Lisa Mollicone v. Universal Handicraft, Inc. et al

NOTICE OF MOTION AND MOTION to Dismiss Case

C.D. Cal.December 2, 2016

1 Jeffrey D. Feldman {Pro Hac Vice pending) j feldman@cozen. com Susan J. Latham {Pro Hac Vice pending) 3 slatham@cozen.com COZEN O'CONNOR 4 One Biscayne Tower, 30th Fl. 2 South Biscayne Blvd. 5 Miami, FL 33131 , Telephone: (305) 397-0812 Facsimile: (305)720-2266 7 Nathan M. Dooley, Esq. (SBN 224331) 8 ndooley@cozen.com Anna L. Heller, Esq. (SBN 299407) aheller@cozen.com Brett N. Taylor, Esq. (SBN 274400) 10 btaylor@cozen.com COZEN O'CONNOR 601 South Figueroa Street, Suite 3700 Los Angeles, CA 90017 Telephone: (213)892-7900 Facsimile: (213)892-7999 11 12 13 14 Attorneys for Defendant 15 UNIVERSAL HANDICRAFT, INC., d/b/a "Deep Sea Cosmetics" d/b/a "Adore Organic Innovations;" and Specially 16 Appearing Defendant SHAY SABAG SEGEV 17 18 UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA 19 20 Case No. 2:16-cv-07322-CAS-MRW LISA MOLLICONE, on behalf of The Honorable Christina A. Snyder 21 herself, all others similarly situated, and the general public, NOTICE OF MOTION AND MOTION TO DISMISS COMPLAINT AGAINST SPECIALLY APPEARING DEFENDANT SHAY SABAG SEGEV; MEMORANDUM OF POINTS AND AUTHORITIES [Filed concurrently Susan Latham; [Proposed] Order] 22 23 Plaintiff, 24 v. 25 UNIVERSAL HANDICRAFT, INC., with Declaration of d/b/a "Deep Sea Cosmetics" d/b/a "Adore Organic Innovations;" and 26 Date: January 9, 2017 Time: 10:00 a.m. 27 SHAY SABAG SEGEV, Courtroom: 8D 28 Defendants. NOTICE OF MOTION AND MO TION TO DISMISS COMPLAIN T AGAINST SPECIALLY APPEARING DEFENDANT SHAY SABAG SEGEV Case 2:16-cv-07322-CAS-MRW Document 17 Filed 12/02/16 Page 1 of 27 Page ID #:320 1 TO THE COURT, ALL PARTIES, AND THEIR ATTORNEYS OF RECORD: PLEASE TAKE NOTICE THAT on January 9, 2017 at 10:00 a.m.in 2 3 Courtroom 8D of the above entitled court, pursuant to Rule 12(b)(1) of the Federal 4 Rules of Civil Procedure, Specially Appearing Defendant Shay Sabag Segev ("Segev" 5 or "Defendant") will and hereby does move this Court for an Order dismissing the 6 Complaint pursuant to Rule 12(b)(5) of the Federal Rules of Civil Procedure because a 7 summons for Segev was never issued and Mr. Segev was not properly served under 8 Federal, Florida, or California law. Mr. Segev additionally moves for an order dismissing the Complaint against Mr. 10 Segev pursuant to Rule 12(b)(6) for failure to state a claim. Plaintiffs claims against 11 Mr. Segev are based on an alter ego theory, and the Complaint asserts nothing but 12 conclusory allegations to support this theory. Additionally, the claims based on or grounded in fraud which include Count I- 14 Intentional Fraud and Deceit, Count II - Fraud by Omissions/Suppression of Facts, 15 Count III - Negligent Misrepresentations, Count IV - Rescission of Purchase Contracts 16 Based on Fraudulent Inducement, Count XII - the False Advertising Law ("FAL"), 17 Count XIII - the Unfair Competition Law (California Business and Professions Code § 18 17200 et seq.) ("UCL"), Count XIV - Violations of New Jersey's Consumer Fraud Act, 19 and Count XV - Violations of New Jersey's Truth-in-Consumer Contract, Warranty and 20 Notice Act, are not sufficiently alleged to meet the heightened pleading standard of Rule 21 9(b) of the Federal Rules of Civil Procedure. Plaintiffs CLRA claim against Mr. Segev should additionally be dismissed with 23 prejudice because Plaintiff failed to give the proper pre-suit notice. Finally, the claims against Segev should be dismissed under Rule 12(b)(1) and 25 12(b)(6) for the same reasons as set forth and fully briefed in the Motion to Dismiss of 26 Defendant Universal Handicraft, Inc., d/b/a "Deep Sea Cosmetics" d/b/a/ "Adore 27 Organic Innovations" (Dkt. No. 15), which is incorporated herein fully by reference. 9 13 22 24 28 2 SPECIALLY APPEARING DEFENDANT SHAY SABAG SEGEV Case 2:16-cv-07322-CAS-MRW Document 17 Filed 12/02/16 Page 2 of 27 Page ID #:321 1 This motion is made following the conference of counsel pursuant to L.R. 7-3 2 which took place on November 25, 2016 and November 28, 2016. 3 This Motion is based on this Notice of Motion and Motion, the Memorandum of 4 Points and Authorities filed in support thereof, the Declaration of Susan Latham and 5 attached exhibits, and all pleadings and papers on file in this action, and such other 6 further matters as the Court may consider. Dated: December 2, 2016 7 COZEN O'CONNOR 8 9 By: /s/ Anna L. Heller Jeffrey D. Feldman {Pro Hac Vice pending) Susan J. Latham (Pro Hac Vice pending) Nathan M. Dooley Anna L. Heller Brett N. Taylor Attorneys for Defendant UNIVERSAL HANDICRAFT Deep Sea Cosmetics" d/b/a "Adore Organic Innovations;" and Specially Appearing Defendant SHAY SABAG SEGEV 10 11 12 , INC., d/b/a " 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 3 SPECIALLY APPEARING DEFENDANT SHAY SABAG SEGEV Case 2:16-cv-07322-CAS-MRW Document 17 Filed 12/02/16 Page 3 of 27 Page ID #:322 Table of Contents 1 Page 2 3 I. INTRODUCTION AND SUMMARY OF ARGUMENT „ II. LEGAL ARGUMENT 4 1 4 Complaint Must Be Dismissed For Insufficient Service of Process undef FRCP 12(b)(5) A. 5 4 6 1. Legal Standard for Dismissal under 12(b)(5). 4 7 Court Never Issued a 2. Service is Improper Because Summons to Mr. Segev 3. Service is Improper Because it Does not Comply with Federal, California, or Florida Law 4. Plaintiffs Unclean Hands Must Bar Any Opportunity to Cure the Defective Service 5 8 9 6 10 7 11 Claims Against Mr. Segev Fail Under Rule 12(b)(6). 8 B 12 1. Complaint Fails to Plead Fraud with Particularity 2. Collective Treatment Of Defendants In Fraud Claims Requires Dismissal 3. Plaintiff Failed to Plead Sufficient Facts to Allege Alter Ego 9 13 14 12 15 14 16 Plaintiff Failed to Provide Pre-Suit Notice to Mr. Segev under Cal. Civ. Code §1782 17 17 18 Mr Segev Joins in Universal Handicraft's Motion to Dismiss 18 D. 19 III. CONCLUSION 19 20 21 22 23 24 25 26 27 28 TABLE OF CONTENTS: Case 2:16-cv-07322-CAS-MRW Document 17 Filed 12/02/16 Page 4 of 27 Page ID #:323 1 TABLE OF AUTHORITIES 2 Page(s) 3 Cases 4 Alan Neuman Prods., Inc., v. Albright, 862 F.2d 1388 (9th Cir. 1988). 10 6 Amore ex rel Estates of Amore v. Accor, 7 529 F. Supp. 2d 85 (D.D.C. 2008) 9 8 Arroyo v. Chattem, Inc., 926 F. Supp. 2d 1070 (N.D. Cal. 2012) 10,11 9 10 Ashcroft v. Iqbal, 555 U.S. 662 (2009) 12 BellAtl. Corp. v. Twombly, 550 U.S. 544 (2007) 9,15 11 8,9 13 Bravo v. County of San Diego, 14 No. C 12-06460 JSW, 2014 WL 555195 (N.D. Cal. Feb. 10,2014) 13 15 Brockmeyer v. May, 16 383 F.3d 798 (9th Cir.2004) 5 17 Chavez v. Nestle USA, Inc., 18 No. CV 09-9192-GW CWX, 2011 WL 10565797 (C.D. Cal. Jan. 10, 2011) 11 19 Conroy v. Regents of Univ. of California, 20 45 Cal. 4th 1244 (2009) 10 21 Davis v. Chase Bank U.S.A., N.A., 22 650 F. Supp. 2d 1073 (C.D. Cal. 2009) 17, 18 23 Direct Mail Specialists, Inc. v. Eclat Computerized Techs., Inc.