Montera v. Premier Nutrition Corp.
| Docket Number | 22-16375 22-16622 |
| Decision Date | 06 August 2024 |
| Citation | 111 F.4th 1018 |
| Parties | Mary Beth MONTERA, individually and on behalf of all others similarly situated, Plaintiff-Appellant/Cross-Appellee, v. PREMIER NUTRITION CORPORATION, fka Joint Juice, Inc., Defendant-Appellee/Cross-Appellant. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Appeal from the United States District Court for the Northern District of California Richard Seeborg, Chief District Judge, Presiding, D.C. No. 3:16-cv-06980-RS
Leslie E. Hurst (argued), Timothy G. Blood, Thomas J. O'Reardon II, and Paula R. Brown, Blood Hurst & O'Reardon LLP, San Diego, California; Todd D. Carpenter, Lynch Carpenter LLP, Del Mar, California; Eugene G. Iredale, Iredale and Yoo APC, San Diego, California; Grace Jun, Law offices of Grace Jun, San Diego, California; for Plaintiff-Appellant.
Aaron D. Van Oort (argued) and Hannah M. Leiendecker, Faegre Drinker Biddle & Reath LLP, Minneapolis, Minnesota; Mark D. Taticchi and Ashlee A. Paxton-Turner, Faegre Drinker Biddle & Reath LLP, Washington, D.C.; Angel A. Garganta, Amit Rana, and Steven E. Swaney, Venable LLP, San Francisco, California; Jessica Grant, Shook Hardy & Bacon LLP, San Francisco, California; Antonia I. Stabile, Benesch Friedlander Coplan & Aronoff LLP, San Francisco, California; for Defendant-Appellee.
Before: Sidney R. Thomas, David F. Hamilton,* and Morgan Christen, Circuit Judges.
This consumer class action involves New York purchasers of Joint Juice, a dietary supplement drink made by defendant Premier Nutrition. Mary Beth Montera sued Premier on behalf of a class of New York consumers for deceptive conduct and false advertising in violation of New York General Business Law (GBL) §§ 349 and 350 based on representations on Joint Juice's packaging that touted its ability to relieve joint pain. The district court certified a class and the case proceeded to trial. Montera introduced peer-reviewed, non-industry-funded studies finding that Joint Juice's key ingredients, glucosamine and chondroitin, have no effect on joint function or pain; Premier maintained the product's efficacy based on industry-funded studies. The jury found the statements on Joint Juice's packaging deceptive under New York law, and the district court awarded statutory damages to the class.
Both parties appeal the district court's rulings. Premier contends that the district court applied erroneous interpretations of New York law when it certified the class and denied Premier's post-trial motion for judgment as a matter of law. In Premier's view, Montera did not prove liability, either individually or on a classwide basis. Premier further contends that the district court made numerous errors during the trial and when it calculated statutory damages on a per-violation basis and awarded prejudgment interest. Montera appeals the district court's decision to cut statutory damages by over 90%.
We find no errors in the district court's class certification rulings, analysis of New York law, trial rulings, or initial calculation of statutory damages. But we conclude that the award of prejudgment interest was error, and that the statutory damages award must be reconsidered in light of our intervening decision in Wakefield v. ViSalus, Inc., 51 F.4th 1109 (9th Cir. 2022). We therefore affirm in part, reverse in part, and vacate and remand in part.
This case began as a putative nationwide consumer class action for the allegedly deceptive advertising of Joint Juice. After the district court declined to certify a nationwide class, plaintiffs filed nine separate cases, each bringing claims under the laws of a different state. The court first certified a class in the California case, Mullins v. Premier Nutrition Corp., No. 13-cv-01271 (N.D. Cal.), then certified the other classes, including the Montera class, in a single order that was entered in each case. The district court ordered the parties to provide "two cases to prioritize for trial, one chosen by the Plaintiffs and one chosen by the Defendant." Plaintiffs proposed the New York case and Premier proposed the Massachusetts case. The district court chose Montera, the New York case, to go first. After the close of discovery and prior to trial, Premier moved to decertify the New York class. The district court denied the motion.
The evidence at trial showed that Premier targeted its Joint Juice advertising to people who suffer joint pain as a result of osteoarthritis. The shrink-wrap packaging for Joint Juice sported the Arthritis Foundation logo and name, and made claims such as "Use Daily for Healthy, Flexible Joints" and "A full day's supply of glucosamine combined with chondroitin helps keep cartilage lubricated and flexible." The jury heard that Premier spent just under $40 million between 2009 and 2015 to market and advertise Joint Juice, and netted annual sales of approximately $20 million in both 2020 and 2021.
