Court Opinion

ID: 4162275
Source: CourtListenerOpinion
Date Created: 2017-04-21 17:03:57.909448+00
Date Added: 2024-06-11T07:46:26.476302
License: Public Domain

FOR PUBLICATION

    UNITED STATES COURT OF APPEALS
         FOR THE NINTH CIRCUIT

 SERENA KWAN, an individual,                     No. 15-15496
 On Behalf of Herself and All
 Others Similarly Situated,                       D.C. No.
               Plaintiff-Appellant,          3:14-cv-03287-MEJ

                    v.
                                                   OPINION
 SANMEDICA INTERNATIONAL, a
 Utah Limited Liability Company,
             Defendant-Appellee.

       Appeal from the United States District Court
          for the Northern District of California
      Maria-Elena James, Magistrate Judge, Presiding

           Argued and Submitted January 12, 2017
                 San Francisco, California

                         Filed April 21, 2017

    Before: J. Clifford Wallace and Milan D. Smith, Jr.,
   Circuit Judges, and Ralph R. Erickson,* District Judge.

                   Opinion by Judge Erickson

    *
      The Honorable Ralph R. Erickson, United States District Judge for
the District of North Dakota, sitting by designation.
2                  KWAN V. SANMEDICA INT’L

                            SUMMARY**

                           California Law

   The panel affirmed the district court’s Fed. R. Civ. P.
12(b)(6) dismissal of plaintiff’s second amended complaint,
which alleged that defendants made claims concerning its
product, SeroVital, that were unsubstantiated.

    Pursuant to the holding in National Council Against
Health Fraud, Inc. v. King Bio Pharmaceuticals, Inc., 107
Cal. App. 4th 1336, 1344 (Cal. App. 2003), the panel held
that the district court did not err in concluding that neither the
Unfair Competition Law nor the Consumer Legal Remedies
Act provided plaintiff with a private cause of action to
enforce the substantiation provisions of California’s unfair
competition and/or consumer protection laws.

    The panel held that the district court did not err in
concluding that the second amended complaint failed to
allege facts that would support a finding that defendants’
claims regarding its product, SerioVital, were actually false.
The panel also held that the district court did not err by
declining to address plaintiff’s complaint as if this case were
a case brought under the Lanham Act.

    **
       This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
                  KWAN V. SANMEDICA INT’L                          3

                           COUNSEL

Stewart M. Weltman (argued) and Max A. Stein, Boodell &
Domanskis LLC, Chicago, Illinois; Elaine Ryan and Patricia
N. Syverson, Bonnett Fairbourn Friedman & Balint P.C.,
Phoenix, Arizona; Manfred Muecke, Bonnett Fairbourn
Friedman & Balint P.C., San Diego, California; for Plaintiff-
Appellant.

Jason Kerr (argued), Christopher B. Sullivan, Mark J.
Williams, and Steven William Garff, Price Parkinson & Kerr
PLLC, Salt Lake City, Utah, for Defendant-Appellee.

                            OPINION

ERICKSON, District Judge:

    Serena Kwan appeals from the district court judgment
dismissing her second amended complaint for failing to state
a claim upon which relief can be granted.1 The district court
correctly concluded that California law does not provide for
a private cause of action to enforce the substantiation
requirements of California’s unfair competition and consumer
protection laws. Further, the district court did not err in
concluding that Kwan’s second amended complaint failed to
allege facts that would support a finding that SanMedica
International’s claims regarding its product, SeroVital, were
actually false. Accordingly, we AFFIRM.

    1
      For purposes of oral argument only, we consolidated this appeal
with the appeal in Julian Engel v. Novex Biotech, LLC, No. 15-15492.
We address Engel in a concurrently filed memorandum disposition.
4               KWAN V. SANMEDICA INT’L

    BACKGROUND FACTS AND PROCEDURAL
                HISTORY

    On July 21, 2014, Plaintiff/Appellant, Serena Kwan, an
Individual, On Behalf of Herself and All Others Similarly
Situated (“Kwan”), filed a class action against
Defendants/Appellees, SanMedica International, LLC
(“SanMedica”), a Utah Limited Liability Company, and
Sierra Research Group, LLC (“Sierra”), a Utah Limited
Liability Company, alleging violations of California’s Unfair
Competition Law (“UCL”) and California’s Consumers
Legal Remedies Act (“CLRA”). Kwan filed a first amended
complaint on August 27, 2014. The amended complaint was
based on an allegation that the defendants falsely represented
that their product, SeroVital, provides a 682% mean increase
in Human Growth Hormone (“HGH”) levels, that it was
clinically tested, and that “peak growth hormone levels” are
associated with “youthful skin integrity, lean musculature,
elevated energy production, [and] adipose tissue distribution.”

