Tuesday, February 19, 2013

FitFlop motion to dismiss flops

Rosales v. FitFlop USA, LLC, 882 F. Supp. 2d 1168 (S.D. Cal. 2012)

Defendant makes sandals and claims in ads and on package labels that FitFlops provide health benefits including improved posture, increased muscle activation and toning, and reduced joint strain as the result of FitFlop’s patent pending “Microwobbleboard Technology” midsole.  As a result, the sandals allegedly command premium prices of up to $240/pair.  The named plaintiffs bought them, allegedly in reliance on the advertising claims.  Plaintiffs alleged that the health benefit claims were deceptive.  They brought UCL and CLRA claims.

The court rejected FitFlop’s arguments that plaintiffs suffered no injury. They sufficiently alleged that FitFlop’s claims allowed it to charge premium prices and that, had the product been labeled accurately, plaintiffs wouldn’t have been willing to pay as much for the sandals or wouldn’t have bought them at all. Thus, they alleged economic injury, giving them UCL standing. 

FitFlop argued that it wasn’t responsible for the statements in the advertising, so plaintiffs lacked standing for failure to plead causation (further showing how standing has become a garbage can into which all arguments are stuffed for purposes of a motion to dismiss).  But “causation does not fail simply because there are several links in the causal chain, so long as they are linked in a plausible manner.”  Plaintiffs alleged that FitFlop provided and authorized ads for third-party retailers such as Victoria’s Secret, and that they relied on these ads.  This was not so attenuated a chain as to be implausible.

Then, FitFlop argued that plaintiffs failed to plead the UCL claim with the requisite particularity.  Plaintiffs responded that UCL claims aren’t fraud claims.  This depends on whether a plaintiff pleads fraudulent conduct, which they did here.  Fortunately, they also pled with particularity: they alleged the existence of an extensive ad campaign along with product labels and hangtags; the complaint included reproductions of the ads and attached substantially similar ads containing the alleged misrepresentations.  They identified a relevant time period, which was sufficiently specific in the context of a long-term ad campaign.  They detailed the language on which they relied and pled that they wouldn’t have bought the products if they’d known the truth.

Separately, FitFlop argued that the UCL claim wasn’t plausible, but that was wrong.  Plaintiffs identified several studies supporting the conclusion that the shoes don’t have any beneficial effect on exercise intensity, improved muscle strength, or toning.  To the degree that FitFlop was arguing that the studies didn’t apply to FitFlop sandals in particular, that was premature for a motion to dismiss. (Not all courts think this way—some courts think that studies on stability shoes, or single ingredient for which health claims are made, are insufficient for a particular shoe brand or a product that contains that ingredient and makes claims about that ingredient; I think this court has the better approach.)

For the same reasons, the CLRA claim survived.  And plaintiffs provided 30 days of notice before amending their complaint to add a damages claim, so that complied with the notice provision of the CLRA.  This also sustained the breach of express warranty claim, which can be based on ads or packaging as long as a plaintiff was actually exposed to the ads.

FitFlop moved to strike the class allegations, arguing that individual issues overwhelmingly predominate and that the proposed class lacks standing and ascertainability. This was premature and should await a motion for class certification; a motion to strike shouldn’t be allowed to circumvent Rule 23.

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