Holt v. Noble House Hotels & Resort, LTD et al, No. 3:2017cv02246 - Document 14 (S.D. Cal. 2018)
Court Description: ORDER Denying 8 Plaintiff's Motion to Remand; and Denying 6 Defendant's Motion to Dismiss. The Court denies Plaintiff's motion to remand and request for fees and costs and denies Defendant Noble House's motion to dismiss. Signed by Judge Michael M. Anello on 1/23/2018. (rmc)
Download PDF
<![CDATA[
1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 12 KATHLEEN HOLT, individually and on behalf of all others similarly situated 15 16 ORDER: Plaintiff, 13 14 Case No.: 17cv2246-MMA (BLM) v. DENYING PLAINTIFF'S MOTION TO REMAND; AND NOBLE HOUSE HOTELS & RESORT, LTD; and DOES 1 TO 25, [Doc. No. 8] DENYING DEFENDANT’S MOTION TO DISMISS Defendants. 17 [Doc. No. 6] 18 19 On November 3, 2017, Defendant Noble House Hotels & Resort, LTD (“Noble 20 House”) removed this action to this Court from the Superior Court of California, County 21 of San Diego. Doc. No. 1. Noble House filed a motion to dismiss Plaintiff’s Complaint 22 pursuant to Federal Rule of Civil Procedure 12(b)(6). Doc. No. 6-1 (“MTD”). Plaintiff 23 opposes dismissal [Doc. No. 9 (“MTD Oppo.”)] and Noble House replied [Doc. No. 11 24 (“MTD Reply”)]. Additionally, Plaintiff moves to remand this case to state court [Doc. 25 No. 8-1 (“Remand”)], which Noble House opposes [Doc. No. 10 (“Remand Oppo.”)]. 26 The Court found the matters suitable for determination on the papers and without oral 27 argument pursuant to Civil Local Rule 7.1.d.1. Doc. No. 13. For the following reasons, 28 1 17cv2246-MMA (BLM) 1 the Court DENIES both Plaintiff’s motion to remand [Doc. No. 8] and Defendant’s 2 motion to dismiss [Doc. No. 6]. BACKGROUND1 3 On September 20, 2017, Plaintiff Kathleen Holt (“Plaintiff”), individually and on 4 5 behalf of all others similarly situated, filed this putative class action against Noble House 6 and Doe Defendants 1 to 25 alleging causes of action for violations of California’s False 7 Advertising Law (“FAL”), California Business and Professions Code sections 17500, et 8 seq.; California’s Unfair Competition law (“UCL”), California Business and Professions 9 Code sections 17200, et seq.; and California’s Consumers Legal Remedy Act (“CLRA”) 10 California Business and Professions Code sections 1750, et seq.. Doc. No. 1-3 11 (“Compl.”). Plaintiff seeks to represent a class defined as “[a]ll consumers who ate or 12 drank at a restaurant in California, owned by Noble House Hotels & Resort, LTD. d/b/a/ 13 Noble House Hotels & Resort, LTD. LP, who were charged a surcharge on their bill in 14 addition to the costs of the food and drinks since four years prior to the filing of this 15 Complaint.” Compl., ¶ 87. Plaintiff’s claims arise out of a 3.5% surcharge of $1.38, which was added to the 16 17 balance of her bill on August 6, 2017, at Acqua California Bistro (“Bistro”)2 in San 18 Diego, California which is owned by Noble House. Compl., ¶¶ 17-23. Plaintiff alleges 19 that Noble House is misleading the public by advertising prices for food and drinks in its 20 menus and then adding the surcharge to the balance of the bill total at checkout after the 21 consumer is finished eating and drinking “when it is too late to make an informed 22 decision about the increased total bill.” Compl., ¶¶ 17, 26. Plaintiff alleges Noble House 23 “purposely added this ‘surcharge’ instead of raising the prices on its menu in order to 24 mislead [and deceive] consumers into thinking that their meal would cost less than it 25 26 1 27 28 Because this matter is partially before the Court on a motion to dismiss, the Court must accept as true the allegations set forth in the complaint. See Hosp. Bldg. Co. v. Trs. of Rex Hosp., 425 U.S. 738, 740 (1976). 2 Plaintiff alleges that the Bistro is located inside the Hilton San Diego Resort and Spa. Compl., ¶ 21. 