Morrison Foerster’s Class Dismissed blog provides insights, recommendations, and timely reports on the latest defense news, developments, and trends in the most current class actions lawsuits and product liability issues that affect consumer-facing companies. Through Class Dismissed, attorneys from our nationally recognized Consumer Class Action and Products Liability practices offer a real-time assessment of the developments in matters that are shaping the industry. This blog examines the full spectrum of consumer-related class action and product liability lawsuits ranging from false advertising, privacy, consumer product safety, ADA, food misbranding, TCPA, environment, retail, and government actions as well as nationwide and multidistrict litigation class actions.<h2>ABOUT MORRISON FOERSTER</h2>Morrison Foerster is a leading global law firm that transforms complexity into advantage for its clients. Our clients include some of the largest financial institutions, banks, consulting and accounting firms, and Fortune 100, technology, and life sciences companies. Highlighting the firm’s commitment to client service, leadership in market-changing deals and impact litigation, and values-based culture, Morrison Foerster has been repeatedly recognized as one of the top 10 firms on The American Lawyer’s A-List. Year after year, the firm receives significant recognition from Chambers and The Legal 500 across their various guides, including Global, USA, Asia‑Pacific, Europe, UK, Latin America, and FinTech Legal. Our lawyers passionately care about delivering legal excellence while living our values. Morrison Foerster has a long-standing commitment to creating a culture that respects and celebrates differences, while providing an inclusive environment. The firm has achieved Mansfield Certification Plus since 2018 as a result of successfully reaching at least 30 percent women, communities of color, and LGBTQ+ lawyer representation in a notable number of current leadership roles and committees. The firm also has a long history of commitment to the community and society through providing pro bono legal services, including litigating for civil rights and civil liberties, improving public education and fostering the wellbeing of children, advocating for veterans, promoting international human rights, enforcing the right to asylum, and safeguarding the environment.

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Partner

Adam Hunt is a partner in the Litigation Department of Morrison Foerster’s New York office. His practice focuses on complex litigation, with an emphasis on class action and commercial litigation.

Adam Hunt

Alexandra Barlow is a partner in the Litigation Department of Morrison Foerster’s San Diego office.Alexandra litigates product liability matters involving medical devices, pharmaceuticals, consumer products, automobiles, and AI. Alexandra's litigation expertise spans the entire case life cycle in both state and federal courts. She handles all phases of discovery, including fact investigation and expert discovery. Alexandra has taken over twenty-five depositions, including experts, plaintiffs, treating physicians, and third-party witnesses. She drafts and argues motions of all types, including motions for summary judgment, motions to quash, and motions for preliminary injunction.Alexandra has significant trial experience. She has first-chaired a one-week jury trial and second-chaired a five‑week jury trial, both involving multiple claims and witnesses. She also has extensive experience in alternative dispute resolution, representing clients at mediations, mandatory settlement conferences, and early neutral evaluations.Alexandra enjoys tracking developments and keeping her clients updated on product liability and personal injury claims, frequently writing or presenting on emerging areas such as autonomous vehicles and smart devices. Alexandra’s experience also extends to professional liability, warranty claims, eminent domain, and construction law.Alexandra earned her J.D. from the University of San Diego School of Law. While in law school, the San Diego Law Review published her comment on the recovery of damages by plaintiffs in a persistent vegetative state, and she also served as a comment editor. She received her B.A. from the University of California, Los Angeles, where she majored in Political Science and minored in Spanish. A San Diego native, she attended a Spanish immersion school through the eighth grade. Alexandra is active in the San Diego community, advising students at a local college. She is also a member of several legal organizations in San Diego, including Lawyer’s Club, the Association of Business Trial Lawyers, and Wallace Inn of Court.

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Alexandra Barlow is a partner in the Litigation Department of Morrison Foerster’s San Diego office. Alexandra litigates product liability matters involving medical devices, pharmaceuticals, consumer products, automobiles, and AI. Alexandra’s litigation expertise spans the entire case life cycle in both state and federal courts. She handles all phases of discovery, including fact investigation and expert discovery. Alexandra has taken over twenty-five depositions, including experts, plaintiffs, treating physicians, and third-party witnesses. She drafts and argues motions of all types, including motions for summary judgment, motions to quash, and motions for preliminary injunction.

Alexandra Barlow is a partner in the Litigation Department of Morrison Foerster’s San Diego office. Alexandra litigates product liability matters involving medical devices, pharmaceuticals, automobiles, AI, and robotics. Alexandra's litigation expertise spans the entire case life cycle in both state and federal courts. She handles all phases of discovery, including fact investigation and expert discovery. Alexandra has taken over twenty-five depositions, including experts, plaintiffs, treating physicians, and third-party witnesses. She drafts and argues motions of all types, including motions for summary judgment, motions to quash, and motions for preliminary injunction.

Alexandra Barlow

<div class="videoWrapper"><iframe frameborder="0" class="sticky-video" allowfullscreen="1" title="Meet Penny Preovolos, Litigation Partner" src="https://www.youtube-nocookie.com/embed/hv7hYn-Bl7c?rel=0&showinfo=0;vq=hd1080" title="iframe"></iframe></div>Penelope has served as lead counsel in major consumer class actions and antitrust cases for more than 35 years, successfully representing high-profile defendants in antitrust, consumer fraud, and product defect matters. Her clients span a range of industries, including consumer electronics, technology, retail, publishing, food and beverage, cosmetics, and household products. According to Chambers USA, Penelope has a “great reputation for antitrust and product liability work” and is a “superb all-around antitrust lawyer.”Penelope was named the 2019 Antitrust Lawyer of the Year by the Antitrust, UCL, and Privacy Section of the California Lawyers Association. She was co-chair of MoFo’s antitrust practice for 14 years. She has served as chair of the Antitrust and Trade Regulation Section of the State Bar of California and as a member of the Ninth Circuit Advisory Committee on Local Rules and Operations. She is an editor of and frequent contributor to Morrison & Foerster’s <a href="https://classdismissed.mofo.com/">Class Dismissed blog</a>, as well as a frequent speaker about class action and antitrust issues.More About PenelopePenelope clerked for the Honorable Charles M. Merrill, United States Court of Appeals for the Ninth Circuit. She graduated cum laude from Harvard Law School, where she was executive editor of the Harvard Civil Rights – Civil Liberties Law Review. Penelope was a member of Phi Beta Kappa at the University of California, Berkeley. She was awarded the University Medal, the highest undergraduate honor at the university, as well as the English Departmental Citation (awarded to the outstanding graduate in that department).

