Opinion
A-21-CV-447-RP
07-09-2024
NICHOLAS A. USLER, et al., Plaintiffs, v. VITAL FARMS, INC., Defendant.
ORDER AND REPORT AND RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE
MARK LANE, UNITED STATES MAGISTRATE JUDGE
TO THE HONORABLE ROBERT PITMAN UNITED STATES DISTRICT JUDGE:
Before the court are Defendant Vital Farms, Inc.'s Motion for Summary Judgment (Dkt. 115), Plaintiffs' Motion to Certify Class (Dkt. 125, 147), Vital Farms' Motion to Exclude and Strike the Report of Dr. Greg Allenby (Dkt. 151), and all related briefing. Having considered the motions, pleadings, and applicable law, and arguments made at two separate hearings, the undersigned submits the following recommendations to the District Judge and order.
The motions and related briefing were referred to the undersigned for disposition or a Report and Recommendation, as appropriate, pursuant to 28 U.S.C. § 636(b), Federal Rule of Civil Procedure 72, and Rule 1(d) of Appendix C of the Local Rules. Dkt. 153; Text Order dated Feb. 16, 2024.
The court heard oral arguments on Vital Farms' motion to exclude Dr. Allenby on May 21, 2024, and on Plaintiffs' motion for class certification on June 11, 2024.
I. Background
Plaintiffs bring suit, on behalf of themselves and all others similarly situated, against Vital Farms, Inc. (“Vital Farms”), an egg supplier. Dkt. 1 (Compl.) at ¶¶ 1, 24. Vital Farms does not operate any farms itself and does not own hens. Class Cert. Resp. Exh. 7 (Gregg Decl.) at ¶ 6. Instead, Vital Farms contracts with family farms that tend to the hens and sell the eggs to Vital Farms. Id. Vital Farms in turn sells the eggs to grocery stores. Id. The contracting family farms are responsible for sourcing the young hens. Id.
Generally, Plaintiffs allege Vital Farms “markets itself as an ethical company that treats animals in an ethical, humane, and transparent manner,” but Vital Farms' “marketing is false and misleading, and its consumers have been tricked into paying an unjustifiably high premium.” Compl. at ¶ 1. Specifically, Plaintiffs allege Vital Farms acquires female chicks from hatcheries that kill male chicks, id. at ¶ 43c; force hens to lay one egg per day-which decreases their longterm ability to lay eggs and causes other health issues-and sell them to be killed when they can no longer lay eggs daily, id. at ¶ 43a; and condone farmer beak cutting, id. at ¶ 43b. Additionally, in contrast to Vital Farms' representations that its hens are “pasture raised,” Vital Farms “stocks hens indoors at extreme densities,” preventing them from engaging in natural behaviors that are key to preventing undue physical and psychological pain, and many hens will never or ineffectively access outdoor pastures, id. at ¶ 46.
Plaintiffs, residents of Michigan, California, Texas, Florida, New York, bring claims on their own behalf and a purported nationwide class, with various state subclasses. Id. at ¶¶ 15-23. Generally, they assert Vital Farms' misrepresentations caused them to pay higher prices than they otherwise would have for similar eggs. Specifically, they assert the following causes of action:
• Count I: Breach of Express Warranty under Texas Law and the Law of the State of Residence of Each Class Representative Respectively (On Behalf of Each State Class), id. at ¶¶ 75-81;
• Count II: Common Law Fraud/Fraud by Omission Under Texas law (On Behalf of the Nationwide Class), id. at ¶¶ 82-89;
• Count III: Texas Deceptive Trade Practices Consumer Protection Act (On Behalf of Plaintiff Andrada and the Texas State Class), id. at ¶¶ 90-98;
• Count IV: California Unfair Competition Law (On Behalf of Plaintiff Kierman and the California State Class), id. at ¶¶ 99-105;
• Count V: Florida Unfair and Deceptive Trade Practices (On Behalf of Plaintiff Vossen and the Florida State Class), id. at ¶¶ 106-112;
• Count VI: Michigan Consumer Protection Act (On Behalf of Plaintiff Usler and the Michigan State Class), id. at ¶¶ 113-119; and
• Count VII: New York Business Laws Section 349 and Section 350-A (On Behalf of Plaintiff Tanz, Sankowich, Karaca, and Gozde and the New York State Class), id. at ¶¶ 120-125.
The parties have conducted some discovery, but discovery is still ongoing. Vital Farms moves for partial summary judgment on a handful of individual Plaintiffs' claims. Nearly simultaneously, Plaintiffs have moved for class certification for most of their claims. Vital Farms has also moved to strike the expert opinion Plaintiffs rely on to support their class certification motion. All motions are ripe, and the court will address each motion in turn.
II. Motion for Summary Judgment
Vital Farms moves for a partial summary judgment. Vital Farms asserts Plaintiffs Gozde, Karaca, Sankowich, Tanz, and Yurkovsky lack evidence to establish that they paid more for Vital Farms' eggs because of the marketing statements that appear on the egg packaging. Vital Farms contends the New York and Florida DTPA claims should be dismissed on this basis. Vital Farms also argues the New York, Florida, and Michigan express warranty claims should be dismissed because those states require privity of contract for an express warranty claim, which Plaintiffs lack.
In the briefing, Plaintiffs did not defend Gozde's or Tanz's claims, and at the June 11, 2024, hearing Plaintiffs affirmatively stated Gozde and Tanz are no longer moving forward with their claims as class representative or individually. Accordingly, the undersigned will recommend that Vital Farms' motion be granted as to Gozde and Tanz, and those Plaintiffs be dismissed from the case.
Plaintiffs also did not defend the New York and Michigan express warranty claims. Instead, Plaintiffs assert the motion is moot as to those claims because they have not moved for class certification of those claims. It is unclear whether Plaintiffs still intend to move forward with the claims on an individual basis. Because Plaintiffs did not clearly state they do not intend to move forward with these individual claims, the court will include them in its analysis, without the benefit any response by Plaintiffs.
The court notes that this motion was filed while discovery is under way. Indeed, fact discovery does not close until August and expert discovery does not close until December. Generally, the court is extremely hesitant to recommend granting summary judgment on a fact issue while discovery is ongoing.
A. Summary Judgment Standard
Summary judgment is appropriate only “if the movant shows there is no genuine dispute as to any material fact and that the movant is entitled to judgment as a matter of law.” FED. R. CIV. P. 56(a). A dispute is genuine only if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 254 (1986).
The party moving for summary judgment bears the initial burden of “informing the district court of the basis for its motion, and identifying those portions of [the record] which it believes demonstrates the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The burden then shifts to the nonmoving party to establish the existence of a genuine issue for trial. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 585-87 (1986); Wise v. E.I. Dupont de Nemours & Co., 58 F.3d 193, 195 (5th Cir. 1995). The parties may satisfy their respective burdens by tendering depositions, affidavits, and other competent evidence. Estate of Smith v. United States, 391 F.3d 621, 625 (5th Cir. 2004). It is not the court's responsibility to hunt through the summary judgment record to determine if a party's arguments are supported by the record. Malacara v. Garber, 353 F.3d 393, 405 (5th Cir. 2003) (“When evidence exists in the summary judgment record but the nonmovant fails even to refer to it in the response to the motion for summary judgment, that evidence is not properly before the district court.”); Ragas v. Tennessee Gas Pipeline Co., 136 F.3d 455, 458 (5th Cir. 1998) (“Rule 56 does not impose upon the district court a duty to sift through the record in search of evidence to support a party's opposition to summary judgment.”).
