Dorris v. Danone Waters of America

Background

Stephanie Dorris and John Axiotakis filed a putative class action alleging that Danone Waters of America falsely or misleadingly advertised evian Natural Spring Water as “carbon neutral.” They alleged that reasonable consumers could understand that statement to mean the product’s manufacturing or life cycle produced no carbon dioxide or left no carbon footprint. They also alleged that they paid a price premium because of the environmental representation and would not have bought the product, or would have paid less, if they had known the representation was inaccurate.

The First Amended Complaint asserted claims under New York General Business Law §§ 349 and 350, Massachusetts General Laws chapter 93A, and California’s Consumers Legal Remedies Act. It also asserted express-warranty, implied-warranty, unjust-enrichment, and fraud claims. Danone moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), arguing primarily that the label was not misleading and that consumers would understand “carbon neutral” to refer to certification by the Carbon Trust rather than the absence of all carbon dioxide emissions.

Court’s Analysis

The court dismissed the New York General Business Law §§ 349 and 350 claims because those statutes require the deceptive transaction to occur in New York. The plaintiffs did not allege that either purchase occurred in New York. Allegations that Danone made important manufacturing, labeling, and marketing decisions at its New York headquarters did not satisfy that requirement.

The court allowed the Massachusetts chapter 93A claim to proceed. It held that “carbon neutral” has multiple technical meanings and may be unfamiliar or confusing to reasonable consumers. At the motion-to-dismiss stage, the court could not determine as a matter of law that the phrase was not misleading. The court also concluded that the plaintiffs adequately alleged an economic injury by claiming that the representation caused them to pay a price premium or purchase a product they otherwise would not have purchased. The court treated the Federal Trade Commission’s environmental-marketing guidance as support for the possibility that an unexplained general environmental claim could mislead consumers, not as creating an independent cause of action.

The court likewise allowed the California Consumers Legal Remedies Act claim to proceed because a reasonable consumer could be misled by the “carbon neutral” representation. The court denied dismissal of the California express-warranty claim for the same reason. It dismissed the Massachusetts express-warranty claim because the plaintiffs alleged only economic losses and did not challenge Danone’s argument based on Massachusetts’s economic-loss doctrine.

The plaintiffs conceded their implied-warranty claims under New York and Massachusetts law. The court dismissed the California implied-warranty claim because Dorris purchased the product from Amazon rather than Danone, so the complaint did not allege the required direct contractual relationship. The court also held that the product was alleged to be fit for drinking and that the plaintiffs did not allege physical injury, contamination, or another condition making the bottled water unfit for its ordinary use.

The court dismissed the Massachusetts unjust-enrichment claim because an adequate legal remedy, including the chapter 93A claim, made unjust enrichment unavailable under Massachusetts law. It allowed the California unjust-enrichment claim to proceed, construing it as a claim seeking restitution and finding that the plaintiffs plausibly alleged Danone received and unjustly retained a benefit through the alleged misleading labeling. The court also allowed the fraud claim to proceed, finding that the allegations that Danone used the label to make the product appear more environmentally friendly, attract consumers, and charge a higher price created a sufficient inference of fraudulent intent.

Disposition

The court granted in part and denied in part Danone’s motion to dismiss. It granted dismissal of the New York General Business Law §§ 349 and 350 claims and the implied-warranty claims, and those claims were dismissed without prejudice. The court also granted dismissal of the Massachusetts express-warranty claim. It denied dismissal of the Massachusetts chapter 93A claim, California Consumers Legal Remedies Act claim, California express-warranty claim, unjust-enrichment claim as allowed under California law, and fraud claim.

Because this was the first complaint for which motion practice occurred, the court granted the plaintiffs leave to file a Second Amended Complaint by February 2, 2024. The court stated that if the plaintiffs did not file one by that deadline, the claims dismissed without prejudice would be deemed dismissed with prejudice. The court directed the clerk to terminate Danone’s motion.