Howard v. DJI Technology, Inc., No. 2:2016cv02292 - Document 23 (E.D. Cal. 2017)
Court Description: ORDER granting in part and denying in part 17 Motion to Dismiss signed by District Judge Leslie E. Kobayashi on 9/20/17. (Kaminski, H)
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Howard v. DJI Technology, Inc. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Doc. 23 IN THE UNITED STATES DISTRICT COURT EASTERN DISTRICT OF CALIFORNIA TYSON HOWARD, individually, and on behalf of all others similarly situated, ) ) ) ) Plaintiff, ) ) vs. ) ) DJI TECHNOLOGY, INC., aka SZ ) DJI TECHNOLOGY CO., LTD., ) ) Defendant. ) _____________________________ ) 2:16-CV-02292 LEK ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION TO DISMISS THE FIRST AMENDED COMPLAINT On January 24, 2017, Defendant DJI Technology, Inc. 22 (“Defendant”) filed its Motion to Dismiss the First Amended 23 Complaint (“Motion”).1 24 (“Plaintiff”) filed his memorandum in opposition on February 14, 25 2017, and Defendant filed its reply on February 20, 2017. 26 nos. 19, 20.] 27 disposition without a hearing pursuant to L.R. 230(g) of the 28 Local Rules of the United States District Court for the Eastern 29 District of California (“Local Rules”). 30 31 32 33 34 35 36 37 38 [Dkt. no. 17.] Plaintiff Tyson Howard [Dkt. The Court finds this matter suitable for Defendant’s Motion is 1 Plaintiff identifies the defendant as “DJI Technology, Inc., aka SZ DJI Technology Co., Ltd.,” and describes it as “a California corporation.” [Amended Complaint at ¶¶ 1-2.] Defendant states that SZ DJI Technology Co., Ltd. “is a separate entity, and it is not a business name of DJI Technology, Inc.” [Mem. in Supp. of Motion at 2 n.2.] Because DJI Technology, Inc. “is the American branch of . . . SZ DJI Technology Co., Ltd.,” SZ DJI Technology Co., Ltd. has not appeared in this case. [Id. at 2 & n.2.] Dockets.Justia.com 1 hereby granted in part and denied in part for the reasons set 2 forth below. BACKGROUND 3 4 Plaintiff filed his original Class Action Complaint 5 (“Complaint”) on September 26, 2016. [Dkt. no. 1.] 6 November 22, 2016, Defendant moved to dismiss the Complaint 7 (“First Motion to Dismiss”), and Plaintiff filed his First 8 Amended Class Action Complaint (“Amended Complaint”) on 9 December 13, 2016. [Dkt. nos. 9, 11.] On In light of the filing of 10 the Amended Complaint, this Court denied the First Motion to 11 Dismiss as moot. 12 [Dkt. no. 13.] Because the issue of class certification is not 13 currently before this Court, it will only consider Plaintiff’s 14 individual allegations for purposes of the instant Motion. 15 According to the Amended Complaint, Defendant is a California 16 corporation that maintains, sells, and distributes drones and 17 video recording devices. 18 “conducts a large share of its business within California” and 19 “Plaintiff alleges, on information and belief, that Defendant’s 20 marketing campaigns, as pertains to this matter, were created by 21 Defendant at its principle place of business in California, and 22 were disseminated from California.” 23 24 [Amended Complaint at ¶ 2.] It [Id. at ¶¶ 11-12.] Around September 2015, Plaintiff purchased a DJI Phantom III Standard drone from Defendant’s website for 2 1 approximately $800. Later that month, he purchased a DJI 2 Phantom III Pro drone from Defendant’s website for approximately 3 $1300.2 4 “Defendant advertised through written representations that 5 Plaintiff would receive [the Drones] with high definition 6 [(“HD”)] recording capabilities.” 7 Plaintiff, Defendant’s website for the DJI Phantom III Standard 8 drone “prominently advertises the ability of the camera on the 9 drone to capture ‘2.7K HD Video,’” and its website for the DJI [Id. at ¶¶ 16-19, 21-22.] According to Plaintiff, [Id. at ¶ 20.] According to 10 Phantom III Pro drone “prominently advertises the ability of the 11 camera on the drone to capture ‘4K HD Video.’” 12 22.] 