Contributors

Christian Scali

Founder and Managing Shareholder

Eric P. Weiss

Principal

In 2023, the California and Federal courts of appeal published opinions on several cases impacting consumers and manufacturers/distributors of consumer products. Of note, the Ninth Circuit held in two cases that a consumer’s false and misleading label claims were preempted by the Food, Drug and Cosmetic Act, a victory of sorts for manufacturers. In addition, a California Court of Appeal published an opinion giving manufacturers of consumer products a potential defense to Proposition 65 claims.

Asbestos litigation

Court of Appeal reverses summary judgment for Avon based on credibility of corporate representatives’ declaration.

In one of the individual cases on In re: LAOSD Asbestos Cases (Ramirez v. Avon Products) plaintiffs Alicia and Fermin Ramirez filed a personal injury complaint in Los Angeles Superior Court against multiple entities alleging Alicia Ramirez developed mesothelioma as a result of exposure to asbestos from various sources, including contaminated talcum powder from Avon Products, Inc. (“Avon”) used by Alicia and her daughter from the mid-1970s to 2007.

Avon brought a motion for summary judgment on the grounds that plaintiffs could not prove Avon’s products contained asbestos. The motion relied on the declaration of Avon’s designated person most knowledgeable, stating Avon never used asbestos in its products, required suppliers to provide asbestos-free talc, and had internal programs to ensure the talc was asbestos-free. The trial court granted Avon’s motion for summary judgment finding the affirmative evidence in Avon’s person most knowledgeable declaration shifted the burden and that plaintiffs’ evidence did not create a triable issue regarding the asbestos content or asbestos exposure from Avon products.

However, the Court of Appeal found the trial court abused its discretion by relying on the declaration of Avon’s person most knowledgeable and ruled the declaration and documents were inadmissible based on lack of foundation, lack of personal knowledge and hearsay. The Court of Appeal reversed the trial court order granting summary judgment, holding that a defendant’s designated corporate representative produced for deposition and in supporting affidavits required the personal knowledge of a non-expert witness pursuant to the rules of evidence.

Product safety/Proposition 65

In case involving whether active ingredient in type 2 diabetes medication increased risk of heart failure, summary judgment was appropriate after trial court properly excluded experts’ testimony as party of its gatekeeping responsibility.

Onglyza Product Cases involved California’s Proposition 65 which requires products with certain listed chemicals to include a warning that the product contains chemicals known to the State of California to cause cancer and/or reproductive harm.

In 2008, in connection with AstraZeneca’s application for approval of Onglyza and Kombiglyze XR, two diabetes drugs with saxagliptin as the active ingredient, the FDA’s Endocrinologic and Metabolic Drugs Advisory Committee required that defendant AstraZeneca perform a cardiovascular outcomes study called “SAVOR” which was a randomized, double-blind, placebo-controlled study that consisted of 16,492 patients with type 2 diabetes who were at high risk of cardiovascular disease. The study concluded that saxagliptin did not increase or decrease the risk of these occurrences but noted a higher risk of hospitalization. Following SAVOR, the FDA required warning labels for medications containing saxagliptin, referring to the potential increased risk of heart failure. Researchers conducted additional studies and did not find an association between saxagliptin and an increased risk of hospitalization for heart failure.

Patients who took drugs with saxagliptin filed approximately 250 related cases against AstraZeneca and other drug companies. Most of these cases were filed in federal court and consolidated into federal multidistrict litigation. A Judicial Council coordination proceeding (“JCCP”) was established for the California state court cases. Defendants first moved to exclude the testimony of plaintiffs’ general causation expert. That motion was granted. Defendants then filed a motion for summary judgment on the grounds that plaintiffs could not establish causation without medical expert testimony. The trial court granted the motion.

The Court of Appeal affirmed summary judgment in favor of the defendants. First, the court of appeal affirmed the order excluding the testimony of plaintiffs’ general causation expert (a cardiologist) on the grounds that the expert’s opinion “does not contain a reliable methodology for weighing the evidence bur rather employed a shifting results-based methodology that fails to logically and consistently weigh all the relevant evidence.” Since the court affirmed the exclusion of the expert’s testimony, it affirmed the order granting summary judgment for the defendants.

