[00:00:15] Speaker 00:
We may proceed.

[00:00:18] Speaker 01:
May it please the court, Kristin Chapman on behalf of Appellant Alexander Panelli.

[00:00:22] Speaker 01:
I would like to reserve four minutes for rebuttal.

[00:00:26] Speaker 01:
The central legal error in this case is the district court's dismissal of Mr. Panelli's straightforward false advertising claim based on a legal rule that this court has never adopted.

[00:00:36] Speaker 01:
The district court misread Moore versus Trader Joe's to mean that physically impossible advertising claims can never mislead a reasonable consumer as a matter of law.

[00:00:45] Speaker 01:
But that is not what Trader Joe's held, and California law recognizes no such rule.

[00:00:49] Speaker 01:
And for good reason.

[00:00:51] Speaker 01:
Under the district court's approach, the more brazen the falsehood, the more immune from liability the advertiser becomes.

[00:00:57] Speaker 01:
As the state of California explained in its amicus brief, that is not and cannot be the law in California.

[00:01:03] Speaker 01:
What Trader Joe's actually held was much more narrow than how the district court interpreted it.

[00:01:08] Speaker 01:
In Trader Joe's, this court looked at context-specific inferences that were available to the consumer at the time of purchase to inform whether a reasonable consumer would be misled by the accurate but ambiguous label in that case.

[00:01:23] Speaker 01:
One of three contextual inferences this court looked at was impossibility.

[00:01:27] Speaker 01:
The impossibility there was relevant because it was common sense.

[00:01:32] Speaker 01:
This court reasoned that consumers generally know that you can't control where bees forage down to a single flower source, and a consumer would not interpret a label to promise something that's impossible to find.

[00:01:46] Speaker 01:
In that case, it was honey from a single flower source.

[00:01:49] Speaker 01:
The district court in this case took that narrow context specific inference of impossibility to stand for a independent legal rule, but it is not.

[00:01:59] Speaker 01:
The court in Trader Joe's did not create a blanket rule that physical impossibility defeats false advertising claims as a matter of law.

[00:02:12] Speaker 03:
Additionally... Council, isn't there a more charitable way of reading the district court's ruling as more in line with what Moore held that a reasonable consumer of bedsheets who would care about the threat counts would know that it would be impossible and therefore the claim of falsity couldn't be raised?

[00:02:32] Speaker 01:
No, Your Honor, and for two reasons.

[00:02:35] Speaker 01:
First, the allegation of Mr. Panelli's complaint regarding impossibility, he did not allege that the physical impossibility of having 100% cotton sheets with a thread count of 600 or higher is something that reasonable consumers know.

[00:02:50] Speaker 01:
Mr. Panelli alleged that thread count is directly tied to higher quality, which in turn is tied to higher prices, and reasonable consumers rely on thread count representations

[00:03:00] Speaker 01:
when making purchases.

[00:03:01] Speaker 01:
Mr. Panelli's own experience making the purchase reinforces that.

[00:03:05] Speaker 01:
He alleges that he would not have purchased his 800 thread count sheets.

[00:03:09] Speaker 01:
if he had known that the true thread count was 288, or he would have paid much less.

[00:03:14] Speaker 01:
The district court's analysis did not engage in any fact finding about whether reasonable consumers know about the physical impossibility that Mr. Panelli alleged.

[00:03:24] Speaker 01:
And to the extent that's debatable, it goes to it being a question of fact, which is why dismissal on the pleadings in false advertising cases is so rare.

[00:03:34] Speaker 01:
Now, going to the other point you raised, Your Honor, about whether a reasonable consumer would have a duty to research a characteristic to care about.

[00:03:43] Speaker 01:
Now, Target argues that that should be the rule, but that is not what this Court has ever held or what any California Court of Appeal has held.

[00:03:52] Speaker 01:
In Trader Joe's, the Court was dealing with a specialty niche product of manuka honey, and the Court held

[00:03:59] Speaker 01:
This court clarified in Whiteside that Trader Joe's makes clear reasonable consumers of everyday goods like the bedsheets in this case are not required to study labels with the same care that a reasonable consumer of a specialty product might.

