On March 24, 2021, Judge William H. Pauley III of the U.S. District Court for the Southern District of New York granted in part and denied in part the Plaintiffs’ motion for certification of three statewide classes of purchasers of KIND bars labeled as containing only natural ingredients. The order serves as a cautionary reminder that some courts continue to punt merits-based questions at the class certification stage. Thus, it is imperative for class action defendants to demonstrate how those merits-based issues are inextricably enmeshed with the requirements of Rule 23, lest the court embrace a plaintiff’s wait-and-see approach to class certification.

• In In re Kind LLC “Healthy and All Natural” Litigation, a group of purchasers of 39 types of KIND bars brought suit against KIND, LLC, alleging that the snack bars they purchased were deceptively labeled. They asserted claims for alleged violations of various states’ consumer protection laws.
• The bars at issue were labeled with one of three different labeling claims—“All Natural / Non-GMO,” “Non-GMO,” and “No Genetically Engineered Ingredients”—depending on the specific flavor and time of purchase. According to the plaintiffs’ allegations, these labels were deceptive and misleading because the products at issue contained various synthetic and GMO ingredients.
• The plaintiffs sought certification of classes of consumers of KIND bars in three states, regardless of which label appeared on the packaging of the products each consumer purchased. KIND argued that class certification was inappropriate in large part because of variations on the products’ labels and because there is not a generally accepted definition of “all natural.” In particular, KIND argued that these variations defeated Rule 23(b)(3)’s predominance requirement and meant that plaintiffs could not propose a coherent damages model.
• The court rejected KIND’s arguments.
  • As to predominance, the court largely focused on the fact that, in its view, the labels meant largely the same thing, i.e., that the products contained ingredients that were not genetically engineered.
  • Moreover, the court found that whether the labels were deceptive was a binary inquiry—the labels either were true or they were false. Such an inquiry is susceptible of classwide proof.
  • The court was also troubled by the policy implications of denying class certification based on different labels that (at least in the court’s view) all conveyed the same message, because such a ruling would provide “a roadmap” for product manufacturers “to avoid class actions.” Finally, that the term “natural” has different definitions did not defeat predominance, because none of the five definitions the plaintiffs posited contradicted the others.
• As to the viability of the plaintiffs’ damages model, the court found that the possibility that different variations of the label might command different price premiums did not defeat class certification, because “[c]ommon issues—such as liability—may be certified, consistent with Rule 23, even where other issues—such as damages—do not lend themselves to classwide proof.” The court further held that the plaintiffs’ expert’s failure to calculate damages did not preclude class certification, because “nothing in Comcast requires experts to perform their analyses at the class certification stage.”
• Although the court granted certification of a damages class under Rule 23(b)(3), it denied certification of an injunctive relief class under Rule 23(b)(2), relying on Berni v. Barilla S.p.A., a recent Second Circuit decision holding that a group of past purchasers of a product cannot maintain a class action for injunctive relief. (We reported on the Second Circuit’s decision in Berni in the August 2020 edition of Predominant Issues, which you can read here.)
• This ruling is a notable—but by no means unique—example of a court repeatedly eschewing merits-based inquiries at the class certification stage, notwithstanding the Supreme Court’s admonition in Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011), that the “rigorous analysis” required by Rule 23 frequently “will entail some overlap with the merits of the plaintiff’s underlying claim.” This failure to grapple with the merits, even when doing so implicates whether the requirements of Rule 23 have been satisfied, leads to confusion and contradiction. For instance, the court acknowledged that the parties disputed whether KIND bars actually contained GMOs, but stated that “at this stage, the focus is on whether that determination could be made on a classwide basis.” And yet, elsewhere, the court stated that “the fact that a single non-natural or non-GMO ingredient is found in dozens but not necessarily all KIND products does not impair predominance” because “[a]s long as each product has at least one non-natural ingredient, that determination answers the question for all members of the putative class.” In other words, the court acknowledged that the issue of whether the class was uniformly misled hinged upon proof that each member purchased a product concerning a non-natural ingredient. And yet, the court expressly declined to decide (at least at the class certification stage) whether the plaintiffs had made this showing.
• Moreover, the court’s wait-and-see approach to the plaintiffs’ damages evidence is also noteworthy, especially since the expert had not even identified or collected the data he intended to use to construct his damages model. The court noted, however, that “[a]s the parties advance to summary judgment, [plaintiff’s expert] will be required to actually build his model and prove damages.” For this reason, it is often advisable for a defendant to file summary judgment motions at the same time it opposes class certification (where permitted under the court’s scheduling order). Doing so may prevent the court from deferring merits-based determinations that impinge upon Rule 23 requirements. Moreover, in an attempt to bolster their summary judgment opposition, plaintiffs frequently raise highly individualized issues that cannot be extrapolated to the class as a whole—thus strengthening the defendant’s opposition to class certification.
• Read the court’s opinion here.