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UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK --------------------------------------------------------------X MARC E. VERZANI, individually and on behalf : of all others similarly situated, : : Plaintiff, : : -vs.: : COSTCO WHOLESALE CORPORATION, : : Defendant. : --------------------------------------------------------------X
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No. 09 Civ.2117 (CM)(FM)
ECF CASE
PLAINTIFF’S MEMORANDUM OF LAW IN SUPPORT OF MOTION FOR PRELIMINARY INJUNCTION
SANFORD WITTELS & HEISLER, LLP 950 Third Avenue, 10th Floor New York, NY 10022 (646) 723-2947 ATTORNEYS FOR PLAINTIFF AND THE CLASS
Dated: New York, New York April 21, 2009
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TABLE OF CONTENTS Page TABLE OF AUTHORITIES ............................................................................................. iii PRELIMINARY STATEMENT .........................................................................................1 I.
SUPPLEMENTAL RELEVANT FACTS...............................................................3
II.
RELEVANT FDCA AND FPLA STATUTES, REGULATIONS, AND CASES ...........................................................................................................5 A.
B. III.
FDCA (21 U.S.C. §§ 301 et seq.) And FPLA (15 U.S.C. §§ 451-1461)..............................................................................5 1.
The FDCA Statutes ..........................................................................5
2.
The FPLA Statutes...........................................................................6
3.
The Relevant Regulations ................................................................8
Relevant Case Law ....................................................................................10
THE WASHINGTON CONSUMER PROTECTION ACT..................................13 A.
The Relevant Statutory Provisions.............................................................13
B.
The Relevant Case Law .............................................................................15 1.
The Elements of a Private CPA Action .........................................15
2.
The Importance of Injunctive Relief by “Private Attorney Generals” to Promote the Public Policy of Washington Reflected in the CPA .................................................16
3.
A Claim under the CPA Can Be Asserted on Behalf of a Nationwide Class in Proper Circumstances............................18
ARGUMENT.....................................................................................................................19 I.
THE STANDARDS GOVERNING PLAINTIFF’S MOTION FOR A PRELIMINARY INJUNCTION..............................................................19
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PLAINTIFF’S MOTION FOR A PRELIMINARY INJUNCTION SHOULD BE GRANTED BY THE COURT .......................................................21 A.
Plaintiff Has Established The Existence Of Irreparable Harm ..........................................................................................................21
B.
Plaintiff Has Shown “A Clear And Substantial Likelihood Of Success On The Merits” .......................................................................22 1.
Defendant is Violating the Labeling Requirements of the FDCA and the FPLA ...........................................................22
2.
Defendant’s Conduct Is an “Unfair or Deceptive Act or Practice” in Violation of the CPA.......................................23
CONCLUSION..................................................................................................................25
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TABLE OF AUTHORITIES Page CASES: Aaron v. National Union Fire Ins. Co., 876 F.2d 1157 (5th Cir.1989) ...................................................................................... 12 Christie-Spencer Corp. v. Hausman Realty Co., Inc., 118 F. Supp. 2d 408 (S.D.N.Y. 2000)...........................................................................20 Curtis v. Northern Life Ins. Co., 147 Wash. App. 1030, 2008 WL 4927365 (Ct. App. Div. 1 Nov. 17, 2008) ...............19 Dix v. ICT Group, Inc., 160 Wash. 2d 826, 161 P.3d 1016 (Wash. 2007) .........................................................18 Dodge v. County of Orange, 208 F.R.D. 79 (S.D.N.Y. 2002) ..............................................................................20, 21 Ell v. S.E.T. Landscape Design, Inc., 34 F. Supp. 2d 188 (S.D.N.Y. 1999).............................................................................13 F.T.C. v. Five-Star Auto Club, Inc., 97 F. Supp. 2d 502 (S.D.N.Y. 2000).......................................................................21, 22 Grocery Manufacturers of Amer., Inc. v. Gerace, 755 F.2d 993 (2d Cir. 1985)..........................................................................................11 Hangman Ridge Training Stables, Inc. v. Safeco Title Ins. Co., 105 Wash. 2d 778, 719 P.2d 531 (Wash. 1986) .....................................................15, 16 Hockley v. Hargitt, 82 Wash. 2d 337, 510 P.2d 1123 (Wash. 1973) ...........................................................17 Hudson Ins. Co. v. American Elec. Corp., 957 F.2d 826 (11th Cir. 1992) ......................................................................................12 Indoor Billboard/Washington, Inc. v. Integra Telecom of Washington, Inc., 162 Wash. 2d 59, 170 P.3d 10 (Wash. 2007) ...............................................................16 Jermyn v. Best Buy Stores, L.P., 2009 WL 773328 (S.D.N.Y. March 19, 2009) .............................................................18 Jones v. Rath Packing Co., 430 U.S. 519, 97 S. Ct. 1305 (1977).................................................................10, 11, 12
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Kraft Foods N. Amer., Inc. v. Rockland County Dept. of Weights & Measures, 2003 WL 554796 (S.D.N.Y. Feb. 26, 2003)...........................................................11, 12 Mason v. Mortgage Amer., Inc., 114 Wash. 2d 842, 792 P.2d 142 (Wash. 2000) ...............................................15, 16, 23 Nordstrom, Inc. v. Tampourlos, 107 Wash. 2d 735, 733 P.2d 208 (Wash. 1987) .....................................................15, 16 Railway Labor Executives Ass'n v. Pittsburgh & L.E.R.R., 858 F.2d 936 (3d Cir. 1988)..........................................................................................12 Rogers v. Tyson Foods, Inc., 308 F.3d 785 (7th Cir. 2002) ..................................................................................12, 13 Schmeling v. NORDAM, 97 F.3d 1336 (10th Cir. 1996) ......................................................................................12 Schnall v. AT & T Wireless Services, Inc., 139 Wash. App. 280, 161 P.3d 395 (Ct. App. Div. 1 2008), review granted, 163 Wash. 2d 1022, 185 P.3d 1194 (Wash. Apr. 30, 2008) .........................................19 Scott v. Cingular Wireless, 160 Wash. 2d 843, 161 P.3d 1000 (Wash. 2007) .........................................................17 Software AG, Inc. v. Consist Software Solutions, Inc., 2008 WL 563449 (Feb. 21, 2008 S.D.N.Y.).................................................................20 Strong v. Telectronics Pacing Sys., Inc., 78 F.3d 256 (6th Cir. 1996) ..........................................................................................12 Tang Capital Partners, LP v. Cell Therapeutics, Inc., 591 F. Supp. 2d 666 (S.D.N.Y. 2008)...........................................................................20 Wayne v. DHL Worldwide Express, 294 F.3d 1179 (9th Cir. 2002) ......................................................................................12 STATUTES AND MISCELLANEOUS: 15 U.S.C. § 45(a) ......................................................................................................................22 15 U.S.C. § 1451............................................................................................................ 7, 21, 24 15 U.S.C. § 1452........................................................................................................................ 7 15 U.S.C. § 1453..................................................................................................................... 7-8 15 U.S.C. § 1456(a) ....................................................................................................................8 15 U.S.C. § 1459(a) ....................................................................................................................7 15 U.S.C. § 1461.....................................................................................................................2, 8 21 U.S.C. § 331...................................................................................................................2, 5, 8 21 U.S.C. § 341.....................................................................................................................5, 21 iv
