Murillo v. Kohl's Corp.

• Decision Date: 24 June 2016
• Docket Number: Case No. 16-CV-196-JPS
• Citation: 197 F.Supp.3d 1119
• Parties: Miguel MURILLO, Michael Baehman, and Bonnie Baehman, on Behalf of Themselves and All Others Similar Situated, Plaintiffs, v. KOHL'S CORPORATION and Kohl's Department Stores, Inc., Defendants.
• Court: U.S. District Court — Eastern District of Wisconsin

197 F.Supp.3d 1119

Miguel MURILLO, Michael Baehman, and Bonnie Baehman, on Behalf of Themselves and All Others Similar Situated, Plaintiffs,

v.KOHL'S CORPORATION and Kohl's Department Stores, Inc., Defendants.

Case No. 16-CV-196-JPS

United States District Court, E.D. Wisconsin.

June 24, 2016

Andrea Farah, Erin G. Comite, Scott Scott LLP, Colchester, CT, E. Kirk Wood, Wood Law Firm LLC, Birmingham, AL, Gary F. Lynch, Carlson Lynch Sweet Kipela & Carpenter LLP, Pittsburgh, PA, Joseph Pettigrew, Scott + Scott LLP, San Diego, CA, Karen Hanson Riebel, Lockridge, Grindal, Hauen PLLP, Minneapolis, MN, Joseph P. Guglielmo, Scott Scott LLP, New York, NY, for Plaintiffs.

David R. Konkel, John L. Kirtley, Matthew W. Wuest, Gadfrey & Kahn SC, Milwaukee, WI, for Defendants.

ORDER

J.P. Stadtmueller, U.S. District Judge

On February 18, 2016, the plaintiffs filed suit, on behalf of themselves and all those similarly situated, against the defendants for purportedly engaging in a nationwide marketing scheme that is untrue, deceptive, and misleading to consumers. (See generally Docket #1). In many respects, this action parallels the allegations set forth in a case that was recently litigated before this Court by a California plaintiff. See Le v. Kohls Dep't Stores, Inc ., No. 15–CV–1171–JPS, 160 F.Supp.3d 1096, 1098–1102, 2016 WL 498083, at *1–*3 (E.D.Wis. Feb. 8, 2016).¹

After the defendants (collectively "Kohls"² ) filed a motion to dismiss (Docket #12), the plaintiffs filed an amended complaint on April 5, 2016 (Docket #14). In response, Kohls filed a motion to dismiss the amended complaint pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). (Docket #17). This motion to dismiss is now fully briefed and ripe for adjudication. (Docket #18, #26, #30). For the reasons stated herein, Kohls' motion will be denied in its entirety.

1. BACKGROUND³

Before addressing the merits of the pending motion to dismiss, the Court will first provide an overview of: (1) the parties; (2) the factual background of this case; and (3) the plaintiffs' claims embodied in the amended complaint.

1.1 The Parties

Plaintiffs Miguel Murillo, Michael Baehman, and Bonnie Baehman are citizens of Wisconsin. (Docket #14 ¶¶ 10-12). Each plaintiff claims to have purchased one or more items from various Kohls stores located in the State of Wisconsin at a sale or discount price off of the "regular" or "original" item prices. (Docket #14 ¶¶ 52-71). The plaintiffs further claim to have made these purchases at various times between March of 2015 and December of 2015. (See Docket #14 ¶¶ 52-71) (listing the specific dates, products, and locations in which the plaintiffs purchased the merchandise).

Defendant Kohl's Corporation is a Wisconsin company with its principal place of business located at N56 W17000 Ridgewood Drive, Menomonee Falls, Wisconsin. (Docket #14 ¶ 13). Defendant Kohl's Department Stores, Inc., is a Delaware company with its principal place of business also located at N56 W17000 Ridgewood Drive, Menomonee Falls, Wisconsin. (Docket #14 ¶ 14). The plaintiffs' claim that both of the defendants own and operate retail stores in Wisconsin. (Docket #14 ¶ 16). Kohls operates approximately 1,164 department stores in 49 states, including 40 stores in Wisconsin, and an e-commerce website (www.Kohls.com), in which it sells private label, exclusive, and national brand apparel, footwear, accessories, beauty, and home products. (Docket #14 ¶ 18).

1.2 Factual Overview

The plaintiffs claim that consumer fraud is afoot in Kohls stores across the nation. (Docket #14 ¶¶ 1-9, 25-38). More precisely, the plaintiffs allege that Kohls engages in an untrue, deceptive, and misleading marketing practice—both in its brick-and-mortar department stores and on its e-commerce website—that induces consumers to buy or pay more for merchandise than they would absent the unlawful conduct. (Docket #14 ¶¶ 1-9, 25-38). The fraud, according to the plaintiffs' theory, plays on a basic consumer motivation: the promise of a good deal. (Docket #14 ¶¶ 1-9, 25-38).

