Baines v. Nature's Bounty (NY), Inc. ( 2023 )

23-710-cv
Baines et al. v. Nature’s Bounty (NY), Inc. et al.
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY
ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF
APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY
ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL
APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY
CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY
COUNSEL.
At a stated term of the United States Court of Appeals for the
Second Circuit, held at the Thurgood Marshall United States Courthouse, 40
Foley Square, in the City of New York, on the 11th day of December, two
thousand twenty-three.
PRESENT:
AMALYA L. KEARSE,
GUIDO CALABRESI,
ALISON J. NATHAN,
Circuit Judges.
_____________________________________
Mashon Baines, on behalf of herself
and all others similarly situated,
Nancy Froning, on behalf of
themselves and all others similarly
situated,
Plaintiffs-Appellants, 23-710-cv
v.
Nature’s Bounty (NY), Inc., The
Bountiful Company (NY),
Defendants-Appellees.
_____________________________________
FOR PLAINTIFFS-APPELLANTS: MICHAEL D. BRAUN, Kuzyk Law,
LLP, Los Angeles, CA.
FOR DEFENDANTS-APPELLEES: WILLIAM A. DELGADO (Megan
O’Neill, Erik P. Mortensen, on the
briefs), DTO Law, New York, NY.
Appeal from a judgment of the United States District Court for the Eastern
District of New York (Seybert, J).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED,
ADJUDGED, AND DECREED that the judgment of the district court is
AFFIRMED.
Plaintiffs, representing proposed classes of consumers, claim that
Defendants misleadingly label their dietary supplement as “fish oil.” While the
product indisputably derives from fish oil, Plaintiffs allege that a particular
processing step transforms it from fish oil into a distinct substance. Based on
this theory, they bring claims under New York General Business Law §§ 349 and
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350; claims under California’s Unfair Competition Law, False Advertising Law,
and Consumers Legal Remedies Act; and claims for common law breach of
express warranty and unjust enrichment under California and New York law.
The district court granted Defendants’ motion to dismiss all claims and denied
leave to amend, holding that Plaintiffs’ claims were preempted and, in any case,
implausible. We assume the parties’ familiarity with the remaining underlying
facts, procedural history, and issues on appeal, to which we refer only as
necessary to explain our decision.
We review both the application of preemption principles and the district
court’s decision to dismiss for failure to state a claim de novo. See Vermont
Railway, Inc. v. Town of Shelburne, 918 F.3d 82, 87 (2d Cir. 2019); Fink v. Time
Warner Cable, 714 F.3d 739, 740 (2d Cir. 2013). On a motion to dismiss, we accept
Plaintiffs’ factual allegations as true and draw all reasonable inferences in
Plaintiffs’ favor. Fink, 714 F.3d at 740-41. In order to withstand a motion to
dismiss, Plaintiffs’ complaint “must contain sufficient factual matter, accepted as
true, to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009) (cleaned up).
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The district court determined that Plaintiffs’ claims were preempted
because federal law requires Defendants’ product to bear the name “fish oil.”
As relevant here, the Food, Drug, and Cosmetic Act (FDCA) and its
implementing regulations require the product to bear its “common or usual
name . . . or, in the absence thereof, [a]n appropriately descriptive term.” 21
C.F.R. § 101.3(b)-(c); see also 21 U.S.C. §§ 341, 343(i)(1). And the FDCA
specifically prevents states from establishing any labeling requirements “not
identical” to its own. 21 U.S.C. § 343-1(a)(3). Thus, if—as the district court
concluded—the common or usual name of Defendants’ product is fish oil, then
Plaintiffs’ state-law claims that the product must bear a different name are
preempted by federal law.
A product’s common or usual name must “accurately identify or describe,
in as simple and direct terms as possible, the basic nature of the food or its
characterizing properties or ingredients,” and “may be established by common
usage.” 21 C.F.R. § 102.5(a), (d). Although it is conceivable that a complaint
and its attached materials could establish the common or usual name of a
product with sufficient clarity to establish preemption at the pleading stage, that
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is not the case here.
To determine the common name of the substance at issue here, the district
court relied on various academic articles and other sources referenced in
Plaintiffs’ complaint, and it concluded that these sources uniformly referred to
supplements like that of Defendants as “fish oil.” To be sure, some of the
sources do refer to esterified supplements derived from fish oil as a type of fish
oil, such as a set of food standards that includes ethyl-ester concentrates under
the general heading “Standard for Fish Oils.” Supp. App’x 65-66. Others,
however, are less clear, including an excerpt from an academic book that appears
to distinguish between “concentrates of omega-3 fatty acids” and “the starting
fish oils” from which they derive. App’x 244. And, importantly, the sources
the district court relied on are largely technical and scientific articles whose
probative value as to common usage by the general public is limited. These
sources may be evidence relevant to determining the common name of the
product, if it has one, but standing alone they are not enough to establish the
common name definitively. Ultimately, they do not provide a sufficient basis
to conclude Plaintiffs’ claims are preempted at this early stage in the litigation.
