Preview
1 Paul E. Gaspari, State Bar No. 76496
weintraub tobin chediak coleman grodin
2 LAW CORPORATION
475 Sansome Street, Suite 510
3
San Francisco, California 94111
4 Telephone: 415.433.1400
Facsimile: 415.433.3883
5 Email: pgaspari@weintraub.com
6 Ryan E. Abernethy, State Bar No. 267538
7 weintraub tobin chediak coleman grodin
LAW CORPORATION
8 400 Capitol Mall, 11th Floor
Sacramento, California 95814
9 Telephone: 916.558.6000
Facsimile: 916.446.1611
10 Email: rabernethy@weintraub.com
11
weintraub tobin chediak coleman grodin
Attorneys for Defendant,
12 SONOMA ACADEMY
13
14 SUPERIOR COURT OF THE STATE OF CALIFORNIA
15 IN AND FOR THE COUNTY OF SONOMA
16 DAVID SUCHARD, JODY SUCHARD, and Case No.: SCV-270984
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JANE DOE, individually, and on behalf of all
17 others similarly situated; REPLY TO PLAINTIFFS’ OPPOSITION
TO SONOMA ACADEMY’S DEMURRER
18
Plaintiffs, TO FIRST AMENDED COMPLAINT
19
vs. Date: June 14, 2023
20 Time: 3:00 p.m.
SONOMA ACADEMY, a California non- Dept: 19
21 profit; and DOES 1 through 500, Judge: Honorable Oscar A. Pardo
22
Defendants. Complaint Filed: June 10, 2022
23 Trial Date: None Set
24
25
26
27
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REPLY IN SUPPORT OF DEMURRER TO FAC
1 I. Introduction
2 Plaintiffs rehash the same unsuccessful arguments from their opposition to the first demurrer.
3 This is because the deficiencies in their FAC are identical to those in their initial doomed Complaint.
4 Plaintiffs’ Opposition is largely grounded on the premise that this class action is for a putative class
5 of students. But it is not. The class definition in Plaintiffs’ FAC is identical to their previously fatally
6 flawed definition which includes all those who funded the tuition payments, which in most cases
7 would be the parents. This problem negates most of their arguments and further illuminates the
8 deficiencies in Plaintiffs’ bizarre class action theory that warrant demurrer for multiple reasons.
9 Plaintiffs’ fraud-based claims fail for this reason because Defendant Sonoma Academy
10 (“Defendant” or the “School”) does not have a fiduciary relationship with students in their custody,
11 much less with the parents of students. And while the School may have a “special relationship” with
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12 its students that creates a duty under negligence law, that special relationship in no way creates a
13 fiduciary relationship in fraud-based actions to all those who funded their tuition.
14 A putative class of tuition-funders raises other class certification and standing problems that
15 can and should be resolved at the pleading stage. The harm alleged in the FAC is not sufficiently
16 “concrete” or “individualized” to warrant standing for a UCL claim because it is based on the purely
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17 hypothetical injury caused by paying for someone else to be enrolled at a school where a teacher
18 allegedly harmed others. This is precisely the type of “shakedown lawsuit” by "unaffected plaintiffs"
19 that Proposition 64 was intended to prevent and that the California Supreme Court warned about.
20 II. Plaintiffs’ Cause of Action for Violation of the Unfair Competition Law Fails.
21 A. Individualized Issues of Fact & Law Predominate as Plaintiffs Still Have Not
Alleged Uniform Exposure.
22
23 Plaintiffs did not even attempt to refute Defendant’s arguments that numerous mini-trials
24 would be required to determine which of the putative class members were exposed to the various
25 advertisements cited in the Complaint and then to determine who among those actually relied upon
26 the representations when enrolling their students at the School. Instead, Plaintiffs fashion a
27 newfangled theory—fully divorced from the School’s alleged advertisements—and pivot exclusively
28 to a theory of concealment. Significantly, this theory directly contradicts their own FAC and the law.
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REPLY IN SUPPORT OF DEMURRER TO COMPLAINT
1 Plaintiffs argue that omissions, not just misrepresentations, can serve as grounds for UCL
2 violations. That principle, in isolation, is not disputed. The actual issue on demurrer though is whether
3 an omission by itself, absent exposure to advertisements or similar representations, can serve as a
4 basis for a UCL claim. This Court already correctly found that it cannot. Nevertheless, Plaintiffs ask
5 the Court to disregard its Order and the case law on point by skipping the exposure requirement and
6 moving on to the materiality issue, which is not the basis of this Demurrer. Plaintiffs’ proposition that
7 uniform exposure is not required is directly contradicted by each and every case they cite on the issue.
8 Plaintiffs first rely on Collins v. eMachines (2011) 202 Cal.App.4th 249 for the notion that an
9 “omission” absent any particular advertisement could support a UCL fraud cause of action. Plaintiffs
10 go so far as to state that “Collins did not involve affirmative misrepresentations.” (Plaintiffs’
11 Opposition (“Opp.”) p. 5:5.) This is false. The complaint in Collins alleged a uniform
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12 misrepresentation, specifically that “[e]ach of the defective computers had a written warranty that
13 they were ‘free from defects in materials and workmanship under normal use for a period of [one]
14 year from the date of purchase,’” and that defendant was “representing that goods have characteristics
15 which they do not have [and] are of a particular standard or quality [and] advertising goods with the
16 intent not to sell them as advertised.” Collins at 253, 255. The “omission” of the disclosed defect
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17 rendered the written warranty—that every class member received—a misrepresentation to the extent
18 it was tethered to the affirmative statements in the warranty. In short, uniform exposure to the
19 advertisement was alleged in Collins.
