Case Information
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
---------------------------------------------------------------------- X
:
MATTHEW COLPITTS , individually and on behalf :
of all others similarly situated , :
: Plaintiff, : 20 Civ. 2487 (JPC) : -v- : OPINION : AND ORDER
BLUE DIAMOND GROWERS, :
:
Defendant. :
:
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JOHN P. CRONAN, United States District Judge:
Plaintiff Matthew Colpitts brings this putative class action against Defendant Blue Diamond Growers, in connection with Defendant’s sale of a specific variety of almonds featuring a smoky taste (the “Product”). Plaintiff alleges that the Product’s use of the word “Smokehouse®” and a color scheme evocative of fire on its packaging misleads consumers into thinking that the almonds were prepared by a natural smoking process, when in fact the Product retains its taste from added flavors that imitate a smoky flavor. Asserting federal jurisdiction under the Class Action Fairness Act of 2005 (“CAFA”), 28 U.S.C. § 1332(d)(2), Plaintiff brings claims under New York consumer protection law and common law.
Defendant moves to dismiss the Complaint on numerous grounds. First, Defendant argues that Plaintiff has not pleaded an injury-in-fact sufficient to establish standing under Article III of the United States Constitution for any of his claims. Second, Defendant seeks dismissal of Plaintiff’s claims under New York General Business Law (“N.Y. G.B.L.”) §§ 349 and 350, arguing that Plaintiff fails to adequately plead a purchase, that he improperly seeks to privately enforce regulations promulgated under the Federal Food, Drug, and Cosmetic Act (“FDCA”), 21 U.S.C. § 301 et seq ., and that no reasonable consumer would interpret the Product’s “Smokehouse®” description and package coloring as meaning that the almonds derive their taste from having been smoked over a fire. Lastly, Defendant argues that Plaintiff has failed to adequately plead his claims of fraud, negligent misrepresentation, breaches of express and implied warranties, and unjust enrichment under common law. See Dkts. 10, 11, 12.
For the reasons below, the Court concludes that Plaintiff has established Article III standing to seek damages. Plaintiff’s N.Y. G.B.L. §§ 349 and 350 claims survive dismissal because Plaintiff has sufficiently pleaded viable grounds for relief under those Sections, including by plausibly alleging that reasonable consumers could be misled by the Product’s labeling. The Court, however, dismisses Plaintiff’s common law claims for failure to state a claim upon which relief may be granted.
I. Background
A. Factual Allegations
For purposes of the present motion to dismiss, the Court accepts as true all factual
allegations in the Complaint and draws all reasonable inferences in Plaintiff’s favor.
See Tsirelman
v. Daines
,
Defendant distributes and manufactures smoke-flavored almonds, i.e. , the Product. Dkt. 1 (“Compl.” or “Complaint”) ¶ 1. The Product is sold in various sizes, and its packaging features the label “Smokehouse®,” among other words, as well as red and red-orange coloring, a color scheme that, according to Plaintiff, is suggestive of fire. Id. ¶¶ 2-4. The Complaint includes the following picture of the front of the Product’s packaging:
Id. ¶ 3. Plaintiff alleges that through these features—the “Smokehouse®” label and the packaging’s color scheme—the Product “makes direct representations” that its smoky flavor is the result of the actual process of smoking. Id. ¶ 4. As alleged, “[s]moking is a method of food preparation (and preservation) where a food is cooked over a fire that contain[s] various kinds of wood chips,” with the wood chips “provid[ing] unique and powerful flavors, based on the type of wood used.” Id. ¶¶ 5-6. Plaintiff further alleges that it would not be unreasonable for consumers to expect that the almonds were in fact smoked over a fire: “‘Smoked Almonds’ that get their smoked flavor from being smoked is not an unheard of or rare delicacy that it would make a reasonable consumer ‘double check’ the veracity of the front label claims.” Id. ¶ 12. Plaintiff contends that consumers therefore receive the impression that the almonds retain their smoky taste through this process of actual smoking. Id. ¶¶ 8, 14. [1]
This representation, according to Plaintiff, is misleading because the Product’s smoky taste is in fact derived from added smoke flavor, not the aforementioned process of smoking over a fire with wood chips. Id. ¶¶ 15, 18. To support this contention, the Complaint includes a picture of the ingredients section on the back of the Product’s packaging, which lists “NATURAL HICKORY SMOKE FLAVOR” as an ingredient:
Id. ¶ 15.
The Complaint also suggests that certain parts of the label fail to put a consumer on notice that the Product is not actually smoked. The Complaint maintains that the trademark symbol at the end of the word “Smokehouse®” does not cure the misleading nature of the representation, because “[t]here is no reason to expect that because a representation may carry a trademark registration that it should mean the thing described is false or that it is necessarily fanciful.” Id. ¶ 10. Plaintiff also alleges that no reasonable consumer would resort to the ingredients list after reading the “Smokehouse®” label to check whether the almonds had smoke flavor additives, id. ¶ 11, and even if one were to, “a reasonable consumer would have no reason to know that the listing of ‘natural hickory smoke flavor’ forecloses the possibility the Product was also subject to smoking,” id. ¶ 17.
