Charles Ballard v. Bhang Corporation

Central District of California, cacd-5:2019-cv-02329

SECOND AMENDED COMPLAINT All Defendants amending Amended Complaint/Petition[17], filed by plaintiff Charles Ballard

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8 Page ID #:297 Reuben D. Nathan, Esq. (SBN 208436) 1 Email: rnathan@nathanlawpractice.com NATHAN & ASSOCIATES, APC 2 2901 W Coast Hwy Ste 200 Newport Beach, CA 92663 3 Phone: (949) 270-2798 4 Ross Cornell, Esq., APC (SBN 210413) Email: rc@rosscornelllaw.com 5 5042 Wilshire Blvd. 46382 Los Angeles, CA 90036 6 Phone: (562) 612-1708 7 Attorneys for Plaintiff Charles Ballard and the Proposed Class 8 9 UNITED STATES DISTRICT COURT 10 FOR THE CENTRAL DISTRICT OF CALIFORNIA 11 12 Charles Ballard, an individual on behalf of Case No. 5:19-cv-02329-JGB-KK 13 himself and all others similarly situated and the general public, SECOND AMENDED CLASS 14 ACTION COMPLAINT 15 Plaintiff v. 16 17 Bhang Corporation; Bhang, Inc.; 18 CannaRoyalty Corp. dba Origin House; Kaya Management, Inc.; Fluid South, Inc. 19 dba Sol Distro; Jeff Droege; Shanna 20 Droege and Does 1 through 25, inclusive, Demand For Jury Trial 21 Defendants 22 23 24 25 1 26 SECOND AMENDED CLASS ACTION COMPLAINT 27 28 8 Page ID #:298 1 COMES NOW PLAINTIFF, CHARLES BALLARD, WHO HEREBY ALLEGES 2 THE FOLLOWING: 3 4 Plaintiff, CHARLES BALLARD ("Plaintiff") brings this action on behalf of 5 himself and all others similarly situated against Defendants BHANG CORPORATION, 6 BHANG, INC., CANNAROYALTY CORP. dba ORIGIN HOUSE., KAYA 7 MANAGEMENT, INC., FLUID SOUTH, INC. dba SOL DISTRO, JEFF DROEGE 8 and SHANNA DROEGE (the "Defendants"). 9 The allegations in this Complaint, stated on information and belief, have evidentiary 10 support or are likely to have evidentiary support after a reasonable opportunity for further 11 investigation and discovery. 12 13 NATURE OF ACTION 14 1. Plaintiff files this class action lawsuit on behalf of himself and all similarly 15 situated persons who were misled into purchasing Bhang Products (as defined below) due 16 to false and misleading advertising, marketing and packaging as described herein. 17 2. Plaintiff brings this action on behalf of himself and a California and 18 Nationwide proposed class of purchasers of the Bhang Products for violations of the 19 California Consumer Legal Remedies Act, the California False Advertising Law, the 20 California Unfair Competition Law, breach of express warranty, breach of the implied 21 warranty of merchantability and for fraud and negligent misrepresentation. 22 23 PARTIES 24 3. Plaintiff, Charles Ballard ("Plaintiff"), is a citizen of California, who resides in the county of Riverside. 25 2 26 SECOND AMENDED CLASS ACTION COMPLAINT 27 28 8 Page ID #:299 1 4. Plaintiff has purchased Bhang Medicinal Chocolate during the time period 2 2016 through 2018 from retail locations, including in Riverside County, Orange County 3 and Los Angeles County, and in doing so altered his position in an amount equal to the 4 amounts, including the price premiums, he paid for the Bhang Products. Plaintiff and the 5 Proposed Class would not have purchased or paid a price premium for the Bhang 6 Products had he known that the representations stated in the marketing of and on the 7 labels of the Bhang Products regarding the amounts and/or levels of THC and/or CBD 8 content were false, deceptive and/or misleading. 9 5. Plaintiff saw, read, and relied on the statements, representations, warranties 10 contained on front and back labels of the Bhang Product packaging and in marketing 11 materials regarding the quantities of THC and CBD contained within the Bhang Products 12 before purchasing the Bhang Products. Plaintiff purchased one or more of the Bhang 13 Products at a premium price and would not have made the purchases of the Bhang 14 Products had he known the statements, representations, and warranties regarding the 15 THC and/or CBD amounts and/or levels did not conform to the claims made by the 16 Defendants. 17 6. The "Bhang Products" as defined herein refers to all Bhang chocolate bars 18 sold prior to December 31, 2018, including but not limited to: Dark Chocolate, 19 Milk Chocolate, Toffee Chocolate, Pretzel Chocolate, Sugar-Free Dark Chocolate, 20 Fire Chocolate, Ice Chocolate, Cookies & Cream Chocolate, Cherries & Cream, CBD 21 Caramel Dark Chocolate, Parisian Espresso, Caramel Mocha, Dark Blueberry, Full 22 Spectrum CBD Dark Chocolate and Full Spectrum CBD Milk Chocolate (hereinafter the 23 "Bhang Products"), which are marketed, advertised, distributed and sold by the 24 Defendants in California and throughout the United States. 25 3 26 SECOND AMENDED CLASS ACTION COMPLAINT 27 28 8 Page ID #:300 1 7. Defendant, BHANG CORPORATION is Nevada corporation with 2 headquarters in Miami. 3 8. Defendant BHANG, INC., formerly known as Pele Mountain Resources, 4 Inc., is a Canadian Corporation with headquarters in Miami. 5 9. Defendants BHANG CORPORATION and BHANG, INC. are referred to 6 collectively herein as "Bhang"). Bhang is actually responsible for the wrongful 7 CBD/THC content and marketing claims regarding the Bhang Products in that Bhang 8 directly participated together with the other Defendants in formulating the Bhang 9 Products, marketing and marketing claims. Bhang participated with the Defendants in 10 the unlawful practices described herein by exercising unbridled control over formulating 11 the misleading, fraudulent and deceptive Bhang Products, marketing and marketing 12 claims described herein. 