Dabish v. Brand New Energy, LLC, No. 3:2016cv00400 - Document 12 (S.D. Cal. 2016)
Court Description: ORDER denying Defensant's 7 Motion to Dismiss for Failure to State a Claim. Signed by Judge Cynthia Bashant on 11/23/2016. (jah)
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Dabish v. Brand New Energy, LLC Doc. 12 1 2 3 4 5 6 7 8 9 10 UNITED STATES DISTRICT COURT 11 SOUTHERN DISTRICT OF CALIFORNIA 12 13 14 15 16 17 18 DURANCE DABISH, individually and on behalf of all others similarly situated, Case No. 16-cv-400-BAS(NLS) ORDER DENYING DEFENDANT’S MOTION TO DISMISS Plaintiff, [ECF No. 7] v. BRAND NEW ENERGY, LLC, Defendant. 19 20 Plaintiff Durance Dabish filed this complaint alleging violations of the 21 California Consumer Legal Remedies Act, the California False Advertising Law, and 22 the California Unfair Competition Law. The class action is based upon Defendant 23 Brand New Energy, LLC’s alleged mislabeling, false advertising, and unlawful sale 24 of various dietary supplement products. Defendant moves to dismiss, arguing: (1) 25 Plaintiff lacks standing to sue regarding the products that he did not purchase; (2) the 26 primary jurisdiction doctrine bars this Court from deciding Plaintiff’s claims since 27 they fall under the purview of the Food and Drug Administration (“FDA”); and (3) 28 the complaint fails to satisfy the specificity standard under Federal Rule of Civil –1– 16cv400 Dockets.Justia.com 1 Procedure 9(b) for claims alleging fraud. Plaintiff opposes. 2 The Court finds this motion suitable for determination on the papers submitted 3 and without oral argument. See Fed. R. Civ. P. 78(b); Civ. L.R. 7.1(d)(1). For the 4 following reasons, the Court DENIES Defendant’s motion to dismiss. 5 6 I. BACKGROUND1 7 Plaintiff brings this suit individually and on behalf of a class claiming 8 Defendant illegally sold dietary supplements including Brand New Energy Oxy Elite, 9 Hard Rock Supplements Yellow Bullet AMP, Hard Rock Supplements Yellow 10 Bullet, EPG Extreme Performance Group Turnt Up, Hard Rock Supplements ECA 11 Elite, EPG Extreme Performance Group Ostalen, EPG Extreme Performance Group 12 Ostagenis Max, and EPG Extreme Performance Group Ostashred. (FAC ¶ 1.) 13 Plaintiff alleges he purchased the first of these products, Brand New Energy Oxy 14 Elite. (FAC ¶ 3.) 15 “Plaintiff and class members were deceived into purchasing [these eight] 16 Products which they believed to be legal dietary supplements but instead received 17 products containing illegal ingredients.” (FAC ¶ 52.) “Plaintiff and class members 18 would not have purchased the Products or would not have paid as much for the 19 Products had they known the truth.” (FAC ¶ 56.) 20 Four of the products—Brand New Energy Oxy Elite, Hard Rock Supplements 21 Yellow Bullet AMP, Hard Rock Supplement Yellow Bullet and Hard Rock 22 Supplements ECA Elite—are adulterated with Picamilon. (FAC ¶ 22.) “Picamilon is 23 a synthetic chemical designed to cross the blood-brain barrier and is a prescription 24 drug used in some countries, but not the United States to treat various neurological 25 conditions.” (FAC ¶ 17.) Picamillon is “not a lawful dietary ingredient” and 26 27 28 All facts are taken from the First Amended Complaint (“FAC”). See Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337-38 (9th Cir. 1996) (“All allegations of material fact [from the complaint] are taken as true and construed in light most favorable to the nonmoving party.”). 1 –2– 16cv400 1 “products that contain Picamilon . . . may not be lawfully sold in the United States.” 2 (FAC ¶ 21.) Picamilon does not meet the legal definition of a dietary ingredient and 3 may not be lawfully used in dietary supplements. (FAC ¶ 17.) 4 Two of the products—Hard Rock Supplements Yellow Bullet AMP and EPG 5 Extreme Performance Group Turnt Up—are adulterated with AMP Citrate.2 (FAC ¶ 6 35.) AMP Citrate is a “powerful and illegal stimulant.” (FAC ¶¶ 23, 25.) AMP Citrate 7 was added to the Products without the required notification to the FDA to determine 8 its safety. (FAC ¶¶ 25-35.) 9 Three of the products—EPG Extreme Performance Group Ostalean, EPG 10 Extreme Performance Group Ostagenin Max, and EPG Extreme Performance Group 11 Ostashred—are adulterated with a Selective Androgen Receptor Modulator 12 (“SARM”). (FAC ¶ 37.) These “SARM products” “are marketed as being natural 13 supplements when, in fact, they contain an illegal unapproved new drug known as 14 Ostarine.” (FAC ¶ 37.) The SARM products are not dietary supplements because 15 they contain Ostarine. (FAC ¶¶ 39-40.) 