Ottesen v. Hi-Tech Pharmaceuticals, Inc.

1

2

3

4 UNITED STATES DISTRICT COURT

5 NORTHERN DISTRICT OF CALIFORNIA

6

7 ALLISON OTTESEN, et al., Case No. 19-cv-07271-JST

8 Plaintiffs,

ORDER GRANTING IN PART AND

9 v. DENYING IN PART MOTION TO

DISMISS

10 HI-TECH PHARMACEUTICALS, INC.,

Re: ECF No. 99

Defendant.

11

12

13 Before the Court is Defendant Hi-Tech Pharmaceutical’s (“Hi-Tech”) motion to dismiss

14 Plaintiffs’ first amended complaint. ECF No. 99. The Court will grant the motion in part and

15 deny it in part.

16 I. BACKGROUND

17 Because the facts are well-known to the parties and the Court has summarized Plaintiffs’

18 allegations in detail in its prior orders, ECF Nos. 41, 70, the Court will not elaborate them here. In

19 sum, Plaintiffs Allison Ottesen, Sean Allen, and Lauren Accardi bring this putative class action

20 against Hi-Tech for allegedly manufacturing, distributing, and selling supplements containing the

21 ingredient DMHA,1 which is allegedly “illegal and not generally recognized as safe.” ECF No.

22 79 ¶ 2 (“FAC”). Plaintiffs bring claims for breach of implied warranty of merchantability, fraud,

23 and unjust enrichment on behalf of a nationwide class; violation of California’s Consumers Legal

24 Remedies Act (“CLRA”), Cal. Civ. Code §§ 1750, et seq., and California’s Unfair Competition

25 Law (“UCL”), Cal. Bus. & Prof. Code §§ 17200, et seq., on behalf of a California subclass; and

26

27

1 The complaint uses “DMHA” as shorthand for the substance also called, variously, 2-

1 violation of New Yorks General Business Law Section 349 on behalf of a New York subclass. Id.

2 at 17–25. They seek injunctive relief, compensatory damages, punitive damages, and restitution.

3 Id. at 26.

4 On April 10, 2019, the FDA sent a warning letter to Hi-Tech “stat[ing] that DMHA ‘is not

5 generally recognized as safe under its conditions for use in Hi-Tech’s dietary supplement

6 products,’” and “that ‘dietary supplements containing DMHA as a new dietary ingredient are

7 adulterated . . . because there is inadequate information to provide reasonable assurance that such

8 ingredient does not present a significant or unreasonable risk of illness or injury.’” Id. ¶ 7 (ellipsis

9 in original).

10 On November 20, 2020, the Court stayed the case on primary jurisdiction grounds,

11 “pending a determination by the FDA regarding the classification of DMHA.” ECF No. 56 at 6.

12 Nearly three years later, Plaintiffs moved to lift the stay following an FDA website update that

13 stated, in part, that “[a]fter further research and consideration, [the] FDA concluded that DMHA is

14 an unsafe food additive” and “adulterated under the FD&C Act.”2 ECF No. 66 (quoting FDA,

15 DMHA in Dietary Supplements (Mar. 6, 2023), https://www.fda.gov/food/dietary-supplement-

16 ingredient-directory/dmha-dietary-supplements [https://perma.cc/BN87-K7JX]). On October 17,

17 2023, the Court lifted the stay. ECF No. 70. The Court concluded:

18 [T]he FDA website states that the agency has “concluded that DMHA

is an unsafe food additive,” and that it “considers dietary supplements

19 containing DMHA to be adulterated.” DMHA in Dietary

Supplements. Nothing about this language appears tentative, nor—

20 unlike the last time this question came before the Court—is there any

indication in the record that the FDA’s “decision-making is still

21 ongoing.” ECF No. 56 at 5. In the absence of any such evidence, the

Court concludes that there no longer is a basis for a stay.

22

23 ECF No. 70 at 2–3. Following this Court’s order lifting the stay, Hi-Tech moved the Court to

24 certify its October 17, 2023 order for interlocutory appeal pursuant to 28 U.S.C. § 1292(b) and

25 enter a stay of all proceedings pending that appeal. The Court granted Hi-Tech’s motion and

26 stayed the case while its order certifying interlocutory appeal was reviewed by the Ninth Circuit.

27

1 ECF No. 90. Two months later, the Ninth Circuit denied Hi-Tech’s request to appeal. ECF

2 No. 91. Hi-Tech then filed the renewed motion to dismiss that is now before the Court. ECF No.

3 99.

4 II. JURISDICTION

5 The Court has jurisdiction over this case as a class action in which a member of the class

6 of plaintiffs is a citizen of a state different from the defendant and the matter in controversy

7 exceeds the sum of $5 million, exclusive of interests and costs. 28 U.S.C. § 1332(d).

8 III. LEGAL STANDARD

9 A. Federal Rule of Civil Procedure 12(b)(2)

10 When a defendant objects to the Court’s personal jurisdiction over it pursuant to Federal

11 Rule of Civil Procedure 12(b)(2), “the plaintiff bears the burden of establishing that jurisdiction is

12 proper.” Boschetto v. Hansing, 539 F.3d 1011, 1015 (9th Cir. 2008). Absent an evidentiary

13 hearing, however, the plaintiff need only make a prima facie showing of personal jurisdiction. Id.

14 “Uncontroverted allegations in the plaintiff’s complaint must be taken as true”, and “[c]onflicts

15 between the parties over statements contained in affidavits must be resolved in the plaintiff’s

16 favor.” Id. (quoting Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 800 (9th Cir.

17 2004)). “Where, as here, there is no applicable federal statute governing personal jurisdiction, the

18 district court applies the law of the state in which the district court sits.” Schwarzenegger, 374

19 F.3d at 800. “Because California’s long-arm jurisdictional statute is coextensive with federal due

20 process requirements, the jurisdictional analyses under state law and federal due process are the

21 same.” Id. at 800–01.

22 B. Federal Rule of Civil Procedure 12(b)(6)

23 A complaint must contain “a short and plain statement of the claim showing that the

24 pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). “Dismissal under Rule 12(b)(6) is

25 appropriate only where the complaint lacks a cognizable legal theory or sufficient facts to support

26 a cognizable legal theory.” Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th

27 Cir. 2008). A complaint need not contain detailed factual allegations, but facts pleaded by a

1 Twombly, 550 U.S. 544, 555 (2007). “To survive a motion to dismiss, a complaint must contain

2 sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its

3 face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quotation marks and citation omitted). “A

4 claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw

5 the reasonable inference that the defendant is liable for the misconduct alleged.” Id. The Court

6 must “accept all factual allegations in the complaint as true and construe the pleadings in the light

7 most favorable to the nonmoving party.” Knievel v. ESPN, 393 F.3d 1068, 1072 (9th Cir. 2005).

8 However, the Court is not “required to accept as true allegations that are merely conclusory,

9 unwarranted deductions of fact, or unreasonable inferences.” In re Gilead Scis. Sec. Litig., 536

10 F.3d 1049, 1055 (9th Cir. 2008) (quotation marks and citation omitted).

11 Because several of Plaintiffs’ causes of action—including their UCL and CLRA claims—

12 are grounded in fraud, the complaint must also satisfy Rule 9(b), which requires that “identify[ing]

13 the who, what, when, where, and how of the misconduct charged, as well as what is false or

14 misleading about the purportedly fraudulent statement, and why it is false.” Davidson v.

