Some of our colleagues from Mintz Levin’s Class Action Practice, Joshua Briones, Crystal Lopez, and Grace Rosales, recently authored an interesting and timely article in the Bloomberg BNA Product Safety & Liability Reporter. The article examines certain defenses in consumer fraud class actions over product labeling – specifically, defenses based on faulty damages models. Beyond proving the factual truth of the allegedly misleading labeling claims, the authors tell us, food and other consumer product companies can combat meritless suits by showing that the plaintiff’s damages-calculation model does not meet the requirements established under Rule 23 of the Federal Rules of Civil Procedure.

When reviewing a purported class action lawsuit, Federal Rule 23(b) requires the court to determine that “questions of law or fact common to class members predominate over any questions affecting only individual members.” Generally, a consumer’s damages in a false advertising case are equal to the amount of money needed to make the consumer “whole” — that is, to compensate the consumer for the harm caused by the false claim. But measuring the actual value received by a consumer and the but-for value that consumer would have received absent the false labeling by the product’s manufacturer requires a fact-intensive economic inquiry (for example, questions related to individual consumers’ behavior and preferences, the actual amount consumers paid for the product, time frame of the purchase, etc.). As a result, according to our expert litigators, defendants in product labeling lawsuits can oppose class certification or even file an early motion to decertify by showing that the plaintiffs’ damage model cannot be calculated with proof that is “common” to the class.

Joshua, Crystal, and Grace’s full article can be viewed here. Any manufacturer or retailer of consumer products that is facing a false labeling suit should give it a quick read!

California Food Labeling Fight

We have blogged regularly about the plethora of litigation, largely centered in California, focused on the labeling of food, beverage, cosmetics, and consumer goods.  Nationwide, consumers are demanding more information from manufacturers and retailers of these goods, and companies in the relevant industries seem ready, willing, and able to provide that information.  This is evidenced by many companies voluntarily going above and beyond what is required by the agency overseeing its products, as well as the GMA’s recent announcement of the SmartLabel™ Initiative, which will provide ready access to detailed product ingredient information.

Even government agencies seem to be more engaged in how that information should be provided.   For example, the USDA Biobased Program specifies what standards must be met for use of the BioBased seal, and FDA finally expressed an interest in defining “natural.”  Just when it seemed we may be getting somewhere, the California Supreme Court jumped into the middle of the fray and threw another wrench into the cog, saying that California’s broad consumer protection laws can be used as an enforcement mechanism for determining whether there is misuse of the term “organic,” despite federal regulations governing this space.
Continue Reading The Continuing Conundrum of the California Food Fight