Kyle Counts, individually and on behalf of all others similarly situated, v. Arkk Food Company, and Wahlburgers I, LLC
No. 23 CV 0236
UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION
November 3, 2023
Judge Lindsay C. Jenkins
Case: 1:23-cv-00236 Document #: 36 Filed: 11/03/23 Page 1 of 21 PageID #:325
Kyle Counts (“Counts” or “Plaintiff“) brings this putative class action against Arkk Food Company (“Arkk“) and Wahlburgers I, LLC (“Wahlburgers“, collectively, “Defendants“) based on allegedly deceptive labeling of various pickle products sold by the Defendants. Before the Court is Defendants’ motion to dismiss Plaintiff‘s First Amended Complaint for failure to state a claim under
I. Background
The following factual allegations are taken from Plaintiff‘s First Amended Complaint and are accepted as true for the purposes of deciding the motion to dismiss. Smith v. First Hosp. Lab‘ys, Inc., 77 F.4th 603, 607 (7th Cir. 2023). Defendant Wahlburgers “sells burgers, sandwiches, and other tasty foods that people enjoy eating.” [Dkt. 23 ¶ 26.] While Wahlburgers initially operated restaurants, the
The labels on each of these products represent that the pickles are “Fresh“, “All Natural“, and contain “No Preservatives.” [Id. ¶ 35.] These assertions are material to consumer decision making because consumers are willing to pay a premium for foods without synthetic ingredients. [Id. ¶ 5.] Despite these representations, laboratory testing conducted on several batches of the Pickles revealed that they contain sodium benzoate, a chemical preservative that is commonly used in the food industry to extend a product‘s shelf life. [Id. ¶¶ 2, 36.] Counts alleges that the presence of sodium benzoate renders the labels’ representations false and misleading. Moreover, Counts alleges that he either would have paid less for the Pickles, or not purchased them at all had he known that they contained sodium benzoate. [Id. ¶¶ 52, 58, 116.]
Counts is an Illinois resident who purchased Wahlburgers‘s Fresh Dill Spears and Fresh Dill Chips products in Illinois at Jewel Osco and other grocery stores, with his latest purchasing occurring in September or October 2022.1 [Id. ¶ 14.] He filed this putative class action against Defendants, seeking to represent a Nationwide
The Defendants have moved to dismiss Plaintiff‘s First Amended Complaint pursuant to
II. Legal Standard
A motion to dismiss pursuant to
III. Analysis
Defendants’ motion to dismiss argues that Plaintiff has failed to adequately plead all claims in the First Amended Complaint under
A. Defendants’ Motion to Dismiss Pursuant to Rule 12(b)(6)
a. ICFA
The first issue for the Court to resolve is what pleading standard governs Plaintiff‘s ICFA claim, a point of disagreement between the parties. Defendants contend that
Plaintiff‘s ICFA claim sounds in fraud. Plaintiff alleges that Defendants “go to considerable lengths to mislead consumers into believing the Pickles” do not contain sodium benzoate, and that they do so “to increase profits and market share in the consumer food product market.” [Dkt. 23 ¶¶ 3-4.] Overall, the complaint alleges fraudulent conduct whereby Defendants induce customers to purchase the Pickles through the label representations, but then include sodium benzoate to give the Pickles “a longer shelf life than truly fresh pickles.” [Id. ¶ 55.] This gives Defendants the competitive advantages of “hold[ing] inventory longer than they otherwise would be able to hold truly fresh pickles“, and being able to attract consumers who value
Defendants’ motion to dismiss does not argue that pickles containing sodium benzoate can still be “Fresh“, “All Natural“, or do not “Contain Preservatives.” Rather, the main thrust of Defendants’ argument for why Plaintiff‘s ICFA claim does not satisfy
As stated above, a Plaintiff can satisfy his
Once Counts no longer possessed the Pickles he purchased, there was no way for him to test them. His only options would be to forego an ICFA claim against Defendants or rely on other evidence that would make his allegations “plausible.”2 Pirelli, 631 F.3d at 443. Said differently, the facts constituting the fraud were no longer accessible to Plaintiff. To provide “grounds for his suspicion” that the
The Court agrees. Plaintiff is relying on verified laboratory results that conclude Defendants’ Pickles selected from three geographically distinct sources in the U.S. manufactured at the same time as Plaintiff‘s purchase contained sodium benzoate. While it would be preferable if Pickles from Illinois were tested, Plaintiff is relying on the best information available to him—the test results—which were performed by another party. Plaintiff cannot go back and retest different Pickles, but it is plausible that a problem that impacted Defendants’ products sold in California, Florida, and Massachusetts would likewise extend to Illinois. Ultimately, the test results and Plaintiff‘s conclusions derived therefrom as alleged in the First Amended
