Case 1:12-md-02413-RRM-RLM Document 51 Filed 12/03/13 Page 1 of 61 PageID #: 797
MILBERG LLP ARIANA J. TADLER HENRY J. KELSTON One Pennsylvania Plaza New York, NY 10119 Telephone: (212) 594 5300 Facsimile: (212) 868 1229 [email protected] [email protected]
REESE RICHMAN LLP MICHAEL R. REESE KIM E. RICHMAN 875 Avenue of Americas, 18th Floor New York, NY 10001 Telephone: (212) 643 0500 Facsimile: (212) 253 4272 [email protected] [email protected]
Interim Class Counsel
UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK
) ) ) CASE NO. 1:12 MD 02413 RRM RLM ) Frito-Lay North America, Inc. “All Natural” ) AMENDED CONSOLIDATED COMPLAINT Litigation ) ) CLASS ACTION ) ) JURY TRIAL DEMANDED ) ) )
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TABLE OF CONTENTS Page PRELIMINARY STATEMENT ...... 1
I. NATURE OF THE ACTION...... 2
II. JURISDICTION AND VENUE...... 4
III. PARTIES ...... 6
A. Plaintiffs...... 6
B. Defendants ...... 10
C. Both PepsiCo and Frito Lay Actively Engage in the Advertising and Marketing of the Products as “All Natural” and Profit Therefrom...... 11
IV. FACTUAL ALLEGATIONS...... 16
A. Defendants Advertise and Market Tostitos, SunChips and Bean Dip as “All Natural”...... 16
B. GMOs Are Not Natural...... 24
C. Tostitos, SunChips and Bean Dip Are Made From GMOs ...... 27
D. Defendants Deceptively Market the Products as “All Natural” to Induce Consumers to Purchase the Products ...... 27
E. Plaintiffs Were Damaged...... 29
V. CLASS ACTION ALLEGATIONS ...... 30
A. Numerosity—Federal Rule of Civil Procedure 23(a)(1)...... 32
B. Commonality and Predominance—Federal Rule of Civil Procedure 23(a)(2) and 23(b)(3)...... 33
C. Typicality—Federal Rule of Civil Procedure 23(a)(3)...... 34
D. Adequacy of Representation—Federal Rule of Civil Procedure 23(a)(4)...... 34
E. Declaratory and Injunctive Relief—Federal Rule of Civil Procedure 23(b)(2). ...34
F. Superiority—Federal Rule of Civil Procedure 23(b)(3)...... 35
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VI. CLAIMS FOR RELIEF ...... 35
COUNT I Violation of the Magnuson Moss Warranty Act, 15 U.S.C. § 2301, et seq. (Brought on Behalf of the Nationwide Classes) ...... 35
COUNT II Violation of New York General Business Law § 349 (Deceptive Acts and Practices) (Brought on Behalf of the Nationwide Classes, NY CA FL Classes, and New York Classes)...... 37
COUNT III Violation of New York General Business Law § 350 (False Advertising(Brought on Behalf of the Nationwide Classes, NY CA FL Classes, and New York Classes)) ...... 38
COUNT IV Violation of California Business & Professions Code §§ 17500 et seq. (Brought on behalf of California Classes) ...... 39
COUNT V Violation of California Business & Professions Code §§ 17200 et seq (Brought on behalf of California Classes) ...... 40
COUNT VI Violation of the California Consumers Legal Remedies Act – Cal. Civ. Code §§ 1750 et seq. (Brought on behalf of California Classes)...... 42
COUNT VII Violation of the Florida Deceptive And Unfair Trade Practices Act § 501.201 et seq...... 44
COUNT VIII Breach of Express Warranty Under New York Law (Brought on Behalf of the Nationwide Classes, NY CA FL Classes and New York Classes) ...... 45
COUNT IX Breach of Express Warranty Under California Law (Brought on Behalf of the California Classes) ...... 46
COUNT X Breach of Express Warranty Under Florida Law (Brought on Behalf of the Florida Classes)...... 48
COUNT XI Intentional Misrepresentation Under New York Law (Brought on Behalf of the Nationwide Classes, NY CA FL Classes and New York Classes) ...... 49
COUNT XII Intentional Misrepresentation Under California Law (Brought on Behalf of the California Classes) ...... 50
COUNT XIII Intentional Misrepresentation Under Florida Law (Brought on Behalf of the Florida Classes)...... 51
REQUEST FOR RELIEF ...... 52
JURY DEMAND...... 53
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PRELIMINARY STATEMENT
This Amended Consolidated Complaint is brought against PepsiCo, Inc. (which has its
headquarters in New York) and Frito Lay North America, Inc. (collectively “Defendants”) by
individual consumers residing in New York, California and Florida, alleging that Defendants
deceptively and misleadingly marketed certain products as “all natural” when, in fact, those
products contained unnatural, genetically modified organisms. Plaintiffs bring this action on
behalf of themselves and nationwide classes seeking declaratory and injunctive relief pursuant to
Federal Rules of Civil Procedure 23(a) and 23(b)(2) for violations of the Magnuson Moss
Warranty Act and the statutory and common law of the State of New York, and monetary
damages pursuant to Federal Rules of Civil Procedure 23(a) and 23(b)(3) for violations of the
Magnuson Moss Warranty Act and the statutory and common law of the State of New York.
