Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_07-cv-01941/USCOURTS-cand-3_07-cv-01941-4/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 28:1391 Personal Injury

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United States District Court

For the Northern District of California

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It is unclear why Plaintiffs are unable to allege the precise dates of their subscription

to the service.

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

KENNETH STICKRATH, et al.,

Plaintiffs,

v.

GLOBALSTAR, INC.,

Defendant.

NO. C07-1941 TEH

ORDER GRANTING IN PART

AND DENYING IN PART

DEFENDANT’S MOTION TO

DISMISS

This matter came before the Court on Monday, September 17, 2007, on Defendant’s

motion to dismiss the complaint. After carefully considering the parties’ written and oral

arguments, the Court GRANTED IN PART and DENIED IN PART Defendant’s motion at

the conclusion of the hearing. The Court now issues this written order to provide additional

reasoning behind its rulings.

BACKGROUND

Plaintiffs Kenneth and Sharan Stickrath seek to represent a class of all individuals

who purchased satellite telephone service from Defendant Globalstar, Inc. between March

2003 and the present. The Stickraths subscribed to the service “from approximately 2004

through 2006 so that they would have the ability to keep their family advised of their location

while they were traveling at sea in the Bahamas. The Service proved unreliable initially and

only became worse.”1

 Am. Compl. ¶ 23. Plaintiffs further allege that they “experienced

numerous dropped calls when attempting to use the service. Often, the phone signal meter

would show a good signal and then the call would be dropped. Frequently there was no

signal at all.” Id. ¶ 24.

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 Plaintiffs complain that Defendant unlawfully failed to disclose material information

regarding the quality of its satellite telephone services and that Defendant also made

affirmative misrepresentations, such as claims that the service “[w]orks virtually

ANYWHERE you can see Sky.” Am. Compl. ¶ 25a. Plaintiffs contend that such conduct is

unfair, unlawful, and fraudulent in violation of California’s unfair competition law (“UCL”),

California Business and Professions Code §§ 17200 et seq., and that it constitutes prohibited

practices under two sections of California’s Consumers Legal Remedies Act (“CLRA”):

“[r]epresenting that goods or services have sponsorship, approval, characteristics,

ingredients, uses, benefits, or quantities which they do not have,” Cal. Civ. Code

§ 1770(a)(5), and “[r]epresenting that goods or services are of a particular standard, quality,

or grade . . . if they are of another,” Cal. Civ. Code § 1770(a)(7). Defendant moves to

dismiss Plaintiffs’ amended complaint on a variety of grounds, each of which the Court

addresses in turn below.

LEGAL STANDARD

Dismissal is appropriate under Federal Rule of Civil Procedure 12(b)(6) when a

plaintiff’s allegations fail “to state a claim upon which relief can be granted.” Fed. R. Civ. P.

12(b)(6). In evaluating the sufficiency of a complaint’s allegations, a court must assume the

facts alleged in the complaint to be true unless the allegations are controverted by exhibits

attached to the complaint, matters subject to judicial notice, or documents necessarily relied

on by the complaint and whose authenticity no party questions. Lee v. City of Los Angeles,

250 F.3d 668, 688-89 (9th Cir. 2001). In addition, a court need not “accept as true

allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable

inferences.” Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001), amended

on other grounds by 275 F.3d 1187 (9th Cir. 2001). A court should not grant dismissal

unless the plaintiff has failed to plead “enough facts to state a claim to relief that is plausible

on its face.” Bell Atlantic Corp. v. Twombly, 127 S. Ct. 1955, 1974 (2007). Moreover,

dismissal should be with leave to amend unless it is clear that amendment could not possibly

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cure the complaint’s deficiencies. Steckman v. Hart Brewing, Inc., 143 F.3d 1293, 1296 (9th

Cir. 1998).

Defendant also moves to dismiss this case for lack of jurisdiction under Federal Rule

of Civil Procedure 12(b)(1). Because Defendant does not seek to rely on any external facts,

this is a facial rather than factual challenge to the court’s jurisdiction. See Wolfe v.