[00:04:13] Speaker 01:
The heightened reasonable consumer standard that Target advocates for also contradicts Whiteside's affirmance of this court's holding in Williams v. Gerber that consumers are not required to look beyond a misleading front label to elsewhere on the product

[00:04:33] Speaker 01:
And here... Council, can I interrupt you for a second?

[00:04:36] Speaker 03:
You had mentioned for specialty products that there may be room for a reasonable consumer to do research in order to determine the truth or falsity of the claim.

[00:04:48] Speaker 03:
How do we distinguish between a product that is a specialty product and a product that is not a specialty product?

[00:04:54] Speaker 03:
Do we really want to go down this road?

[00:04:57] Speaker 01:
Yes, Your Honor, and I think we must, and I think Trader Joe's makes it clear.

[00:05:01] Speaker 01:
I think common sense informs it.

[00:05:04] Speaker 01:
Manuka Honey and Trader Joe's was a niche specialty product.

[00:05:09] Speaker 01:
One example is Brady vs. Bayer Corporation, a California Court of Appeal case where the court was analyzing the one-a-day brand

[00:05:17] Speaker 01:
for vitamin gummies and the court there said this is a everyday consumer item consumers are not required to look beyond the front label that makes a clear representation that it's one a day when the back label reveals that it's two a day and your honor I would

[00:05:35] Speaker 01:
Apologies if my characterization regarding specialty products was not clear.

[00:05:40] Speaker 01:
I didn't mean to suggest that under Trader Joe's, reasonable consumers of specialty products have to engage in off-label research.

[00:05:47] Speaker 01:
Trader Joe's did not hold that.

[00:05:49] Speaker 01:
In Trader Joe's, it was

[00:05:51] Speaker 01:
knowledge that was known to reasonable consumers of specialty products and was contextual inferences available from the product itself.

[00:05:59] Speaker 01:
Here with thread count, the label, thread count is a specific defined objective characteristic of thread sheets.

[00:06:07] Speaker 01:
to even if there was some argument that it was ambiguous, there's nothing, none of the contextual inferences would contradict Mr. Pennelli's interpretation of the label, which is to believe it's true.

[00:06:19] Speaker 01:
This is not a, oh, excuse me.

[00:06:21] Speaker 02:
No, counsel, I do want to ask you about that now that we're talking about the thread count.

[00:06:25] Speaker 02:
One of the things that Target alleged was that Mr. Pennelli failed to adequately allege facts to support his claim that the product had 800 thread count.

[00:06:33] Speaker 02:
My understanding is that there was a test used that was, I think, from 2003, but there have been five new iterations of it since.

[00:06:40] Speaker 02:
Talk to me about that.

[00:06:41] Speaker 02:
Why doesn't this fail under 9b?

[00:06:44] Speaker 01:
Your honor, Mr. Pennelli sufficiently alleged the testing allegations to the specific sheets that he purchased.

[00:06:50] Speaker 01:
The ASTM test method that is the globally accepted industry standard, the 2003 version and the 2023 version are both in the record.

[00:06:59] Speaker 01:
The target submitted the 2023 version.

[00:07:02] Speaker 01:
If you compare them, there's no fundamental differences between the two.

[00:07:05] Speaker 01:
Target doesn't point out any.

[00:07:07] Speaker 01:
Thread count is calculated by yarns or threads per square inch and the ASTM test method makes clear that threads are counted as a single unit even if they're applied.

[00:07:21] Speaker 01:
One way that companies inflate thread count is by counting the thread components, the filaments or the applied components,

[00:07:30] Speaker 01:
And then multiplying that by the number of threads to reach these higher numbers.

[00:07:34] Speaker 01:
In the 2005 FTC letter that Mr. Panelli attaches to his complaint, it makes clear that the FTC thinks that would be misleading.

