Cruz v. D F Stauffer Biscuit Co Inc

Background

Gilberto Cruz and Norma Melendez filed a putative class action against D.F. Stauffer Biscuit Co., Inc. They alleged that the packaging for the company’s Lemon Snaps cookies was false and misleading. The amended complaint asserted claims under Sections 349 and 350 of the New York General Business Law, negligent misrepresentation, fraud, unjust enrichment, breach of express and implied warranties under New York law, and the federal Magnuson-Moss Warranty Act.

The front of the package identified the product as “Lemon Snaps” and displayed pictures of lemons. The ingredient list on the back stated that the cookies contained “NATURAL AND ARTIFICIAL FLAVORS.” The plaintiffs alleged that consumers would understand the front label to mean that the lemon flavor came predominantly, or exclusively, from real lemons. They alleged that testing showed the probable amount of real lemon was only a trace or de minimis amount, and that they paid a premium for the cookies because of the alleged representation.

Motion and Report and Recommendation

The defendant moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which tests whether a complaint adequately states a legally plausible claim. Magistrate Judge James L. Cott recommended granting the motion and dismissing the case with prejudice. He concluded that the plaintiffs had not plausibly alleged that a reasonable consumer would be misled by the packaging. He also concluded that the negligent-misrepresentation, fraud, unjust-enrichment, and warranty claims failed for additional pleading deficiencies, and recommended denying leave to amend.

The plaintiffs objected only to the recommendation concerning their General Business Law claims. The district court therefore reviewed those objections de novo, meaning independently, and reviewed the unchallenged portions for clear error.

General Business Law Claims

The court held that the packaging was not materially misleading as a matter of law. It explained that the packaging must be considered as a whole rather than by viewing the front panel separately. The front panel did not say that the cookies were free of artificial flavor, that their lemon flavor came exclusively or primarily from real lemons, or that real lemons supplied a particular percentage of the flavor.

The court also held that the ingredient list’s disclosure of “NATURAL AND ARTIFICIAL FLAVORS” clarified the product’s flavoring. The plaintiffs had not adequately alleged that consumers expected artificial-flavor information to appear on the front panel or that reasonable consumers viewed that panel in isolation. The court adopted Judge Cott’s recommendation to dismiss the claims under New York General Business Law Sections 349 and 350.

Other Claims

The court found no clear error in dismissing the remaining claims. The negligent-misrepresentation claim did not adequately allege the special relationship required under New York law; the allegations described ordinary commercial transactions. The fraud claim did not allege facts creating a strong inference of fraudulent intent and did not satisfy the heightened pleading requirements for fraud. The unjust-enrichment claim was duplicative of the plaintiffs’ deception theory.

The express-warranty claim did not adequately allege that the cookies failed to match statements on the label or that the plaintiffs satisfied New York’s notice requirement. The implied-warranty claim did not adequately allege the defendant’s pre-suit knowledge or facts showing that the cookies were not fit for human consumption. The Magnuson-Moss claim failed because the plaintiffs did not allege the existence of a written warranty.

Disposition

Judge Gardephe overruled the plaintiffs’ objections and adopted the Report and Recommendation in its entirety. The amended complaint was dismissed with prejudice. The court denied leave to file a second amended complaint because the plaintiffs had already amended once and had not identified facts that would cure the deficiencies. The Clerk was directed to terminate the motion and close the case.