Chufen Chen v. Dunkin' Brands, Inc.

• Decision Date: 31 March 2020
• Docket Number: August Term 2019,Docket No. 18-3087-cv
• Citation: 954 F.3d 492
• Parties: CHUFEN CHEN, on behalf of herself and others similarly situated, Eli Evanson, Sherry L. Johnson, David A. Bucholtz, Michelle Beattie, Plaintiffs-Appellants, v. DUNKIN' BRANDS, INC. (A Delaware Corporation), dba Dunkin' Donuts, Defendant-Appellee.
• Court: U.S. Court of Appeals — Second Circuit

954 F.3d 492

CHUFEN CHEN, on behalf of herself and others similarly situated, Eli Evanson, Sherry L. Johnson, David A. Bucholtz, Michelle Beattie, Plaintiffs-Appellants,

v.DUNKIN' BRANDS, INC. (A Delaware Corporation), dba Dunkin' Donuts, Defendant-Appellee.

Docket No. 18-3087-cv

August Term 2019

United States Court of Appeals, Second Circuit.

Argued: October 24, 2019

Decided: March 31, 2020

C. DOUGLASS THOMAS (John Troy, on the brief), Troy Law, PLLC, Flushing, New York, for Plaintiffs-Appellants.

WILLIAM C. PERDUE (Anthony Franze, Avishai D. Don, on the brief), Arnold & Porter Kaye Scholer LLP, Washington, DC, for Defendant-Appellee.

Before: Parker, Chin, and Bianco, Circuit Judges.

Chin, Circuit Judge:

Plaintiff-appellant Chufen Chen, on behalf of herself and all others similarly situated, and plaintiffs-appellants Eli Evanson, Sherry L. Johnson, David A. Bucholtz, and Michelle Beattie (collectively, "plaintiffs") commenced this action alleging that defendant-appellee Dunkin' Brands Inc. ("Dunkin Donuts") deceptively marketed two of its trademarked products -- the Angus Steak & Egg Breakfast Sandwich (the "Angus Sandwich") and the Angus Steak & Egg Wake-Up Wrap (the "Angus Wrap" and, together, the "Products") -- to consumers. Specifically, plaintiffs alleged that through representations made in labeling and television advertisements, Dunkin Donuts deceived consumers into believing that the Products contained an "intact" piece of meat when the Products actually contained a ground beef patty with multiple additives. J. App'x at 108. The second amended complaint (the "SAC") asserted violations of the Magnuson-Moss Act and various state consumer protection laws, including New York General Business Law (the "GBL") §§ 349 and 350, in connection with the alleged deception.

The district court dismissed the SAC for lack of personal jurisdiction and failure to state a claim. The district court held that Dunkin Donuts was not subject to general personal jurisdiction in New York and dismissed the claims of Evanson, Johnson, Bucholtz, and Beattie (the "out-of-state plaintiffs") for lack of personal jurisdiction because they purchased the allegedly deceptive Products at franchises outside of New York. Although it determined specific personal jurisdiction existed as to Chen's claims, the district court dismissed her claims on the merits pursuant to Federal Rule of Civil Procedure 12(b)(6). The lower court held that the label "Angus steak" was not an actionable warranty under the Magnuson-Moss Act and that Dunkin Donuts' advertisements did not violate the GBL because they were neither deceptive nor misleading to a reasonable consumer.

On appeal, plaintiffs argue that the district court erred in dismissing the out-of-state plaintiffs' claims because Dunkin Donuts consented to general jurisdiction in New York by registering as a foreign corporation under § 1301 of the New York Business Corporation Law (the "BCL"). In the alternative, plaintiffs contend that general personal jurisdiction existed because Dunkin Donuts' contacts with New York are sufficiently "continuous and systematic." Int'l Shoe Co. v. State of Wash., Office of Unemployment Comp. & Placement , 326 U.S. 310, 317, 66 S.Ct. 154, 90 L.Ed. 95 (1945). Plaintiffs also assert that the district court erred in dismissing Chen's claims because the SAC alleged plausible violations of GBL §§ 349 and 350.¹

As discussed more fully below, we hold that under New York law, the act of registering to do business under § 1301 of the BCL does not constitute consent to general personal jurisdiction in New York. In so holding, we join the highest New York courts to have considered the issue since the Supreme Court decided Daimler AG v. Bauman , 571 U.S. 117, 134 S.Ct. 746, 187 L.Ed.2d 624 (2014). See Aybar v. Aybar ("Aybar") , 169 A.D.3d 137, 93 N.Y.S.3d 159, 165 (2d Dep't 2019) ; Best v. Guthrie Med. Grp., P.C. , 175 A.D.3d 1048, 107 N.Y.S.3d 258, 261-62 (4th Dep't 2019) ; Fekah v. Baker Hughes Inc. , 176 A.D.3d 527, 110 N.Y.S.3d 1, 2 (1st Dep't 2019) ; see also Aybar v. Goodyear Tire & Rubber Co., 175 A.D.3d 1373, 106 N.Y.S.3d 361, 361 (2d Dep't 2019); Qudsi v. Larios , 173 A.D.3d 920, 103 N.Y.S.3d 492, 494-95 (2d Dep't 2019). We further reject plaintiffs' arguments that Dunkin Donuts' contacts with New York were sufficient to subject it to general personal jurisdiction in the state, and we agree with the district court that Chen failed to allege a plausible violation of GBL §§ 349 and 350. Accordingly, the district court's judgment dismissing the SAC is AFFIRMED .