Plaintiff pleads that, as a result of the Product’s allegedly misleading labeling, reasonable consumers will purchase the Product, instead of similar products, at a higher price. Id. ¶ 21. This is because “[c]onsumers prefer foods that have the characteristics they seek due to their natural production process, i.e., actual smoking, as opposed to the ‘taste’ of being smoked through ‘smoke flavor,’ for reasons including nutrition, health and/or the avoidance of additives and highly processed ingredients.” Id. ¶ 16. Plaintiff further alleges that, during the relevant statute of limitations period and while in this District, he purchased the Product “for personal consumption and/or use in reliance on the representations the Product’s smoked taste being the result of actual smoking as opposed to smoke flavor.” Id. ¶ 34. Plaintiff alleges that the Product “is sold at a premium price, approximately no less than $2.79 per 1.5 OZ, excluding tax, compared to other similar products represented in a non-misleading way,” id. ¶ 24, and had he and other members of the putative class known that the Product’s taste was not the result of any smoked treatment, they would not have bought the Product or would have paid less for it, id. ¶ 22.
B. Procedural Background
Plaintiff filed the Complaint on March 22, 2020, asserting jurisdiction under the CAFA, 28 U.S.C. § 1332(d)(2). [2] Compl. ¶¶ 25-28. The Complaint pleads claims under N.Y. G.B.L. §§ 349 and 350, as well as common law claims of fraud, negligent misrepresentation, breach of express warranty, breach of implied warranty of merchantability, and unjust enrichment. [3] Id. ¶¶ 43-71. Plaintiff pleads that the class will consist of all purchasers of the Product in New York and other states during the applicable statute of limitations period. [4] Id. ¶ 35.
On September 11, 2020, Defendant moved to dismiss the Complaint. Dkts. 10 (“Notice of Motion”), 11 (“Motion to Dismiss”), 12. Plaintiff filed his brief opposing dismissal on October 2, 2020, Dkt. 14 (“Opposition”), and Defendant filed its reply brief on October 16, 2020, Dkt. 17 (“Reply”). On September 29, 2020, this case was reassigned to the undersigned. The Court held oral argument on Defendant’s Motion to Dismiss on February 18, 2021. See Dkt. 38 (“2/18/21 Tr.”).
II. Discussion
A. Applicable Legal Standards Under Federal Rule of Civil Procedure 12(b)
When reviewing a motion under Federal Rule of Civil Procedure 12(b)(6) for failure to
state a claim upon which relief can be granted, this Court must accept all factual allegations in the
complaint as true and draw inferences from the allegations in the light most favorable to the
plaintiff.
Tsirelman
,
[4] “In analyzing putative, nationwide, consumer-protection class actions, several courts
have determined that the law of the state where each plaintiff resides and purchased the relevant
products should apply.”
In re Grand Theft Auto Video Game Consumer Litig.
,
F.3d 104, 111 (2d Cir. 2010), this Court also considers the Product’s label, including the
“Smokehouse®” description, the color scheme, and the ingredients list.
See Stewart v. Riviana
Foods Inc.
, No. 16 Civ. 6157 (NSR),
The standard of review for a motion to dismiss pursuant to Rule 12(b)(1) for lack of subject
matter jurisdiction is “identical” to the standard for a Rule 12(b)(6) motion for failure to state a
claim.
[5]
Moore v. PaineWebber, Inc.
,
B. Article III Standing
The Court begins with Defendant’s jurisdictional challenge to Plaintiff’s standing. Article
III of the United States Constitution limits federal courts “to the resolution of cases and
controversies.”
Carter
,
Defendant argues that Plaintiff lacks standing to seek damages in connection with his
alleged purchase of the Product because he has failed to adequately allege an injury. Motion to
Dismiss at 11. Defendant appears to argue that because Plaintiff has not sufficiently pleaded a
price premium injury for purposes of his N.Y. G.B.L. §§ 349 and 350 claims, he therefore lacks
standing to bring this action under the Constitution.
Id
. The Court begins with addressing
Plaintiff’s Article III standing before turning to the merits of Plaintiff’s underlying statutory claim.
See Axon v. Florida’s Nat. Growers, Inc.
,
Defendant’s challenge to standing fails in light of Plaintiff’s allegations that he purchased
the Product in reliance on the alleged misrepresentation and, had he “and class members known
the truth, they would not have bought the Product or would have paid less for it.” Compl. ¶ 22;
accord id.
¶¶ 49, 57, 65, 69. Such an allegation that a plaintiff would not have purchased a product
or would not have paid the same amount comfortably satisfies the injury-in-fact prong of Article
III standing.
See, e.g.
,
DaCorta v. AM Retail Grp., Inc.
, No. 16 Civ. 1748 (NSR), 2018 WL
557909, at *6 (S.D.N.Y. Jan. 23, 2018) (“The allegation that Plaintiff would not have made this
purchase, or would not have paid the amount she did, is sufficient for Article III injury.” (citations
and internal quotation marks omitted));
Borenkoff v. Buffalo Wild Wings, Inc.
, No. 16 Civ. 8523
(KBF),
C. Plaintiff’s New York General Business Law Sections 349 and 350 Claims As noted, Plaintiff claims that Defendant violated New York General Business Law §§ 349 and 350 by misleading reasonable consumers into believing that the Product featured almonds whose smoky flavor was derived from being smoked over a fire and, as a result, he and others purchased the Product at a price premium. Compl. ¶¶ 4, 8-12, 14, 22, 24, 44.
Section 349 of the New York General Business Law declares unlawful “[d]eceptive acts
or practices in the conduct of any business, trade or commerce or in the furnishing of any service.”
N.Y. Gen. Bus. L. § 349(a). Section 350 prohibits “[f]alse advertising in the conduct of any
business, trade, or commerce or in the furnishing of any service
.” Id
. § 350. Sections 349 and
350 are both aimed at conduct that is deceptive—
i.e.
