Consumer Class Actions and Mass Torts : Class Action Lawyer & Attorney : J. Russell Jackson : Skadden Law Firm : Complex Class Actions : Consumer Class Actions & Mass Torts Law Blog

As I have noted repeatedly in prior posts, statements about the nutritional value or health effects of food and beverage products often serve as the basis for putative consumer fraud class actions.  Increasingly, however, courts are taking a critical view of these theories, dismissing claims based on puffery or representations that no reasonable consumer would rely upon.

For example, in Carrea v. Dreyer's Grand Ice Cream, Inc., No. 11-15263, Slip op. (9th Cir. Apr. 5, 2012), the plaintiffs had alleged that the defendant had violated California's Unfair Competition Law, Consumer Legal Remedies Act, and False Advertising Law, and New York's GBL section 349 by putting various statements on the packaging for its delicious Drumsticks product.  Plaintiffs alleged that putting "0g Trans Fat" on the front label was deceptive because there were trace amounts (less than 0.5 grams per serving) of trans fat in a serving.  Plaintiffs argued that although the FDA allows such a statement to be made in the Nutrition Facts label, it was fraud to put this statement on the front label unqualified by the statement "per serving."

The Ninth Circuit affirmed the trial court's dismissal of the claim as preempted by the Nutrition and Labeling Act.  Similarly, the court affirmed the trial court's holding that it would be implausible for a reasonable consumer to interpret the following statements to mean that Drumsticks are more nutritious or "wholesome" than competing products:  "Original Sundae Cone," "Original Vanilla," and "Classic."  The court noted that "it strains credulity to claim that a reasonable consumer would be misled to think that an ice cream dessert, with 'chocolate coating topped with nuts,' is healthier than its competitors simply by virtue of these 'Original' and 'Classic' descriptors."  Id. at 3.

Last week the maker of Muscle Milk was largely successful in having a number of allegations dismissed from a putative consumer fraud class action alleging that statements about its nutritional value were deceptive.  In Delacruz v. Cytosport, Inc., No. 11-3532 CW, Slip op. (N.D. Cal. Apr. 11, 2012), the plaintiffs claimed that Muscle Milk's beverage "Ready to Drink" and its snack bars ("Muscle Milk Bars") were deceptively marketed because they contained so many calories, saturated fat, and total fat, but still claimed to be healthy and nutritious.

The court looked to each set of representations allegedly made on the product, in advertising, and on the web.  With respect to representations on the product itself, the only ones that the court found to be potentially actionable were the use of the terms "healthy fats" and "nutritional shake."  The former suggests that the product has more unsaturated fats than it does, the court said.  The latter gave rise to an overall allegation of nutritiousness that could be actionable, the court explained.

The defendant argued that because the fats and other components were specifically listed in the Nutrition Facts panel, there could be no deception as a matter of law. But the court rejected this argument, reasoning that where the package has an affirmative misrepresentation, the defendant should not be allowed to rely on the small print of the Nutrition Facts panel to contradict it.  Slip op. at 13 (citing Williams v. Gerber Prods. Co., 552 F.3d 934, 938 (9th cir. 2008); Yumul v. Smart Balance, Inc., 733 F. Supp. 2d 1117 (C.D. Cal. 2010)).

But the court rejected plaintiff's claim that the statement "Healthy, Sustained Energy" on the product labels was misleading, reasoning that "the term 'healthy' is difficult to define and Plaintiff has not alleged that the drink contains unhealthy amounts of fat, saturated fat, or calories from fat, compared to its protein content, based on any objective criteria."  Slip op. at 13-14.  Plaintiffs had compared the fat content of defendants' products to Krispy Kreme donuts.  But the court held that this was unhelpful because plaintiff did not "explain how much protein, vitamins and minerals are in such a doughnut or posit an objectively healthy ratio of protein to fat.  Slip op. at 14.  With respect to the snack bars, plaintiff had also alleged that "healthy" was deceptive because it did not disclose that the bars contain saturated fats, fractionated palm kernel oil, and partially hydrogenated palm oil.  The court rejected this, stating that plaintiff did not allege that these fats were trans fats.

Looking at the advertising, the court rejected plaintiffs' claim based on the following statements, which it concluded were non-actionable puffery: 

Go from cover it up to take it off.

From invisible to OMG!

From frumpy to fabulous.

Slip op. at 14.

And in analyzing the website, the court considered this statement:  "Ready-to-Drink is an ideal nutritional choice [if] you are . . . on a diet."  The court concluded that this, too, is puffery:  "The word 'ideal' is vague, highly subjective, and non-actionable, like 'superb, uncompromising quality,' addressed in Oesteicher v. Alienware Corp., 544 F. Supp. 2d 964, 973 (N.D. Cal. 2008), and 'high performance' and 'top of the line,' addressed in Brothers v. Hewlett-Packard Co., 2006 WL 3093685, at *4-*5 (N.D. Cal. 2006)."  Slip op. at 15.

