Taylor v. Nike Inc.

Filing 30

Opinion and Order. I GRANT Defendants Motion to Dismiss 15 and DISMISS the Complaint 1 . Because Ms. Taylor may cure the Complaint's deficiencies with additional facts, I grant leave to amend the Complaint. The amended complaint is due 30 days after the issuance of this Opinion and Order. Signed on 02/172017 by Judge Michael W. Mosman. (rs)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON
PORTLAND DIVISION

MONIKA TAYLOR, individually and
on behalf of all others similarly situated,
No. 3:16-cv-00661-MO
v.

OPINION AND ORDER

NIKE, INC.,
Defendant.

MOSMAN, J.,
This matter comes before the Court on Nike’s Motion to Dismiss [15] Ms. Taylor’s
Complaint [1]. For the reasons set forth below, I GRANT Nike’s Motion and DISMISS Ms.
Taylor’s Complaint with leave to amend.
BACKGROUND
Ms. Taylor asserts the following factual allegations in her Complaint. In the summer of
2015, Ms. Taylor visited a Nike Outlet Store in Orange, California. There, she observed several
items marked with tags that contained two prices: a “Sugg. Retail Price” and a lower “Our
Price.” She also observed other items without such tags, leading her to believe that the items with
tags were discounted. Enticed by the prospect of “receiving a bargain,” Ms. Taylor purchased
several items from the store.

1 – OPINION AND ORDER

Believing she was deceived, Ms. Taylor brought this suit against Nike. In general, Ms.
Taylor claims that Nike’s use of the dual price tags is misleading to reasonable consumers. She
asserts four causes of action arising under California law: the False Advertising Law (“FAL”);
the Consumers’ Legal Remedies Act, (“CLRA”); the Unfair Competition Law, (“UCL”); and
unjust enrichment. Nike moves to dismiss these claims, arguing that Ms. Taylor lacks standing to
bring suit and that the Complaint fails to satisfy the heightened pleading requirements for fraud. I
held oral argument on November 10, 2016.
DISCUSSION
I. Whether Ms. Taylor Has Standing Under Article III
To survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(1) for lack of
standing, a plaintiff must have “(1) suffered an injury in fact, (2) that is fairly traceable to the
challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial
decision.” Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1547 (2016) as revised (May 24, 2016).
Plaintiff bears the burden of proof and must “‘clearly . . . allege facts demonstrating’ each
element.” Id. (quoting Warth v. Seldin, 422 U.S. 490, 518 (1975)). An injury in fact is one that is
(a) concrete and particularized and (b) actual or imminent. Lujan v. Defs. of Wildlife, 504 U.S.
555, 560 (1992). In other words, the injury “must affect the plaintiff in a personal and individual
way,” and “must actually exist.” Spokeo, 136 S. Ct. at 1548. “Even named plaintiffs who
represent a class must allege and show that they personally have been injured.” Id. at 1547 n.6
(quoting Simon v. E. Ky. Welfare Rights Org., 426 U.S. 26, 40 n.20 (1976)) (internal quotation
marks omitted).

2 – OPINION AND ORDER

Nike argues that Ms. Taylor lacks standing to bring these state law claims because she
has failed to meet Article III’s injury in fact requirement. Nike also argues that Ms. Taylor has
failed to plead facts sufficient to show she has standing to seek injunctive relief.
A. Injury in Fact
A person has standing under the UCL, FAL, or CLRA when that person has suffered an
economic injury as a result of unfair competition. Hinojos v. Kohl’s Corp., 718 F.3d 1098, 110304, 1108 (9th Cir. 2013) as amended on denial of reh’g and reh’g en banc (July 8, 2013). An
“economic injury” is a loss or deprivation of money or property which requires no more injury
than “the corresponding requirement under Article III of the U.S. Constitution.” Reid v. Johnson
& Johnson, 780 F.3d 952, 958 (9th Cir. 2015). Plaintiffs meet the economic injury in fact
requirement when “they show that, by relying on a misrepresentation on a product label, they
‘paid more for a product than they otherwise would have paid, or bought it when they otherwise
would not have done so.’” Id. (quoting Hinojos, 718 F.3d at 1104 n.3).1
Ms. Taylor has sufficiently pled that she suffered an injury in fact. In her Complaint, she
alleges that she observed merchandise with the dual price tags and understood the tags to mean
she was “receiving a bargain.” She also asserts that she was “induced” to purchase the items on
the prospect of the bargain and would not have purchased them, or paid the prices she did, had
she “known she was not truly receiving a bargain.” These allegations are sufficient to meet the
economic injury requirement under the UCL, FAL, or CLRA, which corresponds to the injury in
fact requirement under Article III.
Nike argues that Ms. Taylor’s failure to plead sufficient facts regarding the falsity of
Nike’s statements undercuts her ability to establish standing under the UCL, FAL, or CLRA.
1

To satisfy standing under the UCL, FAL, or CLRA, a person much also plead a causal link between the economic
injury and the alleged misrepresentation. See Hinojos, 718 F.3d at 1103-04. “In cases such as these,” however, the
“causation requirement . . . and the economic injury requirement are coextensive.” Id. at 1104 n.5.

