ascertainability

Long Term Effects of Tobacco II

** A Return to the Limits of In Re Tobacco II?  Courts Find That Not Every Advertisement is Part of a “Long-Term Campaign” **                                                                                                                                                                                              

London, England - May 20, 2016: Packets of Various Old Cigarette Boxes from the 1970's

We normally don’t blog about unpublished decisions because . . . lack of precedential value and all that . . . .  and that may turn out to be the case with the recent California Court of Appeal’s opinion in Santamarina v. Sears Roebuck & Co., B246705, 2016 WL 1714226, at *1 (Cal. Ct. App. Apr. 26, 2016) and the Ninth Circuit’s memorandum decision in Haskins v. Symantec Corp., No. 14-16141 (9th Cir. June 20, 2016).  But these decisions are simply too good for us to pass up the opportunity to post about them  – particularly for those who represent clients being sued under California’s CLRA or UCL based on foggy claims of consumer fraud.  Invariably, a defendant bringing a Rule 9(b) motion to dismiss or opposing class certification based on the putative class representative’s inability to identify the false advertisements she relied on will be met with the plaintiff’s invocation of the “long-term advertising campaign” language in In re Tobacco II Cases (Tobacco II), 46 Cal. 4th 298 (2009) – the salve that heals all reliance deficiencies.

Of course, Tobacco II dealt with a class representatives’ allegations of “a decades-long campaign of deceptive advertising and misleading statements about the addictive nature of nicotine and the relationship between tobacco use and disease.”  46 Cal. 4th at 306 (emphasis added.)  Which is no exaggeration, Joe Camel was R.J. Reynolds’ pitchman for a decade — although it seemed much longer — and the Marlboro Man rode shotgun for Philip Morris for almost half a century.  Based on that allegation, the California Supreme Court held, “[W]here . . . a plaintiff alleges exposure to a long-term advertising campaign, the plaintiff is not required to plead with an unrealistic degree of specificity that the plaintiff relied on particular advertisements or statements.”  Id. at 328.  Despite the limited nature of this ruling, plaintiffs who have no idea what advertisements they may have seen frequently claim that the defendant engaged in a “long-term [false] advertising campaign.” Id.

Courts have shown varying degrees of willingness to go along with this class representative claim, particularly at the pleading and class certification stages.  Those that do, often quote this language from Tobacco II:  “The substantive right extended to the public by the UCL is the right to protection from fraud, deceit and unlawful conduct, and the focus of the statute is on the defendant’s conduct.” 46 Cal 4th at 324.  Courts accepting the “long-term advertising campaign” excuse for the plaintiff’s inability to identify the advertisements he relied on tend to read Tobacco II as a judicial declaration that the UCL and CLRA are primarily punish-the-defendant statutes and only secondarily consumer protection laws.

But in Santamarina – a case involving “Made in the USA” advertising by Sears for its Craftsman® tools – the California Court of Appeal scaled back the expansive readings of Tobacco II by other California courts.  In Santamarina, the putative class representatives were able to identify the specific advertising and labeling on which they relied so standing was not at issue as it was in Tobacco II.  In addition, falsity and materiality were not in dispute given California law on “Made in the USA” claims.  Moreover, discovery in the case apparently showed that Sears understood that “Made in the USA” was a valuable sales claim and internal marketing studies demonstrated that a significant percentage of consumers believed Craftsman® tools were made in the United States.