Thus, after all of the statements challenged by plaintiffs, the court concluded:

the sole cognizable misrepresentation that Plaintiff has plead is the 'healthy fats' statement on the fourteen ounce Muscle Milk RTD container, buttressed by the 'nutritious snack' statement.

Id.

These decisions -- particularly coming, as they do, from the People's Republic of California -- provide some encouragement that courts are becoming increasingly comfortable with excluding challenged representations as non-actionable as a matter of law where they are puffery or could not be reasonably relied upon by a reasonable consumer to produce an injury.

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I've previously opined on this blog and elsewhere that global warming litigation -- at least cases in which individuals seek damages from companies that emit greenhouse gasses -- has no leg to stand on because causation is so attenuated and the issue is tied up with important political questions that are committed to the expertise of federal agencies like the EPA, as well as Congress.

My viewpoint was confirmed a few years ago in a case called Comer, in which a Mississippi federal court dismissed a class action filed by Hurricane Katrina victims who sought to blame their loss on various energy and mining companies.  The trial court had held that the chain of causation was too attenuated to confer constitutional standing on the plaintiffs, and it further held that the case should be dismissed under the political question doctrine because it required the federal court to decide policy questions about greenhouse gas emissions that were committed to the province of the political branches.

Comer had a curious subsequent history.  Plaintiffs appealed to the Fifth Circuit, where they won a partial victory, with the appellate court reversing the judgment on the state law claims of public and private nuisance, trespass, and negligence.  The defendants, however, petitioned for rehearing en banc, and the Fifth Circuit granted the petition and vacated the three-judge panel's decision.  Then, a Fifth Circuit judge was recused, resulting in the loss of a quorum for an en banc panel to act.  The Fifth Circuit thus dismissed the appeal and reinstated the District Court's opinion.  Plaintiffs did not petition the U.S. Supreme Court for certiorari, but instead petitioned for a writ of mandamus to require the Fifth Circuit to reinstate the appeal.  The Supreme Court denied plaintiffs' petition, and thus the District Court's opinion dismissing the lawsuit remained the law of the case.

In May 2011, Ned Comer and the other plaintiffs filed a virtually identical lawsuit in the same District Court asserting the causes of action the three-judge panel had said should have been remanded:  public and private nuisance, trespass, and negligence.  Plaintiffs sued the same defendants, and added a few more.  Feeling as if it was Groundhog's Day, the defendants once again moved to dismiss.

Yesterday the court issued an opinion unsurprisingly granting the defendants' motion to dismiss.  See Comer v. Murphy Oil USA, Inc., No. 1:11CV220-LG-RHW, Slip op. (S.D. Miss. Mar. 20, 2012).  The court's primary holding is that the suit is barred by the doctrines of res judicata and collateral estoppel.  The 11 plaintiffs in Comer I are the same plaintiffs who have brought Comer II.  The district court's order in Comer I was a final order dismissing the case for lack of jurisdiction, which is a decision on the merits for the purposes of res judicata.  Plaintiffs had a full and fair opportunity to argue the issue in the first suit.  The two suits involve the same "transaction," namely damages arising out of the occurrence of Hurricane Katrina.  Moreover, the admitted purpose of the second lawsuit is to convince the court that it was wrong in the first lawsuit.

The district court's res judicata holding should have ended the issue.  However the court, "out of an abundance of caution," went on to address the defendants' additional arguments.

The court held that plaintiffs lacked Article III standing to assert their state law claims.  The court focused on the causation element of the standing inquiry.  It noted that the U.S. Supreme Court found that a state had standing to bring a lawsuit to force the EPA to issue greenhouse gas regulations in Massachusetts v. EPA, 549 U.S. 497 (2007).  However, the Supreme Court gave special deference to a state  suing in its capacity as a quasi-sovereign, and expressly reserved the question of whether an individual would have standing to bring a global warming claim.  Moreover, the Supreme Court had acknowledged that causation regarding greenhouse gases emissions was a difficult global problem, and that any domestic reductions in emissions likely would be offset by increases in developing countries.

The district court also observed that in American Electric Power Co. v. Connecticut, 131 S. Ct. 2527 (2011), the Supreme Court was equally divided on the question whether states had standing to file lawsuits against corporations to reduce greenhouse gas emissions, and it expressly reserved the question whether individuals could assert such standing.

