In one of the first summary judgment rulings in the onslaught of food mislabeling and misbranding class actions, Judge Lucy Koh of the Northern District of California tossed the plaintiff’s restitution and disgorgement claims. Her exclusion of the plaintiff’s monetary relief claims is a welcome limitation on class action damages.
Background: On January 2, 2014, Judge Koh granted in part and denied in part Bumble Bee’s Motion for Summary Judgment in a class action lawsuit alleging that Bumble Bee made a variety of unlawful, false, and misleading statements about its products, both on its products’ labels and its websites. See Ogden v. Bumble Bee Foods, LLC, Case No. 5-01828 LHK (N.D. Cal. Jan. 2, 2014).
Among other claims, the plaintiff asserted causes of action for violations of California’s Unfair Competition Law (UCL) and False Advertising Law (FAL) and for a violation of the California Consumers Legal Remedies Act (CLRA). She sought injunctive relief as well as damages, restitution, or disgorgement.
While finding that the plaintiff had statutory standing to pursue two of her four product claims and upholding her claim for injunctive relief, the court rejected the plaintiff’s request for restitution and disgorgement.
Statutory Standing: The court first concluded that the plaintiff established a genuine issue of material fact as to whether she possessed statutory standing (i.e., suffered a loss of money or property) to pursue claims that Bumble Bee’s statements about its products’ omega-3 content, as well as its front-of-package disclosures, violated state law. Id. at 23. The court also found, however, that the plaintiff lacked statutory standing with regard to other nutrient content and health and drug claims, as information regarding these claims appeared on Bumble Bee’s nutrition labels and website, and the plaintiff had admitted that she read neither. Id. at 22-23. Most importantly, the court limited its holding to whether the plaintiff possessed statutory standing to pursue her claims—it did not rule on the claims’ substantive merits.
Restitution: The court next held that the plaintiff failed to adequately prove her restitution claim. Id. at 27. Although she presented sufficient evidence of the total amount of money she spent on Bumble Bee products, the plaintiff failed to present evidence of the difference in value between what she spent and what she received. Id. at 27. Indeed, the court stated that:
“[The plaintiff] has not provided evidence of the price of any comparable products that do not make the allegedly unlawful label statements, nor has she offered any other evidence regarding the size of the price premium she paid for Bumble Bee’s product due to the allegedly unlawful label statements.”
Id. at 27-28. The court also rejected the plaintiff’s attempt to rely on the declaration of her expert witness, Dr. Oral Capps, as evidence of restitution, as Dr. Capps merely stated that he could provide an estimate of damages, but failed to make actual calculations. Id. at 28. In light of the plaintiff’s failure to present substantial evidence to support an award of restitution, the court granted Bumble’s Bee’s Motion for Summary Judgment on this ground. Id.
Disgorgement: The court also rejected the plaintiff’s claim for disgorgement. Noting that disgorgement under the UCL and FAL is restitutionary in nature, the court found that the plaintiff’s failure to provide evidence of an appropriate amount of restitution similarly barred her disgorgement claim. Id. at 28-29. The court therefore granted Bumble Bee’s Motion for Summary Judgment on this ground as well. Id. at 29.
Injunctive Relief: Finally, the court concluded that the plaintiff could pursue her claim for injunctive relief. Although Bumble Bee argued that, because it was currently revising its allegedly misbranded labels, there would be no future violations, the court found that Bumble Bee had not produced evidence of when the label changes would occur or what the new labels would say. Id. at 29. The court thus determined that Bumble Bee had not established that there was no genuine issue of material fact with respect to plaintiff’s entitlement to injunctive relief, and thus the court denied that Bumble Bee’s motion for summary judgment on this ground was warranted. Id. at 29-30.
Takeaway: Overall, Judge Koh’s summary judgment order is a victory for class action defendants. Her rulings on the plaintiff’s claims for restitution and disgorgement demonstrate that, without concrete proof of a premium paid for allegedly mislabeled products, it is likely that at best only injunctive relief will stand.