Sihler v. Fulfillment Lab, Inc.
| Decision Date | 08 December 2020 |
| Docket Number | Case No.: 3:20-cv-01528-H-MSB |
| Court | U.S. District Court — Southern District of California |
| Parties | JANET SIHLER, individually and on behalf of all others similarly situated; CHARLENE BAVENCOFF, individually and on behalf of all others similarly situated, Plaintiffs, v. THE FULFILLMENT LAB, INC; RICHARD NELSON; BEYOND GLOBAL INC.; and DOES 1-10, Defendants. |
(1) DENYING DEFENDANT RICHARD NELSON'S MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION
[Doc. No. 13.]
(2) GRANTING IN PART AND DENYING IN PART DEFENDANT THE FULFILLMENT LAB, INC.'S MOTION TO DISMISS; AND
[Doc. No. 14.]
(3) GRANTING IN PART AND DENYING IN PART DEFENDANT BEYOND GLOBAL INC.'S MOTION TO DISMISS AND MOTION TO STRIKE
[Doc. No. 15.]
On August 6, 2020, Plaintiffs Janet Sihler and Charlene Bavencoff filed a class action complaint alleging Defendants The Fulfillment Lab, Inc., Richard Nelson, and Beyond Global Inc. had violated numerous consumer protection laws. (Doc. No. 1, Compl.) On October 9, 2020, Defendant Richard Nelson filed a motion to dismiss for lack of personal jurisdiction, and Defendant The Fulfillment Lab, Inc. ("TFL") filed a motion to dismiss for failure to state a claim. (Doc. Nos. 13-14.) On October 16, 2020, Defendant Beyond Global Inc. filed a motion to dismiss and to strike Plaintiffs' claims. (Doc. No. 15.) On October 22, 2020, Defendants TFL and Nelson joined Defendant Beyond Global's motions to dismiss and to strike Plaintiffs' complaint. (Doc. Nos. 19-20.) Plaintiffs filed their oppositions on November 2, 2020. (Doc. Nos. 22-24.) Defendant TFL and Defendant Beyond Global filed their respective replies on November 9, 2020. (Doc. Nos. 25, 27.) Defendant Nelson filed his reply on November 12, 2020. (Doc. No. 29.)
On November 13, 2020, the Court took the matter under submission. (Doc. No. 30.) For the reasons that follow, the Court (1) denies Defendant Nelson's motion to dismiss for lack of personal jurisdiction, (2) grants in part and denies in part Defendant TFL's motion to dismiss for failure to state a claim, and (3) grants in part and denies in part Defendant Beyond Global's motion to dismiss and motion to strike.
Background
The following facts are taken from Plaintiffs' class action complaint. This lawsuit involves an alleged fraudulent scheme in which the Defendants allegedly use fake celebrity endorsements and reviews and misrepresentations about price and limited availability, to induce consumers into purchasing weight-loss pills branded "Ultra Fast Keto Boost" and "Instant Keto" (collectively, "Keto Products"). (Doc. No. 1 ¶¶ 8-12.) The Defendants allegedly subsequently charge consumers more than they originally agreed to pay, make it difficult or impossible to return the products or receive a refund, and operate "false front" websites to mislead banks and credit card companies investigating chargebacks. (Id.)
///
///
In December 2019, Plaintiff Janet Sihler, a California resident, saw an advertisement for a weight loss product called "InstaKeto" as she was browsing the Internet. (Id. ¶ 49.) The advertisement claimed the product was featured on Shark Tank. (Id.) She clicked on the advertisement, which took her to a website (which Plaintiffs refer to as a "hidden" landing page). (Id.) She selected the "Buy 3 bottles, Get 2 free" promotion with the expectation that she would be billed for three bottles of the product at $39.74 each, and receive two additional bottles for free, for a total purchase price of $119.22. (Id. ¶ 18.) Instead, her debit card was charged for $198.70, the price of all five bottles. (Id.) She received five bottles branded "Instant Keto" a few days later. (Id. ¶ 52.) Plaintiff Sihler called the customer service telephone number to request a refund. (Id. ¶ 54.) The representative told her she would have to ship the bottles back at her own expense to obtain a partial refund; Plaintiff Sihler did not receive any money back. (Id.) Plaintiff Sihler's debit card was charged by the merchant account "VYA*KETOBOOST 8889700695 Port Orange FL." (Id. ¶ 51.) The "Instant Keto" bottles stated they were distributed by "Instant Keto Boost" and listed "www.instantketoboost.com" as the product's website. (Id. ¶ 169.)
