Gordon v. Hain Celestial Group, Inc. et al
Filing
37
OPINION & ORDER re: 32 MOTION to Dismiss Amended Class Action Complaint and/or Strike Class Allegations filed by Jason Natural Products Inc., Hain Celestial Group, Inc. For the reasons set forth above, defendants' partial motio n to dismiss is GRANTED in PART and DENIED in PART. Counts I and III and plaintiff's prayer for injunctive relief are dismissed with prejudice. The Clerk of Court is directed to terminate the motion at ECF No. 32. (Signed by Judge Katherine B. Forrest on 1/18/2017) (cla)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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:
LORI D. GORDON, on behalf of herself and all :
others similarly situated,
:
:
Plaintiff,
:
:
-v:
:
THE HAIN CELESTIAL GROUP, INC. and
:
JASON NATURAL PRODUCTS, INC.,
:
:
Defendants.
:
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USDC SDNY
DOCUMENT
ELECTRONICALLY FILED
DOC #: _________________
DATE FILED: January 18, 2017
16-cv-6526 (KBF)
OPINION & ORDER
KATHERINE B. FORREST, District Judge:
This is a putative consumer class action against defendants The Hain
Celestial Group, Inc. (“Hain Celestial”) and its subsidiary Jason Natural Products,
Inc. (“Jason Natural”), which manufacture, market and sell natural personal care
products. (First Am. Compl. (hereinafter, the “FAC”) (ECF No. 28) ¶¶ 1, 3; see also
id. ¶¶ 7, 11.) Plaintiff claims defendants deceptively marketed five of their products
(which she allegedly purchased) as lacking sodium lauryl sulfate (“SLS”), an
allegedly irritating chemical compound. (Id. ¶ 1.) Plaintiff’s claims are cast as
negligent misrepresentation, breach of express warranty, unjust enrichment, and
violations of New York’s False Advertising Law (N.Y. Gen. Bus. Law. §§ 350 et seq.)
and New York’s Deceptive Trade Practices Act (N.Y. Gen. Bus. Law. §§ 349 et seq.).
(See id. ¶¶ 30-65.)
Now before the Court is defendants’ partial motion to dismiss the FAC under
Federal Rule of Civil Procedure 12(b)(6). (ECF No. 32.) Defendants make various
arguments in support of dismissal of certain claims and relief: (1) that the
negligent misrepresentation claim is barred by the economic loss doctrine; (2) that
the unjust enrichment claim is duplicative of other claims; (3) failure to allege any
causes of action against Hain Celestial; (4) lack of standing to seek injunctive relief;
and (5) that plaintiff’s nationwide class allegations are deficient on their face. (See
ECF No. 33 at 6-7.)
Notably, as to Jason Natural, defendants have only sought to dismiss the
negligent misrepresentation and unjust enrichment claims. The Court grants this
portion of the motion, leaving the breach of express warranty, false advertising and
deceptive trade practices claims pending against Jason Natural. Defendants have,
on the other hand, moved to dismiss all claims against Hain Celestial, arguing that
the FAC disregards the corporate separateness between the two defendants and
only plausibly alleges misconduct by Jason Natural. Whether by oversight or
design, the FAC often does not distinguish between the two defendants and
misattributes statements on Jason Natural’s website to Hain Celestial. At least one
key factual allegation, however, prevents Hain Celestial’s dismissal entirely: the
allegation that Hain Celestial “manufactures and sells natural health and beauty
products under the Jason Natural brand”. (FAC ¶ 3.) The Court must, on this Rule
12(b)(6) motion, accept this allegation as true.
In the absence of the allegation in paragraph 3—that Hain Celestial itself
manufactures and sells Jason Natural brand products—the other “group”
allegations would be insufficient. But that allegation—though thin a reed as can
2
be—saves certain claims from dismissal at this stage. (The Court invites an early
summary judgment motion with respect to whether Hain Celestial in fact itself
manufactures and sells the Jason Natural products at issue here.)
Defendants may ultimately prove correct that Hain Celestial was not directly
involved in any established mislabeling of the products as SLS-free. It could be, for
example, that Jason Natural in fact manufactures and sells the products at issue,
and that Hain Celestial is merely the parent. Nevertheless, at this early stage, and
accepting all allegations as true, the Court concludes that plaintiff’s claims for
breach of express warranty, false advertising and deceptive trade practices against
Hain Celestial must survive. The Court further finds that plaintiff has not alleged
sufficient facts to support injunctive relief, and thus that portion of the motion is
granted. Finally, the Court declines to strike the class allegations on the basis of
prematurity.
