Cook et al v. General Nutrition Corporation

BRIEF in Support re Motion to Dismiss re: 1 Complaint pursuant to Fed.R.Civ.P. 12

W.D. Pa.March 30, 2017

IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA DOUG COOK and JODY EBERHART, Plaintiffs, vs. GENERAL NUTRITION CORPORATION, Defendant. Case No. 2:17-cv-00135-NBF BRIEF IN SUPPORT OF DEFENDANT GENERAL NUTRITION CORPORATION’S MOTION TO DISMISS PURSUANT TO FED. R. CIV. P. 12(b)(6) Case 2:17-cv-00135-NBF Document 18 Filed 03/30/17 Page 1 of 21 i TABLE OF CONTENTS I. INTRODUCTION ...................................................................................................1 A. GNC’s Gold Card Program ..........................................................................2 B. GNC’s Terms and Conditions Reserved the Right to Alter Membership Benefits and Conditions of Membership. ...............................3 C. Plaintiffs’ Complaint ....................................................................................4 II. ARGUMENT ...........................................................................................................4 A. Standard of Review ......................................................................................4 B. Plaintiffs’ Breach of Contract Claims Must Be Dismissed Because Plaintiffs Fail to Allege a Breach of Any Provision of the Terms and Conditions. ............................................................................................5 C. Plaintiffs’ Claim for Breach of the Implied Covenant of Good Faith and Fair Dealing Must Be Dismissed Because it is Duplicative of and Subsumed by Their Breach of Contract Claim. ..........11 D. Plaintiffs’ Unjust Enrichment Claim Must Be Dismissed Because the Parties Do Not Dispute the Existence of a Contract Which Governs the Parties’ Relationship. .............................................................14 III. CONCLUSION ......................................................................................................16 Case 2:17-cv-00135-NBF Document 18 Filed 03/30/17 Page 2 of 21 ii TABLE OF AUTHORITIES Page(s) Federal Cases Ashcroft v. Iqbal, 556 U.S. 662 (2009) .......................................................................................................5 Baraka v. McGreevey, 481 F.3d 187 (3d Cir. 2007)...........................................................................................5 Batoff v. Charbonneau, No. 12-cv-05397, 2013 WL 1124497 (E.D. Pa. Mar. 19, 2013) .................................15 Brown & Brown, Inc. v. Cola, 745 F. Supp. 2d 588 (E.D. Pa. 2010) ...........................................................................14 Burton v. Teleflex Inc., 707 F.3d 417 (3d Cir. 2013).........................................................................................11 Cummings v. Allstate Ins. Co., 832 F. Supp. 2d 469 (E.D. Pa. 2011) ...........................................................................12 Edwards v. N. Am. Power and Gas, LLC, 120 F. Supp. 3d 132 (D. Conn. 2015) ..........................................................................15 Finnell v. Cramet, Inc., 289 F.2d 409 (6th Cir. 1961) .........................................................................................9 Fowler v. UPMC Shadyside, 578 F.3d 203 (3d Cir. 2009)...........................................................................................5 Gordon v. United Continental Holding, Inc., 73 F. Supp. 3d 472 (D.N.J. 2014) ............................................................................9, 10 Hudgins v. Travelers Home and Marine Ins. Co., No. 11-882, 2013 WL 3949208 (E.D. Pa. Jul. 31, 2013) ............................................12 In re Unisys Corp. Retiree Medical Ben. ERISA Litig., 58 F.3d 896 (3d Cir. 1995).............................................................................................9 Kemmerer v. ICI Am. Inc., 70 F.3d 281 (3d Cir. 1995).............................................................................................9 Case 2:17-cv-00135-NBF Document 18 Filed 03/30/17 Page 3 of 21 iii Leveto v. Lapina, 258 F.3d 156 (3d Cir. 2001)...........................................................................................5 Northview Motors, Inc. v. Chrysler Motors Corp., 227 F.3d 78 (3d Cir. 2000)...........................................................................................12 Papasan v. Allain, 478 U.S. 265 (1986) .......................................................................................................7 Phillips v. County. of Allegheny, 515 F.3d 224 (3d Cir. 2008)...........................................................................................5 