13 that the Drones “would meet his needs and expectations as to the 14 quality of the video recordings,” and he purchased the Drones 15 based on Defendant’s representations. [Id. at ¶¶ 21- Based on Defendant’s representations, Plaintiff believed 16 [Id. at ¶¶ 23-24.] After he purchased the Drones, Plaintiff learned that 17 they were not capable of recording at the definition level 18 advertised, and they “recorded video at inferior qualities 19 significantly below 2.7K and 4K.” 20 to Plaintiff, the prices of the Drones were higher than they 21 would have been without the advertised recording capabilities, as 22 evidenced by the fact that the DJI III Pro – which advertised “a 23 24 25 2 [Id. at ¶¶ 25-26.] According This Court will refer to the DJI Phantom III Standard drone and the DJI Phantom III Pro drone that Plaintiff purchased collectively as “the Drones.” 3 1 ‘significantly improved’ 4K camera” – was more expensive than the 2 DJI III Standard. 3 Defendant’s “sales tactics rely on falsities and have a tendency 4 to mislead and deceive a reasonable consumer.” 5 Plaintiff alleges that Defendant’s false representations about 6 the Drones’ HD recording features “were part of a common scheme 7 to mislead [Plaintiff] and incentivize [him] to purchase [the 8 Drones] in spite of the lack of the promised” HD recording 9 capabilities. [Id. at ¶¶ 33-34.] [Id. at ¶¶ 29-30.] Plaintiff alleges that [Id. at ¶ 27.] Plaintiff would not have 10 purchased the Drones if he knew that Defendant’s representations 11 about the HD recording capabilities were false and if he had 12 known what the Drones’ actual recording capabilities were. 13 at ¶¶ 31-32.] 14 [Id. The Amended Complaint alleges the following claims: 15 violation of the California False Advertising Law (“FAL”), Cal. 16 Bus. & Prof. Code § 17500, et seq. (“Count I”); [id. at ¶¶ 52- 17 62;] and violation of the Unfair Competition Law (“UCL”), Cal. 18 Bus. & Prof. Code § 17200, et seq. (“Count II”), [id. at ¶¶ 63- 19 81]. 20 engage in corrective advertising”; [id. at ¶ 83.d;] actual, 21 punitive, and statutory enhanced damages; restitution of sale 22 prices paid; reasonable attorneys’ fees and costs; pre- and post- 23 judgment interest; and any other appropriate relief. 24 // Plaintiff prays for: an order requiring Defendant “to 4 1 In the instant Motion, Defendant seeks dismissal of the 2 Amended Complaint, with prejudice, pursuant to Fed. R. Civ. P. 3 9(b) and 12(b)(6). DISCUSSION 4 5 This district court has recognized that the Fed. R. 6 Civ. P. 9(b) heightened pleading standard applies to claims 7 brought under Cal. Bus. & Prof. Code §§ 17200 and 17500. 8 e.g., Handy v. LogMeIn, Inc., No. 1:14–cv–01355–JLT, 2015 WL 9 4508669, at *5 (E.D. Cal. July 24, 2015) (some citations omitted) See, 10 (citing Kearns v. Ford Motor Co., 567 F.3d 1120, 1125 (9th Cir. 11 2009) (holding “Rule 9(b)’s particularity requirement applies” to 12 claims raised under Cal. Bus. & Prof. Code § 17200); VP Racing 13 Fuels, Inc. v. General Petroleum Corp., 673 F. Supp. 2d 1073, 14 1085-86 (E.D. Cal. 2009) (where the plaintiff alleged the 15 defendant knowingly made misrepresentations to the public and 16 “engaged in a fraudulent course of conduct,” the plaintiff was 17 required to meet the heightened requirements of Rule 9(b) to 18 state a claim under Cal. Bus. & Prof Code § 17500)).3 19 20 21 22 23 24 25 26 27 28 Rule 9(b) requires that, “[i]n alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake.” Fed. R. Civ. P. 9(b). “‘Fraud can be averred by specifically alleging fraud, or by alleging facts that necessarily constitute fraud (even if the word “fraud” is not used).’” Kearns v. Ford Motor Co., 567 F.3d 1120, 1124 (9th Cir. 2009) (quoting 3 This Court will refer to the July 24, 2015 order as “Handy II.” 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 Agha-Khan v. Bank of Am., No. 1:17-cv-00011-DAD, 2017 WL 2833399, 24 at *5 (E.D. Cal. June 30, 2017) (alteration in Agha-Khan). 