20 Plaintiffs’ reliance on Rutledge fails for the same reason. The Rutledge plaintiffs brought a
21 class action against HP alleging that it sold computers it knew would likely fail. Rutledge v. Hewlett-
22 Packard Co. (2015) 238 Cal. App. 4th 1164, 1168. Plaintiffs wield Rutledge to suggest there is no
23 requirement to allege common exposure to a particular advertisement. To the contrary, the plaintiffs
24 in Rutledge “point[ed] to specific misrepresentations in HP's press releases and advertising that
25 created a duty to disclose the known defects in the notebook computers.” Id. at 1176 (the plaintiffs’
26 “claim of misrepresentation is based on statements made by HP about its products in certain press
27 releases … HP was obligated to disclose the inverter defect, because it was contrary to HP's
28 advertising”). Plaintiffs then quote the following passage from Rutledge to convince this Court that
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REPLY IN SUPPORT OF DEMURRER TO COMPLAINT
1 an omission alone can support a UCL claim, provided it is “an omission of a fact the defendant was
2 obliged to disclose.” (Opp. at p. 4:8-10, citing Rutledge at p. 1173.) But that statement pertained
3 solely to the CLRA claim, not the UCL claim. Id. at 1173. Moreover, even if a UCL claim could be
4 based solely on the omission of a fact that a defendant was obligated to disclose, in Rutledge, the duty
5 to disclose the known defects arose solely from the fact that the defendant made “specific
6 misrepresentations in HP’s press releases and advertising” that the product was not defective—i.e. it
7 was still based on exposure to the advertisements. Id. at 1176.
8 Plaintiffs further purport to rely on Tobacco for the same debunked proposition. But, like the
9 other cases, the UCL claim in Tobacco was specifically based on a “long-term campaign of deceptive
10 advertisement and misrepresentations” about the addictive nature of nicotine in its products. In re
11 Tobacco II Cases (“Tobacco”) (2009) 46 Cal.4th 298, 324. It was not based on omissions alone as
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12 Plaintiffs argue. Even more, the class in Tobacco was explicitly defined to only include those “who
13 were exposed to [d]efendants’ marketing and advertising activities in California.” Id. at 337. Uniform
14 exposure was not at issue in Tobacco because the plaintiffs had already met that threshold
15 requirement by including it in the class definition. Conversely here, Plaintiffs’ proposed class
16 purports to include anyone who paid tuition, regardless of their exposure to any advertisements.
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17 In desperation, Plaintiffs go so far as to argue that the Court’s reference to Downey in the
18 Order requiring uniform exposure pertained only to a false advertising claim, which Plaintiffs contend
19 is no longer relevant since they have since dismissed their false advertising claim. (Opp. at p. 5:17-
20 18.) But this mischaracterizes the Court’s order and Downey’s holding. The Order correctly cited
21 Downey, verbatim, in its holding that where “‘plaintiffs seek to certify a class aimed solely at
22 recovering restitution under the unfair competition law or false advertising law and define the
23 members of the class as anyone who purchased the good or service to which the advertisement
24 pertains, those plaintiffs must prove that (1) the class members were exposed to the
25 advertisement, (2) the advertisement was deceptive, and (3) the deception was material.’” (Order at
26 p. 3, citing Downey v. Public Storage, Inc. (2020) 44 Cal.App.5th 1103 at 1115 (emphasis added).)
27 In the end, Plaintiffs could not find a single case where an omission by itself, untethered to a
28 commonly exposed advertisement, could support a UCL claim. This is because it cannot. Common
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REPLY IN SUPPORT OF DEMURRER TO COMPLAINT
1 issues do not predominate and class certification is properly denied when the pleading is open to
2 “variations in how—and, critically, whether—class members were exposed to an allegedly deceptive
3 advertisement.” Downey at p. 1117, citing Stearns v. Ticketmaster Corp. (9th Cir. 2011) 655 F.3d
4 1013, 1020. Plaintiffs could not amend their complaint to establish common exposure so instead they
5 ask the Court to disregard all the law on point.
6 B. Plaintiffs Did Not Establish Standing Under the UCL Because the Putative
Class Was Neither Economically nor Individually Harmed.
7
8 In order to maintain standing under the UCL since the passage of Proposition 64, the plaintiffs
9 themselves must have suffered an actual “economic injury,” limited to “lost money or property” in a
10 “concrete” and “individual way.” Kwikset Corp. v. Superior Court (2011) 51 Cal.4th 310, 322-33.
11 The economic injury cannot be “conjectural,” “hypothetical,” or “intangible”; it must affect the
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12 plaintiff in a particularized and individual way. Id.
13 In Kwikset, the Supreme Court found that plaintiffs met both the “economic” and
14 “individualized” elements by alleging that defendants misrepresented that their locks were “Made in
15 U.S.A,” when they were not, because the representations were false as to each and every lock that
16 every single putative class member actually purchased. Kwikset Corp. supra, 51 Cal.4th at 332.
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17 Plaintiffs argue that their theory of liability is like that in Kwikset because they purchased tuition
18 based on the School’s “omission” that it had benefits, qualities, or standards it did not have. (Opp. at
19 8:8-9.) In fact, their theory is that the putative class paid tuition for educational services for which
20 they each received the full expected benefit, but that they should be paid restitution for hypothetical
21 and intangible harm due to alleged abuse experienced by a tiny fraction of non-class members.
22 Plaintiffs' theory is the epitome of speculative and non-individual as it pleads a class of non-
23 victims who seek recovery for the theoretical non-economic harm suffered by others. To fulfill the
24 economic requirement, Plaintiffs merely argue that they paid tuition. Yet they have not articulated
25 any actual financial loss as the FAC, its conclusions aside, establishes that the class received the full
26 value of their education as the class does not include those actually harmed by Morrone. Plaintiffs’
27 statements that they paid more in tuition than they otherwise would have, and that it kept them from
28 shopping around at other comparable schools, is precisely the type of reasoning courts deem
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REPLY IN SUPPORT OF DEMURRER TO COMPLAINT
1 impermissibly conclusory, conjectural and hypothetical. For instance, in Bower, the plaintiffs alleged
2 that AT&T made false statements that an undisclosed fee was for “sales tax,” when it was not, and
3 that the plaintiffs were therefore denied any opportunity to “shop around” for retailers that do not
4 charge consumers this discretionary fee because they erroneously believed it was a universally
5 applicable charge required by law. supra, 196 Cal. App. 4th at 1554. The court held that such a
6 pleading was “at the most a conjectural or hypothetical injury, not an injury in fact.” Id. at 1555.
