Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_05-cv-00581/USCOURTS-caed-2_05-cv-00581-0/pdf.json

Nature of Suit Code: 195
Nature of Suit: Contract Product Liability
Cause of Action: 28:1332 Diversity-Breach of Contract

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

----oo0oo----

LEBLANC NUTRITIONS, INC.,

Plaintiff, NO. CIV. S-05-0581 FCD JFM

v.

ADVANCED NUTRA LLC,

Defendant. MEMORANDUM AND ORDER

----oo0oo----

Plaintiff, LeBlanc Nutritions (“plaintiff”), filed a

complaint alleging intentional misrepresentation, negligent

misrepresentation, negligence, breach of contract, breach of

implied warranties, and violation of the Federal Food, Drug, and

Cosmetic Act (“FDCA”), 21 U.S.C. § 301, et seq. This matter is

before the court on motion by defendant, Advanced Nutra LLC

(“defendant”), to dismiss the complaint, or, in the alternative,

to dismiss Claims One, Two, Three, Five and Six. For the reasons

set forth below, the court grants defendant’s motion to dismiss

Case 2:05-cv-00581-FCD-JFM Document 9 Filed 06/14/05 Page 1 of 12
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1 Because oral argument will not be of material

assistance, the court orders this matter submitted on the briefs.

E.D. Cal. Local Rule 78-230(h).

2 Pursuant to Fed. R. Civ. P. 12(b)(6), all factual

allegations from the complaint are taken as true.

2

Claim Six based on the FDCA, and denies the motion in all other

respects.1

FACTUAL BACKGROUND

Plaintiff, a Japanese corporation, is an importer, exporter,

and purchaser of certain manufactured food additives and cosmetic

products. (Pl.’s Compl. ¶ 7.) In late 2004, plaintiff purchased

300 kilograms of a product represented to be Ubidecarenone, an

active enzyme, from defendant. (Pl.’s Compl. ¶ 11.) Global

Distribution Inc. (“Global”) served as plaintiff’s broker,

facilitating plaintiff’s purchase of the product.2 (Pl.’s Compl.

¶¶ 8, 12.) Defendant required payment of the more than

$500,000.00 purchase price prior to delivery. (Pl.’s Compl. ¶¶

7, 14.) 

After receiving full payment, defendant shipped the product

from California to plaintiff in Japan. (Pl.’s Compl. ¶¶ 16, 17.) 

Documentation shipped with the product indicated that the product

delivered was ninety-nine percent pure Ubidecarenone. (Pl.’s

Compl. ¶¶ 19-21.) Based on this documentation and defendant’s

representations, plaintiff resold the product as Ubidecarenone to

its customers in Japan. (Pl.’s Compl. ¶ 18.) However, according

to the complaint, the product defendant delivered to plaintiff

was not, in fact, Ubidecarenone. (Pl.’s Compl. ¶ 24.) 

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3

Plaintiff’s customers notified plaintiff that the product

was not Ubidecarenone. (Id.) They continue to return the

product to plaintiff and request information about the identity

of the product they purchased and used. (Pl.’s Compl. ¶ 25.)

Plaintiff has in turn requested the information from defendant,

who has refused to provide it. (Pl.’s Compl. ¶ 25.) 

Plaintiff filed a complaint on March 24, 2005 which alleges

claims for: 1) intentional misrepresentation of the product as

Ubidecarenone; 2) negligent misrepresentation; 3) negligence in

representing, identifying, testing, packaging and handling of the

product defendant sold as Ubidecarenone; 4) breach of contract

based on defendant providing a product not contracted for in lieu

of Ubidecarenone; 5) breach of implied warranties by defendant in

providing a product inferior to Ubidecarenone; and 6) violation

of the FDCA, based on the misbranding of the product as

Ubidecarenone.

On April 18, 2005, defendant filed the instant motion to

dismiss the complaint in its entirety based on plaintiff’s

failure to attach specified documents to the complaint and

plaintiff’s lack of legal standing in California to bring an

action. In the alternative, defendant seeks dismissal of: 1)

Claims One, Two, and Three because plaintiff cannot recover in

tort for purely economic losses; 2) Claim Five based on the lack

of privity to support breach of implied warranty claims; and 3)

Claim Six because the FDCA does not create a private right of

action.

///

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3 Unless otherwise stated, further references to a “Rule”

are to the Federal Rules of Civil Procedure. 

4

STANDARD

A complaint may be dismissed under Fed. R. Civ. P. 12(b)(6)3

for: (1) lack of a cognizable legal theory or (2) insufficient

facts to support a cognizable legal claim. Smilecare Dental

Group v. Delta Dental Plan of Cal., Inc., 88 F.3d 780, 783 (9th

Cir. 1996). A complaint will not be dismissed under Rule

12(b)(6) “unless it appears beyond doubt that plaintiff can prove

no set of facts in support of his [or her] claim that would

entitle him [or her] to relief.” Yamaguchi v. Dept. of the Air

Force, 109 F.3d 1475, 1480 (9th Cir. 1997)(quoting Lewis v. Tel.

