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Ackerman v. Coca-Cola Co.

July 21, 2010


The opinion of the court was delivered by: John Gleeson, United States District Judge



In October 2009, the plaintiffs in the above-captioned putative class action filed a Second Amended Complaint against The Coca-Cola Company ("Coca-Cola") and Energy Brands Inc., d/b/a/ Glaceau ("Glaceau") (collectively "defendants"), alleging claims of: (1) unlawful business acts and practices in violation of California Business and Professions Code ("Cal. BPC") § 17200 et seq. ("Unfair Competition Law" or "UCL");Cal. BPC § 17500 et seq. ("False Advertising Law" or "FAL"); and California's Consumers Legal Remedies Act, Cal. Civ. Code §1750 et seq. ("CLRA");(2) unfair business acts and practices in violation of California UCL; (3) fraudulent business acts and practices in violation of California UCL; (4) misleading and deceptive advertising in violation of California FAL; (5) untrue advertising in violation of California FAL; (6) unfair methods of competition or unfair or fraudulent acts or practices in violation of § 1770(a)(7) of the CLRA; (7) deceptive acts or practices in violation of New York General Business law ("GBL") § 349; (8) false advertising in violation of New York GBL § 350; (9) violation of New Jersey Consumer Fraud Act ("NJCFA"), N.J.S.A. 56:8-1 et seq.; (10) breach of an express warranty; (11) breach of an implied warranty of merchantability; (12) deceit and/or misrepresentation; and (13) unjust enrichment. The claims are brought on behalf of three purported classes of plaintiffs: "[a]ll California Residents who purchased vitaminwater at any time from January 15, 2005 to [the] present," (the "California Class"); "[a]ll New York residents who purchased vitaminwater at any time from January 30, 2003 to [the] present," (the "New York Class"); and "[a]ll New Jersey residents who purchased vitaminwater at any time from January 22, 2003 to [the] present" (the "New Jersey Class").*fn1 Claims one through six are brought on behalf of the California class, claims seven and eight on behalf of the New York Class, claim nine on behalf of the New Jersey Class, and claims ten through thirteen on behalf of all three classes.

The defendants have moved to dismiss on grounds of: (1) federal preemption and (2) failure to satisfy the pleading standards of Federal Rules of Civil Procedure 8 and 9(b). For the reasons set forth below, defendants' motion is granted with respect to claims nine, ten and eleven and denied in all other respects.


The following facts are drawn from the Second Amended Complaint ("Sec. Am. Compl.") and are assumed to be true for the purposes of this motion.

A. The Parties

Plaintiff Batsheva Ackerman is a resident of New York. Plaintiffs Ruslan Antonov, James Koh and Jerrad Pelkey are residents of California. Plaintiffs Jack Petty and Phyllis Valentine are residents of New Jersey. Defendant Coca-Cola is a Georgia corporation headquartered in Atlanta, Georgia, and describes itself, according to the Second Amended Complaint, as the largest manufacturer, distributor and marketer of nonalcoholic beverage concentrates and syrups in the world. Defendant Glaceau, a wholly owned subsidiary of Coca-Cola, produces the beverage "vitaminwater,"*fn2 is headquartered in Whitestone, New York.

B. Procedural History

This lawsuit is a hybrid of five substantially similar cases that had been previously filed in California, New York and New Jersey. Suit was commenced in this court by plaintiff Batsheva Ackerman by the filing of a complaint on January 29, 2009 on behalf of herself and a class consisting of all New York State residents who purchased vitaminwater within three years of the filing of the Complaint.

