Coke Orals

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1 UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF NEW YORK
2 ------------------------------x
BATSHEVA ACKERMAN, ET AL
3 Plaintiffs,
5 versus 09 CV 395(JG)
6
COCA-COLA COMPANY, ET AL
7 Defendants. United States Courthouse
Brooklyn, New York
8 ------------------------------x
9 February 5th, 2010

11:00 a. m.
10
11
12 TRANSCRIPT OF CIVIL CAUSE FOR MOTION
13 BEFORE THE HONORABLE JOHN GLEESON, USDJ
14 A P P E A R A N C E S
15 REPRESENTING THE PLAINTIFFS: Deborah Clark-Weintraub

Whatley Drake & Kallas LLC
16 75 Rockefeller Plaza
19th Floor
17 New York, NY 10019
18 Stephen Gardner
Center for the Science in the
19 Public Interest
5646 Milton Street
20 Suite 211
Dallas, TX 75206
21
Reese Richman LLP
22 230 Park Avenue
10th Floor
BY: MICHAEL REESE, ESQ.
24 KIM RICHMAN, ESQ.
25
LISA SCHMID, CCR, RMR

OFFICIAL COURT REPORTER
2
1 REPRESENTING THE DEFENDANTS: James R. Eiszner

SHOOK, HARDY & BACON L.L.P.
2 2555 Grand Avenue
Kansas City, MO 64108
3
Andrew G. Celli, Jr
4 Emery, Celli, Brinckerhoff &
Abady LLP
5 75 Rockefeller Plaza
20th Floor
7 RUSSELL S. BONDS, ESQ.

BRIAN HOWARD, ESQ.
8 Litigation Counsel
Corporate Legal
9 The Coca-Cola Company
One Coca-Cola Plaza
10 Atlanta, Georgia 30313
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22 REPORTED BY:
23 225 Cadman Plaza East
Brooklyn, New York 11201
24 Tel: (718) 613-2644 Fax: (718) 613-2379
Proceedings recorded by mechanical stenography, transcript
25 produced by computer.

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1 THE CLERK: All rise. Ackerman versus Coca-Cola
2 Company, et al.
3 THE COURT: Good morning, everyone. Please have a
4 seat. Sorry to keep everyone waiting.
5 Did you have appearances already, Lisa?
6 Could I have them, please?
7 MR. REESE: Good morning, Your Honor. Michael Reese,
8 Reese Richman, LLP, on behalf of the plaintiffs.
9 MR. GARDNER: Stephen Gardner, Center for Science in
10 the Public Interest on behalf of plaintiffs, Your Honor.
11 MS. CLARK-WEINTRAUB: Deborah Clark-Weintraub,
12 Whatley, Drake and Kallas, also on behalf of the plaintiffs.
13 MR. RICHMAN: Kim Richman, from Reese Richman, for the
14 plaintiffs. Good morning.
15 THE COURT: Sorry. Your last name is Richman?
16 MR. RICHMAN: Correct.
17 MR. CELLI: Your Honor, I'm Andrew Celli from Emery,
18 Celli, Brinckerhoff and Abady. I'm here for the Coca-Cola
19 Company and Energy Brands.
20 MR. EISZNER: Your Honor, I am James Eiszner of Shook,
21 Hardy and Bacon. I'm from Kansas City, representing the
22 Coca-Cola Company and Energy Brands.
23 THE COURT: Okay. Good morning.
24 MR. BONDS: And I'm Russell Bonds, from the Coca-Cola
25 Company.

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1 THE COURT: Good morning. Okay. Who's going to argue
2 on behalf of the motion?
3 MR. EISZNER: I am, Your Honor.
4 THE COURT: All right.
5 MR. EISZNER: Can Your Honor hear me?
6 THE COURT: Yes.
7 MR. EISZNER: Okay. Then I'll proceed.
8 Your Honor, as I was preparing for oral argument
9 today, I asked one of my colleagues to go look at some of your
10 former preemption decisions. And the colleague came back to me
11 and said that there was one thing that could be discerned from
12 those decisions, was that Your Honor preferred not to rule on
13 preemption and find other ways of ruling. That may or may not
14 be fair. That was his conclusion. And I don't know if it's a
15 Doctrine of Constitutional Avoidance. I don't know if it's
16 simply preemption asks sticky questions, but that was the
17 appearance.
18 So I put my mind thinking. Was there a principle here
19 that would allow us to dispose of this matter without reaching
20 the issue of preemption? And Your Honor, I think the answer
21 is, we've come close.
22 I'd like to call the principle the "First Sip
23 Principle." You may remember law school and the dog that had
24 the first bite, the first free bite. The plaintiffs get a free
25 sip here. They don't get a second.

