Youngevity International, Corp. v. Smith et al, No. 3:2016cv00704 - Document 261 (S.D. Cal. 2017)
Court Description: ORDER Granting Plaintiff's 109 Motion to Amend. Plaintiffs are ordered to file their fourth amended complaint, which must contain all exhibits referred to in the amended complaint, within seven days of entry of this order. Defendants shall have 30 days to respond to the fourth amended complaint. Signed by Judge Barry Ted Moskowitz on 10/30/2017. (mxn)
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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 12 YOUNGEVITY INTERNATIONAL CORP., et al., Plaintiffs, 13 14 15 16 v. Case No.: 16-CV-704-BTM-JLB ORDER GRANTING PLAINTIFFS' MOTION TO AMEND TODD SMITH, et al., Defendant. 17 18 19 20 21 22 23 24 25 26 27 28 Pending before the Court is Plaintiffs Youngevity International Corp.’s (“Youngevity”) and Dr. Joel D. Wallach’s (“Wallach”) motion to file a fourth amended complaint. (Pl.s’ Mtn to Amend, ECF No. 109.) For the reasons discussed below, Plaintiffs’ motion is GRANTED. I. BACKGROUND On December 21, 2016, upon leave of the Court, Plaintiffs filed their third amended complaint. (ECF No. 64.) Plaintiffs now move to amend their complaint for a fourth time. Plaintiffs seek to add Barb Pitcock (“Pitcock”), Mike Casperson (“Casperson”), and Mike Randolph (“Randolph”) as defendants. Plaintiffs also seek to add the following new allegations and claims: (1) allegations that Defendant Wakaya made misleading statements about its 1 16-CV-704-BTM-JLB 1 BulaFIT product line, Plan to a Grand program, Calcium Bentonite Clay Powder, 2 and turmeric products in violation of the Lanham Act; (2) allegations related to 3 Defendant William Andreoli’s alleged breaches of fiduciary duties and contract; 4 and (3) claims against Defendants Brytt Cloward, Patti Gardner, Randolph, and 5 Casperson for their alleged breaches of loyalty. 6 II. STANDARD Pursuant to Federal Rule of Civil Procedure 15(a)(2), “a party may amend 7 8 its pleading only with the opposing party’s written consent or the court’s leave.” 9 Fed. R. Civ. P. 15(a)(2). “The court should freely give leave when justice so 10 requires.” Id. “Liberality in granting a plaintiff leave to amend is subject to the 11 qualification that the amendment not cause undue prejudice to the defendant, is 12 not sought in bad faith, and is not futile.” Bowles v. Reade, 198 F.3d 752, 757 13 (9th Cir. 1999). Additionally, a court may consider the factor of undue delay. Id. 14 at 757–58. These factors are not given equal weight. Bonin v. Calderon, 59 F.3d 815, 15 16 845 (9th Cir. 1995). “Futility of amendment can, by itself, justify the denial of a 17 motion for leave to amend.” Id. The test for futility is the same one used when 18 considering the sufficiency of a pleading under Rule 12(b)(6). Miller v. Rykoff- 19 Sexton, Inc., 845 F.2d 209, 214 (9th Cir. 1988). 20 III. DISCUSSION First, Defendants oppose Plaintiffs’ motion by arguing that it is procedurally 21 22 deficient because Plaintiffs failed to provide any of the 53 separate exhibits 23 supporting the allegations in their amended complaint as required under Civil 24 Local Rule 15.11. While Plaintiffs did violate Rule 15.1 by not providing 25 Defendants with the exhibits they reference to in their amended complaint, the 26 27 28 Civil Local Rule 15.1(a) provides that “[a]ll amended pleadings must contain copies for all exhibits referred to in such amended pleadings.” 1 2 16-CV-704-BTM-JLB 1 Court excuses the violation in the interest of judicial efficiency. Further, because 2 Plaintiffs directly quote from documents that Defendants are in possession of or 3 have at least knowledge of, the violation does not cause sufficient prejudice so 4 as to warrant a denial of Plaintiffs’ motion to amend. 5 Second, Defendants argue that the motion to amend should be denied 6 because Plaintiffs have failed to explain the delay in adding Pitcock, Casperson, 7 and Randolph as defendants or asserting a breach of loyalty cause of action. 8 Plaintiffs filed their motion to amend within the time allotted under the Court’s 9 scheduling order. See (ECF No. 87 at ¶ 1.) Given the present stage of this 10 litigation, the Court does not find that Plaintiffs acted in bad faith or that granting 11 Plaintiffs leave to file an FAC would prejudice Defendants. Undue delay alone is 12 insufficient to justify denying a motion to amend. Bowles, 198 F.3d at 758. 13 Therefore, leave to amend turns on whether the proposed amendments would be 14 futile. 15 A. Lanham Act Claims Section 43(a) of the Lanham Act “allows one competitor to sue another if it 16 17 alleges unfair competition arising from false or misleading product descriptions.” 18 POM Wonderful LLC v. Coca-Cola Co., __ U.S. __, 134 S. Ct. 228, 1879 (2017). 