Sharpe v. A&W Concentrate Co.

• Decision Date: 23 August 2020
• Docket Number: 19-cv-768 (BMC)
• Parties: Lashawn SHARPE, Jim Castoro and Christine Cooney, individually and on behalf of all others similarly situated, Plaintiffs, v. A&W CONCENTRATE COMPANY and Keurig Dr Pepper Inc., Defendants.
• Court: U.S. District Court — Eastern District of New York

481 F.Supp.3d 94

Lashawn SHARPE, Jim Castoro and Christine Cooney, individually and on behalf of all others similarly situated, Plaintiffs,

v.A&W CONCENTRATE COMPANY and Keurig Dr Pepper Inc., Defendants.

19-cv-768 (BMC)

United States District Court, E.D. New York.

Signed August 23, 2020

Filed August 24, 2020

George Volney Granade, II, Reese LLP, Los Angeles, CA, Michael Robert Reese, Sue Jung Nam, Reese LLP, New York, NY, Spencer I. Sheehan, Sheehan & Associates, P.C., Great Neck, NY, for Plaintiff Lashawn Sharpe.

Sue Jung Nam, Reese LLP, New York, NY, for Plaintiffs Jim Castoro, Christine Cooney.

Anthony Peter Badaracco, Elizabeth Rozon-Baksh, Dorsey & Whitney LLP, New York, NY, Creighton Magid, Pro Hac Vice, Dorsey & Whitney LLP, Washington, DC, for Defendants.

MEMORANDUM DECISION AND ORDER

COGAN, District Judge.

This is a putative class action brought under New York's consumer protection law. Plaintiffs are purchasers of defendants’ root beer and cream soda beverages (collectively "the products"). They allege that defendants have misleadingly stated on the front of the products’ labels that the beverages are "MADE WITH AGED VANILLA," even though the vanilla flavor comes predominantly – if not exclusively – from an artificial, synthetic ingredient called ethyl vanillin. Plaintiffs claim that consumers interpret defendants’ representation to mean that the characterizing flavoring derives from the vanilla plant, not a cheap inferior substitute for the natural substance. Before me is defendants’ motion to dismiss the complaint under Fed. R. Civ. P. 12(b)(6) on two grounds: (1) that plaintiffs lack standing for injunctive relief; and (2) that a reasonable consumer cannot be misled because the products contain real vanilla and are conspicuously labeled as "Natural and Artificially Flavored."

The motion is granted in part and denied in part. Defendants’ motion to dismiss plaintiffs’ request for injunctive relief for lack of standing is granted. But plaintiffs have adequately alleged that the "MADE WITH AGED VANILLA" representation on the front of defendants’ packaging communicates to the reasonable consumer the false message that the vanilla flavoring comes from real vanilla, when in reality, the product contains no "aged vanilla" whatsoever. The complaint reiterates that, even if the products contain any aged vanilla, "it is in trace or de minimis amounts not detectable by advanced scientific means." Therefore, defendants’ misleading message that the drink contains "aged vanilla" is not dispelled by the information that the beverages are "Natural and Artificially Flavored," which fails to communicate that the quantity of the artificial flavoring far exceeds the quantity of natural vanilla. Because plaintiffs have stated sufficient facts to make out claims of violations under New York General Business Law §§ 349 and 350 and unjust enrichment, defendants’ motion to dismiss those claims is denied.

Defendants also seek reconsideration as to sanctions I imposed upon them for needlessly multiplying motion practice. This motion is granted in part, and I will reduce the sanctions imposed to $1000.

SUMMARY OF COMPLAINT

To understand this case, one must understand vanilla. Vanilla comes from an orchid plant, which produces a fruit pod, the vanilla bean, from which natural vanilla flavoring is derived. The vanilla bean itself is not consumed. Rather, one must scrape the seed from the pod, infuse it, or extract it by soaking vanilla beans in a solution of ethanol and water.

Defendants produce, market, and sell root beer and cream soda soft drinks under the A&W brand. Defendants prominently state "MADE WITH AGED VANILLA" on their products’ labels. The products are sold in different size plastic and glass bottles and aluminum cans:

Plaintiffs purchased defendants’ soft drinks after seeing that the products contained aged vanilla.¹ They relied on defendants’ representation about the flavored beverages, believing that a characterizing flavor of the product was vanilla and that any flavor came from the macerating process described above.

Plaintiffs were not the only consumers to believe that the statement "MADE WITH AGED VANILLA" meant that vanilla extract formed the characterizing flavor of the products. In a survey of 411 consumers conducted in March 2020, around 89% of the consumers stated this representation led them to believe that the product was vanilla flavored. These consumers also interpreted the representation to mean that the vanilla flavor came exclusively (if not predominantly) from the natural vanilla – not artificial sources. Specifically, around 68% of surveyed consumers believed that the statement meant that the vanilla flavor "comes from a vanilla plant, such as a vanilla extract, which is made from vanilla beans from the vanilla plant."

