On June 23, the California Supreme Court issued its first opinion upholding a class action waiver following the U.S. Supreme Court’s seminal decision in AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740 (2011). Iskanian v. CLS Transportation Los Angeles LLC, Case No. S204032 (2014). In upholding a class action waiver in an arbitration agreement between an employee and his employer, the Court held that California’s so-called Gentry Rule, named after Gentry v. Superior Court, 42 Cal. 4th 443 (2007), under which such waivers had generally been found unenforceable, was contrary to the U.S. Supreme Court’s decision in Concepcion. The Court also rejected the plaintiff’s contention that class action waivers are unlawful under the National Labor Relations Act (NLRA).
The Northern District of California recently issued Procedural Guidance for Class Action Settlements. The court notes that failure to address the issues in the guidance “may result in unnecessary delay, or even failure, of approval.”
Read our client alert.
Copycat lawsuits appear to be increasing in food labeling cases. The Coca-Cola Company (“Coca-Cola”) is the latest company to be targeted with a copycat suit in California. A putative class action, Phelps v. The Coca-Cola Co., No. BC547592, filed in Los Angeles Superior Court on June 3, 2014, alleges that Coca-Cola misleadingly promoted its Simply Orange brand juices as “fresh,” “100% Orange Juice,” and “100% Pure Squeezed,” when, according to the plaintiff, those juices are actually the product of a complex engineering process and use artificial flavoring.
More specifically, the named plaintiff, Gwen Phelps, alleges that Simply Orange juices are “engineered from multiple batches of oranges and orange products eight months to a year old with algorithms and flavor packs, concocted via an unnatural process.” Plaintiff claims that this process involves stripping the juice of its color and flavor, and then “adding back into the juice natural flavors and fragrances captured during squeezing,” along with “flavor packs” created by fragrance companies. She accuses Coca-Cola of concealing its use of this process and of misleading her and others into purchasing Simply Orange products. Plaintiff has asserted claims for intentional misrepresentation, negligent misrepresentation, fraud, and violation of California’s Unfair Competition Law (UCL), False Advertising Law (FAL), and Consumers Legal Remedies Act (CLRA) on behalf of a class of all California residents that purchased Simply Orange products in the last ten years.
More than a dozen similar cases were filed against Coca-Cola in federal courts around the country in 2012, and later consolidated in a multidistrict litigation proceeding in the Western District of Missouri, In re Simply Orange Orange Juice Marketing & Sales Practices Litigation, No. 12-md-02361 (W.D. Mo.). Indeed, the Phelps complaint appears to largely duplicate the allegations made by these federal plaintiffs. This copycat suit was likely spurred by Coca-Cola’s unsuccessful attempt to dismiss the consolidated complaint in the Multidistrict Litigation (MDL). There, Judge Fernando J. Gaitan denied Coca-Cola’s arguments that: (1) the claims were non-actionable puffery; (2) the plaintiffs failed to allege “injury-in-fact”; and (3) the claims were preempted by existing FDA food labeling regulations.
Phelps falls in line with a recent wave of food misbranding lawsuits filed in California state courts which are largely duplicative, if not identical, to cases already pending in federal courts. This trend may stem from the view that California law is more favorable to consumer class actions. And plaintiffs are catching on that, win or lose the first time around, another forum often provides another chance.
On June 12, 2014, the U.S. Supreme Court issued an 8-0 ruling in favor of Pom Wonderful in a long standing false advertising dispute against rival beverage company Coca-Cola. Reversing the Ninth Circuit’s broad FDA preclusion ruling, the Supreme Court held that competitors can bring Lanham Act claims like Pom Wonderful’s challenging food and beverage labels regulated by the FDA. While a blow to FDA primacy in the context of federal business-to-business Lanham Act claims, the Supreme Court made clear that Pom Wonderful does not address the preemption of state law claims. Despite this limitation, the ruling creates uncertainty for the food and beverage industry, and paves the way for more competitor false advertising disputes.
Read our Client Alert.
Despite the recent passage of a genetically engineered (GE) food-labeling law in Vermont, and similar bills appearing in legislatures in other states, proponents of labeling have again failed to pass such a law in California.
Read our Client Alert.