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Patane v. Nestle Waters North America, Inc.

United States District Court, D. Connecticut

May 17, 2018

MARK J. PATANE, et al., Plaintiffs,



         In these consolidated actions, plaintiffs allege that the marketing of “Poland Spring” water is an enormous fraud. They claim that Poland Spring water products are fraudulently labeled and sold as “spring water” despite not meeting the requirements for “spring water” as defined by law. Defendant Nestlé Waters North America Inc. (“Nestlé”) has moved to dismiss the complaints. Although I reject many of Nestlé's arguments, I agree with Nestlé that plaintiffs' claims are all preempted by federal law. Accordingly, I will grant the motion to dismiss and dismiss the complaint in this action as well as the complaint in all but one of the consolidated actions.[1]


         The principal complaint in these consolidated class actions has been filed in the docket of Patane v. Nestlé Waters North America, Inc., 3:17-cv-01381(JAM). It alleges that Nestlé has long marketed its ubiquitous Poland Spring water products as “100% Natural Spring Water, ” despite the fact that it is not “spring water” as that term is very specifically defined by federal law.

         By way of background, the federal Food, Drug and Cosmetic Act (FDCA) establishes basic definitions (known as “standards of identity”) for food products and prohibits the false labeling of such food products.[2] In accordance with its regulatory authority under the FDCA, the U.S. Food and Drug Administration (FDA) has promulgated a detailed regulatory definition of “spring water” that distinguishes it from other kinds of water that may be marketed for public sale. See 21 C.F.R. § 165.110(a)(2)(vi).

         According to the FDA, if a water product is to be labeled and sold as “spring water, ” the water must be “derived from an underground formation from which water flows naturally to the surface of the earth, ” and there must be a “natural force causing the water to flow to the surface through a natural orifice.” Ibid. The FDA's regulation further provides that “spring water” can be “collected only at the spring or through a bore hole tapping the underground formation feeding the spring, ” and that if it is collected “with the use of an external force, ” the water must be “from the same underground stratum as the spring, as shown by a measurable hydraulic connection using a hydrogeologically valid method between the bore hole and the natural spring, and shall have all the physical properties, before treatment, and be of the same composition and quality, as the water that flows naturally to the surface of the earth.” Ibid.

         Plaintiffs allege that Nestlé sells about a billion gallons of Poland Spring water every year but that not one drop of it is actually “spring water” within the FDA's definition. Plaintiffs insist that Poland Spring water is ordinary groundwater and surface water that Nestlé draws from a series of artificial springs in Maine. The bulk of plaintiffs' 325-page complaint is devoted to detailing how the water produced at eight specific Poland Spring sites in Maine does not meet the FDA's “spring water” requirements. Doc. #1 at 65-279.

         According to plaintiffs, Nestlé labels its Poland Spring water as “spring water” so that it may fraudulently charge consumers a higher price than they would be willing to pay for non-spring water products. Plaintiffs have allegedly relied on Nestlé's mislabeling of its water and overpaid for Poland Spring water.

         Although the crux of the complaint is that Poland Spring water does not comply with federal law, it is undisputed that the FDCA does not give rise to a private federal cause of action for violation of the FDA's “spring water” regulation. Accordingly, the complaint alleges only state law causes of action. The first two counts of the complaint allege general state common law claims for fraud and breach of contract on behalf of a nationwide class whose members have purchased Poland Spring water since November 5, 2003. The next nine counts on behalf of individual state sub-classes allege violations of various consumer fraud and unfair trade practice statutes of Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, and Vermont.[3] All of these counts of the complaint are premised on a common allegation that Poland Spring water is mislabeled as “spring water” in violation of federal law. Nestlé has filed a motion to dismiss plaintiffs' claims for multiple reasons I will discuss below.


