Consumer Fraud Class Action Developments, Vol.1, No. 2

Ninth Circuit Closes Door Left Open by Supreme Court: Depositing Payment Does Not Moot Class Action  

Chen v. Allstate Ins. Co., --- F.3d ---, No. 13–16816, 2016 WL 1425869 (9th Cir. Apr. 12, 2016)   

In Campbell–Ewald Co. v. Gomez, 136 S. Ct. 663 (2016), which was summarized in a prior Advertising Litigation Report, the U.S. Supreme Court held that a defendant cannot moot individual or putative class action claims by making an offer of full relief to individual plaintiffs. In so holding, the Court did not “decide whether the result would be different if a defendant deposits the full amount of the plaintiff’s individual claim in an account payable to the plaintiff. . . .” In Chen, the Ninth Circuit reached this unanswered question. Defendant Allstate “deposited $20,000 in full settlement of [plaintiff’s] individual monetary claims in an escrow account ‘pending entry of a final District Court order or judgment directing the escrow agent to pay the tendered funds to [plaintiff]’” and also offered injunctive relief. Allstate argued that its actions mooted plaintiff’s claims, requiring dismissal. The Ninth Circuit disagreed, holding that “a claim becomes moot when a plaintiff actually receives complete relief on that claim, not merely when that relief is offered or tendered. Where, as here, injunctive relief has been offered, and funds have been deposited in an escrow account, relief has been offered, but it has not been received.” Thus, the court held, Allstate’s actions did not moot plaintiff’s claims. Further, the court held plaintiff could still seek certification on behalf of the class even if the district court mooted his claims by entering judgment in his favor. View the decision. 

Reasonable Consumers Cannot Be Misled as to the Quantity of Product in Cosmetic 

Ebner v. Fresh, Inc., --- F.3d ---, No. 13–56644, 2016 WL 1056088 (9th Cir. Mar. 17, 2016)  

Plaintiff alleged that the “vastly oversized tubes and boxes” of Fresh’s Sugar lip balm deceived consumers about the quantity of product that each tube contained because only 75 percent of the product actually advances up the tube. Plaintiff asserted that the omission of a statement about product accessibility rendered the otherwise-accurate net weight statement deceptive. The Ninth Circuit affirmed an order dismissing the complaint, finding plaintiff’s claim implausible. “It is undisputed that the Sugar label discloses the correct weight of included lip product. Dispenser tubes that use a screw mechanism to push up a solid bullet of lip product are commonplace in the market. The reasonable consumer understands the general mechanics of these dispenser tubes and further understands that some of the product may be left in the tube to anchor the bullet in place.” (Footnote omitted.)  View the decision. 

Claim Based Solely on Government Investigation Is Not Actionable 

In re Whole Foods Mkt. Grp., Inc. Overcharging Litig., --- F. Supp. 3d ---, No. 15 CV 5838 (PAE), 2016 WL 852796 (S.D.N.Y. Mar. 1, 2016)  

The court dismissed with prejudice a pair of consolidated putative class actions premised on a press release issued by the NYC Department of Consumer Affairs describing “‘system[ic] overcharging’ for pre-packaged foods” at Whole Foods stores in New York City. The court ruled that plaintiffs failed to establish Article III standing because although plaintiffs alleged “generally that over-weighting, and hence inflated pricing, was common at Whole Foods stores in New York City,” they “d[id] not allege that any particular purchase they made was affected by this practice.” Nor could plaintiffs premise an Article III injury on the press release, which “[did] not provide any basis on which to infer across-the-board overcharging so as to embrace, other than by conjecture, plaintiffs’ purchases.” View the decision. 

