Here at the WLF Legal Pulse, we routinely discuss class-action lawsuits filed against consumer-product makers, especially those who manufacture packaged foods. Plaintiffs’ lawyers have been clogging the aisles of grocery stores for years dissecting food labels for any possible regulatory misstep and perhaps signing up new clients in the process. We could write far more often on this subject, but frankly it’s increasingly difficult to find a decision that breaks new ground or a suit that is uniquely ridiculous. One recent decision was irresistible, however.
The Southern District of California’s March 7, 2019 decision in Branca v. Bai Brands LLC seems like a run-of-the-mill “your product isn’t completely natural” claim. It wasn’t the debate over whether the malic acid in Bai beverages is natural or artificial (though that is perversely interesting) that intrigued us, but the court’s personal-jurisdiction determinations. And Justin Timberlake. Plaintiff Kevin Branca sued Timberlake, a Bai investor, as well as Dr. Pepper Snapple Group CEO Larry Young and former Bai CEO Ben Weiss (Dr. Pepper ousted him when it bought Bai), individually.
Bai states on its drink label that it contains “NO artificial flavors” and is “naturally flavored.” Branca, on behalf of a putative nationwide class of consumers, argues that Bai contains artificial flavors in violation of various California laws. For example, the malic acid listed among the drink’s ingredients is in fact “d-1 malic acid,” an artificial flavor. Bai counters that the ingredient is natural, and rather than provide flavor, it is used as an acidulent to enhance flavor.
Bai’s motion to dismiss argued that Branca’s allegations did not state claims for which relief could be granted and were preempted by federal law. For several of the claims, the court rejected the federal preemption defense and held that further factual development was needed to determine whether Bai had violated state laws. The court did dismiss one claim, and held that statutes of limitations in several California laws barred some class members’ claims.
Which brings us to personal jurisdiction and Justin Timberlake (and the two CEOs). The U.S. Supreme Court’s recent decisions on general and specific jurisdiction have revived personal jurisdiction arguments as a welcome check on frivolous litigation and forum shopping.
Applying those decisions, the court first held that it lacked general jurisdiction over the three individual defendants. Each resided outside of California. Their ownership of property there, occasional travel there, or mere association with a company over which the court has jurisdiction does not make them “at home” in California.
For a court to have specific jurisdiction over a defendant, the defendant’s alleged conduct that gave rise to the lawsuit must enjoy a substantial connection with the forum state. California’s specific jurisdiction over Bai Brands does not, the court explained, “confer personal jurisdiction with respect to the individuals.” The court also held that because Branca failed to demonstrate that Bai’s marketing was specifically directed at California, its advertisements and other promotions seen by Californians did not create specific jurisdiction. As part of the marketing campaign argument, Branca even tried to connect Timberlake’s appearance in Bai’s “NSYNC”-related 2017 Super Bowl advertisement to the lawsuit’s claims.
On whether the court has personal jurisdiction over a putative class member who lives outside of California, the court unfortunately held that Branca need only establish that the court has jurisdiction over him (which Bai did not contest). WLF argued in an amicus brief recently in a case before the U.S. Court of Appeals for the D.C. Circuit that the Supreme Court’s holding in Bristol-Myers Squibb Co. v. Superior Court (which involved a mass-tort action) applies equally to class actions. Bai cited federal district court precedents that supported his argument, and Branca cited supportive decisions from other district courts. With Ninth Circuit guidance lacking, the judge found Branca’s precedents more persuasive.
As a result, it’s Bye, Bye, Bye to Timberlake and the CEOs, but for Bai, it’s hello to a possible nationwide class of plaintiffs. If Bai can establish that the company in fact used natural malic acid in its beverage, it should be able to win summary judgment. And Branca still must meet all the requirements of Rule 23 in order to have his suit formally certified as a class action, no simple task.
Meanwhile, Bai will spend hundreds of thousands of dollars (and pass those costs onto consumers) defending a lawsuit that, even if it succeeds, will enrich Branca and his attorneys with no gain for Bai buyers.
Also published by Forbes.com on WLF’s contributor page.