Valcarcel v. Ahold U.S.A., Inc.

• Decision Date: 22 December 2021
• Docket Number: 21-cv-07821 (JSR)
• Citation: 577 F.Supp.3d 268
• Parties: Idalia VALCARCEL, Plaintiff, v. AHOLD U.S.A., INC., Defendant.
• Court: U.S. District Court — Southern District of New York

577 F.Supp.3d 268

Idalia VALCARCEL, Plaintiff,

v.AHOLD U.S.A., INC., Defendant.

21-cv-07821 (JSR)

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

Signed December 22, 2021

Spencer Sheehan, Sheehan & Associates, P.C., Great Neck, NY, for Plaintiff.

Emily Zambrana, Rory Collins, Sarah L. Brew, Tyler Young, Faegre Drinker Biddle & Reath LLP, Minneapolis, MN, for Defendant.

MEMORANDUM ORDER

JED S. RAKOFF, U.S.D.J.

To paraphrase Justice Holmes, a graham of history is worth a pound of logic.¹ Rising to prominence in the 1830s, Sylvester Graham believed that a high-fiber, vegetarian diet – particularly when combined with cold baths and hard mattresses – could stave off a whole litany of diseases, from cholera

to alcoholism to premature aging.² But his most famous recommendation was that a thick, homemade bread, made from the whole of the wheat and coarsely ground, should be the mainstay of every American's diet. Indeed, it has been said that his harsh condemnation of commercial white bread once incited the bakers of Boston to riot.³

Somewhat more recently, in January or February of 2021, Plaintiff Idalia Valcarcel purchased at her local Stop and Shop supermarket a box of crackers, labeled on its face with the word "GRAHAM" in large, all capital letters, expecting that they would be made predominantly with graham – that is, whole wheat – flour. But they were not. As a result, Valcarcel brings this suit against Stop and Shop's parent company, Defendant Ahold U.S.A., Inc. ("Ahold"), which manufacturers, labels, markets, and sells the product in question, alleging that she was deceived by the product's packaging.

In her complaint, Valcarcel seeks monetary and injunctive relief on behalf of herself and a putative class of consumers, alleging a number of legal theories, including violations of New York State consumer protection laws, fraud, negligent misrepresentation, breach of express and implied warranties, unjust enrichment, and breach of the Magnuson Moss Warranty Act, 15 U.S.C. § 2301, et seq. ⁴ Ahold moves to dismiss the complaint in its entirety for failure to state a claim. For the reasons that follows, the Court holds that Valcarcel's consumer protection claims have been adequately pleaded, but that her other claims fail. Additionally, the Court holds that she lacks standing to seek injunctive relief. Accordingly, Ahold's motion to dismiss is GRANTED in part and DENIED in part.

BACKGROUND

Ahold "manufactures, labels, markets, and sells cinnamon flavored crackers ... under its Stop and Shop brand" that are described as "graham crackers" on the front label. ¶¶ 1-2.⁵ These crackers are sold both in-store and online by the Stop and Shop chain of supermarkets, which Ahold owns and operates. ¶¶ 46-49. The packaging described the product as "Naturally Flavored Cinnamon Graham Crackers," with "GRAHAM" appearing in all capital letters and as the largest word on the label. ¶ 2-3. Pictured on the label is an image of "dark hued crackers" and "a seal promising ‘100% Quality & Trust Guarantee.’ " ¶ 2. The front of the cracker box is pictured below.

?

¶ 1. As the image shows, the word "graham" appears both larger and in a distinct font from the word "crackers," which appears under it.

Valcarcel alleges that the product's name and the emphasis on the word "graham" would lead a reasonable consumer to believe that "graham flour – a type of whole grain flour – is the primary and predominant flour ingredient used." ¶ 4. Dictionaries, Valcarcel alleges, confirm reasonable consumers’ expectations, with one dictionary, for example, defining "graham cracker" as "a semisweet cracker, usually rectangular in shape, made chiefly of whole-wheat flour." ¶ 5 (quoting Graham Cracker, Dictionary.com, https://www.dictionary.com/browse/graham-cracker (last visited 12/21/2021)). The whole grain content allegedly distinguishes a graham cracker from other crackers and cookies made mostly with enriched flour, also referred to as "white flour" or "refined flour." ¶ 6.⁶

The box for the product contains an ingredient list, which Valcarcel's complaint reproduces. ¶ 9. The ingredient list indicates that the crackers contain more "Enriched Wheat Flour" than "Graham Flour (Whole Grain Wheat Flour)":

Ingredients: Enriched Wheat Flour (Wheat Flour, Niacin

, Reduced Iron, Thiamin Mononitrate, Riboflavin, Folic Acid ), Graham Flour (Whole Grain Wheat Flour), Sugar, High Oleic Canola And/or Soybean Oil With TBHQ And Citric Acid to Preserve Freshness, Contains 2% Or Less Of: Molasses, Honey, Leavening (Baking Soda, Calcium Phosphate ), Salt, Dextrose, Cinnamon, Soy Lecithin, Natural Cinnamon Flavor, Sodium Sulfite.

