Case 1:22-cv-06815-NRB Document 1 Filed 08/10/22 Page 1 of 20
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`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF NEW YORK
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` Case No.
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`CLASS ACTION COMPLAINT
`
`
`JURY TRIAL DEMANDED
`
`
`Plaintiff,
`
`v.
`
`ABIGAIL SHAUGHNESSY, individually and
`on behalf of all others similarly situated,
`
`
`
`
`
`NESPRESSO USA, INC.,
`
` Defendant.
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`
`
`
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`Plaintiff Abigail Shaughnessy (“Plaintiff”) brings this action on behalf of herself and all
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`
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`others similarly situated against Defendant Nespresso USA, Inc. (“Defendant”) for the
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`manufacture, marketing, and sale of consumer products that include espresso and coffee machines
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`sold under the Nespresso Vertuo brand name (the “Products”). Plaintiff makes the following
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`allegations pursuant to the investigation of her counsel and based upon information and belief,
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`except as to the allegations specifically pertaining to herself, which are based on personal
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`knowledge.
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`NATURE OF ACTION
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`This is a class action against Defendant for the marketing, manufacture, and/or sale
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`1.
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`of consumer products (the “Products”), the warranties of which include statements that condition
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`the continued validity of the warranties on the use of only an authorized repair service and/or
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`authorized replacement parts (a “tying arrangement” or “unlawful repair restriction”). Tying
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`arrangements that “state or imply that a consumer must buy or use an item or service from a
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`particular company to keep their warranty coverage” violate state and federal law.1 Here, in
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`addition to unlawful restrictions against third-party parts and repair services, the Products’
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`1 https://www.ftc.gov/business-guidance/resources/businesspersons-guide-federal-warranty-law.
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`
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`1
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`Case 1:22-cv-06815-NRB Document 1 Filed 08/10/22 Page 2 of 20
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`warranty states and/or implies that consumers need to purchase Nespresso Vertuo branded Coffee
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`Capsules from Nespresso, at inflated prices, to keep their warranty coverage. Had Plaintiff – or
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`other reasonable class members – been aware that the tying arrangement was unlawful, she would
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`not have purchased the Product, or she would have paid significantly less for it.
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`2.
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`Plaintiff brings her claims against Defendant individually and on behalf of a class
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`of all other similarly situated purchasers of the Products for: (i) violations of the Magnuson-Moss
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`Warranty Act, (ii) unjust enrichment, (iii) fraud, (iv) fraudulent omission, and (v) declaratory
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`judgement.
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`PARTIES
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`Plaintiff Abigail Shaughnessy is, and at all times relevant to this action has been, a
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`3.
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`resident of Winthrop, Massachusetts and a citizen of Massachusetts. In or about July 2020, Ms.
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`Shaughnessy purchased one Nespresso Vertuo Next Premium Coffee Machine for $121.54 from
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`the Bed Bath & Beyond website, which shipped the Product to her home. Ms. Shaughnessy
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`purchased the Product, reasonably believing its warranty complied with state and federal law.
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`However, the Product Ms. Shaughnessy purchased did not comply with state and federal law
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`because the unlawful tying arrangement attached to the warranty stated and/or implied that she
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`would need to purchase Nespresso Vertuo branded Coffee Capsules from Nespresso to keep her
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`warranty coverage. Ms. Shaughnessy would not have purchased the Product, or she would have
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`paid significantly less for the Product, had she known that the Product did not comply with state
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`and federal law. The warranty for the Product Ms. Shaughnessy purchased can be found at
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`https://www.nespresso.com/shared_res/mos/docs/us/US_VERTUO_NEXT_USER_MANUAL.p
`
`df.
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`2
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`Case 1:22-cv-06815-NRB Document 1 Filed 08/10/22 Page 3 of 20
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`4.
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`Because of Defendant’s written warranty, Ms. Shaughnessy purchased several
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`Nespresso Vertuo branded Coffee Capsules at inflated prices. She would have liked to use cheaper
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`third-party coffee capsules, but her warranty, as written, implied that she was prohibited from
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`doing so.
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`5.