25 Further, 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1105 (9th Cir. 2003)). “When an entire complaint, or an entire claim within a complaint, is grounded in fraud and its allegations fail to satisfy the heightened pleading requirements of Rule 9(b), a district court may dismiss the complaint or claim.” Vess, 317 F.3d at 1107 (9th Cir. 2003) (citing Bly-Magee v. California, 236 F.3d 1014, 1019 (9th Cir. 2001)). Under Rule 9(b), the circumstances constituting the alleged fraud must be specific enough to give each defendant notice of its particular misconduct so that the defendant can defend against the charge instead of merely denying that it did anything wrong. Kearns, 567 F.3d at 1124 (citing Bly-Magee, 236 F.3d at 1019). To satisfy the particularity standard of Rule 9(b), the plaintiff must set forth more than the neutral facts necessary to identify the transaction at issue. Id. (citing In re GlenFed, Inc. Sec. Litig., 42 F.3d 1541, 1548 (9th Cir. 1994), superseded by statute on other grounds). The heightened pleading standard of Rule 9(b) requires that “[a] complaint would need to state the time, place, and specific content of the false representations as well as the identities of the parties to the misrepresentation.” Edwards v. Marin Park, Inc., 356 F.3d 1058, 1066 (9th Cir. 2004); see also Kearns, 567 F.3d at 1126 (the plaintiff must articulate the “who, what, when, where, and how” of the fraud alleged[]). Only factual allegations, rather than mere conclusions satisfy this pleading burden. Moore v. Kayport Package Express, Inc., 885 F.2d 531, 540 (9th Cir. 1989). If the factual allegations do not meet the heightened pleading standard, the “averments . . . should be disregarded, or stripped from the claim for failure to satisfy Rule 9(b).” Kearns, 567 F.3d at 1124 (quotations omitted). Handy II, 2015 WL 4508669, at *5 (some alterations in Handy II). 6 1 2 3 4 5 6 7 8 9 10 11 Many courts in California have applied a relatively straightforward test for the application of Rule 9(b) to label-based fraud claims. The “who” are the defendants; the “what” are their allegedly misleading claims; the “when” is the . . . period[] during which those claims were made; the “where” is the offending label; and the “how” is the plaintiff’s explanation why the defendant’s claims are misleading. Handy v. LogMeIn, Inc., No. 1:14–cv–01355–JLT, 2015 WL 1729681, 12 at *4 (E.D. Cal. Apr. 15, 2015) (citation and quotation marks 13 omitted).4 14 I. Count I 15 Count I alleges that Defendant made misrepresentations 16 about the Drones’ recording capabilities. 17 based on Defendant’s omissions, but Plaintiff does not clearly 18 identify what information was omitted. 19 ¶¶ 55-56.] 20 Defendant omitted what the Drones’ actual recording capabilities 21 were. 22 advertised, and represented the [Drones] as lacking high 23 definition recording, Plaintiff would not have purchased the 24 product.”). [Amended Complaint at Read as a whole, the Amended Complaint alleges that See, e.g., id. at ¶ 32 (“Had Defendant properly marketed, 25 26 27 28 29 30 31 32 The claim is also California’s False Advertising Law prohibits any person or entity from making an untrue and misleading statement in advertising. Cal. Bus. & Prof. Code § 17500. It is unlawful for any company to make any statement concerning products offered, which is known or should be known, to be 4 The Court will refer to the April 15, 2015 order as “Handy I.” 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 untrue or misleading. Cal. Bus. & Prof. Code § 17500. A false advertising claim under this section may be brought “where the advertising complained of is not actually false, but thought likely to mislead or deceive, or is in fact false.” Day v. AT&T Corp., 63 Cal. App. 4th 325, 332, 74 Cal. Rptr. 2d 55 (1998). Thus, the FAL proscribes “not only those advertisements which have deceived or misled because they are untrue, but also those which may be accurate on some level, but will nonetheless tend to mislead or deceive.” Id. (emphasis omitted). In addition, a plaintiff may state a claim under the FAL for fraudulent omissions by a defendant. See Ehrlich v. BMW of North Am., 801 F. Supp. 2d 908, 916 (C.D. Cal. 2010). Handy II, 2015 WL 4508669, at *5-6. 