Goldman v. Tapestry, Inc. et al
MEMORANDUM AND ORDER: IT IS HEREBY ORDERED that Tapestry, Inc. and Kate Spade, LLCs Motion to Dismiss 10 is GRANTED. Signed by District Judge Rodney W. Sippel on 11/17/20. (ARL)
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UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
JANICE GOLDMAN, Individually
and On Behalf of All Others
TAPESTRY, INC. and
KATE SPADE, LLC,
Case No. 4:20 CV 748 RWS
MEMORANDUM AND ORDER
Janice Goldman (“Goldman”) brings this class action suit against Tapestry,
Inc. and Kate Spade, LLC, a wholly owned subsidiary of Tapestry, alleging
violations of the Missouri Merchandising Practices Act (“MMPA”) and unjust
enrichment. Tapestry and Kate Spade (“Tapestry”) move to dismiss all of Goldman’s
claims under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). I will grant
this motion for the reasons set forth below.
This lawsuit, like many others across the country, attempts to use a state
consumer protection statute to challenge an outlet store’s pricing and advertising
practices. Goldman shopped at Tapestry’s Kate Spade Outlet store in Chesterfield,
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Missouri several times between October 2016 and July 2019, purchasing at least
nine items. The purses and accessories that she purchased were heavily discounted;
Goldman paid totals ranging from 60% to 70% lower than the listed original price.
However, Goldman alleges that the original prices listed on the tags and receipts for
the items were not the actual, bona fide prices of these items. Rather, according to
Goldman, Tapestry never sold these products at the outlet store at these prices, so
any discounts offered were false and misleading. Goldman also alleges that the items
sold at the outlet store are “manufactured specifically for, and sold exclusively at”
Kate Spade outlet stores and are “materially different from, and inferior to” the items
produced for high-end department stores and Kate Spade flagship stores. Compl. at
¶ ¶ 2, 22.
Goldman contends that she would not have purchased the items that she did
if not for Tapestry’s allegedly deceptive pricing scheme. She does not allege that she
was otherwise damaged by Tapestry.
The party invoking subject matter jurisdiction bears the burden of
establishing that the case is properly in federal court. Lujan v. Defenders of
Wildlife, 504 U.S. 555, 561 (1992) (citations omitted). For diversity cases, this
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means satisfying the statutory requirements for diversity of citizenship and amount
in controversy under 28 U.S.C. § 1332 in addition to the constitutional
requirements for standing. If a plaintiff does not have standing to sue, a court does
not have subject matter jurisdiction over the case and must dismiss it. ABF Freight
Sys., Inc. v. Int’l Bhd. of Teamsters, 645 F.3d 954, 958 (8th Cir. 2011).
In ruling on a motion to dismiss under Rule 12(b)(6), I must accept as true all
factual allegations in the complaint and view them in the light most favorable to the
plaintiff. Hager v. Ark. Dep’t. of Health, 735 F.3d 1009, 1013 (8th Cir. 2013). The
federal rules require only a “short and plain statement of the claim showing that the
pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). To survive a motion to dismiss,
a plaintiff need not provide “detailed factual allegations” but must provide
“sufficient factual matter, accepted as true, to state a claim to relief that is plausible
on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). The facts alleged must be
sufficient to allow the court “to draw the reasonable inference that the defendant is
liable for the misconduct alleged.” Id.
A plaintiff alleging fraud or mistake must “state with particularity the
circumstances constituting fraud or mistake” to survive a motion to dismiss. Fed. R.
Civ. P. 9(b). The Eastern and Western Districts of Missouri have consistently held
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that Rule 9(b) applies to MMPA cases. See Blake v. Career Educ. Corp., 2009 WL
140742, at *2 (E.D. Mo. Jan. 20, 2009) (collecting cases). “Highly specific
allegations” are not required under Rule 9(b), especially when the claim relies on
facts that are known only to the defendants. Abels v. Farmers Commodities Corp.,
259 F.3d 910, 921 (8th Cir. 2001). However, “conclusory allegations that a
defendant’s conduct was fraudulent and deceptive are not sufficient to satisfy the
rule.” Schaller Telephone Co. v. Golden Sky Sys., Inc., 298 F.3d 736, 746 (8th Cir.
2002) (citation omitted). If a plaintiff alleges that a systematic practice of fraud
exists, she “must provide some representative examples of [defendant’s] alleged
fraudulent conduct, specifying the time, place, and content of their acts and the
identity of the actors.” U.S. ex rel. Joshi v. St. Luke’s Hosp., Inc., 441 F.3d 552, 557
(8th Cir. 2006).