5
1 The plaintiffs' key theory here, their whole theory is
2 upon, is that the production, Vitamin Water, contains sugar,
3 that they were harmed because they bought a product that
4 contained sugar. Paragraph 19 of the complaint, they allege
5 that the product is packed full of sugar. Paragraph 31 of the
6 complaint says it's loaded with sugar. I think common sense
7 tells me -- I hope it tells you that anything that's packed or
8 loaded with sugar, as the plaintiffs allege here, you can taste
9 the presence of sugar.
10 I think, Your Honor, it's also common sense that water
11 isn't sweet. Vitamins are not sweet. Sugar is sweet. So if
12 you taste the product, you can taste sweetness and you're put
13 on notice of the presence of something that is sweetening the
14 product. How does that fit in here? I believe, Your Honor, it
15 fits with in with the plausibility requirements of Iqbal and
16 Twombly. Obviously, they have got to state a claim that gives
17 them plausible entitlement to relief.
18 We have one plaintiff, Ms. Ackerman, who is from New
19 York. What do we know about Ms. Ackerman from the complaint?
20 We know she didn't have one sip. She purchased Vitamin Water
21 Revive, and Multi V Lemonade, at a premium price, approximately
22 one to two weeks -- two times per week between October 2007 and
23 October 2008. That's paragraph nine of the complaint.
24 Paragraph ten of the complaint deals with the
25 plaintiff, Mr. Antonov, who is from California. And he bought

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1 four to eight times per month during the class period, which is
2 a period of four years, from various convenience stores located
3 throughout San Francisco. Mr. Antonov didn't take one sip.
4 Mr. Koh is a resident of San Francisco, another
5 California claimant. And Mr. Koh purchased Vitamin Water
6 Rescue and Revive flavors at a premium price, approximately
7 five times per month between October 2007 and July 2008. Mr.
8 Koh from California did not take one sip. He took many more.
9 Mr. Pelkey, we don't know how much -- what the
10 frequency of his purchases were, but we know that he regularly
11 purchased three difference flavors: Multi V, Vitamin Water,
12 Formula 50, also. There may have been others in paragraph 12
13 of the complaint. Mr. Pelkey did not take one sip.
14 Then at lastly, we have our New Jersey plaintiffs.
15 They are discussed in paragraphs 13 and 14 of the complaint,
16 Your Honor, and there, they just allege that they purchased
17 Vitamin Water during the class period. We don't know the
18 frequency.
19 Now, I believe that by alleging that they purchased
20 more -- multiple times a product that contains sugar, they, in
21 fact, stated -- they alleged a claim that is implausible on its
22 face. If you are complaining about the presence of sugar in a
23 product, your repeated purchase of the product over a long
24 period of years suggests that you're not really worried about
25 sugar in the product. There is something else at issue here.

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1 So I believe that the principle, the first sip
2 principle, knocks out all the claims of all the plaintiffs from
3 New York and California.
4 As to our plaintiffs from New Jersey, about whom we
5 know nothing except that they bought the product during the
6 class period, I believe that Iqbal and Twombly require a
7 pleading here -- because of the first sip principle -- require
8 affirmative pleading that they had only one sip, that as soon
9 as they knew the product had sugar, they ceased buying it.
10 Common sense, if you're going to complain about sugar,
11 you don't keep buying the product over and over and over again.
12 On the other hand, it's possible -- it's possible that
13 Mr. Petty and Ms. Valentine had brought ahead, bought one
14 Vitamin Water and had one stip.
15 If so, Iqbal requires them to plead that fact, because
16 you're not entitled to plead facts that are consistent with
17 liability. That's the old Conley versus Gibson standard, which
18 the Supreme Court threw out in Twombly and Iqbal. You have to
19 show facts that entitled you to relief.
20 So my view, Your Honor, is with respect to this case,
21 we can throw out the New York claims, and we can throw out the
22 California claims because of the first sip principle, and it
23 renders their claims implausible, all of them under the state
24 laws of California and New York.
25 Under New Jersey, they might be required to re-plead.

