A recent decision from the Eastern District of New York, Hoth v. Gerber Prods. Co., 15-cv-2995 (E.D.N.Y.), granted class certification to purchasers of Gerber baby formula in Florida and New York who claimed to have been misled by representations that the formula reduced infants’ risk of developing allergies. The certified class is unusual, however, in that not all of its members actually purchased the product labeled with the alleged misrepresentation. Many courts have concluded that this lack of uniform exposure defeats certification by precluding a showing of classwide injury, but the Hoth court credited evidence that the general “advertising and labeling practice [regarding allergy prevention] allowed a price premium to be charged across the entire line of [challenged] products.” Op. at 41 (emphasis in original).

The Hoth court’s lenient interpretation of the Rule 23 requirements, if adopted by other courts, has the potential to give some class members windfalls, permitting them to recover for deceptive representations they never even saw. But industry members need not despair of this possibility just yet, because Hoth is far from a typical “food mislabeling” class action. Gerber’s allergy prevention claim not only appeared on food labels, but in nationally circulated television and magazine advertisements. And although the ultimate questions of classwide materiality and injury have yet to be resolved, the claim at issue is more significant, and thus more credible as a “price premium” driver, than many of the statements that are challenged in class actions. Thus, Hoth should not be read as dispensing with the requirement, applicable in most food labeling actions, that all members of a putative class must have purchased the product with the misrepresentation in order to satisfy the requirements of Rule 23.

The Injury Requirement

Although New York’s General Business Law (GBL) does not require actual reliance on an allegedly false labeling statement, it does require a showing that the plaintiff suffered cognizable injury as a result of the alleged misrepresentation.  This generally requires plaintiffs to offer “reliable evidence that they paid a premium for [the product with the disputed] label.” Weiner v. Snapple Bev. Corp., 2011 U.S. Dist. LEXIS 6094, *12 (S.D.N.Y. Jan. 21, 2011). The Florida Deceptive and Unfair Trade Practices Act (“FDUTPA”)—the other statute under which the Hoth plaintiffs assert claims—likewise does not require actual reliance, but does require a showing of injury that plaintiffs typically make by establishing that they paid a premium for the product. Moss v. Walgreen Co., 765 F. Supp. 2d 1363, 1367 (S.D. Fla. 2011).

This does not necessarily mean that class members who did not see or consider the alleged misrepresentation, but who claim that the market value of the misrepresentation caused the price to become inflated, have suffered an injury.  After all, if a consumer paid the “inflated” price without taking the alleged misrepresentation into account, then she would have been willing to pay the same amount without the misrepresentation, and did not suffer an injury because of it. And class members who purchased the product when it did not did not even have the alleged misrepresentation have an even weaker claim to injury, because a labeling misrepresentation cannot have influenced the price of a product on which it did not appear. For this reason, courts generally deny certification when the defendant can show that not all class members purchased the product with the challenged claim. See Randolph v. J.M. Smucker Co., 303 F.R.D. 679, 691 (S.D. Fla. 2014); In re Scotts EZ Seed Litig., 304 F.R.D. 397, 403 (S.D.N.Y. 2015).

The Hoth Decision

The putative class in Hoth consists of individuals who purchased Gerber’s Good Start Gentle (GSG) infant formula products in New York and/or Florida between 2011 and 2016. Plaintiffs allege Gerber falsely claimed that GSG reduces infants’ risks of developing allergies and atopic dermatitis. These claims, Plaintiffs assert, appeared in a variety of advertising and labeling settings, including the following:

• A television commercial that ran for several weeks in 2012 and 2013, encouraging consumers to choose GSG because “You want your Gerber baby to have your imagination . . . your smile . . . your eyes . . . not your allergies”;
• A magazine advertisement that ran in a variety of magazines between December 2011 and January 2013 with a similar message to the TV ad;
• A safety seal sticker placed on certain GSG containers between July 2013 and January 2015, stating GSG is the “1st & Only Routine Formula to Reduce the Risk of Developing Allergies”;
• A coupon distributed in 2011 and 2012 representing GSG as the “first and only formula” to relieve the symptoms of atopic dermatitis. 

Gerber opposed certification principally because, throughout the five-year class period, its GSG products were sold in three different formats and in various containers with at least 32 different labels, and its advertisements varied over time and across different media.  As a result, Gerber argued, plaintiffs could not show that class members were uniformly injured by the representation at issue and thus could not satisfy Rule 23’s requirements of typicality (the named plaintiffs’ claims are typical of those of the class), commonality (there are questions of law or fact that are common to the class), ascertainability (the class members can be identified according to objective criteria), or predominance (issues common to the class predominate over individualized inquiries). 

In a decision adopting the magistrate judge’s report and recommendation in relevant part, the district court granted certification.[1]  The district court took the broadest possible view of injury under the Florida statute, reasoning that the absence of a reliance requirement permitted a showing of injury “regardless of whether the consumer cared about or even saw those claims,” as the “mental state” of the consumer is irrelevant.  Op. at 30 (citations omitted).  It applied a similar analysis to the New York GBL, holding that “the individual reason for purchasing a product becomes irrelevant” when a statute does not require actual reliance.  Op. at 45.  Thus, although the court concluded that “some amount of exposure [to the challenged claim] is necessary” for each class members to establish reliance, it concluded that the variations over time in Gerber’s marketing and labeling did not preclude a showing of classwide injury.  Op. at 46 (emphasis added). 

