Three Strikes, Damages Out in Recent CA Class Certification

Jones v. ConAgra Foods, Inc. is a recent case that demonstrates the damages-based hurdles to obtaining class certification.  Despite Plaintiff’s presentation of three different damages models (“full refund,” “price premium,” and “regression”), Judge Charles R. Breyer concluded each failed to demonstrate class-wide damages. Because of this failure, Judge Breyer denied class certification.

The case involved three products and their alleged deceptive labeling:

  • Hunt’s tomato products, labeled “100% Natural” and “Free of artificial ingredients & preservatives” despite containing citric acid and/or calcium chloride.
  • PAM products, labelled “100% Natural” despite containing undisclosed petrochemicals such as petroleum gas (liquefied), propane, propane 2-methyl (isobutane) and butane.
  • Swiss Miss products, labelled “Natural Source of Antioxidants” or “Natural Antioxidants Are Found in Cocoa” although they did not meet minimum nutritional requirements for the antioxidant claim

In Comcast Corp. v. Behrend, 133 S. Ct. 1426, 1433-34 (2013), the Supreme Court held that plaintiff must present a damage model that

(1) identifies damages that stem from the defendant’s alleged wrongdoing and

(2) is “susceptible of measurement across the entire class.” 133 S. Ct. at 1433-34.

Further, “At class certification, plaintiff must present a likely method for determining class damages, though it is not necessary to show that his method will work with certainty at this time.” Chavez, 268 F.R.D. at 379.  Judge Breyer rejected all three methods as follows:

 

  1. He ruled that the “full refund” model offered by the plaintiffs’ expert “fails to take into account the value class members received by purchasing the products.”
  2. He ruled that the  the “price premium” or “benefit of the bargain” model price comparison with a similar product (by Safeway Kitchens) was “inadequate” in that it included “a single comparator, given the seven product lines and multiple varieties within each Hunt’s product line.”  He also noted that the Safeway Kitchens item was a generic brand similarly labeled “100% natural” and thereby failed to serve as a valid comparison for the purposes applied.
  3. He rejected the regression / econometric model as “vague and abstract.” in that it did not clearly define its variables or identify whether they exist.

One of the chief complaints with the regard to Judge Breyer’s ruling is that there seem to be different standards being applied in different courts.  In similar matters involving Dole and Blue Diamond food products where “All Natural” labeling was also at issue, Judge Koh had accepted the regression model proposed by the same plaintiff’s expert.  Judge Koh ruled that a regression model would isolate the impact of the alleged misrepresentation and control for other factors such as advertising,and price, while not suffering from questions of different brand image and quality factors that a comparison with other products might create.

The Ninth Circuit is expected to provide some clarity when it hears the resulting appeals.

 

 

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