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1 So that brings me unfortunately to preemption. Preemption here
2 is very important, because it's important Your Honor understand
3 that we're not contending certain things. We are not
4 contending that there's field preemption at play here.
5 When Congress passed a Nutritional Labeling and
6 Education Act, it put in savings clause, which said that lots
7 of things are reserved for state law. That is inconsistent
8 with field preemption, and we are not arguing before Your Honor
9 field preemption. We are not arguing that because the FDA can
10 regulate deceptive conduct under the Federal Food and Drug Act
11 and Cosmetic Act, that that displaces state regulation of
12 deceptive conduct. Plaintiffs somewhat suggest that that is
13 what we're arguing. We are not arguing that.
14 Our argument is based on the Nutritional Labeling and
15 Education Act, and Section R(1)(a), I believe, delegated to the
16 Secretary of the Food and Drug Administration to develop rules
17 that define certain terms, implied nutrient content claims,
18 which is a Congressional fancy word for "healthy."
19 So the Food and Drug Administration, acting -- and the
20 NLEA says that the definition that you've got there, that you
21 are asking the Secretary to make, that has preemptive effect.
22 So we're really arguing the preemptive effect as to a
23 definition.
24 And if you look at the part of the NLEA that became
25 codified as 21 USC 343-1, it's entitled, "Uniform -- Uniform

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1 Laws" -- I'm sorry. I don't have it with me. But the concept
2 of uniformity is stressed very much so in the title.
3 Okay. So we have a definition. The FDA is tasked
4 with going out and defining that, unlike the case in Wyatt,
5 unlike the case in Holt, unlike the case in -- excuse me, Your
6 Honor. This is not informal rule-making. The FDA promulgates
7 a proposed regulation to define the term "healthy." And it
8 puts it out for formal notice and comment, and comes back. And
9 there are comments made -- and I believe some of them were made
10 by the Center for Science in the Public Interest, which is
11 representing the plaintiffs here.
12 That said, please make your definition broader. Right
13 now, you say that healthy means a product that's a good source
14 of certain things. We don't need to worry about what the
15 certain things are here, because I think both sides would
16 concede that it's a good source of vitamins that are listed in
17 that definition. And it doesn't contain significant levels of
18 fat, saturated fat, cholesterol and sodium -- four nutrients
19 that shouldn't have significant values there.
20 CSPI and others come back and say, let's benefit one,
21 sugar. Healthy should mean doesn't have significant levels of
22 sugar. The FDA took a look at this issue. And it decided for
23 three reasons, Your Honor, that it was not going to add sugar
24 into the definition of healthy.
25 One of them was -- it did some survey work. It went

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1 and asked consumers, what do you think healthy means? Does it
2 mean no sugar? And the answer was no. So there's some
3 empirical evidence they developed.
4 Number two, it couldn't develop what is called a DRV,
5 a Daily Recommended Value. Different people have different
6 tolerances for sugar. Some people really should avoid a lot of
7 sugar in their diet. Other people don't have a problem with
8 sugar, because they're very trim and fit. So they didn't want
9 to set a rule. They couldn't set a rule as what a recommended
10 value for sugar was that applied to the general population.
11 And then the third thing is, they came to a policy
12 issue, and this policy issue, I think, is very important. They
13 said that if we were to add sugar as a disqualifying nutrient,
14 that would, in effect, be depriving people who don't have
15 weight loss problems of information about products that would
16 be healthy for them, and we don't want to do that.
17 So you have Congress saying, I want a uniform
18 definition. You have the FDA going out and developing that
19 definition, according to a very formal rule-making process, and
20 then you have a clear articulation of a policy, pursuant to
21 this ruling-making process.
22 And then on top of that, the Center for Science and
23 Public Interest basically moves to reconsider in 1999, and say,
24 let's adds sugar as a disqualifying nutrient when we talk about
25 the definition of healthy. And we cited to their citizen

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1 petition in our opening papers.
2 And they still don't act. The definition of healthy
3 is as it remains today, a significant source of certain
4 nutrients and B vitamins, and what have you, and does not
5 contain a significant levels of sodium, cholesterol, fat and
6 saturated fat. Sugar isn't in there.
7 So we now come to the plaintiffs' theory of this case.
8 The plaintiffs allege -- first, the plaintiffs filed -- this is
9 the seventh complaint, I think we faced here, Your Honor. It's
10 a second amended complaint. The last complaint had a meaning
11 equation. The meaning equation -- and it's not the complaint
12 before Your Honor. It's the first amended complaint I'm
13 talking about -- said specific statements which they allege in
14 their complaint mean healthy, which in turn means no sugar.
15 We moved to dismiss that complaint, and filed motions
16 to dismiss in various cases around the country, because
17 plaintiffs consolidated here before Your Honor voluntarily, but
18 the prior history, they had faced motions to dismiss against
19 this very notion that specific statements on the label of my
20 client's product implied healthy, which in turn implies low
21 sugar.
22 Now, they filed a new complaint. And the new
23 complaint has specific statements and they focus very hard in
24 their reply, their opposition papers, on specific statements,
25 but we're looking at a complaint. We're not looking at reply

