Byron et al v. Stiiizy, Inc.
Filing
26
ORDER: The 19 Motion to Dismiss filed by Defendant Stiiizy, Inc. is GRANTED in part and DENIED in part. The claims of Plaintiff Taylor Berry in Counts IV, V, VI, and VII are DISMISSED for lack of personal jurisdiction. Plaintiff Taylor Byron's negligent misrepresentation claim in Count III is DISMISSED without prejudice. This case shall proceed with discovery on Byron's claims in Counts I, II, and VII. The Court will set a telephonic scheduling conference by separate Order. Signed by Chief Judge Nancy J. Rosenstengel on 1/29/2025. (mlp)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ILLINOIS
TAYLOR BYRON and TAYLOR BERRY,
individually and on behalf of all others
similarly situated,
Plaintiffs,
v.
Case No. 3:24-CV-1082-NJR
STIIIZY, INC.,
Defendant.
MEMORANDUM AND ORDER
ROSENSTENGEL, Chief Judge:
In 2018, the Agricultural Improvement Act legalized certain hemp products,
including “Delta-8” THC, provided they comply with strict tetrahydrocannabinol
(“THC”) content limitations. Taylor Byron and Taylor Berry (collectively, “Plaintiffs”)
allege that Defendant Stiiizy, Inc. (“Stiiizy”) sells Delta-8 THC vape pens and edibles
(“Delta-8 products”) that exceed the THC threshold in violation of federal and state law.
(Doc. 1 at ¶¶ 54-56, 135). Specifically, Plaintiffs claim Stiiizy intentionally markets and
distributes Delta-8 products with THC levels above the legal limit to attract customers
and to avoid compliance with stricter, more costly cannabis regulations. (Id. at ¶¶ 71-73,
114-117, 154-157).
This lawsuit, brought as a putative class action, raises several claims based on sales
of Stiiizy Delta-8 products in Illinois and Missouri, including: (1) violation of the Illinois
Consumer Fraud and Deceptive Business Practices Act (“ICFA”) (Count I); (2) common
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law fraud as to an Illinois class (Count II); (3) negligent misrepresentation as to an Illinois
class (Count III); (4) violation of the Missouri Merchandising Practices Act (“MMPA”)
(Count IV); (5) common law fraud as to a Missouri class (Count V); (6) negligent
misrepresentation as to a Missouri class (Count VI); and (7) unjust enrichment as to both
classes (Count VII). (Id. at ¶¶ 106-197).
Stiiizy now moves pursuant to Rule 12(b)(2) of the Federal Rules of Civil
Procedure to dismiss the Complaint for lack of personal jurisdiction. (Doc. 19).
Alternatively, Stiiizy seeks dismissal under Rules 12(b)(6) and 9(b) for failure to state a
claim. (Id.). Plaintiffs filed a response in opposition to the motion (Doc. 20), and Stiiizy
filed a timely reply (Doc. 23). For the reasons set forth below, the Court grants Stiiizy’s
motion in part and denies it in part.
FACTUAL BACKGROUND
With the passage of the Agriculture Improvement Act in 2018, certain hemp
products, including Delta-8 THC, were legalized—provided the products contain no
more than 0.3% Delta-9 THC on a “dry-weight basis.” See, e.g., 7 C.F.R. § 990.1. Cannabis
products exceeding this threshold remain classified as a Schedule I controlled substance
under federal law. Id.
Stiiizy is a Delaware corporation with its principal place of business in California.
(Doc. 1 at ¶ 54). It manufactures and distributes a range of cannabis and Delta-8 hemp
products—vape pens and edibles—under the “Stiiizy” brand. (Id. at ¶ 55). Stiiizy markets
these products as compliant with the federal THC threshold, representing in its labeling,
advertising, and packaging that the products contain less than 0.3% Delta-9 THC on a
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dry-weight basis. (Id. at ¶¶ 56-56, 60-63).
Plaintiff Byron, a citizen of Illinois, purchased a Delta-8 Stiiizy Starter Pack from a
retailer in Swansea, Illinois, relying on product labeling and representations about
compliance with federal THC limits. (Id. at ¶¶ 77-79). Similarly, Plaintiff Berry, a Missouri
citizen, purchased a Stiiizy product from a store in Chesterfield, Missouri, under the same
understanding. (Id. at ¶ 85). Both Plaintiffs allege that independent lab testing revealed
THC levels exceeding the federal threshold, with one product, the “Skywalker OG Pen
D8,” containing 3.57% Delta-9 THC—more than 10 times the legal limit. (Id. at ¶ 61).