For the reasons set forth below, defendants’ partial motion to dismiss is
GRANTED in PART and DENIED in PART.
I.
BACKGROUND
A.
Factual Allegations
Plaintiff specifically alleges that Hain Celestial manufactures and sells
natural personal care products under the brand names Jason Natural and Earth’s
Best, among others. (Id. ¶ 3.) Plaintiff also specifically alleges that Hain Celestial
and Jason Natural are distinct corporate entities; no allegations clearly establish
3
the relationship between the two or differentiate the defendants’ roles vis-à-vis the
Jason Natural products at issue in this litigation. (Id. ¶¶ 20, 21.)
Plaintiff Lori D. Gordon is an alleged purchaser of five Jason Natural brand
products (the “Products”): (1) Long & Strong Jojoba Pure Natural Shampoo; (2)
Volumizing Lavender Shampoo; (3) Normalizing Tea Tree Treatment Shampoo; (4)
Dandruff Relief 2 in 1 Treatment Shampoo & Conditioner; and (5) Smoothing
Coconut Body Wash. (Id. ¶¶ 6, 8.)1 Plaintiff allegedly purchased these Products on
a regular basis from November 2012 to March 2016 from retailers in New York and
Connecticut. (Id. ¶ 8.) Plaintiff alleges that “Defendants” market, advertise,
produce, supply, promote and sell the Products. (Id. ¶¶ 7, 11.)2
Plaintiff alleges “the companies have long claimed” their products do not
contain SLS, an alleged eye, skin and respiratory irritant. (Id. ¶¶ 2-3.) For
instance, pictures of the Products attached to the FAC show that each bears a label
stating, “NO . . . SLS”. (Id., Ex. A at 2, 4, 6, 8, 10; see also id. ¶ 6.) She further
alleges she purchased the Products after reading and relying upon these labels and
“for the express purpose of avoiding coming into contact with SLS” and its
“dangerous side effects”. (Id. ¶ 8.) Nevertheless, plaintiff asserts that, from 2011 to
Plaintiff seeks to certify a nationwide class of consumers and a New York subclass of consumers
under Federal Rules of Civil Procedure 23(b)(2) and 23(b)(3). (Id. ¶¶ 22, 23.) The nationwide class
would consist of “[a]ll consumers in the United States who, through the date of entry of judgment,
themselves or via an agent, purchased Defendants’ Products for any consumer or household use.”
(Id. ¶ 22.) The New York subclass would consist of “[a]ll consumers who, in the State of New York,
through the date of entry of judgment, themselves or via an agent, purchased Defendants’ Products
for any personal, family or household use.” (Id. ¶ 23.)
1
Plaintiff describes the Products as “Defendants’ Products”—or “their Products”—throughout the
FAC (e.g., id. ¶¶ 7, 8, 10, 12, 13) (emphases added)), except in one instance in which she refers to
“Jason Natural’s shampoo products” (id. ¶ 3) (emphasis added).
2
4
2016, defendants misleadingly produced, supplied, marketed and sold their
Products as being free of SLS, even though they knew or should have known this
was not true. (Id. ¶¶ 1, 7, 11.)
On March 10, 2016, the Wall Street Journal reported that it had
commissioned two independent laboratories to test for SLS in several consumer
products containing sodium coco sulfate (“SCS”) (id. ¶ 4 n.7), a compound plaintiff
alleges to be a “blend of cleaning agents that contains about 50% SLS” (id. ¶ 5). The
laboratories identified SLS in Hain Celestial’s Earth Best baby shampoo. (Id. ¶ 4
n.7.) This shampoo was the only Hain Celestial or Jason Natural product tested in
the study or reported on by the Wall Street Journal. (Id.)
Plaintiff alleges that, “In response to these test results, Hain Celestial has
argued that it does not add SLS to its Products; instead it uses sodium coco sulfate
(‘SCS’)” (id. ¶ 5), and that “Hain Celestial now acknowledges that there may be
some amount of sodium lauryl sulfate contained in some of our surfactant products
as a constituent of the sodium coco sulfate” (id. ¶ 6 (internal quotation marks
omitted)). Although plaintiff attributes these representations to Hain Celestial, the
footnotes accompanying the allegations cite to a Jason Natural website. (See id. ¶¶
5 n.9 (citing http://www.jason-personalcare.com/faq), 6 n. 12 (same).) Citing the
same website, plaintiff further alleges that, “[a]t present, the company claims it is
in the process of removing SLS-free claims from the Products’ packaging.” (Id. ¶ 6
n.13 (citing http://www.jason-personalcare.com/faq).)
