Case 3:17-cv-01579-JCS Document 1 Filed 03/23/17 Page 1 of 26 1 2 3 4 5 6 7 Rosemary M. Rivas (State Bar No. 209147) Email: rrivas@zlk.com Quentin A. Roberts (State Bar No. 306687) Email: qroberts@zlk.com LEVI & KORSINSKY LLP 44 Montgomery Street, Suite 650 San Francisco, California 94104 Telephone: (415) 291-2420 Facsimile: (415) 484-1294 Counsel for Individual and Representative Plaintiffs Julie Dean and Suzanne Jones and the Proposed Class 8 UNITED STATES DISTRICT COURT 9 NORTHERN DISTRICT OF CALIFORNIA 10 11 12 13 JULIE DEAN and SUZANNE JONES, on behalf of themselves and all others similarly situated, 14 Plaintiffs, 15 16 17 18 19 Case No. 3:17-cv-01579 CLASS ACTION COMPLAINT JURY TRIAL DEMANDED vs. LULAROE, LLC; LLR, INC.; DEANNE BRADY; and MARK STIDHAM, Defendants. 20 21 22 23 24 25 26 27 28 CLASS ACTION COMPLAINT Case 3:17-cv-01579-JCS Document 1 Filed 03/23/17 Page 2 of 26 1 Plaintiffs Julie Dean and Suzanne Jones, on behalf of themselves and all others similarly 2 situated, allege the following based upon personal knowledge as to allegations regarding 3 themselves, and on the investigation of their counsel and information and belief as to all other 4 allegations: 5 I. 6 NATURE OF ACTION 1. This is a class action seeking monetary damages, restitution, injunctive and 7 declaratory relief from Defendants LuLaRoe, LLC; LLR, Inc.; DeAnne Brady; and Mark 8 Stidham (collectively “Defendants”), arising from their advertising, marketing and sale of 9 defective leggings and other clothing. 10 2. Defendants sell brightly colored and patterned clothing, such as dresses, tops 11 and leggings throughout the United States. Defendants’ leggings (hereafter “Leggings” or 12 “Products”) are the subjects of the lawsuit. Defendants’ Products, however, are not available in 13 retail stores, or through the company website at www.lularoe.com. 14 3. Instead, Defendants’ business model relies on recruiting members of the general 15 public, called Fashion Consultants (also known as “Fashion Retailers” or “Independent 16 Retailers”), who buy the Products from Defendants at wholesale, and then sell the Products to 17 consumers through in-home and online “boutiques”. 18 4. Defendants’ business model is known as multi-level marketing (“MLM”) or 19 pyramid selling. Other companies that operate under the MLM business model include 20 Tupperware, Beachbody, Mary Kay, and Herbalife. 21 22 23 5. As of 2017, there are approximately 80,000 Fashion Consultants selling Defendants’ clothing, including the Products, throughout the United States. 6. To become a Fashion Consultant, a person must make an initial investment 24 ranging from $5,000 to $9,000, in what is called an “onboard package,” which is essentially a 25 package of clothing and marketing materials. 26 7. LuLaRoe was founded in 2012 by DeAnne Brady and Mark Stidham, and the 27 business has become very successful, very quickly. Reports indicate that sales have soared 600 28 percent to approximately $1 billion as of 2016. -1CLASS ACTION COMPLAINT Case 3:17-cv-01579-JCS Document 1 Filed 03/23/17 Page 3 of 26 1 8. While Defendants and some Fashion Consultants are pleased with the company, 2 many of the customers who buy the Products for personal, family or household use (hereinafter, 3 “Customers”) are not. Specifically, thousands of Customers have taken their outrage to 4 Facebook and other online forums to complain about the defective Products. Specifically, 5 Customers have complained that the leggings are of such poor quality that holes, tears, and rips 6 appear before wearing, during the first use or shortly thereafter. The leggings have also been 7 described as tearing as easily as “wet toilet paper.” 8 9 10 11 9. Other problems with the Products include leggings that have one leg that is substantially larger (or smaller) than the other, and leggings that are supposed to be for adults but instead would only fit a child. 10. Defendants are well aware that their Products are defective. With regard to the 12 leggings, Patrick Winget, the head of production for Defendants, reportedly wrote in a 13 company-wide email about that, “The leggings may get holes, because we weaken the fibers to 14 make them buttery soft. We have done all we can to fix them.” (Emphasis added). 15 11. Defendants’ record for ignoring and/or not satisfactorily addressing customer 16 complaints about the defective Products has earned it an “F” rating from the Better Business 17 Bureau (the “BBB”). 18 12. It is clear that Defendants have chosen to sacrifice the quality of their Products 19 in order to meet the growing demand at the expense of Customers. The extent to which they 20 have done this, however, is unacceptable. Thousands of Customers across the United States are 21 now stuck with defective Products because Defendants will neither issue refunds or make 22 exchanges for Customers and instead steer Customers to the Fashion Consultants to deal with 23 defective or damaged Products. 24 13. Unfortunately for Customers, Defendants will not make refunds to Fashion 25 Consultants for defective Products, and impose various barriers for exchanges. As a result, most 26 Fashion Consultants will not take back defective Products from Customers. 27 28 14. Defendants, as the manufacturers of the Products, would have been in exclusive possession of information providing them the knowledge about the quality of such Products. -2CLASS ACTION COMPLAINT Case 3:17-cv-01579-JCS Document 1 Filed 03/23/17 Page 4 of 26 1 Defendants provide no disclosures on any Products about the defective and negligent 2 construction or quality of the Products, even though they represent that their Products are of 3 acceptable quality and fit for normal use. 4 15. At all relevant times, Defendants misrepresented and suppressed material facts 5 about the quality of their defective Products and negligently designed, manufactured, marketed, 6 advertised, promoted, sold and/or distributed such Products. 7 16. Plaintiffs bring this action pursuant to Rule 23 of the Federal Rules of Civil 8 Procedure to redress Defendants’ failure to disclose and provide adequate warning to Fashion 9 Consultants and Customers that the Products Defendants designed, manufactured, distributed 10 and/or sold were and are defective and unfit for ordinary use. 11 17. Plaintiffs allege claims on behalf of themselves and all others similarly situated 12 for violations of the Unfair Competition Law, Cal. Bus. & Prof. Code §§ 17200, et seq., the 13 Consumers Legal Remedies Act, Cal. Bus. & Prof. Code §§ 1750, et seq., the California False 14 Advertising Law, Cal. Bus. & Prof. Code §§ 17500, et seq., for breach of express and implied 15 warranties, and unjust enrichment. 16 II. THE PARTIES 17 A. Individual and Representative Plaintiffs 18 18. Plaintiff Julie Dean is a resident and citizen of Boston, Massachusetts. 19 19. Plaintiff Dean purchased leggings made by Defendants in 2016 from a Fashion 20 Consultant. Plaintiff Dean saw photos of the leggings online and believed they were suitable for 21 ordinary use. After wearing a pair of black leggings for only a couple hours, they developed tiny 22 holes throughout. Another patterned pair developed a hole so big she could put her finger 23 through them. 24 20. Plaintiff Dean would like to purchase additional leggings in the future, however, 25 she will not know whether they are defective or not because she purchases them online and 26 cannot see or inspect them before she pays for them. 27 21. Plaintiff Suzanne Jones is a resident and citizen of Lafayette, California. 