Employees Credit Union, 87 F.3d 1537, 1545 (9th Cir. 1996)). 

“All allegations of material fact are taken as true and construed

in the light most favorable to the nonmoving party.” Cahill v.

Liberty Mut. Ins. Co., 80 F.3d 336, 337-38 (9th Cir. 1996). 

Thus, the plaintiff need not necessarily plead a particular fact

if that fact is a reasonable inference from facts properly

alleged. Retail Clerks Int'l Ass'n v. Schermerhorn, 373 U.S.

746, 753 n.6 (1963). 

Nevertheless, it is inappropriate to assume that the

plaintiff “can prove facts which it has not alleged or that the

defendants have violated the . . . laws in ways that have not

been alleged.” Associated Gen. Contractors of Calif., Inc. v.

Calif. State Council of Carpenters, 459 U.S. 519, 526 (1983). 

Moreover, the court “need not assume the truth of legal

conclusions cast in the form of factual allegations.” United

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States ex rel. Chunie v. Ringrose, 788 F.2d 638, 643 n.2 (9th

Cir. 1986).

In ruling on a motion to dismiss, the court may consider

only the complaint, any exhibits thereto, and matters which may

be judicially noticed pursuant to Fed. R. Evid. 201. See Mir v.

Little Co. of Mary Hosp., 844 F.2d 646, 649 (9th Cir. 1988);

Isuzu Motors Ltd. v. Consumers Union of United States, Inc., 12

F. Supp. 2d 1035, 1042 (C.D. Cal. 1998). 

ANALYSIS

1. Failure to Attach Documents to the Complaint

Defendant argues that plaintiff’s complaint provides

insufficient facts to state a cognizable legal claim because it

failed to attach to the complaint copies of, inter alia, the

sales documentation, brokerage agreement, and proof of payment. 

However, nothing in the Federal Rules of Civil Procedure

requires plaintiff to attach any document to the complaint. To

satisfy federal notice pleading, plaintiff need only provide a

“short and plain statement of the claim showing that the pleader

is entitled to relief.” Rule 12(b)(6); see Leatherman v. Tarrant

County Intelligence & Coordination Unit, 507 U.S. 163, 168 (1993)

(noting that the “liberal system of ‘notice pleading’ does not

require detailed factual pleadings.”). A plaintiff in federal

court is not expected to “plead his evidence or specific factual

details.” Gibson v. United States, 781 F.2d 1334, 1340 (9th Cir.

1986) (internal quotations omitted). Accordingly, defendant’s

motion to dismiss for failure to attach documents to the

complaint is DENIED.

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4 Cal. Corp. Code § 2203(c) provides:

“A foreign corporation ... which transacts intrastate

business without complying with Section 2105 shall not maintain

any action or proceeding upon any intrastate business so

transacted in any court of this state, commenced prior to

compliance with Section 2105, until it has complied with the

provisions thereof and has paid to the Secretary of State a

penalty of two hundred fifty dollars ($250) in addition to the

fees due for filing the statement and designation required by

Section 2105 and has filed with the clerk of the court in which

the action is pending receipts showing the payment of the fees

and penalty and all franchise taxes and any other taxes on

business or property in this state that should have been paid for

the period during which it transacted intrastate business.

6

2. Lack of Standing Based on Cal. Corp. Code §§ 2105, 2203 

Defendant next contends that plaintiff, as a foreign

corporation, does not have standing to maintain this action

because it did not obtain a certificate of qualification as

required by Cal. Corp. Code §§ 2105 and 2203. 

The California Corporations Code restricts foreign

corporations from transacting intrastate business without having

first obtained a certificate of qualification from the California

Secretary of State. Cal. Corp. Code § 2105. To obtain the

certificate of qualification, a corporation must identify its

state of incorporation, place of business, and principal office

within California; designate an agent for service of process; and

consent to such service of process. Id. A foreign corporation

conducting intrastate business that does not register can be

restricted from maintaining any action or proceeding based upon 

that business. Cal. Corp. Code § 2203(c).4 

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A defendant who seeks to challenge a plaintiff’s standing

under Cal. Corp. Code §§ 2105 and 2203 may do so by motion to

dismiss for lack of standing. The defendant, as moving party,

bears the burden to prove that: 1) the action arose out of

plaintiff’s transaction of intrastate business; and 2) the action

was commenced prior to plaintiff qualifying to transact

intrastate business. United Sys. of Ark., Inc. v. Stamison, 63

Cal. App. 4th 1001, 1007 (3d Dist. 1998), (following United Med.