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Senior Counsel

Penelope has served as lead counsel in major consumer class actions and antitrust cases for more than 35 years, successfully representing high-profile defendants in antitrust, consumer fraud, and product defect matters. Her clients span a range of industries, including consumer electronics, technology, retail, publishing, food and beverage, cosmetics, and household products.

Penelope A. Preovolos

Zak is an associate in the Litigation Department in Morrison Foerster’s New York office.Zak’s practice focuses on class actions, commercial litigation, white collar defense, government investigations, and antitrust litigation and counseling. He has represented clients before federal and state courts in complex commercial matters, as well as in arbitration tribunals.Zak received his J.D. from New York University School of Law in 2018, where he was inducted into the Order of the Barristers. During law school, Zak also served as the Marden executive editor for the NYU Law Moot Court Board. In 2013, Zak received his B.A. and M.A. in political science from Yale University, receiving honors in his major and the Ellsworth Prize for Best Senior Essay in the Social Sciences.

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Associate

Zak Newman

Mitchell A. Hokanson is an associate in the Litigation Department of Morrison Foerster’s San Diego office.Mitchell’s practice focuses on commercial litigation and consumer class actions. He has extensive experience with civil litigation, including managing day-to-day strategy, propounding and responding to discovery, taking and defending depositions, and engaging in motion practice. He also has experience providing regulatory advice to clients, including pro bono partners and multinational corporations. Mitchell maintains an active pro bono practice.After law school, Mitchell worked as a judicial clerk for Justice Susan M. Carney of the Alaska Supreme Court, where he drafted bench memoranda and opinions on a wide range of state and federal law topics. Prior to joining MoFo, Mitchell worked for another international law firm, where he was a member of the Complex Civil Litigation practice group, in Los Angeles, California.Mitchell received his J.D. from Columbia Law School, where he was honored as a James Kent Scholar and Harlan Fiske Stone Scholar. While in law school he was the senior executive editor of the Columbia Journal of Environmental Law and worked as a judicial intern for Judge Sandra S. Ikuta of the United States Court of Appeals for the Ninth Circuit and Judge George B. Daniels of the United States District Court, Southern District of New York. Prior to that, Mitchell earned his B.A. from Stanford University.

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Mitchell Hokanson

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On Wednesday, June 14, 2017 at 12:00 pm, Morrison & Foerster partner Purvi Patel will be presenting at The Bar Association of San Francisco (BASF) CLE program “False Advertising Class Actions – Practitioner’s Guide to Class Certification, Damages and Trial.” Ms. Patel and her fellow panelists will discuss new developments and tips regarding prosecuting, defending and resolving these types of disputes. Additional topics will include strategies in prosecuting and defending class certification; how to present or challenge class-wide proof of damages; and positioning the case for trial and/or resolution.The program will be held at the BASF Conference Center in San Francisco, CA. For more information and to register please click <a href="http://www.sfbar.org/calendar/eventdetail.aspx?id=G173110/G173110">here</a>.

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Purvi G. Patel is the former managing partner of the Los Angeles Office. She represents retail, e-commerce, and other businesses in significant advertising, unfair competition, consumer fraud, and privacy matters.

Purvi G. Patel is the former managing partner of the Los Angeles Office. She represents retail, e-commerce, and other businesses in significant advertising, unfair competition, consumer fraud, and privacy 

Purvi G. Patel

Purvi G. Patel defends retail, e-commerce, and other businesses in significant advertising, unfair competition, consumer fraud, and privacy matters. She has built a robust practice defending household names in complex and class action litigation in federal and state courts across the country, winning motions to dismiss, defeating class certification, and securing summary disposition in several multi-million dollar lawsuits. Purvi is a strategic and practical thinker who is in tune with her clients’ priorities, which leads to successful outcomes both inside and outside the courthouse.

Purvi Patel

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Speaking Engagement: False Advertising Class Actions – Practitioner’s Guide to Class Certification, Damages and Trial

Speaking Engagement: False Advertising Class Actions – Practitioner’s Guide to Class Certification, Damages and Trial

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On Wednesday, June 14, 2017 at 12:00 pm, Morrison & Foerster partner Purvi Patel will be presenting at The Bar Association of San Francisco (BASF) CLE program “