   On October 7, 2014, Sierra filed a motion under rule
12(b)(2) to dismiss for lack of jurisdiction. On October 16,
2014, Kwan filed a notice of voluntary dismissal of Sierra
pursuant to rule 41(a)(1)(A)(I), Fed. R. Civ. P.

    The court granted SanMedica’s motion to dismiss with
leave to amend. The court reasoned that the first amended
complaint was based entirely on allegations related to
whether SanMedica’s claims regarding its product, SeroVital,
were properly substantiated. Citing Cal. Bus. & Prof. Code
§ 17508, the court stated: “Individuals may not bring suit
under the UCL or the CLRA alleging only that advertising
claims lack substantiation” because that “right is reserved to
‘the Director of Consumer Affairs, the Attorney General, any
                KWAN V. SANMEDICA INT’L                     5

city attorney, or any district attorney . . . .’” The court
instructed that if Kwan chose to amend her complaint, “she
must allege facts from which the [c]ourt can conclude that
Defendant’s advertising representations were false.” The
court continued, “it is not enough for Plaintiff to attack the
methodology of Defendant’s study; instead, she must allege
facts affirmatively disproving Defendant’s claims.” The
court advised:

       For example, Plaintiff could allege that one or
       more of the authorities alluded to actually
       studied or tested the formula SeroVital
       contains and found that it does not produce a
       682% mean increase in HGH levels, or that
       Plaintiff herself did not experience such an
       increase when using the product, or that a
       study exists somewhere demonstrating that a
       682% increase is categorically impossible to
       achieve in an over-the-counter pill. Of
       course, Plaintiff should only allege these facts
       if she can do so in good faith.

    Kwan filed a second amended complaint against
SanMedica International, LLC, on December 1, 2014. In the
second amended complaint, Kwan continues to maintain the
two counts. Count one alleges violations of the California
Unlawful Business and Practices Act. Count two alleges
violations of the California Consumers Legal Remedies Act.
Among several paragraphs containing conclusions of law and
sweeping arguments, the second amended complaint contains
the following material factual allegations:

    1) SanMedica manufactures and sells SeroVital, an over-
the-counter amino acid supplement represented as an HGH
6               KWAN V. SANMEDICA INT’L

secretagogue, meaning it is supposed to “prompt the body to
secrete HGH.”

    2) SanMedica represents in its marketing campaign and
on each label of SeroVital that:

       (1) “It is clear that Growth Hormone has been
       associated with wrinkle reduction, decreased
       body fat, increased lean muscle mass, stronger
       bones, improved mood, heightened sex drive,
       and making users look and feel decades – not
       years, but DECADES – younger”; (2) “peak
       growth hormone levels” are “associated with:
       youthful skin integrity, lean musculature,
       elevated energy production, [and] adipose
       tissue distribution”; and (3) that SeroVital is
       clinically tested to boost human growth
       hormone (“HGH”) by a mean of 682%
       (hereafter the “682% HGH increase
       representation”).

    3) These representations are false.

   4) After being exposed to the representation, in May
2014, Kwan purchased one box of SeroVital online from
SanMedica.

   5)   A 120 count bottle of SeroVital sells for
approximately $99.00.

   6) If she had known the truth about the product, or that it
was being sold illegally, Kwan would not have purchased the
product.
                KWAN V. SANMEDICA INT’L                       7

   7) “There is no Credible Scientific Evidence to Support
Defendant’s 682% HGH Increase Representation, HGH
Fountain Of Youth Benefit Representations, And SeroVital
Fountain of Youth And Body Composition Representations.”

    8) The only study identified by Defendant’s website is
not an example of scientific evidence recognized by experts,
was never peer-reviewed, and was never published in a peer-
reviewed journal.

   9) The study is arguably incredible.