Applying this “some exposure” standard to the Gerber campaign at issue, the court concluded “generalized exposure c[ould] be inferred” as to the putative classes, because the misrepresentations at issue were “abundant, accompanied by advertising campaigns, and appeared prominently on shelves where consumers shopped.”  Op. at 41.  The court also noted that although some products “may not have been labeled with the representation, none explicitly disclaimed it and consequently, the representations as to Good Start Gentle could be understood to apply to the full product line.”  Op. at 25 (citation omitted; alterations adopted; emphasis added). 

In summary, the court concluded, the marketing and labeling throughout the class period was “sufficiently uniform that it is likely that a reasonable consumer could have been misled and encouraged to purchase GSG” by the allegedly false representation.  Op. at 48.  This statement is a bit perplexing because the objective “reasonable consumer” standard applies to the determination of whether a claim is actually misleading, not whether a particular consumer was injured by it.  But the upshot of this statement, and of the court’s analysis, is that the campaign was sufficiently pervasive that knowledge of it could be imputed to all the class members, even if they did not purchase products whose labeling bore the challenged representation.  

The court gave great weight to a parallel California case involving the same GSG products and allergy representations, Zakaria v. Gerber Prod. Co., 15-cv-200 (C.D. Cal.), where the court certified a class under California’s Unfair Competition Law (UCL) on the basis that classwide exposure may be inferred where there is a “sufficiently extensive advertising campaign that includes the alleged misrepresentation.”  Op. at 38 (citation omitted).  The Hoth court inferred this exposure as to an even broader swath of consumers than the Zakaria court, a departure that it justified on the grounds that the New York and Florida statutes, unlike the California statute, do not contain an “actual reliance” requirement. 

Having found that the class was generally exposed to the representation, the court had little difficulty concluding that Rule 23’s requirements were satisfied.  As to typicality, the named plaintiffs’ claims shared the same essential characteristics of those of the class, as they were exposed to Gerber’s advertising and business practices in purchasing GSG, regardless of whether they were exposed to different ads or labels.  The court also held that predominance was satisfied because plaintiffs did not need to establish reliance—an issue that often gives rise to overwhelming individualized inquiries—and a class action would resolve the common question of whether Gerber’s representation was objectively unreasonable and resulted in a price premium. 

As to “ascertainability”—which the court construed as a distinct “implied requirement” of Rule 23—the court held that the class could be defined by objective criteria that establish membership through a combination of receipts, purchase information from reward cards or credit cards, and sworn affidavits.  The court noted that lack of memory was less likely to be an issue for baby formula than for other consumer products, since most consumers can pinpoint the period of time during which they purchased baby formula based on their children’s ages. 

How Far Can General Exposure Go?

The theory that “general” or “widespread enough” exposure to misrepresentations is a basis for showing classwide injury has serious shortcomings.  Why should a consumer who bought a truthfully labeled product and did not rely on any misrepresentations be able to assert a consumer protection claim?  And how “pervasive” does a campaign have to be to permit an inference of “general exposure”?  Moreover, shouldn’t the proponent of class certification have to adduce evidence not only that the challenged representations were “abundant,” but that class members actually saw them and took them into account when making their purchasing decisions?  For all of these reasons, the “general exposure” theory is likely to create tremendous uncertainty for consumers and defendants if it is adopted by other courts. 

The Hoth court deemed the “general exposure” finding adequate on the grounds that the consumer protection statutes at issue do not contain an actual reliance requirement.  But setting aside whether that is a fair characterization of the statutes, it does not really justify the court’s conclusions.  The Hoth court essentially used the “abundance” and “prominence” of the campaign as a proxy for reliance, reasoning that the misrepresentations were so pervasive that most class members must have seen them.  So its reasoning still depended on the application of a reliance requirement, albeit a watered-down one. 

At the same time, some of the considerations driving the court’s analysis are well-taken.  It shouldn’t be the case that a seller can avoid liability for misleading marketing by intermittently ceasing its misrepresentations, omitting the misrepresentations from certain products in a product line while including them on others, or varying misrepresentations in immaterial ways “by for example, creating multiple labels for a product line.”  Op. at 41.  If the seller engages in a misleading marketing campaign as to a product line over a general period of time, it may be reasonable to conclude that it affected the purchasing decisions of even those who did not buy products labeled with the misrepresentation.  But contrary to the Hoth court’s suggestions, this is effectively a showing of reliance, i.e., that even class members who did not buy products with the representation still relied on it. 

The good news is that these same factors make it unlikely that the Hoth analysis will have a lot of traction in garden-variety food labeling cases.  One main reason that these cases are such a headache for industry members is that they often arise from peripheral statements that appeared on product labels, but were the subject of limited (if any) advertising.  Thus, despite having invested little in a labeling statement and gotten no “price premium” whatsoever from it, a manufacturer may suddenly face a significant classwide damages claim based on the statement.  The Hoth analysis, which applies only in cases involving a pervasive and concerted advertising campaign, is unlikely to carry the day in those cases.    

Many food-labeling cases also involve claims that are relatively commonplace (e.g., “no preservatives,” “natural ingredients”).  Hoth, by contrast, involved a claim of a health benefit that was purportedly unique to the product category.  Gerber’s claim to offer the “first and only” baby formula with the capacity to reduce allergy risk is more memorable than, say, the fact that a particular canned fruit was one of seven in its category to contain “no added sugar.”  As a result, it is more plausible to assert that it influenced even purchasers who were not looking at the claim at the time they bought the products.  So in our view, the novel Hoth analysis is more likely a result of that case’s particular facts than a sea change in the requirements for showing injury under consumer protection statutes.