Prescott v. TC Heartland, LLC

• Court: District Court, N.D. California
• Decided: July 18, 2024
• Docket: 5:23-cv-04192
• Status: Unknown

Opinion

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 STEVEN PRESCOTT, et al., Case No. 23-cv-04192-PCP

8 Plaintiffs, ORDER DENYING MOTION TO 9 v. DISMISS

10 TC HEARTLAND, LLC, Re: Dkt. No. 25 Defendant. 11

12 13 In this putative class action lawsuit, plaintiffs Steven Prescott, Richard Tilker, Samuel 14 Garcia, and Rochelle Wilson allege that defendant TC Heartland, LLC has engaged in consumer 15 fraud by marketing Splenda to health-conscious consumers (including those with Type 2 diabetes) 16 as a sugar alternative with health benefits, even though Splenda’s primary ingredient sucralose has 17 purportedly been shown to cause and worsen diabetes. TC Heartland now moves to dismiss the 18 case. For the following reasons, the Court denies the motion except as to plaintiffs’ request for a 19 corrective advertising campaign by TC Heartland. 20 BACKGROUND1 21 Plaintiffs allege that TC Heartland’s Splenda products advertise that they “help manage 22 blood sugar,” provide “diabetes care,” are the “#1 recommended brand by doctors and dietitians,” 23 and are “suitable for people with diabetes.” Dkt. No. 23, at 3–4. Plaintiffs argue that these claims 24 are false or misleading and that various scientific studies have in fact shown that Splenda’s 25 primary ingredient sucralose is harmful to diabetics because it leads to blood sugar destabilization, 26 raises blood glucose levels, causes insulin resistance, damages pancreatic beta-cells, harms the gut 27 1 microbiome, promotes obesity, and is linked to genotoxicity and cancer. Plaintiffs cite a World 2 || Health Organization (WHO) report concluding that there may be potential undesirable effects 3 from long-term use of non-sugar sweeteners (NSS) including sucralose, such as increased risk of 4 || type 2 diabetes. Jd. at 39. On this basis, plaintiffs contend that the 1999 approval of sucralose as a 5 food additive safe for the general population by the Food and Drug Administration (FDA) is based 6 || on outdated research. Plaintiffs further allege that TC Heartland’s advertising that Splenda is 7 “suitable for people with diabetes” and “helps manage blood sugar” goes beyond the FDA’s 8 || position on sucralose as being generally safe because, in plaintiffs’ view, these statements imply 9 that Splenda products are healthy and will improve outcomes for diabetics. Id. at 46. 10 Plaintiffs raise concerns with the labeling on 8 Splenda products, two of which are shown 11 below as examples: Diabetes Care Shake and Zero Calorie Sweetener. Jd. at 6-7 (Exhibits 1-2). 12

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25 =e 26 27 Plaintiffs bring this lawsuit on behalf of a nationwide class and a California subclass. They 28 assert the following claims: (1) violation of California’s Consumer Legal Remedies Act (CLRA)

1 on behalf of the California subclass; (2) violation of California’s False Advertising Law (FAL) on 2 behalf of the California subclass; (3) violation of California’s Unfair Competition Law (UCL) on 3 behalf of the California subclass; (4) breach of warranty on behalf of the nationwide class and 4 California subclass; and (5) unjust enrichment and restitution on behalf of the nationwide class 5 and California subclass. Plaintiffs seek to enjoin TC Heartland from selling Splenda products with 6 the purportedly deceptive labels and request monetary compensation for the allegedly false or 7 misleading labeling. They also seek an injunction “requiring Defendant to engage in an affirmative 8 advertising campaign to dispel public misperception of the Products resulting from Defendant’s 9 unlawful conduct.” Id. at 66. 10 TC Heartland moves to dismiss the case under Federal Rule of Civil Procedure 12(b)(6), 11 arguing that plaintiffs’ claims are preempted by the FDA’s determination regarding the safety of 12 sucralose and that plaintiffs rely upon a cherry-picked collection of studies that do not actually 13 support their claim that sucralose is unsafe. TC Heartland also argues that plaintiffs lack Article III 14 standing because they do not contend that they were physically injured, that plaintiffs fail to 15 adequately plead that the Splenda products’ labeling is likely to mislead reasonable consumers, 16 and that plaintiffs’ request for a corrective advertising campaign by TC Heartland violates the First 17 Amendment. 