Defendants moved for summary judgment in this putative class action based on AriZona Iced Tea’s claims to be “All Natural,” which is allegedly false because it contains high fructose corn syrup and citric acid, which is allegedly not natural because it’s produced by humans from certain strains of aspergillus niger mold. The plaintiffs brought the usual California claims.
Plaintiffs didn’t have receipts for the products they bought or remember the exact prices they paid for them. Ries testified that she bought the product because she was thirsty and wanted something healthier than a soft drink, that her drink cost about $2, and that after she took a sip, she looked at the label, saw it contained HFCS, felt deceived by the “All Natural” or “Natural” label, and threw it away.
Defendants argued that there was no injury in fact or reliance. The court accepted the argument that plaintiffs lost money because they bought on the mistaken premise that the beverages were natural. Though they didn’t have receipts and couldn’t recall the precise prices they paid, or even whether the label said “Natural” or “All Natural,” those objections went to the relative weight of the evidence and should be resolved by a jury—there was still economic harm of a dollar or two per purchase, and no authority required a more precise accounting to proceed. To the extent defendants argued that plaintiffs were just offering a “sham,” that was a classic credibility issue.
Reliance was also sufficiently supported to go forward, because plaintiffs specifically recalled the “Natural” claim. Under Tobacco II, it also didn’t matter that plaintiffs admitted multiple reasons for their purchases (e.g., they were thirsty)—as long as the “natural” claim was an immediate cause of the purchase, reliance was satisfied. This was ultimately a fact question, but the court noted that an “All Natural” or “100% Natural” claim was likely to be material. Inconsistencies in plaintiffs’ testimony could be used to impeach them.
Defendants argued that plaintiffs weren’t entitled to restitution or disgorgement under the UCL or FAL. Though courts have discretion under those statutes to grant equitable relief, that discretion had to be bounded by the parties’ evidentiary showing. The absence of receipts wasn’t an insurmountable obstacle, since plaintiffs estimated their losses at a dollar or two per purchase in sworn testimony, which was sufficiently measurable. But the court was more persuaded that plaintiffs weren’t entitles to a full refund. The proper measure of restitution was the difference between what was paid and the value of what was received. The court allowed some more time for discovery on this point, though it thought that plaintiffs had offered “woefully few specifics” about what material facts remained to be discovered.
Defendants challenged plaintiffs’ Article III standing for injunctive relief, because now that they knew the truth, there was no redressability. But past wrongs are evidence bearing on whether there was a real threat of repeated injury. And neither plaintiff disclaimed uninterest in buying the product in the future. “[T]he fact that they discovered the supposed deception some years ago does not render the advertising any more truthful. Should plaintiffs encounter the denomination ‘All Natural’ on an AriZona beverage at the grocery store today, they could not rely on that representation with any confidence. This is the harm California's consumer protection statutes are designed to redress.” If the court accepted the claim that knowing the truth defeats standing for an injunction, “then injunctive relief would never be available in false advertising cases, a wholly unrealistic result.”
However, one plaintiff did get kicked out on statute of limitations grounds—she knew that the product contained HFCS and threw it out in 2006, but only filed suit in 2010, beyond the three-year period. She learned of her injury in 2006, and the statute of limitations began to run even if she didn’t know she had a legal claim.
Turning to class certification, defendants objected that class members wouldn’t be able to prove that they were in the class because they wouldn’t have receipts, but that’s not the standard for administrability or ascertainability. They then argued that some absent class members lacked Article III standing, an issue that is “muddled.” Here, there were no individuals in the proposed class who by definition lacked Article III standing. Defendants’ examples—people who believed HFCS was natural, people who continued to buy the product for years, people who’ve stopped buying the product, or people who bought for reasons unrelated to the label—wouldn’t necessarily lack Article III standing. Article III’s injury requirement was satisfied when class members suffer an economic loss caused by the defendant, which could be buying the product containing misrepresentations. The UCL and FAL focus on defendants’ actions, not on class members’ subjective state of mind.
Numerosity and commonality were also satisfied. Variation in class members’ motivations for buying or in the price they paid wasn’t enough to defeat the relatively minimal showing required for commonality. Injunctive and restitutionary relief under the UCL and FAL is available without proof of individual deception, reliance, and injury, if members of the public are likely to be deceived by the misrepresentations. For the CLRA, which requires each class member to suffer actual injury, causation may still be established on a class-wide basis by materiality.
The Supreme Court’s opinion in Dukes was not to the contrary; Dukes requires that class members have suffered the same injury. “But post-Dukes, the underlying substantive law remains the same and district courts have continued to certify classes in cases alleging violations of the UCL, FAL, and CRLA for allegedly deceptive labeling.… Plaintiffs meet the Dukes standard because the entire proposed class has suffered the same injuries flowing from the alleged misrepresentations, and the requested injunctive relief, prohibiting defendants from advertising beverages containing HFCS or citric acid as ‘natural’ (or variants thereof) will have the effect of remedying the purported harm class-wide.”
Finally, defendants argued that not every class member was exposed to the exact same label. But close enough: the claims arose from a statement, worded in several ways, made on every container; the named plaintiff’s claims were reasonably coextensive with those of absent members. Plaintiffs’ claims were also sufficiently typical, given the objective standard used by California law, even though consumers’ preferences may vary. Some variation in consumer preferences is “inherent” in consumer class actions.
The court considered Rule 23(b)(2) certification generally appropriate for declaratory and injunctive relief. But what about plaintiffs’ request for restitution? Dukes says 23(b)(2) “does not authorize class certification when each class member would be entitled to an individualized award of monetary damages,” even if the award is equitable. Claims for statutory or punitive damages could avoid individualization, but not the claims here, which would depend on how many bottles the class member bought. And the monetary claims were small per class member, but in the aggregate hardly incidental. Thus, class certification was granted for purposes of declaratory and injunctive relief, but denied for monetary damages including restitution, refund, reimbursement and disgorgement.