Marino v. Coach, Inc., 16–CV–1122 (VEC)

264 F.Supp.3d 558

Michelle MARINO, individually and on behalf of all others similarly situated, Plaintiff,

v.COACH, INC., Defendant.

Monica Rael, on behalf of herself and all others similarly situated, Plaintiff,

v.Coach, Inc., Defendant.

Deborah Esparza, individually and on behalf of all others similarly situated, Plaintiff,

v.Coach, Inc., Defendant.

Cera Hinkey, on behalf of herself and all others situated, Plaintiff,

v.Coach, Inc., Defendant.

16–CV–1122 (VEC)

16–CV–3773 (VEC)

16–CV–3677 (VEC)

16–CV–5320 (VEC)

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

Signed August 28, 2017

Gene Joseph Stonebarger, Richard David Lambert, Stonebarger Law, Folsom, CA, for Plaintiff.

Aaron Harvey Marks, Kevin Allen Cyrulnik, Kasowitz, Benson, Torres & Friedman LLP, New York, NY, Jason Sanjuro Takenouchi, Kasowitz, Benson, Torres & Friedman LLP, San Francisco, CA, for Defendant.

OPINION AND ORDER

VALERIE CAPRONI, United States District Judge:

Outlet malls dot the landscape attracting bargain seekers and tour busses. They have also attracted the attention of disgruntled shoppers and plaintiffs' attorneys who claim the outlets are not what they appear. Plaintiffs are four such shoppers. In this particular case they allege that Coach, Inc. ("Coach") uses deceptive marketing tactics to mislead consumers into believing that products sold at Coach outlet and factory stores (together "Coach Factory" stores and products) are deeply discounted, when, in fact, the goods are manufactured exclusively for Coach Factory stores and are not being sold at a discounted price at all. Plaintiffs bring ten statutory and common law claims on behalf of consumers nationwide for fraud, breach of express warranty, and unjust enrichment and violations of at least twenty state consumer protection statutes.

Taking an "everything but the kitchen-sink" approach, Coach has moved to dismiss on the grounds that Plaintiffs lack constitutional standing and class standing to assert claims on behalf of a nationwide class; that their claims are inadequately pleaded under Federal Rule of Civil Procedure 9(b) ; and that Plaintiffs have not alleged necessary elements of each of their causes of action, namely a cognizable injury, a material misstatement, or Coach's intent to deceive. For the reasons that follow, Coach's motion to dismiss is GRANTED IN PART and DENIED IN PART. Coach's motion to dismiss Plaintiffs' claim for injunctive relief is GRANTED WITH PREJUDICE. Coach's motion to dismiss Plaintiff Marino's claim under New Hampshire's consumer protection law and Plaintiffs' claims for common law fraud, unjust enrichment, and breach of express warranty are DISMISSED WITHOUT PREJUDICE. Coach's motion to dismiss is otherwise denied.

BACKGROUND

Coach is a large retailer of luxury accessories. See Consol. Am. Compl. (Dkt. 37)¹ ("CAC") ¶ 30. In addition to its retail or "mainline" presence, Coach operates 204 outlet stores under the "Coach Factory" brand. CAC ¶ 33. The CAC alleges that Coach manufactures certain goods exclusively for sale in Coach Factory stores. These goods are identified by a style number beginning with "F," whereas mainline or retail products have five-digit style numbers with no letters. CAC ¶ 4. Some (or all) Coach Factory goods are marketed with an "MFSRP" or "Manufacturer's Suggested Retail Price." CAC ¶¶ 19–23. According to Plaintiffs, the MFRSPs are "illusory" because Coach Factory goods are never actually sold for the MFSRP. CAC ¶¶ 9–10.

Each of the four named plaintiffs visited Coach Factory stores between the "summer of 2014" and December 5, 2015. CAC ¶¶ 19–23. They allege that they purchased accessories—wristlets, sunglasses, and a handbag—and paid prices ranging between 40% and 70% less than the purported MFSRPs. CAC ¶¶ 19–23. Specifically, during the "summer of 2014," plaintiff Deborah Esparza ("Esparza") purchased a "black wristlet handbag in signature fabric, Style No. F64375," from a Coach Factory store in Cabazon, California. CAC ¶ 19. The wristlet was marked with a hangtag advertising an MFSRP of $65.00. CAC ¶ 19. Esparza paid "approximately $35 to $40." CAC ¶ 19. Plaintiff Monica Rael ("Rael") purchased a "handbag, Style No. F34614," from a Coach Factory store in Carlsbad, California. CAC ¶ 20. The handbag was marked with a hangtag advertising an MFSRP of $395.00. CAC ¶ 20. Rael paid $119.20. CAC ¶ 20. Plaintiff Cera Hinkey purchased a pair of sunglasses marked "IRMA (Coach L993)" from a Coach Factory store in Folsom, California in August 2014. CAC ¶ 21. The sunglasses were marked with an MFSRP of $158.00. CAC ¶ 21. Hinkey paid $65.00. CAC ¶ 21. Plaintiff Michelle Marino bought a "wristlet," Style No. F51763 from a Coach Factory store in Merrimack, New Hampshire on November 29, 2014. CAC ¶ 23. The wristlet was advertised with an MFSRP of $78.00. Marino paid $40.00.

