Schneider et al v. Chipotle Mexican Grill, Inc.
Filing
136
ORDER by Hon. Haywood S. Gilliam, Jr. GRANTING Motion for Reconsideration, Dkt. No. 87 ; DENYING Motion for Summary Judgment, Dkt. No. 92 ; GRANTING Motion to Certify Class, Dkt. No. 95 ; and DENYING Daubert Motions, Dkt. Nos. 100 , 101 , 117 .(hsglc2S, COURT STAFF) (Filed on 9/29/2018)
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UNITED STATES DISTRICT COURT
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NORTHERN DISTRICT OF CALIFORNIA
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MARTIN SCHNEIDER, et al.,
Plaintiffs,
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v.
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CHIPOTLE MEXICAN GRILL, INC.,
Defendant.
United States District Court
Northern District of California
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ORDER GRANTING PLAINTIFFS’
MOTION FOR RECONSIDERATION,
DENYING DEFENDANT’S MOTION
FOR SUMMARY JUDGMENT,
GRANTING PLAINTIFFS’ MOTION
FOR CLASS CERTIFICATION, AND
DENYING PLAINTIFFS’ AND
DEFENDANT’S DAUBERT MOTIONS
Re: Dkt. Nos. 87, 92, 95, 100, 101, 117
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Case No. 16-cv-02200-HSG
Pending before the Court are: (1) Plaintiffs’ unopposed motion for reconsideration, Dkt.
No. 87; (2) Defendant’s motion for summary judgment, Dkt. No. 92; (3) Plaintiffs’ motion for
class certification, Dkt. No. 95; (4) Defendant’s motion to exclude the expert report and testimony
of Colin B. Weir, Dkt. No. 100; (5) Defendant’s motion to exclude the expert report and testimony
of Dr. Jon A. Krosnick, Dkt. No. 101; and (6) Plaintiffs’ motion to exclude testimony of
Defendant’s experts Dr. Margaret Mellon, Ms. Sarah Butler, and Dr. Russell Mangum, Dkt. No.
117. For the following reasons, the Court GRANTS the motion for reconsideration, DENIES
Defendant’s motion for summary judgment, GRANTS the motion for class certification, and
DENIES both parties’ Daubert motions.
I.
INTRODUCTION
Plaintiffs Martin Schneider, Sarah Deigert, Theresa Gamage, and Nadia Parikka bring this
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putative class action against Chipotle Mexican Grill, Inc. (“Chipotle”), alleging that Chipotle’s
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claims that its products were “non-GMO” and “GMO-free” violated California, Maryland, and
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New York consumer protection laws. Plaintiffs currently identify representations on three in-store
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signs displayed during the class period, which state, respectively, (1) “[w]hen it comes to our food,
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genetically modified ingredients don’t make the cut,” Dkt. No. 92-34; (2) “all of our food is non-
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GMO,” Dkt. No. 92-21, and; (3) “only non-GMO ingredients,” Dkt. No. 92-35. See Dkt. No. 131
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at 12:21–24. Specifically, Plaintiffs allege that Defendant’s advertising and labeling was
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misleading and deceptive because consumers reasonably understood these representations to mean
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“that Chipotle does not serve food sourced from animals that have been raised on GMOs or
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genetically engineered feed.” See Dkt. No. 1 (“Compl.”) ¶¶ 2, 19–26; Dkt. No. 111 at 8.
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However, Plaintiffs allege that Defendant serves “protein products such as beef, chicken, and pork
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from poultry and livestock” raised on GMO feed, “dairy products such as cheese and sour cream”
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produced by milk from such animals, and beverages made with corn-syrup from GMO corn. Id.
United States District Court
Northern District of California
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II.
MOTION FOR RECONSIDERATION
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A.
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A “court may relieve a party or its legal representative from a final judgment, order, or
Legal Standard
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proceeding for . . . any . . . reason that justifies relief.” Fed. R. Civ. Pro. 60(b)(6).
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Reconsideration is appropriate if . . . there is an intervening change in controlling law.” Sch. Dist.
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No. 1J, Multnomah Cty., Or. v. ACandS, Inc., 5 F.3d 1255, 1263 (9th Cir. 1993). A motion for
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reconsideration should be granted “in the face of the existence of new evidence, an intervening
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change in the law, or as necessary to prevent manifest injustice.” Navajo Nation v. Confederated
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Tribes & Bands of the Yakama Indian Nation, 331 F.3d 1041, 1046 (9th Cir. 2003) (emphasis
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added); see also Civil Local Rule 7-9(b).
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B.
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On November 4, 2016, the Court granted Defendant’s motion to dismiss Plaintiffs claims
Discussion
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for injunctive relief for lack of standing. Dkt. No. 36 at 4. Following the Court’s order on
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Defendant’s motion to dismiss, the Ninth Circuit issued its opinion in Davidson v. Kimberly-Clark
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Corp., 873 F.3d 1103 (9th Cir. 2017), resolving the district court split regarding whether
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injunctive relief is available to previously deceived consumers in false advertising cases. That
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decision was amended and superseded by Davidson v Kimberly-Clark Corp., 889 F.3d 956 (9th
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Cir. May 9, 2018).
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Davidson involved the advertising and sale of pre-moistened wipes that the plaintiff
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alleged were falsely marketed as “flushable.” Davidson, 889 F.3d at 961. The Ninth Circuit
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reasoned that some set of circumstances may exist where injunctive relief is available to a
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consumer who learns that a label is false after purchasing a product. Id. at 967–972. It held that
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“a previously deceived consumer may have standing to seek an injunction against false advertising
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or labeling, even though the consumer now knows or suspects that the advertising was false at the
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time of the original purchase, because the consumer may suffer an actual and imminent, not
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conjectural or hypothetical threat of future harm.” Id. at 969 (citation and internal quotation marks
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omitted). But the court cautioned that mere knowledge of a label’s falsity in the past “does not
equate to knowledge that it will remain false in the future.” Id. Instead, a plaintiff seeking
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United States District Court
Northern District of California
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injunctive relief may show, for example, that “she will be unable to rely on the product’s
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advertising or labeling in the future, and so will not purchase the product although she would like
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to.” Id. at 970. “In other cases, the threat of future harm may be the consumer’s plausible
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allegations that she might purchase the product in the future, despite the fact it was once marred by
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false advertising or labeling, as she may reasonably, but incorrectly, assume the product was
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improved.” Id. Importantly, the Ninth Circuit’s conclusion is narrower than a blanket conclusion
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that plaintiffs seeking injunctive relief in mislabeling class actions always have standing. The
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principle set forth in Davidson is more accurately cast as the court’s “not [being] persuaded that
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injunctive relief is never available for a consumer who learns after purchasing a product that the
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label is false.” Id. (quoting Duran v. Creek, No. 3:15-cv-05497-LB, 2016 WL 1191685, at *7
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(N.D. Cal. Mar. 28, 2016)) (emphasis in original).
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In light of Davidson, the Court finds that Plaintiffs’ allegations, see Compl. ¶¶ 50–55, are
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sufficient on their face to allege standing to seek injunctive relief. The Complaint alleges that
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Plaintiff Schneider “maintains an interest in continuing as a customer at Chipotle in the future if
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Chipotle eventually does have a non-GMO and GMO-free menu,” and that Plaintiffs Deigert,
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Gamage, and Parikka all “maintain[] an interest” in purchasing food at Chipotle in the future.
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Compl. ¶¶ 50–55. Under Davidson, this is a sufficient basis to find standing under Rule 23(b)(2).
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Accordingly, the Court GRANTS Plaintiffs’ motion for reconsideration. The Court
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AMENDS its previous ruling, and DENIES Defendants’ motion to dismiss Plaintiffs’ claims for
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injunctive relief. Because Plaintiffs did not file an amended complaint following the Court’s
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November 4, 2016 order and both parties have briefed the injunctive relief issues in their summary
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judgment and class certification papers, Plaintiffs need not file any amended complaint at this
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time.
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III.
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MOTION FOR SUMMARY JUDGMENT
Defendant moves for summary judgment on all of Plaintiffs’ claims, contending that there
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is no dispute of material fact that: (1) Plaintiffs were not deceived or harmed as a result of
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Chipotle’s “non-GMO” claims; (2) no reasonable consumer would be deceived by the “nonGMO” claims, and (3) no consumers paid a price premium due to the “non-GMO” claims. Dkt.
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United States District Court
Northern District of California
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No. 92. For the following reasons, the Court DENIES Defendant’s motion for summary
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judgment.
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A.
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Summary judgment is proper when a “movant shows that there is no genuine dispute as to
Summary Judgment Standard
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any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a).