The court will view the summary judgment evidence in the light most favorable to the nonmovant. Griffin v. United Parcel Serv., Inc., 661 F.3d 216, 221 (5th Cir. 2011). The non-movant must respond to the motion by setting forth particular facts indicating that there is a genuine issue for trial. Miss. River Basin Alliance v. Westphal, 230 F.3d 170, 174 (5th Cir. 2000). “After the non-movant has been given the opportunity to raise a genuine factual issue, if no reasonable juror could find for the non-movant, summary judgment will be granted.” Id.
B. Analysis
1. New York General Business Law Section 349 and 350 Claim
These sections are part of New York's Deceptive Trade Practices Act. To recover under these sections, a plaintiff “must prove three elements: first, that the challenged act or practice was consumer-oriented; second, that it was misleading in a material way; and third, that the plaintiff suffered injury as a result of the deceptive act.” Colpitts v. Growers, No. 20 CIV. 2487 (JPC), 2023 WL 2752161, at *3 (S.D.N.Y. Mar. 31, 2023) (quoting Stutman v. Chem. Bank, 731 N.E.2d 608, 611 (N.Y. 2000)).
“The standard for recovery under General Business Law § 350, while specific to false advertising, is otherwise identical to Section 349. Given this overlap, courts have found that the scope of § 350 is as broad as that of § 349 . . . and that its essential elements are the same.” Duran v. Henkel of Am., Inc., 450 F.Supp.3d 337, 346 (S.D.N.Y. 2020) (cleaned up).
Vital Farms argues recovery under these sections requires a showing of “actual injury,” which Plaintiffs (here, Karaca and Sankowich) cannot satisfy because they have no documentation nor recollection of how much they paid for the eggs. See Stutman v. Chem. Bank, 731 N.E.2d 608, 612 (2000) (“In addition, a plaintiff must prove ‘actual' injury to recover under the statute, though not necessarily pecuniary harm.”). Plaintiffs point to Vital Farms' own statements that its eggs command premium pricing. Plaintiffs also argue that it has not yet obtained discovery from resellers that it could use to prove their injury.
Given that Vital Farms does not dispute that Plaintiffs Karaca and Sankowich purchased Vital Farms eggs or that its eggs are sold at a premium price, the court will not recommend that summary judgment be granted at this time. There is sufficient circumstantial evidence to believe at this time that Karaca and Sankowich have been injured, and Vital Farms has not convinced the court that further fact or expert discovery would be futile. Cf. Ebin v. Kangadis Food Inc., No. 13-CV-2311 (JSR), 2014 WL 737878, at *1-2 (S.D.N.Y. Feb. 25, 2014) (ruling that plaintiff had sufficient evidence to overcome a motion for summary judgment on his GBL § 349 claim where he provided a report of an expert and raw data comparing the prices of the product at issue to those of a relevant competitor).
2. New York Express Warranty Claim
“A prima facie claim for breach of express warranty requires the plaintiff to show that there was an affirmation of fact or promise by the seller, the natural tendency of which was to induce the buyer to purchase and that the warranty was relied upon to the plaintiff's detriment.” Weiner v. Snapple Beverage Corp., No. 07 CIV. 8742 DLC, 2011 WL 196930, at *5 (S.D.N.Y. Jan. 21, 2011) (quoting Fendi Adele S.R.L. v. Burlington Coat Factory Warehouse Corp., 689 F.Supp.2d 585, 604 (S.D.N.Y. 2010) (citation omitted). Similar to above, Vital Farms argues Plaintiffs Karaca and Sankowich have no evidence of actual injury. For the same reasons, the undersigned will not recommend summary judgment be granted on this issue.
Vital Farms also argues the New York express warranty claims fail for lack of privity. Plaintiffs did not respond to this argument. “[U]nder New York law, express and implied breach of warranty claims seeking to recover for financial injuries, like those here, require a showing of privity between the manufacturer and the plaintiff unless an exception applies.” MacNaughton v. Young Living Essential Oils, LC, 67 F.4th 89, 101 (2d Cir. 2023). New York recognizes a third-party beneficiary exception, under which privity is not required if the manufacturer delivers to and attempts to meet the remote customer's requirements through a dealer. Id.
It is undisputed that Vital Farms does not sell directly to consumers. Plaintiffs have not come forward with evidence of a contract between Vital Farms and the resellers for their benefit. See id.; Marshall v. Hyundai Motor Am., 51 F.Supp.3d 451, 469 (S.D.N.Y. 2014) (“Under New York law, a plaintiff claiming rights as a third-party beneficiary must demonstrate: (1) the existence of a valid and binding contract between other parties, (2) that the contract was intended for his benefit, and (3) that the benefit to him is sufficiently immediate, rather than incidental, to indicate the assumption by the contracting parties of a duty to compensate him if the benefit is lost.”).
Accordingly, the undersigned finds Plaintiffs Karaca and Sankowich lack the required privity to assert this claim and will recommend that summary judgment be granted on this claim.
3. Florida Deceptive Trade Practices Act Claim
A consumer claim under FDUTPA has three elements: (1) a deceptive act or unfair practice; (2) causation; and (3) actual damages. Lombardo v. Johnson & Johnson Consumer Cos., 124 F.Supp.3d 1283, 1287 (S.D. Fla. 2015) (citing Virgilio v. Ryland Grp., Inc., 680 F.3d 1329, 1338 n. 25 (11th Cir. 2012)). Actual loss is a predicate to recovery under FDUTPA. Id. at 1290. (citing Fla. Stat. § 501.211(2)).
Vital Farms argues Plaintiff Yurkovsky cannot show actual loss. The parties' arguments are similar to the arguments they made with respect to the similar claim under New York law and Karaca's and Sankowich's evidence of injury. For the same reasons, the undersigned will not recommend summary judgment at this stage. Cf. Lombardo, 124 F.Supp.3d at 1290 (“Plaintiff presents no evidence-for example, personal receipts or Walmart pricing or promotional records-that establishes her purchases within those specific ranges.”).
4. Florida Express Warranty Claim
Vital Farms argues actual injury is a required element of this claim. See Dunham-Bush, Inc. v. Thermo-Air Service, Inc., 351 So.2d 351, 353 (Fla. Dist. Ct. App. 1977) (listing “injuries sustained to the buyer” as a claim element). Vital Farms argues Plaintiff Yurkovsky has no evidence of damages. For the same reasons as above, the court rejects this argument at this stage of the case.
Vital Farms also argues this claim should be dismissed because Florida also requires privity to assert the claim, which Plaintiff Yurkovsky lacks. Plaintiffs dispute that the claim requires privity.
“It is well established law in Florida that warranty-based claims, including breach of express warranty, require privity of contract between the parties.” Kaiser v. Depuy Spine, Inc., 944 F.Supp.2d 1187, 1193 (M.D. Fla. 2013). “No privity exists, and a breach of warranty claim fails, where plaintiff did not purchase the product from the defendant.” Id. However, a plaintiff who purchased a product from a third party may properly bring claims for a breach of warranty against the manufacturer if “substantial direct contacts” existed between the plaintiff and the manufacturer. Inouye v. Adidas Am., Inc., No. 8:22-CV-416-VMC-TGW, 2023 WL 2351654, at *7 (M.D. Fla. Mar. 3, 2023) (citing Douse v. Boston Sci. Corp., 314 F.Supp.3d 1251, 1262 (M.D. Fla. 2018)). But Florida law is somewhat murky on this issue. See Smith v. Wm. Wrigley Jr. Co., 663 F.Supp.2d 1336, 1342 (S.D. Fla. 2009) (“The privity requirement in Florida warranty claims is a moving target which depends on factors including whether the warranty is express or implied and the type of injury alleged.”).