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`Defendant Nespresso USA, Inc. is a Delaware corporation with its principal place
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`of business at 101 Park Ave, New York, NY 10178. Defendant markets and distributes the
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`Products throughout the United States. Defendant sells its products to consumers on websites and
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`retail stores nationwide.
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`JURISDICTION AND VENUE
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`This Court has subject matter jurisdiction over this action pursuant to 28 U.S.C.
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`6.
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`§ 1332(d) because there are more than 100 class members and the aggregate amount in controversy
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`exceeds $5,000,000, exclusive of interest, fees, and costs, and at least one Class member is a citizen
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`of a state different from Defendant.
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`7.
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`This Court has personal jurisdiction over Defendant because a substantial portion
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`of the events that gave rise to Plaintiff’s claims occurred in this District and because Defendant’s
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`principal place of business is in this District.
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`8.
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`Venue is proper in this District pursuant to 28 U.S.C. § 1391 because a substantial
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`portion of the events giving rise to Plaintiff’s claims took place within this District at Defendant’s
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`principal place of business.
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`COMMON FACTUAL ALLEGATIONS
`Defendant’s Business Activities
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`I.
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`9.
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`Defendant distributes consumer products to retailers throughout the United States,
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`who then sell the appliances to consumers.
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`3
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`Case 1:22-cv-06815-NRB Document 1 Filed 08/10/22 Page 4 of 20
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`10.
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`Defendant’s products include espresso and coffee machines sold under the
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`“Nespresso Vertuo” brand name.
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`11.
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`All the relevant Products include the same unlawful repair restriction in their
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`warranties.
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`12.
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`Defendant has advertised, marketed, offered for sale, sold, and distributed products
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`through authorized dealers to consumers.
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`13.
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`Defendant’s Products include a “written warranty” as defined by the Magnuson-
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`Moss Warranty Act, 15 U.S.C. § 2301(6), in the form of a limited warranty (“Warranty
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`Statement”).
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`14.
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`15.
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`The length of the limited warranty offered by Defendant is one year.
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`Defendant’s limited warranty includes the aforementioned tying arrangement.
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`II.
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`Defendant Conditions Warranty Coverage On Purchasing First-Party Nespresso
`Vertuo Coffee Capsules, As Well As Additional Unlawful Repair Restrictions
`In numerous instances, Defendant, through its warranty statements on the Products,
`16.
`
`conditions warranty coverage on the usage and purchase of Defendant’s own Nespresso Vertuo
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`Coffee Capsules, rather than allowing consumers to purchase cheaper third-party coffee capsules.
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`17.
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`Specifically, Defendant’s warranty states: “This appliance is designed for
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`Nespresso Vertuo coffee capsules available exclusively through the Nespresso Club or your
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`Nespresso authorized representative.”2
`
`
`2
`https://www.nespresso.com/shared_res/mos/docs/us/US_VERTUO_NEXT_USER_MANUAL.p
`df.
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`
`
`
`4
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`Case 1:22-cv-06815-NRB Document 1 Filed 08/10/22 Page 5 of 20
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`18.
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`Defendant’s warranty also states the following: “Only use capsules intended for
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`this appliance,”3 and “This machine operates with Nespresso Vertuo capsules.”4
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`19.
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`Defendant’s warranty also states, “This limited guarantee does not apply to any
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`defect resulting from … failure to follow the product instructions … [or] unauthorized product
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`modification or repair.”5
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`20.
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`In these passages, Defendant clearly implies that the full advantage of the Product’s
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`Warranty is only available to users who purchase expensive first party Nespresso Vertuo Coffee
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`Capsules.
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`21.
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`Under Defendant’s warranty, Defendant, in effect, provides parts in a manner
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`which impedes or precludes the choice by the consumer to perform necessary labor to install such
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`parts.
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`22.
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`By conditioning its warranty in this manner, Defendant has violated the tying
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`prohibition in the Magnuson-Moss Warranty Act, which prohibits companies from conditioning
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`their warranties on a consumer’s use of any article or service (other than an article or service
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`provided without charge under the terms of the warranty) identified by brand, trade, or corporate
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`name.