, conduct “likely to mislead a reasonable
consumer acting reasonably under the circumstances.”
Oswego Laborers’ Local 214 Pension
Fund v. Marine Midland Bank, N.A.
,
Defendant argues that Plaintiff’s §§ 349 and 350 claims must be dismissed because (1) Plaintiff has not adequately pleaded an injury, Motion to Dismiss at 7-11; (2) Plaintiff is attempting to privately enforce the FDCA, id. at 4-5; and (3) Plaintiff has failed to demonstrate that the Product is materially misleading, id. at 5-7. The Court rejects each of these arguments.
1. Plaintiff Has Pleaded an Injury Under New York General Business Law Sections 349 and 350
Although the Court has concluded that Plaintiff adequately pleaded an injury-in-fact for
purposes of Article III standing, whether Plaintiff has properly alleged an injury for his N.Y.
G.B.L. §§ 349 and 350 claims requires a separate inquiry.
See Borenkoff
,
An injury under §§ 349 and 350 therefore may be alleged under a price premium theory
whereby a plaintiff claims to have paid more for the product than he or she would have if the
defendant did not engage in allegedly deceptive practices.
See e.g.
,
Orlander
,
Defendant first argues that Plaintiff has not adequately pleaded a purchase for purposes of
N.Y. G.B.L. §§ 349 and 350 because the Complaint does not allege with enough specificity where,
when, and for how much Plaintiff purchased the Product. Motion Dismiss at 8. However,
“[c]laims under GBL §§ 349 [and] 350 are ‘not subject to the pleading-with-particularity
requirements of Rule 9(b).’. . . They ‘need only meet the bare-bones notice-pleading requirements
of Rule 8(a).’”
Manchanda v. Navient Student Loans
, No. 19 Civ. 5121 (WHP), 2020 WL
5802238, at *5 (S.D.N.Y. Sept. 29, 2020) (quoting
Pelman ex rel. Pelman v. McDonald’s Corp.
,
Plaintiff’s allegations relating to his purchase of the Product meet this standard. Plaintiff alleges that he purchased the Product in reliance of Defendant’s alleged misrepresentation as to how the almonds were produced, and that the purchase occurred “within his district and/or State” ( i.e. , in the Southern District of New York) and “[d]uring the relevant statute of limitations.” Compl. ¶ 34. Thus, the Complaint puts Defendant on notice as to Plaintiff’s allegations regarding the specific product he purchased, the judicial district where that purchase occurred, whether that purchase occurred within the statute of limitations, and the alleged deceptive practices committed by Defendant. Rule 8(a) does not mandate that “a complaint be a model of clarity or exhaustively present the facts alleged, as long as it gives [the] defendant fair notice of what [the] plaintiff’s claim is and the facts upon which it rests.” Anwar v. Fairfield Greenwich Ltd. , 728 F. Supp. 2d 372, 422 (S.D.N.Y. 2010) (internal quotations and citations omitted). The Complaint has done that as to Plaintiff’s N.Y. G.B.L. §§ 349 and 350 claims. [6]
The sole case cited by Defendant in support of its challenge to the sufficiency of Plaintiff’s
purchase allegations,
Colella v. Atkins Nutritionals, Inc.
,
Defendant next argues that Plaintiff fails to adequately allege a price premium injury
because he “does not allege or identify: (a) the specific price he paid; (b) competitors’ products for
the price premium; or (c) how those products are purportedly comparable to the [a]lmonds.”
Motion to Dismiss at 11. But here too Plaintiff is demanding more than the law requires.
Numerous courts in this Circuit have “found sufficient a plaintiff’s general allegation that she
would not have paid a price premium but for the defendant’s misrepresentations.”
Rodriguez v.
Hanesbrands Inc.
, No. 17 Civ. 1612 (DLI) (RLM),
Although the Complaint does not contain a detailed comparison of the Product’s prices and competitors’ prices, Plaintiff does allege that “the Product is sold at a premium price, approximately no less than $2.79 per 1.5 OZ,” Compl. ¶ 24, and that Defendant’s deception has caused “reasonable consumers” to purchase the Product at its higher price, instead of similar products, id . ¶ 21. Moreover, Plaintiff alleges that “[h]ad plaintiff and class members known the truth, they would not have bought the Product or would have paid less for it.” Id . ¶ 22. These allegations adequately plead a price premium injury to support Plaintiff’s N.Y. G.B.L. §§ 349 and 350 claims. [7]
2. The Complaint Alleges Conduct Separate from Violations of the Federal Food, Drug, and Cosmetic Act
Defendant additionally argues that Plaintiff’s N.Y. G.B.L. §§ 349 and 350 claims should
be dismissed because he seeks to enforce the FDCA, a statute without a private right of action.
Motion to Dismiss at 4. Defendant is correct that the Complaint repeatedly cites provisions of 21
C.F.R. § 101.22(i), a regulation promulgated by the United States Food and Drug Administration
pursuant to the FDCA that sets out flavor-related labeling requirements for food products. Compl.
¶¶ 4, 8, 13. Defendant also is correct that the FDCA does not provide for a private right of action.
See PDK Labs Inc. v. Friedlander
, 103 F.3d 1105, 1113 (2d Cir. 1997). Nor may a plaintiff
circumvent such a lack of a private right of action in one statute by incorporating allegations of its
violations into claims pleaded under another statute that does allow for a private right of action.
See, e.g.
,
Broder v. Cablevision Sys. Corp.
