Clark v. Citizens of Humanity, LLC

• Decision Date: 08 April 2015
• Docket Number: Case No. 14–CV–1404 JLS WVG.
• Citation: 97 F.Supp.3d 1199
• Parties: Louise CLARK, an individual and on behalf of all others similarly situated, Plaintiff, v. CITIZENS OF HUMANITY, LLC, a Delaware limited liability company; Macy's, Inc., a Delaware corporation; and Does 1 through 100, inclusive, Defendants.
• Court: U.S. District Court — Southern District of California

97 F.Supp.3d 1199

Louise CLARK, an individual and on behalf of all others similarly situated, Plaintiff

v.CITIZENS OF HUMANITY, LLC, a Delaware limited liability company; Macy's, Inc., a Delaware corporation; and Does 1 through 100, inclusive, Defendants.

Case No. 14–CV–1404 JLS WVG.

United States District Court, S.D. California.

Signed April 8, 2015.

John H. Donboli, David P. Hall, Del Mar Law Group, LLP, San Diego, CA, Nancy A. Kulesa, Shannon L. Hopkins, Stephanie A. Bartone, Levi & Korsinsky, LLP, Stamford, CT, for Plaintiff.

Michael A. Bowse, Peter W. Ross, Browne George Ross LLP, Los Angeles, CA, for Defendants.

ORDER DENYING DEFENDANTS' MOTION TO DISMISS FIRST AMENDED COMPLAINT

JANIS L. SAMMARTINO, District Judge.

Presently before the Court is Defendants Citizens of Humanity, LLC and Macy's, Inc.'s (“Defendants”) Motion to Dismiss First Amended Complaint (“MTD”). (ECF No. 23.) On January 14, 2015, Defendant BOP, LLC filed a Notice of Joinder joining the instant MTD. (ECF No. 35.) Also before the Court is Plaintiffs Louise Clark and Robyn Marnell's (“Plaintiffs”) Response in Opposition to (ECF No. 31) and Defendants' Reply in Support of (ECF No. 34) the MTD. A hearing on the Motion to Dismiss was held on January 22, 2015. Having considered the parties arguments and the law, the Court DENIES Defendant's Motion to Dismiss.

BACKGROUND

In April 2014, Plaintiff Robyn Marnell purchased jeans manufactured and sold by Defendant Citizens of Humanity from Defendant BOP, LLC. (FAC 7,¹ ECF No. 18.) In May 2014, Plaintiff Louise Clark purchased jeans manufactured and sold by Defendant Citizens of Humanity from Defendant Macy's, Inc. (Id. ) The jeans purchased by both plaintiffs were “marked with a ‘Made in the U.S.A.’ country of origin designation when the product[s] actually contain [ ] component parts made outside of the United. States.”² (Id. ) Plaintiffs allege that they relied on Defendants' representations that the jeans were made in the United States, but that various component parts, including the fabric, thread, buttons, subcomponents of the zipper assembly, and/or rivets, were actually manufactured outside of the United States. (Id. at 3, 8.) Plaintiffs further allege that because the jeans were not made entirely of products manufactured in the United States, they “are of inferior quality” and “less reliable” than jeans actually made entirely in the United States. (Id. at 8.) Plaintiffs allege that they overpaid for the items purchased and seek damages accordingly. (Id. )

On November 20, 2014, the Plaintiffs filed their FAC, which is the operative complaint. (ECF No. 18.) Plaintiffs bring this action as a class action. (FAC 9, ECF No. 18.) Plaintiffs assert three claims against Defendants: (1) violation of the California Consumers Legal Remedies Act; (2) violation of California Business and Professions Code § 17200 et seq; and (3) violation of the California Business and Professions Code § 17533.7.

On December 9, 2014, Defendants filed the instant MTD. Defendants ask the Court to dismiss Plaintiffs' FAC on the ground that § 17533.7 of the California Business and Professions Code is preempted by federal law. Defendants contend that Plaintiffs' first cause of action is preempted because it relies on the standard set out in § 17533.7. Defendants also ask the Court to dismiss this case on the ground that § 17533.7 of the California Business and Professions Code violates the dormant commerce clause.

REQUEST FOR JUDICIAL NOTICE

Federal Rule of Evidence 201 provides that “[t]he court may judicially notice a fact that is not subject to reasonable dispute because it: (1) is generally known within the trial court's territorial jurisdiction; or (2) can be accurately and readily determined from sources whose accuracy cannot be reasonably questioned.” “Judicially noticed facts often consist of matters of public record.” Botelho v. U.S. Bank, N.A., 692 F.Supp.2d 1174, 1178 (N.D.Cal.2010) (citations omitted); see also W. Fed. Sav. & Loan Ass'n v. Heflin Corp., 797 F.Supp. 790, 792 (N.D.Cal.1992). While “a court may take judicial notice of the existence of matters of public record, such as a prior order or decision,” it should not take notice of “the truth of the facts cited therein.” Marsh v. Cnty. of San Diego, 432 F.Supp.2d 1035, 1043 (S.D.Cal.2006).

Plaintiffs ask the Court to judicially notice one (1) document: a recent order issued by Judge Dana M. Sabraw denying a motion to dismiss based on federal preemption in a similar case captioned Paz v. AG Adriano Goldschmeid, Inc. et al., Case No. 14–CV–1372 DMS (DHB). (See generally, Request for Judicial Notice, ECF No. 31–1.) This document is available to the public and maintained by an official government entity. Its accuracy, therefore, cannot be reasonably disputed. Accordingly, the Court GRANTS Plaintiff's Request for Judicial Notice.