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21 U.S.C. § 343...........................................................................................................................6 21 U.S.C. § 343-1 ...............................................................................................................2, 6, 8 21 C.F.R., Part 101......................................................................................................................8 21 C.F.R. § 102.5 ............................................................................................................9, 10, 23 21 C.F.R. § 102.54 ................................................................................................................9, 22 21 C.F.R. § 102.55 ......................................................................................................................9 21 C.F.R. § 161.173 ....................................................................................................................9 21 C.F.R. § 161.175 ....................................................................................................................9 21 C.F.R. § 161.176 ....................................................................................................................9 Fed. R. Civ. P. 65........................................................................................................................1 New York General Business Law § 349...................................................................................18 Revised Code of Washington ("RCW") 19.86 et seq. ................................................................1 RCW 19.86.010 ........................................................................................................................13 RCW 19.86.020 ..................................................................................................................13, 21 RCW 19.86.090 ....................................................................................................1, 3, 14, 16, 21 RCW 19.86.095 ........................................................................................................................17 RCW 19.86.910 ........................................................................................................................13 RCW 19.86.920 ..................................................................................................................14, 21 RCW 2.06.040 ..........................................................................................................................19
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Plaintiff Marc. E. Verzani (“Plaintiff”) respectfully submits this memorandum of law in support of his motion for an order, pursuant to Fed. R. Civ. P. 65 and the Washington Consumer Protection Act (“CPA”), Revised Code of Washington (“RCW”) 19.86 et seq. (specifically including but not limited to RCW 19.86.090), preliminarily enjoining Defendant Costco Wholesale Corporation (“Defendant”) from engaging and continuing to engage in conduct in violation of the CPA as described in Plaintiff’s Class Action Complaint (the “Complaint”) filed and served in this action, and for such additional and further relief as the Court deems just and proper.1 PRELIMINARY STATEMENT Defendant’s unfair and deceptive conduct alleged in Plaintiff’s Complaint is straightforwardly described, and enormous in scope. Simply stated, Defendant is selling a shrimp cocktail it calls “Shrimp Tray with Cocktail Sauce” (“Shrimp Tray”) for $9.99 in all of its more than 400 warehouse stores across the United States, with a standard, uniform label affixed to a standard uniform container that describes the net weight of the shrimp included therein as “NET WT 16 oz (1.00 lb).” However, based on the investigation of counsel over a period now exceeding nine months: (i) the shrimp contents are never individually weighed, and the actual weight of the shrimp is never disclosed; (ii) the actual weight of the shrimp is always less than 16 oz/1.00 lb; and (iii) in many (or most) instances the shrimp are from two to three ounces short of a pound. See, e.g., ¶¶ 4-8, 21-34 and Complaint Ex. A; Weinstein Decl. ¶¶ 2-4, Verzani Decl. ¶ 2. Plaintiff estimates that tens of millions of the deficient
1
For the convenience of the Court, Exhibit 1 to the accompanying Declaration of William R. Weinstein in support of Plaintiff’s Motion (“Weinstein Decl.”) is a copy of Plaintiff’s Complaint, which was filed and informally served on March 9, 2009, and formally served on Defendant’s designated agent on March 31, 2009. References to specific allegations of the Complaint are denoted “¶ __.” Additionally submitted in support of the motion is Plaintiff’s April 20, 2009 Declaration (“Verzani Decl.”) with annexed exhibits. 1
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Shrimp Trays are sold each year, with concomitant annual damages to Defendant’s consumer members also totaling in the tens of millions of dollars. See ¶ 10. Plaintiff’s Complaint elaborates on this factual description, but the specific details for the purposes of the instant motion need not go much beyond those described above. As further established herein, Defendant’s conduct violates federal “net weight” labeling requirements under the Federal Food, Drug and Cosmetic Act (“FDCA”), 21 U.S.C. § 331 et seq., and the regulations promulgated thereunder by the Food and Drug Administration (“FDA”). Defendant’s conduct also violates labeling requirements under the Fair Packaging and Labeling Act (“FPLA”), 15 U.S.C. §§ 1451-1461, and the regulations promulgated by the FDA thereunder. The FDCA and the FPLA generally characterize or define conduct like Defendant’s as “misbranding.” The power of the states to enforce standards identical to the federal standards are expressly not preempted -- under 21 U.S.C. § 343-1(a)(2)-(a)(3) for the FDCA, and 15 U.S.C. § 1461 for the FPLA. Although the FDCA and FPLA do not provide private rights of actions, under established case law the lack of a private right of action confirms that state law claims like those asserted by Plaintiff for consumer fraud are not preempted – so long as Plaintiff seeks only to enforce labeling requirements exactly consistent with the FDCA and FPLA. Based on the continuing investigation of Plaintiff and Plaintiff’s counsel involving the purchase of “Shrimp Trays” after the commencement of this action in states as geographically diverse as Washington and New York, Defendant is continuing to sell the Shrimp Trays with its standard, uniform label failing to disclose the actual weight of the shrimp included therein, and the total shrimp weight continues to be short of the “NET WT 16 oz (1.00 lb)” statement prominently appearing on the uniform label (Weinstein Decl. ¶¶ 5-6; Verzani Decl. ¶¶ 3-4).
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Aside from the fact that Defendant’s customers are being short-weighted based on the misleadingly inaccurate or incomplete labels affixed to the Shrimp Trays they purchase each day, week and month as this case moves forward, the unfair and deceptive consumer practices by Defendant violate the strong public policy expressed by Congress, and by the State of Washington, where: (i) Defendant is incorporated and its principal executive offices are located; (ii) Defendant devised, controlled and made uniform nationwide the labels and their written contents and the labeling practices for the Shrimp Trays described herein; and (iii) Defendant, the Shrimp Tray distributor, is located -- as every label on the Shrimp Trays advises consumers (¶¶ 15(a), 15(b), 27; Weinstein Decl. Exs. 2, 3; Verzani Decl. Exs. 1-4). Thus, Defendant’s conduct inflicts harm to the public interest that can be enjoined under the CPA, and any individual including Plaintiff may bring an action to enjoin Defendant’s conduct, as RCW 19.86.090 of the CPA expressly provides. Assuming the Court agrees with Plaintiff after being presented with the applicable controlling statutes, regulations and case law, Defendant (i) should be preliminarily enjoined from continuing to sell its Shrimp Trays by the use of its standard, misleadingly inaccurate or incomplete label, and (ii) should be required to weigh the shrimp actually included in each of its Shrimp Trays and disclose this weight in accordance with the governing federal regulations and give every customer shrimp with at least the net weight that Defendant describes on every label to render those labels not misleadingly inaccurate or incomplete. Thus, the Court should grant Plaintiff’s motion for a preliminary injunction. I.
