Hudock et al v. LG Electronics U.S.A., Inc. et al

Filing 51

MEMORANDUM OPINION AND ORDER. 1) Granting in part and denying in part defendant LG Electronics U.S.A., Inc.'s #18 Motion to Dismiss. (a) The motion is GRANTED with respect to the New Jersey Consumer Fraud Act [Count IV]. Count IV is DISMISSED without prejudice. (b) The motion is GRANTED with respect to the breach of contract claim [Count VIII]. Count VIII is DISMISSED with prejudice. (c) The motion is DENIED in all other respects. 2) Granting in part and denying in part Best Buy Co., Best Buy Stores, L.P., and BestBuy.com, LLC's #22 Motion to Dismiss. (a)The motion is GRANTED in its entirety with respect to the claims against Best Buy Co., Inc. and Best Buy Stores, L.P. Best Buy Co., Inc. and Best Buy Stores, L.P. are DISMISSED without prejudice from this case. (b) The motion is GRANTED with respect to the New Jersey Consumer Fraud Act claim [Count IV] against BestBuy.com. Count IV is DISMISSED without prejudice. (c) The motion is DENIED in all other respects. (Written Opinion) Signed by Chief Judge John R. Tunheim on March 27, 2017. (DML)

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
BENJAMIN HUDOCK and BREANN
HUDOCK, individually and on behalf of
all others similarly situated,
Plaintiffs,
v.

Civil No. 16-1220 (JRT/FLN)

MEMORANDUM
OPINION AND ORDER ON
DEFENDANTS’ MOTIONS
TO DISMISS

LG ELECTRONICS U.S.A., INC., BEST
BUY CO., INC., BEST BUY STORES,
L.P., and BESTBUY.COM LLC,
Defendants.

David M. Cialkowski, ZIMMERMAN REED, PLLP, 1100 IDS Center,
80 South Eighth Street, Minneapolis, MN 55402; Daniel C. Hedlund,
GUSTAFSON GLUEK PLLC, 120 South Sixth Street, Suite 2600,
Minneapolis, MN 55402; and Luke Hudock, HUDOCK LAW GROUP,
S.C., P.O. Box 83, Muskego, WI 53150, for plaintiffs.
John C. Mitchell, HOGAN LOVELLS US LLP, 80 South Eighth Street,
Suite 1225, Minneapolis, MN 55402; and Phoebe A. Wilkinson, HOGAN
LOVELLS US LLP, 875 Third Avenue, New York, NY 10020, for
defendants.
This case arises from Plaintiffs Benjamin and Breann Hudock’s (“Plaintiffs”)
purchase of a television purporting to have a 120Hz refresh rate. Plaintiffs allege the
television, in fact, has a 60Hz refresh rate. As stated in the Complaint, Plaintiffs filed this
purported class action against Defendant LG Electronics U.S.A., Inc. (LG) and
Defendants Best Buy Co., Inc. (Best Buy Co.), Best Buy Stores, L.P. (Best Buy LP), and
BestBuy.com, LLC (BestBuy.com) (collectively, Best Buy). Plaintiffs allege violations

36

of Minnesota and New Jersey consumer fraud statutes, as well as a number of common
law claims. LG and Best Buy filed motions to dismiss the Complaint pursuant to Rules
12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure. For the reasons set forth
below, the Court will grant in part and deny in part Defendants’ motions to dismiss.

BACKGROUND
Plaintiffs, married Wisconsin residents, purchased a television manufactured by
LG on “Bestbuy.com.” (Compl. ¶¶ 6-7, 34, 37, May 9, 2015, Docket No. 1.) Plaintiffs
assert that, prior to buying the television, Plaintiffs decided to purchase a television with
a minimum of a 120Hz refresh rate. 1 (Id. ¶ 33.) Plaintiffs contend they spent weeks
shopping for the television and, on November 29, 2013, Breann Hudock “viewed
advertisements and specifications” for the television they purchased on “Bestbuy.com.”
(Id. ¶¶ 33-34, 37.) Plaintiffs allege the “advertisements and specifications” indicated the
television had a 120Hz refresh rate. (Id. ¶¶ 35-36.)
According to Plaintiffs, after conferring with Benjamin Hudock and describing the
specifications, Breann Hudock purchased the television from the website “relying on the
1

The refresh rate corresponds to the Hertz (Hz) specification. The refresh rate of a
particular television indicates the number of times per second a television refreshes the image
displayed. (Compl. ¶ 15.) The higher the refresh rate of a television, the more unique images are
displayed per second allowing the television to display moving images more clearly, resulting in
better picture quality. (Id. ¶ 16.)
Defendants challenge Plaintiffs’ definition of refresh rate as “unique images per second”
rather than “cycles per second.” (Mem. of Law is Supp. of LG’s Mot. to Dismiss at 2-3, July 12,
2016, Docket No. 20.) For the purpose of the motion to dismiss, the Court will accept the
Complaint’s definition of the refresh rate as true. See, e.g., Braden v. Wal-Mart Stores, Inc., 588
F.3d 585, 594 (8th Cir. 2009).

