In re 100% Grated Parmesan Cheese Mktg. & Sales Practices Litig.

275 F.Supp.3d 910

IN RE: 100% GRATED PARMESAN CHEESE MARKETING AND SALES PRACTICES LITIGATION

This Document Relates to All Cases

16 C 5802

MDL 2705

United States District Court, N.D. Illinois, Eastern Division.

Signed August 24, 2017

MEMORANDUM OPINION AND ORDER

Gary Feinerman, United States District Judge

Defendants in this multidistrict litigation are purveyors of grated parmesan cheese products with labels stating "100% Grated Parmesan Cheese" or some variation thereof. Plaintiffs allege that they were misled by the labels because the products contain ingredients other than cheese—in particular, a nontrivial amount of cellulose. After the Judicial Panel on Multidistrict Litigation consolidated these suits before the undersigned judge, Doc. 1, Plaintiffs filed five consolidated class action complaints, which allege violations of various state consumer protection statutes, breaches of express and implied warranty, and unjust enrichment. Docs. 120–123, 143. Defendants move to dismiss the complaints under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). Docs. 156, 160, 163, 167, 173. The Rule 12(b)(1) motions are denied, but the Rule 12(b)(6) motions are granted.

Background

On a facial challenge to subject matter jurisdiction under Rule 12(b)(1) or a motion to dismiss under Rule 12(b)(6), the court assumes the truth of the operative complaints' factual allegations, though not their legal conclusions. See Zahn v. N. Am. Power & Gas, LLC , 815 F.3d 1082, 1087 (7th Cir. 2016) ( Rule 12(b)(6) ); Apex Dig., Inc. v. Sears, Roebuck & Co. , 572 F.3d 440, 443–44 (7th Cir. 2009) ( Rule 12(b)(1) ). The court must also consider "documents attached to the complaint[s], documents that are critical to the complaint[s] and referred to in [them], and information that is subject to proper judicial notice," along with additional facts set forth in Plaintiffs' brief opposing dismissal, so long as those additional facts "are consistent with the pleadings." Phillips v. Prudential Ins. Co. of Am. , 714 F.3d 1017, 1020 (7th Cir. 2013). Where a complaint attaches only part of a relevant document, the court may consider the entire document if the defendant appends it to its motion. See Rosenblum v. Travelbyus.com , 299 F.3d 657, 661–62 (7th Cir. 2002) (holding that the court could consider the remainder of a contract referenced in the complaint, where the plaintiff "appended only a part of the relevant instrument" and the defendant attached the rest). The facts are set forth as favorably to Plaintiffs as those materials allow, and all reasonable inferences are drawn in their favor. See Pierce v. Zoetis, Inc. , 818 F.3d 274, 277 (7th Cir. 2016). In setting forth those facts at the pleading stage, the court does not vouch for their accuracy. See Jay E. Hayden Found. v. First Neighbor Bank, N.A. , 610 F.3d 382, 384 (7th Cir. 2010).

Defendants The Kraft Heinz Company, Albertsons Companies, Inc. and Albertsons LLC (together, "Albertsons"), Supervalu, Inc., Target Corporation, Wal–Mart Stores, Inc., ICCO–Cheese Company, Inc., and Publix Super Markets, Inc. design, develop, manufacture, sell, test, package, label, distribute, promote, market, and/or advertise grated parmesan cheese products. Doc. 120 at ¶¶ 16–17; Doc. 121 at ¶¶ 10–14; Doc. 122 at ¶¶ 11–12; Doc. 123 at ¶¶ 13–14; Doc. 143 at ¶ 9. The products all bore labels stating "100% Grated Parmesan Cheese," Doc. 120 at ¶¶ 7, 9–15; Doc. 121 at ¶¶ 7–9; Doc. 122 at ¶¶ 7–11; Doc. 123 at ¶¶ 7–12, or some similar variation, Doc. 120 at ¶ 8 ("100% Grated Parmesan and Romano Cheese"); Doc. 122 at ¶¶ 7–8, 10 ("Parmesan 100% Grated Cheese"); Doc. 123 at ¶¶ 7–12 ("100% Parmesan Grated Cheese"); Doc. 143 at ¶ 7 ("100% Real Grated Romano Parmesan Cheese"); id. at ¶ 8 ("100% Real Grated Parmesan Cheese"); see also Doc. 120 at ¶ 20 ("100% Grated Three Cheese Blend"). In addition, Kraft "developed and paid for [television commercials] throughout the years and the class period [which] reinforced the message that the Products are comprised of only 100% real cheese." Doc. 120 at ¶ 21.

Plaintiffs are consumers who purchased Defendants' products at grocery stores around the country. Doc. 120 at ¶¶ 7–15; Doc. 121 at ¶¶ 7–9; Doc. 122 at ¶¶ 7–10; Doc. 123 at ¶¶ 7–12; Doc. 143 at ¶¶ 7–8. Plaintiffs purchased the products believing that they contained only cheese, and nothing else. Doc. 120 at ¶¶ 7–15; Doc. 121 at ¶¶ 7–9; Doc. 122 at ¶¶ 7–10; Doc. 123 at ¶¶ 7–12; Doc. 143 at ¶¶ 7–8. The products, however, contain not just cheese, but also anywhere from 3.8% to 8.8% cellulose, an organic polymer with no nutritional value that is "often used as a filler." Doc. 120 at ¶¶ 19, 22 (complaint against Kraft, alleging 3.8% cellulose); Doc. 121 at ¶¶ 16, 18 (complaint against Albertsons and Supervalu, alleging 8.8% cellulose); Doc. 122 at ¶¶ 16, 18 (complaint against Target and ICCO, not specifying a percentage); Doc. 123 at ¶¶ 17–18, 20 (complaint against Wal–Mart and ICCO, alleging 7.8% cellulose); Doc. 143 at ¶¶ 11, 13 (complaint against Publix, alleging "a significant portion" of cellulose). Some of the products also contained other ingredients, including potassium sorbate, Doc. 120 at ¶ 19; Doc. 122 at ¶ 16; Doc. 123 at ¶ 18, and corn starch, Doc. 122 at ¶¶ 15–16.

