Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_14-cv-00051/USCOURTS-casd-3_14-cv-00051-1/pdf.json

Nature of Suit Code: 410
Nature of Suit: Antitrust
Cause of Action: 28:1331at Fed. Question: Anti-trust

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

JOSE CONDE, et al.,

Plaintiffs,

v.

SENSA, et al.,

Defendants.

Case No.: 14-cv-51 JLS WVG

ORDER GRANTING IN PART AND 

DENYING IN PART DEFENDANTS’ 

MOTIONS TO DISMISS

(ECF Nos. 80, 81)

Presently before the Court are two sets of Motions to Dismiss and corresponding 

briefing. The first set are Defendants Don Ressler’s, Adam Goldenberg’s, Kristin 

Chadwick’s, IB Holding, LLC’s, and Techstyle, Inc.’s (together, “Primary Defendants”)

Motion to Strike and Dismiss the Third Consolidated Amended Class Action Complaint

(“Mot. to Dismiss”), (ECF No. 81), Plaintiff’s Opposition to the Motion to Dismiss 

(“Opp’n”), (ECF No. 86), and Primary Defendants’ Reply in Support of the Motion to 

Dismiss (“Reply”), (ECF No. 89). The second set are Defendants John Drew’s and TCV 

VI, L.P.’s (together, “TCV Defendants”) Motion to Strike Certain Allegations in the Third 

Consolidated Amended Complaint and to Dismiss the Third Consolidated Amended 

Complaint (“Non-Opp. Mot. to Dismiss”), (ECF No. 80), Plaintiff’s Non-Opposition to the 

Non-Opposed Motion to Dismiss (“Non-Opp’n”), (ECF No. 87), and TCV Defendants’ 

Response to Plaintiff’s Statement of Non-Opposition (“Non-Opp’n Reply”), (ECF No. 88). 

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The Court vacated the hearing on these Motions and took the matters under submission 

without oral argument pursuant to Civil Local Rule 7.1(d)(1). Having considered the 

Parties’ arguments and the law, the Court rules as follows.

BACKGROUND

The Court has previously dismissed various aspects of Plaintiff’s alter ego 

allegations. (Order Granting Without Prejudice Mot. to Dismiss (“Prior MTD Order”), 

ECF No. 75.) The general factual overview of this action is as follows. 

Sensa crystals were marketed as a weight loss product consisting of “tastant crystals” 

that users were instructed to sprinkle on their food. (Id. at 2.) The crystals supposedly 

interacted with users’ taste and smell receptors, triggering bodily responses that would 

cause users to feel full and therefore stop eating earlier than usual. (Id.) Plaintiff alleges 

that the tastant crystals were developed by Dr. Alan Hirsch, M.D., a board-certified 

neurologist who claimed in Sensa advertisements that the crystals were “clinically shown” 

to promote weight loss without dieting. (Id.) Sensa has since been assigned to creditors, 

following an FTC suit that resulted in a $46.5 million stipulated judgment and several other 

related legal actions. (See id.) Plaintiff alleges that the Defendantsrelevant to these pending 

Motions to Dismiss either held various positions of authority within Sensa or were

interrelated corporations at all times relevant to the action. (Id.) Specifically, Sensa 

Products, LLC was 90% owned by Sensa, Inc. (formerly known as Intelligent Beauty, Inc.) 

(“IBI”) and 10% owned by Dr. Hirsch. (TCAC ¶¶ 15, 18). IBI was in turn at least partially 

owned by Intelligent Beauty Holding, LLC (“IBH”), which was in turn at least partially 

owned TechStyle, Inc. (formerly known as JustFab, Inc.) (“JustFab”). (See id. ¶ 17.)

This action was originally filed on January 7, 2014 by Plaintiff Jose Conde against 

Defendant Sensa Products, LLC and Does 1–10 alleging violations of California law. (Id.)

After various motion practice, the Court consolidated Mr. Conde’s case with two others 

and appointed interim class counsel. (ECF No. 32.) Plaintiff subsequently filed the SCAC, 

alleging various tort- and contract-based causes of action. (Prior MTD Order 2.) Count 

XI—“Alter Ego/Veil Piercing”—was added for the first time in the SCAC and formed the

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basis of the prior Motion to Dismiss. (Id.) The Court dismissed Count XI as to all thennamed Defendants, and granted Plaintiff leave to file “any amended complaint that cures 

the deficiencies identified” in the Order. (Id. at 11.)