Strankman, 392 F.3d 358, 362 (9th Cir. 2004) (distinguishing between facial and factual

jurisdictional attacks). Consequently, this Court applies a similar standard to Defendant’s

Rule 12(b)(1) motion as to its Rule 12(b)(6) motion: Dismissal is appropriate only if the

complaint’s allegations, which are assumed to be true, are insufficient to support a finding of

jurisdiction. Id.

DISCUSSION

I. Whether Plaintiffs Have Adequately Alleged Standing

Defendants first move to dismiss Plaintiffs’ claims for lack of standing. To satisfy the

constitutional requirements of standing, “the plaintiff must have suffered an ‘injury in fact’ –

an invasion of a legally protected interest which is (a) concrete and particularized, and

(b) actual or imminent, not conjectural or hypothetical.” Lujan v. Defenders of Wildlife, 504

U.S. 555, 560 (1992) (citations and internal quotations omitted). In addition, the plaintiff’s

“injury in fact” must be fairly traceable to the challenged conduct of the defendant, and “it

must be likely, as opposed to merely speculative, that the injury will be redressed by a

favorable decision.” Id. at 560-61 (citation and internal quotations omitted). Similarly, both

the UCL and CLRA protect only plaintiffs who have suffered harm “as a result of”

defendants’ unlawful or unfair practices. Cal. Bus. & Prof. Code § 17204 (UCL); Cal. Civ.

Code § 1780 (CLRA). Defendant contends that Plaintiffs have failed to plead causation and

have also failed to plead facts giving rise to standing to sue for injunctive relief. 

A. Causation

In their opposition, Plaintiffs claim that they were injured by Defendant’s alleged

misrepresentations and omissions because they would not have purchased Defendant’s

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See True v. Am. Honda Motor Co., Case No. 07-287-VAP, at 14-15 (C.D. Cal.

June 22, 2007) (Solen Decl. Ex. C) (denying motion to dismiss UCL and CLRA claims

where plaintiff alleged that defendant’s misleading advertisements were a substantial factor,

if not the controlling factor, in plaintiff’s decision to purchase a vehicle); Sanchez v. WalMart Stores, Inc., Case No. CIV S-06-CV-2573 DFL KJM, 2007 WL 1345706, at *3 (E.D.

Cal. May 8, 2007) (denying motion to dismiss UCL claim where plaintiffs alleged they

would not have purchased the goods from defendants were it not for defendants’ allegedly

false and misleading statements); Bristow v. Lycoming Engines, Case No. CIV. S-06-1947

LKK GGH, 2007 WL 1106098, at *7 (E.D. Cal. Apr. 10, 2007) (denying motion to dismiss

UCL claim where plaintiffs alleged that defendants failed to disclose material information

and that a reasonable consumer would have considered the omitted information important in

deciding whether to make a purchase); Trew v. Volvo Cars of N. Am., LLC, Case No.

CIV-S-05-1379 DFL PAN, 2006 WL 306904, at *5-6 (E.D. Cal. Feb. 8, 2006) (denying

motion to dismiss UCL and CLRA claims where plaintiff alleged she would not have paid as

much for her vehicle had a defect been disclosed); Chamberlan v. Ford Motor Co., 369 F.

Supp. 2d 1138, 1144-45 (N.D. Cal. 2005) (stating that, to prove materiality of an omission,

plaintiffs must show that the omitted information would have caused them to behave

differently).

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services, or would have done so only at a reduced cost, had all material information been

disclosed. However, no such allegations appear in the complaint. The only paragraphs of

the complaint that Plaintiffs cite as allegations of causation state that, “[a]s a result of

Defendant’s unfair and deceptive practices, Plaintiffs and the Class members purchased

satellite phones and the Service for the purpose of placing and receiving calls in remote

places.” Am. Compl. ¶¶ 49, 62. Plaintiffs further allege that their “injuries were directly and

proximately caused by Globalstar’s conduct.” Id. ¶¶ 50, 63. These statements, however, are

“merely conclusory” and need not be assumed to be true. Sprewell, 266 F.3d at 988.