5
Plaintiff alleges that if the Products were not misleadingly labeled, she and
the other putative class members either would not have purchased them or would
have paid less for them. (Id. ¶ 13.) Plaintiff further alleges that, in this scenario,
she personally would not have purchased the Products. (Id. ¶ 8.)
B.
Procedural History
Plaintiff commenced this action on August 17, 2016. At an initial pretrial
conference held on October 26, 2016, counsel for defendants indicated defendants’
intended to move to dismiss the complaint and outlined the likely bases on which
they would move. (Transcript of Proceedings Held on October 26, 2016 (“IPTC Tr.”,
ECF No. 30) 7:4-8:13.) Counsel for plaintiff indicated plaintiff would likely respond
by seeking to amend the complaint. (Id. 8:17-9:19; 9:20-10:20.) Accordingly, the
Court set a briefing schedule for plaintiff to amend the complaint and for
defendants to move to dismiss the amended complaint. (See ECF No. 26.) The
Court indicated that it would entertain only one set of motion practice at the motion
to dismiss stage. (IPTC Tr. 8:17-9:15; 10:11-18.) Plaintiff filed the FAC on
November 10, 2016 (ECF No. 28), and defendants filed the instant partial motion to
dismiss the FAC on November 30, 2016 (ECF No. 32).
II.
RELEVANT LEGAL PRINCIPLES
A.
Motion to Dismiss
To survive a motion to dismiss under Federal Rule of Civil Procedure
12(b)(6), “the plaintiff must provide the grounds upon which his claim rests through
factual allegations sufficient ‘to raise a right to relief above the speculative level.’”
6
ATSI Commc'ns, Inc. v. Shaar Fund, Ltd., 493 F.3d 87, 98 (2d Cir. 2007) (quoting
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). In other words, the complaint
must allege “‘enough facts to state a claim to relief that is plausible on its face.’”
Starr v. Sony BMG Music Entm't, 592 F.3d 314, 321 (2d Cir. 2010) (quoting
Twombly, 550 U.S. at 570). “A claim has facial plausibility when the plaintiff
pleads factual content that allows the court to draw the reasonable inference that
the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009) (citing Twombly, 550 U.S. at 556).
In applying this standard, the Court accepts as true all well-pled factual
allegations, but does not credit “mere conclusory statements” or “[t]hreadbare
recitals of the elements of a cause of action.” Id. (citing Twombly, 550 U.S. at 555).
The Court will give “no effect to legal conclusions couched as factual allegations.”
Port Dock & Stone Corp. v. Oldcastle Ne., Inc., 507 F.3d 117, 121 (2d Cir. 2007)
(citing Twombly, 550 U.S. at 555). A plaintiff may plead facts alleged upon
information and belief “where the facts are peculiarly within the possession and
control of the defendant.” Arista Records, LLC v. Doe 3, 604 F.3d 110, 120 (2d Cir.
2010) (citations omitted). But, if the Court can infer no more than the mere
possibility of misconduct from the factual averments—in other words, if the wellpled allegations of the complaint have not “nudged [plaintiff's] claims across the line
from conceivable to plausible”—dismissal is appropriate. Twombly, 550 U.S. at 570;
see also Starr, 592 F.3d at 321 (quoting Iqbal, 556 U.S. at 679).
7
In deciding a motion to dismiss under Rule 12(b)(6), the Court may consider
documents referenced in the complaint or relied upon in framing the complaint. See
DiFolco v. MSNBC Cable L.L.C., 622 F.3d 104, 111 (2d Cir. 2010) (“In considering a
motion to dismiss for failure to state a claim pursuant to Rule 12(b)(6), a district
court may consider the facts alleged in the complaint, documents attached to the
complaint as exhibits, and documents incorporated by reference in the complaint.”);
Chambers v. Time Warner, Inc., 282 F.3d 147, 153 (2d Cir. 2002) (“Where plaintiff
has actual notice of all the information in the movant's papers and has relied upon
these documents in framing the complaint, the necessity of translating a Rule
12(b)(6) motion into one under Rule 56 is largely dissipated.”) (internal quotation
marks, alteration and citation omitted).
III.
RELEVANT LEGAL PRINCIPLES
A.
Injunctive Relief
“[I]n order to seek injunctive relief, a plaintiff must show the three familiar
elements of standing: injury in fact, causation, and redressability.” Cacchillo v.
