9th Cir. Passes on Opportunity to Clarify Tobacco II Pleading Requirements

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In Haskins v. Symantec Corp., No. 14-16141 (9th Cir. June 20, 2016) (slip op. available here), a three-page unpublished opinion, the Ninth Circuit came to the unremarkable conclusion that a plaintiff bringing fraudulent advertising claims under the Unfair Competition Law (UCL) and Consumers Legal Remedies Act (CLRA) who “did not allege that she read and relied on a specific misrepresentation” by the defendant has failed to plead her fraud claims with the particularity required by Rule 9(b) of the Federal Rules of Civil Procedure. Slip op. at 2. What is perhaps notable is that the court did not engage with the important issue of how the California Supreme Court’s decision in In re Tobacco II Cases, 46 Cal.4th 298, 328 (2009) (“Tobacco II”) factors into the federal rules for pleading UCL and CLRA claims sounding in fraud.

In Haskins, the plaintiff could not plead that she relied on a specific advertisement when she purchased Symantec’s Norton Antivirus software online, although she alleged her belief that the product would protect her from malware, viruses, and hackers. In fact, the software was compromised by hackers in 2006. Haskins v. Symantec Corp., 2013 WL 6234610, at *1 (N.D. Cal. Dec. 2, 2013). Accordingly, she sought to plead her claim under Tobacco II, in which the California Supreme Court relaxed the requirements for pleading reliance on specific misrepresentations where “those misrepresentations and false statements were part of an extensive and long-term advertising campaign.” Id. at *4. In an effort to plead a Tobacco II-type campaign, in the third amended complaint, she added allegations regarding the scope of the advertising campaign in the case. Haskins v. Symantec Corp., 2014 WL 2450996, at *2 (N.D. Cal. June 2, 2014). However, District Judge Jon Tigar, who has attempted to bring clarity to the requirements for pleading a Tobacco II-type campaign in prior federal cases (see Opperman v. Path, Inc., 84 F.Supp.3d 962 (N.D. Cal. 2015)), found those allegations did not pass muster because the at-issue advertising campaign “does not fall within the ambit of the Tobacco II exception.” Id.

On appeal, the Ninth Circuit agreed with Judge Tigar’s conclusion, but stated,

Even assuming [that the argument that a plaintiff need not allege reliance on a specific misrepresentation to meet the pleading requirements of Rule 9(b)] is correct as a matter of federal procedural requirements, Haskins failed to establish that the Tobacco II standard is applicable to her pleadings because the misrepresentations at issue here were not part of an extensive and long-term advertising campaign like the decades-long campaign engaging in saturation advertising targeting adolescents in Tobacco II.

Haskins, No. 14-16141, slip op. at 2 (emphasis added).

The Ninth Circuit’s tentative language, which appears to question the application of Tobacco II to federal pleadings standards, reflects an unresolved tension among the district courts within the Ninth Circuit regarding the requirements for pleading fraud under Rule 9(b) and the California Supreme Court’s decision in Tobacco II. On the one hand, as Judge Tigar stated, “[i]f Plaintiff can prevail at trial without demonstrating that she saw any specific advertisement, it would make little sense to interpret Rule 9(b) to require dismissal of her claim at the pleading stage for failing to include a specific allegation that she saw a specific advertisement.” Haskins, 2013 WL 6234610, at *5. While some district courts follow Judge Tigar’s approach in Opperman, other district courts disagree with what they perceive to be an overly lax application of Rule 9(b) in the context of allegations purporting to fall within the Tobacco II exception. See Yastrab v. Apple Inc., 2016 WL 1169424, at *6 (N.D. Cal. March 25, 2016) (“[T]he court disagrees with Opperman to the extent it holds that a . . . plaintiff is . . . excused from complying with Rule 9(b) when pleading a long-term advertising campaign.”).

While Haskins did not resolve this conflict, this is certainly an issue to watch. Plaintiffs have a substantive right to proceed under the UCL and CLRA when they have been deceived by the type of advertising campaign described in Tobacco II and its progeny in California courts and federal courts applying California substantive law. Federal deference is required to opinions of the California Supreme Court on issues of state law and Federal Rule of Civil Procedure 9 should not be construed to abridge or modify those rights under the guise of “procedural rules of pleading.” See Haskins, 2013 WL 6234610, at *5.

Authored By:
Robert Friedl, Senior Counsel