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PELMAN v. MCDONALD'S CORPORATION

January 22, 2003

ASHLEY PELMAN, A CHILD UNDER THE AGE OF 18 YEARS, BY HER MOTHER AND NATURAL GUARDIAN ROBERTA PELMAN, ROBERTA PELMAN, INDIVIDUALLY, JAZLYN BRADLEY, A CHILD UNDER THE AGE OF 18 YEARS, BY HER FATHER AND NATURAL GUARDIAN ISRAEL BRADLEY, AND ISRAEL BRADLEY, INDIVIDUALLY, PLAINTIFFS,
v.
MCDONALD'S CORPORATION, MCDONALD'S RESTAURANTS OF NEW YORK, INC., MCDONALD'S 1865 BRUCKERN BOULEVARD, BRONX, NEW YORK, MCDONALD'S 2630 JEROME AVENUE, BRONX, NEW YORK, DEFENDANTS.



The opinion of the court was delivered by: Bert W. Sweet, United States District Judge

    OPINION

Defendants McDonald's Corporation ("McDonalds Corp."); McDonald's Restaurants of New York, Inc. ("McDonalds of New York"); McDonald's 1865 Bruckner Boulevard Bronx, New York ("Bruckner Boulevard outlet"); and McDonald's 2630 Jerome Avenue, Bronx, New York ("Jerome Avenue outlet") (collectively "McDonalds") have moved pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure to dismiss the complaint of class-action plaintiffs Ashley Pelman, Roberta Pelman, Jazlen Bradley, and Israel Bradley. The plaintiffs have cross-moved to remand the case to state court.

This action presents unique and challenging issues. The plaintiffs have alleged that the practices of McDonalds in making and selling their products are deceptive and that this deception has caused the minors who have consumed McDonalds' products to injure their health by becoming obese. Questions of personal responsibility, common knowledge and public health are presented, and the role of society and the courts in addressing such issues.

The issue of determining the breadth of personal responsibility underlies much of the law: where should the line be drawn between an individual's own responsibility to take care of herself, and society's responsibility to ensure that others shield her? Laws are created in those situations where individuals are somehow unable to protect themselves and where society needs to provide a buffer between the individual and some other entity — whether herself, another individual or a behemoth corporation that spans the globe. Thus Congress provided that essentially all packaged foods sold at retail shall be appropriately labeled and their contents described. The Nutrition Labeling and Education Act of 1990, Pub.L. 101-535, 104 Stat. 2353 (Nov. 8, 1990) (the "NLEA"), 21 U.S.C. § 343(q).*fn1 Also as a matter of federal regulation, all alcoholic beverages must warn pregnant women against their use. 27 U.S.C. § 215 (forbidding sale of alcohol unless it bears the following statement: "GOVERNMENT WARNING: (1) According to the Surgeon General, women should not drink alcoholic beverages during pregnancy because of the risk of birth defects. . . ."); 27 C.F.R. § 16.21. Congress has gone further and made the possession and consumption of certain products criminal because of their presumed effect on the health of consumers.*fn2 Other products have created health hazards and resulted in extensive and expensive class action litigation. E.g., Amchem Products v. Windsor, 521 U.S. 591 (1997) (affirming denial of certification of class of potentially millions who had suffered injuries as a result of exposure to asbestos); In re Diet Drugs (Phentermine, Fenfluramine, Dexfenfluramine) Prods. Liability Litig., 282 F.3d 220, 225 (3d Cir. 2002) (class action of six million who took diet drugs (Pondimin and Redux) that were later linked to valvular heart disease); In re Breast Implant Cases, 942 F. Supp. 958, 959-60 (S.D.N.Y. 1996) (discussing possibility of transfer of thousands of cases alleging injuries from silicone breast implants). Public health is one, if not the, critical issue in society.

This opinion is guided by the principle that legal consequences should not attach to the consumption of hamburgers and other fast food fare unless consumers are unaware of the dangers of eating such food. As discussed, infra, this guiding principle comports with the law of products liability under New York law. As Sir Francis Bacon noted, "Nam et ipsa scientia potestas est,"*fn3 or knowledge is power. Following from this aphorism, one important principle in assigning legal responsibility is the common knowledge of consumers. If consumers know (or reasonably should know) the potential ill health effects of eating at McDonalds, they cannot blame McDonalds if they, nonetheless, choose to satiate their appetite with a surfeit of supersized McDonalds products. On the other hand, consumers cannot be expected to protect against a danger that was solely within McDonalds' knowledge. Thus, one necessary element of any potentially viable claim must be that McDonalds' products involve a danger that is not within the common knowledge of consumers. As discussed later, plaintiffs have failed to allege with any specificity that such a danger exists.

