York et al v. Andalou Naturals, Inc.
Filing
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ORDER DENYING Motion to Dismiss for Failure to State a Claim filed by Andalou Naturals, Inc. (Doc. 12 ). Signed by Judge Staci M. Yandle on 12/8/2016. (mah)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ILLINOIS
CASSANDRA YORK and
STEPHANIE TEACHOUT, Individually
and on Behalf of all Others Situated,
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Plaintiffs,
vs.
ANDALOU NATURALS, INC.,
Defendant.
Case No. 16-CV-894-SMY-DGW
MEMORANDUM AND ORDER
Pending before the Court is Defendant Andalou Naturals Inc.’s Motion to Dismiss (Doc.
12). Plaintiffs filed a response (Doc. 16). For the following reasons, the motion is DENIED.
Background
In this putative class action, Plaintiffs Cassandra York and Stephanie Teachout allege that
Defendant Andalou Naturals “deceived consumers into believing that its hair care products (the
“Products”) were solely comprised of ingredients that are “natural” when in fact the Products
contain numerous synthetic and potentially harmful chemicals that are not “natural” at all” (Doc.
1, ¶ 2). Plaintiffs’ Complaint alleges claims for violations of the Illinois Consumer Fraud and
Deceptive Business Practices Act (“ICFA”) (Count I), the Missouri Merchandising Practices Act
(“MMPA”) (Count II), unjust enrichment (Count III), and breach of express warranty (Count IV)
(Doc. 1). Plaintiffs seek to represent a nationwide class of consumers that purchased any of the
eight products included in the Andalou Naturals haircare line. Plaintiffs further seek to represent
putative subclasses of Illinois and Missouri consumers who purchased any of the eight products.
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Discussion
As an initial matter, Defendant argues that Plaintiff York lacks standing because her
claims were rendered moot when Defendant tendered full relief in her Illinois state court action.
However, Plaintiff York rejected the offer and thus her claims are not moot. See CampbellEwald Co. v. Gomez, 136 S.Ct. 663, 672, 193 L.Ed.2d 571 (2016) (concluding that an
unaccepted settlement offer or offer of judgment does not moot a plaintiff’s case). Defendant
also contends that Plaintiffs are forum shopping because they have filed and dismissed claims in
state court prior to the current federal lawsuit. As Plaintiffs correctly note, they are the “masters
of their complaints” and the fact that they voluntarily dismissed lawsuits in state court prior to
filing suit in federal court does not warrant dismissal of the instant action. See Garbie v.
DaimlerChrysler Corp., 211 F.3d 407, 410 (7th Cir. 2000).
Defendant also moves to dismiss the Complaint pursuant to Rule 12(b)(6) of the Federal
Rules of Civil Procedure asserting that: (1) Plaintiffs cannot sustain viable consumer fraud
claims because Defendant does not falsely advertise its line of Products; (2) Plaintiffs unjust
enrichment and breach of express warranty claims fail to state a claim; and (3) this action should
be dismissed under the doctrine of primary jurisdiction.
When reviewing a Rule 12(b)(6) motion to dismiss, the Court must accept all allegations
in the Complaint as true. Erickson v. Pardus, 551 U.S. 89, 94 (2007) (citing Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 555 (2007)). The federal system of notice pleading requires only that a
plaintiff provide a “short and plain statement of the claim showing that the pleader is entitled to
relief.” Fed. R. Civ. P. 8(a)(2). However, the allegations must be “more than labels and
conclusions.” Pugh v. Tribune Co., 521 F.3d 686, 699 (7th Cir. 2008). This requirement is
satisfied if the Complaint (1) describes the claim in sufficient detail to give the defendant fair
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notice of what the claim is and the grounds upon which it rests and (2) plausibly suggests that the
plaintiff has a right to relief above a speculative level. Twombly, 550 U.S. at 555; see Ashcroft v.
Iqbal, 129 S. Ct. 1937, 1949 (2009). “A claim has facial plausibility when the plaintiff pleads
factual content that allows the court to draw the reasonable inference that the defendant is liable
for the misconduct alleged.” Iqbal, 129 S. Ct. at 1949 (citing Twombly, 550 U.S. at 556).
