class action certified with adequate price premium model for “nutritious” claims

McMorrow v. Mondelēz International, Inc., 2021 WL 859137, No.
17-cv-2327-BAS-JLB (S.D. Cal. Mar. 8, 2021)

Consumers in California and New York who purchased belVita
breakfast biscuits, brought a putative class action alleging that MDLZ labeled
the breakfast biscuits as “nutritious,” despite the biscuits’ high added sugar
content. Showing how plaintiffs’ lawyers adapt to barriers to class
certification, the court granted a renewed motion for class certification
because their class-wide damages model matches their theory of liability in
compliance and because no other individual issues predominate over common ones.

Plaintiffs’ expert opined that a conjoint analysis could
measure the relevant price premium. MDLZ argued that the price premium cannot
be estimated without considering supply-side and competitive factors, but
conjoint analysis can do so if the prices used in the surveys underlying the
analysis reflect actual market prices in the class period, and the quantities
used in the calculatiosn reflect actual quantities sold during the class period.
That was the case here. Other criticisms of conjoint analysis went to weight
rather than admissibility.

A similar fate befell MDLZ’s objections to the proposed
survey. Debates over whether the survey should include taste; include only belVita
purchasers or include breakfast biscuit purchasers generally; account for repeat
purchases where a consumer might not scrutinize the label; etc. went to weight
and not admissibility.

The court also declined to exlcude MDLZ’s experts. It relied
on one consumer expert to argue that different interpretations of the term “nutritious”
meant that individualized issues predominated over common ones. The court
disagreed. The expert’s survey sought to measure, in relevant part, whether and
to what degree “consumers associate the term ‘nutritious’ with a variety of
attributes including calorie content, whole grains, and vitamins and minerals.”
However, plaintiffs wouldn’t need to prove individual reliance, but rather that
members of the public are likely to be deceived, so some variation isn’t fatal.
Plaintiffs “need only make an objective showing of a probability that a
significant portion of the relevant consumers acting reasonably could be misled
by the challenged statements.”

Plaintiffs used internal MDLZ documents to show that
reasonable consumers can understand “nutritious” to mean food conducive to
health. This was enough to get to a jury. Similarly, it wasn’t important that the
health effects of sugar varies among consumers; that’s irrelevant to
misleadingness.

NYGBL statutory damages: Plaintiffs sought to recover
statutory damages for the NY class. For violations of section 349, the statute
allows a plaintiff to recover “actual damages or fifty dollars, whichever is
greater” For violations of section 350, a plaintiff may recover “actual damages
or five hundred dollars, whichever is greater.”

MDLZ argues that statutory damages were unavailable absent
class-wide proof that consumers suffered an “actual injury” in the form of a
price premium, and that an award of statutory damages would result in
disproportionate recovery for the New York class as compared to the class
members’ actual injury. It is true that the GBL has injury and causation
elements, requiring them to prove a price premium, which they were prepared to
do. And as for disproportionate recovery: “It is well settled that statutory
damages under the relevant sections of the GBL are available as a class-wide
remedy in class actions brought in federal courts under Federal Rules of Civil
Procedure, irrespective of New York legislature’s limitation of class actions
to causes of actions brought under statutes with specific authorization of
class recovery.” That didn’t bear on whether certification was “superior” to
alternate methods. (Citing, inter alia, a case pointing out that “[i]f the size
of a defendant’s potential liability alone was a sufficient reason to deny
class certification, however, the very purpose of Rule 23(b)(3)—‘to allow
integration of numerous small individual claims into a single powerful
unit’—would be substantially undermined.”) “In the Court’s general experience,
the prospect of recovering $550 (the maximum statutory damages for each
violation under the New York GBL, for example) is not enough to incentivize
individual litigation.”

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