Amy Friedman v. Guthy-Renker LLC, No. 2:2014cv06009 - Document 167 (C.D. Cal. 2016)
Court Description: ORDER DENYING DEFENDANTS MOTION TO ENJOIN STATE COURT PROCEEDINGS 154 by Judge Otis D. Wright, II . (lc). Modified on 8/26/2016 (lc).
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Amy Friedman v. Guthy-Renker LLC Doc. 167 O 1 2 3 4 5 6 United States District Court Central District of California 7 8 9 10 11 AMY FRIEDMAN and JUDI MILLER, on behalf of themselves and all others similarly situated, Plaintiffs, 12 v. 13 14 Case No. 2:14-cv-06009-ODW(AGRx) ORDER DENYING DEFENDANT’S MOTION TO ENJOIN STATE COURT PROCEEDINGS [154] GUTHY-RENKER LLC and WEN BY CHAZ DEAN, INC., 15 Defendants. 16 I. 17 INTRODUCTION 18 Plaintiffs Amy Friedman and Judi Miller bring this putative class action lawsuit 19 against Defendants Guthy-Renker, LLC and Wen By Chaz Dean, Inc., alleging that 20 Defendants’ “WEN Cleansing Conditioner” line of haircare products caused their hair 21 to fall out. In April 2016, the parties reached a class-wide settlement of all claims. 22 Guthy-Renker now moves to temporarily enjoin three similar but non-class lawsuits 23 pending in state court, arguing that those proceedings threaten the settlement in this 24 action. For the reasons discussed below, the Court DENIES Guthy-Renker’s Motion. 25 (ECF No. 154.)1 26 1 27 28 After considering the papers filed in support of and in opposition to the Motion, the Court deems the matter appropriate for decision without oral argument. Fed. R. Civ. P. 78(b); C.D. Cal. L. R. 7-15. Dockets.Justia.com II. 1 FACTUAL BACKGROUND 2 Wen By Chaz Dean created and developed a haircare product called “WEN 3 Cleansing Conditioner,” which Guthy-Renker manufactured, marketed, and sold 4 throughout the United States. (Second Am. Compl. (“SAC”) ¶ 2, ECF No. 69.) 5 According to Plaintiffs, this product causes hair loss. (Id. ¶ 3.) Plaintiffs now assert a 6 variety of false advertising and personal injury claims against Defendants on behalf of 7 all persons in the United States who purchased the product between August 1, 2009, 8 and the present. (Id. ¶¶ 42, 52–118.) 9 In April 2016, after conducting significant discovery and participating in four 10 mediation sessions, the parties reached a class-wide settlement of all claims. (ECF 11 Nos. 135, 137, 140, 144.) 12 products, not just the WEN Cleansing Conditioner. (Settlement Agreement § 2O, 13 Pl.’s Counsel Decl. ¶ 7, Ex. A, ECF No. 153-3.) Soon thereafter, the parties jointly 14 moved for class certification and preliminary approval of the class settlement. (ECF 15 No. 153.) On August 1, 2016, the Court held a hearing on the Motion and discussed 16 with counsel its concerns regarding certain settlement terms and the class notice. 17 (ECF No. 155.) The Court continued the hearing to September 19, 2016, to give the 18 parties time to iron out these problems. (Id.) Notably, the settlement includes all WEN haircare 19 However, this is not the only lawsuit pending against Guthy-Renker concerning 20 its WEN haircare product line. Currently pending before Judge Susan Bryant-Deason 21 of the Los Angeles Superior Court are three lawsuits that make essentially the same 22 allegations against Guthy-Renker concerning the WEN Cleansing Conditioner and 23 other WEN haircare products as Plaintiffs in this lawsuit do.2 (See Cox Decl. ¶¶ 2–6, 24 Exs. A–C, ECF No. 154-1; Second Am. Compl., Bakarat et al. v. Guthy-Renker LLC, 25 Case No. BC 607925 (L.A. Super. Ct. Apr. 1, 2016); Compl., Harris et al. v. Guthy- 26 Renker LLC, Case No. BC 609379 (L.A. Super. Ct. Feb. 5, 2016); Compl., Fisher et 27 28 2 There are also four other such lawsuits pending around the country. (Mot. 5 n.1.) These have all been stayed pending approval of the class settlement in this action. (Id.) 2 1 al. v. Guthy-Renker LLC, Case No. BC626484 (L.A. Super. Ct. July 6, 2016).) 2 However, those three lawsuits are brought on behalf of 75 permissively-joined 3 plaintiffs, and do not assert class claims or seek any sort of class-wide relief. (Id.) 4 The plaintiffs in the Harris case have propounded significant discovery on Guthy- 5 Renker, including 74 requests for production of documents that broadly request all 6 documents relating in any way to the advertising and safety of all WEN haircare 7 products. (Cox Decl. ¶¶ 7–9.) Guthy-Renker believes there are over one million 8 responsive documents, and thus responding to this discovery will take thousands of 9 attorney hours and could cost them close to $1 million. (Mot. 9–10, ECF No. 154.) 