Kominis v. Starbucks Corp.

• Court: U.S. District Court — Southern District of New York
• Writing for the Court: JOHN P. CRONAN, United States District Judge
• Citation: Kominis v. Starbucks Corp., 692 F.Supp.3d 236 (S.D. N.Y. 2023)
• Docket Number: 22 Civ. 6673 (JPC)
• Decision Date: 16 September 2023
• Parties: Joan KOMINIS and Jason McAllister, individually and on Behalf of All Others Similarly Situated, Plaintiffs, v. STARBUCKS CORPORATION, Defendant.

692 F.Supp.3d 236

Joan KOMINIS and Jason McAllister, individually andon Behalf of All Others Similarly Situated, Plaintiffs, v. STARBUCKS CORPORATION, Defendant.

22 Civ. 6673 (JPC)

United States District Court, S.D. New York

Filed September 18, 2023

Signed September 16, 2023

Robert Abiri, Custodio & Dubey LLP, Los Angeles, CA, for Plaintiffs.

Paul Wendell Garrity, Sheppard, Mullin, Richter & Hampton, New York, NY, Robert Guite, Sheppard Mullin Richter & Hampton LLP, San Francisco, CA, Sascha Henry, Sheppard, Mullin, Richter & Hampton, Los Angeles, CA, for Defendant.

OPINION AND ORDER

JOHN P. CRONAN, United States District Judge:

Plaintiffs Joan Kominis and Jason McAllister bring this putative class action against Defendant Starbucks Corporation ("Starbucks") asserting numerous causes of action related to the allegedly misleading names of several beverages sold by Starbucks. Plaintiffs' Amended Complaint alleges violations of section 349 of the New York General Business Law ("NYGBL"), Dkt. 18 ("Am. Compl.") ¶¶ 37-44 (the "First Cause of Action"); section 350 of the NYGBL, id. ¶¶ 45-53 (the "Second Cause of Action"); California's Consumers Legal Remedies Act ("CLRA"), Cal. Civ. Code §§ 1750 et seq., Am. Compl. ¶¶ 54-63 (the "Third Cause of Action"); California's False Advertising Law ("FAL"), Cal. Bus. & Prof. Code §§ 17500 et seq., Am. Compl. ¶¶ 64-68 (the "Fourth Cause of Action"); California's Unfair Competition Law ("UCL"), Cal. Bus. & Prof. Code §§ 17200 et seq., Am. Compl. ¶¶ 69-75 (the "Fifth Cause of Action"); New York's express warranty statute, N.Y. U.C.C. § 2-313, Am. Compl. ¶¶ 76-84 (the "Sixth Cause of Action"); California's express warranty statute, Cal. Com. Code § 2313, Am. Compl. ¶¶ 85-92 (the "Seventh Cause of Action"); New York's implied warranty statute, N.Y. U.C.C Law § 2-314, Am. Compl. ¶¶ 93-101 (the "Eighth Cause of Action"); and California's implied warranty statute, Cal. Com. Code § 2314,¹ Am. Compl. ¶¶ 102-108 (the "Ninth Cause of Action"); as well as unjust enrichment, id. ¶¶ 109-115 (the "Tenth Cause of Action"), and common law fraud, id. ¶¶ 116-124 (the "Eleventh Cause of Action").

Starbucks moves to dismiss all eleven Causes of Action. The Court grants the motion in part and denies it in part. Because Plaintiffs have adequately alleged that a significant portion of the general consuming public could be misled by the names of the at-issue beverages, the Court denies the motion to dismiss the first seven Causes of Action. Starbucks has not adequately addressed the specific statutory provisions under which Plaintiffs bring the Eighth and Ninth Causes of Action, and so the Court denies the motion with respect to them as well. But the Tenth Cause of Action, which pleads unjust enrichment, fails because it is duplicative of the NYGBL claims and because it cannot be brought under California law in conjunction with an express warranty claim. Plaintiffs also have failed to sufficiently plead scienter to support a fraud claim, requiring dismissal of the Eleventh Cause of Action. The Court therefore dismisses the Tenth Cause of Action with prejudice and grants leave to amend with respect to the Eleventh Cause of Action.

I. Background

A. Facts²

This case involves Starbucks's marketing of certain "fruit-based" beverages whose names include specific fruits. Those beverages are the "Mango Dragonfruit Lemonade Starbucks Refreshers" and the "Mango Dragonfruit Starbucks Refreshers," which Plaintiffs allege contain no mango; the "Strawberry Açaí Lemonade Starbucks Refreshers" and the "Strawberry Açaí Starbucks Refreshers," which Plaintiffs allege contain no açaí; and the "Pineapple Passionfruit Lemonade Starbucks Refreshers" and the "Pineapple Passionfruit Starbucks Refreshers," which Plaintiffs allege contain no passion fruit (collectively, the "Products"). Am. Compl. ¶¶ 2-3. Plaintiffs allege that they "purchased the Products and paid a premium price based upon their reliance on Starbucks's naming of the Products." Id. ¶ 4. They further allege that had they "and other consumers been aware that the Products are missing one of the named fruits, . . . they would not have purchased the Products or would have paid significantly less for them." Id.; see also id. ¶ 21 ("The reasonable belief that the Products contain all their advertised fruits was a significant factor in Plaintiffs and other class members' decision to purchase the Products.").³

Starbucks is a coffee and beverage chain that "is responsible for the formulation, manufacturing, marketing, naming, advertising, and sale of its beverage products," including the Products at issue in this case. Id. ¶¶ 7, 11. The Products are "part of [Starbucks's] 'Refresher' line of beverages, marketed as fruit-based beverages." Id. ¶ 12. The Products are marketed with the following images, which Plaintiffs claim show that "the presence of fruit in the Products is central to the Products' identity." Id. ¶ 15.

