Liou v. Organifi, LLCLiou v. Organifi, LLC
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS’ MOTION TO DISMISS
[Doc. No. 3]
This matter is before the Court on Defendants Organifi, LLC‘s and Andrew Canole‘s motion to dismiss Plaintiff‘s complaint. [Doc. No. 3.] The motion has been fully briefed and the Court finds it suitable for determination on the papers submitted and without oral argument. See S.D. Cal. CivLR 7.1(d)(1). For the reasons set forth below, Defendants’ motion to dismiss is granted in part and denied in part with leave to amend.
I. BACKGROUND
Plaintiff Glenn Liou filed this putative consumer class action complaint against Defendants Organifi, LLC and Andrew Canole (collectively “Defendants“) in the Superior Court of California, County of San Diego, on August 30, 2019. [Doc. No. 1-2.] On January 6, 2020, Plaintiff filed a First Amended Complaint (“FAC“) [Doc. Nos. 1-3, 1-4], and Defendants removed the action to this Court on June 12, 2020. [Doc. No. 1.]
The FAC asserts claims for: (1) Breach of Implied Warranties of Merchantability and Fitness for Particular Purpose; (2) Breach of Express Warranty; (3) Violation of
Defendant Organifi, LLC (“Organifi“) manufactures, promotes, advertises, and sells its product Organifi Green Juice (“Green Juice” or “Product“). [Doc. No. 1-3 at ¶ 1.] Defendant Andrew Canole is the founder, manager, and primary promoter of Organifi. [Id. at ¶ 6.] Plaintiff alleges that based on information disseminated by Organifi through its website, on or about January 29, 2019, he placed an order for a one-month supply of the Green Juice, spending $72.90. [Id. at ¶ 21.] Plaintiff alleges that Defendants specifically state that the Green Juice‘s efficacy had been
Plaintiff seeks to represent a class of “All persons who have purchased the [Green Juice] in the past four years other than for purposes of resale or distribution.” [Id. at ¶ 11.] On June 19, 2020, Defendants moved to dismiss Plaintiff‘s FAC. [Doc. No. 3.]
II. LEGAL STANDARD
The familiar standards on a motion to dismiss apply here. To survive a motion to dismiss under
III. DISCUSSION
Defendants move to dismiss Plaintiff‘s FAC for the following reasons: 1) Plaintiff fails to state a claim for breach of an implied warranty of fitness for a particular purpose because Plaintiff fails to allege that the very nature of the product made the product unfit for its purpose; 2) Plaintiff‘s claim for breach of express warranty fails because it is based on a lack of substantiation; 3) Plaintiff‘s claims of violation of the CLRA and UCL fail because: (a) the complaint only alleges a claim for lack of substantiation, which is not actionable by a private plaintiff; (b) the claims fail under the primary jurisdiction doctrine since as predicated on violations of the Food, Drug, and Cosmetic Act (“FDCA“) and the Dietary Supplement Health and Education Act of 1994 (“DSHEA“) and are thus preempted; and 4) Plaintiff‘s claims for the common counts fail because they do not constitute specific causes of action and because Plaintiff failed to allege facts sufficient to show that the money Plaintiff paid Defendants was intended to be used for the benefit of Plaintiff, as opposed to consideration for a purchase.
As a preliminary matter, the parties disagree whether Plaintiff‘s complaint is grounded in fraud which would require heightened pleading standards. Plaintiff attempts to argue that some of his claims are based on violations of state and federal laws for mislabeling and therefore not grounded in fraud. This argument is unconvincing. The entirety of Plaintiff‘s complaint is premised on alleged fraudulent activity by the Defendants with regard to the Clinical Trial and Benefit Statements to promote the efficacy of the Green Juice. Even if fraud is not a necessary element of a claim, the plaintiff must still comply with
Because Plaintiff‘s claims are all grounded in fraud, the complaint must satisfy the heightened pleading requirements of
Plaintiff‘s complaint sufficiently meets the heightened pleading requirements of
B. Warranty Claims
Defendants contend Plaintiff‘s breach of implied warranties claim fails because Plaintiff‘s claim is based on injuries attributable to Defendants’ marketing efforts rather than the nature of the product itself. Defendants also contend Plaintiff‘s breach of express warranty claim fails because it is not pled with sufficient specificity and because it is an impermissible lack of substantiation claim.