1. Constitutional Standing
Tapestry argues that Goldman only has standing to pursue claims relating to
the nine specific items that she identified as purchases in the complaint because she
was not personally harmed by the “thousands of Kate Spade products that she did
not purchase.” [ECF No. 11 at 12]. As a threshold matter, Goldman has alleged
that she purchased more than nine items from Tapestry. In her complaint, she
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explains that while she does not personally have receipts proving that she made
other purchases, Tapestry has records of all her transactions and can corroborate
her allegation. I must accept this allegation as true.
Tapestry cites two cases from the Western District of Missouri in support of
its argument that Goldman only has standing as to the exact items that she
purchased. Smith v. Atkins Nutritionals, Inc., 2018 WL 9868591, at *7 (W.D. Mo.
May 8, 2018); Kelly v. Cape Cod Potato Chip Co., 81 F.Supp.3d 754, 763 (W.D.
Mo. 2015). It does not appear that the Missouri Supreme Court or the Eighth
Circuit have addressed this exact issue.
Goldman has not alleged that she was injured by any of the specific items
that she purchased. Rather, any injury she suffered was caused by the alleged
pricing scheme itself, which Goldman contends is not limited to certain products. It
appears to me that the appropriate inquiry for determining if she has standing as to
products that she did not personally purchase is “whether there is sufficient
similarity between the products purchased and not purchased.” Davidson v.
Kimberly-Clark Corp., 2014 WL 3919857, at *6 (N.D. Cal. Aug. 8, 2014). I agree
with the district courts that have concluded plaintiffs have standing to assert claims
on behalf of a class as to products they have not purchased as long as “the products
and alleged misrepresentations are substantially similar.” Quinn v. Walgreen Co.,
958 F.Supp.2d 533, 541 (S.D.N.Y. 2013) (citation omitted). See also Barclay v.
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ICON Health & Fitness, Inc., 2020 WL 6083704, at *6 (D. Minn. Oct. 15, 2020)
(collecting cases and concluding that, while some courts “have applied a rigid rule
that a plaintiff lacks standing to assert claims related to products that the plaintiff
herself did not buy,” the majority “follow a more a nuanced approach”); In re
Vizio, Inc., Consumer Privacy Litig., 238 F.Supp.3d 1204, 1218 (C.D. Cal. 2017)
(noting that “[c]ourts have taken three broad positions on how related the product
purchased by the named plaintiff and putative class members must be” and
concluding that the “substantially similar” approach, which asks “whether the
plaintiff’s averred injury is substantially similar to the claims of those she seeks to
represent,” is most consistent with Supreme Court precedent).
Since Goldman has standing to bring suit, I need not engage in a separate
standing analysis to determine whether she adequately represents the interests of
the putative class. In re SuperValu, Inc., 870 F.3d 763, 768 (8th Cir. 2017). This
inquiry does not occur until the class certification stage. See Barclay, 2020 WL
6083704, at *6 (“Rather than a standing issue, the distinction between product
types may instead create an issue for the typicality of Plaintiffs’ claims or the
adequacy of their representation, which is better resolved at class certification.”).
2. Diversity Requirements
In her complaint, Goldman asserts that this Court has subject matter
jurisdiction under the Class Action Fairness Act (“CAFA”), which grants district
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courts original diversity jurisdiction in class action suits if certain requirements are
satisfied, including: (1) the aggregated matter in controversy exceeds the sum or
value of $5,000,000; (2) there is diversity of citizenship between at least one
plaintiff and one defendant; and (3) there are at least 100 members in the putative
class. 28 U.S.C. § 1332(d); Standard Fire Ins. Co. v. Knowles, 568 U.S. 588, 592
Goldman alleges that she is a “resident” of Missouri. Compl. at ¶ 8. She has
not adequately established her citizenship because “[w]hen it comes to diversity
jurisdiction, the words ‘resident’ and ‘citizen’ are not interchangeable.” Reece v.
Bank of New York Mellon, 760 F.3d 771, 777-78 (8th Cir. 2014). Additionally,
Goldman has not established the citizenship of Kate Spade, LLC. An LLC’s
citizenship is determined by the citizenship of each of its members. E3 Biofuels,
LLC v. Biothane, LLC, 781 F.3d 972, 975 (8th Cir. 2015) (citation omitted).
