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Azimpour v. Sears, Roebuck & Co.

United States District Court, S.D. California

April 26, 2017

SAEID AZIMPOUR, on behalf of himself and all others similarly situated, Plaintiff,
v.
SEARS, ROEBUCK & COMPANY, Defendant.

          ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT SEARS, ROEBUCK & COMPANY'S MOTION TO DISMISS (ECF NO. 26)

          HON. JANIS L. SAMMARTINO, UNITED STATES DISTRICT JUDGE

         Presently before the Court is a Motion to Dismiss or, in the Alternative, Strike Plaintiff's Second Amended Complaint Pursuant to Federal Rules of Civil Procedure 12(b)(1), 12(b)(6), and 12(f) filed by Defendant Sears, Roebuck & Company (“Sears”). (“MTD, ” ECF No. 26.) Also before the Court is Plaintiff's Response in Opposition to, (“Opp'n, ” ECF No. 27), and Defendant's Reply in Support of, (“Reply, ” ECF No. 28), Defendant's MTD. The Court vacated the hearing on the MTD and took it under submission pursuant to Civil Local Rule 7.1(d)(1). (ECF No. 29.) Having considered the parties' arguments and the law, the Court GRANTS IN PART and DENIES IN PART Defendant's MTD.

         BACKGROUND

         This action arose after Plaintiff purchased a pillow at Defendant's store in San Diego, California on July 19, 2015. (Second Amended Compl. (“SAC”) ¶¶ 9, 29, ECF No. 25.) At the store, Plaintiff saw pricing information indicating that the pillow's “regular” price was $19.99, but was being offered at a “sale” price of $9.99. (Id.) Specifically, Mr. Azimpour examined the price sign bearing the original price and also examined the red sign, with black letters announcing, “Sale” and stating “Save $10.” (Id.; see also Id. Ex. B (a pricing sign that Azimpour describes as nearly identical to the price sign he observed when making his purchase).) The Sale Sign announced the discounted price of $9.99 and the regular price was described immediately next to it as, “reg. $19.99.” (Id.) Plaintiff relied on this purported discounted price in making his purchase, (id.), and claims he would not have purchased the pillow but-for the misrepresented price, (id. ¶¶ 9, 29, 33). Additionally, upon check-out on July 19, 2015, Sears provided Plaintiff with a receipt containing the allegedly misrepresented price, specifically stating “SALE” in large, bold, all-caps lettering directly above the item he purchased. (Id. ¶ 31.) Plaintiff alleges that Defendant has employed a scheme to defraud consumers by advertising merchandise at fabricated “sale” prices. (See, e.g., id. ¶¶ 1, 2, 3, 4, 32.) Plaintiff now also alleges that his “counsel's investigation has revealed” that the pillow Plaintiff purchased remained continuously on “sale” at every Sears store in San Diego County for the same price from the filing of this suit through November 8, 2016. (Id. ¶ 11; see also Id. ¶¶ 19-28 (detailing Plaintiff's counsel's “investigation”).)

         On January 15, 2016, Plaintiff filed his Amended Complaint (“FAC”) seeking a class action against Defendant for false and misleading advertisements in connection with merchandise sold in its retail stores. (FAC ¶ 1, ECF No. 10.) The Court dismissed Plaintiff's FAC for failure to plead with particularity under Rule 9(b). (See First MTD Order, ECF No. 22.)

         Plaintiff filed his SAC on November 8, 2016. Plaintiff brings the same six causes of action, including: (1) violation of Unfair Competition Law-unlawful acts (“UCL, ” Cal. Bus. & Prof. Code § 17200, et seq.) on behalf of the California Class; (2) violation of UCL-unfair acts (Bus. & Prof. Code § 17200, et seq.) on behalf of the California Class; (3) violation of the California False Advertising Law (“FAL, ” Cal. Bus. & Prof. Code § 17500, et seq.) on behalf of the California Class; (4) violation of the Consumers Legal Remedies Act (“CLRA, ” California Civil Code § 1750, et seq.) on behalf of the California Class; (5) Unjust Enrichment on behalf of the California Class; and (6) violations of the Consumer Protection Laws on behalf of Classes in states with similar laws. (See generally SAC, ECF No. 25.)