> 24 840 F.2d 685 (9th Cir. 1988) 5 25 Donohue v. Apple, Inc., 26 871 F. Supp. 2d 913 (N.D. Cal. 2012) 11 27 28 TABLE OF AUTHORITIES Case 2:16-cv-07322-CAS-MRW Document 17 Filed 12/02/16 Page 5 of 27 Page ID #:324 1 Dullv. Wright, No. 15-CV-0083 W (NLS), 2015 WL 12564314 (S.D. Cal. Aug. 18, 2015) 2 14 3 In re Focus Media Inc., 387 F.3d 1077 (9th Cir. 2004) 5 5 Glen Holly Entm't, Inc. v. Tektronix, Inc., 6 100 F. Supp. 2d 1086 (C.D. Cal. 1999) 10 7 Haas Automation, Inc. v. Denny, No. 2:12-CV-04779 CBM, 2013 WL 6502876 (C.D. Cal. Dec. 4, 2013) 8 14 9 In re Hydroxycut Mktg. & Sales Practices Litig., 10 801 F. Supp. 2d 993 (S.D. Cal. 2011) 11 11 Kearns v. Ford Motor Co., 12 567 F.3d 1120 (9th Cir. 2009) 10, 11 13 Lasterv. T-Mobile USA, Inc., 407 F. Supp. 2d 1181 (S.D. Cal. 2005), aff d, 252 F. App'x 111 (9th Cir. 2007) 14 17 15 Leekv. Cooper, 16 194 Cal. App. 4th 399 (2011) 17 17 1 g Platten v. HG Bermuda Exempted Ltd., 437F.3d 1181 (1st Cir. 2006) RCR Plumbing & Mech., Inc. v. ACE Am. Ins. Co., No. EDCV 10-995 14 19 20 5 21 Salameh v. Tarsadia Hotel, 22 726 F.3d 1124 (9th Cir. 2013), 10 23 Shenzhen Tech. Co. LTD v. Altec Lansing, LLC, No. 3:12-CV-2188-GPC-BGS, 2013 WL 6145553 (S.D. Cal. Nov. 21, 2013) 24 13 25 Sklar v. Franchise Tax Board 26 (1986) 185 Cal. App. 3d 616 15, 16 27 28 Case 2:16-cv-07322-CAS-MRW Document 17 Filed 12/02/16 Page 6 of 27 Page ID #:325 1 Soares v. Lorono, No. 12-CV-05979-WHO, 2014 WL 723645 (N.D. Cal. Feb. 25, 2014) 13 2 3 Sonora Diamond Corp., v. Superior Court, 15,16,17 83 Cal App. 4th 523 (2000) 4 5 Sprewell v. Golden State Warriors, 9 266 F.3d 979 (9th Cir. 2001) 6 Tiangang Sun v. China Petroleum & Chem. Corp. Ltd., 1 No. CV 13-05355 BRO (EX), 2014 WL 11279466 (C.D. Cal. Apr. 15, 2014) 5 8 9 Universal Surface Tech, Inc. v. Sae-A Trading Am. Corp., No. CV 10-6972 CAS, 2011 WL 281020 (C.D.Cal. Jan. 26, 2011) 4 10 Vasey v. Cal. Dance Co., 11 70 Cal. App.3d 742 (1977) 15 12 13 Ward v. Pickett, No. C-13-01735 DMR, 2013 WL 5496549 (N.D. Cal. Oct. 3, 2013) 1 _ Wright v. Oregon Metallurgical Corp., 360 F.3d 1090 (9th Cir. 2004) Statutes 13 14 9 16 17 Cal. Civ. Code § 1709 Cal. Civ. Code §1782 Cal. Civ. Code § 1782(a)(2) Cal. Code Civ. Proc. §§ 415.20(b), 415.40 10 18 1, 17 19 17, 18 20 21 7 22 California Consumer Legal Remedies Act ("CLRA") (Cal. Civ. Code §§ 23 1750, et seq.) 1,2,3, 10, 17, 18 24 California's False Advertising Law ("FAL") (Cal. Civ. Code §§ 17500, et seq.) California Unfair Competition Law ("UCL") (Cal. Bus. & Prof. Code § 17200 et seq.) Fed. R. Civ. P., Rule 4 1 ,2 ,3 ,10 ,18 25 26 1,2, 10, 11 27 1,5 28 in TABLE OF AUTHORITIES Case 2:16-cv-07322-CAS-MRW Document 17 Filed 12/02/16 Page 7 of 27 Page ID #:326 1 Fed. R. Civ. P., Rule 4(a)(1)(B), (F), (G) 2 Fed. R. Civ. P., Rule 4(b) Fed. R. Civ. P., Rule 4(1) Fed. R. Civ. P., Rule 9(b) 6 Fed. R. Civ. P., Rule 12(b)(1) 7 Fed. R. Civ. P., Rule 12(b)(5) 8 Fed. R. Civ. P., Rule 12(b)(6) 9 Fed. R. Civ. P , Rule 60(b).... Federal Food, Drug and Cosmetics Act ("FDCA") Federal Magnuson-Moss Warranty Act (15 U.S.C. §§ 2301, et seq.) 13 Fla. Stat. Ann. § 48.031 14 New Jersey's Consumer Fraud Act (N.J.S.A §§ 56:8-1) 4 4 3 5,7 4 passim 1,3,18 1,4 1 ,1 ,3 ,8 8 10 2, 3, 19 11 2,3 ,19 12 7 2,3, 18 15 New Jersey's Truth-in-Consumer Contract, Warranty and Notice Act 2, 10 (N.J.S.A §§ 56:12-14 to 56:12-18) 16 Other Authorities 17 18 2 L.R. 7-3 19 20 21 22 23 24 25 26 27 28 IV Case 2:16-cv-07322-CAS-MRW Document 17 Filed 12/02/16 Page 8 of 27 Page ID #:327 MEMORANDUM OF POINTS AND AUTHORITIES 1 Defendant Shay Sabag Segev ("Mr. Segev") respectfully moves this Court3, 2 3 pursuant to Fed. R. Civ. P., Rule 12(b)(5), Fed. R. Civ. P., Rule 12(b)(6) and Cal. Civ. 4 Code § 1782, for entry of an order dismissing the Complaint against him, and in support 5 states as follows: 6 I. INTRODUCTION AND SUMMARY OF ARGUMENT No summons has been issued by this Court to Mr. Segev. The only summons 8 issued by the Court was to the coiporate defendant. It reasonably appears that Plaintiff 9 served Mr. Segev with an altered version of the summons issued to Universal 10 Handicraft, Inc. ("UHI"), rather than making the effort to request that the Clerk issue a 11 summons in the name of Mr. Segev. Accordingly, there can be no doubt that Plaintiff 12 failed to serve Mr. Segev with the summons and complaint in accordance with the 13 Federal Rules of Civil Procedure, California or Florida law. Similarly, Plaintiff also 14 failed to provide the pre-suit notice to Mr. Segev for her CLRA claim as required by 15 California Civil Code section 1782. Accordingly, this Court must dismiss the 16 Complaint as to Mr. Segev pursuant to Rule 12(b)(5) for insufficient service of process. 17 Moreover, this Court must dismiss the CLRA claims against Mr. Segev with prejudice 18 due to Plaintiffs failure to provide pre-suit notice. Furthermore, Plaintiff entirely failed to assert any individualized facts as to Mr. 20 Segev. This is a generic consumer class action complaint. Mr. Segev appears to have 21 been named solely for leverage. Plaintiffs alter ego theory alleges nothing more than 22 legal conclusions. For these reasons as well, the Motion must be granted. This class action complaint was brought by Plaintiff Lisa Mollicone 24 ("Mollicone" or "Plaintiff'), a New Jersey resident, with regard to her purchase of 25 certain Universal Handicraft's cosmetic products. Plaintiff alleges that she bought 7 19 23 26 1 Mr. Segev appears specially by filing this Motion to Dismiss because, as further explained herein, the Court lacks personal jurisdiction over him pursuant to Fed. R. Civ. P., Rule 12(b)(5). Should a summons ever be properly issued pursuant to Fed. R. Civ. P., Rule 4 and served upon him, Mr. Segev will further address the Court's lack of personal jurisdiction at that time. 27 28 1 Case 2:16-cv-07322-CAS-MRW Document 17 Filed 12/02/16 Page 9 of 27 Page ID #:328 1 UHI's Adore CELLMAX Kit and seeks damages, restitution, injunctive relief, 2 declaratory relief, and attorneys' fees, on behalf of herself, a nationwide class, a direct- 3 to-consumer class, a multi-state warranty class, a California class, and a New Jersey 4 class. The unwieldy class claims are obviously untenable. Plaintiffs claims are based on allegations that UHI and its president, Mr. Segev, 6 made false and misleading representations regarding the Adore CELLMAX Kit and 7 twenty-two allegedly substantially related products because the products do not "halt 8 the aging process" and do not contain an exclusive plant stem cell formula, as 9 advertised. Plaintiff also alleges that the products are sold unlawfully as an unapproved 10 drug in violation of the Federal Food, Drug and Cosmetics Act ("FDCA"). The Complaint sets forth the following causes of action: (1) Intentional Fraud 12 and Deceit; (2) Fraud by Omissions/Suppression of Facts; (3) Negligent 13 Misrepresentation; (4) Rescission of Purchase Contracts Based on Fraudulent 14 Inducement; (5) Rescission of Purchase Contracts Based on Illegality and Violations of 15 Public Policy; (6) Quasi Contract/Unjust Enrichment; (7) Declaratory Relief; (8) Breach 16 of Express Warranties; (9) Breach of the Implied Warranty of Merchantability; (10) 17 Violations of the Federal Magnuson-Moss Warranty Act (15 U.S.C. §§ 2301, et seq.); 18 (11) Violation of the California Consumer Legal Remedies Act ("CLRA") (Cal. Civ. 19 Code §§ 1750, et seq.); (12) Violations of California's False Advertising Law (Cal. Civ. 20 Code §§ 17500, et seq.); (13) Violation of California's Unfair Competition Law 5 1 1 ("UCL") (Cal. Bus. & Prof. Code §§ 17200, et seq.); (14) Violation of New Jersey's Consumer Fraud Act (N.J.S.A §§ 56:8-1); and (15) Violation of New Jersey's Truth- in-Consumer Contract, Warranty and Notice Act ("TCCWNA") (N.J.S.A §§ 56:12-14 to 56:12-18). {See Complaint, Dkt. No. 1. ("Compl.").) All of Plaintiff s claims fail as 21 22 23 24 25 alleged against Mr. Segev. Plaintiff simply lumps Mr. Segev together with UHI, a corporate entity, and makes generalized allegations that fail to state a claim for fraud and breach of contract. Plaintiff also vaguely asserts that the "Defendants" are jointly liable for the misconduct 26 27 28 2 Case 2:16-cv-07322-CAS-MRW Document 17 Filed 12/02/16 Page 10 of 27 Page ID #:329 1 alleged, but Plaintiff fails to provide any factual allegations supporting such theories. 2 (Compl. H[113-120.) Plaintiff fails to plead any individualized allegations against, or 3 attribute any specific misconduct, to Mr. Segev. Plaintiffs entire complaint against Mr. 4 Segev stems from her factually unsupported, and unsubstantiated claims of aiding and 5 abetting {id. at f 114), alter-ego liability {id. at fll 15-118) and corporate officer liability 6 (id. at ^[119-120). As such, Plaintiffs fraud-related claims are not plead with 7 particularity as required under Rule 9(b). Likewise, Plaintiffs other claims against Mr. 8 Segev are not plead with sufficient facts to state a claim for relief under Rule 12(b)(6). 