United States District Court, D. Connecticut
MARK J. PATANE et al., Plaintiffs,
v.
NESTLÉ WATERS NORTH AMERICA, INC., Defendant.
ORDER GRANTING IN PART AND DENYING IN PART
DEFENDANT'S MOTION TO DISMISS
Jeffrey Alker Meyer United States District Judge
Plaintiffs
have filed this class action lawsuit alleging that defendant
Nestlé Waters North America, Inc. fraudulently markets
its Poland Spring water products as “spring
water” when in fact it is not “spring
water” as defined by law. Last year I dismissed the
initial complaint without prejudice on the ground that its
state law causes of action were all preempted by the federal
Food, Drug, and Cosmetic Act (FDCA). See Patane v.
Nestlé Waters N. Am., Inc., 314 F.Supp.3d 375 (D.
Conn. 2018).
Plaintiffs
have now re-framed their claims and filed an amended
complaint that seeks class action relief for consumers under
the laws of nine different States. Nestlé in turn has
moved to dismiss the amended complaint on multiple grounds.
I will
grant in part and deny in part Nestlé's motion to
dismiss. First, I decline to abstain on grounds of
Burford abstention or under the doctrine of primary
jurisdiction. Second, I conclude that plaintiffs' state
law claims are not preempted except for their Vermont law
claims. Third, I decline to rule at this time on
Nestlé's “safe harbor” defense against
the statutory claims because the record is not yet sufficient
to determine the facts necessary to resolve this claim.
Lastly, I decline on similar grounds to dismiss the common
law fraud and contract claims.
Background
The
amended complaint (Doc. #160) alleges state law claims on
behalf of consumers in Connecticut, Maine, Massachusetts, New
Hampshire, New Jersey, New York, Pennsylvania, Rhode Island,
and Vermont. It alleges common law causes of action for fraud
and for breach of contract as well as statutory causes of
action for consumer fraud and unfair trade
practices.[1] It seeks damages for alleged misconduct
dating back to 2003 as well as prospective injunctive relief.
All of
plaintiffs' claims are based on a core of allegations
that Nestlé has fraudulently labeled its Poland Spring
water products as “100% Natural Spring Water”
while knowing that the product is not “spring
water” as that term is defined by law. Doc. #160 at 39
(¶ 101). According to plaintiffs, the multiple sites in
Maine where Nestlé obtains Poland Spring water and
that are identified by name on Poland Spring labels are not
natural springs. Ibid. (¶ 102).[2]Plaintiffs allege
that Nestlé has unlawfully profited from its
misleading marketing of Poland Spring water because consumers
are willing to pay a premium price for “spring
water” over other forms of bottled water.
As I
discussed at length in my prior ruling granting
Nestlé's motion to dismiss, the FDCA establishes
basic definitions (known as “standards of
identity”) for food products and prohibits the false
labeling of such food products. The U.S. Food and Drug
Administration (FDA) has promulgated a detailed regulatory
definition of “spring water” that distinguishes
it from other kinds of bottled water that may be marketed for
public sale. See 21 C.F.R. § 165.110(a)(2)(vi).
According
to the FDA's regulation, 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.
Following
the filing of the amended complaint, Nestlé has again
moved to dismiss on multiple grounds pursuant to Fed.R.Civ.P.
12(b)(1) and 12(b)(6).
DISCUSSION
The
standard that governs motions to dismiss under Rule 12(b)(1)
and Rule 12(b)(6) 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).
Burford
abstention
Nestlé argues that the Court should dismiss this
action pursuant to the doctrine known as Burford
abstention. See Burford v. Sun Oil Co., 319 U.S. 315
(1943). Burford abstention applies “only in
extraordinary circumstances” and where a case
“presents difficult questions of state law bearing on
policy problems of substantial public import whose importance
transcends the result in the case then at bar, or if its
adjudication in a federal forum would be disruptive of state
efforts to establish a coherent policy with respect to a
matter of substantial public concern.” Quackenbush
v. Allstate Ins. Co., 517 U.S. 706, 726-27 (1996)
(cleaned up); see also Liberty Mut. Ins. Co. v.
Hurlbut, 585 F.3d 639, 650 (2d Cir. 2009) (discussing
factors for courts to consider when deciding whether to
invoke Burford abstention, including “(1) the
degree of specificity of the state regulatory scheme; (2) the
need to give one or another debatable construction to a state
statute; and (3) whether the subject matter of the litigation
is traditionally one of state concern”).
