Ogbonna ex rel. & v. United Statesplabs, LLC
| Decision Date | 10 June 2014 |
| Docket Number | EP-13-CV-347-KC |
| Court | U.S. District Court — Western District of Texas |
| Parties | SYLVIA OGBONNA on behalf of and as representative for DEMEKIA COLA, Plaintiff, v. USPLABS, LLC; JONATHAN VINCENT DOYLE; JACOB GEISSLER; USPLABS JACK3D, LLC; USPLABS OXYELITE, LLC; USPLABS HOLDING, LLC; NATURAL ALTERNATIVES INTERNATIONAL, INC.,; and DOES 1-500, inclusive; Defendants. |
On this day, the Court considered the Renewed Motion to Dismiss (the "Motion"), ECF No. 32, filed by Defendants Jonathan Vincent Doyle ("Doyle"); Jacob Geissler ("Geissler"); USPLabs, LLC; USPLabs Jack3D, LLC; USPLabs OxyElite, LLC; and USPLabs Holding, LLC (collectively "USP Defendants") in the above-captioned case (the "Case").1 By the Motion, USP Defendants request that the Court dismiss the Case in its entirety.2 See Mot. 21. For the following reasons, the Court GRANTS the Motion in part and DENIES the Motion in part. The Court also ALLOWS Plaintiff to move to further amend her pleadings in a manner consistentwith this Order, this Court's Scheduling Order, ECF No. 40, and applicable law.
For the purposes of the Motion, the Court assumes the truth of the following well-pleaded factual allegations in Plaintiff's First Amended Complaint, ECF No. 29, which is the live pleading in the Case: Demekia Cola ("Decedent") ingested certain dietary supplements that caused her to suffer rhabdomyolysis, hyperthermia, and liver failure. See Am. Compl. ¶ 22. As a result of these complications, Decedent passed away on December 13, 2011. Id. Plaintiff is Decedent's mother and sole heir. Id. ¶ 18. USP Defendants manufactured, marketed, distributed, and sold the dietary supplements that caused Decedent's death with full knowledge of their health risks and without warning customers of their potentially deadly effects. See id. ¶¶ 23-71. USP Defendants repeatedly and knowingly misrepresented to Decedent and other customers that the dietary supplements were safe and effective, and Decedent consumed the supplements in reliance on these representations. See id. ¶¶ 19, 23-71, 100-01, 113, 116. All of the events giving rise to Plaintiff's claims occurred on Fort Bliss, within the exterior boundaries of the state of Texas. See id. ¶ 1.
Plaintiff additionally alleges that Doyle and Geissler owned and controlled the limited liability company ("LLC") Defendants and used those entities to shield themselves from liability for their wrongful acts. Id. ¶¶ 5-7, 9. Plaintiff therefore contends that "[a]dherence to the fiction of the separate existence of the [USP Defendants] would promote injustice and result in inequity[.]" Id. ¶ 9; accord id. ¶ 8.
Although Plaintiff does not raise a fraud cause of action, she does allege, in support of her veil-piercing claims, that USP Defendants organized the LLC Defendants as a "sham to perpetrate a fraud." Id. ¶ 9. Specifically, Plaintiff alleges that the LLC Defendants "were formed for the purpose of selling untested and dangerous dietary supplements . . . which carried a high risk of causing serious personal injuries, without being responsible to the injured customers." Id. ¶ 8. Plaintiff further alleges that USP Defendants engaged in fraudulent activity by intentionally misleading Decedent and other consumers regarding the safety and efficacy of the dietary supplements. See id. ¶¶ 19, 33-71, 100-01, 113-14, 116, 118. Plaintiff therefore claims that, unless the Court disregards USP Defendants' separate entity status, USP Defendants' fraud will be unjustly insulated from legal redress. See id. ¶¶ 8-9.
USP Defendants filed the Motion on February 25, 2014. See Mot. Plaintiff filed a response (the "Response"), ECF No. 33,3 on March 7, 2014. USP Defendants filed a reply (the "Reply"), ECF No. 35, on March 14, 2014. In compliance with this Court's order requiring further briefing in the Case, see ECF No. 38, USP Defendants and Plaintiff have also submitted supplemental memoranda analyzing the application of Wyoming state law to the Case. SeeDefs.' Br., ECF No. 42; Pl.'s Br., ECF No. 43.
