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Daniel v. Tootsie Roll Industries, LLC

United States District Court, S.D. New York

August 1, 2018

BIOLA DANIEL, ABEL DURAN, and TREKEELA PERKINS, on behalf of themselves and all others similarly situated, Plaintiffs,

          Counsel for plaintiffs: C.K. Lee Anne M. Seelig Lee Litigation Group, LLC

          Counsel for defendant: David W. Haller Covington & Burling LLP



         Plaintiffs Biola Daniel (“Daniel”), Abel Duran (“Duran”), and Trekeela Perkins (“Perkins”), on behalf of themselves and all others similarly situated, bring this action against defendant Tootsie Roll Industries, LLC (“defendant”), asserting violations of the Federal Food Drug & Cosmetic Act, the New York General Business Law, and the Mississippi Consumer Protection Act. Plaintiffs allege that defendant's opaque boxes of Junior Mints candies contain “non-functional slack-fill, ” essentially wasted, empty air, which mislead consumers as to the amount of product contained therein. Defendant now moves, pursuant to Federal Rules of Civil Procedure 9(b), 12(b)(1), 12(b)(2), 12(b)(6), and 12(f), to dismiss plaintiffs' First Amended Class Action Complaint, and/or to strike plaintiffs' class claims. For the following reasons, defendant's motion to dismiss is granted, and its motion to strike is denied as moot.


         I. Factual Background

         Based in Chicago, Illinois, defendant “manufacture[s], package[s], distribute[s], advertise[s], market[s] and s[e]l[ls]” Junior Mints, a 0.5” wide “ovoid chocolate coated mint cand[y], ” to “millions of consumers nationwide.” First Amended Class Action Complaint (“Am. Compl.”) ¶¶ 20, 49, Jan. 2, 2018, Dkt. No. 12.

         On September 23, 2016, Daniel, a New York City resident, purchased a 3.5 oz. box of Junior Mints for $1.49 from a Duane Reade location in Manhattan. Id. ¶ 37. On December 28, 2017, Duran, who also resides in New York City, purchased a 4.13 oz. box of Junior Mints for $4.49 at an AMC Theatre location in Garden City, New York.[1] Id. ¶ 43. Perkins, who resides in Jackson County, Mississippi, purchased “boxes” of Junior Mints, “including the 3.5 oz. size, ” “on several occasions at Walmart and grocery stores” for about $1.00 to $1.29. Id. ¶ 46. In addition to the varieties of Junior Mints plaintiffs purchased, defendant also produces 1.84 oz. and 10.5 oz. boxes, along with “other Junior Mints product[s] that [are] packaged in a box with more than one quarter of the box containing air, ” (collectively, the “Products”). Id. ¶ 1.

         All of the Products, which are “mass produced and packaged in non-transparent boxes of standardized sizes, ” contain a certain amount of empty air or “slack-fill.” Id. ¶ 2. The 1.84 oz. box is 1.88” wide and 0.75” long, with 3” out of its 4.75” vertical capacity filled with candy, meaning 37% is slack-fill; the 3.5 oz. box is 3.25” wide and 0.75” long, with 3.125” out of its 5.5” vertical capacity filled with candy, meaning 43% is slack-fill; the 4.13 oz. box is 3.25” wide and 0.75” long, with 3.5625” out of its 5.5” vertical capacity filled with candy, meaning 35% is slack-fill; and the 10.5 oz. box is 4.5” wide and 1” long, with 4.25” out of its 7” vertical capacity filled with candy, meaning 39% is slack-fill. Id. ¶¶ 5-8, 57-60.

         According to plaintiffs, the size of the Product boxes in comparison to the volume of candy contained therein makes it appear that consumers are buying more than what is actually being sold, thereby denying them the benefit of their bargain. See Id. ¶¶ 2, 4. In other words, consumers receive fewer candies than defendant represents that they are getting, such that consumers pay more money for each quantity of candy than had been bargained for. See Id. ¶¶ 10-11. Plaintiffs allegedly “paid . . . for the Product[s] on the reasonable assumption that [the] box was filled to functional capacity . . . and would not have paid this sum had [they] known that the box was more than one third full of air or had the box been proportioned to its actual contents.” Id. ¶ 38; see Id. ¶¶ 44, 47.

