TANYA COOPER & JOSEPH ROSE, individually and on behalf of all others similarly situated, v. ANHEUSER-BUSCH, LLC
20-CV-7451 (KMK)
UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK
August 9, 2021
KENNETH M. KARAS, District Judge
OPINION & ORDER
Appearances:
Innessa M. Huot, Esq.
Faruqi & Faruqi, LLP
Philadelphia, PA
Counsel for Plaintiffs
James F. Bennett, Esq.
Dowd Bennett LLP
Clayton, MO
Counsel for Defendant
Paul H. Schoeman, Esq.
Kramer Levin Naftalis & Frankel, LLP
New York, NY
Counsel for Defendant
KENNETH M. KARAS, District Judge:
Plaintiffs Tanya Cooper (“Cooper“) and Joseph Rose (“Rose” and, together with Cooper, “Plaintiffs“) bring this putative class action against Anheuser-Busch, LLC (“Defendant“), alleging that the labeling on certain products in Defendant‘s “Ritas” line of beverages is deceptive and misleading. Plaintiffs assert claims against Defendant for (1) violations of
I. Background
A. Factual Background
The following facts are drawn from Plaintiffs’ First Amended Complaint and are taken as true for purposes of resolving the instant Motion.
Defendant is an American brewing company that manufactures, markets, and distributes malt beverages for sale nationwide. (First Am. Compl. (“FAC“) ¶¶ 14-15, 24, 33, 41 (Dkt. No. 16).) This Action involves three such products—Defendant‘s (1) Lime-A-Rita Sparkling Margaritas (the “Margarita Product(s)“), (2) its Sangria Spritz Sparkling Sangria Cocktail and Rosé Spritz Sparkling Rosé Cocktail (the “Wine Product(s)“), and (3) its Mojito Fizz Sparkling Cocktail (the “Mojito Product(s)” and, together with the Margarita Products and Wine Products, the “Products“). (Id. ¶¶ 3-5, 18-42.) The Products are marketed and labeled under the general umbrella of Defendant‘s “Ritas” brand. (See id. ¶¶ 1, 16, 18, 26, 35.)
The Margarita Products are sold in packaging which prominently displays the words “LIME-A-RITA” and “SPARKLING MARGARITA.” (See id. ¶ 18.)1 The front packaging contains an image of a margarita served with a salted rim and lime wedge. (See id.) Relying on definitions of “margarita” from Merriam-Webster dictionary, Dictionary.com, and the International Bartenders Association, Plaintiffs allege that “[i]t is common knowledge, and indeed definitional, that a margarita contains tequila,” and that, “[w]hen consumers order margaritas at bars or other establishments selling alcoholic beverages, they reasonably expect to
receive a cocktail containing tequila.” (Id. ¶¶ 19-21.) Plaintiffs therefore contend that when reasonable consumers view the packaging of the Margarita Products, they would expect these products to contain tequila. (Id. ¶ 22.) But the Margarita Products do not contain tequila. (Id. ¶ 23.) In fact, the Margarita
The Wine Products are sold in packaging that contains images of three different canned beverages. (See id. ¶ 26.) Two of these cans contain the words “SANGRIA SPRITZ” and “SPARKLING SANGRIA COCKTAIL.” (Id.) The third can contains the words “ROSÉ SPRITZ” and “SPARKLING ROSÉ COCKTAIL.” (Id.) In the bottom left-hand corner of the packaging, there are small images of wine glasses next to a number indicating how many cans of each flavor come in the package. (See id.) Relying on definitions from Merriam-Webster, Plaintiffs allege that “[w]hen consumers order Rosé or a Sangria at bars or other establishments selling alcoholic beverages, they reasonable [sic] expect to receive wine or a wine-based beverage.” (Id. ¶¶ 27-28.) They also aver that the term “Spritz” is “well known as a wine-based cocktail.” (Id. ¶ 29.) Accordingly, they assert that reasonable consumers of the Wine Products would expect these products to contain wine. (Id. ¶ 30.) Like the Margarita Products, however, the Wine Products are flavored malt beverages that contain no wine. (Id. ¶¶ 32-33.) Although the packaging discloses this fact, it does so in small font on the bottom panel of the packaging. (Id. ¶ 33.) For the same reasons identified with respect to the Margarita Products, Plaintiffs allege that the packaging of the Wine Products is also false and misleading. (Id. ¶ 34.)
Like the Wine Products, the Mojito Products are sold in packaging that contains images of three different cans. Two cans contain the words “MOJITO FIZZ” and “SPARKLING COCKTAIL.” (Id. ¶ 35.) The third can contains the words “COSMO FIZZ” and “SPARKLING COCKTAIL.” (Id.) The packaging also displays the words “SPARKLING CLASSIC COCKTAILS.” (Id.) At the bottom of the front packaging, there are small images of Collins cocktail glasses and a martini glass next to a number indicating how many cans of each flavor come in the package. (Id.) Once again, Plaintiffs rely on definitions from Merriam-Webster, Dictionary.com, and the International Bartenders Association for the proposition that reasonable consumers would expect the Mojito Products to contain rum. (Id. ¶¶ 36-39.) But the Mojito Products, like the Margarita Products and Wine Products, are malt beverages. (Id. ¶ 41.) Though flavored to resemble a mojito, they contain no rum. (Id.) Again, the disclosure indicating that the Mojito Products are malt beverages appears in small font on the bottom panel of the packaging. (Id.) Based on these features of the Mojito Products’ packaging, Plaintiffs allege that the packaging is false and misleading. (Id. ¶ 42.)
Plaintiffs allege that the Products’ packaging is also misleading in light of similar labeling used by competitor products. (See id. ¶¶ 43-51.) For example, other companies sell canned beverages with labeling such as “SPARKLING MARGARITA” (Jose Cuervo), “CLASSIC Margarita” (Salvador‘s), or “Perfect Margarita” (BuzzBox). (See id. ¶¶ 43-45.) But these products, in contrast to the Margarita Products, actually do contain tequila. (Id. ¶ 43.) Plaintiffs allege that these competing
Plaintiff Cooper purchased a 12-pack of the Margarita Product and a 12-pack of the Mojito Product at a Stop & Shop in Mount Kisco, New York in December 2019. (Id. ¶ 12.) Plaintiff Rose purchased a 12-pack of the Margarita Product and a 12-pack of the Wine Product from a Rite-Aid in Brooklyn, New York in July 2020. (Id. ¶ 13.) In each case, Plaintiffs purchased the Products under the expectation that they contained tequila (the Margarita Products), wine (the Wine Products), or rum (the Mojito Products). (Id. ¶¶ 12-13.) Neither Plaintiff saw a disclaimer indicating that the Products were flavored malt beverages that contained none of these ingredients. (Id.) Plaintiffs maintain that had they known these Products were merely flavored malt beverages, they would not have purchased the Products or would have paid significantly less for them. (Id.) They allege that they—along with other members of a putative class—“have been, and will continue to be, deceived or misled by Defendant‘s false and deceptive packaging of the Products.” (Id. ¶ 52.)
Although substantially similar claims have been raised in the District Court for the Western District of Missouri, see Browning v. Anheuser-Busch, LLC, 539 F. Supp. 3d 965, 2021 WL 1940645 (W.D. Mo. May 13, 2021), Plaintiffs’ allegations present a matter of first impression in this District.