Ninth Circuit holds that the Food Drug and Cosmetic Act preempted plaintiffs’ challenge to labels on “I Can’t Believe It’s Not Butter Spray” that were compliant with FDA requirements.

In Pardini v. Unilever United States, Inc. consumers filed a class action case against Unilever, the manufacturer of ‘I Can’t Believe It’s Not Butter!’ spray, alleging that the claim on labels that it contains 0 calories and 0 grams of fat per serving is misleading because it is based on the false assumption that a consumer would discharge one to five sprays rather than using as much of the substitute as it would of butter. Pursuant to the Food and Drug Administration’s (“FDA”) regulations, if a product has less than five calories per serving, the calorie count “may be expressed as zero” and if it contains less than 0.5 grams of fat per serving, the fat content “shall be expressed as zero.” According to plaintiffs, if the standard for butter—one tablespoon—were applied, the ‘Not Butter’ spray could not claim to contain zero calories and no grams of fat per serving. However, the label fully complied with the FDA’s requirements for sprays. Thus, the issue is whether the product should be evaluated as a “spray” or as “butter.”

The Ninth Circuit held that the product is a spray and since its labeling complied with the FDA’s requirements, plaintiffs’ claims under California law were preempted by the Food, Drug and Cosmetic Act.

Ninth Circuit holds that a reasonable consumer would not have been deceived by an ambiguous front label on products where the back labels both clarified the front label’s meaning and provided an ingredient list.

In McGinity v. The Proctor & Gamble Co. plaintiff contended that Proctor & Gamble’s (“P&G”) packaging “represents that the Products are natural, when, in fact, they contain nonnatural and synthetic ingredients, harsh and potentially harmful ingredients, and are substantially unnatural.” Plaintiff stated that if he had known when he purchased them that the products were not “from nature or otherwise natural,” he would not have purchased the products or paid a price premium for the products. Plaintiff asserted claims under California’s Unfair Competition Law (“UCL”), California’s False Advertising Law (“FAL”), and California’s Consumers Legal Remedies Act (“CLRA”).

The Ninth Circuit affirmed the district court’s dismissal of plaintiff’s action alleging that P&G violated California consumer protection laws by labeling some of its products with the words “Nature Fusion” in bold, capitalized text, with an image of an avocado on a green leaf. The court held that there was some ambiguity as to what “Nature Fusion” means in the context of its packaging, and it must consider what additional information other than the front label was available to consumers of the P&G products. Here, the front label containing the words “Nature Fusion” was not misleading— rather, it was ambiguous. Upon seeing the back label, it would be clear to a reasonable consumer that avocado oil is the natural ingredient emphasized in P&G’s labeling and marketing. With the entire product in hand, the court concluded that no reasonable consumer would think that the products were either completely or substantially natural. The survey results did not make plausible the allegation that the phrase “Nature Fusion” was misleading.

Ninth Consumer holds that claims based on allegedly misleading food labels were preempted where sustaining them would have established a requirement for food labeling that differed from federal requirements.

Nacarino v. Kashi Co. involved two putative class actions that were filed in the Northern District of California asserting materially identical state-law consumer protection claims for unfair business practices, unjust enrichment, and fraud. Both complaints alleged that the front labels on several of defendants’ products were “false and misleading” under state and federal law. Specifically, plaintiffs alleged that the products’ front labels were false and misleading because they overstate the products’ protein quantity and implicitly exaggerate protein quality. The district court dismissed plaintiffs’ claims on the grounds that the protein claims on defendants’ front labels could not be false or misleading under federal law because defendants measured protein quantity using a method approved by the Food and Drug Administration (“FDA”). Furthermore, the district court held that the labels complied with the FDA’s regulations, therefore, because any state labeling requirements that differ from federal requirements are preempted, the court dismissed Plaintiffs’ complaints.

The Ninth Circuit affirmed on different grounds the district court’s dismissal of the two complaints. The court rejected plaintiffs’ arguments that the protein claims on defendants’ labels were false because the nitrogen method for calculating protein content overstated the actual amount of protein the products contained. The court agreed with the district court that FDA regulations specifically allow manufacturers to measure protein quantity using the nitrogen method.

