Be kind, certify a class

In re KIND LLC “Healthy and All Natural” Litig., 2021 WL 1132147, Nos. 15md2645, 15mc2645 (S.D.N.Y. Mar. 24, 2021)

Plaintiffs sought class certification of their false advertising claims based on the claims that KIND falsely advertised “All Natural / Non-GMO,” “Non-GMO,” and “No Genetically Engineered Ingredients”; KIND sought to exclude expert reports. Both were partially successful.

Plaintiffs allege that KIND products contain “a conglomeration of chemically-synthesized and highly-processed ingredients,” that “[t]esting ... detected the presence of GMOs in at least some of the products,” and that “approximately 90% of canola, 89% of corn, and 94% of soybeans grown in the United States are genetically modified.” They brought NY, California, and Florida claims.

Numerosity, adequacy, commonality, and typicality were satisfied. “Even if a named Plaintiff did not see all of the label variants, the typicality requirement would still be met. … The differences are slight and all can be litigated in this action with the current class representatives.”

The class was also ascertainable. “While KIND labels varied, all the labeling over the putative class period is allegedly deceptive. As such, the possibility that a potential class member could join the litigation without ever seeing the allegedly deceptive advertising cannot occur here.” Nor was the lack of a receipt requirement fatal. “Imposing a receipt requirement would severely constrict consumer class actions where most consumers do not keep receipts because the purchase price is low and part of a minerun retail transaction.”

The court thought that the three states’ laws were similar enough on the key aspects to analyze predominance together, focusing on (1) the deceptive act, (2) materiality, and (3) injury.

The court agreed that common questions about deceptiveness/materiality predominated, given the extreme similarity in meaning of the three label variants. None of the labels displayed “All Natural” on its own, but always with “Non-GMO.” They could be proved true or false on a classwide, as could materiality (which is an objective inquiry about reasonable consumers under the governing laws). Nor was the fact that plaintiffs offered various definitions of “All Natural” fatal; none of the definitions contradicted each other. Finding commonality also served “important policy considerations”:

This consumer class action spins a familiar tale. A large company produces similar products with different labels. Should employing slightly different labels allow a company to escape liability? … The labels on these products vary slightly but all are sufficiently similar to draw potential customers to the KIND brand. Moreover, as every company does, KIND refined its advertising strategy with the passage of time and market research, resulting in gradual changes to its labeling. … If this Court declined to certify the proposed classes, consumer-product companies would have a roadmap to avoid class actions. And given the relative low cost of most consumer products, those companies could avoid any liability for deceptive labeling.

KIND also argued that the number of ingredients challenged as non-natural defeated predominance. But, if a product contains (what a jury finds to be) a single non-natural or GMO ingredient, the label is incorrect and plaintiffs may be entitled to damages.

Plaintiffs were also prepared to have their expert quantify the alleged price premium. A damages model for a false advertising case must “isolate the premium due only to the allegedly misleading marketing statement.” Plaintiffs’ expert proposed to use a hedonic regression and a conjoint analysis; this could be workable despite the label variations. KIND’s argument to the contrary assumed that different variations of the label would lead to different premiums. First, a liability class could be certified even if damages weren’t amenable to classwide proof. Second, all purchasers were exposed to allegedly misleading advertising and therefore may have paid a premium. Third, the differences among the labels were slight, making it unlikely that any differences were significant.

The court also rejected KIND’s Daubert motion to exclude the damages expert; he did all that was required at this stage: opine what could be done to assess damages and that the data to do so were available. A rebuttal expert from plaintiffs was, however, excluded as untimely.

Finally, superiority favored certification because a class action was the best way to resolve this kind of dispute about a low-cost problem, and it was already consolidated as MDL.

Plaintiffs were, however, not allowed to seek injunctive relief under Rule 23(b)(2). Berni v. Barilla S.p.A., 964 F.3d 141 (2d Cir. 2020), held that past purchasers couldn’t maintain an injunctive class. They weren’t definitely going to buy again, and they knew they’d been deceived before, so they wouldn’t be fooled again. In the Second Circuit, inability to rely on a continuing representation is not sufficient injury.