Goldman did not identify the members of Kate Spade, LLC in her complaint.
Goldman also alleges, without providing a single factual allegation in
support, that the amount in controversy exceeds $5,000,000. Tapestry has not
disputed this assertion. However, even if the opposing party does not contest the
amount in controversy, a court may question it and require the plaintiff to show
“evidence establishing the amount.” Dart Cherokee Basin Operating Co., LLC v.
Owens, 574 U.S. 81, 89 (2014). Goldman defines the putative class—anyone in
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Missouri who bought any products with an advertised reduced price from any Kate
Spade outlet store in the five years before this suit was filed—but she does not
explain how damages, in the aggregate, exceed $5,000,000. She does not offer any
estimate of how many members comprise the class or the damages that the average
class member suffered. Furthermore, Goldman has not even quantified her own
loss. In her opposition to Tapestry’s motion to dismiss, Goldman notes that the
MMPA measures damages as the difference between the value represented and the
value received. [ECF No. 20 at 7]. She emphasizes that the statute does not require
her to prove that the price she paid for her items exceeded the actual value of those
items. However, Goldman simultaneously argues that the discounts she paid were
false and misleading because the products sold at the outlets are inferior in quality
to those sold at other retailers and are actually worth less than advertised. In raising
these arguments, she indicates that she suffered losses because she paid too much
for the products she purchased. These are two different theories of loss and it is
unclear which Goldman intends to allege.
Because she has not satisfied the CAFA requirements, Goldman has not met
her burden to show that this case belongs in federal court, and Rule 12(b)(1)
mandates its dismissal.
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Even if this Court had subject matter jurisdiction over Goldman’s claims, I
would dismiss this case under Rule 12(b)(6) for failure to state a claim under the
MMPA. A plaintiff alleging a violation of the MMPA must show that she
purchased merchandise from the defendant for personal, family, or household
purposes and suffered an ascertainable loss as a result of an unlawful practice. Mo.
Ann. Stat. § 407.025.1(1). The parties agree that Goldman purchased merchandise
from Tapestry for personal, family, or household purposes. They dispute whether
Goldman suffered an ascertainable loss as a result of an unlawful practice.
1. Ascertainable Loss
Missouri courts apply the “benefit of the bargain rule” to determine whether
a plaintiff has suffered an ascertainable loss under the MMPA. Thompson v.
Allergan USA, Inc., 993 F.Supp.2d 1007, 1012 (E.D. Mo. 2014) (citations
omitted). Under this rule, the plaintiff can recover “the difference between the
value of the product as represented and the actual value of the product as
received.” Id. The price that the plaintiff actually paid for the product is irrelevant
to the analysis. Finke v. Boyer, 56 S.W.2d 372, 377 (Mo. 1932).
Goldman contends that she purchased items that differed from how they
were represented—because the items she purchased were actually worth less than
the original price listed on the items’ tags—and that she therefore did not receive
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the benefit of her bargains. In its motion to dismiss, Tapestry claims that Goldman
did not suffer an ascertainable loss because she did not purchase any products that
were worth less than the amount she paid. In support of this argument, Tapestry
cites several cases involving similar factual scenarios, wherein defendants
prevailed on motions to dismiss brought by plaintiffs challenging pricing schemes
at various outlet stores. However, the consumer protection statutes implicated in
those cases required plaintiffs to show a price-value differential in order to recover,
which is not a requirement under the MMPA.
Here, Goldman has alleged that she purchased items that were worth less
than advertised. Assuming that this is true, then Goldman did not receive the
benefit of her bargains under the MMPA. Hennessey v. Kohl’s Corp., 2020 WL
870982, at *4 (E.D. Mo. Feb. 21, 2020) (citing Smith v. Tracy, 372 S.W.2d 925,
938 (Mo. 1963); Fong v. Town & Country Estates, Inc., 600 F.2d 179, 182 (8th
Cir. 1979)). However, because Rule 9(b)’s heightened pleading standard applies to
MMPA claims, Goldman must state her claims with greater particularity to survive
this motion to dismiss.
Goldman points to similar price-comparison advertising cases from other
courts that have found allegations like hers satisfy the Rule 9(b) standard.
However, these decisions are not binding on this Court. Additionally, several other
courts have held that allegations like Goldman’s do not meet the particularity
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requirement of Rule 9(b). See Cruz v. Kate Spade & Co., LLC, 2020 WL 5848095,
at *4 (D. Nev. Sept. 30, 2020); Hennessey, 2020 WL 870982, at *5; Fisher v.
