Case 2:20-cv-04829-ODW-PLA Document 65 Filed 11/23/20 Page 1 of 20 Page ID #:967
`
`ISABELLE L. ORD (Bar No. 198224)
`isabelle.ord@dlapiper.com
`ELIZABETH C. CALLAHAN (Bar No. 323510)
`elizabeth.callahan@dlapiper.com
`DLA PIPER LLP (US)
`555 Mission Street, Suite 2400
`San Francisco, CA 94105-2933
`Tel: 415.836.2500
`Fax: 415.836.2501
`
`ALEXANDER E. WOLF (Bar No. 299775)
`alexander.wolf@dlapiper.com
`DLA PIPER LLP (US)
`2000 Avenue of the Stars, Suite 400 North Tower
`Los Angeles, CA 90067
`Tel: 310.595.3000
`Fax: 310.595.3300
`
`Attorneys for Defendants
`JUST BRANDS USA, INC., JUST BRANDS, INC.,
`and SSGI FINANCIAL SERVICES, INC.
`[Additional Counsel Listed on Signature Page]
`
`UNITED STATES DISTRICT COURT
`CENTRAL DISTRICT OF CALIFORNIA
`MIGUEL RODRIGUEZ, on behalf of
` CASE NO. 2:20-CV-04829-ODW-PLA
`himself and all others similarly situated,
`DEFENDANTS’ NOTICE OF
`Plaintiff,
`MOTION AND MOTION TO STAY
`THE ACTION
`Date:
`January 25, 2021
`Time:
`1:30 p.m.
`Courtroom: 5D
`Judge:
`Hon. Otis D. Wright II
`
`v.
`JUST BRANDS USA, INC., JUST
`BRANDS, INC., and SSGI FINANCIAL
`SERVICES, INC.,
`
`Defendants.
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`Case 2:20-cv-04829-ODW-PLA Document 65 Filed 11/23/20 Page 2 of 20 Page ID #:968
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`NOTICE OF MOTION AND MOTION
`TO PLAINTIFF AND ALL ATTORNEYS OF RECORD:
`PLEASE TAKE NOTICE that on January 25, 2021 at 1:30 p.m., or as soon
`thereafter as this matter may be heard before the Honorable Otis D. Wright, II, in
`Courtroom 5D of this Court, located at 350 West 1st Street, Los Angeles, CA
`90012, defendants Just Brands USA, Inc. (“Just Brands USA”), Just Brands, Inc.
`(“Just Brands”), and SSGI Financial Services, Inc. (“SSGI”) (collectively,
`“Defendants”) will and hereby do move this Court for an order to stay the action.
`First, this action must by stayed under the primary jurisdiction doctrine in
`light of the Food and Drug Administration (“FDA”) issuing draft guidance that will
`likely establish a new regulatory framework for cannabidiol (known as “CBD”),
`an ingredient in products like those at issue here, and also given regulatory
`developments in the States of California and Florida. Second, the Federal Food,
`Drug, and Cosmetic Act (“FDCA”) gives the FDA jurisdiction to subject CBD
`products to a comprehensive regulatory scheme, and Section 297D(c) of the 2018
`Farm Bill expressly reserved the regulatory oversight of hemp consumables under
`the FDCA to the FDA. 7 U.S.C. § 1639r(c); see Snyder v. Green Roads of Fla.
`LLC, 430 F. Supp. 3d 1297, 1308 (S.D. Fla. 2020) (the 2018 Farm Bill “explicitly
`recognized the FDA’s authority to regulate products . . . under the FDCA”) (quoting
`Colette v. CV Scis., Inc., 2020 WL 2739861, at *5 (C.D. Cal. May 22, 2020)).
`Third, the regulation of CBD products requires both the FDA’s expertise and
`uniformity in administration to prevent inconsistent rulings and allow for judicial
`economy and efficiency. Colette, 2020 WL 2739861 at *4 (“[T]he number of CBD
`class actions currently pending in the federal district courts makes clear the danger
`of inconsistent adjudications.”).
`This Motion is based on this Notice of Motion and Motion, the attached
`Memorandum of Points and Authorities, Defendants’ Request for Judicial Notice in
`
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`///
`support of the Motion filed concurrently herewith, the record in this action, and any
`evidence and argument that may be presented at or before the hearing.
