Trax v. Prize Candle - Opposition To Motion To Dismiss PDF

Case 3:15-cv-01563-CAB-KSC Document 14 Filed 12/29/15 Page 1 of 21
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KAZEROUNI LAW GROUP, APC

Abbas Kazerounian, Esq. (SBN: 249203)
ak@kazlg.com
Mohammad Kazerouni, Esq. (SBN: 252835)
mike@kazlg.com
Mona Amini, Esq. (SBN: 296829)
mona@kazlg.com
245 Fischer Avenue, Unit D1
Costa Mesa, CA 92626
Telephone: (800) 400-6808
Facsimile: (800) 520-5523
[ADDITIONAL COUNSEL ON SIGNATURE PAGE]
Attorneys for Plaintiff,
Thomas Trax
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF CALIFORNIA
K AZERO UNI LAW G RO UP, APC

24 5 F ISCHE R A VENUE , S UITE D1
C OS TA M ES A , CA 92 62 6
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THOMAS TRAX;
INDIVIDUALLY AND ON
BEHALF OF ALL OTHERS
SIMILARLY SITUATED,
Plaintiff,
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v.
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PRIZE CANDLE, LLC,
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Defendant.
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Case No.: 3:15-cv-01563-CAB-KSC

PLAINTIFFS MEMORANDUM OF
POINTS AND AUTHORITIES IN
OPPOSITION TO DEFENDANT
PRIZE CANDLE, LLCS MOTION
TO DISMISS
Without Oral Argument
Per Courts Order [ECF. No. 11]
Judge: Hon. Cathy Ann Bencivengo
Date Filed: July 15, 2015
FAC Filed: October 22, 2015
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///
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PLAINTIFFS MEMORANDUM OF POINTS AND AUTHORITIES IN OPPOSITION TO DEFENDANT
PRIZE CANDLE LLCS MOTION TO DISMISS
TABLE OF CONTENTS
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I.
INTRODUCTION.................................................................................... 1
II.
STATEMENT OF FACTS ...................................................................... 3
III.
LEGAL STANDARD............................................................................... 5
IV.
ARGUMENT ............................................................................................ 6
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A. PRIZE CANDLE OPERATES AN ILLEGAL LOTTERY ........................... 6

B.
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Costa Mesa, California
Kazerouni Law Group, APC
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1) Prize Candles Website Fails to Offer an

Alternative Means of Entry ........................................................ 10
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2) Prize Candles Website Emphasizes the

Lottery Aspect of its Business .................................................... 11
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C. PLAINTIFF HAS STANDING TO ASSERT UCL

AND CLRA CLAIMS ......................................................................... 13
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D. NEGLIGENCE PER SE ....................................................................... 14
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PRIZE CANDLES WEBSITE DOES NOT OFFER A

LEGITIMATE ALTERNATIVE MEANS OF ENTRY TO
WIN A PRIZE AND EMPHASIZES THE LOTTERY
ASPECT OF PRIZE CANDLES BUSINESS........................................... 10
V.
ALTERNATIVE LEAVE TO AMEND............................................... 15
VI.
CONCLUSION ...................................................................................... 15
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TABLE OF CONTENTS & TABLE OF AUTHORITIES
PAGE I OF IV
TABLE OF AUTHORITIES
2 Cases
3 Ashcroft v. Iqbal,
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556 U.S. 662 (2009) .................................................................................. 5, 14
5 Barker v. Riverside County Office of Educ.,

584 F.3d 821 (9th Cir. 2009) ............................................................................ 5
7 Bell Atlantic. Corp. v. Twombly,

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550 U.S. 544 (2007) .................................................................................. 5, 14
10
50 Cal.2d 844 (1958)............................................................................... 1, 6, 8
11 Couch v. Telescope Inc. and Herbert et al. v. Endemol USA, Inc.,*

9 California Gasoline Retailers v. Regal Petroleum Corp.,
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Case No. CV-07-3916-FMC (PLAx) ...................................................... 7, 8, 9
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*Attached to the Declaration of Annasara Purcell as Exhibit D
14 Finster v. Keller,
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18 Cal.App.3d 836 (1971)........................................................................... 2, 6
16 Hall v. City of Santa Barbara,

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833 F.2d 1270 (9th Cir. 1986). ........................................................................ 5
18 Haskell v. Time, Inc.,

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965 F. Supp. 1398 (E.D. Cal.1997). ................................................................ 8
20 Kroger v. Cook,
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265 N.E.2d 780 (Ohio 1970) ........................................................................... 8
22 Lee v. City of Los Angeles,

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250 F.3d 668 (9th Cir. 2001) ........................................................................... 5
24 McDougal v. County of Imperial,

942 F.2d 668 (9th Cir. 1991) ............................................................................ 5
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26 Midwestern Enters. v. Stenehjem,

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625 N.W.2d 234 (N.D. 2001). ......................................................................... 9
28 //
PAGE II OF IV
1 Nguyen v. Tran,
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157 Cal. App. 4th 1032 (2007)...................................................................... 11
3 NL Industries, Inc. v. Kaplan,

