Wednesday, January 20, 2010

Two Recent District Court Opinions: Pom Wonderful LLC v. Welch Foods and Hanni v. Am. Airlines, Inc.

In Hanni v. Am. Airlines, Inc., 2010 U.S. Dist. LEXIS 3410 (N.D. Cal. Jan. 15, 2010), the plaintiffs sought certification of 4 separately defined classes arising out of an incident in which passengers were confined to a grounded American Airlines airplane for approximately four hours. The Court denied certification in its entirety, concluding each of plaintiffs’ proposed theories failed to meet the elements of commonality, typicality, adequacy, predominance and superiority. See Hanni, 2010 U.S. Dist. LEXIS 3410, at 23-35. (I think that this is essentially a royal flush for the defense). The plaintiffs’ problems on certification turned in large part on the inherent individuality of damages that arise in the context of a mass tort (hence, the rule that mass torts are generally not amenable to certification).

In Pom Wonderful LLC v. Welch Foods, 2009 U.S. Dist. LEXIS 123329 (C.D. Cal. Dec. 21, 2009), the Court granted judgment on the pleadings on the grounds the named plaintiff’s alleged injury was couched under a non-restitutionary disgorgement theory, and as such, was incapable of establishing Prop 64 standing as a matter of law:
In this case, Pom seeks a remedy that is not available to it under the UCL or FAL. Pom alleges that Welch's allegedly misleading advertising has caused "confusion, deception and mistake in the pomegranate juice market as a whole," which has "deprived [Pom] of business and goodwill," "injure[d] [Pom's] relationships with existing and prospective customers," and "resulted in increased sales of Welch's own White Grape Pomegranate Product while hindering the sales of [Pom's] pomegranate juice products . . ." Complaint PP 25-26. Thus, the damages that Pom seeks are profits that Welch obtained as a result of its allegedly unfair and fraudulent business practices and advertising. The California Supreme Court has previously held that "disgorgement of profits allegedly obtained by means of an unfair business practice" is not "an authorized remedy under the UCL where the profits are neither money taken from a plaintiff nor funds in which the plaintiff has an ownership interest." Korea Supply, 29 Cal. 4th at 1152.
See Pom Wonderful, 2009 U.S. Dist. LEXIS 123329, 6-7.

Pom underscores the inherent difficulty in bringing a UCL "competittor" action Post-Prop 64.

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