Courts Cannot Resolve Class Certification Doubts in Favor of Certifying a Class 

Brown v. Electrolux Home Prods., Inc., --- F.3d ---, No. 15–11455, 2016 WL 1085517 (11th Cir. Mar. 21, 2016)  

Plaintiffs sought certification of two statewide classes of purchasers of defendant’s Frigidaire front-loading washing machines, alleging that defendant falsely advertised the machines by failing to disclose in marketing materials that a defective seal left its machines prone to mildew. The trial court certified the classes, finding that every element of plaintiffs’ consumer fraud claims was susceptible to classwide proof. Concluding that the trial court “articulated the wrong standard for class certification” and that the named plaintiffs could not “satisfy the predominance requirement of Rule 23(b)(3),” the Eleventh Circuit reversed. Relying on the Supreme Court’s decision in Comcast v. Behrend, 133 S. Ct. 1423 (2013), the Eleventh Circuit rejected the view that courts are to “resolve[] doubts related to class certification in favor of certifying the class,” explaining that “[a]ll else being equal, the presumption is against class certification because class actions are an exception to our constitutional tradition of individual litigation.” As to predominance, the panel held, plaintiffs could not satisfy the causation elements of the state consumer fraud statutes at issue because they failed to adduce evidence that any member of the putative classes had seen the advertising in question before purchasing one of defendant’s washing machines, and they did not establish a common misrepresentation made to members of either class.  View the decision. 

Mere Difference in Price and Color of Two Private-Label Products Is Not Actionable

Boris v. Wal-Mart Stores, Inc., --- F. App’x ---, No. 14–55752, 2016 WL 1622207 (9th Cir. Apr. 25, 2016) (unpublished)

Plaintiff alleged that Wal-Mart deceptively marketed its Equate Migraine medication in violation of several state consumer protection statutes because although Equate Extra Strength contains the same active ingredients in the same amount, Wal-Mart charged two to three times more for Equate Migraine. Plaintiff contended that this increased price and different packaging color scheme were deceptive because customers were led to believe that Equate Migraine was better than Equate Extra Strength. The Ninth Circuit affirmed an order dismissing the action, observing that the “fatal flaw in all of Boris’ claims is his assertion that the mere fact of the proximate presentation of the two products with their different colors and prices is sufficient to run afoul of those laws, even though the ingredients and their amounts are listed on the packages.” View the decision.

Plaintiffs Who Did Not Intend to Purchase Challenged Product in Future Lack Article III Standing to Seek Injunctive Relief

Luman v. Theismann, --- F. App’x ---, No. 14–15385, 2016 WL 1393432 (9th Cir. Apr. 8, 2016) (unpublished)

Khasin v. R.C. Bigelow, Inc., No. 12-cv-2204, 2016 WL 1213767 (N.D. Cal. Mar. 29, 2016)

In Luman, the Ninth Circuit upheld a determination that plaintiffs lacked standing to seek injunctive relief, reasoning that “[b]ecause Plaintiffs [did] not allege that they intend to purchase [defendant’s drug] SBP in the future, they cannot demonstrate a likelihood of future injury.” (Indeed, the trial court held, “plaintiffs’ allegations that defendants have deceived them suggest that the probability they will be injured again by defendants’ alleged deception is infinitesimal.”) Similarly, in Khasin, the court found insufficient to confer Article III standing plaintiff’s “conclusory” assertion in his declaration that he “would consider buying Bigelow tea again if the [challenged] antioxidant claims were removed from the packages and I was assured that the product was in compliance with California law.” The court observed that “[o]ther courts considering these ‘conditional’ declarations have found them unavailing.” Like the Luman court, the court in Khasin saw “no danger” that “[p]laintiffs like Khasin, who were previously misled by deceptive food labels and now claim to be better informed,” would “be misled in the future.” View the decisions for Luman v. Theismann and Khasin v. R.C. Bigelow, Inc.

Disclaimers Preclude Class Action

Polsky v. Dish Network Serv., L.L.C., --- F. App’x ---, No. 15–41101, 2016 WL 826351 (5th Cir. Mar. 2, 2016) (summary order)

The Fifth Circuit upheld the dismissal of this pro se putative consumer fraud class action, rejecting claims that Dish Network Service failed to disclose the limitations of its “Hopper” ad-skipping device. Dish’s advertisements “were replete with references to the Hopper’s limitations, statements that restrictions applied, and notices that potential customers should contact Dish for more details. . . . [A]nd [plaintiff] failed to point to any affirmative misstatement by Dish regarding its service.” View the decision.