Richards v. Direct Energy Servs., LLC, 120 F. Supp. 3d 148 (D. Conn. 2015) ..........................................................................14 Sheinman Provisions, Inc. v. Nat. Deli, LLC, No. 08-cv-453, 2008 WL 2758029 (E.D. Pa. July 15, 2008) ......................................15 Skold v. Galderma Lab., L.P., 99 F. Supp. 3d 585 (E.D. Pa. 2015) .............................................................................15 Sprague v. Gen. Motors Corp., 133 F.3d 388 (6th Cir. 1998) .........................................................................................9 Zaloga v. Provident Life and Acc. Ins. Co. of Am., 671 F. Supp. 2d 623 (M.D. Pa. 2009) ..........................................................................12 State Cases Agrecycle, Inc. v. City of Pittsburgh, 783 A.2d 863 (Pa. Commw. Ct. 2001) ..................................................................12, 13 Grossman v. USAir, Inc., 33 Phila. Co. Rptr. 427 (Pa. C.P. Apr. 16, 1997) ..................................................10, 11 Guinn v. Hoskins Chevrolet, 361 Ill. App. 3d 575 (2005) .........................................................................................15 Mercy Health Sys. v. Metro Partners. Realty LLC, No. 03046, 2003 WL 21904583 (Pa. C.P. July 10, 2003) ...........................................14 Murphy v. Duquesne Univ. of the Holy Ghost, 565 Pa. 571, 777 A.2d 418 (2001) .............................................................................6, 7 Northeast Fence & Iron Works, Inc. v. Murphy Quigley Co., 933 A.2d 664 (Pa. Super. Ct. 2007) .............................................................................14 Case 2:17-cv-00135-NBF Document 18 Filed 03/30/17 Page 4 of 21 iv Ocasio v. Prison Health Servs., 979 A.2d 352 (Pa. Super. Ct. 2009) ...........................................................................5, 6 Pennsy Supply, Inc. v. Am. Ash Recycling Corp., 895 A.2d 595 (Pa. Super. Ct. 2006) ...............................................................................6 Robert F. Felte, Inc. v. White, 451 Pa. 137, 302 A.2d 347 (1973) .................................................................................7 State Statutes 16 Summ. Pa. Jur. 2d Commercial Law § 1:120 (2d ed.) ..................................................12 Rules Federal Rule of Civil Procedure 12(b)(6) ..................................................................1, 4, 16 Case 2:17-cv-00135-NBF Document 18 Filed 03/30/17 Page 5 of 21 1 Defendant General Nutrition Corporation (“GNC”), by and through its undersigned counsel, submits this Brief in Support of its Motion to Dismiss Pursuant to Federal Rule of Civil Procedure 12(b)(6). I. INTRODUCTION GNC offers its customers a membership program, formerly called the “Gold Card Program,” that provides GNC customers with loyalty benefits for shopping at GNC. Since its inception in 1991, GNC has changed its membership program and benefits multiple times, including renaming the program in 2013—from the Member Price Program to the Gold Card Program—and restructuring how membership benefits were provided—“from a fixed 20% discount during the first week of each month to an everyday variable discount Member Pricing model.” In January 2017, GNC again renamed its membership program—from the Gold Card Program to My GNC Rewards— and restructured how membership benefits were provided—from customer discounts to a free customer loyalty program where customers earn rewards points based on purchase history. Through each change, GNC strives to reward customers for their loyalty and make its membership program more accessible to its customers. Plaintiffs Doug Cook and Jody Eberhart purchased membership loyalty cards for GNC’s Gold Card Program and renewed those cards over “several years”—each time agreeing to the Gold Card Program’s Terms and Conditions. Plaintiffs filed this action seeking to represent a putative class based on GNC’s restructuring of its membership program in 2017. Plaintiffs’ putative class action complaint alleges GNC’s 2017 change to its Gold Card benefits breached the Gold Card Program Terms and Conditions, breached the implied covenant of good faith and fair dealing, or in the alternative constitutes unjust enrichment. Plaintiffs’ Complaint must be dismissed for the following reasons: Case 2:17-cv-00135-NBF Document 18 Filed 03/30/17 Page 6 of 21 2 First, Plaintiffs’ breach of contract claims fail because they do not (and cannot) allege GNC breached a specific duty imposed by the Gold Card Program Terms and Conditions. The Terms and Conditions specifically provided: (1) GNC benefits “may be altered at any time with