Hackett v. Skynet Industries

Background

Deshaun Hackett alleged that, over five years, he purchased kratom-based products at Skynet Industries, Inc.’s San Francisco store. He alleged that kratom contains opioid-like ingredients, is highly addictive, and can cause severe withdrawal symptoms. According to Hackett, Skynet did not disclose the products’ addictive nature before his purchases. He brought a proposed nationwide class action based on alleged omissions under California consumer-protection laws and other theories.

Skynet moved to dismiss the first amended complaint. Hackett conceded that his claims were based on omissions rather than affirmative misrepresentations, and he conceded that his implied-warranty claim and his claim under California Civil Code section 1770(a)(9) should be dismissed.

Court’s Analysis

The court held that it had subject-matter jurisdiction under the Class Action Fairness Act. Hackett plausibly alleged a class of at least 100 people, possible citizenship differences among class members and Skynet, and more than $5 million in controversy. The court did not reach Skynet’s separate diversity-jurisdiction argument. It also noted that Hackett did not seek an injunction, so it did not address Skynet’s argument that he lacked standing to seek injunctive relief.

The court rejected Skynet’s statute-of-limitations argument. Because the claims sounded in fraud, the court applied the discovery rule, which delays when a claim begins until the plaintiff knew or should have suspected that wrongdoing caused the injury. Hackett alleged that he first learned of kratom’s addictive nature when he experienced withdrawal symptoms in November 2024. The court found that these allegations were sufficient at the pleading stage and that the materials cited by Skynet did not establish as a matter of law that Hackett knew earlier.

The court also found that Hackett plausibly alleged reliance. He alleged that he would have acted differently, including by not buying the products or paying as much, if Skynet had disclosed their addictive nature. His allegations that the products came in plain brown paper bags supported a plausible inference that he would have seen a disclosure placed on the bags.

The court held that Hackett sufficiently alleged a duty to disclose. Under the applicable law, a duty may arise when a product’s defect creates an unreasonable safety hazard. Hackett alleged that the products were addictive, similar to opioids, and capable of causing severe withdrawal symptoms. The court found those allegations sufficient to plead an unreasonable safety hazard.

The court declined to dismiss the unjust-enrichment claim. Although California law may not recognize unjust enrichment as a standalone claim in every circumstance, a court may treat such allegations as a claim for restitution under a quasi-contract theory. Hackett alleged that Skynet received and retained money for products that he would not have bought, or would have paid less for, had the addictive nature been disclosed. The court found those allegations sufficient. The court did not consider Skynet’s argument based on Sonner because Skynet raised it for the first time in its reply brief.

The court rejected Skynet’s arguments that the complaint failed to satisfy Federal Rule of Civil Procedure 9(b), which requires fraud allegations to be stated with particularity. The court found that details about alleged affirmative assurances were irrelevant because Hackett was not pursuing misrepresentation claims. It also found that Hackett sufficiently identified the products and alleged purchases and spending at Skynet’s San Francisco store.

Finally, the court declined to dismiss claims under the laws of states other than California or to decide potential extraterritorial-application and conflict-of-laws issues. It held that those issues were more appropriately addressed at the class-certification stage after discovery.

Disposition

Judge Rita F. Lin granted in part and denied in part Skynet’s motion to dismiss. The implied-warranty claim and the California Civil Code section 1770(a)(9) claim were dismissed with prejudice. All other claims and the class allegations survived.