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).