2 17cv2246-MMA (BLM) 1 actually does.” Compl., ¶¶ 25, 31. According to Plaintiff, the surcharge is added after 2 consumers finished eating and drinking because they “are less likely to notice or object.” 3 Compl., ¶ 33. MOTION TO REMAND 4 5 Noble House removed this action to this Court on November 3, 2017. Doc. No. 1. 6 In removing the action, Noble House invoked diversity jurisdiction pursuant to Title 28 7 of the United States Code, sections 1332(a), 1441, and 1446.3 Id. at 1. Plaintiff filed the 8 instant motion to remand on December 4, 2017. Remand at 2. 9 1. Legal Standard Federal courts are courts of limited jurisdiction. Lowdermilk v. U.S. Bank Nat’l 10 11 Ass’n, 479 F.3d 994, 998 (9th Cir. 2007). Federal courts possess only that power 12 authorized by the Constitution or a statute. See Bender v. Williamsport Area Sch. Dist., 13 475 U.S. 534, 541 (1986). Pursuant to § 1332(a)(1), a federal district court has 14 jurisdiction over “all actions where the matter in controversy exceeds the sum or value of 15 $75,000, exclusive of interest and costs,” and the dispute is between citizens of different 16 states. 28 U.S.C. § 1332(a). The Supreme Court has interpreted § 1332 to require 17 “complete diversity of citizenship,” meaning each plaintiff must be diverse from each 18 defendant. Caterpillar Inc. v. Lewis, 519 U.S. 61, 67-68 (1996). The Class Action 19 Fairness Act (“CAFA”) also gives district courts original jurisdiction to hear class actions 20 21 22 23 24 25 26 27 28 3 Noble House does not specify which subsection of § 1332 removal is based upon, but indicates diversity jurisdiction exists because “the amount in controversy exceeds $75,000.” Doc. No. 1 at 2. Accordingly, the Court construes Defendant’s removal to be based upon § 1332(a). See 28 U.S.C. § 1332(a) (stating that the amount in controversy for diversity jurisdiction is met “where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs”); see also Evans v. Bantek West, Inc., No. CIV. 08-2966 WBS GGH, 2009 WL 700426, at *1 n.2 (E.D. Cal. Mar. 12, 2009) (construing the defendant’s removal to be premised on § 1332(a) and not § 1332(d) because the defendant asserted that the amount in controversy exceeds $75,000). The Court further finds Defendant’s citation to Rainero v. Archon Corp., 844 F.3d 832 (9th Cir. 2016), which permits a court to exercise supplemental jurisdiction over other plaintiff class members where individual diversity jurisdiction is met with respect to one named plaintiff, inapposite as Defendant need only establish traditional diversity jurisdiction. 3 17cv2246-MMA (BLM) 1 “in which the matter in controversy exceeds the sum or value of $5,000,000, exclusive of 2 interest and costs,” and “in which . . . any member of a class of plaintiffs is a citizen of a 3 State different from any defendant.” 28 U.S.C. § 1332(d)(2). However, “federal 4 diversity jurisdiction still exists for other class actions that satisfy the general diversity 5 jurisdiction provision of § 1332(a).” Serrano v. 180 Connect, Inc., 478 F.3d 1018, 1021 6 n.4 (9th Cir. 2007) (citing e.g., Snyder v. Harris, 394 U.S. 332, 340 (1969)). That is, “a 7 class action [can] be heard in federal court under diversity jurisdiction only if there [is] 8 complete diversity, i.e., all class representatives [are] diverse from all defendants,” and if 9 all named plaintiffs satisfy the amount in controversy requirement of more than $75,000. 10 See Lewis v. Verizon Commc’ns, Inc., 627 F.3d 395, 398 (9th Cir. 2010) (citing Exxon 11 Mobile Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 549-51 (2005)); see also Gibson v. 12 Chrysler Corp., 261 F.3d 927, 938 (9th Cir. 2001). 13 2. 