Plaintiff brings separate claims for breach of implied warranty of merchantability and implied warranty of fitness for a particular purpose. “The California
Here, Plaintiff fails to allege how the Green Juice does not provide for even a minimum level of quality or lacks the most basic degree of fitness for ordinary use. The ordinary use, as the Product‘s name suggests, is a juice, and there is no indication that Plaintiff received anything other than a juice. On the other hand, the Court agrees that Defendants mischaracterize Plaintiff‘s allegations in relation to the breach of implied warranty of fitness for a particular purpose claim. Ultimately, the FAC alleges that Defendants warranted that the Green Juice‘s efficacy as to its numerous Benefit Statements (health management, weight loss, heart health, etc.) is supported by the countless clinical trials published in government websites and undertaken by a prestigious medical university. Plaintiff therefore purchased the Green Juice for the particular purpose of the numerous Benefit Statements that were allegedly supported by these numerous clinical trials, which Plaintiff alleges do not exist. Thus, the Court finds that Defendants’ argument that Plaintiff‘s claim is not attributable to the product itself fails. Moreover, as discussed above, Plaintiff adequately alleged he relied on the Clinical Trial and Benefit Statements when purchasing the Green Juice.
To successfully allege a breach of express warranty,
Plaintiff alleges Defendants’ Clinical Trial Statements to promote the Benefit Statements constitute express warranties that became part of the basis of the bargain. “Whether the label actually provided a warranty and is likely to deceive a consumer are not appropriate questions to decide on a dismissal motion.” Branca v. Bai Brands, LLC, Case No.: 3:13-cv-00757-BEN-KSC, 2019 WL 1082562, at *9 (S.D. Cal. Mar. 7, 2019). For pleading purposes, the Court accepts as true the allegations of the FAC and concludes that Plaintiff has pled the elements of his breach of express warranty claim.
Accordingly, Plaintiff‘s breach of implied warranty of merchantability claim is DISMISSED without prejudice and Defendants’ motion to dismiss Plaintiff‘s breach
C. CLRA and UCL Claims
Defendants contend Plaintiff‘s CLRA and UCL claims should be dismissed because (1) his allegations only support a lack of substantiation which is not actionable by a private plaintiff; (2) the claims fail under the primary jurisdiction doctrine to the extent they are predicated on violations of the FDCA; and (3) the claims are preempted to the extent they are predicated on violations of the DSHEA.
1. Lack of Substantiation
The UCL prohibits “any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising.”
Private litigants may not bring suit under the UCL or CLRA alleging only that advertising claims lack substantiation. See Nat‘l Council Against Health Fraud, Inc. v. King Bio Pharm., Inc., 133 Cal. Rptr. 2d 207, 213 (Cal. App. Ct. 2003); Stanley v. Bayer Healthcare LLC, 2012 WL 1132920, at *3 (S.D. Cal. 2012). That right is reserved for “the Director of Consumer Affairs, the Attorney General, any city attorney, or any district attorney.”
In the false advertising context, an advertising claim is false if it has “actually been disproved,” that is, if the plaintiff can point to evidence that directly conflicts with the claim. Eckler v. Wal-Mart Stores, Inc., 2012 WL 5382218, at *3 (S.D. Cal. Nov. 1, 2012). By contrast, an advertising claim that merely lacks evidentiary support is said to be unsubstantiated. Id. (“There is a difference, intuitively, between a claim that has no evidentiary support one way or the other and a claim that‘s actually been disproved. In common usage, we might say that both are ‘unsubstantiated,’ but the caselaw (and common sense) imply that in the context of a false advertising lawsuit an ‘unsubstantiated’ claim is only the former.“).
