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`UNITED STATES DISTRICT COURT
`CENTRAL DISTRICT OF CALIFORNIA
`
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`Michelene Colette et al,
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`Plaintiff,
`v.
`CV Sciences, Inc.,
`
`Defendant.
`
`
`
`2:19-cv-10227-VAP-JEM(x)
`
`Order GRANTING IN PART
`Defendant’s Motion to Dismiss and
`STAYING Remaining Causes of
`Action (Dkt. 39).
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`
`Before the Court is Defendant CV Sciences, Inc.’s Motion to Dismiss (the
`“Motion”). (Dkt. 39). Plaintiffs Michelene Colette and Leticia Shaw filed
`opposition on April 6, 2020 (Dkt. 43), and Defendant replied on April 20, 2020
`(Dkt. 44). The Court deems the Motion suitable for resolution without oral
`argument pursuant to Local Rule 7-15. After considering all papers filed in support
`of, and in opposition to, the Motion, the Court GRANTS IN PART the Motion and
`STAYS the remaining causes of action.
`
`
`I. BACKGROUND
`This lawsuit is one of several in the vanguard of consumer class actions
`relating to the marketing and sale of cannabidiol (“CBD”) products. Just in the
`Central and Northern Districts of California, the Court is aware of four similar
`cases, each filed around the same time and each now facing a pending motion to
`dismiss. See DaSilva v. Infinite Product Co., No. 2:19-cv-10148, Dkt. 48 (C.D. Cal.
`Mar. 17, 2020); Davis v. cbdMD, Inc., No. 2:19-cv-10241, Dkt. 40 (C.D. Cal Mar.
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`15, 2020); McCarthy v. Elixinol, LLC, 5:19-CV-07948, Dkt. 34 (N.D. Cal. Mar. 13,
`2020); McCarthy v. Charlotte’s Web Holdings, Inc., 5:19-cv-07836, Dkt. 33 (N.D.
`Cal. Mar. 16, 2020).
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`Defendant here, a California corporation with its principal place of business
`in San Diego (Dkt. 35 ¶ 15), produces and sells a range of CBD products, including
`sprays, oil drops, gummies, capsules, and softgels (id. ¶ 1). Plaintiff Colette is an
`Arizona citizen who alleges she purchased Defendant’s CBD spray approximately
`two years ago for $60. (Id. ¶ 13). Plaintiff Shaw is a California citizen who alleges
`that she purchased six of Defendant’s products between May and December 2018
`for a total of $377.73. (Id. ¶ 14). Each Plaintiff claims that, had she known CBD
`products are “not legally sold in the United States,” she would not have purchased
`them. (Id. ¶¶ 13–14).
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`The crux of this lawsuit is Plaintiffs’ allegations that Defendant’s products
`are illegal under the Federal Food, Drug, and Cosmetic Act of 1938, 21 U.S.C. §
`301, et seq (“FDCA”). Plaintiffs claim the products run afoul of the FDCA in two
`ways: first, they “are mislabeled as Dietary Supplements or contain the illegal die-
`tary ingredient CBD,” and second, Defendant’s CBD spray is intended for sublin-
`gual use and, therefore, “does not meet the definition of a dietary supplement.”
`(See generally id. ¶¶ 18–24). The Food and Drug Administration (“FDA”) is ac-
`tively considering the regulation of CBD products, including the “manufacturing,
`product quality, marketing, labeling, and sale of products containing cannabis or
`cannabis-derived products.” See U.S. Food & Drug Admin., Scientific Data and In-
`formation About Products Containing Cannabis or Cannabis-Derived Compounds;
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`Extension of Comment Period, 84 Fed. Reg. 28822, 28823 (June 20, 2019). Cur-
`rently, the FDA’s position is that it is illegal under federal law to “add CBD to a
`food or label CBD as a dietary supplement.” What You Need to Know (And What
`We’re Working to Find Out) About Products Containing Cannabis or Cannabis-de-
`rived Compounds, Including CBD (May 5, 2020), https://www.fda.gov/consum-
`ers/consumer-updates/what-you-need-know-and-what-were-working-find-out-
`about-products-containing-cannabis-or-cannabis.
