Simon Levay et al v. AARP, Inc. et al, No. 2:2017cv09041 - Document 93 (C.D. Cal. 2019)
Court Description: ORDER GRANTING DEFENDANTS MOTION TO DISMISS THE THIRD AMENDED COMPLAINT, 84 by Judge Dean D. Pregerson: The motion to dismiss is GRANTED. The Third Amended Complaint is dismissed with prejudice. ( MD JS-6. Case Terminated ) (shb)
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Simon Levay et al v. AARP, Inc. et al Doc. 93 O 1 2 3 4 5 6 7 JS-6 8 9 UNITED STATES DISTRICT COURT 10 CENTRAL DISTRICT OF CALIFORNIA 11 12 13 SIMON LEVAY, JUDITH WILLIS, and LIONEL BROWN, Individually and on Behalf of All Others Similarly Situated, 14 Plaintiffs, 15 v. 16 17 18 AARP, INC., AARP SERVICES, INC., and DOES 1 through 60, 19 Defendants. 20 21 ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) Case No. 17-09041 DDP (PLAx) ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS THE THIRD AMENDED COMPLAINT [Dkt. 84] 22 Presently before the court is Defendants’ Motion to Dismiss the Third Amended 23 24 Complaint. Having considered the parties’ submissions and heard oral argument, the 25 court adopts the following Order. 26 I. 27 28 BACKGROUND Plaintiffs Simon Levay, Judith Willis, and Lionel Brown (collectively, “Plaintiffs”) bring this putative class action challenging Defendants’ marketing and endorsement of Dockets.Justia.com 1 2 3 4 5 insurance policies. (See Third Amended Complaint (“TAC”), Dkt. 80, ¶ 11.) Defendants are AARP, Inc. (“AARP”) and AARP Services, Inc. (“ASI”), a wholly owned for-profit subsidiary of AARP (collectively, “Defendants”). (Id. ¶¶ 3, 4.) Plaintiffs are AARP members who allege to have “joined and paid to be AARP members” after being “induced . . . through unlawful, misleading and/or unfair 6 representations of products, services and endorsements by AARP and/or concealment of 7 AARP’s unlawful ‘for profit’ business activities.” (Id. ¶ 11.) Specifically, Plaintiffs allege 8 that they relied on “AARP’s misrepresentations that it protected seniors and that it put 9 their interests first ahead of ‘for profit’ business ventures, and about its endorsements of 10 insurance products.” (Id. ¶¶ 29, 30, 31.) Plaintiffs believed that “AARP would act as a 11 non-profit organization that would place the interests of seniors first, and that AARP 12 would fulfill this purpose by picking and only endorsing the best products and services 13 for seniors, consistent with a mission that put protecting senior members over AARP 14 receiving secret profits or kickbacks.” (Id. ¶¶ 29, 30, 31) 15 Plaintiffs claim that AARP’s endorsement of insurance policies is misleading 16 because it “induce[d] Plaintiffs and others to join AARP under the misrepresentation and 17 guise of advocating for the interests of seniors in terms of AARP’s services when, in fact, 18 AARP’s primary purposes and functions have become . . . to generate gross and 19 excessive profits for Defendant ASI and its for-profit business partners.” (Id. ¶ 49.) 20 Plaintiffs allege that AARP “targeted them with for-profit endorsements,” (id. ¶ 24), and 21 that AARP’s stamp of approval is only a “stamp indicating the winner of [a] bidding 22 war.” (Id. ¶ 20.) Plaintiffs allege that they “placed their trust in” the AARP name, while 23 AARP “sold their name to the highest-bidding insurance companies . . . .” (Id. ¶ 24.) 24 Plaintiffs “suffered a loss of money and/or property caused by their justifiable and 25 detrimental reliance on AARP’s misrepresentations,” specifically, Plaintiffs claim to have 26 lost their “payment of member fees to join and/or renew their memberships with AARP.” 27 (Id. ¶ 28.) Plaintiffs bring suit against Defendants alleging (1) violations of California’s 28 2 1 2 3 Unfair Competition Law (“UCL”), Cal. Bus. & Prof. Code § 17200 et seq., and (2) violations of California’s False Advertising Law (“FAL”), Cal. Bus. & Prof. Code § 17500 et seq. The court previously dismissed the First and Second Amended Complaints and 4 5 allowed leave to amend. 