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holding that "[p]laintiffs state a claim for breach of express warranty because they sufficiently allege: the [d]efendant makes a specific description that the product is 'fat free'; the description was the basis of the bargain for the product; and the product ultimately did not conform to the description because it contained one gram of fat per serving."
Summary of this case from Neuss v. Rubi Rose, L.L.C.Opinion
Civil Action No.: 11-6174 (JLL)
06-25-2012
MELISSA STEWART and KEVIN STEWART, on behalf of themselves and all others similarly situated Plaintiffs, v. SMART BALANCE, INC., GFA BRANDS, INC. Defendants.
NOT FOR PUBLICATION
OPINION
LINARES, District Judge.
This matter comes before the Court by way of a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) (CM/ECF No. 30) by Defendants Smart Balance and GFA Brands, Inc. (hereafter "Defendants"). No oral argument was heard pursuant to Rule 78 of the Federal Rules of Civil Procedure. After considering the submissions of the parties in support of and in opposition to the instant motions, Defendant's motion to dismiss is granted in part and denied in part.
I. BACKGROUND
Plaintiffs Melissa and Kevin Stewart (hereafter "Plaintiffs" or the "Stewarts") bring this putative class action against Defendants seeking to redress an alleged "unfair, deceptive, and otherwise improper business practice that Defendants are employing against unsuspecting consumers." (CM/ECF No. 9, Amended Complaint ¶ 4) (hereafter "Compl.").
Defendant Smart Balance markets and sells products, including the one at issue here under the SmartBalance trademark throughout the United States. (Compl. ¶ 11). Defendant GFA Brands, Inc. (hereafter "GFA") is a wholly-owned operating subsidiary of Defendant Smart Balance, which marketed and sold Smart Balance Fat Free Enhanced Milk (hereafter the "Product" or "Fat Free Enhanced Milk"). (Compl. ¶ 12).
Plaintiffs are citizens of New York. Melissa bought Defendant's "Fat Free Milk and Omega-3" approximately every two weeks beginning in May 2011 at two different supermarkets in New York. (Compl. ¶ 9). Kevin purchased same in New Jersey between May and October 2011. (Compl. ¶ 10). Plaintiffs allege that they "paid anywhere from $0.30 to $1.80 more for Defendants' 'Fat Free' Enhanced Milks than [they] would have otherwise paid for alternative fat free milk options because [they] believed that the 'Fat Free' Milk and Omega-3 was in fact fat free." (Compl. ¶¶ 9-10).
Plaintiffs specifically allege as follows:
in an effort to bolster its sales of its "Fat Free" Enhanced Milks in the rapidly expanding enhanced milk market, Defendants misleadingly, and purposefully misrepresent on their milk cartons, on their website, and in their promotions that these enhanced milks are "fat free" when in fact they contain 1 gram of fat per serving and 8 grams of fat per container. This 1 gram of fat per serving is double the legal limit of 0.5 grams of fat per serving that a food is legally permitted to contain to label itself "fat free."(Compl. ¶ 4). Plaintiffs allege that the claim that the Product is "fat free" appears on nine places on the Product carton, which is "false, and intentionally confusing and misleading." (Compl. ¶¶ 33, 60). Defendants allegedly market the Product as "rich and creamy, characteristics not common in fat free milk," which is allegedly "intended to mislead consumers into believing that the enhanced milks are in fact 'fat free.'" (Compl. ¶¶ 35, 37).
Despite the fact that federal regulations require that a food with the label "fat free" contain only 0.5 grams of fat per serving, the Product contains 1 gram of fat per labeled serving. (Compl. ¶ 39). The nutrition facts reflect as such. (Compl. ¶ 61). In addition, Plaintiffs allege that the Fat Free Enhanced Milks "contain an added ingredient that is a fat, in this case Omega-3 Oil Blend, but fail to follow that ingredient with an asterisk that refers to a statement below the list of ingredients which states 'adds a trivial amount of fat,' 'adds a negligible amount of fat,' or 'adds a dietarily insignificant amount of fat'" in violation of federal regulations despite the fact that such is commercially feasible. (Compl. ¶ 40). Essentially, Plaintiffs allege that Defendants' Fat Free Enhanced Milks are no longer fat free because the addition of the Omega-3 Oil Blend raises the content of fat per serving above the amount permitted under federal milk regulations.
On October 19, 2011, Plaintiffs filed suit on behalf of a putative class. (CM/ECF No. 1). Their Amended Complaint asserts the following causes of action: (1) violation of the New Jersey Consumer Fraud Act, N.J.S.A. 56:8-1 et seq.; (2) breach of express warranty; and (3) violation of the Magnuson-Moss Warranty Act, 15 U.S.C. § 2301, et seq. (Compl. ¶¶ 94-123).
II. LEGAL STANDARD
Federal Rule of Civil Procedure 8(a)(2) requires that a complaint set forth "a short and plain statement of the claim showing that the pleader is entitled to relief." For a complaint to survive dismissal, it "must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.' " Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). The plaintiff's short and plain statement of the claim must "give the defendants fair notice of what the . . . claim is and the grounds upon which it rests." Twombly at 545 (quoting Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)).
In evaluating the sufficiency of a complaint, a court must accept all well-pleaded factual allegations as true and draw all reasonable inferences in favor of the non-moving party. See Phillips v. County of Allegheny, 515 F.3d 224, 234 (3d Cir. 2008). "Factual allegations must be enough to raise a right to relief above the speculative level." Bell Atl. Corp. v. Twombly, 550 U.S. at 555 (2007). Further, "[a] pleading that offers 'labels and conclusions' or 'a formulaic recitation of the elements of a cause of action will not do. Nor does a complaint suffice if it tenders 'naked assertion[s]' devoid of 'further factual enhancement.'" Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. at 555, 557 (2007)).
II. DISCUSSION
As noted above, Plaintiffs bring the following claims: (1) violation of the New Jersey Consumer Fraud Act, N.J.S.A. 56:8-2 ("NJCFA"); (2) breach of express warranty; and (3) violation of the Magnuson-Moss Warranty Act ("MMWA"). Defendants move to dismiss the Amended Complaint in its entirety. A. Regulatory Context
1. General Background
In 1938, Congress passed the Federal Food, Drug, and Cosmetic Act ("FDCA"), which gives the Food and Drug Administration ("FDA") power to ensure "foods are safe, wholesome, sanitary, and properly labeled." 21 U.S.C. § 393(b)(2)(A); Fellner v. Tri-Union Seafoods, LLC, 539 F.3d 237, 251 (3d Cir. 2008) ("The FDCA grants the FDA authority to regulate the field of food safety"). In 1990, Congress amended the FDCA with the Nutrition Labeling and Education Act ("NLEA"). Pub.L. No. 101-535, 104 Stat. 2353 (1990) (codified at 21 U.S.C. § 343 et seq.); Holk, 575 F.3d at 332. "NLEA introduced a number of substantial reforms: (1) it required nutrition labeling for nearly all food products under the authority of the FDA, which exemptions for small businesses, restaurants, and some other retail establishments; (2) it changed the requirements for ingredient labels on food packages; (3) it imposed and regulated health claims on packages; (4) it standardized all nutrient content claims; and (5) it standardized all serving sizes." Id. As defined by the applicable federal regulation, an "expressed" nutrient content claim is "any direct statement about the level (or range) of a nutrient in the food, e.g. 'low sodium' or 'contains 100 calories.'" 21 C.F.R. § 101.13(b)(1).