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`Citing the FDA’s statements on CBD products, Plaintiffs’ First Amended
`Complaint (“FAC”) brings claims for (1) violation of California’s Unfair
`Competition Law (“UCL”), (2) violation of California’s false advertising law, (3)
`violation of California’s Consumer Legal Remedies Act (“CLRA”), (4) breach of
`express warranty under California law, (5) breach of implied warranty of
`merchantability under California law, (6) breach of express warranties under
`Arizona law, (7) breach of implied warranty of merchantability under Arizona law,
`(8) violation of the Arizona Consumer Fraud Act (“ACFA”), and (9) declaratory
`judgment. (Dkt. 35 ¶¶ 43–132). Plaintiffs seek to represent a class of “all persons
`in the United States who purchased [Defendant’s products] during the class period,”
`as well as California and Arizona subclasses. (Id. ¶ 31–33). Defendant moves to
`dismiss the FAC for failure to state a claim or, in the alternative, stay the case under
`the primary jurisdiction doctrine. (See generally Dkt. 39-1).
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`II.
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`LEGAL STANDARD
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`A. Motion to Dismiss
`Federal Rule of Civil Procedure 12(b)(6) allows a party to bring a motion to
`dismiss for failure to state a claim upon which relief can be granted. Rule 12(b)(6)
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`is read along with Rule 8(a), which requires a short, plain statement upon which a
`pleading shows entitlement to relief. Fed. R. Civ. P. 8(a)(2); Bell Atl. Corp. v.
`Twombly, 550 U.S. 544, 555 (2007). When evaluating a Rule 12(b)(6) motion, a
`court must accept all material allegations in the complaint—as well as any
`reasonable inferences to be drawn from them—as true and construe them in the
`light most favorable to the non-moving party. See Doe v. United States, 419 F.3d
`1058, 1062 (9th Cir. 2005).
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`“While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not
`need detailed factual allegations, a plaintiff’s 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.” Twombly, 550 U.S. at
`555 (citations omitted). Rather, the allegations in the complaint “must be enough to
`raise a right to relief above the speculative level.” Id.
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` To survive a motion to dismiss, a plaintiff must allege “enough facts to state
`a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570; Ashcroft v.
`Iqbal, 556 U.S. 662, 697 (2009). “The plausibility standard is not akin to a
`‘probability requirement,’ but it asks for more than a sheer possibility that a
`defendant has acted unlawfully. Where a complaint pleads facts that are ‘merely
`consistent with’ a defendant’s liability, it stops short of the line between possibility
`and plausibility of ‘entitlement to relief.’” Iqbal, 556 U.S. at 678 (quoting
`Twombly, 550 U.S. at 556).
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`The Ninth Circuit has clarified that (1) a complaint must “contain sufficient
`allegations of underlying facts to give fair notice and to enable the opposing party to
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`defend itself effectively” and (2) “the factual allegations that are taken as true must
`plausibly suggest an entitlement to relief, such that it is not unfair to require the
`opposing party to be subjected to the expense of discovery and continued
`litigation.” Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011).
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`B. Motion to Stay
`It is well-established that “[a] district court ‘has broad discretion to stay
`proceedings as an incident to its power to control its own docket’ in an effort to
`promote judicial economy.” DeMartini v. Johns, 693 F. App’x 534, 538 (9th Cir.
`2017) (quoting Clinton v. Jones, 520 U.S. 681, 706–07); see also Landis v. N. Am.
`Co., 299 U.S. 248, 254–55 (1936) (“[T]he power to stay proceedings is incidental to
`the power inherent in every court to control the disposition of the causes on its
`docket with economy of time and effort for itself, for counsel, and for litigants.
`How this can best be done calls for the exercise of judgment, which must weigh
`competing interests and maintain an even balance.”).
`
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`III. DISCUSSION
`
`A. Declaratory Relief
`The Court addresses Plaintiffs’ final cause of action first. In Count Nine,
`“Plaintiffs seek a declaration that Defendant has misrepresented the nature,
`ingredients and effectiveness of the Products and that its actions are unlawful.”
`(Dkt. 35 ¶ 131). This claim for relief arises under the Declaratory Judgment Act, 28
`U.S.C. § 2201 (“DJA”), which permits a court to “declare the rights and other legal
`relations of any interested party seeking such declaration.”
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`The DJA authorizes declaratory relief only in “a case of actual controversy.”
`28 U.S.C. § 2201. “[T]he phrase ‘case of actual controversy’ in the Act refers to the
`type of ‘Cases’ and ‘Controversies’ that are justiciable under Article III.”
`MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127 (2007) (citation omitted).
`“In a class action, the plaintiff class bears the burden of showing that Article III
`standing exists.” Ellis v. Costco Wholesale Corp., 657 F.3d 970, 978 (9th Cir.