As Defendant correctly argues, Plaintiffs fail to allege that they read any of the alleged

misrepresentations before purchasing the service – or even that any of the misrepresentations

were made before Plaintiffs’ purchase. Nor do Plaintiffs allege that, had they known the

actual quality of Defendant’s service, they would have chosen either to pay less for the

service or to purchase similar service from a competitor, or that the representations about the

quality of Defendant’s service were a substantial factor in Plaintiffs’ decision to purchase the

service. Thus, the allegations in the complaint are distinguishable even from the cases on

which Plaintiffs rely.2

 Consequently, the Court GRANTS Defendant’s motion to dismiss for

lack of standing with leave to amend.

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B. Injunctive Relief

Although Defendant did not argue that Plaintiffs lack standing to sue for injunctive

relief until its reply brief, this was not improper because Defendant raised the argument in

response to a case cited by Plaintiffs in their opposition. In addition, the Court has an

independent obligation to establish subject matter jurisdiction. United Investors Life Ins. Co.

v. Waddell & Reed Inc., 360 F.3d 960, 966-67 (9th Cir. 2004).

In Deitz v. Comcast Corporation, one of the cases cited by Plaintiffs, the district court

held that the plaintiff lacked standing to seek injunctive relief regarding cable services

because he was no longer a cable subscriber and had “not demonstrated there exists a

definitive likelihood that he will once again become a subscriber of defendants’ cable

services. . . . [P]laintiff’s claims of possible future injury are too speculative and attenuated

to warrant prospective relief.” Case No. 06-6352 WHA, 2006 WL 3782902, at *3 (N.D. Cal.

Dec. 21, 2006). The court also rejected the plaintiff’s contention that a class allegation cured

the named plaintiff’s standing problem because “[a]ny injury that unnamed members of the

proposed class may have suffered is irrelevant to the question whether our named plaintiff is

entitled to the injunctive relief he seeks.” Id. at *4. As the Ninth Circuit has explained,

“system-wide injunctive relief is not available based on alleged injuries to unnamed members

of a proposed class. . . . Unless the named plaintiffs are themselves entitled to seek

injunctive relief, they may not represent a class seeking that relief.” Hodgers-Durgin v. De

La Vina, 199 F.3d 1037, 1045 (9th Cir. 1999).

Here, Plaintiffs do not allege that they currently subscribe to Defendant’s service or

that they intend to subscribe in the future, and any injury allegedly suffered as a result of

Defendant’s conduct appears to lie solely in the past. Although Plaintiffs failed to assert at

oral argument that they could cure this deficiency with leave to amend, it is not clear that

Plaintiffs could not do so. Accordingly, the Court GRANTS Defendant’s motion to dismiss

Plaintiffs’ claim for injunctive relief with leave to amend.

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II. Whether Plaintiffs Have Adequately Stated a Claim

Defendant next argues that Plaintiffs have failed to state a claim for relief even if they

have adequately alleged standing. Before reaching Defendant’s arguments on this issue, the

Court must first resolve whether heightened pleading applies to Plaintiffs’ claims.

A. Pleading Standard Governing Plaintiffs’ Claims

Federal Rule of Civil Procedure 9(b) requires that “[i]n all averments of fraud or

mistake, the circumstances constituting fraud or mistake shall be stated with particularity. 

Malice, intent, knowledge, and other condition of mind of a person may be averred

generally.” Fraud is not an essential element of either a UCL or CLRA claim, but that does

not mean that heightened pleading never applies to such claims. Vess v. Ciba-Geigy Corp.

