Case Information
UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MISSOURI EASTERN DIVISION
JANICE GOLDMAN, Individually )
and On Behalf of All Others )
Similarly Situated, )
)
Plaintiff, )
)
vs. ) Case No. 4:20 CV 748 RWS
)
TAPESTRY, INC. and )
KATE SPADE, LLC, )
)
Defendants. )
MEMORANDUM AND ORDER
Janice Goldman (“Goldman”) brings this class action suit against Tapestry, Inc. and Kate Spade, LLC, a wholly owned subsidiary of Tapestry, alleging violations of the Missouri Merchandising Practices Act (“MMPA”) and unjust enrichment. Tapestry and Kate Spade (“Tapestry”) move to dismiss all of Goldman’s claims under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). I will grant this motion for the reasons set forth below.
BACKGROUND
This lawsuit, like many others across the country, attempts to use a state consumer protection statute to challenge an outlet store’s pricing and advertising practices. Goldman shopped at Tapestry’s Kate Spade Outlet store in Chesterfield, Missouri several times between October 2016 and July 2019, purchasing at least nine items. The purses and accessories that she purchased were heavily discounted; Goldman paid totals ranging from 60% to 70% lower than the listed original price. However, Goldman alleges that the original prices listed on the tags and receipts for the items were not the actual, bona fide prices of these items. Rather, according to Goldman, Tapestry never sold these products at the outlet store at these prices, so any discounts offered were false and misleading. Goldman also alleges that the items sold at the outlet store are “manufactured specifically for, and sold exclusively at” Kate Spade outlet stores and are “materially different from, and inferior to” the items produced for high-end department stores and Kate Spade flagship stores. Compl. at ¶ ¶ 2, 22.
Goldman contends that she would not have purchased the items that she did if not for Tapestry’s allegedly deceptive pricing scheme. She does not allege that she was otherwise damaged by Tapestry.
LEGAL STANDARDS Rule 12(b)(1)
The party invoking subject matter jurisdiction bears the burden of
establishing that the case is properly in federal court. Lujan v. Defenders of
Wildlife,
Rule 12(b)(6)
In ruling on a motion to dismiss under Rule 12(b)(6), I must accept as true all
factual allegations in the complaint and view them in the light most favorable to the
plaintiff. Hager v. Ark. Dep’t. of Health,
Rule 9(b)
A plaintiff alleging fraud or mistake must “state with particularity the
circumstances constituting fraud or mistake” to survive a motion to dismiss. Fed. R.
Civ. P. 9(b). The Eastern and Western Districts of Missouri have consistently held
that Rule 9(b) applies to MMPA cases. See Blake v. Career Educ. Corp., 2009 WL
140742, at *2 (E.D. Mo. Jan. 20, 2009) (collecting cases). “Highly specific
allegations” are not required under Rule 9(b), especially when the claim relies on
facts that are known only to the defendants. Abels v. Farmers Commodities Corp.,
259 F.3d 910, 921 (8th Cir. 2001). However, “conclusory allegations that a
defendant’s conduct was fraudulent and deceptive are not sufficient to satisfy the
rule.” Schaller Telephone Co. v. Golden Sky Sys., Inc.,
ANALYSIS
I. Jurisdiction
1. Constitutional Standing Tapestry argues that Goldman only has standing to pursue claims relating to the nine specific items that she identified as purchases in the complaint because she was not personally harmed by the “thousands of Kate Spade products that she did not purchase.” [ECF No. 11 at 12]. As a threshold matter, Goldman has alleged that she purchased more than nine items from Tapestry. In her complaint, she explains that while she does not personally have receipts proving that she made other purchases, Tapestry has records of all her transactions and can corroborate her allegation. I must accept this allegation as true.
Tapestry cites two cases from the Western District of Missouri in support of
its argument that Goldman only has standing as to the exact items that she
purchased. Smith v. Atkins Nutritionals, Inc.,
Goldman has not alleged that she was injured by any of the specific items
that she purchased. Rather, any injury she suffered was caused by the alleged
pricing scheme itself, which Goldman contends is not limited to certain products. It
appears to me that the appropriate inquiry for determining if she has standing as to
products that she did not personally purchase is “whether there is sufficient
similarity between the products purchased and not purchased.” Davidson v.
