A Key Ruling for Food Labeling Class Action Defendants Issued on “Reasonable Consumer” Standard

Smith_JamesGuest Commentary

by James D. Smith, Bryan Cave LLP

In what seems likely to become a defining case on appeal, Northern District of California Judge Lucy Koh granted summary judgment this week in a long-running food labeling class action. The plaintiff in Brazil v. Dole Packaged Foods, LLC, No. 12-CV-01831-LHK (N.D. Cal.), alleges that 10 Dole products are misbranded because their labels say the products contain “All Natural Fruit.” Mr. Brazil contends this is false because the products contain ascorbic acid (commonly known as Vitamin C) and citric acid (found in citrus). Both of those ingredients, of course, are naturally occurring compounds; many food manufacturers add them because of their natural preservative effects. The 10 products include diced apples, pears, oranges, and grapefruit packed in juice. For the past two years, Mr. Brazil and his counsel have pressed this litigation, alleging that the product labels somehow deceived him because neither he nor any other reasonable consumer would believe that fruit packed in juice contains Vitamin C or citric acid.

The procedural history is long, but readers interested in food labeling class actions in the Northern District of California may want to review Judge Koh’s earlier substantive rulings. By the time she granted summary judgment on December 8, Judge Koh had narrowed the case to a single injunction class. As an aside, Judge Koh’s November 6, 2014, order decertifying the damages class nicely shows why a hedonic damages regression analysis—which many food labeling class action plaintiffs try to rely on to show class-wide damages—isn’t feasible in these types of cases. This most recent ruling in Brazil is noteworthy because it explains that a named plaintiff’s subjective interpretation of a label isn’t sufficient to meet the burden of proving that the label is likely to mislead consumers under California’s Unfair Competition Law (“UCL”).

Granting summary judgment, Judge Koh concluded “there is insufficient evidence that the ‘All Natural Fruit’ label statement on the challenged Dole products was likely to mislead reasonable consumers and that the label statements were therefore unlawful on that basis.” That plaintiff did not attempt to use consumer surveys to establish that the labeling statements could mislead a significant portion of the public or of targeted consumers. Instead, he relied on informal FDA statements that “natural” means nothing artificial or synthetic “has been included in, or has been added to, a food that would not normally be expected to be in the food.” (Emphasis added.) As we’ll see, that plaintiff’s failure to establish that consumers would not normally expect ascorbic acid or citric acid to be in the food doomed his claims. Continue reading

WLF Web Seminar to Assess Whether Third Time is the Charm at SCOTUS on “Injury-in-Law” Standing

PodiumPic1Tomorrow at 10:00 a.m. EDT, Washington Legal Foundation is hosting its final Web Seminar program of 2014. The program will address a critically important case currently awaiting cert consideration by the U.S. Supreme Court, and the larger issues the case implicates.

No-Injury Class Actions: The Rise of Statutorily-Created Harm and the Need for High Court Intervention will be an hour-long live event featuring two appellate experts as our panelists: Andy Pincus of Mayer Brown LLP and Meir Feder of Jones Day. If you are interested in viewing the program live online, you can register for free HERE. If you cannot view it live but would like to watch the video from our online archive, please email WLF Legal Studies Division Chief Counsel Glenn Lammi at glammi@wlf.org.

The petition pending before the Supreme Court that offers the context for our discussion arises from a U.S. Court of Appeals for the Ninth Circuit ruling, Spokeo v. Robins. The case squarely presents the issue of whether private plaintiffs suing under a federal statute that defines certain action or inaction as an “injury” (injury-at-law) must also demonstrate that they have “case or controversy” standing under Article III of the U.S. Constitution (injury-in-fact). The question has been decided differently in a number of federal circuits, and the Supreme Court has twice passed on opportunities to resolve the split. In 2012, after hearing oral arguments, the Court dismissed as improvidently granted another case from the Ninth Circuit, First American Financial v. Edwards. Earlier this year during its October 2013 term, the Court denied review to an Eighth Circuit decision, First National Bank of Wahoo v. Charvat.

The Court has requested that the Solicitor General of the U.S. provide the justices with the federal government’s view of the case and issues. The Solicitor General’s brief has not yet been filed.