15 Kimberly-Clark Corp., 889 F.3d 956, 964 (9th Cir. 2018) (quoting Cafasso, U.S. ex rel. v. Gen.

16 Dynamics C4 Sys., Inc., 637 F.3d 1047, 1055 (9th Cir. 2011)).

17 “Whether a business practice is deceptive is generally a question of fact that requires

18 weighing of evidence from both sides.” Organic Consumers Ass’n v. Sanderson Farms, Inc., 284

19 F. Supp. 3d 1005, 1014 (N.D. Cal. 2018) (citing Linear Tech. Corp. v. Applied Materials, Inc.,

20 152 Cal. App. 4th 115, 134–35 (2007)). “For that reason, courts grant motions to dismiss under

21 the reasonable consumer test only in rare situations in which the facts alleged in the complaint

22 ‘compel the conclusion as a matter of law that consumers are not likely to be deceived.’” Id.

23 (quoting Chapman v. Skype Inc., 220 Cal. App. 4th 217, 226–27 (2013)). However, Plaintiffs

24 must show “more than a mere possibility that [Hi-Tech’s] label ‘might conceivably be

25 misunderstood by some few consumers viewing it in an unreasonable manner.’” Ebner v. Fresh,

26 Inc., 838 F.3d 958, 965 (9th Cir. 2016) (quoting Lavie v. Procter & Gamble Co., 105 Cal. App.

27 4th 496, 508 (2003)). “Rather, the reasonable consumer standard requires a probability ‘that a

1 the circumstances, could be misled.’” Id. (quoting Lavie, 105 Cal. App. 4th at 508).

2 IV. DISCUSSION

3 A. Personal Jurisdiction

4 Hi-Tech argues that this Court does not have personal jurisdiction over the claims asserted

5 by the New York Plaintiffs Accardi and Allen or on behalf of the putative non-California class

6 members. Plaintiffs respond that as a threshold matter, Hi-Tech failed to raise this defense in its

7 initial motion to dismiss, ECF No. 16, and therefore has waived it. ECF No. 99 at 19. Hi-Tech

8 counters that Plaintiffs have suffered no prejudice because the Court stayed the case following Hi-

9 Tech’s initial motion to dismiss and administratively terminated the motion without deciding it,

10 and there is no indication that Hi-Tech raised its personal jurisdiction argument in its subsequent

11 motion to dismiss to delay the case or obtain any unfair advantage. ECF No. 103 at 17–18.

12 Rule 12(g)(2) of the Federal Rules of Civil Procedure provides that, with exceptions not

13 applicable here, a party “must not make another motion under [Rule 12] raising a defense or

14 objection that was available to the party but omitted from its earlier motion.” Fed. R. Civ. P.

15 12(g)(2). However, Rule 12(g)(2) must be read “in light of the general policy of the Federal Rules

16 of Civil Procedure, expressed in Rule 1,” which “directs that the Federal Rules ‘be construed,

17 administered, and employed by the court and the parties to secure the just, speedy, and

18 inexpensive determination of every action and proceeding.’” In re Apple iPhone Antitrust Litig.,

19 846 F.3d 313, 318 (9th Cir. 2017) (quoting Fed. R. Civ. P. 1), aff’d sub nom. Apple Inc. v. Pepper,

20 139 S. Ct. 1514 (2019). “Denying late-filed Rule 12(b)(6) motions . . . can produce unnecessary

21 and costly delays, contrary to the direction of Rule 1,” id., and “courts faced with a successive

22 motion [to dismiss that raises arguments that could have been raised in a prior motion] often

23 exercise their discretion to consider the new arguments in the interests of judicial

24 economy,” Amaretto Ranch Breedables, LLC v. Ozimals, Inc., No. C 10-05696 CRB, 2011 WL

25 2690437, at *2 (N.D. Cal. July 8, 2011). The Court will exercise its discretion to do so here.

26 1. Non-California Named Plaintiffs

27 “Personal jurisdiction must exist for each claim asserted against a defendant.” Action

1 Since the Supreme Court’s ”seminal decision in International Shoe,” courts ”have recognized two

2 types of personal jurisdiction: ‘general’ (sometimes called ‘all-purpose’) jurisdiction and ‘specific’

3 (sometimes called ‘case-linked’) jurisdiction.” Bristol-Myers Squibb Co. v. Super. Ct., 137 S. Ct.

4 1773, 1779–80 (2017) (citation omitted). “[A] court may assert pendent personal jurisdiction over

5 a defendant with respect to a claim for which there is no independent basis of personal jurisdiction

6 so long as it arises out of a common nucleus of operative facts with a claim in the same suit over

7 which the court does have personal jurisdiction.” Action Embroidery, 368 F.3d at 1180 (collecting

8 cases).

9 Here, the parties do not dispute that the Court has jurisdiction over Ottesen—the named

10 California plaintiff. The question is whether the Court may exercise pendent jurisdiction over

11 Accardi and Allen’s claims in light of the Supreme Court’s decision in Bristol-Myers. In Bristol-

12 Myers, plaintiffs from across the country sued the Bristol-Myers Squibb Company in California

13 state court alleging that its drug was harmful to their health. 137 S. Ct. at 1777–78. The

14 Supreme Court found that California courts could not exercise specific jurisdiction over the out-

15 of-state plaintiffs’ claim because the claims did not arise in California or out of the companies’

16 activities in California. Id. at 1780–84. Specific jurisdiction, the Supreme Court explained,

17 requires an “affiliation between the forum and the underlying controversy, principally an activity

18 or an occurrence that takes place in the forum state.” Id. at 1780 (alteration, quotation, and

19 citation omitted). In reaching this decision, the Supreme Court left open the question of “whether

20 the Fifth Amendment imposes the same restrictions on the exercise of personal jurisdiction by

21 a federal court.” Id. at 1783–84 (citation omitted).

22 Although the Ninth Circuit has not yet spoken on this issue, the “overwhelming majority of

23 federal courts,” including courts in this district, “have held that Bristol-Myers applies to claims

24 brought by named plaintiffs in class actions” when federal courts are sitting in diversity. Sloan v.

25 Gen. Motors LLC, No. 16-cv-07244-EMC, 2019 WL 6612221, at *9 (N.D. Cal. Dec. 5, 2019); see

26 La Fosse v. Sanderson Farms, Inc., No. 19-cv-06570-RS, 2020 WL 3617786, at *4 (N.D. Cal.

27 July 2, 2020) (granting 12(b)(2) motion and dismissing all claims brought by the non-California

1 Nationwide Class Action?, 129 Yale L.J. Forum 205, 226 (2019) (“[T]here is consensus

2 that BMS’s personal-jurisdiction holding applies to the named plaintiffs in a class action[.]”).

