DeMaso v. Walmart Inc.

655 F.Supp.3d 696

Eugene DEMASO, individually andon behalf of all others similarly situated, Plaintiff, v. WALMART INC., Defendant.

Case No. 21-cv-06334

United States District Court, N.D. Illinois, Eastern Division

Signed February 7, 2023

Spencer Sheehan, Sheehan & Associates, P.C., Great Neck, NY, for Plaintiff.

Dean Nicholas Panos, Jenner & Block LLP, Chicago, IL, Alexander Smith, Jenner & Block LLP, Los Angeles, CA, for Defendant.

MEMORANDUM OPINION AND ORDER

MARY M. ROWLAND, United States District Judge

Plaintiff Eugene DeMaso brings this suit against Defendant Walmart Inc., individually and on behalf of a putative classes of consumers from 26 states including Illinois alleging they were deceived by the words, "fudge" and "mint" on the front label of Defendant's Fudge Mint Cookies (the "product"). Plaintiff brings claims under the Illinois Consumer Fraud and Deceptive Business Practice Act ("ICFA"), 815 Ill. Comp. Stat. 505/2; the state consumer fraud laws of the other 25 states; breaches of express warranty, implied warranty of merchantability and the Magnuson Moss Warranty Act ("MMWA"), 15 U.S.C. § 2301; and common law claims for negligent misrepresentation, fraud, and unjust enrichment. Plaintiff requests classwide injunctive relief as well as damages and restitution.

Defendant has moved to dismiss the claims under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim and also under Federal Rule of Civil Procedure 12(b)(1), arguing that Plaintiff lacks standing to assert injunctive relief. For the reasons stated herein, Defendant's Motion to Dismiss [8] is granted.

I. Background

The following factual allegations taken from the operative complaint (Dkt. 1) are accepted as true for purposes of the motion to dismiss. See Lax v. Mayorkas, 20 F.4th 1178, 1181 (7th Cir. 2021).

Defendant manufactures, labels, markets, and sells cookies covered in fudge and flavored by mint ingredients identified as Fudge Mint Cookies under the Great Value brand. Dkt. 1 at ¶ 1. Plaintiff alleges that reasonable consumers are misled by the statements "Fudge Mint Cookies" and the picture of the cookie coated with what appears to be fudge. Id. at ¶ 33. Reasonable consumers expect fudge to be made from dairy ingredients, Plaintiff asserts, but the product does not contain any dairy ingredients or milk fat and contains vegetable shortening for its fat content. Id. at ¶¶ 33-34.

According to Plaintiff, the product's green packaging, the picture of two mint leaves next to the word, "Mint" and the lack of any qualifying terms, i.e., "Mint-flavored", "Artificial Mint Flavored," may cause consumers to expect it contains mint ingredients. Id. at ¶ 38. Plaintiff believes that this label is misleading because the product contains no mint; mint is not on the ingredient list. Id. at ¶ 39. The product's mint taste, Plaintiff alleges, is a synthesized blend of compounds extracted in a laboratory from artificial sources. Id. at ¶ 40. Plaintiff alleges that by stating that the product is "Made with Real Cocoa," Defendant enhanced the misleading representations about the fudge and mint because the product actually does contain cocoa so consumers would be more likely to believe there was actual fudge and mint. Id. at ¶ 41. A copy of the packaging (as it appears in the complaint) is reproduced below.

Image materials not available for display.

A copy of the ingredient list as listed on the product's packaging (as it appears in the complaint) is reproduced below.

INGREDIENTS: SUGAR, ENRICHED WHEAT FLOUR (FLOUR, NIACIN, REDUCED IRON, THIAMINE MONONITRATE, RIBOFLAVIN, FOLIC ACID), VEGETABLE OIL SHORTENING (CANOLA, PALM KERNEL AND PALM OILS), COCOA (PROCESSED WITH ALKALI), LEAVENING (BAKING SODA, SODIUM ACID PYROPHOSPHATE, MONOCALCIUM PHOSPHATE), SOY LECITHIN, SALT, NATURAL AND ARTIFICIAL FLAVOR.

Plaintiff alleges that by labeling the product in this manner, Defendant gained an advantage against other companies and misled consumers seeking to purchase a product that contained fudge and mint ingredients. Id. at ¶ 45. Plaintiff additionally alleges that the value of the product was materially less than its value as represented by Defendant. Id. at ¶ 46. Finally, Plaintiff alleges that Defendant has sold more of the product and at higher prices than it would have in the absence of the alleged wrongdoing, providing Defendants with additional profits at consumers' expense. Id. at ¶ 47. Plaintiff seeks to represent a class of consumers from 26 states. Id. at ¶ 82.¹

