Troncoso v. TGI Friday's Inc.

SOLANGE TRONCOSO, on behalf of herselfand others similarly situated, Plaintiff, v. TGI FRIDAY'S INC., INVENTURE FOODS,INC., and UTZ QUALITY FOODS, LLC, Defendants.

19 Civ. 2735 (KPF)

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

June 8, 2020

OPINION AND ORDER

KATHERINE POLK FAILLA, District Judge:

Plaintiff Solange Troncoso purchased a bag of snack chips labeled "TGI Fridays Potato Skins Snacks," believing the chips to contain real potato skins. She later learned, to her dismay, that they did not. This class action lawsuit followed. Specifically, Plaintiff sued Inventure Foods, Inc. ("Inventure"), the company that manufactures the snack chips; Utz Quality Foods, LLC ("Utz"), the parent company of Inventure; and TGI Friday's Inc. ("TGIF"), which licenses its trademark and brand name to Inventure for display on the snack chips (together, "Defendants"). Under a theory of diversity jurisdiction, Plaintiff asserts state-law claims for false and deceptive advertising under New York General Business Law ("GBL") §§ 349 and 350, as well as a claim for common-law fraud. Defendants move to dismiss the complaint for failure to state a claim pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, or in the alternative, to dismiss Utz and TGIF as Defendants. Defendants also move to dismiss Plaintiff's claim seeking injunctive relief for lack of subject matter jurisdiction pursuant to Rule 12(b)(1). For the reasons set forth in the remainder of this Opinion, Defendants' motion to dismiss is granted with respect to Plaintiff's claims against Utz and TGIF, and granted with respect to Plaintiff's claim for injunctive relief, but is otherwise denied.

BACKGROUND¹

A. Factual Background

Plaintiff is a resident of New York. (Am. Compl. ¶ 23). Inventure is a corporation that is incorporated in Delaware and headquartered in Arizona. (Id. at ¶ 27). Utz is a corporation that is incorporated in Delaware and headquartered in Pennsylvania. (Id. at ¶ 30). Inventure operates as a wholly owned subsidiary of Utz. (Id. at ¶ 29). TGIF is a corporation that is incorporated in New York and headquartered in Dallas. (Id. at ¶ 25).

TGIF is a restaurant chain that sells an appetizer named "Potato Skins" as an item on its menu. (Am. Compl. ¶¶ 8, 9). Each individual Potato Skin begins with a thick slice of a potato, including the flesh and peel of the potato. (Id. at ¶¶ 8-10, 12).

Inventure manufactures and produces a line of snack chips (the "snack chips"), the packaging of which displays the label "TGI Fridays Potato Skin Snacks," along with a description of the flavor of the particular snack chipscontained therein, e.g., "Bacon Ranch Flavor." (Am. Compl. ¶¶ 2, 28). TGIF licenses its trademarked brand name to Inventure for marketing of the snack chips, and the trademark is displayed on the packaging of the chips. (Id. at ¶ 26).

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(Id. at Ex. A).

On June 30, 2018, Plaintiff purchased a bag of the snack chips at a New York gas station for $1.99. (Am. Compl. ¶¶ 23, 24). In making her decision to purchase the snack chips at that price, Plaintiff relied on the label on the packaging. (Id.). This packaging caused her to believe that the snack chips were "derived from" TGIF's Potato Skins appetizer, "consist[ed] of" potato skins, and contained potato skins as an ingredient. (Id. at ¶¶ 24, 35). Plaintiff's belief that the snack chips contained potato skins was reinforced by: (i) her knowledge of TGIF's Potato Skins appetizer; and (ii) the picture on the front of the packaging, which picture she understood to display potato skins. (Id. at¶¶ 3, 24, 34). Plaintiff claims that TGIF sells the snack chips on its Amazon.com product page, along with a representation that the chips contain "Real Potato Skins," but she does not allege that she saw this product page before she purchased the chips. (Id. at ¶ 54).

Since purchasing the snack chips in 2018, Plaintiff alleges that she has learned that the chips do not consist of potato skins, nor do they contain potato skins as an ingredient. (Am. Compl. ¶¶ 5, 24). The only potato-based ingredients in the snack chips are "potato flakes" and "potato starch," neither of which, Plaintiff alleges, contains the peels from potatoes. (Id. at ¶¶ 7, 36-49). Plaintiff claims that, had she known that the snack chips do not contain potato skins, she would not have purchased the product or would not have paid the price premium charged. (Id. at ¶¶ 12, 24). Since learning that the snack chips do not contain potato skins, Plaintiff has ceased to purchase the product; she further relates that she would not rely on the truthfulness of representations regarding the snack chips, absent corrective changes to their packaging and labeling. (Id. at ¶ 24).

B. Procedural Background

Plaintiff filed her original Complaint on March 27, 2019. (Dkt. #1). Defendants filed a letter on May 23, 2019, seeking a pre-motion conference concerning their anticipated motion to dismiss. (Dkt. #10). The Court granted Defendants' application for a pre-motion conference on May 29, 2019, and the conference was held on June 25, 2019. (Dkt. #14; Minute Entry for June 25, 2019 Proceedings). During that conference, the Court granted Plaintiff leave tofile an amended complaint to address some of the issues raised in Defendants' pre-motion letter. (Minute Entry for June 25, 2019 Proceedings).

