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Golden v. Home Depot U.S.A. Inc.

United States District Court, E.D. California

May 31, 2018

CLYDE GOLDEN, individually and on behalf of all others similarly situated, Plaintiff,
v.
HOME DEPOT, U.S.A, INC., Defendant.

          MEMORANDUM DECISION AND ORDER GRANTING IN PART DEFENDANT'S MOTION TO DISMISS (ECF No. 7)

          Lawrence J. O'Neill UNITED STATES CHIEF DISTRICT JUDGE.

         I. PRELIMINARY STATEMENT TO PARTIES AND COUNSEL

         Judges in the Eastern District of California carry the heaviest caseloads in the nation, and this Court is unable to devote inordinate time and resources to individual cases and matters. Given the shortage of district judges and staff, this Court addresses only the arguments, evidence, and matters necessary to reach the decision in this order. The parties and counsel are encouraged to contact the offices of United States Senators Feinstein and Harris to address this Court's inability to accommodate the parties and this action. The parties are required to reconsider consent to conduct all further proceedings before a Magistrate Judge, whose schedules are far more realistic and accommodating to parties than that of U.S. District Judge Lawrence J. O'Neill, who must prioritize criminal and older civil cases.

         Civil trials set before Judge O'Neill trail until he becomes available and are subject to suspension mid-trial to accommodate criminal matters. Civil trials are no longer reset to a later date if Judge O'Neill is unavailable on the original date set for trial. Moreover, this Court's Fresno Division randomly and without advance notice reassigns civil actions to U.S. District Judges throughout the nation to serve as visiting judges. In the absence of Magistrate Judge consent, this action is subject to reassignment to a U.S. District Judge from inside or outside the Eastern District of California.

         II. INTRODUCTION

         This matter concerns the motion filed by Defendant Home Depot U.S.A., Inc. (“Home Depot” or Defendant) to dismiss or to strike portions of Plaintiff Clyde Golden's Complaint in this case. ECF No. 7. Plaintiff's Complaint, a putative class action, alleges various causes of action based in fraudulent and unfair business practices in connection with Defendant's sale of lumber as mahogany. For the following reasons, Defendant's motion to dismiss is GRANTED IN PART and DENIED IN PART. Defendant's motion to strike is DENIED.

         III. PROCEDURAL HISTORY

         Plaintiff initially filed a complaint relating to Defendant's sale of mahogany products on August 30, 2017, but voluntarily dismissed that action on January 3, 2018. See Golden v. Home Depot, U.S.A., Inc., No. 1:17-cv-01174-LJO-JLT, ECF Nos. 1, 17. That case closed on January 5, 2018. Id. at ECF No. 18. Plaintiff filed the operative Complaint as a new case on January 5, 2018. ECF No. 1. On March 6, 2018, Defendant moved to dismiss the Complaint. ECF No. 7. Plaintiff filed an opposition on March 21, 2018. ECF No. 9. Defendant filed its reply on March 28, 2018. Pursuant to Local Rule 230(g), the Court determined the matter to be suitable for decision on the papers, and took it under submission on March 29, 2018. ECF No. 13.

         IV. JUDICIAL NOTICE

         Defendant cites in its motion to dismiss a number of documents and websites Defendant asks the Court to consider. ECF No. 7-1 at 16-17, 21-22. Plaintiff opposes the Court's consideration of these materials as outside the pleadings and not properly subject to judicial notice. ECF No. 9 at 6-7. Plaintiff asks that judicial notice not be taken, and that Defendant's references to material outside the pleadings be struck. Id. In the alternative, Plaintiff argues that Defendant's request converts the motion to dismiss into a motion for summary judgment, to which Plaintiff must be given an opportunity to respond. Id. at 9-12.

         A court may “take judicial notice of matters of public record outside the pleadings” on a motion to dismiss. MGIC Indem. Corp. v. Weisman, 803 F.2d 500, 504 (9th Cir. 1986). A judicially noticed fact must be “not subject to reasonable dispute because it: (1) is generally known within the trial court's territorial jurisdiction; or (2) can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned.” Fed.R.Evid. 201(b). If a court does elect to take judicial notice of matters outside the pleadings, the parties are entitled to receive notice of the court's intention and an opportunity to be “heard on the propriety of taking judicial notice and the nature of the fact to be noticed.” Fed.R.Evid. 201(e).

