Problems Mount for Food Labeling Class Actions

December 17, 2014

Authored by: Site Default

The Ninth Circuit is poised to address the implicit “ascertainability” requirement for class actions in Jones v. ConAgra Foods, Inc., No 14-16327 (9th Cir.). Briefing is underway in that matter in which the district court denied class certification when it concluded that the class wasn’t ascertainable and that the plaintiffs’ proposed damages model wasn’t methodologically sound. I wrote about that district court ruling in a post on June 24, 2014.

The Jones appeal may provide some benefit to other defendants as a basis to stay other food labeling class actions. In Gustavson v. Mars, Inc., No. 13-cv-04537-LHK (N.D. Cal. Dec. 10, 2014), Judge Lucy Koh stayed proceedings pending a decision in Jones: “The appellant in Jones has briefed issues concerning ascertainability and damages that could be material to the Court’s disposition of any class certification motion in the instant action.” Judge Koh concluded that any decision in Jones likely will lead to additional briefing and possibly to more discovery regarding class certification in Gustavson.

By itself, the stay is good news for food labeling defendants hoping for clarity regarding the ascertainability standard in the Ninth Circuit and the types of damages models that will or won’t suffice in food labeling class actions. Judge Koh’s stay order is also noteworthy because she issued class certification decisions arguably at odds with the Jones district court decision at nearly the same time. In Werdebaugh v. Blue Diamond Growers, No. 12-cv-2724-LHK (N.D. Cal. May 23, 2014), and Brazil v. Dole Packaged Foods, LLC, No. 12-CV-01831-LHK (N.D. Cal. May 30, 2014), Judge Koh adopted fairly lenient standards for ascertainability and accepted the regression analysis methodology of the plaintiffs’ economist, Dr. Oral Capps—who is also the plaintiff’s expert in Gustavson. In Jones, the district court immediately rejected the same Dr. Capps’ methodology. Even Judge Koh later rejected Dr. Capps’ methodology when she granted summary judgment for the Brazil defendant on December 8, 2014. And she decertified the class relying on Dr. Capps’ opinions in Werdebaugh on December 15.

It is too soon to conclude that regression analysis is finished as a damages model in food labeling class actions in the Northern District of California, but that methodology is far from proving itself as viable. While some judges seemed willing to gloss over myriad problems with regression analyses in general—and Dr. Capps’ opinions in particular—in the early stages of food labeling class actions, the problems proved insurmountable as the cases continued to summary judgment or as more discovery of Dr. Capps’ methodology occurred. We now have a nice body of case law from the Northern District raising questions about the viability of these classes and the plaintiffs’ favored expert witness. Every defendant will want to move to stay proceedings while Ninth Circuit addresses Jones. Based on the number of district court judges finding flaws in these classes, it seems like those jurists may welcome the opportunity to put the brakes on expanding the district’s reputation as the “food court.”

James D. Smith is a partner in the Phoenix office of Bryan Cave LLP. He is a member of the Class & Derivative Actions Client Service Group and the Food and Beverage Team.