United States District Court, S.D. California
ORDER (1) DENYING IN PART AND GRANTING IN PART
DEFENDANTS' MOTION FOR SUMMARY JUDGMENT AS TO
PLAINTIFFS' FIRST CAUSE OF ACTION (2) DENYING
PLAINTIFFS' MOTION TO EXCLUDE TESTIMONY OF JOSHUA PLANT
(3) DENYING PLAINTIFFS' MOTION FOR SUMMARY JUDGMENT AS TO
SUBPART G OF PLAINTIFFS' FIRST CAUSE OF ACTION [ECF NOS.
HONORABLE BARRY TED MOSKOWITZ UNITED STATES DISTRICT JUDGE
the Court is a motion for summary judgment by Wakaya
Perfection, LLC, et al. (“Defendants” or
“the Wakaya parties” or “Wakaya”) as
to the first cause of action in the Fourth Amended Complaint
(ECF No. 269 (“FAC”)) for false advertising under
the Lanham Act. (ECF No. 300 (“Defs.' MSJ
I”).) Youngevity International, et al.
(“Plaintiffs” or “the Youngevity
parties” or “Youngevity”) move for summary
judgment as to subpart G of the first cause of action
(“FAC I.G”) for false advertising under the
Lanham Act with respect to the curcumin content in Wakaya
turmeric and also move to exclude the testimony of
Defendants' rebuttal expert, Dr. Joshua Plant. (ECF No.
559 (“Pls.' MSJ I.G & Mot. Excl.”).) For
the reasons discussed below, the Court denies in part and
grants in part Defendants' motion for summary judgment,
denies Plaintiffs' motion to exclude the testimony of Dr.
Plant, and denies Plaintiffs' motion for summary
judgment is appropriate under Rule 56 of the Federal Rules of
Civil Procedure if the moving party demonstrates the absence
of a genuine issue of material fact and entitlement to
judgment as a matter of law. Celotex Corp. v.
Catrett, 477 U.S. 317, 322 (1986). A fact is material
when, under the governing substantive law, it could affect
the outcome of the case. Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 248 (1986); Freeman v.
Arpaio, 125 F.3d 732, 735 (9th Cir. 1997). A dispute as
to a material fact is genuine if there is sufficient evidence
for a reasonable jury to return a verdict for the nonmoving
party. Anderson, 477 U.S. at 323.
cross motions for summary judgment, a court
“evaluate[s] each motion separately, giving the
nonmoving party in each instance the benefit of all
reasonable inferences.” ACLU v. City of Las
Vegas, 466 F.3d 784, 790-91 (9th Cir. 2006) (internal
citations omitted). The burdens faced by the opposing parties
vary with the burden of proof they will face at trial. When
the moving party bears the burden of proof at trial,
“‘his showing must be sufficient for the court to
hold that no reasonable trier of fact could find other than
for the moving party.'” Indep. Cellular Tel.,
Inc. v. Daniels & Assocs., 863 F.Supp. 1009, 1113
(N.D. Cal. 1994) (quoting Schwarzer, Summary Judgment
Under the Federal Rules: Defining Genuine Issues of Material
Fact, 99 F.R.D. 465, 487-488 (1984)). By contrast, when
the moving party does not bear the burden of proof at trial,
“the [moving party] need only point to the
insufficiency of the [nonmoving party's] evidence to
shift the burden to the [nonmoving party] to raise genuine
issues of fact as to each claim by substantial evidence.
Id. If the nonmoving party then fails to raise a
genuine issue of fact, the court should grant summary
judgment in favor of the moving party. Id.
court must view all inferences drawn from the underlying
facts in the light most favorable to the nonmoving party.
Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,
475 U.S. 574, 587 (1986). “Credibility determinations,
the weighing of evidence, and the drawing of legitimate
inferences from the facts are jury functions, not those of a
judge, [when] he [or she] is ruling on a motion for summary
judgment.” Anderson, 477 U.S. at 255.
first cause of action, Youngevity alleges false advertising
claims under the Lanham Act in eight subparts, A through H.
(See ECF No. 269 (“Fourth Amended Complaint” or
“FAC”), 9-40.) Wakaya moves for summary judgment
as to the entirety of Youngevity's first cause of action.
