Holve v. Mccormick

334 F.Supp.3d 535

Megan HOLVE, individually and on behalf of all others similarly situated, Plaintiff,

v.MCCORMICK & COMPANY, INC., Defendant.

Case # 16-CV-6702-FPG

United States District Court, W.D. New York.

Signed August 14, 2018

George V. Granade, II, Reese LLP, New York, NY, David M. Kaplan, David M. Kaplan, Attorney-at-Law, Penfield, NY, for Plaintiff.

Pieter Van Tol, H.B., III, Benjamin A. Fleming, Courtney L. Colligan, Hogan Lovells U.S. LLP, New York, NY, for Defendant.

DECISION AND ORDER

HON. FRANK P. GERACI, JR., Chief Judge

INTRODUCTION

Plaintiff brings this putative class action alleging that Defendant McCormick & Company, Inc. deceptively marketed certain products as "natural." The Complaint (ECF No. 1) asserts claims for unjust enrichment under New York Common Law and Maryland Common Law, violations of Maryland Commercial Code § 13-301 ("MCC"), and New York General Business Law §§ 349, 350 ("GBL"). Plaintiff seeks to represent a nationwide class of all United States residents or, alternatively, a statewide class of all New York residents who purchased certain McCormick products, for personal use and not resale, since October 27, 2012.

Defendant moves to dismiss Plaintiff's claims or, in the alternative, to stay the action pending the Food and Drug Administration's ("FDA") rulemaking concerning the use of the term "natural" on food labeling and the United States Department of Agriculture's ("USDA") rulemaking concerning labeling of bioengineered foods. ECF No. 8. For the reasons stated below, Defendant's Motion to Dismiss is GRANTED IN PART and DENIED IN PART, and Defendant's Motion to Stay is GRANTED.

BACKGROUND

Defendant is a Maryland-based corporation that manufactures, markets, advertises, and sells various spice and seasoning products with the word "natural" on their front packaging. ECF No. 1 ¶¶ 1-3, 37. Plaintiff's Complaint lists 29 specific spice and seasoning products, which Plaintiff alleges were deceptively labeled as "natural."¹ ECF No. 1 at 2-3. The Products' labels are attached to Plaintiff's Complaint as "Exhibit A" and show that 19 of the 29 Products are labeled "with natural spices," 5 are labeled as "natural," and 5 are labeled as "all natural." See ECF No. 1 at 32-42. Plaintiff alleges that Defendant's use of the "natural" descriptor is an effort to increase sales and "take advantage of" the rapidly growing natural foods market. Id. ¶¶ 5, 56.

Plaintiff also alleges that, rather than being "natural," the Products "contain[ ] unnatural, synthetic, artificial, and/or genetically modified ingredients, including but not limited to, corn starch, white corn flour, and citric acid." Id. ¶ 38. Plaintiff alleges that these ingredients render the "natural" label "untrue, misleading and likely to deceive reasonable consumers" because "the ingredients are, in fact, highly-processed, synthetic, and/or genetically modified." Id. ¶¶ 40, 46. According to Plaintiff, "[g]enetically modified crops do not occur in nature, and as such are not ‘Natural.’ " Id. ¶ 47. "Monsanto, one of the largest producers of genetically modified crop seed ... defines Genetically Modified Organisms (‘GMO’) as 'any organism the genetics of which have been altered through the use of modern biotechnology to create a novel combination of genetic material." Id. Similarly, the World Health Organization defines GMOs as "organisms in which the genetic material (DNA) has been altered in a way that does not occur naturally."² Id. ¶ 51. Plaintiff alleges that "almost all corn in the United States is grown from seeds that have been genetically modified, and as such, almost all corn and corn-based ingredients in the United States are in fact unnatural." Id. ¶ 48. More specifically, Plaintiff alleges that white corn flour and corn starch are derived from GMOs and genetically engineered seeds. Additionally, Plaintiff alleges that citric acid is made through a synthetic process that "utilizes GE sugar beets and GE maize."³ Id. at ¶ 50.

Plaintiff alleges that she and the putative class members relied on Defendant's labeling misrepresentations, which were made "[t]hrough a variety of advertising, including the front packaging of the Products." Id. ¶¶ 39-40. The gravamen of the Complaint is that Plaintiff and the putative class members "paid a price premium over and above the value of Defendant's products that did not claim to be ‘Natural,’ " and were "deprived the benefit of the bargain because the Products they purchased had less value than what was represented by Defendant." Id. ¶¶ 44, 67. Plaintiff, on behalf of herself and the putative class, requests various monetary, declaratory, and injunctive relief. See ECF No. 1 at 30.

LEGAL STANDARDS

I. Rule 12(b)(1) Standard

"A Rule 12(b)(1) motion is the proper channel for dismissal when the district court lacks the statutory or constitutional power to adjudicate a matter." Church v. Fin. Recovery Servs., Inc. , No. 16-CV-6391-FPG, 2018 WL 1383231, at *1 (W.D.N.Y. Mar. 19, 2018) (citing Makarova v. United States , 201 F.3d 110, 113 (2d Cir. 2000) ) (internal quotation marks omitted).

