On June 19, 2017, the U.S. Supreme Court issued a decision clarifying the circumstances in which a lawsuit “arises out of” or “relates to” a corporation’s contacts with a particular jurisdiction, such that it can be sued there. In Bristol-Myers Squibb Co. v. Superior Court, writing for an 8-1 majority, Justice Alito held that California state courts do not have jurisdiction to hear the product liability claims of non-California residents against Bristol-Myers Squibb Co., a foreign corporation. The Court reasoned that the nonresident plaintiffs “do not claim to have suffered harm in that state” from their use of BMS’ drug Plavix, and “all the conduct giving rise to the nonresidents’ claims occurred elsewhere.” The Supreme Court found insufficient BMS’ substantial sales in California, including through its use of 250 sales representatives in that state.
There’s a new tool for deceptive pricing class actions challenging “up to __%” savings promotional messaging: A new lawsuit filed in New Jersey alleges that the clothing retailer’s “up to _% off” promotional messaging violates New Jersey’s consumer protection laws. The plaintiff sued Jos. A. Bank under the New Jersey Truth in Consumer Contract, Warranty and Notice Act (TCCWNA), N.J. Stat. § 56:12-15. This once-forgotten statute has recently been in the limelight, invoked in numerous class actions due to its generous civil penalties provision providing “not less than $100.00 or for actual damages, or both” at the choice of the consumer, plus attorney’s fees. See N.J. Stat § 56:12-17.
Last month, our colleague Joshua Foust analyzed the then-newly introduced Fairness in Class Action Litigation Act of 2017. The bill, sponsored by House Judiciary Chairman Bob Goodlatte (R-VA), amends procedures used in federal court class action and mass tort litigation. Last week, on March 9, just one month after Chairman Goodlatte (R-VA) introduced the bill, the full House of Representatives passed the bill by a vote of 220-201. The legislation will now be considered by the Senate.
Now that the bill has passed the House, we have drafted an alert providing additional analysis. Click here to read the alert on Crowell.com or read below.
The U.S. House Sets Out To Reform Class and Mass Actions
Just a week before Congress began its first extended recess of 2017, the Chairman of the House Judiciary Committee took a step towards dramatically changing the landscape of class action litigation. On Thursday, February 9, Representative Bob Goodlatte (R-Va.) introduced a bill (H.R. 985) that would “amend the procedures used in Federal court class actions” by adding a number of new hurdles to class certification in federal court.
Chairman Goodlatte was a principal author of the Class Action Fairness Act of 2005, which considerably expanded federal diversity jurisdiction over interstate class actions. He was also behind another class action reform bill introduced in 2015 that failed to clear the Senate. His new bill, dubbed the Fairness in Class Action Litigation Act of 2017, is in much the same vein—and, if passed, would represent the most sweeping revision of federal class action law to date.
Highlights from the bill:…
Continue Reading Class Dismissed? New House Bill Could Transform Federal Class Action Law
In a long-awaited pronouncement, on May 25, 2016 the Food and Drug Administration issued its final guidance recommending that food and beverage manufacturers discontinue their use of the term “evaporated cane juice” (ECJ) to refer to sweeteners extracted from sugar cane. As the agency explained, “the use of ‘juice’ in the name of a product that is essentially sugar is confusingly similar to the more common use of the term ‘juice’”—which FDA regulations define as a liquid, puree, or concentrate derived from “one or more fruits or vegetables.”
When the FDA first issued this Guidance, many questioned whether it would reinvigorate a genre of litigation that had recently grown quiet: class actions alleging that the use of “ECJ” on product labels and packages misled consumers. Now, thanks to the Northern District of California’s July 27 decision in Reese v. Odwalla, Inc., the answer is becoming clearer: the ECJ class action is due for a comeback.
Continue Reading Would “Juice” by Any Other Name Taste as Sweet? Court Cites FDA Guidance in Resuscitating “ECJ” Class Action
On July 26, 2016, FDA issued an updated warning on beauty products, warning consumers to avoid certain “skin creams, beauty and antiseptic soaps, and lotions,” particularly those boasting “anti-aging” or “skin lightening” benefits, as potentially containing mercury. While the dangers of mercury exposure are well-known, mercury’s ubiquity in certain beauty products is not. Products that claim to “remove age spots, freckles, blemishes, and wrinkles,” including products targeting teenagers enduring acne, may contain mercury. Checking the label can help—look out for words like “mercurous chloride,” “calomel,” “mercuric,” “mercurio,” or of course, “mercury”, but it’s not fool-proof. As FDA points out, many of these beauty products are often made abroad and can be sold illegally in the U.S., without any labels. FDA continually monitors products like these, but is unable to catch all of them, especially due to their dubious channels of trade. For those that FDA does catch, FDA sets up an import alert to prevent future influxes of such products. Check here for all Consumer Updates from FDA. Thus, retailers should do their due diligence to know what the chemical content is of the products they sell beyond the labels.