Although not at issue here, the regulation also defines implied nutrient content claims such as "high in oat bran" or "healthy, contains 3 grams of fat." 21 C.F.R. § 101.13(b)(2).
The NLEA's preemption provision mandates, in relevant part, that "no State or political subdivision of any state may directly or indirectly establish under any authority...any requirement respecting any claim of the type described in section 343(r)(1) of this title, made in the label or labeling of food that is not identical to the requirement of section 343(r) of this title." 21 U.S.C. § 343-1(a).
b. Milk Regulations
The parties point to the following milk regulations promulgated by the Food and Drug Administration ("FDA") in their respective filings. 21 C.F.R. § 131.110 describes milk as "the lacteal secretion, practically free from colostrum, obtained by the complete milking of one or more healthy cows" and sets forth a "standard of identity," or recipe, for the components of "milk." In order to be labeled as such, it must "contain not less than 8 ¼ percent milk solids not fat and not less than 3 ¼ percent milkfat." Id.
A separate provision, 21 C.F.R. § 130.10, permits the modification of ingredients in standardized foods. As Defendants assert, the regulation "allows milk producers to deviate from the standard identity for milk by reducing the overall milk fat contained in the product." (Defs.' Mot., 5). In addition, 21 C.F.R. § 101.62(b) establishes a nutrient content for "fat free," which provides in relevant part as follows:
(b) Fat content claims.
(1) The terms "fat free," "free of fat," "no fat," "zero fat," "without fat," "negligible source of fat," or "dietarily insignificant source of fat" or, in the case of milk product, "skim" may be used on the label or in labeling foods, provided that:
21 C.F.R. § 101.62(b)(1). Defendants submit and Plaintiffs agree that "[t]aken together, sections 130.10 and 101.62(b) permit the dairy industry to market . . . four different types of milk based on the total fat content: whole, 2% reduced fat, 1% low fat, and skim milk." (Defs.' Mot., 6; Pls.' Opp'n., 7).(i) The food contains less that 0.5 gram (g) of fat per reference amount customarily consumed and per labeled serving, or in the case of a meal product or main dish product, less than 0.5 g of fat per labeled serving; and
(ii) The food contains no added ingredient that is a fat or is generally understood by consumers to contain fat unless the listing of the ingredient in the ingredient statement is followed by an asterisk that refers to the statement below the list of ingredients, which states 'adds a trivial amount of fat," "adds a negligible amount of fat," or "adds a dietarily insignificant amount of fat;" and
(iii) As required in § 101.13(e)(2), if the food meets these conditions without the benefit of special processing, alteration, formulation, or reformulation to lower fat content, it is labeled to disclose that fat is not usually present in the food (e.g., "broccoli, a fat free food").
Finally, as per 21 C.F.R. § 101.13(b), "[a] claim that expressly or implicitly characterizes the level of a nutrient of the type required to be in nutrition labeling under § 101.9 or under § 101.36 (that is, a nutrient content claim) may not be made on the label or in labeling of foods unless the claim is made in accordance with this regulation and with the applicable regulations in subpart D of this part or in part 105 or part 107 of this chapter." Similarly, 21 C.F.R. § 102.5(a) provides: "The common or usual name of a food, which may be a coined term, shall accurately identify or describe, in as simple and direct terms as possible, the basic nature of the food or its characterizing properties or ingredients. The name shall be uniform among all identical or similar products and may not be confusingly similar to the name of any other food that is not reasonably encompassed within the same name." B. Preemption
Under Local Civil Rule 7.1(d)(6), "no sur-replies are permitted without permission of the Judge or Magistrate Judge to whom the case is assigned." Further, the Court need not consider a sur-reply filed without permission. See e.g. Cooper v. Cape May Cnty. Bd. Of Social Services, 175 F. Supp. 2d 732, 742 (D.N.J. 2001); In re Ford Motor Co. E-350 Van Prods. Liab. Litig. (No. II), Civ. No. 03-4558, 2010 WL 2813788, at *29 (D.N.J. July 9, 2010). Defendants filed a letter with the Court with additional authorities in support of their preemption argument after they filed their Reply. (CM/ECF No. 46). In response, Plaintiffs filed a letter in which they addressed those cases submitted by Defendants. (CM/ECF No. 47). Defendants then filed a second letter in which they requested that the Court strike Plaintiffs' letter as an improper sur-reply or that the Court consider the arguments made in Defendants' second letter as a sur-sur-reply. (CM/ECF No. 49). Plaintiffs then filed an additional letter in which they state that the first letter filed by Defendants was an improper sur-reply and ask this Court to either consider all of the letters or solely rely on the briefs. (CM/ECF No. 50). Importantly, neither party requested permission to file any of these letters. However, in light of the fact that the Court read and considered some of the letters before receiving any objection thereto, the Court has considered all of them. The Court emphasizes, however, that should either party seek to file a sur-reply in the future without first requesting permission, the Court will not consider the filing.
The Supremacy Clause of the Constitution, provides: "This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land; . . . any Thing in the Constitution or Laws of any State to the Contrary notwithstanding." U.S. Const., Art. VI, cl. 2. Accordingly, state laws that "interfere with, or are contrary to the laws of Congress, made in pursuance of the constitution" are invalid. Gibbons v. Ogden, 22 U.S. 1, 211, 6 L.Ed. 23 (1824). "Under the Supremacy Clause, federal law may be held to preempt state law where any of the three forms of preemption doctrine may be properly applied: express preemption, field preemption, and implied conflict preemption." Holk, 575 F.3d at 334 (citing Hillsborough Cty., Fla. v. Automated Med. Labs., Inc., 471 U.S. 707, 713 (1985)).
The Supreme Court has instructed that determining whether a state law is preempted by federal statute involves two principles: "First, the purpose of Congress is the ultimate touchstone in every preemption case. Second, 'in all pre-emption cases, and particularly in those in which Congress has 'legislated . . . in a field which the States have traditionally occupied,' . . . we 'start with the assumption that the historic police powers of the States were not to be superseded by the Federal Act unless that was the clear and manifest purpose of Congress.'" Wyeth v. Levine, 555 U.S. 555, 565 (2009) (internal citations omitted) (alterations in original). The Third Circuit has recognized that "health and safety issues have traditionally fallen with the province of state regulation," including "regulation of food and beverage labeling." Holk, 575 F.3d at 334. Traditionally, regulation of food and beverage labeling and branding fall within the purview of state regulation. Id. at 335 (citing Plumley v. Massachusetts, 155 U.S. 461, 472 (1894) ("If there be any subject over which it would seem the states ought to have plenary control . . . it is the protection of the people against fraud and deception in the sale of food products.")); Mason v. Coca-Cola Co., Civ. No. 09-0220, 2010 WL 2674445, at *3 (D.N.J. June 30, 2010). Accordingly, the presumption against preemption "requires that, if confronted with two plausible interpretations of a statute, we 'have a duty to accept the reading that disfavors pre-emption.'" Holk, 575 F.3d at 335 (quoting Bates v. Dow Agrosciences, LLC, 544 U.S. 431, 449 (2005), citing Cipollone v. Liggett Group, Inc., 505 U.S. 504, 505, 112 S. Ct. 2608, 2611, 120 L. Ed. 2d 407 (1992)).
