Lack of Expert Doomed Product Liability Claim

Part of Tim Allen's character, Tim the Tool Man, included teaching the fictional Tool Time tv audience how to fix things at home, preferably with larger, louder, power tools.  Often something would go wrong, and there would be a hole, a leak, or a fire instead of a job well done.  That same spirit infuses the recent federal court decision that only an expert with specialized knowledge can explain to jurors how a toilet seat should be attached to a bowl. See Wells v. Wal-Mart Stores, Inc., No. 15-69, 2016 WL 1453912 (E.D. Ky., 4/13/16).

 

Plaintiff claimed that he was injured when a defective toilet seat he purchased at WalMart Stores, Inc. broke. Wells alleges that Wal-Mart designed and manufactured the defective toilet seat, and that it failed to adequately warn him of the risk associated with using it.  Wal-Mart  moved for summary judgment, arguing that there was no genuine issue of material fact in this case because Wells failed to disclose an expert witness by the required deadline.

Kentucky law recognizes the main three theories of product liability: defective design, defective manufacture, and failure to warn. KRS § 411.300-.350. All of these theories of recovery require the plaintiff to prove the presence of a defect in the product. Prather v. Abbott Labs., 960 F. Supp. 2d 700, 706 (W.D. Ky. 2013). And if Wells could not prove an essential element of his case—here the presence of a defect—at trial, defendant would be entitled to summary judgment.

Expert witnesses are "generally necessary" in a Kentucky products liability case to prove the presence of a defect. Honaker v. Innova, Inc., No. CIV.A. 1:04-CV-132-M, 2007 U.S. Dist. LEXIS 30225 , [2007 BL 9643], 2007 WL 1217744 , at *2 (W.D. Ky. Apr. 23, 2007). This is because evidence that induces mere "surmise or speculation" is not sufficient to establish that a defect exists. Midwestern V. W. Corp. v. Ringley[*2] , 503 S.W.2d 745 , 747 (Ky. 1973). Instead, Kentucky law requires a party to produce an expert witness when a subject is of the type which "requires scientific or specialized knowledge and which cannot be determined intelligently from testimony on the basis of ordinary knowledge gained in the ordinary affairs of life . . . ." Com., Dept. of Highways v. Robbins, 421 S.W.2d 820 , 824 (Ky. 1967). 

Thus, the question presented here was whether an ordinary person is familiar enough with the principles of toilet seat engineering to know whether a toilet seat is defective. How should one attach a toilet seat to a toilet bowl? Is a plastic bolt sufficient to do the job? Or is a metal bolt the way to go? How should the bolt be designed? How long? The court decided that an ordinary person does not know the answers to these questions. Instead, specialized, expert knowledge was required to answer them correctly.  As Wells's own theory of the defect illustrated, understanding how and why the plastic bolt was defective requires extensive technical knowledge: a person must understand the components of the toilet seat, how these components were put together, and whether a plastic bolt was sufficiently strong to attach these components to one another. A person must also understand the engineering intricacies of bolts and screws, including how to design and/or manufacture them to maximize their structural integrity, and how deep the Phillips head of such a component should be.

Without expert testimony, Wells would merely be asking the jury to "speculat[e], suppos[e], or surmise" that there was a defect in the toilet seat. Greene v. B.F. Goodrich Avionics Sys., Inc., 409 F.3d 784 , 793 (6th Cir. 2005). Such guesswork is impermissible under Kentucky law.

While Tim always called for "more power," this job required more expertise.

 

Court of Appeals Affirms Summary Judgment in Home Products Case

The 8th Circuit recently affirmed the grant of summary judgment to the defendant in a proposed class action brought by an Iowa homeowner suing over allegedly defective house trim.  See Brown v. La.-Pac. Corp., No. 15-1830, 2016 WL 1425824 (8th Cir. 4/12/16).

In 2003, Brown purchased a lot and hired a contractor, who in turn selected defendant's  TrimBoard as the product to be installed on Brown's new home. The TrimBoard installed on Brown's home came with a ten-year limited warranty, covering delamination, checking, splitting, cracking and chipping of the basic substrate for a period of ten years from the date of installation under normal conditions of use and exposure, providing the trim is properly stored, installed, maintained, and protected as specified in defendant's Application Instructions.

