Chipotle Case Gives Hope Against Class Actions14 Jan, 2014 By: Gregory J. Sater
As faithful readers of this column know, the scourge of marketers these days is the California-based class action lawsuit. It seems that there is little you can say in an advertisement these days that can’t get you a demand letter or – worse – a lawsuit, from a California class action law firm. So anytime one of us scores a victory, it is worth celebrating. It also is worth evaluating to determine why.
In a U.S. District Court in Los Angeles this past month, my favorite Mexican restaurant, Chipotle Mexican Grill, successfully defeated a class action plaintiff’s motion for class certification. Here’s why.
Chipotle advertises that its products contain “naturally raised” meats, meaning “coming from animals that are fed a pure vegetarian diet, never given antibiotics or hormones, and raised humanely.” And its products generally do. At certain times, however, in some cases, some Chipotle restaurants have run out of their supply of such meats and have served their patrons conventional meats instead. When this has occurred, those Chipotle locations have posted signs at the point-of-purchase, alerting their patrons of that fact.
The court decided not to certify the case as a false advertising class action because, in its opinion, the question of whether a particular class member had seen one of the point-of-purchase signs could not be handled on a class-wide basis. The same was true of the related question of whether each sign that was put in place at each location was reasonably visible or not.
The ascertainability (or lack thereof) of the class was the problem: deciding which consumers were in the class, and which were not, would be too difficult for the court to ascertain. It also would be too difficult to compensate people appropriately.
As the court explained, it would have to obtain claims from everyone who had eaten meat at any Chipotle restaurant during the class period. It would have to require those people to list every time that they had eaten at such a restaurant and to state the date and to state the item purchased. This was something that, in the court’s view, very few people would be able to do (either truthfully or accurately). As a result, “money would be given out basically at random to people who may or may not actually be entitled to restitution.” This, the court said, would be unfair both to legitimate class members and to Chipotle.
The decision continues a recent trend of certain judges in denying class certification on the basis of ascertainability problems.
One of the most important moments, if not the most important moment, in any class action case is the judge’s decision to certify, or not certify, the case as a class. Basically, to defeat class certification is to make the case go away. To have a judge deny class certification based on lack of ascertainability is uncommon, but – as Chipotle proved – it is not impossible.
Although there certainly are some differences, some parallels can be drawn between the facts of the Chipotle case and the facts that often apply to direct response marketers.
Gregory J. Sater is a partner in Venable LLP‘s Advertising, Marketing and New Media Group. He can be reached via E-mail at [email protected].