Cosgrove v. Or. Chai, Inc.

• Decision Date: 22 February 2021
• Docket Number: 19 Civ. 10686 (KPF)
• Citation: 520 F.Supp.3d 562
• Parties: Ryan COSGROVE, individually and on behalf of all others similarly situated, Plaintiff, v. OREGON CHAI, INC., Defendant.
• Court: U.S. District Court — Southern District of New York

520 F.Supp.3d 562

Ryan COSGROVE, individually and on behalf of all others similarly situated, Plaintiff,

v.OREGON CHAI, INC., Defendant.

19 Civ. 10686 (KPF)

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

Filed February 21, 2021

Signed February 22, 2021

Michael Robert Reese, Reese Richman, LLP, New York, NY, Christopher Patalano, Spencer Sheehan, Sheehan & Associates, PC, Great Neck, NY, for Plaintiff Ryan Cosgrove.

Christopher Patalano, Spencer Sheehan, Sheehan & Associates, PC, Great Neck, NY, for Plaintiff Amanda Crout.

Robert B. Wolinsky, Hogan Lovells US LLP, Washington, DC, for Defendant.

OPINION AND ORDER

KATHERINE POLK FAILLA, District Judge:

In the past two years, counsel for Plaintiffs Ryan Cosgrove and Amanda Crout has filed numerous class action complaints across the country, including several in this District, challenging food manufacturers’ use of the term "vanilla" in their descriptions or advertising. See, e.g. , Twohig v. Shop-Rite Supermarkets , 519 F. Supp. 3d 154, No. 20 Civ. 763 (CS), 2021 WL 518021 (S.D.N.Y. Feb. 11, 2021) ; Wynn v. Topco Assocs., LLC , No. 19 Civ. 11104 (RA), 2021 WL 168541 (S.D.N.Y. Jan. 19, 2021) ; Barreto v. Westbrae Nat., Inc. , No. 19 Civ. 9677 (PKC), 2021 WL 76331 (S.D.N.Y. Jan. 7, 2021) ; Cosgrove v. Blue Diamond Growers , No. 19 Civ. 8993 (VM), 2020 WL 7211218 (S.D.N.Y. Dec. 7, 2020) ; Pichardo v. Only What You Need, Inc. , No. 20 Civ. 493 (VEC), 2020 WL 6323775 (S.D.N.Y. Oct. 27, 2020) ; Steele v. Wegmans Food Mkts., Inc. , 472 F. Supp. 3d 47 (S.D.N.Y. 2020) ; see also Sharpe v. A&W Concentrate Co. , 481 F.Supp.3d 94 (E.D.N.Y. 2020). In nearly all of these cases, the district court ultimately found that the plaintiffs had failed to state a viable claim for relief. This time, Plaintiffs challenge Defendant Oregon Chai, Inc. ("Oregon Chai"), claiming that Defendant's use of the term "vanilla" and other statements on the packaging of its chai tea latte powdered mix is misleading to consumers. As set forth in the remainder of this Opinion, this Court agrees with the majority of district courts to have considered the matter, and dismisses the complaint for failure to state a claim.

BACKGROUND¹

A. Factual Background

According to the Second Amended Complaint (or "SAC"), Defendant Oregon Chai "manufactures, distributes, markets, labels[,] and sells powdered chai tea mix with a purported primary characterizing flavor of vanilla, under the Oregon Chai brand." (SAC ¶ 1). The packaging at issue is reproduced below:

(Id. at ¶ 4).

The packaging for the Oregon Chai products contains, among other items, references to: (i) "Vanilla," (ii) "Vanilla and honey combine with premium black tea and chai spices," and (iii) "Made with Natural Ingredients." (SAC ¶ 4). According to Plaintiffs, these references are misleading because

[i] although labeled as "Vanilla," they have less (or no) real vanilla than the label represents, [ii] they are flavored with artificial vanillin, [iii] they contain more honey and cinnamon than vanilla and [iv] despite the representation they are "Made with Natural Ingredients" that gives reasonable consumers the impression that all of the ingredients ... are natural, they contain synthetic ingredients and artificial flavors.

(Id. at ¶ 9).

As background to their claims, Plaintiffs include an extensive discussion of the flavor commonly known as vanilla, both as extracted from the vanilla bean and as replicated using other means. (SAC ¶¶ 10-19). Plaintiffs use the term "vanilla" to refer to the extract from the orchid V. planifolia , and "vanillin" to refer to the flavor compound. According to Plaintiffs, "only 1-2% of vanillin in commercial use is vanillin obtained from the vanilla plant, which means that almost all vanillin has no connection to the vanilla bean." (Id. at ¶ 35). Indeed, Plaintiffs categorize various efforts to replicate the vanilla bean flavor as "food fraud" (e.g. , id. at ¶ 18), and argue more broadly that a global shortage of vanilla beans has prompted the flavor and food manufacturing industries — including Defendant's parent company, Kerry plc (the "Kerry Group") — to develop flavor alternatives that partially or completely replace the vanilla bean (id. at ¶¶ 21-35).