An amended complaint filed on May 26, 2009 added Ruslan Antonov, James Koh and Jerrad Pelkey as plaintiffs, representing a class of "all California residents who purchased vitaminwater at any time from January 15, 2005 to the present." Id. at ¶ 30. Antonov, Koh and Pelkey had previously been plaintiffs in suits filed in California federal courts, alleging similar claims.*fn3

On June 1, 2009, defendants filed a motion with the Judicial Panel on Multidistrict Litigation ("JPML") for transfer of this case, together with another pending case, Thomas Mason, et al. v. The Coca-Cola Company and Energy Brands, Inc., Case No. 1:09-cv-00220-NLH-JH (D.N.J., filed Jan. 14, 2009) ("the New Jersey Action"), to the Northern District of California for coordinated pretrial management pursuant to 28 U.S.C. § 1407. Defendants filed a motion to dismiss pursuant to Federal Rule of Procedure 12(b)(6) on June 22, 2009. On July 6, 2009, the Honorable Charles P. Sifton stayed the briefing schedule for that motion until the JPML ruled on defendants' motion for coordination and transfer.*fn4 On August 6, 2009, the JPML denied defendants' motion to transfer.*fn5 Plaintiffs filed the Second Amended Complaint on October 6, 2009, adding as plaintiffs Jack Petty and Phyllis Valentine, who had been plaintiffs in the New Jersey Action. On October 26, 2009, defendants filed the instant motion to dismiss.

This court has jurisdiction pursuant to 28 U.S.C. § 1332(d), because the aggregate claims of the class exceed $5,000,000 and minimal diversity exists between the proposed class members and defendants.

C. The Federal Regulatory Scheme

The Federal Food, Drug, and Cosmetic Act, 21 U.S.C. § 343 et seq. ("FDCA"), was enacted in 1938 as a successor to the 1906 Pure Food and Drugs Act, 34 Stat. 768, repealed by Act of June 25, 1938, ch. 675, § 902(a), 52 Stat. 1059, which had been the first comprehensive federal legislation designed to protect consumers from fraud or misrepresentation in the sale of food and drugs. See generally, James T. O'Reilly, Food and Drug Administration § 3:1-13 (3d ed. 2009). The FDCA empowers the Food and Drug Administration ("FDA") to (a) protect the public health by ensuring that "foods are safe, wholesome, sanitary, and properly labeled," 21 U.S.C. § 393(b)(2)(A); (b) promulgate regulations pursuant to this authority; and (c) enforce its regulations through administrative proceedings. See 21 C.F.R. § 7.1 et seq. The FDCA deems a food as "misbranded" if its labeling "is false or misleading in any particular." 21 U.S.C.A. § 343(a). There is no private right of action under the statute. Merrell Dow Pharms., Inc. v. Thompson, 478 U.S. 804, 810 (1986).

In 1990 Congress amended the FDCA by enacting the Nutrition Labeling and Education Act (the "NLEA"), codified as amended at 21 U.S.C. §§ 301, 321, 337, 343, 371. "The NLEA was passed to 'clarify and to strengthen the Food and Drug Administration's legal authority to require nutrition labeling on foods, and to establish the circumstances under which claims may be made about the nutrients in foods.'" Nutritional Health Alliance v. Shalala, 144 F.3d 220 (2d Cir. 1998) (citing H.R. Rep. No. 101-538, at 7 (1990)). The NLEA amended the FDCA in several significant respects: it expanded the coverage of nutrition labeling requirements; it changed the form and substance of ingredient labeling on packages; it imposed limitations on health claims; it standardized the definitions of all nutrient content claims; and it required more uniform serving sizes. See The Impact of the Nutrition Labeling and Education Act of 1990 on the Food Industry, 47 Admin. L. Rev. 605, 606 (1995). The NLEA also added a preemption provision to Section 403A of the FDCA. It states, in relevant part: Except as provided in subsection (b),*fn6 no State or political subdivision of a State may directly or indirectly establish under any authority or continue in effect as to any food in interstate commerce . . . .

(5) any requirement respecting any claim of the type described in section 343(r)(1) of this title [i.e., nutrition levels and health-related claims], made in the label or labeling of food that is not identical to the requirement of section 343(r) of this title . . . .

