Opinion
Case No.: SACV 23-00116-CJC (ADSx)
2023-03-08
Pedro IBARRA, individually and on behalf of all others similarly situated, Plaintiff, v. PHARMAGENICS LLC, and Does 1 through 10, inclusive, Defendants.
Scott J. Ferrell, Victoria C. Knowles, Pacific Trial Attorneys APC, Newport Beach, CA, for Plaintiff. William P. Cole, Matthew R. Orr, Richard L. Hyde, Amin Talati Wasserman LLP, Los Angeles, CA, for Defendant Pharmaganics LLC.
Scott J. Ferrell, Victoria C. Knowles, Pacific Trial Attorneys APC, Newport Beach, CA, for Plaintiff. William P. Cole, Matthew R. Orr, Richard L. Hyde, Amin Talati Wasserman LLP, Los Angeles, CA, for Defendant Pharmaganics LLC.
ORDER GRANTING DEFENDANTS' MOTION TO DISMISS PLAINTIFF'S FIRST AMENDED COMPLAINT [Dkt. 13]
CORMAC J. CARNEY, UNITED STATES DISTRICT JUDGE
I. INTRODUCTION
On December 2, 2022, Plaintiff Pedro Ibarra filed this putative class action against Pharmaganics LLC (erroneously sued as "Pharmagenics LLC") in the Superior Court of California, County of Orange. (See Dkt. 1 [Notice of Removal] at 1.) Pharmaganics subsequently removed the action to this Court. (See id.) The operative complaint alleges claims related to a Pharmaganics weight-loss supplement under California's Unfair Competition Law ("UCL"), Cal. Bus. & Prof. Code §§ 17200-17210, False Advertising Law, Cal. Bus. & Prof. Code §§ 17500-17606, and Consumer Legal Remedies Act ("CLRA"), Cal. Civ. Code §§ 1750-1784. (See Dkt. 10 [First Amended Complaint, hereinafter "FAC"].) Now before the Court is Pharmaganics's motion to dismiss the FAC. (See Dkt. 13 [Defendant Pharmaganics LLC's Notice of Motion to Dismiss Plaintiff's First Amended Complaint]; Dkt. 13-1 [Memorandum of Points and Authorities in Support of Defendant Pharmaganics LLC's Motion to Dismiss Plaintiff's First Amended Complaint, hereinafter "Mot."].) For the following reasons, the motion is GRANTED.
Having read and considered the papers presented by the parties, the Court finds this matter appropriate for disposition without a hearing. See Fed. R. Civ. P. 78; Local Rule 7-15. Accordingly, the hearing set for March 13, 2023, is hereby vacated and removed from the calendar.
II. BACKGROUND
Pharmaganics sells a diet pill known as "Dr. Stephanie's Carb & Sugar Blocker." (See FAC at 1.) The front label of the product claims that it will support weight loss. (See id. ¶ 10.) As alleged in the FAC, this claim is not only unsubstantiated but also proven to be false, since "[n]umerous randomized, placebo controlled scientific studies conclusively prove that the ingredients in the Product—Berberine, chromium, and gynama sylvestre—do not and cannot provide weight loss support when taken as directed and at safe levels." (Id. ¶ 11.) Thus, "the Food and Drug Administration routinely initiates enforcement actions against sellers of such products to prevent the false claims." (Id.)
Ibarra "is a consumer advocate" who purchased the product in the spring of 2022. (Id. ¶¶ 9, 12.) His motives for purchasing it were two-fold. First, Ibarra "was genuinely interested in using the product as directed and obtaining the promised results, and [his] desire to obtain the advertised benefits of the [p]roduct was a substantial, meaningful factor in Plaintiff's decision to purchase the product." (Id. ¶ 9.) Second, Ibarra "is a 'tester' who works to ensure that companies abide by the obligations imposed by California law." (Id.) Ibarra "used the [p]roduct as directed but did not experience any of the [weight-loss] benefits promised." (Id. ¶ 12.)