A motion to dismiss pursuant to Rule 12(b)(6) challenges a complaint on the basis that it fails to state a claim upon which relief may be granted. Fed. R. Civ. P. 12(b)(6). When ruling on a Rule 12(b)(6) motion, the Court must accept well-pleaded facts as true and view them in the light most favorable to the plaintiff. Calhoun v. Hargrove, 312 F.3d 730, 733 (5th Cir. 2002); Collins v. Morgan Stanley Dean Witter, 224 F.3d 496, 498 (5th Cir. 2000). Though a complaint need not contain "detailed" factual allegations, a plaintiff's complaint must allege sufficient facts "to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 570 (2007); accord Colony Ins. Co. v. Peachtree Constr., Ltd., 647 F.3d 248, 252 (5th Cir. 2011). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
"[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." Twombly, 550 U.S. at 555 (internal quotation marks omitted); Gulf Coast Hotel-Motel Ass'n v. Miss. Gulf Coast Golf Course Ass'n, 658 F.3d 500, 506 (5th Cir. 2011). Ultimately, the "[f]actual allegations [in the complaint] must be enough to raise a right to relief above the speculative level." Twombly, 550 U.S. at 555 (internal citation omitted). Nevertheless, a "well-pleaded complaint may proceed even if it strikes a savvy judge that actual proof of those facts is improbable, and 'that a recovery is very remote and unlikely.'" Id. at 556 (quoting Scheuer v. Rhodes, 416 U.S. 232, 236 (1974)).
However, a slightly different rule applies when a plaintiff alleges fraud in his or her complaint. Federal Rule of Civil Procedure 9(b) provides that a party alleging fraud "must state with particularity the circumstances constituting fraud . . . Malice, intent, knowledge, and other conditions of a person's mind may be alleged generally." Fed. R. Civ. P. 9(b). "Rule 9(b) requires, at a minimum, 'that the plaintiff set forth the who, what, when, where, and how of the alleged fraud.'" U.S. ex rel. Steury v. Cardinal Health, Inc., 625 F.3d 262, 266 (5th Cir. 2010) (internal quotation marks omitted) (quoting U.S. ex rel. Thompson v. Columbia/HCA Healthcare Corp., 125 F.3d 899, 903 (5th Cir. 1997)). "A dismissal for failure to plead fraud with particularity under Rule 9(b) is treated as a dismissal for failure to state a claim under Rule 12(b)(6)." United States ex rel. Grubbs v. Kanneganti, 565 F.3d 180, 185 n.8 (5th Cir. 2009) (citation and internal quotation marks omitted).
That said, Rule 9(b) "is not intended 'to procure punctilious detail,' and the particularity demanded by Rule 9(b) differs with the facts of each case." Norfolk S. Ry. Co. v. Trinity Indus., Inc., No. 3-07-CV-1905-F, 2009 WL 362437, at *3 (N.D. Tex. Feb. 13, 2009) (quoting Steiner v. Southmark Corp., 734 F. Supp. 269, 273 (N.D. Tex. 1990)). "The rule must be applied in conjunction with the overall pleading requirements of Rule 8, which requires a short and plain statement of the claim showing that the pleader is entitled to relief." Lincoln Gen. Ins. Co. v. U.S. Auto Ins. Servs., Inc., Civil Action No. 3:07-CV-1985-B, 2009 WL 1174641, at *6 (N.D. Tex. Apr. 29, 2009) (citing Landry v. Air Line Pilots Ass'n Int'l AFL-CIO, 892 F.2d 1238, 1264 (5th Cir. 1990)). Rule 9(b) "must also be viewed in light of Rule 8's goal of 'simple, concise, and direct' pleadings." Id. at *6 (quoting Landry, 892 F.2d at 1264 n.92).
"[T]he pleading requirements of Rule 9(b) may be to some extent relaxed where . . . the facts relating to the alleged fraud are peculiarly within the perpetrator's knowledge." U.S. ex rel.Willard v. Humana Health Plan of Tex. Inc., 336 F.3d 375, 385 (5th Cir. 2003) (citing ABC Arbitrage v. Tchuruk, 291 F.3d 336, 350 (5th Cir. 2002)). In particular, a plaintiff may allege fraud upon information and belief if the complaint sets forth the factual basis for the plaintiff's belief. See id. (citing ABC Arbitrage, 291 F.3d at 350 n.67). However, "this exception 'must not be mistaken for license to base claims of fraud on speculation and conclusory allegations.'" Id. (quoting ABC Arbitrage, 291 F.3d at 350 n.67).
When a court dismisses one or more of a plaintiff's claims pursuant to Rule 12(b)(6), the court should generally give the plaintiff an opportunity to amend his or her complaint to cure the defect unless amendment would be futile. See Adams v. Energizer Holdings, Inc., Civil Action No. 3:12CV797TSL-JMR, 2013 WL 1791373, at *4 (S.D. Miss. Apr. 19, 2013) ("Energizer") (citing Hart v. Bayer Corp., 199 F.3d 239, 248 n.6 (5th Cir. 2000)).
USP Defendants argue that all of Plaintiff's claims should be dismissed because she has failed to adequately allege that veil-piercing is warranted. See Mot. 10-19; Reply 3-8. USP Defendants further argue that ...
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