28 -3CLASS ACTION COMPLAINT Case 3:17-cv-01579-JCS Document 1 Filed 03/23/17 Page 5 of 26 1 22. Plaintiff Jones purchased leggings made by Defendants in 2016 from a Fashion 2 Consultant. Plaintiff Jones saw photos of the leggings online and believed they were suitable for 3 ordinary use. One pair of the leggings she could not even get past her knees because they were 4 so small as if they were manufactured for a child. Two other pairs of leggings developed holes 5 when she pulled the leggings on with her fingers. 6 23. Plaintiff Jones would like to purchase additional leggings in the future, however, 7 she will not know whether they are defective or not because she purchases them online and 8 cannot see or inspect them before she pays for them. 9 B. Defendants 10 24. LuLaRoe, LLC is a direct sales and multi-level marketing company with its 11 headquarters in Corona, California. 12 25. LLR, Inc. is a multilevel-marketing company headquartered in Corona, 13 California. 14 26. LuLaRoe, LLC and LLR, Inc. are collectively referred to herein as “LuLaRoe.” 15 27. DeAnne Brady is one of the founders of LuLaRoe who at all relevant times has 16 controlled and directed the activities of LuLaRoe, including those described herein, from 17 California. Among other things, Brady advertised and marketed the Products, including by 18 posting photos wearing the Products on the Internet at www.lularoe.com and on social media, 19 such as Facebook and Twitter. Brady also jointly made the decisions regarding Product 20 manufacturing and directed Fashion Consultants, including by formulating return policies and 21 procedures. DeAnne Brady is a resident and citizen of California. 22 28. Mark Stidham is the CEO and one of the founders of LuLaRoe who at all 23 relevant times, along with his wife DeAnne Brady, controlled and directed the activities of 24 LuLaRoe, including those described herein, from California. Among other things, Stidham 25 jointly made decisions regarding Product manufacturing and directed Fashion Consultants, 26 including by formulating return policies and procedures. Mark Stidham is a resident and citizen 27 of California. 28 -4CLASS ACTION COMPLAINT Case 3:17-cv-01579-JCS Document 1 Filed 03/23/17 Page 6 of 26 1 29. LuLaRoe, LLC; LLR, Inc.; DeAnne Brady; and Mark Stidham are collectively 2 referred to herein as “Defendants” unless otherwise stated. 3 III. 4 JURISDICTION AND VENUE 30. This Court has original jurisdiction of this action under the Class Action Fairness 5 Act of 2005. Pursuant to 28 U.S.C. §§ 1332(d)(2) and (6), this Court has original jurisdiction 6 because the aggregate claims of the members of the putative Class exceed $5 million, exclusive 7 of costs, and at least one of the members of the proposed Class, Plaintiffs, are citizens of a 8 different state than Defendants. 9 31. The Northern District of California has personal jurisdiction over Defendants 10 because they conduct substantial business in this District and it is in this District where 11 Defendants have employed, and continue to employ, the advertising, marketing, manufacturing 12 and sales activities detailed herein. 13 32. Venue is proper in this District pursuant to 28 U.S.C. § 1391, because 14 Defendants conduct operations, including sales and advertising, and thus transact substantial 15 business within this District. 16 IV. 17 FACTUAL ALLEGATIONS A. Defendants’ Business Model and Rapid Success 33. LuLaRoe was founded in 2012 by DeAnne Brady, a former network marketer, 18 19 20 21 and her husband, Mark Stidham. 34. Defendants’ business model depends on the recruitment of Fashion Consultants. 22 In order to attract individuals to undertake this position, Defendants cater towards busy women 23 with children who want a flexible working opportunity to earn money. A main pitch of 24 Defendants is that mothers can earn money while selling their clothing to friends in their living 25 rooms and/or through online forums, such as Facebook. Millennial mothers make up many of 26 Defendants’ Fashion Consultants. 27 28 35. Fashion Consultants are encouraged to sell the Products to their family and friends at parties at home or online known as “pop-ups.” -5CLASS ACTION COMPLAINT Case 3:17-cv-01579-JCS Document 1 Filed 03/23/17 Page 7 of 26 1 36. As of today, Defendants have over approximately 80,000 Fashion Consultants. 2 Reports indicate that the company “on boards” approximately 150 to 200 new Retail Sellers 3 everyday, with the goal of getting 300 new Fashion Consultants per day. 4 37. The initial investment for an individual to become a Fashion Consultant is 5 expensive; it costs between $5,000 and $9,000 to buy an “onboard package” which includes 6 approximately 380 pieces of clothing and marketing materials (the “Onboard Package”). One 7 report alleges, however, that Defendants encourage Fashion Consultants to keep about $20,000 8 in inventory at any given time, and further encourages them to reinvest in their business. 9 38. Conservative back-of-the-envelope calculations, based solely on the daily new 10 Retail Sellers’ Onboard Packages, demonstrates that Defendants are generating millions of 11 dollars in revenue every day from their new Fashion Consultants. That revenue excludes any 12 partnership deals or subsequent purchases of Defendants’ clothing by Fashion Consultants. 13 Based off of these generous numbers, it is evident Defendants want to sell Onboard Packages to 14 as many new Fashion Consultants as they can, even if this means providing them with clothing 15 that has holes in it and/or has been negligently manufactured. 16 39. In order to become a Fashion Consultant, one can visit Defendants’ website at 17 www.lularoe.com and click on the tab, “Join the Movement.” The website boasts: “Becoming a 18 LuLaRoe Fashion Consultant can provide you opportunity to have the means, the time, and the 19 flexibility to pursue your passions and to more fully enjoy the company of those you love.”1 In 20 reality, however, many of the Fashion Consultants are ultimately caught in crosshairs between 21 Defendants and the friends and family who they sold defective Products to. 22 40. Additionally, the burden of making enough sales and thus a profit requires that 23 Fashion Consultants deal with considerable volume. Historically, there have been many critics 24 of the companies that operate as multi-level marketing businesses, and LuLaRoe is no 25 exception. 26 27 28 1 Join the Movement, http://www.lularoe.com/join-the-movement-page (last visited March 13, -6CLASS ACTION COMPLAINT Case 3:17-cv-01579-JCS Document 1 Filed 03/23/17 Page 8 of 26 1 41. Critics of Defendants believe that the high cost to become a Fashion Consultant 2 is simply to convince the potential Fashion Consultants that it is a real business that will provide 3 a real return on investment. Turning a profit, however, is difficult. “[Defendants] estimate[] the 4 average commission that reps earn is a paltry $85 per year, according to Tracy Coenen, a 5 forensic accountant and critic of the MLM industry, citing a 2015 income disclosure statement 6 from LuLaRoe. In a January post on her blog, Coenen described LuLaRoe as a ‘grand scheme 7 made to look like a real business.’”2 8 9 42. Aside from investing thousands of dollars and having to sell hundreds if not thousands of pieces of Defendants’ clothing to make a return on their investment, excluding the 10 time and expenses involved, Fashion Consultants’ ability to be profitable is also greatly 11 diminished because of the defective Products they receive from Defendants. As explained 12 below, the time, effort, and expense involved with returns and exchanges also fall on Fashion 13 Consultants. 14 43. Thus, not only have Defendants outsourced the selling of their Products and the 15 financial risk associated with that to Fashion Consultants, they have also shifted the burden of 16 returns, exchanges, and customer complaints to them. 17 18 19 B. Defendants’ Defective Products 44. Defendants, through their website, on social media, and through the Fashion 20 Consultants, represent to the public that their Products are both comfortable and fit for normal, 21 or even, athletic use. 22 23 45. With respect to their Products, Defendants state: “Our leggings are ultra stretchy and super soft. They’re as close to your own skin as you can get with all the perks of, ahem, not 24 25 26 2 27 28 LuLaRoe’s business is booming, but some sellers are fuming, http://www.wtsp.com/money/consumer/lularoes-business-is-booming-but-some-sellers-arefuming/420039896?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+w tsp%2Ftopstories+(WTSP.com+10+News+Top+Stories (last visited March 14, 2017). -7CLASS ACTION COMPLAINT Case 3:17-cv-01579-JCS Document 1 Filed 03/23/17 Page 9 of 26 1 being naked. You can sport them at your favorite Pilates class or throw on some cute booties 2 and wear them out for a girls night!”3 3 4 46. Thus, not only are Defendants impliedly warranting that their Products are suitable for regular use, they explicitly warrant the Products are fit for athletic use. 5 47. The Products, however, are unfit for normal and athletic use. Customers across 6 the United States have complained that the leggings are ripping and developing holes after as 7 little as a few hours of wear. Sometimes the leggings tear in embarrassing places while 8 Customers are out in public. 9 48. 10 Below are two photos, out of hundreds that have been posted online, showing the defective Products: 11 // 12 // 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 3 Adult Leggings, http://www.lularoe.com/adult-leggings (last visited March 14, 2017). -8CLASS ACTION COMPLAINT Case 3:17-cv-01579-JCS Document 1 Filed 03/23/17 Page 10 of 26 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -9CLASS ACTION COMPLAINT Case 3:17-cv-01579-JCS Document 1 Filed 03/23/17 Page 11 of 26 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 C. Defendants Have a “No Return” Policy 49. Customers who bought and received defective Products, however, are not 20 allowed to return them to Defendants, either for a refund or an exchange. Defendants’ website 21 confirms this policy: “[A]ny request pertaining to returns, damages, or shipping should go to 22 the original Retailer you purchased from. THANK YOU.” 23 50. Thus, when a Customer attempts to complain directly to Defendants, he or she is 24 either ignored, or told to contact the Fashion Consultant from whom they purchased the 25 Products. The Fashion Consultant is supposed to contact Defendants to return the defective 26 Product(s) and receive a credit. 27 28 51. Fashion Consultants, however, have reported that when placing a call to Defendants in order to return damaged goods, they are placed on hold for an hour, and then -10CLASS ACTION COMPLAINT Case 3:17-cv-01579-JCS Document 1 Filed 03/23/17 Page 12 of 26 1 disconnected. Fashion Consultants also report that emails sent to Defendants regarding the 2 defective Products go unanswered. It is therefore unsurprising that Defendants have earned 3 themselves an “F” rating on the BBB. 4 52. Based on Defendants’ return policies, Fashion Consultants will not provide 5 refunds and in the few cases where they will offer an exchange, it will not be for the same item 6 that a Customer purchased. This is because one of Defendants’ gimmicks is that they only make 7 a limited number of patterns, about 5,000 of a particular print per item. As a result, Defendants 8 have been able to create a high demand for a particular pattern, which are called “Unicorns”. In 9 other words, a highly sought after pattern is a “Unicorn” and allows Fashion Consultants to 10 charge significantly more. A Customer, who receives a damaged “Unicorn,” will never receive a 11 refund and if in the rare circumstance is allowed by a Fashion Consultant to make an exchange 12 will not receive the same item, however, due to the limited numbers of patterns that Defendants 13 offer. 14 53. Additionally, to the extent a Fashion Consultant allows an exchange, a Customer 15 is responsible for paying for the cost of shipping the defective Product to the Fashion 16 Consultant, and for the Fashion Consultant’s cost of shipping the replacement item to the 17 Customer. Indeed, Defendants require Fashion Consultants to bear the cost of returning 18 defective Products. 19 54. Moreover, many Fashion Consultants state that they will only exchange unworn, 20 unwashed clothing with tags attached that were originally purchased from them within a limited 21 number of days. This excludes thousands of Customers who wore the Product once, sometimes 22 for as little as a few minutes, at which point, the Product ripped, tore, and developed a hole. 23 Customers who purchased Products during an on-line pop-up hosted by multiple-consultants 24 may not know the consultant from whom they purchased the Products from, and hence, will be 25 unable to exchange the Product(s). 26 27 55. To make matters worse, during weekly conference calls that DeAnne Brady and Mark Stidham hold with Fashion Consultants, Mark Stidham told Fashion Consultants not to 28 -11CLASS ACTION COMPLAINT Case 3:17-cv-01579-JCS Document 1 Filed 03/23/17 Page 13 of 26 1 spend time and energy sending defective Products back to the Company, but that they should try 2 to re-sell them to Customers, including by learning to sew and repairing any defective Products. 3 D. Defendants Have Been on Notice that their Products are Defective 56. Unsurprisingly, thousands of outraged Customers across the United States have 4 5 6 posted complaints about the defective Products they have purchased. 57. 7 The complaints regarding the defective Products are well documented and can be 8 easily found on a variety of Internet forums, websites, and groups. Below is a sample of typical 9 complaints posted on the BBB’s website: 10 • The quality has become extremely poor. The leggings developed holes within minutes of wearing them. • Multiple items purchased have had holes, literally fallen apart in my hands, uneven lengths (leggings, one leg 4 inches longer than the other) and poor customer service. • LuLaRoe is telling all staff and consultants to write positive reviews here - this info came directly from a high level "coach". Be WARY of this slimy company. • The leggings are garbage. I wore a pair from Vietnam for 4 hours and the whole seat of the pants developed tiny holes. • I purchased two pairs of leggings brand new from two separate consultants. Both got holes within the first few hours of wearing them. Lularoe won’t return them, so I'm just out $60. Stay far away! • This company’s products are horrible. I purchase[d] a pair of leggings and they ripped the first day I ever wore them. I tried to exchange them and was not refunded or given another pattern. • I ordered my first pair of LulaRoe Leggings, my first purchase from them in general, in December. After my first time wearing them, [I] found numerous pin holes in the butt area. I contacted the consultant I bought them from, she had me return them to her to exchange them. However, I had to pay for the shipping to both return the item and receive the new pair! So, now I've paid nearly $10 extra, and I'm afraid this pair will rip as well. 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -12CLASS ACTION COMPLAINT Case 3:17-cv-01579-JCS Document 1 Filed 03/23/17 Page 14 of 26 1 58. Moreover, there is a Facebook group specifically dedicated to Customers who 2 bought Defendants’ defective Products, called LuLaRoe Defective/Ripped/Torn Leggings And 3 Clothes. As of March 23, 2017, there are approximately 19,000 members. 4 5 59. Members of the LuLaRoe Defective/Ripped/Torn Leggings Facebook group post complaints about the defective Products on a daily basis. 6 7 8 9 E. Defendants Acknowledge Their Products Are Defectives 60. Defendants know that their Products are defective, whether it has to do with “weakening the fibers” to make the material soft, as the head of production reportedly said, or 10 whether it is because Defendants have decided to meet their growing demand with cheaper 11 materials, toxic chemicals, labor, and design from overseas countries, they know the Products 12 are defective, especially in light of the large number of Customer complaints they have received 13 over the past several months. 14 61. Despite knowing that the Products are defective, Defendants refuse to issue 15 refunds. Defendants also fail to employ proper quality control measures to avoid shipping out 16 defective Products to Fashion Consultants. 17 18 CLASS ALLEGATIONS 62. Plaintiffs bring this action on behalf of themselves and the members of the 19 proposed Class under Rule 23(a), (b)(2), (b)(3), and/or (c)(4) of the Federal Rules of Civil 20 Procedure. The proposed Class consists of the following: 21 22 23 24 25 26 All individuals residing in the United States who, after March 31, 2016, purchased for personal, family or household use, LuLaRoe branded leggings manufactured outside of the United States. 63. Plaintiffs reserve the right to redefine the Class, including by proposing multi- state Classes, prior to class certification after having the opportunity to conduct discovery. 64. Excluded from the Class are Defendants, their parents, subsidiaries, affiliates, 27 officers and directors, any entity in which Defendants have a controlling interest, and all judges 28 assigned to hear any aspect of this litigation, as well as their immediate family members. -13CLASS ACTION COMPLAINT Case 3:17-cv-01579-JCS Document 1 Filed 03/23/17 Page 15 of 26 1 65. Numerosity. Fed. R. Civ. P. 23(a)(1). The members of the Class are so numerous 2 that joinder is impractical. The Class consists of thousands of members, the precise number 3 which is within the knowledge of and can be ascertained only by resort to Defendants’ records. 4 66. Commonality. Fed. R. Civ. P. 23(a)(2) and (b)(3). There are numerous 5 questions of law and fact common to the Class, which predominate over any questions affecting 6 only individual members of the Class. Among the questions of law and fact common to the 7 Class are: 8 9 10 (a) Whether, during the Class Period, Defendants misrepresented that the Products were suitable for wear and ordinary use when they were not; (b) Whether, during the Class Period, Defendants concealed material facts concerning the quality of their Products; (c) Whether Defendants failed to employ quality control measures to avoid shipping defective Products; (d) Whether Defendants’ advertisement and representations concerning their Products constituted false advertising under California law; (e) Whether Defendants engaged in deceptive, unfair, unlawful and/or fraudulent business practices under California law; (f) Whether Class members are entitled to restitution, and in what amount; and (g) Whether Defendants should be enjoined from continuing the practices alleged herein. 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 67. Typicality. Fed. R. Civ. P. 23(a)(3). Plaintiffs’ claims are typical of the claims of the members of the Class and, like all members of the Class, Plaintiffs purchased defective Products advertised, marketed and manufactured by Defendants. Accordingly, Plaintiffs have no interests antagonistic to the interests of any other member of the Class. 68. Adequacy. Fed. R. Civ. P. 23(a)(4). Plaintiffs will fairly and adequately assert and protect the interests of the Class, and retained counsel experienced in prosecuting class actions. Accordingly, Plaintiffs are adequate representatives and will fairly and adequately protect the interests of the Class. 28 -14CLASS ACTION COMPLAINT Case 3:17-cv-01579-JCS Document 1 Filed 03/23/17 Page 16 of 26 1 69. Superiority of Class Action. Fed. R. Civ. P. 23(b)(3). A class action is superior 2 to all other available methods for the fair and efficient adjudication of this lawsuit, because 3 individual litigation of the claims of all members of the Class is economically unfeasible and 4 procedurally impracticable. While the aggregate damages sustained by the Class are in the 5 millions of dollars, the individual damages incurred by each member of the Class resulting from 6 Defendants’ wrongful conduct are too small to warrant the expense of individual lawsuits. The 7 likelihood of individual Class members prosecuting their own separate claims is remote, and, 8 even if every member of the Class could afford individual litigation, the court system would be 9 unduly burdened by individual litigation of such cases. 10 70. The prosecution of separate actions by members of the Class would create a risk 11 of establishing inconsistent rulings and/or incompatible standards of conduct for Defendants. 12 Additionally, individual actions may be dispositive of the interests of the Class, although certain 13 class members are not parties to such actions. 14 71. Injunctive and Declaratory Relief. Fed. R. Civ. P. 23(b)(2). The conduct of 15 Defendants is generally applicable to the Class as a whole and Plaintiffs seek equitable remedies 16 with respect to the Class as a whole. As such, the systematic policies and practices of 17 Defendants make declaratory or equitable relief with respect to the Class as a whole appropriate. 18 72. Issue Certification. Fed. R. Civ. P. 23(c)(4). In the alternative, the common 19 questions of law and fact, set forth in Paragraph 61, are appropriate for issue certification on 20 behalf of the proposed Class. COUNT I Unfair Business Practices (California Business & Professions Code §§ 17200, et seq. Unfair Competition Law (“UCL”)) 21 22 23 24 25 26 73. Plaintiffs incorporate by reference and reallege all paragraphs previously alleged 74. The UCL defines unfair business competition to include any “unlawful, unfair or herein. 27 fraudulent” act or practice, as well as any “unfair, deceptive, untrue or misleading” advertising. 28 Cal. Bus. & Prof. Code §17200. -15CLASS ACTION COMPLAINT Case 3:17-cv-01579-JCS Document 1 Filed 03/23/17 Page 17 of 26 1 75. During the relevant time period, Defendants engaged in unfair business practices 2 by selling defective Products to Fashion Consultants knowing that such Products would be sold 3 to members of the general public. 4 76. During the relevant time period, Defendants engaged in unfair business practices 5 by selling defective Products to Fashion Consultants knowing that such Products would be sold 6 to members of the general public, while formulating a policy to refuse refunds. 7 77. During the relevant time period, Defendants engaged in unfair business practices 8 by selling Products to Fashion Consults knowing that such Products would be sold to members 9 of the general public, while failing to employ appropriate quality control measures. 10 78. During the relevant time period, Defendants also engaged in unfair business 11 practices by misrepresenting and omitting material facts they were obligated to or should have 12 disclosed regarding the fact the Products were known to be defective. Defendants were in 13 exclusive possession of such information but did not disclose it, even though such information 14 went to the quality and ordinary use of such products. In failing to disclose the defective nature 15 of the Products, Defendants concealed material facts from the public. 16 79. Such information with respect to the defectiveness of the Products was material 17 to Plaintiffs in that as reasonable consumers they would have considered such information to be 18 a substantial factor in deciding whether to purchase Products from Defendants. Plaintiffs and the 19 Class Members had a reasonable expectation that Defendants’ Products would not be inherently 20 defective but would be fit for their ordinary use. 21 80. Defendants’ practices constitute unfair business practices in violation of the UCL 22 because, among other things, they are immoral, unethical, oppressive, unscrupulous, or 23 substantially injurious to consumers and/or any utility of such practices is outweighed by the 24 harm caused to consumers. Defendants’ practices violate the legislative policies of the 25 underlying statutes alleged herein: namely, protecting consumers from unfair business practices 26 and preventing persons from being injured by misleading advertising. Defendants’ practices 27 caused substantial injury to Plaintiffs and members of the Class and are not outweighed by any 28 benefits, and Plaintiffs and members of the Class could not have reasonably avoided their -16CLASS ACTION COMPLAINT Case 3:17-cv-01579-JCS Document 1 Filed 03/23/17 Page 18 of 26 1 injuries. 2 81. As a result of Defendants’ unfair business practices, Plaintiffs have suffered 3 injury in fact and a loss of money or property in terms of purchasing the Products that are 4 unsuitable for their ordinary use as clothing, which they would not have purchased at the prices 5 they paid had the true nature of the Products not been misrepresented or had the material facts 6 been fully disclosed. 7 82. Pursuant to Business and Professions Code §17204, Plaintiffs and the Class are 8 entitled to an order of this Court enjoining Defendants’ alleged misconduct, and any other 9 orders and judgments that may be necessary to provide for complete equitable monetary relief 10 by disgorging Defendants’ ill-gotten gains, including the monies Defendants received or saved 11 as a result of its wrongful acts and practices detailed herein, and restoring to any person in 12 interest such monies paid for Defendants’ Products by ordering the payment of full restitution 13 plus interest. Otherwise, Plaintiffs, Class Members, and members of the general public may be 14 irreparably harmed or denied an effective and complete remedy if such an order is not granted. 15 COUNT II Fraudulent Business Practices 16 (California Business & Professions Code §§ 17200, et seq.) 17 18 19 20 21 22 23 24 25 26 27 28 83. Plaintiffs incorporate by reference and reallege all paragraphs previously alleged 84. A business act or practice is “fraudulent” under the UCL if it is likely to deceive herein. reasonable consumers. 85. Defendants have misrepresented the quality and suitability of use of their Products. Specifically, Defendants have disseminated, through their network of Fashion Consultants, clothing that is defective and not fit for ordinary use. 86. Throughout the relevant time period, Defendants omitted material facts they were obligated to disclose regarding the defective nature of their Products, namely that they are of such poor quality they are not fit for ordinary use. The facts concealed or not disclosed by -17CLASS ACTION COMPLAINT Case 3:17-cv-01579-JCS Document 1 Filed 03/23/17 Page 19 of 26 1 Defendants with respect to the defective Products at issue are material in that Plaintiffs would 2 have considered these facts to be a substantial factor in deciding whether to purchase and use 3 Defendants’ Products. 4 87. Plaintiffs and the Class members had a reasonable expectation that the Products 5 they were purchasing for use would not be defective and would be fit for wear. The thousands 6 of complaints posted on various online communities and message boards substantiate these 7 expectations and assumptions. 8 9 88. Based on the facts detailed herein, Defendants were under a duty to Plaintiffs and the Class to disclose the unfit nature of the defective Products. Such a duty existed because 10 Defendants had exclusive possession and knowledge of facts—that the Products were unsuitable 11 for normal use due to their poor quality—that were not available to consumers and that were 12 material. 13 89. Such acts and practices of Defendants, as described herein, constitute 14 “fraudulent” business practices under California Business and Professions Code §17200, et seq. 15 in that such conduct was and is likely to deceive reasonable consumers into believing 16 Defendants’ Products were suitable for normal use. 17 90. As a result of Defendants’ fraudulent business practices, Plaintiffs have suffered 18 injury in fact and a loss of money or property by buying Products that are unsuitable for their 19 ordinary use as clothing, which they would not have otherwise purchased. 20 91. Pursuant to Business and Professions Code §17204, Plaintiffs and the Class are 21 entitled to an order of this Court enjoining such conduct on the part of Defendants, and any 22 other orders and judgments that may be necessary to provide for complete equitable monetary 23 relief by disgorging Defendants’ ill-gotten gains, including the monies Defendants received or 24 saved as a result of its wrongful acts and practices detailed herein, and restoring to any person in 25 interest such monies paid for Defendants’ Products by ordering the payment of full restitution 26 plus interest. Otherwise, Plaintiffs, Class Members, and members of the general public may be 27 irreparably harmed or denied an effective and complete remedy if such an order is not granted. 28 -18CLASS ACTION COMPLAINT Case 3:17-cv-01579-JCS Document 1 Filed 03/23/17 Page 20 of 26 COUNT III Unlawful Business Practices (California Business & Professions Code §§ 17200, et seq.) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 92. Plaintiffs incorporate by reference and reallege all paragraphs previously alleged 93. A business act or practice is “unlawful” under the UCL if it violates any other herein. law or regulation. 94. Defendants’ deceptive and misleading business practices and acts, as described herein, breached and continue to breach the implied warranty of merchantability and constitute breach of express warranty. Defendants’ conduct also violated and continues to violate California’s Consumers Legal Remedies Act, Cal. Civ. Code §§ 1750, et seq., California’s False Advertising Law, Cal. Bus. & Prof. Code §§ 17500, et seq., by representing that the Products’ quality is suitable for normal use when it is not. 95. Plaintiffs reserve the right to identify other violations of law as the facts develop. 96. As a result of Defendants’ unlawful business practices, Plaintiffs have suffered injury in fact and a loss of money or property in terms of purchasing the Products that are unsuitable for their ordinary use as clothing, which they would not have purchased at the prices they paid had the true nature of the Products not been misrepresented or had the material facts been fully disclosed. 97. Pursuant to Business and Professions Code §17204, Plaintiffs and the Class are entitled to an order of this Court enjoining such conduct on the part of Defendants, and any other orders and judgments that may be necessary to provide for complete equitable monetary relief by disgorging Defendants’ ill-gotten gains, including the monies Defendants received or saved as a result of its wrongful acts and practices detailed herein, and restoring to any person in interest such monies paid for Defendants’ Products by ordering the payment of full restitution. Otherwise, Plaintiffs, Class Members, and members of the general public may be irreparably harmed or denied an effective and complete remedy if such an order is not granted. 27 28 -19CLASS ACTION COMPLAINT Case 3:17-cv-01579-JCS Document 1 Filed 03/23/17 Page 21 of 26 1 COUNT IV Violation of the California False Advertising Law, 2 (California Business & Professions Code §§ 17500, et seq.) 3 4 5 6 7 8 9 10 11 98. Plaintiffs incorporate by reference and reallege all paragraphs previously alleged 99. California’s False Advertising Law (“FAL”) prohibits unfair, deceptive, untrue, herein. or misleading advertising, including false statements as to worth, value and former price. 100. The FAL makes it unlawful for a business to disseminate any statement which is untrue or misleading, and which is known, or which by the exercise of reasonable care should be known, to be untrue or misleading. 101. Defendants’ practice of representing to the public, through its website, through 12 Fashion Consultants, and various social media handles and accounts, that their Products are 13 suitable for normal use and are of an acceptable quality, is an unfair, deceptive or misleading 14 advertising practice because it gave the false impression that the Products were not defective. 15 102. On each day throughout the Class Period, Defendants, with the intent to induce 16 members of the public to purchase Products offered from the various Fashion Consultants, made 17 or caused to be made each of the untrue or misleading statements, claims, or representations 18 described herein. 19 20 21 103. Defendants knew, or by the exercise of reasonable care should have known, that these claims were untrue, deceptive, or misleading. 104. When Defendants made or caused to be made the untrue or misleading claims, 22 statements, or misrepresentations described herein to consumers in California, Defendants failed 23 to adequately disclose material facts pleaded herein, namely, that the Products were defective 24 and unsuitable for ordinary use. Plaintiffs request that this Court order Defendants to restore 25 this money to Plaintiffs and all other respective Class Members, and to enjoin Defendants from 26 continuing to violate the FAL, or from violating the FAL in the future. Otherwise, Plaintiffs, 27 the Class they seek to represent, and members of the general public may be irreparably harmed 28 and/or denied an effective and complete remedy if such an order is not granted. -20CLASS ACTION COMPLAINT Case 3:17-cv-01579-JCS Document 1 Filed 03/23/17 Page 22 of 26 1 COUNT V Violation of the California Consumers Legal Remedies Act 2 (California Civil Code §§ 1750, et seq.) 3 4 5 6 105. Plaintiffs incorporate by reference and reallege all paragraphs previously alleged 106. Defendants, with the intent to induce members of the public to purchase its herein. 7 Products, made or caused to be made false or misleading claims to consumers throughout 8 California and the United States. 9 10 11 12 13 14 15 107. Plaintiffs and Class Members are “consumers” within the meaning of California Civil Code §1761(d). 108. Customers’ purchases of Defendants’ Products are “transactions” within the meaning of California Civil Code §1761(e). 109. The Products purchased by Plaintiffs and other Class Members throughout the Class Period are “goods” within the meaning of California Civil Code §1761(a). 110. Defendants engaged in unfair methods of competition, or unfair or deceptive acts 16 or practices against Plaintiffs and Class Members in violation of the California Consumers 17 Legal Remedies Act (the “CLRA”), by making false or misleading statements of fact 18 concerning the quality of the Products and their ability to be used as intended. The express and 19 implied representations made by Defendants concerning the Products’ quality were deceptive, 20 misleading, and/or false. 21 111. Defendants violated and continue to violate the CLRA by engaging in the 22 following deceptive practices proscribed by the California Civil Code §1770(a) that constitute 23 transactions intended to result in, and that did result in, the sale of the Products herein to 24 Plaintiffs and the Class: 25 26 27 28 a. Representing that the goods have characteristics, uses or benefits which they do not have (Cal. Civ. Code §1770(a)(5)); b. Representing that the goods are of a particular standard, quality or grade if it is of another (Cal. Civ. Code §1770(a)(7)); -21CLASS ACTION COMPLAINT Case 3:17-cv-01579-JCS Document 1 Filed 03/23/17 Page 23 of 26 1 c. 2 Advertising goods with the intent not to sell them as advertised (Cal. Civ. Code §1770(a)(9)); and 3 d. Representing that the goods have been supplied in accordance with a 4 previous representation when they have not (Cal. Civ. Code §1770(1)(16)). 5 112. As described herein, by purchasing Defendants’ Products, Plaintiffs and the 6 Class suffered damage by the wrongful acts and practices of Defendants, in violation of 7 California Civil Code §1781. Absent these acts or practices, Plaintiffs and Class Members 8 would not have purchased Defendants’ Products. 9 113. Pursuant to California Civil Code §1780(a)(2), Plaintiffs, on behalf of themselves 10 and all Class Members, request that this Court enjoin Defendants from continuing to engage in 11 the unlawful and deceptive methods, acts or practices alleged herein. Unless Defendants are 12 permanently enjoined from continuing to engage in such violations of the CLRA, consumers 13 will continue to be harmed by Defendants’ acts or practices in the same way as those acts or 14 practices have harmed Plaintiffs and Class Members. 15 114. Plaintiffs will provide notice to Defendants of the alleged violations of the CLRA 16 and the UCL in compliance with Cal. Civ. Code § 1782(a). If Defendants do not cure the 17 alleged misconduct, Plaintiffs will amend this Complaint to seek damages pursuant to this 18 claim. 19 COUNT VI Breach of Implied Warranty of Merchantability 20 21 22 23 24 25 26 115. Plaintiffs incorporate by reference and reallege all paragraphs previously alleged 116. Every sale of consumer goods that are sold at retail are accompanied by the herein. manufacturer’s and the retail seller’s implied warranty that the goods are merchantable. 117. “Defendants” are “manufacturers” and “retail sellers,” and the Products Defendants sold are “consumer goods”. 27 28 -22CLASS ACTION COMPLAINT Case 3:17-cv-01579-JCS Document 1 Filed 03/23/17 Page 24 of 26 1 118. Defendants expressly and impliedly warranted to Plaintiffs and Class members 2 that the Products were merchantable and fit for use as clothing for wearing and covering based 3 on the advertising, marketing and sale of the Products as alleged herein. 4 119. Defendants knew the Products were not merchantable in that they were not 5 reasonably fit for the ordinary purposes for which they were manufactured and sold, namely, 6 wearing and covering. Specifically, the Products disintegrated and developed small holes which 7 turned into larger holes and no longer provided covering as intended or were suitable for wear in 8 public. Other Products had one leg that was shorter or larger than the other. The Products were 9 not sold “as is” nor as “with all faults.” 10 120. Defendants were repeatedly put on notice of these issues through thousands of 11 Customer complaints. Despite, however, receiving notice from its Customers of these claims 12 requesting that they resolve the complaints, Defendants have refused to make refunds to 13 Plaintiffs and Class members. 14 121. Because the Products are used by consumers and such warranties are either 15 expressly made through advertising and statements made by Defendants or are implied by law 16 in all consumer transactions, Plaintiffs and the Class members who purchased such products are 17 entitled to incidental and compensatory damages directly from Defendants. 18 COUNT VII 19 Breach of Express Warranty 20 21 22 23 24 122. Plaintiffs incorporate by reference and reallege all paragraphs previously alleged 123. Defendants are merchants as defined by applicable Uniform Commercial Code herein. provisions and sold the Products to Plaintiffs and members of the Class. 124. Defendants expressly warranted via their advertising, statements, website 25 information and through their Fashion Consultants that the Products were suitable for wear, 26 daily activities and covering. 27 28 -23CLASS ACTION COMPLAINT Case 3:17-cv-01579-JCS Document 1 Filed 03/23/17 Page 25 of 26 1 125. The statements made by Defendants are affirmations of fact that became part of 2 the basis of the bargain and created an express warranty that the goods would conform to the 3 state promises. Plaintiffs placed importance on Defendants’ representations. 4 5 6 7 126. Defendants’ Products did not conform to the express representations; they were not suitable for wear, daily activities and covering. 127. As a result of Defendants’ breach of the express warranty, Plaintiffs and the Class were injured and seek damages. 8 COUNT VIII Unjust Enrichment 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 128. as if fully set forth herein. 129. 26 Plaintiffs and Class members conferred benefits on Defendants by purchasing the Products. 130. Defendants have been unjustly enriched in retaining the revenues derived from Plaintiffs and Class members’ purchases of the defective Products that were improperly manufactured, supplied, and/or distributed into the stream of commerce. Retention of those monies under these circumstances is unjust and inequitable because Defendants misrepresented that the Products were of a quality fit for the purpose for which they were intended. These misrepresentations caused injuries to Plaintiffs and the Class members because they would not have purchased the Products if the true facts had been known. 131. Because Defendants’ retention of the benefits conferred on them by Plaintiffs and the Class members is unjust and inequitable, Defendants must pay restitution to Plaintiffs and the Class members for their unjust enrichment, as ordered by the Court. PRAYER FOR RELIEF 24 25 Plaintiffs incorporate and reallege by reference each and every allegation above WHEREFORE, Plaintiffs and the Class demand judgment against Defendants as follows: 27 28 -24CLASS ACTION COMPLAINT Case 3:17-cv-01579-JCS Document 1 Filed 03/23/17 Page 26 of 26 1 A. An order certifying that this action may be maintained as a class action, that 2 Plaintiffs be appointed Class Representatives and Plaintiffs’ counsel be appointed Class 3 Counsel; 4 B. A judgment awarding Plaintiffs and all members of the Class damages as alleged 5 above incurred by Plaintiffs and Class members as a result of Defendants’ breach of express and 6 implied warranties; 7 C. A judgment awarding Plaintiffs and all members of the Class restitution or other 8 equitable relief, including, without limitation, disgorgement of all profits and unjust enrichment 9 that Defendants obtained from Plaintiffs and the Class as a result of their unlawful, unfair and 10 fraudulent business practices described herein; 11 12 An order enjoining Defendants from continuing to violate the laws as described E. A judgment awarding Plaintiffs the costs of suit, including reasonable attorneys’ herein. 13 14 D. fees, and pre and post-judgment interest; and 15 F. Such other and further relief as may be deemed necessary or appropriate. 16 JURY DEMAND 17 Plaintiffs demand a trial by jury. 18 19 Dated: March 23, 2017 By: /s/ Rosemary M. Rivas Rosemary M. Rivas 20 21 22 23 24 LEVI & KORSINSKY LLP Quentin A. Roberts 44 Montgomery Street, Suite 650 San Francisco, California 94104 Telephone: (415) 291-2420 Facsimile: (415) 484-1294 25 26 27 Counsel for Individual and Representative Plaintiffs Julie Dean and Suzanne Jones and the Proposed Class 28 -25CLASS ACTION COMPLAINT Case 3:17-cv-01579-JCS Document 1-1 Filed 03/23/17 Page 1 of 2 JS-CAND 44 (Rev. 07/16) CIVIL COVER SHEET The JS-CAND 44 civil cover sheet and the information contained herein neither replace nor supplement the filing and service of pleadings or other papers as required by law, except as provided by local rules of court. This form, approved in its original form by the Judicial Conference of the United States in September 1974, is required for the Clerk of Court to initiate the civil docket sheet. (SEE INSTRUCTIONS ON NEXT PAGE OF THIS FORM.) I. (a) PLAINTIFFS DEFENDANTS Julie Dean and Suzanne Jones (b) LuLaRoe, LLC; LLR, Inc.; DeAnne Brady; and Mark Stidham County of Residence of First Listed Plaintiff County of Residence of First Listed Defendant Suffolk County, MA (EXCEPT IN U.S. PLAINTIFF CASES) (IN U.S. PLAINTIFF CASES ONLY) IN LAND CONDEMNATION CASES, USE THE LOCATION OF THE TRACT OF LAND INVOLVED. Attorneys (If Known) NOTE: (c) Attorneys (Firm Name, Address, and Telephone Number) Rosemary M. Rivas, Levi & Korsinsky LLP, 44 Montgomery Street, Suite 650, San Francisco, CA 94104 415-291-2420 II. BASIS OF JURISDICTION (Place an “X” in One Box Only) 1 2 U.S. Government Plaintiff 3 Federal Question (U.S. Government Not a Party) U.S. Government Defendant 4 Diversity (Indicate Citizenship of Parties in Item III) IV. NATURE OF SUIT CONTRACT (For Diversity Cases Only) PTF (Place an “X” in One Box Only) TORTS 110 Insurance 120 Marine 130 Miller Act 140 Negotiable Instrument 150 Recovery of Overpayment Of Veteran’s Benefits 151 Medicare Act 152 Recovery of Defaulted Student Loans (Excludes Veterans) 153 Recovery of Overpayment of Veteran’s Benefits 160 Stockholders’ Suits 190 Other Contract 195 Contract Product Liability 196 Franchise REAL PROPERTY 210 Land Condemnation 220 Foreclosure 230 Rent Lease & Ejectment 240 Torts to Land 245 Tort Product Liability 290 All Other Real Property 2 Removed from State Court 3 Remanded from Appellate Court and One Box for Defendant) PTF DEF DEF Citizen of This State 1 1 Incorporated or Principal Place of Business In This State 4 4 Citizen of Another State 2 2 Incorporated and Principal Place of Business In Another State 5 5 Citizen or Subject of a Foreign Country 3 3 Foreign Nation 6 6 FORFEITURE/PENALTY PERSONAL INJURY PERSONAL INJURY 310 Airplane 365 Personal Injury – 315 Airplane Product Product Liability Liability 367 Health Care/ 320 Assault, Libel & Pharmaceutical Slander Personal Injury 330 Federal Employers’ Product Liability Liability 368 Asbestos Personal 340 Marine Injury Product 345 Marine Product Liability Liability PERSONAL PROPERTY 350 Motor Vehicle 370 Other Fraud 355 Motor Vehicle 371 Truth in Lending Product Liability 380 Other Personal Property Damage 360 Other Personal Injury 385 Property Damage 362 Personal Injury Product Liability Medical Malpractice CIVIL RIGHTS PRISONER PETITIONS Habeas Corpus: 440 Other Civil Rights 441 Voting 463 Alien Detainee 442 Employment 510 Motions to Vacate Sentence 443 Housing/ Accommodations 530 General 535 Death Penalty 445 Amer. w/Disabilities– Employment Other: 540 Mandamus & Other 446 Amer. w/Disabilities– Other 550 Civil Rights 448 Education 555 Prison Condition 560 Civil Detainee– Conditions of Confinement V. ORIGIN (Place an “X” in One Box Only) 1 Original Proceeding III. CITIZENSHIP OF PRINCIPAL PARTIES (Place an “X” in One Box for Plaintiff BANKRUPTCY 625 Drug Related Seizure of Property 21 USC § 881 690 Other 422 Appeal 28 USC § 158 423 Withdrawal 28 USC § 157 PROPERTY RIGHTS 820 Copyrights 830 Patent 840 Trademark LABOR 710 Fair Labor Standards Act 720 Labor/Management Relations 740 Railway Labor Act 751 Family and Medical Leave Act 790 Other Labor Litigation 791 Employee Retirement Income Security Act SOCIAL SECURITY 861 HIA (1395ff) 862 Black Lung (923) 863 DIWC/DIWW (405(g)) 864 SSID Title XVI 865 RSI (405(g)) FEDERAL TAX SUITS 870 Taxes (U.S. Plaintiff or Defendant) 871 IRS–Third Party 26 USC § 7609 IMMIGRATION 462 Naturalization Application 465 Other Immigration Actions 4 Reinstated or Reopened 5 Transferred from Another District 6 Multidistrict Litigation–Transfer (specify) OTHER STATUTES 375 False Claims Act 376 Qui Tam (31 USC § 3729(a)) 400 State Reapportionment 410 Antitrust 430 Banks and Banking 450 Commerce 460 Deportation 470 Racketeer Influenced and Corrupt Organizations 480 Consumer Credit 490 Cable/Sat TV 850 Securities/Commodities/ Exchange 890 Other Statutory Actions 891 Agricultural Acts 893 Environmental Matters 895 Freedom of Information Act 896 Arbitration 899 Administrative Procedure Act/Review or Appeal of Agency Decision 950 Constitutionality of State Statutes 8 Multidistrict Litigation–Direct File Cite the U.S. Civil Statute under which you are filing (Do not cite jurisdictional statutes unless diversity): VI. CAUSE OF ACTION Brief description of cause: Violation of consumer protection statutes for selling defective clothing. DEMAND $ VII. REQUESTED IN CHECK IF THIS IS A CLASS ACTION UNDER RULE 23, Fed. R. Civ. P. COMPLAINT: VIII. RELATED CASE(S), IF ANY (See instructions): JUDGE IX. DIVISIONAL ASSIGNMENT (Civil Local Rule 3-2) (Place an “X” in One Box Only) SAN FRANCISCO/OAKLAND DATE: 03/23/2017 Print CHECK YES only if demanded in complaint: JURY DEMAND: Yes DOCKET NUMBER SAN JOSE EUREKA-MCKINLEYVILLE SIGNATURE OF ATTORNEY OF RECORD: /s/ Rosemary M. Rivas Save As... No Reset JS-CAND 44 (rev. 07/16) Case 3:17-cv-01579-JCS Document 1-1 Filed 03/23/17 Page 2 of 2 INSTRUCTIONS FOR ATTORNEYS COMPLETING CIVIL COVER SHEET FORM JS-CAND 44 Authority For Civil Cover Sheet. The JS-CAND 44 civil cover sheet and the information contained herein neither replaces nor supplements the filings and service of pleading or other papers as required by law, except as provided by local rules of court. This form, approved in its original form by the Judicial Conference of the United States in September 1974, is required for the Clerk of Court to initiate the civil docket sheet. Consequently, a civil cover sheet is submitted to the Clerk of Court for each civil complaint filed. The attorney filing a case should complete the form as follows: I. a) Plaintiffs-Defendants. Enter names (last, first, middle initial) of plaintiff and defendant. If the plaintiff or defendant is a government agency, use only the full name or standard abbreviations. If the plaintiff or defendant is an official within a government agency, identify first the agency and then the official, giving both name and title. b) County of Residence. For each civil case filed, except U.S. plaintiff cases, enter the name of the county where the first listed plaintiff resides at the time of filing. In U.S. plaintiff cases, enter the name of the county in which the first listed defendant resides at the time of filing. (NOTE: In land condemnation cases, the county of residence of the “defendant” is the location of the tract of land involved.) c) Attorneys. Enter the firm name, address, telephone number, and attorney of record. If there are several attorneys, list them on an attachment, noting in this section “(see attachment).” II. Jurisdiction. The basis of jurisdiction is set forth under Federal Rule of Civil Procedure 8(a), which requires that jurisdictions be shown in pleadings. Place an “X” in one of the boxes. If there is more than one basis of jurisdiction, precedence is given in the order shown below. (1) United States plaintiff. Jurisdiction based on 28 USC §§ 1345 and 1348. Suits by agencies and officers of the United States are included here. (2) United States defendant. When the plaintiff is suing the United States, its officers or agencies, place an “X” in this box. (3) Federal question. This refers to suits under 28 USC § 1331, where jurisdiction arises under the Constitution of the United States, an amendment to the Constitution, an act of Congress or a treaty of the United States. In cases where the U.S. is a party, the U.S. plaintiff or defendant code takes precedence, and box 1 or 2 should be marked. (4) Diversity of citizenship. This refers to suits under 28 USC § 1332, where parties are citizens of different states. When Box 4 is checked, the citizenship of the different parties must be checked. (See Section III below; NOTE: federal question actions take precedence over diversity cases.) III. Residence (citizenship) of Principal Parties. This section of the JS-CAND 44 is to be completed if diversity of citizenship was indicated above. Mark this section for each principal party. IV. Nature of Suit. Place an “X” in the appropriate box. If the nature of suit cannot be determined, be sure the cause of action, in Section VI below, is sufficient to enable the deputy clerk or the statistical clerk(s) in the Administrative Office to determine the nature of suit. If the cause fits more than one nature of suit, select the most definitive. V. Origin. Place an “X” in one of the six boxes. (1) Original Proceedings. Cases originating in the United States district courts. (2) Removed from State Court. Proceedings initiated in state courts may be removed to the district courts under Title 28 USC § 1441. When the petition for removal is granted, check this box. (3) Remanded from Appellate Court. Check this box for cases remanded to the district court for further action. Use the date of remand as the filing date. (4) Reinstated or Reopened. Check this box for cases reinstated or reopened in the district court. Use the reopening date as the filing date. (5) Transferred from Another District. For cases transferred under Title 28 USC § 1404(a). Do not use this for within district transfers or multidistrict litigation transfers. (6) Multidistrict Litigation Transfer. Check this box when a multidistrict case is transferred into the district under authority of Title 28 USC § 1407. When this box is checked, do not check (5) above. (8) Multidistrict Litigation Direct File. Check this box when a multidistrict litigation case is filed in the same district as the Master MDL docket. Please note that there is no Origin Code 7. Origin Code 7 was used for historical records and is no longer relevant due to changes in statute. VI. Cause of Action. Report the civil statute directly related to the cause of action and give a brief description of the cause. Do not cite jurisdictional statutes unless diversity. Example: U.S. Civil Statute: 47 USC § 553. Brief Description: Unauthorized reception of cable service. VII. Requested in Complaint. Class Action. Place an “X” in this box if you are filing a class action under Federal Rule of Civil Procedure 23. Demand. In this space enter the actual dollar amount being demanded or indicate other demand, such as a preliminary injunction. Jury Demand. Check the appropriate box to indicate whether or not a jury is being demanded. VIII. Related Cases. This section of the JS-CAND 44 is used to identify related pending cases, if any. If there are related pending cases, insert the docket numbers and the corresponding judge names for such cases. IX. Divisional Assignment. If the Nature of Suit is under Property Rights or Prisoner Petitions or the matter is a Securities Class Action, leave this section blank. For all other cases, identify the divisional venue according to Civil Local Rule 3-2: “the county in which a substantial part of the events or omissions which give rise to the claim occurred or in which a substantial part of the property that is the subject of the action is situated.” Date and Attorney Signature. Date and sign the civil cover sheet.