B. Procedural History
Plaintiffs filed their initial Complaint on September 11, 2020. (Dkt. No. 1.) On December 21, 2020, Defendant filed a pre-motion letter regarding its anticipated motion to dismiss. (Dkt. No. 13.) Plaintiffs filed their First Amended Complaint (the “FAC“) on January 6, 2021. (Dkt. No. 16.) On January 20, 2021, Defendant again filed a pre-motion letter outlining the grounds for its proposed motion to dismiss. (Dkt. No. 17.) Following Plaintiffs’ response to this letter, (Dkt. No. 19), the Court held a pre-motion conference on February 11, 2021, (see Dkt. (minute entry for Feb. 11, 2021)). Pursuant to the briefing schedule adopted at this conference, Defendant filed the instant Motion and supporting papers on February 25, 2021. (See Not. of Mot.; Decl. of Paul H. Schoeman, Esq., in Supp. of Def.‘s Mot. (“Schoeman Decl.“) (Dkt. No. 23); Def.‘s Mem. of Law in Supp. of Mot. (“Def.‘s Mem.“) (Dkt. No. 24).) Plaintiffs filed their Opposition on March 11, 2021, (see Pls.’ Opp‘n to Def.‘s Mot. (“Pls.’ Opp‘n“) (Dkt. No. 25)), and Defendant filed its Reply on March 25, 2021, (see Def.‘s Reply in Supp. of Mot. (“Def.‘s Reply“) (Dkt. No. 26)). On May 14, 2021, Plaintiffs notified the Court of supplemental persuasive authority from the United States District Court for the Western District of Missouri. (Dkt. No. 27.) Defendant filed a brief response on May 17, 2021. (Dkt. No. 28.)
II. Discussion
A. Standard of Review
The Supreme Court has held that although a complaint “does not need detailed factual allegations” to survive a motion to dismiss, “a plaintiff‘s obligation to provide the ‘grounds’ of his [or her] ‘entitlement to relief’ requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (alteration omitted). Indeed,
“[W]hen ruling on a defendant‘s motion to dismiss, a judge must accept as true all of the factual allegations contained in the complaint,” Erickson v. Pardus, 551 U.S. 89, 94 (2007) (per curiam), and “draw[] all reasonable inferences in favor of the plaintiff,” Daniel v. T&M Prot. Res., Inc., 992 F. Supp. 2d 302, 304 n.1 (S.D.N.Y. 2014) (citing Koch v. Christie‘s Int‘l PLC, 699 F.3d 141, 145 (2d Cir. 2012)). Additionally, “[i]n adjudicating a Rule 12(b)(6) motion, a district court must confine its consideration to facts stated on the face of the complaint, in documents appended to the complaint or incorporated in the complaint by reference, and to matters of which judicial notice may be taken.” Leonard F. v. Isr. Disc. Bank of N.Y., 199 F.3d 99, 107 (2d Cir. 1999) (citation and internal quotation marks omitted); see also Wang v. Palmisano, 157 F. Supp. 3d 306, 317 (S.D.N.Y. 2016) (same).
B. Analysis
As noted, Plaintiffs assert claims against Defendant for (1) violations of
1. New York General Business Law §§ 349 and 350
Plaintiffs’ first and second causes of action are based on
a. Consumer-Oriented Conduct
Defendant does not contest the consumer-oriented nature of its conduct. (See generally Def.‘s Mem.) “A defendant engages in ‘consumer-oriented’ activity if [the company‘s] actions cause any ‘consumer injury or harm to the public interest.‘” New York v. Feldman, 210 F. Supp. 2d 294, 301 (S.D.N.Y. 2002) (quoting Securitron Magnalock Corp. v. Schnabolk, 65 F.3d 256, 264 (2d Cir. 1995)). This requirement is liberally construed, id., and “may be satisfied by showing that the conduct at issue ‘potentially affect[s] similarly situated consumers,‘” Wilson v. Nw. Mut. Ins. Co., 625 F.3d 54, 64 (2d Cir. 2010) (alteration in original) (quoting Oswego Laborers’ Local 214 Pension Fund v. Marine Midland Bank, N.A., 647 N.E.2d 741, 745 (N.Y. 1995)). Here, Plaintiffs allege that Defendant is responsible for “formulat[ing], manufacturing, brewing, packaging, marketing, distributing, and [selling] . . . the Products nationwide, including in New York.” (FAC ¶ 14.) They also allege that they and other members of the putative class “have been, and will continue to be, deceived or misled by Defendant‘s false and deceptive packaging of the Products.” (Id. ¶ 52.) These allegations are sufficient to satisfy the first element of Plaintiffs’ GBL claims. See Karlin v. IVF Am., Inc., 712 N.E.2d 662, 665 (N.Y. 1999) (observing that
b. Materially Misleading Conduct
Defendant‘s briefing focuses primarily on the second element of Plaintiffs’ GBL claims—whether the Products’ labeling is materially misleading. (See Def.‘s Mem. 7-18.) To survive a motion to dismiss, “Plaintiffs must do more than plausibly allege that a label might conceivably be misunderstood by some few consumers.” Twohig, 2021 WL 518021, at *3 (alteration omitted) (quoting Sarr v. BEF Foods, Inc., No. 18-CV-6409, 2020 WL 729883, at *3 (E.D.N.Y. Feb. 13, 2020)). Rather, they must “plausibly allege that a significant portion of the general consuming public or of targeted customers, acting reasonably in the circumstances, could be misled.” Id. (quoting Sarr, 2020 WL 729883, at *3). In evaluating the instant Motion, “the Court considers whether the [FAC] plausibly alleges that a reasonable consumer would ascribe the meaning that [P]laintiffs allege
Defendant urges the Court to conclude as a matter of law that the Products are not materially misleading and dismiss the GBL claims. (See Def.‘s Mem. 7-18.) At this stage of the case, however, such a determination is appropriate only if Plaintiffs’ claims are “patently implausible” or “unrealistic.” Eidelman v. Sun Prods. Corp., No. 16-CV-3914, 2017 WL 4277187, at *4 (S.D.N.Y. Sept. 25, 2017) (citing Stoltz v. Fage Dairy Processing Indus., S.A., No. 14-CV-3826, 2015 WL 5579872, at *20 (E.D.N.Y. Sept. 22, 2015)); see also In re Frito-Lay N. Am., Inc. All Nat. Litig., No. 12-MD-2413, 2013 WL 4647512, at *16 (E.D.N.Y. Aug. 29, 2013) (observing that dismissal as a matter of law is appropriate where a plaintiff‘s allegations regarding deceptive labeling “border on fantasy“). For example, courts have dismissed deceptive labeling claims at the pleadings stage where plaintiffs tried to draw highly specific inferences regarding the source or predominance of a particular flavor or ingredient identified on a label, see, e.g., Twohig, 2021 WL 518021, at *4 (concluding that the word “vanilla” on the front label would not “lead a reasonable consumer to believe that vanilla from vanilla beans is the exclusive or predominant flavor ingredient“); Kennedy v. Mondelēz Global LLC, No. 19-CV-302, 2020 WL 4006197, at *11-12 (E.D.N.Y. July 10, 2020) (concluding that the terms “made with real honey,” “Honey Maid,” and “no high fructose corn syrup” did not misleadingly suggest that honey was the “exclusive or predominant sweetener” used in the defendant‘s graham crackers); where the relevant labeling clearly precluded the possibility of deception, see, e.g., Devane v. L‘Oréal USA, Inc., No. 19-CV-4362, 2020 WL 5518484, at *1, 4-5 (S.D.N.Y. Sept. 14, 2020) (holding that a label that described a hair-care product as “100% Vegan” and “Keratin Caring” did not misleadingly suggest that the product itself contained keratin, in part because (1) the label clearly indicated that the product cared for keratin, and (2) such an inference was inconsistent with the representation that the product was “100% Vegan“); Druyan v. Jagger, 508 F. Supp. 2d 228, 244 (S.D.N.Y. 2007) (holding that a reasonable consumer would not be misled into believing that a concert was guaranteed to take place as scheduled where the ticket stated, “DATE & TIME ARE SUBJECT TO CHANGE“); and where the plaintiffs’ alleged inference appeared fundamentally incompatible with basic common sense, see, e.g., Chen v. Dunkin’ Brands, Inc., 954 F.3d 492, 495, 501 (2d Cir. 2020) (ruling that a reasonable consumer purchasing a grab-and-go “Angus Steak & Egg Breakfast Sandwich” (~$4) or an “Angus Steak & Egg Wake-Up Wrap” (~$2) from Dunkin Donuts would not be misled into thinking she was purchasing an actual, intact “steak“); Kommer v. Bayer Consumer Health, 252 F. Supp. 3d 304, 306, 311 (S.D.N.Y. 2017) (dismissing a claim that the “Dr. Scholl‘s Custom Fit Orthotics Foot Mapping Kiosk” (the “Kiosk“) misleads consumers into believing they are having custom orthotics designed for their feet because, “[a]t the point that the consumer is directed [by the Kiosk] to select a pre-packaged [i]nsert stacked along shelves on the side of the Kiosk, . . . it is no longer reasonable for [a consumer] to think that he is getting a product ‘individually designed’ for his feet” (record citation omitted)), aff ‘d, 710 F. App‘x 43 (2d Cir. 2018) (summary order).