False Advertising

Class Certification

On April 13, 2017, United States District Judge Beverly Reid O’Connell for the Central District of California granted a motion to dismiss a class action complaint alleging that Hyundai sold cars with an alleged latent paint defect that caused the “self-healing” paint to bubble, peel, and flake.  Resnick et al. v. Hyundai Motor Am., Inc. et al., No. 8:16-cv-00593-BRO (PJWx), Dkt. No. 80.  The court dismissed plaintiffs’ warranty, negligent misrepresentation, fraudulent concealment, and state consumer protection claims without prejudice, with the exception of a Massachusetts Unfair and Deceptive Trade Practice Act claim, which was dismissed with prejudice.Consumers Challenge Alleged Paint Defect Under State Consumer Protection Laws.In March 2016, 15 individuals from 10 different states sued defendants Hyundai Motor America, Inc. and Hyundai Motor Co., Ltd.  Plaintiffs are current owners of 2006-2016 Hyundai Santa Fe, Sonata, and Elantra automobiles manufactured in the United States that have an alleged paint defect that manifests itself over time and causes the paint to bubble, peel, and flake.  Plaintiffs claim that Hyundai fraudulently concealed the alleged paint defect when plaintiffs purchased their vehicles and refused to offer plaintiffs or the putative class any relief.In November 2016, the court granted defendants’ motion to dismiss plaintiffs’ First Amended Complaint.  (Dkt. No. 57.)  Plaintiffs filed a Second Amended Complaint in November 2016, and stipulated to consolidate two cases against defendants in January 2017.  In February 2017, plaintiffs filed a Consolidated Class Action Complaint, alleging fourteen causes of action, including for breach of warranty, negligent misrepresentation, fraudulent concealment, and violations of various state consumer protection laws.Court Dismisses Express and Implied Warranty Claims.For the majority of plaintiffs, the court dismissed without prejudice the breach of express warranty claims because the alleged defect occurred outside Hyundai’s warranty period.  The court rejected plaintiffs’ argument that an exception should apply to hold Hyundai liable for latent defects outside the warranty period.  The court also dismissed plaintiffs’ warranty claims based on representations on Hyundai’s corporate website and advertising campaigns regarding the quality of the paint as outside the warranty period, which the court limited to the express warranty period.  The court granted leave to amend for two plaintiffs who may have experienced the alleged defect during the warranty period, but did not clearly allege those facts.The court dismissed without prejudice claims for breach of implied warranty of merchantability under California’s Song-Beverly Consumer Warranty Act.  The court held that the implied warranty of merchantability requires “something beyond mere aesthetic concerns,” and that plaintiffs only allege that the paint defect affected their vehicles’ aesthetics.  The court rejected plaintiffs’ argument that a breach of implied warranty of merchantability arises whenever a vehicle’s behavior fails to comport with industry standards.Court Dismisses Negligent Misrepresentation Claims Under the Economic Loss Rule.The court dismissed without prejudice plaintiffs’ negligent misrepresentation claims as barred under the economic loss rule.  Plaintiffs alleged that the paint defect caused “out of pocket losses associated with the paint defect, corrosion repairs and diminished value of [their] vehicle[s].”  Under the economic loss rule, the court held that these alleged damages were insufficient to support a negligent misrepresentation claim because they arose from harm to the product itself (i.e., the body of the car).  The court rejected plaintiffs’ argument that the economic loss rule did not apply because of the “special relationship” exception, which does not apply to those who have a direct contractual relationship with the defendants (like plaintiffs).Court Dismisses State Consumer Protection and Fraudulent Concealment Claims. Plaintiffs also brought claims based on fraudulent concealment and violations of California’s Unfair Competition Law, False Advertising Law, and Consumers Legal Remedies Act based on the allegations that:  (1) defendants made affirmative misrepresentations of fact, and (2) defendants fraudulently concealed their knowledge of the alleged paint defect.  The court dismissed these claims without prejudice based on plaintiffs’ failure to allege facts indicating that defendants knew or should have known of the alleged defect at the time of sale.  Plaintiffs’ general allegations that there were “concerns” regarding the possibility of self-healing paints peeling were insufficient to establish presale knowledge.  Plaintiffs failed to allege “who had these concerns, the substance of the concerns, or whether the concerns were ever communicated to Hyundai.”  The court also found that allegations regarding anonymous online complaints were not sufficient to establish defendants’ knowledge of the alleged defect.  The court further emphasized that, even if plaintiffs’ sufficiently pleaded knowledge, plaintiffs did not adequately plead specific reliance on the alleged affirmative misrepresentations.  The court dismissed plaintiffs’ non-California state consumer protection law claims without prejudice on similar grounds.Hyundai Takeaway.The opinion is quite rigorous in holding plaintiffs to their pleading burden.  As was done here, courts typically allow plaintiffs an opportunity to amend.

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Court Dismisses Peeling Paint Class Action Against Hyundai, But Grants Third Opportunity to Amend

Court Dismisses Peeling Paint Class Action Against Hyundai, But Grants Third Opportunity to Amend

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On April 13, 2017, United States District Judge Beverly Reid O’Connell for the Central District of California granted a motion to dismiss a class action complai