SUPPLEMENTAL RELEVANT FACTS Plaintiff is a resident of Scarsdale, New York (Verzani Decl. ¶ 2). On February 12,
2009, Plaintiff purchased a Shrimp Tray with Cocktail Sauce, Item # 18730, from Defendant’s retail warehouse (Store # 241) located at 1 Industrial Lane, New Rochelle, New 3
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York 10805 (Weinstein Decl. ¶ 2; Verzani Decl. ¶ 2, Ex. 1). The label on the Shrimp Tray was the standard uniform label used by Defendant nationwide, and included in its largest and most prominent type the following net weight representation: “NET WT 16 oz (1.00 lb).” Id. On Plaintiff’s receipt, the Shrimp Tray is described as “18730 SHRIMP CKTL 9.99.” Id. As reflected in the contemporaneous record of what Plaintiff observed regarding the Shrimp Tray he had bought, the Shrimp Tray contained 35 pieces of shrimp with a total weight of 13.5 ounces -- or 2.5 ounces short of the pound described on the label. Id. The specific details of the investigation by Plaintiff’s counsel over a period of more than nine months before and after the action was commenced are set forth and documented in the accompanying Weinstein Declaration at ¶ 3 and Exs. 2, 3, 4. As evidenced therein, the label for all Shrimp Trays examined is uniform, except for the notation identifying the store where the Shrimp Trays were sold and purchased. Id.; see also Verzani Decl. Exs. 1-4. All Shrimp Trays included labels advising purchasers of a “NET WT 16 oz (1.00 lb).” Id. Although the number of shrimp in the examined trays could materially vary, none of the Shrimp Trays examined ever included shrimp weighing at least one pound, and the mode short-weight was from two (or more) to three (or more) ounces. Id. None of the labels ever indicated that any part of the one pound net weight was attributable, or was intended to be attributed, to anything other than the shrimp, and none of the labels disclosed the actual weight of the shrimp contained in the Shrimp Trays. Id. The receipts issued for the Shrimp Trays identified them as “18730 SHRIMP CKTL 9.99”. Id. Defendant is incorporated in the State of Washington with its principal executive offices located at 999 Lake Drive, Issaquah, WA 98027 (¶ 15(a)).
Defendant operates
membership warehouses that offer low prices on a limited selection of nationally branded and selected private label products in a wide range of merchandise categories in no-frills, self4
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service facilities. Id. As reflected in Defendant’s Form 10-Q filed with the Securities and Exchange Commission (“SEC”) for the period ending November 23, 2008, at the end of the first quarter of 2009, Defendant was operating 410 warehouses within the United States (including Puerto Rico) (¶¶ 9, 15(a)). According to Defendant’s Annual Report on Form 10K/A filed with the SEC for the fiscal year ending August 31, 2008, Defendant had 53,500,000 cardholders as of that date, total annual net sales for that period of almost $71 billion, and an additional $1.5 billion of revenues from the annual membership fees charged to its customer members (¶ 15(a)). Plaintiff alleges that the uniform labels and their contents and the labeling practices complained of in the Complaint for the Shrimp Trays were devised, controlled and made uniform nationwide by Defendant from within Washington State; in fact, every label for the Shrimp Trays states “Distributed by Costco Wholesale Corp, PO Box 34535, Seattle WA 98124” (¶ 27; see also, e.g., Weinstein Decl. Exs. 2-4). II.
RELEVANT FDCA AND FPLA STATUTES, REGULATIONS, AND CASES A.
FDCA (21 U.S.C. §§ 331 et seq.) And FPLA (15 U.S.C. §§ 1451-1461) 1.
The FDCA Statutes
FDCA § 301, 21 U.S.C. § 331, entitled “Prohibited acts,” provides in pertinent part: The following acts and the causing thereof are prohibited: (a) The introduction or delivery for introduction into interstate commerce of any food . . . that is . . . misbranded. *** (c) The receipt in interstate commerce of any food . . . that is . . . misbranded, and the delivery or proffered delivery thereof for pay or otherwise.
FDCA § 401, 21 U.S.C. § 341, entitled “Definitions and standards for food,” provides in pertinent part: Whenever in the judgment of the Secretary [of Health and Human Services] such action will promote honesty and fair dealing in the interest of consumers, he shall promulgate regulations fixing and establishing for any food, under its common or 5
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usual name so far as practicable, a reasonable definition and standard of identity, a reasonable standard of quality, or reasonable standards of fill of container. . . . In prescribing a definition and standard of identity for any food or class of food in which optional ingredients are permitted, the Secretary shall, for the purpose of promoting honesty and fair dealing in the interest of consumers, designate the optional ingredients which shall be named on the label.
FDCA § 403, 21 U.S.C. § 343, entitled “Misbranded food,” provides in pertinent part as follows: A food shall be deemed to be misbranded— (a) False or misleading label. If (1) its labeling is false or misleading in any particular. . . . *** (e) Package form. If in package form unless it bears a label containing (1) the name and place of business of the manufacturer, packer, or distributor; and (2) an accurate statement of the quantity of the contents in terms of weight, measure, or numerical count. . . . (f) Prominence of information on label. If any word, statement, or other information required by or under authority of this chapter to appear on the label or labeling is not prominently placed thereon with such conspicuousness (as compared with other words, statements, designs, or devices, in the labeling) and in such terms as to render it likely to be read and understood by the ordinary individual under customary conditions of purchase and use.
FDCA § 403A, 21 U.S.C. §§ 343-1(a)(2) & (a)(3) (untitled), the FDCA preemption statute, precisely limits what the states can do in connection with labeling, in pertinent part as follows: [N]o State or political subdivision of a State may directly or indirectly establish . . . any requirement for the labeling of food of the type required by section 343(c), 343(e)[, 343(f)] or 343(i)(2) of this title that is not identical to the requirement of such section . . . . 2.
The FPLA Statutes
The FPLA states the Congressional policy, as well as prohibited labeling acts and labeling requirements, in 15 U.S.C. §§ 1451-53, in pertinent part as follows:
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§1451. Congressional Delegation of Policy. Informed consumers are essential to the fair and efficient functioning of a free market economy. Packages and their labels should enable consumers to obtain accurate information as to the quantity of the contents and should facilitate value comparisons. Therefore, it is hereby declared to be the policy of the Congress to assist consumers and manufacturers in reaching these goals in the marketing of consumer goods.