Plaintiff never viewed informational or advertising literature for TrimBoard, never spoke to any representative of defendant about the TrimBoard product, and did not see a copy of the limited warranty prior to the product's installation on his home.

In August 2004, Brown moved into his new home. Sometime in 2010, plaintiff allegedly noticed damage to certain pieces of the installed TrimBoard. Ultimately, defendant offered Brown $197.67 in compensation for the damaged TrimBoard, which Brown rejected. In January 2011, Brown hired a local contractor to replace various pieces of TrimBoard on his house, at a total cost of $1,700.00, inclusive of labor and materials. 

Brown subsequently filed this putative class action, alleging claims for negligence, fraudulent misrepresentation, breach of warranty, and unfair or deceptive practices, and requesting declaratory relief and money damages. After some rounds of motion practice, the claims were dismissed. On appeal, Brown argued that the district court erred in granting summary judgment  on his claims for fraudulent misrepresentation, unfair or deceptive practices, and breach of warranty.

The court of appeals began with the fraudulent misrepresentation claim. For Brown to prevail on his fraudulent-misrepresentation claim under Iowa law, he needed to prove the following elements:

(1) defendant made a representation to the plaintiff, (2) the representation was false, (3) the representation was material, (4) the defendant knew the representation was false, (5) the defendant intended to deceive the plaintiff, (6) the plaintiff acted in reliance on the truth of the representation and was justified in relying on the representation, (7) the representation was a proximate cause of plaintiff's damages, and (8) the amount of damages.  Gibson v. ITT Hartford Ins. Co., 621 N.W.2d 388, 400 (Iowa 2001).

The court focused on justifiable reliance. Brown contended that LP's alleged misrepresentations were passed through a third party—his contractor—and then communicated to Brown and relied upon by him. Iowa law provides that "persons who fraudulently misrepresent the truth can be held liable to third parties if they have a 'reason to expect' their misrepresentation will be communicated to third parties." Clark v. McDaniel, 546 N.W.2d 590 , 593 (Iowa 1996) (quoting Restatement (Second) [*4] of Torts § 533 (1977)); see also United States v. Hawley, 619 F.3d 886 , 897 (8th Cir. 2010) ("The [Iowa Supreme] Court [in Clark] expressly adopted section 533 of the Restatement (Second) of Torts (1977) . . . .").  An objective standard applies to whether one has "reason to expect" reliance by another: "'The maker of the misrepresentation must have information that would lead a reasonable man to conclude that there is an especial likelihood that it will reach those persons and will influence their conduct.'" Id. (quoting Restatement (Second) of Torts § 533 cmt. d (1977)). "[T]he fact that the maker has an advantage to gain, even though it is in some other transaction, by furnishing the misrepresentation for repetition to the third person is of great significance in determining whether he has reason to expect that the original recipient should so repeat it." Restatement (Second) of Torts § 533 cmt. e (1977) (emphasis added).

Here, however, the court found that Brown presented insufficient evidence that his contractor ever received a relevant communication from LP. The contractor failed to identify "which advertisements he viewed, when he viewed them, or which statements from the advertisement he read and relied upon in advising [Brown] of the suitability of the product."  In fact, it appeared that the contractor was provided with copies of ads at the time of his sworn affidavit and he could only affirm that the advertisements were consistent with materials he recalled possibly viewing some nine to ten years ago. So the record left open the distinct possibility that the contractor had heard of TrimBoard from another source.