¶ 9. The ingredient list thus reveals that "Enriched Wheat Flour" is the predominant flour – not graham flour, as, the complaint alleges, a reasonable consumer would expect in light of the packaging. ¶¶ 8-9. The complaint alleges further that based on the Nutrition Facts appearing on the packaging, the amount of whole grain wheat flour in the crackers is approximately twenty-five percent of the amount of refined flour. ¶¶ 17-19.⁷ This, according to the complaint, renders the product misbranded under the Food, Drug, and Cosmetic Act, 21 U.S.C. § 343(a)(1). ¶¶ 25-30.

The complaint further alleges that surveys show that consumers care if the products they buy are made with whole grains, "because [such products] contain more fiber than refined white flour." ¶¶ 10-11. The complaint also alleges that the emphasis in the packaging on the word "GRAHAM" highlights the presence of fiber, a nutrient associated with whole grains, even though the product is not actually a good source of fiber. ¶¶ 16-19. Allegedly, the product is sold at a premium price compared to other similar products – no less than $2.99 per 14.4 oz – a higher price than it would have otherwise sold for absent the misleading packaging. ¶ 35.

Valcarcel alleges that she has purchased Ahold's crackers on one or more occasions from a Stop and Shop location in the Bronx, New York at a price of equal to or greater than $2.99. ¶ 49. She viewed the supermarket as having an "established reputation for quality," as promised by the seal on the front label of the packaging. ¶ 52. And she bought the product because she expected that it would contain a predominant amount of whole grain graham flour. ¶ 50-51. She would not have purchased the product if she knew the representations were false and misleading. ¶ 55. She intends to buy the crackers again "when she can do so with the assurance that [the product's] representations are consistent with its composition." ¶ 58.

On September 18, 2021, Valcarcel filed suit against Ahold asserting claims for violations of Sections 349 and 350 of the New York General Business Law ("GBL"), breach of express warranty, breach of the implied warranty of merchantability, violation of the Magnuson Moss Warranty Act, 15 U.S.C. § 2301, et seq., negligent misrepresentation, fraud, and unjust enrichment. The complaint also asserts claims on behalf of a putative class of "[a]ll persons in the State of New York who purchased the Product during the statutes of limitation for each cause of action alleged." ¶ 59. The complaint seeks both damages and injunctive relief. Ahold filed the present motion to dismiss the complaint its entirety on November 11, 2021. ECF No. 15.

LEGAL STANDARD

On a 12(b)(6) motion to dismiss, a court must "accept[ ] all of the complaint's factual allegations as true and draw[ ] all reasonable inferences in the plaintiffs’ favor." Giunta v. Dingman, 893 F.3d 73, 78–79 (2d Cir. 2018).⁸ "Although allegations that are ‘conclusory’ are ‘not entitled to be assumed true,’ ‘[w]hen there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief." Lynch v. City of New York, 952 F.3d 67, 75 (2d Cir. 2020) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 679, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) ). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678, 129 S.Ct. 1937. "[A] well-pleaded complaint may proceed even if it strikes a savvy judge that actual proof of those facts is improbable, and that a recovery is very remote and unlikely." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007).

Discussion

I. The Court Cannot Conclude Valcarcel's Claims are Preempted by Federal Law Given the Current Procedural Posture.

Ahold argues that Valcarcel's claims, including her GBL claims, are preempted by the federal Food, Drug, and Cosmetic Act ("FDCA"). The FDCA prohibits the "misbranding" of food in interstate commerce. 21 U.S.C. § 331. In particular, one provision of the Act, 21 U.S.C. § 343, identifies twenty-three grounds for which a food "shall be deemed misbranded." This includes a catch-all deeming all products misbranded if "its labeling is false or misleading in any particular," id. § 343(a)(1), as well as more specific grounds. Relevant here is § 343(i), which provides that a good is misbranded if the label does not bear "the common or usual name of the food, if any there be." Id. § 343(i). The U.S. Food and Drug Administration ("FDA") has promulgated regulations establishing "general principles" for the "common or usual name of a food," among them that "[t]he name shall be uniform among all identical or similar products" and that the name "may be established [either] by common usage" or regulation. 21 C.F.R. § 102.5(a), (d).

The FDCA, as amended by the Nutrition Labeling and Education Act of 1990, explicitly preempts state laws to the extent they differ from applicable federal labeling laws. Specifically, as implicated here, § 343-1(a)(3) provides that "no State ... may ... establish ... any requirement for the labeling of food" that is: (1) "of the type required by ... [ 21 U.S.C. §] 343(i)(1)"; and (2) "not identical...