Court Opinion

ID: 2642934
Source: CourtListenerOpinion
Date Created: 2013-11-18 21:15:24.78019+00
Date Added: 2024-06-11T12:50:37.139926
License: Public Domain

FILED
                             NOT FOR PUBLICATION                             NOV 18 2013

                                                                          MOLLY C. DWYER, CLERK
                      UNITED STATES COURT OF APPEALS                       U.S. COURT OF APPEALS

                             FOR THE NINTH CIRCUIT

 LEE CHERAMIE, individually and on behalf             No. 12-55148
 of all others similarly situated,
                                                      D.C. No. 2:11-CV-06549-R-
          Plaintiff-Appellant,                        AJW

  v.

 HBB, LLC, a Tennessee limited liability              MEMORANDUM*
 company,

          Defendant-Appellee.

                   Appeal from the United States District Court
                      for the Central District of California
                    Manuel L. Real, District Judge, Presiding

                     Argued and Submitted October 11, 2013
                              Pasadena, California

Before:      KLEINFELD and CHRISTEN, Circuit Judges and SEDWICK,
             District Judge.**
___________________________________
      *This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3(a).

      **The Honorable John W. Sedwick, Senior United States District Judge for
the District of Alaska, sitting by designation.
      Plaintiff-Appellant Lee Cheramie (“Cheramie”) appeals the district court’s

dismissal, without leave to amend, of his diversity class action against Defendant-

Appellee HBB, LLC (“HBB”) pursuant to Rules 12(b)(6) and 9(b) of the Federal

Rules of Civil Procedure. We review the dismissal of Cheramie’s claims de novo.

Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1102 (9th Cir. 2008).

      Cheramie’s complaint alleges that HBB failed to inform consumers about

the serious side effects stemming from the excessive quantity of melatonin in

HBB’s Lazy Cakes product, and thus alleges that he was misled by HBB into

buying an unsafe product that he otherwise would not have bought, causing him

economic damage, in violation of various California statutes that prohibit deceptive

advertising and unfair business practices. The reasonable consumer standard

applies to Cheramie’s statutory claims, Williams v. Gerber Products Co., 552 F.3d
934, 938 (9th Cir. 2008), and forecloses them, for his complaint makes it

impossible for him to demonstrate that a reasonable consumer was “likely to be

deceived” by the Lazy Cakes product in the manner alleged, id. at 938-39. The

complaint alleges that the Lazy Cakes packaging describes the product as a

relaxation agent, discloses the presence and quantity of melatonin in each serving

and the relevant serving size, and warns consumers about the risk of drowsiness.

More tellingly, he admits that research regarding the safety and side effects of

                                          2
melatonin consumption and the proper dosage is inconsistent and inconclusive.

Under the facts as alleged, Cheramie has not stated a plausible claim of deception.

Cheramie’s statutory claims were properly dismissed under Rule 12(b)(6).

      Cheramie’s common law claims were also properly dismissed. For the

reasons articulated above, Cheramie fails to adequately plead the necessary

element of misrepresentation or nondisclosure needed to support a fraud or

fraudulent concealment claim. Robinson Helicopter Co. v. Dana Corp., 34 Cal.
4th 979, 990, 22 Cal. Rptr. 3d 352, 359 (2004) (stating that the elements of a fraud

claim include a showing of a false representation, concealment, or nondisclosure);

Tietsworth v. Sears, 720 F. Supp. 2d 1123, 1132-33 (N.D. Cal. 2010) (citing Hahn

v. Mirda, 147 Cal. App. 4th 740, 748, 54 Cal. Rptr. 3d 527, 532 (Ct. App. 2007))

(noting that under California law a fraudulent concealment claim must include an

allegation that defendant intentionally concealed or suppressed a material fact with

the intent to defraud consumers). As to his negligent misrepresentation claim,

Cheramie fails to allege any affirmative representations by HBB. Mitsui O.S.K.

