Rudy v. Family Dollar Stores, Inc., 21-CV-3575

CourtUnited States District Courts. 7th Circuit. United States District Court (Northern District of Illinois)
Writing for the CourtHonorable Marvin E. Aspen, United States District Judge
PartiesHEATHER RUDY, individually and on behalf of all others similarly situated, Plaintiff, v. FAMILY DOLLAR STORES, INC. Defendant.
Decision Date04 February 2022
Docket Number21-CV-3575

HEATHER RUDY, individually and on behalf of all others similarly situated, Plaintiff,
v.

FAMILY DOLLAR STORES, INC.
Defendant.

No. 21-CV-3575

United States District Court, N.D. Illinois, Eastern Division

February 4, 2022


MEMORANDUM OPINION AND ORDER

Honorable Marvin E. Aspen, United States District Judge

This putative class action concerns the alleged deceptive labeling of snack almonds. Plaintiff Heather Rudy claims that Defendant Family Dollar Stores, Inc. (“Family Dollar”) misled her and other consumers by marketing its Eatz brand Smoked Almonds (the “Product”) as “smoked, ” though they were not roasted over an open fire. (Complaint (“Compl.”) (Dkt. No. 1) ¶¶ 1, 21-23.)[1] Rudy brings claims for violation of the Illinois Consumer Fraud and Deceptive Business Practices Act (“ICFA”), 815 ILCS 505/1 et seq.; breaches of express warranty, implied warranty of merchantability, and the Magnuson-Moss Warranty Act, 15 U.S.C. §§ 2301 et seq.; negligent misrepresentation; fraud; and unjust enrichment. (Id. ¶¶ 95-115.) Rudy asserts that jurisdiction is proper under the Class Action Fairness Act of 2005 (“CAFA”), 28 U.S.C. § 1332(d)(2). (Id. ¶ 63.)[2]

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Family Dollar has moved to dismiss Rudy's claims under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted. (Family Dollar Stores, Inc.'s Motion to Dismiss Plaintiff's Class Action Complaint (“Motion”) (Dkt. No. 24).) For the reasons set forth below, we grant Family Dollar's Motion in part and deny it in part.

BACKGROUND

The following facts are taken from the Complaint and are deemed to be true for the purposes of this motion. See Bell v. City of Chicago, 835 F.3d 736, 738 (7th Cir. 2016); see also Tamayo v. Blagojevich, 526 F.3d 1074, 1081 (7th Cir. 2008).

Rudy purchased the Product “on one or more occasions within the statute of limitations for each cause of action alleged, from [Family Dollar's] stores, including the location at 1106 Washington St, Waukegan, IL 60085, between April and May 2021, among other times.” (Compl. ¶ 76.) Rudy does not specify how much she paid for the Product but alleges that Family Dollar sells the Product for a “price premium compared to other similar products, no less than $1.00 for 7 oz (198g).” (Id. ¶ 62.)

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Before Rudy purchased the Product, she observed that the front label read "Smoked Almonds," that the package had "red coloring," and that "there was no mention of added smoke flavor." (Id. ¶ 77.) An image of the Product's front label is found below:

(Image Omitted)

(Id. ¶ 1.) Based on the Product's front label, Rudy anticipated that the Product had been smoked over an open fire. (Id. ¶ 78.) However, the Product was not smoked over an open fire; it was flavored using natural smoke flavor. (Id. ¶ 21.) If Rudy had known that the Product had not been smoked over an open fire, she would not have purchased the Product or would have paid a lower price for it. (Id. ¶¶ 83, 85.) She claims that she would purchase the Product again if she could do so "with the assurance that the Product's representations are consistent with its composition." (Id. ¶ 86.)

Rudy brings this putative class action on behalf of herself and "Illinois, Texas, Utah, New Mexico, Indiana, West Virginia, and North Carolina residents who purchased the Product during the statutes of limitations for each cause of action alleged." (Id. ¶ 87.)

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LEGAL STANDARD

A Federal Rule of Civil Procedure 12(b)(6) motion to dismiss is meant to test the sufficiency of the complaint, not to decide the merits of the case. McReynolds v. Merrill Lynch & Co., Inc., 694 F.3d 873, 878 (7th Cir. 2012); Gibson v. City of Chicago, 910 F.2d 1510, 1520 (7th Cir. 1990). In evaluating a motion to dismiss, courts “construe the complaint in the light most favorable to the plaintiff, accepting as true all well-pleaded facts alleged, and drawing all possible inferences in her favor.” Tamayo, 526 F.3d at 1081. Courts may grant motions to dismiss under Rule 12(b)(6) only if a complaint lacks sufficient facts “to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 1949 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 1974 (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.” Id. at 678, 129 S.Ct. at 1949. Although a facially plausible complaint need not give “detailed factual allegations, ” it must allege facts sufficient “to raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555, 127 S.Ct. at 1964-65. “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Iqbal, 556 U.S. at 678, 129 S.Ct. at 1949. These requirements ensure that the defendant receives “fair notice of what the . . . claim is and the grounds upon which it rests.” Twombly, 550 U.S. at 555, 127 S.Ct. at 1964 (internal quotation marks and citation omitted).

