Two recent decisions by Federal Court Judge Lucy Koh in the Northern District of California have strengthened the position of defendants facing “all natural” food labeling class actions in California by making it even harder for plaintiffs to (1) articulate a viable damages theory, and (2) prove class members were misled by the labeling statements at issue.

In the case of Brazil v. Dole Packaged Foods, Case No. 12-CV-01831-LHK, [1] Plaintiff Chad Brazil alleged that Dole misrepresented that its frozen berry and other mixed fruit products were “all natural.” Plaintiff alleged that the statement on the packaging and company website that the products contain “All Natural Fruit” was misleading because the products contain citric acid and ascorbic acid (commonly known as Vitamin C). Plaintiff relied on U.S. Food and Drug Administration policies, under which use of the term “natural” on a food product’s label means that nothing synthetic or artificial has been added. Plaintiff contended that citric acid and ascorbic acid are synthetic, chemical preservatives and therefore the fruit products could not be “all natural”.

Earlier in 2014, Judge Koh reached a decision decertifying the class in Brazil because the regression damages model articulated by plaintiff through his expert, Dr. Oral Capps, failed to isolate the damages attributable to the defendant’s use of “all natural” on its labeling, in line with the U.S. Supreme Court’s ruling in Comcast Corp. v Behrend [2]. Following that ruling, Dole filed a motion for summary judgment, arguing that its suppliers used natural fermentation to make the additives in its fruit products and thus, they should not be deemed synthetic. Dole also argued that customers could reasonably expect citric and ascorbic acids to be included in foods purporting to contain no synthetic ingredients. On December 8, 2014, Judge Koh granted Dole’s motion for summary judgment.

The Court did not address whether ascorbic acid and citric acid are “natural” or not. Instead, the Court’s decision was based on plaintiff’s inability to present evidence that citric acid and ascorbic acid would not normally be expected to be in those products. Thus, the Court reasoned, the plaintiff would not be able to prove that the challenged product labeling was likely to mislead reasonable consumers. The Court stated, “Absent any evidence that reasonable consumers would not normally expect citric acid and ascorbic acid to be found in the challenged Dole products, Brazil cannot rely on FDA’s informal policy to show that those consumers were likely to have been misled.”

Plaintiff’s inability in Brazil to identify a triable issue as to the likelihood of consumer deception highlights the difficulty faced by plaintiffs generally in proving the merits of such a claim. All Mr. Brazil offered was his understanding that all of the contents, not just the fruit, were “all natural”. The Court decided that testimony, without more, would be insufficient to meet his burden of proof. Although the Court acknowledged that surveys and expert testimony regarding consumer expectations are not essential elements of a plaintiff’s California consumer fraud claim, “a few isolated examples of actual deception are insufficient” (citing Clemens v. DaimlerChrysler Corp., 534 F.3d 1017, 1026 (9th Cir. 2008)). Although not explicitly required, it is difficult to imagine how a plaintiff could meet its burden without a survey of consumers. After all, the plaintiff’s burden is to establish that a reasonable consumer would not normally expect an ingredient (here, ascorbic acid and citric acid) to be in a product. The Brazil ruling marks the first time a judge has made a decision on the merits in an “all natural” labeling case and sets a high standard for evidentiary proof.

One week later, Judge Koh decertified a class of purchasers of certain almond milk products, affirming the high bar already in place (as affirmed in Brazil) for plaintiffs attempting to articulate an accurate damages model. In Chris Werdebaugh v. Blue Diamond Growers, Case No. 5:12-cv-02724 [3], the plaintiff claimed Blue Diamond violated California’s Unfair Competition and False Advertising Law by using the terms “All Natural” and “evaporated cane juice” on its almond milk packaging. The Court had previously certified a damages class of California purchasers. At that time, Dr. Oral Capps, who was also Werdebaugh’s expert, proposed three different damages models, two of which the Court rejected. The methodology the Court found acceptable under Comcast was a regression model that, according to plaintiff, would calculate the portion of the product’s price attributable to the allegedly false claims.

In Blue Diamond’s motion to decertify the class, it argued that the plaintiff’s methodology included price premiums related to other aspects of the product such as brand loyalty, advertising, seasonality, region, and distribution channels. Plaintiff submitted a supplemental expert report that attempted to cure the issues identified by the same Court’s decision in Brazil. Ultimately, however, the Court reached a decision consistent with its decision in Brazil; the Court concluded that Dr. Capps’ new report conflated the value of the Blue Diamond brand name with the value associated with the “All Natural” and “evaporated cane juice” labeling, and that the model used was not capable of isolating the value of the labeling statements alone.

The Werdebaugh and Brazil decisions reaffirm the impact of Comcast and the flaws in regression analyses, but more broadly, illustrate the difficult road ahead for plaintiffs seeking to advance “all natural” labeling claims past the class certification stage.

Notes:
[1] Brazil v. Dole Packaged Foods, LLC, 2014 U.S. Dist. LEXIS 169943 (N.D. Cal. Dec. 8, 2014).

[2] Comcast Corp. v. Behrend, 133 S. Ct. 1426 (U.S. 2013).

[3] Werdebaugh v. Blue Diamond Growers, 2014 U.S. Dist. LEXIS 173789 (N.D. Cal. Dec. 15, 2014).