UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF OREGON 

KASSIE MERRITT, individually and on 

behalf of all others similarly situated, 

Plaintiff, 

6: 15-CV-0269-TC 

FINDINGS and RECOMMENDATION 

v. 

YAVONE, LLC, a California limted liability 

company, HEALTHY CHOICE LABS, LLC, a 

Nevada limited liability company, and 

GLOBAL PRO SYSTEM, INC., a Nevada 

corporation, 

Defendants. 

COFFIN, Magistrate Judge: 

INTRODUCTION 

Plaintiff brings several claims in this action arising from plaintiffs ordering of a product online 

and the charges made to her debit card after the order. 

Defendant Healthy Choice Labs, LLC (HCL) and defendant Global Pro System, Inc. (GPS) 

move to dismiss all of the claims against them for failure to state a claim upon which relief can be 

granted. 

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STANDARDS 

The Federal Rules of Civil Procedure provide for dismissal for "failure to state a claim upon 

which relief can be granted. " Fed. R. Civ. P. 12 (b)(6). In considering a motion to dismiss made 

pursuant to 12(b)(6), the court views well pleaded factual allegations as true, but also requires the 

complaint to contain enough facts to state a claim that is plausible on its face. Bell Atlantic v. 

Twombly, 127 S.Ct. 1955 (2007) (concluding that prior review standard -affirming dismissal only 

when it appears beyond doubt that plaintiffs can prove "no set of facts" in support of their claim that 

would entitle them to relief - "has earned its retirement.") 

The requirements for pleading a federal claim in federal court were recently set forth in Ashcroft 

v. Iqbal, 129 S. Ct. 1937 (2009): 

Id. at 1949. 

As the Court held in Twombly, 127 S.Ct. 1955, the pleading standard 

Rule 8 announces does not require 'detailed factual allegations,' but 

it demands more than an unadorned, the-defendant-unlawfullyharmed-me accusation.... To survive a motion to dismiss, a 

complaint must contain sufficient factual matter, accepted as true, to 

'state a claim for relief that is plausible on its face.' A claim has facial 

plausibility when the plaintiff pleads factual content that allows the 

court to draw the reasonable inference that the defendant is liable for 

the misconduct alleged. 

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FACTUAL BACKGROUND 

In or around early May 2014, Plaintiff Merritt alleges that she encountered an advertisement for 

Defendants' Simply Garcinia Cambogia product while browsing the Internet. (Compl. if 42.) She 

clicked on the advertisement and viewed representations concerning the product, its effectiveness, 

its availability, and its cost. (Id.) Relying on those representations, Merritt submitted her personal 

information through defendants' initial landing page. (Id.) Thereafter, defendants directed Merritt 

to their checkout page, where she viewed representations substantially similar to those mentioned 

above, including a "price" box that listed $0. 00 for the "free trial" of Simply Garcinia Cambogia and 

a charge ofless than $5.00 for shipping and handling. (Id. if 43.) No other price terms were on the 

webpage. (Id.) Based on the representations made by defendant Yavone, defendant HCL, and 

defendant GPS on the website regarding the nominal price for shipping and handling (i.e., less than 

$5.00), Merritt submitted her debit card information and completed her order. (Id. if 44.) Less than 

one month later, on May 26, 2014, defendants debited Merritt's bank account in the amount of 

$79.99. (Id. if 45.) 

DISCUSSION 

Plaintiff Pleads Sufficient Facts Under Rule 8 (a) 

Defendant GPS argues in its motion that Merritt's claims "fail to allege direct liability against 

GPS" because the allegations do not distinguish between defendants. (GPS Mot at 9.) Essentially, 

GPS argues that none of the allegations apply to GPS because it was the other two named 

Defendants (HCL and Yavone ), not GPS, who were involved in the underlying misconduct that 

forms the bases of Merritt's claims. (Id. at 6-9.) HCL, despite being the recipient of GPS's 

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finger-pointing, also tries to argue that Merritt's claims fail to meet the relevant pleading standards 

and thus do not sufficiently put HCL on notice of the claims against it. (HCL Mot. at 2, 5-10.) 

Neither argument or those in the joint Reply from GPS and HCL are persuasive. 

The pleading requirements under Rule 8(a) require "only a short and plain statement of the claim 

showing that the pleader is entitled to relief." Twombly, 550 U.S. at 555 (internal quotations 

omitted). As this court has previously found, the purpose of this requirement is "to give the 

defendant fair notice of what the ... claim is and the grounds upon which it rests." Slep-Tone 

Entertainment Corp. v. Shenanigans Lounge, No. 12-cv-1236-TC, 2013 WL 1768444, at *2 (D. Or. 