In Smith, the plaintiff purchased chewing gum at a convenience store and sued the gum manufacturer. After analyzing cases, Smith distinguished the cases requiring privity because in those cases the seller had knowledge about the product. Smith allowed the plaintiff's express warranty claim to go forward because “it defies common sense to argue that purchasers of Eclipse gum presumed that the cashier at the local convenience store is familiar with the scientific properties of [the gum]” and “it is significant that the express warranty the manufacturer allegedly breached is contained on the packaging of Eclipse gum.” Id. at 1343; see also Garcia v. Kashi Co., 43 F.Supp.3d 1359, 1389 (S.D. Fla. 2014) (“This Court is persuaded by Judge Cohn's analysis in Smith and, for the same reasons, concludes that Plaintiffs claim for breach of express warranty survives despite the absence of privity.”).
Vital Farms argues that the more recent cases of Inouye and Douse, have rejected Smith. In Inouye, the plaintiff brought an express warranty claim against the manufacturer after purchasing an NHL jersey from a reseller that the manufacturer had falsely advertised as “authentic.” Inouye, 2023 WL 2351654 at *1. Inouye first found the manufacturer's “untargeted marketing” was insufficient to establish “substantial direct contacts” between the manufacturer and the consumer to bring the claim within the substantial direct contacts exception to privity. Id. at *8. Inouye also distinguished Smith finding that unlike the convenience store cashier in Smith, the jersey reseller was in a better position to contradict allegedly misleading product labeling on the athletic jersey. Id. In Douse, the plaintiff sued a medical device manufacturer for breach of express warranty after the device she had implanted in her body caused injury. Douse, 314 F.Supp.3d at 1251. Douse described the conflict in Florida law as “whether the outer boundaries of privity require substantial direct contacts, as in Cedars, [which held the manufacturer's substantial and direct representations were sufficient to establish privity], or mere product labeling, as in Smith.” Id. at 1261. Douse held “the interests of privity are satisfied by direct contact, but only in the sense of personal contact between the consumer and the manufacturer,” whereas “[t]he alternative of extending warranty liability to include product label representations would swallow the privity rule entirely.” Id.
Cedars of Lebanon Hosp. Corp. v. European X-Ray Distribs. of Am., Inc., 444 So.2d 1068 (Fla. Dist. Ct. App. 1984).
The Eleventh Circuit is no help either. “Our review of Florida law reveals no clear rule about whether privity is required in every Florida express warranty claim.” Godelia v. Doe 1, 881 F.3d 1309, 1321 (11th Cir. 2018) (comparing T.W.M. v. Am. Med. Sys., 886 F.Supp. 842, 844 (N.D. Fla. 1995) (stating that privity is required for all express warranty claims), with Smith, 663 F.Supp.2d at 1342-43 (recognizing that privity may not be required for all express warranty claims)). Godelia held that even if court assumed privity was required, it had sufficiently been pled by allegations the plaintiff contracted directly with the manufacturer. Id. at 1321-22.
After considering the reasoning of the cases, the undersigned most agrees with the reasoning of Douse. Most courts find that Florida law requires privity to bring an express warranty claim and many recognize an exception when the manufacture has substantial direct contact with the purchaser. To recognize a further exception in circumstances of product labeling and an unsophisticated seller would swallow the privity requirement entirely. This court is reluctant to do that without explicit guidance from Florida's highest court.
Accordingly, the undersigned finds Plaintiff Yurkovsky lacks the required privity to assert this claim and will recommend that summary judgment be granted on this claim.
5. Michigan Express Warranty Claim
“[B]ecause an express warranty is a specific term of the contract, contractual privity is required for a plaintiff to enforce an express warranty against a remote manufacturer.” Heritage Res., Inc. v. Caterpillar Fin. Servs. Corp., 774 N.W.2d 332, 344 (Mich. Ct. App. 2009). Vital Farms argues that because Plaintiff Usler did not purchase any eggs directly from Vital Farms, he lacks privity to recover under this claim. Plaintiffs did not respond to Vital Farms' motion as to this claim. They have not come forward with any arguments that there is an exception to the privity requirement under Michigan law or that Plaintiff Usler satisfies that exception. Accordingly, the undersigned finds Plaintiff Usler lacks the required privity to assert this claim and will recommend that summary judgment be granted on this claim.
C. Conclusion
For the reasons given above, the undersigned will recommend that summary judgment be granted as to Plaintiffs Gozde and Tanz, and they be dismissed with prejudice. The undersigned will also recommend that summary judgment be granted as to the New York, Florida, and Michigan express warranty claims, and those claims be dismissed with prejudice.
As noted above, Plaintiffs are not seeking class certification of the New York or Michigan express warranty claims. Therefore, only the Florida express warranty claim is implicated in their class certification motion.
III. Motion to Exclude Allenby'S Expert Report
Vital Farms moves to exclude and strike the opinions of Dr. Greg Allenby, which are offered in support of Plaintiffs' motion for class certification. Vital Farms argues that Allenby made numerous errors that render his opinion unreliable and inconsistent with the applicable standards for admissibility of expert opinions. Plaintiffs argue Allenby used a survey methodology known as conjoint analysis, for which he is well known, and his work is reliable.
A. Applicable Law
Rule 702 provides:
A witness who is qualified as an expert by knowledge, skill, experience, training, or education may testify in the form of an opinion or otherwise if the proponent demonstrates to the court that it is more likely than not that:
(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's opinion reflects a reliable application of the principles and methods to the facts of the case.Fed. R. Evid. 702. Rule 702 was amended effective December 1, 2023 to clarify that the proponent bears the burden of showing the expert testimony more likely than not complies with the rule and to emphasize that an expert opinion must reflect a reliable application of the expert's methodology. In re Onglyza (Saxagliptin) & Kombiglyze (Saxagliptin & Metformin) Prod. Liab. Litig., 93 F.4th 339, n.4 (6th Cir. 2024).
Class actions may only be certified “based on adequate admissible evidence to justify class certification.” Georgia Firefighters' Pension Fund v. Anadarko Petroleum Corp., 99 F.4th 770, 774 (5th Cir. 2024) (quoting Prantil v. Arkema Inc., 986 F.3d 570, 575 (5th Cir. 2021) (internal quotation omitted)). Daubert therefore applies with the same rigor at the class certification stage as at trial. Id. (citing Prantil, 986 F.3d at 575).
“[C]ourts have consistently held” that “estimative techniques” for measuring damages “need not be exact at the class certification stage. Rather, models that reasonably account for the defendant's liability are acceptable even if there are measures of uncertainty due to the difficulty of ascertaining damages.” Sampson v. United Servs. Auto. Ass'n, 83 F.4th 414, 421 (5th Cir. 2023) (citing 4 Newberg and Rubenstein on Class Actions § 12:4 (6th ed.) (quotations and citations omitted)). “Even where plaintiffs seeking class certification show that common issues predominate on questions of liability, they must also present a damages model ‘establishing that damages are capable of measurement on a classwide basis.'” Angell v. GEICO Advantage Ins. Co., 67 F.4th 727, 739 (5th Cir. 2023) (quoting Cruson v. Jackson Nat'l Life Ins. Co., 954 F.3d 240, 258 (5th Cir. 2020)).
