Russell v. Walmart Inc.

[3] 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA [6] 7 DEBORAH RUSSELL, Case No. 22-cv-02813-JST Plaintiff, [8] v. ORDER GRANTING MOTION TO 9 DISMISS 10 WALMART, INC., Re: ECF No. 32 Defendant. [12] 13 Before the Court is Defendant Walmart, Inc.’s motion to dismiss. ECF No. 32. The Court 14 will grant the motion. 15 I. BACKGROUND 16 For the purposes of the present motion, the Court accepts as true the following facts in the 17 amended complaint. Walmart is a large retailer that operates many stores in California. Id. ¶ 7. 18 To pay for the items they wish to purchase, Walmart’s customers may choose between using 19 customer-operated self-checkout or having a Walmart-employed cashier check out their items. Id. 20 ¶¶ 13, 17. Plaintiff Deborah Russell shops at one or more Walmart stores and has performed 21 many of the same tasks as a Walmart cashier, without compensation, by using self-checkout. ECF 22 No. 31 ¶ 22. Walmart invites, encourages, and requests customers to use self-checkout instead of 23 checkout lanes operated by Walmart-employed cashiers. Id. ¶¶ 25-27. As a result, Walmart now 24 employs fewer cashiers, which in turn further induces customers to use self-checkout to avoid 25 longer checkout lines. Id. ¶ 28. In using self-checkout, customers perform what Russell argues 26 amounts to “uncompensated work” from which Walmart benefits by lowering its own payroll 27 costs. Id. ¶ 23. Media reports suggest that the use of self-checkout could potentially expose 1 risk. Id. ¶ 38. 2 Russell filed suit on behalf of a putative class, alleging that Walmart owed her unpaid 3 wages for the time she had spent at self-checkout. ECF No. 1-1. The Court dismissed Russell’s 4 initial complaint with leave to amend, concluding that Russell’s “efforts in using Walmart’s self5 checkout apparatus did not constitute ‘work’” under California law. ECF No. 30 at 4-5. 6 Russell filed an amended complaint asserting a single claim “for restitution under theory of 7 quasi-contract and/or unjust enrichment” and alleging that customers who choose self-checkout 8 confer a benefit that would be inequitable for Walmart to retain. ECF No. 31 ¶¶ 34-39. Walmart 9 now moves to dismiss the amended complaint. ECF No. 32. 10 II. JURISDICTION 11 This Court has subject matter jurisdiction under 28 U.S.C. § 1332 (d)(2). 12 III. LEGAL STANDARD 13 “Dismissal under Rule 12(b)(6) is appropriate only where the complaint lacks a cognizable 14 legal theory or sufficient facts to support a cognizable legal theory.” Mendiondo v. Centinela 15 Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th Cir. 2008). To survive a motion to dismiss, “a 16 complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is 17 plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. 18 Twombly, 550 U.S. 544, 570 (2007)). “A claim has facial plausibility when the plaintiff pleads 19 factual content that allows the court to draw the reasonable inference that the defendant is liable 20 for the misconduct alleged.” Id. In determining whether a plaintiff has met the plausibility 21 requirement, a court must “accept all factual allegations in the complaint as true and construe the 22 pleadings in the light most favorable to the nonmoving party.” Knievel v. ESPN, 393 F.3d 1068 , 23 1072 (9th Cir. 2005). 24 IV. DISCUSSION 25 Walmart relies on outdated caselaw to argue that unjust enrichment is not a cause of action 26 under California law. More recent authority, however, confirms that both the Ninth Circuit and 27 the California Supreme Court construe California law to permit a cause of action for unjust 1 that plaintiff sufficiently pleaded unjust enrichment “as an independent cause of action or as a 2 quasi-contract claim for restitution”); Hartford Casualty Ins. Co. v. J.R. Marketing, L.L.C., 61 Cal. 3 4th 988, 1000 (2015) (holding that none of the “numerous objections to the proposition that a 4 direct action . . . for unjust enrichment can lie . . . compels the conclusion that such a claim is 5 absolutely foreclosed”). 6 In the alternative, Walmart argues that Russell fails to sufficiently plead the elements of an 7 unjust enrichment claim. “To allege unjust enrichment as an independent cause of action, a 8 plaintiff must show that a defendant received and unjustly retained a benefit at the plaintiff’s 9 expense.” ESG, 828 F.3d at 1038. Russell alleges that customers confer a benefit on Walmart 10 when providing uncompensated labor as a substitute for the work of regularly employed Walmart 11 cashiers. ECF No. 31 ¶ 35. 12 Russell’s allegation is insufficient. “Restitution is not mandated merely because one 13 person has realized a gain at another’s expense,”; “[r]ather, the obligation arises when the 14 enrichment obtained lacks any adequate legal basis and thus ‘cannot conscientiously be retained.’” 15 Hartford, 61 Cal. 4th at 998 (quoting Restatement (Third) of Restitution & Unjust Enrichment § 1 16 cmt. b (Am. L. Inst. 2011)). Thus, restitution generally requires “that a defendant has been 17 unjustly conferred a benefit ‘through mistake, fraud, coercion, or request.’” Astiana v. Hain 18 Celestial Grp., Inc., 783 F.3d 753, 762 (9th Cir. 2015) (emphasis added) (quoting 55 Cal. Jur. 3d 19 Restitution § 2 (2015)). In other words, it is not enough that Russell have provided Walmart with 20 a beneficial service; Russell must also allege that Walmart unjustly secured that benefit through 21 qualifying conduct. Absent qualifying mistake, fraud, coercion, or request by Walmart, there is no 22 injustice. Regents of Univ. of Cal. v. LTI Flexible Prods., Inc., No. 20-cv-08686-WHO, 2021 WL 23 4133869, at *10 (N.D. Cal. Sept. 10, 2021) (“Under California law, ‘[i]t must ordinarily appear 24 that the benefits were conferred by mistake, fraud, coercion or request; otherwise, though there is 25 enrichment, it is not unjust.’” (quoting Nibbi Bros., Inc. v. Home Fed. Sav. & Loan Ass’n, 205 Cal. 26 App. 3d 1415, 1422 (1988)). 