Haley et al v. Macy's, Inc. et al

Filing 56

ORDER by Judge Haywood S. Gilliam, Jr. GRANTING 41 MOTION TO DISMISS IN PART AND DENYING MOTION TO STRIKE. Amended Pleadings due by 7/28/2017.. (ndrS, COURT STAFF) (Filed on 7/7/2017)

1
2
3
4

UNITED STATES DISTRICT COURT

5

NORTHERN DISTRICT OF CALIFORNIA

6
7

KRISTIN HALEY, et al.,
Plaintiffs,

8
v.

9
10

MACY’S, INC., et al.,
Defendants.

11
United States District Court
Northern District of California

Case No.15-cv-06033-HSG
ORDER GRANTING MOTION TO
DISMISS IN PART AND DENYING
MOTION TO STRIKE
Re: Dkt. No. 41

12
Pending before the Court is a motion to dismiss the complaint and a motion to strike filed

13
14

by Defendants Macy’s, Inc., Macy’s West Stores, Inc., and Bloomingdale’s, Inc. Dkt. No. 41.

15

The Court finds this matter appropriate for disposition without oral argument and the matter is

16

deemed submitted. See Civil L.R. 7-1(b). For the reasons detailed below, the Court GRANTS the

17

motion to dismiss in part and DENIES the motion to strike.

18

I.

BACKGROUND
This putative class action arises out of an alleged pricing scheme by Defendants to

19
20

mislabel their merchandise with false or inflated original or “regular” prices. See Dkt. No. 37

21

¶¶ 3–4, 8–11. (“Compl.”). According to Plaintiffs, these original or regular prices did not reflect

22

the price at which Defendants “routinely, if ever” sold their products. Id. ¶ 12. These prices

23

deceive consumers into believing that the listed sale or discount price is more advantageous,

24

causing consumers to purchase merchandise that they otherwise would not purchase. Id. ¶¶ 3, 10–

25

11.

26

Plaintiffs Kristin Haley, Todd Benson, Zoreh Farhang, Job Carder, and Erica Vinci allege

27

that they each purchased at least one item from a Macy’s store on or after January 1, 2012. See

28

Compl. ¶¶ 27–33, 38. On the basis of these purchases, they filed a complaint on behalf of a

1

putative class of California consumers against Defendants Macy’s Inc. and Bloomingdale’s, Inc.

2

alleging violations of the California Unfair Competition Law (“UCL”), the California False

3

Advertising Law (“FAL”), and the California Consumer Legal Remedies Act (“CLRA”).

4

II.

LEGAL STANDARD
Under Federal Rule of Civil Procedure 12(b)(6), a defendant may move to dismiss a

5
6

complaint for failing to state a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6).

7

To survive a motion to dismiss, a plaintiff must demonstrate “enough facts to state a claim to relief

8

that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A plaintiff

9

must provide more than conclusory statements or “a formulaic recitation of the elements of a
cause of action” for the court to find a facially plausible claim. Id. at 555. Rather, the complaint

11
United States District Court
Northern District of California

10

must present facts which allow “the reasonable inference” of a defendant’s liability for the alleged

12

misconduct. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). In reviewing a motion to dismiss, the

13

court construes factual inferences in a light most favorable to the non-moving party. Manzarek v.

14

St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008).
Federal Rule of Civil Procedure 8(a) requires that a complaint contain “a short and plain

15
16

statement of the claim showing that the pleader is entitled to relief[.]” Fed. R. Civ. P. 8(a). Rule

17

9(b) imposes a heightened pleading standard for claims that “sound in fraud.” Fed. R. Civ. P. 9(b)

18

(“In alleging fraud or mistake, a party must state with particularity the circumstances constituting

19

fraud or mistake.”). A plaintiff must identify “the who, what, when, where, and how” of the

20

alleged conduct, so as to provide defendants with sufficient information to defend against the

21

charge. Cooper v. Pickett, 137 F.3d 616, 627 (9th Cir. 1997).

22

III.

ANALYSIS

23

A.

24

Plaintiffs’ complaint fails to allege sufficient facts to support its three causes of action

25

against Defendants.1 However, the Court finds it premature to evaluate Plaintiffs’ request for

26

restitution.

Motion to Dismiss

27
1

28

Because the Court does not rely on any of the exhibits attached to Defendants’ Request for
Judicial Notice in its analysis, Dkt. No. 42, the Court DENIES Defendants’ request as moot.
2

1.