18 LEGAL STANDARDS 19 I. Federal Rule of Civil Procedure 12(b)(6). 20 The Federal Rules require a complaint to include only a “short and plain statement of the 21 claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). In considering a Rule 22 12(b)(6) motion contending that a complaint fails to state a claim, the Court must “accept all 23 factual allegations in the complaint as true and construe the pleadings in the light most favorable” 24 to the non-moving party. Rowe v. Educ. Credit Mgmt. Corp., 559 F.3d 1028, 1029 (9th Cir. 2009). 25 Dismissal is required if the plaintiff fails to allege facts allowing the Court to “draw the reasonable 26 inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 27 663 (2009). While legal conclusions “can provide the complaint’s framework,” the Court will not 1 II. Regulatory and Statutory Background. 2 The Food, Drug, and Cosmetic Act prohibits the “introduction or delivery for introduction 3 into interstate commerce of any food, drug, device, or cosmetic that is adulterated or misbranded.” 4 21 U.S.C. § 331(a). “A food shall be deemed to be adulterated if it is or if it bears or contains any 5 food additive that is unsafe within the meaning of section 348 of this title.” 21 U.S.C. § 6 342(a)(2)(C)(i). A “food additive shall, with respect to any particular use or intended use of such 7 additives, be deemed to be unsafe for the purposes of the application of clause (2)(C) of section 8 342(a) of this title, unless there is in effect, and it and its use or intended use are in conformity 9 with, a regulation issued under this section prescribing the conditions under which such additive 10 may be safely used.” 21 U.S.C. § 348(a)(2). 11 The FDA issued a regulation permitting the use of sucralose as a food additive in 1999. It 12 first conducted a review of 100 scientific studies and various clinical trials and concluded that the 13 food additive “sucralose has no adverse health effects on short-term or long-term glucose 14 homeostasis or any other adverse effect in diabetic patients.” Food Additives Permitted for Direct 15 Addition to Food for Human Consumption; Sucralose, 63 Fed. Reg. 16417, 16430 (Apr. 3, 1998). 16 After conducting this review, the FDA approved sucralose as a general-purpose sweetener. See 21 17 C.F.R. § 172.831(c) (“The additive [sucralose] may be used as a sweetener in foods generally, in 18 accordance with current good manufacturing practice in an amount not to exceed that reasonably 19 required to accomplish the intended effect.”). 20 In addition to permitting sucralose’s use as a food additive, the FDA’s regulations provide 21 that “[t]he use of an artificial sweetener in a food, except when specifically and solely used for 22 achieving a physical characteristic in the food which cannot be achieved with sugar or other 23 nutritive sweetener, shall be considered a use for regulation of the intake of calories and available 24 carbohydrate[s], or for use in the diets of diabetics and is therefore a special dietary use.” 21 25 C.F.R. § 105.3(a)(2). The legal significance of this “special dietary use” determination involves 26 the labeling of foods containing such food additives: The FDA’s regulations provide that if a food 27 “containing the additive purports to be or is represented to be for special dietary use, it shall be 1 Section 105 sets forth specific labeling requirements for foods purporting to be useful in “reducing 2 or maintaining body weight,” 21 C.F.R. § 105.66, Section 105 does not set forth specific labeling 3 requirements for foods purporting to be useful in the diets of diabetics. 4 ANALYSIS 5 I. Plaintiffs’ Claims Are Not Preempted by The FDA’s 1999 Determination. 6 In moving to dismiss plaintiffs’ complaint, TC Heartland argues that the FDA’s 7 determination that the food additive sucralose is safe as a general-purpose sweetener preempts 8 plaintiffs’ claims. “Under the doctrine of implied conflict preemption, the statutorily authorized 9 regulations of an agency will pre-empt any state or local law that conflicts with such regulations or 10 frustrates the purposes thereof.” Cohen v. Apple Inc., 46 F.4th 1012, 1028 (9th Cir. 2022). In TC 11 Heartland’s view, plaintiffs “seek to use state law to usurp the FDA’s authority to decide whether 12 a substance is safe or injurious to health.” Dkt. No. 25, at 15. TC Heartland contends that the FDA 13 has already made a reasoned judgment about sucralose not being injurious to health for diabetics, 14 and that plaintiffs’ claims conflict with or frustrate this determination. See 63 Fed. Reg. at 16430 15 (“[B]ecause sucralose has no influence on insulin’s action on blood glucose levels, it would not be 16 anticipated to result in difficulties with insulin-based management of diabetes.”). 