§1452. Unfair and Deceptive Packaging and Labeling: Scope of Prohibition. (a) Nonconforming labels It shall be unlawful for any person engaged in the packaging or labeling of any consumer commodity (as defined in this chapter) for distribution in commerce, or for any person . . . engaged in the distribution in commerce of any packaged or labeled consumer commodity, to distribute or to cause to be distributed in commerce any such commodity if such commodity is contained in a package, or if there is affixed to that commodity a label, which does not conform to the provisions of this chapter and of regulations promulgated under the authority of this chapter. (emphasis added) (b) Exemptions The prohibition contained in subsection (a) of this section shall not apply to persons engaged in business as wholesale or retail distributors of consumer commodities except to the extent that such persons (1) are engaged in the packaging or labeling of such commodities, or (2) prescribe or specify by any means the manner in which such commodities are packaged or labeled.2
§1453. Requirements of Labeling; Placement, Form, and Contents of Statement of Quantity; Supplemental Statement of Quantity. (a) Contents of label No person subject to the prohibition contained in section 1452 of this title shall distribute or cause to be distributed in commerce any packaged consumer commodity unless in conformity with regulations which shall be established by the promulgating authority pursuant to section 1455 of this title which shall provide that (1) The commodity shall bear a label specifying the identity of the commodity and the name and place of business of the manufacturer, packer, or distributor; 2
The term “consumer commodity” as used in the FPLA is defined at 15 U.S.C. § 1459(a) to include “any food” “distributed for sale . . . for consumption by individuals” but excluding certain foods other than the shrimp which is the subject of this action. 7
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(2) The net quantity of contents (in terms of weight or mass, measure, or numerical count) shall be separately and accurately stated in a uniform location upon the principal display panel of that label, using the most appropriate units of both the customary inch/pound system of measure, as provided in paragraph (3) of this subsection . . .; (emphasis added) (3) The separate label statement of net quantity of contents appearing upon or affixed to any package (A) (i) if on a package labeled in terms of weight, shall be expressed in pounds, with any remainder in terms of ounces or common or decimal fractions of the pound . . .; (ii) if on a random package, may be expressed in terms of pounds and decimal fractions of the pound carried out to not more than three decimal places . . . . The FPLA defines “misbranded consumer commodities” at 15 U.S.C. § 1456(a), by referencing 21 U.S.C. § 331, supra, as follows: Any consumer commodity which is a food . . . and which is introduced . . . into commerce in violation of any of the provisions of this chapter, or the regulations issued pursuant to this chapter, shall be deemed to be misbranded within the meaning of chapter III of the [FDCA] (21 U.S.C. 331 et seq.). . . . Finally, 15 U.S.C. § 1461, the FPLA preemption statute, is substantially similar to the FDCA preemption statute (21 U.S.C. § 343-1, quoted supra), and also precisely limits what the states can do in connection with labeling, in pertinent part as follows: It is hereby declared that it is the express intent of Congress to supersede any and all laws of the States or political subdivisions thereof insofar as they may now or hereafter provide for the labeling of the net quantity of contents of the package of any consumer commodity covered by this chapter which are less stringent than or require information different from the requirements of section 1453 of this title or regulations promulgated pursuant thereto. 3.
The Relevant Regulations
Some of the labeling regulations are only indirectly pertinent to this case, and are briefly described for the Court. Generally, 21 C.F.R., Part 101, includes some general and other more specific labeling provisions regarding, inter alia, the label display, listing of ingredients, and descriptions of nutritional information. 8
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As it so happens, the labeling of shrimp is specifically, and heavily, regulated by the FDA.
Although not directly applicable, 21 C.F.R., Part 161, contains three sections
governing shrimp: 21 C.F.R. § 161.173 (canned wet pack shrimp), 21 C.F.R. § 161.175 (frozen raw breaded shrimp), and 21 C.F.R. § 161.176 (frozen raw lightly breaded shrimp). Furthermore, 21 C.F.R., Part 102, which imposes “requirements for specific nonstandardized foods,” also specifically addresses the labeling of shrimp, with two separate regulations.
One regulation, 21 C.F.R. § 102.55, deals with “nonstandardized breaded
composite shrimp units,” including shrimp products conforming to 21 C.F.R. § 161.175, described supra. The second shrimp regulation in 21 C.F.R., Part 102, is one of the two specific regulations Plaintiff contends Defendant is violating. Specifically, 21 C.F.R. § 102.54 expressly regulates the labeling of “seafood cocktails,” in pertinent part as follows: § 102.54 Seafood cocktails. The common or usual name of a seafood cocktail in package form fabricated with one or more seafood ingredients shall be: (a) When the cocktail contains only one seafood ingredient, the name of the seafood ingredient followed by the word “cocktail'' (e.g., shrimp cocktail, crabmeat cocktail) and a statement of the percentage by weight of that seafood ingredient in the product in the manner set forth in Sec. 102.5(b). (emphasis added) Per the above, 21 C.F.R. § 102.54(a) expressly incorporates 21 C.F.R. § 102.5(b) -the subsection of 21 C.F.R. § 102.5 (entitled “General principles”) that also is directly relevant to Plaintiff’s claims -- and which provides in pertinent part as follows: (b) The common or usual name of a food shall include the percentage(s) of any characterizing ingredient(s) or component(s) when the proportion of such ingredient(s) or component(s) in the food has a material bearing on price or consumer acceptance or when the labeling or the appearance of the food may otherwise create an erroneous impression that such ingredient(s) or component(s) is present in an amount greater than is actually the case. The following requirements shall apply unless modified by a specific regulation in subpart B of this part [which is inapplicable here]. (emphasis added) 9
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(1) The percentage of a characterizing ingredient or component shall be declared on the basis of its quantity in the finished product (i.e., weight/weight in the case of solids) . . . . (emphasis added) And lest there be any question that the shrimp in Defendant’s “Shrimp Trays” is a “characterizing ingredient” required to be declared on a “weight/weight” basis under 21 C.F.R. § 102.5(b)(1), supra, the following is one of the bullet points found on the FDA “Center for Food Safety and Applied Nutrition” webpage providing general information in answer to the question “What are the required label statements on Food?” – which can be found at http://www.cfsan.fda.gov/~dms/qa-indl1.html: The ingredients in a food must be listed by their common or usual names in decreasing order of their predominance by weight. The word "ingredients" does not refer to the chemical composition, but means the individual food components of a mixed food. If a certain ingredient is the characterizing one in a food (e.g., shrimp in shrimp cocktail) the percent of that ingredient may be required as part of the name of the food. (emphasis added)3 B.