Ibarra brings three sets of claims against Pharmaganics. He alleges a claim under the FAL because "the advertisement and labeling of the [p]roduct have been proven false by the overwhelming weight of scientific evidence" and seeks "public injunctive and equitable relief, restitution and an order for the disgorgement of the funds by which Defendant was unjustly enriched." (Id. ¶¶ 27, 30.) He likewise alleges a claim under the CLRA because of the purported falsity of the representations of weight-loss efficacy. (See id. ¶ 34.) Finally, he alleges that the violation of the CLRA constitutes an "unlawful" business act or practice in violation of the UCL. (See id. ¶ 22-23.) Ibarra seeks actual and statutory damages, punitive damages, attorneys' fees and costs, injunctive relief, and other equitable relief, including restitution and disgorgement. (See id. ¶ 30; id. at 8.)
III. LEGAL STANDARD
"Federal courts are courts of limited jurisdiction." Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994). As such, federal courts are presumed to lack jurisdiction in a particular case "unless the contrary affirmatively appears." Stock W., Inc. v. Confederated Tribes of the Colville Rsrv., 873 F.2d 1221, 1225 (9th Cir. 1989). In deciding a motion challenging subject matter jurisdiction, the burden of proof is on the party asserting jurisdiction, and the court will presume a lack of jurisdiction until the pleader proves otherwise. See Kokkonen, 511 U.S. at 377, 114 S.Ct. 1673.
Article III of the Constitution requires that courts adjudicate only actual cases or controversies. See U.S. Const. art. III, § 2, cl. 1; see also Rhoades v. Avon Prods., Inc., 504 F.3d 1151, 1157 (9th Cir. 2007). To meet this "irreducible constitutional minimum," plaintiffs must establish that they have standing, which requires that they "(1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision." Spokeo, Inc. v. Robins, 578 U.S. 330, 338, 136 S.Ct. 1540, 194 L.Ed.2d 635 (2016). "A plaintiff has the burden to establish that it has standing." WildEarth Guardians v. U.S. Dep't of Agric., 795 F.3d 1148, 1154 (9th Cir. 2015). "A suit brought by a plaintiff without Article III standing is not a 'case or controversy,' and an Article III federal court therefore lacks subject matter jurisdiction over the suit." Cetacean Cmty. v. Bush, 386 F.3d 1169, 1174 (9th Cir. 2004) (citing Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 101, 118 S.Ct. 1003, 140 L.Ed.2d 210 (1998)).
Federal Rule of Civil Procedure 12(b)(1) provides the procedural mechanism to dismiss an action for lack of subject matter jurisdiction. "A Rule 12(b)(1) jurisdictional attack may be facial or factual. In a facial attack, the challenger asserts that the allegations contained in a complaint are insufficient on their face to invoke federal jurisdiction. By contrast, in a factual attack, the challenger disputes the truth of the allegations that, by themselves, would otherwise invoke federal jurisdiction." Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004) (citation omitted). In resolving a facial attack, the court assumes that the allegations are true and draws all reasonable inferences in the plaintiff's favor. See Wolfe v. Strankman, 392 F.3d 358, 362 (9th Cir. 2004) (citations omitted).
A motion to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6) tests the legal sufficiency of a plaintiff's claims. The issue is not whether the plaintiff will ultimately prevail but whether the plaintiff is entitled to offer evidence to support the claims asserted. See Gilligan v. Jamco Dev. Corp., 108 F.3d 246, 249 (9th Cir. 1997). Rule 12(b)(6) is read in conjunction with Rule 8(a), which requires only "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). When evaluating a Rule 12(b)(6) motion, the district court must accept all material allegations in the complaint as true and construe them in the light most favorable to the non-moving party. See Skilstaf, Inc. v. CVS Caremark Corp., 669 F.3d 1005, 1014 (9th Cir. 2012). To survive a motion to dismiss, a complaint must contain sufficient factual material to "state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). A complaint must contain well-pleaded factual allegations, not legal conclusions, that "plausibly give rise to an entitlement to relief." Ashcroft v. Iqbal, 556 U.S. 662, 679, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). Determining whether a complaint states a plausible claim for relief is "a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id.