The plaintiffs in Comer II relied on authorities under the Clean Water Act finding standing where the defendants were merely alleged to have contributed to plaintiffs' injuries.  The district court distinguished their authorities, relying in part on Native Village of Kivalina v. Exxonmobil Corp., 663 F. Supp. 2d 863 (N.D. Cal. 2009), which had explained that CWA cases only find "contribution" standing where a presumption of standing arises as a result of a defendant's violation of federally-mandated pollution limits.  Where, as here, there is no such federally-mandated limit on greenhouse gases (and thus no such violation), no presumption can arise.  Moreover, even the CWA cases recognized that a point of discharge can be too remote from the plaintiff's injury to be legally recognized as a contributing cause.  See slip op. at 21-22 (citing Friends of the Earth, Inc. v. Crown Cent. Petrol. Corp., 95 F.3d 358 (5th Cir. 1996) (plaintiffs whose injury was 18 miles from discharge did not have standing to sue over the discharge)).

Ultimately, the Comer II court recognized, even plaintiffs admit that global warming is attributable to numerous natural and man-made causes that interact cumulatively over the period of centuries to create climate effects:

The plaintiffs cannot allege that the defendants' particular emissions led to their property damage.  At most, the plaintiffs can argue that the types of emissions released by the defendants, when combined with similar emissions released over an extended period of time by innumerable manmade and naturally-occurring sources encompassing the entire planet, may have contributed to global warming, which caused sea temperatures to rise, which in turn caused glaciers and icebergs to melt, which caused sea levels to rise, which may have strengthened Hurricane Katrina, which damaged the plaintiffs' property.

It is insufficient for the plaintiffs to allege that the defendants' emissions contributed to the kinds of injuries that they suffered.

Slip op. at 20-21.  The court concluded that such tenuous causation should not allow plaintiffs to send the defendants on a discovery odyssey "that will likely cost millions of dollars."

The district court in Comer II also held that plaintiffs' claims were non-justiciable under the political question doctrine as established in Baker v. Carr.  Plaintiffs argued that Massachusetts v. EPA had rejected that argument.  But the district court held that Massachusetts v. EPA was fundamentally different because it involved the proper construction of a congressional statute.  Here, the policy judgments regarding greenhouse gas emission levels were expressly committed to the EPA.  Indeed, the district court noted, the Supreme Court had stated "that it possessed neither the expertise nor the authority to evaluate the policy judgments that EPA offered as justification for refusing to regulate motor vehicle emissions, such as issues involving foreign relations."  Slip op. at 26.  The Comer II court concluded:

[T]he plaintiffs are asking the Court, or more specifically a jury, to determine without the benefit of legislative or administrative regulation, whether the defendants' emissions are "unreasonable."  Simply looking to the standards established by the Mississippi courts for analyzing nuisance, trespass, and negligence claims would not provide sufficient guidance to the Court or a jury. . . .

. . . The Supreme Court held that judgments concerning the reasonableness of greenhouse gas emissions are properly committed to the EPA, and if district courts were to make such judgments, those judgments would interfere and potentially conflict with the EPA's actions.

. . . The Court finds that the claims presented by the plaintiffs constitute non-justiciable political questions, because there are no judicially discoverable and manageable standards for resolving the issues presented, and because the case would require the Court to make initial policy determinations that have been entrusted to the EPA by Congress.

Slip op. at 28-29.

The district court in Comer II also concluded that plaintiffs' state law causes of action are preempted by the Clean Air Act and the EPA actions that it authorizes, relying primarily on American Electric Power Company v. Connecticut.  That case had held that the CAA preempted a federal common law right to seek abatement of carbon dioxide emissions from power plants.  The Comer II court reasoned that plaintiffs' state law claims here required the court to do the same thing the federal common law claim would have in Connecticut:  determine the reasonableness of the defendants' greenhouse gas emissions.  Accordingly, it held that the state law claims were similarly preempted.

The district court in Comer II also held that plaintiffs' claims were barred by Mississippi's three-year statute of limitations.  Katrina had hit in 2005, but the lawsuit was filed in 2011.  Plaintiffs argued that Mississippi's savings statute operated to toll the statute of limitations.  The savings statute gives a plaintiff a year to commence a new suit where the prior suit has been dismissed or abated because of a defect or other matter not affecting the merits.

The district court held the savings statute did not apply because there was a judgment of dismissal with prejudice entered in Comer I.  Plaintiffs could have asked the U.S. Supreme Court for a writ of certiorari, but they did not.  Accordingly, the judgment was final.

There is, however, a slim reed of hope for plaintiffs to file a Comer III.  In ruling on the statute of limitations, the court concluded that plaintiffs' allegations about their future risk for more severe storms and loss of property are not yet actionable, in part because plaintiffs did not seek injunctive relief.  "As a result, the Court finds that the only actionable claims filed by the plaintiffs are the claims concerning Hurricane Katrina, and those claims are barred by the statute of limitations."  Slip op. at 33.  Could another storm or another theory of injury produce a Comer III?  It shouldn't.  But with these Plaintiffs, who knows?

