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UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW
YORK
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02 Civ. 7821 (RWS)
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2003.SDNY.0000908< http://www.versuslaw.com>
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September 3, 2003
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ASHLEY PELMAN, A CHILD UNDER THE AGE OF 18 YEARS, BY HER MOTHER AND
NATURAL GUARDIAN ROBERTA PELMAN, ROBERTA PELMAN, INDIVIDUALLY, JAZLYN
BRADLEY, A CHILD UNDER THE AGE OF 18 YEARS, BY HER FATHER AND NATURAL
GUARDIAN ISRAEL BRADLEY, AND ISRAEL BRADLEY, INDIVIDUALLY,
PLAINTIFFS,
v.
MCDONALD'S CORPORATION, DEFENDANT.
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Appearances:
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Attorney for Plaintiffs: Samuel Hirsch & Associates 350 Fifth
Avenue, Suite 2418 New York, NY 10118 By: Samuel Hirsch, Esq. Of
Counsel
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Attorneys for Defendants: Winston & Strawn 200 Park Avenue New
York, NY 10166-4193 By: Thomas J. Quigley, Esq. Bradley E. Lerman, Esq.
Bruce R. Braun, Esq. Of Counsel
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Wildman, Harrold, Allen & Dixon 225 West Wacker Drive, Suite 2800
Chicago, IL 60606 By: Anne G. Kimball, Esq. Sarah L. Olson, Esq. Of
Counsel
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The opinion of the court was delivered by: Robert W. Sweet
U.S.D.J.
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OPINION
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Defendant McDonald's Corporation ("McDonald's") has moved pursuant to
Rule 12(b)(6) to dismiss the amended complaint of plaintiffs Ashley
Pelman, Roberta Pelman, Jazlyn Bradley and Israel Bradley. The plaintiffs
have cross-moved for partial summary judgment.
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For the reasons set forth below, the motion to dismiss by McDonald's
is granted and the motion for partial summary judgment by plaintiffs is
denied. Leave to amend the complaint is denied.
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Prior Proceedings
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The plaintiffs commenced suit by filing their initial complaint on
August 22, 2002 in the State Supreme Court of New York, Bronx County.
Defendants removed the action to the Southern District of New York on
September 30, 2002. By opinion of January 22, 2003, this Court dismissed
the original complaint, but granted leave to amend the complaint within 30
days in order to address the deficiencies listed in the opinion. See
Pelman v. McDonald's Corp., 237 F. Supp.2d 512 (S.D.N.Y.
2003).
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On February 19, 2003, plaintiffs filed an amended complaint.
McDonald's filed a motion to dismiss the amended complaint on April 14,
2003. On May 16, 2003, plaintiffs cross-moved for summary judgment and in
opposition to the motion. After submission of briefs, oral argument on
both motions was held on June 25, 2003, and the motions were considered
fully submitted at that time.
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Facts
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As befits a motion to dismiss, the following facts are drawn from the
allegations in the complaint and do not constitute findings of fact by the
Court.
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Parties
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Ashley Pelman, a minor, and her mother and natural guardian Roberta
Pelman are residents of the Bronx, New York.
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Jazlyn Bradley, a minor, and her father and natural guardian Israel
Bradley are residents of New York, New York.
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The infant plaintiffs are consumers who have purchased and consumed
the defendant's products in New York State outlets and, as a result
thereof, such consumption has been a significant or substantial factor in
the development of their obesity, diabetes, coronary heart disease, high
blood pressure, elevated cholesterol intake, and/or other detrimental and
adverse health effects and/or diseases.
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Defendant McDonald's Corporation is a Delaware corporation with its
principal place of business in Oak Brook, Illinois. It does substantial
business with outlets in the State of New York, as well as throughout the
fifty States and the world.
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McDonald's Advertising Campaigns
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In one survey of the frequency of purchases by visitors to McDonald's
restaurants, McDonald's found that 72% of its customers were "Heavy
Users," meaning they visit McDonald's at least once a week, see Amended
Compl., Exh. E, p. 45 (trial testimony of David Green, McDonald's U.S.
Vice-President of Marketing), and that approximately 22% of its customers
are "Super Heavy Users," or "SHUs," meaning that they eat "at McDonald's
ten times or more a month." Id. at 43. Super Heavy Users make up
approximately 75% of McDonald's sales. Many of McDonald's advertisements,
therefore, are designed to increase the consumption of Heavy Users or
Super Heavy Users. The plaintiffs allege that to achieve that goal,
McDonald's engaged in advertising campaigns which represented that
McDonald's foods are nutritious and can easily be part of a healthy
lifestyle.
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Advertising campaigns run by McDonald's from 1987 onward claimed that
it sold "Good basic nutritious food. Food that's been the foundation of
well-balanced diets for generations. And will be for generations to come."
Amended Compl. ¶ 44(B)(1) (quoting McDonald's advertisement, Exh. G-3).
McDonald's also represented that it would be "easy" to follow USDA and
Health and Human Services guidelines for a healthful diet "and still enjoy
your meal at McDonald's." Id. at § 44(B)(3) (quoting McDonald's
advertisement, Exh. G-7). McDonald's has described its beef as
"nutritious" and "leaner than you think." Id. at ¶ 44(E)(1) (quoting
McDonald's advertisement, Exh. G-15). And it has described its french
fries as "well within the established guidelines for good nutrition." Id.
at ¶ 44(F)(1) (quoting McDonald's advertisement, Exh. G-17).
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While making these broad claims about its nutritious value, McDonald's
has declined to make its nutrition information readily available at its
restaurants. In 1987, McDonald's entered into a settlement agreement with
the New York State Attorney General in which it agreed to
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provide [nutritional] information in easily understood pamphlets or
brochures which will be free to all customers so they could take them with
them for further study [and] to place signs, including in-store
advertising to inform customers who walk in, and drive through information
and notices would be placed where drive-through customers could see
them.
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Id. at ¶ 41. Despite this agreement, the plaintiffs have alleged that
nutritional information was not adequately available to them for
inspection upon request. Id. at ¶ 42.