9 In light of these pleading failures, Plaintiffs claims against Mr. Segev must be 10 dismissed. 1 1 Plaintiff also lacks standing to bring claims for injunctive relief, claims regarding 12 products she did not purchase, and claims under a nationwide class to the extent that 13 her claims are based on state laws other than New Jersey's (where she is a resident) or 14 California's (where she allegedly purchased the product). Therefore, such claims must 15 be dismissed for lack of subject matter jurisdiction under Rule 12(b)(1). Furthermore, Plaintiffs fraud claims must be dismissed because Plaintiff already 17 asserted a contract claim under her breach of warranty counts and, under California law, 18 fraud-based claims fail when they are based upon the same set of facts as a breach of 19 contract claim, as they are here. Accordingly, Plaintiffs fraud claims must be dismissed 20 with prejudice. 16 21 Lastly, Plaintiffs claims below fail under Rule 12(b)(6) for the following 22 reasons: 23 ® The CLRA, UCL, FAL, and New Jersey Consumer Fraud Act claims fail because Plaintiffs allegations only support a claim for lack of substantiation, which is not actionable by a private plaintiff. © The Magnuson-Moss Warranty Act claim fails because the products at issue are subject to their own regulatory scheme, the FDCA; 24 25 26 27 28 3 Case 2:16-cv-07322-CAS-MRW Document 17 Filed 12/02/16 Page 11 of 27 Page ID #:330 1 ® To the extent all of Plaintiff s claims are predicated on the FDA Warning Letters and/or violations, they are barred under the theory of primary jurisdiction; • Plaintiffs declaratory relief claim fails because it is duplicative of other claims in the Complaint; and • Plaintiffs unjust enrichment claim is a request for relief under quasi- contract, not a stand-alone claim, and quasi-contract claims do not exist where there is an expressed contract alleged. Therefore, as explained in further detail below, Defendant's motion to dismiss should be granted in its entirety. 2 3 4 5 6 7 8 9 10 11 II. LEGAL ARGUMENT 12 A. Complaint Must Be Dismissed For Insufficient Service of Process under FRCP 12(b)(5) 13 Plaintiffs complaint against Mr. Segev must be dismissed under Rule 12(b)(5) because the Court has never issued a summons to him and Plaintiff did not properly serve him under federal, California, or Florida law. 14 15 16 17 Legal Standard for Dismissal under 12(b)(5). A complaint may be dismissed for insufficient service of process under Rule 12(b)(5) of the Federal Rules of Civil Procedure. See Universal Surface Tech., 1. 18 19 20 Inc. v. Sae-A Trading Am. Corp., No. CV 10-6972 CAS (PJWx), 2011 WL 281020, at *1 (C.D.Cal. Jan. 26, 2011). FRCP Rule 4(b) states that: "On or after filing the 21 22 complaint, the plaintiff may present a summons to the clerk for signature and seal. If the summons is properly completed, the clerk must sign, seal, and issue it to the plaintiff for service on the defendant. A summons-or a copy of a summons that is addressed to multiple defendants-must be issued for each defendant to be served " Fed. R. Civ. P. 4(b). A summons must be directed to the specific defendant and must be signed by 23 24 25 26 27 the clerk and bear the court's seal. Fed. R. Civ. P. 4(a)(1)(B), (F), (G). 28 4 MEMORANDUM OF POINTS AND AUTHORITIES Case 2:16-cv-07322-CAS-MRW Document 17 Filed 12/02/16 Page 12 of 27 Page ID #:331 Without proper service of process, a court lacks personal jurisdiction over a 2 defendant. See Direct Mail Specialists, Inc. v. Eclat Computerized Techs., Inc., 840 3 F.2d 685, 688 (9th Cir. 1988) ("A federal court does not have jurisdiction over a 4 defendant unless the defendant has been served properly under Fed.R.Civ.P. 4."); see 1 5 also In re Focus Media Inc., 387 F.3d 1077, 1081 (9th Cir. 2004) ("Before a federal 6 court may exercise personal jurisdiction over a defendant, the procedural requirement 7 of service of summons must be satisfied." ) {quoting Omni Capital Int'l, Ltd. v. Rudolf 8 Wolff & Co., 484 U.S. 97, 104 (1987))). "While Rule 4 is a flexible rule that should be 9 liberally construed so long as a party receives sufficient notice of the complaint, neither 10 actual notice nor simply naming the defendant in the complaint will provide personal 11 jurisdiction absent substantial compliance with its requirements. Tiangang Sun v. 12 China Petroleum & Chem. Corp. Ltd., No. CV 13-05355 BRO (EX), 2014 WL 11279466, at *4 (C.D. Cal. Apr. 15, 2014) (internal citations omitted). 13 Once the sufficiency of service of process is challenged, the plaintiff bears the 15 burden of establishing that service, and the court's jurisdiction, is valid. See 16 Brochneyer v.May, 383 F.3d798,801 (9th Cir.2004). In reviewing a motion to dismiss 17 for insufficient service of process, the court may consider affidavits and other evidence 18 submitted by a defendant. See RCR Plumbing & Meek, Inc. v. ACE Am. Ins. Co., No. 14 19 EDCV 10-995 YAP (DTBx), 2011 WL 2412556, at *5 (C.D.Cal. Jun. 3, 2011). 20 Service is Improper Because Court Never Issued a Summons to Mr. Segev First and foremost, this Court never signed, sealed, or issued a summons to Mr. Segev in accordance with Rule 4(1). On September 30, 2016, Plaintiff applied for issuance of a summons, leaving the "To" field blank. {See Request for Clerk to Issue Summons on Complaint, Dkt. No. 4.) The Clerk of this Court rejected that application, issuing a Notice of Deficiency on October 3, 2016, instructing, inter alia, the Plaintiff that "[t]he defendant's name must appear in the 'To:' section of the summons." {See Notice of Deficiencies in Request to Issue Summons, Dkt. No. 7.) Consequently, 2. 21 22 23 24 25 26 27 28 5 MEMORANDUM OF POINTS AND AUTHORITIES Case 2:16-cv-07322-CAS-MRW Document 17 Filed 12/02/16 Page 13 of 27 Page ID #:332 1 Plaintiff filed a new application for summons wherein the name "Universal Handicraft, 2 Inc." was inserted into the "To:" field. (See Request for Clerk to Issue Summons on 3 Complaint, Dkt. No. 8.) Plaintiff did not file any other applications for issuance of a 4 summons. 5 As a result, this Court issued only one summons, which was addressed to 6 Universal Handicraft. (See 21-Day Summons Issued re Complaint 1 as to Defendant 7 Universal Handicraft, Inc, Dkt. No. 9, also attached as Exhibit C to Declaration of Susan 8 Latham ("Latham Deck") filed concurrently.) On November 15, 2016, upon inquiry, 9 the Clerk confirmed such facts, stating: "Please be advised our court docket doesn't 10 reflect an issued summons to Mr. Segev..." (Latham, ]f 5 and Exhibit B.) Therefore, 11 because this Court never issued a summons to Mr. Segev, he could not have been validly 12 served. Accordingly, this Motion must be granted. 13 Service is Improper Because it Does not Comply with Federal, California, or Florida Law. Nevertheless, on November 28, 2016, Plaintiffs filed a "Proof of Service of 16 Summons and Complaint on Defendant Shay Sabag Segev" with this Court ("Proof of 17 Service on Segev"). (See Proof of Service, Dkt. 13, also attached to Latham Decl.,^[ 6 18 and Exhibit C.). Notably, the Proof of Service on Mr. Segev shows only a summons to 19 "Universal Handicraft" and a declaration stating that Mr. Segev was served through 20 substitute service upon a random individual (Vi Sorrentino) designated by the process 21 server as an employee at a specific address with no explanation of who the employee 22 works for, whether he or she was a person apparently in charge, whether she was over 23 the age of eighteen years old, or why he or she is authorized to accept service on behalf 24 of the individual defendant, Mr. Segev (i.e., who authorized that employee to accept 25 service on behalf of Mr. Segev, individually). (Id.) There is no mention of whether the 26 employee worked for Mr. Segev or UHI or neither. The Proof of Service on Segev also 27 does not describe any prior attempts to serve Mr. Segev at his dwelling or usual place 28 of abode. (Id.) Lastly, the Proof of Service on Mr. Segev does not state that a copy of 3. 