Finally, the district court granted the defendants' motion to dismiss regarding proximate cause, which is a required element of each of plaintiffs' state law claims.  Mississippi defines proximate cause as a cause "'which in natural and continuous sequence unbroken by any efficient intervening cause produces the injury and without which the result would not have occurred.'"  Slip op. at 34 (citation omitted).  The court held that plaintiffs' theory couldn't meet this standard as a matter of law:

The assertion that the defendants' emissions combined over a period of decades or centuries with other natural and man-made gases to cause or strengthen a hurricane and damage personal property is precisely the type of remote, improbable, and extraordinary occurrence that is excluded from liability.

Slip op. at 35.

Judge Louis Guirola's opinion in Comer II is a strong reminder of the many difficulties that private plaintiffs would have trying to impose legal liability on companies for the purported effects of global warming.  Although I do not expect plaintiffs' counsel to simply vacate the field in the wake of this opinion, the strength of the arguments against liability suggest why there has been no great rush of firms to file suits asserting these theories of liability.

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In December I posted about Price v. Martin, in which the Louisiana Supreme Court expressly adopted the U.S. Supreme Court's analysis in Wal-Mart v. Dukes to reverse certification of a class of property owners who alleged that they were exposed to certain chemicals by a neighboring wood treatment facility.  In Price, the court recognized that there was no real commonality because establishing damages and causation would require individualized analysis.

Just last week, the Louisiana Supreme Court issued a per curiam opinion demonstrating that Price was not an anomaly.  In Alexander v. Norfolk Southern Corp., No. 11-C-2793, Slip op. (La. Mar. 9, 2012), the putative class action arose out of a chemical spill from a train in New Orleans in 2001.  The Fire Department investigation had established that ethyl acrylic fumes leaked from valves in two cars that were parked for less than an hour waiting for another train.  The firefighters tightened the valves, which solved the problem, and sent the trains on their way.  No evacuation was called.  Twenty people were treated at the scene for exposure and released.  Hundreds of other people complained of eye/nose/throat irritation and a noxious smell.  Naturally this spawned a class action, which was certified by the trial court and affirmed by the intermediate court of appeal.

The Louisiana Supreme Court, citing Price, reiterated that class certification requires a rigorous analysis and that there must be significant proof of a common question, the determination of which will "'resolve an issue that central to the validity of each one of the claims in one stroke.'"  Slip op. (quoting Price quoting Dukes).

The court ultimately premised its reversal on the lack of predominance of common issues, and the need for individual trials:

[T]he district court failed to take into account undisputed evidence in the record demonstrating that any determination of damages will be dependent upon proof of facts individual to each putative class member.  In particular, . . . plaintiffs' toxicologist testified that only those individuals with a unique susceptibility to ethyl acrylate would exhibit physical symptoms at the extremely low concentrations involved in the release, that this susceptibility would manifest itself in less than .1 percent of any given population, and determining whether any particular person was within this microcosm of the population would require an entirely individualized understanding of each person's health, medical history, records, and other variables impacting exposure.  In addition, [he] testified that the dose of exposure would be impacted by important individual variables, such as the specific location of the plaintiff at the time of exposure, and whether the plaintiff moved from location to location during the exposure.  Similarly, the defense toxicologist, . . . testified the symptoms complained of by the plaintiffs, such as irritation of the eyes and nose, respiratory irritation, coughing, nausea, and vomiting, are not specific or unique to ethyl acrylate exposure, but are common symptoms with a myriad of causes.

Given this testimony, it is clear that each member of the proposed class will necessarily have to offer different facts to establish liability and damages. . . . [T]he class would degenerate into a series of individual trials.

Slip op.

The decision in Alexander is a strong reminder that even in state court class actions, expert proof at the class certification stage is important because it can frame how the issues must be tried at trial.

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Previously I have discussed the federal doctrine of so-called American Pipe tolling, in which a legal fiction is employed to toll the running of the statute of limitations on absent class members' federal causes of action during the pendency of the class action -- at least until certification is denied or something else occurs (such as dismissal) that would make it unreasonable for an absent class member to think that her interests are continuing to be protected by the class action lawsuit.  The whole doctrine is based on the legal fiction that absent class members actually are aware of the pending class action suit and would seek to intervene in it unless class action tolling of the statute of limitations applied to their claims.  