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`23.
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`Defendant’s practices also violate state laws, as well as Section 5(a)(1) of the FTC
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`Act, 15 U.S.C. § 45(a)(1), which prohibits unfair or deceptive actors or practices, as well as unfair
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`methods of competition, in or affecting commerce. Section 5 also encompasses violations of the
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`Sherman Act, which prohibits certain exclusionary and other anticompetitive conduct.
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`
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`3 Id.
` Id.
` Id.
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` 4
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` 5
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`5
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`Case 1:22-cv-06815-NRB Document 1 Filed 08/10/22 Page 6 of 20
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`III. The Magnuson-Moss Warranty Act
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`24.
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`The Magnuson-Moss Warranty Act, 15 U.S.C. §§ 2301-2312, is the federal law
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`that regulates consumer warranties and the procedures used to resolve warranty disputes. It also
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`directs the FTC to prescribe rules enforcing certain requirements pertaining to the use and content
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`of consumer warranties.
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`25.
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`Section 2302(c) of the Magnuson-Moss Warranty Act, 15 U.S.C. § 2302(c),
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`prohibits any warrantor from conditioning a warranty on the consumer’s using, in connection with
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`the warranted product, any article or service (other than an article or service provided without
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`charge under the terms of the warranty) which is identified by brand, trade, or corporate name.
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`26.
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`An FTC Rule interpreting this provision specifically addresses warranty language
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`(nearly identical to Defendant’s warranty):
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`No warrantor may condition the continued validity of a warranty on
`the use of only authorized repair service and/or authorized
`replacement parts for non-warranty service and maintenance (other
`than an article of service provided without charge under the
`warranty or unless the warrantor has obtained a waiver pursuant to
`section 102(c) of the Act, 15 U.S.C. 2302(c)). For example,
`provisions such as, “This warranty is void if service is performed by
`anyone other than an authorized ‘ABC’ dealer and all replacement
`parts must be genuine ‘ABC’ parts,” and the like, are prohibited
`where the service or parts are not covered by the warranty. These
`provisions violate the Act in two ways. First, they violate the section
`102(c), 15 U.S.C. 2302(c), ban against tying arrangements. Second,
`such provisions are deceptive under section 110 of the Act, 15
`U.S.C. 2310, because a warrantor cannot, as a matter of law, avoid
`liability under a written warranty where a defect is unrelated to the
`use by a consumer of “unauthorized” articles or service.
`
`16 CFR § 700.10(c).
`
`
`27.
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`The animating purpose of Magnuson-Moss’s anti-tying provision was explained by
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`then-FTC-Chairman Lewis Engman in the early 1970s in the run-up to the Act’s introduction:
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`6
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`Case 1:22-cv-06815-NRB Document 1 Filed 08/10/22 Page 7 of 20
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`This [anti-tying] provision addresses the anticompetitive practice
`which the Commission has opposed in numerous court actions
`wherein a manufacturer uses a warranty unreasonably to tie his
`supplementary products or services to the warranted product. This
`leaves the consumer in the undesirable posture of losing his
`warranty protection if he purchases the supplementary items from
`another and perhaps less expensive source—even if he does so in
`complete ignorance of the warranty’s provisions.6
`
`Finally, the FTC recently clarified that the disclaimer of liability does not need to
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`28.
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`be explicit. Instead, “a warrantor would violate the MMWA if its warranty led a reasonable
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`consumer exercising due care to believe that the warranty conditioned coverage ‘on the consumer’s
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`use of an article or service identified by brand, trade or corporate name.’”7
`Section 5 Of The Federal Trade Commission Act
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`IV.
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`29.
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`The FTC has found that a “manufacturer’s use of a repair restriction could be
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`challenged as an unfair practice under Section 5 of the FTC Act if the repair restriction causes
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`substantial injury (e.g., monetary harm or unwarranted health and safety risks) that is not
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`outweighed by countervailing benefits to consumers or competition that the practice produces, and
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`the injury could not have been reasonably avoided by consumers.”8
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`30.