Alternatively, Plaintiffs bring this action on behalf of themselves and a multi state class
of residents of the states of New York, California and Florida seeking declaratory and injunctive
relief pursuant to Federal Rules of Civil Procedure 23(a) and 23(b)(2) for violations of the
Magnuson Moss Warranty Act and the statutory and common law of the State of New York, and
a multi state class of residents of the states of New York, California and Florida seeking
monetary damages pursuant to Federal Rules of Civil Procedure 23(a) and 23(b)(3) for violations
of the Magnuson Moss Warranty Act and the statutory and common law of the State of New
York.
Alternatively, Plaintiff Shake brings this action on behalf of himself and a class of New
York residents seeking declaratory and injunctive relief pursuant to Federal Rules of Civil
Procedure 23(a) and 23(b)(2), and a class of New York residents seeking monetary damages
pursuant to Federal Rules of Civil Procedure 23(a) and 23(b)(3), for violations of the statutory
and common law of the State of New York; Plaintiffs Gengo and Zuro bring this action on behalf
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of themselves and a class of California residents seeking declaratory and injunctive relief
pursuant to Federal Rules of Civil Procedure 23(a) and 23(b)(2), and a class of California
residents seeking monetary damages pursuant to Federal Rules of Civil Procedure 23(a) and
23(b)(3), for violations of the statutory and common law of the State of California; and Plaintiff
Lawson brings this action on behalf of herself and a class of Florida residents seeking
declaratory and injunctive relief pursuant to Federal Rules of Civil Procedure 23(a) and 23(b)(2),
and a class of Florida residents seeking monetary damages pursuant to Federal Rules of Civil
Procedure 23(a) and 23(b)(3), for violations of the statutory and common law of the State of
Florida.1
The allegations in this Amended Consolidated Complaint are based on the personal
knowledge of each of the Plaintiffs as to themselves, and on information and belief as to all other
matters.
I. NATURE OF THE ACTION
1. Plaintiffs allege that from January 1, 2010 through the present (the “Class
Period”), Defendants deceptively and misleadingly marketed certain products as “all natural”
when, in fact, those products contained unnatural, genetically modified organisms (“GMOs”).2
2. Representations that products are “all natural” are material to consumers, as
Defendants have expressly acknowledged. As John Compton, CEO of PepsiCo Americas Foods,
1 As used herein, “Classes” refers to the nationwide, multi state and statewide classes collectively.
2 As used herein, “genetically modified” refers to the use of molecular biology techniques, such as recombinant DNA techniques, to delete genes or to transfer genes for particular qualities from one species to another. In contrast to conventional breeding techniques, modern molecular biology techniques permit the insertion into an organism of genetic material from an unrelated species, as the DNA of a fish into a tomato. See Ed Wallis, Fish Genes into Tomatoes: How the World Regulates Genetically Modified Foods, 80 N.D. L. Rev. 421 (2004).
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told an industry conference in 2010: “We have talked extensively to consumers about this idea,
and they come back and tell us the number one motivation for purchase is products that claim
to be all natural.” (Emphasis added.)