3 Plaintiffs argue that the New York named Plaintiffs’ claims arise out of the same common

4 nucleus of fact as Ottesen’s claim, so “severing their claims would be contrary to judicial

5 economy.” ECF No. 102 at 20. Clearly so. But the Supreme Court rejected virtually identical

6 arguments in Bristol-Myers. See Bristol-Myers, 137 S. Ct. at 1780–81 (holding that the Due

7 Process Clause can divest a court of jurisdiction “even if the defendant would suffer minimal or no

8 inconvenience from being forced to litigate before the tribunals of another State; even if the forum

9 State has a strong interest in applying its law to the controversy; [and] even if the forum State is

10 the most convenient location for litigation” (citation and internal quotation omitted)). The Court is

11 thus persuaded by “the weight of authority [that] weighs heavily against the exercise of pendent

12 jurisdiction in a diversity case such as this one.” King v. Bumble Trading, Inc., No. 18-cv-06868-

13 NC, 2020 WL 663741, at *6 (N.D. Cal. Feb. 11, 2020). Accordingly, the Court will not assert

14 pendent jurisdiction over Accardi and Allen’s claims because these claims arise from out-of-state

15 activities with no connection to California. The Court thus dismisses Accardi and Allen’s claims

16 on behalf of themselves and the New York subclass under New York General Business Law §

17 349.

18 2. Unnamed Non-California Putative Class Members

19 Hi-Tech further argues that the Court should dismiss the claims of unnamed members of

20 the nationwide class. Hi-Tech relies on Carpenter v. Petsmart, Inc., 441 F. Supp. 3d 1028 (S.D.

21 Cal. 2020), which held that Bristol-Myers barred the claims of unnamed, non-resident plaintiffs in

22 a putative nationwide class action. 441 F. Supp. 2d at 1037.

23 While the Ninth Circuit has not directly addressed the issue, it has found that motions to

24 dismiss unnamed plaintiffs for lack of personal jurisdiction, prior to class certification, are

25 premature. Moser v. Benfytt, Inc., 8 F.4th 872, 878 (9th Cir. 2021). This is “because putative class

26 members ‘are always treated as nonparties’ and ‘become parties to an action – and thus subject to

27 dismissal – only after class certification.’” Id. (quoting Molock v. Whole Foods Mkt. Grp., 952

1 513 F. Supp. 3d 1172, 1188 (N.D. Cal. 2021). Accordingly, Hi-Tech’s request to dismiss the

2 claims on behalf of the nationwide class for lack of personal jurisdiction is denied as premature.

3 B. Primary Jurisdiction3

4 The primary jurisdiction doctrine “allows courts to stay proceedings or to dismiss a

5 complaint without prejudice pending the resolution of an issue within the special competence of

6 an administrative agency” if the court “determines that an otherwise cognizable claim implicates

7 technical and policy questions that should be addressed in the first instance by the agency with

8 regulatory authority over the relevant industry rather than by the judicial branch.” Clark v. Time

9 Warner Cable, 523 F.3d 1110, 1114 (9th Cir. 2008). The doctrine is “prudential” and does not

10 “implicate[] the subject matter jurisdiction of the federal courts.” Syntek Semiconductor Co. v.

11 Microchip Tech. Inc., 307 F.3d 775, 780 (9th Cir. 2002). In determining whether to apply the

12 primary jurisdiction doctrine, courts have generally considered the following factors: “(1) the need

13 to resolve an issue that (2) has been placed by Congress within the jurisdiction of an

14 administrative body having regulatory authority (3) pursuant to a statute that subjects an industry

15 or activity to a comprehensive regulatory authority that (4) requires expertise or uniformity in

16 administration.” Id. at 781 (citing United States v. Gen. Dynamics Corp., 828 F.2d 1356, 1362

17 (9th Cir. 1987)). The parties do not contest that the FDA has regulatory authority over the food

18 industry or that DMHA is subject to regulation by the FDA under the Dietary Supplement Health

19 and Education Act.

20 Hi-Tech argues that Ottesen’s claims are barred by the primary jurisdiction doctrine if the

21 FDA has not yet taken final agency action in declaring DMHA to be adulterated. Specifically, Hi-

22 Tech contends that neither the FDA’s website update nor the warning letter it issued to Hi-Tech

23 constitutes final agency action. ECF No. 99 at 10–12. But whether the FDA has taken final

24 agency action is not the controlling inquiry as to whether the Court should apply the primary

25 jurisdiction doctrine.

26 Instead, the primary jurisdiction doctrine is a prudential one, and efficiency—a guiding

27

1 principle underlying the doctrine—counsels in favor of proceeding with litigation. See Reid, 780

2 F.3d at 967 (explaining that the ‘“deciding factor’ in determining whether the primary jurisdiction

3 doctrine should apply is ‘efficiency’” and finding that it would be more efficient not to apply the

4 primary jurisdiction doctrine when “the FDA has made considered judgments on the legal issues

5 in this case”) (quoting Rhoades v. Avon Prods., Inc., 504 F.3d 1151, 1165 (9th Cir.2007)). As the

6 Court previously found in its October 17, 2023, order, the FDA website states that the agency has

7 “concluded that DMHA is an unsafe food additive,” and that it “considers dietary supplements

8 containing DMHA to be adulterated.” ECF No. 70 at 3 (quoting DMHA in Dietary Supplements).

9 Unlike when the Court originally stayed this case, nothing about this language appears tentative,

10 nor is there any indication in the record that the FDA’s “decision-making is still ongoing.” ECF

11 No. 56 at 5. This case is thus now more similarly situated to Reid v. Johnson & Johnson, Inc., in

12 which the Ninth Circuit affirmed denial of a motion to stay on primary jurisdiction grounds where

13 the FDA had issued warning letters regarding “No Trans Fat” statements and “there [was] no

14 indication that the FDA [was] contemplating authorizing [such] statements” or “signs [that the

15 FDA was] backing away from its determination” regarding the question at issue. 780 F.3d 952,

16 966–67 & n.9 (9th Cir. 2015). Like in Reid, Plaintiffs’ claims “present no issues of first

17 impression, as the FDA has already addressed the substantive issues raised here.” Id. at 966. In

18 the absence of any evidence that the FDA will make any further determinations, the Court

19 concludes that there is no reason for the primary jurisdiction doctrine to apply.

20 C. Preemption

21 The Supremacy Clause of the Constitution enables Congress to enact legislation that

22 preempts state law. See Gibbons v. Ogden, 22 U.S. 1, 211 (1824). “Federal preemption occurs

23 when: (1) Congress enacts a statute that explicitly pre-empts state law; (2) state law actually

24 conflicts with federal law; or (3) federal law occupies a legislative field to such an extent that it is

25 reasonable to conclude that Congress left no room for state regulation in that field.” Chae v. SLM

26 Corp., 593 F.3d 936, 941 (9th Cir. 2010) (citation omitted). In determining whether certain claims

27 are preempted, the Court heeds the long-established presumption against preemption. See

1 1. Express Preemption

2 Most relevant here, the FDCA forbids: (i) the misbranding of supplements by way of false

3 or misleading labeling, 21 U.S.C. § 343; and (ii) the adulteration of food or dietary supplements,

4 including containing a “new dietary ingredient for which there is inadequate information to

5 provide reasonable assurance that such ingredient does not present a significant or unreasonable

6 risk of illness or injury,” 21 U.S.C. § 342(f)(1)(b).

7 “To avoid a patchwork quilt of conflicting state labeling laws, the [FDCA] includes

8 a preemption provision that establishes a national and uniform standard for certain labeling

9 statements.” Greenberg v. Target Corp., 985 F.3d 650, 655 (9th Cir. 2021). The FDCA preempts

10 only those state law claims that impose requirements “not identical to” its own. Id.; see also 21

11 U.S.C. § 343–1(a). Congress thus limited preemption to state laws that “impose more or

12 inconsistent burdens on manufacturers than the burdens imposed by the FDCA.” Krommenhock v.