Relevant Case Law
The leading case regarding the interaction of state and federal law under the FDCA and the FPLA is the opinion of the Supreme Court in Jones v. Rath Packing Co., 430 U.S. 519, 97 S. Ct. 1305 (1977). The principal issue in Rath was whether the State of California could impose net weight requirements for meat and flour products that did not allow for reasonable deviations allowed under the federal regulations for natural causes like moisture loss during the course of good distribution practices. Id., 430 U.S. at 529-32, 97 S. Ct. at 1311-13 (meat products); 430 U.S. at 532-35, 97 S. Ct. at 1312-14 (flour). Rath confirms that, under the FDCA and the FPLA, states have the right to police compliance with federal weights and measures requirements and standards. Nevertheless, the Supreme Court held that California’s failure to allow for reasonable weight deviations allowed for flour under the 3
Shrimp is the first “ingredient” listed in the ingredient list on the uniform “Shrimp Tray” label. E.g., Weinstein Decl. Exs. 2-4. 10
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FDCA and FPLA mandated a determination that the California requirements were preempted. Id., 430 U.S. at 540-43, 97 S. Ct. at 1317-18. In Grocery Manufacturers of Amer., Inc. v. Gerace, 755 F.2d 993 (2d Cir. 1985), the Second Circuit had to decide whether N.Y. Agric. & Mkts. Law § 63 was preempted by the FDCA, when the New York statute required the labeling as “imitation” of “cheese alternatives” (i.e., “products composed wholly or partly of food that looks, smells and tastes like cheese, but is not, in fact, cheese”) without regard to their nutritional value. Id. at 99596. The FDCA regulations, by contrast, provided that only “nutritionally inferior” “cheese alternatives” be labeled “imitation.” Id. at 995-97. The Second Circuit concluded that “[i]ncluding the term imitation on the label of a nutritionally superior alternative cheese in order to comply with New York law, would render the product misbranded under federal law,” and thus the New York law was preempted by the FDCA. Id. at 1001. More recently, Judge Pauley was confronted with a comparable preemption issue involving weights and measures in Kraft Foods N. Amer., Inc. v. Rockland County Dept. of Weights & Measures, 2003 WL 554796 (S.D.N.Y. Feb. 26, 2003). In Kraft Foods, Rockland County utilized sampling techniques in connection with their net weight inspection practices for manufactured packaged food that were more onerous than the labeling requirements under the FDCA and FPLA -- because Rockland County refused to allow reasonable weight variations due to moisture loss, and performed its sampling only at the retail level while federal law allowed sampling at the production and packaging site as well. Id. at *2-3. Kraft argued that the Rockland County regulations “effectively imposed a minimum weight standard where federal law expressly permits reasonable weight variations in packaged foods.” Id. at *4. Judge Pauley, observing that the federal food packaging statutes (including
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the FDCA and FPLA) “explicitly preemp[t] differing state regulations,” id, at *5, held that the Rockland County net weight practices were preempted. Id. at *7. Finally, and arguably most pertinent to Plaintiff’s claims and the instant motion, is the decision of the Seventh Circuit in Rogers v. Tyson Foods, Inc., 308 F.3d 785 (7th Cir. 2002). In Rogers, the plaintiffs were consumers who brought an action in state court for consumer fraud and unjust enrichment based on allegations that Tyson was inflating the weight of chicken carcasses with water during the processing of the chicken, and concealing this practice from the public. Id. at 786-87. Tyson removed the action to federal court, asserting that the plaintiffs’ claims were preempted by the Poultry Products Inspection Act (“PPIA”), which imposed labeling and net weight requirements for poultry products similar to the requirements imposed on shrimp under the FDCA and FPLA. Id. at 787.4 Although Rogers dealt with the procedural issue of federal removal jurisdiction based on a preemption defense, the Seventh Circuit -- citing a list of six other Circuit Court decisions to the same effect5 -held that the absence of a private right of action under the PPIA precluded any finding of “complete preemption” sufficient to support the existence of federal removal jurisdiction. Id. at 788. The Seventh Circuit, however, also observed that a claim of “ordinary preemption” is an affirmative defense, and that Tyson was free in the state court on remand to raise its 4
As Judge Pauley observed in Kraft Foods, supra, the PPIA and the Federal Meat Inspection Act (“FMIA”) impose comparable requirements for poultry and meat, respectively, and contain preemption provisions substantially the same as under the FDCA and FPLA. 2003 WL 554796, at *5. The FDA enforces the FDCA and FPLA, while the U.S. Department of Agriculture enforces the PPIA and the FMIA. See also Rath, 430 U.S. at 533, 97 S. Ct. at 1313 (noting that “misbranding” provisions of FDCA and FMIA were substantially identical). 5
See Wayne v. DHL Worldwide Express, 294 F.3d 1179, 1184 (9th Cir. 2002); Schmeling v. NORDAM, 97 F.3d 1336, 1342 (10th Cir. 1996); Strong v. Telectronics Pacing Sys., Inc., 78 F.3d 256, 260 (6th Cir. 1996); Hudson Ins. Co. v. American Elec. Corp., 957 F.2d 826, 830 (11th Cir. 1992); Aaron v. National Union Fire Ins. Co., 876 F.2d 1157, 116465 (5th Cir. 1989); Railway Labor Executives Ass'n v. Pittsburgh & L.E.R.R., 858 F.2d 936, 942 (3d Cir. 1988). 12
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argument that the plaintiffs’ claims improperly challenged Tyson for failing to meet labeling requirements exceeding those imposed under the PPIA. Id. at 791. See also Ell v. S.E.T. Landscape Design, Inc., 34 F. Supp. 2d 188, 192 (S.D.N.Y. 1999), in which Judge Conner similarly held that the absence of a private right of action for the asserted claims precluded the existence of “complete preemption” sufficient to support removal jurisdiction. III.
THE WASHINGTON CONSUMER PROTECTION ACT A.
The Relevant Statutory Provisions
Thankfully, the relevant provisions under the CPA upon which Plaintiff’s consumer fraud claim is based are far less lengthy and intricate than the relevant federal statutes and regulations. The relevant CPA provisions are as follows:
RCW 19.86.010, entitled “Definitions,” provides in its entirety as follows: As used in this chapter: (1) "Person" shall include, where applicable, natural persons, corporations, trusts, unincorporated associations and partnerships. (2) "Trade" and "commerce" shall include the sale of assets or services, and any commerce directly or indirectly affecting the people of the state of Washington. (3) "Assets" shall include any property, tangible or intangible, real, personal, or mixed, and wherever situate, and any other thing of value.6
RCW 19.86.020, entitled “Unfair competition, practices, declared unlawful,” provides in its entirety as follows: Unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce are hereby declared unlawful. 6
RCW 19.86.910, entitled “Short title,” provides in its entirety as follows: “This act
shall be known and designated as the ‘Consumer Protection Act.’” 13
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RCW 19.86.090, entitled “Civil action for damages – Treble damages authorized – Action by governmental entities,” provides in its entirety as follows: Any person who is injured in his or her business or property by a violation of RCW 19.86.020, 19.86.030, 19.86.040, 19.86.050, or 19.86.060, or any person so injured because he or she refuses to accede to a proposal for an arrangement which, if consummated, would be in violation of RCW 19.86.030, 19.86.040, 19.86.050, or 19.86.060, may bring a civil action in the superior court to enjoin further violations, to recover the actual damages sustained by him or her, or both, together with the costs of the suit, including a reasonable attorney's fee, and the court may in its discretion, increase the award of damages to an amount not to exceed three times the actual damages sustained: PROVIDED, That such increased damage award for violation of RCW 19.86.020 may not exceed ten thousand dollars: PROVIDED FURTHER, That such person may bring a civil action in the district court to recover his or her actual damages, except for damages which exceed the amount specified in RCW 3.66.020, and the costs of the suit, including reasonable attorney's fees. The district court may, in its discretion, increase the award of damages to an amount not more than three times the actual damages sustained, but such increased damage award shall not exceed the amount specified in RCW 3.66.020. For the purpose of this section, "person" shall include the counties, municipalities, and all political subdivisions of this state. (emphasis added) Whenever the state of Washington is injured, directly or indirectly, by reason of a violation of RCW 19.86.030, 19.86.040, 19.86.050, or 19.86.060, it may sue therefor in the superior court to recover the actual damages sustained by it, whether direct or indirect, and to recover the costs of the suit including a reasonable attorney's fee.
