Belch! Ocean Spray Price Premium Damages Model Passes Comcast Scrutiny
The Southern District of California certified a food labeling class against Ocean Spray Cranberries, Inc. based in part upon a price premium damages model developed by an aptly named Dr. Belch. The plaintiff, a self-proclaimed “health coach” and “label guru,” alleged Ocean Spray misrepresented that many of its juice products contained no artificial flavors when in fact they contained malic and fumaric acids, synthetic chemicals that simulate the advertised flavors. She asserted Ocean Spray’s juice labels violated various provisions of the California Consumer Legal Remedies Act as well as other causes of action. The plaintiff sought to certify a Rule 23(b)(3) class of California consumers who purchased any of 12 specified Ocean Spray juices.
The Court dispensed with Ocean Spray’s arguments as to Rule 23(a) requirements and devoted the majority of its attention to the predominance requirement of Rule 23(b)(3). This inquiry asks whether the common, aggregation-enabling issues in the case are more prevalent or important than the class-defeating individual issues.
The plaintiff argued that liability under her statutory consumer fraud claims satisfied predominance because the claims centered on an objective standard that did not require proof of individual reliance: whether Ocean Spray’s representations that its juices did not contain artificial flavors were likely to deceive a reasonable customer. Ocean Spray’s only response on the liability issue was that the plaintiff did not prove the artificial ingredients in its juices were actually flavors. The court agreed with the plaintiff, finding Ocean Spray’s argument was an improper attempt to tread into the merits of the dispute at the class certification stage.
Next, the court conducted a rigorous analysis — as required by Comcast — as to whether Plaintiff’s damages model for restitution to the class was consistent with her liability theory that Ocean Spray’s misrepresentations caused consumers to pay more than they otherwise would have. Such price premium damages models must link the consumer price differential to the defendant’s allegedly deceptive labeling to be acceptable, as we have blogged about.
The plaintiff proffered two damages models. The first, prepared by an expert named Dr. Goedde, was based solely on a survey of California juice prices unrelated to Ocean Spray products. Dr. Goedde found customers paid a price premium of 25 percent for all-natural juice products. The court rejected this model because it was untethered to the plaintiff’s legal theories or Ocean Spray’s alleged misrepresentations and thus failed to satisfy Comcast.
Enter Dr. Belch, who proffered consumer survey results based on the contingent valuation methodology. The results purported to show customers preferred Ocean Spray’s juices without artificial flavoring and that they were willing to pay a premium of 61 cents to obtain such juices. The plaintiff then provided Dr. Belch’s survey to Dr. Goedde, who applied Dr. Belch’s findings to Ocean Spray’s actual unit sales during the class period to arrive at a restitution figure. The court found that this Belch-Goedde model satisfied the predominance requirement and Comcast because it accounted for both the consumer class demand and Ocean Spray supply-side factors in the market.
On the strength of the Belch-Goedde Model, the court certified a Rule 23(b)(3) class under Plaintiff’s statutory consumer fraud claims.
Hilsley v. Ocean Spray Cranberries, Inc., 2018 WL 6245894 (S.D. Cal. Nov. 29, 2018)