Insmed, Inc., 638 F.3d 401, 404 (2d Cir. 2011) (citing Summers v. Earth Island
Inst., 555 U.S. 488, 493 (2009)); see also McCormick ex rel. McCormick v. Sch. Dist.
of Mamaroneck, 370 F.3d 275, 284 (2d Cir. 2004) (setting forth requirements to
establish these elements under Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992)).
“A plaintiff seeking injunctive . . . relief cannot rely on past injury to satisfy the
injury requirement but must show a likelihood that he or she will be injured in the
future.” Deshawn E. by Charlotte E. v. Safir, 156 F.3d 340, 344 (2d Cir. 1998)
8
(citing City of Los Angeles v. Lyons, 461 U.S. 95, 105-06 (1983)). “[A]bstract injury
is not enough; rather, ‘the injury or threat of injury must be both ‘real and
immediate,’ not ‘conjectural’ or ‘hypothetical.’’” Shain v. Ellison, 356 F.3d 211, 215
(2d Cir. 2004) (quoting O’Shea v. Littleton, 414 U.S. 488, 494 (1974)) (alterations
omitted). An injury is “redressable” if there is “a non-speculative likelihood that [it]
can be remedied by the requested relief.” Allco Fin. Ltd. v. Klee, 805 F.3d 89, 93-94
(2d Cir. 2015) (quoting W.R. Huff Asset Mgmt. Co., LLC v. Deloitte & Touche LLP,
549 F.3d 100, 106-07 (2d Cir. 2008)) (internal quotation marks omitted).
B.
Negligent Misrepresentation
“To state a claim for negligent misrepresentation under New York law, the
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) (quoting Hydro Inv’rs, Inc. v.
Trafalgar Power Inc., 227 F.3d 8, 20 (2d Cir. 2000)). Under New York’s economic
loss rule, however, a plaintiff may only assert a claim for negligent
misrepresentation if he or she alleges personal or property damage, as opposed to
economic loss. Weisblum v. Prophase Labs, Inc., 88 F. Supp. 3d 283, 297 (S.D.N.Y.
2015) (quoting Dervin Corp. v. Banco Bilbao Vizcaya Argentaria, S.A., No. 03-cv9
9141 (PKL), 2004 WL 1933621, at *6 n.3 (S.D.N.Y. Aug. 30, 2004)); Cherny v.
Emigrant Bank, 604 F. Supp. 2d 605, 609 (S.D.N.Y. 2009) (citing Manhattan
Motorcars, Inc. v. Automobili Lamborghini, S.p.A., 244 F.R.D. 204, 212, 215
(S.D.N.Y. 2007)); see also Suffolk Cty. v. Long Island Lighting Co., 728 F.2d 52, 62
(2d Cir. 1984) (“New York law holds that a negligence action seeking recovery for
economic loss will not lie”) (citations omitted).
C.
Unjust Enrichment
To state a claim for unjust enrichment under New York law, a plaintiff must
allege that “(1) defendant was enriched, (2) at plaintiff's expense, and (3) equity and
good conscience militate against permitting defendant to retain what plaintiff is
seeking to recover.” Briarpatch Ltd., L.P v. Phoenix Pictures, Inc., 373 F.3d 296,
306 (2d Cir. 2004) (citing Clark v. Daby, 751 N.Y.S.2d 622, 623 (3d Dep’t 2002)).
Generally, “a claim for unjust enrichment may be pleaded in the alternative
to other claims.” Barnet v. Drawbridge Special Opportunities Fund LP, No. 14-cv1376 (PKC), 2014 WL 4393320, at *22 (S.D.N.Y. Sept. 5, 2014) (citations omitted);
see also Fed. R. Civ. P. 8(d)(2) (“A party may set out 2 or more statements of a claim
or defense alternatively or hypothetically, either in a single count or defense or in
separate ones. If a party makes alternative statements, the pleading is sufficient if
any one of them is sufficient.”); Fed. R. Civ. P. 8(d)(3) (“A party may state as many
separate claims or defenses as it has, regardless of consistency.”) However, unjust
enrichment “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)
10
(citations omitted); see also Mahoney v. Endo Health Solutions, Inc., No. 15-cv-9841
(DLC), 2016 WL 3951185, at *11 (S.D.N.Y. July 20, 2016). 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.” Corsello, 18
N.Y.3d at 790; see also Mahoney, 2016 WL 3951185, at *11. “Typical cases are
those in which the defendant, though guilty of no wrongdoing, has received money
to which he or she is not entitled.” Corsello, 18 N.Y.3d at 790 (citations omitted);
see also Mahoney, 2016 WL 3951185, at *11.