47 // To state a cognizable claim for a fraudulent omission, a plaintiff must allege the defendant’s omission was “contrary to a representation actually made by the defendant, or an omission of a fact the defendant was obligated to disclose.” Ehrlich, 801 F. Supp. 2d at 916 (quoting Falk v. Gen. Motors Corp., 496 F. Supp. 2d 1088, 1094–95 (N.D. Cal. 2007)); see also Daugherty v. Am. Honda Motor Co., Inc., 144 Cal. App. 4th 824, 835, 51 Cal. Rptr. 3d 118 (2006). Under California law, There are four circumstances in which nondisclosure or concealment may constitute actionable fraud: (1) when the defendant is in a fiduciary relationship with the plaintiff; (2) when the defendant had exclusive knowledge of material facts not known to the plaintiff; (3) when the defendant actively conceals a material fact from the plaintiff; and (4) when the defendant makes partial representations but also suppresses some material facts. LiMandri v. Judkins, 52 Cal. App. 4th 326, 336, 60 Cal. Rptr. 2d 539 (1997) (quoting Heliotis v. Schuman, 181 Cal. App. 3d 646, 651, 226 Cal. Rptr. 509 (1986)). . . . 8 1 2 A. Misrepresentation As to the alleged misrepresentation, the Amended 3 Complaint alleges: the who – Defendant DJI Technology, Inc.; the 4 what – the statements that the Drones were capable of HD 5 recording; the where – the claims were made on the pages of 6 Defendant’s website for the Drones; and the how – Plaintiff’s 7 explanation that the Defendant’s claims were misleading because 8 the Drones were not in fact capable of HD recording. 9 the Amended Complaint’s factual allegations about the when are However, 10 insufficient. Plaintiff does allege that he bought the Drones 11 around September 2015, [Amended Complaint at ¶¶ 16, 18,] and that 12 he was “drawn to” the Drones because of Defendant’s 13 representations, which he relied upon when he decided to purchase 14 the Drones [id. at ¶¶ 23-24]. 15 true for purposes of the Motion, are sufficient to support a 16 reasonable inference that Plaintiff viewed Defendant’s 17 representations about the Drones’ recording capabilities by 18 September 2015. 19 (“To survive a motion to dismiss, a complaint must contain 20 sufficient factual matter, accepted as true, to ‘state a claim to 21 relief that is plausible on its face.’” (quoting Bell Atlantic 22 Corp. v. Twombly, 550 U.S. 544, 570, 127 S. Ct. 1955 (2007))); 23 id. (“A claim has facial plausibility when the plaintiff pleads 24 factual content that allows the court to draw the reasonable These allegations, taken to be See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) 9 1 inference that the defendant is liable for the misconduct 2 alleged.” (citing Twombly, 550 at 556, 127 S. Ct. 1955)). 3 allegations, however, do not satisfy the heightened pleading 4 standard because they do not sufficiently allege when Plaintiff 5 was exposed to Defendant’s alleged misrepresentations. 6 portion of Count I based on the alleged misrepresentations about 7 the Drones’ recording capabilities must be dismissed. The The 8 Defendant also argues that Plaintiff’s allegations are 9 implausible because, after he allegedly learned that the DJI III 10 Standard did not have the advertised HD recording capability, he 11 purchased the DJI III Pro. 12 credibility issues, which are beyond the scope of the instant 13 motion to dismiss. 14 PC, 2015 WL 5159412, at *3 (E.D. Cal. Sept. 2, 2015) (citing 15 Albino v. Baca, 747 F.3d 1162, 1169 (9th Cir. 2014)), report and 16 recommendation adopted, 2015 WL 6438150 (Oct. 22, 2015). However, this argument raises See Ransom v. McCabe, No. 1:13cv01779 AWI DLB 17 Further, Defendant contends that Plaintiff has failed 18 to plead sufficient allegations regarding Defendant’s knowledge 19 that its representations about the Drones’ recording capabilities 20 were false/misleading. 21 their representations and omissions were untrue and misleading, 22 and deliberately made the aforementioned representations and 23 omissions in order to deceive reasonable Purchasers like 24 Plaintiff.” Plaintiff alleges “Defendant knew that [Amended Complaint at ¶ 56.] 10 Plaintiff’s general 1 allegation of Defendant’s knowledge and intent are sufficient. 2 See Comm. to Protect Our Agric. Water v. Occidental Oil & Gas 3 Corp., 235 F. Supp. 3d 1132, 1177 (E.D. Cal. 2017) (“While 4 plaintiffs must plead the factual circumstances of fraud itself 5 with particularity, they may allege specific intent to defraud 6 through general allegations.” (citing In re GlenFed, Inc. Sec. 7 Litig., 42 F.3d 1541, 1547 (9th Cir. 1994) (en banc))). 