But these cases are exceptions to the norm. Although the inquiry into whether a product is materially misleading may
Here, the Court cannot conclude, as a matter of law, that the Products’ labeling “would not be misleading to a reasonable consumer.” Rivera v. Navient Solutions, LLC, No. 20-CV-1284, 2020 WL 4895698, at *8 (S.D.N.Y. Aug. 19, 2020). Stated differently, Plaintiffs’ claims do not “border on fantasy,” In re Frito-Lay, 2013 WL 4647512, at *16, and are not “patently implausible,” Stoltz, 2015 WL 5579872, at *20, so as to require dismissal at this stage of the case. To the contrary, Plaintiffs have cogently explained how reasonable consumers might be misled into thinking that the Products were canned cocktails, instead of “Flavored Malt Beverage[s].” (FAC ¶ 33 (alteration in original).) Such a mistake is not hard to imagine. Defendant labels its Mojito Product as a “SPARKLING CLASSIC COCKTAIL,” (id. ¶ 35 (emphasis added)), its Wine Product as a “SPARKLING SANGRIA COCKTAIL” or “SPARKLING ROSÉ COCKTAIL,” (id. ¶ 26 (emphasis added)), and its Margarita Product as a “SPARKLING MARGARITA,” (id. ¶ 18 (emphasis added)). A “cocktail,” according to Merriam-Webster, is a “usually iced drink of wine or distilled liquor mixed with flavoring ingredients.” Merriam-Webster, cocktail, Merriam-Webster.com/dictionary/cocktail (last visited July 15, 2021). As Plaintiffs note, a “margarita” is defined as “a cocktail consisting of tequila, lime or lemon juice, and an orange-flavored liqueur.” (FAC ¶ 20 (citation and emphasis omitted).) “Rosé” is defined as a type of wine, “sangria” is defined as a wine-based “punch,” and a “mojito” is defined as a cocktail containing rum. (Id. ¶¶ 28, 37 (citing Merriam-Webster for each).) Thus, it is more than plausible that a reasonable consumer viewing a package labeled “SPARKLING MARGARITA” would assume the beverage inside contained tequila. Likewise, a reasonable consumer might plausibly assume that products labeled “SPARKLING ROSÉ COCKTAIL,” “SPARKLING SANGRIA COCKTAIL,” or “MOJITO FIZZ“/“SPARKLING CLASSIC COCKTAIL[]” contained rosé, sangria, or rum, respectively. The imagery used on the Products’ packaging does little to dispel such misconceptions. If anything, the image of a margarita and the symbols of wine glasses and Collins cocktail glasses, (see id. ¶¶ 18, 26, 35), could arguably reinforce a consumer‘s impression that the beverages inside were actually cocktails, cf. Lugones v. Pete & Gerry‘s Organic, LLC, 440 F. Supp. 3d 226, 241-42 (S.D.N.Y. 2020) (defendant‘s allegedly misleading claim that its “hens have better lives than other hens because they have access to the outdoors” was “only reinforced by . . . images of hens frolicking in elysian pastures“).
In response to Plaintiffs’ allegations, Defendant suggests an alternative interpretation of the Products’ labeling. “[R]easonable consumers,” it argues, “understand that the references to margaritas, mojitos[,] and the like are ‘merely a flavor designator, not an ingredient claim.‘” (Def.‘s Mem. 10 (quoting Twohig, 2021 WL 518021, at *3).) Of course, Defendant
Defendant raises several additional arguments as to why the Court should grant its Motion and dismiss Plaintiffs’ GBL claims prior to discovery. The Court will address each argument as necessary to resolve the instant Motion.
i. Absence of Representation Regarding Distilled Spirits or Wine
First, Defendant argues that the Products are not misleading as a matter of law because their packaging does not identify tequila, wine, or rum as ingredients in the beverages. (See Def.‘s Mem. 8-11.) The
Citing Daniel v. Mondelez International, Inc., 287 F. Supp. 3d 177, 190 (E.D.N.Y. 2018), Defendant argues that, “[w]ithout a material misrepresentation that the Ritas beverages contain the types of alcohol Plaintiffs cite, they fail to state a claim,” (Def.‘s Mem. 9). Daniel involved an allegation that the “non-functional slack-fill“—essentially, the “excessive empty space“—in the defendant‘s box of Swedish Fish candy “misrepresent[ed] the amount of food” in violation of
rarity and cost of real truffles, noting, for example, that truffles were “the most expensive food in the world,” could “cost hundreds or even thousands of dollars per ounce,” and were “highly perishable,” “seasonal,” and “impossible to mass produce.” Id. at 19 (record citations omitted). “In this context,” the Second Circuit explained, “representations that otherwise might be ambiguous and misleading are not: it is simply not plausible that a significant portion of the general consuming public acting reasonably would conclude that [the defendant‘s] mass produced, modestly-priced olive oil was made with ‘the most expensive food in the world.‘” Id. (emphasis added) (record citation and footnote omitted). “This is particularly so,” the court added, “given that the product‘s ingredient list contains no reference to the word ‘truffle’ and the primary label describes the product only as being ‘Truffle Flavored.‘” Id. at 19-20.
Several aspects of Jessani merit comment. First, there is the threshold fact that the case was resolved by summary order, which does not have precedential effect. See Second Circuit Local Rule 32.1.1(a). Second, the court made clear that its determination—like all such determinations under the GBL—was highly context-specific. See 744 F. App‘x at 19; see also Mantikas v. Kellogg Co., 910 F.3d 633, 636 (2d Cir. 2018) (“In determining whether a reasonable consumer would have been misled by a particular advertisement, context is crucial.” (citation and brackets omitted)). Specifically, the court‘s conclusion rested on the fact that, “[i]n th[e] context” of the ingredient in question—alleged to be the most expensive food in the world—it was implausible that a significant portion of consumers could be misled into thinking that a mass-produced, budget-friendly olive oil contained that ingredient. See 744 F. App‘x at 19. Third, the product‘s ingredient list was one of several factors the
produced olive oil in question, as well as the inference consumers would draw from that discrepancy. See id. at 19. The court then added that this conclusion was “particularly” true in light of two secondary factors: the product‘s ingredient list (which did not contain truffle) and the product‘s label (which described the product only as truffle flavored). See id. at 19-20. In other words, the fact that “truffle” did not appear in the product‘s ingredient list did not carry dispositive weight in the court‘s analysis. Jessani did not announce a sweeping rule “that it is not reasonable to assume that a product contains a certain ingredient when it is not listed in the ingredient list.” Devane, 2020 WL 5518484, at *4. Indeed, such a rule would be inconsistent with a binding Second Circuit opinion issued eight days after Jessani, in which the court said that “[r]easonable consumers should not be expected to look beyond misleading representations on the front of [a] box to discover the truth from the ingredient list in small print on the side of the box.” Mantikas, 910 F.3d at 637 (alteration omitted) (quoting Williams v. Gerber Prods. Co., 552 F.3d 934, 939 (9th Cir. 2008)). Standing alone, the fact that a particular ingredient—tequila, say—does not appear on a product‘s ingredient list does not automatically defeat a deceptive labeling claim as a matter of law. To the extent Devane suggests otherwise, the Court believes that view is based on a misreading of Jessani—a case which, as noted, does not have precedential effect.
