Chang v. Fage U.S. Dairy Indus., Inc.

ALLAN CHANG, ROSALIE MAYES, REBECCA STARR, TERESA M. COHEN, KENNETH LEIBOWITZ,GILBERT MENDEZ, SHARON MANIER, ANDREA NEAL, BRITTANEE JACKSONand JAMES MANIER, on behalf of themselves and others similarly situated, Plaintiffs, v. FAGE USA DAIRY INDUSTRY, INC., Defendant.

14-CV-3826 (MKB)

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK

September 28, 2016

MEMORANDUM & ORDER

MARGO K. BRODIE, United States District Judge:

Plaintiffs commenced this putative class action on June 19, 2014 and filed an Amended Complaint on September 15, 2014 against Defendants Fage Dairy Processing, S.A., Fage USA Dairy Industry, Inc. and Fage USA Holdings, Inc. alleging violations of consumer laws of New York, New Jersey, Pennsylvania, California, Florida, Michigan, Georgia and Texas.¹ (Am. Compl., Docket Entry No. 13.) Plaintiffs also alleged negligent misrepresentation and unjust enrichment claims under the laws of all fifty states and the District of Columbia. (Id. ¶¶ 187-205.) Defendants moved to dismiss the Amended Complaint. (Docket Entry No. 19.) By Memorandum and Order dated September 22, 2015, the Court granted the motion in part and denied it in part (the "September 2015 Decision"). Stoltz v. Fage Dairy Processing Indus., S.A., No. 14-CV-3826, 2015 WL 5579872 (E.D.N.Y. Sept. 22, 2015). Plaintiffs filed a SecondAmended Complaint (the "SAC") against Defendant Fage USA Dairy Industry, Inc. on November 15, 2015, alleging: (1) violations of the New York General Business Law, N.Y. Gen. Bus. Law § 349; (2) violations of the New Jersey Consumer Fraud Act, N.J. Stat. Ann. § 56:8-1 et seq.; (3) violations of the Pennsylvania Unfair Trade Practices and Consumer Protection Law, 73 Pa. Cons. Stat. § 201-1 et seq.; (4) violations of the California Consumers Legal Remedies Act, Cal. Civ. Code § 1750 et seq. (the "CLRA"); (5) violations of the California Unfair Competition Law, Cal. Bus. Prof. Code § 17200 et seq. (the "CUCL"); (6) violations of the Florida Deceptive and Unfair Trade Practices Act, Fla. Stat. § 501.201 et seq.; (7) violations of the Michigan Consumer Protection Act, Mich. Comp. Laws § 445.901 et seq.; (8) negligent misrepresentation under the laws of California, New Jersey, Pennsylvania and Florida; and (9) unjust enrichment under the laws of California, Florida and Michigan. (SAC, Docket Entry No. 30.) Plaintiffs seek compensatory and punitive damages, restitution and injunctive relief. (Id. at 58.)

Defendant asserts that Plaintiffs lack Article III standing to seek injunctive relief and moves to dismiss Plaintiffs' claims under the CUCL, the CLRA and Plaintiffs' negligent misrepresentation claims. (Def. Partial Mot. to Dismiss ("Def. Mot."), Docket Entry No. 38; Def. Mem. of Law in Supp. of Def. Mot. ("Def. Mem."), Docket Entry No. 38-1; Def. Reply in Supp. of Def. Mot. ("Def. Reply"), Docket Entry No. 38-3.) For the reasons set forth below, the Court finds that Plaintiffs do not have standing to seek injunctive relief. The Court grants Defendant's motion to dismiss Plaintiffs' negligent misrepresentation claims and denies Defendant's motion to dismiss Plaintiffs' CUCL and CLRA claims.

I. Background

The Court assumes familiarity with the facts as set forth more fully in the September 2015 Decision, Stoltz, 2015 WL 5579872, at *3-4, and provides a summary of the pertinentfacts. For the purposes of deciding Defendant's motion, the Court assumes the truth of the allegations in the SAC.

Defendant manufactures, markets and sells various Greek yogurt products throughout the United States under the brand Fage®, including Defendant's "Total 0%" products. (SAC ¶ 2.) The "Total 0%" products include a plain variety of yogurt as well as fourteen different fruit-flavor varieties (the "Total 0% Products"). (Id. ¶ 28.) The Total 0% Products "are available at most supermarket chains and other retail outlets throughout the United States, including but not limited to Walmart, Costco, Target, Shoprite, Pathmark, Walgreens, and Duane Reade." (Id. ¶ 32.)

According to Plaintiffs, Defendant misleads consumers about the ingredients in the Total 0% Products through a nationwide marketing campaign, including the packaging of the Total 0% Products and Defendant's website, Facebook page and Twitter account. (Id. ¶¶ 3, 56-59.) Plaintiffs specifically allege that Defendant misleads consumers by prominently displaying the phrase "Total 0%" on the top and front labels of the Total 0% Products without providing any context as to the meaning of "0%," (id. ¶¶ 3, 39, 48); that Defendant modeled its marketing campaign for the Total 0% Products on the marketing campaigns of products such as Coke Zero and Pepsi Max, which prominently feature "Zero" or "0" on their packaging to signify that these products are free of sugar, calories and carbohydrates, (id. ¶¶ 4, 39-42); and that Defendant intends for consumers to conclude that "Total 0%" means that the Total 0% Products are healthy and lack sugar, carbohydrates, calories, or any other ingredients, nutrients or qualities that a particular consumer believes to be unhealthy, when instead, the Total 0% Products typically contain approximately sixteen grams of sugar per container, (id. ¶¶ 4, 34, 38-39, 48).