IV. DISCUSSION
Pharmaganics's motion under Rule 12(b)(1) and 12(b)(6) argues that Ibarra has not pled (1) facts to support standing, (2) facts to support the lack of an adequate remedy at law for his claims for equitable relief, and (3) with particularity, or plausibly, that the representations about the product's weight-loss efficacy were false or misleading. The Court addresses the jurisdictional issues first. See Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 94-95, 118 S.Ct. 1003, 140 L.Ed.2d 210 (1998).
A. Standing
"A plaintiff must demonstrate constitutional standing separately for each form of relief requested. For injunctive relief, which is a prospective remedy, the threat of injury must be 'actual and imminent, not conjectural or hypothetical.' " Davidson v. Kimberly-Clark Corp., 889 F.3d 956, 967 (9th Cir. 2018) (citations omitted). Thus, "the 'threatened injury must be certainly impending to constitute injury in fact' and 'allegations of possible future injury are not sufficient.' " Id. (citation omitted).
Ibarra's allegations here do not meet the constitutional minimum for standing. To be sure, "a previously deceived consumer may have standing to seek an injunction against false advertising or labeling, even though the consumer now knows or suspects that the advertising was false at the time of the original purchase." Id. at 969 (emphasis added). But that is only the case when a plaintiff makes plausible allegations of a "threat of future harm." Id. "In some cases, the threat of future harm may be the consumer's plausible allegations that she will be unable to rely on the product's advertising or labeling in the future, and so will not purchase the product although she would like to." Id. at 969-70. "In other cases, the threat of future harm may be the consumer's plausible allegations that she might purchase the product in the future, despite the fact it was once marred by false advertising or labeling, as she may reasonably, but incorrectly, assume the product was improved." Id. at 970. Ibarra makes no such allegations, however. His allegation that he was "genuinely interested in using the product as directed and obtaining the promised results" is linked only to past conduct and already-suffered harm, not a prospective desire or potential future harm. Nor does he even claim that he intends to purchase the product at issue here—or any Pharmaganics products—in the future. Thus, no plausible threat of future harm is pled, and standing for injunctive relief is lacking.
Ibarra does have standing, however, for the other types of relief he seeks—damages, restitution, and the like—since they are remedies for past conduct. The parties spill much ink over whether Ibarra's motive to "test" Pharmaganics's products defeats standing. But the Court need not determine whether that suffices. "[A] plaintiff can satisfy the injury in fact requirement by showing that she paid more for a product than she otherwise would have due to a defendant's false representations about the product." McGee v. S-L Snacks Nat'l, 982 F.3d 700, 706 (9th Cir. 2020). Here, Ibarra alleges sufficient facts for the plausible inference of such an injury. In addition to "testing" the product, Ibarra "was genuinely interested in using the product as directed and obtaining the promised results, and [his] desire to obtain the advertised benefits of the [p]roduct was a substantial, meaningful factor in Plaintiff's decision to purchase the product." (Compl. ¶ 9.) There is nothing facially implausible about Ibarra's dual motives—consumers are allowed to have multiple reasons behind their purchasing decisions. See Cordes v. Boulder Brands USA, Inc., No. CV 18-6534, 2018 WL 6714323, at *3 (C.D. Cal. Oct. 17, 2018). Thus, "[t]he allegations in the complaint give rise to a plausible inference that [Ibarra] would not have purchased the product, or at least that he would not have paid the same price for it, had he known in advance that the" product would not induce weight loss as represented. Id. That is sufficient to confer standing—as Pharmaganics now concedes in its reply. (See Dkt. 17 [Reply in Support of Motion to Dismiss Plaintiff's First Amended Complaint] at 1, 10-11.)
