Campbell v. Freshbev LLC
Campbell v. Freshbev LLC
Opinion of the Court
Plaintiff Gerard Campbell brings this class action based on diversity jurisdiction under the Class Action Fairness Act
I
Plaintiff allegedly bought several juices manufactured and sold by Freshbev at a store operated by Whole Foods,
The labels are as follows:
A. Out-of-State Class Members
Defendants argue that this Court lacks personal jurisdiction over plaintiff's proposed out-of-state class members following the holding in Bristol-Myers Squibb Co. v. Sup. Ct. of Cal. , --- U.S. ----,
*337Some district courts have declined to extend the logic of Bristol-Myers . See Sloan v. General Motors LLC ,
In any event, plaintiff has not yet brought a motion to certify a nationwide class. Until he does so, the issue is not squarely before the Court. Given the unsettled nature of the law following Bristol-Myers , the Court will defer on this question until the plaintiff brings a motion for class certification, if he chooses to do so.
B. Standing for Injunctive Relief
Defendants argue plaintiff lacks standing for injunctive relief because he now knows the truth about the juice and therefore cannot be fooled again. For plaintiff to have Article III standing, he "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." Spokeo v. Robins , --- U.S. ----,
"The Second Circuit has not directly addressed whether plaintiffs alleging claims of false or misleading advertising have standing to seek injunctive relief where the action the plaintiffs seek to enjoin is still ongoing." Sitt v. Nature's Bounty, Inc. ,
However, the Ninth Circuit recently held plaintiffs do have standing so long as they plead a future desire to buy the product. In Davidson v. Kimberly-Clark Corp. ,
The Court finds Davidson persuasive. The parties provide no Second Circuit cases on point,
However, plaintiff has not pleaded such an injury. He alleges only that he has purchased the product in the past and, even in his TAC, does not plead that he intends or desires to purchase FreshBev's juices in the future.
C. Defendants' 12(b)(6) Motions
1. GBL 349 and 350
Plaintiff challenges four claims on the labels of defendants' juices: that the juices are (1) unpasteurized; (2) cold-pressed; (3) fresh; and, (4) for the Cranberry Apple juice, that the name "Cranberry Apple" implies that there is more cranberry juice than apple in the blend. Defendants argue that federal law preempts plaintiff's claims and that the statements on the labels are accurate.
Under Federal Rule of Civil Procedure 12(b)(6), a party may move to dismiss a complaint that "fail[s] to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). To survive, the complaint must plead "enough facts to state a claim to relief that is plausible on its face," Bell Atl. Corp. v. Twombly ,
*339In the case of deceptive advertising claims under GBL §§ 349 and 350, a plaintiff must show that "defendant has engaged in (1) consumer-oriented conduct that is (2) materially misleading and that (3) plaintiff suffered injury as a result of the allegedly deceptive act or practice." Orlander v. Staples, Inc. ,
Defendants challenge the second element, arguing that their label claims are not "materially misleading." This element is "objective," meaning "the alleged act must be 'likely to mislead a reasonable consumer acting reasonably under the circumstances.' " Cohen v. JP Morgan Chase & Co. ,
a. "Unpasteurized"
Plaintiff first alleges that the claim "unpasteurized" on defendants' labels is misleading because the juices are treated with high pressure processing ("HPP"), which plaintiff characterizes as equivalent to pasteurization. Defendants counter that Food and Drug Administration ("FDA") regulations treat pasteurization and HPP as two separate treatments, and the FDA allows the "unpasteurized" label on juice treated with HPP, thereby preempting plaintiff's claims.
Under the Supremacy Clause, state laws are invalid if they "interfere with, or are contrary to the laws of Congress...." Gibbons v. Ogden , 22 U.S. (9 Wheat.) 1,
The Federal Food, Drug, and Cosmetic Act ("FDCA") grants the FDA power to regulate food and expressly bans mislabeled food in interstate commerce. Koenig , 995 F.Supp.2d at 278. The Nutrition Labeling and Education Act ("NLEA") creates the regulatory framework in which the FDA regulates food labels. Id. The NLEA expressly preempts state laws that create a labeling requirement "not identical to" federal requirements.
On March 3, 2004, the FDA passed nonbinding guidance for the juice industry on treating juice safely called the "Juice Hazard Analysis Critical Control Point ("HACCP") Hazard and Controls Guidance" (the "Guidance").
Pasteurization is the primary method for preventing pathogen contamination of juice. The Guidance defines pasteurization as "a heat treatment sufficient to destroy vegetative cells of pathogens." Guidance, § II. Alternatively, high pressure processing, or "HPP," destroys pathogens via pressure. Guidance, § V.C.5.33. The Guidance describes HPP as a "Non-Thermal Treatment[ ] for Juice." Guidance, § V.C.4.5. In a chart describing "Possible control measures" for pathogens, the Guidance separately lists pasteurization and HPP.