Defendant also seeks to rely on the recent vanilla cases from this District. (See Def.‘s Mem. 9-10.) In these cases, the plaintiffs alleged that the word “vanilla” (or the phrase “vanilla bean“) conveyed a specific representation about the source of a product‘s vanilla flavor. See, e.g., Dashnau v. Unilever Mfg. (US), Inc., 529 F. Supp. 3d 235, 2021 WL 1163716, at *1, *3 (S.D.N.Y. Mar. 26, 2021) (gathering cases). Because the vanilla flavoring in each product was not derived exclusively or even predominantly from natural vanilla, the plaintiffs alleged that the products’ labels were misleading. See, e.g., id. at *1-2. Courts rejected this theory, holding as a matter of law that the product labels were not misleading because, while “vanilla” (or “vanilla bean“) describes a flavor, it does not make a representation regarding the source of that flavor. See id. at *5; Oregon Chai, 2021 WL 706227, at *12 (concluding that the word “vanilla” on the front of the package “appears to describe a flavor more than an ingredient“); Twohig, 2021 WL 518021, at *4 (concluding that the word “vanilla” on the front label would not “lead a reasonable consumer to believe that vanilla from vanilla beans is the exclusive or predominant flavor ingredient“); Wynn, 2021 WL 168541, at *4 (concluding that the “[d]efendant‘s ‘Vanilla Almondmilk’ front label makes no representations whatsoever about the source of the vanilla flavor or the ingredients constituting it“); Barreto, 2021 WL 76331, at *4 (concluding that the product‘s labeling—which contained the words “Vanilla Soymilk” and “Natural Vanilla Flavor With Other Natural Flavors“—“makes a representation regarding its flavor and does not imply or represent [that] the source of that flavor comes exclusively or predominantly from natural vanilla“); Cosgrove v. Blue Diamond Growers, No. 19-CV-8993, 2020 WL 7211218, at *3 (S.D.N.Y. Dec. 7, 2020) (concluding that a reasonable consumer would associate the word “vanilla” with a flavor, rather than a particular ingredient); Pichardo v. Only What You Need, Inc., No. 20-CV-493, 2020 WL 6323775, at *5 (S.D.N.Y. Oct. 27, 2020) (noting that “reasonable consumers associate the word ‘vanilla’ with a flavor, not with an ingredient“); Steele v. Wegmans Food Markets, Inc., 472 F. Supp. 3d 47, 50 (S.D.N.Y. 2020) (explaining that the word “vanilla” assists buyers in determining the flavor of a product, rather than the source of that flavor).
According to Defendant, Plaintiffs are making an analogous claim here, essentially arguing that the Products’ labeling conveys a message about the source of the Products’ alcoholic content, or the source of their margarita, wine, or mojito flavoring. (See Def.‘s Mem. 10
(arguing that the Margarita Products “make no representation . . . that tequila is the source of the alcohol“); id. (arguing that “references to margaritas, mojitos and the like are ‘merely ... flavor designator[s], not an ingredient claim” (citation omitted)).) But that is a warped reading of Plaintiffs’ claims. With respect to the Margarita Products, for example, Plaintiffs are not making a claim about the source of the beverage‘s alcoholic content or “margarita” flavor. Fairly construed, their claim is that the beverage purports to be something—a “margarita“—which it is not. Their claim rests on the premise that a “margarita” generally refers to a beverage (not a flavor), made with standard constituent parts (including tequila), that one would purchase for direct consumption (not as a flavoring agent). (See FAC ¶¶ 19–21.) In this sense, a “margarita” (or “mojito,” etc.) is to be distinguished from vanilla, which generally serves as a flavoring agent in other products, as opposed to a discrete item one might order in a bar or restaurant.4 As noted, discovery will give Defendant an opportunity to test its assertion that words such as “margarita” and “mojito” are merely flavor indicators like “chocolate” and “vanilla,” and do not make a representation that the beverages are actually a “margarita” or a “mojito.” But for purposes of resolving this Motion, where the Court “must draw reasonable inferences in favor of the non-moving [P]arty,” CFTC v. TFS-ICAP, LLC, 432 F. Supp. 3d 320, 324 (S.D.N.Y. 2020), the Court is not prepared to accept Defendant‘s argument. Though creative, this argument is a strained attempt to shoehorn this Action under the analytic framework of the vanilla cases.
In addition to the authority already addressed, Defendant purports to invoke “[n]umerous other decisions . . . in accord with the principle that deception claims require a firmer premise than imputing statements to defendants that they clearly did not make.” (Def.‘s Mem. 10.) None of these cases alters the analysis here. In Kennedy, for example, the plaintiffs made similar allegations to those in the vanilla cases, arguing that certain statements on a box of graham crackers—“made with real honey,” “Honey Maid,” and “no high fructose corn syrup“—misleadingly suggested (1) that honey was the only sweetener used, (2) that only pure honey was used, (3) that the honey content was greater than the white sugar content, and (4) that honey was the exclusive or predominant
Likewise, the remaining cases cited by Defendant, (see Def.‘s Mem. 10–11), are too dissimilar to carry any persuasive force here, cf. Axon v. Florida‘s Nat. Growers, Inc., 813 F. App‘x 701, 705 (2d Cir. 2020) (summary order) (affirming decision which held that no reasonable consumer would be misled into thinking that the defendant‘s product—“Florida‘s Natural” orange juice—did not contain any trace amounts of glyphosate based on the word “natural” in the product‘s brand name); Rivas v. Hershey Co., No. 19-CV-3379, 2020 WL 4287272, at *5 (E.D.N.Y. July 27, 2020) (concluding in dicta that a reasonable consumer would not be misled into thinking that “Kit Kat White” candy bars were actually “dipped in white chocolate when the packaging does not mention chocolate, and states that the wafers are dipped in creme, which is not the same as white chocolate“); Kommer, 252 F. Supp. 3d at 306, 311 (S.D.N.Y. 2017) (see parenthetical supra).5
ii. Contextual Factors
Defendant also argues that Plaintiffs’ claims are “implausible” in light of various contextual considerations, specifically (1) federal regulations, (2) the “full context” of the Products’ packaging, (3) the setting in which Plaintiffs purchased the Products, and (4) the labels of the comparator products invoked by Plaintiffs. (See Def.‘s Mem. 11–14.) The Court will address each argument in turn.
First, Defendant argues that Plaintiffs’ inferences regarding the Products are unreasonable because, under federal regulations, it may use “a cocktail name as a brand name or fanciful name.” (Id. at 11 (quoting
Second, Defendant argues that “the full context of the [Products‘] packaging refutes Plaintiffs’ notion that a reasonable consumer could assume Ritas contain hard liquor or wine.” (Def.‘s Mem. 13.) It is true, as noted, that “[i]n determining whether a reasonable consumer would have been misled by a particular advertisement, context is crucial.” Mantikas, 910 F.3d at 636 (citation omitted). Courts must “therefore consider [a] challenged advertisement as a whole.” Id.; see also Stoltz, 2015 WL 5579872, at *16 (advising that “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“). As already discussed, however, whether a label is misleading is normally a question of fact that cannot be resolved on a motion to dismiss. See, e.g., Segedie v. Hain Celestial Grp., Inc., No. 14-CV-5029, 2015 WL 2168374, at *12 (S.D.N.Y. May 7, 2015) (noting that “[w]hether [a] label[] would mislead a reasonable consumer is a question of fact for the jury“). Defendant‘s own arguments underscore this point. Defendant notes, for example, that the “cocktail terms” on which Plaintiffs focus “do not stand alone,” but are just “one part of the fanciful names used for Ritas products.” (Def.‘s Mem. 12.) Defendant‘s theory is that other features of the Products’ packaging—specifically, the references to (1) “Ritas,” (2) “sparkling drinks,” and (3) a “wide variety of flavors in both words and images“—“make it obvious that the [P]roducts are a different type of beverage inspired by—but not the same as—the referenced cocktails.” (Id.) For reasons already discussed, that conclusion is not “obvious,” and the features Defendant cites do not make it so.