"There is no implied preemption resulting from the Act since Congress declared that '[t]he Nutrition Labeling and Education Act of 1990 shall not be construed to preempt any provision of State law, unless such provision is expressly preempted.'" Smajlaj v. Campbell Soup Co., 782 F. Supp. 2d. 84, 92 n. 2 (quoting 101 Pub.L. 535, 104 Stat. 2353, 2364 (Nov. 8, 1990)); Holk, 575 F.3d 336. The parties appropriately confine their arguments to express preemption. As noted above, the NLEA preemption provision prohibits states from establishing labeling requirements that differ from those imposed by federal regulations: "no State or political subdivision of any state may directly or indirectly establish under any authority...any requirement respecting any claim of the type described in section 343(r)(1) of this title, made in the label or labeling of food that is not identical to the requirement of section 343(r) of this title." 21 U.S.C. § 343-1(a)(5).
21 U.S.C. § 343(r)(1) governs claims on food labels that "expressly or by implication...characterize the level of any nutrient." Id. The FDA has regulated the identity for milk under 21 C.F.R. § 130.110(a). As discussed above, nutrient content claims that define "fat free" are regulated under 21 C.F.R. § 101.62(b)(1). Pursuant to this code, "The term . . . 'fat free' . . . may be used on the label or in the labeling of foods, provided that...The food contains less than 0.5 gram (g) of fat per reference amount . . . and . . . the food contains no added ingredient that is a fat or is generally understood by consumers to contain fat unless the listing of the ingredient in the ingredient statement is followed by an asterisk that refers to the statement below the list of ingredients, [and] states 'adds a trivial amount of fat,' 'adds a negligible amount of fat,' or 'adds a dietarily insignificant amount of fat.'" Id.
Defendants argue that "Plaintiffs' state law claims are expressly preempted because they seek to impose obligations that differ from those imposed by the full set of FDA regulations governing milk." (Defs.' Mot., 12). They continue: "But Plaintiffs ignore the FDA requirements for the labeling of standardized products and ask this Court to deem it misleading to use the term 'fat free milk' in the statement of identity of a product that contains nonfat milk as an ingredient. Plaintiffs' claims, thus, ignore the common or usual name regulation that requires the use of a uniform name on identical products." (Defs.' Mot., 13). In addition, they submit that "Plaintiffs' claims seek to establish requirements for the labeling of standardized ingredients in multicomponent products that deviate from the requirements established by the FDA in advisory opinions and policy statements." (Id.).
Defendants argue that FDA Compliance Policy Guide ("CPG") provisions permit multicomponent products which include a standardized food as an ingredient or a standardized food and non-standardized food. (Defs.' Mot., 7). In drawing this comparison, Defendants point to CPG Sec. 585.600, a provision which sets forth the policy and labeling requirements for mixtures of canned peas and carrots, and permits the combination so long as each component complies with its respective standard. (Defs.' Mot. 7). Regarding the combination of standardized and non-standardized foods, Defendants provide the policy for non-standardized jellies set forth in CPG Sec. 550.475, which states as follows:
Although mixtures of standardized and non-standardized jellies are not provided for by the standard of identity, the Food and Drug Administration recognizes that articles that are acceptable to the consumer can be fabricated from mixtures of these foods. Therefore no objection will be taken to such mixture provided they are informatively labeled in a truthful and non-misleading fashion.CPG Sec. 550.475 (emphasis added). Defendants also set forth the FDA regulations and policy regarding the labeling of bottled waters that combine two or more standardized products, such as "drinking water with minerals added for taste." (Defs.' Mot. 7-9). Defendants argue that "Defendant GFA Brands followed the FDA regulations and binding guidance statements on the labeling of 'multicomponent foods' when developing its formulation, labeling, and marketing of its milk products" and that same comply with the regulations. (Defs.' Mot. 9).
Therefore, Defendants do not point to any regulations or policy regarding multicomponent products specifically applicable to milk, and none of the policy guidelines or regulations specifically deal with the type of products at issue. Further, the CPG section dealing with non-standardized jellies provides in relevant part that "[n]o objection will be taken to such mixture provided they are informatively labeled in a truthful and non-misleading fashion." CPG, Sec. 550.475, Jellies, Nonstandardized.
Generally, breach of warranty claims are not preempted because the claim does not relate to requirements "'imposed under State law,' but rather imposed by the warrantor." Cipollone, 505 U.S. at 525-26; see also Bates, 544 U.S. at 444-45 (a warranty claim is not preempted because it involves "a contractual commitment that [defendant] voluntarily undertook by placing that warranty on its product"); Ackerman v. Coco-Cola Co., 2010 WL 2925955, at *7. It is axiomatic, however, that a breach of warranty claim premised on a statement mandated by federal statute would impose a requirement contrary to federal law and would therefore be preempted. Young v. Johnson & Johnson, Civ. No. 11-4580, 2012 WL 1372286, at *5 (D.N.J. Apr. 19, 2012); Ackerman v. Coco-Cola Co., Civ. No. 2010 WL 2925955, at *7 (citing Horowitz v. Stryker Corp., 613 F. Supp. 2d 271 (E.D.N.Y. 2009), Duvall v. Bristol-Myers-Squibb Co., 103 F.3d 324 (4th Cir. 1996)).
In addition, as to the NJCFA, under similar circumstances, courts in this District have found that where a cause of action does not seek to impose requirements greater than those required by FDA regulations, the claim was not preempted. For example, in Smajlaj v. Campbell Soup Co., 782 F. Supp. 2d 84, 96 (D.N.J. 2011), Judge Simandle found that FDA regulations for comparison foods, such as "less sodium" did not preempt an NJCFA claim regarding less sodium soup. He wrote that "Plaintiffs, consistent with FDA's regulations, allege that it is misleading to identify a composite of condensed soups as 'Regular Condensed Soup' juxtaposed with a picture of regular tomato soup and the phrase 'The famous taste . . . with less salt!' This cause of action is consistent with and requires nothing more than the FDA's requirement that the reference food be non-misleadingly identified." Id.; Mason v. Coca-Cola Co., Civ. No. 09-0220, 2010 WL 2674445, at *3 (D.N.J. June 30, 2010) ("Plaintiffs' merely allege that Defendant failed to abide by the federal labeling requirements and, in doing so, misled Plaintiffs as a matter of state law. Nothing in the language of the statute expressly preempts a state claim for consumer fraud based on a failure to follow federal labeling requirements. Thus, express preemption is not appropriate in this case.").
Here Plaintiffs do not premise their breach of warranty claims on a statement expressly mandated by federal law. Nor do their claims attempt to impose requirements different from those proscribed in federal statutes and regulations; rather, the gravamen of Plaintiffs' complaint is precisely that Defendants' products are misleading because they fail to comply therewith. In light of the fact that "[t]he Nutrition Labeling and Education Act of 1990 shall not be construed to preempt any provision of State law, unless such provision is expressly preempted," the Court finds that Plaintiffs' claims brought pursuant to New Jersey law are not preempted. 101 Pub.L. 535, 104 Stat. 2353, 2364 (Nov. 8, 1990); Holk, 575 F.3d at 336; Smajlaj, 782 F. Supp. 2d. at 92 n. 2.
