The opinion of the court was delivered by: Jon S. Tigar United States District Judge
ORDER DENYING MOTION TO DISMISS Re: Dkt. No. 55
United States District Court Northern District of California
In this putative class action for violations of California's Consumer Legal Remedies Act, California's Unfair Competition Law, and California's False Advertising Law, Defendants move 15 under Federal Rule of Civil Procedure 12(b)(6) to dismiss the second amended complaint 16 ("SAC"). For the reasons set forth below, the motion is denied. 17
The court accepts the following allegations of Plaintiffs' complaint as true for the purposes 20 of deciding this motion to dismiss. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). 21
Plaintiffs' claims arise out of the alleged failure of Defendants JCPenney Company and JCPenney Corporation to disclose to consumers that the jewelry they advertise as "white gold" 23 and "sterling silver" is coated with rhodium and that such coating wears off. SAC ¶ 1. The 24 coating's degradation eventually reveals the underlying color of the jewelry, which is an 25 "undesired yellow, off-white or dingy grey color." Id. Once the rhodium coating wears off, 26 consumers can restore the jewelry's original "shiny white" appearance by re-coating the jewelry at 27 their own expense. Id. ¶ 2. 28
Plaintiff Gabriel Rojas purchased an engagement ring from a JCPenney store in November 2011 for $1,070.98 and gave it to Plaintiff Maria Torres as a gift. Id. ¶¶ 21-26. JCPenney 3 represented the ring as being "white gold." Id. ¶ 22. JCPenney did not disclose to Rojas or Torres 4 that the ring was coated with rhodium, that the coating would wear off, and that the true color of 5 the underlying metal was "yellowish," not white. Id. ¶¶ 23-25. Rojas and Torres have had the 6 ring re-coated "more than once" in the past year to restore its original white color. Id. ¶ 28. 7
Plaintiff Ian Kerner purchased a necklace, earrings, and a bracelet from JCPenney's 8 website in January 2012. Id. ¶ 32. The website advertised the items as sterling silver. Id. 9
JCPenney did not disclose to Kerner that the items were coated with rhodium or that the coating 10 would wear off to reveal a layer of copper or nickel that is applied to the sterling silver core to 11 make the rhodium coating adhere more easily to the jewelry. Id. ¶¶ 31, 33. 12
Plaintiffs allege that if they had known that the jewelry they purchased was coated with rhodium, that the coating would wear off, and that they would have to incur additional expenses to 14 restore the jewelry's original "bright white" appearance, they would not have purchased the 15 jewelry or would have paid less for it. Id.¶¶ 29, 34. 16
Plaintiffs bring three causes of action in the SAC, all of which arise out of Defendants' 17 failure to disclose the rhodium coating: (1) count one is for violations of California's Consumer 18 Legal Remedies Act; (2) count two is for violations of California's Unfair Competition Law, 19 Business and Professions Code Section 17200; and (3) count three is for violations of California's 20 Fair Advertising Law, Business and Professions Code Section 17500. 21
Plaintiffs bring this action on behalf of themselves and "all persons residing in the state of California who, during the four years preceding the filing of the original Complaint, purchased 23 jewelry from JCPenney described as 'white gold' and/or 'sterling silver.'" Id. ¶ 44. 24
Before this action was reassigned to this Court, District Judge Seeborg dismissed Plaintiffs' original complaint with leave to amend. ECF No. 32. 27
A pleading must contain a "short and plain statement of the claim showing that the pleader 3 is entitled to relief." Fed. R. Civ. P. 8(a)(2). A motion to dismiss under Federal Rule of Civil 4 Procedure 12(b)(6) tests the legal sufficiency of the claims in the complaint. "To survive a motion 5 to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to 6 relief that is plausible on its face. A claim has facial plausibility when the plaintiff pleads factual 7 content that allows the court to draw the reasonable inference that the defendant is liable for the 8 misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citation and internal quotation 9 marks omitted). "Threadbare recitals of the elements of a cause of action, supported by mere 10 conclusory statements, do not suffice." Id. When dismissing a complaint, leave to amend must be 11 granted unless it is clear that the complaint's deficiencies cannot be cured by amendment. Lucas 12 v. Dep't of Corrections, 66 F.3d 245, 248 (9th Cir. 1995).
A plaintiff asserting a fraud claim must satisfy the heightened pleading standards of Federal Rule of Civil Procedure 9(b), which require the plaintiff to "state with particularity the 15 circumstances constituting fraud or mistake." Fed. R. Civ. P. 9(b). A plaintiff satisfies her 16 pleading burden under Rule 9(b) by alleging the "who, what, where, when, and how" of the 17 charged misconduct. Cooper v. Pickett, 137 F.3d 616, 627 (9th Cir. 1997). 18
Defendants move to dismiss each of the claims in the SAC on the basis that the Federal Trade Commission Guides ("FTC Guides"), the National Sampling Act, and California's Business 22 and Professions Code Section 22179 contain safe harbors that shield them from liability for failing 23 to disclose the rhodium coating. 24
As will be discussed below, Defendants fail to show that any of the provisions they cite 25 contains a safe harbor that clearly permits them to fail to disclose the presence of rhodium on the 26 surface of the jewelry they sell. 27
1. California's Safe Harbor Doctrine
"The California Supreme Court has explained the 'safe harbor' doctrine in this way:
Although the unfair competition law's scope is sweeping, it is not unlimited . . .
Specific legislation may limit the judiciary's power to declare conduct unfair. If the Legislature has permitted certain conduct or considered a situation and
concluded no action should lie, courts may not override that determination. When specific legislation provides a 'safe harbor,' plaintiffs may not use the general ...