3. The deceptively and misleadingly marketed products include Tostitos Restaurant
Style Tortilla Chips, Tostitos Bite Size Rounds Tortilla Chips, Tostitos Crispy Rounds Tortilla
Chips, Tostitos Multigrain Tortilla Chips, Tostitos Scoops Tortilla Chips, Tostitos Multigrain
Scoops Tortilla Chips, Tostitos Restaurant Style with a Hint of Lime Flavored Tortilla Chips,
Tostitos Restaurant Style with a Hint of Jalapeno Flavored Tortilla Chips, Tostitos Restaurant
Style with a Hint of Pepper Jack Flavored Tortilla Chips, Tostitos Artisan Recipes Fire Roasted
Chipotle Flavored Tortilla Chips, Tostitos Artisan Recipes Baked Three Cheese Queso Flavored
Tortilla Chips, Tostitos Artisan Recipes Roasted Garlic and Black Bean Flavored Tortilla Chips,
Tostitos Artisan Recipes Toasted Southwestern Spices Flavored Tortilla Chips (collectively
referred to herein as “Tostitos”); SunChips Original Flavored Multigrain Snacks, SunChips
Garden Salsa Flavored Multigrain Snacks, SunChips French Onion Flavored Multigrain Snacks,
and SunChips Harvest Cheddar Flavored Multigrain Snacks, SunChips Jalapeno Jack Flavored
Multigrain Snacks (collectively referred to herein as “SunChips”); and Fritos Bean Dip and
Fritos Hot Bean Dip (collectively referred to as “Bean Dip”). Tostitos, SunChips and Bean Dip
are collectively referred to herein as the “Products.”
4. Throughout the Class Period, Defendants have systematically marketed and
advertised the Products as “all natural” on each package of Tostitos, SunChips and Bean Dip; on
the Frito Lay website; and in print and television advertisements such that any United States
consumer who purchased, or today or in the future purchases the Products is exposed to
Defendants’ “all natural” claim.
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5. This claim is deceptive and misleading because the Products are not “all natural.”
Specifically, the Products contain ingredients made from GMOs.
6. GMOs are organisms in which the genetic material (DNA) has been altered in a
way that does not occur naturally, allowing the organism to exhibit traits that would not appear
in nature. “For example, by transferring specific genetic material from a bacterium to a plant,
scientists can create plants that produce pesticidal proteins or other chemicals that the plant could
not previously produce. Using this technology, scientists have modified corn, cotton, and
potatoes to produce a pesticidal protein that is toxic when ingested by specific insect pests.”
EPA's Regulation of Biotechnology for Use in Pest Management, January 2012, available at
http://www.epa.gov/oppbppd1/biopesticides/reg_of_biotech/eparegofbiotech.htm.
7. Accordingly, Defendants mislead and deceive reasonable consumers, including
the named Plaintiffs and the other members of the Classes, by portraying a product containing
non natural, genetically modified ingredients as “all natural.”
8. Defendants’ conduct harms consumers by inducing them to purchase and consume
the Products containing GMOs on the false premise that the products are “all natural,” and by
inducing consumers to pay a premium price for the Products.
II. JURISDICTION AND VENUE
9. This Court has subject matter jurisdiction over this consolidated action under the
Class Action Fairness Act of 2005, 28 U.S.C. §§ 1332(a) and 1332(d) because, as to each
proposed nationwide class (and each alternatively proposed class consisting of residents of New
York, California and Florida), (1) there are over 100 members in the proposed class, (2) the
amount in controversy exceeds $5 million exclusive of interest and costs, and (3) at least one
member of the proposed class (Julie Gengo, California; Valarie Zuro, California; Deborah
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Lawson, Florida) is a resident of a state other than Defendants’ states of citizenship (New York
and Texas).
10. This Court also has subject matter jurisdiction under 28 U.S.C. § 1331 over
Plaintiffs’ Magnuson Moss Warranty Act claim because it arises under federal law.
11. This Court has personal jurisdiction over PepsiCo, Inc. (“PepsiCo”) because it is
headquartered in Purchase, NY. Additionally, PepsiCo intentionally avails itself of the markets
in New York; operates and manages facilities and warehouses in New York; advertises, markets
and sells the Products as “all natural” in New York; and has sufficient contacts with this District
such that it is fair and just for PepsiCo to adjudicate this dispute here.