McDonalds has also, rightfully, pointed out that this case, the first of its kind to progress far enough along to reach the stage of a dispositive motion, could spawn thousands of similar "McLawsuits" against restaurants. Even if limited to that ilk of fare dubbed "fast food," the potential for lawsuits is great:*fn4 Americans now spend more than $110 billion on fast food each year, and on any given day in the United States, almost one in four adults visits a fast food restaurant. Eric Schlosser, Fast Food Nation 3 (2002) (hereinafter "Schlosser"). The potential for lawsuits is even greater given the numbers of persons who eat food prepared at other restaurants in addition to those serving fast food. See FDA, Food Labeling; General Requirements for Health Claims for Food, 58 FR 2478, 2516, 1993 WL 1547 (Jan. 6, 1993) ("Almost half of the American food dollar is spent on food consumed away from home, and . . . perhaps as much as 30 percent of the American diet is composed of foods prepared in food service operations."). In light of these facts, the Court is cognizant of its duty "to limit the legal consequences of wrongs to a controlable degree and to protect against crushing exposure to liability." McCarthy v. Olin Corp., 119 F.3d 148, 157 (2d Cir. 1997) (quoting Strauss v. Belle Realty Co., 65 N.Y.2d 399, 402, 492 N.Y.S.2d 555, 557 (1985)).

The interplay of these issues and forces has created public interest in this action, ranging from reports and letters to the Court to television satire.*fn5 Obesity, personal liberty and public accountability affect virtually every American consumer.

In terms of the pending motion by McDonalds to dismiss the complaint, these principles require the complaint to be dismissed for lack of specificity, with leave granted to replead within the limits set forth below.

Prior Proceedings

The plaintiffs commenced suit on August 22, 2002, in the State Supreme Court of New York, Bronx County. Defendants removed the action to the Southern District of New York on September 30, 2002, alleging as the basis of removal that the plaintiffs had fraudulently joined non-diverse parties in order to defeat diversity jurisdiction pursuant to 28 U.S.C. § 1332.

McDonalds filed the instant motion to dismiss plaintiffs' complaint (the "Complaint") on October 7, 2002. The plaintiffs cross-moved to remand and in opposition to the motion on October 25, 2002. Oral argument on both motions was held on November 20, 2002, and the motions were considered fully submitted at that time.

Facts

As befits a motion to dismiss, the following facts are drawn from the allegations in the Complaint and do not constitute findings of fact by the Court.

Parties

Ashley Pelman, a minor, and her mother and natural guardian Roberta Pelman are residents of the Bronx, New York.

Jazlen Bradley, a minor, and her father and natural guardian Israel Bradley are residents of New York, New York.

The infant plaintiffs are consumers who have purchased and consumed the defendants' products and, as a result thereof, have become overweight and have developed diabetes, coronary heart disease, high blood pressure, elevated cholesterol intake, and/or other detrimental and adverse health effects as a result of the defendants' conduct and business practices.

Defendant McDonald's Corp. is a Delaware corporation with its principal place of business at One McDonald's Plaza, Oak Brook, Illinois. It does substantial business with outlets in the State of New York, as well as throughout the fifty states and the world.

Defendant McDonalds of New York is a New York State corporation with a registered agent office located at 80 State Street, Albany, New York. It does substantial business with outlets and/or franchises in the State of New York.

McDonalds is the owner, manager, franchisee and operator of defendants the Bruckner Boulevard and Jerome Avenue outlets. Ashley and Roberta Pelman purchased and consumed food products at the Bruckner Boulevard outlet. Jazlen and Israel Bradley purchased and consumed food products at the Jerome Avenue outlet. All products, ingredients, promotions and advertisements sold, provided, utilized, advertised and promoted by the Jerome Avenue and Bruckner Boulevard outlets were authorized by McDonalds Corp. and McDonalds of New York.

McDonalds Corp. and McDonalds of New York, through its agents, servants, and/or employees, operate both company-owned outlets and franchises, and prescribe their ingredients, qualities and quantities of the food products served, so as to insure that its food products sold in one state or location is substantially identical to food products sold elsewhere in the country.

Obesity in Young Persons and its Effects

Today there are nearly twice as many overweight children and almost three times as many overweight adolescents as there were in 1980. In 1999, an estimated 61 percent of U.S. adults were overweight or obese and 13 percent of children aged 6 to 11 years and 14 percent of adolescents aged 12 to 19 years were overweight.