1

Bloomingdales and Macy’s Inc.

Plaintiffs do not allege any facts to support a claim against Defendants Bloomingdales or

2
3

Macy’s Inc. Although Plaintiffs point out that Bloomingdales is a wholly-owned subsidiary of

4

Macy’s, Inc., see Compl. ¶ 22, there are no allegations that a named Plaintiff purchased anything

5

from a Bloomingdales store. Nor do Plaintiffs allege that Bloomingdales was otherwise

6

responsible for Macy’s pricing scheme. See Lowden v. T-Mobile USA, Inc., 512 F.3d 1213, 1221

7

n.1 (9th Cir. 2008) (“In a class action, standing is satisfied if at least one named plaintiff meets the

8

requirements.”). Defendants further state that Macy’s, Inc. is merely a holding company that does

9

not sell merchandise or operate any stores. See Dkt. No. 41 at 8 n.6. Plaintiffs do not address
these arguments, but concede that they will dismiss their claims against both Bloomingdales and

11
United States District Court
Northern District of California

10

Macy’s, Inc. See Dkt. No. 47 at 7 n.7.

12

2.

13

Macy’s West Stores, Inc.
a.

Sufficiency of Claims

Plaintiffs also fail to allege sufficient facts regarding their alleged purchases at Macy’s

14
15

West Stores, as is required under Rule 9(b). Although the elements for claims brought under the

16

UCL, FAL, and CLRA differ,2 Plaintiffs concede that they must allege Defendants’ alleged false

17

pricing scheme with particularity. See Dkt. No. 47 at 11–12. This includes allegations that the

18

Defendants made a false representation about a product that Plaintiffs purchased. See id.; see also

19

Hinojos v. Kohl’s Corp., 718 F.3d 1098, 1103–04, 1109 (9th Cir. 2013), as amended on denial of

20

reh’g and reh’g en banc (July 8, 2013). Here, Plaintiffs’ claims suffer from the following

21

deficiencies:
First, not all named Plaintiffs identify the products they purchased from Macy’s. For

22
23

example, the complaint alleges that Plaintiff Carder purchased “products including several Maison

24

Jules and Club Room items.” Compl. ¶ 32. And the complaint alleges that Plaintiff Vinci

25
26
27
28

2

California’s UCL prohibits “any unlawful, unfair or fraudulent business act or practice and
unfair, deceptive, untrue or misleading advertising.” Cal. Bus. & Prof. Code § 17200.
California’s FAL prohibits any “unfair, deceptive, untrue, or misleading advertising.” Cal. Bus. &
Prof. Code § 17500. California’s CLRA prohibits “unfair methods of competition and unfair or
deceptive acts or practices.” Cal. Civ. Code § 1770.
3

1

purchased “numerous clothing items,” including one “sports clothing item.” Id. ¶ 33. The

2

complaint does not provide more detail about these specific purchases, but neither does it

3

categorically allege that all of Defendants’ products are misleadingly priced. In fact, Plaintiffs

4

concede some prices may not be false or deceptive. See id. ¶ 36. Without more, therefore,

5

Defendants cannot identify the transactions involving purportedly misleading prices in order to

6

mount a defense against Plaintiffs’ allegations. Cf. Stathakos v. Columbia Sportswear Co., No.

7

15-CV-04543-YGR, 2016 WL 1730001, at *2 (N.D. Cal. May 2, 2016) (upholding allegations that

8

included dates, article of clothing, and prices plaintiffs paid for Columbia clothing items that were

9

all sold exclusively in outlet stores and thus never sold for the higher reference price on their tags);
Horosny v. Burlington Coat Factory of California, LLC, No. CV1505005SJOMRWX, 2015 WL

11
United States District Court
Northern District of California

10

12532178, at *2 (C.D. Cal. Oct. 26, 2015) (upholding allegations that all of the defendant’s

12

products were labeled with an erroneous “compare to” price tag and plaintiff included the dates,

13

article of clothing, and prices he paid for each item); Branca v. Nordstrom, Inc., No. 14CV2062-

14

MMA (JMA), 2015 WL 10436858, at *1 (S.D. Cal. Oct. 9, 2015) (same).