Defendants ask the Court to judicially notice three (3) documents: Federal Trade Commission, “Made in the USA ” and Other U.S. Origin Claims, 62 F.R. 63755; Federal Trade Commission, Questions and Answers Relating to the Textile Fiber Products Identification Act and Regulations, April 1986; and Federal Trade Commission, “Complying with Made in USA Standard.” (See generally Request for Judicial Notice, ECF No. 23–2; Ex. 1, ECF No. 23–3; Ex. 2, ECF No. 23–4; Ex. 3, ECF No. 23–5.) These documents are available to the public and maintained by an official government entity. Their accuracy, therefore, cannot be reasonably disputed. Accordingly, the Court GRANTS Defendants' Request for Judicial Notice.

LEGAL STANDARD

I. Preemption

Federal Rule of Civil Procedure 12(b)(6) permits a party to raise by motion the defense that the complaint “fail[s] to state a claim upon which relief can be granted,” generally referred to as a motion to dismiss. A party may move to dismiss a state law claim pursuant to Rule 12(b)(6) on the ground that the state law claim is preempted by federal law. Silvas v. E*Trade Mortg. Corp., 514 F.3d 1001 (9th Cir.2008) (affirming Rule 12(b)(6) motion on ground of preemption).

Article VI, clause 2 of the United States Constitution, referred to as the Supremacy Clause, instructs that the laws of the United States “shall be the supreme law of the land.” U.S. Const. art. 6, cl. 2. “[T]he Supremacy Clause invalidates all state laws that conflict or interfere with an Act of Congress.”Rose v. Arkansas State Police, 479 U.S. 1, 3, 107 S.Ct. 334, 93 L.Ed.2d 183 (1986). Federal law may invalidate, or preempt, state law in three ways: (1) express preemption; (2) field preemption; and (3) conflict preemption. Silvas, 514 F.3d at 1004. Express preemption requires a clear statement from Congress that federal law preempts state law. (Id. ) Field preemption applies “when federal regulation in a particular field is so pervasive as to make reasonable the inference that Congress left no room for the States to supplement it.” (Id. ) Finally, conflict preemption arises when state law conflicts with federal law. (Id. )

Conflict preemption applies in two situations—when it is impossible to comply with both state and federal law, or when the state law poses an obstacle to accomplishing and executing Congress' purposes and objectives. Bank of America v. City & Cnty. of San Francisco, 309 F.3d 551, 558 (9th Cir.2002) (quoting Florida Lime & Avocado Growers, Inc. v. Paul, 373 U.S. 132, 142–43, 83 S.Ct. 1210, 10 L.Ed.2d 248 (1963) ; Hines v. Davidowitz, 312 U.S. 52, 67, 61 S.Ct. 399, 85 L.Ed. 581 (1941) ). The federal law in question may be a statute or a regulation because federal regulations promulgated by federal agencies are afforded the same preemptive effect as federal statutes. City of New York v. F.C.C., 486 U.S. 57, 63, 108 S.Ct. 1637, 100 L.Ed.2d 48 (1988) (“[t]he phrase “Laws of the United States” [as stated in the Supremacy Clause] encompasses both federal statutes themselves and federal regulations that are properly adopted in accordance with statutory authorization”).

When the laws are in an area in which the state law has historic police powers there is a presumption against preemption. See Silvas, 514 F.3d at 1004. Accordingly, “courts should assume that ‘the historic police powers of the States' are not superseded ‘unless that was the clear and manifest purpose of Congress.’ ” Arizona v. U.S., –––U.S. ––––, 132 S.Ct. 2492, 2501, 183 L.Ed.2d 351 (2012) (quoting Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230, 67 S.Ct. 1146, 91 L.Ed. 1447 (1947) ).

II. Dormant Commerce Clause

Article 1, section 8, clause 3 of the United States Constitution affords Congress the power “to regulate interstate and foreign commerce.” South–Central Timber Dev., Inc. v. Wunnicke, 467 U.S. 82, 87, 104 S.Ct. 2237, 81 L.Ed.2d 71 (1984). Although this is an affirmative grant of power, the Commerce Clause “has long been recognized as a self-executing limitation on the power of the States to enact laws imposing substantial burdens on such commerce.” Id. The limitation placed on the States by the Commerce Clause is known as the dormant commerce clause. Dep't of Revenue v. Davis, 553 U.S. 328, 337, 128 S.Ct. 1801, 170 L.Ed.2d 685 (2008).

“When a state statute directly regulates or discriminates against interstate commerce, or when its effect is to favor in-state economic interests over out-of-state interests, [courts] have generally struck down the statute without further inquiry.” Brown–Forman Distillers Corp. v. N.Y. State Liquor Auth., 476 U.S. 573, 579, 106 S.Ct. 2080, 90 L.Ed.2d 552 (1986). However, when “a statute has only indirect effects on interstate commerce and regulates evenhandedly, [courts] have examined whether the State's interest is legitimate and whether the burden on interstate commerce clearly exceeds the local benefits.” Id. To conduct this balancing test, courts identify the state's interests in the legislation, “and then determine whether the state law imposes an excessive burden on interstate commerce in relation to those legitimate interests.”Valley Bank of...