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dismissing fraud claim under 9(b) where plaintiff "flatly admit[ted] that she [could not] remember the location of the billboard or the precise date and time the advertising was on the [television] or radio" and failed to "allege the specific contents, context, or speaker of these advertisements."
Summary of this case from Douglas v. Renola Equity Fund II, LLCOpinion
Civil Action No. 3:01-CV-2082-G
October 23, 2002
MEMORANDUM ORDER
Before the court is the motion of the defendant Metabolife International, Inc. ("Metabolife") to strike and/or dismiss, pursuant to FED. R. CIV. P. 9(b), 12(b)(6), and 12(e), the state law claim of deceit and fraud brought by the plaintiff Brenda Johnson ("Johnson"). Also before the court is Johnson's motion for leave to amend her complaint. For the following reasons, Metabolife's motion is granted and Johnson's motion is denied.
I. BACKGROUND
This is a personal injury case. Metabolife, a corporation with its principal place of business in the state of California, Notice of Removal at 3, is engaged in the business of marketing and selling weight loss supplements, including a product known as "Metabolife 356" ("M-356"), to the general public. Defendant's Third Amended Answer and Affirmative Defenses ("Defendant's Third Amended Answer") ¶ 6-7. Metabolife markets its products throughout the nation, including Texas. See Defendant's Third Amended Answer ¶ 4, 7. Johnson is an individual domiciliary and resident of the state of Texas. Plaintiffs Original Petition ("Complaint") ¶ 2, attached to Notice of Removal as Tab 2 of Exhibit A. Johnson brought her claim initially in the District Court of Dallas County, 101st Judicial District, on May 30, 2001. Metabolife then removed the case to this court pursuant to 28 U.S.C. § 1441(a). See Notice of Removal. The crux of the case is Johnson's allegation that she suffered serious injuries following her consumption of M-356. See Complaint ¶ 11.
On October 5, 2001, Johnson filed her first amended complaint, which added a state law cause of action for "deceit and fraud." See Plaintiffs First Amended Original Petition ("First Amended Complaint") ¶ 15-21, attached to Notice of Removal as Tab 22 of Exhibit A. The factual allegations in that claim, however, failed to state with particularity the circumstances constituting fraud, which is required by FED. R. CIV. P. 9(b) of any claim of fraud. Consequently, on March 5, 2002, this court granted Metabolife's motion for a more definite statement, pursuant to FED R. CIV. P. 12(e), and ordered Johnson to replead her deceit and fraud claim. See Order, March 5, 2002. In response, Johnson filed her second amended complaint on July 5, 2002.
The deceit and fraud claim in the first amended complaint merely stated that:
Defendant made material representations to the general public and potential users of [M-356] such as Plaintiff, that [M-356] was thoroughly tested and proven safe. Plaintiff reasonably relied on such representations in deciding to use [M-356] and, but for such representations of safety, she would not have used [M-356]. At the time the representations were made, they were false and Defendant knew they were false. Defendant also failed to represent to Plaintiff that [M-356] could cause serious health problems including neurologic injury, seizure, heart failure and sudden death. This omission was material and induced Plaintiff to use [M-356]. . . This omission by Defendant was material and intentional and it had the desired effect — to induce the continued use by Plaintiff and millions of others.
First Amended Complaint ¶ 16-21 (paragraph numbers omitted from text).
On August 12, 2002, Metabolife filed the instant motion to strike and/or dismiss, pursuant to FED. R. CIV. P. 9(b), 12(b)(6), and 12(e), the deceit and fraud cause of action in Johnson's second amended complaint. See Defendant's Motion to Strike/and or [sic] Dismiss ("Defendant's Motion") at 6. Specifically, Metabolife requests that the court strike paragraphs 15-21 of Johnson's second amended complaint and/or dismiss her deceit and fraud claim in its entirety. Id. Johnson responded on September 6, 2002 by filing a motion for leave to further amend her complaint. See Plaintiff's Motion for Leave of Court to Amend Plaintiffs Complaint ("Plaintiff's Motion") Metabolife opposes the motion for leave to further amend. Defendant's Response to Plaintiffs Motion to Amend Pleadings ("Defendant's Response") at 1. The court now addresses both Metabolife's motion to strike and/or dismiss and Johnson's motion for leave to amend.
