Rejecting all three of the plaintiff's proposed damages theories, a federal court judge in California denied class certification in a false advertising lawsuit against R.C. Bigelow Inc.
Alex Khasin claimed that the company deceived consumers about the amount of antioxidants in 12 varieties of its green tea products in a putative class action alleging violations of the state's false advertising law and the Consumer Legal Remedies Act. The products—which shared similar size and shape packaging—bore the statement "Healthy Antioxidants" on the front label with a statement on the back label that "Mother Nature gave us a wonderful gift when she packed powerful antioxidants into green tea…"
Khasin moved to certify a class of all persons in California who purchased one of the 12 green tea products, suggesting three methods for determining class damages: a restitution calculation, statutory damages, and nominal damages.
But U.S. District Court Judge William H. Orrick denied the certification motion, ruling that the damages models failed to satisfy either Federal Rule of Civil Procedure 23(b)(3) or Rule 23(b)(2).
"Khasin's restitution calculation essentially amounts to damages totaling the full retail price of the tea," the court wrote. The plaintiff referred to an order in a prior false advertising case where the court held 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, not the full purchase price or all profits."
But the plaintiff was incorrect that the "product as labeled" is the retail purchase price and that the product was legally worthless, leaving the "product as received" with a value of $0. "The 'full refund' method of calculating restitution has been repeatedly rejected in this district," Judge Orrick wrote. "Attributing a value of $0 to the Green Tea Products assumes that consumers gain no benefit in the form of enjoyment, nutrition, caffeine intake, or hydration from consuming the teas. This is too implausible to accept."
In order to comply with Rule 23(b)(3), the damages calculation must contemplate the production of evidence that attaches a dollar value to the consumer impact or advantage caused by the unlawful business practices, the court said. "The proposed methodology does not do so."
Khasin's second proposed method, statutory damages under the CLRA, similarly failed to persuade the court that certification was appropriate. The statute "does not provide for an automatic award" as a plaintiff must still prove actual damages. "Khasin has failed to provide a viable theory for calculating damages under the CLRA that would be tied to his theory of liability," the judge wrote.
The final attempt at a damages model, nominal damages, lacked support in case law, Judge Orrick said, with the plaintiff unable to cite "a single case demonstrating that nominal damages are available under his causes of action."
One final path to certification existed for Khasin, as a class can be certified under Rule 23(b)(2) where "the party opposing the class has acted or refused to act on grounds that apply generally to the class, so that final injunctive relief or corresponding declaratory relief is appropriate respecting the class as a whole."
But the plaintiff was unable to satisfy the requirements of this alternative means of class certification because he was unable to demonstrate future harm, Judge Orrick found. Despite deposition testimony that he "would consider" drinking Bigelow tea again if the defendant was enjoined from mislabeling, the plaintiff did not plausibly allege an intent to purchase Bigelow products in the future, the court said.
"Khasin's testimony is unconvincing," the judge wrote. " '[A] plaintiff may not manufacture standing for injunctive relief simply by expressing an intent to purchase the challenged product in the future.' Pursuant to Article III's standing requirements, a plaintiff must present a 'sufficient likelihood' that he will be injured. The existence of an unsupported assertion in Khasin's declaration that he 'would consider' purchasing Bigelow tea in the future if he is assured it complies with California law does not satisfy this standard."
Further, the plaintiff had not established a likelihood of suffering the same harm he alleged in his complaint, the court said. "Plaintiffs like Khasin, who were previously misled by deceptive food labels and now claim to be better informed, lack standing for injunctive relief because there is no danger that they will be misled in the future," Judge Orrick said, denying the motion for certification.
To read the order in Khasin v. R.C. Bigelow, click here.
Why it matters: The court noted additional "serious" issues implicated by the class certification motion: "Is the proposed class sufficiently ascertainable? Has Khasin adequately demonstrated that there are questions of law or fact common to the entire class?" Because the problems with the plaintiff's damages theories precluded certification, Judge Orrick declined to address the other issues but made it clear class certification was an uphill battle.