Plaintiff has now filed a Third Consolidated Amended Class Action Complaint 

totaling, with attached exhibits, 967 pages. (ECF No. 76.) A large portion of the attached 

exhibits are other complaints, each initially filed in state court (“state-court complaints”), 

from three pending actions: (1) Sensa v. Hirsch (“the Hirsch Action”), Case No. BC581772 

(L.A. Sup. Ct. May 13, 2015); (2) Windmill Health Products, LLC, et al. v. TCV VI, LP, et 

al. (“the Windmill Action”), Case No. NC561252 (L.A. Sup. Ct. Oct. 3, 2016); and (3) 

Bank of America, N.A. v. Sensa, Inc. et al., Case No. NC 564394 (L.A. Sup. Ct. Apr. 20, 

2016). The Hirsch and Windmill complaints were previously attached to Plaintiff’s Second 

Amended Class Action Complaint. (Second Consolidated Am. Class Action Compl. Exs. 

J, K, ECF No. 60.) Relevant to the pending Motions to Dismiss, Plaintiff has reasserted 

alter ego claims against five previously named Defendants: John Drew; TCV VI, L.P.; Don 

Ressler; Adam Goldenberg; and Kristin Chadwick. (TCAC ¶¶ 19–24, 131–43.) Plaintiff 

has also for the first time added Defendants IBH and JustFab. (TCAC ¶¶ 16, 17, 131–43.)

Each of these Defendants have moved to dismiss the alter ego allegations against them.

LEGAL STANDARDS

I. Motion to Dismiss

Federal Rule of Civil Procedure 12(b)(6) permits a party to raise by motion the 

defense that the complaint “fail[s] to state a claim upon which relief can be granted,” 

generally referred to as a motion to dismiss. The Court evaluates whether a complaint states 

a cognizable legal theory and sufficient facts in light of Federal Rule of Civil Procedure 

8(a), which requires a “short and plain statement of the claim showing that the pleader is 

entitled to relief.” Although Rule 8 “does not require ‘detailed factual allegations,’ . . . it 

[does] demand more than an unadorned, the-defendant-unlawfully-harmed-me 

accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. 

Twombly, 550 U.S. 544, 555 (2007)). In other words, “a plaintiff’s obligation to provide 

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the ‘grounds’ of his ‘entitle[ment] to relief’ requires more than labels and conclusions, and 

a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S.

at 555 (citing Papasan v. Allain, 478 U.S. 265, 286 (1986)). A complaint will not suffice 

“if it tenders ‘naked assertion[s]’ devoid of ‘further factual enhancement.’ ” Iqbal, 556 U.S. 

at 677 (citing Twombly, 550 U.S. at 557).

In order to survive a motion to dismiss, “a complaint must contain sufficient factual 

matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ ” Id. (quoting 

Twombly, 550 U.S. at 570); see also Fed. R. Civ. P. 12(b)(6). A claim is facially plausible 

when the facts pled “allow the court to draw the reasonable inference that the defendant is 

liable for the misconduct alleged.” Iqbal, 556 U.S. at 677 (citing Twombly, 550 U.S. at 

556). That is not to say that the claim must be probable, but there must be “more than a 

sheer possibility that a defendant has acted unlawfully.” Id. Facts “‘merely consistent with’ 

a defendant’s liability” fall short of a plausible entitlement to relief. Id. (quoting Twombly, 

550 U.S. at 557). Further, the Court need not accept as true “legal conclusions” contained 

in the complaint. Id. This review requires context-specific analysis involving the Court’s 

“judicial experience and common sense.” Id. at 678 (citation omitted). “[W]here the wellpleaded facts do not permit the court to infer more than the mere possibility of misconduct, 

the complaint has alleged—but it has not ‘show[n]’—‘that the pleader is entitled to 

relief.’ ” Id.

II. Alter Ego Liability

“Ordinarily, a corporation is regarded as a legal entity, separate and distinct from its 

stockholders, officers and directors, with separate and distinct liabilities and obligations.” 