USA, 317 F.3d 1097, 1103 (9th Cir. 2003). To the contrary:

In cases where fraud is not a necessary element of a claim, a

plaintiff may choose nonetheless to allege in the complaint that

the defendant has engaged in fraudulent conduct. In some cases,

the plaintiff may allege a unified course of fraudulent conduct

and rely entirely on that course of conduct as the basis of a claim. 

In that event, the claim is said to be “grounded in fraud” or to

“sound in fraud,” and the pleading of that claim as a whole must

satisfy the particularity requirement of Rule 9(b). . . .

In other cases, however, a plaintiff may choose not to allege a

unified course of fraudulent conduct in support of a claim, but

rather to allege some fraudulent and some non-fraudulent

conduct. In such cases, only the allegations of fraud are subject

to Rule 9(b)’s heightened pleading requirements. 

Id. at 1103-04.

Plaintiffs thus correctly argue that Rule 9(b) does not necessarily apply to allegations

of non-fraudulent conduct. However, they fail to persuade the Court that their allegations are

not based on a “unified course of fraudulent conduct.” Id. at 1103. Plaintiffs allege that

Defendant failed to disclose material information about the quality of its service and also

made affirmative misrepresentations about that quality. The alleged omissions and

misrepresentations in this case therefore go hand in hand, with all of the allegations related to

how Defendant advertised its service. Accordingly, this Court concludes that the heightened

pleading requirements of Rule 9(b) apply to Plaintiffs’ claims in their entirety.

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At oral argument, Plaintiffs apparently abandoned their claims based on alleged

misrepresentations and expressed an intention to re-plead this case as strictly about alleged

omissions. The Court nonetheless addresses Defendant’s arguments against the

misrepresentation claims in case Plaintiffs did not, in fact, intend to abandon such claims.

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To meet these requirements, fraud allegations must be “specific enough to give

defendants notice of the particular misconduct which is alleged to constitute the fraud

charged so that they can defend against the charge and not just deny that they have done

anything wrong.” Semegen v. Weidner, 780 F.2d 727, 731 (9th Cir. 1985). This generally

requires plaintiffs to “state the time, place, and specific content of the false representations as

well as the identities of the parties to the misrepresentation.” Alan Neuman Prods., Inc. v.

Albright, 862 F.2d 1388, 1392-93 (9th Cir. 1988). However, where allegations rest on claims

of omission, this standard is relaxed because, “[f]or example, a plaintiff cannot plead either

the specific time of [an] omission or the place, as he is not alleging an act, but a failure to

act.” Washington v. Baenziger, 673 F. Supp. 1478, 1482 (N.D. Cal. 1987).

B. Claims Regarding Affirmative Misrepresentations3

Plaintiffs’ claims based on affirmative misrepresentations clearly fail to meet the

pleading standards under Rule 9(b). Although Plaintiffs identify specific comments from

Defendant’s website in paragraph 25 of the amended complaint, they fail to specify the time

frame during which these comments appeared. Nor have Plaintiffs identified any other

specific advertisements that are allegedly false.

In addition, not all of the comments identified by Plaintiffs are actionable. As

Plaintiffs acknowledge, statements are only actionable under the UCL and CLRA if they are

likely to deceive a reasonable consumer. See Freeman v. Time, Inc., 68 F.3d 285, 289 (9th

Cir. 1995); Consumer Advocates v. Echostar Satellite Corp., 113 Cal. App. 4th 1351, 1360

(2003). “Advertisements that amount to ‘mere’ puffery are not actionable because no

reasonable consumer relies on puffery.” Williams v. Gerber Prods. Co., 439 F. Supp. 2d

1112, 1115 (S.D. Cal. 2006). Factual representations, however, are actionable. Echostar,

113 Cal. App. 4th at 1361-62. Thus, for example, statements that a satellite television

service provides “crystal clear” or “CD quality” reception are not actionable because they

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Plaintiffs state this on information and belief, but even under Rule 9(b), knowledge

“may be averred generally.” Fed. R. Civ. P. 9(b). Ultimately, Plaintiffs may have difficulty

proving Defendant’s knowledge of these issues prior to 2007, as much of the complaint

focuses on information released that year. However, it would be premature for this Court to

resolve that issue on this motion to dismiss.

