The United States District Court for the Northern District of California recently granted a defendant’s motion to decertify a class because plaintiff’s damages model was not consistent with his theory of liability as required by the Supreme Court in Comcast Corp. v. Behrend. Plaintiff alleged that defendant’s false and misleading labeling of almond milk products violated California law, bringing claims under California’s Unfair Competition Law, False Advertising Law, and the California Consumers Legal Remedies Act. On October 2, 2013, the court denied defendant’s motion to dismiss, finding, inter alia, that the plaintiff had standing to bring class claims. On January 17, 2014, plaintiff moved for class certification, which the court granted in part. The court refused to certify an injunctive class, but granted the motion to certify a damages class of California consumers under Federal Rule of Civil Procedure 23(b)(3). Of the three damages models offered by plaintiff’s expert, the court found that one, a regression model, was consistent with plaintiff’s theory of liability and therefore met the requirements of Comcast Corp. v. Behrend.
On October 30, 2014, defendant filed a motion to decertify the damages class. Before addressing certification, the court determined that a supplemental report by plaintiff’s expert was both untimely and not a true supplement, as it was based on information available to the expert at the time of his first report. Because an expert may not introduce new opinions under the pretense of submitting a supplemental report, the court excluded the new report under Federal Rule of Civil Procedure 37(c).
The court then granted defendant’s motion to decertify the class. The court clarified that on a motion to decertify, the burden remains with the plaintiff to show that the requirements of Rule 23 have been met. Furthermore, in order to satisfy Comcast, a plaintiff’s damages model must be consistent with his theory of liability. In a case based on mislabeling, damages must compensate a consumer for the difference between the true value of the product received and the value of the product as labeled. Plaintiff’s expert calculated damages using a hedonic regression analysis. The court agreed with the defendant that the expert’s model did not control for other factors that affected the price of the product and conflated the effect of mislabeling with the value of the brand. Because the damages model did not isolate the harm related to the alleged mislabeling or control for the effect of advertising, it was insufficient under Comcast. The court also noted that the expert’s model was problematic due to its assumption that competitors’ products did not use the same labeling. As the plaintiff’s theory of damages was not limited to the theory of liability, the court found that plaintiff had failed to satisfy predominance under Rule 23(b)(3) and therefore granted defendant’s motion to decertify the class.