The manufacturers of Skinnygirl Margarita, a drink conceived by one of the “Real Housewives of New York City,” are facing a class-action suit in New Jersey that alleges the product is falsely claimed to be an all-natural, preservative-free and healthy alternative to other margarita mixes.
Contrary to company advertisements, the drink contains sodium benzoate, a chemical preservative that — when mixed with citric acid in the lime juice commonly added to margaritas — can be carcinogenic, the plaintiffs allege in Stewart v. Beam Global Spirits & Wine Inc., 11-cv-5149, which has just survived its first dispositive motion ruling.
Skinnygirl was launched in 2009 by TV personality Bethenny Frankel, who is also an author of books on women’s health. Beam Global, of Deerfield, Ill., purchased it the following year.
Late last year, a handful of Whole Foods stores, which look to sell only natural products, took the drink off their shelves after discovering the preservative. The suit was filed last September.
Frankel, a named defendant, admits that Skinnygirl is “as close to nature as possible, while still being a shelf-stable product,” the complaint says.
The plaintiffs say they wouldn’t have paid more for Skinnygirl if they knew it wasn’t really all natural.
They seek class certification for anyone who bought the product from the time it launched until Sept. 6, 2011, and assert violations of the New Jersey Consumer Fraud Act, negligent misrepresentation, breach of express and implied warranty, and unjust enrichment.
On the last count, Beam Global, along with defendant Jim Beam Brands Co., moved for judgment based on failure to state a claim upon which relief can be granted, arguing that the unjust- enrichment cause of action is precluded where the product is purchased from a third-party retailer.
Because the plaintiffs allegedly bought Skinnygirl in New Jersey liquor stores, they did not confer a benefit on Beam Global sufficient to sustain the unjust-enrichment claim, the company contended.
U.S. District Judge Noel Hillman disagreed on June 29, ruling that the manufacturers aren’t painted as innocent third parties in the complaint, but rather are alleged to have engaged in nationwide false advertising.
Noting that New Jersey law is applicable, the judge said Beam Global was unable to cite even one case in New Jersey expressly stating that manufacturers who sell through third-party retailers generally are insulated from unjust enrichment claims.
Hillman denied “that such a bright line rule is supported by New Jersey law.” What is required, he said, is “some direct relationship” between the parties, which could exist between the plaintiffs and Beam Global under New Jersey law. That principle “is simply meant to preclude a plaintiff from seeking recovery from a defendant whose involvement is too far removed or too attenuated from the facts and circumstances giving rise to the plaintiff’s claims,” he said.
Hillman acknowledged other rulings in the district that unjust enrichment claims are not maintainable against manufacturers like Beam Global but said he “is not bound by any of the decisions” and “must engage in [his] own analysis of the applicable law.”
He cited a ruling from the Southern District of Florida, Romano v. Motorola Inc., 07-cv-60517 (Nov. 26, 2007) where the judge said the manufacturer-defendant “erroneously equate[d] direct contact with direct benefit.”
He also distinguished a pair of New Jersey Supreme Court cases where unjust enrichment claims were tossed when asserted against third parties who had no knowledge of the underlying dealings and did not unjustly retain a benefit.
Beam Global, unlike those third parties, allegedly was active in the process, Hillman said, noting, “It does not strain credulity to suggest that some of these marketing strategies may have been employed at the retail level and coordinated with the retailers themselves.”
Putative class counsel David Wolfe of Skoloff & Wolfe in Livingston calls it “a good ruling for retail consumers” that “makes clear that manufacturers cannot insulate themselves from unjust enrichment claims” simply because they don’t sell directly to customers.
“There was certainly case law in the district suggesting otherwise,” Wolfe says. “I think the important distinction Judge Hillman made was comparing an innocent third party with a party who is directly involved with the wrongdoing.”
Donald Strauber of Chadbourne & Parke in New York, counsel to the Beam parties, did not return a call Tuesday.