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Block v. Lifeway Foods, Inc.

United States District Court, N.D. Illinois, Eastern Division

September 6, 2017

ANDREW BLOCK, individually and on behalf of all others similarly situated, Plaintiff,
v.
LIFEWAY FOODS, INC., Defendant.

          MEMORANDUM OPINION AND ORDER

          MATTHEW F. KENNELLY UNITED STATES DISTRICT JUDGE

         Andrew Block has filed a class action complaint against Lifeway Foods, Inc., alleging that the company made fraudulent misrepresentations while marketing its kefir products. Lifeway has moved to dismiss all seven counts in Block's complaint. For the reasons stated below, the Court dismisses counts 4 and 5 and otherwise denies Lifeway's motion.

         Background

         The Court takes the facts from the allegations in Block's complaint.

         Lifeway is an Illinois corporation that manufactures and distributes products such as smoothie drinks, cheese, and supplements. The company focuses on providing probiotic and nutritious foods. Its "flagship" product is kefir, "a tart and tangy cultured milk smoothie that is high in protein, calcium, and vitamin D." Am. Compl. ¶¶ 20-21. Lifeway's website states that all of its kefir products are 99% lactose-free. Labels for its kefir products-such as the plain, low-fat kefir-likewise state that the product is 99% lactose-free. As a result, Lifeway charges $2.50 for 32 ounces of kefir, approximately the same price consumers pay for 128 ounces (a gallon) of regular milk.

         In February 2017, Block purchased Lifeway's plain, low-fat kefir from a grocery store in McHenry County. Block wished to purchase a product that contained "little to no lactose" and chose Lifeway's kefir based on the company's statements that it is 99% lactose-free. He later learned that the kefir actually contains close to 4% lactose, which is similar to the percentage of lactose in regular milk. Further, Block alleges that Lifeway knew that its plain, low-fat kefir is not 99% lactose-free and that the company deliberately made false or misleading statements while advertising the product in order to charge a premium for a lactose-free product. In doing so, Block points to a study Lifeway funded that was conducted at the Ohio State University in 2003 which allegedly determined that Lifeway's kefir drinks contained approximately 4% lactose. Id. ¶ 29.

         Block then filed this class action complaint against Lifeway. He alleges that he and others were misled by Lifeway's misrepresentations regarding its plain kefir and that they would have purchased other "99% lactose-free" products had they known Lifeway's kefir contained 4% lactose. Am. Compl. ¶ 9. Block proposes certification of three classes:

National Class: All persons within the United States who purchased and consumed the Plain Kefir from the beginning of any applicable limitations period through the date of class certification (the "National Class" or the "Class").
Consumer Fraud Multi-State Class: All persons in the States of California, Florida, Illinois, Massachusetts, Michigan, Minnesota, Missouri, New Hampshire, New Jersey, New York, Rhode Island, Washington and Wisconsin who purchased and consumed the Plain Kefir from the beginning of any applicable limitations period through the date of class certification (the "Consumer Fraud Multi-State Class").[ ]
Illinois Sub-Class: All persons in Illinois who purchased and consumed the Plain Kefir from the beginning of any applicable limitations period through the date of class certification (the "Illinois Sub-Class").

Id. ¶ 44.

         Block brings seven claims against Lifeway. In count 1, he alleges on behalf of the proposed national class that Lifeway's false statements regarding its plain kefir violate the Illinois Consumer Fraud and Deceptive Business Practices Act (ICFA). In count 2, which Block brings in the alternative to count 1, he alleges on behalf of the proposed consumer fraud multi-state class that Lifeway's false statements regarding its plain kefir violate the various consumer fraud laws of the thirteen states named in that class. In count 3, which Block brings in the alternative to counts 1 and 2, he alleges on behalf of the Illinois sub-class that Lifeway's false statements regarding its plain kefir violate the ICFA. In count 4, Block alleges on behalf of the national class and the Illinois sub-class that Lifeway breached its express warranty to consumers that its plain kefir is 99% lactose-free. In count 5, Block alleges on behalf of the national class and the Illinois sub-class that Lifeway likewise breached its implied warranties that its plain kefir was fit for its ordinary use and for its particular purpose. Am. Compl. ¶¶ 95-96. In count 6, Block alleges on behalf of the national class and the Illinois sub-class that Lifeway's misrepresentations constitute common-law fraud. In count 7, Block alleges on behalf of the national class and the Illinois sub-class that Lifeway has been unjustly enriched as the result of its fraudulent statements. Block requests injunctive relief, actual damages, punitive damages, attorneys' fees and litigation costs, and pre- and post-judgment interest.

         Discussion

         Lifeway has moved to dismiss each of the counts in Block's class action complaint. It contends that Block has failed to state a claim that would permit him to pursue certification of the national class and that he lacks standing to pursue the consumer fraud multi-state class. Lifeway also argues that Block has failed to state a claim for consumer fraud under the ICFA or for common-law fraud. The company contends that both claims for breach of warranty are deficient because Block has not alleged that Lifeway had notice of his claims, and the claim for breach of implied warranty is deficient because Block has not alleged that he was in privity with Lifeway. And Lifeway argues that the unjust enrichment claim must be dismissed because Block has alleged the existence of a contract between the parties. Finally, Lifeway asks the Court to strike Block's request for injunctive relief.

         When considering a motion to dismiss, the Court takes as true all well-pled facts and views them in the light most favorable to the plaintiff. Camasta v. Jos. A. Bank Clothiers, Inc., 761 F.3d 732, 736 (7th Cir. 2014). The plaintiff must "plead sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Crichton v. Golden Rule Ins. Co., 576 F.3d 392, 395 (7th Cir. 2009) (internal quotation marks omitted). Further, Block's fraud-based claims are subject to the heightened pleading requirements of Federal Rule of Civil Procedure 9(b) and therefore must be pled with particularity. See id.

         A. Classes

         Block proposes three classes: a national class, a consumer fraud multi-state class, and an Illinois sub-class. He also alleges three counts of statutory consumer fraud in the alternative based on each proposed class. Which of these claims proceeds will depend on which (if any) proposed class the court ultimately certifies. At this stage, Lifeway challenges Block's ability to ...


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