18-3087-cv Chen v. Dunkin' Brands, Inc. UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT
August Term 2019
(Argued: October 24, 2019 Decided: March 31, 2020)
Docket No. 18-3087-cv
CHUFEN CHEN, on behalf of herself and others similarly situated, ELI EVANSON, SHERRY L. JOHNSON, DAVID A. BUCHOLTZ, MICHELLE BEATTIE,
Plaintiffs-Appellants,
v.
DUNKIN' BRANDS, INC. (A DELAWARE CORPORATION), DBA DUNKIN' DONUTS,
Defendant-Appellee.
ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF NEW YORK
Before: PARKER, CHIN, AND BIANCO, Circuit Judges.
Appeal from a judgment of the United States District Court for the
Eastern District of New York (Amon, J.), dismissing plaintiffs-appellants' second
amended complaint asserting violations of various state and federal consumer protection laws pursuant to Federal Rules of Civil Procedure 12(b)(2) and (6).
The district court dismissed the claims of four of the five plaintiffs-appellants on
the grounds that defendant-appellee was not subject to general personal
jurisdiction in New York and their allegations stemmed from conduct that
occurred outside the state. The district court dismissed the second amended
complaint as to the remaining plaintiff-appellant on the grounds that, although
personal jurisdiction existed as to her claims, she failed to state a claim because
the advertising in question was not actionable as a warranty and was not
deceptive or misleading to a reasonable consumer.
AFFIRMED.
C. DOUGLASS THOMAS (John Troy, on the brief), Troy Law, PLLC, Flushing, New York, for Plaintiffs- Appellants.
WILLIAM C. PERDUE (Anthony Franze, Avishai D. Don, on the brief), Arnold & Porter Kaye Scholer LLP, Washington, DC, for Defendant-Appellee.
2 CHIN, Circuit Judge:
Plaintiff-appellant Chufen Chen, on behalf of herself and all others
similarly situated, and plaintiffs-appellants Eli Evanson, Sherry L. Johnson,
David A. Bucholtz, and Michelle Beattie (collectively, "plaintiffs") commenced
this action alleging that defendant-appellee Dunkin' Brands Inc. ("Dunkin
Donuts") deceptively marketed two of its trademarked products -- the Angus
Steak & Egg Breakfast Sandwich (the "Angus Sandwich") and the Angus Steak &
Egg Wake-Up Wrap (the "Angus Wrap" and, together, the "Products") -- to
consumers. Specifically, plaintiffs alleged that through representations made in
labeling and television advertisements, Dunkin Donuts deceived consumers into
believing that the Products contained an "intact" piece of meat when the Products
actually contained a ground beef patty with multiple additives. J. App'x at 108.
The second amended complaint (the "SAC") asserted violations of the
Magnuson-Moss Act and various state consumer protection laws, including New
York General Business Law (the "GBL") §§ 349 and 350, in connection with the
alleged deception.
The district court dismissed the SAC for lack of personal jurisdiction
and failure to state a claim. The district court held that Dunkin Donuts was not
3 subject to general personal jurisdiction in New York and dismissed the claims of
Evanson, Johnson, Bucholtz, and Beattie (the "out-of-state plaintiffs") for lack of
personal jurisdiction because they purchased the allegedly deceptive Products at
franchises outside of New York. Although it determined specific personal
jurisdiction existed as to Chen's claims, the district court dismissed her claims on
the merits pursuant to Federal Rule of Civil Procedure 12(b)(6). The lower court
held that the label "Angus steak" was not an actionable warranty under the
Magnuson-Moss Act and that Dunkin Donuts' advertisements did not violate the
GBL because they were neither deceptive nor misleading to a reasonable
consumer.
On appeal, plaintiffs argue that the district court erred in dismissing
the out-of-state plaintiffs' claims because Dunkin Donuts consented to general
jurisdiction in New York by registering as a foreign corporation under § 1301 of
the New York Business Corporation Law (the "BCL"). In the alternative,
plaintiffs contend that general personal jurisdiction existed because Dunkin
Donuts' contacts with New York are sufficiently "continuous and systematic."
Int'l Shoe Co. v. State of Wash., Office of Unemployment Comp. & Placement, 326 U.S.