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120Hz advertised refresh rate.” (Id. ¶ 37.) After purchasing the television, Plaintiffs
allege they “noticed that the television’s images were not as clear as expected,” but did
not learn until later that the television only had a 60Hz refresh rate. (Id. ¶ 38; see also
Decl. of J. Christopher Mitchell (“Mitchell Decl.”), Ex. 1, July 12, 2016, Docket No. 26.)
On April 29, 2016, two and a half years after Plaintiffs purchased the television,
Plaintiffs notified LG and Best Buy that the television’s refresh rate did not conform to
LG’s and Best Buy’s representations. (Id. ¶ 88.) On May 9, 2016, Plaintiffs filed this
purported class action against LG and Best Buy, alleging eight claims: (1) violation of
Minnesota’s Consumer Fraud Act (MCFA), Minn. Stat. § 325F.68, et seq. (Count I);
(2) violation of Minnesota’s Uniform Deceptive Trade Practices Act (MDTPA), Minn.
Stat. § 325D.43, et seq. (Count II); (3) violation of Minnesota’s Unlawful Trade Practices
Act (MUTA), Minn. Stat. § 325D.13 (Count III); (4) violation of New Jersey’s Consumer
Fraud Act (NJCFA), N.J. Stat. Ann. § 54:8-1, et seq. (Count IV); (5) unjust enrichment
(Count V); (6) breach of express warranty (Count VI); (7) breach of implied warranty
(Count VII); and (8) breach of contract (Count VIII). 2 (Compl. ¶¶ 51-102.) LG and Best
Buy filed motions to dismiss the Complaint pursuant to Rules 12(b)(1) and 12(b)(6).

2

While Plaintiffs did not indicate the state law invoked for the common law claims, both
parties apply Minnesota law for the purpose of the motion to dismiss. As the case proceeds,
however, choice of law issues with respect to Plaintiffs’ common law claims remain.

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DISCUSSION
I.

STANDING
Defendants first argue Plaintiffs lack standing to bring their claims under various

theories.

Normally, the Court would address Defendants’ standing arguments first,

before the merits, because “standing is a jurisdictional prerequisite that must be resolved
before reaching the merits of a suit.” Turkish Coal. of Am., Inc. v. Bruininks, 678 F.3d
617, 621 (8th Cir. 2012) (quoting City of Clarkson Valley v. Mineta, 495 F.3d 567, 569
(8th Cir. 2007)).

But in the class action context, the Supreme Court’s decisions in

Amchem Prods., Inc. v. Windsor, 521 U.S. 591 (1997), and Ortiz v. Fibreboard Corp.,
527 U.S. 815 (1999), “‘make clear that there are situations in which a court may defer’
the standing question ‘to later in the case.’” Roth v. Life Time Fitness, Inc., No. 15-3270,
2016 WL 3911875, at *4 (D. Minn. July 14, 2016) (quoting In re Target Corp. Customer
Data Sec. Breach Litig., 66 F. Supp. 3d 1154, 1160 (D. Minn. 2014)). 3 Although neither
created a blanket exception, Amchem and Ortiz stand for the proposition that standing
questions may be postponed when class certification is “logically antecedent” to standing.

3

This Court acknowledges that courts disagree on the scope and application of Amchen
and Ortiz. Compare Roth, 2016 WL 3911875, at *5 (declining to address the standing argument
on a motion to dismiss), and In re Target Corp. Customer Data Sec. Breach Litig, 66 F. Supp. 3d
at 1159 (finding that the court may wait to address standing questions until after class
certification), with Insulate SB, Inc. v. Advanced Finishing Syss., Inc., No. 13-2664, 2014 WL
943224, at *10-12 (D. Minn. Mar. 11, 2014) (finding the court must address standing prior to
class certification). But the Eighth Circuit has not addressed the issue and well-reasoned
decisions support this Court’s interpretation. See, e.g., In re Carrier IQ, Inc., 78 F. Supp. 3d
1051, 1068-70 (N.D. Cal. 2015) (describing the split in authority in detail and finding federal
courts possess discretion to delay adjudication of standing questions when class certification is
logically antecedent to the standing question).

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See Roth, 2016 WL 3911875, at *4; In re Anthem, Inc. Data Breach Litig.,
162 F. Supp. 3d 953, 970-71 (N.D. Cal. Feb. 14, 2016); In re Carrier IQ, Inc.,
78 F. Supp. 3d 1051, 1068-70 (N.D. Cal. 2015).
Here, the Court will exercise its discretion to defer consideration of the standing
issues until after class certification. There is no question that Plaintiffs have standing to
sue Defendants under, at the very minimum, Wisconsin law. (Mem. of Law in Supp. of
LG’s Mot. to Dismiss at 6, July 12, 2016, Docket No. 20 (admitting Plaintiffs have
standing under Wisconsin law).)

The Court finds Defendants’ standing arguments,

therefore, do not address whether Plaintiffs have individual standing. Instead, class
certification is “logically antecedent” to the standing issues raised by Defendants;
specifically, the Court can determine during the class certification process whether
Plaintiffs’ can bring claims under the laws of states in which no currently-named plaintiff
resides or whether Plaintiffs’ injuries are sufficiently similar to those of the proposed
class to permit claims for a broader range of LG products. Blessing v. Sirius XM Radio
Inc., 756 F. Supp. 2d 445, 451 (S.D.N.Y. 2010); see also Fed. R. Civ. P. 23(a). If
standing issues remain after class certification, Defendants are free to make a motion at
that time. See Anwar v. Fairfield Greenwich Ltd., 728 F. Supp. 2d 372, 402 (S.D.N.Y.
2010).

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II.

FAILURE TO STATE A CLAIM
A.