With respect to the “Ritas” branding, Defendant obliquely suggests that because the brand name is owned by Defendant, “a company synonymous with beer,” reasonable consumers would conclude that the Products do not contain wine or distilled liquor. (See id.) That argument is unpersuasive for several reasons. First, the argument assumes that reasonable consumers associate Defendant exclusively with beer. That proposition is not alleged in the FAC, and it requires a factual determination that cannot be made on a motion to dismiss. Second, the names “Anheuser-Busch” or “A-B” do not appear in the images of the Products’ labeling provided in the FAC, (see FAC ¶¶ 18, 26, 35), and the Court has no basis to assume that consumers would otherwise know the Products were manufactured and marketed by Defendant. Third, insofar as Defendant contends that the word “Ritas” itself clearly connotes that the beverage is not a cocktail, it is not obvious why reasonable consumers would draw that conclusion. Finally, with respect to the words “sparkling” and the “wide variety of flavors in both words and images” used on the Product
Third, Defendant notes that in the state of New York, wine and liquor cannot be sold in convenience and drug stores like those in which Plaintiffs purchased the Products. (Id. at 13.) Defendant argues that reasonable consumers know this fact, and thus, they would not infer that beverages sold in a drug or convenience store contained tequila, wine, or rum. (Id.) Although “reasonable consumer[s] do[] not lack common sense,” (id. (quoting Daniel, 287 F. Supp. 3d at 193)), at this stage of the case, the Court may not resolve questions regarding “the background knowledge, experience[,] and understanding of reasonable consumers” as a matter of law, Stoltz, 2015 WL 5579872, at *19 (rejecting a similar argument based on customers’ alleged background knowledge regarding nutritional labeling). There is good reason for this principle: “A federal trial judge, with a background and experience unlike that of most consumers, is hardly in a position to declare” that, because he or she knows that wine and hard spirits may not be purchased in a drug or convenience store, “all [customers] must appreciate [that fact] as well.” See Verizon Directories Corp. v. Yellow Book USA, Inc., 309 F. Supp. 2d 401, 407 (E.D.N.Y. 2004); see also Rivera, 2020 WL 4895698, at *7 (“In determining whether an act is ‘materially misleading,’ the reasonable consumer is not held to the same standard as a lawyer trained to make fine distinctions reading a bond indenture or a regulation.“). In this case, the knowledge and expectations of reasonable consumers purchasing alcoholic beverages in a drug or convenience store “cannot be resolved without surveys, expert testimony, and other evidence of what is happening in the real world.” Verizon Directories, 309 F. Supp. 2d at 407. Neither the Second Circuit‘s opinion in Chen, nor its summary order in Jessani—both of which Defendant cites, (see Def.‘s Mem. 13)—is to the contrary. A consumer‘s mistaken assumption that she can purchase a beverage containing wine or distilled liquor in a drug or convenience store is not comparable to a consumer‘s putative belief that an “Angus” breakfast sandwich sold for under $5 at Dunkin Donuts is an actual, “intact” steak, cf. Chen, 954 F.3d at 495, 501, or that a “mass produced, modestly-priced olive oil [is] made with ‘the most expensive food in the world,” cf. Jessani, 744 F. App‘x at 19 (footnote and record citation omitted). In Chen and Jessani, the contextual discrepancy was based on price—specifically, the implausible price discrepancy between the product being purchased and the product that plaintiffs allegedly thought they were getting. Here, the contextual discrepancy is based on state alcohol laws, something that may be far less obvious to the reasonable consumer. Specifically, the discrepancy is between Plaintiffs’ expectations—that they could purchase wine or distilled liquor at a Stop & Shop or Rite-Aid—and the reality that, under New York law, such purchases are outlawed. To find that reasonable consumers would not countenance this discrepancy, the Court would have to impute to these consumers a threshold background knowledge regarding New York‘s alcohol laws. But for reasons already discussed, the Court may not do so at this stage in the case.
Accordingly, the four contextual factors cited by Defendant do not warrant dismissal of Plaintiffs’
iii. Disclosures Regarding “Flavored Malt Beverages”
Defendant also argues that the disclosures on the bottom of the Products’ packaging—which state that the Products are flavored malt beverages—render Plaintiffs’ “purported assumption about the [Products‘] alcohol ingredients . . . unreasonable.” (Def.‘s Mem. 14.) In considering whether a label is misleading, courts consider “the challenged advertisement as a whole, including disclaimers and qualifying language.” Mantikas, 910 F.3d at 636. “[U]nder certain circumstances, the presence of a disclaimer or similar clarifying language may defeat a claim of deception.” Fink, 714 F.3d at 742. “[T]he mere inclusion of an accurate disclaimer,” however, “does not necessarily cure other potentially misleading statements or representations set forth in a label or advertisement.” Stoltz, 2015 WL 5579872, at *16 (gathering cases); see also Mantikas, 910 F.3d at 637 (concluding that certain disclosures on the side panel of a Cheez-Its box did not “render [p]laintiffs’ allegations of deception implausible“). “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.” Stoltz, 2015 WL 5579872, at *16 (gathering cases).
The Second Circuit‘s opinion in Mantikas illustrates these principles. There, the court scrutinized the labeling on two boxes of Cheez-Its crackers: the first box contained the words “WHOLE GRAIN” in large print at the center of the front panel, with the words “MADE WITH 5G OF WHOLE GRAIN PER SERVING” in smaller print at the bottom of the same panel; the second box contained the words “MADE WITH WHOLE GRAIN” in large print at the center of the front panel, with the words “MADE WITH 8G OF WHOLE GRAIN PER SERVING” in smaller print at the bottom of the same panel. 910 F.3d at 634–35. The side of each box contained a “Nutrition Facts” panel disclosing—“in much smaller print“—that a serving size was 29 grams and that “enriched white flour” was the first ingredient on the ingredient list. Id. The court found that the small-print disclosures on the side of the box did not “cure[] the deceptive quality of the ‘WHOLE GRAIN’ claims as alleged by [p]laintiffs.” Id. at 637. Relying on a Ninth Circuit decision, the court observed that “[r]easonable consumers should not be expected to look beyond misleading representations on the front of the box to discover the truth from the ingredient list
Here, likewise, the Court cannot conclude that the disclosures on the bottom of Defendant‘s packaging renders Plaintiffs’ “allegations of deception implausible” as a matter of law. Id. at 637. This approach is consistent not only with Mantikas, but also with numerous District Court decisions declining to dismiss similar claims based on a label‘s less-than- prominent disclosures. See, e.g., Stoltz, 2015 WL 5579872, at *14–19 (declining to hold as a matter of law that no reasonable consumer would be misled by the product‘s prominent “Total 0%” representation, despite the presence of (i) clarifying language (“nonfat“) indicating that “Total 0%” referred only to fat content, and (2) a nutritional panel that contained accurate information as to the product‘s calorie, fat, carbohydrate, and sugar content); Delgado v. Ocwen Loan Servicing, LLC, No. 13-CV-4427, 2014 WL 4773991, at *9 (E.D.N.Y. Sept. 24, 2014) (declining to hold as a matter of law that a check solicitation scheme was not deceptive, despite the presence of certain fine-print disclosures, because “[t]he disclosures . . . [were] not conspicuous or prominent enough to necessarily cure [consumers‘] misperception” that they were receiving a refund); Goldemberg, 8 F. Supp. 3d at 479–80 (holding, where a product “exclusively tout[ed]” its natural ingredients, that disclosure of synthetic ingredients in an ingredient list did not defeat plaintiffs’ deceptive labeling claim as a matter of law); Koenig, 995 F. Supp. 2d at 287–88 (despite label disclosing that a product contained one gram of fat, court could not hold as a matter of law that the product‘s use of the phrase “Fat Free” was not misleading, because “a reasonable consumer might also 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“); In re Frito-Lay, 2013 WL 4647512, at *16 (although certain disclosures (“No MSG–No Preservatives–No Artificial Flavors“) “g[a]ve context” to a label‘s pronouncement that a product was “Made with ALL NATURAL ingredients,” the court could not hold as a matter of law that “no reasonable consumer would be deceived into believing the product [was] GMO-free” based on the “ALL NATURAL” representation); Ackerman v. Coca-Cola Co., No. 09-CV-395, 2010 WL 2925955, at *16 (E.D.N.Y. July 21, 2010) (information in nutritional panel, “though relevant, [did] not as a matter of law extinguish the possibility that reasonable consumers could be misled by [a product‘s] labeling and marketing“).
