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Dietary Supplements and Class Actions: Getting Schooled in California

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Three cases pending in the Ninth Circuit Court of Appeals may help resolve splits in the district courts over (1) defining an appropriate class of plaintiffs ("ascertainability") and (2) the propriety of awarding class-wide damages in class action lawsuits. The split of authority in the California/Ninth Circuit cases is of particular importance to dietary supplement suppliers because California's laws are the most pro-consumer in the nation, and as a result, this is where we see and defend most of the class action lawsuits launched against suppliers based on their dietary supplement labels and claims. The crux of the split regards the proof required of a plaintiff class in these consumer cases where small purchases are not usually documented at the time of sale. In addition to ascertainability, these cases address issues of damages, specifically whether the plaintiffs' method for estimating damages pinpoints the extent to which the specific labeling claim prompted the purchase.

Defining a Plaintiff Class

Before a court will certify a class-action lawsuit class, plaintiffs must satisfy the ascertainability requirement by showing that the class can be defined and the class members can be identified. A lax approach to this requirement was taken by the District Court for the Central District of California in the false advertising case, Briseno v. ConAgra Foods, Inc., in which Plaintiffs argued that a cooking oil labeled "100% Natural" actually contained genetically modified ingredients. Instead of requiring a verifiable record of purchase, such as a receipt, it required only a class definition that "describes 'a set of common characteristics sufficient to allow' a prospective plaintiff to 'identify himself or herself as having a right to recover based on the description.'" The court certified the class, finding that the class definition based on objective criteria (whether the individual purchased Wesson Oils during the class period) was sufficient and that plaintiffs provided an adequate method to calculate damages that would produce a damages amount attributable solely to the misleading label.

In contrast, the District Court for the Northern District of California in Jones v. ConAgra Foods, Inc. denied class certification because there was "no objective, verifiable criteria for determining [class] membership." In other words, it was impossible to tell who had purchased products with labels bearing claims like "100% Natural," "Free of artificial ingredients & preservatives" and "Natural Source of Antioxidants." The court observed that the labels had changed during the class period, and that stores sometimes sold at the same time products with and without the labels at issue. Further, consumers were unlikely to remember if and when they purchased the product and whether the purchased product had the allegedly misleading label.

Damages

Class-wide damages were at issue in Brazil v. Dole Packaged Foods, LLC, where the District Court for the Northern District of California ultimately decertified the damages class because the plaintiff couldn't establish class-wide damages linked to the alleged misrepresentation that the products were "All Natural Fruit." In particular, the court found that the plaintiff failed to "isolate the price premium" attributable to the "All Natural Fruit" statement on the label.

The Ninth Circuit Will Review These Issues

Brazil and Briseno will be considered by the same panel of judges and are set for oral argument in September. The Jones case is stayed pending the Supreme Court's decision in Microsoft Corp. v. Baker, where the Supreme Court will decide a jurisdictional issue.

The Ninth Circuit's future rulings in these cases are important given California's pro-consumer approach and the resulting centrality of the state's courts in addressing these issues. The future rulings may deepen a split among the federal circuit courts on the ascertainability issue. The Sixth and Seventh Circuits currently take a more flexible approach like that of the district court in Briseno, and require only a clear class definition using objective criteria. In contrast, the Third Circuit requires more than a clear, definite class definition. It has a separate requirement that there be a "reliable and administratively feasible mechanism" to determine who belongs in the class. This requirement could be met with a sales record, such as a receipt, or other reliable evidence of product purchase. The Supreme Court has declined to review these decisions so far.

For more information about how this issue may affect your businesses or related matters, please contact the authors of this alert, Micheline Johnson and Kathleen Harrison, or any method of the Firm's FDA Group. 

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