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A fact is “material” if it “might affect the outcome of the suit under the governing law.” Anderson
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v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute is “genuine” if there is evidence in the
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record sufficient for a reasonable trier of fact to decide in favor of the nonmoving party. Id. The
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Court views the inferences reasonably drawn from the materials in the record in the light most
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favorable to the nonmoving party, Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S.
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574, 587–88 (1986), and “may not weigh the evidence or make credibility determinations,”
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Freeman v. Arpaio, 125 F.3d 732, 735 (9th Cir. 1997), overruled on other grounds by Shakur v.
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Schriro, 514 F.3d 878, 884–85 (9th Cir. 2008).
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The moving party bears both the ultimate burden of persuasion and the initial burden of
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producing those portions of the pleadings, discovery, and affidavits that show the absence of a
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genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Where the
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moving party will not bear the burden of proof on an issue at trial, it “must either produce
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evidence negating an essential element of the nonmoving party’s claim or defense or show that the
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nonmoving party does not have enough evidence of an essential element to carry its ultimate
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burden of persuasion at trial.” Nissan Fire & Marine Ins. Co. v. Fritz Cos., 210 F.3d 1099, 1102
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(9th Cir. 2000). Where the moving party will bear the burden of proof on an issue at trial, it must
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also show that no reasonable trier of fact could not find in its favor. Celotex Corp., 477 U.S. at
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325. In either case, the movant “may not require the nonmoving party to produce evidence
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supporting its claim or defense simply by saying that the nonmoving party has no such evidence.”
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Nissan Fire & Marine Ins. Co., 210 F.3d at 1105. “If a moving party fails to carry its initial
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burden of production, the nonmoving party has no obligation to produce anything, even if the
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nonmoving party would have the ultimate burden of persuasion at trial.” Id. at 1102–03.
“If, however, a moving party carries its burden of production, the nonmoving party must
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United States District Court
Northern District of California
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produce evidence to support its claim or defense.” Id. at 1103. In doing so, the nonmoving party
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“must do more than simply show that there is some metaphysical doubt as to the material facts.”
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Matsushita Elec. Indus. Co., 475 U.S. at 586. A nonmoving party must also “identify with
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reasonable particularity the evidence that precludes summary judgment.” Keenan v. Allan, 91
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F.3d 1275, 1279 (9th Cir. 1996). If a nonmoving party fails to produce evidence that supports its
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claim or defense, courts enter summary judgment in favor of the movant. Celotex Corp., 477 U.S.
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at 323.
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B.
Discussion
i.
Standing
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Defendant contends that Plaintiffs cannot establish Article III standing because there is no
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issue of material fact that Plaintiffs were neither deceived nor harmed by the “non-GMO” claims.
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Dkt. No. 92 at 13–16. Defendant additionally contends that Plaintiffs lack standing to pursue
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injunctive relief because Chipotle has removed the advertisements at issue. Id. at 16–17. The
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Court addresses each argument in turn.
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a. Legal Standard
To establish Article III standing, a plaintiff must show an injury-in-fact that is: (1) concrete
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and particularized, as well as actual or imminent; (2) fairly traceable to the challenged action of
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the defendant; and (3) redressable by a favorable ruling from the court. Lujan v. Defenders of
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Wildlife, 504 U.S. 555, 560-61 (1992). “A plaintiff must demonstrate standing for each claim he
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or she seeks to press and for each form of relief sought.” Wash. Envtl. Council v. Bellon, 732 F.3d
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1131, 1139 (9th Cir. 2013). “In food-labeling cases such as this one, a plaintiff can satisfy the
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Article III injury-in-fact requirement by showing that she either: (1) paid a price premium for a
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mislabeled product; or (2) would not have purchased the product had he or she known about the
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misbranding.” Nguyen v. Medora Holdings, LLC, No. 5:14-cv-00618-PSG, 2015 WL 4932836, at
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*5 (N.D. Cal. Aug. 18, 2015) (citations omitted); see also Mazza v. Am. Honda Motor Co., Inc.,
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666 F.3d 581, 595 (9th Cir. 2012) (stating that, in class action alleging UCL, FAL, and CLRA
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claims, “[t]o the extent that class members were relieved of their money by [Defendant’s]
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United States District Court
Northern District of California
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deceptive conduct . . . they have suffered an ‘injury in fact’”) (citation omitted).
b. Deception
Defendant contends that (1) Plaintiffs Deigert, Gamage, and Parikka were motivated to
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purchase Chipotle products because they were preexisting customers; (2) Plaintiffs Deigert,
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Gamage, and Schneider cannot have been deceived about GMO content in soft drinks because
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they have never purchased soft drinks at Chipotle; and, (3) all Plaintiffs believe that they were
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misled only because they hold the false belief that the meat and dairy ingredients are or contain
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GMOs. Dkt. No. 92 at 13–14.
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None of these arguments defeats Plaintiffs’ standing. Plaintiffs concede that only Plaintiff
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Parikka has standing to assert reliance with respect to soft drinks. Dkt. No. 104 at 10 n.7. A
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genuine issue of material fact remains as to whether Named Plaintiffs would have purchased the
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products at issue had they known about the alleged misbranding, regardless of their motivation to
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purchase before the “non-GMO” representations appeared or after the in-store campaign
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concluded. Further, Defendant’s argument that certain Named Plaintiffs may have understood the
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term “non-GMO” to mean that the meat and dairy products are not, and do not contain, GMOs is
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inapposite. See Dkt. No. 92 at 14–15. Plaintiffs’ contention that the term “non-GMO” also means
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meat and dairy products from animals who have not consumed GMO feed is not inconsistent with
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the Named Plaintiffs’ understanding, and the Named Plaintiffs’ testimony therefore does not
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preclude them from holding both beliefs. The cases Defendant cites do not hold otherwise. See
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Wilson v. Frito-Lay N. Am., Inc., 260 F. Supp. 3d 1202, 1215 (N.D. Cal. 2017) (granting summary
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judgment in part because Plaintiff “testified at his deposition that he did not rely on the ‘all
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natural’ label when making his purchasing decision”); Major v. Ocean Spray Cranberries, Inc.,
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No. 5:12-CV-03067-EJD, 2015 WL 859491, at *3 (N.D. Cal. Feb. 26, 2015), aff'd, 690 F. App'x
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564 (9th Cir. 2017) (granting summary judgment where Plaintiff admitted she did not rely to her
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detriment on the theory of deception proffered in the complaint). Here, taking the evidence in the
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light most favorable to the nonmovants, no Plaintiff has disavowed the Plaintiffs’ proffered
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misrepresentation theory.
Plaintiffs have offered sufficient evidence to create a disputed issue of material fact that
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Named Plaintiffs would not have purchased the Chipotle meat and/or dairy products were it not
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United States District Court
Northern District of California
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for the allegedly misleading branding. See, e.g., Dkt. No. 95-19 ¶ 7 (Deigert Declaration stating
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that she continued frequenting Chipotle in part because she “trusted that its representations were
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truthful”); Dkt. No. 95-21 ¶ 7 (Gamage Declaration stating that she began frequenting Chipotle
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more often after the representations were made, and believed that the products were “not tainted
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by GMOs”); Dkt. No. 95-22 ¶ 7 (Parikka Declaration stating that she “rel[ied] on Chipotle’s Non-
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GMO signage” when making her purchases); Dkt. No. 95-20 ¶ 7 (Schneider Declaration stating
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that he began frequenting Chipotle partly because he saw the “non-GMO” signage).
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c. Harm
Defendant additionally contends that (1) Plaintiffs lack standing because they cannot
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establish that the food they purchased entitles them to a full refund; and, (2) because Chipotle did
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not raise its prices during the Class Period, Plaintiffs cannot establish that they paid a price
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premium for the items they bought. Dkt. No. 92 at 15–16. Defendant also contends that Plaintiffs
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are not entitled to restitution under California law because any such restitution “must account for
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the benefits or value that a plaintiff received at the time of purchase” and “represent a measurable
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loss supported by the evidence.” Id. at 15 (quoting Stathakos v. Columbia Sportswear Co., No.
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15-CV-04543-YGR, 2017 WL 1957063, at *10 (N.D. Cal. May 11, 2017)).
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Defendant’s contentions do not establish as a matter of law that Plaintiffs were not harmed
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by Defendant’s alleged misrepresentations. Firstly, Defendant’s contention that, because Plaintiffs
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received “some value from” their purchases they are not entitled to a full refund addresses a
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question of damages, not one of standing. Defendant’s only cited cases address this question with
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respect to damages and under California law. Stathakos, 2017 WL 1957063, at *10 (granting
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summary judgment of no entitlement to a full refund); Brazil v. Dole Packaged Foods, LLC, No.
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12-CV-01831-LHK, 2014 WL 2466559, at *15 (N.D. Cal. May 30, 2014) (addressing full refund
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model during class certification under 12(b)(3)).
