"no preservatives" plausibly misleading where ingredients had preservative function

Kelly v. Beliv LLC, --- F.Supp.3d ----, 2022 WL 16836985, No. 21-cv-08134 (LJL) (S.D.N.Y. Nov. 9, 2022)

Kelly sued Beliv based on the “No Preservatives” claim on its juice-based beverage Nectar Petit, alleging violations of NYGBL §§ 349 and 350 and the corresponding consumer fraud statutes of Connecticut and Massachusetts; violations of the Magnuson-Moss Warranty Act (MMWA); breaches of express warranty and the implied warranty of merchantability; as well as negligent misrepresentation, fraud, and unjust enrichment. The core NYGBL claims survived, as did Massachusetts-based claims and express warranty claims.

The complaint alleged that market research indicates that many Americans prefer foods and drinks with “free from” claims because they believe such products are more natural, healthier, and less processed, and that they are willing to pay more for such products. But citric acid and ascorbic acid are two of the ingredients, and the FDA has identified citric acid and ascorbic acid as “Names Found on Product Labels” that consumers should look for to determine if a food contains preservatives. In 2010, the FDA issued a warning to a different food and beverage company, stating that its products were mislabeled “in that they contain the chemical preservative[s] ascorbic acid and citric acid but their labels fail to declare these preservatives with a description of their functions.”

The label here “identifies ascorbic acid as an ingredient, but places the words ‘ascorbic acid’ in parentheses after ‘Vitamin C,’ implying that the terms are equivalent: ‘Vitamin C (as Ascorbic Acid).’” While the FDA has authorized the use of ascorbic acid as a synonym for Vitamin C for purposes of describing a product’s nutritional content, it has not authorized it as a synonym for Vitamin C for purposes of an ingredient list. The ingredient list also identifies citric acid “as an acidulant, a compound that confers a tart, sour, or acidic flavor to foods,” but not as a preservative.

At this stage, Kelly plausibly alleged misleadingness. The court rejected Beliv’s argument that a “preservative” must “actually function” in a specific product to preserve a given product. While that was one plausible meaning, another, according to dictionary definitions, was “an ingredient that has the power or the tendency to preserve, regardless of whether it has a preserving function in a specific product.”

While Kelly didn’t lack standing to bring claims under other states’ substantively identical consumer protection statutes, the Connecticut claims went because CUTPA bars a nonresident of Connecticut who was injured outside of Connecticut from bringing class action claims under CUTPA.

Express warranty claims survived because the NYGBL claim did, but implied warranty claims didn’t because Kelly didn’t allege that the product was unfit for human consumption, or that there was privity, which is required except for personal injuries.

Magnuson-Moss Warranty Act claims failed because the statement “No Preservatives” didn’t meet MMWA’s definition of a “written warranty,” which is “any affirmation of fact or written promise ... which ... affirms or promises that such material ... will meet a specified level of performance over a specified period of time.”

Negligent misrepresentation: no plausible allegation of the existence of a special relationship or a privity-like relationship.

Fraud: the allegations didn’t give rise to an inference of fraudulent intent. “The simple knowledge that a statement is false is not sufficient to establish fraudulent intent, nor is a defendant’s ‘generalized motive to satisfy consumers’ desires [or] increase sales and profits.’ ” Unjust enrichment: duplicative.

Injunctive relief: no standing.