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.
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