Feb. 22, 2013) (quoting Twombly, 550 U.S. at 555). When a party cannot possibly know each 

individual defendant's role in the unlawful conduct at the pleading stage, this court and others find 

that a determination of the roles of each defendant "is an issue to be vetted in discovery." Id. at *2. 

As a result, it is common for courts to deny motions to dismiss based on a plaintiffs inability to 

differentiate defendants at the pleadings stage, and find that a complaint that "identifies the 

defendants, their places of business, plaintiffs investigators' observations, and the specific 

allegations against each individual defendant," meet Rule 8(a)'s pleading requirements. See id. 

(denying motion to dismiss that argued "the complaint should differentiate between defendant 

institutions that provide in-house karaoke entertainment services and those that hire a karaoke jockey 

... as an independent contractor" when the plaintiff had no way of knowing the companies' exact 

interplay without the benefit of discovery). 

The Complaint in this action spends an entire section identifying the roles - as plaintiff notes 

to the best of plaintiffs knowledge at this early stage of the litigation - that each defendant plays in 

the alleged fraud. (See id. iii! 33-41.) Just like the complaint in Slep-Tone, Merritt's Complaint 

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separately identifies the defendants and their individual places of business (id. if if 6-8), delineates 

their roles based on the limited information available through a pre-discovery investigation (id. iii! 

33-41 ), and asserts specific factual allegations related to each defendant's role. (See id. iii! 1 n.1 ); see 

Slep-Tone, 2013 WL 1768444, at *2 (holding that allegations such as these are sufficiently detailed 

under Rule 8(a)). Therefore, under Rule 8(a), Merritt pleads "sufficient facts particularized to each 

defendant such that defendants are given fair notice of the allegations against them." See id. 

Plaintiffs Complaint Also Meets the Heightened Pleading Requirements Under Rule 9(b) 

GPS and HCL also argue that plaintiff failed to adequately plead her claims for fraud under 

Rule 9(b ), which requires a plaintiff to identify the "who, what, when, where, and how" of the 

alleged fraud. (GPS Mot. at 7; HCL Mot. at 6.). Such argument fails. 

In cases like this one, where the intricacies of each defendant's role in the fraudulent scheme can 

only be determined through discovery, the standard merely requires plaintiffs to identify, but not 

describe in exacting detail, "the role of each defendant in the alleged fraudulent scheme." Fields v. 

Wise Media, LLC, No. C 12-05160, 2013 WL 3187414 at *4 (N.D. Cal. June 21, 2013) (quoting 

Swartz v. KPMG LLP, 476 F.3d 756, 765 (9th Cir. 2007)) (finding that plaintiffs met Rule 9(b) 

pleading requirements when the complaint described generally each defendant's role in the alleged 

fraudulent scheme). 

Here, Merritt provides sufficiently detailed allegations to meet-and exceed-the pleading 

standard in the circumstances of this case. Merritt alleges when she "encountered an advertisement 

for Defendants' Simply Garcinia Cambogia product"-in May 2014. (Compl. if 42.) Merritt also 

alleges what representations she saw on which website. (See id. iii! 21-32, 42.) Specifically, she 

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alleges that she "clicked on the advertisement and viewed representations substantially similar to 

those described concerning the efficacy, availability, and cost of Simply Garcinia Cambogia" (id. 

142)-i.e., that the product "HELPS STOP FAT FROM BEING MADE," "SUPPRESSES YOUR 

APPETITE," and "Bum[ s] Fat Quicker and More Efficiently"; that consumers would receive a "free 

trial" or "FREE BOTTLE"; that the offer was "Risk Free"; and that the total cost was "0.00" with 

a small charge for shipping and handling. (Id. 1if 22, 24-25, 43.) Merritt also specifies where she saw 

the representations-as online advertisements when browsing the World Wide Web. (Id. 142.) She 

also sufficiently alleges who made the representations by pointing to a number of websites that are 

operated by Defendant HCL in collaboration with Defendants Y avone and GPS and that employ the 

same marketing scheme to sell Simply Garcinia Cambogia and names several of the defendants' 

websites used in the alleged scheme. (Id. 1 35.) Merritt finally alleges that she submitted her 

payment information in reliance on the representations that she would only be charged less than 

$5.00 for shipping and handling. (Id. 1143-44.) Thus, Merritt explicitly alleges that in May 2014 

(when) all three defendants (who)- including GPS and H CL-made false representations regarding 

the cost of the "free trial" of Simply Garcinia Cambogia (what) in online advertisements on various 

named websites (where). She also alleges that those representations were false inasmuch as the "free 

trial" was designed to gather her payment information in order to process automatic and recurring 

charges to which she never agreed (how). (Compl. 1 44-47.) These allegations easily satisfy Rule 

9(b)' s heightened pleading requirement. See generally Ro lex Employees Retirement Trust v. Mentor 

Graphics Corp., 749 F. Supp. 1042, 1047 (D. Or. 1990) (finding that the plaintiff pleaded its fraud 

claims sufficiently to satisfy Rule 9(b) where it identified the specific statements made, the date on 

which those statements were made, and to the extent possible, the role of each defendant in the 

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misrepresentations). 

