In Re: McCormick & Company, Inc., Pepper Products Marketing and Sales Practices Litigation , 217 F. Supp. 3d 124 ( 2016 )


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  •                                UNITED STATES DISTRICT COURT
    FOR THE DISTRICT OF COLUMBIA
    IN RE: MCCORMICK & COMPANY,
    INC., PEPPER PRODUCTS MARKETING
    AND SALES PRACTICES LITIGATION
    _____________________________________                       MDL Docket No. 2665
    Misc. No. 15-1825 (ESH)
    This Document Relates To:
    ALL CONSUMER CASES
    MEMORANDUM OPINION
    Plaintiffs, who are retail purchasers of black pepper supplied by defendant McCormick &
    Co., claim that they were deceived about the amount of pepper in the containers and paid inflated
    prices for them as a result of a conspiracy between McCormick and its retailers, including
    defendant Wal-Mart. Plaintiffs claim that defendants violated Section 1 of the Sherman Act, 
    15 U.S.C. § 1
     (Count I), violated consumer protection statutes in twenty-five different states (Count
    II), and were unjustly enriched under the laws of all fifty states and the District of Columbia
    (Count III). Defendants have moved to dismiss all three counts. The Court grants their motions
    with respect to Count I, but it denies them without prejudice with respect to Counts II and III.
    Plaintiffs originally filed separate class actions in federal courts in several states, but the
    Judicial Panel on Multi-District Litigation consolidated them before this Court, along with a suit
    by McCormick’s competitor Watkins, which claims that Watkins lost sales as a result of the
    same deception that the consumer plaintiffs allege. See In re McCormick & Co., Inc., Pepper
    Prods. Mktg. & Sales Practices Litig., Misc. No. 15-1825, 
    2016 WL 6078250
     (D.D.C. Oct. 17,
    2016) (dismissing Watkins’ claim of unfair competition but not its claims under the Lanham Act
    and state unfair trade practices statutes). After consolidation of the cases before this Court, the
    consumer plaintiffs filed a consolidated complaint on March 2, 2016. (See Consol. Am. Class
    Action Compl., ECF No. 34 (“Compl.”).) According to the complaint, McCormick and its
    retailers agreed to implement a price increase by decreasing the quantity in both the branded
    McCormick pepper containers and the store-branded containers which were also supplied by
    McCormick. Furthermore, plaintiffs claim that defendants misled them about the reduction in
    quantity by keeping the non-transparent containers the same size. Plaintiffs sue on behalf of
    “[a]ll persons in the United States who purchased McCormick-brand black pepper, Walmart’s
    Great Value-brand black pepper, Publix-brand black pepper and/or McCormick-filled private-
    label black pepper between January 1, 2015, and the present, for their personal or household
    use.” (Id. at ¶ 64.)
    Defendants have moved to dismiss. (See McCormick’s Mot. Dismiss, ECF No. 38; Wal-
    Mart’s Mot. Dismiss, ECF No. 40.) First, they argue that this Court should dismiss the antitrust
    claim (Count I) because plaintiffs have not adequately alleged (1) an anticompetitive agreement;
    (2) antitrust injury; or (3) relevant markets. (See McCormick’s Mem. at 3-13, ECF No. 38-1;
    Wal-Mart’s Mem., ECF No. 40-1.) Second, they argue that named plaintiffs have standing to
    raise state-law claims (Counts II and III) only under their own states’ laws, so this Court should
    dismiss all class claims under other states’ laws. (See McCormick’s Mem. at 14-18.) Finally,
    they argue that this Court should dismiss all of the state-law claims for class treatment because of
    (1) variation among states’ laws; and (2) the need for individualized factual inquiries. (See 
    id. at 18-38
    .) Plaintiffs filed their opposition on April 27, 2016. (See Pls.’ Opp., ECF No. 43.)
    2
    Defendants filed their replies on May 18, 2016. (See McCormick’s Reply, ECF No. 47; Wal-
    Mart’s Reply, ECF No. 49.) This Court held a hearing on October 25, 2016.
    For the reasons stated below, defendants’ motions to dismiss consumer plaintiffs’
    complaint are granted in part and denied without prejudice in part.
    FACTUAL ALLEGATIONS
    According to plaintiffs, “McCormick controls as much as 70% of the black pepper retail
    market.” (Compl. at ¶ 58.) McCormick is the “clear market leader in the sale of spices
    (including black pepper).” (Id. at ¶ 1.) In addition to supplying retailers with black pepper under
    the McCormick brand, it “supplies about half of the store-brand spices sold annually in the
    United States,” including Wal-Mart’s Great Value brand. (Id. at ¶¶ 3, 48.) Plaintiffs allege that
    for decades prior to 2015, McCormick sold ground black pepper in “non-transparent metal tins”
    whose “sizes have become the industry norm.” (Id. at ¶ 35.) The tin measuring 3 1/16” tall
    contained 2 ounces of pepper, the tin measuring 3 10/16” tall contained 4 ounces, and the tin
    measuring 4 10/16” tall contained 8 ounces. (Id.) McCormick also sold a small peppercorn
    grinder containing 1.24 ounces and a large grinder containing 3.1 ounces. (Id. at ¶¶ 44, 47.)
    Wal-Mart’s Great Value tins are “of a similar size and shape” as McCormick’s and, until 2015,
    contained the same quantities of pepper that the McCormick-branded tins did. (Id. at ¶¶ 48, 51-
    52.)
    Plaintiffs allege that “[s]ince 2010 the cost of raw black pepper has increased by
    approximately 500%,” with a particularly steep increase in 2014. (Id. at ¶ 31.) “In 2015, unable
    to meet its cost savings targets without a substantial reduction in costs or increase in prices,
    McCormick began shipping millions of pepper tins and grinders to retail stores containing 25%
    and 19% less black pepper, respectively, than the containers were designed to hold.” (Id. at
    3
    ¶ 34.) The containers “note the [new] weight in small print” on the front, but they are the “exact
    same size” as before. (Id. at ¶¶ 38-40, 45.) In addition, “McCormick and the Retailers agreed
    that McCormick would reduce the amount of ground black pepper contained in the McCormick-
    supplied, store-branded tins, even though the actual size of the store-branded tins has, at all
    relevant times, remained the same.” (Id. at ¶ 50.)
    Plaintiffs further allege that “McCormick and the Retailers agreed to, and did, maintain
    the same retail prices (as if the black pepper tins and grinders were full) for the now slack-filled
    black pepper containers.” (Id. at ¶ 62.) There are no allegations about specific communications
    or documents evidencing such an agreement, but plaintiffs allege that “McCormick and each of
    the Retailers had regular opportunities to meet, exchange information, and agree with one
    another as to the fill of the pepper containers.” (Id. at ¶ 59.) Furthermore, “McCormick and the
    Retailers had a motive to maintain their profit margins” and “McCormick was in a position to act
    as the ‘hub’ in a ‘hub-and-spoke’ conspiracy.” (Id. at ¶ 61.) As a result of this “conspiracy in
    restraint of trade to artificially fix, raise, maintain, and stabilize prices for pepper,” plaintiffs
    claim that they paid “supra-competitive, artificially inflated prices for pepper.” (Id. at ¶¶ 74, 76.)
    According to plaintiffs, they were also harmed because the non-transparent tins “falsely
    appear[ed] to contain the same amount of ground black pepper” as they had before. (Id. at ¶¶ 38-
    40.) The named plaintiffs allege that they “reasonably expected that the tin was full of black
    pepper” and “did not know that in fact the tin contained just 75% of the pepper that the tin was
    designed to hold.” (Id. at ¶¶ 9-23.) They “would not have paid for Defendants’ black pepper
    had they known that the containers were under-filled.” (Id. at ¶ 90.) Thus, plaintiffs assert that
    defendants engaged in “unfair and deceptive acts.” (Id. at ¶ 87.)
    4
    ANALYSIS
    I.      ANTITRUST CLAIM
    Section 1 of the Sherman Act bars contracts and conspiracies in restraint of trade. 
    15 U.S.C. § 1
    . Defendants argue that plaintiffs have failed to state a claim under Section 1 because
    they have not plausibly alleged an agreement in restraint of trade, an antitrust injury, or relevant
    product and geographic markets. Because the Court finds that defendants are correct about the
    first two arguments, it will dismiss Count I without reaching the third argument.
    A. Agreement in Restraint of Trade
    Plaintiffs have alleged and briefed two alternative agreements that they contend violated
    Section 1 of the Sherman Act. First, they allege that McCormick agreed with Wal-Mart and
    other retailers to reduce the weight of pepper in store-branded containers supplied by
    McCormick at the same time that McCormick made the same reduction in weight for containers
    that bore its own brand name. (Compl. at ¶¶ 4, 5, 50; see Pls.’ Opp. at 11.) Second, they allege
    that McCormick and its retailers not only agreed on the weight of pepper but also agreed on the
    retail price. (Compl. at ¶ 62; see Pls.’ Opp. at 9-11.) At the hearing on the motion to dismiss,
    plaintiffs stated that they were claiming an agreement only on quantity of pepper. (Mot. Hr’g Tr.
    at 69, 93, Oct. 25, 2016 (“Tr.”) (COURT: “You are arguing there is an explicit agreement on
    price . . . or are you saying something about quantity then gets translated into cost?” MS.
    FEGAN: “So, Your Honor, the answer is the latter.”).) However, the Court will address the
    adequacy of pleading for both alternative agreements because plaintiffs’ pleadings and some of
    their arguments at the hearing seemed to suggest an agreement on price.
    5
    1. Agreement on Price
    To state a claim for violation of Section 1 of the Sherman Act, plaintiffs’ allegations
    “must be placed in a context that raises a suggestion of a preceding agreement, not merely …
    conduct that could just as well be independent action.” Bell Atlantic Corp. v. Twombly, 
    550 U.S. 544
    , 557 (2007). The Supreme Court has explained that there is a “need at the pleading stage for
    allegations plausibly suggesting (not merely consistent with) agreement” so that courts can avoid
    sending parties into expensive discovery without a sufficient likelihood that the plaintiffs can
    support their claim. 
    Id. at 557-59
    . In Twombly, plaintiffs claimed that local telephone carriers
    must have entered into an illegal agreement not to compete in each other’s territory, but the
    Supreme Court found that “a natural explanation for the noncompetition alleged is that the
    former Government-sanctioned monopolists were sitting tight, expecting their neighbors to do
    the same thing.” 
    Id. at 568
    . Given this “obvious alternative explanation,” the Court concluded
    that there was no plausible suggestion of conspiracy and therefore the complaint should be
    dismissed. 
    Id. at 567-70
    .
    Following Twombly, courts dismiss Section 1 complaints when there is an independent
    business justification for the observed conduct and no basis for rejecting it as the explanation for
    the conduct. For example, in a case involving parallel reductions in the commissions that
    airlines paid to travel agents, the Sixth Circuit concluded that “each defendant had a reasonable,
    independent economic interest in adopting a competitor’s commission cut” and therefore there
    was no reason to infer agreement. In re Travel Agent Comm’n Antitrust Litig., 
    583 F.3d 896
    ,
    908-09 (6th Cir. 2009). The Second Circuit dismissed a parallel pricing complaint because it
    found that the similar contract terms could reflect similar bargaining power and commercial
    goals. In re Elevator Antitrust Litig., 
    502 F.3d 47
    , 51 (2d Cir. 2007). In the Northern District of
    6