C. Private Action under the FDCA
In a similar but unrelated argument, Defendants posit that Plaintiffs are attempting to assert a private right of action for violation of the FDCA, which is prohibited. (Defs.' Mot., 10-11) (citing Redmond v. Fresh Grocers Store, 402 Fed. Appx. 685, 685 (3d Cir. 2010); In re Orthopedic Bone Screw Prods. Liab. Litig., 193 F.3d 781, 788-89 (3d Cir. 1999)). Plaintiffs respond that they "do not allege a cause of action pursuant to the FDCA, nor do they seek to impose different or greater obligations upon Defendants than the FDCA requires." (Pls.' Opp'n., 2-3, 13). They continue: "Rather, Plaintiffs' claims mirror the federal requirements, alleging that Defendants failed to abide by the FDCA, and in doing so, misled Plaintiffs in violation of the New Jersey Consumer Fraud Act, N.J.S.A. 56:8-1, et seq., breached an express warranty, and violated the Magnusson-Moss Warranty Act, rendering Defendants' preemption argument meritless." (Pls.' Opp'n., 2-3, 13-14). The Court finds Defendants' argument in this regard unavailing. Plaintiffs do not purport to bring a cause of action pursuant to the FDCA; rather, Plaintiffs causes of action are grounded in state consumer protection laws and the Court has already determined that the claims are not preempted. See In re Orthopedic Bone Screw Prod. Liab. Litig., 193 F.3d 781, 792 (3d Cir. 1999) ("state law claims such as negligence, breach of implied warranty, and fraudulent misrepresentation are viable, even to the extent they seek recovery for conduct that may have also violated the FDCA."). D. New Jersey Consumer Fraud Act
The New Jersey Consumer Fraud Act (hereafter "NJCFA") provides that
[t]he act, use or employment by any person of any unconscionable commercial practice, deception fraud, false pretense, false promise, misrepresentation, or the knowing, concealment, suppression, or omission of any material fact with intent that others rely upon such concealment, suppression,
or omission, in connection with the sale or advertisement of any merchandise or real estate, or with the subsequent performance of such person as aforesaid, whether or not any person has in fact been misled, deceived or damaged thereby, is declared to be an unlawful practice . . . .N.J.S.A 56:8-2. In order to state a claim under the NJCFA, a plaintiff must allege the following: (1) unlawful conduct; (2) an ascertainable loss; and (3) a causal relationship between the defendant's unlawful conduct and the plaintiff's ascertainable loss. Int'l Union of Operating Eng'rs Local No. 68 Welfare Fund v. Merck & Co., 192 N.J. 372, 929 A.3d 1076, 1086 (N.J. 2007). The NJCFA is "remedial legislation which should be construed liberally." Id. at 1079 n.1. Similarly, a court adjudicating a CFA claim must approach dismissal of said claim "with hesitation." New Jersey Citizen Action v. Schering-Plough Corp., 367 N.J. Super. 8, 13 (App. Div. 2003).
At the outset, claims under the NJCFA must be plead with particularity under Rule 9(b) of the Federal Rules of Civil Procedure. Frederico v. Home Depot, 507 F.3d 188, 200, 202-203 (3d Cir. 2007); Parker v. Howmedica Osteonics Corp., Civ. No. 07-2400, 2008 WL 141628 at *3 (D.N.J. Jan 14, 2008). To satisfy the heightened Rule 9(b), a "plaintiff must plead or allege the date, time and place of the alleged fraud or otherwise inject precision or some measure of substantiation into a fraud allegation." Frederico, 507 F.3d at 200.
Defendants argue that Plaintiffs do not sufficiently allege the factual circumstances with particularity. (Defs.' Br., 16). Specifically, they submit that Plaintiffs do not identify the following: (1) the products actually purchased; (2) the specific stores in which Mr. Stewart claims to have purchased the products; (3) the number of time he purchased the products. (Id.). However, the Complaint sets forth that both Kevin and Melissa Stewart purchased "Fat Free" Milk and Omega-3 (Compl. ¶¶ 9-10) and Kevin made the relevant purchases "in stores in or around Fort Lee and Englewood, New Jersey between May and October 2011" (Compl. ¶ 10). The Court finds that in this regard, Plaintiffs' Complaint injects sufficient precision to put Defendants on notice of the "precise misconduct with which [they are] charged." Frederico v. Home Depot, 507 F.3d at 200 (quoting Lum v. Bank of America, 361 F.3d 217, 223-224 (3d Cir. 2004). However, as discussed below, Plaintiffs do not sufficiently plead an ascertainable loss which is quantifiable. Accordingly, the Court dismisses this claim without prejudice.
Although the Court dismisses Count I because of inadequacies in the allegations concerning ascertainable loss, it will review the first and third requirements necessary to state a claim because a court should approach dismissal of these claims "with hesitation."
1. Unlawful Conduct
Under the NJCFA, unlawful conduct or practices consist of the following, in relevant part:
The act, use or employment by any person of any unconscionable commercial practice, deception, fraud, false pretense, false promise, misrepresentation, or the knowing, concealment, suppression, or omissions of any material fact with the intent that others rely upon such concealment, suppression or omission, in connection with the sale or advertisement of any merchandise . . . .N.J.S.A., 56:8-2. Stated another way, such unlawful practices comprise three categories: (1) affirmative acts; (2) knowing omissions; and (3) violation of regulations promulgated under the act. Federico, 507 F.3d at 202 (citation omitted).
The unlawful conduct alleged here is an affirmative misrepresentation relating to the fat content in Defendants' Fat Free Enhanced Milks, which misled Plaintiffs into believing that the Fat Free Milk and Omega-3 was in fact fat free. (Pls.' Opp'n., 15-16). Accordingly, intent is not an essential element here. Cox v. Sears Roebuck & Co, 138 N.J. 2, 17-18 (1994) (when the alleged unlawful act consists of an affirmative act, "intent is not an essential element and the plaintiff need not prove that the defendant intended to commit an unlawful act."); Leon v. Rite Aid Corp., 340 N.J. Super. 462, 468 (App. Div. 2001).
Under the NJCFA, an affirmative representation is "one which is material to the transaction and which is a statement of fact, found to be false, made to induce the buyer to make the purchase." Mango v. Pierce-Coombs, 370 N.J. Super. 239, 251 (App. Div. 2004).
Further, to rise to the level of consumer fraud, "the business practice in question must be misleading and stand outside the norm of reasonable business practice in that it will victimize the average consumer." Smajlaj, 782 F. Supp. 2d at 98 (citing New Jersey Citizen Action v. Schering-Plough Corp., 367 N.J. Super. 8, 842 A.2d 174, 177 (App. Div. 2003)). Defendant relies on Hassler v. Sovereign Bank, for the proposition that "where a CFA claim is 'based upon an allegedly incomplete or misleading disclosure' and the product at issue contains the very information that the plaintiff alleges was misrepresented, 'dismissal for failure to state a claim is appropriate.'" (Defs.' Reply, 7) (citing 644 F. Supp. 2d 509, 515 (D.N.J. 2009)). Hassler involved a challenge arising out of the way the defendant bank processed its customers' electronic debit transactions. 666 F. Supp. 2d at 511. The court granted defendant's motion to dismiss, in relevant part, because the bank's "personal deposit account agreement" contained terms which "unequivocally belied . . . the plain terms of the parties' [a]greement." Id. The Court finds this case more akin to those in which the parties do not have a contractual agreement, and particularly those that deal with representations in product labels or advertisements.
