September 28, 2020

Volume X, Number 272

September 28, 2020

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Ninth Circuit’s Ingredients List Rule Keeps Nestlé in Hot Water with Denial of Nestlé’s Statute of Limitations-Based Summary Judgment Motion

The Northern District of California recently applied the Ninth Circuit’s ingredients list rule in a putative class action decision. The Court refused to grant Nestlé USA Inc.’s summary judgment motion based on the statute of limitations in a suit involving allegations that Nestlé misleads consumers about the trans-fat content of their Coffee Mate creamer products. The Court held that a triable issue of fact remained because it was not clear when the consumer first learned about the alleged deception.

In Beasley v. Lucky Stores, Inc., et al., Beasley, a California citizen, alleged that from January 2010 to December 2014, Nestlé’s Coffee Mate products contained trans-fat in the form of partially hydrogenated oils (PHOs), although the products’ labels featured statements about containing “0g Trans Fat.” Beasley alleged this was part of a marketing scheme by Nestlé to deceive consumers. He asserted claims against defendants Nestlé and various grocery retailers under California’s Unfair Competition Law, False Advertising Law and Consumer Legal Remedies Act, and a claim for breach of express warranty.

The Merits of Defendants’ Motion for Summary Judgment

The defendants moved for summary judgment just 10 days after Beasley’s deposition. They argued that Beasley’s claims were barred by the applicable four-year statute of limitations because the creamers’ ingredient lists set forth “partially hydrogenated” oil as an ingredient at all relevant times, but the plaintiff did not file suit until October 2018.

Beasley’s response raised California’s discovery rule, arguing that he did not learn that the products contained trans fat until a 2017 discussion with his counsel. In support of their motion, the defendants cited Beasley’s deposition, at which he testified that he had known since the “late 1990s” that PHO was “the ingredient that is the source of artificial trans fat,” that he had been aware since at least 2010 that packaged foods contained ingredient lists, and that he knew that consumers seeking to avoid trans fat could look at a product’s ingredient list to see if it contained PHO. In light of these facts, defendants claimed Beasley “was at least on inquiry notice, if not actual notice, during the class period of the factual basis for his claims,” and therefore they were barred by the statute of limitations.

Beasley then offered an errata sheet and a declaration opposing the motion, claiming that he “misspoke” at his deposition.

The Hon. Maxine M. Chesney held that the Ninth Circuit’s ingredients list rule gave rise to a triable issue of fact. The Ninth Circuit has held that “reasonable consumers expect that the ingredient list” on packaged food items such as the Coffee Mate products “contain more detailed information about the product that confirms other representations on the packaging.”

It was undisputed here that the phrase “0g Trans Fat” appeared on the Coffee Mate packaging, and that each products’ Nutritional Facts panel above the ingredients list contained the phrase “Trans Fat/Grasa Trans 0g.” The court found that a plaintiff “may possess information to alter the above-noted general expectation and, as a matter of law, put such plaintiff on inquiry notice.” But the court held that “even given [Beasley’s] knowledge about the relationship between PHO and trans fat,” a triable issue of fact existed as to whether Beasley should have investigated the ingredients list. Accordingly, the court denied the defendants’ motion for summary judgment.

The Plaintiff’s Errata Sheet

While post-deposition errata sheets correcting typos and the like are ordinarily fairly mundane, this case reminds that substantive changes have the capacity to create challenging issues.

At his deposition, Beasley testified that he had known since the 1990s that PHOs were a source of trans fat. However, in response to the motion for summary judgment, Beasley filed the deposition errata and declaration claiming he misspoke and seeking to “correct” his testimony. The errata stated, “I’ve known trans-fat was bad since I’d guess in the late 1990s, and I learned that trans-fat came from PHO in 2017.” The declaration stated he “did not know that partially hydrogenated oil was the source of artificial trans-fat in food until 2017, or otherwise understand the connection between partially hydrogenated oil and trans-fat.”

Settled law requires a court to disregard statements in a declaration that contradict prior sworn statements, including deposition testimony, but courts have struggled to distinguish prohibited “contradictions” from permissible “explanations.”

The Court acknowledged that Beasley’s about-face to defeat summary judgment was “suspect” in content and timing, but avoided grappling with its impact by holding that summary judgment was inappropriate “even if the challenged changes” to testimony were “disregarded.” Though the “corrections” ultimately did not come into play, this decision serves as a reminder that attempts to revise deposition testimony in response to a dispositive motion probably will hold little persuasive weight with the court.

Conclusion

This summary judgment decision came after a series of wins by Nestlé. In September 2019, Judge Chesney initially dismissed the suit because the first amended complaint was too vague as to when Beasley bought the product, but ultimately granted Beasley leave to amend the deficiencies in his labeling counts. Nestlé also won a motion to strike more than 40 paragraphs of the complaint related to alleged long-term patterns of deceptive behavior, which the Court agreed were immaterial, impertinent and scandalous.

The second amended complaint survived dismissal in January. The plaintiff narrowed down his class period and added more detail about his own purchases. Now the claims have survived a statute of limitations challenge, but the class representative’s credibility has been dented in the process. Further challenges – including class certification – seem likely.

© 2020 Faegre Drinker Biddle & Reath LLP. All Rights Reserved.National Law Review, Volume X, Number 182

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About this Author

Mary E. Hershewe Product Liability Litigation Attorney Faegre Drinker Biddle & Reath Denver, CO
Associate

Mary Hershewe solves clients’ product liability litigation challenges.

Prior to joining the firm, Mary was an associate at Armstrong Teasdale, where she managed all aspects of cases and client files. She also prepared for trials and arbitrations, and she oversaw all aspects of discovery.

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Kaitlyn E. Stone, litigation attorney, Drinker Biddle
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Kaitlyn E. Stone represents major pharmaceutical companies in products liability cases involving prescription medications in individual cases, class actions, multidistrict litigation, and coordinated state proceedings. Kate also demonstrates an unwavering commitment to serving her community by maintaining an active pro bono practice focused primarily on securing the expungement of clients’ records so as to enable clients to obtain improved employment and a higher quality of life for themselves and their families.

Prior to joining Drinker Biddle, Kate’s practice focused on advising clients in a combination of complex business, commercial and land use and zoning matters, including antitrust, class actions, insurance defense, business tort, redevelopment, environmental, and public contract disputes. She has represented client interests in both state and federal court, as well as before local planning and zoning boards. She also served as a law clerk to the Honorable Clarkson S. Fisher, Jr., P.J.A.D. in the Superior Court of New Jersey, Appellate Division for the 2013-2014 term.

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