15

Second, Plaintiffs do not identify what false or misleading statements they relied on when

16

making their purchases. Plaintiffs state that Macy’s “represented on price tags, sales labels or on

17

signs above the merchandise” artificially inflated original or regular prices. Compl. ¶ 3. The

18

complaint also includes four sample “sales tags and signs prominently displayed for products

19

available for sale at its stores.” Id. ¶ 6. Yet when explaining why they made their respective

20

purchases at Macy’s, Plaintiffs only generically refer to “advertisements” or “advertising.”

21

Compl. ¶¶ 27, 30–33. Plaintiffs must specify what statements they relied on to give Defendants

22

“the opportunity to respond to the alleged misconduct.” Kearns v. Ford Motor Co., 567 F.3d

23

1120, 1126 (9th Cir. 2009) (affirming district court’s dismissal where plaintiff identified television

24

advertisements and sales materials for cars, but failed to “specify when he was exposed to them or

25

which ones he found material.”). This is particularly important here where Plaintiffs intermittently

26

propose three different theories of fraud. They contend, on information and belief, that the

27

original or regular price does not reflect: (1) the price at which Defendants’ regularly or routinely

28

offered the merchandise, Compl. ¶¶ 4, 12, 31–33; (2) the price at which Defendants’ made a
4

1

“substantial number” of sales, id. ¶ 31; or (3) the “prevailing market price” within three months

2

preceding Plaintiffs’ respective purchases, id.¶¶ 31–33. Yet Plaintiffs concede that they “have no

3

realistic way to know which — if any — of Defendants’ label price comparisons are not false or

4

deceptive.” Compl. ¶ 36.

5

Lastly, Plaintiffs do not clearly allege how Defendants’ original or regular prices were
false or otherwise misleading. As discussed above, Plaintiffs allege three theories of fraud, but fail

7

to provide the factual basis to support any of them. This is insufficient. Rule 9(b)’s heightened

8

pleading standard exists in part to “prohibit[] plaintiff[s] from unilaterally imposing upon the

9

court, the parties and society enormous social and economic costs absent some factual basis.” See

10

Kearns, 567 F.3d at 1125. Accordingly, allegations of fraud based on “information and belief” do

11
United States District Court
Northern District of California

6

not satisfy the particularity requirements of Rule 9(b). Even where “matters [are] peculiarly

12

within the opposing party’s knowledge,” plaintiffs still must “state the facts upon which the[ir]

13

belief is founded.” Wool v. Tandem Computers, Inc., 818 F.2d 1433, 1439 (9th Cir. 1987),

14

overruled on other grounds by Hollinger v. Titan Capital Corp., 914 F.2d 1564, 1573 (9th Cir.

15

1990) (en banc). Here, Plaintiffs allege “on information and belief” that Defendants did not sell

16

their products at the original or regular price, while at the same time asserting that they “have no

17

realistic way to know” whether that is true. See, e.g., Compl. ¶¶ 31, 36. Plaintiffs cannot rely on

18

such unsupported allegations of belief as a “pretext for the discovery of unknown wrongs.” In re

19

Stac Elec. Sec. Litig., 89 F.3d 1399, 1405 (9th Cir. 1996).

20

Plaintiffs’ reliance on various “compare to” pricing cases is unavailing. In those cases, the

21

plaintiffs alleged that the defendants’ products were not sold outside the outlet or discount stores

22

at all, rendering any “comparison” price inherently misleading. See, e.g., Rubenstein v. Neiman

23

Marcus Grp. LLC, No. 15-55890, 2017 WL 1381147, at *2 (9th Cir. Apr. 18, 2017); Stathakos,

24

2016 WL 1730001, at *3–*4; Branca, 2015 WL 10436858, at *7; cf. Chester v. TJX Companies,

25

Inc., No. 515CV01437ODWDTB, 2016 WL 4414768, at *1, *10 (C.D. Cal. Aug. 18, 2016)

26

(finding allegations of fraud sufficient where the store’s definition of “compare at” was the

27

“buying staff’s estimate of the regular retail price”). Moreover, some of these cases also found

28

that the plaintiffs had pled additional clear and specific bases for their assertion that the reference
5

1

prices were false or misleading. See, e.g., Branca, 2015 WL 10436858, at *7 (plaintiff attached

2

defendant’s pricing manual to complaint). To satisfy Rule 9(b)’s heightened pleading standard,

3

Plaintiffs must allege with specificity what products they purchased, on what statements they

4

relied in making those purchases, and why those statements were false or misleading.

5
6

b.

