The panel of Circuit Judges Kim McLane Wardlaw, Ana de Alba, and Eric C. Tung unanimously revived claims by plaintiff Alexander Panelli, who purchased a queen-sized Threshold Signature sheet set at a southern California Target in September 2023. The sheets were labeled "800 Thread Count Sheet Set" and "100% cotton sateen." Independent testing using the ASTM D 3775 method showed the sheets had a thread count of 288, according to the complaint.
Writing for the panel, Circuit Judge de Alba held that U.S. District Judge Marilyn L. Huff of the Southern District of California "skipped a step by not analyzing whether the label was ambiguous" before applying the framework from Moore v. Trader Joe's Co., 4 F.4th 874 (9th Cir. 2021). Huff had dismissed the case with prejudice in October 2024, reasoning that "[n]o reasonable consumer would interpret [Target's] 100% cotton bedsheet advertising and labeling 'as promising something that is impossible to find.'"
The panel rejected that reading. "Without the required finding of ambiguity, the district court was not permitted to pull back the covers on Target's claim and account for outside, contextual information in its reasonable consumer analysis," de Alba wrote. The thread count representation, the panel held, "plausibly conveys a concrete and unambiguous meaning to a reasonable [consumer]."
Target had argued that because Panelli's amended complaint conceded multiple methods exist for counting threads, the "800 Thread Count" label was susceptible to different interpretations. "But there is a loose thread in Target's argument: it is unlikely that a reasonable consumer would know there are multiple thread-counting methodologies," the panel wrote. Consumers shopping the bedding aisle "are likely to exhibit a low degree of care when purchasing low-priced, everyday items," the opinion said, quoting Moore.
The panel applied the California caselaw governing literally false advertising, citing Moore v. Mars Petcare for the proposition that "'Literal truth can sometimes protect a product manufacturer from a misleading claim, but it is no guarantee,' whereas 'there is no protection for literal falseness.'" The court held that Panelli's allegations were actionable because he alleged the challenged claim was literally false.
The opinion credited an amicus argument from California Attorney General Rob Bonta that the district court's rule would yield absurd results. "[A]ccepting the district court's reasoning would, for instance, allow one retailer to advertise 288 thread count sheets as '800 thread count' sheets, while subjecting a competitor to liability for advertising the very same sheets as '500 thread count' sheets," the state argued. Such a framework "would create an untenable and bizarre situation where partially false advertising would be actionable under California's consumer protection laws, but wholesale falsity would not," de Alba wrote.
The reasonable consumer standard under California's Unfair Competition Law and Consumers Legal Remedies Act, the panel noted, "raises questions of fact that are appropriate for resolution on a motion to dismiss only in 'rare situations.' … This is not one of those situations." The panel declined to reach Target's other arguments, including challenges to standing, equitable jurisdiction, and class scope, and remanded for further proceedings.
Panelli is represented by Christen Chapman, Glenn A. Danas, and others at Clarkson Law Firm PC; Craig W. Straub, Michael Houchin, and Zachary Crosner at Crosner Legal PC; and Lawrence J. Salisbury of Salisbury Legal Corp. Target is represented by Grant Ankrom and Michael J. Duvall of Dentons US LLP.