POPEJOY et al v. SHARP ELECTRONICS CORPORATION

Filing 28

OPINION. Signed by Judge William J. Martini on 9/18/15. (gh, )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY

JASON POPEJOY, JOE SAWYER, and
DANIEL SULLIVAN, individually and on
behalf of all others similarly situated,

Civ. No. 2:14-06426 (WJM)

OPINION
Plaintiffs,
v.
SHARP ELECTRONICS CORPORATION,
Defendant.

WILLIAM J. MARTINI, U.S.D.J.:
Plaintiffs Jason Popejoy, Joe Sawyer, and Daniel Sullivan filed this putative class
action against Defendant Sharp Electronics Corporation (“Sharp”). This matter comes
before the Court on Defendant’s motion to dismiss under Federal Rule of Civil Procedure
12(b)(6) or, alternatively, to strike the nationwide class allegations from the Complaint.
There was no oral argument. Fed. R. Civ. P. 78(b). For the reasons set forth below,
Defendant’s motion to dismiss is GRANTED, and Defendant’s motion to strike is
DENIED.
I.

BACKGROUND

The following facts are alleged in the Complaint. Sharp is “a well-known
electronics manufacturer and a significant player in the U.S. television market.” Compl.
¶ 20, ECF No. 1. Plaintiffs contend that Sharp has engaged in “a massive consumer
fraud” by “deceptively labeling” certain of its televisions as “LED TVs,” “LED HDTVs,”
or “LED televisions.” Id. ¶¶ 5, 9.
A. The Development of LED TVs
Some background on television technology is helpful in understanding Plaintiffs’
claims. Until the late 1990s, most televisions used “direct view CRT-technology
(cathode ray tubes)” to produce images. Compl. ¶ 22. These televisions were large and
boxy, and they were generally available only in sizes up to 37 inches diagonally. Id. ¶

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27. During the early 2000s, manufacturers introduced “plasma display televisions” that
were thin and light enough to be mounted on a wall. Id. ¶ 30.
During the early-to-mid 2000s, manufacturers introduced new, flat-panel
televisions employing liquid crystal displays (“LCD”). Compl. ¶ 35. Early televisions
employing LCD technology used cold cathode fluorescent lights (“CCFLs”) as their light
source. Id. ¶ 39. The Court will refer to televisions with CCFL-lit LCD panels as
“CCFL-lit LCD TVs.”
Manufacturers – while continuing to use LCD panels – replaced CCFLs with light
emitting diodes (“LEDs”) in later models. Compl. ¶ 41. The Court will refer to this
category of televisions, which use LCD panels illuminated by LEDs, as “LED-lit LCD
TVs.” Although LED-lit LCD TV utilize a different light source, they generate the
screen image in the same manner as CCFL-lit LCD TVs. Id. ¶ 40. LED-lit LCD TVs
“quickly c[a]me to dominate” the U.S. market for flat-panel televisions. Id. ¶ 19.
Another type of television exists, “which employ[s] a fundamentally different
technology that is still several years away from availability at prices accessible to
mainstream purchasers.” Compl. ¶ 56. Plaintiffs refer to these TVs as “Actual LED
TVs.” These televisions use LED displays instead of the LCD or plasma displays
described above. Id. ¶ 56.
B. The Marketing of LED TVs
When LED-lit LCD TVs were first introduced into the market, they were
universally marketed as “LCD TVs.” Compl. ¶ 43. No effort was made to advertise or
designate the product line by the light source used to light the LCD panel. Id. Sharp’s
initial LED-lit LCD TVs were similarly identified and advertised as LCD TVs or LEDbacklit LCD TVs. Id. ¶ 44. Plaintiffs allege that the LED-lit LCD TVs marketed in this
manner “did not sell well.” Id. ¶ 45. They were priced higher than comparable CCFL-lit
LCD TVs, and consumers continued to purchase CCFL-lit LCD TVs despite the alleged
benefits of LED backlighting. Id.
Sharp then changed strategies and began marketing its LED-lit LCD TVs as LED
TVs. It described the LED TVs “as a new, advanced, technologically superior ‘type’ of
television . . . , which was allegedly different from and better than LCD TVs.” Compl. ¶
47. Accordingly, Sharp changed its cartons to refer to the LED-lit LCD TVs as “LED
TVs,” “LED HDTVs,” “LED Smart TVs,” or as having an “LED HD Picture.” Id. ¶ 48.
In addition, for years Sharp’s website directed consumers to choose from LCD TVs and
LED TVs, with no explanation that the LED TVs have LCD displays. Id. ¶ 52. Sharp
has also “used circulars, newspaper and magazine advertisements, and point of sale
display materials to further its deception.” Id. ¶ 53.