or without notice”; and (2) “GNC reserves the right to alter the fee at any time, but changes will apply only to new or renewed memberships.” Plaintiffs are bound by the contractual terms they agreed to (year after year). Second, Plaintiffs cannot state a claim for breach of the covenant of good faith and fair dealing because the Terms and Conditions create an express contract that governs their claims. Third, Plaintiffs cannot state an unjust enrichment claim, even in the alternative, because they acknowledge the Terms and Conditions create a valid contract. A. GNC’s Gold Card Program GNC is “one of the world’s largest specialty retailers of health, wellness and performance products, including protein, performance supplements, weight management supplements, vitamins, wellness supplements, health and beauty products, and general merchandise.”1 Complaint (Dkt. 5) ¶ 1. Plaintiff alleges that throughout the class period “GNC regularly and continuously offered and operated certain paid membership programs for the benefit of its participant-customers” (collectively, the “Gold Card Program”). Id. at ¶ 2. Up until “the end of 2016,” GNC customers became Gold Card members for either one-year or two-year annual periods by paying a $15 membership fee. Id. at ¶¶ 2-3, 11. In exchange, Gold Card members received benefits such as “discounts of up to 50% off purchases, every day, from GNC.” Id. at ¶¶ 2, 11. The Gold Card Program is governed by detailed Terms and Conditions. Id. at ¶ 14 & Ex. A. 1 GNC accepts the facts alleged in the Complaint as true for purposes of this motion only. Case 2:17-cv-00135-NBF Document 18 Filed 03/30/17 Page 7 of 21 3 GNC launched its membership program in 1991 to encourage customer loyalty and reward its loyal customers. In 2013, GNC renamed the program—from the Membership Price Program to the Gold Card Program—and restructured membership conditions and benefits: [GNC] expanded [the] Gold Card Member Pricing model to be nationwide, evolving Gold Card from a fixed 20% discount during the first week of each month to an everyday variable discount Member Pricing model. Gold Card members also receive personalized mailings and e- mails with product news, nutritional information and exclusive offers. Id. at ¶ 14, n.1. At the beginning of 2017, GNC again renamed its membership program—from the Gold Card Program to My GNC Rewards—and again restructured how benefits are provided to customers. Id. at ¶¶ 3, 11, 15-16. The new My GNC Rewards Program is free and “available to everyone, whereby customers accumulate points based on volume of purchases.” Id. at ¶ 16. B. GNC’s Terms and Conditions Reserved the Right to Alter Membership Benefits and Conditions of Membership. As a condition of purchasing a Gold Card membership, Plaintiffs agreed to GNC’s Gold Card Program Terms and Conditions. Compl. ¶ 14 & Ex. A (May 2015 Terms & Conditions) at 1 (“By purchasing a Membership, you agree to the Terms and Conditions of the Program.”). GNC’s Gold Card Terms and Conditions give GNC the right to alter membership benefits and/or conditions of membership at any time, with or without notice. Specifically, at all relevant times, the Terms and Conditions provided “[b]enefits may be altered at any time with or without notice” and the “[m]embership fee is non-refundable.” Compl. Ex. A at 1. The Terms and Conditions also provide that GNC may alter the conditions of membership as to new members only: Membership fee is $15.00 unless otherwise stated. GNC reserves the right to alter the fee at any time, but changes will apply only to new or renewed Case 2:17-cv-00135-NBF Document 18 Filed 03/30/17 Page 8 of 21 4 memberships. Membership fee is non-refundable. GNC is not responsible for lost or stolen Membership cards. Id. C. Plaintiffs’ Complaint Plaintiff Doug Cook, a resident of Georgia, alleges he has been a member of the Gold Card Program for “several years,” and “most recently paid $15 to renew his membership in April 2016” with an expiration of April 2017. Compl. ¶ 4. Plaintiff Jody Eberhart, a resident of Pennsylvania, also claims to have been a Gold Card Program member for “several years,” and “most recently paid $15 to renew his membership in 2016.” Id. at ¶ 5. Both Plaintiffs are bound by the May 2015 Gold Card Program Terms and Conditions. Id. at ¶ 14 & Ex. A. As to both Plaintiffs, they claim “GNC refused to recognize or provide Gold Card Program member benefits” on purchases in 2017. Id. at ¶¶ 4-5. Plaintiffs allege that GNC “terminated” their Gold Card Program memberships prior to expiration and “were not refunded their membership fees or a pro-rata portion thereunder.” Id. at ¶ 25. Plaintiffs allege