Ninth Circuit Puts a Cap on Coca-Cola Class Certification Order
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 Davidson. Engurasoff 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.
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