Each product has an ingredient list somewhere on its label, and each ingredient list disclosed the non-cheese ingredients. Doc. 157 at 11–12; Doc. 162 at 14; Doc. 164–1; Doc. 168–1; Doc. 174 at 8. While "100% Grated Parmesan Cheese" (and the other, similar descriptions) are prominently featured on the products' front labels, the ingredient lists are smaller, less conspicuous, and located near the nutritional facts on the rear labels. Doc. 157 at 11–12; Doc. 162 at 14; Doc. 164–1; Doc. 168–1; Doc. 174 at 8. Each ingredient list states that the cellulose is added "to prevent caking." Doc. 157 at 11–12; Doc. 162 at 14; Doc. 164–1; Doc. 168–1; Doc. 174 at 8.

As a representative example, Kraft's "100% Grated Parmesan Cheese" packaging includes, on the back of the container, the following list in a relatively small, all-capital-letters font: "Ingredients: Parmesan Cheese (pasteurized part-skim milk, cheese culture, salt, enzymes), cellulose powder to prevent caking, potassium sorbate to protect flavor." Doc. 162 at 14. The "100% Grated Parmesan Cheese" description is featured prominently on the front label. Ibid. The packaging advises purchasers to "refrigerate after opening," ibid. , plainly indicating that the unopened product is shelf-stable and need not be refrigerated.

The following images show the products' general appearance and the labels' layout and design.

Doc. 162 at 14 (Kraft).

Doc. 168–1 at 2 (Wal–Mart and ICCO).

Doc. 174 at 8 (Publix).

Doc. 157 at 12 (Albertsons and Supervalu).

Doc. 164–1 at 2 (Target and ICCO).

Discussion

Defendants seek dismissal under Rule 12(b)(1) for lack of Article III standing and under Rule 12(b)(6) for failure to state a claim. Because standing is jurisdictional, the court must consider it before reaching the merits. See Hinrichs v. Speaker of House of Representatives of Ind. Gen. Assembly , 506 F.3d 584, 590 (7th Cir. 2007).

I. Article III Standing

Defendants assert that Plaintiffs do not adequately plead two necessary components of Article III standing, injury and causation. Doc. 164 at 23–25. The Supreme Court recently reiterated the requirements for Article III standing:

[T]he irreducible constitutional minimum of standing consists of three elements. The plaintiff must have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision. The plaintiff, as the party invoking federal jurisdiction, bears the burden of establishing these elements.

Spokeo, Inc. v. Robins , ––– U.S. ––––, 136 S.Ct. 1540, 1547, 194 L.Ed.2d 635 (2016) (citations and internal quotation marks omitted); see also Lewert v. P.F. Chang's China Bistro, Inc. , 819 F.3d 963, 966 (7th Cir. 2016) ("[Plaintiffs] must demonstrate that they have 'suffered a concrete and particularized injury that is fairly traceable to the challenged conduct, and is likely to be redressed by a favorable judicial decision.' ") (quoting Hollingsworth v. Perry , 570 U.S. 693, 133 S.Ct. 2652, 2661, 186 L.Ed.2d 768 (2013) ).

Plaintiffs' alleged injuries are financial. They claim that they purchased a product worth less than what they paid because it contained non-cheese ingredients, and also that they received something different—and less valuable—than what they were promised, because the front label misleadingly states that the product is 100% cheese. Doc. 120 at ¶ 24; Doc. 121 at ¶ 20; Doc. 122 at ¶ 20; Doc. 123 at ¶ 22; Doc. 143 at ¶ 15. For the reasons given in In re Aqua Dots Products Liability Litigation , 654 F.3d 748 (7th Cir. 2011), these allegations are sufficient to establish standing.

The plaintiffs in Aqua Dots sued the manufacturer and distributors of a children's toy consisting of little beads that could be fused together to create designs. Id. at 749. When swallowed, a chemical in the beads metabolized into gamma-hydroxybutyric acid, commonly known as the "date rape" drug. Ibid. Children who swallowed a large number of beads became sick, with some falling into comas. Id. at 749–50. The plaintiffs were not physically injured children or their parents, but instead were the parents of children who suffered no physical injury. Id. at 750. The Seventh Circuit held that the plaintiffs had Article III standing. According to the court, the fact that the plaintiffs "did not suffer physical injury, ... [did] not mean that they were uninjured. The plaintiffs' loss is financial: they paid more for the toys than they would have, had they known of the risks the beads posed to children. A financial injury creates standing." Id. at 751 ; see also United States v. Students Challenging Regulatory Agency Procedures , 412 U.S. 669, 686, 93 S.Ct. 2405, 37 L.Ed.2d 254 (1973) (noting th...