Background
A recently decided Ninth Circuit case provides additional guidance for defendants looking to challenge standing in consumer class actions. In, McGee v. S-L Snacks National, Plaintiff brought a putative class action asserting claims of unfair competition, nuisance, and breach of the implied warranty of merchantability arising from her contention that her popcorn brand of choice, Pop Secret from Diamond Foods, contained trans-fat. Even though trans-fat was a listed ingredient, Plaintiff argued that it caused her both economic loss and physical injury. The Ninth Circuit disagreed.
Analysis
The Ninth Circuit rejected Plaintiff's claims regarding her supposed economic injury largely due to the fact that the popcorn clearly listed trans-fat as an ingredient on its nutritional label. Under a benefit of the bargain theory, Plaintiff claimed that she was injured because she believed she was purchasing a safe product when, in fact, the popcorn contained "unsafe and unlawful ingredients." However, the court explained that Plaintiff's beliefs were immaterial where Plaintiff could not allege that Diamond made any false representations given its disclosure of trans-fat in its labeling. The Ninth Circuit similarly found Plaintiff's claims regarding economic injury unavailing under an overpayment theory. Even entertaining the possibility of an overpayment theory being viable absent a misrepresentation, the Ninth Circuit disregarded Plaintiff's arguments. The nutritional label plainly disclosed the presence of trans-fat and the health risks associated with consuming trans-fat had been well established. Therefore, the popcorn did not contain some hidden defect and was not worth objectively less than what Plaintiff paid for.
Turning to Plaintiff's allegations of physical injury, the Ninth Circuit found that Plaintiff's claims were too speculative to be actionable. Plaintiff alleged that she experienced immediate physical injury because there is no safe quantity for which one can consume trans-fat. The Ninth Circuit found that, even at the pleading stage, Plaintiff's failure to provide facts regarding medical testing, examination, or the like to confirm her supposed injuries was fatal to her claim. The Ninth Circuit found that Plaintiff's claim of future physical injury suffered the same defect. Simply claiming that consuming trans-fat substantially increased her risk of disease was not enough. Plaintiff's failure to tie this risk to the quantities that she consumed made her injury too remote.
Takeaway: Defendants should always look to whether a class action suit can be challenged on the basis of standing. The Ninth Circuit has signaled that even at the pleading stage, a plaintiff cannot get by with conclusory allegations. A plaintiff must adequately and specifically plead an injury in fact.
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