B. Claims for Equitable Relief
In Sonner v. Premier Nutrition Corp., 971 F.3d 834 (9th Cir. 2020), the Ninth Circuit held that "the traditional principles governing equitable remedies in federal courts, including the requisite inadequacy of legal remedies, apply when a party requests restitution under the UCL and CLRA in a diversity action." Id. at 844. Under those principles, a plaintiff "must establish that she lacks an adequate remedy at law before securing equitable restitution for past harm under the UCL and CLRA." Id. A plaintiff fails to do so when the operative complaint does not "allege that [the plaintiff] lacks an adequate legal remedy." Id. Because Sonner's reasoning draws from "traditional principles governing equitable remedies in federal courts," id. at 844, the rule that Sonner announced applies to other types of equitable relief, such as disgorgement, and claims for equitable relief under other statutes, like the FAL. See, e.g., In re ZF-TRW Airbag Control Units Prods. Liab. Litig., 601 F. Supp. 3d 625, 769-70 (C.D. Cal. 2022).
Ibarra's complaint is insufficient under Sonner. Again, "in order to assert a claim for equitable" relief, "the complaint must allege that the plaintiff lacks an adequate legal remedy." Alvarado v. Wal-Mart Assocs., Inc., No. CV 20-1926, 2020 WL 6526372, at *4 (C.D. Cal. Aug. 7, 2020). Courts generally require plaintiffs to allege some facts suggesting that damages are insufficient to make them whole. See, e.g., Duttweiler v. Triumph Motorcycles (Am.) Ltd., No. 14-cv-04809, 2015 WL 4941780, at *8 (N.D. Cal. Aug. 19, 2015); Huu Nguyen v. Nissan N. Am., Inc., No. 16-CV-05591, 2017 WL 1330602, at *5 (N.D. Cal. Apr. 11, 2017). Ibarra's complaint is "devoid of substantive allegations showing [his] legal claims would not provide [him] an adequate remedy." Drake v. Toyota Motor Corp., 2020 WL 7040125, at *13 (C.D. Cal. Nov. 23, 2020). Indeed, his claim for damages under the CLRA, which is predicated on the same conduct as his claims for equitable relief, undermines any potential inadequacy of legal remedies. And Ibarra fails to explain why he might lack adequate legal remedies in his opposition to the motion to dismiss.
Ibarra's arguments to the contrary are unavailing. He tries to distinguish Sonner on the grounds that, unlike the complaint in that case, "there is nothing in the FAC" in this case "alleging the precise amount of equitable restitution and damages sought by Plaintiff and the putative class and whether such sums certain are identical." (See Dkt. 16 [Memorandum of Points and Authorities in Support of Plaintiff's Response in Oposition (sic) to Defendant's Motion to Dismiss Plaintiff's First Amended Complaint, hereinafter "Opp."] at 9.) True, Sonner did emphasize that the plaintiff sought the same amount in damages and restitution. See 971 F.3d at 844. But the point on the equivalence of the amount sought in damages and in restitution appeared only in the court's analysis of whether the complaint failed to plead inadequate remedies at law; this point was not a limitation on the general rule announced in Sonner that a complaint must adequately plead such facts. Ibarra cannot escape his pleading obligations under Sonner simply by failing to state an amount that he seeks to recover.
Also unavailing is Ibarra's argument that Sonner does not preclude pleading claims for legal remedies and equitable remedies in the alternative. (See Opp. at 9.) "[T]he issue" that the Sonner rule creates "is not whether a pleading may seek distinct forms of relief in the alternative, but rather whether a prayer for equitable relief states a claim if the pleading does not demonstrate the inadequacy of a legal remedy." Sharma v. Volkswagen AG, 524 F. Supp. 3d 891, 907 (N.D. Cal. 2021). Thus, numerous courts post-Sonner have rejected that pleading in the alternative is sufficient to skirt the import of Sonner. See, e.g., In re Cal. Gasoline Spot Mkt. Antitrust Litig., No. 20-cv-03131, 2021 WL 1176645, at *8 (N.D. Cal. Mar. 29, 2021) (collecting cases); In re MacBook Keyboard Litig., No. 5:18-cv-02813, 2020 WL 6047253, at *2 (N.D. Cal. Oct. 13, 2020).
Accordingly, the Court must dismiss Ibarra's claims under the UCL and FAL in their entirety and his claim under the CLRA for equitable relief. This conclusion, however, does not apply to the sought injunctive relief, as the Court has already concluded that it lacks jurisdiction due to Ibarra's failure to allege sufficient facts to have standing for an injunction.
