In Gyorke-Takatri v. Nestle USA, Inc., the United States District Court for the Northern District of California held that parties in a class action seeking to remove an action to federal court must provide sufficient admissible evidence supporting the jurisdictional basis for removal.
No. 15-cv-03702-YGR. Judge Yvonne Gonzalez Rogers remanded to California state court an action involving Gerber Products Co.’s Graduates Puffs as a result of insufficient admissible evidence.
Gerber removed the action to federal court under the Class Action Fairness Act (CAFA), 28 U.S.C.
§ 1332(d). CAFA requires an amount in controversy of at least $5 million. Gerber argued that the sales amount of Graduates Puffs in California exceeded $5 million during the alleged period and should satisfy the statutory amount. Gerber attempted to prove this monetary amount through the affidavit of one of its employees who had reviewed sales data provided by a third party researcher tracking the sales of the product. Gerber provided documents summarizing the third party sales data but failed to provide any documentation in regards to potential hearsay issues.
Judge Gonzales Rogers ruled that the evidence was inadmissible multiple hearsay and not subject to any exception. The affidavit constituted inadmissible multiple hearsay because it was a document presenting information from a third party resource. Geber did not submit a declaration from anyone who had knowledge regarding how the data was collected or maintained. Nor did Gerber make any offer of how it intended to cure the defects. As a result, Gerber could not prove it satisfied CAFA’s amount in controversy requirement by a preponderance of the evidence, and the action was remanded from federal court.
 Gerber’s product, Gerber Graduates Puffs, contains labels depicting vegetables and fruits. Plaintiffs represent a class of California consumers who allege that these images misled consumers into thinking the products were healthier than they actually are.
On November 10, the federal Food and Drug Administration (FDA) announced that it is seeking public comments on use of the term “natural” on food labeling. FDA, “Natural” on Food Labeling (Nov. 10, 2015). The agency explained that its actions were prompted by the “changing landscape of food ingredients and production, and in direct response to consumers who have requested that the FDA explore the use of the term ‘natural.’” The announcement came as a surprise since FDA had previously declined requests from consumers, the food industry, and federal judges to define the term.
Read our client alert.
An Illinois federal judge recently certified a class of consumers who allege that Sturm Foods and its parent company Treehouse Foods Inc. marketed their Grove Square Coffee pods for use in Keurig Inc. brewers—and designed them to mimic Keurig’s “K-Cups” that yield fresh coffee—but hid the fact that they were 95% instant coffee by using the terms “soluble and microground” on the package labels. Suchanek et al. v. Sturm Foods Inc. et al., No. 3:11-cv-00565. This class includes consumers who bought Grove Square Coffee products in Alabama, California, Illinois, New Jersey, New York, North and South Carolina, and Tennessee.
This decision comes after the previously assigned district court judge (Judge G. Patrick Murphy (Ret.)) sided with Strum on class certification and summary judgment and dismissed the suit. Judge Murphy held that the plaintiffs failed to show that every class member has been harmed by Sturm’s alleged mislabeling or deception. He noted that the plaintiffs may have been motivated to buy Grove Square Coffee because of its price point, the desire to try new things, or a host of other factors. On appeal, the Seventh Circuit disagreed, finding that factual disputes about the packaging called for a trial rather than summary judgment. In addition, the Seventh Circuit held that the class certification commonality requirement was satisfied because the question of whether the packaging was likely to mislead a reasonable consumer applied to every class member.
On remand, the case was re-assigned to Judge Nancy J. Rosenstengel who granted the plaintiffs’ motion for class certification. Judge Rosenstengel found that commonality and typicality were met because plaintiffs claimed that they would not have purchased Grove Square Coffee pods, or paid as much as they did, but for the misleading packaging. She also ruled that the plaintiffs presented a viable damages model based on a full-refund theory. Specifically, Judge Rosenstengel noted that there was “plenty of evidence in the record suggesting that consumers would not have purchased GSC but for its deceptive labeling that created and/or failed to correct the misimpression that GSC was premium, ground coffee.”
