Nutella Case Another Example of California's Tough Class Action Laws6 Dec, 2011 By: Gregory J. Sater
As discussed in previous DRMA Voice articles, California has become a battleground state for consumer class action cases alleging false advertising. Unfortunately, due to changes in the law following a 2009 decision called Tobacco II, it seems marketers have fewer options available to them to successfully oppose the certification of such cases as class actions.
Why is that important? Because class certification can make such a case prohibitively expensive for a marketer to fight, even if it is confident it could prevail on the merits. That often leads to a settlement.
Under California’s unfair competition statute, a plaintiff must plead and prove that he or she has “lost money as a result of” the challenged advertising claim. But Tobacco II held that the only person in the class who must meet that burden of proof is the named class representative; the thousands of unnamed class members don’t need to prove reliance, so long as the advertising claim was “material” because, if it was, then their reliance can be presumed. A “material” claim is one to which “a reasonable man would attach importance [as] to its existence or nonexistence in determining his choice of action in the transaction.”
What a marketer still can argue, however, is that not everyone in the class was exposed to the challenged advertising claim. The messaging was variable and/or exposure to it was variable. Consumers who bought the product but were never exposed to the challenged advertising claim can’t possibly have relied on it.
In a case called In re Ferrero Litigation, decided on Nov. 15, the marketer of Nutella, had made claims about its product being healthy and beneficial for kids when, according to the plaintiff, it contained very unhealthy levels of unsaturated fat and sugar. The marketer had aired television spots nationwide and labeled the product with such words as “balanced breakfast.” It argued that there had been variability of messaging and exposure and argued that “this case involves class members’ individual expectations, dietary preferences, and nutritional knowledge.” However, the court certified the class based on “the common advertising campaign of Nutella.”
If you get sued in a class action case for false advertising (and this may apply not only in California but in other states as well) ask yourself this: How uniform were the claims that I made in my advertising campaign? The more uniform they were, and the more uniform the consumer exposure, the greater the chances of a class being certified against you.
A year ago, in a case called Pfizer v. Superior Court – involving a television and retail marketing campaign for Listerine – the court said, “Tobacco II does not stand for the proposition that a consumer who is never exposed to an alleged false or misleading advertising or promotional campaign is entitled to restitution,” and it denied class certification because Listerine’s retail packaging had varied and there was no evidence to show that everyone who had bought it at retail had seen the TV spots that contained the claim.
Stay tuned because the coming months surely will produce much more case law on this.