D.
Liability of Corporate Parent
“Under New York Law, a parent company is not automatically liable for the
acts of its wholly-owned subsidiary.” Beck v. Consol. Rail Corp., 394 F. Supp. 2d
632, 637 (S.D.N.Y. 2005) (internal quotation marks and citation omitted);
Henneberry v. Sumitomo Corp. of Am., No. 04-cv-2128 (PKL), 2005 WL 1036260, at
*3 (S.D.N.Y. May 3, 2005) (same). “Because a principal purpose for organizing a
corporation is to permit its owners to limit their liability, there is a presumption of
separateness between a corporation and its owners”. Am Protein Corp. v. AB Volvo,
844 F.2d 56, 60 (2d Cir. 1988) (citation omitted); see also Billy v. Consol. Mach. Tool
Corp., 51 N.Y.2d 152, 163 (1980) (“As a general rule, the law treats corporations as
having an existence separate and distinct from that of their shareholders and,
consequently, will not impose liability upon shareholders for the acts of the
corporation.”) (citation omitted). “A parent company will not be held liable for the
11
torts of its subsidiary unless it can be shown that the parent exercises complete
dominion and control over the subsidiary.” Beck, 394 F. Supp. 2d at 638 (quoting
Montes Serrano v. New York Times Co. Inc., 797 N.Y.S.2d 135, 136 (2d Dep’t 2005))
(internal quotation marks and alterations omitted); accord Potash v. Port Auth. of
N.Y. & N.J., 719 N.Y.S.2d 290, 291 (2d Dep’t 2001) (collecting New York cases).
E.
Motions to Strike Class Allegations
Federal Rule of Civil Procedure 12(f) provides that a court may strike from a
pleading “any redundant, immaterial, impertinent or scandalous matter.” Fed. R.
Civ. P. 12(f). “Motions to strike are generally looked upon with disfavor”, Yang
Chen v. Hiko Energy, LLC, No. 14-cv-1771 (VB), 2014 WL 7389011, at *3 (S.D.N.Y.
Dec. 29, 2014) (internal quotation marks and citation omitted); Blagman v. Apple
Inc., No. 12-cv-5453 (ALC)(JCF), 2013 WL 2181709, at *2 (S.D.N.Y. May 20, 2013)
(same), and are “rarely successful”, Reynolds v. Lifewatch, Inc., 136 F. Supp. 3d 503,
511 (S.D.N.Y. 2015) (citations omitted). “Such motions are ‘even more disfavored’ in
the class action context because they seek ‘to preemptively terminate the class
aspects of litigation, solely on the basis of what is alleged in the complaint, and
before plaintiffs are permitted to complete the [class certification] discovery to
which they would otherwise be entitled.’” Yang Chen, 2014 WL 7389011, at *3
(quoting Chenensky v. N.Y. Life Ins. Co., No. 07-cv-11504 (WHP), 2011 WL
1795305, at *1 (S.D.N.Y. Apr. 27, 2011)); accord Reynolds, 136 F. Supp. 3d at 511
(citation omitted); Blagman, 2013 WL 2181709, at *2 (same). Thus, courts typically
deny motions to strike class allegations from the pleadings unless they “‘address[]
12
issues separate and apart from the issues that will be decided on a class
certification motion’”. Yang Chen, 2014 WL 7389011, at *3 (quoting Chen-Oster v.
Goldman, Sachs & Co., 877 F. Supp. 2d 113, 117 (S.D.N.Y. 2012)). Class
certification is governed by Federal Rule of Civil Procedure 23. See Fed. R. Civ. P.
23(c)(1)(A) (“At an early practicable time after a person sues or is sued as a class
representative, the court must determine by order whether to certify the action as a
class action.”).
IV.
DISCUSSION
A.
Negligent Misrepresentation
Defendants invoke New York’s economic loss rule to dismiss plaintiff’s
negligent misrepresentation claim (Count I). (ECF No. 33 at 12-13.) The Court
agrees that dismissal is appropriate on that basis. The only cognizable injury
alleged in connection with plaintiff’s negligent misrepresentation claim is economic
loss, i.e., that plaintiff and the putative class members purchased products they
would have otherwise purchased at a lesser price or not at all. (FAC ¶ 13; see also
id. ¶ 37.) In the absence of any alleged personal or property damage, the economic
loss rule bars plaintiff’s negligent misrepresentation claim. See Long Island
Lighting Co., 728 F.2d at 62 (“New York law holds that a negligence action seeking
recovery for economic loss will not lie.”) (citations omitted); see also Weisblum, 88 F.
