Cooper v. Anheuser-Busch, LLC

Background

Tanya Cooper and Joseph Rose filed a proposed class action against Anheuser-Busch, LLC concerning products in its “Ritas” beverage line. The products included Lime-A-Rita Sparkling Margaritas, Sangria Spritz Sparkling Sangria Cocktail, Rosé Spritz Sparkling Rosé Cocktail, and Mojito Fizz Sparkling Cocktail. The complaint alleged that the products’ prominent names, descriptions, and images suggested that they contained tequila, wine, or rum, even though they were flavored malt beverages containing none of those ingredients. The complaint also alleged that the disclosures identifying the products as flavored malt beverages appeared in small print on the packaging.

Cooper and Rose asserted claims under Sections 349 and 350 of the New York General Business Law, for breach of express warranty, common-law fraud, and unjust enrichment. Anheuser-Busch moved to dismiss the first amended complaint. At this stage, the court was required to accept the complaint’s factual allegations as true and determine whether they plausibly stated claims for relief.

New York consumer-protection claims

The court denied the motion as to the claims under Sections 349 and 350. Those provisions address deceptive consumer practices and false advertising. The court held that the plaintiffs plausibly alleged consumer-oriented conduct, materially misleading labeling, and injury.

The court rejected Anheuser-Busch’s argument that the product names merely identified flavors rather than ingredients or actual cocktails. It concluded that the plaintiffs’ interpretation was not implausible because terms such as “margarita,” “sangria,” “rosé,” and “mojito” can refer to drinks ordinarily associated with tequila, wine, or rum. The cocktail images and other packaging features could reinforce that impression.

The court also rejected arguments based on federal alcohol-labeling regulations, the overall packaging, the stores where the products were purchased, competing products, and the small-print disclosures. The court stated that whether reasonable consumers would be misled was generally a factual question that could not be resolved on a motion to dismiss. It further explained that an accurate but inconspicuous disclosure does not necessarily cure a prominent misleading impression. The plaintiffs’ alleged injury—that they would not have bought the products or would have paid less had they known the products lacked tequila, wine, or rum—was sufficient at the pleading stage.

Express-warranty claim

The court granted the motion as to the express-warranty claim. It found that the plaintiffs plausibly alleged that the product descriptions amounted to promises that the beverages contained distilled liquor or wine. However, New York law requires a buyer to notify the seller of a breach within a reasonable time after discovering it. The complaint provided only general statements that the plaintiffs had satisfied all conditions and had notified Anheuser-Busch within a reasonable time. It did not provide specific facts, such as when or how notice was given. The court dismissed this claim without prejudice and allowed the plaintiffs to amend.

Fraud claim

The court granted the motion as to the fraud claim. Although the plaintiffs identified the allegedly fraudulent product representations, the speaker, and the relevant purchase periods, they did not plead facts creating a strong inference that Anheuser-Busch intended to defraud consumers. The court held that a general desire to increase sales was not enough, and that the complaint did not provide sufficient circumstantial evidence of deliberate or reckless misconduct. The fraud claim was dismissed without prejudice, with leave to amend.

Unjust-enrichment claim

The court granted the motion as to the unjust-enrichment claim. It held that the claim relied on the same alleged labeling conduct and sought the same type of injury as the plaintiffs’ statutory, warranty, and fraud claims. Under New York law, unjust enrichment is not available as a substitute for other claims based on the same facts when no distinct damages are alleged. The court dismissed this claim without prejudice.

Disposition

The court concluded that Anheuser-Busch’s motion was granted in part and denied in part. The motion was denied as to the General Business Law Sections 349 and 350 claims and granted as to the express-warranty, fraud, and unjust-enrichment claims. Because this was the first adjudication of those claims on the merits, the dismissed claims were dismissed without prejudice. The plaintiffs were given 30 days to file a second amended complaint if they had a good-faith basis to do so. The court stated that failure to amend properly and on time would result in dismissal of those claims with prejudice.