Lara v. Cool Clouds Distribution, Inc.

RUTH LARA, individually and on behalf of J.S.and all others similarly situated, Plaintiff, v. COOL CLOUDS DISTRIBUTION, INC., UMAIS ABUBAKER, SHAHID SHAIKH,PUFF BAR, NICK MINAS, and PATRICK BELTRAN, Defendants.

Civil Action No. 20-8030 (SDW) (LDW)

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY

February 16, 2021

NOT FOR PUBLICATION

OPINION

WIGENTON, District Judge.

Before this Court are Defendants Puff Bar, Patrick Beltran, Nick Minas, Umais Abubaker, Shahid Shaikh, and Cool Clouds Distribution, Inc.'s (collectively, "Defendants") Motions to Dismiss Plaintiff Ruth Lara's ("Plaintiff") First Amended Class Action Complaint ("Complaint") pursuant to Federal Rules of Civil Procedure ("Rule") 12(b)(6) and 12(b)(2). This Court, having considered the parties' submissions, decides this matter without oral argument pursuant to Rule 78. For the reasons stated below, Puff Bar, Patrick Beltran, and Nick Minas' Motions to Dismiss pursuant to Rule 12(b)(6) are GRANTED in part and DENIED in part, and Umais Abubaker, Shahid Shaikh, and Cool Clouds Distribution, Inc.'s Motion to Dismiss pursuant to Rule 12(b)(2) is GRANTED.

I. BACKGROUND

Plaintiff brings this class action individually and on behalf of her minor child, J.S., as wellas all those similarly situated who have purchased and used Puff Bar brand products.¹ (D.E. 33 ¶ 1.) Defendant Puff Bar designs, manufactures, markets, and sells disposable e-cigarettes and other accessory products under the Puff Bar brand.² (Id. ¶ 12.) PB e-cigarettes are pocket-sized, buttonless, disposable devices that have no removeable pieces or charging ports. (Id. ¶¶ 33-34.) Allegedly "easy-to-use," the internal battery is automatically activated when users vape e-liquid contained within each cartridge. (Id. ¶¶ 34-35.) The Complaint contains numerous pages of information on the harmful health effects of e-cigarettes and the current epidemic in the United States among young consumers of Electronic Nicotine Delivery System ("ENDS") products.³ (Id. ¶¶ 21-32, 78-113.) The following is a summary of Plaintiff's allegations.

Plaintiff maintains that because PB e-cigarettes are made with a nicotine salt formula, they are designed to deliver higher levels of nicotine than earlier e-cigarette products. (Id. ¶¶ 36, 38, 117, 140.) Puff Bar's e-liquid formula allegedly delivers nicotine more efficiently and in a less-irritating manner than older e-cigarette products and traditional, combustible cigarettes. (Id. ¶¶ 36, 38, 41, 43, 44.) For example, e-cigarettes made with an alkaline form of nicotine (known as "free-base nicotine") are purportedly more bitter and irritate the throat when inhaled, which creates a harsh feeling known as the "throat hit." (Id. ¶ 39.) Plaintiff avers that e-cigarettes with a salt formula reduce the throat hit and thus appeal to nonsmokers, particularly the youth. (Id. ¶¶ 42-44.) By reducing the throat hit, Plaintiff claims that PB e-cigarettes mask "the amount of nicotinebeing delivered" and remove the "physiological drawbacks of inhaling traditional free-base nicotine," which eliminates "the principal barrier to nicotine consumption and addiction." (Id. ¶ 43.) In addition, Plaintiff cites to various sources to support the assertion that adolescents and youth are especially vulnerable to nicotine addiction. (Id. ¶¶ 5, 78-86.)

Puff Bar products are allegedly marketed to America's youth using bold, bright-colored packaging and come in a variety of "kid-friendly" flavors, including Sour Apple, Cool Mint, Blue Razz, and Pink Lemonade, among others. (Id. ¶¶ 37, 45, 68-69.) Moreover, Plaintiff maintains that Puff Bar's website contained false and misleading statements and omissions regarding the nicotine content in Puff Bar products, such as: "Original Puff Bar [is] equivalent to one pack of 20 cigarettes." (Id. ¶ 114.) Although PB e-cigarettes are represented to contain nicotine quantities equivalent to one package of traditional cigarettes, (id. ¶¶ 114, 116, 140), one researcher found that a single PB e-cigarette can contain nicotine quantities equivalent to roughly two to three packs of traditional cigarettes. (Id. ¶ 115.)

In the instant matter, J.S. began purchasing Puff Bar products from retail stores in New Jersey after their release in early 2019.⁴ (Id. ¶¶ 4, 7, 10.) J.S. has seen Puff Bar advertisements and purportedly used Puff Bar products "as a direct result of the numerous kid-friendly flavors offered by Puff Bar." (Id. ¶¶ 7, 9.) Neither Plaintiff nor J.S. were aware that (i) PB e-cigarettes contain more nicotine than a package of traditional cigarettes, or (ii) Puff Bar developed its products "to create and sustain a nicotine addiction." (Id. ¶ 11.) Plaintiff avers that J.S. has a nicotine addiction "and other physical and personal injuries" as a result of Defendants' allegedly unlawful conduct. (Id.)