13 10. Defendant CANNAROYALTY CORP. dba ORIGIN HOUSE (hereinafter 14 "CannaRoyalty") is a Canadian Corporation with headquarters in Ontario. The term 15 "CannaRoyalty" as used herein will include all post-acquisition activities of Defendant 16 KAYA MANAGEMENT, INC. CannaRoyalty is actually responsible for the wrongful 17 CBD/THC content and marketing claims regarding the Bhang Products in that 18 CannaRoyalty directly participated together with the other Defendants in formulating the 19 Bhang Products, marketing and marketing claims. CannaRoyalty participated with the 20 Defendants in the unlawful practices described herein by exercising unbridled control 21 over formulating the misleading, fraudulent and deceptive Bhang Products, marketing 22 and marketing claims described herein. 23 11. Defendant KAYA MANAGEMENT, INC. (hereinafter "Kaya") was 24 acquired by Defendant CANNAROYALTY CORP. dba ORIGIN HOUSE in March, 2018 and prior to the acquisition was a California Corporation with headquarters in 25 4 26 SECOND AMENDED CLASS ACTION COMPLAINT 27 28 8 Page ID #:301 1 Irvine. Kaya is actually responsible for the wrongful CBD/THC content and marketing 2 claims regarding the Bhang Products in that Kaya directly participated together with the 3 other Defendants in formulating the Bhang Products, marketing and marketing claims. 4 Kaya participated with the Defendants in the unlawful practices described herein by 5 exercising unbridled control over formulating the misleading, fraudulent and deceptive 6 Bhang Products, marketing and marketing claims described herein. 7 12. Defendant FLUID SOUTH, INC. dba SOL DISTRO (hereinafter "Sol 8 Distro") is a California Corporation with headquarters in Costa Mesa. Sol Distro is 9 actually responsible for the wrongful CBD/THC content and marketing claims regarding 10 the Bhang Products in that Sol Distro directly participated together with the other 11 Defendants in formulating the Bhang Products, marketing and marketing claims. Sol 12 Distro participated with the Defendants in the unlawful practices described herein by 13 exercising unbridled control over formulating the misleading, fraudulent and deceptive 14 Bhang Products, marketing and marketing claims described herein. 15 13. Defendants JEFF DROEGE and SHANNA DROEGE (hereinafter the 16 "Droege Defendants") are residents of the State of California. The Droege Defendants 17 are actually responsible for the wrongful CBD/THC content and marketing claims 18 regarding the Bhang Products in that Droege Defendants directly participated together 19 with the other Defendants in formulating the Bhang Products, marketing and marketing 20 claims. The Droege Defendants participated with the Defendants in the unlawful 21 practices described herein by exercising unbridled control over formulating the 22 misleading, fraudulent and deceptive Bhang Products, marketing and marketing claims 23 described herein. 24 14. The Bhang Products contain the statements, representations, and warranties,, which were/are and are false, misleading, and deceptive claims and advertisements set 25 5 26 SECOND AMENDED CLASS ACTION COMPLAINT 27 28 8 Page ID #:302 1 forth on packaging, labeling and in advertisements as alleged herein. On information and 2 belief, the Bhang Products do not contain the amounts and/or levels of THC and/or CBD 3 identified on the Products' labels, packaging, and marketing materials. Independent lab 4 testing commissioned by Plaintiff of the Bhang Products reveals that the amounts and/or 5 levels of THC and/or CBD do not conform to the statements, representations, and 6 warranties set forth on the front and back labels, packaging, or marketing materials of the 7 Bhang Products. The actual amounts and/or levels of THC and/or CBD are substantially 8 less than stated on the front and back of the labels, packaging, and marketing materials by 9 Defendants. Consumers, such as Plaintiff and the proposed class purchase medicinal 10 products for the amounts and/or levels of THC and/or CBD. The amounts and/or levels 11 of THC and/or CBD are not only material, but the primary reason consumers purchase 12 THC and/or CBD products such as Bhang Products. But for the false statements, 13 representations, and warranties contained on the Bhang Products' front and back labels, 14 packaging, and marketing materials. Sample picture of the statements, representations, 15 and warranties contained on the Bhang Products are set forth below: 16 17 18 19 20 21 22 23 24 25 6 26 SECOND AMENDED CLASS ACTION COMPLAINT 27 28 8 Page ID #:303 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 15. The true names and capacities, whether individual, corporate, associate or 16 otherwise of each of the Defendants designated herein as a DOE are unknown to Plaintiff 17 at this time, who therefore, sue said Defendants by fictitious names, and will ask leave of 18 this Court for permission to amend this Complaint to show their names and capacities 19 when the same have been ascertained. 20 16. Plaintiff is informed and believes and thereon alleges that each of the 21 Defendants, including each Defendant designated as a DOE, is legally responsible in some 22 manner for the events and happenings herein referred to, and caused injuries and damages 23 thereby to these Plaintiffs as alleged herein. 24 25 7 26 SECOND AMENDED CLASS ACTION COMPLAINT 27 28 8 Page ID #:304 1 2 ALTER EGO ALLEGATIONS 3 17. Plaintiff is informed and believes and thereon alleges that the Defendants 4 herein, including but not limited to Bhang Corporation and Bhang, Inc., CannaRoyalty 5 Corp. dba Origina House and Kaya Management, Inc., Fluid South, Inc. dba Sol Distro and 6 the Droege Defendants, and the DOES were at all times herein the alter ego ("ALTER 7 EGO") of each other, and each of them, by reason of the following: 8 (a) Plaintiff is informed and believes and thereon alleges that each defendant at 9 all times herein created, dominated, influenced and controlled each ALTER EGO and the 10 officers thereof as well as the business, property, assets, accounts and affairs of each 11 ALTER EGO. 12 (b) Plaintiff is informed and believes and thereon alleges that at all times 13 herein mentioned there existed and now exists a unity of interest and ownership between 14 each defendants and each ALTER EGO such that legal separateness of and individual 15 governance of the ALTER EGOS never truly existed and/or has ceased. 