         The Court does not believe that the facts advanced by Defendant regarding mahogany, including its dictionary definition, are generally known within the Eastern District of California, and the various sources offered by Defendant are not of the type “whose accuracy cannot reasonably be questioned.” The Wood Database appears to be a privately maintained source for woodworking information. About the Project, The Wood Database, http://www.wood-database.com/about (last visited May 25, 2018). Woodworkers Source is a website primarily selling mahogany and other hardwoods and also hosting FAQs, a blog, and other informational resources for lumber buyers. Woodworkers Source, http://www.woodworkerssource.com (last visited May 25, 2018).[1] Defendant also references a collection of other websites selling Santos mahogany and Red mahogany. See ECF No. 7-1 at 22. None of these are sources whose accuracy cannot be questioned. See Experian Info. Solutions, Inc. v. Lifelock, Inc., 633 F.Supp.2d 1104, 1107 (C.D. Cal. 2009) (the webpage of the Governor of Connecticut was not judicially noticeable); Ruiz v. Gap, Inc., 540 F.Supp.2d 1121, 1124 (N.D. Cal. 2008) (webpage containing a study on identity theft and a webpage containing a list of reported identity theft breaches were not judicially noticeable). Moreover, Defendant asks the Court to take judicial notice of these sources not for the fact that they exist, but rather as to the truth of the facts asserted therein and as they pertain to an apparent dispute of fact. The meaning of a disputed term in trade or common usage is precisely the factual question that is at the heart of this matter, that is, whether Defendant's lumber labeling practices were false or misleading to consumers.

         Defendant cites a number of cases for the proposition that courts may look to dictionaries, trade and industry usage, and law to determine the meaning of words. ECF No. 7-1 at 20-21. In its reply, Defendant appears to assert that those same cases support his argument that the Court should consider such sources in ruling on the instant motion to dismiss. ECF No. 11 at 3. The cases Defendant cites are, however, distinguishable from this one.

         In Davidson v. Kimberly-Clark Corp., 873 F.3d 1103 (9th Cir. 2017), amended and superseded on denial of reh'g en banc, __ F.3d___, 2018 WL 2169784 (9th Cir. May 9, 2018), the Ninth Circuit held that a complaint properly alleged that the defendant had falsely represented their product to be flushable, doing so in part by including in the complaint dictionary definitions and the defendant's statements. Id. at 1110-11. Here, Defendant asks the Court to take notice of dictionary definitions which did not appear in the Complaint. At the motion to dismiss stage, the pleadings are evaluated as to whether sufficient facts, taken as true, have been pled to state a claim. A Rule 12(b)(6) motion is not the time or place for a defendant to rebut factual allegations with contradictory evidence.

         In Wagner v. Circle W Mastiffs, Nos. 2:08-CV-00431, 2:09-CV-00172, 2014 WL 1308713 (S.D. Ohio Mar. 31, 2014), the court considered evidence regarding American Mastiff dog breed standards in granting a motion for summary judgment. Id. at *20-21. Evidence provided by both parties may properly be considered at summary judgment to determine whether there is a genuine issue of material fact. The same is not true at the motion to dismiss stage.

         In Delacruz v. Cytosport, Inc., No. C 11-3532 CW, 2012 WL 2563857 (N.D. Cal. June 28, 2012), the court referenced federal regulatory standards and definitions to which the plaintiff had made reference in the complaint. Id. at *3. Plaintiff here has not referred in his complaint to any of the sources Defendant wishes the Court to consider, apart from Woodworker's Source. Defendant cites to a different, unrelated section of that website than Plaintiff, namely a listing advertising a “Genuine Mahogany” dowel rod at a price of $22.25. ECF No. 7-1 at 17. Plaintiff, on the other hand, cited Woodworker's Source as a reference to his allegation that “[g]enuine Mahogany ranks among the finest cabinetry in the world as its working characteristics are outstanding for all woodworking processes, including cutting, shaping, tuning, and sanding.” ECF No. 1 at ¶ 32. Plaintiff's citation to what appears to be an informational blog maintained on a website does not open the door to Defendant's use of unrelated portions of that same website in presenting a motion to dismiss.

