Ackerman v. Coca-Cola Co.

• Decision Date: 17 July 2013
• Docket Number: 09 CV 395 (DLI)(RML)
• Parties: BATSHEVA ACKERMAN, RUSLAN ANTONOV, JAMES KOH, and JULIANA FORD, individually and on behalf of all others similarly situated, Plaintiffs, v. COCA-COLA COMPANY and ENERGY BRANDS, INC., Defendants.
• Court: U.S. District Court — Eastern District of New York

BATSHEVA ACKERMAN, RUSLAN ANTONOV, JAMES KOH,and JULIANA FORD, individually and on behalf of all others similarly situated, Plaintiffs, v. COCA-COLA COMPANY and ENERGY BRANDS, INC., Defendants.

09 CV 395 (DLI)(RML)

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK

Filed: July 18, 2013

July 17, 2013

REPORT AND RECOMMENDATION

LEVY, United States Magistrate Judge:

Plaintiffs Batsheva Ackerman, Ruslan Antonov, James Koh, and Juliana Ford ("plaintiffs") allege that defendants The Coca Cola Company and Energy Brands Inc. d/b/a Glaceau (collectively, "defendants") have engaged in the deceptive labeling and marketing of "vitaminwater," which defendants promote as a "nutrient-enhanced water beverage." (See Second Amended Class Action Complaint, dated Sept. 15, 2009 ("Second Am. Compl."), ¶¶ 1-6.) Plaintiffs now move for an order certifying the following two classes¹:

1) The New York Class: all New York residents who purchased vitaminwater at any time from January 20, 2003 to the present. (Plaintiff Ackerman seeks to be appointed representative of this class); and

2) The California Class: all California residents who purchased vitaminwater at any time from January 15, 2005 to the present. (Plaintiffs Antonov, Koh, and Ford seek to beappointed representatives of this class).

By order dated September 11, 2012, the Honorable Dora L. Irizarry, United States District Judge, referred the class certification motions to me for a report and recommendation. After full briefing, I heard oral argument on October 11, 2012. (See Transcript of Oral Argument, dated Oct. 11, 2012 ("Tr."), ECF No. 126.) Thereafter, the parties submitted supplemental materials. For the reasons stated below, I respectfully recommend that the classes be certified as injunction classes under FED. R. CIV. P. 23(b)(2), subject to the modifications described below.

BACKGROUND AND FACTS

A. Plaintiffs' Claims

Plaintiffs identify the "central issue" in this case as "whether Defendants' uniform labeling of vitaminwater products - including the name 'vitaminwater' - is deceptive to a reasonable consumer." (Master Memorandum of Law in Support of Plaintiffs' Motion for Class Certification, dated June 29, 2012 ("Pls.' Master Mem."), at 1-2.) It is undisputed that all vitaminwater bottles have a three-part label. The left panel lists each product's sugar and vitamin content, among other information, and the right panel lists the ingredients, including the amount of sugar and the vitamins included for each flavor. (See Declaration of Isaac Nesser, Esq., dated Aug. 24, 2012 ("Nesser Decl."), Ex. B.) Plaintiffs do not contend that any of the ingredient or nutritional information on the vitaminwater labels is or has ever been inaccurate or incomplete. Nor is there any dispute that vitaminwater contains both vitamins and water. Rather, plaintiffs contend that:

Defendants deceptively promote vitaminwater as an alternativebeverage to water and soft drinks that will assist consumers in maintaining healthy dietary practices. The product name (vitaminwater), description (Nutrient Enhanced Water Beverage), and slogans such as "vitamins+water=all you need" and "vitamins+water=what's in your hand" that appear on all vitaminwater labels,² together with flavor names that are associated with specific purported health benefits, mislead consumers to believe that vitaminwater is simply water fortified with nutrients that will provide certain stated health benefits rather than just another sugary soft drink.

(Pls.' Master Mem. at 2-3.) Plaintiffs' class certification motions must be considered in the context of their claims, all of which are based on state law.

B. New York Law³

The New York plaintiffs bring claims under Sections 349 and 350 of New York's General Business Law ("GBL"), N.Y. GEN. BUS. LAW. §§ 349, 350 (McKinney 2004), and under New York common law for deceit/misrepresentation and unjust enrichment.⁴ (SecondAm. Compl. ¶¶ 135-149, 146-149.) GBL § 349 provides that "[d]eceptive acts or practices in the conduct of any business, trade or commerce or in the furnishing of any service in this state are hereby declared unlawful." N.Y. GEN. BUS. LAW. § 349(a) (McKinney 2004). The Second Circuit has held that "[t]o state a claim under § 349, a plaintiff must allege that: (1) the act or practice was consumer-oriented; (2) the act or practice was misleading in a material respect; and (3) the plaintiff was injured as a result." Spagnola v. Chubb Corp., 574 F.3d 64, 74 (2d Cir. 2009). GBL § 349 does not require proof that any consumer relied on a misrepresentation. See Pelman v. McDonald's Corp., 396 F.3d 508, 511 (2d Cir. 2005) ("a private action brought under § 349 does not require proof of actual reliance"). Rather, "[d]eceptive acts are defined objectively as acts likely to mislead a reasonable consumer acting reasonably under the circumstances." Spagnola, 574 F.3d at 74 (internal citations, quotation marks, and alterations omitted). See also Leider v. Ralfe, 387 F. Supp. 2d 283, 292 (S.D.N.Y. 2005) (explaining that § 349 defines a deceptive act or practice using an "objective definition," whereby deceptive acts or practices are "limited to those likely to mislead a reasonable consumer acting reasonably under the circumstances.") (internal citation omitted); Stutman v. Chem. Bank, 731 N.E.2d 608, 612 (N.Y. 2000) ("[A]s we have repeatedly stated, reliance is not an element of a section 349 claim."). "A deceptive practice . . . need not reach the level of common-law fraud to be actionable under section 349." Douyon v. N.Y. Med. Health Care, P.C., No. 10 CV 3983, 2012 WL 4486100, at *15 (E.D.N.Y. Sept. 28, 2012) (quoting Stutman, 731 N.E.2d at 608).