         Defendant now moves to dismiss or, in the alternative, strike Plaintiff's SAC on various grounds. (See generally MTD, ECF No. 26.) The Court considers each argument in turn.

         MOTION TO DISMISS PURSUANT TO RULE 12(b)(1)

         I. Legal Standards

         A. Rule 12(b)(1)

         Federal courts are courts of limited jurisdiction, and as such have an obligation to dismiss claims for which they lack subject-matter jurisdiction. Demarest v. United States, 718 F.2d 964, 965 (9th Cir. 1983). Because the issue of standing pertains to the subject-matter jurisdiction of a federal court, motions raising lack of standing are properly brought under Federal Rule of Civil Procedure 12(b)(1). White v. Lee, 227 F.3d 1214, 1242 (9th Cir. 2000). The plaintiff bears the burden of establishing he has standing to bring the claims asserted. Takhar v. Kessler, 76 F.3d 995, 1000 (9th Cir. 1996); see also In re Dynamic Random Access Memory (DRAM) Antitrust Litig., 546 F.3d 981, 984 (9th Cir. 2008) (“The party asserting jurisdiction bears the burden of establishing subject matter jurisdiction on a motion to dismiss for lack of subject matter jurisdiction.”).

         Rule 12(b)(1) motions may challenge jurisdiction facially or factually. Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004). “In a facial attack, the challenger asserts that the allegations contained in a complaint are insufficient on their face to invoke federal jurisdiction. By contrast, in a factual attack, the challenger disputes the truth of the allegations that, by themselves, would otherwise invoke federal jurisdiction.” Id. Here, Defendant's challenge is facial because it disputes whether Plaintiff's alleged harm is sufficiently particularized to confer Article III standing as well as statutory standing under the UCL and FAL. Defendant does not rely upon extrinsic evidence, but instead relies only on the pleadings. Accordingly, the Court will assume the truth of Plaintiff's factual allegations, and draw all reasonable inferences in favor of Plaintiff. Whisnant v. United States, 400 F.3d 1177, 1179 (9th Cir. 2005); Safe Air for Everyone, 373 F.3d at 1039.

         B. Article III Standing

         Under Article III of the United States Constitution, a federal court may only adjudicate an action if it constitutes a justiciable “case” or a “controversy” that has real consequences for the parties. Raines v. Byrd, 521 U.S. 811, 818 (1997); Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992). A threshold requirement for justiciability in federal court is that the plaintiff have standing to assert the claims brought. Id.; see also DaimlerChrysler Corp. v. Cuno, 547 U.S. 332, 342 (2006) (“Article III standing . . . enforces the Constitution's case-or-controversy requirement.”) (citations omitted). As the sole[1] proposed class representative, Plaintiff has the burden of showing that Article III standing exists in this case. Ellis v. Costco Wholesale Corp., 657 F.3d 970, 978 (9th Cir. 2011).

         The essence of the standing inquiry is to determine whether the party seeking to invoke the Court's jurisdiction has “alleged such a personal stake in the outcome of the controversy as to assure that concrete adverseness which sharpens the presentation of issues upon which the court so largely depends.” Baker v. Carr, 369 U.S. 186, 204 (1962). Three elements form the core of the standing requirement:

First, the plaintiff must have suffered an “injury in fact”-an invasion of a legally protected interest which is (a) concrete and particularized, and (b) actual or imminent, not conjectural or hypothetical. Second, there must be a causal connection between the injury and the conduct complained of-the injury has to be fairly . . . traceable to the challenged action of the defendant, and not . . . the result of the independent action of some third party not before the court. Third, it must be likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision.

