Kim Allen v. Hyland's, Inc. ( 2022 )

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS MAY 12 2022
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
KIM ALLEN; DANIEL XENOS; No. 21-55289
SHERRELL SMITH; NANCY
RODRIGUEZ; YUANKE XU; DIANA D.C. No.
SISTI; MELISSA NIGH, on behalf of 2:12-cv-01150-DMG-MAN
themselves, all others similarly situated, and
the general public,
MEMORANDUM*
Plaintiffs-Appellants,
v.
HYLAND'S, INC., a California corporation;
STANDARD HOMEOPATHIC
COMPANY,
Defendants-Appellees.
Appeal from the United States District Court
for the Central District of California
Dolly M. Gee, District Judge, Presiding
Submitted May 10, 2022**
Pasadena, California
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
Before: WATFORD and FRIEDLAND, Circuit Judges, and ROBRENO,***
District Judge.
This is the second time this case has come before our court. We previously
remanded the case to the district court for additional proceedings on Plaintiffs’
claim that, by marketing various homeopathic products, Defendants committed
unfair business practices under California’s Unfair Competition Law, Cal. Bus. &
Prof. Code §§ 17200 et seq. (“UCL”). See Allen v. Hylands, Inc., 773 F. App’x
870, 874 (9th Cir. 2019). On remand, the district court granted judgment to
Defendants on that claim. Plaintiffs now appeal that judgment, including by
arguing that the district court erred by declining to take judicial notice of certain
documents issued by the Federal Trade Commission (“FTC”). We review the
district court’s findings of fact for clear error and its conclusions of law de novo.
Lim v. City of Long Beach, 217 F.3d 1050, 1054 (9th Cir. 2000). We review the
district court’s decision whether to take judicial notice for abuse of discretion.
Ritter v. Hughes Aircraft Co., 58 F.3d 454, 458 (9th Cir. 1995). We have
jurisdiction under 28 U.S.C. § 1291 and affirm.
1. The parties dispute the proper test under California law for a consumer’s
unfair business practice claim brought under the UCL. We agree with the district
***
The Honorable Eduardo C. Robreno, United States District Judge for
the Eastern District of Pennsylvania, sitting by designation.
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court that it is not necessary to decide which test should apply in this case because,
in light of the district court’s findings of fact, Plaintiffs cannot prevail under any of
the three tests the parties are debating.
The district court was required to accept as true the jury’s determination that
Plaintiffs failed to prove, by a preponderance of the evidence, that Defendants’
products do not work as advertised. See Sanders v. City of Newport, 657 F.3d 772,
783 (9th Cir. 2011) (“[W]here legal claims tried by the jury and equitable claims
tried by the court are ‘based on the same set of facts, the Seventh Amendment
requires the trial judge to follow the jury’s implicit or explicit factual
determinations.’” (quoting Miller v. Fairchild Indus., Inc., 885 F.2d 498, 507 (9th
Cir. 1989))). On remand, the district court made additional factual findings,
including that Defendants’ products followed all applicable FDA labeling
regulations,1 and that Plaintiffs failed to meet their burden of showing that “the
only medical benefit provided by Defendants’ products is via the placebo effect.”
Those factual determinations were not clearly erroneous. In finding that
Plaintiffs had failed to meet their burden of showing that Defendants’ homeopathic
remedies did not work, the district court cited testimony from one of Defendants’
experts, who testified about studies that found certain homeopathic products
performed better than placebos or just as effectively as standard treatments, as well
1
Plaintiffs do not appear to challenge this finding on appeal.
3
as testimony from one of Plaintiffs’ experts, who conceded that there was a
scientific dispute about the efficacy of homeopathic remedies. Although the
district court’s finding that Plaintiffs failed to meet their burden regarding the
efficacy of homeopathic remedies is not the only conclusion one could draw from
the evidence, that finding is “plausible in light of the record viewed in its entirety”
and therefore “cannot be clearly erroneous.” United States v. Working, 224 F.3d
1093, 1102 (9th Cir. 2000) (en banc) (quoting Anderson v. Bessemer City, 470 U.S.
564, 574 (1985)).
The jury’s and district court’s factual findings foreclose Plaintiffs’ unfair
business practice theory, no matter which test applies. Under the FTC section 5
test, Plaintiffs would need to show that their consumer injury is “substantial.”
Camacho v. Auto. Club of S. Cal., 48 Cal. Rptr. 3d 770, 777 (Ct. App. 2006).
Plaintiffs contend that the substantial injury in this case is that Defendants
marketed products to Plaintiffs that provide no benefit beyond the placebo effect.
The district court expressly found that Plaintiffs failed to meet their burden of
proving Defendants’ products provided no such benefit. Under the tethering test,
Plaintiffs argue that Defendants’ conduct violated California’s “strong public
policy against the deceit of another.” That argument is foreclosed by the jury’s
finding that Plaintiffs had failed to meet their burden of showing that the products
could not work as advertised and the district court’s finding that Defendants
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complied with all applicable FDA requirements in marketing their products.
Finally, under the balancing test, Plaintiffs contend that Defendants engaged in
conduct that was “immoral, unethical, oppressive, unscrupulous or substantially
injurious to consumers,” S. Bay Chevrolet v. Gen. Motors Acceptance Corp., 85
Cal. Rptr. 2d 301, 316 (Ct. App. 1999) (quotation marks omitted), by marketing
products that were ineffective, not adequately tested, and/or heavily diluted. This
argument fails in light of the jury’s and district court’s factual determinations that
Plaintiffs failed to show the products did not work and that Defendants complied
with FDA requirements for marketing homeopathic products.2
2. Plaintiffs also contend that the district court abused its discretion by
declining to take judicial notice of three FTC documents that Plaintiffs submitted
following remand. “We do not reverse the district court’s decisions under an abuse
of discretion standard unless we are ‘convinced firmly that the reviewed decision
lies beyond the pale of reasonable justification under the circumstances.’” Boyd v.
City & County of San Francisco, 576 F.3d 938, 943 (9th Cir. 2009) (quoting
Harman v. Apfel, 211 F.3d 1172, 1175 (9th Cir. 2000)).
2
Because we affirm the judgment for Defendants on the merits, we need not
reach their alternative argument that this appeal should be dismissed, or that the
judgment should be summarily affirmed, on the basis of Plaintiffs’ purported
failure to comply with the federal rules of appellate procedure. See Fed. R. App. P.
10(b)(2).
5
Plaintiffs have failed to show that the district court abused its discretion in
declining to take judicial notice of these documents. In light of the parties’ agreed-
upon post-remand joint status report, which provided that the parties would file
findings of fact and conclusions of law based upon “evidence previously submitted
at trial relevant to the UCL claim,” we cannot say that it was “beyond the pale of
reasonable justification” for the district court to decline to consider new evidence
on remand. See id.AFFIRMED.
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