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Further, under California law, “[f]or each consumer who relies on the truth and accuracy of
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a label and is deceived by misrepresentations into making a purchase, the economic harm is the
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same: the consumer has purchased a product that he or she paid more for than he or she otherwise
might have been willing to pay if the product had been labeled accurately.” Kwikset Corp. v.
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United States District Court
Northern District of California
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Superior Court, 51 Cal. 4th 310, 329 (2011) (emphasis in original). The fact that the price of the
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product did not change after the representation does not establish that there is no triable issue as to
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whether Plaintiffs paid a price premium. See, e.g., McCrary v. Elations Co. LLC, No.
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EDCV130242JGBSPX, 2014 WL 12589137, at *9 (C.D. Cal. Dec. 2, 2014) (“A price premium
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may exist even though, at some point,” the product “was sold at the same price” with and without
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the alleged misrepresentation).
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d. Injunctive Relief
The Court has already established that Plaintiffs’ pleadings on their face are sufficient to
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allege standing to pursue injunctive relief. See Section II, supra. The Complaint alleges that
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Plaintiff Schneider “maintains an interest in continuing as a customer at Chipotle in the future if
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Chipotle eventually does have a non-GMO and GMO-free menu,” and that Plaintiffs Deigert,
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Gamage, and Parikka all “maintain[] an interest” in purchasing food at Chipotle in the future.
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Compl. ¶¶ 50–55.
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Defendant contends that Chipotle has “removed from its restaurants each of the ‘Non-
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GMO Claims’ allegedly seen by Plaintiffs.” Dkt. No. 92 at 17. However, Defendant does not
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contest that similar statements are still made by Chipotle on its website, in its ingredients guide,
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and by Chipotle employees in stores, including the claim that “[w]hen it comes to [its] food,
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genetically modified ingredients don’t make the cut,” which “has appeared on [Chipotle’s]
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homepage and continues to be one of the first things consumers see on the GMO Webpage.” Dkt.
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No. 120 at 2–3. Defendant contends that, because these statements are (or, in the case of
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employee representations, are designed to be) accompanied by an explanation that “much of the
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meat and dairy we serve come from animals fed at least some GMO grain,” Plaintiffs are not
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likely to be further misled. Id. at 2.
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Defendant cites to Kane v. Chobani, Inc., No. 12-CV-02425-LHK, 2013 WL 5289253
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(N.D. Cal. Sept. 19, 2013), in which the court dismissed similar California law claims of
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misrepresentation. In Kane, the representation at issue appeared on a label that also disclosed
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information that clarified the meaning of the representation such that it was “not plausible” for
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United States District Court
Northern District of California
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Plaintiffs to interpret the representation as misleading. Kane, 2013 WL 5289253, at *10.
The Kane court dismissed California law claims due to lack of standing under the UCL and
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FAL, which require a demonstration of actual reliance. Id. at *5. Here, Plaintiffs seek injunctive
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relief under California, Maryland, and New York law. Compl. ¶¶ 78, 115, 124. To establish
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Article III standing “[w]here standing is premised entirely on the threat of repeated injury, a
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plaintiff must show a sufficient likelihood that he will again be wronged in a similar way.”
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Davidson, 889 F.3d at 967. (internal quotation marks omitted). To establish standing for
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injunctive relief, a plaintiff may show, for example, that “she will be unable to rely on the
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product’s advertising or labeling in the future, and so will not purchase the product although she
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would like to.” Davidson, 889 F.3d at 970.
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Plaintiffs’ current position is that “1) reasonable consumers understood Non-GMO to
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include meat and dairy ingredients that were not sourced from animals fed GM feed; 2) Defendant
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failed to include that information on its in-store billboards and other marketing materials in a
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deceptive manner; and 3) Defendant misrepresented its Non-GMO claims by omitting to include
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this clarifying information.” Dkt. No. 111 at 8 (internal footnote omitted); see also Compl. ¶ 41;
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Dkt. No. 104 at 12 (“Plaintiffs believed that all of Defendant’s ingredients were non-GMO,
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meaning that none of the ingredients came from animals that fed on GM feed.”).
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The disclaimer on Defendant’s website and handbooks does not ensure that Plaintiffs will
be able to rely on Chipotle labeling or advertisements in the future such that Plaintiffs are deprived
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of standing. See Davidson, 889 F.3d at 970.
Neither are Plaintiffs’ claims for injunctive relief rendered moot simply because Chipotle
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has removed the in-store signage. A demonstration of mootness requires that “the reform of the
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defendant must be irrefutably demonstrated and total.” Polo Fashions, Inc. v. Dick Bruhn, Inc.,
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793 F.2d 1132, 1135 (9th Cir. 1986). Defendant has not met this high burden by demonstrating
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that the alleged misrepresentations have totally and irrefutably ceased. The Court therefore
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DENIES Defendant’s motion for summary judgment as to Plaintiffs’ claims for injunctive relief.
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United States District Court
Northern District of California
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ii.
Reasonable Consumer
Defendant contends that that there is no issue of material fact that a reasonable consumer
would not be deceived by Chipotle’s “non-GMO” claims. Dkt. No. 92 at 17.
a. Legal Standard
Plaintiffs’ claims under California, Maryland, and New York law are evaluated under a
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“reasonable consumer” test. See Williams v. Gerber Prod. Co., 552 F.3d 934, 938 (9th Cir. 2008);
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Luskin's, Inc. v. Consumer Prot. Div., 353 Md. 335, 357–58 (1999); Oswego Laborers' Local 214
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Pension Fund v. Marine Midland Bank, N.A., 85 N.Y.2d 20, 26 (1995). “Under the reasonable
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consumer standard, [a plaintiff] must show that members of the public are likely to be deceived.”
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Williams, 552 F.3d at 938 (internal quotation marks omitted).
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b. Website Disclaimer
Defendant first contends that, because Plaintiffs challenge all of Defendant’s “non-GMO”
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advertising and marketing claims, the challenged claims necessarily include statements made on
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Chipotle’s website that, even during the Class Period, included a disclaimer that “the meat and
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dairy served at Chipotle are likely to come from animals given at least some GMO feed.” Dkt.
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No. 92 at 17–18. Defendant cites several cases supporting the proposition that a disclaimer or
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clarifying language can defeat a claim of deception. Id. at 18 (citing Ebner v. Fresh, Inc., 838
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F.3d 958 (9th Cir. 2016); Freeman v. Time, Inc., 68 F.3d 285, 290 (9th Cir. 1995); Fink v. Time
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Warner Cable, 714 F.3d 739, 742 (2d Cir. 2013); Broder v. MBNA Corp., 281 A.D.2d 369, 371,
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722 N.Y.S.2d 524 (2001)). But none of the cases Defendant cites establishes that a disclaimer
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appearing as part of one advertisement is sufficient to defeat claims that other, wholly separate
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advertisements are misleading. It would not be reasonable to expect a consumer to search for
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disclaimers on a website to clarify a purported misrepresentation on in-store signage. See
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Williams, 552 F.3d at 939 (“[R]easonable consumers should [not] be expected to look beyond
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misleading representations on the front of the box to discover the truth from the ingredient list in
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small print on the side of the box.”). The Court therefore finds that Defendant’s disclosures on the
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website do not establish as a matter of law that a reasonable consumer could not have been misled
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by the “non-GMO” in-store advertisements.
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c. Deception
Defendant next contends that Plaintiffs have not presented any evidence that a reasonable
consumer would be deceived by Chipotle’s “non-GMO” claims. Dkt. No. 92 at 18–22. Defendant
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United States District Court
Northern District of California
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contends that, because the in-store advertisements do not specifically address the feed consumed
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by the animals that produce Chipotle’s meat and dairy ingredients or the soft drinks offered in the
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restaurants, it would not be reasonable for a consumer to be misled by the “non-GMO”
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representations. Id. at 21.
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Plaintiffs have provided extrinsic evidence that the “non-GMO” representations at least
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could be misleading, making all inferences in their favor as required here. Plaintiffs support their
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allegations with definitions used by the Non-GMO Project and the federal government, as well as
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market research and surveys into consumers’ interpretations of the phrases. Dkt. Nos. 95-28, 94-
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24, 94-26, 94-28, 94-38. Additionally, Plaintiffs point to several emails directed to Chipotle
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indicating that at least some customers may have believed the representations to be misleading.
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See Dkt. No. 94-10, 94-12, 94-14, 94-16, 94-18, 94-20, 94-22. Viewed in the light most favorable
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to Plaintiffs, there is a triable issue of fact as to whether a reasonable consumer could find that
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Chipotle’s “non-GMO” claims implied that the animals that produce Chipotle’s meat and dairy
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ingredients were not fed GMO grain. Plaintiffs’ have submitted sufficient evidence to present a
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genuine issue of material fact as to whether Defendant’s representations would have deceived a
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reasonable consumer.