Sonora Diamond Corp. v. Superior Court, 83 Cal. App. 4th 523, 538 (2000) (citation 

omitted). “A corporate identity may be disregarded—the ‘corporate veil’ pierced—where 

an abuse of the corporate privilege justifies holding the equitable ownership of a 

corporation liable for the actions of the corporation.” Id. (citing Roman Catholic 

Archbishop v. Superior Court, 15 Cal. App. 3d 405, 411 (1971)). California courts have 

stated that “[t]he purpose behind the alter ego doctrine is to prevent defendants who are the 

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alter egos of a sham corporation from escaping personal liability for its debts.” 

Hennessey’s Tavern, Inc. v. Am. Air Filter Co., 204 Cal. App. 3d 1351, 1358 (1988) (citing 

Hiehle v. Torrance Millworks, Inc., 272 P.2d 780, 783–84 (1954)). There are two separate 

requirements to justify imposing alter ego liability:

First, that the corporation is not only influenced and governed by [the 

defendant], but that there is such a unity of interest and ownership that the 

individuality, or separateness, of the said [defendant] and corporation has 

ceased; second, that the facts are such that an adherence to the fiction of the 

separate existence of the corporation would, under the particular 

circumstances, sanction a fraud or promote injustice.

Firstmark Capital Corp. v. Hempel Fin. Corp., 859 F.2d 92, 94 (9th Cir. 1988) (emphasis

removed) (quoting Wood v. Elling Corp., 572 P.2d 755, 761–62 n.9 (1977)); see also 

Sonora Diamond Corp., 83 Cal. App. 4th at 538.

Nonexclusive “[f]actors that can be used to support the first element, unity of 

interest, include commingling of funds, failure to maintain minutes or adequate corporate 

records, identification of the equitable owners with the domination and control of the two 

entities, the use of the same office or business locations, the identical equitable ownership 

of the two entities, the use of a corporation as a mere shell, instrumentality or conduit for 

a single venture or the business of an individual, and the failure to adequately capitalize a 

corporation.” Pac. Mar. Freight, Inc. v. Foster, No. 10-CV-0578-BTM-BLM, 2010 WL 

3339432, at *6 (S.D. Cal. Aug. 24, 2010) (citing Assoc. Vendors, Inc. v. Oakland Meat 

Co., 210 Cal. App. 2d 825, 838–40 (1962)). “The second element requires that an 

inequitable result occur by the recognition of the corporate form.” Sonora Diamond Corp., 

83 Cal. App. 4th at 539. “Alter ego is an extreme remedy, sparingly used.” Id. Courts look 

to “all the circumstances to determine whether the doctrine should be applied.” Id.

ANALYSIS

The Court first addresses the Non-Opposed Motion to Dismiss and then moves to 

the Primary Defendants’ Motion to Dismiss.

/ / /

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I. Non-Opposed Motion to Dismiss

After the TCV Defendants moved to dismiss Plaintiff’s TCAC, Plaintiffs submitted 

a statement of Non-Opposition to the TCV Defendants’ Motion indicating that “Plaintiff 

. . . does not oppose the [M]otion” but nonetheless “reserves the right to seek leave to 

amend her complaint in the future should additional facts be discovered regarding” the 

TCV Defendants. (Non-Opp’n 1.) Defendants submitted a response asking the Court to 

“dismiss the [TCAC] with prejudice as to the TCV Defendants” because “the TCV 

Defendants’ Motion to Dismiss sought dismissal ‘with prejudice,’ and as Plaintiff did not 

oppose it, the Motion to Dismiss should be granted with prejudice as to the TCV 

Defendants.” (Non-Opp’n Reply 1.)

The Court is mindful of the fact that dismissing without prejudice Plaintiff’s claims 

against the TCV Defendants permits Plaintiff’s statement of non-opposition to effectively 

skirt Defendants’ arguments for dismissal with prejudice. However, Defendants support 

their dismissal argument with citations only to our District’s local rules and a secondary 

source. (Id.) And although “[t]he district court’s discretion to deny leave to amend is 

particularly broad where plaintiff has previously amended the complaint[,]” Allen v. City 

of Beverly Hills, 911 F.2d 367, 373 (9th Cir. 1990) (quoting Ascon Properties, Inc. v. Mobil 

Oil Co., 866 F.2d 1149, 1160 (9th Cir. 1989)), “Rule 15’s policy of favoring amendments 

to pleadings should be applied with ‘extreme liberality.’ ” United States v. Webb, 655 F.2d 

977, 979 (9th Cir. 1981) (citing Rosenberg Bros. & Co. v. Arnold, 283 F.2d 406 (9th Cir. 