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“are not factual representations that a given standard is met,” but statements that a service

would provide “50 channels” and “7 day service” are actionable factual representations. Id.

Similarly, terms such as “high quality,” “reliable,” “high performance,” and “latest

technology” are non-actionable puffery, whereas “brand-name components” and “most

stringent quality control tests” are actionable factual representations that can be proved or

disproved during discovery. Anunziato v. eMachines, Inc., 402 F. Supp. 2d 1133, 1140-41

(C.D. Cal. 2005).

Puzzlingly, Plaintiffs seek to rely on Anunziato, even though some of Plaintiffs’

allegations contain the very language rejected by the court in that case – i.e., that Globalstar

provides “high quality” and “reliable” service. As the Anunziato court concluded, these

statements are non-actionable puffery that would not be likely to mislead a reasonable

consumer. Id. The same is true of advertising the service as “dependable.”

On the other hand, statements asserting that the service “[w]orks virtually

ANYWHERE you can see Sky” and that the “products can help you maintain productivity

and keep in contact from remote locations or worksites” are actionable factual

representations that can be proved or disproved during discovery. Defendant’s contention

that Plaintiffs failed to allege that these statements were false when made is unpersuasive. 

Although Plaintiffs themselves admit that their complaint is not a model of clarity or

eloquence, Plaintiffs do allege that Defendant knew, as early as 2003, that it was having

problems with its satellite configurations that affected the quality of Defendant’s service.4

Am. Compl. ¶ 33. In addition, the allegation that Plaintiffs experienced unreliable service

while at sea in the Bahamas belies the assertion that Defendant’s service works virtually

anywhere. Thus, these factual statements may form the basis for UCL and CLRA claims,

provided that Plaintiffs can adequately amend their complaint to comply with the

particularity requirements of Rule 9(b).

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Although the agreement was not referenced in the complaint, Plaintiffs do not object

to the Court’s consideration of the document on this motion to dismiss. Consideration is

proper since the complaint necessarily relies on the service agreement, which forms the basis

for Plaintiffs’ claims, and no party contests the agreement’s authenticity. Lee, 250 F.3d at

688.

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Defendant finally contends that none of the statements identified by Plaintiffs would

be likely to mislead a reasonable consumer because Plaintiffs signed a service agreement

stating that they accepted the service on an “AS IS, WHERE IS” basis, that the service would

be “limited by the space technology involved and availability of assigned radio spectrum,”

and that Globalstar USA would not be liable under any circumstances for any “interruptions

or defects in the Globalstar Service which affect Customer for less than 72 continuous

hours.” Service Agreement ¶¶ 2(d), 5(a), 5(c) (Rogers Decl. Ex. A).5

 However, a reasonable

consumer may interpret such language to be boilerplate legalese rather than an implication

that the consumer should expect frequent or regular interruptions to service that do not

exceed 72 continuous hours. Consequently, this is not an issue that can be decided on a

motion to dismiss as a matter of law, and the Court rejects Defendant’s arguments that

dismissal is proper based on the service agreement signed by Plaintiffs.

In light of all of the above, the Court GRANTS Defendant’s motion to dismiss

Plaintiffs’ claims regarding misrepresentations for failure to plead fraud with particularity, as

required by Federal Rule of Civil Procedure 9(b). Dismissal is with prejudice as to

Plaintiffs’ allegations regarding such language as “high quality,” “dependable,” and

“reliable” because these terms constitute non-actionable sales puffery that is not likely to

mislead a reasonable consumer. Dismissal is without prejudice as to Plaintiffs’ allegations

regarding factual representations, such as that the service works “virtually anywhere,”

because such representations may be proved or disproved in discovery and Plaintiffs may be

able to meet the heightened pleading requirements of Rule 9(b) if given leave to amend.

