113 F. Supp. 3d 1047

Jude TRAZO, Plaintiff, v. NESTLÉ USA, INC., Defendant.

Case No. 5:12-cv-02272-PSG

United States District Court, N.D. California, San Jose Division.

Signed 07/10/2015

Ben F. Pierce Gore, Pratt & Associates, San Jose, 0Á, David Shelton, Attorney-at-Law, J. Price Coleman, Coleman Law Firm, Richard Barrett, Law Offices' of Richard R. Barrett, PLLC, Oxford, MS,' Alex Peet, Dewitt Marshall Lovelace, Sr., Lovelace Law Firm, P.A., Miramar Beach, FL, Ananda N. Chaudhuri, Frank Karam, Keith M. Fleischman, , Fleischman Law Firm, New York, NY, Brian K. Herring-ton, David Malcolm McMullan, Jr., Katherine B. Riley, Don Barrett, P.A., Don Barrett, Barrett Law Group, Lexington, MS, Carol Nelkin, Jay P. Nelkin, Stuart M. Nelkin, Nelkin, Nelkin & Krock, PC, Houston, TX, Charles Barrett, Charles Barrett,' P.C., Nashville, TN, Gene M. Zona Jones, Provost Umphrey Law Firm, LLP; Beaumont, TX, for Plaintiff.

Dale Joseph Giali, Elizabeth Jean Crepps, Mayer Brown LLP, Los Angeles, *1048CA, Carmine R. Zarlenga, III, Mayer Brown, LLP, Washington, DC, for Defendant.

ORDER GRANTING MOTION FOR RECONSIDERATION

PAUL S. GREWAL, United States Magistrate Judge

Plaintiff Jude Trazo, individually and on behalf of similarly situated Plaintiffs, moves for reconsideration of his unjust enrichment/quasi-contract claim. Because the Ninth Circuit recently decided that the duplicative nature of an unjust enrichment/quasi-contract claim is not a valid reason to dismiss it, the court GRANTS Trazo’s motion.1

I.

“Reconsideration is appropriate if the district court (1) is presented with newly discovered evidence, (2) committed clear error or the initial decision was manifestly unjust, or (3) if there is an intervening change in controlling law. There may also be other, highly unusual, circumstances warranting reconsideration.”2

In August 2013, the court dismissed Plaintiffs’ claim for restitution based on unjust enrichment/quasi-contract.3 The court specifically held that because “Plaintiffs’ quasi-contract theory rests on the same allegations already covered by their other claims, which also provide for restitution as a remedy, the claim is ‘merely duplicative of statutory or tort claims’ and must be dismissed.”4

Trazo requests reconsideration on the grounds that Astiana “requires that [he] be allowed to pursue a claim for unjust enrichment.”5

II.

This court has subject matter jurisdiction pursuant to 28 U.S.C. § 1367. The parties further consented to the jurisdiction of the undersigned magistrate judge under 28 U.S.C. § 636(c) and Fed.R.Civ.P. 72(a).6

As a preliminary matter, while Nestlé may be right that Trazo was dilatory in bringing this motion, its contention that Trazo “relinquished and waived” his unjust enrichment claim is insufficient.7 This court has broad discretion to reconsider and revise its prior orders.8

Nestlé also argues that Trazo’s motion should be denied because “the ‘unjust enrichment’ claim [he is] trying to assert is not for restitution” but only for nonrestitu-*1049tionary disgorgement9 — an entirely new claim. Since Astiana denied dismissal of a claim for restitution but did not discuss nonrestitutionary disgorgement, Nestlé asserts that the Ninth Circuit’s decision is “entirely beside the point of what [Trazo] seek[s] in [his] motion[] for reconsideration.”10 Nestlé’s argument is unfounded. Trazo explicitly requests reconsideration of his original unjust enrichmenVquasi-con-tract claim before he discusses nonrestitm tionary disgorgement as a remedy.11 Tra-zo’s claim for restitution is appropriately before the court in a request for reconsideration.

HI.

The Ninth Circuit’s decision in Astiana is “an intervening change in controlling law” and therefore presents a valid basis for reconsideration.12

First, Astiana settled the long-standing question of whether a court may dismiss a claim for unjust enrichment as merély du-plicative of other statutory ortort claims.13 Astiana involved a putative class action suit in which Plaintiffs alleged that Defendant falsely labeled its cosmetic products as “All Natural.”14 Plaintiffs claimed that such false labeling deceived customers into buying those products and unjustly enriched Defendant as a result.15 The complaint sought damages under-California’s Unfair Competition Law and False Advertising Law and under a quasi-contract theory.16 Before the class-certification stage, the district court dismissed the quasi-contract claim, “concluding that restitution ‘[was] not a standalone-cause'of action in California and [that the claim was] nonsensical as pled in any event.’ ”17 The Ninth Circuit agreed that unjust enrichment did not constitute a standalone cause of action in California.18 However, it confirmed that “[w]hen a plaintiff alleges unjust enrichment, a court may' ‘construe the cause of action as a quasi-contract claim seeking restitution.’ ”19 Accordingly, the court found that Plaintiffs’ allegations were “sufficient to state a quasi-contract cause of action.”20 The court then ‘held that “[t]o the extent the district court concluded that the [claim] was nonsensical because it was duplicative of or superfluous to [Plaintiffs’] other claims, this [was] not grounds for dismissal.”21