B. Analysis
Using conjoint analysis, Allenby opines on the “price premium” of Vital Farms' eggs that are attributable to its claims that its eggs are “pasture raised” and ethical.” According to Allenby,
Conjoint analysis is a marketing research technique used to predict changes in the demand for products when product features change. Examples of product features include price and attributes that deliver benefits to the consumer (the ability of a laundry detergent to remove specific stains and odors from cloths, the horsepower and gas mileage of an automobile, and the battery life of a cell phone). Conjoint analysis allows analysts to assess the value of product features, and to estimate the effect of changes to a product's formulation on demand, price and market share so as to assess whether the change is worthwhile.Dkt. 147-19 (Allenby Report at 5). Allenby calculated a “Willingness to Pay” (WTP), which “is the monetized utility of an enhanced product feature that takes into consideration the effects of competition.” Id. at 19. He also calculated “Equilibrium Price Premium” (EPP), which is the percent increase in equilibrium price for a dozen Vital Farm Large.” Id. Allenby specifically relies on the EPP, not WTP, for his valuation opinion. Id. at 23.
The court recognizes that Allenby has been successfully offered as an expert in many cases and conjoint analysis has been accepted by many courts. The court's concern here is not Allenby or conjoint analysis, but how Allenby uses conjoint analysis in this case. Allenby admitted during his deposition that he had never applied his methodology in this type of supply chain situation. Mtn. to Exclude, Allenby Depo. Tr. at pp. 262-263, 302-03, 307-12. Allenby admitted that he calculated the financial benefit to Vital Farms of labeling eggs “pasture raised” and “ethical.” Id. at 304:5-6 (“I'm trying to isolate the economic benefit to Vital Farms.”). He assumes, without offering evidence or support, that Vital Farms' benefit is equal to consumers' injury, without addressing the impact retailers (who price the eggs to consumers) may play in the supply chain.
Allenby states he is making the “implicit assumption that the wholesale price and the retail price are proportional to each other.” Mtn. to Exclude, Allenby Depo. Tr. at 303:15-17. In his Reply Report, he refers to this as the “Constant Markup Pricing Rule” (CMPR). Allenby Reply Report at 9 (“My calculation is based on the assumption that retailers employ a constant markup pricing rule where wholesale prices (the price charged by Vital Farms) is inflated by a constant percentage to obtain the retail price.”). Although he describes this as “common in many industries,” id., his only support is a blog post website that yields an error message.
Neither side was able to direct the court to a case approving the use of conjoint analysis to calculate consumer damages where the producer and consumer were separated by a retailer, who was not a party to the litigation. Accordingly, although the court recognizes both Allenby's expertise and the credibility of conjoint analysis, Plaintiffs have not shown here that Allenby's application of conjoint analysis is sufficiently tied to their damages model.
Plaintiffs argue that even if Allenby's opinions as to EPP are not allowed, they can still rely on Allenby's WTP calculation. Plaintiffs argue Vital Farms did not challenge WTP as a damages methodology. But only in his Reply Report does Allenby purport to proffer WTP as an alternative damages measure. Reply Report at 10. As Vital Farms points out, Allenby has opined on the flaws of WTP in calculating damages. See Mtn to Exclude, Exh. C; see also Allenby Report at 20-21. Additionally, Allenby distinguishes WTP from EPP as follows: “The purpose of the EPP estimate is to provide a dynamic, long-term estimate of damage, while the WTP provides a static, short-term estimate of damage.” Allenby Reply Report at 2. Yet, the proposed class periods at issue here begin in 2017 and run until the date the classes are notified of class certification. Neither Plaintiffs in argument nor Allenby have offered any evidence or opinion that the 7 years at issue are sufficiently “short-term” for WTP to be an accurate reflection of damages. Moreover, although not addressed by either party, the undersigned cannot ignore that those 7 years included a pandemic, which brought supply chain disruptions and shortages of basic supplies, including eggs. Plaintiffs have not shown that WTP is an acceptable substitute for the original model that Allenby proffered.
In this article, Allenby wrote at page 3:
While conjoint estimates enable the damages expert to forecast demand for a non-misrepresented version of the accused product, additional analysis is required to determine Pnew, the market price for this version of the accused product. In particular, the conjoint-based demand forecast must be incorporated into an economic analysis that also takes into account factors such as costs and competition among suppliers.
Additionally, Plaintiffs offer no pricing evidence with their briefing on this motion or with their briefing on class certification that support the integrity of Allenby's opinions. In response to the court's questions about their lack of evidence, Plaintiffs responded that Plaintiffs and Vital Farms had agreed not to seek pricing related discovery from Vital Farms's resellers until after class certification. However, this representation has not held up. Post-hearing submissions on this issue demonstrate that there was no formal or tacit agreement that prevented Plaintiffs from seeking this type of discovery. Dkts. 174, 176, 177. Instead, Plaintiffs informed Vital Farms they intended to wait until class certification was completed before seeking such discovery. Indeed, just before the hearing on Vital Farms' motion to exclude Allenby, Plaintiffs served third-party subpoenas on several of Vital Farms' resellers seeking pricing information and then withdrew them. Dkt. 161, 170.
Accordingly, Plaintiffs have not shown that Allenby's opinion are sufficiently reliable to be considered in support of their motion for class certification. The court GRANTS Vital Farms' motion to exclude.
IV. Class Certification
Although Plaintiffs' Class Certification Motion initially asserted Vital Farm's contention that its hens are “humane[ly]” treated was at issue, through the briefing and at the class certification hearing, it became clear that Plaintiffs' claims are limited to Vital Farms' use of the terms “ethical” and “pasture raised.” Plaintiffs contend class certification is appropriate because Vital Farms acted consistently as to all class members, and they are only asserting express warranty and DTPA claims from states that do not require individual reliance. Specifically, Plaintiffs seek to certify the following five Classes:
See Class Certification Motion at 6.
The Texas Class. Pursuant to the Texas Express Warranty Statute, Tex. Bus. & Com. Code § 2.313, and the Texas Deceptive Trade Practices Statute, Tex. Bus. & Com. Code § 17.41, et seq., including all persons who are residents in Texas between the first day of the class period and the date the Class is notified of class certification, and who purchased Vital Farms eggs in Texas between May 20, 2017 and the date this Class is notified of class certification.
The California Class. Pursuant to the California Express Warranty Statue, Cal. Civ. Code § 1792 to 1795.8, and the California Consumers Legal Remedies Act (“CLRA”), Cal. Civ. Code §17500; California Unfair Competition Law (“UCL”), Cal. Bus. & Prof. Code §17505; and California False Advertising Law (“FAL”),
Cal. Bus. & Prof. Code §17508, including all persons, who are residents in California between the commencement of the class period through the date the Class was notified of class certification, and who purchased Vital Farms eggs in California between May 20, 2017 and the date this Class is notified of class certification.
The New York Class. Pursuant to the New York Deceptive Trade Statutes, New York GBL §§ 349a and 350, including all persons, who are residents in New York between the commencement of the class period through the date the Class was notified of class certification, and who purchased Vital Farms eggs in New York between May 20, 2017 and the date this Class is notified of class certification.