The court turned next to the unfair and deceptive trade practices act claim. The Iowa Private Right Act provides that any "consumer who suffers an ascertainable loss of money or property as the result of a prohibited practice or act in violation of this chapter may bring an action at law to recover actual damages." Iowa Code Ann. § 714H.5(1)(including material misrepresentations). Brown argued that the materiality of LP's alleged misrepresentations created an inference of causation that satisfied factual causation between LP's alleged unfair or deceptive trade practice and Brown's damages. But the act requires that plaintiff "suffer[ed] an ascertainable loss of money or property as the result of a prohibited practice." Iowa Code Ann. § 714H.5(1). And Brown failed to establish such causation as a matter of law. To show causation, Brown needed to prove that, but-for LP's purported misrepresentation, he would not have elected to purchase TrimBoard and install it on his home. And to satisfy this requirement, he needed to show that his contractor received a material representation that LP made. As noted, Brown failed to satisfy this showing. Because Brown produced no evidence that the contractor was the recipient of any representation made by LP, Brown "failed to generate a genuine issue of material fact with respect to causation."

Finally, Brown argued that the limited warranty failed of its essential purpose by inadequately compensating him for the costs to repair the direct and consequential damages to his home. The Iowa Supreme Court has elaborated on the meaning of "essential purpose," stating:  A remedy's essential purpose "is to give to a buyer what the seller promised him." Hartzell v. Justus Co., Inc., 693 F.2d 770 , 774 (8th Cir. 1982). The focus of analysis "is not whether the remedy compensates for all damage that occurred, but that the buyer is provided with the product as seller promised." Brunsman v. DeKalb Swine Breeders, Inc., 952 F. Supp. 628 , 635 (N.D. Iowa 1996); Nelson v. DeKalb Swine Breeders, Inc., 952 F. Supp. 622 , 628 (N.D. Iowa 1996).

Where repair or replacement can give the buyer what is bargained for, a limitation of remedies does not fail of its essential purpose. Badgett Constr. & Dev. Co. v. Kan-Build, Inc., 102 F. Supp. 2d 1098 , 1105 (S.D. Iowa 2000). In other circumstances, however, repair or replacement is not sufficient, and then a court may find the remedy failed of its essential purpose. See Select Pork, Inc. v. Babcock Swine, Inc., 640 F.2d 147 , 150 (8th Cir. 1981). "The issue of whether a limited remedy fails of its essential purpose is separate and distinct from whether a limited remedy is unconscionable." Baptist Mem'l Hosp. [*9] v. Argo Constr. Corp., 308 S.W.3d 337 , 345 (Tenn. Ct. App. 2009). Here, Brown essentially argued that the warranty fails of its essential purpose because the defect was latent and could not have been discovered. But numerous jurisdictions have held that a latent defect does not cause an exclusive contractual remedy to fail of its essential purpose. See Arkwright-Boston Mfrs. Mut. Ins. Co. v. Westinghouse Elec. Corp., 844 F.2d 1174 , 1179-80 (5th Cir. 1988); Wis. Power & Light Co. v. Westinghouse Elec. Corp., 830 F.2d 1405 , 1412-13 (7th Cir. 1987); Boston Helicopter Charter, Inc. v. Agusta Aviation Corp., 767 F. Supp. 363 , 374 (D. Mass. 1991); Hart Eng'g Co. v. FMC Corp., 593 F. Supp. 1471 , 1479 (D.R.I. 1984); Regents of the Univ. of Colo. ex rel . Univ. of Colo. at Boulder v. Harbert Constr. Co., 51 P.3d 1037 , 1041 (Colo. Ct. App. 2001 ); Clark v. Int'l Harvester Co., 99 Idaho 326 , 581 P.2d 784 , 802-03 (Idaho 1978)). The court of appeals concluded that the Iowa Supreme Court would follow this majority rule.  The court also noted that there is no evidence—and Brown made no allegation—that the purported defects in the TrimBoard were not remedial and could not be repaired or replaced.  So, the mere fact that the Limited Warranty does not compensate a buyer for the entirety of his damages does not mean it has failed of its essential purpose.

Court of Appeals Rejects Washer Class Action

The 11th Circuit recently ruled that class certification had been improperly granted to owners of front-loading washing machines that allegedly were susceptible to mold build-up. See Brown v. Electrolux Home Prods. Inc., No. 15-11455, 2016 WL 1085517 (11th Cir. 3/21/16).