Johnson has appended a copy of her proposed third amended complaint to her motion for leave to amend. See Plaintiffs Third Amended Complaint ("Third Amended Complaint"), attached to Plaintiffs Motion as Exhibit A.
II. ARGUMENT 1. Defendant's Motion to Strike and/or Dismiss a. The Legal Standard
Federal Rule of Civil Procedure 12(b)(6) authorizes dismissal of a complaint for "failure to state a claim upon which relief can be granted." However, a motion under Rule 12(b)(6) should be granted only if it appears beyond doubt that the plaintiff could prove no set of facts in support of her claim that would entitle her to relief. Conley v. Gibson, 355 U.S. 41, 45-46 (1957); Leffall v. Dallas Independent School District, 28 F.3d 521, 524 (5th Cir. 1994); see also Kaiser Aluminum Chemical Sales, Inc. v. Avondale Shipyards, Inc., 677 F.2d 1045, 1050 (5th Cir. 1982), cert. denied, 459 U.S. 1105 (1983). In determining whether dismissal should be granted, the court must accept all well-pleaded facts as true and view them in the light most favorable to the plaintiff. See Capital Parks, Inc. v. Southeastern Advertising and Sales System, Inc., 30 F.3d 627, 629 (5th Cir. 1994); Norman v. Apache Corporation, 19 F.3d 1017, 1021 (5th Cir. 1994); Chrissy F. by Medley v. Mississippi Department of Public Welfare, 925 F.2d 844, 846 (5th Cir. 1991).
Under Federal Rule of Civil Procedure 9(b), a plaintiff must state with particularity the circumstances constituting a claim of fraud. See FED. R. CIV. P. 9(b); see also Tuchman v. DSC Communications Corporation, 14 F.3d 1061, 1067 (5th Cir. 1994); Guidry v. Bank of LaPlace, 954 F.2d 278, 288 (5th Cir. 1992). Although Rule 9(b) permits the plaintiff to allege generally the defendant's intent to commit fraud, a mere allegation that the defendant had the requisite intent will not satisfy Rule 9(b). See Melder v. Morris, 27 F.3d 1097, 1102 (5th Cir. 1994); Tuchman, 14 F.3d at 1068. To adequately plead fraudulent intent, the plaintiff must set forth specific facts that support an inference of fraud. Tuchman, 14 F.3d at 1068.
"What constitutes particularity will necessarily differ with the facts of each case." Guidry, 954 F.2d at 288. Generally, this circuit has interpreted Rule 9(b) as requiring the plaintiff to include specific details of the time, place, contents, and nature of the activities which form the basis of the allegedly fraudulent conduct, as well as the speaker's identity and what was obtained thereby. See Williams v. WMX Technologies, Inc., 112 F.3d 175, 177 (5th Cir.), cert. denied, 522 U.S. 966 (1997); Tel-Phonic Services, Inc. v. TBS International, Inc., 975 F.2d 1134, 1139 (5th Cir. 1992); see also 5 CHARLES A. WRIGHT ARTHUR MILLER, FEDERAL PRACTICE AND PROCEDURE § 1297 (2d edition 1990). "Anything less fails to provide defendants with adequate notice of the nature and grounds of the claim." Hart v. Bayer Corporation, 199 F.3d 239, 248 (5th Cir. 2000) (citing Tuchman, 14 F.3d at 1067). Dismissal of a fraud claim for failure to plead the claim with particularity under Rule 9(b) is treated as a dismissal for failure to state a claim under Rule 12(b)(6). See Lovelace v. Software Spectrum, Inc., 78 F.3d 1015, 1017 (5th Cir. 1996); Shushany v. Allwaste, Inc., 992 F.2d 517, 520 (5th Cir. 1993); Guidry, 954 F.2d at 281.