The Florida Class. Pursuant to Florida Express Warranty Statue, Fl. St. §672.313,and Florida Deceptive & Unfair Trade Practice Act (“FDUTPA”) Statute, Fl. St. §501.211(2), including all persons, who are residents in Florida between the commencement of the class period through the date the Class was notified of class certification, and who purchased Vital Farms eggs in Florida between May 20, 2017 and the date this Class is notified of class certification.
The Michigan Class. Pursuant to the Michigan Consumer Protection Act, Act 331 of 1976 §445.903, et seq., including all persons, who are residents in Michigan between the commencement of the class period through the date the Class was notified of class certification, and who purchased Vital Farms eggs in Michigan between May 20, 2017 and the date this Class is notified of class certification.Class Cert. Mtn. at 3-4.
The undersigned has recommended that Plaintiffs' individual Florida express warranty claim be dismissed for lack of privity. If the District Judge adopts that recommendation, there would be no lead plaintiff to represent the class, and therefore the claim should not be certified as a class claim.
A. Applicable Law
“The class action is ‘an exception to the usual rule that litigation is conducted by and on behalf of the individual named parties only.'” Sampson, 83 F.4th at 418 (quoting Comcast Corp. v. Behrend, 569 U.S. 27, 33 (2013)). Class certification requires that plaintiffs' claims “can be proved on a classwide basis,” id. (quoting Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 356 (2011)), and it is the party seeking to maintain a class action who “must affirmatively demonstrate his compliance with Rule 23,” id. (citing Comcast, 569 U.S. at 33). This is not “a mere pleading standard”; the plaintiff must “be prepared to prove” that the requirements of Rule 23 are met “in fact.” Id. (citing Comcast, 569 U.S. at 33); Elson v. Black, 56 F.4th 1002, 1006 (5th Cir. 2023) (“It is the party seeking certification who bears the burden of establishing that the requirements of Rule 23 have been met.”).
District courts must “rigorously” consider Rule 23's prerequisites and “[t]his ‘rigorous analysis' mandate is not some pointless exercise .... It matters.” Sampson, 83 F.4th at 418 (quoting Chavez v. Plan Benefit Servs., Inc., 957 F.3d 542, 547 (5th Cir. 2020)). “[C]reative uses” of the class action form “are perilous” because improper certification “can coerce a defendant into settling on highly disadvantageous terms regardless of the merits of the suit. And the existence of a class fundamentally alters the rights of present and absent class members.” Id. (quoting Chavez, 957 F.3d at 547). Therefore, “[n]o less than due process is implicated.” Id.
Rule 23 is not a context where courts must assiduously separate certification from merits issues; they will often be deeply intertwined. Id. at 421. Rule 23 analysis “will frequently entail overlap with the merits of the plaintiff's underlying claim. That is so because the class determination generally involves considerations that are enmeshed in the factual and legal issues comprising the plaintiff's cause of action.” Comcast, 569 U.S. at 33-34 (cleaned up).
Rule 23(a) provides four prerequisites for a class action: (1) numerosity; (2) commonality; (3) typicality; and (4) adequacy of representation. Elson, 56 F.4th at 1006. Certification requires plaintiffs to satisfy all requirements of Rule 23 and at least one of the three requirements listed in Rule 23(b). Sampson, 83 F.4th at 418 (citing Wal-Mart, 564 U.S. at 345-46).
B. Rule 23(a)
1. Rule 23(a)(1)-Numerosity
Numerosity requires a “class [so large] that joinder of all members is impracticable.” Amchem Prod., Inc. v. Windsor, 521 U.S. 591, 613 (1997). It is undisputed that the purchasers of Vital Farms' eggs are too many to join in this suit.
2. Rule 23(a)(2)-Commonality
“Rule 23(a)(2)'s ‘commonality' requirement is subsumed under, or superseded by, the more stringent Rule 23(b)(3) requirement that questions common to the class ‘predominate over' other questions.” Elson, 56 F.4th at 1006 (quoting Amchem Prod., Inc. v. Windsor, 521 U.S. 591, 609 (1997)). Accordingly, the court will examine this factor under Rule 23(b)(3).
3. Rule 23(a)(3)-Typicality
Rule 23(a)(3)'s typicality requirement “focuses on the similarity between the named plaintiffs' legal and remedial theories and the theories of those whom they purport to represent.” Angell v. GEICO Advantage Ins. Co., 67 F.4th 727, 736 (5th Cir. 2023) (quoting Stirman v. Exxon Corp., 280 F.3d 554, 562 (5th Cir. 2002)). [A] complete identity of claims” is not required; “[r]ather, the critical inquiry is whether the [named plaintiff's] claims have the same essential characteristics of those of the putative class. If the claims arise from a similar course of conduct and share the same legal theory, factual differences will not defeat typicality.” Id.
The named Plaintiffs seek to represent a class of individuals who, like themselves, purchased Vital Farms' eggs and paid a premium price for those eggs. The legal claims of the named Plaintiffs are typical of those of the class members.
4. Rule 23(a)(4)-Adequacy
Rule 23(a)(4) requires that the representative plaintiff “will fairly and adequately protect the interest of the class.” FED. R. CIV. P. 23(a)(4). The adequacy requirement mandates an inquiry into (1) the zeal and competence of the representatives' counsel and (2) the willingness and ability of the representatives to take an active role in and control the litigation and to protect the interests of absentees. Berger v. Compaq Computer Corp., 257 F.3d 475, 479 (5th Cir. 2001). The adequacy inquiry also “serves to uncover conflicts of interest between the named plaintiffs and the class they seek to represent.” Id. at 479-80. Differences between named plaintiffs and class members render the named plaintiffs inadequate representatives only where those differences create conflicts between the named plaintiffs' and the class members' interests. Id. at 480.
The court is satisfied that both the class representatives and their counsel will adequately represent the class members' interest. The proposed class representatives have sat for depositions and are willing to continue to participate in the litigation. The court is also satisfied that there are no conflicts that would preclude their representation. Counsel has competently asserted and defended Plaintiffs' claims.
Rule 23(b)(3) authorizes class certification where (1) “questions common to the class members predominate over questions affecting only individual members,” and (2) “class resolution is superior to alternative methods for adjudication of the controversy.” Elson, 56 F.4th at 1006 (quoting Bell Atlantic Corp. v. AT&T Corp., 339 F.3d 294, 301 (5th Cir. 2003)).
Rule 23(b)(3) requires that “questions of law or fact common to class members predominate over any questions affecting only individual member, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy.” FED. R. CIV. P. 23(b)(3). “The predominance inquiry asks whether the common, aggregation-enabling, issues in the case are more prevalent or important than the non-common, aggregation-defeating, individual issues.” Sampson, 83 F.4th at 418 (quoting Tyson Foods Inc. v. Bouaphakeo, 577 U.S. 442, 453 (2016)).
When one or more of the central issues in the action are common to the class and can be said to predominate, the action may be considered proper under Rule 23(b)(3) even though “other important matters” will have to be tried separately, such as damages or some affirmative defenses peculiar to some individual class members. Sampson, 83 F.4th at 418, 422. But while damages are specifically described among these “other important matters,” liability and injury are not. Id. at 422 (citing 2 Newberg and Rubenstein on Class Actions § 4:53 (6th ed.) (“A series of issues recur in the predominance analysis. Several of these-[including] individual damage[s] . . .-rarely defeat a finding of predominance.”)).