27 Russell fails to adequately allege that Walmart has engaged in qualifying conduct 1 encouraged, and requested” customers’ use of self-checkout stands through “fishing.” ECF No. 31 2 ¶ 39. Russell quotes a retail industry publication that defines fishing as the practice of assigning 3 employees as self-checkout attendants who “encourag[e] shoppers to come use the self-service and 4 help[] where necessary.” Id. ¶ 27. Russell does not allege that she ever encountered fishing at any 5 Walmart, or that such fishing induced her use of self-checkout. Moreover, even if she had made 6 such an allegation, such “encourag[ement]” does not constitute a request of the sort that can 7 provide a basis for unjust enrichment. See Dinosaur Dev., Inc. v. White, 216 Cal. App. 3d 1310 , 8 1316 (1989) (interpreting “request,” for the purposes of unjust enrichment, to mean a “direct 9 request” (emphasis added)).1 Russell does not allege that any Walmart employee directly 10 requested that she or anyone else use the self-checkout stand in lieu of having their items checked 11 out by an employee. In fact, Russell expressly alleges that customers “have a choice” between the 12 two. ECF No. 31 ¶ 17. 13 Russell also argues that Walmart’s failure to warn customers that self-checkout could 14 expose them to criminal liability constitutes a “material nondisclosure” sufficient to render 15 Walmart’s retention of any benefit unjust.2 ECF No. 34 at 16. But Russell cites no authority to 16 suggest that nondisclosure of such a possibility can support a cause of action for unjust [18] 1 Russell argues that “[a] request to perform services[] ‘[] can be either express or implied.’” ECF [19] No. 34 at 12 (quoting Pierson v. Helmerich & Payne International Drilling Co., 4 Cal. App. 5th 608, 633 (2016)). The quoted text, read in context, summarizes the plaintiff’s contentions [20] regarding the applicability of the special errand exception to the general rule that an employee does not act within the scope of employment while traveling to and from work. Pierson, 4 Cal. 21 App. 5th at 633 (“Pierson supports this contention with the following three principles. . . . Second, the employer’s request that triggers the special errand exception can be either express or implied.” [22] (emphasis added)). The relevance of this authority is lost to the Court. [23] 2 Alternatively, Russell alleges that it is sufficient that Walmart acquiesced to customers’ use of self-checkout, citing Producers Cotton Oil Co. v. Amstar Corp., 197 Cal. App. 3d 638 , 659 [24] (1988). Producers concerned the application of principles of unjust enrichment to Article 9 of the Uniform Commercial Code, which governs secured transactions. The court held that principles of [25] unjust enrichment permitted an unsecured creditor who mistakenly paid harvesting costs before obtaining the secured creditor’s subordination to recover such costs from a secured creditor who [26] “had knowledge of and acquiesce[d]” to the expenses, “which [we]re necessary to the development of the crop” of their shared debtor. Producers, 197 Cal. App. 3d at 660 (emphasis [27] omitted). Russell cites no authority that suggests acquiescence would be conduct sufficient to 1 enrichment;? fails to plausibly allege that any nondisclosure was material; and fails to plausibly 2 allege causation, i.e., that Walmart was conferred any benefit through such nondisclosure. 3 Absent binding or persuasive authority in support, the Court declines to accept such 4 attenuated inferences of qualifying conduct as a sufficient basis for an unjust enrichment claim.* 5 The Court therefore dismisses the complaint and, because further amendment of this claim would 6 be futile, the Court denies leave to amend. See Novak v. United States, 795 F.3d 1012, 1020 (9th 7 Cir. 2015) (“[T]he ‘general rule that parties are allowed to amend their pleadings . . . does not 8 || extend to cases in which any amendment would be an exercise in futility.’” (quoting Steckman v. 9 Hart Brewing, Inc., 143 F.3d 1293, 1298 (9th Cir. 1998))). 10 CONCLUSION 11 For the foregoing reasons, Walmart’s motion to dismiss is granted in full. The Clerk shall 12 || enter judgment and close the file. IT IS SO ORDERED. = □ 14 || Dated: July 5, 2023 . [45] = JON S. TIGAR Q 16 ited States District Judge = 17 Z 18 [23] 24 3 Russell cites only Astiana, 783 F.3d at 762 , in which the Ninth Circuit found allegations that the defendant had “‘entic[ed]’ plaintiffs to purchase their [cosmetic] products through ‘false and 25 || misleading’ labeling” sufficient to state a claim for unjust enrichment. Astiana concerned a benefit secured through fraudulent labeling, which is not at issue here. 26 || 4 As Walmart notes, at least two state courts have rejected similar unjust enrichment claims. The 07 Court takes judicial notice of the existence and nature of the state court orders filed at ECF Nos. 33-1 and 33-2. See Reyn’s Pasta Bella, LLC v. Visa USA, Inc., 442 F.3d 741 , 746 n.6 (9th Cir. 2g || 2006) C[Courts] may take judicial notice of court filings and other matters of public record.”).