On Appeal from the Food Court: Must Consumer Class Action Plaintiffs be “Ascertainable”?

food-courtOver the past several years, WLF has advocated that trial court judges should deny certification of consumer class actions if the lead plaintiffs cannot offer an administratively feasible method for the court to determine who is a “member” of the class. This “ascertainability” issue has arisen in many food-labeling class actions in the Food Court (a/k/a the U.S. District Court for the Northern District of California) and in other federal districts. With the December, 2014 appeal of Judge Charles Breyer’s denial of certification in Jones v. ConAgra, the battle over ascertainability has finally moved from the Food Court to the U.S. Court of Appeals for the Ninth Circuit.

This won’t be the first time that the ascertainability issue has been before the Ninth Circuit. The court has either ducked the issue in the past or issued unpublished rulings that barely reference it. And because Judge Breyer found numerous problems with Mr. Jones’s proposed class under Federal Rule of Civil Procedure 23, the appeals court could affirm the decision here without addressing ascertainability too. A marked split exists within the federal districts that make up the Ninth Circuit, with opinions ranging from Judge Breyer’s cautious acceptance of ascertainability to other trial judges’ melodramatic rejection of it as a class-action killer. An amicus brief in support of Jones’s Ninth Circuit appeal by Public Citizen and Center for Science in the Public Interest attempts to amplify this “sky is falling” rationale for ignoring ascertainability. Continue reading

Will the High Court Permit Backdoor Regulation of Natural Gas Industry Via State-Law Antitrust Suits?

oneokEarlier this month, the Supreme Court heard oral argument in ONEOK v. Learjet, an important case that hinges on the scope of the Federal Energy Regulatory Commission’s (FERC) field preemption under the Natural Gas Act (NGA). I attended to hear the argument in person because Washington Legal Foundation has been quite active in the case.

While it is undisputed that the NGA preempts state-law claims directed at conduct affecting the wholesale rates for natural gas, the Court must now consider whether such claims are preempted when the same alleged conduct affects both wholesale and retail rates. Reversing the district court, the Ninth Circuit rejected ONEOK’s preemption argument on the basis that the state-law claims brought by the plaintiff-purchasers arose from retail gas transactions.

On behalf of ONEOK, Neal Katyal argued that even though the alleged conduct at issue in this case affected both retail and wholesale rates, it still counts as a practice that affects wholesale rates for preemption purposes. The only relevant question, then, is whether plaintiffs’ state-law claims are directed at conduct in the field that the NGA occupies—and they are. The United States, representing FERC’s regulatory interests, filed an amicus brief and argued on the merits in support of ONEOK’s position.

From his questions, Justice Breyer seemed to appreciate the difficulty in setting a strict boundary between wholesale and retail sales in cases where the retail and wholesale prices are both affected by the same conduct. He could prove to be the decisive vote in the case.

Plaintiffs’ attorney Jeffrey Fisher insisted that FERC has no power over antitrust claims tied to retail prices, which the NGA excepts from federal regulation. The State of Kansas as amicus curiae, joined by 20 other states, argued in support of Plaintiffs, with attorney Steven McAllister emphasizing the states’ strong interest in policing antitrust violations.

Justice Kagan seemed fully prepared to side with the Plaintiffs, explaining that so long as no conflict exists between state antitrust liability and regulation by FERC, “I don’t really see a reason … why you would exclude the state entirely, even if nothing the state was doing was conflicting with federal regulation or federal policy.”

In all likelihood, the Supreme Court will issue its decision within the next few months. As WLF’s amicus brief argued, the stakes for the natural gas industry are high. The NGA promotes uniformity, not random regulation by jury verdicts in 50 states. Permitting private plaintiffs to pursue state-law antitrust remedies that second-guess FERC—including in states where antitrust remedies dwarf those available under federal law—would create industry-wide chaos and an unnecessary drag on investment in a vibrant and growing sector of the economy.

The Court agreed to grant review in the case following WLF’s brief in support of the petition for certiorari—and WLF’s separate online analysis of the Solicitor General’s unusual advice to the Supreme Court about (not) granting review in the case. WLF’s brief on the merits provides the Court with additional policy reasons to overrule the Ninth Circuit.

Also published by Forbes.com at WLF’s contributor page

WLF Developments You May Have Missed During the Holidays

new yearHere’s some things you may have missed from Washington Legal Foundation during the December 2014 holidays season.

WLF Amicus Briefs:

  • King v. Burwell (On December 29, 2014, WLF asked the U.S. Supreme Court to reverse an appeals court ruling that, if upheld, would allow IRS to appropriate billions of dollars a year without authorization from Congress.)
  • In re: Deepwater Horizon (On December 24, 2014, WLF filed a brief in the U.S. Court of Appeals for the Fifth Circuit, urging it to remove the court-appointed Claims Administrator who evaluates all claims filed by those seeking to recover economic losses suffered as a result of the 2010 Gulf of Mexico oil spill. )

WLF Publications

WLF Legal Pulse Posts

Struggle over Federal Environmental Law Preemption of Public Nuisance Suits Heats Up in Kentucky

faulkFeatured Expert Column − Complex Serial and Mass Tort Litigation

by Richard O. Faulk, Hollingsworth LLP*

It’s been a long wait for those who believe the federal Clean Air Act preempts public nuisance claims under state common law.