`Concurrently with this Motion, Defendants move to dismiss the First
`Amended Complaint (“FAC”) pursuant to Federal Rule of Civil Procedure 12(b)(1),
`12(b)(2), and 12(b)(6) because, inter alia, Plaintiff lacks Article III standing to
`assert claims based on products that he did not purchase; Plaintiff cannot represent a
`putative nationwide class as Defendants are not subject to personal jurisdiction in
`California for non-California putative class members’ claims; Plaintiff’s express
`warranty, unjust enrichment, and fraud claims are defective because the FAC fails to
`state which state’s law governs these claims; and Plaintiff’s unjust enrichment,
`Unfair Competition Law, and False Advertising Law claims for equitable restitution
`fail because Plaintiff has not (and cannot) allege inadequate remedies at law.
`This Motion is made following the conference of counsel pursuant to Local
`Rule 7-3, which took place by telephone on November 12, 2020, and involved
`Plaintiff’s attorney Alex Straus and Defendants’ attorneys Isabelle L. Ord and
`Alexander E. Wolf. The parties were unable to reach an informal resolution and
`Plaintiff’s counsel stated Plaintiff would oppose the Motion.
`
`Dated: November 23, 2020
`
`DLA PIPER LLP (US)
`
`By: /s/ Isabelle L. Ord
`ISABELLE L. ORD
`ALEXANDER E. WOLF
`ELIZABETH C. CALLAHAN
`Attorneys for Defendants
`JUST BRANDS USA, INC., JUST
`BRANDS, INC., and SSGI FINANCIAL
`SERVICES, INC.
`
`STEFANIE J. FOGEL (Pro Hac Vice)
`ii
`NOTICE OF MOTION AND MOTION TO STAY ACTION
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`stefanie.fogel@dlapiper.com
`DLA PIPER LLP (US)
`33 Arch Street, 26th Floor
`Boston, MA 02110
`Tel: 617.406.6000
`Fax: 617.406.6100
`
`COLLEEN GULLIVER (Pro Hac Vice)
`colleen.gulliver@dlapiper.com
`DLA PIPER LLP (US)
`1251 Avenue of the Americas
`New York, NY 10020
`Tel: 212.335.4500
`Fax: 212.335.4501
`
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`Case 2:20-cv-04829-ODW-PLA Document 65 Filed 11/23/20 Page 5 of 20 Page ID #:971
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`TABLE OF CONTENTS
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`I.
`II.
`
`INTRODUCTION .......................................................................................... 1
`FACTUAL BACKGROUND ........................................................................ 2
`A. Overview of the Case and Procedural History ..................................... 2
`B. Hemp Legalization, and Active and Impending Hemp-CBD
`Regulation and Guidance. .................................................................... 2
`III. ARGUMENT ................................................................................................. 7
`A.
`The Primary Jurisdiction Doctrine Requires a Stay............................. 7
`1.
`The FDA and State Regulators Will Decide Material
`Issues Affecting This Case. ....................................................... 8
`The FDA Has Jurisdiction Over and Will Subject CBD
`Products to a Comprehensive Regulatory Scheme Under
`the FDCA. ................................................................................ 10
`The Regulation of CBD Products Requires Both the
`FDA’s Expertise and Uniformity in Administration. .............. 11
`IV. CONCLUSION ............................................................................................ 13
`
`2.
`
`3.
