Proceedings: (In Chambers) Order re: Motion to Dismiss Complaint; [8]
Beatrice Herrera, Deputy Clerk.
This matter is before us on Defendants Hyland’s, Inc. (“Hyland’s”), Standard Homeopathic Laboratories, Inc., and Standard Homeopathic Company’s (collectively, “Defendants”) Motion to Dismiss Complaint (“Motion”). We have considered the papers filed in support of and in opposition to this Motion and deem this matter appropriate for resolution without oral argument. L.R. 7-15. As the Parties are familiar with the facts, we will repeat them only as necessary. Accordingly, we rule as follows.
I. Background
On a motion to dismiss, we accept the allegations of the Complaint as true and construe them in the light most favorable to the plaintiff. Cousins v. Lockyer;
Defendants move to dismiss the CAC for the following reasons: First, Defendants argue that based on the Ninth Circuit’s opinion in Mazza v. Am. Honda Motor Co.,
II. Legal Standard for Motion to Dismiss
In order to survive dismissal for failure to state a claim, a complaint must set forth “more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Bell Atl. Corp. v. Twombly,
III. Discussion
A. Plaintiff’s Nationwide Class Claims
Defendants argue that under the Ninth Circuit’s decision in Mazza,
Additionally, once the relevant facts of the case have been explored during discovery, it is possible that Plaintiff could narrow or define the class in such a way at the class certification stage to make any differences between applicable laws immaterial. Moreover, should choice-of-law analysis appear to pose problems at the class certification stage, Plaintiff could seek to certify subclasses of putative class members from individual states or subclasses of class members from groups of states with consumer protection laws that are not materially different.
Courts rarely undertake choice-of-law analysis to strike class claims at this early stage in litigation. See In re Sony Grand Wega KDF-E A10/A20 Series Rear Projection HDTV Television Litigation,
B. Plaintiff’s Standing to Assert Claims Under California Law
Defendants argue that, as a resident of New Jersey, Plaintiff lacks standing to bring consumer protection claims under California law. Defendants contend that “the Ninth Circuit recently recognized in Mazza ” that “a plaintiff or class member’s consumer protection claims must be brought under the laws of the state where the consumer received alleged misrepresentations or omissions which resulted in the consumer transaction at issue.” (Mot. 5). Defendants appear to misunderstand the concept of standing. As noted by the court in Mazza, “standing requires that (1) the plaintiff suffered an injury in fact ... (2) the injury is fairly traceable to the challenged conduct, and (3) the injury is likely to be redressed by a favorable decision.”
Whether a nonresident plaintiff can assert a claim under California law is a constitutional question based on whether California has sufficiently significant contacts with the plaintiffs claims. See id. at 589-90 (noting that “[s]uch a showing is necessary to ensure that application of California law is constitutional”). Plaintiff alleges that Defendants are headquartered in Los Angeles, California. Therefore, application of California law poses no constitutional concerns. See Chavez v. Blue Sky Natural Beverage Co.,
In arguing that choice-of-law analysis requires “Plaintiff [to] seek relief under his home state’s consumer protection laws,” Defendants do not even discuss the differences between the consumer protection laws of New Jersey and California, let alone address whether these differences are material based on the facts and circumstances of this case. Instead, Defendants rather generically argue that numerous courts, including the Ninth Circuit in
Additionally, Defendants cite numerous cases holding that differences between California consumer protection laws and the consumer protection laws of other states preclude class certification. See, e.g., Mazza,
Defendants’ briefing on the issues pertinent to this case — that is, whether Plaintiffs individual claims asserted under California law should be dismissed — is therefore inadequate for us to conclude that California law should be displaced on the facts of this case. Merely citing other courts’ choice-of-law analyses, based on the facts before those courts, fails to discharge Defendants’ burden of showing a “compelling reason” justifying the displacement of California law on Plaintiffs claims. Accordingly, Defendants’ Motion is DENIED insofar as it seeks dismissal of Plaintiffs claims under California law.
C. Plaintiff’s Standing to Assert Claims with Respect to Products He Did Not Use
Defendants argue that Plaintiff cannot assert claims as to the entire category of Defendants’ “Cold and Flu Remedies” and instead may only assert these claims with respect to the one product within that category that Plaintiff alleges to have purchased — Defendants’. Cold ‘n Cough product. We disagree. Although the district courts within this circuit have not been entirely consistent on this issue, we agree with the numerous recent decisions that have concluded that Defendants’ argument is better taken under the lens of typicality or adequacy of representation, rather than standing. See Donohue v. Apple,
D. Plaintiff’s Warranty Claims 1. Breach of Express Warranty
Plaintiff alleges that “Defendants expressly warranted that Hyland’s Cold and Flu remedies were effective and would provide -fast acting, multi-symptom relief for the symptoms of the common cold and flu.” (CAC ¶ 104). These purported express warranties were communicated on the packaging of Defendants’ products. (Id. ¶¶ 45-50). Plaintiff alleges that “Defendants breached this warranty because Hyland’s Cold and Flu Remedies are neither fast acting nor effective treatments for the cold or flu or any symptoms thereof.” (Id. ¶ 105).
