Telesco v. Starbucks Corporation

Background

Kenneth Telesco brought a proposed class action against Starbucks Corporation concerning Starbucks Cold Brew Concentrate. Telesco alleged that the product’s packaging falsely represented how much cold brew coffee a 32-ounce bottle could make. The front of the bottle stated, “Makes 8 servings when prepared as directed.” Telesco alleged that, using a 12-ounce serving size identified in the federal government’s Reference Amounts Customarily Consumed standard, the bottle made only five servings.

The bottle’s side instructions called for combining four fluid ounces of concentrate with four fluid ounces of water, producing an eight-ounce serving. The nutrition label also stated that the concentrate made five servings when using 12 ounces per serving. Telesco alleged that he relied on the front-label statement when purchasing the product and did not receive the benefit of the bargain.

The First Amended Complaint asserted three claims: breach of express warranty; violation of New York General Business Law § 349, which concerns deceptive business practices; and violation of New York General Business Law § 350, which concerns false advertising. Starbucks moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which permits dismissal when a complaint does not state a legally sufficient claim. The opinion also notes that Starbucks moved under Rule 12(b)(1), but the court’s analysis addressed whether the complaint stated claims for relief.

Court’s Analysis

For the New York General Business Law claims, the court explained that Telesco had to allege consumer-oriented conduct, a materially misleading act or practice, and injury caused by that conduct. The court found that the consumer-oriented requirement was satisfied because the allegations concerned Starbucks’s marketing to consumers generally.

The court concluded, however, that the product label was not materially misleading as a matter of law. It considered the entire label rather than only the statement about eight servings. In the court’s view, “when prepared as directed” referred clearly to the side instructions, which called for a one-to-one mixture of concentrate and water and produced eight eight-ounce servings. The court rejected the theory that a reasonable consumer would expect eight 12-ounce servings despite those instructions.

The court also stated that the federal 12-ounce serving-size standard did not legally require Starbucks to use a 12-ounce serving size for its product. It concluded that Telesco’s allegations depended on ignoring clear language elsewhere on the bottle and therefore did not plausibly state claims under New York General Business Law §§ 349 or 350.

For the express-warranty claim, the court identified the requirements of a material warranty statement, reliance on that warranty as a basis for the purchase, breach, and resulting injury. Applying its reasoning on the deceptive-practices and false-advertising claims, the court concluded that the statements on the bottle were not false or misleading as a matter of law. It therefore held that they did not support a breach-of-express-warranty claim.

Disposition

The court granted Starbucks’s motion to dismiss with respect to all three claims: breach of express warranty, violation of New York General Business Law § 349, and violation of New York General Business Law § 350. The court dismissed those claims without prejudice.

Because the First Amended Complaint was the first complaint in the case to receive motion practice, the court granted Telesco leave to file a Second Amended Complaint by August 11, 2023. The new complaint was to replace, rather than supplement, the First Amended Complaint. If Telesco did not file it by the deadline, the claims dismissed without prejudice would be deemed dismissed with prejudice. Judge Nelson S. Roman directed Starbucks to answer or otherwise respond by September 5, 2023.