16 (c) Plaintiff is informed and believes and thereon alleges that at all times 17 since the incorporation of each ALTER EGO, each ALTER EGO has been and now is a 18 mere shell and naked framework which the individual defendants used as a conduit for the 19 conduct of their personal business, property and affairs. 20 (d) Plaintiff is informed and believes and thereon alleges that, at all times 21 herein, each ALTER EGO was created for and continued pursuant to a fraudulent plan, 22 scheme and device conceived and operated by the individual defendants whereby the 23 property, income, revenue and profits of each ALTER EGO was diverted by the individual 24 defendants for their own personal benefit. (e) Plaintiff is informed and believes and thereon alleges that, at all times 25 8 26 SECOND AMENDED CLASS ACTION COMPLAINT 27 28 8 Page ID #:305 1 herein mentioned, each ALTER EGO was organized by the individual defendants as a 2 device to avoid individual liability and for the purpose of substituting financially 3 irresponsible sham entities in the place and stead of said individual defendants, and each 4 of them, and accordingly, each ALTER EGO was formed with capitalization inadequate 5 for the business in which each ALTER EGO was supposedly engaged. 6 (f) Plaintiff is informed and believes and thereon alleges that each ALTER EGO 7 is insolvent. 8 (g) By virtue of the foregoing, adherence to the fiction of the separate 9 corporate existence of each ALTER EGO would, under the circumstances, sanction a fraud 10 and promote injustice in that Plaintiff would be unable to realize upon any judgment in his 11 favor. 12 18. Plaintiff is informed and believe and thereon alleges that, at all times relevant 13 hereto, the Defendants and the ALTER EGOS acted for each other in connection with the 14 conduct hereinafter alleged and that each of them performed the acts complained of herein 15 or breached the duties herein complained of as agents of each other and each is therefore 16 fully liable for the acts of the other. Hereinafter, references to the "Defendants" shall 17 include each ALTER EGO. 18 19. On information and belief, Plaintiff alleges that at all times herein mentioned, 19 each of the Defendants was acting as the agent, servant or employee of the other Defendants 20 and that during the times and places of the incident in question, Defendants and each of 21 their agents, servants, and employees became liable to Plaintiff and class members for the 22 reasons described in the complaint herein, and thereby proximately caused Plaintiff to 23 sustain damages as set forth herein. 24 20. On information and belief, Plaintiff alleges that Defendants carried out a joint scheme with a common business plan and policies in all respects pertinent hereto and that 25 9 26 SECOND AMENDED CLASS ACTION COMPLAINT 27 28 8 Page ID #:306 1 all acts and omissions herein complained of were performed in knowing cooperation with 2 each other. 3 21. On information and belief, Plaintiff alleges that the shareholders, executive 4 officers, managers, and supervisors of the Defendants directed, authorized, ratified and/or 5 participated in the actions, omissions and other conduct that gives rise to the claims asserted 6 herein. Defendants' officers, directors, and high-level employees caused the Bhang 7 Products to be sold with knowledge or reckless disregard that the statements and 8 representations concerning the Bhang Products were false and misleading. 9 22. Plaintiff is informed and believes, and thereon alleges, that each of the 10 Defendants is in some manner intentionally, negligently, or otherwise responsible for the 11 acts, omissions, occurrences, and transactions alleged herein. 12 13 JURISDICTION AND VENUE 14 23. This Court has subject matter jurisdiction according to 28 U.S.C. § 1332(d), 15 because this case is a class action where the aggregate claims of all members of the 16 proposed class are in excess of $5,000,000.00, exclusive of interest and costs and most 17 members of the proposed class are citizens of states different from Defendant. This 18 Court also has supplemental jurisdiction over state law claims pursuant to 28 U.S.C. § 19 1367. 20 24. Plaintiff is a citizen of California and this Court has personal jurisdiction 21 over Defendant because Defendant conducts business in California and otherwise 22 intentionally avail itself of the markets in California so as to render the exercise of 23 jurisdiction by this Court proper. Defendant have marketed, promoted, distributed, and 24 sold the Bhang Products in California and in this District. 25 10 26 SECOND AMENDED CLASS ACTION COMPLAINT 27 28 8 Page ID #:307 1 25. Pursuant to 28 U.S.C. §1391(b), this Court is the proper venue since the 2 Defendant are subject to personal jurisdiction in this district and a substantial part of the 3 events or omissions giving rise to the claims occurred in this district. 4 5 PRIVATE ATTORNEYS GENERAL ALLEGATIONS 6 26. In addition to asserting class claims, Plaintiffs assert claims on behalf of 7 class members pursuant to California Business & Professions Code § 17200, et seq. The 8 purpose of such claims is to obtain injunctive orders regarding the false labeling, 9 deceptive marketing and consistent pattern and practice of falsely promoting natural 10 claims and the disgorgement of all profits and/or restoration of monies wrongfully 11 obtained through the Defendant' pattern of unfair and deceptive business practices as 12 alleged herein. This private attorneys general action is necessary and appropriate because 13 Defendant have engaged in wrongful acts described herein as part of the regular practice 14 of its business. 