21 U.S.C. § 343-1(a)(5) ("Section 403A").

Section 343(r)(1) of the NLEA describes claims in the labeling of food*fn7 that "expressly or by implication," "characterize[] the level of any nutrient" or "characterize[] the relationship of any nutrient . . . to a disease or health related condition . . . ." 21 U.S.C. § 343(r)(1). The FDA has promulgated regulations concerning three different kinds of claims of the type described in Section 343(r)(1): express nutrient-content claims, implied nutrient-content claims, and health claims. See 21 C.F.R. §§ 101.13 (defining express and implied nutrient-content claims), 101.14 (defining health claims). An express nutrient-content claim is a direct statement about the level or range of a nutrient in a food, such as "low sodium" or "100 calories." 21 C.F.R. § 101.13(b)(1). An "implied nutrient-content claim" is a statement suggesting "that a nutrient or an ingredient is absent or present in a certain amount," such as "high in oat bran," (suggesting a high dietary fiber content), a statement such as "as much fiber as an apple," which suggests a nutrient level comparable to a specified reference food, or a "general nutritional claim," (a subcategory of an implied nutrient claim) consisting of an express or implied claim that the nutrient content of a food may help consumers maintain healthy dietary practices. See 21 C.F.R. §§ 101.13(b)(2)(i)-(ii); 21 C.F.R. § 101.65. A claim that a product is "healthy" is generally an implied nutritional content claim.*fn8 "Health claims" by contrast, specifically "characterize[] the relationship of any substance to a disease or health-related condition." 21 C.F.R. 101.14.

D. The State Regulatory Schemes

California, New York and New Jersey broadly prohibit the misbranding of food in language largely identical to that found in the FDCA. California's Sherman Food, Drug, and Cosmetic Law (the "Sherman Law"), Health & Saf. Code § 109875 et seq., provides that food is misbranded "if its labeling is false or misleading in any particular." Id. The Sherman Law explicitly incorporates by reference "[a]ll food labeling regulations and any amendments to those regulations adopted pursuant to the [FDCA]," as the food labeling regulations of California. Cal.

Health & Saf. Code, § 110100, subd. (a). New York's Agriculture and Marketing law similarly provides in relevant part that food shall be deemed misbranded "[i]f its labeling is false or misleading in any particular," and incorporates the FDCA's labeling provisions found in 21 C.F.R. part 101. Agriculture and Markets Law § 201(1); N.Y. Comp. Codes R. & Regs. tit. 1, § 259.1. Likewise, New Jersey law provides that "a food shall . . . be deemed misbranded . . . [i]f its labeling is false or misleading in any particular," and incorporates by reference the FDCA's labeling regulations in 21 C.F.R. part 101. N.J.S.A. 24:5-17 (a), N.J. Admin. Code tit. 8, § 24-3.6. California, New York, and New Jersey each also discourage the misbranding of food through the availability of remedies pursuant to the respective state's consumer protection laws.


A. The Standard of Review

Motions to dismiss pursuant to Rule 12(b)(6) test the legal, not the factual, sufficiency of a complaint. See, e.g., Sims v. Artuz, 230 F.3d 14, 20 (2d Cir. 2000) ("At the Rule 12(b)(6) stage, 'the issue is not whether a plaintiff is likely to prevail ultimately, but whether the claimant is entitled to offer evidence to support the claims.'" (quoting Chance v. Armstrong, 143 F.3d 698, 701 (2d Cir. 1998))). Accordingly, I must accept the factual allegations in the complaint as true, Erickson v. Pardus, 551 U.S. 89, 93-94 (2007) (per curiam), and draw all reasonable inferences in favor of the plaintiff. Bolt Elec., Inc. v. City of New York, 53 F.3d 465, 469 (2d Cir. 1995). However, "the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions." Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009).

In Iqbal, the Supreme Court provided additional guidance regarding the consideration of motions to dismiss under Rule 12(b)(6). Citing its earlier decision in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), the Court explained:

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. 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, 129 S.Ct. at 1949 (internal citations and quotation marks omitted). Pursuant to Fed. R. Civ. P. 9(b), the circumstances of fraud or mistake must be pleaded with particularity. See, e.g., Campaniello Imports, Ltd. v. Saporiti Italia S.p.A., 117 F.3d 655, 663 (2d Cir. 1997).