C. Claims Regarding Omissions

Contrary to Defendant’s assertions, the amended complaint also contains allegations

based on omissions and is not limited to allegations based solely on affirmative

misrepresentations. For example, Plaintiffs allege that:

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Upon information and belief, Defendant has known of the

degradation of the communications satellites and associated

satellite telephone service since at least 2003, if not earlier, and

has concealed from purchasers of the satellite telephone service

and/or failed to alert the purchasers of the degradation of the

communications satellites and associated satellite telephone

service.

Am. Compl. ¶ 33 (emphasis added). They also allege that Defendant violated the UCL and

CLRA by its “misrepresentations and/or its failure to disclose material facts concerning the

failures it was and is experiencing in its satellite constellation and the problems it was

experiencing with its Service.” Id. ¶¶ 43, 57 (emphasis added). Additionally, Plaintiffs

allege that, “[a]t all relevant times, Globalstar knew, or should have known, that its Service

contained a material defect. Globalstar failed to disclose this material defect to Plaintiffs and

other members of the Class.” Id. ¶¶ 44, 58.

The allegation that the failure to disclose was “material,” however, is a legal

conclusion rather than a factual allegation. The Court agrees with Defendant that Plaintiffs

have not adequately alleged materiality because they have failed to allege that, “had the

omitted information been disclosed, [they] would have been aware of it and behaved

differently.” Mirkin v. Wasserman, 5 Cal. 4th 1082, 1093 (1993). Nonetheless, as noted

above as part of the standing analysis, Plaintiffs can apparently cure this deficiency and will

therefore be granted leave to amend the complaint to allege materiality.

Defendant next argues that the content of the alleged omissions was, in fact, actually

disclosed in the service agreement. However, Plaintiffs contend that Defendant knew

specific information about defects in its service that it did not disclose. A reasonable

consumer may well have chosen not to subscribe to the service had Defendant disclosed such

specific defects in its service, rather than noting in the fine print of the service agreement that

limitations may occur. Whether Defendant adequately disclosed the information it is alleged

to have withheld therefore cannot be resolved on this motion to dismiss.

Finally, Defendant argues that Plaintiffs’ omission claims must be dismissed because

Plaintiffs have failed to allege any duty to disclose. See Falk v. General Motors Corp., 496

F. Supp. 2d 1088, 1094 (N.D. Cal. 2007) (holding that a claim under the CLRA will lie based

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on an unlawful omission when a duty to disclose exists). Under California law, a duty to

disclose arises in four circumstances:

(1) when the defendant is in a fiduciary relationship with the

plaintiff; (2) when the defendant had exclusive knowledge of

material facts not known to the plaintiff; (3) when the defendant

actively conceals a material fact from the plaintiff; and (4) when

the defendant makes partial representations but also suppresses

some material facts.

Heliotis v. Schuman, 181 Cal. App. 3d 646, 651 (1986); see also Falk, 496 F. Supp. 2d at

1094-95 (applying the same test). The Court agrees that Plaintiffs’ complaint does not

sufficiently allege a duty to disclose because it fails to allege materiality. However,

Defendant has not persuaded the Court that Plaintiffs cannot satisfy one of the above

circumstances if they amend their complaint to allege materiality. Consequently, the Court

GRANTS Defendant’s motion to dismiss Plaintiffs’ claims based on omissions for failure to

state a claim, but Plaintiffs shall be granted leave to amend these claims.

III. Whether Plaintiffs Complied with the CLRA’s Filing Requirements

Defendant also argues that Plaintiffs’ CLRA claim must be dismissed for failure to

comply with the statute’s notification requirements. A consumer may not bring a damages

suit under the CLRA without first giving the alleged violator at least thirty days’ notice to

cure the alleged violations, but a suit for injunctive relief may be brought without providing

such notice. Cal. Civ. Code § 1782(a), (d).