three counts against GNC in their Complaint, the first two seeking damages, while the third seeks injunctive relief only. While not entirely clear from the face of the pleading, the first count appears to be a blended claim for breach of contract and breach of the duty of good faith and fair dealing. Id. at ¶¶ 23-30. The second count alleges, in the alternative and to the extent the Court finds that no contract exists, a claim for unjust enrichment. Id. at ¶¶ 31-33. Finally, the third count alleges an injunctive relief claim for breach of GNC’s duties, which appears only to allege a breach contract claim. Id. at ¶ 35. II. ARGUMENT A. Standard of Review A motion under Rule 12(b)(6) tests the legal sufficiency of the plaintiffs’ claims. In evaluating the motion, the Court must “determine whether the facts alleged in Case 2:17-cv-00135-NBF Document 18 Filed 03/30/17 Page 9 of 21 5 the complaint are sufficient to show that the plaintiff has a ‘plausible claim for relief.’” Fowler v. UPMC Shadyside, 578 F.3d 203, 211 (3d Cir. 2009) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009)). To withstand such a motion, “[f]actual allegations must be enough to raise a right to relief above the speculative level.” Phillips v. Cnty. of Allegheny, 515 F.3d 224, 232 (3d Cir. 2008) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Iqbal, 556 U.S. at 678. Instead, the plaintiff must “plead[] factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. (citing Twombly, 550 U.S. at 556). A court is “not compelled to accept unwarranted inferences, unsupported conclusions or legal conclusions disguised as factual allegations.” Baraka v. McGreevey, 481 F.3d 187, 211 (3d Cir. 2007). First, the court must separate the complaint’s factual allegations from its legal conclusions. Fowler, 578 F.3d at 210-11. Having done that, the court must take only the factual allegations as true and determine whether the plaintiff has alleged a “plausible claim for relief.” Id. at 211. Further, “a complaint may be subject to dismissal under Rule 12(b)(6) when an affirmative defense . . . appears on its face.” Leveto v. Lapina, 258 F.3d 156, 161 (3d Cir. 2001) (alteration in original; citation and internal quotation marks omitted). B. Plaintiffs’ Breach of Contract Claims Must Be Dismissed Because Plaintiffs Fail to Allege a Breach of Any Provision of the Terms and Conditions. In Counts I and III, Plaintiffs assert that GNC breached the Gold Card Program Terms and Conditions. In order to prevail on their breach of contract claim, Plaintiffs must demonstrate: “(1) the existence of a contract, including its essential terms, (2) a breach of a duty imposed by the contract and (3) resultant damages.” Ocasio v. Prison Health Servs., 979 A.2d 352, 355 (Pa. Super. Ct. 2009) (citations and internal quotation marks omitted). While Plaintiffs allege that the Gold Card Program Terms and Case 2:17-cv-00135-NBF Document 18 Filed 03/30/17 Page 10 of 21 6 Conditions constitute a bilateral contract between Plaintiffs and GNC, Plaintiffs do not (and cannot) allege GNC breached a specific duty imposed by the Gold Card Program Terms and Conditions. Plaintiffs allege that the Gold Card Program Terms and Conditions constitute a contract between Plaintiffs and GNC that governs Plaintiffs’ Gold Card memberships and membership benefits. Compl. ¶ 14 (“The detailed terms and conditions specify that the membership lasts for one year from the date of purchase.”); see also id. at ¶ 21(D) (“The claims involve matters of contract based on the same documents”); Id. at ¶¶ 31 & 33 (alleging an alternative claim to their stated claims for breach of contract). The Terms and Conditions provide: The following Terms and Conditions govern membership in GNC’s Member Price Program (the “Program”),2 a loyalty program brought to you by General Nutrition Corporation. Purchase or use of a membership in the Program (a “Membership”) at any time binds the purchaser or user to the Terms set forth herein. Compl. Ex. A at 1. GNC does not challenge through this motion Plaintiffs’ allegations that the parties entered into a contract governed by the Gold Card Program Terms and Conditions. In addition to alleging the existence of a contract, however, Plaintiffs are required to allege the breach of a specific duty imposed by the contract. See Pennsy Supply, Inc. v. Am. Ash Recycling Corp., 895 A.2d 595, 600 (Pa. Super. Ct. 2006). Yet Plaintiffs do not (and cannot) identify a breach of duty GNC owed to them. In construing the terms of a written contract, a court must “give effect to the intent of the contracting parties” as “embodied in the writing itself.” Murphy v. Duquesne Univ. of the Holy Ghost, 565 Pa. 2 As Plaintiffs acknowledge, the Gold Card Program and the Member Price Program are interchangeable. Compl. ¶ 2 (“Those programs were variously called the “Gold Card Program” and/or the “Member Price Program” (collectively, the “Gold Card Program”)). Case 2:17-cv-00135-NBF Document 18 Filed 03/30/17 Page 11 of 21 7 571, 590-91, 777 A.2d 418, 429 (2001) (citations omitted). As the Pennsylvania Supreme Court recognized in Robert F. Felte, Inc. v. White: When a written contract is clear and unequivocal, its meaning must be determined by its contents alone. It speaks for itself and a meaning cannot be given to it other than that expressed.