The FDA also issued a 1998 Proposed Rule that tentatively concluded that "[m]anufacturers who wish to label their products voluntarily with the term 'pasteurized' or with the term 'unpasteurized,' along with the warning statement, may do so under the proposed rule, provided that these terms are used in a truthful and nonmisleading manner." Food Labeling: Warning and Notice Statements; Labeling of Juice Products, 63 FR 20486-01, 20488 (Apr. 24, 1998).
The agency ... tentatively concludes that labeling a product as "unpasteurized" may be misleading in that the term does not distinguish between a product that may contain harmful pathogens that could result in serious disease and one that is treated using a method (other than pasteurization ) that is capable of achieving a 5-log reduction in the target pathogen. A product that is processed by a means other than pasteurization to achieve a 5-log reduction in the target pathogen does not have the potential microbiological hazard, and thus, would not require a warning statement, yet that product could not be labeled "pasteurized." Without additional information , the consumer would not know how to interpret the label with the term "unpasteurized."
In short, the FDA ruled that an unpasteurized label can be used in a "truthful and nonmisleading fashion,"
Here, the labels of the Cranberry Apple and Pineapple juices purchased by plaintiff explain that the juices were treated with pressure. This provides the consumer with the requisite additional information. Therefore, the "unpasteurized" labels on the juice products are not false or misleading, and plaintiff's claims regarding this term are preempted.
However, the Cranberry juice label, at least as presented in the TAC, does not explain that it is treated with pressure.
b. "Cold-Pressed"
Plaintiff next alleges that the "cold-pressed" label on the three juice products is misleading because the juices are treated with HPP after being cold-pressed. Coldpressing, as defined by plaintiff:
entails the shredding of fruits and vegetables into a pulp, using a steel rotating disc. The fruits and vegetables are loaded into a large hopper feeding tube and falls [sic] into a filter bag. Multiple tons of hydraulic pressure are applied to the shredded produce. This causes juice and water from the produce to drip into a collection tray, while fiber and pulp remains in the filter bag. This liquid is bottled and labeled depending on the specific product type.
TAC ¶ 19.
Plaintiff argues a reasonable consumer would interpret a "cold-pressed" label to imply that nothing had been done to the juice except cold-pressing. Plaintiff's claim is implausible. There is no "only" or "exclusively" modifier before "cold-pressed" to indicate that the juice has been subjected to no other process.
c. "Fresh"
Plaintiff next challenges defendants' representation that the product is "fresh." The parties agree that
HPP is a form of preservation. Therefore, at face value,
Defendants argue that the regulation provides an exception if "the term [fresh] does not suggest or imply that a food is unprocessed or unpreserved."
In this context, juice treated with HPP cannot be described as fresh because juice is sold both with and without processing, so the term "fresh" would imply that the juice is unprocessed. See Final Rule,
Defendants also argue that the labels' inclusion of discussions of "pressure" would resolve any consumer confusion about the "fresh" claim. However, because the term "fresh" is misleading in isolation, it is not clear as a matter of law that confusion generated by the misuse of the term would be resolved by additional statements elsewhere on the label. See Goldemberg v. Johnson & Johnson Consumer Cos., Inc. ,
Whether a reasonable consumer would be misled by the term "fresh" combined with additional language regarding the application of pressure is a question for the factfinder. Therefore, plaintiff has successfully stated a claim with regard to this term.
d. "Cranberry Apple"
Finally, plaintiff challenges the name "Cranberry Apple" as applied to FreshBev's Cranberry Apple juice. According to plaintiff, this name implies that the product has more cranberry juice than apple, but the ingredient statement reveals that it actually contains more apple juice than cranberry. Defendants argue that the name of the product is not intended to be an expression of the proportionality of the juices, and regardless, any confusion could be resolved by reading the ingredients list.
The FDA has again provided guidance.
If the product is a diluted multiple-juice beverage or blend of single-strength juices and names, other than in the ingredient statement, more than one juice, then the names of those juices, except in the ingredient statement, must be in descending order of predominance by volume unless the name specifically *343shows that the juice with the represented flavor is used as a flavor (e.g., raspberry-flavored apple and pear juice drink).
Defendants' label violates this regulation because it does not list the predominant apple juice before cranberry. Nor does it contain the saving caveat "flavored." Because it violates FDA labeling requirements, a reasonable consumer may be misled into believing that Cranberry Apple juice has more cranberry juice than apple.
2. Plaintiff's Fraud Claim
Plaintiff also pleads a claim for common law fraud regarding defendants' unpasteurized claim only. Defendants argue plaintiff lacks standing, or alternatively, fails to state this claim against Whole Foods. However, both of defendants' arguments are essentially the same-they argue that plaintiff has not alleged that Whole Foods itself made a misleading statement, and therefore, there is no injury traceable to Whole Foods, nor can plaintiff satisfy the elements of the common law fraud test.
The Court must address the standing question first. Steel Co. v. Citizens for a Better Env't ,
"To state a claim for fraud under New York law, a plaintiff must allege (1) a material misrepresentation or omission of fact; (2) which the defendant knew to be false; (3) which the defendant made with the intent to defraud; (4) upon which the plaintiff reasonably relied; and (5) which caused injury to the plaintiff." Fin. Guar. Ins. Co. v. Putnam Advisory Co., LLC ,
*344Boiled down, plaintiff's argument is essentially that Whole Foods is fraudulently misrepresenting the juice as unpasteurized by failing to put an unpasteurized warning label on the juice. This is illogical. If anything, Whole Foods's decision not to place an unpasteurized sticker on the product shows it is not making such a representation.
