September 19, 2014

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September 19, 2014

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A (POM) Wonderful Result For Consumer Class Action Defendants

On March 25, 2014, the court in In re: POM Wonderful LLC Marketing and Sales Practices Litigation, Case No. ML 10-02199 DDP (C.D. Cal.), granted a motion by defendant POM Wonderful LLC (“POM”) to decertify a previously certified class of consumers who purchased certain POM juice products.  The court granted POM’s motion because plaintiff failed to present a damages model that satisfied Comcast Corp. v. Behrend, 133 S. Ct. 1426 (2013), and because the class was not ascertainable.

Plaintiff alleged claims under California’s Unfair Competition Law (“UCL”), False Advertising Law (“FAL”), and Consumers Legal Remedies Act (“CLRA”), alleging that defendant POM Wonderful LLC (“POM”) falsely and misleadingly advertised that its juices provided various health benefits.

Applying Comcast, the district court concluded that plaintiff had not demonstrated that either of his two damages models measured classwide damages—i.e., neither model sufficiently linked the measure of damages to plaintiff’s theories of liability.

Plaintiff’s first model called for full refunds based on the argument that class members would not have purchased the juice but/for the alleged misrepresentations.  The district court rejected this model almost out of hand, noting that under the UCL, FAL, and CLRA, restitution or damages awards must account for the benefits received by the complaining parties.  Since the juice provided some benefits to the class members (calories, hydration, vitamins, minerals, etc.) the full refund model was not appropriately tied to the theories of liability and could not be used to calculate damages on a classwide basis.

The plaintiff’s second model calculated the “price-premium,” comparing the price of POM’s juice with an average price of refrigerated orange, apple, grape, and grapefruit juices.  In rejecting this model, the district court recognized that the juice market was not an “efficient” market such that a false representation can be tied directly to a change in price.  The district court concluded that “Absent such traceable market-wide influence, and, where, as here, consumers buy a product for myriad reasons, damages resulting from the alleged misrepresentations will not possibly be uniform or amenable to class proof.”  In other words, it is impossible to determine on a classwide basis how much of the supposed price premium to attribute to the alleged misrepresentations.  Furthermore, even assuming such a theory was tenable, the court noted that plaintiff’s lack of survey evidence of “what consumers’ behavior might otherwise have been” meant that the plaintiff failed to show that, absent the representations, all consumers would have purchased other beverages at a lower price.  This was particularly relevant given that consumers may have purchased the product for any number of reasons that were unrelated to the alleged misrepresentations.

The court also found that the class was not ascertainable.  Because the product did not cost very much, the court reasoned that few, if any, consumers saved their receipts, particularly since the class period ended years ago.  Additionally, since “every adult in the United States is a potential class member,” the court had grave concerns about how to define an ascertainable class and how it would be managed.  Taking these facts together, the court found that the case “falls well toward the unascertainable end of the spectrum,” providing further justification for decertifying the class.

In re POM Wonderful provides a powerful example of how courts may reconsider class certification, particularly after discovery closes, when plaintiffs fail to present a valid damages theory appropriately tied to plaintiff’s theory of liability.  In re POM Wonderful provides a valuable roadmap for defendants to invoke Comcast and, presumably, for plaintiffs to try and work around it.  As a practical matter, In re POM Wonderful also serves as a reminder that class treatment can remain a live issue even after a court grants certification.

Copyright © 2014, Sheppard Mullin Richter & Hampton LLP.

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