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Le v. Kohls Department Stores, Inc.

United States District Court, E.D. Wisconsin

February 8, 2016

VICTOR LE, on Behalf of Himself and All Others Similarly Situated, Plaintiff,
v.
KOHLS DEPARTMENT STORES, INC. and KOHLS CORPORATION, Defendants.

ORDER

J.P. Stadtmueller U.S. District Judge

The plaintiff, Victor Le (“Le”), on behalf of himself and others similarly situated, filed the complaint in this action on September 30, 2015. (Docket #1). In short, Le claims that he and putative class members have suffered-and continue to suffer-from unfair, deceptive, and unlawful business practices implemented by the defendants, collectively “Kohls.”[1](Docket #1 ¶ 1). Before any issues related to class certification could be resolved, however, Kohls moved to dismiss Le’s complaint pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). (Docket #18). That motion is now fully briefed and ripe for adjudication. As explained in further detail below, Kohls’ motion will be denied.

1.BACKGROUND

Before delving into the complex legal issues underlying this motion, the Court must first provide an overview of: (1) the parties; (2) the factual background of this case; and (3) Le’s claims in relation to the pending motion to dismiss.

1.1The Parties

Plaintiff, Victor Le, is a citizen of California.[2] (Docket #1 ¶ 10). During the relevant time period, Le alleges that he purchased merchandise from Kohls at a “sale” or “discount” price off of the “regular” or “original” item prices. (Docket #1 ¶ 10).

Defendant Kohls Corporation is a Wisconsin company with its principal place of business located at N56 W17000 Ridgewood Drive, Menomonee Falls, Wisconsin. (Docket #1 ¶ 11). Defendant Kohls Department Stores, Inc., is a Delaware company with its principal place of business located at N56 W17000 Ridgewood Drive, Menomonee Falls, Wisconsin.[3](Docket #1 ¶ 11). Kohls operates approximately 1, 162 department stores in 49 states, including 37 stores in Wisconsin, 126 stores in California, and an e-commerce website (www.Kohls.com). (Docket #1 ¶ 16). Kohls sells private label, exclusive and national brand apparel, footwear, accessories, beauty, and home products. (Docket #1 ¶ 16).

1.2Factual Background

The gravamen of Le’s complaint is that Kohls uses inflated or fabricated “original” prices on its merchandise so that Kohls’ products-and Kohls’ “sale” prices-appear more attractive to consumers. (Docket #1 ¶¶ 2, 8, 20-28). Le describes this practice as a “misleading discount price comparison scheme, ” which is, according to Le, deceptive and thereby harms consumers. (See Docket #1 ¶ 5).

More specifically, Le alleges that Kohls engages in a company-wide, pervasive, and continuous campaign of falsely claiming that each of their products sells at far higher prices than by other merchants. (Docket #1 ¶ 27). He asserts that this practice in turn induces consumers to purchase merchandise at purportedly marked-down sale prices. (Docket #1 ¶¶ 23-29). Le thus claims the “item prices” or “original” prices advertised by Kohls do not reflect a price at which Kohls’ products are routinely, if ever, sold to retail customers. (Docket #1 ¶¶ 23-29). This concept was most aptly demonstrated by the plaintiff in a graph (see Table 1), which was prepared by Consumers’ Checkbook/Center for the Study of Services (“CSS”), an independent, nonprofit consumer organization based in Washington, D.C. (Docket #1 ¶ 35).[4] Quoting CSS, Le claims that graph proves the point that, “at Kohl’s, the sales often never end.” (Docket #1 ¶ 40) (internal citations omitted).

(IMAGE OMITTED)

Table 1: Comparison of Kohls’ Regular Prices and Offer Prices

According to Le, the issue with Kohls’ advertising scheme is that it misleads consumers into believing that Kohls’ prices are significantly lower than the prices regularly offered for those products-by Kohls itself or other merchants. (Docket #1 ¶¶ 20-27). Under this theory, Kohls’ marketing tactics are economically harmful because they deceive consumers to: (1) buy products that they would not have bought “but for” the illusory “sale”; or (2) pay more for products than they would have paid had they been fully informed of the actual “item price” for that merchandise. (Docket #1 ¶¶ 23-29).

