Levy v. Hu Products LLC

Background

Sonya F. Levy brought a proposed class action against Hu Products LLC, Hu Master Holdings LLC, and Mondelez Global LLC. She alleged that the defendants marketed their dark chocolate bars as “clean” and “simple” while failing to disclose that the products contained or risked containing lead. Her claims included breach of express warranty, fraud, and violations of New York General Business Law §§ 349 and 350. The opinion states that the proposed amended complaint omitted an unjust-enrichment claim that had appeared in earlier versions.

Levy alleged that she bought and consumed the products multiple times in September 2022, relying on the defendants’ representations that the products contained simple, clean, and safe ingredients. She further alleged that Consumer Reports testing found lead in Hu’s 70% dark chocolate bar and that she would not have paid the same amount, or would not have purchased the products, had she known about the lead.

Judicial Notice

The court took judicial notice of documents incorporated into the complaint and documents publicly available on government websites. It also took judicial notice of a California consent judgment and a New Jersey court order. The court limited this notice to establishing what the documents said or that the other proceedings and filings existed; it did not accept the truth of the statements in those documents for purposes of the motion.

Standing

The defendants argued that Levy lacked standing because she did not personally test the products, could not link her purchases to the batches tested by Consumer Reports, and had not shown that the products contained an unsafe amount of lead. The court rejected these arguments at the pleading stage. Accepting the complaint’s allegations as true and drawing reasonable inferences in Levy’s favor, the court found it plausible that she purchased at least one product containing lead.

The court also found that Levy plausibly alleged an economic injury. Her theory was that she paid a premium for products marketed as clean and simple and would have paid less, or would not have bought them, if the alleged truth had been disclosed. The court therefore denied the motion to dismiss for lack of subject-matter jurisdiction.

New York Consumer-Protection Claims

For claims under New York General Business Law §§ 349 and 350, the court explained that a plaintiff must allege consumer-oriented conduct that materially misled a reasonable consumer and caused injury. Levy alleged both an omission—the failure to disclose the presence or possible presence of lead—and misleading statements about the products’ simplicity, ingredients, and absence of undesirable substances.

The court declined to resolve at the motion-to-dismiss stage how much lead is safe to consume. It found that Levy plausibly alleged that consumers could not reasonably determine the products’ lead content because detecting the chemicals required scientific testing. The court also concluded that, viewed as a whole, the product packaging could plausibly mislead a reasonable consumer into believing that the products contained no lead or no unsafe amount of lead. The court therefore denied the motion to dismiss the claims under Sections 349 and 350.

Express-Warranty Claim

The court also found that Levy stated a claim for breach of express warranty. She alleged that the defendants’ representations that their products were “better-for-you,” “clean,” “organic,” and made with “simple, close to nature ingredients” amounted to express promises about purity and quality control. Because the court could not determine as a matter of law that the statements were not misleading, it denied the motion to dismiss the warranty claim.

Fraud, Unjust Enrichment, and Tolling

The proposed second amended complaint added a fraud claim that was not addressed by the defendants’ motion. The court declined to decide whether Levy had adequately pleaded fraud and stated that the defendants could seek permission to file a renewed motion directed only to that claim.

The proposed complaint omitted the unjust-enrichment claim included in earlier versions. Because Levy had abandoned that claim, the court denied the defendants’ motion to dismiss it as moot.

The court also declined to decide whether any claim was barred by the statute of limitations. It stated that Levy had not yet established a basis for extending the limitations period, but the defendants had not identified an applicable limitations period that would justify dismissal at that stage.

Request for a Stay

The defendants asked the court to stay the case under the primary-jurisdiction doctrine, which can allow an agency to address technical or policy issues within its expertise before a court proceeds. The court concluded that the central issue—whether the product labels misled reasonable consumers about lead—was suitable for judicial resolution. It also noted that no prior application to the Food and Drug Administration concerning lead in chocolate had been identified and that deferring to the agency could substantially delay the case. The court denied the request for a stay.

Sealing and Final Disposition

The court found that the defendants’ proposed redactions and sealing requests concerned proprietary marketing strategies and business-development activities whose disclosure could cause competitive harm. It granted the request to seal specified exhibits and redact portions of the second amended complaint.

Judge Analisa Torres denied the defendants’ motion to dismiss the complaint or stay the proceedings. She granted Levy’s motion to file a second amended complaint and granted the defendants’ motion to redact and seal materials associated with that complaint. Levy was directed to confer with the defendants and file a redacted version with exhibits by March 15, 2024. The court stated that the defendants could submit a pre-motion letter by March 22, 2024, if they sought to file a motion directed to the fraud claim.