…[T]his Court long ago emphasized that the parties have the right to make their own contract, and it is not the function of this Court to re-write it, or give it a construction in conflict with the accepted and plain meaning of the language used. 451 Pa. 137, 144, 302 A.2d 347, 351 (1973) (citation and internal quotation marks omitted). Plaintiffs allege that GNC breached the Terms and Conditions by terminating the program and not returning or issuing pro-rata refunds of the membership fees it charged, and not continuing to honor all benefits and performing all its obligations under the Gold Card Program for the duration of the membership periods.3 Compl. ¶ 15. Plaintiffs’ Complaint is full of vague allegations of “obligations” and “benefits” they claim to have been due: GNC described the benefits of membership in its Member Price Program as follows: • Save up to 50% Every Day[] • Save at GNC.com and Any GNC Store in America • New, Unbeatable Low Prices on Store Purchases[] • Simplified Pricing Makes Shopping Easier • More Savings. Every Day. Any Time You shop! 3 Plaintiffs allege throughout their Complaint that GNC “terminated” the Gold Card Program. But whether the program was “terminated” or merely “altered” or “changed” is a legal conclusion, and thus those allegations need not be accepted as true for purposes of this motion. The Court must only accept factual allegations as true, not legal conclusions. See Papasan v. Allain, 478 U.S. 265, 286 (1986) (“Although for the purposes of this motion to dismiss we must take all the factual allegations in the complaint as true, we are not bound to accept as true a legal conclusion couched as a factual allegation.”). Other than mere conclusory statements, Plaintiffs make no specific allegations to support their contention that the Gold Card Program was terminated, rather than merely altered or changed. Case 2:17-cv-00135-NBF Document 18 Filed 03/30/17 Page 12 of 21 8 Id. at ¶ 13. Plaintiffs further state the Terms and Conditions specifically provide “[u]p to fifty percent (50%) off eligible purchases made at GNC retail stores every day for one year. Some exclusions may apply.” Id. at ¶ 14 & Ex. A at 1. Conspicuously absent from Plaintiffs’ Complaint, however, is the express language of the Terms and Conditions that specifically permit GNC to act as it did in altering the membership program. Indeed, the Terms and Conditions expressly provide that: (1) benefits may be altered with or without notice; (2) GNC may alter the terms of membership at any time (but changes will apply only to new or renewed memberships); and (3) the membership fee is non-refundable. Id. Ex. A at 1-2. The Gold Card Program Terms and Conditions specifically describe Plaintiffs’ entitlement to membership benefits: A Membership entitles members to the following benefits: Up to fifty percent (50%) off eligible purchases made at GNC retail stores every day for one year. Some exclusions may apply. By purchasing a Membership, you agree to the Terms and Conditions of the Program. Additional benefits may apply. Full details are available at GNC.com. Benefits may be altered at any time with or without notice. Benefits may not be available for immediate use. Id. Ex. A at 1 (emphasis added). The Terms and Conditions further provide GNC may alter the terms of membership as to any new or renewed memberships: GNC reserves the right to alter the fee at any time, but changes will apply only to new or renewed memberships. Membership fee is non-refundable. GNC is not responsible for lost or stolen Membership cards. Id. Thus, the Terms and Conditions expressly permitted GNC to alter membership benefits and customer terms of membership at any time, including but not limited to modifying Plaintiffs’ benefits to allow them to “accumulate points based on volume of purchases” and removing the membership loyalty fee for all new or renewed Case 2:17-cv-00135-NBF Document 18 Filed 03/30/17 Page 13 of 21 9 memberships as of 2017. Compl. ¶ 16. In light of this express