    Illinois, a judge explained why an industry-wide increase in text-messaging prices did not permit
    an inference of agreement: “The far more likely inference from Sprint-Nextel’s price ‘leadership’
    is that it raised per-message prices to push more subscribers to purchase bundled calling and
    texting plans. . . . The defendant companies had self-interested reasons to follow Sprint-Nextel’s
    lead . . . .” In re Text Messaging Antitrust Litig., No. 08 C 7082, 
    2009 WL 5066652
    , at *11
    (N.D. Ill. Dec. 10, 2009). The common theme in all of these cases is that if the most natural
    explanation for defendants’ conduct is not collusion, merely alleging that the conduct was
    collusive does not make it plausible.
    To make their allegations of conspiracy plausible, plaintiffs must allege plus-factors, such
    as details about the making of the agreement, reasons a supposed business justification seems
    pretextual, or motivations for defendants to make the agreement. In this district, a judge refused
    to dismiss a price-fixing complaint because plaintiffs had identified the meetings at which the
    agreement was reached and alleged that defendants had used hurricanes as a pretext to withhold
    supply and raise prices, when in fact the natural gas resource base had not decreased. City of
    Moundridge v. Exxon Mobile Corp., 
    250 F.R.D. 1
    , 4-6 (D.D.C. 2008). The judge handling the
    Apple e-books litigation denied defendants’ motion to dismiss the complaint, which alleged a
    conspiracy between Apple and publishers to raise the price of e-books, because the complaint
    described specific conversations from which it was fair to infer an agreement and because it
    alleged motives for both Apple and the publishers to join the conspiracy. In re Elec. Books
    Antitrust Litig., 
    859 F. Supp. 2d 671
    , 682-83, 690 (S.D.N.Y. 2012). The fact that defendants had
    opportunities for communication contributes to making an alleged agreement plausible, but
    feasibility is not enough on its own to support a reasonable inference of agreement. In re Text
    Messaging, 
    2009 WL 5066652
    , at *7. Therefore, in the absence of specific allegations about the
    7
    making of the agreement, an alleged agreement is not plausible without allegations that the
    defendants had a motive to make the agreement and would not have had independent business
    justifications for their conduct.
    Plaintiffs’ complaint fails to plausibly suggest an agreement between McCormick and
    Wal-Mart or any other retailer to fix retail prices. In the language of Twombly, there is an
    “obvious alternative explanation” for the continuity in retail prices that does not require any
    agreement. 
    550 U.S. at 567
    . That “natural explanation,” 
    id. at 568
    , is that McCormick
    maintained its wholesale prices when it reduced the fill level of pepper to offset the increased
    cost of raw pepper, and retailers in turn maintained their retail prices to preserve their usual
    allowance for operating costs and their traditional profit margin. Retailers could well have
    expected that most consumers would be insensitive to the precise amount of pepper in a
    container and therefore willing to pay the same retail prices as before. Retailers could also have
    expected their competitors to reach the same conclusions, and therefore, they did not worry that
    they needed to reduce their traditional profit margins in order to avoid being undercut by their
    competitors. Cf. VI Phillip E. Areeda & Herbert Hovenkamp, Antitrust Law: An Analysis of
    Antitrust Principles and Their Application ¶ 1434c (3d ed. 2010) (explaining that a significant
    rise in raw material costs is an independent explanation, other than an agreement, for an
    oligopolist’s price increase).
    Plaintiffs have offered no basis for rejecting this logical and lawful explanation.
    Although they make a conclusory allegation of agreement, they do not allege a single fact that
    plausibly suggests agreement. First, while they allege that McCormick and its retailers would
    have had an opportunity to make an agreement on prices at the same time that they
    communicated about their supply agreements, mere feasibility is insufficient to make agreement
    8
    plausible. Plaintiffs do not allege any specific communications from which an agreement can be
    inferred. Second, they allege no facts to suggest that defendants would have been acting against
    their independent economic self-interest if they had chosen the same prices as charged before
    without having an agreement about them. Indeed, plaintiffs conceded at the hearing that each
    retailer would have had an independent economic motive to maintain the retail price if
    McCormick reduced the amount of pepper without reducing the wholesale price. (Tr. at 86.)
    Finally, plaintiffs fail to allege any motivations for McCormick and the retailers to make
    an agreement about retail prices. Without an agreement, the retailers could each choose to
    maintain their traditional prices, because plaintiffs have not alleged any reason that retailers
    would have had to fear being undercut by competitors. Meanwhile, there is no apparent
    incentive for McCormick to insist on maintaining retail prices. As the preeminent antitrust
    treatise explains, “manufacturers ordinarily maximize their profits through intense competition
    among dealers.” VIII Areeda ¶ 1601. Although there are circumstances in which a manufacturer
    can benefit from restricting retail prices (and often do so without hurting consumers), see 
    id.,
    plaintiffs have not offered any reason why this would be one of those circumstances. 1
    In sum, the complaint fails to plausibly suggest an agreement on prices because there is
    an obvious lawful explanation for the observed prices, no allegations of specific communications
    that suggest agreement, no allegations that defendants were acting against their independent
    economic self-interest, and no alleged motivations for defendants to make an agreement on price.
    1
    For example, one reason a manufacturer might want to set retail prices is to encourage dealers to provide services
    without worrying that consumers will take advantage of the services while buying the product at a lower price from
    another dealer who does not provide such services. VIII Areeda ¶ 1601e.
    9
    2. Agreement on Quantity
    a. There is no restraint of trade.
    Only agreements “in restraint of trade” can violate Section 1 of the Sherman Act. 
    15 U.S.C. § 1
    . Agreements between suppliers and customers are ubiquitous, for they are necessary
    to do business, so courts “need to be clear on which ones should be of concern to antitrust law.”
    VII Areeda ¶ 1437a, b. In particular, an “ordinary sales contract fixes the transaction price, but it
    does not restrain trade.” 
    Id.
     at ¶ 1437a. For example, car dealers who had contracts with
    General Motors once tried to argue that GM had engaged in illegal price-fixing because the
    contracts set prices at which GM would compensate its dealers for providing warranty repair
    parts and services. 49er Chevrolet, Inc. v. Gen. Motors Corp., 
    803 F.2d 1463
    , 1467-68 (9th Cir.
    1986). The Ninth Circuit explained that the Sherman Act is not concerned with the agreement
    between a buyer and a seller on the price for a particular item or service. 
    Id.
     (“Ordinary sales
    contracts do not unlawfully restrain trade.”)
    The agreements between suppliers and buyers that are of concern to antitrust law are
    generally categorized as either interbrand restrictions or distribution restraints. VIII Areeda
    ¶ 1600a; I ABA Section of Antitrust Law, Antitrust Law Developments 136 (7th ed. 2012). An
    interbrand restriction is a restriction by a manufacturer that restrains its dealers from patronizing
    other manufacturers. VIII Areeda ¶ 1600a. A distribution restraint restricts a dealer from
    competing with other dealers selling the same product, such as by restricting the dealer’s
    freedom to set prices, sell in certain geographic areas, or sell to certain customers. 
    Id.
    The agreement between McCormick and its retailers about the quantity of pepper in the
    tins that McCormick was selling to retailers was an ordinary sales contract, not a restraint of
    trade. Retailers could not obtain pepper for their store brands from McCormick or any other
    10
    supplier without an agreement on the amount of pepper that would be in the supplied containers.
    When a manufacturer specifies the characteristics of the product it is willing to sell, it neither
    restrains its dealer from patronizing other dealers (which would be an interbrand restriction), nor
    does it restrict the dealer from competing with other dealers of the same product (which would
    be a distribution restraint). Thus, this case does not involve any agreement that implicates
    antitrust concerns.
    b. The alleged agreement is not illegal per se.
    Even when an agreement restrains trade, which is not the case here, plaintiffs cannot
    survive a motion to dismiss without plausibly alleging that the agreement unreasonably restrains
    trade. See Nw. Wholesale Stationers, Inc. v. Pacific Stationery & Printing Co., 
    472 U.S. 284
    ,
    289 (1985) (Whether an agreement in restraint of trade “violates § 1 of the Sherman Act depends
    on whether it is adjudged an unreasonable restraint.”). The Supreme Court labels categories of
    restraints as illegal per se when they would always or almost always tend to restrict competition,
    and therefore, it is not worthwhile to analyze the effects in a particular instance. I Antitrust Law
    Developments 54-55. Horizontal agreements — agreements among competitors — to fix prices
    or allocate markets are deemed illegal per se. Id. at 54-61. In contrast, some other horizontal
    agreements and almost all vertical agreements — agreements between firms at different levels in
    the chain of distribution — must be analyzed under the rule of reason, which requires the court to
    look at the restraint’s likely effect on competition. Id. at 136-37. Even vertical agreements
    setting dealers’ resale prices (known as “resale price maintenance”) can sometimes have
    procompetitive rather than anticompetitive effects. Leegin Creative Leather Prods., Inc. v.
    PSKS, Inc., 
    551 U.S. 877
    , 889-90, 907 (2007).
    11
    There are two independent reasons that the alleged agreement on quantity is not illegal
    per se: (1) it is not a horizontal agreement; and (2) it is an agreement about standardizing
    products rather than an agreement on price. Beginning with the first point, plaintiffs have made
    two arguments for labeling the alleged agreement as horizontal. First, plaintiffs contend that
    they have alleged a hub-and-spoke conspiracy. (Pls.’ Opp. at 15.) A hub-and-spoke conspiracy
    is one in which “an entity at one level of the market structure, the ‘hub,’ coordinates an
    agreement among competitors at a different level, the ‘spokes.’” United States v. Apple Inc., 
    791 F.3d 290
    , 314 (2d Cir. 2015). Thus, the conspiracy involves a horizontal agreement among the
    spokes, in addition to vertical agreements between the hub and each spoke. 
    Id.
     The Second
    Circuit has concluded that when there is express collusion among competitors, and a hub uses
    vertical agreements to organize that horizontal conspiracy, the hub is also subject to per se
    liability. 
    Id. at 316, 324-25
    . Vertical arrangements do not give rise to per se liability, however,
    if there is no evidence of a horizontal agreement among the spokes. Am. Steel Erectors, Inc. v.
    Local Union No. 7, Int’l Assoc. of Bridge, Structural, Ornamental & Reinforcing Iron Workers,
    