In 1980, those figures for children were 7 percent for children aged 6 to 11 years and 5 percent for adolescents aged 12 to 19 years.

Obese individuals have a 50 to 100 percent increased risk of premature death from all causes. Approximately 300,000 deaths a year in the United States are currently associated with overweight and obesity. As indicated in the U.S. Surgeon General's 2001 Report on Overweight and Obesity, "left unabated, overweight and obesity may soon cause as much preventable disease and death as cigarette smoking."

Obesity and overweight classification are associated with increased risk for coronary heart disease; type 2 diabetes; endometrial, colon, postmenopausal breast and other cancers; and certain musculoskeletal disorders, such as knee osteoarthritis.

Studies have shown that both modest and large weight gains are associated with significantly increased risk of diseases. For example, a weight gain of 11 to 18 pounds increases a person's risk of developing type 2 diabetes to twice that of individuals who have not gained weight, while those who gain 44 pounds or more have four times the risk of coronary heart disease (nonfatal myocardial infarction and death) of 1.25 times in women and 1.6 times in men. A gain of 22 pounds in men and 44 pounds in women result in an increased coronary heart disease risk of 1.75 and 2.65, respectively.

In certain obese women, the risk of developing endometrial cancer is increased by more than six times. Overweight and obesity are also known to exacerbate many chronic conditions such as hypertension and elevated cholesterol and such individuals may also suffer from social stigmatization, discrimination and poor body image.

In 1995, the total estimated costs attributable to obesity amounted to an estimated $99 billion. In 2000, the cost of obesity was estimated to be $117 billion. Most of the costs associated with obesity arise form type 2 diabetes, coronary heart disease and hypertension.

Claims

The plaintiffs allege five causes of action as members of a putative class action of minors residing in New York State who have purchased and consumed McDonalds products. Counts I and II are based on deceptive acts and practices in violation of the Consumer Protection Act, New York Gen. Bus. Law §§ 349 and 350, and the New York City Administrative Codes, Chapter 5, 20-700 et seq. Count I alleges that McDonalds failed to adequately disclose the ingredients and/or health effects of ingesting certain of their food products with high levels of cholesterol, fat, salt and sugar; described their food as nutritious; and engaged in marketing to entice consumers to purchase "value meals" without disclosing the detrimental health effects thereof. Count II focuses on marketing techniques geared toward inducing children to purchase and ingest McDonalds' food products. Count III sounds in negligence, alleging that McDonalds acted at least negligently in selling food products that are high in cholesterol, fat, salt and sugar when studies show that such foods cause obesity and detrimental health effects. Count IV alleges that McDonalds failed to warn the consumers of McDonalds' products of the ingredients, quantity, qualities and levels of cholesterol, fat, salt and sugar content and other ingredients in those products, and that a diet high in fat, salt, sugar and cholesterol could lead to obesity and health problems. Finally, Count V also sounds in negligence, alleging that McDonalds acted negligently in marketing food products that were physically and psychologically addictive.

Discussion

I. Diversity Jurisdiction Exists, and the Plaintiffs' Motion to Remand Is Denied

In order to rule on this motion, this Court must have jurisdiction. Defendants removed to federal court alleging that diversity jurisdiction exists pursuant to 28 U.S.C. § 1332.

Section 1332 states, in pertinent part, that:

(a) The district court shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between —

(1) Citizens of different States. . . .

28 U.S.C. § 1332. Section 1332 requires complete diversity of citizenship; therefore no defendant may share citizenship with a plaintiff. Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365, 373-74, 98 S.Ct. 2396, 2403, 57 L.Ed.2d 274 (1978). There is no dispute that all of the plaintiffs are New York residents and that three of the defendants — McDonalds of New York, the Bruckner Boulevard outlet, and the Jerome Avenue outlet — are New York residents. Therefore, unless the three non-diverse defendants were "fraudulently joined" to defeat jurisdiction, complete diversity does not exist, and this Court lacks subject matter jurisdiction over the controversy.

As an initial matter, although this concept is described as "fraudulent joinder," suggesting that the determinative issue is one of motive, motive in fact has nothing to do with it. In re Rezulin Prods. Liability Litig., 133 F. Supp.2d 272, 279 (S.D.N.Y. 2001) ("The only issue is whether the plaintiff has a legitimate claim against the non-diverse or in-state defendant — whether, in other words, the plaintiff has a real or direct interest in the controversy vis-a-vis the non-diverse or in-state defendant . . . ."). The standard for determining whether a plaintiff's claim against a defendant is sufficiently substantial to defeat removal jurisdiction is governed by Pampillonia v. RJR Nabisco, Inc., 138 F.3d 459, 461 (2d Cir. 1998).