Image materials not available for display.

Id. at 5.

Image materials not available for display.

Id. at 6. Based on this advertising, Plaintiffs allege that "reasonable consumers purchase the Products with the expectation that the Products contain all the fruits clearly listed in their respective names," id. ¶ 16, yet the Products are each missing either mango, passion fruit, or açaí, id. ¶ 17. Instead of containing these fruits, "all of the Products are predominantly made with water, grape juice concentrate, and sugar." Id. ¶ 18. The Products thus differ from other Starbucks products: "Starbucks' hot chocolate contains cocoa, its matcha lattes contain matcha, and its honey mint tea contains honey and mint." Id. ¶ 19. Moreover, "the Products do in fact contain freeze-dried pieces of strawberries, pineapple, and dragon fruit." Id. Starbucks does not affirmatively indicate anywhere which ingredients are and are not in the Products. Id. ¶ 20.

Plaintiffs allege that the "missing fruit ingredients are important to consumers because they are premium ingredients, and consumers value them over the less nutritious and cheaper grape juice concentrate found in the Products" at least in part because of nutritional benefits from each of the respective fruits or their juices. Id. ¶ 21. Further, Plaintiffs allege that Starbucks "knew or should have known that the Products falsely and deceptively represent to contain certain ingredients that they do not contain," and that consumers "would rely on [Starbucks's] advertising" such that they would be "willing to pay more for the Products based on the belief that the Products contain mango, passionfruit, and acai," allowing Starbucks to charge higher prices than they otherwise would be able to charge. Id. ¶¶ 22-24.

B. Procedural History

Kominis initiated this action on August 5, 2022. Dkt. 1. After Starbucks filed a motion to dismiss on September 15, 2022, Dkts. 14-15, Plaintiffs filed the Amended Complaint on October 7, 2022, Dkt. 18, which added McAllister as a Plaintiff. Starbucks then filed another motion to dismiss on November 9, 2022, seeking to dismiss all eleven Causes of Action in the Amended Complaint. Dkts. 23, 24 ("Motion"). Plaintiffs opposed dismissal on December 7, 2022, Dkt. 27 ("Opposition"), and Starbucks filed a reply on December 16, 2022. Dkt. 28 ("Reply").

II. 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, 678, 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)). A claim is plausible "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. A complaint's "[f]actual allegations must be enough to raise a right to relief above the speculative level." Twombly, 550 U.S. at 555, 127 S.Ct. 1955. In making this determination, the Court must "accept[ ] as true the factual allegations in the complaint and draw[ ] all inferences in the plaintiff's favor," Biro v. Conde Nast, 807 F.3d 541, 544 (2d Cir. 2015), but it need not "accept as true legal conclusions couched as factual allegations," LaFaro v. N.Y. Cardiothoracic Grp., PLLC, 570 F.3d 471, 475-76 (2d Cir. 2009).

III. Discussion

A. "Reasonable Consumer" Claims

Starbucks first argues that Plaintiffs' first five Causes of Action—which allege violations of the NYGBL, the CLRA, the UCL, and the FAL—each fail because no reasonable consumer would be misled by the Products' names into thinking that the Products contain the missing fruit. Motion at 6.

Section 349 of the NYGBL declares unlawful "[d]eceptive acts or practices in the conduct of any business, trade or commerce or in the furnishing of any service." NYGBL § 349(a). Section 350 prohibits "[f]alse advertising in the conduct of any business, trade, or commerce or in the furnishing of any service." Id. § 350. Sections 349 and 350 are both aimed at conduct that is deceptive—i.e., conduct "likely to mislead a reasonable consumer acting reasonably under the circumstances." Oswego Laborers' Local 214 Pension Fund v. Marine Midland Bank, N.A., 85 N.Y.2d 20, 26, 623 N.Y.S.2d 529, 647 N.E.2d 741 (1995). "The only difference between the two is that Section 350 more narrowly targets deceptive or misleading advertisements, while Section 349 polices a wider range of business practices." Cline v. TouchTunes Music Corp., 211 F. Supp. 3d 628, 635 (S.D.N.Y. 2016); see Goshen v. Mut. Life Ins. Co. of N.Y., 98 N.Y.2d 314, 324 n.1, 746 N.Y.S.2d 858, 774 N.E.2d 1190 (2002). To state a claim under either section 349 or section 350, "a plaintiff must allege that a defendant has engaged in (1) consumer-oriented conduct that is (2) materially misleading and that (3) plaintiff suffered injury as a result of the allegedly deceptive act or practice." Orlander v. Staples, Inc., 802 F.3d 289, 300 (2d Cir. ...