Across the country, consumers have filed class actions against the manufacturers of front-loading washing machines. Front-loaders are considered an improvement over traditional top-loading machines because they use less water and energy. But the initial models allegedly had a problem: the rubber seal on the front door of the machine retains water, which allows mildew to grow.  In this case, consumers from California and Texas filed a class action against Electrolux Home Products, the manufacturer of Frigidaire front-loading washing machines. After the district court certified two statewide classes, see Terrill v. Electrolux Home Prods., Inc., 295 F.R.D. 671 (S.D. Ga. 2013), Electrolux filed this interlocutory appeal. The 11th Circuit vacated the certification as the district court abused its discretion in determining the predominance requirement of Federal Rule of Civil Procedure 23(b)(3).

The district court certified two statewide classes: California Class: All persons and entities who purchased, other than for resale, after March 5, 2004, and while in the State of California, a Frigidaire front-loading washing machine with a convoluted bellow. And Texas Class: All persons and entities who purchased, other than for resale, after March 5, 2004, and while in the State of Texas, a Frigidaire front-loading washing machine with a convoluted bellow.  

The district court recognized that it must conduct a "rigorous analysis" to determine whether a class action satisfies Rule 23 . See Vega v. T-Mobile USA, Inc., 564 F.3d 1256 , 1266 (11th Cir. 2009). And it correctly explained that "[a] party seeking class certification must affirmatively demonstrate his compliance with the Rule."  Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011).  The district court concluded that the questions of law or fact common to class members predominate over any questions affecting only individual members, Fed. R. Civ. P. 23(b)(3). With respect to the consumer claims, the district court somehow concluded that every element was susceptible to class-wide proof. For example, the district court concluded that each class member presumably relied on the fact that defendant provided Washing Machines suited for cleaning and freshening clothing.  The district court then explained that the class members could show their reliance on defendant's alleged failure to disclose the Washing Machines' alleged design defect and the inevitable consequences of that defect through the same class-wide proof that they purchased machines to clean and freshen their clothes rather than to soil and odorize them.  As for the warranty claims, the district court rejected Electrolux's argument that the questions whether the class members gave Electrolux pre-suit notice of the defect, whether the class members gave Electrolux an opportunity to cure the defect, and whether the defect manifested during the warranty period would require individual proof. Instead, it concluded that the questions whether pre-suit notice, an opportunity to cure, and manifestation of the defect are required under California and Texas law are "common questions" that weigh in favor of class certification.

The court of appeals noted first that the district court misstated the law when it said that it "resolves doubts related to class certification in favor of certifying the class."  Indeed, the party seeking class certification has the burden of proof. Valley Drug Co. v. Geneva Pharms., Inc., 350 F.3d 1181 , 1187 (11th Cir. 2003). And the entire point of a burden of proof is that, if doubts remain about whether the standard is satisfied, "the party with the burden of proof loses." Simmons v. Blodgett, 110 F.3d 39 , 42 (9th Cir. 1997). All else being equal, the presumption is against class certification because class actions are an exception to our constitutional tradition of individual litigation. See Comcast Corp. v. Behrend, 133 S. Ct. 1426 , 1432 (2013); Hansberry v. Lee, 311 U.S. 32 , 40-41 (1940). A district court that has doubts about whether "the requirements of Rule 23 have been met should refuse certification until they have been met." Fed. R. Civ. P. 23 advisory committee's note to 2003 amendment; accord In re Hydrogen Peroxide Antitrust Litig., 552 F.3d 305 , 321 (3d Cir. 2008); Wallace B. Roderick Revocable Living Trust v. XTO Energy, Inc., 725 F.3d 1213, 1218 (10th Cir. 2013).

