The panel ruled that the district court misinterpreted Moore v. Trader Joe's Co. when it dismissed Panelli's claims under California's Unfair Competition Law and Consumer Legal Remedies Act. According to the opinion, Moore involved ambiguous labels, and the labels on Target's Threshold Signature sheets were not ambiguous.
Panelli bought a queen-sized set labeled as an 800 Thread Count Sheet Set made of 100% cotton sateen at a Target in southern California in September 2023. He alleged he paid a higher price based on the understanding that a higher thread count correlated to higher quality, and claimed the sheets felt considerably rougher than expected after purchase.
He filed suit in April 2024. According to the complaint, independent testing using the ASTM D 3775 method in January 2024 showed the sheets had a thread count of 288, not the 800 claimed on the label. Panelli argued that it is physically impossible for cotton threads to be fine enough to allow for 600 or more threads in a single square inch of 100% cotton fabric.
The district court granted Target's motion to dismiss, relying on Moore to conclude that no reasonable consumer would be deceived by a claim that is factually impossible. It denied leave to amend, reasoning that Panelli could not contradict his own allegation of physical impossibility.
The Ninth Circuit rejected that reading. The panel held that the reasonable consumer standard under the UCL and CLRA raises questions of fact that are appropriate for resolution on a motion to dismiss only in rare situations.
The panel concluded that a reasonable consumer may still be deceived by a physically impossible claim, and that the district court erred in dismissing the complaint on that basis.