Stoltz et al v. Fage Dairy Processing, S.A. et al
Filing
25
MEMORANDUM AND ORDER granting in part and denying in part 19 Motion to Dismiss for Failure to State a Claim. For the reasons set forth in the attached Memorandum and Order, the Court denies Defendants' motion to transfer venue to the Northe rn District of New York and grants in part and denies in part Defendants' motion to dismiss. The Court sua sponte dismisses Plaintiffs' claims on behalf of John Doe and Jane Doe as class representatives for Georgia and Texas, respectively. Plaintiffs are granted thirty (30) days' leave to file an amended complaint as specified in this Memorandum and Order. Ordered by Judge Margo K. Brodie on 9/22/2015. (Plimpton, Elizabeth)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
--------------------------------------------------------------BARRY STOLTZ, ALLAN CHANG, ROSALIE
MAYES, REBECCA STARR, TERESA M.
COHEN, KENNETH LEIBOWITZ, GILBERT
MENDEZ, SHARON MANIER, ANDREA NEAL,
BRITTANEE JACKSON, JAMES MANIER,
JOHN DOE (GEORGIA), and JANE DOE
(TEXAS) on behalf of themselves and others
similarly situated,
MEMORANDUM & ORDER
14-CV-3826 (MKB)
Plaintiffs,
v.
FAGE DAIRY PROCESSING INDUSTRY, S.A.,
FAGE USA DAIRY INDUSTRY, INC., and FAGE
USA HOLDINGS, INC.,
Defendants.
--------------------------------------------------------------MARGO K. BRODIE, United States District Judge:
On September 15, 2014, Plaintiffs in the above-captioned putative class action filed an
Amended Complaint1 against Defendants Fage Dairy Processing, S.A., Fage USA Dairy
Industry, Inc. and Fage USA Holdings, Inc. alleging: (1) deceptive acts or practices in violation
of the New York General Business Law, N.Y. Gen. Bus. Law § 349; (2) violations of the New
Jersey Consumer Fraud Act, N.J. Stat. Ann. § 56:8-1 et seq.; (3) violations of the Pennsylvania
Unfair Trade Practices and Consumer Protection Law, 73 Pa. Cons. Stat. § 201-1 et seq.;
1
Plaintiffs Barry Stoltz and Allan Chang commenced this action on June 19, 2014 on
behalf of themselves and all others similarly situated. (Compl., Docket Entry No. 1.) On August
11, 2014, Defendants requested a pre-motion conference to move to dismiss Plaintiffs’ claims.
(Docket Entry No. 9.) The parties subsequently agreed that Plaintiffs would file an amended
complaint, which Plaintiffs did on September 15, 2014. (Pls. Letter in Resp. to Defs. Pre-Mot.
Conference Req., Aug. 13, 2014, Docket Entry No. 10; Am. Compl., Docket Entry No. 13.)
(4) unlawful business acts and practices in violation of the California Consumers Legal
Remedies Act, Cal. Civ. Code § 1750 et seq.; (5) violations of the Florida Deceptive and Unfair
Trade Practices Act, Fla. Stat. § 501.201 et seq.; (6) violations of the Michigan Consumer
Protection Act, Mich. Comp. Laws § 445.901 et seq.; (7) violations of the Georgia Fair Business
Practices Act, Ga. Code Ann. § 10-1-390 et seq.; (8) violations of the Texas Deceptive Trade
Practices Act, Tex. Bus. & Com. Code § 17.41 et seq.; (9) negligent misrepresentation under the
laws of all fifty states and the District of Columbia; and (10) unjust enrichment under the laws of
all fifty states and the District of Columbia. Plaintiffs seek injunctive relief and monetary
damages.
Defendants move to dismiss the Amended Complaint for failure to state a claim pursuant
to Rule 12(b)(6) of the Federal Rules of Civil Procedure or, in the alternative, to transfer venue
to the Northern District of New York pursuant to 28 U.S.C. § 1404(a). By the same motion,
Defendants also move to dismiss all claims against Fage Dairy Processing, S.A. and Fage USA
Holdings, Inc. for failure to state a claim pursuant to Rule 12(b)(6). For the reasons set forth
below, the Court denies Defendants’ motion to transfer venue to the Northern District of New
York without prejudice to renew and grants in part and denies in part Defendants’ motion to
dismiss. The Court sua sponte dismisses Plaintiffs’ claims on behalf of John Doe and Jane Doe
as class representatives for Georgia and Texas, respectively. The Court grants Defendants’
motion to dismiss: (1) Plaintiffs’ negligent misrepresentation and unjust enrichment claims under
the laws of the District of Columbia and all states other than New York, New Jersey,
Pennsylvania, California, Florida and Michigan; (2) Plaintiffs’ negligent misrepresentation claim
2
under New York law;2 (3) Plaintiffs’ unjust enrichment claim under New York law;3 and (4) the
Amended Complaint as against Defendants Fage Dairy Processing, S.A. and Fage USA
Holdings, Inc. The Court denies Defendants’ motion to dismiss: (1) Plaintiffs’ consumer
protection claims under New York, New Jersey, Pennsylvania, California, Florida and Michigan
state laws; and (2) Plaintiffs’ unjust enrichment claims under Florida and California law.
Plaintiffs are granted thirty (30) days’ leave to file a second amended complaint as specified in
this Memorandum and Order.
I.
Background
a.
Procedural background
On June 19, 2014, Plaintiffs Barry Stoltz and Allan Chang commenced this putative class
action, on behalf of themselves and all others similarly situated, against Defendants Fage Dairy
Processing, S.A., Fage USA Dairy Industry, Inc. and Fage USA Holdings, Inc. based on
Defendants’ marketing and packaging of their “Total 0%” line of Greek yogurt products.
(Compl. ¶¶ 1–7, Docket Entry No. 1.) Plaintiffs alleged claims of: deceptive acts or practices in
the conduct of business, trade or commerce under the New York General Business Law section
349; negligent misrepresentation under the laws of all fifty states and the District of Columbia;
breach of express warranties under the laws of all fifty states and the District of Columbia; and
unjust enrichment under the laws of all fifty states and the District of Columbia. (Id. ¶¶ 50–78.)
Plaintiffs also sought an order certifying a nationwide class pursuant to Rule 23 of the Federal
2
As discussed below, infra Section III(b), the Court construes Defendants’ motion as
challenging only Plaintiffs’ negligent misrepresentation claim under New York law.
3
As discussed below, infra Section III(e), the Court construes Defendants’ motion as
challenging only Plaintiffs’ unjust enrichment claims under New York, Florida and California
laws.
3
Rules of Civil Procedure and naming Stoltz and Chang as representatives of the class and their
attorneys as class counsel. (Id. ¶¶ 28–29.)
On September 15, 2014, Plaintiffs Stoltz, Chang, Rosalie Mayes, Rebecca Starr, Teresa
M. Cohen, Kenneth Leibowitz, Gilbert Mendez, Sharon Manier, Andrea Neal, Brittanee Jackson,
James Manier, John Doe (Georgia) and Jane Doe (Texas) filed an Amended Class Action
Complaint on behalf of themselves and all others similarly situated (“Amended Complaint”).
(Am. Compl.) The Amended Complaint asserts claims of: (1) deceptive acts or practices in the
conduct of business, trade or commerce under the New York General Business Law, N.Y. Gen.
Bus. Law § 349, seeking (a) injunctive relief, costs and attorneys’ fees and (b) monetary
damages; (2) unlawful practices in connection with the sale or advertisement of merchandise
under the New Jersey Consumer Fraud Act, N.J. Stat. Ann. § 56:8-1 et seq., seeking damages;
(3) unfair methods of competition and unfair or deceptive acts or practices under the
Pennsylvania Unfair Trade Practices and Consumer Protection Law, 73 Pa. Cons. Stat. § 201-1 et
seq., seeking compensatory and punitive damages and attorneys’ fees; (4) unfair methods of
competition and unfair or fraudulent acts or practices under the California Consumers Legal
Remedies Act, Cal. Civ. Code § 1750 et seq., seeking injunctive relief, compensatory and
punitive damages, restitution and attorneys’ fees; (5) unfair or deceptive acts or practices in the
conduct of trade or commerce under the Florida Deceptive and Unfair Trade Practices Act, Fla.
Stat. § 501.201 et seq., seeking injunctive and declaratory relief, actual damages, attorneys’ fees
and court costs; (6) unfair, unconscionable or deceptive methods, acts or practices in the conduct
of trade or commerce under the Michigan Consumer Protection Act, Mich. Comp. Laws
§ 445.901 et seq., seeking injunctive relief and disgorgement and restitution; (7) unfair or
deceptive acts or practices in the conduct of consumer transactions under the Georgia Fair
4
Business Practices Act, Ga. Code Ann. § 10-1-390 et seq., seeking injunctive relief, actual
damages and restitution; (8) false, misleading or deceptive acts or practices in the conduct of
trade or commerce under the Texas Deceptive Trade Practices Act, Tex. Bus. & Com. Code Ann.
§ 17.41 et seq., seeking injunctive relief and compensatory and punitive damages; (9) negligent
misrepresentation under the laws of all fifty states and the District of Columbia seeking punitive
damages; and (10) unjust enrichment under the laws of all fifty states and the District of
Columbia. (Am. Compl. ¶¶ 91–205.)
Plaintiffs bring the claims on behalf of nine purported classes of plaintiffs who purchased
Fage Total 0% Greek yogurt products: “[a]ll New York residents who made retail purchases of
the Products during the applicable limitations period” (the “New York Class”); “[a]ll New Jersey
residents who made retail purchases of the Products during the applicable limitations period”
(the “New Jersey Class”); “[a]ll Pennsylvania residents who made retail purchases of the
Products during the applicable limitations period” (the “Pennsylvania Class”); “[a]ll California
residents who made retail purchases of the Products during the applicable limitations period”
(the “California Class”); “[a]ll Florida residents who made retail purchases of the Products
during the applicable limitations period” (the “Florida Class”); “[a]ll Michigan residents who
made retail purchases of the Products during the applicable limitations period” (the “Michigan
Class”); “[a]ll Georgia residents who made retail purchases of the Products during the applicable
limitations period” (the “Georgia Class”); “[a]ll Texas residents who made retail purchases of the
Products during the applicable limitations period” (the “Texas Class”); and “[a]ll persons or
entities in the United States who made retail purchases of the Products during the applicable
5
limitations period” (the “Nationwide Class”).4
Defendants move to dismiss the Amended Complaint in its entirety for failure to state a
claim pursuant to Rule 12(b)(6) of the Federal Rule of Civil Procedure or, in the alternative, to
transfer venue to the Northern District of New York pursuant to 28 U.S.C. § 1404(a). (Mot. to
Dismiss and, alternatively, to Transfer Venue, Docket Entry No. 19; Defs. Mem. in Support of
Mot. to Dismiss and, alternatively, to Transfer Venue (“Defs. Mem.”), Docket Entry No. 19-1.)
Defendants also move for dismissal of all claims against Fage Dairy Processing, S.A. and Fage
USA Holdings, Inc. for failure to state a claim pursuant to Rule 12(b)(6).
b.
Factual background5
Fage Dairy Processing Industry, S.A. (“Fage Greece”) is a Greek corporation with its
principal place of business in Athens, Greece. (Am. Compl. ¶ 31.) Fage Greece has a place of
business in the United States located in Johnstown, New York. (Id.) Fage USA Dairy Industry,
Inc. (“Fage USA”) and Fage USA Holdings, Inc. (“Fage Holdings”) are both domestic
corporations with their principal places of business in Johnstown, New York. (Id.) Defendants
4
Each class excludes “current and former officers and directors of Defendants, members
of the immediate families of the officers and directors of Defendants, Defendants’ legal
representatives, heirs, successors, assigns, and any entity in which they have or have had a
controlling interest” and “the judicial officer to whom this lawsuit is assigned.” (Am. Compl.
¶¶ 73–81.) Plaintiffs’ state law consumer protection claims are asserted on behalf of the
following named Plaintiffs and state subclasses: the New York claims are brought on behalf of
Stoltz, Chang and the New York Class; the New Jersey claim is brought on behalf of Mayes and
the New Jersey Class; the Pennsylvania claim is brought on behalf of Starr and the Pennsylvania
Class; the California claim is brought on behalf of Mendez, Manier, Neal, Jackson and the
California Class; the Florida claim is brought on behalf of Cohen, Leibowitz and the Florida
Class; the Michigan claim is brought on behalf of Manier and the Michigan Class; the Georgia
claim is brought on behalf of John Doe and the Georgia Class; and the Texas claim is brought on
behalf of Jane Doe and the Texas Class. The negligent misrepresentation and unjust enrichment
claims are brought on behalf of Plaintiffs and the Nationwide Class.
5
The facts alleged in the Amended Complaint are assumed to be true for purposes of this
motion.
6
operate as a single, integrated and common enterprise. (Id. ¶ 32.) Defendants manufacture and
sell Fage Total Greek yogurt products and market these products as the “#1 yogurt in Greece.”
(Id. ¶ 1.) Defendants manufacture, market and sell various Greek yogurt products throughout the
United States under the brand Fage®, including the products in Defendants’ “Total 0%” product
line. (Id.) The “Total 0%” product line includes a plain variety of yogurt as well as fourteen
different fruit-flavor varieties (hereinafter referred to as the “Total 0% Products”). (Id. ¶ 38.)
The Total 0% Products are distributed to approximately 280 supermarket chains, with
approximately 75,000 retail outlets in over thirty-five countries. (Id. ¶ 34.)
According to Plaintiffs, Defendants mislead consumers about the Total 0% Products’
ingredients through an extensive and comprehensive nationwide marketing campaign that
encompasses the Total 0% Products’ packaging, Defendants’ website, and Defendants’ Facebook
page and Twitter account. (Id. ¶¶ 3, 52, 55.) Defendants misled consumers by prominently
displaying the phrase “Total 0%” on the top and front labels of the Total 0% Products without
providing any context as to what the “0%” refers to. (Id. ¶¶ 3, 36, 39.) Defendants intend for
consumers to impute any meaning to the “Total 0%” language that will lead consumers to
believe the Total 0% Products are healthy and to purchase the Total 0% Products. (Id. ¶¶ 4–5, 8,
36.) Defendants intend for consumers to conclude that the “Total 0%” language indicates that
the Total 0% Products lack sugar, carbohydrates, calories, or any other ingredients, nutrients or
qualities that a particular consumer believes to be unhealthy. (Id.) Plaintiffs allege that
Defendants have intentionally modeled their marketing campaign for the Total 0% Products on
the campaigns of products like Coke Zero and Pepsi Max which prominently feature “Zero” or
“0” on their packaging to signify that these products are sugar, calorie and carbohydrate free.
(Id. ¶¶ 4, 36, 40.) Plaintiffs further allege that the Total 0% Products typically contain about
7
sixteen grams of sugar per container. (Id. ¶ 4.)