In further support of the contention that the representations on the Fat Free Enhanced Milks do not constitute an unlawful practice, Defendants describe the packaging and detail the places in which it refers to the fact that the product contains more than 0.5 grams of fat. (Defs.' Mot., 17). However, "the fact that the labels were literally true does not mean that they cannot be misleading to the average consumer." Smajlai, 782 F. Supp. 2d at 98 (citing Miller v. Am. Family Publishers, 284 N.J.Super. 67, 663 A.2d 643, 648 (N.J. Super. Ch. 1995); Union Ink Co., Inc. v. AT&T Corp., 352 N.J.Super. 617, 645, 801 A.2d 361, 379 (App. Div. 2002)). In this case, Plaintiffs allege that the claim that the Product is "fat free" appears on nine places on the Product carton. (Compl. ¶¶ 33, 60). Whether the labeling as a whole is misleading to an average consumer is a question of fact. Leon, 340 N.J. Super. at 469 ("Although there may be some circumstances in which an advertisement is so patently deceptive that a violation of the Consumer Fraud Act may be found as a matter of law, the determination whether an advertisement is misleading is ordinarily for the trier of fact -here the jury- to decide); Union Ink Co., Inc., 352 N.J.Super. at 645 ("Whether an advertisement is misleading presents a question of fact in most cases"). Accordingly, at this stage of the litigation, Plaintiffs' claims of misleading representations are sufficient to satisfy the first element.
2. Ascertainable Loss
There is neither a statutory definition for "ascertainable loss" nor relevant legislative history. Thiedemann v. Mercedes-Benz USA, LLC, 872 A.2d 783, 792 (N.J. 2005); Smajlaj, 782 F. Supp. 2d at 99. However, in cases involving misrepresentation, "either out-of-pocket loss or a demonstration of loss in value will suffice to meet the ascertainable loss hurdle." Thiedemann, 872 A.2d at 792. In addition, the New Jersey Supreme Court has found ascertainable loss premised on a benefit-of-the-bargain theory sufficient to establish a prima facie case. Id. at 795 n. 8; Smajlaj, 782 F. Supp. 2d at 99. Importantly, "[t]he certainty implicit in the concept of an 'ascertainable' loss is that it is quantifiable or measurable." Thiedemann, 872 A.2d at 792. In the case at bar, Plaintiffs assert that both theories apply to their claim. (Pls.' Opp'n., 18).
First, Plaintiffs assert that they suffered an "out-of-pocket" loss in the amount of the purchase price of the misrepresented product because they "demonstrate that they purchased Defendants' 'Fat Free' Milk and Omega-3s for approximately $4.29, after viewing misleading statements and representations . . . which led them to believe that the milk they were purchasing was fat free when it was not." (Pls.' Br., 18-19). However, because the substance of the claims is that Plaintiffs would have bought a different "fat free" milk product if they had known that Defendants' product contained 1 gram of fat, the purchase price does not reflect the amount of loss sustained with reasonable certainty.
In their Opposition, Plaintiffs point to the court's analogy in Smajlaj: "[i]f a manufacturer promises a car with all the features of a Formula One racecar and delivers an ordinary minivan, the consumer's fraud claim is not foreclosed by the fact that the minivan runs fine, and many people choose it for its great interior space." 782 F. Supp. 2d at 99. Building thereon, Plaintiffs write: "Plaintiffs here were promised the formula one racecar of milk and instead received a minivan loaded with fat." (Pls.' Opp'n., 20).
Unlike the authorities on which Plaintiffs rely in support of the argument that the purchase price should apply, Plaintiffs do not allege that "all of the representations about the product are baseless." See Lee v. Carter-Reed Co. LLC, 203 N.J. 496, 529 (2010) ("Under plaintiff's scenario, the ascertainable loss here is the purchase price of a bottle of broken promises" where marketing scheme was "founded on a multiplicity of deceptions"). Nor do they allege that they paid for a product that they "did not want or need." See Gonzalez v. Wilshire Credit Corp., 207 N.J. 557, 584 (2011) (the amount of force-placed insurance that plaintiff "did not want or need . . . could constitute an 'ascertainable loss'").
Rather, the benefit of the bargain theory as explained in Smajlaj is more appropriate here. "Misrepresenting a product in order to get a consumer to purchase it does cause an injury, and what New Jersey Courts require for that loss to be 'ascertainable' is for the consumer to quantify the difference in value between the promised product and the actual product received." Smajlaj, 782 F. Supp. 2d at 99.
The Court notes, however, that the Plaintiffs in Smajlaj did not raise an out-of-pocket theory. 782 F. Supp. 2d at 101.
As set forth by Judge Simandle in that case, "[a] plaintiff alleging a benefit-of-the-bargain states a claim if he or she alleges (1) a reasonable belief about the product induced by a misrepresentation; and (2) that the difference in value between the product promised and the one received can be reasonably quantified." Id. In addition, "[f]ailure to quantify this difference in value results in the dismissal of a claim." Id. at 101. Accordingly, a plaintiff "'must proffer evidence of loss that is not hypothetical or illusory' and that is 'presented with some certainty demonstrating that it is capable of calculation.'" Id. (quoting Thiedemann, 872 A.2d at 792-93).
Therefore, as this Court previously explained in Parker v. Howmedica Osteonics Corp, Civ. No. 07-2400, 2008 WL 141628, at *3, a plaintiff must allege more than a mere failure to receive the benefit of the bargain. See Dabush v. Mercedes-Benz USA, LLC, 378 N.J.Super 105, 116 (App. Div. 2005). Rather, in essence, it requires that a Plaintiff demonstrate he or she has "receive[d] less than what was promised." Solo v. Bed Bath & Beyond, Inc., 2007 WL 1237825, at *3.
The Complaint sufficiently alleges a reasonable belief about the product induced by a misrepresentation. Indeed, Defendants do not argue otherwise in their motion to dismiss. However, Defendants submit that Plaintiffs do not allege "appropriate comparative products by which a price difference would be measured," which in turn requires dismissal because Plaintiffs cannot sufficiently allege a difference between what was promised and what was received. (Defs.' Mot., 20). The types of "alternative milk options" alleged in the Complaint are as follows: 1) generic grocery store skim milk; 2) "Skim Plus"; and 3) Horizon Fat Free Milk with DHA Omega-3. (Defs.' Mot. 20) (citing Compl. ¶ 90). However, "[n]either generic grocery store skim milk nor Skim Plus would be an appropriate comparative product because they do not contain omega-3s. Second, the Horizon Fat Free Milk with DHA Omega-3 is not an appropriate comparative product because it does not claim to have one of the two characteristics that formed the basis of Plaintiffs' purchase: 'the rich and creamy characteristics of 2% milk or whole milk.'" (Defs.' Mot., 20).
