Clemmons v. Upfield US Inc.

667 F.Supp.3d 5

Duval CLEMMONS, individually and on behalf of all others similarly situated, Plaintiff, v. UPFIELD US INC., Defendant.

22-cv-355 (PKC)

United States District Court, S.D. New York

Signed March 31, 2023

Angele Aaron, Spencer Sheehan, Sheehan & Associates, P.C., Great Neck, NY, Katherine Lalor, Great Neck, NY, for Plaintiff.

August T. Horvath, Foley Hoag LLP, New York, NY, for Defendant.

OPINION AND ORDER

CASTEL, United States District Judge:

Plaintiff Duval Clemmons brings a putative class action against defendant Upfield US Inc., alleging that the labeling on one of the company's "plant butter" products misrepresents that the plant butter is made predominantly with olive oil. Contrary to his expectations based on the product packaging, the product was composed mostly of palm and canola oils, and olive oil—while undeniably present—was only the smallest constituent in a four-oil blend.

The Complaint asserts claims for violation of sections 349 and 350 of the New York General Business Law ("GBL"), as well as for violation of similar consumer protection statutes in other states. It additionally asserts claims for breach of contract, breach of express warranty, breach of implied warranties of merchantability and fitness for a particular purpose, violation of the Magnuson Moss Warranty Act, negligent misrepresentation, fraud, and unjust enrichment. (Dkt. 1, Compl.) Upfield has moved to dismiss under Rule 12(b)(6), Fed. R. Civ. P. (Dkt. 14) For the reasons discussed below, the motion to dismiss will be granted in part and denied in part.

I. BACKGROUND

A. Factual Background

For purposes of a motion to dismiss, the Court accepts the Complaint's well-pleaded factual allegations as true, drawing all reasonable inferences in favor of the non-movant, Clemmons. In re Elevator Antitrust Litig., 502 F.3d 47, 50 (2d Cir. 2007).

Upfield is the largest manufacturer of margarines and "plant-based" consumer products in the world. (Compl. ¶ 37) Relevant here, the company markets and sells a spread labeled "Country Crock Plant Butter Made With Olive Oil" ("the Product").¹ (Id. ¶ 1) The Product is marketed as "Dairy Free," and its packaging is green-themed with pictures of olives. (Id.) The Complaint includes the following image of the packaging:

Image materials not available for display.

(Id.)

The Complaint asserts that the packaging is misleading because, despite the olive imagery and the highlighted statement "Made With Olive Oil," the Product is made mostly of palm and canola oil. The Complaint alleges that the Product packaging includes following ingredient list:

INGREDIENTS: BLEND OF PLANT-BASED OILS (PALM FRUIT, PALM KERNEL, CANOLA AND OLIVE OIL), WATER, SALT, PEA PROTEIN, SUNFLOWER LECITHIN, CITRIC ACID, VITAMIN A PALMITATE, NATURAL FLAVOR, BETA CAROTENE (COLOR)

(Id. ¶ 16) The first ingredient is a "blend of plant-based oils," which consists of palm fruit oil, palm kernel oil, canola oil, and olive oil.² (Id. ¶¶ 16, 17) Olive oil is the smallest component oil in the blend. (Id. ¶¶ 17, 18)

The Complaint states that olive oil is sought out by consumers as a healthy alternative to butter, other oils, and spreads. (Id. ¶¶ 19-21) Additionally, an increasing number of consumers seek out plant-based foods due to the perceived health benefits and lower environmental impact of such products. (Id. ¶ 12) Consumers may also understand "plant-based" products to have only natural ingredients.³ (Id. ¶ 11)

The Complaint alleges that the Product has been labeled to take advantage of these consumer trends and to mislead consumers seeking out the health benefits of olive oil into purchasing a product that is "indistinguishable" from margarine. (Id. ¶¶ 8-10, 14) In contrast to the above trends, consumers have moved away from margarine due to rising consumer awareness of potential negative health effects associated with trans fats and other margarine components. (Id. ¶¶ 4-6) The Product is alleged to have a fat content of 79%, which just narrowly avoids the 80% threshold that would require classification in the disfavored category of margarine. (Id. ¶¶ 3, 8) Other differences between the Product's ingredients and those of margarine are alleged to be minimal. (Id. ¶ 9)

Clemmons alleges he purchased the Product on at least one occasion in Bronx County, New York between July 2021 and December 2021. (Id. ¶ 42) When deciding to purchase the Product, Clemmons observed the phrase "Made With Olive Oil" and the pictures of olives on the label; on this basis, he believed olive oil would be the main oil used in the Product. (Id. ¶¶ 43-47) Clemmons states that had he known that olive oil was only a minor ingredient, he would not have made the purchase, or at minimum would have paid less. (Id. ¶¶ 52-54).