310, 317 (1945). Plaintiffs also assert that the district court erred in dismissing
4 Chen's claims because the SAC alleged plausible violations of GBL §§ 349 and
350. 1
As discussed more fully below, we hold that under New York law,
the act of registering to do business under § 1301 of the BCL does not constitute
consent to general personal jurisdiction in New York. In so holding, we join the
highest New York courts to have considered the issue since the Supreme Court
decided Daimler AG v. Bauman, 571 U.S. 117 (2014). See Aybar v. Aybar ("Aybar"),
93 N.Y.S.3d 159, 165 (2d Dep't 2019); Best v. Guthrie Med. Grp., P.C., 107 N.Y.S.3d
258, 261-62 (4th Dep't 2019); Fekah v. Baker Hughes Inc., 110 N.Y.S.3d 1, 2 (1st Dep't
2019); see also Aybar v. Goodyear Tire & Rubber Co., 106 N.Y.S.3d 361, 361 (2d Dep't
2019); Qudsi v. Larios, 103 N.Y.S.3d 492, 494-95 (2d Dep't 2019). We further reject
plaintiffs' arguments that Dunkin Donuts' contacts with New York were
sufficient to subject it to general personal jurisdiction in the state, and we agree
with the district court that Chen failed to allege a plausible violation of GBL
§§ 349 and 350. Accordingly, the district court's judgment dismissing the SAC is
1 Plaintiffs do not appeal the dismissal of Chen's Magnuson-Moss Act claim. 5 BACKGROUND
The facts alleged in the SAC are assumed to be true. Dunkin Donuts
is one of the largest retail chains in the United States, with more than 11,500
franchises worldwide. The company is incorporated in the state of Delaware and
headquartered in Massachusetts, although it has franchises in additional states,
including New York.
Sometime between 2013 and 2017, each of the plaintiffs purchased
one or more of the Products after "repeated[] expos[ure]" to Dunkin Donuts'
representations about the Products in television advertisements. J. App'x at 114-
16. Evanson, Johnson, Bucholtz, and Beattie purchased the Products from
franchises in Massachusetts, Florida, Michigan, and California respectively,
while Chen purchased hers from a franchise in Flushing, New York. Plaintiffs
also paid a premium for the Products -- the Angus Sandwich cost between $.45
and $.50 more than the comparable Classic Egg and Cheese Sandwich with ham,
bacon, or sausage, and the Angus Wrap cost $.60 more than the comparable
Classic Egg and Cheese Wrap with ham, bacon, or sausage.
Plaintiffs later learned that although the Products were labeled as
"steak," neither contained an "intact" piece of meat. J. App'x at 100. Instead, the
6 Products contained ground beef patties with multiple additives. Plaintiffs filed
suit, alleging that labeling these products as "Angus steak" and describing them
as "steak" in television advertisements was deceptive and misleading to the
reasonable consumer.
The SAC identified three television advertisements, providing links
to videos, that allegedly deceived plaintiffs into buying the Products. All three
advertisements featured actors holding the Products and describing them using
the words "Angus" and "steak." Each advertisement also concluded with a
photograph of each of the Products, showing a beef patty. The SAC, a proposed
class action lawsuit, alleged that these representations were deceptive, in
violation of the Magnuson-Moss Act and various state consumer protection laws,
including GBL §§ 349 and 350.
On February 8, 2018, Dunkin Donuts moved to dismiss the SAC for
lack of personal jurisdiction and failure to state a claim pursuant to Federal Rules
of Civil Procedure 12(b)(2) and (6). In a Memorandum and Order issued
September 17, 2018, the district court granted the motion and dismissed the SAC.
This appeal followed.
7 DISCUSSION
I. General Personal Jurisdiction
Plaintiffs argue principally that the district court erred in dismissing
the SAC as to the out-of-state plaintiffs' claims because Dunkin Donuts
consented to general personal jurisdiction in New York by registering to do
business and designating an agent for service of process in the state. In the
alternative, plaintiffs argue that Dunkin Donuts' contacts with New York are
sufficient to subject it to general personal jurisdiction.
A. Standard of Review
"We review a district court's dismissal of an action for want of
personal jurisdiction de novo, construing all pleadings and affidavits in the light
most favorable to the plaintiff." SPV Osus Ltd. v. UBS AG, 882 F.3d 333, 342 (2d
Cir. 2018). "[T]o survive a motion to dismiss for lack of personal jurisdiction, a
plaintiff must make a prima facie showing that jurisdiction exists." Id.