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792 F.2d 896, 898 (9th Cir.1986) .................................................................... 5
5 People v. Cardas,
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137 Cal.App. Supp. 788 (Dept Super. Ct.1933) ............................................ 7
7 People v. Carpenter,
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141 Cal.App.2d 884 (Ct.App.1956) ................................................................ 7
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62 Cal. App. 3d 442 (1976) ..................................................................... 1, 6, 8
11 Ramirez v. Plough, Inc.,

9 People v. Shira,
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6 Cal.4th 539 (1993) ..................................................................................... 15
13 Smith v. Jackson,
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84 F.3d 1213 (9th Cir. 1996). .......................................................................... 5
15 State ex rel. Schillberg v. Safeway Stores, Inc.,

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450 P.2d 949 (Wash. 1969). ............................................................................ 8
17 Theranos, Inc. v. Fuisz Pharma LLC,

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76 F. Supp. 2d 1123 (N.D. Cal. 2012) .......................................................... 14
19 U.S. S.E.C. v. ICN Pharm., Inc.,

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84 F. Supp. 2d 1097 (C.D. Cal. 2000)............................................................. 5
21 Usher v. City of Los Angeles,

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828 F.2d 556 (9th Cir. 1987) ......................................................................... 14
23 Vess v. Ciba-Geigy Corp. USA,

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317 F.3d 1097 (9th Cir. 2003) ....................................................................... 6
25 Walling v. Beverly Enters.,

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476 F.2d 393 (9th Cir. 1973) ...................................................................... 5, 14
27 Westlands Water Dist. v. Firebaugh Canal,

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10 F.3d 667 (9th Cir.1993) .............................................................................. 5

PAGE III OF IV
1 Statutes
2 Cal. Bus. & Prof. Code 17200, et seq......................................................... 1, 3, 15
3 Cal. Civ. Code 17204 ........................................................................................... 13
4 Cal. Civ. Code 17203 ........................................................................................... 13
5 Cal. Civ. Code 1750, et seq ........................................................................ 1, 3, 15
6 Cal. Civ. Code 17535 ........................................................................................... 13
7 Cal. Civ. Code 1780(a) ......................................................................................... 13
8 Cal. Penal Code 319 ......................................................................................passim
10 Rules
11 Fed. R. Civ. P. 12(b)(6) ......................................................................................... 5, 6
12 Fed. R. Civ. P. 15(a) ................................................................................................ 15

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PAGE IV OF IV

I.
INTRODUCTION
Plaintiff THOMAS TRAX (Plaintiff) hereby submits this Memorandum of
Points and Authorities in Opposition to Defendant PRIZE CANDLE, LLCs
(Defendant and/or Prize Candle) Motion to Dismiss.
Plaintiff initiated the present putative class action against Prize Candle for
unlawfully owning and operating lotteries as defined by Cal. Penal Code 319 in
violation of Californias Unfair Competition Law (UCL), Cal. Bus. & Prof. Code
17200 et seq.; Consumers Legal Remedies Act (CLRA), Cal. Civ. Code
1750, et seq.; and negligence per se. See ECF No. 5, Plaintiffs First Amended
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Complaint (FAC) 1. It is well settled and rooted in the California Constitution
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that California has a strong public policy against private lotteries. People v. Shira,
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62 Cal.App.3d 442, 452 (1976). Notwithstanding a few narrow exceptions, the
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Legislature has no power to authorize lotteries and shall prohibit the sale of lottery
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tickets in the state. California Constitution, Article IV, section 19. Id. 2.
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A lottery is defined as any scheme for the disposal or distribution of
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property by chance, among persons who have paid or promised to pay any valuable
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consideration for the chance of obtaining such property or a portion of it... upon
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any agreement, understanding, or expectation that it is to be distributed or disposed
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of by lot or chance.... Cal. Penal Code 319. Id. 4. In other words, a lottery is
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any scheme that contains the following three elements: (1) a prize, (2) a chance
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distribution of the prize, and (3) consideration. California Gasoline Retailers v.
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Regal Petroleum Corp., 50 Cal.2d 844, 851 (1958). Id.
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In distinguishing a lawful promotional giveaway from an unlawful lottery,
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courts often focus on whether the element of consideration is present. In doing so,
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courts analyze whether the schemes general and indiscriminate distribution of
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free entries is adequate to eliminate the element of consideration, thus, creating a
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lawful promotional giveaway. Shira, supra, 62 Cal.App.3d at 459. Under this
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analysis, in order for a promotional giveaway scheme to be legal any and all
PAGE 1 OF 16

persons must be given a ticket free of charge and without any of them paying for
the opportunity of a chance to win the prize. (Ibid). Courts are quick to caution,
however, that [i]n determining whether the [scheme] is in the nature of a lottery,
[they] look, not to the name, but the game. Courts will not tolerate subterfuge,
however ingenious may be the scheme devised to evade the law. Id. at 461
[quoting Finster v. Keller, 18 Cal.App.3d 836, 842 (1971). Id. 5.
Prize Candle owns and operates unlawful lotteries by manufacturing and
selling products, including the candle purchased by Plaintiff, with the promise that
each candle contains a hidden ring and a chance to win a prize valued up to $5,000.
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Id. 7-8. Plaintiff contends that Defendant, in offering a chance to win a prize in
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exchange for consideration, operates an illegal lottery in violation of California
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Penal Code 319, among other statutes.
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In response to Plaintiffs action, Prize Candle has filed the present Motion to
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Dismiss, contending that Plaintiffs claims should be dismissed, based primarily on
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Defendants argument that Prize Candle does not operate a lottery. However,
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Defendants motion must be denied, as it is clear that Prize Candles business
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model is an illegal lottery and Plaintiff has proper standing to bring the
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abovementioned claims for this Courts consideration.
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Defendants conduct in unlawfully operating lotteries violates the UCL, CLRA, or
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is negligent per se are factually driven inquiries that are inappropriate for
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resolution on a Motion to Dismiss. Therefore, for these reasons and as further
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discussed herein, Defendants motion should be denied.
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//
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//
Furthermore, whether

