Extracted from Law360
Courts issued many class certification opinions in food and beverage class actions during the first half of 2014. These opinions demonstrate the continued difficulty in certifying food and beverage class actions, as only four[1] of the 11[2] opinions analyzed certified a class. In all cases, the Third Circuit’s ascertainability analysis in Carrera,[3] the U.S. Supreme Court’s predominance analysis of damages models in Comcast,[4] and the Ninth Circuit’s choice-of-law decision in Mazza[5] are emerging as the precedents having the most impact on the certification decision.
Ascertainability
In the wake of Carrera, many of 2014’s food and beverage class certification decisions turned on ascertainability. For example, in Brazil v. Dole Packaged Foods LLC,[6] the Northern District of California certified a class of all California residents who purchased Dole products that were labeled “all natural,” but contained allegedly synthetic ingredients.[7] Relying on Carrera, Dole argued that the class was not ascertainable because it lacked company records to identify relevant purchasers.[8] The court disagreed, holding that Carrera “is not currently the law in the Ninth Circuit.”[9] The court continued, “[i]n this circuit, it is enough that the class definition describes a set of common characteristics sufficient to allow a prospective plaintiff to identify himself or herself as having a right to recover based on the description.”[10]
Importantly, the court distinguished Carrera because “here all of the purchasers of the identified products are included in the class definition and all identified Dole products bore the same alleged misstatements,”[11] so purchasers could likely proffer reliable affidavits demonstrating class membership. Thus, a consumer would only have to remember that she bought the product as opposed to identifying a version with a particular label. Notably, the decision does not mention a defendant’s right to due process, which was crucial in Carrera. The court focused instead on the reliability of the affidavits, apparently implying that a sufficiently reliable affidavit provides the due process to which a defendant is entitled. The same judge issued a virtually identical order in Werdebaugh v. Blue Diamond Growers,[12] where consumers alleged that Blue Diamond’s almond milk was not “all natural.” Moreover, in Lanovaz v. Twinings North America Inc.,[13] a California court certified an injunctive relief class also finding that the class was ascertainable because holding otherwise “would be the death of consumer class actions.”[14]
Despite California’s permissive approach to ascertainability in those decisions, a court decertified a class in In re Pom Wonderful LLC,[15] on these grounds. It reasoned that because of limited sales records and because the allegedly misleading “100 percent juice” statement was made only in Pom’s advertising, it would be too difficult to identify those purchasers who saw the alleged misleading statement.[16] Several other 2014 decisions refused to certify classes on ascertainability grounds utilizing a similar rationale.[17] In Bruton v. Gerber Products Co.,[18] for example, the court held that the class was not ascertainable because “[t]he number of products at issue in this case, the varieties included and not included in the class definition, the changes in product labeling throughout the class period, the varied and uncertain length of time it takes for products with new labels to appear on store shelves and the fact that the same products were sold with and without the challenged label statements simultaneously ma[d]e plaintiff’s proposed class identification method administratively unfeasible.”[19]
In Ebin v. Kangadis Food Inc.,[20] one of two 2014 class certifications decisions from a non-California court, the Southern District of New York certified a class of all purchasers of Capatriti "100 percent Pure Olive Oil," which plaintiffs alleged was improperly labeled as “100 percent pure.” Interestingly, the Ebin court questioned ascertainability but declined to deny certification because “the class action device, at its very core, is designed for cases like this where a large number of consumers have been defrauded but no one consumer has suffered an injury sufficiently large as to justify bringing an individual lawsuit. Against this background, the ascertainability difficulties, while formidable, should not be made into a device for defeating the action.”[21] The court did not address defendant’s due process rights discussed in Carrera.
Predominance
Comcast Issues
Whether a proposed class could satisfy Comcast’s requirement for a classwide damages model was frequently litigated in the first half of 2014. In general, the Comcast analysis hinged on the viability of plaintiffs’ proposed regression analysis, as simpler theories such as a purchase price model generally failed to support class certification.