14 15 6 MEMORANDUM OF POINTS AND AUTHORITIES Case 2:16-cv-07322-CAS-MRW Document 17 Filed 12/02/16 Page 14 of 27 Page ID #:333 1 the summons and complaint were mailed to Mr. Segev at this same address, as required 2 under California law in order to effect substitute service, (Cal. Code Civ. Proc. §§ 3 415.20(b), 415.40), nor does the method of service conform to Florida laws regarding 4 substitute service of process. Fla. Stat. Ann. § 48.031. In sum, it is clear from this Court's docket that Plaintiff never requested that a 6 Summons be issued to Mr. Segev and that the Clerk never issued a Summons to Mr. 7 Segev. The Proof of Service on Mr. Segev also shows that the summons purportedly 8 served upon Mr. Segev does not conform to the requirements of FRCP 4(1), because 9 the summons Plaintiff claims to have served upon Mr. Segev was issued to UHI, not to 10 Mr. Segev. Therefore, Plaintiff has failed to properly serve Mr. Segev and Plaintiffs 11 Complaint against Mr. Segev should be dismissed. 5 12 4. Plaintiffs Unclean Hands Must Bar Any Opportunity to Cure the Defective Service Notably, there is a substantial and disturbing discrepancy between what Plaintiffs process server served to Mr. Segev {through Vi Sorrentino) and what Plaintiff filed with this Court as Proof of Service on Mr. Segev. {Compare Latham Decl., ^ 4 and Exhibit A, to Latham Decl. If 6 and Exhibit C.) On or about October 28, 2016, a process server handed to Vi Sorrentino a summons addressed to Shay Sabag Segev. (Latham Decl., f 4 and Exhibit A.) However, as explained above, the Clerk was never requested to and never did issue a summons to Mr. Segev. Therefore, it reasonably appears that what Plaintiff had served upon Mr. Segev, by way of Vi Sorrentino, was a doctored-up version of the summons issued to the corporate defendant, UHI. Indeed, the docket entry number at the top of the doctored version is the same as for the summons issued to UHI, but the name in the "To:" field is different as it states "Shay Sabag Segev." Additionally, the version served upon Mr. Sorrentino for Mr. Segev bears a black and white seal and signature. (Id.) Given that the Clerk confirmed that no summons was issued to Mr. Segev, there is no other reasonable explanation except that the Plaintiff altered the summons issued 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 7 Case 2:16-cv-07322-CAS-MRW Document 17 Filed 12/02/16 Page 15 of 27 Page ID #:334 1 to UHI to, instead, reflect Mr. Segev's name. By doing so, Plaintiff and her counsel 2 have committed a fraud upon Mr. Segev and this Court. Indeed, by means of serving 3 the doctored summons, Plaintiff represented to Mr. Segev that the Clerk of this Court 4 had issued legal process to him containing the official seal and signature of this Court 5 and that, thereby, Mr. Segev was obligated to respond to Plaintiffs Complaint or suffer 6 legal consequences by default. Similarly, by self-issuing a doctored summons to Mr. Segev using the Court's 8 seal and the Clerk's signature, the Plaintiff has also committed a fraud upon this Court 9 Furthermore, by serving a doctored summons but filing a different summons with the 10 Court with her Proof of Service on Mr. Segev, Plaintiff attempted to cover-up the fraud 11 she committed against Mr. Segev and, thereby, has exacerbated the fraud upon this 12 Court. {Compare Latham Decl., ^ 4 and Exhibit A, to Latham Decl. 6 and Exhibit C.) Consequently, Plaintiff comes into this Court with unclean hands and should not 14 be permitted to request a summons be issued to Mr. Segev and cure the improper 15 service. Additionally, pursuant to Rule 60(b), upon motion and just terms, the court 16 may relieve Mr. Segev from a judgement, order or proceeding in an action for fraud, 17 misrepresentation, or misconduct perpetrated by a plaintiff. As a result of Plaintiff s 18 fraud upon this Court, Plaintiffs claims should be dismissed. 7 13 19 B. Claims Against Mr. Segev Fail Under Rule 12(b¥6). 20 Pursuant to Rule 12(b)(6), a "plaintiffs obligation to provide the 'grounds' of 'his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atl Corp. v. Twombly, 550 U.S. 544, 555 (2007). "Factual allegations must be enough to raise a right to relief above the speculative level." Id. The district court need not accept as true unreasonable inferences or conclusory legal allegations. Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001). Because they are not entitled to the assumption of truth, the 21 22 23 24 25 26 27 28 8 Case 2:16-cv-07322-CAS-MRW Document 17 Filed 12/02/16 Page 16 of 27 Page ID #:335 1 court should dismiss pleadings that are no more than conclusions. Ashcroft v. Iqbal, 2 555 U.S. 662, 678-79 (2009). 3 The necessary factual allegations must state a claim for relief that is "plausible 4 on its face." Iqbal, 555 U.S. at 678. The plausibility standard requires "more than a 5 sheer possibility that a defendant has acted unlawfully." Id. Allegations in the 6 complaint are not "plausible" if they contradict one another or contradict facts that are 7 established by the very documents on which a plaintiff relies. See Amore ex rel. Estates 8 of Amore v. Accor, 529 F. Supp. 2d 85, 94 (D.D.C. 2008) (citing Kaempe v. Myers, 367 9 F.3d 958, 963 (D.C. Cir. 2004)). Even before Twombly and Iqbal, it was well 10 established that courts were "not required to accept as true conclusory allegations which are contradicted by documents referred to in the complaint." 1 1 Wright v. Oregon 12 Metallurgical Corp., 360 F.3d 1090, 1096 (9th Cir. 2004). 13 Here, Plaintiff fails to plead any individualized allegations against Mr. Segev. 14 Further, Plaintiff fails to attribute any specific misconduct to Mr. Segev. Plaintiff 15 vaguely lumps Mr. Segev in with UHI as the "Defendants," and without supporting 16 facts asserts the conclusion that Mr. Segev "personally participated in, directed, and 17 controlled the sales, distribution, manufacturing, and advertising of the Adore 18 Products." (Compl. 1f24.) Plaintiffs entire complaint against Mr. Segev stems from 19 her factually unsupported, and unsubstantiated claims of aiding and abetting (id. at 20 1(114), alter-ego liability (id. at fflfl 15-118) a n d corporate officer liability (id. at ^[119- 21 120), and therefore, her complaint must be dismissed. 22 1. Complaint Fails to Plead Fraud with Particularity Plaintiff fails to plead her fraud-based claims with sufficient particularity against Mr. Segev. The elements of a claim for fraud are: "(1) a misrepresentation, (2) with knowledge of its falsity, (3) with the intent to induce another's reliance on the misrepresentation, (4) justifiable reliance, and (5) resulting damage." Conroy v. 23 24 25 26 27 Regents of Univ. of California, 45 Cal. 4th 1244, 1254 (2009); Cal. Civ. Code § 1709. 28 9 [ W W Case 2:16-cv-07322-CAS-MRW Document 17 Filed 12/02/16 Page 17 of 27 Page ID #:336 Rule 9(b) of the Federal Rules of Civil Procedure mandates that a plaintiff 2 alleging fraud must "state with particularity the circumstances constituting fraud or 3 mistake," including "the who, what, when, where, and how of the misconduct charged." 