Kendall v. BlueTriton Brands, Inc.

• Decision Date: 13 July 2022
• Docket Number: 2:20-CV-10511-CAS (Ex)
• Parties: DONELL COREY KENDALL v. BLUETRITON BRANDS, INC. ET AL.
• Court: U.S. District Court — Central District of California

DONELL COREY KENDALL
v.
BLUETRITON BRANDS, INC. ET AL.

No. 2:20-CV-10511-CAS (Ex)

United States District Court, C.D. California

July 13, 2022

Present: Honorable Christina A. Snyder, Judge.

CIVIL MINUTES - GENERAL ‘O'

Proceedings: DEFENDANTS' MOTION TO DISMISS THIRD AMENDED COMPLAINT (Dkt. 41, filed on MARCH 28, 2022)

I. INTRODUCTION

On September 23, 2022, plaintiff Donell Corey Kendall, on behalf of himself and all others similarly situated, filed a class action case in Los Angeles Superior Court against defendants BlueTriton Brands., Inc, formerly known as Nestle Waters North America, Inc., d/b/a ReadyRefresh, By Nestle and Does 1-20, inclusive, 20-STCV-36528, (collectively, “ReadyRefresh”). Dkt. 1-1 (“Compl.”). The gravamen of Kendall's claim is that ReadyRefresh, a retail beverage delivery service company, charged him and members of the proposed class disproportionately high late payment fees on defendants' bottled water service subscription, in violation of California's consumer protection laws. Id.

On November 17, 2020, ReadyRefresh removed the action to federal court, asserting jurisdiction pursuant to the Class Action Fairness Act of 2005 (“CAFA”), 28 U.S.C. § 1332(d)(2). Dkt. 1. On December 17, 2020, plaintiff filed a motion to remand this action to the Los Angeles Superior Court. Dkt. 9. On February 1, 2021, the Court issued an order denying plaintiff s motion to remand, determining that ReadyRefresh had sufficiently demonstrated that the amount in controversy satisfies the jurisdictional requirements under CAFA. Dkt. 16.

On April 23, 2021, plaintiff filed the first amended complaint. Dkt. 21. On October 29, 2021, plaintiff filed the second amended complaint, adding Marlon Javier as an additional plaintiff. Dkt. 30. On January 21, 2022, plaintiffs filed the operative third amended complaint. Dkt. 33 (“TAC”). The third amended complaint alleges claims for:

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(1) violation of California's Unfair Competition Law (“UCL”), Bus. & Prof. Code § 17200 et seq.; (2) violation of California's Consumer Legal Remedies Act (“CLRA”), Civ. Code § 1750 et seq.; and (3) for imposition of unlawful penalties in violation of Cal. Civ. Code § 1671. Id. On March 3, 2022, the Court dismissed Doe defendants 11-20 inclusive, pursuant to Local Rule 19-1. Dkt. 39

On March 28, 2022, ReadyRefresh filed a motion to dismiss for failure to state a claim. Dkt. 41 (“MTD”). On the same day, ReadyRefresh filed a motion to compel arbitration and stay this action. Dkt. 42. On May 9, 2022, plaintiffs filed oppositions to the respective motions. Dkt. 44; dkt. 45 (“Opp.”). On June 6, 2022, ReadyRefresh filed its replies. Dkt. 47 (“Reply”); dkt. 48.

On July 13, 2022, the Court held a hearing. Having carefully considered the parties' arguments and submissions, the Court finds and concludes as follows as to defendants' motion to dismiss.

II. BACKGROUND

Defendant ReadyRefresh, a Delaware corporation with its principal office in Connecticut, is a retail beverage delivery service company that provides bottled water and other beverages to customers' homes and offices on a monthly subscription basis. TAC at 4. Plaintiffs Donell Corey Kendall and Marlon Javier, and others similarly situated, are all citizens of California who purchased water and other beverages from defendants pursuant to contracts on a monthly basis. Id. at 4. Kendall purchased water from defendants from at least 2015 to approximately late 2018. Javier purchased water from defendants from at least 2020 to the present. Id.

Plaintiffs, on behalf of themselves and the class they seek to represent, allege that defendants charged them “exorbitant late fees” without adequate notice. TAC ¶ 13. ReadyRefresh charged plaintiffs late fees for each monthly bill they failed to pay by the “pay by” date. TAC ¶ 3. From around 2015 to the end of 2016, the fee was $15. Beginning in 2017, the fee increased to $20. Id. Plaintiffs allege that when they entered into agreements with ReadyRefresh for the water delivery services, it was plaintiffs' understanding that they had 30 days to pay their monthly bill, according to the contracts. Id. at 4. However, the “pay by” date on the invoices plaintiffs received was only 20 days from the “billing date.” Id.