When considering a motion to dismiss, a court may examine (1) the factual allegations in the complaint, which are accepted as true; (2) documents attached to the complaint as exhibits or incorporated in it by reference; (3) matters of which judicial notice may be taken; and (4) documents either in the plaintiff's possession or of which the plaintiff had knowledge and relied on in bringing suit. Brass v. Am. Film Techs., Inc., 987 F.2d 142, 150 (2d Cir. 1993).

B. Plaintiffs' Claims

Plaintiffs' state law claims are premised on twelve allegedly misleading statements made in connection with the labeling of vitaminwater:

1. The description of the product as a "Nutrient-Enhanced Water Beverage";

2. The phrase "vitamins water = all you need" on the product label;

3. Flavor names such as "rescue" and "defense";

4. The name "vitaminwater" itself;

5. The statement "vitamins water = what's in your hand" on in-store advertising materials;

6. The statement "this combination of zinc and fortifying vitamins can . . . keep you healthy as a horse" on the label of vitaminwater's "defense" flavor;

7. The statement "specially formulated to support optimal metabolic function with antioxidants that may reduce the risk of chronic diseases, and vitamins necessary for the generation and utilization of energy from food" on the label of vitaminwater's "rescue" flavor;

8. The statement "specially formulated to provide vitamin [A] (a nutrient known to be required for visual function), antioxidants and other nutrients [that] scientific evidence suggests may reduce the risk of age-related eye disease" on the label of vitaminwater's "focus" flavor;

9. The statement "specially formulated with bioactive components that contribute to an active lifestyle by promoting healthy, pain-free functioning of joints, structural integrity of joints and bones, and optimal generation and utilization of energy from food" on the label of vitaminwater's "balance" flavor;

10. The statement "specially formulated with nutrients required for optimal functioning of the immune system, and the generation and utilization of energy from food to support immune and other metabolic activities" on the label of vitaminwater's "defense" flavor;

11. The statement "specially formulated with [B] vitamins and theanine. The [B] vitamins are there to replace those lost during times of stress (physical and mental). Theanine is an amino acid found naturally in tea leaves and has been shown to promote feelings of relaxation. This combination can help bring about a healthy state of physical and mental being" on the label of vitaminwater's "B-relaxed" flavor;

12. The statement "specially formulated with nutrients that enable the body to exert physical power by contributing to structural integrity of the musculoskeletal system, and by supporting optimal generation and utilization from food" on the label of vitaminwater's "Power-C" flavor.*fn9 Plaintiffs no longer contend that the particular vitamins in vitaminwater fail to provide the benefit claimed.*fn10 Rather, they claim that vitaminwater's labeling and marketing is misleading because it: (1) "bombard[s] consumers with a message of purported benefits, and draw[s] consumer attention away from the significant amount of sugar in the product," Sec. Am. Compl. ¶ 6; (2) portrays vitaminwater as healthy when it is essentially a snack food that provides nutritional benefits solely because it has been specifically fortified to do so, see Sec. Am. Compl. ¶ 57; and (3) suggests that vitaminwater contains nothing but vitamins and water. See Sec. Am. Compl. ¶ 26.

C. Preemption

Defendants argue that plaintiffs' claims should all be dismissed because they are expressly preempted by federal law, or in the alternative, because they are barred by implied conflict preemption.