Plaintiffs were exposed to Defendants’ marketing campaign for the Total 0% Products,
were misled by the “Total 0%” language, and purchased the Total 0% Products for a premium
price based on their erroneous beliefs as to the meaning of “Total 0%.” (Id. ¶¶ 6, 53, 58–59, 64,
67.) Plaintiffs compare the Total 0% Products to those of Defendants’ competitors and assert
that, while some of Defendants’ competitors employ “0%” in the marketing and packaging of
their yogurt products, these products and marketing campaigns make clear that the “0%” refers
to the products’ fat content. (Id. ¶¶ 44–45.) Plaintiffs contend that Defendants ensure an unfair
advantage over competitors by failing to disclose to consumers in a clear manner whether the
Total 0% Products are free of fat, sugar, caffeine, carbohydrates, or calories. (Id. ¶ 46.) As a
result, reasonable consumers like Plaintiffs are left to impute any meaning to the prominent
“0%” on the Total 0% Products’ packaging. (Id. ¶¶ 40, 46.) Plaintiffs further contend that given
that the “0%” is preceded by the word “Total,” a reasonable consumer is likely to believe that the
Total 0% Products contain no fat, sugar, sodium, cholesterol, carbohydrates, calories, or any
other item required to be disclosed on the Total 0% Products’ packaging. (Id. ¶ 46.)
Plaintiffs acknowledge that the fine print on the Total 0% Products’ front and top labels
states “All Natural — Nonfat Greek Strained Yogurt,” but contend that this disclosure is not
placed in close enough proximity to the prominent “Total 0%” claim on the labels, thus making
it impossible for the reasonable consumer to deduce that “Total 0%” refers only to fat content.
(Id. ¶ 47.)
II. Motion to Transfer Venue
a.
Standard of review
“For the convenience of parties and witnesses, in the interest of justice, a district court
8
may transfer any civil action to any other district or division where it might have been brought or
to any district or division to which all parties have consented.” 28 U.S.C. § 1404(a); see also
N.Y. Marine & Gen. Ins. Co. v. Lafarge N. Am., Inc., 599 F.3d 102, 112 (2d Cir. 2010) (noting
the district courts’ discretionary power to transfer for the convenience of parties and witnesses
pursuant to 28 U.S.C. § 1404(a)). Deciding a motion to transfer involves a two-part inquiry: “(1)
whether the action could have initially been brought in the transferee court; and (2) whether the
interests of justice and convenience of the parties and witnesses will be served by the transfer.”6
JetBlue Airways Corp. v. Helferich Patent Licensing, LLC, 960 F. Supp. 2d 383, 398 (E.D.N.Y.
2013); Forjone v. California, 425 F. App’x 73, 74 (2d Cir. 2011). The following factors are to
be considered in determining whether transfer is warranted under § 1404(a): “(1) the plaintiff’s
choice of forum, (2) the convenience of witnesses, (3) the location of relevant documents and
relative ease of access to sources of proof, (4) the convenience of parties, (5) the locus of
operative facts, (6) the availability of process to compel the attendance of unwilling witnesses,
and (7) the relative means of the parties.” D.H. Blair & Co., Inc. v. Gottdiener, 462 F.3d 95,
106–07 (2d Cir. 2006) (alteration, citation and internal quotation marks omitted); see also N.Y.
Marine, 599 F.3d at 112 (listing factors). Courts have also recognized the importance of
considering trial efficiency and the “interest of justice,” based on the totality of the
circumstances.7 See Recurrent Capital Bridge Fund I, LLC v. ISR Sys. & Sensors Corp., 875 F.
Supp. 2d 297, 304 (S.D.N.Y. 2012) (including these additional factors); Fellus v. Sterne, Agee &
6
Plaintiffs do not challenge Defendants’ claim that this action could have been brought
in the Northern District of New York.
7
The Second Circuit has yet to adopt these additional factors. But see N.Y. Marine &
Gen. Ins. Co. v. Lafarge N. Am., Inc., 599 F.3d 102, 112 (2d Cir. 2010) (recognizing that, in
deciding a motion to transfer, a district court will consider, “inter alia,” factors one through
seven).
9
Leach, Inc., 783 F. Supp. 2d 612, 617–18 (S.D.N.Y. 2011) (same).
It is the burden of the moving party to “mak[e] a strong case for a transfer.” Filmline
(Cross-Country) Prods., Inc. v. United Artists Corp., 865 F.2d 513, 521 (2d Cir. 1989) (citation
and internal quotation marks omitted); see also Xiu Feng Li v. Hock, 371 F. App’x 171, 175 (2d
Cir. 2010) (noting that “the burden is on the movant to show that the transfer is justified”).
Courts apply the “clear and convincing evidence standard” in determining whether to grant a
motion to transfer, N.Y. Marine, 599 F.3d at 113–14, and operate with considerable discretion,
see Forjone, 425 F. App’x at 74 (“The determination whether to grant a change of venue requires
a balancing of conveniences, which is left to the sound discretion of the district court.” (citation
and internal quotation marks omitted)).
b.
Application of the factors
Defendants claim transfer to the Northern District of New York is appropriate because
the Northern District is the location of Fage’s corporate headquarters, Fage employees with
relevant knowledge, and Fage’s current and historical business records. (Defs. Mem. 24; Defs.
Reply Mem. in Support of Mot. to Transfer Venue (“Defs. Venue Transfer Reply Mem.”) 3,
Docket Entry No. 19-10.) Defendants also claim that Fage makes strategic decisions about the
sale, marketing and labeling of the Total 0% Products in the Northern District of New York and
that all Fage Total yogurt products are produced and prepared for sale throughout the United
States in the Northern District. (Defs. Venue Transfer Reply Mem. 3.) Plaintiffs claim their
choice of forum is entitled to deference and argue that Defendants have failed to show by clear
and convincing evidence that transfer is justified. (Pls. Opp’n to Mot. to Transfer Venue (“Pls.
Venue Transfer Opp’n Mem.”) 1, Docket Entry No. 20.) Based on its assessment of the relevant
factors, the Court denies Defendants’ motion to transfer venue to the Northern District of New
10
York.
i.
Plaintiffs’ choice of forum
The parties disagree about the relative significance of Plaintiffs’ choice of forum in this
case. Plaintiffs claim their choice of forum is entitled to “great deference.” (Id.) Defendants
counter that Plaintiffs’ choice of forum is entitled to “little, if any, deference” because this
putative class action now includes named Plaintiffs from New York, New Jersey, Pennsylvania,
Florida, California, Michigan, Georgia and Texas, and only one of the thirteen Plaintiffs resides
within the Eastern District of New York. (Defs. Mem. 3, 24.) Plaintiffs assert that, while only
one Plaintiff resides in this District, three of the named Plaintiffs reside in the New York City
area, including the two Plaintiffs who initially brought the action. (Pls. Venue Transfer Opp’n
Mem. 1.)
Normally, a plaintiff’s choice of forum warrants substantial deference. See Cosa Xentaur
Corp. v. Bow, No. 13-CV-2912, 2014 WL 1331030, at *13 (E.D.N.Y. Mar. 31, 2014) (“As a
general rule, ‘a plaintiff’s choice of forum is presumptively entitled to substantial deference.’”
(quoting Gross v. British Broad. Corp., 386 F.3d 224, 230 (2d Cir. 2004))). However, while the
Second Circuit “has not definitively answered what effect a plaintiff’s representative capacity
has on his or her choice of forum,” Gilstrap v. Radianz Ltd., 233 F. App’x 83, 85 (2d Cir. 2007),
it has acknowledged that a plaintiff’s choice of forum is entitled to less deference in the context
of national class actions, see Warrick ex rel. Warrick v. Gen. Elec. Co., 70 F.3d 736, 741 n.7 (2d
Cir. 1995) (“It is true, as the respondents assert, that the plaintiff’s choice of forum is a less
significant consideration in a (here, putative) class action than in an individual action.” (internal
citation omitted)). This is so even where the plaintiff who initiates the putative class action
resides in the chosen forum. See Ahmed v. T.J. Maxx Corp., 777 F. Supp. 2d 445, 450–51
11
(E.D.N.Y. 2011) (holding plaintiff’s choice of forum entitled to less deference in putative class
action notwithstanding that plaintiff was a resident of the chosen forum). Although a plaintiff’s
choice of forum is given less weight in the class action context, a representative plaintiff’s choice
is still entitled to some deference. See Sebrow v. Zucker, Goldberg & Ackerman, LLC, No. 10CV-4767, 2012 WL 911552, at *4 (E.D.N.Y. Mar. 16, 2012). Therefore, although less
significant than it would be in an individual action, Plaintiffs’ choice of the Eastern District of
New York weighs in favor of Plaintiffs.
ii.
Convenience of witnesses
Defendants claim the convenience of witnesses weighs in favor of transfer because
Fage’s corporate headquarters are located in the Northern District and, as such, Fage employees
who are knowledgeable about the production and marketing of Fage Total yogurt are located in
the Northern District. (Defs. Venue Transfer Reply Mem. 3.) Defendants specifically identify
three Fage employees who live and work in the Northern District of New York and “will be
critical witnesses in any trial of this case:” Chief Financial Officer Robert Shea; Executive Vice
President for Production, Research & Development, and Quality Assurance Spyros Gianpapas;
and Chief Executive Officer Athanassios Filippou. (Id. at 3–4.) Plaintiffs assert that this factor
weighs against transfer because Plaintiffs’ non-party, expert witnesses “are based in or regularly
do business in the Eastern District.” (Pls. Venue Transfer Opp’n Mem. 2.) In response,
Defendants argue that the convenience of expert witnesses is not relevant for purposes of
assessing a motion to transfer. (Defs. Venue Transfer Reply Mem. 5.)
“Convenience of both the party and non-party witnesses is probably the single-most
important factor in the analysis of whether transfer should be granted.” Mazuma Holding Corp.
v. Bethke, 1 F. Supp. 3d 6, 29–30 (E.D.N.Y. 2014) (quoting Fuji Photo Film Co., Ltd. v. Lexar
12
Media, Inc., 415 F. Supp. 2d 370, 373 (S.D.N.Y. 2006)); see also EasyWeb Innovations, LLC v.
Facebook, Inc., 888 F. Supp. 2d 342, 350 (E.D.N.Y. 2012) (collecting cases). “[T]he weight
given to the convenience of witnesses depends upon whether the party seeking transfer has
described the witnesses’ testimony so the court can qualitatively evaluate its materiality.”
Excellent Home Care Servs., LLC v. FGA, Inc., No. 13-CV-05390, 2014 WL 652357, at *3
(E.D.N.Y. Feb. 19, 2014). “Generally, the moving party submits an affidavit explaining why the
transferee forum is more convenient, which includes the potential principal witnesses expected to
be called and the substance of their testimony.” EasyWeb, 888 F. Supp. 2d at 350 (citation and
internal quotation marks omitted). However, the convenience of expert witnesses is of little to
no relevance in deciding whether to transfer venue. JetBlue Airways, 960 F. Supp. 2d at 398; In
re McDermott Int’l, Inc. Sec. Litig., Nos. 08-CV-9943, 08-CV-10615, 09-CV-570, 2009 WL
1010039, at *4 (S.D.N.Y. Apr. 13, 2009) (“Expert witnesses are generally excluded from the
analysis of the convenience of the witnesses.”); Glass v. S & M NuTec, LLC, 456 F. Supp. 2d
498, 502 (S.D.N.Y. 2006) (“[I]t is well settled that the location of expert witnesses is irrelevant
to a transfer decision.” (quoting Cerussi v. Union Coll., 144 F. Supp. 2d 265, 269 (S.D.N.Y.
2001))).
Here, although Defendants have identified three likely witnesses, Defendants have not
provided any information as to the likely substance of the witnesses’ testimony. While it is
logical to assume the specified witnesses may offer some degree of relevant testimony on the
nationwide marketing campaign and product packaging at issue, the Court is unable to gauge the
relative relevance of such testimony without more detail. Therefore, this factor weighs only
slightly in favor of Defendants.
13
iii. Location of relevant documents and relative ease of access to sources
of proof
Defendants claim that the location of relevant documents weighs in favor of transfer
because documents about Fage’s adoption and marketing of the Total 0% Products are located at
Fage’s corporate headquarters and production facility in the Northern District of New York.
(Defs. Venue Transfer Reply Mem. 3.) Defendants also assert that Fage’s current and historical
business records “are maintained mostly in Johnstown.” (Id. at 4.) Plaintiffs claim that this
factor does not support transfer because Defendants have not established or even alleged that
their documents could not easily be copied and transported to the Eastern District of New York.
(Pls. Venue Transfer Opp’n Mem. 2.)
“In an era of electronic documents, easy copying and overnight shipping, . . . [the
location of relevant documents] assumes much less importance than it did formerly.” ESPN, Inc.
v. Quiksilver, Inc., 581 F. Supp. 2d 542, 548 (S.D.N.Y. 2008). However, although this factor is
less important, “it nonetheless retains some relevance to the venue inquiry.” Price v. Stossel, No.
07-CV-11364, 2008 WL 2434137, at *5 (S.D.N.Y. June 4, 2008). It is not sufficient for the
moving party to assert merely that relevant documents are located in the proposed transferee
forum, rather the moving party must establish that it would be unable to move or copy the
documents easily. See Royal Ins. Co. of Am. v. Tower Records, Inc., No. 02-CV-2612, 2002 WL
31385815, at *6 (S.D.N.Y. Oct. 22, 2002) (“[A] defendant’s assertion that documents are located
in the proposed transferee forum is entitled to little weight unless the defendant makes a detailed
showing as to the burden it would incur absent transfer.”).
Because Defendants have failed to demonstrate that it would be burdensome to transport
the business records and marketing-related documents located in the Northern District of New
York, this factor is neutral.
14
iv. Convenience of the parties
Defendants assert that the Northern District of New York is a more convenient forum for
Defendants because Fage’s corporate headquarters, employees and documents are all located in
the Northern District. (Defs. Mem. 24; Defs. Venue Transfer Reply Mem. 3–4.) Plaintiffs claim
that transferring this case to the Northern District would merely shift the inconvenience that
Defendants claim as a result of the current forum to Plaintiffs such that transfer is not
appropriate. (Pls. Venue Transfer Opp’n Mem. 2.)
“A defendant moving for transfer must show both that the original forum is inconvenient
for it and that the plaintiff would not be substantially inconvenienced by a transfer.” SBAV LP v.
Porter Bancorp, Inc., No. 13-CV-372, 2013 WL 3467030, at *8 (S.D.N.Y. July 10, 2013)
(internal quotation marks omitted) (quoting 15 Charles Alan Wright et al., Federal Practice and
Procedure § 3849 (3d ed. 2007)); see also Liberty Mut. Ins. Co. v. Fairbanks Co., No. 13-CV3755, 2014 WL 1796005, at *11 (S.D.N.Y. May 5, 2014) (“The convenience of the parties
favors transfer when transfer would increase convenience to the moving party without generally
increasing the inconvenience to the non-movant.”). “[W]here transfer would merely shift the
inconvenience from one party to the other, the Court should leave plaintiff’s choice of venue
undisturbed.” Mazuma Holding Corp., 1 F. Supp. 3d at 31 (alteration, citation and internal
quotation marks omitted).
While Defendants claim that litigating in the Northern District of New York would be
more convenient for Defendants, they do not expressly address the relative inconvenience to
Plaintiffs in the event of transfer. Ostensibly, Defendants’ position is that, because only Stoltz
and Chang reside in New York, and only Chang resides in the Eastern District, the majority of
Plaintiffs will have to travel to the forum regardless of whether this case is tried in the Eastern or
15
Northern District of New York such that the Northern District would not be any less convenient
for most Plaintiffs. Plaintiffs claim, however, that for several Plaintiffs, airfare to the Northern
District is nearly twice the cost of flying to the New York City area. (Pls. Venue Transfer Opp’n
Mem. 3.) While the Court notes that Plaintiffs offer no data in support of their claim about the
relative cost of airfare to the Eastern District of New York versus the Northern District of New
York, the convenience of the parties is a neutral factor given Defendants’ failure to address the
extent to which Plaintiffs would be inconvenienced if this case was transferred to the Northern
District of New York.
v.
