New federal UCL/CLRA decision: Chavez v. Blue Sky Natural Beverage Co.

In Chavez v. Blue Sky Natural Beverage Co., 2007 WL 1691249 (N.D. Cal. Jun. 11, 2007), Judge Conti dismissed UCL and CLRA claims alleging that the defendant falsely represented that its beverages were manufacturered and bottled in New Mexico. The Court rejected the plaintiff's argument that "he would not have purchased Blue Sky beverages had he known the truth about the geographic origin of the products" and that he "lost the full value of the price paid for each can or bottle of soda" (id. at *3):

In contrast to Daghlian [v. DeVry Univ., Inc., 461 F.Supp.2d 1121, 1153-57 (C.D. Cal. 2006)] and Laster [v. T-Mobile, 407 F.Supp.2d 1181, 1194 (S.D. Cal. 2005)], the Plaintiffs in this case suffered no injury or damages as a result of Defendants' conduct. Plaintiff did not pay a premium for Defendants' beverages because the drinks purportedly originated in Santa Fe, New Mexico. Accepting the facts as stated by Plaintiffs and drawing all inferences in their favor, Defendants' promise concerning geographic origin had no value and Plaintiffs have suffered no damages by purchasing beverages they thought were produced in New Mexico by a New Mexico-based company, but actually originated in California. As a result of Plaintiffs' failure to allege any damages under all four causes of action, Plaintiffs have no standing to pursue their claims against Defendants.

Id. at *4. In other words, the plaintiff got what he paid for (the soda). Perhaps the plaintiff would have fared better if he had sought only a portion of the soda's purchase price, rather than "the full value of the price paid." Under Colgan v. Leatherman Tool Group, Inc., 135 Cal.App.4th 663, 700 (2006), evidence of the “value of the consumer impact or the advantage realized by [the defendant]” is admissible to prove “the amount of restitution necessary to restore [the plaintiffs] to the status quo ante” (citing Korea Supply)). Evidently, Judge Conti thought that the alleged misrepresentation did not affect the soda's price and thus caused no harm as a matter of law.

UPDATE: On June 23, 2009, the Ninth Circuit reversed this decision in an unpublished memorandum opinion that reads, in part:

In summary, Chavez asserts that he purchased beverages that he otherwise would not have purchased in absence of the alleged misrepresentations. As a result, Chavez personally lost the purchase price, or part thereof, that he paid for those beverages. This is not a situation where, for example, Chavez never even purchased Blue Sky soda. .... We conclude that the district court erred by granting appellees’ motion [to dismiss].

Slip op. at 6-7.

Comments

[Seth Safier]

As one of the attorneys for the Plaintiff in this matter, we were, of course, very disappointed with Judge Conti's order. We believe that his decision was incorrect as a matter of fact and law. We intend to appeal.

[Steve]

It appears that the court did not see any harm to the plaintiff resulting from the misrepresentation. Did the plaintiff allege that bottling standards in New Mexico were unsafe causing a health hazard as opposed to clean facilities in California? Is the water in New Mexico polluted and the California water pure? Did the plaintiff get sick drinking a beverage bottled in New Mexico? How would the plaintiff's choice of the beverage be affected by production in California as opposed to New Mexico?

Even before prop 64 plaintiffs had to show some real or potential harm resulting from the alleged unfairly competitive act, even if the representative plaintiff did not personally suffer that harm.

I cannot judge this particular case because I do not know all the facts. However, Prop. 64 passed because the public believed that many class actions were frivolous and benefitted only the lawyers. The corporate interests based their campaign for Prop. 64 on reports of such cases to get this bad law passed.

As "UCL practitioners" I think we need to be very careful about the cases we file in order to avoid further restrictions on the important UCL remedies, and, as a practical matter, to avoid investing in unwinnable cases.

[Safier]

I am happy to report that Judge Conti's decision was reversed.