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Hudock v. LG Electronics U.S.A., Inc.

United States District Court, D. Minnesota

March 27, 2017

BENJAMIN HUDOCK and BREANN HUDOCK, individually and on behalf of all others similarly situated, Plaintiffs,

          David M. Cialkowski, ZIMMERMAN REED, PLLP, Daniel C. Hedlund, GUSTAFSON GLUEK PLLC, and Luke Hudock, HUDOCK LAW GROUP, S.C., for plaintiffs.

          John C. Mitchell, HOGAN LOVELLS U.S. LLP, and Phoebe A. Wilkinson, HOGAN LOVELLS U.S. LLP, for defendants.


          JOHN R. TUNHEIM Chief Judge

         This case arises from Plaintiffs Benjamin and Breann Hudock's (“Plaintiffs”) purchase of a television purporting to have a 120Hz refresh rate. Plaintiffs allege the television, in fact, has a 60Hz refresh rate. As stated in the Complaint, Plaintiffs filed this purported class action against Defendant LG Electronics U.S.A., Inc. (LG) and Defendants Best Buy Co., Inc. (Best Buy Co.), Best Buy Stores, L.P. (Best Buy LP), and, LLC ( (collectively, Best Buy). Plaintiffs allege violations of Minnesota and New Jersey consumer fraud statutes, as well as a number of common law claims. LG and Best Buy filed motions to dismiss the Complaint pursuant to Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure. For the reasons set forth below, the Court will grant in part and deny in part Defendants' motions to dismiss.


         Plaintiffs, married Wisconsin residents, purchased a television manufactured by LG on “” (Compl. ¶¶ 6-7, 34, 37, May 9, 2015, Docket No. 1.) Plaintiffs assert that, prior to buying the television, Plaintiffs decided to purchase a television with a minimum of a 120Hz refresh rate.[1] (Id. ¶ 33.) Plaintiffs contend they spent weeks shopping for the television and, on November 29, 2013, Breann Hudock “viewed advertisements and specifications” for the television they purchased on “” (Id. ¶¶ 33-34, 37.) Plaintiffs allege the “advertisements and specifications” indicated the television had a 120Hz refresh rate. (Id. ¶¶ 35-36.)

         According to Plaintiffs, after conferring with Benjamin Hudock and describing the specifications, Breann Hudock purchased the television from the website “relying on the 120Hz advertised refresh rate.” (Id. ¶ 37.) After purchasing the television, Plaintiffs allege they “noticed that the television's images were not as clear as expected, ” but did not learn until later that the television only had a 60Hz refresh rate. (Id. ¶ 38; see also Decl. of J. Christopher Mitchell (“Mitchell Decl.”), Ex. 1, July 12, 2016, Docket No. 26.)

         On April 29, 2016, two and a half years after Plaintiffs purchased the television, Plaintiffs notified LG and Best Buy that the television's refresh rate did not conform to LG's and Best Buy's representations. (Id. ¶ 88.) On May 9, 2016, Plaintiffs filed this purported class action against LG and Best Buy, alleging eight claims: (1) violation of Minnesota's Consumer Fraud Act (MCFA), Minn. Stat. § 325F.68, et seq. (Count I); (2) violation of Minnesota's Uniform Deceptive Trade Practices Act (MDTPA), Minn. Stat. § 325D.43, et seq. (Count II); (3) violation of Minnesota's Unlawful Trade Practices Act (MUTA), Minn. Stat. § 325D.13 (Count III); (4) violation of New Jersey's Consumer Fraud Act (NJCFA), N.J. Stat. Ann. § 54:8-1, et seq. (Count IV); (5) unjust enrichment (Count V); (6) breach of express warranty (Count VI); (7) breach of implied warranty (Count VII); and (8) breach of contract (Count VIII).[2] (Compl. ¶¶ 51-102.) LG and Best Buy filed motions to dismiss the Complaint pursuant to Rules 12(b)(1) and 12(b)(6).