In Brazil, for example, plaintiffs offered three damages models in their effort to satisfy Comcast. The court concluded that neither a “full refund” model nor a “price premium” damages model satisfied Comcast. A “full refund” model ignored plaintiffs’ received benefits and a “price premium” model failed to account for the fact that a premium may be placed on the product for several reasons.[22] However, the court held that the proffered regression model “sufficiently tie[d] damages to Dole’s alleged liability under Comcast,” because it allowed the plaintiff to compare Dole’s profits for the same product with and without the allegedly misleading label.[23]
As in Brazil, other courts found that damages models did not satisfy Comcast where plaintiffs proffered only a “full refund” or “price premium” model.[24] The decisions also make clear that not just any proffered regression analysis will support class certification. In Lanovaz, for example, plaintiffs could not rely on the initially proffered regression analysis because the misleading statement had been on the product labels “over the entire class period,” meaning there was no way to establish the price premium attributable to the allegedly misleading label alone.[25] Similarly, in Jones v. ConAgra Foods Inc., the court held that plaintiff’s expert had not sufficiently described his proffered regression analysis to permit certification.[26]
Choice of Law
In the first half of 2014, no court certified a nationwide 23(b)(3) class action in a food or beverage case; instead, courts certified two California classes, one class of purchasers from several states and one 23(b)(2) class. In Ebin, for example, unlike in other cases, the product was sold only “throughout the Northeast,” not nationwide.[27] Accordingly, the court held that “a survey of potentially applicable state laws [including the laws of New York, Connecticut, Pennsylvania and Vermont], reveal[ed] no material difference that would affect the merits of the class' common law claims at trial,” so the court certified a multistate class.[28]
In Brazil and Werdebaugh, the courts held that it was only proper to certify a class of California plaintiffs.[29] In both cases, the court walked through California’s three-step government interest choice-of-law test, noting first that there were material differences “between California’s consumer protection regime and that of other states ... including: (1) injury requirements, (2) deception requirements, (3) scienter, (4) reliance, (5) prefiling notice requirements, (6) statutes of limitation, (7) restrictions on consumer protection class actions and (8) remedies.”[30] The courts also held that each state had an interest in applying its own law, and finally, that other states’ interests would be more impaired than California’s if those states’ laws were not applied.
Materiality
Less than half of the opinions analyzed discussed the materiality of the allegedly misleading statements, and only one court held that individual issues regarding materiality predominated, thereby defeating certification.
Under California law, a plaintiff can establish materiality by showing that a “‘reasonable man would attach importance to the existence or nonexistence of the information in determining’” whether to buy the product.[31] In Brazil, Werdebaugh and Lanovaz, the courts held that no individualized examination of materiality was necessary.
On the other hand, in Jones, the court held that individual inquiries regarding materiality precluded class certification.[32] In Jones, to establish that a reasonable consumer would attach significance to the challenged label statements, plaintiffs submitted an expert affidavit where the expert failed to explain how the challenged statements were a factor in any purchasing decisions. The expert also did not survey any customers to assess whether the statements were material to them, and she even conceded that she personally did not pay attention to “natural” claims.[33]
Conclusions
These 2014 food and beverage cases suggest that defendants should continue to create a robust factual record at the class certification stage that provides a developed basis for challenging ascertainability and plaintiffs’ damages model. Contesting materiality has been less successful for defendants, but a successful challenge is possible in the right court, and a defendant would be well-served in all instances to generate evidence sufficient to rebut materiality.
Though expensive, consumer surveys demonstrating that a given statement is not “material” to the reasonable consumer can be persuasive and might require plaintiffs to go beyond the pleadings at the class certification stage. Overall, the cases demonstrate that the particular court continues to have a large impact on the certification decision, and inconsistency in the class certification decisions remains the norm.
[1] Brazil v. Dole Packaged Foods LLC, No. 12- cv -01831, 2014 U.S. Dist. LEXIS 74234 (N.D. Cal. May 30, 2014); Ebin v. Kangadis Food Inc., 297 F.R.D. 561 (S.D.N.Y. 2014); Lanovaz v. Twinings N. Am. Inc., No. C-12-02646, 2014 U.S. Dist. LEXIS 57535 (N.D. Cal. Apr. 24, 2014); Werdebaugh v. Blue Diamond Growers, 12-CV-2724, 2014 U.S. Dist. LEXIS 71575 (N.D. Cal. May 23, 2014).