Product Liability

Consumer Products

The House of Representatives has passed legislation that will fundamentally change class actions as we know them.  The Fairness in Class Action Litigation Act of 2017 (the “Act” or “H.R. 985”) leaves no stage of class action litigation untouched.  For example, the provisions require stricter “typicality” requirements for class members, the disclosure of conflicts of interest between class counsel and named plaintiffs, an administratively feasible way to identify class members, capping distribution fees to class counsel, staying discovery pending motion practice, and automatic appeals of class certification rulings.  The bill also proposes changes to the multidistrict litigation (MDL) procedure, including that plaintiffs claiming personal injury must submit evidence of the harm and causation within 45 days of filing or transfer.H.R. 985 is not an isolated bill—it is part of a larger effort to pass litigation reform through Congress in the era of President Trump.  There are five other pending bills related to legal reform that address issues such as the fraudulent joinder of parties (H.R. 725), EPA Settlement of citizen suits (H.R. 469), Department of Justice settlement funds (H.R. 732), sanctions for frivolous litigation (H.R. 720), and reporting of payments to plaintiffs in asbestos cases (H.R. 906).  All six bills are expected to pass (or have passed) the House.  Given the sweeping nature of the bills, many of the issues are likely to be hotly contested as the bills head to the Senate.BackgroundOn February 9, 2017, Representative Robert Goodlatte (R-Va.) introduced H.R. 985, which, if enacted, would fundamentally alter class action litigation.  Rep. Goodlatte is no stranger to class action reform.  He was the author of the 2005 Class Action Fairness Act (CAFA) and has introduced a variety of proposed class action reforms since that time.  The Act, however, is by far the most comprehensive reform proposed since CAFA.The U.S. Chamber of Commerce is also a leading supporter of the Act, and recently published a case study likely intended to demonstrate a need for legal form:  The Food Court, Trends in Food and Beverage Class Action Litigation.  (U.S. Chamber Institute for Legal Reform, February 2017.)  In addition to providing an overview of the surge in food class actions and theories, the publication discusses the need for legislative action to ensure class actions benefit consumers instead of lawyers.From Cradle to Grave:  Examples of the Act’s Broad Changes to Every Aspect of Class Action LitigationH.R. 985 proposes changes to every aspect of class action litigation, from inception to settlement.  Below is a summary of some of the key provisions of the bill.   Class Member Typicality.  Current law requires that class representatives have claims that are “typical” of the other class members.  Under the Act, class representatives are subject to a heightened typicality requirement:  they must demonstrate that each proposed class member suffered the same type and scope of injury they did.  This change would ensure that class actions are only available where the named plaintiffs can show that all class members incurred actual harm.  It would prohibit plaintiffs from including uninjured individuals in their class definition—a question the United States Supreme Court ducked in Tyson Foods, Inc. v. Bouaphakeo, 136 S. Ct. 1036 (2016), and that is the subject of a Circuit split.Plaintiffs’ firms have already lambasted the provision as limiting the availability of the class action device for individuals who are affected by alleged abuses in different ways.  On the other hand, the proposed change would ensure that class actions are addressing real consumer harms and not imaginary harms for the benefit of class action attorneys.Class Counsel Conflicts of Interest. The Act requires class counsel to disclose whether the proposed class representative is a relative, former or current employee, or former or current client (aside from the current action).  If the proposed representative falls into any of those categories, the court is prohibited from certifying the class.  This provision would send major shockwaves through the plaintiffs’ bar, as many class representatives are repeat players and have some relationship to class counsel.Ascertainability:  Administratively Feasible Method of Identifying Class Members.  The Act officially adds an “ascertainability” prong to the class certification inquiry.  Under the Act, a class representative must demonstrate that there is a reliable and administratively feasible means to identify class members and to distribute payment to the class.  This change would resolve a current Circuit split regarding the ascertainability requirement and would side with the Third Circuit’s decision in Carrea v. Bayer Corp., 727 F.3d 300 (3d Cir. 2013), and overrule the Ninth Circuit’s recent decision in Briseno v. ConAgra Foods, Inc., ___ F.3d ___ (Jan. 3, 2017), which held that Rule 23 does not require plaintiffs to establish an “administratively feasible” means of identifying putative class members.While the Act does not address whether affidavits attesting to class membership would be considered a feasible mechanism, this added provision would strengthen the case for affirmance (or even moot the appeal) of the Northern District of California’s decision in Jones v. ConAgra Foods, Inc., 3:12-cv-01633 (June 14, 2014), wherein the court found that such affidavits were insufficient when there were multiple label changes and the purchase price was small.[1] This provision could have broad implications, as it could effectively eliminate class actions against companies that sell small dollar items and do not track who obtains their products.Limitations on Class Counsel’s Recovery of Attorneys’ Fees.  The Act also aims to curb actions where the main beneficiaries of the actions are the class counsel.  The Act prohibits fee distribution until the distribution of monetary relief to the class has been completed, and the fee determination must be based on the money actually distributed to the class.  In no event can the attorney fee award exceed the amount of monetary relief received by the class; however, class counsel can still receive compensation for obtaining equitable relief.  This provision could also be costly for defendants, as plaintiffs are likely to insist on more expansive and expensive class notice to increase claims rate.No Issue-Only Classes.The Act prohibits courts from granting certification to a class as to a particular issue under Rule 23(c)(4) unless the entirety of the cause of action satisfies all the class certification requirements of Rules 23(a) and (b).  This provision is an attempt to limit the class action device where there is no classwide damage, and it is an effort to overrule the Sixth and Seventh Circuit Whirlpool cases, Glazer v. Whirlpool Corp., 722 F.3d 838 (6th Cir. 2013) and Butler v. Sears, Roebuck and Co., 727 F.3d 796 (7th Cir. 2013), in which the plaintiffs were able to avoid Comcast v. Behrend, 133 S.Ct. 1426 (2013), (only a small percentage of the class has a defect manifest) by certifying liability-only classes.  The Supreme Court in Comcast held that certification was improperly granted where plaintiffs had not shown that common issues predominated as to damages.Stay of Discovery Pending Motions.  The Act also stays discovery during the pendency of any motion to transfer, dismiss, or strike class allegations, unless the court finds that particularized discovery is necessary to preserve evidence or prevent undue prejudice.  This change would enable defendants to fight claims without being subject to costly discovery.  This change could be viewed as at odds with the recent amendments to the Federal Rules of Civil Procedure, which permit parties to serve discovery even prior to the initial case management conference.Right to Appeal Class Certification Decisions.  Grants or denials of class certification would be immediately appealable—eliminating the courts of appeals’ discretion in determining whether such decisions warrant review.  While this would give defendants an immediate appeal for an erroneous class certification decision, it would likely increase plaintiffs’ appeals as well.  This would also effectively eliminate the issue pending before the Supreme Court in Baker v. Microsoft, No. 15-457, which is whether a court of appeals has jurisdiction to hear an appeal of a denial of class certification where the plaintiffs voluntarily dismiss the action with prejudice, as plaintiffs would no longer need to dismiss the claim to obtain review.MDL Procedural Changes.  While the Act provides for several procedural changes, the most noteworthy change is that in any consolidated or coordinated MDL proceeding seeking recovery for personal injuries, the plaintiff must submit evidentiary support, including medical records, for the alleged injury, the exposure that allegedly caused the injury, and the alleged cause of the injury within 45 days of transfer or filing.  No extensions of this deadline are permitted.ConclusionThe Act would change the landscape of class action litigation.  We expect passage of the key provisions of the Act in the Senate to be contentious. We will continue to track the Act through the legislative process and will update this client alert with any developments.[1] Jones is currently stayed pending the Supreme Court’s decision in Baker v. Microsoft, No. 15-457.

