John v Whole Foods Market Group Inc., 858 F.3d 732 (2d Cir. June 2, 2017).

In this action, while vacating a district court’s order dismissing the plaintiff’s complaint, the Second Circuit found that when the defendant asserts a “facial” challenge to standing, the courts should continue to draw from the pleadings all reasonable inferences in the plaintiff’s favor and are to presume that general allegations embrace those specific facts that are necessary to support the claim.

The plaintiff brought a putative class action in the New York State court alleging that New York City grocery stores operated by the defendant systematically overstated the weights of pre-packaged food products and overcharged customers as a result.

The defendant removed the action to the federal court pursuant to CAFA. The district court granted the defendant’s motion to dismiss the plaintiff’s complaint for lack of Article III standing.  On appeal, the Second Circuit vacated the district court’s order.

The plaintiff argued that his complaint adequately and plausibly alleged that the defendant overcharged him at least once for pre-packaged cheese and cupcakes. In addition to the allegation that he made monthly purchases of the defendant’s pre-packaged cheese and cupcakes, the critical basis for the plaintiff’s claim that he was overcharged was the New York City Department of Consumer Affairs (the “DCA’s”) press release announcement that 89 percent of the defendant’s pre-packaged products tested by the DCA were mislabeled, and the press release’s conclusion that the mislabeling was “systematic” and “routine.”

The district court granted the defendant’s motion to dismiss holding that the plaintiff lacked Article III standing because he failed to plausibly allege that he was personally overcharged by the defendant for a specific purchase. The Second Circuit noted that each element of standing must be supported with the manner and degree of evidence required at the successive stages of the litigation, and at the pleading stage, general factual allegations of injury resulting from the defendant’s conduct may suffice.  The Second Circuit found that because the defendant mounted only a “facial” challenge to the plaintiff’s allegations of standing, the plaintiff bears no evidentiary burden at the pleading stage.

The district court dismissed the plaintiff’s suit on the ground that he failed to satisfy the injury-in-fact requirement. The Second Circuit, however, ruled that it had repeatedly described that requirement as “a low threshold,” which helps to ensure that the plaintiff has a personal stake in the outcome of the controversy.  The Second Circuit found that at the pleading stage, the plaintiff need not prove the accuracy of the DCA’s findings or the rigor of its methodology; he need only generally allege facts that, accepted as true, make his alleged injury plausible.  The Second Circuit opined that although the plaintiff might ultimately be unable to show he was injured under the more demanding standards applicable at summary judgment or trial, at that time the plaintiff had plausibly alleged a nontrivial economic injury sufficient to support standing.

The Second Circuit thus ruled that the plaintiff’s complaint satisfied the “low threshold” required to plead injury in fact and, accordingly, vacated the district court’s order.

-Melissa M. Grand