12. This Court has personal jurisdiction over Frito Lay North America, Inc. (“Frito
Lay”) because a substantial portion of the wrongdoing alleged by Plaintiffs occurred in New
York; Frito Lay intentionally avails itself of the markets in New York; operates and manages
facilities and warehouses in New York; advertises, markets and sells the Products as “all natural”
in New York; and has sufficient contacts with this District such that it is fair and just for Frito
Lay to adjudicate this dispute here.
13. Venue is proper in this District because Defendants are subject to personal
jurisdiction here, a substantial portion of Defendants’ alleged wrongdoing occurred here,
PepsiCo is located in New York, and many of the relevant documents and witnesses with
knowledge of Defendants’ alleged wrongdoing are believed to be located here.
14. Pursuant to a stipulation dated February 15, 2012, the Parties in Gengo v. Frito
Lay North America, Inc., No.11 10322 SVW (FMOx), agreed that transfer to the Eastern District
of New York, where the Shake v. Frito Lay North America, Inc. and PepsiCo, Inc., No.12 cv
00408 RRM, action was pending, would serve the convenience of the Parties and witnesses, and
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the interests of justice as contemplated by 28 U.S.C. § 1404(a). The Honorable Steven V.
Wilson of the United States District Court for the Central District of California, Western
Division, found such transfer appropriate under 28 U.S.C. § 1404(a), and by order dated
February 15, 2012, transferred the Gengo action to the Eastern District of New York.
15. Pursuant to a stipulation dated February 21, 2012, the Parties in Zuro v. Frito Lay
North America, Inc., No.11 cv 06672 JW, agreed that transfer to the Eastern District of New
York, where the Shake v. Frito Lay North America, Inc. and PepsiCo, Inc., No.12 cv 00408
RRM, action was pending, would serve the convenience of the Parties and witnesses, and the
interests of justice as contemplated by 28 U.S.C. § 1404(a). The Honorable James Ware of the
United States District Court for the Northern District of California, San Francisco Division,
found such transfer appropriate under 28 U.S.C. § 1404(a), and by order dated February 22,
2012, transferred the Zuro action to the Eastern District of New York.
16. On March 16, 2012, this Court ordered the consolidation of the Shake, Gengo and
Zuro actions under the caption shown above.
III. PARTIES
A. Plaintiffs
17. Plaintiff Chris Shake is a consumer residing in Brooklyn, New York. Shake
purchased Tostitos, SunChips and Bean Dip for his personal consumption approximately once
per month in 2011 at Key Foods, Associated Supermarkets, and various convenience stores
located in Brooklyn. During that period all of those products contained the representations on
their packages and in related advertising that they were “all natural.” Shake was exposed to
Defendants’ claims that the Products were “all natural” through Defendants’ product packaging,
to which he was exposed approximately once per month in stores and more frequently in his
home. Shake believed Defendants’ representations that the Tostitos, SunChips and Bean Dip he
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purchased were “all natural.” He relied on those representations in making his purchase
decisions and would not have purchased the products had he known they were not all natural
because they contained GMOs. Shake paid for “all natural” products, but he received products
that were not all natural; specifically, he received products made from corn that was genetically
manipulated in a laboratory to exhibit traits that corn does not possess in nature. The products
Shake received were worth less than the products for which he paid. Shake was injured in fact
and lost money as a result of Defendants’ improper conduct.
18. Plaintiff Julie Gengo is a consumer residing in Richmond, California. From
approximately 2010 until September 2011, Gengo purchased Tostitos and SunChips
approximately once per month for her own and her family’s consumption. Specifically, Gengo
purchased Tostitos Multigrain Tortilla Chips, Tostitos Scoops Tortilla Chips, Tostitos Artisan
Recipes Fire Roasted Chipotle Tortilla Chips, SunChips Original flavored Multigrain Snacks,
SunChips French Onion Flavored Multigrain Snacks, and SunChips Harvest Cheddar Flavored
Multigrain Snacks. During that period all of those products contained the representations on
their packages and in related advertising that they were “all natural.” Gengo became aware of
Defendants’ “all natural” representations through Defendants’ print media advertising and
product packaging, to which she was exposed approximately once per week in stores and more
frequently in her home. Gengo believed Defendants’ representations that the Tostitos and
SunChips she purchased were “all natural.” She relied on those representations in making her
purchase decisions and would not have purchased the products had she known they were not “all
natural” because they contained GMOs. Gengo paid for “all natural” products, but she received
products that were not all natural; specifically, she received products made from corn that was
genetically manipulated in a laboratory to exhibit traits that corn does not possess in nature. The
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products Gengo received were worth less than the products for which she paid. Gengo was
injured in fact and lost money as a result of Defendants’ improper conduct.