(Defs.' MSJ I.) Youngevity moves for summary judgment as
to subpart G and also moves to exclude the testimony of
Defendants' rebuttal expert, Dr. Joshua Plant. (Pls.'
MSJ I.G & Mot. Excl.)
Liability Under § 43(a) of the Lanham Act
§ 43(a) of the Lanham Act, codified as 15 U.S.C. §
1125(a), false advertising is a distinct basis for liability.
See Lexmark Int'l, Inc., v. Static Control
Components, Inc., 572 U.S. 118, 122 (2014). The Act
creates a cause of action imposing civil liability on:
[a]ny person who, on or in connection with any goods or
services, or any container for goods, uses in commerce any
word, term, name, symbol, or device, or any combination
thereof, or any false designation of origin, false or
misleading description of fact, or false or misleading
representation of fact, which . . . in commercial advertising
or promotion, misrepresents the nature, characteristics,
qualities, or geographic origin of his or her or another
person's goods, services, or commercial activities.
POM Wonderful LLC v. Coca-Cola Co., 573 U.S. 102,
107-08 (2014) (quoting 15 U.S.C. § 1125(a)(1)(B)).
Ninth Circuit, there are five elements to a false advertising
(1) a false statement of fact by the defendant in a
commercial advertisement about its own or another's
(2) the statement actually deceived or has the tendency to
deceive a substantial segment of its audience;
(3) the deception is material, in that it is likely to
influence the purchasing decision;
(4) the defendant caused its false statement to enter
interstate commerce; and
(5) the plaintiff has been or is likely to be injured as a
result of the false statement, either by direct diversion of
sales from itself to defendant or by a lessening of the
goodwill associated with its products.
Skydive Arizona, Inc. v. Quattrocchi, 673 F.3d 1105,
1110 (9th Cir. 2012) (citing 15 U.S.C. § 1125(a)(1)(B));
Southland Sod Farms v. Stover Seed Co., 108 F.3d
1134, 1139 (9th Cir. 1997)). Defendants claim that Plaintiffs
cannot establish a genuine dispute of material fact as to
elements one, two, three, and five, but concede that there is
no dispute with respect to the fourth element.
constitute commercial advertising or a promotion, a statement
of fact must be:
(1) commercial speech; (2) by the defendant who is in
commercial competition with the plaintiff; (3) for the
purpose of influencing consumers to buy defendant's goods
or services. While the representations need not be made in a
“classic advertising campaign, ” but may consist
instead of more informal types of “promotion, ”
the representations (4) must be disseminated sufficiently to
the relevant purchasing public to constitute
“advertising” or “promotion” within
Newcal Indus., Inc. v. Ikon Office Solution, 513
F.3d 1038, 1054 (9th Cir. 2008) (citing Coastal Abstract
Serv., Inc., First American Title Ins. Co., 173 F.3d
725, 735 (9th Cir. 1999)).
demonstrate falsity, “a plaintiff may show that the
statement was literally false, either on its face or by
necessary implication, or that the statement was literally
true but likely to mislead or confuse consumers.”
Southland Sod Farms, 108 F.3d at 1139. Because the
evaluation of whether an advertising claim is literally false
requires analyzing the claim “in its full context,
” a claim may be “literally false by necessary
implication.” Id. (citing Castrol Inc. v.
Pennzoil Co., 987 F.2d 939, 946 (3d Cir. 1993) (holding
that a company made a literally false claim even when its
assertion of superiority over its competitors was done
implicitly)). Moreover, “[e]ven if an advertisement is
not literally false, relief is available under § 43(a)
of the Lanham Act if it can be shown that the advertisement
has misled, confused, or deceived the consuming
public.” Id. at 1140.
claim is literally false, a plaintiff need not provide
evidence on whether the claim was deceptive or material.
See Pizza Hut, Inc. v. Papa John's Int'l,
Inc., 227 F.3d 489, 497 (5th Cir. 2000) (“[W]hen
the statements of fact at issue are shown to be literally
false, the plaintiff need not introduce evidence on the issue
of the impact the statements had on consumers [because] [i]n
such a circumstance, the court will assume that the
statements actually misled consumers.”); Logan v.
Burgers Ozark Cty. Cured Hams Inc., 263 F.3d 447, 462
(5th Cir. 2001) (holding that when a plaintiff established
that defendant made literally false statements, arguments
that those statements “did not mislead  customers and
that the advertising did not affect their purchasing decision
[were] inconsequential”); American Home Prods.
