In re Whole Foods Mkt. Grp., Inc.

397 F.Supp.3d 406

IN RE: WHOLE FOODS MARKET GROUP, INC. OVERCHARGING LITIGATION

15 Civ. 5838 (PAE)

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

Signed July 17, 2019

OPINION & ORDER

PAUL A. ENGELMAYER, District Judge:

On June 24, 2015, the New York City Department of Consumer Affairs (the "DCA") issued a press release stating that, based on its investigation, Whole Foods Market Group, Inc. ("Whole Foods"), by assigning exaggerated weights to pre-packaged foods priced by individual weight, frequently overcharged consumers for these products. Soon after, plaintiff Sean John ("John"), a customer of certain Whole Foods stores in Manhattan, brought a putative class action against Whole Foods based on his having purchased allegedly short-weighted pre-packaged cupcakes and cheeses during 2014 and 2015. John did not claim ever to have weighed any cupcake or cheese that he had bought, to have direct evidence of any kind that any product he had bought had been short-weight, or even to have retained records of his purchases. His claim to have been personally overcharged was instead based on extrapolating from the DCA investigation.

Discovery, fact and expert, is now complete on John's individual claims. Whole Foods seeks summary judgment on these claims. Whole Foods argues that the undisputed facts would not permit a jury to find, other than by speculation, that John himself was ever overcharged by Whole Foods for any pre-packaged food item. This failure, Whole Foods argues, entitles it now to prevail, either on the merits or because the same facts demonstrate that John has failed to establish an injury-in-fact, as necessary for Article III standing. John counters that a jury could find injury to him by extrapolating from what he contends is proof of a uniform Whole Foods practice of falsely inflating the weights, and therefore the price, of its pre-packaged foods. John argues that a jury could find that Whole Foods used "[u]niform, [s]ystematic [p]ractices" to prepare and price cupcakes and cheeses and, considering these unitary practices alongside the DCA's findings of short-weighted products, could infer that at least some items John bought in 2014 and 2015 must also have been short-weight.

For the following reasons, the Court finds that the evidence adduced could not support a verdict in John's favor. Although John's testimony can establish that he purchased cupcakes and cheeses from two Whole Foods stores, there is no competent, non-speculative, evidence that any cupcake or cheese item John bought weighed less than the weight used to price it. The DCA investigation, in the form of spot checks at certain stores, does not support the inference of systematic over-pricing. And John in discovery did not adduce competent evidence of a uniform practice by Whole Foods of falsely inflating the weight of its pre-packaged goods in general, or of cupcakes and cheese in particular.

Although John's failure to prove his own injury would support either dismissal for lack of Article III standing or entry of summary judgment for Whole Foods on the merits of his claims, the Court dismisses this case for lack of standing because standing is jurisdictional.

I. Background¹

A. The Parties

1. Whole Foods

A Delaware corporation headquartered in Texas, Whole Foods currently operates 21 stores in New York state, 12 of which are located in New York City.² JSF ¶¶ 1–2. Among the goods sold at Whole Foods are various pre-packaged products. These included baked goods, meats, dairy products, nuts, berries, vegetables, and seafood. Id. ¶ 3. Each package is labeled and priced based on weight, as such weight is determined by Whole Foods. Id. ¶ 4.

2. Plaintiff Sean John

John is a resident of New York. He works as a caterer and private chef in New York City. Id. ¶ 5. John makes purchases from Whole Foods for both his catering work and for personal consumption. Id. ¶ 6.

B. The Initial Complaint

On June 24, 2015, the DCA issued a press release announcing an "ongoing investigation" into Whole Foods and its finding that the company "routinely overstated the weights of its pre-packaged products." See JSF ¶ 20; Dkt. 35-1 ("Press Release") 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." Press Release at 2. In winter 2014–2015, the Press Release stated, the DCA "revisited several stores and found [that] products continued to be mislabeled." Id.

The Press Release concluded 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.

A month later, on July 24, 2015, John filed a putative class action against Whole Foods Market, Inc., claiming violations of sections 349 and 350 of the New York General Business Law ("GBL"). Dkt. I.³ Federal jurisdiction was based on the Class Action Fairness Act, 28 U.S.C. § 1332(d) ("CAFA"). Id. John based his claim of systematic overcharges for pre-packages products on the DCA Press Release. See id.⁴

C. Initial Proceedings Before This Court

On July 31, 2015, Whole Foods removed to federal court, under CAFA, a class action filed against it by plaintiff Joseph Bassolino, who brought similar claims to John's but involving other products (e.g., chicken fingers). See 15 Civ. 6046, Dkt. 1. On August 21, 2015, Bassolino's case was reassigned to this Court as related to John's. 15 Civ. 6046, Dkt. 8.

