Birch et al v. Family First Life, LLC et al, No. 3:2022cv00815 - Document 54 (S.D. Cal. 2023)
Court Description: ORDER Granting 47 Motion to Dismiss Third Amended Complaint. Signed by Judge Michael M. Anello on 12/14/23. (aas)
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Birch et al v. Family First Life, LLC et al Doc. 54 1 2 3 4 5 6 7 8 9 UNITED STATES DISTRICT COURT 10 SOUTHERN DISTRICT OF CALIFORNIA 11 12 13 MICHAEL BORISH, individually and on behalf of all others similarly situated, et al., 14 15 16 Case No. 22-cv-815-MMA (SBC) ORDER GRANTING MOTION TO DISMISS THIRD AMENDED COMPLAINT Plaintiffs, v. [Doc. No. 47] FAMILY FIRST LIFE, LLC, 17 Defendant. 18 19 20 21 Pending before the Court is Defendant Family First Life, LLC’s (“Defendant” or 22 “FFL”) motion to dismiss Plaintiffs Michael Borish, Kevin Vega, and Ramon Fazah’s 23 (“Plaintiffs”) Third Amended Complaint. Doc. No. 47. Plaintiffs filed an opposition, 24 Doc. No. 50, to which Defendant replied, Doc. No. 52. The Court found this matter 25 suitable for determination on the papers and without oral argument pursuant to Federal 26 Rule of Civil Procedure 78(b) and Civil Local Rule 7.1.d.1. See Doc. No. 53. For the 27 reasons set forth below, the Court GRANTS Defendant’s motion to dismiss without 28 leave to amend. -1- 22-cv-815-MMA (SBC) Dockets.Justia.com I. BACKGROUND 1 1 2 A. 3 Procedural Background Plaintiffs initiated this action on June 3, 2022. Doc. No. 1. Thereafter, Plaintiffs 4 amended their complaint twice: once as a matter of course, Doc. No. 3, and shortly after, 5 a second time with leave of Court, Doc. No. 7 (Second Amended Complaint, the “SAC”). 6 In its April 13, 2023 Order, the Court dismissed Plaintiffs’ SAC with leave to amend. 7 Doc. No. 45. Notably, the Court held Plaintiffs did not allege facts to support personal 8 jurisdiction over FFL in California. Id. at 9–15. The Court also held Plaintiffs did not 9 plead any cause of action. Id. at 17–21. First, in response to FFL’s motion to dismiss, 10 Plaintiffs conceded they did not state a claim as to two of their causes of action— 11 violation of California Penal Code § 496 and of Florida Statute § 817.06—and they 12 abandoned their two breach of contract causes of action. Id. at 17–18. Second, the Court 13 held Plaintiffs did not plead fraud with particularity under Federal Rule of Civil 14 Procedure 9(b), which applied to each of the causes of action at issue, because they relied 15 on “vague,” “broad,” and generalized allegations that did not plead “with particularity a 16 single specific advertisement or representation made by [FFL].” Id. at 20–21. The Court 17 then granted Plaintiffs leave to amend because it had not previously “ruled on the 18 pleading sufficiency of Plaintiffs’ claims.” Id. at 21 n.11. 19 In response to the Court’s Order, Plaintiffs filed their Third Amended Complaint 20 on May 4, 2023. Doc. No. 46 (Third Amended Complaint, the “TAC”). In that pleading, 21 Plaintiffs replaced two of the original plaintiffs—Greg Birch and David Doehring—with 22 Plaintiffs Vega and Fazah. TAC ¶¶ 6–7. However, Plaintiffs—on behalf of themselves 23 and as representatives of all those similarly situated—assert the same claims for relief 24 against Defendant as in their SAC, including: (1) Violation of California’s False 25 26 27 28 1 Reviewing Defendant’s motion to dismiss, the Court accepts as true all facts alleged in the TAC and construes them in the light most favorable to Plaintiffs. See Snyder & Assocs. Acquisitions LLC v. United States, 859 F.3d 1152, 1157 (9th Cir. 2017). -2- 22-cv-815-MMA (SBC) 1 Advertising Law, Cal. Bus. & Prof. Code § 17500 et seq.; (2) Violation of California’s 2 Unfair Competition Law, Cal. Bus. & Prof. Code § 17200 et seq.; (3) Violation of 3 California Penal Code § 496; (4) Violation of Texas’s Deceptive Trade Practices Act, 4 Tex. Bus. & Com. Code § 17.46; (5) Violation of Florida’s Deceptive and Unfair Trade 5 Practices Act, Fla. Stat. § 501.204; (6) Violation of Florida Statute § 817.06; (7) Breach 6 of Written Contract; and (8) Breach of Oral Contract. See generally TAC. 7 In the instant motion, Defendant again moves to dismiss Plaintiffs’ TAC in its 8 entirety pursuant to Federal Rules of Civil Procedure 9(b), 12(b)(1), 12(b)(2), and 9 12(b)(6). Doc. No. 47 at 2. As stated above, Defendant’s motion to dismiss is fully 10 briefed and ripe for decision. 