In its warning, FDA again mentioned one of its growing complaints levied against cosmetics – that the product may actually be an unapproved new drug under the law.
Continue Reading Beauty with a Side of Mercury?
One week before the Vermont GMO labeling law will take effect, a bipartisan bill requiring mandatory labeling for products containing genetically modified ingredients has been agreed to by Senate AG committee ranking member Debbie Stabenow (D-MI) and Committee Chairman Pat Roberts (R-KS). The bill, which would require the Secretary of Agriculture to establish a national disclosure standard for bioengineered foods, will need to be passed in the Senate and the House of Representatives, and would go into effect two years after passed. If successful, the new law would specifically preempt all state GMO labeling laws and would prevent the feared patchwork of conflicting state labeling laws.
The bill has a narrow definition of genetic engineering — traits developed through in vitro recombinant DNA techniques, which could not be obtained through conventional breeding or found in nature. It excludes food served in a restaurant and food derived from animals that consumed genetically modified feed. The Secretary would be responsible for establishing a specific regulation setting forth the amount of a genetically modified substance that would require labeling.
Continue Reading A New Federal GMO Labeling Standard in the Works?
In Spokeo, Inc. v. Robins, the U.S. Supreme Court has issued yet another narrow decision—apparently designed to avoid a 4-4 deadlock—in another hard-fought, potentially divisive case on its docket this term. On May 16, 2016, the Court held 6-2 that the Ninth Circuit had erred in not asking whether plaintiff Robins had alleged that he suffered a “concrete” harm—actual, rather than hypothetical, damage—as a result of statutory violations by defendant Spokeo.
In reaching this decision, the Court reaffirmed that plaintiffs bringing class actions in federal court must do more than allege a “mere technical violation” of a statute or regulation. In order to demonstrate that they have a real stake in the case—or “standing”—as required in federal court by Article III of the Constitution, they must also explain how the violation in question caused them real harm. At the same time, however, the majority was careful to point out that, “in some circumstances,” plaintiffs could base standing on procedural or technical violations if coupled with a “real risk of harm.” And the Court remanded the specific question of whether Robins himself had alleged that he suffered real harm as a result of Spokeo’s technical violations.
In sending the case back to the Ninth Circuit, then, the Court left the deeper issues in the case unresolved—inviting further litigation over what its holding means in specific cases.…
Companies from Procter & Gamble and Unilever to Mars and Starbucks have recently been hit with class actions slightly different from the false advertising claims we have gotten used to seeing. Now, instead of just alleging that companies are deceiving consumers through the language used in their advertising claims, consumer plaintiffs are expanding their allegations to target visual impressions created by product packaging.
These suits typically raise one—or both—of two theories. First, they often allege that defendants have violated federal and state regulations by including too much nonfunctional empty space—or “slack fill”—in their packages. Second, even if the defendants’ practices do not violate such regulations, their packages are still deceptive and unlawful because they run afoul of the “reasonable consumer” standard. Put differently, the defendants have intentionally manipulated their packaging, the theory goes, in order to dupe ordinary consumers into believing they are getting more product than they actually are—whether that means consistently underfilling lattes, dumping too much ice into iced coffees, or housing small amounts of product in oversized containers. These two distinct theories, often raised together, belong to a common genre of litigation that is relatively new but growing: the “slack fill-inspired” class action.
These cases have had a mixed track record so far, and the pace of new filings continues unabated. But recently, on March 17, 2016, the Ninth Circuit issued a decision that could give companies a potent tool in combatting these suits. That decision, Ebner v. Fresh, Inc., confirmed that the district court had properly dismissed with prejudice the plaintiff’s complaint, which alleged both that (1) Fresh had used deceptively large packaging that was misleading to “the reasonable consumer,” and (2) its packaging violated California’s slack fill rules.
The Ninth Circuit in Ebner rejected both of these commonly-used theories, making the Court’s reasoning instructive for companies facing similar slack fill-inspired class actions going forward. But it is worth noting that this decision is no get-out-of-litigation-free card: as we will explain, companies must still pay close attention to the specific slack fill rules applicable to their products in order to minimize their exposure to these opportunistic class actions.…
Federal judges often find themselves confronting a familiar conundrum in consumer class actions that challenge misleading practices. The typical plaintiff will file a suit after somehow discovering that one of the defendant’s advertisements, product labels, or other representations is “false” or “misleading.” The self-nominated “representative” asks the court to certify a class of all consumers “similarly situated”—that is, other consumers who bought the product or were exposed to the misleading message. The plaintiff then seeks not only compensation for the class, but also an injunction or ban prohibiting the defendant from making the challenged claims going forward.
Since an injunction is to stop the likelihood of irreparable future harm, the deceptively tricky question that judges face is whether the named plaintiff can seek an injunction prohibiting the misleading claims when she herself is no longer at risk of being deceived by something she now knows is false. In other words, if the named plaintiff won’t get fooled again, does she have standing to obtain injunctive relief on the class’s behalf? One California Federal court’s take: fool the plaintiff twice, shame on him.…