Nguyen v. Medora Holdings, LLC, Case No. 5:14-cv-00618-PSG

• Decision Date: 18 August 2015
• Docket Number: Case No. 5:14-cv-00618-PSG
• Court: U.S. District Court — Northern District of California
• Parties: KARISA NGUYEN, et al., Plaintiffs, v. MEDORA HOLDINGS, LLC, Defendant.

KARISA NGUYEN, et al., Plaintiffs, v. MEDORA HOLDINGS, LLC, Defendant.

Case No. 5:14-cv-00618-PSG

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN JOSE DIVISION

August 18, 2015

ORDER DENYING MOTION FOR CLASS CERTIFICATION

(Re: Docket No. 50)

Beginning in 2009, Plaintiffs Karisa Nguyen, Andre Vandenberg and Pearline Blackwood all bought triangular "Popcorners" chips made and sold by Defendant Medora Holdings, LLC. The chip packaging bore labels touting the chips as "all natural."¹ In 2013, lawyers for Plaintiffs sent Medora letters questioning the truth of the labeling and threatening a lawsuit. Soon thereafter, Medora decided to implement new packaging that omitted the offending "all natural" language.

Plaintiffs filed suit anyway, alleging that because the products contain genetically-modified organisms the labels were false and misleading. Like the majority of consumers, allege Plaintiffs,they expect "natural" foods to be free of GMOs.² They now move for certification of a class and various subclasses pursuant to Fed. R. Civ. P. 23(b)(2) and 23(c)(4).

Before considering the usual issues of ascertainability, typicality and predominance of damages necessary for the class certification Plaintiffs seek, the court must consider Plaintiffs' Article III standing. Because Plaintiffs offer no evidence to support their alleged injury-in-fact, they lack standing under Article III to pursue any relief. They additionally lack standing to pursue injunctive relief because Plaintiffs offer no evidence of a likelihood of injury in the future, and even if they did, the Popcorners label no longer includes the offending "all natural" language.

The court DENIES Plaintiffs' motion.

I.

"In a class action, standing is satisfied if at least one named plaintiff meets the requirements."³ Not only must at least one named plaintiff satisfy constitutional standing requirements, but the plaintiff "bears the burden of showing that he has standing for each type of relief sought."⁴ Article III standing to sue requires a plaintiff show "(1) an injury-in-fact that is concrete and particularized, as well as actual or imminent; (2) that the injury is fairly traceable to the challenged action of the defendant; and (3) that the injury is redressable by a favorableruling."⁵ A plaintiff seeking equitable relief such as an injunction must further demonstrate a likelihood of future injury.⁶ This requires a showing that the plaintiff is "realistically threatened by a repetition of the violation."⁷ Allegations that a defendant's continuing conduct subjects unnamed class members to the alleged harm are insufficient if the named plaintiffs are themselves unable to demonstrate a likelihood of future injury.⁸

Medora developed and first marketed a domestic corn-based triangular snack chip named Popcorners in April 2010.⁹ Apart from limited direct sales online, Medora has sold Popcorners for resale through wholesalers and distributors.¹⁰ Medora's annual net sales for Popcorners increased from less than $450,000 in 2010¹¹ to less than $6 million in 2011, $15 million in 2012, and $26 million in 2013.¹² In late July, 2013, a lawyer for Plaintiffs sent Medora a letter quoting the California Consumers Legal Remedies Act,¹³ demanding that Medora cease using the words "allnatural" on its packaging and website, and threatening to file a class action suit.¹⁴ In late October, 2013, another lawyer for Plaintiffs sent a draft complaint along with a settlement demand, similarly demanding that Medora cease using the words "all natural" on its Popcorners packaging.¹⁵ While Medora denies there is anything misleading about its old labeling, in October and November 2013, Medora decided to implement a new label that did not include the words "all natural."¹⁶ The new label went into effect in December 2013.¹⁷ In 2014, annual net sales for Popcorners increased again, to approximately $34 million.¹⁸

In February 2014, Nguyen filed an initial complaint in this district. Vandenberg followed later that year with a complaint in the Southern District of Florida. Vandenberg's action was transferred here, and ultimately related and consolidated with Nguyen's.¹⁹ Blackwood joined the case earlier this year by way of the operative amended class action complaint.²⁰ The operative complaint includes a variety of claims, including: violation of the California Consumers Legal Remedies Act, Civ. Code § 1750 et seq.; violation of the California Unfair Competition Law, Bus. & Prof. Code § 17200 et seq.—Unlawful Business Acts and Practices; violation of the California Unfair Competition Law, Bus. & Prof. Code § 17200 et seq.—Fraudulent Business Acts andPractices; violation of the California False Advertising Law, Bus. & Prof. Code § 17500 et seq.; breach of express warranty; breach of the implied warranty of merchantability; violation of the New York General Business Law Section 349; violations of the Florida Deceptive and Unfair Trade Practices Act, negligent misrepresentation and violation of the California Magnusson-Moss Warranty Act.²¹