Finally, RCW 19.86.920, entitled “Purpose – Interpretation - Liberal construction – Savings,” provides in pertinent part as follows: The legislature hereby declares that the purpose of this act is to complement the body of federal law governing restraints of trade, unfair competition and unfair, deceptive, and fraudulent acts or practices in order to protect the public and foster fair and honest competition. It is the intent of the legislature that, in construing this act, the courts be guided by final decisions of the federal courts and final orders of the federal trade commission interpreting the various federal statutes dealing with the same or similar matters and that in deciding whether conduct restrains or monopolizes trade or commerce or may substantially lessen competition, determination of the relevant market or effective area of competition shall not be limited by the boundaries of the state of Washington. To this end this act shall be liberally construed that its beneficial purposes may be served. (emphasis added) 14
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The Relevant Case Law
A host of Washington Supreme Court cases sets out the elements of a consumer claim under the CPA, as well as the important policies underlying the CPA and regarding the CPA’s application. 1.
The Elements of a Private CPA Action
The five elements of a private CPA action are well-established under Washington law, and include: (1) an unfair or deceptive act or practice; (2) in the conduct of trade or commerce; (3) which impacts the public interest; (4) injury to the plaintiffs in their business or property; and (5) a causal link between the unfair or deceptive act and the injury suffered. Mason v. Mortgage Amer., Inc., 114 Wash. 2d 842, 852, 844, 792 P.2d 142, 147 (Wash. 2000) (en banc); Nordstrom, Inc. v. Tampourlos, 107 Wash. 2d 735, 739, 733 P.2d 208, 210 (Wash. 1987) (en banc); Hangman Ridge Training Stables, Inc. v. Safeco Title Ins. Co., 105 Wash. 2d 778, 780, 719 P.2d 531, 532 (Wash. 1986) (en banc). With respect to the third element -- an impact on the public interest – Washington has adopted two complimentary approaches. First, if the transaction is a consumer transaction, the public interest element can be established by analyzing the following five factors: (1) Were the alleged acts committed in the course of defendant's business? (2) Are the acts part of a pattern or generalized course of conduct? (3) Were repeated acts committed prior to the act involving plaintiff? (4) Is there a real and substantial potential for repetition of defendant's conduct after the act involving plaintiff? (5) If the act complained of involved a single transaction, were many consumers affected or likely to be affected by it? See Hangman Ridge Training Stables, Inc., 105 Wash. 2d at 790, 719 P.2d at 537-38. Additionally, the public interest requirement can be satisfied per se “when a statute containing a legislative public interest pronouncement can be shown to have been violated.” Id., 105 Wash. 2d at 791-92, 719 P.2d at 538.
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The fourth element -- injury to the plaintiff’s business or property – has been interpreted expressly to not require “monetary damages,” but rather “will be met if the consumer's property interest or money is diminished because of the unlawful conduct even if the expenses caused by the statutory violation are minimal.” Mason, 114 Wash. 2d at 854, 792 P.2d at 148; Nordstrom, Inc., 107 Wash. 2d at 740, 733 P.2d at 211. Finally, the fifth element -- a causal link between the unfair or deceptive act and the injury suffered – was recently clarified by the decision of the Washington Supreme Court in Indoor Billboard/Washington, Inc. v. Integra Telecom of Washington, Inc., 162 Wash. 2d 59, 170 P.3d 10 (Wash. 2007) (en banc). There, the Washington Supreme Court did not adopt the “reliance/inducement” standard for causation, and instead prescribed a “proximate causation” standard requiring the plaintiff “to establish that but for the defendant's unfair or deceptive act or practice the plaintiff's injury would not have occurred.” Id., 162 Wash. 2d at 82, 170 P.3d at 21. See also id. (“‘Proximate cause’ is defined in WPI 310.07 as a ‘cause which in direct sequence [unbroken by any new independent cause] produces the injury complained of and without which such injury would not have happened. [There may be one or more proximate causes of an injury.].’”). 2.
The Importance of Injunctive Relief by “Private Attorney Generals” to Promote the Public Policy of Washington Reflected in the CPA
The relevant Washington cases also have commented on the importance of the injunctive relief obtained by “private attorney generals” under RCW 19.86.090, so as to accomplish the important public policies and the public interests that the CPA is intended to promote. As the Washington Supreme Court observed some 35 years ago, in Hockley v. Hargitt, 82 Wash. 2d 337, 350-51, 510 P.2d 1123, 1132-33 (Wash. 1973) (en banc): By the very language of the statute, plaintiff may obtain injunctive relief in addition to recovering actual damages. . . . Th[e] broad public policy [of the CPA] 16
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is best served by permitting an injured individual to enjoin future violations of RCW 19.86, even if such violations would not directly affect the individual's own private rights. . . . If each consumer victim were limited to injunctive relief tailored to his own individual interest, the fraudulent practices might well continue unchecked while a multiplicity of suits developed. On the other hand, if a single litigant is allowed to represent the public and consumer fraud is proven, the multiplicity of suits is avoided and the illegal scheme brought to a halt. Both results are in the public interest and consistent with the liberal construction of our consumer protection act. Indeed, in many private consumer protection cases the damage has already been done to the particular individual plaintiff at the time the lawsuit is filed, making ineffectual an injunction limited solely to the protection of the individual plaintiff. In Scott v. Cingular Wireless, 160 Wash. 2d 843, 161 P.3d 1000 (Wash. 2007) (en banc), the Washington Supreme Court recently elaborated on the importance of the issuance of injunctive relief requested by private individuals. Instructing that the CPA is required to “be liberally construed that its beneficial purposes may be served” – i.e., to prevent conduct “injurious to the public,” the Washington Supreme Court went on to state, 160 Wash. 2d at 853, 161 P.3d at 1005-06. Private actions by private citizens are now an integral part of CPA enforcement. See RCW 19.86.090. Private citizens act as private attorneys general in protecting the public's interest against unfair and deceptive acts and practices in trade and commerce. . . . Consumers bringing actions under the CPA do not merely vindicate their own rights; they represent the public interest and may seek injunctive relief even when the injunction would not directly affect their own private interests. . . . Again, the CPA contemplates that individual consumers will act as “private attorneys general,” harnessing individual interests in order to promote the public good. (emphasis added) (citations omitted)7 7
RCW 19.86.095 requires that “[i]n any proceeding in which there is a request for injunctive relief under RCW 19.86.090, the attorney general shall be served with a copy of the initial pleading alleging a violation of” the CPA. Consistent with this provision, Plaintiff will provide his motion papers to the Washington Attorney General after filing the instant motion. The purpose of the notice, however, is to ensure that the public interest requirement is met, and not to require the Attorney General’s involvement in the action. As Senator Phillip Talmadge stated in his response to a point of inquiry before the state Senate that passed the relevant CPA bill: “[M]any private actions would satisfy the public interest requirement even though there was no involvement by the Attorney General in particular private suits. This section is not designed to require the appearance of the Attorney General to establish the public interest requirement.” Wash. Senate Journal, April 15, 1983, Reg. Sess., Substitute House Bill No. 458. 17
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And in Dix v. ICT Group, Inc., 160 Wash. 2d 826, 161 P.3d 1016 (Wash. 2007) (en banc), issued the same day as Scott, the Washington Supreme Court expressed a comparable sentiment about the importance under the CPA of issuing injunctive relief to private consumers to protect the “public interest:” The private right of action to enforce RCW 19.86.020 is more than a means for vindicating the rights of the individual plaintiff. In order to prevail in a private action under the CPA, the plaintiff must show that the challenged acts or practices affect the public interest. . . . That the private right of action is for the purpose of enforcement for the public as a whole is also demonstrated by the fact that a private consumer can obtain injunctive relief even if that injunction would not affect that particular consumer's private interests[.]8 (emphasis added) 3.