PAGE 2 OF 16

II.
STATEMENT OF FACTS
Plaintiff, Thomas Trax, initiated the present action on July 15, 2015 against
Defendant Prize Candle, LLC. See ECF No. 1. Subsequently, Plaintiff filed his
First Amended Complaint (FAC). See ECF No. 5. The operative pleadings
allege that Defendants business model constitutes an unlawful and illegal lottery,
in violation of Cal. Penal Code 319, Californias Unfair Competition Law
(UCL), Cal. Bus. & Prof. Code 17200 et seq.; Consumers Legal Remedies
Act (CLRA), Cal. Civ. Code 1750, et seq.; and negligence per se. Id. Plaintiff
purchased a Gardenia scented candle giving rise to this action on or about June 5,
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2015, from Prize Candles website1 (Id. 25), which is like the majority, if not all,
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of Defendants other products which similarly offer a chance to win a prize valued
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up to $5,000.
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Prize Candle markets and/or sells products that are essentially lottery tickets.
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Specifically, Prize Candle sells products, including the candle purchased for
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consideration by Plaintiff, with the promise that each candle contains a hidden ring
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and a chance to win a prize valued up to $5,000. Id. 7-8, and 16. Prize
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Candles name itself and marketing of its products emphasizes the lottery aspect of
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its business practice. Id. 17. The value of the specific hidden item and the
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chances to win the $5,000 prize is not disclosed at the time of the purchase; rather,
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each purchaser is simply promised that by purchasing and burning Defendants
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candles, s/he has a chance to win a ring or charm bracelet of varying value and also
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a chance to win a $5,000 prize.
Id. 18. Defendant makes these promises
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Defendant nonsensically mentions in Defendants Motion, p. 4, Fn. 1 that

Plaintiffs purchase occurred just a week after on of the law firms representing
Plaintiff in this lawsuit (Gottlieb and Associates) filed a very similar lawsuit.
Plaintiff finds this footnote irrelevant and Defendants mention of Gottlieb and
Associates and attachment of the docket report and pleadings in Guzman v.
Diamond Candles, LLC is wholly immaterial to Plaintiffs action and Defendants
Motion. Accordingly, Plaintiff disregards Defendants footnote.
PAGE 3 OF 16

throughout its website and other advertisements. Defendants website also induces
consumers to join the Prize Candle membership club by touting its membership
perks and claiming that [e]very candle contains a $25 ring, with a chance to win
a ring valued up to $5,000.2 Id. 19.
In a Medium.com article from May 2015, Defendants representative stated
that Defendant [h]as delighted users [by] , shipping over 400,000 candles in
2014; Prize Candle has distributed over $12 million in prizes!3 Id. 22. Such
growth would be unprecedented for a mere candle or scented product company, but
not for a company offering consumers unregulated opportunity on the internet to
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pay to play a game of chance. Id. 23. It can reasonably be inferred that Prize
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Candles exponential growth is attributable to more than the mere sale of candles,
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and likely a result the lottery aspect of Prize Candles business, which draws
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consumers in with the chance to win a prize through the purchase of its products.
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Consumers are particularly vulnerable to these deceptive and fraudulent
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practices. Most consumers possess limited knowledge of the applicable lottery
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laws. Id. 27. As such and due to Defendants scheme to defraud the market,
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members of the general public were not only fraudulently induced to purchase
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Defendants products, but also induced to purchase Defendants products at a
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higher price. Id. 28. California laws are designed to protect consumers from such
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predatory conduct. Defendants scheme to defraud consumers for its own self-
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interest and monetary gain is ongoing and will victimize consumers daily for the
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foreseeable future unless altered by judicial intervention.
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member of the Class suffered an injury in fact because Defendant took the
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consumers money as a result of Defendants predatory business practice. Id. 29-
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30.
Plaintiff and each
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See, https://www.prizecandle.com.
See, https://medium.com/@mjones/third-year-of-science-our-startup-formula2c46eb81ccb8#.uiqi1p99o.
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PAGE 4 OF 16

