DRMA

Nutella Case Speaks to Limits on Scope of Class Actions

6 Mar, 2012 By: Jeffrey Richter, John Waller

---

As noted in the December 2011 issue of the DRMA Voice, the marketer of Nutella recently succeeded in substantially limiting the size of the proposed putative class of purchasers of its product by arguing that not everyone in the proposed class had been exposed to the alleged misrepresentation. An equally important lesson to be gleaned from this case is that nationwide marketers who find themselves sued for alleged violations of a single state’s unfair competition laws need not necessarily fear that they will always need to defend their conduct in a nationwide class action based upon that single state’s unfair competition laws.

In the In re Ferrero case, the plaintiffs sought to certify a nationwide class of purchasers of Nutella who had allegedly been exposed to misleading labeling and advertising about the benefits of consuming Nutella. The plaintiffs alleged that the marketer promoted Nutella as being healthy and beneficial to children despite its high levels of fat and sugar.

The named class representatives were all California residents who viewed the advertisements for Nutella in California and thereafter purchased Nutella in California. No doubt seeking to take advantage of California’s consumer-favorable unfair competition laws and desiring to maximize the size of the putative class, the plaintiffs asked the court to certify a nationwide class of purchasers of Nutella and to apply California’s unfair competition laws to the entire class.

Although the court concluded that it was appropriate to certify a class consisting solely of California-based purchasers of Nutella, it refused to certify a nationwide class of purchasers of Nutella notwithstanding that the same advertisements and label were used throughout the United States. The court noted that the plaintiffs made no showing that non-California purchasers saw the allegedly misleading advertising for Nutella in California, purchased Nutella in California, or that their claims arose out of conduct that occurred in California. The court, following established precedent that California’s unfair competition laws embody a presumption that they do not apply to conduct occurring outside of California, concluded that it was not appropriate to apply California’s unfair competition statutes to non-California residents in this case.

Although nationwide marketers may not always be as fortunate as the marketer of Nutella in limiting the scope of the putative classes that they face to consumers located in a single state – and may occasionally desire to resolve all potential claims about their products or the advertising or labeling therefore in a single lawsuit rather than in multiple lawsuits – the Nutella case is a good reminder that even marketers that run the same advertisements nationwide need not always fear that a single state’s laws will be applied to their conduct nationwide. Although the Nutella decision was based upon specific case law interpreting California’s unfair competition statutes, if faced with an attempt by an artful plaintiff to apply one state’s laws to residents of other states, carefully review the applicability of that state’s laws to residents of other states before assuming and accepting that they are correct. 

Jeffrey Richter and John Waller are partners at Los Angeles-based Finestone & Richter. They can be reached at (310) 575-0800, or at jrichter@frlawcorp.com and jwaller@frlawcorp.com.

Bookmark it: digg del.icio.us technorati yahoo facebook twitter