Kimberly-Clark Corp.,
Since Goldman has standing to bring suit, I need not engage in a separate
standing analysis to determine whether she adequately represents the interests of
the putative class. In re SuperValu, Inc.,
2. Diversity Requirements
In her complaint, Goldman asserts that this Court has subject matter
jurisdiction under the Class Action Fairness Act (“CAFA”), which grants district
courts original diversity jurisdiction in class action suits if certain requirements are
satisfied, including: (1) the aggregated matter in controversy exceeds the sum or
value of $5,000,000; (2) there is diversity of citizenship between at least one
plaintiff and one defendant; and (3) there are at least 100 members in the putative
class. 28 U.S.C. § 1332(d); Standard Fire Ins. Co. v. Knowles,
Goldman alleges that she is a “resident” of Missouri. Compl. at ¶ 8. She has
not adequately established her citizenship because “[w]hen it comes to diversity
jurisdiction, the words ‘resident’ and ‘citizen’ are not interchangeable.” Reece v.
Bank of New York Mellon,
Goldman also alleges, without providing a single factual allegation in
support, that the amount in controversy exceeds $5,000,000. Tapestry has not
disputed this assertion. However, even if the opposing party does not contest the
amount in controversy, a court may question it and require the plaintiff to show
“evidence establishing the amount.” Dart Cherokee Basin Operating Co., LLC v.
Owens,
Because she has not satisfied the CAFA requirements, Goldman has not met her burden to show that this case belongs in federal court, and Rule 12(b)(1) mandates its dismissal.
II. MMPA Violations Even if this Court had subject matter jurisdiction over Goldman’s claims, I would dismiss this case under Rule 12(b)(6) for failure to state a claim under the MMPA. A plaintiff alleging a violation of the MMPA must show that she purchased merchandise from the defendant for personal, family, or household purposes and suffered an ascertainable loss as a result of an unlawful practice. Mo. Ann. Stat. § 407.025.1(1). The parties agree that Goldman purchased merchandise from Tapestry for personal, family, or household purposes. They dispute whether Goldman suffered an ascertainable loss as a result of an unlawful practice.
1. Ascertainable Loss
Missouri courts apply the “benefit of the bargain rule” to determine whether
a plaintiff has suffered an ascertainable loss under the MMPA. Thompson v.
Allergan USA, Inc.,
Goldman contends that she purchased items that differed from how they were represented—because the items she purchased were actually worth less than the original price listed on the items’ tags—and that she therefore did not receive the benefit of her bargains. In its motion to dismiss, Tapestry claims that Goldman did not suffer an ascertainable loss because she did not purchase any products that were worth less than the amount she paid. In support of this argument, Tapestry cites several cases involving similar factual scenarios, wherein defendants prevailed on motions to dismiss brought by plaintiffs challenging pricing schemes at various outlet stores. However, the consumer protection statutes implicated in those cases required plaintiffs to show a price-value differential in order to recover, which is not a requirement under the MMPA.
Here, Goldman has alleged that she purchased items that were worth less
than advertised. Assuming that this is true, then Goldman did not receive the
benefit of her bargains under the MMPA. Hennessey v. Kohl’s Corp., 2020 WL
870982, at *4 (E.D. Mo. Feb. 21, 2020) (citing Smith v. Tracy,
Goldman points to similar price-comparison advertising cases from other
courts that have found allegations like hers satisfy the Rule 9(b) standard.
However, these decisions are not binding on this Court. Additionally, several other
courts have held that allegations like Goldman’s do not meet the particularity
requirement of Rule 9(b). See Cruz v. Kate Spade & Co., LLC,
The complaint contains conclusory allegations regarding the actual values of
the items Goldman purchased. See, e.g., Compl. at ¶ 29 (“In reality, the prevailing
retail price and, therefore, the actual fair market value of each item at the time of
[Goldman’s] purchase was materially lower than the advertised higher regular
price.”). These types of allegations do not satisfy the Rule 9(b) standard. BJC
Health Sys. v. Columbia Cas. Co.,
Prior to bringing this suit, Goldman did not conduct any investigation that would have revealed at least some information about Tapestry’s pricing practices. Without any facts about the prices of the items she purchased, and if or when the items were ever sold at the original listed prices, as Tapestry contends they were, it is impossible to determine whether Goldman was deprived of the benefit of her bargains. Goldman has therefore not alleged sufficient facts under Rule 9(b) to show that she suffered an ascertainable loss under the MMPA.
