Thursday, September 21, 2023

claims against Starbucks fruit drinks without named fruit can continue

Kominis v. Starbucks Corp., 2023 WL 6066199, No. 22 Civ. 6673 (JPC) (S.D.N.Y. Sept. 18, 2023)

Plaintiffs alleged violations of New York and California law based on Starbucks’ allegedly misleading use of fruit words for drinks.  The court allowed some claims to proceed, dismissing only unjust enrichment (duplicative under NY law/not allowed with express warranty claims under California law) and fraud (failure to sufficiently plead scienter).

The “Mango Dragonfruit Lemonade Starbucks Refreshers” and the “Mango Dragonfruit Starbucks Refreshers” allegedly contain no mango; the “Strawberry Açaí Lemonade Starbucks Refreshers” and the “Strawberry Açaí Starbucks Refreshers” allegedly contain no açaí; and the “Pineapple Passionfruit Lemonade Starbucks Refreshers” and the “Pineapple Passionfruit Starbucks Refreshers” allegedly contain no passion fruit. But they are “part of [Starbucks’s] ‘Refresher’ line of beverages, marketed as fruit-based beverages.” The following marketing images allegedly show that “the presence of fruit in the Products is central to the Products’ identity.”

Starbucks menu board with names and prices
challenged products along with Pink Drink, Dragon Drink, Honey Citrus Mint Tea and others

challenged drinks with images of fruit floating in beverages

Instead of containing these fruits, “all of the Products are predominantly made with water, grape juice concentrate, and sugar.” By contrast, “Starbucks’ hot chocolate contains cocoa, its matcha lattes contain matcha, and its honey mint tea contains honey and mint.” Also, “the Products do in fact contain freeze-dried pieces of strawberries, pineapple, and dragon fruit.” Starbucks allegedly does not affirmatively indicate anywhere which ingredients are and are not in the Products. Plaintiffs alleged that the “missing fruit ingredients are important to consumers because they are premium ingredients, and consumers value them over the less nutritious and cheaper grape juice concentrate found in the Products” at least in part because of nutritional benefits from each of the respective fruits or their juices. Both states’ laws use the reasonable consumer standard. Indeed, the court noted, courts in the Second Circuit have freely relied on Ninth Circuit cases. Has it been tightened of late? The court considered two unpublished summary orders that it deemed to articulate a “more demanding” standard: Axon v. Florida’s Natural Growers, Inc., 813 F. App’x 701, 704 (2d Cir. 2020) (“To survive a motion to dismiss, plaintiffs must plausibly allege that a significant portion of the general consuming public or of targeted consumers, acting reasonably in the circumstances, could be misled by the relevant statements.” (internal quotation marks and brackets omitted) (quoting Jessani v. Monini N. Am., Inc., 744 F. App’x 18, 19 (2d Cir. 2018))); Jessani, 744 F. App’x at 19 (explaining that “plaintiffs must do more than plausibly allege that a ‘label might conceivably be misunderstood by some few consumers,’ ” but instead “must plausibly allege ‘that a significant portion of the general consuming public or of targeted consumers, acting reasonably in the circumstances, could be misled’ ” (quoting Ebner v. Fresh Inc., 838 F.3d 958, 965 (9th Cir. 2016))).

Does the addition of “significant portion of the general consuming public” change things? The court here doesn’t decide the issue because, even under that standard, the claims survived.

Starbucks argued that its names accurately described the flavors, not the ingredients. “[C]ontext is crucial” for a court’s determination of “whether a reasonable consumer would have been misled by a particular advertisement.” Here, the products were listed without any affirmative statement one way or another about ingredients/flavors; there was no ingredients list on the display. Parts of the names do refer to both a flavor and an ingredient, e.g. strawberry, dragonfruit, and pineapple. This context was mixed; a significant portion of reasonable consumers could be deceived.

This was unlike a product called “Açaí-Flavored Strawberry Starbucks Refresher” or the like. “Starbucks’s position necessarily would entail that two of the three parts of each name refer to actual ingredients (i.e., dragon fruit, strawberry, pineapple, and lemonade), yet that a reasonable consumer would somehow know the third term (i.e., mango, açaí, and passion fruit) does not. The images of several of the Products add to this information jumble, in that they depict the Products containing actual pieces of fruit, just not the fruit apparently desired by Plaintiffs.” Starbucks argued that a consumer would see the strawberry but not the açaí berry and thereby conclude that the beverage contains only real strawberry. “But it is equally if not more plausible that the image of real fruits would indicate to a consumer that the drink contains all, not only part, of the fruits mentioned in the Products’ name, especially given that fruit may be present in a drink in a non-visible form, such as a juice.” Likewise, a consumer seeing drinks named “Pink Drink” and “Dragon Drink” on the menu “may think that all of the names are similarly fanciful or that only the fanciful names without a fruit reference do not indicate the presence of actual fruit in the drink.” The other items that contain the ingredients, like “Ice Matcha Tea Latte” which contains matcha, “contribute to a reasonable conclusion that the names of the Products refer to their ingredients as well as their flavors.”

 Unlike in other cases, there was no explicit disclaimer, and there was no reason to think that “mango,” “passionfruit,” and “açaí” are terms that typically are understood to represent a flavor without also representing that ingredient—unlike in the vanilla cases. “There is no comparable term that appears to distinguish the flavors of mango, passion fruit, and açaí from the actual presence of those fruits, as vanilla bean may do for vanilla.” Moreover, “nothing before the Court indicates that the fruit flavoring in fruit drinks is frequently created by something other than a fruit ingredient.”

Starbucks also argued that any confusion experienced by a consumer could be dispelled by asking a Starbucks employee about the Products’ ingredients. “This argument fails for the simple reason that it assumes the truth of facts not asserted within the Amended Complaint, namely that Starbucks’s employees are aware of the full ingredient list of each of the Products.” But even if the argument were to be considered, it failed on the merits. A reasonable consumer is not expected to consult an ingredients panel to correct misleading information on the front of a box, much less a barista.

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