Patane v. Nestle Waters North America, Inc.

          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 ...