Defendants, relying on Pirelli, argue that the lab results should be of limited value to the Court because “[i]t is appropriate to accord limited corroborative weight to allegations in another‘s lawsuit.” [Dkt. 30 at 4.] While Defendants accurately quote Pirelli, there are two salient differentiating factors here. First, Plaintiff is not depending on the allegations made in another lawsuit, but scientific testing used to support those allegations. In Pirelli, the plaintiff relied on allegations made in two other lawsuits, many of which themselves were made on information and belief. Id. at 444. The Seventh Circuit held that parroting allegations in this manner was inappropriate and would reduce pre-suit inquiry to reading a “daily law bulletin.” Id. Here, by contrast, Plaintiff points to more concrete proof that several batches of Defendants’ Pickles, manufactured around the same time as Plaintiff‘s purchase, contained sodium benzoate. The Pirelli court also found that the plaintiff failed to exhaust the information available at his disposal before suing, unlike here where Plaintiff does not have access to superior sources of untapped knowledge at his disposal. Id. at 445. Absent testing the specific pickles he purchased, there was no additional pre-suit inquiry Plaintiff could have done to strengthen his claim.
Plaintiff‘s allegations also otherwise satisfy the
b. Unjust Enrichment Claim
Defendants also move to dismiss under
It is well established that “under Illinois law, unjust enrichment is not a separate cause of action” but is instead tied to fraudulent or unlawful conduct. Pirelli, 631 F.3d at 447. Because Plaintiff‘s ICFA claim can proceed, so too can his “claim” for unjust enrichment, properly understood as a request for restitution for Defendants’ wrongful conduct. Vanzant, 934 F.3d 730 at 740 (“the request for relief based on unjust enrichment is tied to the fate of the claim under the Consumer Fraud Act“).
Defendants also move to dismiss Plaintiff‘s breach of express warranty claim, which, again, is based on the same underlying conduct as the ICFA and unjust enrichment claims. While warranty claims are typically tethered to the success of an ICFA claim, Plaintiff‘s failure to provide adequate pre-suit notice as required by Illinois law defeats his warranty claim.
“To state a claim for breach of express warranty in Illinois, plaintiffs must allege that the seller: (1) made an affirmation of fact or promise; (2) relating to the goods; (3) which was part of the basis for the bargain; and (4) guaranteed that the goods would conform to the affirmation or promise.” O‘Connor v. Ford Motor Co., 477 F.Supp. 3d 705, 714 (N.D. Ill. 2020). Like unjust enrichment, a warranty claim survives with a properly pleaded ICFA claim so long as they are based on the same conduct. See e.g., Bonahoom v. Staples, Inc., 2021 WL 1020986 at *7 (N.D. Ill. Mar. 17, 2021) (“Bonahoom‘s allegations about the existence of an express warranty and the breach of that warranty are adequate for the same reasons his ICFA allegations were adequate“); Hayes v. General Mills, Inc., 2021 WL 3207749, at *4 (N.D. Ill. July 29, 2021) (breach of warranty claims based on the same conduct as an ICFA claim, “rise and fall” together); Acosta v. Hopper (USA), Inc., 2023 WL 3072358, at *5 (N.D. Ill. Apr. 25, 2023) (plaintiff‘s breach of express warranty claim “arise[s] from the same allegations as her ICFA claim” and therefore “survive[s] alongside her ICFA claim.“)
Illinois law, however, requires a plaintiff to provide the defendant with pre-suit notice of his breach of warranty claim, and Defendants have also moved to
Plaintiff argues in response (without citing to any legal authority) that his original complaint serves as adequate pre-suit notice because it did not contain a breach of warranty claim. [Dkt. 23 ¶ 123; compare Dkt. 1]; [Dkt. 29 at 8.] This is incorrect. Plaintiff was aware of the conduct serving as the basis for the breach of warranty (i.e., the alleged misrepresentations on the labels) when he filed his initial pleading, so he was obligated to provide notice prior to filing suit. Jones v. Apple, Inc., 2016 WL 11647699 (S.D. Ill. Aug. 22, 2016) (a party who brings a breach of warranty claim for the first time in an amended pleading does not satisfy the pre-suit notice requirement through the initial pleading where the plaintiff knew the facts underlying the warranty claim at the time of the initial suit).
