Nirvana, Inc. v. Nestle Waters N. Am. Inc.

• Decision Date: 10 August 2015
• Docket Number: No. 6:14–cv–01181 (MAD/ATB).,6:14–cv–01181 (MAD/ATB).
• Citation: 123 F.Supp.3d 357
• Parties: NIRVANA, INC., Plaintiff, v. NESTLE WATERS NORTH AMERICA INC., Defendant.
• Court: U.S. District Court — Northern District of New York

123 F.Supp.3d 357

NIRVANA, INC., Plaintiff,

v.NESTLE WATERS NORTH AMERICA INC., Defendant.

No. 6:14–cv–01181 (MAD/ATB).

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

Signed Aug. 10, 2015.

Office of Richard Pertz, Richard Pertz, Esq., of Counsel, Remsen, NY, for Plaintiff.

Mayer Brown LLP, Adam L. Hudes, Esq., Carmine R. Zarlenga, III, Esq., Stephen M. Medlock, Esq., of Counsel, Smith Sovik Kendrick & Sugnet, P.C., Karen G. Felter, Esq., of Counsel, Washington, DC, for Defendants.

MEMORANDUM–DECISION AND ORDER

MAE A. D'AGOSTINO, District Judge.

I. INTRODUCTION

On August 20, 2014, Plaintiff commenced this suit in New York State Supreme Court of Oneida County. See Dkt. No. 1–1. In the complaint, Plaintiff asserted violations of federal and state antitrust laws as well as claims for breach of contract, tortious interference, unfair competition, and trade disparagement, among other related claims. See id. On September 2, 2014, Plaintiff filed an amended summons and complaint. See Dkt. No. 1–2. On September 26, 2014, Defendant removed the action from the Supreme Court of the State of New York of Oneida County to this Court.See Dkt. No. 1. This Court has original jurisdiction pursuant to 28 U.S.C. § 1331 based on the federal law violations alleged in the complaint. See id. This Court also has original jurisdiction pursuant to 28 U.S.C. § 1332 based on the diversity of the parties and the amount in controversy exceeds $75,000. See id. Defendant filed a motion to dismiss the complaint, see Dkt. No. 9–1, which was subsequently dismissed as moot because Plaintiff timely filed a first amended complaint (the "complaint") on November 30, 2014. See Dkt. Nos. 15; 20.

Currently before the Court is Defendant's motion to dismiss Plaintiff's first amended complaint for failure to state a claim upon which relief can be granted under Rule 12(b)(6) of the Federal Rules of Civil Procedure. See Dkt. No. 23.

II. BACKGROUND

Plaintiff is a New York corporation with its corporate headquarters in Forestport, New York. See Dkt. No. 15 at ¶ 1. Plaintiff's business is the bottling and distribution of unflavored, still, natural spring water that is collected from its property located in the foothills of the Adirondack Mountains. See id. at ¶¶ 1, 17. Defendant is a Delaware corporation that maintains its corporate headquarters in Stamford, Connecticut. See id. at ¶ 2. Defendant is the largest distributor of "bottled water in the United States," according to Plaintiff's complaint. See id. Plaintiff and Defendant are direct competitors in the market for "bottled spring water in the northeastern United States," and both parties engage in interstate commerce by selling and shipping to "New York, New Jersey, Connecticut, Pennsylvania and Massachusetts." See id. at ¶ 3.¹

In or about 2005, Plaintiff packaged its own water under one of Defendant's labels, a practice called co-packaging, and, later that year, Defendant made an oral offer to purchase Plaintiff, but the offer was declined. See id. at ¶¶ 19, 20. During the period from 2005 through 2011, a majority of Plaintiff's product was co-packed bottled water under other companies' labels. See id. at ¶ 22. According to Plaintiff, for this reason, it was not a significant competitor to Defendant during this time. See id. at ¶ 22. However, in 2011, Plaintiff introduced its own self-branded water and was taking market share from Defendant's labels, which included brands such as Poland Spring and Deer Park. See id. at ¶ 22. During that same year, Defendant approached Plaintiff again about a potential buyout. See id. at ¶ 23. Executives of the two companies met at Defendant's headquarters in Connecticut and entered into a non-disclosure agreement dated February 20, 2012, agreeing to not disclose or discuss the potential transaction or the terms, conditions, or other facts related to the potential transaction. See id. at ¶ 24.

Defendant then visited and researched Plaintiff's buildings, springs, and facilities. See id. at ¶ 25. Defendant also requested to see complete financial information from the years 2011 through 2013 as well as projected financial information for 2014 and 2015. See id. at ¶ 25. Upon Plaintiff's information and belief, during this same period of time, Defendant disclosed to Plaintiff's commercial customers that Defendant planned to purchase Plaintiff and showed these customers a letter from Plaintiff to Defendant indicating a desire to sell out in the face of financial difficulties. See id. at ¶ 30. As a result of this disclosure and related rumors, Plaintiff alleges that wholesale buyers and supermarket retailers ceased purchasing from Plaintiff.See id. at ¶ 31.

