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Defense Victory in Product Labeling Class Action

On September 26, 2018, the Honorable Judge Robert N. Scola entered an Order denying class certification in a consumer deceptive advertising case. Plaintiffs claimed that the use of the phrase “born in brazil” on containers of Vita Coco, the leading brand of coconut water, caused them to believe that Vita Coco was manufactured in or sourced exclusively from Brazil, when it was not. Plaintiffs sought to certify injunctive classes under FRCP Rule 23(b)(2) and damages classes under Rule 23(b)(3).

The Court denied class certification for two primary reasons. First, the Court found that the named plaintiffs lacked standing to represent the injunctive classes where there was no real and immediate threat of future injury. The Court observed that any alleged future harm suffered by the plaintiffs was self-inflicted:

“AMI has not forced the Plaintiffs to stop buying Vita Coco; rather, that was the Plaintiffs’ choice. And the face of the Second Amended Complaint reveals that the Plaintiffs will not be deceived by the ‘born in brazil’ slogan in the future. Indeed, the Plaintiffs allege that they now know ‘that not all Vita Coco is manufactured in Brazil, or that the Vita Coco being purchased is neither manufactured nor sourced in Brazil, nor made with Brazilian coconuts.’ Thus, if and when the Plaintiffs choose to purchase Vita Coco in the future, they will do so with knowledge that the “born in brazil” slogan does not reflect the location the beverage was manufactured in or sourced from. And any amount paid for those future purchases will be the result of an informed decision—not because the Plaintiffs were deceived by the “born in brazil” slogan as to the origin of the product.” Opinion at 7.

Second, the court held that plaintiffs failed to satisfy the implied ascertainabily requriment under Rule 23.  To support their ascertainability contention, Plaintiffs relied on a declaration of a claims administrator who proposed a protocol that he claimed would identify class members. The protocol involved reference to third party retailer data, consumer-maintained receipts, and sword affidavits from purported class members regarding their purchase history.

The court concluded that the plaintiffs’ proposed methodology was insufficient to satisfy the ascertainabilty requirement. As the court observed, the plaintiffs did not identify any third party sales data that could be used to identify individual consumers, and plaintiffs admitted that it was unlikely that consumers would maintain receipts for low cost consumer goods like Vita Coco. The Court also rejected the plaintiffs’ self-identification by consumers affidavit methodology, which required class members to “undergo a second-level, five-part analysis entailing: review of third party records to verify a claimant’s state of residence; searches for duplicate claims based on substantially similar claimant information, including IP addresses; analysis of price and quantity data with respect to claimed amounts that fall outside of the normal range for each metric; and participation in a photo identification exercise requiring claimants to select a one-liter unflavored Vita Coco tetrapack from a line-up of other products. Claimants who fail the second-level analysis would be ‘subject to additional review and documentation.” Opinion at 12.

The Court held that this proposed methodology was not a “manageable process that does not require much, if any, individual inquiry,” and in fact would involve “layers of individual inquiry that amount to a series of impermissible “mini-trials,” in addition to affording denied claimants a right of appeal.” Id.

The Court also recognized that it would be unlikely for any class member to recall the detailed information about their purchases of Vita Coco over a six year period beginning in 2012.

Finally, because the sole alleged basis for federal jurisdiction was the Class Action Fairness Act, the Court dismissed the case for lack of subject matter jurisdiction.

The Court’s ruling is significant for food and beverage companies faced with product labeling class actions.  The case is the most recent District Court Order following the Eleventh Circuit’s seminal decision in Karhu v. Vital Pharms., Inc., 621 F. App’x 945 (11th Cir. 2015), which sets forth the parameters of the ascertainability standard.  The opinion further solidifies that Karhu’s requirement that plaintiffs establish that a defendant’s “records are in fact useful for identification purposes, and that identification will be administratively feasible,” (id. at 948) extends equally to the records of third parties such as retailers.

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