Wal-Mart doesn't defeat consumer protection class action

Johnson v. General Mills, Inc. --- F.R.D. ----, 2011 WL 4056208 (C.D. Cal.)

Johnson sued General Mills and Yoplait under California’s UCL and CLRA for falsely representing that YoPlus yogurt products promote digestive health. The court granted his motion for class certification, finding commonality and predominance (as well as the other necessary factors). The common issues included: “(1) whether General Mills communicated a representation--through YoPlus packaging and other marketing, including television and print advertisements--that YoPlus promoted digestive health; (2) if so, whether that representation was material to individuals purchasing YoPlus; (3) if the representation was material, whether it was truthful; … and (4) if reasonable California consumers who purchased YoPlus were deceived by a material misrepresentation as to YoPlus' digestive health benefit, what is the proper method for calculating their damages.”

Defendants moved for reconsideration based on Wal-Mart v. Dukes, 131 S.Ct. 2541 (2011), and then the 9th Circuit issued Stearns v. Ticketmaster, --- F.3d ---, 2011 WL 2659354 (9th Cir.2011), which directly addressed the issue of class certification of claims brought pursuant to the UCL and the CLRA. The court denied the motion.

Under Wal-Mart, commonlaity requires the plaintiff to demonstrate that class members have suffered the same injury, not just suffered a violation of the same provision of law. The common contention of the class members must be capable of classwide resolution: “determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke.” Johnson presented sufficient facts to show that all class members’ claims had at their heart the common contention of defendants’ material misrepresentation. “Unlike in Wal-Mart, where the injury suffered, discrimination, happened at the hands of different supervisors in different regions without the link of a common practice or policy, any injury suffered by a class member in this case stems from a common core of salient facts. The class members all assert they were misled by a common advertising campaign that had little to no variation.” Thus “unitary message” was absent in Wal-Mart.

Defendants argued that reliance (CLRA) and causation (UCL) couldn’t be resolved “in one stroke,” destroying commonality. But “Wal-Mart does not mandate that every element of a cause of action must be common. The Supreme Court reversed class certification in Wal-Mart because there was no common policy or practice, not because there were factual and legal issues that could not be determined on a classwide basis.” Defendants overstated the required uniformity. “The requirement of predominance in Rule 23(b)(3) itself implies that a court may certify a class even though there will, at some point, be issues that must be determined individually.”

Indeed, Ticketmaster reaffirmed that UCL plaintiffs need not establish actual reliance. Similarly, for the CLRA claim, Ticketmaster recognized that California permits a class to establish causation as a common issue by inference if the court finds that material misrepresentations were made to the entire class.

Defendants argued that inferring reliance is only allowed for material omissions, not affirmative misrepresentations. The court disagreed. They then argued that such an inference is rebuttable and that they’d rebutted it with evidence that some class members bought the yogurt for other reasons. “While such a rebuttal may defeat Mr. Johnsons' ability to succeed in proving that an inference of classwide reliance is warranted for liability, it does not defeat class certification. Permitting decertification on this basis would require an impermissible determination of the merits of Mr. Johnson's claims.” Moreover, these decisions to buy the yogurt don’t, as a matter of law, contradict a potential finding of materiality; materiality exists when “a reasonable man would attach importance to [a fact’s] existence or nonexistence in determining his choice of action in the transaction in question.” A factfinder may well find that this information prevents liability, or precludes damages for an individual class member. But that’s not enough for decertification.

Defendants also argued that they were in the same position as Ticketmaster, which won its claim that the proposed class against it was uncertifiable. The court found that this distorted the facts. Ticketmaster involved a scheme whereby Ticketmaster passed on customers’ credit card information to a third party, allegedly inducing many to sign up for an additional fee-based reward/coupon program without knowing they were going to be charged. The proposed class covered everyone who was enrolled through Ticketmaster and who didn’t get any rewards or coupons from the program; the district court found that this was too broad because people might have known what they were signing up for but, for other reasons, failed to claim rewards or coupons.

The court found the analogy inappropriate. “Defendants assert no facts that support a finding that there were members of the class who were not misled, that is, who knew the yogurt did not provide digestive health benefits.” The 9th Circuit simply upheld the Ticketmaster trial court’s lack of predominance finding because the class contained members who weren’t misled. Here, the claims center around a common question: did defendants state a false claim that a reasonable person would have been deceived by, for purposes of the UCL, or would have attached importance to, for purposes of the CLRA? “While individualized determinations may be required to calculate damages, those determinations do not warrant decertification. The common question is sufficiently central to satisfy commonality, and, when compared to those aspects of the suit which are individualized, still predominate.”

Defendants also argued that certification violated their due process rights to challenge each plaintiff’s claim on a case-by-case basis. The court here found that a misinterpretation of the facts and holdings of Wal-Mart. An individualized determination of damages doesn’t preclude a predominance finding under Rule 23(b)(3); Wal-Mart involved Rule 23(b)(2). “Moreover, Wal-Mart's explanation of the usual damages process condones permitting separate proceedings to determine the scope of individual relief after establishing the pattern or practice which is common.” If the class prevails on deceptiveness, defendants could challenge reliance and causation individually during a determination of damages, after the common issues have been litigated and resolved. "The amount of damages is invariably an individual question and does not defeat class action treatment."