1 (Dkts. 58, 77.) In the Second Amended Complaint, the court 6 identified Plaintiffs’ theory of false and misleading advertisements as the following: 7 “AARP represented that it ‘endorsed’ the insurance policies, even though its 8 endorsement did not mean that those insurance policies were vetted as superior.” (Order 9 II, at 8.) The court reviewed the complaint for UCL statutory standing and concluded 10 that “AARP’s endorsement was a material fact and that reasonable consumers could 11 have been misled about the endorsement.” (Id.) In dismissing the Second Amended 12 Complaint, the court granted leave to amend only to (1) allege a viable theory of injury 13 that corresponded with the measure of damages sought, namely, the cost of the AARP 14 membership fees, and (2) to sufficiently plead fraud pursuant to Rule 9(b). (See Order II.) 15 Defendants now move to dismiss the TAC under Rule 12(b)(6) and Rule 9(b). 16 II. LEGAL STANDARD 17 a. Motion to Dismiss Under Rule 12(b)(6) 18 A complaint will survive a motion to dismiss when it contains “sufficient factual 19 matter, accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v. 20 Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). 21 When considering a Rule 12(b)(6) motion, a court must “accept as true all allegations of 22 material fact and must construe those facts in the light most favorable to the plaintiff.” 23 Resnick v. Hayes, 213 F.3d 443, 447 (9th Cir. 2000). Although a complaint need not include 24 25 26 27 28 Order Re: Defendants’ Motions to Dismiss (“Order I”), July 12, 2018, Dkt. 58, and Order Re: Defendants’ Motions to Dismiss Second Amended Complaint (“Order II”), Nov. 2, 2018, Dkt. 77. 3 1 1 2 3 4 5 “detailed factual allegations,” it must offer “more than an unadorned, the-defendantunlawfully-harmed-me accusation.” Iqbal, 556 U.S. at 678. Conclusory allegations or allegations that are no more than a statement of a legal conclusion “are not entitled to the assumption of truth.” Id. at 679. In other words, a pleading that merely offers “labels and conclusions,” a “formulaic recitation of the elements,” or “naked assertions” will not 6 be sufficient to state a claim upon which relief can be granted. Id. at 678 (citations and 7 internal quotation marks omitted). 8 b. Rule 9(b) 9 “In alleging fraud or mistake, a party must state with particularity the 10 circumstances constituting fraud or mistake.” Fed. R. Civ. P. 9(b). A complaint need not 11 mention the word “fraud” to be subject to Rule 9(b)’s heightened pleading requirement, 12 but it must contain allegations “that necessarily constitute fraud.” Vess v. Ciba-Geigy 13 Corp. USA, 317 F.3d 1097, 1103 (9th Cir. 2003). When a plaintiff alleges a “unified course 14 of fraudulent conduct and rel[ies] entirely on that course of conduct as the basis of a 15 claim,” a claim sounds in fraud and is subject to Rule 9(b). Id. at 1105. “Rule 9(b) demands that the circumstances constituting the alleged fraud ‘be 16 17 “specific enough to give defendants notice of the particular misconduct . . . so they can 18 defend against the charge and not just deny that they have done anything wrong.”’” 19 Kearns v. Ford Motor Co., 567 F.3d 1120, 1124 (9th Cir. 2009) (citations omitted). Claims 20 sounding in fraud must be “accompanied by the ‘who, what, when, where, and how’ of 21 the misconduct charged.” Id. (quoting Vess, 317 F.3d at 1106.) 22 /// 23 /// 24 /// 25 /// 26 /// 27 28 4 1 III. a. Motion to Dismiss Under Rule 12(b)(6) 2 Plaintiffs allege that Defendants’ advertising was false, misleading, and deceptive 3 4 5 DISCUSSION in violation of the FAL and the UCL. 2 (TAC ¶¶ 44, 59.) Defendants argue that (1) Plaintiffs have failed to identify any misrepresentation by AARP about membership 6 benefits, (2) assuming that AARP’s endorsement can be viewed as an implied promise of 7 superiority, Plaintiffs have failed to identify any actionable misrepresentation, and (3) 8 Plaintiffs have failed to identify how any alleged representation was false. (Motion to 9 Dismiss (“MTD”) at 10-17.) The UCL prohibits “any unlawful, unfair, or fraudulent business act or practice.” 