“[T]o prevail on a breach of express warranty claim, the plaintiff must prove (1) the seller’s statements constitute an ‘affirmation of fact or promise’ or a ‘description of the goods’; (2) the statement was ‘part of the basis of the bargain’; and (3) the warranty was breached.” Weinstat v. Dentsply Int’l, Inc.,
Defendants’ second argument is even less clear and is based on compliance with regulatory requirements. Defendants appear to argue that their' packaging statements are mere “indication for use statements] required under federal law in order for consumers to understand the conditions for which the drug is intended,” rather than express promises or guarantees. (Mot. 11). Although we do not purport to pass judgment-on whether regulatory compliance would immunize Defendants from liability — an argument Defendants do not actually make — we dispute their characterization of the alleged packaging statements as “indication for use statements'.” One can indicate “the general pharmacological category(ies) or the principal intended action(s) of [a] drug” as Defendants argue is required by regulations, (id.), without stating that the product is “safe and effective,” (CAC ¶ 16), “relieves fevers and chills,” (id. ¶ 48), or “fast acting,” (id. ¶ 2). Indeed, one could merely state that its product is “intended for treatment of cold and flu symptoms.” We also reject Defendants’ opaque attempt to vaguely reference regulatory compliance without explicitly making any argument on the basis of these federal regulations.
In light of the foregoing, Defendants’ Motion is DENIED inasmuch as it seeks dismissal of Plaintiffs express warranty claim.
2. Breach of Implied Warranty
To succeed on an implied warranty claim, a plaintiff must demonstrate that the products are not “fit for the ordinary purposes for which such goods are used” or fail to “[c]onform to the promises or affirmations of fact made on the container or label.” Cal. Civ.Code § 1791.1(a)(2), (4). Plaintiff alleges that Defendants’ products are not “merchantable or fit for the purpose they were sold” — the fast and effective treatment of cold and flu remedies. (Id. ¶ 110). Defendants argue that Plaintiffs implied warranty claim “fails for the same reasons his express warranty claim fails” — the “claim is premised simply on the assertion that the Product did not work for him.” (Mot. 14). Defendants also argue that their products are intended for use as homeopathic drugs, and “there are no .allegations that the Product is not fit for, its intended use ... as a homeopathic drug.” (Id.).
Defendants again appear to misunderstand Plaintiffs claims. Plaintiff alleges that Defendants’ products are not effective at all. The fact that Defendants’ products contain the word “homeopathic” on the packaging, along with statements that the products provide safe, effective, and fast-acting relief for cold and flu symptoms, does not immunize Defendants from liability if their products are entirely ineffective in treating cold and flu symptoms, as Plaintiff alleges. Accordingly, Defendants’ Motion is DENIED inasmuch as it seeks dismissal of Plaintiffs implied warranty claim.
3. Magnuson-Moss Act Claim
Defendants’, argue that Plaintiffs Magnuson-Moss Act claim fails because the Act only applies to “consumer prod
The Magnuson-Moss Act defines “consumer product” as “any tangible personal property which is distributed in commerce and which is normally used for personal, family, or household purposes (including any such property intended to be attached to or installed in any real property without regard to whether it is so attached or installed).” 15 U.S.C. § 2301(1). While the Act does not enumerate any particular “consumer products,” numerous courts have discussed FTC regulations articulating such examples as “boats, photographic film and chemicals, clothing, appliances, jewelry, furniture, typewriters, motor homes, automobiles, mobile homes, vehicle parts and accessories, stereos, carpeting, small aircraft, toys, and food.” Kemp v. Pfizer, Inc.,
In Kanter, the case cited by Defendants, the plaintiffs sued the manufacturers of an over-the-counter head lice treatment and alleged “that the product labels contain false and misleading statements about the effectiveness of the .drugs.”
Magnuson-Moss applies only to “consumer produces],” defined as “any tangible personal property which is distributed in commerce and which is normally used for personal, family, or household purposes.... ” The act does not otherwise enumerate products within the scope of the definition. The federal Consumer Product . Safety Act, however, expressly states that “drugs, devices, or cosmetics” as defined in the FDCA are not “consumer product[s].” Reading these statutes together, at least two courts have concluded that a medical device regulated by the [FDCA] is not a consumer product within the meaning of Magnuson-Moss. [Goldsmith v. Mentor Corp.,913 F.Supp. 56 ,*1165 63 (D.N.H.1995); Kemp v. Pfizer, Inc.,835 F.Supp. 1015 (E.D.Mich.1993).] By parity of reasoning, a drug regulated by the FDCA is also not a consumer product within the meaning of MagnusonMoss.
