Cases out of New York involving food products catch our eye these days, as NY threatens to become the new “food court.” Today’s post involves Eric Parham v. ALDI, Inc., No. 19 CIV. 8975 (PGG), 2021 WL 4296432 (S.D.N.Y. Sept. 21, 2021).
Plaintiff asserted false advertising claims under New York General Business Law (“GBL”) §§ 349 & 350 against defendant pertaining to an unsweetened vanilla almond milk product. The complaint was dismissed without leave to file a second amended complaint.
Plaintiff claimed he purchased an organic unsweetened almond milk purporting to be flavored only with vanilla at various Aldi stores, including an Aldi store in the Bronx. Plaintiff alleged he purchased “the Product because he liked the product type for its intended use and expected its vanilla flavor to not to be enhanced by artificial flavors….” The front label of the Product contains the brand name “Friendly Farms” at the top, along with a banner that says “Organic.” Under the banner is the word “Almond” in larger font, below which the words “unsweetened” and “vanilla” appear. Plaintiff contended that the label’s representations were misleading because although the characterizing flavor is represented as vanilla, its flavor is not derived exclusively from vanilla beans, contains non-vanilla artificial flavors that are not disclosed to consumers on the front label or ingredients list.
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. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A complaint is inadequately pled if it tenders naked assertions devoid of ‘further factual enhancement, Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 557), and does not provide factual allegations sufficient to give the defendant fair notice of what the claim is and the grounds upon which it rests. Port Dock & Stone Corp. v. Oldcastle Northeast, Inc., 507 F.3d 117, 121 (2d Cir. 2007).
To successfully assert a claim under either GBL §§ 349 or 350, a plaintiff must allege that a defendant has engaged in (1) consumer-oriented conduct that is (2) materially misleading and that (3) plaintiff suffered injury as a result of the allegedly deceptive act or practice. Beck v. Manhattan Coll., 20 Civ. 3229 (XLS), 2021 WL 1840864, at *5 (S.D.N.Y. May 7, 2021), An act is deceptive within the meaning of the New York statute only if it is likely to mislead a reasonable consumer. Id. Additionally, under either provision, it is well settled that a court may determine as a matter of law that an allegedly deceptive advertisement would not have misled a reasonable consumer. Chufen Chen v. Dunkin’ Brands, Inc., 954 F.3d 492, 500 (2d Cir. 2020) (citation, quotation marks, and alteration marks omitted).
Here the magistrate judge recommended and the district court agreed that Defendant’s labeling was not misleading, because a reasonable consumer would understand that the word vanilla on the front of the carton describes how the Product tastes, not what it contains, especially in circumstances where the ingredients listed on the Product container do not mention vanilla at all. See, e.g., Twohig v. Shop-Rite Supermarkets, Inc., 519 F. Supp. 3d 154, 158-61 (S.D.N.Y. 2021).
The most interesting part of the opinion, perhaps, was the discussion of the request for leave to amend; often complaints are dismissed with or without prejudice and the opinions offer little discussion why, Although Rule 15(a) of the Federal Rules of Civil Procedure provides that leave to amend shall be freely given when justice so requires, it is within the sound discretion of the district court to grant or deny leave to amend. A district court has discretion to deny leave for good reason, including futility, bad faith, undue delay, or undue prejudice to the opposing party. McCarthy v. Dun & Bradstreet Corp., 482 F.3d 184, 200 (2d Cir. 2007) (citing Foman v. Davis, 371 U.S. 178, 182 (1962)). An amendment is futile if the proposed claim could not withstand a motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6). Lucente v. Int’l Bus. Machs. Corp., 310 F.3d 243, 258 (2d Cir. 2002).
Plaintiffs’ proposed new allegations addressed the results of a consumer survey concerning Defendant’s “vanilla” labelling and “the labeling of the Product in the marketplace vis-à-vis its competitors’ products. Plaintiff argued that the survey showed that like himself, the vast majority of consumers surveyed understood the “Vanilla” representation as not being solely about the flavor of the Product. The court concluded that the survey commissioned by Plaintiffs’ counsel does not salvage their claim. The survey did not demonstrate that the respondents believed the flavor in Defendant’s product came predominantly or exclusively from vanilla beans – which is what Plaintiffs alleged. In actuality, the way the questions were worded did not clearly address the issue. Plaintiffs constructed the survey, noted the court. If they wanted to ascertain whether respondents thought the flavor came 100% from the vanilla plant, that would have been an easy enough response to draft. The survey seemingly presumed that the label conveyed something about that origin, and asked what it conveyed; it did not give participants the option of stating that they believed that the label conveyed nothing about the origin of the vanilla taste. So the survey here – designed at the behest of counsel who apparently has brought nearly 100 similar lawsuits challenging the labeling of vanilla flavored products and presumably has given significant thought to the questions, observed the court – was sufficiently flawed that it did not contribute enough to render the claims plausible. See Procter & Gamble Co. v. Ultreo, Inc., 574 F. Supp. 2d 339, 352 (S.D.N.Y. 2008) (“A survey is not credible if it relies on leading questions which are inherently suggestive and invite guessing by those who did not get any clear message at all.”).
Plaintiff also asserted that his understanding of Defendant’s representation was reasonable in light of marketplace practice. Plaintiff pointed to federal regulations, arguing these regulations “effectively establish custom and practice in the industry,” But even if Plaintiffs were correct about what the federal regulations require – a point Defendants disputed – the complaint did not allege that reasonable consumers are aware of these complex regulations, much less that they incorporate the regulations into their day-to-day marketplace expectations. There is no extrinsic evidence that the perceptions of ordinary consumers align with these various complicated labeling standards. See also Twohig, 519 F. Supp. 3d at 164 (quoting Wynn v. Topco Associates, LLC, No. 19-CV-11104, 2021 WL 168541, at *3 (S.D.N.Y. Jan. 19, 2021)); see also Clark v. Westbrae Nat., Inc., No. 20-cv-3221-JSC, 2020 WL 7043879, at *1, 4 (N.D. Cal. Dec. 1, 2020). In sum, Plaintiff’s argument in the proposed SAC about the federal regulations also provided no basis for granting leave to amend, which would have been futile.