10 11 Cal. Bus. & Prof. Code § 17200. “The false advertising law prohibits any ‘unfair, 12 deceptive, untrue, or misleading advertising.’” Williams v. Gerber Prod. Co., 552 F.3d 934, 13 938 (9th Cir. 2008) (citing Cal. Bus. & Prof. Code § 17500). The FAL prohibits advertising 14 that is false and advertising that “although true, is either actually misleading or which 15 has a capacity, likelihood or tendency to deceive or confuse the public.” Kasky v. Nike, 16 Inc., 27 Cal. 4th 939, 951 (2002), as modified (May 22, 2002) (citation omitted). “[A]ny 17 violation of the false advertising law . . . necessarily violates the [UCL].” Id. at 950. To state a cause of action under the FAL and UCL, Plaintiffs must plausibly allege 18 19 that “reasonable consumers” are likely to be deceived by the advertising. Ebner v. Fresh, 20 Inc., 838 F.3d 958, 965 (9th Cir. 2016). “This requires more than a mere possibility that 21 [the representation] ‘might conceivably be misunderstood by some few consumers 22 viewing it in an unreasonable manner.’” Id. (quoting Lavie v. Proctor & Gamble Co., 105 23 Cal. App. 4th 496, 508 (2003)). The “reasonable consumer standard requires a probability 24 25 26 27 28 Plaintiffs also allege violation of California’s Insurance Code § 785. (TAC ¶ 44.) The court dismissed the § 785 claim with prejudice in its previous orders. See Order I, Dkt. 58, 7-8 and Order II, Dkt. 77, 6-7. The court finds no reason to revive this claim. 5 2 1 2 3 that a significant portion of the general consuming public or of targeted consumers, acting reasonably in the circumstances, could be misled.” Id. (internal quotation and citation omitted). 1. The Alleged Representations 4 Defendants argue that the TAC does not allege any “statements by AARP, only 5 6 advertisements run by United Healthcare and New York Life . . . .” (MTD at 11.) The 7 court disagrees. The court discerns two alleged AARP representations. 3 The 8 representations are, (1) solicitations and ads from AARP in which it represents its status 9 and role as an advocate for seniors, and (2) the AARP endorsements on United and New 10 York Life insurance advertisements. Specifically, Plaintiffs allege that (1) they “saw 11 solicitations and ads from AARP . . . in which AARP represented its non-profit status and 12 advocacy role for seniors and that it provide[d] endorsements for products and services 13 as a benefit of membership,” and (2) they “saw the [endorsements] from AARP which 14 appear like the ones set forth in Paragraph 27.” (TAC ¶¶ 29, 30, 31.) 15 As to the first alleged AARP representation, the Complaint provides the general 16 description: “solicitations and ads from AARP . . . in which AARP represented its non- 17 profit status and advocacy role . . . .” (Id. ¶¶ 29, 30, 31.) Whether this alleged 18 representation is pled with particularity will be discussed in section (b) of this order. As 19 to the second misrepresentation, paragraph 27 provides samples of AARP’s 20 endorsements on United Healthcare’s and New York Life’s webpages, television 21 commercials, and in publications. (Id. ¶ 27.) One such sample of the AARP endorsement 22 provides: “AARP endorses the AARP Medicare Supplement Insurance Plans . . . 23 UnitedHealthcare Insurance Company pays royalty fees to AARP for the use of its 24 intellectual property. These fees are used for the general purposes of AARP. AARP and 25 26 The thirty-page complaint contains numerous allegations, many of which lack clarity and specificity. 6 3 27 28 1 2 3 4 5 its affiliates are not insurers.” (Id. ¶ 27(a).) Another sample provides: “AARP Life Insurance Program from New York Life . . . Exclusively for AARP members ages 50-74.” (Id. ¶ 27(b).) Although the endorsements are found on advertisements run by United Healthcare and New York Life, AARP does not dispute that it permits its name to appear on the advertisements and that AARP in fact endorses these products. Therefore, the 6 endorsements constitute AARP’s representations even though they appear on United 7 and New York Life advertisements. The allegations are that both representations 8 discussed above—AARP’s representation about its advocacy status and AARP’s 9 endorsements, taken together, misled Plaintiffs into believing that the “endorsements 10 [were] AARP’s actual stamp of approval . . . when in fact it is only a stamp indicating the 11 winner of the bidding war.” (Id. ¶ 20.) 12 The court finds that Plaintiffs have identified representations made by AARP. 13 Whether these representations are actionable and are pled with particularity as required 14 under Rule 9(b) are issues discussed below. 15 16 2. Actionable Misrepresentations Plaintiffs allege that they “believed that AARP endorsed products and services, 17 such as insurance products, were products and services that were the best for seniors.” 