15 16 CLASS ACTION ALLEGATIONS 17 27. Plaintiff brings this action on his own behalf and on behalf of all other 18 persons similarly situated pursuant to Federal Rule of Civil Procedure 23. 19 28. Plaintiff seeks to represent the following Nationwide Class and California 20 Class (hereinafter collectively the "Classes"): 21 All persons residing in the United States who purchased the Bhang Products 22 for personal use and not for resale during the time period December 4, 2014 23 through December 31, 2018 (the "Nationwide Class"). 24 All persons residing in the State of California who purchased the Bhang Products primarily for personal, family or household purposes and not for 25 11 26 SECOND AMENDED CLASS ACTION COMPLAINT 27 28 8 Page ID #:308 1 resale during the time period December 4, 2014 through December 31, 2018 (the "California Class"). 2 29. The Classes comprise many thousands of persons throughout the United 3 States and California, the joinder of whom is impracticable, and the disposition of their 4 claims in a class action will benefit the parties and the Court. The Classes are sufficiently 5 numerous because on information and belief, thousands to hundreds of thousands of units 6 of the Bhang Products have been sold in the United States and State of California during 7 the time period December 4, 2014 through December 31, 2018 (the "Class Period"). 8 30. There is a well-defined community of interest in this litigation and the 9 10 Classes are easily ascertainable: a. Numerosity: The members of the Classes are so numerous that any form of 11 12 joinder of all members would be unfeasible and impractical. On information 13 and belief, Plaintiff believes the size of the Classes exceed thousands of 14 members. 15 b. Typicality: Plaintiff is qualified to and will fairly and adequately protects the 16 interests of each member of the Classes with whom he has a well-defined 17 community of interest and the claims (or defenses, if any), are typical of all 18 members of the Classes. 19 c. Adequacy: Plaintiff does not have a conflict with the Classes and is qualified to 20 and will fairly and adequately protect the interests of each member of the 21 Classes with whom he has a well- defined community of interest and typicality 22 of claims, as alleged herein. Plaintiff acknowledges that he has an obligation to 23 the Court to make known any relationship, conflict, or difference with any 24 putative class member. Plaintiff's attorneys and proposed class counsel are well versed in the rules governing class action and complex litigation regarding 25 discovery, certification, and settlement. 12 26 SECOND AMENDED CLASS ACTION COMPLAINT 27 28 8 Page ID #:309 1 d. Superiority: The nature of this action makes the use of class action adjudication 2 superior to other methods. Class action will achieve economies of time, effort, 3 and expense as compared with separate lawsuits, and will avoid inconsistent 4 outcomes because the same issues can be adjudicated in the same manner and at 5 the same time for the entire class. 6 31. There exist common questions of law and fact that predominate over 7 questions that may affect individual class members. Common questions of law and fact 8 include, but are not limited to, the following: 9 a. Whether Defendants' conduct is a fraudulent business act or practice within 10 the meaning of Business and Professions Code section 17200, et seq.; 11 b. Whether Defendants' advertising is untrue or misleading within the meaning 12 of Business and Professions Code section 17500, et seq.; 13 c. Whether Defendants made false and misleading representations in the 14 advertising and/or packaging of the Bhang Products; 15 d. Whether or not Defendants website contains misleading statements or 16 representations; 17 e. Whether Defendants knew or should have known that its THC content 18 and/or CBD content claims on the Bhang Products were false; 19 f. Whether Defendants represented that the Bhang Products have 20 characteristics, benefits, uses, or quantities which they do not have; 21 g. Whether Defendants representations regarding the Bhang Products are false; 22 h. Whether the Defendants breached warranties regarding the Bhang Products; 23 i. Whether the Defendants committed statutory and common law fraud; and 24 25 13 26 SECOND AMENDED CLASS ACTION COMPLAINT 27 28 8 Page ID #:310 1 j. Whether Defendants' conduct as alleged herein constitutes an unlawful 2 business act or practice within the meaning of Business and Professions 3 Code section 17200, et seq.; 4 k. Whether the Claims deceived Plaintiff and the Classes, who reasonably 5 relied on them in making their purchase decisions. 6 32. Plaintiff's claims are typical of the claims of the Classes, and Plaintiff will 7 fairly and adequately represent and protect the interests of the Classes. Plaintiff has 8 retained competent and experienced counsel in class action and other complex litigation. 9 33. Plaintiff and the Classes have suffered injury in fact and have lost money as 10 a result of Defendants' false representations. Indeed, Plaintiff purchased the Bhang 11 Products under the belief that they contained at least the amount of THC and/or CBD 12 identified thereon and in marketing materials. Plaintiff relied on Defendants' packaging, 13 labeling, marketing and website and would not have purchased the Bhang Products or 14 paid a premium for them if he had known that they did not have the characteristics, 15 ingredients, uses, benefits, or quantities as represented vis-à-vis the Claims. 16 34. The Defendants' misrepresentations regarding the statements and 17 representations related to the Bhang Products were material insofar as the primary 18 motivating factor for purchasing the Bhang Products was the THC and/or CBD content. 