American Pipe tolling is a judicially-created exception to federal statutes of limitations in federal courts.  Whether a previously-filed class action has any effect on the running of the statute of limitations on a state law cause of action is for each state to decide.  Most states have not directly considered the question.  Of those that have, many do not give any tolling effect to class actions filed outside of the state, i.e., they reject cross-jurisdictional class action tolling.  This makes sense, of course, when you remember that the whole tolling doctrine is premised on the fiction that absent class members are actually aware of the putative class action.  That is much less likely where the class action was filed in another state far away.

Recently, the MDL transferee in the Fosamax litigation certified two tolling questions to the Virginia Supreme Court.  The MDL transferee was faced with a motion for summary judgment on four individual claims brought by Virginia residents.  Each was clearly outside the statute of limitations unless tolling was applied.  Plaintiffs argued that the prior pendency of a putative nationwide class action filed in the Middle District of Tennessee operated to toll the running of the statute of limitations on their Virginia law claims for strict liability, negligence, and medical monitoring.

Virginia law doesn't even allow class actions in state court.  So the MDL transferee asked two questions of the Virginia Supreme Court:  (1) does equitable tolling apply to extend the statute of limitations during the pendency of a putative class action, and (2) does the statute of limitations itself allow for tolling during the pendency of a putative class action.  The Virginia Supreme Court answered with a resounding "no."  See Casey v. Merck & Co., No. 111438, Slip op. (Va. Mar. 2, 2012).

It first held that Virginia law is clear that there are no equitable exceptions to the statute of limitations.  It then looked at the text of the statute of limitations itself.  The statute does allow for credit to be given to a previously-filed action, but that previously-filed action must have been the same party as the party to the later suit.  Here, different named plaintiffs had filed the Tennessee action -- albeit as putative representatives of all people who took Fosamax.  The Virginia Supreme Court noted that Virginia law does not allow class actions and thus does not recognize such "representative" status.  Accordingly, it held that there was no statutory authority for tolling the statute of limitations here because the parties to the two actions were different.

Casey thus squarely places Virginia in the camp of states that have rejected not only cross-jurisdictional class action tolling, but any form of class action tolling whatsoever.

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The Sixth Circuit recently affirmed dismissal of a putative class action against a car rental company based on the voluntary payment doctrine.  See Salling v. Budget Rent-A-Car Sys., Inc., No. 10-3998, Slip op. (6th Cir. Feb. 29, 2012).

In Salling, Plaintiff challenged Budget's EZ FUEL fee.  Under the rental contract, Budget will charge you the EZ FUEL fee (a flat, $!3.99 fee) for gas if you have driven the car less than 75 miles.  To avoid having the fee charged, you have to fill the tank with gas and provide a receipt.  The receipt requirement makes sense, since the amount of gas used on short trips may not be visible from looking at the gas gauge.  

Plaintiff objected to paying the fee when he returned his car.  But he apparently did not have his gas receipt with him.  Ultimately, he paid the fee, receiving a receipt that broke out the EZ FUEL fee that he disputed.  He then filed a class action against Budget.  Budget removed it to federal court and moved to dismiss based on the voluntary payment doctrine.  The trial court granted the motion, and Plaintiff appealed.

The Sixth Circuit first examined its jurisdiction, It observed that Budget bore the burden of proof on the jurisdiction question, but held that it met its burden with a spreadsheet that listed more than 1 million renters who drove less than 75 miles, were charged the EZ FUEL fee, and had a fuel gauge reading of "full" upon return of the car.  The spreadsheet indicated that Budget collected $11.2 million from those drivers.  This was enough to satisfy CAFA's pre-requisites. 

The court then turned to the voluntary payment doctrine, finding that it is recognized by Ohio law.  The doctrine is best described in this way:  "money voluntarily paid by one person to another on a claim of right to such payment, cannot be recovered merely because the person who made the payment mistook the law as to his ability to pay."  Slip op. at 5.  The court noted that the Plaintiff had paid the fee in anticipation of filing suit, and held that the payment was voluntary.  It explained that a payment that is made on a disputed construction of a contract term is not made under a mistake of fact, but rather under a mistake of law.  Although a payment made under a mistake of fact might be recoverable, a payment made under a mistake of law is still voluntary and cannot be reversed.  Slip op. at 6.

A little over a year ago I had written about an opinion from the Seventh Circuit written by none other than Justice Sandra Day O'Connor, which applied the "voluntary payment doctrine" with even more discussion.  That opinion, along with the Sixth Circuit's opinion in Salling, reiterate that the voluntary payment doctrine is alive and well as a defense in consumer class action litigation.

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February 29, 2012 will go down as a red-letter day in First Amendment history.  It was the day that U.S. District Judge Richard J. Leon struck down regulations in which the federal government tried to force product manufacturers to publish the government's opinions about their products.  See R.J. Reynolds Tobacco Co. v. United States Food and Drug Administration, Civ. Case No. 11-1482 (RJL) (D.D.C. Feb. 29, 2012).