GBL § 350 states: "[f]alse advertising in the conduct of any business, trade or commerce or in the furnishing of any service in this state is hereby declared unlawful." To succeed on a claim under this statute, a plaintiff must establish that "(1) the act, practice oradvertisement was consumer-oriented; (2) the act, practice or advertisement was misleading in a material respect, and (3) the plaintiff was injured as a result of the deceptive practice, act or advertisement." Medisim Ltd. v. BestMed LLC, 10 CV 2463, 2012 WL 5954757, at *6 (S.D.N.Y. Nov. 28, 2012). GBL § 350-a expressly defines "advertisement" to include "labeling." An act, practice or advertisement is actionable under this statute only if it is likely to mislead a reasonable consumer. Szymczak v. Nissan N. Am., Inc., 10 CV 7493, 2011 WL 7095432, at *14 (S.D.N.Y. Dec. 16, 2011) (quoting Marcus v. AT & T Corp., 138 F.3d 46, 64 (2d Cir. 1998)). However, to prevail on a claim under GBL § 350, a plaintiff must also demonstrate reliance on defendants' false advertising.⁵ Horowitz v. Stryker Corp., 613 F. Supp. 2d 271, 288 (E.D.N.Y. 2009) ("In order to make a claim under NYGBL Section 350, a plaintiff must plead reliance on a false advertisement at the time the product was purchased."); Small v. Lorillard Tobacco Co., 679 N.Y.S.2d 593, 599 (1st Dep't 1998) ("individualized proof of reliance is essential to the cause[ ] of action for false advertising under General Business Law § 350"), aff'd, 720 N.E.2d 892 (N.Y. 1999); McGill v. Gen. Motors Corp., 647 N.Y.S.2d 209, 210 (1st Dep't 1996) (same); Gershon v. Hertz Corp., 626 N.Y.S.2d 80, 81 (1st Dep't 1995) (same). Under New York law, "[r]eliance on defendants' misrepresentations will not be presumed where plaintiffs had a reasonable opportunity to discover the facts about the transaction beforehand by using ordinary intelligence or where a variety of factors could have influenced a class member's decision to purchase." Leider, 387 F. Supp. 2d at 297 (citing Small, 679 N.Y.S.2d at 600). Seealso Pelman III, 2003 WL 22052778, at *7 (same).⁶

For their unjust enrichment claim, the New York plaintiffs must demonstrate "(1) that the defendant[s] benefitted; (2) at the plaintiff[s'] expense; and (3) that equity and good conscience require restitution." Leibowitz v. Cornell Univ., 584 F.3d 487, 509 (2d Cir. 2009) (citation omitted). Thus, plaintiffs must show that the benefits that they received "were less than what they bargained for." Vigiletti v. Sears, Roebuck & Co., 838 N.Y.S.2d 785, 785 (2d Dep't 2007).

C. California Law

The California plaintiffs bring claims under the California Unfair Competition Law ("UCL"), CAL. BUS. & PROF. CODE §§ 17200-17210, the California False Advertising Law ("FAL"), CAL. BUS. & PROF. CODE § 17500-17509, the California Consumers Legal Remedies Act ("CLRA"), CAL. CIV. CODE § 1770(a), and under California common law for deceit/misrepresentation.⁷ The UCL provides a cause of action for harms caused by "anyunlawful, unfair or fraudulent business act or practice." CAL. BUS. & PROF. CODE § 17200. "[T]he primary purpose of the [UCL] . . . is to protect the public from unscrupulous business practices."⁸ Consumers Union of U.S., Inc. v. Alta-Dena Certified Dairy, 6 Cal. Rptr. 2d 193, 200 (Cal. Ct. App. 1992). A business practice need only meet one of the three criteria ("unlawful," "unfair," or "fraudulent") to violate the UCL. McKell v. Wash. Mut., Inc., 49 Cal. Rptr. 3d 227, 239 (Cal. Ct. App. 2006).

Pursuant to In re Tobacco II Cases, 207 P.3d 20, 35 (Cal. 2009) ("Tobacco II"), "relief under [California's] UCL is available without individualized proof of deception, reliance and injury." See also Stearns v. Ticketmaster Corp., 655 F.3d 1013, 1020-21 (9th Cir. 2011), cert. denied, 132 S. Ct. 1970 (2012).⁹ Therefore, although reliance is generally an element of aUCL claim, "class reliance can be presumed" under the UCL. Johns v. Bayer Corp., 280 F.R.D. 551, 557 (S.D. Cal. 2012). See also Williams v. Gerber Prods. Co., 552 F.3d 934, 940 (9th Cir. 2008) (explaining that an individual inquiry into reliance is unnecessary for class certification under the UCL); Gonzalez v. Proctor & Gamble Co., 247 F.R.D. 616, 624 (S.D. Cal. 2007) (explaining that "an inference of common reliance" is permitted under the UCL "when the...