9th Circuit orders class decertified: common issues on materiality/damages insufficient without deception

Rusoff v. Happy Group, Inc., --- F.4th ----, 2026 WL 2387098, No. 24-7706 (9th Cir. Aug. 17, 2026)

Court’s summary:

This is a deceptive advertising class action concerning “pasture raised” labels on egg cartons. After excluding the opinion of plaintiffs’ expert on egg industry standards, the district court found that plaintiffs’ inability to demonstrate consumer deception on a class-wide basis “precludes a finding of predominance” under Federal Rule of Civil Procedure 23(b)(3). The court nonetheless certified the classes based on assertedly common questions of materiality and damages. Because plaintiffs did not meet the requirements of Rule 23(b)(3), we reverse the grant of class certification.

USDA recognizes caged and cage free eggs; the latter has two subcategories, organic and free range. USDA considers “free range,” “pasture raised,” and certain similar terms to be synonymous. But there are a number of other standards from associations and retailers who operate voluntary certification programs, which egg producers pay to participate in. To these certifying organizations, “pasture raised” is the more stringent standard, so certified pasture-raised eggs tend to command a price premium in the market. But the certifiers’ standards differ, e.g., one requires at least 2 square feet of uncovered outdoor area per hen, while another requires about 22 square feet per hen available for potential use (though only about 5.5 square feet needs to be accessible to the hens at any one time if there’s rotation).

Happy Egg’s egg cartons advertise that its hens are “free range” and “pasture raised on over 8 acres.” Plaintiffs alleged that the more stringent “pasture raised” standards are the dominant industry standards, and that consumers paid a price premium for Happy Egg products based on the company’s implied compliance with these standards (even though Happy Egg did not identify either standard on its cartons).

Plaintiffs’ expert opined that “the prevailing consumer expectation is that an egg producer making a free-range or pasture-raised claim is adhering to the commonly accepted standards pertaining to such claims as set by the AHA or HFAC.” The lead plaintiffs testified that they didn’t know about the standards’ content. The court found that one expert didn’t have a methodology for examining different egg products in Seattle, rather than California or New York (where the class members resided).

There was also a consumer survey expert. The survey results found that using both the “pasture raised” and “free range” labels led consumers to conclude that the eggs were both pasture-raised and free-range, whereas with only a “free range” label, they concluded that the eggs were free-range, but not pasture-raised. The survey did not address whether a reasonable consumer understood “pasture raised” as aligned with either allegedly dominant standards. For materiality, survey respondents were 8.1 times more likely to state a preference for the eggs that included the “pasture raised on over 8 acres” representation.

Thus, plaintiffs’ theory of deception required both experts: the first to show that “pasture raised” had a commonly understood meaning tied to the dominant standards, while the survey would show that a reasonable consumer would understand Happy Egg’s “pasture raised on over 8 acres” claim to mean that its eggs were pasture-raised.

But the district court excluded the first expert, whose methods for assessing what a reasonable consumer would understand—such as photographing egg cartons in stores near his home for his own “personal purposes”—were unreliable, as they “[did] not pass the standards that he would expect of his own survey consultant.” Then, the survey lacked a key foundation piece, and couldn’t prove predominance.

But the district court still certified the class under Rule 23(b)(3) after finding that materiality and damages were common questions that predominated.

The district court correctly excluded the first expert’s opinions as unreliable because they didn’t come from “a rigorous evaluation of how a reasonable consumer understands the term ‘pasture raised.’” As a result, “on the foundational issue of deception, plaintiffs failed to make the required showing.” It wasn’t enough to show that certain industry standards are dominant without connecting that to consumer beliefs.

Plaintiffs responded that deception is governed by an objective “reasonable consumer” standard, which means that all claims by any plaintiff will necessarily rise and fall together. “But in order to reach the reasonable consumer analysis, a plaintiff must first show, on a classwide basis, what deceptive marketing or false advertising a reasonable consumer could have been misled by.” Thus, “[w]here the theory of deception is tied to an industry standard, evidence must be brought forward showing that there is a commonly understood industry standard, and that a reasonable consumer would associate a given representation with that standard.”

Then, the district court erred by not weighing the common issues against the individualized issues and determining whether the common issues are, on balance, important enough to justify class-wide treatment despite the existence of individualized issues. Deception is a central element of the claims. “[O]n this record, the lack of a classwide showing on deception cannot be overcome by supposedly common issues of materiality and damages that are unmoored from any classwide showing of actionable wrongdoing.”