Zeller v. Optavia, LLC
| Decision Date | 22 December 2022 |
| Docket Number | 22-cv-434-DMS-MSB |
| Parties | JAMIE ZELLER, and ANGELICA ALPERT, Individually, and on Behalf of All Others Similarly Situated, Plaintiffs, v. OPTAVIA, LLC and MEDIFAST, INC., Defendants. |
| Court | U.S. District Court — Southern District of California |
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT OPTAVIA, LLC'S MOTION TO DISMISS
This case comes before the Court on Defendant Optavia LLC's (“Defendant”) motion to dismiss Plaintiffs Jamie Zeller's and Angelica Alpert's (“Plaintiffs”) claims under the California Automatic Renewal Law, Unfair Competition Law, Consumer Legal Remedies Act, and California Weight Loss Contract Law, and under common law theories of fraud and unjust enrichment. (ECF No. 18.) Defendant moves to dismiss Plaintiffs' claims on the grounds that Plaintiffs lack standing under Federal Rule of Civil Procedure 12(b)(1), fail to state a claim under Rule 12(b)(6), and fail to satisfy a heightened pleading standard under Rule 9(b). Defendant also requests the Court to judicially notice certain extra-pleading materials. (ECF no. 18-9.) Plaintiffs filed an opposition to Defendant's motion and request for judicial notice, and Defendant filed a reply. (ECF Nos. 23, 24, 28.) Plaintiffs filed a sur-reply, and Defendant filed a response to the sur-reply. (ECF Nos. 33 35.) The motion is fully briefed and submitted. For the reasons stated below, the Court GRANTS IN PART and DENIES IN PART Defendant's motion to dismiss.
The Optavia Premier Program (“Optavia Premier” or “Premier Program”) is an autoship program for Optavia meal plan products. Participants can enroll in the Premier Program either directly online through Optavia's website or over the phone through an Optavia representative (“Optavia coach”). Optavia customers who are enrolled in the Premier Program are charged for monthly recurring shipments, but do not pay extra to join the program. Plaintiffs claim they were auto-enrolled in the Premier Program without their knowledge or consent. (ECF No 10 at 16-17.)
On April 1, 2022, Plaintiffs filed a Complaint against Defendants Optavia LLC and Medifast, Inc. (“Defendants”) in a putative class action. Plaintiffs allege Defendants violated the California Automatic Renewal Law, Unfair Competition Law, Consumer Legal Remedies Act, and California Weight Loss Contract Law. Plaintiffs also claim Defendants committed fraud and were unjustly enriched. On May 16, 2022, Plaintiffs filed an amended complaint against both Defendants (“First Amended Complaint” or “FAC”). On July 1, 2022, Defendant Medifast, Inc. filed a Motion to Dismiss Plaintiff's Complaint, and subsequently filed an Amended Motion to Dismiss on July 11, 2022. On July 1, 2022, Defendant Optavia filed a Motion to Dismiss Plaintiff's Complaint and Request for Judicial Notice. Plaintiffs oppose Defendants' motions. The case was initially assigned to Judge Moskowitz and later transferred to the undersigned judge.
Plaintiffs bring six putative class action claims against Defendants. First, Plaintiffs claim that Defendants charged consumers for automatically renewing weight loss products without obtaining explicit consent for the ongoing shipments and in violation of prepurchase and post-purchase disclosure requirements under the California Automatic Renewal Law, which is part of California's False Advertising Law. (ECF No. 1 at 2.) Second and third, Plaintiffs claim that Defendants' practices constitute “unfair competition” and “unlawful, unfair, and deceptive conduct” in violation of the Unfair Competition Law and an “unfair or deceptive act[] or practice[] undertaken . . . in a transaction intended to result or which results in the sale or lease of goods or services to any consumer” under the Consumer Legal Remedies Act (ECF No. 1 at 22-24.) Fourth, Plaintiffs argue their subscriptions with Optavia constitute a “weight loss contract,” which did not contain required pre- and post-purchase disclosures and were unlawful, willful, or fraudulent under California's Weight Loss Contract Law. (ECF No. 1 at 25-26.) Fifth, Plaintiffs claim Defendants knowingly and intentionally committed fraud by making “misleading statements and/or omissions in the marketing and billing of its monthly subscriptions” and made these statements “maliciously, oppressively, deliberately, with intent to defraud, and in reckless disregard of Plaintiff's rights and well-being.” (ECF No. 1 at 27-28.) Sixth, Plaintiffs claim Defendants received “a direct and unjust benefit” at Plaintiffs' expense and as a result of Defendants' wrongful conduct. (ECF No. 28.)