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Plaintiffs claim that Sharp’s marketing of its LED TVs is false and misleading
because Sharp fails to disclose that its references to LED refer to the light source that
illuminates the LCD panel rather than the display technology itself. Id. ¶ 7. Plaintiffs
allege that Sharp’s marketing is “designed to falsely suggest that the televisions at issue
are not LCD TVs at all, but an entirely different, improved, and technologically advanced
class or species of television.” Id. In reality, both types of televisions are “functionally
identical” because they use the same LCD panel to generate the screen image. Id. ¶¶ 7,
38-41, 52.
Plaintiffs allege that this marketing strategy has increased Sharp’s sales of its
LED-lit LCD TVs. Compl. ¶ 49. Plaintiffs further allege that Sharp’s strategy has
allowed Sharp to charge a premium for LED-lit LCD TVs, even though those televisions
are not inherently superior to CCFL-lit LCD TVs. Id. ¶¶ 60-61.
C. Named Plaintiffs
Plaintiff Jason Popejoy is a citizen of California and purchased a Sharp-brand
LED TV, model number LC60LE550U. Compl. ¶ 10. Plaintiff Joe Sawyer is a citizen of
North Carolina and purchased two Sharp-brand LED TVs, model numbers LC70LE632
and LC80LE857. Id. ¶ 11. Plaintiff Daniel Sullivan is a citizen of Massachusetts and
purchased a Sharp-brand LED TV, model number LC42LB150U. Id. ¶ 12. Each
Plaintiff alleges that he “selected Sharp’s ‘LED TV’ model because of Sharp’s marketing
assertions on the carton containing the television that it was an ‘LED TV.’” Id. ¶¶ 10-12.
Plaintiffs allege that they and other purchasers were misled into believing that they
were purchasing an LED TV, not the LED-lit LCD TV that they actually received.
Compl. ¶ 62. Plaintiffs maintain that they would not have purchased or would have paid
less for their televisions had they known the truth. Id. Plaintiffs jointly seek to assert a
nationwide class action against Sharp. Id. ¶ 65. Additionally, (1) Plaintiff Jason Popejoy
brings this action on behalf of himself and all other members of a California class; (2)
Plaintiff Joe Sawyer brings this action on behalf of himself and all other members of a
North Carolina class; and (3) Plaintiff Daniel Sullivan brings this action on behalf of
himself and all other members of a Massachusetts class.
II.

LEGAL STANDARD

Federal Rule of Civil Procedure 12(b)(6) provides for the dismissal of a complaint, in
whole or in part, if the plaintiff fails to state a claim upon which relief can be granted.
The moving party bears the burden of showing that no claim has been stated. Hedges v.
United States, 404 F.3d 744, 750 (3d Cir. 2005). In deciding a motion to dismiss under
Rule 12(b)(6), a court must take all allegations in the complaint as true and view them in
the light most favorable to the plaintiff. See Jenkins v. McKeithen, 395 U.S. 411, 421
(1969); Jordan v. Fox, Rothschild, O’Brien & Frankel, 20 F.3d 1250, 1261 (3d Cir.
1994).
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Although a complaint need not contain detailed factual allegations, “a plaintiff’s
obligation to provide the ‘grounds’ of his ‘entitlement to relief’ requires more than labels
and conclusions, and a formulaic recitation of the elements of a cause of action will not
do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). Thus, the factual allegations
must be sufficient to raise a plaintiff’s right to relief above a speculative level, such that it
is “plausible on its face.” See id. at 570; see also Umland v. PLANCO Fin. Serv., Inc.,
542 F.3d 59, 64 (3d Cir. 2008). 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.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing
Twombly, 550 U.S. at 556). While “[t]he plausibility standard is not akin to a
‘probability requirement’ . . . it asks for more than a sheer possibility.” Id.
Pursuant to Federal Rule of Civil Procedure 9(b), a plaintiff alleging fraud must
state the circumstances of the alleged fraud with sufficient particularity to place the
defendant on notice of the “precise misconduct with which [it is] charged.” Frederico v.
Home Depot, 507 F.3d 188, 200 (3d Cir. 2007) (quoting Lum v. Bank of America, 361
F.3d 217, 223-24 (3d Cir. 2004)) (internal quotations omitted). To satisfy this standard,
the plaintiff must plead or allege the date, time and place of the alleged fraud or
otherwise inject precision or some measure of substantiation into a fraud allegation. Id.
III.