Id. (some citations omitted). We respectfully disagree with the California Court of Appeal that parity of reasoning requires the two statutes, with different definitions, to be interpreted similarly. First, the cases upon which the court relied discussed products that could not reasonably be considered goods that are “normally used for personal, family, or household purposes.” 15 U.S.C. § 2301(1). In Goldsmith, the court discussed whether a testicular prosthesis was a “consumer product” under the Magnuson-Moss Act.
Second, we do not consider the FDCA’s definition of “consumer product” to be conclusive, or even compelling for determining whether a good is a “consumer product” under Magnuson-Moss. The FDCA defines “consumer product,” in pertinent part, as follows:
The term “consumer product” means any article, or component part thereof, produced or distributed (i) for sale to a consumer for use in or around a permanent or temporary household or residence, a school, in recreation, or otherwise, or (ii) for the personal use, consumption or enjoyment of a consumer in or around a permanent or temporary household or residence, a school, in recreation, or otherwise; but such term does not include—
(A) any article which is not customarily produced or distributed for sale to, or use or consumption by, dr enjoyment of, a consumer,
(C) motor vehicles or motor vehicle equipment (as defined by section 30102(a)(6) and (7) of Title 49),
(G) boats which could be subjected to safety regulation under chapter 43 of Title 46; vessels, and appurtenances to vessels (other than such boats), which could be subjected to safety regulation under title 52 of the Revised Statutes or other marine safety statutes administered by the department in which the Coast Guard is operating; and equipment (including associated equipment, as defined in section 2101(1) of Title 46) to the extent that a risk of injury associated with the use of such equipment on boats or vessels could be eliminated or reduced by actions taken under any statute referred to in this subparagraph,
(H) drugs, devices, or cosmetics (as such terms are defined in sections 201(g), (h), and (i) of the Federal Food, Drug, and Cosmetic Act [21 U.S.C.A. § 321(g), (h), and (i) ]), or
(I) food. The term “food”, as used in this subparagraph means all “food”, as defined in section 201(f) of the Federal Food, Drug, and Cosmetic Act [21*1166 U.S.C.A. § 321(f) ], including poultry and poultry products (as defined in sections 4(e) and (f) of the Poultry Products Inspection Act [21 U.S.C.A. § 453(e) and (f) ]), meat, meat food products (as defined in section l(j) of the Federal Meat Inspection Act [21 U.S.C.A. § 601© ]), and eggs and egg products (as defined in section 4 of the Egg Products Inspection Act [21 U.S.C.A. § 1033]).
15 U.S.C. § 2052(a)(5). Accordingly, “consumer product” is defined much differently in the FDCA than the Magnuson-Moss Act, and it expressly excludes products that, clearly fall within Magnuson-Moss. For example, the FDCA excludes food, boats, and motor vehicles — products that are expressly included as consumer products in the FTC’s regulations interpreting Magnuson-Moss. Therefore, a product’s express exclusion from the definition of “consumer product” in the FDCA does not compel a similar interpretation of the Magnuson-Moss Act where the product is otherwise a good “normally used for personal, family, or household purposes.”
Third, there may be very good reasons for “consumer product” to be defined differently in Consumer Product Safety Act (as part of the FDCA) and the MagnusonMoss Act. The Consumer Product Safety Act is primarily concerned with the safety of various products, and thus it may make sense to exclude products whose safety is regulated by agencies other than the Consumer Product Safety Commission — products like vehicles, food, and drugs. This helps to prevent conflicting or inconsistent regulatory requirements. In contrast, Magnuson-Moss is less focused on safety and more focused on ensuring that products do not have misleading claims as to the efficacy of those products. Thus, it may not be a significant concern if goods considered “consumer products” under Magnuson-Moss are regulated by other agencies with regard to those products’ safety. This is perhaps evidenced by the FTC’s interpretation of Magnuson-Moss as including vehicles and food, even though the safety of those products are regulated by other acts. Accordingly, Defendants have provided no compelling reason for why we should interpret these two different definitions to be coterminous, and there appear to be very good reasons not to (not the least of which is the fact that FTC regulations expressly include products that are excluded from the definition in the FDCA).
Defendants have not engaged in a sufficiently comprehensive analysis of these two statutes, their interpretive regulations, and the regulatory structure of the agencies governing over-the-counter medications for us to conclude that over-the-counter homeopathic medications are not “consumer products” under MagnusonMoss. Accordingly, they have not borne their burden at this stage of litigation of demonstrating that Plaintiffs MagnusonMoss Act claim should be dismissed as a matter of law. We hereby DENY Defendants’ motion inasmuch as it seeks dismissal of Plaintiffs Magnuson-Moss Act claim.