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Claims
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In the amended complaint, the plaintiffs alleged four causes of action
as members of a putative class action of minors residing in New York State
who have purchased and consumed McDonald's products. Shortly before oral
argument, however, the plaintiffs informed the Court that they are
dropping their fourth cause of action, which alleged negligence by
McDonald's because of its failure to warn plaintiffs of the dangers and
adverse health effects of eating processed foods from
McDonald's.
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The three remaining causes of action are based on deceptive acts in
practices in violation of the Consumer Protection Act, New York General
Business Law §§ 349 and 250. Count I alleges that McDonald's misled the
plaintiffs, through advertising campaigns and other publicity, that its
food products were nutritious, of a beneficial nutritional nature or
effect, and/or were easily part of a healthy lifestyle if consumed on a
daily basis. Count II alleges that McDonald's failed adequately to
disclose the fact that certain of its foods were substantially less
healthier, as a result of processing and ingredient additives, than
represented by McDonald's in its advertising campaigns and other
publicity. Count III alleges that McDonald's engaged in unfair and
deceptive acts and practices by representing to the New York Attorney
General and to New York consumers that it provides nutritional brochures
and information at all of its stores when in fact such information was and
is not adequately available to the plaintiffs at a significant number of
McDonald's outlets.
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The plaintiffs allege that as a result of the deceptive acts and
practices enumerated in all three counts, they have suffered damages
including, but not limited to, an increased likelihood of the development
of obesity, diabetes, coronary heart disease, high blood pressure,
elevated cholesterol intake, related cancers, and/or detrimental and
adverse health effects and/or diseases.
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Discussion
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I. The Motion to Dismiss Standard
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In reviewing a Rule 12(b)(6) motion, courts must "accept as true the
factual allegations made in the complaint and draw all inferences in favor
of the pleader." Grandon v. Merrill Lynch & Co. Inc., 147 F.3d 184,
188 (2d Cir. 1998) (citing Mills v. Polar Molecular Corp., 12 F.3d 1170,
1174 (2d Cir. 1993)). However, "legal conclusions, deductions or opinions
couched as factual allegations are not given a presumption of
truthfulness." Ying Jing Gan v. City of New York, 996 F.2d 522, 534 (2d
Cir. 1993) (quoting Moore's Federal Practice ¶ 12.07[2.-5], at 12-63 to
12-64 (2d ed. 1993)). The complaint may only be dismissed when "it appears
beyond doubt that the plaintiff can prove not set of facts in support of
his claim which would entitle him to relief." Conley v. Gibson, 355 U.S.
41, 45-46 (1956); see also Desiano v. Warner-Lambert Co., 326 F.3d 339,
347 (2d Cir. 2003).
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Review must be limited to the complaint and documents attached or
incorporated by reference thereto. Kramer v. Time Warner, Inc., 937 F.2d
767, 773 (2d Cir. 1991). In this context, the Second Circuit has held that
a complaint is deemed to include"... documents that the plaintiffs either
possessed or knew about and upon which they relied in bringing the suit."
Rothman v. Gregor, 220 F.3d 81, 88 (2d Cir. 2000).
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Plaintiffs, however, in their opposition papers rely on facts outside
the pleading. The Court of Appeals has made clear that where a District
Court is provided with materials outside the pleadings in the context of a
12(b)(6) motion to dismiss, it has two options: the court may exclude the
additional materials and decide the motion on the complaint alone or
convert the motion to one from summary judgment under Fed. R. Civ. P. 56
and afford all parties the opportunity to present supporting material.
Fed. R. Civ. P. 12(b). Kopec v. Coughlin, 922 F.2d 152, 154 (2d Cir. 1991)
(quoting Fonte v. Board of Managers of Continental Towers Condominium, 848
F.2d 24, 25 (2d Cir. 1988)). The Court has not converted this motion to
one for summary judgment and thus will not consider statements outside the
pleadings in reaching its holding.
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Counts I, II and III: Plaintiffs Fail to State a Claim Pursuant to
N.Y. GBL §§ 349 and 350
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Counts I, II and III allege that McDonald's violated the New York
Consumer Protection Act, N.Y. Gen. Bus. Law §§ 349 and 350, by (1)
misleading the plaintiffs into believing that its food products "were
nutritious, of a beneficial nature/effect, and/or easily part of a healthy
lifestyle if consumed on a daily basis..." (Compl. ¶ 59); (2) failing
adequately to disclose the fact that certain of its foods "were
substantially less healthier (as a result of processing and ingredient
additives)" than represented by McDonald's in its advertising campaigns
and other publicity. Id., ¶ 65; and (3) representing to the New York
Attorney General and to New York consumers "that it provides nutritional
brochures and information at all of [its] stores, when in fact, such
information was/is not adequately available" to the plaintiffs at a
significant number of McDonald's outlets. Id., ¶ 70.
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Section 349 of New York General Business Law makes unlawful
"[d]eceptive acts or practices in the conduct of any business, trade or
commerce or in the furnishing of any service in this state." N.Y. Gen.
Bus. Law § 349(a).*fn1 Section 350 prohibits
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"[f]alse advertising in the conduct of any business." N.Y. Gen. Bus.
Law § 350. To state a claim for deceptive practices under either section,
a plaintiff must show: (1) that the act, practice or advertisement was
consumer-oriented; (2) that the act, practice or advertisement was
misleading in a material respect, and (3) that the plaintiff was injured
as a result of the deceptive practice, act or advertisement. E.g., Stutman
v. Chem. Bank, 95 N.Y.2d 24, 29, 709 N.Y.S.2d 892, 731 N.E.2d 608 (2000);
St. Patrick's Home for Aged and Infirm v. Laticrete Intern., Inc., 264
A.D.2d 652, 655, 696 N.Y.S.2d 117, 122 (1st Dep't 1999); BNI NY Ltd. v.
DeSanto, 177 Misc. 2d 9, 14, 675 N.Y.S.2d 752, 755 (N.Y. City Ct. 1998).
