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Weiner v. Snapple Beverage Corp.

August 5, 2010

EVAN WEINER AND TIMOTHY MCCLAUSLAND, ON BEHALF OF THEMSELVES AND ALL OTHERS SIMILARLY SITUATED, PLAINTIFFS,
v.
SNAPPLE BEVERAGE CORPORATION, DEFENDANT.



The opinion of the court was delivered by: Denise Cote, District Judge

SEALED OPINION & ORDER

This case concerns whether defendant's labeling of its teas and juice drinks as "All Natural," despite their inclusion of high fructose corn syrup ("HFCS"), was misleading to consumers. The plaintiffs move for class certification pursuant to Rules 23(a) and (b)(3), Fed. R. Civ. P. For the following reasons, the motion is denied.

BACKGROUND

A. Snapple Beverage Corporation

Defendant Snapple Beverage Corporation ("Snapple") was founded in New York's Greenwich Village in 1972. Snapple began selling and marketing its teas and juice drinks in the late 1980s. In marketing its beverages, Snapple focused on, among other things, flavor, innovation, and humor. Snapple became known for its quirky personality and funny advertising, as well as its colorful product labels and beverage names. For instance, Snapple's television advertisements featured, among other silly things, Snapple bottles dressed in wigs and hats, singing in a "boy-band," running with the "bulls"*fn1 in Spain, saving the world from a mad scientist, being attacked by robots, and performing synchronized swimming. Snapple also built brand loyalty through promotions like the "Snaffle" and the "Snapple Yardsale."

Most relevant to this action, Snapple labeled and marketed its teas and juice drinks as being "All Natural." When Snapple entered the beverages market in the late 1980s, it avoided putting preservatives, which were then commonly found in similar beverages, in its teas and juice drinks. Snapple was able to do so by using a "hot-fill" process, which uses high-temperature heat pasteurization to preserve products immediately before bottling. Snapple also used 16-ounce glass bottles instead of aluminum cans or plastic. The glass bottles are vacuum-sealed with metal lug caps, the underside of which features "Snapple Facts" on a variety of topics.

From their inception, Snapple's beverages were sweetened with HFCS.*fn2 HFCS is made from corn and its primary constituents are glucose and fructose, the sugars that comprise table sugar and honey. It is undisputed that Snapple disclosed the inclusion of HFCS in the ingredient list that appears on the label of every bottle of Snapple that was labeled "All Natural."

Snapple does not sell its teas and juice drinks directly to consumers. Instead, Snapple sells to independent and company-owned distributors who sell to retailers, who in turn sell to consumers. Snapple "line prices" beverages that it sells to its distributors. Line pricing involves assigning a single, uniform price to all products sold in identical quantities. For instance, all 24-packs of 16-ounce glass Snapple products, regardless of flavor or whether they are regular or diet, are priced identically for sale to distributors. Thus, a case of 16-ounce "All Natural" lemon tea had the same wholesale list price as a case of 16-ounce diet lemon tea, which had artificial sweeteners and was not labeled "All Natural." Likewise, distributors of Snapple beverages line price when selling to retailers. Retailers set their own prices for Snapple beverages. Thus, Snapple does not have any control over the prices that consumers ultimately pay for its beverages.

B. The Plaintiffs

Plaintiffs Evan Weiner ("Weiner") and Timothy McCausland*fn3 ("McCausland," and with Weiner, the "plaintiffs") are purchasers of Snapple beverages sold in New York state. Plaintiffs allege that they paid a price premium for Snapple beverages as a result of the "All Natural" labeling. Plaintiffs contend that Snapple's "All Natural" labeling was misleading because Snapple beverages were sweetened with HFCS.*fn4 Plaintiffs assert claims for violation of N.Y. Gen. Bus. L. § 349, unjust enrichment, and breach of express and implied warranty. Plaintiffs seek damages on behalf of a putative class that consists of:

All persons and entities who, within the State of New York, purchased for personal consumption and not for resale or assignment, a Snapple beverage marketed, advertised and promoted as "All Natural," but that contained [HFCS], from October 10, 2001 to January 1, 2009.*fn5

Based on this definition, the class is not limited to New York residents, but includes, among millions of others, commuters from neighboring states, college students studying in New York, foreign travelers passing through New York airports, and tourists who purchased a Snapple beverage while in New York. Nor is the class limited by type of retailer that sold Snapple, and thus includes consumers who purchased Snapple beverages at, among other places, grocery stores, mass merchandisers, drug stores, movie theaters, push cart vendors, and vending machines.

The potential diversity among putative class members is apparent even among the named plaintiffs. Weiner lives and works in New Jersey. He bought Snapple beverages "hundreds of times" in New York and New Jersey. For Weiner, there were "numerous reasons" why he might have purchased Snapple beverages instead of its competitors, but his primary motivation was to "find something that tasted good." Weiner also bought Snapple because of Snapple's humorous promotions, flavor offerings, and because Snapple beverages were refreshing and thirst-quenching.