Plaintiff also argues that he satisfied the pre-suit notice requirement through a separate communication mailed to Defendants the same day he filed his initial suit. [Dkt. 23 ¶ 123]; [Dkt. 29 at 8.] This contention likewise fails. Not only does this tactic highlight the possibility for “gamesmanship” in avoiding the notice requirement, Jones, 2016 WL 11647699 at *4 n.1, it also defeats its purpose, which is “to give the seller an opportunity to cure a defect and minimize damages, protect his ability to
There are two exceptions to the notice requirement—“the seller has actual knowledge of the defect of the particular product” and “the plaintiff suffers a physical injury from the product“—but neither are applicable here. Muir v. Nature‘s Bounty, Inc., 2017 WL 4310650, at *3 (N.D. Ill. Sept. 28, 2017). While Defendants were generally aware of allegations that their labels were misleading through the Grillo litigation, Illinois law requires the defendant to be aware that the precise products sold to the plaintiff were allegedly defective. De Falco v. Vibram USA, Inc., 2013 WL 1122825, at *8 (N.D. Ill. Mar. 18, 2013) (rejecting argument that defendant had actual notice of plaintiff‘s claims based on earlier filed “nearly identical lawsuits” because “notice would only be excused in this case if the Defendants had actual knowledge of defects with the particular pairs of shoes sold to the Plaintiff“); Cerretti v. Whole Foods Mkt. Grp., Inc., 2022 WL 1062793, at *6 (N.D. Ill. Apr. 8, 2022) (defendant‘s knowledge that other plaintiffs have alleged defects regarding the same type of product is “not the kind of knowledge that can excuse pre-suit notice under Illinois law.“) Put differently, “the plaintiff must allege that the defendant had actual knowledge of the alleged breach of the particular product purchased by the named plaintiffs in the lawsuit.” Cristia v. Trader Joe‘s Co., 2022 WL 17551552, at *6 (Dec. 9, 2022). That is not the case here.
B. Article III Standing
Beyond claims in his individual capacity, Plaintiff also seeks to represent both a Nationwide Class and a Multi-State Subclass for various state consumer fraud statutes (Multi-State) and warranty/unjust enrichment claims (Nationwide). [Dkt. 23.] Defendants challenge Plaintiff‘s Article III standing to bring claims on behalf of these classes under the laws of any state beside Illinois because Plaintiff was only injured in Illinois. [Dkt. 27 at 10-11.] Plaintiff argues in response that the question of whether he may serve as a class representative for non-Illinois plaintiffs with non-Illinois claims is not an Article III issue and should be decided at the class certification stage. [Dkt. 29 at 11-12.]
The Court, in line with the “prevailing view” in this District, concludes that Plaintiff has satisfied his standing requirements. Rawson v. Aldi, Inc., 2022 WL 1556395, at *5 (N.D. Ill. May 17, 2022). To establish standing under Article III, a plaintiff must show that he (1) “suffered an injury in fact that is concrete, particularized, and actual or imminent“; (2) “the injury was likely caused by [Defendants]“; and (3) “the injury would likely be redressed by judicial relief.”
Defendants do not challenge Plaintiff‘s Article III standing to bring an ICFA, breach of warranty or unjust enrichment claim on behalf of himself. Nor can they—Plaintiff alleges he was injured (purchasing or overpaying for pickles), the injury was caused by Defendants (they misrepresented the content of the pickles), and the Court can provide relief (awarding damages). Instead, Defendants argue that Counts has no standing to sue based on other states’ law, whether statutory or common law, because he was not injured under those statutes. Courts have rejected this precise argument:
[Plaintiff] is proposing to serve as a class representative, not seeking to redress an injury specific to her—of course she herself did not pay for the pacifiers bought by each proposed class member. That is the whole point of a class action: to represent the interests of class members, not just the representative‘s own interests. If MAM is right about how Article III standing applies to proposed class actions—that is, that a plaintiff can only raise claims under her own State‘s laws—then no multi-state or nationwide class can ever be certified without a representative from each and every State in the proposed class.