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iii.
Economic Harm
Defendant again contends that there is no genuine issue of material fact that Plaintiffs did
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not suffer an economic harm because: (1) Chipotle did not change the price of its products during
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the Class Period; (2) Plaintiffs’ expert report does not appropriately measure the harm Plaintiffs
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allege; and (3) Plaintiffs’ expert report finds no price premium among a group of all respondents.
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Dkt. No. 92 at 23–25. The Court addresses each argument in turn.
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a. Change in Price
The fact that the price of the allegedly mislabeled products did not change during the Class
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Period does not by itself demonstrate as a matter of law that Plaintiffs cannot prove economic
8
harm caused by the misrepresentations. See Brazil v. Dole Packaged Foods, LLC, No. 12-CV-
9
01831-LHK, 2014 WL 5794873, at *10 (N.D. Cal. Nov. 6, 2014) (noting that producer pricing
does not necessarily correlate with value to the consumer when calculating restitution). Defendant
11
United States District Court
Northern District of California
10
cites no law in support of its proposition that “Chipotle’s own pricing behavior provides a perfect
12
before-and-after scenario for observing whether consumers did, in fact, pay a price premium.”
13
Dkt. No. 92 at 23. Such a test does not take into account economic harm or the potential benefit to
14
a defendant in increased market share caused by a misrepresentation that induces consumers to
15
purchase a product they otherwise would not have purchased. See Kwikset, 51 Cal. 4th 310, 329.
16
A reasonable jury could find that, despite no change in price during the Class Period, Plaintiffs
17
suffered economic harm as a result of Defendant’s alleged misrepresentations.
18
19
b. Dr. Krosnick’s Methodology
The parties agree that the proper measure of restitution in this case is “the difference
20
between the market price actually paid by consumers and the true market price that reflects the
21
impact of the unlawful, unfair, or fraudulent business practices.” Dkt. No. 104 at 22; Dkt. No. 120
22
at 13; see also Pulaski & Middleman, LLC v. Google, Inc., 802 F.3d 979, 989 (9th Cir. 2015)
23
(“[R]estitution is based on what a purchaser would have paid at the time of purchase had the
24
purchaser received all the information.”).
25
Defendant contends that Plaintiffs have failed to present any evidence of a difference
26
between the price paid by consumers and the true market price of the Chipotle products. Dkt. No.
27
120 at 13. Plaintiffs’ expert Dr. Krosnick offers a report based on a questionnaire comparing the
28
price respondents would pay for food items after having been presented with the text of Chipotle’s
12
1
“non-GMO” in-store advertisements against the price respondents would pay after having seen
2
both the “non-GMO” advertisements and a corrective statement about animals eating GMO feed.
3
Dkt. No. 92-9 (“Krosnick Report”) ¶¶ 1–15. Defendant contends that, because the report does not
4
directly measure the difference in a consumer’s willingness to pay with and without the “non-
5
GMO” representations, it cannot be relied upon as evidence that Plaintiffs paid a price premium.
6
Dkt. No. 92 at 24.
7
The Court is not persuaded. Dr. Krosnick’s report is relevant to Plaintiffs’ theory that
8
Chipotle, by displaying “non-GMO” representations, misled consumers into believing that the
9
meat and dairy products came from animals that did not consume GMO feed. The report therefore
provides extrinsic evidence of some weight that a reasonable consumer would pay less for
11
United States District Court
Northern District of California
10
Defendant’s products if not for the alleged misrepresentation. Whether or not a jury is likely to
12
find the evidence persuasive, this is sufficient to present a genuine issue of material fact as to
13
whether Plaintiffs have suffered economic harm.
14
15
c. Dr. Krosnick’s Results
Defendant notes that Dr. Krosnick’s survey results only show that customers who have
16
purchased and/or eaten at Chipotle would pay more without the clarifying disclaimer, whereas Dr.
17
Krosnick’s results for all respondents (including those who are not Chipotle customers) indicate
18
an increased willingness to pay for food when shown the “GMO feed” disclaimer. Dkt. No. 92 at
19
24–25. Defendant contends that this discrepancy proves that Plaintiffs cannot establish that a
20
reasonable consumer would have paid more given the corrective statement. Id. Defendant cites to
21
no legal precedent holding that analysis focusing on a defendant’s actual customers cannot be
22
probative of the economic harm suffered by a reasonable consumer. Though the Court
23
acknowledges that the import of Dr. Krosnick’s survey results is ambiguous at best, viewing the
24
report in the light most favorable to the nonmoving party, an issue of material fact remains as to
25
whether Plaintiffs or a reasonable consumer suffered economic harm as a result of the alleged
26
misrepresentations.
27
C.
28
For the foregoing reasons, the Court DENIES Defendant’s motion for summary judgment.
Conclusion
13
1
2
3
IV.
PLAINTIFFS’ MOTION FOR CLASS CERTIFICATION
A.
Background
i.
Class Allegations
Plaintiffs Martin Schneider, Sarah Deigert, Theresa Gamage, and Nadia Parikka seek to
4
5
certify three classes of consumers who purchased Defendant’s food products between April 27,
2015, and June 30, 2016 (the “Class Period”). Dkt. No. 95 at 1.
6
Plaintiffs bring causes of action under California, Maryland, and New York consumer
7
protection laws. Plaintiffs seek certification under Federal Rules of Civil Procedure 23(b)(2) and
8
23(b)(3). More specifically, Plaintiffs allege that they purchased food products manufactured and
9
sold by Defendant that falsely and misleadingly-advertised as “non-GMO” when, in fact, those
10
food products contained ingredients that came from animals that fed on genetically modified feed.
11
United States District Court
Northern District of California
Dkt. No. 95 at 1. They accordingly seek to certify three separate classes corresponding to these
12
violations that include all California, Maryland, and New York consumers who Defendant’s
13
products at any time during the Class Period. The proposed class definitions are as follows:
14
California: All persons in California who purchased Chipotle’s
Food Products containing meat and/or dairy ingredients during the
Class Period.
15
16
Maryland: All persons in Maryland who purchased Chipotle’s Food
Products containing meat and/or dairy ingredients during the Class
Period.
17
18
New York: All persons in New York who purchased Chipotle’s
Food Products containing meat and/or dairy ingredients during the
Class Period.
19
20
21
22
See Dkt. No. 95 at i.
ii.
Procedural Posture
23
Plaintiffs filed the operative complaint on April 22, 2016. Compl. On November 4, 2016,
24
the Court granted in part Defendant’s motion to dismiss the complaint, narrowing the claims for
25
which Plaintiffs could seek relief. See Dkt. No. 36. Defendant answered the complaint on
26
December 1, 2016. Dkt. No. 40.
27
On November 17, 2017, Plaintiffs filed this motion for class certification. Dkt. No. 95.
28
14
1
On December 22, Defendant moved to exclude the testimony of Plaintiffs’ expert witnesses. Dkt.
2
Nos. 100, 101. Defendant filed its opposition on December 27, 2017, Dkt. No. 106. On January
3
19, 2018, Plaintiffs replied. Dkt. No. 121. On January 17, 2018, Plaintiffs filed a motion to
4
exclude testimony of Defendant’s experts Drs. Mellon, Dr. Mangum, and Ms. Butler. Dkt. No.
5
117. The Court heard argument on the class certification motion on February 8, 2018. Dkt. No.
6
127.
7
B.
Legal Standard
8
Plaintiffs bear the burden of showing by a preponderance of the evidence that class
9
certification is appropriate under Federal Rule of Civil Procedure 23. See Wal-Mart Stores, Inc. v.
Dukes, 564 U.S. 338, 350-51 (2011). First, the plaintiffs must establish that each of the four
11
United States District Court
Northern District of California
10
requirements of Rule 23(a) are met: numerosity, commonality, typicality, and adequacy of
12
representation. Id. at 349. Where the plaintiffs “succeed[] in establishing all four of the 23(a)
13
elements, [they] must then satisfy one of the three requirements of Rule 23(b).” Civil Rights Educ.
14
& Enforcement Ctr. v. Hospitality Props. Trust, 867 F.3d 1093, 1103 (9th Cir. 2017).
15
As relevant here, Rule 23(b)(2) requires that “the party opposing the class has acted or
16
refused to act on grounds that apply generally to the class, so that final injunctive relief . . . is
17
appropriate respecting the class as a whole.” Rule 23(b)(3), on the other hand, requires a finding
18
“that the questions of law or fact common to class members predominate over any questions
19
affecting only individual members, and that a class action is superior to other available methods
20
for fairly and efficiently adjudicating the controversy.” To determine whether a putative class
21
action satisfies the requirements of Rule 23(b)(3), courts consider:
22
23
24
25
26
27
(A) the class members’ interests in individually controlling the
prosecution or defense of separate actions;
(B) the extent and nature of any litigation concerning the
controversy already begun by or against class members;
(C) the desirability or undesirability of concentrating the litigation of
the claims in the particular forum; and
(D) the likely difficulties in managing a class action.
