Ary v. Target Corporation

Background

Shejuana Ary filed a proposed class action on behalf of purchasers of Target’s over-the-counter “up & up lidocaine pain-relief patches.” She alleged that the packaging’s statements that the patches provide “pain relief” using a “maximum strength” dose of lidocaine for “up to 8 hours” are misleading. According to the complaint, the patches can peel off within hours or minutes after proper application and do not contain or deliver the maximum amount of lidocaine available with or without a prescription.

Ary asserted claims under the federal Magnuson-Moss Warranty Act, California’s Consumer Legal Remedies Act, Unfair Competition Law, and False Advertising Law, as well as a claim for unjust enrichment. Target moved to dismiss the complaint and to strike allegations referring to certain publications and a citizen petition. The court also granted Target’s request to take judicial notice of the complete patch package because the complaint referred to it, it was central to the claims, and its authenticity was not disputed.

Claims Based on the Labeling

The court denied Target’s argument that Ary had not plausibly alleged deceptive labeling under the California Unfair Competition Law, Consumer Legal Remedies Act, and False Advertising Law. Those claims use the “reasonable consumer” test, which asks whether a significant portion of reasonable consumers could probably be misled.

Ary alleged that “maximum strength” could lead consumers to believe that the patches contained and delivered the maximum amount of lidocaine available and were at least as effective as other over-the-counter or prescription-strength patches. She also alleged that “pain relief” for “up to 8 hours” could lead consumers to believe that the patches would stay attached and provide pain relief throughout that period. The court concluded that these allegations were sufficient at the motion-to-dismiss stage and that Target’s arguments raised factual disputes that could not be resolved at that stage.

Because the court found that Ary plausibly alleged misleading affirmative statements, it also found that her related theory that Target failed to disclose material information was adequately pleaded. The court therefore allowed the labeling-based theories under the Unfair Competition Law, Consumer Legal Remedies Act, and False Advertising Law to proceed, subject to the separate rulings on particular remedies and claims.

Standing and Equitable Relief

The court found that Ary adequately alleged standing to seek an injunction. She alleged that she still wanted to buy the patches but could not make informed purchasing decisions while Target continued using the challenged labeling. The court also found that she adequately alleged economic injury for her False Advertising Law and Unfair Competition Law claims by alleging that she paid a price premium because of the alleged misrepresentations. The court rejected Target’s argument that Ary had to request a refund before having standing.

The court distinguished between legal remedies, such as damages, and equitable remedies, such as restitution, disgorgement, and injunctions. It concluded that Ary had not shown that she lacked an adequate legal remedy for past harm. Accordingly, her requests for restitution and disgorgement under the Unfair Competition Law and False Advertising Law, and her unjust-enrichment claim, were dismissed without leave to amend and without prejudice to refiling in state court.

The court reached a different conclusion regarding future harm. It found that Ary’s allegations were sufficient at this stage to support injunctive relief under the False Advertising Law and Consumer Legal Remedies Act. Those injunctive-relief claims could proceed. The court also granted Ary leave to amend to seek damages under the Consumer Legal Remedies Act.

Magnuson-Moss Warranty Act

The court dismissed Ary’s Magnuson-Moss Warranty Act claim. For a class action under that statute, the court explained, at least 100 named plaintiffs are required for federal jurisdiction. Ary was the only named plaintiff. The court also noted that Ary had admitted she did not assert an independent state-law warranty claim and had not addressed Target’s argument that she failed to meet the jurisdictional requirements for an individual Magnuson-Moss claim.

The Magnuson-Moss claim was dismissed with leave to amend. The court stated that Ary could not renew the claim if she could not meet the statute’s jurisdictional requirements consistent with counsel’s obligations under Rule 11.

Punitive Damages

Target sought dismissal of Ary’s punitive-damages request. The court explained that California law requires allegations supporting a plausible inference of oppression, fraud, or malice committed by an officer, director, or managing agent. The court rejected Ary’s argument that this state-law requirement conflicted with federal pleading rules.

The request for punitive damages was dismissed with leave to amend. Any amended complaint seeking punitive damages had to include allegations satisfying the California statutory requirements.

Motion to Strike and Disposition

Target also moved to strike allegations about publications and a citizen petition, arguing that they were immaterial and irrelevant because they did not concern Target’s product. The court denied Target’s motion to strike, finding that the materials could provide background or context, that their relevance was disputed, and that Target had not shown prejudice or explained how striking the allegations would streamline the case.

Judge Haywood S. Gilliam, Jr. granted in part and denied in part Target’s motion to dismiss. The court dismissed the restitution and disgorgement requests under the Unfair Competition Law and False Advertising Law, and the unjust-enrichment claim, without leave to amend and without prejudice to refiling in state court. The injunctive-relief claim under the False Advertising Law and Consumer Legal Remedies Act could proceed; Ary received leave to amend to seek Consumer Legal Remedies Act damages; and the Magnuson-Moss claim and punitive-damages request were dismissed with leave to amend. Ary could file an amended complaint within 21 days of the order.