Standard of Review

In reviewing a Rule 12(b)(6) motion, the Court views a complaint in “the light
most favorable to the nonmoving party.” Longaker v. Boston Sci. Corp., 872 F. Supp. 2d
816, 819 (D. Minn. 2012). The Court considers all facts alleged in the complaint as true
to determine whether the complaint states a “‘claim to relief that is plausible on its face.’”
Braden v. Wal-Mart Stores, Inc., 588 F.3d 585, 594 (8th Cir. 2009) (quoting Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009)). “A claim has facial plausibility when the plaintiff
pleads factual content that allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678. “Where a
complaint pleads facts that are ‘merely consistent with’ a defendant’s liability, it ‘stops
short of the line between possibility and plausibility[,]’” and therefore must be dismissed.
Id. (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). Although the Court
accepts the complaint’s factual allegations as true, it is “not bound to accept as true a
legal conclusion couched as a factual allegation.” Twombly, 550 U.S. at 555 (quoting
Papasan v. Allain, 478 U.S. 265, 286 (1986)). Therefore, to survive a motion to dismiss,
a complaint must provide more than “‘labels and conclusions’ or ‘a formulaic recitation
of the elements of a cause of action.’” Iqbal, 556 U.S. at 678 (quoting Twombly, 550
U.S. at 555).

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B.

Claims Against Best Buy Co., Best Buy LP, and BestBuy.com

In order to evaluate Defendants’ motions to dismiss, the Court must first
determine how to construe the Complaint’s allegations regarding Best Buy in “the light
most favorable” to Plaintiffs. Longaker, 872 F. Supp. 2d at 819. While Plaintiffs
contend construing Best Buy Co., Best Buy LP, and BestBuy.com collectively as “Best
Buy” is “in the light most favorable” to Plaintiffs, the Court disagrees. Instead, the Court
construes Plaintiffs’ allegations regarding “Bestbuy.com” and the “Best Buy website” to
refer to the entity BestBuy.com. The Court’s construction preserves the most claims in
light of the Eighth Circuit’s holding that “attribut[ing] fraudulent representations and
conduct to multiple defendants generally in a group pleading fashion” falls short of the
Fed. R. Civ. P. 9(b) standard. Streambend Props. II LLC v. Ivy Tower Minneapolis, LLC,
781 F.3d 1003, 1013 (8th Cir. 2015).
In light of this construction, the Court will dismiss without prejudice all claims
against Best Buy Co. and Best Buy LP. For the purpose of the motion to dismiss, only
Plaintiffs’ claims, and not those of any potential class members, are considered. Browe v.
Evenflo Co., Inc., No. 14-4690, 2015 WL 3915868, at *4 n.1 (D. Minn. June 25, 2015).
The Complaint does not set forth any relationship between Plaintiffs’ purchase of the
television and Best Buy Co. or Best Buy LP.

Plaintiffs specifically alleged all

representations came from BestBuy.com and, based on those representations, Plaintiffs
purchased the television from BestBuy.com. (Compl. ¶¶ 32-38.) Plaintiffs failed to
make any allegations that would impute liability for BestBuy.com’s actions onto Best
Buy Co. and Best Buy LP.
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Plaintiffs respond that the Court may attach alter ego liability for Plaintiffs’ claims
against Best Buy Co. and Best Buy LP because Plaintiffs define the three entities as “Best
Buy.” 4 But there is a “presumption of separateness” between a parent and a subsidiary
corporation. Ass’n of Mill & Elevator Mutual Ins. Co. v. Barzen Int’l, Inc., 553 N.W.2d
446, 449 (Minn. Ct. App. 1996). “Piercing the corporate veil is an equitable remedy that
may be applied in order to avoid an injustice.” Equity Trust Co. Custodian ex rel.
Eisenmenger IRA v. Cole, 766 N.W.2d 334, 339 (Minn. Ct. App. 2009). “A court may
pierce the corporate veil to hold a party liable for the acts of a corporate entity if the
entity . . . is the alter ego of the entity.” Id. Courts assess a number of factors to
determine whether piercing the corporate veil is appropriate. Barton v. Moore, 558
N.W.2d 746, 749 (Minn. 1997).
Here, Plaintiffs do not allege any of the facts necessary to plead alter ego liability.
All Plaintiffs allege regarding the relationship between the entities is the use of
“(collectively, ‘Best Buy’)” at the beginning of the Complaint. (Compl. at 1.) Other than
this reference, the Complaint is silent regarding the interaction between the three entities.
Plaintiffs, thus, failed to meet their burden of pleading alter ego liability because
4

Plaintiffs further posit the Court can consider other litigation where Best Buy admitted
Best Buy Co. owned Best Buy LP and BestBuy.com. But neither case cited by Plaintiffs
addressed the issue of alter ego liability. Sterk v. Best Buy Stores, L.P., No. 11-894, 2012 WL
5197901, at *1 (N.D. Ill. Oct. 17, 2012) (refusing to consider Best Buy’s disclosure at the motion
to dismiss stage of litigation); In re TFT-LCD (Flat Panel) Antitrust Litig., No. 10-4572, 2011
WL 3738968, at *2 (N.D. Cal. Aug. 24, 2011) (finding Best Buy’s claims fell within the “control
exception to Illinois Brick” and permitting Best Buy’s direct-purchase claims to survive a motion
to dismiss). The Court, therefore, cannot find previous litigation prevents a dispute over this
issue. See United States v. Young, 804 F.2d 116, 117 (8th Cir. 1986).