Plaintiffs claim this representation is false and misleading, and they allege defendants’ products do not contain any real vanilla at all. Scientific testing of the products by an independent laboratory revealed that the vanilla flavoring of the products does not come from the vanilla plant. Rather, the opposite is true. Testing disclosed that the predominant, if not exclusive, source of the vanilla flavor derives from an artificial, synthetic ingredient – ethyl vanillin. A cheap and inferior substitute for real vanilla, ethyl vanillin does not come from the vanilla plant. Had plaintiffs known the truth about the origin of the vanilla flavoring, they would not have purchased the product at a premium price. If the products are reformulated such that the vanilla flavor comes exclusively or predominantly from the vanilla plant or the products are no longer deceptively labeled, plaintiff would purchase the drinks again in the future.

DISCUSSION

I. Standard of Review

In deciding a motion to dismiss under Fed. R. Civ. P. 12(b)(6), I must "constru[e] the complaint liberally, accept[ ] all factual allegations in the complaint as true, and draw[ ] all reasonable inferences in the plaintiff's favor." Elias v. Rolling Stone LLC, 872 F.3d 97, 104 (2d Cir. 2017) (quoting Chase Grp. All. LLC v. City of New York Dep't of Fin., 620 F.3d 146, 150 (2d Cir. 2010) ). To survive a motion to dismiss, a complaint must include "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). "Factual allegations must be enough to raise a right to relief above the speculative level." Id. at 555, 127 S.Ct. 1955. "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009).

II. Materials Considered

On this motion, I considered the amended complaint, the findings of a survey that plaintiffs’ counsel caused to be conducted, and images of the products’ labels contained within the amended complaint.

Defendants also enclosed competing images of the products’ labels when briefing this motion.² At the motion to dismiss stage, a court may consider "factual allegations in plaintiffs’ amended complaint, ... documents attached to the complaint as an exhibit or incorporated in it by reference, ... matters of which judicial notice may be taken, or ... documents either in plaintiffs’ possession or of which plaintiffs had knowledge and relied on in bringing suit." Brass v. Am. Film Techs., Inc., 987 F.2d 142, 150 (2d Cir. 1993). Matters suitable for judicial notice include, among others, materials such as product labels and packaging referenced numerous times in the complaint. See Nelson v. MillerCoors, LLC, 246 F. Supp. 3d 666, 673 (E.D.N.Y. 2017) ; see also Silva v. Smucker Natural Foods, Inc., No. 14-cv-6154, 2015 WL 5360022, at *1 (E.D.N.Y. Sept. 14, 2015) (taking judicial notice of the offending product's label and packing).

An issue arises because both sides submitted images of the products from the perspective most favorable to their respective position. The images contained in plaintiffs’ amended complaint show the products prominently displaying the "MADE WITH AGED VANILLA" label and from an angle from which the "Natural and Artificially Flavored" disclosure defendants rely upon is not visible:

On the other hand, images provided by defendants are from a different angle, in which the "MADE WITH AGED VANILLA" statement is masked and unintelligible, while the statement "Natural and Artificially Flavored" is clearly visible:

For the purposes of this motion, I will consider both sides’ images, while drawing all reasonable inferences in plaintiffs’ favor.³

III. Standing for Injunctive Relief

Before deciding the case on the merits, I must first determine whether plaintiffs have standing for injunctive relief. See All. For Envtl. Renewal, Inc. v. Pyramid Crossgates Co., 436 F.3d 82, 85 (2d Cir. 2006).

To satisfy the requirements of standing under Article III of the Constitution, a plaintiff must establish three elements: (1) the plaintiff must have suffered an injury in fact; (2) there must be a causal connection between the injury and the conduct complained of; and (3) it must be likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision. Nat'l Org. for Marriage, Inc. v. Walsh, 714 F.3d 682, 688 (2d Cir. 2013) (quoting Lujan v. Defs. of Wildlife, 504 U.S. 555, 560-61, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992) ). To demonstrate an injury in fact when seeking injunctive relief, "a plaintiff cannot rely on a past injury alone," Buonasera v. Honest Co., Inc., 208 F. Supp. 3d 555, 564 (S.D.N.Y. 2016) (quoting City of Los Angeles v. Lyons, 461 U.S. 95, 103 S.Ct. 1660, 75 L.Ed.2d 675 (1983) ), but must establish "a ‘real or immediate threat’ of injury," Nicosia v. Amazon.com, Inc., 834 F.3d 220, 239 (2d Cir. 2016) (quoting Lyons, 461 U.S. at 111-12, 103 S.Ct. 1660 ). "The Supreme Court has repeatedly reiterated that threatened injury must be certainly impending to constitute...