Furthermore, the Ninth Circuit rejected plaintiffs’ arguments that the protein claims on defendants’ labels were misleading because the “amount of digestible or usable protein the Products actually deliver to the human body is even lower” than the actual amount of protein the products contain. The Ninth Circuit held that defendants’ protein claims could be misleading under FDA regulations if they did not accurately state the quantity of protein or if the products did not display the quality-adjusted percent daily value in the Nutritional Facts Panel. However, plaintiffs’ complaints did not allege that the challenged protein claims were misleading within the meaning of the federal regulations. Thus, the claims were preempted by the Food, Drug and Cosmetic Act.

Ninth Circuit affirms district court’s ruling enjoining California from enforcing a Proposition 65 warning requirement for chemicals because their link to cancer was disputable.

National Association of Wheat Growers v. Bonta involved California’s Proposition 65 which requires products with certain listed chemicals to include a warning that the product contains chemicals known to the State of California to cause cancer and/or reproductive harm.

Glyphosate is a widely used herbicide in multiple settings and is best known as the main active ingredient in Roundup, a herbicide manufactured by Monsanto Company. In 2015, the International Agency for Research on Cancer (“IARC”) identified glyphosate as “probably carcinogenic” to humans. As a result, under the current regulatory scheme implementing Proposition 65, the California Office of Environmental Health Hazard Assessment (“OEHHA”) was required to place glyphosate on the State’s list of known carcinogens. Due to that listing, Proposition 65 also requires certain businesses whose products expose consumers to glyphosate to provide a clear and reasonable warning to those consumers that glyphosate is a carcinogen. While IARC is of the view that glyphosate is probably carcinogenic to humans, that conclusion is not shared by a consensus of the scientific community.

A coalition of agricultural producers and business entities brought an action against Attorney General of California (“State”), alleging that California’s warning requirements for glyphosate under Proposition 65 violated their First Amendment right to be free from compelled speech. Specifically, plaintiffs contended that glyphosate’s link to cancer is in dispute. Plaintiffs filed a motion for summary judgment which was granted by the district court, and the State appealed.

The Ninth Circuit affirmed. The Ninth Circuit first held that under First Amendment caselaw, the government may only compel commercial speech if it can demonstrate that in so doing it meets the requirements of intermediate scrutiny. However, an exception applies to compelled commercial speech that is “purely factual and uncontroversial.” In that scenario, the government need only demonstrate the compelled speech survives a lesser form of scrutiny akin to a rational basis test. Based on the dispute in the scientific community regarding the carcinogenicity of glyphosate, the Ninth Circuit concluded that “the Prop 65 warning as applied to glyphosate—in any form that has been presented to this Court—is not purely factual and uncontroversial, and thus is subject to intermediate scrutiny.” Because the Attorney General failed to meet that standard the Ninth Circuit affirmed the district court’s grant of summary judgment and entry of a permanent injunction.

Debt collection

Court of Appeal holds that under the Rosenthal Act, a consumer need only to make a prima facie showing that the debt collectors made a false representation and need not show that it was made knowingly.

In Young v. Midland Funding Young alleged that Midland Funding (“Midland”) improperly pursued a debt collection lawsuit and obtained a default judgment against her for a delinquent credit account of $8,529.93. She sought vacatur of the default judgment and damages under the Rosenthal Fair Debt Collection Practices Act. She claimed that Midland falsely and deceptively represented in the debt collection lawsuit that they effected substituted service of process on her, and then relied on this false representation to obtain the default judgment and attempt to collect on it. The complaint also cited the Fair Debt Collection Practices Act (15 U.S.C. 1692). Midland responded with a motion to strike all of Young’s causes of action under Code of Civil Procedure section 425.16 (anti-SLAPP statute), The trial court granted the anti-SLAPP motion, finding that Young did not show she would probably prevail on the merits of her claims.

The Court of Appeal reversed. The court held that Young showed she would probably prevail on the merits of her Rosenthal Act cause of action; she produced prima facie evidence that Midland falsely represented substituted service on her was effected in the debt collection lawsuit. She was not required under the Rosenthal Act to show that Midland knowingly made this false representation.