See also Berrios v. Sprint Corp., 1998 WL 199842, at *3 (E.D.N.Y. March
16, 1998). The standard for whether an act or practice is misleading is
objective, requiring a showing that a reasonable consumer would have been
misled by the defendant's conduct. Marcus v. AT&T, 138 F.3d 46, 64 (2d
Cir. 1998); Oswego Laborers v. Marine Midland Bank, 85 N.Y.2d 20, 26, 623
N.Y.S.2d 529, 533 (1995). Omissions, as well as acts, may form the basis
of a deceptive practices claim. Stutman, 95 N.Y.2d at 29 (citing Oswego
Laborers, 85 N.Y.2d at 26 (delineating different inquiry in case of claim
of deceit by omission)). Further, traditional showings of reliance and
scienter are not required under § 349. Blue Cross and Blue Shield of New
Jersey, Inc. v. Philip Morris, Inc., 178 F. Supp.2d 198, 231 (E.D.N.Y.
2001) (Weinstein, J.).
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McDonald's argues that plaintiffs' claims under §§ 349 and 350 fail
because (1) each of the alleged misrepresentations fall outside of the
applicable statute of limitations; (2) plaintiffs do not allege that they
saw the alleged misrepresentations; (3) the plaintiffs fail to allege that
any particular alleged misrepresentation caused any injury; and (4) the
alleged misrepresentations are either not deceptive or are non-actionable
puffery.
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The Statute of Limitations Bars All Claims Except for Those of the
Infant Plaintiffs
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In reviewing plaintiffs' initial complaint, the Court considered
allegations that related to actions taken against McDonald's advertising
practices in the late 1980's by state attorney generals from several
states, including New York State. At that time, this Court noted that "a
review of those advertisements and that state attorney general's analysis
of them may assist plaintiffs in shaping a claim." Pelman, 237 F. Supp.2d
at 528. But the Court also warned that "any claim based on the
advertisements would likely be time barred." Id. (citing Morelli v. Weider
Nutrition Group, Inc., 275 A.D.2d 607, 608, 712 N.Y.S.2d 551 (1st Dept.
2000) (three-year limitations period for deceptive practices actions)).
Despite that warning, plaintiffs have submitted several allegedly
deceptive advertisements, promotions and statements that date from those
same investigations.
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Plaintiffs allege in their complaint that the advertisements that were
the subject of the investigation were never "removed or terminated
although requested by the New York State Attorney General... and that said
advertisements continued for several years." (Amended Compl. ¶ 40).
However, that statement is immediately followed by a 1994 statement by
David Green, the Vice-President of Marketing for McDonald's, who testified
at a trial in the United Kingdom that following the investigation, "we
continued the campaign for not only a number of months but for a few
years." Id. Green's use of the past tense that the campaign had ended by
1994, well outside of the statute of limitations period for a complaint
filed in 2002.
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Plaintiffs argue that McDonald's was engaged in a scheme of continuing
deceptive practices, and that the statute of limitations is therefore
tolled upon each successive deceptive statement in furtherance of the
overall scheme. The "continuing practice" exception to which plaintiffs
refer has been "long described as disfavored by the Second Circuit," De La
Fuente v. DCI Telecomms., 259 F. Supp.2d 250, 267 n.12 (S.D.N.Y. 2003),
and is "not recognized" outside of the employment discrimination context.
Id. at 266.
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Plaintiffs also argue that the statute of limitations is tolled by the
"separate accrual rule" the Second Circuit has adopted for RICO claims.
See In re Merrill Lynch Ltd. Partnerships Litig., 154 F.3d 56, 59 (2d Cir.
1998) (per curiam); Bingham v. Zolt, 66 F.3d 553, 559 (2d Cir. 1995).
Under the separate accrual rule for civil RICO actions, "a new claim
accrues, triggering a new four-year limitations period, each time a
plaintiff discovers, or should have discovered, a new injury caused by the
predicate RICO violations." Bingham, 66 F.3d at 559. The separate accrual
rule has recently been extended to section 349 claims. See Blue Cross, 178
F. Supp.2d at 272.
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Plaintiffs cannot take advantage of the special accrual rule, however,
because they have failed to allege that new injuries have taken place
within the limitations period. Instead, plaintiffs have alleged only that
by continuing to purchase and consume McDonald's food, plaintiffs'
"respective injuries also continue[d] to accrue, thereby triggering a new
limitations period each time a plaintiffs' added injury [was] manifested
(additional weight gain, diabetes, heart disease) [that was] caused by the
predicate violations." Pl. Opp. Mem. at 37. Additional injuries that are
an outgrowth of the initial injury are insufficient to toll the statute of
limitations. See Bingham, 66 F.3d at 558-560 (injuries must be "separate
and independent" in order to toll statute of limitations under separate
accrual rule); Bankers Trust Co. v. Rhoades, 859 F.2d 1096, 1103 (2d Cir.
1988) (a civil RICO claim accrues each time "a new and independent injury
is incurred from the same violation"). Because any additional weight gain
or other injuries that may be suffered by plaintiffs are not independent
of initial injury to the plaintiffs -- obesity -- the statute of
limitations is not tolled under the separate accrual rule.
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Plaintiffs further argue that the statute of limitations should be
tolled under the "diligence-discovery accrual rule." Under this rule,
"accrual may be postponed until the plaintiff has or with reasonable
diligence should have discovered the critical facts of both his injury and
its cause." Corcoran v. New York Power Auth., 202 F.3d 530, 544 (2d Cir.
1999). However, discovery of the critical facts of injury and
causation
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requires only knowledge of, or knowledge that could lead to, the basic
facts of the injury, i.e., knowledge of the injury's existence and
knowledge of its cause or of the person or entity that inflicted it... A
plaintiff need not know each and every relevant fact of his injury or even
that the injury implicates a cognizable legal claim. Rather, a claim will
accrue when the plaintiff knows, or should know, enough of the critical
facts of injury and causation to protect himself by seeking legal
advice.
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Id. (ellipses in original) (quoting Kronisch v. United States, 150
F.3d 112, 121 (2d Cir. 1998)). This Court has previously held
that
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"[i]t is well-known that fast food in general, and McDonald's products
in particular, contain high levels of cholesterol, fat, salt and sugar,
and that such attributes are bad for one." Pelman, 237 F. Supp.2d at 532.
