Torres v. Upfield US Inc.

Background

Josephine Torres brought a proposed class action against Kohlberg, Kravis, Roberts & Co. L.P. (KKR), Conopco, Inc., and Upfield U.S., Inc. She alleged that I Can’t Believe It’s Not Butter! Spray was deceptively marketed as a diet food because its label stated that it contained zero fat and zero calories per serving. Torres alleged that the serving size was unrealistically small, that the product was actually an ordinary margarine spread containing significant fat and calories, and that she bought the product and paid a premium because of the allegedly misleading representations.

Torres sought to represent people who purchased the spray from June 2014 onward in states other than California and Missouri. Defendants moved under Rule 12(b)(1), which permits dismissal for lack of subject-matter jurisdiction, arguing that Torres had not suffered an injury, that she lacked standing to sue KKR and Conopco, and that she could not pursue claims involving product versions she did not buy, laws of states other than New York, or injunctive relief.

Court’s analysis

The court held that Torres alleged an injury in fact—an actual financial injury sufficient for constitutional standing—because she alleged that misleading statements induced her to buy a product she otherwise would not have purchased and caused her to pay more. The court rejected defendants’ attempt to characterize this argument as a challenge to whether Torres had adequately stated a claim. It explained that defendants had previously been told they could not bring a failure-to-state-a-claim motion in this case.

The court separately considered whether Torres had shown that each defendant caused her injury. Although the complaint alleged that Conopco marketed, sold, and distributed the product, defendants submitted evidence disputing Conopco’s involvement. Torres offered no evidence supporting her allegations, so she did not establish by the required greater-than-50-percent standard that Conopco caused her injury. The court therefore found that she lacked standing to sue Conopco.

As to KKR, the evidence showed that KKR was an investment advisor and that funds managed by KKR invested in the acquisition of the business that included the product. The court found no evidence or allegation that KKR purchased or sold the spray or indirectly influenced its allegedly deceptive marketing. It therefore found that Torres lacked standing to sue KKR.

The court rejected defendants’ argument concerning the product’s 2018 label change. It treated the case as involving one product whose label changed, rather than different products, and concluded that the alleged deceptive marketing theory—marketing the spray as a diet food despite an unrealistically small serving size—could apply both before and after the change. The court stated that defendants could raise issues about whether Torres adequately represented purchasers who saw different labels in a later motion concerning class certification.

The court also rejected defendants’ argument that Torres lacked standing to assert claims under states’ laws other than New York. It held that, under binding Second Circuit precedent, whether a plaintiff may bring a multistate class action is generally a question about whether common issues predominate under the class-action rules, not a constitutional standing question.

Finally, the court held that Torres lacked standing to seek injunctive relief, which is a court order requiring or forbidding future conduct. Torres did not allege that she intended to purchase the spray again, so she did not show a likelihood of future harm.

Disposition

The court denied in part and granted in part defendants’ motion to dismiss for lack of subject-matter jurisdiction. Specifically:

- The request to dismiss the entire case for lack of standing was denied. - The request to dismiss the case as to Conopco and KKR was granted. - The request to dismiss claims involving the product after the 2018 label change was denied without prejudice. - The request to dismiss claims under states’ laws other than New York was denied without prejudice. - The request to dismiss claims for injunctive relief was granted.

The court also directed defendants to file an answer, submit versions of certain documents with fewer redactions, and justify the redactions they sought to retain. The parties were directed to submit a joint letter and proposed case-management plan.