February 20, 2014
Authored by: James Smith
Another recent decision from the Northern District of California provides defendants with reason for cautious optimism regarding food labeling class actions. In Sethavanish v. ZonePerfect Nutrition Co., No. 12-20907-SC (N.D. Cal. Feb. 13, 2014), the court denied the plaintiff’s motion for class certification. That plaintiff alleged that the “all natural” representations on ZonePerfect bars were false and misleading because the bars contain at least one of ten specified non-natural ingredients. The plaintiff alleged that she regularly purchased those bars for her then-fiancé, who was an active-duty Marine who eventually deployed overseas. The plaintiff alleged that she and her fiancé relied on those representations and paid more for the ZonePerfect bars than she would have paid for other bars that were not all natural. She alternatively alleged that she would have purchased another brand of nutrition bar that truly was all natural.
In ruling on class certification, the court first addressed whether the plaintiff had standing to bring her claims. While the court’s ruling in this regard is not helpful to defendants, it is also not surprising. The defendant argued that the plaintiff did not suffer any injury because its bars are less expensive than the Pure Protein bars that the plaintiff now purchases. The defendant also noted that the plaintiff admitted that she and her fiancé were willing to purchase non-natural nutrition bars so long as they were less expensive than “all natural” alternatives. Plaintiff also admitted that she has always been willing to eat foods with artificial and synthetic ingredients. While the court saw some tension among the plaintiff’s declaration, her pleadings, and her deposition testimony, that tension was not enough to eliminate standing. From the court’s perspective, “[i]t is enough that she has asserted that she would not have purchased the product but for Defendant’s alleged misrepresentation. She bargained for a nutrition bar that was all natural, and she allegedly received one that was not.” Again, the standing threshold is not a terribly difficult one to overcome, so this ruling is not too surprising.
More helpful for defendants, however, is the court’s ruling on ascertainability. The court agreed with the defendant that the plaintiff could not define an objectively ascertainable class. The defendant overwhelmingly sells to retailers, and not directly to consumers. Records could only identify a very small fraction of consumers who purchased ZonePerfect bars in the last several years. Thus, no method existed to identify the members of the class.
The district court noted that courts in the Ninth Circuit are split on the issue. It cited Xavier v. Philip Morris USA, Inc., 787 F. Supp. 2d 1075 (N.D. Cal. 2011), as an example of a case concluding a class could not be certified when there is no way to ascertain class membership. That court declined to rely on affidavits from potential class members, reasoning that such a procedure could invite fraudulent or inaccurate claims. In that respect, the Third Circuit’s opinion in Carrera v. Bayer Corp., 727 F.3d 300 (3d Cir. 2013), also was instructive. There, the Third Circuit found that retailer records were not sufficiently thorough or accurate to identify class members. In addition, the Carrera court “held that fraudulent or inaccurate claims could dilute the recovery of absent class members, and, as a result, absent class members could argue that they were not bound by a judgment because the named plaintiff did not adequately represent them.” The court also pointed to Ries v. AriZona Beverages USA LLC, 287 F.R.D. 523 (N.D. Cal. 2012), as an example of a court rejecting a defendant’s ascertainability argument when dealing with “all natural” claims. Nonetheless, this court found the reasoning in Xavier and Carrera more persuasive. While those cases may restrict types of consumer class actions that may be certified, they do not bar such classes altogether. Because this plaintiff did not identify any method to determine class membership, let alone an administratively feasible method, the court denied class certification without prejudice.
One effect of such decisions may be to encourage class counsel to try to certify narrower classes. For example, if a manufacturer sells directly to consumers through its website, a class action plaintiff may contend that a court could certify a class of those consumers. Of course, that assumes that the manufacturer maintains adequate records of such customers. Similarly, class representatives may argue that the court may certify a class of consumers who purchased the products at retail locations with robust consumer loyalty programs. Those types of programs often track individual customer’s purchases, though the extent of data maintained varies considerably. This is not to say that such narrowed classes would be appropriate. They would bring a host of other difficult issues. Nonetheless, it would not be surprising to see plaintiffs resort to that tactic in hopes convincing a court to certify a class. Such class certification would, of course, provide the type of leverage that class counsel seek to negotiate a broader settlement.
James Smith is a partner in Bryan Cave’s Phoenix office. He is a member of the firm’s Class & Derivative Actions Client Service Group and of the Food & Beverage Practice Team.