Mullins v. Premier Nutrition Corp.

          ORDER DENYING MOTION TO EXPAND CLASS CERTIFICATION BEYOND CALIFORNIA CONSUMERS

          RICHARD SEEBORG, United States District Judge

         I. INTRODUCTION

         Plaintiff Kathie Sonner represents a class of California consumers who purchased Joint Juice, a drinkable glucosamine hydrochloride and chondroitin sulfate supplement. She has sought to expand those classes to include members: (1) who purchased Joint Juice in all fifty states or, in the alternative, (2) who purchased the product in ten specific states. Questions remained about whether the nationwide or ten-state class could proceed where the claims are based on California law, and therefore the parties were directed to file briefs addressing that issue.

         The responses submitted by the parties exposed the material conflicts between California’s Unfair Competition Law (“UCL”), Cal. Bus. & Prof. Code § 17200, and the Consumer Legal Remedies Act (“CLRA”), Cal. Civ. Code § 1770, on the one hand, and the laws of other effected states. Premier demonstrated there are at least some states with laws that materially conflict with the UCL and CLRA and, on balance, the interests of the states where the advertising occurred outweigh those of California. Sonner concedes the existence of true conflicts between the law of some states and California law, thereby making a nationwide class improper. Similarly, Premier has demonstrated there are material conflicts between the laws of those ten states in the alternative sub-group, and that those states have more interest in applying their laws to the advertisements at issue than does California.

         Sonner now offers a new proposal: to carve out those states whose laws materially conflict with the UCL or CLRA. The trouble, however, is that the material conflicts that Premier has identified conflict with the UCL, but not the CLRA, or vice versa. Sonner has not offered a proposal that resolves all conflicts cleanly. Nor has Premier had the opportunity to challenge Sonner’s new proposal. Accordingly, because Sonner has not demonstrated that California law should apply to the two classes originally proposed, she will represent only a class of California consumers who have purchased Joint Juice since March 1, 2009. Her request to represent a larger class of consumers therefore must be denied.

         II. PROCEDURAL HISTORY^[1]

         Plaintiff Kathie Sonner seeks to represent consumers in all fifty states, or, in the alternative, consumers in ten specific states in this class action premised on California consumer-protection statutes. Sonner satisfied her burden to prove that the consumer claims she advances are amenable to classwide adjudication and that common questions predominate. Accordingly, at a minimum, a class of California consumers who have purchased Joint Juice since March 1, 2009, was certified. Difficult questions remained, however, about whether, under California’s government-interests test, California law could apply nationwide or to the proposed ten-state subclass in light of Mazza v. American Honda Motor Co., 666 F.3d 581 (9th Cir. 2012). To assist with these issues, the parties submitted additional briefs addressing the following two questions:

(1) Does California’s government-interests test require a categorical approach, where the existence of a scienter requirement, for example, always gives rise to a material conflict between the UCL and the CLRA and the consumer-protection laws of other states? Or must Premier prove that this differing element is seriously in dispute in this case?

(2) Why do scienter and reliance elements and differing damages models make a difference in this case in terms of the geographic scope of the putative class? When answering this question, the parties should examine the specific facts of this case.

         III. LEGAL STANDARD

         “A federal court sitting in diversity must look to the forum state’s choice of law rules to determine the controlling substantive law.” Mazza, 666 F.3d at 589 (internal quotation marks omitted). Thus, in this case, California’s choice-of-law rules apply. Application of California law to class members from other jurisdictions is permissible only if Sonner shows “doing so comports with both (1) due process, and (2) California’s choice of law rules.” In re Optical Disk Drive Antitrust Litig., No. 3:10-MD-2143 RS, 2016 WL 467444, at *12 (N.D. Cal. Feb. 8, 2016) (citing Mazza, 666 F.3d at 589). Sonner has already demonstrated application of California law to California-based Premier will not offend due process, and thus the only remaining question is whether California’s choice of law rules are satisfied here. Premier bears the burden to show “‘foreign law, rather than California law, should apply to class claims.’” Mazza, 666 F.3d at 590 (quoting Wash. Mut. Bank, F.A. v. Superior Court, 24 Cal.4th 906, 921 (2001)).