13 Post Foods, LLC, 255 F. Supp. 3d 938, 951 (N.D. Cal. 2017) (quoting Gallagher v. Bayer AG, No.

14 14-cv-04601-WHO, 2015 WL 1056480, at *4 (N.D. Cal. Mar. 10, 2015)).

15 Ottesen brings her claims under California’s Sherman Law, which imposes requirements

16 identical to those in the FDCA. Brazil v. Dole Food Co., Inc., 935 F. Supp. 2d 947, 954 (N.D.

17 Cal. 2013) (finding that “through the Sherman Law, California has expressly adopted the federal

18 labeling requirements as its own”). Hi-Tech does not appear to argue that Ottesen’s claims are

19 expressly preempted by the FDCA. But to the extent that it does, the Court finds that her claims

20 are not expressly preempted because they are based on an alleged violation of FDA regulations

21 and therefore require “nothing more or less than what the FDCA already requires.” Guerra v.

22 KIND, LLC, No. 22-cv-06654-RS, 2023 WL 3436093, at *7 (N.D. Cal. May 11, 2023). Similarly,

23 Hi-Tech’s submission of the Second Circuit’s decision in Jackson-Mau v. Walgreen Co., No. 23-

24 642, 115 F.4th 121 (2d Cir. 2024), ECF No. 106, is unpersuasive because that case dealt with state

25 laws that differed from FDCA requirements. See Jackson-Mau, 115 F.4th at 132 (finding that

26 “state law cannot be used to impose a ‘different’ or ‘additional’ naming requirement).

27 2. Implied Preemption

1 preempted if it conflicts with the FDCA’s provisions. Buckman Co. v. Plaintiffs’ Legal Comm.,

2 531 U.S. 341, 348 (2001). There is no private right of action under the FDCA. Perez v. Nidek

3 Co., Ltd., 711 F.3d 1109, 1119 (9th Cir. 2013). Rather, “[t]he FDA is responsible for investigating

4 potential violations of the FDCA.” Id. Thus, state claims that “exist solely by virtue of the

5 FDCA . . . requirements,” Buckman, 531 U.S. at 348, are impliedly preempted as they “conflict[ ]

6 with the FDCA’s enforcement scheme,” which entrusts enforcement to the FDA. Perez, 711 F.3d

7 9 at 1119.

8 However, as recognized by the Ninth Circuit, “Buckman . . . left the door open to state-law

9 claims ‘parallel’ to federal requirements.” McClellan v. I-Flow Corp., 776 F.3d 1035, 1040 (9th

10 Cir. 2015). To avoid preemption, “[t]he plaintiff must be suing for conduct that violates the

11 FDCA (or else his claim is expressly preempted [ ]) but the plaintiff must not be suing because the

12 conduct violates the FDCA (such a claim would be impliedly preempted under Buckman).” Perez,

13 711 F.3d at 1120 (citation omitted) (emphasis in original). Ottesen’s claims satisfy these

14 requirements. As this Court has explained, the Sherman Law “exists independently . . . and

15 violating its requirements would be a valid state cause of action even if the [FDCA] ceased to

16 exist.” Clancy v. Bromley Tea Co., 308 F.R.D. 564, 574 (N.D. Cal. 2013). Unlike in Buckman,

17 where the plaintiffs’ claims depended on federal law, Ottesen’s claims do “not depend on the

18 [FDCA], except in the sense that the Sherman Law mirrors the requirements of the FDCA.” Id.

19 Accordingly, Ottesen’s state law claims are not impliedly preempted. Davidson v. Sprout Foods,

20 Inc., 106 F.4th 842, 845 (9th Cir. 2024) (finding that “federal law does not preempt private

21 enforcement of the Sherman Law’s labeling requirements”).

22 Hi-Tech argues that Ottesen’s state law claims are nevertheless preempted “because they

23 would require this Court to decide issues that are reserved for the FDA.” ECF No. 103 at 13. Hi-

24 Tech cites Nexus Pharmaceuticals, Inc. v. Cent. Admixture Pharmacy Servs., Inc., 48 F.4th 1040

25 (9th Cir. 2022), as support for this argument. In Nexus Pharmaceuticals, the plaintiffs there

26 claimed that drug-compounding facilities violated state statutes prohibiting the sale of drugs not

27 approved by the FDA. Id. at 1044. But the FDA indicated that it “d[id] not intend to take action”

1 that it would “issue clarifying regulations on what ‘essentially a copy’” meant. Id. at 1050. The

2 court thus found that the plaintiffs’ claim would require determining whether the drug at issue was

3 “essentially a copy” of a discontinued drug and qualified for an exception to FDA approval. Id. at

4 1049. Because the “plain text of the FDCA leaves that determination in the first instance to the

5 FDA’s balancing of risks and concerns in its enforcement process,” the court held that the claim

6 was impliedly preempted by the FDCA. Id. at 1050–51.

7 Here, by contrast, as the Court explained in declining to apply the primary jurisdiction

8 doctrine, the FDA has already concluded that DMHA is an “unsafe food additive” and that

9 “dietary supplements containing DMHA are adulterated under the FD&C Act” because “DMHA

10 does not qualify as a dietary ingredient, is not an approved food additive, is not GRAS, and does

11 not meet any of the other listed exceptions to the food additive definition . . . .” DMHA in Dietary

12 Supplements. Unlike in Nexus Pharmaceuticals, the FDA has not stated that there are any

13 forthcoming “clarifying regulations” on the status of DMHA. Instead, the FDA has indicated that

14 it has come to a conclusive determination after thorough consideration and research. And

15 allowing Plaintiffs’ claims to proceed would be consistent with the FDA’s determination and not

16 contradict the FDA’s policies. See Reid v. Johnson & Johnson, 780 F.3d 952, 959 (9th Cir. 2015)

17 (“The preemption analysis turns on whether the challenged statements are authorized by the

18 FDA’s regulations or other pronouncements of similar legal effect.”).

19 D. Standing

20 Article III of the U.S. Constitution authorizes the judiciary to hear “cases” and

21 “controversies.” To establish standing, a “plaintiff must have (1) suffered an injury in fact, (2)

22 that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be

23 redressed by a favorable decision.” Spokeo, Inc. v. Robins, 578 U.S. 330, 338 (2016). A

24 “quintessential injury-in-fact” occurs when the “plaintiffs spent money that, absent defendants’

25 actions they would not have spent.” Maya v. Centex Corp., 658 F.3d 1060, 1069 (9th Cir. 2011).

26 Hi-Tech argues that Ottesen has failed to establish an injury-in-fact because she has only

27 alleged a “non-specific economic injury,” rather than alleging that the product she purchased did

1 ECF No. 103 at 14. Hi-Tech mischaracterizes what is required for standing here.

2 The Ninth Circuit—in reversing a case cited by Hi-Tech and on the same grounds for

3 which Hi-Tech cited the case—has recently reiterated that the requirements for standing in an

4 economic injury case are simple. In Bowen v. Energizer Holdings, Inc., the court rejected the

5 district court’s characterization that the plaintiff needed to prove that the product she purchased

6 was unsafe. No. 23-55116, 2024 WL 4352496, at *9 (9th Cir. Oct. 1, 2024). The court explained

7 that the plaintiff “need prove only that she paid more for [the product] than [she] otherwise would

8 have paid, or bought it when [she] otherwise would not have done so, absent Defendants’ false

9 representations—or actionable non-disclosures—about [the product].” Id. (internal quotation

10 marks omitted) (internal citations omitted).