Plaintiffs originally filed suit on April 5, 2007, admittedly before notifying Defendant

of the alleged CLRA violations, but this was not improper because the original complaint

explicitly disavowed any claim for damages under the CLRA. Compl. ¶ 51. When, as here,

a suit for injunctive relief is filed under the CLRA, “[n]ot less than 30 days after the

commencement of [such] an action . . . and after compliance with subdivision (a), the

consumer may amend his or her complaint without leave of court to include a request for

damages.” Cal. Civ. Code § 1782(d). Plaintiffs claim that they complied with these

requirements by sending a certified letter to Defendant on April 26, 2007, and waiting more

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Defendant also alludes to the fact that Plaintiffs filed the amended complaint without

leave of court. However, section 1782(d) explicitly provides that no leave of court is

required. In addition, Defendant had yet to file a responsive pleading as of the time of the

amended complaint’s filing, and amendment without leave of court was therefore also proper

under Federal Rule of Civil Procedure 15(a).

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than sixty days – until June 29, 2007 – before filing their amended complaint seeking

damages.

Defendant raises two objections to Plaintiffs’ assertion: first, that the amendment was

untimely and, second, that Plaintiffs’ notice failed to comply with the requirements of section

1782(a). However, Defendant misreads section 1782(d)’s timeliness requirements. Rather

than requiring any amendment to be made within thirty days of the filing of the original

complaint, as Defendant argues, the statute provides exactly the contrary; it allows

amendment “[n]ot less than thirty days” – i.e., thirty days or more – from the date of the

original complaint’s filing. Plaintiffs’ amendment was therefore timely.6

As to the content of Plaintiffs’ notice, Defendant cites no persuasive authority for its

assertion that the notice failed to describe the alleged violations with the requisite specificity. 

Section 1782(a)(1) requires notice to include “the particular alleged violations of Section

1770,” but there is no case law describing how “particular” the notice must be. Nonetheless,

the purpose of the requirement is clear: “to give the manufacturer or vendor sufficient notice

of alleged defects to permit appropriate corrections or replacements.” Outboard Marine

Corp. v. Superior Court, 52 Cal. App. 3d 30, 40 (1975). Plaintiffs here have adequately

given such notice. In the two cases cited by Defendant where the courts dismissed a CLRA

claim for failure to comply with the notice requirements, either the plaintiffs did not send any

pre-filing notice to defendants, Laster v. T-Mobile USA, Inc., 407 F. Supp. 2d 1181, 1195

(S.D. Cal. 2005), or the notice “made no mention of § 1770 or any specific violations

thereof,” Von Grabe v. Sprint PCS, 312 F. Supp. 2d 1285, 1304 (S.D. Cal. 2003). Here, by

contrast, Plaintiffs’ April 26, 2007 letter explicitly alleged two violations of the CLRA: that

“Globalstar represented through its advertising and other express representations that its

Service had characteristics or uses which they do not have (Cal. Civ. Code § 1770(a)(5))”

and that “Globalstar falsely represented that its Service is of a particular standard, quality or

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grade when they were in fact of another (Cal. Civ. Code § 1770(a)(7)).” Apr. 26, 2007 letter

at 1 (Rogers Decl. Ex. D). The letter further explained that:

Plaintiffs allege that Globalstar has fraudulently concealed or

intentionally failed to disclose the nature and quality of the

Service it provided from March 2003 to the present. More

specifically, the Service has not performed according to the

representations made by Globalstar with respect to its coverage

and reliability. Rather, the Service has been exceedingly

unreliable. Plaintiffs and the proposed Class members’ calls

cannot be connected, have repeatedly been dropped, and when

connected suffer from poor voice quality.

Id. Such statements sufficiently put Defendant on notice of the CLRA violations alleged by

Plaintiffs in this case, and the Court therefore DENIES Defendant’s motion to dismiss for

failure to comply with the notice requirement under California Civil Code section 1782.