Similar to the allegations made previously before this Court in Le , the plaintiffs claim that Kohls advertises its goods at certain discounts off of "original" or "regular" prices. (Docket #14 ¶¶ 2, 22-23, 26). According to the plaintiffs, these "original" or "regular" prices, however, are misleading because they do not reflect the actual prices at which the products are routinely, if ever, sold to retail customers. (Docket #14 ¶¶ 2, 22-23, 26). Instead, the plaintiffs claim that Kohls' "regular" prices are either inflated or fabricated. (Docket #14 ¶¶ 2, 22-31). The amended complaint explains that the problem with this practice is that the inflated and/or fabricated prices advertised by Kohls give consumers the wrongful impression that they are getting a better deal for goods than they actually are in reality. (Docket #14 ¶¶ 1-9, 22-31). As a result of this purportedly deceptive discount price comparison scheme, the plaintiffs claim that Kohls encourages consumers to either: (1) buy products that they would never buy absent the "incredible savings"; or (2) pay more for products than they would have paid absent the illusory "deal." (Docket #14 ¶¶ 8-9, 31, 55).

Although the plaintiffs claimed to have purchased various items—including, but not limited to, juniors', boys' and women's clothing—at various Kohls stores in Wisconsin, they claim that Kohls operates its deceptive price comparison scheme on a national scale. (Docket #14 ¶¶ 29-30, 52-71). Further, they claim that this scheme "has been uniformly implemented as part of a concerted, years long, pervasive campaign to mislead consumers that is ongoing and continues to this day." (Docket #14 ¶ 124). The plaintiffs claim that this national scheme is effectuated by the "prominent" display of "regular" and "sale" prices on Kohls' in-store merchandise tags, online advertisements, and in-store price displays, such as that which is pictured below. (See Figure 1; Docket #14 ¶¶ 30, 46).

Figure 1: Sample Deceptive Price Display (Docket #14 ¶ 46)

The plaintiffs claim that Kohls also furthers this scheme by displaying false price comparisons on product receipts. (Docket #14 ¶ 30).

1.3 The Plaintiffs' Claims

On April 5, 2016, the plaintiffs filed an amended complaint alleging a putative class action on behalf of two potential classes, a Wisconsin Class and a Nationwide class. (Docket #1 ¶¶ 77-129). They alleged:

1. A statutory violation of the Wisconsin Deceptive Trade Practices Act, Wis. Stat. § 100.18 ("WDTPA") (Docket #14 ¶¶ 90-98), on behalf of a nationwide class, or, in the alternative, a Wisconsin class;

2. A Wisconsin common law unjust enrichment claim on behalf of a nationwide class, or, in the alternative, a Wisconsin class (Docket #14 ¶¶ 99-106);

3. A multi-state consumer fraud claim (Docket #14 ¶¶ 107-121); and

4. A claim for declaratory and injunctive relief pursuant to 28 U.S.C. § 2201 et seq . (Docket #14 ¶¶ 122-129).

Kohls has moved to dismiss all of these claims pursuant to Federal Rules of Civil Procedure 12(b)(6) and 12(b)(1). (Docket #17). In support of its motion, Kohls argues that:

1. The plaintiffs' WDTPA claim must be dismissed because it: (i) is based, in part, on representations that are not actionable; and (ii) is not pled with sufficient particularity;

2. The plaintiffs cannot maintain a cause of action for unjust enrichment because they have not alleged a common law intentional misrepresentation claim;

3. The plaintiffs lack statutory standing to pursue their multi-state claim, which is also improperly pled; and

4. The plaintiffs' claim under the Declaratory Judgment Act is not justiciable, and, in any case, the Court should decline to exercise its discretion to hear the claim because it is duplicative.

(See generally Docket #18). The plaintiffs oppose all of these arguments. (Docket #26).

2. LEGAL STANDARD

"A motion to dismiss pursuant to [Rule] 12(b)(6) challenges the viability of a complaint by arguing that it fails to state a claim upon which relief may be granted." Camasta v. Jos. A. Bank Clothiers, Inc ., 761 F.3d 732, 736 (7th Cir.2014). "To survive a motion to dismiss under Rule 12(b)(6), a plaintiff must state enough facts that, when accepted as true, 'state a claim for relief that is plausible on its face.' " Spierer v. Rossman , 798 F.3d 502, 510 (7th Cir.2015) (citing Bell Atlantic Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." McCauley v. City of Chicago , 671 F.3d 611, 615 (7th Cir.2011) (citing Ashcroft v. Iqbal , 556 U.S. 662, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) ). The Court must "tak[e] all factual allegations as true and draw[ ] all reasonable inferences in favor of the plaintiffs." Pugh v. Tribune Co. , 521 F.3d 686, 692 (7th Cir.2008).

With respect to challenges made to subject matter jurisdiction, "[m]otions to dismiss under Rule 12(b)(1) are meant to test the sufficiency of the complaint, not to decide the merits of the case." Ctr. for Dermatology & Skin Cancer, Ltd. v. Burwell , 770 F.3d 586, 588–89 (7th Cir.2014) (citing Weiler v. Household Fin. Corp ., 101 F.3d 519, 524 n.1 (7th Cir.1996) ); see also Gibson v. City of Chicago , 910 F.2d 1510, 1520 (7th Cir.1990) (applying the same principle to motions under Rule 12(b)(6) ). As when deciding a Rule 12(b)(6) motion, "[i]n the context of a motion to dismiss for lack of subject matter jurisdiction, [the Court must] accept as true the well pleaded factual allegations, drawing all reasonable inferences in favor of the plaintiff."

Iddir v. INS , 301 F.3d 492, 496 (7th Cir.2002). However, "a plaintiff faced with a 12(b)(1) motion to dismiss bears the burden of establishing that the jurisdictional requirements have been met." See Burwell , 770 F.3d at 588–89 (citing Kontos v. U.S. Dep't Labor , 826...