Moreover, even though Sturm had modified the language on the labels during the class period to say “instant and microground,” Judge Rosenstengel found that the class properly included consumers who purchased after the label change because the plaintiffs provided evidence showing that consumers continued to complain about being misled after the change took place.
On November 2, 2015, Judge Alsup of the Northern District of California dismissed a consumer class action against food manufacturer Plum Organics for failure to state a claim. In Workman et al. v. Plum Inc., D/B/A Plum Organics, Case No. C 15-02568, the putative class alleged that Plum Organics’ Mighty 4® puree pouches and fruit bars were deceptive because their labels showed pictures of pumpkin, pomegranate, and other ingredients that were not the products’ most prominent ingredients. The plaintiffs argued that this allegedly deceptive advertising was a violation of the California Consumer Legal Remedies Action, Section 1750, and the California Business and Professions Code, Section 17200. Plum Organics moved to dismiss for failure to state a claim under Fed. R. Civ. P. 12(b)(6), lack of standing, and failure to plead with particularity as required by Fed. R. Civ. P. 9.
Judge Alsup applied a “reasonable consumer test” to hold that the plaintiffs’ allegations did not amount to a plausible claim, as required by Ashcroft v. Iqbal, 556 U.S. 662 (2009). The operative question was whether members of the public are likely to be deceived by the product at issue. He found that a reasonable consumer would not be deceived by the labels at issue. For one, there was no misrepresentation: the food items pictured on the label were ingredients in the products. Moreover:
In contrast to plaintiff’s assertions, a reasonable consumer would simply not view pictures on the packaging of a puree pouch or box of fruit bars and assume that the size of the items pictured directly correlated with their predominance in the blend. One can hardly walk down the aisles of a supermarket without viewing large pictures depicting vegetable or fruit flavors, when the products themselves are largely made up of a different base ingredient. Every reasonable shopper knows that the devil is in the details. Moreover, any potential ambiguity could be resolved by the back panel of the products, which listed all ingredients in order of predominance, as required by the FDA.
The take-aways from this holding may be critical to food-labeling matters: (1) deception claims are still subject to dismissal on the pleadings and (2) the “reasonable consumer test” assumes that a reasonable shopper would not rely on pictures on the front of product packaging without reading the ingredient list. The latter finding may be especially useful in disposing of food‑labeling litigation at the outset. Indeed, Judge Alsup granted a complete dismissal, without leave to amend, since “the labels at issue are not deceptive and the labels themselves cannot be changed by a new complaint.”
Read more about the “reasonable consumer test” on our September 14th post on Williams v. Gerber Products Co.
A recent decision from the Southern District of New York demonstrates the challenges consumers face in seeking injunctive relief on behalf of a class. On October 21, 2015, in Albert et al. v. Blue Diamond Growers, et al., Case No. 1:15-cv-04087-VM, U.S. District Judge Victor Marrero granted defendants’ motion to dismiss the injunctive relief claim for lack of subject matter jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(1).
Albert is a consolidated false advertising case about both Blue Diamond’s and WWF Operating Company’s (“WhiteWave”) almond milk products. Plaintiffs alleged that defendants misrepresented their almond milk products as “heart healthy” and as containing a significant amount of almonds when the milk products only contained two percent almonds. Plaintiffs challenged defendants’ packaging as well as statements on the defendants’ websites and social media sites.
The court held that plaintiffs lacked standing because the complaint did not contain allegations that plaintiffs were still purchasing defendants’ products or would be purchasing them in the future. The court noted that the complaint’s allegations demonstrated that each plaintiff had stopped purchasing defendants’ products in 2015 and that, in a letter submitted to the court, the Blue Diamond plaintiffs alleged that they “have suffered the same exact injury that unsuspecting consumers and proposed class members are now suffering.”
While defendants successfully defeated the injunctive relief claim, the case remains because the court declined to dismiss plaintiffs’ New York and California consumer claims under Rule 12(b)(6).