Plaintiff filed her Amended Complaint on July 11, 2019. (Dkt. #17). On August 12, 2019, Defendants notified the Court that they wished to file a motion to dismiss the Amended Complaint. (Dkt. #23). On August 19, 2019, the parties presented a proposed briefing schedule concerning Defendants' anticipated motion to dismiss that the Court adopted the same day. (Dkt. #24, 25). Defendants filed their motion to dismiss, with an accompanying memorandum of law, on September 17, 2019. (Dkt. #26). Plaintiff filed her opposition papers on October 16, 2019. (Dkt. #27). Defendants filed their reply brief on October 29, 2019. (Dkt. #28).

DISCUSSION

A. The Court Grants Defendants' Rule 12(b)(1) Motion to Dismiss Plaintiff's Claim for Injunctive Relief

Among other forms of relief, Plaintiff seeks to enjoin Defendants from labeling, packaging, or marketing the snack chips as "Potato Skins" pursuant to GBL § 349 (Am. Compl. ¶¶ 84-93). Defendants counter that Plaintiff lacks standing to seek injunctive relief, and moves to dismiss this claim for lack of subject matter jurisdiction pursuant to Federal Rule of Procedure 12(b)(1). (Def. Br. 21-23).

1. Motions Under Federal Rule of Civil Procedure 12(b)(1)

Rule 12(b)(1) permits a party to move to dismiss a complaint for "lack of subject-matter jurisdiction." Fed. R. Civ. P. 12(b)(1). "A case is properly dismissed for lack of subject matter jurisdiction under Rule 12(b)(1) when thedistrict court lacks the statutory or constitutional power to adjudicate it." Lyons v. Litton Loan Servicing LP, 158 F. Supp. 3d 211, 218 (S.D.N.Y. 2016) (quoting Makarova v. United States, 201 F.3d 110, 113 (2d Cir. 2000)).

The Second Circuit has identified two types of Rule 12(b)(1) motions: facial and fact-based. See Carter v. HealthPort Techs., LLC, 822 F.3d 47, 56-57 (2d Cir. 2016); see also Katz v. Donna Karan Co., L.L.C., 872 F.3d 114, 119 (2d Cir. 2017). A facial Rule 12(b)(1) motion is one "based solely on the allegations of the complaint or the complaint and exhibits attached to it." Carter, 822 F.3d at 56. A plaintiff opposing such a motion bears "no evidentiary burden." Id. Instead, to resolve a facial Rule 12(b)(1) motion, a district court must "determine whether [the complaint and its exhibits] allege[ ] facts that" establish subject matter jurisdiction. Id. (quoting Amidax Trading Grp. v. S.W.I.F.T. SCRL, 671 F.3d 140, 145 (2d Cir. 2011) (per curiam)). And to make that determination, a court must accept the complaint's allegations as true "and draw[ ] all reasonable inferences in favor of the plaintiff." Id. at 57 (internal quotation marks and citation omitted).

"Alternatively, a defendant is permitted to make a fact-based Rule 12(b)(1) motion, proffering evidence beyond the complaint and its exhibits." Carter, 822 F.3d at 57; see also MMA Consultants 1, Inc. v. Rep. of Peru, 719 F. App'x 47, 49 (2d Cir. 2017) (summary order) (defining fact-based Rule 12(b)(1) motion as one where "the defendant puts forward evidence to challenge the factual contentions underlying the plaintiff's assertion of subject-matter jurisdiction"). "In opposition to such a motion, [a plaintiff] must come forwardwith evidence of their own to controvert that presented by the defendant, or may instead rely on the allegations in the[ir p]leading if the evidence proffered by the defendant is immaterial because it does not contradict plausible allegations that are themselves sufficient to show standing." Katz, 872 F.3d at 119 (internal citations and quotations omitted). If a defendant supports his fact-based Rule 12(b)(1) motion with "material and controverted" "extrinsic evidence," a "district court will need to make findings of fact in aid of its decision as to subject matter jurisdiction." Carter, 822 F.3d at 57.

2. Plaintiff Lacks Standing to Pursue Injunctive Relief

Federal courts are courts of limited jurisdiction, "and lack the power to disregard such limits as have been imposed by the Constitution or Congress." Platinum-Montaur Life Scis., LLC v. Navidea Biopharmaceuticals, Inc., 943 F.3d 613, 616 (2d Cir. 2019). Article III of the Constitution "limits the jurisdiction of federal courts to 'Cases' and 'Controversies,'" thereby "restrict[ing] the authority of federal courts to resolving 'the legal rights of litigants in actual controversies.'" Genesis Healthcare Corp. v. Symczyk, 569 U.S. 66, 71 (2013) (internal quotation marks omitted) (quoting Valley Forge Christian College v. Americans for Separation of Church and State, Inc., 454 U.S. 471 (1982)). The "Cases and Controversies" requirement places the burden on "those who invoke the...