Claims sounding in fraud, such as a claim alleging deceptive conduct in violation of the ICFA, must also meet the heightened pleading standard of Federal Rule of Civil Procedure 9(b). See Fed. R. Civ. P. 9(b); Benson v. Fannie May Confections Brands, Inc., 944 F.3d 639, 646 (7th Cir. 2019); Greenberger v. GEICO Gen. Ins. Co., 631 F.3d 392, 399 (7th Cir. 2011). As a practical matter, this means that a plaintiff “must identify the ‘who, what when, where, and how'

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of the alleged fraud.” Benson, 944 F.3d at 646 (quoting Vanzant v. Hill's Pet Nutrition, Inc., 934 F.3d 730, 738 (7th Cir. 2019)).

ANALYSIS

I. ICFA

The ICFA is designed “to protect consumers, borrowers, and business persons against fraud, unfair methods of competition, and other unfair and deceptive business practices.” Siegel v. Shell Oil Co., 612 F.3d 932, 934 (7th Cir. 2010) (internal citation and quotation marks omitted). “In order to state a claim under the ICFA, a plaintiff must show: ‘(1) a deceptive or unfair act or promise by the defendant; (2) the defendant's intent that the plaintiff rely on the deceptive or unfair practice; and (3) that the unfair or deceptive practice occurred during a course of conduct involving trade or commerce.'” Camasta v. Jos. A. Bank Clothiers, Inc., 761 F.3d 732, 739 (7th Cir. 2014) (quoting Wigod v. Wells Fargo Bank, N.A., 673 F.3d 547, 574 (7th Cir. 2012)). “Although ICFA claims often involve disputed questions of fact not suitable to a motion to dismiss, a court may dismiss the complaint if the challenged statement was not misleading as a matter of law.” Ibarrola v. Kind, LLC, 83 F.Supp.3d 751, 756 (N.D. Ill. 2015) (citing Bober v. Glaxo Wellcome PLC, 246 F.3d 934, 940 (7th Cir. 2001); Pelayo v. Nestle USA, Inc., 989 F.Supp.2d 973, 978 (C.D. Cal. 2013)).

Family Dollar argues that Rudy has failed to plead two elements of her ICFA cause of action: (1) a deceptive or unfair practice and (2) damages. (Defendant Family Dollar Stores, Inc.'s Memorandum of Law in Support of Motion to Dismiss Plaintiff's Class Action Complaint (“Memo”) (Dkt. No. 19) at 5-14.) We consider each of these arguments in turn.

A. Deceptive Practice

Rudy's ICFA claim challenges a “deceptive, ” as opposed to an “unfair, ” practice. (See, e.g., Compl. ¶ 97 (referring to Family Dollar's representations as “deceptive”); Plaintiff's

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Memorandum in Opposition to Defendant's Motion to Dismiss the Complaint (“Opposition”) (Dkt. No. 26) at 8-12 (explaining why Rudy sufficiently pled a deceptive practice).) Accordingly, we apply the standard for deceptive practices to Rudy's ICFA claim.

“[A] practice is deceptive ‘if it creates a likelihood of deception or has the capacity to deceive.'” Benson, 944 F.3d at 646 (quoting Bober, 246 F.3d at 938). “To determine the likelihood of deception, courts apply a ‘reasonable consumer' standard.” Geske v. PNY Techs., Inc., 503 F.Supp.3d 687, 704-05 (N.D. Ill. 2020) (citing Benson, 944 F.3d at 646). The reasonable consumer standard “requires more than a mere possibility that [a] label might conceivably be misunderstood by some few consumers viewing it in an unreasonable manner. Rather, the reasonable consumer standard requires a probability that a significant portion of the general consuming public . . . acting reasonably in the circumstances, could be misled.” Ebner v. Fresh, Inc., 838 F.3d 958, 965 (9th Cir. 2016) (internal citations and quotation marks omitted); Geske, 503 F.Supp.3d at 705 (quoting Ebner).

Courts considering “deceptive advertising claims should take into account all the information available to consumers and the context in which that information is provided and used.” Bell v. Publix Super Markets, Inc., 982 F.3d 468, 476 (7th Cir. 2020). “What matters most is how real consumers understand and react to the advertising.” Id. “[W]here plaintiffs base deceptive advertising claims on unreasonable or fanciful interpretations of labels or other advertising, dismissal on the pleadings may well be justified.” Id. at 477.

Family Dollar argues that Rudy has not pled a deceptive or unfair trade practice because no reasonable consumer would assume that the Product was roasted over an open fire, as opposed to treated with liquid smoke. (Memo at 6-8.) According to Family Dollar, the Product is priced too cheaply for a reasonable consumer to believe that it was roasted over an open fire.

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(Id. at 7-8.) Additionally, the ingredient list discloses that the Product is roasted in oil and contains natural smoke flavor. (Id. at 9-10.)

The front of the Product bears the phrase “Smoked almonds, ” in red packaging that Rudy alleges is “evocative of fire.” (Compl. ¶ 1.) Rudy claims that she interpreted the phrase “smoked” to mean that the Product was smoked over an open fire. (Id. ¶¶ 77-80.) This is not an unreasonable or fanciful interpretation....

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