19 A plaintiff seeking to establish a prima facie case under the Lanham Act must 20 show that: (1) the defendant made a false statement either about the plaintiff’s or its own product; (2) the statement was made in commercial advertisement or promotion; (3) the statement actually deceived or had the tendency to deceive a substantial segment of its audience; (4) the deception is material; (5) the defendant caused its false statement to enter interstate commerce; and (6) the plaintiff has or is likely to be injured as a result of the false statement, either by direct diversion of sales from itself to the defendant, or by a lessening of goodwill associated with the plaintiff’s product. 21 22 23 24 25 26 27 Newcal Indust. V. Ikon Office Solution, 513 F.3d 1038, 1052 (9th Cir. 2008). 28 // 3 16-CV-704-BTM-JLB 1 1. Plan to a Grand Amendments 2 Defendants challenge Plaintiffs’ allegations concerning Wakaya’s Plan to 3 a Grand program, arguing that the statements they made are not actionable 4 under the Lanham Act. Specifically, they argue that the claims that Wakaya 5 Ambassadors could easily earn $1,000 per month and that 95% of Wakaya 6 Ambassadors would earn more than $1,000 per month are either true or non- 7 actionable generalized statements. “To demonstrate falsity within the meaning of the Lanham Act, a plaintiff 8 9 may show that the statement was literally false, either on its face or by necessary 10 implication, or that the statement was literally true but likely to mislead or confuse 11 consumers.” Southland Sod Farms v. Stover Seed Co., 108 F.3d 1134, 1139 12 (9th Cir. 1997). Even if an advertisement is not literally false, it still remains 13 actionable if a plaintiff can show “that the advertisement has misled, confused, or 14 deceived the consuming public.” Id. at 1140. When determining whether an 15 advertising claim is literally false, it must be analyzed within its full context. Id. at 16 1139. 17 Whether Wakaya’s statements are false or misleading is a question of fact 18 for the jury. See Newcal Industries, Inc., 513 F.3d at 1053–54. Thus, Plaintiffs’ 19 amendments are not futile because they have sufficiently stated a claim under 20 the Lanham Act. 21 2. The Calcium Bentonite Clay Powder Amendments 22 Defendants also challenge Plaintiffs’ allegations concerning Wakaya’s 23 Calcium Bentonite Clay Powder, arguing that Plaintiffs are inappropriately 24 attempting to bring a cause of action under the Safe Drinking Water Act, 40 25 C.F.R. § 114.1, et seq.. However, a review of the proposed amended complaint 26 reveals that Plaintiffs are not attempting to bring a cause of action under the Safe 27 Drinking Water Act, but instead bringing a claim for Defendants’ alleged false 28 advertising about its clay products. Defendants advertise that these products 4 16-CV-704-BTM-JLB 1 produce “AMAZING health benefits” and “powerful detoxifying benefits.” (Pl.s’ 2 Mtn to Amend, Ex. A, ¶¶ 102, 105.) Plaintiffs allege that these statements are 3 misleading because Wakaya advertises its clay products as healthy and 4 beneficial even though they contain toxic levels of lead. (Id. at ¶¶ 109–114.) 5 Plaintiffs have, therefore, sufficiently pled allegations under the Lanham Act. 6 3. BulaFIT Burn! Capsule Amendments 7 As to Plaintiffs’ amendments related to Wakaya’s BulaFIT Burn! products, 8 Defendants argue that their use of the phrase “herbs and extracts” is not 9 misleading because the label discloses its ingredients. However, as discussed 10 above, whether Wakaya’s statements are false or misleading is a question of fact 11 that is not appropriate for determination at this juncture. See Newcal Industries, 12 Inc., 513 F.3d at 1054. Therefore, Plaintiffs have sufficiently stated a claim under 13 the Lanham Act. 14 4. BulaFIT Weight Loss Amendments 15 Lastly, Defendants argue that Plaintiffs’ BulaFIT weight loss amendments 16 are futile because Plaintiffs cannot assert a cause of action under the Federal 17 Trade Commission Act, 15 U.S.C. § 45. Defendants made claims that their 18 weight loss products will cause all or a substantially majority of consumers 19 participating in the BulaFIT program to lose substantial amounts of weight. (Pl.’s 20 Mtn to Amend, Ex. A, ¶¶ 170–80.) Rather than assert a claim under the Federal 21 Trade Commission Act, Plaintiffs assert a claim under the Lanham Act, alleging 22 that these weight loss claims are either false or misleading. (Id. at ¶ 184.) 23 Accordingly, the Court finds that Plaintiffs’ amendments are not futile. 24 // 25 // 26 // 27 // 28 // 5 16-CV-704-BTM-JLB 1 IV. CONCLUSION 2 Therefore, the Court GRANTS Plaintiffs’ motion to file a fourth amended 3 complaint. Plaintiffs are ordered to file their fourth amended complaint, which 4 must contain all exhibits referred to in the amended complaint, within seven days 5 of entry of this order. Defendants shall have 30 days to respond to the fourth 6 amended complaint. 7 IT IS SO ORDERED. 8 9 Dated: October 30, 2017 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 6 16-CV-704-BTM-JLB
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