b. Johnson's Deceit and Fraud Claim
Johnson filed her current live pleading, the second amended complaint, on July 5, 2002. This pleading was filed after the court granted Metabolife's motion for a more definite statement, pursuant to FED. R. CIV. P. 12(e), and ordered Johnson to replead her claim for deceit fraud with the specificity required by FED. R. CIV. P. 9(b). In the instant motion to strike and/or dismiss, Metabolife argues that Johnson's second amended complaint again fails to meet the minimum pleading requirements for a claim of fraud under Rule 9(b). The court agrees with this assertion.
Johnson took four months to file her second amended complaint. A careful review of that complaint, however, reveals that the only change of any significance made to the deceit and fraud claim was the addition of language to paragraph number 16. In the first amended complaint, paragraph 16 stated that:
The court granted Metabolife's motion for more definite statement on March 5, 2002, and, as mentioned, Johnson did not file her second amended complaint until July 5, 2002. See Docket Sheet.
Defendant made material representations to the general public and to potential users of [M-356] such as Plaintiff, that [M-356] was thoroughly tested and proven safe.
First Amended Complaint ¶ 16. Plaintiff amended this paragraph in the second amended complaint to assert that:
Defendant made material representations to the general public and to potential users of [M-356] such as Plaintiff, through billboard, television and other media advertisements, that [M-356] was an all-natural product and safe to use.
Plaintiffs Second Amended Original Petition ("Second Amended Complaint") ¶ 16 (italicized words indicate new language).
However, even with the additional language alleging that Metabolife made material representations "through billboard, television and other media advertisements, that [M-356] was an all-natural product and safe to use," Johnson's claim for deceit and fraud falls well short of the specificity required for a claim of fraud. "At a minimum, Rule 9(b) requires that [Johnson] specify the particulars of 'time, place, and contents of the [allegedly] false representations.'" Williams, 112 F.3d at 179 (quoting Tuchman, 14 F.3d at 1068). Johnson's repled deceit and fraud claim identifies neither the time nor the place of these alleged misrepresentations. In fact, Johnson flatly admits that she cannot "remember the location of the billboard or the precise date and time the advertising was on the [television] or radio." Plaintiffs Response to Defendant's Motion to Strike and/or Dismiss ("Plaintiffs Response") ¶ 3. Nor does she allege the specific contents, context, or speaker of these advertisements. Johnson has also failed to present any facts to support an inference of Metabolife's alleged fraudulent intent. Finally, Johnson does not adequately show how any alleged statements on behalf of Metabolife were actually fraudulent. Thus, the deceit and fraud claim in Johnson's second amended complaint lacks sufficient particularity to comply with Rule 9(b).
Johnson responds to these deficiencies by simply arguing that "[n]o one could be expected to remember those details," Plaintiffs Response ¶ 3, and by pointing her finger at Metabolife, whom she alleges failed to provide adequate information concerning the missing details of where, when and what, which she sought through written discovery. Id. The court acknowledges that Rule 9(b) imposes a more onerous standard for pleading fraud, one which is significantly more difficult to satisfy than the usual standard of FED. R. CIV. P. 8(a). However, as the Fifth Circuit has stated:
[T]he requirement for particularity in pleading fraud does not lend itself to refinement, and it need not in order to make sense. Directly put, the who, what, when, and where must be laid out before access to the discovery process is granted. . . We remind that this bite of Rule 9(b) was part of the pleading revolution of 1938. In short, we apply the rule with force, without apology.
Williams, 112 F.3d at 178 (italics in original).