Injunctive Relief

Defendants argue that the Court should dismiss Plaintiffs’ request for injunctive relief

7

because Plaintiffs lack standing to seek such relief. Dkt. No. 41 at 9–11. To have standing to seek

8

injunctive relief, a plaintiff must “demonstrate a ‘real and immediate threat of repeated injury’ in

9

the future.” Chapman v. Pier 1 Imports (U.S.) Inc., 631 F.3d 939, 946 (9th Cir. 2011) (quoting
Fortyune v. Am. Multi-Cinema, Inc., 364 F.3d 1075, 1081 (9th Cir. 2004)). Classwide injunctive

11
United States District Court
Northern District of California

10

relief is not available “[u]nless the named plaintiffs are themselves entitled to seek injunctive

12

relief.” Hodger-Durgin v. de la Vina, 199 F.3d 1037, 1045 (9th Cir. 1999).

13

Plaintiffs contend that they have alleged facts showing that they are at risk of future injury

14

sufficient to support injunctive relief because they “have alleged an intent to buy in the future.”

15

Dkt. No. 47 at 7. It is implausible that Plaintiffs risk being harmed by the same pricing scheme

16

again now that they are aware of how it works. See, e.g., Gershman v. Bayer HealthCare LLC,

17

No. 14-CV-05332-HSG, 2015 WL 2170214, at *8 (N.D. Cal. May 8, 2015) (analyzing standing in

18

false advertising case). The Court finds that the Plaintiffs have not alleged a real threat of future

19

injury and therefore do not have standing to seek injunctive relief.

20
21

c.

Restitution

Defendants argue that, as a matter of law, the proper measure of monetary restitution is the

22

difference between what was paid and the value of what was received. Dkt. No. 41 at 17–19.

23

Thus, Defendants argue, because “Plaintiffs do not allege that the items they purchased were

24

damaged or otherwise worth less than what they paid for them,” their allegations are insufficient to

25

support a request for restitution. Id. at 18.

26

Yet this is but one method of calculating restitution. See Jacobo v. Ross Stores, Inc., No.

27

CV-15-04701-MWF-AGR, 2016 WL 3482041, at *7 (C.D. Cal. Feb. 23, 2016) (“Remedy for the

28

alleged misconduct is not limited to the difference between the value of the goods [p]laintiffs
6

1

purchased and the price for those goods.”); In re Tobacco Cases II, 240 Cal. App. 4th 779, 792–93

2

(Cal. Ct. App. 2015). The Court has broad powers to enter “such orders or judgments . . . as may

3

be necessary to restore any person . . . any money or property . . . which may have been acquired

4

by means of such unfair competition.” Cal. Bus. & Prof. Code § 17203. Whether Plaintiffs can

5

prove up the amount of restitution is a question better addressed at a later stage in the litigation.

6

See, e.g., Russell v. Kohl’s Dep’t Stores, Inc., No. 15-cv-1143, at *5 (C.D. Cal. Oct. 6, 2015)

7

(“While it remains to be seen whether [p]laintiffs can adduce sufficient evidence of a measurable

8

amount of restitution, such an inquiry is premature at this early pleading stage.”).

9

B.

Motion to Strike

Defendants reiterate the same arguments in their motion to strike Plaintiffs’ class

11
United States District Court
Northern District of California

10

allegations as they raised in their motion to dismiss. See Dkt. No. 41 at 19–21. Defendants state

12

that Plaintiffs do not have standing to bring a claim against Bloomingdales and that they allege

13

“only vague conclusory allegations of fraud.” Id. at 20. The Court has already addressed the

14

deficiencies in the complaint above and concludes that the class allegations are not otherwise

15

“redundant, immaterial, impertinent, or scandalous.” Fed. R. Civ. P. 12(f). Because Defendants

16

have failed to demonstrate that the Court should strike the class allegations at this early stage of

17

the proceedings, the motion is DENIED.

18

IV.

19

CONCLUSION
Accordingly, the Court DENIES the motion to dismiss Plaintiffs’ restitution request, but

20

otherwise GRANTS the motion to dismiss in its entirety. The Court further DENIES the motion

21

to strike class allegations. Plaintiffs have 21 days from the date of this order to amend.

22
23

IT IS SO ORDERED.
Dated: 7/7/2017

24
25
HAYWOOD S. GILLIAM, JR.
United States District Judge

26
27
28
7