Baum v. J-B Weld Company, LLC ( 2020 )

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 FELIX BAUM, Case No. 19-cv-01718-EMC 8 Plaintiff, ORDER GRANTING DEFENDANT’S MOTION FOR LEAVE TO FILE 9 v. MOTION FOR RECONSIDERATION AND MODIFYING PRIOR ORDER RE 10 J-B WELD COMPANY, LLC, SUMMARY JUDGMENT 11 Defendant. Docket No. 90 12 13 I. INTRODUCTION 14 On July 28, 2020, this Court granted in part J-B Weld’s Motion for Summary Judgment. 15 See Docket No. 86. J-B Weld has now moved for leave to file a Motion for Reconsideration, 16 challenging the scope of that order and urging that the Court’s ruling—which was limited to 17 addressing only California Business and Professions Code § 17533.7 as a predicate claim to 18 Plaintiff’s UCL claim—should be expanded. Specifically, J-B Weld contends that it is entitled to 19 summary judgment on all of Plaintiff’s predicate claims. As the motion cites no new cases and 20 because Plaintiff already had the opportunity to respond to the arguments advanced and authorities 21 relied upon by J-B Weld, the Court decides the motion without further briefing or argument. 22 II. BACKGROUND 23 As the relevant facts and procedural background of this case were set forth in the Court’s 24 prior order, see Docket No. 86, they are not recounted again here. 25 III. DISCUSSION 26 A. Legal Standard 27 Under Civil Local Rule 7-9, a party must seek leave of the court to file a motion for 1 diligence in bringing the motion” and establish one of the following: 2 (1) That at the time of the motion for leave, a material difference in fact or law exists from that which was presented to the Court before 3 entry of the interlocutory order for which reconsideration is sought. The party also must show that in the exercise of reasonable diligence 4 the party applying for reconsideration did not know such fact or law at the time of the interlocutory order; or 5 (2) The emergence of new material facts or a change of law 6 occurring after the time of such order; or 7 (3) A manifest failure by the Court to consider material facts or dispositive legal arguments which were presented to the Court 8 before such interlocutory order. 9 Civ. L.R. 7-9(b). Motions for reconsideration are generally disfavored and are not the place for 10 parties to make new arguments not raised in their original briefs. Northwest Acceptance Corp. v. 11 Lynnwood Equip., Inc., 841 F.2d 918, 925–26 (9th Cir. 1988). “Nor is reconsideration to be used 12 to ask the Court to rethink what it has already thought.” Gray v. Golden Gate Nat. Recreational 13 Area, 866 F. Supp. 2d 1129, 1132 (N.D. Cal. 2011) (citing United States v. Rezzonico, 32 F. Supp. 14 2d 1112, 1116 (D. Ariz. 1998)). 15 Here, J-B Weld assert that there was “[a] manifest failure by the Court to consider material 16 facts or dispositive legal arguments.” See Docket No. 90 at 1 (citing Civ. L.R. 7-9(b)(3)). 17 B. Analysis 18 As stated in the Court’s prior order, Plaintiff’s Complaint alleges two counts: Count I is a 19 UCL claim, premised upon: violations of California Business & Professions Code § 17533.7 20 (Made in USA labeling), the FTC Act 15 U.S.C. §§ 45 and 45a, California Civil Code § 21 1770(a)(4) (misrepresenting a product’s geographic origin), California Civil Code §§ 1572–73 22 (actual and constructive fraud), and California Civil Code §§ 1709 (willful deceit and deceit to 23 defraud the public or a particular class). Count II is a CLRA claim, premised upon California 24 Civil Code § 1770(a)(4) (misrepresenting a product’s geographic origin). See Second Amended 25 Complaint “SAC”) at 22–25, Docket No. 38. 26 The Court previously granted summary judgment in favor of J-B Weld only as to the 27 California Business & Professions Code § 17533.7. See Docket No. 86 at 16. However, J-B Weld 1 the company to summary judgment as to all of Plaintiff’s remaining claims as well. On further 2 review of those authorities, the Court finds that argument has merit. 3 J-B Weld relies on several district court cases in support of its contention that “numerous 4 cases . . . have consistently applied the same Made in the U.S.A. standard and the California safe 5 harbor to various claims and . . . [those cases] expressly did not limit its applicability to Section 6 17533.7 claims.” Motion for Leave to File Motion for Reconsideration (“Mot.”) at 2, Docket No. 7 90. The cases cited by J-B Weld are each discussed in turn. 8 In Fitzpatrick v. Tyson Foods, Inc., No. 216CV00058JAMEFB, 2016 WL 5395955 (E.D. 9 Cal. Sept. 27, 2016), aff’d, 714 F. App’x 797 (9th Cir. 2018), the plaintiff brought a UCL claim 10 premised upon both “unfair conduct” and § 17533.7 and a CLRA claim premised upon a violation 11 of California Civil Code § 1770(a)(4) (deceptive representations or designations of geographic 12 origin in connection with goods or services). Id. at *1. The court first concluded that the plaintiff 13 had failed to adequately allege a violation of § 17533.7 because “her complaint d[id] not include 14 any allegations regarding the percentage of foreign sourced materials contained in Defendant’s 15 products.” 