Ascertain this: All Natural liability class certified

Lilly v. Jamba Juice Company, No. 13-cv-02998, 2014 WL 4652283 (N.D. Cal. Sept. 18, 2014)

Earlier Jamba Juice proceeding.  Plaintiffs moved to certify a California class of purchasers of certain frozen Jamba Juice Smoothie Kit products using “All Natural” prominently on the front of the package. These kits contain ascorbic acid, xanthan gum, steviol glycosides, modified corn starch, and gelatin, which are allegedly not “natural.”  This opinion is notable both for certifying an “all natural” class action and for dealing extensively with ascertainability, the latest defendant-side argument.

Jamba Juice argued that the class wasn’t ascertainable because nobody would have receipts.  The Ninth Circuit and the Supreme Court haven’t specifically required “ascertainability” or “definiteness” over and above the enumerated Rule 23 factors, though those concepts can be relevant to certification, and ascertainability is an inherent requirement of at least Rule 23(b)(3) class actions. “A class definition is sufficient if the description of the class is ‘definite enough so that it is administratively feasible for the court to ascertain whether an individual is a member.’” This must be a manageable process that doesn’t require much individual factual inquiry, but not every member need be identified at the outset.

Courts have looked at three types of ascertainability concerns. First, an identifiable class exists if its members can be determined by reference to objective criteria, rather than subjective standards like state of mind or merits determinations like whether they personally were discriminated against.  The class definition here was based on objective criteria.  Second, some courts deny certification if the class includes any members who will not be able to recover. The court found this an inappropriate standard.  Third, some courts require plaintiffs to show they can locate absent class members.  The Third Circuit has adopted this view.  Carrera v. Bayer Corp., 727 F.3d 300, 308 (3d Cir. 2013).  Since no one has records demonstrating which specific individuals bought the challenged smoothie kits, Jamba Juice argued that the class wasn’t ascertainable.

It’s not the law in the Ninth Circuit that if consumers don’t have receipts and manufacturers don’t have records of end consumers, there can’t be certification.  Carrera’s approach would substantially impair consumers’ ability to obtain redress for their injuries.  “Few people retain receipts for low-priced goods.”  (Great footnote: See Mitch Hedberg, Minibar, on Strategic Grill Locations (Comedy Central Records, 2003) (“I bought a doughnut, and they gave me a receipt for the doughnut. I don’t need a receipt for the doughnut, man. … I just cannot imagine a scenario where I would have to prove that I got a doughnut. Some skeptical friend? ‘Don’t even act like I didn’t get that doughnut. I got the documentation right here.’”)  But “it is precisely in circumstances like these, where the injury to any individual consumer is small, but the cumulative injury to consumers as a group is substantial, that the class action mechanism provides one of its most important social benefits.”  Without the class action, there’d be no redress for the injury.  Though difficulties identifying class members can frustrate compensation, class actions also deter misconduct.

But, the court continued, it would look more deeply at the reasoning behind Carrera.  First, there seems to be a concern that if you can’t find class members and give them notice, it’s unfair to bind them to any final judgment.  “This concern is legitimate, but our law has long recognized that direct notice to every class member is not always possible.”  All that’s required is the best notice practicable under the circumstances.  Here, plaintiffs submitted a detailed plan for notice prepared by an expert, including direct notice where contact information is on file with the retailer (for example, when they bought using store membership cards) as well as a targeted internet and print campaign.  The court saw no reason this would conflict with due process.

Second, Carrera expressed concern with the defendant’s due process right to challenge individual class members.  But plaintiffs weren’t trying to establish the “fact or extent” of Jamba Juice’s liability through the notice and claim administration process.  “[T]he amount of liability will be proven at trial.”  There’d be a problem if a non-judicial administrator determined class membership based only on self-identification, with no opportunity to challenge that determination, and then enhanced the defendant’s bill each time a form was submitted.  But Jamba Juice’s liability “will be proven by admissible evidence submitted at summary judgment or at trial, or it will not be proven at all.”  Plaintiffs had the burden of producing evidence of the total damages to which the class would be entitled; responses to the class notice couldn’t lighten that burden unless they were admissible evidence.  But neither could Jamba Juice avoid a class action by claiming that those responses would affect its liability. 

The Third Circuit reasoned that “[i]f fraudulent or inaccurate claims materially reduce true class members’ relief,” those true class members might be able to succeed in challenging the adequacy of the named plaintiff’s representation.  The court commented that this concern was “at best, premature at this stage of the litigation.” The court could revisit the issue if it looked to be a problem.  But that’s no reason to refuse certification entirely.  “If the problem is that some absent class members may get less relief than they are entitled to, it would be a strange solution to deprive absent class members of any relief at all.”

Typicality, adequacy, numerosity, and superiority were all present.  Jamba Juice argued that the named plaintiffs were unrepresentative and atypical because they sometimes consumed other products that contain the ingredients they complain of here.  But when they did so, they knew what they were eating, because the ingredients were disclosed.  Their consumption “does not harm their case any more than a person who sometimes eats ice cream would be deprived of her legal ability to challenge a product falsely labeled to contain no sugar.”

Commonality was present because of the common questions: whether Jamba Juice’s “All Natural” representations were false and misleading, whether the challenged ingredients could legally be included in a product labeled “All Natural,” and whether the representations constitute “unfair” or “unlawful” practices under the UCL, constitute a breach of warranty, or are likely to deceive reasonable consumers in violation of the FAL, CLRA, and UCL.

Predominance: For CLRA claims, “an inference of common reliance arises if representations are material, and materiality is judged by an objective standard rather than any understandings specific to the individual consumer.”  So too with the FAL and UCL fraudulent clams, as well as the unfair/unlawful UCL claims.

Jamba Juice argued that there was no common definition of “All Natural,” since there was no regulation defining the term and different consumers understand it to mean different things. Thus, there could be no objective materiality, and reliance would have to be shown individually, defeating predominance.  But cases refusing to certify misrepresentation class actions “generally involve representations that differ for each proposed class member or unique individual decisions.” In this case, only one representation was at issue – “All Natural” on five products with substantially the same challenged ingredients.

Jamba Juice also argued that plaintiffs failed to provide a damages model that could measure damages on a classwide basis.  Plaintiffs offered three methods: (1) restitution of the full purchase price, (2) restitution from Jamba Juice’s net profits, and (3) restitution from the portion of revenue attributed to the challenged ingredient.  But plaintiffs didn’t submit any “evidence, expert reports, or even detailed explanation, about how those damages models can be fairly determined or at least estimated.”  Jamba Juice also argued that any damages model had to address differences in damages among individual class members, as a matter of predominance.  But Comcast didn’t impose that high of a burden.  Even after Comcast, “[i]n this circuit ... damage calculations alone cannot defeat certification.”

Still, after Comcast, Jamba Juice’s argument that plaintiffs failed to provide evidence that damages could be feasibly and efficiently calculated had “considerable force.”  Where, as here, a defendant could make at least a prima facie showing that damage calculations are likely to be complex, “expert reports or at least some evidentiary foundation may have to be laid to establish the feasibility and fairness of damage assessments.”  Though plaintiffs were seeking full refunds, restitution can require the court to take into account the benefit consumers received even from a mislabeled product.  Likewise, disgorgement might require plaintiffs to demonstrate what portion of Jamba Juice’s revenue stemmed from its purportedly unlawful conduct.  Without evidence in the record showing the feasibility and efficiency of the damages models, a damages class couldn’t be certified.  However, liability could still be established on a class-wide basis; some of the difficulties in determining individual damages might be removed after a liability determination.  Thus, the court certified a liability-only class.