3 – OPINION AND ORDER

But, the facts necessary to establish standing are not the same as those required to plead a claim
with particularity. See Vassigh v. Bai Brands LLC, No. 14-CV-05127-HSG, 2015 WL 4238886,
at *3 (N.D. Cal. July 13, 2015) (finding that challenges to standing and a complaint’s sufficiency
under Rule 8(a) or 9(b) involve different questions); Branca v. Nordstrom, Inc., No. 14CV2062MMAJMA, 2015 WL 1841231, at *4, *6 (S.D. Cal. Mar. 20, 2015) (finding that the plaintiff had
made sufficient allegations for purposes of standing even though those same allegations failed to
meet the heightened pleading requirement under Rule 9(b)). Thus, even if Ms. Taylor’s claims
are insufficient under the heightened pleading standard of Rule 9(b), they are sufficient to
provide Ms. Taylor with standing under Article III.
B. Standing to Seek Injunctive Relief
Regardless of whether Ms. Taylor has made sufficient allegations to show she suffered an
injury in fact, she still has to demonstrate that she has standing to seek injunctive relief. Nike
argues that even if Ms. Taylor plans to shop at Nike Outlets in the near future, her knowledge of
the purported false pricing scheme precludes her from seeking injunctive relief because she can
no longer be induced by a bargain she knows does not exist.
In addition to the three general requirements for Article III standing, a plaintiff seeking
injunctive relief must also show that she is “realistically threatened by repetition of the
violation.” Gest v. Bradbury, 443 F.3d 1177, 1181 (9th Cir. 2006) (quoting Armstrong v. Davis,
275 F.3d 849, 860-61 (9th Cir. 2001)). “Past exposure to illegal conduct does not in itself show a
present case or controversy regarding injunctive relief . . . if unaccompanied by any continuing,
present adverse effects.” Lujan, 504 U.S. at 564 (quoting City of L.A. v. Lyons, 461 U.S. 95, 102
(1983)).
District courts in the Ninth Circuit are split on the issue of whether plaintiffs in Ms.

4 – OPINION AND ORDER

Taylor’s position have standing to seek injunctive relief. Spann v. J.C. Penney Corp., No. SA CV
12-0215 FMO (RNBx), 2015 WL 1526559, at *11 (C.D. Cal. Mar. 23, 2015). In some cases,
district courts have denied standing because consumers who become aware of a defendant’s false
advertising cannot establish that they are likely to be “fooled again” by the misrepresentations.
See, e.g., Romero v. Flowers Bakeries, LLC, No. 14-CV-05189-BLF, 2015 WL 2125004, at*7
(N.D. Cal. May 6, 2015); Castagnola v. Hewlett-Packard Co., No. C 11-05772 JSW, 2012 WL
2159385, at *6 (N.D. Cal. June 13, 2012). In other cases, district courts have found standing,
reasoning that holding otherwise would “eviscerate the intent of the California legislature in
creating consumer protection statutes.” Koehler v. Litehouse, Inc., No. CV 12-04055 SI, 2012
WL 6217635, at *6 (N.D. Cal. Dec. 13, 2012); Spann, 2015 WL 1526559, at *11; Henderson v.
Gruma Corp., No. CV 10-04173 AHM (AJWX), 2011 WL 1362188, at *7-8 (C.D. Cal. Apr. 11,
2011). Although I recognize the policy concerns of denying standing in cases like these, I agree
with the former line of cases and conclude that Ms. Taylor does not have standing to seek
injunctive relief.
“[S]tanding in federal court is a question of federal law, not state law.” Hollingsworth v.
Perry, 133 S. Ct. 2653, 2667 (2013). Under federal law, it is “the imminent prospect of future
injury,” not the “presence or absence of a past injury,” that “determines Article III standing to
seek injunctive relief.” Ervine v. Desert View Reg’l Med. Ctr. Holdings, LLC, 753 F.3d 862, 868
(9th Cir. 2014) (citations omitted) (internal quotation marks omitted); see also Lujan, 504 U.S. at
564 (“Past exposure to illegal conduct does not in itself show a present case or controversy
regarding injunctive relief . . . if unaccompanied by any continuing, present adverse effects.”
(citation omitted) (internal quotation marks omitted)).