`2011). Standing requires that (1) “the plaintiff suffered an injury in fact,” (2) “the
`injury is fairly traceable to the challenged conduct,” and (3) “the injury is likely to
`be redressed by a favorable decision.” Id. (internal quotation marks omitted).
`“Standing exists if at least one named plaintiff meets the requirements.” Id.
`“Basically, the question is whether there is a ‘substantial controversy, between
`parties having adverse legal interests, of sufficient immediacy and reality to warrant
`the issuance of a declaratory judgment.’” Phillips & Stevenson, Rutter Group Prac.
`Guide Fed. Civ. Proc. Before Trial (Nat Ed.) § 10:24 (2020) (quoting Maryland
`Cas. Co. v. Pacific Coal & Oil Co., 312 US 270, 273 (1941) (emphasis added).
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`Defendant argues Plaintiffs lack standing to pursue declaratory relief,
`“because they do not allege that they intend to purchase CVSI’s CBD products in
`the future.” (Dkt. 39-1 at 21). Plaintiffs counter that they “face [a] threat of future
`harm because, while they desire to purchase CBD products in the future, they
`cannot be certain that Defendant’s representations are true when they see the
`products on the store shelves.” (Dkt. 43 at 23). This contention is unpersuasive
`and, indeed, strains credulity. Plaintiffs make it clear they believe Defendant’s
`products are illegal and mislabeled, and they do not allege they expect to be repeat
`customers as things stand now. If they did, it would be with full knowledge of
`Defendant’s alleged misconduct. Under these circumstances, Plaintiffs fail to
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`establish standing for declaratory relief. See Campion v. Old Republic Home Prot.
`Co., 861 F. Supp. 2d 1139, 1150 (S.D. Cal. 2012) (“Plaintiff’s UCL claim is based
`entirely on a past transaction. . . . Furthermore, . . . [Plaintiff] now has knowledge
`of Defendant’s alleged misconduct. Thus, Plaintiff cannot show he is realistically
`threatened by a repetition of the alleged violation.”); Snyder v. Green Roads of Fla.
`LLC, 2020 WL 42239, at *4 (S.D. Fla. Jan. 3, 2020) (“Plaintiffs simply have not
`alleged a likelihood of future injury. In fact, Plaintiffs allegations make clear that
`they will not purchase more of Defendant’s products so long as the labelling does
`not meet their standards. Accordingly, Plaintiffs lack standing to assert a claim for
`injunctive relief.”).
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`B. Primary Jurisdiction Doctrine1
`“The primary jurisdiction doctrine allows courts to stay proceedings or to
`dismiss a complaint without prejudice pending the resolution of an issue within the
`special competence of an administrative agency.” Clark v. Time Warner Cable, 523
`F.3d 1110, 1114 (9th Cir. 2008). It “is a prudential doctrine under which courts
`may, under appropriate circumstances, determine that the initial decisionmaking
`responsibility should be performed by the relevant agency rather than the courts.”
`GCB Commc’ns, Inc. v. U.S. S. Commc’ns, Inc., 650 F.3d 1257, 1263–64 (9th Cir.
`2011) (internal quotation marks omitted). “It is useful . . . in instances where the
`federal courts do have jurisdiction over an issue, but decide that a claim requires
`resolution of an issue of first impression, or of a particularly complicated issue that
`Congress has committed to a regulatory agency.” Id. at 1264 (internal quotation
`marks omitted).
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`1 Having concluded a stay is appropriate, the Court does not reach the remainder of
`Defendant’s Motion to Dismiss.
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`“Not every case that implicates the expertise of federal agencies warrants
`invocation of primary jurisdiction. Rather, the doctrine is reserved for a limited set
`of circumstances that requires resolution of an issue of first impression, or of a
`particularly complicated issue that Congress has committed to a regulatory agency.”
`Astiana v. Hain Celestial Group, Inc., 783 F.3d 753, 760 (9th Cir. 2015) (internal
`quotation marks omitted); see also Clark, 523 F.3d at 1114 (stating the doctrine
`applies in “limited circumstances” and is “not designed to secure expert advice from
`agencies every time a court is presented with an issue conceivably within the
`agency’s ambit.” (internal quotation marks omitted)). The Ninth Circuit has stated
`that “even when agency expertise would be helpful, a court should not invoke
`primary jurisdiction when the agency is aware of but has expressed no interest in
`the subject matter of the litigation[,]” or when “referral to the agency would
`significantly postpone a ruling that a court is otherwise competent to make.”