7 Plaintiffs’ conjecture that parents would not enroll their students at the School if they knew
8 what was concealed (the hypothetical injury) is directly contradicted by the facts alleged in their own
9 FAC. The FAC admits that an investigative report of all the alleged unsafe conditions/sexual
10 misconduct was summarized and “publicly-released on November 28, 2021” (FAC ¶ 44), yet the
11 School continues to operate “to the present” (FAC ¶ 102), over one-and-a-half years later, as putative
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12 class members continue to pay the School the full tuition for their students at the School
13 notwithstanding the full publicly released information. This was raised in the moving papers but
14 Plaintiffs did not address it because the implications irrefutably negate their UCL claim.
15 Plaintiffs also did not address Defendant’s lengthy discussion about the non-individualized
16 nature of Plaintiffs’ UCL claim that seeks to establish a massive class of “tuition funders” to coopt
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17 liability for the harm suffered by a few non-class member “young female students.” (See Demurrer
18 MPA at 11:3-12:2.) Tellingly, Plaintiffs could not cite a single case where a UCL class was permitted
19 to proceed based on the harm suffered by others. This is because Plaintiffs’ bizarre class-based
20 bystander theory of UCL liability violates Proposition 64 as it seeks to reward those who have not
21 actually been harmed and “thereby strip such unaffected parties of the ability to file ‘shakedown
22 lawsuits,’ while preserving for actual victims of deception and other acts of unfair competition the
23 ability to sue and enjoin such practices.” Kwikset Corp., 51 Cal. 4th at 317 and 334.1
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27 Plaintiffs failed to address, and therefore conceded, Defendant’s position on demurrer that the putative class
lacks superiority as to the entire FAC. Before a class action can proceed, the plaintiff must establish that class
28 treatment is superior to alternative methods, including individual litigation. Caro, supra, 18 Cal.App.4th at
654. Defendant hereby incorporates its uncontested arguments at page 12:3-19 of its MPA.
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REPLY IN SUPPORT OF DEMURRER TO COMPLAINT
1 III. Plaintiffs Failed to Demonstrate That They Sufficiently Pleaded Causes of
Action for Constructive Fraud and Fraud by Concealment.
2
3 A. Individualized Issues of Reliance and Exposure Still Predominate.
4 As indicated in the moving papers, the Court previously sustained Defendant’s demurrer as
5 to the constructive fraud and fraud-by-concealment causes of actions on the grounds that both lack
6 commonality and superiority. (Order pp. 4-5.) Specifically, the Court relied on Tucker V. Pacific
7 Benn Mobile Services, which held in granting a demurrer to a class-based fraud action, “[i]f the issue
8 of materiality or reliance, is a matter that would vary from consumer to consumer, the issue is not
9 subject to common proof, and the action is properly not certified as a class action.” (Order pp. 4-5,
10 citing Tucker, supra, 208 Cal.App.4th at 357.) The Court made clear that both Plaintiffs’ fraud-based
11 causes of action would require individualized proof of reliance and resulting damages—whether the
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12 theory was ultimately based on alleged “fraud or concealment”—and that “it appears to the court,
13 based on the current definition of the class in the Complaint, that there is no reasonable possibility
14 that there are predominate questions of fact as to causes of action” for constructive fraud and fraud-
15 by-concealment. (Id. (emphasis added).)
16 In their Opposition, Plaintiffs admit that the only facts they added to their amended complaint
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17 on this issue were paragraphs 73 to 75, which they claim “identify multiple instances from 2002 to
18 2020 when SA received complaints about faculty, failed to investigate, and failed to disclose
19 information to the Class or the public.” (Opp. p. 8:2-5.) But these merely restate the same allegations
20 in the original Complaint. (See e.g. Original Complaint at ¶¶ 42, 44, 49, 56, 57, 60, 64, 69 and 127
21 (the School received numerous complaints about faculty, failed to investigate, and actively concealed
22 the information from the Class and the public).) In similar fashion, since no new facts on the point
23 have been alleged, Plaintiffs then parrot the same arguments they made in their first opposition that
24 the Court already rejected. Plaintiffs restate how, in their view, Tucker does not mandate
25 individualized inquiries into reliance in every case because reliance can be inferred in the case of
26 “material misrepresentations.” (Opp. p. 8:11-15, citing Tucker, supra, 208 Cal.App.4th at 222.) But
27 Tucker made clear that “if the issue of materiality or reliance, is a matter that would vary from
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1 consumer to consumer, the issue is not subject to common proof, and the action is properly not
2 certified as a class action.” (Id.)
3 To get around this holding, Plaintiffs try to distinguish the facts of this case from Tucker in
4 the same way they unsuccessfully tried to do in their Opposition to the first demurrer—by pivoting
5 to an omission-only theory. But as already addressed in the moving papers, the FAC does not allege
6 an omission-only theory. In fact, in the FAC, Plaintiffs doubled-down on their misrepresentation
7 theory by including allegations relating to the School’s advertisements which only raise additional
8 individualized issues. In Plaintiffs’ original Complaint, the only alleged misleading advertisement
9 was on the School’s website. The FAC added how the School made misrepresentations “through
10 pamphlets, websites, statements, enrollment materials, marketing, advertisements, press releases,
11 articles, or other verbal or written material.” (FAC ¶ 16.) Given this, Plaintiffs’ representation that
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12 they “made it abundantly clear in the FAC that their claims are based on a theory of omission, failure
13 to disclose and concealment by Defendant,” is contradicted by their own judicial admissions. (Opp.
14 p. 10:22-24.) Just like Tucker, the FAC is a mix of allegations “involving false representations and
15 the concealment of material facts (omissions)” that would necessitate numerous mini-trials to
16 adjudicate the issue of exposure and reliance, which would vary greatly.
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17 But even if Plaintiffs’ theory was based solely on omissions, the same results would apply.
18 Constructive fraud and fraud by concealment require proof of (1) actual reliance on alleged fraudulent
19 statements and/or omissions and (2) resulting damage. CACI Nos. 1901 and 1444. “If the issue of
20 materiality or reliance, is a matter that would vary from consumer to consumer, the issue is not subject
21 to common proof, and the action is properly not certified as a class action.” Tucker, supra, 208 Cal
22 App. 4th at 357.
23 To circumvent the obligation to allege common reliance and damages, Plaintiffs erroneously
24 rely on UCL case law to extract principles that do not apply to fraud claims. As the court held in
25 Mutual Massachusetts Mutual Life Ins. Co. v. Superior Court (2002) 97 Cal.App.4th 1282, 1293:
26 [T]he 'fraud' contemplated by section 17200[] (the UCL) . . . bears little resemblance to common law
27 fraud or deception. The test is whether the public is likely to be deceived. This means that a section
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REPLY IN SUPPORT OF DEMURRER TO COMPLAINT
1 17200 violation, unlike common law fraud, can be shown even if no one was actually deceived, relied
2 upon the fraudulent practice, or sustained any damage. Id. at 1290 (internal citations omitted).
