Antitrust Law Daily Wrap Up, ADVERTISING—S.D. Cal.: Class representative substituted due to health issues in butter case, (Sep 4, 2014)

By Greg Hammond, J.D.

A new class representative may be substituted in a class action against the maker of Smart Balance Spreadable Butter, due to health issues outside of the representative’s control, the federal district court in San Diego decided. In granting the representative’s motions for leave to file a second amended complaint and to substitute a new proposed class representative, the court determined that the plaintiff demonstrated good cause and did not act in bad faith or with undue delay and that the defendants would not be prejudiced (Aguilar v. Boulder Brands, Inc., September 2, 2014, Moskowitz, B.).

Background. Maria Aguilar filed a consumer class action against Boulder Brands, Inc., alleging the company engaged in false and misleading advertising in its marketing of Smart Balance Spreadable Butter. She alleged that Boulder misleadingly labeled its product—stating that “100mg Plant Sterols Helps Block Cholesterol in the Butter,” and plant sterols “help block the absorption of dietary cholesterol in the butter”—because Smart Balance Spreadable Butter “does not have sufficient levels of plant sterols to block the absorption and thus reduce cholesterol in the body.” Aguilar moved for leave to file a second amended complaint and also moved for leave to further amend the proposed second amended complaint and to substitute a new plaintiff. Boulder opposed both motions.

Second amended complaint. In opposition to Aguilar’s motion to file a second amended complaint, Boulder argued that the proposed amendment—which changed the basis of her claim from literal falsity to deception—would be futile; the motion was made in bad faith and with undue delay; and granting the motion would prejudice the company. The court first decided that the futility argument was unpersuasive, concluding that reasonable consumers could plausibly understand the labeling to mean that consumers will derive a meaningful cholesterol blocking benefit from consuming the butter.

Second, the court found that Boulder’s bad faith and undue delay arguments failed, as: (1) the proposed amendments are substantial, they clarify the allegations, and there is nothing deceptive about the scope of the revisions; (2) there is nothing improper in Aguilar’s inclusion of a new scientific study to support her claims; (3) the amendments still fall within the ambit of California’s Unfair Competition Law (UCL) and Consumers Legal Remedies Act (CLRA); and (4) although the delay in filing the motion was “less than ideal,” it did not rise to the level of undue delay that can bar a motion to amend.

Finally, the court disagreed with the notion that Boulder would be prejudiced by the amendment, noting that a new motion for class certification will not be briefed, heard, or resolved before the instant motion to amend is ruled on, and discovery will not be substantially impacted by the amended complaint, as the UCL and CLRA claims remain largely unchanged.

Substitution of new plaintiff. In her motion to substitute a new plaintiff, Aguilar alleged that she could no longer commit to serving as class representative due to her health issues and emergency health issues that arose with her son, requiring her assistance. Boulder opposed the motion, arguing: (1) no case or controversy currently existed due to Aguilar’s attempt to withdraw prior to class certification, and the court therefore lacked jurisdiction; (2) Aguilar failed to demonstrate good cause; and (3) an amendment would be futile and was sought with undue delay and in bad faith.

First, the court determined that the substitution of Aguilar prior to class certification was allowed in this case, because Aguilar’s claims had not been settled or dismissed; she intended to become part of the class, which allows her claims to persist, keeping the case or controversy alive; and Aguilar’s counsel could produce a proposed substitute immediately. Consequently, Aguilar’s withdrawal and substitution did not moot the case, and the court was able to retain jurisdiction.

The court also determined that good cause existed to modify the scheduling order, as Aguilar “cannot be faulted for developing emergent health issues after the deadline imposed by the Court, and Plaintiff’s counsel’s response to that development was prompt.” In addition, the futility, undue delay, and bad faith arguments also failed, because: (1) the futility argument was already disposed of when the court granted Aguilar’s motion to amend; (2) Aguilar’s counsel acted diligently and promptly by filing the motion less than a month after learning that Aguilar sought to withdraw; and (3) there was no evidence that Aguilar acted in bad faith. Consequently, the plaintiff’s motion to amend the second amended complaint by substituting a new class representative was granted.

The case number is 3:12-cv-01862-BTM-BGS.

Attorneys: Manfred Patrick Muecke, Jr. (Bonnett Fairbourn Friedman and Balint PC) for Maria Aguilar. Neil R. O'Hanlon (Hogan Lovells U.S. LLP) for Boulder Brands, Inc.

Companies: Boulder Brands, Inc.

Cases: Advertising CaliforniaNews