Defendant argues that Mantikas was limited to “addressing a specific concern” where “packaging... makes ‘an express claim about ingredients’ and ‘strongly suggests’ that a particular ingredient is the ‘predominant[] or exclusive[]’ one in the product.” (Def.‘s Mem. 15 (alterations in original) (quoting Wynn, 2021 WL 168541, at *4).) This argument does not alter the Court‘s conclusion for two reasons.
Second, as cases such as Stoltz, Delgado, Goldemberg, Koenig, In re Frito-Lay, and Ackerman suggest, courts were hesitant to dismiss deceptive labeling claims on the basis of small-print or easy-to-miss disclosures even before Mantikas. Although Defendant spends two paragraphs advancing a narrow interpretation of Mantikas, (see id. at 15–16), it ignores the considerable pre-Mantikas authority that also weighs against dismissing the instant claims. Mantikas only reinforced this line of authority. Thus, even if the Court accepted Defendant‘s narrow reading of Mantikas, the outcome would not change here. Indeed, the relevant principle articulated in Mantikas—that reasonable consumers
Accordingly, at this stage in the case, the Court cannot hold as a matter of law that the Products’ disclosures eliminate the possibility that reasonable consumers might be misled by the more prominent representations on the front of the packaging.
iv. Materiality
Finally, Defendant cites Daniel, discussed supra, for the proposition that
finding regarding materiality, see 287 F. Supp. 3d at 189–90, in discussing what constitutes materiality, the court simply recycled the legal standard for establishing the second element of a claim under
Accordingly, Plaintiffs have adequately pled the second element of their GBL
c. Injury
With respect to the third element of Plaintiffs’ GBL claims, Defendant argues that Plaintiffs have not adequately pled injury because their “threadbare recitation of a price ‘premium’ theory lacks even minimal supporting detail.” (Def.‘s Mem. 18.) As stated, Plaintiffs allege that, had they known the Products were merely flavored malt beverages that did not contain tequila, wine, or rum, they would not have purchased the Products, or would have paid considerably less for them. (FAC ¶¶ 12–13, 57.) Defendant “submits that more should be required here,” particularly because Plaintiffs “have injected alleged ‘competitor brands’ into the [First] Amended Complaint[,]” without disclosing pricing information for those comparator products. (Def.‘s Mem. 18–19.)
“An actual injury claim under [§§] 349 [and 350] typically requires a plaintiff to ‘allege that, on account of a materially misleading practice, she purchased a product and did not receive the full value of her purchase.” Duran, 450 F. Supp. 3d at 350 (second alteration in original) (citation omitted). A plaintiff can make this showing by alleging “an overpayment, or ‘price premium,’ whereby a plaintiff pays more than she would have but for the deceptive practice.” Id. (citation omitted). To allege injury under this theory, a plaintiff “must allege not only that [the] defendants charged a price premium, but also that there is a ‘connection between the misrepresentation and any harm from, or failure of, the product.” Id. (citation omitted). Typically, a plaintiff makes this allegation by asserting that a particular product was marketed as having a special quality, that the marketing enabled the company to charge a premium for the
product, and that the plaintiff paid this premium and later discovered that the product “did not, in fact, have the marketed quality.” Id. (gathering cases).
Here, Plaintiffs allege that they paid more for the Products “based on the beverage names ‘Margarita,’ ‘Mojito,’ ‘Rose,’ and/or ‘Sangria,’ reasonably believing that the Products [would] contain tequila, rum, or wine.” (FAC ¶ 53.) They also allege that if they had known the Products did not contain tequila, rum, or wine, they would have paid less for the Products or would not have purchased them at all. (Id. ¶¶ 12–13, 57.) At this stage of the case, these allegations suffice to allege a price premium theory of injury. See Fishon, 2020 WL 6564755, at *10–11 (allegations that plaintiffs “would not have purchased the [product], or would not have purchased it on the same terms, [had] they kn[o]w[n] the truth,” were sufficient to survive dismissal, because “[n]o more is necessary at this stage“); Duran, 450 F. Supp. 3d at 351 (plaintiff adequately pled a price premium theory of injury where he alleged that he and other customers “paid full price for the [p]roduct but received something inferior to what [the defendant] had promised, and that, had [he] known that the [p]roduct [was inferior], he would not have purchased
The authority cited by Defendant is not to the contrary. For example, Defendant cites Wright v. Publishers Clearing House, Inc., 439 F. Supp. 3d 102, 116 (E.D.N.Y. 2020), for the proposition that “[p]laintiffs relying on a price premium theory . . . must still identify a plausible basis for paying a price premium.” (See Def.‘s Mem. 19.) But Plaintiffs have identified such a basis, namely the fact that the Products—according to Plaintiffs—purported to contain either tequila, rum, or wine. (See FAC ¶ 53.) The other cases cited by Defendant, (see Def.‘s Mem. 19), articulate the principle that “[s]imply . . . recit[ing] the word ‘premium’ multiple times in [a] [c]omplaint does not make [p]laintiffs’ injury any more cognizable[,]” Izquierdo, 2016 WL 6459832, at *7; Colella v. Atkins Nutritionals, Inc., 348 F. Supp. 3d 120, 143 (E.D.N.Y. 2018) (same); see also Naimi v. Starbucks Corp., 798 F. App‘x 67, 70 (9th Cir. 2019) (observing that “bare recitation of the word ‘premium’ does not adequately allege a cognizable injury“). As noted, however, Plaintiffs do not invoke the word “premium” without identifying a plausible basis for allegedly paying more than they otherwise would have. Finally, although Defendant suggests “that more should be required here” because Plaintiffs have invoked the products of competing brands, it cites no authority that would authorize the Court to apply a more rigorous pleading standard in such a situation. “Although plaintiffs sometimes point to comparators in support of a price premium claim, a plaintiff is not required to do so in order to allege injury.” Duran, 450 F. Supp. 3d at 352 (citation omitted). “And even when comparators are alleged, they do not have to be ‘precisely comparable products,’ and the ‘actual comparability’ of such products is a factual determination not appropriate for a motion to dismiss.” Id. (alteration omitted) (quoting Greene v. Gerber Prods. Co., 262 F. Supp. 3d 38, 69 (E.D.N.Y. 2017)). That Plaintiffs have cited the labeling of competing products does not trigger a more exacting standard in order to allege injury. Here, for the reasons already stated, Plaintiffs have adequately pled the injury prong of their GBL claims.