8 9 Defendant argues that the dismissal should be with prejudice because it is not possible for Plaintiff to cure the 10 defect in this portion of Count I by further amendment. See 11 Rodriguez v. Brown, 1:15-cv-01754-LJO-EPG-PC, 2016 WL 6494705, at 12 *3 (E.D. Cal. Nov. 1, 2016) (“Whether dismissal is with or 13 without prejudice will depend upon whether it is possible for 14 Plaintiff to cure any defects.” (citing Vess v. Ciba-Geigy Corp. 15 USA, 317 F.3d 1097, 1107–08 (9th Cir. 2003) (collecting cases))), 16 report and recommendation adopted, 2016 WL 7104173 (E.D. Cal. 17 Dec. 6, 2016). 18 raised the same issues raised in the instant Motion, and 19 Plaintiff failed to cure the defects when he filed the Amended 20 Complaint. 21 be possible for Plaintiff to cure any defects in a second amended 22 complaint. 23 this portion of Count I is the failure to allege when Plaintiff 24 viewed Defendant’s alleged misrepresentations, and it is possible Defendant argues that the First Motion to Dismiss Defendant contends that this shows that it would not This Court disagrees. 11 The only identified defect in 1 for Plaintiff to cure this defect by amendment. 2 the portion of Count I based on Defendant’s alleged 3 misrepresentations about the Drones’ recording capabilities is 4 without prejudice. 5 6 B. The dismissal of Omission Plaintiff also pleads a related allegation that 7 Defendant omitted information about what the Drones’ actual 8 recording capabilities were. 9 could support a claim based on fraudulent nondisclosure. Plaintiff’s allegations, if proven, See 10 LiMandri, 52 Cal. App. 4th at 336. 11 exclusive knowledge of the Drones’ recording capabilities that 12 was not known to Plaintiff when he purchased them. 13 also alleges that: Defendant deliberately concealed the Drones’ 14 actual recording capabilities, which were material features of 15 the products. 16 Defendant arguably made a partial representation, i.e. that the 17 Drones were capable of video recording, but suppressed the 18 material fact that the Drones were not capable of HD recording. 19 Defendant arguably had [Amended Complaint at ¶¶ 23, 56.] Plaintiff Similarly, The portion of Count I based on Defendant’s alleged 20 omission, however, fails to state a plausible claim for the same 21 reason as the portion based on Defendant’s alleged 22 misrepresentation. 23 Defendant’s materials which he alleges omitted information about 24 the Drones’ actual recording capabilities. Plaintiff has not alleged when he viewed 12 For the same reasons 1 set forth as to the portion of Count I based on Defendant’s 2 alleged misrepresentation, the portion of Count I based on 3 Defendant’s alleged omission is also dismissed without prejudice. 4 II. 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 Count II Count II alleges that Defendant’s actions, omissions, misrepresentations, and practices violate § 17200. Under § 17200, unfair competition includes any “unlawful, unfair, or fraudulent business act or practice.” Cal. Bus. & Prof. Code § 17200. Therefore, there are three prongs under which a claim may be established under § 17200. Daro v. Superior Court, 151 Cal. App. 4th 1079, 1093, 61 Cal. Rptr. 3d 716 (2007) (“Because section 17200 is written in the disjunctive, a business act or practice need only meet one of the three criteria-unlawful, unfair, or fraudulent-to be considered unfair competition”); Lozano v. AT&T Wireless Servs., 504 F.3d 718, 731 (9th Cir. 2007) (“[e]ach prong . . . is a separate and distinct theory of liability”). Actions prohibited by § 17200 include “any practices forbidden by law, be it civil or criminal, federal, state, or municipal, statutory, regulatory, or court-made.” Saunders v. Superior Court, 27 Cal. App. 4th 832, 838-39, 33 Cal. Rptr. 2d 438 (1994). Thus, the “unlawful” prong requires an underlying violation of law. Krantz v. BT Visual Images, 89 Cal. App. 4th 164, 178, 107 Cal. Rptr. 2d 209 (2001). An “unfair” practice under section 17200 is one “whose harm to the victim outweighs its benefits.” Saunders v. Superior Court, 27 Cal. App. 4th 832, 839, 33 Cal. Rptr. 2d 438 (1994). Finally, a “fraudulent” act or practice under § 17200 is “one which is likely to deceive the public,” and “may be based on misrepresentations . . . which are untrue, and also those which may be accurate on some level, but will nonetheless tend to mislead or deceive.” McKell v. Washington Mutual, Inc., 142 Cal. App. 4th 1457, 1474, 49 Cal. Rptr. 3d 227 (2006). 