2. Unlawful Practice Goldman also has not alleged sufficient facts under Rule 9(b) to show that any loss she may have suffered resulted from an unlawful practice. Unlawful practices covered under the MMPA include “[t]he act, use or employment by any person of any deception, fraud, false pretense, false promise, misrepresentation, unfair practice or the concealment, suppression, or omission of any material fact in connection with the sale or advertisement of any merchandise in trade or commerce.” Mo. Ann. Stat. § 407.020.1. I turn to the factual allegations in the complaint to determine whether Goldman has alleged sufficient facts to show that Tapestry engaged in an unlawful practice under the statute. [1] Goldman has alleged that “the products offered in the Kate Spade Outlet stores are manufactured for, and sold exclusively at, the Kate Spade Outlet stores, and they are always sold for a price that is substantially below the higher advertised comparison price.” Compl. at ¶ 22. She has further alleged that the made-for-outlet products “are inferior to (based on materials, quality, grade and/or workmanship), and therefore materially different from, the higher quality Kate Spade products offered in Kate Spade flagship and high-end department stores.” Compl. at ¶ 22. I must accept these assertions as true. Goldman contends that these claims are supported by information in two exhibits submitted with her opposition brief. [ECF Nos. 22-1 & 22-2]. The first exhibit is Tapestry’s SEC filing for fiscal year 2018. The second exhibit is a newspaper article about a potential Congressional investigation into marketing and pricing practices at outlet stores nationwide.
I am permitted to take judicial notice of public records when deciding a
motion to dismiss. Levy v. Ohl,
Spade outlet stores carry “manufactured-for-outlet product and discontinued retail inventory outside the retail channel.” [ECF No. 22-1 at 5]. This statement supports Goldman’s allegation that Tapestry sells made-for-outlet products in its outlet stores. However, the filing does not indicate that the made-for-outlet products are of inferior quality compared to other Kate Spade products, as Goldman alleges. The filing also notes that the outlet stores carry “discontinued retail inventory” in addition to the made-for-outlet products, which does not support Goldman’s allegation that the products sold at the outlet stores are never sold at any other locations at any other prices.
As to the second exhibit, the Federal Rules of Evidence permit me to take judicial notice of facts that are either “generally known within the trial court’s territorial jurisdiction” or “can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned.” Fed. R. Evid. 201. Several courts have concluded that it is appropriate to take judicial notice of a newspaper article under this rule while others have found that it is not. Assuming that judicial notice is proper, the article does not contain facts upon which Goldman’s allegations of fraud are founded. The article does not mention or discuss Tapestry and its pricing or marketing practices.
Goldman has not adequately explained “how” the alleged fraud occurred.
Joshi,
III. Unjust Enrichment
Unjust enrichment occurs when “a person retains the benefit and enjoys the
benefit conferred upon him without paying its reasonable value.” Hawkins v.
Nestle U.S.A. Inc.,
Goldman’s claim of unjust enrichment fails for the same reasons as her MMPA claim. Lacking more facts, it is impossible to determine the “reasonable value” of the products that she purchased and as a result, this Court cannot conclude whether Tapestry was unjustly enriched.
Accordingly,
IT IS HEREBY ORDERED that Tapestry, Inc. and Kate Spade, LLC’s Motion to Dismiss [10] is GRANTED .
RODNEY W. SIPPEL UNITED STATES DISTRICT JUDGE Dated this 17th day of November, 2020.
Notes
[1] Tapestry argues that its pricing and advertising practices are protected by the “safe harbor” provision of 15 CSR 60-7.060(2)(B). In support of this argument, Tapestry submitted two exhibits—the “Russell Declaration” and the “Ingrid Crain Deposition”—that Goldman objects to as matters outside the pleadings. Because I find that Goldman has not stated a claim under Rule