Business Law

Pelman ex rel. Pelman v. McDonald's Corp.* 396 F.3d 508 C.A.2 (N.Y.),2005. Jan 25, 2005 (Approx. 4 pages)

United States Court of Appeals,

Second Circuit.

Ashley PELMAN, a child under the age of 18 years, by her mother and natural

guardian, Roberta PELMAN, Roberta Pelman, Individually, Jazlen Bradley, a child

under the age of 18 years, by her father and natural guardian, Isreal Bradley,

and Isreal Bradley, Individually, Plaintiffs-Appellants,

v.

MCDONALD'S CORPORATION, McDonald's Restaurants of New York, Inc., McDonald's,

1865 Bruckner Boulevard, Bronx, New York and McDonald's, 2630 Jerome Avenue,

Bronx, New York, Defendants-Appellees.

No. 03-9010.

Argued: Oct. 13, 2004.

Decided: Jan. 25, 2005.

Background: Two minor customers of fast food restaurant chain sued chain claiming consumption of

chain's food caused obesity and related serious health problems, and that chain violated false advertising

and deceptive trade practices provisions of the New York Consumer Protection Act. The District Court,

Sweet, J., 237 F.Supp.2d 512, dismissed complaint with leave to amend. Following amendment,

restaurant chain moved to dismiss. The United States District Court for the Southern District of New

York, Robert W. Sweet, J., 2003 WL 22052778, again dismissed. Customers appealed.

Holding: The Court of Appeals, Rakoff, District Judge, sitting by designation, held that allegations stated

claim against chain for violation of deceptive trade practices provision of New York Consumer Protection

Act.

Vacated and remanded.

Allegations by minor customers of fast food restaurant chain that alleged deceptive trade practices by

chain, including chain's failure to disclose its use of certain additives and food processing methods, and

its failure to provide nutritional information about its food, caused customers' obesity and related adverse

health problems stated claim against chain for violation of deceptive trade practices provision of New

York Consumer Protection Act, despite customers' failure to disclose the other foods they ate, how much

they exercised, and whether they had family history of health problems alleged to have been caused by

chain's food; missing information was appropriately the subject of discovery, rather than what was

required to satisfy notice-pleading requirements.

RAKOFF, District Judge.

In this diversity action, plaintiffs Ashley Pelman and Jazlen Bradley, by their respective parents, Roberta

Pelman and Isreal Bradley, appeal from the dismissal, pursuant to Rule 12(b)(6), Fed.R.Civ.P., of Counts

I-III of their amended complaint. See Pelman v. McDonald’s Corp., 2003 WL 22052778 (S.D.N.Y. Sept.

3, 2003), 2003 U.S. Dist. LEXIS 15202 ("Pelman II "). [FN1] Each of the these counts purports to *510

allege, on behalf of a putative class of consumers, that defendant McDonald's Corporation [FN2] violated

both § 349 and § 350 of the New York General Business Law, commonly known as the New York

Consumer Protection Act, during the years 1987 through 2002.

* Parts of the Pelman case were reformatted for easier reading.

Specifically, Count I alleges that the combined effect of McDonald's various promotional representations

during this period was to create the false impression that its food products were nutritionally beneficial

and part of a healthy lifestyle if consumed daily. Count II alleges that McDonald's failed adequately to

disclose that its use of certain additives and the manner of its food processing rendered certain of its foods

substantially less healthy than represented.

Count III alleges that McDonald's deceptively represented that it would provide nutritional information to

its New York customers [FN3] when in reality such information was not readily available at a significant

number of McDonald's outlets in New York visited by the plaintiffs and others.

The amended complaint further alleges that as a result of these deceptive practices, plaintiffs, who ate at

McDonald's three to five times a week throughout the years in question, were "led to believe[ ] that

[McDonald's] foods were healthy and wholesome, not as detrimental to their health as medical and

scientific studies have shown, ... [and] of a beneficial nutritional value," and that they "would not have

purchased and/or consumed the Defendant's aforementioned products, in their entire[t]y, or on such

frequency but for the aforementioned alleged representations and campaigns." Finally, the amended

complaint alleges that, as a result, plaintiffs have developed "obesity, diabetes, coronary heart disease,

high blood pressure, elevated cholesterol intake, related cancers, and/or other detrimental and adverse

health effects ...."

What is missing from the amended complaint, however, is any express allegation that any plaintiff

specifically relied to his/her detriment on any particular representation made in any particular McDonald's

advertisement or promotional material. The district court concluded that, with one exception, the absence

of such a particularized allegation of reliance warranted dismissal of the claims under § 350 of the New

York General Business Law, which prohibits false advertising. Pelman II, 2003 U.S. Dist. LEXIS 15202,

at *25-*26. As to the exception--involving McDonald's representations that its French fries and hash

browns are made with 100% vegetable oil and/or are cholesterol-free-- the district *511 court found that,

while the amended complaint might be read to allege implicit reliance by plaintiffs on such

representations, see id., at *30, the representations themselves were objectively nonmisleading, see id., at

*35.

[1] Although plaintiffs' notice of appeal states that they challenge the judgment "dismissing the Plaintiffs'

Amended Complaint," their brief on appeal contains no argument as to why the district court's dismissal

of the claims asserted under § 350 was incorrect. Accordingly, we regard any challenge to the dismissal

of the § 350 claims as abandoned. See generally Otero v. Bridgeport Hous. Auth., 297 F.3d 142, 144 (2d

Cir.2002); Day v. Morgenthau, 909 F.2d 75, 76 (2d Cir.1990); Fed. R.App. P. 28(a)(9).

