Federal Court Grants Summary Judgment on Statute of Limitations Grounds in DBCP Case

A federal court has dismissed as time-barred the claims of 3,000 foreign banana plantation workers allegedly exposed to pesticides.  See Marquinez v. Dole Food Co., No. 12-695 (D.Del., 5/27/14).

This litigation stems from injuries allegedly caused during the use in the 1970's and 1980's of dibromochloropropane ("DBCP") on banana plantations of multiple defendants in Panama, Ecuador, Guatemala, and Costa Rica. Plaintiffs' May, 2012 complaint included the boilerplate assertion that no plaintiff knew the cause of his injuries before August 31, 1993.  Why that day?  In August 1993, a putative DBCP class action had been filed in Texas state court. The case was removed to federal court based on the Foreign Sovereign Immunities Act because one of the defendants was largely owned by the State of Israel. In July 1995, the federal court had dismissed the case based on forum non conveniens. See Delgado v. Shell Oil Co.,890 F.Supp. 1324, 1375 (S.D. Tex. 1995). The dismissal was affirmed by the Fifth Circuit, 231 F.3d 165 (5th Cir. 2000), cert. denied, 532 U.S. 972 (2001). The case was, after some procedural issues and delays, reinstated in Texas state court. Plaintiffs filed a motion for class certification in 2009, which the state court denied on June 3, 2010.

Here, defendants moved for summary judgment based on the running of the statutes of limitations- 1993 to 2012 seemed like a long time. Plaintiffs argued that the doctrine of cross-jurisdictional tolling applied, and that the denial of class certification in the previous class case did not occur until June 3, 2010, and therefore the claims here were still within the applicable statutes of limitations.

Cross-jurisdictional tolling can be defined as a rule under which a court in one jurisdiction tolls the applicable statute of limitations on a pending claim based on the previous filing of an overlapping class action in a different jurisdiction.  The Delaware federal court had originally been inclined to reject defendant's motion because in Blanco v. AMVAC Chemical Corp., 2012 WL 3194412 (Del. Super. Aug. 8, 2012), the Delaware state court held that Delaware recognizes this type of cross-jurisdictional tolling, See also  Dow Chemical Corp. v. Blanco, 67 A.3d 392, 394 (Del. 2013)(Delaware does recognize doctrine).

After further briefing, the court concluded, however, that tolling here stopped in 1995, when the case was dismissed. Extending tolling in the manner and to the extent advocated for by plaintiffs here would go far beyond the policy-based justifications for the doctrine. In American Pipe, for example, the Supreme Court found that tolling the statute of limitations for putative class members was appropriate because it promoted judicial economy such that individual class members need not file individual suits. 414 U.S. at 551. In Crown, Cork & Seal, the Supreme Court further explained that once the statute of limitations has been tolled, it remains tolled for all members of the putative class until class certification is denied. At that point, class members may choose to file their own suits or to intervene as plaintiffs in the pending action. 462 U.S. at 354. Under the doctrine, tolling lasts only until the denial of class certification, not until the termination of the appeals process. Because the policy justification for tolling is to encourage class members reasonably to rely on the class action to protect their rights, tolling ends when reliance on the named plaintiffs' prosecution of the matter ceases to be reasonable. Here, the dismissal of the federal class action was sufficient to end any reasonable reliance -- the plaintiffs' home countries did not provide for a class action, so each individual was on his own, regardless of forum.

In addition to the objective reasonableness of an individual's reliance on the action to protect his or her rights, the prejudice to the defendant based upon the principles underlying class actions and statutes of limitations is also a relevant concern.

Motion granted.

Federal Court Dismisses Cane Juice Class Under Primary Jurisdiction Doctrine

A California federal court took a second look and decided to dismiss a proposed class action related to the ingredient “evaporated cane juice” in guacamole products. See  Swearingen et al. v. Yucatan Foods LP, No. 3:13-cv-03544 (N.D. Cal. 2014).

I am told that guacamole actually dates back to at least the 16th century, and was first made by the Aztecs in Mexico.  The 21st century issue relates to Plaintiffs in this putative class action claiming that use of the term “evaporated cane juice” in the product was unlawful in light of federal food labeling laws and regulations -- and therefore violative of California’s Sherman and Unfair Competition Laws.

Defendants moved to dismiss based on the doctrine of primary jurisdiction.  The primary jurisdiction doctrine applies when there is: (1) [a] need to resolve an issue that (2) has been placed by Congress within the jurisdiction of an administrative body having regulatory authority (3) pursuant to a statute that subjects an industry or activity to a comprehensive regulatory authority that (4) requires expertise or uniformity in administration. See Clark v. Time Warner, 523 F.3d 1110, 1115 (9th Cir. 2008). The doctrine of primary jurisdiction is not designed to secure expert advice from agencies every time a court is presented with an issue conceivably within the agency’s ambit. It is to be used if a claim requires resolution of an issue of first impression, or of a particularly complicated issue that Congress has committed to a regulatory agency.