DISCUSSION

Plaintiffs’ Complaint asserts claims under the consumer protections statutes of
New Jersey, California, North Carolina, and Massachusetts.1 To state a claim under the
consumer protection statutes referenced in the Complaint, Plaintiffs must allege that
Sharp made statements likely to deceive an average or reasonable customer. See Conner
v. Perdue Farms, Inc., No. 11-888, 2013 WL 5977361, at *6 (D.N.J. Nov. 7, 2013) (“One
of the threshold questions in deciding a case under the NJCFA is whether a statement has
the capacity to mislead the average or reasonable consumer.”); Gustavson v. Wrigley
Sales Co., 961 F. Supp. 2d 1100, 1130 (N.D. Cal. 2013) (quoting Williams v. Gerber
Products Co., 552 F.3d 934, 938 (9th Cir. 2008)) (“The standard for establishing a
violation of California’s UCL, FAL, and CLRA is the ‘reasonable consumer’ test, which
requires a plaintiff to ‘show that members of the public are likely to be deceived’ by the
business practice or advertising at issue.”); Hager v. Vertrue, Inc., No. 09-11245, 2011
WL 4501046, at *5 (D. Mass. Sept. 28, 2011) (quoting Aspinall v. Philip Morris Cos.,
Inc., 813 N.E.2d 476, 488 (Mass. 2004) (“Conduct is deceptive when it has ‘the capacity .
. . to entice a reasonable consumer to purchase the product.’”); Spartan Leasing Inc. v.
Pollard, 400 S.E.2d 476, 482 (N.C. App. Ct. 1991) (citing Johnson v. Insurance Co., 266
S.E.2d 610 (N.C. 1980) (“A practice is deceptive if it has the capacity or tendency to
deceive the average consumer . . . .”).
Specifically, Plaintiffs assert claims under (1) New Jersey’s Consumer Fraud Act, (2) California’s Unfair
Competition Law, (3) California’s False Advertising Law, (4) California’s Consumer Legal Remedies Act, (5) North
Carolina General Statues §§ 75-1.1 and 75.16, and (6) Massachusetts General Laws Chapter 93A §§ 2 and 9.
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A reasonable consumer is not “expected to look beyond . . . the front of the box.”
Williams v. Gerber Products Co., 552, F.3d 934, 939 (9th Cir. 2008). However, a
reasonable consumer will read the text prominently displayed on a products’ packaging,
including any “qualifying language.” Freeman v. Time Inc., 68 F.3d 285, 289-90 (9th
Cir. 1995) (finding that promotional sweepstakes mailers stating that plaintiff won a
sweepstakes with language in smaller type indicating that plaintiff would win only if he
returned a winning prize number was not deceptive); see also Ciser v. Nestle Waters N.
Am., Inc., No. 11-05031, 2013 WL 5774121, at *5 (D.N.J. Oct. 24, 2013) aff’d, 596 F.
App’x 157 (3d Cir. 2015) (holding, despite plaintiff’s allegations that defendant’s “bills
were confusing” and that there was an inconsistency between [the defendant’s] website
and its invoices,” that the plaintiff could not plausibly allege that it was misled because
the defendant disclosed that it might charge a late fee); Rooney v. Cumberland Packing
Corp., No. 12-0033, 2012 WL 1512106, at *4 (S.D. Cal. Apr. 16, 2012) (dismissing
claim that “sugar in the raw” was misleading because the box “clearly indicate[d] that the
product contain[ed] natural cane turbinado sugar”).
Plaintiffs have not adequately alleged that a reasonable consumer could be
deceived by Sharp’s marketing. Plaintiffs base their claims entirely upon their allegation
that they each saw and relied on “Sharp’s marketing assertions on the carton[s]
containing the television[s].” Compl. ¶¶ 10-12. But the cartons for the model numbers
cited in the Complaint state – on every side of the carton including the front – that the
product is both an “LED TV” and a “Liquid Crystal Television.” Cert. of Jeremy M.
Creelan Exs 3, 4, 5 & 6, ECF No. 14.2 And although Plaintiffs argue in their opposition
brief that they were deceived by misrepresentations made through multiple marketing
channels, those allegations are absent from the Complaint. See Commonwealth of Pa. ex.
Rel. Zimmerman v. PepsiCo, Inc., 836 F.2d 173, 181 (3d Cir. 1988) (“It is axiomatic that
the complaint may not be amended by the briefs in opposition to a motion to dismiss”).
The Court will thus dismiss the Complaint and deny Defendant’s motion to strike as
moot.
IV.

CONCLUSION

For the reasons stated above, Defendant’s motion to dismiss is GRANTED, and
the Complaint is DISMISSED WITHOUT PREJUDICE. The Court shall grant
Plaintiffs thirty days to file an Amended Complaint consistent with this Opinion.
Plaintiffs’ motion to strike is DENIED. An appropriate order follows.

Because the cartons are “integral” to Plaintiffs’ claims, the Court may properly consider them. In re Burlington
Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997); see also Young v. Johnson & Johnson, No. 11-4580,
2012 WL 1372286, at *3 n.3 (D.N.J. Apr. 19, 2012) (considering product packaging in consumer fraud claim).
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/s/ William J. Martini
WILLIAM J. MARTINI, U.S.D.J.
Date: September 18, 2015

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