Plaintiffs contend they would not have purchased the products had they known
they exceeded the THC limit and allege Stiiizy knowingly misrepresented compliance to
avoid the cost of regulatory testing. (Id. at ¶¶ 114-117, 129, 154). In addition to marketing
mislabeled products, Plaintiffs further allege that Stiiizy engaged in targeted promotional
efforts to establish a foothold in Illinois, including distributing its products through
Illinois retailers, hosting promotional events in Illinois, and advertising directly to Illinois
consumers. (Doc. 20 at 2-3).
This putative class action is brought on behalf of similarly situated consumers in
Illinois and Missouri who allege they were misled by Stiiizy’s representations regarding
the THC content of its products. (Doc. 1 at ¶¶ 98-102). Plaintiff Byron seeks to represent
a class of Illinois citizens who purchased Stiiizy products in Illinois, while Plaintiff Berry
seeks to represent a class of Missouri citizens who purchased Stiiizy products in Missouri.
(Id. at ¶ 97).
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LEGAL STANDARDS
I.
Federal Rule of Civil Procedure 12(b)(2)
A motion to dismiss under Rule 12(b)(2) of the Federal Rules of Civil Procedure
challenges the court’s personal jurisdiction over a defendant. Once personal jurisdiction
is challenged, the plaintiff bears the burden of establishing that jurisdiction is proper.
Purdue Research Foundation v. Sanofi-Synthelabo, S.A., 338 F.3d 773, 782 (7th Cir. 2003). In
such cases, courts consider whether the plaintiff has made a prima facie showing of
jurisdiction, accepting all well-pleaded facts as true and resolving any factual dispute in
the plaintiff’s favor. Id.
II.
Federal Rule of Civil Procedure 12(b)(6)
When evaluating a motion to dismiss filed under Rule 12(b)(6), the Court must
consider whether the complaint states a claim for relief that is “plausible” on its face. Bell
Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). Plausibility requires more than labels
and conclusions; the allegations must allow the court to reasonably infer that the
defendant is liable on the assumption that all the allegations in the complaint are true,
“even if doubtful in fact.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); Twombly, 550 U.S. at
555 (internal citations omitted). While the court accepts as true all well-pleaded facts and
draws reasonable inferences in the plaintiff’s favor, it does not accept legal conclusions.
Burke v. 401 N. Wabash Venture, LLC, 714 F.3d 501, 504 (7th Cir. 2013).
In deciding a motion to dismiss under Rule 12(b)(6) with allegations that sound in
fraud, courts must apply the heightened pleading standard imposed by Rule 9(b). Benson
v. Fannie May Confections Brands, Inc., 944 F.3d 639, 646 (7th Cir. 2019) (citing Vanzant v.
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Hill’s Pet Nutrition, Inc., 934 F.3d 730, 736 (7th Cir. 2019)). Plaintiffs are required to state
with particularity, the “who, what, when, where, and how” of the alleged fraud. Id.
However, “knowledge” and “intent” may be alleged generally. FED. R. CIV. P. 9(b).
DISCUSSION
The Court first addresses Stiiizy’s Motion to Dismiss under Rule 12(b)(2). As a
threshold matter, the Court must determine whether it has personal jurisdiction over
Stiiizy. If personal jurisdiction is lacking, the Court cannot proceed to consider dismissal
under Rules 12(b)(6) and 9(b). See Norberg v. Shutterfly, Inc., 152 F. Supp. 3d 1103, 1104
(N.D. Ill. 2015). If jurisdiction is established, the Court will then evaluate the adequacy of
Plaintiffs’ claims.
I.
Motion to Dismiss for Lack of Personal Jurisdiction
“As a procedural matter, federal courts look to state law in determining the
bounds of their jurisdiction over a party.” Brook v. McCormley, 873 F.3d 549, 552 (7th Cir.
2017) (citing FED. R. CIV. P. 4(k)(1)(A)). Because the Illinois long-arm statute permits a
court to exercise jurisdiction to the full extent permitted by the Due Process Clause of the
Fourteenth Amendment, the state statutory and federal constitutional requirements
merge. Id. (citing Tamburo v. Dworkin, 601 F.3d 693, 700 (7th Cir. 2010)).