,
In this context, however, the Second Circuit has instructed that “a GBL claim is viable
where the plaintiff ‘make[s] a free-standing claim of deceptiveness . . . that happens to overlap
with a possible claim’ under another statute that is not independently actionable.”
Nick’s Garage,
Inc. v. Progressive Cas. Ins. Co.
,
Certain allegations in the Complaint appear to rely on federal regulations to establish deceptiveness for purposes of violations of N.Y. G.B.L. §§ 349 and 350. See Compl. ¶¶ 4 (citing 21 C.F.R. § 101.22(i)), 8 (citing 21 C.F.R. § 101.22(i)(1)(i)), 13 (citing 21 C.F.R. § 101.22(i)(1)). In general, these regulations provide labeling requirements for a food product when it contains an artificial flavor which stimulates its characterizing flavor. The implications from these citations appear to be that the Product should have been labeled “Smokehouse®” only if its flavor was in fact the result of actual smoking in a smokehouse, without artificial flavor simulating a smoky taste, and that Defendant’s failure to comply with § 101.22(i) made reasonable consumers more likely to purchase the Product, including at a higher price than competitors’ almonds.
Reading the Complaint in the light most favorable to Plaintiff, however, the Court
determines that Plaintiff alleges multiple “free-standing claims of deceptiveness” that may violate
N.Y. G.B.L. §§ 349 and 350, apart from the Product’s alleged failure to comply with the labeling
requirements of 21 C.F.R. § 101.22(i).
See
Compl. ¶¶ 17-18, 22-23, 46-49. A few examples of
these alleged separate bases for deceptiveness include the misleading use of the word
“Smokehouse®” to indicate that the almonds were produced through an actual smoking process
(regardless of whether that use also violated § 101.22(i)),
id.
¶ 18, the packaging’s deceptive “color
scheme evocative of the fire used in actual smoking,”
id
. ¶ 4, the Product’s elevated price,
id
. ¶ 22,
and the assertion that smoked almonds are “not an unheard of or rare delicacy,”
id
. ¶ 12. These
allegations are separate from violations of the cited federal regulations. The Court therefore
concludes this is not a case where Plaintiff “dogged[ly] insist[s]” on the FDCA violations
misleading the reasonable consumer, such that his “true goal is to privately enforce alleged
violations of the FDCA.”
PDK Labs, Inc.
,
While dismissal of Plaintiff’s N.Y. G.B.L. §§ 349 and 350 claims is unwarranted on this
ground, the Court proceeds to analyze the sufficiency of these claims in the subsequent sections
without reliance on any purported violations of § 101.22(i).
See e.g.
,
Pichardo v. Only What You
Need, Inc.
, No. 20 Civ. 493 (VEC),
3. Plaintiff Has Plausibly Alleged a Claim Under New York General Business Law Sections 349 and 350
At the core of this case is whether the Product was materially misleading to reasonable consumers as to the manner in which the almonds were prepared. Defendant argues that dismissal at this stage is required because “no reasonable consumer seeing a red package labeled ‘Smokehouse’ would conclude that the [a]lmonds necessarily derive their taste from having been smoked over a hardwood fire in an outbuilding constructed for that specific purpose.” Motion to Dismiss at 6. While the Court finds Defendant’s motion to present a close call, the Court cannot conclude at this early stage, where all reasonable inferences must be drawn in Plaintiff’s favor, that the Complaint fails to plausibly allege that a reasonable consumer would be misled by the Product.
To survive a motion to dismiss a consumer fraud claim brought under New York law, a
plaintiff must plausibly allege facts showing that the statements were “‘likely to mislead a
reasonable consumer acting reasonably under the circumstances.’”
Cohen v. JP Morgan Chase &
Co.
,
Against this legal backdrop and crediting Plaintiff’s allegations, the Court concludes that Plaintiff has plausibly pleaded that the Product is likely to mislead a reasonable consumer into believing that Defendant’s almonds were manufactured through an actual smoking process. Plaintiff therefore has sufficiently pleaded a material misrepresentation under N.Y. G.B.L. §§ 349 and 350.
To start, the front packaging of the Product is labeled, in large font, with the word “Smokehouse®.” The word “smokehouse” is a noun that describes a physical structure where food is prepared through the process of using actual smoke. See Smokehouse , Merriam-Webster’s Online Dictionary, https://www.merriam-webster.com/dictionary/smokehouse (“[A] building where meat or fish is cured by means of dense smoke.”) (last visited Mar. 9, 2021); Smoke-house , Oxford English Dictionary Online, https://www.oed.com/view/Entry/182710?redirectedFrom =smokehouse#eid (“A house or room used for curing meat, fish, etc., by means of smoke.”) (last visited Mar. 9, 2021); see also 2/18/21 Tr. at 33 (statement of Plaintiff’s counsel) (describing an industrial smoking process whereby “almonds are put on a huge tray and they’re slid into a smoking structure like . . . an industrial smokehouse”). The word “smokehouse” is exclusively used as a noun to describe such a physical structure; it is not also an adjective or otherwise a word commonly used to describe a flavor. And nothing else on the front of the packaging would alert consumers that the “Smokehouse®” label refers only to the almonds’ flavor, rather than the flavoring process, such as words like “smoky flavor.” As such, the Product is labeled with a word whose sole meaning goes directly to the misrepresentation alleged by Plaintiff, i.e. , the fire-infused process by which a food product is prepared, without any qualifying or clarifying language. [9]
For that reason, this case presents a very different situation from the many cases in this
District involving vanilla descriptors, upon which Defendant heavily relies. Several courts in this
District have found the label “vanilla” on various food products not to be materially misleading,
despite the products lacking any actual vanilla beans or vanilla bean extract.