19 By advertising and marketing that the Bhang Products contain higher levels of THC 20 and/or CBD than they really have, Defendants gain an unfair advantage over their 21 competition and mislead consumers. 22 35. A class action is superior to other available methods for fair and efficient 23 adjudication of this controversy. The expense and burden of individual litigation would 24 make it impracticable or impossible for class members to prosecute their claims individually. 25 14 26 SECOND AMENDED CLASS ACTION COMPLAINT 27 28 8 Page ID #:311 1 36. The trial and litigation of Plaintiff's claims are manageable. Individual 2 litigation of the legal and factual issues raised by Defendant's' conduct would increase 3 delay and expense to all parties and the court system. The class action device presents far 4 fewer management difficulties and provides the benefits of a single, uniform 5 adjudication, economies of scale, and comprehensive supervision by a single court. 6 37. Defendant acted on grounds generally applicable to the Classes as a whole, 7 thereby making final injunctive relief and/or corresponding declaratory relief appropriate 8 with respect to the Classes as a whole. The prosecution of separate actions by individual 9 class members would create the risk of inconsistent or varying adjudications with respect 10 to individual members of the Classes that would establish incompatible standards of 11 conduct for the Defendants. 12 38. Absent a class action, Defendant is likely to retain the benefits of its 13 wrongdoing. Because of the small size of the individual class members' claims, few, if 14 any, class members could afford to seek legal redress for the wrongs complained of 15 herein. Absent a representative action, the class members will continue to suffer losses 16 and Defendant will be allowed to continue these violations of law and to retain the 17 proceeds of their ill-gotten gains. 18 39. Excluded from the class is the Defendant in this action, any entity in which 19 Defendant has a controlling interest, including, but not limited to officers, directors, 20 shareholders, current employees and any and all legal representatives, heirs, successors, 21 and assigns of the Defendant. 22 40. Were if not for this class action, most class members would find the cost 23 associated with litigating claims extremely prohibitive, which would result in no remedy. 24 25 15 26 SECOND AMENDED CLASS ACTION COMPLAINT 27 28 8 Page ID #:312 1 41. This class action would serve to preserve judicial resources, the respective 2 parties' resources, and present fewer issues with the overall management of claims, while 3 at the same time ensuring a consistent result as to each class member. 4 5 FIRST CAUSE OF ACTION Violations of California Civil Code § 1750, et seq. 6 By Plaintiff and the Proposed California Class against Defendants 7 42. Plaintiff hereby incorporates by reference the allegations contained in all 8 preceding paragraphs of this complaint. 9 43. Plaintiff and the California Class are "consumers" as defined by Cal. Civ. 10 Code § 1761(d) and the Bhang Products are each a "good" as defined by Cal. Civ. Code § 11 1761(a). 12 44. The California Consumers Legal Remedies Act, Cal. Civ. Code § 13 1770(a)(5), expressly prohibits "[r]epresenting that goods or services have sponsorship, 14 approval, characteristics, ingredients, uses, benefits, or quantities which they do not have 15 or that a person has a sponsorship, approval, status, affiliation, or connection which he or 16 she does not have." Defendants' claims and representations regarding the Bhang 17 Products' supposed THC and/or CBD content are false and are likely to deceive the 18 reasonable consumer in that the Bhang Products contain substantially less than the 19 amount of THC and/or CBD represented by Defendants. Bhang's use of the Claims on 20 the Bhang Products and in marketing materials violates Cal.Civil Code § 1770(a)(5) 21 insofar as the claims constitute representations that the Bhang Products have 22 characteristics, ingredients, uses or benefits which they do not have (they contain less 23 than the THC and/or CBD claimed). 24 45. Defendants use of the Claims also violates Cal. Civil Code § 1770(a)(7) because the they constitute representations that the Bhang Products are of a particular 25 16 26 SECOND AMENDED CLASS ACTION COMPLAINT 27 28 8 Page ID #:313 1 standard, quality, or grade when in fact they are of another (they contain less than the 2 THC and/or CBD claimed). Accordingly, it is evident that Bhang had no intention of 3 selling the Bhang Products as advertised, in violation of Cal. Civil Code § 1770(a)(9), 4 and that Defendants violated Cal Civil Code § 1770(a)(16), which expressly prohibits 5 "[r]epresenting that the subject of a transaction has been supplied in accordance with a 6 previous representation when it has not." Defendants violated § 1770(a)(16) insofar as 7 Bhang represented that Plaintiff and similarly situated consumers have been provided 8 with Bhang Products containing the cannabinoid content claimed when they have not. 9 46. Plaintiff and the proposed California Class of California class members 10 suffered injuries caused by Defendants because they would not have purchased the Bhang 11 Products if the true facts were known concerning the Defendants' false and misleading 12 Claims regarding THC and CBD content. 13 47. At least thirty days prior to filing this action, a pre-filing notice letter was 14 served on each Defendant via certified U.S. mail, return receipt requested, advising the 15 Defendants that they are in violation of the CLRA and demanding remedies for Plaintiff 16 and class members in accordance with Cal. Civ. Code 1782(a). Defendants denied 17 liability, did not cure the deficiencies alleged in Plaintiff's CLRA demand letter and/or 18 did not respond within the statutory time period. 