Kelly v. Beliv LLC

640 F.Supp.3d 286

Kevin KELLY, individually and on behalf of all others similarly situated, Plaintiff, v. BELIV LLC, Defendant.

21-cv-08134 (LJL)

United States District Court, S.D. New York

Signed November 9, 2022

Alexander J. Korolinsky, Law Office of Alexander J. Korolinsky, P.A., Miami, FL, Spencer Sheehan, Sheehan & Associates, P.C., Great Neck, NY, for Plaintiff.

Pieter Van Tol, H.B., III, Daniel Joseph Petrokas, Hogan Lovells U.S. LLP, New York, NY, for Defendant.

OPINION AND ORDER

LEWIS J. LIMAN, United States District Judge:

Plaintiff Kevin Kelly ("Plaintiff" or "Kelly") brings this putative class action against Beliv LLC ("Beliv" or "Defendant") alleging violations of New York General Business Law ("NYGBL") §§ 349 and 350; violations of the corresponding consumer fraud statutes of Connecticut and Massachusetts; violations of the Magnuson-Moss Warranty Act ("MMWA"); breaches of express warranty and the implied warranty of merchantability; as well as negligent misrepresentation, fraud, and unjust enrichment.

Defendant moves, pursuant to Federal Rule of Civil Procedure Rule 12(b)(6), for dismissal of the First Amended Class Action Complaint ("Complaint") on the grounds that it fails to state a claim upon which relief can be granted and that Plaintiff lacks standing to bring some of the claims alleged. Dkt. No. 23.

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 supplemented by the documents incorporated by reference therein, as true for purposes of the motion to dismiss.

Plaintiff purchased Nectar Petit (the "Product"), a juice-based beverage produced and marketed by Defendant, on one or more occasions from stores in New York, including Walmart, between 2019 and 2021. Dkt. No. 8 ¶¶ 1, 54-55, 61. The Product is described on its label as containing "No Preservatives." Id. ¶ 1. Market research indicates that many Americans prefer foods and drinks with "free from" claims because they believe such products are more natural, healthier, and less processed, and that they are willing to pay more for such products. Id. ¶¶ 2-5.

The Product's ingredient list identifies citric acid and ascorbic acid as two of the Product's ingredients. Id. ¶ 6. In its Overview of Food Ingredients, Additives, and Colors, the Food and Drug Administration ("FDA") has identified citric acid and ascorbic acid as "Names Found on Product Labels" that consumers should look for to determine if a food contains preservatives. Id. ¶ 11. Ascorbic acid is a modified form of Vitamin C used as a preservative. Id. ¶ 12. In 2010, the FDA issued a warning to a different food and beverage company, which identified both ascorbic acid and citric acid as chemical preservatives. Id. ¶ 13. That warning stated:

The 'Pineapple Bites' and 'Pineapple Bites with Coconut' products are further misbranded within the meaning of section 403(k) of the Act [21 U.S.C. 343(k)] in that they contain the chemical preservative[s] ascorbic acid and citric acid but their labels fail to declare these preservatives with a description of their functions.

Id.

The Product's ingredient list identifies ascorbic acid as an ingredient, but places the words "ascorbic acid" in parentheses after "Vitamin C," implying that the terms are equivalent: "Vitamin C (as Ascorbic Acid)." Id. ¶ 18. The FDA has authorized the use of ascorbic acid as a synonym for Vitamin C for purposes of describing a product's nutritional content, but it has not authorized it as a synonym for Vitamin C for purposes of an ingredient list. Id. ¶ 20. The ingredient list also identifies citric acid as an acidulant, a compound that confers a tart, sour, or acidic flavor to foods. Id. ¶¶ 15, 16. Neither ingredient is identified as a preservative in the ingredient list. Id. ¶ 21.