11 B. 12 Factual Background This putative class action centers around the insurance industry and one of its 13 common features: independent marketing organizations (“IMOs”). TAC ¶¶ 9–11. 14 Defendant FFL is an IMO that distributes life insurance products to the public through a 15 network of independent contractors known as “agents.” Id. ¶ 11. Plaintiffs allege they 16 relied on false representations made by Defendant in purchasing low-quality insurance 17 “leads” while working as agents for FFL. Id. ¶¶ 18, 41–43. As many of Plaintiffs’ 18 allegations in the TAC remain unchanged, the Court incorporates by reference its 19 background discussion from its April 13, 2023 Order. Doc. No. 45; see also Birch v. 20 Fam. First Life, LLC, No. 22-CV-815-MMA (NLS), 2023 WL 2940020, at *1 (S.D. Cal. 21 Apr. 13, 2023). 22 Because, as detailed below, the Court is dismissing this action for lack of personal 23 jurisdiction over Defendant, the Court only elaborates on facts relevant to that issue here. 24 To that end, Plaintiffs allege in the TAC that Defendant “is a Connecticut limited liability 25 company with its principal place of business” in Connecticut. TAC ¶ 8. However, 26 Plaintiffs now allege that Defendant “maintains fourteen (14) offices within the state of 27 California” and that “authorized representatives of [FFL] . . . as well as several FFL 28 websites, made representations to California residents, that form the basis of the[ir] -3- 22-cv-815-MMA (SBC) 1 claims” in the TAC. Id. ¶¶ 2–3. Further, Plaintiffs allege that Defendant “has held and 2 continues to hold several corporate events in California, which are intended to promote 3 [Defendant]’s business and its leads to the public, which include California residents.” 4 Id. ¶ 4. 5 II. LEGAL STANDARD 6 Plaintiffs “bear[] the burden” of establishing personal jurisdiction exists. In re 7 Boon Global Ltd., 923 F.3d 643, 650 (9th Cir. 2019). “Where, as here, the defendant’s 8 motion is based on written materials rather than an evidentiary hearing, ‘the plaintiff need 9 only make a prima facie showing of jurisdictional facts to withstand the motion to 10 dismiss.’” Ranza v. Nike, Inc., 793 F.3d 1059, 1068 (9th Cir. 2015) (quoting 11 CollegeSource, Inc. v. AcademyOne, Inc., 653 F.3d 1066, 1073 (9th Cir. 2011)). The 12 Court may consider declarations and other evidence outside the pleadings to determine 13 whether it has personal jurisdiction. See Boon Global, 923 F.3d at 650. 14 “[U]ncontroverted allegations in [Plaintiffs’] complaint must be taken as true,” but courts 15 “may not assume the truth of allegations in a pleading which are controverted by 16 affidavit.” Mavrix Photo, Inc. v. Brand Techs., Inc., 647 F.3d 1218, 1223 (9th Cir. 2011) 17 (cleaned up). Any “factual disputes” must be “resolve[d] . . . in [Plaintiffs’] favor.” Id. 18 When there is no applicable federal statute governing personal jurisdiction, as is 19 the case here, the law of the forum state determines personal jurisdiction. 20 Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 800 (9th Cir. 2004). 21 California’s long arm statute is co-extensive with federal due process requirements, and 22 therefore the jurisdictional analyses under California law and federal due process are the 23 same. See Cal. Civ. Proc. Code § 410.10; Mavrix, 647 F.3d at 1223. 