In re Whole Foods Mkt. Grp., Inc. Overcharging Litig.

167 F.Supp.3d 524

In re Whole Foods Market Group, Inc. Overcharging Litigation.

15 Civ. 5838(PAE)

United States District Court, S.D. New York.

Signed March 1, 2016

Brittany Sloane Weiner, Imbesi Christensen and Michael, New York, NY, Douglas Gregory Blankinship, Jeremiah Lee Frei–Pearson, Finkelstein Blankinship, Frei–Pearson & Garber, LLP, White Plains, NY, for Plaintiff.

David Sellinger, Florham Park, NJ, for Defendant.

OPINION & ORDER

PAUL A. ENGELMAYER, United States District Judge:

This case involves claims by plaintiffs Sean John and Joseph Bassolino that Whole Foods stores in New York City overcharged for certain pre-packaged foods. The complaint arises out of, and is based on, a June 24, 2015 press release ("Press Release") issued by the New York City Department of Consumer Affairs ("DCA") following an investigation into alleged overcharging by defendant Whole Foods Market Group, Inc. ("Whole Foods"), which operates those stores.

The Press Release announced that the DCA's investigation had uncovered "systemic overcharging" for pre-packaged foods at Whole Foods stores in New York City. Soon after, John and Bassolino filed separate lawsuits, each a putative class action, against Whole Foods. On October 21, 2015, the Court consolidated the lawsuits and directed plaintiffs to file a consolidated amended complaint ("CAC"). The CAC, echoing the Press Release, alleges that Whole Foods mislabeled pre-packaged foods sold at its New York stores so as to overstate their weights, and thereby overcharged customers for those products. Plaintiffs seek money damages under New York General Business Law ("GBL") § 349, which prohibits deceptive trade practices; § 350, which prohibits false advertising; and under the doctrine of unjust enrichment. Plaintiffs also seek injunctive relief under the GBL.

Whole Foods now moves to dismiss the CAC under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). As to Rule 12(b)(1), Whole Foods argues that plaintiffs lack standing to bring any claims because they have not adequately pled that they themselves suffered an injury-in-fact, or to pursue injunctive relief because they have not alleged irreparable harm. As to Rule 12(b)(6), Whole Foods argues that the CAC fails to state a claim.

For the reasons that follow, the Court grants the motion to dismiss for lack of standing, because plaintiffs have not adequately alleged an injury to themselves.

I. Background¹

A. Factual Background

1. Whole Foods

A Delaware corporation headquartered in Texas, Whole Foods currently operates 422 stores throughout the United States and the United Kingdom. CAC ¶ 8. Fifteen stores are located in New York. Id.

Whole Foods bills itself as "America's Healthiest Grocery Store," and as a leader in providing the "finest natural and organic goods available." Id. (quoting Whole Foods Market, http://www.wholefoodsmarket.com/mission-values/core-values/we-satisfy-delight-and-nourish-our-customers (last visited Nov. 3, 2015)). Among the goods sold at Whole Foods stores are various pre-packaged products, including meats, dairy products, nuts, berries, vegetables, and seafood. Id. ¶ 13. These products vary by weight from package to package, and each package is purportedly labeled and priced based on its individual weight. See Moll Aff. ¶ 6; CAC ¶ 14.

2. The DCA's Investigation and Press Release

On June 24, 2015, the DCA issued a Press Release announcing its "ongoing investigation" into Whole Foods' "system[ic] overcharging for pre-packaged foods." CAC ¶ 19 (quoting DCA Rpt. at 1). The Press Release stated that in fall 2014, the DCA had "conducted in-depth inspections into how Whole Foods was weighing and labeling its pre-packaged foods and discovered troubling issues with their labeling of the weight of pre-packaged foods." DCA Rpt. at 2. In winter 2014–2015, the Press Release stated, the DCA "revisited several stores and found products continued to be mislabeled." Id.

The Press Release reported that:

DCA tested packages of 80 different types of pre-packaged products and found all of the products had packages with mislabeled weights. Additionally, 89 percent of the packages tested did not meet the federal standard for the maximum amount that an individual package can deviate from the actual weight, which is set by the U.S. Department of Commerce. The overcharges ranged from $0.80 for a package of pecan panko to $14.84 for a package of coconut shrimp.

Id. at 1; see also CAC ¶ 20.