“The Due Process Clause of the Fourteenth Amendment limits the power of a court
to render a judgment over nonresident defendants.” Id. at 552 (citing World-Wide
Volkswagen Corp. v. Woodson, 444 U.S. 286, 291 (1980)). Thus, personal jurisdiction is only
proper if the defendant has sufficient minimum contacts with the forum state “such that
the maintenance of the suit does not offend traditional notions of fair play and substantial
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justice.” Id. While the defendant’s physical presence in the forum State is not required,
there must be sufficient minimum contacts such that one “should reasonably anticipate
being haled into court there.” Id. (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462,
474 (1985)).
Personal jurisdiction can be established through general or specific jurisdiction.
General jurisdiction refers to the forum in which a party, either a person or corporation,
is “essentially at home.” Ford Motor Co. v. Mont. Eighth Jud. Dist. Ct., 592 U.S. 351, 358
(2021). Specific jurisdiction covers those cases where a party is not “at-home” in the forum
state, but has sufficient “minimum contacts” with the forum state such that the exercise
of jurisdiction “does not offend traditional notions of fair play and substantial justice.”
NBA Props., Inc. v. HANWJH, 46 F.4th 614, 621 (7th Cir. 2022).
Here, Plaintiffs have conceded that this Court cannot exercise general personal
jurisdiction over Stiiizy, as it is not “at home” in Illinois. Thus, the Court focuses its
analysis on whether it has specific personal jurisdiction over Stiiizy.
“There are three requirements for a court to exercise specific personal jurisdiction
over a defendant: (1) the defendant must have purposefully availed itself of the privilege
of conducting business in the forum state or directed its activities at the forum state;
(2) the plaintiff’s injury must have arisen out of the defendant’s forum-related activities;
and (3) the Court’s exercise of personal jurisdiction must comport with traditional notions
of fair play and substantial justice.” Curry v. Revolution Lab’ys, LLC, 949 F.3d 385, 398.
“The inquiry whether a forum State may assert specific jurisdiction over a
nonresident defendant focuses on the relationship among the defendant, the forum, and
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the litigation.” Walden v. Fiore, 134 S. Ct. 1115, 1121 (2014) (quotation omitted). “The mere
fact that a defendant’s conduct affects a plaintiff with connections to the forum State is
not sufficient to establish jurisdiction.” Id. Rather, the out-of-state defendant must
purposefully direct its activities at residents of the forum, and the litigation must “arise
out of contacts that the ‘defendant himself’ creates with the forum state.” Curry, 949 F.3d
at 396 (quoting Burger King, 471 U.S. at 475). The defendant’s relationship with the
plaintiff or a third party, standing alone, is insufficient to create the necessary “minimum
contacts.” Walden, 134 S. Ct. at 1123.
A. Purposeful Availment
Stiiizy first argues that it has not purposely availed itself of the privilege of
conducting business in Illinois. Stiiizy asserts that Plaintiffs’ only allegation as to specific
personal jurisdiction is the conclusory statement that “Stiiizy has transacted business in
Illinois and committed tortious acts in Illinois.” (Doc. 1 at ¶ 95). It also points to Plaintiffs’
allegation that Byron purchased one Delta-8 Stiiizy Starter Pack at a store in Swansea,
Illinois, arguing that specific jurisdiction cannot be exercised over an out-of-state
defendant based on a single sale in a forum, citing Matlin v. Spin Master Corporation,
921 F.3d 701, 707 (7th Cir. 2019).
In response, Plaintiffs argue that Stiiizy has deliberately and continuously
exploited the Illinois market for sales of its products. Plaintiffs produced evidence that
Stiiizy has hosted events in Illinois to promote the sale of its products, including a
“massive launch party in Chicago” where guests were able to try Stiiizy’s latest products.
(Doc. 20-1). Stiiizy also announced the opening of a “flagship store in Chicago,” and
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claimed that the “launch of STIIIZY in Illinois is a significant development for the
cannabis industry in the state.” (Id.). In addition to its launch party and flagship Chicago
store, Stiiizy sells its products “at almost every dispensary” in the State of Illinois, hosts
events at those dispensaries, sells Illinois-themed Stiiizy merchandise, and claims that
“STIIIZY is poised to make a big impact in the Illinois market.” (Id.).