The plaintiffs therefore either knew or should have known enough of the
critical facts of their injury that their claims accrued upon being
injured.
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Lastly, plaintiffs argue that the statute of limitations is tolled due
to the infancy of plaintiffs Ashley Pelman, Jazlyn Bradley, and proposed
infant class members Niassa Bradley, Shakima Bradley, Julian Tawfik,
Gregory Rhymes and William Scaglione. Under New York CPLR § 208, the
statute of limitations for a cause of action is tolled during the period
when a person is "under a disability because of infancy." For an infant
plaintiff, the statute of limitations does not begin to accrue until the
plaintiff reaches eighteen years old. See CPLR § 105(j); Henry v. City of
New York, 94 N.Y.2d 275, 281, 724 N.E.2d 372, 702 N.Y.S.2d 580 (N.Y.
1999). The infancy toll of the statute of limitations is not terminated by
acts of a guardian or legal representative who takes steps to pursue
claims on the infant's behalf. See Henry, 94 N.Y.2d at
279-280.
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McDonald's has responded that the infant plaintiffs were either not
alive at the time of the 1987 advertisements or could not read or write.
Such arguments relate to questions of reliance or causation, but do not
address the infancy toll on the statute of limitations. McDonald's has
made no showing as to why the statute of limitations should not be tolled
as to the infant plaintiffs.*fn2 The statute of limitations is therefore not a bar to
the infant plaintiffs pursuing their claims. However, CPLR § 208 provides
no protection to the adult plaintiffs Roberta Pelman and Israel Bradley,
even though they are suing as the guardians of the infant plaintiffs. See
Rosado v. Langsam Prop. Serv. Corp., 251 A.D.2d 258, 259 675 N.Y.S.2d 53
(1st Dept. 1998) ("The infant plaintiff's mother cannot claim the
protection of the infancy disability toll."); Quinones v. NYRAC, 277
A.D.2d 110, 111 717 N.Y.S.2d 36, 37 (1st Dept. 2000) (same). Any claims by
the adult plaintiffs based on misrepresentations made more than three
years before the commencement of suit on August 22, 2002 are therefore
barred by the statute of limitations.
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Plaintiffs Have Successfully Stated Reliance on a Single Allegedly
Deceptive Advertising Campaign
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McDonald's argues that the consumer protection claims under both § 349
and § 350 must be dismissed because the plaintiffs do not "allege that any
of them ever saw even one of the McDonald's statements and advertisements
described in the Amended Complaint." McDonald's Mem. at 36. The plaintiffs
counter that they have alleged that their misconceptions about the
healthiness of McDonald's food resulted from "a long-term deceptive
campaign by Defendant of misrepresenting the nutritional benefits of their
foods over last approximate [ sic ] fifteen (15) years." Pl. Opp. Mem. at
25. Plaintiffs further argue that reliance is not an element of New York
GBL § 349.
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Plaintiffs are correct that it is not necessary to allege reliance on
defendant's deceptive practices in the context of a § 349 claim. See,
e.g., F.T.C. v. Crescent Pub. Group, Inc., 129 F. Supp.2d 311, 321 n.67
(S.D.N.Y. 2001) (§ 349 imposes no requirement of justifiable reliance);
Stutman, 95 N.Y.2d at 29 ("we have repeatedly stated [that] reliance is
not an element of a section 349 claim"); Small v. Lorillard Tobacco Co.,
252 A.D.2d 1, 7 (N.Y. App. Div. 1st Dept. 1998) ("General Business Law §
349 'does not require proof of justifiable reliance.'") (quoting Oswego
Laborers, 85 N.Y.2d at 26).
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To state a claim under Section 350 for false advertising, however, it
is necessary to allege reliance on the allegedly false advertisement. See,
e.g., Andre Strishak & Associates, P.C. v. Hewlett Packard Co., 300
A.D.2d 608, 610 (N.Y. App. Div. 2d Dept. 2002) (affirming dismissal of §
350 cause of action because "plaintiffs failed to show that they relied
upon or were aware of the allegedly false advertisement when purchasing
the printers."); Small, 252 A.D.2d at 8 ("individualized proof of reliance
is essential to the cause[] of action for false advertising under General
Business Law § 350"); McGill v. General Motors Corp., 231 A.D.2d 449, 450
(N.Y. App. Div. 1st Dept. 1996) (same); Gershon v Hertz Corp., 215 A.D.2d
202, 203 (N.Y. App. Div. 1995) (same).*fn3 Further, plaintiffs are not entitled to a presumption
of reliance, which would preclude making explicit
allegations,
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where plaintiffs had a reasonable opportunity to discover the facts
about the transaction beforehand by using ordinary intelligence... Only
when defendants effectively controlled all the information about the
transaction will the existence of misrepresentations give rise to an
inference of reliance without need for further proof.
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Small, 252 A.D.2d at 8 (citations omitted). While plaintiffs have
alleged that McDonald's has made it difficult to obtain nutritional
information about its products, see Amended Compl. ¶ 42, they have not
alleged that McDonald's controlled all relevant information. Indeed, the
complaint cites the complete ingredients of several McDonald's products.
Amended Compl. ¶ 44(F)(7) (French fries), 44(I)(3) (Chicken McNuggets),
44(K)(2) (Fish Filet Patty). Plaintiffs are therefore required to allege
reliance in order to survive a motion to dismiss.
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The plaintiffs' vague allegations of reliance on a "long term
deceptive campaign" are insufficient to fulfill the reliance requirement
of § 350 for otherwise unspecified advertisements. Even assuming that the
specific advertisements cited by the plaintiffs would be considered
deceptive, it cannot be determined that the other advertisements upon
which the plaintiffs are alleged to have relied are also deceptive without
citing at least one instance of such advertisements. Absent an example of
an alleged false advertisement on which plaintiffs relied, the amended
complaint states only a legal conclusion -- that the campaign in its
entirety is deceptive -- without making a factual allegation. Such
conclusory allegations are not entitled to a presumption of truthfulness.
