Let's continue on our recent focus on some interesting class action decisions. A federal court recently rejected a proposed class of coffee product purchasers. See McManus v. Sturm Foods Inc., No. 3:11-cv-00565 (S.D. Ill., 8/26/13).
Plaintiffs claimed that defendants violated the consumer protection statutes and unjust enrichment laws of the eight states with regard to their Grove Square Coffee single serving coffee product. Per the amended complaint, defendants allegedly misrepresented and omitted the true nature of Grove Square Coffee products by indicating the product contained fresh ground coffee and a filter rather than “instant” or “soluble” coffee.
In considering a motion for class certification, the court looked to the implicit, foundational prerequisites. A court must first ensure that the class is sufficiently “defined.” Jamie S. v. Milwaukee Public Schools, 688 F.3d. 481, 493 (7th Cir. 2012) (“a class must be sufficiently definite"). The class should be “ascertainable,” which it is if the court can determine membership with objective criteria. A class is, on the other hand, overbroad if it sweeps in a great number of members who “for some reason could not have been harmed by the defendant’s allegedly unlawful conduct.” Messner, 669 F.3d 802 at 824; Kohen v. Pacific Inv. Management Co. LLC, 571 F.3d 672, 677 ( 7th Cir. 2009) (“a class should not be certified if it is apparent that it contains a great many persons who have suffered no injury at the hands of the defendant.”); Oshana v. Coca-Cola Co., 472 F.3d 506, 514 (7th Cir. 2006) (denying class certification when “[c]ountless members of Oshana’s putative class could not show any damage, let alone damage proximately caused by the alleged deception.”). A class is overbroad if it sweeps in many members who could not have been harmed at all: This distinction is critical for class certification purposes. If a proposed class consists largely (or entirely, for that matter) of members who are ultimately shown to have suffered no harm, that may not mean that the class was improperly certified but only that the class failed to meet its burden of proof on the merits. If, however, a class is defined so broadly as to include a great number of members who for some reason could not have been harmed by the defendant’s allegedly unlawful conduct, the class is defined too broadly to permit certification. A class cannot, then, include numerous people who have no claim at all, observed the court.
The court here found that under any of the relevant the state consumer protection laws requiring causation or actual reliance, the plaintiffs’ class definitions were overbroad. The class definition included all individuals who purchased a Grove Square Coffee product. This definition necessarily includes purchasers who knew, or who were indifferent to the product’s alleged insoluble coffee content. For those purchasers, plaintiffs cannot prove causation, reliance, or actual injury from defendants’ alleged misrepresentation. For this reason, plaintiffs’ claims under Alabama, New York, New Jersey, North Carolina, Illinois, and South Carolina were overbroad and improper for class certification.
Turning to the remaining states, the court engaged in a specific analysis of the state law. For example, to the extent a state requires plaintiffs to prove an actual loss, but would allow a class-wide presumption of actual loss if the defendant’s alleged misrepresentations were material and made to the entire class, the definition still ran into problems, In California, said the court, an inference of reliance may be established on a class wide basis with a showing of materiality. Materiality is objective and exists if a reasonable person would attach importance to the misrepresentation’s existence or nonexistence in determining his choice of action in the transaction in question. However, the inference of reliance is only appropriate if all purported class members were exposed to the alleged misleading advertising. Plaintiffs’ proposed class definition here included individuals who were not exposed to defendants’ alleged misrepresentation; therefore a court could not presume reliance. In 2011, Sturm Foods allegedly changed its label to include the word “instant.” Class members that were exposed to the packaging after this date (nearly 4 million dollars of gross sales; a vast majority of the overall sales during the class period) were not exposed to what plaintiffs claim was defendants’ primary deception.
Moreover, the record indicates that extensive sales occurred online, and the class as defined by plaintiffs included these online purchasers. Consumers who purchased the product online without ever seeing the packaging or product placement could not have been exposed to the alleged misrepresentation prior to purchase.
Plaintiffs’ amended complaint thus did not contain sufficient evidence of sales such that any presumption of exposure was appropriate. Materiality cannot be presumed and plaintiffs cannot adequately allege actual injury for the California class.
Overall, the class potentially included a great many individuals who bought Grove Square Coffee products because of, or in spite of, knowing that it contained instant coffee; thus, the class included a great number of individuals who could not prove causation or an ascertainable loss, as required in various states. These individuals suffered no lost value or incurred no out of pocket expenses as a result of the alleged misrepresentation. Since this class definition potentially swept in a great number of individuals that could not show harm resulting from defendant’s conduct, the class definition was fatally overbroad.
Was there any way to cure the deficiency? It must be administratively feasible for the court to determine whether a particular individual is a member of the proposed class. Clay v. American Tobacco Co., 188 F.R.D. 483, 490 (S.D. Ill. 1999). And the administrative burden of using subjective membership criteria obviates the judicial efficiency that is the fundamental motive for class actions. See Milwaukee Public Schools, 668 F.3d 481, 496 (7th Cir. 2012) (denying class certification for indefiniteness when “identifying disabled students who might be eligible for special-education services is a complex, highly individualized task, and cannot be reduced to the application of a set of simple, objective criteria.”); Simer v. Rios, 661 F.2d 655, 669 (7th Cir. 1981) (noting that determining whether potential class members “knew of the existence of the regulation and were discouraged from applying for [state heating] assistance . . . would be a burden on the court and require a large expenditure of valuable court time.”); Alliance, 565 F.2d at 978 (“In those cases in which class certification has been denied on account of indefiniteness, the primary defect in the class definition has been that membership in the class was contingent on the state of mind of the prospective class members.”).
Here, the only way to avoid over-inclusiveness would have been to impose criteria limiting class membership to individuals properly captured by the underlying claim. However, any such criteria would necessarily be subjective. Limiting class membership to individuals that were actually exposed to the deceptive packaging or advertisement would be largely subjective and thus improper. See In re Yasmin, 2012 WL 865041, at *16. This court saw no way to limit class membership without an impermissible plaintiff-by-plaintiff subjective inquiry. Plaintiff’s proposed class was inadequate.
Another useful recent decision as courts place proper focus on the implicit requirements of Rule 23 and the no-longer-pro-forma issues of class definition.
Class certification denied.