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Belcastro v. Burberry Ltd.

United States District Court, S.D. New York

February 23, 2017

THOMAS BELCASTRO, individually and on behalf of all others similarly situated, Plaintiff,
v.
BURBERRY LIMITED, Defendant.

          OPINION AND ORDER

          VALERIE CAPRONI United States District Judge.

         This case is one of many[1] that have been brought in recent years under a variety of state laws to challenge the alleged practice of some retailers that operate “outlet stores” to price their products in a manner that misleads the buyer to believe that he or she is getting a “bargain.” The Plaintiff in this case has attempted to shoehorn his “But-I-Thought-I-Was-Getting-A-Bargain” claims into Florida's consumer protection statute and common law torts. Although the Court can appreciate Plaintiff's disappointment when he learned that he may not have gotten the bargain he thought he had, it agrees with the Defendant that, as currently drafted, this Complaint does not state a claim on which relief can be granted.

         For the reasons stated below, Defendant's motion to dismiss is GRANTED.

         BACKGROUND[2]

         In July 2014 and July 2015, Plaintiff Thomas Belcastro visited a Burberry Outlet store in Orlando, Florida. Compl. (Dkt. 13) ¶ 8. Some of the merchandise had price tags showing two prices: a so-called “deceptive reference price” and a “now” price that was “significantly” lower than the deceptive reference price. Id. ¶ 3. The reference price was identified as the “Manufacturer's Suggested Retail Price” or the “Was” price. Id. Plaintiff, believing he was receiving a “bargain” or a “deal, ” purchased several shirts at prices ranging from $119.99 to $249.99. Id. ¶ 33. Plaintiff alleges that the price tags on all of the products that he purchased had reference prices that were greater than the “Now” prices that he paid for the clothing. Id. ¶ 34.

         According to the Complaint, the deceptive reference prices “are fictional creations designed by Burberry to portray false price reductions, ” id. ¶ 41; “Burberry never intended, nor did it ever, sell the items at the represented deceptive [r]eference [p]rices.” Id. ¶ 36. Plaintiff claims that “Burberry manufactures the Burberry Outlet Products for exclusive sale at its Burberry Outlets and always sells these goods for the advertised ‘Now' price.” Id. ¶ 5. “As a result, such items were never sold, never suggested to be sold, or even intended to be sold at the [d]eceptive [r]eference [p]rice listed on its price tags.” Id.

         Plaintiff claims he was “deceived by the false price comparison into making a full retail purchase with no discount.” Id. ¶ 36. Plaintiff claims that he “would not have purchased the Burberry Outlet Products, or would not have paid the price he did, if he had known he was not truly receiving a bargain, or receiving a discount, as specified.” Id. ¶ 37. According to Plaintiff, he believed “he was getting a terrific bargain on his purchases . . . [when] [i]n reality, he was not getting a bargain at all.” Id. ¶ 30. He further alleges that “consumers-including Plaintiff-reasonably perceived they were receiving products which were regularly sold at substantially higher prices (and were, therefore, worth more) than what they paid.” Id. ¶ 62.

         DISCUSSION

         1. The Court Has Subject Matter Jurisdiction

         “Determining the existence of subject matter jurisdiction is a threshold inquiry and a claim 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.” Morrison v. Nat'l Austl. Bank Ltd., 547 F.3d 167, 170 (2d Cir. 2008) (quoting Arar v. Ashcroft, 532 F.3d 157, 168 (2d Cir. 2008)). Article III requires the plaintiff to establish an injury in fact, a causal connection between the injury and the conduct complained of, and that the injury will likely be redressed by a favorable decision. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992). “In resolving a motion to dismiss for lack of subject matter jurisdiction under Rule 12(b)(1), the district court must take all uncontroverted facts in the complaint (or petition) as true, and draw all reasonable inferences in favor of the party asserting jurisdiction.” Tandon v. Captain's Cove Marina of Bridgeport, Inc., 752 F.3d 239, 243 (2d Cir. 2014). “But ‘where jurisdictional facts are placed in dispute, the court has the power and obligation to decide issues of fact by reference to evidence outside the pleadings, such as affidavits.'” Id. (quoting APWU v. Potter, 343 F.3d 619, 627 (2d Cir. 2003)). “A plaintiff has the burden of showing by a preponderance of the evidence that subject matter jurisdiction exists.” Lunney v. United States, 319 F.3d 550, 554 (2d Cir. 2003).

