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Gordon v. Hain Celestial Group, Inc.

United States District Court, S.D. New York

January 18, 2017

LORI D. GORDON, on behalf of herself and all others similarly situated, Plaintiff,

          OPINION & ORDER

          KATHERINE B. FORREST, District Judge

         This is a putative consumer class action against defendants The Hain Celestial Group, Inc. (“Hain Celestial”) and its subsidiary Jason Natural Products, Inc. (“Jason Natural”), which manufacture, market and sell natural personal care products. (First Am. Compl. (hereinafter, the “FAC”) (ECF No. 28) ¶¶ 1, 3; see also id. ¶¶ 7, 11.) Plaintiff claims defendants deceptively marketed five of their products (which she allegedly purchased) as lacking sodium lauryl sulfate (“SLS”), an allegedly irritating chemical compound. (Id. ¶ 1.) Plaintiff's claims are cast as negligent misrepresentation, breach of express warranty, unjust enrichment, and violations of New York's False Advertising Law (N.Y. Gen. Bus. Law. §§ 350 et seq.) and New York's Deceptive Trade Practices Act (N.Y. Gen. Bus. Law. §§ 349 et seq.). (See id. ¶¶ 30-65.)

         Now before the Court is defendants' partial motion to dismiss the FAC under Federal Rule of Civil Procedure 12(b)(6). (ECF No. 32.) Defendants make various arguments in support of dismissal of certain claims and relief: (1) that the negligent misrepresentation claim is barred by the economic loss doctrine; (2) that the unjust enrichment claim is duplicative of other claims; (3) failure to allege any causes of action against Hain Celestial; (4) lack of standing to seek injunctive relief; and (5) that plaintiff's nationwide class allegations are deficient on their face. (See ECF No. 33 at 6-7.)

         Notably, as to Jason Natural, defendants have only sought to dismiss the negligent misrepresentation and unjust enrichment claims. The Court grants this portion of the motion, leaving the breach of express warranty, false advertising and deceptive trade practices claims pending against Jason Natural. Defendants have, on the other hand, moved to dismiss all claims against Hain Celestial, arguing that the FAC disregards the corporate separateness between the two defendants and only plausibly alleges misconduct by Jason Natural. Whether by oversight or design, the FAC often does not distinguish between the two defendants and misattributes statements on Jason Natural's website to Hain Celestial. At least one key factual allegation, however, prevents Hain Celestial's dismissal entirely: the allegation that Hain Celestial “manufactures and sells natural health and beauty products under the Jason Natural brand”. (FAC ¶ 3.) The Court must, on this Rule 12(b)(6) motion, accept this allegation as true.

         In the absence of the allegation in paragraph 3-that Hain Celestial itself manufactures and sells Jason Natural brand products-the other “group” allegations would be insufficient. But that allegation-though thin a reed as can be-saves certain claims from dismissal at this stage. (The Court invites an early summary judgment motion with respect to whether Hain Celestial in fact itself manufactures and sells the Jason Natural products at issue here.)

         Defendants may ultimately prove correct that Hain Celestial was not directly involved in any established mislabeling of the products as SLS-free. It could be, for example, that Jason Natural in fact manufactures and sells the products at issue, and that Hain Celestial is merely the parent. Nevertheless, at this early stage, and accepting all allegations as true, the Court concludes that plaintiff's claims for breach of express warranty, false advertising and deceptive trade practices against Hain Celestial must survive. The Court further finds that plaintiff has not alleged sufficient facts to support injunctive relief, and thus that portion of the motion is granted. Finally, the Court declines to strike the class allegations on the basis of prematurity.

         For the reasons set forth below, defendants' partial motion to dismiss is GRANTED in PART and DENIED in PART.

         I. BACKGROUND

         A. Factual Allegations

         Plaintiff specifically alleges that Hain Celestial manufactures and sells natural personal care products under the brand names Jason Natural and Earth's Best, among others. (Id. ¶ 3.) Plaintiff also specifically alleges that Hain Celestial and Jason Natural are distinct corporate entities; no allegations clearly establish the relationship between the two or differentiate the defendants' roles vis-à-vis the Jason Natural products at issue in this litigation. (Id. ¶¶ 20, 21.)