14 Analysis As an initial matter, CAFA does not supplant traditional diversity jurisdiction; it 15 supplements it. See Serrano, 478 F.3d at 1021 n.4. Accordingly, the Court need not 16 analyze whether removal is appropriate under CAFA because Noble House removed the 17 case pursuant to § 1332(a). See Remand at 4-7 (arguing the case should be remanded 18 because Noble House has not met its burden to prove subject matter jurisdiction pursuant 19 to CAFA). 20 Plaintiff argues that Defendant has failed to establish both complete diversity and 21 the amount in controversy under the traditional diversity requirements. Remand at 4-7. 22 With respect to complete diversity, the requirement “in class actions is based on the 23 citizenship of the named plaintiffs at the time the action is filed.” Gibson, 261 F.3d at 24 931 n.2. The citizenship of unnamed class members and unidentified Doe defendants are 25 disregarded. Id. (citing Supreme Tribe of Ben-Hur v. Cauble, 255 U.S. 356, 366-67 26 (1921)); 28 U.S.C. § 1441(b)(1) (stating that for purposes of removal “the citizenship of 27 defendants sued under fictitious names shall be disregarded”); see Bryant v. Ford Motor 28 Co., 886 F.2d 1526, 1528 (9th Cir. 1989), cert. denied, 493 U.S. 1076 (1990); see also 4 17cv2246-MMA (BLM) 1 Ogamba v. Wells Fargo Bank, N.A., No. 2:17-cv-01754-KJM-AC, 2017 WL 4251124, at 2 *3 (E.D. Cal. Sept. 26, 2017) (stating doe defendants are disregarded because the plaintiff 3 included no information as to “who they are, where they live or their relationship to the 4 action”). “A corporation shall be deemed a citizen of every State and foreign state by 5 which it has been incorporated and of the State or foreign state where it has its principal 6 place of business[.]” 28 U.S.C. § 1332(c)(1). 7 Here, Plaintiff declares that she is a citizen of California and the Noble House Vice 8 President of Food and Beverage declares that Noble House “is a Texas corporation with 9 its principal place of business in Washington State.” Doc. No. 1-17, Declaration of 10 Kathleen Holt in Support of Venue for Class Action Pursuant to Civil Code Section 11 1780(d) (“Holt Decl.”), ¶ 2; Doc. No. 1 at 3; Doc. No. 1-4, Declaration of Thomas Haas 12 In Support of Notice of Removal to Federal Court (“Haas Decl.”) at ¶ 2; Haas Decl, 13 Exhibits A-B. Accordingly, complete diversity exists. 14 Plaintiff next argues that Plaintiff’s damages do not “equal[] or exceed[]” $75,000 15 because her compensatory damages are $1.38. Remand at 5. Defendant counters that 16 Plaintiff’s prayer for disgorgement of all surcharge funds and injunctive relief exceeds 17 the jurisdictional minimum. Remand Oppo. at 4; see Doc. No. 1 at 3. In the Complaint, 18 Plaintiff prays for injunctive relief “requiring Noble House to cease adding a ‘surcharge’ 19 to consumers’ bills,” and “a constructive trust and and/or [sic] disgorgement of Noble 20 House’s ill-gotten gains and to pay restitution.” See Compl. at p. 19. 21 Removal jurisdiction exists under § 1332(a) only where “the matter in controversy 22 exceeds the sum or value of $75,000.” 28 U.S.C. § 1332(a) (emphasis added). In a 23 putative class action each named plaintiff must have “claims with an amount in 24 controversy in excess of $75,000.” See Gibson, 261 F.3d at 938. “In actions seeking 25 declaratory or injunctive relief, it is well established that the amount in controversy is 26 measured by the value of the object of the litigation.” Cohn v. Petsmart, Inc., 281 F.3d 27 837, 840 (9th Cir. 2002) (citing Hunt v. Wash. State Apple Adver. Comm’n, 432 U.S. 333, 28 347 (1977), superseded by statute on other grounds as stated in United Food & Commer. 