Despite the above, the Court of Appeal concluded that plaintiffs could not establish commonality or that the proposed class was ascertainable.  Notably, the plaintiffs defined the class as “All persons who purchased, in the State of California from January 6, 2001 through the present, any Craftsman branded tool or product where any unit or part thereof was entirely or substantially made, manufactured, or produced outside of the United States.”  The Court of Appeal agreed with the superior court that this definition doomed the proposed class under commonality and ascertainability requirements because the proposed class included consumers who never saw any Craftsman® “Made in the USA” advertising or labeling.  The Court of Appeal responded to plaintiffs’ incantation of Tobacco II by holding, “Given that the time period at issue was several years, and only some Sears advertising and marketing could potentially be found to be false or misleading, substantial evidence supported the trial court’s finding that the advertising at issue here is not equivalent to the decades-long campaign in Tobacco II.”  Particularly important are these words:  “In contrast to the evidence here, Tobacco II ‘involved identical misrepresentations and/or nondisclosures by the defendants made to the entire class.’” Santamarina, 2016 WL 1714226, at *10 (citing  Kaldenbach v. Mutual of Omaha Life Ins. Co. (2009) 178 Cal.App.4th 830, 849.

For being designated as an unpublished opinion, the California Court of Appeal’s decision in Santamarina is unusually expansive in its analysis – covering 34 pages.  In contrast, Haskins v. Symantec is the soul of wit.  In a mere two paragraphs, the Ninth Circuit upheld the district court’s dismissal of a putative class action complaint alleging that Symantec failed to warn consumers that hackers had compromised the 2006 version of its ubiquitous Norton antivirus software.  The plaintiff claimed, among other things, that she relied on Symantec’s advertising that its software was secure (when it allegedly wasn’t) in buying it – without identifying the specific advertising.  The Ninth Circuit affirmed the district court’s dismissal under Rule 9(b) “[b]ecause Haskins’s complaint did not allege that she read and relied on a specific misrepresentation by Symantec.”  In response to the plaintiff’s predictable invocation of Tobacco II, the Ninth Circuit found that the plaintiff “failed to establish that the Tobacco II standard is applicable to her pleadings because the misrepresentations at issue here were not part of an extensive and long-term advertising campaign like the decades-long campaign engaging in saturation advertising targeting adolescents in Tobacco II.”

Two cases do not a trend make — especially when California law is involved.  But it is encouraging to see courts – even in unpublished decisions – return Tobacco II to its stated limits rather than assuming that any and every advertisement is part of a long-term campaign.

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Ice Ice (Baby)

** Purported Class Action Attempts to Sink Starbucks with claims over allegedly misleadingly frozen water **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

danger thin ice - warning sign by a lake

Last week, a disgruntled Starbucks patron in Chicago filed a putative class action against the coffee icon in the Northern District of Illinois claiming that consumers like her have been defrauded over the past ten years by big plastic cups of ice.  Pincus v. Starbucks Corporation, 1:16-cv-04705 (N.D. Ill. April 27, 2016) (Dkt. No. 1).  Granted, all of the drinks that are part of the lawsuit are called “Iced Something-Or-Other,” but according to the Plaintiff that doesn’t justify Starbucks putting ice in the beverages.  Okay, that’s overstating it a bit.

The lawsuit hinges on Starbucks’ use of the acronym for fluid ounce (“fl. oz.”) on its menus and in other advertising.  Plaintiff contends that “fl. oz.” means just that – an ounce of fluid – and the actual fluid ounces in Starbucks iced drinks are less than those claimed in its advertising.  It is only by putting pre-measured scoops of ice in the drinks that the nefarious Starbucks baristas are able to completely fill those ubiquitous transparent cups.  Starbucks, of course, is behind the whole scheme supplying the baristas with beverage cups with fill-lines printed on them (product/water or lemonade/ice) as well as different size ice scoopers (Tall/Grande/Venti).  Plaintiff claims that she, and millions of other Starbucks aficionados across the United States, relied on the Company’s representations about the number of fluid ounces in their drinks and “Plaintiff would not have paid as much, if anything for the Cold Drinks had she known that it [sic] contained less, and in many cases, nearly half as many, fluid ounces than claimed by Starbucks.”

