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Nutrition Distribution, LLC v. New Health Ventures, LLC

United States District Court, S.D. California

June 13, 2017

NUTRITION DISTRIBUTION, LLC, Plaintiff,
v.
NEW HEALTH VENTURES, LLC, Defendant.

          ORDER DENYING PLAINTIFF'S MOTION FOR LEAVE TO AMEND COMPLAINT, GRANTING DEFENDANT'S MOTION TO DISMISS AND DENYING DEFENDANT'S MOTION TO STRIKE

          Barry Ted Moskowitz, Chief Judge United States District Court.

         Before the Court are Defendant New Health Ventures, LLC's motion to dismiss and motion to strike, as well as Plaintiff Nutrition Distribution, LLC's motion for leave to file an amended complaint. (ECF Nos. 5-6, 13.) For the reasons discussed below, Plaintiff's motion for leave to amend is denied, Defendant's motion to dismiss is granted and its motion to strike certain portions of the Complaint is denied as moot.

         I. BACKGROUND

         On September 15, 2016, Plaintiff filed a Complaint against Defendant alleging a single cause of action of false advertisement in violation of Section 43(a)(1)(B) of the Lanham Act. (ECF No. 1 (“Compl.”).) Plaintiff alleges that Defendant falsely advertised and marketed products containing various “Selective Androgen Receptor Modulators (“SARMS”)” such as “Ostarine.” (Compl. ¶ 27.) On October 26, 2016, Defendant filed a motion to dismiss for failure to state a claim and a motion to strike Plaintiff's request for injunctive relief. In response, on December 12, 2016, Plaintiff filed a proposed First Amended Complaint (ECF No. 8 (“FAC”)) asserting three causes of action including a violation of the Lanham Act, a violation of the Civil Racketeer Influenced and Corrupt Organizations Act (“RICO”), and a violation of the California Business and Professions Code Section 17200. Unlike Plaintiff's original Complaint, its proposed FAC is based on Defendant's sale of products containing Dimethazine (“DMZ”).

         Defendant subsequently filed a request for entry of dismissal with prejudice, arguing that because Plaintiff did not oppose the motion to dismiss and instead filed an untimely FAC without leave from the Court, the case should be dismissed with prejudice. (ECF No. 9.) On January 3, 2017, Plaintiff filed a motion for leave to amend its Complaint.

         II. STANDARD

         A. Leave to Amend

         Pursuant to Federal Rule of Civil Procedure 15(a)(2), “a party may amend its pleading only with the opposing party's written consent or the court's leave.” Fed.R.Civ.P. 15(a)(2). “The court should freely give leave when justice so requires.” Id. “Liberality in granting a plaintiff leave to amend is subject to the qualification that the amendment not cause undue prejudice to the defendant, is not sought in bad faith, and is not futile.” Bowles v. Reade, 198 F.3d 752, 757 (9th Cir. 1999). Additionally, a court may consider the factor of undue delay. Id. at 757-58.

         These factors are not given equal weight. Bonin v. Calderon, 59 F.3d 815, 845 (9th Cir. 1995). “Futility of amendment can, by itself, justify the denial of a motion for leave to amend.” Id. The test for futility is the same one used when considering the sufficiency of a pleading under Rule 12(b)(6). Miller v. Rykoff-Sexton, Inc., 845 F.2d 209, 214 (9th Cir. 1988).

         B. Rule 12(b)(6)

         A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) should be granted only where a plaintiff's complaint lacks a "cognizable legal theory" or sufficient facts to support a legal claim. Balistreri v. Pacifica Police Dept., 901 F.2d 696, 699 (9th Cir. 1988). When reviewing a motion to dismiss, the allegations of material fact in plaintiff's complaint are taken as true and construed in the light most favorable to the plaintiff. Parks Sch. of Bus., Inc. v. Symington, 51 F.3d 1480, 1484 (9th Cir. 1995). Although detailed factual allegations are not required, factual allegations “must be enough to raise a right to relief above the speculative level.” Bell Atlantic v. Twombly, 550 U.S. 544, 555 (2007). “A plaintiff's obligation to prove the ‘grounds' of his ‘entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Id. “[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged - but it has not show[n] that the pleader is entitled to relief.” Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009) (internal quotation marks omitted). Only a complaint that states a plausible claim for relief will survive a motion to dismiss. Id.

         C. Rule 9(b)

         Under Federal Rule of Civil Procedure 9(b), a plaintiff “must state with particularity the circumstances constituting fraud or mistake.” Fed. R. Civ. Proc. 9(b). A plaintiff alleging fraud “must state the time, place, and specific content of the false representations as well as the identities of the parties to the misrepresentations.” Alan Neuman Prods., Inc. v. Albright, 862 F.2d 1388, 1392-93 (9th Cir. 1988) (quoting Schreiber Distrib. Co. v. Serv-Well Furniture Co., 806 F.2d 1393, 1401 (9th Cir. 1986)).

         II. DISCUSSION

         A. Plaintiff's Motion to Amend

         Defendant opposes Plaintiff's motion for leave to file its FAC on grounds of bad faith, undue prejudice, and futility. First, Defendant argues that Plaintiff acted in bad faith because it completely abandoned its original claim and evaded an unfavorable ruling and possible attorney's fees. Second, Defendant argues that it would be prejudiced if an amendment is permitted because the original claims will never be adjudicated and it would be deprived of seeking its attorneys' fees. Finally, Defendant contends that the Court should deny Plaintiff leave to amend because the proposed amendments are futile.

         At this juncture, no ENE has taken place and discovery has not yet commenced. Though the motion is procedurally defective, given the early stage of this litigation, the Court does not find that Plaintiff acted in bad faith, caused undue delay, or that granting Plaintiff leave to file an FAC would prejudice Defendants. Therefore, leave to amend turns on whether the proposed amendments would be futile.

         1. Lanham Act Claim

         Defendant argues that Plaintiff's Lanham Act claim is futile because it is barred under the primary jurisdiction doctrine ...


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