See Ying Jing Gan, 996 F.2d at 534. The rationale behind this doctrine is
that the defendants must be given sufficient notice to have the
opportunity to challenge the alleged deceptiveness of particular
advertisements. Plaintiffs must therefore enumerate the allegedly
deceptive practices along with plaintiffs' reliance thereon, rather than
merely asserting their deceptiveness.
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Plaintiffs argue that it would be impracticable to require each of the
tens of thousands of potential class members to state exactly when and
where they observed the deceptive advertisements. Before a class has been
certified, however, the number of infant plaintiffs is only two, making
the task much more manageable. It is true that it would be unduly
burdensome for plaintiffs, at this stage, to allege the particular time
and place that they saw the advertisements which allegedly caused their
injuries. It will therefore be considered sufficient for plaintiffs to
allege in general terms that plaintiffs were aware of the false
advertisement, and that they relied to their detriment on the
advertisement.
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Nowhere in the amended complaint is it explicitly alleged that
plaintiffs witnessed any of the allegedly false advertisements cited. In
one instance, plaintiffs do allege that despite McDonald's representations
that "nutritional brochures are/were available in every store for New York
consumers," such "information was not adequately available to the
Plaintiff consumers at a significant number of the Defendant's New York
stores for inspection upon request." Amended Compl. ¶¶ 42, 42.*fn4 However, this allegation is made "upon information and
belief," id., despite that fact that the details about plaintiffs' visits
to McDonald's and requests for brochures are uniquely within the
plaintiffs' knowledge. Allegations made upon information and belief are
insufficient to support a cause of action under New York's consumer
protection laws. See Weaver v. Chrysler Corp., 172 F.R.D. 96, 100
(S.D.N.Y. 1997); Tinlee Enters., Inc. v. Aetna Cas. & Sur. Co., 834 F.
Supp. 605, 610 (E.D.N.Y. 1993). Another allegation that the 2002
advertising campaign with the slogans "McChicken Everyday!" and "Big N'
Tasty Everyday!" imparted to the plaintiffs the belief "that Defendant's
foods are nutritious, healthy, and can be consumed every day without
incurring any detrimental health effects," Amended Compl. at ¶¶ 44(L)(8),
44(L)(9), is also made upon information and belief and cannot support a
consumer protection law claim.
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Making all reasonable inferences in favor of the plaintiffs, the
complaint implicitly alleges only one instance in which the infant
plaintiffs were aware of allegedly false advertisements. The plaintiffs
implicitly allege that they were aware of McDonald's national advertising
campaign announcing that it was switching to "100 percent vegetable oil"
in its French fries and hash browns, and that McDonald's fries contained
zero milligrams of cholesterol, when they claim that they "would not have
purchased or consumed said french fries or hash browns, or purchased and
consumed in such quantities," had McDonald's disclosed the fact that these
products "contain beef or extracts and trans fatty acids." Amended Compl.
¶ 44(F)(8).*fn5
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The complaint also includes a statement applicable to all of the
plaintiffs' claims that the plaintiffs "would not have purchased and/or
consumed the Defendant's aforementioned products, in their entirety, or
[with] such frequency but for the aforementioned alleged representations
and campaigns made by Defendant." Id. at ¶ 47. This statement is
sufficient to allege reliance on the alleged misrepresentation listed
above for purposes of section 350.
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Plaintiffs Have Failed to Allege that Consumption of McDonald's Food
Caused Their Injuries
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The most formidable hurdle for plaintiffs is to demonstrate that they
"suffered injury as a result of the deceptive act." Smith v. Chase
Manhattan Bank USA, N.A., 293 A.D.2d 598, 599, 741 N.Y.S.2d 100, 102 (App.
Div. 2d Dep't 2002). McDonald's argues that plaintiffs have failed to
allege that any particular deceptive act caused any injury. The plaintiffs
reply that they have alleged numerous injuries that have resulted from
McDonald's deceptive practices, and that statistical sampling may be used
to establish causation.
|
| [69] |
Causation under New York's Consumer Protection Act differs from
proximate cause as applied under the common law. See Blue Cross, 178 F.
Supp.2d at 241 ("Cases in consumer fraud expand the reach of proximate
causation... Causation is thus more broadly construed to carry out state
policy against fraud on consumers.") It would therefore be inappropriate
to apply the standard from plaintiffs' voluntarily dismissed negligence
action to the statutory claims. The plaintiffs need not "establish that
the defendant's conduct was a substantial cause in bringing about the
harm." Pelman, 237 F. Supp.2d at 538 (emphasis added). Nevertheless,
"[t]he causation element is essential: 'The plaintiff... must show that
the defendant's material deceptive act caused the injury.'" Petitt v.
Celebrity Cruises, Inc., 153 F. Supp.2d 240, 266 (S.D.N.Y. 2001) (quoting
Stutman, 95 N.Y.2d at 29). In Petitt, the district court first dismissed
the plaintiff's negligence claim under the more rigorous standard of
proximate causation, and then dismissed the statutory claims because
"plaintiffs are unable to show that Celebrity's actions resulted in such
injuries, directly or indirectly." Id.
|
| [70] |
The causation requirement is also distinct from the reliance
requirement. As explained by the New York Court of Appeals,
|
| [71] |
Reliance and causation are twin concepts, but they are not identical.
In the context of fraud, they are often intertwined.... But there is a
difference between reliance and causation, as illustrated by the facts of
this case. Here, plaintiffs allege that because of defendant's deceptive
act, they were forced to pay a $275 fee that they had been led to believe
was not required. In other words, plaintiffs allege that defendant's
material deception caused them to suffer a $275 loss. This allegation
satisfies the causation requirement. Plaintiffs need not additionally
allege that they would not otherwise have entered into the transaction.