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`CASES
`Ahumada v. Global Widget LLC,
`No. 19-CV-12005, 2020 WL 5669032 (D. Mass. Aug. 11, 2020) ..... 9, 10, 11, 12
`Astiana v. Hain Celestial Grp., Inc.,
`783 F.3d 753 (9th Cir. 2015) ................................................................................ 1
`Clark v. Time Warner Cable,
`523 F.3d 1110 (9th Cir. 2008) .............................................................................. 7
`Colette v. CV Scis., Inc.,
`No. 19-CV-10227, 2020 WL 2739861 (C.D. Cal. May 22, 2020) .... 9, 10, 11, 12
`DaSilva v. Infinite Prod. Co.,
`No. 19-CV-10148 (C.D. Cal. Nov. 27, 2019) .................................................... 12
`Davis v. cbdMD, Inc.,
`No. 19-CV-10241 (C.D. Cal Dec. 3, 2019) ........................................................ 12
`Figy v. Lifeway Foods, Inc.,
`No. 13-CV-04828, 2014 WL 1779251 (N.D. Cal. May 5, 2014) ........................ 8
`Funke v. Sorin Grp. USA, Inc.,
`147 F. Supp. 3d 1017 (C.D. Cal. 2015) ................................................................ 3
`GCB Commc’ns, Inc. v. U.S. South Commc’ns, Inc.,
`650 F.3d 1257 (9th Cir. 2011) .............................................................................. 7
`Gentry v. Cellco P’ship,
`No. 05-CV-07888, 2006 WL 6927883 (C.D. Cal. Mar. 22, 2006) .............. 11, 12
`Glass v. Global Widget, LLC, d/b/a/ Hemp Bombs,
`No. 19-CV-01906, 2020 WL 3174688 (E.D. Cal. June 15, 2020) ....................... 9
`Glass v. Global Widget, LLC, d/b/a/ Hemp Bombs,
`No. 19-CV-01906 (E.D. Cal. Sept. 18, 2019) .................................................... 12
`Greenfield v. Yucatan Foods, L.P.,
`18 F. Supp. 3d 1371 (S.D. Fla. 2014) ................................................................. 10
`Lopez v. Miami-Dade Cty.,
`145 F. Supp. 3d 1206 (S.D. Fla. 2015) ................................................................. 7
`
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`Case 2:20-cv-04829-ODW-PLA Document 65 Filed 11/23/20 Page 7 of 20 Page ID #:973
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`Peviani v. Hostess Brands, Inc.,
`750 F. Supp. 2d 1111 (C.D. Cal. 2010) .............................................................. 12
`Pfister v. Charlotte’s Web Holdings,
`No. 20-CV-00418, ECF No. 43 (N.D. Ill. Aug. 11, 2020) ....................... 9, 10, 12
`Snyder v. Green Roads of Fla. LLC,
`430 F. Supp. 3d 1297 (S.D. Fla. 2020) ........................................... 7, 9, 10, 11, 12
`Snyder v. Green Roads of Fla. LLC,
`No. 19-CV-62342 (S.D. Fla. Sept. 19, 2019) ..................................................... 12
`Syntek Semiconductor Co., Ltd. v. Microchip Tech, Inc.,
`307 F.3d 775 (9th Cir. 2002) ................................................................................ 7
`STATUTES AND OTHER AUTHORITIES
`7 U.S.C. § 1639(o)(1) ................................................................................................ 3
`7 U.S.C. § 1639r(c) .............................................................................................. 3, 10
`21 U.S.C. § 301, et seq. ............................................................................................. 3
`21 U.S.C. § 413 .......................................................................................................... 5
`Pub. L. No. 115-334, 132 Stat. 4908–11 ................................................................... 2
`Fla. Stat. § 500.01, et seq. .......................................................................................... 6
`Fla. Stat. § 581.217(7) ............................................................................................... 8
`Fla. Admin. Code, Rule 5K-4.034(6) .................................................................... 6, 8
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`Case 2:20-cv-04829-ODW-PLA Document 65 Filed 11/23/20 Page 8 of 20 Page ID #:974
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`I.
`
`MEMORANDUM OF POINTS AND AUTHORITIES
`INTRODUCTION
`Defendants move to stay this action under the primary jurisdiction doctrine
`because the labeling and testing of certain cannabidiol (“CBD”) products is
`currently within the purview of the Food and Drug Administration (“FDA”). This
`case is like at least seven putative class actions currently pending nationwide that
`challenge the labeling and testing of CBD products. Courts have already stayed five
`of those actions under the primary jurisdiction doctrine to allow time for the FDA to
`finalize and issue its guidance.
`Here, Plaintiff Miguel Rodriguez (“Plaintiff”) claims the labels on JustCBD
`branded products (“Products”) do not accurately portray their amount of CBD
`content, based on unspecified testing of fifteen such Products—only one of which
`Plaintiff purchased himself. But the FDA has jurisdiction over consumable products
`containing CBD, and it is actively developing guidance governing the testing and
`labeling of CBD products. Moreover, both California and Florida—the two states
`potentially implicated by Plaintiff’s claims—have developed and are in the process
`of implementing regulations for CBD products.
`The need for specialized expertise in the regulation of CBD products requires a stay
`of this action under the primary jurisdiction doctrine. This approach will allow the
`FDA to address relevant regulatory issues first. Astiana v. Hain Celestial Grp., Inc.,
`783 F.3d 753, 760 (9th Cir. 2015) (the doctrine “permits courts to determine that an
`otherwise cognizable claim implicates technical and policy questions that should be
`addressed in the first instance by the agency with regulatory authority”). To
`determine whether the doctrine applies, courts must consider (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
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`(4) requires expertise or uniformity in administration. Id. All of these factors weigh
`in favor of a stay here.