Nature's Path Foods

Suja Juices

Unilever USA Inc.

Nature’s Path Foods and Sprouts Farmers Market

Iovate Health Sciences, International

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Claudia focuses her practice on the defense of consumer class actions and on complex commercial litigation, including unfair business competition, false advertising, product liability, and privacy mat

Claudia Vetesi

Claudia focuses her practice on the defense of consumer class actions and on complex commercial litigation, including unfair business competition, false advertising, product liability, and privacy matters. She is currently representing numerous consumer goods manufacturers and retailers in false advertising and mislabeling class actions.

Claudia M. Vetesi

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House Passes Bill Proposing Sweeping Changes to Class Action Litigation

Trump Nominates Buerkle as Permanent CPSC Chair

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The House of Representatives has passed legislation that will fundamentally change class actions as we know them.  The Fairness in Class Action Litigation Act o

House Passes Bill Proposing Sweeping Changes to Class Action Litigation

On February 2, 2017, the Central District of California terminated a false advertising lawsuit against Schwabe North America, Inc. and Nature’s Way Products, LLC (Defendants), based on allegations that the companies misrepresented the cognitive benefits of two Ginkgo biloba products.  Sonner v. Schwabe North America, Inc. et al., Case No. 15-1358-VAP (C.D. Cal., filed July 7, 2015).  The court granted Defendants’ motion for summary judgment, finding that Plaintiff Kathleen Sonner (Plaintiff) had failed to establish that the claimed memory benefits were provably false.Background of the Case.  On July 7, 2015, Plaintiff Kathleen Sonner filed a class action against Defendants, alleging that the companies had falsely advertised that Ginkgold and Ginkgold Max products had cognitive benefits, including mental sharpness, memory, and concentration.  The complaint alleged claims under the Wisconsin Unfair Trade Practices Act (UTPA), California’s Unfair Competition Law (UCL) and Consumers Legal Remedies Act (CLRA), and breach of express warranty.  Ms. Sonner sought to represent a class of consumers who had purchased the Ginkgold and Ginkgold Max products in the United States.Plaintiff Had Standing to Pursue Claims for Products Not Purchased.  Defendants argued that Plaintiff lacked standing to pursue claims as to the Ginkgold Max product, which Plaintiff never purchased.  The court disagreed, finding that she had standing to assert claims for unnamed class members because the two products were “essentially identical.”  The only purported difference between the products—the level of active ingredient EGb 761—was irrelevant since the dispute was whether any amount of EGB 761 provided cognitive benefits.Plaintiff Failed to Show the Cognitive Benefits Advertisements Were False or Misleading.  Defendants argued that Plaintiff’s UCL and CLRA claims were barred because they were “lack of substantiation claims,” which may not be brought by private individuals.  But the court found that Plaintiff did more than claim that Defendants lacked substantiation for their advertising claims; she provided evidence of scientific reports concluding that Ginkgo biloba does not appear to provide cognitive health benefits.  As such, the relevant inquiry was whether a reasonable juror could find that Plaintiff had proven that Defendants’ advertising claims were false or misleading.To resolve that inquiry, the court analyzed each side’s proffered evidence, including quantitative meta-analyses and clinical studies, in what the court called the “Battle of the Experts.”  Plaintiff criticized Defendants’ reliance on less recent studies and criticized the fact that Defendants’ studies conflicted with what Plaintiff claimed was the most authoritative source of review and synthesis.  But the court found that merely taking issue with the strength of the studies was not enough to prove their falsity.Plaintiff also argued that Mullins v. Premier Nutrition Corp., 178 F. Supp. 3d 867 (N.D. Cal. 2016) compelled her recovery.  In that case, the plaintiff brought almost identical UCL and CLRA claims against a defendant that had advertised the health benefits of its product.  The court in Mullins found that plaintiff had met her burden to establish that a reasonable jury could find that defendant’s claims were provably false by offering principled, supported critiques of the studies relied upon by defendants.  The Plaintiff in Mullins was also entitled to recover under a theory that the representations were misleading because a reasonable juror could conclude that the “vast weight of the competent evidence establishe[d] that th[e] health claims [were] false.”The court found that Mullins did not support recovery.  Unlike in Mullins, the Plaintiff failed to offer “principled, supported critique” of “each of the studies finding beneficial effects.”  Nor did Plaintiff challenge the methodology, structure, or independence of any of the studies.  As such, Plaintiff failed to meet her burden of proving falsity.For these reasons, the court held that Defendants were entitled to summary adjudication as to Plaintiff’s UCL and CLRA claims.  The court also granted Defendants’ motion with regards to Plaintiff’s UTPA claim and breach of express warranty claim finding that Plaintiff had failed to identify any express warranty.Takeaway.  Companies should carefully consider which scientific evidence they use to support defenses in false advertising cases, and should be on the lookout for outside studies that may challenge the methodology, structure, or independence of proffered scientific evidence.