         I. STANDING

         Defendants first argue Plaintiffs lack standing to bring their claims under various theories. Normally, the Court would address Defendants' standing arguments first, before the merits, because “standing is a jurisdictional prerequisite that must be resolved before reaching the merits of a suit.” Turkish Coal. of Am., Inc. v. Bruininks, 678 F.3d 617, 621 (8th Cir. 2012) (quoting City of Clarkson Valley v. Mineta, 495 F.3d 567, 569 (8th Cir. 2007)). But in the class action context, the Supreme Court's decisions in Amchem Prods., Inc. v. Windsor, 521 U.S. 591 (1997), and Ortiz v. Fibreboard Corp., 527 U.S. 815 (1999), “‘make clear that there are situations in which a court may defer' the standing question ‘to later in the case.'” Roth v. Life Time Fitness, Inc., No. 15-3270, 2016 WL 3911875, at *4 (D. Minn. July 14, 2016) (quoting In re Target Corp. Customer Data Sec. Breach Litig., 66 F.Supp.3d 1154, 1160 (D. Minn. 2014)).[3] Although neither created a blanket exception, Amchem and Ortiz stand for the proposition that standing questions may be postponed when class certification is “logically antecedent” to standing. See Roth, 2016 WL 3911875, at *4; In re Anthem, Inc. Data Breach Litig., 162 F.Supp.3d 953, 970-71 (N.D. Cal. Feb. 14, 2016); In re Carrier IQ, Inc., 78 F.Supp.3d 1051, 1068-70 (N.D. Cal. 2015).

         Here, the Court will exercise its discretion to defer consideration of the standing issues until after class certification. There is no question that Plaintiffs have standing to sue Defendants under, at the very minimum, Wisconsin law. (Mem. of Law in Supp. of LG's Mot. to Dismiss at 6, July 12, 2016, Docket No. 20 (admitting Plaintiffs have standing under Wisconsin law).) The Court finds Defendants' standing arguments, therefore, do not address whether Plaintiffs have individual standing. Instead, class certification is “logically antecedent” to the standing issues raised by Defendants; specifically, the Court can determine during the class certification process whether Plaintiffs' can bring claims under the laws of states in which no currently-named plaintiff resides or whether Plaintiffs' injuries are sufficiently similar to those of the proposed class to permit claims for a broader range of LG products. Blessing v. Sirius XM Radio Inc., 756 F.Supp.2d 445, 451 (S.D.N.Y. 2010); see also Fed. R. Civ. P. 23(a). If standing issues remain after class certification, Defendants are free to make a motion at that time. See Anwar v. Fairfield Greenwich Ltd., 728 F.Supp.2d 372, 402 (S.D.N.Y. 2010).


         A. Standard of Review

         In reviewing a Rule 12(b)(6) motion, the Court views a complaint in “the light most favorable to the nonmoving party.” Longaker v. Boston Sci. Corp., 872 F.Supp.2d 816, 819 (D. Minn. 2012). The Court considers all facts alleged in the complaint as true to determine whether the complaint states a “‘claim to relief that is plausible on its face.'” Braden v. Wal-Mart Stores, Inc., 588 F.3d 585, 594 (8th Cir. 2009) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). “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.” Iqbal, 556 U.S. at 678. “Where a complaint pleads facts that are ‘merely consistent with' a defendant's liability, it ‘stops short of the line between possibility and plausibility[, ]'” and therefore must be dismissed. Id. (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). Although the Court accepts the complaint's factual allegations as true, it is “not bound to accept as true a legal conclusion couched as a factual allegation.” Twombly, 550 U.S. at 555 (quoting Papasan v. Allain, 478 U.S. 265, 286 (1986)). Therefore, to survive a motion to dismiss, a complaint must provide more than “‘labels and conclusions' or ‘a formulaic recitation of the elements of a cause of action.'” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 555).

         B. Claims Against Best Buy Co., Best Buy LP, and

         In order to evaluate Defendants' motions to dismiss, the Court must first determine how to construe the Complaint's allegations regarding Best Buy in “the light most favorable” to Plaintiffs. Longaker, 872 F.Supp.2d at 819. While Plaintiffs contend construing Best Buy Co., Best Buy LP, and collectively as “Best Buy” is “in the light most favorable” to Plaintiffs, the Court disagrees. Instead, the Court construes Plaintiffs' allegations regarding “” and the “Best Buy website” to refer to the entity The Court's construction preserves the most claims in light of the Eighth Circuit's holding that “attribut[ing] fraudulent representations and conduct to multiple defendants generally in a group pleading fashion” falls short of the Fed.R.Civ.P. 9(b) standard. Streambend Props. II LLC v. Ivy Tower Minneapolis, LLC, 781 F.3d 1003, 1013 (8th Cir. 2015).

