Patane v. Nestlé Waters N. Am., Inc.

• Decision Date: 17 May 2018
• Docket Number: No. 3:17–cv–01381 (JAM),3:17–cv–01381 (JAM)
• Parties: Mark J. PATANE, et al., Plaintiffs, v. NESTLÉ WATERS NORTH AMERICA, INC., Defendant.
• Court: U.S. District Court — District of Connecticut

314 F.Supp.3d 375

Mark J. PATANE, et al., Plaintiffs,

v.NESTLÉ WATERS NORTH AMERICA, INC., Defendant.

No. 3:17–cv–01381 (JAM)

United States District Court, D. Connecticut.

Signed May 17, 2018

Alexander E. Barnett, Pro Hac Vice, Cotchett, Pitre & McCarthy, LLP, Y. Gloria Park, Pro Hac Vice, Susman Godfrey L.L.P, New York, NY, Alexander H. Schmidt, Esq., Pro Hac Vice, Colts Neck, NJ, Craig A. Raabe, Christopher M. Barrett, Mark P. Kindall, Robert A. Izard, Jr., Izard, Kindall & Raabe LLP, West Hartford, CT, Oleg Elkhunovich, Pro Hac Vice, Amanda K. Bonn, Pro Hac Vice, Steven G. Sklaver, Susman Godfrey L.L.P, Pro Hac Vice, Los Angeles, CA, Steven N. Williams, Pro Hac Vice, V. Chai Oliver Prentice, Joseph Saveri Law Firm, San Francisco, CA, for Plaintiffs.

Craig A. Ollenschleger, Pro Hac Vice, Jeffrey M. Garrod, Orloff Lowenbach Stifelman & Siegel, Roseland, NJ, Thomas B. Mayhew, Pro Hac Vice, Farella, Braun & Martel LLP, San Francisco, CA, Jonathan B. Tropp, Day Pitney LLP, Stamford, CT, for Defendant.

ORDER GRANTING DEFENDANT'S MOTION TO DISMISS

Jeffrey Alker Meyer, United States District JudgeIn these consolidated actions, plaintiffs allege that the marketing of "Poland Spring" water is an enormous fraud. They claim that Poland Spring water products are fraudulently labeled and sold as "spring water" despite not meeting the requirements for "spring water" as defined by law. Defendant Nestlé Waters North America Inc. ("Nestlé") has moved to dismiss the complaints. Although I reject many of Nestlé's arguments, I agree with Nestlé that plaintiffs' claims are all preempted by federal law. Accordingly, I will grant the motion to dismiss and dismiss the complaint in this action as well as the complaint in all but one of the consolidated actions.¹

BACKGROUND

The principal complaint in these consolidated class actions has been filed in the docket of Patane v. Nestlé Waters North America, Inc. , 3:17–cv–01381(JAM). It alleges that Nestlé has long marketed its ubiquitous Poland Spring water products as "100% Natural Spring Water," despite the fact that it is not "spring water" as that term is very specifically defined by federal law.

By way of background, the federal Food, Drug and Cosmetic Act (FDCA) establishes basic definitions (known as "standards of identity") for food products and prohibits the false labeling of such food products.² In accordance with its regulatory authority under the FDCA, the U.S. Food and Drug Administration (FDA) has promulgated a detailed regulatory definition of "spring water" that distinguishes it from other kinds of water that may be marketed for public sale. See 21 C.F.R. § 165.110(a)(2)(vi).

According to the FDA, if a water product is to be labeled and sold as "spring water," the water must be "derived from an underground formation from which water flows naturally to the surface of the earth," and there must be a "natural force causing the water to flow to the surface through a natural orifice."Ibid. The FDA's regulation further provides that "spring water" can be "collected only at the spring or through a bore hole tapping the underground formation feeding the spring," and that if it is collected "with the use of an external force," the water must be "from the same underground stratum as the spring, as shown by a measurable hydraulic connection using a hydrogeologically valid method between the bore hole and the natural spring, and shall have all the physical properties, before treatment, and be of the same composition and quality, as the water that flows naturally to the surface of the earth." Ibid.

Plaintiffs allege that Nestlé sells about a billion gallons of Poland Spring water every year but that not one drop of it is actually "spring water" within the FDA's definition. Plaintiffs insist that Poland Spring water is ordinary groundwater and surface water that Nestlé draws from a series of artificial springs in Maine. The bulk of plaintiffs' 325–page complaint is devoted to detailing how the water produced at eight specific Poland Spring sites in Maine does not meet the FDA's "spring water" requirements. Doc. # 1 at 65–279.

According to plaintiffs, Nestlé labels its Poland Spring water as "spring water" so that it may fraudulently charge consumers a higher price than they would be willing to pay for non-spring water products. Plaintiffs have allegedly relied on Nestlé's mislabeling of its water and overpaid for Poland Spring water.

