Class Action Litigation

Class Action Litigation
Food Week Day 2:
Food Advertising,
Labeling, and
Litigation
February 24, 2015
Renaissance Washington,
DC Downtown Hotel
Washington, D.C.
Andrew Kaplan, Partner, Crowell & Moring LLP
Trent Taylor, Partner, McGuireWoods LLP
Kara McCall, Partner, Sidley Austin LLP
Moderated by William Garvin, Partner, Buchanan Ingersoll & Rooney PC
Class Action Litigation
Feb. 24, 2015 | 90 minutes | 1:45 – 3:00 p.m. EST
WEBINAR
Food Litigation Class Actions –
Early Motions Practice
Andrew D. Kaplan
Crowell & Moring, LLP
2
Motions to Dismiss
Reasonable Consumer Standard
• Standard: whether members of the public are likely to be
deceived
• Generally question of fact not appropriate for motion to
dismiss
• But some courts have dismissed at the pleading stage based
on reasonable consumer standard:
– Pelayo v. Nestlé USA, 989 F.Supp.2d 973 (C.D. Cal. 2013)
– Werbel v. Pepsico Inc., No. C 09-04456 SBA (N.D.Cal. Dec.
10, 2013)
– Others
4
Primary Jurisdiction
• Stay or dismiss an action pending resolution of an issue
within the “special confidence” of an administrative
agency.
• Courts typically not receptive to the argument
• Recent Attempts to Use Primary Jurisdiction
– “All natural”
– Evaporated Cane Juice
5
Preemption
• Claim is preempted by federal laws and regulations such as:
– Federal Meat Inspection Act (FMIA)
– The federal Food, Drug and Cosmetic Act (FDCA)
– Nutritional Labeling and Education Act (NLEA)
• No preemption when challenged label is not directly
governed by statute or regulation
– Eggnatz v. Kashi Co., No. 12-cv-21678 (S.D. Fla.
September 5, 2014)
– Carrea v. Dreyer’s Grand Ice Cream, 475 Fed. Appx. 113
(9th Cir. 2012)
6
Pleading Deficiency
Rule 9(b)
• Pleading with Particularity
(1) What representations the plaintiff actually read and relied on?
(2) What specific statements the plaintiff claims to be misleading?
(3) Which products the plaintiff actually purchased?
(4) When the plaintiff purchased those products?
(5) Where the products were purchased?
• Claims of fraud vs. fraudulent course of conduct
• Statutes without reliance element
7
Standing
• Dispositive motion or class certification issue?
– No Standing to assert claims for products plaintiff did not
purchase- Hemy v. Perdue Farms Inc., No. 11-888 (MAS)(LHG)
(D.N.J. March 31, 2013)
– Plaintiff may have standing to assert claims based on products she
did not purchase, provided that the nonpurchased products are
“substantially similar” to the purchased products- Figy v. Frito-Lay
North America Inc., No. 3:13-cv-03988 (N.D. Cal. August 12, 2014)
– This is a question of typicality and adequacy of presentation to be
addressed at the class certification stage- Salazar v. Honest Tea,
Inc., Case No. 13cv2318 (E.D. Cal. June 9, 2014)
• Injunctive Relief
8
Benefits and Risks
• Benefits for Defendants
– Dismissal
– Narrowing claims
– Less discovery
– Opportunity to present story to judge
– Class certification arguments easier
• Risks for Defendants
– Cost
– Revealing summary judgment or class certification argument
– The possibility of plaintiffs re-pleading
9
Motion to Strike Class Allegations
Fed. R. Civ. P. 23(c)(1)(A)
• The court “[a]t an early practicable time…,must determine
by order whether to certify the action as a class action.”
• Courts have struck class allegations at the pleadings stage
when the class allegations were deficient or improper on
their face.
11
Growing Trend
• The number of defendants filing motions to strike class
allegations has significantly increased in the past few years
• Utilized early in the litigation in an effort to avoid the cost
of unnecessary class discovery and briefing
• Better success
• Risks for Defendants:
– Additional sub-classes
– Previews class certification arguments
12
Legal Framework
• Mazza v. American Honda Motor Co., Inc., 666 F.3d 581 (9th Cir. 2012)
– National class not viable
• Trazo v. Nestle USA, Inc., No. 12cv2272, 2013 WL 4083218 (N.D. Cal. Aug. 9,
2013)
– Multiple successful theories
13
Summary Judgment
• The Importance of Surveys
– Rahman v. Mott’s LLP, No. CV 13-3482 SI (N.D. Cal. Oct.
