Antitrust Law Daily Wrap Up, ADVERTISING—C.D. Cal.: Award of attorney fees to plaintiff in dismissed case against food manufacturer undisturbed, (Nov 26, 2013)

By Linda O’Brien, J.D., LL.M.

The federal district court in Los Angeles has denied reconsideration of its order granting attorney fees to a consumer as the prevailing party under the catalyst theory in her false and misleading advertising claims against a food manufacturer in the marketing of two of its products (Henderson v. J.M. Smucker Co., November 20, 2013, King, G.).

Mary Henderson filed a consumer class action against The J.M. Smucker Company alleging violations of California’s Unfair Competition Law (UCL), False Advertising Law (FAL), and Consumer Legal Remedies Act (CLRA). Henderson alleged that Smucker made certain false and misleading health and wellness advertising claims in its marketing of its Uncrustables and Crisco Shortening brand products. The Uncrustables product contained high fructose corn syrup and both products contained amounts of trans fat from partially hydrogenated vegetable oil that was linked in studies to the development of many chronic diseases. Prior to filing the class action, Henderson filed for bankruptcy and did not identify her interest in the litigation in her petition. Henderson reopened her bankruptcy proceedings, and the bankruptcy trustee settled Henderson’s individual claims against Smucker. Smucker’s moved to dismiss Henderson’s individual claims, and the motion was granted.

Henderson subsequently filed a motion for attorney fees and costs as the prevailing party under the catalyst theory as her suit caused Smucker to make changes to its business practices. In its June 19 order, the court concluded that Henderson was entitled to attorney fees because her suit was the catalyst for Smucker’s removal of trans fat from the Uncrustables product. However, the court rejected her arguments that her suit was the catalyst for Smucker’s removal of the “wholesome” and “homemade goodness” marketing claims from Uncrustables and the removal of the bar chart comparing Crisco’s saturated fat content to butter since the packaging redesigns were underway prior to the litigation. The court did not determine the reasonableness of the attorney fees sought because the plaintiff’s records were organized by timekeepers that did not show how much attorney and paralegal time was spent on a particular task and allowed the plaintiff time to submit reorganized records. Smuckers sought reconsideration of the attorney fee order.

The court found that Henderson’s suit resulted in the enforcement of an important right affecting the public interest. The suit was a factor that caused Smucker to remove trans fat from its Uncrustables product and the evaluation of whether the advertising was deceptive had important public policy implications to California consumers and businesses. Henderson’s suit also had a significant benefit had been conferred on a large class of persons. Henderson offered evidence that Uncrustables was a widely distributed consumer product, trans fat was linked to certain diseases in various studies, and Smuckers removed trans fat from Uncrustables as a result of the suit. Such evidence was sufficient to establish that the removal of trans fat from the product conferred a significant benefit to a large class of persons.

Finally, the necessity and financial burden of private enforcement made an award of attorney fees appropriate. Private enforcement was necessary in this case because no government agency had sought to enforce the state false advertising laws against Smucker. The court concluded that Smucker made no showing that the court failed to consider material facts in its order to form a basis for reconsideration.

The case is No. CV 10-4524-GHK.

Attorneys: Beatrice Skye Resendes (Law Offices of Ronald A. Marron APLC) for Mary Henderson. Denise A. Smith-Mars (Loeb & Loeb LLP) for J. M. Smucker Co.

Companies: The J.M. Smucker Company.

Cases: Advertising StateUnfairTradePractices CaliforniaNews