Plaintiff claims that the Product's label is misleading first because the "No Preservatives" representation is false due to the presence of ascorbic acid and citric acid, and second because it designates ascorbic acid and citric acid according to their non-preservative functions as Vitamin C and an acidulant, respectively. Id. ¶ 14. Plaintiff alleges that had he or the hypothetical members of his proposed class "known the truth" that the Product contained preservatives, they would not have purchased the product, or else would not have been willing to pay as much for it. Id. ¶ 30. Plaintiff bases this claim partially on his own knowledge of himself, and partially on market research studies showing that consumers highly value products that contain no preservatives or other additives. Id. ¶¶ 2-5. Plaintiff alleges as well that Defendant held itself out as knowledgeable about the Product by virtue of its prominence as an importer and manufacturer of this and similar products and its roots in the Latin American and Caribbean regions, thus establishing a relationship of trust between Defendant and its customers. Id. ¶ 95. Finally, Plaintiff claims that Defendant possessed knowledge of its own misrepresentations and decided to make them anyway, evincing fraudulent intent, id. ¶¶ 99-102, and that its misrepresentations unjustly enriched Defendant at the expense of consumers, id. ¶ 103.

Plaintiff seeks certification of a multi-state class to pursue this litigation, injunctive relief directing Defendant to correct its labeling, restitution and disgorgement of Defendant's wrongfully obtained profits, compensatory and punitive damages, and costs and expenses including attorneys' fees. Id. at 12-13.

PROCEDURAL HISTORY

Plaintiff filed a class action complaint on October 1, 2021, naming Kasim International Corporation as the sole defendant. Dkt. No. 1. On November 24, 2021, Plaintiff informed the Court that he had sued Kasim International erroneously and sought permission to amend the complaint, substituting Beliv as the defendant. Dkt. No. 6. On November 28, 2021, the Court granted Kelly leave to amend. Dkt. No. 7. Plaintiff filed the operative Complaint shortly thereafter. Dkt. No. 8.

On March 15, 2022, Defendant filed its motion to dismiss and supporting documentation. Dkt. Nos. 23-25. On March 29, 2022, Plaintiff filed a memorandum of law in opposition to the motion to dismiss, Dkt. No. 27, and on April 5, 2022, Defendant filed a reply memorandum of law and a supporting declaration, Dkt. Nos. 28-29.

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 (2d Cir. 1995) (quoting Scheuer v. Rhodes, 416 U.S. 232, 235-36, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974)).

A complaint must offer more than "labels and conclusions," "a formulaic recitation of the elements of a cause of action," or "naked assertion[s]" devoid of "further factual enhancement" in order to survive dismissal. Twombly, 550 U.S. at 555, 557, 127 S.Ct. 1955. The ultimate question is whether "[a] claim has facial plausibility, [i.e.,] the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678, 129 S.Ct. 1937. "Determining whether a complaint states a plausible claim for relief will . . . be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. at 679, 129 S.Ct. 1937. Put another way, the plausibility requirement "calls for enough fact to raise a reasonable expectation that discovery will reveal evidence [supporting the claim]." Twombly, 550 U.S. at 556, 127 S.Ct. 1955; see also Matrixx Initiatives, Inc. v. Siracusano, 563 U.S. 27, 46, 131 S.Ct. 1309, 179 L.Ed.2d 398 (2011).

DISCUSSION

Defendant moves to dismiss each of Plaintiff's claims, specifically (i) the NYGBL §§ 349 and 350 claims; (ii) the Massachusetts and Connecticut state law claims on behalf of a putative class of consumers in those states; (iii) Plaintiff's breach of warranty claims; and (iv) Plaintiff's claims for negligent misrepresentation, fraud, and unjust enrichment.¹ Dkt. No. 24 at 6-17. Defendant also argues that Plaintiff lacks standing to seek injunctive relief because he has not plausibly pleaded a likelihood of specific future harm and that all of the above claims be dismissed with prejudice, arguing that no amendments could be made to salvage any of Plaintiff's claims. Dkt. No. 42 at 17-19. The Court addresses each of these claims in turn.

I. New York General Business Law §§ 349 and 350

Defendant asks the Court to dismiss Plaintiff's NYGBL claims, arguing that a reasonable consumer would not be misled by the "No Preservatives" representation. Defendant argues that the "No Preservatives" label is true as the ingredients at issue have non-preservative functions in the Product, which the Product expressly identifies (identifying citric acid as an acidulant and ascorbic acid as a nutrient). Dkt. No. 24 at 7. Defendant also argues that Plaintiff has failed to allege that citric acid and ascorbic acid actually act as preservatives in the Product. Id. at 9.

Section 349 of the NYGBL prohibits "[d]eceptive acts or practices in the conduct of any business, trade or...