Atik v. Welch Foods, Inc.
| Decision Date | 30 September 2016 |
| Docket Number | 15-CV-5405 (MKB) (VMS) |
| Parties | ALIZA ATIK and WINNIE LAU, on behalf of themselves and all others similarly situated, Plaintiffs, v. WELCH FOODS, INC. and THE PROMOTION IN MOTION COMPANIES, INC., Defendants. |
| Court | U.S. District Court — Eastern District of New York |
Plaintiffs Aliza Atik and Winnie Lau commenced the above-captioned putative class action on behalf of themselves and all others similarly situated against Defendants Welch Foods, Inc. ("Welch") and The Promotion in Motion Companies, Inc. ("PIM"). (Compl., Docket Entry No. 1.) Plaintiffs allege claims of (1) breach of express warranty, (2) breach of implied warranty, (3) unjust enrichment, (4) deceptive acts or practices in violation of the New York General Business Law, N.Y. Gen. Bus. Law § 349, (5) false advertising in violation of the New York General Business Law, N.Y. Gen. Bus. Law § 350, (6) unfair and deceptive acts and practices in violation of the California Consumers Legal Remedies Act, Cal. Civ. Code § 1750 et seq., (7) unlawful business acts and practices in violation of the California Unfair Competition Law, Cal. Bus. & Prof. Code § 17200 et seq., (8) fraudulent business acts and practices in violation of the California Unfair Competition Law, Cal. Bus. & Prof. Code § 17200 et seq., and (9) misleading and deceptive advertising in violation of the California False Advertising Law, Cal. Bus. & Prof. Code § 17500 et seq. (Id. ¶¶ 69-135.) Plaintiffs seek money damages, restitution and injunctive relief. (Id. at 29.) Defendants move to dismiss or stay the action pursuant to the primary jurisdiction doctrine. (Defs. Mot. to Dismiss, Docket Entry No. 17; Defs. Mem. of Law in Supp. of Mot. to Dismiss ("Defs. Mem.") 9-12, Docket Entry No. 19.) Defendants also move to dismiss the Complaint pursuant to Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure for lack of standing and for failure to state a claim. (Defs. Mem. 4-8, 13-25.)
By report and recommendation dated August 5, 2016 (the "R&R"), Magistrate Judge Vera M. Scanlon recommended that the Court grant Defendants' motion to dismiss Plaintiffs' claims for breach of implied warranty, unjust enrichment, injunctive relief and Plaintiffs' remaining claims to the degree that they fall outside the relevant statutes of limitation, and that the Court otherwise deny Defendants' motion to dismiss. (R&R 29-30, Docket Entry No. 24.) On August 19, 2006, Plaintiffs and Defendants objected to the R&R. (Pls. Obj. to R&R ( ), Docket Entry No. 26; Defs. Objs. to R&R ("Defs. Objs."), Docket Entry No. 27; Defs. Resp. to Pls. Obj., Docket Entry No. 29.) For the reasons set forth below, the Court adopts the R&R in its entirety.
The facts alleged in the Complaint are assumed to be true for purposes of this motion. Plaintiffs' claims arise from Defendants' product labeling of Welch's Fruit Snacks, which they allege misrepresents the fruit content and nutritional and health qualities of the snacks. (Compl. ¶ 1.) Welch's Fruit Snacks include Fruit Snacks, sold in eleven different flavors,1 Fruit 'n Yogurt Snacks, sold in strawberry and blueberry flavors, and PB&J Fruit Snacks, sold in strawberrycreamy, strawberry crunchy, grape creamy and grape crunchy flavors (the "Products").2 (Id. ¶ 1 n.2.)
Welch is a Michigan corporation with its principal place of business in Massachusetts, and PIM is a New Jersey corporation with its principal place of business in New Jersey. (Id. ¶¶ 20-21.) PIM is a "maker of fruit snacks, fruit rolls, and private label confections and food products." (Id. ¶ 21.) PIM licenses the trademark "Welch's" from Welch and "produces, markets, and distributes" the Products under Welch's authority. (Id. ¶¶ 21-22.)
Plaintiffs allege that, beginning in 2009 and continuing to the present, "Defendants have engaged in a deceptive marketing campaign to convince consumers that [the Products] contain significant amounts of the actual fruits shown in the marketing and on the labeling of the Products, were nutritious and healthful to consume, and were more healthful than similar products." (Id. ¶ 2.) Plaintiffs state as examples of these misrepresentations that Defendants labeled the Products to state that they are "Made With REAL Fruit" and depicted pictures of the fruit advertised as the flavor of the Product, (id. ¶¶ 35-38); labeled the Products as containing "100% Vitamin C" and "25% Vitamins A & E," as "FAT FREE," and as containing no gluten or preservatives, (id. ¶¶ 3, 35-36, 38); included on the packaging of the Products that "[t]he Welch's name has been built on the highest quality fruit proudly grown on family farms" and that "[i]n this tradition of wholesome goodness come Welch's Fruit Snacks, made with real fruit and fruit juices," (id. ¶ 32); and stated on Welch's website that the Products are "wholesome" and of a "quality that can only be Welch's," (id. ¶ 34).