“Ounce” is Middle English from the Anglo-French “unce” and is a unit of mass equal to 1/16 of an avoirdupois pound and 1/12 of the troy pound favored by precious metal dealers.  More importantly, an ounce is 0.666682 of a jigger of Jim Beam.  Accordingly, any class certified in this case must certainly exclude gold investors and may need to be limited to hard core drinkers who know what an ounce looks (and feels) like.  But while the public may have some difficulty visually identifying an ounce, they certainly know the difference between a Grande and a Venti, which is, after all, what they’re buying.

Plaintiff’s class definition is “[a]ll persons in the United States of America who purchased one or more of Defendant’s Cold Drinks at any time between April 27, 2006 and the present.”  “Cold Drinks”  include, but are not limited to, “iced coffee, shaken iced tea, shaken iced tea lemonade, Refreshers®, and Fizzio™ handcrafted sodas” (which, as an aside, are sadly not available at all Starbucks locations – but for those in the right locale, our pro tip is the Golden Ginger Ale).  Although both cold and a drink, the Frappuccino® is not included.  And that’s the whole problem with this case, isn’t it?

The Frappuccino® contains plenty of ice.  But because the ice is blended with the flavored ingredients, it apparently qualifies as a liquid even though it’s really tiny shards of ice.  Which raises the questions:  If the ice melts in a Starbucks Iced Coffee before the purchaser finishes drinking it, is the purchaser getting the advertised number of fluid ounces?  What if the purchaser is an ice chomper?  Plaintiff’s complaint shrewdly anticipates these defenses.  First, Starbucks uses “large pieces of ice” that “take up more space and thus when melted, will yield fewer measured ‘fluid’ ounces of coffee or tea . . . .”  (Starbucks is skimping on the water!)  More broadly, Plaintiff declares that “a reasonable consumer does not wait for the ice in a Cold Drink to melt before consuming the Cold Drink.”  This point, of course, will require survey evidence to establish — or perhaps the class can be limited to purchasers of Starbucks Cold Beverages who are not sippers or chompers.  (Ascertainability might be a problem here.)

Starbucks suffers from its transparency (which is the opposite of the problem it faced in a now dismissed slack fill case against it filed in New York).  Anyone who purchases an iced beverage for the first time – particularly a shaken iced tea, a Refresher® or a Fizzio™  – is startled when the barista pours such a small amount of the flavored stuff in the bottom of one of those big plastic cups and then tops it off with water (or lemonade) and finally, a huge mound of ice.  A Diet Coke from the McDonald’s drive-thru window retains its mystery.  How much syrup?  How much ice?  But for those who love Starbucks, the beverages are consistently great – a treat to be savored slowly . . . while the triple-filtered ice melts.

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All Eyes on the Supreme Court for Consumer Class Action Lawyers

supreme-court

**The Supreme Court’s 2015 Term Opens With a Series of Cases Important for Consumer Class Action Defendants: Campbell-Ewald v Gomez, Spokeo v Robins and Tyson Foods v Bouaphakeo** . . .                                                                                                                                                                                                                                                          

In recent years, the Supreme Court has handed down victories to the class action defense bar.  In Wal-Mart v. Dukes, 564 U.S. ___ (2011), the Court reversed a California district court certification of a gender discrimination class – raising the bar on commonality questions for plaintiffs.  In Comcast v. Behrend, 569 U.S. __ (2013), the Court again reversed a district court certification – heightening scrutiny on plaintiffs’ methods for alleging class wide damages.  As the 2015 term opens this week, defense counsel around the country eye further potential victories in three key cases.