         In light of this construction, the Court will dismiss without prejudice all claims against Best Buy Co. and Best Buy LP. For the purpose of the motion to dismiss, only Plaintiffs' claims, and not those of any potential class members, are considered. Browe v. Evenflo Co., Inc., No. 14-4690, 2015 WL 3915868, at *4 n.1 (D. Minn. June 25, 2015). The Complaint does not set forth any relationship between Plaintiffs' purchase of the television and Best Buy Co. or Best Buy LP. Plaintiffs specifically alleged all representations came from and, based on those representations, Plaintiffs purchased the television from (Compl. ¶¶ 32-38.) Plaintiffs failed to make any allegations that would impute liability for's actions onto Best Buy Co. and Best Buy LP.

         Plaintiffs respond that the Court may attach alter ego liability for Plaintiffs' claims against Best Buy Co. and Best Buy LP because Plaintiffs define the three entities as “Best Buy.”[4] But there is a “presumption of separateness” between a parent and a subsidiary corporation. Ass'n of Mill & Elevator Mutual Ins. Co. v. Barzen Int'l, Inc., 553 N.W.2d 446, 449 (Minn.Ct.App. 1996). “Piercing the corporate veil is an equitable remedy that may be applied in order to avoid an injustice.” Equity Trust Co. Custodian ex rel. Eisenmenger IRA v. Cole, 766 N.W.2d 334, 339 (Minn.Ct.App. 2009). “A court may pierce the corporate veil to hold a party liable for the acts of a corporate entity if the entity . . . is the alter ego of the entity.” Id. Courts assess a number of factors to determine whether piercing the corporate veil is appropriate. Barton v. Moore, 558 N.W.2d 746, 749 (Minn. 1997).

         Here, Plaintiffs do not allege any of the facts necessary to plead alter ego liability. All Plaintiffs allege regarding the relationship between the entities is the use of “(collectively, ‘Best Buy')” at the beginning of the Complaint. (Compl. at 1.) Other than this reference, the Complaint is silent regarding the interaction between the three entities. Plaintiffs, thus, failed to meet their burden of pleading alter ego liability because Plaintiffs did “not plead[] any facts directly addressing . . . the operative test.” See N. Cent. EMS Corp. v. Bound Tree Med., LLC, No. 15-2793, 2016 WL 544472, at *5 (D. Minn. Feb. 10, 2016).

         For this reason, the Court will grant Defendants' motion to dismiss all claims against Best Buy Co. and Best Buy LP without prejudice.

         C. Particularity

         Defendants assert Plaintiffs failed to plead their fraud-based claims with the particularity required by Rule 9(b).[5] Rule 9(b) provides that “[i]n alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake.” The rule requires a plaintiff to “identify who, what, where, when, and how.” Streambend Properties II, 781 F.3d at 1013 (quoting United States ex rel. Roop v. Hypoguard USA, Inc., 559 F.3d 818, 822 (8th Cir. 2009)). It must “specify[] the time, place, and content of the defendant's false representations, as well as the details of the defendant's fraudulent acts, including when the acts occurred, who engaged in them, and what was obtained as a result.” Id. (quoting Hypoguard USA, 559 F.3d at 822). The goal of Rule 9(b), like Rule 8, “is fair notice, ” City of Wyoming v. Procter & Gamble Co., No. 15-2101, 2016 WL 5496321, at *6 (D. Minn. Sept. 28, 2016), and, therefore, “[w]here multiple defendants are asked to respond to allegations of fraud, the complaint should inform each defendant of the nature of his [or her] alleged participation in the fraud, ” Streambend Properties II, 781 F.3d at 1013.

         LG argues Plaintiffs failed to allege the fraud-based claims with particularity because they failed to identify any misrepresentations made by LG, the date LG made any misrepresentation, and the causal effect of any LG misrepresentation. further argues Plaintiffs failed to allege any conduct that would amount to fraud because Plaintiffs did not immediately recognize any problem with the refresh rate.

         To the contrary, Plaintiffs alleged the “who, what, where, when, why, and how” of both LG's and's conduct. Plaintiffs alleged: on November 29, 2013 Plaintiffs viewed advertisements and specifications for the television on (Compl. ¶ 34); the advertisements and specifications stated the television had a 120Hz refresh rate (id. ¶¶ 35-36); “adopted LG's misrepresentations” about the 120Hz refresh rate (id. ¶¶ 23, 28); and LG “joined” together to “deceiv[e] consumers” - including Plaintiffs - “by advertising a fraudulent 120Hz refresh rate” (id. ¶ 28); Plaintiffs purchased the television based on LG and's representations (id. ¶ 37); Plaintiffs received the television and, arguably, LG advertised the 120Hz refresh rate on its packaging (id. ΒΆΒΆ 24, 38); and Plaintiffs were ...

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