67 F.4th 89
2d Cir.2023Background
- Young Living labeled certain essential oils "100% Pure, Therapeutic-Grade" and advertised specific physical/mental benefits (e.g., promoting calm, maintaining energy). NAD and NARB concluded many of the health-related claims were unsupported.
- Plaintiff Lori MacNaughton purchased Young Living oils after viewing those claims and sued on behalf of a putative class for violations of state consumer-protection statutes (including NY GBL §§ 349/350), unjust enrichment, and breach of warranty.
- The district court dismissed all claims, ruling the advertising was non-actionable puffery, the unjust enrichment claim failed Rule 9(b), and warranty claims lacked notice and privity.
- On appeal, the Second Circuit applied its Int'l Code Council framework distinguishing subjective puffery from provable objective claims, and reviewed Rule 9(b) and warranty requirements de novo.
- The Second Circuit vacated dismissal of the NY General Business Law claims and the unjust enrichment claim, concluding the challenged statements were provable and not facially implausible and that the unjust enrichment allegations met Rule 9(b). It affirmed dismissal of the breach of warranty claims for failure to plead pre-suit notice and privity.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Are Young Living's "therapeutic-grade" and health-benefit statements actionable or non-actionable puffery? | MacNaughton: statements were false/unsupported and induced purchase. | Young Living: statements are mere puffery and non-actionable. | Vacated dismissal — statements are provable and not so hyperbolic as to be facially implausible; fact-intensive inquiry required. |
| Does a claim that advertising is merely "unsubstantiated" fail under NY GBL? | MacNaughton: lack of substantiation supports a materially misleading claim that caused her to pay a premium. | Young Living: unsubstantiated claims are insufficient to plead falsity/misleadingness. | Rejected — court found no binding rule that unsubstantiated health claims cannot be misleading under NY law; plaintiff pleaded causation, injury, territoriality. |
| Did the unjust enrichment claim satisfy Rule 9(b)? | MacNaughton: complaint specified the fraudulent statements, who made them, when/where she purchased, and cited NAD/NARB and studies. | Young Living: claim was boilerplate and lacked particularity. | Vacated dismissal — complaint met Mills/Mills-derived particularity requirements under Rule 9(b). |
| Were breach of warranty claims properly dismissed for lack of notice and privity? | MacNaughton: alleges exceptions to privity and argues notice was or should be excused. | Young Living: plaintiff failed to plead timely pre-suit notice and privity; exceptions inapplicable. | Affirmed — plaintiff did not plead the timing of notice or allege contractual privity or applicable exceptions. |
Key Cases Cited
- Int'l Code Council, Inc. v. UpCodes Inc., 43 F.4th 46 (2d Cir. 2022) (distinguishes subjective non-actionable puffery from provable objective claims and requires fact-intensive inquiry for the latter)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility pleading standard under Rule 8)
- Mills v. Polar Molecular Corp., 12 F.3d 1170 (2d Cir. 1993) (Rule 9(b) particularity requirements)
- Goshen v. Mutual Life Ins. Co. of N.Y., 98 N.Y.2d 314 (2002) (elements and purpose of NY General Business Law consumer protection provisions)
- Orlander v. Staples, Inc., 802 F.3d 289 (2d Cir. 2015) (elements of NY GBL §§ 349/350 claims)
- Time Warner Cable, Inc. v. DIRECTV, Inc., 497 F.3d 144 (2d Cir. 2007) (discussion of puffery and consumer reliance analysis)
- Oswego Laborers' Local 214 Pension Fund v. Marine Midland Bank, 85 N.Y.2d 20 (1995) ("reasonable consumer" objective misleadingness standard)