18 (TAC ¶¶ 29, 30, 31 (emphasis added).) Plaintiffs also allege that “when persons join 19 AARP for the representations of AARP endorsements and discounts, including the 20 advertised insurance services and products, they are actually looking at insurance 21 services and products offered, not be[cause] the insurance company [was] objectively 22 determined to be the ‘best’ insurer for seniors based on objective measures or standards, 23 but rather by the insurance company that paid the most money, profits and percentages 24 of premiums back to AARP.” (TAC ¶ 18.) Defendants argue that even if the 25 endorsements were implied representations of superiority, specifically, that the 26 endorsements represented that the products were “the best for seniors,” this is a 27 generalized representation that is insufficient to state a claim for relief. (MTD at 11-13.) 28 7 1 2 3 4 5 As a preliminary matter, the court notes that in the prior motions to dismiss, neither party argued or briefed whether the endorsements’ implied promise of superiority was actionable. Defendants raise this objection for the first time in the present motion; therefore, the court finds it appropriate to revisit its prior finding that Plaintiffs had sufficiently pled the theory that a reasonable consumer could have been 6 misled about the endorsement. (See Order II, at 8.) The Third Amended Complaint 7 alleges more specifically what Plaintiffs believed the implied promises in the 8 endorsements were. First, Plaintiffs believed that the endorsement represented what was 9 “best for seniors,” based on objective standards, and second, Plaintiffs believed that the 10 products were selected “irrespective of profits.” (TAC ¶¶ 29, 30, 31.) The court reviews 11 each of these alleged misrepresentations below. 12 a. Best for Seniors 13 General statements of product superiority are not actionable absent some 14 “misdescriptions of specific or absolute characteristics.” Cook, Perkiss & Liehe, Inc. v. N. 15 California Collection Serv. Inc., 911 F.2d 242, 246 (9th Cir. 1990) (quoting Stiffel Co. v. 16 Westood Lighting Group, 658 F. Supp. 1103, 1115 (D.N.J. 1987)). “Puffing is exaggerated 17 advertising, blustering, and boasting upon which no reasonable buyer would rely.” 18 Southland Sod Farms v. Stover Seed Co., 108 F.3d 1134, 1145 (9th Cir. 1997) (citations 19 omitted). “A statement is considered puffery if the claim is extremely unlikely to induce 20 consumer reliance[,] . . . the difference between a statement of fact and mere puffery rests 21 on the specificity or generality of the claim.” Newcal Industries, Inc. v. Ikon Office Solution, 22 513 F.3d 1038, 1053 (9th Cir. 2008). “While product superiority claims that are vague or 23 highly subjective often amount to nonactionable puffery, ‘misdescriptions of specific or 24 absolute characteristics of a product are actionable.’” Southland Sod Farms, 108 F.3d at 25 1145 (quoting Cook, Prekiss & Liehe, 911 F.2d at 246)). 26 27 28 Plaintiffs’ primary allegation is essentially that the AARP endorsement represented a promise that the endorsed products were the “best for seniors.” (See TAC 8 1 2 3 4 5 ¶¶ 18, 20, 21, 29, 30, 31, 46, 49.) Plaintiffs have not, however, identified what qualities of an insurance product they believed would qualify that product as the “best,” nor have they alleged how the products were not in fact the “best.” “Best” is a problematic word because it is vague, highly subjective, and lacks the specific or absolute characteristics required to state an actionable misrepresentation. An individual’s insurance needs vary 6 with age, health, and many other factors. An insurance product that is the “best for 7 seniors” could be the cheapest, the most coverage, the best customer service rating, the 8 most plans, the most financial stability behind the company, or have the best response 9 time. Indeed, AARP’s endorsements appear to recognize the impossibility of 10 recommending a “best” policy for every individual. (See TAC ¶ 27(b) (“AARP 11 encourages you to consider your needs when selecting products and does not make 12 specific product recommendations for individuals.”).) 