Counts I and II - ICFA and MMPA Claims
The Illinois Consumer Fraud and Deceptive Business Practices Act (“ICFA”) prohibits
the “misrepresentation or the concealment, suppression or omission of any material fact” in the
conduct of any trade or commerce. 815 ILCS § 505/2. In order to state a claim for violation of
the ICFA, a plaintiff must allege: “(1) a deceptive act or practice by the defendant, (2) the
defendant's intent that the plaintiff rely on the deception, (3) the occurrence of the deception in a
course of conduct involving trade or commerce, and (4) actual damage to the plaintiff that is a
result of the deception.” De Bouse v. Bayer, 922 N.E.2d 309, 313 (Ill. 2009); Rickher v. Home
Depot, Inc., 535 F.3d 661, 665 (7th Cir. 2008).
To state a claim under the Missouri Merchandising Practices Act (“MMPA”), a plaintiff
must allege that: (1) she purchased merchandise from the defendant; (2) for personal, family, or
household purposes; and (3) suffered an ascertainable loss; (4) as a result of an unlawful practice.
Mo. Rev. Stat. § 407.025(1). Under the MMPA, “[t]he act, use or employment by any person of
any deception, fraud, false pretense, false promise, misrepresentation, unfair practice or the
concealment, suppression, or omission of any material fact in connection with the sale or
advertisement of any merchandise in trade or commerce...is declared to be an unlawful practice.”
Mo. Rev. Stat. § 407.020.1. The MMPA is interpreted broadly in order to promote its purpose to
protect consumers. Huch v. Charter Commc'ns., Inc., 290 S.W.3d 721, 724 (Mo. 2009).
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Relying on Murphy v. Stonewall Kitchen, LLC, No. 1522-CC00481 (22nd Judicial
Circuit, Jan. 26, 2016), Defendant argues that Plaintiffs’ consumer fraud claims fail because its
product labels neither create a likelihood of deception nor are “likely to mislead a reasonable
consumer.” Specifically, Defendant asserts that reasonable consumers understand that hair care
products contain synthetic ingredients and that placing its brand name in the labels of its
products does not in and of itself connote a product free of synthetic ingredients. In Murphy, the
trial court dismissed the plaintiff’s consumer fraud claim for failure to state a claim, finding that
the defendants' labeling of its cupcake mix as “all natural” was not deceptive or misleading
because the disputed ingredient was specifically listed on the label.
The Court notes that Murphy was recently reversed by the Missouri Court of Appeals.
See Murphy v. Stonewall Kitchen, LLC, 2016 WL 6596083 (Mo. Ct. App. Nov. 8, 2016). More
importantly, whether a reasonable consumer would be deceived by a product label or a
reasonable consumer’s understanding of the term “natural” are questions of fact that cannot be
resolved pursuant to a motion to dismiss. See Murphy, 2016 WL 6596083, at * 2; Gubala v.
CVS Pharm., Inc., 2016 WL 1019794, at *8 (N.D. Ill. Mar. 15, 2016) (“Plaintiff does not need to
prove his case at the pleading stage of the case.”). Rather, Plaintiffs are only required to state a
claim to relief that is plausible on its face. Twombly, 550 U.S. at 570, 127 S.Ct. 1955; see also,
Swanson v. Citibank, N.A., 614 F.3d 400, 404 (7th Cir. 2010).
Here, Plaintiffs allege that (1) Defendant intended that they would rely on its “naturals”
representations; (2) Defendant’s products are misleading because they contain synthetic
substances including Sodium Benzoate, Citric Acid and Potassium Sorbate; (3) that the
“naturals” misrepresentation is material because it is the type of information upon which a
reasonable consumer would be expected to rely on in making a decision whether to purchase a
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particular product; (4) that no reasonable consumer would know that those ingredients were not
natural ingredients; and (5) that Defendant’s conduct causes substantial injury to consumers by
exposing them to unwanted, potentially harmful synthetic ingredients. These allegations are
sufficient to state viable claims for violations of the ICFA and MMPA.
Defendant further contends that its labels clearly and unambiguously disclose the
presence of both natural and synthetic ingredients. This so-called “ingredient list” defense has
been rejected by numerous courts. See Williams v. Gerber Prods. Co., 552 F.3d 934, 939-40
(9th Cir. 2008); Thornton v. Pinnacle Foods Grp, LLC, 2016 WL 4073713, at *3 (E.D. Mo. Aug.
1, 2016); Blue Buffalo Co. v. Nestle Purina Petcare Co., 2015 WL 3645262, at *5 (E.D. Mo.