    10) SeroVital is a dietary supplement that is sold illegally
because SanMedica’s marketing claims are not properly
substantiated as required by federal and state law regulating
the sale of dietary supplements.

    11) Kwan and other “Class members have been damaged
in their purchases of the Product.”

Although the second amended complaint alleges that Kwan
purchased SeroVital, it does not allege that she, or any of the
purported class members, ever actually used the product.

    SanMedica filed a motion to dismiss the second amended
complaint under rule 12(b)(6), Fed. R. Civ. P., for failure to
state a claim upon which relief can be granted. Because the
second amended complaint failed to specifically allege facts
to support a finding that SanMedica’s claims regarding
SeroVital were actually false, the court concluded that Kwan
was again merely alleging lack of substantiation. Because
Kwan had been provided “the opportunity to amend her
complaint, and she has once again failed to allege facts from
which the [c]ourt could conclude that Defendant’s advertising
8                KWAN V. SANMEDICA INT’L

representations were false,” the court dismissed the matter
with prejudice. Kwan timely appealed.

    JURISDICTION AND STANDARD OF REVIEW

    We have jurisdiction pursuant to 28 U.S.C. § 1291. We
review de novo the district court’s judgment granting a
12(b)(6) motion for failure to state a claim upon which relief
can be granted. Johnson v. Fed. Home Loan Mortg. Corp.,
793 F.3d 1005, 1007 (9th Cir. 2015). This court may affirm
the dismissal “based on any ground supported by the record.”
Johnson v. Riverside Healthcare Sys., LP, 534 F.3d 1116,
1121 (9th Cir. 2008). A dismissal under rule 12(b)(6) “may
be based on either a ‘lack of a cognizable legal theory’ or ‘the
absence of sufficient facts alleged under a cognizable legal
theory.’” Id. at 1121–22 (quoting Balistreri v. Pacifica
Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1990)).

    “The task of a federal court in a diversity action is to
approximate state law as closely as possible in order to make
sure that the vindication of the state right is without
discrimination because of the federal forum.” Gee v.
Tenneco, Inc., 615 F.2d 857, 861 (9th Cir. 1980); accord U.S.
Fidelity and Guaranty Co. v. Lee Investments LLC, 641 F.3d
1126, 1133 (9th Cir. 2011) (“Perhaps a better way of putting
it is to say that one of the goals in deciding state law
questions is to do no harm to state jurisprudence.”).
“[F]ederal courts are bound by the pronouncements of the
state’s highest court on applicable state law.” Ticknor v.
Choice Hotels, Inc., 265 F.3d 931, 939 (9th Cir. 2001).
Similarly, a federal court is “not free to reject a state judicial
rule of law merely because it has not received the sanction of
the state’s highest court, but it must ascertain from all
available data what the state law is and apply it.” Estrella v.
                 KWAN V. SANMEDICA INT’L                       9

Brandt, 682 F.2d 814, 817 (9th Cir. 1982). “An intermediate
state appellate court decision is a ‘datum for ascertaining state
law which is not to be disregarded by a federal court unless
it is convinced by other persuasive data that the highest court
of the state would decide otherwise.’” Id. at 817 (quoting
West v. A.T.&T. Co., 311 U.S. 223, 237 (1940)); see also
Lewis v. Tel. Empl. Credit Union, 87 F.3d 1537, 1546 (9th
Cir. 1996) (citing In re Kirkland, 915 F.2d 1236, 1239 (9th
Cir. 1990) to recognize that “. . . where there is no convincing
evidence that the state supreme court would decide
differently, ‘a federal court is obligated to follow the
decisions of the state’s intermediate appellate courts’”).

    Further, as this court has previously explained:

        On appeal, we are limited in our review of the
        district court’s interpretation of the law of the
        state in which it sits. We do not overrule a
        district judge on the question of state law
        unless the judge’s findings are “clearly
        wrong.” . . . While this circuit does not regard
        the district judge’s presumed expertise in the
        law of his or her own state to be infallible, . . .
        we nonetheless regard the standard of review
        on this issue as one which does restrict our
        scrutiny of the district judge’s determination.

Gee v. Tenneco, 615 F.2d at 861 (citations omitted).
10               KWAN V. SANMEDICA INT’L

                        DISCUSSION

1. Whether the California law regulating advertising
   provides a cause of action for private citizens alleging
   that marketing claims lack proper scientific
   substantiation.