Here, Plaintiff argues that the FAC identifies a series of specific statements that are allegedly provably false and misleading, again referring to Defendants’ Clinical Trial Statements. Plaintiff alleges provable falsity of Defendants’ Clinical Trial Statements such that: (1) there are in fact no supporting clinical trials sponsored by a prestigious medical university and posted on clinicaltrials.gov; (2) there are not “numerous” clinical trials of Green Juice; (3) the supposed studies that do exist do not apply to Green Juice or are of the ingredient levels in Green Juice at levels not contained in Green Juice; and (4) the lone “clinical trial” that supports the efficacy of Green Juice to address various maladies is not in fact a clinical trial. The Court agrees that Defendants’ Clinical Trial Statements are specific factual statements that do not amount to mere lack of substantiation claims. Plaintiff also attempts to argue that Defendants’ Benefit Statements, listed in the FAC at ¶ 31(a)-(t) are a separate basis for Plaintiff‘s CLRA and UCL claims. However,
To that extent, Plaintiff‘s CLRA and UCL claims premised solely on the Benefit Statements are DISMISSED without prejudice as lack of substantiation claims. However, according to the Court‘s reading of the FAC, the Benefit Statements only come into play because ultimately it is the Clinical Trial Statements that Defendants affirmatively made that were used to promote the efficacy of the Benefit Statements. Accordingly, Defendants’ motion to dismiss Plaintiff‘s CLRA and UCL claims as lack of substantiation claims is DENIED as to the Clinical Trial Statements.
2. Primary Jurisdiction Doctrine
The primary jurisdiction doctrine “is a prudential doctrine under which courts may, under appropriate circumstances, determine that the initial decision making responsibility should be performed by the relevant agency rather than the courts.” Davel Comm‘ns, Inc. v. Qwest Corp., 460 F.3d 1075, 1086 (9th Cir. 2006). “[T]he doctrine applies where there is (1) the need to resolve an issue that (2) has been placed by Congress within the jurisdiction of an administrative body having regulatory authority (3) pursuant to a statute that subjects an industry or activity to a comprehensive regulatory scheme that (4) requires expertise or uniformity in administration.” Id. at 1086. Notably, “the doctrine does not, however, require that all claims within an agency‘s purview be decided by the agency.” Id. Where “the allegations of the complaint do not necessarily require the doctrine‘s applicability, then the primary jurisdiction doctrine may not be applied.” Id. at 1088.
When deciding whether to defer jurisdiction at the motion to dismiss stage, courts must “apply a standard derived from
3. Preemption
The FDCA “governs the labeling of food, drugs, cosmetic products and medical devices.” Lilly v. ConAgra Foods, Inc., 743 F.3d 662, 664-65 (9th Cir. 2014). In 1990, Congress amended the FDCA by enacting the NLEA, “which established uniform food labeling requirements[.]” Id. The NLEA contains an express preemption provision that preempts state-law food-labeling requirements that are “not identical to the requirements of section 343(r).”
Under this framework, state-law claims are generally preempted only “where application of state laws would impose more or inconsistent burdens on manufacturers than the burdens imposed by the FDCA.” Gallagher v. Bayer AG, No. 14-CV-04601-WHO, 2015 WL 1056480, at *4 (N.D. Cal. Mar. 10, 2015). Conversely, “[i]f a lawsuit asserts that a manufacturer has violated the FDCA (as amended by NLEA) and does not seek to impose additional or contrary burdens to those imposed under the FDCA, the claims raised under state law are not preempted.” Id., at *4 (citing Salazar v. Honest Tea, Inc., No. 2:13-CV-02318-KJM, 2014 WL 2593601, at *4 (E.D. Cal. June 10, 2014)). In short, to avoid preemption, “the plaintiff must be suing for conduct that violates the FDCA” but not “solely because the conduct violates the FDCA, else his claim would be impliedly preempted under [
As discussed above, Plaintiff‘s CLRA and UCL claims are premised on Defendants’ Clinical Trial Statements being false and misleading. Defendants’ argument with regard to whether the statements are permissible structure/function or disease claims is irrelevant. The Court has already dismissed Plaintiff‘s CLRA and UCL claims to the extent they are based solely on the Benefit Statements as lack of substantiation claims. Accordingly, Defendants’ motion to dismiss Plaintiff‘s CLRA and UCL claims as preempted is DENIED.