         II. Procedural Background

         Plaintiffs filed the operative First Amended Class Action Complaint on January 2, 2018. Plaintiffs allege, on behalf of a putative nationwide class[2] and certain subclasses in the alternative, [3] that defendant “manufactures, markets and sells the Products with non-functional slack-fill” in violation of the Federal Food, Drug, and Cosmetic Act (“FDCA”), 21 U.S.C. § 301 et seq. Am. Compl. ¶ 9. However, as the FDCA does not provide a private right of action, plaintiffs bring claims pursuant to New York's prohibition on (1) deceptive and unfair trade practices, N.Y. Gen. Bus. Law § 349 (“GBL § 349”), and (2) false advertising, Id. §§ 350, 350-a (“GBL §§ 350, 350-a”), see Am. Compl. ¶¶ 126-43, as well as (3) the Mississippi Consumer Protection Act (“MPCA”), Miss. Code Ann. § 75-24-1 et seq., see Am. Compl. ¶¶ 144-53. Plaintiffs also assert a common law fraud claim. See Id. ¶¶ 154-60.

         On February 16, 2018, defendant moved to dismiss the First Amended Class Action Complaint. See Dkt. No. 18. Defendant argues that: (1) plaintiffs do not have standing with respect to claims under laws of states in which they did not reside, the Products they did not purchase, and/or to the extent they seek injunctive relief; (2) this Court may not exercise personal jurisdiction with respect to Perkins' claims; (3) plaintiffs have not plausibly pleaded that the slack-fill in the Products is “non-functional, ” in violation of the FDCA; (4) no reasonable consumer would be misled by the Products; (5) plaintiffs have not alleged an injury under GBL §§ 349, 350, and/or 350-a; (6) plaintiffs' fraud claims fail under Rule 9(b); and (7) plaintiffs' class claims should be dismissed or stricken. We proceed to consider each argument seriatim and ultimately grant defendant's motion to dismiss and deny its motion to strike as moot. Before doing so, however, we first review the applicable federal and state regulatory schemes governing food product labeling.


         I. Federal and State Regulatory Schemes

         a. Federal Regulatory Scheme

         By enacting the FDCA, Congress established the Federal Food and Drug Administration (“FDA”) to “promote the public health” by “ensuring that . . . foods are safe, wholesome, sanitary, and properly labeled.” 21 U.S.C. § 393(b). The FDA enforces the FDCA and the accompanying regulations it promulgates; there is no private right of action under the FDCA. PDK Labs, Inc. v. Friedlander, 103 F.3d 1105, 1113 (2d Cir. 1997).

         Congress amended the FDCA by enacting the Nutrition Labeling and Education Act of 1990 (“NLEA”), which “sought ‘to clarify and to strengthen the [FDA's] legal authority to require nutrition labeling on foods, and to establish the circumstances under which claims may be made about nutrients in foods.'” N.Y. State Rest. Ass'n v. N.Y.C. Bd. of Health, 556 F.3d 114, 118 (2d Cir. 2009) (quoting H.R. Rep. No. 101-538, at 7 (1990), reprinted in 1990 U.S.C.C.A.N. 3336, 3337). Among other requirements, the NLEA provides that “[a] food shall be deemed to be misbranded” if “its container is so made, formed, or filled as to be misleading.” 21 U.S.C. § 343(d).

