Lopez v. Stages of Beauty, LLC

• Decision Date: 09 February 2018
• Docket Number: Case No.: 17cv1888–MMA (KSC)
• Citation: 307 F.Supp.3d 1058
• Parties: Matthew LOPEZ, individually and on behalf of all others similarly situated, Plaintiff, v. STAGES OF BEAUTY, LLC, and Does 1–10, Defendants.
• Court: U.S. District Court — Southern District of California

307 F.Supp.3d 1058

Matthew LOPEZ, individually and on behalf of all others similarly situated, Plaintiff,

v.STAGES OF BEAUTY, LLC, and Does 1–10, Defendants.

Case No.: 17cv1888–MMA (KSC)

United States District Court, S.D. California.

Signed February 9, 2018

Scott J. Ferrell, Victoria Knowles, Pacific Trial Attorneys, Newport Beach, CA, for Plaintiff.

Daniel Scott Silverman, Matthew M. Gurvitz, Venable LLP, Los Angeles, CA, for Defendants.

ORDER:

(1) GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO DISMISS THE COMPLAINT; AND

(2) DENYING DEFENDANT'S MOTION FOR SANCTIONS

Hon. Michael M. Anello, United States District Judge

On September 14, 2017, Plaintiff Matthew Lopez ("Plaintiff"), individually and on behalf of all others similarly situated, filed this putative class action against Defendant Stages of Beauty, LLC ("Defendant") and Doe Defendants 1 through 10 alleging causes of action for violations of California's Automatic Renewal Law ("ARL"), California Business and Professions Code § 17600, et seq. and California's Unfair Competition Law ("UCL"), California Business and Professions Code § 17200, et seq. Doc. No. 1 ("Compl."). Defendant filed a motion to dismiss Plaintiff's Complaint pursuant to Federal Rules of Civil Procedure 12(b)(6) and 12(b)(1). Doc. No. 4–1 ("MTD"). Also, Defendant filed a motion for sanctions pursuant to Federal Rule of Civil Procedure 11. Doc. No. 7–1 ("Sanct. Mtn."). Plaintiff opposes both motions [Doc. No. 8 ("MTD Oppo."), Doc. No. 9 ("Sanct. Oppo.") ], and Defendant replied [Doc. No. 10 ("MTD Reply"), Doc. No. 11 ("Sanct. Reply") ]. The Court found the matters suitable for determination on the papers and without oral argument pursuant to Civil Local Rule 7.1.d.1. Doc. No. 12. For the following reasons, the Court GRANTS IN PART AND DENIES IN PART Defendant's motion to dismiss [Doc. No. 4] and DENIES Defendant's motion for sanctions [Doc. No. 7].

BACKGROUND ¹

Defendant sells cosmetics, beauty aids and related products primarily through a website which markets weekly subscription programs. Compl., ¶¶ 8, 17. These subscription programs "constitute[ ] ... automatic renewal and/or continuous service plan[s] or arrangement[s]...." Compl., ¶ 17. Plaintiff purchased a subscription plan from Defendant and seeks to represent a class of "[a]ll persons within California who, within the applicable statute of limitations period, up to and including the date of final judgment in this action, purchased any product or service in response to an offer constituting an "Automatic Renewal" as defined by [California Business and Professions Code] § 17601(a) from Stages of Beauty, LLC, its predecessors, or its affiliates." Compl., ¶¶ 7, 22.

Plaintiff alleges that Defendant's automatic renewal or continuous service offers failed to present the offer terms in a clear and conspicuous manner and in visual proximity to the request for consent to the offer prior to purchasing the subscription and that Defendant charged Plaintiff's and class members' credit or debit cards, or third-party accounts, without first obtaining the subscriber's consent to the agreement containing the offer terms. Compl., ¶ 2. Specifically, Plaintiff alleges the full and complete cancellation policy is not listed on the webpage inviting a prospective subscriber to complete a purchase. Compl., ¶ 18.

Plaintiff also alleges that Defendant failed to provide an acknowledgement including the full cancellation policy. Compl., ¶ 2. After subscribing to one of Defendant's plans, Defendant sends a "follow-up[ ]" email to the subscriber. See Compl., ¶ 21. Plaintiff alleges that these emails provide language regarding cancellation without specifying that a subscriber must call the cancellation number "at least one day prior to the date the subscriber's next monthly delivery ships." Id. According to Plaintiff, Defendant's webpage also references "cancellation and gives a phone number for cancellation," but "does not specify, as do terms set forth later in the website, that that number must be called at least one day prior to the date the subscriber's next monthly delivery ships, and thus does not contain a full description of the cancellation policy in visual proximity to the request for consent to the offer...." Compl., ¶ 18.

As a result, Plaintiff alleges "all goods, wares, merchandise, or products, sent to Plaintiff and Class Members under the automatic renewal or continuous service agreement are deemed to be an unconditional gift...." Compl., ¶ 20. Based on these allegations, Plaintiff raises the following causes of action: (1) failure to present the automatic renewal or continuous service offer terms clearly and conspicuously and in visual proximity to the request for consent offer in violation of the ARL; (2) failure to obtain the consumer's affirmative consent before the subscription is fulfilled in violation of the ARL; (3) failure to provide an acknowledgement with the automatic renewal terms and information regarding the cancellation policy in violation of the ARL; and (4) violations of California's UCL for unlawful and/or unfair business practices. Compl., ¶¶ 32–53.

