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

United States District Court, D. Minnesota

January 30, 2018

BENJAMIN HUDOCK, BREANN HUDOCK, and GERALD DELOSS, individually and on behalf of all others similarly situated, Plaintiffs,
v.
LG ELECTRONICS U.S.A., INC., BEST BUY CO., INC., BEST BUY STORES, L.P., and BESTBUY.COM, LLC, Defendants.

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

          Phoebe Anne Wilkinson, HOGAN LOVELLS U.S. LLP, and Peter H. Walsh, HOGAN LOVELLS U.S. LLP, for defendants.

          MEMORANDUM OPINION AND ORDER DENYING DEFENDANTS' PARTIAL MOTIONS TO DISMISS

          JOHN R. TUNHEIM CHIEF JUDGE

         This case arises from Plaintiffs Benjamin and Breann Hudock's and Gerald DeLoss's respective purchases of televisions purporting to have a 120Hz refresh rate. Plaintiffs allege that the televisions, in fact, have a 60Hz refresh rate. Plaintiffs filed this purported class action against LG Electronics U.S.A., Inc. (“LG”) and Best Buy Co., Inc., Best Buy Stores, L.P., and BestBuy.com, LLC (collectively “Best Buy”). Plaintiffs allege violations of Minnesota and New Jersey consumer-fraud statutes, as well as a number of common-law claims.

         In July 2016, LG and Best Buy filed motions to dismiss the Complaint, in its entirety, pursuant to Fed.R.Civ.P. 12(b)(1) and 12(b)(6). On March 27, 2017, the Court granted Defendants' motion in part. Relevant here, the Court dismissed without prejudice the Hudocks' claim under the New Jersey Consumer Fraud Act (“NJCFA”). The Complaint was amended. Defendants renew their motion to dismiss the NJCFA claim, and LG also moves to dismiss all the claims of newly added Plaintiff Gerald DeLoss. For the reasons set forth below, the Court will deny Defendants' renewed motion to dismiss.

         BACKGROUND [1]

         In deciding the Defendants' first motion to dismiss, the Court dismissed the Hudocks' NJCFA claim without prejudice because nowhere in the original Complaint did they “allege: (1) the amount . . . paid for the television; or (2) the cost of a comparable LG television with a 60Hz refresh rate. In the absence of this information, the Court “ha[d] ‘no basis for valuing the products [the Hudocks] received as opposed to the products they were promised.'” Hudock v. LG Elecs. U.S.A., Inc., No. 16-1220, 2017 WL 1157098, at *7 (D. Minn. Mar. 27, 2017) (quoting Mladenov v. Wegmans Food Mkts., Inc., 124 F.Supp.3d 360, 376 (D.N.J. 2015)) (second alteration in original).

         In the Amended Complaint, the Hudocks state that they paid $499.99 for their LG television, and the newly added Plaintiff, Gerald DeLoss, states that he paid $699.99 for his. (Am. Compl. ¶¶ 73, 77, May 5, 2017, Docket No. 60.) Plaintiffs also include in the Amended Complaint allegations related to the cost of a comparable LG television with a 60Hz refresh rate. They allege that “higher refresh rates are directly, demonstrably and mathematically linked to higher prices”; that “televisions with higher refresh rates have more objective value and command a price premium”; that “[t]elevisions with higher refresh rate capabilities consistently command a quantifiable, 15-20% higher Manufacturer's Suggested Retail Price (“MSRP”)”; that Defendants are in possession of the relevant MSRP data, sales data, and manufacturing-cost data; that “an expert can perform a hedonic regression analysis to isolate the exact value associated with . . . the refresh rate”; and that “an expert can conduct a conjoint analysis, involving a scientific survey measuring consumer preferences, which can isolate and quantify the premium attributable to refresh rates in retail pricing.” (Id. ¶¶ 4, 62-67.) “Plaintiffs approximate their losses at 15-20% of their purchase price, ” and they allege that they “will be able to provide a detailed quantification of damages both for the class and for themselves during the appropriate stage of litigation.” (Id. ¶ 67.) Plaintiffs do not allege the specific retail price of comparable televisions with 120Hz refresh rates available for purchase at the time that Plaintiffs purchased their televisions.

         The Amended Complaint also adds a second Plaintiff: Gerald DeLoss, an Illinois resident, who purchased a 55” LG 55UF6450 television - a different model from the one that the Hudocks purchased. (Id. ¶¶ 9, 74-78.) DeLoss alleges that he too was misled into buying a television that he thought had a 120Hz refresh rate, but that actually had a 60Hz refresh rate. (Id.)

         Defendants ask the Court to dismiss Plaintiffs' NJCFA claim with prejudice under Rule 12(b)(6) for failure to state a claim, arguing that the Plaintiffs have failed to plead an ascertainable loss under the loss-in-value theory. Defendants also ask the Court to dismiss all claims of newly added Plaintiff DeLoss under Rules 8(a) and 9(b). Because Plaintiffs plausibly plead a method of ascertaining damages using expert testimony and analysis, and because DeLoss's claims comply with Rules 8(a) and 9(b), the Court will deny Defendants' motions.

         DISCUSSION

         I. 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. Bos. 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, 557 (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).

         II. ...


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