A federal judge in New York denied Phusion Projects’ motion to dismiss a putative class action lawsuit alleging damages caused by its product, the energy drink Four Loko. The lawsuit, Yourth v. Phusion Projects, LLC, alleges that the company failed to warn consumers of potential negative effects of the beverage’s allegedly high levels of both caffeine and alcohol. Phusion argued that the plaintiff’s claim was moot because of a settlement offer the company made, and that federal law preempted the plaintiff’s state law claims. The court rejected the defendant’s arguments and denied its motion.
Four Loko is a beverage containing both caffeine and alcohol, marketed to young adults as an “energy drink.” The plaintiff, Jeremiah Yourth, alleges in his amended complaint that a typical unit of Four Loko, which is sold in 23.5-ounce cans, potentially has the same effect as six beers and two cups of coffee. Because of its composition, the beverage can allegedly mask the effects of alcohol consumption and thereby cause injury. According to the plaintiff, Phusion did not disclose the potential harm of its beverage to consumers.
The plaintiff did not assert any personal injuries in his complaint, but rather violations of New York’s deceptive business practices law, false advertising, and unjust enrichment. He alleges that he purchased multiple Four Loko beverages in reliance on the company’s marketing and labeling, and that this gives him standing as a consumer to bring suit. His damages consisted of economic injuries sustained by his purchase of the beverages at what he called a “price premium,” when the products were in reality worthless. Had he known the alleged reality of Four Loko’s health effects, he claims that he would not have purchased the product. He asserts grounds for certification as a class action under the Federal Rules of Civil Procedure, although at the time of the defendant’s motion to dismiss, he had not moved for class certification. The amended complaint requests restitution and other damages for the plaintiff and the class members.