-8-

Plaintiffs did “not plead[] any facts directly addressing . . . the operative test.” See
N. Cent. EMS Corp. v. Bound Tree Med., LLC, No. 15-2793, 2016 WL 544472, at *5
(D. Minn. Feb. 10, 2016).
For this reason, the Court will grant Defendants’ motion to dismiss all claims
against Best Buy Co. and Best Buy LP without prejudice.

C.

Particularity

Defendants assert Plaintiffs failed to plead their fraud-based claims with the
particularity required by Rule 9(b). 5 Rule 9(b) provides that “[i]n alleging fraud or
mistake, a party must state with particularity the circumstances constituting fraud or
mistake.” The rule requires a plaintiff to “identify who, what, where, when, and how.”
Streambend Properties II, 781 F.3d at 1013 (quoting United States ex rel. Roop v.
Hypoguard USA, Inc., 559 F.3d 818, 822 (8th Cir. 2009)). It must “specify[] the time,
place, and content of the defendant’s false representations, as well as the details of the
defendant’s fraudulent acts, including when the acts occurred, who engaged in them, and
what was obtained as a result.” Id. (quoting Hypoguard USA, 559 F.3d at 822). The goal
of Rule 9(b), like Rule 8, “is fair notice,” City of Wyoming v. Procter & Gamble Co.,
No. 15-2101, 2016 WL 5496321, at *6 (D. Minn. Sept. 28, 2016), and, therefore,
“[w]here multiple defendants are asked to respond to allegations of fraud, the complaint

5

Plaintiffs’ fraud-based claims include Minnesota’s consumer protection statutes,
New Jersey’s consumer protection statute, and unjust enrichment (Counts I through V). See
Nunez v. Best Buy Co., 315 F.R.D. 245, 248-49 n.3 (D. Minn. 2016); Rosenthal v. Sharkninja
Operating LLC, No. 16-1048, 2016 WL 7338535, at *3 (D.N.J. Dec. 19, 2016).

-9-

should inform each defendant of the nature of his [or her] alleged participation in the
fraud,” Streambend Properties II, 781 F.3d at 1013.
LG argues Plaintiffs failed to allege the fraud-based claims with particularity
because they failed to identify any misrepresentations made by LG, the date LG made
any misrepresentation, and the causal effect of any LG misrepresentation. BestBuy.com
further argues Plaintiffs failed to allege any conduct that would amount to fraud because
Plaintiffs did not immediately recognize any problem with the refresh rate.
To the contrary, Plaintiffs alleged the “who, what, where, when, why, and how” of
both LG’s and BestBuy.com’s conduct.

Plaintiffs alleged: on November 29, 2013

Plaintiffs viewed advertisements and specifications for the television on BestBuy.com
(Compl. ¶ 34); the advertisements and specifications stated the television had a 120Hz
refresh rate (id. ¶¶ 35-36); BestBuy.com “adopted LG’s misrepresentations” about the
120Hz refresh rate (id. ¶¶ 23, 28); BestBuy.com and LG “joined” together to “deceiv[e]
consumers” – including Plaintiffs – “by advertising a fraudulent 120Hz refresh rate” (id.
¶ 28); Plaintiffs purchased the television based on LG and BestBuy.com’s representations
(id. ¶ 37); Plaintiffs received the television and, arguably, LG advertised the 120Hz
refresh rate on its packaging (id. ¶¶ 24, 38); and Plaintiffs were injured because, but for
LG and BestBuy.com’s representations, Plaintiffs would not have purchased the
television or would have paid a lower price (id. ¶ 38). Consequently, Rule 9(b) does not
require dismissal of Plaintiffs’ fraud-based claims.

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D.

MCFA and MUTA

Defendants next challenge Plaintiffs’ claims under the MCFA, Minn. Stat.
§ 325F.68 et seq. and MUTA, Minn. Stat. § 325D.13. Specifically, Defendants argue
Plaintiffs failed to allege a public benefit.
Neither the MCFA nor the MUTA provides a private cause of action. In re
Levaquin Prods. Liab. Litig., 752 F. Supp. 2d 1071, 1076 (D. Minn. 2010). Under
Minnesota’s Private Attorney Statute (“Private AG Statute”), however, “any person
injured by a violation” of the laws entrusted to the Minnesota Attorney General to
investigate and enforce – including the MCFA and MUTA – may file a lawsuit and
recover damages as well as costs and attorney fees. Id. (citing Minn. Stat. § 8.31,
subd. 3a).
But “the Private AG Statute [only] grants private citizens the right to act as a
‘private’ attorney general.” Ly v. Nystrom, 615 N.W.2d 302, 313 (Minn. 2000). Thus,
“the role and duties of the attorney general . . . define the limits of the private claimant
under the statute.” Id. at 313. The Minnesota Supreme Court concluded that “the Private
AG Statute applies only to those claimants who demonstrate that their cause of action
benefits the public.” Id. at 314; see also In re Levaquin, 752 F. Supp. 2d at 1076 (listing
public benefit cases).
“To determine whether a lawsuit is brought for the public benefit[,] the Court must
examine not only the form of the alleged misrepresentation, but also the relief sought by
the plaintiff.” Zutz v. Case Corp., No. 02-1776, 2003 WL 22848943, at *4 (D. Minn.
Nov. 21, 2003). “Courts consistently focus their inquiry on the relief sought by the
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plaintiff, and find no public benefit where plaintiffs request only damages even when
plaintiffs are suing for injuries resulting from mass produced and mass marketed
products.” In re Levaquin, 752 F. Supp. 2d at 1077 (collecting cases). Defendants argue
Plaintiffs only seek damages resulting from Defendants’ actions and, therefore, Plaintiffs
failed to allege a public benefit.
To begin, Defendants’ assertion that Plaintiffs failed to allege injunctive relief
defies the plain language of the Complaint. In the section labeled “Proposed Class and
Subclass Satisfy the Rule 23(b)(2) Prerequisites for Injunctive Relief,” Plaintiffs
alleged “Defendants should be ordered to cease from further advertisements that
inaccurately state the refresh rates of LG televisions.”