Mgmt. Ltd. v. Gatto, 49 Cal. App. 4th 1732, 1740 (2d Dist.

1996)); McMillan Process Co. v. Brown, 33 Cal. App. 2d 279, 284

(3d Dist. 1996). If the defendant prevails in challenging

standing, plaintiff’s action may be dismissed or stayed pending

compliance with Cal. Corp. Code § 2203. United Med., 49 Cal.

App. 4th at 1740. 

Defendant has failed to demonstrate that plaintiff was

required to comply with Cal. Corp. Code §§ 2105 and 2203 prior to

filing its complaint. Specifically, defendant failed to offer

any evidence that plaintiff engaged in intrastate business

triggering the obligation to obtain a certificate of

qualification in accordance with Cal. Corp. Code § 2105. For

purposes of qualification under that section “‘transact[ing]

intrastate business’ means entering into repeated and successive

transactions of its business in this state, other than interstate

or foreign commerce.” Cal. Corp. Code § 191(a). Plaintiff’s

complaint alleges that plaintiff entered into two transactions,

between California and Japan. (Pl.’s Compl. ¶¶ 11, 22.) Courts

have found similar transactions were not intrastate for the

purposes of Cal. Corp. Code §§ 2105 and 2203. See Cal. Corp.

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Code § 191(c)(6) (“Soliciting or procuring orders where such

orders require acceptance without the state to become contracts

does not constitute transacting intrastate business.”); Thorner

v. Selective Cam Transmission Co., 180 Cal. App. 2d 89 (1st Dist.

1960) (finding no intrastate business even when negotiations are

carried out within the state by an agent of a foreign

corporation, if the final acceptance of the offer is made outside

the state). Accordingly, the court DENIES defendant’s motion to

dismiss based on plaintiff’s lack of standing. 

3. Restriction on Tort Claims in the Commercial Code

Plaintiff alleges tort claims for intentional

misrepresentation, negligent misrepresentation, and negligence

against defendant due to its allegedly false representations that

the product supplied was Ubidecarenone. Defendant contends that

plaintiff’s tort claims must be dismissed because plaintiff prays

for solely economic relief. 

As a general rule, solely economic losses are not

recoverable in tort. S.M. Wilson & Co. v. Smith Intl., Inc., 587

F.2d 1363, 1376 (9th Cir. 1978); Seely v. White Motor Co., 63

Cal. 2d 9, 18 (1965). However, California courts recognize

numerous to this general rule. Aas v. Superior Court, 24 Cal.

4th 627, 643 (2000) (allowing recovery in tort for a contract

breach where an independent duty was violated); J’Aire Corp. v.

Gregory, 24 Cal. 3d 799 (1979) (allowing recovery for solely

economic loss where the risk of harm was foreseeable and where

privity was lacking with defendant); Walker v. Signal Co., 84

Cal. App. 3d 982, 994-997 (4th Dist. 1978) (allowing the

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possibility of recovery in contract cases if defendant

fraudulently induced plaintiff to enter into contract).

However, the court does not need to delve into the

intricacies and exceptions to tort recovery for pure economic

loss, since plaintiff’s complaint can be construed to allege more

than solely economic damages. The complaint alleges that “[i]n

addition, LeBlanc has suffered other damages not yet

ascertained.” (Pl.’s Compl. §§ 45, 59, 78.) The court can

reasonably infer from these averments that plaintiff seeks more

than solely economic damages, including possible injury to

property, employees, or customers caused by the unidentified

product. See Yamaguchi, 109 F.3d at 1480; Retail Clerks, 373

U.S. at 753 (finding reasonable inferences must be given to

allegations in complaint). 

Additionally, under Rule 8(e)(2), plaintiff is entitled to

set forth multiple claims upon which “alternatively or

hypothetically” relief could be based. Claims can be pled in the

alternative “regardless of the consistency and whether based on

legal, equitable or maritime ground.” Rule 8(e)(2). “When two

or more statements are made in the alternative and one of them if

made independently would be sufficient, the pleading is not made

insufficient by the insufficiency of one or more of the

alternative statements.” Id. 

Here, plaintiff is entitled to plead in the alternative,

particularly given defendant’s contentions that privity is

lacking between plaintiff and defendant. (Mot. to Dismiss 7:3-

7). California courts permit negligence claims based on solely

economic loss between commercial litigants not in privity when

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the harm to the plaintiff is foreseeable. Frank M. Booth, Inc.

v. Reynolds Metals Co., 754 F. Supp. 1441 (E.D. Cal. 1991); See

J’Aire Corp., 24 Cal. 3d at 799. Thus, if it were determined, as

defendant alleges, that there is no basis for contractual relief,

plaintiff clearly would be entitled to seek relief in tort. 