III.
LEGAL STANDARD
To survive a motion to dismiss under Fed. R. Civ. P. 12(b)(6), a complaint
need only plead enough facts to state a claim [for] relief that is plausible on its
face. Bell Atlantic. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim is
plausible on its face when the plaintiff pleads factual content that allows the court
to draw the reasonable inference that the defendant is liable for the misconduct
alleged. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). In determining whether
Plaintiff has stated sufficient facts such that the claim is plausible, [a]ll allegations
of material facts are taken as true and construed in the light most favorable to the
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nonmoving party. Smith v. Jackson, 84 F.3d 1213, 1217 (9th Cir. 1996). In
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addition, the Court must also draw inferences in the light most favorable to the
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plaintiff. Barker v. Riverside County Office of Educ., 584 F.3d 821, 824 (9th Cir.
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2009); see also U.S. S.E.C. v. ICN Pharm., Inc., 84 F. Supp. 2d 1097, 1098 (C.D.
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Cal. 2000) (The court must accept as true the factual allegations of the complaint
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and indulge all reasonable inferences to be drawn from them, construing the
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complaint in the light most favorable to the Plaintiff.) (citing Westlands Water
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Dist. v. Firebaugh Canal, 10 F.3d 667, 670 (9th Cir.1993); NL Industries, Inc. v.
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Kaplan, 792 F.2d 896, 898 (9th Cir.1986). Any existing ambiguities must be
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resolved in favor of the pleading. Walling v. Beverly Enters., 476 F.2d 393, 396
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(9th Cir. 1973).
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A court will not normally look beyond the four corners of the complaint in
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resolving a Rule 12(b)(6) motion. Lee v. City of Los Angeles, 250 F.3d 668, 688
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(9th Cir. 2001). A Rule 12(b)(6) Motion to Dismiss is viewed with disfavor and is
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rarely granted. McDougal v. County of Imperial, 942 F.2d 668, 676 n.7 (9th Cir.
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1991); quoting Hall v. City of Santa Barbara, 833 F.2d 1270, 1274 (9th Cir. 1986).
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Therefore, a dismissal of a plaintiffs complaint, without leave to amend, is
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appropriate only where it appears beyond doubt that plaintiff can prove no set of
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facts that would entitle her to relief. Smith v. Jackson, 84 F.3d 1213, 1217 (9th
PAGE 5 OF 16
Cir. 1996). A dismissal for failure to state a claim with Rule 12(b)(6) should
ordinarily be without prejudice. Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097,
1108 (9th Cir. 2003).

In light of the above standards, Defendants Motion should be denied or, in
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the alternative, Plaintiff requests to be granted leave to amend.
IV.

ARGUMENT
A. PRIZE CANDLE OPERATES AN ILLEGAL LOTTERY
A lottery requires three elements under California law: (1) disposition of
property; (2) upon a contingency determined by chance; (3) to a person who has
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paid a valuable consideration for the chance of winning the prize. Cal. Gasoline
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Retailers v. Regal Petroleum Corp., 50 Cal.2d 844, 853-44 (1958); see also Cal.
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Penal Code 319.
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unlawful lottery, courts often focus on whether the element of consideration is
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present. In doing so, courts analyze whether the schemes general and
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indiscriminate distribution of free entries is adequate to eliminate the element of
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consideration, thus, creating a lawful promotional giveaway. Shira, supra, 62
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Cal.App.3d at 459. Under this analysis, in order for a promotional giveaway
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scheme to be legal any and all persons must be given a ticket free of charge and
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without any of them paying for the opportunity of a chance to win the prize.
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(Ibid). Courts are quick to caution, however, that [i]n determining whether the
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[scheme] is in the nature of a lottery, [they] look, not to the name, but the game.
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Courts will not tolerate subterfuge, however ingenious may be the scheme devised
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to evade the law. Id. at 461 [quoting Finster v. Keller, 18 Cal.App.3d 836, 842
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(1971).
In distinguishing a lawful promotional giveaway from an
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Defendants Motion challenges only the third element of consideration,
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arguing that Prize Candles business model constitutes a lawful promotional
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sweepstakes, rather than an illegal lottery based on the premise that consumers
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may enter for free without making a purchase or otherwise paying valuable
PAGE 6 OF 16

consideration for entry. However, this argument will fail, as it is clear that Plaintiff
and similarly situated consumers paid consideration for the chance of winning a
prize from Prize Candle. Furthermore, Defendants Motion also fails because
Defendant cannot show that Prize Candle truly provided and marketed to
consumers a legitimate free alternative means of entry for a chance to win a prize.
Evolving case law contradicts Defendants assertion that Prize Candles
business model constitutes a lawful promotional sweepstakes, rather than an
illegal lottery because consumers may enter for free without making a purchase or
otherwise paying valuable consideration for entry. As further discussed below,
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Defendants purported free method of entry was not truly promoted, advertised,
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or even pointed out to Plaintiff and similarly situated consumers when selecting
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a product and checking out on Defendants website. Instead, the only indication
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that any alternative method of entry was available is hidden and buried in the
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text visible only after finding and clicking the Prize Candle Sweepstakes link
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located at the bottom of Defendants webpage.4 These facts give rise to the
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issue, which will be further discussed below, of whether Defendants purported
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alternative means of entry was offered in a manner that was real enough to
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insulate Prize Candles business model from being considered an illegal lottery.
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In Couch v. Telescope Inc. and Herbert et al. v. Endemol USA, Inc., Case
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No. 07-3916 (C.D. Cal., order filed Nov. 30, 2007), the court addressed the issue in
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of consideration in a modern, Internet-media context. In Couch, the defendants
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moved to dismiss plaintiffs class action claim on the basis that the consideration
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element was missing. In doing so, the Couch defendants based their argument on
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three leading California lottery cases, Cal. Gasoline Retailers, 50 Cal.2d 844;
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People v. Carpenter, 141 Cal.App.2d 884 (Ct.App.1956); and People v. Cardas,
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137 Cal.App. Supp. 788 (Dept Super. Ct.1933). However, the United States
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District Court for the Central District of California, relying on those cases and
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See, https://www.prizecandle.com