E. Plaintiff’s Unjust Enrichment Claim
Defendants argue that Plaintiffs unjust enrichment claim fails because unjust enrichment is a remedy, rather than a freestanding claim. Although state and federal courts are somewhat inconsistent in their characterization of unjust enrichment under California law, we agree with Defendants that the majority of state and federal district courts in California do not recognize unjust enrichment as a freestanding claim. See, e.g., Levine v. Blue Shield of Cal.,
F. Plaintiff’s NJCFA Claim
To prevail on his NSCFA claim, Plaintiff must establish “1) unlawful conduct by defendant[s]; 2) an ascertainable loss by plaintiff; and 3) a causal relationship between the unlawful conduct and the ascertainable loss.” Bosland v. Warnock Dodge, Inc.,
Second, Defendants argue that Plaintiff has “failed to adequately plead an ascertainable loss.” (Mot. 17). Defendants assert that “Plaintiff merely alleges that he purchased the Product and, without any explanation or details, he makes the con
The ascertainable loss element of an NJCFA claim requires that the Plaintiff plead “a loss that is ‘quantifiable or measurable[,’ not] ‘hypothetical or illusory.’ ” Lee v. Carter-Reed Co., LLC,
The “out-of-pocket” theory may include the purchase price of a misrepresented product if the purchasers did not receive a refund and the seller’s misrepresentations rendered the product essentially worthless. A “loss-in-value” theory is based on the quantifiable difference in value between the merchandise as advertized and the merchandise as delivered. Under the third theory, an “ascertainable loss” can include a nominal overcharge for which the plaintiffs have not made a “pre-suit demand for a refund.”
Hammer v. Vital Pharmaceuticals, Inc., No. 11-4124,
Plaintiff clarifies in his Opposition that he relies on the “out-of-pocket” theory, as he claims that Defendants’ products are nothing more than “flavored water or sugar tablets.” (Opp’n 22-23). Because he is relying on the “out-of-pocket” theory, rather than the “loss-in-value” theory, Plaintiff argues that pleading the loss in purchase price is sufficient to state a claim.
Plaintiff pleads the ascertainable loss element as follows:
Plaintiff and members of the New Jersey Subclass suffered an ascertainable loss caused by Defendants’ misrepresentations because: (a) Plaintiff and the New Jersey Subclass would not have purchased the Hyland’s Cold and Flu Remedies on the same terms if they had known' the true facts regarding the effectiveness and contents of the products; (b) Plaintiff and the New Jersey Subclass paid a price premium due to the mislabeling of Hyland’s Cold and Flu Remedies; and (c) Hyland’s Cold and Flu Remedies did not have the quality, effectiveness or value as promised.
(CAC ¶ 115). If we were construing this paragraph in a vacuum, we would agree with Defendants that Plaintiff appears to rely on the “loss-in-value” theory and thus insufficiently pleads an ascertainable loss under Rule 9(b)’s fraud pleading requirement. However, we construe the CAC’s allegations in the light most favorable to the Plaintiff. See Lockyer,
In light of the foregoing, we hereby DENY Defendants’ Motion insofar as it seeks dismissal of Plaintiffs NJCFA claim.
IV. Conclusion
Defendants’ Motion is GRANTED in part and DENIED in part. Plaintiffs unjust enrichment claim is hereby DISMISSED with prejudice. In all other respects, Defendants’ Motion is hereby DENIED. Defendants SHALL answer Plaintiffs CAC within fourteen (14) days hereof. Fed.R.Civ.P. 12(a)(4)(A).
IT IS SO ORDERED.
Notes
. Plaintiff purchased only Hyland’s Cold 'n Cough, yet he asserts claims on behalf of individuals who purchased other products that are part of Hyland’s line of Cold and Flu Remedies.
. In their Reply, Defendants additionally argue that Plaintiff is precluded from asserting an unjust enrichment claim because he asserts contract-based claims (warranty claims). As this argument was asserted for the first time in Defendants’ Reply, we decline to consider it. See Ass’n of Imitated Residents v.C & R Vanderham Dairy,
. We do not, however, purport to conclude that there are no material differences between the laws of different states or that a nationwide class is certifiable. Instead, we merely defer this decision until the class certification stage. We caution Plaintiff that depending on the facts of this case, given Mazza, he may need to seriously consider whether he can maintain a nationwide class on all of his claims throughout this litigation. Given Mazza, we also caution the Parties to take their meet-and-confer obligations particularly seriously before filing any future motion addressing this issue.
. Defendants also argue that because Plaintiff’s express and implied warranty claims fail under state law, they also fail under Magnuson-Moss. Because we have determined that Plaintiff’s state law warranty claims are valid, we likewise reject this argument as to Plaintiff’s Magnuson-Moss Act claim.