March 3, 2016

Dismissal of Class Action Suit Against Whole Foods Highlights Strategy of Challenging Standing Early in Cases

Seller Beware: Consumer Protection Insights for Industry

On March 1, 2016, Judge Paul Engelmayer of the federal district court in New York dismissed a class action suit filed in June 2015 against Whole Foods. The court held that plaintiffs lacked a cognizable injury and therefore lacked Article III standing. The case, In re Whole Foods Market Group, Inc. Overcharging Litigation, No. 15 Civ. 5838 (S.D.N.Y.), was brought in the wake of last year's highly publicized investigation by the New York Department of Consumer Affairs ("DCA") concerning Whole Foods' alleged "systemic overcharging" for pre-packaged foods sold by weight at New York City locations. Plaintiffs, purporting to represent a class of purchasers who bought mislabeled foods, sought injunctive relief and damages under New York laws prohibiting deceptive trade practices and false advertising and under the doctrine of unjust enrichment.

The two named plaintiffs alleged they regularly purchased the types of pre-packaged products described in the DCA's press release, but did not identify any specific transactions in which they were overcharged. Instead, plaintiffs relied exclusively upon the DCA press release and generalized claims of purchasing foods with overstated weights to support their claims.

In dismissing plaintiffs' claims with prejudice, the court noted that the DCA press release fell "very far short of reporting an investigative finding of ubiquitous, systemic over-weighting" and provided no basis to infer "across-the board overcharging." The court found that plaintiffs' claims were "based only on probabilistic evidence of injury, devoid of any factual allegations particular to the plaintiff[s] and without a basis to plausibly infer that all covered products were implicated." Moreover, the court dismissed the lawsuit with prejudice. Because plaintiffs had conceded they did not weigh their food at the time of purchase and had long ago eaten the food, the court found that plaintiffs could not produce evidence to rehabilitate their claims.

The Whole Foods decision reinforces the importance of challenging a plaintiff's actual and particularized standing as early as possible as a defense strategy. A claim of injury asserted in broad and generalized terms may not pass muster in federal court in light of Article III standing requirements.

© Arnold & Porter Kaye Scholer LLP 2016 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.

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