B. Procedural History

Clemmons filed his Complaint on January 14, 2022. He seeks to represent a class of consumers in New York, as well as a Multi-State Class comprising consumers in Michigan, Montana, Rhode Island, Georgia, North Dakota, Virginia, South Dakota, and Oklahoma. (Id. ¶ 57) The Complaint asserts claims for (1) violation of sections 349 and 350 of the GBL (and the consumer fraud statutes of the other states relevant to the proposed Multi-State Class), (2) breach of contract, (3) breach of express warranty, breach of the implied warranties of merchantability and fitness for a particular purpose, and violation of the Magnuson Moss Warranty Act, (4) negligent misrepresentation, (5) fraud, and (6) unjust enrichment. The Complaint seeks both damages and injunctive relief. (Id. ¶¶ 58, 64)

Upfield moved to dismiss the Complaint in its entirety (Dkt. 14) and filed an accompanying memorandum of law (Dkt. 15) ("Def. Br."). Clemmons filed a response in which he withdrew his request for injunctive relief. (Dkt. 16 at 7 n.1) ("Opp. Br.") Upfield filed a reply. (Dkt. 17) ("Reply")

II. LEGAL STANDARD FOR MOTION TO DISMISS UNDER RULE 12(B)(6)

To survive a Rule 12(b)(6) 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, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (internal quotation marks omitted). In assessing the sufficiency of a pleading, a court must disregard legal conclusions, which are not entitled to the presumption of truth. Id. Instead, the Court must examine the well-pleaded factual allegations and "determine whether they plausibly give rise to an entitlement to relief." Id. at 679, 129 S.Ct. 1937. The Court is instructed to "construe the complaint liberally," to "accept[ ] all factual allegations in the complaint as true," and to "draw[ ] all reasonable inferences in the plaintiff's favor." Palin v. New York Times Co., 940 F.3d 804, 809 (2d Cir. 2019) (brackets and internal quotation marks omitted).

"The choice between two plausible inferences that may be drawn from factual allegations is not a choice to be made by the court on a Rule 12(b)(6) motion." Anderson News, L.L.C. v. Am. Media, Inc., 680 F.3d 162, 185 (2d Cir. 2012). "A court ruling on such a motion may not properly dismiss a complaint that states a plausible version of the events merely because the court finds a different version more plausible." Id. "[A] well-pleaded complaint may proceed even if it strikes a savvy judge that actual proof of those facts is improbable, and that a recovery is very remote and unlikely." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (internal quotation marks omitted).

III. DISCUSSION

A. Plaintiff's State Law Claims Are Not Preempted

As an initial matter, Upfield argues that Clemmons's state law claims are expressly preempted by the Food, Drug, and Cosmetic Act ("FDCA"), as amended by the Nutrition Labeling and Education Act of 1990 ("NLEA"). See 21 U.S.C. §§ 343 et seq. Specifically, Upfield characterizes Clemmons's argument as involving "an implied nutrient content claim" and argues that suits about such claims are preempted by sections 343(r) and 343-1(a)(5) of the FDCA. The Court concludes that the Complaint does not allege that the label makes an implied nutrient content claim, and federal law accordingly does not preempt the state law claims.

Section 343(r)(1) of the FDCA states that "[a] food shall be deemed to be misbranded" (1) where a claim on the food's labeling either "expressly or by implication . . . characterizes the level of any nutrient" required to be on the label and (2) where that claim does not conform to certain federal regulatory requirements. Id. § 343(r)(1)(A); see Seljak v. Pervine Foods, LLC, 21 Civ. 9561 (NRB), 2023 WL 2354976, at *9 (S.D.N.Y. Mar. 3, 2023). The required label nutrients are set by regulation and the list includes such familiar items as "saturated fat," "dietary fiber," and "protein." 21 C.F.R. § 101.9(c) (maintaining current list of nutrients that either must or may be included on a nutrition label); see 21 U.S.C. § 343(q)(1), (q)(2).

The Food and Drug Administration ("FDA") sets rules for how these nutrients must be displayed in the Nutrition Facts panel on a food product, see generally 21 C.F.R. § 101.9, and it also regulates claims about these nutrients on other parts of the label, see id. § 101.13(b) ("A claim that expressly or implicitly characterizes the level of a nutrient of the type required to be in nutrition labeling . . . may not be made on the label or in labeling of foods unless the claim is made in accordance with this regulation . . . ."). These claims are divided into two types. "An expressed nutrient content claim is any direct statement about the level (or range) of a nutrient in the food, e.g., 'low sodium' or 'contains 100 calories.' " Id. § 101.13(b)(1). An "implied nutrient content" claim is a statement that:

(i) Describes the food or an ingredient therein in a manner that suggests that a nutrient is absent or present in a certain amount (e.g., "high in oat bran"); or

(ii) Suggests that the food, because of its nutrient

...