When the Supreme Court reversed and remanded Connecticut v. American Electric Power in 2011, it refused to rule on the preemption issue—leaving the question for the U.S. Court of Appeals for the Second Circuit to resolve on remand.1 Before that could happen, however, the plaintiffs withdrew their complaints—and the opportunity vanished.2

When a federal district court granted dismissal of a public nuisance claim in Bell v. Cheswick Generating Station, the opportunity rose again. Hopes were high that the Third Circuit would affirm the dismissal, but alas, the court reversed. Nevertheless, the case rose to the Supreme Court on a petition for certiorari. Numerous amicus curiae briefs were submitted to support the petition, but the Supreme Court denied review. Many were left wondering whether the Supreme Court’s remand of the issue in AEP truly reflected the Court’s interest in the issue—or whether it was simply a matter of appellate housekeeping. Continue reading

One Major Positive, But Still Many Negatives, for Asbestos Defendants in 2014

NewportWhen assessing liability risk, businesses, insurers, and others impacted by America’s free-wheeling civil justice system often ask, “What’s the next asbestos?” Regrettably for defendants still wrapped up in what the Supreme Court once called “the elephantine mass” of asbestos litigation, asbestos is still the next asbestos. In 2014, asbestos defendants continued to struggle against the tide of unfavorable judicial rulings, though one positive development this year did offer a great deal of hope to besieged businesses.

A January 9 ruling by U.S. Bankruptcy Court Judge George Hodges found a “startling pattern of misrepresentation” and withholding of exposure evidence in a ten-case sampling from asbestos actions consolidated in his court as In re Garlock Sealing Technologies, LLC, et al. Judge Hodges ordered full discovery in those cases to determine whether allegedly injured plaintiffs had exaggerated the value of their claims and failed to disclose claims they had made to asbestos bankruptcy trusts. A Fall 2014 WLF Conversations With paper, featuring former Attorney General Dick Thornburgh and former Delaware state court judge Peggy Abelman, addressed the larger concerns with such withholding of bankruptcy claims information. A January 21 Featured Expert Column on the WLF Legal Pulse also discussed In re Garlock in detail. Continue reading

Supreme Court Observations: “Dart Cherokee” Eliminates the Presumption against Removal of Class Actions

supreme court*Joining WLF’s Richard Samp as a guest commentator on this post is M.C. Sungaila, a partner with Snell & Wilmer LLP. Ms. Sungaila acted as counsel to the International Association of Defense Counsel and the Federation of Defense and Corporate Counsel, both of which joined WLF in its amicus brief in Dart Cherokee.

The Supreme Court’s ruling Monday, December 15 in Dart Cherokee Basin Operating Co. v. Owens, overturning a Tenth Circuit removal jurisdiction decision, was hardly surprising. After all, the Tenth Circuit’s restrictive interpretation of the federal removal statute, 28 U.S.C. § 1446(a)—that a defendant forfeits its removal rights unless the removal petition attaches documentary evidence supporting the jurisdictional allegations—conflicted with decisions from every other federal courts of appeal that has addressed the issue and elicited no supporting comments from the justices during October’s oral argument. Of far more lasting significance was Dart Cherokee’s rejection of a presumption against removal, in class-action cases and perhaps in other removal cases as well. That presumption had been adopted by 10 of the 11 regional courts of appeals and has been cited by countless district courts as the basis for remanding cases to state court. Organizations with which we are affiliated—the Washington Legal Foundation, the International Association of Defense Counsel, and the Federation of Defense and Corporate Counsel—are justly proud of having filed a brief that focused attention on the presumption-against-removal issue, an issue largely ignored by the parties.

Background. Dart Cherokee involved a class-action claim that an oil company breached a contract by underpaying royalties allegedly owed to lessors from production of oil wells located in Kansas. The oil company removed the case to federal district court, asserting jurisdiction under the Class Action Fairness Act (CAFA). CAFA permits removal of class actions even in the absence of complete diversity of citizenship, so long as the amount in controversy exceeds $5 million. The plaintiffs filed a motion to remand, asserting that the removal petition inadequately demonstrated the amount in controversy.

The district court agreed and ordered a remand. It did so despite acknowledging that the oil company’s response to the motion adequately demonstrated that the amount in controversy exceeded $5,000,000 and that the plaintiffs conceded as much. The court concluded that under Tenth Circuit case law, evidence supporting federal removal jurisdiction must be included within the removal petition itself and not added later. The court explained that its decision to remand was “guided by the strong presumption against removal.” It noted that the Tenth Circuit “narrowly construes removal statutes, and all doubts must be resolved in favor of remand.” Continue reading

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