“Natural” Food Labeling Claims Stayed Pending Conclusion of FDA Proceedings

Kane v. Chobani, LLC, --- F. App’x ---, No. 14–15670, 2016 WL 1161782 (9th Cir. Mar. 24, 2016) (unpublished)

In this putative class action, the district court granted a motion to dismiss plaintiffs’ complaint that “Chobani deceptively and unlawfully labels its yogurt as ‘natural’ in violation of FDA regulations, and ... deceptively and unlawfully uses the term ‘evaporated cane juice’ to describe its yogurt’s added sugar ingredient.” The Ninth Circuit vacated the lower court’s order and remanded for entry of an order staying the proceedings pending resolution of the FDA’s contemplated regulation of the terms “evaporated cane juice” and “natural.” View the decision.

Relatedly, last year the FDA opened a pre-rulemaking docket, seeking public comment on the use of the term “natural” in food labeling. See Use of the Term “Natural” in the Labeling of Human Food Products; Request for Information and Comments, 80 Fed. Reg. 69905 (Nov. 12, 2016) (to be codified at 21 C.F.R. Part 101) (Docket No. FDA–2014–N–1207). Although the comment period was originally set to close on Feb. 10 of this year, on Dec. 28, 2015, the FDA extended the period an additional 90 days, in reaction to a number of requests from the public. 80 Fed. Reg. 80719 (Dec. 28, 2015). When the comment period closed on May 10, the FDA had received more than 7,500 comments.

Ninth Circuit Sides With Apple in Cases in Which Plaintiff Failed to Allege an Actionable Representation or Omission

Hodges v. Apple, Inc., --- F. App’x ---, No. 14–15106, 2016 WL 696429 (9th Cir. Feb. 22, 2016) (unpublished)

In re iPhone 4S Consumer Litig., --- F. App’x ---, No. 14–15487, 2016 WL 758346 (9th Cir. Feb. 25, 2016) (unpublished)

In Hodges, Apple used two manufacturers — Samsung and LG — for the screen on the MacBook Pro, but only LG’s display was prone to problems. The court rejected plaintiff’s argument that by giving the computer the same name regardless of the manufacturer of the retina screen, Apple falsely represented that the computers were a single, unitary product “of uniform quality.” The court also held that plaintiff could not establish a claim based on an alleged fraudulent omission because he had not alleged any representation regarding component manufacturers or quality or a failure to disclose a risk of physical injury or safety concerns.

In iPhone 4S, the Ninth Circuit rejected plaintiffs’ claim that Apple misrepresented the functionality of its virtual assistant feature, Siri, holding that “[m]erely pointing to product demonstrations of Siri in Apple’s general advertising campaign is insufficient to show that Apple fraudulently misled Plaintiffs into believing Siri would perform . . . . Failure to meet Plaintiffs’ undefined expectations of consistency does not render Apple’s representations misleading.” View the decisions for Hodges v. Apple, Inc. and iPhone 4S Consumer Litig.

Lack of Substantiation Theory Fails Again: Study Did Not Support Plaintiff’s Claim

Spector v. Mondelez Int’l, Inc., --- F. Supp. 3d ---, No. 15 C 4298, 2016 WL 1270493 (N.D. Ill. Mar. 31, 2016)

Plaintiff failed to plausibly allege that defendant’s “four hours of nutritious steady energy” claim communicated the false message that the benefit could be achieved without a glass of milk. In support of her claim, plaintiff cited a study on the company’s website which included a disclaimer for the performance claim “with an 8-ounce glass of milk.” The court held “Plaintiff [] presumes that the statement ‘belVita plus a glass of milk’ necessarily means that a glass of milk is required. The actual statements do no more than refer to the fact that milk was consumed with the Products in the cited studies.” Accordingly, “Plaintiff commit[ted] the classic error of inferring a causal connection from a scientific study which merely references the variables in the study without purporting to report any conclusions regarding the cause and effect relationship between the variables and the study’s results.” View the decision.