Last November, Judge Leon had granted a preliminary injunction against the regulations.  R.J. Reynolds Tobacco Co. v. FDA, 2011 WL 5307391 (D.D.C. Nov. 7, 2011).  Subsequently both sides had moved for summary judgment.  Yesterday, Judge Leon granted summary judgment for the tobacco industry and denied the government's summary judgment motion.

In response to Congress's mandate in the Family Smoking Prevention and Tobacco Control Act of 2009, the FDA issued a final rule requiring certain "warnings" on cigarette packs.  These "warnings" included 9 textual warnings, and ten graphic images.  The graphic images include:  a man blowing smoke through his tracheotomy hole, a cloud of smoke enveloping a baby being kissed by his mother, a pair of diseased lungs next to healthy lungs, a mouth with lesions, a man with an oxygen mask, a post-autopsy cadaver with chest staples, a weeping woman, a man wearing a t-shirt with the no-smoking symbol and the words "I QUIT," and a cartoon baby in an incubator.  Each graphic displays "1-800-QUIT-NOW."  These graphics are to take up 50% of the front and back panels of cigarette packages, and 20% of all printed advertising.

In publishing the final rule, FDA acknowledged that the graphic "warnings" are estimated to reduce smoking rates by 0.088%.  Slip op. at n.7.  Yes, that 88 thousandths of a percent.  And that's the estimate of the anti-smoking zealots who are imposing the new rule.  FDA conceded that such a reduction is "in general not statistically distinguishable from zero."  Slip op. at 5-6.

Let's be absolutely clear about what the government was trying to do here.  It hijacked 50% of the manufacturers' packages (and 20% of their print advertising) to force the manufacturers -- against their will -- to convey messages explicitly designed by the government's experts to manipulate people's emotions into preventing them from buying the manufacturers' lawful products.  This was forced speech, plain and simple.  Somebody call the ACLU!

The First Amendment, of course, does not allow the government to put opinions in your mouth and force you to repeat them.  Such rules typically merit strict scrutiny.  There was a fight in this case over whether strict scrutiny should apply.  The government argued that it shouldn't because it was "commercial speech" that deserved less constitutional protection, and purportedly involved merely government-mandated informational disclosures designed to prevent consumer confusion or deception.  See Zauderer v. Office of Disciplinary Counsel of Sup. Ct. of Ohio, 471 U.S. 626, 651 (1985). 

Horsefeathers!  These graphic images are not "purely factual" or "uncontroversial disclosures."  As the court recognized, "the graphic images here were neither designed to protect the consumer from confusion or deception, nor to increase consumer awareness of smoking risks; rather, they were crafted to evoke a strong emotional response calculated to provoke the viewer to quit or never start smoking."  Slip op. at 11.  Indeed, the court cited the Institute of Medicine report, which clearly stated:

It is time to state unequivocally that the primary objective of tobacco regulation is not to promote informed choice but rather to discourage consumption of tobacco products, especially by children and youths, as a means of reducing tobacco-related death and disease.

Slip op. at 11.  Because the FDA's mandated "warnings" were not factual statements designed to inform or educate, but instead were opinions that smoking is bad and people should quit smoking, the regulations were subject to strict scrutiny.

To withstand strict scrutiny, a regulation must be narrowly tailored to achieve a compelling government interest.

Judge Leon concluded that the government had not introduced proof of a compelling government interest:  "Although an interest in informing or educating the public about the dangers of smoking might be compelling, an interest in simply advocating that the public not purchase a legal product is not."  Slip op. at 16.  Indeed, the court even noted that a study showed people already know and overestimate the health risks of smoking, which is why the use of even the graphic images proposed by the FDA was not going to appreciably change actual behavior.  Id. at n.15.

Moreover, Judge Leon held that the restrictions were far from narrowly tailored.  Notably, the court said, "there is no evidence that Congress even considered the First Amendment implications when drafting the Act."  Slip op. at 17.  And there were plenty of less speech-restrictive and burdensome alternatives than hijacking 50% of the manufacturers' packaging to achieve any legitimate government objective.  For example, "the Government could disseminate its anti-smoking message itself" through a media campaign.   It could have changed the display requirements to be less burdensome, such as reducing the "warnings" to 20% of only the front or the back of the package.  It also could have selected graphics that conveyed only factual information, rather than playing on viewers' emotions.  And it could improve law enforcement efforts to prevent unlawful sales to minors.  As the court observed, "because Congress did not consider the First Amendment implications of this legislation, it did not concern itself with how the regulations could be narrowly tailored to avoid unintentionally compelling commercial speech."  Slip op. at 19.