5 17cv2246-MMA (BLM) 1 Workers Union Local 751 v. Brown Group, 517 U.S. 544 (1996)). In such cases, federal 2 courts employ the “either viewpoint” rule, which permits the “object of the litigation” to 3 be valued either from the plaintiff’s viewpoint or the defendant’s viewpoint. See In re 4 Ford Motor Co./Citibank (S.D.) N.A., 264 F.3d 952, 958 (9th Cir. 2001) (“[u]nder the 5 ‘either viewpoint’ rule, the test for determining the amount in controversy is the 6 pecuniary result to either party which the judgment would directly produce”). Noble House asserts that its “aggregate food and beverage revenue at [the relevant] 7 8 restaurants . . . annually exceeds $5,000,000” and that enjoining the 3.5% surcharge 9 would thereby “prevent Noble House from collecting more than $100,000 per year.” 10 Doc. No. 1 at 3; Haas Decl., ¶¶ 6-8. In addition, Noble House claims the funds 11 attributable to the surcharge since its inception in early 2017 amount to more than 12 $75,000. Doc. No. 1 at 4; Haas Decl., ¶ 8. Thus, the Court is satisfied that the amount in 13 controversy requirement has been met because the pecuniary result to Noble House is 14 valued at roughly $100,000 per year based upon Plaintiff’s requested injunctive relief, 15 and more than $75,000 for Plaintiff’s requested constructive trust or disgorgement of 16 Noble House’s gains from the surcharge. 17 3. Conclusion Accordingly, the Court DENIES Plaintiff’s motion to remand.4 18 MOTION TO DISMISS 19 Noble House moves to dismiss Plaintiff’s Complaint without leave to amend on 20 21 the grounds that Plaintiff’s FAL, CLRA, and UCL claims each fail to state a claim upon 22 which relief can be granted. MTD at 8. Plaintiff opposes dismissal of any claims. See 23 MTD Oppo. 24 25 26 27 28 In addition to remand, Plaintiff asks this Court to award “payment of just costs and attorney fees by Defendant, for time spent on this motion.” Remand at 8. “An order remanding the case may require payment of just costs and any actual expenses, including attorney fees, incurred as a result of the removal.” 28 U.S.C. § 1447(c). Since the Court has denied the motion to remand the case, it also DENIES Plaintiff’s request for attorney fees and costs. 4 6 17cv2246-MMA (BLM) 1 2 1. Request for Judicial Notice Noble House requests the Court consider a copy of the menu used at the restaurant 3 where the surcharge was imposed upon Plaintiff, and a bill issued by that restaurant in 4 August 2017. MTD at 7 n.1. Plaintiff objects, contending that considering the exhibits 5 would require the Court to make findings of fact, which are inappropriate at this stage of 6 the proceedings. MTD Oppo. at 8. 7 In determining the propriety of a Rule 12(b)(6) dismissal, courts generally may not 8 look beyond the complaint for additional facts. See United States v. Ritchie, 342 F.3d 9 903, 907-08 (9th Cir. 2003). “A court may, however, consider certain materials— 10 documents attached to the complaint, documents incorporated by reference in the 11 complaint, or matters of judicial notice—without converting the motion to dismiss into a 12 motion for summary judgment.” Id. at 908; see also Fed. R. Evid. 201; see also Lee v. 13 City of Los Angeles, 250 F.3d 668, 688 (9th Cir. 2001), overruled on other grounds by 14 Galbraith v. Cnty. of Santa Clara, 307 F.3d 936, 942 (9th Cir. 2009). Courts can take 15 judicial notice of facts that are not subject to reasonable dispute because they are either 16 generally known or can be readily determined by reference to sources whose accuracy 17 cannot be reasonably questioned. Fed. R. Evid. 201. A document “may be incorporated 18 by reference into a complaint if the plaintiff refers extensively to the document or the 19 document forms the basis of the plaintiff’s claim.” Ritchie, 342 F.3d at 908 (internal 20 citations omitted). In other words, a court “may consider a document the authenticity of 21 which is not contested, and upon which the plaintiff’s complaint necessarily relies.” 22 Parrino v. FHP, Inc., 146 F.3d 699, 706 (9th Cir. 1998), superseded by statute on other 23 grounds in Abrego v. Dow Chem. Co., 443 F.3d 676 (9th Cir. 2006); Swartz v. KPMG 24 LLP, 476 F.3d 756, 763 (9th Cir. 2007); Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 25 2005). 