When the Rule 12(b)(1) motion is facial, i.e., based solely on the allegations of the complaint or the complaint and exhibits attached to it (collectively the ‘Pleading’), the plaintiff has no evidentiary burden. The task of the district court is to determine whether the Pleading allege[s] facts that affirmatively and plausibly suggest that [the plaintiff] has standing to sue.

John v. Whole Foods Market Grp., Inc. , 858 F.3d 732, 736 (2d Cir. 2017) (citing Carter v. HealthPort Techs., LLC , 822 F.3d 47, 56-57 (2d Cir. 2016) ) (internal quotation marks omitted).

II. Rule 12(b)(6) Standard

Rule 12(b)(6) permits a party to move to dismiss a complaint for "failure to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). When presented with a motion to dismiss under Rule 12(b)(6), the reviewing court "must accept as true all of the factual allegations contained in the complaint," Bell Atl. Corp. v. Twombly , 550 U.S. 544, 572, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), and "draw all reasonable inferences in Plaintiff's favor," Faber v. Metro. Life Ins. Co. , 648 F.3d 98, 104 (2d Cir. 2011).

Under Rule 8(a)(2), "a pleading must contain a short and plain statement of the claim showing the pleader is entitled to relief." Ashcroft v. Iqbal , 556 U.S. 662, 677-78, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (internal quotation marks omitted). To satisfy this standard, a complaint need not contain "detailed factual allegations but it demands more than unadorned, the defendant-unlawfully-harmed-me accusation."

Id. at 678, 129 S.Ct. 1937 (citation and internal quotation marks omitted).

To survive dismissal under Rule 12(b)(6), a complaint must contain sufficient factual matter, accepted as true, to "state a claim to relief that is plausible on its face." Twombly , 550 U.S. at 570, 127 S.Ct. 1955. "A claim is plausible when its factual content allows the court to draw the reasonable inference that the defendant is liable for the conduct alleged." Bryant v. Silverman , 284 F.Supp.3d 458, 468 (S.D.N.Y. 2018) (citing Ashcroft , 556 U.S. at 678, 129 S.Ct. 1937 ) (internal quotation marks omitted). This plausibility standard is a lower threshold than a "probability requirement," however, it requires "more than a sheer possibility that the defendant has acted unlawfully." Id.

In reviewing the sufficiency of a complaint under Rule 12(b)(6), "a district court may consider the facts alleged in the complaint, documents attached to the complaint as exhibits, and documents incorporated by reference in the complaint." DiFolco v. MSNBC Cable L.L.C. , 622 F.3d 104, 111 (2d Cir. 2010). "Whether a document is attached to a complaint is self evident." DeLuca v. AccessIT Grp., Inc. , 695 F.Supp.2d 54, 60 (S.D.N.Y. 2010). A court may also consider a document that is "integral" to the complaint. "A document is integral to the complaint where the complaint relies heavily upon its terms and effect." Lightner v. Wenderlich , 271 F.Supp.3d 445, 453 (W.D.N.Y. 2017) (citing Yung v. Lee , 432 F.3d 142, 146 (2d Cir. 2005) (internal quotation marks omitted) ).

DISCUSSION

I. Standing

Defendant challenges Plaintiff's standing to bring this suit. The Court considers these arguments first "[b]ecause standing is a jurisdictional matter." See Elkind v. Revlon Consumer Prods. Corp. , No. 14-CV-2484(JS)(AKT), 2015 WL 2344134, at *3 (E.D.N.Y. May 14, 2015) (citing Warth v. Seldin , 422 U.S. 490, 498, 95 S.Ct. 2197, 45 L.Ed.2d 343 (1975) ).

"Article III standing and class standing are different issues that require separate consideration...." Reid v. GMC Skin Care USA Inc. , No. 8:15-CV-277 (BKS/CFH), 2016 WL 403497, at *4 (N.D.N.Y. Jan. 15, 2016) (citations omitted). The Second Circuit explained this distinction in Retirement Board of the Policemen's Annuity and Benefit Fund of the City of Chicago v. Bank of New York Mellon , 775 F.3d 154 (2d Cir. 2014) :

In NECA , we addressed the murky line between traditional Article III standing and so-called ‘class standing.’ There, the named plaintiff had purchased RMBS certificates from the defendants. It asserted claims under §§ 11, 12(a)(2), and 15 of the Securities Act, 15 U.S.C. §§ 77k, 77l (a)(2), 77o, on behalf of a putative class that included purchasers of all certificates that were issued under the same allegedly false and misleading SEC Shelf Registration Statement. Those certificates, however, had been sold in seventeen separate offerings with unique offering documents, and because the named plaintiff had purchased certificates in only two of the seventeen offerings, the named plaintiff was asserting claims related to certificates (from the fifteen other offerings) that only absent class members owned. As we noted, the named plaintiff ‘clearly lack[ed] standing to assert such claims on its behalf because it did not purchase those Certificates’ and so was not injured by any misstatements the defendants might have made

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