Determining whether the plaintiffs can clear the predominance hurdle set by Rule 23(b)(3) also requires courts to consider “how a trial on the merits would be conducted if a class were certified.” Bell Atl. Corp, 339 F.3d at 302. This, in turn, “entails identifying the substantive issues that will control the outcome, assessing which issues will predominate, and then determining whether the issues are common to the class,” a process that ultimately “prevents the class from degenerating into a series of individual trials.” Id. at 302 (quoting O'Sullivan v. Countrywide Home Loans, Inc., 319 F.3d 732, 738 (5th Cir. 2003)).
Plaintiffs argue that none of the state statutes asserted by the five classes raise issues of individual reliance. Instead, those statutes consider how a reasonable consumer would define “pasture raised” and “ethical” and whether a reasonable consumer would have been misled by Vital Farms' use of the terms. Nonetheless, Vital Farms raises a myriad of individual issues it argues will predominate over common issues.
1. “Pasture Raised”
Vital Farms concedes that “Pasture Raised” is consistently used on its packaging in a manner that stands out. See Class Cert. Resp. Exh. 1. The evidence demonstrates that Vital Farm complies with both the HFAC standard and Whole Foods' standards for “pasture raised.” Resp. Exh. 7, Gregg Decl. ¶ 12. The HFAC standard requires that hens must be outdoors 12 months per year, every day for a minimum of 6 hours per day. In emergencies, the hens may be confined all day, but for no more than 14 consecutive days. MSJ Exh 2 at ¶ 0003158. Whole Foods requires that hens begin to have access to grassland by 22 weeks of age and daily outdoor access by 24 weeks of age. Id. To qualify as an outdoor access day, all doors or popholes must be open from within three hours of sunrise until one hour before sunset. Id. Additionally, Vital Farms requires its egg producers to actively monitor and encourage outdoor access of the hens. Id. at ¶ 0003159. Confinement for more than 7 days in a calendar month disqualifies the eggs from being marketed as “pasture raised,” and if a flock is disqualified, the 14 consecutive outdoor access days is required before their eggs are considered “pasture raised” again. Id. Notably, in his survey, Allenby defined “pasture-raised” as “hens have freedom to spend their days year-round outdoors in uncrowded fields with grass and plants.” Dkt. 147-19 at 13. Thus, Allenby's definition matches Vital Farms' stated practice.
Allenby does not provide an exception to outdoor access in emergencies, but no reasonable consumer could expect the hens to remain outside when it is dangerous to their health to do so, such as during a hurricane or tornado.
At the hearing, Plaintiffs would not commit to any definition of “pasture raised” and deferred that issue to a jury determination. Instead, Plaintiffs argued Vital Farms' claims of “pasture raised” are false. See Dkt. 179-2 (Pl. Hrg. Exh.) at 2 (quoting from Mtn. Exh 2). Plaintiffs' evidence that Vital Farms sold eggs that were not in fact “pasture raised” come from Vital Farms' emails. Mtn. Exh 2. In context, these emails address non-systemic instances in which Vital Farms had sold eggs from young hens-younger than 24 weeks-that did not yet have access to pasture from three hours after sunrise to one hour before sunset. Mtn. Exh 2, Exh. B. Plaintiffs also point to emails that acknowledge Vital Farms' hens do not have outside access “all day” because of the four-hour window that farms have to open and close the barn doors and that some hens may choose not to go outside at all. Id.
From 22-24 weeks of age, growers are training the hens to go outside. MSJ Exh. 2 at ¶ 0003158.
Vital Farms justifies this practice because the farm itself has been certified as “pasture raised.” MSJ Exh. 2 at ¶ 0003348.
Plaintiffs' claims demonstrate that, at most, there is a razor-thin margin between Vital Farms' practices and what a reasonable consumer could believe “pasture raised” to mean. Nonetheless, Plaintiffs' claims make class certification inappropriate because individual issues of injury and liability will predominate any common issues. Even accepting Plaintiffs' claims as true-that a reasonable consumer would not consider eggs from a hen “pasture raised” if the hen did not go outdoors all day because it was too young or chose not to-Plaintiffs have offered no common way to determine which consumers were injured by paying more such eggs. Similarly, Plaintiffs have offered no common way to determine which class members received eggs from a hen whose farmer opened the barn doors later within the three-hour window and closed the barn earlier within the 1-hour window.
This case is most similar to Wallace v. ConAgra Foods, Inc., 747 F.3d 1025 (8th Cir. 2014), in which Wallace sought to represent a class of consumers who had purchased Hebrew National hotdogs at a premium cost, believing the hotdogs to be “100% kosher.” Id. at 1027. Wallace alleged that not all of the beef used to make the hotdogs was 100% kosher. The Eighth Circuit held plaintiffs lacked a particularized injury because their “allegations fail to show that any of the particular packages of Hebrew National beef they personally purchased contained non-kosher beef.” Id. at 1030. “In the context of defective products, it is not enough for a plaintiff to allege that a product line contains a defect or that a product is at risk for manifesting this defect; rather, the plaintiffs must allege that their product actually exhibited the alleged defect.” Id. (cleaned up). The Eighth Circuit ordered the case be remanded to state court for lack of standing. Id. 1033.
In re Recalled Abbott Infant Formula Products Liability Litigation, 97 F.4th 525, 527 (7th Cir. 2024), is also similar. In Abbott, a potential class of plaintiffs brought suit asserting claims of state consumer fraud, unjust enrichment, breach of the implied warranty of merchantability, and negligent misrepresentation, arguing they had been economically damaged by their purchases of potentially contaminated baby formula. Id. at 527-28. That court also held plaintiffs lacked standing because they failed to allege any of the products they purchased were contaminated or that suggested contamination was sufficiently widespread to plausibly affect the formula they purchased. Id. at 529. The court distinguished cases involving universal defects where every product was defective. Id. at 529-30.
Separate suits asserted personal injury claims related to the actually contaminated formula. Id. at 527.
Similarly in Rivera v. Wyeth-Ayerst Laboratories, 283 F.3d 315 (5th Cir. 2002), the Fifth Circuit found that a certified class lacked standing to pursue its claims. The court described plaintiffs' claim:
Rivera's claim to injury runs something like this: Wyeth sold Duract; Rivera purchased and used Duract; Wyeth did not list enough warnings on Duract, and/or Duract was defective; other patients were injured by Duract; Rivera would like her money back. The plaintiffs do not claim Duract caused them physical or emotional injury, was ineffective as a pain killer, or has any future health consequences to users. Instead, they assert that their loss of cash is an “economic injury.”Id. at 319. The Fifth Circuit found the plaintiffs had failed to allege they had been personally injured and therefore lacked standing to assert their claims, as a class or individually.
Although Defendants earlier moved to dismiss, they did not raise this issue of standing. Nor would they have been successful if they had-Plaintiffs' Complaint suggests a widespread issue that Vital Farms' hens are effectively denied access to outdoor pastures. Compl. ¶ 11 (“while hens have ‘access' to pastures through door slots, Vital [Farm]'s animal care practices ensure that many hens rarely-if ever-venture outdoors, and instead spend most of their time indoors in crowded stationary barns”), ¶ 46. In contrast, the uncontroverted class certification evidence demonstrates this is not the case. Several of Vital Farms' producers submitted declarations contradicting Plaintiffs' allegations.