Johnson alone must "specify the statements contended to be fraudulent, identify the speaker, state when and where the statements were made, and explain why the statements were fraudulent" in order to satisfy the minimum requirements of Rule 9(b). Id. at 177 (adopting the standards of Mills v. Polar Molecular Corporation, 12 F.3d 1170, 1175 (2d. Cir. 1993)). Metabolife has no duty to assist Johnson in her attempt to plead deceit and fraud. Nevertheless, the record reflects that Metabolife actually provided Johnson with some materials concerning Metabolife's advertising of M-356. Plaintiff's Response ¶ 3; Defendant's Reply to Plaintiffs Response to Defendant's Motion to Strike and/or Dismiss ("Defendant's Reply") at 3-4. Even with the benefit of these materials, however, Johnson has been unable to plead her claim of fraud with the particularity required by Rule 9(b). Consequently, this court must dismiss Johnson's deceit and fraud claim, pursuant to FED. R. CIV. P. 12(b)(6), for failure to state a claim upon which relief can be granted. See Lovelace, 78 F.3d at 1017.
Concluding that Johnson's deceit and fraud claim should be dismissed under FED. R. CIV. P. 12(b)(6), the court finds it unnecessary to address Metabolife's alternative request to strike paragraphs 15-21 of the deceit and fraud claim pursuant to FED. R. CIV. P. 12(e).
2. Plaintiffs Motion for Leave to Amend
On September 6, 2002, Johnson requested yet another bite at the apple by filing a motion for leave to amend her complaint for the third time. Johnson filed this motion following Metabolife's motion to strike and/or dismiss. Importantly, Johnson has provided a copy of the proposed third amended complaint, which allows the court to determine whether the proposed changes are detailed enough to comply with Rule 9(b). For the reasons discussed below, the court finds that Johnson has again failed to plead her claim of fraud with the requisite specificity and, therefore, denies her motion for leave to amend.
Johnson filed the motion for leave to amend contemporaneously with her response to Metabolife's motion to strike and/or dismiss.
Under Federal Rule of Civil Procedure 15(a), leave to amend should be "freely given when justice so requires." This and the other federal rules "reject the approach that pleading is a game of skill in which one misstep by counsel may be decisive to the outcome and accept the principle that the purpose of pleading is to facilitate a proper decision on the merits." Conley, 355 U.S. at 48. The Fifth Circuit has repeatedly held that Rule 15(a) evinces a liberal amendment policy. See, e.g., Lowrey v. Texas A M University System, 117 F.3d 242, 245 (5th Cir. 1997); Nance v. Gulf Oil Corporation, 817 F.2d 1176, 1180 (5th Cir. 1987); Youmans v. Simon, 791 F.2d 341, 348 (5th Cir. 1986). That liberal amendment policy, however, does not require the federal courts to engage in "futile gestures." DeLoach v. Woodley, 405 F.2d 496, 497 (5th Cir. 1968); see also Foman v. Davis, 371 U.S. 178, 182 (1962) (amendment of pleading need not be allowed if amendment would be futile). Thus, "[w]here a complaint, as amended, would be subject to dismissal, leave to amend need not be granted." DeLoach, 405 F.2d at 497. Finally, "the circumstances and terms upon which leave is to be 'freely given' is committed to the informed, careful judgment and discretion of the Trial Judge as he superintends the development of a cause toward its ultimate disposition." Lone Star Motor Import, Inc. v. Citroen Cars Corporation, 288 F.2d 69, 75 (5th Cir. 1961).
In the instant case, Johnson seeks to augment her deceit and fraud claim in an attempt to comply with FED. R. CIV. P. 9(b). In addition to the information provided in the second amended complaint, Johnson now proposes a complaint that avers:
Plaintiff began taking the drug in late 1998. Before she bought the product, she saw billboards advertising the product as being "all natural". She also saw television advertising and heard radio advertising which indicated that the product was safe because it was all natural. When she first purchased a bottle of [M-356] pills, the label on the bottle said that the pills contained natural herbs that were independently laboratory tested for safety. Plaintiff reasonably relied upon such representations that the product was all natural and safe in deciding to use [M-356] to her detriment and, but for such representations of safety, she would not have used [M-356]. At the time the representations were made, the Defendant had received hundreds of reports from users of its products indicating that the product could cause serious health problems and therefore, it knew that the representations of safety were false.