MOTION TO DISMISS

Defendant moves to dismiss Plaintiff's Complaint on four grounds. See MTD at 7. First, Defendant argues Plaintiff lacks Article III standing with respect to his ARL claims. Id. Second, Defendant asserts the ARL does not provide a private right of action. Id. Third, Defendant contends its pre- and post-transaction disclosures comply with the ARL. Id. Fourth, Defendant states that Plaintiff lacks statutory standing and insufficiently pleads a UCL claim. Id. at 8. Plaintiff opposes dismissal. MTD Oppo.

1. Request for Judicial Notice

In determining the propriety of a Rule 12(b)(6) dismissal, courts generally may not look beyond the complaint for additional facts. See United States v. Ritchie , 342 F.3d 903, 907–08 (9th Cir. 2003). "A court may, however, consider certain materials—documents attached to the complaint, documents incorporated by reference in the complaint, or matters of judicial notice—without converting the motion to dismiss into a motion for summary judgment." Id. at 908 ; see also Fed. R. Evid. 201 ; see also Lee v. City of Los Angeles , 250 F.3d 668, 688 (9th Cir. 2001), overruled on other grounds by Galbraith v. Cnty. of Santa Clara , 307 F.3d 1119, 1125–26 (9th Cir. 2002). Courts can take judicial notice of facts that are not subject to reasonable dispute because they are either generally known or can be readily determined by reference to sources whose accuracy cannot be reasonably questioned. Fed. R. Evid. 201(b). A document "may be incorporated by reference into a complaint if the plaintiff refers extensively to the document or the document forms the basis of the plaintiff's claim." Ritchie , 342 F.3d at 908 (internal citations omitted). In other words, a court "may consider a document the authenticity of which is not contested, and upon which the plaintiff's complaint necessarily relies." Parrino v. FHP, Inc. , 146 F.3d 699, 706 (9th Cir. 1998), superseded by statute on other grounds in Abrego v. Dow Chem. Co. , 443 F.3d 676, 681–82 (9th Cir. 2006) ; Swartz v. KPMG LLP , 476 F.3d 756, 763 (9th Cir. 2007) ; Knievel v. ESPN , 393 F.3d 1068, 1076 (9th Cir. 2005).

In support of its motion to dismiss, Defendant requests the Court judicially notice Plaintiff's receipt that was sent with his purchase on or about June 2, 2017. Doc. No. 4–2, Request for Judicial Notice In Support of Defendant Stages of Beauty, LLC's Motion to Dismiss the Complaint ("DRJN") at 3. Defendant contends judicial notice is appropriate because Plaintiff's claim is based on Defendant's alleged failure to provide a post-transaction acknowledgment of its automatic renewal policy terms, but Plaintiff deliberately omits the receipt he received for the product. Id. at 3–4. Because Plaintiff's Complaint does partially rely upon the claim that Defendant's post-transaction acknowledgment of the renewal policy terms are insufficient and because Plaintiff does not object, the Court GRANTS Defendant's request to judicially notice Exhibit A. DRJN, Exhibit A.

Additionally, Plaintiff requests the Court judicially notice documents of the ARL's legislative history, and the first amended complaint and the PACER docket sheet in Kissel v. Omega Natural Science, Inc. , No. CV 16–27700–GW (SKx). Doc. No. 8–1, Plaintiff's Request for Judicial Notice in Support of Plaintiff's Memorandum of Points and Authorities in Opposition to Defendant's Motion to Dismiss the Complaint ("PRJN") at 2–3. Judicial notice of legislative history materials is proper pursuant to Federal Rule of Evidence 201(b). See Aramark Facility Servs. v. SEIU, Local 1877 , 530 F.3d 817, 826 n.4 (9th Cir. 2008) ; Zephyr v. Saxon Mortg. Servs. , 873 F.Supp.2d 1223, 1226 (E.D. Cal. 2012). Additionally, the Court may judicially notice matters of public record, including pleadings, orders, and other papers filed with the court, or materials from a proceeding in another tribunal. Mack v. South Bay Beer Distribs. , 798 F.2d 1279, 1282 (9th Cir. 1986) ; Papai v. Harbor Tug & Barge Co. , 67 F.3d 203, 207 n.5 (9th Cir. 1995), reversed on other grounds , 520 U.S. 548, 117 S.Ct. 1535, 137 L.Ed.2d 800 (1997). Accordingly, the Court GRANTS Plaintiff's request to judicially notice Exhibits 1 through 8. PRJN, Exhibits 1–8.

2. Legal Standard

a. Rule 12(b)(6)

A Rule 12(b)(6) motion to dismiss tests the sufficiency of the complaint. Navarro v. Block , 250 F.3d 729, 732 (9th Cir. 2001). A pleading must contain "a short and plain statement of the claim showing that the pleader is entitled to relief...." Fed. R. Civ. P. 8(a)(2). However, plaintiffs must also plead "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ; Fed. R. Civ. P. 12(b)(6). The plausibility standard demands more than "a formulaic recitation of the elements of a cause of...