`The need to wait for FDA regulatory guidance is heightened here because
`there is a substantial risk of inconsistent rulings as courts across the country address
`the seven currently pending cases. Guidance is expected soon, as the FDA has
`already submitted draft guidance on the development of CBD-containing drugs and
`a proposed enforcement policy for review. As such, there is little risk of an
`unreasonably lengthy stay or prejudice to Plaintiff. For these reasons, the Court
`should exercise its discretion and stay this action based on the primary jurisdiction
`doctrine.
`II.
`FACTUAL BACKGROUND
`A.
`Overview of the Case and Procedural History
`Plaintiff filed the First Amended Complaint (“FAC”) on October 26, 2020.
`Plaintiff alleges that he is a California resident and purchased four Products over a
`four-month period: Signature CBD Cartridges in the flavors “Pineapple Express”
`and “Northern Lights” in October 2018, and CBD Gummies and JustPets Dog
`Treats in March 2019. (FAC ¶ 5). Plaintiff’s counsel commissioned testing on
`
`fifteen Products, although Plaintiff alleges a purchase of only one—the JustPets Dog
`
`Treats. (Id. ¶ 20). The testing purportedly showed that those products contained a
`lower quantity of CBD than indicated on the product labels. (Id.). While Plaintiff
`seeks to predicate his claim on this purported testing, he does not attach the testing
`to his Complaint nor describe the testing or the methodology employed. (See id.
`¶¶ 2, 20).
`B.
`
`Hemp Legalization, and Active and Impending Hemp-CBD
`Regulation and Guidance.
`Almost two years ago, in December 2018, the federal government legalized
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`hemp containing no more than 0.3 percent THC on a dry weight basis. Agricultural
`Improvement Act of 2018, Pub. L. No. 115-334, 132 Stat. 4908–11 (the “2018 Farm
`Bill”). In doing so, the federal government preserved the FDA’s authority to
`
`regulate hemp products—including their product labeling—under the Federal Food,
`compounds of the hemp plant that include CBD—an ingredient in the products at
`
`Drug, and Cosmetic Act, 21 U.S.C. § 301, et seq. (“FDCA”). See 7 U.S.C.
`§ 1639r(c).1
`The federal statutory definition of “hemp” includes cannabinoids, which are
`
`issue in this case. See 7 U.S.C. § 1639(o)(1). The FDA has acknowledged that it is
`responsible for oversight of hemp and hemp-derived CBD products and that it
`intends to take action to regulate them. (See Exs. 2, 3).2 At both the federal and
`state level, substantial efforts are ongoing to create CBD regulations and guidance.
`Specifically, in the last twenty-three months, the FDA has taken the following
`steps towards CBD regulation and guidance:
`(1) forming an agency task force to develop the approach to CBD policy and
`regulation (see Ex. 1);
`
`1 See also Ex. 1, U.S. Food & Drug Admin., Senate Testimony of Amy Abernethy (July 25, 2019),
`available at https://www.fda.gov/news-events/congressional-testimony/hemp-production-and-
`2018-farm-bill-07252019 (“The 2018 Farm Bill explicitly preserved FDA’s authorities over hemp
`products.”). The Court may take judicial notice of public FDA records. See, e.g., Funke v. Sorin
`Grp. USA, Inc., 147 F. Supp. 3d 1017, 1025 (C.D. Cal. 2015) (taking judicial notice of a public
`document available on the FDA website, “whose accuracy cannot reasonably be questioned”).
`2 In a May 2019 statement, the FDA’s Commissioner stated: “The regulation of a product like
`CBD is complex and touches almost every aspect of FDA’s authority.” Ex. 2, U.S. Food & Drug
`Admin., FDA Acting Commissioner’s Remarks to the 2019 FDLI Annual Conference, at 4 (May 2,
`2019), available at https://www.fda.gov/news-events/speeches-fda-officials/fda-acting-
`commissioners-remarks-2019-fdli-annual-conference-05022019; see also Ex. 3, U.S. Food &
`Drug Admin., Consumer Update, What You Need to Know (and What We’re Working to Find Out)
`About Products Containing Cannabis or Cannabis-derived Compounds, Including CBD (last
`updated March 5, 2020), available at https://www.fda.gov/consumers/consumer-updates/what-
`you-need-know-and-what-were-working-find-out-about-products-containing-cannabis-or-cannabis
`(“The FDA is evaluating the regulatory frameworks that apply to certain cannabis-derived
`products . . . including whether and/or how the FDA might consider updating its regulations, as
`well as whether potential legislation might be appropriate.”).
