class action certified with adequate price premium model for "nutritious" claims

McMorrow v. Mondelēz International, Inc., 2021 WL 859137, No. 17-cv-2327-BAS-JLB (S.D. Cal. Mar. 8, 2021)

Consumers in California and New York who purchased belVita breakfast biscuits, brought a putative class action alleging that MDLZ labeled the breakfast biscuits as “nutritious,” despite the biscuits’ high added sugar content. Showing how plaintiffs’ lawyers adapt to barriers to class certification, the court granted a renewed motion for class certification because their class-wide damages model matches their theory of liability in compliance and because no other individual issues predominate over common ones.

Plaintiffs’ expert opined that a conjoint analysis could measure the relevant price premium. MDLZ argued that the price premium cannot be estimated without considering supply-side and competitive factors, but conjoint analysis can do so if the prices used in the surveys underlying the analysis reflect actual market prices in the class period, and the quantities used in the calculatiosn reflect actual quantities sold during the class period. That was the case here. Other criticisms of conjoint analysis went to weight rather than admissibility.

A similar fate befell MDLZ’s objections to the proposed survey. Debates over whether the survey should include taste; include only belVita purchasers or include breakfast biscuit purchasers generally; account for repeat purchases where a consumer might not scrutinize the label; etc. went to weight and not admissibility.

The court also declined to exlcude MDLZ’s experts. It relied on one consumer expert to argue that different interpretations of the term “nutritious” meant that individualized issues predominated over common ones. The court disagreed. The expert’s survey sought to measure, in relevant part, whether and to what degree “consumers associate the term ‘nutritious’ with a variety of attributes including calorie content, whole grains, and vitamins and minerals.” However, plaintiffs wouldn’t need to prove individual reliance, but rather that members of the public are likely to be deceived, so some variation isn’t fatal. Plaintiffs “need only make an objective showing of a probability that a significant portion of the relevant consumers acting reasonably could be misled by the challenged statements.”

Plaintiffs used internal MDLZ documents to show that reasonable consumers can understand “nutritious” to mean food conducive to health. This was enough to get to a jury. Similarly, it wasn’t important that the health effects of sugar varies among consumers; that’s irrelevant to misleadingness.

NYGBL statutory damages: Plaintiffs sought to recover statutory damages for the NY class. For violations of section 349, the statute allows a plaintiff to recover “actual damages or fifty dollars, whichever is greater” For violations of section 350, a plaintiff may recover “actual damages or five hundred dollars, whichever is greater.”

MDLZ argues that statutory damages were unavailable absent class-wide proof that consumers suffered an “actual injury” in the form of a price premium, and that an award of statutory damages would result in disproportionate recovery for the New York class as compared to the class members’ actual injury. It is true that the GBL has injury and causation elements, requiring them to prove a price premium, which they were prepared to do. And as for disproportionate recovery: “It is well settled that statutory damages under the relevant sections of the GBL are available as a class-wide remedy in class actions brought in federal courts under Federal Rules of Civil Procedure, irrespective of New York legislature’s limitation of class actions to causes of actions brought under statutes with specific authorization of class recovery.” That didn’t bear on whether certification was “superior” to alternate methods. (Citing, inter alia, a case pointing out that “[i]f the size of a defendant’s potential liability alone was a sufficient reason to deny class certification, however, the very purpose of Rule 23(b)(3)—‘to allow integration of numerous small individual claims into a single powerful unit’—would be substantially undermined.”) “In the Court’s general experience, the prospect of recovering $550 (the maximum statutory damages for each violation under the New York GBL, for example) is not enough to incentivize individual litigation.”