(Compl. ¶ 48.)

Plaintiffs

explained injunctive relief may be appropriate because “there is no way for [Plaintiffs] to
know when or if Defendants have ceased misrepresenting the refresh rates of LG
televisions.” (Id. ¶ 47.) Plaintiffs incorporated these allegations into both their MCFA
and MUTA claims (id. ¶¶ 51, 61) and, while failing to specifically request injunctive
relief in the Prayer for Relief, requested “[s]uch other and further relief as the Court
deems just and proper” (id. at 24).
Even if Plaintiffs had failed to request injunctive relief, however, that fact would
“not preclude” satisfaction of “the public benefit requirement.” ADT Sec. Servs., Inc. v.
Swenson, ex rel. Estate of Lee, 687 F. Supp. 2d 884, 892 (D. Minn. 2009). The other
factor considered in a public benefit inquiry – the form of the alleged misrepresentation –
proved dispositive in Collins v. Minnesota School of Business, Inc., 655 N.W.2d 320
(Minn. 2003). As this Court observed regarding Collins, “[n]either the Minnesota Court
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of Appeals nor the Minnesota Supreme Court indicated that the plaintiffs had sought
injunctive relief.” ADT Sec. Servs., Inc. v. Swenson, No. 97-2983, 2008 WL 2828867, at
*6 (D. Minn. July 21, 2008). “Nonetheless, both courts concluded that plaintiffs had
sought a sufficient ‘public benefit’ for the purposes of the Private Attorney General
Statute.” Id. “Thus, although federal courts in Minnesota have focused the public benefit
inquiry on whether plaintiff is seeking only money damages . . . after Collins, it seems
reasonable to infer that the Minnesota Supreme Court is as much if not more concerned
with the degree to which defendants’ alleged misrepresentations affect the public.” In re
Levaquin, 752 F. Supp. 2d at 1078.
Plaintiffs alleged LG and BestBuy.com mass marketed misrepresentations about
LG televisions to the public. (Compl. ¶¶ 23-25, 28-29.) Further, Plaintiffs alleged an
injunction would be appropriate because “there is no way for them to know when or if
Defendants . . . ceased misrepresenting the refresh rates of LG televisions.” (Id. ¶ 47.)
And, arguably, the result of this lawsuit may indirectly lead to changes in LG’s and
BestBuy.com’s marketing related to the 120Hz refresh rate, thereby preventing future
lawsuits and creating a public benefit. See In re Levaquin, 752 F. Supp. 2d at 1078; ADT
Sec. Servs., 2008 WL 2828867, at *8.
Thus, construing the Complaint in the light most favorable to Plaintiffs, Plaintiffs
requested injunctive relief and alleged that LG and BestBuy.com fraudulently market
televisions to the public. (Compl. ¶¶ 23-25, 28-29, 47-49, 51, 61.) The result of this
lawsuit may, either directly or indirectly, benefit the public by causing LG and
BestBuy.com to redress the allegedly fraudulent marketing. And, for these reasons, the
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Court will deny Defendants’ motion to dismiss Counts I and III against LG and
BestBuy.com.

E.

MDTPA

Defendants next contest Plaintiffs’ MDTPA claim.

Under the MDTPA, “[a]

person likely to be damaged by a deceptive trade practice of another may be granted an
injunction against it under the principles of equity and on terms that the court considers
reasonable.” Minn. Stat. § 325D.45, subd. 1. Because the MDTPA provides relief for “a
person likely to be damaged,” it only provides injunctive relief “from future damage, not
past damage.” Gardner v. First Am. Title Ins. Co., 296 F. Supp. 2d 1011, 1020 (D. Minn.
2003). Thus, to state an MDTPA claim, a plaintiff must both request an injunction and
allege “a likelihood of future harm.” Jaskulske v. State Farm Mut. Auto. Ins. Co., No. 14869, 2014 WL 5530758, at *6 (D. Minn. Nov. 3, 2014).
Defendants argue that, even if Plaintiffs alleged injunctive relief, 6 Plaintiffs’
MDTPA claim fails because Plaintiffs are not entitled to an injunction. Specifically,
Defendants assert Plaintiffs are not “likely to be damaged” because Plaintiffs are aware
of Defendants’ alleged misconduct and unlikely to be damaged in the future.
On a motion to dismiss, the MDTPA requires Plaintiffs to allege irreparable injury
or threat of future harm to Plaintiffs. See Johnson v. Bobcat Co., 175 F. Supp. 3d 1130,

6

Defendants reassert their claim that Plaintiffs failed to ask for injunctive relief. As set
forth above, reading the Complaint in the light most favorable to Plaintiffs, Plaintiffs requested
injunctive relief. (Compl. ¶¶ 47-48, 58.)

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1141 (D. Minn. 2016) (dismissing an MDTPA claim where all plaintiff’s claims were
“grounded in past damage”).