The Court finds that Plaintiffs have met their burden of demonstrating that Stiiizy
purposefully availed itself of the privilege of conducting business in Illinois and directed
its activities at Illinois residents. Stiiizy’s arguments to the contrary are unpersuasive, and
its citation to Matlin is distinguishable. In that case, two inventors sued their former
company in Illinois for royalties from the products they invented. 921 F.3d at 703-04.
When the defendants challenged personal jurisdiction in Illinois, the plaintiffs’ own
attorney submitted a receipt from the defendants’ website showing that “he purchased
and received a single patented product in Illinois.” Id. at 704. The Seventh Circuit Court
of Appeals held that personal jurisdiction was lacking for three reasons. First, the case
involved “a single incident conjured up by the plaintiffs’ attorney for the exclusive purpose
of establishing personal jurisdiction over the defendants,” second, the plaintiffs’ claims
did not arise out of defendants’ contacts with Illinois, and third, the plaintiffs “attempted
to salvage personal jurisdiction—after the defendants moved to dismiss—by luring them
into shipping a product into Illinois.” Id. at 706-07 (emphasis added).
Unlike the extremely limited contacts present in Matlin, in this case Plaintiffs have
produced evidence that Stiiizy sells its products throughout Illinois and directly targets
Illinois residents, both online and in brick-and-mortar stores. There is no doubt that
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Stiiizy has purposely availed itself of the privilege of conducting business in Illinois.
B. Relatedness
In addition to purposefully directing its activities at the forum state, “[t]he proper
exercise of specific jurisdiction also requires that the defendant’s minimum contacts with
the forum state be ‘suit-related.’” Curry, 949 F.3d at 400; see also Ford Motor Co., 141 S. Ct.
at 1026 (the plaintiffs’ claims must “arise out of or relate to the defendant’s contacts with
the forum”). That is, “[t]here must be a connection between the forum and the specific
claims at issue.” Id. (citation and quotation omitted). “[E]ven regularly occurring sales of
a product in a State do not justify the exercise of jurisdiction over a claim unrelated to
those sales.” Id. (quoting Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 931
n.6 (2011)). Yet, where a corporation has “continuously and deliberately exploited a
State’s market, it must reasonably anticipate being haled into that State’s courts to defend
actions based on products causing injury there.” Ford Motor Co., 592 U.S. at 364 (cleaned up
and emphasis added).
Stiiizy asserts that Plaintiff Byron’s purchase of a single Stiiizy-branded product
at an unaffiliated retail location in Illinois is too attenuated to support an inference that
Stiiizy’s business activities in Illinois are related to her claims. The Court disagrees.
Plaintiffs allege that Stiiizy’s products were deceptively marketed, labeled, and sold to
Illinois consumers, that Byron purchased a Stiiizy product in Illinois in reliance on
Stiiizy’s product labeling and representations about its products’ THC content, and that
Byron was harmed by the alleged misrepresentations on Stiiizy’s product packaging.
(Doc. 1 at ¶¶ 77-79, 85-87). These claims directly relate to Stiiizy’s Illinois activities, which
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include distributing the allegedly deceptive products to Illinois retailers, selling Stiiizybranded products to Illinois consumers, and fostering familiarity with the Stiiizy brand
through advertising. Thus, the Court finds that there is a sufficient relationship between
the forum and Plaintiff Byron’s claims.
Stiiizy also argues that the Court does not have personal jurisdiction over it with
regard to Plaintiff Berry’s Missouri claims. As the Supreme Court has explained on
multiple occasions, for a court to exercise specific personal jurisdiction consistent with
due process, “the defendant’s suit-related conduct must create a substantial connection
with the forum State.” Walden, 571 U.S. at 284. Additionally, this requirement applies
separately to the claims of each named plaintiff. See Mussat v. IQVIA, Inc., 953 F.3d 441,
447 (7th Cir. 2020) (“[N]amed representatives must be able to demonstrate either general
or specific personal jurisdiction.”); In re Testosterone Replacement Therapy Prods. Liab. Litig.