II. Standard

"To survive a motion to dismiss under Rule 12(b)(6), the complaint must provide enough factual information to state a claim to relief that is plausible on its face and raise a right to relief above the speculative level." Haywood v. Massage Envy Franchising, LLC, 887 F.3d 329, 333 (7th Cir. 2018) (quoting Camasta v. Jos. A. Bank Clothiers, Inc., 761 F.3d 732, 736 (7th Cir. 2014)); see also Fed. R. Civ. P. 8(a)(2) (requiring a complaint to contain a "short and plain statement of the claim showing that the pleader is entitled to relief"). A court deciding a Rule 12(b)(6) motion "construe[s] the complaint in the light most favorable to the plaintiff, accept[s] all well-pleaded facts as true, and draw[s] all reasonable inferences in the plaintiff's favor." Lax, 20 F.4th at 1181. However, the court need not accept as true "statements of law or unsupported conclusory factual allegations." Id. (quoting Bilek v. Fed. Ins. Co., 8 F.4th 581, 586 (7th Cir. 2021)). "While detailed factual allegations are not necessary to survive a motion to dismiss, [the standard] does require 'more than mere labels and conclusions or a formulaic recitation of the elements of a cause of action to be considered adequate.' " Sevugan v. Direct Energy Servs., LLC, 931 F.3d 610, 614 (7th Cir. 2019) (quoting Bell v. City of Chicago, 835 F.3d 736, 738 (7th Cir. 2016)).

Dismissal for failure to state a claim is proper "when the allegations in a complaint, however true, could not raise a claim of entitlement to relief." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 558, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). Deciding the plausibility of the claim is "a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." McCauley v. City of Chicago, 671 F.3d 611, 616 (7th Cir. 2011) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 679, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009)).

For fraud claims and claims of deceptive conduct under ICFA, the heightened pleading standard of Federal Rule of Civil Procedure 9(b) applies. Vanzant v. Hill's Pet Nutrition, Inc., 934 F.3d 730, 738 (7th Cir. 2019). The plaintiff must "plead with particularity the circumstances constituting fraud" and allege the "who, what, when, where, and how" of the alleged conduct. Id.

III. Analysis

Plaintiff argues that Defendant's labeling of its product as containing "fudge" misleads consumers because Plaintiff expects milkfat, an essential ingredient in fudge, to be present in the listed ingredients. As this fudge is made with a vegetable shortening and not milkfat, it is not "fudge", according to Plaintiff. Similarly, Plaintiff argues that the product label misleads consumers into believing that the product contains actual "mint". Defendant argues that its labeling is not deceptive or misleading and so Plaintiff fails to state a claim under the ICFA and other state consumer fraud statutes. Defendant further contends that Plaintiff's fraud, negligent misrepresentation, and unjust enrichment claims should also be dismissed. Finally, Defendant argues that Plaintiff lacks standing to seek injunctive relief.

A. ICFA, State Consumer Fraud Laws, common Law Fraud Claims

Defendant moves to dismiss, arguing that its label is not deceptive as a matter of law. The Court begins with the ICFA claim, since Defendant's argument seeking to dismiss that claim informs the Court's analysis of the entire class action complaint.²

ICFA is "a regulatory and remedial statute intended to protect consumers against fraud, unfair methods of competition, and other unfair and deceptive business practices." Benson v. Fannie May Confections Brands, Inc., 944 F.3d 639, 646 (7th Cir. 2019) (cleaned up). To state a claim under the ICFA, a plaintiff must allege "(1) a deceptive or unfair act or practice by the defendant; (2) the defendant's intent that the plaintiff rely on the deceptive or unfair practice; and (3) the unfair or deceptive practice occurred during a course of conduct involving trade or commerce." Wigod v. Wells Fargo Bank, N.A., 673 F.3d 547, 574 (7th Cir. 2012) (citation omitted). "[T]he facts alleged in a complaint attempting to show fraud under the ICFA must show not just the mere possibility of a fraud, but that fraud is a 'necessary or probable inference from the facts alleged." Spector v. Mondelēz Int'l, Inc., 178 F. Supp. 3d 657, 672 (N.D. Ill. 2016) (quoting People ex rel. Hartigan v. E & E Hauling, Inc., 153 Ill.2d 473, 180 Ill.Dec. 271, 607 N.E.2d 165, 174 (1992)). Plaintiff must plead that "the relevant labels are likely to deceive reasonable consumers," which "requires a probability that a significant portion of the general consuming public or of targeted consumers, acting reasonably in the circumstances, could be misled." Bell v. Publix Super Markets, Inc., 982 F.3d 468, 474-75 (7th Cir. 2020) (quoting Beardsall v. CVS Pharmacy, Inc., 953 F.3d 969, 972-73 (7th Cir. 2020)).

"Consumer-protection laws do not impose on average consumers an obligation to question the labels they see and to parse them as lawyers might for ambiguities, especially in the seconds usually spent picking a low-cost product." Id. at 476. Indeed the "reasonable consumer standard does not presume, at least as a matter of law, that reasonable consumers will test prominent front-label claims by examining the fine print on the back label." Id. at 477. "[W]here plaintiffs base deceptive advertising claims on unreasonable or fanciful interpretations of...