26 Both the menu’s and bill’s accuracy can be reasonably questioned. Noble House 27 has not submitted a declaration certifying their authenticity and the allegations in the 28 Complaint contradict the content of these exhibits. See Compl., ¶¶ 19, 23; see also MTD. 7 17cv2246-MMA (BLM) 1 Accordingly, Noble House’s exhibits are inappropriate for both incorporation by 2 reference and judicial notice. Therefore, Noble House’s request is DENIED. 3 2. 4 Legal Standard A Rule 12(b)(6) motion to dismiss tests the sufficiency of the complaint. Navarro 5 v. Block, 250 F.3d 729, 732 (9th Cir. 2001). A pleading must contain “a short and plain 6 statement of the claim showing that the pleader is entitled to relief. . . .” Fed. R. Civ. P. 7 8(a)(2). However, plaintiffs must also plead “enough facts to state a claim to relief that is 8 plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007); Fed. R. Civ. 9 P. 12(b)(6). The plausibility standard demands more than “a formulaic recitation of the 10 elements of a cause of action,” or “naked assertions devoid of further factual 11 enhancement.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal quotations and 12 alterations omitted). Instead, the complaint “must contain sufficient allegations of 13 underlying facts to give fair notice and to enable the opposing party to defend itself 14 effectively.” Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011). 15 In reviewing a motion to dismiss under Rule 12(b)(6), courts must assume the truth 16 of all factual allegations and must construe them in the light most favorable to the 17 nonmoving party. Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337-38 (9th Cir. 1996). 18 The court need not take legal conclusions as true merely because they are cast in the form 19 of factual allegations. Roberts v. Corrothers, 812 F.2d 1173, 1177 (9th Cir. 1987). 20 Similarly, “conclusory allegations of law and unwarranted inferences are not sufficient to 21 defeat a motion to dismiss.” Pareto v. FDIC, 139 F.3d 696, 699 (9th Cir. 1998). 22 In alleging fraud or mistake, the plaintiff must “state with particularity the 23 circumstances constituting fraud or mistake.” Fed. R. Civ. P. 9(b). Failure to satisfy this 24 heightened pleading requirement can result in dismissal of the claim. Vess v. Ciba-Geigy 25 Corp. USA, 317 F.3d 1097, 1107 (9th Cir. 2003). In general, the plaintiff’s allegations of 26 fraud or mistake must be “specific enough to give defendants notice of the particular 27 misconduct . . . so that they can defend against the charge and not just deny that they 28 have done anything wrong.” Id. at 1106. This heightened pleading standard requires the 8 17cv2246-MMA (BLM) 1 plaintiff to allege fraud or mistake by detailing “the who, what, when, where, and how” 2 of the misconduct charged. Id. at 1106-07. In other words, the plaintiff must specify the 3 time, place, and content of the alleged fraudulent or mistaken misconduct. See id. 4 3. 5 Analysis Defendant asserts that Plaintiff has failed to state a claim upon which relief may be 6 granted because mandatory surcharges do not violate the UCL, FAL, or CLRA, Plaintiff 7 insufficiently pleads that the surcharge is misleading, and the UCL claim fails because 8 the surcharge is protected by a legislative safe harbor. MTD at 11-17. Each of these 9 arguments is dependent upon the Court considering the menu and bill attached to Noble 10 House’s motion to dismiss. See id. 11 a. 12 Noble House first argues that mandatory surcharges do not violate the UCL, FAL, Mandatory Surcharges 13 or CLRA. MTD at 11-13. Specifically, Noble House contends that “California Courts 14 have unanimously held that mandatory surcharges do not violate the UCL or FAL if 15 disclosed” and the menu and bill evince the surcharge was disclosed. Id. at 11-12 16 (emphasis added). Noble House further asserts that the surcharge does not violate the 17 CLRA because it “is not an addition to the price of the ‘product’ (i.e., the food or 18 beverage), as the statute prohibits; rather it is a separate charge for service.” Id. at 11. 