Plaintiff Steeps in Green Tea Class Action Defeat12 Apr, 2016 By: Jeffrey D. Knowles, Venable LLP’s Advertising, Stephen R. Freeland
A California federal court recently ruled that a consumer’s false labeling claims against tea manufacturer R.C. Bigelow could not proceed as a class action due to the lack of an acceptable class-wide damages model and standing. This development, especially in class action-friendly California, should comfort marketers and other companies frequently targeted by plaintiffs.
The complaint alleged that two antioxidant claims on Bigelow’s green tea product labels were unlawful, unapproved health claims under California law because the products did not satisfy minimum nutritional and antioxidant substantiation requirements.
The plaintiff moved to certify a class of California consumers who purchased Bigelow’s green tea products, but the court denied the motion.
The court held that, at the certification stage, a plaintiff must submit a damages model that measures “only those damages attributable to” the defendant’s allegedly misleading conduct. “If the model does not even attempt to do that, it cannot possibly establish that damages are susceptible of measurement across the entire class,” the court added.
The court rejected all three of the plaintiff’s proposed models. The first – the “restitution calculation” – measured class-wide damages as the entire average retail price multiplied by the number of each green tea product sold during the class period, which was premised on the contention that “the product [was] legally worthless.” The court disagreed, holding that it was implausible that consumers “gain no benefit” from the use of the product and because the court has repeatedly rejected the “full refund” method of calculating restitution.
The plaintiff’s other models sought statutory damages under the California Consumer Legal Remedies Act (CLRA) and/or nominal damages. CLRA provides that “actual damages” in a class action shall be no less than $1,000, but the award is not automatic. A plaintiff must prove that the alleged deception actually caused their damage. The court held that the plaintiff had “failed to provide a viable theory for calculating damages under the CLRA that would be tied to his theory of liability.” The nominal damages theory was dismissed because the plaintiff failed to cite “a single case demonstrating that nominal damages” were available.
The plaintiff also sought to certify a class to enjoin Bigelow from continuing to allegedly mislabel, but the court denied this request because the plaintiff had not shown an intent to purchase Bigelow products in the future and, therefore, lacked standing.
Despite California’s well-deserved reputation as a plaintiff-friendly jurisdiction, this case is the latest in a trend where that state’s courts have required plaintiffs to prove that damages can be calculated on a class-wide basis at the certification stage. While the judges’ recent refusals to accept shortcuts does not level the playing field in the state, it is a welcome change for companies targeted by class action plaintiffs.
Jeffrey D. Knowles is the chair of Venable’s Advertising, Marketing, and New Media practice group. Stephen R. Freeland is an attorney in the group. They may be reached at (202) 344-4000.