Part of Parents' Obesity Suit Against McDonalds Revived
Mark Hamblett
New York Law Journal
01-26-2005

The 2nd U.S. Circuit Court of Appeals Tuesday reinstated claims made by the parents that McDonald's violated a section of New York state's Consumer Protection Act by engaging in deceptive advertising over the health benefits of its fast food.

Southern District of New York Judge Robert W. Sweet in 2003 dismissed an amended complaint brought in a putative class action against the fast food giant under New York General Business Law §350 and §349.

A three-judge panel, in a brief opinion written by Southern District Judge Jed Rakoff, sitting by designation, said the lower court erred in dismissing the claim under §349.

The reason, Rakoff wrote, was that §349, which makes it unlawful to commit deceptive acts or practices does not "require proof of actual reliance" on the deceptive statements.

The case, Pelman v. McDonald's Corp., 03-9010, drew national attention when it was first filed. Some critics lashed out at the plaintiffs for blaming McDonald's for the eating habits of their own children, seeing the suit as an example of a culture of litigation and victimhood.

The complaint alleged that McDonald's created the false impression that its food was part of a healthy lifestyle and nutritionally beneficial. It charged that McDonald's failed to disclose adequately that its food additives and its processing techniques were less healthy than represented. The complaint accused McDonald's of representing that it would provide nutritional information to New York customers, but then failing to do so at a number of restaurants in the state.

The plaintiffs' children had eaten at McDonald's between three and five time a week between 1987 and 2002 and, allegedly because of McDonald's deception, did not know that its food could cause their obesity, diabetes, heart disease, high-blood pressure and elevated cholesterol levels.

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At the 2nd Circuit, Rakoff said Sweet was correct to dismiss the claims under §350 of the General Business Law, which prohibits false advertising because the plaintiffs had failed to properly plead reliance on the advertising. But the court said the pleading standards for allegations under §349 were easier, and the plaintiffs had met them.

Rakoff wrote that "because §349 extends well beyond common-law fraud to cover a broad range of deceptive practices ... 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 Federal Rule of Civil Procedure 9(b) "but need only meet the bare-bones notice-pleading requirements of Rule 8(a)."

While Sweet recognized that §349 does not require proof of reliance, he still dismissed the claim because of a lack of causal connection between the food and the injuries, saying the complaint did not answer such questions as "What else did the plaintiffs eat?" and "How much did they exercise?" and "Is there a family history of the diseases which are alleged to have been caused by McDonald's products?"

Rakoff said these were questions for discovery, rather than "what is required to satisfy the limited pleading requirements of Rule 8(a)." Judges Amalya Kearse and Guido Calabresi joined in the opinion.