December 15, 2014 brought good news for Blue Diamond Growers in a decision of the U.S.
District Court for the Northern District of California, which decertified a class. In Werdebaugh v. Blue Diamond Growers, No. 12-CV-02724 (N.D. Cal. 12/15/2014) the Plaintiff brought a class action alleging that he bought his children Defendant’s chocolate almond shelf stable milk product as a healthy “treat” alternative to white dairy milk. But he contended that the purchased product and similar products of Defendant were packaged unlawfully in that he alleged that two label statements were false and misleading with respect to whether the product was all natural and whether it was sweetened with sugar.
Initially the Court granted in part Plaintiff’s motion for class certification, certifying a Rule 23(b)(3) damages class while denying certification of an injunctive class. In doing so the Court accepted one of the three proposed damages models of Plaintiff’s damages expert, Dr. Oral Capps. Under Comcast Corp. v. Behrend, 133 S. Ct. 1426 (2013), the Court accepted the proposed regression damages model. The new decision followed a second amended complaint, expert discovery and a motion to decertify the damages class.
At issue was the predominance requirement. The Court cited Comcast, supra, for the proposition that, “To satisfy the Rule 23(b)(3) predominance requirement, a plaintiff must present a damages model that is ‘consistent with [his or her] liability Case.’” Although it was not necessary for calculations to be exact at this point in the case, the damages model must measure damages in fact attributable to the defendant’s conduct of which the plaintiff is complaining.
The Court in Werdebaugh noted that, “The proper measure of restitution in a mislabeling case is the amount necessary to compensate the purchaser for the difference between a product as labeled and the product as received.” Although the court had preliminarily approved the expert’s proposal for a “before and after” regression model, this was not the model actually submitted. The Court concluded that the damages model submitted was flawed such that it did not, in fact, in the words of Comcast, “measure only those damages attributable” to Plaintiff’s theory of injury. The Court stated, “The Court concludes that the perfect collinearity problem here renders the damages model insufficient under Comcast because Dr. Capps’ model is incapable of isolating the damages attributable to Defendant’s alleged wrongdoing.”
Thus the Plaintiff had not met his Rule 23(b)(3) obligation to put forth damages limited to Defendant’s liability. After analysis of an additional flaw in this model and of a second model in a proffered supplemental report, and of the expert’s “alternative” damages calculation, the Court concluded that, “Plaintiff has failed to put forth evidence that damages can be ‘determined and attributed to plaintiff’s theory of liability’ on a classwide basis.” Similar to Comcast, there was a “mismatch” between the damages model and the liability theory. The predominance requirement was not met, class certification was not appropriate and the motion to decertify was granted.