24 Courts recognize two forms of personal jurisdiction, general and specific. Bristol- 25 Myers Squibb Co. v. Super. Court of Cal., S.F. Cty., 582 U.S. 255, 262 (2017) (citing 26 Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 918 (2011)). General 27 jurisdiction over a nonresident corporation “is appropriate only when the corporation’s 28 contacts with the forum state are so constant and pervasive as to render it essentially at -4- 22-cv-815-MMA (SBC) 1 home in the state.” Martinez v. Aero Caribbean, 764 F.3d 1062, 1066 (9th Cir. 2006) 2 (cleaned up); see also Tuazon v. R.J. Reynolds Tobacco Co., 433 F.3d 1163, 1169 (9th 3 Cir. 2006) (“[T]he standard for general jurisdiction is high” and “a defendant must not 4 only step through the door, it must also [sit] down and [make] itself at home.”) 5 (quotations and citations omitted). By contrast, specific jurisdiction requires a 6 nonresident defendant’s “suit-related conduct [to] create a substantial connection with the 7 forum State.” Walden v. Fiore, 571 U.S. 277, 284 (2014). 8 9 10 11 III. DISCUSSION Plaintiffs do not contend general jurisdiction exists. So, the Court must analyze whether Plaintiffs have made a prima facie showing of specific jurisdiction. The Ninth Circuit applies a three-part test to determine if the exercise of specific 12 personal jurisdiction over a nonresident is appropriate: (1) the defendant must 13 purposefully direct its activities toward the forum or purposefully avail itself of the 14 privileges of conducting activities in the forum; (2) the plaintiff’s claim must arise out of 15 or relate to those activities; and (3) the assertion of personal jurisdiction must be 16 reasonable. Schwarzenegger, 374 F.3d at 802. It is Plaintiffs’ burden to plead allegations 17 that satisfy the first two prongs, whereupon the burden shifts to Defendant to show why 18 the exercise of specific personal jurisdiction would not be reasonable under prong three. 19 Id. (citing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 476–78 (1985)). 20 In its previous Order, the Court found that Plaintiffs failed to allege sufficient facts 21 to satisfy the first part of the test for specific personal jurisdiction. Doc. No. 45 at 14. 22 Specifically, the Court held that Plaintiffs did not satisfy the “express aiming” element of 23 the Ninth Circuit’s three-part “effects” test for purposeful direction derived from Calder 24 v. Jones, 465 U.S. 783 (1984) (the “Calder” test). Id. Because failing to sufficiently 25 plead any one of the three Calder elements is fatal to show personal jurisdiction, the 26 Court declined to reach the remaining specific jurisdiction requirements, i.e., whether 27 Plaintiffs’ claims arise out of or relate to Defendants’ forum-related activities and 28 whether the exercise of jurisdiction would comport with fair play and substantial justice. -5- 22-cv-815-MMA (SBC) 1 Id. In the instant motion, Defendant does not dispute that Plaintiffs have now alleged 2 sufficient facts to satisfy the “purposeful direction” element for specific jurisdiction.2 3 Instead, Defendant now argues that Plaintiffs fail to satisfy the second element: whether 4 Plaintiffs’ claims arise out of or relate to Defendant’s California contacts. Doc. No. 47 at 5 20. The Court agrees. 6 In Ford Motor Co. v. Montana Eighth Judicial District Court, the Supreme Court 7 held “arise out of” and “relate to” are separate requirements, and each is independently 8 sufficient for a finding of personal jurisdiction. 141 S. Ct. 1017, 1026 (2021). “[F]or a 9 claim to arise out of a defendant’s forum contacts requires causation, while a claim can 10 relate to those contacts, even absent causation, where, for example, ‘a company . . . 11 serves a market for a product in the forum State and the product malfunctions there.’” 12 Yamashita v. LG Chem, Ltd., 62 F.4th 496, 504–05 (9th Cir. 2023) (quoting Ford, 141 S. 13 Ct. at 1026–27). 14 In Ford, the Supreme Court held Ford Motor Company was subject to specific 15 personal jurisdiction for claims of injuries caused by a Ford Explorer in Montana, and by 16 a Ford Crown Victoria in Minnesota, despite the vehicles having been sold by Ford out- 17 of-state. Id. at 1028. The Court explained Ford had engaged in marketing efforts in 18 Montana and Minnesota, including marketing efforts related specifically to Ford 19 Explorers and Crown Victorias. Id. Both models are for sale in Montana and Minnesota, 20 and Ford distributes replacement parts to its own dealers and other repair shops in both 21 states. Id. So, the Court concluded, there was a “strong