17 Plaintiffs respond that their claims are not preempted because a recognition by the FDA 18 that sucralose is generally safe does not give TC Heartland license to make specific health claims 19 about sucralose’s benefits for diabetics that are false or misleading. Dkt. No. 28, at 16. Plaintiffs 20 thus argue that their state law claims targeted at the misleading labeling on Splenda products fall 21 outside the scope of FDA preemption. See Chavez v. Blue Sky Nat. Beverages Co., 268 F.R.D. 22 365, 375 (N.D. Cal. 2010) (noting that “the FDA has traditionally regarded state law as an 23 additional layer of consumer protection that complements FDA regulation”). 24 In addition, plaintiffs argue that their state law claims cannot conflict with FDA 25 regulations because they assert that TC Heartland’s Splenda advertising violates those very 26 regulations. Plaintiffs allege an underlying violation of 21 C.F.R. § 101.14(d)(2)(iii), which 27 requires health claims to be “complete, truthful, and not misleading.” The FDA defines a health 1 expressly or by implication … characterizes the relationship of any substance to a disease or 2 health-related condition.” 21 C.F.R. § 101.14(a)(1). Plaintiffs allege that the labels on TC 3 Heartland’s products constitute misleading health claims because they link Splenda consumption 4 with diabetes improvement. In plaintiffs’ view, their state law claims effectively parallel or mirror 5 the relevant federal labeling regulations and therefore cannot be seen as usurping federal law. 6 The Court agrees with plaintiffs that the FDA regulations cited by TC Heartland do not 7 preempt plaintiffs’ state law claims. Plaintiffs allege that TC Heartland makes claims that go 8 beyond the safety of sucralose by promoting its Splenda products as “suitable for people with 9 diabetes” and appropriate for “diabetes care” because they “help manage blood sugar.” 10 Determining whether these health claims are misleading because they imply that the products 11 improve diabetes will not conflict with the FDA’s determination that sucralose is generally safe. 12 While TC Heartland’s core argument is that plaintiffs are attempting to “second-guess the FDA’s 13 determination that sucralose is safe for human consumption,” Dkt. No. 25, at 9, plaintiffs’ primary 14 allegation is that TC Heartland’s health claims lead “reasonable consumers to mistakenly believe 15 that the [Splenda] Products benefit diabetics and manage blood sugar levels.” Dkt. No. 28, at 13. 16 Plaintiffs’ state law claims alleging that TC Heartland misleadingly advertised its products as 17 beneficial to diabetics therefore do not “frustrate[] the purposes” of the FDA’s determination that 18 sucralose is generally safe. Cohen, 46 F.4th at 1028. 19 Plaintiffs’ claims predicated on deceptive labeling violations are not preempted for the 20 additional reason that they mirror 21 C.F.R. § 101.14, which prohibits misleading health claims on 21 food labels. Because the state law claims asserted here parallel the FDA’s advertising regulations, 22 they cannot be preempted on that basis. See Chacanaca v. Quaker Oats Co., 752 F.Supp.2d 1111, 23 1118 (N.D. Cal. 2010) (“Where a requirement imposed by state law effectively parallels or mirrors 24 the relevant sections of the [federal statute], courts have repeatedly refused to find preemption.”). 25 II. Plaintiffs Have Article III Standing To Bring This Lawsuit. 26 TC Heartland also contends that plaintiffs lack Article III standing to bring this lawsuit 27 because they do not allege that they suffered physical harm and instead contend only that they paid 1 To establish Article III standing, a plaintiff must meet the three requirements of injury-in- 2 fact, causation, and redressability. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992). TC 3 Heartland argues that plaintiffs’ dissatisfaction with the labeling alone does not amount to a 4 cognizable injury. See, e.g., Boysen v. Walgreen Co., 2012 WL 2953069, at *2 (N.D. Cal. July 19, 5 2012) (finding no Article III standing where plaintiff alleged that defendants failed to disclose the 6 presence of arsenic in fruit juices but “plaintiff d[id] not allege that the products caused him any 7 physical injury.… [or] that the products violated FDA guidelines for fruit juices.… [but] only … 8 that he purchased and consumed the fruit juices [and] the levels of lead and arsenic in defendant’s 9 product were unsatisfactory to him”). 10 Plaintiffs respond that they have standing because they expressly allege in the complaint 11 that they “would not have purchased the Products or would have paid significantly less for them if 12 they had known that the Products’ label claims were false and misleading.” Dkt. No. 23, at 47; see 13 Hinojos v. Kohl’s Corp., 718 F.3d 1098, 1103–08 (9th Cir. 2013) (holding that plaintiffs who 14 alleged that they purchased “merchandise on the basis of false price information” and “would not 15 have made the purchase but for the misrepresentation” had Article III standing). 16 Contrary to TC Heartland’s arguments, plaintiffs have sufficiently alleged that they 17 suffered an injury-in-fact for purposes of Article III. They allege that, but for TC Heartland’s 18 purported misrepresentation that the Splenda products were healthy, they would not have 19 purchased the products (at least at their current price). See Weizman v. Talkspace, Inc., 2023 WL 20 8461173, at *3 (N.D. Cal. Dec. 6, 2023) (“Since [plaintiff] alleged that she would not have paid 21 anything to [defendant] had it provided the legally required disclosures, she experienced an 22 economic injury sufficient to establish UCL standing.”). Nor does Boysen support TC Heartland’s 23 position. In that case, the Court held that the plaintiff did not plead injury-in-fact because he did 24 “not allege that had defendant’s juice been differently labeled, he would have purchased an 25 alternative juice.” 2012 WL 2953069, at *7. In contrast to Boysen, and like Weizman, plaintiffs 26 here specifically alleged that they would not have purchased TC Heartland’s Splenda products, or 27 would at least have paid a reduced price, but for its labeling. 1 Horti v. Nestle Healthcare Nutrition, Inc., 2023 WL 8613601 (9th Cir. Dec. 13, 2023), is 2 instructive.2 In that case, the plaintiffs alleged in a similar deceptive labeling lawsuit that 3 defendant Nestle was misleading consumers through statements on its “Glucose Control” products 4 such as “designed for people with diabetes” and “helps manage blood sugar.” The Ninth Circuit 5 held that plaintiffs had alleged a “tangible economic injury” sufficient to establish standing 6 because they “alleged that they purchased a product they otherwise would not have bought but for 7 the defendant’s alleged misrepresentations.” Id. at *1. For the same reasons, plaintiffs here have 8 adequately alleged an economic injury and have Article III standing to assert their claims. 9 III. Plaintiffs Adequately Plead that TC Heartland’s Health Claims Are Misleading. 10 In addition to arguing that plaintiffs’ claims are preempted and that plaintiffs lack standing, 11 TC Heartland argues that plaintiffs’ claims are implausible. 12 TC Heartland first argues that the FDA’s prior determination that sucralose is safe and 13 serves a “special dietary use” for diabetics renders plaintiffs’ claims about its ill effects 14 implausible. 21 C.F.R. § 105.3(a)(2). As noted above, however, 21 C.F.R. § 105 governs the 15 labeling requirements for foods that purport to serve such special dietary uses. It does not 16 necessarily represent the FDA’s affirmative endorsement of such claims. 17 TC Heartland also argues that plaintiffs’ cited studies do not support their sweeping claims 18 about sucralose being unsafe. In TC Heartland’s view, the studies do not establish causation (only 19 at most correlation) between sucralose and weight gain, metabolic syndrome, and type 2 diabetes. 20 TC Heartland notes that many of the studies do not even involve the Splenda products at issue or 21 sucralose but instead discuss other artificial sweeteners like aspartame. TC Heartland additionally 22 argues that several of plaintiffs’ cited studies were done in animals and thus cannot be 23 extrapolated to humans. 24 Plaintiffs counter that reasonable consumers are deceived by TC Heartland’s health claims 25 because they believe that Splenda products can help in managing diabetics’ blood sugar levels, 26