    815 F.3d 43
    , 64-66 (1st Cir. 2016); PepsiCo, Inc. v. Coca-Cola Co., 
    315 F.3d 101
    , 109-10 (2d
    Cir. 2002).
    Here plaintiffs allege that “McCormick was in a position to act as the ‘hub’ in a ‘hub-
    and-spoke’ conspiracy,” but their allegations focus on the relationship and communication
    between McCormick and each retailer. (See Compl. at ¶¶ 5, 57-62 (“McCormick also agreed
    with its retail customers . . . .”; “There is substantial evidence showing that McCormick agreed
    with the Retailers . . . .”; “McCormick and each of the Retailers had regular opportunities to meet
    . . . .”; “[T]he Retailers agreed with and permitted McCormick to roll out the scheme . . . .
    McCormick and the Retailers agreed to, and did, maintain the same retail prices . . . .”).) There
    12
    is no explicit allegation that the retailers made an agreement with each other. If there were such
    an allegation, plaintiffs would also need to allege supporting facts. Plaintiffs have not done this.
    In fact, plaintiffs do not even name the retailers who allegedly made agreements, other than Wal-
    Mart and Publix. (See Compl. at ¶¶ 5, 48.) Therefore, the alleged agreement on quantity cannot
    be deemed illegal per se as a hub-and-spoke conspiracy.
    Next plaintiffs argue that McCormick’s alleged agreement with retailers is horizontal
    because “McCormick sells pepper products that directly compete with the store-branded pepper
    products.” (Pls.’ Opp. at 15.) Plaintiffs offer no precedent for this novel claim that when a
    manufacturer supplies both its own branded product and generic products, agreements between
    the manufacturer and the owner of the generic brand are horizontal and therefore illegal per se.
    Rather, many courts have concluded that rule-of-reason analysis is necessary for any new factual
    situations that are not readily identifiable as being equivalent to conduct that has been analyzed
    in the past. I Antitrust Law Developments 57. In a similar vein, the Areeda treatise recommends
    defaulting to an analysis under the rule of reason when alleged conduct seems to have some
    characteristics of both horizontal and vertical restraints. See VIII Areeda ¶ 1605a (discussing
    dual distribution situations, where a manufacturer sells both to independent dealers and directly
    to customers, so that in some ways the manufacturer-as-dealer competes with rival dealers); see
    also Bedi v. Hewlett-Packard Co., Civ. No. 07-12318, 
    2008 U.S. Dist. LEXIS 102672
    , at *3-*4
    (D. Mass Nov. 17, 2008) (Where Staples sold both HP cartridges supplied by HP and Staples
    brand cartridges obtained from a different supplier, “although Staples and HP brand cartridges
    directly competed with one another, the relationship between HP and Staples is primarily a
    vertical one.”). Our case presents both a new type of conduct for which there is no prior analysis
    and a relationship that arguably has both horizontal and vertical aspects. Therefore, the Court
    13
    cannot conclude that the agreement on quantity is obviously anticompetitive. 2 Rather, it should
    be analyzed under the rule of reason.
    Even if the agreement on fill level were characterized as horizontal, it would not qualify
    for per se treatment. Horizontal agreements on price or a price element, such as financing, are
    illegal per se, but horizontal agreements to standardize a product are generally analyzed under
    the rule of reason. Compare XII Areeda ¶ 2022a (price and price elements) with XIII Areeda
    ¶ 2136 (standard setting). Plaintiffs argue that even without an agreement on price, the “slack-
    fill, in aggregate, results in a reduction of output, which would have the same effect of raising
    prices on consumers in violation of Section 1.” (Pls.’ Opp. at 11.) Admittedly, a horizontal
    agreement among producers to limit their output is equated with a price-fixing agreement
    because an artificial restriction of the total supply of a product will drive up the price of that
    product until demand matches the reduced supply. See, e.g., Gen. Leaseways, Inc. v. Nat’l Truck
    Leasing Ass’n, 
    744 F.2d 588
    , 594 (7th Cir. 1984) (“Consumers will pay more when supply is
    scarcer . . . .”); City of Moundridge v. Exxon Mobil Corp., 
    471 F. Supp. 2d 20
    , 40 (D.D.C. 2007).
    However, McCormick’s agreement with retailers to fill individual containers with less pepper
    did not restrict the total supply of pepper, and therefore, the output-restriction cases are irrelevant
    to this case. Even assuming arguendo that a horizontal agreement existed, any alleged
    2
    The single case that plaintiffs cite in support of their argument for horizontal classification is of no help. The case
    is Am. Motor Inns, Inc. v. Holiday Inns, Inc., 
    521 F.2d 1230
     (3d Cir. 1975). (See Pls.’ Opp. at 15 n.62.) Holiday Inn
    licensed some independent franchisees but also owned some of the franchisees, leading the Third Circuit to conclude
    that “since HI, in one of its capacities, was dealing on the same market level as its franchisees, its contracts that, in
    effect, foreclosed such franchisees from operating either Holiday Inns or non-Holiday Inns in cities where HI
    operated an inn, except with HI’s permission, constitute market allocation agreements among competitors” and
    therefore are illegal per se. Am. Motor Inns, 
    521 F.2d at 1254
    . This case is inapposite because it is equivalent to a
    manufacturer owning some of its dealers, not to a manufacturer supplying an independent dealer with both a
    branded and a generic product. Furthermore, the Areeda treatise explains that the court was wrong to characterize
    the agreement as illegal per se, because “[t]he legitimate reasons a manufacturer may have for limiting intrabrand
    competition among dealers are no less applicable when it owns one or more of the dealerships.” VIII Areeda ¶
    1605c.
    14
    agreement on quantity concerned not price or output but product standardization and thus must
    be analyzed under the rule of reason.
    c. Plaintiffs have not satisfied the requirements of the rule of reason.
    With limited exceptions not applicable here, analysis under the rule of reason requires a
    plaintiff to define a relevant market, show that the defendants have market power in that market,
    and demonstrate that the restraint is likely to have anticompetitive effects — that is, “to impair
    competition by creating, increasing, or maintaining that market power or by facilitating its
    exercise, or by otherwise harming consumers.” I Antitrust Law Developments 70-73. A
    demonstration of market power alone is not sufficient; plaintiffs must also show that the
    challenged practice is likely to harm competition. See, e.g., K.M.B. Warehouse Distribs. v.
    Walker Mfg. Co., 
    61 F.3d 123
    , 129 (2d Cir. 1995); General Leaseways, 
    744 F.2d at 596
    .
    Because anticompetitive effect is an essential element of a claim under the rule of reason,
    plaintiffs must plausibly allege it in their complaint. See Twombly, 
    550 U.S. at 555
     (“Factual
    allegations must be enough to raise a right to relief above the speculative level . . . .); see, e.g.,
    Spanish Broad. Sys. of Fla., Inc. v. Clear Channel Commc’ns, Inc., 
    376 F.3d 1065
    , 1071-74
    (11th Cir. 2004) (requiring “specific allegations linking market power to harm to competition”).
    Conclusory allegations of supracompetitive prices are not sufficient. See Jacobs v. Tempur-
    Pedic Int’l, Inc., 
    626 F.3d 1327
    , 1339-40 (11th Cir. 2010) (dismissing complaint that made
    conclusory allegations of supracompetitive prices and elimination of price competition without
    alleging facts about what the competitive price should be or how the agreement harmed
    competition); PSKS, Inc. v. Leegin Creative Leather Prods., 
    615 F.3d 412
    , 419-20 (5th Cir.
    2010) (dismissing complaint that alleged that consumers had to pay artificially high prices for
    Brighton products without explaining why consumers would not buy from competitors instead,
    15
    alleged elimination of competition for purchase of Brighton products while ignoring the potential
    benefits for competition between Brighton and other products, and did not allege that retailers
    had driven the agreement for the sake of their own profit.)
    Plaintiffs have failed to allege potential or actual anticompetitive effects. They allege
    that “[p]rices for pepper sold by McCormick and its co-conspirators have been fixed, raised,
    maintained, and stabilized at artificially high, non-competitive levels” and “[p]rice competition
    in the sale of pepper has been restrained.” (Compl. at ¶ 76.) However, there are no allegations
    about how an agreement on the quantity of pepper in containers that McCormick supplies to
    Wal-Mart would lead to artificially high prices for those containers.
    Moreover, plaintiffs have been unable to offer in their pleadings or at the hearing any
    satisfactory explanation for how an agreement on quantity would harm competition. Plaintiffs
    have repeatedly insisted that this agreement is an output restriction, but, as explained above, that
    argument fails. At the hearing, plaintiffs responded that even if the total supply of pepper is not
    reduced, “the reduction of the amount of pepper in the can effectively raises the price per ounce
    of the pepper in that can.” (Tr. at 69.) This argument ignores the fact that if there is no
    agreement on retail price, decreasing the amount of pepper in the can does not automatically
    increase the price per ounce. Retailers are free to choose their prices. If the retail price per
    ounce did increase, as alleged, it suggests that the increased price was a competitive price given
    wholesale prices and consumer demand. As the Court has already explained, it is not surprising
    that the retail price would rise due to an increase in raw pepper costs.
    At the hearing plaintiffs also claimed that a wholesale price increase would leave Wal-
    Mart free to choose whether to pass the price increase on to consumers, but this agreement was
    anticompetitive because “Wal-Mart and McCormick came together to agree on . . . the action
    16
    they would take to affect consumers.” (Tr. at 115.) Again, plaintiffs ignore the fact that an
    agreement on quantity does not restrict what retailers can charge consumers. If retailers want to
    charge the same price per ounce as they did before, they can do that. If an increase in the
    wholesale price per ounce drives retailers to increase the retail price per ounce, the relevant
    inquiry is whether the wholesale price was supracompetitive, but there is no such claim here.
    In their final attempt to portray the agreement on quantity as anticompetitive, plaintiffs
    claim that “this case is not the first of its kind” because the Federal Trade Commission and
    consumers have previously challenged an agreement between two gas companies to reduce the
    amount of propane in their tanks. (Pls.’ Opp. at 14.) Each of the gas companies had proposed to
    sell the reduced amount of propane to Wal-Mart without reducing the price, and when Wal-Mart
    objected, the two companies agreed with each other that they would not relent on the reduction
    and thereby would force Wal-Mart to accept the reduced fill. In re Ferrellgas Partners, L.P.,
    
