Anti-GMO Plaintiffs Surrender Following Class Certification Denial

SILICON VALLEY— A consortium of class action plaintiffs’ lawyers Thursday dismissed a significant false advertising case in response to a strong rejection of their class certification motion by Judge Paul Grewal of the Northern District Federal Court in California.

Pillsbury client and defendant Medora Holdings developed, manufactured and distributed a new snack popped corn chip named “Popcorners.” Although its “Sea Salt” flavor chip contains only two ingredients, corn and sea salt, class plaintiffs alleged that Medora falsely advertised the product as being “all natural.” Plaintiffs’ claims boiled down to the theory that because most domestically grown corn derives from GMO-improved seed, the product is not “natural.”

Litigation and Insurance Recovery & Advisory partner Robert Wallan handled the case with partners Kimberly Buffington and John Grenfell and associate Alyson Parker.

Hundreds of similar cases are working their way through courts across the country. Procedural motions by defendants attacking the pleadings have met with mixed results. In Florida, for example, a court refused to dismiss a similar lawsuit against Snyder’s-Lance Inc. for labeling its pretzels and other snacks “all natural.” In California, defendant Marie Callender’s motion to dismiss “all natural” false advertising claims met the same result. Recently, a California court certified a class to bring false advertising claims against Kraft Foods Group, Inc. for falsely advertising its cheese as “all natural.”

In many cases, plaintiffs’ lawyers have been able to extract very large settlements from defendants not willing to risk an adverse decision. For example, in 2014, the maker of competing product Popchips settled “all natural” class action claims for $2.4 million in addition to exposure for attorney’s fees. Other companies have entered into settlements of up to $9 million to resolve “all natural” false advertising lawsuits.

Medora elected to forego early procedural motions, and instead took depositions of plaintiffs which resulted in important admissions: Plaintiffs admitted they had suffered no financial harm, and could not show any likelihood of being “misled” by Medora’s advertising in the future. For its part, early on Medora decided to remove the “all natural” language from its packaging. Sales for this new product increased significantly after the label change, providing strong evidence that there was no basis for either damages or the injunctive relief sought by plaintiffs. Medora opposed plaintiffs’ motion to certify the consolidated cases as a class action. In late August, in a strongly reasoned decision, Judge Grewal agreed with Medora that plaintiffs who have not been damaged and who face no credible threat of future harm do not have standing under Article III of the United States Constitution. Given this lack of real harm, the Court concluded the case could not proceed as a class action.

After initially disputing the class certification denial, plaintiffs elected to dismiss with prejudice rather than attempt a challenge in the Ninth Circuit Court of Appeals.