In 2012, Plaintiff Chad Brazil filed a consumer class action against Dole, alleging that the labels on a total of 38 varieties of Dole’s packaged fruit misleadingly describe the products as “all natural,” despite Dole’s use of artificial ingredients, including chemical preservatives synthetic citric acid and ascorbic acid. See Order Granting in Part and Denying in Part Motion for Class Certification, Brazil v. Dole Packaged Foods, LLC, No. 12-CV-01831-LHK, 2014 WL 2466559, at *1-2 (N.D. Cal. May 30, 2014). Brazil then filed a motion for class certification on January 31, 2014, limiting the claims therein to 10 products and the “All Natural Fruit” label statement. Id. at *3. In May 2014, Judge Koh granted in part the plaintiff’s motion for certification under Rule 23(b)(2) to seek declaratory and injunctive relief, but denied it to the extent that monetary damages were sought under Rule 23(b)(2), reasoning they were “more properly brought under Rule 23(b)(3).” Id. at *11. Thus, the court also certified a California damages class under Rule 23(b)(3) instead, noting that, pursuant to the Unfair Competition Law (UCL), False Advertising Law (FAL), and Consumers Legal Remedies Act (CLRA), “[t]he proper measure of restitution in a mislabeling case is the amount necessary to compensate the purchaser for the difference between a product as labeled and the product as received.” Id. at *15.
Judge Koh’s analysis of the damages models proffered by Brazil is instructive in the context of class actions involving the mislabeling of consumer products. The Brazil plaintiff offered three different damages models to the court. The court rejected the first option, the “Full Refund Model” (refunding the entire purchase price of the relevant product), as inconsistent with the plaintiff’s theory of liability “because it is based on the assumption that consumers receive no benefit whatsoever from purchasing the identified products. This cannot be the case, as consumers received benefits in the form of calories, nutrition, vitamins, and minerals.” Order Granting in Part and Denying in Part Motion for Class Certification, Brazil v. Dole Packaged Foods, LLC, 2014 WL 2466559, at *15. The court also rejected the plaintiff’s second option, the “Price Premium Model,” which proposed calculating the difference in price between the challenged products and comparable products without the “All Natural” label statements, as too speculative. Id. at *16. As Judge Koh explained, the model “‘assumed that 100% of that price difference [is] attributable to [Dole]’s alleged misrepresentations’” and thus fails under Comcast. Id. (quoting In re POM Wonderful LLC, 2014 WL 1225184, at *5 (C.D. Cal. Mar. 25, 2014)). However, the court accepted the third option, the “Regression Model,” which examined sales of the identified products before and after Dole placed the alleged misrepresentations on its product labels, using regression analysis to control for other variables that could otherwise explain changes in Dole’s sales. Id. at *17. Judge Koh found that this model sufficiently tied damages to Dole’s alleged liability under Comcast because the regression analysis “isolates the effect of the alleged misrepresentation by controlling for all other factors that may affect the price of Dole’s fruit cups and the volume of Dole’s sales.” Id. The injunction and damages classes where certified accordingly.
However, once the plaintiff’s expert report had been filed, Dole filed a motion to decertify on August 21, 2014, contending that the regression model could not adequately assess damages on a class-wide basis and that the damages and injunction classes were not ascertainable, which the court partially granted and partially denied. The court held that the plaintiff failed to tie damages to his theory of liability because “the labels for nine of the ten products certified did not actually change during the class period,” precluding the methodology proposed by the preliminarily approved Regression Model. See Order Granting in Part and Denying in Part Motion to Decertify, Brazil v. Dole Packaged Foods, LLC, 2014 WL 5794873, at *6 (N.D. Cal. Nov. 6, 2014). In granting Dole’s motion to decertify the damages class, Judge Koh opined that, ultimately, the regression analysis used instead to compensate for the unanticipated data was too speculative and failed to meet the Rule 23(b)(3) requirement that common issues predominate over individual ones. Id. at *14. She denied Dole’s motion to decertify the injunction class, however, on the grounds that it remained ascertainable. Id. at *15.
The district court also granted a motion for summary judgment, primarily on the grounds that Brazil’s arguments that the “All Natural Fruit” statement on Dole product labels was likely to mislead reasonable consumers generally were too conclusory to support any triable issues of fact. See Order Granting Defendant’s Motion for Summary Judgment, Brazil v. Dole Packaged Foods, LLC, 2014 WL 6901867, at *4 (N.D. Cal. Dec. 8, 2014), aff’d in part, rev’d in part, No. 14-17480, 2016 WL 5539863 (9th Cir. Sept. 30, 2016). For example, Brazil’s own testimony that he was misled, without more, and citing the FDA’s informal definition of the term “natural” as “evidence of how reasonable consumers would view” the “All Natural Fruit” label while presenting no evidence that citric acid and ascorbic acid “would not normally be expected to be in” those products, per the FDA definition, was insufficient to create a genuine dispute of material fact. Id. at *4-5.
The plaintiff appealed the district court’s orders on defendant’s motions to dismiss, for summary judgment, and on plaintiff’s motion for class certification. In an unpublished order, the Ninth Circuit recently held that summary judgment on the merits for claims under the UCL, FAL, and CLRA had been erroneously granted, finding that a reasonable consumer could have been misled by the challenged labels. Brazil v. Dole Packaged Foods, LLC, No. 14-17480, 2016 WL 5539863 (9th Cir. Sept. 30, 2016) (slip op. available here). The panel, however, affirmed the decision to grant Dole’s motion to decertify the class, agreeing that “Brazil did not explain how this [price] premium could be calculated with proof common to the class.” Slip op. at 7. The panel also affirmed dismissal of Brazil’s class-wide claim for unjust enrichment on the same grounds, noting, however, that its recent decision in Astiana v. Hain Celestial Grp., Inc. provides that “unjust enrichment claims may be pleaded in the alternative in quasi-contract” and preserving his individual claim. Id. at 8 (citing Astiana, 783 F.3d 753 (9th Cir. 2015)). The case was remanded to resolve claims on behalf of the injunction class and Brazil’s individual claim for restitution.
A final, compelling question raised in Brazil regarding plaintiff’s burden of proof, but not resolved by either Judge Koh or the Ninth Circuit and specific to claims of misbranding or mislabeling, is whether “non-binding FDA policy statements,” which do not specifically regulate labeling statements, make such statements material as a matter of law. Brazil, 2014 WL 2466559, at *8; Brazil, 2014 WL 6901867, at *6. As Judge Koh noted, “[a]bsent any evidence that reasonable consumers would not normally expect citric acid and ascorbic acid to be found in the challenged Dole products, Brazil cannot rely on FDA’s informal policy to show that those consumers were likely to have been misled,” the judge said. Brazil, 2014 WL 6901867, at *6. The Brazil opinions as a whole stress the evidentiary burden plaintiffs face in alleging class claims for product liability, generally, as well as the particular challenge of establishing a reasonable, class-wide damages calculations that will satisfy Rule 23(b)(3) under Comcast.
Karen Wallace, Associate
CAPSTONE LAW APC