Brockington v. Dollar Gen. Corp.

695 F.Supp.3d 487

Leonard BROCKINGTON, Plaintiff, v. DOLLAR GENERAL CORPORATION, Defendant.

1:22-cv-06666 (LJL)

United States District Court, S.D. New York

Signed September 28, 2023

Spencer Sheehan, Sheehan & Associates, P.C., Great Neck, NY, for Plaintiff.

Josiah Young, Rory Collins, Tyler Young, Faegre Drinker Biddle & Reath LLP, Minneapolis, MN, William Joshua Lattimore, Faegre Drinker Biddle & Reath LLP, New York, NY, for Defendant.

OPINION AND ORDER

LEWIS J. LIMAN, United States District Judge:

Plaintiff Leonard Brockington ("Plaintiff" or "Brockington") brings this action against Dollar General Corporation ("Dollar General" or "Defendant") alleging violations of the New York General Business Law ("GBL") §§ 349 and 350; violations of the consumer fraud statutes of Alaska, Georgia, Maine, and Utah; breaches of the express warranty and the implied warranty of merchantability; violations of the Magnuson-Moss Warranty Act, 15 U.S.C. § 2301, et seq. ("MMWA"); and common-law claims of fraud and unjust enrichment. Dkt. No. 1 ("Complaint").

Defendant moves, pursuant to Federal Rule of Civil Procedure Rule 12(b)(6), for dismissal of the Complaint on the ground that it fails to state a claim upon which relief can be granted. Dkt. No. 15.

For the following reasons, the motion to dismiss is granted in part and denied in part.

BACKGROUND

The Court accepts the well-pleaded facts of the Complaint as true for purposes of this motion.

Between 2019 and 2022, Plaintiff purchased Honey Graham Crackers (the "Product"), a cracker manufactured, labeled, and sold by Defendant, on multiple occasions from Dollar General stores in New York, including one located at 1312 Southern Boulevard, Bronx, NY 10459. Dkt. No. 1 ¶¶ 1, 84. The Product is described on its label as "Honey Graham Crackers," and "Made with Real Honey" and contains a depiction of a honey dipper with honey flowing from it. Id. ¶ 2. The Product's front label contains a seal that states, "Contains 8g of whole grain per serving" above another statement that the "USDA recommends 48g or more of whole grain daily." Id. ¶ 21. The front of the label is depicted below:

Image materials not available for display. Id. ¶ 1. The Product was released under one of Dollar General's private label brands, Clover Valley. Id. ¶ 75. Products bearing the Clover Valley brand have an industry-wide reputation for quality and value. Id. ¶ 80.

Graham flour is an alternative name for whole wheat flour. Id. ¶ 14. Whole grains, such as graham flour, include the entire grain, consisting of the endosperm, bran, and germ. Id. ¶ 5. The bran and germ contain important nutrients like fiber, vitamins, minerals, and antioxidants, such as iron, zinc, folate, magnesium, thiamin, niacin, selenium, riboflavin, manganese, copper, vitamin A, and vitamin B6. Id. ¶ 6. "Non-whole grains" or "refined grains" have been processed to remove the bran and germ and appear white in color. Id. ¶¶ 7, 10. When a refined grain is enriched, some, but not all, of the previously removed nutrients are added back. Id. ¶¶ 8-9. Where flour is made of refined grains which only contain the endosperm, it is white in color. Id. ¶ 10. Consumers increasingly prefer whole grains to non-whole grains because they are nutritionally superior. Id. ¶ 4. The 2015-2020 Dietary Guidelines for Americans recommend that at least half of all grains eaten be whole grain. Id. ¶ 19. The whole grain content distinguishes a graham cracker from other crackers and cookies made with mostly enriched flour, also referred to as "white flour" or "refined flour." Id. ¶ 17. However, the Product's ingredient list identifies enriched flour as the Product's predominant flour, ahead of "Graham Flour (Whole Wheat Flour)." Id. ¶ 18.

The Federal Trade Commission ("FTC") and Food and Drug Administration ("FDA") have recognized that "[m]any reasonable consumers will likely understand 'whole grain' [claims] to mean that all, or virtually all, of the food product is whole grain, or that all of the grain ingredients in the product are whole grains." Id. ¶ 20. The FTC, FDA, and a non-profit group have warned companies about misleading consumers by incorporating "whole wheat" and specific whole grain flours in product names. Id. ¶ 13.