2016 WL 5395955, at *4. It then addressed whether that failure “extinguishe[d] 16 Plaintiff’s more general UCL claim for unfair conduct, Cal. Bus. & Prof. Code §§ 17200, et seq., 17 and CLRA claim for deceptive representations of geographic origin, Cal. Civ. Code § 1770(a)(4).” 18 Id. To resolve that question, the court relied on the following explanation from the California 19 Supreme Court: 20 If the Legislature has permitted certain conduct or considered a situation and concluded no action should lie, courts may not 21 override that determination. When specific legislation provides a “safe harbor,” plaintiffs may not use the general unfair competition 22 law to assault that harbor. 23 Id. at *5 (quoting Cel-Tech Commc’ns, Inc. v. Los Angeles Cellular Tel. Co., 20 Cal. 4th 163, 182 24 (1999)) (also noting that the safe-harbor rule had been applied in both the UCL and CLRA 25 contexts). Accordingly, Fitzpatrick concluded that—without a viable § 17533.7 claim— 26 California’s safe-harbor doctrine also barred the plaintiff’s other UCL and CLRA claims (alleging 27 unfair conduct and deceptive representations of a product’s geographic origin). In other words, it 1 legislature had made a clear and overriding judgment that “no action should lie” where the 5- 2 percent safe-harbor limit was not exceeded. The court dismissed all predicate claims of the UCL 3 and CLRA. 4 In Alaei v. Rockstar, Inc., 224 F. Supp. 3d 992 (S.D. Cal. 2016), the plaintiff alleged 5 violations of § 17533.7, a separate UCL claim premised both upon violations of § 17533.7 and 6 upon unfair and deceptive practices, and a CLRA claim premised upon violations of § 1770. See 7 Docket No. 4 in Case No. 3:15-cv-02959-JAH-BGS (S.D. Cal., filed Dec. 31, 2015). As in 8 Fitzpatrick, the court first found that the plaintiff had failed to state a claim under § 17533.7 9 because she “fail[ed] to specify . . . what percentage of [the d]efendants’ products are comprised 10 of foreign-sourced ingredients.” Alaei, 224 F. Supp. 3d at 1000. It then turned to the question 11 whether the plaintiff’s UCL and CLRA claims could survive based on the non-17533.7 predicate 12 claims. It relied on the same passage from Cel-Tech to conclude that the safe-harbor doctrine 13 barred those predicates as well. Id. at 1000–01 (first quoting Cel-Tech, 20 Cal. 4th at 182 (UCL); 14 and then quoting Lopez v. Nissan N. Am., Inc., 201 Cal. App. 4th 572, 594 (2011) (CLRA)). In 15 doing so, the court rejected the plaintiff’s argument that Cel–Tech prohibited use of the unfair 16 competition law “to assault th[e safe] harbor only when specific legislation provides a ‘safe 17 harbor’ provision.” Id. at 1001. Instead, it concluded that the safe-harbor provision evinced a 18 legislative determination that “no action should lie” where the safe harbor was not exceeded and 19 therefore that the safe harbor applied to all predicate claims, not just the § 17533.7 predicate. Id. 20 The court found that to conclude otherwise would permit the plaintiff “to attack conduct which the 21 legislature has thoughtfully considered and deemed lawful.” Id. at 1001. 22 Finally, in Hass v. Citizens of Humanity, LLC, No. 14-CV-1404 JLS (WVG), 2016 WL 23 7097870 (S.D. Cal. Dec. 6, 2016), the plaintiff alleged violations of § 17533.7, a separate UCL 24 claim premised both upon violations of § 17533.7 and upon unfair and deceptive practices, and a 25 CLRA claim premised upon violations of § 1770 (as in Alaei). See Docket No. 90 in Case No. 26 3:14-cv-01404-JLS-WVG (S.D. Cal., filed June 9, 2014). As in the other two cases, the court first 27 concluded that the plaintiff had failed to “raise a plausible inference that . . . [the foreign] materials 1 the amended § 17533.7.” Hass, 2016 WL 7097870, at *4 (citing Fitzpatrick, 2016 WL 5395955, 2 at *4). It then relied on Fitzpatrick and Cel-Tech to conclude that “under California’s safe harbor 3 doctrine, Plaintiff’s [failed] claim that Defendant violated § 17533.7 forecloses both of Plaintiff’s 4 additional claims based on that alleged conduct.” Id. Because any allegations related to “unfair” 5 business practices under the UCL or the §1770 predicate for the CLRA focused on the same 6 alleged misconduct that underpinned the plaintiff’s § 17533.7 claims (which failed), the plaintiff 7 could not proceed on her UCL and CLRA claims even based on the non-17533.7 predicate claims. 