[00:07:43] Speaker 01:
The FTC in that letter recommends that if you had 300 thread count and one of the threads

[00:07:50] Speaker 01:
One of the sides was two-ply.

[00:07:53] Speaker 01:
An accurate way to convey that would be 300 by two-ply.

[00:07:57] Speaker 01:
But if you called that 600 thread count, that was likely to deceive the consumer.

[00:08:01] Speaker 03:
Did the label indicate in this case what method was being used to count the threads?

[00:08:07] Speaker 01:
I don't believe so, Your Honor.

[00:08:08] Speaker 01:
I think it said 800 thread count.

[00:08:12] Speaker 01:
The ASTM test method allows for different techniques to count threads, whether you can use different tools or cut a square inch and then unravel it, but it's clear that thread count means

[00:08:25] Speaker 01:
The vertical yarns by the horizontal yarns and one square inch and a yarn or thread is a single unit.

[00:08:31] Speaker 02:
So are you alleging or standing by the fact that you believe Mr. Panelli alleged the who what where why sufficiently?

[00:08:38] Speaker 02:
It's my understanding reading through all of the information here that Target says we were never really put on notice.

[00:08:43] Speaker 02:
We didn't know who did the testing.

[00:08:45] Speaker 02:
We were promised the results of the test and we never received anything.

[00:08:50] Speaker 02:
So what's your response to that?

[00:08:51] Speaker 01:
Yes, sir.

[00:08:52] Speaker 01:
Mr. Pennelly alleged sufficient information to put Target on notice.

[00:08:55] Speaker 01:
He alleged the test method that was used, the ASTM method.

[00:08:59] Speaker 01:
He alleged the equipment that was used by the expert, the traverse thread counter.

[00:09:03] Speaker 01:
He explained the results, 168 by 220, to reach the 288 thread count.

[00:09:10] Speaker 01:
He alleged the year and the month, January 2024, at a lab in the US.

[00:09:15] Speaker 01:
In one of the district court cases that dealt with thread count, Thomas versus Walmart, the district court there dealt with a similar argument and said the identity of the tester or the identity of the lab doesn't make it any more plausible.

[00:09:31] Speaker 01:
Either the testing occurred or it didn't, and Mr. Panelli has alleged it occurred, and he has provided sufficient information for Target to be aware of the allegations against it.

[00:09:39] Speaker 01:
Additionally, in Thomas versus Walmart, the court there talked about the extensive allegations that were made about testing.

[00:09:48] Speaker 01:
But if you look at what's quoted in the decision and if you look at the complaint in that case, it's essentially what Mr. Panelli alleged.

[00:09:54] Speaker 01:
There, the plaintiff discussed the ASTM method, which is what his expert used, and that's what Mr. Panelli has done here.

[00:10:00] Speaker 01:
It's unclear what additional information, aside from perhaps the name of the lab,

[00:10:04] Speaker 01:
that target would receive in any report.

[00:10:06] Speaker 01:
And at this stage, Mr. Panelli is not required to provide that information.

[00:10:11] Speaker 01:
He's just required to plausibly allege his claim, and he has done so.

[00:10:15] Speaker 03:
And to be clear, counsel, the district court didn't reach those issues, right?

[00:10:19] Speaker 03:
All the district court held was that a factual impossibility that has been alleged would negate a claim under the CLRA.

[00:10:28] Speaker 01:
That's correct, Your Honor.

[00:10:29] Speaker 01:
The court's analysis began and ended with its misinterpretation of Moore versus Trader Joe's, so it did not reach any other issues.

[00:10:38] Speaker 00:
Do you want to reserve the rest of your time?

[00:10:40] Speaker 01:
Yes, Your Honor, I will.

[00:10:41] Speaker 01:
Thank you.

[00:10:54] Speaker 04:
Good morning, Your Honors.

[00:10:55] Speaker 04:
Good morning.

[00:10:56] Speaker 04:
My name is Grant Ancrum, I represent Appellee Target Corporation.