15, 2014)
• Damages Theories
– In re Cheerios Marketing and Sales Practices Litigation,
No. 09-cv-2413 (D.N.J. Sept. 10, 2012)
14
Class Action Litigation
Feb. 24, 2015 | 90 minutes | 1:45 – 3:00 p.m. EST
WEBINAR
Class Certification Issues
Trent Taylor
McGuireWoods LLP
15
Recent Trends
Maturing Litigation
Appellate Courts Digesting Food Cases
Pom Wonderful LLC v. The Coca-Cola Co.
Holding: Competitors may bring
Lanham Act claims alleging unfair
competition from false or
misleading product descriptions on
food and beverage labels regulated
by the Federal Food, Drug and
Cosmetic Act.
Judgment: Reversed and
remanded, 8-0, in an opinion by
Justice Kennedy on June 12, 2014.
Justice Breyer took no part in the
consideration of this case.
Ninth Circuit
• Brazil v. Dole Packaged Foods, LLC
• Jones v. ConAgra Foods
• Werdebaugh v. Blue Diamond Growers
Venue Shift?
Do-Overs/Mulligans
Turning of the Tide?
Turning of the Tide?
• Brazil v. Dole Packaged Foods, LLC, 2014 WL 5794873 (N.D. Cal. Nov. 6, 2014) (granting
motion to decertify in part)
• Werdebaugh v. Blue Diamond Growers, 2014 WL 7148923 (N.D. Cal. Dec. 15, 2014)
(granting motion to decertify)
• Randolph v. J.M. Smucker Co., 2014 WL 7330430 (S.D. Fla. Dec. 23, 2014) (denying
class certification)
Class Certification Issues
Ascertainability
• Carrera v. Bayer Corp., No. 1202621 (3d Cir. Aug. 21, 2013)
• Held that without receipts or sales records, there may be no reliable way to identify
class members in a false advertising lawsuit
• No ascertainability
• Reversed certification of a class of Florida consumers who claimed that Bayer falsely
advertised the metabolism-boosting benefits of its One-A-Day WeightSmart vitamin
• Rejected plaintiffs’ contention that class membership could be determined by retailer
records for customer-loyalty cards and online purchases or based on affidavits from
consumers
Ascertainability
• Randolph v. J.M. Smucker Co., 2014 WL 7330430 (S.D. Fla. Dec.
23, 2014)
• Sethavanish v. Zoneperfect Nutrition Co., No. 12-2907-SC, 2014
U.S. Dist. LEXIS 18600, at *13 (N.D. Cal. February 13, 2014)
• Clancy v. Bromley Tea Co., No.12-cv-03003-JST, 2014 U.S. Dist.
LEXIS 102917, at *6-7 (N.D. Cal. July 28, 2014)(denying class
certification in part because plaintiff failed to provide a method
to ascertain absent class members’ identities)
• Stewart v. Beam Global Spirits & Wine, Inc., Case No. 11-cv05149 (D. N.J. June 27, 2014)
• Karhu v. Vital Pharmaceuticals Inc., 2014 WL 815253, at *3 (S.D.
Fla. Mar. 3, 2014)
Ascertainability
–
–
–
“In situations where purported class members purchase an inexpensive
product for a variety of reasons, and are unlikely to retain receipts or other
transaction records, class actions may present such daunting administrative
challenges that class treatment is not feasible.” In re POM Wonderful, LLC,
No. ML10-02119 DDP, 2014 U.S. Dist. LEXIS 40415, at *23 (C.D. Cal. Mar. 25,
2014).
“While courts in this district have previously found proposed classes
ascertainable even when the only way to determine class membership is with
self-identification through affidavits…, courts in this district have also
declined to certify classes when self-identification would be unreliable or
administratively unfeasible.” Bruton v. Gerber Products Co., No. 12-CV02412-LHK, 2014 U.S. Dist. LEXIS 86581, at *20 (N.D. Cal. June 23, 2014).
