The Impact of Comcast v. Behrend on Food Labeling Class Action Litigation

Co-authored by Christopher D. Barraza.

Last month, I co-authored with my colleague Konrad Cailteux an article discussing the impact of Comcast Corp. v. Behrend, 133 S. Ct. 1426 (2013) on food labeling class actions.  Given that food labeling litigation shows no signs of stopping, see here, here, and here for some recent examples, I thought the article might be of interest to readers of the Monitor. Over the past few years, an ever-growing number of food labeling class actions have been filed in courts across the United States. The cases typically involve claims against manufacturers over the allegedly misleading use of the terms “all-natural,” “100% natural” and “organic” on product labels that contain artificial ingredients; or they are filed against food, beverage, and dietary supplement companies for making allegedly false health claims about their products. Corporate defendants have had modest success defending these food labeling class actions, in particular by using the U.S. Supreme Court’s decision in Comcast Corp. v. Behrend, 133 S. Ct. 1426 (2013), to defeat them at the class certification stage. To provide a refresher, the plaintiffs in Comcast alleged that Comcast Corporation entered so-called “clustering transactions” that enabled it to monopolize cable television services in the Philadelphia market area. The plaintiffs moved to certify a class under Rule 23(b)(3), proposing four separate and alternative theories of antitrust impact. In granting class certification, the district court accepted one theory of antitrust impact as capable of class-wide proof and rejected the rest. Notably, the plaintiffs’ expert presented a damages model that addressed impact based on all four impact theories. He “did not isolate damages resulting from any one theory of antitrust impact.” On appeal, Comcast argued that the model’s failure to isolate impact and damages resulting only from the remaining theory of class-wide impact precluded certification. The Third Circuit affirmed the grant of certification, but the Supreme Court reversed, reasoning that to satisfy the Rule 23(b)(3) predominance requirement, a plaintiff must present a damages model that is “consistent with [his or her] liability case.”  The plaintiffs in Comcast failed to meet this burden because their damages expert’s economic model improperly measured damages stemming from alternative liability theories and related antitrust injuries that were no longer in the case. When the Supreme Court decided Comcast two years ago, it was described as a “game-changer” that would make it more difficult for plaintiffs to obtain class certification by requiring class-wide proof of damages under Fed. R. Civ. P. 23(b)(3) at the certification stage. Since Comcast, however, the federal circuit courts of appeal have, by and large, narrowly interpreted the decision as standing for just two propositions: (1) when moving for class certification under Rule 23(b)(3), the plaintiffs’ model for determining class-wide damages must measure damages that result from the class’s asserted theory of injury; and (2) individualized damages do not automatically defeat Rule 23(b)(3) certification.  See, e.g., Roach v. T.L. Cannon Corp., — F.3d —, No. 13-3070-cv, (2d Cir. 2015) (Comcast “simply” requires that a damages calculation reflect the associated theory of liability, and discussing the “well-established” principle that individualized damages do not automatically defeat Rule 23(b)(3) certification); In re Nexium Antitrust Litig., — F.3d —, No. 14–1521, (1st Cir. 2015) (“Comcast did not require that plaintiffs show that all members of the putative class had suffered injury at the class certification stage — simply that at class certification, the damages calculation must reflect the liability theory.”); In re Urethane Antitrust Litig., 768 F.3d 1245, 1257–58 (10th Cir. 2014) (“Comcast did not rest on the ability to measure damages on a class-wide basis”); In re Deepwater Horizon, 739 F.3d, 790, 817 (5th Cir. 2014) (rejecting, post-Comcast, the argument “that certification under Rule 23(b)(3) requires a reliable, common methodology for measuring class-wide damages” (internal quotation marks omitted)); Butler v. Sears, Roebuck & Co., 727 F.3d 796, 801 (7th Cir. 2013) (holding, upon remand in light of Comcast, that “the fact that damages are not identical across all class members should not preclude class certification”); In re Whirlpool Corp. Front–Loading Washer Prods. Liab. Litig., 722 F.3d 838, 860–61 (6th Cir. 2013), cert. denied, 134 S.Ct. 1277 (2014) (noting that Comcast was “premised on existing class-action jurisprudence” and that “it remains the ‘black letter rule’ that a class may obtain certification under Rule 23(b)(3) when liability questions common to the class predominate over damages questions unique to class members”); Leyva v. Medline Indus. Inc., 716 F.3d 510, 513 (9th Cir. 2013) (reiterating Ninth Circuit precedent, post-Comcast, that “damage calculations alone cannot defeat certification”)).  Notwithstanding the narrow reading of Comcast by circuit courts, corporate defendants have been able to use the decision to their advantage to defeat certification in a number of food labeling class actions. For example, in Brazil v. Dole Packaged Foods, LLC, 2014 WL 2466559 (N.D. Cal. Nov. 6, 2014), 2014 WL 5794873 (N.D. Cal. May 30, 2014), a putative class challenged the “all natural” labeling on Dole’s packaged fruit products, which allegedly contain ascorbic acid and citric acid. On May 30, 2014, the Northern District of California certified a national class seeking injunctive relief, but limited the damages class to cover only California consumers. The court determined predominance was lacking for the proposed national class for money damages, as non-resident class members’ claims would have to be decided under the consumer protection laws of the states in which they live, requiring the court to apply the laws of all 50 states. Further, the court held that the proper measure of restitution in such a mislabeling case is the amount necessary to compensate the purchaser for the difference between the product as labeled and the product as-received. The court did, however, approve the plaintiffs’ proposed regression model of damages analysis. This victory proved pyrrhic, as the court subsequently decertified the damages class, finding plaintiff’s proffered damages model failed to provide a means for showing damages through common proof, and thus could not meet the predominance requirements set forth in Comcast. Ultimately, the court granted Dole’s motion for summary judgment, finding insufficient evidence that the “all natural” labeling was likely to mislead reasonable consumers. 2014 WL 6901867 (N.D. Cal. Dec. 8, 2014). In Lilly v. Jamba Juice Co., 2014 WL 4652283 (N.D. Cal. Sept. 18, 2014), the plaintiffs sought certification of a putative class alleging that “all natural” labeling on Jamba Juice home smoothie kits was misleading because the kits contained several synthetic ingredients. The defendants opposed class certification, arguing inter alia that the plaintiffs failed to satisfy Comcast because they did not provide enough expert evidence that damages could be calculated on a class-wide basis consistent with their theory of liability. The district court agreed, finding that the plaintiffs did not submit any evidence about how the damages models could fairly be determined or at least estimated, as required by Comcast. Likewise, in In re POM Wonderful LLC Mktg. & Sales Practices Litig., 2014 WL 1225184 (C.D. Cal. Mar. 25, 2014), a class action alleging that the defendant falsely and misleadingly advertised that certain juice products provide various health benefits, the court granted the defendant’s motion for class decertification on the grounds that neither of the plaintiffs’ damages models satisfied Comcast’s requirement that class-wide damages be tied to a legal theory. Id. at *6. And, in Werdebaugh v. Blue Diamond Growers, 2014 WL 2191901 (N.D. Cal. May 23, 2014), the court granted the defendant’s motion to decertify a damages class on the grounds that the plaintiff’s damages models suffered from incurable deficiencies that render them incapable of satisfying Comcast.