According to Plaintiffs, these representations are deceptive because they permit Defendants to "create the false impression that the fruit named and depicted on the labeling is present in an amount greater than is actually the case," (id. ¶ 6), when, in actuality, the Products "contain only minimal amounts" of the fruits depicted on the label,3 (id. ¶ 4). Plaintiffs also allege that Defendants use these representations to market the Products as "healthful and nutritious" snacks, (id. ¶¶ 34, 38-39), but contend that because "two of the first three ingredients in the [Products] are added sweeteners" and because "[o]n average, sugar makes up 40% of each serving of the regular Fruit Snacks, 50% of each serving of the Fruit 'n Yogurt Snacks, and more than half of each serving of the PB & J Snacks," (id. ¶ 4), they are not healthy snacks.
Plaintiffs purchased the Products after being exposed to and relying on Defendants' marketing and labeling of the Products. (Id. ¶¶ 14-17.) Plaintiffs believed that the Products "contained significant amounts of the actual fruit Defendants emphasized in the marketing and labeling of the Products, were nutritious and healthful, and were more healthful than similar products." (Id. ¶ 15.) Of all the Products, Plaintiffs have purchased the Fruit Snacks in mixed fruit, strawberry, white grape raspberry and concord grape flavors (the "Purchased Products"). (Id. ¶¶ 16, 19.) Plaintiffs have not purchased the Fruit Snacks in the island fruits, reduced sugar mixed fruit, berries 'n cherries, tangy fruits, fruit punch, white grape peach or apple orchard medley flavors, nor have they purchased the Fruit 'n Yogurt Snacks or the PB&J Fruit Snacks (the "Non-Purchased Products"). (See id.) "[H]ad Defendants not made certainmisrepresentations in the Products' marketing and labeling," Plaintiffs would not have purchased the Purchased Products. (Id. ¶¶ 16, 19.) Plaintiffs no longer purchase the Products because they are not "confident that the marketing and labeling of the Products [are], and will be, truthful and non-deceptive," but they would resume purchasing the Products if the marketing and labeling were not deceptive. (Id.)
i. Report and recommendation
A district court reviewing a magistrate judge's recommended ruling "may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge." 28 U.S.C. § 636(b)(1)(C). When a party submits a timely objection to a report and recommendation, the district court reviews the parts of the report and recommendation to which the party objected under a de novo standard of review. Id.; see also United States v. Romano, 794 F.3d 317, 340 (2d Cir. 2015). The district court may adopt those portions of the recommended ruling to which no timely objections have been made, provided no clear error is apparent from the face of the record. John Hancock Life Ins. Co. v. Neuman, No. 15-CV-1358, 2015 WL 7459920, at *1 (E.D.N.Y. Nov. 24, 2015). The clearly erroneous standard also applies when a party makes only conclusory or general objections, or simply reiterates its original arguments. Chime v. Peak Sec. Plus, Inc., 137 F. Supp. 3d 183, 187 (E.D.N.Y. 2015) ; see also DePrima v. N.Y.C. Dep't of Educ., No. 12-CV-3626, 2014 WL 1155282, at *3 (E.D.N.Y. Mar. 20, 2014) (collecting cases).
ii. Rule 12(b)(1)
A district court may dismiss an action for lack of subject matter jurisdiction pursuant to Rule 12(b)(1) when the court "lacks the statutory or constitutional power to adjudicate it." Cortlandt St. Recovery Corp. v. Hellas Telecomms., S.A.R.L., 790 F.3d 411, 416-17 (2d Cir. 2015) (quoting Makarova v. United States, 201 F.3d 110, 113 (2d Cir. 2000)); Shabaj v. Holder, 718 F.3d 48, 50 (2d Cir. 2013) (quoting Aurecchione v. Schoolman Transp. Sys., Inc., 426 F.3d 635, 638 (2d Cir. 2005)). The plaintiff has the burden to prove that subject matter jurisdiction exists, and in evaluating whether the plaintiff has met that burden, "'[t]he court must take all facts alleged in the complaint as true and draw all reasonable inferences in favor of plaintiff,' but 'jurisdiction must be shown affirmatively, and that showing is not made by drawing from the pleadings inferences favorable to the party asserting it.'" Morrison v. Nat'l Austl. Bank Ltd, 547 F.3d 167, 170 (2d Cir. 2008) (citations omitted), aff'd, 561 U.S. 247 (2010). A court may consider matters outside of the pleadings when determining whether subject matter jurisdiction exists. M.E.S., Inc. v. Snell, 712 F.3d 666, 671 (2d Cir. 2013); Romano v. Kazacos, 609 F.3d 512, 520 (2d Cir. 2010).
iii. Rule 12(b)(6)
In reviewing a motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure, a court must "accept all factual allegations in the complaint as true and draw inferences from those...
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