         Finally, California Lettuce Growers, Inc. v. Union Sugar Co., 45 Cal. 2d 474 (1955), concerned the application of evidence regarding past practice between the parties to determine that an unspecified purchase price did not render a contract void. Id. at 482-83. The evidence of past practice was applied by the California Lettuce Growers court to reject a defense based on lack of mutuality and the use of the evidence was based on a specific allegation in the defendant's counterclaim. Id. at 482. Here, the sources Defendant asks the Court to consider are entirely outside of the pleadings and no allegation puts those sources at issue, besides the previously discussed sections of Woodworker's Source.

         Defendant also argues that its failure to request by motion that the Court take judicial notice of the external sources is not fatal, since a court may sua sponte take judicial notice. ECF No. 11 at 3. The Court declines to take sua sponte notice of the sources proffered by Defendant. As the Court has explained, the sources cited by Defendant in its motion are not of the type whose provenance provides assurances that the accuracy of the facts therein cannot reasonably be questioned. Additionally, the facts Defendant references are not generally known within the Eastern District of California. Finally, the factual questions for which Defendant cites the aforementioned sources are precisely those which are disputed in this case. Conflicts of evidence should be determined at trial, not on a motion to dismiss. For the foregoing reasons, the Court concludes that it is inappropriate to take notice of the documents cited by Defendant.[2]

         V. FACTUAL BACKGROUND

         Plaintiff's Complaint alleges the following facts, which are accepted as true for the purposes of the instant motion to dismiss. Cousins v. Lockyer, 568 F.3d 1063, 1067 (9th Cir. 2009). Authentic mahogany is prized for its beauty, durability, color, and ease of use in woodworking. Id. at ¶ 30. Authentic mahogany has a reddish-brown color, darkens over time, and displays a reddish sheen when polished. Id. at ¶ 31. It is used in paneling, furniture, boats, musical instruments, and cabinetry. Id. at ¶ 31-32. Authentic mahogany is the wood of several species of trees in the Meliaceae family. Id. at ¶ 33. Varieties of authentic mahogany include the type alternately known as Dominican, Cuban, West Indian, or small-leaf mahogany (Swietenia mahagoni), Honduran, or large-leaf, mahogany (Swietenia macrophylla), and Pacific Coast mahogany (Swietenia humilis). Id. at ¶ 34

         Home Depot operates more than 2200 stores, and also conducts business through a website, HomeDepot.com. Id. at ¶¶ 21-22. In both the brick and mortar stores and the online portal, Home Depot sells lumber as mahogany. Id. at ¶¶ 28-29. Some of the wood varieties Home Depot advertises, markets, and sells as mahogany are species of eucalyptus from the Myrtaceae family. Id. at ¶ 35. Home Depot markets as mahogany the wood of Eucalyptus rubusta trees, which is commonly known as “Swamp mahogany.” Id. at ¶ 36. Swamp mahogany is denser and more difficult to work with than authentic mahogany. Id. at ¶ 38. Home Depot also markets Ecualyptus resinifera wood as “Red mahogany” and wood of the Myroxylon balsamum, a tree in the Fabaceae family, as “Santos mahogany.” Id. at ¶¶ 40, 42. Santos mahogany is heavier than authentic mahogany and more difficult to work with. Id. at ¶ 43.

         Home Depot discloses the species of some types of wood that it sells online, but does not disclose the species of its mahogany products. Id. at ¶¶ 45, 49. Knowing the species is important in determining the quality of the wood, and influences factors including workability, durability, and resistance to rot. Id. at ¶ 48. Home Depot advertises that the mahogany board it sells online is “premium” and “finest grade.” Id. at ¶¶ 47, 52. The same representations regarding mahogany products are made in brick and mortar stores. Id. at ¶ 53. Because the species of the wood marketed as mahogany by Home Depot is not disclosed, consumers are led to believe that they are purchasing authentic mahogany when they are instead buying a less desirable type of wood. Id. at ¶ 50. Home Depot deliberately refuses to answer questions about the species of mahogany products posed through HomeDepot.com's “Questions & Answers” tab. Id. at ¶ 51.