10 Guthy-Renker objected to the discovery requests, which led to the Harris plaintiffs 11 filing multiple motions to compel before Judge Bryant-Deason. 12 In June and July 2016, Guthy-Renker filed multiple requests before Judge 13 Bryant-Deason to stay all three lawsuits pending consummation of the class-wide 14 settlement in this case. (Cox Decl. ¶¶ 11–13, Exs. G–I.) On July 26, 2016, Guthy- 15 Renker also moved this Court to enjoin the state court actions for the same period of 16 time. (ECF No. 154.) On August 12, 2016, Judge Bryant-Deason stayed the three 17 actions until November 8, 2016, which the court calculated to be sufficient time for 18 (1) this Court to consider and grant preliminary approval for the settlement, (2) for 19 Guthy-Renker to send out notice to the class members, and (3) for the state court 20 plaintiffs to consider whether or not to opt out of the settlement. (Opp’n 2–3, ECF 21 No. 163.) However, the court also set a hearing on the Harris plaintiffs’ motions to 22 compel for November 8, 2016, thus requiring the parties to meet and confer and brief 23 issues relating to those motions during the stay. (Reply 2, ECF No. 166.) 24 Guthy-Renker contends that this stay is insufficient in scope and length, and 25 thus presses on with the Motion to Enjoin that it filed with this Court. (Id. at 2–4.) 26 Counsel for the plaintiffs in all three state court actions have filed oppositions to the 27 Motion to Enjoin. (ECF Nos. 160, 163.) That Motion is now before this Court for 28 consideration. 3 III. 1 LEGAL STANDARD 2 District courts “may issue all writs necessary or appropriate in aid of their 3 respective jurisdictions and agreeable to the usages and principles of law.” 28 U.S.C. 4 § 1651(a). 5 prohibits federal courts from “grant[ing] an injunction to stay proceedings in a State 6 court except as expressly authorized by Act of Congress, or where necessary in aid of 7 its jurisdiction, or to protect or effectuate its judgments.” 28 U.S.C. § 2283. The 8 Anti-Injunction Act “rests on the fundamental constitutional independence of the 9 States and their courts,” Atl. Coast Line R. Co. v. Bhd. of Locomotive Eng’rs, 398 U.S. 10 281, 287 (1970), and is designed “to prevent friction between federal and state courts 11 by barring federal intervention in all but the narrowest of circumstances.” Sandpiper 12 Vill. Condo. Ass’n, Inc. v. Louisiana-Pac. Corp., 428 F.3d 831, 842 (9th Cir. 2005). 13 Thus, “[t]he Act creates a presumption in favor of permitting parallel actions in state 14 and federal court.” Bennett v. Medtronic, Inc., 285 F.3d 801, 806 (9th Cir. 2002). This power is limited, however, by the Anti-Injunction Act, which 15 Accordingly, the Supreme Court has construed the “necessary in aid of 16 jurisdiction” exception narrowly. To fall within this exception, the state court action 17 must “so interfer[e] with a federal court’s consideration or disposition of a case as to 18 seriously impair the federal court’s flexibility and authority to decide that case.” Atl. 19 Coast Line R. Co., 398 U.S. at 295; see also Bennett, 285 F.3d at 806 (“[A] parallel in 20 personam state court proceeding does not, in and of itself, present the sort of 21 impediment envisioned by Atlantic Coast. [Rather, p]arallel in personam actions in 22 state court seriously impede a federal court’s ability to adjudicate a case only where 23 the state court proceeding threatens to ‘render the exercise of the federal court’s 24 jurisdiction nugatory.’” (quoting Winkler v. Eli Lilly & Co., 101 F.3d 1196, 1202 (7th 25 Cir. 1996))). “Any doubts as to the propriety of a federal injunction against state court 26 proceedings should be resolved in favor of permitting the state courts to proceed in an 27 orderly fashion to finally determine the controversy. The explicit wording of § 2283 28 itself implies as much, and the fundamental principle of a dual system of courts leads 4 1 inevitably to that conclusion.” Atl. Coast Line R. Co., 398 U.S. at 297. IV. 2 DISCUSSION 3 Guthy-Renker argues that the parallel state court proceedings constitute a 4 serious threat to the pending class-wide settlement in this matter for several reasons. 