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Cannabis Class Action Lawsuit

Tauler Smith LLP Successfully Defends THC Potency Class Action

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Cannabis Class Action Lawsuit

A California court granted Tauler Smith LLP’s motion to dismiss without leave to amend in a deceptive pricing class action alleging mislabeling of THC potency. The plaintiffs specifically alleged that the cannabinoid content in the defendant’s infused joints did not match what was on label. Tauler Smith’s skilled Los Angeles class action defense attorneys filed a demurrer to the class action based on the discrepancy between the plaintiffs’ purchases and the potency tests that formed the basis of plaintiffs’ claims.

To learn more about Tauler Smith’s latest legal victory, keep reading this blog.

California Consumer Laws on Cannabis Advertising and THC Content

Recreational marijuana is a multi-billion-dollar business in the states where it is legal, which includes California. In fact, it is estimated that California is the largest cannabis market in the world. Although there are no clear federal regulations of cannabis sales, California agencies do regulate marijuana product sales within the state. For example, the California Department of Cannabis Control allows just a 10% margin of error for THC content listed on product packaging and labels. If the THC potency amount listed on the package is not close enough to the THC potency amount of the actual product, then a court may find that the company selling the products engaged in false advertising.

One reason that cannabis product labels may promise higher potency is that consumers are typically willing to pay more for weed with a stronger concentration of THC, which stands for Delta-9-tetrahydrocannabinol. Marijuana with a higher percentage of THC can deliver a more euphoric “high” for users.

Class Action Lawsuit: Ayala v. Central Coast Agriculture

Central Coast Agriculture is a California-based progressive farm that focuses on sustainability. The company is also a licensed cannabis cultivator, and some of its products are sold under the Raw Garden brand name. According to the original complaint against Central Coast Agriculture, the consumer-plaintiffs purchased two products: a Raw Garden Infused Joints three-pack in the “Sunset Cookies” strain, and Raw Garden Infused Joints in the “Caribbean Slurm” strain. The plaintiffs alleged that the marijuana products were mislabeled because the amount of THC contained in the products was substantially lower than the amount stated on the packaging: 25 percent THC potency versus 44 percent THC potency.

The plaintiffs in Ayala et al. v. Central Coast Agriculture, Inc. filed a class action lawsuit under a number of consumer protection statutes, including the California Consumers Legal Remedies Act (CLRA), the California Unfair Competition Law (UCL), and the California False Advertising Law. The case was heard in the Superior Court of California, County of Santa Clara, and the Honorable Theodore C. Zayner ruled on the litigants’ pre-trial motions.

Tauler Smith LLP Wins Defense Demurrer in Class Action Lawsuit

A demurrer is a legal challenge to a specific claim made in court, much like a motion to dismiss in federal court. When determining whether to grant a demurrer, courts will typically assume that all the facts alleged in the pleading are true, no matter how improbable they might be. If the plaintiff’s case is still unlikely to succeed even under these circumstances, then the motion for demurrer may be granted by the court.

The defendant in Ayala v. Central Coast Agriculture was represented by Los Angeles law firm Tauler Smith LLP. Our class action defense attorneys demurred to all causes of action in the case because the plaintiffs failed to allege sufficient facts. Specifically, the defense attorneys objected because the plaintiffs were unable to sufficiently demonstrate that the marijuana products purchased actually contained less THC than the amount listed on the product labels.

California Class Action Defense Lawyers Win THC Potency Case

The Santa Clara Superior Court sustained defense counsel’s demurrers on every cause of action in the case, which represented another huge pre-trial victory for the Tauler Smith LLP law firm. Moreover, the court held that the legal arguments were so overwhelmingly in favor of the defendant that the plaintiffs should have no leave to amend their complaint. In other words, the plaintiffs’ complaint was dismissed entirely.

In its ruling, the court held that the plaintiffs’ class action complaint relied on several faulty assumptions about the products they purchased, as well as the lab results cited in the lawsuit:

  1. Testing was done too late. The court noted that the THC lab tests were conducted roughly two (2) months after the original purchases, which cast serious doubt on how relevant the tests might be in the case. The court further noted that there was nothing in the plaintiffs’ lawsuit about when the joints tested by the WeedWeek researchers were produced or sold. This meant that the plaintiffs had no way of knowing how long the products were on the shelves before being tested.
  2. Not the same products. The court also said that the plaintiffs failed to show that the joints tested by WeedWeek were the same as the products at issue in the lawsuit. There was no evidence that any lab tests were conducted on the particular “Sunset Cookies” strain of marijuana purchased by one of the plaintiffs. (The plaintiffs suggested that a “Fire Walker” THC product tested by researchers was “substantially similar” to the “Sunset Cookies” strain, but the court rejected this argument.) Beyond that, only a single pre-rolled joint of the “Caribbean Slurm” strain was tested, which was an insufficient analog of the particular product purchased by the other plaintiff. Even the WeedWeek article authors characterized their testing as an “imperfect experiment” with conclusions that do not necessarily apply to any individual brand, company, or product.
  3. No information on product labeling. The court stated that there was zero information about the labelling of the products tested by the lab researchers and cited by the plaintiffs. This meant that the plaintiffs failed to prove that the THC amounts listed on the packages they purchased were the same as the THC amounts listed on the packages of the products being tested.
  4. Failed to account for testing variables. The court noted other problems with the laboratory test results referenced by the plaintiff in their lawsuit, including the failure of the testers to account for significant variables. For example, there was no information about the products’ temperature exposure, the potential for testers’ bias, or the possibility of human error.
  5. No injury or harm suffered by plaintiffs. The court found that since the plaintiffs failed to show that the marijuana products purchased actually contained less THC than was listed on the product labels, they could not establish that they sustained any injury or damage as a result of their purchases.

The Santa Clara Superior Court held that there was no clear connection between the lab testing results and the plaintiffs’ actual purchases. The testing results could not be applied to the Raw Garden marijuana joints purchased by the plaintiffs because the tests were conducted on different products at different times by different entities using different methods for different purposes. This was a clear and decisive victory for both the defendant and the Tauler Smith LLP litigation team. The legal win was even more impressive because the consumer protection statutes relied on by the plaintiffs tend to be interpreted broadly by California courts and often in favor of plaintiffs.

You Need to Hire the Right Lawyer for Your Consumer Class Action Defense

When ruling on the demurrer in Ayala et al. v. Central Coast Agriculture, Inc., the court concluded that the lab tests relied on by the plaintiffs were insufficient to draw an inference that the products at issue were inaccurately labeled. This was in stark contrast to the ruling in another false advertising case.

Two other consumers recently sued a different California marijuana company, DreamFields Brands, Inc. That class action complaint, which was filed in Los Angeles Superior Court, alleged similar facts: that the plaintiffs purchased pre-rolled joints containing a lower percentage of THC than declared on the product packaging. Additionally, the class action lawsuit cited the same independent lab tests performed by WeedWeek. The defendant in that lawsuit was represented by a different law firm, and those lawyers were unsuccessful in getting the case dismissed.

The dissimilar results in these cases should make one thing abundantly clear: hiring the right lawyer to represent you in your class action defense could be the difference between winning and losing.

Contact the California Class Action Defense Lawyers at Tauler Smith LLP

Class action lawsuits filed in California courts are notoriously complicated, particularly when they involve consumer protection claims. That’s why it is imperative that defendants in these cases be represented by the experienced California class action defense lawyers at Tauler Smith LLP. Our litigation team has extensive experience representing defendants in false advertising cases, including both private civil actions and class actions.

Call or email us today for a free initial consultation.

California Unfair Competition Law

California’s Unfair Competition Law (UCL)

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California Unfair Competition Law

California’s Unfair Competition Law (UCL) is one of the most important consumer protection laws in the country. California courts tend to interpret the UCL broadly so that it applies to a wide range of unethical business practices. The statute explicitly prohibits companies from engaging in unlawful, unfair, or fraudulent business actions. It also prohibits companies from using false advertising. Businesses that violate the UCL may be subject to penalties that include financial compensation, monetary fines, and injunctions to stop committing certain acts. This means that consumers who purchase a product or service from a business that violates the UCL may be able to have an experienced California consumer fraud lawyer file a lawsuit and seek financial restitution.

To learn more about the California Unfair Competition Law, keep reading this blog.

What Is the California Unfair Competition Law?

The California Unfair Competition Law (UCL) is codified in Bus. & Prof. Code section 17200. The UCL protects consumers against business fraud, false advertising, and other deceptive practices by placing limits on companies doing business in California. The statute also protects honest companies and ensures that competition remains fair and strong, with no one company allowed to stifle competition and gain a competitive advantage by breaking the law.

Importantly, the UCL applies to all private companies doing business in California. This means that if a company is based in another state, if they sell to consumers located in the state, or even if they advertise in the state, they can be sued under the UCL.

What Is “Unfair Competition”?

