Budhani v. Monster Energy Co.

• Decision Date: 12 March 2021
• Docket Number: 20-cv-1409 (LJL)
• Citation: 527 F.Supp.3d 667
• Parties: Akash BUDHANI, individually and on behalf of all others similarly situated, Plaintiff, v. MONSTER ENERGY COMPANY, Defendant.
• Court: U.S. District Court — Southern District of New York

527 F.Supp.3d 667

Akash BUDHANI, individually and on behalf of all others similarly situated, Plaintiff,

v.MONSTER ENERGY COMPANY, Defendant.

20-cv-1409 (LJL)

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

Signed March 12, 2021

Filed March 22, 2021

Spencer Sheehan, Sheehan & Associates, PC, Great Neck, NY, for Plaintiff.

John Michael Lyons, Shook, Hardy & Bacon L.L.P, Philadelphia, PA, Marc Phillip Miles, Naoki Stephen Kaneko, Shook, Hardy & Bacon LLP, Irvine, CA, for Defendant.

OPINION AND ORDER

LEWIS J. LIMAN, United States District Judge:

Defendant Monster Energy Company ("Monster" or "Defendant") moves, pursuant to Federal Rule of Civil Procedure 12(b)(6), to dismiss the complaint against it for failure to state a claim for relief. For the following reasons, Defendant's motion to dismiss is granted.

FACTUAL BACKGROUND

Monster manufactures, distributes, markets, labels, and sells espresso energy drinks blended with European milk and purporting to be flavored with vanilla under their Monster brand. Dkt. No. 30 ("Complaint" or "SAC") ¶ 1. The drinks are available to consumers from third party retail and online stores, Monster's website, and Amazon.com. Id. ¶ 2. One Monster brand espresso energy drink identified by Plaintiff Akash Budhani ("Plaintiff") is the Espresso Monster Vanilla Cream Triple Shot (the "Product"). Id. ¶ 3. The front label of the Product contains the representations "Vanilla Cream," "Triple Shot," and an image of the vanilla flower. Id. The front label appears as follows:

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Dkt. No. 33-2

Plaintiff claims that he purchased Espresso Monster Vanilla Cream Triple Shot on one or more occasions. Id. ¶ 88. Plaintiff alleges that the reference on the Product's front label to "Vanilla Cream" would convey to a reasonable consumer that the product contains vanilla sourced from vanilla beans, produced from a fruit pod on an orchid plant that originated and was first cultivated in Mexico. Id. ¶¶ 14, 15. This bean is not consumed alone—it is heated in the sun for weeks and then placed in ethyl alcohol, where its flavor constituents are extracted and the solution becomes known as vanilla extract. Id. ¶ 16. Plaintiff does not allege that the Product does not taste like vanilla; rather, Plaintiff's claims center on the ingredients that are included in the Product or that contribute to the vanilla taste. Specifically, Plaintiff claims that the representations on the Product's label are false and misleading in several alternative respects: (1) it conveys that the Product contains extract from the vanilla bean, whereas in fact the Product "contains trace or a de minimis amount of vanilla from real vanilla beans from the vanilla plant, id. ¶ 4; see also id. ¶ 44; (2) it falsely conveys that the Product's taste is provided predominantly or exclusively from vanilla beans, whereas other ingredients contribute to the vanilla taste, id. ¶ 68; see also id. ¶¶ 45, 63, 89; and (3) it fails to disclose that the Product contains artificial vanilla, specifically vanillin and artificial flavors maltol and piperonal. Id. ¶ 44.

Plaintiff relies on a consumer survey he commissioned to support these contentions. According to Plaintiff, the survey demonstrates that over 56% of respondents believed that the flavor in Defendant's Product "came from vanilla beans from the vanilla plant." Id. ¶ 43. In addition, Plaintiff offers results from a Gas Chromatography-Mass

Spectrometry ("GC-MS") test performed on the Product, which he alleges demonstrates that the "Natural Flavors" listed in the ingredients may contain some vanilla but that the Product is "predominantly flavored by non-vanilla flavors including vanillin." Id. ¶ 63.

Plaintiff contends that the amount and proportion of vanilla has a material bearing on price and consumer acceptance of the Product. Id. ¶ 107. Plaintiff alleges that when he purchased the Product, he relied upon the Product's front label claims for his expectation that the Product's taste came exclusively and/or predominantly from vanilla beans from the vanilla plant. Id. ¶ 89. Because of Defendant's false and misleading statements and omissions, Plaintiff alleges, the Product was worth less than what he paid for it. Id. ¶ 92. If the true facts had been known, Plaintiff claims that he would not have purchased the Product or paid as much for it. Id. ¶ 111.