         There are typically three steps to decide which state’s law applies. The first task is to determine whether the laws of the affected jurisdictions are “the same or different.” Id. at 590 (quoting McCann v. Foster Wheeler LLC, 48 Cal.4th 68, 81-82 (2010)). If the laws are different, the second step requires an examination of “each jurisdiction’s interest in the application of its own law” to determine whether a true conflict exists. Id. If it does, then the final step involves analyzing “which state’s interest would be more impaired if its policy were subordinated to the law of the other state.” Id.

         IV. DISCUSSION

         A. The Impact of Mazza

SThe language used by the Mazza court speaks broadly, suggesting nationwide consumer class actions are never permissible because some states require proof of reliance or scienter, or have different methods for compensating victims of consumer fraud. See Mazza, 666 F.3d at 592-93 (“Each of our states has an interest in balancing the range of products and prices offered to consumers with the legal protections afforded to them. Each of our states also has an interest in being able to assure individuals and commercial entities operating within its territory that applicable limitations on liability set forth in the jurisdiction’s law will be available . . . .” (internal quotation marks omitted)). Yet, the court was careful to limit its holding to “the facts and circumstances of this case, ” id. at 594, and thus district courts routinely require fact- and case-specific analysis to determine whether to apply California law to absent class members in other jurisdictions. See, e.g., Forcellati v. Hyland’s, Inc., 876 F.Supp.2d 1155, 1160-61 (C.D. Cal. 2012) (“Defendants can only meet [their] burden by engaging in an analytically rigorous discussion of each prong of California’s ‘government interests’ test based on the facts and circumstances of this case and this Plaintiff’s allegations.” (emphasis in original)); In re Clorox Consumer Litig., 894 F.Supp.2d 1224, 1237 (N.D. Cal. 2012) (“Since the parties have yet to develop a factual record, it is unclear whether applying different state consumer protection statutes could have a material impact on the viability of Plaintiffs’ claims.”); Allen v. Hyland’s Inc., 300 F.R.D. 643, 658 (C.D. Cal. 2014); Bruno v. Eckhart Corp., 280 F.R.D. 540, 550 (C.D. Cal. 2012) (“Defendants cannot profitably rely on the work of a different party in a different case with different facts-or on the Ninth Circuit finding error in a district court rejecting an argument Defendants did not themselves present to this Court-to correct their failure” to show “the law of other states conflicted with California law as applied to this particular case.” (emphasis in original)).

         Premier correctly notes that when district courts have permitted nationwide class actions involving claims for violations of consumer protection laws, the defendants failed to offer any analysis of states’ laws or case-specific discussion whatsoever. See Allen, 300 F.R.D. at 643; Forcellati, 2014 WL 1410264, at *3; Bruno, 280 F.R.D. at 549-50. Of course, defendants need do more than simply submit a table of state law to show the UCL and CLRA are inapplicable nationwide; they must demonstrate the elements at issue are actually in dispute and amount to true conflicts.

         This fact-specific approach comports with the California Supreme Court’s decision to abandon its prior categorical rule “that in tort actions the law of the place of the wrong was the applicable law in a California forum regardless of the issues before the court.” Hurtado v. Superior Court, 11 Cal.3d 574, 579 (1974). Instead, the court chose to adopt the more flexible government-interests test. Thus, under that test, “[t]he fact that two states are involved does not itself indicate there is a ‘conflict of laws’ or ‘choice of law’ problem. There is obviously no problem where the laws of the two states are identical.” Id. at 580. In other words, the analysis begins by identifying whether the statutes are worded differently, and, if so, whether the differences rise to the level of substantive requirements. “The key step in this [choice of law] process is delineating the issue to be decided.” Id. at 584.

         B. ...