See, e.g.
,
Wynn v.
Topco Associates, LLC.
, No. 19 Civ. 11104 (RA),
While no prior case appears to be directly on point to the scenario presented here, some other decisions within the Circuit have addressed more analogous product descriptions concerning the manner of producing goods. The Honorable Brenda K. Sannes of the Northern District of New York addressed the production of Tito’s vodka in connection with a claim that its bottles were deceptively labeled. See Singleton v. Fifth Generation, Inc. , No. 15 Civ. 474 (BKS), 2016 WL 406295, at *1-2 (N.D.N.Y. Jan. 12, 2016). The plaintiff in Singleton contended that the label’s use of the term “handmade” and statement that it was “Crafted in an Old Fashioned Pot Still by America’s Original Microdistillery,” id. at *2, would lead a reasonable consumer to believe that the vodka was made by human hand, with little automated machinery, whereas in actuality the vodka was “manufactured in massive buildings containing ten floor-to-ceiling stills, using automated machinery and highly mechanized processes,” id. at *9. Judge Sannes rejected the defendant’s argument that “no reasonable consumer could believe that the vodka was physically made by human hands without machinery,” and held that the “handmade” representation could lead a consumer to believe that the vodka was made in a “hands-on, small-batch process.” Id. at *9-10. Similarly, a reasonable consumer could read the Product’s “Smokehouse®” label to believe that the almonds were smoked over a fire in a smokehouse or similar structure.
Also instructive is the recent decision of the Honorable Alison J. Nathan in
Hesse v. Godiva
Chocolatier, Inc
. At issue in
Hesse
was whether the defendant’s use of the words “Belgium 1926”
on its chocolate products misled consumers to believe that the chocolates were made in Belgium.
The Complaint also pleads that it would not be unreasonable for consumers to believe that
the almonds here were smoked over a fire. The Complaint alleges that it is not an “unheard of or
rare delicacy” for almonds to obtain a smoky flavor from an actual smoking process over a fire,
Compl. ¶ 12, and Defendant has not yet argued otherwise.
See also id.
¶ 7 (“For example, hickory
wood chips – from deciduous hardwood trees of the genus Carya – are often used for providing
hearty yet sweet flavors to nuts and meat.”). The logical inference from this allegation is that it
would not be unreasonable for a consumer reading a description indicating that almonds were
flavored through a smoking process to assume that the almonds were in fact prepared that way.
Smoking almonds also does not seem to entail a process that would trigger such substantial costs
that no reasonable consumer would believe that these almonds, priced at “no less than $2.79 per
1.5 OZ,”
id.
¶ 24, were smoked over a fire.
Cf. Jessani v. Monini N. Am., Inc.
,
Given the plausibility of Plaintiff’s allegations that the “Smokehouse®” label could
mislead reasonable consumers, Defendant finds no help from the disclosure on the Product’s
ingredients list that the almonds contain “NATURAL HICKORY SMOKE FLAVOR.” Compl.
¶ 15. An ingredients list on the back of a package cannot cure a misleading label on the front.
See
Mantikas v. Kellogg Co.
,
Lastly, the Complaint also sufficiently pleads materiality. A “‘material claim is one that
involves information that is important to consumers and, hence, likely to affect their choice of, or
conduct regarding, a product.’”
In re Sling Media Slingbox Advert. Litig.
,
To be sure, in denying dismissal as to the §§ 349 and 350 claims, the Court only holds that Plaintiff has pleaded sufficient allegations to survive a Rule 12(b)(6) motion. Further factual development may very well reveal that reasonable consumers would not infer from the Product’s label that the almonds were smoked, or that the process by which the almonds were flavored is not a significant consideration when consumers decide to purchase the Product. Cf. Petrosino , 2018 WL 1614349, at *7 (observing that “[t]he question of whether [d]efendant’s label is actually misleading to a reasonable consumer” is one “of fact better suited for the jury”). But the Court is now considering the question at the motion to dismiss stage and has only the pleadings upon which to rely, with inferences to be drawn in Plaintiff’s favor. Because the Court concludes that those allegations sufficiently state claims under N.Y. G.B.L. §§ 349 and 350, the Court denies Defendant’s Motion to Dismiss as to those claims.
D. Plaintiff’s Common Law Claims
The Court now turns to the host of claims that Plaintiff brings under common law, all of which in some way relate to the same alleged misrepresentation on the Product’s label. For reasons that follow, each of these claims falls short in at least one fatal way. [12]
1. Plaintiff Fails to Allege Fraudulent Intent to Support a Fraud Claim
To state a claim of common law fraud under New York law, a plaintiff must allege “(1) a
material misstatement, (2) known by the perpetrator to be false, (3) made with an intent to deceive,
(4) upon which the plaintiff reasonably relies, and (5) damages.”
Quiroz
,
The Court dismisses Plaintiff’s fraud claim for failure to plead fraudulent intent. Plaintiff
asserts that “Defendant’s fraudulent intent is evinced by its failure to accurately identify the
Product on the front label, when it knew its statements were not true nor accurate.” Compl. ¶ 68.
Such conclusory allegations fall short of the Rule 9(b) standard.
See Twohig v. Shop-Rite
Supermarkets, Inc.
