Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—S.D. N.Y.: Consumers lacked standing to bring product mislabeling suit against Whole Foods, (Mar 4, 2016)

By Michael Menzhuber, J.D., LL.M.

In a consolidated class action, claims that Whole Foods Market Group, Inc. mislabeled pre-packaged foods at its New York City stores, in violation of the New York Deceptive Acts and Practices Law, were dismissed by the federal district court in New York City for lack of standing (In re Whole Foods Market Group, Inc. Overcharging Litigation, March 1, 2016, Engelmayer, P.).

In June 2015, the New York City Department of Consumer Affairs (DCA) issued a press release, stating that it had uncovered “systemic overcharging” for pre-packaged foods sold at Whole Foods stores in New York City. According to the press release, 89 percent of the 80 different types of pre-packaged products that were 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.

Shortly after DCA’s press release, Sean John and Joseph Bassolino filed separate purported class action suits against Whole Foods, based on the labeling and charging practices described in the press release. Specifically, John alleged that he had regularly purchased pre-packaged cheese and cupcakes from certain Whole Food stores in New York City, while Bassolino alleged that he had regularly purchased pre-packaged chicken fingers from a particular Whole Food store in New York City.

The plaintiffs sought money damages and injunctive relief under: (1) New York General Business Law §349, which prohibits deceptive trade practices; and (2) New York General Business Law §350, which prohibits false advertising. Whole Foods responded by filing a motion to dismiss the complaint for lack of standing and for failure to state a claim.

Article III standing. The court noted that an essential element of standing is a “concrete and particularized” harm to a “legally protected interest.” In support of the plaintiffs’ claim that they suffered such harm by being overcharged, their complaint alleged the types of pre-packaged foods that they purchased at the Whole Food stores in New York City and that over-weighting was common at these stores. However, the court found that the complaint did not allege that any particular purchase that they made was affected by this practice.

The plaintiffs’ complain also alleged that the results of the DCA’s investigation, as documented in their press release, made their claims of overcharging as to the food that they bought sufficiently “concrete.” However, the court found that the press release failed to make the factual allegations necessary to enable the complaint to state a claim because it left unresolved a number of important methodical questions about DCA’s sampling that would be necessary to answer before a fair inference of systematic overcharging, extending to the plaintiffs’ purchases, could arise. It also did not report, even within the limited perimeters of the DCA’s investigation, a finding of across-the board overweighting, leaving open the possibility that the plaintiffs purchased products that were among the 11 percent that were tested and found to be in compliance with federal standards.

The case is No. 1:15-cv-06046-PAE.

Attorneys: Annie Erin Causey (Napoli Bern Ripka Shkolnik LLP) and Brittany Sloane Weiner (Imbesi Law PC) for Joseph Bassolino. David Sellinger (Greenberg Traurig, LLP) for Whole Foods Market Group Inc.

Companies: Whole Foods Market Group, Inc.

Cases: ConsumerProtection StateUnfairTradePractices NewYorkNews