This is, in fact, exactly what Le claims happened to him in March, April, May, and July of 2015 when he shopped at various Kohls stores located in California. (Docket#1 ¶¶ 42-47). Le claims that he “and the members of the [putative] Classes would not have purchased the [Kohls] merchandise…at all, or would not have paid as much for the merchandise were it not for the purported ‘savings’ adverted to by [Kohls].” (Docket #1 ¶ 50).

1.3Le’s Claims and Kohls’ Motion to Dismiss

On September 30, 2015, Le filed this putative class action on behalf of three potential classes. (Docket #1 ¶¶ 64-70, 78-126). He alleged statutory violations of:

1. The Wisconsin Deceptive Trade Practices Act, Wis.Stat. Ann. § 100.18 (“WDTPA”) (Docket #1 ¶¶ 64-70) on behalf of a nationwide class;
2. The California Unfair Competition Law, Cal. Bus. & Prof. Code § 17200, et seq. (“UCL”) (Docket #1 ¶¶ 93-117) on behalf of a California class;
3. The Consumers Legal Remedies Act, Cal. Civ. Code § 1750, et seq. (“CLRA”) (Docket #1 ¶¶ 118-126) on behalf of a California class; and
4. Forty consumer protection laws on behalf of a multi-state class of consumers (Docket #1 ¶¶ 78-92).

Le also brings a common law unjust enrichment claim on behalf of a nationwide class or, in the alternative, a California class. (Docket #1 ¶¶ 71-77). The plaintiff brings this unjust enrichment claim under Wisconsin law or, in the alternative, under California law. (Docket #1 ¶¶ 72, 73).

Kohls has moved to dismiss all of these claims pursuant to Federal Rules of Civil Procedure 12(b)(6) and 12(b)(1). (Docket #18). In support of its motion, Kohls argues that Le: (1) failed to adequately plead the necessary facts showing that he is entitled to restitution under the UCL and CLRA; (2) lacks Article III standing to sue for injunctive relief under the UCL and CLRA; (3) lacks Article III standing to sue under any state law other than California (where he lives and was allegedly injured by Kohls); (4) fails to state a claim under the WDTPA because Le “saw” the allegedly deceptive statements in California; (5) fails to state an unjust enrichment claim under Wisconsin law because he entered into express contracts with Kohls; and (6) fails to state an unjust enrichment claim under California law because unjust enrichment is not a cognizable cause of action in California. (See generally Docket #19). Le opposes all of these arguments. (Docket #24).

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 (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 (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).

Similarly, “[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 F.2d 573, 576 (7th Cir. 1987)).

3.ANALYSIS

Kohls argues that “each and every” one of Le’s purported claims for relief should be dismissed under Rule 12(b)(1) and/or Rule 12(b)(6). (See Docket #19 at 2). For the sake of clarity, the Court will discuss these issues on an argument-by-argument basis.

3.1Monetary Damages under the UCL and CLRA

On behalf of a class of California citizens, Le seeks restitution[5] under the UCL (Docket #1 ¶¶ 100, 108, 117) and CLRA (Docket #1 ¶¶ 124-25); see also Cal. Bus. & Prof. Code § 17200 (West); Cal. Civ. Code § 1770 (West). On the one hand, “[a] UCL action is an equitable action by means of which a plaintiff may recover money or property obtained from the plaintiff or persons represented by the plaintiff through unfair or unlawful business practices.” Cortez v. Purolator Air Filtration Products Co., 23 Cal.4th 163, 173 (2000). The UCL “covers a wide range of conduct, ” including “unlawful, unfair or fraudulent business act[s] or practice[s] and unfair, deceptive, untrue or misleading advertising.” See Cal. Bus. & Prof. Code § 17200 (West); see also Korea Supply Co. v. Lockheed Martin Corp., 29 Cal.4th 1134, 1142 (2013). Similarly, the CLRA proscribes “unfair methods of competition and unfair or deceptive acts or practices.” Cal. Civ. Code, § 1770(a) (West). This includes: (1) “[r]epresenting that goods or services have sponsorship, approval, characteristics, ingredients, uses, benefits, or quantities which they do not have”; (2)“[a]dvertising goods or services with intent not to sell them as advertised”; and (3) “[m]aking false or misleading statements of fact concerning reasons for, existence of, or amounts of price ...


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