11 Here, Ottesen pleads exactly that—she spent money on Hi-Tech supplements that, absent

12 Hi-Tech’s misrepresentations about the legality and safety of DMHA, she otherwise would not

13 have spent. See FAC ¶¶ 10–12 (“Had Defendant disclosed that the Supplements are unsafe and

14 illegal, Ms. Ottesen would have been aware of that and would not have purchased the

15 Supplements.”). This is a concrete injury sufficient to confer standing. See Maya, 658 F.3d at

16 1069 (plaintiffs’ allegations that “they would not have purchased their homes had defendants

17 made the disclosures allegedly required by law” constituted “actual and concrete economic

18 injuries.”).4

19 The Court also rejects Hi-Tech’s argument that even if the publication of the Website

20 Update in 2023 made DMHA “illegal,” this did not occur until after Ottesen had already made her

21 purchase. ECF No. 103 at 15. This argument misconstrues Ottesen’s theory of liability and the

22 economic injury she has suffered. Ottesen alleges that Hi-Tech is liable for selling supplements

23

24

4 The cases cited by Hi-Tech are inapposite and do not require a different conclusion. See, e.g.,

Myers-Armstrong v. Actavis Totowa, LLC, No. C 08-04741 WHA, 2009 WL 1082026, at *4 (N.D.

25

Cal. Apr. 22, 2009), aff’d, 382 F. App’x 545 (9th Cir. 2010) (involving a claim of economic injury

where the plaintiff did not allege any kind of intentional deception and where the product in

26

question was not categorically unsafe); Simpson v. California Pizza Kitchen, Inc., 989 F. Supp. 2d

1015, 1022–23 (S.D. Cal. 2013) (finding that the plaintiff did not “allege[] an injury premised on

27

economic loss due to misleading information” because she failed to allege “any advertising or

1 containing DMHA because Hi-Tech has omitted information about the dangers associated with

2 DMHA, misbranded its products as dietary supplements rather than as containing an unsafe food

3 additive, and sold a defective product. None of these theories of liability hinge on the FDA’s 2023

4 website update. Hi-Tech’s comparison of this case to Backus v. Biscomerica Corp., 378 F. Supp.

5 3d 849 (N.D. Cal. 2019) is thus unpersuasive. Unlike in Backus, the FDA has never recognized

6 DMHA as safe and has instead asserted that there is no consensus that DMHAs are generally

7 recognized as safe. Cf. Backus, 378 F. Supp. 3d at 851–54 (explaining that the FDA had

8 recognized the ingredient at issue as safe for many years until it issued a determination finding

9 otherwise and which implemented a three-year compliance period where products containing that

10 ingredient would still not be considered adulterated). There is accordingly no retroactivity issue.

11 1. Nationwide Class

12 Hi-Tech asks the Court to dismiss Ottesen’s nationwide class claims because Ottesen lacks

13 standing to bring claims under the substantive law of states in which she is not a citizen and was

14 not injured. This Court has previously found that determinations of nationwide class standing

15 should be deferred until class certification. See, e.g., Miller v. Nature’s Path Foods, Inc., No. 23-

16 CV-05711-JST, 2024 WL 4177940, at *9 (N.D. Cal. Sept. 11, 2024); In re Natera Prenatal

17 Testing Litig., 664 F. Supp. 3d 995, 1013–14 (N.D. Cal. 2023). In Melendres v. Arpaio, 784 F.3d

18 1254 (9th Cir. 2015), the Ninth Circuit adopted the “class certification approach” to such standing

19 issues, holding “that once the named plaintiff demonstrates her individual standing to bring a

20 claim, the standing inquiry is concluded, and the court proceeds to consider whether the Rule

21 23(a) prerequisites for class certification have been met.” 784 F.3d at 1261–62. “Although

22 Melendres ‘involved a dissimilarity in injuries suffered,’ while this case involves named plaintiffs

23 bringing legal claims pursuant to state laws for states they did not reside in, ‘the distinction is not

24 material for purposes of taking the class certification approach.’” Hrapoff v. Hisamitsu Am., Inc.,

25 No. 21-cv-01943-JST, 2022 WL 2168076, at *2 (N.D. Cal. June 16, 2022) (quoting Pecanha v.

26 Hain Celestial Grp., Inc., No. 17-cv-04517-EMC, 2018 WL 534299, at *9 (N.D. Cal. Jan. 24,

27 2018)). Accordingly, the Court will not dismiss the nationwide class allegations at this stage.

1 2. Injunctive Relief

2 Hi-Tech also argues that Ottesen lacks standing to obtain an injunction because she has not

3 alleged that she will suffer any “actual and imminent” future harm. ECF No. 99 at 17. Ottesen

4 provides only a brief response in her opposition, arguing that “absent injunctive relief ‘Defendant

5 will continue to manufacture and sell its Supplements without disclosing that they are illegal and

6 not generally recognized as safe.’” ECF No. 102 at 18–19 (quoting FAC ¶¶100, 103). But Ottesen

7 fails to explain how Hi-Tech’s continued manufacturing and sale of its Supplements will lead to

8 her suffering of any “actual and imminent” future harm.

9 The Ninth Circuit has recognized that a “previously deceived consumer may have standing

10 to seek an injunction against false advertising or labeling, even though the consumer now knows

11 or suspects that the advertising was false.” Davidson v. Kimberly-Clark Corp., 889 F.3d 956, 969

12 (9th Cir. 2018). This is because “[k]nowledge that the advertisement or label was false in the past

13 does not equate to knowledge that it will remain false in the future” and “the threat of future harm

14 may be the consumer‘s plausible allegations that she will be unable to rely on the product’s

15 advertising or labeling in the future, and so will not purchase the products although she would like

16 to.” Id. at 969–70. See also Lilly v. Jamba Juice Co., No. 13–CV–02998–JST, 2015 WL 1248027,

17 at *5 (N.D. Cal. Mar. 18, 2015) (noting that “injunctive relief enables the Plaintiffs and other

18 consumers to have confidence that the information they receive about the challenged products at

19 the time of purchase is accurate”).