D. Unjust Enrichment, Money Had and Received, and Assumpsit
“The elements of an unjust enrichment claim are the ‘receipt of a benefit and [the] unjust retention of the benefit at the expense of another.‘” Peterson v. Cellco P‘ship, 164 Cal. App. 4th 1583, 1593 (2008) (quoting Lectrodryer v. SeoulBank, 77 Cal. App. 4th 723, 726 (2000)). “A quasi-contract action, in the form of a common count for money had and received, to recover money obtained by fraud (waiver of tort) or mistake, is governed by the fraud statute.” First Nationwide Savings v. Perry, 11 Cal. App. 4th 1657, 1670 (1992). To bring an action based on a quasi-contract, a plaintiff must allege “that a defendant has been unjustly conferred a benefit through mistake, fraud, coercion, or request.” Astiana v. Hain Celestial Grp., Inc., 783 F.3d 753, 762 (9th Cir. 2015).
Here, Plaintiff alleges Defendants were unjustly conferred a benefit through his purchase of the Green Juice due to Defendants’ false and misleading Clinical Trial Statements. Accordingly, Plaintiff has alleged sufficient facts to plead the alternative common counts and Defendants’ motion to dismiss such claims is DENIED.
E. Injunctive Relief
To establish standing for injunctive relief, Plaintiff must “demonstrate that he has suffered or is threatened with a concrete and particularized legal harm, coupled with a sufficient likelihood that he will again be wronged in a similar way.” Bates v. United Parcel Serv., Inc., 511 F.3d 974, 985 (9th Cir. 2007) (internal quotations omitted); see also Davidson v. Kimberly-Clark Corp., 889 F.3d 956, 967 (9th Cir. 2018) (holding that a deceived consumer may have standing to sue for injunctive relief based on allegedly false advertising, but the consumer must still establish the threat of actual and imminent injury). In Davidson, the Ninth Circuit held “that a previously deceived consumer may have standing to seek an injunction against false advertising or labeling, even though the consumer now knows or suspects that the advertising was false at the time of the original purchase.” Id. at 969. The Ninth Circuit explained that, “[i]n some cases, the threat of future harm may be the consumer‘s plausible allegations that [he] will be unable to rely on the product‘s advertising or labeling in the future, and so will not purchase the product although [he] would like to.” Id. at 969-70.
Here, while it is clear Plaintiff now knows or suspects that Defendants’ advertising was false at the time of his purchase, Plaintiff does not allege any facts that suggest he intends to purchase the Green Juice in the future and therefore would be unable to rely on the Green Juice‘s advertising in the future. Accordingly, under Davidson, Plaintiff has failed to allege sufficient facts to suggest the threat of future harm and has not met his burden of establishing standing to seek injunctive relief.
IV. CONCLUSION
For the reasons set forth above, Defendants’ motion to dismiss is GRANTED in part and DENIED in part. Plaintiff‘s breach of the implied warranty of merchantability claim, Plaintiff‘s CLRA and UCL claims premised solely on Defendants’ Benefit Statements, and Plaintiff‘s request for injunctive relief, are DISMISSED without prejudice. Should Plaintiff wish to amend his complaint he must do so by October 22, 2020. If no amended complaint is filed by this date, this case will continue on Plaintiff‘s remaining claims and Defendants must answer the FAC by November 5, 2020.
It is SO ORDERED.
Dated: October 1, 2020
Hon. Cathy Ann Bencivengo
United States District Judge