Ninth Circuit Thwarts Plaintiffs’ Efforts to Evade Removal Under CAFA

Cruz-Alvarez_FFeatured Expert Contributor – Civil Justice/Class Actions

Frank Cruz-Alvarez, Shook, Hardy & Bacon, L.L.P. with Rachel A. Canfield,  Shook, Hardy & Bacon, L.L.P.

Addressing a question of first impression, the U.S. Court of Appeals for the Ninth Circuit Court of Appeals, sitting en banc, weighed into an issue that has split the circuit courts involving the invocation of federal mass-action jurisdiction. Corber v. Xanodyne Pharmaceuticals, Inc.¸ Nos.13-56306 & 13-56310, — F.3d —-, 2014 WL 6436154 (9th Cir. Nov. 18, 2014). This is just one in a series of recent federal decisions limiting plaintiffs’ efforts to avoid federal class or mass action jurisdiction.

To prevent class-action abuse, the Class Action Fairness Act of 2005 (“CAFA”) expands federal jurisdiction over certain class or mass actions that fall within its purview. Corber, 2014 WL 6436154, at *11. In pertinent part, CAFA defines mass actions as any civil action in which “monetary relief claims of 100 or more persons are proposed to be tried jointly on the ground that the plaintiff’s claims involve common questions of law or fact.” 28 U.S.C. § 1332(d)(11)(B)(i).

Treated as companion cases, Romo v. Teva Pharmaceuticals USA, Inc., and Corber v. Xanodyne Pharmaceuticals, Inc., were two of twenty-six cases pending before the district court, and more than forty actions filed in California state courts, alleging injuries due to the ingestion of an ingredient found in certain pain relief drugs. Corber, 2014 WL 6436154, at *7. A number of the actions were brought by one group of plaintiffs’ attorneys who sought to obtain coordination of the actions pursuant to section 404 of the California Code of Civil Procedure, which permits coordination of civil actions containing a common question of fact or law if one judge hearing all of the actions for all purposes will promote the ends of justice. Id. at *8-9. In an attempt to obtain coordination in state court and evade federal jurisdiction, these plaintiffs’ attorneys superficially segmented the cases to involve fewer than 100 plaintiffs and crafted the petitions for coordination absent an express proposal that the actions be jointly tried. Continue reading

Update: Senate Judiciary Committee Chairman Urges Payment Processors to Deter Online Copyright Piracy

copyrightwarningIn our October 2, 2014 post, Profit, Not Ideology, Motivates Cyberlockers that Facilitate Copyright Infringement, we noted that a Digital Citizens Alliance study found that 29 out of the 30 cyberlockers it reviewed accepted payment using a MasterCard or Visa credit card. We urged those payment processors to follow the example of PayPal, which has worked aggressively to deny such piracy-facilitating sites the use of its service.

Today, the current Chairman of the Senate Judiciary Committee, Senator Patrick Leahy, added his influential voice to those pressing for further MasterCard and Visa action. He sent letters to the CEOs of those businesses asking them to swiftly review the complaints against those cyberlockers and to ensure that payment processing services offered to those sites, or any others dedicated to infringing activity, cease.”

Senator Leahy also made the important point that not only do the payment processors “unwittingly contribute” to cyberlockers’ profitability, they also “lend[ ] the sites a harmful imprimatur of legitimacy” by allowing their logos to appear on the sites. He continued, “A consumer wondering whether a site is offering lawful access to copyrighted content may easily trust the cyberlocker’s legitimacy if world-respected payment processors service the site.”

Local “Fracking” Bans Face Constitutional Takings Challenges

sboxermanFeatured Expert Column – Environmental Law and Policy

by Samuel B. Boxerman, Sidley Austin LLP with Ben Tannen, Sidley Austin LLP

Recently, the citizens of Denton, Texas voted to ban hydraulic fracturing within the city limits, becoming the first municipality in the state to do so. One day later, the Texas Oil and Gas Association filed suit, arguing the ordinance was unconstitutional and preempted by state law. N1 In enacting a ban, Denton joined the list of municipalities that have adopted limits on hydraulic fracturing, N2 including a number of outright bans. N3 The bans reflect the ongoing battle between state and local interests over the value and risks of oil and gas development. The legality of local bans is being hotly disputed in the courts, with two common challenges being that the bans are preempted by state law or constitute an unconstitutional taking.