         Nestlé moves to dismiss under Fed.R.Civ.P. 12(b)(1) for lack of subject matter jurisdiction and under Fed.R.Civ.P. 12(b)(6) for failure to state a claim. The standard that governs such a motion is well established: a complaint may not survive unless it alleges facts that taken as true give rise to plausible grounds to sustain the Court's subject matter jurisdiction and to sustain plaintiffs' claims for relief. See, e.g., Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); Kim v. Kimm, 884 F.3d 98, 103 (2d Cir. 2018); Lapaglia v. Transamerica Cas. Ins. Co., 155 F.Supp.3d 153, 155-56 (D. Conn. 2016). Because a federal court should ordinarily resolve any doubts about the existence of subject matter jurisdiction prior to considering the merits of a complaint, see, e.g., Singh v. United States Citizenship & Immigration Servs., 878 F.3d 441, 445 (2d Cir. 2017), I will first consider Nestlé's arguments that challenge the Court's jurisdiction before turning to Nestlé's merits arguments.

         Constitutional Standing

         Nestlé first argues that plaintiffs have no standing as required to sustain this Court's jurisdiction over the complaint. In accordance with the Constitution's “case-or-controversy” requirement, a federal court lacks jurisdiction over a lawsuit unless a plaintiff alleges a concrete and particularized injury-in-fact that is fairly traceable to a defendant's wrongful conduct and redressable by a court order. See, e.g., Spokeo, Inc. v. Robins, 136 S.Ct. 1540, 1547 (2016); Crupar-Weinmann v. Paris Baguette Am., Inc., 861 F.3d 76, 79 (2d Cir. 2017).

         The allegations here easily suffice to meet the requirements for constitutional standing. Plaintiffs allege that they relied on Nestlé's representation that Poland Spring water was “100% Natural Spring Water, ” and because of this reliance they paid a higher price for Poland Spring water than they would have paid for alternative water products.[4] If Nestlé indeed mislabeled its water as plaintiffs claim, it is plausible to conclude that plaintiffs chose to buy Poland Spring water and paid more for it than for non-spring-water alternatives. It is likewise plausible to conclude that Nestlé was well aware of the likely effect that labeling its water as “100% Natural Spring Water” would have on consumer preferences. The facts alleged plausibly establish an injury-in-fact caused by Nestlé's alleged wrongful conduct and redressable by an award of damages. See, e.g., Estrada v. Johnson & Johnson, 2017 WL 2999026, at *13 (D.N.J. 2017) (collecting cases); Kacocha v. Nestlé Purina Petcare Co., 2016 WL 4367991, at *7 (S.D.N.Y. 2016).

         Nestlé argues that plaintiffs could not have been deceived because it has been sued many times before on the same grounds. According to Nestlé, these prior lawsuits and attendant media coverage put plaintiffs on notice that Poland Spring's “spring water” labels were false. But the possibility that any prior lawsuits or media coverage put plaintiffs on notice of anything is a fact question that is not suitable for me to resolve at the pleading stage on a motion to dismiss. Moreover, Nestlé's argument ignores Nestlé's own steadfast denials in prior lawsuits that it was mislabeling Poland Spring water. Nestlé cannot have it both ways: that plaintiffs somehow “knew” Nestlé's labels were false but that Nestlé's labels were not in fact false. Plaintiffs have standing to maintain their claims.[5]

         The Rooker-Feldman Doctrine

         Nestlé next argues that the Court lacks subject matter jurisdiction because of the Rooker-Feldman doctrine. “Rooker-Feldman bars the federal courts from exercising jurisdiction over claims ‘brought by state-court losers complaining of injuries caused by state-court judgments rendered before the district court proceedings commenced and inviting district court review and rejection of those judgments.'” Sykes v. Mel S. Harris & Assocs. LLC, 780 F.3d 70, 94 (2d Cir. 2015) (quoting Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 284 (2005)).