13 Plaintiffs urge this court to accept their theory that “the best for seniors,” is an 14 actionable misrepresentation by contending that AARP’s representation is similar to the 15 representation in Hanberry v. Hearst Corp., 276 Cal. App. 2d 680 (1969). In Hanberry, the 16 California Court of Appeal held that the Hearst Corporation could be liable for negligent 17 representation to a consumer who purchased shoes with the Hearst Good Housekeeping 18 seal of approval and who was subsequently injured while wearing the defective shoes. 19 Hanberry, 276 Cal. App. 2d at 684. The court held that “[i]mplicit in the seal and 20 certification is the representation [that] respondent has taken reasonable steps to make an 21 independent examination of the product endorsed, with some degree of expertise, and 22 found it satisfactory.” Id. Notably, the Good Housekeeping magazine included the 23 following statements: “‘This is Good Housekeeping’s Consumers’ Guaranty’ and ‘We 24 satisfy ourselves that products advertised in Good Housekeeping are good ones and that 25 the advertising claims made for them in our magazine are truthful.’” Id. at 682. “The seal 26 itself contained the promise, ‘If the product or performance is defective, Good 27 Housekeeping guarantees replacement or refund to consumer.’” Id. When plaintiff there 28 9 1 2 3 4 5 was injured by the alleged defective shoe, the court permitted suit against the Hearst Corporation based on the representations on the Good Housekeeping seal of approval. Id. at 688. The alleged representation here is distinguishable from the representation in Hanberry. In Hanberry, the magazine and the seal at issue contained express promises of 6 guaranty. The express promises of guaranty and satisfaction made a consumer’s reliance 7 on Good Housekeeping’s independent examination reasonable. Here, there are no 8 express representations about the meaning of the AARP endorsements. And in the 9 context of this case, where Plaintiffs have not alleged what they plausibly believed “best” 10 meant, the implied promise of superiority is nonactionable puffery. And, as discussed 11 below, even if a promise of superiority is actionable in this context, Plaintiffs have not 12 identified any deficiencies, or in the language of Hanberry, any “defect” with the 13 insurance products at issue. 14 Plaintiffs also argue that “AARP Defendants stand in a more fiduciary-like 15 relationship to Plaintiffs” than the commercial, for-profit businesses did in cases 16 involving nonactionable misrepresentations. (Opp. at 12.) Plaintiffs assert that “[h]aving 17 assumed a relationship of trust to Plaintiffs and other consumers, AARP Defendants 18 should answer the complaint and provide discovery to permit the parties to determine 19 the factual degree and extent of AARP Defendants’ misleading statements and 20 concealment of facts and the impact of AARP’s for[-]profit manipulation of its stamp of 21 approval.” (Id. at 16.) Plaintiffs, however, do not cite to any authority supporting the 22 theory that AARP should be held to a “higher duty” than a for-profit corporation because 23 it is a non-profit. Furthermore, Plaintiffs have not pled a breach of fiduciary duty theory 24 in the Third Amended Complaint. To plead fiduciary duty, Plaintiffs must put forth 25 facts to show that AARP owes Plaintiffs a fiduciary duty imposed by law or undertaken 26 by agreement. See Oakland Raiders v. Nat’l Football League, 131 Cal. App. 4th 621, 631-32 27 28 10 1 2 3 4 5 (2005). Therefore, Plaintiffs have not sufficiently pled facts to establish that AARP owed Plaintiffs a fiduciary duty. The court concludes that the word “best” in the context of this case is vague. The court further notes that the Third Amended Complaint does not define what is meant by this term or what characteristics would make the insurance products “best for seniors.” 6 The alleged implied representation that endorsed products are “the best” is not an 7 actionable representation. Construing the facts in the light most favorable to Plaintiffs, 8 the court finds that the allegations do not state a claim for relief. 9 10 b. Selected Irrespective of Profits Plaintiffs also allege that they saw “solicitations and ads from AARP . . . in which 11 AARP represented its non-profit status and advocacy role for seniors and that it 12 provide[d] endorsements for products and services as a benefit of membership, which 13 [Plaintiffs] believed meant that AARP would [ ] make endorsements and stamps of 14 approval based on what was best for seniors, rather than based on profits.” (TAC ¶¶ 29, 30, 15 31 (emphasis added).) Plaintiffs allege that Defendants made these false representations 16 “while concealing AARP’s for-profit business activities and sales practices.” (Id. ¶ 22.) In 17 other words, Plaintiffs were duped into paying membership dues believing they were 18 accessing products selected irrespective of profits, not based on a “bidding war.” (Id. ¶¶ 19 20, 24, 49, 60.) 