Fed. R. Civ. P. 23(b)(3)(A)–(D).
28
15
1
While a court’s “class-certification analysis must be rigorous and may entail some overlap
2
with the merits of the plaintiff’s underlying claim, Rule 23 grants courts no license to engage in
3
free-ranging merits inquiries at the certification stage.” Amgen Inc. v. Conn. Ret. Plans & Trust
4
Funds, 568 U.S. 455, 465-66 (2013) (internal citations and quotation marks omitted). “Merits
5
questions may be considered to the extent—but only to the extent—that they are relevant to
6
determining whether the Rule 23 prerequisites for class certification are satisfied.” Id. at 466
7
(citation omitted). A trial court’s “broad discretion to certify a class . . . must be exercised within
8
the framework of Rule 23.” Zinser v. Accufix Research Inst., Inc., 253 F.3d 1180, 1186 (9th Cir.
9
2001), reh’g denied, 273 F.3d 1266 (9th Cir. 2001) (citation omitted).
C.
11
United States District Court
Northern District of California
10
Before considering whether Plaintiffs have satisfied the requirements of Rule 23, the Court
12
13
Discussion
turns to two threshold issues: Plaintiffs’ standing and the parties’ evidentiary objections.
i.
Standing
14
Plaintiffs must show they have standing to bring their claims in order to represent the
15
putative class. See Lierboe v. State Farm Mut. Auto. Ins. Co., 350 F.3d 1018, 1022 (9th Cir.
16
2003). Defendant contends that Plaintiffs do not have standing to assert any of their claims
17
because they have “been neither deceived nor harmed by Chipotle’s ‘non-GMO ingredients’
18
announcement.” Dkt. No. 106 at 7. Defendant relies solely on the arguments made in their
19
motion for summary judgment to contest Plaintiffs’ standing. Id. The Court has fully addressed
20
these standing arguments in Section III(B)(i) above, and finds that Plaintiffs have adequately
21
established standing for all claims.
22
23
ii.
Evidentiary Objections
Defendant objects to seven email exchanges Plaintiffs offer as evidence (Exs. 7–13) as
24
inadmissible hearsay. See Dkt. No. 106 at 25, 11. The statements in these emails made by
25
Chipotle employees are non-hearsay party admissions. Fed. R. Evid. 801(d)(2). The statements
26
made by non-Chipotle employees are admitted not for their underlying truth, but as evidence of
27
what customers may have believed and communicated to Chipotle. Fed. R. Evid. 801(c)(2).
28
Defendant additionally objects to Plaintiffs’ exhibits 23–27, 29, and 32–42 without establishing a
16
1
basis for the objection. These objections made without specific grounds are DENIED. See Fed.
2
R. Evid. 103(a).
3
4
5
iii.
Having resolved these threshold issues, the Court next considers whether Plaintiffs have
satisfied the requirements of Rule 23(a).
6
7
Rule 23(a)
a. Numerosity
Rule 23(a)(1) requires that the putative class be “so numerous that joinder of all members
8
is impracticable.” Plaintiffs contend that the numerosity requirement is satisfied because, based
9
on the “millions of units” sold by Chipotle, “each of the Classes consists of hundreds of thousands
of consumers.” Dkt. No. 95 at 11. Defendant does not contest that numerosity requirement is
11
United States District Court
Northern District of California
10
satisfied.
12
“[C]ourts have routinely found the numerosity requirement satisfied when the class
13
comprises 40 or more members.” Villalpando v. Exel Direct Inc., 303 F.R.D. 588, 605-06 (N.D.
14
Cal. 2014) (citation omitted). Although Plaintiffs do not provide an exact estimate of how many
15
proposed class members there are, based on Plaintiffs’ estimation and Chipotle’s sales numbers,
16
see Dkt. No. 95 at 11, the Court is satisfied that the putative class members are sufficiently
17
numerous to make joinder impracticable within the meaning of Rule 23(a)(1).
18
19
b. Commonality
Rule 23(a)(2) requires that “there are questions of law or fact common to the class.”
20
Plaintiffs contend that claims of all members of the proposed classes share common questions of
21
law as to whether Chipotle’s advertising was misleading and likely to deceive a reasonable
22
consumer, and as to the appropriate measure of relief. Dkt. No. 95 at 12.
23
Defendant points to individualized issues involved in determining which consumers were
24
exposed to which specific representations (including the disclaimer on the website), which
25
consumers paid attention to the claims to which they were exposed, which consumers understood
26
the term “non-GMO” to mean food products that are not sourced from animals that have
27
consumed GMO feed, which consumers found the “non-GMO” claims to be material, and which
28
consumers relied on the claims. Dkt. No. 106 at 8–14.
17
1
Defendant’s arguments regarding common exposure, attention, understanding, materiality,
2
and reliance are inappropriate here at the 23(a)(1) determination. The individualized issues raised
3
by the question of “which buyers saw or heard which advertisements . . . go to preponderance
4
under Rule 23(b)(3), not to whether there are common issues under Rule 23(a)(2).” Mazza, 666
5
F.3d at 589.
Further, misrepresentation claims under California, Maryland, and New York law must be
7
proved based on a “reasonable consumer” standard. See Williams, 552 F.3d at 938; Luskin's, Inc.,
8
353 Md. at 357–58; Oswego Laborers' Local 214 Pension Fund, 85 N.Y.2d at 26. This reasonable
9
consumer inquiry encompasses materiality and reliance. See In re ConAgra Foods, Inc., 90 F.
10
Supp. 3d 919, 983 (C.D. Cal. 2015), aff'd sub nom. Briseno v. ConAgra Foods, Inc., 844 F.3d
11
United States District Court
Northern District of California
6
1121 (9th Cir. 2017), and aff'd sub nom. Briseno v. ConAgra Foods, Inc., 674 F. App'x 654 (9th
12
Cir. 2017) (“[A] California class suing under the state's consumer protection statutes need not
13
show individualized reliance if it can establish the materiality of ConAgra's ‘100% Natural’ label
14
to a reasonable consumer.”); see also In re Tobacco II Cases, 46 Cal. 4th 298, 327 (2009) (“A
15
misrepresentation is judged to be ‘material’ if ‘a reasonable man would attach importance to its
16
existence or nonexistence in determining his choice of action in the transaction in question.”).
17
The Court agrees that the legal issue highlighted by Plaintiffs is appropriate for class
18
treatment. A contention is sufficiently common where “it is capable of classwide resolution—
19
which means that determination of its truth or falsity will resolve an issue that is central to the
20
validity of each one of the claims in one stroke.” Dukes, 564 U.S at 350. Commonality exists
21
where “the circumstances of each particular class member vary but retain a common core of
22
factual or legal issues with the rest of the class.” Parra v. Bashas’, Inc., 536 F.3d 975, 978–79
23
(9th Cir. 2008). “What matters to class certification . . . is not the raising of common
24
‘questions’—even in droves—but rather the capacity of a classwide proceeding to generate
25
common answers apt to drive the resolution of the litigation.” Dukes, 564 U.S at 350 (citation
26
omitted) (emphasis in original). Because the identified common issues are sufficient for purposes
27
of commonality, the Court finds this requirement satisfied.
28
c. Typicality
18
1
Rule 23(a)(3) requires that “the claims or defenses of the representative parties are typical
2
of the claims or defenses of the class.” Defendant contends that Plaintiffs fail to satisfy the
3
typicality requirement because: (1) Plaintiffs’ have not specified which of Chipotle’s GMO-related
4
representations they were exposed to; (2) Named Plaintiffs’ belief that the “non-GMO” claims are
5
false because animals that eat GMO feed “become, or contain, GMOs” is contrary to the liability
6
theory presented by Plaintiffs’ counsel; (3) only Plaintiff Schneider relied upon the “non-GMO”
7
representations when making his purchase; and (4) Named Plaintiffs have stated a desire for a full
8
refund, which does not match the price premium damages model presented by Plaintiffs’ counsel.
9
Dkt. No. 106 at 15–16.
10
“The test of typicality is whether other members have the same or similar injury, whether
United States District Court
Northern District of California
11
the action is based on conduct which is not unique to the named plaintiffs, and whether other class
12
members have been injured by the same course of conduct.” Hanon v. Dataproducts Corp., 976
13
F.2d 497, 508 (9th Cir. 1992) (internal quotation marks omitted). Under the “permissive
14
standards” of Rule 23(a)(3), the claims need only be “reasonably co-extensive with those of absent
15
class members,” rather than “substantially identical.” Hanlon v. Chrysler Corp., 150 F.3d 1011,
16
1020 (9th Cir. 1998). In other words, typicality is “satisfied when each class member’s claim
17
arises from the same course of events, and each class member makes similar legal arguments to
18
prove the defendant’s liability.” Rodriguez v. Hayes, 591 F.3d 1105, 1124 (9th Cir. 2010)
19
(internal quotation marks omitted).