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1 papers. And I think they're trying to amend their complaint
2 through their reply papers -- because three times, they tell
3 you essentially, there's a central message here.
4 They tell you in paragraph four of the complaint that
5 the central message of these claims -- these are the claims
6 that -- the specific claims that they make -- is that Vitamin
7 Water is not a sugary soft drink and --
8 THE COURT: Slow down when you're reading for the
9 court reporter.
10 MR. EISZNER: I'm sorry.
11 THE COURT: Just start what you were reading over
12 again, please.
13 MR. EISZNER: Absolutely, sir.
14 Okay. Paragraph four, the central message of these
15 claims is that Vitamin Water not a sugary soft drink and that
16 drinking it provides a significant source of dietary
17 supplements. That's one central message statement, Your Honor.
18 Another one comes in paragraph six. "Defendant's
19 misrepresentation about Vitamin Water -- including its dietary
20 supplement name and good-for-you promises -- bombard consumers
21 with a message of purported benefits, and draw consumer
22 attention away from the significant amount of sugar in the
23 product." That's paragraph six.
24 Paragraph 29 has another central message allegation.
25 And that is, the central message of these claims is that

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1 drinking Vitamin Water provided a significant source of dietary
2 supplements without the ill effects of other sugary soft
3 drinks. Paragraph 29.
4 We're not quite done, Your Honor, because they then go
5 on to provide a warranty claim. And then in their warranty
6 claim, their warranty -- they made an express warranty claim
7 and implied warranty claim, but they're both implied warranty
8 claims. They're implied warranty claims because they never say
9 anywhere that we expressly clearly claim that the product is
10 beneficial and use the word "beneficial" on the label. They
11 say it's implied.
12 So in paragraph 128 -- this is the express warranty
13 count -- says that, "We warrant that our Vitamin Water
14 beverages were beneficial, and had particular beneficial
15 characteristics."
16 And then paragraph 129 says, that, "The product was --
17 the warranty was therefore breached," allegedly, "because the
18 product was not beneficial in that it contained a high amount
19 of sugar."
20 So the plaintiffs are giving you words that are
21 synonyms -- beneficial, good for you, nutritious, dietary
22 supplement, but they're trying to find synonyms for the word
23 "healthy." And Congress has said healthy means -- and they're
24 really saying healthy means that a product has no sugar, but
25 the FDA, as a policy matter, has said that's not what we want

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1 that definition to mean.
2 And so, I believe the claims here are expressly
3 preempted, with the exception of certain things. The breach of
4 warranty claim, I'm sure they'll bring up the Bates decision,
5 that it's correct that Bates says that the fact that you
6 undertake a voluntary contractual commitment does not make it a
7 requirement of federal law. And the Section 343-1 of the NLEA
8 says that the requirements of state and federal law have to be
9 identified.
10 And I agree with that analysis as far as it goes, but
11 we're not arguing what the requirements are. We're arguing
12 what the meaning of the term is, and that's "beneficial." And
13 Congress has -- not Congress, but the FDA, pursuant to
14 Congressionally-delegated power has decided what the term
15 "beneficial" and "healthy" and "nutritious" means -- and it
16 doesn't mean no sugar. So, I believe, we have implied
17 preemption here, not express preemption, when it comes to the
18 warranty.
19 That's -- in the interest of time and being fair to my
20 adversaries, I thought I would stop there, unless Your Honor
21 has questions.
22 THE COURT: Thank you.
23 Who would like to be heard?
24 MR. REESE: Good morning, Your Honor. Michael Reese,
25 on behalf of the plaintiffs.

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1 We actually divided the argument. I'm going to handle
2 the portion regarding whether the pleadings are sufficient. My
3 colleague, Mr. Gardner, is going to address preemption. We
4 were actually going to address the preemption first, but since
5 defense counsel seems to have conceded that they are probably
6 not going to prevail on that, I would like to go first and
7 address the "first sip" argument he's made.
8 The first sip argument, which basically boils down to,
9 well, these people have tasted it, and it seems sweet to them.
10 How could they have not known there was sugar contained in it?
11 It fails for two reasons, and both legal reasons and factual
12 reasons.
13 First of all, what Mr. Eiszner is really asking you is
14 to say, well, you get one free bait and switch. You get to
15 commit fraud one time, and shame on you if you buy the product
16 again. Well, that's not what the consumer protection laws in
17 New Jersey and California or New York are about. You commit
18 the fraud one time, that's enough.
19 The second thing is, he's asking for you -- really
20 asking for you to substitute his opinion as the advocate for
21 the defendant for that of the plaintiffs, who have said that
22 they did not know that this product contained the high amount
23 of sugar that it did, for both the plaintiffs and the
24 reasonable consumer, and that's wrong for two reasons.
25 First of all, the Ninth Circuit, in the Williams v.