June 10, 2015) (holding that “the mere presence of an ingredient statement on the back of a
product does not eliminate the possibility that reasonable consumers may be misled,” and that
the effect that an ingredient statement may have on a reasonable consumer's understanding of
advertising and product labels involves a factual inquiry); Lam v. Gen. Mills, Inc., 859 F.Supp.2d
1097, 1105 (N.D. Cal. 2012). As the Missouri Court of Appeals noted in Murphy:
The FDA does not require an ingredient list so that manufacturers can mislead
consumers and then rely on the ingredient list to correct those misrepresentations
and provide a shield from liability for that deception. A reasonable consumer
would expect that the ingredient list comports with the representations on the
packaging. Furthermore, the manufacturer, not the consumer, is in the superior
position to know and understand the ingredients in its product and whether the
ingredients comport with its packaging. While the presence of an ingredient list
may be relevant to… defense at trial, the “ingredient list” defense cannot, as a
matter of law, defeat an MMPA claim.
Murphy, 2016 WL 6596083, at *3 (internal citation omitted). Accordingly, Defendant’s motion
to dismiss Counts I and II of Plaintiffs’ Complaint is denied.
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Count III - Unjust Enrichment
To state a claim for unjust enrichment under Illinois law, “a plaintiff must allege that the
defendant has unjustly retained a benefit to the plaintiff's detriment and that the defendant's
retention of the benefit violates the fundamental principles of justice, equity and good
conscience.” HPI Health Care Servs., Inc. v. Mt. Vernon Hosp., Inc., 131 Ill.2d 145, 137 Ill.Dec.
19, 545 N.E.2d 672, 679 (Ill. 1989). A claim of unjust enrichment under Missouri law requires
proof that: (1) the defendant was enriched by the receipt of a benefit, (2) the enrichment was at
the expense of the plaintiff and (3) it would be unjust to allow the defendant to retain the benefit.
Beeler v. Martin, 306 S.W.3d 108, 112 (Mo. App. 2010).
Defendant asserts that Plaintiffs’ unjust enrichment claim fails because it is based on their
non-actionable consumer fraud claims. Defendant further asserts that Plaintiffs are barred from
pursuing an equitable claim because they have not and cannot allege they have no adequate
remedy at law. As previously discussed however, Plaintiffs have alleged claims under the ICFA
and MMPA. Additionally, it is permissible to pursue alternative theories at the pleading stage.
See Fed.R.Civ.P. 8(e)(2) (authorizing a party to “set forth two or more statements of a claim or
defense alternately or hypothetically” and “to state as many separate claims or defenses as the
party has regardless of consistency and whether based on legal, equitable, or maritime
grounds.”). Accordingly, Defendant’s motion to dismiss Count III of Plaintiffs’ Complaint is
denied.
Count IV - Breach of Express Warranty
“To state a claim for breach of express warranty [in Illinois], a plaintiff must allege that
(1) the seller made an affirmation of fact or promise; (2) relating to the goods; (3) which was part
of the basis for the bargain; and (4) seller guaranteed that the goods would conform to the
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affirmation or promise.” Indus. Hard Chrome, Ltd. v. Hetran, Inc., 64 F.Supp.2d 741, 747 (N.D.
Ill. 1999) (applying Illinois law). Generally, a party must have privity of contract in order to
bring a cause of action for breach of express warranty. Canadian Pac. Ry. Co. v. Williams–
Hayward Protective Coatings, 2005 WL 782698, at *15 (N.D. Ill. 2005) (applying Illinois law).
The exception to this rule is if a manufacturer “expressly warranted its goods to the ultimate
consumers and this was the basis for the bargain and relied upon by plaintiffs.”
In re
McDonald's French Fries Litig., 503 F.Supp.2d 953, 957 (N.D. Ill. 2007). In Missouri, to state a
claim of breach of express warranty, a plaintiff must demonstrate: (1) that there was a sale of
goods; (2) the seller made a statement of fact about the kind or quality of those goods; (3) the
statement of fact was a material factor inducing the buyer to purchase the goods; (4) the goods
did not conform to that statement of fact; (5) the nonconformity injured the buyer; and (6) the
buyer notified the seller of the nonconformity in a timely fashion. Pfitzer v. Smith & Wesson
Corp., 2014 WL 636381, at *1 (E.D. Mo. 2014).
Defendant contends that Plaintiffs’ breach of warranty claim fails because Defendant’s
disclosure of its corporate name on its Products is not something that can be “proven false” and
that by utilizing the name “Andalou Naturals”, Defendant does not seek to convey that its
products are devoid of synthetic or unnatural ingredients. Defendant further contends that
Plaintiffs are not in privity with Defendant.