     The UCL provides:

        It shall be unlawful for any person doing
        business in California and advertising to
        consumers in California to make any false or
        misleading advertising claims that (1) purport
        to be based on factual, objective, or clinical
        evidence, (2) compare the product’s
        effectiveness or safety to that of other brands
        or products, or (3) purport to be based on any
        fact.

Cal. Bus. & Prof. Code § 17508. The UCL does not provide
a private cause of action unless a person suffers an injury in
fact as a result of unfair competition:

        Actions for relief pursuant to this chapter shall
        be prosecuted exclusively in a court of
        competent jurisdiction by the Attorney
        General or a district attorney or by a county
        counsel authorized by agreement with the
        district attorney in actions involving violation
        of a county ordinance, or by a city attorney of
        a city having a population in excess of
        750,000, or by a city attorney in a city or
        county or, with the consent of the district
        attorney, by a city prosecutor in a city having
                KWAN V. SANMEDICA INT’L                     11

       a full-time city prosecutor in the name of the
       people of the State of California upon their
       own complaint or upon the complaint of a
       board, officer, person, corporation, or
       association, or by a person who has suffered
       injury in fact and has lost money or property
       as a result of the unfair competition.

Cal. Bus. & Prof. Code § 17204.

    The CLRA “shall be liberally construed and applied to
promote its underlying purposes, which are to protect
consumers against unfair and deceptive business practices
and to provide efficient and economical procedures to secure
such protection.” Cal. Civ. Code § 1760. The CLRA
proscribes certain “unfair methods of competition and unfair
or deceptive acts or practices undertaken by any person in a
transaction intended to result or which results in the sale or
lease of goods or services to any consumer . . . .” Cal. Civ.
Code § 1770(a). Specific to the case at hand, the CLRA
prohibits representing that goods have approval, ingredients,
uses, or benefits “which they do not have” or representing
that goods “are of a particular standard, quality, or grade, or
that goods are of a particular style or model, if they are of
another.” Cal. Civ. Code § 1770(a)(5) and (7). The CLRA
provides: “Any consumer who suffers any damage as a result
of the use or employment of a method, act, or practice
declared unlawful by Section 1770 may bring an action
against that person to recover or obtain” relief including
actual damages, enjoining of “methods, acts, or practices”,
restitution, punitive damages, or any “other relief that the
court deems proper.” Cal. Civ. Code § 1780(a).
12              KWAN V. SANMEDICA INT’L

    The California Supreme Court recognizes that both the
UCL and the CLRA, with the purposes of promoting fair
competition and consumer protection, contain “broad,
sweeping language” to describe their substantive provisions.
Loeffler v. Target Corp., 324 P.3d 50, 75 (Cal. 2014) (quoting
Kwikset Corp. v. Superior Court, 246 P.3d 877, 883 (Cal.
2011)). However, California’s highest state court also
recognizes that these statutes do not give the courts the
authority to “simply impose their own notions” of fairness
and the legislature may “limit the judiciary’s power to
declare conduct unfair.” Id. at 76 (quoting Cal-Tech
Communications, Inc. v. Los Angeles Cellular Tel. Co.,
973 P.2d 527, 541 (Cal. 1999)). For example, if the
legislature “has permitted certain conduct or considered a
situation and concluded no action should lie, courts may not
override that determination.” Id. (internal quotation marks
omitted). “Moreover,” the California Supreme Court has
explained, “in some instances, an action may not lie under the
UCL because another statutory scheme provides the exclusive
means for resolving disputes.” Id.

    In National Council Against Health Fraud, Inc. v. King
Bio Pharmaceuticals, Inc., (“King Bio”), the California Court
of Appeal, Second District, after careful analysis of the
statutory provisions addressing who may bring a legal action
under the UCL, stated:

       In sum, both private persons and prosecuting
       authorities may sue to enjoin false advertising
       and obtain restitution. When they bring such
       actions, both private persons and prosecuting
       authorities bear the burden of proving the
       advertising claims to be false or misleading.
       Prosecuting authorities, but not private
                    KWAN V. SANMEDICA INT’L                             13

         plaintiffs, have the administrative power to
         request advertisers to substantiate advertising
         claims before bringing actions for false
         advertisement, but the prosecuting authorities
         retain the burden of proof in the false
         advertising actions.

