Antitrust Law Daily Wrap Up, ADVERTISING—C.D. Cal.: Kraft “natural cheese” consumers obtain class certification, (Jun 25, 2015)

By Greg Hammond, J.D.

Consumers of Kraft’s “Natural Cheese Fat Free Shredded Fat Free Cheddar Cheese” obtained class certification in a false and misleading advertising suit against Kraft Foods Group, Inc., over the use of the term “natural cheese.” The federal district court in Los Angeles limited the class, however, to consumers that were misled by Kraft’s use of the term “natural cheese” and made their purchasing decisions due to that deception (Morales v. Kraft Foods Group, Inc., June 23, 2015, Kronstadt, J.).

Claudia Morales and Mocha Gunaratna filed suit against Kraft, alleging that they were misled by the use of the term “natural cheese” in connection with their purchase of Kraft’s “Natural Cheese Fat Free Shredded Fat Free Cheddar Cheese.” They claim that they would not have purchased the product had they known it contained artificial coloring. The complaint alleges violations of California’s False Advertising Law, Unfair Competition Law, and Consumer Legal Remedies Act (CLRA). Morales and Gunaratna moved for class certification.

The court first found that the numerosity requirement was satisfied, because there were approximately 1.2 million sales to consumers of the cheese at issue, and it was therefore reasonable to conclude that there are at least thousands of prospective class members.

There were also central questions that were sufficient to meet the commonality requirement, including: (1) whether the use of the term “natural cheese” would mislead a reasonable consumer; and (2) whether Kraft knew or should have known that its labeling of the product was misleading.

The court next concluded that the typicality requirement was satisfied because each of the named plaintiffs alleged that she purchased the product based on the understanding that arose from the label “natural cheese,” and each believed that the “natural cheese” label meant the product did not contain artificial ingredients, including artificial coloring.

No evidence was found that demonstrated the plaintiffs have a conflict of interest or that plaintiffs’ counsel will not prosecute the action vigorously on behalf of the proposed class, which satisfied the adequacy of representation requirement.

With regard to predominance, the court determined: (1) the question whether it is likely a reasonable consumer would be confused by the term “natural cheese,” is amenable to resolution on a class-wide basis; (2) materiality on a class-wide basis—with regard to the CLRA claim—is substantially similar to the inquiry whether it is likely that a reasonable consumer would be confused by the term “natural cheese”; and (3) plaintiffs have demonstrated that damages may be calculated on a class-wide basis. The predominance requirement was therefore met. In addition, a class proceeding would be superior to other forms of litigation, the court concluded, given the unlikelihood that consumers would pursue individual claims for the small amount of damages if certification was denied, and it would be an inefficient use of judicial and party resources to litigate the class’ claims on an individual basis.

Finally, the court found that the class could be clearly ascertainable on a self-identification basis, through sworn statements. It reasoned that absent this approach, a class proceeding would not be available in this consumer class action, given the modest retail price of the cheese product and the unlikelihood that consumers kept their receipts; sworn statements have inherent reliability; and the plaintiffs will be required to offer proof that applies across the class with regard to a reasonable consumer being misled by the term “natural cheese.”

Although the court found class certification appropriate, it limited the class because restitution for portions of the amounts spent on purchasing the cheese is only available to purchasers that suffered injury. Consequently, certification was granted for the following class definition: “All persons who, between May 7, 2010 through the present, purchased the Product in the State of California for personal use and not for resale and who did so because the Product was described as ‘natural cheese,’ which meant that it contained no artificial ingredients.”

The case number is LA CV14-04387 JAK (PJWx).

Attorneys: Paul D. Stevens (Milstein Adelman LLP) for Claudia Morales. Dean N. Panos (Jenner & Block LLP) for Kraft Foods Group, Inc.

Companies: Kraft Foods Group, Inc.

Cases: Advertising StateUnfairTradePractices CaliforniaNews