The unambiguous holding' in Astiana requires'this court to side with Trazo and reinstate his claim for restitution based on unjust enrichmenVquasi-contract.22 Trazo’s amended complaint alleged that “Defendant sold Misbranded Food Products to Plaintiffs” and that “[a]s a result of Defendant’s fraudulent and misleading labeling ... Defendant was enriched at the expense of Plaintiffs and the *1050class.”23 This allegation .is sufficient to state a quasi-contract cause, of action. “That the claim may be duplicative of Plaintiffs statutory claims under the UCL, FAL, and [California Consumer Legal Remedies Act] is not a proper ground for dismissal at this stage of the litigation, particularly as Plaintiff seeks to represent a nationwide, class on [his] claim for quasi-contract.” 24

Second, Nestlé’s reliance on Lanovaz v. Twinings North America25 to support its opposition, is misplaced because the facts and posture of that case are distinguishable to those here. In Lanovaz, Plaintiff also sought reconsideration of hqr unjust enrichment claim, which had been dismissed as “duplicative of her consumer protection claims” under the UCL, FAL and CLRA.26 But Lanovaz filed her motion for reconsideration after the court had “denied certification of a damages class based upon [her] consumer protection claims.”27 Lanovaz’s motion for reconsideration further sought damages in the form of restitutionary disgorgement, a remedy also available under her UCL claim.28 Yet, Lanovaz :had not pursued this remedy in her prior motion for class certification (which, as mentioned above, was ultimately denied).29 The court thus determined that Lanovaz’s use of the unjust enrichment claim was an improper “vehicle for belatedly obtaining a second bite at class certification.”30 In other Words, Lanovaz'“could have sought certification of a damages class equivalent to a damages class based upon an unjust enrichment claim” but chose not to do so.31 She therefore could not “seek class certification of a damages class under an unjust' enrichment claim in light of the court’s prior Cértification Order.”32 “[T]o the extent [the] dismissal was in error in light of Astiana, [it] did not limit the remedies plaintiff could have sought at the class certification stage.”33 The court essentially denied the motion by reason of harmless error.34

This is not the case here. Trazo has not yet presented the court with a motion for class certification.35 Reinstating Trazo’s quasi-contract claim will not give him another bite at obtaining class certification or otherwise unreasonably prejudice Nestlé in any way.

*1051Third, to be clear, the court reinstates Trazo’s claim for restitution based on unjust enrichment/quasi-contraet as pled in the amended complaint,36 but does not grant Trazo leave to seek damages in the form of nonrestitútionary disgorgement.

Trazo may not seek damages in the form of nonrestitútionary disgorgement for two reasons. First, “[a] motion for reconsideration ‘may not be used to raise arguments or present evidence for the 'first time when they could reasonably have been raised earlier in the litigation.’”37 Trazo’s amended complaint did not discuss nonrestitútionary disgorgement as a remedy for quasi-contract, and the two cases on which Trazo primarily relies to support his argument for nonrestitútionary disgorgement summarize precedent that predated the court’s August 2013 dismissal of Tra-zo’s quasi-contract claim.38 As such, Trazo could have reasonably raised an argument for nonrestitútionary disgorgement earlier in this litigation, but- chose not to do so. He cannot use a motion for. reconsideration to raise that argument now.

Second, nonrestitútionary disgorgement is not the appropriate remedy for a quasi-contract claim based on alleged mislabeling of a consumer product.39 Trazo cites a number of cases, to support. his argument that he can pursue nonrestitutionary disgorgement under a quasi-contract theory. But none of those cases address that remedy in the context of a product mislabeling claim,40. The nonresti-*1052tutionary disgorgement remedy which Tra-zo seeks would require Nestlé “to surrender ... all profits earned as a result of [the alleged] unfair business practice regardless of whether those profits represent money taken directly from persons who were victims of the unfair practice.”41 Yet, Trazo’s amended complaint specifically sought restitution, “a remedy whose purpose is ‘to restore the status quo by returning to the plaintiff funds in which he or she has an ownership interest.’ ”42 “The proper measure of restitution in a mislabeling case is the amount necessary to compensate the purchaser for the difference between a product as labeled and the product as received,” not the full purchase price or all profits.43 “There is no reason to go beyond the price premium, and doing so would result in a windfall to plaintiff.”44

IV.

Trazo’s motion for reconsideration is GRANTED. As discussed above, Trazo may amend his complaint to include a claim for restitution based on unjust enrichment/quasi-contract, but may not include a claim for damages in the form of nonrestitutionary disgorgement.

SO ORDERED.

Trazo v. Nestlé USA, Inc.
113 F. Supp. 3d 1047

Case Details

Name
Trazo v. Nestlé USA, Inc.
Decision Date
Jul 10, 2015
Citations

113 F. Supp. 3d 1047

Jurisdiction
United States

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