You’ll remember the scene from "Casablanca." Ilse (Ingrid Bergman) comes in and Rick (Humphrey Bogart) says, "Your unexpected visit isn’t connected by any chance with the letters of transit. It seems as long as I have those letters, I’ll never be lonely." That’s sort of how I feel about "all natural" product labeling litigation. So long as those cases exist, perhaps I’ll never be lonely. But will they always exist? The latest decision in our old friend, Astiana v. Ben & Jerry’s Homemade, Inc., provides me with some optimism I might be lonely again.
As you’ll recall from our post when this case was first filed, the plaintiff was upset because, she claimed, dutched cocoa was somehow an artificial product. We pooh-poohed that notion, but, presumably for reasons of judicial economy, Ben & Jerry’s chose to settle the case.
In the meantime, though, the Ninth Circuit Court of Appeals decided Dennis v. Kellogg Co., which greatly restricted the terms under which settlements of similar cases could be approved. In particular, the case limited the use of the cy pres doctrine, which would dispose of unexpended settlement funds, to charities that benefit the same goals as the unrepresented and unfound members of the plaintiff class. The court said,
Thus, appropriate cy pres recipients are not charities that feed the needy, but organizations dedicated to protecting consumers from, or redressing injuries caused by, false advertising. On the face of the settlement’s language, "charities that provide food for the indigent" may not serve a single person within the plaintiff class of purchasers of [the allegedly offending product].
Dennis was decided by the Ninth Circuit literally between the time the court in Astiana had preliminarily approved the class settlement and the date of the hearing on final approval. The court, cognizant of the decision, asked the parties to go back and revise their settlement to one that could be approved in light of Dennis. This they were unable to do, and the settlement collapsed. The plaintiffs then moved to certify the class. And got pounded by the court. After the jump, you’ll see how.
We’re written a lot about class actions before. In particular, this article by Melissa Jones outlines the issues in California well. In Astiana, the court focused on two related issues needed to certify a class, "ascertainability" and "predominance of common questions". The court found that the plaintiffs had made no showing on either issue. The claim had been that alkalized cocoa was not "all natural." Evidence after discovery showed that the cocoa in Ben & Jerry’s ice cream had been dutched using different alkalis, some of which were unquestionably "natural" and some of which were arguably "synthetic". Neither Ben & Jerry’s nor its cocoa vendors kept track of what ice cream contained which cocoa, and federal law does not require them to do so. Since the only class members were those who had purchased cocoa dutched using synthetic alkali, it was impossible to ascertain who was a member of the class and who was not.
The issue of "predominance of common questions" in this case focused almost entirely on damages. And here is where Ben & Jerry’s experts provided evidence that might start crumbling the walls of these "all natural" cases. Ben & Jerry’s, after all, had taken the words "all natural" off their labels (replacing it with a more prominent display of the slogan "Vermont’s Finest"), and thus had evidence of the impact the change had had on their sales, which was effectively none at all. The plaintiff, on the other hand, basically had no evidence supporting her claim that there was a market price difference between an ice cream labeled "all natural" and one that was not.
What did she claim? Here is the quote from the decision:
Defendant also notes that plaintiff complains about her "vibe" being "disrupted" upon learning from class counsel that Ben & Jerry’s might have used a "synthetic" alkali, but that she provides no evidence that other consumers shared this view.
Since the last Gratetful Dead concert (July 9, 1995 at Soldier Field, Chicago), it’s not as easy as it once was to identify a class of people who share the same vibes, disrupted or undisrupted. In any event, the court wasn’t going to let the plaintiff channel the vibes of others. What the court was looking for was more in the way of evidence of a common theory of damages, i.e., evidence exactly like the evidence in Ben & Jerry’s studies on consumer behavior, only coming to the exact opposite conclusion. The plaintiff had nothing:
Plaintiff has not offered any expert testimony demonstrating that the market price of Ben & Jerry’s ice cream with the "all natural" designation was higher than the market price of Ben & Jerry’s without the "all natural" designation. Thus, by definition, there is no evidence showing how much higher the price of one was than the other. More importantly, plaintiff has not offered any expert testimony demonstrating a gap between the market price of Ben & Jerry’s "all natural" ice cream and the price it purportedly should have sold for if it had not been labeled "all natural" – or any evidence demonstrating that consumers would be willing to pay a premium for "all natural" ice cream that was made with cocoa alkalized with a "natural" alkali, and did in fact pay such a premium.
The plaintiff’s utter failure to come forth with a theory of damages was fatal to class certification. And of course, the lack of class certification is practically fatal to plaintiff’s case. Even to win as a non-class action, plaintiff will still need to identify both her quantity of purchases of Ben & Jerry’s products, prove which ones had cocoa dutched with the allegedly unnatural alkali, and then demonstrate some difference between the price she paid and the price if her vibe had not been disrupted. Even with statutes that can also pay attorneys’ fees, it’s hard to see how anyone would bring such an action.
The combination of Dennis and Ben & Jerry’s market studies for Astiana may finally start to turn the tide against these cases. The application of the cy pres doctrine as required in the Ninth Circuit by Dennis leaves the parties with a dilemma they seemed to have found a way around before that case was decided. The plaintiffs’ bar would of course love for the unclaimed funds to go to an organization that can help bring the next “all natural case”. The defendants, naturally, would prefer not to arm the opposition. Before Dennis, the plaintiffs’ bar and the food industry had reached a détente, where the unclaimed funds would go to "good works" organizations. The plaintiffs’ bar needed to have the settlements of a certain size to justify their fees. Giving food to the homeless, particularly giving food the defendants already have on hand, was nearly costless to the defendants. Dennis now bars that way, which will be a significant impediment to easy settlements.
One might not want to make too much of the Ben & Jerry’s market studies, unless one is Ben & Jerry’s. They focused on that specific brand of ice cream, a brand that a large number of consumers have purchased and will continue to purchase based on general satisfaction with the brand and the values it has long stood for. So long as the ice cream appears to taste the same, consumers are not likely to abandon it because it no longer says "all natural", as the studies show. But that doesn’t mean that a less established product will have the same market acceptance without an “all natural” label. So maybe I won’t be lonely after all.