A pleading can be so deficient that awareness of a

fraudulent practice can preclude an inference of future damage. See, e.g., Indep. Glass
Ass’n, Inc. v. Safelite Grp., Inc., No. 05-238, 2005 WL 3079084, at *2 (D. Minn.
Nov. 16, 2005) (dismissing MDTPA claim where plaintiff was never deceived by
defendant’s practices). But on a motion to dismiss a plaintiff must simply “allege facts
sufficient to support a likelihood of future harm.” Deleski Ins. Agency, Inc. v. Allstate
Ins. Co., No. 13-1780, 2013 WL 6858573, at *13 (D. Minn. Dec. 30, 2013) (citing
Gardner, 296 F. Supp. 2d at 1020).
Here, Plaintiffs alleged sufficient facts to survive a motion to dismiss. Plaintiffs
request injunctive and declaratory relief (Compl. ¶¶ 48-49, 61), state that injunctive relief
is appropriate because “there is no way for them to know when or if Defendants have
ceased misrepresenting the refresh rates of LG televisions” (id. ¶ 47), and assert Plaintiffs
“are . . . in danger of being harmed again” because “Plaintiffs remain in the market for
televisions” (id.). At the motion to dismiss stage, “these allegations provide a proper
basis for Plaintiffs’ MDTPA claim.” Masterson Pers., Inc. v. McClatchy Co., No. 051274, 2005 WL 3132349, at *7 (D. Minn. Nov. 22, 2005); see also Gardner,
296 F. Supp. 2d at 1020-21 (distinguishing pleading and proving a “likelihood of future
harm”). Thus, the Court will deny Defendants’ motion to dismiss Count II as to LG and
BestBuy.com.
Plaintiffs alternatively argue that, in spite of caselaw to the contrary, Plaintiffs are
not limited to injunctive relief under the MDTPA.
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But both this Court and the

Minnesota Court of Appeals have consistently found the sole remedy for violations of
the MDTPA is injunctive relief. See, e.g., Damon v. Groteboer, 937 F. Supp. 2d 1048,
1070 (D. Minn. 2013); Alsides v. Brown Institute, Ltd., 592 N.W.2d 468, 476 (Minn. Ct.
App. 1999). The Court applies this precedent and finds Plaintiffs are only entitled to
injunctive relief under the MDTPA.

F.

NJCFA

Defendants next contend Plaintiffs failed to state an NJCFA claim. To state a claim
under the NJCFA, N.J. Stat. Ann. § 54:8-1 et seq., a plaintiff must allege sufficient facts
to demonstrate: “(1) unlawful conduct; (2) an ascertainable loss; and (3) a causal
relationship between the unlawful conduct and the ascertainable loss.”

Smajlaj v.

Campbell Soup Co., 782 F. Supp. 2d 84, 97 (D.N.J. 2011).
Defendants argue Plaintiffs failed to allege sufficient facts to demonstrate
ascertainable loss. “The plain language of the [NJCFA] unmistakably makes a claim of
ascertainable loss a prerequisite for a private cause of action.” D’Agostino v. Maldonado,
216 N.J. 168, 185 (2013). An “ascertainable loss” is “either an out-of-pocket loss or a
demonstration of loss in value that is quantifiable or measureable.” Thiedemann v.
Mercedes-Benz U.S.A., LLC, 183 N.J. 234, 248 (2005). “Put differently, a plaintiff is not
required to show monetary loss, but only that he purchased something and received ‘less
than what was promised.’” Marcus v. BMW of N. Am., LLC, 687 F.3d 583, 606 (3d Cir.
2012) (quoting Union Ink Co., Inc. v. AT&T Corp., 352 N.J. Super. 617, 646 (App. Div.
2002)).

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“There are at least three recognized theories of ascertainable loss that may apply to
a NJCFA claim.” Truglio v. Planet Fitness, Inc., 2016 WL 4084030, at *6 (D.N.J.
July 28, 2016) (quoting Hammer v. Vital Pharm., Inc., 2012 WL 1018842, at *8 (D.N.J.
Mar. 26, 2012)). Reviewing the Complaint, Plaintiffs only allege ascertainable loss under
the “loss in value” theory.
The “loss in value” theory “requires that the consumer be misled into buying a
product that is ultimately worth less than the product that was promised.” Mladenov v.
Wegmans Food Markets, Inc., 124 F. Supp. 3d 360, 375 (D.N.J. 2015). To survive a
motion to dismiss, “a plaintiff must allege ‘(1) a reasonable belief about the product
induced by a misrepresentation; and (2) that the difference in value between the product
promised and the one received can be reasonably quantified.’” Id. (quoting Smajlaj,
782 F. Supp. 2d at 99).

“Failure to quantify this difference in value results in the

dismissal of a claim.” Smajlaj, 782 F. Supp. 2d at 99. Here, the Court must determine
whether Plaintiffs adequately pled “that the difference in value between the product
promised and the one received could be reasonably quantified.”

