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Pelman v. McDonald's Corp.

October 27, 2010

PELMAN, ET AL., PLAINTIFFS,
v.
MCDONALD'S CORP. DEFENDANT.



The opinion of the court was delivered by: Pogue, Judge

OPINION AND ORDER

[Plaintiffs' motion for class certification and, in the alternative, issue class certification is denied.]

Plaintiffs in this action are New York State consumers claiming, pursuant to Section 349 of New York's General Business Law ("GBL § 349"), exposure to and injury from Defendant McDonald's Corporation's allegedly deceptive marketing scheme. Plaintiffs claim that the effect of Defendant's affirmative representations and material omissions throughout this marketing scheme -- from 1985 until the filing of this case in 2002 -- was to mislead consumers into falsely believing that Defendant's food products may be consumed on a daily basis without incurring any adverse health effects, and that, as a result of this marketing scheme, Plaintiffs and putative class members suffered injury in the form of, inter alia, the development of certain adverse medical conditions. The court has jurisdiction over this action pursuant to 28 U.S.C. § 1332 (2000).

Before the court is Plaintiffs' motion for class certification pursuant to Federal Rule of Civil Procedure 23(b)(3) or, in the alternative, for class certification solely with respect to the litigation of issues common to all putative class members, pursuant to Rule 23(c)(4). As explained below, because establishment of the causation and injury elements of Plaintiffs' claims will necessitate extensive individualized inquiries, the court finds that the questions of law and fact which would be common to putative class members would not predominate over questions affecting only individual members. Accordingly, certification of this action for class litigation under Rule 23(b)(3) is not appropriate. See Fed. R. Civ. P. 23(b)(3).

Moreover, class certification under Rule 23(c)(4) is not appropriate at this time. Although Plaintiffs' claim contains issues which may be common to potential class members, the resolution of which is susceptible to proof by common evidence on the basis of objective standards, there is insufficient evidence to establish the existence of a class of persons who hold identical claims, on the basis of identical injuries, to those allegedly suffered by Plaintiffs -- i.e., the evidence presented is not sufficient to satisfy the numerosity requirement of Rule 23(a)(1). See, e.g., Charron v. Pinnacle Gr. N.Y., __ F.R.D. __, No. 07 Civ. 6316(CM)(RLE), 2010 WL 1752501, at *19 (S.D.N.Y. Apr. 27, 2010) (issue classes certified under Rule 23(c)(4) must satisfy the criteria of Rules 23(a) and (b) with respect to the issues certified).

The court therefore denies Plaintiffs' motion for class certification in its entirety.

BACKGROUND

A. Procedural History

Plaintiffs originally commenced this suit in the State Supreme Court of New York, Bronx County, on August 22, 2002. Plaintiffs claimed that Defendants McDonald's Corporation, McDonald's Restaurants of New York, Inc., McDonald's 1865 Bruckner Boulevard Bronx, New York, and McDonald's 2630 Jerome Avenue, Bronx, New York (collectively "McDonald's") engaged in deceptive business practices in making and selling their products, and that "this deception has caused the minors who have consumed McDonald[']s' products to injure their health by becoming obese." Pelman v. McDonald's Corp., 237 F. Supp. 2d 512, 516 (S.D.N.Y. 2003) ("Pelman I").

McDonald's removed the action to this Court on September 30, 2002, alleging that Plaintiffs had fraudulently joined non-diverse parties to defeat diversity jurisdiction under 28 U.S.C. § 1332. By opinion of January 22, 2003, the court denied Plaintiff's motion to remand back to the Supreme Court of New York, Pelman I, 237 F. Supp. 2d at 521-23, concluding that "there is no reasonable basis, based on the pleadings, for liability against the non-diverse defendants in light of the claims alleged." See id. at 521 (citation omitted); 523 ("Clearly what is at issue in this lawsuit is the national menu and national policy of McDonald's Corp., and the plaintiffs' real beef is with McDonald's Corp.").*fn2

Having satisfied itself of jurisdiction, the court, by the same opinion of January 22, 2003, granted Defendant's Rule 12(b)(6) motion to dismiss all counts of Plaintiffs' complaint for failure to state a claim upon which relief may be granted, id. at 524-43, but granted Plaintiffs leave to amend their complaint. Id. at 543.