Nothing more is required.
|
| [72] |
Stutman, 95 N.Y.2d at 30. The absence of a reliance requirement
effectively allows plaintiffs to allege a deceptive practice and then to
show some connection between that practice and the injury without having
to allege specifically that the individual plaintiff was deceived or that
the deception was the only reason that the plaintiff purchased the product
or, as in the present case, purchased it as frequently as they
did.
|
| [73] |
The absence of a reliance requirement does not, however, dispense with
the need to allege some kind of connection between the allegedly deceptive
practice and the plaintiffs' injuries. If a plaintiff had never seen a
particular advertisement, she could obviously not allege that her injuries
were suffered "as a result" of that advertisement. Excusing the reliance
requirement only allows the plaintiff to forgo the heightened pleading
burden that is necessary for common law fraud claims. It cannot, however,
create a causal connection between a deceptive practice and a plaintiff's
injury where none has been alleged. Accordingly, this Court required that
to state a claim under § 349 in an amended complaint, plaintiffs would
"have to set forth grounds to establish... that they suffered some injury
as a result of that particular promotion." Pelman, 237 F. Supp.2d at
530.
|
| [74] |
Although proceeding under a different standard, the proximate cause
analysis undertaken by this Court in considering the initial complaint
demonstrates that the amended complaint fails even to allege the more
relaxed level of causation needed to state a claim under section
349.
|
| [75] |
As discussed above, plaintiffs have successfully alleged that they
were witness to only one instance of deceptive acts or practices: the
various representations by McDonald's that its French fries and hash
browns are made with 100% vegetable oil and/or are cholesterol-free,
whereas they are actually cooked and processed in beef tallow. Assuming
for the purposes of the causation analysis that these acts are deceptive,
and granting all inferences in the plaintiffs' favor, the plaintiffs have
stated, albeit just barely, a causal connection between the deceptive acts
and the plaintiffs' decisions to consume McDonald's food, or to consume it
more frequently than they would have otherwise.
|
| [76] |
Plaintiffs have failed, however, to draw an adequate causal connection
between their consumption of McDonald's food and their alleged injuries.
This Court noted that the original complaint did not adequately allege the
causation of plaintiffs' injuries because it did "not specify how often
the plaintiffs ate at McDonald's." Pelman, 237 F. Supp.2d at 538. In terms
of causation, "the more often a plaintiff had eaten at McDonald's, the
stronger the likelihood that it was the McDonald's food (as opposed to
other foods) that affected the plaintiffs' health." Id. at
539.
|
| [77] |
Unlike the initial complaint, the amended complaint does specify how
often the plaintiffs ate at McDonald's. For example, Jazlyn Bradley is
alleged to have "consumed McDonald's foods her entire life... during
school lunch breaks and before and after school, approximately five times
per week, ordering two meals per day." Amended Compl., ¶ 17. Such
frequency is sufficient to begin to raise a factual issue "as to whether
McDonald's products played a significant role in the plaintiffs' health
problems." Pelman, 237 F. Supp.2d at 538-39.
|
| [78] |
What plaintiffs have not done, however, is to address the role that "a
number of other factors other than diet may come to play in obesity and
the health problems of which the plaintiffs complain." Id. This Court
specifically apprised the plaintiffs that
|
| [79] |
in order to allege that McDonald's products were a significant factor
in the plaintiffs' obesity and health problems, the Complaint must address
these other variables and, if possible, eliminate them or show that a
McDiet is a substantial factor despite these other variables. Similarly,
with regard to plaintiffs' health problems that they claim resulted from
their obesity..., it would be necessary to allege that such diseases were
not merely hereditary or caused by environmental or other
factors.
|
| [80] |
Id. (emphasis added). Plaintiffs have not made any attempt to isolate
the particular effect of McDonald's foods on their obesity and other
injuries. The amended complaint simply states the frequency of consumption
of McDonald's foods and that each infant plaintiff "exceeds the Body Mass
Index (BMI) as established by the U.S. Surgeon General, National
Institutes of Health, Centers for Disease Control, U.S. Food and Drug
Administration and all acceptable scientific, medical guidelines for
classification of clinical obesity." Amended Compl. ¶ 15, 17-19, 21,
23.
|
| [81] |
In their opposition brief, plaintiffs argue that "surveys and sampling
techniques" may be employed to establish causation. Plaintiffs' Opp. at
31. While that may be true, it is irrelevant in the present context, where
a small number of plaintiffs are alleging measurable injuries. Following
this Court's previous opinion, the plaintiffs should have included
sufficient information about themselves to be able to draw a causal
connection between the alleged deceptive practices and the plaintiffs'
obesity and related diseases. Information about the frequency with which
the plaintiffs ate at McDonald's is helpful, but only begins to address
the issue of causation. Other pertinent, but unanswered questions include:
What else did the plaintiffs eat? How much did they exercise? Is there a
family history of the diseases which are alleged to have been caused by
McDonald's products? Without this additional information, McDonald's does
not have sufficient information to determine if its foods are the cause of
plaintiffs' obesity, or if instead McDonald's foods are only a
contributing factor.
|
| [82] |
Plaintiffs also argue that a defendant "must accept an injured party
as he finds him, even with a 'thin skull.'" Pl. Opp. Mem. at 32. By this
plaintiffs presumably mean that the remainder of the plaintiffs' diet, and
their susceptibility to obesity and related diseases are irrelevant so
long as McDonald's can be found to have caused the plaintiffs' injuries in
some way. The thin skull plaintiff doctrine has not been applied to claims
under § 349 or § 350. Even if the doctrine were applicable, McDonald's
correctly notes that the doctrine is "one of foreseeability of the scope
or extent of injury." McDonald's Reply Mem. at 5. The susceptibility of
the plaintiff to injury does not excuse the need to establish causation.
