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DaCorta v. AM Retail Group, Inc.

United States District Court, S.D. New York

January 23, 2018

DIANA DACORTA, individually, and on behalf of others similarly situated, Plaintiff,
v.
AM RETAIL GROUP, INC., d/b/a G.H. BASS & Co., Defendant.

          OPINION & ORDER

          NELSON S. ROMAN, UNITED STATES DISTRICT JUDGE.

         Plaintiff Diana DaCorta ("DaCorta" or "Plaintiff), commenced this putative class action suit against AM Retail Group, Inc. d/b/a G.H. Bass & Co. ("Bass" or "Defendant"). This Court has diversity jurisdiction to hear this matter pursuant to 28 U.S.C. § 1332. The lawsuit arises from Plaintiffs purchase of a pair of "Quincy" style boots from Bass's factory outlet store in Fishkill, New York. Plaintiff alleges that she purchased this product on the mistaken belief that she was receiving a steep discount on the merchandise, when in fact no discount existed at all. Accordingly, Plaintiff alleges violations of New York General Business Law ("GBL") §§ 349 and 350 and seeks an injunction and monetary damages.

         Defendant now moves to dismiss Plaintiffs Amended Complaint ("Am. Compl.") for lack of standing, pursuant to Fed.R.Civ.P. 12(b)(1), and for failure to state a claim upon which relief could be granted pursuant to Fed.R.Civ.P. 12(b)(6). For the following reasons, Defendant's motion is GRANTED in part and DENIED in part and Plaintiffs Complaint is DISMISSED without prejudice.

         BACKGROUND

         I. Procedural History

         Plaintiff commenced this cause of action by filing a putative class action complaint on March 8, 2016. (See ECF No. 1.) On August 3, 2016, this Court held a pre-motion conference to hear Defendant's request to file a motion to dismiss the complaint. (See Transcript from August 3, 2016 Pre-Motion Conference ("Conf. Tr.") (ECF No. 18).) During the conference, Defendant argued that the complaint failed to state a cognizable claim under GBL §§ 349 and 350. Defendant identified specific deficiencies, (see Conf. Tr. at 9:2-12), and this Court asked if Plaintiff would consider amending the complaint to cure such deficiencies, (id at 9:13-10:4.) At the conference, Plaintiff notified the Court that she likely would not amend the Complaint, (see Id. at 10:5), but did file an Amended Complaint shortly after the conference purportedly addressing the deficiencies discussed thereat, (see Am. Compl. (ECF No. 20).)

         II. Facts Alleged[1]

         The following facts - which are taken from the Complaint and matters of which the Court may take judicial notice - are construed in the light most favorable to Plaintiff, as it is the non-moving party. See, e.g., Kleinman v. Elan Corp., 706 F.3d 145, 152 (2d Cir. 2013); Gonzalez v. Hasty, 651 F.3d 318, 321 (2d Cir. 2011). This Court is also permitted to consider documents attached to Defendant's brief for purposes of subject matter jurisdiction. Morrison v. Nat 7 Australia Bank Ltd, 547 F.3d 167, 170 (2d Cir. 2008).

         This case is one of many[2] percolating through the federal courts and aimed at challenging the pricing practices in "outlet stores" by alleging violations of various state consumer protection statutes (hereinafter the "Outlet Cases"). This case concerns the pricing practices of Bass's outlet stores. (Am. Compl. ¶1.) The facts here are largely indistinguishable from other Outlet Cases. Here, Plaintiff alleges that Bass has engaged in the practice of selling products at outlet stores that are deceptively sold for a steep discount, when in fact, the products are not on sale at all. (Id. at ¶¶1-5.)

         According to Plaintiff, Bass manufactures two lines of merchandise: (1) product made for retail sale and sold at department stores - merchandise that is not the subject of this litigation; and (2) "lesser quality merchandise manufactured specifically" for sale at Bass outlets. (Am Compl. ¶2.) Relying on the mistaken belief that she was getting a deep discount, Plaintiff purchased a pair of Quincy boots from the outlet store on October 13, 2015.[3] (Id. ¶4.) In the outlet stores, some products are listed with a high price that is stricken out and accompanied by a placard bearing a significantly lower price. (Id. ¶3.) Such practices create the illusion of a discount, but in fact the merchandise is "only sold at the purported 'discount' price." (Id. at ¶14.) To be sure, Plaintiff alleges that the factory outlet merchandise is "never offered at the comparison price." (Am. Compl. ¶3.)

