Tuesday, January 31, 2017

Disgorgement isn't distinguishable from restitution in ordinary consumer protection case

Brazil v. Dole Packaged Foods, LLC, 660 Fed.Appx. 531 (9th Cir. 2016)

Brazil brought the usual California claims, alleging that defendants deceptively described their fruit products as “All Natural Fruit.” Brazil property alleged that Dole’s labels were deceptive given that the products contain synthetic citric and ascorbic acid. His allegations of misleadingness including his own testimony that he was deceived; Dole’s consumer surveys prepared for the litigation; the FDA’s informal, non-binding policy on the use of the word “natural” in food labels (as meaning “that nothing artificial or synthetic ... has been included in, or has been added to, a food that would not normally be expected to be in the food”); and recent FDA warning letters to food sellers that alleged deceptiveness under the policy because the products in question included synthetic citric acid, among other substances. This evidence could allow a trier of fact to conclude that “All Natural Fruit” was misleading to a reasonable consumer and that the synthetic citric and ascorbic acids in Dole’s products were not “natural.”

However, class certification was properly denied, leaving only Brazil’s individual claims.  Brazil offered a price premium theory of damages; Dole’s products weren’t valueless.  Brazil didn’t explain how a price premium could be calculated with proof common to the class.  Brazil couldn’t substitute a theory of “nonrestitutionary disgorgement”:

Under California law, a plaintiff who successfully proves a defendant was unjustly enriched at his expense may in some cases recover all profits the defendant received unjustly. Theoretically an award of disgorgement may exceed an award of restitution; not always is the defendant’s benefit equal to the plaintiff’s loss. But in most cases, as in this one, the defendant’s benefit is equal to the plaintiff’s loss, so restitution and disgorgement are functionally the same remedy. 

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