27 2 Because Horti was an unpublished memorandum disposition, the Court does not rely on it as 1 which plaintiffs allege is untrue. Plaintiffs argue that they need not show that sucralose is unsafe to 2 prevail on their claims, only that sucralose is not beneficial to diabetics in controlling blood sugar. 3 According to plaintiffs, the FDA’s findings on the general safety of sucralose are inapposite 4 because they do not address whether sucralose improves conditions for diabetics. Plaintiffs 5 contend that their cited studies provide enough evidence to plausibly allege that specific claims 6 about the possible health benefits of Splenda products are misleading. 7 In their briefing, plaintiffs and TC Heartland talk past one another as to what plaintiffs 8 must allege to adequately plead their claims. While TC Heartland believes that plaintiffs must 9 plausibly allege that sucralose is unsafe, plaintiffs respond that they need only plead that sucralose 10 does not provide health benefits to those with diabetes. The Court agrees with plaintiffs that a 11 showing that sucralose is unsafe is not necessary to allege the false advertising claims asserted 12 here. Rather, plaintiffs must only plausibly allege that the labels on Splenda products mislead 13 reasonable consumers with diabetes to believe that sucralose would improve their conditions. 14 Consequently, the Court need not delve into the specifics of the studies presented by 15 plaintiffs or determine whether sucralose has deleterious effects on human health. Rather than 16 focusing on the parties’ factual dispute over the health risks (or lack thereof) of sucralose for 17 diabetics, the Court need only ascertain whether the health claims presented on Splenda products 18 go beyond the assertion that sucralose is safe. After all, and as TC Heartland does not seem to 19 contest, none of the studies cited by plaintiffs show a positive health benefit of sucralose for 20 diabetics. Health claims indicating as much could therefore plausibly be deceptive. 21 Courts in this circuit evaluate deceptive labeling theories under the reasonable consumer 22 test, which requires plaintiffs to “demonstrate that a reasonable consumer is likely to be misled by 23 the representation.” Moore v. Trader Joe’s Co., 4 F.4th 874, 881 (9th Cir. 2021); see also Becerra 24 v. Dr. Pepper/Seven-Up, Inc., 945 F.3d 1225, 1228 (9th Cir. 2019) (“[C]laims under the California 25 consumer-protection statutes”—such as claims under the CLRA, FAL, and UCL—“are governed 26 by the reasonable consumer test.”). Meeting this standard “requires a probability that a significant 27 portion of the general consuming public or of targeted consumers, acting reasonably in the 1 Plaintiffs here allege that the phrases “diabetes care,” “suitable for people with diabetes,” 2 and “helps manage blood sugar” could mislead a significant portion of reasonable consumers to 3 believe that TC Heartland’s Splenda products provide health benefits for diabetics. This is so 4 because words such as “care” and “help” could, according to plaintiffs, imply that the products 5 have a therapeutic effect and provide a health benefit to diabetic consumers. 6 Horti is again instructive. In that case, the Ninth Circuit determined that phrases essentially 7 the same as those at issue here could mislead a reasonable consumer. 2023 WL 8613601, at *1 8 (finding that the three analogous phrases “glucose control,” “designed for people with diabetes,” 9 and “helps manage blood sugar” were plausibly misleading because a “a reasonable consumer 10 could expect the product to exert some benefit on the control and regulation of blood sugar.”). As 11 in Horti, “a reasonable consumer could understand these representations [by TC Heartland] to 12 indicate that the product[s] will have a positive effect on diabetes and blood sugar levels.” Id.3 13 TC Heartland responds that the reasonable consumer test requires “more than a mere 14 possibility that [the] label might conceivably be misunderstood by some few consumers viewing it 15 in an unreasonable manner.” Becerra, 945 F.3d at 1228. TC Heartland argues that the phrase 16 “suitable for people with diabetes” is not misleading to a significant portion of reasonable 17 consumers because the Splenda products literally do not