3 Plaintiffs cite Tobacco for the proposition that individualized proof of reliance is not required
4 where the defendant uniformly withheld information in its exclusive knowledge and control. (Opp.
5 p. 11:12-14.) But Tobacco involved a UCL claim, not a fraud claim. And as the Tobacco court itself
6 noted, “[t]he fraudulent business practice prong of the UCL has been understood to be distinct from
7 common law fraud. A common law fraudulent deception must be actually false, known to be false by
8 the perpetrator and reasonably relied upon by a victim who incurs damages. None of these elements
9 are required to state a claim for injunctive relief under the UCL.” Tobacco, supra 46 Cal.4th at 312.
10 Inversely, relief under fraud-based claims require “individualized proof of deception, reliance and
11 injury.” Id. at 320l; see also Tucker, supra 208 Cal. App. 4th at 221 (“actual reliance” must be
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12 established on a class basis in a fraud action). Plaintiffs further use People v. Johnson & Johnson, 77
13 Cal. App. 5th 295, 325 (again, a UCL case—not a fraud case) to further smuggle inapplicable UCL
14 principles into their fraud claims.
15 Plaintiffs’ appeal to Vasquez is misplaced for other reasons. That case involved standardized
16 rote statements made directly to every member of the class who purchased a freezer or frozen foods.
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17 Vasquez v. Superior Court (1971) 4 Cal. 3d 800, 811-812. It did not involve uniform omissions as
18 Plaintiffs suggest, so its reasoning is of little use to establish class-wide reliance on concealment only.
19 Moreover, in addition to the standardized rote statements themselves, the materiality, reliance and
20 damages in that case were obviously uniform as they involved identical representations regarding the
21 sale of identical goods directly to the class. Id. Here, materiality and any damages resulting from the
22 alleged omissions would vary greatly among the class based on numerous individualized factors,
23 including but not limited to whether the class member was independently aware of the allegations,
24 whether the class member’s student was ever in Morrone’s class, and whether they were one of the
25 few students allegedly subject to any sort of sexual misconduct. While Defendant raised all this in
26 the moving papers and in its first demurrer, Plaintiffs have yet to articulate how they can establish
27 actual reliance and injury on a class-wide basis without the need of numerous individual trials.2
28 2
In the end, Plaintiffs admit that their class definition is deficient because it seeks restitution for harm that
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1 B. Plaintiffs Have Not Shown the Existence of a Fiduciary Duty to Maintain
Their Constructive Fraud & Fraud by Concealment Causes of Action.
2
3 None of the five cases that Plaintiffs cite in their Opposition on this issue hold that a fiduciary
4 duty or heightened duty of care arises out of any relationship asserted against Defendant in the FAC.
5 Plaintiffs regurgitate the same arguments from their prior Opposition that this Court already rejected.
6 First, Plaintiffs cite Cleveland v. Johnson (2012) 209 Cal.App.4th 1315 for the proposition
7 that a fiduciary relationship arises when one “enters into a confidential relationship with another and
8 is founded on the confidence and trust placed by one person in the integrity and expertise of another.”
9 (Opp. p. 12:3-6.) However, Cleveland addressed the financial relationship between an investor and
10 a promotor, and says nothing about the school-parent relationships at issue here. Id. at 1339.
11 Plaintiffs cite Doe v. United States Youth Soccer Assn., Inc. (2017) 8 Cal. App. 5th 1118,
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12 1128, for the unremarkable proposition that a “special relationship” exists between children and their
13 adult caregivers. It is not disputed that such a “special relationship” giving rise to a duty in negligence
14 (not fiduciary duty) can be based on a school-student and caregiver relationship. The fact that a school
15 district owes a student a duty of care in negligence law based on the existence of a “special
16 relationship” is not novel, as there are many cases that so hold. However, Defendant is not aware of
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17 any authority that a school owes a fiduciary or confidential duty to a student, much less their parents.
18 Plaintiffs similarly cite Virginia G. v. ABC Unified School Dist. (1993) 15 Cal. App. 4th 1848,
19 1851-1852, for the same undisputed and irrelevant proposition that a “special relationship” is
20 recognized between a school and its students so as to impose a duty to protect students in a negligence
21 action. That case involved a negligence claim by a student who was actually sexual abused by a
22 teacher—which is not at issue in this demurrer of a fraud-based class action grounded on false-
23 advertising. Id. Plaintiffs similarly rely on Phyllis v. Superior Court (1986) 183 Cal.App.3d 1193,
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occurred long after the release of the Debevoise report on November 28, 2021. (Opp. at p. 11:15-16; FAC par.
26
44.) In actuality, the class period would of necessity cease a year earlier, in November of 2020, when Morrone
27 was terminated. (FAC ¶ 44(q).) Plaintiffs concede they could have easily reframed the Class to end at the
correct time, but they instead ask the Court to modify the class definition for them. The Court should not do
28 for Plaintiffs what they refuse to do for their own case. Moreover, the overbroad timeline is perhaps the least
significant problem with the FAC. Plaintiffs are unable to adequately amend because the defects are incurable.
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1 1196-1997, and Rodriguez v. Inglewood Unified School Dist. (1986) 186 Cal.App.3d 707, 715, both
2 of which involve negligence-based causes of action.
3 A special relationship creating a duty in negligence is not equivalent to a fiduciary or
4 confidential duty, nor does the existence of a special relationship give rise to a fiduciary or
5 confidential duty. Jennifer C, 168 Cal.App.4th at 1328-29. As the court explained in Jennifer C.,
6 although the school owed the special needs student a duty in negligence based upon the existence of
7 a special relationship, it did not owe “a higher duty of care with respect to such a child.” Id.