The district court also misstated the law when it said that it "accepts the allegations in the complaint as true." and "draws all inferences and presents all evidence in the light most favorable to Plaintiffs." The party seeking class certification has a burden of proof, not a burden of pleading. See Halliburton Co. v. Erica P. John Fund, Inc., 134 S. Ct. 2398 , 2412 (2014). He "'must affirmatively demonstrate his compliance' with Rule 23 " by proving that the requirements are "in fact" satisfied. Comcast, 133 S. Ct. at 1432 (quoting Wal-Mart, 131 S. Ct. at 2551 ). And the district court must conduct a "rigorous analysis" to determine whether the movant carried his burden, which "will frequently entail 'overlap with the merits of the plaintiff's underlying claim.'" Id . (quoting Wal-Mart, 131 S. Ct. at 2551 ). Of course, the district court can consider the merits to the extent "they are relevant to determining whether the Rule 23 prerequisites for class certification are satisfied." Amgen Inc. v. Conn. Ret. Plans & Trust Funds, 133 S. Ct. 1184 , 1195  (2013). And if a question of fact or law is relevant to that determination, then the district court has a duty to actually decide it and not accept it as true or construe it in anyone's favor. See Comcast, 133 S. Ct. at 1432-33 ; Szabo v. Bridgeport Machs., Inc., 249 F.3d 672 , 675-76 (7th Cir. 2001); Gariety v. Grant Thornton, LLP, 368 F.3d 356, 365-66 (4th Cir. 2004). The district court erred when it stated the opposite.
 

Ultimately, the district court abused its discretion when it decided that the questions of law or fact common to class members predominate over any questions affecting only individual members, Fed. R. Civ. P. 23(b)(3). To determine whether the requirement of predominance is satisfied, a district court must first identify the parties' claims and defenses and their elements. The district court should then classify these issues as common questions or individual questions by predicting how the parties will prove them at trial. Common questions are ones where "the same evidence will suffice for each member," and individual questions are ones where the evidence will "vary] from member to member." Blades v. Monsanto Co., 400 F.3d 562 , 566 (8th Cir. 2005).  After identifying the common and individual questions, the district court should determine whether the common questions predominate over the individual ones. Many courts  have adopted the following rule of thumb: if common issues truly predominate over individualized issues in a lawsuit, then the addition or subtraction of any of the plaintiffs to or from the class should not have a substantial effect on the substance or quantity of evidence offered. If, on the other hand, the addition of more plaintiffs leaves the quantum of evidence introduced by the plaintiffs as a whole undisturbed, then common issues are likely to predominate.

But predominance requires a qualitative assessment too; it is not bean counting, and the relative importance of the common versus individual questions also matters. Predominance can only be determined after considering what value the resolution of the class-wide issue will have in each class member's underlying cause of action.  District courts should assess predominance with its overarching purpose in mind—namely, ensuring that "a class action would achieve economies of time, effort, and expense, and promote . . . uniformity of decision as to persons similarly situated, without sacrificing procedural fairness or bringing about other undesirable results." Amchem Prods., Inc. v. Windsor, 521 U.S. 591 , 615 (1997).

Electrolux argued that the district court misapplied California and Texas law when it concluded that the plaintiffs could prove causation on a class-wide basis. Electrolux argued that causation requires individual proof. Under California law, one who was not exposed to the alleged misrepresentations and therefore could not possibly have lost money or property as a result of the unfair competition is not entitled to restitution. Pfizer Inc. v. Superior Court, 182 Cal. App. 4th 622 , 105 Cal. Rptr. 3d 795 , 803 (Cal. Ct. App. 2010); accord Am. Honda Motor Co. v. Superior Court, 199 Cal. App. 4th 1367 , 132 Cal. Rptr. 3d 91 , 101 (Cal. Ct. App. 2011); Kaldenbach v. Mut. of Omaha Life Ins. Co., 178 Cal. App. 4th 830 , 100 Cal. Rptr. 3d 637 , 652 (Cal. Ct. App. 2009). The district court rejected Electrolux's argument because it concluded that the class members were exposed to uniform business practices.
The district court misunderstood the plaintiffs' complaint. Brown alleged that Electrolux engaged in unfair competition by omitting essential information in its advertisements. The only advertisements that Brown identified were on Frigidaire's website, but he made no effort to prove that any member of the California Class visited the website before purchasing a washing machine. Brown in fact admitted that he never saw any advertisements from Frigidaire. Because the class members were not exposed to a uniform misrepresentation, the claim under the California Unfair Competition Law is unsuitable for class treatment. See Simon v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 482 F.2d 880 , 883 (5th Cir. 1973); Mazza v. Am. Honda Motor Co., 666 F.3d 581 , 595 (9th Cir. 2012).

