Buckland v. Threshold Enterprises, Ltd., B192832.

CourtCalifornia Court of Appeals
Citation155 Cal.App.4th 798,66 Cal.Rptr.3d 543
Decision Date25 September 2007
Docket NumberNo. B192832.,B192832.
PartiesKatherine Lee BUCKLAND, Plaintiff and Appellant, v. THRESHOLD ENTERPRISES, LTD., et al., Defendants and Respondents.

The Carrick Law Group and Roger Lane Carrick, Los Angeles, for Plaintiff and Appellant.

Bingham McCutchen, Trenton H. Norris and Mark P. Pifko, Los Angeles, for Defendants and Respondents.

MANELLA, J.

When appellant [Catherine Lee Buckland sought a preliminary injunction to prevent respondent Threshold Enterprises, Ltd. (Threshold) from selling its skin cream, Threshold demurred to Buckland's first amended complaint, which alleged that the skin cream constituted a misbranded or mislabeled drug. The trial court sustained the demurrer with leave to amend, and denied Buckland's request for injunctive relief on the ground that there was no operative complaint. After Buckland elected to stand on her complaint, judgments of dismissal were entered in favor of Threshold and the other respondents. We affirm.

FACTUAL AND PROCEDURAL BACKGROUND

Buckland and the California Women's Law Center (Center) filed their first amended complaint in the underlying action on January 24, 2006. The complaint asserts 11 claims against Threshold and more than 30 other defendants that market skin lotions and creams, including nine claims by Buckland as an individual for fraudulent concealment, negligent misrepresentation and violations of the unfair competition law (UCL) (Bus. & Prof.Code, § 17200 et seq.), the false advertising law (FAL) (Bus. & Prof.Code, § 17500 et seq.), and the Consumers Legal Remedies Act (CLRA) (Civ.Code, § 1750 et seq.). Buckland sought injunctive relief, restitution, and damages.1

The first amended complaint alleges the following facts: Buckland is the executive director of the Center, which seeks to advance the civil rights of women and girls. Threshold and the other defendants sell skin creams or lotions that contain progesterone or other chemicals regulated by the Food and Drug Administration (FDA) under the Federal Food, Drug, and Cosmetic Act (FDCA) (21 U.S.C., § 301 et seq.). Like the other defendants, Threshold has not complied with FDA regulations in marketing its skin cream, and its skin cream lacks adequate warnings about the chemicals.

On March 15, 2006, Buckland filed a motion for a preliminary injunction against Threshold. Her accompanying declaration states: "I do not make in this litigation any personal injury claims (though in using one of the products at issue in this litigation, I did suffer a skin rash). Rather, I am acting in this matter on my own behalf and as a consumer in the public interest, in light of my own personal desire to evaluate the claims of the products at issue in this case. I believe that a woman who advocates professionally for women's rights must be especially sensitive as an individual woman to the claims of products that purport to address women's health. I am acting in this litigation to evaluate, as an individual consumer, these defendants' respective products, incurring the cost of purchasing each of these products in order to meet the letter of the law to have standing to make appropriate claims regarding these products where the facts and law warrant, and thereby incurring the economic damages that provide standing under the statutes by which I am proceeding in the case." The declaration further states: "I am a consumer of these [p]roducts and have suffered damages in the amount of at least the purchase price of each [p]roduct. In the case of Threshold, I purchased their Source Naturals ® Eternal WomanTM Natural Progesterone Cream through my attorney on August 31, 2005 for $14.99."

Threshold demurred to Buckland's claims in the first amended complaint, contending that Buckland lacked standing to assert claims under the UCL, FAL, and CLRA, and that she had failed to plead her common law fraud claims with specificity. In opposing Buckland's request for a preliminary injunction, Threshold argued that she was unlikely to prevail at trial on the grounds raised in the demurrer; in addition, it argued that the balance of hardships weighed against injunctive relief.

On June 19, 2006, the trial court sustained Threshold's demurrer to Buckland's claims with leave to amend, and denied her request for a preliminary injunction without prejudice, on the ground that she lacked an operative complaint. Buckland noticed an appeal from these rulings. After Buckland elected not to amend the first amended complaint, the trial court entered a judgment of dismissal in Threshold's favor on October 10, 2006. The court also entered judgments of dismissal in favor of respondents AllVia Integrative Pharmaceuticals, Inc., Arterio, Inc., Before and After Cosmetics LLC, Nature's Light, Inc., NOW Health Group, Inc., One Life USA, Inc., Pure Essence Laboratories, Inc., Sayge Biosciences, LLC, and Star Health & Beauty, LLC, who joined in Threshold's demurrer or otherwise sought dismissal of Buckland's claims on the basis of the ruling on Threshold's demurrer.2

DISCUSSION

Buckland contends the trial court erred in denying injunctive relief and entering the judgments of dismissal after sustaining Threshold's demurrer. She argues that her claims against Threshold and the other respondents, as alleged in the first amended complaint, are legally tenable. We disagree.