[2] Astiana v. Ben & Jerry’s Homemade Inc., No. C 10-4387, 2014 U.S. Dist. LEXIS 1640 (N.D. Cal. Jan. 7, 2014); Brazil, 2014 U.S. Dist. LEXIS 74234; Bruton v. Gerber Prods. Co. 12-CV-02412, 2014 U.S. Dist. LEXIS 86581 (N.D. Cal., June 23, 2014); Caldera v. J.M. Smucker Co., CV 12-4936, 2014 U.S. Dist. LEXIS 53912 (C.D. Cal. Apr. 15, 2014); Ebin, 297 F.R.D. 561; In re POM Wonderful, ML 10-02199, 2014 U.S. Dist. LEXIS 40415 (C.D. Cal. Mar. 25, 2014); Jones v. ConAgra Foods Inc., No. C 12-01633, 2014 U.S. Dist. LEXIS 81292 (N.D. Cal. June 13, 2014); Lanovaz, 2014 U.S. Dist. LEXIS 57535; Sethavanish v. ZonePerfect Nutrition Co., No. 12-2907, 2014 U.S. Dist. LEXIS 18600 (N.D. Cal. Feb. 13, 2014); Stewart v. Beam Global Spirits & Wine Inc., No. 11-5149, 2014 U.S. Dist. LEXIS 87487 (D.N.J. June 27, 2014); Werdebaugh, 2014 U.S. Dist. LEXIS 71575.
[3] Carrera v. Bayer Corp., 727 F.3d 300 (3d Cir. 2013).
[4] Comcast v. Behrend, 133 S. Ct. 1426 (2013).
[5] Mazza v. Am. Honda Motor Corp., 666 F.3d 581 (9th Cir. 2012).
[6] No. 12-cv-01831, 2014 U.S. Dist. LEXIS 74234 (N.D. Cal. May 30, 2014).
[7] Id.
[8] Id. at *16.
[9] Id. at *18 (quoting McCrary v. The Elations Co. LLC, No. 13-242, 2014 U.S. Dist. LEXIS 8443 (C.D. Cal. Jan. 13, 2014).
[10] Id.
[11] Id. at *20.
[12] 12-cv-2724, 2014 U.S. Dist. LEXIS 71575 (N.D. Cal. May 23, 2014).
[13] No. C-12-02646, 2014 U.S. Dist. LEXIS 57535 (N.D. Cal. Apr. 24, 2014).
[14] Id. at *8-*9.
[15] 2014 U.S. Dist. LEXIS 40415 (C.D. Cal. Mar. 25, 2014).
[16] Id.
[17] See, e.g., Astiana v. Ben & Jerry’s Homemade Inc., 2014 U.S. Dist. LEXIS 1640, at *9-*11; Sethavanish v. ZonePerfect Nutrition Co., 2014 U.S Dist. LEXIS 18600, at *17-*18.
[18] 12-CV-02412, 2014 U.S. Dist. LEXIS 86581 (N.D. Cal., June 23, 2014).
[19] Id. at *29.
[20] 297 F.R.D. 561 (S.D.N.Y. 2014)
[21] Id.
[22] Brazil, 2014 U.S. Dist. LEXIS 74234, at *52-*57.
[23] Id. at *59. See also Werdebaugh, 2014 U.S. Dist. LEXIS 71575.
[24] See also Astiana, 2014 U.S. Dist. LEXIS 1640; Caldera v. J.M. Smucker Co., 2014 U.S. Dist. LEXIS 53912; In re POM Wonderful, 2014 U.S. Dist. LEXIS 40415 (decertifying class on this ground).
[25] Lanovaz, 2014 U.S. Dist. LEXIS 57535, at *23.
[26] Jones, 2014 U.S. Dist. LEXIS 81292 at *77-*78.
[27] Ebin, 297 F.R.D. at 570.
[28] Id.
[29] Brazil, 2014 U.S. Dist. LEXIS 74234; Werdebaugh, 2014 U.S. Dist. LEXIS 71575.
[30] Brazil, 2014 U.S. Dist. LEXIS 74234 at *44; Werdebaugh, 2014 U.S. Dist. LEXIS 71575 at *69.
[31] Brazil, 2014 U.S. Dist. LEXIS 74234 at *22 (quoting In re Steroid Hormone Prod. Cases, 181 Cal. App. 4th 145, 157 (2010)).
[32] Jones, 2014 U.S. Dist. LEXIS 81292.
[33] Id. at *56-58.