Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—N.D. Cal.: Salad kit deceptive labeling action against Dole transferred, (Sep 17, 2013)

By Tobias J. Gillett, J.D., LL.M.

The federal district court in Oakland has transferred, under the “first-to-file” rule, an action against Dole Fresh Vegetables, Inc., asserting that Dole deceptively labeled its All Natural Dole Salad Kits as “All Natural” even though they contained artificial ingredients, to the U.S. District Court for the Central District of California, where a similar action was already pending (Wallerstein v. Dole Fresh Vegetables, Inc., September 13, 2013, Rogers, Y.).

Dole Fresh Vegetables, Inc., a subsidiary of Dole Food Company, Inc., produces a variety of food products including All Natural Dole Salad Kits. According to the purchasers’ complaint, the salad kits could not be “All Natural” because they contained the food additives xanthan gum and ascorbic acid.

A purchaser of the salad kits filed a putative class action lawsuit in the Northern District of California, asserting claims against Dole for violations of California’s Unfair Competition Law (UCL), Consumers Legal Remedies Act (CLRA), and False Advertising Law (FAL); New York’s Consumer Protection Act; breach of implied contract/quasi-contract under California law; and unjust enrichment under New York law. Dole filed a motion to transfer the case to the Central District of California, where a similar lawsuit against Dole, Park v. Dole Fresh Vegetables, Inc., Case No. 13-cv-00872-LHK, was already pending. That case had been transferred from the Northern District of California on August 2, 2013, pursuant to Federal Rule of Civil Procedure 1404(a).

The court concluded that the action should be transferred to the Central District of California pursuant to the first-to-file rule. The court explained that the first-to-file rule gives federal district courts the discretion to decline to exercise jurisdiction over an action, and instead stay it, dismiss it, or transfer it to another jurisdiction, to avoid duplicative litigation and the possibility of conflicting judgments. Courts consider three facts when deciding whether to apply the rule, including (1) chronology of the actions; (2) similarity of the parties; and (3) similarity of the issues.

Chronology of the actions. The court initially concluded that a third action filed against Dole in the Central District of California but later voluntarily dismissed could not constitute the first-filed action because “[a]ctions that were previously filed and voluntarily dismissed are no longer pending and are therefore moot for the purposes of the first-to-file rule.” However, the court observed that the current case posed an issue not directly addressed by any cases cited by the parties or located by the court: “can a court apply the first-to-file rule where both actions are originally filed in the same district and the first-filed action is subsequently transferred to another district?” Wallerstein contended that “the first-to-file rule only applies when cases involving the same parties and issues have been filed in two different districts.”

The court disagreed, finding “that the first-to-file rule is not limited to cases brought in different districts.” The court observed that the purposes of the first-to-file rule (avoiding duplicative litigation and preventing conflicting judgments) would be served in the case before the court. Therefore, the “first-to-file rule simply require[d] a chronology of the actions,” and the “chronology of the actions” factor was satisfied because Wallerstein filed her action over three weeks after the Park action was filed.

Similarity of the parties. The “similarity of the parties” factor was also satisfied, according to the court. Wallerstein contended that it was improper for the court to compare the classes in the two actions prior to certification, but the court concluded that “comparing the putative classes even prior to certification” was “the more widely accepted rule.” The court noted that courts considered proposed classes to be “substantially similar where both classes seek to represent at least some of the same individuals.”

Here, the plaintiffs in both cases sought “to represent a nationwide class of consumers who purchased the exact same ten varieties of Dole Salad Kits.” Although the Park action did not specify a class period, the court assumed it would cover all consumers that ever purchased Dole Salad Kits, a period that would include the consumers in Wallenstein’s class, which ran from January 1, 2009 to the present. Moreover, the named class representatives were similar, despite residing in different states, because they both alleged that they purchased at least two of the salad kits, and each could be a member of the other’s class. Dole was the sole defendant in both cases.

Similarity of the issues. Finally, the court found the “similarity of the issues” factor to be met, even though Wallerstein brought claims under New York and California law and Park only relied on California law. The court found the “thrust” of the two lawsuits to be “identical”—that the salad kits were deceptively labeled as “All Natural” despite containing Xanthan gum and ascorbic acid, and that consumers were misled into purchasing them. Park alleged only two claims, one under the UCL and one under the CLRA, both of which Wallerstein also alleged.

The purposes of the first-to-file rule would also be served by transferring the case, in the court’s view. The overlapping claims, products, and class periods would result in duplicative discovery, the court observed. Moreover, Wallerstein did not “present any reason outweighing the judicial efficiency to be gained by transferring” the action to the Central District of California, nor did she provide any “reason why the Central District court could not adequately address the different issues in this action.”

The case is No. 13-cv-01284-YGR.

Attorneys: Jon A Tostrud (Tostrud Law Group, P.C.) for Traci Wallerstein.

Companies: Dole Fresh Vegetables, Inc.

Cases: StateUnfairTradePractices CaliforniaNews