In a mixed ruling for food manufacturers, the Ninth Circuit affirmed the decertification of a Rule 23(b)(3) class alleging a false “all natural fruit” labeling claim, but reversed the grant of summary judgment on the named plaintiff’s individual claim. Brazil v. Dole Packaged Foods, LLC, No. 14-17480, 2016 U.S. App. LEXIS 17733 (9th Cir. Sept. 30, 2016).
In Brazil v. Dole Packaged Foods, LLC, the plaintiffs alleged that Dole mislabeled its products as “all natural fruit” when they actually contained artificial ingredients, colorings, flavorings, and chemical preservatives. 2014 U.S. Dist. LEXIS 157575, at *4-5 (N.D. Cal. Nov. 6, 2014). While the district court preliminarily certified both a damages class and an injunctive false labeling class, it decertified the damages class at the close of discovery. Id. at*4-5. The court based its decertification on a rigorous analysis under Comcast Corp. v. Behrend, 133 S. Ct. 1426 (2013), finding that plaintiffs’ damages model did not sufficiently isolate the price impact of Dole’s use of the “all natural fruit” labeling statements, and therefore failed to provide any means of showing damages on a class-wide basis through common proof. Id. at *24. Specifically, the court held that the plaintiffs’ damages model must reliably calculate the price premium attributable to the “all natural fruit” label; however, plaintiffs’ proposed model failed to control for other variables, such as advertising, multiple labels, and packaging differences, that could have affected the price of Dole’s products. Id. at *34-37. The court later granted defendant Dole’s motion for summary judgment on the plaintiff’s individual false labeling claim on the ground that the plaintiff had failed to present sufficient evidence that the challenged “all natural fruit” label was likely to mislead reasonable consumers. 2014 U.S. Dist. LEXIS 169943 (N.D. Cal. Dec. 8, 2014).
First, the good news. On September 30, 2016, the Ninth Circuit agreed with the lower court’s order decertifying the 23(b)(3) class, holding that the district court properly limited the available damages to the “price premium” theory, which could not be calculated with common proof. Brazil, 2016 U.S. App. LEXIS 17733 at *6-7. This confirmation of the lower court’s ruling bolsters the nationwide trend of courts taking a critical eye to the damages models proposed by putative food litigation class action plaintiffs, and finding them lacking under Comcast.
However, the Ninth Circuit also reversed the grant of summary judgment on named plaintiff Brazil’s claims under the California Unfair Competition Law, the California False Advertising Law, and the California Consumer Legal Remedies Act. The Ninth Circuit cited U.S. Food and Drug Administration (FDA) warning letters to food sellers accusing the sellers of deceptive advertising for describing products that contained synthetic citric acid as “all natural.” Id. at *2-3. It also credited the plaintiff’s testimony that he was misled, Dole’s consumer surveys, and the FDA’s nonbinding policy on use of the word “natural” in food labels. Id. at *2. Taken together, that evidence could allow a trier of fact to conclude that Dole’s description of its products as “all natural fruit” was misleading to a reasonable consumer and that synthetic acids were not “natural.” Id. at
The upshot, then, is that putative class plaintiffs alleging “all natural” food claims will continue to battle Comcast’s heightened evidentiary standards for proof of common damages in the food and beverage class action arena. However, while Comcast,and now Brazil, confirm the requirement that a damages model underlying a Rule 23(b)(3) class must provide a method of calculating damages on a class-wide basis, Brazil also opens the door for named plaintiffs to rely on contested evidence, including self-serving testimony and non-binding FDA communications, to survive summary judgment on claims involving “all natural” labeling under California law.