Merritt also goes even further to provide detailed allegations as to how consumers are allegedly 

tricked into signing up for a "free trial" of Simply Garcinia Cambogia. (Compl. iii! 21-32.) She 

explains that once consumers are directed to one of defendants' websites, they are greeted with 

statements designed to convince them to sign up for a free-trial bottle, like "HELPS STOP FAT 

FROM BEING MADE," "SUPPRESSES YOUR APPETITE," and "Bum[s] Fat Quicker and 

More Efficiently," as well as "CLAIM YOUR FREE BOTTLE TODAY!" and "RUSH MY 

ORDER." (Id. iii! 21-22, 24.) She further explains that the websites did not contain pricing 

information for future automatic charges or a request that the consumer review or agree to any terms 

and conditions. (Id. if 24.) Instead, once consumers provided their name, address, phone number, and 

email address to claim their free bottle, they were directed to a checkout page that contained 

representations like "Final Step" and "Rush My Order" where Defendants represented that the price 

of the bottle was $0. 00 with a charge ofless than $5. 00 for shipping and handling. (Id. if 25.) Directly 

below the "payment information" form, consumers had the option of clicking the large "RUSH MY 

ORDER" button, which completed the entire transaction without the need to scroll down or view 

any other part of the page. (Id. if 26.) The Complaint also specifies that the defendants intentionally 

designed the product checkout page in a way to discourage any consumer from seeing or reading a 

price disclosure. (Id. iii! 28-29.) And Merritt alleges that the various representations made on these 

websites, combined with the intentional concealment of a price disclosure, induced consumers to 

submit their payment information believing they would only be charged a nominal amount for 

shipping and handling. (Id. if 29.) 

Defendants again argue that plaintiff has not pleaded enough, arguing that plaintiff has not 

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identified each defendant's role in the alleged scheme. Such argument fails in this context also. In 

certain cases involving fraud, Rule 9(b)' s particularity requirements "may be relaxed as to matters 

within the [plaintiffs] knowledge." Moore v. Kayport Package Exp., Inc., 885 F.2d 531, 540 (9th 

Cir. 1989). Rule 9(b) thus only requires that a plaintiff "specifically plead those facts surrounding 

alleged acts of fraud to which they can reasonably be expected to have access." Concha v. London, 

62 F.3d 1493, 1503 (9th Cir. 1995) (emphasis added). For example, when alleging corporate fraud, 

"plaintiffs will not have personal knowledge of all the underlying facts" which makes it "difficult 

to attribute particular fraudulent conduct to each defendant as an individual." Id. In such cases, 

knowledge of specific factual information is solely within the corporation's control and remains 

"inaccessible to the [plaintiff] until discovery has been completed." Altamont Summit Apartments, 

LLC v. Wolff Properties, LLC, No. Civ. 01-1260, 2002 WL 926264, at *5 (D. Or. Feb. 13, 2002). 

The Ninth Circuit further relaxes the particularity requirement "for claims against a corporation 

where the alleged misstatements are attributed to a group," stating that a plaintiff need only identify 

the roles of the individual defendants "where possible." Holmes, 2004 WL 1379590, at *4. 1 

Here, Merritt has alleged as many facts as possible at this early stage of the case to describe each 

Defendant's role in the joint marketing operation to deceive consumers (like herself) into signing 

up forthe "free trial" of Simply Garcinia Cambogia. (Compl. iii! 33-41.) For example, Merritt alleges 

that HCL "operates dozens of websites on the internet that have been designed (with assistance from 

Defendants Yavone and OPS) to sell defendants' Simply Garcinia Cambogia brand of garcinia 

cambogia extract," and goes so far as to identify more than twenty of them. (Id. if 35.) Merritt then 

1

Defendants try to distinguish Rolex, supra,, and Moore, supra, as they included "group 

published information," but such does not change the outcome of the motions in the 

cirrcumstances of this case. 