PAGE 7 OF 16

People v. Shira, 62 Cal.App.3d 442 (Ct.App.1976), and finding no California law
to the contrary, denied the defendants motion. Subsequently, the Ninth Circuit
approved the district courts ruling in its 2010 opinion.
Defendants Motion, like the Couch defendants motion, primarily relies on
those same three cases, which were all decided over fifty years ago, long before
courts could conceive of modern Internet-based commerce. Also Haskell v. Time,
Inc., which Defendants Motion also relies on, was decided in 1997 when the
Internet was still in its infancy. Haskell v. Time, Inc., 965 F. Supp. 1398 (E.D. Cal.
1997). The Regal, Cardas, Carpenter, and Haskell courts could not have
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envisioned or foreseen a sophisticated Internet-based lottery scheme that could
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exist today, such as Prize Candles. Indeed, Couch is firmly rooted in our modern
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era, where Internet-based commerce is ubiquitous. Accordingly, this Court should
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follow the Couch precedent, established by the Central District and approved by
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the Ninth Circuit, rather than the outdated opinions of the Regal, Cardas,
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Carpenter, and Haskell courts.
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Many other courts from across the nation have found that illegal lottery or
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gambling schemes existed despite the defendants claims that they offered a free
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alternative means of entry (hereinafter AMOE) for their contests. For instance,
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an Ohio court found the availability of an AMOE insufficient because a portion of
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grocery sales proceeds funded the scheme, resulting in some entrants paying for a
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chance to win. Kroger v. Cook, 265 N.E.2d 780 (Ohio 1970). Also, a Washington
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court found that an illegal lottery existed because a grocery store required a visit
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to the store to be entered in the contest, even though no purchase was necessary.
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State ex rel. Schillberg v. Safeway Stores, Inc., 450 P.2d 949 (Wash. 1969).
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Additionally, a North Dakota court noted that some states have refused to find that
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an AMOE for retail sales promotions is sufficient to eliminate consideration, thus
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suggesting that the court may still have found the scheme to be an illegal lottery
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even if the phone cards in question were sold for fair market value. Midwestern
PAGE 8 OF 16

Enters. v. Stenehjem, 625 N.W.2d 234 (N.D. 2001).
The Attorney General of
Texas also weighed in on the subject by issuing an opinion letter stating that a
promotional scheme must also involve the legitimate sale of a product in order to
avoid characterization as a lottery.5 Tex. Atty Gen. Op. Letter 97-008 (1997).
Thus, if a product of little or no value is being sold in conjunction with a
sweepstakes ticket, the consideration may be deemed to have been paid for the
privilege of entering the sweepstakes. Id. Moreover, the district court in Couch, in
reaching its decision, framed the relevant question as whether the contests were
nothing more than organized scheme[s] of chance, in which payment was
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induced by the chance of winning a prize. Couch v. Telescope Inc. and Herbert
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et al. v. Endemol USA, Inc., Case No. 07-3916, slip opinion at p. 9. (C.D. Cal.,
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order filed Nov. 30, 2007).
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Accordingly, the key issue here is whether Prize Candles products are
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items of equivalent economic value that the consumer received in exchange for
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the money they paid, or whether the candles are nothing more than lottery ticket
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delivery systems in which payment was induced by the chance of winning a prize.
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In response to this key inquiry, Prize Candle will surely contend that their candles
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prices (ranging from $24.99 to $39.99 plus a minimum shipping charge of $6.99)
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reflect their true value. However, a cursory Internet search revealed similar nine-
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ounce, 100% soy candles infused with essential oils priced as low as four to six
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dollars. Consequently, there is no legitimate sale of an actual product here as the
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candles sold on Prize Candles website are nothing more than lottery ticket
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delivery systems, with the lottery ticket for a chance to win a prize embedded
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within the candle itself.
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Therefore, based on the Central Districts decision in Couch and the
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overwhelming amount of persuasive opinions from around the country, Prize
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See a copy of the Texas Attorney Generals opinion letter attached as Exhibit A
to the Declaration of Abbas Kazerounian (Kazerounian Decl.)
5

PAGE 9 OF 16
Candle is operating an illegal lottery, rather than a lawful sweepstakes.
Furthermore, the candles true value is an issue for a court to decide on summary
judgment and/or a trier of fact to decide during formal proceedings rather on a
motion to dismiss.
5
7
Defendants Motion.
B. PRIZE CANDLES WEBSITE DOES NOT OFFER A LEGITIMATE
ALTERNATIVE MEANS OF ENTRY TO WIN A PRIZE AND EMPHASIZES THE
LOTTERY ASPECT OF PRIZE CANDLES BUSINESS
Contrary to Defendants limited and selective screenshots of its website
attached to the Declaration of Annasara Purcell (Purcell Decl.), a visit to the
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Prize Candle website does not prominently inform consumers that no purchase or
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entry fee is required and that they can obtain sweepstakes codes for free upon a
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simple written request. See Defendants Motion, pp. 1-2, lines 28-2. In fact, a
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consumer visiting Prize Candles website will see a landing page which boldly
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promotes Defendants game of chance, advertising that a $25 ring is in every
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candle plus a chance to win a ring valued up to $5,000. While Defendant argues
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Prize Candle does disclose to consumers the value of the rings hidden in its
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candles (See Defendants Notion, p. 2, lines 16-17), Defendant cannot argue that
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it discloses the value of the specific prize that a consumer has the chance of
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winning though a purchase, as the purchaser is only told the prize may have a
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varying value up to $5,000. FAC 18 and 49.