19. Plaintiff Valarie Zuro is a consumer residing in San Francisco, California. From
2010 until December 2011, Zuro purchased Tostitos and SunChips approximately once per
month for her own consumption. Specifically, Zuro purchased Tostitos Restaurant Style Tortilla
Chips, Tostitos Crispy Rounds Tortilla Chips, Tostitos Multigrain Tortilla Chips, Tostitos
Scoops Tortilla Chips, Tostitos Restaurant Style with a Hint of Lime Tortilla Chips, Tostitos
Artisan Recipes Fire Roasted Chipotle Tortilla Chips, SunChips Original flavored Multigrain
Snacks, SunChips Garden Salsa Flavored Multigrain Snacks, Sun Chips French Onion Flavored
Multigrain Snacks, and SunChips Harvest Cheddar Flavored Multigrain Snacks. During that
period, all of those products contained the representations on their packages and in related
advertising that they were “all natural.” Zuro became aware of these representations through
Defendants’ print media advertising and product packaging, to which she was exposed
approximately once per week. Zuro believed Defendants’ representations that the Tostitos and
SunChips she purchased were “all natural.” She relied on those representations in making her
purchase decisions and would not have purchased the products had she known they were not “all
natural” because they contained GMOs. Zuro paid for “all natural” products, but she received
products that were not all natural; specifically, she received products made from corn that was
genetically manipulated in a laboratory to exhibit traits that corn does not possess in nature. The
products Zuro received were worth less than the products for which she paid. Zuro was injured
in fact and lost money as a result of Defendants’ improper conduct.
20. Plaintiff Deborah Lawson is a consumer residing in Perry, Florida. Lawson
purchased SunChips approximately once per week for her own and her family’s consumption
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beginning in the first half of 2010 for a period of about six months. Specifically, Lawson
purchased SunChips Original Flavored Multigrain Snacks, SunChips French Onion Flavored
Multigrain Snacks, and SunChips Harvest Cheddar Flavored Multigrain Snacks at the Walmart
Supercenters in Tallahassee, FL and Perry, FL. During that period, all of those products
contained the representations on their packages and in related advertising that they were “all
natural”. Lawson became aware of Defendant’s “all natural” representations through
Defendant’s product packaging, to which she was exposed approximately once per week at
Walmart and on an ongoing basis in her home. Lawson believed Defendant’s representations that
the SunChips she purchased were “all natural”. She relied on those representations in making her
purchase decisions and would not have purchased the Products had she known they were not “all
natural” because they contained GMOs. Lawson paid for “all natural” products, but she received
products that were not all natural; specifically, she received products made from corn that was
genetically manipulated in a laboratory to exhibit traits that corn does not possess in nature. The
products Lawson received were worth less than the products for which she paid. Lawson was
injured in fact and lost money as a result of Defendant’s improper conduct.
21. Plaintiffs were damaged, in an amount to be determined at trial, as a result of
Defendants’ misrepresentations of the Products as “all natural.” Plaintiffs paid for products they
believed to be “all natural,” but did not receive products that were “all natural.” The products
Plaintiffs received were worth less than the products for which they paid. Further, Plaintiffs paid
a premium price for the Products over the costs of competitive products not bearing an “all
natural” label.
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B. Defendants
22. Defendant PepsiCo, Inc., is a Delaware Corporation with headquarters in
Purchase, NY. PepsiCo is the parent company of Frito Lay, which it holds as a wholly owned
subsidiary. PepsiCo markets, advertises and distributes the Products.
23. PepsiCo is a world leader in convenient snacks, foods, and beverages, with net
revenues of over $60 billion and over 285,000 employees. PepsiCo owns some of the world’s
most popular brands, including Pepsi