And while plaintiffs can plead intent to defraud generally, "this leeway is not a 'license to base claims of fraud on speculation and conclusory allegations.' "
Therefore, plaintiff has not effectively pleaded that Whole Foods had an intent to defraud consumers, and his common law fraud claim is dismissed.
III
Plaintiff's claim for injunctive relief is dismissed. Plaintiff's claims with respect to the "cold-pressed" labels and the "unpasteurized" labels on the Cranberry Apple and Pineapple juices are dismissed. Plaintiff's common law fraud claim is dismissed. Plaintiff may pursue his GBL §§ 349 and 350 claims with respect to the "fresh" and "Cranberry Apple" labels and the "unpasteurized" label on the Cranberry juice.
SO ORDERED
Plaintiff is a citizen of New York, and defendant Whole Foods is a Delaware corporation. Plaintiff alleges thousands of potential class members. The amount in controversy is over $5 million. See
Plaintiff brings this complaint against Whole Foods under a "private label" theory, alleging that at least one of the juice brands, the Fresh Juice line, was created exclusively for Whole Foods. Though it could have been better pleaded, the essence of this argument is that Whole Foods exercises control over its private label products sufficient to support a cause of action. See Cohn v. Kind, LLC ,
Plaintiff also sporadically complains about other Freshbev juices; however, these are the only three juice products he claims he purchased. See TAC at 62.
At oral argument, there was considerable confusion on the part of the defendants as to which labels were implicated by plaintiff's complaint. In particular, defendants' counsel appeared unaware that plaintiff alleged claims related to the Ripe Juice 12 Cranberry Unsweetened product (i.e. the "Cranberry juice"). Plaintiff's allegations regarding this product were made in ¶¶ 4, 12, 13, 17, 26, 29, 31, and 62 of the TAC.
The Court similarly defers on defendants' other challenges to plaintiff's purported class until the issue of class certification is squarely presented. The viability of plaintiff's proposed out-of-state class members does not necessarily affect subject matter jurisdiction because the minimal diversity between the named plaintiff and out-of-state defendants will not be affected. See
Nicosia v. Amazon.com, Inc. ,
At oral argument, plaintiff's counsel acknowledged he has not alleged future injury.
For § 350 claims, plaintiffs must also plead reliance. See Ackerman v. Coca-Cola. Co. ,
Available at https://www.fda.gov/food/guidanceregulation/guidancedocumentsregulatoryinformation/juice/ucm072557.
FDA regulations often refer to effective pathogen control as achieving a 5-log reduction in pathogens.
The proposed rule was later adopted in a final rule issued on July 9, 1998. Food Labeling: Warning and Notice Statement: Labeling of Juice Products, 63 FR 37030-01 (July 8, 1998).
After oral argument, defendants submitted a graphic by letter that they claim represents the full label. This graphic includes a disclaimer regarding pressure. However, for the purpose of 12(b)(6), the Court can only consider the four corners of the complaint. See Friedl v. City of New York ,
Plaintiff's convoluted analogy to grapes, vinegar, and wine does not aid him. Grapes, wine, and vinegar are three entirely different products. Cold-pressed juice and juice that is both cold-pressed and treated with HPP are the same product: juice.
Furthermore, the Cranberry Apple and Pineapple labels also explain that the juice product was treated with pressure, which would instantly dispel any possible consumer confusion.
At oral argument, defendants argued for the first time that the Court cannot consider FDA regulations because they do not create a private right of action. However, defendants' own briefs rely heavily on the FDA regulations, including
This is different than the additional information provided in the pasteurization context because the FDA rule regarding pasteurization specifically states that "additional information" would dispel consumer confusion. 1998 Proposed Rule at 20488.
The ingredient list on the back is not sufficient to overcome this misleading statement on the front label. "[T]he FDA [does not] require[ ] an ingredient list so that manufacturers can mislead consumers and then rely on the ingredient list to correct those misrepresentations and provide a shield for liability for the deception." Williams v. Gerber Prods. Co. ,
Whole Foods sells a separate line of unpasteurized juices not at issue in this lawsuit. These juices are labeled with a sticker informing customers of the health hazards of drinking unpasteurized juices.
"It is firmly established in our cases that the absence of a valid (as opposed to arguable) cause of action does not implicate subject-matter jurisdiction...." Steel Co. ,
In the TAC, plaintiff also alleges FreshBev acted fraudulently based on statements made in a patent application, but plaintiff abandoned this argument in his opposition. Regardless, these statements, without more, fall far short of the Rule 9(b) requirement to plead fraud with particularity.
Reference
- Full Case Name
- Gerard CAMPBELL, individually on behalf of himself and all others similarly situated v. FRESHBEV LLC, and Whole Foods Market Group, Inc.
- Cited By
- 17 cases
- Status
- Published