The California Unfair Competition Law defines “unfair competition” as any of the following:

  1. An unlawful business act or practice.
  2. An unfair business act or practice.
  3. A fraudulent business act or practice.
  4. Unfair, deceptive, untrue, or misleading advertising.
  5. Any other act prohibited by the UCL.

Courts have interpreted the UCL broadly so that just about any violation of the law by a business can also constitute a violation, so long as the action or practice injured consumers or gave the business an advantage over its competitors. One of the most common examples of unfair competition in consumer transactions is when a company makes misrepresentations to customers about the type, quality, or cost of a product or service.

Deceptive Advertising

Examples of deceptive advertising that may violate the UCL include robocalling customers, using bait and switch advertising to trick customers, using fake endorsements in ads, exaggerating product descriptions, omitting important information about a product or service in an advertisement, manipulating prices, using false reference pricing in ads, and infringing on another company’s intellectual property.

Unlawful, Unfair, and Fraudulent Business Acts

The UCL defines “unlawful” business acts or practices as any action taken by a company that violates state or federal law. Even if the company committed the unlawful act just once, that can be enough to trigger legal action under the UCL.

An “unfair” business act or practice, as defined by the UCL, is typically committed by either a company or a business competitor. Generally speaking, a company violates the UCL when they attempt to sell goods or services that harm consumers. In the context of a business competitor, it is considered an unfair business act when the company does something that broadly undermines competition in the marketplace.

The UCL also prohibits “fraudulent” business acts or practices, which means any conduct that misleads or deceives consumers. When a consumer relies on false statements made by the company in an advertisement or at the point of sale and subsequently suffers an economic injury, they may be able to bring a UCL claim for restitution.

Private Right of Action Under Section 17200 of the UCL

The California Unfair Competition Law (UCL) allows both private parties and public prosecutors to take legal action against companies that commit fraudulent business acts. In most cases, an individual who has suffered an injury because of unfair competition must have their lawsuit filed by a county or city prosecutor. When the lawsuit is filed as a class action, however, a consumer may bring the action as a private plaintiff.

Standing to sue under the UCL can be established by showing that the plaintiff sustained an economic injury because of the business’ conduct. If the plaintiff bought an item from the business, then this would be enough to meet the UCL standing requirement.

False advertising claims brought under the UCL must establish that the plaintiff sustained economic injury because the defendant company engaged in misleading advertising of goods or services. Basically, this means that the consumer needs to show that they purchased an item or service and that they did so because of a deceptive advertisement.

Strict Liability

Section 17200 of the Unfair Competition Law imposes strict liability on businesses that commit fraud, which means that it does not matter whether they intended to commit fraud. The mere fact that their actions were unlawful, unfair, or fraudulent is enough to violate the statute. Additionally, it is not a defense against a UCL claim that the company’s ad was true or accurate. That’s because the plaintiff in a UCL case merely needs to show that the ad was likely to mislead consumers.

Moreover, it is important for businesses to understand that they can be sued under the UCL even if their actions are not technically unlawful. That’s because the statute explicitly prohibits “unfair” business acts and practices.

Restitution and Damages Available in UCL Claims

There are two remedies available to plaintiffs in an Unfair Competition Law claim:

  1. Actual economic damages, which means the defendant company is ordered to pay back any money received from the consumer.
  2. An injunction ordering the defendant to stop committing the fraud.

There are no punitive damages allowed in UCL cases. This is one reason that individual consumers often join forces to file a UCL claim as a class action, which can make it harder for the defendant to avoid paying a large damages award. A knowledgeable California UCL attorney can help the plaintiffs determine if it would be better to bring a class action lawsuit.

What Is the Statute of Limitations for UCL Claims?

The statute of limitations for a UCL claim is four (4) years, with the clock starting as soon as the business commits the fraudulent act or as soon as the plaintiff discovers the fraud. The standard used in these cases is a reasonable person standard, which means that the court will ask whether a person who exercised reasonable diligence would have discovered the unlawful business act when the statute of limitations period started to run.

Consumer Fraud Defense: Answering UCL Claims

Sometimes, a consumer brings a UCL claim against a company without merit. These claims can be tricky for businesses to answer because the statute is interpreted broadly by courts, and plaintiffs are typically given wide latitude to prove their case. If you have been sued in state court for allegedly violating the Unfair Competition Law, you need to speak with a knowledgeable consumer fraud defense lawyer immediately.

Related Laws: CLRA, ARL, and FTC Act

There are a few other related statutes that California consumers should be aware of when deciding whether to file a UCL claim.