    159 F.T.C. 1
    , 3 (Compl. at ¶¶ 4-7). The FTC entered into a consent order with the companies.
    
    Id. at 18-40
    . The court dismissed the corresponding consumer class action without reaching the
    merits. Order, In re Pre-Filled Propane Tank Antitrust Litig., MDL No. 2567, Master Case No.
    14-02567-MD (W.D. Mo. Jul. 2, 2015), ECF No. 162; Order, In re Pre-Filled Propane Tank
    Antitrust Litig., MDL No. 2567, Master Case No. 14-02567-MD (W.D. Mo. Jan. 13, 2016), ECF
    No. 229.
    Ferrellgas does not demonstrate the unreasonableness of the agreement alleged in this
    case. The FTC filed its complaint under Section 5 of the Federal Trade Commission Act, 
    15 U.S.C. § 45
    , rather than Section 1 of the Sherman Act. In re Ferrellgas, 159 F.T.C. at 2. The
    consent orders did not constitute an admission of any violation by the companies and did not
    contain any findings of law. Id. at 18, 29. The commissioners expressed significant
    17
    disagreement about whether and why the challenged conduct was anticompetitive. 3 Id. at 45-59.
    Most importantly, the facts were quite different. Ferrellgas concerned a horizontal agreement
    between competitors, whereas McCormick’s relationship to Wal-Mart and other retailers is
    primarily vertical. Even if that relationship has some horizontal features because consumers
    choose between McCormick-branded and store-branded pepper, it is not equivalent to a
    relationship that is clearly horizontal. Furthermore, the result of the collusion in Ferrellgas was
    that Wal-Mart accepted a price increase that it had refused to accept before the collusion.
    Nothing like that happened in our case. Given these important differences, plaintiffs cannot
    claim an anticompetitive agreement by relying on Ferrellgas. (See Pls.’ Opp. at 14.)
    In sum, the alleged agreement on quantity is nothing more than an ordinary sales contract
    describing the product to be sold, which does not implicate antitrust concerns. Alternatively, it is
    certainly not illegal per se, and plaintiffs have failed to offer any facts or argument plausibly
    suggesting that the agreement is anticompetitive. Since plaintiffs have not made any plausible
    allegations of an agreement that unreasonably restrains trade, the Court must dismiss Count I.
    B. Antitrust Injury
    Private plaintiffs claiming damages for an antitrust violation must also allege “antitrust
    injury,” which is “injury of the type the antitrust laws were intended to prevent and that flows
    from that which makes defendants’ acts unlawful.” Brunswick Corp. v. Pueblo Bowl-O-Mat,
    Inc., 
    429 U.S. 477
    , 489 (1977). Plaintiffs cannot recover damages unless their injury “stems
    from a competition-reducing aspect or effect of the defendant’s behavior.” Atl. Richfield Co. v.
    USA Petroleum Co., 
    495 U.S. 328
    , 344 (1990).
    3
    Note that the F.T.C. reporter erroneously labels the statement of Commissioner Joshua D. Wright as a Dissenting
    Statement, when the text shows that it is in fact a Concurring Statement. See id. at 54. In total, three commissioners
    voted for the consent order and one commissioner voted against it.
    18
    Here, the alleged antitrust injury is “receiving less pepper in a pepper tin or grinder and
    thus effectively paying higher prices for their pepper purchases than they would have paid in the
    absence of those [antitrust] violations.” (Compl. at ¶ 77.) Since plaintiffs have not plausibly
    alleged that the increased price per ounce of pepper was a result of anticompetitive conduct,
    rather than simply reflecting the increasing global cost of raw pepper, the higher prices that
    plaintiffs paid do not constitute an antitrust injury. If plaintiffs paid higher prices for pepper
    because McCormick’s packaging misled them about the quantity and they would otherwise have
    chosen lower-priced pepper of another brand, their injury is not an antitrust injury. See
    Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters, 
    459 U.S. 519
    ,
    526-27 (1983) (“common-law fraud or deceit” is “not subject to review under the federal
    antitrust laws”); E. R.R. Presidents Conference v. Noerr Motor Freight, Inc., 
    365 U.S. 127
    , 145
    (1961) (“deception, reprehensible as it is, can be of no consequence so far as the Sherman Act is
    concerned”). The lack of antitrust injury is an independent basis for dismissing Count I.
    II.    CONSUMER PROTECTION AND UNJUST ENRICHMENT CLAIMS
    Plaintiffs have claimed violations of the consumer protection statutes of twenty-five
    states, as well as unjust enrichment under the laws of all fifty states and the District of Columbia.
    (Compl. at ¶¶ 89, 94-97.) Defendants argue that the Court should dismiss all of these class
    claims because legal and factual variations among individuals and state laws bar class treatment.
    In the alternative, defendants argue that this Court should dismiss claims under the laws of states
    where no named plaintiffs reside because they have no standing to pursue those claims. As
    explained herein, the Court finds that none of defendants’ arguments warrant dismissal of any
    state-law claims at this stage.
    19
    A. Legal Standard
    To survive a motion to dismiss, plaintiffs must “state a claim to relief that is plausible on
    its face.” Bell Atlantic Corp. v. Twombly, 
    550 U.S. 544
    , 570 (2007). The D.C. Circuit has not
    considered the application of the plausibility standard to class allegations, but several other
    circuits have held that Rule 12(b)(6) motions can be used to strike class allegations when it is
    apparent on the face of the complaint that they cannot satisfy the requirements of Rule 23. 4 See
    McCrary v. Stifel, Nicolaus, & Co., 
    687 F.3d 1052
    , 1059 (8th Cir. 2012) (holding that “class
    claims that fail to meet the requirements of Rule 23 may be properly dismissed by granting a
    Rule 12(b)(6) motion”); Pilgrim v. Universal Health Card, LLC, 
    660 F.3d 943
    , 947-49 (6th Cir.
    2011) (dismissing suit brought under laws of many different states because the lack of common
    legal or factual issues would preclude class certification); John v. Nat’l Sec. Fire & Cas. Co.,
    
