Terrazzino v. Wal-Mart Stores, Inc.
335 F. Supp. 3d 1074
E.D. Ill.2018Background
- Plaintiff Erin Terrazzino purchased a bag of "Great Value All Natural Pita Chips" from Walmart's website and alleges the product was labeled "All Natural" despite containing enriched wheat flour and other processed/synthetic ingredients.
- The product page disclosed an ingredient list, but the list was only accessible after multiple "read more" clicks/scrolling; Terrazzino alleges the ingredients were effectively difficult to find and she did not read them before purchase.
- Terrazzino sues on behalf of a proposed national class and an Illinois class, asserting breach of express warranty, unjust enrichment, and violations of the Illinois Consumer Fraud and Deceptive Practices Act (ICFA).
- Walmart moved to dismiss under Rules 9(b), 12(b)(1), and 12(b)(6), arguing lack of standing for out-of-state claims, failure to plead fraud with particularity, no damages/proximate cause, and absence of pre-suit notice for the warranty claim.
- The district court denied Walmart's standing argument (holding standing challenges tied to class scope are better addressed at certification), denied dismissal of the ICFA and unjust enrichment claims, dismissed the breach of express warranty claim for failure to allege pre-suit notice (no actual-knowledge exception pleaded), and dismissed the request for injunctive relief for lack of likelihood of future harm.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to assert out-of-state statutory claims | Terrazzino has Article III standing based on her Illinois purchase and injury; class-certification issues are antecedent | Walmart: Terrazzino lacks standing to pursue other states' laws because she was injured only in Illinois | Court: Denied dismissal for lack of standing; class-representation scope better resolved at certification |
| Sufficiency of fraud/ICFA pleading (deceptive act) | Labeling as "All Natural" was deceptive; ingredient disclosure on website is not an adequate shield | Walmart: Ingredient disclosure defeats deception claims (consumer could have read the list) | Court: Denied dismissal; ingredient-list defense insufficient at pleading stage; consumers can be misled despite ingredient lists |
| Actual damages and proximate causation under ICFA | Terrazzino paid a premium for "All Natural" chips and would not have purchased them if she knew the truth | Walmart: No plausible pecuniary loss alleged; damages speculative without market-compare facts | Court: Held allegations that she overpaid and would not have bought the product sufficed to plead actual damages and proximate cause |
| Breach of express warranty (pre-suit notice) | Exception to notice applies because Walmart knew consumers relied on "All Natural" labeling | Walmart: Plaintiff failed to give UCC pre-suit notice; claim barred | Court: Granted dismissal without prejudice; plaintiff did not plausibly allege Walmart's actual knowledge of the product defect so notice required |
| Injunctive relief | Plaintiff seeks injunction to stop Walmart's alleged unlawful labeling | Walmart: Plaintiff aware of the alleged deception; no reasonable likelihood of future harm | Court: Dismissed injunctive relief claim for lack of likelihood of future harm |
| Unjust enrichment (alternative pleading) | Pleaded as alternative to contract claim | Walmart: Mere breach of contract; unjust enrichment not available | Court: Denied dismissal; unjust enrichment may be pleaded in the alternative under Rule 8(d) |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (pleading must state a claim plausible on its face)
- Ashcroft v. Iqbal, 556 U.S. 662 (legal conclusions not entitled to be assumed true for pleading plausibility)
- Camasta v. Jos. A. Bank Clothiers Inc., 761 F.3d 732 (Rule 9(b) particularity and damages investigation guidance)
- Williams v. Gerber Products Co., 552 F.3d 934 (FDA ingredient lists do not automatically shield deceptive labeling claims)
- Oshana v. Coca-Cola Co., 472 F.3d 506 (elements of an ICFA claim include deceptive practice and actual damages)
- Connick v. Suzuki Motor Co., 174 Ill.2d 482 (proximate-cause requirement under ICFA is minimal; factfinder issue)
- Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (injury-in-fact must be concrete and particularized for Article III standing)
- Amchem Prods., Inc. v. Windsor, 521 U.S. 591 (class-certification issues can be logically antecedent in certain contexts)
- Ortiz v. Fibreboard Corp., 527 U.S. 815 (Rule 23 certification sometimes assessed before Article III issues)
- Payton v. County of Kane, 308 F.3d 673 (Seventh Circuit guidance to consider certification prior to standing when appropriate)