CLRA Claims

Unfair Competition Law claims are often accompanied by claims under the California Consumers Legal Remedies Act (CLRA). The CLRA is more limited than the UCL because the CLRA includes protections for specific actions by businesses, whereas the UCL applies broadly to business fraud. It may be in the best interests of a plaintiff to bring a claim under both statutes because the remedies are cumulative. Beyond that, only the CLRA allows for punitive damages to be imposed against the defendant. Additionally, the CLRA allows plaintiffs to recover attorney’s fees.

ARL Claims

It is also possible for California consumers to use the Unfair Competition Law to bring a private civil action against companies that violate California’s automatic renewal laws. This is significant because the California ARL does not allow for a private right of action, which means that consumers who are deceived into signing up for an auto-renewal subscription may still be able to sue for full restitution under the UCL.

Federal Laws

There are also federal laws, such as the Federal Trade Commission Act (FTC Act), that protect California consumers against business fraud and false advertising. One advantage for plaintiffs filing a UCL claim is that the state statute has broad consumer protections that go beyond the protections provided under federal law.

Keep in mind that defendants may argue that more lenient federal law should apply in a particular case instead of the stringent California state law. That’s why it is important to have a skilled Los Angeles false advertising attorney on your side throughout the case.

Contact the California Consumer Protection Attorneys at Tauler Smith LLP

Tauler Smith LLP is a Los Angeles law firm that represents consumers in civil litigation, including class actions based on UCL violations. Our Los Angeles consumer protection lawyers understand the nuances of the California Unfair Competition Law, and we can help you get financial restitution from a company that used fraudulent business practices. Call us today at 310-590-3927 or email us to discuss your case.

CLRA Consumer Protection

What Is the Consumers Legal Remedies Act?

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CLRA Consumer Protection

California consumer fraud lawyers know that the state has been at the forefront of the consumer rights movement for a long time. In 1970, the California State Legislature passed the Consumers Legal Remedies Act (CLRA) to safeguard customers against deception by businesses. The CLRA makes it unlawful to engage in unfair or misleading acts when selling goods or services to consumers. The CLRA is often applicable in cases involving false advertising claims and/or consumer fraud. For example, when a company uses a misleading advertisement to persuade someone to purchase a product or service, the misrepresentation may constitute a violation of both the CLRA and the Unfair Competition Law (UCL). The same is true when a deceptive or intentionally confusing ad causes a customer to trigger an automatic renewal policy.

To learn more about the Consumers Legal Remedies Act, keep reading this blog.

What Deceptive Business Practices Does the CLRA Prohibit?

The California Consumers Legal Remedies Act, or CLRA, is a consumer statute that’s codified in Cal. Civil Code §§ 1750. The law allows plaintiffs to bring private civil actions against companies that use “unfair methods of competition and unfair or deceptive acts or practices in a transaction.”

The CLRA explicitly prohibits certain deceptive business practices, including the following acts:

  • Selling counterfeit goods.
  • Misrepresenting the source of a good or service.
  • Lying about a professional affiliation, certification, or endorsement.
  • Lying about the geographic origin of a product.
  • Selling a used or reconditioned item as new.
  • Misrepresenting the quality of a good or service.
  • Making false statements that disparage another business’ products.
  • Advertising items as being available for sale when they won’t be.
  • Advertising furniture as available for sale without disclosing that it is unassembled.
  • Telling a customer that a repair or replacement is necessary when it isn’t.
  • Offering a rebate or discount with hidden conditions.
  • Falsely presenting a salesperson’s authority to negotiate and finalize a transaction.
  • “Robo-calling” individuals who are not already customers.

One of the advantages of the CLRA is that victims of business fraud in California are not limited to filing lawsuits under the statute. This means that a consumer could bring multiple claims citing both the CLRA and other state or federal laws.

What Remedies Are Available to California Consumers in CLRA Cases?

The CLRA gives California consumers a powerful tool to hold businesses accountable for deceptive practices because the statute allows plaintiffs to recover different kinds of damages. The law is often interpreted broadly by courts to provide strong protections against consumer fraud, false advertising, and unfair business practices. When a consumer has been defrauded, they can file a lawsuit in a California Superior Court.

Consumers who bring a claim under the CLRA may pursue several remedies for any harm they suffered, including:

  • Actual monetary damages.
  • Punitive damages.
  • Restitution of property to the plaintiff.
  • An injunction against the defendant.
  • Attorney’s fees and court costs.
  • Any other relief the court deems proper.