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`Per a 2021 FTC Report, “[e]ven when a warranty does not explicitly require that
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`repairs be performed by the original equipment manufacturer (OEM) using OEM parts, many
`
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`6 Statement of Hon. Lewis A. Engman, Chairman, Federal Trade Commission, included in H.
`Rep. No. 93-17, at 58 (1973).
` Final Action: Magnuson-Moss Warranty Act Interpretations; Rules Governing Disclosure of
`Written Consumer Product Warranty Terms and Conditions, Pre-Sale Availability of Written
`Warranty Terms, and Informal Dispute Settlement Procedures; and Ad Guides, Federal Trade
`Commission, 11 (May 22, 2015),
`https://www.ftc.gov/system/files/documents/federal_register_notices/2015/05/150522 mag-
`mossfrn.pdf).
` https://www.ftc.gov/system/files/documents/reports/nixing-fix-ftc-report-congress-repair-
`restrictions/nixing_the_fix_report_final_5521_630pm-508_002.pdf, pg 14.
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`
` 8
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` 7
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`7
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`Case 1:22-cv-06815-NRB Document 1 Filed 08/10/22 Page 8 of 20
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`manufacturers restrict independent repair and repair by consumers through [inter alia] Product
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`designs that complicate or prevent repair; … Policies or statements that steer consumers to
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`manufacturer repair networks; … [and] Disparagement of non-OEM parts and independent
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`repair[.]”9
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`31.
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`The 2021 FTC Report confirmed that MMWA-violative conduct was rampant in
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`the marketplace:
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`The Commission continues to receive reports of companies not
`complying with the MMWA. In response to staff’s call for empirical
`research and comments related
`to
`the Workshop, several
`organizations reported that warranty tying continues to be prevalent
`in the marketplace. For example, the Education Fund of U.S. PIRG,
`the federation of state Public Interest Research Groups (PIRGs),
`submitted an October 2018 study analyzing warranties from 50
`companies. U.S. PIRG concluded that 45 of the 50 companies had
`warranties that appeared to violate Section 102(c) of the MMWA.
`Likewise, the Specialty Equipment Market Association (SEMA)
`submitted a comment stating that it regularly receives complaints
`that automobile dealerships void automobile warranties if the
`dealership finds a specialty part (e.g., custom wheels) had been
`installed on the automobile, regardless of whether the specialty part
`caused the automobile to malfunction. Other commenters submitted
`information claiming that certain warrantors either expressly or by
`implication continue to condition warranty coverage of the use of
`particular products or services. … Tying is illegal where the effect
`is to impair competition and harm consumers in the market for either
`the tying product or the tied product.10
`
`Section 5 of the Federal Trade Commission Act prohibits unfair or deceptive
`
`32.
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`actions or practices, as well as unfair methods of competition, in or affecting commerce. Section
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`5 also encompasses violations of the Sherman Act, which prohibits certain exclusionary and other
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`anticompetitive conduct. See, e.g., Eastman Kodak Co. v. Image Technical Servs., Inc., 504 U.S.
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`451 (1992); United States v. Microsoft, 253 F.3d 34 (D.C. Cir. 2001).
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`9 Id., pg 6.
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`10 Id., pg 8.
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`8
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`Case 1:22-cv-06815-NRB Document 1 Filed 08/10/22 Page 9 of 20
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`33.
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`The FTC has noted that “[r]estricting consumers and businesses from choosing how
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`they repair products can substantially increase the total cost of repairs, generate harmful electronic
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`waste, and unnecessarily increase wait times for repairs. In contrast, providing more choice in
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`repairs can lead to lower costs, reduce e-waste by extending the useful lifespan of products, enable
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`more timely repairs, and provide economic opportunities for entrepreneurs and local businesses.”11
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`34.
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`The FTC has issued several warning letters to companies that appeared to be
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`engaged in warranty tying in violation of the Magnuson-Moss Warranty Act and has brought at
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`least one enforcement action. See e.g. Exhibits 1-6.
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`35.
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`This includes letters to companies that offer ostensibly free repairs under the
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`warranty.