1 4 Id. (citing Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003)); see 5 also Salameh v. Tarsadia Hotel, 726 F.3d 1124, 1133 (9th Cir. 2013). In other words, 6 "the pleader must state the time, place and specific content of the false representations 7 as well as the identities of the parties to the representation." Alan Neuman Prods., Inc., 8 v. Albright, 862 F.2d 1388, 1392-93 (9th Cir. 1988); see also Arroyo v. Chattem, Inc., 9 926 F. Supp. 2d 1070, 1077 (N.D. Cal. 2012) (plaintiffs also must plead with 10 particularity the role of each defendant in the alleged fraud). Additionally, a plaintiff must also set forth "what is false and misleading about a 12 statement and why it is false," (Glen Holly Entm't, Inc. v. Tektronix, Inc., 100 F. Supp. 13 2d 1086, 1094 (C.D. Cal. 1999)), and the circumstances surrounding the plaintiffs 14 reliance on the statements. See Kearns, 567 F.3d at 1125 (holding that the complaint 15 did not meet the standard of Rule 9(b) partly because the plaintiff failed to specify when 16 he was exposed to the allegedly fraudulent advertisements, which ones he found 17 material, and on which ones he relied). The same requirement of particularity applies 18 to any claim grounded in, or based on, fraud. See Arroyo v. Chattem, Inc., 926 F. Supp. 11 19 2d 1070, 1077 (N.D. Cal. 2012). 20 In addition to her various other claims, Plaintiffs Complaint alleges Intentional 21 Fraud and Deceit (Compl. 128-142); Fraud by Omissions/Suppression of Facts {id. 22 at 143-151); Negligent Misrepresentations {id. at 152-160); Rescission of 23 Purchase Contracts Based on Fraudulent Inducement {id. at 161-170); violations of 24 the Consumer Legal Remedies Act {id. at 217-233), the False Advertising Law, {id. 25 at 234-241), and the Unfair Competition Law (California Business and Professions 26 Code § 17200 et seq.); and violations of New Jersey's Consumer Fraud Act and Truth- 27 in-Consumer Contract, Warranty and Notice Act (id. at 260-277). These claims are 28 based on, or grounded in, Plaintiffs accusations of fraudulent misconduct. 10 MEMORANDUM OF POINTS AND AUTHORITIES Case 2:16-cv-07322-CAS-MRW Document 17 Filed 12/02/16 Page 18 of 27 Page ID #:337 1 Consequently, they must meet the heightened pleading requirement of Rule 9(b). See 2 Kearns v. Ford Motor Co., 567 F.3d 1120 (9th Cir. 2009) (holding Rule 9(b) applied to 3 the plaintiffs claims under California's Unfair Competition Law because Plaintiffs 4 claim that Ford made false and misleading statements regarding its Certified Pre- 5 Owned vehicles to purchasers was in fact alleging that Ford engaged in a fraudulent 6 course of conduct.); see also In re Hydroxycut Mktg. & Sales Practices Litig801 F. 7 Supp. 2d 993, 1005-06 (S.D. Cal. 2011) (dismissing consumer protection claims under 8 similar grounds as Kearns); Arroyo, 926 F. Supp. at 1077 (finding that because all of 9 Plaintiffs claims were grounded in accusations of fraudulent conduct, she must satisfy 10 the particularity requirement of Rule 9(b)). 11 In Donohue v. Apple, Inc., 871 F. Supp. 2d 913, 925 (N.D. Cal. 2012), the court 12 dismissed consumer protection claims because the plaintiffs' allegations did not include enough detail in the Complaint. Although plaintiff alleged that a product display at a store falsely appeared to function properly, he did not indicate what it specifically depicted or how he relied on the information conveyed in making his purchase. See id. 13 14 15 16 at 925; see also Chavez v. Nestle USA, Inc., No . C V 09-9192-GW C W X , 2011 W L 17 10565797 at *8 (C.D. Cal. Jan. 10,2011) (dismissing claims because the complaint did 18 not specify when plaintiffs bought the products, what representations they saw, when 19 they viewed them, or how they relied on them). Here, Plaintiffs Complaint provides little detail and fails to plead who made the 21 allegedly false representations, whether the representations were made with knowledge 22 of their falsity, when Plaintiff read or heard the representations, and how Plaintiffs 23 reliance on them was justifiable. Throughout the Complaint, Plaintiff refers vaguely to 24 representations and false claims made on the company's website and in articles, but 25 fails to identify the specific content of the statements or the specific products to which 26 they refer, or the time she spent reviewing the statements. Plaintiff also fails to attribute any specific misconduct to Mr. Segev. Indeed, 28 Plaintiffs mere conclusions that Mr. Segev "authorized, directed, or participated in 20 27 11 MEMORANDUM OF POINTS AND AUTHORITIES Case 2:16-cv-07322-CAS-MRW Document 17 Filed 12/02/16 Page 19 of 27 Page ID #:338 1 such acts notwithstanding the fact that he acted as an agent of the corporation/' are 2 based on one article allegedly accessed on www.specialtyretail.com which purports to 3 quote Mr. Segev. (See Compl. 1J120.) Plaintiff states, "For example, Segev was quoted 4 making the following Representations and Warranties about the Adore Products: 'Stem 5 Cells Prevent Aging', 'Scientists have found that the stem cells of apples are similar to 6 the stem cells in human beings', 'through the use of biotechnology, science is able to 7 utilize these fruit stem cells using them in cosmetics so they are able to penetrate the 8 skin.'" (Id. at T[120.) Notably, however, Plaintiff incorrectly avers that Mr. Segev made 9 these representations "about the Adore Products," which is patently false because 10 nowhere in the paragraph Plaintiff quoted does Mr. Segev reference the Adore Products, 11 let alone the Cellmax Kit that Plaintiff alleges to have purchased. In addition, Plaintiff does not aver that Mr. Segev, individually, was present when 13 she made the alleged purchase, that he made any representations about the Adore 14 products to her, or that she ever read and relied on any such representations prior to 15 allegedly purchasing the products. (Id.) Plaintiff provides no other details about how 16 Mr. Segev individually authorized, directed, or participated in the alleged misconduct 17 that supports her claims grounded in fraud. Instead, Plaintiff relies on vague, sweeping 18 generalizations about "Defendants." Plaintiffs claims are based on allegedly false, 19 misleading and deceptive representations, yet she entirely fails to identify the alleged 20 misrepresentations with sufficient detail. Because Plaintiff has not provided the 21 specificity required for all fraud-based claims, her claims against Mr. Segev must be 22 dismissed. 12 23 2. Collective Treatment Of Defendants In Fraud Claims Requires Dismissal Under Federal Rule of Civil Procedure 9(b), when multiple defendants are sued in connection with an allegedly fraudulent scheme, a plaintiff cannot "merely lump multiple defendants together" but, rather, must differentiate the allegations and "inform each defendant separately of the allegations surrounding his alleged participation in the 24 25 26 27 28 12 MEMORANDUM OF POINTS AND AUTHORITIES Case 2:16-cv-07322-CAS-MRW Document 17 Filed 12/02/16 Page 20 of 27 Page ID #:339 1 fraud." Soares v. Lorono, No. 12-CV-05979-WHO, 2014 WL 723645 (N.D. Cal. Feb. 2 25, 2014) (citing Swartz v. KPMG LLP, 476 F.3d 756, 764 (9th Cir. 2007)). At a 3 minimum, the plaintiff must "identify the role of each defendant in the alleged 4 fraudulent scheme." Id. For example, in Bravo v. County of San Diego, No. C 12-06460 JSW, 2014 W L 6 555195 (N.D. Cal. Feb. 10, 2014), the plaintiff grouped all defendants together and 5 7 failed to allege which ones engaged in the misconduct he claimed. Therefore, the court 8 found that he failed to provide them with fair notice of the claims against them. 9 Likewise, the court dismissed fraud claims in Ward v. Pickett, 2013 WL 5496549 (N.D. 10 Cal. Oct. 3,2013) because the general allegations failed to identify the defendant's role 11 in the alleged fraud and any actions she took to participate in it. See also Shenzhen 12 Tech. Co. LTD v. Altec Lansing, LLC, No . 