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`(2) holding a public hearing on May 31, 2019 to “obtain scientific data and
`information about the safety, manufacturing, labeling, and sale of [CBD] products”
`(see Ex. 43);
`(3) conducting a public comment period to solicit additional scientific data
`(Ex. 4; see also Ex. 1);
`(4) reporting in June 2020 that it had made “substantial progress” on CBD
`regulations, stating “[w]e are working toward a goal of providing additional
`guidance” and “[a]s part of our work, the FDA continues to explore potential
`pathways for various types of CBD products to be lawfully marketed” (see Ex. 54);
`(5) issuing a July 8, 2020 report, in response to a Congressional directive,
`describing the results of its study on the extent to which there is mislabeling and
`adulteration of CBD products currently in the market (see Ex. 65);
`(6) issuing draft guidance on July 21, 2020 regarding clinical research and the
`development of cannabis-based drugs (see Ex. 76); and
`
`3 Ex. 4, U.S. Food & Drug Admin., Scientific Data and Information About Products Containing
`Cannabis or Cannabis-Derived Compounds; Public Hearing; Request for Comments, 84 Fed.
`Reg. 12969 (Apr. 3, 2019).
`4 Ex. 5, Elaine Watson, FDA Says It’s Made “Substantial Progress” on CBD Regs; CV Sciences
`Weighs in on Food vs. Pharma Path; Man Sues CBD Firm After Failing Drugs Test,
`FOODNAVIGATOR-USA.com (June 5, 2020), available at https://www.foodnavigator-
`usa.com/Article/2020/06/05/FDA-says-it-s-made-substantial-progress-on-CBD-regs-CV-Sciences-
`weighs-in-on-food-vs-pharma-path-man-sues-CBD-firm-after-failing-drugs-test.
`5 Ex. 6, U.S. Food & Drug Admin., Report to the U.S. House Committee on Appropriations and
`the U.S. Senate Committee on Appropriations: Sampling Study of the Current Cannabidiol
`Marketplace to Determine the Extent That Products are Mislabeled or Adulterated, Report in
`Response to Further Consolidated Appropriations Act, 2020 (July 8, 2020), available at
`https://hempindustrydaily.com/wp-content/uploads/2020/07/CBD-Marketplace-
`Sampling_RTC_FY20_Final.pdf.
`6 Ex. 7, U.S. Food & Drug Admin., FDA In Brief: FDA Issues Draft Guidance to Encourage
`Cannabis-Related Clinical Research (July 21, 2020), available at https://www.fda.gov/news-
`events/fda-brief/fda-brief-fda-issues-draft-guidance-encourage-cannabis-related-clinical-research.
`In a supplement to the guidance, the FDA stated that it “and many stakeholders have concerns
`about marketed products that contain CBD, including concerns about potential contamination and
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`(7) the next day, on July 22, 2020, submitting a CBD enforcement policy,
`titled “Cannabidiol Enforcement Policy; Draft Guidance for Industry,” to the White
`House Office of Management and Budget (see Ex. 97).
`As noted above, Congress is applying substantial pressure on the FDA to
`accelerate its development of CBD regulations, including by directives associated
`with a recently enacted appropriations bill. (See Ex. 108). As are other entities. On
`November 14, 2019, the Consumer Healthcare Products Association submitted a
`citizen petition, which requested that the FDA establish a regulatory pathway to
`market CBD dietary supplements. (See Ex. 119). On June 16, 2020, the Council for
`Responsible Nutrition likewise submitted a petition to request that the FDA regulate
`CBD as a dietary supplement. (See Ex. 1210).
`Most recently, on September 4, 2020, House Bill 8179 was introduced, which
`proposes to make hemp, cannabidiol derived from hemp, and any other ingredient
`derived from hemp lawful for use under the FDCA as a dietary ingredient in a
`
`inaccurate or misleading labeling.” Ex. 8, U.S. Food & Drug Admin., Cannabis and Cannabis-
`Derived Compounds: Quality Considerations for Clinical Research; Draft Guidance for Industry;
`Availability, 85 Fed. Reg. 44305 (July 22, 2020).