20
None of Defendant’s contentions defeats typicality. The question of exposure, as
21
addressed above, “go[es] to preponderance under Rule 23(b)(3).” Mazza, 666 F.3d at 589. The
22
Court addressed Defendant’s contention that Plaintiffs’ beliefs are misaligned with Plaintiffs’
23
theory of liability in Section III(B)(i)(b), above. Named Plaintiffs’ testimony regarding their own
24
understanding is not inconsistent with Plaintiffs’ theory, and therefore does not, in itself, defeat
25
typicality.
26
Defendant’s contention that only Plaintiff Schneider relied on the “non-GMO” statements
27
in making his purchases is not supported by the evidence in the record. See, e.g., Dkt. No. 95-19 ¶
28
7 (Deigert Declaration stating that she continued frequenting Chipotle in part because she “trusted
19
1
that its representations were truthful”); Dkt. No. 95-21 ¶ 7 (Gamage Declaration stating that she
2
began frequenting Chipotle more often based on the representations, and believed that the products
3
were “not tainted by GMOs”); Dkt. No. 95-22 ¶ 7 (Parikka Declaration stating that she “rel[ied]
4
on Chipotle’s Non-GMO signage” when making her purchases); Dkt. No. 95-20 ¶ 7 (Schneider
5
Declaration stating that he began frequenting Chipotle partly because he saw the “non-GMO”
6
signage).
7
Finally, Defendant cites no legal basis for its contention that Named Plaintiffs’ statements
8
in depositions that they desire a full refund prevents their claims from being typical of those of the
9
class. The class allegations all aver injury based on Defendant’s “non-GMO” claims. For
typicality purposes, this is sufficient, even though Plaintiffs may believe themselves entitled to
11
United States District Court
Northern District of California
10
damages larger than Plaintiffs currently seek. See Hopkins v. Stryker Sales Corp., No. 5:11-CV-
12
02786-LHK, 2012 WL 1715091, at *7 (N.D. Cal. May 14, 2012) (finding that “differences
13
between [named plaintiffs’] damages and the damages of other putative class members do
14
not defeat typicality because ‘each of the Plaintiffs’ claims stem from the same allegedly unlawful
15
policies and practices.’”).
16
17
18
19
d. Adequacy
Rule 23(a)(4) requires that the “representative parties will fairly and adequately represent
the interests of the class.”
On the question of adequacy, the Court must address two legal questions: (1) whether the
20
named plaintiffs and their counsel have any conflicts of interest with other putative class members,
21
and (2) whether the named plaintiffs and their counsel will prosecute the action vigorously on
22
behalf of the proposed class. See In re Mego Fin. Corp. Sec. Litig., 213 F.3d 454, 462 (9th Cir.
23
2000). This inquiry “tend[s] to merge” with the commonality and typicality criteria. Gen. Tel.
24
Co. of Sw. v. Falcon, 457 U.S. 147, 158 n.13 (1982). In part, these requirements determine
25
whether “the named plaintiff’s claim and the class claims are so interrelated that the interests of
26
the class members will be fairly and adequately protected in their absence.” Id.
27
Defendant does not contend that named Plaintiffs and their counsel have any conflicts of
28
interest, or that they have not prosecuted the action vigorously. Rather, Defendant contends that
20
1
Plaintiffs’ counsel has acted unethically in a variety of ways. Dkt. No. 106 at 16–17. Defendant
2
identifies a representation made by Plaintiffs regarding Dr. Krosnick’s expert report, a separate
3
representation regarding the availability of a witness for deposition, and alleges that Plaintiffs’
4
counsel “improperly solicited” Plaintiff Parikka. Id.
“The degree of unethical conduct justifying a finding of inadequacy is high, and often turns
5
6
on counsel's integrity and candor.” Victorino v. FCA US LLC, 322 F.R.D. 403, 408 (S.D. Cal.
7
2017) (internal quotation marks omitted). Here, Defendant’s allegations do not rise to the level
8
required to find Plaintiffs’ counsel inadequate. Defendant’s contentions are insufficiently
9
supported to persuade the Court that Plaintiffs made knowing misrepresentations, or that
10
Plaintiffs’ counsel communicated improperly with Plaintiff Parikka.
Defendant additionally contends that the Named Plaintiffs are not adequate class
United States District Court
Northern District of California
11
12
representatives because they have no role in the case beyond “furnishing their names as plaintiffs.”
13
Dkt. No. 106 at 18. Defendant repeats its arguments regarding Named Plaintiffs’ understanding of
14
the term “non-GMO” and damages, and adds that Plaintiffs are indemnified from an attorneys’
15
fees award against them, and that Plaintiffs’ counsel had begun preparing this litigation before
16
being retained. Id.
“To establish adequacy lead plaintiffs need only be familiar with the basis for the suit and
17
18
their responsibilities as lead plaintiffs.” In re Lendingclub Sec. Litig., 282 F. Supp. 3d 1171, 1182
19
(N.D. Cal. 2017). Plaintiffs have engaged in this litigation by answering discovery requests and
20
providing testimony at deposition. See Dkt. No. 121 at 10. Plaintiffs are not required to meet the
21
high burden presented by Defendant in order to satisfy Rule 23(a)(4).
22
Because the Court is unaware of any conflicts among Plaintiffs and proposed class
23
members, and finds that Plaintiffs have, to date, vigorously prosecuted the action on behalf of the
24
alleged classes, the Court is satisfied that Plaintiffs can adequately represent the various classes as
25
pled.
26
27
28
iv.
Rule 23(b)(2)
a. Standing
In its opposition to the motion for class certification, Defendant contends that Plaintiffs
21
1
lack standing to seek injunctive relief under Rule 23(b)(2). Dkt. No. 106 at 19. Defendant
2
presents the same argument made in its motion for summary judgment. For the same reasons
3
discussed in Section III(B)(i)(d) above, the Court finds that Plaintiffs have standing to pursue
4
claims for injunctive relief.
5
6
b. Discussion
“Rule 23(b)(2) applies only when a single injunction . . . would provide relief to each
7
member of the class.” Dukes, 564 U.S. at 360. The “key” to finding a class under Rule 23(b)(2)
8
“is the indivisible nature of the injunctive or declaratory remedy warranted—the notion that the
9
conduct is such that it can be enjoined . . . only as to all of the class members or as to none of
them.” Id. (citation and internal quotation marks omitted) (emphasis added). Rule 23(b)(2) “does
11
United States District Court
Northern District of California
10
not authorize class certification when each individual class member would be entitled to a different
12
injunction . . . against the defendant,” or “to an individualized award of monetary damages.” Id. at
13
360–61 (emphasis in original).
14
Defendant contends that Plaintiffs’ claims for restitution are “predominantly for money
15
damages,” and therefore improper for 23(b)(2) certification. Dkt. No. 106 at 19–20. Initially,
16
Plaintiffs purported to seek “all incidental monetary relief” in addition to declaratory and
17
injunctive relief under 23(b)(2). Dkt. No. 95 at 15. In reply, however, they appear to pursue only
18
a claim for injunctive relief under Rule 23(b)(2). Dkt. No. 121 at 10–11.
19
Defendant appears to argue that Plaintiffs’ attempt to certify a damages class pursuing
20
restitution under Rule 23(b)(3) bars certification under Rule 23(b)(2). The Court finds no such bar
21
to 23(b)(2) certification. See In re ConAgra Foods, Inc., 302 F.R.D. 537, 573 (C.D. Cal. 2014)
22
(“Ninth Circuit precedent indicates that the court can separately certify an injunctive relief class
23
and if appropriate, also certify a Rule 23(b)(3) damages class.”).
24
The only remaining question, then, is whether “a single injunction . . . would provide relief
25
to each member of the class.” Dukes, 564 U.S. at 360. Based on the alleged mislabeling, the
26
Court finds that it would, and grants certification of all four classes under Rule 23(b)(2). The
27
Court remains mindful, however, that a showing of irrefutable and total cessation of the
28
challenged conduct prior to a final judgment in this litigation may be grounds for a decertification
22
1
motion. See Fed. R. Civ. P. 23(c)(1)(C) (“An order that grants or denies class certification may be
2
altered or amended before final judgment.”).
3
4
v.
Rule 23(b)(3)
Plaintiffs also seek certification under Rule 23(b)(3), which requires Plaintiffs to show
5
predominance and superiority. As detailed below, the Court finds that Plaintiffs have met both
6
requirements.
7
8
9
a. Predominance
1. Legal Standard
“The predominance inquiry tests whether proposed classes are sufficiently cohesive to
warrant adjudication by representation.” Tyson Foods, Inc. v. Bouaphakeo, 136 S. Ct. 1036, 1045
11
United States District Court
Northern District of California
10
(2016) (internal quotation marks omitted). The Supreme Court has defined an individual question
12
as “one where members of a proposed class will need to present evidence that varies from member
13
to member, while a common question is one where the same evidence will suffice for each
14
member to make a prima facie showing [or] the issue is susceptible to generalized, class-wide
15
proof.” Id. (citation and internal quotation marks omitted; brackets in original). This “inquiry
16
asks whether the common, aggregation-enabling, issues in the case are more prevalent or
17
important than the non-common, aggregation-defeating, individual issues.” Id. (citation and
18
internal quotation marks omitted).
19
The Supreme Court has made clear that Rule 23(b)(3)’s predominance requirement is
20
“even more demanding” than the commonality requirement of Rule 23(a). See Comcast, 569 U.S.
21
at 34 (citing Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 623–24 (1997)). Accordingly, the
22
Court will apply this rigorous standard in determining whether Plaintiffs have shown that
23
restitution owed is “capable of measurement on a classwide basis.” See Just Film, Inc. v. Buono,
24
847 F.3d 1108, 1120 (9th Cir. 2017).
25
26
2. Exposure
In cases alleging misrepresentation, “common issues predominate when plaintiffs
27
are exposed to [a] common set of representations about a product.” Butler v. Porsche Cars N.
28
Am., Inc., No. 16-CV-2042-LHK, 2017 WL 1398316, at *10 (N.D. Cal. Apr. 19, 2017); see also
23
1
Solomon v. Bell Atl. Corp., 777 N.Y.S.2d 50, 55 (2004) (“[C]ertification of a class for purposes of
2
an action brought under GBL §§ 349 and 350 may be appropriate where the plaintiffs allege that
3
all members of the class were exposed to the same misrepresentations.”). “[T]he relevant class
4
must be defined in such a way as to include only members who were exposed to advertising that is
5
alleged to be materially misleading.” Mazza, 666 F.3d at 596.
This case does not involve the type of massive advertising campaign that gives rise to a
6
7
presumption of exposure to all class members. See id. (distinguishing Tobacco II, which involved
8
a “‘decades-long’ tobacco advertising campaign where there was little doubt that almost every
9
class member had been exposed to defendants' misleading statements”). Here, the in-store
advertising campaign lasted 430 days, and involved two signs displayed on the in-store menus and
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United States District Court
Northern District of California
10
one sign displayed in the outward-facing store window. See Dkt. No. 94-7 at 25:12–28:2.
12
Plaintiffs therefore must show classwide exposure to the misleading statements/omissions.
Plaintiffs rely primarily on the advertisements and statements issued and installed in all of
13
14
Chipotle’s stores, which include: (1) a sign displayed in the window of all Chipotle locations
15
between April 27, 2015 and June 15, 2015 reading in relevant part “[w]hen it comes to our food,
16
genetically modified ingredients don’t make the cut,” Dkt. No. 92-34; (2) a sign displayed on the
17
in-store menu between April 27, 2015 and June 15, 2015 reading in relevant part “all of our food
18
is non-GMO,” Dkt. No. 92-21, and; (3) a sign displayed on the in-store menu between June 15,
19
2015 and June 30, 2016 reading in relevant part “only non-GMO ingredients,” Dkt. No. 92-35.
20
See Dkt. No. 94-7 at 25:12–28:2. Some combination of these signs was present in all Chipotle
21
restaurants for the entire class period, and every store displayed the in-store menu in use during
22
the time periods at issue. See id.; Dkt. No. 92-21; Dkt. No. 92-35; Dkt. No. 121 at 2. Based on
23
Plaintiffs’ theory that “reasonable consumers understood Non-GMO to include meat and dairy
24
ingredients that were not sourced from animals fed GM feed,” Dkt. No. 111 at 8, the Court finds
25
that the representations made on these three in-store signs are not so disparate as to preclude
26
cohesion among class members. Cf. Stearns v. Ticketmaster Corp., 655 F.3d 1013, 1020 (9th Cir.
27
2011).
28
Neither party has offered any evidence or argument that members of the proposed classes
24
1
could have purchased Chipotle meat and/or dairy products without setting foot inside the
2
restaurants, and therefore without having been exposed to any of this signage. The Court therefore
3
concludes that Plaintiffs have sufficiently alleged class-wide exposure.
4
5
3. Damages
With respect to the monetary relief sought by a putative class, predominance requires that
6
“damages are capable of measurement on a classwide basis, in the sense that the whole class
7
suffered damages traceable to the same injurious course of conduct underlying the plaintiffs’ legal
8
theory.” Just Film, 847 F.3d at 1120 (quoting Comcast Corp. v. Behrend, 569 U.S. 27, 34 (2013))
9
(internal quotation marks omitted); see also Bruton v. Gerber Prods. Co., No. 12-CV-02412-LHK,
2018 WL 1009257, at *8–12 (N.D. Cal. Feb. 13, 2018) (applying Comcast’s damages
11
United States District Court
Northern District of California
10
predominance requirement to proposed restitution calculation methods); Jones v. ConAgra Foods,
12
Inc., No. C 12-01633 CRB, 2014 WL 2702726, at *19–23 (N.D. Cal. June 13, 2014) (same). As
13
such, “a model purporting to serve as evidence of damages in [a] class action must measure only
14
those damages attributable” to the relevant theory of liability. Comcast, 569 U.S. at 35. While a
15
proffered model “need not be exact” at the class certification stage, it “must be consistent with [the
16
plaintiff’s] liability case.” Id. (citations and internal quotation marks omitted); see also Cal. v.
17
Infineon Techs. AG, No. C 06-4333 PJH, 2008 WL 4155665, at *9 (N.D. Cal. Sept. 5, 2008)
18
(stating that at class certification stage, court’s role is to “discern only whether plaintiffs have
19
advanced a plausible methodology to demonstrate that . . . injury can be proven on a class-wide
20
basis”) (emphasis added). Moreover, while predominance is not shown where “[q]uestions of
21
individual damage calculations . . . inevitably overwhelm questions common to the class,”
22
Comcast, 569 U.S. at 34, the “presence of individualized damages” on its own is insufficient to
23
defeat class certification, Just Film, 847 F.3d at 1120 (quoting Leyva v. Medline Indus. Inc., 716
24
F.3d 510, 514 (9th Cir. 2013)).
25
Defendant again contends that Dr. Krosnick’s survey does not measure the impact of the
26
“non-GMO” claims because it instead focuses on the impact of the “non-GMO” claims with and
27
without a corrective statement. See Dkt. No. 106 at 22. The Court previously addressed this
28
argument in Section III(B)(iii)(b) above. Even though Dr. Krosnick’s survey does not compare a
25
1
consumer’s willingness to pay with and without having seen the allegedly misleading
2
representations, it does produce some measure of the price differential attributable to the “non-
3
GMO” statements. It is therefore not inconsistent with Plaintiffs’ liability case.
4
Defendant next contends that Dr. Krosnick’s report only measures consumers’ willingness
5
to pay without taking into account supply-side factors, and therefore does not determine the
6
difference “between the market values of the product as advertised and as delivered.” Dkt. No.
7
106 at 23–24. Defendant also contends that Mr. Weir’s report, which relies on Dr. Krosnick’s
8
findings, does not correct this issue because Mr. Weir “did nothing more than apply Dr.
9
Krosnick’s willingness-to-pay numbers to Chipotle’s sales.” Id. Defendant cites In re NJOY, Inc.
Consumer Class Action Litig., in which the court rejected Plaintiffs’ proposed damages model
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United States District Court
Northern District of California
10
because it “completely ignore[d] the price for which [defendant] is willing to sell its products,
12
what other e-cigarette manufacturers say about their products, and the prices at which those
13
entities are willing to sell their products.” In re NJOY, Inc. Consumer Class Action Litig., 120 F.
14
Supp. 3d 1050, 1120 (C.D. Cal. 2015).
15
Here, Dr. Krosnick’s report bases its price options on “actual prices that Chipotle charged
16
for their food items.” Krosnick Report ¶ 46. This is sufficient to tie the measured willingness to
17
pay to the real-world marketplace in which Chipotle’s products are sold. Dr. Krosnick’s report,
18
though subject to myriad challenges on cross-examination, does demonstrate that a price premium
19
model is “consistent with” Plaintiffs’ liability case. See Comcast, 569 U.S. at 35.
20
21
4. Conclusion
Because Plaintiffs have demonstrated common exposure to the alleged misrepresentations
22
and Plaintiffs’ damages model is sufficient at this stage to show that damages traceable to the
23
“non-GMO” claims can be measured in some way on a classwide basis, the Court finds that
24
common questions of law predominate.