Here, the court originally denied the motion, in light of the fact that the FDA had not yet finalized a draft guidance issued more than four years ago, and that it continued to issue warning letters consistent with that earlier position.  However, on March 5, 2014, the FDA issued a notice in the Federal Register reopening the comment period for the draft guidance first issued on October 7, 2009, relative to the use of the term “evaporated cane juice.” That notice stated: “We have not reached a final decision on the common or usual name for this ingredient and are reopening the comment period to request further comments, data, and information about the basic nature and characterizing properties of the ingredient sometimes declared as ‘‘evaporated cane juice,’ how this ingredient is produced, and how it compares with other sweeteners.” In light of this notice, Yucatan moved for reconsideration of the court’s prior order.

Plaintiffs argued in response to the motion that the FDA is not engaged in formal rulemaking, and that even final guidance would not be binding on either the agency or manufacturers. See 21 C.F.R. § 10.115 (“Guidance documents do not establish legally enforceable rights or responsibilities. They do not legally bind the public or FDA.”).  But the notice did indicate that the FDA is actively engaged with the very issue presented in this litigation, one which has prompted a flurry of litigation in the federal courts.  The court noted that the question of evaporated cane juice labeling presents a host of technical issues uniquely within the agency’s expertise. For example, the FDA has specifically solicited comment on the basic nature and characterizing properties of the ingredient in question, and the difference between this ingredient and other sweeteners made from sugar cane.  Deferring to the FDA for resolution of these issues would enhance decision-making and efficiency by allowing the court to take advantage of administrative expertise.

A court presented with an issue to which agency deference is due under the primary jurisdiction doctrine has the discretion either to stay the case or to dismiss it without prejudice. Normally, if the court concludes that the dispute which forms the basis of the action is within the agency’s primary jurisdiction, the case should be dismissed so that the parties may pursue their administrative remedies. Syntek Semiconductor Co. v. Microchip Tech., Inc., 307 F.3d 775, 782 (9th Cir. 2002). Here, concluded the court, it was not necessary in this case for the court to maintain jurisdiction. Plaintiffs in this case sought primarily injunctive relief on behalf of a putative class for various products purchased throughout a four-year period preceding this litigation. Should some amount of time elapse before the FDA issued final guidance on this issue, no particular disadvantage inured to the plaintiffs. 

 

Long-lasting Lipstick Class Kissed Off

A federal court has rejected a proposed class of plaintiffs who alleged that they purchased deceptively labeled lipstick and foundation, in part because of an inability to show class-wide damages. See Algarin v. Maybelline, LLC,  No. 12-03000 (S.D. Cal., 5/12/14).

Maybelline manufactures, markets, sells, and distributes SuperStay 24HR Lipcolor, a line of lipcolors, and SuperStay 24HR Makeup, a line of skin foundations, Plaintiffs alleged these products were marketed to provide "all day comfort,” that withstands “heat, sweat, and humidity,” but allegedly do not. Plaintiffs alleged they paid a price premium because of the company's claims. On behalf of a proposed California class of consumers who bought the SuperStay products, they asserted claims under the California Unfair Competition Law and Consumers Legal Remedies Act.

In assessing the motion for class certification, the court found that there were issues with the proposed class definition. Plaintiffs defined the class as: “[a]ll California consumers who purchased SuperStay 24HR Lipcolor and/or SuperStay 24HR Makeup for personal use."  Given the number of differences between the two products, including but not limited to, pricing differences, claims differences, labeling differences, and ultimately merits differences, the Court questioned whether creating sub-classes would be needed. Beyond that, though not explicitly stated in Rule 23, courts have held that the class must be adequately defined and clearly ascertainable before a class action may proceed. See Chavez v. Blue Sky Natural Beverage Co., 268 F.R.D. 365, 376 (N.D. Cal. 2010) .  A class is sufficiently defined and ascertainable if, among other things, it is administratively feasible for the court to determine whether a particular individual is a member. See O’Connor v. Boeing N. American, Inc., 184 F.R.D. 311, 319 (C.D. Cal. 1998).   It must be administratively feasible to determine whether a particular person is a class member as an identifiable class exists if its members can be ascertained by reference to objective criteria, but not if membership is contingent on a prospective member’s state of mind. While here the class definition seemed ascertainable in the sense that class membership might be determined based on an objective criterion -- whether members purchased either the SuperStay lipcolor of the SuperStay makeup --  Plaintiffs failed to provide a reliable method of determining who the actual members of the class were. So it was not ascertainable in the sense that members could actually ever be determined. Plaintiffs failed to show how it was “administratively feasibile" to determine whether a particular person was a class member. The court correctly noted that this inquiry overlaps with the “manageability” prong of Rule 23(b)(3).

