Food for Thought: Food Industry Decisions with Bite

Food for Thought: Olive Oil Manufacturer’s "Imported from Italy" Representation On Product Label Results in Certification of Consumer Fraud Class Action

Mass Tort and Product Liability   |   July 15, 2016
Kumar v. Salov N. Am. Corp., No. 4:14-cv-02411-YGR, 2016 WL 3844334 (N.D. Cal., July 15, 2016)

The Northern District of California certified a class of "All purchasers in California of liquid Filippo Berio brand olive oil of any grade … between May 23, 2010 and August 31, 2015." Plaintiff brought this class action contending that purchasers of defendant’s olive oil products were deceived as to the origin of defendant’s olive oil by misleading labels on the bottles stating the products were "Imported from Italy," but the oil is not produced in Italy. Rather, according to plaintiff, defendant’s olive oil is "produced in Tunisia, Greece, and Spain, then shipped to Italy, mixed with a small amount of Italian olive oil, bottled, and sold to consumers."

Plaintiff alleged the defendant’s statement, "Imported from Italy," violates California’s Unfair Competition Law, California’s Consumers Legal Remedies Act, and the California False Advertising Law. Plaintiff, relying on a diminution in value damages theory, seeks to recover the price premium paid for the olive oil.

The defendant, Salov North America Corp., defended against class certification arguing the proposed class should not be certified because plaintiff Rohini Kumar has not: (1) met the threshold Rule 23(a) requirements pertaining to adequacy or typicality; (2) established that the proposed class was ascertainable; (3) satisfied the Rule 23(b)(3) requirement that questions of law or fact common to the class predominate over individualized questions; or (4) shown that damages can be determined on a classwide basis. The district court disagreed and certified the class concluding that the Rule 23(a) and Rule 23(b)(3) requirements were satisfied.

Origin Disclaimer Insufficient to Defeat Certification Absent Evidence Plaintiff Saw It

Defendant’s primary argument for why the Rule 23(a) adequacy and typicality requirements were not met was that plaintiff, unlike the proposed class, was not misled by the "Imported from Italy" statement on the front of the bottle of olive oil. The defendant argued that, because plaintiff read the back of the bottle to check the "Best By" date, she must have seen the bottle’s county of origin disclaimer located adjacent to the "Best By" date, which stated that the olive oils come from Italy, Greece, Spain, and Tunisia. Defendant’s argument did not convince the court. As the district court explained, while plaintiff conceded reading the "Best By" date on the back of the bottle, she also testified that she did not see the country of origin disclaimer. Thus, defendant’s argument about what plaintiff must have seen was not a persuasive basis for finding the adequacy and typicality requirements had not been met.

Whether a Class is Ascertainable Turns on the Class Definition

With regard to ascertainability, the district court noted that the Ninth Circuit had yet to answer the question of whether there is an ascertainability requirement implied in, or in addition to, Rule 23. Nevertheless, the court found the proposed class of olive oil purchasers to be sufficiently ascertainable because the class definition is precise and objective. Also, the "Imported from Italy" statement appeared on all bottles during the class period.

Notably, in its discussion of the ascertainability issue, the court found the class was ascertainable while acknowledging that it is unlikely that the consumer class would be able to produce receipts or other evidence to verify purchase during the class period. The court dismissed this concern explaining class members can offer "evidence of purchase by affidavit or claim form."

Materiality and Reliance Can Be Established Classwide Without Individual Proof

The defendant opposed certification under Rule 23(b)(3) arguing questions of law or fact common to the class would not predominate over individual questions because whether the statement "Imported from Italy" was material and relied upon would require individual evidence. The court disagreed, citing numerous cases for the proposition that materiality and reliance do not "necessarily require individualized evidence for each class member."

"Materiality can be shown by a third party’s, or defendant’s own, market research showing the importance of such representations to purchasers." Once materiality is established, a presumption or, at a minimum, an inference of reliance arises.

Moreover, the court explained misrepresentations of origin have been held to be material without individual proof of materiality as to each consumer. If there is evidence that a label "misleads a consumer about a product’s origins, and the associated value of the product," this is sufficient to establish materiality. Here, the defendant’s own market research regarding the importance of Italian origin to olive oil purchasers together with plaintiff’s expert’s opinion evidence of "a price premium attributable to the representations of Italian origin" established materiality.

Plaintiff’s Damages Model Matched Plaintiff’s Theory of Liability

After addressing the Rule 23 requirements, the court took a "close look" at plaintiff’s damages model and conducted a "rigorous analysis" to determine "whether the model is appropriate to capture damages under plaintiff’s theory of liability." The court found that plaintiff’s expert’s multiple regression damages model that purported to isolate the price premium associated with the "Imported from Italy" statement was sufficient for calculating damages under plaintiff’s theory of liability.

Parties’ Proposed Settlement Pays Class Members 50 Cents and Class Counsel $1 Million

After the consumer class of olive oil purchasers was certified, the parties went to mediation. The mediation resulted in a preliminary settlement, which the parties asked the district court to initially approve in January 2017. The proposed settlement would pay 50 cents to each class member for each bottle of olive oil purchased. The settlement would pay class counsel nearly $1 million in attorneys’ fees. At press time, the district court had not yet addressed the proposed settlement.

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