Monday, March 07, 2011

Motion to dismiss still not easy to win in California

Peviani v. Natural Balance, Inc., --- F.R.D. ----, 2011 WL 754958 (S.D. Cal.)

Peviani filed a putative class action against Natural Balance under the standard California laws, alleging that Natural Balance’s Cobra Sexual Energy dietary supplement is labeled falsely and misleadingly.

Natural Balance moved to dismiss, first arguing that the court lacked jurisdiction because the allegation that the amount in controversy was over $5 million was speculative. But a federal court has subject matter jurisdiction under CAFA unless it’s obvious from the face of the complaint that the suit can’t involve the necessary amount. Given the allegations that thousands of individuals have bought the product, that wasn’t obvious.

Next, Natural Balance argued that Peviani failed to satisfy Rule 9(b)’s heightened pleading requirements. Among other things, Natural Balance argued that Peviani could not have relied on the statements because she is a woman, and the product is a men's formula. Also, Natural Balance argued that the product's labels contained adequate warnings and didn’t contain misrepresentations.

Peviani argued that she’d detailed why each challenged statement was deceptive, and that she had standing because she suffered an economic injury from purchasing the supplement, even if it was ultimately used by someone else in her household.

The court found that the complaint’s allegations satisfied Rule 9(b)’s heightened pleading requirements by, among other things, providing pictures of the product’s labels and listing each challenged statement with an explanation of why it is deceptive or fraudulent. She also properly alleged reliance and injury—specifically, an economic injury because she paid more for the product than she would have absent the deceptive statements. There’s no requirement that the purchaser of the product use the product herself to have relied on the label and suffered injury.

Natural Balance also argued that the label statements were nonactionable puffery. Although puffery may be decided as a matter of law on a motion to dismiss, that’s rarely appropriate under the UCL. The statements at issue here include: "Cobra Sexual Energy"; "'adphrodiasiac' plants to enhance ... sexual energy"; "Scientifically blending select, high-quality herbs"; "offering specialty supplements that work"; and "proprietary formulas." The allegedly deceptive statements were specific enough, not generalized or vague. Moreover, while other statements alleged to be false might constitute puffery standing on their own, they contribute to the deceptive context of the packaging as a whole. Natural Balance could raise the issue of puffery again on a motion for summary judgment. (What evidence could come in on this point?  Courts are pretty vague on this themselves.)

Likewise, Natural Balance’s arguments that plaintiff was not an appropriate class representative were also inappropriate for a motion to dismiss.

No comments: