Judge Barbara M. Scheper, Case 22STCV31828 2023-03-30 Tentative Ruling

Judge: Barbara M. Scheper, Case: 22STCV31828, Date: 2023-03-30 Tentative Ruling

Case Number: 22STCV31828 Hearing Date: March 30, 2023 Dept: 30

Dept. 30

Calendar No.

Landgrebe vs. Obagi Inc., et. al., Case No. 22STCV31828

Tentative Ruling re: Defendants’ Demurrer to First Amended Complaint; Motion to Strike

Defendant Obagi Cosmeceuticals, LLC (Defendant) demurs to and moves to strike the First Amended Complaint (FAC) of Plaintiff Susanne Landgrebe (Plaintiff). Defendants Bausch Health Companies, Inc., and Bausch Health Americas, Inc., as successor-in-interest to Defendant OMP, Inc., join the demurrer. The demurrer is sustained as to all Defendants. The motion to strike is denied as moot.

In reviewing the legal sufficiency of a complaint against a demurrer, a court will treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions, or conclusions of law. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318 (Blank); C & H Foods Co. v. Hartford Ins. Co. (1984) 163 Cal.App.3d 1055, 1062.) It is well settled that a “demurrer lies only for defects appearing on the face of the complaint[.]” (Stevens v. Superior Court (1999) 75 Cal.App.4th 594, 601.) “The rules by which the sufficiency of a complaint is tested against a general demurrer are well settled. We not only treat the demurrer as admitting all material facts properly pleaded, but also give the complaint a reasonable interpretation, reading it as a whole and its parts in their context.” (Guclimane Co. v. Stewart Title Guaranty Co. (1998) 19 Cal.4th 26, 38 (internal quotes omitted).) For purposes of ruling on a demurrer, the complaint must be construed liberally by drawing reasonable inferences from the facts pleaded. (Wilner v. Sunset Life Ins. Co. (2000) 78 Cal.App.4th 952, 958.)

When ruling on a demurrer, the Court may only consider the complaint’s allegations or matters which may be judicially noticed. (Blank, supra, 39 Cal.3d at 318.) The Court may not consider any other extrinsic evidence or judge the credibility of the allegations plead or the difficulty a plaintiff may have in proving his allegations. (Ion Equip. Corp. v. Nelson (1980) 110 Cal.App.3d 868, 881.) A demurrer is properly sustained only when the complaint, liberally construed, fails to state facts sufficient to constitute any cause of action. (Kramer v. Intuit Inc. (2004) 121 Cal.App.4th 574, 578.)

Plaintiff is a U.S. citizen and resident of the State of Iowa. (FAC ¶ 1.) From 2006 through June 2022, Plaintiff used Defendant’s skin care products to ameliorate hyperpigmentation. (FAC ¶ 14.) Plaintiff placed the orders from Iowa, and alleges that Defendant, a corporation headquartered in and with its principal place of business in California, shipped the products from California. (FAC ¶ 13.) Plaintiff allegedly used Defendant’s products while visiting California for conferences, most recently from June 13 to June 15, 2019. (FAC ¶ 14.) Plaintiff alleges that she developed Acute Lymphocytic Leukemia (ALL) as a result of using Defendant’s products on her skin for over 15 years. (FAC ¶¶ 14-15.) The FAC asserts claims against all named Defendants for negligence, strict liability, fraudulent concealment, and breach of implied warranties.

Choice-of-law analysis

The parties dispute whether California or Iowa law applies to Plaintiff’s claims.

California applies the three-part governmental interest analysis in resolving choice-of-law issues. This test requires the court to determine, (1) “whether the relevant law of each of the potentially affected jurisdictions with regard to the particular issue in question is the same or different”; (2) if there is a difference, whether “a true conflict exists” between each jurisdiction’s interest in the application of its own law; and, (3) if there is true conflict, “which state's interest would be more impaired if its policy were subordinated to the policy of the other state.” (Kearney v. Salomon Smith Barney, Inc. (2006) 39 Cal.4th 95, 107.)

First Step

Here, for the first step of the governmental interest analysis, the relevant laws of the potentially affected jurisdictions of California and Iowa differ. Most relevant here, under Iowa law, actions for personal injury brought against the manufacturer or distributor of a product cannot be brought more than fifteen years after the product was first purchased. (Iowa Code § 614.1(2A)(a).) In comparison, claims under California law may be tolled indefinitely based on the discovery rule. (See, e.g., Clark v. Baxter Healthcare Corp. (2000) 83 Cal.App.4th 1048, 1055.) There is no analogous California statute of repose imposing a time limit on product liability claims running from purchase of the product.

Plaintiff alleges in the FAC that she first used Defendant’s product in Fall 2006, over 15 years prior to her commencement of this action on September 29, 2022. (FAC ¶ 14.) Plaintiff’s claims thus may be timely under California law if tolling applies, but are untimely under Iowa’s statute of repose.

Plaintiff argues that Iowa’s statute of repose would not bar her claims based on two exceptions. First, Iowa’s fifteen-year statute of limitations does not apply “if the manufacturer, assembler, designer, supplier of specifications, seller, lessor, or distributor of the product intentionally misrepresents facts about the product or fraudulently conceals information about the product and that conduct was a substantial cause of the claimant's harm.” (Iowa Code § 614.1(2A)(a).) Under Iowa law, “a plaintiff seeking to estop a defendant from raising a statute of repose defense must prove four things: “(1) The defendant has made a false representation or has concealed material facts; (2) the plaintiff lacks knowledge of the true facts; (3) the defendant intended the plaintiff to act upon such representations; and (4) the plaintiff did in fact rely upon such representations to his prejudice.” (Downing v. Grossmann (Iowa 2022) 973 N.W.2d 512, 520.) For the first element, “a party relying on the doctrine of fraudulent concealment must prove the defendant did some affirmative act to conceal the plaintiff's cause of action independent of and subsequent to the liability-producing conduct.’” (Id. at 520.)

Here, Plaintiff asserts a cause of action against Defendants for fraudulent concealment, based on the allegation that Defendants concealed the toxic property of their products from Plaintiff. (FAC ¶¶ 124-128.) The allegations are insufficient to invoke the fraudulent concealment exception because Plaintiff has not alleged any “affirmative act” by Defendants , “independent of and subsequent to the liability-producing conduct.” (Downing, 973 N.W.2d at 520; see Hallett Const. Co. v. Meister (Iowa 2006) 713 N.W.2d 225, 231 [finding no estoppel based on fraudulent concealment where “[plaintiffs] have not pointed to any evidence of false or misleading conduct by [defendant], other than the alleged fraud itself, that dissuaded them from investigating a possible claim or that caused them to refrain from filing suit”].)

Plaintiff’s second argument invokes the exception that the statute of repose “shall not apply to the time period in which to discover a disease that is latent and caused by exposure to a harmful material, in which event the cause of action shall be deemed to have accrued when the disease and such disease's cause have been made known to the person or at the point the person should have been aware of the disease and such disease's cause...” (Iowa Code § 614.1(2A)(b)(1).) For purposes of this exception, “harmful material” is defined as “silicone gel breast implants, which were implanted prior to July 12, 1992; and chemical substances commonly known as asbestos, dioxins, tobacco, or polychlorinated biphenyls, whether alone or as part of any product; or any substance which is determined to present an unreasonable risk of injury to health or the environment by the United States environmental protection agency pursuant to the federal Toxic Substance Control Act, 15 U.S.C. § 2601 et seq., or by this state, if that risk is regulated by the United States environmental protection agency or this state.” (Iowa Code § 614.1(2A)(b)(2).)

Plaintiff alleges that her injuries were caused by the chemical hydroquinone. (FAC ¶ 18.) Plaintiff argues that hydroquinone is a “harmful material” under this exception as a substance determined by the EPA to present an unreasonable risk of injury. In support, Plaintiff requests judicial notice of the EPA’s Toxic Substances Control Act Substance Inventory (TSCA Inventory), which lists hydroquinone under the chemical name “1,4-Benzenediol.” However, the fact that a chemical is listed on the Inventory appears to have no connection to whether the EPA has determined that the presents an unreasonable risk of injury to health. As the EPA’s website explains, “For purposes of regulation under TSCA, if a chemical is on the Inventory, the substance is considered an ‘existing’ chemical substance in U.S. commerce.” [https://www.epa.gov/tsca-inventory/about-tsca-chemical-substance-inventory]. The mere fact that hydroquinone is considered an “existing” chemical substance in U.S. commerce does not show that the chemical has been deemed unreasonably dangerous by the EPA. The FDA regulations cited by Plaintiff also do not show that hydroquinone has been designated by the EPA as dangerous under the Toxic Substance Control Act. Consequently, Plaintiff has not shown that either exception to Iowa’s fifteen-year statute of repose applies here.

Plaintiff last argues that Iowa’s statute of repose is unconstitutional. However, courts have concluded that the statute of repose is not unconstitutional under either the federal or Iowa constitutions. (Branson v. O.F. Mossberg & Sons, Inc. (8th Cir. 2000) 221 F.3d 1064, 1065.)

Second Step

For the second step of the governmental interest test, the court must examine “each jurisdiction's interest in the application of its own law in the circumstances of the particular case to determine whether a true conflict exists.” (McCann v. Foster Wheeler LLC (2010) 48 Cal.4th 68, 90.)