Plaintiff also claims that, in 2011, Defendant entered into an "exclusive dealing contract" with Stew Leonard, a supermarket company, by paying Stew Leonard a sum of money to stop carrying Plaintiff's water. See id. at ¶ 32. Plaintiff states that Stew Leonard abruptly stopped purchasing from Plaintiff. See id. It is alleged in the complaint that, in 2014, Defendant paid another supermarket company, A & P, a sum of money to remove Plaintiff from its promotional calendar. See id. at ¶ 34. These supermarket promotions sold certain brands of bottled water at reduced prices for certain periods of time, and Plaintiff claims that its removal from the promotional calendar caused its sales to fall. See id. at ¶¶ 33–35. Plaintiff submits that its market share of bottled water at the A & P supermarkets was reduced from 30% in the Fall of 2012 to 5% in the Fall of 2014 compared to Defendant's market share of bottled water at the A & P supermarkets, which increased from 40% to 70% during that same period. See id. at ¶ 37.

Plaintiff also claims that Defendant charged a higher price to its commercial buyers, who also purchased water from Plaintiff, as compared to its commercial buyers of water that did not purchase from Plaintiff. See id. at ¶ 38. Plaintiff alleges that Defendant's practice was to incentivize these commercial buyers to not purchase Plaintiff's product. See id. Except for Dave's Market, these commercial buyers are not identified by Plaintiff. See id. Plaintiff also makes generalized allegations that Defendant offered these types of incentives to "other supermarkets" that Plaintiff was attempting to sell to. See id. at ¶ 39. Plaintiff specifically claims that, in 2011, Defendant offered Dave's Market "a better price" for their water in exchange for not carrying Nirvana and, as a result, Dave's Market stopped carrying Plaintiff's product. See id. at ¶ 38. According to Plaintiff, Defendant has moved or cause to have moved Plaintiff's bottled water to be less visible in the retail stores, and Defendant had also asked A & P to removed Plaintiff's product from the shelves entirely. See id. at ¶¶ 36, 42.

Plaintiff states that "[a]s the price of [Defendant's] bottled water fell relative to the price of [Plaintiff's] bottled water, demand for [Plaintiff's bottled water] fell." Id. at ¶ 41. Plaintiff claims that its sales have "fallen dramatically, in part because of [Defendant's] predatory and discriminatory pricing, insistence of exclusivity, and other anti-competitive practices." Id. at ¶ 43. The alleged injury to competition, according to the complaint, can be inferred from the changes in the market shares of Plaintiff and Defendant in six regional supermarket chains. Plaintiff acknowledges that the sales data and market share information of Plaintiff and Defendant, as alleged in the complaint, do not account for "all sales of bottled water in every venue in every state where the two companies sell natural spring water" but claims that the sales are "an accurate statistical sample and reflect the anti-competitive effects of [Defendant's] conduct on the market, and the degree to which [Defendant] has foreclosed competition from other brands." See id. at ¶ 46.

In the complaint, Plaintiff alleges the following causes of action:

1. violation of section 2(a) of the Robinson–Patman Act, 15 U.S.C. § 13(a),

2. violation of section 2(c) of the Robinson–Patman Act, 15 U.S.C. § 13(c),

3. violation of section 3 of the Clayton Act, 15 U.S.C. § 14,

4. violation of New York State Donnelly Act, N.Y. General Business Law § 340,

5. common law claim for tortious interference,

6. common law claim for unfair competition, and

7. common law breach of contract claim.

See id. at ¶¶ 53–71.

Presently before the Court is Defendant's motion to dismiss Plaintiff's seven causes of action for failure to state claims upon which relief can be granted pursuant to section 12(b)(6) of the Federal Rules of Civil Procedure. See Dkt. No. 23.

III. DISCUSSION

A. Standard of review

" Federal Rule of Civil Procedure 8(a)(2) requires only ‘a short and plain statement of the claim showing that the pleader is entitled to relief,’ in order to ‘give the defendant fair notice of what the claim is and the grounds upon which it rests.’ "

Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957) ). A motion to dismiss for failure to state a claim pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure tests the legal sufficiency of the party's claim for relief. See Patane v. Clark, 508 F.3d 106, 111–12 (2d Cir.2007). "[T]he Supreme Court rejected the ‘oft quoted’ standard ... that a complaint should not be dismissed, ‘unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitled him to relief,’ " Li Xi v. Apple, Inc., 603 F.Supp.2d 464, 467 (E.D.N.Y.2009) (quoting Conley, 355 U.S. at 45–46, 78 S.Ct. 99 ), and, instead, held that a plaintiff must "plead enough facts ‘to state a claim to relief that is plausible on its face.’ " Id. at 467 (quoting Twombly, 550 U.S. at 555, 127 S.Ct. 1955 ). Although detailed factual allegations are not required in a pleading, a plaintiff must provide the grounds for their entitlement to relief. See Twom...