Schottenstein v. Wakefern Food Corp.

Background

Alexis Schottenstein brought this putative class action against Wakefern Food Corp. The complaint alleged that Wakefern used FaceFirst facial-recognition software at Fairway Market grocery stores to identify repeat shoplifters and organized retail theft rings. Schottenstein alleged that this conduct violated New York State General Business Law § 349, New York City’s Biometric Identifier Information Law, New York Civil Rights Law §§ 50–51, and New York unjust-enrichment law.

The complaint alleged that Wakefern failed to disclose its biometric-data practices and did not adequately tell customers about its use of the technology or sharing of biometric information. It also acknowledged that Wakefern used signs at store entrances and statements to the media to disclose its use of facial-recognition technology. The signs stated that the business collected, retained, converted, stored, or shared customers’ biometric identifier information.

Wakefern removed the case from New York state court under the Class Action Fairness Act and federal diversity jurisdiction. It moved under Federal Rule of Civil Procedure 12(b)(6), which permits dismissal when a complaint does not allege enough facts to support a legally plausible claim.

New York Consumer-Protection Claim

A claim under New York General Business Law § 349 requires a consumer-oriented practice, a material deception or misleading act, and injury caused by that deception. Wakefern argued that Schottenstein had not adequately alleged materially misleading conduct.

The court agreed. It noted that Schottenstein did not allege that Wakefern completely failed to disclose its use of facial recognition. The entrance signs disclosed that Wakefern collected and shared biometric information. Although Schottenstein argued that Wakefern should have identified FaceFirst as the recipient, she did not explain why failing to identify that specific entity was misleading or material to a reasonable consumer. The court therefore held that the complaint did not adequately state a § 349 claim.

The court did not decide Wakefern’s alternative argument that the complaint failed to allege a legally recognizable injury under § 349.

New York City Biometrics Claim

New York City’s Biometric Identifier Information Law prohibits selling, leasing, trading, sharing in exchange for anything of value, or otherwise profiting from the transaction of biometric identifier information. The issue was whether Wakefern “otherwise profit[ed]” when it collected biometric information and shared it with FaceFirst to identify potential shoplifters.

Relying on its earlier reasoning in a related biometric-information case, the court held that the law does not prohibit every commercially useful benefit from biometric-data sharing. In the court’s view, a company does not necessarily profit from the transaction of biometric information merely because it buys a service from a vendor and receives business benefits from that service.

The court rejected Schottenstein’s arguments that Wakefern profited by reducing theft, lowering loss-prevention costs, identifying customers, or keeping grocery costs down. It also concluded that the statute’s requirement for a clear and conspicuous notice sign regulates commercial biometric-data use rather than prohibiting every beneficial use. The court found decisions interpreting Illinois’s different biometric statute unpersuasive.

New York Civil Rights and Unjust-Enrichment Claims

Schottenstein conceded that her New York Civil Rights Law claim was insufficient, and the court dismissed that claim.

The court also dismissed the unjust-enrichment claim. It held that the New York Civil Rights Law provides the exclusive cause of action for claims based on the unauthorized use of a person’s name, image, or likeness, so the unjust-enrichment claim was preempted—meaning displaced by that statute. The court stated that facial-recognition technology analyzes facial features to identify a person and therefore falls within the type of conduct covered by that rule.

Disposition

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