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1 Gerber case, which is directly on point and controlling, at
2 least as far as the California claims have stated that, in
3 deed, and I'm quoting here -- it's the rarest case where a
4 motion to dismiss is appropriate. Instead, whether business
5 practices are deceptive under California Consumer Protection
6 Laws would usually be a question of fact, not appropriate to
7 decide on a motion to dismiss. That is certainly the case
8 here.
9 If you think about it, and if you were going to try to
10 put yourself in the shoes of the reasonable consumer, which we
11 propose is actually improper on a motion to dismiss, and Judge
12 Weinstein made that clear in the Verizon case, where he said,
13 how can I substitute my own opinion for what these plaintiffs
14 said they were deceived as to, as well as what the reasonable
15 consumer -- that's really a test for a jury. That's a test for
16 the trier of fact.
17 And if you think about it, it makes sense in this
18 situation -- what, first of all, Vitamin Water tastes like. Is
19 it sweet or is it somewhat medicinal? And if you go beyond
20 that, you think about what does Vitamin C taste like? What
21 does Vitamin B12 taste like? What does Vitamin B3 taste like?
22 Are they sweet? Do they taste like something else? How about
23 Vitamin B5? Does anybody here know what Vitamin B5 tastes
24 like? If it's sweet, could that be the reason that this
25 product may taste sweet?

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1 The consumers, believing what Coke said on the label,
2 and in the advertisement marketing Vitamin Water took it at its
3 word, that it did not contain sugar, that it was vitamins and
4 water -- vitamins plus water equals all that's in your hand.
5 Vitamins plus water equals all that you need.
6 THE COURT: Does the complaint say what statements the
7 plaintiffs relied on?
8 MR. REESE: It does. It's in paragraph 16, if I
9 remember correctly -- I'm sorry. Paragraph 15 of the second
10 amended complaint, and it says, "The plaintiffs rely on
11 statements such as vitamins plus water equals all you need and
12 the same of product itself, Vitamin Water. And even though
13 this is not in evidence, but this really underscores the point
14 that it's improper on a motion to dismiss.
15 THE COURT: So all of them relied on those specific
16 statements?
17 MR. REESE: That's correct, Your Honor. You know,
18 this is not evidence, but this just underscores why it's
19 improper on a motion to dismiss to consider the type of
20 evidence where Mr. Eiszner wants you to substitute his opinion
21 for what's pled in the complaint.
22 Here is the bottom line, Your Honor: This is the
23 offending product. Mr. Eiszner says, well, you should know
24 after tasting that that it is loaded with sugar. Well, they
25 can be sweetened maybe by vitamins, which this claims just to

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1 have. It can be sweetened by other products such as Stevia,
2 which is not sugar.
3 But here's another Coca-Cola product: Vitamin
4 Enhanced water. No sugar. How am I supposed to know the
5 difference, that this is loaded with sugar and this is not,
6 even though they both are sweet?
7 Here's another Coca-Cola product: Smart Water, made
8 by the same company, Glaceau. Look similar. No sugar in the
9 product.
10 THE COURT: Glaceau, you mean?
11 MR. GARDNER: Glaceau. I apologize, Your Honor.
12 And here's another water product, which is enhanced
13 with vitamins, no sugar.
14 So even though this is not in evidence, it just goes
15 straight to the point, that this case should proceed beyond the
16 motion to dismiss stage. We can get into the discovery.
17 This is the type of evidence that we propose we would
18 present to a jury to explain why a reasonable consumer would
19 take Coca-Cola at its word when it represented that its product
20 only contained vitamins and water. Because these other
21 completing products, some of them were actually made by
22 Coca-Cola, which claimed to be in the same field of product,
23 these vitamin-enhanced waters, don't contain sugar.
24 THE COURT: If that's the way you had them, where they
25 were now? You are going to argue to the jury that they misled