19 48. Plaintiff seeks injunctive relief and damages and reasonable attorney's fees 20 for this violation of the CLRA on behalf of himself and class members. In compliance 21 with Cal. Civ. Code 1782(d), Plaintiff has executed the affidavit of venue attached hereto 22 and filed concurrently herewith. 23 24 25 17 26 SECOND AMENDED CLASS ACTION COMPLAINT 27 28 8 Page ID #:314 1 SECOND CAUSE OF ACTION Violations of California Business & Professions Code §§17500, et seq. 2 By Plaintiff and the Proposed California Class against Defendants 3 49. Plaintiff hereby incorporates by reference the allegations contained in all 4 preceding paragraphs of this complaint. 5 50. Pursuant to Cal. Bus. & Prof. Code §§ 17500, et seq., it is "unlawful for any 6 person to make or disseminate or cause to be made or disseminated before the public in 7 this state, ... in any advertising device ... or in any other manner or means whatever, 8 including over the Internet, any statement, concerning ... personal property or services, 9 professional or otherwise, or performance or disposition thereof, which is untrue or 10 misleading and which is known, or which by the exercise of reasonable care should be 11 known, to be untrue or misleading." 12 51. Defendants committed acts of false advertising, as defined by §17500, by 13 making statements and representations regarding the Bhang Products because those 14 claims are false and misleading. 15 52. Because Defendants knew or should have known through the exercise of 16 reasonable care that the THC and/or CBD content Claims regarding the Bhang Products 17 were false, untrue and misleading to Plaintiff and class members. 18 53. Defendants' actions in violation of § 17500 were false and misleading such 19 that the Plaintiff, the Proposed California Class and the general public are and were likely 20 to be deceived. 21 54. Plaintiff and the Proposed California Class lost money or property as a result 22 of Defendants' false advertising violations, because they would not have purchased or 23 paid a premium for the Bhang Products if they had not been deceived by the false and 24 misleading statements and representations regarding the THC and/or CBD Claims. 25 18 26 SECOND AMENDED CLASS ACTION COMPLAINT 27 28 8 Page ID #:315 1 55. Plaintiff and the Proposed California Class paid a premium for the Bhang 2 Products due to their reliance on the Claims and on the Defendant's reputation. 3 4 THIRD CAUSE OF ACTION For Breach of Express Warranty 5 Violations of Cal. Com. Code § 2313(1) 6 By Plaintiff Againstt Defendants 7 By Plaintiff and the Proposed California Class against the Defendants 8 9 56. Plaintiff hereby incorporates by reference the allegations contained in all 10 preceding paragraphs of this complaint. 11 57. Defendants made representations, promises and/or affirmations of fact 12 constituting express warranties regarding the claims which are/were contained on the 13 Bhang Products. Defendants' statements, representations, and/or warranties regarding the 14 Claims formed a basis of the bargain on which the Plaintiff and the Proposed California 15 Class relied on in deciding to purchase and actually purchasing the Bhang Products. The 16 warranties failed to comply with the affirmation that the Bhang Products contained the 17 quantity of THC and/or CBD claimed. 18 58. The Defendant breached the express warranties by selling the Bhang 19 Products in contravention of the express warranties insofar as the Bhang Products are do 20 not contain at least the claimed quantities of THC and/or CBD. 21 59. Defendants' breach of the express warranties were the actual and proximate 22 cause of damage to the Plaintiff and the Proposed California Class including, inter alia, 23 the loss of the purchase prices and/or the payment of a price premium in connection with 24 their purchase of the Bhang Products. 25 19 26 SECOND AMENDED CLASS ACTION COMPLAINT 27 28 8 Page ID #:316 1 60. Plaintiff provided written notice of breach to the Defendants, who failed to 2 adequately respond or remedy the breach. 3 61. Accordingly, Plaintiff and the Proposed California Class seek actual 4 damages arising from the Defendants' breach of express warranty. 5 6 FOURTH CAUSE OF ACTION For Fraud 7 By Plaintiff and Proposed Nationwide Class against Defendants 8 9 62. Plaintiff hereby incorporates by reference the allegations contained in all 10 preceding paragraphs of this complaint. 11 63. Plaintiff brings this claim individually and on behalf of the Proposed Class 12 against Defendants. At all times in purchasing Bhang Products, Plaintiff and class 13 members believed prior to making purchase that they were purchasing Bhang Products 14 that contained certain amount and/or levels of THC and/or CBD as set forth on the label, 15 packaging, and/or marketing materials of Defendants. From at least 2014 through 2018, 16 Plaintiff saw and read labels and packaging prominently displayed on the Bhang Products 17 at stores located in California, including the THC and/or CBD content claims on which 18 Plaintiff relied on in deciding to purchase the Bhang Products. Plaintiff and class 19 members read and relied on the claims made on the labels and packaging of the Bhang 20 Products and paid a premium as a result of Defendant's statements, representations, 21 and/or warranties. 22 64. As discussed above, Defendants provided Plaintiff and Class members with 23 false or misleading material information in connection with the claims contained on the 24 labeling and packaging of the Bhang Products. Plaintiff and class members relied on Defendants' statements, representations, and warranties prior to making the decision to 25 20 26 SECOND AMENDED CLASS ACTION COMPLAINT 27 28 8 Page ID #:317 1 purchase the Bhang Products. Defendants misrepresented and/or failed to disclose 2 material facts to Plaintiff and class members about the Bhang Products do not contain the 3 amount of THC and/or CBD claimed. 