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Article: Ninth Circuit Revives “All Natural” Label Class Action, but Affirms Decertification of Damages Class

December 01, 2016
Business Litigation Reports

In an unpublished decision that is significant for both shoppers and consumer food companies, the Ninth Circuit recently reversed a district court’s ruling that the label “All Natural Fruit” is not likely to deceive customers. The court found that a trier of fact could conclude that Dole Foods Co. Inc.’s “description of its products as ‘All Natural Fruit’ is misleading to a reasonable consumer.” Brazil v. Dole Packaged Foods, Inc., Case No. 14-17480, Dkt. No. 51 (9th Cir. Sept. 30, 2016) (“Memorandum”) at 4. The Court also affirmed the district court’s limit on recovery to the premium paid under the misunderstanding that the fruit was actually “all natural” and decertification of the class pursuing damages because the plaintiff did not show how the premium could be calculated with proof common to the class. Id. at 6-8. The case was remanded to allow the plaintiff to move forward on behalf of an injunctive relief class and his remaining individual claims. Id. at 8.

Other courts have watched the Dole case closely and several lawsuits regarding “natural” label claims were stayed pending the Ninth Circuit’s decision. In the Dole case, the plaintiff and class representative Chad Brazil alleges that Dole’s “All Natural Fruit” labels are deceptive because the packaged fruits they describe contain synthetic citric and ascorbic acid. Dole moved for summary judgment on the merits of Brazil’s claims under California’s Unfair Competition Law (UCL), (Cal. Bus. & Prof. Code §§ 17200-17210), the California False Advertising Law (FAL) (Bus. & Prof. Code §§17500-17509), and the California Consumer Legal Remedies Act (CLRA) (Cal. Civ. Code §§ 1750-1784) on the grounds that there was no evidence that reasonable consumers likely would have been misled by Dole’s “All Natural Fruit” label.

The claims under each of these statutes are evaluated from the perspective of a reasonable consumer, meaning “the ordinary consumer acting reasonably under the circumstances.” Colgan v. Leatherman Tool Grp., 38 Cal. Rptr. 3d 36, 48 (Cal. Ct. App. 2006). To succeed on his claims, Brazil needs to show that Dole’s “All Natural Fruit” labels would probably have misled “a significant portion of the general consuming public or of targeted consumers, acting reasonably in the circumstances.” Lavie v. Proctor & Gamble Co., 129 Cal. Rptr. 2d 486, 495 (Cal. Ct. App. 2003). The FDA has not promulgated a formal definition of the word “natural” in relation to packaged food, but it has stated its policy that the use of the term “natural” means “that nothing artificial or synthetic (including all color additives regardless of source) has been included in, or has been added to, a food that would not normally be expected to be in the food.” Food & Drug Admin., Food Labeling: Nutrient Content Claims, General Principles, Petitions, Definition of Terms; Definitions of Nutrient Content Claims for the Fat, Fatty Acid, and Cholesterol Content of Food (“FDA Policy Statement”), 58 Fed. Reg. 2303, 2407 (Jan. 6, 1993); see also Brazil v. Dole Packaged Foods, Inc., Case No. 5:12-cv-01831-LHK, Dkt. No. 240 (C.D. Cal. Dec. 8, 2014) (“Order Granting Defendant’s Motion for Summary Judgment”) at 7-8.

To prove his claim that a reasonable consumer would be misled by the label, Brazil relied on his own testimony that he was deceived by the label. U.S. District Judge Lucy H. Koh found this evidence insufficient as a matter of “binding Ninth Circuit precedent” under Clemens v. DaimlerChrysler Corp., 534 F.3d 1017 (9th Cir. 2008), to demonstrate that it is probable that a significant portion of the consuming public could be mislead by the label and granted summary judgment in Dole’s favor. Order Granting Defendant’s Motion for Summary Judgment at 8-9. In Clemens, the Ninth Circuit held that “a few isolated examples of actual deception are insufficient” to survive summary judgment. 534 F.3d at 1026.