Supp. 3d at 297 (dismissing negligent misrepresentation claim because plaintiff
alleged economic loss, but not personal or property injury); Cherny, 604 F. Supp. 2d
at 609-10 (same); Manhattan Motorcars, Inc., 244 F.R.D. at 220 (same).
13
Plaintiff attempts to circumvent the economic loss rule in two ways. Plaintiff
first argues that her alleged exposure to SLS constitutes actionable personal injury.
(See ECF No. 34 at 16-17.) The Court disagrees. At most, the FAC mentions that
“[e]xposure to SLS can cause adverse health effects” (FAC ¶ 2 (emphasis added)),
and that plaintiff was “aware of the dangerous side effects of SLS” (id. ¶ 8). These
statements may allude to conceivable personal injuries, but they fall short of
alleging that plaintiff herself suffered any plausible personal injury in particular.
Plaintiff’s reliance on In re Methyl Tertiary Butyl Ether (“MTBE”) Prod.
Liab. Litig., 457 F. Supp. 2d 298 (S.D.N.Y. 2006) is thus misplaced. In MTBE,
property owners across the country sued several petroleum companies seeking relief
from defendants’ alleged or threated contamination of the groundwater supply with
MTBE, a toxic gasoline additive. Id. at 302. The Court held that the economic loss
rule did not bar plaintiff’s negligence claim because plaintiffs adequately alleged
personal and property damage. Id. at 317. As a preliminary matter, the Court
notes that MTBE construes Maryland’s economic loss doctrine. Id. In any event,
the case does not stand for the proposition (advanced by plaintiff) that alleging mere
exposure to a harmful chemical suffices to allege personal injury. (See ECF No. 34
at 16 (citing MTBE for the proposition that “[w]here, as here a complaint articulates
exposure to a harmful chemical, a plaintiff has properly pled credible risk of injury,
and the economic loss rule does not bar her claim.”).) Although the complaint at
issue in MTBE did allege that defendants’ “‘reckless, negligent, and illegal conduct
resulted in the actual dangerous releases of hazardous and toxic substances into the
14
Plaintiffs' water supply”, 457 F. Supp. at 318 (quoting Compl. ¶ 72), this was not
the only allegation supporting personal injury. Rather, unlike the FAC, the
complaint in MTBE expressly alleged that defendants’ conduct resulted in an
“‘unreasonable risk of harm, threat of future harm’ and ‘actual injuries to their
property, economic interests and person.’” Id. at 318 n.149 (quoting Compl. ¶ 72)
(emphasis added).
Plaintiff additionally submits that the economic loss rule does not bar her
negligent misrepresentation claim because she has alleged a “special relationship”
with defendants. (ECF No. 34 at 17.) See Anschutz Corp., 690 F.3d at 114 (noting
that “special relationship” is a separate element of a negligent misrepresentation
claim under New York law). Plaintiff has not alleged sufficient facts to support a
“special relationship” with defendants, however. For instance, she has not asserted,
as is required, that the parties shared a level of trust and confidence beyond that
typical of counter-parties in arms-length consumer transactions. See Segedie v.
Hain Celestial Grp., Inc., No. 14-cv-5029 (NSR), 2015 WL 2168374, at *14 (S.D.N.Y.
May 7, 2015) (“To allege a special relationship, the plaintiff must establish
something beyond an ordinary arms’ length transaction.”) (internal quotation
marks, alteration and citation omitted); see also Kimmell v. Schaefer, 89 N.Y.2d
257, 263 (1996). The lack of a special relationship between the parties provides an
independent basis on which to dismiss plaintiff’s negligent misrepresentation claim.
Thus, the Court dismisses the negligent misrepresentation claim (Count I) with
prejudice.
15
B.
Unjust Enrichment
Defendant next argues plaintiff’s unjust enrichment claim (Count III) must
be dismissed because it is based on the same factual allegations as the other tort
claims asserted in the FAC. (ECF No. 33 at 13-14.) The Court agrees. Although
Rule 8(d) permits a plaintiff to plead alternative—and even inconsistent—theories
of liability, see Barth Packaging, Inc. v. Excelsior Packaging Grp., Inc., No. 11-cv2563 (VB), 2011 WL 3628858, at *1 (S.D.N.Y. Aug. 16, 2011) (citing Fed. R. Civ. P.