Plaintiffs contend that they were misled by the use of "Total 0%" in Defendant's marketing campaign for the Total 0% Products and purchased the Total 0% Products for a premium price based on their erroneous belief as to the meaning of "Total 0%." (Id. ¶¶ 6, 55, 63, 66, 68-70.) Plaintiffs compare the Total 0% Products to other yogurt products sold by Defendant's competitors and assert that, while some of Defendant's competitors employ the phrase "0%" in the marketing and packaging of their yogurt products, these products and marketing campaigns make clear that the "0%" refers only to those yogurts' fat content. (Id. ¶¶ 43-47.) Plaintiffs allege that by failing to disclose to consumers in a clear manner whether the Total 0% Products are free of fat, sugar, cholesterol, carbohydrates or calories, Defendant has an unfair advantage over its competitors. (Id. ¶ 48.) As a result of Defendant's failure to clarify what the "0%" refers to, reasonable consumers like Plaintiffs are left to impute meaning to the prominent "0%" on the package of the Total 0% Products. (Id. ¶¶ 39, 48.) Plaintiffs also allege that because the "0%" is preceded by the word "Total," a reasonable consumer is likely to believe that the Total 0% Products contain no fat, sugar, sodium, cholesterol, carbohydrates, calories, or any other item required to be disclosed on the Total 0% Products' packaging. (Id. ¶ 48.)

Plaintiffs acknowledge that the fine print on the front and top labels of the Total 0% Products states "All Natural — Nonfat Greek Strained Yogurt," but contend that this disclosure is not placed in sufficiently close proximity to the prominent "Total 0%" claim on the labels, making it impossible for the reasonable consumer to deduce that "Total 0%" refers only to fat content. (Id. ¶ 49.)

Plaintiffs bring claims on behalf of six purported classes of plaintiffs who purchased the Total 0% Products in New York, New Jersey, Pennsylvania, California, Florida and Michigan. (SAC ¶¶ 77-82); Stoltz, 2015 WL 5579872, at *3.

II. Discussion

a. Standard of review

In reviewing a motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure, a court must "accept all factual allegations in the complaint as true and draw inferences from those allegations in the light most favorable to the plaintiff." Tsirelman v. Daines, 794 F.3d 310, 313 (2d Cir. 2015) (quoting Jaghory v. N.Y. State Dep't of Educ., 131 F.3d 326, 329 (2d Cir. 1997)); see also Matson v. Bd. of Educ., 631 F.3d 57, 63 (2d Cir. 2011) (quoting Connecticut v. Am. Elec. Power Co., 582 F.3d 309, 320 (2d Cir. 2009)). A complaint must plead "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim is plausible "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Matson, 631 F.3d at 63 (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)); see also Pension Ben. Guar. Corp. ex rel. St. Vincent Catholic Med. Ctrs. Ret. Plan v. Morgan Stanley Inv. Mgmt. Inc., 712 F.3d 705, 717-18 (2d Cir. 2013). Although all allegations contained in the complaint are assumed true, this principle is "inapplicable to legal conclusions" or "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements." Iqbal, 556 U.S. at 678.

b. Standing

Defendant asserts in its reply brief that Plaintiffs lack standing to seek injunctive relief because they fail to allege a likelihood of continuing or future injury.² (Defs. Reply 8, Docket Entry No. 38-3.) Defendant argues that because Plaintiffs "now unquestionably know what [the Total 0% Products'] packaging refers to," Plaintiffs "cannot show that they are realistically threatened by a repetition of the alleged violation." (Id.)

When seeking injunctive relief, "a plaintiff must show the three familiar elements of standing: injury in fact, causation, and redressability." Cacchillo v. Insmed, Inc., 638 F.3d 401, 404 (2d Cir. 2011) (citing Summers v. Earth Island Inst., 555 U.S. 488, 493 (2009)). "[T]o meet the constitutional minimum of standing" for injunctive relief, a plaintiff "must carry the burden of establishing that 'he has sustained or is immediately in danger of sustaining some direct injury as the result of the challenged official conduct.'" Shain v. Ellison, 356 F.3d 211, 215 (2d Cir. 2004) (quoting Lyons, 461 U.S. at 101-102); see also Nicosia v. Amazon.com, Inc., --- F.3d ---, ---, 2016 WL 4473225, at *12 (2d Cir. Aug. 25, 2016) ("Plaintiffs lack standing to pursue injunctive relief where they are unable to establish a 'real or immediate threat' of injury." (firstciting Lyons, 461 U.S. at 111-12; and then citing Shain, 356 F.3d at 215-16)...