    501 F.3d 443
    , 445 (5th Cir. 2007) (“Where it is facially apparent from the pleadings that there is
    no ascertainable class, a district court may dismiss the class allegation on the pleadings.”).
    However, “courts rarely grant motions to dismiss or strike class allegations before there is a
    chance for discovery” and refuse to grant motions to dismiss when the “complaint states a
    plausible claim for class-wide relief.” Smith v. Washington Post Co., 
    962 F. Supp. 2d 79
    , 90-91
    (D.D.C. 2013).
    B. Variation Among States’ Laws
    Multi-state class claims should not be dismissed if it is possible that the plaintiffs could
    demonstrate a manageable grouping of the state laws. On a motion for class certification, the
    4
    In multi-district litigation, a transferee court should apply the law of its own circuit to federal issues, including
    procedural issues. Multidistrict Litigation Manual § 9:18 (2016); see In re Korean Air Lines Disaster of Sept. 1,
    1983, 
    829 F.2d 1171
    , 1174-76 (D.C. Cir. 1987) (transferee court should apply its own law to federal issues); In re
    Bridgestone/Firestone, Inc., ATX, ATX II, 
    128 F.Supp.2d 1198
    , 1200 (S.D. Ind. 2001) (transferee court should apply
    its own law to procedural issues).
    20
    D.C. Circuit has explained that “to establish the commonality of the applicable law, nationwide
    class action movants must creditably demonstrate, through an ‘extensive analysis’ of state law
    variances, ‘that class certification does not present insuperable obstacles’” because the
    “variations can be effectively managed through creation of a small number of subclasses
    grouping the states that have similar legal doctrines.” Walsh v. Ford Motor Co., 
    807 F.2d 1000
    ,
    1017 (D.C. Cir. 1986) (quoting In re School Asbestos Litig., 
    789 F.2d 996
    , 1010 (3d Cir. 1986)).
    In most cases, courts find plaintiffs’ grouping proposals inadequate and conclude that the class
    action fails commonality, predominance, or superiority requirements. See, e.g., Grandalski v.
    Quest Diagnostics Inc., 
    767 F.3d 175
    , 183-85 (3d Cir. 2014); Walsh v. Ford Motor Co., 
    130 F.R.D. 260
    , 271 (D.D.C. 1990); Agostino v. Quest Diagnostics, Inc., Civ. No. 04-4362, 
    2010 WL 5392688
    , at *12 (D.N.J. Dec. 22, 2010). A few courts, however, have certified multi-state
    classes after finding grouping of state laws is possible. The Third and Ninth Circuits have
    certified multi-state classes for settlement purposes, In re Prudential Ins. Co. Am. Sales Practice
    Litig. Agent Actions, 
    148 F.3d 283
    , 290, 315 (3d Cir. 1998); Hanlon v. Chrysler Corp., 
    150 F.3d 1011
    , 1022-23 (9th Cir. 1998), and courts have also certified classes that were not so limited,
    see, e.g., In re Pharm. Indus. Avg. Wholesale Price Litig., 
    252 F.R.D. 83
    , 93-95, 107 (D. Mass.
    2008); In re Telectronics Pacing Sys., Inc., 
    172 F.R.D. 271
    , 293-94 (S.D. Ohio 1997).5
    Therefore, the Court will not dismiss claims for which it does not yet know if grouping is
    possible.
    5
    This Court will not follow the Sixth Circuit, which dismissed a multi-state class action complaint because it would
    be “measured by the legal requirements of different state laws,” without even considering the possibility of
    grouping, see Pilgrim, 
    660 F.3d at 947-50
    , because that result contravenes the D.C. Circuit’s recognition that multi-
    state classes can be certified if grouping is possible.
    21
    1. Consumer Protection Statutes
    Defendants assert without objection by plaintiffs that each plaintiff’s consumer protection
    claim is governed by the law of the state where he lives and purchased the pepper.
    (McCormick’s Mem. at 18-19.) A transferee court handling multi-district litigation should apply
    the same state law that the transferor court would have applied, and it does so by applying the
    choice-of-law rules of the state where the transferor court was located. In re U.S. Office Prods.
    Co. Sec. Litig., 
    251 F. Supp. 2d 58
    , 68 (D.D.C. 2003). Thus, for each plaintiff’s claim, this Court
    should apply the choice-of-law rules for the state where that plaintiff originally filed suit.
    However, defendants assert that it is unnecessary to look at specific states’ choice-of-law rules
    for consumer protection statutes because they would universally point to the consumers’ home
    states. (McCormick’s Mem. at 19.) It is quite believable that every state’s choice-of-law rules
    would apply consumers’ home-state consumer protection law. In any case, defendants have not
    asked the Court for dismissal on this basis, so the Court will assume for purposes of this motion
    that consumers’ home-state laws will apply. Since plaintiffs have brought claims under the
    consumer protection statutes of twenty-five different states, this Court must evaluate whether it is
    plausible that those state statutes could be grouped.
    Courts have reached different results in different cases about whether state consumer
    protection statutes can be grouped sufficiently to permit class certification. On the one hand, a
    district court judge in Massachusetts certified a nationwide class for multi-district litigation
    involving unfair and deceptive trade practices laws in over thirty states after finding that
    grouping made the statutes manageable. In re Pharm. Indus., 252 F.R.D. at 93-95, 107. On the
    other hand, judges have refused to certify multi-state classes for consumer protection claims
    because the plaintiffs had not demonstrated how grouping would work. See Grandalski, 767
    22
    F.3d at 183-85; Agostino, 
    2010 WL 5392688
    , at *12. Furthermore, some judges have refused
    class certification without considering the possibility of grouping state laws. See Pilgrim, 
    660 F.3d at 947-50
    ; In re Celexa & Lexapro Mktg. & Sales Practices Litig., 
    291 F.R.D. 13
    , 19 (D.
    Mass. 2013). Since grouping is possible in some cases, the fact that plaintiffs have alleged
    violations of many states’ statutes does not automatically make it impossible that they could
    satisfy the requirements of Rule 23.
    To bolster their contention that the consumer protection statutes at issue are too variable
    to permit class certification, defendants argue that the statutes incorporate multiple standards
    about reliance and the availability of punitive damages. (See McCormick’s Mem. at 21-23.)
    Specifically, defendants identify three different requirements with respect to reliance and two
    categories for whether punitive damages are available. (See id.) The problem with this
    argument is that it actually suggests the possibility of grouping. Given that grouping of
    consumer protection statutes might be possible, it would be inappropriate to dismiss plaintiffs’
    claims without giving them an opportunity to demonstrate that there are workable groupings.
    This is especially true because plaintiffs may not seek to certify a class under all of the states
    pled in the complaint. (See Tr. at 14 (“[T]he defendants [are] looking to argue class cert before it
    is ripe, before they know what states we’re looking to certify.”).) As defendants conceded at oral
    argument, the Court can exercise its discretion and wait to address the differences among state
    statutes at the class certification stage, when the parties will have presented a thorough analysis
    of those differences. (See Tr. at 53 (“If your Honor is asking me is there something that compels
    you to decide it now, the answer is no.”).)
    23
    2. Unjust Enrichment
    Mirroring their argument in the consumer protection context, defendants also assert that
    all choice-of-law rules will point to the unjust enrichment law of the states where plaintiffs
    purchased pepper. (McCormick’s Mem. at 25-26.) Assuming that to be true for purposes of this
    motion, the Court must determine whether it is possible that the unjust enrichment laws of
    different states can be grouped. Plaintiffs have made an unjust enrichment claim on behalf of a
    nationwide class, so it appears that they seek to include all fifty states. (See Compl. at ¶¶ 94-97.)
    Again, like the consumer protection issue, courts faced with the question of whether
    variations in the state law of unjust enrichment bar class certification have reached different
    outcomes. Compare, e.g., Overka v. Am. Airlines, Inc., 
    265 F.R.D. 14
    , 19-21 (D. Mass. 2010)
    (stating that “unjust enrichment claims in different states are substantially similar” and certifying
    a 34-state class) and In re Terazosin Hydrochloride Antitrust Litig., 
    220 F.R.D. 672
    , 697 n.40
    (S.D. Fla. 2004) (stating that the “standards for evaluating various states classes’ unjust
    enrichment claims are virtually identical”) with Casa Orlando Apartments, Ltd. v. Fed. Nat’l
    Mortg. Ass’n, 
    624 F.3d 185