Court of Appeal holds that bills sent to homeowner were an attempt to collect an alleged consumer debt for purposes of the Rosenthal Act despite homeowner not actually owing any debt.

In Hagey v. Solar Service Experts plaintiff owned a home with a solar energy system (“system”). At the time he purchased the home, the prior homeowner was party to a contract with a company, Kilowatt Systems, LLC (“Kilowatt”), which owned the system (“solar agreement”). Among other terms, the solar agreement required the prior homeowner to purchase the energy produced by the system through monthly payments to Kilowatt. In the event of a sale of the house, the solar agreement afforded the prior homeowner three options. The prior homeowner and plaintiff agreed to an option which allowed prepayment of all remaining monthly payments and a transfer of all solar agreement rights and obligations to plaintiff, except for the monthly payment responsibility. In conjunction with the sale of the house, prepayment occurred and the parties entered into the requisite transfer agreement.

At some later point in time, defendant Solar Service Experts, LLC (“Solar”) began sending plaintiff monthly bills on Kilowatt’s behalf, demanding payments pursuant to the solar agreement. After receiving a bill, plaintiff spoke to a representative of defendant who told him he should not have received the bill and the issue would be resolved. Plaintiff received additional bills and at least one late payment notice which identified defendant as a debt collector. Plaintiff communicated with defendant’s representatives about the errors by phone and email, all to no avail.

Plaintiff thereafter filed a class action lawsuit against Solar for violation of the Rosenthal Fair Debt Collection Practices Act (“Act”). The trial court dismissed the action on demurrer, concluding plaintiff did not, and could not, allege facts sufficient to constitute a consumer credit transaction, as defined by the Act.

On appeal, plaintiff argued the trial court erroneously focused on the undisputed fact he did not owe the debt which defendant sought to collect and, in doing so, failed to recognize that the Act applied to debt alleged to be due or owing by reason of a consumer credit transaction. The Court of Appeal agreed and reversed.

Ninth Circuit holds that text messages sent to consumer’s cellular telephone were not “voice” messages, thus, the texts did not violate the Telephone Consumer Protection Act.

Trim v. Reward Zone USA LLC was a putative class action lawsuit brought under the Telephone Consumer Protection Act (“TCPA”). Specifically, plaintiff alleged Reward Zone USA (“Reward Zone”) violated the TCPA because she received at least three mass marketing text messages from Reward Zone which utilized “prerecorded voices.” The district court granted Reward Zone’s motion to dismiss as to the TCPA cause of action, and plaintiff appealed.

The Ninth Circuit affirmed holding that the text messages did not use prerecorded voices as required under the TCPA because they did not include audible components. The court relied on the statutory context of the TCPA and the ordinary meaning of “voice,” which showed that Congress used the word “voice” to include only an audible sound, and not a more symbolic definition such as an instrument or medium of expression.

Court of Appeal holds that Code of Civil Procedure section 669.730, which prohibits the forced sale of a judgment debtor’s home to satisfy a consumer debt, violates neither the Contract nor the Equal Protection Clauses of the United States and California Constitutions.

In Davis Boat Manufacturing-Nordic, Inc. v. Smith Mr. Smith purchased a boat from Davis Boat Manufacturing-Nordic, Inc. (“Davis Boat”). The underlying agreement required installment payments. Smith failed to pay the installments and Davis Boat sued Smith for breach of contract. Davis Boat prevailed in the breach-of-contract action against Smith and applied for an order to sell defendant’s home to satisfy the judgment. The trial court denied the application based on Code of Civil Procedure section 699.730, a recently added statute that prohibits the forced sale of a judgment debtor’s principal place of residence to satisfy a “consumer debt” except under certain circumstances.

The Court of Appeal affirmed. The court first held that the debtor incurred a “consumer debt” within the meaning of section 699.730 since it was a “debt incurred by an individual primarily for personal, family, or household purposes.” The court also held that the definition of “consumer debt” in section 669.730 is not latently ambiguous, and does not violate the Contract or the Equal Protection clauses of the Federal and State Constitutions.