Although the crux of the complaint is that Poland Spring water does not comply with federal law, it is undisputed that the FDCA does not give rise to a private federal cause of action for violation of the FDA's "spring water" regulation. Accordingly, the complaint alleges only state law causes of action. The first two counts of the complaint allege general state common law claims for fraud and breach of contract on behalf of a nationwide class whose members have purchased Poland Spring water since November 5, 2003. The next nine counts on behalf of individual state sub-classes allege violations of various consumer fraud and unfair trade practice statutes of Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, and Vermont.³ All of these counts of the complaint are premised on a common allegation that Poland Spring water is mislabeled as "spring water" in violation of federal law. Nestlé has filed a motion to dismiss plaintiffs' claims for multiple reasons I will discuss below.

DISCUSSION

Nestlé moves to dismiss under Fed. R. Civ. P. 12(b)(1) for lack of subject matter jurisdiction and under Fed. R. Civ. P. 12(b)(6) for failure to state a claim. The standard that governs such a motion is well established: a complaint may not survive unless it alleges facts that taken as true give rise to plausible grounds to sustain the Court's subject matter jurisdiction and to sustain plaintiffs' claims for relief. See, e.g., Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) ; Kim v. Kimm , 884 F.3d 98, 103 (2d Cir. 2018) ; Lapaglia v. Transamerica Cas. Ins. Co. , 155 F.Supp.3d 153, 155–56 (D. Conn. 2016). Because a federal court should ordinarily resolve any doubts about the existence of subject matter jurisdiction prior to considering the merits of a complaint, see, e.g., Singh v. United States Citizenship & Immigration Servs. , 878 F.3d 441, 445 (2d Cir. 2017), I will first consider Nestlé's arguments that challenge the Court's jurisdiction before turning to Nestlé's merits arguments.

Constitutional Standing

Nestlé first argues that plaintiffs have no standing as required to sustain this Court's jurisdiction over the complaint. In accordance with the Constitution's "case-or-controversy" requirement, a federal court lacks jurisdiction over a lawsuit unless a plaintiff alleges a concrete and particularized injury-in-fact that is fairly traceable to a defendant's wrongful conduct and redressable by a court order. See, e.g., Spokeo, Inc. v. Robins , ––– U.S. ––––, 136 S.Ct. 1540, 1547, 194 L.Ed.2d 635 (2016) ; Crupar–Weinmann v. Paris Baguette Am., Inc. , 861 F.3d 76, 79 (2d Cir. 2017).

The allegations here easily suffice to meet the requirements for constitutional standing. Plaintiffs allege that they relied on Nestlé's representation that Poland Spring water was "100% Natural Spring Water," and because of this reliance they paid a higher price for Poland Spring water than they would have paid for alternative water products.⁴ If Nestlé indeed mislabeled its water as plaintiffs claim, it is plausible to conclude that plaintiffs chose to buy Poland Spring water and paid more for it than for non-spring-water alternatives. It is likewise plausible to conclude that Nestlé was well aware of the likely effect that labeling its water as "100% Natural Spring Water" would have on consumer preferences. The facts alleged plausibly establish an injury-in-fact caused by Nestlé's alleged wrongful conduct and redressable by an award of damages. See, e.g., Estrada v. Johnson & Johnson , 2017 WL 2999026, at *13 (D.N.J. 2017) (collecting cases); Kacocha v. Nestlé Purina Petcare Co. , 2016 WL 4367991, at *7 (S.D.N.Y. 2016).

Nestlé argues that plaintiffs could not have been deceived because it has been sued many times before on the same grounds. According to Nestlé, these prior lawsuits and attendant media coverage put plaintiffs on notice that Poland Spring's "spring water" labels were false. But the possibility that any prior lawsuits or media coverage put plaintiffs on notice of anything is a fact question that is not suitable for me to resolve at the pleading stage on a motion to dismiss. Moreover, Nestlé's argument ignores Nestlé's own steadfast denials in prior lawsuits that it was mislabeling Poland Spring water. Nestlé cannot have it both ways: that plaintiffs somehow "knew" Nestlé's labels were false but that Nestlé's labels were not in fact false. Plaintiffs have standing to maintain their claims.⁵

The Rooker–Feldman Doctrine

Nestlé next argues that the Court lacks subject matter jurisdiction because of the Rooker–Feldman doctrine. "Rooker–Feldman bars the federal courts from exercising jurisdiction over claims ‘brought by state-court losers complaining of injuries caused by state-court judgments rendered before the district court proceedings commenced and inviting district court review and rejection of those judgments.’ " Sykes v. Mel S. Harris & Assocs. LLC , 780 F.3d 70, 94 (2d Cir. 2015) (quoting Exxon Mobil Corp. v. Saudi Basic Indus. Corp. , 544 U.S. 280, 284, 125 S.Ct. 1517, 161 L.Ed.2d 454 (2005) ).

According to Nestlé, plaintiffs are in essence complaining about an injury caused by Nestlé's settlement in November of 2003 of a similar class action lawsuit that was filed in a state court of Illinois. See Doc. # 53–2 at 5 (Ramsey v. Nestlé Waters N. Am. , No. 03 CHK 817 (Ill. Cir. Ct., Nov. 5, 2003) (final judgment and order of dismissal with settlement agreement) ). That class action—referred to by the parties as "the Ramse...