13 1 2 3 4 5 6 7 8 9 10 11 Handy I, 2015 WL 1729681, at *8 (some alterations in Handy I). 12 Count II relies all three prongs. 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 Significantly, as with a False Advertising Law claim, a plaintiff may demonstrate a violation of the “fraudulent” prong of the UCL by showing that reasonable “members of the public are likely to be deceived.” Sybersound Records, Inc. v. UAV Corp., 517 F.3d 1137, 1151-52 (9th Cir. 2008); see also Bardin v. DaimlerChrysler Corp., 136 Cal. App. 4th 1255, 1261, 39 Cal. Rptr. 3d 634 (2006). . . . A. Unfair [T]his court has previously summarized the various definitions of “unfair” under the UCL as provided by the California courts: 1. “An act or practice is unfair if the consumer injury is substantial, is not outweighed by any countervailing benefits to consumers or to competition, and is not an injury the consumers themselves could reasonably have avoided.” Daugherty v. Am. Honda Motor Co., Inc., 144 Cal. App. 4th 824, 839 (2006). 2. “‘[U]nfair’ business practice occurs when that practice offends an established public policy or when the practice is immoral, unethical, oppressive, unscrupulous or substantially injurious to consumers.” Smith v. State Farm Mut. Auto. Ins. Co., 93 Cal. App. 4th 700, 719 (2001) (internal citation and quotation marks omitted). 3. An unfair business practice means “the public policy which is a predicate to the action must be ‘tethered’ to specific constitutional, statutory or regulatory provisions.” Scripps Clinic v. Superior Court, 108 Cal. App. 4th 917, 940 (2003). Vincent v. PNC Mortgage, Inc., No. 14-00833, 2014 WL 2766116, at *8 (E.D. Cal. June 18, 2014). 14 1 Wilkins v. Bank of Am., N.A., No. 2:15-cv-02341-KJM-EFB, 2016 WL 2 5940082, at *8 (E.D. Cal. Aug. 19, 2016) (some alterations in 3 Wilkins). 4 Count II alleges unfair business practices based the 5 first two definitions. As to the second definition, Plaintiff 6 merely alleges, in conclusory fashion, that “Defendant’s acts, 7 omissions, misrepresentations, and practices” are “substantially 8 injurious . . . offend[] public policy, and [are] immoral, 9 unethical, oppressive, and unscrupulous as the gravity of the 10 conduct outweighs any alleged benefits attributable to such 11 conduct.” 12 sufficiently alleged unfair business practices based on the first 13 definition. 14 [Amended Complaint at ¶ 65.] However, Plaintiff has The Amended Complaint alleges that Plaintiff has 15 suffered a substantial injury because he paid valuable 16 consideration for the Drones, which had higher prices because of 17 the advertised HD recording features, but which did not have 18 advertised features. 19 Plaintiff also alleges that Defendant’s practice of falsely 20 advertising and representing that the Drones were capable of HD 21 recording in order to induce consumers to purchase them did not 22 provide any benefit to Plaintiff or any other consumer. 23 the injury that Plaintiff suffered is not outweighed by any 24 countervailing benefits to consumers. [Amended Complaint at ¶¶ 16-25, 33-35, 67.] 15 Thus, [Id. at ¶¶ 35, 68.] 1 Finally, Plaintiff alleges that the injury he suffered is not one 2 that consumers could have avoided because, based on the 3 information Defendant made available about the Drones, consumers 4 would not have realized that Defendant’s representations about 5 the Drones’ ability to record HD video were false. 6 ¶ 69.] 7 sufficient facts to state a § 17200 claim against Defendant. 