5 – OPINION AND ORDER

Here, Ms. Taylor’s economic injury is rooted in Nike’s alleged deception; without such
deception, she would not have purchased the merchandise or paid as much as she did. By virtue
of her past injury, however, Ms. Taylor is now aware of any false pricing scheme in which Nike
might be engaged. Therefore, she cannot demonstrate “the imminent prospect of future jury”
because she can no longer be deceived.
The fact that California’s consumer protection laws2 explicitly provide for injunctive
relief does not change this conclusion. See Cal. Bus. & Prof. Code § 17203 (West 2017); Cal.
Civ. Code § 1780 (West 2017); Spann, 2015 WL 1526559, at *9 (“An injunction is the primary
form of relief available . . . to protect consumers from unfair business practices[.]” (citation
omitted) (internal quotation marks omitted)). Regardless of whether the California legislature
intended injunctive relief to be available in these cases, Article III “limits the jurisdiction of
federal courts to ‘cases and controversies.’” Lee v. Am. Nat. Ins. Co., 260 F.3d 997, 1001 (9th
Cir. 2001); see also 3 Henry P. Johnston, Correspondence and Public Papers of John Jay 486-89
(1891); 10 Jared Sparks, The Writings of George Washington 542-45 (1836) (detailing how
Justices, by letter to President Washington, declined to answer questions posed to the Supreme
Court by Secretary of State Thomas Jefferson as not involving cases or controversies). Thus, “a
plaintiff whose cause of action is perfectly viable in state court under state law may nonetheless
be foreclosed from litigating the same cause of action in federal court, if he cannot demonstrate
the requisite injury.” Lee, 260 F.3d at 1001-02.
Again, I recognize that in this instance, the federal standing requirements create a
situation in which a consumer who has demonstrated economic injury under California’s
consumer protection laws lacks Article III standing to pursue injunctive relief in federal court.
But a body of law almost as old as the Republic requires this result. Ms. Taylor has not
2

I use “consumer protection laws” as shorthand for the UCL, FAL, and CLRA collectively.

6 – OPINION AND ORDER

demonstrated, nor can she demonstrate, that she has standing to seek injunctive relief under
Article III.
II. Whether Ms. Taylor Has Met the Pleading Standard Under Rule 9(b)
To survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) for failure
to state a claim, “a complaint must contain 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) (quoting
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A pleading that offers only “labels and
conclusions” or “‘naked assertion[s]’ devoid of ‘further factual enhancement’” will not suffice.
Id. (quoting Twombly, 550 U.S. at 555, 557) (alteration in original). While the plaintiff does not
need to make detailed factual allegations at the pleading stage, the allegations must be
sufficiently specific to give the defendant fair notice of the claim and the grounds on which it
rests. See Erickson v. Pardus, 551 U.S. 89, 93–94 (2007) (per curiam) (citing Twombly, 550 U.S.
at 555).
Federal Rule of Civil Procedure 15 provides that a court should freely give leave to
amend a complaint “when justice so requires.” Fed. R. Civ. P. 15(a)(2). As such, “when a court
dismisses a complaint for failure to state a claim, ‘leave to amend should be granted unless the
court determines that the allegation of other facts consistent with the challenged pleading could
not possibly cure the deficiency.’” DeSoto v. Yellow Freight Sys., Inc., 957 F.2d 655, 658 (9th
Cir. 1992) (quoting Schreiber Distrib. Co. v. Serrv-Well Furniture Co., 806 F.2d 1393, 1401 (9th
Cir. 1986)).
In addition to the pleading requirements under Rule 8(a), a plaintiff alleging fraud must
plead her claim with particularity. Fed. R. Civ. P. 9(b). Under this heightened pleading standard,
a plaintiff must “state the time, place, and specific content of the false representations as well as