The parties agree that both states have legitimate interests in the application of their law to the present case. California has an interest in applying its laws to corporations located within California that do business principally within the state. (Rutledge v. Hewlett-Packard Co. (2015) 238 Cal.App.4th 1164, 1187.) California also has a legitimate interest in applying its laws in cases involving products manufactured and sold from California, as is the case here. (Ibid.; FAC ¶ 13.)

On the other hand, Iowa has an important interest in applying its laws to conduct taking place within its borders. (McCann, 48 Cal.4th at 92.) This interest extends to commercial activity conducted by out-of-state companies in Iowa; as explained by the California Supreme Court in McCann, “[w]hen a state adopts a rule of law limiting liability for commercial activity conducted within the state in order to provide what the state perceives is fair treatment to, and an appropriate incentive for, business enterprises, we believe that the state ordinarily has an interest in having that policy of limited liability applied to out-of-state companies that conduct business in the state, as well as to businesses incorporated or headquartered within the state.” (Id. at 91.)

Because the laws of California and Iowa differ and each state has an interest in having its law applied here, there a “true conflict” exists here.

Third Step

When a “true conflict” exists between the law of two states, the “comparative impairment analysis” applies. This approach requires the court to “carefully evaluate [ ] and compare[ ] the nature and strength of the interest of each jurisdiction in the application of its own law ‘to determine which state's interest would be more impaired if its policy were subordinated to the policy of the other state.’ ” (McCann, 48 Cal.4th at 96-97.) On this step, the court must “decide—in light of the legal question at issue and the relevant state interests at stake—which jurisdiction should be allocated the predominating lawmaking power under the circumstances of the present case.” (Id. at 97.)

One significant consideration is that “[t]he state where the injury occurs has a ‘predominant interest’ in applying its law.” (Rutledge v. Hewlett-Packard Co. (2015) 238 Cal.App.4th 1164, 1187.) “California choice-of-law cases nonetheless continue to recognize that a jurisdiction ordinarily has ‘the predominant interest’ in regulating conduct that occurs within its borders [Citations], and in being able to assure individuals and commercial entities operating within its territory that applicable limitations on liability set forth in the jurisdiction's law will be available to those individuals and businesses in the event they are faced with litigation in the future. (McCann, 48 Cal.4th at 97-98.)

The comparative impairment test favors application of Iowa law to the present case. The allegations indicate that Plaintiff’s injury took place in Iowa, as Plaintiff has resided in Iowa since her first exposure to Defendant’s products in Fall 2006. (FAC ¶¶ 13-14.) In support of the application of California law, Plaintiff also alleges that she used Defendant’s products while visiting California to attend conferences, most recently during a three-day period in June 2019. (FAC ¶ 14.) However, Plaintiff’s alleged use of Defendant’s product on intermittent visits to California does not show that her injury arose in California, in light of her residence in Iowa for the entire 16-year period of alleged exposure. (FAC ¶¶ 12-14.)

The fact that Defendant is a California corporation is insufficient to show that California’s interest would be more impaired, as Iowa’s “interest in the application of its statute of repose applies equally to out-of-state businesses.” (McCann, 48 Cal.4th at 97.) While Plaintiff argues that California law should apply based on Rutledge v. Hewlett-Packard Co. (2015) 238 Cal.App.4th 1164, that case supports the application of Iowa law; in Rutledge, the Court of Appeal found that “the alleged injuries occurred in California where HP conducted the repairs, and California has the ‘predominant interest’ in applying its law.” (Id. at 1188.) In this case, Plaintiff’s alleged injury took place in Iowa, and so Iowa’s interest is predominant.

Accordingly, the Court concludes that Iowa law should apply here, and that Plaintiff’s claims are untimely under Iowa’s fifteen-year statute of repose. (Iowa Code § 614.1(2A)(b)(1).)

Plaintiff’s claims are separately time-barred by California’s Code of Civil Procedure § 361, which “creates a general rule that when a cause of action has arisen in another jurisdiction but cannot be maintained against a particular defendant in that jurisdiction because of the lapse of time, the action cannot be maintained against that defendant in a California court,” except for a plaintiff “who has been a citizen of this State, and who has held the cause of action from the time it accrued.” (McCann, 48 Cal.4th at 85.)

Joining Defendants

Defendants Bausch Health Companies, Inc., and Bausch Health Americas, Inc., as successor-in-interest to Defendant OMP, Inc. (the Bausch Defendants), join Obagi’s demurrer. Each of Plaintiff’s claims are asserted against all named Defendants. There are no allegations directed specifically at the Bausch Defendants or at OMP, Inc. For the reasons discussed above, the demurrer is also sustained as to Plaintiff’s claims against the Bausch Defendants.