16 17 II. LEGAL STANDARD 18 A motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil 19 Procedure tests the legal sufficiency of the claims asserted in the complaint. Fed. R. 20 Civ. P. 12(b)(6); Navarro v. Block, 250 F.3d 729, 731 (9th Cir. 2001). The court must 21 accept all factual allegations pleaded in the complaint as true and must construe them 22 and draw all reasonable inferences from them in favor of the nonmoving party. Cahill 23 v. Liberty Mutual Ins. Co., 80 F.3d 336, 337-38 (9th Cir. 1996). To avoid a Rule 24 12(b)(6) dismissal, a complaint need not contain detailed factual allegations, rather, 25 it must plead “enough facts to state a claim to relief that is plausible on its face.” Bell 26 27 28 Plaintiff first alleges that “the Products” (earlier defined as all eight products) are adulterated with AMP Citrate (FAC ¶¶ 23, 25), but then later limits the AMP Citrate products to the above two products. 2 –3– 16cv400 1 Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim has “facial plausibility 2 when the plaintiff pleads factual content that allows the court to draw the reasonable 3 inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 4 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 556). “Where a complaint 5 pleads facts that are ‘merely consistent with’ a defendant’s liability, it stops short of 6 the line between possibility and plausibility of ‘entitlement to relief.’” Iqbal, 556 U.S. 7 at 678 (quoting Twombly, 550 U.S. at 557). 8 “[A] plaintiff’s obligation to provide the ‘grounds’ of his ‘entitle[ment] to 9 relief’ requires more than labels and conclusions, and a formulaic recitation of the 10 elements of a cause of action will not do.” Twombly, 550 U.S. at 555 (quoting 11 Papasan v. Allain, 478 U.S. 265, 286 (1986)) (alteration in original). A court need 12 not accept “legal conclusions” as true. Iqbal, 556 U.S. at 678. Despite the deference 13 the court must pay to the plaintiff’s allegations, it is not proper for the court to assume 14 that “the [plaintiff] can prove facts that [he or she] has not alleged or that defendants 15 have violated the . . . laws in ways that have not been alleged.” Associated Gen. 16 Contractors of Cal., Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 526 17 (1983). 18 19 III. DISCUSSION 20 A. Standing 21 To establish standing under the Constitution, plaintiff must show: (1) injury- 22 in-fact; (2) causation; and (3) redressability. Lujan v. Defenders of Wildlife, 504 U.S. 23 555, 560 (1992). In the context of a class action, standing is established if “at least 24 one named plaintiff meets the requirements.” Bates v. UPS, 511 F.3d 974, 985 (9th 25 Cir. 2007). 26 Defendant argues Plaintiff lacks standing to bring claims on behalf of the class 27 for any product he did not purchase. Plaintiff alleges only that he purchased Brand 28 New Energy Oxy Elite. (FAC ¶ 3.) –4– 16cv400 1 Courts have reached different conclusions on when a named plaintiff in a class 2 action may represent a class of individuals who brought similar but not identical 3 products. See generally Donohue v. Apple, Inc., 871 F. Supp. 2d 913, 921-22 (N.D. 4 Cal. 2012). Some courts only permit a named plaintiff to represent a class for 5 products he or she actually purchased and find a plaintiff lacks standing for products 6 he or she did not specifically purchase. See, e.g., Allen v. Hylands, Inc., No. CV 12- 7 1150-DMG (MANx), 2012 WL 1656750, at *5 (C.D. Cal. May 2, 2012); Johns v. 8 Bayer Corp., No. 09-cv-1935 DMS (JMA), 2012 WL 476688, at *5 (S.D. Cal. Feb. 9 9, 2010) (Sabraw, J.). “The majority of courts that have carefully analyzed the 10 question, [however], hold that a plaintiff may have standing to assert claims for 11 unnamed class members based on products he or she did not purchase so long as the 12 products and alleged misrepresentations are substantially similar.” Dorfman v. 13 Nutramax Labs., Inc., No. 13-cv-873 WQH (RBB), 2013 WL 5353043, at *6 (S.D. 14 Cal. Sept. 23, 2013) (quoting Brown v. Hain Celestial Group, Inc., 913 F. Supp. 2d 15 881, 890 (N.D. Cal. 2012)). In these latter cases, the courts have found that analyzing 16 the issue of standing, when there are similarities between the products, is better 17 accomplished under Rule 23 at the time of class certification. See, e.g., Cardenas v. 18 NBTY, Inc., 870 F. Supp. 2d 984, 992 (E.D. Cal. 2012) (citing Bruno v. Quten 19 Research Inst., LLC, 280 F.R.D. 524, 529-32 (C.D. Cal. 2011)). 