Specifically, Maybelline argued that purchasers were unlikely to have documentary proof of purchase of products like these years later, and Maybelline does not maintain a purchaser list or other identifying method. In such a situation, the Court and the parties would necessarily rely on class members to self-identify. There are a number of cases that stand for the proposition that where a court has no way to verify if a purchaser is actually a class member, class certification may be improper. See e.g., Red, 2012 WL 8019257, at *4;  Hodes v. Int’l Foods, 2009 WL 2424214, at
*4 (C.D. Cal. July 23, 2009). Here, the relevant purchase was not a memorable “big ticket” item, but rather small-ticket items that cost around $10.00; it was extremely unlikely the average purchaser would even remember she purchased the specific SuperStay products versus a competitor product.

The court also observed that expert evidence shows that materiality and reliance varied from consumer to consumer, such that these elements were not an issue subject to common proof. Under the claims alleged, a representation is considered material if it induced the consumer to alter his position to his detriment. If the issue of materiality or reliance is a matter that would vary from consumer to consumer, the issue is not subject to common proof, and the action is properly not certified as a class action. Maybelline introduced evidence of who the reasonable consumer in the target audience was and what drives her in making purchasing decisions. With cosmetics such as the ones at issue here, customers can readily discern how well they work and whether they lived up to the claimed representations. Accordingly, repeat purchasers can not be considered injured in the manner proposed by Plaintiffs. A repeat purchase indicates satisfaction. The evidence suggested that duration was not the only motivating factor in making the purchases; actual duration expectations varied widely among purchasers; and very few consumers actually read the package the way plaintiffs' counsel did and thus could have been “injured” in the manner alleged by Plaintiffs.

This undermined both the commonality and the typicality prerequisites. Based upon the evidence presented, the named Plaintiffs’ reliance on the alleged misrepresentations was not typical of other class members.

Under Rule 23(b)(2), the court concluded that the injunctive relief requested by the plaintiffs wasn't appropriate for the class as a whole. Class members who bought the cosmetics and used them became well aware of the realities of the products, and wouldn't benefit from the relief sought.

Under Rule 23(b)(3), the Plaintiffs sought individual monetized relief that would require an assessment of each class member's claim based on purchase history.  Given the number of individual purchasing inquiries, as well as the evidence showing materiality and reliance varied from consumer to consumer, it was evident that common issues did not predominate.  As is standard, Plaintiffs proposed the “price premium” method of determining class-wide damages, contending  that their damage theory was “simple."  It was not obvious to the Court, however, that the alleged 24 hour/no transfer claim commanded the alleged premium of $1.00-$3.00. Indeed, that was pure speculation on the part of Plaintiffs. Pricing could have been equally impacted by a higher quality of ingredients, the selection of colors offered, or the unique costs Maybelline expended in the research and development of these products. Plaintiffs’ method of using comparable products from other sellers is inconsistent with the law. To establish that any difference in price was attributed  to the alleged misrepresentation, the Court needed to compare a product, exactly the same but without the challenged marketing claim. Such a task was nearly impossible as no two products are completely identical.

Moreover, Maybelline did not sell retail and does not set retail prices. Establishing a higher price for a comparable product would be difficult where prices in the retail market differ and are affected by the nature and location of the outlet in which they are sold and/or the use of promotions and coupons. The Court could not simply assume that all retailers throughout California purchase and sell the products at one price. 

Finally, the existence of an economic injury was also not a common question as many purchasers were satisfied with the products. Economic injury is not a common question when many purchasers find the class products were worth the amount paid and fully satisfied.

Class motion denied.

Class Discovery Sufficient for Merits Summary Judgment

Readers know that courts will sometimes, perhaps often, bifurcate discovery in a proposed class action between the discovery needed to assess certification issues and that related to merits issues. This procedural tool can save the parties costs, and expedite the crucial decision on class status, which needs to be made as soon as practicable.

Sometimes that class discovery can shed light on summary judgement issues as well.  In a recent case, the Eighth Circuit held that a class plaintiff was not entitled to merits discovery before the court considered summary judgment based solely on the class certification discovery.  See Toben v. Bridgestone Retail Operations, LLC,  No. 13-3329 (8th Cir. 5/13/14).

