United States: Consumer Fraud Class Action Developments

SCOTUS: Rule 68 Offer Does Not Moot Class Action

Campbell-Ewald Co. v. Gomez, 136 S. Ct. 663 (2016)

The Supreme Court held that defendants cannot moot putative class action claims by making an offer of full relief to individual plaintiffs. "[A]n unaccepted settlement offer has no force," Justice Ginsburg wrote for the Court. "Like other unaccepted contract offers, it creates no lasting right or obligation. With the offer off the table, and the defendant's continuing denial of liability, adversity between the parties persists." In so holding, the Court distinguished decisions where plaintiffs had "received full redress for the injuries asserted in their complaints" from those (like the present case) where plaintiff was not actually provided any relief. Indeed, the Court specifically noted: "We need not, and do not, now decide whether the result would be different if a defendant deposits the full amount of the plaintiff's individual claim in an account payable to the plaintiff, and the court then enters judgment for the plaintiff in that amount. That question is appropriately reserved for a case in which it is not hypothetical." View the decision.

"Specifically Worded Statement" Necessary to Certify Class Action Alleging Misrepresentations in Advertising

Cabral v. Supple LLC, No. EDCV-12-85-MWF(x) (C.D. Cal. Jan. 7, 2016)

The Ninth Circuit previously vacated an order granting class certification, finding that plaintiff failed to establish the "critical" requirement of a case alleging misrepresentations in advertising: namely, that the misrepresentation in question was made to all class members. Plaintiff sought to renew her motion for class certification, attempting to limit the class to consumers who viewed defendant's infomercials (which, plaintiff maintained, included various false statements). The court denied plaintiff's request, rejecting the theory that a class could be certified without showing that a "specifically worded statement" was made to the entire class. View the decision.

Consumers' "Willingness to Pay" Is an Inadequate Measure of Classwide Harm

In re NJOY Consumer Class Action Litig., No. CV 14-428-JFW (C.D. Cal. Feb. 2, 2016)

Plaintiff claimed that manufacturer NJOY engaged in a false and misleading advertising campaign conveying the message that its electronic cigarettes are safer than regular tobacco cigarettes and that NJOY omitted material information from its packaging, including both an ingredient list and the potential risks associated with certain ingredients. In a previous order denying class certification, the court held that a consumer's subjective willingness to pay is an inadequate measure of classwide harm, and the proper measure of damages is "the difference between the market price actually paid by consumers and the true market price that reflects the impact of the unlawful, unfair, or fraudulent business practices." The court rejected plaintiffs' renewed motion for class certification, concluding that their new and revised models again failed to meet this standard. View the decision.

Denying Certification of Injunctive Class: Article III

Torrent v. Yakult U.S.A., Inc., No. SACV 15-00124-CJC(JCGx) (C.D. Cal. Jan. 5, 2016)

Plaintiff, who alleged that defendant falsely labeled its probiotic beverages as providing health benefits, had Article III and statutory standing to pursue his claim to recover restitution and declaratory relief. Nevertheless, the court simultaneously concluded that plaintiff lacked Article III standing to seek injunctive relief because he had no intention of purchasing the challenged product again, and therefore could not satisfy Article III's standing requirement that a plaintiff seeking injunctive relief must proffer evidence that there is a sufficient likelihood that he will be wronged in the same way in the future. View the decision.

Football Fans Lack Standing Under Article III

Finkelman v. Nat'l Football League, 810 F.3d 187 (3d Cir. 2016)>

Consumers who were allegedly frustrated in their attempts to purchase tickets to the Super Bowl at face value brought a putative class action against the NFL. The court held that a consumer who decided not to purchase tickets due to allegedly exorbitant prices did not suffer an injury-in-fact under Article III since he took no meaningful action to attempt to attend the event and experienced no out-of-pocket loss. A consumer who did purchase tickets on the secondary market at prices in excess of the printed ticket value likewise lacked Article III standing because he "can only speculate as to whether, absent the NFL's withholding, the prices he paid in the resale market would have been cheaper. He has to guess. In the final analysis, Article III requires more than this kind of conjecture." View the decision.

Individual Statute of Limitations Issues Defeat Class Certification

Enea v. Cal. Culinary Acad., Inc., No. A141886, 2016 WL 409939 (Cal. Ct. App. Feb. 3, 2016)

Plaintiffs brought a putative class action against a culinary program, alleging that the program falsely advertised postgraduation employment rates in order to induce students to enroll and to take on expensive loans. The appellate court affirmed the trial court's denial of class certification, finding that plaintiffs' allegations raised numerous statute of limitations questions that necessarily require individualized inquiries regarding many, if not all, plaintiffs. Because these individualized issues predominated over common questions of law and fact, class certification was inappropriate. View the decision.

Claims Alleging Intentional Misuse of "Organic" Label Are Not Preempted

Quesada v. Herb Thyme Farms, Inc., 195 Cal. Rptr. 3d 505 (Cal. 2015)

Plaintiff alleged that herbs were labeled and sold as organic even though some were conventionally grown. The California Supreme Court unanimously held that preemption of state law claims under the federal Organic Foods Production Act of 1990 (OFPA) does not extend to state lawsuits alleging intentional misuse of the organic label. The court held: (1) because the pertinent provisions of OFPA do not reference enforcement, the statute expressly preempts state law only as to the definition of organic and the process for certifying that a grower's methods of production entitle it to use the organic label; and (2) the claims are not impliedly preempted because they did not pose an obstacle to the uniform federal regulatory scheme but, rather, furthered the purpose of that scheme. View the decision.

Advertising Litigation Report: January/February 2016

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