8(d)(2), (3)), see also Barnet, 2014 WL 4393320, at *22, an unjust enrichment claim
must be dismissed when it entirely “duplicates” other tort or contract claims,
Corsello, 18 N.Y.3d at 790; Mahoney, 2016 WL 3951185, at *11; see also Weisblum,
88 F. Supp. 3d at 296-97 (suggesting that Corsello diminished plaintiff’s ability to
plead unjust enrichment in the alternative under New York law); Goldemberg v.
Johnson & Johnson Consumer Cos., Inc., 8 F. Supp. 3d 467, 483-84 (S.D.N.Y. 2014)
(same).
Dismissal with prejudice is required here. Plaintiff alleges that defendants’
alleged unjust enrichment stems from “Defendants’ deceptive, fraudulent, and
misleading labeling, advertising, marketing and sales of their Products”—the very
same conduct underlying her other claims. (See FAC ¶ 44.) Indeed, plaintiff’s
unjust enrichment claim incorporates all allegations in the preceding paragraphs of
the FAC. (Id. ¶ 43 (“Plaintiff repeats the allegations contained in the foregoing
paragraphs as if fully set forth herein.”). Thus, “To the extent [plaintiff’s other]
claims succeed, the unjust enrichment claim is duplicative; if plaintiff[‘s] other
16
claims are defective, an unjust enrichment claim cannot remedy the defects.”
Corsello, 18 N.Y. 3d at 791; see also Kriss v. Bayrock Grp. LLC, No. 10-cv3959(LGS)(DCF), 2016 WL 7046816, at *23 (S.D.N.Y. Dec. 2, 2016).
C.
Liability of Hain Celestial
Defendants additionally seek to dismiss all claims alleged against Hain
Celestial, arguing that plaintiff exclusively alleges misconduct by Hain Celestial’s
subsidiary, Jason Natural. (ECF No. 33 at 9-10.)
As a preliminary matter, the FAC is not pled with precision. Plaintiff often
conflates Hain Celestial with Jason Natural or blurs the distinction between them.
For instance, although plaintiff alleges that “Hain Celestial now acknowledges that
‘there may be some amount of sodium lauryl sulfate contained in some of our
surfactant products as a constituent of the sodium coco sulfate’” (FAC ¶ 6)
(emphasis added), this quote appears on Jason Natural’s website, not Hain
Celestial’s (see id. n.12). Plaintiff also cites the Jason Natural website to support its
allegation that “Hain Celestial has argued that it does not add SLS to its Products;
instead it uses sodium coco sulfate (‘SCS’).” (FAC ¶ 5 n.10) (emphasis added).)
In other instances, plaintiff groups Hain Celestial and Jason Natural together,
making allegations referencing the “companies”, “company” or “defendants” (e.g., id.
¶¶ 3, 7, 11) and “defendants’ Products” or “their Products” (e.g., id. ¶¶ 7, 8, 10, 12,
13).
Standing alone, the above allegations would not state a claim against Hain
Celestial, as they do not put Hain Celestial on notice of what it allegedly did wrong.
17
See, e.g., Pension Ben. Guar. Corp. ex rel. St. Vincent Catholic Med. Centers Ret.
Plan v. Morgan Stanley Inv. Mgmt. Inc., 712 F.3d 705, 734 (2d Cir. 2013) (noting
that Rule 8 requires that “the facts pleaded give the defendant fair notice of the
claim”); Howard v. Mun. Credit Union, No. 05-cv-7488 (LAK), 2008 WL 782760, at
*12 (S.D.N.Y. Mar. 25, 2008) (“While Rule 8 does not prohibit collective allegations
against multiple defendants, it does require that the allegations be sufficient to put
each defendant on notice of what they allegedly did or did not do”) (internal
quotation marks, alterations and citations omitted). But, critically, plaintiff further
alleges that Hain Celestial “manufactures and sells” the Jason Natural Products
allegedly purchased by plaintiff. (FAC ¶ 3.) This allegation very narrowly saves
plaintiff’s breach of express warranty (Count II), false advertising (Count IV) and
deceptive trade practices (Count V) claims against Hain Celestial.
A breach of express warranty claim requires proof, inter alia, that the
defendant has made “a material statement amounting to a warranty”. See
Cohn v. Kind, LLC, No. 13-cv-8365 (AKH), 2015 WL 9703527, at *2 (S.D.N.Y. Jan.
