2003) (distinguishing agency suits that vindicate public interests from suits seeking only individual compensation)
- Quackenbush v. Allstate Ins. Co., 121 F.3d 1372 (9th Cir. 1997) (standard of review for discretionary injunctions under Anti-Injunction Act)