provision permitting GNC to make alterations to the benefits and terms of membership, Plaintiffs cannot show that GNC breached its contract with them. See, e.g., Gordon v. United Continental Holding, Inc., 73 F. Supp. 3d 472, 479 (D.N.J. 2014) (granting motion to dismiss where contractual terms of mileage awards program permitted United to modify, or even cancel the terms of mileage program); Sprague v. Gen. Motors Corp., 133 F.3d 388, 404 (6th Cir. 1998) (reversing district court’s grant of class certification where employer “unambiguously” reserved the right to amend or terminate lifetime healthcare benefits under the employees’ plans); Kemmerer v. ICI Am. Inc., 70 F.3d 281, 287-88 (3d Cir. 1995) (recognizing that “top hat” contracts could be terminated if “an explicit right to terminate or amend after the participants’ performance is reserved.”); In re Unisys Corp. Retiree Medical Ben. ERISA Litig., 58 F.3d 896, 903-04 (3d Cir. 1995) (granting partial summary judgment where employer “expressly reserv[ed] the company’s right to terminate the plans” and thus the plaintiff’s “eligibility for benefits was qualified because it was subject to Unisys’ reserved right to terminate the plan under which those benefits were provided”); Finnell v. Cramet, Inc., 289 F.2d 409, 413 (6th Cir. 1961) (where defendant acted in accordance with an express reservation of the power to amend a pension plan, amendment did not breach plaintiffs’ legal rights). In Gordon v. United Continental Holding, Inc., the District Court for New Jersey granted United’s motion to dismiss a putative class action complaint alleging United had an undisclosed practice of overcharging members who had higher mileage balances. 73 F. Supp. 3d at 475-76, 481. In dismissing the breach of contract claim, the court noted Case 2:17-cv-00135-NBF Document 18 Filed 03/30/17 Page 14 of 21 10 that the express terms of the mileage program permitted United to make unilateral changes to, or even cancel, the program rules. Id. at 479. Similarly, in Grossman v. USAir, Inc., 33 Phila. Co. Rptr. 427 (Pa. C.P. Apr. 16, 1997), plaintiffs in a putative class action asserted breach of contract claims against USAir for unilateral changes it made to its frequent flier program. USAir had unilaterally raised the number of credit miles that would be needed to obtain certain tickets, and applied those changes both to miles yet to be earned and to miles that had been earned, but not yet redeemed. Id. at 428-29. Both parties moved for summary judgment. In analyzing the respective issues, the court looked to the express contractual language of USAir’s terms that governed their frequent flier program. Those terms included a reservation of rights provision that provided as follows: “USAir reserves the right to change the Frequent Traveler Program rules, regulations, partners, mileage credits or award levels. This means that, with notice, USAir may raise award or mileage levels, add an unlimited number of blackout days or limit the number of seats available to any or all destinations. Also, program members may not be able to use awards to certain destinations, or may not be able to obtain certain types of awards. In addition, USAir reserves the right to terminate the program with advance notice.” Id. at 431 (emphasis in original) (citations and internal quotation marks omitted). Later versions of the terms also included similar express language providing that “mileage levels are subject to change with or without prior notice…” and “USAir reserves the right to terminate the Frequent Traveler Program or portions of the Program at any time.” Id. at 431-432 (emphasis in original; citations and internal quotations omitted). Case 2:17-cv-00135-NBF Document 18 Filed 03/30/17 Page 15 of 21 11 The court granted USAir’s motion for summary judgment. In doing so, the court found the language in USAir’s terms to be “clear and unambiguous, and that it permits USAir to make changes in the levels of credit miles needed to exchange for free travel, and to make those changes applicable to miles already accrued and banked by [frequent flier] members.” Id. at 432. Notably, in addressing and overruling plaintiffs’ argument that it would be unfair to permit USAir to make the increase of mileage levels applicable to miles already earned, the court specifically cited to the terms of the program, which “clearly and unambiguously permit USAir to terminate” the program. Id. at 432-33 (emphasis in original). The court noted that if “USAir can terminate the [mileage program], essentially wiping out miles that members spent significant money with USAir to accrue, why can it not take the lesser step of