The Texas Deceptive Trade Practices—Consumer Protection Act prohibits "[f]alse, misleading, or deceptive acts or practices in the conduct of any trade or commerce." Tex. Bus. & Com. Code Ann. § 17.46(a) . To recover under the Act, a plaintiff must prove that he "relied on" the defendant's conduct to his detriment. Id.§ 17.50(a)(1) (B). This reliance element requires that the plaintiff "actually did rely" on the defendant's statement or omission, not that the defendant "wanted purchasers to rely on its advertisements and other representations." Henry Schein, Inc. v. Stromboe, 102 S.W.3d 675 , 694 (Tex. 2002).  It appears that no Texas court has ever certified a class action under the Texas Deceptive Trade Practices—Consumer Protection Act, see Tex. S. Rentals, Inc. v. Gomez, 267 S.W.3d 228 , 237 (Tex. App. 2008). That a plaintiff could prove reliance on a class-wide basis is "a near-impossibility," according to the Texas Court of Appeals. Id . (quoting Fid. & Guar. Life Ins. Co. v. Pina, 165 S.W.3d 416 , 423 (Tex. App. 2005)).  The district court certified a class anyway, and it erred.  The court cannot presume that the class members relied on any uniform misrepresentation. The court could have no inkling whether the class members saw any advertisements from Frigidaire, much less uniform advertisements, before they purchased their washing machines. This means that their claim under the Texas Deceptive Trade Practices-Consumer Protection Act cannot proceed as a class action. See Wal-Mart, 131 S. Ct. at 2552 n.6; Sandwich Chef of Tex, Inc. v. Reliance Nat. Indem. Ins. Co., 319 F.3d 205, 219 (5th Cir. 2003); In re Clorox Consumer Litig., 301 F.R.D. 436, 446 (N.D. Cal. 2014).

Electrolux next argued that the district court prematurely certified the warranty claims because it did not first resolve several questions of state law that were relevant to predominance. That is, the district court could not determine predominance without first deciding whether California and Texas law require pre-suit notice, an opportunity to cure, and manifestation of the defect. The court of appeals agreed. A district court must decide all questions of fact and law that bear on the propriety of class certification. For example, a question of state law bears on predominance if, answered one way, an element or defense will require individual proof but, answered another way, the element or defense can be proved on a class-wide basis. Because each requirement of Rule 23 must be met, a district court errs as a matter of law when it fails to resolve a genuine legal or factual dispute relevant to determining the requirements.  

The questions of state law that Electrolux asked the district court to resolve—whether the plaintiffs must prove pre-suit notice, an opportunity to cure, and manifestation of the defect—bear on predominance. If California and Texas law do not excuse pre-suit notice and an opportunity to cure when the defendant had prior knowledge of the design defect, as the district court speculated, then each class member will need to prove that he gave Electrolux pre-suit notice and an opportunity to cure. This showing could require individual proof.  And if California and Texas law require the defect to manifest, then each class member will need to prove that his washing machine actually grew mildew during the warranty period. This showing could also require individual proof. See Gen. Motors Corp. v. Garza, 179 S.W.3d 76 , 82-84 (Tex. App. 2005). Because the answers to these preliminary questions of California and Texas law could affect whether Rule 23(b)(3) is satisfied, the district court had a duty to resolve them.What matters to class certification is not the raising of common 'questions'—even in droves—but, rather the capacity of a class-wide proceeding to generate common answers apt to drive the resolution of the litigation. Wal-Mart, 131 S. Ct. at 2551.  Answering the questions whether California and Texas law require pre-suit notice, an opportunity to cure, and manifestation of the defect would not resolve issues that are "central to the validity" of the plaintiffs' warranty claims. Because the district court punted these questions instead of answering them, it abused its discretion.

