Thursday, July 27, 2017

OJ may be guilty ... of adding ingredients without disclosure

In re: Simply Orange Orange Juice Marketing & Sales Practices Litig., MDL No. 2361, 2017 WL 3142095 (W.D. Mo. Jul. 24, 2017)

Plaintiffs alleged that Coca-Cola sold Simply Orange, Minute Maid Pure Squeezed, and Minute Maid Pure Premium without disclosing its use of added flavors in these products, as required by federal labeling regulations, leading consumers in seven states to pay a price premium. Coca-Cola argued that it didn’t add flavoring in need of disclosure, because the “add-backs” it uses are 100% made-from-the-orange products.  Also, Simply Orange and Minute Maid Pure Squeezed don’t consistently use add-backs year round, meaning that there was no injury/standing. Further, Coca-Cola maintained that only 1 in 25 consumers care about the add backs, according to its survey expert, and therefore plaintiffs couldn’t demonstrate reliance on a class-wide basis.  The court partially certified the proposed class.

The first hint of what will happen comes from the court’s characterization of Coca-Cola’s standing argument: “that its own inconsistent and un-labelled use of add-backs means that certain consumers purchased orange juice not containing add-backs, and those consumers were not injured.”  First, every container of Minute Maid Premium had add-backs, and thus those consumers had standing.  Second, the existing discovery suggested that approximately 70 percent of the time, purchasers of Simply Orange and MMPS would be receiving drinks that included add-back; for certain years, nearly every container sold included add-back. The plaintiffs alleged that they were regular purchasers of juice throughout the year, and thus “undoubtedly purchased juice containing add-backs.”  That was enough to show standing, as required by Spokeo v. Robins, for the named plaintiffs who represented the class.

Ascertainability: the court was concerned about the privacy implications of getting purchaser information from merchants/customer loyalty cards, but the proposed class included all purchasers of the specified products under each state’s laws.  Self-identification would work, given that the odds were that most class members had purchased an orange juice product containing add-back. “[I]n low-value consumer goods cases, there may be no better means of identifying members of a class in circumstances such as these.” If unrebutted consumer testimony “would be sufficient to establish injury in an individual suit, it follows that similar testimony in the form of an affidavit or declaration would be sufficient in a class action.” In re Nexium Antitrust Litig., 777 F.3d 9, 20 (1st Cir. 2015).
Commonality: the court was concerned about whether plaintiffs will be able to provide common proof as to reliance, materiality, and/or causation, but several of plaintiffs’ issues were susceptible to common proof: whether the orange juice products contain added flavors not permitted by federal law; whether the orange juice products omit disclosure of added flavors as required by federal labeling laws; whether the orange juice products conformed to the representations on the labels of the products; whether the orange juice products omitted material information from the products’ labels; whether defendant warranted that the orange juice products would conform to the label representations; and whether defendant breached these warranties.  The predominance requirement was likewise satisfied with respect to some elements of the state law claims, but not others, particularly requirements to prove reliance, materiality, and/or causation, as well as damages.  (Plaintiffs’ proposed damages model was based on a flawed survey that measured consumers preference for juice with “added flavoring,” vs. no “added flavoring,” with wording that suggested inferiority, even though current FDA regulations allow some amount of added flavoring.)  An issues class was therefore appropriate.

However, plaintiffs lacked standing to pursue injunctive relief.

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