In a January 3, 2017, decision likely to have broad implications in food class action litigation, the Ninth Circuit Court of Appeals affirmed a California federal district court judge’s decision certifying a consumer class action brought by purchasers of Wesson-brand cooking oil. In Briseño v. ConAgra, residents of eleven states, alleged that the “100% Natural” claim on the principal display panel (“PDP”) of ConAgra’s Wesson oil products was false and misleading because they are made from bioengineered/GMO ingredients. The Ninth Circuit, starting the year off with a bang, soundly rejected ConAgra’s arguments that Federal Rule of Civil Procedure 23 requires plaintiffs to demonstrate an administratively feasible way of identifying class members as a prerequisite to class certification.
ConAgra, during proceedings before the District Court, argued in opposition to class certification that consumers would not be able to reliably identify themselves as class members. Although ConAgra’s attempted to cast this as a “failure of ‘ascertainability,’” Slip Op., at 5, the Ninth Circuit declined to utilize such term, noting that different circuit courts have interpreted ascertainability differently. The court of appeals also rejected ConAgra’s arguments, noting that it has never interpreted Rule 23 to require class actions plaintiffs to demonstrate there is an “administratively feasible way to determine who is in the class.” Id. at 7. Instead, the Ninth Circuit joined the Sixth, Seventh, and Eighth Circuits in refusing to require an administrative feasibility requirement as a prerequisite to class certification.
The Court based its decision on the text of Rule 23(b)(3), which requires district courts to determine whether a class action is “superior to other methods for fairly and efficiently adjudicating the controversy … including “the likely difficulties in managing a class action.” The decision relied in part on a 2001 Second Circuit decision by now-Supreme Court Justice Sotomayor which held, in pertinent part, that refusing to certify a class on the sole ground that it would be unmanageable is disfavored and should be the exception rather than the rule. The Ninth Circuit also pointed out that a “standalone administrative feasibility requirement would invite courts to consider the administrative burdens of class litigation ‘in a vacuum.’” Id. at 14. This, the court noted, would be “outcome determinative” for virtually all class actions involving inexpensive consumer goods. Because Rule 23 expressly directs district courts to “balance the benefits of class adjudication against its costs,” the court of appeals concluded it was bound to enforce such requirements.
The Ninth Circuit also rejected ConAgra’s arguments regarding ensuring notice to class members, concluding that neither Rule 23 nor the Due Process clause of the U.S. Constitution requires actual or individual notice to all class members in all cases. Id. at 15-16. ConAgra’s potential fraud concerns similarly carried no water with the panel, which posited that consumers would not risk perjury charges associated with filing false claims in a low-cost consumer class action which would result in a de minimis monetary recovery. Even if false claims were submitted, this would not be likely to harm bona fide class members based on the very low redemption rate in most consumer class actions.
Finally, the court of appeals pointed out that class action defendants have a veritable plethora of opportunities to raise defenses to class claims, noting that even post-certification, “the plaintiff class must carry the burden of proving every element of its claims to prevail on the merits.” Id. at 20. Based thereon, it was unclear to the panel why requiring an administratively feasible way of identifying all class members at the class certification stage was necessary to project ConAgra’s due process rights. “[T]here is no due process right to ‘a cost-effective procedure’ for challenging very individual claim to class membership.” Id. at 21 (emphasis in original).
In an unpublished memorandum, the Court also rejected ConAgra’s arguments that typicality, predominance, and superiority determinations. The Ninth Circuit concluded that the district court correctly determined that none of the certified claims required a showing of actual reliance by absent class members and that the class representatives’ showing was adequately demonstrated based on record evidence. The panel also held that the district court properly found that common issues predominated over individual ones and that the plaintiffs’ proffered damages model – based on hedonic regression and conjoint analysis – was sufficient for class certification purposes. Administration of eleven statewide classes also did not render the case unmanageable for class treatment, commenting that the sub-classes could always be “severed for separate adjudication if necessary.” Id., at 5.
Several conclusions can be drawn from the Ninth Circuit’s panel decision. First, absent a different conclusion by the entire Ninth Circuit or the U.S. Supreme Court, the affirmance of the District Court’s class certification decision likely is the “death knell” of this case. Few defendants, regardless of size, have taken food labeling class actions to trial in light of the risks and costs thereof, including substantial attorneys’ fees.
Second, the Briseño decision will likely embolden an already hyperactive food litigation plaintiffs’ bar in the Golden State. Although fewer food manufacturers are making natural-related claims on the PDP and elsewhere, a leisurely stroll down the supermarket aisle by a career class action plaintiff often results in the issuance of demand letters to food manufacturers of all sizes based on alleged violations of FDA’s complex labeling regulations under state consumer protection laws. This decision removes one potential defense frequently asserted by food manufacturers in response to demand letters and during litigation, especially before the Northern District of California, the so-called food court.
Finally, the Ninth Circuit’s opinion, which conflicts with the Third Circuit’s decision in Byrd v. Aaron’s Inc., 784 F. 3d 154 (3rd Cir. 2015), increases the likelihood that the Supreme Court will eventually revisit Rule 23 in an effort to resolve this apparent circuit conflict. The recent election of a Republican to the White House and his forthcoming appointment of a conservative Supreme Court justice to fill the vacancy caused by Justice Scalia’s passing may tilt the pendulum enough to level a playing field that most food manufacturers view as being tilted sharply in favor of class action plaintiffs.