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Mollicone v. Universal Handicraft, Inc.

United States District Court, C.D. California

April 17, 2017

LISA MOLLICONE
v.
UNIVERSAL HANDICRAFT, INC. ET AL.

          Present: The Honorable CHRISTINA A. SNYDER

          CIVIL MINUTES - GENERAL

         Proceedings: DEFENDANT UNIVERSAL HANDICRAFT, INC.'S MOTION TO CHANGE VENUE (Dkt. 50, filed March 20, 2017)

         I. INTRODUCTION

         On September 29, 2016, plaintiff Lisa Mollicone filed a class action complaint against defendants Shay Sabag Segev and Universal Handicraft, Inc. (“UHI”), doing business as Deep Sea Cosmetics and Adore Organic Innovations. Dkt. 1. The gravamen of plaintiff's claims is that defendants made false and misleading representations regarding the anti-aging properties of cosmetic products that defendants manufacture, market, and sell.

         On December 19, 2016, plaintiff filed a first amended complaint. Dkt. 25 (“FAC”). As a result, on December 20, 2016, the Court denied as moot defendants' pending motions to dismiss the original complaint. Dkt. 26.

         On January 30, 2017, the Court granted in part and denied in part defendants' motions to dismiss plaintiff's FAC. Dkt. 40. Plaintiff filed a second amended complaint on February 21, 2017. Dkt. 42 (“SAC”).

         In the operative SAC, plaintiff asserts thirteen claims on behalf of herself and all others similarly situated: (1) intentional fraud and deceit, pursuant to California Civil Code §§ 1709-1711; (2) fraud by omission and suppression of facts, pursuant to California Civil Code § 1710(3); (3) negligent misrepresentation; (4) rescission of purchase contracts based on fraudulent inducement; (5) rescission of purchase contracts based on illegality and violations of public policy; (6) quasi-contract/unjust enrichment; (7) breach of express warranties; (8) breach of the implied warranty of merchantability; (9) violations of the California Consumer Legal Remedies Act (“CLRA”), Cal. Civ. Code §§ 1750 et seq.; (10) violations of California's False Advertising Law (“FAL”), Cal. Civ. Code. §§ 17500 et seq.; (11) violations of California's Unfair Competition Law (“UCL”), Cal. Bus. & Prof. Code §§ 17200 et seq.; (12) violations of New Jersey's Consumer Fraud Act (“CFA”), N.J.S.A. § 56:8-1 et seq.; and (13) violations of New Jersey's Truth-in-Consumer Contract Warranty and Notice Act (“TCCWNA”), N.J. Stat. Ann. §§ 56:12-14-56:12-18.

         On March 20, 2017, UHI filed a motion to transfer venue pursuant to 28 U.S.C. § 1404(a). Dkt. 50 (“Motion”). UHI seeks to transfer this action to the Southern District of Florida, where UHI is located, or, in the alternative, to the District of New Jersey, where plaintiff resides. Id. Plaintiff filed her opposition on March 27, 2017, dkt. 51 (“Opp'n”), and UHI filed its reply on April 3, 2017, dkt. 53 (“Reply”).

         Having carefully considered the parties' arguments, the Court finds and concludes as follows.

         II. BACKGROUND

         Plaintiff alleges the following facts.

         UHI is organized under Florida laws and maintains its principal place of business in Miami Beach, Florida. SAC ¶ 21. Segev is believed to be residing in Florida. Id. ¶ 22.

         UHI is a corporation that sells, distributes, manufactures, and advertises a line of “super premium cosmetics” under the Adore Organic Innovation product line. Id. ¶¶ 5, 21. Plaintiff contends that Segev is the president of UHI and that he “personally participated in, directed, and controlled the sales, distribution, manufacturing, and advertising of the Adore Products.” Id. ¶ 22. Plaintiff avers that Segev was an agent of UHI and that UHI had actual or constructive knowledge of Segev's conduct. Id. ¶ 98. Segev allegedly abused UHI's organizational form to accomplish the fraudulent promotion of UHI's cosmetic products. Id. ¶ 101. Plaintiff alleges that Segev is liable for UHI's conduct because, inter alia: (a) Segev dominates and controls UHI to the extent that the independence of UHI is a sham; (b) UHI is undercapitalized; and (c) Segev intermingles the assets of UHI and several other companies that share the same address in Miami Beach, Florida. Id. ¶¶ 100-25. Plaintiff also avers that Segev actually participated in the unlawful conduct plaintiff alleges in her complaint, and is therefore personally liable for all such conduct. Id. ¶ 130.

         Defendants advertise their Adore Organic Innovation line as containing a “proven Plant Stem Cell formula . . . to enable your skin's own stem cells to renew and slow the aging process.” Id. ¶ 5. The Adore Organic Innovation line includes CELLMAX Products-including a cream, serum, and mask, sold together as a CELLMAX Kit-that are touted as “proven to restore youthful appearance[.]” Id. ¶¶ 6-7. Defendants manufacture, market, and distribute at least 22 products that are substantially similar to the CELLMAX products because they contain the same types of “plant stem cells” and use almost identical labeling. Id. ¶ 8. Plaintiff refers to the CELLMAX products and substantially similar products as the “Adore Products.” Id.

         According to plaintiffs, defendants engaged in a “uniform marketing and advertising campaign designed to convince consumers that its Adore Organic Innovation Products are scientifically and clinically proven to provide consumers with dramatic anti-aging results.” Id. ¶ 28. Plaintiff alleges that defendants' representations regarding the anti-aging effects of their products are false and misleading because the products neither “halt the aging process” nor are they “proven to store youthful appearance.” Id. ¶ 11. Citing several statements from the Adore website, YouTube videos, and social media posts, plaintiffs assert that defendants' anti-aging claims are purportedly backed by scientific research. Id. ¶¶ 31-38. In addition, defendants provide a brochure, entitled “Adore Organic Innovation Science - Stem Cell Technology, ” in which defendants assert, inter alia, that “researchers” have concluded that “plant stem cells [could] be used to protect human skin stem cells[, ]” and that “[e]xtensive studies have shown that Plant Stem Cell formula [sic] increases the vitality and efficiency of all essential skin cells[.]” Id. ¶¶ 39-43.

         The plant stem cells that defendants use in their products are manufactured by Mibelle Biochemistry (“Mibelle”). Id. ¶ 11. The plant stem cells are a proprietary ingredient called “PhytoCellTecTM”. Id. According to Mibelle's research director, the anti-aging benefit of the plant stem cells “could not be confirmed at clinical trial.” Id. ΒΆ 13. Plaintiff also cites statements from academics, doctors, and industry ...


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