According to the Press Release, the overcharges were especially prevalent in packages of products "labeled with exactly the same weight when it would be practically impossible for all of the packages to weigh the same amount." DCA Rpt. at 1–2.²

3. Plaintiffs' Claims

Bassolino and John are New York citizens who claim to "regularly shop[ ] at Whole Foods locations in New York City." CAC ¶¶ 6–7. Shortly after the DCA's Press Release, each plaintiff filed suit against Whole Foods, based on the labeling and charging practices described therein.³

In the CAC, plaintiffs allege that, during the past few years, they each "regularly purchased" from New York City Whole Foods stores pre-packaged products of the types identified in the Press Release. See id. ¶¶ 22–24. Specifically, they allege that during 2014 and 2015, John purchased pre-packaged cheese and cupcakes approximately one or two times per month from stores including those at 250 7th Avenue and 95 East Houston Street, id. ¶¶ 17, 22,⁴ and that beginning in 2010, Bassolino purchased pre-packaged chicken fingers several times per month from the store in Union Square, id. ¶ 23.

The CAC alleges that, when purchasing pre-packaged products at New York City stores, plaintiffs and other consumers rely on Whole Foods' representation "that it has accurately priced these items according to their respective actual weights." Id. ¶¶ 14–15. However, plaintiffs claim, citing the Press Release, Whole Foods "routinely overcharge[es]" customers by overstating the weight of such products and "calculating price based on the greater weight." Id. ¶ 16. Plaintiffs allege that overcharged customers "have no way of knowing that they [are] in fact being overcharged for the pre-packaged products." Id. ¶ 35. Accordingly, plaintiffs allege, at the time they made their purchases, they "were deceived into believing that Whole Foods was charging them by the actual weight of a given Product." Id. ¶ 33. However, neither plaintiff identifies any particular transaction in which he was, allegedly, overcharged.

Plaintiffs bring this lawsuit as a putative class action on behalf of "[a]ll persons who purchased at least one of the [pre-packaged products identified by the Press Release] from a Whole Foods store located within the State of New York within the previous six years." Id. ¶ 38. The CAC claims violations of GBL § 349, which prohibits deceptive trade practices, and § 350, which prohibits false advertising, and unjust enrichment. Plaintiffs seek money damages under GBL §§ 349and 350, and injunctive relief barring Whole Foods from continuing to deceptively mislabel pre-packaged goods.

4. The Settlement Agreement Between the DCA Whole Foods

On December 23, 2015, after the CAC was filed, Whole Foods and the DCA entered into a settlement agreement. It terminated the DCA's investigation against Whole Foods, in exchange for Whole Foods' (1) payment of $500,000, and (2) implementation of policies and procedures for pricing and labeling accuracy. See Consent Order, ¶¶ 12, 20–34.

The Consent Order represents that Whole Foods "denies all of the [DCA's] allegations," and that "its agreements and payments pursuant to [the Consent Order] do not constitute an admission or finding of wrongdoing." Id. ¶ 14. It further states that Whole Foods "asserts that any items that were mistakenly labeled were incidents of simple human error, and not as a result of intentional misconduct." Id. ¶ 15. Finally, it provides that Whole Foods and the DCA agree that: (1) the violations alleged by the DCA are limited to New York City; (2) the DCA did not make any findings as to fraud with respect to New York City stores; and (3) the DCA did not find any evidence of systematic or intentional misconduct by any individual across the Northeast region or the company. Id. 17.

B. Procedural History

As noted, shortly after the issuance of the Press Release, plaintiffs each filed a putative class action against Whole Foods. See 15 Civ. 6046, Dkt. 1 (Bassolino); 15 Civ. 5838, Dkt. 1 (John).⁵

On July 31, 2015, Whole Foods removed Bassolino's action to federal court pursuant to the Class Action Fairness Act, 28 U.S.C. § 1332(d)("CAFA"). 15 Civ. 6046, Dkt. 1. On August 21, 2015, Bassolino's case was reassigned to this Court as related to John's. On August 28, 2015, Bassolino moved to remand his case to state court, on the ground that Whole Foods had not demonstrated an amount in controversy exceeding CAFA's $5 million jurisdictional minimum. Id., Dkt. 14. On September 25, 2015, Whole Foods moved to dismiss both lawsuits. Id., Dkt. 24; 15 Civ. 5838, Dkt. 16. On October 2, 2015, the Court stayed briefing on the motions to dismiss, pending the resolution of Bassolino's motion to remand. 15 Civ. 6046, Dkt. 33; 15 Civ. 5838, Dkt. 18.

On October 5, 2015, the Court issued an order, directing Whole Foods to explain more concretely its basis for asserting potential damages of $5 million. 15 Civ. 6046, Dkt. 36. In response, Whole Foods prepared a list of products that it understood, based on the DCA's Press Release, to be covered by the DCA investigation, and thereby within the scope of Bassolino's claims. Moll Aff. ¶ 3.⁶ The list included a variety of meats, dairy products, and baked goods, including cheese plates, ground beef, chicken legs, chicken thighs, split chicken breasts, chocolate, cupcakes, vegan cupcakes, vanilla cake, and wing buckets. Id., Ex. A; CAC ¶ 21. Jeffrey Moll, a Whole Foods senior data mining analyst, calculated that at least 11,420,178 packages of these products had been sold at...