Eddie Bauer, LLC, 2019 WL 9467922, at *5 (S.D. Cal. Oct. 18, 2019); Dennis v.
Ralph Lauren Corp., 2017 WL 3732103, at *5 (S.D. Cal. Aug. 29, 2017). While
these decisions are also not binding, I agree with the reasoning of these courts and
find that under current Eighth Circuit precedent, Goldman’s allegations, without
more, do not meet the Rule 9(b) pleading standard for claims sounding in fraud.
The complaint contains conclusory allegations regarding the actual values of
the items Goldman purchased. See, e.g., Compl. at ¶ 29 (“In reality, the prevailing
retail price and, therefore, the actual fair market value of each item at the time of
[Goldman’s] purchase was materially lower than the advertised higher regular
price.”). These types of allegations do not satisfy the Rule 9(b) standard. BJC
Health Sys. v. Columbia Cas. Co., 478 F.3d 908, 917 (8th Cir. 2007) (citation
omitted). The allegations appear to be made on the basis of information and belief,
which is permitted under Rule 9(b) only when “the facts constituting the fraud are
peculiarly within the opposing party’s knowledge” or “the allegations are
accompanied by a statement of facts on which the belief is founded.” Drobnak v.
Andersen Corp., 561 F.3d 778, 783-84 (8th Cir. 2009). While Goldman
understandably could not obtain some of the specific information underlying her
allegations at this stage in litigation, not all of the facts about Tapestry’s pricing
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practices are “peculiarly within” Tapestry’s knowledge. In similar cases, plaintiffs
have successfully alleged more specific facts in support of allegations of fraud.
Goldman even cited one such case in her response brief. Calderon v. Kate Spade &
Co., LLC, 2020 WL 1062930, at *4 (S.D. Cal. Mar. 5, 2020) (finding that plaintiffs
satisfied the Rule 9(b) standard by not only alleging that “the Kate Spade
merchandise sold in the Kate Spade outlet stores is exclusively sold at the Kate
Spade outlet stores and it is not sold anywhere else,” but also by conducting an
investigation confirming that “the merchandise purchased by Plaintiffs was priced
with a false reference price and a corresponding discounted price for at least the
90-day period immediately preceding Plaintiffs’ purchases”). See also Cruz, 2020
WL 5848095, at *4 (noting that “not all information and sources related to Kate
Spade’s reference pricing is held exclusively by Kate Spade. There are ways to
obtain information on the reference prices before filing suit.”); Dennis, 2017 WL
3732103, at *2 (explaining the investigation that plaintiff’s counsel conducted to
track which stores sold the shirt that plaintiff purchased, and whether the price of
the shirt changed over a period of several months); Taylor v. Nike, Inc., 2017 WL
663056, at *7-8 (D. Or. Feb. 17, 2017) (concluding that one case, Stathakos v.
Columbia Sportswear Co., 2016 WL 1730001 (N.D. Cal. May 2, 2016), which did
not require plaintiffs to conduct a pre-suit investigation, “appears to be an
exception to the general rule regarding sufficient pleadings under Rule 9(b)”).
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Prior to bringing this suit, Goldman did not conduct any investigation that
would have revealed at least some information about Tapestry’s pricing practices.
Without any facts about the prices of the items she purchased, and if or when the
items were ever sold at the original listed prices, as Tapestry contends they were, it
is impossible to determine whether Goldman was deprived of the benefit of her
bargains. Goldman has therefore not alleged sufficient facts under Rule 9(b) to
show that she suffered an ascertainable loss under the MMPA.
2. Unlawful Practice
Goldman also has not alleged sufficient facts under Rule 9(b) to show that
any loss she may have suffered resulted from an unlawful practice. Unlawful
practices covered under the MMPA include “[t]he act, use or employment by any
person of any deception, fraud, false pretense, false promise, misrepresentation,
unfair practice or the concealment, suppression, or omission of any material fact in
connection with the sale or advertisement of any merchandise in trade or
commerce.” Mo. Ann. Stat. § 407.020.1. I turn to the factual allegations in the
complaint to determine whether Goldman has alleged sufficient facts to show that
Tapestry engaged in an unlawful practice under the statute. 1
Tapestry argues that its pricing and advertising practices are protected by the “safe harbor”
provision of 15 CSR 60-7.060(2)(B). In support of this argument, Tapestry submitted two
exhibits—the “Russell Declaration” and the “Ingrid Crain Deposition”—that Goldman objects to
as matters outside the pleadings. Because I find that Goldman has not stated a claim under Rule
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Goldman has alleged that “the products offered in the Kate Spade Outlet
stores are manufactured for, and sold exclusively at, the Kate Spade Outlet stores,
and they are always sold for a price that is substantially below the higher
advertised comparison price.” Compl. at ¶ 22. She has further alleged that the
made-for-outlet products “are inferior to (based on materials, quality, grade and/or
workmanship), and therefore materially different from, the higher quality Kate
Spade products offered in Kate Spade flagship and high-end department stores.”