107 Cal. App. 4th 1336, 1344 (Cal. App. 2003).

    In the fourteen years since King Bio was decided, courts,
including several federal district courts, have cited it to
require that private citizens bringing suit under the UCL or
the CLRA properly allege proof that plaintiffs sustained
injury from relying on marketing statements that were
actually false.2 These courts have precluded private citizens

    2
       Several courts have followed the reasoning in King Bio in granting
in full or in part motions for dismissal under rule 12(b)(6). These include:
Franz v. Beiersdorf, Inc., No. 14cv2241, 2015 WL 4659104, at **2–3
(S.D. Cal. Aug. 5, 2015); Aloudi v. Intramedic Research Group, LLC, No.
15-cv-00882, 2015 WL 4148381, at **3–4, 6 (N.D. Cal. July 9, 2015);
McCrary v. Elations Co., LLC, No. EDVC 13-0242, 2013 WL 6402217,
at *3, *6 (C.D. Cal. April 24, 2013); and Marshall v. PH Beauty Labs,
Inc., No. CV 15-02101, 2015 WL 3407906, at *3 (C.D. Cal. May 27,
2015). In Stanley v. Bayer Healthcare LLC, No. 11cv862, 2012 WL
1132920 (S.D. Cal. April 3, 2012), the district court followed the
reasoning of King Bio in granting summary judgment against plaintiff. In
Nilon v. Natural-Immunogenics Corp., No. 3:12cv00930, 2013 WL
5462288 (S.D. Cal. Sept. 30, 2013), the district court cited King Bio and
cases citing King Bio in denying class action certification and ordering,
sua sponte, that Plaintiff file an amended complaint because, as it stood,
the complaint merely alleged lack of substantiation. The following courts
have acknowledged the force of King Bio as precedent, but have at least
partially denied dismissal because of factual allegations that distinguished
the complaints from the complaint in King Bio: Mollicone v. Universal
Handcraft, Inc., Slip Copy, No. 2:16-cv-07322, 2017 WL 440257, at
**11–12 (C.D. Cal. Jan. 30, 2017); Melgar v. Zicam LLC, Slip Copy, No.
14                 KWAN V. SANMEDICA INT’L

from bringing actions that allege that the challenged
advertising language lacked proper scientific substantiation.
The California State Legislature has not amended the
statutory language on which the King Bio holding relied. The
California Supreme Court has not addressed King Bio’s
holding directly. However, the California Supreme Court
recognizes that the “overriding purpose” of Proposition 64,
which amended the UCL and the CLRA in 2004, “was to
impose limits on private enforcement actions[.]” In re
Tobacco II Cases, 207 P.3d 20, 39 (Cal. 2009). Tobacco II
concluded that the amending language “imposes an actual
reliance requirement on plaintiffs prosecuting a private
enforcement action under the UCL’s fraud prong.” Id.
Reliance, according to the California Supreme Court, “is
proved by showing that defendant’s misrepresentation is an
‘immediate cause’ of the plaintiff’s conduct by showing that
in its absence the plaintiff ‘in all reasonable probability’
would not have engaged in the injury-producing conduct.”
Id. (internal quotation marks omitted) (emphasis added). The
California Supreme Court’s references to “reliance” on a
“misrepresentation” is consistent with King Bio’s requirement

2:14-cv-00160, 2016 WL 1267870, at *10 (E.D. Cal. March 31, 2016);
Fortillati v. Hylands, Inc, et al., No. CV 12-1983, 2015 WL 9685557, at
**4–5 (C.D. Cal. Jan. 12, 2015); Bronson v. Johnson & Johnson, No. C
12-04184, 2013 WL 1629191 at **8–12 (N.D. Cal. April 16, 2013); and
Hughes v. Ester C Co., 930 F. Supp. 2d 439, 455–59 (E.D. New York
2013). See also Eckler v. Wal-Mart Stores, Inc., No. 12-CV-727, 2012
WL 5382218 at *1 (S.D. Cal. Nov. 1, 1012) (citing King Bio and stating:
“The first question for the Court is whether Eckler’s false advertising
claims under the Unfair Competition Law and Consumer Legal Remedies
Act are really just “lack of substantiation” claims. It’s a problem if they
are, because private litigants can’t bring those claims.”); In re Clorox
Consumer Litigation, 894 F. Supp. 2d 1224, 1232 (N.D. Cal. 2012)
(“Consumer claims for lack of substantiation are not cognizable under
California law.”).
                 KWAN V. SANMEDICA INT’L                      15

that private plaintiffs, unlike prosecuting authorities, do not
have the power to require defendants to substantiate their
advertising claims, and that private plaintiffs, like prosecuting
authorities, have the burden of proving that the marketing
claims are false or misleading.