Under the Supremacy Clause, U.S. Const., Art. VI, cl.2, state laws that "interfere with, or are contrary to the laws of Congress, made in pursuance of the constitution" are invalid. Gibbons v. Ogden, 22 U.S. (9 Wheat) 1, 211 (1824). An otherwise valid state law is preempted if: (1) Congress expressly preempts the state law; (2) Congress completely occupies the law's field of operation; (3) compliance with both federal and state law is impossible; or (4) the state law presents an obstacle to the achievement of the full purposes and objectives of Congress. See Wis. Pub. Intervenor v. Mortier, 501 U.S. 597, 603-07 (1991). The Supreme Court has instructed that the task of determining whether a federal statute has preempted state law is guided by two basic principles. First, "the purpose of Congress is the ultimate touchstone in every pre-emption case." Wyeth v. Levine, 129 S.Ct. 1187, 1194 (2009) (quoting Medtronic, Inc. v. Lohr, 518 U.S. 470, 485 (1996)). "Second, [i]n all pre-emption cases, and particularly in those in which Congress has legislated . . . in a field which the States have traditionally occupied, . . . we start with the assumption that the historic police powers of the States were not to be superseded by the Federal Act unless that was the clear and manifest purpose of Congress." Id. at 1194-95 (quoting Lohr, 518 U.S. at 485) (quotation marks omitted). The presumption against preemption has been recognized in matters of public health and safety, including the regulation of food and drugs. See, e.g., Hillsborough County, Fla. v. Automated Med. Labs., Inc., 471 U.S. 707 (1985); New York State Rest. Ass'n v. New York City Bd. of Health, 556 F.3d 114, 123 (2d Cir. 2009). Moreover, where Congress provides an express preemption clause, the presumption against preemption requires courts to read the clause narrowly. See Lohr, 518 U.S. at 485 (citing Cipollone v. Liggett Group, Inc., 505 U.S. 504, 518 (1992)).

Because Section 403A(a)(5) preempts any state requirement that is different than the FDCA's regulation in Section 343(r)(1), there are two ways plaintiffs may escape its preemptive force: (1) if the plaintiffs' claims seek to impose requirements that are identical to those imposed by the FDCA; or (2) if the requirements plaintiffs seek to impose are not with respect to claims of the sort described in Section 343(r)(1). With regard to the first exception, the Supreme Court has held that "in the context of express preemption provisions, 'the term "requirements". . . reaches beyond positive enactments, such as statutes and regulations, to embrace common-law duties.'" In re PepsiCo, Inc., Bottled Water Mktg. and Sales Practices, 588 F. Supp. 2d 527, 532 (S.D.N.Y. 2008) (citing Bates v. Dow Agrosciences L.L.C., 544 U.S. 431, 443 (2005)); see also Riegel v. Medtronic, Inc., 552 U.S. 312, 325 (2008) ("excluding common-law duties from the scope of pre-emption would make little sense"); Cipollone, 505 U.S. at 522 ("common-law damages actions. . . are premised on the existence of a legal duty, and it is difficult to say that such actions do not impose 'requirements or prohibitions'"). However, a state statute mirroring its federal counterpart does not impose any additional requirement merely by providing a damage remedy for conduct that would otherwise violate federal law, even if the federal statute provides no private right of action. See Bates, 544 U.S. at 432 (preemption of additional requirements "[does] not preclude States from imposing different or additional remedies") (emphasis in original); see also Medtronic, 518 U.S. at 513 (O'Connor, J., concurring in part and dissenting in part) ("[T]he threat of a [state law] damages remedy" does not impose a "requirement" where "the requirements imposed on [defendants] under state and federal law do not differ."). Accordingly, claims under state laws that parallel the FDCA's requirements are not preempted.*fn11

A plaintiff's claims may avoid preemption under the second exception even if they seek to impose additional "requirements" on a defendant, as long as any such requirement is not "respecting any claim of the type described in Section 343(r)(1)." 21 U.S.C. § 343-1(a)(5). That section describes claims made in the label or labeling of food; thus, claims based on statements contained in an advertisement may not be preempted unless the advertisement qualifies as labeling under the FDCA.*fn12 In addition, Section 403A preempts only claims based on statements that expressly or by implication characterize the level of a nutrient or the relationship of a nutrient to a disease or health related condition; claims based on statements not falling into those categories are not preempted. Further, breach of warranty claims are generally not preempted because they are not requirements "'imposed under State law,' but rather imposed by the warrantor." Cipollone, 505 U.S. at 525-26; see also Bates, 544 U.S. at 444-45 (concluding warranty was "a contractual commitment that [defendant] voluntarily undertook by placing that warranty on its product," and therefore was not preempted by federal law). However, only those breach of warranty claims based on statements not required by federal regulations will avoid the bar of preemption; a breach of warranty claim premised on a statement that is mandated by federal statute would clearly impose a requirement contrary to federal ...

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