, No. 20 Civ. 763 (CS), 2021 WL 518021, at *8 (S.D.N.Y. Feb. 11, 2021)
(finding identical allegations to be too conclusory to support a strong inference of fraudulent
intent);
Barreto
,
As noted above, “conclusory assertions of intent” may support a fraud claim “‘if supported
by facts giving rise to a strong inference of fraudulent intent.’”
Aetna Cas. & Sur. Co. v. Aniero
Concrete Co.
,
Plaintiff has not alleged any facts that would allow for a circumstantial finding of
fraudulent intent, such as by showing an awareness of the Product’s deceptive nature.
Cf. Greene
,
The Complaint also does not allege a specific motive for the fraud. Even construing
Plaintiff’s allegations regarding the price premium charged by Defendant as evincing a desire to
profit from the misrepresentation, “simply alleging a defendant’s self-interested desire to increase
sales does not give rise to an inference of fraudulent intent.”
Duran
, 450 F. Supp. 3d at 354;
accord Negrete v. Citibank, N.A.
,
Further, when asked at oral argument, Plaintiff’s counsel was unable to point to any allegation in the Complaint that supports an inference of fraudulent intent. [13] See 2/18/21 Tr. at 37-38. For all these reasons, Plaintiff has failed to plead sufficient allegations to raise an inference of Defendant’s fraudulent intent, and his fraud claim is dismissed with prejudice.
2. Plaintiff Fails to Allege a Special Relationship to Support a Negligent Misrepresentation Claim
To sufficiently plead a claim for negligent misrepresentation, 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., Inc.
, 690
F.3d 98, 114 (2d Cir. 2012). “[A] special relationship exists if the defendant ‘possess[es] unique
or special expertise’ or is ‘in a special position of confidence and trust with the injured party such
that reliance on the negligent misrepresentation is justified.’”
Sarr v. BEF Foods, Inc.
, No. 18
Civ. 6409 (ARR),
Plaintiff alleges that Defendant’s duty here arose from “h[olding] itself out as having special knowledge and experience” in the sale of the Product, Compl. ¶ 54, and a breach of that the Court is aware of no authority suggesting that the use of a trademark symbol, without more, allows an inference of fraudulent intent.
duty occurred when Defendant misrepresented the Product’s attributes,
id.
¶¶ 50-57. These
allegations, however, fall short of establishing a special relationship between Plaintiff and
Defendant.
See, e.g.
,
Twohig
,
Nevertheless, even if the Complaint only “sparsely ple[ads]” a special relationship of trust
or confidence, a claim of negligent misrepresentation may survive if a plaintiff “emphatically
allege[s]” that “the person making the representation held or appeared to hold unique or special
expertise” and that “the speaker was aware of the use to which the information would be put and
supplied it for that purpose.”
Greene
,
Plaintiff’s conclusory allegation that Defendant’s duty arose from “having special
knowledge and expertise in the production, service and/or sale of the product,” Compl. ¶ 54, does
not plead a special relationship based on Defendant’s possession of unique knowledge. In cases
where courts have found a defendant to hold itself out as an expert, the representations involved
scientific, technical, or non-public information,
i.e.
, subjects of which a regular consumer normally
would be unaware of and therefore more likely to rely on the provided information.
See Hughes
,
930 F. Supp. 2d at 475 (finding inference of a special relationship when vitamin manufacturer
purported to have “good clinical research,” and included a section titled “[a]sk an [e]xpert” on its
website);
Greene
,
Accordingly, Plaintiff’s claim for negligent misrepresentation is dismissed with prejudice. [14]
3. Plaintiff Failed to Plead Notice as Required for a Breach of Express Warranty Claim
Plaintiff’s claims for breaches of express and implied warranties rely on identical allegations: Defendant manufactured and labeled the Product in a manner that warranted to Plaintiff and class members that the almonds were smoked over a fire. Compl. ¶ 59. The Complaint alleges that Defendant had a duty, as “one of the most recognized companies in the nation in this sector,” to “disclose and/or provide non-deceptive descriptions and marketing of the Products.” Id. ¶¶ 60-61. Additionally, Plaintiff asserts that he “provided or will provide” notice to Defendant, and that Defendant has “received notice and should have been aware of these misrepresentations due to numerous complaints by consumers to its main office over the past several years.” Id. ¶¶ 62-63.
A claim for breach of express warranty under New York law requires a plaintiff to allege
an “‘affirmation of fact or promise by the seller, the natural tendency of which was to induce the
buyer to purchase and that the warranty was relied upon.’”
Factory Assocs. & Exps., Inc. v. Lehigh
Safety Shoes Co.
, 382 F. App’x 110, 112 (2d Cir. 2010) (internal quotations omitted) (quoting
Schimmenti v. Ply Gem Indus., Inc.
, 549 N.Y.S.2d 152, 154 (App. Div. 1989)). To survive a
motion to dismiss, a breach of express warranty claim must allege: “(1) the existence of a material
statement amounting to a warranty, (2) the buyer’s reliance on this warranty as a basis for the
contract with the immediate seller, (3) breach of the warranty, and (4) injury to the buyer caused
by the breach.”
Goldemberg
,
Plaintiff contends that pre-suit notice was not required here, citing an exception for retail
customers crafted by certain New York state courts. Opposition at 17. The Court disagrees.
“Although a minority of New York State cases suggest an exception to the notice requirement in
retail sales . . . the exception appears to be exclusively applied when a party alleges physical, in
addition to economic, injury.”
