Drone Certification TestNinth Circuit Puts A Cap On Coca-Cola Class Certification Order – Media, Telecoms, IT, Entertainment

September 6, 2021by helo-10
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United States:

Ninth Circuit Puts A Cap On Coca-Cola Class Certification Order


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A new decision in the Ninth Circuit significantly limits which
consumers may have standing to seek an injunction against false
advertising or labeling. For the past several years, the law in the
Ninth Circuit was that a “previously deceived consumer may
have standing to seek an injunction against false advertising or
labeling, even though the consumer now knows or suspects that the
advertising was false at the time of the original purchase,”
because a consumer’s “[k]nowledge that the
advertisement or label was false in the past does not equate to
knowledge that it will remain false in the
future.” Davidson v. Kimberly-Clark Co., 889
F.3d 956, 969 (9th Cir. 2018). But in August 2021, the Ninth
Circuit significantly limited this holding by clarifying that a
consumer’s “abstract interest in compliance with
labeling requirements” or desire for a manufacturer to
“truthfully label its products” does not suffice to
establish Article III standing
under DavidsonEngurasoff v. Coca-Cola
Refreshments USA, Inc.
, No. 25-15742, 2021 WL 3878654, at *2
(9th Cir. Aug. 31, 2021).

Engurasoff  arises out of a long-running
multidistrict litigation in which the plaintiffs alleged that Coke,
Coca-Cola’s signature cola, is mislabeled as having “no
preservatives” and “no artificial flavors”
because it contains phosphoric acid, which allegedly functions as
both an “artificial flavor” and a “chemical
preservative.” In February 2020, the district court granted
the plaintiffs’ motion to certify an injunctive relief class
under Rule 23(b)(2) and held that they had established standing to
seek injunctive relief under Davidson. In reaching
this conclusion, the district court reasoned that consumers could
satisfy Davidson by alleging either (1) that
“their inability to rely on the labels would cause them to
refrain from purchasing a product that they otherwise would
want” or (2) that they would “purchase the product in
the future, despite the fact that it was once marred by false
advertising or labeling, because they may reasonably, but
incorrectly assume the product was improved.” In re
Coca-Cola Mktg. & Sales Practices Litig.
, No, 14-2555,
2020 WL 759388, at *5 (N.D. Cal. Feb. 14, 2020) (citation and
internal quotation marks omitted). The district court agreed with
Coca-Cola that the plaintiffs did not satisfy the second test
because there was no reasonable possibility that Coca-Cola would
stop using phosphoric acid as an ingredient in Coke, whose
formula—leaving aside the ill-fated rollout of New
Coke
—has remained largely unchanged for over a century.
But the district court nonetheless found that the plaintiffs had
satisfied the first test by alleging that they would purchase Coke
in the future, even if it continued to contain phosphoric acid, so
long as the labeling either disclosed the presence of phosphoric
acid or refrained from representing that Coke was free of
preservatives and artificial flavors. See id. at
*7-9.

On August 31, 2021, the Ninth Circuit vacated this ruling and
held that the plaintiffs had not established standing to seek
injunctive relief. In so holding, the Ninth Circuit found it
dispositive that “[n]one of the plaintiffs in this case
allege a desire to purchase Coke as advertised, that is, free from
what they believe to be artificial flavors or preservatives.”
2021 WL 3878654, at 2. Instead, some of the plaintiffs alleged that
they would consider purchasing Coke in the future if it were
“properly labeled.” The Ninth Circuit concluded that
this “abstract interest in compliance with labeling
requirements” was “insufficient, standing alone, to
establish Article III standing.” Id. at
*2. After articulating this rule, the Ninth Circuit concluded that
the majority of the plaintiffs lacked Article III standing because
they either expressed no interest in purchasing Coke in the future
or merely stated that they would “consider” purchasing
Coke in the future, which the Ninth Circuit found insufficient to
establish an imminent future injury sufficient to give those
plaintiffs standing. It then addressed the two plaintiffs who
stated that “they would be interested in purchasing Coke
again if its labels were accurate, regardless of whether it
contained chemical preservatives or artificial
flavors.” Id. Although these plaintiffs
stated that they would likely purchase Coke in the future if its
labeling were truthful, the Ninth Circuit concluded that their
“desire for Coca-Cola to truthfully label its products,
without more, is insufficient to demonstrate that they have
suffered any particularized adverse
effects.” Id.

Engurasoff’s central holding—that a
plaintiff’s “abstract interest in compliance with
labeling requirements” or desire for a manufacturer to
“truthfully label its products” does not amount to an
injury-in-fact cognizable under Article III—has significant
ramifications for false advertising cases in federal court. A
plaintiff can no longer satisfy Davidson  by
stating that they would “consider” purchasing a product
in the future or that they would likely purchase the product in the
future if the allegedly “untruthful” statements were
removed from the labeling. Instead, a plaintiff must allege that
they would be likely to purchase the product “as
advertised”—which, in many cases, will necessitate a
change to the product itself rather than a change to the challenged
advertising. And the Ninth Circuit’s holding that an
“abstract interest in compliance with labeling
requirements” does not amount to a cognizable injury-in-fact
may provide additional ammunition to manufacturers faced with cases
premised on alleged violations of federal labeling regulations,
particularly when the plaintiff is unable to allege a cognizable
injury other than a violation of the applicable regulation. It
remains unclear how broadly or narrowly courts will
apply Engurasoff, but it may provide defendants with
a powerful tool to defeat false advertising cases on Article III
standing grounds.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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