7 – OPINION AND ORDER

the identities of the parties to the misrepresentation.” Schreiber, 806 F.2d at 1401; see also
Swartz v. KPMG LLP, 476 F.3d 756, 764 (9th Cir. 2007). The purpose of this heightened
standard is:
(1) to provide defendants with adequate notice to allow them to defend the charge
and deter plaintiffs from filing of complaints as a pretext for discovery of
unknown wrongs; (2) to protect those whose reputation would be harmed as a
result of being subject to fraud charges; and (3) to prohibit [] plaintiff[s] from
unilaterally imposing on the court, the parties and society enormous social and
economic costs absent some factual basis.
Kearns v. Ford Motor Co., 567 F.3d 1120, 1125 (9th Cir. 2009) (citation omitted) (internal
quotation marks omitted).
When a plaintiff’s claim is “grounded in fraud,” the entire pleading “must satisfy the
particularity requirement of Rule 9(b).” Id. Thus, even though fraud may not be a necessary
element of the state statutes at issue here, Ms. Taylor’s allegation of fraudulent conduct on the
part of Nike requires that she plead her claims with particularity. See id.; Rubenstein v. Neiman
Marcus Grp. LLC, 2015 WL 1841254, at *4 (C.D. Cal. Mar. 2, 2015) (stating that Rule 9(b)
applies to “state-law ‘false advertising’ claims under statutes such as the UCL, CLRA and
FAL”). Both parties agree that Ms. Taylor’s entire Complaint is subject to the heightened
pleading standard of Rule 9(b).
A. UCL, FAL, and CLRA Claims
California’s UCL prohibits any “unlawful, unfair or fraudulent business act or practice
and unfair, deceptive, untrue or misleading advertising.” Cal. Bus. & Prof. Code § 17200. The
UCL “expressly incorporates the FAL’s prohibition on unfair advertising as one form of unfair
competition,” meaning that any violation to the FAL also violates the UCL. Hinojos, 718 F.3d at
1103. The FAL prohibits any “unfair, deceptive, untrue, or misleading advertising.” Branca v.
Nordstrom, Inc., No. 14CV2062-MMA (JMA), 2015 WL 10436858, at *7 (S.D. Cal. Oct. 9,

8 – OPINION AND ORDER

2015) (“Branca II”) (quoting Cal. Bus. & Prof. Code § 17500). In relevant part, the FAL
prohibits advertising a former price “unless the alleged former price was the prevailing market
price . . . within three months next immediately preceding the publication of the advertisement.”
Cal. Bus. & Prof. Code § 17501. Finally, the CLRA generally prohibits “unfair methods of
competition and unfair or deceptive acts or practices.” Cal. Civ. Code § 1770. The CLRA lists
several specific prohibited acts, including “[a]dvertising goods or services with intent not to sell
them as advertised” and “[m]aking false or misleading statements of fact concerning reasons for,
existence of, or amounts of price reductions.” Cal. Civ. Code § 1770(a)(9), (13).
To state a claim under any of these consumer protection laws, a plaintiff must allege that
the defendant’s conduct is deceptive or misleading to a reasonable consumer. Williams v. Gerber
Prod. Co., 552 F.3d 934, 938 (9th Cir. 2008). This implies “that a significant portion of the
general consuming public or of targeted consumers, acting reasonably in the circumstances,”
could be misled by the defendant’s statement. In re Sony Gaming Networks & Customer Data
Sec. Breach Litig., 903 F. Supp. 2d 942, 967-68 (S.D. Cal. 2012) (quoting Lavie v. Proctor &
Gamble Co., 105 Cal. App. 4th 496, 508 (2003)). Ultimately, whether the defendant’s conduct is
misleading or deceptive “will usually be a question of fact not appropriate for decision on
demurrer.” Williams, 552 F.3d at 938.
Ms. Taylor asserts claims based on the UCL, FAL, and CLRA. Although the exact
elements of each statute differ, all of her claims ultimately depend on her ability to plead Nike’s
alleged false pricing scheme with particularity. In other words, she must “specify the identities of
the parties to fraudulent misrepresentations, where and when the alleged misrepresentations
occurred, and the specific content of the false misrepresentations.” Zing Toys, Inc. v. Zuru, LLC,
3:10-cv-863-MO, 2011 WL 2935404, at *3 (D. Or. July 15, 2011).