[2] [3] Plaintiffs' appellate brief does, however, challenge the district court's dismissal of the claims under

§ 349 of the New York General Business Law, which makes unlawful "[d]eceptive acts or practices in the

conduct of any business, trade or commerce or in the furnishing of any service in this state." Unlike a

private action brought under § 350, a private action brought under § 349 does not require proof of actual

reliance. See Stutman v. Chem. Bank, 95 N.Y.2d 24, 29, 709 N.Y.S.2d 892, 731 N.E.2d 608 (2000).

[FN4] Additionally, because § 349 extends well beyond common-law fraud to cover a broad range of

deceptive practices, see Gaidon, 94 N.Y.2d at 343, 704 N.Y.S.2d 177, 725 N.E.2d 598, and because a

private action under § 349 does not require proof of the same essential elements (such as reliance) as

common-law fraud, an action under § 349 is not subject to the pleading-with-particularity requirements of

Rule 9(b), Fed.R.Civ.P., but need only meet the bare-bones notice-pleading requirements of Rule 8(a),

Fed.R.Civ.P., see generally Swierkiewicz v. Sorema N.A., 534 U.S. 506, 513, 122 S.Ct. 992, 152 L.Ed.2d

1 (2002); Leatherman v. Tarrant County Narcotics Intelligence and Coordination Unit, 507 U.S. 163,

168, 113 S.Ct. 1160, 122 L.Ed.2d 517 (1993).

FN4. Originally this was because the statute, which applies to a broad range of deceptive practices

regardless of the perpetrator's intent, was only enforceable by the Attorney General. See Blue Cross and

Blue Shield of N.J., Inc. v. Philip Morris, Inc., 3 N.Y.3d 200, 205, 785 N.Y.S.2d 399, 818 N.E.2d 1140

(2004); Gaidon v. Guardian Life Ins. Co. of Am., 94 N.Y.2d 330, 343, 704 N.Y.S.2d 177, 725 N.E.2d 598

(1999); N.Y. Gen. Bus. Law §§ 349(a)-(b). In 1980, however, § 349 was amended to provide a private

right of action for "any person who has been injured by reason of any violation of this section." See N.Y.

Gen. Bus. Law § 349(h). While the "by reason of" language might have been read to require reliance, as

was the case with respect to the comparable language of § 350-e(3) permitting a private right of action

under § 350, the New York courts, in keeping with the prophylactic purposes of § 349, instead

required that a plaintiff seeking to recover under § 349 show only that the practice complained of was

objectively misleading or deceptive and that he had suffered injury "as a result" of the practice. See

Stutman. 95 N.Y.2d at 29, 709 N.Y.S.2d 892, 731 N.E.2d 608.

[4] Although the district court recognized that § 349 does not require proof of reliance, the district court

nonetheless dismissed the claims under § 349 because it concluded that "[p]laintiffs have failed, however,

to draw an adequate causal connection between their consumption of McDonald's food and their alleged

injuries." Pelman II, 2003 U.S. Dist. LEXIS 15202, at * 30. Thus, the district court found it fatal that the

complaint did not answer such questions as:

What else did the plaintiffs eat? How much did they exercise? Is there a family history of the diseases

which are alleged to have been caused by McDonald's *512 products? Without this additional

information, McDonald's does not have sufficient information to determine if its foods are the cause of

plaintiffs' obesity, or if instead McDonald's foods are only a contributing factor.

Id. at *33. This, however, is the sort of information that is appropriately the subject of discovery, rather

than what is required to satisfy the limited pleading requirements of Rule 8(a), Fed.R.Civ.P. As a

unanimous Supreme Court stated in Swierkiewicz:

This simplified notice pleading standard [of Rule 8(a) ] relies on liberal discovery rules and summary

judgment motions to define disputed facts and issues and to dispose of unmeritorious claims. "The

provisions for discovery are so flexible and the provisions for pretrial procedure and summary judgment

so effective, that attempted surprise in federal practice is aborted very easily, synthetic issues detected,

and the gravamen of the dispute brought frankly into the open for the inspection of the court."

534 U.S. at 512-13, 122 S.Ct. 992 (quoting 5 Charles A. Wright & Arthur R. Miller, Federal Practice and

Procedure § 1202, at 76 (2d ed.1990)) (internal citations omitted). So far as the § 349 claims are

concerned, the amended complaint more than meets the requirements of Rule 8(a). [FN5]

FN5. Although the district court also dismissed the § 349 claims on the ground that plaintiffs' allegations

of a generalized campaign to create a false impression were vague and conclusory, see Pelman II, 2003

U.S. Dist. LEXIS 15202, at *22-*26, the cure for such deficiencies, in a claim not required to be plead

with particularity, is a motion for a more definite statement under Rule 12(e), Fed.R.Civ.P., rather than

dismissal, see Swierkiewicz, 534 U.S. at 514-15, 122 S.Ct. 992. As for the district court's finding that

McDonald's representations regarding its French fries and hash browns were objectively nonmisleading,

the § 349 claims are not subject to dismissal on that basis given that the amended complaint alleges the

deceptiveness of many other representations.

Accordingly, the district court's dismissal of those portions of Counts I-III of the amended complaint as

alleged violations of § 349 is VACATED, and the case is REMANDED for further proceedings

consistent with this opinion.

C.A.2 (N.Y.),2005.

Pelman ex rel. Pelman v. McDonald's Corp.

396 F.3d 508