relationship among the 22 defendant, the forum, and the litigation,” and specific jurisdiction was warranted even 23 24 25 26 27 28 2 Because Plaintiffs previously abandoned their contract claims in their SAC, the Court applied the “purposeful direction” test in its analysis as all of Plaintiffs’ other claims sounded in tort. Doc. No. 45 at 11. In their opposition, Plaintiffs again “concede on FFL’s argument and acknowledge that they cannot assert breach of contract claims.” Doc. No. 50 at 16. Therefore, the Court finds the purposeful direction test also applicable to the TAC. -6- 22-cv-815-MMA (SBC) 1 though there was not a causal connection between the defendants’ activities in the forum 2 states and the plaintiffs’ claims. Id. 3 In Yamashita, the court focused on three aspects of Ford’s reasoning to “provide 4 guidance on how to determine whether a defendant’s contacts sufficiently relate to a 5 plaintiff's injury.” Yamashita, 62 F.4th at 505. First, “a plaintiff’s injury relates to a 6 defendant’s forum contacts if similar injuries will tend to be caused by those contacts” 7 because, “[i]n effect, relatedness proxies for causation” in some cases. Id. Second, “a 8 plaintiff’s injury relates to a defendant’s forum contacts if the defendant should have 9 foreseen the risk that its contacts might cause injuries like that of the plaintiff.” Id. at 10 506. And third, “‘relate to’ does not mean anything goes,” and instead “relatedness 11 requires a close connection between contacts and injury.” Id. (cleaned up). 12 Here, Plaintiffs allege that (1) Defendant maintains offices in California, 13 (2) authorized representatives of Defendant made representations to California residents 14 about its leads, and that (3) Defendant made representations to Plaintiffs about its leads 15 “in phone conferences, at company events, on YouTube videos when Plaintiffs enrolled 16 in FFL, and on numerous occasions throughout their tenure with the company.” TAC 17 ¶¶ 2–3, 43. Plaintiffs also allege that Defendant maintains websites based out of 18 California and YouTube channels which are recorded and broadcasted in California. Id. 19 ¶¶ 28–36. Construing these allegations “in light most favorable to [Plaintiffs],” Interpipe 20 Contracting, Inc. v. Becerra, 898 F.3d 879, 886–87 (9th Cir. 2018), they support an 21 inference that FFL maintains contacts in California. However, Plaintiffs fail to 22 demonstrate that their injuries arose from Defendant’s California contacts. None of the 23 Plaintiffs—even Plaintiff Fazah who states he lives in California—allege they purchased 24 leads while in California, that they used Defendant’s leads while in California, or that 25 they were injured in California. Indeed, Plaintiffs do not specifically allege where they 26 were injured or when they specifically interacted with any of Defendant’s alleged 27 California contacts. Plaintiffs do not dispute this in their opposition. Therefore, the 28 Court cannot find that Plaintiffs have established specific personal jurisdiction. -7- 22-cv-815-MMA (SBC) 1 Because the Court finds that Plaintiffs’ claims do not arise out of Defendant’s 2 activities in California, it need not consider whether, under the third prong, Defendant has 3 met its burden of demonstrating that the exercise of specific jurisdiction would not 4 “comport with fair play and substantial justice” or is reasonable. Picot v. Weston, 780 5 F.3d 1206, 1211 (9th Cir. 2015). Moreover, the Court need not consider Defendant’s 6 alternative arguments that the TAC should be dismissed pursuant to Federal Rules of 7 Civil Procedure 9(b), 12(b)(1), and 12(b)(6). 8 9 Although they did not file a motion, Plaintiffs ask for jurisdictional discovery in its opposition brief. 3 Ninth Circuit law applies to this issue. Autogenomics, Inc. v. Oxford 10 Gene Tech., 566 F.3d 1012, 1017 (Fed. Cir. 2009). Under Ninth Circuit law, 11 “[d]iscovery may be appropriately granted where pertinent facts bearing on the question 12 of jurisdiction are controverted or where a more satisfactory showing of the facts is 13 necessary.” Boschetto v. Hansing, 539 F.3d 1011, 1020 (9th Cir. 2008) (quoting Data 14 Disc., Inc. v. System Tech. Assoc., Inc., 557 F.2d 1280, 1285 n.1 (9th Cir. 1977)). 