Claims Asserted
The first significant wave of food and beverage class action litigation challenged products that were labeled as “natural.” The plaintiff generally claimed that the products contained some ingredient that was synthetic. Another popular claim in early cases centered on the use of the term “evaporated cane juice” on labels instead of “sugar.”
The peak of “natural” and “evaporated cane juice” litigation in California seems to have passed, at least for now. The Food and Drug Administration (FDA) has indicated that it intends to provide guidance on the use of both terms. It remains to be seen whether that guidance will further slow the filing of new lawsuits based on these claims or lead to a new filing frenzy.
Now the focus has shifted from “natural litigation” to other label claims. For example, challenges to labels representing products as “healthy” have increased as plaintiffs allege the ingredients in the product render it patently unhealthy. Challenges to representations about levels of certain nutrients in a product have become more frequent, with complaints challenging representations that products are free of trans fats or partially hydrogenated oils. A number of cases have also challenged whether products were “imported from” or “made in” certain locations. Other cases have claimed that products are misleadingly labeled “handmade” when there is some manufacturing aspect to the process of making the product. There has also been a spike in the filing of cases alleging that products in containers, like tuna in cans, are improperly under-filled.
As the focus of food and beverage class actions has shifted from “natural” litigation, their geographical reach has also expanded. The Northern District of California, once dubbed the “Food Court,” is no longer alone as cases are increasingly being filed in New York, Illinois, Florida, and other states.
Pending Developments in Food and Beverage Class Actions
The coming months may bring significant changes to the legal landscape of food and beverage class actions. The FDA is expected to issue guidance on the use of the terms “natural” and “evaporated cane juice.” Although guidance on “natural” is not likely to be provided in the near future (the comment period does not even close until May 10, 2016), the FDA has stated that it intends to provide guidance on “evaporated cane juice” by the end of the year. Regardless of what substantive guidance the FDA ultimately provides, the slew of stayed “evaporated cane juice” cases will finally be allowed to progress.
Broader developments in the realm of consumer class action litigation are also on the horizon, and they may have a significant impact on food and beverage cases. Two fully briefed cases, Jones v. ConAgra Foods, Inc., No. 14-16327 (9th Cir. filed July 14, 2014), and Brazil v. Dole, No. 14-17480 (9th Cir. filed Dec. 17, 2015), present the Ninth Circuit with an opportunity to provide guidance on two key issues in food and beverage class actions: ascertainability and damages models.
Ascertainability and damages models are crucial to food and beverage class actions. Food and beverage mislabeling claims, by their nature, tend to involve products that are small consumables like boxes of cereal, canned produce, and cartons of ice cream. Consumers buying these products generally do not save their receipts and are unlikely to remember what statements were made on the label of a given product. In addition, consumers challenging representations on product labels generally have derived some benefit from their purchase and use of the product.
Jones v. Conagra. The appeal in Jones v. Conagra calls for the court to issue guidance on ascertainability. The Jones plaintiffs moved to certify three putative classes, alleging that the defendant used deceptive and misleading labels on three types of food products, including Hunt’s tomato products, PAM cooking spray products, and Swiss Miss hot cocoa products. The trial court declined to certify the class on various grounds, including that the classes were not ascertainable. Because the products were relatively low-price consumables, it was unlikely that class members had retained receipts. The defendant did not have any way to know who the ultimate purchasers of its products were. And the products’ labels had changed over the course of the class period, such that products with and without the challenged representations were being sold at the same time. The only way to identify the class members was to have them self-identify.
The plaintiffs’ appeal in Jones asks the Ninth Circuit to reverse the trial court and hold (1) that ascertainability is not an independent requirement for class certification, or (2) that the proposed class is ascertainable, because the class may be identified by objective criteria, and the trial court placed “undue importance” on products that did not contain the challenged representations.
Brazil v. Dole. The appeal in Brazil v. Dole calls for guidance on the types of damages models permissible in a small-consumable class action, particularly given the U.S. Supreme Court’s ruling in Comcast Corp. v. Behrend, 133 S. Ct. 1426 (2013). The Brazil plaintiffs sought to certify classes of consumers who had purchased ten Dole products. The plaintiffs alleged that the products’ use of the phrase “All Natural Fruit” was false and misleading. The plaintiffs presented three damages models in support of their motion for certification: (1) a full refund model, (2) a price premium model, and (3) a regression model. The court held that the only proper measure of restitution in a mislabeling case is the amount necessary to compensate the consumer for the difference between the product as labeled and the product as received. It rejected the full refund and price premium models. Although the price premium model had demonstrated that there were differences between the prices of the subject products and allegedly comparable products, the plaintiffs had failed to present any method of linking that price difference to the challenged statements. The court initially approved the regression model and certified a 23(b)(3) damages class on the ground that the model was purportedly going to isolate the effect of the alleged misrepresentation. After the plaintiffs actually presented their model, however, the court decertified the class because the regression model had failed to isolate the effect of the alleged misrepresentation.
The plaintiffs’ appeal asks the Ninth Circuit to find that the district court erred in (1) holding that the difference between the product as labeled and as sold is the only proper measure of restitution and (2) decertifying the damages class because plaintiffs had failed to present a viable way to prove class-wide damages.
The evolution of trends and case law in the food and beverage class action sphere continues. While it is uncertain which label statement will take the place that “natural” has held as the most challenged advertising claim, one thing seems clear: The Ninth Circuit’s forthcoming decisions in Jones and Brazil could significantly alter the way these claims are litigated, no matter which label statement is being challenged.
Keywords: litigation, woman advocate, class action, consumer class action, labeling, food and beverage class actions, damages models, ascertainability, FDA, regression