1960) (per curiam)). Accordingly, the Court determines that in the present case a decision 

regarding dismissal with prejudice should be made only if Plaintiff does, in fact, seek leave 

to amend her Complaint to allege additional information against the TCV Defendants.

Given the foregoing, the Court GRANTS the TCV Defendants’ Motion to Dismiss, 

but DISMISSES WITHOUT PREJUDICE Plaintiffs’ claims against the TCV 

Defendants.

/ / /

/ / /

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II. The Primary Defendants’ Motion to Dismiss

Prior to analyzing the substance of the TCAC’s alter ego allegations, the Court must 

first address several threshold issues. Accordingly, the Court discusses in the following 

order (A) whether it was or is permissible for Plaintiff to add Defendants IBH and JustFab 

for the first time in the TCAC; (B) whether Plaintiff may rely on pleadings in other statecourt actions to bolster her own in this Court; and (C) the plausibility of Plaintiff’s alter 

ego allegations against each of the remaining Defendants.

A. The Addition of Defendants IBH and JustFab

Defendants urge that the TCAC should be dismissed as to Defendants IBH and 

JustFab because Plaintiff’s recent naming of the Defendants contravenes both the Court’s 

Prior MTD Order and the Federal Rules of Civil Procedure. (Mot. to Dismiss 4.) Plaintiff 

counters that “[n]othing in the Court’s [O]rder precluded Plaintiff from including 

additional claims or defendants as necessary to cure the deficiencies identified[,]” and that, 

even if the Court’s Prior MTD Order did limit the scope of Plaintiff’s amendment, our 

Circuit’s admonition that leave to amend should be granted “with extreme liberality” 

counsels in favor of permitting the addition of Defendants IBH and JustFab. (Opp’n 19–

23.) The Court agrees with Plaintiff.

Specifically, the Court’s prior Order, while validly subject to either party’s 

interpretation, did not expressly limit Plaintiff’s amendment to only the previously named 

Defendants. And Plaintiff makes a solid showing that she did not know of Defendants IBH 

and JustFab prior to April 20, 2016, which was both the date on which the Second Amended 

Complaint was filed in the Bank of America action and several months after Plaintiff here

filed her previous complaint. Finally, our Circuit’s highly permissive stance towards 

amendment counsels in favor of permitting the addition of these two Defendants. This is

especially true where, as here, many of the defendant parties are interrelated, the case has 

not proceeded to discovery, and the IBH and JustFab Defendants have already produced 

discovery in a state court action regarding their potential alter ego liability for largely the 

same underlying factual conduct here at issue. Eminence Capital, LLC v. Aspeon, Inc., 316 

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F.3d 1048, 1052 (9th Cir. 2003) (“Absent prejudice, or a strong showing of any . . . 

[other] factors, there exists a presumption under Rule 15(a) in favor of granting leave to 

amend.” (emphasis original)).

Accordingly, the Court concludes that dismissing Defendants IBH and JustFab is 

inappropriate on these grounds.

B. Reliance on Other Pleadings

Defendants argue that “the Court should strike Plaintiff’s allegations in the TCAC 

to the extent they rely on or refer to unproven allegations from the” related state-court 

actions. (MTD 9–10 (citing cases).) Plaintiff attempts to distinguish Defendants’ cited 

cases in support and argues that to strike “citations to primary documents that support 

[Plaintiff’s] factual allegations . . . is absurd.” (Opp’n 23.) The Court partially agrees with 

both parties.

Although our Circuit has not squarely addressed this issue, this Court agrees that 

unproven state-court allegations may not validly support a plaintiff’s cause of action in this 

Court. In re Merrill Lynch & Co., Inc. Research Reports Sec. Litig., 218 F.R.D. 76, 78 

(S.D.N.Y. 2003) (“[R]eferences to preliminary steps in litigations and administrative 

proceedings that did not result in an adjudication on the merits or legal or permissible 

findings of fact are, as a matter of law, immaterial under Rule 12(f) of the Federal Rules of 

Civil Procedure.”); see also Kyung Cho v. UCBH Holdings, Inc., 890 F. Supp. 2d 1190, 

1203 (N.D. Cal. 2012) (noting that “as other courts have found, allegations from other 

complaints or documents, which are unproved and are contested, may not be used to 

establish facts to demonstrate scienter” and collecting cases). In particular, it is the plaintiff 

in the other, state-court case that has knowledge of the facts underlying his complaint. And 

if the Court were here to accept as sufficient the current, federal plaintiff’s “adoption” of 

those bare state-court pleadings, then “two plaintiffs could file separate actions each relying 

on the allegations in the other’s complaint and both would state a claim . . . .” In re Apollo 

Grp., Inc. Sec. Litig., No. CV-10-1735-PHX-JAT, 2011 WL 5101787, at *10 (D. Ariz. Oct.