A Claim under the CPA Can Be Asserted on Behalf of a Nationwide Class in Proper Circumstances
Plaintiff is aware of only two cases under Washington law that address the issue whether the CPA can be applied nationwide. Both are decisions of the Washington Court of Appeals holding that the CPA can apply both to Washington residents and non-residents with respect to unfair or deceptive conduct originated by a Washington business within Washington State. The first is the published decision of the Washington Court of Appeals in Schnall v. AT & T Wireless Services, Inc., 139 Wash. App. 280, 161 P.3d 395 (Ct. App. Div. 1 2008), review granted, 163 Wash. 2d 1022, 185 P.3d 1194 (Wash. Apr. 30, 2008). Schnall involved nationwide class claims by a number of plaintiffs from a number of states including Washington, California, Florida and New Jersey. The Court of Appeals affirmed the holding of the trial court that “the legislature intended that the CPA regulate Washington businesses 8
Just last month, in Jermyn v. Best Buy Stores, L.P., 2009 WL 773328 at *15 (S.D.N.Y. March 19, 2009) (CM), this Court similarly recognized that “[t]he state of New York place[s] a high value on this type of injunctive relief” by authorizing “any person” to seek it under New York General Business Law § 349 -- the deceptive practices statute analogous to the CPA. 18
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whether their conduct affects Washington or non-Washington consumers.” Id., 139 Wash. App. at 292, 161 P.3d at 402. In so holding, the Court of Appeals approved of the application of the “most significant contacts” analysis set out, inter alia, in Restatement (Second) of Conflict of Laws §§ 145, 148 (1971), and described the basis for its affirmance of the trial court as follows, 139 Wash. App. at 294, 161 P.3d at 402-403: Here, the trial court found that the most significant relationships were in Washington because all of the marketing materials and service agreements originated in Washington at the direction of Washington employees. All of the billing and disclosure decisions were made by AT&T employees in Washington. All relevant evidence and witnesses are in Washington. Washington has a strong interest in regulating the activities of Washington businesses. And most importantly, as a Washington business, AT&T is subject to Washington law. These are significant factors which the trial court correctly applied to conclude that the Washington CPA applies to all of the appellants' CPA claims. The other decision of which Plaintiff is aware is also a decision of the Washington Court of Appeals, Division 1, in Curtis v. Northern Life Ins. Co., 147 Wash. App. 1030, 2008 WL 4927365 (Ct. App. Div. 1 Nov. 17, 2008). Curtis was not designated by the Court of Appeals for publication as “precedential” under RCW 2.06.040, but is based on Schnall and holds the same as Schnall with respect to the reach of the CPA to non-residents in appropriate circumstances. 2008 WL 4927365 at *10. ARGUMENT I.
THE STANDARDS GOVERNING PRELIMINARY INJUNCTION
PLAINTIFF’S
MOTION
FOR
A
This Court has written many times on the requirements for granting a preliminary injunction: The standards for granting a preliminary injunction are irreparable injury and either a likelihood of success on the merits or a sufficiently serious question going to the merits coupled with a balancing of the equities favoring the party seeking injunctive relief.
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Software AG, Inc. v. Consist Software Solutions, Inc., 2008 WL 563449 at *20 (Feb. 21, 2008 S.D.N.Y.) (CM). See also, e.g., Tang Capital Partners, LP v. Cell Therapeutics, Inc., 591 F. Supp. 2d 666, 670 (S.D.N.Y. 2008) (CM); Dodge v. County of Orange, 208 F.R.D. 79, 86 (S.D.N.Y. 2002) (CM); Christie-Spencer Corp. v. Hausman Realty Co., Inc., 118 F. Supp. 2d 408, 417-18 (S.D.N.Y. 2000) (CM). Several other nuances are appropriately considered in connection with Plaintiff’s motion. First, in connection with a motion for a preliminary injunction seeking to enforce “the public interest,” this Court observed in Christie-Spencer Corp., 118 F. Supp. 2d at 418: Although [the standard for a preliminary injunction] does not explicitly mention the public interest . . . [the Second Circuit] ha[s] recognized that, as a court of equity, [it] “may go much further both to give or to withhold relief in furtherance of the public interest than where only private interests are involved.” . . . Nonetheless, the burden rests with the plaintiff to establish that he is entitled to the relief sought. (citations omitted) Second, because Plaintiff seeks a “mandatory injunction” which would require Defendant to comply with the federal labeling requirements going forward and thus seeks to “disturb the status quo prior to final adjudication . . . a plaintiff must show a clear and substantial likelihood of success on the merits.” Id. Finally, Plaintiff’s motion may or may not require the Court to hold a hearing. As a general matter, a hearing is required where the essential facts are in dispute, although the rule is not mandatory when the written record or the lack of credibility issues renders the hearing unnecessary. Dodge v. County of Orange, 208 F.R.D. at 86.
Similarly, a hearing is
unnecessary if the Court determines that the moving party has failed to meet the burden of establishing irreparable harm. Id.
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PLAINTIFF’S MOTION FOR A PRELIMINARY INJUNCTION SHOULD BE GRANTED BY THE COURT A.
