Second Circuit holds that allegations of “systematic” underweighing plead injury in fact for specific individual

John v. Whole Foods
Market Gp., Inc., 858 F.3d 732 (2d. Cir. 2017)
John filed a
putative class action under GBL §§ 349-350 alleging that New York City Whole
Foods grocery stores systematically overstated the weights of pre-packaged food
products and overcharged customers as a result. The court of appeals reversed
the district court’s holding of lack of Article III standing on the pleadings.
John alleged that he
“routinely shopped” for two years at two Whole Foods stores in Manhattan and
made “regular[ ] purchase[s]” of pre-packaged products, including “pre-packaged
cheese and cupcakes approximately one or two times per month.” The complaint didn’t
identify a specific food purchase as to which Whole Foods overcharged John, but
described pervasive overcharging of pre-packaged food throughout Whole Foods’
stores in New York City. The complaint a June 2015 press release of the New
York City Department of Consumer Affairs announcing preliminary findings that
Whole Foods’ New York City stores “routinely overstated the weights of its
pre-packaged products—including meats, dairy and baked goods”:
DCA tested packages of 80 different types of pre-packaged products and
found all of the products had packages with mislabeled weights. Additionally,
89 percent of the packages tested did not meet the federal standard for the
maximum amount that an individual package can deviate from the actual weight,
which is set by the U.S. Department of Commerce. The overcharges ranged from
$0.80 for a package of pecan panko to $14.84 for a package of coconut shrimp.
The DCA’s findings,
the press release continued, “point to a systematic problem with how products
… are weighed and labeled” and “suggest[ ] that individual packages are
routinely not weighed or are inaccurately weighed, resulting in overcharges for
consumers.” The investigation took place during the same period as John’s
purchases and focused on the eight Whole Foods stores in NYC, including the two
stores he patronized.  Whole Foods confirmed
that cheese and cupcakes were among the pre-packaged products that the DCA
alleged were mislabeled.
Because Whole Foods brought
only a facial challenge to John’s allegations of standing, John had no
evidentiary burden at the pleading stage. The district court thought that John
didn’t plead injury in fact, which consists of “an invasion of a legally
protected interest that is concrete and particularized and actual or imminent,
not conjectural or hypothetical.”
The court of appeals
disagreed. It was undisputed that overpaying for a product results in a
financial loss constituting a particularized and concrete injury in fact. But
the critical basis for John’s claim that he was overcharged was the DCA’s press
release announcement that 89 percent of Whole Foods’ pre-packaged products tested
by the DCA were mislabeled, and the press release’s conclusion that the
mislabeling was “systematic” and “routine[ ].”  The district court didn’t think that was
enough, but it failed to draw all reasonable inferences in John’s favor.  It wanted “an investigative finding of
ubiquitous, systematic over-weighting at Whole Foods’ New York City stores,”
“invariable incidents of this deceptive labeling practice,” and
“across-the-board overcharging so as to embrace, other than by conjecture, the
cheese and cupcakes … that John … occasionally bought in 2014 and 2015.” It
also wanted a description of the DCA’s methodology.

But the DCA’s press
release asserted that the mislabeling was “systematic” and “routine[ ],” and a
facial attack on the pleadings wasn’t the right place to test the DCA’s
sampling methods.  His alleged facts made
his alleged injury plausible.  The
district court was concerned over evidentiary obstacles on the merits, but
targeted discovery might be able to address those. 

from Blogger

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