3 :12-CV-2188-GPC-BGS, 2013 W L 13 6145553 at *6 (S.D. Cal. Nov. 21, 2013) (dismissing fraud and negligent 14 misrepresentation claims because plaintiff failed to identify participation or connection 15 with the alleged misrepresentation). Here, only once in the massive, seventy-page Complaint, does Plaintiff even 17 vaguely refer to any misconduct on the part of Mr. Segev in an attempt to support her 18 conclusory allegation that he: "authorized, directed, or participated in" the alleged 19 conduct alleged of UHI, and such reference is a misstatement of evidence at best. 20 (Compl. If 120.) Indeed, the closest Plaintiff gets to making a specific allegation as to 21 Mr. Segev's conduct is where Plaintiff states, "Segev was quoted making the following 22 Representations and Warranties about the Adore Products: 'Stem Cells Prevent Aging", 23 "Scientists have found that the stem cells of apples are similar to the stem cells in human 24 beings", "through the use of biotechnology, science is able to utilize these fruit stem 25 cells using them in cosmetics so they are able to penetrate the skin." (Id.) (emphasis 26 added.) However, as explained above, the referenced exhibits shows that the alleged 27 quote was not "about the Adore Products," because nowhere in the purported quote 28 does Mr. Segev mention Adore products. (Id.) 16 13 Case 2:16-cv-07322-CAS-MRW Document 17 Filed 12/02/16 Page 21 of 27 Page ID #:340 Under applicable precedent, Plaintiffs failure to differentiate among Defendants 2 UHI and Mr. Segev results in her failure to adequately inform them of their alleged 3 roles in the unspecified fraud and other alleged misconduct. Indeed, this failure to 4 differentiate makes it impossible for Mr. Segev to meaningfully respond. Accordingly, 5 all of Plaintiff s claims against Mr. Segev must be dismissed. 1 6 3. Plaintiff Failed to Plead Sufficient Facts to Allege Alter Ego In an attempt to involve Defendant Mr. Segev, an individual who has no connection to the asserted claims other than his position within the company, Plaintiff 9 vaguely lumps together UHI and Mr. Segev into one, but fails to allege the elements of 10 Plaintiffs "Alter-Ego" theory. Plaintiff makes the naked and conclusory allegation that there is a "unity of interest and ownership" among the defendants, such that "any sense of independence is non-existent." (Compl. % 118.) Further, Plaintiff claims in a conclusory fashion that Mr. Segev "abused its organizational form as corporation to accomplish fraudulent objects, namely, to fraudulently promote the sale of Adore Products, to conceal the proceeds of those frauds, and to frustrate the ability of victims to obtain redress for the fraud." (Id. at HI 17.) Normally, a corporation is regarded as a legal entity separate and distinct from 1 O its shareholders, officers or directors. See Haas Automation, Inc. v. Denny, 2013 WL 6502876 (C.D. Cal. Dec. 4, 2013) (internal citation omitted); see also Dull v. Wright, 7 8 11 12 13 14 15 16 17 19 20 No. 15-CV-0083 W(NLS), 2015 WL 12564314, at *3 (S.D. Cal. Aug. 18,2015). There 21 is a presumption of corporate separateness that must be overcome by clear evidence. 22 See Flatten v. HG Bermuda Exempted Ltd., 437 F .3d 1181, 119 (1st Cir. 2006). 23 Generalized allegations that a corporation is the "alter ego" of the individual stockholders are insufficient to justify disregarding the corporate entity, in the absence of allegations of facts from which it appears that justice cannot otherwise be 24 25 26 accomplished. Vasey v. Cal. Dance Co., 70 Cal. App.3d 742, 749 (1977). Legal 27 conclusions, rather than factual allegations, do not suffice. See, e.g., Sklar v. Franchise 28 14 MEMORANDUM OF POINTS AND AUTHORITIES Case 2:16-cv-07322-CAS-MRW Document 17 Filed 12/02/16 Page 22 of 27 Page ID #:341 Tax Board, 185 CaL App. 3d 616, 621 (1986) (allegations that conduct was 1 2 "impermissible," "improper" and "arbitrary and capricious, contrary to law and an 3 abuse of discretion," are legal conclusions); Dull, 2015 WL 12564314, at *4 (finding 4 that the complaint's factual allegations were simply "too vague and conclusory" to 5 establish alter-ego liability). The United States Supreme Court has unambiguously held that a claim only "has 7 facial plausibility when the plaintiff pleads factual content that allows the court to draw 8 the reasonable inference that the defendant is liable for the misconduct alleged." 6 9 Ashcroft v. IqbaU 556 U.S. 662, 678 (2009). As the Court instructed, proper pleading 10 "demands more than an unadorned . . . accusation. A pleading that offers labels and 11 conclusions or a formulaic recitation of the elements of a cause of action will not do. 12 Nor does a complaint suffice it if it tenders naked assertions devoid of further factual 13 enhancement." Id. "In California, two conditions must be met before the alter ego doctrine will be 15 invoked. First, there must be such a unity of interest between the corporation and its 16 equitable owner that the separate personalities of the corporation and the shareholder 17 do not in reality exist. Second, there must be an inequitable result if the acts in question 18 are treated as those of the corporation alone." Sonora Diamond Corp., v. Superior 19 Court, 83 Cal. App. 4th 523, 538 (2000). There are numerous factors that must be 20 considered when deciding whether to invoke the alter ego doctrine. These include: the 21 use of the same office or employees, commingling of funds, a lack of corporate 22 formalities and whether the corporations have the same officers and directors. Sonora 23 Diamond Corp., 83 Cal. App. 4th at 538-539. No one factor is determinative, the court 24 must view all the facts and circumstances when determining whether to apply the 25 doctrine. Id. Nevertheless, "[a]lter ego is an extreme remedy, sparingly used." Id. 14 26 at 539. 27 Here, Plaintiff has entirely failed to allege any facts to satisfy either the first or second prong of the "alter ego" test, and her legal conclusions do not suffice. Sklar v. 28 15 MEMORANDUM OF POINTS AND AUTHORITIES Case 2:16-cv-07322-CAS-MRW Document 17 Filed 12/02/16 Page 23 of 27 Page ID #:342 1 Franchise Tax Board, 185 Cal.App.3d 616, 621 (1986). Plaintiff claims a "unity of 2 interest" exists and decries an "abuse of the organizational form" in the most conclusory 3 fashion, launching one unsubstantiated allegation after another. (Compl. ^[116-118.) 4 As shown below, the allegations are apropos of nothing, often attacking what amount 5 to the most routine of corporate activities. Consider the following unsubstantiated and 6 conclusory allegations upon which Plaintiff bases her Complaint: that Mr. Segev founded Universal Handicraft, Inc. and it is essentially wholly owned by Mr. Segev. who serves as the President of the company. This legality establishes no entitlement to pierce the corporate veil. (See ia. at 24, 117.) 7 8 9 • that Mr. Segev "exercises total operational control and decision making power over all business activities at Universal Handicraft, including but not limited to product origination and development; product marketing, sales, ana promotion; accounting and finance; product distribution; public and media relations; business development and strategy; vendor and third-party relationship; and contract negotiations." Again, Plaintiff provides no facts to demonstrate such or that these activities are anything other than routine corporate activities. Likewise, Plaintiff fails to aver facts that plausibly show a lack of corporate formalities, commingling of funds, or undercapitalization to justify her alter-ego theory. (Id at 10 11 12 13 14 15 16 ® that "Segev actually participated in the conduct alleged in this complaint... because he authorized, directed, or participated in such acts notwithstanding the fact that he acted as an agent of the corporation." As illusory and failed support for this allegation, Plaintiff merely refers to a snippet of an article which does not even refer to the Adore products at issue here. (Id. at ]f 120.) Additionally, the second prong of the "Alter-ego" test requires that an inequitable result occur by the recognition of the corporate form. Sonora Diamond Corp. Superior Court, 83 Cal. App. 4th 523, 539 (2000). Here, there is no cognizable 17 18 19 20 v. 22 allegation as to any inequitable result created by recognition of UHI's corporate form. 23 Even if Plaintiff had alleged some inability by UHI to satisfy a potential judgment 24 against it as a basis for her alter-ego claim, it is well-established that inability of a corporate debtor to pay a judgment is not enough to find inequitable conduct. Sonora 25 26 Diamond Corp, 83 Cal. App. 4th at 539; Leek v. Cooper, 194 Cal. App. 4th 399, 418 27 (2011) ("Difficulty in enforcing a judgment does not alone satisfy this element.") While 28 16 Case 2:16-cv-07322-CAS-MRW Document 17 Filed 12/02/16 Page 24 of 27 Page ID #:343 1 Plaintiff conclusory alleges the ultimate legal elements of alter ego liability, there are 2 no ultimate facts alleged to support this conclusion. Accordingly, this Court must 3 dismiss Plaintiffs Complaint. 