14, 2015) (quoting Goldemberg, 8 F. Supp. 3d at 482). The alleged statements upon
which plaintiff grounds her claim are the representations on the Products’ labels
stating “NO . . . SLS”. (See FAC ¶¶ 39; see also id. ¶¶ 3, 6.) Plaintiff plausibly
alleges that Hain Celestial made these representations. For instance, she asserts
that “Hain Celestial manufactures and sells natural health and beauty products
under the Jason Natural Brand”. (Id. ¶ 3). She then also asserts that “Defendants
caused the Products to be produced, supplied, promoted/marketed, and sold to
18
consumers with the representation that said Products contained ‘no . . . SLS,’ when
they knew or should have known that the Products contained SLS” (id. ¶ 11) and
that “Defendants marketed and advertised their Products as being SLS-free even
though they knew that the Products contained substantial amounts of SLS” (id. ¶
7). Accepted as true, these allegations sufficiently—but very, very weakly—tie Hain
Celestial to the “NO . . . SLS” representations. Thus, the Court declines to dismiss
the breach of express warranty claim as to Hain Celestial.
The Court reaches a similar conclusion with respect to the false advertising
and deceptive trade practices claims. Under New York law, claims for false
advertising and deceptive trade practices both require proof, inter alia, that the
defendant engaged in “materially misleading” consumer-oriented conduct. Orlander
v. Staples, Inc., 802 F.3d 289, 300 (2d Cir. 2015) (quoting Koch v. Acker, Merrall &
Condit Co., 18 N.Y.3d 940, 941 (2012)) (discussing N.Y. Gen. Bus. Law. §§ 349 and
350, et seq.). Plaintiff alleges that misleading marketing, advertising, packing and
labeling form the allegedly actionable conduct. (See FAC ¶¶ 49, 59.) Here too, the
above allegations suffice to assert that Hain Celestial directly engaged in this
conduct. As a result, the Court also declines to dismiss the false advertising and
deceptive trade practices claims as to Hain Celestial.3
3 Plaintiff has not alleged any facts in support of a theory that Hain Celestial is derivatively liable
for the conduct of Jason Natural because it exercises complete dominion and control over Jason
Natural. See Beck, 394 F. Supp. 2d at 638; Potash, 719 N.Y.S.2d at 291.
19
D.
Injunctive Relief
Defendants additionally argue that plaintiff lacks standing to seek injunctive
relief because she cannot establish she is likely to again be wronged. (ECF No. 33
at 11-12.) The Court agrees. To obtain an injunction, a plaintiff must demonstrate
“a likelihood that he or she will be injured in the future.” Deshawn E., 156 F.3d at
344 (citing City of Los Angeles, 461 U.S. at 105-06). Plaintiff’s alleged injury,
however, is based exclusively on her past purchases of the Products. (See FAC ¶ 8.)
Plaintiff has not plausibly alleged future injury based on future purchases. To the
contrary, the FAC makes clear that plaintiff is not likely to continue purchasing the
Products because (1) she is now allegedly aware that they contain SLS; and (2)
Jason Natural is revising the “SLS-free” designation on its labeling. (See id. ¶ 8.)
Indeed, plaintiff alleges that “[h]ad the Products not been misleadingly labeled as
being SLS-free, [she] would not have purchased” them in the first place. (Id. ¶ 8
(emphasis in original).) Under these circumstances, plaintiff has failed to
demonstrate a likelihood of future harm and, therefore, lacks standing to seek
injunctive relief. Plaintiff’s request for injunctive relief is thus dismissed.
E.
Nationwide Class Allegations
Defendants contend that plaintiff’s nationwide class allegations should be
dismissed under Rule 12(f) because plaintiff’s common law claims (of which only
unjust enrichment and breach of express warranty remain) “vary materially from
state to state.” (ECF No. 33 at 15.) This argument is premature because it raises
issues “‘that would be decided in connection with determining the appropriateness
20
of class certification’”. See Yang Chen, 2014 WL 7389011, at *7 (quoting Kassman
v. KPMG LLP, 925 F. Supp. 2d 453, 464-65 (S.D.N.Y. 2013)) (denying motion to
strike class allegations premised on argument that complaint did not satisfy Rule
23(a) and Rule 23(b)(3)’s predominance requirements, among others).
V.
CONCLUSION
For the reasons set forth above, defendants’ partial motion to dismiss is
GRANTED in PART and DENIED in PART. Counts I and III and plaintiff’s prayer
for injunctive relief are dismissed with prejudice.
The Clerk of Court is directed to terminate the motion at ECF No. 32.
SO ORDERED.
Dated:
New York, New York
January 18, 2017
KATHERINE B. FORREST
United States District Judge
21
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