5 First, the burdensome discovery requests that the Harris plaintiffs have served are 6 consuming substantial resources that Guthy-Renker could otherwise dedicate to 7 ensuring that the settlement in this action is approved and carried out. (Mot. 8–12.) 8 Second, and relatedly, the discovery requests are eviscerating the benefits of the class 9 settlement—i.e., a speedy and inexpensive method of adjudicating the personal injury 10 and false advertising claims of the class members—before those state court plaintiffs 11 have even had an opportunity to consider the settlement. (See id. at 11, 18.) Third, 12 counsel for the state court plaintiffs have supposedly retained a significant number of 13 additional plaintiffs that are not, as of yet, named in those lawsuits. According to 14 Guthy-Renker, if these new plaintiffs are added to the existing lawsuits, the class-wide 15 settlement’s confidential “opt out cap” may be breached,3 thus jeopardizing the 16 settlement. (Id. at 17.) The Court finds none of these reasons convincing. 17 Courts analyzing the necessary in aid of jurisdiction exception to the Anti- 18 Injunction Act typically look at three factors in determining whether an injunction is 19 appropriate. “First, we look to the nature of the federal action to determine what kinds 20 of state court interference would sufficiently impair the federal proceeding.” In re 21 Diet Drugs, 282 F.3d 220, 234 (3d Cir. 2002). “Second, we assess the state court’s 22 actions, in order to determine whether they present a sufficient threat to the federal 23 action.” Id. “And finally, we consider principles of federalism and comity, for a 24 primary aim of the Anti–Injunction Act is to prevent needless friction between the 25 26 27 28 3 The settlement agreement gives Guthy-Renker the option of withdrawing from the settlement if more than a certain number of class members opt out of the settlement. (Settlement Agreement § 18A, Pl.’s Counsel Decl. ¶ 7, Ex. A, ECF No. 153-3.) The threshold number itself is confidential. (Id.) 5 1 state and federal courts.” Id. (internal quotation marks omitted). 2 A. Nature of the Federal Action 3 With respect to the first inquiry, several circuit courts, including the Ninth 4 Circuit, have concluded that “a federal court entertaining complex litigation, 5 especially when it involves a substantial class of persons from multiple states, or 6 represents a consolidation of cases from multiple districts, may appropriately enjoin 7 state court proceedings in order to protect its jurisdiction.” Id. at 235; see also In re 8 Corrugated Container Antitrust Litig., 659 F.2d 1332, 1333 (5th Cir. 1981) (enjoining 9 state action that threatened “an enormous [federal] class action in which more than 10 fifty private treble damage actions [were] brought on behalf of all purchasers of 11 corrugated containers and sheets against thirty-seven manufacturers, alleging an 12 antitrust conspiracy”). “The threat to the federal court’s jurisdiction posed by parallel 13 state actions is particularly significant where there are conditional class certifications 14 and impending settlements in federal actions.” 15 Compare, e.g., Hanlon v. Chrysler Corp., 150 F.3d 1011, 1025 (9th Cir. 1998) 16 (enjoining a state court action that threatened a nationwide class action settlement in a 17 consolidated multidistrict litigation case); Carlough v. Amchem Prod., Inc., 10 F.3d 18 189, 199 (3d Cir. 1993) (enjoining a state court action that threatened a nationwide 19 class action settlement); Battle v. Liberty Nat. Life Ins. Co., 877 F.2d 877, 881 (11th 20 Cir. 1989) (same); In re Baldwin-United Corp. (Single Premium Deferred Annuities 21 Ins. Litig.), 770 F.2d 328, 338 (2d Cir. 1985) (same), with Negrete v. Allianz Life Ins. 22 Co. of N. Am., 523 F.3d 1091, 1103 (9th Cir. 2008) (declining to enjoin state action 23 where “[the federal action] was not an MDL case; discovery was not complete; no 24 class settlement was imminent, in fact, as far as the record shows no serious settlement 25 progress had been made”); Sandpiper Vill. Condo. Ass’n, 428 F.3d at 845 (declining 26 to enjoin state action in part because the federal class action settlement was approved 27 years ago and final judgment had already been entered); In re Gen. Motors Corp. 28 Pick-Up Truck Fuel Tank Prod. Liab. Litig., 134 F.3d 133, 145 (3d Cir. 1998) 6 Diet Drugs, 282 F.3d at 236. 