I open the barn doors every morning after sunrise. The precise time I set the timer to open the barn doors varies depending on the time of the year and other factors, such as the weather. My barn doors are automatic, but I manually open and close the doors every day. I like manually opening and closing the doors myself. It allows me to check on the chickens and make sure they're safe. After opening the barn doors, the majority of chickens go outside within 5 minutes. I have never experienced an issue with the chickens exiting or entering the barn. The chickens can go in and out of the barn as fast as they want.Resp. Exh. 11 (Smith Decl.) at ¶¶ 28-30.
I open the barn doors every morning after sunrise. The precise time I open the barn doors varies depending on the time of the year and other factors, such as the weather. After opening the barn doors, the majority of chickens go outside within a few minutes. I have never experienced an issue with overcrowding at the barn doors or observed it being difficult for my chickens to exit the barn.Resp. Exh. 12 (Martin Decl.) at ¶¶ 26-27.
I open the barn doors every morning after sunrise. My barn doors are on a pully system and set to a timer. The precise time I set the timer to open the barn doors varies depending on the time of the year and other factors, such as the weather. After opening the barn doors, the majority of chickens go outside within 30 minutes. The chickens go in and out of the barn throughout the day. I have never experienced an issue with the chickens exiting or entering the barn. The chickens can head in and out as fast as they want.Resp. Exh. 13 (Clemons Decl.) at ¶¶ 27-28.
After opening the barn doors, the majority of chickens go outside within 10 minutes. I have never experienced an issue with the chickens exiting or entering the barn. The chickens can go in and out of the barn as fast as they want. Even though we open the barn doors and encourage the chickens to go outside, not every chicken will exit the barn. Whether chickens go outside mainly depends on the weather. Specifically, if it's really cold or hot, the chickens prefer to stay inside.Resp. Exh. 14 (Lightfoot Decl.) at ¶¶ 24-26.
It is clear from the class certification evidence that even if Vital Farms' claims of “pasture raised” is not true as to every single egg it has sold, not every potential class member has been harmed because some, if not most, did purchase eggs that a reasonable consumer could only consider “pasture raised.” As such, the individual issues of injury will overwhelm any class proceeding. As to their claims based on “pasture raised,” the undersigned will not recommend certification.
2. “Ethical”
Plaintiffs identify three primary practices they contend are unethical: (1) beak tipping, (2) the killing or culling of male chicks just after birth, and (3) end of life depopulation. Plaintiffs argue the use of the term “ethical” is misleading in light of Vital Farms' practices. Plaintiffs argue a jury should decide what “ethical” means and whether Vital Farms' practices are ethical.
The farms that Vital Farms contract with obtain their hens from hatcheries, where hens are hatched from eggs. Resp. Exh. 7 (Gregg Decl.) ¶ 7. Vital Farms does not operate the hatcheries. Male chicks are culled at the hatcheries because there is no commercially viable use for them. Id. The culling of male chicks is an industry-wide practice not limited to hatcheries used by Vital Farms' farmers. Id. The hatcheries used by Vital Farms' farmers use culling methods that are considered humane by applicable veterinary standards and by the American Veterinary Medical Association. Id. There is currently no viable alternative to culling male chicks in the U.S. See id.
A few days after they hatch, the female hens are moved to pullet houses, where they grow for approximately 17 weeks until they are moved to family farms. Id. at ¶ 8. Before August 2022, hens' beaks were tipped or trimmed at either the hatchery or pullet house. Id. Since August 2022, hens' beaks are trimmed at the hatchery. Id. Beak tipping is another industry-wide practice because otherwise hens will peck at one another, injuring or killing each other. Id.
The hens spend about 76 weeks on the family farms. Id. at ¶ 9. As hens age, their eggs shells become thinner, their eggs become larger and thinner, their rate of egg production slows, and it can become painful for them to lay eggs. Id. Eventually, the flock becomes so much less productive that it must be replaced with a younger flock. Id. Vital Farms' farmers are responsible for depopulating their flocks, within the guidelines of the Pastured Egg Producer Agreements and the Vital Farms and certifying bodies' standards. Id. Family farms depopulate their flocks sometimes themselves through euthanasia and sometimes give or sell the hens to third parties, who either euthanize the hens or use them for other purposes such as being slaughtered for pet food. Id.
Vital Farms contends these are industry-wide practices for which there are no viable commercial alternatives, and it uses the most humane processes available. See Resp. Exh. 7 (Gregg Decl.) at ¶¶ 7-9. Vital Farms also asserts that it uses ethical business practices. Class Cert. Hrg. Exh. 1 at 10 (screenshot from Vital Farms website). It is a Certified B Corporation, which means it meets certain levels of social and environmental performance, accountability and transparency. Resp. Exh. 7 (Gregg Decl.) ¶ 4. Vital Farms is also a Delaware public benefit corporation, which means it is required by law to pursue a public benefit and to operate in a responsible and sustainable manner, on top of its traditional business objectives. Resp. Exh. 7 (Gregg Decl.) ¶ 4. Plaintiffs alleged that “Vital [Farms] markets itself as an ethical company that treats animals in an ethical, humane, and transparent manner.” See Compl. ¶ 1 (emphasis added). The text portion of screenshot Vital Farms' website states:
Bringing Ethical Food to the Table
Our mission is to bring ethical food to the table. We do everything we can to improve the lives of people, animals, and the planet through food. Whether it's giving the girls outdoor access, supporting family farmers, enabling you to trace your eggs back to the farm, or setting the record straight in the egg aisle, you can always trust that Vital Farms is Keeping it Bullsh*t Free. Our eggs and butter from family farms are delicious, ethical food you don't have to question.Class Cert. Hrg. Exh. 1 at 10. Vital Farms argues there are many ways consumers understand the word “ethical.” It can be understood to refer to Vital Farms' treatment of the hens and/or it can be understood to refer to Vital Farms' business practices.
Finally, Vital Farms argues “ethical eggs” is not predominately displayed on its egg cartons and not all cartons contain the phrase. Vital Farms contends there is no way to determine which customers purchased eggs in cartons that contained the phrase.
Plaintiffs put forth no evidence of what the individual Plaintiffs believed “ethical” to mean. Nor did they put forth any evidence that class members would have a consistent meaning of the term. Nor is there any evidentiary support for the definition of “ethical” that Allenby used in his survey. He defined “ethical” as meaning “the company takes care of its chickens, without inflicting unnecessary pain. For example, the company does not use artificial methods to force hens to lay more eggs than they naturally would. They do not have the birds' beaks trimmed. When young hens start laying fewer eggs than the company wants, they don't have them killed. And, they don't have male chickens killed when they hatch.” Class Cert. Mtn. Exh 12 (Allenby Report) at 11-13. Plaintiffs simply assert that a jury should determine what the term means to a reasonable consumer.
In contrast, Vital Farms put forth evidence that only 51% of survey respondents attached any meaning to the term. Class Cert. Resp. Ex. 28, Simonson ¶¶ 48-49 and Table 12. Moreover, only 8.4% of the 51% of respondents who gave the term any meaning defined the term as “cruelty free” and “no abuse,” which was the closest any definition came to one used by Plaintiffs' expert. Id. ¶ 49 and Table 13.