Colella
, 348 F. Supp. 3d at 143-44;
see Campbell
, 2021 WL
355405, at *12 n.12;
Lugones
,
At oral argument, Plaintiff’s counsel conceded that Plaintiff never provided Defendant with
pre-suit notice. 2/18/21 Tr. at 26. The Complaint likewise does not sufficiently plead notice.
Plaintiff merely alleges that he “provided or will provide notice to defendant, its agents, its
representatives, retailers and their employees.” Compl. ¶ 62. The Court cannot construe this vague
allegation as adequately pleading that Plaintiff did in fact provide notice.
See Campbell
, 2021 WL
355405, at *12 (rejecting a verbatim pleading of notice as “wholly equivocal,” because it did “not
allege that notice has been provided, only that Plaintiff ‘provided or will provide’ notice”);
see
also NECA-IBEW Health & Welfare Fund v. Goldman Sachs & Co.,
The Complaint also suggests that the notice requirement has been satisfied because
“Defendant received notice and should have been aware of these misrepresentations due to
numerous complaints by consumers to its main office over the past several years.” Compl. ¶ 63.
This allegation similarly is too conclusory and is unsupported by any specific factual allegations.
For instance, Plaintiff does not point to any other lawsuits concerning the Product, or any specific
customer complaints that Defendant received about the Product. Nor was Plaintiff’s counsel able
to do so at oral argument. 2/18/21 Tr. at 26-27. But even if Defendant had been aware of similar
suits or customer complaints prior to the filing of this lawsuit, New York’s pre-suit notice
requirement still has not been met, as that requirement is intended to “open[] the way for normal
settlement through negotiation.”
Singleton
,
Plaintiff’s failure to satisfy the pre-suit notice requirement is fatal to his breach of express warranty claim. The Court therefore dismisses this claim with prejudice as well.
4. Plaintiff’s Implied Warranty of Merchantability Claim Fails for Lack of Privity and Lack of Notice
To state a claim for breach of implied warranty of merchantability, Plaintiff must plead
that a merchant seller breached its “guarantee . . . that its goods are fit for the intended purpose for
which they are used and that they will pass in the trade without objection.”
Wojcik v. Empire
Forklift, Inc.
,
Under New York law, a plaintiff must allege privity with the defendant for a claim of
breach of an implied warranty.
See e.g.
,
Sarr
,
The Complaint does not allege that privity of contract existed between Plaintiff and
Defendant. Instead, Plaintiff pleads that “[t]he Product is available to consumers from retail and
online stores
of third-parties
.” Compl. ¶ 2 (emphasis added). At oral argument, Plaintiff’s counsel
further confirmed that Plaintiff “did not buy [the Product] directly from defendant[].” 2/18/21 Tr.
at 30. This lack of an immediate transaction “renders [P]laintiff a remote purchaser who is barred
as a matter of law from claiming economic damages due to [Defendant’s] alleged breach of implied
warrant[y].”
Arthur Glick Leasing, Inc.
,
The Court further finds that, like Plaintiff’s breach of express warranty claim, his breach
of implied warranty claim also fails for lack of pre-suit notice for the same reasons discussed
above.
See Campbell
, 2021 WL 355405, at *13 (collecting cases holding that the notice
requirement applies to claims for breach of implied warranty);
Richards
,
The Court therefore dismisses Plaintiff’s claim for breach of implied warranty with prejudice.
5. Plaintiff’s Unjust Enrichment Claim is Duplicative
Lastly, Plaintiff brings a claim for unjust enrichment, on the theory that that “Defendant
obtained benefits and monies because the Products were not as represented and expected, to the
detriment and impoverishment of [P]laintiff and class members.” Compl. ¶ 71. To sufficiently
plead unjust enrichment, a plaintiff must allege that “(1) the defendant was enriched, (2) at the
expense of the plaintiff, and (3) . . . it would be inequitable to permit the defendant to retain that
which is claimed by the plaintiff.”
Koenig v. Boulder Brands, Inc.
, 995 F. Supp. 2d 274, 290
(S.D.N.Y. 2014) (quoting
Baron
,
Plaintiff’s unjust enrichment claim must be dismissed because it merely duplicates his
other claims. The Complaint devotes two sentences to the unjust enrichment claim:
“incorporat[ing] by reference all preceding paragraphs” and then stating that Defendant received
profits to the “detriment and impoverishment of plaintiff and class members.” Compl. ¶¶ 70-71.
As Judge Woods explained when faced with identical pleading language in
Campbell
, “the unjust
enrichment claim is a mere repackaging of [Plaintiff’s] other claims based on the alleged
misrepresentations on the Product’s packaging.”
Accordingly, the Court dismisses Plaintiff’s unjust enrichment claim with prejudice.
III. Conclusion
For the reasons discussed above, Defendant’s motion to dismiss is granted in part and denied in part. The Court denies Defendant’s motion to dismiss as to Plaintiff’s claims for damages under N.Y. G.B.L. §§ 349 and 350. The Court grants the motion as to Plaintiff’s claims for fraud, negligent misrepresentation, breaches of express and implied warranties, and unjust enrichment. Because the Court finds that any amendment of these claims would be futile, they are dismissed with prejudice. The Court further dismisses with prejudice Plaintiff’s claim under the Magnuson-Moss Warranty Act and his request for injunctive relief, based on his counsel’s representation at oral argument that Plaintiff is no longer pursuing these avenues for relief because they would lack merit in this case. The Court will schedule an Initial Pretrial Conference by separate order.
The Clerk of Court is respectfully directed to close the motion pending on Docket Number 10.
SO ORDERED.