On August 28, 2015, Bassolino filed a motion to remand on the grounds that Whole Foods had not demonstrated that the amount in controversy exceeded CAFA's $5 million jurisdictional minimum. 15 Civ. 6046, Dkt. 17. On September 25, 2015, while the remand motion was pending, Whole Foods moved to dismiss both John and Bassolino's lawsuits. Dkt. 16; 15 Civ. 6046, Dkt. 24. On October 2, 2015, the Court stayed briefing on the motions to dismiss pending the resolution of Bassolino's motion to remand. Dkt. 18. On October 21, 2015, after hearing argument, the Court denied Bassolino's motion to remand. 15 Civ. 6046, Dkt. 46. The Court consolidated the John and Bassolino actions under the caption In re Whole Foods Market Group, Inc. Overcharging Litigation , and docket number 15 Civ. 5838. On November 6, 2015, plaintiffs filed a Consolidated Amended Complaint, Dkt. 26 ("CAC"), bringing claims under GBL §§ 349 and 350, and under the doctrine of unjust enrichment.

On November 20, 2015, Whole Foods moved to dismiss the CAC for lack of standing, under Rule 12(b)(1), and for failure to state a claim, under Rule 12(b)(6). Dkt. 30. On March 1, 2016, the Court granted the motion to dismiss on both grounds. See In re Whole Foods Mkt. Grp., Inc. Overcharging Litig. , 167 F. Supp. 3d 524, 538 (S.D.N. Y 2016) (" Whole Foods I "), rev'd , 858 F.3d 732 (2d Cir. 2017).

The Court held, first, that the CAC did not adequately plead a particularized injury-in-fact. Although John and Bassolino had each alleged that he had bought certain categories of pre-packaged foods several times per month from various Whole Foods stores, neither alleged having ever weighed the foods they purchased, and neither alleged that "any particular purchase they made was affected" by short-weighting. Id. at 532. Plaintiffs' claim to have paid excessive prices for these foods based on allegedly excessive weights was thus unsubstantiated, generalized, and conclusory. Id.

And, the Court held, the DCA Press Release, the sole basis on which plaintiffs claimed that Whole Foods had sold them pre-packaged food bearing excessive weights, did not support this claim. Id. at 533–37. The Press Release, the Court noted, had not alleged an across-the-board uniform pattern of overcharging of all pre-packaged products—or, pertinent to John and Bassolino, of all pre-packaged cheese, cupcakes, and chicken fingers—during the relevant time period. Id. at 533–35. Had it done so, the Court held, plaintiffs' claims tracking the Press Release and alleging that they had purchased a product in these categories within the same time period would plead an injury-in-fact. Id. at 535–37. But, the Court noted, the DCA Press Release had done no more than state that: (1) one or more types of pre-packaged products in the categories plaintiffs had purchased (cheese and cupcakes for John; chicken fingers for Bassolino) had been found to have a mislabeled weight, and (2) 89% of all packages tested did not meet the federal standard for the maximum amount that an individual package can deviate from the actual weight. Id. at 533–37. Further, the Press Release did not identify the stores at which the pre-packaged products had been tested and did not allege that DCA inspectors had tested products from the Whole Foods stores at which John and Bassolino shopped. Instead, the Court noted, the Press Release described, by its terms, a "snapshot." Id. at 534. The Press Release, the Court stated, "fall[s] very far short of reporting an investigative finding of ubiquitous, systematic overweighting" and "does not provide any basis on which to infer across-the-board overcharging so as to embrace, other than by conjecture," the pre-packaged products purchased by the plaintiffs in 2014 and 2015. Id. The Court also noted methodological issues affecting the DCA's sampling practices. Id. at 534–35. Finally, the Court noted, the DCA's finding that the listed weight of the remaining 11% of tested packages did not deviate from their actual weight undercut plaintiffs' claim of ubiquitous, systematic, short-weighting. Id. Reviewing cases in which injury-in-fact had been held lacking, the Court held that the CAC—by not alleging that any specific...