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`36. Microsoft, for example, was sent a compliance warning letter from the FTC for
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`including a provision in the Xbox One warranty that stated that “Microsoft is not responsible and
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`this warranty does not apply if Your Xbox One or Accessory is: ... (f) repaired by anyone other
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`than Microsoft.” See Exhibit 1. This is despite the warranty stating that “Microsoft will (at its
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`option) repair or replace it, or refund the purchase price to You.” See Exhibit 8, pg. 2.
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`37.
`
`In response to this enforcement letter, Microsoft updated their warranty to remove
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`the offending provision.12 13
`
`
`11https://www.ftc.gov/system/files/documents/public_statements/1592330/p194400repairrestricti
`onspolicystatement.pdf, pg 1.
`
`12 https://www.ign.com/articles/2018/05/10/nintendo-and-sony-update-their-warranty-policies-
`following-ftc-warning (last accessed June 6, 2022).
`
`13 See exhibit 9 for Microsoft’s updated warranty.
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`9
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`Case 1:22-cv-06815-NRB Document 1 Filed 08/10/22 Page 10 of 20
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`38.
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`The FTC has concluded that “it is clear that repair restrictions … steered consumers
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`into manufacturers’ repair networks or to replace products before the end of their useful lives.”14
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`39.
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`The FTC has also expressed concern that tying arrangements “may place a greater
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`financial burden on communities of color and lower-income Americans.”15
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`40. While manufacturers explain that these tying arrangements often arise from their
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`desire to protect intellectual property rights and prevent injuries and other negative consequences
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`resulting from improper repairs, the FTC has found that such justifications “should be rejected if
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`found to be a mere pretext for anticompetitive conduct.”16
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`41.
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`Here there is no justification for Defendant’s tying arrangements since the
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`technology inside many of Defendant’s Products (such as its espresso and coffee machines) are
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`well-known and simple.
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`42.
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`Due to these factors, on July 21, 2021, the FTC unanimously voted to ramp up law
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`enforcement against tying arrangements that prevent small businesses, workers, consumers, and
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`even government entities from fixing their own products.17
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`CLASS REPRESENTATION ALLEGATIONS
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`Plaintiff seeks to represent a class defined as all purchasers of Nespresso Vertuo
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`43.
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`branded products in the United States with warranty provisions that prohibit self-repair and/or the
`
`
`14 “Nixing the Fix: An FTC Report to Congress on Repair Restrictions”, available at
`https://www.ftc.gov/system/files/documents/reports/nixing-fix-ftc-report-congress-repair-
`restrictions/nixing_the_fix_report_final_5521_630pm-508_002.pdf, pg 6.
`
`15 Id. at 5.
`
`16 Id. at 10.
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`17 https://www.ftc.gov/news-events/press-releases/2021/07/ftc-ramp-law-enforcement-against-
`illegal-repair-restrictions.
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`
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`10
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`Case 1:22-cv-06815-NRB Document 1 Filed 08/10/22 Page 11 of 20
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`use of unauthorized parts (the “Class”). Excluded from the Class are persons who made such
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`purchases for the purpose of resale.
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`44.
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`Plaintiff also seeks to represent a subclass of all Class Members who purchased
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`Nespresso Vertuo branded products in the Commonwealth of Massachusetts with warranty
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`provisions that prohibit self-repair and/or the use of unauthorized parts (the “Massachusetts
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`Subclass”) (collectively with the Class, the “Classes”).
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`45.
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`Subject to additional information obtained through further investigation and
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`discovery, the above-described Classes may be modified or narrowed as appropriate, including
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`through the use of multi-state subclasses.
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`46.
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`At this time, Plaintiff does not know the exact number of members of the
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`aforementioned Class and Massachusetts Subclass (“Class Members” and “Subclass Members,”
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`respectively) but believes it numbers in the hundreds of thousands. Given the size of the
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`Defendant’s operation and the number of retail stores in the United States selling Defendant’s
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`Products, Plaintiff believes that Class and Subclass Members are so numerous that joinder of all
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`members is impracticable.
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`47.
