Ninth Circuit: Plaintiff’s Lawyer Can’t “Mint” Money Over Voluntary Label Changes

Patterson Belknap Webb & Tyler LLP

Patterson Belknap Webb & Tyler LLP

Earlier this month, in a consumer action challenging alleged slack-fill in boxes of Junior Mints and Sugar Babies, the Ninth Circuit considered the reach of the “catalyst theory” for recovering attorney’s fees under California law. See Gordon v. Tootsie Roll Industries, Inc., No. 18-56315, 2020 WL 1846920 (9th Cir. Apr. 13, 2020). Under this theory—which the U.S. Supreme Court has rejected for federal claims—a litigant may be considered a “successful party” entitled to seek a fee award upon a showing that the litigation impelled the defendant to take corrective action.  Unfortunately for the plaintiff, the panel held that she was not a “successful party” under California law—even though the defendant had changed its marketing practices after the lawsuit was filed—because she had insisted that those changes would not resolve her gripes. 

When Ketrina Gordon patronized the concession stand of a Los Angeles movie theater in July 2016, she might have had Kramer's immortal words in mind: “Who’s going to turn down a Junior Mint? It’s chocolate—it’s peppermint—it’s delicious! . . . it’s very refreshing!” But when she opened the box, she saw it contained more empty space—and fewer candies—than she had expected.  Miffed, Gordon brought suit under the California consumer protection statutes on behalf of herself and others similarly situated, seeking an order requiring defendant Tootsie Roll Industries to either modify the boxes or fill them with more candy.

In the midst of Gordon’s lawsuit—after her motion for class certification was fully briefed—Tootsie Roll made several changes to its candy packaging.  Specifically, it added an “ACTUAL SIZE” label under the illustrations of the candies on the box; added a piece count to the front of the box; and moved the disclaimer “PRODUCTS SOLD BY NET WEIGHT NOT VOLUME. CONTENTS TEND TO SETTLE AFTER PACKAGING” from the back to the front of the box. In light of these changes, Gordon dropped her lawsuit, declared the case moot, and promptly moved for an award of attorney’s fees and expenses, arguing that her lawsuit was the “catalyst” that caused Tootsie Roll to adopt the new packaging.

Under federal law and the law of many states, this would clearly be insufficient to support a fee award. Nearly two decades ago, in Buckhannon, the U.S. Supreme Court rejected this “catalyst theory” for recovering fees, holding that, for purposes of federal fee-shifting statutes, a party “prevails” only when it has been awarded “some relief from by the Court.Buckhannon Board & Care Home, Inc. v. West Virginia Dep’t of Health and Human Services, 532 U.S. 598, 603 (2001) (emphasis added). 

California, by contrast, does not require a “judicially recognized change in the legal relationship between the parties,” such as a judgment or other court-ordered relief, to support a fee award.  Tipton-Whittingham v. City of Los Angeles, 101 P.3d 174, 177 (Cal. 2004). Under California Code of Civil Procedure § 1021.5, a “successful party” in a matter that results in the “enforcement of an important right affecting the public interest” may obtain a fee award. Moreover, California law regards a defendant’s voluntary change in behavior as a “success” for purposes of this statute.  To qualify for fees under this theory, a plaintiff must show (among other things) that “the lawsuit was a catalyst motivating defendants to provide the primary relief sought.” Tipton-Whittingham, 101 P.3d at 177. This requires a showing that the plaintiff’s lawsuit brought about the “precise factual/legal condition that [the plaintiff] sought to change or affect.” Graham v. DaimlerChrysler Corp., 101 P.3d 140, 155 (Cal. 2004).

Applying that standard, the District Court rejected Gordon’s claims for attorney’s fees.  Recall that Tootsie Roll’s voluntary changes all involved modifications to the product labeling. By contrast, Gordon’s demands throughout the litigation had focused on requiring Tootsie Roll to add more candy or change the size of the box; as the court put it, for Gordon, the product’s “[l]abeling” was “no[] . . . more than a side thought.” Gordon v. Tootsie Roll Industries, Inc., 2018 WL 6133638, at *1 (C.D. Cal. Sept. 6, 2018).  Thus, the District Court refused to credit Gordon’s assertion that Tootsie Roll’s labeling changes “would have satisfied [her] primary demands” at any point in the litigation. Id.

The Ninth Circuit summarily agreed, finding Gordon’s arguments unpersuasive—and contradicted by the record in the case. Gordon, 2020 WL 1846920, at *1-3.  As the Ninth Circuit saw it, Gordon’s “theory of the case was that the size of the box itself was misleading” and that Tootsie Roll should either “fill the Products’ box with more candy . . . or shrink the box to accurately represent the amount of candy product therein.” Id. at *1. Tootsie Roll’s voluntary changes to the packaging did not do either of those things.  In addition, the Court noted that Gordon had “expressly disclaimed” throughout the litigation that a change in product labeling would remedy her grievances.  Id. at *2.  It pointed to statements from Gordon that the “net weight and serving disclosures are simply irrelevant to the issue here” and that adding additional information on the label was a “red herring.” Id.

The Ninth Circuit also affirmed the District Court’s award of more than $5,000 in costs to Tootsie Roll, ironically enough, as “prevailing party” under Federal Rule of Civil Procedure 54(d)(1).  Id.  (Needless to say, that’s a lot to pay in pursuit of a few extra Junior Mints.)

Gordon’s claim was easy for the Ninth Circuit to shoot down given the clear record evidence that Tootsie Roll’s changes were not the “primary relief” she sought.  But the decision also highlights that the catalyst theory is not the clear path to attorney’s fees that many plaintiffs’ lawyers may imagine.  Even if a lawsuit asserting California claims causes a defendant to change its advertising, the plaintiff won’t be deemed a “successful” party unless the change closely corresponds to the specific relief the plaintiff demanded.  This means companies retain some leeway to change advertising that’s been put at issue in litigation without necessarily resigning themselves to making big payouts to plaintiffs’ lawyers in the process.  Perhaps not as refreshing as a Junior Mint, but it’s still some relief.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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