As consumers continue to file class actions around the country, it is important for practitioners to analyze how federal courts interpret class certification requirements. For defense attorneys, it is especially helpful to understand the nuanced arguments that have been successful in defeating class certification and, in particular, to develop a strong factual record during discovery in support of those arguments. One recent federal court decision highlights potential arguments with respect to two hurdles that continue to be the Achilles heel for proposed consumer classes: predominance and ascertainability.
One issue defense attorneys in consumer class actions should have on their radar when conducting discovery is a focus on the reasons why each individual consumer purchased the relevant product. Some consumers read labels – others do not – and these variations can highlight reasons why certification of a class may be improper. Discovery often reveals that many consumers made their purchases based on a host of different reasons completely unrelated to the claims at issue in the lawsuit, which may prevent certification due to too many individualized issues. Another issue that may also come into play with consumer class actions is ascertaining a class where the defendant did not sell the relevant product directly to consumers, but rather sold to distributors, who then sold to consumers. This scenario will likely make it more difficult for plaintiffs to show that a potential class is ascertainable based on the nature and extent of the available consumer records.
Both of these issues were at the core of the District Court of New Jersey’s recent decision denying a proposed class of consumers of Tropicana orange juice. See In re Tropicana Orange Juice Marketing and Sales Practices Litigation, Civ. No. 2:11-07382 (D.N.J Jan. 22, 2018). There, Plaintiffs argued that Defendant Tropicana Products, Inc. added ingredients, specifically natural flavoring, in violation of the FDA’s standard of identity for pasteurized orange juice; that its labeling failed to disclose all ingredients as required; and that its marketing that its product was “pure, natural and fresh from the grove” was false given the added flavoring. Plaintiffs alleged various causes of action including unjust enrichment, breach of warranty, and consumer fraud violations. The proposed class was defined as purchasers from various states from either Members Only clubs or Loyalty Card stores. In addition, Plaintiffs sought to certify four individual subclasses for California, New York, New Jersey, and Wisconsin. While the Court found Plaintiffs met Rule 23(a)’s requirements, it concluded that Plaintiffs failed to satisfy the requirements for predominance and ascertainability.
The predominance requirement “calls upon courts to give careful scrutiny between common and individual questions in a case.” Id. at 5 (citing Tyson Foods, Inc. v. Bouaphakeo, 136 S. Ct. 1036, 1045 (2016)). An individual question is “one where members of a proposed class will need to present evidence that varies from member to member, while a common question is one where the same evidence will suffice for each member to make a prima facie showing that the issue is susceptible to generalized, class-wide proof.” Id. The Court held that common questions did not predominate Plaintiffs’ unjust enrichment claim. As the Court explained, under the applicable state laws, Tropicana was only unjustly enriched if Plaintiffs did not receive the benefit of the bargain for which he or she paid. This required an inquiry into what the benefit of the bargain was in each consumer’s purchase. The Court explained that common questions could predominate if Plaintiffs could show that every consumer bought Tropicana’s orange juice because they believed it to be pasteurized; however, the record proved otherwise. Not surprisingly, discovery revealed that consumers purchased Tropicana’s orange juice for a wide variety of reasons unrelated to the pasteurization claim, including based on price point, vitamin content, and taste.
The Court found the same logic also applied to Plaintiffs’ breach of express warranty claim. For those states’ laws incorporating a reliance requirement for a breach of warranty claim, the Court concluded that Plaintiffs similarly failed to demonstrate that Plaintiffs purchased Tropicana’s orange juice because of the statement on its label that it was pasteurized. Again, discovery revealed that some Plaintiffs did not even read the label claiming it to be pasteurized orange juice. And, even with respect to those states that did not have an explicit reliance requirement to succeed on a breach of warranty claim, the Court nevertheless concluded that the statement that the orange juice was pasteurized still had to be the basis of the bargain. This standard clearly required Plaintiffs to have at least seen the statement that the juice was pasteurized, which the record showed was not the case.
As to New Jersey’s Consumer Fraud Act, the Court likewise concluded that the predominance requirement prevented certification since that Act, like many other states’ consumer fraud statutes, requires causation (i.e., price premium paid to Tropicana’s pasteurization statement). Discovery revealed, however, that class members reacted differently to Tropicana’s pasteurization statement. In fact, Plaintiffs’ own expert conducted a survey showing that 20% of consumers would still purchase Tropicana’s orange juice, despite containing the natural flavoring. In sum, the Court found that Plaintiffs failed to show predominance to certify the class.
Despite the class failing on predominance, the Court nevertheless addressed the ascertainability as well. To satisfy this requisite, Plaintiffs must show that the class is defined with reference to objective criteria and that there is a reliably and administratively feasible way to determine whether a class member falls within the class definition. The Court explained the two rationales for the ascertainability requirement: facilitating opt-outs and identifying persons bound by the final judgment. Id. at 15 (citation omitted).
In an attempt to prove ascertainability, Plaintiffs proffered an expert who claimed he could create a computer program that would reliably identify all putative class members by requiring each member to submit an electronic claim form that includes a loyalty card or member ID number and other personal identifying information. The expert explained that he would collect retailer data and draft a program that would look up the ID number in the retailer’s customer records and verify that claimants purchased Tropicana’s juice. The Court noted that the expert’s methodology assumed retailer data existed and contained the necessary information required for such verification. In fact, the expert himself acknowledged that he had never seen the data, had never conducted a similar project, and had not heard of anyone else doing so. While Plaintiffs maintained that Catalina Marketing Corporation has a consumer database that tracks purchases of consumers who use loyalty cards at various stores, it does not contain any personal identifying information on consumers themselves.
The Court underscored that “there is no records requirement” for ascertainability. Id. at 14 (citation omitted). But, this case presented more complicated circumstances because Tropicana distributes its products through retails stores and not directly to consumers. Thus, Tropicana did not have its own database of purchasers. The Court concluded that there was insufficient evidence to show that Plaintiffs could identify all, or even a majority, of putative class members. The retailer’s consumer data was the focus and that data was largely not in the record. Indeed, one retailer did not maintain any consumer data at all. Thus, a consumer who purchased Tropicana at that store would be excluded from the class because there would be no way to verify his or her purchase, yet that consumer would still be bound by the judgment. The Court found that this “defie[d] one of the principal rationales of ascertainability[.]” Id. at 16.
While the Plaintiffs have sought reconsideration of the Court’s decision (which remains pending), these arguments routinely arise in defending against consumer class actions. Both the predominance and ascertainability requirements provide avenues for defense attorneys to explore throughout discovery. Defense practitioners should take note of this decision and others like it, which can serve as a roadmap to build the strongest factual record to prevail at the certification stage.