In October 2019, Plaintiff Charlene Bavencoff, a California resident, saw an advertisement on Facebook for a weight-loss product called "Ultra Fast Keto Boost." (Id. ¶ 55.) She clicked the advertisement, which brought her to a page that claimed the product was endorsed on Shark Tank. (Id.) She also selected the "Buy 3 bottles, Get 2 free" promotion with the expectation that she would be billed for three bottles of the product at $39.74 each, and receive two additional bottles for free, for a total purchase price of $119.22. (Id. ¶ 19.) Instead, her credit card was charged for $198.70, the price of all five bottles. (Id.) After receiving the product and deciding it did not work, Plaintiff Bavencoff called the customer service number listed on the packing slip, but the number was disconnected. (Id. ¶¶ 20, 58.) She also has not recovered any money. (Id.) Plaintiff Bavencoff's credit card was charged by the merchant account "UltraFast Keto Boost 8444-7041211NV." (Id. ¶ 56.)
Plaintiffs allege Defendants' fraudulent scheme operates as follows. False claims about the effectiveness of the Keto Products, as well as fake celebrity or TV show endorsements, are allegedly used to induce consumers into clicking onto product advertisements. (Id. ¶¶ 62-78, 98.) The advertisement "funnels" consumers to a landing page for the product, where they are presented with several purchase options, including the "Buy 3, Get 2 Free" option selected by Plaintiffs Sihler and Bavencroft. (Id. ¶¶ 82, 89-92, 99-101.) These landing pages are allegedly inaccessible to anyone who does not view the advertisements or are deleted after a few weeks or months to avoid detection. (Id. ¶¶ 63, 80.) Plaintiffs allege that the terms and conditions of purchases, including the Refund/Return Policy, are hidden or buried on the landing page; consumers do not need to read or acknowledge the terms in order to complete their purchase. (Id. ¶¶ 85-88, 90.)
After providing their credit card information and completing their purchase, the consumers are allegedly overcharged for the full price of all five bottles of product, rather than the discounted "Buy 3, Get 2 Free" price. (Id. ¶¶ 93-96, 102.) When consumers seek to dispute the overcharge with their bank or credit card company, the Defendants allegedly present the investigators with a second website, which Plaintiffs term a "false front" website. (Id. ¶¶ 103-114.) These "false front" websites are visually similar to the landing pages consumers used to make their purchase, but the terms and conditions are clearly stated, the false advertisements are removed, and the actual purchase prices of the different options are listed, thus deceiving the investigators into believing consumers agreed to the full terms of sale. (Id.) Additionally, the Defendants create multiple shell companies, each of whom signs up for a unique merchant account; these accounts are then rotated through customer billings with a "load balancing" software to prevent any individual account from being flagged for fraud due to high levels of chargebacks. (Id.)
Plaintiffs allege the named Defendants are involved in this scheme as follows. The "Keto Doe Defendants," which includes Defendant Beyond Global, are the marketers and/or branders of the Keto Products who allegedly operate the hidden landing pagesviewed by consumers as well as the false front websites provided to banks and credit card companies. (Id. ¶ 11.) Defendant Beyond Global is incorporated in Wyoming. (Id. ¶ 24.) The "Ultra Fast Keto Boost" bottles purchased by Plaintiff Bavencoff stated they were distributed by "Beyond Global Inc." and listed "www.thesuperbooster.com" as the product's website. (Id. ¶¶ 149, 169.) Defendant TFL, owned by Defendant Nelson, is a fulfillment company that allegedly provides generic "white label" products to the Keto Doe Defendants, assists them with marketing and advertising, distributes the products to consumers, and handles returns when customers complain. (Id. ¶¶ 11, 169-80.) Defendant TFL is incorporated in Florida, with its principal place of business in Tampa, Florida. (Id. ¶ 21.) Defendant Nelson is a resident of and domiciled in Florida. (Id. ¶ 5.) Plaintiffs allege Defendant TFL is the fulfillment company for both the "Instant Keto" and "Ultra Fast Keto Boost" products, and that both products are the same white-labeled products offered by Defendant TFL. (Id. ¶¶ 169-71.) The packing slip accompanying the five bottles shipped to Plaintiff Sihler described the product as "KetoBoost" and identified the shipper as "Ultra Fast Instant Keto" with an office located at 3201 Hillsborough Avenue 153201-1378, Tampa, Florida, 33684. (Id. ¶ 53.) The packing slip accompanying the five bottles shipped to Plaintiff Bavencoff described the product as "Ultra Fast Keto Boost" and identified the shipper as "Ultra Fast Instant Keto" with an office located at 3201 Hillsborough Avenue 153201-1378, Tampa, Florida, 33684. (Id. ¶ 57.) Plaintiffs allege the Hillsborough address is for a United States Post Office that is close to the TFL headquarters. (Id. ¶ 171.)
On August 6, 2020, Plaintiffs filed a complaint alleging the following causes of action: (1) violation of California's Consumer Legal Remedies Act ("CLRA"); (2) violation of California's False Advertising Law ("FAL"); (3) violation of the unfair and fraudulent prongs of California's Unfair Competition Law ("UCL"); (4) violation of the unlawful prong of California's Unfair Competition Law; (5) civil Racketeer Influenced and Corrupt Organizations ("RICO") Act violations; (6) violation of various state's consumer protection laws; (7) aiding and abetting; and (8) conspiracy. (Doc. No. 1.)
Defendant...
To continue reading
Request your trial