[00:11:03] Speaker 04:
Appellant attempts to paint the District Court's order as broad and far-reaching.

[00:11:09] Speaker 04:
The reality, however, is that the District Court simply dismissed a wholly deficient complaint based on Appellee's own factually unsupported allegations and contradictory allegations.

[00:11:21] Speaker 04:
to understand that you have to step back and look at exactly what plaintiffs are alleging.

[00:11:26] Speaker 04:
They're not alleging that just one sheet is misrepresented, the one that they tested.

[00:11:33] Speaker 04:
They're alleging that every 600 that count or more, 600, 700, 800 counts,

[00:11:39] Speaker 04:
Thread counts of 100% cotton sheets are falsely advertised.

[00:11:43] Speaker 04:
In other words, everyone in the industry, regardless of manufacturer, regardless of type of cotton used, regardless of weave, is misrepresenting its thread count if they are saying it's more than 600.

[00:11:58] Speaker 04:
To support this, plaintiff has two paragraphs in his complaint.

[00:12:03] Speaker 04:
The first one is the testing allegation paragraph.

[00:12:06] Speaker 04:
In that paragraph, plaintiff summarily alleges that independent testing confirmed that the thread count on the she's the plaintiff purchase was 288.

[00:12:15] Speaker 04:
The plaintiff did not identify the person, lab, or individual that conducted that testing.

[00:12:24] Speaker 04:
That's one issue.

[00:12:26] Speaker 04:
They didn't attach the report or attach any sort of depiction of how these threads were counted or of the sample that was used.

[00:12:36] Speaker 04:
And they didn't provide any other information about how the ASTM methodology was actually applied in this particular case.

[00:12:45] Speaker 04:
The only thing they did was attach a 20-year-old ASTM standard cut out of a book.

[00:12:52] Speaker 04:
They did this despite repeated attempts from Target to request additional information relating to this testing.

[00:13:01] Speaker 04:
We had filed two motions to dismiss.

[00:13:05] Speaker 04:
They had said they were going to amend and add additional questions.

[00:13:07] Speaker 03:
Council, I'm sorry to interrupt, but that's not an issue we need to reach here, right?

[00:13:10] Speaker 03:
Because the district court never reached those issues itself.

[00:13:14] Speaker 03:
We're a court of review, not a court of first view, generally.

[00:13:18] Speaker 04:
I would say that for two reasons this should be considered here.

[00:13:23] Speaker 04:
The first is because it provides the context of how the judge got to Moore and the Moore decision.

[00:13:29] Speaker 04:
And I'll get to that here in just a second.

[00:13:31] Speaker 04:
And the second is that this court can affirm on any grounds.

[00:13:33] Speaker 04:
The district court's decision you don't have to defer necessarily on the court's reasoning so another ground and that we briefed in our Opinion is that this complaint is lacks any factual allegations to plausibly support their claims They've they've got these tests these tests conclusory resort the results But don't provide target with any information about how they actually got to 200 I mean aren't you veering into questions of fact like whether in fact a

[00:14:03] Speaker 00:
Target is representing that it's selling 800 thread count cotton sheets and in fact, they are 800 thread count by some other test.

[00:14:16] Speaker 00:
I mean, I have the same problem with this case as I did with the first case.

[00:14:20] Speaker 00:
It's like put in your answer, show that this test is inaccurate or they tested the wrong sheet or that,

[00:14:29] Speaker 00:
By targets testing, it is 600.

[00:14:34] Speaker 04:
So Your Honor, I would say that this court has always held that you have to at least allege facts to plausibly state a claim.

[00:14:45] Speaker 04:
And to compare it to the case that you just spoke about, it would be as if in the prior case, they alleged that the product contained malic acid, but didn't show anywhere, didn't point to the back of the product label, and show that it actually contains malic acid.

[00:15:01] Speaker 04:
It was just a summary and conclusion that, take our word for it, this product contains malic acid.

[00:15:07] Speaker 04:
That's what plaintiffs are doing here.