See W. Page Keeton et al., Prosser & Keeton on the Law of Torts § 43,
at 292 (5th ed. 1984 & Supp. 1988) (discussing thin skull plaintiff
rule, and noting that "[t]he defendant of course is liable only for the
extent to which the defendant's conduct" caused the harm).
|
| [83] |
The Advertising Campaign Upon Which Plaintiffs Have Stated Reliance is
Not Objectively Deceptive
|
| [84] |
Even if plaintiffs were able sufficiently to allege that their
injuries were causally related to McDonald's representations about its
french fries and hash browns, that claim must still be dismissed because
the plaintiffs have not alleged that those advertisements were objectively
misleading.
|
| [85] |
In order to demonstrate, under section 349, that a practice or
advertisement is deceptive or misleading, it must be shown objectively
that a reasonable consumer would have been misled by the defendant's
conduct. Marcus, 138 F.3d at 64; Oswego Laborers, 85 N.Y.2d at 26. It is
appropriate for a court, given particular facts and circumstances, to
determine whether or not a given practice is or is not deceptive as a
matter of law. See S.Q.K.F.C. v. Bell Atlantic Triton Leasing Corp., 84
F.3d 629, 636-37 (2d Cir. 1996) (determining, on the basis of the
complaint and attached exhibits, that a reasonable consumer would not have
been misled by defendant's conduct); Oswego Laborers, 85 N.Y.2d at 26
(same).
|
| [86] |
The essence of the plaintiffs' claim of deception with regard to
McDonald's french fries and hash browns is that McDonald's represented
that its fries are cooked in "100 percent vegetable oil" and that they
contain zero milligrams of cholesterol whereas in reality they "contain
beef or extracts and trans fatty acids." Amended Compl. at ¶ 44(F).
However, the citations in the amended complaint to McDonald's
advertisements, and the appended copies of the advertisements, do not bear
out the plaintiffs' claims of deception. The first citation is to an
advertisement titled "How we're getting a handle on cholesterol," alleged
to have commenced in 1987 and to have continued for several years
thereafter. The text cited by the plaintiffs states:
|
| [87] |
...a regular order of french fries is surprising low in cholesterol
and 4.6 grams of saturated fat. Well within established guidelines for
good nutrition.
|
| [88] |
Id. at 44(F)(1). The text cited in the complaint, however,
inexplicably drops several significant words from the text of the
advertisement included in the appendix to the amended complaint. The
actual advertisement states:
|
| [89] |
...a regular order of french fries is surprising low in cholesterol
and saturated fat: only 9 mg of cholesterol and 4.6 grams of saturated
fat. Well within established guidelines for good nutrition.
|
| [90] |
Id., Exhibit G-17 (emphasis added). The advertisement also states that
McDonald's uses "a specially blended beef and vegetable shortening to cook
our world famous french fries and hash browns." Id.
|
| [91] |
The plaintiffs next allege that beginning on or around July 23, 1990,
McDonald's announced that it would change its french fry recipe and cook
its fries in "100 percent vegetable oil," a change that rendered its fries
cholesterol-free. Id. at ¶ 44(F)(2)-(4). They allege that from the time of
the change until May 21, 2001, McDonald's never acknowledged "that it has
continued the use of beef tallow in the french fries and hash browns
cooking process." Id. at 44(F)(5). On its website, however, McDonald's is
alleged to have "admitted the truth about its french fries and hash
browns":
|
| [92] |
A small amount of beef flavoring is added during potato processing --
at the plant. After the potatoes are washed and steam peeled, they are
cut, dried, par-fried and frozen. It is during the par-frying process at
the plant that the natural flavoring is used. These fries are then shipped
to our U.S. restaurants. Our french fries are cooked in vegetable oil at
our restaurants.
|
| [93] |
Id. While the plaintiffs do allege that the beef flavoring that
McDonald's acknowledges using is equivalent to beef tallow, see id. at ¶
44(F)(6), the complaint does not allege that the beef flavoring contains
cholesterol.*fn6 McDonald's maintains that its "cholesterol disclosure
is regulated by the FDA and is entirely accurate and appropriate under the
FDA's regulations." McDonald's Reply Mem. at 32 (citing 21 C.F.R. §
101.9(c)(3) (regulating the disclosure of cholesterol levels on food
labels)).
|
| [94] |
Plaintiffs further allege that McDonald's claims that its french fries
and hash browns are cholesterol-free is also misleading because the oils
in which those foods are cooked contain "trans fatty acids responsible for
raising detrimental blood cholesterol levels (LDL) in individuals, leading
to coronary heart disease." Amended Compl. ¶ 44(F)(7). However, plaintiffs
have made no allegations that McDonald's made any representations about
the effect of its french fries on blood cholesterol levels. As McDonald's
argues,
|
| [95] |
The contents of food and the effects of food are entirely different
things. A person can become "fat" from eating "fat-free" foods, and a
person's blood sugar level can increase from eating "sugar-free"
foods.
|
| [96] |
McDonald's Mem. at 34-35. McDonald's representation that its fries are
"cholesterol-free" or contain zero milligrams of cholesterol is therefore
objectively non-deceptive.
|
| [97] |
Because the plaintiffs have failed to allege both that McDonald's
caused the plaintiffs' injuries or that McDonald's representations to the
public were deceptive, the motion to dismiss the complaint is
granted.
|
| [98] |
II. The Plaintiffs' Motion for Partial Summary Judgment is Denied as
Moot
|
| [99] |
Because all of plaintiffs' claims in the amended complaint have been
dismissed as a matter of law, it follows necessarily that plaintiffs'
motion for partial summary judgment "regarding the Chicken McNugget and
'cholesterol-free' 45% less saturated fat french fries representations,"
see Pl. Opp. Mem. at 7, must be denied as moot. See Onandaga Landfill
Systems, Inc. v. Williams, 624 F. Supp. 25, 33 (N.D.N.Y. 1985) (dismissing
plaintiff's motion for partial summary judgment as moot after granting
defendant's motion to dismiss).
|
| [100] |
III. Leave to Amend is Denied
|
| [101] |
Leave to amend should be granted "freely... when justice so requires."
Fed. R. Civ. P. 15(a); Foman v. Davis 371 U.S. 178, 182, 83 S.Ct. 227, 9
L.Ed.2d 222 (1962); Kropelnicki v. Siegel, 290 F.3d 118, 130 (2d Cir.
2002). However, "leave may be denied when there is good reason to do so,
such as futility, bad faith, or undue delay." Kropelnicki, 290 F.3d at 130
(citing Chill v. General Electric Co., 101 F.3d 263, 271-72 (2d Cir.