    , 195 (5th Cir. 2010) (holding that plaintiff’s “survey here fails to
    show that burden of proof standards do not vary or that differences in state unjust enrichment
    laws are insignificant”); Rapp v. Green Tree Servicing, LLC, 
    302 F.R.D. 505
    , 513-14, 519 (D.
    Minn. 2014) (holding that unjust enrichment laws differ substantially); and Thompson v. Jiffy
    Lube Int’l, Inc., 
    250 F.R.D. 607
    , 626 (D. Kan. 2008) (stating that “federal courts have generally
    refused to certify a nationwide class based upon a theory of unjust enrichment” and plaintiffs had
    failed to explain how to deal with the variation).
    As already held, this Court cannot determine the manageability of grouping unjust
    enrichment laws without an extensive analysis of the states’ laws. Plaintiffs have the burden to
    24
    present such an analysis with their motion for class certification, Walsh, 
    807 F.2d at 1017
    , and
    nothing prevents the Court from waiting and addressing this issue at the class certification stage.
    C. Standing to Pursue Claims Under Other States’ Laws
    Defendants contend that named plaintiffs do not have standing to pursue class claims
    under the laws of states where they do not reside. (McCormick’s Mem. at 14-18.) Although
    plaintiffs have asserted consumer protection claims under twenty-five states’ laws and unjust
    enrichment claims on behalf of a nationwide class, there are not named plaintiffs from every
    state. In the complaint, there were named plaintiffs from eleven states. (Compl. at ¶¶ 9-23.)
    Only one of the named plaintiffs had purchased Wal-Mart’s Great Value brand pepper. (See
    Compl. at ¶ 10.) After defendants filed their motions to dismiss, some plaintiffs voluntarily
    dismissed themselves from the suit, so the remaining named plaintiffs come from eight states.
    (See Notice of Voluntary Dismissal, ECF No. 68.) The single Great Value purchaser was one of
    the plaintiffs dismissed. (See id.) As a result, Wal-Mart moved for leave to file a supplemental
    memorandum arguing that all state-law claims against it should be dismissed because there was
    no longer any named plaintiff with standing to sue Wal-Mart. (Mot. Leave File Supplemental
    Mem., ECF No. 79.) Plaintiffs then moved to substitute a new named plaintiff who purchased
    Great Value pepper. (Mot. Substitute Party, ECF No. 83.) The Court has granted plaintiffs’
    motion as conceded. (Order, Nov. 11, 2016, ECF No. 96.) Therefore, Wal-Mart’s argument in
    its supplemental memorandum fails. This leaves the Court to address whether named plaintiffs
    can bring claims under other states’ laws.
    Outside the class-action context, “a plaintiff must demonstrate standing for each claim he
    seeks to press.” DaimlerChrysler Corp. v. Cuno, 
    547 U.S. 332
    , 352 (2006). For class actions,
    the Supreme Court’s cases show “tension” about “whether [a named plaintiff’s ability to
    25
    represent unnamed class members with somewhat different claims] . . . is appropriately
    addressed under the rubric of standing or adequacy.” Gratz v. Bollinger, 
    539 U.S. 244
    , 263 n.15
    (2003). For example, the Court has declared that a conclusion about the named plaintiff’s
    individual standing “shift[s] the focus of examination from the elements of justiciability to the
    ability of the named representative to ‘fairly and adequately protect the interests of the class.’
    Rule 23(a).” Sosna v. Iowa, 
    419 U.S. 393
    , 403 (1975). However, the Supreme Court has also
    held that named plaintiffs do not have “standing” to represent other plaintiffs whose injuries are
    too dissimilar. Lewis v. Casey, 
    518 U.S. 343
    , 357-58 (1996).
    Reflecting this ambiguity, courts have split on how to handle class actions in which
    named plaintiffs seek to represent classes bringing state-law claims in states where the named
    plaintiffs do not reside. Some courts dismiss claims under other states’ laws on the ground that
    the named plaintiffs must have standing for every claim they raise. See, e.g., In re G-Fees
    Antitrust Litig., 
    584 F. Supp. 2d 26
    , 36 (D.D.C. 2008) (“[A] case or controversy requires a
    specific, identified plaintiff who can establish a personal injury under the claim asserted.”); In re
    Wellbutrin XL Antitrust Litig., 
    260 F.R.D. 143
    , 151-55 (E.D. Pa. 2009); In re Packaged Ice
    Antitrust Litig., 
    779 F.Supp.2d 642
    , 653-59 (E.D. Mich. 2011). Other courts reason that once a
    named plaintiff has standing to raise one claim, whether he can raise related claims for the class
    is a Rule 23 question, so related claims under other states’ laws should not be dismissed at the
    outset for lack of standing. See, e.g., Ramirez v. STi Prepaid LLC, 
    644 F. Supp. 2d 496
    , 505
    (D.N.J. 2009) (“[T]he fact that the named Plaintiffs may not have individual standing to allege
    violations of consumer protection laws in states other than those in which they purchased
    Defendants’ calling cards is immaterial. The issue Defendants raise is one of predominance
    . . . .”); In re Hyroxycut Mktg. & Sales Practices Litig., 
    801 F. Supp. 2d 993
    , 1104-05 (S.D. Cal.
    26
    2011) (“[T]he issue of individual standing is separate and distinct from the inquiry whether
    named plaintiffs can meet the requirements to certify a class under Rule 23.”); In re Bayer Corp.
    Combination Aspirin Prods. Mktg. & Sales Practices Litig., 
    701 F. Supp. 2d 356
    , 376-77
    (E.D.N.Y. 2010) (“[T]he sundry state law claims cannot be dismissed for lack of standing when
    there is no requirement that the named plaintiffs have standing to bring them”).
    It is more logical to consider named plaintiffs’ ability to raise other state-law claims as a
    question of commonality, typicality, and adequacy under Rule 23, rather than a question of
    standing. Generally, the named plaintiffs in a class action do not have individual standing for all
    of the claims that they raise, because one individual does not have standing to claim injury to
    another individual. Therefore, standing analysis cannot address whether one plaintiff should be
    able to bring claims on behalf of others. See, e.g., Bayer, 
    701 F. Supp. 2d at 377
     (“Whether the
    named plaintiffs have standing to bring suit under each of the state laws alleged is ‘immaterial’
    because they are not bringing those claims on their own behalf, but are only seeking to represent
    other, similarly situated consumers in those states.” (quoting Ramirez, 
    644 F. Supp. 2d at 505
    )).
    In contrast, “the requirements of Rule 23(a)—commonality, typicality, and adequacy—exist to
    test the relationship between the named plaintiff’s claims and those of the class.” William B.
    Rubenstein, Newberg on Class Actions § 2:6 (5th ed. 2016). Thus, when defendants are “not
    challenging Plaintiffs’ standing to bring their own claims” but rather “their standing to bring
    claims on behalf of the class,” “[t]his question would be appropriately, and more efficiently
    addressed at the class certification stage.” Sheet Metal Workers Local No. 20 Welfare & Benefit
    Fund v. CVS Health Corp., C.A. No. 16-046, 
    2016 WL 6462137
    , at *6 (D.R.I. Nov. 1, 2016). 6
    6
    Analyzing this issue under Rule 23 rather than as a standing question does not leave courts helpless to prevent
    “lengthy class discovery” when plaintiffs “propos[e] to represent the claims of parties whose injuries and modes of
    redress they would not share.” Wellbutrin, 260 F.R.D. at 155. A court can still dismiss a class claim or require
    additional named plaintiffs if it is apparent from the complaint that the original named plaintiffs will not satisfy the
    27
    Whether the named plaintiffs can adequately represent unnamed class members with
    claims under other states’ laws depends on how variable the laws are. If the laws are similar
    enough, or if they can be grouped into a small number of categories with named plaintiffs
    representing each category, it may be unnecessary to have a named plaintiff from every state.
    Defendants have conceded that the Court has discretion to wait until class certification to
    evaluate differences among state laws. (Tr. at 53.) Since the parties have not yet presented a
    complete analysis of variability among state laws, the Court cannot determine at this stage
    whether the named plaintiffs can adequately represent the entire class.
    D. Individualized Factual Inquiries
    This Court can dismiss class claims if factual variations among plaintiffs’ experiences
    will prevent class certification. To maintain a class action, plaintiffs must show that “the
    questions of law or fact common to class members predominate over any questions affecting
    only individual members.” Fed. R. Civ. P. 23(b)(3). If such predominance is not plausible, a
    Rule 12(b)(6) motion can be used to strike class allegations. See supra Section II.A; Pilgrim,
    