[00:15:09] Speaker 04:
Their entire test result is, take our word for it, it's 288 thread count.

[00:15:14] Speaker 04:
It's not, here's how we got to this.

[00:15:16] Speaker 04:
It's not like these other thread count cases where they attach a picture or a depiction of how they got there.

[00:15:21] Speaker 04:
It's, hey, we had this tested, 288, we're good.

[00:15:25] Speaker 04:
And that's the primary argument that they take forth in their brief is,

[00:15:30] Speaker 04:
Look, Your Honor, we don't have to do anything.

[00:15:32] Speaker 04:
These complaints shouldn't be dismissed ever at the pleading stage.

[00:15:37] Speaker 04:
We've pled 288, and that's it.

[00:15:39] Speaker 04:
But that's just a conclusion.

[00:15:41] Speaker 04:
And then the only other thing that they have to support their claim, that everyone in the industry that is selling 600 plus thread count sheets is misleading consumers, is a statement that's made upon information and belief that it's impossible to have a 600 plus thread count.

[00:16:00] Speaker 04:
And they cite a couple of media excerpts that they say support this.

[00:16:04] Speaker 04:
But when you read them, they don't actually support this claim.

[00:16:09] Speaker 04:
So it's with this context, these two very minimal allegations.

[00:16:12] Speaker 02:
Counsel Amit, sorry.

[00:16:13] Speaker 02:
I want to bring you back to that.

[00:16:15] Speaker 02:
Yes.

[00:16:15] Speaker 02:
So I understand you said, look, they don't identify who ran the test.

[00:16:18] Speaker 02:
They don't attach the report.

[00:16:20] Speaker 02:
They don't really explain what methodology was used.

[00:16:23] Speaker 02:
If they did all that, would we be in a different position here?

[00:16:30] Speaker 04:
Potentially, your honor, but the issue is that there's a reason that they have not done this.

[00:16:36] Speaker 04:
We've asked them multiple times, and it's because there's a methodology that is being applied here.

[00:16:42] Speaker 04:
Look, Target has ASTM testing, ASTM methodology testing that confirms the 800-thread count.

[00:16:50] Speaker 04:
And the reason we've requested it so often, like give us more details, is because we simply cannot understand how they got to 288.

[00:16:58] Speaker 04:
So if they had alleged a actual possible... Question for discovery, right?

[00:17:04] Speaker 03:
After the motion to dismiss stage and then you would have summary judgment hearings on it and then go to trial potentially.

[00:17:11] Speaker 03:
That all seems going to judge word loss question, the question of fact.

[00:17:14] Speaker 04:
Again, I think, Your Honor, there can be questions of fact, but there's also a pleading threshold, a standard, that you have to put the party on notice of what your allegation is of how you actually allege that they're... So, Counsel, the reason I was asking that question is if you were going to say, well, yeah, Your Honor, we'd be in a different position, it's like, well, then why don't we allow them to amend their complaint so that they can do that?

[00:17:40] Speaker 04:
Yeah.

[00:17:41] Speaker 04:
On the amendment piece, Your Honor, I mean,

[00:17:43] Speaker 04:
There's two reasons.

[00:17:46] Speaker 04:
The first is they have had multiple opportunities.

[00:17:50] Speaker 04:
They've told us they're going to do it.

[00:17:52] Speaker 04:
They didn't do it.

[00:17:52] Speaker 04:
They refused to do it.

[00:17:53] Speaker 04:
They have stood on this repeatedly to the detriment of Target having to brief this multiple times and with the same result that we told them was going to be the case at the very beginning.

[00:18:06] Speaker 04:
And the other reason, Your Honor, is because it's a futile effort at this point, demonstrated by their refusal to do it before.

[00:18:13] Speaker 04:
There isn't an actual testing methodology that is going to result in 288 thread count on target sheets.

[00:18:23] Speaker 03:
Counsel, can we return to the district court's reason for dismissing this case?

[00:18:28] Speaker 03:
So I'm looking at the decision.