4 65. The Defendants' misrepresentations and omissions regarding the claims 5 were made with knowledge of the falsehood thereof or in conscious disregard of the 6 likelihood of their falsehood. 7 66. The misrepresentations and/or omissions made by Defendants, upon which 8 Plaintiff and Class members reasonably and justifiably relied, were intended to induce 9 and actually induced Plaintiff and the Proposed Class members to purchase the Bhang 10 Products. 11 67. The fraudulent actions of Defendants caused damage to Plaintiff and the 12 Proposed Class members, who are entitled to damages, punitive damages, and other legal 13 and equitable relief as a result. 14 15 FIFTH CAUSE OF ACTION For Negligent Misrepresentation 16 By Plaintiff and Proposed Nationwide Class against Defendants 17 18 68. Plaintiff hereby incorporates by reference the allegations contained in all 19 preceding paragraphs of this complaint. 20 69. Plaintiff brings this claim individually and on behalf of the Proposed Class 21 against Defendants. At all times in purchasing Bhang Products, Plaintiff and class 22 members believed prior to making purchase that they were purchasing products that 23 contained the THC and/or CBD amounts and/or levels claimed as a result of Defendant's 24 product labeling, packaging, and advertising. Plaintiff and class members read 25 21 26 SECOND AMENDED CLASS ACTION COMPLAINT 27 28 8 Page ID #:318 1 Defendant's labeling on the Bhang Products and paid a premium as a result of 2 Defendant's Claims, statements, representations, and/or warranties. 3 70. Defendants misrepresented the nature, quality and ingredients of the Bhang 4 Products. Defendants had a duty to disclose this information. 5 71. At the time Defendants made the false claims, Defendants knew or should 6 have known that these statements, representations, and warranties were false or made 7 them without knowledge of their truth or veracity. 8 72. Defendants negligently misrepresented and omitted material facts about the 9 Bhang Products, in that they do not contain the amount of THC and/or CBD claimed, and 10 the Proposed Class relied upon the negligent statements or omissions and were deceived 11 and induced into purchasing the Bhang Products. 12 73. The negligent misrepresentations and/or omissions made by Defendants, 13 upon which Plaintiff and the Proposed Class members reasonably and justifiably relied, 14 were intended to induce and actually induced Plaintiff and the Proposed Class members 15 to purchase the Bhang Products. The THC and/or CBD content claims were material to 16 the Plaintiff, the proposed class, and any reasonable consumer who purchase Bhang 17 Products for their THC and/or CBD content. 18 74. Plaintiff and Class members would not have purchased the Bhang Products 19 and/or would not have paid a price premium therefore, if the true facts had been known to 20 them regarding the falsity of Defendants' statements, representations, and warranties. 21 75. The negligent actions of Defendants caused damage to Plaintiff and the 22 Proposed Class members, who are entitled to damages and other legal and equitable relief 23 as a result. 24 25 22 26 SECOND AMENDED CLASS ACTION COMPLAINT 27 28 8 Page ID #:319 1 SIXTH CAUSE OF ACTION For Violation Cal. Bus. & Prof. Code § 17200, et seq. 2 By Plaintiff and Proposed California Class against Defendants 3 4 76. Plaintiff hereby incorporates by reference the allegations contained in all 5 preceding paragraphs of this complaint. 6 77. Plaintiff brings this claim individually and on behalf of the proposed 7 California Class against Defendants. 8 78. Defendants are subject to California's Unfair Competition Law, Cal. Bus. & 9 Prof. Code §§ 17200, et seq. (the "UCL"). The UCL provides, in pertinent part: "Unfair 10 competition shall mean and include unlawful, unfair or fraudulent business practices and 11 unfair, deceptive, untrue or misleading advertising …." 12 79. Defendants know and have known that the amounts and/or levels of THC 13 and/or CBD are false, deceptive and misleading to a reasonable consumer, including 14 Plaintiff and the Class members. 15 80. The foregoing acts and omissions by the Defendants constitute unfair, 16 fraudulent business acts or practices and false advertising. 17 81. As alleged hereinabove, the false, deceptive and misleading claims by the 18 Defendants are and were likely to deceive the Plaintiff, the Proposed Class members, 19 reasonable consumers and members of the general public and are therefore "fraudulent" 20 within the meaning of the UCL. 21 82. The foregoing violations of the Consumer Legal Remedies Act, the False 22 Advertising Law and the California Commercial Code constitute "unlawful" business 23 practices within the meaning of the UCL. 24 83. Defendants' misrepresentations and other conduct, described herein, violated the "unfair" prong of the UCL in that its conduct is substantially injurious to consumers, 25 23 26 SECOND AMENDED CLASS ACTION COMPLAINT 27 28 8 Page ID #:320 1 offends public policy, and is immoral, unethical, oppressive, and unscrupulous, as the 2 gravity of the conduct outweighs any alleged benefits. The harm is substantial given the 3 fact consumers are misled as to the nature of the Bhang Products and the THC and/or CB 4 content claims. Plaintiff and the Proposed California Class members have thereby been 5 deceived and misled into unfairly paying premium prices. 6 84. Defendants had specific knowledge that its natural claims are false and 7 misleading, but continued to market the Bhang Products with the intent of making 8 substantial profits based on the unfair, fraudulent, deceptive practices alleged herein. 9 85. The Defendants' conduct is also unfair given the huge profits derived from 10 the sale of the Bhang Products at the expense of consumers as a result of the false and 11 misleading Claims. 