United States District Court, S.D. New York
THOMAS BELCASTRO, individually and on behalf of all others similarly situated, Plaintiff,
BURBERRY LIMITED, Defendant.
OPINION AND ORDER
VALERIE CAPRONI United States District Judge.
case is one of many 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
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.
reasons stated below, Defendant's motion to dismiss is
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.
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.
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.
The Court Has Subject Matter Jurisdiction
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.
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).
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.
Defendant's motion to dismiss for lack of subject matter
jurisdiction is DENIED.
Plaintiff Fails to State a Claim
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).
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. 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. ...