increasing the mileage levels needed to obtain free travel?” Id. at 433. The court found that the only reasonable interpretation was that USAir could. Id. Plaintiffs’ inability to allege a breach of the Terms and Conditions’ express language is fatal to their breach of contract claims, and thus Counts I and III must be dismissed. C. Plaintiffs’ Claim for Breach of the Implied Covenant of Good Faith and Fair Dealing Must Be Dismissed Because it is Duplicative of and Subsumed by Their Breach of Contract Claim. Under Pennsylvania law, a “claim for breach of the implied covenant of good faith and fair dealing is subsumed in a breach of contract claim.” Burton v. Teleflex Inc., 707 F.3d 417, 432 (3d Cir. 2013) (quoting LSI Title Agency, Inc. v. Evaluation Servs., Case 2:17-cv-00135-NBF Document 18 Filed 03/30/17 Page 16 of 21 12 Inc., 951 A.2d 384, 392 (Pa. Super. Ct. 2008). Therefore, in practice, the covenant of good faith functions “as an interpretative tool” to aid the court in evaluating breach of contract claims but the implied duty is never “divorced from the specific clauses of the contract.” Northview Motors, Inc. v. Chrysler Motors Corp., 227 F.3d 78, 91 (3d Cir. 2000). Thus, although Pennsylvania law generally recognizes a duty of good faith in the performance of contracts, this duty “does not create independent substantive rights.” Burton, 707 F.3d at 432 (quoting Commonwealth v. BASF Corp., No. 3127, 2001 WL 1807788, at *12 (Pa. Com. Pl.. Mar. 15, 2001); Hudgins v. Travelers Home and Marine Ins. Co., No. 11-882, 2013 WL 3949208, at *5 (E.D. Pa. Jul. 31, 2013) (“the claim for breach of the implied covenant of good faith and fair dealing is subsumed by the breach of contract claim[.]”); Cummings v. Allstate Ins. Co., 832 F. Supp. 2d 469, 473 (E.D. Pa. 2011) (“a breach of the covenant of good faith is nothing more than a breach of contract claim and . . . separate causes of action cannot be maintained for each, even in the alternative”); Zaloga v. Provident Life and Acc. Ins. Co. of Am., 671 F. Supp. 2d 623, 631 (M.D. Pa. 2009) (“a breach of the implied covenant of good faith and fair dealing merges with a breach of contract claim”) (citations omitted). Pennsylvania courts rarely recognize or apply the implied covenant of good faith and fair dealing in analyzing contractual disputes. See Agrecycle, Inc. v. City of Pittsburgh, 783 A.2d 863, 867 (Pa. Commw. Ct. 2001) (“In Pennsylvania, the courts have recognized the duty of good faith only in limited situations.”); 16 Summ. Pa. Jur. 2d Commercial Law § 1:120 (2d ed.) (“In Pennsylvania, the duty of good faith has been Case 2:17-cv-00135-NBF Document 18 Filed 03/30/17 Page 17 of 21 13 recognized in limited situations …”). Indeed, Pennsylvania courts hold the covenant inapplicable when: (1) a plaintiff has an independent cause of action to vindicate the same rights with respect to which the plaintiff invokes the duty of good faith; (2) such implied duty would result in defeating a party’s express contractual rights specifically covered in the written contract by imposing obligations that the party contracted to avoid; or (3) there is no confidential or fiduciary relationship between the parties. Agrecycle, Inc., 783 A.2d at 867. Plaintiffs allege “GNC has wrongfully and without justification repudiated its obligations under the Gold Card Program and has breached its duty of good faith and fair dealing.” Compl. ¶ 27. But Plaintiffs’ claim fails because it falls within each of the preceding categories. First, Plaintiffs have an independent breach of contract claim with which they may vindicate the same rights as protected by the covenant of good faith and fair dealing——namely that GNC “repudiated its obligations under the Gold Card Program[.]” Second, Plaintiffs’ claim concerning the implied covenant would defeat the parties’ express contractual rights set forth in the Terms and Conditions. Third, there is no confidential or fiduciary relationship between Plaintiffs and GNC. Thus the Court should find Plaintiffs’ claim for implied covenant of good faith and fair dealing is subsumed in Plaintiffs’ breach of contract claim, and dismiss it. Case 2:17-cv-00135-NBF Document 18 Filed 03/30/17 Page 18 of 21 14 D. Plaintiffs’ Unjust Enrichment Claim Must Be Dismissed Because the Parties Do Not Dispute the Existence of a Contract Which Governs the Parties’ Relationship. Plaintiffs assert that “[t]o the extent that GNC is not subject to contractual duties, GNC has been unjustly enriched through it retaining the Gold Card Program membership fees of plaintiffs and the putative class members.” Id. at ¶ 33. To prove their claim, Plaintiffs must demonstrate: (1) they conferred a benefit on GNC; (2) GNC retained those benefits; and (3) “acceptance and retention of such benefits under such circumstances that it would be inequitable for defendant to retain the benefit without payment of value.” Northeast Fence & Iron Works, Inc. v. Murphy Quigley Co., 933 A.2d 664, 669 (Pa. Super. Ct. 2007) (citations omitted). Unjust enrichment claims do not apply, however, where an express or written contract governs the dispute between the parties. Id.; Brown & Brown, Inc. v. Cola, 745 F. Supp. 2d 588, 625 (E.D. Pa. 2010) (“[I]t is a well-established rule that the doctrine of unjust enrichment is inapplicable when the relationship between the parties is founded upon written agreements, no matter how ‘harsh the provisions of such contracts may seem in light of subsequent happenings.’”) (quoting Wilson Area Sch. Dist. v. Skepton, 586 Pa. 513, 519, 895 A.2d 1250, 1254 (2006); Mercy Health Sys. v. Metro Partners. Realty LLC, No. 03046, 2003 WL 21904583, at *3 (Pa. C.P. July 10, 2003) (“Defendants allege that because there are express written agreements that govern the rights and obligations between the parties, [the plaintiff] cannot maintain an unjust enrichment claim. [The plaintiff] concedes this point in its brief and the Court agrees.”). Moreover, courts regularly dismiss unjust enrichment claims where plaintiffs fail to allege that the contract is unenforceable. See Richards v. Direct Energy Servs., LLC, 120 F. Supp. 3d 148, 165 (D. Conn. 2015) (dismissing unjust enrichment claim where the Plaintiff “has not claimed that the contract is void, illusory or otherwise unenforceable [and the plaintiff] also has not alleged facts in Case 2:17-cv-00135-NBF Document 18 Filed 03/30/17 Page 19 of 21 15 support of these legal conclusions.”); Edwards v. N. Am. Power and Gas, LLC, 120 F. Supp. 3d 132, 148 (D. Conn. 2015) (same); Guinn v. Hoskins Chevrolet, 361 Ill. App. 3d 575, 604-05 (2005) (affirming dismissal of unjust enrichment claim where the plaintiff did not dispute the contract and relied on the express terms of the contract throughout her complaint). Plaintiffs’ unjust enrichment claim must be dismissed because the Gold Card Program Terms and Conditions govern the parties’ relationship. Plaintiffs do not dispute the validity of the contract in their complaint; in fact, Plaintiffs repeatedly aver that the Terms and Conditions form a valid contract between the parties. See, e.g., Compl. ¶ 3 ([P]laintiffs … seek to recover their damages for GNC’s breach of its agreement …”); see also id. at ¶¶ 20(B)(i), 21, 31 & 33. GNC does not challenge through this motion Plaintiffs’ allegations that the parties entered into a contract governed by the Gold Card Program Terms and Conditions. Accordingly, Plaintiffs are prohibited from advancing an unjust enrichment claim, even in the alternative. See Skold v. Galderma Lab., L.P., 99 F. Supp. 3d 585, 599 (E.D. Pa. 2015) (“Only if there were a ‘question as to the validity of the contract in question’ could [the plaintiff] proceed on both theories in the alternative against [the defendant] … There being no such question, the motion to dismiss the unjust enrichment claim against [the defendant] is granted.”) (citations omitted); Batoff v. Charbonneau, No. 12-cv-05397, 2013 WL 1124497, at *9 (E.D. Pa. Mar. 19, 2013) (finding that “a party may plead alternative theories of breach of contract and unjust enrichment when there is a dispute about the existence or validity of the contract in question.”); Sheinman Provisions, Inc. v. Nat. Deli, LLC, No. 08-cv-453, 2008 WL 2758029, at *4 (E.D. Pa. July 15, 2008) (“The bar to this type of claim is not altered when unjust enrichment is plead in the alternative to an unsuccessful breach of contract Case 2:17-cv-00135-NBF Document 18 Filed 03/30/17 Page 20 of 21 16 claim as the relationship of the parties is still governed by a valid contract …. Plaintiff’s unjust enrichment claim will be dismissed.”). III. CONCLUSION For the foregoing reasons, GNC respectfully asks the Court to grant its motion to dismiss Plaintiffs’ class action complaint pursuant to Fed. R. Civ. P. 12(b)(6). DATED: March 30, 2017 Respectfully submitted, /s/ Sean M. Sullivan Sean M. Sullivan (admitted pro hac vice) DAVIS WRIGHT TREMAINE LLP 865 South Figueroa Street, Suite 2400 Los Angeles, CA 90017 T: (213) 633-8644 seansullivan@dwt.com Zana Z. Bugaighis Jordan Clark (admitted pro hac vice) DAVIS WRIGHT TREMAINE LLP 1201 Third Avenue, Suite 220 Seattle, WA 98101 T: (206) 757-8304 zanabugaighis@dwt.com jordanclark@dwt.com Attorneys for Defendant GENERAL NUTRITION CORPORATION Case 2:17-cv-00135-NBF Document 18 Filed 03/30/17 Page 21 of 21