9 – OPINION AND ORDER

Here, the parties dispute whether Ms. Taylor has adequately pled the specific content of
Nike’s alleged misrepresentation. Pleading the specific content of a false misrepresentation
involves “more than conclusory allegations or generic facts.” Id. at *4. Instead, “the plaintiff
must specify what is false or misleading about a statement, and why it is false.” Id. Here, Nike
makes two principle arguments as to why Ms. Taylor fails to satisfy this standard. First, Nike
argues that Ms. Taylor failed to plead the “what” of the alleged statements because she did not
provide prices for any of the purchased merchandise. Second, Nike argues that Ms. Taylor failed
to sufficiently show why the alleged statements were false.
1. The “What” of the Alleged Misrepresentation
Ms. Taylor’s failure to allege the specific prices of the items she purchased is not fatal to
her Complaint. In fact, I have found no case dealing with similar false pricing schemes that
explicitly required a plaintiff to plead prices in order to satisfy Rule 9(b). That being said,
plaintiffs typically allege at least some information regarding the price of the purchased items.
See, e.g., Stathakos v. Columbia Sportswear Co., No. 15-CV-04543-YGR, 2016 WL 1730001, at
*3 (N.D. Cal. May 2, 2016); Jacobo v. Ross Stores, Inc., CV-15-04701-MWF-AGR, 2016 WL
3482041, at *4 (C.D. Cal. Feb. 23, 2016).
Regardless, the absence of price in this case does not prevent Nike from being able to
adequately defend against the alleged fraud. Even though Ms. Taylor did not allege the Sugg.
Retail Price and Our Price of every individual item, she provided (1) the date on which the items
were purchased, (2) the number, types, and product codes for each item, and (3) the location of
the outlet store. Nike admitted that such information is sufficient for it to determine both the
Sugg. Retail Price and Our Price for all but one of the items Ms. Taylor purchased. Thus, Nike

10 – OPINION AND ORDER

cannot seriously contend that the absence of price in the Complaint hampers its ability to mount
a defense. Accordingly, Ms. Taylor has adequately pled the “what” of the alleged fraud.
2. The “Why” of the Alleged Misrepresentation
The more difficult task is determining whether Ms. Taylor adequately alleged the falsity
of Nike’s representation. In the Ninth Circuit, several district courts have considered this
question in the context of similar false pricing schemes and have drawn different conclusions.
Compare Rael v. Dooney & Bourke, Inc., No. 16CV0371 JM(DHB), 2016 WL 3952219, at *3-4
(S.D. Cal. July 22, 2016) (finding that the plaintiff failed to allege facts to illustrate why the
“original” price was misleading), with Stathakos, 2016 WL 1730001, at *4 (finding that the
plaintiff did not need to plead the results of a pre-suit investigation to support the conclusion that
the Reference Prices were not “former, original, or regular prices”). These cases are highly factspecific, and it is somewhat difficult to extrapolate general principles from which courts can
decide similar cases. As such, even though these cases are instructive, they do not definitively
answer whether Ms. Taylor has sufficiently pled her Complaint in this specific case.
Ms. Taylor’s core fraud allegation appears to be that reasonable consumers would find
Nike’s conduct deceptive because: (1) reasonable consumers believe the Sugg. Retail Price to be
a former price and (2) unbeknownst to reasonable consumers, the items are made exclusively for
Nike Outlet stores or were not sold at the Sugg. Retail Price within 90 days prior to being
marked. From her Complaint and subsequent briefing, it is difficult to determine whether this
core allegation encompasses one or multiple theories of fraud. Regardless, her assertions are
insufficient for several reasons.

11 – OPINION AND ORDER

a)

Former Price Assertion

As to her first assertion, Ms. Taylor has not alleged with particularity how Nike’s price
tag is likely to deceive reasonable consumers into believing that the Sugg. Retail Price is a
former price.3 In her Complaint, Ms. Taylor alleges that she “and reasonable consumers
understand the MSRP to be the former, original, or regular price of the item on which is [sic]
appears.” She also alleges that “the term ‘outlet’ conveys to reasonable consumers that at least
some products are comprised of merchandise formerly offered for sale at full-price retail
locations” and that she understood the dual price tags to mean “she was receiving a bargain.”
These assertions might seem sufficient to establish Nike’s alleged fraudulent conduct, but on
closer look, it is unclear what exactly Ms. Taylor is alleging.
Although she claims to address the issue “in detail below,” Ms. Taylor gives no meaning
to the terms “former,” “original,” or “regular.” These terms represent three different concepts,
but the Complaint treats them as if they are indistinguishable. As such, it is difficult to determine
the exact theory upon which she claims she and other consumers were deceived by Nike’s dual
price tags. Did she believe the Sugg. Retail Price to be one at which the same items were
previously offered at Nike retail stores or other, non-outlet retailers? Or, did she believe the
Sugg. Retail Price to be one at which the same items were being currently offered by other stores
in the relevant market? Or, did she believe the Sugg. Retail Price to be one at which an
independent manufacturer determined the items to be worth? Without answering these or similar