Where a district court's jurisdictional finding is premised on an
application of state law, we similarly review the district court's interpretation of
state law de novo. In re Thelen LLP, 736 F.3d 213, 219 (2d Cir. 2013). When
deciding a question of state law, "we . . . look to the state's decisional law, as well
8 as to its constitution and statutes." Id. "Where state law is unsettled, we are
obligated to carefully . . . predict how the state's highest court would resolve the
uncertainty or ambiguity." Id. (internal quotation marks omitted). Absent a clear
directive from a state's highest court, "federal authorities must apply what they
find to be the state law after giving proper regard to relevant rulings of other
courts of the State." Travelers Ins. Co. v. 633 Third Assocs., 14 F.3d 114, 119 (2d Cir.
1994) (internal quotation marks omitted). 2
B. Consent to General Personal Jurisdiction under BCL § 1301(a)
"In the absence of a federal statute specifically directing otherwise,
and subject to limitations imposed by the United States Constitution, we look to
the law of the forum state to determine whether a federal district court has
personal jurisdiction over a foreign corporation." Brown v. Lockheed Martin Corp.,
814 F.3d 619, 624 (2d Cir. 2016); see also Fed. R. Civ. P. 4(k)(1). General personal
jurisdiction in New York is governed by Civil Practice Law and Rules, Section
301, which allows a court to exercise "such jurisdiction over persons, property, or
status as might have been exercised heretofore." N.Y. C.P.L.R. § 301. New York
2 Although this Court also has the option of certifying the question to the New York Court of Appeals, certification is not warranted here because "sufficient precedents exist for us to make [the] determination." DiBella v. Hopkins, 403 F.3d 102, 111 (2d Cir. 2005). 9 law also requires foreign corporations to register with the state and designate an
agent for service of process before conducting business in the state. See N.Y. Bus.
Corp. Law § 1301(a). Prior to 2014, New York courts interpreted the act of
registering under BCL § 1301(a) as consent to general jurisdiction in the state. See
Aybar, 93 N.Y.S.3d at 169 (collecting cases).
In 2014, however, the Supreme Court decided Daimler and further
defined the circumstances under which a state may exert general personal
jurisdiction over a foreign corporation. 571 U.S. at 126. The Supreme Court
clarified that a state's exercise of general personal jurisdiction over a foreign
corporation will not comport with the Fourteenth Amendment's Due Process
Clause unless "that corporation's affiliations with the State are so continuous and
systematic as to render it essentially at home in the forum." Id. (internal
quotation marks and alterations omitted). We have since explained "our view"
that "Daimler established that, except in a truly exceptional case, a corporate
defendant may be treated as essentially at home only where it is incorporated or
maintains its principal place of business." Brown, 814 F.3d at 627 (internal
quotation marks omitted).
10 This Court has not considered the impact of Daimler on New York
courts' longstanding interpretation of BCL § 1301(a). We have, however,
considered general personal jurisdiction in the context of Connecticut's business
registration statute. See Brown, 814 F.3d at 624-26. In Brown, the plaintiff argued,
inter alia, that the defendant consented to general personal jurisdiction in
Connecticut when it registered to do business and appointed an agent for service
of process in the state. Id. at 630. In affirming the lower court's dismissal for lack
of personal jurisdiction, we expressed reservations as to whether such use of a
state's "coercive power" could survive constitutional scrutiny in light of Daimler
and its progeny. Id. at 639, 641. Because we determined, however, that
Connecticut's business registration statute did not actually impose such a
requirement, we did not reach the issue. Id. at 641.
Unlike the statute in Brown, New York's business registration statute
has historically been interpreted as conditioning registration under BCL § 1301(a)
on consent to general jurisdiction in the state. Indeed, our opinion in Brown
expressly identified New York's business registration statute as one that has been
"definitively construed" in such a way, noting that although the statute itself did
not explicitly impose such a requirement, "legislation has been introduced to
11 ratify that construction of the statute." Id. at 640; see also 2015 N.Y. Senate-
Assembly Bill S4846, A6714. The legislation referenced in Brown, however, never
passed, and the "definitive[ness]" of New York law interpreting registration
under BCL § 1301(a) as consenting to general jurisdiction in New York is no
longer settled. Compare Aybar, 93 N.Y.S.3d at 170 (holding that the consent-by-
registration New York cases do not survive Daimler) with Bailen v. Air & Liquid
Sys. Corp., 2014 WL 3885949, at *4-5 (N.Y. Sup. Ct., N.Y. Cty., Aug. 5, 2014)
(holding that even after Daimler, foreign corporations registered to do business in
New York are subject to general jurisdiction by consent).