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1 the consumer into thinking that all that's in the product is
2 vitamins and water?
3 MR. GARDNER: Correct. And this just illustrates the
4 type of evidence that we would rely upon. We haven't developed
5 our case fully for trial yet, but if you go to the grocery
6 store and you see where these products are placed, they're
7 placed on the shelf by even bottled water, such as Dasani,
8 which is another Coca-Cola product.
9 You go Coca-Cola's website and if you click on soft
10 drinks, Vitamin Water doesn't come up. If you click on water,
11 you get Dasani. This is a Dasani product, as well, which has
12 no sugar in it, and you get Vitamin Water.
13 So those -- that's the type of evidence that would
14 come in after a motion to dismiss stage. And it just goes to
15 illustrate why the Ninth Circuit was correct in the Gerber case
16 and why the Second Circuit in the Pullman v. McDonald's case
17 states that it's really improper on a motion to dismiss to
18 determine, as matter of law, what the reasonable consumer would
19 think. If the plaintiffs have pled a plausible case, this just
20 goes to underscore that fact.
21 I'm going to turn it over to Mr. Gardner now, unless
22 you have any questions regarding the sufficiency of the
23 pleadings.
24 THE COURT: Not at the moment. Thank you.
25 MR. REESE: Thank you, Your Honor.

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1 MR. GARDNER: Thank you, Your Honor. Steve Gardener,
2 Center for Science in the Public Interest.
3 I'm going to address specifically the preemption
4 questions, and I want to address first what's off the table
5 by -- my learned opponent concedes there's no preemption on
6 express warranty, concedes that there's no field preemption.
7 He doesn't concede that he should have advised the Court that
8 we're only talking about, if anything, preemption of the labels
9 that are subject to FDA regulation. We're not talking about
10 other marketing efforts, advertising and other types of
11 efforts, because those are not subject to the Food and Drug and
12 Cosmetics Act. They're not subject to FDA's jurisdiction. So
13 if the Court were to dismiss on FDA preemption, we would just
14 use the labels as they are presented in advertisements, which
15 are worse than those in stores, because you can't even look on
16 the back to find the information. All we're talking about here
17 is whether the FDA has actively done something to overcomes the
18 NLEA, the Nutritional Labeling and Education Act, presumption
19 against preemption except for -- it's quite specific.
20 Let me be very clear. Vitamin Water is a problem
21 because it's not vitamin water. It's sugar water. We're not
22 going to pretend otherwise. It's an unhealthy beverage. But
23 that's not what is before the Court. That's not what we're
24 arguing entirely. We argue that this is unhealthy. We also
25 argue that they misrepresent its benefits by terms such as

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1 offense, rescue, balance, focus, revive and other terms from
2 paragraph 24 of the second amended complaint.
3 And in paragraph 28 of the second amended complaint,
4 we go into details of marketing efforts both on and off the
5 label, that make claims that are actually drug claims, that
6 promise to prevent or cure diseases. That's not preempted by
7 NLEA.
8 All that is conceivably preempted is the healthy
9 claim, and that is a constructive code. That is not what our
10 lawsuit is about. As Coke acknowledged, we had pled healthy.
11 They raised a brouhaha, and we thought, well, we didn't agree
12 with it, but we could take it off the table by getting rid of
13 it.
14 But even if were still there, healthy is under FDA
15 regulation, merely a subset of one type of implied nutrient
16 content claim. To be any type of nutrient content claim,
17 expressed or implied, it has to characterize the level of the
18 nutrient. And we're not saying that they do characterize a
19 level of the nutrient. Certainly, if we're talking about
20 sugar, they certainly do not characterize the level of that.
21 There is no implied representation. There is no express
22 representation. They just don't.
23 An example of a healthy implied nutrient content claim
24 the FDA gives is healthy contains 3 grams of fat. That
25 characterizes the level of a nutrient, but just healthy alone

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1 is not what the FDA is talking about in its regulation. And
2 that's fine, because we're not trying to rewrite the
3 regulation. Absolutely. My organization has tried to get the
4 FDA in the past to recognize that obesity is a problem. A lot
5 of sugar is a problem.
6 And in fact, the FDA in the complaint -- I mean,
7 rather, Coke in the complaint, we quote from one of their
8 reports, where they recognize that they're losing business
9 because people want to avoid sugary drinks. What we're about
10 here is, is Vitamin Water marketed to people in a deceptive
11 manner on the label, in the store, on the web and in
12 advertising?
13 The only arguably preemption is unhealthy. We're not
14 claiming that we did. We're not. I assume, and my learned
15 opponent is going back to the prior complaint because it suits
16 his argument, but it doesn't suit reality, because before the
17 Court is the second amended complaint.
18 The word in there is "beneficial." Coke says that the
19 FDA has defined that. That's not correct. The citation that
20 Coke uses in its brief is to -- a preamble from 63 Federal
21 Register 14, 349.
22 It uses the word "beneficial" sometimes in a way
23 connected to healthy, but it doesn't define it, and it doesn't
24 mean healthy. I looked -- I highlighted each time the FDA used
25 word "beneficial." And they said that the benefit of this rule