[00:18:31] Speaker 03:
The district court judge says, defendant argues that plaintiff's claims fail because if the court accepts plaintiff's allegations as true that it is physically impossible for cotton fabric to have a thread count of 600 or more, then no reasonable consumer could be deceived by the representations at issue.

[00:18:48] Speaker 03:
Court agrees with defendant.

[00:18:50] Speaker 03:
Now that seems quite a categorical statement.

[00:18:53] Speaker 03:
Every time a plaintiff alleges that a claim is factually impossible,

[00:18:59] Speaker 03:
They can't bring a claim of fraud.

[00:19:02] Speaker 03:
That seems wrong to me because false claims are, to some degree or another, impossible.

[00:19:07] Speaker 03:
If I promise to sell you a Buick Skylar convertible for $10,000, and you pay me $10,000, and I say, I'm not going to give it to you because I don't have it.

[00:19:18] Speaker 03:
I'm sorry.

[00:19:18] Speaker 03:
You can't sue me for fraud.

[00:19:20] Speaker 03:
Because my argument, according to the district court's logic, is that it's impossible for me to give you the car because I don't have it.

[00:19:28] Speaker 03:
It's a physically impossible claim.

[00:19:31] Speaker 03:
But it's still fraud.

[00:19:32] Speaker 03:
So help me square the circle here.

[00:19:34] Speaker 03:
I don't quite understand what the district court.

[00:19:36] Speaker 03:
I do understand, I think, what the district court is saying.

[00:19:38] Speaker 03:
And if my understanding is correct, it seems flat out wrong.

[00:19:42] Speaker 04:
So great questions, Your Honor.

[00:19:45] Speaker 00:
Well, how do you square that to add on to his question

[00:19:50] Speaker 00:
more versus Trader Joe's very contextual analysis.

[00:19:57] Speaker 04:
Yeah, so great questions.

[00:20:02] Speaker 04:
Target is not continuing, and I don't think the district court's order is intended to say that you can never sue on a literally false statement.

[00:20:11] Speaker 04:
If you say no sugars and the product contains sugars, that is actionable.

[00:20:16] Speaker 04:
The issue here, and I think where the district court was going with this, is that if you have two plausible interpretations, or strike that, not plausible, you have two competing interpretations of a term, 800 thread count,

[00:20:32] Speaker 04:
using plaintiff's unspecified methodology, and this is why the methodology is important.

[00:20:37] Speaker 04:
Plaintiff's unspecified methodology versus a methodology, unspecified methodology where it's, they claim impossible to get 600 thread counts, versus a methodology that it is and that the industry is using for all these 600 thread count sheets,

[00:20:57] Speaker 04:
to and you have those two things, then a reasonable consumer is not going to assume what the product is saying is something that's impossible to achieve.

[00:21:06] Speaker 04:
In other words, a reasonable consumer is not going to choose the methodology that there's no way to get to 600 thread count.

[00:21:13] Speaker 04:
when there is a methodology, one that, again, the industry across the board is using, that does show a 600-thread count sheet.

[00:21:22] Speaker 04:
And that's where the impossibility comes in.

[00:21:24] Speaker 04:
It's when you have these two competing potential interpretations.

[00:21:28] Speaker 04:
Reasonable consumer is not going to assume the impossible.

[00:21:35] Speaker 03:
And... Council, can you respond to Judge Wardlaw's question?

[00:21:38] Speaker 03:
How, I mean, it seems to me Moore is,

[00:21:43] Speaker 03:
eminently distinguishable because in Moore there was an allegation or at least the court found that there to be an allegation that a reasonable consumer would know that the representation was physically impossible, factually impossible.

[00:21:59] Speaker 03:
Here I don't see an allegation here in the complaint.