Locus of operative facts
Defendants claim the locus of operative facts is in the Northern District because that is
where: (1) Fage’s corporate headquarters are located; (2) Fage’s executives made strategic
decisions about the sale, marketing and labeling of the Total 0% Products; (3) Fage Total yogurt
products are all produced and prepared for sale throughout the United States; and (4) Fage
evaluates the nutritional content of its products as stated on the nutrition facts. (Defs. Venue
Transfer Reply Mem. 3, 5.) Defendants assert that, in contrast to the Northern District of New
York, there is no particular nexus between this case and the Eastern District of New York
because only one of the thirteen named Plaintiffs resides in and is alleged to have purchased the
Total 0% Products from stores located within the Eastern District of New York. (Defs. Mem.
22.) Defendants also claim that the Northern District is the locus of operative facts because it is
where the alleged misrepresentations were made. (Defs. Venue Transfer Reply Mem. 5–6.)
Plaintiffs argue that this factor weighs against transfer because the location where the
Total 0% Products’ labels were made is irrelevant to Plaintiffs’ claim that the labels are
deceptive and misleading. (Pls. Venue Transfer Opp’n Mem. 3.) Plaintiffs claim the events
16
giving rise to their claims can be said to have occurred in the Eastern District because the Total
0% Products were sold in this District and the Total 0% Products continue to be sold in this
District such that the Eastern District is the situs of the harm giving rise to Plaintiffs’ damages.
(Id.)
“The location of the operative events is a ‘primary factor’ in determining a § 1404(a)
motion to transfer.” Billing v. Commerce One, Inc., 186 F. Supp. 2d 375, 377 (S.D.N.Y. 2002)
(quoting ZPC 2000, Inc. v. SCA Grp., Inc., 86 F. Supp. 2d 274, 279 (S.D.N.Y. 2000)). “To
ascertain the locus of operative facts, courts look to ‘the site of the events from which the claim
arises.’” Zaltz v. JDATE, 952 F. Supp. 2d 439, 460 (E.D.N.Y. 2013) (quoting 800–Flowers, Inc.
v. Intercontinental Florist, Inc., 860 F. Supp. 128, 134 (S.D.N.Y. 1994)).
Here, the site at which Defendants created the Total 0% Products and the sites at which
Plaintiffs purchased the Total 0% Products are all relevant. While Plaintiffs claim that the place
where the labels were made is not relevant to the claims, the allegations in the Amended
Complaint suggest the process by which the labels were designed and evaluated will be, at least
to some degree, relevant in the event of a trial. For example, in support of the state law
consumer fraud and deceptive trade practices claims under the laws of at least three states, the
Amended Complaint alleges that Defendants engaged in fraudulent and intentional misconduct.8
Therefore, the Northern District is likely to be the locus of many, though certainly not all,
operative facts. See CYI, Inc. v. Ja-Ru, Inc., 913 F. Supp. 2d 16, 21 (S.D.N.Y. 2012) (noting, in
context of considering motion to transfer venue, that plaintiff “has alleged willfulness which will
presumably turn, in large part, on facts regarding the design and development of the accused
8
The Amended Complaint alleges fraudulent or intentional misconduct in support of the
state law consumer fraud and deceptive trade practices claims asserted on behalf of the putative
New Jersey, (Am. Compl. ¶ 118), Michigan, (id. ¶ 156), and Georgia classes, (id. ¶ 169).
17
products and packaging and the knowledge of the employees involved in that process”).
Plaintiffs are correct that the places at which they purchased the Total 0% Products and incurred
the alleged harm are also relevant to the claims. However, while the loci of the operative facts
involving Plaintiffs are spread across at least eight states and, allegedly, all fifty states, the main
locus of operative facts as to Defendants is the Northern District of New York. Accordingly, this
factor weighs in favor of Defendants. See Horanzy v. Vemma Nutrition Co., No. 14-CV-1296,
2015 WL 728379, at *6 (N.D.N.Y. Feb. 18, 2015); CYI, Inc., 913 F. Supp. 2d at 19–22; Glass,
456 F. Supp. 2d at 503.
vi. Availability of process to compel attendance of unwilling witnesses
As the parties have not alleged their expected non-party witnesses would be unwilling to
testify in either the Eastern or Northern Districts of New York, this factor has no bearing on the
analysis and is neutral. See, e.g., Seltzer v. Omni Hotels, No. 09-CV-9115, 2010 WL 3910597, at
*4 (S.D.N.Y. Sept. 30, 2010).
vii. Relative means of the parties
Plaintiffs claim the relative means of the parties weighs against transfer because, “given
Plaintiffs’ limited financial resources,” transfer would adversely affect their ability to prosecute
this case. (Pls. Venue Transfer Opp’n Mem. 2.) As noted in the above discussion of the
convenience of the parties factor, Plaintiffs claim the cost of airfare for flights to the Northern
District of New York is twice that of flights to the Eastern District of New York. (Id. at 3.)
Plaintiffs also claim they have to bear the costs of counsel’s travel to and from the Northern
District of New York and of counsel’s living expenses during appearances. (Id. at 2–3.)
Plaintiffs assert that “Defendants are in a much better position than Plaintiffs financially and thus
are more capable of bearing any financial inconvenience” if this case remains in the Eastern
18
District of New York. (Id. at 3.) Defendants argue that this factor is neutral because Plaintiffs
have not offered any evidence to support their claims as to the relative means of the parties.
(Defs. Venue Transfer Reply Mem. 6.) The Court agrees with Defendants; Plaintiffs have not
established that this factor weighs against transfer because Plaintiffs fail to offer any evidence as
to their financial condition. See Cosa Xentaur, 2014 WL 1331030, at *15 (finding this factor to
weigh in favor of the defendant (individual) over the plaintiff (corporation) in light of the
defendant’s presentation of his financial condition via sworn declaration); Mazuma Holding
Corp., 1 F. Supp. 3d at 31–32 (finding this factor to be neutral absent any evidence of the parties’
finances); see also It’s a 10, Inc. v. PH Beauty Labs, Inc., 718 F. Supp. 2d 332, 338 (S.D.N.Y.
2010) (“[A] party arguing for or against a transfer because of inadequate means must offer
documentation to show that transfer (or lack thereof) would be unduly burdensome to his
finances.” (alteration, citation and internal quotation marks omitted)). But see Chong v.
Healthtronics, Inc., No. 06-CV-1287, 2007 WL 1836831, at *13 (E.D.N.Y. June 20, 2007)
(“Since plaintiff is an individual and defendant is a corporation, the ‘relative means of the
parties’ factor weighs in favor of plaintiff.”).
viii. Trial efficiency and the interests of justice
Plaintiffs argue that trial efficiency weighs against transfer because the Northern District
of New York is more congested than the Eastern District of New York. (Pls. Venue Transfer
Opp’n Mem. 3–4.) Plaintiffs claim, based on data from the past five years, that the median times
from filing to disposition and from filing to trial in each district support their contention. (Id.)
Defendants claim that Plaintiffs overstate and skew the figures. (Defs. Venue Transfer Reply
Mem. 6.) “Although docket congestion is insufficient on its own to support a transfer motion, it
is a proper factor for the Court to consider and is accorded some weight.” In re Hanger
19
Orthopedic Grp., Inc. Sec. Litig., 418 F. Supp. 2d 164, 171 (E.D.N.Y. 2006) (internal citations
and quotation marks omitted). For the twelve-month period ending March 31, 2015, the median
disposition time for a civil case was 9.5 months in the Eastern District of New York and 10.8
months in the Northern District of New York. See Admin. Office of the U.S. Courts, U.S.
District Courts — Combined Civil and Criminal Federal Court Management Statistics (March
31, 2015), available at http://www.uscourts.gov/statistics-reports/caseload-statistics-data-tables.
Given the marginal difference in disposition time, this factor weighs only slightly in favor of
Plaintiffs and is due minimal weight. See Excellent Home Care Servs., LLC v. FGA, Inc., No.
13-CV-5390, 2014 WL 652357, at *5 (E.D.N.Y. Feb. 19, 2014); Hanger, 418 F. Supp. 2d at 171.
Having considered Defendants’ arguments and each of the relevant factors, the Court
finds that the interests of justice only slightly favor transfer. As discussed above, two factors —
the convenience of witnesses and the locus of operative facts — favor transfer, and the
convenience of witnesses only slightly favors transfer. Two factors — Plaintiffs’ choice of
forum and trial efficiency — each weigh slightly against transfer. The remaining factors are
neutral. Accordingly, the Defendants have failed to meet their burden of showing by clear and
convincing evidence that transfer is justified. Defendants’ motion to transfer venue to the
Northern District of New York is therefore denied without prejudice.
III. Motion to Dismiss
a.
Standard of review
In reviewing a motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil
Procedure, a court must “accept all factual allegations in the complaint as true and draw
inferences from those allegations in the light most favorable to the plaintiff.” Tsirelman v.
Daines, 794 F.3d 310, 313 (2d Cir. 2015) (quoting Jaghory v. N.Y. State Dep’t of Educ., 131
20
F.3d 326, 329 (2d Cir. 1997)); see also Matson v. Bd. of Educ., 631 F.3d 57, 63 (2d Cir. 2011)
(quoting Connecticut v. Am. Elec. Power Co., 582 F.3d 309, 320 (2d Cir. 2009)). A complaint
must plead “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007). A claim is plausible “when the plaintiff pleads factual
content that allows the court to draw the reasonable inference that the defendant is liable for the
misconduct alleged.” Matson, 631 F.3d at 63 (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009)); see also Pension Ben. Guar. Corp. ex rel. St. Vincent Catholic Med. Ctrs. Ret. Plan v.
Morgan Stanley Inv. Mgmt. Inc., 712 F.3d 705, 717–18 (2d Cir. 2013). Although all allegations
contained in the complaint are assumed true, this principle is “inapplicable to legal conclusions”
or “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory
statements.” Iqbal, 556 U.S. at 678.9
b.
Standing
i.
Standing of John Doe and Jane Doe — Georgia and Texas
Plaintiffs assert a claim under Georgia state law on behalf of a Georgia class purportedly
represented by “John Doe.” (Am. Compl. ¶¶ 28, 80, 163–172.) Similarly, Plaintiffs assert a
claim under Texas State law on behalf of a Texas class purportedly represented by “Jane Doe.”
(Id. ¶¶ 29, 81, 173–186.) There is, however, no indication in the parties’ submissions, in
connection with the instant motion or otherwise, that John Doe and Jane Doe are actual people or
that either “John Doe” or “Jane Doe” are used in any sense other than as placeholder names for
9
When deciding a motion to dismiss, a court’s review is limited to the four corners of
the complaint, as well as (1) documents attached to the complaint, (2) any documents
incorporated in the complaint by reference, (3) any documents deemed integral to the complaint,
and (4) public records. See L-7 Designs, Inc. v. Old Navy, LLC, 647 F.3d 419, 422 (2d Cir.
2011) (documents attached to the complaint, those incorporated by reference, and those integral
to the complaint); Global Network Commc’ns, Inc. v. City of New York, 458 F.3d 150, 156 (2d
Cir. 2006) (documents integral to the complaint).
21
parties whose true identity is unknown. Defendants raise this issue in passing in a footnote in
their memorandum of law in support of their motion to dismiss. (Defs. Mem. 24 n.10 (“For
unstated reasons, the Amended Complaint identifies the class representatives from Georgia and
Texas anonymously. No valid justification could exist for why these class plaintiffs should not
be named in the Amended Complaint.”).) Plaintiffs’ do not address this issue in their opposition,
or otherwise, and the Court is, therefore, left to conclude that “John Doe” and “Jane Doe” are
used as placeholders for plaintiffs who do not exist. As such, the Court must sua sponte address
the threshold issue of standing as to the claims brought on behalf of these two Plaintiffs to
determine whether the Court has the requisite jurisdiction to consider the sufficiency of these
claims.
Article III of the Constitution limits the jurisdiction of federal courts to the resolution of
actual “cases” and “controversies.” U.S. Const. art. III, § 2. “To have such Article III standing,
the plaintiff [must have] alleged such a personal stake in the outcome of the controversy as to
warrant [its] invocation of federal-court jurisdiction and to justify exercise of the court’s
remedial powers on [its] behalf.” Cortlandt St. Recovery Corp. v. Hellas Telecomms., S.à.r.l.,
790 F.3d 411, 417 (2d Cir. 2015) (internal quotation marks omitted) (quoting Warth v. Seldin,
422 U.S. 490, 498–99 (1975)). Whether a Plaintiff has Article III standing is a threshold
question in every federal case that “determine[s] the power of the court to entertain the suit.”
Warth, 422 U.S. at 498. “To satisfy the irreducible constitutional minimum of [Article III]
standing, a plaintiff must demonstrate (1) a personal injury in fact (2) that the challenged conduct
of the defendant caused and (3) which a favorable decision will likely redress.” Mahon v. Ticor
Title Ins. Co., 683 F.3d 59, 62 (2d Cir. 2012) (citations and internal quotation marks omitted).
“If plaintiffs lack Article III standing, a court has no subject matter jurisdiction to hear their
22
claim.” Id. (citations and internal quotation marks omitted).
Standing is required regardless of whether a case is brought on behalf of an individual or
as a putative class action. In the case of a class action, there must be “a named plaintiff
sufficient to establish jurisdiction over each claim advanced.” Police & Fire Ret. Sys. of Detroit
v. IndyMac MBS, Inc., 721 F.3d 95, 112 (2d Cir. 2013). As such, “named plaintiffs who
represent a class must allege and show that they personally have been injured, not that the injury
has been suffered by other, unidentified members of the class to which they belong and which
they purport to represent.” Mahon, 683 F.3d at 64 (quoting Lewis v. Casey, 518 U.S. 343, 357
(1996) (citations, internal quotation marks, and alterations omitted)).
While “Article III standing is generally a prerequisite to class certification,”10 Okla.
Police Pension & Ret. Sys. v. U.S. Bank Nat. Ass’n, No. 11-CV-8066, 2013 WL 6508843, at *5
n.3 (S.D.N.Y. Dec. 12, 2013), “[a]t this preliminary stage of the litigation, the only relevant
standing inquiry is that of the named plaintiffs,” In re Bayer Corp. Combination Aspirin Prods.
Mktg. & Sales Practices Litig., 701 F. Supp. 2d 356, 377 (E.D.N.Y. 2010).
Here, Plaintiffs have not responded to the footnote in Defendants memorandum regarding
Plaintiffs John Doe and Jane Doe. As such, the Court has no basis to conclude that either John
10
In Ortiz v. Fibreboard Corp., the Supreme Court recognized an exception to this
general rule where class certification is “logically antecedent” to the determination of standing
such that courts may decline to dismiss on the basis of lack of standing before class certification.
527 U.S. 815, 831 (1999). The Second Circuit has subsequently made clear, however, that
logical antecedence is only a narrow “exception” to the rule that Article III standing is a
prerequisite to class certification. See Mahon v. Ticor Title Ins. Co., 683 F.3d 59, 65 (2d Cir.