C. Pleading the CLRA Claim with Particularity and Plausibly
"In alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake." Fed. R. Civ. P. 9(b). "[T]he circumstances constituting the alleged fraud [must] be specific enough to give defendants notice of the particular misconduct so that they can defend against the charge and not just deny that they have done anything wrong." Kearns v. Ford Motor Co., 567 F.3d 1120, 1124 (9th Cir. 2009) (cleaned up). "Averments of fraud must be accompanied by the who, what, when, where, and how of the misconduct charged. A party alleging fraud must set forth more than the neutral facts necessary to identify the transaction." Id. (cleaned up). Claims under the CLRA that sound in fraud are subject to this heightened pleading standard. See id. at 1125-26.
Ibarra's complaint does not meet this standard. He does identify the "what," i.e., which statement is allegedly false—the statement on the product label that the product supports weight loss—and he includes an image of the label. (See Compl. ¶¶ 10-11; id. at 4.) He also identifies the "when"—he purchased the product "[i]n the Spring of 2022." (Compl. ¶ 12); see also Thomas v. Wells Fargo Bank, N.A., No. CV-10-901, 2010 WL 3401060, at *5 (D. Ariz. Aug. 26, 2010) (concluding that an allegation that a misrepresentation occurred "in the summer of 2006" was pled with particularity); McKinney v. Corsair Gaming, Inc., No. 22-cv-00312, 2022 WL 2820097, at *6 (N.D. Cal. July 19, 2022) (concluding that an allegation that a misrepresentation occurred "in or around December 2018 and July 2019" was pled with particularity). Since his allegation rests on representations on a product label manufactured by Pharmaganics, he also arguably has alleged the "who." But Ibarra certainly has not alleged the "where"—that is, the location of his purchase. For that reason alone, he has not pled with particularity the circumstances of the conduct at issue.
Pharmaganics also argues that Ibarra has not, as required, pled plausibly and with particularity that the representations of weight-loss efficacy are false. The Court need not, however, adjudicate those issues at this juncture—first, because the Court is granting the motion to dismiss with respect to the CLRA claim for lack of particularity anyway, and second, because Ibarra has offered to attach studies supporting the alleged falsity to an amended complaint. (See Opp. at 11 ["To the extent that the Court would like Plaintiff to attach them to Plaintiff's operative pleading and incorporate by reference such studies, the Court should grant leave to amend to file a Second Amended Complaint."].)
D. Leave to Amend
A party may amend its pleading with the court's leave, which should be "freely give[n] . . . when justice so requires." Fed. R. Civ. P. 15(a). Generally, the Ninth Circuit has a liberal policy favoring amendments and thus, leave to amend should be freely granted. See, e.g., DeSoto v. Yellow Freight Sys., Inc., 957 F.2d 655, 658 (9th Cir. 1992). A court need not grant leave to amend if permitting a plaintiff to amend would be an exercise in futility. See Rutman Wine Co. v. E. & J. Gallo Winery, 829 F.2d 729, 738 (9th Cir. 1987) ("Denial of leave to amend is not an abuse of discretion where the pleadings before the court demonstrate that further amendment would be futile."). "An amendment is futile when 'no set of facts can be proved under the amendment to the pleadings that would constitute a valid and sufficient claim or defense.' " Missouri ex rel. Koster v. Harris, 847 F.3d 646, 656 (9th Cir. 2017) (citation omitted).
It is not yet clear that no set of facts could be alleged to support standing for the claim for injunctive relief or to support the lack of an adequate remedy at law for the claims for other equitable relief. Likewise, the particularity and plausibility problems for the claims are theoretically fixable with additional factual allegations. Additionally, this is the first time that the Court is granting a motion to dismiss in the present action. All these reasons caution toward granting Ibarra leave to amend.
V. CONCLUSION
For the foregoing reasons, Pharmaganics's motion to dismiss is GRANTED WITH LEAVE TO AMEND. Any amended complaint must be filed by April 7, 2023. The failure to file an amended complaint by that date may result in dismissal of this action with prejudice.