Terrazzino v. Wal-Mart Stores, Inc.

• Decision Date: 16 August 2018
• Docket Number: No. 17-cv-01731,17-cv-01731
• Citation: 335 F.Supp.3d 1074
• Parties: Erin TERRAZZINO, on behalf of herself and others similarly situated, Plaintiff, v. WAL-MART STORES, INC., Defendant.
• Court: U.S. District Court — Northern District of Illinois

335 F.Supp.3d 1074

Erin TERRAZZINO, on behalf of herself and others similarly situated, Plaintiff,

v.WAL-MART STORES, INC., Defendant.

No. 17-cv-01731

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

Signed August 16, 2018

James X. Bormes, Catherine P. Sons, Law Office of James X. Bormes, P.C., Thomas Michael Ryan, Law Offices of Thomas Ryan, Kasif Khowaja, Frank B. Castiglione, The Khowaja Law Firm, LLC, Chicago, IL, for Plaintiff.

Francis A. Citera, Brian D. Straw, Greenberg Traurig, LLP, Chicago, IL, for Defendant.

MEMORANDUM OPINION AND ORDER

Andrea R. Wood, United States District Judge

Plaintiff Erin Terrazzino purchased a bag of Great Value All Natural Pita Chips ("Pita Chips") from Defendant Wal-Mart Stores, Inc.'s ("Walmart") website. Terrazzino alleges that despite the fact that the Pita Chips were prominently branded as "All Natural," the product contained a variety of synthetic, artificial, and heavily-processed ingredients. Consequently, Terrazzino has filed this lawsuit alleging that Walmart's representation of the Pita Chips as "All Natural" was false, misleading, and deceptive. Presently before the Court is Walmart's motion to dismiss the complaint pursuant to Federal Rules of Civil Procedure 9(b), 12(b)(1), and 12(b)(6). (Dkt. No. 13). For the reasons explained below, Walmart's motion to dismiss is granted in part and denied in part.

BACKGROUND

As alleged in the Complaint, Walmart manufactured, distributed, advertised, labeled, and sold the Pita Chips. (Compl. ¶ 23, Dkt. No. 1.) The Pita Chips' packaging prominently displayed the words "All Natural" in all capital letters on the front center of the bag. (Id. ¶ 26.) The package also had a stamp on the bottom-right side of the bag that said "All Natural" and "Cholesterol Free" around the edge and "baked" in the center. (Id. ¶ 37 & Fig. 2.) The image below shows the packaging's general appearance:

Despite this advertising, the Pita Chips actually contained a variety of synthetic, artificial, and heavily-processed ingredients, including enriched wheat flour, which contains niacin

, thiamine mononitrate, and folic acid. (Id. ¶ 29.) Enriched flour is formed when wheat seeds are ground to remove the outer layer of the seed, as well as almost all nutrients. The flour is then synthetically bleached with chemical additives to give it a white color. After bleaching, synthetic substances (including niacin, thiamine mononitrate, and folic acid ) are added to the flour to restore nutritional value to the Pita Chips. (Id. ¶ 30.)

On February 4, 2017, Terrazzino purchased the Pita Chips through Walmart's online store, paying approximately $2.00 for the bag. (Id. ¶ 21.) On the webpage where the Pita Chips were sold, there was an "about this item" section, which listed the following ingredients: "Enriched Wheat Flour (Wheat Flour, Niacin

, Reduced Iron, Thiamine Mononitrate, Riboflavin, Folic Acid ), Sunflower Oil, Sea Salt, Yeast, Oat Fiber, Sugar, Wheat Starch, Ascorbic Acid, Silicon Dioxide." (Def.'s Mot. to Dismiss, Ex. 1 at 4 of 12, Dkt. No. 58.) To view these ingredients, however, a user had to go through one of two processes: the user could either scroll three pages of web content to the "about this item" tab, and then click on the "read more" tab to find the ingredients (Resp. to Mot. to Dismiss, Ex. A, Dkt. No. 21); or the user could click on an earlier "read more" tab, which would take her straight to the "about this item" tab, and then click on a second "read more" tab to find the ingredients. (Id. Ex. B.)

Terrazzino has brought the present class-action lawsuit, alleging that Walmart's representation that the Pita Chips were "All Natural" was false, misleading, and deceptive. She seeks to represent the following classes:

• The National Class: All persons who, between March 3, 2012 and present purchased one or more bags of "Great Value All Natural PITA CHIPS" at a Walmart store located in the United States or online at www.walmart.com.

• The Illinois Class: All persons who, between March 3, 2014 and present purchased one or more bags of "Great Value All Natural PITA CHIPS" at a Walmart store located in Illinois or online at www.walmart.com while in Illinois.

(Compl. ¶¶ 51, 52.) Terrazzino's complaint alleges common law claims for breach of express warranty (Count I) and unjust enrichment (Count II) on behalf of the National Class, and violations of the Illinois Consumer Fraud and Deceptive Practices Act ("ICFA") on behalf of the Illinois Class (Count III).