4 C. Plaintiff Failed to Provide Pre-Suit Notice to Mr. Segev under Cal. Civ. Code §1782 5 California Civil Code section 1782 requires that "thirty days or more" prior to 7 commencing an action "for damages" under the Consumer Legal Remedies Act, the 8 "consumer" plaintiff "shall" notify the potential defendant "of the particular alleged 9 violations of Section 1770" and demand that he or she "correct, repair, replace or 10 otherwise rectify the goods or services alleged to be in violation of Section 1770." 11 "The notice shall be in writing and shall be sent by certified or registered mail, return 12 receipt requested, to the place where the transaction occurred or to the person's principal 13 place of business within California." Cal. Civ. Code § 1782(a)(2). The procedural 14 requirements of Section 1782 are strictly adhered to by dismissing a claim with 6 15 prejudice. Davis v. Chase Bank U.S.A., N.A., 650 F. Supp. 2d 1073, 1089 (C.D. Cal. 16 2009) (plaintiff did not provide notice according to Section 1782 and court dismissed 17 CLRA claim with prejudice); see also Laster v. T-Mobile USA, Inc., 407 F. Supp. 2d 18 1181, 1196 (S.D. Cal. 2005), affd, 252 F. App'x 111 (9th Cir. 2007) ("§ 1782 19 scrupulously prohibits any action for damages unless its notice provisions are met... the 20 Legislative goals would be eviscerated if consumers were allowed to sue for damages 21 without first providing the statutorily mandated period for remediation. Plaintiffs' claim 22 for damages is therefore dismissed with prejudice.") Here, Plaintiffs pre-suit notice was sent to and received solely by UHI, as shown 24 in Exhibit 21 to Plaintiffs Complaint. Indeed, the sole return receipt reflects receipt 25 only by Adore Organic Innovation. (Exhibit 21 attached to Compl., Dkt. No. 1-21.) 26 Plaintiff does not aver any fact showing that Mr. Segev was ever notified pursuant to 23 Section 1782(a)(2). 27 28 17 MEMORANDUM OF POINTS AND AUTHORITIES Case 2:16-cv-07322-CAS-MRW Document 17 Filed 12/02/16 Page 25 of 27 Page ID #:344 1 Notably, even actual notice of a CLRA claim is not sufficient. Davis v. Chase 2 Bank U.S.A., N.A., 650 F. Supp. 2d 1073, 1089 (C.D. Cal. 2009). Moreover, based on 3 Plaintiffs failure to allege facts to support her alter ego theory of liability against Mr. 4 Segev, Plaintiffs notice to UHI cannot suffice as notice to Mr. Segev. As a result, 5 Plaintiff failed to adhere to the strict notice requirements for her CLRA claims and, 6 therefore, her complaint against Mr. Segev must be dismissed with prejudice. 7 D. Mr. Segev Joins in Universal Handicraft's Motion to Dismiss Mr. Segev hereby joins and adopts the following arguments, fully briefed by UHI 9 within its Motion to Dismiss filed concurrently (see Universal Handicraft's Motion to Dismiss, Dkt. No. 15), incorporated by reference as if fully set forth herein: • Plaintiffs claims should be dismissed pursuant to Rule 12(b)(1) for lack of standing to seek injunctive relief under her declaratory relief claim, her CLRA claims, under California's False Advertising Law, and under New Jersey's Consumer Fraud Act. Additionally, Plaintiffs claims should be dismissed because she lacks standing to assert claims with regard to any products she did not actually purchase. Finally, Plaintiffs claims should be dismissed because she lacks standing to bring claims under the laws of states in which Plaintiff neither resides nor purchased the products at issue. • Plaintiffs CLRA, UCL, FAL, and New Jersey Consumer Fraud Act Claims should be dismissed because Plaintiffs allegations within the Complaint only support a claim for lack of substantiation, which is not actionable by a private plaintiff. • The Magnuson-Moss Warranty Act Claim fails because the products at issue are subject to their own regulator scheme, the FDCA; • To the extent all of Plaintiff s claims are predicated on the FDA Warning Letters and/or violations, they are barred under the theory of primary jurisdiction; 8 10 1 1 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 18 MEMORANDUM OF POINTS AND AUTHORITIES Case 2:16-cv-07322-CAS-MRW Document 17 Filed 12/02/16 Page 26 of 27 Page ID #:345 1 Plaintiffs declaratory relief claim fails because it is duplicative of other claims in the complaint; and Lastly, Plaintiffs unjust enrichment claim is a request for relief under quasi-contract, not a stand-alone claim, and quasi-contract claims do not exist where there is an expressed contract alleged. 2 3 4 5 6 III. CONCLUSION 7 For the foregoing reasons, Specially Appearing Defendant Mr. Segev 8 respectfully requests that the Court dismiss Plaintiffs Complaint with prejudice. 9 Dated: December 2, 2016 COZEN O'CONNOR 10 11 By: /s/ Anna L. Heller Jeffrey D. Feldman {Pro Hac Vice pending) Susan J. Latham (Pro Hac Vice pending) Nathan M. Dooley Anna L. Heller Brett N. Taylor Attorneys for Defendant UNIVERSAL HANDICRAFT, INC., d/b/a " Deep Sea Cosmetics" d/b/a "Adore Organic Innovations;" and Specially Appearing Defendant SHAY SABAG SEGEV 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 19 Case 2:16-cv-07322-CAS-MRW Document 17 Filed 12/02/16 Page 27 of 27 Page ID #:346 1 Jeffrey Feldman, Esq. (Pro Hac Vice pending) Susan Latham, Esq. [Pro Hac Vice pending) 2 COZEN O'CONNOR One Biscayne Tower, 30th Fl. 3 2 South Biscayne Blvd. Miami, FL 33131 4 Telephone: (305)397-0812 Facsimile: (305)720-2266 Nathan M. Dooley (SBN # 2243 31) ndooley@cozen.com Anna L. Heller (SBN # 299407) 7 aheller@cozen.com 8 Brett N. Taylor (SBN # 274400) btaylor@cozen.com 9 COZEN O'CONNOR , n 601 South Figueroa Street Suite 3700 11 Los Angeles, CA 90017 Telephone: (213)892-7900 12 Facsimile: (213)892-7999 13 Attorneys for Defendants UNIVERSAL HANDICRAFT, INC., 14 d/b/a "Deep Sea Cosmetics" d/b/a "Adore Organic Innovations;" and 15 SHAY SABAG SEGEV 16 UNITED STATES DISTRICT COURT 17 18 CENTRAL DISTRICT OF CALIFORNIA 19 Case No. 2:16-cv-07322-CAS-MRW LISA MOLLICONE, on behalf of 20 herself, all others similarly situated, and the general public, The Honorable Christina A. Snyder 21 22 DECLARATION OF SUSAN LATHAM IN SUPPORT OF SPECIALLY APPEARING DEFENDANT SHAY SABAG SEGEV'S MOTION TO DISMISS Plaintiff, 23 v. 24 UNIVERSAL HANDICRAFT, INC, 25 d/b/a "Deep Sea Cosmetics" d/b/a "Adore Organic Innovations;" and [Filed concurrently with Motion] Date: Time: Courtroom: 8D 26 Januarv 9, 2017 10:00 a.m. SHAY SABAG SEGEV, 27 Defendants. 28 1 DECLARATION OF SUSAN LATHAM IN SUPPORT OF SPECIALLY APPEARING DEFENDANT SHAY SABAG SEGEV'S MOTION TO DISMISS Case 2:16-cv-07322-CAS-MRW Document 17-1 Filed 12/02/16 Page 1 of 13 Page ID #:347 1 DECLARATION OF SUSAN J. LATHAM 2 I, Susan J. Latham, declare and state as follows: 1. The following facts are known by me to be true and correct and if called 3 4 as a witness I could and would competently testify thereto under oath. 5 I am an attorney at law licensed to practice in the state of Florida, New Jersey and New York, and my application for Pro Hac Vice is currently pending before 7 this Court. I am a member at the law firm of Cozen O'Connor, counsel of record for Defendants Universal Handicraft, Inc., d/b/a "Deep Sea Cosmetics" d/b/a "Adore 8 9 Organic Innovations;" and Shay Sabag Segev ("Defendants"). 