Plaintiffs request various forms of relief including but not limited to certification of their claims as a putative class action, injunctive relief, equitable relief, compensatory damages, punitive damages, pre- and post-judgment interest, costs, reasonable attorneys' fees, and expenses. (ECF No. 29.) In response, Defendant Optavia filed the present motion to dismiss. Defendant argues that Plaintiffs lack standing to maintain their claims under Rule 12(b)(1) because the Premier Program did not operate as an auto-ship program for Plaintiff Zeller and because Plaintiff Alpert never participated in the Premier Program. Plaintiffs object that Defendants' arguments improperly rely on information outside the scope of the facts pleaded in the FAC. Defendant also argues Plaintiffs lack Rule 12(b)(1) standing because neither Plaintiff directly placed orders using the Optavia website, and therefore, cannot establish causation for their purported injuries. Additionally, Defendant argues Plaintiffs lack standing to sue for equitable damages because there is an adequate remedy at law and Plaintiffs have failed to plead otherwise.
Defendant argues Plaintiffs also failed to state any claim upon which relief can be granted, and consequently do not satisfy Rule 12(b)(6). Defendant claims that California's Automatic Renewal Law, Consumer Legal Remedies Act, and Weight Loss Contract Law do not apply and that Plaintiffs lack standing under the False Advertising Law, Unfair Competition Law, and Consumer Legal Remedies Act. Defendant claims Plaintiffs also lack standing to sue for equitable damages because they have an adequate remedy at law and have failed to plead otherwise. Finally, Defendant argues that Plaintiffs failed to meet the heightened pleading standard of Rule 9(b) for their claims sounding in fraud. The Court will address the parties' arguments in turn.
The first category of Defendant's challenges relates to Plaintiffs' standing. Defendant questions both Plaintiffs' Article III standing and statutory standing under the FAL, UCL, and CLRA. Before turning to these arguments, the Court addresses Defendants' request for judicial notice.
Defendant requests judicial notice of four exemplar emails that purportedly illustrate the information that would have been sent to Plaintiffs with respect to their orders or anticipated auto-shipments. (ECF No. 18, Exhs. 1-4.) Defendant submits exemplars because it no longer possesses the actual emails sent to Plaintiffs, on account of an outside vendor's 90-day retention policy. (ECF No. 18-9 at 5.) Defendant does not request judicial notice of Harsh Tewari's Declaration (“Tewari Declaration”) or invoices for orders shipped to Plaintiffs (Exhibits 5-6).
On a motion to dismiss under Rule 12(b)(6), a court's review is generally limited to facts alleged on the face of the complaint and to exhibits attached to the complaint. Price v. Synapse Grp., Inc., No. 16-CV-01524-BAS-BLM, 2017 WL 3131700, at *3 (S.D. Cal. July 24, 2017) (citing Swartz v. KPMG LLP, 476 F.3d 756, 763 (9th Cir. 2007)). Under the “incorporation by reference” doctrine, however, a court may take into account documents that are not attached to the complaint, and whose authenticity no party questions, so long as the complaint refers extensively to the documents, or the documents are “central” to the complaint. Id (citing Ecological Rights Foundation v. Pacific Gas & Elec. Co., 713 F.3d 502, 511 (9th Cir. 2013)). “Whether a document is ‘central' to a complaint turns on whether the complaint ‘necessarily relies' on that document.” Id.
Defendant argues that Exhibits 1-4 are admissible to support its Rule 12(b)(6) arguments under the doctrine of incorporation-by-reference. Defendant claims that Plaintiff “referr[ed] extensively” to Plaintiff Zeller's partial acknowledgement email. (ECF No. 28-1 at 4.) Defendant argues that the acknowledgement email, attached as Exhibit 1, shows that “by failing to attach the full email received by Zeller (which she now has), and failing to attach the acknowledgment email received by Alpert at all, Plaintiffs were able to shield Alpert's material misrepresentation that she was enrolled in OPTAVIA Premier . . . on her first order.” (ECF No. 28-1 at 6.) In the same vein, Defendant argues that the exemplar reminder emails and order update email it has attached as Exhibits 2, 3, and 4, also show that “Plaintiffs purposefully omitted their receipt of these communications from Optavia because to do so would again put the lie to their claims that they were injured by Optavia's alleged ARL violations.” (ECF No. 28-1 at 7.) Defendant claims that the documents are authenticated by Mr. Tewari in his role as the Executive Vice President of Technology for Defendant, Medifast, Inc. Finally, Defendant requests the Court's judicial notice of Optavia's entire website because the entire case rests on the contents of the website and Plaintiffs refer to the website throughout the FAC. (ECF No. 28-1 at 7.)
In their opposition to Defendant's request for judicial notice, Plaintiffs attached the entire post-order...
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