See Mladenov,

124 F. Supp. 3d at 375.
Plaintiffs pled only that they “suffered an ascertainable loss as a result of
Defendants’ conduct in that they paid more than the LED television was worth and more
than what Defendants would have been able to charge had the true refresh rates been
displayed.” (Compl. ¶¶ 31, 71, 73.) Nowhere do Plaintiffs allege: (1) the amount

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Plaintiffs paid for the television; 7 or (2) the cost of a comparable LG television with a
60Hz refresh rate. In the absence of this information, the Court has “no basis for valuing
the products [Plaintiffs] received as opposed to the products they were promised.” See
Mladenov, 124 F. Supp. 3d at 375-76 (holding plaintiff failed to plead an ascertainable
loss based on the general allegation that plaintiffs “would not have purchased the . . .
products . . . or would have purchased alternative products in absence of Defendant’s
misleading advertisements” because plaintiff supplied “no basis for valuing the products
they received as opposed to the products they were promised”); see also Smajlaj,
782 F. Supp. 2d at 101-03 (holding plaintiff adequately alleged ascertainable loss under
the “loss in value” theory where plaintiffs calculated the value of the allegedly
misleading “low sodium” soup from the value of regular “sodium” soup).
Therefore, the Court will grant Defendants’ motion to dismiss Count IV against
both LG and BestBuy.com without prejudice.

G.

Unjust Enrichment

Defendants also assert Plaintiffs failed to plead an unjust enrichment claim.
Applying Minnesota law, Defendants argue Plaintiffs’ unjust enrichment claim must be

7

Defendants also argue Plaintiffs did not suffer an ascertainable loss because Plaintiffs
purchased the television at a deep discount. To support this contention, Defendants submitted
evidence outside the Complaint showing the price Plaintiffs paid for the television. The Court
generally must ignore materials outside the pleadings, unless materials “are part of the public
record or do not contradict the complaint.” Thunander v. Uponor, Inc., 887 F. Supp. 2d 850, 859
n.1 (D. Minn. 2012) (quoting Mo. ex rel. Nixon v. Coeur D’Alene Tribe, 164 F.3d 1102, 1107
(8th Cir. 1999), cert. denied, 527 U.S. 1039 (1999)). Here, the evidence submitted is not a public
record and contradicts the Complaint to the extent it is used to undermine Plaintiffs alleged loss.

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dismissed because an unjust enrichment claim “is not available where there is an
adequate legal remedy or where statutory standards for recovery are set by the
legislature.”

United States v. Bame, 721 F.3d 1025, 1030 (8th Cir. 2013) (quoting

Southtown Plumbing, Inc. v. Har-Ned Lumber Co., 493 N.W.2d 137, 140 (Minn. Ct. App.
1992)).
This Court has had numerous occasions to address this issue under Minnesota law.
Most recently, this Court addressed the issue in North Central EMS, 2016 WL 544472, at
*9. There, the Court held it will not dismiss an unjust enrichment claim when a plaintiff
states “a plausible alternative claim for unjust enrichment” on a motion to dismiss. Id.;
see also In re Levaquin, 752 F. Supp. 2d at 1081.
Further supporting this conclusion, while the parties agree with the application of
Minnesota law for the purpose of the motion to dismiss, it is unclear that Minnesota law
will ultimately apply to the state-law claims. The parties have not directly addressed the
choice of law issues raised by this case and, on the current record, the Court declines to
decide the issue. Cantonis v. Stryker Corp., No. 09-3509, 2011 WL 1084971, at *3
(D. Minn. Mar. 21, 2011) (refusing to engage in a choice of law analysis when the choice
of law was not clear from the face of the pleadings and the issue was not appropriately
before the court). Thus, dismissing Plaintiffs’ unjust enrichment claim under Minnesota
law is improper at this stage. The Court will, therefore, deny Defendants’ motion to
dismiss Count V against LG and BestBuy.com.

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H.

Breach of Express and Implied Warranties

Defendants next argue Plaintiffs failed to plead viable warranty claims.
Defendants first argue Plaintiffs failed to provide adequate notice as required under
Minnesota law. To the contrary, the Complaint alleges “Plaintiffs provided notice to Best
Buy and LG of this claimed breach of warranty by letter dated April 29, 2016” (Compl.
¶ 88) and, reading this allegation in the light most favorable to Plaintiffs, Plaintiffs pled
they provided notice to Defendants prior to filing the lawsuit.
Defendants’ second argument postulates that in purchasing the television Plaintiffs
agreed to the terms of LG’s limited warranty and Best Buy’s express disclaimer of any
warranty. The Complaint does not discuss the existence of either a limited warranty or a
warranty disclaimer.

(Id. ¶¶ 81-97.)

Thus, Defendants ask the Court to consider

materials outside the pleadings to resolve its argument.
When considering a Rule 12(b)(6) motion, the Court generally must ignore
materials outside the pleadings, but it may consider “some materials that are part of the
public record or do not contradict the complaint.” Thunander v. Uponor, Inc.,
887 F. Supp. 2d 850, 859 n.1 (D. Minn. 2012) (quoting Mo. ex rel. Nixon v. Coeur
D’Alene Tribe, 164 F.3d 1102, 1107 (8th Cir. 1999), cert. denied, 527 U.S. 1039 (1999)).
A court may also consider materials that are “necessarily embraced by the pleadings.”
Piper Jaffray Cos., Inc. v. Nat’l Union Fire Ins. Co., 967 F. Supp. 1148, 1152 (D. Minn.
1997).

Here, Defendants argue the Court may consider the limited warranty and

warranty disclaimer because they are embraced by the pleadings.

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But the Court has only considered a warranty outside the pleadings when the
complaint discussed the existence of a written warranty.