19 Noble House’s argument fails because “at this stage, a court does not make factual 20 findings.” Browne v. McCain, 612 F. Supp. 2d 1125, 1130 (C.D. Cal. 2009). With 21 respect to the UCL and FAL claims, Plaintiff alleges that the surcharge “is not reflected 22 in the prices listed in the restaurant’s menus” and that the surcharge is “surreptitiously 23 add[ed] . . . to the balance of the bill total at check out [sic] time,” which she contends 24 was “hidden.” Compl., ¶¶ 17, 19, 23. Plaintiff does not allege that Noble House 25 disclosed the surcharge. See Compl. With respect to Plaintiff’s CLRA claim, Plaintiff 26 alleges that the surcharge is added “instead of raising the prices on its menu” and that it is 27 “not a gratuity for the server or bartender, but is, instead a charge that goes directly to 28 Noble House.” Compl., ¶¶ 25, 27. Thus, construing Plaintiff’s factual allegations in the 9 17cv2246-MMA (BLM) 1 light most favorable to her, the surcharge was not disclosed and is not a separate charge 2 for service. See Compl.; ¶¶ 17-27; see Cahill, 80 F.3d at 337-38. Noble House’s argument would require the Court to make factual findings and/or 3 4 construe them in favor of the moving party, which it cannot do in determining the 5 propriety of a Rule 12(b)(6) motion to dismiss. See MTD at 11-13 (urging the Court to 6 find that the surcharge was disclosed and is an additional charge for service); see also 7 Cahill, 80 F.3d at 337-38; Browne, 612 F. Supp. 2d at 1130. Accordingly, the Court 8 DENIES Noble House’s motion to dismiss on the grounds that the surcharge does not 9 violate the UCL, FAL, and CLRA based on factual allegations not presently before the 10 Court. See Branch v. Tunnell, 14 F.3d 449, 453 (9th Cir. 1994) (excluding material 11 outside the pleadings from consideration on a Rule 12(b)(6) motion to dismiss). 12 b. 13 Noble House also asserts that Plaintiff has not adequately or plausibly pleaded that 14 the surcharge is misleading because the bill and menu prove the surcharge was disclosed, 15 Again, the Court does not make factual findings in determining the propriety of a Rule 16 12(b)(6) motion to dismiss. See Browne, 612 F. Supp. 2d at 1130. Plaintiff alleges the 17 surcharge is added to the balance of the bill at checkout, is “hidden” and “hard to find” 18 and is “not reflected in the prices listed in the restaurants’ menus.” Compl., ¶¶ 17-23. 19 Moreover, Plaintiff alleges that “the surcharge was added in such a way that a consumer 20 could easily miss it” and “deceive[s customers] into thinking their meal will cost less.” 21 Compl., ¶¶ 24, 31. Plaintiff’s allegations are sufficient to survive a Rule 12(b)(6) motion 22 to dismiss. 5 See MTD Oppo. at 13 (stating that a reasonable consumer would be misled Misleading Surcharge 23 24 25 26 27 28 5 The cases cited by Noble House are distinguishable because the operative complaint stated that the allegedly misleading information was disclosed. See Dimond v. Darden Restaraounts, Inc., No. 13 Civ. 5244 (KPF), 2014 WL 3377105, at *1 (S.D.N.Y. July 9, 2014) (stating that the first amended complaint alleged the menus state that an 18% gratuity is automatically added and calculated to the bill); Searle v. Wyndham Int’l, Inc., 102 Cal. App. 4th 1327, (Cal. Ct. App. 2002) (indicating that the complaint alleged the plaintiff’s room service menu stated that a 17% service charge would be added to the bill); Italian Colors Rest. v. Harris, 99 F. Supp. 3d 1199, 1202 (E.D. Cal. Mar. 26, 2015) (stating that plaintiffs allege 10 17cv2246-MMA (BLM) 1 where “notice is not given of [sic] the real prices of the menu items, and in fact, incorrect 2 prices are listed in the menus”). Accordingly, the Court DENIES dismissal based on 3 Noble House’s argument that disclosure of the surcharge on the menu and bill prove that 4 the surcharge is not misleading. See Browne, 612 F. Supp. 2d at 1130 (“At this stage, a 5 court does not make factual findings, nor deem material facts undisputed or admitted.”). 