The evidence demonstrates that it is highly likely that the majority of class members have not have suffered an actual injury by Vital Farms' use of the word “ethical.” Plaintiffs' hope that a jury may disagree with Vital Farms' use of the term “ethical” is not enough to certify a class. Plaintiffs have failed to show their proposed classes should be certified under Rule 23(b)(3).
Additionally, in light of Vital Farms' evidence, the court has serious concerns as to whether “ethical” can have a sufficient definite meaning to warrant the term going to a jury.
The undersigned's previous R&R addressing this issue was based solely on the Complaint and the legal arguments presented. The court has now been enlightened by Vital Farms' survey evidence and expert reports. Moreover, Plaintiffs are attacking industry-wide practices for which there are no viable alternatives. Under Plaintiffs' theory, no commercial egg company can use the term “ethical” because modern commercial egg production is inherently unethical.
D. Ascertainability
The existence of an ascertainable class of persons to be represented by the proposed class representative is an implied prerequisite of Rule 23. John v. Nat'l Sec. Fire & Cas. Co., 501 F.3d 443, 445 (5th Cir. 2007). “[T]o maintain a class action, the class sought to be represented must be adequately defined and clearly ascertainable.” DeBremaecker v. Short, 433 F.2d 733, 734 (5th Cir. 1970)(per curiam). Courts traditionally refuse to certify classes that are “amorphous” or “imprecise.” John, 501 F.3d at 445 & n.3. Ascertainability is required for both Rule 23(b)(2) and (3) classes. Braidwood Mgmt., Inc. v. Equal Emp. Opportunity Comm'n, 70 F.4th 914, 933 n.36 (5th Cir. 2023); DeBremaecker, 433 F.2d at 734 (requiring ascertainability in a Rule 23(b)(2) class action).
1. Pasture Raised
For all the reasons discussed above about “pasture raised” under Rule 23(b)(3), none of the proposed classes are sufficiently ascertainable to certify a class under Rule 23(b)(3) or (b)(2) on any claim based on the “pasture raised” representation.
2. Ethical
For the reasons discussed above about “ethical” raised under Rule 23(b)(3), none of the proposed classes are sufficiently ascertainable to certify a class under Rule 23(b)(3) or (b)(2) on any claim based on the “ethical” representation. It will be impossible to determine which class members have standing to assert their claims.
Rule 23(b)(2) permits class actions for declaratory or injunctive relief where “the party opposing the class has acted or refused to act on grounds generally applicable to the class.” FED. R. CIV. P. 23(b)(2); Amchem Prod., Inc. v. Windsor, 521 U.S. 591, 614 (1997).
Vital Farms argues Plaintiffs waived certification of a Rule 23(b)(2) class because they have failed to brief it. Plaintiffs dispute this. Despite asserting in their motion that they seek certification for the proposed classes under Rule 23(b)(2), the entirety of their argument as to Rule 23)(b)(2) is made in a single sentence: “Rule 23(b)(2)'s criteria are also satisfied, because common issues of law or fact predominate and can be resolved through common evidence through proof of a reasonable objective standard.” Class Cert. Mtn. at 21; see also Id. at 5-6. Plaintiffs argue their Rule 23(b)(2) arguments are subsumed within their other arguments. But the undersigned has found that Plaintiffs' proposed classes should not be certified under Rule 23(b)(3), and Plaintiffs have made no arguments that the classes should nonetheless be certified under Rule 23(b)(2). As stated above, Plaintiffs have not shown any Rule 23(b)(2) class would be ascertainable.
F. Conclusion
At the hearing, Plaintiffs argued that they have a right to test their claims. However, they have no right to test their claims as a class. See Sampson, 83 F.4th at 418 (improper certification “can coerce a defendant into settling on highly disadvantageous terms regardless of the merits of the suit”). Plaintiffs have not met Rule 23's requirements. Id. (“District courts must ‘rigorously' consider Rule 23's prerequisites”). They have failed to show the likelihood of injury or liability on a class-wide basis or that an injured class is ascertainable. Moreover, even if they had satisfied those requirements, they have failed to show any classwide means of determining damages. Accordingly, the undersigned will recommend that Plaintiffs' motion for class certification be denied.
V. Conclusion
If the District Judge adopts the undersigned's recommendations as to Vital Farms' summary judgment motion and Plaintiffs' class certification motion, this case will be limited to the following individual claims:
Count I-Breach of express warranty under Texas law brought by Plaintiff Andrada;
Count II-Common law fraud/fraud by omission under Texas law brought by Plaintiff Andrada;
Count III-Texas DTPA under Texas Business & Commerce Code §§ 17.41, et seq. brought by Plaintiff Andrada;
Count IV-California unfair competition, under the California Consumers Legal Remedies Act (“CLRA”), Cal. Civ. Code §17500; California Unfair Competition
Law (“UCL”), Cal. Bus. & Prof. Code §17505; and California False Advertising Law (“FAL”), Cal. Bus. & Prof. Code §17508, brought by Plaintiff Kierman; Count I-Breach of express warranty under California law, Cal. Civ. Code § 1792 to 1795.8, brought by Plaintiff Kierman;
Count V-Florida DTPA under Fl. St. §501.211(2), brought by Plaintiff Vossen;
Count VI-Michigan Consumer Protection Act under Mich. Comp. Laws Ann. § 445.903(1). brought by Plaintiff Usler;
Count VII--New York DTPA under New York General Business Law §§ 349(a) and 350-a brought by Plaintiffs Sankowich and Karaca.
This claim was not presented in the motion for class certification, nor was it addressed in Vital Farms' summary judgment motion. Accordingly, the undersigned assumes it is still a live claim.
However, the undersigned has serious concerns that any Plaintiff can demonstrate an injury sufficient to confer standing as to any claim based on the “pasture raised” representation.
V. Recommendations
For the reasons stated above, the court RECOMMENDS that Defendant Vital Farms, Inc.'s Motion for Summary Judgment (Dkt. 115) be GRANTED IN PART AND DENIED IN PART. Specifically, the undersigned recommends Plaintiffs Tanze and Godze be DISMISSED WITH PREJUDICE and the New York, Florida, and Michigan express warranty claims and be DISMISSED WITH PREJUDICE. The court RECOMMENDS the motion otherwise be DENIED WITHOUT PREJUDICE.
The court further RECOMMENDS that Plaintiffs' Motion to Certify Class (Dkt. 125, 147) be DENIED.
Finally, the court GRANTS Vital Farms' Motion to Exclude and Strike the Report of Dr. Greg Allenby (Dkt. 151).
VI. Objections
The parties may file objections to this Report and Recommendation. A party filing objections must specifically identify those findings or recommendations to which objections are being made. The District Court need not consider frivolous, conclusive, or general objections. See Battles v. United States Parole Comm'n, 834 F.2d 419, 421 (5th Cir. 1987).
A party's failure to file written objections to the proposed findings and recommendations contained in this Report within fourteen (14) days after the party is served with a copy of the Report shall bar that party from de novo review by the District Court of the proposed findings and recommendations in the Report and, except upon grounds of plain error, shall bar the party from appellate review of unobjected-to proposed factual findings and legal conclusions accepted by the District Court. See 28 U.S.C. § 636(b)(1)(C); Thomas v. Arn, 474 U.S. 140 (1985); Douglass v. United Services Automobile Ass'n, 79 F.3d 1415 (5th Cir. 1996) (en banc).