See, e.g., Thunander,

887 F. Supp. 2d at 859 n.1 (noting the complaint quoted the warranty); Johnsen v.
Honeywell Int’l Inc., No. 14-594, 2015 WL 631361, at *3 (E.D. Mo. Feb. 12, 2015)
(noting the plaintiff referenced the warranty in the complaint).
Where, as here, a complaint did not discuss the existence of a written warranty or
warranty waiver, the Court refused to consider the evidence on a Rule 12(b)(6) motion.
See, e.g., Browe, 2015 WL 3915868, at *3 (noting plaintiff’s complaint did not reference
the limited warranty); George v. Uponor Corp., 988 F. Supp. 2d 1056, 1072 (D. Minn.
2013) (finding “an express warranty would likely qualify as a document embraced by the
pleadings where a plaintiff . . . alleged a breach of a specific warranty” (emphasis
added)); Stephens v. Arctic Cat Inc., No. 09-2131, 2011 WL 890686, at *3 (E.D. Mo.
Mar. 14, 2011) (noting that when a defendant submits a written warranty on a motion to
dismiss it is unclear the warranty is “embraced by the pleadings”).
In the Complaint, Plaintiffs neither reference the warranty/warranty waiver nor
indicate any such written instrument exists.

Thus, the Court will not consider the

evidence outside the record.
Because Defendants do not assert Plaintiffs failed to allege the elements of breach
of express and/or implied warranties, the Court will deny Defendants’ motion to dismiss
Counts VI and VII as to LG and BestBuy.com.

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I.

Breach of Contract

Defendants finally argue Plaintiffs failed to allege a breach of contract claim. To
plead breach of contract, Plaintiffs must allege “(1) formation of a contract,
(2) performance by plaintiff of any conditions precedent to his right to demand
performance by the defendant, and (3) breach of the contract by defendant.” Lyon Fin.
Servs., Inc. v. Ill. Paper & Copier Co., 848 N.W.2d 539, 543 (Minn. 2014) (quoting Park
Nicollet Clinic v. Hamann, 808 N.W.2d 828, 833 (Minn. 2011)).
Beginning with BestBuy.com, the Complaint plainly alleges BestBuy.com offered
to sell Plaintiffs a television with a 120Hz refresh rate (Compl. ¶¶ 34-35, 99), Plaintiffs
accepted the offer when they purchased the television (id. ¶¶ 37, 100), Plaintiffs paid the
purchase price for the television and, as such, both paid consideration and performed all
conditions precedent under the contract (id.), BestBuy.com breached the contract when it
failed to deliver a television with a 120Hz refresh rate (id. ¶ 101), and BestBuy.com’s
breach damaged Plaintiffs (id. ¶¶ 38, 102). Therefore, the Court will deny Defendants’
motion to dismiss Count VIII as to BestBuy.com.
Next, LG argues the Complaint only alleges Plaintiffs purchased a television from
BestBuy.com and, thereby, Plaintiffs failed to allege formation of a contract with LG. 8
In order to plead formation of a contract, Plaintiffs must allege offer, acceptance and

8

LG also argues the only contract that exists between LG and Plaintiffs is the limited
warranty submitted to support the motion to dismiss. For the reasons articulated above, the
Court does not consider this evidence because it is not referenced in the Complaint. Browe, 2015
WL 3915868, at *3.

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consideration. Commercial Assocs., Inc. v. Work Connection, Inc., 712 N.W.2d 772, 782
(Minn. Ct. App. 2006).
Here, Plaintiffs failed to allege formation of a contract with LG. Namely, the
Complaint only alleges Plaintiffs purchased a television from BestBuy.com and makes no
allegations that LG offered to sell Plaintiffs the television. In this situation, Plaintiffs did
not allege sufficient facts to support a breach of contract claim against LG. See, e.g.,
Jacobsen Diamond Ctr., LLC v. ADT Sec. Servs., Inc., No. 14-1578, 2016 WL 3766236,
at *13 (N.J. Super. Ct. App. Div. July 15, 2016) (finding a plaintiff did not allege a
breach of contract claim with a manufacturer when plaintiff purchased items from a
retailer); N. Cent. EMS Corp., 2016 WL 544472, at *4 (dismissing breach of contract
claim under Minnesota law where defendant was not party to a contract). For this reason,
the Court will grant Defendants’ motion to dismiss Count VIII as to LG with prejudice.

ORDER
Based on the foregoing, and all the files, records, and proceedings herein, IT IS
HEREBY ORDERED that:
1.

Defendant LG Electronics U.S.A., Inc.’s Motion to Dismiss [Docket

No. 18] is GRANTED in part and DENIED in part as follows:
a.

The motion is GRANTED with respect to the New Jersey Consumer

Fraud Act [Count IV]. Count IV is DISMISSED without prejudice.
b.

The motion is GRANTED with respect to the breach of contract

claim [Count VIII]. Count VIII is DISMISSED with prejudice.

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c.
2.

The motion is DENIED in all other respects.

Defendants Best Buy Co., Best Buy Stores, L.P., and BestBuy.com, LLC’s

Motion to Dismiss [Docket No. 22] is GRANTED in part and DENIED in part as
follows:
a.

The motion is GRANTED in its entirety with respect to the claims

against Best Buy Co., Inc. and Best Buy Stores, L.P. Best Buy Co., Inc. and Best
Buy Stores, L.P. are DISMISSED without prejudice from this case.
b.

The motion is GRANTED with respect to the New Jersey Consumer

Fraud Act claim [Count IV] against BestBuy.com. Count IV is DISMISSED
without prejudice.
c.

The motion is DENIED in all other respects.

DATED: March 27, 2017
at Minneapolis, Minnesota.

____s/

____
JOHN R. TUNHEIM
Chief Judge
United States District Court

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