12 86. Defendants violated the "fraudulent" prong of the UCL by making false 13 statements, untruths, and misrepresentations about the Bhang Products vis-à-vis the 14 Claims which are/were likely to deceive the Plaintiff, the Proposed California Class 15 members, reasonable consumers and the general public. 16 87. Plaintiff, the Class, and the California Class members lost money or property 17 as a result of Defendants' UCL violations because they would not have purchased the 18 Bhang Products, would not have purchased the amount of Bhang Products they 19 purchased, and/or would not have paid the premium price they paid for the Bhang 20 Products if the true facts were known concerning the false and misleading statements set 21 forth in the Claims. 22 88. Defendant's business practices, as detailed above, are unethical, oppressive 23 and unscrupulous, and they violate fundamental policies of this state. Further, any 24 justification for Defendants' wrongful conduct is outweighed by the adverse effects of such conduct. 25 24 26 SECOND AMENDED CLASS ACTION COMPLAINT 27 28 8 Page ID #:321 1 89. Pursuant to California Civil Code § l780(a)(2), Plaintiffs, on behalf of 2 themselves and the Class, requests that this Court enjoin Defendants from continuing to 3 engage in the unlawful and deceptive methods, acts and practices alleged above. Unless 4 Defendants is permanently enjoined from continuing to engage in such violations of the 5 CLRA, future consumers will be damaged by its acts and practices in the same way as 6 have Plaintiff and the members of the proposed Class. Plaintiffs also requests that this 7 Court order a backward-reaching injunction in order to remedy the past effects of the 8 unfair conduct alleged herein. 9 90. Plaintiff and the California Class members could not reasonably avoid the 10 harm caused by Defendant's wrongful practices. Assuming, arguendo, that Defendants' 11 practices are/were not express violations of the laws set forth above, those practices fall 12 within the penumbra of such laws and a finding of unfairness can properly be tethered to 13 the public policies expressed therein. Thus, Defendants engaged in unfair business 14 practices prohibited by California Business & Professions Code § 17200 et seq. 15 92. Plaintiff, the Class, and the California Class members are entitled to 16 restitution and injunctive relief. 17 18 PRAYER FOR RELIEF 19 WHEREFORE, Plaintiff, individually and on behalf of all others similarly situated, 20 seeks judgment against Defendant, as follows: 21 a. For an order certifying the nationwide Class and the California Class under 22 Rule 23 of the Federal Rules of Civil Procedure; 23 b. For an order certifying Plaintiff as the representative of the Class and 24 California Class and Plaintiff's attorneys as Class Counsel to represent members of the Class and California Class; 25 25 26 SECOND AMENDED CLASS ACTION COMPLAINT 27 28 8 Page ID #:322 1 c. For an order declaring the Defendants' conduct violates the statutes and laws 2 referenced herein; 3 d. For a permanent injunction restraining and enjoining Bhang and its agents, 4 servants, and employees, and all persons acting under, in concert with, or for 5 it from making, disseminating, or causing to be made or disseminated before 6 the public in this state, in any advertising device, any statement 7 concerning products offered for sale that are untrue or misleading, and that 8 are known, or by the exercise of reasonable care should be known, to be 9 untrue or misleading. 10 e. For an order enjoining Bhang from continuing to engage in the unlawful and 11 unfair business acts and practices as alleged herein; 12 f. For an order awarding Plaintiffs and the members of the Class actual 13 damages, restitution, and/or disgorgement and/or for any other fashioned 14 remedy appropriate, legal and equitable under the circumstances; 15 g. For an order to correct, destroy, and change all false and misleading labeling 16 terms relating to Defendants' statements and representations; 17 h. For an order finding in favor of Plaintiff, the Class and the California Class 18 on all counts asserted herein; 19 i. For compensatory and punitive damages in amounts to be determined; 20 j. For prejudgment interest on all amounts awarded; 21 k. For injunctive relief as pleaded or as the Court may deem proper; and 22 l. For an order awarding Plaintiff, the Class, and the California Class their 23 reasonable attorneys' fees and expenses and costs of suit. 24 25 26 26 SECOND AMENDED CLASS ACTION COMPLAINT 27 28 8 Page ID #:323 1 DEMAND FOR TRIAL BY JURY 2 Plaintiff demands a trial by jury of all issues so triable. 3 Respectfully submitted 4 5 Dated: August 3, 2020 LAW OFFICES OF ROSS CORNELL, APC 6 By: /s/ Ross Cornell 7 Ross Cornell, Esq. 8 Attorneys for Plaintiff, CHARLES BALLARD 9 and the Proposed Classes 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 27 26 SECOND AMENDED CLASS ACTION COMPLAINT 27 28 DocuSign Envelope ID: 2FD8C5FC-E8EC-428E-BF13-EB66B3B730AE 8 Page ID #:324 EXHIBIT A California CLRA Declaration I, CHARLES BALLARD, hereby declare that: 1. I am over the age of eighteen, I have personal knowledge of the facts stated in this declaration, and if called upon to do so I could and would competently testify in conformity herewith. 2. I am the named Plaintiff in this case and have asserted a Consumer Legal Remedies Act claim herein. 3. I purchased one or more of the Bhang Products identified in paragraph 6 of the Second Amended Complaint in Riverside County, California. 4. I am a resident of Riverside County, California. I hereby declare under penalty of perjury under the laws of the United States 8/2/2020 that the foregoing is true and correct. Executed on in Riverside, California. Charles Ballard