For the reasons stated above, Plaintiffs have adequately pled each element of their deceptive labeling claims under
2. Breach of Express Warranty
Plaintiffs bring a claim for breach of express warranty in Count III of the FAC. (FAC ¶¶ 98–107.) “An express warranty is an affirmation of fact or promise made by the seller to the buyer which relates to the goods and becomes part of the basis of the bargain.” Barreto, 2021 WL 76331, at *6 (citation and internal quotation marks omitted). To adequately state a claim for breach of an express warranty under New York law, Plaintiffs must plead “(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.” Wynn, 2021 WL 168541, at *7 (quoting Goldemberg, 8 F. Supp. 3d at 482). Under the
Here, Plaintiffs allege that Defendant‘s description of the Products constituted a promise that the Products contained distilled liquor or wine; that this promise formed part of the basis of the bargain for purchasing the Products; that Defendant breached this promise “by failing to provide products with distilled liquors or wine“; and that Plaintiffs have suffered economic injury as a result. (FAC ¶¶ 101–106.) “Whether Plaintiff[s‘] interpretation of the [Products‘] label[s] was erroneous or reflected a promise made by Defendant necessarily depends on what a reasonable consumer would believe.” Singleton, 2016 WL 406295, at *11. In the context of an express warranty claim—as with a claim under
[the] New York Class.” (FAC ¶ 103.) Courts have found that this general, boilerplate assertion does not establish compliance with the pre-suit notice requirement. See Tomasino, 44 F. Supp. 3d at 261 (holding that allegation that “all conditions precedent to [the] [d]efendants’ liability under this contract have been performed by [the] [p]laintiff and the other members of the [c]lass and NY [s]ubclass” was insufficient to establish that plaintiff had notified defendants of their breach of warranty (brackets and record citation omitted)); In re Frito-Lay, 2013 WL 4647512, at *27 (same with respect to plaintiffs’ allegation that “[a]ll conditions precedent to [the] [d]efendants’ liability under this contract have been performed by the [p]laintiffs and other members of the [c]lasses when they purchased the [p]roducts for their ordinary purposes” (record citations omitted)). The FAC also contains the allegation that, “[w]ithin a reasonable amount of time after Plaintiffs discovered that Defendant did in fact breach the foregoing express warranties, Plaintiffs notified Defendant of the breach.” (FAC ¶ 107.) Without more, this allegation is also insufficient to plead the pre-suit notice requirement. See Grossman, 2021 WL 293774, at *12 (holding that the plaintiff‘s allegation—which stated that, “within a reasonable time after they knew or should have known of [the] [d]efendants’ breach, [the] [p]laintiff, on behalf of herself and [c]lass [m]embers, placed [the] [d]efendants on notice of their breach, giving [the] [d]efendants an opportunity to cure their breach, which they refused to do”—was, “by itself, ... insufficient to plead pre-suit notice” (record citation and brackets omitted)); Mid Island LP v. Hess Corp., 983 N.Y.S.2d 204 (Table Decision), 2013 WL 6421281, at *4 (Sup. Ct. N.Y. Cnty. Dec. 2, 2013) (dismissing warranty claim where the complaint was “silent as to when the plaintiffs discovered the supposed breach, instead offering a legally conclusory statement that notice was given within a reasonable time thereof”).
Because Plaintiffs do not allege specific facts in support of the allegation that they notified Defendant of the alleged breach within a reasonable time after its discovery, the Court will dismiss their express warranty claim without prejudice. See Grossman, 2021 WL 293774, at *12. Plaintiffs will be given leave to amend the FAC to correct this deficiency.
3. Fraud
Plaintiffs bring a claim for common law fraud in Count IV of the FAC. (FAC ¶¶ 108–15.) “Under New York law, stating a claim for fraud requires alleging (1) a material misrepresentation or omission of fact, (2) made with knowledge of its falsity, (3) with an intent to defraud, and (4) reasonable reliance on the part of the plaintiff, (5) that causes damage to the plaintiff.” Wynn, 2021 WL 168541, at *7 (citing Schlaifer Nance & Co. v. Estate of Warhol, 119 F.3d 91, 98 (2d Cir. 1997)). To adequately plead fraud, Plaintiffs must meet the particularity requirement in
N.A., 459 F.3d 273, 290–91 (2d Cir. 2006)). To determine whether a plaintiff has met the “strong inference” requirement, courts should “consider the complaint in its entirety and take into account plausible opposing inferences.” Id. (quoting Loreley Fin. (Jersey) No. 3 Ltd. v. Wells Fargo Secs., LLC, 797 F.3d 160, 177 (2d Cir. 2015)). “If the inference is ‘cogent and at least as compelling as any opposing inference one could draw from the facts alleged,’ then it is sufficiently strong.” Id. (quoting Loreley Fin., 797 F.3d at 177).
Here, Plaintiffs have satisfied
However, the Court finds that Plaintiffs’ allegations fall short of establishing a “strong inference” of fraudulent intent. The FAC does not “alleg[e] facts to show that [D]efendant[] had both motive and opportunity to commit fraud.” Lerner, 459 F.3d at 290. Although Plaintiffs assert that “Defendant has intentionally used commonly known cocktail and wine names on its packaging in order to induce Plaintiffs and other reasonable consumers to purchase and/or pay
more for the Products than they otherwise would have,” (FAC ¶ 60), “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 (allegation that defendant made a fraudulent representation “to boost sales” was insufficient to “raise a strong inference of fraudulent intent”); see also Chill v. Gen. Elec. Co., 101 F.3d 263, 268 (2d Cir. 1996) (holding that generalized profit motive, “which could be imputed to any publicly-owned, for-profit endeavor,” is insufficient to “support a strong inference of fraudulent intent”); In re Frito-Lay, 2013 WL 4647512, at *25 (“Frito-Lay‘s generalized motive to satisfy consumers’ desires, [and] increase sales and profits, ‘does not support a strong inference of fraudulent intent.’” (quoting Chill, 101 F.3d at 268)).
Nor does the FAC “alleg[e] facts that constitute strong circumstantial evidence of conscious misbehavior or recklessness,” Lerner, 459 F.3d at 291, though this, admittedly, is a closer call. Although Plaintiffs invoke an allegedly deceptive advertisement in which the speaker appears in front of a wine cellar, (see FAC ¶ 31; Pls.’ Opp‘n 21), the Court is not persuaded this advertisement constitutes the type of strong circumstantial evidence necessary to support an inference of fraudulent intent. The outcome might be different, for example, if Plaintiffs had plausibly alleged that Defendant was aware of consumers’ preferences for beverages with distilled liquor or wine, and then deliberately marketed the Products as such in order to capitalize on that market. Such a scenario would be analogous to that in Izquierdo v. Panera Bread Co., 450 F. Supp. 3d 453 (S.D.N.Y. 2020), in which the court found a viable allegation of fraud where the plaintiff alleged that the defendant was “aware of consumer beliefs about the healthful qualities of blueberries,” and “sought to capitalize on those beliefs” by marketing one of its products as a “Blueberry Bagel,” despite knowing that the bagel in fact contained only “trace amounts of real blueberries,” id. at 457, 466 (record citation omitted). Though Plaintiffs invoke
Panera Bread, (Pls.’ Opp‘n 20), they have not put forth comparable allegations regarding “strong circumstantial evidence of conscious misbehavior or recklessness,” Lerner, 459 F.3d at 291 (citation omitted). Nor do Plaintiffs allege, for example, that Defendant was losing market share because of competition from canned cocktail manufacturers, and then decided to market its malt beverages deceptively as “cocktails” to salvage its position in the market for alcoholic beverages. Cf. In re Ford Fusion & C-Max Fuel Econ. Litig., No. 13-MD-2450, 2015 WL 7018369, at *35 (S.D.N.Y. Nov. 12, 2015) (holding that allegation that defendant “was lagging in the hybrid market and sought to improve its positioning by advertising improved fuel economy in
Inc., 297 F. Supp. 3d 327, 337 (E.D.N.Y. 2018) (same). Thus, the Court finds Elkind unpersuasive.