IV. Whether Plaintiffs Named the Correct Entity as Defendant

Finally, Defendant argues that Plaintiffs should have sued Globalstar USA, LLC, a

subsidiary of Defendant Globalstar, rather than Globalstar itself. It is undisputed that

Plaintiffs signed a service agreement with Globalstar USA, but Plaintiffs do not seek

damages flowing from an alleged breach of contract, such as the alleged breach of the

implied covenant of good faith and fair dealing at issue in the cases relied on by Defendant. 

See Monaco v. Liberty Life Assurance Co., Case No. C06-07021 MJJ, 2007 WL 420139, at

*9 (N.D. Cal. Feb. 6, 2007); Gruenberg v. Aetna Ins. Co., 9 Cal. 3d 566, 576 (1973). 

Whether Globalstar was a party to the service agreement is thus not dispositive in this case.

In addition, while a parent corporation may generally not be held liable for the actions

of its subsidiary, it may be held liable if “the subsidiary is the parent’s alter ego” or if “the

subsidiary acts as the general agent of the parent.” Harris Rutsky & Co. Ins. Servs., Inc. v.

Bell & Clements Ltd., 328 F.3d 1122, 1134 (9th Cir. 2003); see also United States v.

Bestfoods, 524 U.S. 51, 61-62 (1998). A parent may also be held directly liable if it

participates in the wrongdoing. Bestfoods, 524 U.S. at 64-65.

Plaintiffs here allege such direct participation in wrongdoing by Globalstar. They

allege, for example, that “Globalstar’s advertisements, including its website, have

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represented and continue to represent its satellite telephone service as high-quality, reliable,

and working virtually anywhere.” Am. Compl. ¶ 25. Plaintiffs also allege that Globalstar

“has concealed from purchasers of the satellite telephone service and/or failed to alert the

purchasers of the degradation of the communications satellites and associated satellite

telephone service.” Id. ¶ 33. These allegations demonstrate that Plaintiffs’ claims against

Globalstar are not merely derived from its parent-subsidiary relationship with Globalstar

USA; instead, they relate specifically to Globalstar’s alleged conduct. Accordingly, the

Court DENIES Defendant’s motion to dismiss based on Plaintiffs’ naming of Globalstar, Inc.

rather than Globalstar USA, LLC as Defendant.

CONCLUSION

For all of the above reasons, the Court GRANTS IN PART and DENIES IN PART

Defendant’s motion to dismiss as follows:

1. The motion to dismiss for lack of standing is GRANTED with leave to amend. 

Plaintiffs have failed to allege causation and have also failed to allege facts giving rise to

standing to sue for injunctive relief.

2. The motion to dismiss for failure to state a claim is GRANTED.

(a) Plaintiffs’ claims based on affirmative misrepresentations are dismissed for

failure to plead fraud with particularity and failure to allege causation. Dismissal of these

claims is with prejudice as to representations that the service was of “high quality,”

“reliable,” and “dependable” because such statements are non-actionable sales puffery. 

Dismissal of the misrepresentation claims is with leave to amend as to factual

representations, such as that the service works “virtually anywhere.”

(b) Plaintiffs’ claims based on omissions are dismissed with leave to amend for

failure to allege materiality.

3. The motion to dismiss for failure to comply with the Consumers Legal

Remedies Act’s pre-filing notice requirements is DENIED. Plaintiffs adequately complied

with the requirements of California Civil Code section 1782.

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4. The motion to dismiss for failure to sue the proper entity based on Plaintiffs’

service agreement with Globalstar USA, LLC is DENIED. Plaintiffs have adequately

alleged wrongful conduct by Defendant Globalstar, Inc.

5. As ordered at the hearing, Plaintiffs shall file their second amended complaint

within thirty days of the date of the hearing – i.e., on or before October 17, 2007.

IT IS SO ORDERED.

Dated: 09/25/07 

THELTON E. HENDERSON, JUDGE

UNITED STATES DISTRICT COURT

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