Antitrust Law Daily Wrap Up, ADVERTISING NEWS—N.D. Cal.: Class certification granted in unfair competition case against almond milk producer, (May 28, 2014)

By Greg Hammond, J.D.

California consumers who purchased Blue Diamond Growers almond milk products containing the label statements “evaporated cane juice” and “all natural,” may be able to join a putative class action against Blue Diamond for allegedly false and misleading labeling. In reaching its decision to grant class certification, the federal district court in San Jose, California determined that the consumer who brought the class action sufficiently demonstrated standing, class ascertainability, numerosity, commonality, typicality, adequacy, predominance, and superiority (Werdebaugh v Blue Diamond Growers, May 23, 2014, Koh, L).

Background. Blue Diamond is a California corporation that produces and sells almond milk products to retailers and distributors for the eventual sale of the products to consumers at grocery stores throughout the U.S. Chris Werdebaugh is a California consumer who purchased one of Blue Diamond’s almond milk products, “Chocolate Almond Breeze,” on multiple occasions. According to Werdebaugh, the product’s label contained false, misleading, and unlawful phrases—“evaporated cane juice,” as opposed to the common name of “sugar,” and “all natural,” when the product contained a synthetic ingredient. Werdebaugh alleged that he reasonably relied on those statements when he made his purchase decision, and would not have otherwise bought the product.

Consequently, Werdebaugh brought a putative class action against Blue Diamond, alleging: (1) violation of California’s Unfair Competition Law (UCL) (Cal. Bus. & Prof. Code 17200 et seq.); (2) violation of California’s False Advertising Law (FAL) (Cal. Bus. & Prof. Code 17500 et seq.); and (3) violation of California’s Consumers Legal Remedies Act (CLRA) (Cal. Civ. Code 1750 et seq.). The case was before the district court on Werdebaugh’s motion for class certification.

Standing. The first issue the court was required to decide was whether Werdebaugh had standing to bring his claims for damages under Rule 23(b)(3) and for injunctive relief under Rule 23(b)(2). To determine whether Werdebaugh had standing for damages, he was required to demonstrate that either he would not have purchased the almond milk had he known about the misbranding or that he paid a price premium. Although he alleged that he has standing to bring his “all natural” and “evaporated cane juice” claims on both theories, the court found that his deposition clearly demonstrated he would not have purchased the product had he known about the misbranding. Consequently, the court did not address his price premium arguments. Because it was determined that Werdebaugh provided sufficient evidence that he relied on the misleading label statements when making his purchases, the court determined that he had standing to bring his class claims for monetary relief under California’s UCL, FAL, and CLRA.

However, the court determined that Werdebaugh did not have standing to bring his claims for injunctive relief. To demonstrate standing for an injunctive relief claim, Werdebaugh was required to show he suffered or was threatened with a concrete and particularized legal harm, “coupled with a sufficient likelihood that he will again be wronged in a similar way.” Because he did not allege or provide proof that he intended to buy Blue Diamond almond milk products again in the future, the court determined that there was no likelihood of future injury. Therefore, he lacked standing to pursue such a remedy.

Ascertainability. The district court next determined whether Werdebaugh demonstrated that an identifiable and ascertainable class exists. In response to Werdebaugh’s purported class of individuals who purchased Blue Diamond almond milk products within a particular class period, Blue Diamond argued that such a class would not be ascertainable, as there were no company records that could identify purchasers. In addition, Blue Diamond was further concerned that class members would not have actual proof that they belong in the class. However, the court noted that there was no requirement that the identity of class members be actually known at the time of class certification, and that the proposed class in this case was sufficiently definite and feasible to determine whether particular individuals are members of the class or not. As such, the proposed class was deemed sufficiently ascertainable.

Rule 23(a) requirements. Under the requirements of Rule 23(a), Werdebaugh was required to demonstrate sufficient numerosity, commonality, typicality, and adequacy. According to the court: (1) the numerosity requirement was met because there are thousands of class members; (2) the question of whether the alleged “all natural” and “evaporated cane juice” deceptions are material is a question common to the class; (3) although Werdebaugh did not purchase all of Blue Diamond’s almond milk products that contain the allegedly misleading label, the court concluded that his claims were reasonably coextensive with claims of absent class members, satisfying the typicality requirement; and (4) Werdebaugh and his attorney are adequate representatives of the proposed class, meeting the adequacy requirement of Rule 23(a).

Rule 23(b)(3) requirements. Under the requirements of Rule 23(b)(3), Werdebaugh was required to show that “the questions of law or fact common to the members of the class predominate over any questions affecting only individual members and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy.” With regard the predominance inquiry of Rule 23(b)(3), the court was required to determine whether the proposed class was sufficiently cohesive to permit adjudication by representation. To meet that requirement, Werdebaugh was forced to reduce his certification request to a California-only class, as the court determined that each of the other 49 states would be impaired in their ability to protect consumers within their borders if California law applied to all claims of the nationwide class. Because his expert’s Regression Model for proposed damages provided a way to show damages on a class-wide basis through common proof, the district court determined that Werdebaugh satisfied the requirement that the class’ common issues predominate over individual issues.

With regard to the superiority inquiry of Rule 23(b)(3), the court was required to determine whether the class action will reduce litigation costs and promote greater efficiency. Because individual actions would be economically infeasible given the small size of each purported class member’s claim and the relatively expensive costs of litigation, the court determined that a class action is superior to other available methods for the fair and efficient adjudication of the Blue Diamond controversy.

Consequently, the district court granted Werdebaugh’s motion for class certification for a California-only class, and denied his motion for class certification of a nationwide class.

The case number is 12-CV-2724-LHK.

Attorneys: Ben F. Pierce Gore (Pratt & Associates), Brian K. Herrington (Don Barrett, P.A.), Colin Harvey Dunn (Clifford Law Offices, P.C.), Dewitt Marshall Lovelace, Sr. (Lovelace Law Firm, P.A.), and Gary McKay Yarborough, Jr. (Yarborough Law Firm) for Chris Werdebaugh. Lawrence M. Cirelli, Geoffrey R. Pittman, and Megan Oliver-Thompson (Hanson Bridgett LLP) for Blue Diamond Growers. Chant Yedalian (Chant & Company) for Levon Tchayelian.

Companies: Blue Diamond Growers

Cases: Advertising CaliforniaNews