The first case up is Campbell-Ewald Co. v. Gomez (No. 14-857) on appeal from the Ninth Circuit where the Court will deal with two frequently litigated questions as yet unresolved by the circuits.  Namely, does a Rule 68 offer of complete relief to a plaintiff moot his or her claim and, if so, does it also moot the resulting class claim under Rule 23?  The underlying case concerns unsolicited text messages prohibited by the Telephone Consumer Protection Act (TCPA) 47 U.S.C. § 227.  The TCPA contains a statutory remedy and defendants argued that, to the extent they had offered Plaintiff  the full amount of the statutory remedy (per Rule 68) as relief,  the plaintiff suffered no cognizable Article III damages.  Thus, defendants argue that because the plaintiff suffered no injury,  he has no right to represent a class of people who may have been damaged.  From a practical perspective, the case addresses the question:  Can a defendant “pick off” would be class representatives through Rule 68 offers of judgment thereby destroying the foundation of the class action claim?  As anyone who has defended corporations receiving required pre-litigation notices under consumer protection statutes has observed, plaintiff law firms have become increasingly reticent to disclose the identity of their clients at the notice stage in order to forestall Rule 68 offers of judgment until the putative class action lawsuit has been filed.

The second case is Spokeo Inc. v. Robins, (No. 13-1339) also on appeal from the Ninth Circuit.  This case involves a related question of Article III standing for class representatives.  Spokeo concerns the  Fair Credit Reporting Act, 15 U.S.C. § 1681 (FCRA), which requires consumer credit agencies to take reasonable steps to ensure the accuracy of their published reports.  Plaintiff in a putative class action argued in the Central District of California that results for his name on the Spokeo website contained inaccurate information about plaintiff’s education and professional experience – and that this inaccuracy harmed his employment prospects.   The District Court dismissed, finding that the alleged damages – based on hypothetical impact on his employment – were too speculative to satisfy Article III standing.  The Ninth Circuit reversed, holding that the statutory violation implicitly creates a private cause of action to enforce and that this violation of a statutory right was an “injury” sufficient to confer standing.  The Ninth Circuit Spokeo decision was the latest in a circuit split – on one side the Second and Fourth circuits, which have rejected standing arguments from plaintiffs who alleged bare statutory violations that did not result in any actual harm (Kendall v. Emps. Ret. Plan of Avon Prods., 561 F.3d 112 (2d Cir. 2009); David v. Alphin, 704 F.3d 327 (4th Cir. 2013)); and the Ninth Circuit joining the Sixth and Seventh Circuits, which have come out on the side of recognizing “damages” for private plaintiffs with respect to minor statutory violations.  Beaudry v. TeleCheck Servs, 579 F.3d 702 (6th Cir. 2009); Murray v. GMAC Mortg. Corp., 434 F.3d 948 (7th Cir, 2006).  If the Supreme Court recognizes damages irrespective of actual harm, the impact could be felt more broadly than FCRA – there are numerous similar statutory schemes, including truth-in-lending legislation (15 U.S.C. § 1640(a)); debt collection statutes, (15 U.S.C. § 1692k(a)); as well as various privacy laws (18 U.S.C. § 2710(c)(1); 47 U.S.C. § 551(f)(1)-(2)).

The third case is Tyson Foods v. Bouaphakeo (No. 14-1146) – a challenge to a $5.8 million wage-and-hour judgment in favor of a class of employees at Tyson’s meat packing plant in Iowa.  Tyson’s petition seeks a reversal of the district court and Eight Circuit’s decision to permit liability and damages verdicts to be based – not on an individual analysis of each purported class member – but by extrapolating a statistical average across the board based on the discrepancies observed in a sample class of workers’ hours and pay.  Tyson further appeals on the lack of ascertainability of the class itself – that is, that the certified group (even according to the Plaintiffs’ own expert) included a significant number of people who weren’t underpaid at all.  If successful, the Tyson case will build upon the Court’s disapproval in Wal-Mart of “trial by formula” and provide a significant bulwark against plaintiffs in putative class actions glossing over differences amongst their claimed class in order to achieve certification.

Not surprisingly, this trifecta of cases has generated a significant amount of interest, amicus briefing, and optimistic thinking from the defense bar that momentum is on its side.  The implications are not insubstantial if defendants prevail:  the type of de facto strict liability for statutory compliance created by such class actions will diminish, there will be new avenues to derail cases pre-certification, and the barrier of ascertainable and reliable class wide damages that plaintiff s must hurdle will be reinforced.

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