20 Here, however, Ottesen does not allege that she would like to continue buying Hi-Tech’s

21 Supplements in the future. Indeed, the crux of her claims is that the fundamental formulation of

22 Hi-Tech’s Supplements is illegal and unsafe and that had she known the Supplements contained

23 an unsafe stimulant, she would not have purchased the Supplements. See FAC ¶ 10 (“Ms. Ottesen

24 purchased and used Defendant’s HydroxyElite supplements based on the understanding that the

25 supplements were lawfully sold and did not contain illegal and unsafe stimulants. Had Defendant

26 disclosed that the Supplements are unsafe and illegal, Ms. Ottesen would have been aware of that

27 and would not have purchased the Supplements.”). The Court cannot interpret Ottesen’s

1 labeled, i.e., labeled as “unsafe food additives” rather than “dietary supplements.” See Gatling-

2 Lee v. Del Monte Foods, Inc., No. 22-CV-00892-JST, 2023 WL 11113888, at *5 (N.D. Cal. Mar.

3 28, 2023), reconsideration denied sub nom. Nacarino v. Del Monte Foods, Inc., No. 22-CV-

4 00892-JST, 2024 WL 847925 (N.D. Cal. Feb. 28, 2024). Accordingly, the Court dismisses

5 Ottesen’s request for injunctive relief.

6 3. Supplements Not Purchased

7 Finally, Hi-Tech argues that Ottesen lacks standing to sue for supplements she did not

8 purchase. ECF No. 99 at 17. But as this Court has previously explained, “analyzing the

9 ‘sufficient similarity’ of the products is not a standing inquiry, but rather an early analysis of the

10 typicality, adequacy, and commonality requirements of Rule 23.” Clancy v. Bromley Tea Co., 308

11 F.R.D. 564, 571 (N.D. Cal. 2013); see also Moore v. EO Prods., LLC, No. 22-cv-07618, 2023 WL

12 6391480, at *4 (N.D. Cal. Sept. 29, 2023) (“After Melendres, this Court and others in this district

13 have applied the class certification approach to whether class representatives may represent a class

14 of individuals who purchased different products from the class representatives.”). Accordingly, “it

15 is premature to consider [Ottesen’s] ability to represent a class who purchased different products

16 than [she] did.” Dailey v. A&W Concentrate Co., 519 F. Supp. 3d 668, 672 (N.D. Cal. 2021)

17 (citing Clancy, 308 F.R.D. at 569–71).

18 E. Failure to State a Claim

19 Federal Rule of Civil Procedure 9(b) requires a party “alleging fraud or mistake” to “state

20 with particularity the circumstances constituting fraud or mistake,” but allows “[m]alice, intent,

21 knowledge, and other conditions of a person’s mind” to “be alleged generally.” Fed. R. Civ. P.

22 9(b). The pleading of a claim “as a whole must satisfy the particularity requirement of Rule 9(b)”

23 where a plaintiff “allege[s] a unified course of fraudulent conduct and rel[ies] entirely on that

24 course of conduct as the basis of a claim.” Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1103

25 (9th Cir. 2003). Because “the Federal Rules of Civil Procedure apply in federal court[ ]

26 ‘irrespective of the source of subject matter jurisdiction, and irrespective of whether the

27 substantive law at issue is state or federal,’” Kearns v. Ford Motor Co., 567 F.3d 1120, 1125 (9th

1 heightened pleading requirements to claims arising under the UCL and CLRA, as well as claims

2 for fraudulent misrepresentation, fraud by omission, and unjust enrichment. E.g., Opperman v.

3 Path, Inc., 84 F. Supp. 3d 962 (N.D. Cal. 2015) (applying Rule 9(b) to claims under the UCL and

4 CLRA); Wang v. OCZ Tech. Grp., Inc., 276 F.R.D. 618 (N.D. Cal. 2011) (applying Rule 9(b) to

5 claims under the UCL and CLRA, and unjust enrichment); Scherer v. FCA US, LLC, 565 F. Supp.

6 3d 1184 (S.D. Cal. 2021) (applying Rule 9(b) to fraud by omission claim).

7 Most of Ottesen’s claims—including her UCL unfair conduct claims, UCL unlawful

8 conduct claims predicated on violations of the CLRA and the Sherman Law, and unjust

9 enrichment claim—are based on a single course of conduct: Ottesen’s allegedly fraudulent

10 omissions regarding DMHA’s safety and legality.5 Such claims sound in fraud and must satisfy

11 Rule 9(b). Ottesen also alleges that Hi-Tech violated the implied warranty of merchantability by

12 selling defective consumer goods. This warranty claim does not rely on Hi-Tech’s fraudulent

13 omissions, so the claim does not sound in fraud.

14 1. Fraud-Based Claims

15 Hi-Tech argues that Ottesen has failed to state her fraud-based claims with particularity.

16 Ottesen pleads claims for violations of California’s CLRA and UCL, as well as common law

17 fraud, on a theory of fraud by omission. Claims based on a fraud by omission theory are subject to

18 a lower pleading standard than those based on affirmative misrepresentations, as “‘a plaintiff in a

19 fraud by omission suit will not be able to specify the time, place, and specific content of an

20 omission as precisely as would a plaintiff in a false representation claim,’ and such a claim ‘will

21 not be dismissed purely for failure to precisely state the time and place of the fraudulent

22 conduct.’” Holley v. Gilead Scis., Inc., 379 F. Supp. 3d 809, 817 (N.D. Cal. 2019) (quoting

23 Falk v. Gen. Motors Corp., 496 F. Supp. 2d 1088, 1098–99 (N.D. Cal. 2007)).

24

5 Ottesen alleges that Hi-Tech violated the unfair prong of the UCL by making misrepresentations

25

about the legality and safety of the Supplements and engaging in “conduct [that] is substantially

injurious to consumers, offends public policy, and is immoral, unethical, oppressive and

26

unscrupulous as the gravity of the conduct outweighs any alleged benefits.” FAC ¶ 108. Plaintiffs

further allege that Hi-Tech violated the unlawful prong of the UCL based on predicate violations

27

of the CLRA and the Sherman Food, Drug, and Cosmetic Law, California Health and Safety Code

i. Actionable Omissions

1

Under California law, “to be actionable[,] the omission must be contrary to a

2

representation actually made by the defendant, or an omission of a fact the defendant was obliged

3

to disclose.” Hodsdon v. Mars, 891 F.3d 857, 861 (9th Cir. 2018) (emphasis omitted) (quoting

4

Daugherty v. Am. Honda Motor Co., Inc., 144 Cal. App. 4th 824, 835 (2006)). In Hodsdon, the

5

Ninth Circuit explained that a plaintiff sufficiently pleads a duty to disclose where: (1) the plaintiff

6

alleges the omission was material; (2) the alleged defect was central to the product’s function; and

7

(3) the defendant (a) is plaintiff’s fiduciary, (b) has “exclusive knowledge” of material facts, (c)

8

“actively conceals” a material fact, or (d) makes misleading partial representations. Id. at 863

9

(quoting LiMandri v. Judkins, 52 Cal. App. 4th 326, 337 (1997)). “The last Limandri factor is

10

applicable to a partial, not pure, omission claim.” Anderson, 500 F. Supp. 3d at 1014.

11

Here, Ottesen alleges that the material omission is that “the Supplements contain an illegal

12

and unsafe ingredient.” ECF No. 102 at 21; see also FAC ¶ 2 (“Defendant is breaking the law by

13

manufacturing and distributing supplements containing the stimulant DMHA and failing to

14

disclose that they contain an ingredient that is illegal and not generally recognized as safe.”). Hi-

15

Tech argues that Ottesen fails sufficiently to allege that Hi-Tech owed her any duty to disclose the

16

omitted facts. ECF No. 99 at 23. Ottesen responds that Hi-Tech had a duty to disclose under the

17

last three LiMandri factors—Hi-Tech had exclusive knowledge of the omitted facts; Hi-Tech

18

actively concealed the omitted facts; and Hi-Tech made misleading partial representations. ECF

19

No. 102 at 25.6

20

Under California law, a defendant has exclusive knowledge of material facts giving rise to

21

a duty to disclose where “according to the complaint, [defendant] knew of [a] defect while

22

plaintiffs did not, and, given the nature of the defect, it was difficult to discover.”