20 A representation that a product is selected irrespective of profits could be an 21 actionable misrepresentation because it is sufficiently specific and objectively 22 determinable such that a consumer could reasonably rely on such representation. See 23 Cook, Perkiss & Liehe, Inc., 911 F.2d at 246 (quoting Stiffel Co., 658 F. Supp. at 1115) 24 (“misdescriptions of specific or absolute characteristics of a product are actionable.”). 25 Evidence could be developed one way or another to determine whether the selection 26 process considered profits. Therefore, a representation that profits played no role in the 27 selection of a product could be actionable. However, the complaint is devoid of any such 28 11 1 2 3 4 5 representation. Rather, it appears that Plaintiffs believed products were endorsed “irrespective of profits” because, Plaintiffs allege, AARP “conceal[ed] AARP’s for-profit business activities and sales practices.” (TAC ¶¶ 11, 22, 23, 28.) However, this allegation is belied by the complaint itself. Sample advertisements in paragraph 27 provide: United Healthcare and New York Life Insurance Companies “pay[] royalty fees to AARP for the 6 use of its intellectual property.” (TAC ¶ 27.) Therefore, it would not be reasonable for a 7 consumer to believe that AARP was not engaged in revenue generating activities. 8 Because there is no allegation in the complaint that AARP made a representation that 9 revenue concerns played no role in its endorsement decisions, the complaint is defective. 10 The court also concludes that Plaintiffs’ theory of there being an actionable wrong 11 because AARP made decisions which may have been influenced, in part, by receiving 12 “profits” to be impermissibly vague as pled. Assuming that AARP received some 13 financial gain from licensing its endorsement, the court fails to see, absent “something 14 more” that such arrangement constitutes an actionable wrong. It would be foolish 15 indeed for an enterprise, regardless of its status as a non or for-profit entity, to be blind, 16 all other factors being substantially equal, to revenue generating opportunities. In short, 17 there is nothing nefarious about AARP making endorsement decisions, or any other 18 business decisions, based on generating maximum revenue that will be used to support 19 its activities, absent some allegation that such decision resulted in articulable harm to its 20 members. Alleging, in effect, that plaintiffs must have been injured because AARP 21 received revenue is not sufficient. 22 To the extent that Plaintiffs also allege that AARP misrepresented its non-profit 23 status and advocacy role, (see, e.g., TAC ¶¶ 11, 14, 23, 24), Plaintiffs fail to connect this 24 alleged fraudulent conduct with any injury they may have suffered. The only viable 25 injury Plaintiffs allege is their payment of membership fees. Plaintiffs do not appear to 26 allege that they joined AARP based on its non-profit status, but rather, because they 27 believed AARP’s endorsements represented “the best [products] for seniors.” (Id. ¶¶ 29, 28 12 1 2 3 4 5 6 30, 31.) In any event, as noted above receiving revenue is not necessarily inconsistent with being an advocate for seniors and endorsing products for seniors. The court concludes that the alleged representation that AARP’s endorsements were selected irrespective of profits does not adequately state a claim for relief. 3. Allegations of Falsity or Deception Assuming, arguendo, that the alleged representation that an insurance product is 7 “the best” is actionable, Plaintiffs have not alleged how the endorsed products were 8 materially deficient or otherwise not “the best.” The only allegation that can be read as 9 indicating the endorsed products were deficient states: “[Plaintiff] Levay was offered the 10 same or similar insurance policy from New York Life (outside of AARP) at half the 11 price.” (TAC ¶ 8.) However, Plaintiffs did not allege how the two products may have 12 compared. The court should not be required to speculate what “same or similar” means. 