    Under the circumstances, it is readily apparent that King
Bio’s holding is firmly established law in California. As this
court has not been presented with any “convincing evidence”
to decide differently, we are obligated to follow the holding
in King Bio. Accord Lewis v. Telephone Employees Credit
Union, 87 F.3d at 1546. The district court did not err in
concluding that neither the UCL nor the CLRA provides
Kwan with a private cause of action to enforce the
substantiation provisions of Calfornia’s unfair competition or
consumer protection laws.

2. Whether the district court erred when it concluded
   that the Second Amended Complaint failed to
   specifically allege facts to support a finding that
   SanMedica’s claims regarding SeroVital were actually
   false.

    In order to “survive a rule 12(b)(6) motion to dismiss, a
‘plaintiff must allege enough facts to state a claim to relief
that is plausible on its face.’” Turner v. City and County of
San Francisco, 788 F.3d 1206, 1210 (9th Cir. 2015) (quoting
Lazy Y Ranch Ltd. v. Behrens, 546 F.3d 580, 588 (9th Cir.
2008)). “In assessing whether a party has stated a claim upon
which relief can be granted, a court must take all allegations
of material fact as true and construe them in the light most
favorable to the nonmoving party[.]” Turner, 788 F.3d at
1210. “[C]onclusory allegations of law and unwarranted
inferences”, however, “are insufficient to avoid” dismissal.
16              KWAN V. SANMEDICA INT’L

Id. (quoting Cousins v. Lockyer, 568 F.3d 1063, 1067 (9th
Cir. 2009)). “[A] court considering a motion to dismiss can
choose to begin by identifying pleadings that, because they
are no more than conclusions, are not entitled to the
assumption of truth.” Ashcroft v. Iqbal, 556 U.S. 662, 679
(2009). Legal conclusions may provide a framework for a
complaint, but “they must be supported by factual
allegations.” Id. The court will assume the veracity of well-
pleaded factual allegations “and then determine whether they
plausibly give rise to an entitlement to relief.” Id. This
plausibility standard requires more than “a sheer possibility
that a defendant has acted unlawfully” but “is not akin to a
probability standard.” Turner, 788 F.3d at 1210 (9th Cir.
2015) (quoting Iqbal, 556 U.S. at 678). “‘A claim has facial
plausibility when the plaintiff pleads content that allows the
court to draw the reasonable inference that the defendant is
liable for the misconduct alleged.’” Johnson, 793 F.3d at
1007 (quoting Iqbal, 556 U.S. at 678.

    Kwan asserts the second amended complaint sufficiently
alleges false misrepresentation in at least two ways that do
not implicate a mere lack of substantiation. First, she
contends that she adequately pled falsity when she alleged
that the “clinically tested” representation, at a minimum,
falsely implied that the marketing claims of SeroVital’s
health benefits were clinically proven by credible scientific
proof. Secondly, she contends that the claims that growth
hormone levels are associated with certain health benefits
described in paragraph 1 of the second amended complaint
falsely imply that defendant’s product claims were based on
credible scientific proof. These allegations are conclusory
and do nothing to support or prove the falsehood of the
claims. Instead each of these is simply an allegation that
defendant’s marketing claims lack scientific substantiation.
                KWAN V. SANMEDICA INT’L                    17

Since California law does not provide a private cause of
action for claims that advertising lacks substantiation, the
failure to allege specific facts pointing to actual falsehood
constitutes a fatal flaw.