Plaintiffs allege that they and other consumers of the Oregon Chai products have been tricked into believing that the products have more vanilla than other flavors (such as cinnamon or honey), and that the vanilla flavor touted on the packaging comes from vanilla beans, as opposed to artificial vanillins. (SAC ¶¶ 57-78). In point of fact, according to a gas chromatography-mass spectrometry ("GC-MS") analysis summarized in the SAC, the Oregon Chai products contain "the abundance of cinnamon flavor yet a trace, if any, of real vanilla." (Id. at ¶ 56; see also id. at ¶ 67 (noting that "real vanilla ... is likely present in a nominal amount far enough back in the supply chain so defendant can credibly and truthfully claim, ‘Yes, the Products contain[ ] vanilla (extract).’ ")). Similarly, consumers are deceived by the Oregon Chai products’ references in their packaging to "Made with Natural Ingredients," because (i) not all of the constituent ingredients are natural; (ii) apart from "dried honey," the ingredients list only contains a generic reference to "natural flavors" without further elaboration; and (iii) the reference suggests that the vanilla flavor in the products is derived only from vanilla beans. (Id. at ¶¶ 79-99).

Plaintiff Ryan Cosgrove lives in, and purchased Oregon Chai products in, the Bronx, New York. (SAC ¶¶ 115, 119). Plaintiff Amanda Crout lives in, and purchased Oregon Chai products in, Brooklyn, New York. (Id. at ¶¶ 116, 121). Each Plaintiff recites that she

bought the Products because she liked chai, expected the vanilla flavor to only come from real vanilla beans because the front label lacked any reference to the Products being "flavored," thought that the Products would contain more vanilla than its other flavoring components, did not state it contained vanillin, an artificial flavor when used with vanilla and she believed it only contained natural ingredients.

(Id. at ¶¶ 120, 122). Each Plaintiff also represents that she would buy the Oregon Chai products again "if [she] were assured the vanilla flavor in the Products was only from real vanilla and did not come from non-vanilla sources and was only made with natural ingredients." (Id. at ¶ 123).

B. Procedural Background

Plaintiffs filed the original complaint in this action on November 18, 2019 (Dkt. #1), and an amended complaint on February 20, 2020 (Dkt. #19). After a pre-motion conference that was held on March 19, 2020, in part to discuss Defendant's contemplated motion to dismiss, Plaintiffs filed a Second Amended Complaint on April 1, 2020. (Dkt. #25). The SAC alleges violations of New York's General Business Law ("GBL") Sections 349 and 350 and the federal Magnuson-Moss Warranty Act (the "MMWA"), Pub. L. 93-637, 88 Stat. 2183 (1975), codified at 15 U.S.C. Ch. 50; as well as common-law claims for negligent misrepresentation, breach of warranty, fraud, and unjust enrichment. (Id. at ¶¶ 132-59).

Defendant filed its motion to dismiss and supporting brief on May 8, 2020 (Dkt. #28, 31-32); Plaintiffs filed their opposition brief on June 12, 2020 (Dkt. #29); and Defendant filed its reply brief on June 26, 2020 (Dkt. #30). After briefing had concluded, the parties filed several letters addressing decisions from other district courts resolving ostensibly similar cases. (Dkt. #33, 35-41).

DISCUSSION

A. The Court Has Subject Matter Jurisdiction Under CAFA

1. Motions to Dismiss Under Fed. R. Civ. P. 12(b)(1)

Defendants begin by challenging the Court's jurisdiction to hear the matter in the first instance. (See Def. Br. 4-8). Federal Rule of Civil Procedure 12(b)(1) permits a party to move to dismiss a complaint for "lack of subject-matter jurisdiction." Fed. R. Civ. P. 12(b)(1). "A case is properly dismissed for lack of subject matter jurisdiction under Rule 12(b)(1) when the district court lacks the statutory or constitutional power to adjudicate it." Lyons v. Litton Loan Servicing LP , 158 F. Supp. 3d 211, 218 (S.D.N.Y. 2016) (quoting Makarova v. United States, 201 F.3d 110, 113 (2d Cir. 2000) ); see also Morrison v. Nat'l Austl. Bank Ltd. , 547 F.3d 167, 170 (2d Cir. 2008), aff'd , 561 U.S. 247, 130 S.Ct. 2869, 177 L.Ed.2d 535 (2010).

The Second Circuit has identified two types of Rule 12(b)(1) motions: facial and fact-based. see Carter v. HealthPort Techs., LLC , 822 F.3d 47, 56-57 (2d Cir. 2016) ; see also Katz v. Donna Karan Co., L.L.C. , 872 F.3d 114, 119 (2d Cir. 2017). A facial Rule 12(b)(1) motion is one "based solely on the allegations of the complaint or the complaint and exhibits attached to it." Carter , 822 F.3d at 56. A plaintiff opposing such a motion bears "no evidentiary burden." Id. Instead, to resolve a facial Rule 12(b)(1) motion, a district court must "determine whether [the complaint and its exhibits] allege[ ] facts that" establish subject matter jurisdiction. Id. (quoting Amidax Trading Grp. v. S.W.I.F.T. SCRL , 671 F.3d 140, 145 (2d Cir. 2011) (per curiam)). And to make that determination, a court must accept the complaint's allegations as true "and draw[ ] all reasonable inferences in favor of the plaintiff." Id. at 57 (internal quotation marks and citation omitted).

"Alternatively, a defendant is permitted to make a fact-based Rule 12(b)(1) motion, proffering evidence beyond the complaint and its exhibits." Carter , 822 F.3d at 57 ; see also MMA Consultants 1, Inc. v. Rep. of Peru , 719 F. App'x 47, 49 (2d Cir. 2017) (summary order) (defining fact-based Rule 12(b)(1) motion as one where "the defendant puts forward evidence to challenge the factual contentions underlying the plaintiff's assertion of subject-matter jurisdiction"). "In opposition to such a motion, [a plaintiff] must come forward with evidence of their own to controvert that presented by the defendant, or may instead rely on the...