Tea company Twinings is facing a certified class of plaintiffs in a false advertising lawsuit but won’t be paying them a dime.
U.S. District Court Judge Ronald M. Whyte granted the plaintiff’s class certification motion for injunctive relief but ruled that she failed to present a viable theory for financial relief.
Nancy Lanovaz claimed that Twinings mislabeled 51 different varieties of green, black and white tea products in violation of state and federal law. Product packaging for all of the tea stated “Natural Source of Antioxidants,” while the green teas elaborated that they offered “[a] natural source of protective antioxidants . . . Twinings’ Green Teas provide a great tasting and healthy tea drinking experience.”
Twinings’ tea contains flavonoids, a type of antioxidant, but the Food and Drug Administration does not allow nutrient content claims about flavonoids because the agency has not established a recommended daily intake for flavonoids, Lanovaz alleged. Therefore, the labels are “deceptive, misleading and unlawful even if technically true,” she contended.
After the court denied Twinings’ motion for summary judgment, Lanovaz moved to certify a class of California tea purchasers. Although he determined the proposed class met the requirements for ascertainability, commonality, and typicality, Judge Whyte certified the group under Federal Rule of Civil Procedure 23(b)(2) for injunctive relief only.
Because the class was certified under Rule 23(b)(2), none of the class members will receive an individualized award of monetary damages in the form of restitution, refund, reimbursement, or disgorgement.
Although Lanovaz sought monetary damages, the court held that she failed to present a viable theory.
Plaintiffs must show that monetary relief resulting from the defendant’s conduct is measurable on a classwide basis through use of a common methodology, Judge Whyte wrote. In a false advertising suit such as Lanovaz’s, the damages are limited to the price premium paid as a result of Twinings’ allegedly misleading statements.
In a declaration from a damages expert, Lanovaz proposed three possible models for measuring damages. The first suggested a full refund for the register price of the tea. Judge Whyte quickly rejected that model as not the proper measure of damages.
The court also vetoed the “benefit of the bargain” model, which would have compared Twinings products to comparable products that do not have the antioxidant label. “[The expert] has no way of linking the price difference, if any, to the antioxidant label or controlling for other reasons why ‘comparable’ products may have different prices,” the court said.
Finally, the “econometric or regression analysis” was ruled out by the plaintiff herself, the court said. This method would allow the expert to estimate the portion of sales earned by Twinings as a result of the allegedly false statements. But since antioxidant claims were on the labels over the entire class period, it was not possible to invoke the regression analysis in the absence of any variable in sales or units sold attributable to the antioxidant claims.
“[P]laintiffs do not present any damages model capable of estimating the price premium attributable to Twinings’ antioxidant labels,” the court concluded.
To read the court’s order in Lanovaz v. Twinings North America, click here.
Why it matters: The court’s order presented a mixed bag for the advertiser. Twinings still faces a class action lawsuit but dodged any monetary damages for the class.