Dated: March 16, 2021 __________________________________ New York, New York JOHN P. CRONAN
United States District Judge
Notes
[1] Plaintiff offers an example of what he deems an appropriate label for smoke-flavored almonds, and includes in the Complaint a picture of the packaging of one of Defendant’s competitors, whose label features the words “SMOKED ALMONDS” above “NATURALLY FLAVORED.” Compl . ¶¶ 19-20.
[2] To establish federal jurisdiction under CAFA, a plaintiff must “prove to a reasonable
probability that (1) there is minimal diversity (meaning at least one defendant and one member of
the putative class are citizens of different states); (2) the putative class exceeds 100 people; and
(3) the amount in controversy is greater than $5 million.”
Cohen v. Casper Sleep Inc.
, No. 17 Civ.
9325 (WHP),
[3] The Complaint additionally seeks class-wide injunctive relief and alleges a violation of the Magnuson-Moss Warranty Act (“MMWA”), 15 U.S.C. § 2301 et seq. Compl. ¶¶ 42, 58-65, p. 10-11. At oral argument, Plaintiff’s counsel withdrew his request for injunctive relief and his
[5] Defendant moves to dismiss the Complaint on multiple grounds, including for lack of
standing. Motion to Dismiss at 11-12. While Defendant cites only Rule 12(b)(6) as the basis for
dismissal, Notice of Motion at 1; Motion to Dismiss at 3, a motion to dismiss challenging a
plaintiff’s standing is properly reviewed under Rule 12(b)(1) for lack of subject matter jurisdiction.
See All. for Envtl. Renewal, Inc. v. Pyramid Crossgates Co.
,
[6] Defendant also argues that the pleadings do not permit it to assess whether it has a viable statute of limitations defense. Motion to Dismiss at 8. But “plaintiffs are not required to plead
[7] In support of its argument that no price premium injury is pleaded, Defendant cites again
to
Colella
,
[8] Although it is well settled that a plaintiff’s N.Y. G.B.L. claims may be dismissed as a
matter of law under the reasonable consumer standard, courts have offered various articulations of
the minimal pleading required to survive a defendant’s motion to dismiss a consumer fraud claim.
See e.g.
,
Grossman v. Simply Nourish Pet Food Co. LLC
, No. 20 Civ. 1603 (KAM), 2021 WL
293774, at *8 (E.D.N.Y. Jan. 27, 2021) (explaining that a defendant “seeking to dismiss a false
labeling claim must ‘extinguish . . . the possibility’ that a reasonable consumer could be misled”
(quoting
In re Frito-Lay N. Am., Inc. All Nat. Litig.
, No. 12-MD-2413 (RRM),
[9] Because the Court concludes that Plaintiff has adequately pleaded his N.Y. G.B.L. §§ 349 and 350 claims based on the use of the word “Smokehouse®” on the label, the Court does not reach Plaintiff’s assertion that the color scheme of the packaging further leads a consumer to believe that the almonds were prepared over a fire. See Compl. ¶ 4.
[10] At oral argument, Defendant’s counsel provided another analogy: “barbecue potato chips.” See 2/18/21 Tr. at 6. Although the Court takes no position on whether labeling potato chips with added barbecue flavor as “barbecue” would be misleading, the term “barbecue,” like “vanilla,” is commonly used to describe a flavor, in addition to a manner of food preparation.
[11] Neither was Defendant’s counsel able to point to any such cases at oral argument. See 2/18/21 Tr. at 12.
[12] Defendant argues that Plaintiff’s Opposition “ignore[s] at least one of [Defendant’s]
dismissal arguments” for every common law claim, necessitating dismissal of those claims. Reply
at 1. “Federal courts have the discretion to deem a claim abandoned when a defendant moves to
dismiss that claim and the plaintiff fails to address in their opposition papers defendants’
arguments for dismissing such a claim.”
Estate of M.D. by DeCosmo v. New York
, 241 F. Supp.
3d 413, 423 (S.D.N.Y. 2017) (internal quotation marks and citation omitted). “Application of this
proposition is, however, tempered by this Court’s discretion.”
Lipton v. County of Orange, New
York
,
[13] At oral argument, Plaintiff’s counsel asserted that Defendant’s use of the trademark symbol in “Smokehouse®” showed an “awareness of the regulations and what’s required” and is the “best evidence of intent that can be asserted [by Plaintiff].” 2/18/21 Tr. at 37-38. This theory was never pleaded in the Complaint or even argued in Plaintiff’s opposition brief. In any event,
[14] Defendant also argues that Plaintiff has failed to allege a misrepresentation or an injury for both his fraud and negligent misrepresentation claims. Motion to Dismiss at 12. The Court does not reach these arguments because it dismisses Plaintiff’s fraud and negligent misrepresentation claims on other grounds.
[15] The parties dispute how this standard applies in the context of consumer transactions
concerning food products. Defendant contends that when the claim involves the sale of food, the
product must merely be fit for human consumption to meet the implied warranty.
See
Motion to
Dismiss at 19 (citing,
inter alia
,
Silva
, 2015 WL 5360022, at *11). Plaintiff counters that
Defendant breached the implied warranty of merchantability because the Product is not “capable
of passing without objection in the trade under the contract description.” Opposition at 18-19
(citing
Jackson v. Eddy’s LI RV Ctr., Inc.
,
[16] A limited exception to the privity requirement exists for recovering personal injuries.
See e.g.
,
Colangelo v. Champion Petfoods USA, Inc.
, No. 18 Civ. 1228 (LEK),