Patricia Toben filed a putative class action alleging a violation of the Missouri Merchandising Practices Act (MMPA).  Plaintiff alleged on behalf of the proposed class that defendant's service shop improperly charged 6 percent of labor charges as a shop supply fee. Defendant responded that the supply fee covered a wide array of essential stuff, such as cleaners and rags. Specifically, Bridgestone identified over 70 examples of shop supplies covered by the fee.

After limited discovery, Toben moved for class certification. Bridgestone moved for summary judgment. Toben moved to stay summary judgment pending merits discovery. The district court denied the stay and granted summary judgment.  Plaintiff appealed.

The court of appeals noted that plaintiff had set forth some kinds of facts she hoped to elicit from further discovery, but had not shown that the facts sought exist.  It is well settled that Rule 56 does not condone a fishing expedition where a plaintiff merely hopes to uncover some possible evidence. Mere speculation that there is some relevant evidence not yet discovered will never suffice.  Here, class discovery revealed relevant information about the shop supply fee, and plaintiff identified no documents or specific facts she believed would contradict that.

If all one had to do to obtain a grant of a Rule 56d motion were to allege possession by movant of certain information, every summary judgment decision would have to be delayed while the non-movant goes fishing in the movant's files.  Plaintiff's motion for a stay provided only "speculative hope" of finding evidence to support her claim.

Thus, the court could not conclude that the district court abused its discretion in denying it. Summary judgment affirmed.

 

 

 

Fail Safe Class Rejected in TCPA Case

This year marks the 50th Anniversary of the taut Cold War thriller "Fail-Safe", starring Henry Fonda and Walter Matthau. (If I recall, there is no music in the entire B&W film.) In honor of the film, we post about a modern day fail-safe issue, less dramatic of course.

A crucial implicit requirement for class certification is that the plaintiff propose a workable, ascertainable class definition. One sub-set of this issue is the highly improper "fail-safe" class in which absent class members can use an imprecise class definition to affirm their membership when the class wins, but assert they were never members of the class when the defendant wins. A recent federal case sees the court striking class allegations that fall under this impermissible “fail safe” class rubric. See Sauter v. CVS Pharmacy, Inc., No. 2:13-cv-846 (S.D. Ohio, 5/7/14).

The Plaintiff brought a putative class action against the Defendant for alleged violations of the Telephone Consumer Protection Act (TCPA), 47 U.S.C. § 227. Plaintiff alleged that the class received phone calls from CVS, which utilized an automatic telephone dialing system (ATDS) to call, without the Plaintiffs' consent.  The call allegedly provided general information about a prescription refill and the location of his local CVS pharmacy.  (actually sounds kind of useful, but we digress)

Defendant made a Motion to Strike Plaintiff's Class Allegations. Most courts recognize that a motion to strike class action allegations may properly be filed before plaintiffs have filed a motion for class certification. See, e.g., Pilgrim v. Universal Health Card, LLC, 660 F.3d 943, 945 (6th Cir. 2011); Bearden v. Honeywell Intern., Inc., No. 3:09-01035, [2010 BL 63279], 2010 WL 1223936, at *9 (M.D. Tenn. Mar. 24, 2010).  A court may strike class action allegations before a motion for class certification where the complaint itself demonstrates that the requirements for maintaining a class action cannot be met. See Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 160 (1982) ("Sometimes the issues are plain enough from the pleadings"). 

The big issue here was whether the complaint proposed a fail-safe class.   A class definition is impermissible where it is a class that cannot be defined until the case is resolved on its merits. See Randleman v. Fidelity Nat'l Title Ins. Co., 646 F.3d 347, 352 (6th Cir. 2011). A fail-safe class is defined to in essence include only those who are entitled to relief.  Such a class is prohibited because it would allow putative class members to seek a remedy but not be bound by an adverse judgment — either those class members win or, by virtue of losing, they are not in the class and are not bound.

The various subclasses here included those who received calls and did not provide prior express written consent, and those who received calls who had expressly revoked their consent for such calls.  Thus, each of the Plaintiff's proposed classes was defined to include only those individuals who did not expressly consent to the receipt of the defendant's phone calls made with the use of an ATDS. Because the TCPA prohibits calls to cellular telephones using ATDSs unless prior express consent has been given, defining the class to include anyone who received such a call without prior express consent meant that only those potential members who would prevail on this liability issue would be members of the class.  In other words, the proposed classes consisted solely of persons who could establish that defendant violated the TCPA. Thus, if the Plaintiff successfully demonstrated that the Defendant made calls using an ATDS without the class members' prior express consent, then the class members would win, said the court. However, if the Plaintiffs were unsuccessful in meeting their burden of proof, the class did not even not exist and the apparent class members (folks who got a call) would not be bound by the judgment in favor of the Defendant. This was the very definition of a prohibited fail-safe class.

So, motion granted; class allegations struck.