Both parties offered expert witnesses to testify about scientific studies on the effect of glucosamine and chondroitin on joint health. Montera offered evidence of numerous studies conducted over the past three decades, including three by the National Institutes of Health, that found glucosamine and chondroitin had no effect on joint health. In contrast, industry-funded studies almost uniformly found glucosamine to be effective for joint pain, though some of the sponsoring companies refused to release data for external review. Evidence showed that Premier was aware of the studies concluding that glucosamine and chondroitin have no effect on joint health but continued to sell—and increased its marketing of—Joint Juice to arthritis and joint-pain sufferers. For example, Montera introduced an internal email dated January 2011, in which the brand director for Joint Juice wrote, "there is no scientific evidence for chondroitin at 200 mg." When Premier considered running its own study, its president wrote a note that was introduced at trial: "if poor—don't publish." For its defense, Premier introduced evidence that some studies found that glucosamine and chondroitin have therapeutic benefits, and that Joint Juice is beneficial because it is hydrating and contains Vitamins C and D.
Both parties' experts introduced surveys they conducted that sought to determine what messages Joint Juice's packaging conveyed to consumers and whether that messaging was material to consumers' decisions to buy Joint Juice. Montera's expert testified that 92.5 percent of respondents to his study "believed that the product packaging was communicating one or more of [the packaging's claimed] joint health benefits," and 56% of respondents said that Joint Juice's claimed joint health benefits "were material to their purchase decisions." Montera also introduced Premier's internal customer survey in which 96% of those surveyed said they were managing chronic pain, 75% said they bought Joint Juice because they have joint pain and thought the drink would help them, and 56% said they had been diagnosed with arthritis. In Premier's expert's survey, 21.5% of respondents said that information on Joint Juice's packaging influenced their purchase decisions, and 32.3% said they had generally heard about the benefits of glucosamine.
After a nine-day trial, the jury returned a verdict for Montera, finding that Premier "engaged in an act or practice that [was] deceptive or misleading in a material way" and that "Montera and the class suffered injury as a result." The jury further found that 166,249 units of Joint Juice had been sold in New York during the class period and that the class's actual damages (based on average purchase price) were $1,488,078.49. GBL §§ 349 and 350 require courts to award the greater of actual damages or statutory damages of $50 or $500, respectively. N.Y. Gen. Bus. Law §§ 349(h), 350-e. Because the jury found Premier liable under both §§ 349 and 350, Montera sought $550 per unit sold in statutory damages, totaling $91,436,950. Premier argued that a damages award of $91,436,950 would violate its right to substantive due process. The district court agreed and awarded statutory damages of $50 per unit sold—the amount available under § 349—totaling $8,312,450. The district court also awarded $4,583,004.90 in prejudgment interest and entered final judgment on August 12, 2022. Premier filed post-trial motions to decertify the class and for judgment as a matter of law or a new trial, all of which the district court denied. Both Montera and Premier timely appealed.
We review de novo a district court's denial of a motion for judgment as a matter of law, and "[a] jury verdict will be upheld if supported by substantial evidence." Optronic Techs., Inc. v. Ningbo Sunny Elec. Co., 20 F.4th 466, 476 (9th Cir. 2021). "We review a district court's formulation of civil jury instructions for an abuse of discretion, but we consider de novo whether the challenged instruction correctly states the law." Wilkerson v. Wheeler, 772 F.3d 834, 838 (9th Cir. 2014). We review for abuse of discretion a district court's class certification orders, evidentiary rulings, and denials of motions for a new trial. Yokoyama v. Midland Nat. Life Ins. Co., 594 F.3d 1087, 1090-91 (9th Cir. 2010); United States v. Daly, 974 F.2d 1215, 1216-17 (9th Cir. 1992); Kode v. Carlson, 596 F.3d 608, 611 (9th Cir. 2010) (per curiam).
When interpreting New York law, we are bound by the decisions of New York's highest court, the Court of Appeals. See In re Kirkland, 915 F.2d 1236, 1238 (9th Cir. 1990). "In the absence of such a decision, a federal court must predict how the highest state court would decide the issue using intermediate appellate court decisions, decisions from other jurisdictions, statutes, treatises, and restatements as guidance." Id. at 1239.
On appeal, Premier argues that Montera failed to prove deceptive...
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