Coordinated Pretrial Proc., 164 F. Supp. 3d 1040, 1047 (N.D. Ill. 2016) (“Based on the
rationale underlying the ‘minimum contacts’ requirement as well as sensitivity to
‘traditional notions of fair play and substantial justice,’ . . . the specific personal
jurisdiction inquiry in this case must be conducted separately for the claims of each
individual plaintiff.”); Thomas v. Walmart Inc., 720 F. Supp. 3d 650, 661 (N.D. Ill. 2024)
(finding that specific personal jurisdiction must exist independently for each separately
pleaded claim, and dismissing claims of California plaintiff where claims were based on
conduct that occurred solely in California); Letoski v. Coca-Cola Co., No. 23 CV 238, 2024
WL 4476120, at *3 (N.D. Ill. Oct. 11, 2024) (dismissing claims of a Vermont citizen because
he alleged no contacts with Illinois related to his purchases of defendant’s product).
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Here, Plaintiff Berry, the named Plaintiff for the proposed Missouri class,
purchased a Stiiizy product in Missouri and seeks to represent a class of Missouri citizens
who, likewise, purchased Stiiizy products in Missouri. Berry has alleged no facts related
to the sale of a Stiiizy product in Illinois. Because Berry’s claims are based solely on events
that occurred in Missouri—and because Plaintiffs have provided no argument to the
contrary—the Court finds that it lacks personal jurisdiction over Stiiizy with regard to
Plaintiff Berry’s Missouri claims. Accordingly, Counts IV, V, VI, and VII (as to the
Missouri class only) shall be dismissed.
C. Fair Play and Substantial Justice
Finally, exercising jurisdiction over Stiiizy in Illinois comports with traditional
notions of fair play and substantial justice. See Int’l Shoe v. Washington, 326 U.S. 310, 316
(1945). In determining whether jurisdiction is reasonable, courts evaluate several factors,
including: (1) the burden on the defendant, (2) the forum state’s interest in adjudicating
the dispute, (3) the plaintiff’s interest in obtaining relief, and (4) the interstate judicial
system’s interest in efficient resolution of controversies. See Burger King, 471 U.S. at 47677.
Here, the burden on Stiiizy is minimal. Stiiizy is a Delaware corporation with
nationwide operations, including substantial business activities in Illinois. (Doc. 1 at
¶ 55). Moreover, Stiiizy’s sustained and intentional efforts to exploit the Illinois market
provide reasonable notice of being haled into an Illinois court. See Ford Motor Co., 592 U.S.
at 364 (holding that a corporation must reasonably anticipate being haled into a State’s
courts when it “continuously and deliberately” exploits a State’s market).
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Furthermore, Illinois has a significant interest in protecting its residents from
alleged consumer fraud, particularly when the defendant has cultivated a strong
presence in the state. See Curry, 949 F.3d at 402 (“Illinois has a significant interest in
providing a forum for its residents to seek redress for harms caused by out-of-state
actors.”). Stiiizy’s alleged misrepresentations supposedly harmed Illinois consumers,
further heightening the State’s interest in adjudicating this matter. And the putative
Illinois class, as Illinois residents, has a compelling interest in pursuing relief in their
home forum. Adjudicating the claims in Illinois also promotes the interstate judicial
system’s interest in efficient resolution as Byron’s claims are closely tied to Stiiizy’s
Illinois-related conduct. Finally, resolving the dispute in Illinois, where the relevant
transaction occurred, ensures a logical forum for adjudication.
Considering these factors, the Court finds that exercising jurisdiction over Stiiizy
in Illinois is reasonable and consistent with traditional notions of fair play and substantial
justice. Accordingly, the Court finds that specific jurisdiction is proper with respect to the
Plaintiff Byron and the putative Illinois class.
II.
Motion to Dismiss Under Rule 12(b)(6) and Rule 9(b)
Having determined that the Court has personal jurisdiction over Stiiizy with
respect to Byron’s claims, the Court now evaluates whether her fraud, negligent
misrepresentation, and unjust enrichment claims survive Stiiizy’s motion to dismiss
under Rules 12(b)(6) and 9(b).
A.
Common Law Fraud
To state a claim for common law fraud in Illinois, a plaintiff must allege: (1) a false
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statement of a material fact; (2) defendant’s knowledge that the statement was false;
(3) defendant’s intent that the statement induce plaintiff to act; (4) plaintiff’s reliance
upon the truth of the statement; and (5) damages resulting from reliance on the statement.
