Cigarettes Cheaper! et al v. State Board of Equalization et al

Filing 40

ORDER signed by Judge John A. Mendez on 6/27/11 GRANTING 7 Motion to Dismiss filed by Philip Morris USA, Inc. Philip Morris USA, Inc. terminated. (Matson, R)

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1 2 3 4 5 6 7 8 9 Hunton & Williams LLP 550 South Hope Street, Suite 2000 Los Angeles, California 90071-2627 10 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF CALIFORNIA 11 12 13 14 15 16 17 18 19 20 CIGARETTES CHEAPER!, a California CASE NO.: 2:11-CV-00631-JAM-EFB corporation, and THE CUSTOMER COMPANY, a California corporation, ORDER GRANTING DEFENDANT PHILIP MORRIS USA INC.’S Plaintiffs, MOTION TO DISMISS v. STATE BOARD OF EQUALIZATION, an agency of the State of California, ALTRIA GROUP, INC., a Virginia corporation, PHILIP MORRIS USA INC., and COSTCO WHOLESALE CORPORATION, a Washington corporation, Defendants. Action Filed: January 18, 2011 21 22 23 24 25 26 27 28 [PROPOSED] ORDER GRANTING PHILIP MORRIS USA INC.’S MOTION TO DISMISS PDF created with pdfFactory trial version www.pdffactory.com 1 ORDER 2 On June 15, 2011, the Motion to Dismiss brought by Defendant Philip Morris 3 USA, Inc. (“Philip Morris USA”), joined by Defendant Costco Wholesale 4 Corporation, came on for hearing before the Honorable John A. Mendez. After 5 reviewing all pleadings in support of and in opposition to the Motion, and after 6 considering the oral arguments of counsel, the Court hereby GRANTS Philip Morris 7 USA’s Motion and DISMISSES this action against Philip Morris USA WITH 8 PREJUDICE. 9 Plaintiffs’ attempt to maintain a sales tax refund suit against Philip Morris USA Hunton & Williams LLP 550Hunton & Williams LLP South Hope Street, Suite 2000 Los Angeles, California 90071-2627 550 South Hope Street, Suite 2000 Los Angeles, California 90071-2627 10 fails as a matter of law for the following independent reasons: 11 I. 12 Plaintiffs Have Failed To Meet The Standing Requirements of Article III. Standing is a threshold requirement to maintain a lawsuit in federal court. U.S. 13 Const. art. III, § 2; Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992). The 14 “irreducible constitutional minimum” for standing requires the plaintiff to allege an 15 injury-in-fact that is: (1) “fairly traceable” to the defendant’s allegedly unlawful 16 conduct; and (2) likely to be redressed by the requested relief. Lujan, 504 U.S. at 560- 17 561, 590. Plaintiffs have failed to meet their burden of demonstrating Article III 18 standing. The alleged wrongdoing, including making the tax rulings which Plaintiffs 19 dispute, assessment of a purportedly unlawful sales tax, and collection of the disputed 20 tax, was exclusively within the control of the State Board of Equalization (the “BOE”) 21 and not Philip Morris USA. 22 At most, Plaintiffs allege that Philip Morris USA cooperated with the state 23 taxing authority in providing relevant sales information. See, e.g., Complaint, ¶ 1. 24 However, Philip Morris USA’s cooperation with the BOE is not only authorized, it is 25 required under California law and therefore cannot serve as the basis of a claim 26 27 28 1 [PROPOSED] ORDER GRANTING PHILIP MORRIS USA INC.’S MOTION TO DISMISS PDF created with pdfFactory trial version www.pdffactory.com 1 against Philip Morris USA. Cal. Rev. & T. Code § 7055. Plaintiffs’ allegations are, 2 therefore, inadequate to establish Article III standing as a matter of law.1 3 II. Plaintiffs Have Failed To State A Claim Against Philip Morris USA. 4 Plaintiffs’ failure to allege a cognizable legal theory supported by well pled conclusions and without the benefit of any legal authority, Plaintiffs attempt to allege 7 two claims against Philip Morris USA under California Business and Professions 8 Code § 17200 et seq. (“Section 17200”). First, Plaintiffs’ attempt to convert this tax 9 refund case into a Section 17200 claim is barred by Article XIII, § 32 of the California 10 Hunton & Williams LLP facts provides an independent basis to dismiss with prejudice. Relying only on legal 6 550Hunton & Williams LLP South Hope Street, Suite 2000 Los Angeles, California 90071-2627 550 South Hope Street, Suite 2000 Los Angeles, California 90071-2627 5 Constitution and fails as a matter of law. See, e.g., Woosley v. State of Cal., 3 Cal. 4th 11 758, 792 (1992). Plaintiffs cannot use Section 17200 to either expand the scope of 12 allowable remedies in a tax refund case or to circumvent the constitutional and 13 statutory restraints that California law places on tax refund suits. Instead, “the sole 14 legal avenue for resolving tax disputes is a post-payment refund action” against the 15 BOE. State Bd. of Equalization v. Superior Court, 39 Cal. 3d 633, 638 (1985). 