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ConAgra dealt blow by ninth circuit in '100% natural' case, but its wider significance is less clear, say experts

By Elaine Watson+

04-Jan-2017
Last updated on 05-Jan-2017 at 03:08 GMT2017-01-05T03:08:18Z

ConAgra Foods dealt blow by ninth circuit in 'natural' lawsuit

A hotly-anticipated opinion by the US court of appeals for the ninth circuit in a high-profile false advertising case, contains bad news for defendant ConAgra Foods (now ConAgra Brands), but may prove to be of less significance to other food manufacturers, say attorneys. 

The lawsuit* consolidates legal actions in multiple states alleging ConAgra falsely advertised Wesson-branded cooking oils as ‘100% natural’ when they were made from GM crops, and has been watched closely by regulatory experts.

While the Ninth Circuit on Tuesday upheld a lower court's certification of the consumer class in the case, however, its published opinion  only dealt with one aspect of the case (ascertainability – or how to identify members of a class).

Several other, equally critical, issues - notably abut how to calculate damages - were addressed in an unpublished memorandum, which can be referenced here, but establishes no binding legal precedent except as to the parties in the case in question.

Judge: It's unrealistic to expect consumers to keep receipts for low ticket items at the center of food labeling lawsuits

In the published opinion, ninth circuit Judge Michelle T. Friedland affirmed a lower court’s view on the ascertainability of the class vs ConAgra Foods, and agreed that requiring plaintiffs to demonstrate an ‘administratively feasible’ way to identify class members should not be a prerequisite to class certification.

In other words, she said, it’s unrealistic to expect consumers to keep receipts for low-value food items for months and even years just in case they need them later on to qualify as a member of a class action lawsuit, and are required to demonstrate proof of purchase.

Meanwhile, the likelihood of fraud in the absence of receipts for such low-ticket items is in reality pretty slim given how low the stakes are (it’s not worth committing perjury over a bottle of cooking oil) and how few people typically even bother to file claims in cases when a settlement is reached, she added.

Key issues not addressed in published opinion

Other issues raised in the case, however, were not covered in the published opinion, but were instead remarked upon in an unpublished ‘memorandum.’

In this far shorter memorandum, which sets no legal precedent, the ninth circuit judges disagreed with ConAgra Foods’ arguments on issues such as typicality (were the named plaintiffs’ claims different from those of absent class members?), commonality, and damages (they disagreed with ConAgra's contention that the plaintiffs had failed to come up with a reliable method for calculating damages).

Attorney: 'On all the important points for class certification, they essentially punted and left these issues with the trial courts'

So should food manufacturers hit with similar putative class action lawsuits be drowning their sorrows with ConAgra this week?

Maybe not, said Perkins Coie partner David Biderman, given that only the published opinion set a legal precedent, and was not unexpected (several other appeals court have recently come to the same conclusion); while the more jarring memorandum opinion “cannot be cited or used as precedent in briefs or court opinions.”

He added: “On all the important points for class certification, they essentially punted and left these issues with the trial courts... the important class certification issues of materiality, reliance and damages are still open and provide important defenses to class certification in these cases."

"The published opinion is definitely not helpful to defendants opposing class certification, but it is not a surprising result in the Ninth Circuit...

"The unpublished decision is obviously also not helpful, but gives short shrift to most of the issues.  The two points in the unpublished opinion that are likely to get the most play from plaintiffs’ lawyers are the discussion of damages... and the eleven statewide classes.  

"Coming up with an adequate class wide damages model in 'all natural' and other food labeling cases continues to be a challenge for plaintiffs, so they’ll take comfort in the Circuit’s affirmation on this point. And courts are generally reluctant to certify either nationwide or multiple statewide classes given the material differences in state laws, so plaintiffs will jump on that point as well.  But keep in mind that the standard of review was merely abuse of discretion, so all the Circuit is saying is that the district judge did not abuse her discretion, not that her approach was the required one under the law."

Angel Garganta, partner, Venable LLP 

It’s disappointing, but I can’t say the result was entirely unexpected

Ryan Kaiser, chair, class action and business litigation team, Amin Talati Upadhye, told FoodNavigator-USA: "Seeing as how most of these food and beverage cases involve inexpensive goods (for which consumers rarely retain proof of purchase), a heightened standard would have been nice tool in the defense bar’s belt. [So] it’s disappointing, but I can’t say the result was entirely unexpected.

"Several other circuit courts have already refused to adopt stricter standards for class certification in cases where there is no readily apparent way to identify class members."

Meanwhile, he added: "This appeal focused on typicality, predominance and superiority (in the unpublished opinion), and ascertainability (in the published opinion).  Thus, the issues of damages, reliance and materiality are still available in defense strategy mix, unchanged by the ninth circuit’s decision."

Asked why the court chose to address some of the pertinent issues in the case in an unpublished opinion that cannot be cited in other cases, he said: "It’s not surprising they went this route since the issues decided in the unpublished decision were, as framed in this particular appeal, less likely to have broader impact on the class action landscape."

ConAgra Foods 'disappointed' by decision

A ConAgra Brands spokesman told FoodNavigator-USA: "While we are disappointed by the Ninth Circuit's order, ConAgra is confident it will ultimately prevail on the merits."

*The case is Robert Briseno et al v ConAgra Foods Inc  2:11-cv-05379

More legal comment to follow...

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