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District Court Sacks Ginkgo Biloba False Advertising Case

District Court Sacks Ginkgo Biloba False Advertising Case

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On February 2, 2017, the Central District of California terminated a false advertising lawsuit against Schwabe North America, Inc. and Nature’s Way Products, LL

Retail

On November 18, 2016, the Ninth Circuit issued five rulings rejecting three Hawaii counties’ attempts to regulate pesticides and genetically modified crops, finding that the regulations were preempted by state and federal laws.Alika Atay et al. v. County of Maui et. al.In Atay, citizens of Maui County had voted into law an ordinance that banned the planting and testing of genetically engineered (“GE”) plants.  Maui citizens were concerned about the effects of GE crops and pesticides, particularly in Maui, which “had become an attractive location for field tests” of genetically engineered crops and pesticides.   After the ordinance passed, a group of proponents of the ordinance filed suit, seeking declaratory relief to resolve the ordinance’s legality.  At the same time, opponents of the ordinance filed suit against Maui County to invalidate the ordinance.  After removal to federal court, the district court later granted the opponents’ motion for summary judgment.The Ninth Circuit affirmed the district court’s order on summary judgment.  While the citizen groups had standing to bring the claim, the ordinance was expressly preempted by federal and state law.StandingRelying on Hollingsworth v. Perry, 133 S. Ct. 2652 (2013), opponents of the ordinance argued that proponents lacked standing to defend the constitutionality of the ordinance because the relevant public officials had chosen not to.  The Ninth Circuit disagreed, finding that proponents could establish standing if they could do so independently of their status as ballot initiative proponents.  Unlike in Hollingsworth, appellants established an interest of their own: GE farming operations would threaten economic harm to their organic, non-GE farms.  Opponents had therefore established Article III standing.Federal PreemptionThe Ninth Circuit held that the ordinance was expressly preempted by the Plant Protection Act (“PPA”), to the extent the ordinance bans genetically engineered plants that the U.S. Animal and Plant Health Inspection Service (“APHIS”) regulates as plant pests.  As the court explained, the PPA includes an express preemption provision forbidding a state or local agency from regulating the movement in interstate commerce of a plant, if the regulation is intended to control or eradicate that plant, and if the APHIS has regulated the specific plant.  All conditions were met here.State PreemptionThe Ninth Circuit also held that, while the ban was not impliedly preempted by the PPA in its application to crops that APHIS had deregulated, it was impliedly preempted to these crops by Hawaii’s state statutory scheme for the regulation of potentially harmful plants.  This was because the ordinance addressed the same subject as Hawaii law—the regulation of potentially harmful plants and invasive species.  Moreover, the state’s statutory scheme made clear that the legislature intended for the State’s regulation of potentially harmful plants to be exclusive of supplemental local regulations.  As such, the ordinance was preempted by Hawaii state law.Other Hawaii CasesThe Ninth Circuit also blocked similar attempts to regulate pesticides in Kauai, County and Hawaii County in Syngenta Seeds Inc. et al. v. County of Kauai et al., No. 14-16833, and Hawai’i Papaya Industry Assn. et al. v. County of Hawaii, No. 14-17538.In Syngenta, the Ninth Circuit shut down Kauai County’s attempt to regulate pesticides and GE plants, applying the Hawaii Supreme Court’s “comprehensive statutory scheme” test to find that the ordinance was preempted by state law.   In Hawaii Papaya Industry, the court found that the ordinances were expressly preempted by federal law for the same reasons set forth in Atay.  The ordinances were also impliedly preempted by state law for the same reasons set forth in Atay and Syngenta.

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The Ninth Circuit Kills GMO Pesticide Regulations in Hawaii Counties

The Ninth Circuit Kills GMO Pesticide Regulations in Hawaii Counties

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On November 18, 2016, the Ninth Circuit issued five rulings rejecting three Hawaii counties’ attempts to regulate pesticides and genetically modified crops, fin

Environmental Law

District Court Judge Gonzalo Curiel recently considered and rejected—for the second time—a proposed class action settlement involving false advertising claims against a defendant jeans manufacturer.  Hofmann v. Dutch, LLC, No. 3:14-cv-02418-GPC-JLB (S.D. Cal. Aug. 16, 2016).  The court initially rejected the proposed settlement because of its coupon offer, charitable award unrelated to the issues of the case, and attorneys’ fee provision, which the Court found excessive.  The court rejected the parties’ renewed attempt to secure settlement approval because the problematic provisions remained unchanged and the sole addition – a free denim tote bag – did not adequately address the Court’s concerns.On September 5, 2014, plaintiff Sonia Hofmann sued defendant Dutch, LLC, alleging the denim company manufactured and sold jeans labeled “Made in the USA” that contained foreign-made components (buttons, rivets, zipper assembly, thread, and fabric).  Plaintiff alleged four causes of action under California law:  violations of the Unfair Competition Law (UCL); violations of the Business and Professions Code § 17533.7 (relating to manufacturers’ and retailers’ use of the label “Made in the USA”); violations of the Consumer Legal Remedies Act (CLRA); and negligent representation.Settlement Reached.  After litigating the case for just over a year, the parties agreed to a settlement.  On October 26, 2015, Plaintiff filed an unopposed motion requesting the court’s approval of a settlement agreement including the following terms:<ul><li>an injunction requiring Dutch to change its labels to reflect the country-of-origin of its jeans’ component parts;</li><li>$20 e-gift certificates for participating class members;</li><li>an award of $250,000 over five years to charities that benefit women; and</li><li>attorneys’ fees and costs not to exceed $175,000.</li></ul>Initial Settlement Rejected.  On April 26, 2016, Judge Curiel rejected the proposed settlement.  While the Court had no issue with the injunction, it rejected the $20 gift card offer, charitable award, and attorneys’ fees provisions, finding that the first two provisions did not provide sufficient value to potential class members, and the third suggested collusion between the parties.$20 Gift Card.  The parties argued that a $20 gift card was appropriate restitution for class members in light of the risk that they would receive nothing if the case went to trial.  The Court disagreed, noting that the average price of a pair of Dutch jeans is $205.  Therefore, the $20 offer was merely a coupon or discount requiring class members to spend more money to buy a Dutch product.  The Court reasoned that this was an inadequate offer to class members because it would require them to spend additional money on Dutch products, which would result in a net benefit to Dutch.Charitable Award.  The Court also rejected the cy pres provision whereby Dutch would pay $250,000 to various charities that purportedly benefit women, including breast cancer research and juvenile diabetes charities.  The Court noted that charitable awards may be acceptable when they benefit a cause related to the litigation and therefore provide an indirect benefit to class members.  The parties argued that there was a link between class members, who tended to be women, and charities that benefit women.  The Court rejected this argument as too tenuous, finding no link between women-focused charities and a “Made in the USA” class action.Attorneys’ Fees and Costs.  The settlement included a “clear sailing” term, whereby Dutch agreed not to contest any attorneys’ fees or cost awards that did not exceed $175,000.  The Court noted that such provisions create a danger of collusion, because they may encourage plaintiff’s counsel to accept an inadequate settlement on behalf of class members in exchange for an excessive fee award, and therefore require close scrutiny.  The Court rejected the fee award, reasoning that it was too high in light of the fact that class members received no value from the settlement apart from the $20 discount.Second Settlement Fails.  On June 23, 2016, the parties submitted a second settlement agreement to Judge Curiel.  The terms of the agreement remained the same, with one addition: class members were entitled to a denim tote bag valued at $128.  Judge Curiel rejected this settlement in short order, sharply noting that none of the problematic terms in the initial agreement had been remedied.  The Court reiterated its concerns regarding the coupon provision, charitable award, and fee provision, and was unpersuaded by Dutch’s tote bag offer.  As before, the Court denied approval, but permitted an additional 60 days for the parties to submit an improved settlement.Takeaway.  Hofmann offers yet another reminder that courts today strictly scrutinize class action settlements to ensure that they provide real value to settlement class members, do not appear collusive, provide sufficient notice, and treat all members of the class fairly.  See, e.g., Cotter v. Lyft, No. 13-cv-04065-VC, 2016 U.S. Dist. LEXIS 50579 (N.D. Cal. Apr. 7, 2016) (denying settlement agreement that short-changed members of the class by offering less than half the reimbursement to which they were entitled); Deatrick v. Securitas Sec. Servs., No. 13-cv-050160-JST U.S. Dist. LEXIS 22597 (N.D. Cal. Feb. 24, 2016) (settlement failed to provide clear notice procedures to class members); Thomas v. MagnaChip Semiconductor, Inc., No. 14-cv-01160-JST (N.D. Cal. Apr. 7, 2016) (settlement denied in part for distributing class funds to a charitable recipient without a sufficient nexus to the interests of the class members).  Parties submitting a settlement agreement for court approval need to carefully evaluate whether the proposed terms are consistent with current case law in their jurisdiction.