20 This Court agrees with the latter line of cases. In this case, Plaintiff alleges 21 Defendant misbranded a series of products as dietary supplements when they were 22 not. Although at the class-certification stage, the fact that Plaintiff purchased only 23 one of these products and that the eight products had different adulterants may cause 24 difficulty, the Court finds the allegations at this stage of the proceedings are sufficient 25 to establish standing. 26 // 27 // 28 // –5– 16cv400 1 B. Particularity Under Rule 9(b) 2 Defendant next argues that Plaintiff fails to allege sufficient particularity under 3 Rule 9(b) because he fails to allege: (1) how and when he consumed the supplement; 4 (2) what advertising or labels he reviewed; (3) that he did not experience advertised 5 benefits; and (4) facts demonstrating that any representations were false. 6 When a claim is based on fraud or mistake, the circumstances surrounding the 7 fraud or mistake must be alleged with particularity. Fed. R. Civ. P. 9(b). If the 8 allegations fail to satisfy the heightened pleading requirements of Rule 9(b), a district 9 court may dismiss the claim. Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1087, 1107 10 (9th Cir. 2003). To satisfy the particularity requirement of Rule 9(b), “[a]verments 11 of fraud must be accompanied by ‘the who, what, when, where, and how’ of the 12 misconduct charged.” Id. at 1106 (quoting Cooper v. Pickett, 137 F.3d 616, 627 (9th 13 Cir. 1997)). Plaintiffs must plead enough facts to give defendants notice of the time, 14 place, and nature of the alleged fraud, together with an explanation of the statement 15 and why it was false or misleading. See id. at 1107. The circumstances constituting 16 the alleged fraud must “be specific enough to give defendants notice of the particular 17 misconduct . . . so that they can defend against the charge and not just deny that they 18 have done anything wrong.” Id. at 1106 (quoting Bly-Magee v. California, 236 F.3d 19 1014, 1019 (9th Cir. 2001)) (internal quotation marks omitted); see also In re 20 GlenFed, Inc. Sec. Litig., 42 F.3d 1541, 1547 (9th Cir. 1994) (superseded by statute 21 on other grounds as stated in Ronconi v. Larkin, 253 F.3d 423, 429 n.6 (9th Cir. 22 2001)). 23 In this case, Plaintiff alleges when and where he purchased Brand New Energy 24 Oxy Elite. (FAC ¶ 3.) Plaintiff need not allege consumption of the product. See 25 Hesano v. Iovate Health Sciences, Inc., No. 13-cv-1960-WQH-JMA, 2014 WL 26 197719, at *5 (S.D. Cal. Jan. 15, 2014). Nor, given the allegations, is Plaintiff 27 required to allege that he did not experience any advertised benefits. The allegations 28 do not pertain to allegations of benefits. The allegations pertain to mislabeling the –6– 16cv400 1 products. 2 Plaintiff alleges the products were labeled as “dietary supplements” when they 3 were not, because they included adulterants that disqualified the product from being 4 lawfully labelled a dietary supplement. (FAC ¶¶ 17, 25-35, 39-40.) He provides 5 specifics outlining why labelling the products as “dietary supplements” was false. 6 This is sufficient to meet the particularity requirements of Rule 9(b). 7 Finally, Plaintiff alleges he and the class members were deceived into 8 purchasing the Products, which they believed to be legal dietary supplements, and 9 would not have purchased the Products or would not have paid as much for the 10 Products had they known the truth. (FAC ¶¶ 52, 56.) This is sufficient who, what, 11 when, where and how under Rule 9(b) and gives Defendant sufficient notice of the 12 misconduct alleged so it can defend itself against the charge. 13 14 C. Primary Jurisdiction 15 The primary-jurisdiction doctrine is a “prudential” doctrine in which courts 16 may choose to defer the determination of a particular issue to the relevant 17 administrative agency before allowing the cause of action to proceed. Syntek 18 Semiconductor Co., Ltd. v. Microchip Tech., Inc., 307 F.3d 775, 780 (9th Cir. 2002). 19 The doctrine may be invoked in circumstances where the plaintiff’s claims implicate 20 technical and/or policy questions “that should be addressed in the first instance by 21 the agency with regulatory authority over the relevant industry rather than by the 22 judicial branch.” Clark v. Time Warner Cable, 523 F.3d 1110, 1114 (9th Cir. 2008) 23 (citing Syntek, 307 F.3d at 780). 24 When deciding whether a particular issue implicates the primary-jurisdiction 25 doctrine, the court looks to four factors: “(1) the need to resolve an issue that (2) has 26 been placed by Congress within the jurisdiction of an administrative body having 27 regulatory authority (3) pursuant to a statute that subjects an industry or activity to a 28 comprehensive regulatory scheme that (4) requires expertise or uniformity in –7– 16cv400 1 administration.” Clark, 523 F.3d at 1115 (quoting United States v. Gen. Dynamics 2 Corp., 828 F.2d 1356, 1362 (9th Cir. 1987). When the court finds primary jurisdiction 3 applies, it may “stay[] proceedings or dismiss[] the case without prejudice so that the 4 parties may seek an administrative ruling.” Id. at 1115. 