Clemmons v. Upfield US Inc.

Background

Duval Clemmons brought a proposed class action against Upfield US Inc. He alleged that the labeling of Country Crock Plant Butter Made With Olive Oil was misleading because the packaging emphasized olive oil and pictured olives, while the product allegedly contained mostly palm and canola oils and only a small amount of olive oil. Clemmons alleged that he bought the product in New York and would not have bought it, or would have paid less, had he known olive oil was not the predominant oil.

The complaint asserted New York consumer-protection claims under General Business Law sections 349 and 350, similar consumer-protection claims under other states’ laws, breach of contract, breach of express and implied warranties, a claim under the Magnuson Moss Warranty Act, negligent misrepresentation, fraud, and unjust enrichment. Upfield moved to dismiss the complaint under Rule 12(b)(6), which asks whether the complaint alleges enough facts to state a legally plausible claim.

Federal Preemption

Upfield argued that federal food-labeling law preempted Clemmons’s state-law claims. The court rejected that argument. It held that “Made With Olive Oil” was a statement about a valued ingredient, not an express or implied claim about the level of a regulated nutrient. Because the complaint did not allege a nutrient-content claim, the court concluded that the state-law claims were not preempted.

New York Consumer-Protection Claims

The court held that the complaint plausibly alleged violations of General Business Law sections 349 and 350. Those provisions prohibit deceptive consumer practices and false advertising, using a reasonable-consumer standard. The court concluded that a reasonable consumer could understand “Made With Olive Oil” to suggest that olive oil was the primary or predominant oil in a plant-butter spread.

The court relied on the Second Circuit’s reasoning concerning “made with” ingredient statements. It held that the ingredient list and the statement that the product was a vegetable-oil spread did not necessarily cure the alleged misleading impression on the front of the package. Whether consumers would understand palm and canola oils to be the product’s primary oils was a factual question that could not be resolved on a motion to dismiss. The court noted, however, that any separate theory based on olive oil being merely “significant,” rather than predominant, would be dismissed because the complaint identified no legal standard for what a significant amount would be.

Contract and Warranty Claims

The court dismissed the breach-of-contract claim because the complaint did not plausibly allege that Clemmons and Upfield were in a direct contractual relationship. The complaint alleged that Clemmons bought the product from third-party retailers and stated only conclusory allegations about a contract with Upfield.

The court dismissed the express-warranty claim because the complaint did not adequately allege that Clemmons gave Upfield timely pre-litigation notice of the alleged breach. The statement that he “provided or will provide notice” did not identify when or how notice was given. The court also rejected the argument that filing the complaint alone supplied the required notice.

The implied-warranty claims were dismissed because the complaint did not plausibly allege direct contractual privity between Clemmons and Upfield, and Clemmons alleged only economic loss rather than personal injury. The Magnuson Moss Warranty Act claim was dismissed because the complaint did not adequately allege a qualifying breach of warranty.

Other Claims

The negligent-misrepresentation claim was dismissed because the complaint did not allege the special or trust-based relationship required for that claim. The court concluded that the parties’ relationship was only an ordinary buyer-seller relationship.

The fraud claim was dismissed because the complaint did not allege facts creating a strong inference that Upfield intended to deceive consumers. Alleging that the product did not match the label was not enough to establish fraudulent intent, particularly because the ingredient list disclosed the components of the oil blend.

The unjust-enrichment claim was dismissed because it duplicated the other claims based on the alleged labeling misrepresentation and did not plausibly explain why equitable considerations required Upfield to pay Clemmons.

Disposition

Judge P Kevin Castel granted in part and denied in part Upfield’s motion to dismiss. The motion was granted, and the claims were dismissed with prejudice, as to breach of contract; breach of express warranty and the implied warranties of merchantability and fitness for a particular purpose; the Magnuson Moss Warranty Act; negligent misrepresentation; fraud; and unjust enrichment. The motion was denied as to the consumer-protection claims under New York General Business Law sections 349 and 350.