Schottenstein v. Wakefern Food Corp.

Background

Alexis Schottenstein filed a putative class action concerning Wakefern Food Corp.’s alleged use of FaceFirst facial-recognition software at Fairway Market grocery stores. The complaint alleged that Wakefern used the technology to identify repeat shoplifters and organized retail-theft groups, and that it collected customers’ biometric information without adequately disclosing its practices.

The complaint asserted claims under New York General Business Law § 349, New York City Administrative Code § 22-1202(b), New York Civil Rights Law §§ 50–51, and for unjust enrichment. Wakefern removed the case from New York state court under the Class Action Fairness Act and moved under Federal Rule of Civil Procedure 12(b)(6) to dismiss for failure to state a legally sufficient claim. At this stage, the court accepted the complaint’s well-pleaded factual allegations as true and drew reasonable inferences for Schottenstein. The court also took judicial notice of the text of Wakefern’s entrance sign, which stated that the business collected, retained, converted, stored, or shared customers’ biometric identifier information.

New York Consumer-Protection Claim

Section 349 requires a plaintiff to allege consumer-oriented conduct that was materially misleading and caused injury. Schottenstein alleged that Wakefern failed to disclose its biometric-data practices and did not tell customers that it shared data with FaceFirst.

The court held that the complaint did not adequately allege a materially misleading omission. Schottenstein acknowledged that Wakefern disclosed its use of facial-recognition technology on signs at store entrances. The sign stated that Wakefern shared customers’ biometric identifier information. The court concluded that the complaint did not identify material information omitted from that disclosure or explain why identifying the particular third-party recipient would have been misleading or material to a reasonable consumer. The court therefore held that Schottenstein had not adequately alleged a Section 349 claim. It did not reach Wakefern’s alternative argument concerning injury.

New York City Biometrics Law Claim

Section 22-1202(b) of New York City’s Biometric Identifier Information Law prohibits selling, leasing, trading, sharing biometric identifier information in exchange for something of value, or otherwise profiting from the transaction of that information.

The court held that Wakefern’s alleged use of biometric data to identify potential shoplifters did not constitute profiting from the transaction under that provision. Relying on its earlier reasoning in Gross v. Madison Square Garden Entertainment Corp., the court distinguished between profiting from the biometric-data transaction itself and receiving a broader business benefit from using a service that involves biometric data. The alleged benefits—reducing theft, lowering loss-prevention costs, identifying customers, and keeping grocery costs down—did not amount to profiting from the transaction of biometric information. The court also concluded that Schottenstein’s interpretation would conflict with the law’s separate provision allowing commercial collection and sharing when customers receive clear and conspicuous notice. The court rejected reliance on decisions interpreting Illinois’s different biometric-privacy statute.

New York Civil Rights Law Claim

Schottenstein conceded that the Civil Rights Law claim was insufficient. The court therefore dismissed that claim.

Unjust-Enrichment Claim

The court held that the unjust-enrichment claim was preempted by New York’s Civil Rights Law. It explained that the Civil Rights Law provides the exclusive cause of action for claims based on unauthorized use of a person’s name, image, or personality, and that facial-recognition technology analyzes facial features to identify a person. Schottenstein’s decision to concede the Civil Rights Law claim did not change the law’s preemptive scope. The court therefore dismissed the unjust-enrichment claim.

Disposition

Judge Lewis A. Kaplan granted Wakefern’s motion to dismiss. The ruling was without prejudice to a motion for leave to amend filed no later than December 15, 2025. Any such motion had to include a clean proposed amended complaint, a redlined version showing changes, and a memorandum explaining why the proposed amendments would not be futile.