/ / /

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27, 2011). “Clearly, [the Federal Rules of Civil Procedure] do not allow this type of 

pleading loophole.” Id. 1

However, a complaint is not always composed solely of bare allegations. In 

particular, Plaintiff here at times points to specific “primary documents attached to those 

[state-court] complaints, such as deposition transcripts, emails, accounts and articles of 

incorporation.” (Opp’n 23.) Because these documents in effect mostly speak for 

themselves, there is no reason to bar Plaintiff from relying on these attachments to the statecourt complaints. See, e.g., In re Bear Stearns Mortg. Pass-Through Certificates Litig., 851 

F. Supp. 2d 746, 768 (S.D.N.Y. 2012) (“It makes little sense to say that information from 

such a study—which the [complaint] could unquestionably rely on if it were mentioned in 

a news clipping or public testimony—is immaterial simply because it is conveyed in an 

unadjudicated complaint.”).

In sum, the Court agrees that Plaintiff may not rely on the unsubstantiated allegations 

in the attached state-court complaints to defeat these Motions to Dismiss. However, where 

appropriate, the Court will consider the various primary documents attached to those 

complaints.2

/ / /

/ / /

/ / /

 

1 The Court notes that in the present case the Hirsch Action might stand on different footing, given that 

Sensa Products, LLC is there the named Plaintiff. However, the Hirsch Action is devoid of any allegations 

regarding the Defendants who are the subject of these Motions to Dismiss. (See generally TCAC Ex. J.) 

Accordingly, the Court need not consider this argument at this time.

2 Given the foregoing, the Court will not strike any portion of the state-court complaints, but instead will 

simply not rely on any unsubstantiated allegations. More specifically, Rule 12(f) permits a court to strike 

“any redundant, immaterial, impertinent, or scandalous matter.” In the present case, the attached statecourt complaints come from cases that are still being adjudicated, and therefore the relevant allegations 

cannot as a matter of law be said to fit into any of these categories at this time. See, e.g., Fantasy, Inc. v. 

Fogerty, 984 F.2d 1524, 1527 (9th Cir. 1993) (explaining that district courts enjoy wide discretion under 

Rule 12(f) and defining “immaterial” and “impertinent” as having no “essential[,]” “important[,]” or 

“necessary” relationship to suit), rev’d on other grounds, 510 U.S. 517 (1994).

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C. The Plausibility of Plaintiff’s Alter Ego Allegations

Because various allegations overlap, the Court addresses several of the relevant

Defendants together in the following order: (i) JustFab and IBH; (ii) Chadwick; (iii) 

Goldenberg and Ressler.

(i) JustFab and IBH

Defendants argue that both IBH and JustFab should be dismissed due to an 

insufficient showing under either alter-ego prong, and that dismissal of JustFab is 

especially warranted given that the “TCAC is bereft of any allegations that JustFab had 

any ownership in or control of the Sensa Entities.” (MTD 9 (emphasis original).) Plaintiff 

responds that JustFab, IBH, and other corporate components of the “Sensa Entities” were 

“operated as a single enterprise such that they should respond, as a whole, for the liabilities 

that arose from the Sensa fraud.” (Opp’n 15.) The Court agrees with Plaintiff.

“Generally, alter ego liability is reserved for the parent-subsidiary relationship.” Las 

Palmas Assocs. v. Las Palmas Ctr. Assocs., 235 Cal. App. 3d 1220, 1249 (1991). However, 

California courts have recognized a “single-enterprise rule” where “liability can be found 

between sister companies.” Id.

“In effect what happens is that the court, for sufficient reason, has determined 

that though there are two or more personalities, there is but one enterprise; 

and that this enterprise has been so handled that it should respond, as a whole, 

for the debts of certain component elements of it. The court thus has 

constructed for purposes of imposing liability an entity unknown to any 

secretary of state comprising assets and liabilities of two or more legal 

personalities; endowed that entity with the assets of both, and charged it with 

the liabilities of one or both.”

