In a recent decision, the California Court of Appeal reaffirmed and clarified how the “reasonable consumer” standard must be applied at the pleadings stage to mislabeling claims. In simplest terms, if the packaging makes a definitive statement on the front that suggests one thing, but fine print on the back contradicts that statement, the defendant cannot rely on the fine print to escape a mislabeling claim. In reaching that conclusion, however, the Court of Appeal appears to have laid a roadmap for how to defeat class certification. Continue Reading
The ruling in Lanovaz v. Twinings N. Am., Inc., 2018 U.S. App. LEXIS 15248 (9th Cir. June 6, 2018), settles what was arguably an open issue among district courts within the Ninth Circuit. A plaintiff must have an intent to re-purchase a product alleged to be falsely advertised in order to maintain an action for injunctive relief.
Twinings’ labels on its green, black, and white tea products stated that the teas were a “Natural Source of Antioxidants”. Plaintiff Lanovaz asserted that the labels amounted to “nutrient content claims,” which are regulated by the FDA (the term “antioxidant” is also subject to regulation). The plaintiff alleged that Twinings’ labels did not satisfy FDA regulations, and therefore were unlawful, misleading consumers. Continue Reading
On May 21, 2018, the United States Supreme Court upheld the legality of arbitration agreements containing class action waivers. In a 5-4 decision written by Justice Gorsuch, the Court held that arbitration agreements providing for individualized proceedings were valid, and neither the Federal Arbitration Act’s (“FAA”) savings clause, nor the National Labor Relations Act (“NLRA”) suggest otherwise. Continue Reading
1. Have the GOP’s Hopes for Enacting the Fairness in Class Action Litigation Act Been Dashed? – Passed in March 2017 by the U.S. House of Representatives, the Fairness in Class Action Litigation Act of 2017, H.R. 985, has stalled in the Senate. Among other things, the House bill would dictate the method by which to calculate attorneys’ fees in a class action and significantly limit recoverable attorneys’ fees to a “reasonable percentage of (1) any payments received by class members; and (2) the value of any equitable relief.” (H.R. 985, § 103) The bill also installs a stringent “ascertainability” rule that would likely result in more denials of class certification. On March 13, 2017, the House bill was sent to the Senate Judiciary Committee, but the Committee has not taken any further actions to advance the bill. In the current political climate, there may be a tailwind for this legislative effort in 2018.
2. The FCC’s Progress and Speed in Resolving the Backlog of TCPA Petitions – Several petitions for declaratory ruling were filed with the FCC in late 2016 and 2017 requesting clarification on issues relating to the meaning of “prior express consent” under the TCPA. After soliciting and receiving comments from the public, those petitions are ripe for decision by the FCC. See In the Matter of Credit Union Nat’l Ass’n Petition for Declaratory Ruling, Dkt. No. 02-278 (filed Sept. 29, 2017) (requesting FCC to exempt from the TCPA all informational calls made by credit unions to cell phones where the wireless subscriber has an established business relationship with the credit union, or the called party is not charged for the call); In the Matter of Petition for Expedited Declaratory Ruling of Bebe Stores, Inc., Dkt. No. 02-278 (filed Nov. 18, 2016) (requesting retroactive waiver of TCPA’s “prior express written consent” requirement for robocalls for calls made by Bebe from October 16, 2013, to October 7, 2015). At least two petitions for declaratory ruling were filed by defendants in pending TCPA fax class actions last year, and those petitions also await decision from the FCC. Continue Reading
In In re Hyundai & Kia Fuel Economy Litigation, No. 15-56014, 2018 WL 505343 (9th Cir. Jan. 23, 2018), the Ninth Circuit vacated a nationwide class action settlement, concluding that the district court’s failure to conduct a choice-of-law analysis precluded a finding that common issues predominated. Continue Reading
Deciding an issue of first impression, the California Court of Appeal issued a writ of mandate confirming that there is only one standard for the admissibility of expert opinion in California, and that standard applies when considering a motion for class certification. Apple, Inc. v. Superior Court of San Diego County, 2018 Cal. App. LEXIS 69 (Cal. Ct. App. Jan. 29, 2018). Accordingly, the Court of Appeal issued a peremptory writ of mandate directing the trial court to vacate its order granting Plaintiffs’ motion for class certification for reconsideration in light of the standards for the admission of expert testimony set forth in Sargon Enters., Inc. v. Univ. of S. Cal., 55 Cal.4th 747 (2012). Continue Reading
In Waggoner v. Barclays PLC, No. 16-1912 (2d Cir. Nov. 6, 2017), the United States Court of Appeals for the Second Circuit, in a Rule 10b-5 securities fraud action, affirmed the district court’s order granting class certification and, in the process, made a number of significant rulings including concluding that direct evidence of price impact is not always necessary to demonstrate market efficiency and confirming that defendants seeking to rebut the fraud-on-the-market presumption must do so by a preponderance of evidence. The decision will potentially make it easier for securities fraud plaintiffs seeking class certification to demonstrate market efficiency, including, for example, when the securities at issue are not traded on national exchanges. Continue Reading
The 9th Circuit Court of Appeals ruled that a non-party online behavioral advertising firm could not benefit from the arbitration clause in the agreement between Verizon and its customers because it was not a party to that agreement. Continue Reading
The Seventh Circuit’s rejection of a class action settlement in a case alleging consumer fraud against Subway for allegedly “shorting” customers of its Footlong sandwiches illustrates the pitfalls of settlements that provide only injunctive relief and the perils to plaintiffs who pursue claims for “worthless benefits.” In Re Subway Footlong Sandwich Mktg. & Sales Practices Litig., 2017 U.S. App. LEXIS 16260, at *14 (7th Cir. Aug. 25, 2017). The Seventh Circuit recognized: “[a] class action that ‘seeks only worthless benefits for the class’ and ‘yields [only] fees for class counsel’ is ‘no better than a racket’ and ‘should be dismissed out of hand.’ That’s an apt description of this case.” Id. (citation omitted). The court further warned that, “[n]o class action settlement that yields zero benefits for the class should be approved[.]” Id. at *11. Continue Reading
Over the past two years, class actions have been filed against nearly every major retailer challenging various sales and pricing practices. Many of these have focused on outlet stores (sometimes called “factory” stores). These cases have generally claimed that selling product made only for the outlet or factory store, where that product was never sold in mainline channels (e.g., in regular stores, boutiques, department stores or online), is deceptive, particularly product if the store suggests that the made-for-outlet was previously sold in mainline channels for a higher price. In many states, the trend has been to dismiss the case on the pleadings, holding that plaintiffs, who purchased a product for the price advertised, were not injured, especially if they cannot allege that the product was worth less than what they paid. In California, with the expansive reach of the Unfair Competition Law (UCL), False Advertising Law (FAL), and Consumer Legal Remedies Act (CLRA), courts have generally permitted these claims to proceed beyond the pleadings. Continue Reading