Corp. v. Johnson & Johnson, 577 F.2d 160, 165 (2d
Cir. 1978) (“Deceptive advertising or merchandising
statements may be judged in various ways. If a statement is
actually false, relief can be granted on the court's own
findings without reference to the reaction of the buyer or
consumer of the product.”).
materiality in false advertising claims is “typically
proven through consumer surveys, nothing in the Lanham Act,
nor under [9th Circuit] precedents, requires a plaintiff to
use such surveys.” Skydive Arizona, Inc, 673
F.3d at 1110-11 (holding that a declaration may support a
finding of materiality).
determining damages under the Lanham Act, the court,
“‘in its discretion, ' may award
‘(1) defendant's profits, (2) any damages
sustained by the plaintiff, and (3) the costs of the
action'” for a a violation under section 43(a).
Id. at 1111-12 (quoting 15 U.S.C. § 1117(a))
(emphasis in original). The district court assesses
“any damages sustained by the plaintiff in the same
manner as in tort damages: the reasonably foreseeable harms
caused by the wrong.” Id. at 1112 (internal
quotations omitted) (citing DSPT Int'l, Inc. v.
Nahum, 624 F.3d 1213, 1222 (9th Cir. 2010)).
of the possibility that a competitor may suffer future
injury, as well as the additional rationale underlying
section 43(a)-consumer protection-a competitor need not prove
injury when suing to enjoin conduct that violates section
43(a).” Harper House, Inc. v. Thomas Nelson,
Inc., 889 F.2d 197, 210 (9th Cir. 1989). Moreover,
“an inability to show actual damages does not alone
preclude a recovery under section 1117.” Southland
Sod Farms, 108 F.3d at 1146 (internal quotations
omitted) (citing Lindy Pen Co. v. Bic Pen Corp., 982
F.2d 1400, 1411 (9th Cir. 1993)). In the Ninth Circuit,
“the preferred approach allows the district court in
its discretion to fashion relief, including monetary relief,
based on the totality of the circumstances.”
the Ninth Circuit emphasizes that § 1117 “confers
a wide scope of discretion upon the district judge in
fashioning a remedy.” Skydive Arizona, Inc,
673 F.3d at 1110-11 (internal quotations omitted) (quoting
Maier Brewing Co. v. Fleischmann Distilling Corp.,
390 F.2d 117, 121 (9th Cir. 1968)). “Section 1117
demands neither empirical quantification nor expert testimony
to support a monetary award of actual damages; many sources
can provide the requisite information upon which a reasonable
jury may calculate damages.” Id. at 1113.
Wakaya's Arguments in Support of Summary
threshold matter, before analyzing the various statements
that Youngevity alleges are actionable as false advertising
under § 43(a), the Court considers several arguments
that Defendants raise as reasons to grant its motion for
summary judgment with respect to most or all of the subparts
within Plaintiffs' first cause of action.
argue that summary judgment should be granted because
Plaintiffs have not established “either the fact or
amount of damages attributable to the conduct alleged in
Count I.” (Defs.' MSJ I, 8:10:11.) But, as stated
above, “an inability to show actual damages does not
alone preclude a recovery under section 1117 [of the Lanham
Act].” Southland Sod Farms, 108 F.3d at 1146.
In addition, to the extent that Plaintiff seeks injunctive
relief based on its first cause of action, (see FAC
77:16-79:16), granting summary judgment because Plaintiffs
have not sufficiently established damages is not appropriate.
See Harper House, Inc., 889 F.2d at 210.
Plaintiffs provide several sources of evidence upon which a
reasonable jury could calculate damages for violations under
§ 43(a) of the Lanham Act. See Skydive Arizona,
Inc, 673 F.3d at 1113. A declaration by Youngevity CEO
Steve Wallach demonstrates that Youngevity's sales
decreased during the time period in which Defendants began
allegedly engaging in false advertising. (ECF No. 376
(“Pls.' Opp'n”), 8:25-26 (citing ECF No.