`7 Ex. 9, Executive Office of the President, Office of Management and Budget, Cannabidiol
`Enforcement Policy; Draft Guidance for Industry; Availability (July 22, 2020), available at
`https://www.reginfo.gov/public/do/eoDetails?rrid=130894&source=email.
`8 Ex. 10, Division – Agriculture, Rural Development, Food and Drug Administration, and Related
`Agencies Appropriations Act, 2020, Congressional Directives, Joint Explanatory Statement, Title
`IV, at 29, available at
`https://appropriations.house.gov/sites/democrats.appropriations.house.gov/files/HR%201865%20-
`%20Division%20B%20-%20AG%20SOM%20FY20.pdf (last visited Nov. 16, 2020).
`9 Ex. 11, A Citizen Petition Requesting FDA Establish a Regulatory Pathway to Legally Market
`Dietary Supplements Containing Cannabidiol (CBD) by Issuing a Regulation Finding that the
`Article, CBD, is Lawful (Nov. 14, 2019), available at
`https://www.chpa.org/PDF/11_14_19_CommentsCBDinDietarySupplements.aspx.
`10 Ex. 12, Citizen Petition Requesting FDA Establish a Regulatory Pathway to Legally Market
`Dietary Supplements Containing Hemp-Derived Cannabidiol (CBD) (June 16, 2020), available at
`https://www.crnusa.org/sites/default/files/Daily/2020-06/CRN-CBD-Citizen-Petition061620.pdf.
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`5N
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`dietary supplement.11 If enacted, these substances would be classified as “new
`ingredients” under section 413 of the FDCA once the FDA reviewed information
`demonstrating the safety of the ingredient and gave its approval.
`
`At the state level, the only states potentially implicated here—California and
`Florida—are in various stages of developing and implementing CBD laws,
`
`regulations, policies, and/or guidance. The California State Legislature passed and
`enacted S.B. 153 in October 2019, which governs the cultivation and testing of
`industrial hemp. (See Ex. 14).12 California law does not currently provide any
`requirements for the manufacturing, processing, or selling of hemp-derived CBD
`products. Within the past year, the California State Legislature has considered two
`bills to establish a regulatory framework for the use of industrial hemp products to
`be used in food, beverage, or cosmetic products.13
`Florida also recently enacted a set of rules, which became effective on
`January 1, 2020. Rule 5K-4.034(6) regulates the labeling of CBD products and
`provides that food products containing CBD “must be labeled as required by” the
`Florida Food Safety Act, § 500.01, Fla. Stat. et seq. and applicable FDA regulations.
`See FLA. ADMIN. CODE, Final Rule 5K-4.034(6)(a). In recent months, the Florida
`Department of Agriculture and Consumer Services has issued four guidance
`
`11 Ex. 13, H.R. 8179, 116th Cong. (2020).
`12 Ex. 14, S.B. 153, Industrial Hemp, available at
`https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201920200SB153 (last visited
`Nov. 16, 2020).
`13 Ex. 15, A.B. 228, 2019 Gen. Assemb., Reg. Sess. (Cal. 2019), available at
`https://leginfo.legislature.ca.gov/faces/billHistoryClient.xhtml?bill_id=201920200AB228 (held
`under submission in August 2019); Ex. 16, A.B. 2028, 2019 Gen. Assemb., Reg. Sess. (Cal.
`2020), available at
`http://leginfo.legislature.ca.gov/faces/billStatusClient.xhtml?bill_id=201920200AB2028 (placed
`on inactive file in Sept. 2020).
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`6N
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`Case 2:20-cv-04829-ODW-PLA Document 65 Filed 11/23/20 Page 14 of 20 Page ID #:980
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`documents relating to labeling and testing of hemp products.14
`III. ARGUMENT
`A.
`The Primary Jurisdiction Doctrine Requires a Stay.
`“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. South Commc’ns, Inc., 650 F.3d 1257, 1263-64 (9th
`Cir. 2011).
`The doctrine is designed to help federal courts adjudicate in instances where
`“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.
`Accordingly, courts invoke the primary jurisdiction doctrine to “promote judicial
`economy, reduce confusion and prejudice, and prevent possibly inconsistent
`resolutions.” Snyder v. Green Roads of Fla. LLC, 430 F. Supp. 3d 1297, 1302 (S.D.