1 (necessary in aid of jurisdiction exception did not apply because no settlement was 2 pending). 3 The nature and posture of the federal action here makes an injunction 4 potentially appropriate. After spending hundreds of thousands of dollars on pre- 5 certification discovery, as well as engaging in four mediation sessions, the parties 6 reached a complex settlement of all claims on behalf of a nationwide class. Moreover, 7 this settlement is at a precarious stage, as certification of the nationwide class and 8 preliminary approval of the settlement is currently pending before this Court. Any 9 state court proceedings that threaten to thwart this settlement would effectively 10 threaten this Court’s jurisdiction over the federal action. Diet Drugs, 282 F.3d at 236. 11 B. 12 Nature of the State Action Under the second inquiry, however, the mere existence of a parallel state court 13 proceeding is insufficient to enjoin that proceeding. 14 proceeding must substantially threaten the viability of the pending class-wide 15 settlement, such as by attempting to effect a mass opt-out from that settlement. For 16 example, in Diet Drugs, the Third Circuit held that a parallel state court action that 17 sought to opt out all West Virginia residents from a federal nationwide class action 18 settlement constituted “an intentional ‘preemptive strike’ against the federal action” 19 that substantially threatened the federal court’s ability to craft a viable settlement. 282 20 F.3d at 237; see also Hanlon, 150 F.3d at 1024 (injunction appropriate where state 21 court plaintiff “sought to represent himself and all other Georgia consumers . . . , and 22 asserted the right to opt-out all Georgia customers from the federal class action”); 23 Carlough, 10 F.3d at 203 (injunction appropriate where “the stated purpose of the 24 [state court] suit is to challenge the propriety of the federal class action, . . . and to 25 obtain rulings from the West Virginia state court regarding the West Virginia class 26 members’ right to opt out of the federal action”); Baldwin-United Corp., 770 F.2d at 27 337 (injunction appropriate where state attorneys general sought to bring derivative 28 claims on behalf of the same consumers that were the subject of the federal class 7 Instead, the state court 1 action settlement, reasoning that “[i]f states or others could derivatively assert the 2 same claims on behalf of the same class or members of it, there could be no certainty 3 about the finality of any federal settlement”). However, where the state court action 4 presents no particular threat to consummating a class settlement, federal courts have 5 typically declined to enjoin the state court action. Sandpiper Vill. Condo. Ass’n, 428 6 F.3d at 845 (injunction inappropriate in part because the plaintiff in the state court 7 action “was not a class member and did not seek to represent class members”); Wilson 8 v. Airborne, Inc., No. EDCV07-770VAP(OPX), 2007 WL 5010298, at *3 (C.D. Cal. 9 Nov. 28, 2007) (“Unless the New Jersey plaintiffs persist in seeking class action relief 10 in their case after the certification of any nationwide settlement class in this case, there 11 can be no showing that their pending case poses a threat to this Court’s jurisdiction 12 over the settlement.”). 13 The state court actions here do not present any substantial threat to the 14 settlement in this case. The plaintiffs in those actions do not purport to represent a 15 class of persons, and are not attempting to use those actions as vehicles to opt out 16 absent class members en-masse. Nor are they otherwise attempting to interfere with 17 this Court’s ability to shepherd through a nationwide class settlement. Rather, the 18 state court actions are simply individual actions against the same defendants 19 concerning the same subject matter as this action.4 “[A]n ‘injunction cannot issue to 20 restrain a state court action’ simply because it involves ‘the same subject matter at 21 issue before the federal court.’” Sandpiper Vill. Condo. Ass’n, 428 F.3d at 844 22 (citations omitted). 