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We thus reach the merits of Plaintiffs’ claims, which the district court also
reached in the alternative. Here we agree with the district court that the claims,
as alleged in this complaint, are not plausible. Plaintiffs’ statutory claims under
New York and California law are governed by substantially the same reasonable
consumer test. See Orlander v. Staples, Inc., 802 F.3d 289, 300 (2d Cir. 2015);
Williams v. Gerber Prods. Co., 552 F.3d 934, 938 (9th Cir. 2008). And the parties
do not contest that Plaintiffs’ remaining claims rise and fall with that same
reasonable consumer test since they rely on the claim that Defendants’ labeling
is misleading.
Under that test, Plaintiffs’ obligation at the pleadings stage was to
plausibly allege that Defendants’ labeling was materially misleading, i.e., “likely
to mislead a reasonable consumer acting reasonably under the circumstances.”
Himmelstein, McConnell, Gribben, Donoghue & Joseph, LLP v. Matthew Bender & Co.,
Inc., 171 N.E.3d 1192, 1198 (N.Y. 2021) (quotation marks omitted). In evaluating
Defendants’ labeling from the standpoint of a reasonable consumer, we consider
the entire label, bearing in mind that “context is crucial,” and that “under certain
circumstances, the presence of a disclaimer or similar clarifying language may
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defeat a claim of deception.” Fink, 714 F.3d at 742. However, because a
reasonable consumer should not be expected to “look beyond misleading
representations on the front of [a product] to discover the truth from the
ingredient list in small print,” additional back-label information that
“contradict[s], rather than confirm[s]” front-label representations cannot defeat
a deceptive labeling claim at the pleading stage. Mantikas v. Kellogg Co., 910 F.3d
633, 637 (2d Cir. 2018) (quotation marks omitted).
In this case, it is not plausible that the challenged labeling would
materially mislead reasonable consumers. Plaintiffs allege that Defendants’
product is no longer fish oil because it has undergone a transformation at a
molecular level: Although derived from natural fish oil, the supplement has
been esterified, meaning that the omega-3s in the fish oil have been changed from
their naturally occurring triglyceride form to ethyl-ester form. This molecular
difference, Plaintiffs allege, means that the product is fundamentally a new and
distinct substance. Fish oil that has undergone esterification is, according to
Plaintiffs, no longer fish oil at all.
We need not settle the ontological status of Defendants’ dietary
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supplement, nor decide whether the distinction Plaintiffs emphasize could ever
support a viable claim, in order to conclude that the complaint in this case fails
to plausibly allege materially misleading labeling. The complaint delves into
the molecular differences between omega-3s in triglyceride and in ethyl-ester
form, drawing from scientific and technical articles on the production and
processing of fish oil supplements, and cites comparative mass spectra findings
that confirm the molecular make-up of Defendants’ product. But it does not
contain factual allegations that make it plausible that a reasonable consumer
reading “fish oil” on the front label of Defendants’ product would be misled into
thinking the supplement only contains omega-3s in triglyceride form. The
complaint alleges in a conclusory fashion that consumers care about the
distinction between triglyceride and ethyl-ester omega-3s, but it does not
provide any supporting allegations that make it plausible that consumers who
purchase Defendants’ product are actually thinking about the molecular form of
their fish-oil-derived omega-3s at all.
Moreover, to the extent that this molecular distinction does matter to any
consumer, that consumer can look to the back label and read that the product’s
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omega-3s are present “As Ethyl Esters.” App’x 65. This additional
information cures any potential ambiguity from the front label as to the form of
the omega-3s in the supplement. Plaintiffs argue that this back-label statement
cannot defeat their claim because it contradicts the representation on the front
label that the product is “fish oil.” See Mantikas, 910 F.3d at 637. But because
Plaintiffs failed to plausibly allege that consumers understand the designation
“fish oil” to communicate that the product necessarily contains fish-oil-derived
omega-3s in triglyceride form, they have also failed to allege that the clarifying
information on the back label contradicts the representations on the front label.
To the extent the front label leaves any ambiguity about the contents of
Defendants’ product, the back label provides sufficient clarification. Cf.
Mantikas, 910 F.3d at 637; see Fink, 714 F.3d at 742. Taking into account the
entirety of Defendants’ labeling, then, we agree with the district court’s
alternative conclusion that Plaintiffs have not pled plausible claims.
Nor did the district court err in denying leave to amend, a decision we
generally review for abuse of discretion. See, e.g., MSP Recovery Claims, Series
LLC v. Hereford Ins. Co., 66 F.4th 77, 90 (2d Cir. 2023). Plaintiffs already amended
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their complaint once in the face of a pre-motion letter from Defendants arguing
that their claims were preempted, that the product’s label was not misleading as
a matter of law, and that the product’s back label cured any ambiguity created
by the front label. In opposing Defendants’ motion to dismiss, Plaintiffs then
requested leave to amend again in a single, boilerplate sentence without
specifying what allegations they could add or how amendment would cure any
deficiencies. In these circumstances, it was not an abuse of discretion to deny
leave to amend. Cf. Powell v. Ocwen Loan Servicing, LLC, 840 F. App’x 610, 613-
14 (2d Cir. 2020) (summary order) (affirming denial of leave to amend where
plaintiffs “requested, in passing, that they should have an opportunity to amend
their complaint . . . but did not otherwise suggest how they would amend [their]
claims”).
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We have considered the remaining arguments advanced by Plaintiffs and
find them to be without merit. Accordingly, we AFFIRM the judgment of the
district court.
FOR THE COURT:
Catherine O’Hagan Wolfe, Clerk of Court
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