         Plaintiff Lori D. Gordon is an alleged purchaser of five Jason Natural brand products (the “Products”): (1) Long & Strong Jojoba Pure Natural Shampoo; (2) Volumizing Lavender Shampoo; (3) Normalizing Tea Tree Treatment Shampoo; (4) Dandruff Relief 2 in 1 Treatment Shampoo & Conditioner; and (5) Smoothing Coconut Body Wash. (Id. ¶¶ 6, 8.)[1] Plaintiff allegedly purchased these Products on a regular basis from November 2012 to March 2016 from retailers in New York and Connecticut. (Id. ¶ 8.) Plaintiff alleges that “Defendants” market, advertise, produce, supply, promote and sell the Products. (Id. ¶¶ 7, 11.)[2]

         Plaintiff alleges “the companies have long claimed” their products do not contain SLS, an alleged eye, skin and respiratory irritant. (Id. ¶¶ 2-3.) For instance, pictures of the Products attached to the FAC show that each bears a label stating, “NO . . . SLS”. (Id., Ex. A at 2, 4, 6, 8, 10; see also id. ¶ 6.) She further alleges she purchased the Products after reading and relying upon these labels and “for the express purpose of avoiding coming into contact with SLS” and its “dangerous side effects”. (Id. ¶ 8.) Nevertheless, plaintiff asserts that, from 2011 to 2016, defendants misleadingly produced, supplied, marketed and sold their Products as being free of SLS, even though they knew or should have known this was not true. (Id. ¶¶ 1, 7, 11.)

         On March 10, 2016, the Wall Street Journal reported that it had commissioned two independent laboratories to test for SLS in several consumer products containing sodium coco sulfate (“SCS”) (id. ¶ 4 n.7), a compound plaintiff alleges to be a “blend of cleaning agents that contains about 50% SLS” (id. ¶ 5). The laboratories identified SLS in Hain Celestial's Earth Best baby shampoo. (Id. ¶ 4 n.7.) This shampoo was the only Hain Celestial or Jason Natural product tested in the study or reported on by the Wall Street Journal. (Id.)

         Plaintiff alleges that, “In response to these test results, Hain Celestial has argued that it does not add SLS to its Products; instead it uses sodium coco sulfate (‘SCS')” (id. ¶ 5), and that “Hain Celestial now acknowledges that there may be some amount of sodium lauryl sulfate contained in some of our surfactant products as a constituent of the sodium coco sulfate” (id. ¶ 6 (internal quotation marks omitted)). Although plaintiff attributes these representations to Hain Celestial, the footnotes accompanying the allegations cite to a Jason Natural website. (See id. ¶¶ 5 n.9 (citing, 6 n. 12 (same).) Citing the same website, plaintiff further alleges that, “[a]t present, the company claims it is in the process of removing SLS-free claims from the Products' packaging.” (Id. ¶ 6 n.13 (citing

         Plaintiff alleges that if the Products were not misleadingly labeled, she and the other putative class members either would not have purchased them or would have paid less for them. (Id. ¶ 13.) Plaintiff further alleges that, in this scenario, she personally would not have purchased the Products. (Id. ¶ 8.)

         B. Procedural History

         Plaintiff commenced this action on August 17, 2016. At an initial pretrial conference held on October 26, 2016, counsel for defendants indicated defendants' intended to move to dismiss the complaint and outlined the likely bases on which they would move. (Transcript of Proceedings Held on October 26, 2016 (“IPTC Tr.”, ECF No. 30) 7:4-8:13.) Counsel for plaintiff indicated plaintiff would likely respond by seeking to amend the complaint. (Id. 8:17-9:19; 9:20-10:20.) Accordingly, the Court set a briefing schedule for plaintiff to amend the complaint and for defendants to move to dismiss the amended complaint. (See ECF No. 26.) The Court indicated that it would entertain only one set of motion practice at the motion to ...

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