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Richards v. Safeway Inc.

United States District Court, N.D. California

January 12, 2015

RYAN RICHARDS, Plaintiff,
v.
SAFEWAY INC., Defendant.

ORDER DISMISSING CASE Re: Dkt. No. 67

JAMES DONATO, District Judge.

Plaintiff Ryan Richards filed this putative class action alleging that defendant Safeway deceptively advertised certain products as "100% Natural" when they allegedly contained a synthetic ingredient known as sodium acid pyrophosphate ("SAPP"). On December 12, 2014, the parties filed a stipulation seeking dismissal of the case with prejudice. The Court ordered the parties to submit a statement regarding the fairness of the settlement to the absent putative class members.

The Court has carefully reviewed the submission and approves the dismissal.

BACKGROUND

Mr. Richards filed an amended complaint on June 20, 2014, alleging eight claims for relief against Safeway. All claims relate to Safeway's alleged labeling, marketing and sale of "100% Natural" products which, plaintiffs allege, actually contained one or more synthetic ingredients. Dkt. No. 45. The Safeway products at issue include Open Nature 100% Natural Multi-Grain Waffles and Open Nature 100% Natural Multi-Grain Waffles. Id. at 2. Mr. Richards alleges that both of these products are advertised and labeled as "100% Natural, " but contain SAPP. Id. He asserts that Safeway falsely and dishonestly induced health-conscious customers into purchasing these products at a premium price. Id. at 8. Mr. Richard seeks to represent national and California-resident classes of consumers who purchased Safeway's food products that were labeled "100% Natural, " yet contained SAPP. Id. at 5. The amended complaint alleges the following claims: (1) a violation of California's False Advertising Law, Business & Professions Code §§ 17500 et seq. ("FAL"), (2) a violation of California's Consumer Legal Remedies Act ("CLRA"), (3) common law fraud, (4) negligent misrepresentation, (5) breach of express warranty, (6) breach of contract, (7) a violation of California's Unfair Competition Law, Business and Professions Code §§ 17200-17208 ("UCL"), and (8) quasi-contract/unjust enrichment. Id. at 15-25.

On December 12, 2014, the parties filed a stipulation seeking dismissal of the case with prejudice. See Dkt. No. 67. Because the Court was concerned about potential prejudice to absent class members, it ordered the parties to submit a statement discussing the fairness of the settlement to the absent putative class members. See Dkt. No. 68.

On January 8, 2015, the parties submitted a joint statement regarding the fairness of the settlement. See Dkt. No. 69. The parties stated that it is unlikely that absent class members have relied on the claims here, because the case has mostly been reported in the legal media. See id. at 3. With respect to the effect of the statute of limitations on putative class members, the parties say that it would be impossible to calculate the time remaining for each member of the putative class, but point out that the statute of limitations has been tolled by plaintiff's suit here. See id. at 4. Finally, the parties point out that only the plaintiff's claims are being dismissed with prejudice; the missing putative class members' rights are not being adversely affected. See id. at 4-5.

DISCUSSION

Federal Rule of Civil Procedure Rule 23(e) requires the Court to review and approve a proposed voluntary dismissal, settlement or other compromise of a certified class's claims. The Ninth Circuit has held that Rule 23(e) also applies before certification, but in a much lighter form that does not entail "the kind of substantive oversight required when reviewing a settlement binding upon the class." Diaz v. Trust Territory of Pac. Islands, 876 F.2d 1401, 1408 (9th Cir. 1989). This holding pre-dates substantial amendments to Rule 23 in 2003, and courts in this district have noted "some uncertainty" about the continued application of Rule 23(e) to pre-certification settlement proposals in the wake of the 2003 amendments. See, e.g., Lyons v. Bank of America, NA, No. C 11-1232 CW, 2012 WL 5940846, at *1 n.1 (N.D. Cal. Nov. 27, 2012). But our decisions have "generally assumed that it does" apply, id., and this Court will follow Diaz to evaluate the proposed settlement and dismissal here. The Court finds that this approach is consistent with Rule 23(e) as it exists today. It also strikes the right balance between the full-bore fairness review for settlement of certified class claims, and doing nothing at all to ensure that putative class members are protected from collusive deals and not sacrificed for convenience when named representatives decide to settle their claims individually.

To determine whether pre-certification settlement or dismissal is appropriate, the Court must assess potential prejudice to the absent putative class members from: (1) "possible reliance on the filing of the action if they are likely to know of it either because of publicity or other circumstances"; (2) "lack of adequate time for class members to file other actions, because of a rapidly approaching statute of limitations"; and (3) "any settlement or concession of class interests made by the class representative or counsel in order to further their own interests." Diaz, 876 F.2d at 1408. "The central purpose of this inquiry is to determine whether the proposed settlement and dismissal are tainted by collusion or will prejudice absent putative members.'" Lyons, 2012 WL 5940846, at *1 (citing Mahan, 2010 WL 4916417, at *3).

The Court finds that the parties have satisfied the Diaz factors for the reasons given in the Background section, above. Although the parties did not provide the Court with the proposed settlement agreement, the parties have represented to the Court that under the settlement, Mr. Richards would voluntarily dismiss all his claims against Safeway with prejudice, while the putative class claims would be dismissed without prejudice. See Dkt. No. 69 at 1-2.

The Court therefore dismisses Mr. Richards' individual claims with prejudice and the putative class claims without prejudice. The clerk is directed to enter final judgment.

IT IS SO ORDERED.


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