Within one week’s time, Judge George H. King, Chief Judge of the U.S. District Court for the Central District of California, came down on opposite sides of the class certification coin, granting class certification in Forcellati v. Hyland’s, Inc., CV 12-1983-GHK (MRWx) (C.D. Cal. Apr. 9, 2014), and denying it in Caldera v. The J.M. Smucker Co., No. CV 12-4936-GHK (VBKx) (C.D. Cal. Apr. 15, 2014). In both opinions, Judge King focused on whether plaintiffs could prove damages on a classwide basis to meet post-Dukes predominance requirements. The determinative factor? Whether the plaintiffs received a product that had value independent of the alleged false advertising.
The answer in Forcellati was no, as plaintiffs claimed that defendants’ homeopathic cold and flu remedies contained no active ingredients at all, and thus were allegedly worthless. In Caldera, by contrast, the answer was yes—although plaintiffs argued that defendant’s food product labels contained misleading health claims, plaintiffs still received a benefit from the products. As Judge King clarified, if the Forcellati plaintiffs prevailed on the merits, they would be entitled to a full refund of their purchase price (which could be determined on a classwide basis), while the Caldera plaintiffs would be entitled only to the difference between the products’ market price and their true value without the allegedly misleading labels (which could vary from class member to class member). Judge King therefore found that the Forcellati plaintiffs satisfied the predominance requirement whereas the Caldera plaintiffs did not, and in turn, certified a damages class in Forcellati while denying one in Caldera.
Judge King’s class certification rulings suggest that plaintiffs in food labeling cases like Caldera face steep hurdles at the class certification stage. Indeed, Judge King joins several judges in the Northern District of California in ruling that, for proposed “misbranding” class actions, the only relevant measure of restitutionary damages is a price premium. See, e.g., Judge Koh’s Order in Ogden v. Bumble Bee Foods, LLC, No. 5:12-CV-01828-LHK, 2014 U.S. Dist. LEXIS 565 at *51 (N.D. Cal. Jan. 2, 2014); and Judge Seeborg’s Order in Ries v. Arizona Beverages USA LLC, 287 F.R.D. 523, 541-42 (N.D. Cal. 2012).
Moreover, Judge King expressed skepticism as to whether the Caldera plaintiffs could have provided a valid price premium calculation even if they tried, because “in reality, the true value of the products to consumers likely varies depending on individual consumer’s motivation for purchasing the products at issue.” Caldera, No. CV 12-4936-GHK (VBKx) at 5. Without a satisfactory method for calculating the difference between a product’s purchase price and its “true value” absent allegedly misleading labels, future misbranding class actions may suffer the same fate as that of Caldera.