New York's highest court has yet to definitively weigh in on
whether the state's longstanding interpretation of BCL § 1301(a) survives
Daimler. The three intermediate appellate courts to have considered the issue,
however, have concluded that it does not. See Aybar, 93 N.Y.S.3d at 170; Best, 107
N.Y.S.3d at 260; Fekah, 110 N.Y.S.3d at 2; see also Aybar v. Goodyear, 106 N.Y.S.3d
at 361; Qudsi, 103 N.Y.S.3d at 494. In Aybar, after giving great consideration to
"the evolution of in personam jurisdiction jurisprudence, and, particularly the
way in which Daimler has altered that jurisprudential landscape," 93 N.Y.S.3d at
166, the Second Department held that "a corporate defendant's registration to do
12 business in New York . . . does not constitute consent by the corporation to
submit to the general jurisdiction of New York for causes of action that are
unrelated to the corporation's affiliations with New York," id. at 170. The First
and Fourth Departments have since cited favorably to Aybar in adopting that
holding. See Best, 107 N.Y.S.3d at 260; Fekah, 110 N.Y.S.3d at 2.
Admittedly, lower New York courts are not unanimous on this
interpretation since Daimler. 3 But absent specific direction from the highest New
York court, we remain "obligated to carefully . . . predict how the state's highest
court would resolve the uncertainty or ambiguity." In re Thelen LLP, 736 F.3d at
219 (internal quotation marks omitted); see also V.S. v. Muhammad, 595 F.3d 426,
432 (2d Cir. 2010) ("This Court is bound to apply the law as interpreted by a
state's intermediate appellate courts unless there is persuasive evidence that the
state's highest court would reach a different conclusion."). We note that nothing
in the statutory text of BCL § 1301(a) expressly conditions registration on consent
to general jurisdiction in the state, and that the constitutional concerns we
expressed in Brown -- including that such a regime "could justify the exercise of
3 See, e.g., Wheeler v. CBL & Assocs. Props., Inc., 2017 WL 3611295, at *2-3 (N.Y. Sup. Ct., N.Y. Cty., Aug. 17, 2017); Corp. Jet Support, Inc. v. Lobosco Ins. Grp., 2015 WL 5883026, at *1-2 (N.Y. Sup. Ct., N.Y. Cty., Oct. 7, 2015); Bailen, 2014 WL 3885949, at *4-5. 13 general jurisdiction over a corporation in a state in which the corporation had
done no business at all," 814 F.3d at 640, and that "every corporation would be
subject to general jurisdiction in every state in which it registered, and Daimler's
ruling would be robbed of meaning by a back-door thief," id. -- are also present
here.
Accordingly, in light of Daimler, our own precedent, and the
unanimous conclusion of the three New York intermediate courts to have
considered the issue, we now hold that a foreign corporation does not consent to
general personal jurisdiction in New York by merely registering to do business in
the state and designating an in-state agent for service of process under BCL §
1301(a). We have little trouble concluding that were the New York Court of
Appeals to decide the issue, it would agree that this conclusion is consistent with
the U.S. Constitution and the evolving law surrounding general personal
jurisdiction. We thus affirm the lower court's holding that Dunkin Donuts did
not consent to general personal jurisdiction in New York.
C. General Personal Jurisdiction Absent Consent
Plaintiffs argue, in the alternative, that even if Dunkin Donuts did
not consent to general jurisdiction, the district court nonetheless had jurisdiction
14 over it because of its contacts with New York. This argument fails because it is
both waived by plaintiffs' failure to raise it with the district court below, see In re
Nortel Networks Corp. Sec. Litig., 539 F.3d 129, 132 (2d Cir. 2008), and because
plaintiffs have not alleged facts sufficient to demonstrate that Dunkin Donuts'
contacts in New York suffice to render it "at home" in the jurisdiction. Daimler,
571 U.S. at 122. Dunkin Donuts is not incorporated or headquartered in New
York. Plaintiffs contend that Dunkin Donuts "is a franchisor with numerous
retail establishments in New York," and "that it governs . . . and controls
nationwide product labeling and advertising," Appellants' Br. at 6, but they
made no showing that the company's relationship with New York was in any
way significant or exceptional in relation to the company's nationwide business
activity, see Brown, 814 F.3d at 627 (finding no general personal jurisdiction
where defendant's contacts, "while not insubstantial, constitute[d] only a very
small part of its portfolio"); see also Gucci Am., Inc. v. Weixing Li, 768 F.3d 122, 135
(2d Cir. 2014) (bank not subject to general personal jurisdiction where it has
branch offices in the forum but is headquartered and incorporated elsewhere).
Accordingly, plaintiffs failed to allege facts upon which the exercise of general
jurisdiction would be appropriate.