Preview
1 Paul E. Gaspari, State Bar No. 76496 weintraub tobin chediak coleman grodin 2 LAW CORPORATION 475 Sansome Street, Suite 510 3 San Francisco, California 94111 4 Telephone: 415.433.1400 Facsimile: 415.433.3883 5 Email: pgaspari@weintraub.com 6 Ryan E. Abernethy, State Bar No. 267538 7 weintraub tobin chediak coleman grodin LAW CORPORATION 8 400 Capitol Mall, 11th Floor Sacramento, California 95814 9 Telephone: 916.558.6000 Facsimile: 916.446.1611 10 Email: rabernethy@weintraub.com 11 weintraub tobin chediak coleman grodin Attorneys for Defendant, 12 SONOMA ACADEMY 13 14 SUPERIOR COURT OF THE STATE OF CALIFORNIA 15 IN AND FOR THE COUNTY OF SONOMA 16 DAVID SUCHARD, JODY SUCHARD, and Case No.: SCV-270984 law corporation JANE DOE, individually, and on behalf of all 17 others similarly situated; REPLY TO PLAINTIFFS’ OPPOSITION TO SONOMA ACADEMY’S DEMURRER 18 Plaintiffs, TO FIRST AMENDED COMPLAINT 19 vs. Date: June 14, 2023 20 Time: 3:00 p.m. SONOMA ACADEMY, a California non- Dept: 19 21 profit; and DOES 1 through 500, Judge: Honorable Oscar A. Pardo 22 Defendants. Complaint Filed: June 10, 2022 23 Trial Date: None Set 24 25 26 27 28 {3880529.DOCX:3} REPLY IN SUPPORT OF DEMURRER TO FAC 1 I. Introduction 2 Plaintiffs rehash the same unsuccessful arguments from their opposition to the first demurrer. 3 This is because the deficiencies in their FAC are identical to those in their initial doomed Complaint. 4 Plaintiffs’ Opposition is largely grounded on the premise that this class action is for a putative class 5 of students. But it is not. The class definition in Plaintiffs’ FAC is identical to their previously fatally 6 flawed definition which includes all those who funded the tuition payments, which in most cases 7 would be the parents. This problem negates most of their arguments and further illuminates the 8 deficiencies in Plaintiffs’ bizarre class action theory that warrant demurrer for multiple reasons. 9 Plaintiffs’ fraud-based claims fail for this reason because Defendant Sonoma Academy 10 (“Defendant” or the “School”) does not have a fiduciary relationship with students in their custody, 11 much less with the parents of students. And while the School may have a “special relationship” with weintraub tobin chediak coleman grodin 12 its students that creates a duty under negligence law, that special relationship in no way creates a 13 fiduciary relationship in fraud-based actions to all those who funded their tuition. 14 A putative class of tuition-funders raises other class certification and standing problems that 15 can and should be resolved at the pleading stage. The harm alleged in the FAC is not sufficiently 16 “concrete” or “individualized” to warrant standing for a UCL claim because it is based on the purely law corporation 17 hypothetical injury caused by paying for someone else to be enrolled at a school where a teacher 18 allegedly harmed others. This is precisely the type of “shakedown lawsuit” by "unaffected plaintiffs" 19 that Proposition 64 was intended to prevent and that the California Supreme Court warned about. 20 II. Plaintiffs’ Cause of Action for Violation of the Unfair Competition Law Fails. 21 A. Individualized Issues of Fact & Law Predominate as Plaintiffs Still Have Not Alleged Uniform Exposure. 22 23 Plaintiffs did not even attempt to refute Defendant’s arguments that numerous mini-trials 24 would be required to determine which of the putative class members were exposed to the various 25 advertisements cited in the Complaint and then to determine who among those actually relied upon 26 the representations when enrolling their students at the School. Instead, Plaintiffs fashion a 27 newfangled theory—fully divorced from the School’s alleged advertisements—and pivot exclusively 28 to a theory of concealment. Significantly, this theory directly contradicts their own FAC and the law. {3880529.DOCX:3} -1- REPLY IN SUPPORT OF DEMURRER TO COMPLAINT 1 Plaintiffs argue that omissions, not just misrepresentations, can serve as grounds for UCL 2 violations. That principle, in isolation, is not disputed. The actual issue on demurrer though is whether 3 an omission by itself, absent exposure to advertisements or similar representations, can serve as a 4 basis for a UCL claim. This Court already correctly found that it cannot. Nevertheless, Plaintiffs ask 5 the Court to disregard its Order and the case law on point by skipping the exposure requirement and 6 moving on to the materiality issue, which is not the basis of this Demurrer. Plaintiffs’ proposition that 7 uniform exposure is not required is directly contradicted by each and every case they cite on the issue. 8 Plaintiffs first rely on Collins v. eMachines (2011) 202 Cal.App.4th 249 for the notion that an 9 “omission” absent any particular advertisement could support a UCL fraud cause of action. Plaintiffs 10 go so far as to state that “Collins did not involve affirmative misrepresentations.” (Plaintiffs’ 11 Opposition (“Opp.”) p. 5:5.) This is false. The complaint in Collins alleged a uniform weintraub tobin chediak coleman grodin 12 misrepresentation, specifically that “[e]ach of the defective computers had a written warranty that 13 they were ‘free from defects in materials and workmanship under normal use for a period of [one] 14 year from the date of purchase,’” and that defendant was “representing that goods have characteristics 15 which they do not have [and] are of a particular standard or quality [and] advertising goods with the 16 intent not to sell them as advertised.” Collins at 253, 255. The “omission” of the disclosed defect law corporation 17 rendered the written warranty—that every class member received—a misrepresentation to the extent 18 it was tethered to the affirmative statements in the warranty. In short, uniform exposure to the 19 advertisement was alleged in Collins. 20 Plaintiffs’ reliance on Rutledge fails for the same reason. The Rutledge plaintiffs brought a 21 class action against HP alleging that it sold computers it knew would likely fail. Rutledge v. Hewlett- 22 Packard Co. (2015) 238 Cal. App. 4th 1164, 1168. Plaintiffs wield Rutledge to suggest there is no 23 requirement to allege common exposure to a particular advertisement. To the contrary, the plaintiffs 24 in Rutledge “point[ed] to specific misrepresentations in HP's press releases and advertising that 25 created a duty to disclose the known defects in the notebook computers.” Id. at 1176 (the plaintiffs’ 26 “claim of misrepresentation is based on statements made by HP about its products in certain press 27 releases … HP was obligated to disclose the inverter defect, because it was contrary to HP's 28 advertising”). Plaintiffs then quote the following passage from Rutledge to convince this Court that {3880529.DOCX:3} -2- REPLY IN SUPPORT OF DEMURRER TO COMPLAINT 1 an omission alone can support a UCL claim, provided it is “an omission of a fact the defendant was 2 obliged to disclose.” (Opp. at p. 4:8-10, citing Rutledge at p. 1173.) But that statement pertained 3 solely to the CLRA claim, not the UCL claim. Id. at 1173. Moreover, even if a UCL claim could be 4 based solely on the omission of a fact that a defendant was obligated to disclose, in Rutledge, the duty 5 to disclose the known defects arose solely from the fact that the defendant made “specific 6 misrepresentations in HP’s press releases and advertising” that the product was not defective—i.e. it 7 was still based on exposure to the advertisements. Id. at 1176. 