Thus, Plaintiffs claims are valid and should survive
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1. Prize Candles Website Fails to Offer an Alternative Means of Entry
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Under the well-developed case law on lotteries, gambling, games of chance
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an sweepstakes, the Courts have observed that the alternative free mode of entry
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must not be so burdensome and cumbersome as to be ineffective. Here,
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Defendants purported alternative means of entry was not offered in a manner
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that was real enough to insulate Prize Candles business model from being
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considered an illegal lottery. As stated above, Defendants purported free method
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of entry was not truly promoted or advertised, and nothing on Defendants

PAGE 10 OF 16

website directs consumers to the Prize Candle Sweepstakes link located at the
bottom of Defendants website. Instead, the only indication that any alternative
method of entry was available is hidden and buried in the text visible only after
finding and clicking the Prize Candle Sweepstakes link.
Defendant may attempt to argue that Prize Candle adequately provided
notice of its alternative means of entry; however, as the party with the burden of
proving, by clear and convincing evidence, that Plaintiff viewed and assented to
the terms of the sweepstakes rules, Defendant has failed to introduce any
admissible evidence to demonstrate that Plaintiff and other consumers saw or
10
should have seen the language in the Prize Candle Sweepstakes link.
11
Furthermore, in cases like this involving a browse-wrap agreement, wherein
12
terms and conditions are disclosed to a web user (entering into a legally binding
13
agreement) solely when that user clicks on a separate hyperlink to access terms and
14
conditions, Nguyen v. Barnes & Noble makes it clear that where a consumer is
15
provided access to legal terms and conditions via a browse-wrap agreement, that
16
individual has not assented to the terms and conditions that he or she is required to
17
separately view by clicking on said links. Nguyen v. Barnes & Noble, 763 F.3d
18
1171.
19
Thus, absent a showing that Plaintiff and similarly situated consumers
20
viewed and assented to Defendants sweepstakes rules, which is the only location
21
on Defendants website which contained the purported alternative means of entry,
22
Defendant will be unable to assert that these sweepstakes rules apply or were
23
viewed by Plaintiff and similarly situated consumers.
24
2. Prize Candles Website Emphasizes the Lottery Aspect of its Business
25
Defendants promotion and marketing of its products emphasizes the lottery
26
aspect of Defendants business practice as each of Defendants products are sold
27
for consideration with the promise that the purchaser of the products will have a
28
chance to win a ring of varying value up to $5,000. See FAC 48. The Prize
PAGE 11 OF 16

Candle website also tantalizes consumers, inducing purchase of its products and
its membership with language on the main images on its home page like WILL
YOU BE THE NEXT $5000 Prize Winner? Simply enter the code discovered in
your Prize Candle to see if you are a winner! 6 and WARNING! Highly
Addictive! Amazing fragrances, a prize in every candle, plus a chance to win a
ring valued up to $5,000? Youll want more than one (See FAC 19)
emblazoned on an image of playing cards, matches and numerous ornate rings.7
The lottery aspect of Defendants business is even further emphasized by
Defendants explanation of How It Works on the home or main page of the
10
Prize Candle website as well as on the How It Works tab on the Prize Candle
11
website.8 The steps illustrated under How It Works simply lays out the steps
12
for a consumer to discover whether they are a winner of a prize valued up to
13
$5,000. See Exhibit D. These steps do not mention or direct a consumer to
14
anywhere that suggests a prize code can be obtained in any way other than
15
purchasing a Prize Candle product. Instead Defendants How It Works page
16
reflects how Defendants candles are nothing more than lottery ticket delivery
17
systems, as the illustrated steps explain that a ring and prize code are contained in
18
the candle, and by entering the code on the Prize Candle Appraisal Page, the
19
consumer will learn whether they are a winner of a prize valued up to $5,000. Id.
20
Accordingly, Prize Candles own instructions indicate that the candle is
21
nothing more than a lottery ticket delivery system. Three out of the four steps
22
focus on redeeming the code found on the lottery ticket. The terms lucky and
23
winner also reflect the emphasis on the businesss gambling aspect. And the
24
only step that even mentions the candle, supposedly the focus of Prize Candles
25
business, encourages the consumer to burn your candle until the ring and prize
26
27
28
See, https://www.prizecandle.com; and Exhibit B attached to Kazerounian Decl.