23

Collins v. eMachines, Inc., 202 Cal.App.4th 249, 256 (2011). Courts have not applied the

24

“exclusive knowledge” requirement “with rigidity.” Czuchaj v. Conair Corp., No. 13-CV-1901,

25

2014 WL 1664235, at *4 (S.D. Cal. Apr. 18, 2014) (collecting cases). “The defendant need not

26

27

1 have literally been the sole holder of the knowledge. It is generally sufficient for defendants to

2 have had ‘superior knowledge’ and for the information to have not been reasonably discoverable

3 by the plaintiffs.” Anderson v. Apple Inc., 500 F. Supp. 3d 993, 1014–15 (N.D. Cal. 2020). This

4 means “even the presence of the information from publicly available sources—for instance,

5 online—does not automatically foreclose an exclusive-knowledge claim.” Id. “Instead, courts

6 have looked to the nature of the product, the nature of the alleged omission, and the difficulty in

7 reasonably finding the omitted information from sources other than the defendant.” Edwards v.

8 FCA US LLC, No. 22-CV-01871-WHO, 2022 WL 1814144, at *3 (N.D. Cal. June 2, 2022) (citing

9 Anderson, 500 F. Supp. 3d at 1015).

10 Hi-Tech argues that because the information regarding DMHA’s safety and legality was

11 contained in the warning letter that the FDA sent Hi-Tech and in the FDA website update, that

12 information cannot be considered the “exclusive knowledge” of Hi-Tech. ECF No. 103. But

13 Ottesen alleges that she purchased the Supplements “in or around late 2018,” before the FDA sent

14 its warning letter on April 10, 2019, and updated its website in 2023. FAC ¶ 10. Ottesen thus

15 could not have relied on the information published by the FDA. Moreover, given that the alleged

16 defect cannot be discoverable from mere inspection and involves scientifically complex

17 classifications, the FDA’s publications do not change the fact that Hi-Tech has “superior

18 knowledge” compared to Ottesen regarding the omitted safety information. Ottesen has thus

19 adequately alleged that Hi-Tech owes a duty to disclose the omitted information regarding

20 DMHA’s legality and safety.

21 ii. Deceptive Omissions

22 Whether the alleged omissions are deceptive under the UCL and CLRA is governed by the

23 “reasonable consumer” test. Williams, 552 F.3d at 938 (“[U]nless the advertisement targets a

24 particular disadvantaged or vulnerable group, it is judged by the effect it would have on a

25 reasonable consumer.”) (quoting Lavie, 105 Cal. App. 4th at 506–07). “Under the reasonable

26 consumer standard, [a plaintiff] must ‘show that “members of the public are likely to be

27 deceived”‘“ by the product label. Id. (quoting Freeman v. Time, 68 F.3d 285, 289 (9th Cir.

1 appropriate for decision on demurrer.” Id. Courts grant motions to dismiss on this ground

2 only where the “the [label] itself [makes] it impossible for the plaintiff to prove that a reasonable

3 consumer [is] likely to be deceived,” Williams, 552 F.3d at 939, or where the facts alleged

4 otherwise “compel the conclusion as a matter of law that consumers are not likely to be

5 deceived,” Chapman, 220 Cal. App. 4th at 226–27.

6 Hi-Tech argues that Ottesen cannot meet the reasonable consumer test because she

7 challenges the labeling of the Supplements as “dietary supplements,” which is merely a truthful

8 description of the products. ECF No. 99 at 22–23. But Ottesen’s entire contention is that Hi-Tech

9 has violated the law by mislabeling its products as “dietary supplements” when they actually

10 contain “unsafe food additives.” Ottesen alleges that by not disclosing that DMHA is illegal and

11 unsafe, Hi-Tech deceives reasonable consumers into buying its products. These allegations

12 require determinations of fact. The Court thus rejects Hi-Tech’s argument because the motion to

13 dismiss stage is not the appropriate place to resolve disputes of fact.

14 iii. Common-law Fraud

15 The parties agree that the elements of fraud under California law are: (1)

16 misrepresentation; (2) knowledge of falsity; (3) intent to defraud or induce reliance; (4) justifiable

17 reliance; and (5) resulting damages. Lazar v. Superior Court, 12 Cal. 4th 631, 638 (1996).

18 The Court finds that Ottesen has pleaded the five elements of her fraud claim with

19 sufficient particularity. First, she identifies the misrepresentation to be a material omission—that

20 the Supplements contain an illegal and unsafe ingredient. FAC ¶ 2. Second, she alleges that Hi-

21 Tech had knowledge that DMHA was unsafe by detailing, among other things, the prior litigation

22 and controversies involving Hi-Tech’s use of the chemically similar ingredient DMAA. See id.

23 ¶¶ 22–46. Third, she alleges that Hi-Tech intentionally concealed the fact that DMHA was unsafe

24 to avoid the controversies Hi-Tech already had with its supplements containing DMAA. See id. ¶

25 19 (“Each of the Supplements were originally manufactured with DMAA. However, after the

26 FDA’s ban on DMAA, Hi-Tech simply reformulated the Supplements with DMHA in an attempt

27 to stay one step ahead of the proverbial sheriff.”).

1 Supplements are unsafe and illegal, Ms. Ottesen would have been aware of that and would not

2 have purchased the Supplements.” FAC ¶ 10. This allegation is sufficient to plead reliance for

3 pure omission claims. Daniel v. Ford Motor Co., 806 F.3d 1217, 1225 (9th Cir. 2015) (“A

4 plaintiff may [prove reliance on an omission] by simply proving ‘that, had the omitted information

5 been disclosed, one would have been aware of it and behaved differently.’”) (quoting Mirkin v.

6 Wasserman, 5 Cal. 4th 1082, 1093, 23 Cal.Rptr.2d 101, 858 P.2d 568 (1993)). Fifth, Ottesen

7 alleges that she was injured because she “paid an unwarranted amount” for the unsafe and illegal

8 products. FAC ¶¶ 69–70.

9 2. UCL Claims

10 California’s UCL “prohibits any unfair competition, which means ‘any unlawful, unfair or

11 fraudulent business act or practice.’” In re Pomona Valley Med. Grp., 476 F.3d 665, 674 (9th Cir.

12 2007) (quoting Cal. Bus. & Prof. Code § 17200 et seq.). “Each of the three ‘prongs’ under the

13 UCL – (1) unlawful, (2) unfair, and (3) fraudulent – creates an independent theory of liability.”

14 Regueiro v. FCA US, LLC, 671 F. Supp. 3d 1085, 1096 (C.D. Cal. 2023) (citation omitted). The

15 UCL’s coverage is “sweeping,” and its standard for wrongful business conduct is “intentionally

16 broad.” In re First Alliance Mortg. Co., 471 F.3d 977, 995 (9th Cir. 2006).

17 A plaintiff may bring a claim under the fraudulent prong of the UCL if the defendant’s

18 conduct is “likely to deceive members of the public.” Morgan v. AT&T Wireless Servs., Inc., 177

19 Cal. App. 4th 1235, 1255 (2009). In addition, a plaintiff must allege the existence of a duty to

20 disclose, Berryman v. Merit Prop. Mgmt., Inc., 152 Cal. App. 4th 1544, 1557 (2007), as well as

21 reliance, In re Tobacco II Cases, 46 Cal. 4th 298, 328 (2009). In its discussion of fraud-based

22 claims, the Court found that the complaint adequately alleges actionable deception, a duty to

23 disclose, and reliance. Ottesen has thus stated a claim under the fraudulent prong of the UCL.