13 Further, Plaintiff Willis does not allege to have purchased or otherwise inquired into any 14 of the endorsed products, and Plaintiff Brown, who purchased the endorsed 15 UnitedHealth Medigap insurance, alleges no inadequacies with the product. (TAC ¶¶ 16 30, 31.) The Complaint contains no allegations that the products Plaintiffs received, or 17 that the membership benefits they paid for, were not “the best.” In contrast to the 18 plaintiff in Hanberry who alleged the shoes were defective because she slipped while 19 wearing them, Plaintiffs here have not alleged that the endorsed products are in some 20 way materially not “the best” insurance products based on objective characteristics. 21 b. Rule 9(b) 22 Specific allegations are necessary to describe the circumstances of the alleged 23 fraudulent conduct. See Kearns, 567 F.3d at 112. General allegations of the circumstances 24 surrounding fraud, and how it is fraudulent, are insufficient. Id. at 1127. “Rule 9(b) 25 serves three purposes: (1) to provide defendants with adequate notice to allow them to 26 defend the charge and deter plaintiffs from the filing of complaints ‘as a pretext for the 27 discovery of unknown wrongs’; (2) to protect those whose reputation would be harmed 28 13 1 2 3 4 5 as a result of being subject to fraud charges; and (3) to ‘prohibit [ ] plaintiff[s] from unilaterally imposing upon the court, the parties and society enormous social and economic costs absent some factual basis.’” Id. at 1125 (quoting In re Stac Elecs. Sec. Litig., 89 F.3d 1399, 1405 (9th Cir. 1996)). In dismissing the first and second amended complaints, the court found that the 6 allegations set forth a unified course of fraudulent conduct, and allowed leave to plead 7 the “who, what, when, where, and how” of the alleged fraud. (Order I, at 12; Order II, at 8 11.) Indeed, Plaintiffs do not dispute that they must satisfy the heightened pleading 9 requirements of Rule 9(b). Plaintiffs instead argue that “AARP Defendants have run a 10 pervasive advertising and marketing campaign designed specifically to induce and trick 11 senior consumers,” and therefore, assert that they should not be required to provide an 12 explanation for every advertisement. (Opp. at 19.) Plaintiffs urge this court to not 13 require more specificity than currently presented in the Third Amended Complaint 14 because this case is like Comm. On Children’s Television, Inc. v. Gen. Foods Corp, 35 Cal. 3d 15 197 (1983) superseded on other grounds as stated in Branick v. Downey Savings & Loan 16 Ass’n, 35 Cal. 4th 235 (2006). (Opp. at 18.) The court finds important deficiencies in the 17 Complaint here that distinguish Comm. On Children’s Television from this case. 18 In Comm. On Children’s Television, the California Supreme Court observed that 19 “certain exceptions [ ] mitigate the rigor of the rule requiring specific pleading of fraud.” 20 Id. at 217. There, the plaintiff alleged that defendants, General Foods Corporation and 21 Safeway Stores, engaged in “fraudulent, misleading, and deceptive advertising in the 22 marketing of sugared cereals.” Id. at 204. The complaint alleged “thousands of 23 misrepresentations in various media over a span of four years – representations which, 24 while similar in substance, differ in time, place, and detail of language and presentation.” 25 Id. at 216. The court held that “[a] complaint which set out each advertisement verbatim, 26 and specified the time, place, and medium, might seem to represent perfect compliance 27 with the specificity requirement, but as a practical matter, it would provide less effective 28 14 1 2 3 4 5 notice and be less useful . . . .” Id. The court also stated that “[a] long-term advertising campaign may seek to persuade by cumulative impact, not by a particular representation on a particular date.” Id. at 219. Here, Plaintiffs allege that they purchased membership based on AARP’s misrepresentations, yet, Plaintiffs have not pled facts setting forth when each named 6 Plaintiff joined or renewed their AARP membership. Such basic information, at a 7 minimum, would provide a timeframe for when each Plaintiff allegedly viewed the 8 advertisements and relied on them to join or renew their AARP membership. In Comm. 9 On Children’s Television, Plaintiffs pointed out a campaign covering four years, while 10 here, there is no indication of how long Plaintiffs may have viewed the alleged 11 misrepresentations. See id. at 217. 