`Astiana, 783 F.3d at 761.
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`Defendant asks the Court to “stay the case under the primary jurisdiction
`doctrine until the FDA concludes ongoing rulemaking on CBD products.” (Dkt. 39-
`1 at 19–20). Regulatory oversight of CBD ingestible products, including labelling,
`is currently the subject of rulemaking at the FDA. The FDA recently has conducted
`a public hearing and instituted an agency task force on CBD regulation. 84 Fed.
`Reg. 12969. In its Notice of Public Hearing, the FDA stated: “Regulatory oversight
`of products containing cannabis or cannabis derived compounds is complex and
`involves multiple Federal and State agencies.” Id. at 12970. It also made clear that
`it was concerned with labelling of products containing cannabis-derived, including
`hemp-derived, compounds. Id. at 12971–72. Although the FDA rulemaking
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`process is ongoing, the FDA is under considerable pressure from Congress and the
`industry to expedite the publication of regulations and policy guidance regarding
`CBD products. See Snyder, 2020 WL 42239, at *6 n.2.
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`Courts consider the following non-exhaustive factors in deciding whether the
`primary jurisdiction doctrine applies: “(1) the need to resolve an issue that (2) has
`been placed by Congress within the jurisdiction of an administrative body having
`regulatory authority (3) pursuant to a statute that subjects an industry or activity to a
`comprehensive regulatory authority that (4) requires expertise or uniformity in
`administration.” Syntek Semiconductor Co., Ltd. v. Microchip Tech., Inc., 307 F.3d
`775, 781 (9th Cir. 2002).
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`The Court finds the relevant factors here require applying the primary
`jurisdiction doctrine. This lawsuit raises issues of first impression surrounding how
`the FDA intends to classify and regulate CBD products; to the Court’s knowledge,
`the only federal court to confront similar issues also invoked the primary
`jurisdiction doctrine. See generally Snyder, 2020 WL 42239. Although Plaintiffs
`rely heavily on the FDA’s November 22, 2019 issuance of warning letters to certain
`CBD retailers to establish the illegality of Defendant’s actions, “regulatory letters
`do not constitute final agency action,” Dietary Supplemental Coal., Inc. v. Sullivan,
`978 F.2d 560, 563 (9th Cir. 1992) (citations omitted). The fact remains that the
`FDA has not formally established its position. Moreover, the “[r]egulatory
`oversight of products containing cannabis or cannabis derived compounds is
`complex and involves multiple Federal and State agencies.” 84 Fed. Reg. 12970.
`As discussed earlier, Congress has committed regulation of CBD products to the
`FDA and expects the agency to publish guidance as soon as possible. Finally, the
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`number of CBD class actions currently pending in the federal district courts makes
`clear the danger of inconsistent adjudications.
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`The Snyder court thoughtfully applied the primary jurisdiction factors in a
`similar case, and the Court adopts its analysis here:
`
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`First, it appears to the Court that the FDA is exercising regula-
`tory authority over ingestible and other CBD products, but there
`is uncertainty with respect to whether the FDA will conclude
`that some or all CBD products are food additives, supplements
`or nutrients that can be safely marketed to the public and, if nu-
`trients, whether the labelling standards and requirements for
`CBD products will be different or the same as for other nutrients.
`Thus, there appears to be a need for consistent guidance. Sec-
`ond, the FDA appears to be properly exercising their regulatory
`authority; the FDA regulates, among other matters, food addi-
`tives, supplements and nutrients, and because ingestible CBD
`products could be deemed to fall into any of these categories,
`they are within the FDA’s jurisdiction. Third, the Agriculture
`Improvement Act of 2018 (the “2018 Farm Bill”), Pub. L. No.
`115-334, 132 Stat. 4908–11, explicitly recognized the FDA’s au-
`thority to regulate products containing cannabis-derived com-
`pounds, including hemp-derived products under the FDCA. 7
`U.S.C. §§ 1639(o)–(s). Fourth, the exercise of regulatory au-
`thority by the FDA over the labelling of ingestible CBD products
`requires both expertise and uniformity in administration. The
`need is well-illustrated by the fact that, among other issues with
`which the FDA is concerned, are whether CBD products pose
`safety risks, how the mode of delivery affects safety, whether
`there are dosage considerations related to safety, whether there
`is a need for manufacturing standards, and whether there are
`standardized definitions for the ingredients in, for example,
`hemp oil. U.S. Food & Drug Admin., FDA Regulation of Can-
`nabis and Cannabis-Derived Products, Including Cannabidiol
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`2019),
`31,
`of Dec.