    660 F.3d at 947-49
     (dismissing suit because the lack of common legal or factual issues would
    preclude class certification); McCrary, 687 F.3d at 1058-59 (dismissing class claim that would
    require highly individualized facts).
    1. Unjust Enrichment
    Defendants argue that “evaluation of Plaintiffs’ unjust enrichment claim would require
    resolution of disparate issues of fact.” (McCormick’s Mem. at 29.) Defendants are correct that
    courts often refuse to certify classes for unjust enrichment claims because these equitable claims
    adequacy and commonality requirements to represent a class under other states’ laws. Cf. In re Carrier IQ, Inc., 
    78 F. Supp. 3d 1051
    , 1074 (N.D. Cal. 2015) (requiring the plaintiffs “to present a named class member who possesses
    individual standing to assert each state law’s claims” because otherwise “there is a meaningful risk that the
    requirements of class certification under Rule 23 may not be met”).
    28
    require courts to evaluate the plaintiffs’ individual circumstances. See Grandalski, 767 F.3d at
    185 (“[I]ndividual inquiries would be required to determine whether an alleged overbilling
    constituted unjust enrichment for each class member.”); Vega v. T-Mobile USA, Inc., 
    564 F.3d 1256
    , 1274-75 (11th Cir. 2009) (stating that “common questions will rarely, if ever, predominate
    [in] an unjust enrichment claim, the resolution of which turns on individualized facts” and
    concluding there was a commonality problem because employees who understood the
    commission policy “cannot claim injustice when the company follows its compensation policies
    as expected and understood”); Oshana v. Coca-Cola Co., 
    472 F.3d 506
    , 515 (7th Cir. 2006)
    (finding that there was not an identifiable and definite class for the plaintiffs’ claim that they
    were deceived about whether Diet Coke contained saccharin, since the class of all purchasers
    could include many people who were not deceived); In re Actiq Sales & Mktg. Practices Litig.,
    