Third Time’s the Charm? Court Rejects Parties’ Second Settlement Agreement for Failure to Provide Sufficient Value to Class Members

District Court Judge Gonzalo Curiel recently considered and rejected—for the second time—a proposed class action settlement involving false advertising claims a

Third Time’s the Charm?  Court Rejects Parties’ Second Settlement Agreement for Failure to Provide Sufficient Value to Class Members

In Spokeo, Inc. v. Robins, the Supreme Court clarified the requirements necessary for plaintiffs to establish standing.  The Court held that an allegation of a statutory violation, without some showing of concrete harm, is not enough.  Concrete harm, however, is not synonymous with tangible harm.  In evaluating standing, the issue articulated by the Court is whether the particular violations alleged entail a degree of risk of harm sufficient to meet the concreteness requirement. While the Court provided some guideposts, lower courts must engage in a fact-intensive analysis to evaluate the sufficiency of risk of harm.  To read more about the Spokeo decision, see our previous blog post <a href="http://classdismissed.mofo.com/class-action/the-supreme-courts-spokeo-decision-concrete-shoes-for-consumer-class-actions/">here</a> and read our discussion of Spokeo’s impact on product liability claims <a href="http://classdismissed.mofo.com/consumer-products/generalized-products-liability-claims-not-viable-post-spokeo/">here</a>.Before the Court handed down Spokeo, many cases were stayed, hopeful that the decision would resolve questions of standing.  We report below on several cases that had been stayed pending a decision in Spokeo to see what trends have emerged in lower courts’ application of Spokeo.Trend 1: Case DismissedCourts have dismissed cases alleging no more than “bare procedural violations.”  Under Spokeo, such allegations are insufficient to confer standing.  Plaintiffs in Smith v. Ohio State University, No. 2:15-cv-3030 (S.D. Ohio June 8, 2016) and Alaleh v. XO Communications, No. 2:15-cv-05507-SJO-FFM (C.D. Cal. filed June 8, 2016) admitted that they suffered no concrete or consequential damages, so courts dismissed the actions citing Spokeo.  These cases stand for the broader trend that bare procedural violations will not survive post-Spokeo.Trend 2: Let’s Settle ThisSeveral actions that were stayed pending Spokeo settled while waiting for the Court to hand down its opinion or shortly thereafter.  See, e.g., Taylor v. Spherion Staffing LLC, et al. No. 3:15-cv-2299 (N.D. Ohio 2015), Ernst v. Dish Network, LLC, et al. No. 1:12-cv-8794 (S.D.N.Y May 27, 2016); Hillson et al. v. Kelly Services, No. 2:15-cv-10803 (E.D. Mich. June 8, 2016).  The cases that settled involved allegations of statutory violations.  Although Spokeo left open the possibility that a statutory violation may involve a sufficient risk of harm to satisfy the concreteness requirement, settlement may have presented a more attractive alternative than extended litigation about the sufficiency of alleged harms.Trend 3: See You in State CourtFor the majority of stayed cases that we tracked, Spokeo did not immediately resolve the standing questions.  In about a third of these ongoing cases, the lower court, sua sponte, ordered parties to file supplemental briefs or reports discussing Spokeo’s impact on the action, indicating that courts are uncertain about what factors to consider in determining which harms present a sufficient risk to meet the concreteness requirement.  In supplemental reports filed so far, plaintiffs allege that Spokeo did not change the state of Article III standing law since intangible injuries can still meet the concreteness requirement.  Defendants take the opposite view, reading Spokeo to require actual harm.Instead of addressing head-on whether the requirements of standing have been met, some plaintiffs have argued that the defendants who removed the action to federal court bear the burden of establishing the elements of standing and if they cannot, the action should be remanded back to state court, rather than dismissed.  The plaintiffs in Bulcao, Jr. v. Ziprecruiter, Inc., No. 2:15-cv-7340 (C.D. Cal June 27, 2016) employed this strategy in response to the court’s order to show cause why the action should not be dismissed for lack of standing.  Although Ziprecruiter settled before the issue of remand was decided, courts have remanded other actions to state court after finding no Article III standing.  See Patton v. Experian Data Corp., No. 15-cv-1871 (C.D. Cal. May 6, 2016).So the uncertainty left in the wake of Spokeo could lead to more action in state court.TakeawaysSince the Supreme Court’s narrow decision in Spokeo, several trends have emerged in lower courts.  While Spokeo seems to clearly preclude actions in which plaintiffs alleged only a bare procedural violation and suffered no concrete or consequential harm, less clarity exists as to what degree of risk of harm is sufficient to meet the concreteness requirement.  As courts continue to apply the Spokeo rationale to more actions, perhaps it will not be long before one trend emerges as the most dominant. *Co-author Claire Bonelli was a summer associate in our San Francisco office.