6 c. 7 Noble House also argues that Plaintiff’s UCL claim fails because the surcharge is Safe Harbor 8 protected by a legislative safe harbor. MTD at 15. Noble House contends that 9 California’s State Board of Equalization (“BOE”) enacted a regulation “providing that 10 when a restaurant’s ‘menu, brochures, advertisements or other printed materials contain 11 statements that notify customers that . . . service charges will or may be added’ that 12 ‘amount automatically added by the [restaurant] to the bill’ is subject to tax.” Id. at 16 13 (citing 18 CCR § 1603(h)(3)) (emphasis in original). 14 “The California Supreme Court has explained . . . that conduct affirmatively 15 authorized by another statute may provide a defendant with a safe harbor from UCL 16 liability: ‘Although the unfair competition law’s scope is sweeping, it is not unlimited . . . 17 . When specific legislation provides a ‘safe harbor,’ plaintiffs may not use the general 18 unfair competition law to assault the harbor.’” Hauk v JP Morgan Chase Bank United 19 States, 552 F.3d 1114, 1122 (9th Cir. 2009) (citing Cal-Tech Commc’ns, Inc. v. L.A. 20 Cellular Tel. Co., 20 Cal. 4th 163, 182 (Cal. 1999)). However, the safe harbor rule does 21 not “prohibit an action under the unfair competition law merely because some other 22 statute on the subject does not, itself, provide for the action or prohibit the challenged 23 24 25 26 27 28 that California Civil Code section 1748.1(a), which prohibits retailers from imposing a surcharge on customers who make payments with credit cards, but permits discounts for payments by cash or other means), affirmed on appeal as applied to plaintiffs only by Italian Colors Rest. v. Becerra, -- F.3d – , No. 15-15873, 2018 WL 266332 (9th Cir. 2018); Freeman v. Time, Inc., 68 F.3d 285, 287 (9th Cir. 1995) (indicating that plaintiff alleged receiving mailers indicating he had won a $1,666,675 which also had qualifying language “indicating that Freeman would win only if he returned a winning prize number”). 11 17cv2246-MMA (BLM) 1 conduct. To forestall an action under the unfair competition law, another provision must 2 actually ‘bar’ the action or clearly permit the conduct.” Cal-Tech Commc’ns, Inc., 20 3 Cal. 4th at 183. 4 As stated throughout this order, the Court does not make factual findings in 5 determining the propriety of a Rule 12(b)(6) motion to dismiss. Plaintiff has not alleged 6 that the surcharge is disclosed in the menu, and the Court declines to make a factual 7 finding based on factual allegations not included in Plaintiff’s Complaint. See Browne, 8 612 F. Supp. 2d at 1130. Accordingly, the Court DENIES Noble House’s motion to 9 dismiss Plaintiff’s UCL claim on the grounds that disclosed surcharges are protected by 10 the safe harbor rule. 11 4. 12 Conclusion Because Noble House depends upon the Court considering material outside the 13 pleadings, whose accuracy can be reasonably questioned, the Court DENIES Noble 14 House’s motion to dismiss. See Branch, 14 F.3d at 453. 15 CONCLUSION 16 Based on the foregoing, the Court DENIES Plaintiff’s motion to remand and 17 request for fees and costs [Doc. No. 8] and DENIES Defendant Noble House’s motion to 18 dismiss [Doc. No. 6]. 19 20 IT IS SO ORDERED. Dated: January 23, 2018 21 22 23 24 25 26 27 28 12 17cv2246-MMA (BLM)
]]>
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You
should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google
Privacy Policy and
Terms of Service apply.