A. Standards of Review

In deciding whether to issue a preliminary injunction, the trial court considers two related factors: (1) the likelihood the plaintiff will prevail on the merits of its case at trial, and (2) the interim harm the plaintiff is likely to sustain if the injunction is denied, as compared to the harm the defendant is likely to suffer if the court grants a preliminary injunction. (King v. Meese (1987) 43 Cal.3d 1217, 1226, 240 Cal.Rptr. 829, 743 P.2d 889.) Here, the denial of injunctive relief and the judgment of dismissal rest solely on the trial court's ruling on Threshold's demurrer. For the reasons explained below, we agree with the trial court that Buckland's claims fail as a matter of law, and that injunctive relief is thus unavailable to her.

In examining the ruling on the demurrer, we "review the complaint de novo to determine whether ... [the] complaint alleges facts sufficient to state a cause of action under any legal theory, [citation].... [Citation.]" (Cantu v. Resolution Trust Corp. (1992) 4 Cal.App.4th 857, 879, 6 Cal.Rptr.2d 151, fn. omitted.) If a proper ground for sustaining the demurrer exists, "this court will ... affirm the demurrers even if the trial court relied on an improper ground, whether or not the defendants asserted the proper ground in the trial court. [Citation.]'' (Id. at p. 880, fn. 10, 6 Cal.Rptr.2d 151.)

"When reviewing a demurrer on appeal, appellate courts generally assume that all facts pleaded in the complaint are true. [Citation.]" (Cantu v. Resolution Trust Corp., supra, 4 Cal.App.4th at p. 877, 6 Cal.Rptr.2d 151, fn. omitted.) Here, the trial court's ruling on the demurrer also relied on Buckland's statements in her declaration in support of injunctive relief. When a party opposing a demurrer admits that it does not dispute facts extrinsic to the complaint, the trial court may properly treat these facts as judicial admissions for the purpose of testing the sufficiency of the complaint. (Scafidi v. Western Loan & Bldg. Co. (1946) 72 Cal.App.2d 550, 560-562, 165 P.2d 260.) We therefore examine Buckland's complaint in light of her declaration.

B. Fraud Claims

We begin with Buckland's claims for fraud by concealment and negligent misrepresentation (Civ.Code, §§ 1709, 1710). Generally, "`"[t]he elements of fraud ... are (a) misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of falsity (or `scienter'); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage."' [Citation.] [However, t]he tort of negligent misrepresentation does not require scienter or intent to defraud. [Citation.] It encompasses `[t]he assertion, as a fact, of that which is not true, by one who has no reasonable ground for believing it to be true' [citation], and '[t]he positive assertion, in a manner not warranted by the information of the person making it, of that which is not true, though he believes it to be true' [citations]." (Small v. Fritz Companies, Inc. (2003) 30 Cal.4th 167, 173-174, 132 Cal. Rptr.2d 490, 65 P.3d 1255.) Furthermore, to establish fraud" through nondisclosure or concealment of facts, it is necessary to show that the defendant "was under a legal duty to disclose them." (Lingsch v. Savage (1963) 213 Cal.App.2d 729, 735, 29 Cal.Rptr. 201.)

Here, Buckland alleged that respondents, in packaging and marketing their products, improperly suppressed the fact that the products contained potentially unsafe chemicals regulated under the FDCA and the Sherman Food, Drug and Cosmetic Act (SFDCA) (Health & Saf.Code, § 111330 et seq.), and otherwise portrayed the products as safe and healthful. The trial court concluded that Buckland's claims failed because she did not allege the pertinent omissions and misrepresentations with specificity, and did "not even make a gesture toward pleading justifiable reliance." We agree that Buckland has not pleaded reliance.

The focus of our inquiry is the requirement of actual reliance, which is a component of "justifiable reliance." (Garcia v. Superior Court, (1990) 50 Cal.3d 728, 737, 268 Cal.Rptr. 779, 789 P.2d 960; 5 Witkin, Summary of Cal. Law (10th ed. 2005) Torts, §§ 808-813, pp. 1164-1176.) A plaintiff asserting fraud by misrepresentation is obliged to plead and prove actual reliance, that is, to "`establish a complete causal relationship' between the alleged misrepresentations and the harm claimed to have resulted therefrom." (Mirkin v. Wasserman (1993) 5 Cal.4th 1082, 1092, 23 Cal.Rptr.2d 101, 858 P.2d 568, quoting Garcia v. Superior...

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