Antitrust Law Daily Wrap Up, ADVERTISING—N.D. Cal.: Reconsideration of dismissal of unjust enrichment claims denied in tea mislabeling case, (Jun 12, 2015)

By Edward L. Puzzo, J.D.

In an ongoing class action, alleging mislabeling of Twinings tea products with regard to antioxidant claims, the federal district court in San Jose, California has declined to reconsider its dismissal of an unjust enrichment claim (Lanovaz v. Twinings North America, Inc., June 10, 2015, Whyte, R.).

Class certification. Nancy Lanovaz had sought class certification for her claims against Twinings for allegedly mislabeling tea products in violation of the California Unfair Competition Law (UCL), the California False Advertising Law (FAL), and the Consumers Legal Remedies Act (CLRA). Lanovaz stated that the FDA had not established a recommended daily intake for flavonoids, a type of antioxidant; consequently, FDA regulations prohibited nutrient content claims about flavonoids. Twinings violated that prohibition, Lanovaz alleged, by its "Natural Source of Antioxidants" labeling on 51 of their tea varieties.

On April 24, 2014, the court granted class certification for purposes of injunctive and declaratory relief, but denied it to the extent plaintiffs sought monetary damages, including restitution, refund, reimbursement, and disgorgement. The court found that “the price premium attributable to the antioxidant labels is the only legally permissible measure of damages” and that “plaintiffs do not present any damages model capable of estimating the price premium attributable to Twinings’ antioxidant labels.” Plaintiff appealed, but her appeal was declined by the Court of Appeals for the Ninth Circuit. Later, after a case management conference, plaintiff was granted leave to file a motion for reconsideration of the court’s order denying certification of the damages class, but that motion was denied.

Unjust enrichment. Plaintiff then filed a motion for leave to file a motion for reconsideration of the court’s February 25, 2013 order, dismissing her unjust enrichment claims. Prior to the class certification ruling, the court had dismissed with prejudice plaintiff’s unjust enrichment claims because they were based on the same allegations as her UCL, FAL, and CLRA claims. As restitution was already a remedy under the UCL, that court stated, plaintiff’s restitution claim was superfluous.

In her motion for leave to file a motion for reconsideration, plaintiff argued that the unjust enrichment claim was not duplicative because restitution from such claims includes nonrestitutionary disgorgement, which goes beyond the restitutionary disgorgement of the UCL, FAL, or CLRA. Nonrestitutionary disgorgement in this case would be full refunds of the tea price plus the profit Twinings’ derived from selling the tea.

However, stated the court, once the motion for leave to file a motion for reconsideration was granted, the motion for reconsideration itself abandoned the remedy of nonrestitutionary disgorgement and sought only restitutionary disgorgement. The plaintiff cited cases where parties seeking a disgorgement remedy for unjust enrichment had been allowed to proceed, while also asserting claims pursuant to consumer protection statutes. The court found certain cited cases unhelpful because they addressed damages under the FTC Act and not unjust enrichment claims or California consumer protection claims. Because plaintiff was actually seeking damages that were available under the consumer protection claims, the court denied the motion for reconsideration, as it had already found that plaintiff could not certify a damages class based on damages theories available under the consumer protection statutes.

Citing the lengthy procedural history of this case and plaintiff’s multiple opportunities to brief the damages issues, the court declined to give the plaintiff “yet another bite at class certification—essentially a fourth bite (one class certification motion plus two motions for reconsideration)...” To give the plaintiff yet another chance would be unduly prejudicial to Twinings and a waste of judicial resources because it was clear that such a motion would be futile.

The case is No. 5:12-cv-02646-RMW.

Attorneys: Ben F. Pierce Gore (Pratt & Associates) for Nancy Lanovaz. William Lewis Stern (Morrison & Foerster LLP) for Twinings North America, Inc.

Companies: Twinings North America, Inc.

Cases: Advertising ConsumerProtection StateUnfairTradePractices CaliforniaNews