Id. at 1249–50 (quoting 2 Marsh’s Cal. Corp. Law § 16.23, p. 1416 (3d ed. 1990)). In the 

present case, although JustFab might be treated differently from IBH under the traditional, 

parent-subsidiary analytical framework, Plaintiff focuses her Opposition for both 

Defendants on the single-enterprise rule. Nonetheless, the Court concludes that Plaintiff 

states a plausible claim against both Defendants under the “single-enterprise” rule.

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For instance, Plaintiff alleges that the Sensa Entities, JustFab, and IBH were all 

headquartered in the same building, and engaged in making “intercompany loans” that 

“generally had no formal agreements, bargained for consideration, or loan payment 

schedule.” (TCAC ¶ 135(a), (e).) Plaintiff provides specific examples, such as that (1) “IBI 

released JustFab of nearly $20,000,000 in debt for no consideration[,]” thus “solely 

benefit[ting] IB Holding, JustFab and their owners[,]” (id. ¶ 135(f)); (2) “IBI provided 

$10,000,000 to IB Holding to purchase JustFab shares[,]” (id. ¶ 135(g)); and (3) “Financial 

statements for years 2012 and 2013 show that JustFab and IB Holding prepared 

consolidated financials and filed a unitary tax return with IBI in 2012[,]” (id. ¶ 135(h)).

And ownership was largely consolidated between all of the entities—IBI owned 90% of 

Sensa Products, and IBH in turn at least partially owned IBI and JustFab.3 The end result

of these (and allegedly other) transfers and the multi–million-dollar settlement with the 

FTC is that, despite Sensa sales of nearly $364 million from 2008-2012, (id. ¶ 12), Sensa 

Products, LLC was assigned to the benefit of creditors on October 6, 2014, (id. ¶ 14). Taken 

together, these allegations demonstrate a plausible unity of interest under the single 

enterprise framework. See Tran v. Farmers Grp., Inc., 104 Cal. App. 4th 1202, 1219 

(2002), as modified on denial of reh’g (Jan. 27, 2003) (noting that single-enterprise theory 

requires there to be “such a unity of interest and ownership that the separate corporate 

personalities are merged, so that one corporation is a mere adjunct of another or the two 

companies form a single enterprise”).

Plaintiffs also satisfy the inequitable result prong by alleging sufficient factual 

material to suggest that Sensa first deceived consumers into purchasing a non-effective 

product and then strategically transferred money between various related corporations in 

order to safeguard the proceeds from the deception. To now shield Defendants IBH and 

JustFab from liability would both be inequitable and sanction a fraud. See, e.g., Doe v. 

 

3 Plaintiffs indicate that “ownership interest in either IBI or JustFab could only be acquired indirectly 

through ownership of IBH stock.” (Opp’n 16.) However, this specific assertion comes from the unproven 

allegations in the Bank of America Action and therefore cannot be credited as true. (Supra Section II.B.)

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Unocal Corp., 248 F.3d 915, 927 (9th Cir. 2001) (“[U]nder California law, ‘inadequate 

capitalization of a subsidiary may alone be a basis for holding the parent corporation liable 

for the acts of the subsidiary.’ ” (quoting Slottow v. Am. Cas. Co. of Reading, Penn., 10 

F.3d 1355, 1360 (9th Cir. 1993))), abrogated on other grounds by Williams v. Yamaha 

Motor Co. Ltd., __ F.3d __, 2017 WL 1101095 (9th Cir. Mar. 24, 2017).

Taken the foregoing in concert, Plaintiff has plausibly pled sufficient facts regarding 

unity of interest via inadequate capitalization, shared equitable ownership, and shared 

business locations to suggest that an inequitable result would inhere if Defendants IBH and 

JustFab are not exposed to liabilty under an alter ego theory. Accordingly, the Court 

DENIES Defendants’ Motion to Dismiss the TCAC as against Defendants IBH and 

JustFab.

(ii) Chadwick

Defendants argue that the same deficiencies the Court previously identified 

regarding Plaintiff’s allegations against Defendant Chadwick, (Prior MTD Order 7–8), 

remain, and that Plaintiff’s only additional allegations “are impermissibly conclusory” and 

therefore insufficient to state a plausible alter ego relationship. (MTD 12–14.) Plaintiff 

responds by reasserting the allegations contained in the TCAC. (Opp’n 13–15.) The Court 

agrees with Defendants.

