United States District Court, N.D. California
ORDER GRANTING PLAINTIFF'S MOTION FOR PRELIMINARY
APPROVAL DOCKET NO. 142
M. CHEN United States District Judge
Plaintiff Mary Hall brought the
instant class action based on Defendant PepsiCo's alleged
failure to warn consumers that its Pepsi, Diet Pepsi, and
Pepsi One soft drinks (collectively, Pepsi products)
contained elevated levels of 4-Methylimidazole (4-MeI), in
violation of California consumer protection statutes and
common law. Docket No. 68 (First Amended Complaint) (FAC) at
¶¶ 1, 7. 4-MeI is a compound formed during the
manufacturing of caramel coloring, and is recognized by
California as a chemical known to cause cancer. Id.
at ¶¶ 16, 24. Plaintiffs' suit was on behalf of
all individuals residing in California who purchased Pepsi
products. Id. at ¶ 50.
before the Court is Plaintiff's motion for preliminary
approval of the settlement. Docket No. 142 (Mot.). As part of
the settlement agreement, the parties have also stipulated to
a second amended complaint to create a nationwide class for
settlement purposes. Docket No. 142 (Stip.) at 2. For the
reasons stated below, the Court GRANTS Plaintiff's motion
for preliminary approval.
FACTUAL & PROCEDURAL BACKGROUND
January 23, 2014, Consumer Reports published test results on
the presence of 4-MeI in Pepsi products, finding that the
amount was in excess of the 29 micrograms allowed per can or
bottle and concluding that the results presented health risks
to consumers. FAC at ¶ 34. Following the report, several
consumers filed substantially similar class action suits
alleging that PepsiCo failed to warn consumers of the
elevated levels of 4-MeI. The Court consolidated nine
actions, and appointed the firms of Pearson, Simon & Warshaw
(PSW) and Glancy Binkow & Goldberg (GBG) as interim lead
counsel. Docket No. 65 at 1-2. On September 17, 2014, the
Court severed from the consolidated cases the Riva v.
PepsiCo case, which was a standalone case for personal
injury and medical monitoring claims. Docket No. 75.
August 25, 2014, Plaintiffs filed an amended complaint
alleging violations of Proposition 65 (failure to provide
warnings), the Consumers Legal Remedies Act (CLRA)
(misrepresentation of the safety, composition, and quality of
the Pepsi products), and the Unfair Competition Law (UCL)
under the unlawful, unfair, and fraudulent business practice
prongs. FAC at ¶¶ 62-90. Plaintiffs sought civil
penalties for violation of the Health & Safety Code, damages,
restitution, and injunctive relief requiring PepsiCo to
"cease and desist from engaging in the unlawful, unfair,
and/or deceptive practices alleged in this Complaint."
Id. at 19.
moved to dismiss the amended complaint, arguing that: (1)
Plaintiffs failed to comply with Proposition 65's
mandatory notice provisions before filing suit; (2) the
federal Food, Drug, and Cosmetic Act (FDCA) and the Food and
Drug Administration's (FDA) regulations preempt the state
law claims; and (3) the Court should not adjudicate the
action because the FDA has primary jurisdiction over the
subject matter of the suit and because there was a pending
Proposition 65 action in state court. Docket No. 105 (Order
on Motion to Dismiss) (Ord.) at 3.
Court denied PepsiCo's motion to dismiss Plaintiff
Hall's Proposition 65 claims, but granted the motion to
dismiss Ibusuki's Proposition 65 claim, although it noted
that the dismissal had little practical effect as Hall could
proceed as the named plaintiff for the Proposition 65 claim.
Id. at 14. The Court also found that there was no
preemption, and further declined to dismiss or stay the
action under a theory of primary jurisdiction. Id.
at 30-31, 37. The Court declined to stay on the basis of
abstention, finding that the pending state action Center
for Environmental Health v. Pepsi Beverages Co. only
alleged a Proposition 65 claim and sought civil penalties,
but did not allege any UCL or CLRA claims or seek restitution
and monetary damages. Id. at 42-43.
September 2015, the parties stipulated to continuing the
pending deadlines in order to pursue settlement. Docket No.
124. The parties participated in mediation before Judge
Ronald M. Sabraw on November 3, 2015. Docket No. 142-1
(Warshaw Dec.) at ¶ 9. The parties did not settle the
case at the time, but continued having settlement discussions
over the next several months before entering into the
Settlement Agreement now before the Court. Id.
settlement class is defined as:
All individuals in the United States and all U.S. territories
(including, but not limited to, the Commonwealth of Puerto
Rico, the U.S. Virgin Islands, Guam, American Samoa, the
Northern Mariana Islands, and the other territories and
possessions of the United States), who purchased one or more
of the Products from January 1, 2010, until the date of the
preliminary approval of the settlement of this litigation.
Warshaw Dec., Exh. 1 (Settlement Agreement) at ¶ 4.3.
settlement does not involve any monetary payment; instead, it
consists of "mandatory, non-opt-out, nationwide
injunctive relief pursuant to Federal Rule of Civil Procedure
23(b)(2) by way of modification of the ingredients for the
Products as set forth in this Settlement Agreement."
Settlement Agreement at ¶ 5.1. Primarily, PepsiCo agrees
to require its caramel coloring suppliers to meet certain
4-MeI levels in products shipped for sale in the United
States, ensuring the 4-MeI concentration levels will not
exceed the level of 100 parts per billion, and to test the
covered products pursuant to an agreed protocol. Mot. at 5.
This injunctive relief is the same that PepsiCo already
agreed to in the state court action, Center for
Environmental Health v. Pepsi Beverages Co.,
which was settled in 2015 Id. at 4. However, the
Settlement Agreement will "enhance the CEH settlement
by: (1) expanding the geographic scope of the stipulated
injunction from California to nationwide; (2) increasing the
duration of the injunctive relief from three years to five
years." Id. (original emphasis
exchange for the injunctive relief, the settlement class
releases the following claims:
any and all claims for injunctive and/or declaratory relief
of any kind or character -- whether matured or unmatured, now
known or unknown, liquidated or unliquidated, preliminary or
final, at law or in equity, whether before a local, state, or
federal court, or state or federal administrative agency,
commission, arbitrator(s) or otherwise -- that the Settlement
Class Members now have or may have, from the beginning of the
Class Period up until and including the Effective Date, based
on or relating in any way to the alleged presence of, or
labeling for, 4-MEI and/or caramel color in any Products.
Agreement at ¶ 1.16. There is no release of any damages
claims. See Settlement Agreement at ¶ 8.3.1
("Settlement Class Members will not release claims for
personal injury, wrongful death, or damages, and for that
reason no notice or opt-out right is required."), ¶
Certification of the Settlement Class
Court's "threshold task is to ascertain whether the
proposed settlement class satisfies the requirements of Rule
23(a) of the Federal Rules of Civil Procedure applicable to
all class actions, namely: (1) numerosity, (2) commonality,
(3) typicality, and (4) adequacy of representation."
Hanlon v. Chrysler Corp., 150 F.3d 1011, 1019 (9th
Cir. 1998). In addition, the ...