16 Second, Plaintiffs have failed to allege facts sufficient to pass Rule 12(b)(6) 17 scrutiny under the principles set forth in Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009) and 18 Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007). Plaintiffs’ Complaint makes 19 conclusory allegations that Philip Morris USA’s conduct is “unfair,” “deceptive” and 20 that it constitutes “price-fixing,” but such labels need not be accepted as true on a 21 motion to dismiss. See, e.g., Oestreicher v. Alienware Corp., 544 F. Supp. 2d 964, 22 968 (N.D. Cal. 2008), aff’d, 322 Fed. Appx. 489 (9th Cir. Apr. 2, 2009) (courts need 23 not “accept as true allegations that are conclusory, legal conclusions, unwarranted 24 deductions of fact or unreasonable inferences.”). Because Plaintiffs’ Complaint does 25 26 27 28 1 Under the same analysis, Plaintiffs lack statutory standing under Section 17200. See, e.g., In re Tobacco II Cases, 46 Cal. 4th 298, 305-06 (2009) (plaintiff must suffer injury-in-fact and lose money or property “‘as a result of’” unfair competition). 2 [PROPOSED] ORDER GRANTING PHILIP MORRIS USA INC.’S MOTION TO DISMISS PDF created with pdfFactory trial version www.pdffactory.com 1 not contain sufficient factual matter, accepted as true, which states a claim to relief 2 that is plausible, dismissal is warranted. See Iqbal, 129 S. Ct. at 1949. 3 III. Amendment Would Be Futile. 4 Leave to amend is properly denied where amendment would be futile. Cal. (9th Cir. 1987) (futility is a valid reason for denying leave to amend). Amendment 7 would be futile here because: (1) Plaintiffs lack standing and the only remedy 8 available to them is a tax refund suit against the BOE (see Lujan, 504 U.S. at 560-561, 9 590 (harm caused by Defendant required for Article III standing));2 (2) Plaintiffs’ 10 Complaint relies only on threadbare allegations and legal conclusions (see Ruiz v. 11 Mort. Elec. Registration Sys., Inc., No. CIV. S-09-0780 FCD, 2009 WL 2390824, *10 12 (E.D. Cal. Aug. 3, 2009)); and (3) Plaintiffs have failed to cite any legal authority to 13 oppose Philip Morris USA’s Motion meaningfully (see Allen v. Dollar Tree Stores, 14 Inc., No. C 10-4492 WHA, 2011 WL 198148, *1 (N.D. Cal. Jan. 20, 2011) 15 (dismissing action without leave to amend where “plaintiff fail[ed] to cite a single 16 legal authority in response to defendant’s motion to dismiss” and instead relied on 17 implausible legal conclusions)). 18 Hunton & Williams LLP Architectural Bldg. Prods., Inc. v. Franciscan Ceramics, Inc., 818 F.2d 1466, 1472 6 550Hunton & Williams LLP South Hope Street, Suite 2000 Los Angeles, California 90071-2627 550 South Hope Street, Suite 2000 Los Angeles, California 90071-2627 5 IV. Conclusion 19 For the foregoing reasons, the Court hereby GRANTS Philip Morris USA’s 20 Motion and DISMISSES this action against Philip Morris USA WITH 21 PREJUDICE. 22 IT IS SO ORDERED. 23 24 Dated: June 27, 2011 /s/ John A. Mendez________________ John A. Mendez UNITED STATES DISTRICT JUDGE 25 26 27 28 2 See also United Food And Commercial Workers Unions, Employers Health and Welfare Fund v. Philip Morris, Inc., 223 F.3d 1271, 1275 (11th Cir. 2000) (leave to amend properly denied on futility grounds because proffered cause of action failed to state a claim under applicable state law). 50594.000391 EMF_US 36121083v2 3 [PROPOSED] ORDER GRANTING PHILIP MORRIS USA INC.’S MOTION TO DISMISS PDF created with pdfFactory trial version www.pdffactory.com

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