As the Court previously held, Plaintiff’s allegations that Defendant Chadwick “had 

‘day-to-day’ management duties” and “continued marketing Sensa even after the FTC 

judgment” do not plausibly demonstrate “ ‘that the separate personalities of the corporation 

and the individual . . . no longer exist[ed] . . . .’ ” (Prior MTD Order 8 (quoting KEMA, Inc. 

v. Koperwhats, C091587-MMC, 2010 WL 3464737, at *8 (N.D. Cal. Sept. 1, 2010)).)

Accordingly, here these allegations again fail. And Plaintiff’s only further original 

allegations are either (1) entirely conclusory, (e.g., TCAC ¶¶ 140(b) (“As president of the 

Sensa Entities Defendant Chadwick participated in, ratified and/or endorsed Defendant 

Goldenberg’s release of around $20,000,000 in JustFab receivables, despite no 

consideration or benefit to the Sensa entities.”); 140(d) (“Defendant Chadwick was 

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instrumental in controlling the flow of capital across the web of Defendant Entities.”); 

140(j) (“Plaintiff alleges that, based on Dr. Hirsch’s compensation structure, as well as the 

other de-capitalization schemes, Defendant Chadwick[] was compensated through 

advancements that de-capitalized the Sensa Entities and hid the ill-gotten gains of the Sensa 

fraud.”)); (2) specific, but innocuous, (id. ¶ 140(e) (“From April 2011 until September 11, 

2013, Defendant Chadwick discussed the potential implication of an FTC fine ranging from 

$65,000,000 to $45,000,000 with Ressler[,] Goldenberg and Defendant Entities.”)); or (3)

potentially incriminating, but non-specific, (id. ¶ 140(h) (“Defendant Chadwick instructed 

Ressler and the Sensa Entities Board to not disclose the true financial state of the Sensa 

Entities[] to creditors.”)). Finally, the only allegation validly incorporated from the statecourt complaints is an email between Kristin Chadwick and four other Sensa-related 

individuals discussing a transfer of approximately $28 million between Sensa and IBI; 

$26.5 million of the sum would satisfy the FTC settlement, and the remaining amount went 

to “the deposit account held in the name of Intelligent Beauty.” (TCAC Ex. K at 265–266, 

ECF No. 76-4, 424–25.) But this allegation—as confirmed by its use in the underlying 

state-court complaint—is more appropriately geared towards general “single-enterprise” 

allegations against Sensa and its various related entities. (Id. at 9 (state-court complaint 

using email to support allegation that “[t]he Funds to pay the fine the FTC imposed on IBI 

came from the sale of a purported ‘separate’ affiliated entity, Dermstore, where the 

proceeds from its sale to Target generated $100,000,000 that was divided up among other 

affiliated entities . . . .”).) It does nothing to demonstrate that Defendant Chadwick herself 

so dominated and controlled the Sensa companies that it would be plausible to conclude 

there was little to no separation between them.

Given the foregoing, the Court again concludes that Plaintiff fails to state a plausible 

theory of alter ego liability as against Defendant Chadwick. Accordingly, the Court 

DISMISSES Plaintiff’s Complaint as against Defendant Chadwick.

/ / /

/ / /

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(iii) Goldenberg and Ressler

Defendants argue that the same deficiencies the Court previously identified 

regarding Plaintiff’s allegations against Defendants Goldenberg and Ressler, (Prior MTD 

Order 9–10), remain, and that Plaintiff’s only additional allegations are merely 

“regurgitate[ed]” from the state-court complaints and are independently “insufficient to 

state a claim here.” (MTD 14–18.) Plaintiff responds by reasserting the allegations 

contained in the TCAC and arguing that together they “describe how Defendants 

Goldenberg and Ressler controlled the flow of capital across the Defendant entities and

used their positions of authority within the Sensa Entities to actively de-capitalize the Sensa

Entities in the face of looming liability to the FTC, creditors and consumers.” (Opp’n 9–

15.) The Court agrees with Defendants.