8 Id. 9 These cases indicate that the California legislature did not intend a claim of false “Made in 10 USA” representations to lie where the 5% safe harbor is not exceeded. In the instant case, as 11 explained in the summary judgment order, Plaintiff failed to present any evidence that a 12 reasonable consumer would understand the “merchandise” at issue as including the “containers” in 13 which that merchandise is packaged. See Docket No. 86 at 15. Accordingly, in light of this 14 Court’s construction of merchandise, there was no evidence to support the contention that the 5% 15 safe-harbor limit was exceeded, and the Court saw fit to grant summary judgment for Defendants 16 to the extent that Count I (the UCL claim) was premised upon a violation of California Business & 17 Professions Code § 17533.7. Id. at 16.1 However, what the cases cited by Defendant make clear 18 is that, where there is no viable claim under § 17533.7, the California legislature has determined 19 that “no action should lie.” Fitzpatrick, 2016 WL 5395955 at *5 (quoting Cel-Tech, 20 Cal. 4th at 20 182). To permit a plaintiff to proceed on his or her other state law predicate claims (alleging, e.g., 21 fraud, deceit, or misrepresentation) where there is no § 17533.7 violation based on the safe-harbor 22 would permit that plaintiff “to attack conduct which the legislature has thoughtfully considered 23 and deemed lawful.” Alaei, 224 F. Supp. 3d at 1001. If there is no violation of § 17533.7 and its 24 safe harbor, no state law claim will lie to the extent it arises out of the same conduct. 25 1 Although not necessary to this decision, the Court notes that J-B Weld submitted substantial 26 evidence showing that for 23 of the 24 products—even if packaging were included as part of “merchandise,” assuming the relevant metric for assessing the percentage of foreign content was 27 wholesale price—the 5% safe harbor was not exceeded. Because of the ruling herein, the Court 1 Plaintiff appears to concede that the cases discussed above would spell doom for his other 2 state-law predicate claims (should his § 17533.7 claim fail), as he asserts that his “reliance on 15 3 U.S.C. §§ 45 and 45a distinguishes this case from Fitzpatrick . . . , Alaei . . ., and Hass . . . .” 4 Opposition to Motion for Summary Judgment at 14 n.8, Docket No. 79. In addition, he cited no 5 case law that would support a different interpretation of those cases or a different outcome for this 6 analysis. 7 Accordingly, the Court now GRANTS Defendant’s Motion for Summary Judgment to the 8 extent that Counts I and II are premised upon any violation of California state law (which fully 9 disposes of Count II – the CLRA claim). 10 J-B Weld asserts that, in light of the aforementioned cases, it is more broadly entitled to 11 summary judgment on all of Plaintiff’s claims, including Plaintiff’s UCL claim to the extent it is 12 premised upon violations of the FTC Act. Mot. at 3. However, the case law provided speaks only 13 to the impact that a failed § 17533.7 claim has on the other state-law predicate claims; it does not 14 directly address the relationship between Plaintiff’s federal predicate (15 U.S.C. §§ 45 and 45a), 15 California’s 5% safe-harbor rule, and the UCL. Nonetheless, Cel-Tech instructs that “a plaintiff 16 may not bring an action under the unfair competition law if some other provision bars” such an 17 action. Cel-Tech, 20 Cal. 4th at 184; see also Perea v. Walgreen Co., 939 F. Supp. 2d 1026, 1040 18 (C.D. Cal. 2013) (“[A] defendant is not liable under the UCL if some other law clearly permits the 19 conduct.”); cf. Knevelbaard Dairies v. Kraft Foods, Inc., 232 F.3d 979, 994 (9th Cir. 2000) (citing 20 Cel-Tech, 20 Cal. 4th at 184) (“[A] plaintiff may bring an unfair competition claim under 21 California law unless some other provision bars the action by clearly permitting the conduct.”). 22 Thus, even if Plaintiff could prove a violation of the FTC Act (15 U.S.C. §§ 45 and 45a) by 23 showing that the foreign content of Defendant’s products exceeded the “all or virtually all” federal 24 standard, no UCL claim would lie unless Plaintiff could show that the foreign content exceeded 25 five percent of the total wholesale value of the product. As noted above, the 5% safe-harbor was 26 meant to bar suits based on false “Made in USA” claims for merchandise falling within that safe 27 harbor. There is no reason to believe that bar does not apply to all California laws addressing this 1 Accordingly, the Court also GRANTS summary judgment as to Count I (UCL) to the 2 extent that it is premised on a violation of the FTC Act. 3 IV. CONCLUSION 4 For the foregoing reasons, the Court GRANTS summary judgment in favor of Defendant 5 as to all remaining state-law predicate claims and the FTC Act predicate claim. This decision 6 fully disposes of all of Plaintiff’s claims. 7 This order disposes of Docket No. 90. The Clerk is directed to enter judgment and close 8 this case. 9 10 IT IS SO ORDERED. 11 12 Dated: August 21, 2020 13 14 ______________________________________ EDWARD M. CHEN 15 United States District Judge 16 17 18 19 20 21 22 23 24 25 26 27