[00:22:01] Speaker 03:
The complaint just says

[00:22:04] Speaker 03:
You know Pennelli bought the bedsheets thinking that it would have 600 or more counts of thread But in fact it had 288 and also it would have been impossible for the bedsheets to have more than 600 Yes, your honor and more is very very well reasoned opinion, and it does rely on those contextual factors, and it's it's it's interesting here because the issue is that

[00:22:31] Speaker 04:
It's the interpretation that's being offered.

[00:22:34] Speaker 04:
The reasonable consumer doesn't have that knowledge to even get to what the plaintiffs are alleging.

[00:22:42] Speaker 04:
We don't know exactly how their testing methodology is being applied, but they are alleging that a reasonable consumer has a very specific expectation that this particular methodology, the one that they don't tell us about, is being applied.

[00:23:00] Speaker 00:
And that... I think what they're really alleging, because I sort of relate to this, is that the reasonable consumer has a basic understanding that the higher the thread count in a cotton sheet or a cotton towel or any of these things, that the higher quality the sheet is and therefore that justifies paying a higher price.

[00:23:29] Speaker 00:
And so I would imagine, you know, in discovery in this case, one, I think Target may be able to demonstrate with its own testing that it in fact has, I don't know, what is it, 800, 600 plus.

[00:23:52] Speaker 00:
a thread count or that, in fact, there's not a higher price for the 600 thread.

[00:23:58] Speaker 00:
I mean, there's so many different ways.

[00:24:01] Speaker 00:
I see so many different defenses that you would have, but that doesn't make this complaint not plausible because the reasonable consumer does, I think, basically does have that assumption that the higher the thread count, the more expensive and better quality the sheet will be.

[00:24:22] Speaker 04:
I agree, Your Honor, that stepping back without getting into discovery and consumer perceptions or whatever, sure, that is an appealing argument.

[00:24:32] Speaker 04:
It brings it all back to they still have a duty to allege that we don't plausibly have that 800-thread count.

[00:24:42] Speaker 04:
I agree 800 is a way to measure quality, no doubt about it, but everyone in the industry is selling 600 plus 30 accounts, and they're challenging every single one of those.

[00:24:52] Speaker 04:
It's a comparative factor, right?

[00:24:55] Speaker 04:
So they're challenging every single one, saying everyone's lying.

[00:24:58] Speaker 04:
If it's a comparative factor and everyone's lying, then everyone's telling the truth.

[00:25:03] Speaker 04:
But then you go back and you look at what they've pled in terms of what their test results actually how they got to their test results of 288 and there's nothing there absolutely nothing to support what they're conclusively alleging and that's We had a test and it's 288 take our word for it.

[00:25:22] Speaker 00:
I See your point.

[00:25:23] Speaker 00:
Thank you.

[00:25:23] Speaker 04:
Thank you

[00:25:32] Speaker 01:
Just a few points to make in rebuttal.

[00:25:34] Speaker 01:
I think your honor is correct.

[00:25:35] Speaker 01:
The district court's categorical rule is just wrong in this case.

[00:25:41] Speaker 01:
The target repeatedly said that the testing was unspecified.

[00:25:46] Speaker 01:
That is not true.

[00:25:47] Speaker 01:
The ASTM method is what Mr. Pennelly alleged his expert used.

[00:25:53] Speaker 01:
He attached it to the report or to the complaint as we've discussed.

[00:25:56] Speaker 01:
The 2003 is

[00:25:58] Speaker 01:
I'm not sure.

[00:26:01] Speaker 02:
I'm not sure.

[00:26:03] Speaker 01:
I'm not sure.

[00:26:10] Speaker 01:
Lancaster and Bruno where in one it's an expert of a report and in one they actually attach the report.

[00:26:15] Speaker 01:
The report there doesn't actually reveal that much more information.

[00:26:18] Speaker 01:
It has the name of the lab, which Mr. Panelli has just said it's a lab in the U.S.

[00:26:22] Speaker 01:
But there it just says ASTM method.

[00:26:25] Speaker 01:
It doesn't say what tool the expert used.

[00:26:26] Speaker 01:
It doesn't name the expert.