Villanizing tobacco companies is in vogue these days.  But their products are lawful and are enjoyed by millions of Americans.  Judge Leon understood that if the government is allowed to force these product manufacturers, however unpopular, to trumpet government opinions critical of their products, then before long it will do the same thing with other lawful products, like medicines or mobile phones.  Government is a behemoth that already has in its arsenal many, many ways to make its opinions known and discourage the use of products that it opposes.  It should not be allowed to conscript into its service manufacturers of lawful products and dictate that they speak against their own products.  Thankfully, the First Amendment requires much more before the government can compel speech from its citizens.

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Once again, my friend Andrew Trask has beaten me to the punch with a post -- this time about Judge Richard Posner's decision in McReynolds v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 2012 WL 592745 (7th Cir. 2012). In McReynolds, the court held that, in a class of 700 people, an issues class could have been certified on the question whether two facially-benign company-wide policies nevertheless had a discriminatory effect in practice.

You've gotta get up early in the morning to put up a post before Andrew.  Given that he has described the opinion already, I won't say much here, other than offer a few thoughts.

First, the Seventh Circuit is one of the few circuits to hold that an issues class may be certified under Rule 23(c)(4) without a prior determination that certification is appropriate under some subdivision of Rule 23(b).

Second, the McReynolds court was not deciding that a class could be certified that would provide monetary relief to the plaintiffs.  Rather, the court expressly recognized that "the only issue of relief at present is whether to allow the plaintiffs to seek class-wide injunctive relief."  Id. at *9.  That is why the court reversed the denial of certification under Rule 23(c)(4) and 23(b)(2).

Third, the court understood that the claims for monetary damages could not be tried as a class action:

Obviously a single proceeding, while it might result in an injunction, could not resolve class members' claims.  Each class member would have to prove that his compensation had been adversely affected by the corporate policies, and by how much.  So should the claim of disparate impact prevail in the class-wide proceeding, hundreds of separate trials may be necessary to determine which class members were actually adversely affected by one or both of the practices and if so what loss he sustained--and remember that the class has 700 members.

Id. at *8.

Fourth, and what I view as particularly important, the court invoked the decisions in Rhone Poulenc and Bridgestone/Firestone outside of a negligence -- or even a tort -- context to recognize that using a class action to achieve "consistency" of judgments on a particular issue may be unfair, and that -- particularly in the context of multiple claims for monetary damages -- it may be better for a series of trials to occur before different triers of fact so that some sort of pattern or consensus of judgments may emerge.  As the court explained:

The Mejdrech decision, and Bridgestone/Firestone and Rhone-Poulenc more fully, discuss the danger that resolving an issue common to hundreds of different claimants in a single proceeding may make too much turn on the decision of a single fallible judge or jury.  The alternative is multiple proceedings before different triers of fact, from which a consensus might emerge; a larger sample provides a more robust basis for an inference.  But that is an argument for separate trials on pecuniary relief . . .

Id. at *9.  In the mass tort context, we have the concept of what Francis McGovern has labeled "immature" and "mature" mass torts.  "Immature" mass torts are those where few, if any, trials have occurred.  "Mature" mass torts are those where scores of trials have played out in different geographic locations over enough time that plaintiffs and defendants have had the opportunity to adjust their claims and defenses, such that patterns have emerged and some predictability is inherent in the trial process.  

McReynolds does not abandon the notion that, in cases for monetary damages -- which can bankrupt a company in an all-or-nothing class action trial -- a "larger sample" of smaller judgments (even those that conflict) is necessary to build a "more robust basis" for a conclusion.

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Wednesday.  Woden's day.  The day between Tyr's day and Thor's day.  The middle of the week.  Humpday.  It's all downhill from here, baby.

I've awakened this Humpday with a grab bag of cases, each of moderate interest, but none with enough meat to fully satisfy.  So today, readers, it's tapas.  Small plates for you.  Mangia.

First plate:  Personal Jurisdiction.  The Utah Court of Appeals recently issued an interesting opinion that applied the U.S. Supreme Court's recent gallimaufry of opinions in J. McIntyre Machinery, Ltd. v. Nicastro, 131 S. Ct. 2780 (2011).

In Gardner v. SPX Corp., 2012 WL 503722 (Utah. Ct. App. Feb. 16, 2012), the plaintiff's husband, a truck driver, was killed on his employer's loading dock when a vertical dock leveler fell on him.  Plaintiff alleged that the control box was defective.  It had been designed and made by a Canadian company.  A Delaware corporation had an ownership interest in the Canadian company, but they were separate companies and all of the corporate formalities had been been observed, so no veil piercing could occur.