The district court also found unavailing the FDA’s informal definition of “natural” because Brazil offered no evidence besides a “conclusory statement” that citric acid and ascorbic acid “would not normally be expected to be in” the products at issue. FDA Policy Statement, 58 Fed. Reg. at 2407; see also Order Granting Defendant’s Motion for Summary Judgment at 9. Brazil appealed this dismissal.

A Ninth Circuit panel found Brazil’s evidence—the label itself, his own testimony, Dole’s consumer surveys prepared for litigation, and the FDA’s informal definition of “natural” including recent FDA warning letters—when taken together, “could allow a trier of fact to conclude that Dole’s description of its products as ‘All Natural Fruit’ is misleading to a reasonable consumer” and that a trier of fact could also “find that the synthetic citric acid and ascorbic acids in Dole’s products were not ‘natural.’” Memorandum at 3-4. The Ninth Circuit did not discuss the Clemens case on which the district court relied.

Two cases similar to Dole are also currently pending before the Ninth Circuit. In Jones v. ConAgra Foods, Inc., the Ninth Circuit is considering whether self-identified class members who do not have a receipt or other objective proof of their membership in the class are sufficient to fulfill the ascertainability requirement of Federal Rule of Civil Procedure 23. Case No. 14-16327, Dkt. No. 21 (9th Cir. Nov. 21, 2014, filed July 14, 2014) (Opening Brief). In Jones, plaintiffs filed a class action alleging certain ConAgra products were falsely advertised as “100% Natural” or “Free from artificial ingredients & preservatives.” Id. at 5-7. Acknowledging a split in California authority, the district court denied certification of the proposed classes, in part on the grounds that they were not ascertainable based only on class member affidavits. Id. at 16-17. One of the plaintiffs appealed the district court’s denial of one of the classes. Id. at 4-5.

In Kosta v. Del Monte Foods Inc., the plaintiffs allege that Del Monte’s labels misled them to falsely believe Del Monte’s tomato products contained certain nutrients and that certain fruit products were fresh. Case No. 15-16974, Dkt. No. 8 (9th Cir. Feb. 10, 2016, filed Oct. 2, 2015) (Opening Brief). Plaintiffs appealed the district court’s denial of class certification on the grounds that variations in the labels meant the class members were not determinable. See id. at 15-18.

Several significant cases in California have been stayed pending the outcome of Dole, Jones, and Kosta. These include a proposed class action by shoppers against Costco Wholesale Corp. over allegedly mislabeled “Kirkland Signature” brand foods. See Thomas v. Costco Wholesale Corp., Case No. 5:12-cv-02908 (N.D. Cal. filed June 5, 2012). In its order granting the stay in Thomas, the district court explained that the Ninth Circuit’s decisions would provide “substantial guidance on issues material to the class certification issues in the instant case,” and the “summary judgment issue from Brazil—about whether label statements such as 'all natural' can mislead a reasonable consumer—will provide guidance on arguments in this case.” Id., Dkt. No. 115 at 5. In Park v. Welch Foods, Inc., a class action alleging deception by “no sugar added” labels on juices and jams, the district court stayed a decision on class certification to avoid “wasted effort if the Ninth Circuit’s rulings change the requirements for class certification, standing, and damages in food labeling class actions.” Case No. 3:12-cv-06449, Dkt. No. 77 at 3 (N.D. Cal. Oct. 22, 2015, filed Dec. 20, 2012).

These suits highlight the tension between the increased demand for products perceived to be healthier and transparency in food production, on the one hand, and the lack of standard definitions or presence of inconsistent definitions for the “healthier” characteristics, on the other hand. While Dole’s somewhat relaxed evidentiary standard for proving a reasonable consumer would probably be misled may encourage consumers to bring lawsuits over food labels, the Ninth Circuit’s decisions regarding class certification in the two cases still pending before it, Jones and Kosta, will likely have a greater effect on plaintiffs’ and their counsels’ willingness to bring more lawsuits like Dole.