Although Plaintiff’s Opposition paints a picture of Defendants Goldenberg and 

Ressler unilaterally taking extreme actions to safeguard the profits of the alleged Sensa 

fraud, the TCAC’s allegations do not adequately support that conclusion. Specifically, 

much of Plaintiff’s argument turns on the fact that Goldenberg and Ressler were “owners, 

managers and officers,” (Opp’n 9–10), and that therefore it necessarily follows that 

Defendants Goldenberg and Ressler took certain actions on behalf of the corporation, 

(compare, e.g., id. (“Indeed, the Sensa Entities were so undercapitalized at this time that 

Defendants Goldenberg and Ressler paid the FTC fine with proceeds from the sale of 

Dermstore, Inc., supposedly a separate entity.” (citing TCAC Ex. K at 9, 61, 265–66)), 

with, e.g., TCAC Ex. K at 9, 61, 265–66 (nowhere specifying who paid or authorized 

payment of the FTC fine)).) But this lack of specificity is directly contrary to the alter ego 

requirement that “the corporation is not only influenced and governed by that [particular] 

person, but that there is such a unity of interest and ownership that the individuality, or 

separateness, of the said person and corporation has ceased . . . .” Firstmark, 859 F.2d at

94 (emphasis in original) (quoting Wood v. Elling Corp., 572 P.2d 755, 761–62 n.9 (1977)

(emphasis in original)). Accordingly, all Plaintiff’s allegations of this type fail to 

sufficiently allege a plausible alter ego relationship. (E.g., Opp’n at 10 (arguing that “[a]s 

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owners and managers of the Sensa Entities, Goldenberg and Ressler authorized informal 

intercompany loans with no collateral, repayment plan, or bargained for consideration[,]” 

but relying on allegations that do not explain how intercompany loans were made, or by 

whom, except to say that “these transactions were often executed by a single employee of 

the enterprise, Heidi Crane, who served as CFO for JustFab and IBI”); 11 (arguing that 

“Defendants Goldenberg and Ressler, as owners, directors and officers of IBI, caused IBI 

to forego its right to collect nearly $20 million from JustFab[,]” but relying on allegations 

contained in Bank of America complaint without underlying documentation); 11–12 

(arguing that “Defendants Goldenberg and Ressler organized the compensation structure 

of Dr. Hirsch” and that “[a]s creditor and consumer liabilities loomed . . . continued to bail 

money from Sensa Products into the pockets of Defendant Hirsch[,]” but relying on Hirsch 

complaint for support where Hirsch complaint attached five amendments to the underlying 

IBI LLC agreement and only one amendment was signed by Defendant Goldenberg and 

was signed prior to Sensa’s insolvency).)

Given the foregoing, Plaintiff has again failed to specifically allege that either 

Defendant Goldenberg or Defendant Ressler so dominated and controlled the Sensa 

companies that it would be plausible to conclude there was little to no separation between 

them. Accordingly, the Court again DISMISSES Plaintiff’s Complaint as against 

Defendant Goldenberg and Defendant Ressler for failure to plausibly plead an alter ego 

relationship between these Defendants and the Sensa companies.

/ / /

/ / /

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/ / /

/ / /

/ / /

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/ / /

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CONCLUSION

Given the foregoing, the Court GRANTS Defendants’ Motion to Dismiss regarding

the TCV Defendants and Defendants Goldenberg, Ressler, and Chadwick, and DENIES 

Defendants’ Motion to Dismiss regarding Defendants JustFab and IBH. Although the 

Court entertains serious doubts regarding Plaintiff’s ability to successfully amend her 

Complaint against Defendants Goldenberg, Ressler, and Chadwick, the Court GRANTS 

PLAINTIFF LIMITED LEAVE TO AMEND regarding these three specific Defendants. 

To be clear, Plaintiff may not add additional Defendants prior to seeking further leave of 

this Court.4

IT IS SO ORDERED.

Dated: April 26, 2017

 

4 Defendants request that additional leave to amend “should be conditioned on Plaintiff paying costs.” 

(MTD 18–19); see Gen. Signal Corp. v. MCI Telecomm. Corp., 66 F.3d 1500, 1514 (9th Cir. 1995) (“[A]

district court, in its discretion, may impose costs pursuant to Rule 15 as a condition of granting leave to 

amend in order to compensate the opposing party for additional costs incurred because the original 

pleading was faulty.”). Although Plaintiff did not oppose this aspect of Defendants’ Motion, the Court 

nonetheless declines to impose costs at this time, especially in light of the split ruling on theses Motions 

to Dismiss. However, should Plaintiff again amend her complaint and Defendants again move to dismiss, 

Plaintiff would be well served to oppose this aspect of Defendants’ motion.

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