Plaintiff also claims that Defendant's labeling violates Food and Drug Administration ("FDA") regulations governing how food flavorings are labeled. Id. ¶¶ 65, 67. Those regulations set forth the requirements for how a manufacturer or distributor must label foods "with respect to the primary recognizable flavor(s)," including what is called "the characterizing flavor." 21 C.F.R. § 101.22(i). They provide that if the labeling or advertising of a product makes any direct or indirect representations with respect to the primary recognizable flavor(s), by word, vignette, or other means, or if for any other reason the manufacturer or distributor wishes to designate the type of flavor in the product other than through the statement of ingredients, such flavor shall be considered the characterizing flavor. 21 C.F.R. § 101.22(i). If a food "contains no artificial flavor which simulates, resembles or reinforces the characterizing flavor, the name of the food on the principal display panel or panels of the label shall be accompanied by the common or usual name of the characterizing flavor, e.g., ‘vanilla.’ " 21 C.F.R. § 101.22(i)(1). However, if a food "contains any artificial flavor which simulates, resembles or reinforces the characterizing flavor, the name of the food on the principal display panel or panels of the label shall be accompanied by the common or usual name(s) of the characterizing flavor ... and the name of the characterizing flavor shall be accompanied by the word(s) ‘artificial’ or ‘artificially flavored.’ " 21 C.F.R. § 101.22(i)(2). Plaintiff contends that the presence of vanillin in the Product constitutes an artificial flavor, under 21 C.F.R. § 101.22(i)(2), and required Defendant to add to the front label the statement that it was "artificially flavored." SAC ¶ 67. Additionally, Plaintiff contends that under 21 C.F.R. § 169.181(b), the Product's ingredient list must disclose the presence of vanillin from non-vanilla sources as an artificial flavor because it is paired with vanilla. Id. ¶ 65.

Plaintiff brings claims for damages for violations of New York General Business Law (the "NYGBL") §§ 349 and 350 and common law claims on behalf of himself and a class consisting of all purchasers of the Product who resided in New York during the applicable statutes of limitations. The Complaint can also be construed to bring claims based on federal labeling standards, 21 C.F.R. § 101.22(i). Defendant moves to dismiss the Complaint, raising five principal arguments in support of its motion. First, Defendant argues that no reasonable consumer would understand the label to make a representation about whether the Product contains vanilla from vanilla beans and how much. Second, Defendant argues that Plaintiff's allegations about the contents of the Product are based on speculation insufficient to support a claim under the NYGBL. Third, Defendant argues that federal law preempts Plaintiff's attempt to require Defendant to specifically identify every flavor in the Product on the front label or in the ingredients list, as these requirements mark an improper attempt to privately enforce the Food, Drug, and Cosmetic Act ("FDCA"), 21 U.S.C. § 301 et seq. , and the regulations promulgated thereunder. Fourth, Defendant argues that Plaintiff's common law claims fail as a matter of law, regardless of whether they are couched as fraud, breach of warranty, or unjust enrichment claims. Fifth, Defendant argues that Plaintiff lacks standing to seek injunctive relief because no risk of future harm is alleged.

LEGAL STANDARD

To survive a motion to dismiss, "a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ " Ashcroft v. Iqbal , 556 U.S. 662, 679, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). Plaintiffs must allege sufficient facts to "nudge[ ] their claims across the line from conceivable to plausible." Twombly , 550 U.S. at 570, 127 S.Ct. 1955. Although the Court must accept all the factual allegations of a complaint as true, it is not "bound to accept as true a legal conclusion couched as a factual allegation." Iqbal , 556 U.S. at 678, 129 S.Ct. 1937 (quoting Twombly , 550 U.S. at 555, 127 S.Ct. 1955 ). The issue "is not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims." Villager Pond, Inc. v. Town of Darien , 56 F.3d 375, 378 (2d Cir. 1995) (quoting Scheuer v. Rhodes , 416 U.S. 232, 235-36, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974) ).

DISCUSSION

A. N.Y. Gen. Bus. Law Sections 349 and 350

Section 349 of the NYGBL prohibits "[d]eceptive acts or practices in the conduct of any business, trade or commerce or in the furnishing of any service in this state." N.Y. Gen. Bus. Law § 349(a). Section 350 of the NYGBL prohibits "[f]alse advertising in the conduct of any business, trade or commerce or in the furnishing of any service in this state." N.Y. Gen. Bus. Law § 350. In order to state a claim under either Section 349 or 350, a plaintiff must allege: (1) that the defendant's acts were consumer oriented,¹ (2) that the acts or practices are deceptive or misleading in a material way, and (3) that the plaintiff has been injured as a result. Goldemberg v. Johnson & Johnson Consumer Cos., Inc. , 8 F. Supp. 3d 467, 478 (S.D.N.Y. 2014) ; see Orlander v. Staples, Inc. 802 F.3d 289, 302 (2d Cir. 2015) (at the pleading stage, plaintiff must allege that "on account of a materially misleading practice, [Plaintiff] purchased a product and did not receive the full value of [thei...