8 Plaintiffs further purport to rely on Tobacco for the same debunked proposition. But, like the 9 other cases, the UCL claim in Tobacco was specifically based on a “long-term campaign of deceptive 10 advertisement and misrepresentations” about the addictive nature of nicotine in its products. In re 11 Tobacco II Cases (“Tobacco”) (2009) 46 Cal.4th 298, 324. It was not based on omissions alone as weintraub tobin chediak coleman grodin 12 Plaintiffs argue. Even more, the class in Tobacco was explicitly defined to only include those “who 13 were exposed to [d]efendants’ marketing and advertising activities in California.” Id. at 337. Uniform 14 exposure was not at issue in Tobacco because the plaintiffs had already met that threshold 15 requirement by including it in the class definition. Conversely here, Plaintiffs’ proposed class 16 purports to include anyone who paid tuition, regardless of their exposure to any advertisements. law corporation 17 In desperation, Plaintiffs go so far as to argue that the Court’s reference to Downey in the 18 Order requiring uniform exposure pertained only to a false advertising claim, which Plaintiffs contend 19 is no longer relevant since they have since dismissed their false advertising claim. (Opp. at p. 5:17- 20 18.) But this mischaracterizes the Court’s order and Downey’s holding. The Order correctly cited 21 Downey, verbatim, in its holding that where “‘plaintiffs seek to certify a class aimed solely at 22 recovering restitution under the unfair competition law or false advertising law and define the 23 members of the class as anyone who purchased the good or service to which the advertisement 24 pertains, those plaintiffs must prove that (1) the class members were exposed to the 25 advertisement, (2) the advertisement was deceptive, and (3) the deception was material.’” (Order at 26 p. 3, citing Downey v. Public Storage, Inc. (2020) 44 Cal.App.5th 1103 at 1115 (emphasis added).) 27 In the end, Plaintiffs could not find a single case where an omission by itself, untethered to a 28 commonly exposed advertisement, could support a UCL claim. This is because it cannot. Common {3880529.DOCX:3} -3- REPLY IN SUPPORT OF DEMURRER TO COMPLAINT 1 issues do not predominate and class certification is properly denied when the pleading is open to 2 “variations in how—and, critically, whether—class members were exposed to an allegedly deceptive 3 advertisement.” Downey at p. 1117, citing Stearns v. Ticketmaster Corp. (9th Cir. 2011) 655 F.3d 4 1013, 1020. Plaintiffs could not amend their complaint to establish common exposure so instead they 5 ask the Court to disregard all the law on point. 6 B. Plaintiffs Did Not Establish Standing Under the UCL Because the Putative Class Was Neither Economically nor Individually Harmed. 7 8 In order to maintain standing under the UCL since the passage of Proposition 64, the plaintiffs 9 themselves must have suffered an actual “economic injury,” limited to “lost money or property” in a 10 “concrete” and “individual way.” Kwikset Corp. v. Superior Court (2011) 51 Cal.4th 310, 322-33. 11 The economic injury cannot be “conjectural,” “hypothetical,” or “intangible”; it must affect the weintraub tobin chediak coleman grodin 12 plaintiff in a particularized and individual way. Id. 13 In Kwikset, the Supreme Court found that plaintiffs met both the “economic” and 14 “individualized” elements by alleging that defendants misrepresented that their locks were “Made in 15 U.S.A,” when they were not, because the representations were false as to each and every lock that 16 every single putative class member actually purchased. Kwikset Corp. supra, 51 Cal.4th at 332. law corporation 17 Plaintiffs argue that their theory of liability is like that in Kwikset because they purchased tuition 18 based on the School’s “omission” that it had benefits, qualities, or standards it did not have. (Opp. at 19 8:8-9.) In fact, their theory is that the putative class paid tuition for educational services for which 20 they each received the full expected benefit, but that they should be paid restitution for hypothetical 21 and intangible harm due to alleged abuse experienced by a tiny fraction of non-class members. 22 Plaintiffs' theory is the epitome of speculative and non-individual as it pleads a class of non- 23 victims who seek recovery for the theoretical non-economic harm suffered by others. To fulfill the 24 economic requirement, Plaintiffs merely argue that they paid tuition. Yet they have not articulated 25 any actual financial loss as the FAC, its conclusions aside, establishes that the class received the full 26 value of their education as the class does not include those actually harmed by Morrone. Plaintiffs’ 27 statements that they paid more in tuition than they otherwise would have, and that it kept them from 28 shopping around at other comparable schools, is precisely the type of reasoning courts deem {3880529.DOCX:3} -4- REPLY IN SUPPORT OF DEMURRER TO COMPLAINT 1 impermissibly conclusory, conjectural and hypothetical. For instance, in Bower, the plaintiffs alleged 2 that AT&T made false statements that an undisclosed fee was for “sales tax,” when it was not, and 3 that the plaintiffs were therefore denied any opportunity to “shop around” for retailers that do not 4 charge consumers this discretionary fee because they erroneously believed it was a universally 5 applicable charge required by law. supra, 196 Cal. App. 4th at 1554. The court held that such a 6 pleading was “at the most a conjectural or hypothetical injury, not an injury in fact.” Id. at 1555. 7 Plaintiffs’ conjecture that parents would not enroll their students at the School if they knew 8 what was concealed (the hypothetical injury) is directly contradicted by the facts alleged in their own 9 FAC. The FAC admits that an investigative report of all the alleged unsafe conditions/sexual 10 misconduct was summarized and “publicly-released on November 28, 2021” (FAC ¶ 44), yet the 11 School continues to operate “to the present” (FAC ¶ 102), over one-and-a-half years later, as putative weintraub tobin chediak coleman grodin 12 class members continue to pay the School the full tuition for their students at the School 13 notwithstanding the full publicly released information. This was raised in the moving papers but 14 Plaintiffs did not address it because the implications irrefutably negate their UCL claim. 