See, https://www.prizecandle.com; and Exhibit C attached to Kazerounian Decl.
8
See, FAC fn. 3; https://www.prizecandle.com/pages/how-it-works and Exhibit D
6
7

PAGE 12 OF 16

code become visible. Rather than encouraging Plaintiff and similarly situated
consumers to enjoy the relaxing fragrances released by this supposedly high-
quality candle, Prize Candles prominently displayed instructions instead place the
emphasis squarely on obtaining the lottery ticket by burning the candle as quickly
as possible. This provides further evidence that the candle is nothing more than a
lottery ticket delivery system, and clearly emphasizes the businesss gambling
aspect over the nature and quality of its candles.
Everything immediately visible to consumers on Defendants website
suggests that they must purchase a candle, or in other words pay consideration,
10
for a chance to win a prize. Defendants assertion that it prominently informs
11
consumers that no purchase is required is misleading.
12
meaningfully provide an alternative free means of entry as it is not apparent to
13
consumers browsing and purchasing from Defendants website. Furthermore, the
14
Prize Candle website clearly touts the gambling aspect of its business over the
15
quality and nature of the products it contends are the primary focus of its business.
16
Defendant fails to
C. PLAINTIFF HAS STANDING TO ASSERT UCL AND CLRA CLAIMS
17
As explained above, Plaintiff has adequately alleged that Prize Candle
18
operates an illegal lottery. Furthermore, Plaintiffs claims are valid and Plaintiff
19
has adequate standing to assert Plaintiffs claims.
20
Defendant argues that Plaintiff lacks standing under the UCL and CLRA
21
because he has not sufficiently alleged facts showing that he lost money or
22
property.
23
injury in fact and lost money or property as a result of the challenged practice.
24
Cal. Bus. & Prof. Code 17203, 17204, 17535. Similarly, under the CLRA,
25
Plaintiff must show that he suffered damage as a result of the challenged
26
practice. Cal. Civ. Code 1780(a). In the instant matter, Plaintiff easily satisfies
27
both these requirements as Plaintiff, who is a purchaser of a candle from
28
Defendants website, has sufficiently alleged that he has suffered an injury in fact,
To bring a claim under the UCL, Plaintiff must show that he suffered

PAGE 13 OF 16

lost money, and suffered damages as a result of Defendants unlawful conduct.
Moreover, on a motion to dismiss, the Court taking as true all allegations of fact
and drawing all reasonable inferences in favor of the Plaintiff. Theranos, Inc. v.
Fuisz Pharma LLC, 76 F. Supp. 2d 1123, 1126 (N.D. Cal. 2012) (citing Twombly,
550 U.S. 544, 570; Iqbal, 556 U.S. 662, 678; Usher v. City of Los Angeles, 828
F.2d 556, 561 (9th Cir. 1987); and any existing ambiguities must be resolved in the
favor of the pleading. Walling, 476 F.2d 393, 396.
Plaintiff specifically alleges that Plaintiff paid for a Gardenia scented Prize
Candle purchased from Defendants website. See FAC 14 and 25. Plaintiff
10
further alleges that due to Defendants scheme to defraud the market, members of
11
the general public were not only fraudulently induced to purchase Defendants
12
products, but also induced to purchase Defendants products at a higher price. Id.
13
28. Plaintiff further establishes that he lost money as a result of Defendants
14
misrepresentations by alleging that Defendants unlawful conduct directly and
15
proximately cause Plaintiff and the Class actual monetary damages in the amount
16
of the price paid for each of Defendants Products; and but for Defendants
17
conduct described in Plaintiffs FAC, Plaintiff and the Class would not have spent
18
money on Defendants products. See FAC 62-63. Thus, Plaintiff adequately
19
alleges injury and causation for standing purposes.
20
Accordingly, here Plaintiff has standing and sufficiently alleged his injury
21
and damages as a result of being induced to purchase a candle by representations
22
on Defendants website regarding the possibility of uncovering a prize valued up to
23
$5,000 and Plaintiff was motivated by or relied upon such deceptive marketing
24
scheme in deciding to purchase Prize Candles product.
25
D. NEGLIGENCE PER SE
26
While Plaintiff does not dispute that negligence per se is an evidentiary
27
presumption rather than an independent cause of action, dismissal of this cause of
28
action does not hinder Plaintiffs claims against Defendant for violations of Cal.
PAGE 14 OF 16
Penal Code 319; Californias Unfair Competition Law (UCL), Cal. Bus. &
Prof. Code 17200 et seq.; and Consumers Legal Remedies Act (CLRA), Cal.
Civ. Code 1750, et seq. Furthermore, in the event that Plaintiffs requests or is
granted leave to amend, Plaintiff could instead include the same allegations under
Defendants violation of Cal. Penal Code 319, or alternatively, add a cause of
action for Negligence as negligence per se is a theory of negligence that raises a
presumption of negligence. Ramirez v. Plough, Inc., 6 Cal.4th 539, 547 (1993).
Regardless, based on the above, Plaintiffs other claims should survive
Defendants Motion.

10
V.
ALTERNATIVE LEAVE TO AMEND
11
Alternatively, should this Court find any of Defendants arguments
12
persuasive, Plaintiff respectfully requests leave to amend the operative Complaint
13
to cure any such perceived deficiencies. As this Court is well aware, leave to
14
amend should be freely given when the plaintiff could cure the pleadings defects
15
and present viable claims. Fed. R. Civ. P. 15(a); see Foman v. Davis, 371 U.S.
16
178, 182 (1962).
17
VI.
CONCLUSION
18
For the foregoing reasons, Plaintiffs Complaint should not be dismissed.
19
Thus, Defendants Motion should be denied, or in the alternative, Plaintiff
20
respectfully requests the Court grant leave to amend to cure any deficiencies.
21
22
23
Dated: December 29, 2015
Respectfully submitted,
KAZEROUNI LAW GROUP, APC
24
25
26
27
_
By: __/s/ ABBAS KAZEROUNIAN
ABBAS KAZEROUNIAN, ESQ.
MOHAMMAD KAZEROUNI, ESQ.
MONA AMINI, ESQ.
ATTORNEYS FOR PLAINTIFF
28
PAGE 15 OF 16
1
2
3
4
5
[ADDITIONAL PLAINTIFFS COUNSEL]