         On July 26, 2017, Plaintiff purchased several strips of wood from a Home Depot location on Ming Road in Bakersfield, California. Id. at ¶ 59. The wood was sold as mahogany board, and Plaintiff paid $3.52 per strip, plus a state lumber fee and tax. Id. at 15 fig. 13. Unnamed employees of Home Depot told Plaintiff that he was purchasing “authentic, genuine mahogany.” Id. at ¶ 60. Plaintiff later tested the wood strips and learned that they were made of Swamp mahogany. Id. at ¶¶ 61-62. Swamp mahogany is less valuable than “genuine, authentic mahogany.” Id. at ¶ 63. Plaintiff would not have purchased the wood, or would only have purchased it at a lower price, had he known that it was Swamp mahogany. Id. at ¶ 71. A consumer has no way of knowing that the mahogany marketed by Home Depot is actually Swamp mahogany. Id. at ¶ 65.

         Plaintiff alleges the following causes of action: (1) declaratory judgment under 28 U.S.C. § 2201; (2) breach of the implied covenant of good faith and fair dealing; (3) violation of the California Consumer Legal Remedies Act (“CLRA”), Cal. Civ. Code § 1750; (4) violations of California's Unfair Competition Laws (“UCL”) prohibiting unfair, (5) unlawful, and (6) fraudulent business practices, Cal Bus. & Prof. Code § 17200 et seq.; (7) violation of California's false advertising laws (“FAL”), Cal. Bus. & Prof. Code § 17500 et seq.; (8) negligent misrepresentation; (9) unjust enrichment; and (10) breach of express warranty. ECF No. 1 at 1.

         VI. STANDARD OF DECISION

         A. Rule 12(b)(1)

         A motion to dismiss under Federal Rule of Civil Procedure (“Rule”) 12(b)(1) attacks the subject-matter jurisdiction of the district court. Chandler v. State Farm Mut. Auto. Ins. Co., 598 F.3d 1115, 1121-22 (9th Cir. 2010). The party asserting that the district court has jurisdiction “bears the burden of proving its existence. Id. at 1122. “Rule 12(b)(1) attacks on jurisdiction can be either facial, confining the inquiry to allegations in the complaint, or factual, permitting the court to look beyond the complaint.” Savage v. Glendale Union High Sch., 343 F.3d 1036, 1039 n. 2 (9th Cir. 2003) (citing White v. Lee, 227 F.3d 1214, 1242 (9th Cir. 2000). On a motion to dismiss under Rule 12(b)(1), “a district court must accept as true all material allegations in the complaint, and must construe the complaint in the nonmovant's favor.” Chandler, 598 F.3d at 1121.

         B. Rule 12(b)(6)

         A motion to dismiss under Rule 12(b)(6) challenges the legal sufficiency of the opposing party's pleadings. Dismissal of an action under Rule 12(b)(6) is proper where there is either a “lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory.” Balistreri v. Pacifica Police Dept., 901 F.2d 696, 699 (9th Cir. 1990). When considering a motion to dismiss for failure to state a claim under Rule 12(b)(6), all allegations of material fact must be accepted as true and construed in the light most favorable to the pleading party. Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337-38 (9th Cir. 1996). The inquiry is generally limited to the allegations made in the complaint. Lazy Y Ranch LTD v. Behrens, 546 F.3d 580, 588 (9th Cir. 2008).

         To overcome a Rule 12(b)(6) challenge, a complaint must allege “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim is plausible on its face when “the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). A plausible claim is one which provides more than “a sheer possibility that a defendant has acted unlawfully.” Id. A claim which is possible, but which is not supported by enough facts to “nudge [it] across the line from conceivable to plausible . . . must be dismissed.” Twombly, 550 U.S. at 570.

         A complaint facing a Rule 12(b)(6) challenge “does not need detailed factual allegations [but] a plaintiff's obligation to provide the ‘grounds' of his ‘entitlement to relief' requires more than labels and conclusions, and a formulaic recitation of the element of a cause of action will not do.” Twombly, 550 U.S. 544, 555 (internal citations omitted). In essence, “a complaint . . . must contain either direct or inferential allegations respecting all the material elements necessary to sustain recovery under some viable legal theory.” Id. at 562. To the extent that any defect in the pleadings can be cured by the allegation of additional facts, the plaintiff should be afforded leave to ...


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