Monday 24 April 2017

Nutella

Federal Court in California Certifies Nutella Class

Food Court reported back in February on the Nutella lawsuit (click here to read the earlier post). The suit is brought by a mother of a 4 year old child claims she was falsely lead to believe Nutella was a health food. She sought certification of a class of plaintiffs who purchased at least one jar of Nutella during 2009.

A California district court certified that class of California purchasers of Nutella today.  (See In re Ferrero Litigation, Case No. 11-CV-205 H(CAB), Slip op. (S.D. Cal. Nov. 15, 2011)).  Plaintiffs’ consolidated complaint asserted claims under California’s Unfair Competition Law, its False Advertising Act, Consumer Legal Remedies Act, and for breach of express and implied warranties.  It claims that “Ferrero misleadingly promotes its Nutella spread as healthy and beneficial to children when it in fact contains dangerous levels of fat and sugar.”  (Slip opinion pg 2).

The certification comes on the heals of Wal-Mart v. Dukes. Well aware its decision falls under the shadow cast by the Duke’s precedent the district court gives its rigorous analysis on commonality due deference quoting often from the case.  Despite this the court ultimately certifies a class in which most of the class members likely were not deceived and would have bought Nutella even if they had read the label and thus knew the facts that plaintiffs claim were concealed.  The district court reasoned:

To the extent that Defendant interprets the decision in Wal-Mart as requiring plaintiffs to prove common class-wide injury at the class certification stage, the Court disagrees.  Rather, Plaintiffs must show that the claims of the class “depend on a common contention . . . of such a nature that it is capable of classwide resolution–which means that determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke.”  Wal-Mart Stores, Inc., 131 S. Ct. at 2551.  In this case, the claims made on behalf of the proposed class are based on a common advertising campaign, and include common questions such as whether Ferrero’s advertising campaign misrepresented that Nutella is healthier or more nutritious than it actually is, or makes a more significant contribution to a balanced breakfast than it actually does, including for children.  Thus, Rule 23(a)(2)’s commonality requirement is satisfied.

Slip opinion pg 6 (emphasis added).

The Supreme Court in Dukes sought to limit class actions to cases through a strict analysis of commonality. The district court instead loosely finds commonalty based on the defendant’s advertising. It ignores, and leave unanswered a fundamental question, what happens if a consumer didn’t feel mislead or would still buy Nutella? The class is defined as a classic “all purchasers” class:  “all persons who . . . bought one or more Nutella products in the United States for their own household use rather than resale or distribution.”  (Slip opinion pg. 2).  This, of course, sweeps into the class everyone, even those who used and enjoyed the product and would purchase it again and again.  Take for example, plaintiff Hohenberg, who testified at her deposition that she “does not regret buying Nutella and continued using the spread after she learned about its sugar content.”  (Slip opinion pg 8-9.)

Of course, where a class includes a large number of people who have no damages and have not been injured, the class definition is imprecise and overbroad.  Courts routinely deny class certification in such circumstances. See, e.g., State ex rel. The Coca-Cola Company v. Nixon, 249 S.W.3d 855 (Mo. 2008) (class of all purchasers of fountain Diet Coke was overbroad because many did not care that the product contains saccharin and would drink it anyway).  But the court in the Nutella litigation did not even consider the issue.  Nor did it consider how class members would provide objective proof at the outset of the litigation that they are class members.  Ascertainability, too, is a problem for this class.

The court acted pragmatically in limiting the class from “all purchasers” nationally to only those in Califonria. Perhaps this was a recognition by the district court that the consumer protection laws of the 50 states are far too different for a nationwide class to pass muster under the predominance requirement of the federal rules of civil procedure. It also avoid an appeal by other states who believe that California could not properly impose its consumer protection statutes on transactions that occurred outside its borders involving nonresidents. (see Slip opinion pg 10-11).  Thus, the court certified a California-only class.  And it limited the class period to the start of the defendant’s advertising campaign in August 2009, rather than the January 2000 start-date the plaintiffs had requested.

Still, that means that the maker of Nutella must endure merits discovery and a classwide trial over the claims of many Californians who have not experienced an injury or suffered any damages.  This case highlights the lengths to which current rules of civil procedure (those governing class actions) must be bent to accommodate labeling lawsuits. It also emphasizes the impracticality of bringing these suits. The plaintiffs still must survive summary judgment by showing reliance and damages. It will take a highly accommodating court to clear that hurdle absent excellent findings during discovery.

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