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The relevant terms of the contract states:

If Customer does not pay any charge within thirty (30) days of the invoice date, Customer will pay Company the greater of (i) a late fee not to exceed $20 per month, or (ii) interest of 1.5% per month on any unpaid amount from the invoice date until paid. If the late fee or interest rate exceeds the maximum rate allowed by law, the late charge will be equal to such maximum rate.

Dkt. 42-2 at 10 (“ReadyRefresh Terms and Conditions”).

1. Plaintiff Donell Corey Kendall

Plaintiffs allege that they believed they would be charged a late fee that would be both proportional to their underlying balance and reasonable given the circumstances. Id. For example, Donell Corey Kendall signed up for recurring delivery of bottled water from ReadyRefresh around 2015. Id. at 4. In doing so, Kendall agreed to ReadyRefresh's Terms and Conditions. Id. ¶ 21.^[1] During the summer of 2015, Kendall realized he was being assessed a flat fee of $ 15 for making late payments on beverage delivery. Id. Kendall's monthly bill was about $30, and therefore he “could not understand why he was being charged 50% or more of that amount for a late fee, and why this late fee was assessed 20 days from the ‘pay by' date,” because when he signed up, he was told he had 30 days to pay each bill. Id. Kendall called a customer service representative who apologized and reversed the fee. Id. Over the next three years, Kendall contacted ReadyRefresh's customer service numerous times to complain about excessive late fees, and on each occasion a representative reversed the charge. Id. Based on these interactions, Kendall believed that the late fees were assessed by mistake. Id.

In early 2018, Kendall saw an online offer on ReadyRefresh's website that detailed the terms and conditions of its beverage service by recurring delivery. Id. Kendall alleges that this was the first time he read the specifics of the late-fee provision. Id.

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2. Plaintiff Marlon Javier

Additionally, plaintiff Javier signed up for monthly deliveries of bottled water and beverages from ReadyRefresh pursuant to an online contract he entered into in 2020.^[2]TAC at 6. Unbeknownst to Javier, the contract contained an arbitration clause. Id. When Javier did not pay his bill on time, Javier received a charge for a late fee of $20 (over 70% of the monthly cost of the beverage service). Id. Further, Javier alleges that he was assessed a late fee 20 days after his balance was due, not after 30 days, as was specified in the written terms and conditions of his contract. For example, Javier states he received an invoice with a billing date of June 16, 2021 in the amount of $39.28 for the products he received; however, the “pay by” date on the invoice was only 20 days later, on July 6, 2021. Id. at 16. Furthermore, the $20 late fee was charged on July 14, 2021, only 8 days after the “pay by” date, and only 28 days after billing date. Id. ¶ 51.

III. LEGAL STANDARD

A. Motion to Dismiss

A motion pursuant to Federal Rule of Civil Procedure 12(b)(6) tests the legal sufficiency of the claims asserted in a complaint. Under this Rule, a district court properly dismisses a claim if “there is a Tack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory.'” Conservation Force v. Salazar, 646 F.3d 1240, 1242 (9th Cir. 2011) (quoting Balisteri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1988)). “While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff s obligation to provide the ‘grounds' of his ‘entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Bell Atlantic Corp, v. Twombly, 550 U.S. 544, 555 (2007). “[F]actual allegations must be enough to raise a right to relief above the speculative level.” Id.

In considering a motion pursuant to Rule 12(b)(6), a court must accept as true all material allegations in the complaint, as well as all reasonable inferences to be drawn from them. Pareto v. FDIC, 139 F.3d 696, 699 (9th Cir. 1998). The complaint must be

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read in the light most favorable to the nonmoving party. Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001). However, “a court considering a motion to dismiss can choose to begin by identifying pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth. While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations.” Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009); see Moss v. United States Secret Service, 572 F.3d 962, 969 (9th Cir. 2009) (“[F]or a complaint to survive a motion to dismiss, the non-conclusory ‘factual content,' and reasonable inferences from that content, must be plausibly suggestive of a claim entitling the plaintiff to relief.”). Ultimately, “[determining whether a complaint states a plausible claim for relief will... be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Iqbal. 556 U.S. at 679.

Unless a court converts a Rule 12(b)(6) motion into a motion for summary judgment, a court cannot consider material outside of the complaint (e.g., facts presented in briefs, affidavits, or discovery materials). In re American Cont'l Corp./Lincoln Sav. & Loan Sec. Litig., 102 F.3d 1524, 1537 (9th Cir. 1996), rev'd on other grounds sub nom Lexecon, Inc, v. Milberg Weiss Bershad Hynes & Lerach, 523 U.S. 26 (1998). A court may, however, consider exhibits submitted with or...