Court Opinion

ID: 4299706
Source: CourtListenerOpinion
Date Created: 2018-07-31 20:00:32.545524+00
Date Added: 2024-06-11T14:42:15.382842
License: Public Domain

NOT FOR PUBLICATION                           FILED
                    UNITED STATES COURT OF APPEALS                        JUL 31 2018
                                                                     MOLLY C. DWYER, CLERK
                                                                       U.S. COURT OF APPEALS
                           FOR THE NINTH CIRCUIT

JASON DECARLO, individually and on              No.   16-56602
behalf of all others similarly situated,
                                                D.C. No.
                Plaintiff-Appellant,            3:14-cv-00202-JAH-BLM

 v.
                                                MEMORANDUM*
COSTCO WHOLESALE CORPORATION,
a Washington Corporation and MBNR,
INC., a New Mexico corporation,

                Defendants-Appellees.

                   Appeal from the United States District Court
                      for the Southern District of California
                    John A. Houston, District Judge, Presiding

                        Argued and Submitted July 9, 2018
                              Pasadena, California

Before: PAEZ, FISHER,** and CHRISTEN, Circuit Judges.

      Plaintiff-Appellant Jason DeCarlo (“DeCarlo”) appeals the dismissal with

prejudice of his suit against Defendants-Appellees Costco Wholesale Corporation

      *
        This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.

      **
        The Honorable D. Michael Fisher, United States Circuit Judge for the
U.S. Court of Appeals for the Third Circuit, sitting by designation.
(“Costco”) and MBNR, Inc (“MBNR”). We reverse in part, vacate in part, and

remand for further proceedings.

1.    We first consider whether DeCarlo has sufficiently alleged Article III

standing, that is, whether he “(1) suffered an injury in fact, (2) that is fairly

traceable to the challenged conduct of the defendant, and (3) that is likely to be

redressed by a favorable judicial decision.” Spokeo, Inc. v. Robins, 136 S. Ct.

1540, 1547 (2016). We review de novo the district court’s determination of this

issue. Maya v. Centex Corp., 658 F.3d 1060, 1067 (9th Cir. 2011).

      The district court correctly concluded that DeCarlo lacks Article III standing

with respect to his claims under the “unlawful” prong of California’s Unfair

Competition Law (“UCL”), because the harm that DeCarlo alleges is not fairly

traceable to the mere fact that Costco and MBNR allegedly violated certain

provisions of California law regulating their business relationships. But with “no

jurisdiction to reach the merits,” the district court “had no power to dismiss [these

claims] with prejudice.” Hampton v. Pac. Inv. Mgmt. Co. LLC, 869 F.3d 844, 847

(9th Cir. 2017). We therefore vacate the judgment as to these claims and remand

with instructions to dismiss them without prejudice pursuant to Federal Rule of

Civil Procedure 12(b)(1).

      As to DeCarlo’s claims based on the allegation that it was misleading to

market Costco-based optometrists as independent—specifically, his claims under

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California’s False Advertising Law (“FAL”), Consumer Legal Remedies Act

(“CLRA”), as well as the “unfair” and “fraudulent” prongs of the UCL—the

district court erred in concluding that DeCarlo lacks Article III standing. Someone

who alleges that he or she “paid more” for something than he or she “otherwise

would have paid” or “bought [something] when they otherwise would not have

done so” has “suffered an Article III injury in fact.” Hinojos v. Kohl’s Corp., 718

F.3d 1098, 1104 n.3 (9th Cir. 2013) (quoting Mazza v. Am. Honda Motor Co., 666

F.3d 581, 595 (9th Cir. 2012)); accord Maya, 658 F.3d at 1069. DeCarlo has

alleged that he was injured in this way. That alleged injury, moreover, is not

speculative and is traceable to Costco and MBNR because DeCarlo adequately

alleged that his optometrist was not independent even though Costco and MBNR

advertised that he was. DeCarlo’s alleged injury is also redressable, as he could be

compensated for the difference between how much he paid for the eye exam and

how much he valued one from an optometrist who was not independent.

2.    We next consider whether DeCarlo has sufficiently alleged statutory

standing under California law with respect to his misrepresentation claims. We

conclude that he has.

      Under the UCL and the FAL, “the quantum of lost money or property

necessary to show standing” is the same as that required to show Article III

standing. Van Patten v. Vertical Fitness Grp., LLC, 847 F.3d 1037, 1048–49 (9th

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Cir. 2017) (quoting Kwikset Corp. v. Superior Court, 246 P.3d 877, 886 (Cal.

2011)). And much like the plaintiffs in Kwikset Corp. v. Superior Court, 246 P.3d

877 (Cal. 2011), who “bargained for locksets that were made in the United States”

but “got ones that were not” made in the United States, id. at 892, DeCarlo

bargained for an eye exam performed by an independent optometrist but got one

performed by an optometrist who allegedly was not independent. Furthermore,

because the California legislature chose to regulate the independence of

optometrists, and because Costco allegedly marketed Costco-based optometrists as

independent, at this stage we can conclude only that the independence of the

optometrist was a material part of DeCarlo’s bargain.1 See id. at 892 (applying

similar reasoning and observing that materiality should rarely be decided at the

pleadings stage).

      DeCarlo has also satisfied the UCL’s and the FAL’s causation requirements.

That is because “[p]leading that one would not have otherwise purchased the

product but for the [defendants’ alleged misconduct] . . . satisfies the consumer’s

      1
         Birdsong v. Apple, Inc., 590 F.3d 955 (9th Cir. 2009), does not counsel
otherwise. There, the plaintiffs admitted that the defendant “provided a warning
against listening to music at loud volumes,” rather than representing that doing so
was safe. Id. at 961. That is why safety from hearing loss “was not part of the
bargain to begin with.” Id. This case is precisely the opposite. Again, Costco
allegedly marketed Costco-based optometrists as independent, making
independence part of the bargain.

                                          4
obligation to plead a causal link between the advertising and the alleged economic

injury.” Hinojos, 718 F.3d at 1104 n.5.

      Based on the foregoing, it follows a fortiori that DeCarlo has statutory

standing under the CLRA as well. See id. at 1108.

3.    We remand for the district court to consider in the first instance whether

DeCarlo has plausibly stated a claim for relief under Federal Rule of Civil

Procedure 12(b)(6), and for further proceedings not inconsistent with this

disposition.2

      REVERSED in part, VACATED in part, and REMANDED.

      2
         We express no view on the argument that DeCarlo’s CLRA claims fail as
a matter of law due to the CLRA’s reference to “any person in a transaction,” Cal.
Civ. Code § 1770(a), and—with respect to the claim against MBNR—DeCarlo’s
alleged failure to send a notice-and-demand letter.

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