Ninth Circuit Affirms Dismissal of Putative Class Action for Lack of Article III Standing

King & Spalding
Contact

On December 4, 2020, the U.S. Court of Appeals for the Ninth Circuit affirmed a district court order dismissing, for lack of Article III standing, a putative class action involving allegations that the plaintiff was harmed by purchasing popcorn that contained partially hydrogenated oils (“PHOs”).

  • Plaintiff Jacquelyn McGee filed a putative class action against S-L Snacks National alleging that S-L sold popcorn products that contained PHOs, which she claimed were toxic and unsafe for human consumption. She asserted claims for alleged violations of California’s Unfair Competition Law (“UCL”), nuisance, and breach of the implied warranty of merchantability.
  • Plaintiff McGee alleged that she suffered both economic and physical injuries. As to the economic injuries, she claimed that: (1) she did not get the benefit of her bargain because she thought she was purchasing products that contained ingredients that were safe for human consumption (the “price premium theory”); and (2) she overpaid for the products because they were not actually fit for human consumption and therefore had a value of $0 (the “overpayment theory”). As to physical injuries, Plaintiff claimed that the ingestion of PHOs immediately “inflame[d] and damage[d] [her] vital organs” and “substantially increase[d]” the risk that she would develop “heart disease, diabetes, cancer, and death” in the future.
  • S-L moved to dismiss for lack of Article III standing, and the district court granted that motion. On appeal, the Ninth Circuit affirmed in a published opinion.
  • As to Plaintiff’s “price premium theory,” the Ninth Circuit agreed that allegations that a plaintiff bargained for a product that was worth a given value but received a product worth less than that value could, in some cases, support Article III standing to sue. This was not such a case, however, because to demonstrate Article III standing based on a “price premium theory,” a plaintiff “must do more than allege that she ‘did not receive the benefit she thought she was obtaining.’” Rather, she “must show that she did not receive a benefit for which she actually bargained.” Here, Plaintiff had not shown that she did not receive a benefit for which she actually bargained, because the labeling of the popcorn products at issue disclosed that the products contained PHOs.
  • Plaintiff’s “overpayment theory” fell short for similar reasons. Although the Ninth Circuit agreed that overpayment could—in some instances—be a viable theory of economic injury, to prevail on such a theory, a plaintiff typically must show “that she paid more for a product than she otherwise would have due to a defendant’s false representations about the product.” Here, however, Plaintiff did not allege that the S-L made any false representations or fraudulent omissions about the popcorn products at issue. To the contrary, the products’ labeling disclosed the presence of PHOs.
  • Significantly, the Ninth Circuit stopped short of ruling that a plaintiff must allege misrepresentations or fraudulent omissions to state a claim based on an “overpayment theory.” The court explained that while some courts have suggested that such a theory might be viable based on a hidden defect or if the product was worth objectively less than what the plaintiff paid for it, Plaintiff had not alleged either of those things here.
  • As to Plaintiff’s allegations of physical injury, they were too speculative to support Article III standing as a matter of law, especially because Plaintiff did not allege that she had “undergone medical testing or examination to confirm that she suffers from [any] conditions or that they were caused by her consumption of [the product at issue].” Nor had Plaintiff plausibly alleged that her consumption of the product substantially increased her risk of disease in the future.
  • The Ninth Circuit’s opinion provides helpful authority for class-action defendants to argue that a consumer’s unilateral expectations concerning a product’s efficacy or safety are insufficient to state a consumer protection claim—particularly when those expectations are either belied, or at least qualified, by the full context of the product’s labeling.
  • The case is McGee v. S-L Snacks National. Read the Ninth Circuit’s opinion here.

Written by:

King & Spalding
Contact
more
less

King & Spalding on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.