contain real sugar, which otherwise 18 would exacerbate diabetes. TC Heartland also contends that the phrases “diabetes care” and “helps 19 manage blood sugar” are not misleading because they accord with the FDA’s finding that such 20 zero-calorie artificial sweeteners are appropriate for the “diets of diabetics and [are] therefore a 21 special dietary use.” 21 C.F.R § 105.3(a)(2). In TC Heartland’s view, a reasonable person would 22 not interpret these phrases to mean that the Splenda products would cure or improve diabetes but 23 only that the products would not worsen it. 24 3 TC Heartland argues that the phrase “#1 recommended brand by doctors and dieticians” is not 25 misleading because plaintiffs do not plead any facts suggesting this to be untrue. See, e.g., Amado v. Procter & Gamble Co., 2023 WL 3898984, at *9 (N.D. Cal. June 8, 2023) (holding that 26 plaintiffs failed to adequately plead the falsity of statement “#1 Doctor Recommended” in Proctor & Gamble’s Metamucil products). But of the 8 Splenda products here, none include this phrase 27 alone. Dkt. No. 23, at 5–19. Because all of the products contain at least one of the other three 1 Ultimately, the parties’ “contrary interpretations of the product labels” present an issue that 2 “is not appropriate for resolution on a motion to dismiss.” Horti, 2023 WL 8613601, at *1. This is 3 a “factual dispute” and “at this stage the [plaintiffs’] allegations must be taken as true.” Prescott v. 4 Abbott Laboratories, 2024 WL 2843092, at *4 (N.D. Cal. June 5, 2024). Under this lens, plaintiffs 5 have pleaded facts satisfying the reasonable consumer standard and have therefore adequately 6 pleaded their various state law claims. 7 IV. Plaintiffs Cannot Require TC Heartland To Conduct an Advertising Campaign. 8 As one form of relief, plaintiffs seek an injunction “requiring Defendant to engage in an 9 affirmative advertising campaign to dispel public misperception of the Products resulting from 10 Defendant’s unlawful conduct.” Dkt. No. 23, at 66. TC Heartland argues that this request for 11 affirmative “corrective advertising” violates the First Amendment. See Zauderer v. Office of 12 Disciplinary Counsel, 471 U.S. 626, 651 (1985) (holding that compelling a party to engage in 13 affirmative speech is only permitted if the content of that speech consists of “purely factual and 14 uncontroversial information.”). TC Heartland contends that there is no serious scientific 15 disagreement about the safety of sucralose but that, even if there were, a court-mandated 16 advertising campaign regarding its risks would violate the First Amendment by “elevat[ing] one 17 side of a legitimately unresolved scientific debate.” Cal. Chamber of Commerce v. Council for 18 Educ. & Research on Toxics, 29 F.4th 468, 478 (9th Cir. 2022). Plaintiffs counter that commercial 19 speech related to advertising is not entitled to the same First Amendment protection as non- 20 commercial speech, so compelling clarifying disclosures would not be unconstitutional. In re R. 21 M. J., 455 U.S. 191, 200 (1982). 22 The Court agrees with TC Heartland that plaintiffs’ requested injunctive relief would 23 violate the First Amendment. Compelling speech is generally prohibited by the First Amendment. 24 See W. Va. State Bd. Of Educ. V. Barnette, 319 U.S. 624 (1943). While the restrictions on 25 compelling commercial speech are looser, see, e.g., Central Hudson Gas & Elec. V. Pub. Serv. 26 Comm’n of N.Y., 447 U.S. 557 (1980), requiring such affirmative speech is only permitted if the 27 speech contains “purely factual and uncontroversial information.” Zauderer, 471 U.S. at 651. 1 || of sucralose undermines plaintiffs’ contention that any affirmative advertising regarding Splenda’s 2 || risks could be merely factual and uncontroversial. Indeed, the FDA’s 1999 determination of 3 sucralose’s general safety strongly cuts against plaintiffs’ position. The Court therefore grants TC 4 || Heartland’s motion to dismiss plaintiffs’ request for this form of injunctive relief. 5 CONCLUSION 6 For the foregoing reasons, the Court denies TC Heartland’s motion to dismiss except as to 7 || plaintiffs’ request for injunctive relief in the form of an affirmative advertising campaign. 8 9 IT IS SO ORDERED. 10 || Dated: July 18, 2024 11 LA Qe 12 . P. Casey Pitts 13 United States District Judge

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