As with Plaintiffs’ express warranty claim, the Court dismisses the fraud claim without prejudice. Plaintiffs will be given leave to amend the FAC to correct the deficiencies above.
4. Unjust Enrichment
Finally, Plaintiffs bring a claim of unjust enrichment in Count V of the FAC. (FAC ¶¶ 116–21.) “The basic elements of an unjust enrichment claim in New York require proof that (1) [the] defendant was enriched, (2) at [the] plaintiff‘s expense, and (3) equity and good conscience militate against permitting defendant to retain what [the] plaintiff is seeking to recover.” Briarpatch Ltd., L.P. v. Phoenix Pictures, Inc., 373 F.3d 296, 306 (2d Cir. 2004). Unjust enrichment “lies as a quasi-contract claim” that “contemplates ‘an obligation imposed by equity to prevent injustice, in the absence of an actual agreement between the parties.’” Georgia Malone & Co. v. Rieder, 19 N.Y.3d 511, 973 N.E.2d 743, 746 (N.Y. 2012) (citation omitted). New York‘s highest court has made clear, however, that “unjust enrichment is not a catchall cause of action to be used when others fail.” Corsello v. Verizon N.Y., Inc., 18 N.Y.3d 777, 967 N.E.2d 1177, 1185 (N.Y. 2012). Rather, the claim “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.” Id. “An unjust enrichment claim is not available where it simply duplicates, or replaces, a conventional contract or tort claim.” Id.
The Second Circuit has stated that “[t]wo claims are duplicative of one another if they ‘arise from the same facts and do not allege distinct damages.’” NetJets Aviation, Inc. v. LHC Commc‘ns, LLC, 537 F.3d 168, 175 (2d Cir. 2008) (ellipsis omitted) (quoting Sitar v. Sitar, 50 A.D.3d 667, 854 N.Y.S.2d 536, 538 (App. Div. 2008)). Here, the unjust enrichment claim is premised on the same
factual allegations as those supporting Plaintiffs’ other claims, and Plaintiffs have not alleged distinct damages with respect to this
The cases cited by Plaintiffs, (see Pls.’ Opp‘n 25), do not persuade the Court otherwise. In Nuss v. Sabad, No. 10-CV-279, 2016 WL 4098606 (N.D.N.Y. July 28, 2016), which was decided at the summary judgment stage, the court found that even if the plaintiff failed to establish her tort claims at trial, a reasonable trier of fact could still find that the plaintiff was entitled to “equitable recovery under a theory of unjust enrichment,” and thus, her unjust enrichment claim was not duplicative of other claims, id. at *11. Thus, Nuss possibly presented the “unusual situation[] whe[re], though the defendant ha[d] not breached a contract nor committed a recognized tort, circumstances create[d] an equitable obligation running from the defendant to the plaintiff.” Corsello, 967 N.E.2d at 1185. In this sense, the Nuss court
explained, the facts before it were distinguishable from those in Corsello, where the New York Court of Appeals found that the “plaintiffs’ claims for either trespass or inverse condemnation could not fail while still permitting an unjust enrichment claim.” Nuss, 2016 WL 4098606, at *11; see also Corsello, 967 N.E.2d at 1185 (“To the extent that [the plaintiffs’ trespass and inverse condemnation] claims succeed, the unjust enrichment claim is duplicative; if [the] plaintiffs’ other claims are defective, an unjust enrichment claim cannot remedy the defects. The unjust enrichment claim should be dismissed.”).9 This case, however, is more like Corsello than Nuss. That is, the Court “cannot conceive of any set of facts upon which [Plaintiffs] would fail to establish [their] ... statutory claims, but nonetheless succeed in proving unjust enrichment.” Silva v. Smucker Natural Foods, Inc., No. 14-CV-6154, 2015 WL 5360022, at *12 (E.D.N.Y. Sept. 14, 2015); see also Koenig, 995 F. Supp. 2d at 291 (“Accepting the truth of the allegations in the [c]omplaint, [the] [d]efendants reaped a financial reward at [the] [p]laintiffs’ expense. However, to the extent that [the] [p]laintiffs’ other claims succeed, ‘the unjust enrichment claim is duplicative,’ and ‘if [the] plaintiffs’ other claims are defective, an unjust enrichment claim cannot remedy the defects.’” (quoting Corsello, 967 N.E.2d at 1185)). Nuss is therefore unavailing here.
The two additional cases cited by Plaintiffs, (see Pls.’ Opp‘n 25)—McCracken v. Verisma Systems, Inc., No. 14-CV-6248, 2017 WL 2080279 (W.D.N.Y. May 15, 2017), and Warner v. StarKist Co., No. 18-CV-406, 2019 WL 1332573 (N.D.N.Y. Mar. 25, 2019)—hinge on a misapplication of Nuss and the underlying authority on which Nuss relied. The McCracken court cited Nuss for the proposition that “[a]n unjust enrichment claim is not duplicative if a ‘reasonable trier of fact could find unjust enrichment without establishing all the elements for
one of [a plaintiff‘s] claims sounding in law.’” 2017 WL 2080279, at *8 (ellipsis omitted) (quoting Nuss, 2016 WL 4098606, at *11). This formulation is fine so far as it goes: if a plaintiff can establish an unjust enrichment claim where his tort or contract claims fail, then, under Corsello, the unjust enrichment claim is not duplicative of these other claims. See Corsello, 967 N.E.2d at 1185. The McCracken court‘s error was in how it applied this rule. Whereas Corsello envisions a fact-intensive inquiry, see id. (unjust enrichment “available only in unusual situations,” typically where “the defendant, though guilty of no wrongdoing, has received money to which he or she is not entitled” (emphasis added)), the McCracken court reduced this analysis to a formulaic, element-to-element comparison between two causes of action, see 2017 WL 2080279, at *8. Specifically, the court compared the elements of unjust enrichment to the elements of
distinct damages.’” NetJets Aviation, 537 F.3d at 175 (citation and ellipsis omitted). Notably, this rule focuses on facts and damages, but says nothing about a comparison of elements. Thus, McCracken and Warner cannot salvage Plaintiffs’ unjust enrichment claim.
III. Conclusion
For the reasons stated above, Defendant‘s Motion is granted in part and denied in part. The Motion is denied as to Plaintiffs’ claims under
Because this is the first adjudication of Plaintiffs’ claims on the merits, dismissal of the express warranty, fraud, and unjust enrichment claims is without prejudice. To the extent Plaintiffs have a good faith basis for filing a second amended complaint, they must do so within 30 days of the date of this Opinion & Order. Failure to properly and timely amend will result in dismissal of these claims with prejudice. The Clerk of Court is respectfully directed to terminate the pending Motion, (Dkt. No. 22).
SO ORDERED.
Dated: August 9, 2021
White Plains, New York
KENNETH M. KARAS
United States District Judge
Notes
Although Defendant does not rely on Daniel when discussing the Products’ allegedly immunizing disclaimer, (see Def.‘s Mem. 14-16), the distinction identified by the Daniel court would cut in Plaintiffs’ favor. In the Court‘s view, Plaintiffs are making a claim about a qualitative aspect of the Products—that is, they argue that Defendant‘s labeling makes a representation about a particular quality of the Products, namely that they contain wine or distilled liquor. Though one could also frame the alleged misrepresentation in quantitative terms—where the claim is that the Products purport to contain an amount of distilled liquor or wine that is greater than zero—that is a more strained construction of the claim.