Accordingly, the court DENIES defendant’s motion to dismiss

Claims One, Two, and Three.

4. Lack of Privity

Plaintiff alleges that defendant breached implied warranties

of merchantability and fitness by providing a product inferior to

Ubidecarenone. Defendant contends that this claim must be

dismissed because there is no privity between plaintiff and

defendant. 

California has adopted the Uniform Commercial Code’s implied

warranty provisions. Cal. Com. Code § 2315. Under these

provisions, “[v]ertical privity is a prerequisite in California

for recovery on the theory of breach of implied warranties of

fitness and merchantability.” U.S. Roofing, Inc. v. Credit

Alliance Corp., 228 Cal. App. 3d 1431, 1441 (3d Dist. 1991). 

Vertical privity generally requires a direct contractual nexus

between plaintiff and defendant for a claim of breach of implied

warranty to succeed. Osbourne v. Subaru of America, Inc., 198

Cal. App. 3d 646, 656 n.6 (3d Dist. 1988). 

Here, the complaint sets forth facts sufficient to allege

privity. Specifically, the complaint alleges that “LeBlanc

agreed in late 2004 to purchase from Advanced Nutra 300 kilograms

of Ubidecarenone, an active enzyme, for resale to LeBlanc’s

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customers in Japan.” (Pl.’s Compl. ¶ 11 (emphasis added)). In

deciding a motion to dismiss, “[a]ll allegations of material fact

are taken as true and construed in the light most favorable to

the nonmoving party.” Cahill v. Liberty Mut. Ins. Co., 80 F.3d

336, 337-38 (9th Cir. 1996). Thus plaintiff’s allegations are

sufficient to survive a motion to dismiss. Accordingly, the

court DENIES defendant’s motion to dismiss Claim Five.

5. No Private Action under the FDCA

In Claim Six, plaintiff alleges that defendant violated the

FDCA by misbranding the product it represented as Ubidecarenone. 

Defendant moves to dismiss this claim on the grounds that

Congress did not create a private right of action in the FDCA.

The FDCA provides that “all such proceedings for the

enforcement, or to restrain violations, of this chapter shall be

by and in the name of the United States [or by a state in certain

circumstances]” 21 U.S.C. §§ 332(a), 337. “Courts have

generally interpreted this provision to mean that no private

right of action exists to redress alleged violations to the

FDCA.” Summit Tech., Inc. v. High-line Med. Instruments Co., 922

F. Supp. 299, 304 (S.D. Cal. 1996); See also In re: Orthopedic

Bones Screw Prods. Liab. Litig., 159 F.3d 817, 824 (3d Cir. 1998)

(“It is ... well established that Congress has not created an

express or implied private cause of action for violation of the

FDCA.”); PDK Labs., Inc. v. Friedlander, 103 F.3d 1105, 1113 (2d

Cir. 1997), (holding plaintiff’s suit “represents an

impermissible attempt to enforce the FDCA through a private right

of action”); Gile v. Optical Radiation Corp., 22 F.3d 540, 544

(3d Cir. 1994), cert. denied, 115 S. Ct. 429 (1994) (citing Pac.

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Trading Co. v. Wilson & Co., 547 F.2d 367, 370 (7th Cir. 1976)

(“violations of the FDCA do not create private rights of

action”)); Mylan Lab., Inc. v. Matkari, 7 F.3d 1130, 1139 (4th

Cir. 1993), cert. denied, 114 S. Ct. 1307 (1994) (same); Ginochio

v. Surikos, Inc. 864 F. Supp. 948, 956 (N.D. Cal. 1994) (citing

various courts that have held “there is no private cause of

action for violation of the [FDCA]”); see also Fielder v. Clark,

714 F.2d 77, 79 (9th Cir. 1983) (holding that the court lacked

subject matter jurisdiction based on 21 U.S.C. § 337 because a

“private party suing in his own name [has] no jurisdiction under

the Act”). 

As a private party, plaintiff cannot maintain an action

under the FDCA. Accordingly, the court GRANTS defendant’s motion

to dismiss Claim Six for violation of the FDCA. 

CONCLUSION

For the foregoing reasons:

1. Defendant’s motion to dismiss Claim Six under Federal Food,

Drug and Cosmetic Act is GRANTED. 

2. In all other respects defendant’s motion to dismiss is

DENIED.

3. The parties shall file a joint status conference statement

on or before August 1, 2005.

IT IS SO ORDERED

Dated: June 14, 2005.

/s/ Frank C. Damrell Jr. 

FRANK C. DAMRELL, Jr.

UNITED STATES DISTRICT JUDGE 

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