         Plaintiff further alleges that the merchandise sold at the Bass outlet stores is "often of lesser quality." (Am. Compl. ¶¶ 2, 13.) Despite this inferior quality, Plaintiff alleges that "manufacturers such as Bass seek to trade on their brand names and the quality of their normal retail lines" and are thus, "able to charge a premium for this lesser quality merchandise." (Id. ¶13.) Bass engages in similar pricing practices on its factory website. (Id. ¶¶ 3, 15.)

         On October 13, 2015, Plaintiff purchased a pair of "Quincy" styles boots from Bass's outlet store in Fishkill, New York.[4] (Id. ¶4.) The Quincy boots "were displayed with a placard identifying a price of $180.00, with a 'sale' price of $44.99."[5] (Id. ¶ 21.) Such information "creat[ed] the impression of an approximately 75% discount." (Id.) Despite the signage, in reality, the Quincy boots are "manufactured for, and sold exclusively at Bass's factoiy outlet store and the 'factory outlet' page of its website;" they are "never offered for sale, or sold at the $180.00 price." (Id. at ¶23.) As such, there is no actual discount, only "the false and deceptive appearance of a discount." (Id.) Plaintiff alleges that she purchased the boots thinking she was getting a steep discount. (Id. ¶22.)

         Accordingly, Plaintiff "would not have purchased the Quincy boots, or would not have paid the amount she did, if not for Bass's false and deceptive pricing scheme." (Id. at ¶¶ 4, 20, 25.) Plaintiff otherwise alleges that she was damaged as a result of her purchase, (see Id. ¶6), though she makes no allegations as to the quality of the Quincy boots she purchased or how they fall short of what she bargained for.

         LEGAL STANDARD

         A. Standard of Review

         1. Rule 12(b)(1)

         A challenge to a federal court's subject matter jurisdiction is properly raised by way of a 12(b)(1) motion. Morrison v. Nat'l Australia Bank Ltd., 547 F.3d 167, 170 (2d Cir. 2008), affd, 561 U.S. 247 (2010); Alliance for Envt'l Renewal, Inc. v. Pyramid Crossgates Co., 436 F.3d 82, 87-88 (2d Cir. 2006). Without jurisdiction, the Court is devoid of the "power to adjudicate the merits of the case" and for that reason, a Court must decide a 12(b)(1) motion before any motion on the merits. Carter v. HealthPort Tech., LLC, 822 F.3d 47, 55 (2d Cir. 2016).

         Plaintiff bears the burden to demonstrate standing by showing she is the "proper party to bring this suit" by a preponderance of the evidence. Carter, 822 F.3d at 55 (quoting Raines v. Byrd, 521 U.S. 811 (1997)); Morrison, 547 F.3d at 170 (citing Makarova v. United States, 201 F.3d 110, 113 (2d Cir. 2000)). While a Court must accept all factual allegations in Plaintiffs complaint as true, a jurisdictional showing must be made affirmatively; "it is not made by drawing from the pleadings inferences favorable to the party asserting it." Morrison, 547 F.3d at 170; see also TZ Manor, LLC v. Daines, 815 F.Supp.2d 726, 733-34 (S.D.N.Y. 2011), affd, 503 Fed.Appx. 82 (2d Cir. 2012).

         Standing challenges pursuant to 12(b)(1) can be factual or facial. Carter, 822 F.3d at 56; Aikens v. Portfolio Recovery Assocs., LLC, No. 17-1132, 2017 WL 5590341, at *4, n.2 (2d Cir. Nov. 21, 2017). A facial challenge considers the sufficiency of the allegations in the complaint. Id. A factual challenge, on the other hand, questions the existence of standing. Id. In such circumstances, the Court may consider evidence outside the pleadings, but should not consider any "conclusory or hearsay statements contained in" the evidence. TZ Manor, 815 F.Supp.2d at 733-34. Where a Defendant provides evidence that controverts material factual allegations in the complaint, the Court could, and should, make ...


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