Third Amended Complaint ¶ 16-18 (paragraph numbers omitted from text).
Unfortunately, while Johnson's proposed third amended complaint provides more detail as to the nature of Metabolife's allegedly deceitful and fraudulent activities, the proposed amendment still lacks the particularity required by Rule 9(b). As previously discussed, a claim of fraud must include specific details as to the time, place, contents, and nature of the activities which form the basis of the allegedly fraudulent conduct. See Tel-Phonic Services, 975 F.2d at 1139. Moreover, even though a plaintiff may allege additional facts in support of a claim of fraud, it is the quality, not the quantity, of those facts which is significant under Rule (9)(b). As the Fifth Circuit has stated, "[a] complaint can be long-winded, even prolix, without pleading with particularity. . . . [S]uch a garrulous style is not an uncommon mask for an absence of detail." Williams, 112 F.3d at 178. Here, each of Johnson's new allegations misses the mark.
First, while Johnson now alleges that "[b]efore she bought the product, she saw billboards advertising the product as being 'all natural,'" she fails to state where she saw these billboards, the content of the billboards, or even how the statement of "all natural" is fraudulent. See Plaintiffs Third Amended Complaint ¶ 16. In addition, a claim of fraud requires a more specific statement of time than to simply allege "before she bought the product." Second, Johnson also alleges that she "saw television advertising and heard radio advertising which indicated that the product was safe because it was all natural." Id. Nevertheless, Johnson continues to admit that she is unable remember any of the dates or times when she saw these advertisements on the television or heard them on the radio. Plaintiffs Motion ¶ 2. And again, she fails to allege the specific contents, context, or speaker of these advertisements. This is insufficient to state a claim of fraud with the particularity required by Rule 9(b). Third, Johnson now alleges that she purchased a bottle of M-356, which on its label "said that the pills contained natural herbs that were independently laboratory tested for safety." Third Amended Complaint ¶ 16. However, she never alleges that M-356 is not "all natural" or that it was not "independently laboratory tested for safety." Johnson also fails to allege any specific statement located on the label of the M-356 bottles, other than the assertion that the pills were "all natural" and "independently laboratory tested for safety." Id. Finally, Johnson's third amended complaint contains absolutely no statement of where or when Metabolife received the "hundreds of reports from users of its products," how these reports should have put Metabolife on notice that M-356 might cause serious health problems, or how such reports might indicate the fraudulent intent of Metabolife. See id. ¶ 18. Thus, as with her previous complaint, Johnson's proposed third amended complaint lacks sufficient detail to satisfy the requirements of Rule 9(b).
Johnson again blames any inadequacies in her amended pleading on Metabolife's failure to produce information though discovery. Plaintiff's Motion ¶ 2. However, as discussed above, the heightened pleading requirements of Rule 9(b) must be met before access to the discovery process will be granted. Williams, 112 F.3d at 178. Consequently, while Johnson's proposed third amended complaint may have designated Metabolife as the "who" responsible for the alleged deceit and fraud, she has again failed to provide sufficient facts concerning the "what, where, when, and how" required by FED. R. CIV. P. 9(b). See id. This court, therefore, will not engage in the futile gesture of allowing Johnson to substitute one insufficiently-pled claim for another. Accordingly, Johnson's motion for leave to amend her complaint is denied.
III. CONCLUSION
For the reasons discussed above, Metabolife's motion to dismiss Johnson's claim for deceit and fraud in her second amended complaint is GRANTED. Additionally, because Johnson's proposed third amended complaint fails to cure the deficiencies in her deceit and fraud claim, Johnson's motion for leave to amend her second amended complaint is DENIED.