Discovery commenced. Nguyen testified in deposition that she bought a few bags of Popcorners in California in 2013.²² In making her purchase, Nguyen says she relied upon the statement that the product was "all natural." Put another way, Nguyen says that had she known at the time that the product was not, in fact, "all natural" but was, instead, made with GMOs, she would not have purchased the product. Nguyen also says that if she knew that the product labels were truthful and not misleading, she would continue to purchase the products in the future. But Nguyen did not know the price she paid for the Popcorners she bought, and has no record of herpurchases.²³ Nguyen also testified that she suffered no financial harm as a result of her purchases.²⁴

Vandenberg bought one bag of Popcorners in 2013, and has no record of that purchase.²⁵ He says he bought the bag from a Whole Foods Market in Florida for approximately $2.99. The bag he purchased was labeled "all natural" on the front packaging, which he says he perceived, read and relied on in making his purchase. Vandenberg interpreted the "all natural" claim to mean that the White Cheddar Popcorners All Natural Corn Chips did not contain unnatural, synthetic, and/or artificial ingredients. He testified that he is now aware that most corn is genetically modified, but that he continues to eat corn-based foods that are probably genetically modified, regardless of whether they contain genetically modified ingredients.²⁶

Blackwood testified that the first time she tried Popcorners, she was on a flight and selected a free snack from an attendant without reading the label.²⁷ She testified that she continued to purchase Popcorners during most of 2014, well after the label change removed the words "all natural" from Popcorners packaging.²⁸

In the operative complaint, Plaintiffs request declaratory relief, injunctive relief and damages generally.²⁹ But they seek to certify a class only as to declaratory and injunctive reliefunder Rules 23(b)(2) and 23(c)(4) for liability purposes specifically, leaving damages for later.³⁰ Plaintiffs also seek alternative state subclasses consisting of California, Florida and New York residents.³¹

II.

This court has original subject-matter jurisdiction over this proposed class action pursuant to the Class Action Fairness Act of 2005 and under 28 U.S.C. § 1332(d), which explicitly provides for the original jurisdiction of the federal courts in any class action in which at least 100 members are in the proposed plaintiff class, any member of the plaintiff class is a citizen of a state different from the state of citizenship of any defendant, and the matter in controversy exceeds the sum of $5,000,000, exclusive of interest and costs. Plaintiffs alleges there are at least 100 members in the proposed class, the total claims of the proposed class members are well in excess of $5,000,000 in the aggregate, exclusive of interest and costs and a member of the proposed class is a citizen of a state different from the state of citizenship of Medora. The parties further consented to the jurisdiction of the undersigned under 28 U.S.C. § 636(c) and Fed. R. Civ. P. 72(a).³²

Ordinarily, questions of standing are raised by way of a motion to dismiss for lack of subject matter jurisdiction.³³ Here, rather than filing any Rule 12 motion, Medora simply answered. But a court is always obligated to consider whether any plaintiff has standing to pursue the relief sought. "Standing is a threshold matter central to our subject matter jurisdiction. We must assure ourselves that the constitutional standing requirements are satisfied before proceeding to the merits."³⁴ Although presented as part of Medora's opposition to class certification, the court must therefore consider Plaintiffs' standing to pursue their proposed class-wide injunctive relief before anything else.³⁵ Upon such consideration, the court finds that not only has no named Plaintiff offered any proof of any injury-in-fact, no named Plaintiff is realistically threatened by a repetition of the violation.

III.

"[P]rior to the certification of a class, and technically speaking before undertaking any formal typicality or commonality review, the district court must determine that at least one named class representative has Article III standing to raise each class subclaim."³⁶ "The standing formulation for a plaintiff seeking prospective injunctive relief is simply one implementation of Lujan's requirements. The plaintiff must demonstrate that he has suffered or is threatened with a 'concrete and particularized' legal harm, coupled with 'a sufficient likelihood that he will again bewronged in a similar way.' As to the second inquiry, he must establish a 'real and immediate threat of repeated injury.'"³⁷ Between their failure to show any past injury, Plaintiffs' failure to express any intent to buy Popcorners in the future, and Medora's change to the...