    307 F.R.D. 150
    , 169-71 (E.D. Pa. 2015) (holding that common issues of fact did not predominate
    because it was necessary to make an “individualized inquiry into equitable circumstances”).
    Plaintiffs respond that some courts have certified classes for unjust enrichment claims.
    (Pls.’ Opp. at 27.) This is true, but all of the cases cited by plaintiffs involved special situations
    that allowed the plaintiffs to demonstrate injustice without addressing individual circumstances.
    For example, in cases where plaintiffs alleged anticompetitive conduct that artificially inflated
    prices, courts have found that they could demonstrate unjust enrichment because all purchasers
    would have paid more than they should have. In re Terazosin Hydrochloride, 
    220 F.R.D. 672
     at
    698; In re Abbott Labs. Norvir Anti-Trust Litig., Nos. C 04-1511 CW, C 04-4203 CW, 
    2007 WL 1689899
    , at *1-*2, *9-*10 (N.D. Cal. June 11, 2007); see also Overka, 265 F.R.D. at 18-21;
    Keilholtz v. Lennox Hearth Prods. Inc., 
    268 F.R.D. 330
    , 343 (N.D. Cal. 2010).
    29
    It seems likely that plaintiffs’ unjust enrichment claims against McCormick and Wal-
    Mart will require individualized factual inquiries that bar class treatment. Some plaintiffs
    presumably bought McCormick pepper with full knowledge of the quantity of the pepper in the
    container, either because they understood that the listed weight had changed or because they had
    already purchased another container and seen the reduced quantity. Other plaintiffs might not
    have realized the quantity had been reduced but would have bought the pepper regardless. There
    would be no injustice in defendants’ retaining what these plaintiffs paid for their pepper. Since
    plaintiffs have not made plausible allegations of anticompetitive conduct, this case is not like the
    cases where courts certified classes because all plaintiffs would have paid unfair prices.
    However, because the parties have not yet provided analyses of all fifty states’ unjust
    enrichment law, the Court cannot be certain that every state requires an individualized showing
    of injustice. Therefore, the Court will wait to address this issue at class certification.
    2. Consumer Protection Statutes
    Defendants claim that no class is certifiable in this case because the alleged injury
    depends on individual consumers’ state of mind at the time they purchased the pepper.
    (McCormick’s Mem. at 31-35.) It is true that when a consumer fraud claim requires a showing
    that individual consumers were misled or relied upon defendants’ deceptive conduct, class
    certification is not possible.7 Newberg on Class Actions § 4:58; Oshana, 
    472 F.3d at 513-15
    ;
    Byrd v. Aaron’s Inc., 
    784 F.3d 154
    , 167-69, 171 (3d Cir. 2015); Castano v. Am. Tobacco Co., 
    84 F.3d 734
    , 745 (5th Cir. 1996). However, defendants’ own memorandum demonstrates that many
    states’ consumer protection statutes do not require reliance. (See McCormick’s Mem. at 21-22.)
    7
    Defendants treat this as a problem of overbreadth or ascertainability of the class. (See McCormick’s Mem. at 31-
    35.) Some courts use those terms, but others treat this as a problem of predominance. See, e.g., Byrd, 784 F.3d at
    167-69; Castano, 
    84 F.3d at 745
    .
    30
    Defendants’ argument about the necessity of looking at individual consumers’ states of mind
    does not specify any particular state’s consumer protection statute. (See id. at 31-35.) Therefore,
    defendants have not fairly presented this argument, and the Court will not dismiss any consumer
    protection claims on this ground at this stage. 8 The Court expects to confront this issue again at
    class certification, however, since it appears that Maryland’s statute does require reliance, and
    perhaps other states as well. (See McCormick’s Mem. at 21-22 (citing Peete-Bey v. Educ. Credit
    Mgmt. Corp., 
    131 F. Supp. 3d 422
    , 432 (D. Md. 2015)).)
    CONCLUSION
    For the reasons discussed above, defendants’ motions to dismiss are granted in part and
    denied without prejudice in part. Specifically, Count I is dismissed with prejudice. A separate
    Order accompanies this Memorandum Opinion.
    /s/ Ellen Segal Huvelle
    ELLEN SEGAL HUVELLE
    United States District Judge
    Date: November 11, 2016
    8
    Any argument about manageability (see McCormick’s Mem. at 36-37) is also premature.
    31
    

Document Info

Docket Number: Misc. No. 2015-1825

Citation Numbers: 217 F. Supp. 3d 124

Judges: Judge Ellen S. Huvelle

Filed Date: 11/11/2016

Precedential Status: Precedential

Modified Date: 1/13/2023

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