Davis v. G.N. Mortg. Corp., 396 F.3d 869, 881–82 (7th Cir. 2005). Rule 9(b) requires
allegations of fraud to be pleaded with particularity. Haywood v. Massage Envy Franchising,
LLC, 887 F.3d 329, 333 (7th Cir. 2018). In other words, a plaintiff must describe “the who,
what, when, where, and how of the fraud.” Id. (quoting Camasta v. Jos. A. Bank Clothiers,
Inc., 761 F.3d 732, 736 (7th Cir. 2014)). However, “knowledge” and “intent” may be
alleged generally. FED. R. CIV. P. 9(b).
Here, Stiiizy argues that the Complaint must be dismissed under Rules 12(b)(6)
and 9(b) because it fails to allege any plausible facts supporting the element of falsity.
Instead, the Complaint contains a single allegation that an undated lab test on one Delta8 product—which Byron did not purchase—contained more than the allowable amount
of THC. It further contends that Byron has failed to adequately allege Stiiizy’s knowledge
of the falsity. Finally, Stiiizy asserts the Complaint fails to allege facts demonstrating its
intent to induce consumers to rely on the falsity.
The Court finds these arguments unpersuasive. Byron alleges that Stiiizy sells a
variety of cannabis and Delta-8 products in stores and online in Illinois. (Doc. 1 at ¶ 55).
Its products include Delta-8 vape pens and edibles, which must contain less than 0.3% of
active THC to qualify as Delta-8 hemp products. (Id. at ¶ 56). Stiiizy even represents
through Certificates of Analysis that its Delta-8 products have been independently tested
and that those results confirm its Delta-8 products contain less than 0.3% of active THC.
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(Id. at ¶ 60). In reality, however, “Stiiizy’s D8 products contain more than 0.3% of active
THC.” (Id. at ¶ 58). Indeed, independent testing of one Stiiizy Delta-8 product revealed
3.57% of Delta-9 THC. (Doc. 1 at ¶ 61). Meanwhile, Stiiizy’s labels, packaging,
advertisements, active ingredient information, and lab results provided to consumers do
not accurately reflect the amount of active THC in Stiiizy’s Delta-8 products. (Id. at ¶ 62).
As a result, Byron alleges, consumers are being placed at increased health, safety, and
medical risk by Stiiizy Delta-8 products that are, in fact, a controlled substance. (Id. at
¶ 68). Taking these facts as true, and drawing all inferences in Byron’s favor, these
allegations are sufficiently particular under Rules 12(b)(6) and 9(b) to support a
reasonable inference of falsity.
With regard to Stiiizy’s knowledge of the falsity, Byron alleges that Stiiizy is one
of the nation’s largest cannabis product manufacturers and, thus, is well aware of the
THC requirements for all types of products, including Delta-8, CBD, and traditional
cannabis products. (Id. at ¶ 75). Furthermore, under the Illinois Department of
Agriculture’s regulations governing the growth and processing of industrial hemp, all
growers are subject to inspection and testing to verify that “delta-9 THC concentration
does not exceed 0.3% on a dry weight basis.” (Id. at ¶ 20). While Stiiizy purports to
consumers that its Delta-8 products have been independently tested and contain less than
0.3% of active THC on its labels, on its packaging, and in advertising, Byron claims that,
in actuality, Stiiizy’s products contain well over the legal amount of active THC. (Id. at
¶¶ 60-61). These allegations, when accepted as true, are sufficient to support a reasonable
inference that Stiiizy knew its Delta-8 products contained false representations and
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omissions about their THC levels.
Finally, Byron adequately alleges Stiiizy’s intent to induce consumers to rely on
the falsity. Byron claims Stiiizy intends for consumers to rely on the false, deceptive, and
misleading representations made in its packaging, labeling, and advertising for its Delta8 products and that it profits financially as a result. Not only does Stiiizy profit from
consumers
who
purchase
the
Delta-8
products
in
reliance
upon
Stiiizy’s
misrepresentations, but it also saves the burden and expense of complying with the far
more extensive regulations and requirements placed upon cannabis products. (Id. at
¶¶ 71-73). Furthermore, absent Stiiizy’s misrepresentations about the THC level of its
Delta-8 products, consumers would not purchase the products. Again, accepting these
allegations as true, the Court finds that Byron has adequately alleged Stiiizy’s intent to
induce consumers to rely on the falsity for its own financial benefit.
