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Pearlstone v. Costco Wholesale Corp.

United States District Court, E.D. Missouri, Eastern Division

February 21, 2019

SCOTT PEARLSTONE, individually and on behalf of similarly situated individuals, Plaintiff,
v.
COSTCO WHOLESALE CORPORATION, Defendant.

          MEMORANDUM AND ORDER

          RONNIE L. WHITE UNITED STATES DISTRICT JUDGE

         This matter is before the Court on Defendant Costco Wholesale Corporation's ("Costco") Motion to Dismiss Plaintiffs Class Complaint (ECF No. 9), Plaintiff Scott Pearlstone's Motion to Strike Exhibit 1 to Costco's Reply Memorandum in Support of Its Motion to Dismiss (ECF No. 23), and Costco's Motion to Strike and in the Alternative for Leave to File Response out of Time (ECF No. 25). The motions are fully briefed and ready for disposition.

         BACKGROUND[1]

         Costco operates an international chain of membership warehouses, and customers generally must purchase a 12-month membership in order to fully access and shop at Costco stores. (Compl., ECF No. 1, Tffl 13, 14) Customers can purchase one of two levels of memberships that can be renewed annually: a basic, entry-level membership for $60.00 and an executive membership for $120.00. (Id. at ¶17) Customers who purchase executive memberships earn rewards in the form of certificates that provide Costco store credit in the amount of 2% of qualifying purchases made over a certain period. (Id. at ¶ 18) These 2% rewards are generally issued in executive members' renewal notices and are only redeemable at Costco warehouse locations. (Id.)

         All Costco members must complete a membership application and agree to Costco's "Member Privileges & Conditions." (Id. at ¶119) One of the conditions is a "Risk-Free 100% Satisfaction Guarantee," which provides in relevant part: "On Membership: We will cancel and refund your membership fee in full at any time if you are dissatisfied." (Id. at ¶¶ 22, 24; ECF No. 1-1)

         In March 2017, Plaintiff enrolled in a 12-month executive membership with Costco at a location in St. Louis and paid $110.00 for the executive membership.[2] (Id. at ¶ 29) Plaintiff asserts he became dissatisfied with his experience and his executive membership, and he subsequently cancelled his membership in January 2018. (Id. at¶32) Upon Plaintiffs cancelation, Costco refunded him $86.13, which was $23.87 less than what he paid to purchase his executive membership. (Id. at ¶ 33)

         Plaintiff filed this putative Class Action Complaint in which he asserts the following three claims against Costco: breach of contract (Count I), unjust enrichment (Count II), and violation of the Missouri Merchandising Practices Act ("MMPA"), Mo. Rev. Stat. § 407.010 et seq. (Count III).[3] He argues Costco "repeatedly and systematically breaches its Risk-Free 100% Satisfaction Guarantee by failing to provide full refunds of membership fees to executive members who cancel their membership, instead refunding less than the amount originally paid for such memberships." (Id. at ¶126)

         Costco filed a Motion to Dismiss pursuant to Federal Rules of Civil Procedure 12(b)(6) and 9(b). (ECF No. 9) As more fully addressed below, Costco argues Plaintiff has failed to state a claim for which relief can be granted because he did not attach or otherwise address additional terms that govern the contract between the parties. (ECF No. 10, at 2) According to Costco, the amount it refunded Plaintiff ($86.13) reflects the amount of money Plaintiff paid to purchase his executive membership ($110.00) less the $23.87 Plaintiff had previously accrued pursuant to the 2% rewards program. (ECF No. 10, at 4) To support its argument, Costco references the "Executive Membership Terms and Conditions" that are available on the corporation's website. (Id. at 3) Costco contends these terms and conditions state "any 2% Reward issued or accrued will be forfeited" if an executive member cancels his or her membership before the expiration of the 12-month membership term. (Id.) Additionally, Costco attached a screenshot of the "Executive Membership Terms and Conditions" page of its website as Exhibit 1 to its Reply Memorandum in Support of Its Motion to Dismiss. (ECF No. 20-1)

         Plaintiff filed a Motion to Strike Exhibit 1 to Costco's Reply Memorandum in Support of its Motion to Dismiss (ECF No. 23) on November 12, 2018. He argues the screenshot of the "Executive Membership Terms and Conditions" page from Costco's website is irrelevant to this case as the exhibit indicates the terms were updated five months after the initiation of this lawsuit. Fourteen days later on November 26, Plaintiff filed a Reply Memorandum in Support of his Motion to Strike (ECF No. 24) and noted Costco had failed to timely file a response within

         (Id. at f 38) Plaintiff brings Counts I and II on behalf of the entire class and Count III on behalf of the Missouri Subclass.

         seven days as required by this district's local rules. Ten days later on December 6, Costco filed a Motion to Strike and in the Alternative for Leave to File Response out of Time. (ECF No. 25) Costco argues that Plaintiffs motion to strike should be stricken for failing to comply with this district's local rules and, in the alternative, that it should be permitted to file its accompanying Memorandum in Opposition to Plaintiffs Motion to Strike Exhibit 1 to Its Reply Memorandum in Support of Its Motion to Dismiss (ECF No. 26-1). The Court now grants Costco's motion as to its request to file its response to Plaintiffs Motion to Strike Exhibit 1 out of time, and the Court considered the arguments therein. Accordingly, all motions have been fully briefed.

         LEGAL STANDARD

         A complaint must be dismissed under Federal Rule 12(b)(6) for failure to state a claim upon which relief can be granted if the complaint fails to plead "enough facts to state a claim to relief that is plausible on its face." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). "Factual allegations must be enough to raise a right to relief above the speculative level.. .." Id. at 555. Courts must liberally construe the complaint in the light most favorable to the plaintiff and accept the factual allegations as true. See Schaaf v. Residential Funding Corp., 517 F.3d 544, 549 (8th Cir. 2008) (stating that in a motion to dismiss, courts accept as true all factual allegations in the complaint); Eckert v. Titan Tire Corp., 514 F.3d 801, 806 (8th Cir. 2008) (explaining that courts should liberally construe the complaint in the light most favorable to the plaintiff).

         However, "[w]here the allegations show on the face of the complaint there is some insuperable bar to relief, dismissal under Rule 12(b)(6) is appropriate." Benton v. Merrill Lynch & Co., 524 F.3d 866, 870 (8th Cir. 2008) (citation omitted). Courts "are not bound to accept as true a legal conclusion couched as a factual allegation." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 555). When considering a motion to dismiss, a court can "begin by identifying pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth." Id. at 679. Legal conclusions must be supported by factual allegations to survive a motion to dismiss. Id.

         DISCUSSION

         I. ...


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