In order to show that a non-diverse defendant was fraudulently joined to defeat diversity jurisdiction, the defendant must demonstrate, by clear and convincing evidence, either that there has been outright fraud committed in the plaintiffs' pleadings, or that there is no reasonable basis, based on the pleadings, for liability against the non-diverse defendants in light of the claims alleged. Whitaker v. American Telecasting, Inc., 261 F.3d 196, 207 (2d Cir. 2001) (quoting Pampillonia, 138 F.3d at 461). The burden on a removing defendant to meet this standard is a heavy one, and all reasonable doubts of fact and law are resolved in favor of the plaintiff. Id. "Nevertheless, the burden is not impossible of satisfaction." In re Rezulin, 133 F. Supp.2d at 280.

In order to interpret the legal standards stated above, it is necessary to look to the "realities of the record." Rose v. Giamatti, 721 F. Supp. 906, 915 (S.D.Ohio 1989). The discussion of whether the plaintiffs have stated a claim against the outlets and McDonalds of New York necessarily augurs the discussion, infra, of whether the Complaint should be dismissed. For ease of reading, this section summarizes the later analysis.

A. The Outlets

Plaintiffs have chosen to join as defendants two of McDonalds' myriad outlets in New York State — both of which happen to be located in the Bronx, New York. As an initial matter, it is worth noting that this action is labeled a statewide class action, and any putative class members will certainly have eaten at other outlets than the ones named in the Complaint.

With regard to the claims under the Consumer Protection Act, as discussed infra, plaintiffs fail to cite any specific advertisements or public statements that may be considered "deceptive" on the part of any of the defendants, including the outlets. In addition, while the Complaint does cite to specific omissions on the part of all defendants — namely the failure to include nutritional labeling at points of purchase*fn6 — it does not claim that the outlets had any particular knowledge in their possession and not in the public's possession that would require them to post such information. Therefore, the plaintiffs have not stated a claim against the outlets under the Consumer Protection Act.

Plaintiffs also cannot state the negligence claims against the outlets. First, plaintiffs have failed to establish that any of the defendants have produced a product that was so unhealthy as to be outside a reasonable's consumer's expectations. A larger problem is raised here with regard to probable cause than that pointed out later in the discussion of McDonalds' motion to dismiss. Normally, a products liability action that is brought against retailers, distributors and manufacturers is premised on an injury that results from the use of a single item that was purchased from a particular retailer and distributor.*fn7 Here, however, the claim is premised on an over-consumption of products specified and provided by the national defendant, McDonalds Corp. In order to establish proximate cause, the injury of over-consumption must somehow be tied to the outlets. Presumably, that would require, in addition to alleging the facts discussed infra, some allegation that plaintiffs ate primarily at the particular outlet. In the absence of such allegations, a claim against the outlets cannot stand.

B. McDonalds of New York

The inclusion of McDonalds of New York is more logical than the inclusion of two of the many McDonalds outlets in New York State. Plaintiffs nonetheless fail to state a claim for similar reasons discussed above.

First, with regard to the Consumer Protection Act, there is no allegation of any specific advertisements or public statements arising from McDonalds of New York. Further, there is no allegation that McDonalds of New York had in its possession any particular knowledge that consumers did not have that would require it to promulgate information about the nutritional contents of the products. Therefore, the deceptive practices claim cannot stand against McDonalds of New York.

Second, the negligence claims fail for the same reasons discussed above and in greater detail below. There is no allegation that McDonalds of New York has produced or distributed a product that is so dangerous that its danger is outside the reasonable understanding of a consumer. Further, the proximate cause issues discussed below also inhibit this claim. It should be noted that the proximate cause issue discussed above — tying the injury to a particular outlet — is not as damaging against the claim against McDonalds of New York. However, plaintiffs must allege that they have eaten primarily, if not wholly, at McDonalds of New York outlets. In other words, a plaintiff who has lived for merely a year in New York State — and thus eaten at outlets run by McDonalds of New York only for one year — may have a difficult time in showing causation. The absence of explicit allegations to this effect provides a further ground for dismissal of the Complaint as against McDonalds of New York.

C. The Outlets and McDonalds of New York Are Akin to Retailers and Distributors of McDonalds Corp.'s Products

In addition, because the outlets and McDonalds of New York are akin to retailers and distributors of a manufacturer's products, the negligence claims cannot attach to the outlets and ...


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