15 Plaintiffs also did not address Defendant’s lengthy discussion about the non-individualized 16 nature of Plaintiffs’ UCL claim that seeks to establish a massive class of “tuition funders” to coopt law corporation 17 liability for the harm suffered by a few non-class member “young female students.” (See Demurrer 18 MPA at 11:3-12:2.) Tellingly, Plaintiffs could not cite a single case where a UCL class was permitted 19 to proceed based on the harm suffered by others. This is because Plaintiffs’ bizarre class-based 20 bystander theory of UCL liability violates Proposition 64 as it seeks to reward those who have not 21 actually been harmed and “thereby strip such unaffected parties of the ability to file ‘shakedown 22 lawsuits,’ while preserving for actual victims of deception and other acts of unfair competition the 23 ability to sue and enjoin such practices.” Kwikset Corp., 51 Cal. 4th at 317 and 334.1 24 /// 25 /// 26 1 27 Plaintiffs failed to address, and therefore conceded, Defendant’s position on demurrer that the putative class lacks superiority as to the entire FAC. Before a class action can proceed, the plaintiff must establish that class 28 treatment is superior to alternative methods, including individual litigation. Caro, supra, 18 Cal.App.4th at 654. Defendant hereby incorporates its uncontested arguments at page 12:3-19 of its MPA. {3880529.DOCX:3} -5- REPLY IN SUPPORT OF DEMURRER TO COMPLAINT 1 III. Plaintiffs Failed to Demonstrate That They Sufficiently Pleaded Causes of Action for Constructive Fraud and Fraud by Concealment. 2 3 A. Individualized Issues of Reliance and Exposure Still Predominate. 4 As indicated in the moving papers, the Court previously sustained Defendant’s demurrer as 5 to the constructive fraud and fraud-by-concealment causes of actions on the grounds that both lack 6 commonality and superiority. (Order pp. 4-5.) Specifically, the Court relied on Tucker V. Pacific 7 Benn Mobile Services, which held in granting a demurrer to a class-based fraud action, “[i]f the issue 8 of materiality or reliance, is a matter that would vary from consumer to consumer, the issue is not 9 subject to common proof, and the action is properly not certified as a class action.” (Order pp. 4-5, 10 citing Tucker, supra, 208 Cal.App.4th at 357.) The Court made clear that both Plaintiffs’ fraud-based 11 causes of action would require individualized proof of reliance and resulting damages—whether the weintraub tobin chediak coleman grodin 12 theory was ultimately based on alleged “fraud or concealment”—and that “it appears to the court, 13 based on the current definition of the class in the Complaint, that there is no reasonable possibility 14 that there are predominate questions of fact as to causes of action” for constructive fraud and fraud- 15 by-concealment. (Id. (emphasis added).) 16 In their Opposition, Plaintiffs admit that the only facts they added to their amended complaint law corporation 17 on this issue were paragraphs 73 to 75, which they claim “identify multiple instances from 2002 to 18 2020 when SA received complaints about faculty, failed to investigate, and failed to disclose 19 information to the Class or the public.” (Opp. p. 8:2-5.) But these merely restate the same allegations 20 in the original Complaint. (See e.g. Original Complaint at ¶¶ 42, 44, 49, 56, 57, 60, 64, 69 and 127 21 (the School received numerous complaints about faculty, failed to investigate, and actively concealed 22 the information from the Class and the public).) In similar fashion, since no new facts on the point 23 have been alleged, Plaintiffs then parrot the same arguments they made in their first opposition that 24 the Court already rejected. Plaintiffs restate how, in their view, Tucker does not mandate 25 individualized inquiries into reliance in every case because reliance can be inferred in the case of 26 “material misrepresentations.” (Opp. p. 8:11-15, citing Tucker, supra, 208 Cal.App.4th at 222.) But 27 Tucker made clear that “if the issue of materiality or reliance, is a matter that would vary from 28 /// {3880529.DOCX:3} -6- REPLY IN SUPPORT OF DEMURRER TO COMPLAINT 1 consumer to consumer, the issue is not subject to common proof, and the action is properly not 2 certified as a class action.” (Id.) 3 To get around this holding, Plaintiffs try to distinguish the facts of this case from Tucker in 4 the same way they unsuccessfully tried to do in their Opposition to the first demurrer—by pivoting 5 to an omission-only theory. But as already addressed in the moving papers, the FAC does not allege 6 an omission-only theory. In fact, in the FAC, Plaintiffs doubled-down on their misrepresentation 7 theory by including allegations relating to the School’s advertisements which only raise additional 8 individualized issues. In Plaintiffs’ original Complaint, the only alleged misleading advertisement 9 was on the School’s website. The FAC added how the School made misrepresentations “through 10 pamphlets, websites, statements, enrollment materials, marketing, advertisements, press releases, 11 articles, or other verbal or written material.” (FAC ¶ 16.) Given this, Plaintiffs’ representation that weintraub tobin chediak coleman grodin 12 they “made it abundantly clear in the FAC that their claims are based on a theory of omission, failure 13 to disclose and concealment by Defendant,” is contradicted by their own judicial admissions. (Opp. 14 p. 10:22-24.) Just like Tucker, the FAC is a mix of allegations “involving false representations and 15 the concealment of material facts (omissions)” that would necessitate numerous mini-trials to 16 adjudicate the issue of exposure and reliance, which would vary greatly. law corporation 17 But even if Plaintiffs’ theory was based solely on omissions, the same results would apply. 18 Constructive fraud and fraud by concealment require proof of (1) actual reliance on alleged fraudulent 19 statements and/or omissions and (2) resulting damage. CACI Nos. 1901 and 1444. “If the issue of 20 materiality or reliance, is a matter that would vary from consumer to consumer, the issue is not subject 21 to common proof, and the action is properly not certified as a class action.” Tucker, supra, 208 Cal 22 App. 4th at 357. 