Friday, June 10, 2011

Northern District Certifies False Advertisement Class Based on Walnut Manufacturer Health Claims: Zeisel v. Diamond Foods, Inc.

On June 7, 2011, Northern District Judge Jeffrey S. White certified a nationwide UCL/CLRA class based on allegations that the defendant engaged in promotional activities that “‘used express and implied statements about the positive effects of omega-3 fatty acid consumption on health to entice consumers to purchase its’ Shelled Walnut Products.” See Zeisel v. Diamond Foods, Inc., 2011 U.S. Dist. LEXIS 60608, 12-13 (N.D. Cal.). The Court’s opinion contains interesting analysis on issues relating to absent class member standing, as well as the element of ascertainability.

With regard to the first issue, the defendant attempted to re-hatch an issue, raised and rejected in Tobacco II, that absent class members must independently establish Article III standing. The defendant maintained that the California Supreme Court’s ruling in Tobacco II only applies in State court (a line of argumentation that I have been seeing with increasing frequency on various issues).  The Court rejected the argument, reasoning that the Tobacco II court relied on Federal authorities interpreting Article II standing under Rule 23 in making its determination:
Diamond also urges the Court to deny class certification because absent class members lack Article III standing. [] Diamond argues that although the California Supreme Court has held that "state courts may permit uninjured individuals to pursue UCL actions in state court, so long as the class representative has established standing," the Supreme Court's decision did not and could not "remove the standing requirements set forth in Article III, including injury-in-fact and causation." (Opp. Br. at 14:8-13 (emphasis in original, citing Tobacco II, 46 Cal. 4th at 324).) The Court does not read Tobacco II to hold that a class may include members who have not been injured by a defendant's conduct. Rather, the Tobacco II court held that Proposition 64 "was not intended to, and does not, impose section 17204's standing requirement on absent class members in a UCL class action where class requirements have otherwise been found to exist." Tobacco II, 46 Cal. 4th at 324. This holding appears to be in accord with federal authority construing Rule 23. Indeed, the Tobacco II court relied heavily on federal cases interpreting the requirements of Rule 23. Thus, it noted that, in general, "standing in a class action is assessed solely with respect to class representatives, not unnamed members of the class." Id., 46 Cal. 4th at 319 (quoting In re General Motors Corp. Dex-Cool Prod. Liab. Litig., 241 F.R.D. 305, 310 (S.D. Ill. 2007)).
See Zeisel, 2011 U.S. Dist. LEXIS 60608, at 13-14.

With regard to the second issue, the Court the rejected the defendant’s argument that the lack of records enabling one to confirm whether individual consumers actually purchased the products in question foreclosed a finding of ascertainability. As reasoned by the Court, it was sufficient that the class was defined in such a way that consumers could identify themselves:
Diamond argues that it is not administratively feasible to determine if a person is a member of the proposed class because it sells its Shelled Walnut products to retailers and it does not track consumer purchases. Diamond also argues that it sells numerous other nut products and that neither the prospective class members nor the Court would have a means by which they could determine whether they purchased the Shelled Walnut products at issue in this litigation. The Court is not persuaded. [] The proposed class includes (1) all persons (2) who purchased Shelled Walnut Products in 6 ounce, 10 ounce, 16 ounce and/or 3 pound bags (3) which bore labels bearing the Structure Function Claim and Banner (4) from March 22, 2006 through the present. The Court does not find this definition to be subjective or imprecise. Rather, it includes objective characteristics that would permit a consumer to identify themself as a member of the proposed class. See, e.g. Parkinson v. Huyndai Motor America, 258 F.R.D. 580, 594 (C.D. Cal. 2008); cf. Keilholtz, 268 F.R.D at 336 (finding class definition that included persons who lived in the United States who own a home in which the disputed product was installed after a particular date was not subjective or imprecise); Chavez v. Blue Sky Nat. Bev. Co., 268 F.R.D. 365, 377 (N.D. Cal. 2010) (concluding that class of persons who purchased beverage bearing disputed mark or brand, in the United States, during a particular period was ascertainable).
See Zeisel, 2011 U.S. Dist. LEXIS 60608, at 20-21.

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