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Morrow v. ANN Inc.

United States District Court, S.D. New York

January 24, 2017

SIOBHAN MORROW and ASHLEY GENNOCK, on behalf of themselves and all others similarly situated, Plaintiffs,
v.
ANN INC., Defendant.

          OPINION AND ORDER

          J. PAUL OETKEN, United States District Judge

         Plaintiffs Siobhan Morrow and Ashley Gennock, on behalf of themselves and all others similarly situated, initiated this action on May 5, 2016, and filed the operative First Amended Complaint on July 15, 2016. (Dkt. No. 23 ("Compl.").). Plaintiffs allege that Defendant Ann Inc. ("Ann") engaged in a deceptive pricing and advertising scheme involving merchandise sold in its Ann Taylor Factory and LOFT Outlet stores (the "Outlet Stores") in violation of federal and state law. Ann moves to dismiss all claims against it for lack of subject matter jurisdiction and for failure to state a claim, under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). For the reasons that follow, the motion is denied.

         I. Background[1]

         Defendant Ann is a retail seller of women's apparel, shoes, and fashion accessories, sold under the "Ann Taylor" and "LOFT" brand names, including at the LOFT Outlet and Ann Taylor Factory outlet stores. (Compl. ¶ 17.) Plaintiffs shop at the Outlet Stores. (Id. ¶¶ 11, 15-16.)

         Morrow purchased a pair of pants from an Ann Taylor Factory store in San Diego, California; Gennock purchased a pair of pants from an Ann Taylor Factory store in Grove City, Pennsylvania, and two knit tops from a LOFT Outlet store, also in Grove City. (Id. ¶¶ 15-16.) Plaintiffs allege that they would not have purchased these garments, or would have paid less for them, were it not for Ann's false and misleading advertising. (Id.)

         Plaintiffs allege that Ann, whose principal place of business is in New York, engaged in a nationwide campaign of falsely claiming-on its sales tags, in-store signage, and website-that products sold in the Outlet Stores were originally or regularly sold at much higher prices. (Id. ¶¶ 2, 17.) Plaintiffs claim that Ann generated “phantom markdowns, ” by advertising discounted prices, based on a false full price (at which the clothing had never been marked for sale). (Id. ¶ 3.) The products sold at a supposed discount in the Outlet Stores, Plaintiffs allege, are manufactured specifically for the Outlet Stores and were not previously sold in Ann's retail stores, rendering “illusory” any advertised “discount” on original prices. (Id. ¶¶ 3, 7.) Ann's pattern of false markdowns was “likely to mislead reasonable consumers” into purchasing particular products on the mistaken belief that they were getting a good deal. (Id. ¶¶ 8-9.)

         Plaintiffs claim that Ann's conduct violates state and federal law. In particular, Plaintiffs allege violations of California's Business & Professions Code §17200, et seq. (the “UCL”), California's Business & Professions Code §17500, et seq. (the “FAL”), the California Consumers' Legal Remedies Act, California Civil Code §1750, et seq. (the “CLRA”), Pennsylvania's Unfair Trade Practices & Consumer Protection Law, 73 Pa. Stat. § 201-1, et seq. (the “UTPCPL”), as well as the laws of numerous other states, and the Federal Trade Commission Act, 15 U.S.C. § 45, et seq. (“FTCA”), which prohibits “unfair or deceptive acts or practices in or affecting commerce, " id. § 45(a)(1), and dissemination of false advertisements, id. § 52(a). Plaintiffs also bring a claim of unjust enrichment. (Compl. ¶¶ 131-37.)

         Plaintiffs bring their suit against Ann as a putative class action, pursuant to Rule 23 of the Federal Rules of Civil Procedure, on behalf of themselves and all others similarly situated, both nationwide and in individual states.[2] Ann moved to dismiss on August 15, 2016.[3]

         II. Legal Standard

         A. Rule 12(b)(1)

         "A case 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." Makarova v. United States, 201 F.3d 110, 113 (2d Cir. 2000) (citing Fed.R.Civ.P. 12(b)(1)). When resolving a Rule 12(b)(1) motion, a district court may refer to evidence outside the pleadings, and the plaintiff bears the burden to prove subject-matter jurisdiction by a preponderance of the evidence. See id.

         B. Rule 12(b)(6)

         To survive a Rule 12(b)(6) motion to dismiss, a plaintiff must allege "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim is facially plausible "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). In considering a motion to dismiss, courts must accept as true all "factual allegations contained in the complaint, " Twombly, 550 U.S. at 572, and must draw "all inferences in the light most favorable to the non-moving party, " In re NYSE Specialists Sec. Litig., 503 F.3d 89, 95 (2d Cir. 2007) (Sotomayor, J.).

         Under Federal Rule of Civil Procedure 9(b), a plaintiff alleging fraud must state her claim "with particularity." Fed.R.Civ.P. 9(b). The Second Circuit has "held that Rule 9(b) requires that a complaint '(1) specify the statements that the plaintiff contends were fraudulent, (2) identify the speaker, (3) state where and when the statements were made, and (4) explain why the statements were fraudulent.'" DiMuro v. Clinique Labs., LLC, 572 F.App'x 27, 30 (2d Cir. 2014) (quoting Mills v. Polar Molecular Corp., 12 F.3d 1170, 1175 (2d Cir. 1993)).

         III. Discussion

         Ann argues that Plaintiffs' claims should be dismissed for several reasons. First, Ann argues that Plaintiffs lack constitutional and statutory standing to bring any of their claims. Second, Ann argues that Plaintiffs' claims under the Consumer Protection Laws of California and Pennsylvania must be dismissed for failure to state a claim. Third, Ann argues that Plaintiffs' UCL claim, which is based on their rights under the FTCA, should be dismissed because the FTCA does not authorize a private right of action directly. Finally, Ann argues that Plaintiffs fail to state a claim for unjust enrichment. The Court addresses each of these arguments in turn.

         A. Standing

         “‘Federal courts are courts of limited jurisdiction, ' possessing ‘only that power authorized by Constitution and statute.'” Gunn v. Minton, 133 S.Ct. 1059, 1064 (2013) (quoting Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994)). Ann argues that Plaintiffs lack constitutional standing for all claims and statutory standing for the California and Pennsylvania law claims, as well as the other state consumer-protection law claims.

         1. ...


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