John Sandoval v. Pharmacare US, Inc.

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS APR 5 2018
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
JOHN SANDOVAL, on behalf of himself No. 16-56301
and all others similarly situated,
D.C. No. 3:15-cv-00738-H-JLB
Plaintiff - Appellant,
v. MEMORANDUM*
PHARMACARE US, INC.,
Defendant - Appellee.
JONATHAN KANFER, No. 16-56710
Plaintiff - Appellant, D.C. No. 3:15-cv-00120-H-JLB
v.
PHARMACARE US, INC., a Delaware
Corporation,
Defendant - Appellee.
Appeal from the United States District Court
for the Southern District of California
Marilyn L. Huff, Senior District Judge, Presiding
Argued and Submitted February 6, 2018
Pasadena, California
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
Before: CALLAHAN and NGUYEN, Circuit Judges, and PRATT,** District
Judge.
John Sandoval (“Sandoval”) and Jonathan Kanfer (“Kanfer”) appeal the
district court’s orders granting summary judgment in favor of Appellee
PharmaCare US, Inc. (“PharmaCare”), denying class certification, and other
interlocutory rulings. We have jurisdiction under 28 U.S.C. § 1291.
1. Reviewing the district court’s grant of summary judgment de novo, see
Glenn v. Wash. Cty., 673 F.3d 864, 870 (9th Cir. 2011), we affirm in part and
reverse in part.
a. We affirm the district court’s order granting summary judgment to
PharmaCare on Sandoval’s and Kanfer’s false advertising and express warranty
claims based on the IntenseX website. To sustain a false advertising claim under
California law, a plaintiff must show that he actually relied on the allegedly false
advertising. See In re Tobacco II Cases, 46 Cal. 4th 298, 326 (2009); Cohen v.
DirecTV, Inc., 178 Cal. App. 4th 966, 973 (2009). To prove an express warranty
claim, a plaintiff must show that the seller’s affirmation of fact or promise formed
the “basis of the bargain.” Weinstat v. Dentsply Int’l, Inc., 180 Cal. App. 4th 1213,
1227 (2010). If “the resulting bargain does not rest at all on the representations of
the seller, those representations cannot be considered as becoming any part of the
**
The Honorable Robert W. Pratt, United States Senior District Judge
for the Southern District of Iowa, sitting by designation.
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‘basis of the bargain.’” Keith v. Buchanan, 173 Cal. App. 3d 13, 23 (1985)
(citation omitted). Here, Sandoval testified that the website had no effect on his
decision to purchase IntenseX, and Kanfer failed to submit sufficient evidence that
he viewed and relied on the website before his first purchase of IntenseX.
Therefore, their website-based false advertising and express warranty claims fail.
b. We reverse the district court’s order granting summary judgment
to PharmaCare on Sandoval’s and Kanfer’s false advertising and express warranty
claims based on the IntenseX label (as opposed to the website). IntenseX’s label
stated that the product would “intensify” a user’s “endurance, stamina, and sexual
performance,” and included a seal stating that IntenseX was “Laboratory Quality
Tested.” These statements are sufficiently specific and concrete such that a
reasonable consumer could construe it as an affirmation of fact or promise and not
just the seller’s opinion. See Keith, 173 Cal. App. 3d at 21 (stating that a seller’s
statements during negotiations “are presumptively affirmations of fact unless . . .
the buyer could only have reasonably considered the statement as a statement of
the seller’s opinion”). While the word “intensify” may have multiple meanings,
when read in context, the label’s statements could convey to a reasonable
consumer that IntenseX will increase the consumer’s endurance and stamina
during sex and that its effectiveness has been laboratory tested. See Williams v.
Gerber Prods. Co., 552 F.3d 934, 938 (9th Cir. 2008) (explaining that false
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advertising claims are governed under a “reasonable consumer” test). Sandoval
and Kanfer testified that they experienced no such increase in endurance or
stamina after taking IntenseX, and they submitted expert testimony and scientific
literature showing that products such as IntenseX have not been proven to improve
a user’s sexual performance in any way. This evidence was sufficient to create a
genuine issue of fact for a jury. See Nat’l Council Against Health Fraud, Inc. v.