Plaintiffs filed their first amended complaint ("FAC") on February 19, 2003. On September 3, 2003, the court again granted Defendant's renewed Rule 12(b)(6) motion, dismissing Plaintiffs' complaint in its entirety, without leave to amend. Pelman v. McDonald's Corp., No. 02 Civ. 7821 (RWS), 2003 WL 22052778, at *14 (S.D.N.Y. Sept. 3, 2003) ("Pelman II").*fn3

Plaintiffs appealed solely the district court's dismissal of counts I, II and III -- each brought under GBL § 349*fn4 -- of their FAC. Pelman v. McDonald's Corp., 396 F.3d 508, 509-11 (2d Cir. 2005) ("Pelman III").*fn5 The United States Court of Appeals for the Second Circuit ("Second Circuit") vacated the district court's dismissal of these claims, holding that, "because a private action under [GBL] § 349 does not require proof of the same essential elements (such as reliance) as common-law fraud, an action under [GBL] § 349 is not subject to the pleading-with-particularity requirements of Rule 9(b), Fed. R. Civ. P., but need only meet the bare-bones notice-pleading requirements of Rule 8(a), Fed. R. Civ. P," id. at 511 (citations omitted), and that "[s]o far as the [GBL] § 349 claims are concerned, the [FAC] more than meets the requirements of Rule 8(a)." Id. at 512 (footnote omitted).

Following a remand to this Court for further proceedings consistent with the Second Circuit's opinion in Pelman III, see Pelman III, 396 F.3d at 512, the court granted in part Defendant's Rule 12(e) motion for a more definite statement, requiring Plaintiffs to "identify the advertisements that collectively amount to the alleged deceptive nutritional scheme." Pelman v. McDonald's Corp., 396 F. Supp. 2d 439, 445 (S.D.N.Y. 2005) ("Pelman IV"). In addition, the court required Plaintiffs to provide "a brief explanation of why the advertisements are materially deceptive to an objective consumer." Id.*fn6 In addition, "in accordance with GBL § 349's requirement that [P]laintiffs' injuries be 'by reason of' [D]efendant's conduct, the court directed Plaintiffs [to] provide a brief explanation of how [P]laintiffs were aware of the nutritional scheme[] they allege to have been deceptive." Id. at 446 (citing Stutman v. Chem. Bank, 731 N.E.2d 608, 612 (N.Y. 2000)).*fn7 The court also required Plaintiffs to "outline the injuries that were suffered by each plaintiff 'by reason of' defendant's alleged deceptive nutritional scheme." Id. (quoting N.Y. Gen. Bus. L. § 349).*fn8

Plaintiffs filed their second amended complaint ("SAC") on December 12, 2005. By opinion of September 16, 2006, the court denied Defendant's motion to strike and dismiss the SAC for failure to comport with the court's orders in Pelman IV. Pelman v. McDonald's Corp., 452 F. Supp. 2d 320, 328 (S.D.N.Y. 2006) ("Pelman V").*fn9 The court noted that: the SAC identifies a number of advertisements being claimed as part of the Defendant's deceptive practices[;] . . . outlines why the advertisements are objectively deceptive[;] . . . alleges that Plaintiffs were aware of McDonald's deceptive practices through their exposure to the advertisements and statements annexed to their pleading and that such statements were disseminated in the specified fora of[] television, radio, internet, magazine, periodical, in-store poster advertisements, and press releases issued in New York State from 1985 and continuing through filing in 2002[;] . . . [and] alleges that each named Plaintiff was injured as a result of Defendant's practices, in the following respects: obesity, elevated levels of Low-Density Lipoprotein, or LDL, more commonly known as 'bad' cholesterol ["LDL"], significant or substantial increased factors in the development of coronary heart disease, pediatric diabetes, high blood pressure, and/or other detrimental and adverse health effects and/or diseases as medically determined to have been causally connected to the prolonged use of Defendant's products[].

Id. at 323 (citing SAC ¶¶ 558, 564, 570, 576, 582, 588, 594, 600, 617, 623, 629, 635, 641, 647, 653, & 659). The court then held that, because "Plaintiffs need not have seen or heard each advertisement, but rather only to have been exposed to them in some manner," id. at 324 (citing Pelman IV, 396 F. Supp. 2d at 445-46), the SAC sufficiently described how Plaintiffs were aware of the marketing scheme alleged to be deceptive, id. at 325, and that, "[c]ontrary to McDonald's contentions, . . . the SAC outlines the injuries sustained by each Plaintiff in a manner sufficient for McDonald's to answer." Id. at 326.

Now pending before the court is Plaintiffs' motion to certify the class requested in the SAC.*fn10

B. The Claims of the Second Amended Complaint ("SAC")

Count I of Plaintiffs' SAC alleges that Defendant, "its respective agents, servants, and[/]or employees, engaged in unfair and deceptive acts and practices, in violation of [GBL § 349], by allegedly representing, subjecting, exposing, and/or attempting to mislead the Plaintiffs, putative class members, New York State users and consumers, from 1985 and continuing thereafter to 2002,*fn11 that its certain foods, including but not limited to[] Chicken McNuggets, Filet-O-Fish, Chicken Sandwich, French Fries and/or Hamburgers were ...


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