Weiner bought single bottles of Snapple from pushcart vendors and convenience stores while he was in New York City at various times during the class period. For instance, Weiner recalls purchasing a Snapple juice drink in 2003 or 2004 at Penn Station. He does not know exactly what price he paid, but believes it was between $1.50 and $1.75. The prices Weiner paid for Snapple varied based on the location and type of retailer, but he thinks that he generally paid between $1.49 and $1.79 per bottle for the Snapple beverages that he bought at convenience stores in New York. Weiner last purchased a Snapple beverage that was labeled "All Natural" and that contained HFCS sometime in 2005.

The other named plaintiff, McCausland, is a lawyer and lives in rural Sullivan County, New York.*fn6 For more than twenty years, McCausland has bought various brands of teas, including those produced by Snapple. When choosing among Snapple and its competitors, McCausland considered a "combination of things," the first of which was taste. He also prefers teas that come in glass bottles rather than plastic or aluminum cans. For McCausland, Snapple's "All Natural" label was not the "deciding factor" in his purchasing decision. In fact, he would have bought Snapple over other teas and juice drinks "regardless of whether it was labeled 'All Natural.'" McCausland chose Snapple because, among other things, he liked that it was "New York-bred," that it was a "funny" brand, and because he liked the "Snapple Facts." He acknowledges that it was "plain from the label" that Snapple's "All Natural" beverages contained HFCS.

When purchasing Snapple, McCausland mostly bought single bottles from a convenience store, occasionally bought cases, and sometimes purchased six-packs. He recalls paying $1.79 per bottle at a Rock Hill, New York, gas station on one occasion, but has no idea what price he paid for the cases of Snapple that he purchased during the class period. McCausland also believes that he bought six-packs of Snapple for between seven and nine dollars, and his wife sometimes used coupons to obtain a discount off the multi-pack price. McCausland has no way to quantify how much Snapple he purchased during the class period. He has no receipts or other records for his Snapple purchases, which were generally made with cash. McCausland last purchased a Snapple beverage that was labeled "All Natural" and that contained HFCS in the summer of 2006 or 2007.

Putative class member Stacy Holk ("Holk")*fn7 lives in New Jersey and works on Wall Street.*fn8 She started drinking Snapple beverages when she was a child. Holk was attracted to the taste and variety of Snapple beverages, the glass bottles, the "Snapple Facts," and the humor associated with the Snapple brand. Holk did not purchase Snapple because it was labeled "All Natural." In fact, because she liked Snapple's taste, glass bottle, and brand, she would have purchased Snapple even if it were not labeled "All Natural." Holk acknowledges that Snapple's labels disclosed that HFCS was an ingredient in its "All Natural" beverages.

Holk does not recall which Snapple beverages she bought, where or when she bought them, or what prices she paid. She recalls that the prices at different retailers where she purchased Snapple varied, and sometimes were lowered due to sales or other discounts. Holk believes that the per-bottle price that she paid during the class period could have ranged anywhere between $1.00 and $2.00. Holk also bought Snapple by the case if it was on sale. Like Weiner and McCausland, Holk does not have any receipts or other records for her Snapple purchases.

C. Procedural History

On October 10, 2007, Weiner filed a class action complaint against Snapple seeking certification of a nationwide class of consumers who purchased Snapple beverages labeled "All Natural" and that contained HFCS, exclusive of consumers whose purchases were made in New Jersey. On November 7, Snapple moved to dismiss. On November 20, a first amended complaint was filed which named McCausland as an additional plaintiff.

On December 7, the action was stayed pending the outcome of an appeal of the dismissal of a nearly identical action concerning purchases of Snapple's "All Natural" beverages in New Jersey. See Holk v. Snapple Beverage Corp., No. 07 Civ. 3018 (MLC), 574 F. Supp. 2d 447 (D.N.J. 2008). On August 12, 2009, the Court of Appeals for the Third Circuit reversed the district court's dismissal in Holk and remanded for further proceedings. See Holk v. Snapple Beverage Corp., 575 F.3d 329 (3d Cir. 2009). By letter dated September 9, Snapple advised that it would not appeal the Third Circuit's decision. On October 2, plaintiffs filed a second amended complaint and on October 15, Snapple answered.

Discovery closed on February 26, 2010. On March 12, plaintiffs moved for class certification, which became fully submitted on April 30. On April 9, Snapple moved to exclude the testimony of two of plaintiffs' expert witnesses, Dr. Alan Goedde ("Goedde") and Lauran Schultz ("Schultz"), offered in support of plaintiffs' class certification motion. On April 27, plaintiffs moved to exclude the testimony of one of Snapple's expert witnesses, Dr. Keith Ugone ("Ugone"), offered ...


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