340-1).) Plaintiffs' expert, Mr. Bergmark, links
Youngevity's missed revenue projections with
corresponding sales earned by former Youngevity distributors
who went to work for Wakaya. (Id. at 8:19-23 (citing
ECF No. 318-3, p. 55-57) (“I understand that at least
the primary source of Wakaya's revenues were the result
of sales generated by Defendants in this matter who had
previously worked with Youngevity.”).) Thus, the Court
determines that the issue of damages is more appropriately
reserved for a jury.
also argue that a statement made by a Wakaya distributor
(also known as “Wakaya Ambassador”) may not be a
basis for holding Wakaya liable under § 43(a). “It
is well established that traditional vicarious liability
rules ordinarily make principals or employers vicariously
liable for acts of their agents or employees in the scope of
their authority or employment.” Operation Tech.,
Inc. v. Cyme Int'l T & D Inc., 2016 WL 6246806,
at *4 (C.D. Cal. Mar. 31, 2016) (citing Burlington
Indus., Inc. v. Ellerth, 524 U.S. 742, 756 (1998)
(quotation omitted). The question for the Court to resolve is
whether there is sufficient evidence for a jury to find that
the Wakaya Ambassadors are agents of Wakaya for purposes of
Lanham Act liability. See Id. The Court concludes
that there is.
“[w]hether or not a principal holds out the purported
agent as an agent by calling them such does not determine the
scope of the relationship.” Id. (citing
Restatement (Third) of Agency § 1.02 (2006)). Thus, the
fact that Wakaya Ambassadors are classified as independent
contractors within Wakaya Policies and Procedures is not
sufficient to establish the absence of a genuine issue of
material fact as to whether the Ambassadors are agents of
Wakaya. (See Defs.' MSJ I, 2:19-3:1.)
Defendants only argue that the Wakaya Ambassadors do not
speak on behalf of Wakaya or any other individual. However,
Defendants do not challenge that the Ambassadors engaged in
the allegedly false advertising for the purpose of attracting
distributors and increasing sales. The Wakaya Ambassadors who
relied on the allegedly false advertising to carry out their
objective of increasing the number of Wakaya distributors
were acting squarely within their roles as representatives of
Wakaya. Moreover, Plaintiffs assert that Wakaya exercises
control over the Ambassadors by reserving the right to
terminate their accounts for unapproved conduct. (See
Pls.' Opp'n, 10:2-4 (citing ECF No. 340-2, p.
42-43).) Thus, when construing the facts in the light most
favorable to Plaintiffs, the Court cannot say that there is
no dispute of material fact as to whether the Wakaya
Ambassadors who made the alleged false claims were acting as
agents of Wakaya within the scope of their authority granted
Remedies Under § 43(a) Are Available to a Private
argues that Youngevity is attempting to “use the Lanham
Act to create a private right of action” under federal
administrative regulations. (Defs.' MSJ I, § III.)
However, Defendants fail to establish that any federal
statute or regulation would bar Plaintiffs' false
advertising claims. The U.S. Supreme Court has held that in
particular, the Food, Drug, and Cosmetic Act (FDCA) does not
preclude a private party from bringing a Lanham Act claim
challenging advertisements of products that are also
regulated by the FDCA. See generally POM
Wonderful LLC v. Coca-Cola Co., 573 U.S. 102 (2014). In
POM Wonderful, the Supreme Court explained:
When two statutes complement each other, it would show
disregard for the congressional design to hold that Congress
nonetheless intended one federal statute to preclude the
operation of the other” and that “[a]lthough both
[the Lanham Act and the FDCA] touch on food and beverage
labeling, the Lanham Act protects commercial interests
against unfair competition while the FDCA protects public
health and safety.
Id. at 115. Thus, even if there is overlap in the
claims that Plaintiffs assert in the first cause of action
and any hypothetical FDCA violations committed by Defendants,
Plaintiff may nonetheless proceed in protecting its
commercial interests under the Lanham Act.
assert that Plaintiff fails to prove that claims made by
Defendants are false or misleading, and at most, provides
evidence that claims “lack substantiation” which
“coopt[s] . . . the standard adopted by the Federal
Trade Commission in [an attempt] to shoehorn a private right
of action under the FTC and FDA Acts into a Lanham Act
claim.” (Defs.' MSJ I, 3:25-27.) If Plaintiff is
unable to establish a genuine issue of material fact as to
whether Defendants made false or misleading claims, then the
Court would agree that summary judgment would be appropriate,
but only because ...