Snow v. Align Technology, Inc.

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

MISTY SNOW, et al., Case No. 21-cv-03269-VC

Plaintiffs,

SUPPLEMENTAL ORDER

v. GRANTING IN PART AND DENYING

IN PART MOTION TO DISMISS;

ALIGN TECHNOLOGY, INC., DENYING MOTION TO STRIKE

Defendant. Re: Dkt. Nos. 65, 67

The plaintiffs bring a series of antitrust challenges against Align—the manufacturer of

Invisalign-brand clear dental aligners. Align moved to dismiss the complaint and strike some of

its allegations. An accompanying ruling addresses the more difficult questions raised by the

motions. The remainder of the issues are discussed here.

Section 2 Claims: The plaintiffs seek injunctive relief under Section 2 of the Sherman

Act. The sufficiency of most of the plaintiffs’ allegations were tested, and upheld, in a related

case. See Simon & Simon, PC v. Align Technology, Inc., 533 F. Supp. 3d 904 (N.D. Cal. 2021).

Align rightfully does not attempt to relitigate its prior arguments. Instead, it raises two technical

challenges unique to this case. Neither prevails.

1. Align argues that the plaintiffs do not have standing to seek injunctive relief. To satisfy

the requirements of Article III when seeking prospective relief, a plaintiff must plausibly allege a

threat of future harm that is “actual and imminent, not conjectural or hypothetical.” Davidson v.

Kimberly-Clark Corp., 889 F.3d 956, 967 (9th Cir. 2018) (quoting Summers v. Earth Island Inst.,

555 U.S. 488, 493 (2009)). While “allegations of possible future injury are not sufficient,” courts

“must be careful not to employ too narrow or technical an approach” and “consider instead the

context of the inquiry.” Id. (quoting Clapper v. Amnesty International USA, 568 U.S. 398, 409

(2013); Armstrong v. Davis, 275 F.3d 849, 867 (9th Cir. 2001), abrogated on other grounds by

Johnson v. California, 543 U.S. 499 (2005)).

The relevant named plaintiff, Emily Vo, purchased Invisalign for one of her children in

July 2019 and “intends to purchase Invisalign aligners in the future” for her other child. That the

complaint alleges that she will not make this purchase “until [she is] financially ready” does not

undermine the imminence of her future harm. Vo intends to purchase Invisalign aligners in the

future, and she will be subject to the alleged harm of Align’s anticompetitive actions when she

does so, absent an injunction. The plaintiffs have therefore adequately alleged Article III

standing to seek injunctive relief.

2. Align argues that the plaintiffs fail to state a Section 2 claim because, in tacking on

allegations about the direct-to-consumer market and the agreements between Align and

SmileDirectClub, the plaintiffs have fatally undermined the plausibility of their Section 2 story.

This argument is unconvincing.

To be fair, the plaintiffs’ complaint is not always precise in its terminology. For example,

the plaintiffs note that Align has a 90% share of the $3 billion “clear aligner market,” while

noting elsewhere that SmileDirectClub has a 90% share of the “multi-billion dollar” direct-to-

consumer submarket. Read in context, however, there is no inconsistency: the $3 billion figure

plainly refers to the dentist-driven market, while the latter figure refers to the direct-to-consumer

market. This and other instances of inartful pleading do not warrant dismissal. While the

complaint may have benefitted from an additional round of edits, Align’s argument that these

statements doom the plaintiffs’ claims is frivolous.

New York & Tennessee Claims: In the accompanying ruling, the plaintiffs’ Cartwright

Act claim was dismissed for failing to plausibly allege concerted action. The antitrust laws of

Tennessee and New York require concerted action as well. See Tenn. Code Ann. § 47-25-101;

N.Y. Gen. Bus. § 340; Staley v. Gilead Sciences, Inc., 446 F. Supp. 3d 578, 642 (N.D. Cal.

2020). The plaintiffs concede that their claims under these statutes rise or fall with their

Cartwright Act clam. The New York and Tennessee claims are therefore dismissed.

