Spice Jazz LLC v. Youngevity International, Inc.

District Court, S.D. California·Decided March 11, 2020·No. 3:19-cv-00583·Unknown

Opinion

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9 10 UNITED STATES DISTRICT COURT 11 SOUTHERN DISTRICT OF CALIFORNIA

12 SPICE JAZZ LLC, Case No. 19-cv-583-BAS-WVG 13 Plaintiff, ORDER GRANTING IN PART 14 AND DENYING IN PART DEFENDANT’S MOTION TO 15 v. DISMISS

16 YOUNGEVITY INTERNATIONAL, [ECF No. 21] INC. et al., 17 Defendant. 18 19

20 Plaintiff Spice Jazz LLC was once a successful multi-level marketing 21 operation with profits in the millions of dollars. Plaintiff is now bankrupt, and it 22 alleges this downfall occurred because of the actions of Colleen Walters and 23 Defendant Youngevity International, Inc. Plaintiff has filed a complaint against 24 Youngevity as well as Plaintiff’s former employee Bianca Reyne Djafar-Zade. 25 Youngevity moved to dismiss the complaint. (ECF No. 13.) The Court granted in 26 part and denied in part the motion, granting Plaintiff leave to amend. (“Prior Order,” 27 ECF No. 19.) Plaintiff then filed a second amended complaint. (“SAC,” Second 1 (“Mot.,” ECF No. 21.) Plaintiff filed an opposition to the Motion, (“Opp’n,” ECF 2 No. 23), to which Youngevity filed a reply, (“Reply,” ECF No. 24). 3 The Court finds this Motion suitable for determination on the papers and 4 without oral argument. Civ. L. R. 7.1(d)(1). For the reasons stated below, the Court 5 GRANTS IN PART and DENIES IN PART the Motion. 6 I. FACTUAL ALLEGATIONS 7 Plaintiff sold culinary recipes and spices to customers using a multi-level 8 marketing (“MLM”) sales force composed of individual sales representatives. (SAC 9 ¶ 2.) Sales force members were recruited, provided with marketing materials and 10 strategies, entrusted with secret recipes, and encouraged to sell the products 11 throughout Australia and the United States. (Id.) Plaintiff hired Colleen Walters to 12 be its CEO, and Walters successfully recruited sales team members and ran the 13 company’s operation. (Id. ¶¶ 19, 21.) But during her employment with Plaintiff, 14 Walters worked with Defendant Youngevity, a direct competitor also running an 15 MLM sales force. (Id. ¶¶ 21, 27.) Walters “hatched a scheme” to steal Plaintiff’s 16 business and bring it to Youngevity, who offered her “a sweeter deal for her spices.” 17 (Id. ¶¶ 27, 28.) Walters then left Plaintiff’s company, taking with her all of Plaintiff’s 18 sales force and “a treasure trove of proprietary recipes and products.” (Id. ¶ 31.) 19 Youngevity allegedly “look[ed] the other way” when Walters brought over a wealth 20 of valuable information, or maybe conspired with her in a plan to “sabotage 21 Plaintiff’s business operation.” (Id. ¶¶ 66, 71.) 22 Plaintiff brings claims against Youngevity and against Bianca Reyne Djafar- 23 Zade. Ms. Djafar-Zade was an employee on Plaintiff’s payroll but “never actually” 24 did any work, by virtue of being Walters’ daughter. (Id. ¶ 90.) Djafar-Zade is not a 25 part of the pending Motion. 26 II. LEGAL STANDARDS 27 A motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil 1 Civ. P. 12(b)(6); Navarro v. Block, 250 F.3d 729, 731 (9th Cir. 2001). The court 2 must accept all factual allegations pleaded in the complaint as true and must construe 3 them and draw all reasonable inferences from them in favor of the nonmoving party. 4 Cahill v. Liberty Mutual Ins. Co., 80 F.3d 336, 337–38 (9th Cir. 1996). To avoid a 5 Rule 12(b)(6) dismissal, a complaint need not contain detailed factual allegations, 6 rather, it must plead “enough facts to state a claim to relief that is plausible on its 7 face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim has “facial 8 plausibility when the plaintiff pleads factual content that allows the court to draw the 9 reasonable inference that the defendant is liable for the misconduct alleged.” 10 Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 556). 11 “Where a complaint pleads facts that are ‘merely consistent with’ a defendant’s 12 liability, it stops short of the line between possibility and plausibility of ‘entitlement 13 to relief.’” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 557). 14 “[A] plaintiff’s obligation to provide the ‘grounds’ of his ‘entitle[ment] to 15 relief’ requires more than labels and conclusions, and a formulaic recitation of the 16 elements of a cause of action will not do.” Twombly, 550 U.S. at 555 (quoting 17 Papasan v. Allain, 478 U.S. 265, 286 (1986) (alteration in original). A court need 18 not accept “legal conclusions” as true. Iqbal, 556 U.S. at 678. Despite the deference 19 the court must pay to the plaintiff’s allegations, it is not proper for the court to assume 20 that “the [plaintiff] can prove facts that [he or she] has not alleged or that defendants 21 have violated the . . . laws in ways that have not been alleged.” Associated Gen. 22 Contractors of Cal., Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 526 23 (1983). 24 III. ANALYSIS 25 Youngevity moves to dismiss only some of Plaintiff’s causes of action. 26 A. Interference with Prospective Economic Relationships Claim 27 Plaintiff previously brought two claims for tortious interference with 1 dismissed without prejudice the negligent interference with prospective economic 2 relationships claim because Plaintiff has not pled that Youngevity owed it any duty, 3 (Prior Order at 10–11) but denied the motion to dismiss the intentional interference 4 with prospective economic relationships claim. (Id. at 13–14.) In its amended 5 complaint, Plaintiff again includes allegations for intentional interference. Plaintiff’s 6 claim stems from the allegation that Plaintiff lost future business opportunities 7 because “Plaintiffs’ existing sales force members were actively recruiting additional 8 members, and would have continued to do so but-for Defendants’ wrongful conduct.” 9 (SAC ¶ 121.) “Plaintiff had a reasonable likelihood—indeed a certainty—of entering 10 into profitable economic relationships with additional sales force members as its 11 business continued to grow.” (Id. ¶ 122.) 12 The Court previously addressed Youngevity’s argument that the interference 13 claim should be dismissed because “the alleged interference must have been 14 wrongful by some measure beyond the fact of the interference itself.” (Prior Order 15 at 14 (quoting Crown Imports, LLC v. Superior Court, 223 Cal. App. 4th 1395, 1404 16 (2014)). After analyzing Plaintiff’s claim and finding it sufficiently pled, the Court 17 denied the motion to dismiss the claim. Youngevity now moves to dismiss the claim 18 based on two new grounds: first because Plaintiff “fails to specifically identify the 19 third party or parties with whom it had a prospective economic relationship” and 20 second because “Plaintiff has not identified any facts from which the Court can 21 reasonably infer that any identified party had a ‘probability of future economic 22 benefit.’” (Mot. at 3, 5.) Plaintiff argues Youngevity has waived its opportunity to 23 make these arguments. 24 Courts are divided on the issue of whether a defendant may raise objections to 25 causes of action that existed at the time it filed its previous motion to dismiss. On 26 one hand, courts hold the defendant cannot raise such objections if the grounds for 27 dismissal raised in a defendant’s motion “could have properly been raised” in the 1 Supp. 3d 1320, 1326 (N.D. Cal.

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Spice Jazz LLC v. Youngevity International, Inc., (S.D. Cal. 2020).

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