25
26
b. Superiority
The superiority requirement tests whether “a class action is superior to other available
27
methods for fairly and efficiently adjudicating the controversy.” Fed. R. Civ. P. 23(b)(3). The
28
Court considers four non-exclusive factors: (1) the interest of each class member in individually
26
1
controlling the prosecution or defense of separate actions; (2) the extent and nature of any
2
litigation concerning the controversy already commenced by or against the class; (3) the
3
desirability of concentrating the litigation of the claims in the particular forum; and (4) the
4
difficulties likely to be encountered in the management of a class action. Id. “Where classwide
5
litigation of common issues will reduce litigation costs and promote greater efficiency, a class
6
action may be superior to other methods of litigation.” Valentino v. Carter-Wallace, Inc., 97 F.3d.
7
1227, 1234–35 (9th Cir. 1996).
8
Defendant focuses here on the fourth factor, stating that “Chipotle does not possess records
9
that would make it easy to identify and notify class members and determine the extent of damages,
10
if any, that each has suffered.” Dkt. No. 106 at 25.
That there may be some difficulty in identifying all class members is not dispositive: the
United States District Court
Northern District of California
11
12
Ninth Circuit rejected a similar argument that plaintiffs must identify an administratively feasible
13
way to determine who is in the class in order to satisfy the requirements of Rule 23. Briseno v.
14
ConAgra Foods, Inc., 844 F.3d 1121, 1126 (9th Cir. 2017) (“[T]he language of Rule 23 does not
15
impose a freestanding administrative feasibility prerequisite to class certification.”). Therefore,
16
given the weight of the other three factors, the Court finds that class action is the superior method
17
to adjudicate this matter.
Under the Rule 23(b) factors, therefore, the Court is compelled to certify the classes
18
19
20
proposed here.
V.
DAUBERT MOTIONS
21
A.
22
Federal Rule of Evidence 702 allows a qualified expert to testify “in the form of an opinion
23
Legal Standard
or otherwise” where:
24
25
26
27
28
(a) the expert’s scientific, technical, or other specialized knowledge
will help the trier of fact to understand the evidence or to determine
a fact in issue;
(b) the testimony is based on sufficient facts or data;
(c) the testimony is the product of reliable principles and methods;
and
(d) the expert has reliably applied the principles and methods to the
facts of the case.
27
1
2
Fed. R. Evid. 702.
3
Expert testimony is admissible under Rule 702 if it is both relevant and reliable. See
4
Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579, 589 (1993). “[R]elevance means that the
5
evidence will assist the trier of fact to understand or determine a fact in issue.” Cooper v. Brown,
6
510 F.3d 870, 942 (9th Cir. 2007); see also Primiano v. Cook, 598 F.3d 558, 564 (9th Cir. 2010)
7
(“The requirement that the opinion testimony assist the trier of fact goes primarily to relevance.”)
8
(internal quotation marks omitted).
Under the reliability requirement, the expert testimony must “ha[ve] a reliable basis in the
9
knowledge and experience of the relevant discipline.” Primiano, 598 F.3d at 565. To ensure
11
United States District Court
Northern District of California
10
reliability, the court must “assess the [expert's] reasoning or methodology, using as appropriate
12
such criteria as testability, publication in peer reviewed literature, and general acceptance.” Id. at
13
564. These factors are “helpful, not definitive,” and a court has discretion to decide how to test
14
reliability “based on the particular circumstances of the particular case.” Id. (internal quotation
15
marks and footnotes omitted). “When evaluating specialized or technical expert opinion
16
testimony, the relevant reliability concerns may focus upon personal knowledge or experience.”
17
United States v. Sandoval-Mendoza, 472 F.3d 645, 655 (9th Cir. 2006).
The inquiry into the admissibility of expert testimony is “a flexible one” where “[s]haky
18
19
but admissible evidence is to be attacked by cross examination, contrary evidence, and attention to
20
the burden of proof, not exclusion.” Primiano, 598 F.3d at 564. “When the methodology is
21
sound, and the evidence relied upon sufficiently related to the case at hand, disputes about the
22
degree of relevance or accuracy (above this minimum threshold) may go to the testimony's weight,
23
but not its admissibility.” i4i Ltd. P’ship v. Microsoft Corp., 598 F.3d 831, 852 (Fed. Cir. 2010).
24
The burden is on the proponent of the expert testimony to show, by a preponderance of the
25
evidence, that the admissibility requirements are satisfied. Lust By & Through Lust v. Merrell
26
Dow Pharm., Inc., 89 F.3d 594, 598 (9th Cir. 1996); see also Fed. R. Evid. 702 Advisory Cttee.
27
Notes.
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1
B.
Dr. Kroskick
Defendant moves to exclude Dr. Krosnick’s report and testimony as inadmissible under
2
Federal Rule of Evidence 702. Dkt. No. 101. Defendant raises the same arguments addressed
3
4
above in Section III(B)(iii) with respect to the relevance of Dr. Krosnick’s report to Plaintiffs’
theory of liability and the applicability of the report’s results. The Court need not repeat its
5
analysis of these issues. For the same reasons discussed in Section III(B)(iii), above, the Court
6
7
finds that Dr. Krosnick’s report is relevant to the claims at issue.
Defendant additionally contends that Dr. Krosnick’s report is unreliable because: (1) the
8
results presented are not statistically significant; (2) the survey failed to question respondents
9
10
about the materiality of the “non-GMO” claims; (3) the survey did not account for outside factors
affecting willingness to pay; (4) the survey did not present the “non-GMO” claims in the same
11
United States District Court
Northern District of California
visual context as they appeared in Chipotle stores; and (4) the survey did not present the corrective
12
13
14
statement messaging verbatim from Chipotle’s website.
Given the established relevance of Dr. Krosnick’s report to Plaintiffs’ damages theory, all
of Defendant’s challenges go to the weight of Dr. Krosnick’s opinions, rather than to their
15
admissibility. See Clicks Billiards, Inc. v. Sixshooters, Inc., 251 F.3d 1252, 1263 (9th Cir. 2001)
16
(after deeming a survey admissible, “follow-on issues of methodology, survey design, reliability,
17
the experience and reputation of the expert, critique of conclusions, and the like go to the weight
18
of the survey rather than its admissibility”).
19
20
C.
Mr. Weir, Dr. Mellon, Ms. Butler, and Dr. Mangum
Defendant additionally moves to exclude Mr. Weir’s testimony as inadmissible under
21
Federal Rule of Evidence 702. Dkt. No. 100. Plaintiffs move to exclude the testimony and expert
22
opinions of Dr. Mellon, Ms. Butler, and Dr. Mangum. Dkt. No. 117. Because the Court finds that
23
the expert opinions of Mr. Weir, Dr. Mellon, Ms. Butler, and Dr. Mangum would not alter the
24
outcome of the Court's analysis and the Court does not rely on any of these opinions, the Court
25
DENIES as moot the motions to exclude the testimony of Mr. Weir, Dr. Mellon, Ms. Butler, and
26
Dr. Mangum. The Court’s denial of these motions is made without prejudice to the parties
27
reasserting these objections in their pretrial filings.
28
29
1
VI.
CONCLUSION
For the foregoing reasons, the Court GRANTS Plaintiffs’ motion for reconsideration,
2
3
DENIES Defendant’s motion for summary judgment, DENIES Defendant’s motion to exclude
4
the testimony and opinions of Dr. Krosnick, and DENIES as MOOT Plaintiffs’ and Defendant’s
5
remaining Daubert motions.
The Court finds that all the requirements of Federal Rule of Civil Procedure 23(a), Rule
6
7
23(b)(2), and Rule 23(b)(3) have been met in this case. Accordingly, the Court GRANTS
8
Plaintiff’s motion for class certification and certifies the following classes:
9
California: All persons in California who purchased Chipotle’s
Food Products containing meat and/or dairy ingredients during the
Class Period.
10
United States District Court
Northern District of California
11
Maryland: All persons in Maryland who purchased Chipotle’s Food
Products containing meat and/or dairy ingredients during the Class
Period.
12
13
New York: All persons in New York who purchased Chipotle’s
Food Products containing meat and/or dairy ingredients during the
Class Period.
14
15
The Court appoints Plaintiffs Martin Schneider, Sarah Deigert, Theresa Gamage, and
16
17
18
19
20
Nadia Parikka as Class representatives and the law firm of Kaplan Fox as Class Counsel in this
action. The Court also SETS a further case management conference on October 30 2018, at 2:00
p.m. The parties shall meet and confer and submit a joint case management statement by October
23, 2018. The joint statement should include a proposed case schedule through trial.
IT IS SO ORDERED.
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22
23
24
Dated:
______________________________________
HAYWOOD S. GILLIAM, JR.
United States District Judge
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