This is
not the type of extraordinary case for which Burford
abstention is warranted. To begin with, Burford
abstention is most appropriate when a plaintiff seeks
injunctive or prospective relief that would interfere with
the ongoing authority of the state to apply and enforce its
laws. See Tribune Co. v. Abiola, 66 F.3d 12, 13, 17
(2d Cir. 1995) (“[W]e hold that it is generally
appropriate for a district court to abstain on
Burford grounds only when asked to provide equitable
relief, ” and “the plaintiffs in this case have
brought garden-variety claims for money damages . . . that
present no danger of interfering with any proceeding or order
of the New York State Workers' Compensation
Board”). Although it is true that plaintiffs here seek
injunctive relief, the bulk of this action is for money
damages from many years of past alleged violations of their
rights.
So far
as I can tell from the present record, even though plaintiffs
challenge the integrity of prior regulatory actions in Maine
(Doc. #160 at 273-76 (¶¶ 796-808)), the litigation
of plaintiffs' claim for money damages poses no danger of
interfering with any ongoing regulatory functions of
the State of Maine or any of the other States at issue in
this case. If such concerns arise in the future, I would be
prepared to consider whether appropriate action should be
taken on the basis of a substantiated record.
Nor
does this case present difficult questions of state law where
adjudication in a federal forum would disrupt state efforts
to establish a coherent policy with respect to a matter of
substantial public concern. For the most part, the state laws
at issue merely incorporate the federal “spring
water” standard in order to avoid being subject to
preemption. “Congress and the FDA appear to have made a
conscious choice to allow the several states to regulate
bottled water so long as the state standards employed are
identical to those adopted by the FDA. The requirement of
identity promotes uniformity in that courts in every state
look to the same standard.” Vt. Pure Holdings, Ltd.
v. Nestlé Waters N. Am., Inc., 2006 WL 839486, at
*7 (D. Mass. 2006).
Accordingly,
I decline to dismiss or stay this case on Burford
abstention grounds. This ruling is without prejudice to
renewal of Nestlé's motion in the event that
plaintiffs seek to effectuate any judgment for injunctive
relief or to otherwise take action that would obstruct or
impede any state authority's ongoing administration of
the law.
Primary
jurisdiction
Nestlé argues that “the Court should dismiss
this action in deference to the primary jurisdiction of the
FDA to exercise its expertise and authority to determine in
the first instance whether Poland Spring Water meets the FDA
Identity Standard.” Doc. #164 at 3. The doctrine of
primary jurisdiction seeks to “promot[e] proper
relationships between the courts and administrative agencies
charged with particular regulatory duties, ” and it
applies when “enforcement of the claim requires the
resolution of issues which, under a regulatory scheme, have
been placed within the special competence of an
administrative body.” Ellis v. Tribune Television
Co., 443 F.3d 71, 81 (2d Cir. 2006) (internal citations
and quotations omitted). While there is “[n]o fixed
formula” for deciding when to invoke the doctrine,
courts generally examine whether the case involves
“technical or policy considerations within the
agency's particular field of expertise, ” and
“whether the question at issue is particularly within
the agency's discretion, ” among other factors.
Id. at 82-83 (internal citations omitted).
The
Second Circuit has cautioned that the primary jurisdiction
doctrine has a “relatively narrow scope, ” and
does not apply when the claim involves matters within the
“traditional realm of judicial competence.”
Goya Foods, Inc. v. Tropicana Prods., Inc., 846 F.2d
848, 851 (2d Cir. 1988). When the primary jurisdiction
doctrine does apply, a court will either stay the case or
dismiss it without prejudice. See Johnson v. Nyack
Hosp., 86 F.3d 8, 11 (2d Cir. 1996).
According
to a letter from the FDA that Nestlé has previously
submitted as part of the record, the “FDA does not
provide approval for the use of the term ‘spring
water' for bottled water, ” and “recognize[s]
that some states have certification programs that evaluate
whether bottled water may be designated as ‘spring
water' under state regulations that incorporate FDA's
requirements under 21 C.F.R. § 165.110.” Doc.
#53-3 at 5-6. This letter suggests that the FDA leaves it to
the States to decide if particular water products meet the
federal “spring water” standard. Although
Nestlé now urges me to allow the FDA to determine
whether Poland Spring Water meets the federal standard, Doc.
#164 at 3, the letter from the FDA that Nestlé has
submitted raises significant doubt in my mind about whether
the FDA stands ready and willing to make some kind of
case-specific determination that might advance the litigation
here. It does not appear that Nestlé has yet invited a
team of expert FDA investigators to come inspect its
properties and issue a ruling on whether all of its sites
comply with federal “spring water” requirements.
Moreover,
the federal definition of “spring water” is now
well established, and Nestlé does not suggest that
this definition is under active federal review. This is not a
case where there are reasons to conclude that the FDA is in
the throes of rulemaking or poised anytime soon to refine
definitional aspects of its “spring water” rule.
Compare In re KIND LLC “Healthy & All
Nat.” Litig., 209 F.Supp.3d 689, 697 (S.D.N.Y.
2016) (staying case in light of FDA announcement of ongoing
rulemaking regarding the use of the term
“natural” on food labels), with In re KIND
...