Lujan, 504 U.S. at 560-61 (quotations, citations, and footnote omitted). This irreducible constitutional minimum, often termed “Article III standing, ” seeks to limit the reach of the judiciary into matters properly reserved for other branches of government. See DaimlerChrysler, 547 U.S. at 341; see also Valley Forge Christian Coll. v. Ams. United for Separation of Church and State, Inc., 454 U.S. 464, 474 (1982). Although the Supreme Court has noted that “the concept of ‘Art. III standing' has not been defined with complete consistency, ” Valley Forge, 454 U.S. at 475, these three “bedrock” requirements of injury, causation, and redressability are uniformly essential to federal court jurisdiction. Raines, 521 U.S. at 818-20; see also Bennett v. Spear, 520 U.S. 154, 164-66 (1997).

         C. Statutory Standing Under the UCL and FAL

         Standing under the UCL and FAL is further limited to any person “who has suffered injury in fact and has lost money or property” as a result of unfair competition. Cal. Bus. & Prof. Code §§ 17204, 17535; see also Kwikset Corp. v. Superior Court., 51 Cal.4th 310, 321 (2011). To plead standing under the UCL, a party must “(1) establish a loss or deprivation of money or property sufficient to qualify as injury in fact, i.e., economic injury, and (2) show that that economic injury was the result of, i.e., caused by, the unfair business practice or false advertising that is the gravamen of the claim.” Kwikset, 51 Cal.4th at 322 (emphasis in original).

         II. Analysis

         The Court previously found that Plaintiff had, at minimum, “standing to sue for his alleged injury based solely on the in-store advertisement he relied on in making his pillow purchase.” (First MTD Order 8, ECF No. 22.) Because Plaintiff failed to plead his fraud claims with particularity, the Court declined “to rule on whether Plaintiff has standing to sue on behalf of others who have similarly relied on misrepresented pricing information.” (Id.) The Court finds that this time around Plaintiff has pled with sufficient particularity his fraud claims under Rule 9(b) and thus now considers Defendant's arguments regarding standing.

         Defendant argues that Plaintiff lacks standing for a variety of reasons, including that he lacks standing to (1) represent individuals who relied on anything other than in-store advertisements; (2) represent a class of individuals that purchased different products than Plaintiff; (3) represent a class of individuals who purchased a product discounted from an “original” price; and (4) obtain injunctive relief. (See generally MTD, ECF No. 26-1.) The Court considers each argument in turn.

         First, Defendant argues that Plaintiff does not have standing to raise claims arising from anything other than the in-store advertising he alleges to have seen. (Id. at 12-13.) Plaintiff argues that Defendant conflates the standing inquiry with considerations better suited for class certification. (MTD Opp'n 14-18, ECF No. 27.) Additionally, Plaintiff has removed online purchasers from the class definition, and thus limited the class to in-store purchasers. (Id. at 17 (citing SAC ¶¶ 35-36, ECF No. 25).) In other words, Plaintiff's class is limited to those who “have been exposed to the same type of in-store, misleading advertising as Plaintiff.” (Id.)

         Given Plaintiff's concessions, and because the Court has already held that Plaintiff adequately alleged actual reliance based on the causal link between Defendant's in-store advertising and Plaintiff's alleged economic injury, (see First MTD Order 7-8, ECF No. 22), the Court finds that Plaintiff has adequately pled standing to represent at least a class of purchasers who relied on in-store advertisements in making their purchase.

         But Defendant points out that while Plaintiff amended his SAC to exclude “all online purchasers” from the class definition, (see SAC ¶ 38, ECF No. 25), he still seeks to represent a class of individuals that may have relied on “online promotional materials, in-store displays, and print advertisements, ” regardless of where they made their purchase, (id. ¶ 3). The Court finds Plaintiff's concession that his class is limited to those who “have been exposed to the same type of in-store, misleading advertising as Plaintiff, ” (MTD Opp'n 17, ECF No. 27), all but eliminates that concern.

         However, to the extent Plaintiff still seeks to incorporate other media platforms into this case, the Court again finds that Plaintiff fails to adequately plead reliance on online or print advertisements, among possible others, for standing purposes. The Court understands that Plaintiff alleges he and other putative class members were exposed to a years-long campaign that might otherwise lessen the significance of the advertisement form or medium in the standing inquiry. (See Id. at 16 n.3, ECF No. 27.) But Plaintiff's allegations of fraud stretch from 2015 through the present date, which ...


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