1996).
|
| [102] |
The plaintiffs have not only been given a chance to amend their
complaint in order state a claim, but this Court laid out in some detail
the elements that a properly pleaded complaint would need to contain.
Despite this guidance, plaintiffs have failed to allege a cause of action
for violations of New York's consumer protection laws with respect to
McDonald's advertisements and other publicity. The plaintiffs have made no
explicit allegations that they witnessed any particular deceptive
advertisement, and they have not provided McDonald's with enough
information to determine whether its products are the cause of the alleged
injuries. Finally, the one advertisement which plaintiffs implicitly
allege to have caused their injuries is objectively
non-deceptive.
|
| [103] |
There is no indication that granting plaintiffs leave to amend a
second time would provide an opportunity to correct the failings in the
amended complaint. The plaintiffs have been warned that they must make
specific allegations about particular advertisements that could have
caused plaintiffs' injuries, and to provide detail on the alleged
connection between those injuries and the consumption of McDonald's foods.
They have failed to remedy the defects of the initial complaint in the
face of those warnings. Granting leave to amend would therefore be
futile.
|
| [104] |
In light of the previous decision and the granting of leave to amend,
the complaint will be dismissed with prejudice. The
plaintiffs
|
| [105] |
have no right to a second amendment -- a third bite at the apple --
particularly where, as here, they had ample opportunity to craft their
complaints and were advised by the Court, prior to amending their
complaints, of certain pleading deficiencies and what the court would
require.
|
| [106] |
In re Merrill Lynch & Co. Research Reports Sec. Litig., -- F.
Supp.2d --, 02 MDL 1484, 2003 WL 21920386, at *9 (S.D.N.Y. Aug. 12, 2003).
"As Judge Friendly noted in Denny v. Barber, 576 F.2d 465, 471 (2d Cir.
1978), where a district judge puts plaintiff's counsel 'on the plainest
notice of what was required,' justice does not require the court to
'engage in still a third go-round.'" Moran v. Kidder Peabody & Co.,
617 F. Supp. 1065, 1068 (S.D.N.Y. 1985), aff'd mem., 788 F.2d 3 (2d Cir.
1986).
|
| [107] |
Conclusion
|
| [108] |
McDonald's motion to dismiss the amended complaint is granted. The
plaintiffs' motion for partial summary judgment is denied as moot.
Plaintiffs' request for leave to amend the complaint is
denied.
|
| [109] |
It is so ordered.
|
| |
|
| |
Opinion Footnotes |
| |
|
| [110] |
*fn1 As indicated by the statute's "expansive" language,
section 349 was intended to be broadly applicable, extending far beyond
the reach of common law fraud. Blue Cross and Blue Shield of New Jersey,
178 F. Supp.2d at 230-31 (upholding claim under section 349 that tobacco
companies engaged in scheme to distort public knowledge concerning risks
of smoking); Gaidon v. Guardian Life Ins. Co. of Am., 94 N.Y.2d 330, 343,
704 N.Y.S.2d 177, 182, 725 N.E.2d 598, 603 (1999) ("In contrast to
common-law fraud, General Business Law § 349 is a creature of statute
based on broad consumer-protection concerns."); Karlin v. IVF Am., Inc.,
93 N.Y.2d 282, 291, 690 N.Y.S.2d 495, 498, 712 N.E.2d 662, 665 (1999)
("The reach of th[is] statut[e] 'provide[s] needed authority to cope with
the numerous, ever-changing types of false and deceptive business
practices which plague consumers in our State.'") (quoting N.Y. Dept. of
Law, Mem. to Governor, 1963 N.Y. Legis. Ann., at 105).
|
| [111] |
*fn2 Although plaintiff Jazlyn Bradley is now 19 years old,
the suit on her behalf was commenced within three years after the
disability of infancy ceased. Claims made on her behalf are therefore
timely.
|
| [112] |
*fn3 Plaintiffs rely on Committee on Children's Television,
Inc. v. General Foods Corp., 673 P.2d 660, 668 (Cal. 1983) for the
proposition that "[a]llegations of actual deception, reasonable reliance
and damage are unnecessary." That decision is based entirely on California
unfair competition and false advertising law. The fact that California's
consumer protection statutes lack a reliance requirement does not change
the settled law in New York. McDonald's persuasively argues that the
plaintiffs' reliance on Children's Television throughout their opposition
brief is misplaced. First, in that decision, an unfair competition
plaintiff need not have seen the advertisement, been deceived by it, or
been damaged by it. See id. In New York, however, a claim under §§ 349 or
350 "must show that the defendant engaged in a material deceptive act or
practice that caused actual... harm." Oswego Laborers, 85 N.Y.2d at 26.
Second, the Children's Television court applied a subjective standard to
determine the deceptiveness of the advertisements. It excused the need to
plead the substance of each allegedly deceptive advertisement because even
with such knowledge, it would still "be difficult for judges unaided by
expert testimony to determine how a three-year old would interpret that
advertisement." Id. at 670. Because New York employs an objective standard
of deceptiveness, see Oswego Laborers, 85 N.Y.2d at 25, such difficulties
are avoided, and plaintiffs are required to plead the substance of the
advertisements upon which they allegedly relied.
|
| [113] |
*fn4 The amended complaint contains a second paragraph 42
between paragraphs 43 and 44.
|
| [114] |
*fn5 Many of the allegations related to the nutritional
content of McDonald's french fries are also made upon information and
belief. However, plaintiff has included examples of such advertisements in
the amended complaint. More importantly, the allegations concerning the
plaintiffs -- that they would not have otherwise consumed french fries in
such quantities -- is not made upon information and belief.
|
| [115] |
*fn6 Plaintiffs allege in their opposition brief that "beef
flavorings and tallow [are] believed to be a source of cholesterol and
added fats." Pl. Opp. Mem. at 18 n.11. However, a court may not consider
"factual allegations contained in legal briefs or memoranda" when
considering a motion to dismiss under Rule 12(b)(6). Friedl v. City of New
York, 210 F.3d 79, 83 (2d Cir. 2000).
|