5 “Primary jurisdiction applies in a limited set of circumstances.” Clark, 523 6 F.3d at 1114. “Competence [of the agency] alone is not sufficient. The particular 7 agency deferred to must be one that Congress has vested with the authority to regulate 8 an industry or activity such that it would be inconsistent with the statutory scheme to 9 deny the agency’s power to resolve the issues in question.” Gen. Dynamics, 828 F.3d 10 at 1363. The primary-jurisdiction doctrine is “not designed to ‘secure expert advice’ 11 from agencies ‘every time a court is presented with an issue conceivably within the 12 agency’s ambit.’” Clark, 523 F.3d at 1114 (quoting Brown v. MCI WorldCom 13 Network Servs., 277 F.3d 1166, 1172 (9th Cir. 2002)). The doctrine “is to be used 14 only if a claim requires resolution of an issue of first impression, or of a particularly 15 complicated issue that Congress has committed to a regulatory agency” and if 16 “protection of the integrity of a regulatory scheme dictates preliminary resort to the 17 agency which administers the scheme.” Id. (internal quotations and citations 18 omitted); see also Brown, 277 F.3d at 1172 (noting “primary jurisdiction is properly 19 invoked when a case presents a far-reaching question that ‘requires expertise or 20 uniformity in administration’”). 21 Furthermore, because it is a discretionary doctrine, the court may decline to 22 invoke the doctrine when deciding the issue is not outside the ability of the court. 23 See Morgan v. Wallaby Yogurt Co., Inc., No. 13-cv-296-WHO, 2013 WL 5514563, 24 at *4 (N.D. Cal. Oct. 4, 2013) (denying defendant’s motion to dismiss on the ground 25 of primary jurisdiction because defendant gave no reason why deciding the issue was 26 outside the ability of the court and such questions are frequently determined by 27 courts). 28 // –8– 16cv400 1 Defendant argues the Court should refer the questions raised in this case to the 2 Food and Drug Administration (“FDA”) under the primary-jurisdiction doctrine. The 3 FDA has issued extensive regulations, including the definitions of a “dietary 4 supplement.” See 21 U.S.C. §321(ff)(1). And the question in this case is whether 5 Defendant’s labelling of its products as “dietary supplements” was false or 6 misleading. In this circumstance, the doctrine of primary jurisdiction is not 7 implicated. See, e.g., Chacanaca v. Quaker Oats Co., 752 F. Supp. 2d 1111, 1124 8 (N.D. Cal. 2010) (plaintiff’s assertion that the defendant has violated FDA 9 regulations and marketed a product that could have mislead a reasonable consumer 10 was not subject to the doctrine of primary jurisdiction); Imagenetix, Inc. v. Frutarom 11 USA, Inc., No. 12-cv-2823-GPC (WME), 2013 WL 6419674, at *4 (S.D. Cal. Dec. 12 9, 2013) (allegations of mislabeling, where the FDA has already provided guidance 13 on the issue, and the court’s role was to determine whether the labels were misleading 14 to the reasonable consumer, does not require FDA expertise); Morgan, 2013 WL 15 5514563, at *4 (“[w]hile food regulation is undoubtedly in the purview of, and an 16 area of special competence for, the FDA, [defendant] has given no reason why 17 determining whether a label is misleading is outside the ability of the Court.”). 18 The FDA has already issued guidance as to what a dietary supplement is and 19 what dietary ingredients may be legally added to a dietary supplement and how. The 20 issue now presented to this Court is whether Defendant’s labelling of the products 21 was accurate: whether the products were in fact legal dietary supplements as already 22 defined by the FDA, and whether the labelling of the products as such misled 23 consumers. Such a determination does not need additional FDA expertise or 24 implicate concerns about uniformity in administration. Therefore, the Court declines 25 to dismiss or stay the action under the doctrine of primary jurisdiction. 26 // 27 // 28 // –9– 16cv400 1 2 3 4 IV. CONCLUSION & ORDER In light of the foregoing, the Court DENIES Defendant’s motion to dismiss. (ECF No. 7.) IT IS SO ORDERED. 5 6 DATED: November 23, 2016 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 – 10 – 16cv400
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