Plaintiffs allege that Defendant made affirmations of fact and the promise to Plaintiffs
that the Products were “natural.” Plaintiffs further allege that the affirmations of fact and
promises became part of the basis of the bargain in which Plaintiffs purchased Defendant’s
products, that Plaintiffs relied on the affirmations when making their purchasing decisions, and
that Plaintiffs suffered damages as a result. The Court finds that the Complaint sufficiently states
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a claim for breach of express warranty and that Plaintiffs’ allegations establish the exception for
express warranties under Illinois law 1. Defendant’s intentions in branding its products with the
phrase “natural” are not a proper inquiry at this stage in the litigation. The motion to dismiss
Count IV of Plaintiffs’ Complaint is denied.
Doctrine of Primary Jurisdiction
“The doctrine of primary jurisdiction ‘is concerned with promoting proper relationships
between the courts and administrative agencies charged with particular regulatory duties.”’
Nader v. Alleghany Airlines, Inc., 426 U.S. 290, 303 (1976) (quoting United States v. Western
Pac. R.R. Co., 352 U.S. 59, 63 (1956)). It applies where a claim that is originally cognizable in
court “requires the resolution of issues which, under a regulatory scheme, have been placed
within the special competence of an administrative body.” Western Pac., 352 U.S. at 63-64.
The primary jurisdiction doctrine does not deprive the court of its jurisdiction, but it
requires the court to suspend further judicial proceedings pending referral of the issues for an
administrative ruling. Reiter v. Cooper, 507 U.S. 258, 268 (1993). This permits the agency to
initially determine specific issues where such determinations “would secure ‘[u]niformity and
consistency in the regulation of business entrusted to a particular agency’ or where ‘the limited
functions of review by the judiciary [would be] more rationally exercised, by preliminary resort
for ascertaining and interpreting the circumstances underlying legal issues to agencies that are
better equipped than courts by specialization, by insight gained through experience, and by more
flexible procedure.”’ Nader, 426 U.S. at 303-04 (quoting Far East Conference v. United States,
342 U.S. 570, 574-75 (1952)).
A court applying the doctrine of primary jurisdiction has
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No privity is required under Missouri law. See Whitman v. Consol. Aluminum Corp., 637 S.W.2d 405,
407 (Mo. Ct. App. 1982).
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“discretion either to retain jurisdiction or, if the parties would not be unfairly disadvantaged, to
dismiss the case without prejudice.” Reiter, 507 U.S. at 268.
Application of the primary jurisdiction doctrine is unwarranted where the relevant
administrative agency has shown no interest in addressing the matter. See, e.g., In re ConAgra
Foods, Inc., 2013 WL 4259467 (C.D. Cal. 2013) (for the doctrine to apply, “first, the FDA
would have to act, something it has declined to do in the past”). Specifically relevant to this
case, “in 2013, the FDA admitted that “proceedings to define ‘natural’ [in the context of
cosmetic product ingredients] do not fit within [its] current health and safety priorities.” See
Langan v. Johnson & Johnson Consumer Companies, Inc., 95 F. Supp. 3d 284, 292–93 (D.
Conn. 2015); see also Goldemberg v. Johnson & Johnson Consumer Companies, Inc., 8
F.Supp.3d 467, 477–78 (S.D.N.Y. 2014) (declining to apply primary jurisdiction doctrine to
claim involving use of term “Active Naturals” on Aveeno products in light of evidence that FDA
does not wish to determine the meaning of “natural”); Fagan v. Neutrogena Corp., 2014 WL
92255, at *1 (C.D. Cal. 2014) (holding that nearly identical claims were not barred by the
doctrine of primary jurisdiction based on the FDA's guidance that it had no intention of defining
the term “natural” in the cosmetics context). Courts have regularly considered whether the term
“natural” is mislabeled without deferring to special agency expertise. See Kosta v. Del Month
Corp., 2013 WL 2147413, at *10 (N.D. Cal., 2013) (collecting cases). Likewise, this Court
declines to apply the primary jurisdiction doctrine to Plaintiffs’ claims. Defendant’s motion to
dismiss is denied in its entirety.
IT IS SO ORDERED.
DATED: December 8, 2016
s/ Staci M. Yandle
STACI M. YANDLE
United States District Judge
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