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`There is a well-defined community of interest in the questions of law and fact
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`involved in this case. Questions of law and fact common to the members of the Classes that
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`predominate over questions that may affect individual Class Members include:
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`(a) Whether Defendant misrepresented and/or failed to disclose
`material facts concerning the Products;
`(b) whether Defendant’s conduct was unfair and/or deceptive;
`(c) whether Defendant has been unjustly enriched as a result of the
`unlawful conduct alleged in this Complaint such that it would be
`
`
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`11
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`Case 1:22-cv-06815-NRB Document 1 Filed 08/10/22 Page 12 of 20
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`inequitable for Defendant to retain the benefits conferred upon
`Defendant by Plaintiff and the Classes;
`(d) whether Plaintiff and the Classes sustained damages with respect
`to the common law claims asserted, and if so, the proper measure
`of their damages;
`(e) whether Defendant’s conduct violates the Magnuson-Moss
`Warranty Act; and
`(f) whether Defendant’s conduct violates section 5 of the Federal
`Trade Commission Act.
`
`48.
`
`Plaintiff’s claims are typical of those of the Classes because Plaintiff, like all
`
`members of the Classes, purchased, in a typical consumer setting, Defendant’s Products, and
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`Plaintiff sustained damages on account of Defendant’s wrongful conduct.
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`49.
`
`Plaintiff will fairly and adequately protect the interests of the Classes and has
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`retained counsel that is experienced in litigating complex class actions. Plaintiff has no interests
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`which conflict with those of the Classes.
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`50.
`
`A class action is superior to other available methods for the fair and efficient
`
`adjudication of this controversy, especially given the potentially low individual damages suffered
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`by individual class members.
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`51.
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`The prosecution of separate actions by members of the Classes would create a risk
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`of establishing inconsistent rulings and/or incompatible standards of conduct for Defendant. For
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`example, one court might enjoin Defendant from performing the challenged acts, whereas another
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`might not. In addition, individual actions could be dispositive of the interests of the Classes even
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`where certain Class or Subclass Members are not parties to such actions.
`
`COUNT I
`Violation Of The Magnuson-Moss Warranty Act,
`15 U.S.C. §§ 2301, et seq.
`
`
`
`12
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`Case 1:22-cv-06815-NRB Document 1 Filed 08/10/22 Page 13 of 20
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`Plaintiff incorporates by reference and re-alleges herein all paragraphs alleged
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`52.
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`above.
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`53.
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`Plaintiff brings this claim individually and on behalf of the members of the
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`proposed Classes against Defendant.
`
`54.
`
`55.
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`The Products are consumer products as defined in 15 U.S.C. § 2301(1).
`
`Plaintiff and the Class and Subclass Members are consumers as defined in 15
`
`U.S.C. § 2301(3).
`
`56.
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`Defendant is a supplier and warrantor as defined by the Warranty Act because it is
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`a supplier or entity who gives or offers to give a written warranty or who are or may be obligated
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`under an implied warranty. 15 U.S.C. § 2301(4) and (5).
`
`57.
`
`No warrantor may condition the continued validity of a warranty on the use of only
`
`authorized repair service and/or authorized replacement parts for non-warranty service and
`
`maintenance (other than an article of service provided without charge under the warranty or unless
`
`the warrantor has obtained a waiver pursuant to section 102(c) of the Act, 15 U.S.C. 2302(c)). 16
`
`CFR § 700.10(c).
`
`58.
`
`In connection with the marketing and sale of the Product, Defendant has
`
`conditioned a warranty on the consumer’s using, in connection with the warranted Product, with
`
`the use of only an authorized repair service and/or authorize replacement parts. 16 CFR §
`
`700.10(c).
`
`
`
`13
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`Case 1:22-cv-06815-NRB Document 1 Filed 08/10/22 Page 14 of 20
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`59.
`
`Specifically, Defendant’s warranty states: “This appliance is designed for
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`Nespresso Vertuo coffee capsules available exclusively through the Nespresso Club or your
`
`Nespresso authorized representative.”18
`
`60.
`
`Defendant’s warranty also states the following: “Only use capsules intended for
`
`this appliance,”19 and “This machine operates with Nespresso Vertuo capsules.”20
`
`61.