2012). The exception applies in cases in which “the Article III concerns would arise only if the
Court affirmed class certification.” Id.; see also Ortiz, 527 U.S. at 825–26, 830–31 (holding that
it was unnecessary to determine whether “exposure-only” claimants had standing prior to
deciding whether a class involving claimants with asbestos-related diseases and “exposure-only”
claimants who had yet to manifest injury should be certified because, absent class certification,
“exposure only” claimants would not be in the case). Here, there is no indication that Plaintiffs
are attempting to invoke this exception.
23
Doe or Jane Doe are actual people whom Plaintiffs have elected to name anonymously, and
instead concludes that neither John Doe nor Jane Doe exists. Indeed, Black’s Law Dictionary
defines “John Doe” as “[a] fictitious name used in a legal proceeding to designate a person
whose identity is unknown, to protect a person’s known identity, or to indicate that a true
defendant does not exist.” John Doe, Black’s Law Dictionary (10th ed. 2009). Similarly, “Jane
Doe” is defined as “[a] fictitious name for a female party to a legal proceeding, used because the
party’s true identity is unknown or because her real name is being withheld.” Id. at Jane Doe. If
John Doe and Jane Doe do not exist, there are no parties before the Court who have alleged
standing to assert claims under Georgia or Texas state law requiring dismissal of these claims.
See In re HSBC BANK, USA, N.A., Debit Card Overdraft Fee Litig., 1 F. Supp. 3d 34, 49–50
(E.D.N.Y.) (“In this case, the Court finds that the Plaintiffs may only assert a state claim if a
named plaintiff resides in, does business in, or has some other connection to that state.”), on
reconsideration, 14 F. Supp. 3d 99 (E.D.N.Y. 2014); In re Direxion Shares ETF Trust, 279
F.R.D. 221, 230 (S.D.N.Y. 2012) (holding named plaintiffs in putative securities class action
only had standing to assert claims relating to funds in which they had purchased shares, plaintiffs
could not allege an injury traceable to funds in which they did not personally invest).
Therefore, the Court sua sponte dismisses Plaintiffs’ claims on behalf of John Doe and
Jane Doe as class representatives for Georgia and Texas, respectively. Plaintiffs are granted
thirty (30) days’ leave to file an amended complaint alleging that John Doe or Jane Doe exists or
that there is some other basis for this Court’s jurisdiction to consider the claims under Georgia
and Texas state law.
ii.
Negligent misrepresentation and unjust enrichment claims
Defendants move to dismiss Plaintiffs’ negligent misrepresentation and unjust
enrichment claims under the laws of states other than New York, New Jersey, Pennsylvania,
24
California, Florida and Michigan. (Defs. Mem. 21.) Defendants assert that Plaintiffs cannot
assert claims under the laws of states that are not the subject of any particularized allegations that
support a connection and the requisite standing as to each state. (Id.) Plaintiffs’ response, which
is limited to a single paragraph in their opposition, asserts that Plaintiffs are entitled to assert
claims under the laws of all fifty states and the District of Columbia because Plaintiffs have
alleged that Defendants marketed and sold the Total 0% Products to “hundreds of thousands of
customers nationwide,” engaged in a nationwide marketing campaign, and deceived Plaintiffs
“and other consumers nationwide.” (Pls. Opp’n to Mot. to Dismiss (“Pls. Opp’n Mem.”) 23–24,
Docket Entry No. 19-3.) For the reasons discussed as to the lack of Plaintiffs’ standing to bring
claims under Georgia and Texas state law, the Court agrees with Defendants that Plaintiffs
cannot assert claims under the laws of states for which they have not established standing.
Mahon, 683 F.3d at 64 (“It is well established that ‘a plaintiff must demonstrate standing for
each claim [s]he seeks to press.’” (quoting DaimlerChrysler Corp. v. Cuno, 547 U.S. 332, 335
(2006))). Plaintiffs’ negligent misrepresentation and unjust enrichment claims under the laws of
the District of Columbia and all states other than New York, New Jersey, Pennsylvania,
California, Florida and Michigan are dismissed without prejudice. Plaintiffs are granted thirty
(30) days to amend and may assert negligent misrepresentation or unjust enrichment claims
under these state laws provided that Plaintiffs can allege standing as to each claim.11
c.
State law consumer protection claims
Plaintiffs assert consumer protection claims under the laws of New York, New Jersey,
Pennsylvania, California, Florida and Michigan. (Am. Compl. ¶¶ 91–162.) Defendants move to
11
Defendants have also moved to dismiss the negligent misrepresentation and unjust
enrichment claims under the laws of New York, New Jersey, Pennsylvania, California, Florida
and Michigan. Defendants’ motion to dismiss these claims is addressed below.
25
dismiss Plaintiffs’ state law consumer protection claims for failure to state a claim pursuant to
Rule 12(b)(6) of the Federal Rules of Civil Procedure.12 Defendants argue that Plaintiffs’ state
law consumer protection claims must be dismissed because the allegations do not establish a
plausible basis to conclude that a reasonable consumer would likely be misled by the alleged
misrepresentations, as is required to state a claim under the relevant New York, New Jersey,
Pennsylvania, California, Florida and Michigan laws. (Defs. Mem. 6–16.) Defendants assert
that Plaintiffs’ claims are also subject to dismissal because Plaintiffs fail to allege damages and
causation in support of these claims. (Id. at 16–17.)
In order to state a claim under the relevant New Jersey, California and Florida laws, a
plaintiff must allege the following elements, with some variations in the particular formulation
applicable in each state: (1) a deceptive act or practice, (2) causation, and (3) actual damages. 13
To state a claim under the relevant Pennsylvania law, a plaintiff must allege “(1) a deceptive act;
(2) justifiable reliance; and (3) ascertainable loss caused by that reliance.” DuMont v. Litton
12
Defendants moved to dismiss each of the state law consumer protection claims
asserted in the Amended Complaint. Having determined that Plaintiffs lack standing to assert
consumer protection claims under Georgia and Texas state law, the Court only considers the
sufficiency of the allegations in support of Plaintiffs’ consumer protection claims under New
York, New Jersey, Pennsylvania, California, Florida and Michigan state laws.
13
See, e.g., California: Bower v. AT & T Mobility, LLC, 127 Cal. Rptr. 3d 569, 578 (Ct.
App. 2011) (“An individual seeking to recover damages under the [California Consumers Legal
Remedies Act] . . . [must show (1)] a misrepresentation[,] . . . [(2)] actual injury[,] . . . . [and (3)]
. . . that the [defendant’s deceptive conduct] . . . caused them harm.”); Florida: Lustig v. Bear
Stearns Residential Mortg. Corp., 411 F. App’x 224, 225 (11th Cir. 2011) (“A consumer claim
for damages under [the Florida Deceptive and Unfair Trade Practices Act] has three elements:
(1) a deceptive act or unfair practice; (2) causation; and (3) actual damages.” (quoting City First
Mortg. Corp. v. Barton, 988 So. 2d 82, 86 (Fla. Dist. Ct. App. 2008))); New Jersey: Zaman v.
Felton, 98 A.3d 503, 516 (N.J. 2014) (In order to state a claim pursuant to the New Jersey
Consumer Fraud Act under N.J. Stat. Ann. § 56:8-2, “a plaintiff must establish three elements: 1)
unlawful conduct by defendant; 2) an ascertainable loss by plaintiff; and 3) a causal relationship
between the unlawful conduct and the ascertainable loss.” (internal quotation marks omitted)).
26
Loan Servicing, LP, No. 12-CV-2677, 2015 WL 1061138, at *11 (S.D.N.Y. Mar. 11, 2015)
(quoting Seldon v. Home Loan Servs., Inc., 647 F. Supp. 2d 451, 470 (E.D. Pa. 2009)). To state
a claim under the relevant New York law a plaintiff must allege, “(1) that the act, practice, or
advertisement was consumer-oriented; (2) that the act, practice, or advertisement was misleading
in a material respect, and (3) that the plaintiff was thereby injured.” See Stutman v. Chem. Bank,
95 N.Y.2d 24, 29 (2000). Finally, to state a claim under the relevant Michigan law a plaintiff
must allege “[(1)] that the defendant made a material misrepresentation that was false; [(2)] the
defendant knowingly made the false representation with the intent that the plaintiff would act
upon it; [(3)] that the plaintiff acted in reliance upon it; and [(4)] resulting damages.” In re
OnStar Contract Litig., 278 F.R.D. 352, 376 (E.D. Mich. 2011) (internal citations and quotation
marks omitted) (stating that “The provisions of the [Michigan Consumer Protection Act] are to
be construed with reference to the common-law tort of fraud.”). The Court considers the
sufficiency of the allegations as to each of the elements.
i.
Deceptive act or practice
In each of the states, in order to satisfy the first element, a plaintiff must establish that a
reasonable consumer would likely be misled by the alleged misrepresentation or omission. The
same standard — that the alleged misrepresentation or omission would likely mislead a
reasonable consumer acting reasonably under the circumstances — is applicable in each state.14
14
See, e.g., California: McKinniss v. Sunny Delight Beverages Co., No. 07-CV-02034,
2007 WL 4766525, at *3 (C.D. Cal. Sept. 4, 2007) (“California courts have defined the
‘reasonable consumer’ as an ordinary member of the consuming public who acts reasonably
under all of the circumstances.”); Colgan v. Leatherman Tool Grp., Inc., 38 Cal. Rptr. 3d 36, 46
(Ct. App. 2006) (noting that “standard[] for determining whether a representation is misleading”
for claim under CLRA § 1770(a) is whether alleged misrepresentation is “likely to mislead a
reasonable consumer”); Florida: Zlotnick v. Premier Sales Grp., Inc., 480 F.3d 1281, 1284 (11th
Cir. 2007) (considering claim under Fla. Stat. Ann. § 501.204(1) and stating, “The Florida
Supreme Court has noted that ‘deception occurs if there is a representation, omission, or practice
that is likely to mislead the consumer acting reasonably in the circumstances, to the consumer’s
27
Because this element is common to all of Plaintiffs’ state law consumer protection claims, the
Court simultaneously addresses this element as to all claims.
Defendants contend that the allegations are insufficient to satisfy the reasonable
consumer prong for a number of reasons, which reasons fall into two categories: (1) arguments
based on the broader context of the “Total 0%” language in light of the entire label on the Total
0% Products and the other representations set forth on the label, and (2) arguments based on
what Defendants claim is the background knowledge, experience and understanding of any
reasonable consumer.
As to the entire context of the Total 0% Products’ label, Defendants make two arguments.
detriment.’” (quoting PNR, Inc. v. Beacon Prop. Mgmt., Inc., 842 So. 2d 773, 777 (Fla. 2003)));
Michigan: Mich. Comp. Laws Ann. § 445.903(1)(bb) (“Unfair, unconscionable, or deceptive
methods, acts, or practices in the conduct of trade or commerce” includes “[m]aking a
representation of fact or statement of fact material to the transaction such that a person
reasonably believes the represented or suggested state of affairs to be other than it actually is.”);
Mich. Comp. Laws Ann. § 445.903(1)(s) (“Unfair, unconscionable, or deceptive methods, acts,
or practices in the conduct of trade or commerce” also includes omissions: “[f]ailing to reveal a
material fact, the omission of which tends to mislead or deceive the consumer, and which fact
could not reasonably be known by the consumer.”); Zine v. Chrysler Corp., 600 N.W.2d 384,
398 (Mich. Ct. App. 1999) (“Subsection 3(1)(s) [of the MCPA] prohibits making an omission
that tends to mislead or deceive any consumer, but only if the omitted fact could not be
reasonably known by that consumer. Thus, the issue is not whether the omission is misleading to
a reasonable consumer but whether the consumer could reasonably be expected to discover the
omission at issue.”); New Jersey: Dzielak v. Whirlpool Corp., 26 F. Supp. 3d 304, 335 (D.N.J.
2014) (noting that in order to state a claim under N.J.S.A. 56:8-2 “a plaintiff must allege that a
misrepresentation induced an objectively reasonable expectation about a product and that this
expectation was not met”); New York: Oswego Laborers’ Local 214 Pension Fund v. Marine
Midland Bank, N.A., 85 N.Y.2d 20, 26 (1995) (adopting an “objective definition of deceptive
acts and practices” for purposes of establishing a claim under N.Y. Gen. Bus. Law § 349,
representations or omissions must be “likely to mislead a reasonable consumer acting reasonably
under the circumstances”); Goldemberg v. Johnson & Johnson Consumer Cos., 8 F. Supp. 3d
467, 478 (S.D.N.Y. 2014) (“The New York Court of Appeals has established an objective
standard for determining whether acts or practices are materially deceptive or misleading ‘to a
reasonable consumer acting reasonably under the circumstances.’”); Pennsylvania: Prukala v.
Elle, 11 F. Supp. 3d 443, 447 (M.D. Pa. 2014) (In order to state a claim under 73 Pa. Stat. § 201–
2(4)(xxi) a “plaintiff must allege facts showing a ‘deceptive act,’ that is, ‘conduct that is likely to
deceive a consumer acting reasonably under similar circumstances.’”).
28
First, Defendants claim the “Nutrition Facts” label appears “mere centimeters” from the “Total
0%” language and provides accurate information as to the Total 0% Products’ calorie, fat,
carbohydrate and sugar content.15 (Defs. Mem. 9–10.) Defendants assert that the inclusion of
the information listed on the “Nutrition Facts” label, in particular, “prohibits as a matter of law
any claim that consumers could be misled.” (Id. at 9.) Second, Defendants argue that it would
be clear to any reasonable consumer that “Total 0%” only refers to fat content because “nonfat”
appears in close proximity to the “Total 0%” language on the front and top label of each
container. (Id. at 8–9.)
As to the background knowledge, experience and understanding of a reasonable
consumer, Defendants make three arguments. First, Defendants argue that consumers are
accustomed to the use of percentages — like 0% and 2% — to denote the fat content of dairy
products, and nothing else, such that a reasonable consumer would not likely believe that “Total
15
Under federal law, the packaging of food products must include a “Nutrition Facts”
label setting forth certain nutritional information. See 21 U.S.C. § 343(q) (providing that “food
intended for human consumption” and “offered for sale” is “misbranded” unless packaging
includes label providing the requisite nutrition information); 21 C.F.R. § 101.9 (providing that
“[n]utrition information relating to food shall be provided for all products intended for human
consumption and offered for sale unless an exemption is provided” and setting forth
requirements for “Nutrition Facts” label). The impetus for the “Nutrition Facts” label
requirement was the 1990 enactment of the Nutrition Labeling and Education Act (“NLEA”),
which was intended “to clarify and to strengthen the Food and Drug Administration’s legal
authority to require nutrition labeling on foods, and to establish the circumstances under which
claims may be made about nutrients in foods.” N.Y. State Rest. Ass’n v. N.Y.C. Bd. of Health,
556 F.3d 114, 118 (2d Cir. 2009). As a result of the NLEA, “specific, uniform
disclosures . . . must be made on food labels” via “the ubiquitous ‘Nutrition Facts’ panel on
packaged foods . . . set[ting] forth calories per serving, as well as the amount or percentage of
fat, cholesterol, sodium, carbohydrates, protein, and select vitamins and minerals.” N.Y. State
Rest. Ass’n v. N.Y.C. Bd. of Health, No. 08-CV-1000, 2008 WL 1752455, at *2 (S.D.N.Y. Apr.
16, 2008), aff’d, 556 F.3d 114 (2d Cir. 2009).