15 The district court correctly dismissed the out-of-state plaintiffs'
claims for lack of personal jurisdiction.
II. The Reasonable Consumer under GBL §§ 349 and 350
We turn now to the merits of the remaining plaintiff's claims. We
review a district court's grant of a motion to dismiss under Rule 12(b)(6) de novo.
Bldg. Indus. Elec. Contractors Ass'n v. City of New York, 678 F.3d 184, 187 (2d Cir.
2012). "To survive a motion to dismiss, a complaint must contain sufficient
factual matter, accepted as true, to state a claim to relief that is plausible on its
face." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal quotation marks
omitted).
Section 349 of the GBL provides a cause of action for any person
injured by "[d]eceptive acts or practices in the conduct of any business, trade or
commerce or in the furnishing or any service." N.Y. Gen. Bus. Law § 349(a), (h).
"Deceptive acts" are acts that are "likely to mislead a reasonable consumer acting
reasonably under the circumstances." Fink v. Time Warner Cable, 714 F.3d 739, 741
(2d Cir. 2013). "To make out a prima facie case under Section 349, a plaintiff
must demonstrate that (1) the defendant's deceptive acts were directed at
consumers, (2) the acts are misleading in a material way, and (3) the plaintiff has
16 been injured as a result." Maurizio v. Goldsmith, 230 F.3d 518, 521 (2d Cir. 2000)
(citing Oswego Laborers' Local 214 Pension Fund v. Marine Midland Bank, 85 N.Y.2d
20, 25 (1995)).
Section 350 of the GBL prohibits "[f]alse advertising in the conduct
of any business, trade or commerce," and is analyzed under the same "reasonable
consumer" standard as Section 349. Id. at 521. Under either provision, "[i]t is
well settled that a court may determine as a matter of law that an allegedly
deceptive advertisement would not have misled a reasonable consumer." Fink,
714 F.3d at 741.
The SAC identified three Dunkin Donuts television advertisements,
providing descriptions along with video links, and alleged that the
advertisements were deceptive in their use of the word "steak." All three
advertisements, however, conclude with multiple zoomed-in images that clearly
depict the "steak" in the Products as a beef patty. See, e.g., Addendum hereto.
Because "there can be no section 349(a) claim when the allegedly deceptive
practice was fully disclosed," Broder v. MBNA Corp., 722 N.Y.S.2d 524, 526 (1st
Dep't 2001), the district court properly concluded that these advertisements were
17 not actionable under either GBL provision as a matter of law. 4 Moreover, while
the word "steak" can refer to "a slice of meat," it is also defined as "ground beef
prepared for cooking or for serving in the manner of a steak." Merriam-Webster
Online Dictionary, https://www.merriam-webster.com/dictionary/steak (last
visited March 23, 2020). Classic examples of ground beef served as "steak"
include chopped steak, hamburger steak, and Salisbury steak.
The district court also did not err in basing dismissal, in part, on the
undisputed fact that the Products do in fact contain "Angus beef." While it is
true that literally accurate statements can still be misleading, this Court has
repeatedly observed that "in determining whether a reasonable consumer would
have been misled by a particular advertisement, context is crucial." Geffner v.
Coca-Cola Co., 928 F.3d 198, 200 (2d Cir. 2019). Here, Chen bought her Angus
Sandwich for less than $4 and her Angus Wrap for less than $2. As the television
advertisements themselves demonstrate, the Products are marketed as grab-and-
go products that can be consumed in hand, without the need for a fork and knife.
4 See Ludl Elecs. Prods., Ltd. v. Wells Fargo Fin. Leasing, Inc., 775 N.Y.S.2d 59, 61 (2d Dep't 2004) ("[B]ecause the conduct complained of is specifically provided for by the parties' lease and thus was fully disclosed, such conduct is not a deceptive business practice."); see also Goshen v. Mut. Life Ins. Co. of N.Y., 98 N.Y.2d 314, 324 n.1 (2002) ("The standard for recovery under [GBL] § 350, while specific to false advertising, is otherwise identical to section 349."). 18 A reasonable consumer purchasing one of the Products from Dunkin Donuts in
that context would not be misled into thinking she was purchasing an
"unadulterated piece of meat." Appellants' Br. at 31.
The district court properly dismissed Chen's claims under GBL
§§ 349 and 350.
CONCLUSION
For the reasons set forth above, the district court's judgment of
dismissal is AFFIRMED.
19 Addendum
"Fellow-Steak-Lover Handshake" Commercial at 00:16. J. App'x at 110 n.1.