23 The Court is not convinced that the burdensome discovery in the Harris matter 24 warrants enjoining that proceeding. First, the fact that it may be more efficient or 25 26 27 28 4 The partial stay imposed by Judge Bryant-Deason further ameliorates any threat the state court actions could pose to this proceeding. Guthy-Renker contends that the stay is insufficient both in scope and length, but for the reasons discussed herein, the Court is not persuaded that it is necessary to pile a federal court injunction on top of the stay. 8 1 economical for Guthy-Renker not to spend money responding to discovery while the 2 class-wide settlement in this action is processed is not a sufficient reason to enjoin 3 state proceedings. Diet Drugs, 282 F.3d at 234 (injunction not warranted just because 4 “th[e] state actions risk some measure of inconvenience or duplicative litigation”). 5 Parallel state court actions are by their very nature inefficient and burdensome for the 6 defendant, in that the same issue against the same defendant is being litigated twice at 7 the same time. Nevertheless, the Anti-Injunction Act reflects a policy decision that 8 some degree of efficiency must be sacrificed to prevent unnecessary friction between 9 state and federal courts, and that only threats to the federal court’s jurisdiction 10 warrants disturbing the “fundamental constitutional independence of the States and 11 their courts.” Atl. Coast Line R. Co., 398 U.S. at 287. As a result, Guthy-Renker 12 cannot just point to efficiencies that would be gained by enjoining the state 13 proceedings, because a loss of efficiency generally does not threaten a federal court’s 14 jurisdiction.5 See Negrete, 523 F.3d at 1101; Diet Drugs, 282 F.3d at 234. Rather, to 15 show a threat to this Court’s jurisdiction, Guthy-Renker must show that the discovery 16 sought in the Harris action was intended to or has the effect of thwarting the federal 17 class action settlement entirely. Guthy-Renker has not done this. 18 Second, if, as Guthy-Renker contends, the majority of the discovery sought in 19 Harris is irrelevant and overbroad, it should first move the state court for a protective 20 order (or await the state court’s decision on the plaintiffs’ motions to compel) before 21 moving this Court to enjoin the state court action. From a purely practical standpoint, 22 this Court cannot evaluate the extent to which the state action truly threatens the 23 federal action unless and until the state court decides the extent to which Guthy- 24 25 26 27 28 5 In fact, it is not even clear that the requested injunction would ultimately save Guthy-Renker the expense of responding to the pending discovery, for the Harris plaintiffs have already proclaimed their intent to opt out of the settlement and continue pursuing their individual actions. (See Opp’n 3, ECF No. 163; Opp’n, ECF No. 160; Mot. 17.) While it is true that some of these plaintiffs might change their mind upon receiving notice of the settlement, it is nevertheless far from certain that the efficiencies Guthy-Renker envisions will be realized. 9 1 Renker must respond to the challenged discovery. Moreover, considerations of 2 comity and federalism dictate that this Court should refrain from intruding on the state 3 court’s domain before that court has had a chance to decide issues that could moot the 4 need for an injunction. Because the propriety of the Harris discovery is still pending 5 before the state court, this Motion is premature. 6 Finally, the Court fails to see how the settlement’s confidential opt-out 7 threshold warrants an injunction. Preventing the state court lawsuits from proceeding, 8 or enjoining other putative class members from filing additional individual lawsuits, 9 does not prevent these persons from opting out of the settlement in this action—or 10 even make their opting out less likely. In addition, as Guthy-Renker never filed any 11 paper work indicating what this confidential opt-out threshold actually is, the Court 12 has no way of judging whether the parallel state court actions could somehow present 13 an actual threat of reaching that number. V. 14 15 CONCLUSION For the reasons discussed above, the Court DENIES Guthy-Renker’s Motion. 16 17 IT IS SO ORDERED. 18 19 August 26, 2016 20 21 22 ____________________________________ OTIS D. WRIGHT, II UNITED STATES DISTRICT JUDGE 23 24 25 26 27 28 10
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