Compl. at ¶ 22. I must accept these assertions as true. Goldman contends that these
claims are supported by information in two exhibits submitted with her opposition
brief. [ECF Nos. 22-1 & 22-2]. The first exhibit is Tapestry’s SEC filing for fiscal
year 2018. The second exhibit is a newspaper article about a potential
Congressional investigation into marketing and pricing practices at outlet stores
I am permitted to take judicial notice of public records when deciding a
motion to dismiss. Levy v. Ohl, 477 F.3d 988, 991 (8th Cir. 2007). This includes
SEC filings “where the filings were required by law and [are] not offered to prove
the truth of the documents’ contents.” Kushner v. Beverly Enter., Inc., 317 F.3d
820, 832 (8th Cir. 2003) (citation omitted). Tapestry’s SEC filing states that Kate
12(b)(6) based on her failure to meet the Rule 9(b) pleading standard, I will not consider these
materials or Tapestry’s substantive argument.
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Spade outlet stores carry “manufactured-for-outlet product and discontinued retail
inventory outside the retail channel.” [ECF No. 22-1 at 5]. This statement supports
Goldman’s allegation that Tapestry sells made-for-outlet products in its outlet
stores. However, the filing does not indicate that the made-for-outlet products are
of inferior quality compared to other Kate Spade products, as Goldman alleges.
The filing also notes that the outlet stores carry “discontinued retail inventory” in
addition to the made-for-outlet products, which does not support Goldman’s
allegation that the products sold at the outlet stores are never sold at any other
locations at any other prices.
As to the second exhibit, the Federal Rules of Evidence permit me to take
judicial notice of facts that are either “generally known within the trial court’s
territorial jurisdiction” or “can be accurately and readily determined from sources
whose accuracy cannot reasonably be questioned.” Fed. R. Evid. 201. Several
courts have concluded that it is appropriate to take judicial notice of a newspaper
article under this rule while others have found that it is not. Assuming that judicial
notice is proper, the article does not contain facts upon which Goldman’s
allegations of fraud are founded. The article does not mention or discuss Tapestry
and its pricing or marketing practices.
Goldman has not adequately explained “how” the alleged fraud occurred.
Joshi, 441 F.3d at 556 (citations omitted) (plaintiff must identify the “who, what,
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where, when, and how” of the alleged fraud). She has thus failed to state sufficient
facts to support the allegation that Tapestry engaged in an unlawful practice under
Unjust enrichment occurs when “a person retains the benefit and enjoys the
benefit conferred upon him without paying its reasonable value.” Hawkins v.
Nestle U.S.A. Inc., 309 F.Supp.3d 696, 708 (E.D. Mo. 2018) (quoting Webcon
Group, Inc. v. S.M. Properties, L.P., 1 S.W.3d 538, 542 (Mo. Ct. App. 1999)). A
plaintiff bringing a claim of unjust enrichment must show three elements: “(1) the
plaintiff conferred a benefit on the defendant; (2) the defendant appreciated the
benefit; and (3) the defendant accepted and retained the benefit under inequitable
and/or unjust circumstances.” Binkley v. American Equity Mortgage, Inc., 447
S.W.3d 194, 199 (Mo. banc 2014) (quoting Hargis v. JLB Corp., 357 S.W.3d 574,
586 (Mo. banc 2011)).
Goldman’s claim of unjust enrichment fails for the same reasons as her
MMPA claim. Lacking more facts, it is impossible to determine the “reasonable
value” of the products that she purchased and as a result, this Court cannot
conclude whether Tapestry was unjustly enriched.
IT IS HEREBY ORDERED that Tapestry, Inc. and Kate Spade, LLC’s
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Motion to Dismiss  is GRANTED.
RODNEY W. SIPPEL
UNITED STATES DISTRICT JUDGE
Dated this 17th day of November, 2020.
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