Defendants argue that Plaintiffs do not sufficiently allege an ascertainable loss because "they do not allege a viable comparative product and therefore cannot quantify to a reasonable degree the difference in value between the product received and the product promised." (Defs.' Reply, 9). Specifically, they assert that "none of the proposed comparative products are appropriate because they either do not contain omega-3s (a key distinguishing feature of the Fat Free Milk and Omega-3s Products) or they do not provide 'the rich and creamy characteristics of a 2% milk or whole milk.'" Id.
Plaintiffs detail the lower prices of a number of other products including store brand skim milks, Skim Plus, and another brand of fat free milk which contains Omega-3s and does not contain a full gram of fat. It would seem that the more apt comparison necessary to calculate damages with a reasonable degree of certainty would be a product with Omega-3s and at least 1 gram of fat, which is what was ultimately delivered. Plaintiffs detail the price of Fat Free Skim Milk with Omega-3s, but Plaintiffs do not allege whether a comparable product exists with 1 gram of fat and if so, its price.
3. Causation
"A plaintiff need not even show reliance on the violation of the Act as long as an ascertainable loss resulting from defendant's conduct is demonstrated." Leon, 340 N.J. Super. at 468. Courts in this District have found "allegations that a plaintiff would not have purchased a product had it been accurately labeled or that they purchased the product because of the misleading claim sufficient to plead causation." Mason, 2010 WL 2674445, at *7; Maniscalco v. Brother Int'l. Corp. (USA), 627 F. Supp. 2d 494, 503 (D.N.J. 2009); Franulovic v. Coca-Cola Co., Civ. Nos. 07-539 and 07-828, 2007 WL 3166953, at *8-9 (D.N.J. Oct. 25, 2007); Solo v. Bed Bath & Beyond, Inc., Civ. No. 06-1908, 2007 WL 1237825, at *3 (D.N.J. Apr. 26, 2007). Accordingly, this element is satisfied. E. Breach of Express Warranty
Under New Jersey law, to state a claim for breach of express warranty, the plaintiff must allege: "(1) that [d]efendant made an affirmation, promise or description about the product; (2) that this affirmation, promise or description became part of the basis of the bargain for the product; and (3) that the product ultimately did not conform to the affirmation, promise or description." Snyder v. Farnam Cos., Inc., 792 F. Supp. 2d 712, 721 (D.N.J. 2011); Smajlaj, 782 F. Supp. 2d at 103. "Sales puffery," mere affirmations of the value of the goods, and statements of the seller's opinion or commendation of the goods fail to create an express warranty. Snyder, 792 F. Supp. 2d at 723.
In this case, Plaintiffs argue that the written words "fat free" on the Defendants Enhanced Milk product label constitute an express warranty that was the basis of the bargain between Plaintiffs and Defendants. (Pls.' Opp'n., 24). The claims challenge a specific description made by the Defendants that could be found to constitute an express warranty. The description in question is explicit, and is distinguishable from mere "puffery." See Snyder, 792 F. Supp. 2d at 721 (citing In re Toshiba Am. HD DVD Mktg. & Sales Practices Litig., Civ. No. 08-939, 2009 WL 2940081 (D.N.J. Sept. 10, 2009) ("dismissing a breach of warranty claim based on Defendant's statement that HD DVD Players were for 'Today, Tomorrow, and Beyond,' since that statement is just 'puffery'")); see also Castrol Inc. v. Pennzoil Co., 987 F.2d 939, 945 (3d Cir. 1993) (dismissing a claim based on Defendant's statement that its product provided "superior engine protection," since that statement is just "puffery"). Rather, the term "Fat Free" is specific and guarantees the product falls into a precise category. See 21 C.F.R. § 101.62(b).
Defendants, contend, however, that the isolation of these words on its label "ignores the remainder of the packaging, which includes explicit and conspicuous statements regarding the fat content" and argue that "a court should analyze the message conveyed in its full context and not examine particular phrases in isolation." (Def.' Memo p. 21). Defendants rely on Pernon Ricard USA, LLC v. Bacardi USA, Inc., 653 F.3d 241, 253 (3d Cir. 2011), a trademark case premised on misleading statements as to the geographic origin of the product at issue, in support of their argument. (Def Reply p. 10). In that case, the court determined that the phrase "Havana Club" was not misleading to a reasonable consumer, even though it was Puerto Rican rum. Pernon Ricard USA, 653 F.3d at 248-49. The court there held that when analyzing the label as a whole, and not just the isolated phrase, it was clear that it would not mislead any reasonable consumer because the phrase "Puerto Rican Rum" followed the statement in question. Id. at 250. This argument is inapplicable here, however, because "whether a given statement constitutes an express warranty is normally a question of fact for the jury." Snyder, 792 F. Supp. 2d at 721-722; see Union Ink Co., Inc, 362 N.J. Super at 645 ("Whether the advertisements contained material misstatements of fact, or were merely puffing, as alleged by defendants, presents a question to be determined by the trier of fact); see also Pernon Ricard USA, 653 F.3d at 241. As discussed above, Plaintiffs here allege that the term "fat free" appears on nine places on the Product carton. (Compl. ¶¶ 33, 60). The question of whether the labeling as a whole is misleading to an average consumer is a question of fact, and is not an appropriate basis for dismissal at this time. See Leon, 340 N.J. Super. at 469.
Defendants additionally argue that "Plaintiffs' claim that they relied on the description as the basis of the bargain is foreclosed by the presence of an unambiguous disclaimer on the same label." However, Defendants cite no cases in support of their argument that dismissal is appropriate at this time.
"At the motion to dismiss stage, it is enough that [p]laintiffs provide more than 'bald assertions,' and identify specific affirmations by [d]efendant that could be found to constitute an express warranty." Snyder, 792 F. Supp. 2d at 722. Therefore, the Court concludes that Plaintiffs state a claim for breach of express warranty because they sufficiently allege: (1) the Defendant makes a specific description that the product is "fat free"; (2) the description was the basis of the bargain for the product; and (3) the product ultimately did not conform to the description because it contained one gram of fat per serving. Accordingly, Defendants' motion to dismiss is denied as to breach of express warranty. F. Magnuson-Moss Warranty Act
The MMWA provides that "a consumer who is damaged by the failure of a supplier, warrantor, or service contractor to comply with any obligation under this chapter, or under a written warranty, implied warranty, or service contract, may bring suit for damages and other legal and equitable relief." 15 U.S.C. § 2310(d)(1).
Defendants argue that dismissal is warranted on two independent grounds: (1) failure to allege facts that meet the jurisdictional requirements of MMWA that each individual claim meets or exceeds twenty-five dollars in value and that there are at least one hundred named plaintiffs; and (2) "the phrase 'fat free' on the labels of the Fat Free Milk and Omega-3s Products does not constitute a 'written warranty' under the MMWA." (Defs.' Mot., 22).
