Obillo v. i-Health Inc.

Background

This putative class action was brought by Malia Obillo against i-Health Inc. Obillo alleged that she bought Culturelle IBS Complete Support from a Target store in Emeryville, California, after reading the product label. She claimed the label’s statement that the product was “clinically shown” to relieve irritable bowel syndrome symptoms was false and misleading.

Obillo based her falsity theory primarily on a National Advertising Division report, which said the clinical study supporting the labeling claims was methodologically unreliable. She also alleged that she did not experience relief from her symptoms and would not have bought the product, or would have paid less, if she had known the advertising claims were unsubstantiated. She asserted claims under the California Consumers Legal Remedies Act, California Unfair Competition Law, California False Advertising Law, breach of express and implied warranty, breach of contract, negligent and intentional misrepresentation, and unjust enrichment.

Rulings on the Motion

The court granted i-Health’s request for judicial notice of documents from National Institutes of Health and Federal Trade Commission websites and the full National Advertising Division report. Judicial notice permits a court to accept certain facts or documents without requiring proof of them at trial. The court found that the report was appropriate for consideration because the complaint relied on it and Obillo did not dispute its authenticity or oppose the request.

The court dismissed without prejudice all claims seeking injunctive relief because Obillo withdrew those claims without prejudice. The court also dismissed without prejudice the requests for equitable relief under the Consumers Legal Remedies Act and the claims under the Unfair Competition Law, False Advertising Law, and unjust enrichment. The court held that Obillo did not allege that she lacked an adequate remedy through damages, as required to pursue equitable relief in federal court.

Consumers Legal Remedies Act Claim

The court granted dismissal of the Consumers Legal Remedies Act damages claim with leave to amend. The court explained that private plaintiffs may not use that statute to demand substantiation for advertising claims. Instead, they must allege specific facts showing that the advertising statement was actually false.

The court found that Obillo challenged the reliability and scientific adequacy of the underlying study but did not allege facts directly disproving the product’s claimed benefits. She did not allege that the study was fictitious, falsified, or never conducted; cite testing or other studies producing contrary results; or identify other scientific evidence disproving the study’s results. The court also found that Obillo’s individual lack of relief was anecdotal evidence from one person and did not establish that the product’s clinical claim was false.

Contract and Warranty Claims

The court granted dismissal with leave to amend of the breach-of-contract, breach-of-express-warranty, and breach-of-implied-warranty claims. Under California law, a buyer generally must notify the seller of an alleged breach within a reasonable time after discovering it. The court found that Obillo did not plausibly allege that she provided the required pre-suit notice or that notice was unnecessary. The opinion states that Obillo effectively conceded at the hearing that these claims were subject to dismissal on that basis.

Misrepresentation Claims

The court dismissed without prejudice the negligent and intentional misrepresentation claims as currently pleaded. It applied California’s economic-loss rule, which generally prevents recovery in tort for purely financial losses that arise from a contract unless an independent duty or recognized exception applies.

For negligent misrepresentation, the court found that Obillo alleged only economic loss and did not allege an independent duty, injury to a person or property, or damages outside the parties’ contractual expectations. For intentional misrepresentation, the court likewise found no personal injury, damage to other property, special or confidential relationship, separate contractual duty, or severe and unmitigable harm that would support an exception to the economic-loss rule.

Disposition

The court ordered that i-Health’s motion to dismiss was granted. The complaint was dismissed without prejudice under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim for relief. Obillo was granted leave to file an amended complaint addressing the identified problems by April 18, 2025.