`Fla. 2020) (quoting Lopez v. Miami-Dade Cty., 145 F. Supp. 3d 1206, 1208 (S.D.
`Fla. 2015)).
`In determining whether the primary jurisdiction doctrine applies, courts
`
`14 Ex. 17, FDACS, Weights and Measures Considerations for Cannabis, Hemp, and Similar
`Products (June 22, 2020), available at
`https://www.fdacs.gov/content/download/92033/file/weights-and-measures-considerations-for-
`cannabis-hemp-and-similar-products.pdf; Ex. 18, FDACS, Hemp Extract and Heavy Metals FAQ
`(June 4, 2020), available at https://www.fdacs.gov/content/download/91911/file/hemp-extract-
`and-heavy-metals-faq.pdf; Ex. 19, FDACS, Labeling Guidance for Hemp Food Establishments
`(February 3, 2020), available at
`https://www.fdacs.gov/ezs3download/download/90799/2581392/Media/Files/Cannabis/labeling-
`guidance-for-hemp-food-establishments.pptx; Ex. 20, FDACS, Hemp Food Establishment
`Guidance (Jan. 1, 2020), available at https://www.fdacs.gov/content/download/89947/file/Hemp-
`Food-Establishment-Guidance.pdf.
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`7N
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`OTICE OF MOTION AND MOTION TO STAY ACTION
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`consider four factors: “(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 scheme that (4) requires expertise or uniformity in
`administration.” Syntek Semiconductor Co., Ltd. v. Microchip Tech, Inc., 307 F.3d
`775, 781 (9th Cir. 2002).
`Here, each one of these four factors warrants a stay, as detailed below.
`1.
`The FDA and State Regulators Will Decide Material Issues
`Affecting This Case.
`A stay is warranted because several questions that are central to this case will
`be addressed by the impending federal regulations and the implementation of the
`state regulations and guidance. First, the labeling of CBD products is a core issue
`here as Plaintiff alleges that the “[d]efendants’ labeling and packaging . . . overstate
`the quantity of CBD contained in their Products.” (FAC ¶ 2). The FDA is in the
`process of active rulemaking, in conjunction with its own internal CBD Policy
`Working Group, to develop regulations regarding the packaging and labeling of
`CBD products. See Ex. 4 at 12972. The FDA has already solicited scientific data
`and input to inform its development of standards applicable to the labeling of CBD
`products. See id. The regulations that Florida has implemented and the legislation
`that California has considered similarly address or would address the labeling of
`CBD products, including the labeling requirements regarding CBD content.
`See, e.g., Final Rule 5K-4.034(6)(a); A.B. 228.
`Second, the predicate of Plaintiff’s labeling claim is testing that Plaintiff’s
`counsel allegedly performed, which purportedly demonstrated that the CBD content
`in certain products was below what the label reported. (FAC ¶¶ 2, 20). Currently,
`there are no uniform standards or guidance for performing CBD testing. The FDA,
`however, is considering “[w]hat validated analytical testing is needed to support the
`
`8N
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`manufacturing of safe and consistent” CBD products. See Ex. 4 at 12972.
`Moreover, both California and Florida are addressing or expected to address the
`proper testing of CBD products. See California A.B. 228; Fla. Stat. § 581.217(7).
`Therefore, “the Court [will] . . . benefit from the FDA’s definitive guidance on the
`issue.” Figy v. Lifeway Foods, Inc., No. 13-CV-04828, 2014 WL 1779251, at *5
`(N.D. Cal. May 5, 2014) (granting stay in case involving food labeling); see also
`Colette v. CV Scis., Inc., No. 19-CV-10227, 2020 WL 2739861 (C.D. Cal. May 22,
`2020) (granting stay in case involving CBD products); Glass v. Global Widget, LLC,
`d/b/a/ Hemp Bombs, No. 19-CV-01906, 2020 WL 3174688 (E.D. Cal. June 15,
`2020) (same).
`Five stays in CBD labeling putative class actions have already been issued,
`including two from California district courts. Colette, 2020 WL 2739861, at *5;
`Glass, 2020 WL 3174688, at *4; Snyder, 430 F. Supp. at 1309; Ahumada v. Global
`Widget LLC, No. 19-CV-12005, 2020 WL 5669032, at *2 (D.