April 8, 2016

Nice Try, But Your Green Tea Is Not Worth $0: District Court Denies Certification of Class of Bigelow Tea Drinkers

Seller Beware: Consumer Protection Insights for Industry

On March 29, 2016, Judge William H. Orrick III denied certification of a class of California tea drinkers because the named plaintiff failed to put forth a viable damages model and is not entitled to injunctive relief. The case, Khasin v. R.C. Bigelow, Inc., Case No. 12-cv-002204 (N.D. Cal.) centered on plaintiff's allegations that Bigelow's labels for its green tea products are deceptive because they misleadingly tout the benefits of healthy, powerful antioxidants but do not contain the sufficient nutritional content and antioxidants to make such claims. Bigelow asserted that there was no reliable way to determine class membership because it rolled out changes to all of its green tea labels in 2013 and had no means of tracking which retailers sold inventory under the older labels at any point in time.

Applying Comcast Corp. v. Behrend's requirement that a plaintiff must demonstrate that "damages are capable of measurement on a classwide basis," the Court firmly rejected the plaintiff's attempt to certify a damages class under Rule 23(b)(3). The Court characterized the plaintiff's full refund method of calculating restitution as "too implausible" to pass muster. Notably, to attribute a value of $0 to the green tea products would ignore the fact that purchasers benefited from the enjoyment, nutrition, caffeine intake, and hydration caused by consuming the products. Accordingly, because the plaintiff's damages model did not "determine the price premium attributable only to Bigelow's use of the allegedly misleading claim," the full refund method was an inappropriate damages model. The Court likewise dismissed the plaintiff's arguments for actual and nominal damages, holding that the plaintiff was not entitled to nominal damages and "failed to provide a viable theory for calculating damages . . . that would be tied to his theory of liability."

Finally, the Court held that the plaintiff could not "manufacture standing" to warrant certification for injunctive relief under Rule 23(b)(2). Plaintiff's declaration stating he "would consider" purchasing Bigelow's tea products in the future if their labeling complied with California law was "unsupported" and failed to show a "sufficient likelihood" of future injury. Thus, the Court denied plaintiff's motion for class certification.

Interestingly, a growing trend in the Northern District of California has been to stay mislabeling cases pending the Ninth Circuit's decisions in three mislabeling class actions: Jones v. ConAgra Foods, Inc., No. 12-cv-01633 (N.D. Cal. June 12, 2014) (appeal filed July 15, 2014); Brazil v. Dole Packaged Foods, LLC, No. 12-cv-01831 (N.D. Cal. Dec. 8, 2014) (appeal filed Dec. 18, 2014); Kosta v. Del Monte Foods, Inc., 308 F.R.D. 217 (N.D. Cal. 2015) (appeal filed Oct. 2, 2015). Here, however, rather than stay the case, both parties urged the Court to decide the class certification motion, ultimately resulting in a "win" for Bigelow. While a stay is often considered a safe and favorable outcome for defendants facing class certification, the Bigelow decision should remind manufacturers that tackling weak cases head on at the class certification stage can provide a meaningful opportunity to avoid lengthy, expensive, and protracted litigation.

© Arnold & Porter Kaye Scholer LLP 2016 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.

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