24 Next, Ottesen’s “unlawful” claim under the UCL relies upon violations of the FDCA and

25 California’s Sherman Law. Hi-Tech does not argue that Ottesen has failed to state a claim under

26 this prong of the UCL. The Court thus finds that the allegations in the complaint sufficiently state

27 a claim for relief under the “unlawful” prong of the UCL.

1 challenged conduct is tethered to any underlying constitutional, statutory or regulatory provision,

2 or that it threatens an incipient violation of an antitrust law, or violates the policy or spirit of an

3 antitrust law; (2) whether the practice is immoral, unethical, oppressive, unscrupulous or

4 substantially injurious to consumers; or (3) whether the practice’s impact on the victim outweighs

5 ‘the reasons, justifications and motives of the alleged wrongdoer.” Doe v. CVS Pharmacy, Inc.,

6 982 F.3d 1204, 1214–15 (9th Cir. 2020) (internal quotation marks and citations omitted). The

7 parties’ briefs focus only on the first test, which is sometimes called the “tethering test,” and the

8 last one, which is sometimes called the “balancing test.” ECF No. 99 at 23–24; ECF No. 102 at

9 26–27. Here, because the Court has already found that Ottesen adequately alleges conduct that is

10 misleading and fraudulent, the same conduct also meets either of the applicable ‘unfair’ standards

11 both as conduct that inflicts harm to consumers without any justifiable utility and conduct that

12 “violates a particular public policy—prohibitions against fraud” under the Sherman Law. See

13 Hilario v. Allstate Ins. Co., No. 20-cv-05459-WHO, 2020 WL 7643233, at *9 (N.D. Cal. Dec. 23,

14 2020).

15 3. Unjust Enrichment

16 Hi-Tech argues that unjust enrichment is not a cause of action under California law. While

17 California case law on this issue could be clearer,7 the Ninth Circuit “has construed the common

18 law to allow an unjust enrichment cause of action through quasi-contract.” ESG Capital Partners,

19 LP v. Stratos, 828 F.3d 1023, 1038 (9th Cir. 2016) (citing Astiana v. Hain Celestial Grp., Inc., 783

20 F.3d 753, 762 (9th Cir. 2015)). “[Hi-Tech] is therefore incorrect that the unjust enrichment claim

21 should be dismissed solely on the ground that no such claim is cognizable under California law.”

22

23

7 “There is no cause of action in California labeled ‘unjust enrichment.’” City of Oakland v.

Oakland Raiders, 83 Cal. App. 5th 458, 477 (2022) (citation omitted). “But ‘[c]ommon law

24

principles of restitution require a party to return a benefit when the retention of such benefit would

unjustly enrich the recipient; a typical cause of action involving such remedy is ‘quasi-

25

contract.’” Id. (quoting Munoz v. MacMillan, 195 Cal. App. 4th 648, 661 (2011)). See

also Hartford Cas. Ins. Co. v. J.R. Mktg., L.L.C., 61 Cal. 4th 988, 998, 353 P.3d 319, 326

26

(2015) (“An individual who has been unjustly enriched at the expense of another may be required

to make restitution. Where the doctrine applies, the law implies a restitutionary obligation, even if

27

no contract between the parties itself expresses or implies such a duty. Though this restitutionary

1 In re Toyota RAV4 Hybrid Fuel Tank Litig., 534 F. Supp. 3d 1067, 1120 (N.D. Cal. 2021)

2 (quotation marks and citation omitted).

3 Hi-Tech further argues that Ottesen’s unjust enrichment claim fails because she has not

4 pleaded with particularity an actionable misrepresentation or omission. ECF No. 103 at 22. As

5 the Court has already found that Ottesen adequately pleaded an actionable omission, Ottesen has

6 sufficiently stated an unjust enrichment claim.

7 4. Implied Warranty of Merchantability

8 Hi-Tech argues that Ottesen’s claim for breach of the implied warranty of merchantability

9 fails because she does not adequately allege privity with Hi-Tech. To assert a claim for breach of

10 the implied warranty, a plaintiff generally must “stand in vertical contractual privity with the

11 defendant. A buyer and seller stand in privity if they are in adjoining links of the distribution

12 chain.” Clemens v. DaimlerChrysler Corp., 534 F.3d 1017, 1023 (9th Cir. 2008) (citation

13 omitted). Therefore, an “end consumer . . . who buys from a retailer is not in privity with a

14 manufacturer.” Id. But certain exceptions to the privity rule exist, including the “foodstuffs”

15 exception, “where it is held that an implied warranty of fitness for human consumption runs from

16 the manufacturer to the ultimate consumer regardless of privity of contract.” Burr v. Sherwin

17 Williams Co., 42 Cal. 2d 682, 695 (1954); see also Vaccarezza v. Sanguinetti, 71 Cal. App. 2d

18 687, 689 (1945) (“The warranty applies to the sale of foodstuffs for human consumption, and runs

19 with the goods to the ultimate consumer, there being no requirement of privity between the

20 ultimate consumer and manufacturer.”). Here, the Supplements qualify as “foodstuffs,” as they

21 are intended for human consumption. See Arnold v. Dow Chem. Co., 91 Cal. App. 4th 698, 720

22 (2001) (“An exception to the general rule [requiring privity] has been recognized in the case of

23 foodstuffs, and has been extended to drugs, on the basis that a drug is intended for human

24 consumption quite as much as is food.”).

25 Hi-Tech contends that the foodstuffs exception should be interpreted narrowly and that

26 Ottesen should be required to allege a physical injury to state a claim under the foodstuffs

27 exception. ECF No. 103 at 22 (citing Nadler v. Nature’s Way Prods., LLC, 2014 WL 12601567,

1 have found that “the foodstuffs exception applies even to purely economic harms.” See, e.g.,

2 || Bland v. Sequel Nat. Ltd., No. 18-CV-04767-RS, 2019 WL 4674337, at *3 (N.D. Cal. Aug. 2,

3 2019) (collecting cases). The foodstuffs exception is “designed to protect consumers from

4 || adulterated food items that pose a risk to human health, and not merely to ensure a remedy for

5 those consumers who have suffered a physical injury because of that risk.” Musgrave v. Taylor

6 || Farms Pac., Inc., No. 18-CV-02841-JSW, 2019 WL 8230850, at *4—-5 (N.D. Cal. Feb. 20, 2019).

7 Accordingly, the Court finds that the foodstuffs exception applies here, and Ottesen has

8 adequately pleaded a claim that Hi-Tech breached the implied warranty of merchantability.

9 CONCLUSION

10 The Court dismisses Allen and Accardi’s claims on behalf of themselves and a New York

11 subclass for lack of jurisdiction. The Court further dismisses Ottesen’s request for injunctive

12 || relief. The remainder of Hi-Tech’s motion to dismiss is denied. Ottesen may file an amended

5 13 complaint, solely to correct the deficiencies identified above, within 21 days of the date of this

14 || order.

IT IS SO ORDERED.

a 16 Dated: December 23, 2024 . .

M | JON S. oF

18 United States District Judge

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