Finally, on damages, even if individual issues regarding damages do not always defeat predominance in and of themselves, individual damages defeat predominance if computing them will be so complex, fact-specific, and difficult that the burden on the court system would be simply intolerable. Klay, 382 F.3d at 1260.  Furthermore, individual damages defeat predominance when they are accompanied by "significant individualized questions going to liability." Id. (citing Sikes v. Teleline, Inc., 281 F.3d 1350 , 1366 (11th Cir. 2002). The court of appeals left it to the district court on remand to decide whether the latter rule was satisfied here.
 

Federal Court Rejects Tea Class Action

A federal court in California has rejected a proposed class action in a case challenging claims on tea labels. See Alex Khasin et al. v. R.C. Bigelow Inc., No. 4:12-cv-02204 (N.D. Calif. 3/29/16),

Plaintiff Khasin sought certification of a class of all persons in California who purchased for household use one or more of several green tea products manufactured and sold by Bigelow since May 2, 2008 (a companion case covered black tea products).  

Plaintiff alleged that the front of the Green Tea Products’ packaging bore the statement, “Healthy Antioxidants,” and the back panel included the statement, “Mother Nature gave us a wonderful gift when she packed powerful antioxidants into green tea." He claimed these food labeling practices were unlawful because they were deceptive and misleading to consumers. Khasin allegedly purchased three of the Green Tea Products: Green Tea, Green Tea with Lemon, and Green Tea Naturally Decaffeinated. He allegedly read and “reasonably relied” on “the antioxidant, nutrient content and health labeling claims including the ‘healthy antioxidants,’ and ‘packed with powerful antioxidants’ claims and based and justified the decision to purchase [Bigelow’s] products in substantial part on [Bigelow’s] package labeling including the antioxidant, nutrient content and health labeling claims.” Had they not been misbranded, he would not have bought the products, or paid a “premium” for them.

Plaintiff sought class certification under Rule 23 (b)(3). At class certification, plaintiff must present a likely method for determining class damages, though it is not necessary to show that his method will work with certainty at this time. Chavez v. Blue Sky Nat. Beverage Co., 268 F.R.D. 365, 379 (N.D. Cal. 2010).  Khasin offerred three damages models: (i) a restitution calculation; (ii) statutory damages; and (iii) a nominal alternative. None, said the court, had any merit.

Khasin’s restitution calculation essentially amounted to damages totaling the full retail price of the tea. Plaintiff purportedly based his calculation on a formulation that the proper measure of restitution in a mislabeling case is the amount necessary to compensate the purchaser for the difference between a product as labeled and the product as received, not the full purchase price or all profits. See Brazil v. Dole Packaged Foods, LLC, No. 12-cv-01831-LHK, 2014 WL 5794873, at *5 (N.D. Cal. Nov. 6, 2014) (finding that “[t]he proper measure of restitution in a mislabeling case is the amount necessary to compensate the purchaser for the difference between a product as labeled and the product as received”); Ivie v. Kraft Foods Glob., Inc., No. 12-cv-02554-RMW, 2015 WL 183910, at *2 (N.D. Cal. Jan. 14, 2015) (concluding that “restitutionary damages [in a mislabeling case should] be the price premium attributable to the offending labels, and no more”).  Khasin contended that the “product as labeled” is the retail purchase price. And that because the product is legally worthless, the “product as received” has a value of $0.  

But this “full refund” method of calculating restitution has been repeatedly rejected by the courts. See, e.g., See Jones v. ConAgra Foods, Inc., No. 12-cv-01633-CRB, 2014 WL 2702726, at *23 (N.D. Cal. June 13, 2014) (rejecting the “legally worthless” damages model); Werdebaugh v. Blue Diamond Growers, No. 12-cv-2724-LHK, 2014 WL 2191901, at *22 (N.D. Cal. May 23, 2014) (“[F]ull refund model is deficient because it is based on the assumption that consumers receive no benefit whatsoever from purchasing the accused products.”); Lanovaz v. Twinings N. Am., Inc., No. 12-cv-02646-RMW, 2014 WL 1652338, at *6 (N.D. Cal. Apr. 24, 2014) (rejecting the “full refund” model as an appropriate measure of restitution). Attributing a value of $0 to the Green Tea Products assumes that every consumer had gained no benefit in the form of enjoyment, nutrition, caffeine intake, or hydration from consuming the teas. This is implausible.  In order to comply with Rule 23(b)(3) requirements, the damages calculation must contemplate “the production of evidence that attaches a dollar value to the consumer impact or advantage caused by the unlawful business practices.” Lanovaz, 2014 WL 1652338, at *6 (internal quotation marks and citations omitted). Accordingly, Khasin needed to present a damages model that can likely determine the price premium attributable only to Bigelow’s use of the allegedly misleading claim. The proposed methodology did not do so. 