Astiana v. Ben & Jerry’s Homemade, Inc, 2014 WL 60097, at *1 (N.D. Cal. Jan.
7, 2014) (“apart from the explicit requirements of Rule 23, the party seeking
class certification must also demonstrate that an identifiable and
ascertainable class exists.”)
Ascertainability
But compare:
• Brown v. The Hain Celestial Group, Inc., 2014 WL 6483216 (N.D.
Cal. Nov. 18, 2014)
• Brazil v. Dole Packaged Foods LLC, (N.D. Cal. May 30, 2014)
• Werdebaugh v. Blue Diamond Growers, 2014 U.S. Dist. Lexis
71575 (N.D. Cal. May 23, 2014)
• Lanovaz v. Twinings N.A. Inc., 2014 U.S. Dist. Lexis 57535 (N.D.
Cal. Apr. 24, 2014)
• Ebin v. Kangadis Food, Inc., 297 F.R.D. 561 (S.D. N.Y. 2014)
Predominance (Damages)
• Randolph v. J.M. Smucker Co., 2014 WL 7330430 (S.D. Fla. Dec.
23, 2014)
• Brazil v. Dole Packaged Foods, LLC, 2014 WL 5794873 (N.D. Cal.
Nov. 6, 2014)
• Werdebaugh v. Blue Diamond Growers, 2014 WL 7148923 (N.D.
Cal. Dec. 15, 2014)
• Astiana v. Ben & Jerry’s Homemade Inc., 2014 U.S. Dist. LEXIS
1640 (N.D. Cal. Jan. 7, 2014)
• Caldera v. J.M. Smucker Co., 2014 U.S. Dist. LEXIS 53912 (C.D.
Cal. Apr. 15, 2014)
• Jones v. ConAgra Foods, Inc., 2014 U.S. Dist. LEXIS 81292 (N.D.
Cal. June 13, 2014)
• Lanovaz v. Twinings N. Am. Inc., 2014 U.S. Dist. LEXIS 57535
(N.D. Cal. Apr. 24, 2014)
Class Action Litigation
Feb. 24, 2015 | 90 minutes | 1:45 – 3:00 p.m. EST
WEBINAR
Settling Consumer Fraud Class
Actions
Kara L. McCall
Sidley Austin, LLP
31
Basic Structure of Class Action Settlements
• Compensation to the Class
• Fees to Class Counsel
• Injunctive Relief (Labeling Changes)
• Notice and Administration
• Incentive Awards to Named Plaintiffs
32
Procedural Requirements for
Class Action Settlements
• Preliminary Approval
• Notice (Publication and/or Individual), Including CAFA Notice to State AGs
• Opt-Out/Objection Period
• Claim Period
• Class Counsel Fee Petition
• Final Approval
• Appeal
• Payment of Claims and Attorneys’ Fees
33
Issues and Challenges
• Compensation to the Class
• Automatic Payments v. Claims-Made
• Different Tiers (Proof of Purchase v. Non-Proof of Purchase)
• Capped (Fund) v. Uncapped
• Claims Rates
• Individual Payments (“Free Money”)
• Cash v. Non-Cash Benefits (Coupons, Products)
• Payment of “Leftover” in Fund
• Cy Pres
• Comparison to Exposure
34
Issues and Challenges
• Class Counsel Fees
• Timing of Negotiation
• Fees Exceeding Payment to Class
• Does cy pres count as payment to class?
• Do costs of notice and administration count as payment to class?
• “Clear Sailing” Agreement
• “Reversion” or “Kicker”
35
Issues and Challenges
• Injunctive Relief (Labeling Changes)
• Permanent v. Temporary
• Timing
• Valuation of Benefit to Class
• Benefit to Class Members v. Benefit to Future Purchasers
36
Issues and Challenges
• Notice and Administration
• Publication Notice (including Unearned Media – “Going Viral”)
• Individual Notice
• Claims Rate Stimulation
• Claim Process
• Prevention of Fraud v. Ease of Claim Process
• Proof of purchase
• Under penalty of perjury
• Claim Form/Website/Smart Phone App
• One and Done/No Cure Provision
37