In a recent decision, Judge William Orrick of the Northern District of California denied class certification in a putative consumer class action based on the plaintiff’s failure to provide a viable damages model.
In Khasin v. R.C. Bigelow, Inc., No. 12-cv-02204-WHO (N.D. Cal. Mar. 29, 2016) the plaintiff, Alex Khasin, purporting to represent a class of California consumers, filed suit against R.C. Bigelow, Inc. (“Bigelow”), a manufacturer and seller of green tea products, alleging that the product packaging made false and misleading claims – namely, that the products contain “healthy antioxidants.” Khasin alleged that he relied on the labeling claims in purchasing the products, and that he would not have bought the products, or would not have paid as much for them, had he known the labeling claims were false.
The court denied class certification under Rule 23(b)(3) of the Federal Rules of Civil Procedure because Khasin failed to demonstrate that “damages are capable of measurement on a classwide basis.” Comcast Corp. v. Behrend, 133 S.Ct. 1426, 1433 (2013). The court repeated its prior ruling that the proper measure of restitution is “the amount necessary to compensate the purchaser for the difference between a product as labeled and the product as received, not the full purchase price or all profits.” The court rejected plaintiff’s “full refund” model because the assumption that consumers “gain no benefit” from the green tea products is “too implausible to accept.” Rather, under Comcast, Khasin was required to present a damages model that could determine the price premium attributable only to the allegedly misleading labeling claims.
Khasin also sought statutory damages under the California Legal Remedies Act (“CLRA”) and “nominal damages.” The court rejected these theories. With respect to the CLRA, Khasin could not pursue statutory damages because this required proof of actual damages and Khasin could not establish a viable damages method for the reasons already noted.
The court further denied class certification under Rule 23(b)(2), which provides for classwide injunctive relief. The court held that Khasin lacked standing to seek injunctive relief because he could not establish an intent to purchase Bigelow products in the future, and there was no danger that Khasin would be misled in the future because he is aware of the alleged deception.
Finally, although the problems with Khasin’s damages theories and his injunctive relief request were sufficient grounds for denial of class certification, the court went on to note its additional concerns regarding certification of a class. In particular, the court expressed doubt whether the proposed class was sufficiently ascertainable, whether Khasin could establish predominance, and whether potential class members who were misled by the disputed statements would be readily identifiable based on Bigelow’s records.
In sum, the Khasin decision provides further ammunition for consumer class action defendants to challenge certification based on the lack of a viable damages theory under Comcast and the lack of standing to pursue injunctive relief, and casts further doubt on important issues central to the class certification inquiry.