DISCUSSION

I. Rule 12(b)(1) Motion to Dismiss for Lack of Standing

Walmart first argues that Terrazzino lacks standing to assert claims premised on the laws of states other than Illinois and therefore any such claims must be dismissed. Specifically, Walmart contends that because Terrazzino claims no injuries in any state other than Illinois, she has no standing to pursue statutory causes of action under the laws of any other state. Terrazzino counters that this argument is premature.

"[T]he question of standing is whether the litigant is entitled to have the court decide the merits of the dispute or particular issues." Apex v. Digital, Inc. v. Sears, Roebuck & Co. , 572 F.3d 440, 443 (7th Cir. 2009) (quoting Perry v. Vill. of Arlington Heights , 186 F.3d 826, 829 (7th Cir. 1999) ). The plaintiff bears the burden of proof as to standing. Kathrein v. City of Evanston, Ill. , 636 F.3d 906, 914 (7th Cir. 2011). To establish standing, a plaintiff must demonstrate: "(1) that [the plaintiff has] suffered an injury in fact (2) that is fairly traceable to the action of the defendant and (3) that will likely be redressed with a favorable decision." Id. at 914 (quoting Books v. City of Elkhart, Ind. , 235 F.3d 292, 299 (7th Cir. 2000) ). To demonstrate an injury in fact, the plaintiff must allege that she "suffered an invasion of a legally protected interest that is concrete and particularized and actual or imminent, not conjectural or hypothetical." Spokeo, Inc. v. Robins , ––– U.S. ––––, 136 S.Ct. 1540, 1548, 194 L.Ed.2d 635 (2016) (quoting Lujan v. Defenders of Wildlife , 504 U.S. 555, 560, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992) ).

With respect to the timing of standing motions in class actions, courts in this District are split on whether standing issues should be postponed until after class certification. This split stems from the interpretation of two Supreme Court cases: Amchem Products, Inc. v. Windsor , 521 U.S. 591, 117 S.Ct. 2231, 138 L.Ed.2d 689 (1997), and Ortiz v. Fibreboard Corp. , 527 U.S. 815, 119 S.Ct. 2295, 144 L.Ed.2d 715 (1999). In Amchem , the Supreme Court considered whether a class should be certified for settlement purposes and held that dispositive class certification issues were "logically antecedent to the existence of any Article III issues." 521 U.S. at 612, 117 S.Ct. 2231. Notably, the Supreme Court agreed with the Third Circuit's decision not to reach Article III standing issues when standing was only at issue because of the plaintiff's proposed class certification. Id. Similarly, in Ortiz , the Supreme Court held that while courts generally must resolve Article III standing concerns before reaching the merits of a case, Federal Rule of Civil Procedure 23 class certification issues should be assessed first when they are logically antecedent to Article III concerns. 527 U.S. at 831, 119 S.Ct. 2295. Both Amchem and Ortiz concerned certification of settlement classes in asbestos litigation, and in both cases the Supreme Court made its decision based on class certification issues. Amchem , 521 U.S. at 628–29, 117 S.Ct. 2231 ; Ortiz , 527 U.S. at 864–65, 119 S.Ct. 2295. Thus, in neither case did the Supreme Court substantively address standing issues.

In Payton v. County of Kane , 308 F.3d 673 (7th Cir. 2002), the Seventh Circuit followed the Supreme Court's guidance and addressed class certification prior to standing issues. Id. at 680–81. Specifically, the Seventh Circuit began its "analysis with the question of class certification, mindful of the Supreme Court's directive to consider issues of class certification prior to issues of standing." Id. at 680. One difference between Payton and Terrazzino's case, however, is the fact that the class representatives in Payton were all personally injured by the operation of the same statute that caused injuries to all other members of the proposed class. Id. at 682. Here, in contrast, Terrazzino brings claims not just under the laws of the state in which she resides and was injured—Illinois—but also under the laws of every other state. Whether a court may postpone a standing analysis until after class certification when the plaintiff seeks to represent nationwide class members, even when she only has a connection to one state, is a question that has divided courts in this District. See In re Dairy Farmers of Am., Inc. Cheese Antitrust Litig. , No. 09-cv-03690, 2015 WL 3988488, at *25 (N.D. Ill. June 29, 2015) (where the defendant argued that the plaintiff only had standing to raise claims under New York law, not the laws of any of the other states named in her class action complaint, holding that because a ruling on the plaintiff's standing did not depend on the standing of proposed class members, the class certification issue was not logically antecedent to the standing issue); c.f. McDonnell v. Nature's Way Prod., LLC , No. 16-cv-5011, 2017 WL 1149336, at *5 (N.D. Ill. Mar. 28, 2017) ("Having considered both interpretations, the Court agrees with the cases finding the standing issue to be premature at this stage. [Plaintiff] has Article III standing to pursue her claim under Illinois law, having allegedly suffered injuries caused by [defendant]. Her ... standing issues therefore arise from [her] attempt to represent the multistate class, making class certification issues logically antecedent to standing concerns.") (internal quotation marks and citations omitted).

It is unclear how Ortiz and Amchem apply here since Terrazzino has not yet...