`as
`current
`(content
`(CBD)
`https://www.fda.gov/news-events/public-health-focus/fda-regu-
`lation-cannabis-and-cannabis-derived-products-including-can-
`nabidiol-cbd. Lastly, the FDA obviously has expressed an active
`interest in regulating the manufacture and marketing of CBD
`products. Id. (“FDA continues to be concerned at the prolifera-
`tion of products asserting to contain CBD that are marketed for
`therapeutic or medical uses although they have not been ap-
`proved by the FDA.”); 84 Fed. Reg. 12969 (notice of public
`hearing).
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`2020 WL 42239, at *7.
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`Plaintiffs offer two reasons the primary jurisdiction doctrine is inapposite
`here. First, they argue “[a]ny forthcoming regulatory action by the FDA cannot be
`retroactively applied to class claims accrued prior to enactment of the rule.” (Dkt.
`43 at 17). Plaintiffs concede, however, that the presumption against retroactivity
`may be overcome by statutory authorization. (Id. at 18). Whether cannabis
`regulations will apply retroactively is unknown, but given the widespread use and
`sale of CBD products—and particularly the large number of states that have
`legalized their sale—Congress may conclude that fairness, practicality, and comity
`require retroactive legislation.
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`Second, Plaintiffs assert “[t]he Court does not need the FDA’s guidance to
`determine whether the CBD products are illegal,” because “consumer class actions
`based on unlawful, misleading, or deceptive labeling and advertising are areas the
`courts can address without the need to ‘secure [the FDA’s] expert advice.’” (Dkt.
`43 at 20 (citing Reid v. Johnson & Johnson, 780 F.3d 952, 967 (9th Cir. 2015))).
`The cases they cite, however, are distinguishable. In Reid, for instance, the
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`plaintiff’s “claims present[ed] no issues of first impression, as the FDA ha[d]
`already addressed the substantive issues raised [t]here.” 780 F.3d at 966. The facts
`showed the FDA had published an interim final rule that covered some of the
`plaintiff’s claims and was unlikely to announce any other, relevant guidance. Id. at
`966–67. Here, the FDA has yet to issue rules and is working feverishly to do so. In
`another case cited by Plaintiffs, Zakaria v. Gerber Prod. Co., the court stated,
`“Plaintiff raises neither an issue of first impression nor a complex one” and found
`adjudication did “not present a ‘substantial danger of inconsistent rulings.’” 2015
`WL 3827654, at *6 (C.D. Cal. June 18, 2015) (quoting Brown v. MCI WorldCom
`Network Servs., Inc., 277 F.3d 1166, 1173 (9th Cir.2002)). As noted above, there
`are several CBD-related lawsuits currently making their way through the court
`systems; inconsistent rulings are likely to follow in the absence of FDA guidance.
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`“If a court determines that the doctrine of primary jurisdiction applies, it
`must either stay the case pending an administrative ruling or dismiss the case
`without prejudice.” Capaci v. Sports Research Corp., 2020 WL 1482313, at *8
`(C.D. Cal. Mar. 26, 2020) (citing Astiana, 783 F.3d at 761). “When the purpose of
`primary jurisdiction is for parties to pursue their administrative remedies, a district
`court will normally dismiss the case without prejudice. However, when a court
`invokes primary jurisdiction but further judicial proceedings are contemplated, then
`jurisdiction should be retained by a stay of proceedings, not relinquished by a
`dismissal.” Astiana, 783 F.3d at 761 (internal quotation marks and citation
`omitted). “In either circumstance, the district court must be attuned to the potential
`prejudice arising from the dismissal of claims.” Id. The Court anticipates further
`judicial proceedings in this lawsuit. Accordingly, the case will be STAYED until
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`Case 2:19-cv-10227-VAP-JEM Document 46 Filed 05/22/20 Page 13 of 13 Page ID #:306
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`the FDA completes its rulemaking regarding the marketing, including labelling, of
`CBD ingestible products.
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`IV. CONCLUSION
`The Court therefore DISMISSES Plaintiff’s request for declaratory relief and
`STAYS the remaining causes of action. The parties are directed to file joint status
`reports with the Court every 90 days, beginning on September 1, 2020.
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`IT IS SO ORDERED.
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`Dated:
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`5/22/20
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` Virginia A. Phillips
` Chief United States District Judge
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`United States District Court
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