Actual Damages & Attorney’s Fees

The first remedy available under the CLRA – actual damages – has a statutory minimum of $1,000 for each deceptive act or practice. The last remedy – “any other relief the court deems proper” – is a catch-all provision that gives courts wide latitude when determining what kind of monetary relief should be available to plaintiffs in CLRA actions.

In addition to getting damages for fraud, a plaintiff filing a claim under the CLRA may also be able to get attorney’s fees from a defendant who is found to have violated the Act. This can make it financially feasible for a plaintiff to bring a CLRA claim – since the defendant would have to pay the legal costs for both sides if they lose the case.

Additional Damages for Senior Citizens & Disabled Persons

A couple of special categories of consumers may be eligible for additional damages: senior citizens and disabled persons. As set forth by the CLRA, a “senior citizen” is defined as anyone over the age of 65. (In California, a senior citizen is usually defined as anyone over the age of 62, with the age threshold being lowered to 55 years old when the person lives in a senior citizen housing development.) California law defines “disabled person” quite broadly to include just about anyone who has a physical or mental condition that substantially limits at least one major life activity. For both seniors and disabled persons, the CLRA allows an award of up to $5,000 in damages to be tacked on by the court.

Proving a CLRA Violation

Although the Consumers Legal Remedies Act gives plaintiffs many options when seeking damages for consumer fraud, there are still ways for defendants to avoid paying maximum compensation. For example, if the defendant did not intentionally violate the CLRA, and they subsequently made a good faith attempt to correct the mistake, then the court might not award damages to the plaintiff. The complexities of the statute are one reason why it’s so important for you to have a knowledgeable California business fraud attorney handling your case.

Who Is Allowed to Bring a Lawsuit Under the Consumers Legal Remedies Act?

Private Civil Actions & Class Actions

The CLRA may serve as the basis for a civil suit in any consumer transaction where goods changed hands or services were provided, including transactions with a shipping insurance surcharge. Anyone who can show damages having been caused by one of the acts prohibited by the CLRA can file a lawsuit, either individually by the consumer or in a class action involving other consumers who were deceived or defrauded. For class action litigation, the cases must be substantially similar. An experienced California consumer protection lawyer can assist you with a CLRA class action lawsuit and help get your class certified.

Exclusions from the CLRA

Certain types of transactions and business owners are excluded from the Consumers Legal Remedies Act: (1) real estate transactions, and (2) newspapers and other advertisers. Although the CLRA applies to most commercial transactions, the statute cannot be used as the basis for a legal claim when the transaction involved the sale of either a residential property or a commercial property. Additionally, the CLRA cannot be used to bring a lawsuit against the owner of a newspaper, magazine, radio station, or any other advertising medium unless the plaintiff can prove that the business owner knew that the ads were deceptive before disseminating them.

How Long Do You Have to Bring a CLRA Claim?

Three-Year Statute of Limitations

It is important for you to speak with a qualified CLRA attorney as soon as possible because you do not want the statute of limitations to expire before you attempt to bring a claim. The general rule is that a consumer has three (3) years from the date on which the unfair business practice occurred to file a lawsuit under the Consumers Legal Remedies Act. If you miss this deadline, you may be barred from bringing a legal action.

Business Owner’s Opportunity to Cure

In addition to making sure you file within the statute of limitations, an experienced attorney can also ensure that you meet any other important deadlines and filing requirements. For example, before the CLRA suit can proceed in court, the consumer must notify the defendant in writing about the alleged violation. This must happen at least 30 days before the lawsuit is filed, and the business owner will then have an opportunity to take appropriate action to fix or otherwise “cure” the harm. (E.g., repairing or replacing a damaged item that was sold to the consumer.)

Defending Against CLRA Claims in California

It is very important for injured consumers to have an experienced consumer protection attorney handling their case throughout the legal process. The same is true for businesses that are accused of consumer fraud or false advertising. If you have been sued for allegedly violating a California consumer protection law like the CLRA, you need to speak with a qualified defense attorney as soon as possible.

Contact the California CLRA Lawyers at Tauler Smith LLP

Tauler Smith LLP is a Los Angeles law firm that focuses on consumer fraud litigation. Our attorneys are extremely familiar with the Consumers Legal Remedies Act, and we have filed both private civil actions and class action lawsuits on behalf of consumers. If you were a victim of business fraud or false advertising in California, we can help you take legal action and get you the financial compensation to which you are entitled. Call or email us to discuss your eligibility to file a CLRA claim.