Plaintiff Has Established The Existence Of Irreparable Harm
The public interest at stake in this case has been fully set out in the Preliminary Statement, supra. First, Congress has expressed a strong public interest under the FDCA to “promote honesty and fair dealing in the interest of consumers.” See FDCA § 401, 21 U.S.C. § 341, supra. Of comparable importance, Congress enacted the FPLA because it determined, inter alia, that “[i]nformed consumers are essential to the fair and efficient functioning of a free market economy,” and that “[p]ackages and their labels should enable consumers to obtain accurate information as to the quantity of the contents and should facilitate value comparisons.” 15 U.S.C. § 1451, supra. And finally, the Washington legislature was equally clear about the important public purpose for its enactment of the CPA: “The legislature hereby declares that the purpose of this act is to complement the body of federal law governing . . . unfair, deceptive, and fraudulent acts or practices in order to protect the public and foster fair and honest competition.” See RCW 19.86.920, supra. Thus, this case is not merely about monetary damages, although monetary damages are one aspect of the impact of Defendant’s unlawful conduct. In a situation like this, the ongoing failure of Defendant to comply with the federal labeling regulations is expressly prohibited (and unlawful) conduct injurious not just to Defendant’s customers but the public and society at large. That is why the CPA, RCW 19.86.090, supra, expressly authorizes “[a]ny person who is injured in his or her business or property by a violation of RCW 19.86.020 . . . [to] bring a civil action in the superior court to enjoin further violations.” In fact, this Court has already considered the propriety of injunctive relief in a prior case involving unfair and deceptive practices by a defendant. See F.T.C. v. Five-Star Auto Club, Inc., 97 F. Supp. 2d 502, 525, 539 (S.D.N.Y. 2000) (CM). In that case, the Federal 21
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As the federal agency responsible for
enforcing § 5 of the FTC Act, 15 U.S.C. § 45(a), which prohibits “unfair or deceptive acts or practices in or affecting commerce,” the FTC sought a permanent injunction to prevent the defendant from continuing to violate a prior temporary injunction entered in the action, and to prevent additional unfair and deceptive conduct going forward. 97 F. Supp. 2d at 525. This Court had no problem finding that the facts of that case as applied to the law supported the issuance of the requested injunctive relief. Id. at 539. The CPA is expressly intended to accomplish the same result that the FTC accomplished. See RCW 19.86.920, supra. B.
Plaintiff Has Shown “A Clear And Substantial Likelihood Of Success On The Merits” 1.
Defendant is Violating the Labeling Requirements of the FDCA and the FPLA
Defendant’s “Shrimp Tray with Cocktail Sauce” is nothing but a less than “16 oz/one pound” “shrimp cocktail” for which Defendant is required, but has uniformly failed, to state the net weight of the shrimp on the label under 21 C.F.R. § 102.54, supra. First, the Shrimp Tray is uniformly described as a “SHRIMP CKTL” on every receipt of purchase. Second the Shrimp Tray, of which the two main “characterizing ingredients” are shrimp and cocktail sauce, fits numerous definitions of “shrimp cocktail” in the various dictionaries on the internet -- all of which confirm the “common name” of the product.9 Third, internet websites with stock photographs of “shrimp cocktails” include many pictures of the larger shrimp 9
E.g., English Collins Dictionary, http://dictionary.reverso.net/englishcobuild/shrimp%20cocktail (“a dish that consists of shrimp, salad and a sauce. It is usually eaten at the beginning of the meal.”) Wikipedia, http://en.wikipedia.org/wiki/Shrimp_cocktail (“seafood dish consisting of cooked, peeled, and chilled shrimp . . . and cocktail sauce, usually served as an hors d'oeuvre”); Longman Dictionary of Contemporary English, http://www.ldoceonline.com/dictionary/shrimp-cocktail (“shrimps without their shells that are cooked and put in a pink sauce, and eaten cold before the main part of a meal”); Dictionary.com, http://dictionary.reference.com/browse/shrimp+cocktail (“a cocktail of cold cooked shrimp and a sauce”). 22
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rings that are substantially the same as Defendant’s Shrimp Tray -- including a “Shrimp Platter” on Shutterstock.com that is virtually identical except for its somewhat smaller size. See
http://www.shutterstock.com/pic-19779979-shrimp-platter.html;
See
generally,
Fotosearch, http://www.fotosearch.com/photos-images/shrimp-cocktail.html. It also is indisputable that Defendant is violating the labeling requirements of 21 C.F.R. § 102.5(b)(1), supra, which separately requires the label to state the percentage of the shrimp (the “characterizing ingredient") to the total product on a weight-weight basis “when the proportion of such ingredient(s) or component(s) in the food has a material bearing on price or consumer acceptance or when the labeling or the appearance of the food may otherwise create an erroneous impression that such ingredient(s) or component(s) is present in an amount greater than is actually the case.” 2.
Defendant’s Conduct Is an “Unfair or Deceptive Act or Practice” in Violation of the CPA
Nor can there be any dispute that Defendant’s conduct satisfies the five requirements for a violation of the CPA: (1) an unfair or deceptive act or practice; (2) in the conduct of trade or commerce; (3) which impacts the public interest; (4) injury to the plaintiffs in their business or property; and (5) a causal link between the unfair or deceptive act and the injury suffered. E.g., Mason v. Mortgage Amer., Inc., 114 Wash. 2d at 852, 844, 792 P.2d at 147. First, Defendant’s failure to adequately label the shrimp is inherently deceptive and unfair: (i) because no customer has any real idea how much shrimp they are actually getting in a Shrimp Tray with a nationally uniform “NET WT 16 oz (1.00 lb)” label that has a material bearing on the uniform $9.99 price of the Shrimp Tray and also creates the erroneous impression that it contains more shrimp than is actually the case; and (ii) because two customers can buy the exact same product and get materially different amounts of the principal “characterizing ingredient,” and are thus precluded from making the “value 23
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comparisons” to which they are entitled under 15 U.S.C. § 1451. Nor can there be any dispute that Defendant’s conduct is in “trade or commerce” and has a broad impact “on the public interest” described at length supra -- it is nationwide. And because Defendant is describing each Shrimp Tray as having a “NET WT 16 oz (1.00 lb)” without actually weighing the shrimp and disclosing the shrimp’s weight as required, Defendant’s customers are injured by paying for more shrimp and/or receiving less shrimp than they are entitled to based on Defendant’s label, with that label and its omissions being the undisputed proximate cause of the injury caused by Defendant’s short-weighting of the Shrimp Trays. It remains to be seen if Defendant has any explanation or argument why it is not subject to the labeling requirements of the FDCA and FPLA described herein, why it is not violating the CPA, and why it should not be enjoined. The ball is now in Defendant’s court.
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CONCLUSION For all of the reasons stated herein, Plaintiff’s motion for a preliminary injunction should be granted by the Court. Alternatively, if Defendant is able to create any genuine factual dispute regarding the matters described herein, the Court should hold a hearing on the motion, preceded by any expedited discovery that may be necessary to fully develop the evidence regarding those factual issues before the Court issues its ruling. Dated: New York, New York April 21, 2009 Respectfully submitted, SANFORD WITTELS & HEISLER, LLP By:
/s/ William R. Weinstein William R. Weinstein (WW-4289) 950 Third Avenue, 10th Floor New York, NY 10022 (646) 723-2947
[email protected]
ATTORNEYS FOR PLAINTIFF AND THE CLASS OF COUNSEL: Michael L. Kelly, Esq. KIRTLAND & PACKARD 2361 Rosecrans Avenue, Fourth Floor El Segundo, CA 90245 (310) 536-1000
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