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1 is to provide for beneficial information to consumers. They
2 don't mean healthy information. They mean information that
3 will profit people. Here, the only people that are profiting
4 by it is Coke. They're providing non-beneficial information,
5 because it is both false and deceptive.
6 That's what our lawsuit is about, Your Honor. It is
7 not about whether it's healthy. It is about whether Coke has
8 misrepresented the benefits of this drink, both in its
9 sweetener content, but also -- and more space in the complaint
10 is given to the name of it -- the benefits of it, the
11 disease-preventative aspect of it, and that doesn't form any
12 part of Coke's motion to dismiss. Thank you.
13 THE COURT: Thank you. The Common Law Fraud claim,
14 which is claim 12, doesn't look like it's in your opposition
15 papers. Am I right about that?
16 MR. REESE: Just one moment, Your Honor. If I
17 remember correctly, that's actually is actually -- they
18 characterize it as common fraud. It is actually a deception
19 and misrepresentation claim.
20 THE COURT: Are you alleging a Common Law Fraud Claim?
21 MR. REESE: No, just deceit and misrepresentation.
22 THE COURT: All right.
23 Anything else from the plaintiffs' side?
24 MR. GARDNER: No, Your Honor.
25 THE COURT: Sir, any rebuttal?

24
1 MR. EISZNER: Your Honor, I don't want to have a bad
2 case of last word-itis, but a couple of things.
3 I did not say that there was one free fraud, as
4 Mr. Reese implied. I, in fact, said that the New Jersey
5 plaintiffs had alleged they had one sip, threw out the product,
6 that then, in fact, they would have a plausible claim for
7 relief.
8 Williams versus Gerber, I don't believe the Ninth
9 Circuit can overrule Twombly versus Iqbal. The question is
10 plausibility. We have some rather odd cases in the Ninth
11 Circuit. Gerber found that the defendant, the individual
12 company, had waived Congress's right to preempt state law. So
13 it just waived the preemption defense. I would be very careful
14 in applying it.
15 In any event, it's not opposite for two reasons.
16 Number one, we believe the test is Twombly and Iqbal. It's not
17 placeable.
18 Number two, in the Gerber case, the allegations were
19 that you had fruit on the front, and if you tasted the product,
20 you really couldn't tell if the product did or did not have the
21 juice of the fruit whose picture was on the front of the
22 package. Here, you can tell there's sugar. The one free sip
23 rule does make sense, and distinguishes this from Gerber.
24 Plausibility, we have had some cases. Mr. Bonds
25 always likes to use Grape Nuts. I think we all know Grape Nuts

25
1 doesn't contain grapes. I think we all know Eggos, which is
2 waffles, doesn't contain just eggs. So we have got to have
3 some plausibility here, Your Honor, under Twombly and Iqbal.
4 They don't overrule. Gerber doesn't overrule. In fact, Gerber
5 isn't applicable here at all.
6 In terms of the preemption, I have heard the point
7 about added versus labeling. Again, Twombly versus and Iqbal
8 comes into play here.
9 Counsel is telling you that advertising is not reached
10 by the NLEA, and he's correct. We may have implied preemption,
11 that we would argue that we do have preemption as to such
12 cases, otherwise, you end up with a definition that has the
13 word "healthy" on it that can't be used in advertising, but can
14 be used on the labeling of the product with impunity, and you
15 confuse consumers, and the purpose of the NLEA is to give a
16 uniform definition.
17 And then the last thing --
18 THE COURT: I'm sorry. Are you arguing that the
19 advertising claim is preempted?
20 MR. EISZNER: I would argue that the advertising claim
21 is impliedly preempted. And the I think the Wyatt case is very
22 strongly in my favor here, Your Honor. Mr. Gardner never
23 thought I would be citing Wyatt in my support.
24 Wyatt said a couple things one. One, Wyatt said that
25 express preemption, we are -- would require a great deal of