         Defendant challenges Plaintiff's claim that he suffered an Article III injury, claiming that Plaintiff's allegations about his purchase are “impossible.” Def.'s Mem. (Dkt. 3) at 8. Defendant claims that “[n]ot a single one of his allegations squares with the price at which Burberry actually sold those items, and some blatantly contradict the fact that Burberry did not offer certain items for sale at the stores and times Plaintiff allegedly bought them.” Id. Defendant supports this claim with a sworn declaration from Burberry's vice president of merchandising, Paul Chomyonk. See Declaration of Paul Chomyonk (“Chomyonk Decl.”) (Dkt. 31). When a party brings a “factual” challenge to jurisdiction based on extrinsic evidence, “no presumptive truthfulness attaches to the complaint's jurisdictional allegations; rather, the burden is on the plaintiff to satisfy the Court, as fact-finder, of the jurisdictional facts.” Guadagno v. Wallack Ader Levithan Assoc., 932 F.Supp. 94, 95 (S.D.N.Y. 1996) (internal citations omitted).

         The Court does not find this challenge to be truly jurisdictional. Accepting as true Defendant's evidence about pricing and availability, at least one of the items, a navy shirt, item number 3872648, was available for purchase when Plaintiff claimed to have purchased it. See Compl. ¶ 33; Chomyonk Decl. ¶ 8. Although Defendant states that the navy shirt was sold for eleven dollars less than Plaintiff alleges he paid, Compl. ¶ 33; Chomyonk Decl. ¶ 8, the Court does not find that small factual discrepancy regarding the price sufficient to defeat standing. Plaintiff's allegation that he was injured by the purchase of the navy shirt is sufficient to meet the “low threshold” for injury required to establish Article III standing. See Ross v. Bank of America, N.A. (USA), 524 F.3d 217, 222 (2d Cir. 2008) (“Injury in fact is a low threshold, which we have held ‘need not be capable of sustaining a valid cause of action.'” (quoting Denney v. Deutsche Bank AG, 443 F.3d 253, 264 (2d Cir. 2006))). Whether Plaintiff in fact purchased the other items identified in the complaint and whether those items were marketed with a deceptive reference price is otherwise a question of fact to be resolved at a later stage in these proceedings.

         Accordingly, Defendant's motion to dismiss for lack of subject matter jurisdiction is DENIED.

         2. Plaintiff Fails to State a Claim

         To survive a motion to dismiss under Rule 12(b)(6), “a complaint must allege sufficient facts, taken as true, to state a plausible claim for relief.” Johnson v. Priceline.com, Inc., 711 F.3d 271, 275 (2d Cir. 2013) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555-56 (2007)). In reviewing a Rule 12(b)(6) motion to dismiss, courts “accept[] all factual allegations as true and draw[] all reasonable inferences in favor of the plaintiff.” N.J. Carpenters Health Fund v. Royal Bank of Scotland Grp., PLC, 709 F.3d 109, 119 (2d Cir. 2013) (quoting Litwin v. Blackstone Grp., LP, 634 F.3d 707, 715 (2d Cir. 2011)). “Although for the purposes of a motion to dismiss we must take all of the factual allegations in the complaint as true, we ‘are not bound to accept as true a legal conclusion couched as a factual allegation.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 555). “[T]o survive a motion under Rule 12(b)(6), a complaint does not need to contain detailed or elaborate factual allegations, but only allegations sufficient to raise an entitlement to relief above the speculative level.” Keiler v. Harlequin Enters., Ltd., 751 F.3d 64, 70 (2d Cir. 2014).

         Defendant moves to dismiss on the grounds that Plaintiff has not identified any “actual damages” that could be the basis for a claim under New York or Florida law. Def.'s Mem. at 14-18. Although each of Plaintiff's claims has distinct elements, Defendant argues that both Florida and New York law require Plaintiff to allege an injury based on either the price or “intrinsic value” of the products. Def.'s Mem. at 16.[3] As noted at the outset, this case is one of several to challenge retailers' pricing policies under consumer protection laws and common law torts, and the courts appear split on whether a disappointed bargain-hunter suffers any “actual damages.” Applying California law, the Ninth Circuit has held that a disappointed bargain hunter may suffer actual injury based on his mistaken subjective valuation of the product. See Hinojos v. Kohl's Corp., 718 F.3d 1098, 1104 (9th Cir. 2013). Hinojos is in tension with decisions from other federal courts, however, including the Seventh Circuit, which have held that disappointed bargain-hunters do not allege any “actual injury” simply because they did not get as good a deal as they had hoped. See Kim v. Carter's Inc., 598 F.3d 362, 365-66 (7th Cir. 2010) (applying Illinois law); Shaulis v. ...


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