         According to Nestlé, plaintiffs are in essence complaining about an injury caused by Nestlé's settlement in November of 2003 of a similar class action lawsuit that was filed in a state court of Illinois. See Doc. #53-2 at 5 (Ramsey v. Nestlé Waters N. Am., No. 03 CHK 817 (Ill. Cir. Ct., Nov. 5, 2003) (final judgment and order of dismissal with settlement agreement)). That class action-referred to by the parties as “the Ramsey action”-involved a nationwide class of plaintiffs who purchased Poland Spring water from January 1, 1996, to November 5, 2003. Doc. #53-2 at 8. Nestlé relies in particular on a provision of the Ramsey settlement agreement stating that “[t]he Parties agree that Defendant shall be permitted to continue to bottle, label and sell Poland Spring brand bottled water as ‘spring water' using all of the spring water sources it has used since January 1, 1996, ” and that “[n]othing in this Settlement Agreement shall require that Defendant relabel its Poland Spring brand spring water products as anything other than spring water or alter its spring water advertising in any way with respect to the spring water sources it has used since January 1, 1996.” Doc. #53-2 at 33-34.

         Nestlé's argument relies on a misunderstanding of the scope of the Rooker-Feldman doctrine. The Rooker-Feldman doctrine does not apply merely because there has been a prior state court action or merely because the settlement of a prior state court action has not foreclosed a defendant from continuing to engage in the conduct that forms the basis for a later federal action. Instead, the Rooker Feldman doctrine applies only if it can be said that the prior state court action has caused the federal plaintiff's injuries: “[T]he plaintiff must complain of injuries caused by a state-court judgment, ” and “[t]he causation requirement is only satisfied if ‘the third party's actions are produced by a state court judgment and not simply ratified, acquiesced in, or left unpunished by it.'” Sykes, 780 F.3d at 94 (quoting Hoblock v. Albany Cty. Bd. of Elections, 422 F.3d 77, 85, 88 (2d Cir. 2005)).

         Here the provision relied on by Nestlé at best does no more than ratify Nestlé's future conduct (and only as to those particular sources of sources of water it has used since 1996). The Ramsey action involved purchasers of Poland Spring water before November 5, 2003, while the current action involves purchasers of Poland Spring water after November 5, 2003. The agreement by a prior class of plaintiffs in Ramsey to allow Nestlé to continue some of its conduct is precisely the kind of ratification or acquiescence that does not meet the more demanding causation requirement for the Rooker-Feldman doctrine. See, e.g., Green v. City of New York, 438 F.Supp.2d 111, 121 (E.D.N.Y. 2006) (prior state court settlement agreements did not “cause” later federal court plaintiff's injury despite fact that settlement agreements allowed conduct by defendant that was later challenged in federal court). Plaintiffs' alleged injuries here are caused by Nestlé's purported ongoing, post-Ramsey course of deceptive conduct and not by what the state court in Ramsey ordered or by what the prior parties to the Ramsey judgment agreed. Accordingly, the Rooker-Feldman doctrine does not deprive the Court of subject matter jurisdiction over this case.

         Release and Res Judicata

         In a similar vein, Nestlé argues that plaintiffs' claims are foreclosed by the Ramsey settlement agreement. According to Nestlé, the Ramsey settlement precludes plaintiffs' class action for at least two reasons: (1) the Ramsey settlement agreement expressly released Nestlé from plaintiffs' claims, and (2) the Ramsey settlement agreement triggers the rule of res judicata. I don't agree with either of these arguments.

         As an initial matter, the record does not presently allow for a conclusion that the Ramsey class is the same as or is in privity with the current proposed class of plaintiffs. The Ramsey action involved purchasers and consumers of Poland Spring water from 1996 to the date of final judgment on November 5, 2003. Doc. #53-2 at 8. By contrast, the present plaintiffs and proposed class include only purchasers after November 5, 2003. Doc. #1 at 16-22, 285. Is it possible that one or more of the present class plaintiffs purchased Poland Spring water both before and after November 5, 2003? Likely so. But there is an insufficient factual record at this time to determine the degree of overlap between these two classes, and it would be speculative for me to ...

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