29
0%” referred to anything other than fat content.16 (Id. at 1, 10.) Second, Defendants claim no
reasonable consumer would believe “Total 0%” refers to anything other than fat because there is
no yogurt or dairy product of any kind in existence that is entirely devoid of calories. (Id. at 1–2,
11.) Defendants argue that “such a product would defy the laws of chemistry and nutrition” and
could not possibly exist because “[a]ll pasteurized milk products contain naturally-occurring
proteins and sugar (lactose) and, therefore, calories.” (Id. at 2.) Third, Defendants argue that,
because sugar and carbohydrates are measured in grams and calories are measured numerically,
and not as percentages, no reasonable consumer would conclude the “Total 0%” language
referred to sugar, carbohydrates or calories and indicated that the Total 0% Products contained
“0% sugar,” “0% carbohydrates” or “0% calories.”17
In response, Plaintiffs assert that the likelihood that a reasonable consumer would be
misled and interpret the “Total 0%” language as an indication that the Total 0% Products
contained no calories, carbohydrates, or sugar presents an issue of fact that cannot be determined
as a matter of law. (Pls. Opp’n Mem. 5–7.) Plaintiffs challenge Defendants’ argument that
percentages are typically used to denote the fat content of dairy products as missing the point
because it ignores the fact that “Total” modifies “0%” in the language at issue. (Id. at 7.)
16
On this point, Defendants assert that the pictures of other brands of yogurt included in
the Amended Complaint, (see Am. Compl. 20–21), bolster Defendants argument that “0%” is
commonly used to signify the fat content of yogurt products. (Defs’ Mem. 9 n.6.)
17
Defendants also contend that Plaintiffs take the erroneous position that their state law
consumer protection claims are, categorically, not subject to dismissal because all such claims
necessarily present fact issues. (Defs. Mem. 2.) Irrespective of whether Defendants’
characterization of Plaintiffs’ position is an accurate one, it is well-settled that, depending upon
the particular allegations in each case, the reasonable consumer prong may either present fact
issues or it may be capable of resolution as a matter of law. See Oswego Laborers’ Local 214
Pension Fund, 85 N.Y.2d at 26 (“[W]hether representations or omissions [are] . . . likely to
mislead a reasonable consumer acting reasonably under the circumstances . . . may be
determined as a matter of law or fact (as individual cases require).”).
30
Plaintiffs also argue that, although Defendants claim it is clear from “obvious signals on the
container” that “Total 0%” refers to the “nonfat” language, Defendants fail to identify these
“obvious signals” or to explain how a reasonable consumer would be able to infer the connection
between “Total 0%” and “nonfat” “without any statement or symbol on the packaging linking”
these representations. (Id. at 8.) Plaintiffs further contend that Defendants’ reliance on the
Nutrition Facts set forth in the Total 0% Products’ label is misplaced and amounts to an attempt
by Defendants to “disclaim what their Products promise on the front label by the ingredient list
on the back.” (Id.) Plaintiffs also argue that, notwithstanding Defendants’ claim that the
Nutrition Facts label “prohibits as a matter of law any claim that consumers could be misled,”
(Defs. Mem. 9), the law is, in fact, “well-settled that small print and back-of-the-label disclosures
do not insulate defendants from liability stemming from otherwise misleading affirmative
statements because reasonable consumers should not be expected to scour a label to be sure
prominent representations are not false,” (Pls. Opp’n Mem. 15). The Court addresses
Defendants’ arguments as categorized above.
1.
Context of the “Total 0%” language
In assessing the likelihood that a reasonable consumer would be misled, it is necessary to
consider not only the allegedly misleading statement but also the surrounding context based on
the content of the entire label or advertisement at issue. The Second Circuit has recognized that,
“in determining whether a reasonable consumer would have been misled by a particular
advertisement, context is crucial” and, “under certain circumstances, the presence of a disclaimer
or similar clarifying language may defeat a claim of deception.” Fink v. Time Warner Cable,
714 F.3d 739, 742 (2d Cir. 2013); see also Freeman v. Time, Inc., 68 F.3d 285, 289 (9th Cir.
1995) (considering both large and small print in advertisement in dismissing consumer protection
31
claims).
However, the mere inclusion of an accurate disclaimer does not necessarily cure other
potentially misleading statements or representations set forth in a label or advertisement.
Goldemberg v. Johnson & Johnson Consumer Cos., 8 F. Supp. 3d 467, 478–481 (S.D.N.Y.
2014) (holding that, where defendant’s trademark and advertising “exclusively tout[ed]” the
natural ingredients in its “Active Naturals” personal care products, the disclosure of synthetic
ingredients on the products’ back label did not, as a matter of law, preclude a reasonable
consumer from being misled); Hughes v. Ester C Co., 930 F. Supp. 2d 439, 463–65 (E.D.N.Y.
2013) (denying dismissal of claims against vitamin manufacturer and its corporate parent based
on allegedly misleading statements that plaintiffs claimed created expectation that products were
an immune system defense because, “[a]t this early stage of the litigation, it cannot be
determined whether a disclaimer on the back of . . . [the] products, stating that it is ‘not intended
to diagnose, treat, or prevent any disease,’ eliminates the possibility of a reasonable consumer
being misled into thinking . . . [the allegedly misleading statements] signified a cold or flu
prevention product”).
Rather, the significance of a disclaimer depends upon factors such as the font size and
placement of the disclaimer as well as the relative emphasis placed on the disclaimer and the
allegedly misleading statement. See Koenig v. Boulder Brands, Inc., 995 F. Supp. 2d 274, 287–
88 (S.D.N.Y. 2014) (holding that disclosure did not, as a matter of law, cure alleged
misrepresentation because “a reasonable consumer might . . . focus on the more prominent
portion of the product label that touts the product as ‘Fat Free Milk and Omega–3s,’ and
overlook the smaller text that discloses the fat content on the front of the carton or the nutrition
label”); Delgado v. Ocwen Loan Servicing, LLC, No. 13-CV-4427, 2014 WL 4773991, at *9
32
(E.D.N.Y. Sept. 24, 2014) (holding that disclosures were “not conspicuous or prominent enough
to necessarily cure” alleged misrepresentation and declining to grant dismissal on basis of
reasonable consumer prong); Lonner v. Simon Prop. Grp., Inc., 866 N.Y.S.2d 239, 247 (App.
Div. 2008) (denying motion to dismiss deceptive business practices claim under N.Y. Gen. Bus.
Law § 349 based on “the inadequate font size in which the [gift card’s] dormancy fee provision
was printed”).
A.
Nutrition Facts label
“[T]he presence of a nutritional panel, though relevant, does not as a matter of law
extinguish the possibility that reasonable consumers could be misled by [the defendant]’s
labeling and marketing.” Ackerman v. Coca-Cola Co., No. 09- CV-0395, 2010 WL 2925955,
at *16 (E.D.N.Y. July 21, 2010). In Ackerman, the court denied the defendants’ motion to
dismiss a putative consumer class action complaint asserting claims under California, New York
and New Jersey consumer protection laws where the plaintiffs alleged, inter alia, that the
labeling and marketing of the beverage “vitaminwater” was misleading because it “bombard[s]
consumers with a message of purported benefits, and draw[s] consumer attention away from the
significant amount of sugar in the product” and “suggests that vitaminwater contains nothing but
vitamins and water.” Id. at *1–2, 5–6. The defendants in Ackerman argued that no reasonable
consumer could have been misled because the Nutrition Facts included on each bottle of
vitaminwater provided accurate sugar-content information. Id. at *16. In rejecting this
argument, the court concluded that “[t]he fact that the actual sugar content of vitaminwater was
accurately stated in an FDA-mandated label on the product [did] not eliminate the possibility that
reasonable consumers may be misled” into believing that vitaminwater consisted solely of
vitamins and water. Id. In so holding, the court relied on a Ninth Circuit decision regarding the
33
allegedly deceptive packaging of food manufacturer Gerber’s “Fruit Juice Snacks.” Id. (citing
and discussing Williams v. Gerber Prods. Co., 552 F.3d 934 (9th Cir. 2008)). In Williams, the
district court granted the defendants’ motion to dismiss on the grounds that no reasonable
consumer could be misled due to the inclusion of Nutrition Facts on the fruit snacks’ label.
Williams v. Gerber Prods. Co., 552 F.3d 934, 937–39 (9th Cir. 2008). The Ninth Circuit
reversed and held that:
Reasonable consumers should [not] be expected to look beyond
misleading representations on the front of the box to discover the
truth from the ingredient list in small print on the side of the box. . . .
We do not think that the FDA requires an ingredient list so that
manufacturers can mislead consumers and then rely on the
ingredient list to correct those misinterpretations and provide a
shield for liability for the deception. Instead, reasonable consumers
expect that the ingredient list contains more detailed information
about the product that confirms other representations on the
packaging.
Id. at 939–40.
Here, although Defendants claim the Nutrition Facts “prohibit[] as a matter of law any
claim that consumers could be misled,” (Defs. Mem. 9), the Court is persuaded by Ackerman and
Williams and agrees with Plaintiffs that the Nutrition Facts do not, as a matter of law, foreclose
the possibility that a reasonable consumer would likely be misled by Defendants’ Total 0%
Products.18
18
Defendants claim their position is not inconsistent with the relevant precedent
regarding the significance of Nutrition Facts information in the context of misbranded food
claims. (Defs. Reply Mem. in Support of Mot. to Dismiss (“Defs. Reply Mem.”) 3–4, Docket
Entry No. 19-9.) Defendants claim this precedent stands for the proposition that a “nutritional
label cannot ‘correct’ flat-out misstatements elsewhere on the product.” (Id. at 4.) Defendants
argue such is not the case here because they have not made a misrepresentation on one side of
the package that is corrected on the opposite side because “‘FAGE Total 0%’ is flanked by the
term ‘nonfat,’ and the non-fat quality of the product is confirmed by the nutritional facts.” (Id. at
3.) Defendants claim that, because the “Total 0%” representation was in accordance with the
meaning Defendants claim a reasonable consumer would ascribe to it and was, therefore, literally
true, cases that stand for “the proposition that a manufacturer cannot use an ingredients list to
34
B.
Proximity of clarifying language
Similarly, the Court cannot conclude, as a matter of law, that a reasonable consumer
would not likely be misled based on the inclusion of clarifying language on the Total 0%
Products’ labels in proximity to the “Total 0%” representation. Defendants argue that a
reasonable consumer could not fail to appreciate that the “Total 0%” language was qualified by
the “nonfat” language also included on the label. The Court is not persuaded by Defendants’
argument.
The Court finds the decision in In re Frito-Lay N. Am., Inc. All Nat. Litig., No. 12-MD2413, 2013 WL 4647512 (E.D.N.Y. Aug. 29, 2013) (hereinafter “In re Frito-Lay”), instructive.
In In re Frito-Lay, the court considered the defendants’ motion to dismiss misbranded food
claims based on an allegedly misleading “All Natural” label on products containing genetically
modified organisms (“GMOs”). Id. at *1, 13. The defendants argued that no reasonable
consumer would be misled by the “Made with ALL NATURAL ingredients” language on the
packaging because this text was surrounded by an explanatory-ring of text stating “No MSG —
No Preservatives — No Artificial Flavors.” Id. at *16. Although the court determined that
“these additional representations give context to the label’s center pronouncement,” the court
nevertheless concluded that it could not “hold as a matter of law that they show no reasonable
consumer would be deceived into believing the product is GMO-free . . . .” Id. Defendants’
argument based on the “nonfat” language is strikingly similar to that of the defendants in In re
Frito-Lay and the Court concludes it is similarly unavailing.
Defendants rely on a number of cases in which the reasonable consumer prong is
correct a flat-out misrepresentation” are distinguishable and do not apply here. (Id. at 3–4.) This
argument, however, assumes the central issue — whether the “Total 0%” language is misleading
— and is therefore not persuasive.
35
determined as a matter of law on the basis of context and the presence of a disclaimer or
qualifying language. However, the Court does not find these cases persuasive since they are
factually distinguishable. See Fink v. Time Warner Cable, 714 F.3d 739 (2d Cir. 2013); Milich v.
State Farm Fire & Cas. Co., 513 F. App’x 97 (2d Cir. 2013); Fink v. Time Warner Cable, 837 F.
Supp. 2d 279 (S.D.N.Y. 2011), aff’d, 714 F.3d 739 (2d Cir. 2013).
Defendants rely on Fink for the proposition that the context of the entire label warrants
dismissal of the claims in this case. (Defs. Mem. 11–12.) Fink involved a deceptive sales
practices claim under New York General Business Law section 349 brought by subscribers to the
defendant’s “Road Runner High Speed Online” Internet service. Fink, 837 F. Supp. 2d at 280.
The plaintiffs’ claim was based on statements in the defendant’s advertisements that their highspeed internet service provided (1) an “always-on connection,” (2) at a “blazing speed,” (3) that
was “up to 3 times the speed of most standard DSL packages and up to 100x faster than dial-up,”
and (4) the “fastest, easiest way to get online.” Id. at 283. The district court held that the
“blazing fast” and “fastest, easiest way to get online” representations were non-actionable
puffery. Id. As to the remaining representations, the plaintiffs alleged these statements were
deceptive because the plaintiffs were blocked from using certain Internet applications and
because the speed of their connections was slower than promised when they used certain
applications. Id. The district court dismissed the claim based on these statements because, based
on plaintiffs’ allegations, the actual nature of the service was not contrary to the plaintiffs’
alleged expectation. Id. at 283–84. That is, the allegations were not contrary to the “always-on
connection” representation because the plaintiffs did “not allege . . . that their Internet
connections as a whole were blocked” but only that certain applications were blocked and,
similarly, plaintiffs’ allegations about the speed of their connection were not “about the speed of
36
their overall Internet connections,” rather plaintiffs “allege[d] only that their connection speeds
were subpar with respect to a narrow subset of applications.” Id. The court also concluded that
the “representations as to the speed of [defendant’s] Internet service are qualified by the phrase
‘up to,’ which would lead a reasonable consumer to expect that speeds could be less than the
advertised ‘3x faster’ and ‘100x faster’ speeds.” Id.
On appeal, the Second Circuit upheld the district court’s dismissal and noted that one of
the challenged advertisements contained “multiple disclaimers and explanatory language,
including the statement, ‘[a]ctual speeds may vary.’” Fink, 714 F.3d at 741 n.2. The Second
Circuit also noted that the “[p]laintiffs themselves concede that a promise to provide ‘up to’ a
certain speed is not a guarantee that that speed will be achieved.” Id. at 742 n.3. Unlike Fink,
Plaintiffs here allege that their expectation as to the nature of the Total 0% Products is
inconsistent with the actual nature of the Total 0% Products; Plaintiffs allege that they believed
the Total 0% Products contained, inter alia, no sugar or calories, whereas the Total 0% Products
did, in fact, contain both calories and sugar. While Defendants may take issue with whether the
expectation Plaintiffs allege is one a reasonable consumer would likely share, the issue here,
unlike in Fink, is not whether Plaintiffs’ alleged expectation is actually inconsistent with the
reality.