    In an attempt to resuscitate her complaint, Kwan invites
the court to incorporate Lanham Act provisions into
California’s unfair competition and consumer protection law
by distinguishing between “establishment” and “non-
establishment” claims. In support Kwan cites several cases
decided under the Lanham Act or laws with similar
provisions. In King Bio, however, the court made plain that
the plaintiff carries the burden of proof in false advertising
actions, stating “We are aware of no cases in which the
burden of proof shifts to the defendant upon the filing of the
complaint.” 107 Cal. App. 4th at 1346–47. Courts have
recognized that no authority exists under California law for
using the Lanham Act distinction between “establishment”
and “non-establishment” claims as a means of shifting the
burden of proof in California consumer protection law
actions. E.g., Aloudi v. Intramedic Research Group, LLC,
No. 15-cv-00882, 2015 WL 4148381, at *4 (N.D. Cal. 2015)
(“Plaintiff does not cite any case in which the “establishment
claim” standard has been applied outside the context of
Lanham Act claims, and all of Plaintiff’s cited authority
exclusively analyzed Lanham Act claims.”). Like the
plaintiff in Aloudi, Kwan has not cited any authority for
applying the “establishment claim” standard outside of the
Lanham Act context and, more specifically, has not cited any
authority for applying Lanham Act analysis to private causes
of action under the UCL or the CLRA.

   The King Bio court stated:
18              KWAN V. SANMEDICA INT’L

       Public policy in this regard has been clearly
       established by the Legislature.             The
       Legislature has established as a general rule
       that the burden of proof is on the plaintiff to
       establish a defendant’s wrongdoing. . . . More
       specifically, the Legislature has confirmed
       that the burden of proof rests with the plaintiff
       in false advertising actions. . . . In Business
       and Professions Code section 17508, the
       Legislature has authorized prosecuting
       authorities to administratively seek
       substantiation of advertising claims from
       advertisers.       If substantiation is not
       forthcoming, is inadequate, or fails to dispel
       the belief the advertising claim is false or
       misleading, the prosecuting authority may
       bring an action for false advertising under
       Business and Professions Code section 17535.
       In these actions for false advertising, the
       prosecuting authority is expressly assigned the
       burden of proof. It would be inappropriate to
       shift the burden of proof to the defendant in a
       private plaintiff false advertising action when
       the private plaintiff is not statutorily
       authorized to seek substantiation of the
       advertising claim from the defendant.
107 Cal. App. 4th at 1347–48 (citations omitted).

   Reading a requirement that Lanham Act distinctions
apply would clearly violate recognized California law on the
burden of proof placed on the plaintiff. The King Bio court
emphasized:
                KWAN V. SANMEDICA INT’L                   19

       there is nothing in the nature of a false
       advertising action that makes it difficult for a
       plaintiff to prove the allegations of the
       complaint. The homeopathic remedies are
       marketed and readily available for testing by
       the plaintiff. The falsity of the advertising
       claims may be established by testing,
       scientific literature, or anecdotal evidence.
       That NCAHF does not wish to bear the
       expense of proving its case does not mean that
       the burden and expense should be shifted to
       King Bio.

Id. at 1348.

    The rationale behind the legislation regarding
substantiation claims is to provide prosecuting authorities a
means of protecting consumers while limiting “undue
harassment of advertisers and is the least burdensome method
of obtaining substantiation for advertising claims.” Id. at
1345; accord McCrary v. Elations LLC, Slip Copy, No.
EDCV 13-0242, 2014 WL 12561600, at *13 (noting that
plaintiff’s cites to Federal Trade Commission Act and
Lanham Act cases “are not precedent that is applicable to” a
case brought under the CLRA or the UCL).

    The district court did not err by declining to address
Kwan’s complaint as if this were a case brought under the
Lanham Act. Nor did it err in recognizing that the second
amended complaint failed to allege facts that would support
a finding that defendant’s marketing claims were actually
false.
20              KWAN V. SANMEDICA INT’L

                      CONCLUSION

    The district court applied established California law and
correctly identified that the second amended complaint did
not allege facts to support a finding that defendant’s
advertising claims were actually false. We AFFIRM the
order granting the motion to dismiss under rule 12(b)(6) of
the Federal Rules of Civil Procedure. As the court provided
Kwan with ample opportunity to amend her complaint to
plead satisfactorily a cause of action under California law and
Kwan was unable to do so, we AFFIRM the district court’s
dismissal with prejudice.

     AFFIRMED.