         One category of misleading products are those that contain “slack-fill, ” defined as “the difference between the actual capacity of a container and the volume of product contained therein.” 21 C.F.R. § 100.100(a). Yet not all slack-fill is misleading; rather, slack-fill is only misleading if (1) consumers are unable to fully view the contents of the package, and (2) the slack-fill is non-functional. See Id. Slack-fill is, in turn, non-functional only if none of the following raisons d'être apply: (1) protection of the contents of the package; (2) requirements of the machines used to enclose the contents in the package; (3) unavoidable settling during shipping and handling; (4) the need for the package to perform a specific function; (5) the food is packaged in a reusable container with empty space as part of the presentation of the food; and/or (6) the inability to increase the fill level or reduce the package size because, for example, the size is necessary to accommodate food labeling requirements or to discourage theft. See Id. § 100.100(a)(1)-(6).

         b. State Regulatory Schemes

         New York law provides that “[f]ood shall be deemed to be misbranded . . . [i]f its container is so made, formed, colored or filled as to be misleading.” N.Y. Agric. & Mkts. Law § 201(4). “Like its federal counterpart, New York law also provides remedies, including private rights of action, for misbranding food under consumer protection laws.” Izquierdo v. Mondelez Int'l, Inc., No. 16-cv-04697 (CM), 2016 WL 6459832, at *3 (S.D.N.Y. Oct. 10, 2016). GBL Sections 349, 350 and 350-a in particular have been interpreted to provide a private right of action for excessive slack-fill. See Mennen Co. v. Gillette Co., 565 F.Supp. 648, 655 (S.D.N.Y. 1983), aff'd sub nom. Mennen v. Gillette, 742 F.2d 1437 (Table) (2d Cir. 1984); see also Waldman v. New Chapter, Inc., 714 F.Supp.2d 398, 406 (E.D.N.Y. 2010).

         Mississippi law, and specifically the MCPA, prohibits “unfair or deceptive trade practices in or affecting commerce.” Miss. Code Ann. § 75-24-5(1); see Holman v. Howard Wilson Chrysler Jeep, Inc., 972 So.2d 564, 571 (Miss. 2008) (The purpose of the MCPA “is to protect the citizens of Mississippi from deceptive and unfair trade practices.”). The MCPA defines unfair or deceptive trade practices as, inter alia, “[r]epresenting that goods or services have . . . quantities that they do not have, ” and “[a]dvertising goods or services with the intent not to sell them as advertised.” Miss. Code Ann. § 75-24-5(2)(e), (i).

         In addition to enforcement rights reserved for the Attorney General of the State of Mississippi, the MCPA “creates a private right of action in favor of any person who purchases or leases goods or services primarily for personal, family or household purposes and thereby suffers any ascertainable loss of money or property, real or personal, as a result of the use of or employment by the seller, lessor, manufacturer or producer” of such unfair or deceptive trade practices. Humphrey v. Citibank NA, No. 2:12CV148M-V, 2013 WL 5407195, at *6 (N.D. Miss. Sept. 25, 2013) (internal quotation marks omitted) (quoting Miss. Code Ann. § 75-24-15(1)).

         c. Preemption

         “Consistent with the NLEA's purpose of promoting uniform national labeling standards, the statute includes an express preemption provision that forbids the states from ‘directly or indirectly establish[ing] . . . any requirement . . . made in the labeling of food that is not identical to' the federal labeling requirements established by certain specifically enumerated sections of the FDCA.” Izquierdo, 2016 WL 6459832, at *4 (quoting 21 U.S.C. § 343-1(a)). “The effect of the NLEA's preemption provision is to ensure that the states only enact food labeling requirements that are equivalent to, and consistent with, the federal food labeling requirements.” Id. “State laws that impose affirmatively different labeling requirements from federal law in these areas are preempted.” Id. However, “state laws that seek to impose labeling requirements identical to those required by federal regulations are not preempted.” Id. (citing Koenig v. Boulder Brands, Inc., 995 F.Supp.2d 274, 284 (S.D.N.Y. 2014)). The consequence is that if a product's packaging does not run afoul of federal law governing food labeling, no state law claim for consumer deception will lie. See Daniel v. Mondelez Int'l, Inc., 287 F.Supp.3d 177, 187 n.7 (E.D.N.Y. 2018); cf. Martin v. Wm. Wrigley Jr. Co., No. 4:17-cv-00541-NKL, 2017 WL 4797530, at *2 (W.D. Mo. Oct. 24, 2017) (“[T]he Court must construe the [Missouri Merchandising Practices Act] provisions governing Plaintiff's claims, which purport to concern misleading containers and slack-fill, as being no broader than corresponding federal law.”); Bautista v. CytoSport, Inc., 223 F.Supp.3d 182, 192 (S.D.N.Y. 2016); Izquierdo, 2016 WL 6459832, at *4.