First, Section 2310(d)(3) sets forth applicable jurisdictional requirements for MMWA claims:
No claim shall be cognizable in a suit brought under paragraph (1)(b) of this subsection -(A) if the amount in controversy of any individual claim is less than the sum or value of $25; (B) if the amount in controversy is less than the sum or value of $50,000 (exclusive of interests and costs) computed on the basis of all claims to be determined in this suit; or (C) if the action is brought as a class action, and the number of named plaintiffs is less than one hundred.15 U.S.C. § 2310(d)(3). "It is clear that jurisdictional requisites of 15 U.S.C. § 2310(d)(3) must be met when a suit is brought as an original action in federal court. However, § 1332(d)(2) of [the Class Action Fairness Act of 2005] also creates an alternative basis for federal jurisdiction over the MMWA claim." McCalley v. Samsung Electronics America, Inc., Civ. No. 07-2141, 2008 WL 878402, at *4 (D.N.J. Mar. 31, 2008). Further, "CAFA requires that the class members' aggregate claims exceed $5,000,000" and that minimal diversity exists between the parties. Similarly, a plaintiff must satisfy the requirements set forth in Fed. R. Civ. P. 23." Id. (citations omitted). Defendants concede that the jurisdictional requirements are met.
However, Plaintiffs fail to establish that the statement "fat free" constituted a "written warranty" within the meaning of the MMWA. The MMWA defines "written warranty," in relevant part, as "any written affirmation of fact or promise made in connection with the sale of a consumer product by a supplier to a buyer which relates to the nature of the material...and affirms or promises that such material . . . is defect free or will meet a specified level or performance over a specified period of time." 15 U.S.C. § 2301(6)(A).
As the Court finds that Plaintiffs fail to state a claim, it need not address the additional arguments with respect to notice and reasonable opportunity to cure under the MMWA.
Plaintiffs argue that the term "fat free" is analogous to "defect free" (Pls.' Opp'n., 25). In so doing, they point to Goodman v. Perlstein, which concerned diamond appraisal certificates with estimates of the value of the diamonds at issue. Civ. No. 86-2144, 1989 WL 83452 (E.D.Pa. Jul. 21, 1989). Although the court there found that the certificates did not constitute written warranties, Plaintiffs point to the following language:
Had the defendant warranted that a particular diamond had no flaws, it is crystal clear that the statutory definition would have been met. Or, if a plaintiff had been promised that the stone was rock-solid, impervious to chipping, but when lightly tapped, it shattered, that would constitute a breach of the statutory definition of a "written warranty."1989 WL 83452, at *2. They continue: "[h]ere, Defendants warranted that the milks at issue had 'no fat' and Plaintiffs were promised that the milk was 'fat free,' similar to the diamonds in Goodman, with 'no flaws' that are 'rock-solid.'" (Pls.' Opp'n., 26).
However, the parallel between the dicta in that case regarding defects in diamonds and the fat content in milk at issue here is tenuous at best. As an initial matter, putting aside the issue of the added fat from Omega-3s, "fat free" milk that complies with FDA regulations may contain an amount of fat "less than" 0.5 grams. 21 C.F.R. § 101.62(b). Taken to its logical conclusion, Plaintiffs argument suggests that would also be a defect sufficient to support a claim.
The MMWA provides, however, that it is "inapplicable to any written warranty the making or content of which is otherwise governed by Federal law." 15 U.S.C. § 2311(d). In the present case, the FDA and FDCA govern the "fat free" label on defendant's product. See 21 C.F.R. § 101.62 (2007). To the extent that "fat free" is the equivalent of "defect free," despite the fact that compliant milk may contain no less than 0.5 grams of fat, the making or content of the claim is governed by Federal law. Hairston v. South Beach Beverage Co., Civ. No. 12-1429, 2012 WL 1893818, *5 (C.D.Cal. May 18, 2012). G. Plaintiffs' Claims as to Products Not Purchased Individually
In addition to the Fat Free Milk with Omega-3s, the Complaint contains allegations related to other Smart Balance products, Smart Balance Lactose-Free Fat Free Milk and Omega-3s and Smart Balance HeartRight® Fat Free Milk and Omega-3s & Natural Plant Sterols. However, Plaintiffs do not allege that they purchased those products. See Compl. ¶¶ 9-10. Defendants assert that Plaintiffs lack standing to pursue claims for two out of the three Fat Free Enhanced Milk products, stating "the injury in fact requirement does not, as Plaintiffs urge, disappear in the class action context." (Defs.' Reply, 4). Importantly, Defendants do not dispute that Plaintiffs have standing to assert their individual claims regarding Fat Free Milk with Omega-3s.
The Third Circuit summarized the requirements of Article III constitutional standing as follows:
(1) the plaintiff must have suffered an injury in fact - an invasion of a legally protected interest which is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical; (2) there must be a causal connection between the injury and the conduct complained of - the injury has to be fairly traceable to the challenged action of the defendant and not the result of the independent action of some third party not before the court; and (3) it must be likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision.Society Hill Towers Owners' Ass'n v. Rendell, 210 F.3d 168, 175-76 (3d Cir. 2000) (citing Trump Hotels & Casino Resorts, Inc. v. Mirage Resorts Inc., 140 F.3d 478, 484-85 (3d Cir. 1998) and Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61, 112 S.Ct. 2130 (1992)).
As Courts in this District have explained in recent years, "standing cannot be predicated on an injury which the plaintiff has not suffered, nor can it 'be acquired through the back door of a class action." In re Franklin Mut. Funds Litig., 388 F. Supp. 2d 451, 461 (D.N.J. 2005) (quoting Allee v. Medrano, 416 U.S. 802, 828-29 (1974); Koronthaly v. L'Oreal USA, Inc., 2008 WL 2938045, at *4 (D.N.J. July 29, 2008), aff'd, 374 F.App'x 257 (3d Cir. 2010); Lieberson v. Johnson & Johnson Consumer Litig., --- F. Supp. 2d ---, 2011 WL 4414214, at *4 (D.N.J. 2011). "In the class action context, however, traditional notions of standing are not completely informative of what claims may be asserted." In re Franklin Mut. Funds Litig., 388 F. Supp. 2d at 461-462.
Defendant points to a number of recent decisions in this District which have repeatedly dismissed claims in putative class actions where plaintiffs only alleged injury as to one product in a series or line of products by the same defendant. (Defs.' Reply, 5). See Lieberson v. Johnson & Johnson Consumer Cos., Inc., --- F. Supp. 2d ---, 2011 WL 4414214, at *4 (D.N.J. 2011) (plaintiff could only bring claim as to baby bath products actually purchased); Green v. Green Mountain Coffee Roasters, Inc., ---F.R.D. ---, 2011 WL 6372617, at * 3-4 (D.N.J. 2011) (plaintiff seeking to represent all individuals who purchased coffee brewing systems could only pursue claim as to product actually purchased); Hemy v. Perdue Farms, Inc., Civ. No. 11-888, 2011 WL 6002463, at *11 (D.N.J. Nov. 30, 2011) (limiting claims regarding inhumanely raised and slaughtered chicken to brand of chicken products actually purchased by plaintiff). Accordingly, Defendant argues that Plaintiffs conflate the requirements of standing with class certification under Federal Rule of Civil Procedure 23.