`
`Defendant’s warranty also states, “This limited guarantee does not apply to any
`
`defect resulting from … failure to follow the product instructions … [or] unauthorized product
`
`modification or repair.”21
`
`62.
`
`In these passages, Defendant clearly implies that the full advantage of the Product’s
`
`Warranty is only available to users who purchase expensive first party Nespresso Vertuo Coffee
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`Capsules.
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`63.
`
`Additionally, warrantors offering a limited warranty that provides only for the
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`replacement of defective parts and no portion of labor charges, are prohibited from conditioning
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`that the consumer use only service (labor) identified by the warrantor to install the replacement
`
`parts. A warrantor or her designated representative may not provide parts under the warranty in a
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`manner which impedes or precludes the choice by the consumer of the person or business to
`
`perform necessary labor to install such parts. 16 C.F.R. § 700.10(b).
`
`
`18
`https://www.nespresso.com/shared_res/mos/docs/us/US_VERTUO_NEXT_USER_MANUAL.p
`df.
`
`19 Id.
`
`20 Id.
`
`21 Id.
`
`
`
`
`14
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`

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`Case 1:22-cv-06815-NRB Document 1 Filed 08/10/22 Page 15 of 20
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`64.
`
`Defendant also violates this provision by requiring that any modification of
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`Defendant’s products be performed with the authorization of Defendant, specifically stating, “Any
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`servicing other than cleaning and user maintenance should be performed by an authorized service
`
`representative.”22
`
`65.
`
`By reason of Defendant’s breach of warranties, Defendant violated the statutory
`
`rights due Plaintiff and the Class and Subclass Members pursuant to the Magnuson-Moss Warranty
`
`Act, 15 U.S.C. §§ 2301, et seq., thereby economically damaging Plaintiff and the Class and
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`Subclass Members.
`
`66.
`
`Plaintiff and the Class and Subclass Members were injured as a direct and
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`proximate result of Defendant’s breach because they would not have purchased the Products if
`
`they knew the truth about the unlawful nature of the Products or would have paid substantially less
`
`for them.
`
`67.
`
`Plaintiff and the Class and Subclass Members were also injured as a direct and
`
`proximate result of Defendant’s breach because Defendant’s breach caused Plaintiff and members
`
`of the Classes to purchase Nespresso Vertuo branded coffee capsules at inflated prices, rather than
`
`cheaper third-party coffee capsules.
`
`COUNT II
`Unjust Enrichment
`
`Plaintiff incorporates by reference and re-alleges herein all paragraphs alleged
`
`68.
`
`above.
`
`69.
`
`Plaintiff brings this claim individually and on behalf of the members of the
`
`proposed Classes against Defendant.
`
`
`22
`https://www.nespresso.com/shared_res/mos/docs/us/US_VERTUO_NEXT_USER_MANUAL.p
`df, pg 8.
`
`
`
`15
`
`

`

`Case 1:22-cv-06815-NRB Document 1 Filed 08/10/22 Page 16 of 20
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`70.
`
`Plaintiff and members of the Classes conferred benefits on Defendant by
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`purchasing the Products.
`
`71.
`
`Defendant has been unjustly enriched in retaining the revenues derived from
`
`Plaintiff and Class and Subclass Members’ purchases of the Product. Retention of those moneys
`
`under these circumstances is unjust and inequitable because Defendant did not disclose that the
`
`tying arrangement was unlawful and unenforceable. These omissions caused injuries to Plaintiff
`
`and Class and Subclass members because they would not have purchased the Products if the true
`
`facts were known or would have paid substantially less for the Products. Plaintiff and the Class
`
`and Subclass Members were also injured as a direct and proximate result of Defendant’s omissions
`
`because Defendant’s omissions caused Plaintiff and members of the Classes to purchase Nespresso
`
`Vertuo branded coffee capsules at inflated prices rather than cheaper third-party coffee capsules
`
`72.
`
`Because Defendant’s retention of the non-gratuitous benefits conferred on it by
`
`Plaintiff and members of the Classes is unjust and inequitable, Defendant must pay restitution to
`
`Plaintiff and members of the Classes for its unjust enrichment, as ordered by the Court.