         II. Subject Matter Jurisdiction: Article III Standing

         Defendant first moves under Federal Rule of Civil Procedure 12(b)(1) to dismiss the First Amended Class Action Complaint for lack of subject matter jurisdiction, namely, plaintiffs' purported failure to establish Article III standing.

         To defeat a Rule 12(b)(1) motion, a plaintiff must establish subject matter jurisdiction by a preponderance of the evidence. Makarova v. United States, 201 F.3d 110, 113 (2d Cir. 2000). In considering such a motion, the Court must accept as true all material facts alleged in the complaint and draw all reasonable inferences in the plaintiff's favor. Conyers v. Rossides, 558 F.3d 137, 143 (2d Cir. 2009). Nevertheless, “even on a motion to dismiss, courts are not bound to accept as true a legal conclusion couched as a factual allegation.” Id. (internal quotation marks omitted) (quoting Sharkey v. Quarantillo, 541 F.3d 75, 83 (2d Cir. 2008)).

         Defendant raises three different standing arguments: (1) that plaintiffs lack standing to bring claims on behalf of a class under the laws of states where the named plaintiffs have never lived or resided; (2) that plaintiffs were not injured, and thus do not have standing, with respect to the Products they did not personally purchase; and (3) that Daniel and Duran, who seek injunctive relief under GBL § 349, have not demonstrated that defendant's allegedly misleading packaging is likely to injure them in the future.

         In order to bring a suit in federal court, a plaintiff must demonstrate that he possesses standing to do so. Under well settled Supreme Court precedent, in order to demonstrate standing, a plaintiff must show three elements: (1) an injury in fact, (2) that is fairly traceable to the defendant's allegedly unlawful conduct, and (3) that is likely to be redressed by a favorable judicial decision. Spokeo, Inc. v. Robins, 136 S.Ct. 1540, 1547 (2016). The “injury in fact” must be a “concrete and particularized” harm to a “legally protected interest” that is “actual or imminent not conjectural or hypothetical.” Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992) (internal quotation marks omitted). A “particularized” injury is one that “affect[s] the plaintiff in a personal and individual way.” Id. at 560 n.1.

         “That a suit may be a class action . . . adds nothing to the question of standing, for even named plaintiffs who represent a class must allege and show that they personally have been injured.” Lewis v. Casey, 518 U.S. 343, 357 (1996) (internal quotation marks omitted) (quoting Simon v. E. Ky. Welfare Rights Org., 426 U.S. 26, 40 n.20 (1976)). Thus, “[f]or each claim asserted in a class action, there must be at least one class representative . . . with standing to assert that claim.” Fort Worth Emps.' Ret. Fund v. J.P. Morgan Chase & Co., 862 F.Supp.2d 322, 331-32 (S.D.N.Y. 2012) (citing Cent. States Se. & Sw. Areas Health & Welfare Fund v. Merck-Medco Managed Care, L.L.C., 504 F.3d 229, 241 (2d Cir. 2007)).

         a. Standing for Class Claims Under Other States' Laws

         Plaintiffs purport to bring their claims “in conjunction with the substantively similar common law of other states and the District of Columbia to the extent New York common law is inapplicable to out-of-state Class members.” Am. Compl. at 43, 46, 47, 51. Defendant, pointing to several district court cases within this Circuit, argues that “named plaintiffs lack standing to bring claims on behalf of a class under the laws of states where the named plaintiffs have never lived or resided.” Def.'s Supp. at 27 (citing In re HSBC BANK, USA, N.A., Debit Card Overdraft Fee Litig.,1 F.Supp.3d 34, 50 ...

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