BACKGROUND

The facts alleged in the SAC are assumed to be true. Dunkin Donuts is one of the largest retail chains in the United States, with more than 11,500 franchises worldwide. The company is incorporated in the state of Delaware and headquartered in Massachusetts, although it has franchises in additional states, including New York.

Sometime between 2013 and 2017, each of the plaintiffs purchased one or more of the Products after "repeated[ ] expos[ure]" to Dunkin Donuts' representations about the Products in television advertisements. J. App'x at 114-16. Evanson, Johnson, Bucholtz, and Beattie purchased the Products from franchises in Massachusetts, Florida, Michigan, and California respectively, while Chen purchased hers from a franchise in Flushing, New York. Plaintiffs also paid a premium for the Products -- the Angus Sandwich cost between $.45 and $.50 more than the comparable Classic Egg and Cheese Sandwich with ham, bacon, or sausage, and the Angus Wrap cost $.60 more than the comparable Classic Egg and Cheese Wrap with ham, bacon, or sausage.

Plaintiffs later learned that although the Products were labeled as "steak," neither contained an "intact" piece of meat. J. App'x at 100. Instead, the Products contained ground beef patties with multiple additives. Plaintiffs filed suit, alleging that labeling these products as "Angus steak" and describing them as "steak" in television advertisements was deceptive and misleading to the reasonable consumer.

The SAC identified three television advertisements, providing links to videos, that allegedly deceived plaintiffs into buying the Products. All three advertisements featured actors holding the Products and describing them using the words "Angus" and "steak." Each advertisement also concluded with a photograph of each of the Products, showing a beef patty. The SAC, a proposed class action lawsuit, alleged that these representations were deceptive, in violation of the Magnuson-Moss Act and various state consumer protection laws, including GBL §§ 349 and 350.

On February 8, 2018, Dunkin Donuts moved to dismiss the SAC for lack of personal jurisdiction and failure to state a claim pursuant to Federal Rules of Civil Procedure 12(b)(2) and (6). In a Memorandum and Order issued September 17, 2018, the district court granted the motion and dismissed the SAC.

This appeal followed.

DISCUSSION

I. General Personal Jurisdiction

Plaintiffs argue principally that the district court erred in dismissing the SAC as to the out-of-state plaintiffs' claims because Dunkin Donuts consented to general personal jurisdiction in New York by registering to do business and designating an agent for service of process in the state. In the alternative, plaintiffs argue that Dunkin Donuts' contacts with New York are sufficient to subject it to general personal jurisdiction.

A. Standard of Review

"We review a district court's dismissal of an action for want of personal jurisdiction de novo, construing all pleadings and affidavits in the light most favorable to the plaintiff." SPV Osus Ltd. v. UBS AG , 882 F.3d 333, 342 (2d Cir. 2018). "[T]o survive a motion to dismiss for lack of personal jurisdiction, a plaintiff must make a prima facie showing that jurisdiction exists." Id.

Where a district court's jurisdictional finding is premised on an application of state law, we similarly review the district court's interpretation of state law de novo. In re Thelen LLP , 736 F.3d 213, 219 (2d Cir. 2013). When deciding a question of state law, "we ... look to the state's decisional law, as well as to its constitution and statutes." Id. "Where state law is unsettled, we are obligated to carefully ... predict how the state's highest court would resolve the uncertainty or ambiguity." Id. (internal quotation marks omitted). Absent a clear directive from a state's highest court, "federal authorities must apply what they find to be the state law after giving proper regard to relevant rulings of other courts of the State." Travelers Ins. Co. v. 633 Third Assocs. , 14 F.3d 114, 119 (2d Cir. 1994) (internal quotation marks omitted).²

B. Consent to General Personal Jurisdiction under BCL § 1301(a)

"In the absence of a federal statute specifically directing otherwise, and subject to limitations imposed by the United States Constitution, we look to the law of the forum state to determine whether a federal district court has personal jurisdiction over a foreign corporation." Brown v. Lockheed Martin Corp. , 814 F.3d 619, 624 (2d Cir. 2016) ; see also Fed. R. Civ. P. 4(k)(1). General personal jurisdiction in New York is governed by Civil Practice Law and Rules, Section 301, which allows a court to exercise "such jurisdiction over persons, property, or status as might have been exercised heretofore." N.Y. C.P.L.R. § 301. New York law also requires foreign corporations to register with the state and designate an agent for service of process before conducting business in the state. See N.Y. Bus. Corp. Law § 1301(a). Prior to 2014, New York courts interpreted the act of registering under BCL § 1301(a) as consent to general jurisdiction in the state. See Aybar, 93 N.Y.S.3d at 169 (collecting cases).

In 2014, however, the Supreme Court decided Daimler and further defined the circumstances under which a state may exert general personal jurisdiction over a foreign corporation. 571 U.S. at 126, 134 S.Ct. 746. The Supreme Court clarified that a...