`
`COUNT III
`Fraud
`
`Plaintiff incorporates by reference and re-alleges herein all paragraphs alleged
`
`73.
`
`above.
`
`74.
`
`Plaintiff brings this claim individually and on behalf of the members of the Classes
`
`against Defendant.
`
`75.
`
`As discussed above, Defendant provided Plaintiff and members of the Classes with
`
`false or misleading material information about the Products.
`
`76.
`
`Specifically, Defendant indicated to Plaintiff and members of the Classes that they
`
`would be unable to repair or use parts not authorized by Defendant on the products that they had
`
`
`
`16
`
`

`

`Case 1:22-cv-06815-NRB Document 1 Filed 08/10/22 Page 17 of 20
`
`just purchased. Defendant knowingly added this provision in order to encourage Plaintiff and
`
`members of the Classes to purchase new Products and/or Nespresso Vertuo branded Coffee
`
`Capsules at inflated prices rather than purchase third-party coffee capsules.
`
`77.
`
`Defendant misrepresented these unlawful tying arrangements as binding and
`
`enforceable even though such restrictions were explicitly unlawful according to FTC regulations
`
`and thus unenforceable.
`
`78.
`
`79.
`
`These misrepresentations were made with knowledge of their falsehood.
`
`The misrepresentations made by Defendant, upon which Plaintiff and members of
`
`the Classes reasonably and justifiably relied, were intended to induce, and actually induced
`
`Plaintiff and members of the Classes to purchase Nespresso Vertuo branded coffee capsules that
`
`they otherwise would not have or at least pay substantially more for the coffee capsules than they
`
`would have.
`
`80.
`
`The fraudulent actions of Defendant caused damage to Plaintiff and members of
`
`the Classes in the form of price premiums. Thus, Plaintiff and members of the Classes are entitled
`
`to damages and other legal and equitable relief as a result.
`
`COUNT IV
`Fraudulent Omission
`
`Plaintiff incorporates by reference and re-alleges herein all paragraphs alleged
`
`81.
`
`above.
`
`82.
`
`Plaintiff brings this claim individually and on behalf of the members of the
`
`proposed Classes against Defendant.
`
`83.
`
`This claim is based on fraudulent omissions concerning the unlawfulness of the
`
`tying arrangements that are included in Defendant’s warranties. As discussed above, Defendant
`
`failed to disclose that the Products’ tying arrangements were unlawful and unenforceable.
`
`
`
`17
`
`

`

`Case 1:22-cv-06815-NRB Document 1 Filed 08/10/22 Page 18 of 20
`
`84.
`
`The false and misleading omissions were made with knowledge of their falsehood.
`
`Defendant manufactures, markets, and sells consumer products nationwide and knows that the
`
`FTC has stated that tying arrangements of the type that appears on Defendant’s warranty are
`
`unlawful. Nonetheless, Defendant continued to include its unlawful tying arrangements on its
`
`Products.
`
`85.
`
` The false and misleading omissions were made by Defendant, upon which Plaintiff
`
`and members of the proposed Classes reasonably and justifiably relied, and were intended to
`
`induce, and actually induced, Plaintiff and members of the Classes to purchase Products that they
`
`otherwise would not have or at least pay substantially more for the Products than they otherwise
`
`would have.
`
`86.
`
`The fraudulent actions of Defendant caused damage to Plaintiff and members of
`
`the proposed Classes, who are entitled to damages and punitive damages.
`
`COUNT V
`Declaratory Judgment
`Plaintiff incorporates by reference and re-alleges each and every allegation set forth
`
`87.
`
`above as though fully set forth herein.
`
`88.
`
`Plaintiff brings this claim individually and on behalf of members of the Classes
`
`against Defendant.
`
`89.
`
`As described above, under Federal law it is unlawful for Defendant to condition the
`
`continued validity of a warranty on the use of only an authorized repair service and/or authorized
`
`replacement parts.
`
`90.
`
`As currently written, Plaintiff cannot take full advantage of her Product’s warranty
`
`without purchasing Nespresso Vertuo branded Coffee Capsules at inflated prices.