26
1 formality to the agency, a great deal of deliberation, I guess,
2 to the agency action. Here, we have great, great deliberation.
3 We have formal rule-making, Your Honor. And we have, in
4 effect, a motion to reconsider and statements of policy, and
5 it's not informal at all. It's a formal policy, that that
6 applies to, obviously. The labeling is covered by the NLEA.
7 It doesn't cover to the advertising.
8 But then you look at the implied preemption argument
9 in Wyatt, and in Wyatt, one of the reasons that the Court
10 rejected implied preemption was that, as the Federal Food Drug
11 and Cosmetic Act been around 70 years, the Court said. And yet
12 Congress had never said anything -- anything about preemption,
13 expressed preemption. And if there really was a threat, the
14 state regulation would frustrate a federal policy. One would
15 expect to see something from Congress in the regard.
16 That says two things. Number one, for an implied
17 case, you really need to show some express preemption. We have
18 expressed preemption here on the labeling. It ought to apply
19 to the advertising. And implied preemption deals with the
20 penumbra. Frankly, Your Honor, advertising, we believe is in
21 the penumbra of the labeling. It's not expressly covered. I
22 concede Mr. Gardner's point, but I also believe it would
23 frustrate federal policy to have a meaning here, for
24 advertising, and the word "healthy," the meaning there, for
25 healthy in labeling.

27
1 THE COURT: Thank you. Thank you, all. I'll take the
2 motion under advisement. Have a good day.
3 MR. GARDNER: Thank you, Your Honor. Have a good day.
4 MR. EISZNER: Thank you, Judge.
5 (Motion concluded.)
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1

1 UNITED STATES DISTRICT COURT

9 February 5th, 2010

12 TRANSCRIPT OF CIVIL CAUSE FOR MOTION

13 BEFORE THE HONORABLE JOHN GLEESON, USDJ

15 REPRESENTING THE PLAINTIFFS: Deborah Clark-Weintraub

LISA SCHMID, CCR, RMR

1 REPRESENTING THE DEFENDANTS: James R. Eiszner

7 RUSSELL S. BONDS, ESQ.

LISA SCHMID, CCR, RMR

1 THE CLERK: All rise. Ackerman versus Coca-Cola

3 THE COURT: Good morning, everyone. Please have a

4 seat. Sorry to keep everyone waiting.

5 Did you have appearances already, Lisa?

6 Could I have them, please?

7 MR. REESE: Good morning, Your Honor. Michael Reese,

8 Reese Richman, LLP, on behalf of the plaintiffs.

9 MR. GARDNER: Stephen Gardner, Center for Science in

10 the Public Interest on behalf of plaintiffs, Your Honor.

11 MS. CLARK-WEINTRAUB: Deborah Clark-Weintraub,

12 Whatley, Drake and Kallas, also on behalf of the plaintiffs.

13 MR. RICHMAN: Kim Richman, from Reese Richman, for the

14 plaintiffs. Good morning.

15 THE COURT: Sorry. Your last name is Richman?

16 MR. RICHMAN: Correct.

17 MR. CELLI: Your Honor, I'm Andrew Celli from Emery,

18 Celli, Brinckerhoff and Abady. I'm here for the Coca-Cola

19 Company and Energy Brands.

20 MR. EISZNER: Your Honor, I am James Eiszner of Shook,

21 Hardy and Bacon. I'm from Kansas City, representing the

22 Coca-Cola Company and Energy Brands.

23 THE COURT: Okay. Good morning.

24 MR. BONDS: And I'm Russell Bonds, from the Coca-Cola

LISA SCHMID, CCR, RMR

1 THE COURT: Good morning. Okay. Who's going to argue

2 on behalf of the motion?

3 MR. EISZNER: I am, Your Honor.

4 THE COURT: All right.

5 MR. EISZNER: Can Your Honor hear me?

6 THE COURT: Yes.

7 MR. EISZNER: Okay. Then I'll proceed.

8 Your Honor, as I was preparing for oral argument

9 today, I asked one of my colleagues to go look at some of your

10 former preemption decisions. And the colleague came back to me

12 those decisions, was that Your Honor preferred not to rule on

14 be fair. That was his conclusion. And I don't know if it's a

15 Doctrine of Constitutional Avoidance. I don't know if it's

16 simply preemption asks sticky questions, but that was the

18 So I put my mind thinking. Was there a principle here

19 that would allow us to dispose of this matter without reaching

20 the issue of preemption? And Your Honor, I think the answer

21 is, we've come close.

22 I'd like to call the principle the "First Sip

25 sip here. They don't get a second.

LISA SCHMID, CCR, RMR

1 The plaintiffs' key theory here, their whole theory is

2 upon, is that the production, Vitamin Water, contains sugar,

3 that they were harmed because they bought a product that

4 contained sugar. Paragraph 19 of the complaint, they allege

5 that the product is packed full of sugar. Paragraph 31 of the

6 complaint says it's loaded with sugar. I think common sense

7 tells me -- I hope it tells you that anything that's packed or

9 the presence of sugar.