Preemption

Plaintiffs have challenged local bans as expressly preempted by or in direct conflict with a comprehensive state oil and gas statute—quite simply, the argument goes, municipalities and other local governments cannot prohibit what has already been expressly authorized by the state. Moreover, as a policy matter, allowing local governments to restrict or otherwise regulate oil and gas development would create a patchwork of regulation within a state—or even within a single county. To date, several courts have found preemption, but others have deferred to local land use authority. N4

Takings

Plaintiffs have also challenged local bans on constitutional grounds, N5 asserting a range of claims, including a Takings claim under the Fifth Amendment (and state analogs). N6 Although as of yet no courts have ruled on the issue, here are a few of the basics:

Of course a traditional “taking” occurs when the government actually causes a “permanent physical occupation” of an individual’s property. N7 A regulation, however, can be a taking when it affects or limits the use of private property to a sufficient degree. N8 According to the Supreme Court, a “regulatory” taking occurs if the regulation deprives the property holder of all economically beneficial use of their property, Lucas v. South Carolina Coastal Council, 505 U.S. 1003 (1992), or satisfies a three-part balancing test set out by the Court in Penn Central Transportation Co. v. New York City, 438 U.S. 104 (1978). Continue reading

Concurrence in Federal Circuit’s “Ultramercial” Ruling Sends Pointed Message to Patent Litigants

Kaminski_Jeffri_LRFeatured Expert Contributor – Intellectual Property (Patents)

Jeffri A. Kaminski, Venable LLP

The recent Federal Circuit decision in Ultramercial v. Wild Tangent continues the trend of courts invalidating software and business method patents made vulnerable by the Supreme Court’s decision in Alice Corp. v. CLS Bank International. The Ultramercial decision also continues the wave of “patent reform” in the courts, at the Patent Office, and in Congress. Software and business method patent owners and applicants should be concerned by these recent developments, and alleged infringers should be encouraged. The concurring opinion by Judge Mayer describes how an early determination of patent eligibility during litigation may help stem “[t]he scourge of meritless infringement claims [that] has continued unabated for decades.”

The Federal Circuit invalidated Ultramercial’s patent as being directed to an abstract idea, which is not patentable subject matter under 35 U.S.C. § 101. The asserted patent, U.S. Patent No. 7,346,545 (“the ’545 Patent”), is optimistically titled, “Method and system for payment of intellectual property royalties by interposed sponsor on behalf of consumer over a telecommunications network.” The main patent claim includes eleven specific steps for displaying an advertisement in exchange for access to copyrighted media. However, the appellate court determined that the patent “describes only the abstract idea of showing an advertisement before delivering free content” and is therefore invalid.

In spite of the eleven steps enumerated in the method claim, the court held that merely adding additional routine steps to an abstract idea “does not transform an otherwise abstract idea into patent-eligible subject matter.” Furthermore, although the claims of the ’545 Patent were tied to a general purpose computer, “adding a computer to otherwise conventional steps does not make an invention patent-eligible” either. Continue reading

WLF Briefing: Private Ordering Solutions Advance Patent Non-Aggression

This November 10, 2014 WLF Media Briefing, Toward Patent Non-Aggression: Market-Based Approaches to Deterring Legal Risks and Neutralizing Litigation, featured presentations by three innovators whose ideas are minimizing operating companies’ exposure to abusive patent lawsuits:

  • Keith Bergelt, CEO of the Open Invention Network;
  • Kevin Jakel, CEO of Unified Patents, Inc.; and
  • Tim Kowalski, Senior Patent Counsel to Google Inc. and Director, License on Transfer Network

Our speakers make reference to PowerPoint slides, which can be downloaded here.

If you would prefer to watch the presentation in higher resolution video where you can view the slides synched with the presentations, WLF has posted it in its online archive of on-demand videos here.