15 However, “where a plaintiff’s claim of personal jurisdiction appears to be both attenuated 16 and based on bare allegations in the face of specific denials made by the defendants, the 17 Court need not permit even limited discovery. . . .” Pebble Beach Co. v. Caddy, 453 F.3d 18 1151, 1160 (9th Cir. 2006) (quoting Terracom v. Valley Nat. Bank, 49 F.3d 555, 562 (9th 19 Cir.1995)). “An appellate court will not interfere with the trial court’s refusal to grant 20 discovery except upon the clearest showing that the dismissal resulted in actual and 21 substantial prejudice to the litigant; such a refusal is not an abuse of discretion when it is 22 clear that further discovery would not demonstrate facts sufficient to constitute a basis for 23 24 25 26 27 3 The failure to file a formal motion is itself a basis for denial of this request. Autogenomics, Inc. v. Oxford Gene Tech., 566 F.3d 1012, 1022 (Fed. Cir. 2009) (quoting Sopcak v. N. Mountain Helicopter Serv., 52 F.3d 817, 819 (9th Cir.1995)) (“[U]nder Ninth Circuit law, it is not necessarily an abuse of discretion to reject a request for jurisdictional discovery because no formal motion was made.”). 28 -8- 22-cv-815-MMA (SBC) 1 jurisdiction.” Autogenomics, 566 F.3d at 1023 (quoting Wells Fargo & Co. v. Wells 2 Fargo Express Co., 556 F.2d 406, 430 n. 24 (9th Cir. 1977)). Here, because the Court 3 agrees with Defendant that “all of the relevant information” Plaintiffs would need to 4 demonstrate personal jurisdiction “is already in their possession,” Doc. No. 52 at 12, the 5 Court DENIES Plaintiffs’ request for jurisdictional discovery. 6 Finally, Plaintiffs also request leave to amend. Doc. No. 50 at 17. Defendant 7 opposes this request. Doc. No. 52 at 6, 15. Generally, leave to amend a dismissed 8 complaint should be freely granted unless it is clear the complaint could not be saved by 9 any amendment. Fed. R. Civ. P. 15(a); Manzarek v. St. Paul Fire & Marine Ins. Co., 519 10 F.3d 1025, 1031 (9th Cir. 2008). To date, Plaintiffs have already been granted leave to 11 file two amended complaints, Doc. Nos. 6, 45, and the Court laid out the legal standard 12 for personal jurisdiction in its previous Order. Thus, the Court already put Plaintiffs on 13 notice regarding the Court’s concerns with respect to the lack of specificity surrounding 14 the test for specific jurisdiction. Plaintiffs cannot be granted unlimited attempts to amend 15 their complaint.4 Because Plaintiffs have still not alleged specific facts surrounding their 16 injuries in their TAC, the Court is left with the conclusion that there are no facts available 17 sufficient to justify the assertion of personal jurisdiction over Defendant. Therefore, the 18 Court determines that granting further leave to amend would be futile and DENIES 19 Plaintiffs’ request. See Rutman Wine Co. v. E. & J. Gallo Winery, 829 F.2d 729, 738 (9th 20 Cir. 1987) (affirming denial of leave to amend where amended complaint failed to cure 21 defects identified in order dismissing prior complaint). 22 /// 23 24 25 26 4 27 The Court also notes that the original complaint was filed on June 3, 2022, over a year and a half ago, and the case is still in its pleading stage. 28 -9- 22-cv-815-MMA (SBC) 1 IV. CONCLUSION 2 For the foregoing reasons, the Court GRANTS Defendant’s motion to dismiss 3 without leave to amend for lack of personal jurisdiction. 5 The Clerk of Court is 4 DIRECTED to close this case. 5 6 IT IS SO ORDERED. Dated: December 14, 2023 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 5 Dismissal under Rule 12(b)(2) is without prejudice as to the merits of the case. Accordingly, this Order is not intended to preclude Plaintiffs from pursuing their claims in another state. However, Plaintiffs’ TAC is dismissed with prejudice to the extent that, for the purposes of this action, this Court does not have personal jurisdiction over FFL. -10- 22-cv-815-MMA (SBC)
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