Trending Now: Article III Standing After Spokeo

In Spokeo, Inc. v. Robins, the Supreme Court clarified the requirements necessary for plaintiffs to establish standing.  The Court held that an allegation of a 

Trending Now: Article III Standing After Spokeo

The Ninth Circuit Court of Appeals’ recent decision in Haskins v. Symantec Corp., Case No. 14-16141 (9th Cir. June 20, 2016), supports the requirement that plaintiffs must allege exposure to and reliance on specific misrepresentations in order to maintain fraud claims.  Plaintiff Kathleen Haskins alleged Symantec had violated unfair competition laws (UCL) by waiting until 2012 to inform customers that previous versions of its antivirus software may have vulnerabilities due to a 2006 data breach.In June 2014, U.S. District Judge Jon S. Tigar dismissed plaintiff’s Third Amended Complaint because plaintiff had not cited any particular advertisement or representation made by Symantec upon which she relied. In an unpublished opinion, the Ninth Circuit agreed, holding that plaintiff “failed to plead her fraud claims with particularity as required by Rule 9(b) of the Federal Rules of Civil Procedure.”Under California law, plaintiffs may be able to avoid pleading individualized reliance on specific misrepresentations when the alleged misrepresentations are a part of an extensive advertisement campaign. Here, however, the Ninth Circuit held that Haskins failed to establish that Symantec was engaged in such a campaign.

Ninth Circuit Affirms Dismissal of Fraud-Based UCL Claims Based on Lack of Reliance

The Ninth Circuit Court of Appeals’ recent decision in Haskins v. Symantec Corp., Case No. 14-16141 (9th Cir. June 20, 2016), supports the requirement that plai

Ninth Circuit Affirms Dismissal of Fraud-Based UCL Claims Based on Lack of Reliance

If your company is involved in selling products or services to consumers in New Jersey over the web or through mobile apps, you’ll want to read this client alert.In what amounts to a feeding frenzy, plaintiffs’ lawyers are working overtime bringing class action suits against e-commerce companies, alleging that their online terms and conditions violate New Jersey’s unusual <a href="http://www.gannlaw.com/OnlineApp/dtSearch-Data/TextFiles/Condominium/App-32.pdf" target="_blank" rel="noopener">Truth-in-Consumer Contract, Warranty and Notice Act</a> (“TCCWNA”). Some of the online retailers to have been sued include Victoria’s Secret, Bed Bath & Beyond and TOYS ‘R’ US, with more suits being filed every day.Unlike most consumer protection laws, the TCCWNA focuses specifically on the contractual terms governing certain transactions with consumers, imposing limitations on such terms even if such contractual terms are governed by the law of a state other than New Jersey—creating a potential gotcha for e-tailers who are based outside of New Jersey and who traditionally have their online terms and conditions reviewed only by lawyers admitted to practice in the state whose laws govern such terms and conditions.Although the TCCWNA was enacted in 1981, it has only recently achieved notoriety, as more and more plaintiffs’ lawyers have embraced the statute due to its broad scope and its statutory penalty of not less than $100 per violation without the need to prove actual harm.

Controversial New Jersey Consumer Protection Law Creates a Potential “Gotcha” for E-Commerce Companies

If your company is involved in selling products or services to consumers in New Jersey over the web or through mobile apps, you’ll want to read this client aler

Controversial New Jersey Consumer Protection Law Creates a Potential “Gotcha” for E-Commerce Companies

Internet of Things

On May 16, 2016, the Supreme Court issued its highly anticipated decision in Spokeo, Inc. v. Robins. The decision takes on a hot topic in consumer class action law today—what must a plaintiff plead and prove to have standing to sue for a violation of a federal statute? The Court held that an allegation of a statutory violation, without some showing of concrete harm, is not enough. Instead, in this Fair Credit Reporting Act case, the issue is “[w]hether the particular procedural violations alleged . . . entail a degree of risk [of harm] sufficient to meet the concreteness requirement.” In its focused 11-page opinion, the Court declined to decide to evaluate that risk on the record before it and, instead, remanded the case to the Ninth Circuit for further proceedings. However, the Court did provide several guideposts for how the Ninth Circuit, and courts around the country evaluating standing questions, may consider plaintiffs’ claimed injuries.

The Supreme Court’s Spokeo Decision: Concrete Shoes For Consumer Class Actions?

Today the Supreme Court issued its highly anticipated decision in Spokeo, Inc. v. Robins. The decision takes on a hot topic in consumer class action law today—w

The Supreme Court’s Spokeo Decision: Concrete Shoes For Consumer Class Actions?