23 To circumvent the obligation to allege common reliance and damages, Plaintiffs erroneously 24 rely on UCL case law to extract principles that do not apply to fraud claims. As the court held in 25 Mutual Massachusetts Mutual Life Ins. Co. v. Superior Court (2002) 97 Cal.App.4th 1282, 1293: 26 [T]he 'fraud' contemplated by section 17200[] (the UCL) . . . bears little resemblance to common law 27 fraud or deception. The test is whether the public is likely to be deceived. This means that a section 28 /// {3880529.DOCX:3} -7- REPLY IN SUPPORT OF DEMURRER TO COMPLAINT 1 17200 violation, unlike common law fraud, can be shown even if no one was actually deceived, relied 2 upon the fraudulent practice, or sustained any damage. Id. at 1290 (internal citations omitted). 3 Plaintiffs cite Tobacco for the proposition that individualized proof of reliance is not required 4 where the defendant uniformly withheld information in its exclusive knowledge and control. (Opp. 5 p. 11:12-14.) But Tobacco involved a UCL claim, not a fraud claim. And as the Tobacco court itself 6 noted, “[t]he fraudulent business practice prong of the UCL has been understood to be distinct from 7 common law fraud. A common law fraudulent deception must be actually false, known to be false by 8 the perpetrator and reasonably relied upon by a victim who incurs damages. None of these elements 9 are required to state a claim for injunctive relief under the UCL.” Tobacco, supra 46 Cal.4th at 312. 10 Inversely, relief under fraud-based claims require “individualized proof of deception, reliance and 11 injury.” Id. at 320l; see also Tucker, supra 208 Cal. App. 4th at 221 (“actual reliance” must be weintraub tobin chediak coleman grodin 12 established on a class basis in a fraud action). Plaintiffs further use People v. Johnson & Johnson, 77 13 Cal. App. 5th 295, 325 (again, a UCL case—not a fraud case) to further smuggle inapplicable UCL 14 principles into their fraud claims. 15 Plaintiffs’ appeal to Vasquez is misplaced for other reasons. That case involved standardized 16 rote statements made directly to every member of the class who purchased a freezer or frozen foods. law corporation 17 Vasquez v. Superior Court (1971) 4 Cal. 3d 800, 811-812. It did not involve uniform omissions as 18 Plaintiffs suggest, so its reasoning is of little use to establish class-wide reliance on concealment only. 19 Moreover, in addition to the standardized rote statements themselves, the materiality, reliance and 20 damages in that case were obviously uniform as they involved identical representations regarding the 21 sale of identical goods directly to the class. Id. Here, materiality and any damages resulting from the 22 alleged omissions would vary greatly among the class based on numerous individualized factors, 23 including but not limited to whether the class member was independently aware of the allegations, 24 whether the class member’s student was ever in Morrone’s class, and whether they were one of the 25 few students allegedly subject to any sort of sexual misconduct. While Defendant raised all this in 26 the moving papers and in its first demurrer, Plaintiffs have yet to articulate how they can establish 27 actual reliance and injury on a class-wide basis without the need of numerous individual trials.2 28 2 In the end, Plaintiffs admit that their class definition is deficient because it seeks restitution for harm that {3880529.DOCX:3} -8- REPLY IN SUPPORT OF DEMURRER TO COMPLAINT 1 B. Plaintiffs Have Not Shown the Existence of a Fiduciary Duty to Maintain Their Constructive Fraud & Fraud by Concealment Causes of Action. 2 3 None of the five cases that Plaintiffs cite in their Opposition on this issue hold that a fiduciary 4 duty or heightened duty of care arises out of any relationship asserted against Defendant in the FAC. 5 Plaintiffs regurgitate the same arguments from their prior Opposition that this Court already rejected. 6 First, Plaintiffs cite Cleveland v. Johnson (2012) 209 Cal.App.4th 1315 for the proposition 7 that a fiduciary relationship arises when one “enters into a confidential relationship with another and 8 is founded on the confidence and trust placed by one person in the integrity and expertise of another.” 9 (Opp. p. 12:3-6.) However, Cleveland addressed the financial relationship between an investor and 10 a promotor, and says nothing about the school-parent relationships at issue here. Id. at 1339. 11 Plaintiffs cite Doe v. United States Youth Soccer Assn., Inc. (2017) 8 Cal. App. 5th 1118, weintraub tobin chediak coleman grodin 12 1128, for the unremarkable proposition that a “special relationship” exists between children and their 13 adult caregivers. It is not disputed that such a “special relationship” giving rise to a duty in negligence 14 (not fiduciary duty) can be based on a school-student and caregiver relationship. The fact that a school 15 district owes a student a duty of care in negligence law based on the existence of a “special 16 relationship” is not novel, as there are many cases that so hold. However, Defendant is not aware of law corporation 17 any authority that a school owes a fiduciary or confidential duty to a student, much less their parents. 18 Plaintiffs similarly cite Virginia G. v. ABC Unified School Dist. (1993) 15 Cal. App. 4th 1848, 19 1851-1852, for the same undisputed and irrelevant proposition that a “special relationship” is 20 recognized between a school and its students so as to impose a duty to protect students in a negligence 21 action. That case involved a negligence claim by a student who was actually sexual abused by a 22 teacher—which is not at issue in this demurrer of a fraud-based class action grounded on false- 23 advertising. Id. Plaintiffs similarly rely on Phyllis v. Superior Court (1986) 183 Cal.App.3d 1193, 24 /// 25 occurred long after the release of the Debevoise report on November 28, 2021. (Opp. at p. 11:15-16; FAC par. 26 44.) In actuality, the class period would of necessity cease a year earlier, in November of 2020, when Morrone 27 was terminated. (FAC ¶ 44(q).) Plaintiffs concede they could have easily reframed the Class to end at the correct time, but they instead ask the Court to modify the class definition for them. The Court should not do 28 for Plaintiffs what they refuse to do for their own case. Moreover, the overbroad timeline is perhaps the least significant problem with the FAC. Plaintiffs are unable to adequately amend because the defects are incurable. {3880529.DOCX:3} -9- REPLY IN SUPPORT OF DEMURRER TO COMPLAINT 1 1196-1997, and Rodriguez v. Inglewood Unified School Dist. (1986) 186 Cal.App.3d 707, 715, both 2 of which involve negligence-based causes of action. 3 A special relationship creating a duty in negligence is not equivalent to a fiduciary or 4 confidential duty, nor does the existence of a special relationship give rise to a fiduciary or 5 confidential duty. Jennifer C, 168 Cal.App.4th at 1328-29. As the court explained in Jennifer C., 6 although the school owed the special needs student a duty in negligence based upon the existence of 7 a special relationship, it did not owe “a higher duty of care with respect to such a child.” Id.