King Bio Pharm., Inc., 107 Cal. App. 4th 1336, 1348 (2003) (“The falsity of the
advertising claims may be established by testing, scientific literature, or anecdotal
evidence.”). Because we reverse as to Sandoval’s and Kanfer’s label-based
express warranty claim, we also reverse as to their implied warranty of
merchantability claim. See Cal. Com. Code § 2314(2) (providing that
“merchantable” goods must “[c]onform to the promises or affirmations of fact
made on the container or label if any”).
c. We also reverse the district court’s order granting summary
judgment to PharmaCare on Sandoval’s and Kanfer’s Unfair Competition Law
(“UCL”) claim based on PharmaCare’s alleged failure to comply with federal law.
See Cal. Bus. & Prof. Code § 17200. 21 C.F.R. § 310.528(b) requires any over-
the-counter (“OTC”) aphrodisiac drug to be approved by the FDA before
marketing. A product marketed as a dietary supplement will be regulated as a drug
“[i]f the label or labeling of [the dietary supplement] bears a disease claim.” 21
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C.F.R. § 101.93(f); see also id. § 310.528(a). “Labeling” is construed broadly
under the Food, Drug, and Cosmetic Act (“FDCA”) and includes any article that
“supplements or explains” the product even if the article is not physically attached
to it. See Kordel v. United States, 335 U.S. 345, 349–50 (1948). Here, the
IntenseX label refers consumers specifically to www.intensex.com (rather than
PharmaCare’s company website), which contains information only about IntenseX,
including the product’s ingredients, their beneficial properties, and their ability to
treat diseases. Under Kordel, the IntenseX website supplements or explains the
IntenseX product. And as the district court recognized when it ruled on
PharmaCare’s motions to dismiss, some of these website representations are
disease claims. See 21 U.S.C. § 343(r)(6); 21 C.F.R. § 101.93(g). Therefore,
PharmaCare’s alleged failure to obtain approval of IntenseX as an OTC
aphrodisiac drug under 21 C.F.R. § 310.528 creates a basis for a claim under the
UCL’s unlawful prong.1 See Durell v. Sharp Healthcare, 183 Cal. App. 4th 1350,
1360–61 (2010) (stating that the UCL “borrows” violations of other laws and treats
them as unlawful practices that are independently actionable).
2. Reviewing for abuse of discretion, see United States v. Bahena-
Cardenas, 411 F.3d 1067, 1078 (9th Cir. 2005), we affirm the district court’s order
1
Because we hold that Plaintiffs can pursue their UCL claim under the OTC
aphrodisiac drug theory, we need not and do not address whether the district court
erred in holding that the IntenseX labeling made only “structure/function” claims.
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excluding Sandoval’s expert rebuttal reports. The district court reasonably allowed
the use of rebuttal reports “only to the extent they are true rebuttal.”
3. Reviewing for abuse of discretion, see Lozano v. AT&T Wireless Servs.,
504 F.3d 718, 725 (9th Cir. 2007), we affirm the district court’s denial of class
certification. The district court did not err in concluding that Sandoval’s and
Kanfer’s claims are not typical of the proposed class, which included prospective
members who, unlike Sandoval and Kanfer, suffered sexual health problems and
purchased IntenseX based on the website’s representations that it can treat sexual-
health conditions. In addition to the economic injury from buying IntenseX, these
class members may have suffered additional harm from taking IntenseX rather than
seeking medical treatment. Therefore, they may have other claims and remedies
available to them and different incentives for how best to pursue their interests. Cf.
Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 625–27 (1997) (noting the
different interests between the “currently injured” and “exposure-only plaintiffs”).
Nothing precludes the district court, however, from exercising its discretion to
revisit the class certification issue on remand should it find it appropriate to do so.
* * *
In sum, we affirm the district court’s orders (1) granting summary judgment
on Sandoval’s and Kanfer’s website-based false advertising and express warranty
claims, (2) limiting the use of Sandoval’s expert rebuttal reports, and (3) denying
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class certification. We reverse the district court’s order granting summary
judgment on the (1) label-based false advertising and express warranty claims, (2)
implied warranty of merchantability claim, and (3) UCL unlawful prong claim
based on PharmaCare’s alleged failure to comply with federal law.
AFFIRMED IN PART AND REVERSED IN PART.
Each party shall bear their own fees and costs on appeal.
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