Defendants also rely on Milich v. State Farm Fire & Cas. Co., where the Second Circuit
upheld dismissal of the plaintiff’s claim under New York General Business Law section 349 for
failure to state a claim based on a workers’ compensation endorsement to the plaintiff’s
homeowners’ insurance policy. Milich, 513 F. App’x at 98–99. In Milich, the challenged
endorsement stated that it covered “residence employees” who were defined, in part, as
employees for whom workers’ compensation benefits are required under the New York Workers’
37
Compensation Law. Id. at 98. The plaintiff claimed the endorsement was misleading on the
basis of his ignorance of New York Workers’ Compensation Law and the Second Circuit
rejected this argument and dismissed the claim because “[a] policyholder who declines to read
the readily accessible provisions referred to cannot claim to have been misled.” Id. at 99. The
alleged facts and circumstances of the transaction that formed the basis of the plaintiff’s claim in
Milich are distinguishable from the transaction at issue here for a variety of reasons. Primarily,
whereas Milich involved a contract with patent disclaimers that the plaintiff contemplated in the
context of purchasing insurance coverage, the instant case involves representations set forth on
food product labels presented to consumers like Plaintiffs in grocery store aisles in order to
induce food shoppers to buy yogurt. Given the many differences between the nature and
circumstances of these transaction — and, consequently, the relative amount of time, research
and deliberation a consumer is likely to invest prior to the point of sale in each case — a
reasonable consumer would presumably approach these transactions quite differently.
2.
Background knowledge, experience and understanding of
reasonable consumers
The Court is also not convinced on the basis of Defendants’ second category of
arguments — those based on what Defendants claim are the background knowledge, experience
and understanding of reasonable consumers — that these issues can be resolved as a matter of
law at this juncture.
While Defendants’ arguments — that consumers are accustomed to the use of
percentages to denote the fat content of dairy products, are cognizant of the “laws of chemistry
and nutrition” as they pertain to lactose, and are aware that calories, carbohydrates, and sugar are
not typically reported as a percentage — may ultimately prevail, the allegations in this case do
not present the type of patently implausible claim that warrants dismissal as a matter of law
38
based on the reasonable consumer prong. Cf. McKinnis v. Kellogg USA, No. 07-CV-2611, 2007
WL 4766060, at *4 (C.D. Cal. Sept. 19, 2007) (dismissing misbranded food claim because
plaintiffs’ allegations were “not rational, let alone reasonable”).
In Kellogg USA, the court dismissed claims pursuant to, inter alia, the California
Consumers Legal Remedies Act alleging the packaging for the defendant’s “Froot Loops” cereal
was likely to mislead consumers into believing the cereal contained actual fruit. Kellogg USA,
2007 WL 4766060 at *1. The plaintiffs In Kellogg USA claimed that the “Froot Loops” box was
likely to mislead consumers given: “(1) the use of the word ‘Froot’ in the name; (2) the depiction
of brightly colored rings of cereal that [the] [p]laintiffs claim[ed] resemble[d] fruit; and (3) the
depiction of illustrate[d] fruit around a banner stating “NATURAL FRUIT FLAVORS,” which
the plaintiffs claimed was in “disproportionately small type.” Id. at *1. The court explained the
basis for dismissal stating:
First, the product’s name is spelled F-R-O-O-T, and while this might
be a fanciful take on the word F-R-U-I-T, it appears in the
trademarked name of the cereal, not on its own or as a description
of the actual ingredients of the cereal itself. No reasonable
consumer would view the trademark “FROOT LOOPS” name as
describing the ingredients of the cereal. Second, Plaintiffs’
allegation that the cereal pieces themselves resemble fruit is not
rational, let alone reasonable. The cereal pieces are brightly colored
rings, which in no way resemble any currently known fruit. As a
matter of law, no reasonable consumer would view them as
depicting any fruit.
Id. at *4; See also McKinniss v. Gen. Mills, Inc., No. 07-CV-2521, 2007 WL 4762172, at *3
(C.D. Cal. Sept. 18, 2007) (dismissing similar claims brought by the same plaintiffs based on
products including the cereals Berry Berry Kix, Trix and Fruity Cheerios because, among other
things, “a reasonable consumer would be expected to note, upon pouring the contents of the
packaging into a cereal bowl, that the product contained no actual fruit”).
As the Honorable Jack Weinstein has recognized, at least in some cases, “[a] federal trial
39
judge, with a background and experience unlike that of most consumers, is hardly in a position to
declare” that reasonable consumers would not be misled. Verizon Directories Corp. v. Yellow
Book USA, Inc., 309 F. Supp. 2d 401, 407 (E.D.N.Y. 2004) (noting that resolution of the issue
may require “surveys, expert testimony, and other evidence of what is happening in the real
world”).
The Court declines to dismiss the Amended Complaint on the basis of the reasonable
consumer prong.
ii.
Causation and damages elements19
Defendants assert that Plaintiffs’ state law consumer fraud and deceptive trade practices
claims should also be dismissed for failure to allege causation and damages. (Defs. Mem. 16–
17.)
Defendants contend that Plaintiffs have not alleged causation because they have not
established any connection between the “Total 0%” language, Plaintiffs’ interpretation of that
19
Although Defendants claim they are moving as to each state consumer protection
claim on the basis of failure to allege causation and damages, (Defs. Mem. 3), Defendants have
only cited to New York cases, applying New York law as to causation and damages, and have
not cited any cases construing the consumer protection laws of the other five states under which
Plaintiffs assert claims, (id. at 16–17). As a result, the Court construes Defendants’ motion as
challenging only the claims brought under New York state law on the basis of failure to allege
causation and damages. The Court notes that, unlike the first prong — likelihood that reasonable
consumers would be misled — where the laws of the states are similar, the relevant laws as to
causation and damages are not the same in each of the six states. For example, while claims
under New York General Business Law section 349 are governed by the pleading standard under
Rule 8(a), see Pelman ex rel. Pelman v. McDonald’s Corp., 396 F.3d 508, 511 (2d Cir. 2005),
New Jersey Consumer Fraud Act claims are categorically governed by the heightened-pleading
standard under Rule 9(b), see Frederico v. Home Depot, 507 F.3d 188, 200 (3d Cir. 2007), and
claims under Pennsylvania’s Unfair Trade Practices and Consumer Protection Law (“UTPCPL”)
may be subject to either Rule 8(a) or 9(b) depending on whether fraud is alleged, see Laskowski
v. Brown Shoe Co., No. 14-CV-1812, 2015 WL 1286164, at *7 (M.D. Pa. Mar. 20, 2015).
Moreover, while reliance is not a required element of a section 349 claim under New York law,
Pelman, 396 F.3d at 511, “justifiable reliance” is a required element of UTPCPL claims under
Pennsylvania law, Seldon v. Home Loan Servs., Inc., 647 F. Supp. 2d 451, 470 (E.D. Pa. 2009).
40
language, and Plaintiffs’ decision to purchase the Total 0% Products. (Id. at 17.) Plaintiffs
assert causation is sufficiently pled because the Amended Complaint alleges, (1) that Plaintiffs
would not have purchased the Total 0% Products had they been accurately labeled, and (2) that
Plaintiffs paid a premium price for the Total 0% Products as a result of the misrepresentations on
their labels, which led Plaintiffs to believe the Total 0% Products were preferable to other similar
products. (Pls. Opp’n Mem. 17–18.)
Defendants assert that Plaintiffs have failed to allege damages because Plaintiffs’ claimed
damages are based on having paid a premium price for the Total 0% Products as a result of the
“Total 0%” language and Defendants’ related deceptive conduct. (Defs. Mem. 16.) Defendants
contend that Plaintiffs’ premium-price theory of damages is not cognizable and cannot form the
basis of claims for consumer fraud and deceptive trade practices. (Id.) Defendants argue
Plaintiffs’ premium-price theory is also invalid because Plaintiffs allege a premium on the basis
of the difference between the prices of the Total 0% Products — which Defendants claim are
“high end” — and the prices of other, non-comparable yogurt products. (Id.)
In response, Plaintiffs argue that the premium-price allegations are sufficient to allege
injury for purposes of Plaintiffs’ claim under New York law. (Pls. Opp’n Mem. 16.) Plaintiffs
assert that, because the less-onerous pleading standard under Rule 8(a) governs their section 349
claim, the premium-price allegations, in fact, surpass what is required. (Id. at 17.) Plaintiffs also
contend that the alleged premium is based on comparisons between the Total 0% Products and
other comparable, substantially similar yogurt products and that Plaintiffs are, in any event, not
required to allege the exact amount of the premium at this stage. (Id.)
In order to state a claim for deceptive acts or practices under New York General Business
Law section 349, a plaintiff must sufficiently allege: (1) that the act, practice, or advertisement
41
was consumer-oriented, (2) that the act, practice, or advertisement was misleading in a material
respect, and (3) that the plaintiff was thereby injured. See Stutman v. Chem. Bank, 95 N.Y.2d 24,
29 (2000); N.Y. Gen. Bus. Law § 349. A plaintiff is not required to establish intent to mislead or
justifiable reliance. Oswego Laborers’ Local 214 Pension Fund v. Marine Midland Bank, N.A.,
85 N.Y.2d 20, 26 (1995) (stating § 349 does not require “that a plaintiff establish the defendant’s
intent to defraud or mislead” or “proof of justifiable reliance”). “[B]ecause § 349 extends well
beyond common-law fraud to cover a broad range of deceptive practices” and “does not require
proof of the same essential elements (such as reliance) as common-law fraud, an action under
§ 349 is not subject to the pleading-with-particularity requirements of Rule 9(b), . . . .”
Schwartzco Enters. LLC v. TMH Mgmt., LLC, 60 F. Supp. 3d 331, 359 (E.D.N.Y. 2014) (quoting
Pelman ex rel. Pelman v. McDonald’s Corp., 396 F.3d 508, 511 (2d Cir. 2005)); see also
Leonard v. Abbott Labs., Inc., No. 10-CV-4676, 2012 WL 764199, at *19 (E.D.N.Y. Mar. 5,
2012) (considering case law and discerning a categorical rule that New York General Business
Law section 349 claims, “regardless of whether they ‘sound in fraud,’ or are premised on
specific misrepresentations rather than an ‘advertising scheme,’ are not subject to the heightened
pleading requirement of Rule 9(b)”).
While “reliance is not an element of a section 349 claim,” a plaintiff “must show that the
defendant’s ‘material deceptive act’ caused the injury.” Stutman, 95 N.Y.2d at 29. Causation is
adequately pled where a plaintiff alleges that the defendant’s material deception caused the
plaintiff to suffer a monetary loss. See id. (“[P]laintiffs allege that because of defendant’s
deceptive act, they were forced to pay a $275 fee that they had been led to believe was not
required. In other words, plaintiffs allege that defendant’s material deception caused them to
suffer a $275 loss. This allegation satisfies the causation requirement.”). In the context of
42
claims involving consumable goods, “[t]o properly allege causation, a plaintiff must state in his
complaint that he has seen the misleading statements of which he complains before he came into
possession of the products he purchased.” Goldemberg, 8 F. Supp. 3d at 480 (holding plaintiff
adequately pled causation where complaint alleged plaintiff saw the alleged misrepresentations
on the defendant’s website and Facebook page and “was thus deceived into purchasing the
products in question”); cf. Gale v. Int’l Bus. Machs. Corp., 781 N.Y.S.2d 45, 47 (App. Div.
2004) (dismissing section 349 claim brought by plaintiff who alleged he purchased hard drive
based on manufacturer’s misleading statements; complaint did not allege plaintiff saw the
manufacturer’s statements before he purchased hard drive and thus failed to plead causation).
The Amended Complaint alleges that Plaintiffs were exposed to Defendants’ marketing
campaign, that Plaintiffs read the Total 0% representation on the Total 0% Products’ labels, and
that Plaintiffs purchased the Total 0% Products at a premium price as a result of the misleading
Total 0% representation. (Am. Compl. ¶¶ 64–67.) These allegations are sufficient to allege that
Defendants’ deceptive acts or practices caused Plaintiffs’ injury. See Ward v. TheLadders.com,
Inc., 3 F. Supp. 3d 151, 169–70 (S.D.N.Y. 2014) (holding plaintiffs who brought section 349
claim based on their purchase of premium subscription to defendant’s website sufficiently
alleged that deceptive practices caused their injury because plaintiffs claimed they purchased
defendant’s services and incurred expenses as a result of having seen misleading statements on
defendant’s website); see also Goldemberg, 8 F. Supp. 3d at 480; Stutman, 95 N.Y.2d at 29.
The injury prong of a GBL section 349 claim is satisfied “by a claim that a plaintiff paid
a premium for a product based on defendants’ inaccurate representations.” Ackerman, 2010 WL
2925955 at *23. In Ackerman, the court rejected the same argument — that premium-price
allegations are insufficient to allege injury — that Defendants make in this case. Id. As here, the
43
defendants in Ackerman relied on Small v. Lorillard Tobacco Co., 679 N.Y.S.2d 593 (App. Div.
1998), and the court in Ackerman held that injury was adequately pled based on the allegation
that “[d]efendants command a premium price for vitaminwater by distinguishing it from soft
drinks (including their own), and by marketing and advertising it as a fortified beverage, a
dietary supplement in liquid form.” Ackerman, 2010 WL 2925955 at *23; see also Orlander v.
Staples, Inc., --- F.3d ---, 2015 WL 5438783, at *9 (2d Cir. Sept. 16, 2015) (noting that payment
of “price premium” is relevant to section 349 claims because “it show[s] that plaintiffs paid more
than they would have for the good but for the deceptive practices of the defendant-sellers”).
Here, Plaintiffs allege that “[t]hrough the deceptive practice of marketing and selling
their Products displaying ‘Total 0%’, Defendants have been able to command a premium price
by deceiving consumers about the attributes of their yogurt and distinguishing themselves from
similar products.” (Am. Compl. ¶ 59.) The premium-price allegations in the Amended
Complaint are therefore sufficient to allege injury under New York General Business Law
section 349.
The Court, therefore denies Defendants’ motion to dismiss as to Plaintiffs’ consumer
protection claims under New York law because Plaintiffs’ allegations are sufficient to state a
claim. The Court also denies Defendants’ motion to dismiss as to Plaintiffs’ consumer
protection claims under New Jersey, Pennsylvania, California, Florida and Michigan state law
because Plaintiffs have alleged a deceptive act or practice and Defendants failed to challenge
causation or damages as to these claims.
44
d.
Negligent misrepresentation under New York law20
Defendants argue that Plaintiffs fail to state a claim for negligent misrepresentation
because no “special relationship” exists between the parties and, as such, Defendants did not owe
Plaintiffs a duty of care. (Defs. Mem. 17–18.) Defendants also argue that Plaintiffs’ negligent
misrepresentation claim is subject to dismissal on the basis of Plaintiffs’ failure to allege
reliance. (Id. at 18–19.) Defendants argue further that Plaintiffs’ negligent misrepresentation
claim must be dismissed pursuant to the “economic loss doctrine” which, Defendants claim,
precludes Plaintiffs from asserting a tort claim because Plaintiffs allege only economic loss and
not personal injury or property injury.21 (Defs. Mem. 19–20.) In response, Plaintiffs contend the
allegations set forth in the Amended Complaint establish that, through the use of marketing,
Defendants “sought to get Plaintiffs to rely on [Defendants’] unique and specialized knowledge
of the [Total 0% Products] and their purported effect on health,” and, Plaintiffs claim, this is
20
Defendants claim they are moving as to Plaintiffs’ negligent misrepresentation
“claim.” (Defs. Mem. 3, 17–20.) The Amended Complaint, however, asserts negligent
misrepresentation claims under the laws of “[a]ll [s]tates and the District of Columbia.” (Am.