Plaintiff brings this action against Puff Bar—a California corporation with its principal place of business in Glendale, California—and five other defendants: (i) Patrick Beltran, Puff Bar's Chief Financial Officer and a citizen of California; (ii) Nick Minas, Puff Bar's Chief Executive Officer and a citizen of California; (iii) Cool Clouds Distribution, Inc. ("Cool Clouds"), a California corporation that allegedly "manufactures, designs, sells, markets, promotes and distributes" Puff Bar's products with its principal place of business in Los Angeles, California; (iv) Umais Abubaker, Cool Clouds' Chief Executive Officer and a citizen of California; and (v) Shahid Shaikh, Cool Clouds' Chief Operating Officer and citizen of California. (Id. ¶¶ 12-17.)

As explained further below, Plaintiff brings Count I under the New Jersey Product Liability Act ("NJPLA"), see N.J. Stat. Ann. § 2A:58C-1 et seq., premised on design defect and failure to warn.⁵ (Id. ¶¶ 128-158.) Plaintiff also brings Count II, a claim for a preliminary and permanent injunction, to prevent the sale, distribution, and marketing of Puff Bar products. (Id. ¶¶ 159-165.) Before this Court are three motions to dismiss the Complaint. (D.E. 37 (Puff Bar); D.E. 38 (Minas and Beltran); D.E. 47 (Abubaker, Shaikh, and Cool Clouds).) Plaintiff opposed each motion separately. (D.E. 43; D.E. 44; D.E. 55.) The motions were fully briefed on December 22, 2020. (D.E. 51; D.E. 52; D.E. 56.)

II. LEGAL STANDARDS

A. Motion for Lack of Personal Jurisdiction

Federal Rule of Civil Procedure ("Rule") 4(e) "authorizes personal jurisdiction over non-resident defendants to the extent permissible under the law of the state where the district court sits." Pennzoil Prod. Co. v. Colelli & Assoc., Inc., 149 F.3d 197, 200 (3d Cir. 1998). A federal court in New Jersey exercises jurisdiction to the extent permitted by New Jersey law. See Miller Yacht Sales, Inc. v. Smith, 384 F.3d 93, 96 (3d Cir. 2004). New Jersey's long-arm statute provides for the exercise of jurisdiction over non-residents "to the uttermost limits permitted by the United States Constitution." Charles Gendler & Co., Inc. v. Telecom Equip. Corp., 102 N.J. 460, 469 (1986) (quoting Avdel Corp. v. Mecure, 58 N.J. 264, 268 (1971)); N.J. Ct. R. 4:4-4.

A court can assert either specific or general jurisdiction over a defendant. Spuglio v. Cabaret Lounge, 344 F. App'x 724, 725 (3d Cir. 2009). Specific jurisdiction is established through a minimum contacts analysis. See Int'l Shoe Co. v. State of Wash., 326 U.S. 310, 316 (1945); O'Connor v. Sandy Lane Hotel Co., Ltd., 496 F.3d 312, 316 (3d Cir. 2007). In the Third Circuit, proving specific jurisdiction requires establishing the following three requirements: (1) "the defendant must have purposefully directed [its] activities at the forum"; (2) "the litigation must arise out of or relate to at least one of those activities"; and (3) if the first two requirements are met, the exercise of jurisdiction must "otherwise comport[ ] with fair play and substantial justice." O'Connor, 496 F.3d at 317 (internal citations and quotations omitted); Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985). "A single contact that creates a substantial connection with the forum can be sufficient to support the exercise of personal jurisdiction over a defendant." Miller Yacht, 384 F.3d at 96 (citing Burger King Corp., 471 U.S. at 475 n.18).

General jurisdiction, by contrast, requires the defendant to have "systematic and continuous" contacts with the forum state. Spuglio, 344 F. App'x at 725 (quoting Int'l Shoe, 326 U.S. at 320). These contacts need not relate to the subject matter of the litigation. Id. at 725-26. The facts required to establish sufficient contacts for general jurisdiction must be "extensive andpersuasive." Reliance Steel Prods. Co. v. Watson, Ess, Marshall & Enggas, 675 F.2d 587, 589 (3d Cir. 1982). Thus, the plaintiff must demonstrate "significantly more than minimum contacts." Provident Nat. Bank v. California Fed. Sav. & Loan Ass'n, 819 F.2d 434, 437 (3d Cir. 1987).

When analyzing a motion to dismiss for lack of personal jurisdiction, the Court must accept plaintiff's allegations as true and resolve disputes in plaintiff's favor. Pinker v. Roche Holdings Ltd., 292 F.3d 361, 368 (3d Cir. 2002). Plaintiff's "allegations may be contradicted by the defendant through opposing affidavits or other evidence, at which point the plaintiff must respond with 'actual proofs, not mere allegations.'" Am. Bd. of Internal Med. v. Rushford, No. 14-6428, 2015 WL 5164791, at *5 (D.N.J. Sept. 2, 2015) (quoting Patterson by Patterson v. FBI, 893 F.2d 595, 603 (3d Cir. 1990)). Thus, if a defendant challenges a court's exercise of personal jurisdiction, "the plaintiff bears the burden to prove, by a preponderance of the evidence, facts sufficient to establish personal jurisdiction" with sworn affidavits or other competent documentary evidence. Carteret Sav. Bank, FA v. Shushan, 954 F.2d 141, 146 (3d Cir. 1992); Miller Yacht, 384 F.3d at 101, n.6. The facts must demonstrate that the defendant purposefully availed itself "of the privilege of...