3

At oral argument, Ms. Taylor suggested that cases involving price tags with the language “Compare At” or
“Compare To,” such as the Branca cases, did not apply to the situation at hand. Ms. Taylor argues that language like
Compare At denotes a value comparison, while Sugg. Retail Price denotes a former price. In the Branca cases,
however, the plaintiff argued or attempted to argue that she and other consumers believed the Compare At Price to
be a former price, just like Ms. Taylor is attempting to argue that she and other consumers understand the Sugg.
Retail Price to be a former price. See Branca II, 2015 WL 10436858, at *7; Branca I, 2015 WL 1841231, at *6-7.
Thus, the district court’s assessment of the plaintiff’s allegations in Branca I and II is relevant to the situation here.
See also Jacobo, 2016 WL 3482041, at *6 (noting that “former price” and “Compare At” cases involve the same
alleged harm to consumers).

12 – OPINION AND ORDER

questions, it is difficult to identify Ms. Taylor’s theory of fraud in a way that allows Nike to
adequately defend against the allegations. Thus, Plaintiff has failed to sufficiently plead how she
and reasonable consumers understand the Sugg. Retail Price to be a former price.4
b)

Made-for-Outlet Assertion

Ms. Taylor’s second assertion is that the items in question are “outlet exclusive” in that
they were never sold anywhere but Nike Outlet stores or that they did not sell at the Sugg. Retail
Price within 90 days of being marked. It is unclear how this assertion relates to Ms. Taylor’s core
allegation of fraud. In any event, the assertion appears to allege two distinguishable theories of
fraud that should be separated in the Complaint.
First, Ms. Taylor’s 90-day theory appears to be that even though the Sugg. Retail Price
represents a legitimate former price, it was a former price more than 90 days before Nike offered
the items at a discounted price, which California law makes fraudulent. See Cal. Bus. & Prof.
Code § 17501. Ms. Taylor clearly alleges that the Sugg. Retail price was not “the prevailing
market price within three months immediately preceding the publication of the former prices.”
She does not, however, specifically identify the items that were priced outside the 90-day
window, allege how such conduct would be deceptive to a reasonable consumer, or state that she
is relying on a per se theory of fraud under California law. Accordingly, Ms. Taylor has failed to
plead her 90-day theory with particularity.
Second, Ms. Taylor alleges the items are outlet exclusive because they were
manufactured exclusively for sale in Nike Outlet stores. Again, it is unclear what Ms. Taylor
4

This conclusion does not undermine the fact that generally, whether a defendant’s conduct is misleading or
deceptive is “a question of fact not appropriate for decision” on a motion to dismiss. See Williams, 552 F.3d at 938.
Even though the ultimate question of whether a statement is misleading to a reasonable consumer is a question of
fact, the plaintiff must still allege a coherent theory by which the factfinder could conclude the statement is
deceptive. In other words, a plaintiff must still allege why the statement is misleading, even though she need not
prove it to be so. See Chester v. TJX Companies, Inc., No. 515CV01437ODWDTB, 2016 WL 4414768, at *12 (C.D.
Cal. Aug. 18, 2016) (“The focus is on whether enough facts support a reasonable consumer’s reaction to an
allegedly deceptive advertisement – not whether enough facts can definitively prove fraud at the pleading stage.”).

13 – OPINION AND ORDER

attempts to demonstrate with this argument. It might be that Ms. Taylor makes this allegation as
a way to infer that the Sugg. Retail Price is an illegitimate former price. It is equally plausible,
however, that Ms. Taylor attempts to allege an entirely new theory: that reasonable consumers
believe they are receiving high-quality, retail merchandise when in fact they are receiving lower
quality, made-for-outlet merchandise. If the former, the allegation merely buttresses Ms.
Taylor’s former price assertion and, even if sufficiently pled in its own right, does not prevent
the Complaint from being dismissed. If the latter, Ms. Taylor fails to plead the theory with
particularity because she never alleges that she believed the items were of higher quality than
what she actually received. In any event, the Complaint’s lack of clarity prevents Nike from
mounting a legitimate defense and warrants dismissal.
c)

Made-for-Outlet Assertion as a Buttress to Former
Price Assertion

Assuming Ms. Taylor asserts the items are outlet exclusive to infer the Sugg. Retail Price
is illegitimate as a former price, the question has arisen as to whether she has adequately alleged
her made-for-outlet assertion. To support this assertion, Ms. Taylor relies on news articles that
detail false pricing schemes at similar outlet stores and confirmations of unnamed Nike Outlet
employees. Ms. Taylor argues that she is not required to conduct a pre-suit investigation and that
her allegations are sufficient to satisfy the heightened pleading requirement under Rule 9(b).
Ms. Taylor principally relies on Stathakos to demonstrate that she is not required to plead
the results of a pre-suit investigation to demonstrate the items in question are exclusively sold in