Lines, Ltd. v. SeaMaster Logistics, Inc., 913 F. Supp. 2d 780, 789 (N.D. Cal. 2012)

(citing Lopez v. Nissan N. Am., Inc., 201 Cal. App. 4th 572, 596, 135 Cal. Rptr. 3d
116, 136 (Ct. App. 2011)) (holding that a negligent misrepresentation claim under

                                         3
California law requires an affirmative representation and cannot be based on

nondisclosures).

      The law concerning unjust enrichment in California is unclear. See, e.g.,

Nordberg v. Trilegiant Corp., 445 F. Supp. 2d 1082, 1099–1101 (N.D. Cal. 2006).

The weight of authority indicates that “[u]njust enrichment is not a cause of action,

just a restitution claim.” Hill v. Roll Int'l Corp., 195 Cal. App. 4th 1295, 1307, 128
Cal. Rptr. 3d 109, 118 (Ct. App. 2011). A claim for restitution may be recognized

in the absence of a valid express contract, such as when a contract “is

unenforceable or ineffective for some reason” or when a quasi-contract is implied

in law. McBride v. Boughton, 123 Cal. App. 4th 379, 388, 20 Cal. Rptr. 3d 115,

121–22 (Ct. App. 2004). But here, Cheramie cannot plead this theory because he

does not dispute that a valid contract was formed. See, e.g., Klein v. Chevron

U.S.A., Inc., 202 Cal. App. 4th 1342, 1388, 137 Cal. Rptr. 3d 293, 330-31 (Ct.

App. 2012); Chapman v. Skype Inc., No. B241398, 2013 WL 5502960, at *8–9

(Cal. Ct. App. Oct. 4, 2013).

      The district court denied Cheramie’s request for leave to amend. We review

the denial for abuse of discretion. Rutman Wine Co. v. E. & J. Gallo Winery, 829
F.2d 729, 738 (9th Cir. 1987). Here, the district court provided no explanation for

denying the request to amend. Such a denial is subject to reversal for abuse of

                                          4
discretion. Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir.

2003). In the absence of an explanation, it is not otherwise apparent to this court

that amendment would be futile. See Roth v. Garcia Marquez, 942 F.2d 617, 628-

29 (9th Cir. 1991) (noting that when it is readily apparent that an amendment

would be futile, the district court need not state its reasons for denying leave to

amend). On remand Cheramie should be allowed an opportunity to file an

amended complaint, for it may be possible for him to allege facts sufficient to state

a claim for relief under California law that would survive a motion to dismiss.

AFFIRMED in part, REVERSED in part, and REMANDED. Each party

shall bear its own costs on appeal.

                                           5
                                                                       FILED
Lee Cheramie v HBB, LLC, 12-55148                                      NOV 18 2013
KLEINFELD, Senior Circuit Judge, concurring:                        MOLLY C. DWYER, CLERK
                                                                     U.S. COURT OF APPEALS

      I agree that we should affirm the dismissal and remand with leave to amend.

I write separately only to clarify one proposition. Cheramie may be able to plead

that the defendant sold a sleep aid while falsely marketing it as a relaxation aid.

That may be a good claim under state law.1

      Sleep and relaxation are different. People may relax by playing golf,

paddling a canoe, or having cocktails with friends. Nobody sleeps while swinging

a club or paddling a canoe, and ideally guests do not retire for a nap at a cocktail

party. Melatonin is a hormone the body secretes, and the brownies contain, to

promote sleep.

      The reason I concur in the dismissal is that I am not entirely sure what

Cheramie has pleaded, because the complaint is not “simple, concise, and direct”

as required by Federal Rule of Civil Procedure 8(d). The complaint contains

implausible allegations about the dangerous and “life threatening” side effects of

the brownies. I cannot tell whether Cheramie is pleading that a sleep aid was sold

deceptively as a relaxation aid, or that the melatonin brownies are dangerous to

health and are not labeled as such. The facts pleaded would not support the latter

      1
        California Unfair Competition Law, Cal. Bus. & Prof. Code § 17200;
California False Advertising Law, Cal. Bus. § Prof. Code § 17500; and California
Consumers Legal Remedies Act, Cal. Civ. Code § 1770.
claim.

Accordingly, I concur.