Class Action Defense Cases–In re ConAgra: Georgia Federal Court Denies Class Certification Motion Holding Proposed Products Liability Class Action Lacked Typicality And Failed Predominance And Superiority Test

Sep 1, 2008 | By: Michael J. Hassen

Class Action Seeking Economic and Personal Injury Damages Resulting from Sale of Contaminated Peanut Butter not Entitled to Class Action Certification because Rule 23(a)’s Typicality Test and Rule 23(b)(3)’s Predominance/Superiority Test not Satisfied Georgia Federal Court Holds

Numerous individual and class action lawsuits were filed against ConAgra arising out of peanut butter contaminated with Salmonella. The Judicial Panel on Multidistrict Litigation consolidated the various individual and class action lawsuits in the Northern District of Georgia, after which a master class action complaint was filed that sought to represent two nationwide classes: (1) purchasers of peanut butter “rendered unusable and valueless” by ConAgra’s recall, and (2) consumers of contaminated peanut butter who suffered personal injury. by the February 14, 2007 recall of such peanut butter.” In re ConAgra Peanut Butter Products Liab. Litig., ___ F.Supp.2d ___ (N.D. Ga. July 22, 2008) [Slip Opn., at 3-4]. The class action complaint sought to recover damages under an “unjust enrichment” theory with respect to the first class, and personal injury damages as to the second class. Id., at 4. Plaintiffs moved the district court to certify the litigation as a class action; the district court denied the motion. Id., at 1.

The event itself was uncontested: the FDA issued a warning concerning ConAgra’s peanut butter in February 2007, and by May 2007, the Center for Disease Control had confirmed that 628 people in 48 states had been infected by Salmonella-tainted peanut butter, and more than 70 people required hospitalization. In re ConAgra, at 1-2. ConAgra recalled all of the potentially-contaminated products. Testing revealed that less than 2% of the jars contained Salmonella, but ConAgra “offered full refunds to all purchasers of recalled peanut butter.” Id., at 3. The district court noted that the recall “received a lot of publicity” and that there was “widespread participation in the refund program.” Id. Specifically, by January 2008 ConAgra had “refunded $2,984,308.68 directly to consumers, representing 941,302 jars of peanut butter” and had “reimbursed retailers $30,665,293.00 for inventory that was in the retailers’ possession at the time of the recall or for product returned to the retailers by customers.” Id.

After summarizing the standard governing certification of class actions, see In re ConAgra, at 4-6, the district court noted that defense attorneys challenged only Rule 23(a)’s typicality requirement for class action certification and Rule 23(b)(3)’s superiority requirement for class action certification, id., at 6. The threshold question as to typicality involved choice of law, with plaintiffs arguing that Georgia law applied to the unjust enrichment claims because the master class action complaint had been filed in the Georgia federal court following pretrial coordination by the Judicial Panel on Multidistrict Litigation, and defense attorneys insisting that the separate laws of each of the transferor states must be applied to the class action claims. Id., at 7-9. Ultimately, the district court agreed with the defense and concluded that the various substantive laws of the transferor courts must be applied to the class action claims. And the district court found that the parties had implicitly conceded that this finding alone would defeat class action treatment of the litigation. See id., at 12-13.

With respect to the superiority test, defense attorneys argued that individual issues predominate over common questions of law or fact. In re ConAgra, at 16. As the federal court explained, “Under Rule 23(b)(3), common questions of law or fact must predominate. In a nationwide class, variations in state law may swamp any common issues and defeat predominance.” Id., at 17. In this case, the defense argued that numerous individual issues existed as to the manner in which the various states would handle the class action’s unjust enrichment claims. See id., at 17-20. The district court found that plaintiffs “downplayed” the significance of these differences, id., at 20-21. In point of fact, there are “important variances” in state laws, going to such issues as “state of mind, the effect of implied warranties, and direct benefit requirements,” and these differences demonstrate that common issues of law do not predominate. Id., at 21. Plaintiffs simply ignore these differences, but the district court held at page 21, “Whether treated as a predominance question or a manageability question, this is fatal to the quest for certification of a purchaser class.” Moreover, with respect to class action treatment of the personal injury class, Eleventh Circuit authority holds that “the combination of significant individualized questions going to liability and the need for individualized assessments of damages precludes Rule 23(b)(3) certification.” Id. (citation omitted). Finally, the district court concluded that the voluntary efforts undertaken by the company weighed heavily against a finding that class action treatment was the “superior” means of redressing any wrong suffered by the “purchaser class” proposed in the class action complaint, see id., at 30.

We do not detail plaintiffs’ creative efforts to avoid the lack of typicality, the lack of commonality and the lack of superiority identified by the district court. In the end, the district court held that plaintiffs failed to meet their burden to secure class action certification under Rule 23, and denied plaintiffs’ motion. See id., at 33.

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