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 B. [Id. at With respect to the unfair prong, Plaintiff has pled Fraudulent [T]he fraudulent prong of the UCL is “governed by the reasonable consumer test: a plaintiff may demonstrate a violation by show[ing] that [reasonable] members of the public are likely to be deceived.” Rubio v. Capital One Bank, 613 F.3d 1195, 1204 (9th Cir. 2010) (citation omitted). A UCL “plaintiff need not show that he or she or others were actually deceived or confused by the conduct or business practice in question.” Schnall v. Hertz Corp., 78 Cal. App. 4th 1144, 1167 (2000). Whether a business practice is deceptive will usually be a question of fact not appropriate for decision on a motion to dismiss. Williams v. Gerber Products Co., 552 F.3d 934, 938 (9th Cir. 2008). At the same time, an unfair practice claim grounded in fraud must be pled with the particularity required by Federal Rule of Civil Procedure 9(b). Vess, 317 F.3d at 1103. Wilkins, 2016 WL 5940082, at *8 (some alterations in Wilkins). Reading the Amended Complaint as a whole, Plaintiff 30 alleges that Defendant falsely represented that the Drones had HD 31 recording capabilities and failed to disclose what the Drones’ 32 actual recording capabilities were. 33 the public is likely to be deceived by Defendant’s practices 34 because, as evidenced by Plaintiff’s reasonable reliance on 16 Plaintiff also alleges that 1 Defendant’s statements, Defendant had unequal bargaining power 2 over the public, [Amended Complaint at ¶ 73,] and the information 3 Defendant made available about the Drones prevented Plaintiff and 4 other consumers from learning until after purchase that the 5 representations about the HD recording capabilities were false. 6 Although Plaintiff alleges that he was actually deceived, see, 7 e.g., id. at ¶ 73, because actual deception is not required, he 8 is not required to allege when he was exposed to Defendant’s 9 representations, as he is in his § 17500 claim. Thus, his 10 failure to plead the “when” with particularity that was fatal to 11 Count I is not fatal to this portion of Count II. 12 to the fraudulent prong, Plaintiff has pled sufficient facts to 13 state a § 17200 claim against Defendant. 14 C. With respect Unlawful 15 As to the unlawful practices prong, 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 a plaintiff must show a violation of some independent law. See Farmers Ins. Exch. v. Superior Court, 2 Cal. 4th 377, 383 (1992). The predicate violation may be federal, state, local, or common law. Id. (section 17200 “borrows” violations of other laws and treats them as unlawful practices actionable separately under section 17200). Because the statute borrows violations of other laws, a failure to state a claim under the underlying law translates to a failure to state a claim under the unlawful prong. See Saunders v. Superior Court, 27 Cal. App. 4th 832, 838 (Cal. Ct. App. 1994). Wilkins, 2016 WL 5940082, at *8. 31 the unlawful prong on the alleged violation of § 17500. 17 Plaintiff bases his claim under [Amended 1 Complaint at ¶ 78.] However, because Count I fails to state a 2 claim, Plaintiff has also failed to state a claim as to the 3 portion of his § 17200 claim based on the unlawful prong, and 4 must be dismissed. 5 without prejudice because it is possible for Plaintiff to cure 6 the defects in Count I by amendment. The dismissal of this portion of Count II is CONCLUSION 7 8 9 On the basis of the foregoing, Defendant’s Motion to Dismiss the First Amended Complaint, filed January 24, 2017, is 10 HEREBY GRANTED IN PART AND DENIED IN PART. 11 insofar as Count I and the portion of Count II based on the 12 “unlawful” prong of Cal. Bus. & Prof. Code § 17200 are HEREBY 13 DISMISSED. 14 based on the “unfair” and “fraudulent” prongs of § 17200 and 15 insofar as the dismissal of Count I and the portion of Count II 16 based on the “unlawful” prong is WITHOUT PREJUDICE. 17 The Motion is GRANTED The Motion is DENIED as to the portion of Count II The Court GRANTS Plaintiff leave to file a second 18 amended complaint by October 30, 2017. 19 file his second amended complaint by October 30, 2017, this case 20 will proceed on the remaining portions of the First Amended Class 21 Action Complaint – the portions of Count II based on the unfair 22 and fraudulent prongs of § 17200. 23 IT IS SO ORDERED. 24 18 If Plaintiff fails to 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 DATED AT HONOLULU, HAWAII, September 20, 2017. /s/ Leslie E. Kobayashi Leslie E. Kobayashi United States District Judge TYSON HOWARD VS. DJI TECHNOLOGY, INC.; 2:16-CV-02292 LEK 19
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