Alternatively, plaintiff sought statutory damages under the California Legal Remedies Act (“CLRA”), Cal. Civ. Code § 1750, et seq., and/or nominal damages. Mot. at 18. Under the CLRA, any consumer who suffers damage may bring an action to recover, among other things, “[a]ctual damages, but in no case shall the total award of damages in a class action be less than one thousand dollars ($1,000).” Cal. Civ. Code § 1780(a)(1). That language sets the minimum for a total award of damages in a class action at $1,000 but does not provide for an automatic award. A plaintiff must still prove “actual damages” in order to be entitled to the $1,000 minimum award. Therefore relief under the CLRA is specifically limited to those who suffer damage, making causation a necessary element of proof. Here, Khasin failed to provide a viable theory for calculating damages under the CLRA that would be tied to his theory of liability. Plaintiff also sought nominal damages, but could not cite a single case demonstrating that nominal damages are available under his causes of action.

Alternatively, plaintiff sought Rule 23 (b)(2) certification to enjoin the defendant from continuing to mislabel the subject products. However, plaintiff had not demonstrated standing to seek injunctive relief. First, Khasin did not plausibly allege an intent to purchase Bigelow products in the future. In a class action, “[u]nless the named plaintiffs are themselves entitled to seek injunctive relief, they may not represent a class seeking that relief.” Hodgers-Durgin v. De La Vina, 199 F.3d 1037, 1045 (9th Cir. 1999). Khasin testified that he has not purchased any of the Green Tea Products since the commencement of this lawsuit.  A plaintiff may not manufacture standing for injunctive relief simply by expressing an intent to purchase the challenged product in the future. See Rahman, 2014 WL 5282106, at *6. Other courts considering these “conditional” declarations have found them unavailing. See In re ConAgra Foods, Inc., 90 F. Supp. 3d 919, 980 (C.D. Cal. 2015) (noting that “[ot]her courts have questioned whether this type of statement demonstrates there is a real and immediate threat of future injury.”). Pursuant to Article III’s standing requirements, a plaintiff must present a “sufficient likelihood” that he will be injured. City of Los Angeles v. Lyons, 461 U.S. 95, 111 (1983). The alleged injury cannot be “conjectural” or “hypothetical.” Id. at 102.

Second, said the court, standing for injunctive relief in this case requires more than simply declaring an intent to purchase the Green Tea Products in the future. Even if Khasin were to satisfactorily demonstrate a future intent to purchase the products, he had not established a likelihood of suffering the same harm he alleged. See Morgan v. Wallaby Yogurt Co., Inc., No. 13-cv-00296-WHO, 2014 WL 1017879, at *6 (N.D. Cal. Mar. 13, 2014) (“Plaintiffs must be must be threatened by the same alleged harm in order to seek injunctive relief, even if on behalf of a class of consumers.”). Plaintiffs who were previously allegedly misled by deceptive food labels and now claim to be better informed, lack standing for injunctive relief because there is no danger that they will be misled in the future by that conduct. See Ham v. Hain Celestial Grp., Inc., No. 14-cv-02044-WHO, 2014 WL 4965959, at *6 (N.D. Cal. Oct. 3, 2014) (“Because [plaintiff] is now aware that [defendant’s] products [are mislabeled], she cannot allege that she would be fraudulently induced to purchase the products in the future.”).
This, concluded the court, plaintiff lacked standing to pursue injunctive relief and failed to satisfy the requirements of Rule 23(b)(2).