Stiiizy’s motion to dismiss Byron’s common law fraud claim is denied.
B.
ICFA
To state a claim under the ICFA, a plaintiff must plead facts demonstrating that:
(1) the defendant committed a deceptive or unfair act; (2) the defendant intended that
others rely on the deception; (3) the act occurred in the course of trade or commerce; and
(4) the act caused actual damages. Benson v. Fannie May Confections Brands, Inc., 944 F.3d
639, 646 (7th Cir. 2019) (citing Vanzant v. Hill’s Pet Nutrition, Inc., 934 F.3d 730, 736 (7th
Cir. 2019)). Claims of deception brought under the ICFA are analyzed under the
heightened pleading standard set forth in Rule 9(b). Haywood, 887 F.3d at 333.
Courts apply a “reasonable consumer” standard when evaluating the likelihood
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of deception and review the “totality of the information” available to the consumer at the
point of deception. Kahn v. Walmart Inc., 107 F.4th 585, 598 (7th Cir. 2024). “Where, as
here, the alleged deceptive practice involves misleading labels, the ICFA requires plaintiff
to allege plausibly that the relevant labels are likely to deceive reasonable consumers,
which requires a probability that a significant portion of the general consuming public or
of targeted consumers, acting reasonably in the circumstances, could be misled.” Id.
(quotation marks omitted).
Stiiizy moves to dismiss Byron’s ICFA claim because nothing in the complaint
plausibly suggests that Stiiizy committed a deceptive act. Stiiizy argues that Byron does
not allege that any product she purchased has been tested or that any test results
demonstrate that the product was mislabeled. And Stiiizy again argues Byron has not
alleged facts showing Stiiizy knew the THC content of its products exceeded the legal
limit.
As with the common law fraud claim, Stiiizy’s arguments fail. Byron alleges that
Stiiizy failed to accurately convey the amount of THC in its Delta-8 products, failed to
identify them as cannabis, falsely labeled them as hemp products, and failed to use labels
that accurately identified the quantity or proportion of THC in the products. (Doc. 1 at
¶ 133). She further claims that she relied upon the accuracy of the representations made
on the packaging and labeling of the Delta-8 Stiiizy Starter Pack, including but not limited
to representations regarding the percentage of active THC in the product. (Id. at ¶ 78).
Unbeknownst to her, however, “the Delta 8 Stiiizy Starter Pack she purchased contained
more than 0.3% of Delta-9 THC on a dry weight basis.” (Id. at ¶ 81). At this point, Byron
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does not need to prove that allegation.
Finally, Byron alleges that Stiiizy was aware of the alleged misrepresentations, as
it engaged in these deceptive practices to avoid compliance costs and to induce customers
to purchase its products. (Id. at ¶¶ 75, 128-131). These allegations, taken as true, are
sufficient to state a claim for deception under the ICFA.
C.
Negligent Misrepresentation
Byron concedes that her negligent misrepresentation claim brought under Illinois
law is barred by the economic loss doctrine. Accordingly, Count III shall be dismissed.
D.
Unjust Enrichment
Finally, Stiiizy argues that Byron’s unjust enrichment claim is an impermissible
“freestanding” claim that is not recognized under Illinois law. (Doc. 19 at 23-24). Stiiizy’s
argument relies on the dismissal of Byron’s fraud and ICFA claims. But since those claims
have not been dismissed, Byron’s unjust enrichment claim remains viable. See Kahn, 107
F.4th at 606 (reinstating plaintiff’s unjust enrichment claim after finding that plaintiff
adequately pleaded the elements of an ICFA claim). Accordingly, Stiiizy’s motion to
dismiss Byron’s unjust enrichment claim is denied.
CONCLUSION
For these reasons, the Motion to Dismiss filed by Defendant Stiiizy (Doc. 19) is
GRANTED in part and DENIED in part.
The claims of Plaintiff Taylor Berry in Counts IV, V, VI, and VII are DISMISSED
for lack of personal jurisdiction.
Plaintiff Taylor Byron’s negligent misrepresentation claim in Count III is
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DISMISSED without prejudice.
This case shall proceed with discovery on Byron’s claims in Counts I, II, and VII.
The Court will set a telephonic scheduling conference by separate Order.
IT IS SO ORDERED.
DATED: January 29, 2025
____________________________
NANCY J. ROSENSTENGEL
Chief U.S. District Judge
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