Schleyer v. Starbucks Corporation

CourtDistrict Court, S.D. New York
DecidedSeptember 12, 2023
Docket1:22-cv-10932
StatusUnknown

This text of Schleyer v. Starbucks Corporation (Schleyer v. Starbucks Corporation) is published on Counsel Stack Legal Research, covering District Court, S.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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Schleyer v. Starbucks Corporation, (S.D.N.Y. 2023).

Opinion

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

ERIC SCHLEYER, et al., on behalf of himself and all others similarly situated, Plaintiffs, 22-CV-10932 (JPO)

-v- OPINION AND ORDER

STARBUCKS CORPORATION, Defendant.

J. PAUL OETKEN, District Judge: On December 28, 2022, Plaintiffs commenced this putative class action against Starbucks Corporation (“Starbucks”), alleging violations of New York General Business Law § 349 and § 350; the California Consumers Legal Remedies Act, Cal. Civ. Code § 1750, et seq.; California Business & Professions Code § 17500, et seq. (the “California False Advertising Law”); and the California Business & Professions Code § 17200, et seq. (“the California Unfair Competition Law”), as well as breach of implied warranty and unjust enrichment under New York and California law. Plaintiffs Eric Schleyer and Emilyn Mishkan allege that they purchased Starbucks’s “sprouted grain” bagels in separate retail locations believing the bagels’ primary grain ingredient to be sprouted grain, when, in fact, the bagel’s primary grain source is traditional, unsprouted grain. Pending before the Court is Starbucks’s motion to dismiss the complaint. For the reasons that follow, that motion is granted in part and denied in part. I. Background A. Factual Background The following facts are drawn from the Complaint and are assumed true for purposes of the motion to dismiss. Plaintiff Eric Schleyer is a New York citizen, and Plaintiff Emilyn Mishkan is a California citizen. (ECF No. 1 (“Compl.”) ¶¶ 8-9.) Starbucks is a national coffee, tea, and pastry chain with over 15,000 brick and mortar stores across the country. (Compl. ¶ 11.) Plaintiffs allege that Starbucks has used “false and deceptive advertising to boost sales

and increase profits” by falsely labelling bagels as “sprouted grain” bagels in its in-store display cases. (Compl. ¶¶ 13-14.) Based on Starbucks’s representations, Schleyer and Mishkan believed that sprouted grains “are used as the sole, or at least primary source of grain” in the bagels when, in fact, they are made primarily with traditional, non-sprouted grains. (Compl. ¶ 15-16.) Plaintiffs allege that Starbucks’s misrepresentation is material to a reasonable consumer because “consumers value sprouted grains over traditional non-sprouted grains” due to the greater nutritional value and health benefits of sprouted grains. (Compl. ¶ 19.) Plaintiffs claim they would have paid significantly less for the bagels, or would not have purchased them at all, had they known their primary grain ingredient is traditional, unsprouted grain. (Compl. ¶ 24.) B. Procedural History On behalf of himself and the members of the proposed New York Class, Schleyer alleges

that Starbucks’s sale of the bagels violated Sections 349 and 350 of the New York General Business Law (“GBL”). Similarly, Mishkin sues on behalf of herself and the proposed California Class, alleging that Starbucks violated a variety of similar California consumer protection statutes. Specifically, Mishkan brings claims under the California Consumers Legal Remedies Act (the “CLRA”) Cal. Civ. Code §§ 1750 et seq., Unfair Competition Law (the “UCL”), Cal. Bus. & Prof. Code §§ 17200 et seq., and the California False Advertising Law (the “FAL”), Cal. Bus. & Prof. Code §§ 17500 et seq. Like New York’s consumer protection statutes, the FAL and provisions of the CCLRA prohibit “untrue and misleading” advertising and misrepresenting a product’s characteristics. See Cal. Bus. & Prof. Code § 17500 (FAL); Cal. Civ. Code §§ 1770(a)(5), (a)(7), (a)(9) (CCLRA). The UCL prohibits “any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising,” including any underlying FAL violation. Cal. Bus. & Prof. Code § 17200. Both named Plaintiffs also assert common law claims of unjust enrichment individually

and on behalf of a proposed nationwide class. Alternatively, the named Plaintiffs assert unjust enrichment claims individually and on behalf of the proposed New York and California classes under New York and California law, respectively. (Compl. ¶¶ 83-88). On February 28, 2023, Starbucks moved to dismiss all the above claims pursuant to Federal Rule of Civil Procedure 12(b)(6) or, alternatively, to strike Plaintiffs’ nationwide class allegations pursuant to Federal Rule of Civil Procedure 12(f). (ECF No. 22.) II. Legal Standard To survive a motion to dismiss under Rule 12(b)(6), a plaintiff must plead “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A complaint need not contain “detailed factual allegations,” but it must offer something “more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Ashcroft

v. Iqbal, 556 U.S. 662, 678 (2009) (internal citation omitted). A plaintiff must plead “factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. (citing Twombly, 550 U.S. at 556). In resolving a motion to dismiss, “the court must accept as true all well-pled factual allegations in the complaint and draw all reasonable inferences in the plaintiff’s favor.” Doe v. Indyke, 457 F. Supp. 3d 278, 282 (S.D.N.Y. 2020) (citing Steginsky v. Xcelera Inc., 741 F.3d 365, 368 (2d Cir. 2014)). III. Discussion The Court first addresses Plaintiffs’ New York GBL claims. It then turns to Plaintiffs’ various theories of consumer protection liability under California statutory law. The Court concludes by addressing Plaintiffs’ common-law claims. A. New York General Business Law Sections 349 and 350 Claims 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 of any service.” N.Y. Gen. Bus. Law § 349(a), (h). Section 350 prohibits “[f]alse advertising in the conduct of any business, trade or commerce or in the furnishing of any service in this state.” N.Y. Gen. Bus. Law § 350. “To successfully assert a claim under either section, ‘a plaintiff must allege that a defendant has engaged in (1) consumer-oriented conduct that is (2) materially misleading and that (3) plaintiff suffered injury as a result of the allegedly deceptive act or practice.’” Orlander v. Staples, Inc., 802 F.3d 289, 300 (2d Cir. 2015) (quoting Koch v. Acker, Merrall & Condit Co., 18 N.Y.3d 940, 952 (2012)). Materially misleading conduct encompasses acts “‘likely to mislead a reasonable consumer acting reasonably under the

circumstances.’” Cohen v. J.P. Morgan Chase & Co., 498 F.3d 111, 126 (quoting Oswego Laborers’ Local 214 Pension Fund v. Marine Midland Bank, 85 N.Y.2d 20, 26 (1995).

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