A decision issued earlier this year in In re ConAgra Foods, Inc., 11-cv-05379 (N.D. Cal. Feb. 23, 2015), however, shows that Comcast will not be a cure for all putative food labeling class actions. The plaintiffs in In re ConAgra Foods Inc. alleged that ConAgra’s Wesson brand cooking oils contained genetically modified organisms and were therefore not “100% Natural” as stated on the products’ labels. The court granted in part the plaintiffs’ amended motion for class certification, concluding that the combined approaches of the plaintiffs’ two damages experts allowed them to produce a class-wide damage figure attributable solely to ConAgra’s alleged misconduct. The decision is noteworthy for two reasons. First, it marked a reversal of the court’s prior denial of a motion for class certification by plaintiffs. In denying the previous certification attempt, the court reasoned that the plaintiffs’ original damages expert failed to provide a damages methodology that isolates and quantifies damages associated with the plaintiffs’ specific theory of liability, as required by Comcast. Second, the court allowed the plaintiffs to proceed by creating a hybrid damages model that could serve as a template for future food labeling class actions. While the “sea change” anticipated by many commentators following the Comcast decision may not have occurred in all cases, defendants in food labeling class actions have enjoyed some success in leveraging Comcast’s clarification of the requirements of Rule 23(b)(3) to thwart certification of putative classes. However, it remains to be seen whether courts will follow ConAgra by giving plaintiffs a second bite at the apple when attempting to satisfy Comcast.