10 3. I make this Declaration in support of Specially Appearing Defendant Shay Sabag Segev's Motion to Dismiss. 4. Attached as Exhibit A is a true and correct copy of a Summons that a process server "served" to Mr. Segev through Vi Sorrentino on or about October 28, 2016, which was then given to me by Raul Flores, in-house General Counsel for Universal Handicraft, Inc. 5. Attached as Exhibit B is a true and correct copy of the correspondence that I received on November 15, 2016 from the Clerk of this Court stating, "Please be advised our court docket doesn't reflect an issued summons to Mr. Segev, there is a summons issued to Defendant Handicraft." 6. Attached as Exhibit C is a true and correct copy of the "Proof of Service" upon Defendant Shay S Segev, filed with the Court on November 28, 2016, Dkt. 11 12 13 14 15 16 17 18 19 20 21 22 No. 13. 23 I declare under penalty of perjury under the laws of the State of California and the United States of America that the foregoing is true and correct. Executed at Miami, Florida, on December 2, 2 0 1 6 ^ 7 24 25 26 UOCy- 27 Susan J. Latham 28 2 DECLARATION OF SUSAN LATHAM IN SUPPORT OF SPECIALLY APPEARING DEFENDANT SHAY SABAG SEGEV'S MOTION TO DISMISS Case 2:16-cv-07322-CAS-MRW Document 17-1 Filed 12/02/16 Page 2 of 13 Page ID #:348 Case 2:16-cv-07322-CAS-MRW Document 17-1 Filed 12/02/16 Page 3 of 13 Page ID #:349 Case 2:16-cv-07322-CAS-MRW Document 17-1 Filed 12/02/16 Page 4 of 13 Page ID #:350 Case 2:16-cv-07322-CAS-MRW Document 17-1 Filed 12/02/16 Page 5 of 13 Page ID #:351 Case 2:16-cv-07322-CAS-MRW Document 17-1 Filed 12/02/16 Page 6 of 13 Page ID #:352 Case 2:16-cv-07322-CAS-MRW Document 17-1 Filed 12/02/16 Page 7 of 13 Page ID #:353 Case 2:16-cv-07322-CAS-MRW Document 17-1 Filed 12/02/16 Page 8 of 13 Page ID #:354 Case 2:16-cv-07322-CAS-MRW Document 17-1 Filed 12/02/16 Page 9 of 13 Page ID #:355 Case 2:16-cv-07322-CAS-MRW Document 17-1 Filed 12/02/16 Page 10 of 13 Page ID #:356 Case 2:16-cv-07322-CAS-MRW Document 17-1 Filed 12/02/16 Page 11 of 13 Page ID #:357 Case 2:16-cv-07322-CAS-MRW Document 17-1 Filed 12/02/16 Page 12 of 13 Page ID #:358 Case 2:16-cv-07322-CAS-MRW Document 17-1 Filed 12/02/16 Page 13 of 13 Page ID #:359 1 2 3 4 5 6 7 8 9 UNITED STATES DISTRICT COURT 10 FOR THE CENTRAL DISTRICT OF CALIFORNIA 11 LISA MOLLICONE, on behalf of herself, all others similarly situated, and the generic public, Case No.: 2:16-cv-07322-CAS-MRW 12 The Honorable Christina A. Snyder 13 Plaintiff, PROPOSED] ORDER GRANTING HE MOTION TO DISMISS OF SPECIALLY APPEARING DEFENDANT SHAY SABAG SEGEV ? 14 15 vs. UNIVERSAL HANDICRAFT, INC., d/b/a/ "Deep Sea Cosmetics" d/b/a "Adore Organic Innovations;" and SHAY SAfeAG SEGEV, 16 [Filed concurrently with Motion; Declaration of Susan Latham] Date: Time: Courtroom: 8D 17 January 9, 2017 10:00 a.m. 18 Defendant(s). 19 20 ORDER 21 The Motion of Specially Appearing Defendant SHAY SABAG SEGEV ("Defendant" or "Segev") to dismiss the complaint of Plaintiff LISA MOLLICONE ("Plaintiff') pursuant to Rule 12(b)(1), 12(b)(5) and 12(b)(6) of the Federal Rules of 22 23 24 Civil Procedure ("Motion to Dismiss") came on for hearing on the Court's regular motion calendar on January 9, 2017 at 10:00 a.m. in courtroom D of the above entitled Court, Honorable Christina A. Snyder presiding. 25 26 27 28 1 [PROPOSED] ORDER GRANTING THE MOTION TO DISMISS OF SPECIALLY APPEARING DEFENDANT SHAY SABAG SEGEV LEGAL\28809445\2 Case 2:16-cv-07322-CAS-MRW Document 17-2 Filed 12/02/16 Page 1 of 3 Page ID #:360 The Court has read and considered the papers filed in support of and in 2 opposition to the Motion to Dismiss, the arguments of counsel at the hearing, and the 3 case file in this action. Good cause appears for the requested relief. The Court finds 4 the Motion to Dismiss should be granted, and Plaintiffs Complaint against Segev 5 should be dismissed in its entirety with prejudice on the following grounds: Plaintiffs Complaint should be dismissed pursuant to Rule 12(b)(5) of the 7 Federal Rules of Civil Procedure because a summons for Segev was never issued and 8 Segev was not properly served under Federal, Florida, or California law. Additionally, Plaintiffs claims for injunctive relief, claims regarding products 10 she did not purchase, and her claims under a nationwide class to the extent the claims 11 are based on state laws other than New Jersey (where she is a resident) or California 12 (where she allegedly purchased the product) are dismissed with prejudice pursuant to 13 Rule 12(b)(1) on the grounds that this Court does not have subject matter jurisdiction 14 over these claims because Plaintiff lacks Article III standing to bring such claims. Finally, the Complaint fails to state a claim in its entirety under Rule 12(b)(6) of 16 the Federal Rules of Civil Procedure because the only allegations against Segev are 17 based on an alter ego theory, and Plaintiff has not adequately plead facts to support an 18 alter ego Theory. Additionally, the following claims are dismissed pursuant to 19 12(b)(6) on the additional grounds set forth below: • Count I- Intentional Fraud and Deceit, Count II - Fraud by Omissions/Suppression of Facts, Count III - Negligent Misrepresentations, Count IV- Rescission of Purchase Contracts Based on Illegality and Violations of Public Policy, Count XI - Violations of the Consumer Legal Remedies Act 1 6 9 15 20 21 22 23 ("CLRA"), Count XII - the False Advertising Law ("FAL"), Count XIII - the 24 Unfair Competition Law (California Business and Professions Code § 17200 et seq.) ("UCL"), Count XIV - Violations of New Jersey's Consumer Fraud Act, and Count XV - Violations of New Jersey's Truth-in-Consumer Contract, 25 26 27 28 2 [PROPOSED] ORDER GRANTING THE MOTION TO DISMISS OF SPECIALLY APPEARING DEFENDANT SHAY SAB AG SEGEV LEGALY28809445\2 Case 2:16-cv-07322-CAS-MRW Document 17-2 Filed 12/02/16 Page 2 of 3 Page ID #:361 Warranty and Notice Act are dismissed with prejudice because they are based on or grounded in fraud, and Plaintiff fails to sufficiently plead these claims under the heightened pleading standard of Rule 9(b) of the Federal Rules of Civil Procedure. Even had Plaintiff sufficiently plead these claims, these claims are dismissed with prejudice because Plaintiff already pleads a contract claim under her breach of warranty count, and under California law, fraud-based claims fail when they are based on the same set of facts as a breach of contract claim, as they are here. Furthermore, the CLRA, UCL, FAL, and New Jersey Consumer Fraud Act Claims are dismissed with prejudice on the additional ground that Plaintiffs allegations only support a claim for lack of substantiation, which is not actionable by a private plaintiff. • Count X - The Magnuson-Moss Warranty Act Claim is dismissed with prejudice because the products at issue are subject to their own regulatory scheme, the 1 2 3 4 5 6 7 8 9 10 11 12 13 14 FDCA. • Any claim in Plaintiffs complaint that is predicate on the FDA Warning Letters and/or violations are dismissed with prejudice because the FDA has primary jurisdiction over such claims. • Plaintiffs Count XII for declaratory relief is dismissed with prejudice because it is duplicative of other claims in the complaint; and • Plaintiffs Count VI for unjust enrichment is dismissed with prejudice because it is a request for relief under quasi-contract, not a stand-alone claim, and quasi- contract claims do not exist where there is an expressed contract alleged. 15 16 17 18 19 20 21 22 IT IS SO ORDERED. 23 24 DATED: 25 Honorable Christina A. Snyder 26 JUDGE OF THE DISTRICT COURT 27 28 3 [PROPOSED] ORDER GRANTING THE MOTION TO DISMISS OF SPECIALLY APPEARING DEFENDANT SHAY SAB AG SEGEV LEGAL\28809445\2 Case 2:16-cv-07322-CAS-MRW Document 17-2 Filed 12/02/16 Page 3 of 3 Page ID #:362