[00:26:28] Speaker 01:
Here Mr. Panelli has alleged that his expert used the traverse thread counter so it provides more information.

[00:26:33] Speaker 01:
And there it says the

[00:26:34] Speaker 01:
and then the pick count and the total true thread count, which is what Mr. Panelli has alleged here.

[00:26:39] Speaker 01:
In those cases, the report says a hypothesis on how they believe the company reached the inflated thread count, but that's not required at this stage.

[00:26:48] Speaker 01:
Mr. Panelli has sufficiently alleged the method that his expert used to test the thread count.

[00:26:53] Speaker 01:
your honor.

[00:26:53] Speaker 01:
Additionally, Target essentially agrees that reasonable consumers do not know it is physically impossible to achieve a thread count of six or under a high.

[00:27:05] Speaker 00:
How do we know that?

[00:27:07] Speaker 00:
I mean, the thing is, your paragraph 24 says,

[00:27:11] Speaker 00:
On information and belief, any marketing or advertising of 100% cotton bedsheets consisting of a thread count of 600 or higher is false and misleading.

[00:27:21] Speaker 00:
That's on information and belief.

[00:27:24] Speaker 00:
Is that plausible when everybody in the industry is, I mean, I've seen 1200 thread count things for sale like at Neiman Marcus.

[00:27:34] Speaker 00:
And I'm going to assume they're higher quality and that justifies the price.

[00:27:40] Speaker 00:
What's the basis for that statement?

[00:27:42] Speaker 01:
Yes, Your Honor.

[00:27:43] Speaker 01:
And as this Court has held, plaintiffs can plead allegations on information and belief if the belief is supported by factual allegations that make the inference of culpability plausible.

[00:27:52] Speaker 01:
And Mr. Panelli has done that.

[00:27:54] Speaker 01:
He has multiple independent sources.

[00:27:56] Speaker 01:
The textile expert at Consumer Reports says the sweet spot for thread count is 400.

[00:28:01] Speaker 01:
The CEO of a luxury linen provider says, depending on the type of cotton used, that number referring to thread count is generally not more than 400.

[00:28:09] Speaker 01:
And a bedding manufacturer that says, when it comes to bed linen, 400 threads per square inch is about all that will fit into the space.

[00:28:15] Speaker 00:
So is your answer to me that you've plausibly alleged that it is a question of fact that has to go beyond the motion to dismiss stage?

[00:28:26] Speaker 00:
That's correct, Your Honor.

[00:28:27] Speaker 01:
We have plausibly alleged that it's physically impossible to achieve.

[00:28:31] Speaker 01:
Target will dispute that, which I think also underscores why this is not something that reasonable consumers know and that it would

[00:28:39] Speaker 01:
dissuade a reasonable consumer from Mr. Panelli's interpretation of the label, which is to believe that the label is true.

[00:28:46] Speaker 01:
And if this court has any misgivings or believes that Mr. Panelli's allegations are deficient in any way, the remedy here is not affirmance.

[00:28:55] Speaker 01:
It's to reverse the district court's denial of leave to amend and give Mr. Panelli the chance to amend his complaint.

[00:29:02] Speaker 01:
He can add

[00:29:03] Speaker 01:
Additional allegations about testing of unpurchased products, allegations regarding what reasonable consumers know.

[00:29:11] Speaker 01:
At this stage, amendment is not futile.

[00:29:14] Speaker 01:
Mr. Panelli has amended his complaint once, but it was not in response to a court order.

[00:29:19] Speaker 01:
It was just following removal of the case.

[00:29:21] Speaker 01:
So he should be given, at the very minimum, a chance to amend his complaint.

[00:29:25] Speaker 01:
But again, as the complaint is currently pled, he has sufficiently alleged his straightforward, literally false advertising claims.

[00:29:35] Speaker 00:
Thank you, Council.

[00:29:36] Speaker 01:
Thank you, Your Honors.

[00:29:37] Speaker 00:
Pennelli versus Target Corporation is submitted and we will take up Brown versus Brita products.