14 – OPINION AND ORDER

Nike Outlet stores.5 In Stathakos, the defendant argued that the plaintiffs were required to allege
“pre-suit investigation revealing that the items they purchased were previously sold . . . at a price
lower than the alleged Reference Price.” 2016 WL 1730001, at *4. The court, however,
disagreed, reasoning that “plaintiffs are not required to plead that they had conducted a pre-suit
investigation – or include the results of such investigations – in every case, particularly where the
information is not within the personal knowledge of the pleader.” Id. As such, the plaintiffs
allegations that the items were exclusively manufactured for Columbia outlet stores was
sufficient. Id.
The outcome in Stathakos appears to be an exception to the general rule regarding
sufficient pleadings under Rule 9(b). As noted above, Rule 9(b) requires a plaintiff to detail the
who, what, when, where, and how of an alleged misrepresentation, which generally involves a
“precomplaint investigation in sufficient depth to assure that the charge of fraud is responsible
and supported.” Jacobo, 2016 WL 3482041, at *3 (quoting Ackerman v. Nw. Mut. Life Ins., Co.,
172 F.3d 467, 469 (7th Cir. 1999)). In Stathakos, the court made an exception because the
information was “not within the personal knowledge of the pleader.” 2016 WL 1730001, at *4;
see also Chester, 2016 WL 4414768, at *13 (“[F]acts supporting allegations of fraud that are
exclusively within the defendant’s possession and of which a plaintiff cannot be expected to have
personal knowledge prior to discovery are not held to Rule 9’s heightened strictures.” (citation
omitted) (internal quotation marks omitted)). In contrast, in Dooney & Bourke, the court
suggested that information regarding an alleged false pricing scheme was not necessarily within
5

Ms. Taylor also relies on two unpublished California state cases, Adame v. Guess? (No. BC579128) and Young v.
Levi Strauss & Company (CGC-14-541316), to support her position. Regardless of what these cases say, they are
unpersuasive for purposes of the current motion. For one, Ms. Taylor has made no argument that the complaints
filed in California state courts were subjected to the same or a similar pleading standard of Rule 9(b). Furthermore,
the cases are unpublished, meaning the Court cannot rely on them as precedent. See Robinson v. Lewis, 795 F.3d
926, 930 (9th Cir. 2015) (noting that Rule 8.115 of the California Rules of Court direct courts not to rely on
unpublished cases as precedent).

15 – OPINION AND ORDER

the exclusive control of the defendant. 2016 WL 3952219, at *3. Thus, some specifics regarding
a pre-suit investigation were required. Id.
I am not convinced that the information regarding Ms. Taylor’s made-for-outlet
allegation is solely within the control of Nike. She could support her assertion, for example, by
looking at Nike and other retailers in the area or doing a quick search online for the same items
offered in Nike Outlet stores.6 Such investigation would by no means prove her claim, but it
would provide factual support for her allegation that the items are exclusively sold in Nike Outlet
stores. Thus, I disagree with Ms. Taylor that she need not conduct any pre-suit investigation in
order to satisfy the heightened pleading requirement of Rule 9(b).
That said, it appears that Ms. Taylor did conduct a pre-suit investigation and alleged
some of the results of such investigation in her Complaint. Specifically, she alleges that “sales
associates at Nike Outlet [stores] routinely confirm that products are manufactured exclusively
for outlet stores.” Although extremely vague, this allegation is likely sufficient to satisfy Rule
9(b), at least in regard to Ms. Taylor’s assertion that the items are only sold in Nike Outlets.
Thus, even though reliance on industry practices alone is insufficient to demonstrate the items
are outlet exclusive, when coupled with the purported confirmation of Nike sales associates, Ms.
Taylor has satisfied her burden to plead the assertion with particularity. As I stated above,
however, at best this assertion supports a “former price” theory of fraud that is defective for
other reasons.
3. Additional Pleading Issue Under CLRA
Even though Ms. Taylor’s failure to plead Nike’s false pricing scheme with particularity
is fatal to her California state law claims, there is an additional problem with her CLRA claim.

6

To the extent that products with identical names and appearances have indistinguishable differences, as Ms. Taylor
argues, Ms. Taylor can make this assertion in her complaint.