12 Plaintiffs have also not articulated what advertisements they each saw and 13 personally relied on. Such specificity was also required in Comm. On Children’s Television, 14 “[w]e believe, however, that the trial court could reasonably require plaintiffs to attach a 15 representative selection of advertisements, to state the misrepresentations made by those 16 advertisements, and to indicate the language or images upon which any implied 17 misrepresentations are based.” Id. at 219. While the Complaint includes sample 18 advertisements with AARP’s endorsement (TAC ¶ 27), Plaintiffs have not identified what 19 language or images they relied on. Also, Plaintiffs do not include any sample AARP 20 “solicitations and ads . . . in which AARP represented its non-profit status and advocacy 21 role . . . ” (TAC ¶¶ 29, 30, 31.) As the court interprets the complaint, Plaintiffs’ fraud 22 theory requires the existence of both representations, first, AARP’s representations of 23 itself as a non-profit whose mission is to protect seniors, and second, based on the first 24 representation, Plaintiffs believed the endorsements represented “the best for seniors” 25 and “irrespective of profits.” See supra Part a(i)(1). 26 27 28 As an example of the specificity required for a claim sounding in fraud under the UCL and FAL, the court looks to Kearns v. Ford Motor Co., 567 F.3d 1120 (9th Cir. 2009). 15 1 2 3 4 5 There, the plaintiff alleged that Ford Motor Company marketed Certified Pre-Owned Vehicles by representing that they were more rigorously inspected and therefore safer. Id. Plaintiff alleged that he was “exposed” to the representations through various marketing channels, including television, at the dealership, and through sales personnel. Id. at 1125-26. The Ninth Circuit held that the plaintiff failed to specify “which sales 6 material he relied upon in making his decision[,] . . . who made the statement or when 7 [the] statement was made . . . [thus] fail[ing] to articulate the who, what, when, where, 8 and how of the misconduct alleged.” Id. at 1126. 9 Plaintiffs here have similarly failed to articulate the who, what, when, where, and 10 how of the alleged misconduct. As discussed above, Plaintiffs do not provide any 11 representative ads containing the first alleged misrepresentation. Plaintiffs also do not 12 specifically allege which of the advertisements in Paragraph 27, advertisements showing 13 the AARP endorsement, they viewed and relied on, or through which channels they 14 viewed the endorsements. Plaintiffs only generally allege that “[Plaintiffs] saw the 15 solicitations and ads from AARP which appear like the ones set forth in Paragraph 27.” 16 (TAC ¶ 27.) The court does not require that Plaintiffs allege the specific day or time they 17 viewed the advertisements. See Comm. On Children’s Television, 35 Cal. 3d at 216. 18 Plaintiffs are, however, required to provide allegations of when they joined, what material 19 they found important in their decision to join AARP, what that material represented to 20 support their alleged beliefs of the endorsements, and how that representation was false. 21 See Kearns, 567 F.3d at 1126. The court finds that Plaintiffs have not met the particularity 22 requirements of Rule 9(b). 23 c. Amendment 24 Plaintiffs have had ample opportunity to properly plead their claims and have 25 failed to do so. The court has twice dismissed with leave to amend and has instructed 26 Plaintiffs to plead with particularity as required under Rule 9(b). A court’s discretion to 27 deny leave to amend “is ‘particularly’ broad where the plaintiff has previously 28 16 1 2 3 4 5 amended.” Salameh v. Tarsadia Hotel, 726 F.3d 1124, 1133 (9th Cir. 2013). Therefore, the court denies further leave to amend. IV. CONCLUSION The motion to dismiss is GRANTED. The Third Amended Complaint is dismissed with prejudice. 6 IT IS SO ORDERED. 7 Dated: May 14, 2019 8 ___________________________________ 9 DEAN D. PREGERSON 10 UNITED STATES DISTRICT JUDGE 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 17
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