As noted, the Product's label describes the Product and emphasizes the fact that it contains honey, through the Product's name, "Honey Graham Cracker," the statement that it is "Made with Real Honey," and the picture of a honey dipper with honey dripping from it. Id. ¶¶ 2, 49. The Complaint alleges that in place of sugar, consumers are increasingly seeking foods sweetened with honey. Id. ¶ 34. According to the National Institute of Health, there is a direct link between sugar consumption and obesity. Id. ¶ 29. Doctors and nutritionists agree that excess sugar intake leads to weight gain, Type 2 diabetes, dental caries, metabolic syndrome, heart disease, cancer, and dementia. Id. ¶ 30. Consumers seek foods primarily sweetened with honey or that contain honey as a significant sweetening ingredient because most recognize it is a natural sweetener and, unlike sugar, it is not heavily refined through a harsh unnatural process; it has a lower glycemic index than sugar, causing slower fluctuations in blood sugar and insulin levels; it is sweeter than sugar, so less is needed to achieve the same level of sweetness; and, unlike sugar, honey has small but significant amounts of nutrients. Id. ¶¶ 39, 41, 43, 45-46. These benefits promote immunity and aid digestion. Id. ¶ 47. Roughly 60% of consumers look for references to honey on a front label when deciding what to buy and at least 50% of consumers are willing to pay more for foods primarily sweetened with honey. Id. ¶¶ 37-38. Honey also imparts a darker color to baked products, such as bread and crackers. Id. ¶ 53. This is because honey contains mostly reducing sugars, which causes it to brown during baking. Id.

Notwithstanding the message conveyed by the Product's label, the ingredient list reveals that "sugar" is the predominant sweeting agent in the Product and "honey" is the least predominant. Id. ¶ 49. Laboratory analysis and/or review of the Nutrition Facts and ingredient list indicates the amount of honey is slightly above 2%, which is consistent with its placement ahead of "Contains 2% or Less Of" on the ingredient list. Id. ¶ 50.

Plaintiff alleges that the Product's labeling gives consumers the impression that the Product contains whole grain graham flour and honey as its primary grain and sweeting ingredient, respectively, instead of enriched flour and sugar. Id. ¶ 3. Plaintiff claims that the Product's labeling is misleading because it identifies whole grain flour and honey yet fails to disclose more predominant ingredients like refined flour and sugar. Id. ¶ 55. Plaintiff alleges that reasonable consumers expect that crackers identified by the names of specific grain and sweetening ingredients will contain more of those ingredients than if labeled "Crackers," and that, had Plaintiff known the truth, he would not have bought the Product, or else would not have been willing to pay as much for it. Id. ¶¶ 57, 60. Plaintiff also alleges that the value of the Product that Plaintiff purchased was materially less than the value represented by Defendant and that Defendant sold more of the Product than it would have in the absence of its misconduct. Id. ¶¶ 58-59. Plaintiff also alleges that the Product is sold at a price higher than similar products represented in a non-misleading way. Id. ¶ 61. Plaintiff bases this claim partially on his own knowledge, and partially on market research studies showing that consumers highly value products that contain a predominant amount of whole-grain ingredients and that are primarily or exclusively sweetened with honey or contain honey as a significant sweetening ingredient. Id. ¶¶ 88-93. Plaintiff also claims that Defendant was aware of consumer demand for whole grains and honey compared to refined grains and sugar and intended that members of the multi-state class would rely on its deceptive conduct. Id. ¶¶ 107, 112. Finally, Plaintiff claims to have provided notice to Defendant, its agents, representatives, retailers, and their employees that it breached the express and implied warranties associated with the Product. Id. ¶ 119.

Plaintiff seeks certification of a New York class and a multi-state class under Federal Rule of Civil Procedure Rule 23 to pursue this litigation; compensatory, statutory, and punitive damages; restitution and disgorgement; and costs and expenses including attorneys' fees. Id. at 17.

PROCEDURAL HISTORY

Plaintiff filed a class action complaint on August 5, 2022, naming Dollar General Corporation as the sole Defendant. See id. On December 12, 2022, Defendant filed its motion to dismiss and supporting documentation. Dkt. Nos. 15-17. On December 28, 2022, Plaintiff filed a memorandum of law in opposition to the motion to dismiss, Dkt. No. 18, and on January 9, 2023, Defendant replied, Dkt. No. 19.

LEGAL STANDARD

To survive a motion to dismiss, "a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.' " Ashcroft v. Iqbal, 556 U.S. 662, 679, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). Plaintiff must allege sufficient facts to "nudge[ ] their claims across the line from conceivable to plausible." Twombly, 550 U.S. at 570, 127 S.Ct. 1955. Although the court must accept all the factual allegations of a complaint as true, it is not "bound to accept as true a legal conclusion couched as a factual allegation." Iqbal, 556 U.S. at 678, 129 S.Ct. 1937 (quoting Twombly, 550 U.S. at 555, 127 S.Ct. 1955). The issue "is not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support their claims." Villager Pond, Inc. v. Town of Darien, 56 F.3d 375, 378 ...