16 – OPINION AND ORDER

As noted above, the CLRA prohibits “unfair methods of competition and unfair or deceptive acts
or practices.” Cal. Civ. Code § 1770. Ms. Taylor alleges that Nike’s conduct violated two
specific prohibitions in the CLRA: subsection (a)(9) and subsection (a)(13). Under subsection
(a)(13), an advertiser is prohibited from making “false or misleading statements of fact
concerning reasons for, existence of, or amounts of price reductions.” Cal. Civ. Code §
1770(a)(13). Because Ms. Taylor has not pled the alleged false pricing scheme with particularity,
she has not adequately pled a violation to subsection (a)(13).
Subsection (a)(9) is different. It prohibits advertisers from advertising “goods or services
with intent not to sell them as advertised.” Cal. Civ. Code § 1770(a)(9). Courts have generally
applied this subsection to situations where a consumer has been “baited” into purchasing an item
that turns out to be different than was advertised. Lengen v. General Mills, Inc., 2016 WL
2602416, at *6 (E.D. Cal. May 5, 2016) (applying subsection (a)(9) where Cheerios containing
gluten were advertised as “Gluten Free” in the stream of commerce); Kelly v. BP West Coast
Prods. LLC, 2014 WL 7409220, at*6 (E.D. Cal. Dec. 30, 2014) (applying subsection (a)(9)
where gas was advertised at one price but ended up costing a higher price after consumer
inserted his credit card). Here, there are no allegations that the items sold were different than
what Nike purported them to be at the time of purchase, or that Ms. Taylor purchased products at
a different price than was advertised. Thus, even if Ms. Taylor is able to allege the false pricing
scheme with particularity, she may still fail to state a claim for relief under subsection (a)(9),
unless she can allege additional facts to show that Nike sold “goods or services with intent not to
sell them as advertised.”
B. Unjust Enrichment Claim
Finally, Ms. Taylor also asserts a claim for unjust enrichment. Because she has failed to

17 – OPINION AND ORDER

adequately plead her UCL, FAL, and CLRA claims, her unjust enrichment claim necessarily
fails.
In California, “there is not a standalone cause of action for ‘unjust enrichment.’” Astiana
v. Hain Celestial Grp., Inc. 783 F.3d 753, 762 (9th Cir. 2015). This does not mean that unjust
enrichment is irrelevant under California law; rather it is simply a “theory underlying a claim
that a defendant has been unjustly conferred a benefit through mistake, fraud, coercion, or
request.” Id. (internal quotations omitted). As such, failure to allege a substantive claim for relief
– such as one under the UCL, FAL, or CLRA – warrants dismissal of any additional claim for
unjust enrichment. See Hovsepian v. Apple, Inc., 08-5788 JF (PVT), 2009 WL 5069144, at *5
(N.D. Cal. Dec. 17, 2009); Oestreicher v. Alienware Corp., 544 F. Supp. 2d 964, 975 (N.D. Cal.
2008).7
In this case, Ms. Taylor has failed to sufficiently plead the alleged fraudulent pricing
scheme underlying her state law causes of action. Therefore, her unjust enrichment claim cannot
survive.
CONCLUSION
For the reasons stated above, I find that Ms. Taylor has alleged sufficient facts to
establish Article III standing for economic damages. She has not demonstrated, however, that she
has standing to seek injunctive relief. Furthermore, she has failed to sufficiently plead Nike’s
alleged fraudulent pricing scheme with particularity as required by Rule 9(b). Accordingly, I
GRANT Defendant’s Motion to Dismiss [15] and DISMISS the Complaint [1]. Because Ms.
7

In response, Ms. Taylor argues that California law clearly recognizes a freestanding claim for unjust enrichment
and cites several cases in support of her position. See Le v. Kohls Dep’t Stores, No. 15-CV-1171-JPS, 2016 WL
498083 (E.D. Wis. Feb. 8, 2016) (interpreting California law). The cases, however, do not stand for what Ms. Taylor
claims they do. Rather, they simply address whether California recognizes a cause of action for unjust enrichment at
all; a point Nike does not dispute. In Le, for example, the court simply found that California law permitted a cause of
action for unjust enrichment even where a party “set[s] out alternative claims for relief.” Id. at *17 (citing Astiana,
783 F.3d at 762). This is not the same as saying that a plaintiff may bring a claim for unjust enrichment absent any
substantive claim for relief.

18 – OPINION AND ORDER

Taylor may cure the Complaint’s deficiencies with additional facts, I grant leave to amend the
Complaint. The amended complaint is due 30 days after the issuance of this Opinion and Order.
DATED this

17th

day of February, 2017.

/s/ Michael W. Mosman_________
MICHAEL W. MOSMAN
Chief United States District Judge

19 – OPINION AND ORDER