The United States Supreme Court has noted that there is an inherent tension between the two. "Although we do not resolve here whether such an inquiry in this case is appropriately addressed under the rubric of standing or adequacy, we note that there is a tension in our prior cases in this regard." Gratz v. Bollinger, 539 U.S. 244, 263 n. 15 (2003) (citing Burns, Standing and Mootness in Class Actions: A Search for Consistency, 22 U.C.D.L.Rev. 1239, 1240-1241 (1989); General Tel. Co. of Southwest v. Falcon, 457 U.S. 147, 149 (1982) (Mexican-American plaintiff alleging that he was passed over for a promotion because of race was not an adequate representative to "maintain a class action on behalf of Mexican-American applicants" who were not hired by the same employer); Blum v. Yaretsky, 457 U.S. 991 (1982) (class representatives who had been transferred to lower levels of medical care lacked standing to challenge transfers to higher levels of care)).
In Baby Neal for and by Kanter v. Casey, the Third Circuit held that "[w]here an action challenges a policy or practice, the named plaintiffs suffering one specific injury from the practice can represent a class suffering other injuries, so long as all the injuries are shown to result from the practice." 43 F.3d 48, 58 (3d Cir. 1994) (citing Falcon, 457 U.S. at 157-59); accord In re Cmt'y. Bank of Northern Virginia, 418 F.3d 277, 303 (3d Cir. 2005); see also Piazza v. Ebsco Indus., Inc., 273 F.3d 1341, 1351 (11th Cir. 2000) ("It is beyond dispute that in order to have the requisite typicality to represent a class, a named plaintiff must have individual standing to assert the claim. However, there is no similar requirement that 'all putative class members share identical claims.'") (quoting Prado-Steiman ex rel Prado v. Bush, 221 F.3d 1266, 1279 (11th Cir. 2000) (quoting Baby Neal, 43 F.3d at 54)). In addition, in Haas v. Pittsburgh National Bank, the Third Circuit held that notwithstanding the fact that a plaintiff lacked standing to pursue a particular claim, she could assert that claim in a putative class action where she did have standing to pursue two closely related claims against the same defendant. 526 F.2d 1083, 1088-89 (3d Cir. 1975). The Third Circuit explained in that case: "Haas' two claims against Mellon Bank, moreover, are closely related to the commercial transactions claim on which she lacks standing. Not only do all three claims involve identical revolving accounts under the same Mellon Bank cardholder agreements, but the statutory damages sought to be recovered for each asserted violation are in large part the same." Id.
In Piazza v. Ebsco Indus, Inc., the Court continued: "In fact, typicality and commonality 'may be satisfied even if some factual differences exist between the claims of the named representatives and the claims of the class at large . . . [although] we do require that the named representatives' claims share the same essential characteristics as the claims of the class at large.'" Id. (quoting Prado-Steiman, 221 F.3d at 1279) (alteration in original).
Here, Defendants do not challenge Plaintiffs' standing to assert individual claims, the basis for each of the claims relating to the Fat Free Enhanced Milks is the same, the products are closely related, and the Defendants are the same. Thus, even though the Stewarts do not have standing to challenge the Smart Balance Lactose-Free Fat Free Milk and Omega-3s or the Smart Balance HeartRight® Fat Free Milk and Omega-3s & Natural Plant Sterols claims themselves, dismissal is inappropriate at this stage of the litigation because whether they may represent a class of plaintiffs who do have standing is not before the Court. See Haas, 526 F.2d at 1088. H. Parent Company Liability
Defendants argue that "[a]t an absolute minimum, Defendant Smart Balance should be dismissed from this action because Plaintiffs fail to allege particular facts establishing that Smart Balance participated in the alleged wrongful conduct." (Defs.' Mot., 27). In support of that argument, Defendants provide: "Here, although Plaintiffs allege that Smart Balance may have been involved in the marketing and sale of Fat Free Milk and Omega-3s Products, the products' labels - which Plaintiffs include within their Amended Complaint - belie their claims." (Def. Mot., 28) (emphasis in original). Defendants attempt to distinguish Smajlaj, where the court emphasized that the labels on the products at issue referred only to the parent company and found the allegations in the complaint as to the parent company. 782 F. Supp. 2d at 105. They continue, "[i]n contrast to the Smajlaj case, here the product labels clearly indicate that the products are owned and distributed through GFA Brands, not Smart Balance." (Defs.' Mot., 29). Also, Defendants assert that "dismissal is especially appropriate where, as here, one of [Plaintiffs'] claims requires heightened pleading under Rule 9(b) of the Federal Rules of Civil Procedure" and "Plaintiffs fail to make particularized allegations against Smart Balance, as opposed to its operating entity GFA Brands." (Id.)
Plaintiffs respond that they are seeking to hold Smart Balance liable for its own actions, as opposed merely attempting to hold it vicariously liable for those of its subsidiary. (Pls.' 28). The Complaint contains factual allegations regarding the actions of Smart Balance. For example, "Defendant Smart Balance is a consumer food products company that markets and sells, among other products, 'Fat Free' Enhanced Milks under the Smart Balance® Trademark. Smart Balance marketed and sold its 'Fat Free' Enhanced milks throughout the United States during the class period." (Compl. ¶ 11). Also, "Defendants market, advertise, promote, distribute, and sell 'Fat Free' Enhanced Milks under the Smart Balance® trademark." (Compl. ¶ 31). In addition, the Complaint provides depictions of the Fat Free Enhanced Milks labeling, which prominently feature the trademarks of Smart Balance as opposed to those of GFA Brands, if any. Plaintiffs' Complaint also alleges that the product is also marketed on Defendant Smart Balance's website. At the motion to dismiss stage, these allegations are sufficient because it is entirely plausible that both companies were involved in acts that form the basis of Plaintiffs' claims, such as the "creation or approval of labeling, creation or approval of other marketing and the website." Smajlaj, 782 F. Supp. 2d at 105.
Both parties point to Securities and Exchange Commission ("SEC") filings by Defendant Smart Balance. Generally, if a court considers material submitted outside the pleadings on a Rule 12(b)(6) motion to dismiss, the court must treat the motion as one for summary judgment. Fed. R. Civ. P. 12(d). A court may exclude such outside matters and treat the Rule 12 motions as labeled. Pryor v. NCAA, 288 F.3d 548, 559 (3d Cir. 2002). However, "a court may consider an undisputedly authentic document that a defendant attaches as an exhibit to a motion to dismiss if the plaintiff's claims are based on that document." Pension Benefit Guar. Corp. v. White Consol. Indus., 998 F.2d 1192, 1196 (3d Cir. 1993); In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997) (a court may consider a document that is integral to or explicitly relied on in the complaint without converting a motion to dismiss into one for summary judgment). While the SEC filings are undisputedly authentic, they are not integral to the Complaint. Accordingly, the Court will not consider those filings and will treat the motion as labeled.
IV. CONCLUSION
For the above detailed reasons, Defendant's motion to dismiss is granted in part and denied in part. Specifically, Defendants' motion is granted with respect to the New Jersey Consumer Fraud Act and Manguson-Moss Warranty Act claims. Accordingly, those claims are dismissed without prejudice and Plaintiffs may amend their Complaint to cure the deficiencies set forth herein within 30 days. Defendants' motion is denied, however, as to Plaintiffs' breach of express warranty claim, claims relating to the Fat Free Enhanced Milks not purchased by Plaintiffs, and the issue of parent company liability.
An appropriate Order accompanies this Opinion.
DATE: June 25, 2012
/s/_________
Jose L. Linares
United States District Judge