Plaintiffs allege that they understood the MFSRPs to be prices at which the Coach Factory goods were previously offered for sale. CAC ¶¶ 10, 16 (Plaintiffs "believed that the price tags attached to the products purchased at [Coach Factory stores] signified a former price at which the products were sold in the marketplace."). The CAC alleges that the MFSRPs are fictitious and intended to entice bargain-hunters with the appearance of a discount. CAC ¶¶ 58–60. Consumers like Plaintiffs, who believe the MFSRPs represent former prices, think they have scored a substantial discount. CAC ¶ 14. In truth, however, Coach Factory items are never sold or intended to be sold for the MFSRP. CAC ¶¶ 6, 40, 53.

According to Plaintiffs, the MFSRPs also create a "false impression of quality." CAC ¶ 40. Consumers base their expectations for the quality of Coach Factory products on their MFSRPs, rather than on the lower, actual prices at which the products are offered for sale.² CAC ¶¶ 37, 53–54. This mistaken impression of quality is enhanced by comparison to Coach retail products and prices. Plaintiffs allege that at least some of Coach's factory-only products are designed to appear similar to Coach goods sold in retail stores. CAC ¶¶ 46–52. By marketing these factory-only products with MFSRPs equivalent to or higher than the prices of similar retail goods, Coach leads consumers to believe that the factory-only goods are equivalent in quality to the similarly-styled retail goods.³ See CAC ¶¶ 48, 50, 52.

For example, the CAC includes a side-by-side comparison of the Coach Factory "Phoebe" handbag (style number F35723) and the visually similar "Edie" bag sold in Coach retail stores (style number 36464). CAC ¶¶ 42, 46–49. The Phoebe bag is sold in Coach Factory stores with a hangtag showing an MFSRP of $395, while the Edie bag is sold in retail stores for $325. CAC ¶¶ 48. According to Plaintiffs, consumers viewing the two similar bags base their expectations for the quality of the Phoebe bag on its similarity to the Edie. But, Plaintiffs explain, the Phoebe bag is actually of lesser quality; unlike the Edie, the Phoebe has multiple seams, indicating that it is made from "fabric remnants" rather than a larger, more desirable, single piece of fabric. CAC ¶ 49.

Plaintiffs bring ten causes of action in total. On behalf of a nationwide class, Plaintiffs assert claims for common law fraud, breach of express warranty, and unjust enrichment under New York law. On behalf of a subclass of California consumers, Plaintiffs assert claims under California's Unfair Competition Law (the "UCL"), Cal. Bus. & Prof. Code § 17200 et seq. , California's False Advertising Law (the "FAL"), Cal. Bus. & Prof Code § 17500 et seq. , and California's Consumers Legal Remedies Act (the "CLRA"), Cal. Civ. Code § 1750 et seq. On behalf of a subclass of New Hampshire consumers, Plaintiffs bring a claim for violations of New Hampshire's Consumer Protection Act, N.H. Rev. Stat. Ann. § 358–A:1 et seq. And, on behalf of a "multi-state" class of consumers (the "Multi–State Subclass"), plaintiffs allege violations of the consumer protection statutes of 18 other states.

Coach has moved to dismiss.

DISCUSSION

1. Constitutional Standing

"Determining the existence of subject matter jurisdiction is a threshold inquiry and a claim is properly dismissed for lack of subject matter jurisdiction under Rule 12(b)(1) when the district court lacks the statutory or constitutional power to adjudicate it." Morrison v. Nat'l Austl. Bank Ltd. , 547 F.3d 167, 170 (2d Cir. 2008) (quoting Arar v. Ashcroft , 532 F.3d 157, 168 (2d Cir. 2008) ). Article III requires a plaintiff to establish an injury in fact, a causal connection between the injury and the conduct complained of, and that the injury will likely be redressed by a favorable decision. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 560–61, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). "In resolving a motion to dismiss under Rule 12(b)(1), the district court must take all uncontroverted facts in the complaint (or petition) as true, and draw all reasonable inferences in favor of the party asserting jurisdiction." Tandon v. Captain's Cove Marina of Bridgeport, Inc., 752 F.3d 239, 243 (2d Cir. 2014). "But 'where jurisdictional facts are placed in dispute, the court has the power and obligation to decide issues of fact by reference to evidence outside the pleadings, such as affidavits.' " Id. (quoting APWU v. Potter, 343 F.3d 619, 627 (2d Cir. 2003) ). "A plaintiff has the burden of showing by a preponderance of the evidence that subject matter jurisdiction exists." Lunney v. United States , 319 F.3d 550, 554 (2d Cir. 2003).

A. Individual Claims

Relying on Spokeo, Inc. v. Robins , ––– U.S. ––––, 136 S.Ct. 1540, 194 L.Ed.2d 635 (2016), Coach argues that Plaintiffs have not pleaded an "injury in fact." According to Coach, the CAC alleges, at best, bare procedural violations that do not amount to cognizable injury under Article III. See Spokeo, Inc. , 136 S.Ct. at 1549–50 (reversing and remanding for the lower courts to consider in the first instance whether plaintiff alleged a procedural violation that "entail[ed] a degree of...