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goes on to describe Y av one's role as "merchant" in supplying the website domains and contracting 

with marketing affiliates to draw consumers to these websites, (id. iii! 36-37), and explains how GPS 

"recruits and coordinates the efforts of the merchants operating in this [multi-level marketing] 

scheme" by tapping into the "downline" of its principal, Anthony Powell. (Id. if 40.) As a result, the 

Complaint sufficiently explores the roles each defendant played in deceiving consumers through 

their sale of Simply Garcinia Cambogia, and Rule 9(b) is satisfied. Even if parts of the Complaint 

falter under the Rule 9(b) standard, plaintiff persuasively argues, like the plaintiff in Fields, that the 

relevant facts remain in the defendants' exclusive knowledge and are therefore not subject to the 

same rigors of the Rule. With appropriate discovery, plaintiff might succeed in curing any 

deficiencies , though they should be aware that failure to do so may impact the viability of their 

claims. See Fields, 2013 WL 3187414, at *4. 

Fraud in the Inducement Claim and Fraud in Omission Claim 

GPS and HCL's Joint Reply notes an error in a purported Terms and Conditions Agreement (T 

& C Agreement) that was submitted and was a basis for many of defendant's specifically targeted 

arguments in their motion to dismiss. Plaintiff had previously dedicated a substantial effort in her 

Opposition to demonstrate that the T & C Agreement is inapplicable to the pending motions. 

Defendants have since withdrawn the T & C and the arguments based thereon for the purposes of 

the pending motions. As such, defendants' motion against the fraud in inducement claim and fraud 

in omission claim were not revisited after the withdrawal of the T & C arguments and are deemed 

abandoned. 

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Claim Under ORS 646A.295 

Defendants' argument that plaintiff concedes her claim regarding ORS 646A.295 as plaintiff 

purportedly never addressed all of defendants' arguments is not persuasive in the circumstances of 

this case. A substantial part of defendants' arguments are based on the T & C Agreement that 

plaintiff disputed and defendants withdrew. Moreover, contrary to one of defendants' arguments, 

plaintiffs pleading included references to the existence of "automatic renewal charges" and 

deceptive enrollment tactics. See, ~' ~ 62. 

Claims for Breach of Contract 

A substantial part of defendants' arguments seeking the dismissal of the breach of contract 

claims is based on the T & C Agreement that plaintiff disputed and defendants withdrew. 

Moreover, the Complaint alleges the existence of a valid contract between plaintiff and each 

defendant. Such is adequately pled in the circumstances of this action and at this stage of the 

litigation. 

Claim Under Electronic Funds Transfer Act 

Plaintiff asserts a claim under§ l 693e of the Electronic Funds Transfer Act. However, plaintiffs 

general allegations, as set forth previously, do not support such a claim as illustrated by the 

following three cases. Sharkey v. NAC Mktg. Co., LLC, 2012 WL 5967409, at *3 (N.D. Ill. Nov. 

28, 2012)(the authorization for a one-time electronic debit transaction in the amount of $6.99 was, 

based on Sharkey's own allegations, not a 'preauthorization' for recurring transfers. Sharkey also 

specifically states he did not authorize any future recurring transfers from his account. Section l 693e 

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was not intended to address such situations."); In re DirecTV Early Cancellation Litigation, 738 

F.Supp. 2d 1062, 1091 (C.D. Cal. 2010) (finding that a transfer must be "recurring" for § 1693e to 

apply); Okocha v. HSBC Bank USA, N.A.. 08 Civ. 8650, 2010 WL 5122614 (S.D.N.Y. Dec.14, 

2010) (dismissing EFTA § l 693e claim because the preauthorized transfer was not set to occur at 

recurringintervals and the transfer between the account holder's bank accounts was not an electronic 

transfer covered by the EFTA). 

As noted in Okocha, Section l 693e was aimed to protect "consumers who arrange for regular 

payments (such as insurance premiums or utility bills) to be deducted automatically from their bank 

accounts." Okacha 2010 WL 5122614, at *2 (citing S. Rep. 95-915 (1978)). No such arrangement 

occurred here. 2 

CONCLUSION 

Defendant Healthy Choice Labs, LLC's motion (#32) to dismiss and defendant Global Pro 

System, Inc's motion (#33) to dismiss should be allowed in part and denied in part. It should be 

allowed as to the claim under §1693e of the Electronic Funds Transfer Act and such claim should 

be dismissed. The remainder of the motions should be denied. 

2

Sharkey, supra, notes that at least one other section of the EFTA protects consumers 

from unauthorized electronic -funds transfers initiated without the authority of the consumer. See 

15 U.S.C. §1693a (12). 

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~ 

DATED this 5- day ofNovember, 2015. 

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