HYDE & SWIGART
Joshua B. Swigart, Esq. (SBN: 225557)
josh@westcoastlitigation.com
2221 Camino Del Rio South, Suite 101
San Diego, CA 92108-3551
Telephone: (619) 233-7770
Facsimile: (619) 297-1022
6
7
8
9
10
11
12
Jeffrey M. Gottlieb, Esq. (JG-7905) *

Dana L. Gottlieb, Esq. (DG-6151) *
Gottlieb & Associates
150 East 18th Street
Suite PHR
New York, NY 10003
NYJG@aol.com
danalgottlieb@aol.com
*Pro hac vice to be filed
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
PAGE 16 OF 16

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Case 3:15-cv-01563-CAB-KSC Document 14 Filed 12/29/15 Page 1 of 21

KAZEROUNI LAW GROUP, APC

K AZERO UNI LAW G RO UP, APC

PRIZE CANDLE, LLC,

Case No.: 3:15-cv-01563-CAB-KSC

Case 3:15-cv-01563-CAB-KSC Document 14 Filed 12/29/15 Page 2 of 21

STATEMENT OF FACTS ...................................................................... 3

A. PRIZE CANDLE OPERATES AN ILLEGAL LOTTERY ........................... 6

Kazerouni Law Group, APC

1) Prize Candles Website Fails to Offer an

2) Prize Candles Website Emphasizes the

C. PLAINTIFF HAS STANDING TO ASSERT UCL

D. NEGLIGENCE PER SE ....................................................................... 14

PRIZE CANDLES WEBSITE DOES NOT OFFER A

ALTERNATIVE LEAVE TO AMEND............................................... 15

Case 3:15-cv-01563-CAB-KSC Document 14 Filed 12/29/15 Page 3 of 21

556 U.S. 662 (2009) .................................................................................. 5, 14

5 Barker v. Riverside County Office of Educ.,

7 Bell Atlantic. Corp. v. Twombly,

550 U.S. 544 (2007) .................................................................................. 5, 14

50 Cal.2d 844 (1958)............................................................................... 1, 6, 8

11 Couch v. Telescope Inc. and Herbert et al. v. Endemol USA, Inc.,*

Kazerouni Law Group, APC

9 California Gasoline Retailers v. Regal Petroleum Corp.,

Case No. CV-07-3916-FMC (PLAx) ...................................................... 7, 8, 9

*Attached to the Declaration of Annasara Purcell as Exhibit D

18 Cal.App.3d 836 (1971)........................................................................... 2, 6

16 Hall v. City of Santa Barbara,

833 F.2d 1270 (9th Cir. 1986). ........................................................................ 5

18 Haskell v. Time, Inc.,

965 F. Supp. 1398 (E.D. Cal.1997). ................................................................ 8

265 N.E.2d 780 (Ohio 1970) ........................................................................... 8

22 Lee v. City of Los Angeles,

250 F.3d 668 (9th Cir. 2001) ........................................................................... 5

24 McDougal v. County of Imperial,

26 Midwestern Enters. v. Stenehjem,

625 N.W.2d 234 (N.D. 2001). ......................................................................... 9

Case 3:15-cv-01563-CAB-KSC Document 14 Filed 12/29/15 Page 4 of 21

157 Cal. App. 4th 1032 (2007)...................................................................... 11

3 NL Industries, Inc. v. Kaplan,

792 F.2d 896, 898 (9th Cir.1986) .................................................................... 5

137 Cal.App. Supp. 788 (Dept Super. Ct.1933) ............................................ 7

141 Cal.App.2d 884 (Ct.App.1956) ................................................................ 7

62 Cal. App. 3d 442 (1976) ..................................................................... 1, 6, 8

11 Ramirez v. Plough, Inc.,

Kazerouni Law Group, APC

6 Cal.4th 539 (1993) ..................................................................................... 15

84 F.3d 1213 (9th Cir. 1996). .......................................................................... 5

15 State ex rel. Schillberg v. Safeway Stores, Inc.,

450 P.2d 949 (Wash. 1969). ............................................................................ 8

17 Theranos, Inc. v. Fuisz Pharma LLC,

76 F. Supp. 2d 1123 (N.D. Cal. 2012) .......................................................... 14

19 U.S. S.E.C. v. ICN Pharm., Inc.,

84 F. Supp. 2d 1097 (C.D. Cal. 2000)............................................................. 5

21 Usher v. City of Los Angeles,

828 F.2d 556 (9th Cir. 1987) ......................................................................... 14

23 Vess v. Ciba-Geigy Corp. USA,

317 F.3d 1097 (9th Cir. 2003) ....................................................................... 6

25 Walling v. Beverly Enters.,

476 F.2d 393 (9th Cir. 1973) ...................................................................... 5, 14

27 Westlands Water Dist. v. Firebaugh Canal,

10 F.3d 667 (9th Cir.1993) .............................................................................. 5