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Kwan v. SanMedica International

United States Court of Appeals, Ninth Circuit

April 21, 2017

Serena Kwan, an individual, On Behalf of Herself and All Others Similarly Situated, Plaintiff-Appellant,
v.
SanMedica International, a Utah Limited Liability Company, Defendant-Appellee.

          Argued and Submitted January 12, 2017 San Francisco, California

         Appeal from the United States District Court for the Northern District of Californi, D.C. No. 3:14-cv-03287-MEJa Maria-Elena James, Magistrate Judge, Presiding

          Stewart M. Weltman (argued) and Max A. Stein, Boodell & Domanskis LLC, Chicago, Illinois; Elaine Ryan and Patricia N. Syverson, Bonnett Fairbourn Friedman & Balint P.C., Phoenix, Arizona; Manfred Muecke, Bonnett Fairbourn Friedman & Balint P.C., San Diego, California; for Plaintiff-Appellant.

          Jason Kerr (argued), Christopher B. Sullivan, Mark J. Williams, and Steven William Garff, Price Parkinson & Kerr PLLC, Salt Lake City, Utah, for Defendant-Appellee.

          Before: J. Clifford Wallace and Milan D. Smith, Jr., Circuit Judges, and Ralph R. Erickson, [*] District Judge.

         SUMMARY[**]

         California Law

         The panel affirmed the district court's Fed.R.Civ.P. 12(b)(6) dismissal of plaintiff's second amended complaint, which alleged that defendants made claims concerning its product, SeroVital, that were unsubstantiated.

         Pursuant to the holding in National Council Against Health Fraud, Inc. v. King Bio Pharmaceuticals, Inc., 107 Cal.App.4th 1336, 1344 (Cal.App. 2003), the panel held that the district court did not err in concluding that neither the Unfair Competition Law nor the Consumer Legal Remedies Act provided plaintiff with a private cause of action to enforce the substantiation provisions of California's unfair competition and/or consumer protection laws.

         The panel held that the district court did not err in concluding that the second amended complaint failed to allege facts that would support a finding that defendants' claims regarding its product, SerioVital, were actually false. The panel also held that the district court did not err by declining to address plaintiff's complaint as if this case were a case brought under the Lanham Act.

          OPINION

          ERICKSON, District Judge:

         Serena Kwan appeals from the district court judgment dismissing her second amended complaint for failing to state a claim upon which relief can be granted.[1] The district court correctly concluded that California law does not provide for a private cause of action to enforce the substantiation requirements of California's unfair competition and consumer protection laws. Further, the district court did not err in concluding that Kwan's second amended complaint failed to allege facts that would support a finding that SanMedica International's claims regarding its product, SeroVital, were actually false. Accordingly, we AFFIRM.

         BACKGROUND FACTS AND PROCEDURAL HISTORY

         On July 21, 2014, Plaintiff/Appellant, Serena Kwan, an Individual, On Behalf of Herself and All Others Similarly Situated ("Kwan"), filed a class action against Defendants/Appellees, SanMedica International, LLC ("SanMedica"), a Utah Limited Liability Company, and Sierra Research Group, LLC ("Sierra"), a Utah Limited Liability Company, alleging violations of California's Unfair Competition Law ("UCL") and California's Consumers Legal Remedies Act ("CLRA"). Kwan filed a first amended complaint on August 27, 2014. The amended complaint was based on an allegation that the defendants falsely represented that their product, SeroVital, provides a 682% mean increase in Human Growth Hormone ("HGH") levels, that it was clinically tested, and that "peak growth hormone levels" are associated with "youthful skin integrity, lean musculature, elevated energy production, [and] adipose tissue distribution."

         On October 7, 2014, Sierra filed a motion under rule 12(b)(2) to dismiss for lack of jurisdiction. On October 16, 2014, Kwan filed a notice of voluntary dismissal of Sierra pursuant to rule 41(a)(1)(A)(I), Fed. R. Civ. P.

         The court granted SanMedica's motion to dismiss with leave to amend. The court reasoned that the first amended complaint was based entirely on allegations related to whether SanMedica's claims regarding its product, SeroVital, were properly substantiated. Citing Cal. Bus. & Prof. Code § 17508, the court stated: "Individuals may not bring suit under the UCL or the CLRA alleging only that advertising claims lack substantiation" because that "right is reserved to 'the Director of Consumer Affairs, the Attorney General, any city attorney, or any district attorney . . . .'" The court instructed that if Kwan chose to amend her complaint, "she must allege facts from which the [c]ourt can conclude that Defendant's advertising representations were false." The court continued, "it is not enough for Plaintiff to attack the methodology of Defendant's study; instead, she must allege facts affirmatively disproving Defendant's claims." The court advised:

For example, Plaintiff could allege that one or more of the authorities alluded to actually studied or tested the formula SeroVital contains and found that it does not produce a 682% mean increase in HGH levels, or that Plaintiff herself did not experience such an increase when using the product, or that a study exists somewhere demonstrating that a 682% increase is categorically impossible to achieve in an over-the-counter pill. Of course, Plaintiff should only allege these facts if she can do so in good faith.

         Kwan filed a second amended complaint against SanMedica International, LLC, on December 1, 2014. In the second amended complaint, Kwan continues to maintain the two counts. Count one alleges violations of the California Unlawful Business and Practices Act. Count two alleges violations of the California Consumers Legal Remedies Act. Among several paragraphs containing conclusions of law and sweeping arguments, the second amended complaint contains the following material factual allegations:

1) SanMedica manufactures and sells SeroVital, an over-the-counter amino acid supplement represented as an HGH secretagogue, meaning it is supposed to "prompt the body to secrete HGH."
2) SanMedica represents in its marketing campaign and on each label of SeroVital that:
(1) "It is clear that Growth Hormone has been associated with wrinkle reduction, decreased body fat, increased lean muscle mass, stronger bones, improved mood, heightened sex drive, and making users look and feel decades - not years, but DECADES - younger"; (2) "peak growth hormone levels" are "associated with: youthful skin integrity, lean musculature, elevated energy production, [and] adipose tissue distribution"; and (3) that SeroVital is clinically tested to boost human growth hormone ...

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