Compl. 55.) Because, as discussed above, Plaintiffs lack standing to assert negligent
misrepresentation claims under the laws of all but six states, six negligent misrepresentations
claims — under the laws of New York, New Jersey, Pennsylvania, California, Florida and
Michigan — remain. Defendants have only cited to New York, Pennsylvania and California
cases applying the laws of New York, Pennsylvania and California, respectively. (Defs. Mem.
17–20; Defs. Reply Mem. 7–8.) In fact, Defendants only cite to a single Pennsylvania case,
(Defs. Mem. 19 (citing Hunt v. U.S. Tobacco Co., 538 F.3d 217 (3d Cir. 2008))), and a single
California case, (id. (citing Kane v. Chobani, Inc., 973 F. Supp. 2d 1120 (N.D. Cal. 2014))), and
neither decision involves, analyzes or even mentions a negligent representation claim. As a
result, the Court construes Defendants’ motion as challenging only the negligent
misrepresentation claim under New York law.
21
Defendants also argue Plaintiffs’ negligent misrepresentation claim is subject to
dismissal because Plaintiffs have not alleged a misrepresentation by Defendants. (Defs. Mem.
17.) Having determined the allegations are sufficient to satisfy the reasonable consumer element
of Plaintiffs’ consumer fraud and deceptive trade practices claims, the Court rejects this
argument.
45
sufficient to give rise to a special relationship between Defendants and consumers including
Plaintiffs. (Pls. Opp’n Mem. 18–19.) Specifically, Plaintiffs claim Defendants do not “passively
sell food products by way of retailers and distributors,” rather social media assumes a “pivotal
role” in Defendants’ marketing efforts and Defendants post advertisements that “actively
encourage consumers to rely on Defendants’ reputation and skill in warranting the quality of the
Products.” (Id. at 18.)
To state a claim for negligent misrepresentation under New York law a plaintiff must
allege that:
(1) the defendant had a duty, as a result of a special relationship, to
give correct information; (2) the defendant made a false
representation that he or she should have known was incorrect; (3)
the information supplied in the representation was known by the
defendant to be desired by the plaintiff for a serious purpose; (4) the
plaintiff intended to rely and act upon it; and (5) the plaintiff
reasonably relied on it to his or her detriment.
Anschutz Corp. v. Merrill Lynch & Co., 690 F.3d 98, 114 (2d Cir. 2012) (internal quotation
marks omitted) (quoting Hydro Inv’rs v. Trafalgar Power Inc., 227 F.3d 8, 20 (2d Cir. 2000)).
Negligent misrepresentation claims are subject to the heightened pleading standard under Rule
9(b). See Aetna Cas. & Sur. Co. v. Aniero Concrete Co., 404 F.3d 566, 583 (2d Cir. 2005)
(stating negligent misrepresentation claims under New York law “must be pled in accordance
with the specificity criteria of Rule 9(b)”); see also Schwartzco Enters., 60 F. Supp. 3d at 350
(noting that Second Circuit resolved issue of whether negligent misrepresentation claims are
subject to 9(b) in Aetna Cas. & Sur. Co. v. Aniero Concrete Co., 404 F.3d 566 (2d Cir. 2005)).
Because, as discussed below, Plaintiffs have not alleged a special relationship, the Court declines
to address any of the other elements of Plaintiffs’ negligent misrepresentation claims.
Under the “duty” element, “New York strictly limits negligent misrepresentation claims
to situations involving ‘actual privity of contract between the parties or a relationship so close as
46
to approach that of privity.’” Anschutz Corp., 690 F.3d at 114 (quoting In re Time Warner Inc.
Sec. Litig., 9 F.3d 259, 271 (2d Cir. 1993)). “[L]iability for negligent misrepresentation has been
imposed only on those persons who possess unique or specialized expertise, or who are in a
special position of confidence and trust with the injured party such that reliance on the negligent
misrepresentation is justified.” Kimmell v. Schaefer, 89 N.Y.2d 257, 263 (1996). In the
commercial context, a closer degree of trust between the parties than that of the ordinary buyer
and seller is required to establish the “existence of . . . a special relationship . . . [capable of]
giv[ing] rise to an exceptional duty regarding commercial speech and justifiable reliance on such
speech.” Id. at 264. Kimmell directs courts to examine the following factors to determine
whether a special relationship, and a duty to provide correct information, exists: “whether the
person making the representation held or appeared to hold unique or special expertise; whether a
special relationship of trust or confidence existed between the parties; and whether the speaker
was aware of the use to which the information would be put and supplied it for that purpose.”
Id.; see also Suez Equity Inv’rs, L.P. v. Toronto-Dominion Bank, 250 F.3d 87, 103 (2d Cir. 2001)
(citing Kimmell for relevant factors).
Defendants argue that the parties were involved in nothing more than an arms-length
commercial transaction, and there is no special, privity-like relationship between the parties
capable of giving rise to a duty of care. (Defs. Mem. 17–18.) Plaintiffs argue that the Amended
Complaint sufficiently alleges a special relationship between Defendants and Plaintiffs on the
basis of an advertisement for the Total 0% Products that, according to Plaintiffs, was posted on
Defendants’ Facebook page. (Pls. Opp’n Mem. 19.) The specific advertisement that is the focal
point of Plaintiffs’ argument is alleged to depict a scale and, Plaintiffs argue “[t]he fact that
Defendants used a scale, a well-known symbol of justice, underscores their intent to lure consumers
to trust their Product claims. As such, a special relationship existed between the parties.” (Id.)
47
Plaintiffs do not cite any cases in support of the proposition that a special relationship
may be based on an advertisement directed at consumers and intended to induce reliance and
courts have consistently held that advertisements alone are not sufficient. See M&T Bank Corp.
v. McGraw Hill Cos., 126 A.D.3d 1414, 1415, 1417–18 (N.Y. App. Div. 2015) (holding plaintiff
failed to state a claim for negligent misrepresentation based on credit ratings issued by
defendant, Moody’s Investors Services, regarding creditworthiness of investment products
purchased by plaintiffs, that ratings were included in materials used to market investment
products to allegedly small group of potential investors was not sufficient to establish requisite
special relationship); McGill v. Gen. Motors Corp., 647 N.Y.S.2d 209, 210 (App. Div. 1996)
(dismissing negligent misrepresentation claim for failure to allege special relationship; car
manufacturer’s allegedly deceptive statements in advertisements were not sufficient because
“this kind of mass communication cannot establish ‘privity’ with unidentified members of the
public”); Austin v. Albany Law Sch. of Union Univ., 957 N.Y.S.2d 833, 844–45 (Sup. Ct. 2013)
(dismissing negligent misrepresentation claim brought by graduates against law school based on
alleged misrepresentations posted on defendant’s website and included in its marketing materials
used to attract prospective students because defendant “presented material to prospective
students in a broad, generalized format, and there are no allegations that [defendant] fostered a
special relationship with plaintiffs or provided them with personalized information”); see also
DeBlasio v. Merrill Lynch & Co., No. 07-CV-318, 2009 WL 2242605, at *5, 33 (S.D.N.Y. July
27, 2009) (dismissing negligent misrepresentation claim because allegedly misleading statements
made on defendants’ websites and in their advertisements did not give rise to special
relationship).
In the Amended Complaint, Plaintiffs also allege a special relationship on the basis of
48
Defendants’ unique expertise as the manufacturer of the Total 0% Products. The Amended
Complaint states, “[a]s the sole manufacturer of their products, Defendants’ are in the unique
position of being able to provide accurate information about their products. Therefore there is a
special and privity-like relationship between Defendants and Plaintiffs and other consumers.” (Am.
Compl. ¶ 193.) The requisite special relationship may not, however, be based solely on Defendants’
status as the manufacturer of the Total 0% Products because, if this alone were sufficient, a special
relationship would necessarily always exist for purposes of misbranded food claims, which is not the
case. See Segedie v. Hain Celestial Grp., Inc., No. 14-CV-5029, 2015 WL 2168374, at *1, 14
(S.D.N.Y. May 7, 2015) (dismissing negligent misrepresentation claim under New York law
brought by purchasers of allegedly misbranded food, body care and home care products because
plaintiffs failed to plead any cognizable special relationship with defendant manufacturer, stating
defendant’s “obligation to label products truthfully does not arise from any special relationship”
and “[t]here is nothing approximating privity between the parties”); cf. Hughes, 930 F. Supp. 2d
at 475 (denying motion to dismiss negligent misrepresentation claim and holding plaintiffs
sufficiently alleged special relationship between consumers and vitamin manufacturer defendants
because defendants’ marketing held defendants out as having “special expertise regarding the
purported health benefits” of supplement; labeling on supplement contained language suggesting
medical or scientific backing for claims and defendants’ website included section purportedly
written by “expert” recommending daily use of supplement “because it is gentler on the stomach
and because of all the clinical research that supports the use of this product”). Therefore,
Plaintiffs’ allegations are not sufficient to establish a special relationship between Plaintiffs and
Defendants.
Plaintiffs’ negligent misrepresentation claim under New York law is dismissed without
prejudice. Plaintiffs are granted thirty (30) days to file an amended complaint.
49
e.
Unjust enrichment22
Defendants argue that Plaintiffs’ unjust enrichment claim must be dismissed because
such claims are only viable where no adequate legal remedy exists which is not the case here.
(Defs. Mem. 20–21.) Defendants assert that Plaintiffs’ unjust enrichment claim is based on the
same allegations as those set forth in support of Plaintiffs’ other claims and, as such, the unjust
enrichment claim should be dismissed as duplicative of Plaintiffs’ other claims. (Id. at 20.)
Defendants also assert that, even if Plaintiffs were entitled to pursue an unjust enrichment claim,
Plaintiffs fail to state such a claim because the allegations are insufficient to establish “an
equitable obligation running from FAGE to Plaintiffs” or that Defendants have been unjustly
enriched. (Id.)
In response, Plaintiffs argue that the allegations are sufficient to state a claim for unjust
enrichment because the Amended Complaint alleges Defendants were enriched by their receipt
of the monies Plaintiffs paid for the Total 0% Products, Plaintiffs made these purchases as a
result of Defendants’ deceptive conduct, and it would, therefore, be unjust to permit Defendants
to retain such funds. (Pls. Opp’n Mem. 21–22.) Plaintiffs also argue that, under New York law,
they are entitled to plead unjust enrichment as an alternative theory of liability. (Id. at 22–23.)
i.
Unjust enrichment under New York law
“To prevail on a claim for unjust enrichment in New York, a plaintiff must establish (1)
22
Defendants claim they are moving as to Plaintiffs’ unjust enrichment “claim.” (Defs.
Mem. 20–21.) However, while the Amended Complaint asserts unjust enrichment claims under
the laws of “[a]ll [s]tates and the District of Columbia,” (Am. Compl. 57), and six such claims
remain, Defendants only cite to New York, Florida and California cases applying the laws of
New York, Florida and California, respectively, in support of their motion as to the unjust
enrichment claims. (Defs. Mem. 20–21.) Defendants offer no explanation for their failure to
address New Jersey, Pennsylvania and Michigan cases. As a result, the Court construes
Defendants’ motion as challenging the unjust enrichment claims under New York, Florida and
California laws only.
50
that the defendant benefitted; (2) at the plaintiff's expense; and (3) that equity and good
conscience require restitution.” Beth Israel Med. Ctr. v. Horizon Blue Cross & Blue Shield of
N.J., Inc., 448 F.3d 573, 586 (2d Cir. 2006) (quoting Kaye v. Grossman, 202 F.3d 611, 616 (2d
Cir. 2000)). Where an unjust enrichment claim is premised on allegations of fraud, the
heightened pleading standard under Rule 9(b) applies. Silverman Partners, L.P. v. First Bank,
687 F. Supp. 2d 269, 288 (E.D.N.Y. 2010) (“[U]njust enrichment must be pled with specificity
when the underlying acts are allegedly fraudulent.”). An unjust enrichment claim may, however,
be premised on deceptive conduct. Cox v. Microsoft Corp., 778 N.Y.S.2d 147, 149 (App. Div.
2004) (“[P]laintiffs’ allegations that Microsoft’s deceptive practices caused them to pay
artificially inflated prices for its products state a cause of action for unjust enrichment.”).
Under New York law, “unjust enrichment is not a catchall cause of action to be used
when others fail . . . [and] [a]n unjust enrichment claim is not available where it simply
duplicates, or replaces, a conventional contract or tort claim.” Corsello v. Verizon N.Y., Inc., 18
N.Y.3d 777, 790 (2012). Rather, unjust enrichment is available:
only in unusual situations when, though the defendant has not
breached a contract nor committed a recognized tort, circumstances
create an equitable obligation running from the defendant to the
plaintiff. Typical cases are those in which the defendant, though
guilty of no wrongdoing, has received money to which he or she is
not entitled.
Id. (dismissing unjust enrichment claim where it was based on same allegations as inverse
takings claim grounded in trespass). Here, Plaintiffs have asserted a negligent misrepresentation
claim under New York law and Plaintiffs’ unjust enrichment claim is based on the same
allegations as those set forth in support of the negligent misrepresentation claim. (Am. Compl.
¶¶ 187–200, 201–205.) Accordingly, because Plaintiffs’ negligent misrepresentation and unjust
enrichment claims under New York law are based on the same allegations and Plaintiffs have not
51
shown how their unjust enrichment claim differs from their negligent misrepresentation claim,
Plaintiffs’ unjust enrichment claim under New York law is dismissed without prejudice. See
Weisblum v. Prophase Labs, Inc., No. 14-CV-3587, 2015 WL 738112, at *11 (S.D.N.Y. Feb. 20,
2015) (dismissing plaintiff’s unjust enrichment claim under New York law as duplicative of
negligent misrepresentation and fraud claims); Ebin v. Kangadis Food Inc., No. 13-CV-2311,
2013 WL 6504547, at *7 (S.D.N.Y. Dec. 11, 2013) (dismissing unjust enrichment claim as
duplicative of, inter alia, negligent misrepresentation claim).
Plaintiffs’ unjust enrichment claim under New York law is dismissed without prejudice.
Plaintiffs are granted thirty (30) days to file an amended complaint.
ii.
Unjust enrichment under Florida law
Under Florida law, “[a] claim for unjust enrichment has three elements: (1) the plaintiff
has conferred a benefit on the defendant; (2) the defendant voluntarily accepted and retained that
benefit; and (3) the circumstances are such that it would be inequitable for the defendants to
retain it without paying the value thereof.” Virgilio v. Ryland Grp., Inc., 680 F.3d 1329, 1337
(11th Cir. 2012). The Eleventh Circuit has held that, while “[i]t is generally true that equitable
remedies are not available under Florida law when adequate legal remedies exist . . . that rule
does not apply to unjust enrichment claims.” State Farm Mut. Auto. Ins. Co. v. Physicians Injury
Care Ctr., Inc., 427 F. App’x 714, 722 (11th Cir. 2011) (internal citation omitted), rev’d in part
on other grounds sub nom., State Farm Mut. Auto. Ins. Co. v. Williams, 563 F. App’x 665 (11th
Cir. 2014). The Eleventh Circuit explained that “[i]t is only upon a showing that an express
contract exists [between the parties] that the unjust enrichment . . . count fails.” Id. (quoting
Williams v. Bear Stearns & Co., 725 So. 2d 397, 400 (Fla. Dist. Ct. App. 1998)).