California UCL: Although Align’s unilateral conduct cannot be the basis for a claim

under California’s Cartwright Act, it can support a claim under California’s Unfair Competition

Law (UCL). The California UCL defines “unfair competition” to include “any unlawful, unfair,

or fraudulent business act or practice.” Cal. Bus. & Prof. Code § 17200. Violations of the

Sherman Act fall within the scope of this provision as “unlawful” business acts. See Cel-Tech

Communications, Inc. v. Los Angeles Cellular Telephone Co., 20 Cal. 4th 163, 180 (1999) (“By

proscribing ‘any unlawful’ business practice, ‘section 17200 borrows violations of other laws

and treats them as unlawful practices’ that the unfair competition law makes independently

actionable.”) (quoting State Farm Fire & Casualty Co. v. Superior Court, 45 Cal. App. 4th 1093,

1103 (Cal. Ct. App. 1996)). And since the plaintiffs have no adequate remedy at law because

they cannot seek damages under the Sherman Act or the Cartwright Act, equitable relief under

the UCL would be appropriate. See Sonner v. Premier Nutrition Corp., 971 F.3d 834, 844 (9th

Cir. 2020).

Here, however, the plaintiffs have failed to state a claim under the UCL because the

named California plaintiff does not have standing. Cindy Ellis purchased Invisalign in July

2017—before Align terminated its interoperability agreement. And, as was discussed in the

accompanying ruling, Align’s agreement with SmileDirectClub cannot be the basis for an

antitrust action concerning the dentist-directed market. The plaintiffs’ UCL claim is therefore

dismissed.

Iowa: The plaintiffs’ claim under Iowa’s Competition Law is dismissed for the same

reason, as named plaintiff Marjorie Sandner purchased Invisalign in June 2017.

Arizona: Align argues that this Court does not have subject-matter jurisdiction over the

Arizona class because Align is a citizen of Arizona. This argument may have been successful if

Align had prevailed in its motion to dismiss the plaintiffs’ federal claims. But because the

plaintiffs’ Sherman Act claims have survived, the lack of diversity between the Arizona class

and Align is no barrier to the exercise of supplemental jurisdiction. See 28 U.S.C. § 1367(a), (b).

Florida: Align contends that the plaintiffs’ claim under the Florida Deceptive & Unfair

Trade Practices Act (DUTPA) should be dismissed because the plaintiffs have not pled the claim

“with particularity.” Florida’s DUTPA prohibits both “unfair” and “deceptive” acts. Fla. Stat.

§ 501.204. Although courts sometimes find that claims under Florida’s DUTPA must be pled

with particularity, Align has not offered any support for the proposition that this pleading

requirement extends to all DUTPA claims, as opposed to only those sounding in fraud. See, e.g.,

Jones v. Micron Tech., Inc., 400 F. Supp. 3d 897, 927 (N.D. Cal. 2019) (citing Wrestlereunion,

LLC v. Live Nation TV Holdings, Inc., 2008 WL 3048859, at *3 (M.D. Fla. Aug. 4, 2008)).

But even if the particularity requirement applies here, the plaintiffs have met this

heightened burden. The plaintiffs go into great detail describing the specific conduct that

constitutes Align’s “unfair” business practices. The complaint has therefore adequately pled the

“who, what, when, where, and how” required under Rule 9’s heightened standard. Cooper v.

Pickett, 137 F.3d 616, 627 (9th Cir. 1997). The motion to dismiss the Florida claim is therefore

denied.

Motion to Strike: Align’s motion to strike is denied in its entirety.

1. The allegations concerning the agreement between Align and SmileDirectClub are

relevant to the plaintiffs’ Section 1 claim, which has survived Align’s motion to dismiss.

Although only the restraint on Align’s ability to enter the direct-to-consumer market is

cognizable under the antitrust laws, the entire agreement is relevant to the plaintiffs’ claim,

which turns on whether the restraint was reasonably necessary to the formation of the broader

agreement.

2. The plaintiffs’ allegations about the scanner market support their claims about Align’s

allegedly unlawful activities affecting the dentist-directed aligner market. These claims should

therefore not be stricken.

3. The remainder of Align’s motion to strike is denied as moot, as the requests concern

claims that have been dismissed.

* * *

In summary, the plaintiffs’ claims under California, lowa, New York, and Tennessee law

are dismissed. The federal claims have survived, along with the remaining state law claims:

Arizona, Connecticut, Florida, Maryland, Massachusetts, Michigan, Minnesota, Nebraska,

Nevada, North Carolina, and Oregon.

Where the plaintiffs’ claims are dismissed, dismissal is with leave to amend. If the

plaintiffs wish to file an amended complaint, they must do so within 14 days of this order. A

response is due 14 days after the filing of an amended complaint (or 14 days after the deadline to

file an amended complaint expires). With respect to the Cartwright Act claim and related state

law claims, dismissal is also without prejudice to seeking leave to add these claims at a later time

if discovery gives rise to a basis for doing so.

IT IS SO ORDERED.

Dated: February 16, 2022 Ko“.

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VINCE CHHABRIA

United States District Judge