Liou v. Organifi, LLC, Case No.: 20-cv-1077-CAB-DEB

491 F.Supp.3d 740

Glenn LIOU, Plaintiff,

v.ORGANIFI, LLC et al., Defendants.

Case No.: 20-cv-1077-CAB-DEB

United States District Court, S.D. California.

Signed October 1, 2020

Alan McQuarrie Mansfield, San Diego, CA, for Plaintiff.

David Allen Shimkin, Cozen O'Connor, Los Angeles, CA, for Defendants.

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS’ MOTION TO DISMISS

Cathy Ann Bencivengo, United States District Judge

This matter is before the Court on Defendants Organifi, LLC's and Andrew Canole's motion to dismiss Plaintiff's complaint. [Doc. No. 3.] The motion has been fully briefed and the Court finds it suitable for determination on the papers submitted and without oral argument. See S.D. Cal. CivLR 7.1(d)(1). For the reasons set forth below, Defendants’ motion to dismiss is granted in part and denied in part with leave to amend.

I. BACKGROUND

Plaintiff Glenn Liou filed this putative consumer class action complaint against Defendants Organifi, LLC and Andrew Canole (collectively "Defendants") in the Superior Court of California, County of San Diego, on August 30, 2019. [Doc. No. 1-2.] On January 6, 2020, Plaintiff filed a First Amended Complaint ("FAC") [Doc. Nos. 1-3, 1-4], and Defendants removed the action to this Court on June 12, 2020. [Doc. No. 1.]

The FAC asserts claims for: (1) Breach of Implied Warranties of Merchantability and Fitness for Particular Purpose; (2) Breach of Express Warranty; (3) Violation of California's Consumer Legal Remedies Act ("CLRA"), California Civil Code § 1750 et seq. ; (4) Violation of California's Unfair Competition Law ("UCL"), California Business & Professions Code § 17200 et seq. ; and (5) Restitution, Money Had and Received, Unjust Enrichment, and/or Quasi-Contract and Assumpsit. [Doc. No. 1-4 at ¶¶ 68–116.]

Defendant Organifi, LLC ("Organifi") manufactures, promotes, advertises, and sells its product Organifi Green Juice ("Green Juice" or "Product"). [Doc. No. 1-3 at ¶ 1.] Defendant Andrew Canole is the founder, manager, and primary promoter of Organifi. [Id. at ¶ 6.] Plaintiff alleges that based on information disseminated by Organifi through its website, on or about January 29, 2019, he placed an order for a one-month supply of the Green Juice, spending $72.90. [Id. at ¶ 21.] Plaintiff alleges that Defendants specifically state that the Green Juice's efficacy had been established by numerous clinical trials published on a prominent government website and supported by a prestigious medical university ("Clinical Trial Statements"), Georgetown University Medical Center. [Id. at ¶¶ 21, 28.] As alleged in the FAC, the Clinical Trial Statements made by Defendants are false and misleading as neither the links that Defendants cited to, nor the search results on the web pages returned references to any clinical trials. [Id. at ¶¶ 25, 27, 28, 29, 30.] Additionally, Plaintiff specifies twenty statements Defendants made relating to the Green Juice's benefits ("Benefit Statements") that are allegedly false or misleading. [Id. at ¶ 31(a)–(t).]

Plaintiff seeks to represent a class of "All persons who have purchased the [Green Juice] in the past four years other than for purposes of resale or distribution." [Id. at ¶ 11.] On June 19, 2020, Defendants moved to dismiss Plaintiff's FAC. [Doc. No. 3.]

II. LEGAL STANDARD

The familiar standards on a motion to dismiss apply here. To survive a motion to dismiss under Rule 12(b)(6), "a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ " Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atlantic Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). Thus, the Court "accept[s] factual allegations in the complaint as true and construe[s] the pleadings in the light most favorable to the nonmoving party." Manzarek v. St. Paul Fire & Marine Ins. Co. , 519 F.3d 1025, 1031 (9th Cir. 2008). On the other hand, the Court is "not bound to accept as true a legal conclusion couched as a factual allegation." Iqbal , 556 U.S. at 678, 129 S.Ct. 1937 (quoting Twombly , 550 U.S. at 555, 127 S.Ct. 1955 ). Nor is the Court "required to accept as true allegations that contradict exhibits attached to the Complaint or matters properly subject to judicial notice, or allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences." Daniels-Hall v. Nat'l Educ. Ass'n , 629 F.3d 992, 998 (9th Cir. 2010). "In sum, for a complaint to survive a motion to dismiss, the non-conclusory factual content, and reasonable inferences from that content, must be plausibly suggestive of a claim entitling the plaintiff to relief." Moss v. U.S. Secret Serv. , 572 F.3d 962, 969 (9th Cir. 2009) (quotation marks omitted).

III. DISCUSSION

Defendants move to dismiss Plaintiff's FAC for the following reasons: 1) Plaintiff fails to state a claim for breach of an implied warranty of fitness for a particular purpose because Plaintiff fails to allege that the very nature of the product made the product unfit for its purpose; 2) Plaintiff's claim for breach of express warranty fails because it is based on a lack of substantiation; 3) Plaintiff's claims of violation of the CLRA and UCL fail because: (a) the complaint only alleges a claim for lack of substantiation, which is not actionable by a private plaintiff; (b) the claims fail under the primary jurisdiction doctrine since as predicated on violations of the Food, Drug, and Cosmetic Act ("FDCA") and the Dietary Supplement Health and Education Act of 1994 ("DSHEA") and are thus preempted; and 4) Plaintiff's claims for the common counts fail because they do not constitute specific causes of action and because Plaintiff failed to allege facts sufficient to show that the money Plaintiff paid Defendants was intended to be used for the benefit of Plaintiff, as opposed to consideration for a purchase.

A. Rule 9(b) Heightened Pleading Requirements

As a preliminary matter, the parties disagree whether Plaintiff's complaint is grounded in fraud which would require heightened pleading standards. Plaintiff attempts to argue that some of his claims are based on violations of state and federal laws for mislabeling and therefore not grounded in fraud. This argument is unconvincing. The entirety of Plaintiff's complaint is premised on alleged fraudulent activity by the Defendants with regard to the Clinical Trial and Benefit Statements to promote the efficacy of the Green Juice. Even if fraud is not a necessary element of a claim, the plaintiff must still comply with Rule 9(b) if he "allege[s] in the complaint that the defendant has engaged in fraudulent conduct." Vess v. Ciba-Geigy Corp. USA , 317 F.3d 1097, 1103 (9th Cir. 2003). This is true when the plaintiff "allege[s] a unified course of fraudulent conduct and rel[ies] entirely on that course of conduct as the basis of a claim." Id. This renders the claim "grounded in" or "sounding in" fraud. Id. A claim grounded in fraud must meet the heightened pleading requirements of Rule 9(b). Id. at 1103–04.

Because Plaintiff's claims are all grounded in fraud, the complaint must satisfy the heightened pleading requirements of Federal Rule of Civil Procedure 9(b) which provides: "in alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake." Fed. R. Civ. P. 9(b). The pleader must "identify the who, what, when, where, and how of the misconduct charged, as well as what is misleading about the purportedly fraudulent statement, and why it is false." Davidson v. Kimberly-Clark Corp. , 873 F.3d 1103, 1110 (9th Cir. 2017) (quoting Cafasso, U.S. ex rel. v. Gen. Dynamics C4 Sys., Inc. , 637 F.3d 1047, 1055 (9th Cir. 2011)). These heightened pleading requirements apply equally to any claims based on UCL, FAL and CLRA claims which ground in fraud. Kearns v. Ford Motor Co. , 567 F.3d 1120, 1124 (9th Cir. 2009).

Plaintiff's complaint sufficiently meets the heightened pleading requirements of Rule 9(b). Defendants contend that Plaintiff failed to address the following: (1) when did Plaintiff view the website; (2) in what way did Plaintiff detrimentally rely on Defendants’ statements; (3) what statements did Plaintiff specifically rely upon; and (4) why did he rely upon those statements? Yet each of these questions are answered by the complaint. Plaintiff alleges that on January 29, 2019, he viewed information disseminated by Defendants online and placed an order for the Green Juice in reliance on the Clinical Trial and Benefit Statements which he specifically identifies throughout his complaint in sufficient detail. Plaintiff alleges he detrimentally relied on these statements because he cares about the nutritional content of food and seeks to maintain a healthy diet. Accordingly, Plaintiff's complaint meets Rule 9(b) ’s heightened pleading requirements.

B. Warranty Claims

Defendants contend Plaintiff's breach of implied warranties claim fails because Plaintiff's claim is based on injuries attributable to Defendants’ marketing efforts rather than the nature of the product itself. Defendants also contend Plaintiff's breach of express warranty claim fails because it is not pled with sufficient specificity and because it is an impermissible lack of substantiation claim.

Plaintiff brings separate claims for breach of implied warranty of merchantability and implied warranty of fitness for a particular purpose. "The California Commercial Code implies a warranty of merchantability that goods ‘are fit for ordinary purposes for which such goods are used.’ " Birdsong v. Apple, Inc. , 590 F.3d 955, 958 (9th Cir. 2009) (citing Cal. Com. Code § 2314(2)(c) ). Thus, an implied warranty of merchantability "provides for a minimum level of quality," and "a breach of the warranty of merchantability occurs if the product lacks even the most basic degree of fitness for ordinary use." Id. (internal citations and quotation...