The control box manufacturer made its boxes based on the specifications of another Canadian company to which it sold the boxes.  That company, in turn, sold the boxes to another Canadian company, which then sold the boxes to a US company that incorporated the boxes into dock levelers.  Plaintiff argued that the Canadian control box manufacturer knew that the majority of dock levelers incorporating its component ultimately were sold in the United States to US users, particularly in the West. 

The court held that this was not enough to meet the minimum requirements inherent in the due process concept of "fair play and substantial justice."  The court analyzed the various opinions in Nicastro, observing that the "Court splintered on the question whether, in products liability cases, and especially products liability cases involving foreign defendants, the United States is more properly regarded as a 'single market' or fifty separate markets, each subject to a different authority."  2012 WL 503722 at *5.  Focusing on the lack of "purposeful availment" of the forum's laws, the Utah court held that the Canadian control box manufacturer ("Schneider Canada") had not purposefully availed itself of the benefits of Utah law:

We conclude that, under the foregoing authorities, Schneider Canada lacks the requisite minimum contacts with the State of Utah.  Schneider Canada is located and operates in Canada; it maintains no offices, owns no property, and has no employees in Utah.  Schneider Canada manufactured the control box in question in Canada and sold it to a Canadian distributor. . . .  Schneider Canada did not purposefully avail itself of the Utah market.  It did not take active steps to sell its products in Utah.  Although it was aware of potential sales in the United States, it neither advertised in Utah nor sent sales representatives to Utah.  In short . . . the record does not show "special designing for Utah's market, advertising in Utah, establishing channels for providing regular advice to customers in Utah, or marketing the product through a distributor who has agreed to act as a sales agent in Utah."  And although this was not as isolated a sale as occurred in [Nicastro], the record here does not show "special state-related design, advertising, advice, marketing or . . . special effort by the [Canadian] Manufacturer to sell in [Utah]."

Id. at *6 (citations omitted).

The court also focused on two other facts, which are interesting:  regional sales, and the nature of the product as a component:

In addition, Schneider Canada's "knowledge of the mere possibility that its product might be taken into a region of the country in which Utah is located is not sufficient" to subject it to Utah's jurisdiction.  Finally, unlike [the manufacturer in Nicastro], Schneider Canada "was a component-part manufacturer with 'little control over the final destination of its products once they were delivered into the stream of commerce.'"

Id. at *7 (citations omitted).  The Utah court affirmed the dismissal of the Canadian control box manufacturer.

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Your second small plate:  Fraudulent Joinder.

In Demarcet v. General Nutrition Corp., 2012 WL 525479 (W.D. La. Feb. 15, 2012), the plaintiff claimed to have suffered personal injuries after ingesting "Mega Men Sport," which he had bought at a GNC store.  Plaintiff wanted to avoid federal court, so in order to destroy diversity, plaintiff needed to sue a Louisiana resident like himself.  GNC, however, was a resident of another state.  So what to do?

I know!  Let's also sue the poor GNC store clerk who sold plaintiff the product!

Yes, that's what plaintiff's counsel did.  And you can only imagine the trauma that poor hourly store clerk endured thinking that he might be held personally liable simply for selling a product for his employer.

As you can imagine, GNC removed the case to federal court, arguing that plaintiff's joinder of the employee was improper because there could be no cause of action against the employee under Louisiana law.  In Louisiana, an employee cannot be held individually liable to a customer unless he has a personal duty to the customer that he breaches.  The Louisiana Supreme Court has articulated a four-part test:  (1) the employer must owe a duty of care to the customer, (2) the employer must have delegated this duty of care to the particular employee, (3) the employee must have breached that duty of care through his own personal fault, and (4) the duty must be personal to him and not delegated to another employee; personal liability cannot be imposed simply because of his "general administrative responsibility for performance of some function of the employment."   Id. at *3 (citation omitted).

The plaintiff moved to remand the case to state court, and the federal court allowed limited discovery to be taken on the issue of the employee's duty.  Analyzing the parties' evidentiary presentations, the court held that the employee had been improperly joined and that diversity jurisdiction thus was proper in the federal court:

The record establishes that defendant Lejeune was a GNC sales associate who was neither trained nor expected to extend warnings to customers regarding the potential risks posed by a product.  As with all GNC sales associates, Lejeune was merely provided GNC information along with the Mega Man Sport label to answer questions or explain products to customers.  GNC never advised Lejeune that he had a duty to inform customers as to how to properly take a supplement and never told him that consumers of Mega Man Sport should drink a lot of liquids when taking the product.  The Mega Man Sport label does not contain any warning regarding the amount of liquids a person should consume when taking the product. . . . [T]he Court finds that Chase Lejeune was improperly joined.

Id. at *4.

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