Therefore, because an express contract between the parties is not alleged, Plaintiffs are
52
not precluded from asserting a claim for unjust enrichment under Florida law and the unjust
enrichment claim is not subject to dismissal as duplicative of Plaintiffs’ claim under the Florida
Deceptive and Unfair Trade Practices Act (“FDUTPA”).23 See Mazzeo v. Nature’s Bounty, Inc.,
No. 14-CV-60580, 2015 WL 1268271, at *5 (S.D. Fla. Mar. 19, 2015) (denying motion to
dismiss unjust enrichment claim because “[t]he availability of Plaintiff’s FDUTPA claim does
not require dismissal of its unjust enrichment claim”); Marty v. Anheuser-Busch Cos., 43 F.
Supp. 3d 1333, 1349 (S.D. Fla. 2014) (denying motion to dismiss unjust enrichment claim and
rejecting argument that unjust enrichment claim was duplicative of state law consumer protection
claims on basis of Eleventh Circuit holding in State Farm); State Farm Mut. Auto. Ins. Co. v.
Comprehensive Physician Servs., Inc., No. 14-CV-2381, 2014 WL 7070832, at *2–3 (M.D. Fla.
Dec. 15, 2014) (denying motion to dismiss unjust enrichment claim as duplicative of state law
consumer protection claim).
23
Defendants rely on Guerrero v. Target Corp., 889 F. Supp. 2d 1348 (S.D. Fla. 2012),
for the proposition that Plaintiffs’ unjust enrichment claim must fail because Plaintiffs have an
adequate remedy at law. (Defs. Mem. 20.) While there is conflicting precedent on the issue of
whether the existence of an adequate legal remedy precludes a claim for unjust enrichment, the
majority of decisions that post-date State Farm Mut. Auto. Ins. Co. v. Physicians Injury Care
Ctr., Inc., 427 F. App’x 714 (11th Cir. 2011), construe the Eleventh Circuit’s State Farm
decision as settling the issue and establishing that unjust enrichment claims are available
notwithstanding the existence of adequate legal remedies. See In re Horizon Organic Milk Plus
DHA Omega-3 Mktg. & Sales Practice Litig., 955 F. Supp. 2d 1311, 1337 (S.D. Fla. 2013)
(noting disagreement among Florida courts as to whether unjust enrichment claim may be
asserted where adequate legal remedies exist and stating “[t]he Eleventh Circuit recently
addressed this issue” in State Farm and established that only showing of express contract
precludes unjust enrichment claim). Indeed, Judge James Cohn, who issued the decision in
Guerrero v. Target Corp., 889 F. Supp. 2d 1348 (S.D. Fla. 2012) on which Defendants rely, has
since departed from the holding in Guerrero on the basis of State Farm. See Reilly v. Amy’s
Kitchen, Inc., No. 13-CV-21525, 2013 WL 9638985, at *7 (S.D. Fla. Dec. 9, 2013) (holding that
Eleventh Circuit State Farm decision was controlling for purposes of motion to dismiss unjust
enrichment claim as duplicative of claims under Florida Deceptive and Unfair Trade Practices
Act, noting that, although holding was inconsistent with holding in Guerrero v. Target Corp.,
neither party in Guerrero brought State Farm decision to court’s attention).
53
Plaintiffs allege that Defendants’ marketing and packaging of the Total 0% Products is
deceptive and misleading as to the health and nutritional benefits of the Total 0% Products, and
that Plaintiffs paid a premium price for the Total 0% Products as a result of Defendants’
misleading and deceptive conduct. (Am. Compl. ¶¶ 149–150, 201–205.) Plaintiffs’ allegations
are sufficient to state a claim for unjust enrichment under Florida law. See Romano v. Motorola,
Inc., No. 07-CV-60517, 2007 WL 4199781, at *2 (S.D. Fla. Nov. 26, 2007) (denying motion to
dismiss putative consumer class action asserting FDUTPA and unjust enrichment claims,
allegations that defendant engaged in deceptive conduct in designing and marketing Razr cellular
phones were sufficient to state a claim for unjust enrichment, plaintiffs sufficiently alleged that
they conferred a direct benefit on defendant notwithstanding that plaintiffs purchased phones
from third-party retailers, defendant marketed phones directly to consumers and was directly
benefitted by profits earned from sale of phones); see also Marty, 43 F. Supp. 3d at 1350–51
(holding allegations were sufficient to state a claim for unjust enrichment in putative consumer
class action against brewer of domestic beer alleging beer’s packaging contained
misrepresentations that led consumers to believe beer was brewed in Germany and to pay
premium price). Therefore, Defendants’ motion to dismiss the unjust enrichment claim under
Florida law is denied.
iii. Unjust enrichment under California law
The elements of an unjust enrichment claim under California law are “receipt of a benefit
and unjust retention of the benefit at the expense of another.” Berger v. Home Depot USA, Inc.,
741 F.3d 1061, 1070 (9th Cir. 2014) (quoting Lectrodryer v. SeoulBank, 91 Cal. Rptr. 2d 881,
883 (Ct. App. 2000)). California courts are divided as to the viability of unjust enrichment
claims under California law. See, e.g., Anderson v. U.S. Bank, N.A., No. 13-CV-636, 2014 WL
54
47087, at *8 (N.D. Cal. Jan. 6, 2014) (“Both California and federal courts of this district are
divided as to whether there is an independent cause of action for restitution/unjust enrichment —
some courts have declined to recognize such a cause of action, holding that it is merely a remedy
that rests on a separate claim, while others have permitted it to proceed independently.” (quoting
Park v. Welch Foods, Inc., No. 12-CV-06449, 2013 WL 5405318, at *5 (N.D. Cal. Sept. 26,
2013))); see also 55 Cal. Jur. 3d Restitution § 2: Unjust Enrichment (“While it is said that there
is no separate cause of action in this state for unjust enrichment, that unjust enrichment is not a
cause of action, just a restitution claim, some courts in this state have suggested the existence of
a separate cause of action for unjust enrichment and . . . . [o]ther courts also refer to the ‘unjust
enrichment cause of action’ in certain contexts.”). The California Supreme Court does not
appear to have squarely addressed the issue of if and when an unjust enrichment claim is viable
under California law and while some decisions dismiss unjust enrichment claims as duplicative
of other statutory or common law claims or as invalid under California law, other decisions
decline to dismiss unjust enrichment claims on these bases.24
24
Compare In re Sony PS3 Other OS Litig., 551 F. App’x 916, 923 (9th Cir. 2014)
(affirming dismissal of unjust enrichment claim because “[i]n light of the adequate legal
remedies available, Plaintiffs cannot state a claim for unjust enrichment”), Musgrave v.
ICC/Marie Callender’s Gourmet Prods. Div., No. 14-CV-02006, 2015 WL 510919, at *10 (N.D.
Cal. Feb. 5, 2015) (dismissing unjust enrichment claim as duplicative), McVicar v. Goodman
Global, Inc., 1 F. Supp. 3d 1044, 1059 (C.D. Cal. 2014) (dismissing unjust enrichment claim
“[b]ecause it is, in fact, not a claim at all”), and In re Apple & AT & T iPad Unlimited Data Plan
Litig., 802 F. Supp. 2d 1070, 1077 (N.D. Cal. 2011) (dismissing unjust enrichment claim as
duplicative), with Berger v. Home Depot USA, Inc., 741 F.3d 1061, 1070 (9th Cir. 2014) (setting
forth elements of unjust enrichment claim, holding plaintiff’s unjust enrichment claim was not
susceptible to class treatment), Naoko Ohno v. Yuko Yasuma, 723 F.3d 984, 1006 n.25 (9th Cir.
2013) (“The Supreme Court of California and California Courts of Appeal have recognized
actions for relief under the equitable doctrine of unjust enrichment.”), Waldrup v. Countrywide
Fin. Corp., No. 13-CV-8833, 2014 WL 4978437, at *5–6 (C.D. Cal. Oct. 6, 2014) (denying
motion to dismiss unjust enrichment claim because plaintiff sufficiently alleged elements as
delineated by Ninth Circuit in Berger), Imber-Gluck v. Google, Inc., No. 14-CV-1070, 2014 WL
3600506, at *7–8 (N.D. Cal. July 21, 2014) (denying dismissal of unjust enrichment claim on
55
Given that the law is unsettled and because Defendants only cite to a single case on this
issue, (Defs. Mem. 20 (citing In re Apple & AT & T iPad Unlimited Data Plan Litig., 802 F.
Supp. 2d 1070 (N.D. Cal. 2011))), and Plaintiffs do not cite any cases or otherwise address this
issue, (Pls. Opp’n Mem. 21–23), the Court declines to dismiss Plaintiffs’ unjust enrichment
claim under California law. See Cortina v. Goya Foods, Inc., No. 14-CV-169, 2015 WL
1411336, at *16–17 (S.D. Cal. Mar. 19, 2015) (noting “division in the law on the question of
unjust enrichment” and denying motion to dismiss unjust enrichment claim because, “[g]iven
this conflict [in the law], the Court declines to conclude that this claim is legally incognizable”).
Defendants’ motion to dismiss Plaintiffs’ unjust enrichment claim under California law is
therefore denied.
f.
Defendants Fage Holdings and Fage Greece
Defendants have moved to dismiss the Amended Complaint as against Defendants Fage
Holdings and Fage Greece for failure to state a cognizable claim as to these corporate entities.
Defendants assert that the Amended Complaint refers to all three Defendants collectively using
“group pleading” and fails to allege any particularized basis for naming either Fage Holdings or
Fage Greece as Defendants. (Defs. Mem. 21–22.) Defendants assert that Fage USA is the main
United-States-based operating entity responsible for the manufacture and sale of Fage Total
Greek yogurt in the United States. (Id.) Defendants also assert that Fage Holdings is a holding
company for the stock of Fage’s United-States-based subsidiaries and Fage Greece is a corporate
subsidiary of Fage’s global corporate parent and is responsible only for the manufacture and sale
basis of, inter alia, Ninth Circuit’s analysis in Berger v. Home Depot USA, Inc.), and In re Apple
In-App Purchase Litig., 855 F. Supp. 2d 1030, 1042–43 (N.D. Cal. 2012) (denying motion to
dismiss unjust enrichment claim because “a claim for unjust enrichment exists under California
law when there is no contractual relationship between the parties”).
56
of Fage products in Greece.25 (Id. at 21–22, 22 n.9.) According to Defendants, Fage Greece has
no direct relationship with Fage USA and does not operate in the United States. (Id. at 22.)
Defendants claim neither Fage Holdings nor Fage Greece has any responsibility for
manufacturing, marketing, promotion or sale of Fage Total yogurt. (Id.)
Plaintiffs argue that dismissal of Fage Greece and Fage Holdings is not warranted
because the Amended Complaint alleges Defendants “operate as a single integrated and common
enterprise.” (Pls. Opp’n Mem. 24; Am. Compl. ¶ 32.) Plaintiffs also assert that Defendants
have, themselves, failed to distinguish between each corporate entity and instead refer to
themselves collectively as “Fage” throughout Defendants’ memorandum in support of the
motion to dismiss.26 (Pls. Opp’n Mem. 24.)
In order to state a plausible claim that a parent company may be held directly liable for
the acts of its subsidiary, a plaintiff must allege facts supporting an inference that the parent
company engaged in the conduct at issue, and general, conclusory allegations are not sufficient.
See Dumont v. Litton Loan Servicing, LP, No. 12-CV-2677, 2014 WL 815244, at *18–19
(S.D.N.Y. Mar. 3, 2014) (granting corporate parent company’s motion to dismiss state law
consumer protection claims where parent company’s liability was “premised on indirect conduct
taken through its subsidiary” and complaint “merely offers general, conclusory allegations about
25
The Fage corporate structure according to Defendants, and as the Court understands it
based on Defendants’ various submissions, is as follows: Fage USA is the wholly-owned
subsidiary of Fage Holdings which is, in turn, the wholly-owned subsidiary of Fage Luxembourg
S.A. (Defs. Rule 7.1 Corp. Disclosure Statement, Docket Entry No. 7; Defs. Mem. 21–22.)
Prior to a corporate restructuring that began in 2012, Fage Greece was the Fage global corporate
parent. (Defs. Mem. 22 n.9.) Since this restructuring, Fage Greece is a subsidiary of Fage
International S.A. (Id.)
26
Plaintiffs state that if, upon discovery, they determine any of the corporate Defendants
has no direct relationship to operations relating to the Total 0% Products at issue, Plaintiffs will
not oppose dismissal of those Defendants. (Pls. Opp’n Mem. 24 n.11.)
57
[parent’s] involvement” in challenged conduct); In re Frito-Lay, 2013 WL 4647512 at *5–6
(granting corporate parent’s motion to dismiss for failure to state a claim in context of putative
class action based on allegedly misleading marketing and packaging of food products
manufactured and sold by parent company’s wholly-owned subsidiary, although plaintiffs
alleged that parent company “market[ed], advertise[d] and distribute[d]” the products at issue, no
specific facts were plead in support of this allegation); see also In re Digital Music Antitrust
Litig., 812 F. Supp. 2d 390, 417 (S.D.N.Y. 2011) (“Although Plaintiffs argue that they alleged
that the Parent Companies were directly involved in the alleged conspiracy, a reading of the
complaint indicates otherwise. The complaint alleges direct involvement of the Parent
Companies by way of generic references to ‘defendants.’ This approach is insufficient.”
(internal citations omitted)).
Here, Plaintiffs have alleged only that Fage USA, Fage Greece and Fage Holdings
“operate as a single integrated and common enterprise” without setting forth any specific facts to
support this allegation. (Am. Compl. ¶ 32.) Plaintiffs have, therefore, failed to state a claim
against Fage Greece and Fage Holdings. Dumont, 2014 WL 815244 at *18–19; In re Frito-Lay,
2013 WL 4647512 at *5–6.
Defendants’ motion to dismiss the Amended Complaint as against Defendants Fage
Holdings and Fage Greece is granted. Plaintiffs are granted thirty (30) days’ leave to file an
amended complaint alleging facts sufficient to state a claim against Fage Greece or Fage
Holdings.
IV. Conclusion
For the foregoing reasons, the Court denies Defendants’ motion to transfer venue to the
Northern District of New York and grants in part and denies in part Defendants’ motion to
58
dismiss. The Court sua sponte dismisses Plaintiffs’ claims on behalf of John Doe and Jane Doe
as class representatives for Georgia and Texas, respectively. The Court grants Defendants’
motion to dismiss: (1) Plaintiffs’ negligent misrepresentation and unjust enrichment claims under
the laws of the District of Columbia and all states other than New York, New Jersey,
Pennsylvania, California, Florida and Michigan; (2) Plaintiffs’ negligent misrepresentation claim
under New York law; (3) Plaintiffs’ unjust enrichment claim under New York law; and (4) the
Amended Complaint as against Defendants Fage Holdings and Fage Greece. The Court denies
Defendants’ motion to dismiss: (1) Plaintiffs’ consumer protection claims under New York, New
Jersey, Pennsylvania, California, Florida and Michigan state laws and (2) Plaintiffs’ unjust
enrichment claims under Florida and California law. Plaintiffs are granted thirty (30) days’ leave
to file an amended complaint as specified in this Memorandum and Order.
SO ORDERED:
s/ MKB
MARGO K. BRODIE
United States District Judge
Dated: September 22, 2015
Brooklyn, New York
59
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