Freeman v. MAM USA Corp., 528 F.Supp.3d 849, 859 (N.D. Ill. 2021); see also Woodman‘s Food Market, Inc. v. Clorox Co., 833 F.3d 743, 750 (7th Cir. 2016) (“the question of who is authorized to bring an action under a statute is one of statutory interpretation; it does not implicate Article III or jurisdiction.“); Block v. Lifeway Foods, Inc., 2017 WL 3895565, at *4 (N.D. Ill. Sept. 6, 2017) (the Seventh Circuit has
As other courts have recognized, Defendants’ argument is really a question of whether a plaintiff “can satisfy the Civil Rule 23 class-certification requirements as applied to a nationwide and multi-state class.” Freeman, 528 F. Supp.3d at 859; see also Morrison v. YTB Intern., Inc., 649 F.3d 533, 536 (7th Cir. 2011). And whether a purported class representative meets the requirements of
C. Striking Class Allegations
Defendants also move to strike Plaintiff‘s class allegations under
“At an early practicable time after a person sues ... as a class representative,
However, “[m]ost often it will not be ‘practicable’ for the court to [strike class allegations] at the pleading stage[.]” Hill v. Wells Fargo Bank, N.A., 946 F. Supp. 2d 817, 829 (N.D. Ill. 2013); see also Murdock-Alexander v. Tempsnow Emp‘t, 2016 WL 6833961, at *3 (N.D. Ill. Nov. 21, 2016) (quoting Heller Fin., Inc. v. Midwhey Powder Co., 883 F.2d 1286, 1294 (7th Cir. 1989)) (noting that the Seventh Circuit has warned that motions to strike are generally “disfavored” as plaintiffs have the burden of meeting
Defendants argue that Plaintiff‘s class allegations are inadequately plead because conflicts among states’ consumer fraud statutes, and warranty and unjust enrichment law are too varied for
Plaintiff‘s class allegations related to breach of warranty are nonetheless ripe to strike because he does not (and cannot) have a surviving breach of warranty claim and therefore cannot serve as a class member or representative. See e.g.,
Given the case‘s infancy and the lack of any discovery on the class, striking Plaintiff‘s class allegations related to consumer fraud or unjust enrichment now would be premature. See Damasco v. Clearwire Corp., 662 F.3d 891, 897 (7th Cir. 2011), overruled on other grounds by Chapman v. First Index, Inc., 796 F.3d 783 (7th Cir. 2015) (“[A] court may abuse its discretion by not allowing for appropriate discovery before deciding whether to certify a class.“); Lucas v. Vee Pak, Inc., 68 F. Supp. 3d 870, 883 (N.D. Ill. 2014) (observing that the issue of predominance is “uniquely difficult to resolve based on the complaint alone“); Messner v. Northshore Univ. HealthSystem, 669 F.3d 802, 825 (7th Cir. 2012) (“Defining a class so as to avoid ... being over-inclusive ... is more of an art than a science ... [and] can and often should be solved by refining the class definition rather than by flatly denying class certification on that basis.“).
This is particularly true for Plaintiff‘s proposed Multi-State Subclass, which Plaintiff contends was created after analysis of each state‘s consumer protection law
The Court has its reservations about Plaintiff‘s ability to represent his proposed Nationwide Class, particularly with respect to the unjust enrichment claim. Plaintiff did not undertake the same rigorous approach in narrowing his unjust enrichment (or warranty) classes as he did for the consumer protection claims, and Defendants have cited to cases which suggest nationwide classes for unjust enrichment claims are per se uncertifiable.6 In re Aqua Dots, 270 F.R.D. at 386 (“[a]s other members of this court have pointed out, the law of unjust enrichment varies too much from state to state to be amenable to national or even to multistate class treatment.“). While the Court is not prepared to strike the allegations now, class discovery will shed light on these issues, and Defendants are free to re-raise the matter at the appropriate time.
Defendants’ motion to dismiss and motion to strike is denied in part and granted in part. Plaintiff‘s Counts III-V are dismissed with prejudice, and Plaintiff‘s allegations related to his proposed warranty classes are stricken.
Enter: 23-cv-0236
Date: November 3, 2023
Lindsay C. Jenkins
United States District Judge