Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—S.D. Ill.: Coffee purchasers denied class action certification , (Aug 28, 2013)

By Jody Coultas, J.D.

Coffee purchasers were denied certification of various state consumer protection law claims against coffee manufacturer Strum Foods, Inc. for allegedly misrepresenting the qualities of its coffee product by the federal district court in East St. Louis, Illinois (McManus v. Sturm Foods, Inc., August 26, 2013, Murphy, G.).

The purchasers alleged that Strum Foods misrepresented and omitted the true nature of Grove Square Coffee products by indicating the product contained fresh ground coffee and a filter rather than “instant” or “soluble” coffee.

Claims filed under the Alabama, New York, New Jersey, North Carolina, Illinois, and South Carolina consumer protection laws were overbroad and improper for class certification, according to the court. The class definition included all individuals who purchased a Grove Square Coffee product. These state statutes required the purchasers to show causation and/or actual reliance. Because the class definition included purchasers who knew, or who were indifferent to the product’s insoluble coffee content, the purchasers could not show causation, reliance, or actual injury for every class member.

Because the California purchasers failed to show an extensive and long term advertising campaign, the court dismissed the California claims. The California Unfair Competition Law allows a private individual to bring suit only if he or she has suffered injury in fact and has lost money or property as a result of the unfair competition. The False Advertising Law required an actual economic loss and causation, and the Consumers Legal Remedies Act required each class member to have an actual injury caused by the unlawful practice. An inference of reliance may be established on a class wide basis with a showing of materiality. To presume exposure on the basis of an advertising campaign, it must have been extensive and long term. The advertising campaign was not decades-long. Since the court could not presume that most purchasers were exposed to the alleged misrepresentation, materiality cannot be presumed and the purchasers could not adequately allege actual injury for the California class.

The class was also overly broad to state a New Jersey Consumer Fraud Act claim, according to the court. New Jersey courts apply a class-wide presumption of causation in very limited circumstances. The New Jersey class included individuals who bought Grove Square Coffee products because of, or in spite of, knowing that it contained instant coffee. Therefore, not every class member could prove causation or an ascertainable loss. Also, numerous class members could have known, appreciated, or easily learned that soluble coffee is distinct from ground coffee—precluding a presumption of causality.

The Tennessee Consumer Protection Act of 1977 required the purchasers to prove (1) that the defendant engaged in an unfair or deceptive act or practice declared unlawful by the TCPA and (2) that the defendant's conduct caused an ascertainable loss. The purchasers could not show that the class would have refused to engage in the transaction had they known that the product was instant rather than ground coffee, so it too is too indefinite for certification, according to the court.

The court also held that purchasers failed to meet the requirements of Federal Rule of Civil Procedure 23(a) or 23(b). To be certifiable, a class must meet the requirements of numerosity, commonality, typicality, and adequacy. Under Rule 23(b)(3), the purchasers were required to show questions of law or fact common to the members of the proposed class predominated over questions affecting individualized issues and that a class action was the superior method of adjudication. The purchasers could not show questions of law or fact that were common to the class, or that the named plaintiffs’ claims were typical of the class. Individualized issues predominated based on each state’s requirement individualized proof of reliance, causation, or both.

The case is No. 11-565-GPM.

Attorneys: Joseph Allen Schreiber (Burke Harvey et al.) for Richard McManus. Michael M. Conway (Foley & Lardner) for Sturm Foods, Inc.

Companies: Sturm Foods, Inc.

Cases: StateUnfairTradePractices Advertising IllinoisNews