Page 14 - Complex Litigation

S14 | MONDAY, MAY 22, 2017 | Complex Litigation
| NYLJ.COM
Slack Fill
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the actual capacity of the container and the volume of the product contained therein.” Id. In other words, the empty space that is included in the container.
The FDA acknowledges that some slack ll is necessary and functional when packaging food and beverage products. To accommo- date those purposes, the regulation deems slack ll nonfunctional, and thus unlawful, only if it does not fall into one of six safe har- bor provisions. These provisions provide that slack ll is functional when: (1) it protects the contents of the package; (2) the machine can- not enclose the package without that empty space; (3) the empty space results from the product settling during shipment; (4) the package performs a speci c function that is communicated to the consumers, such as being used for consumption; (5) the container is reusable, is part of the presentation of the food, and has its own value, such as a gift product with a container designed to be used after consumption; or (6) the manufacturer cannot provide more product or make the package smaller for other legitimate rea- sons, such as to accommodate necessary food labels or to discourage theft. 21 CFR §100.100(a)(1)-(6). If any of the safe harbor provisions apply, then the slack ll is not misleading under the NLEA. If none of the safe harbor provisions apply, then the FDA considers the slack ll to be nonfunctional, and therefore misleading to the consumer in violation of the FDA regulations.
Pleading Slack Fill Claims
In these trending class actions, plaintiffs allege that the presence of nonfunctional slack ll not only violates the FDA regula-
Management
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entertain informal letter submissions or the like? Such procedures would conserve the resources of the parties and enable the judge to resolve disputes on an expedited basis.
(9) Whether a con dentiality order under Rule 26(c) or its state equivalent might the parties agree to? Such an order would protect information deemed by a party from disclo- sure to the public and could be “blanket” in nature and require only a certi cation that demonstrated good cause for protection. (Bear in mind, however, that such an agree- ment or order should only address discov- ery and not the sealing of led materials or proceedings).
(10) Whether the parties can reach agree- ment on the protection of attorney-client
tions, but also deceives consumers about the amount of product in the package in violation of various state consumer protection laws and false advertising laws. These claims invoke the FDA slack ll regulation and allege that, in violating these regulations, manufacturers are violating state consumer protection and advertising laws by misleading consumers. Typically, the plaintiff alleges that the con- sumers purchased a product in a package that contained nonfunctional slack ll and, expecting to receive more product than was contained therein, did not receive the bene t of the bargain for that purchase. See, e.g., Izquierdo v. Mondelez Int’l, No. 16-CV-04697 (CM), 2016 WL 6459832, at *7 (S.D.N.Y. Oct. 26, 2016). Dismissal of these cases indicates, however, the dif culty in both plausibly alleg- ing that the manufacturers violated the FDA regulations and that the plaintiffs, in turn, suffered an actual injury as a result.
First, plausibility pleading represents one hurdle for plaintiffs, at least in some New York federal courts. While some courts have found that mere allegations that the slack ll is nonfunctional under the FDA regula- tions is sufficient to meet the Twombly/ Iqbal plausibility pleading standard, other courts have rejected such basic pleading as the type of merely conclusory allegations barred under the standard. Compare Wald- man v. New Chapter, 714 F. Supp. 2d 398, 406 (E.D.N.Y. 2010) with Bautista v. CytoSport, No. 15-CV-9081 (CS), 2016 WL 7192109, at *4 (S.D.N.Y. Dec. 12, 2016). In Bautista, the plaintiff, on behalf of a putative class, alleged that the defendant had violated New York consumer protection laws because at least 30 percent of its containers of protein pow- der contained only “nonfunctional slack ll.” 2016 WL 7192109 at *4. The Bautista court held that plaintiffs would need to do more than make such conclusory allegations to state a claim, and must allege speci c facts
privilege or work product that might be inadvertently disclosed during discovery? Assuming that the privilege log required by Rule 26(b)(5)(A) or a state equivalent might encompass a large volume of materials, could the parties agree on categorical or truncated descriptions of the materials with disputes about designations presented to the judge for categorical rulings? Should nonwaiver agreements be entered into pursuant to Federal Rule of Evidence 502(e) or whatever state equivalent might exist and should that agreement be embodied into a 502(d) order? Such agreements and orders would protect against waiver by inadvertent production and establish a framework for resolution of any disputes that might arise.
(11) When might the parties think it appropriate to discuss settlement rather than continued litigation? Should groups of parties engage in settlement discussions at
in support of the nonfunctional nature of the slack ll. Bautista, 2016 WL 7192109, at *5. The court noted that while this burden may force plaintiffs to consult an expert at the pleading stages, plausibility pleading sometimes requires just that. Id.
Similarly, plaintiffs have encountered standing limitations in obtaining both injunc- tive relief and damages under New York con- sumer protection laws in the context of slack ll actions. The Izquierdo court found that plaintiff had no standing to seek injunctive relief where plaintiffs alleged a mere possibil- ity of future injury, because the plaintiff could simply choose not to purchase the allegedly deceptive product in the future. See, e.g., Izquierdo, 2016 WL 6459832, at *5 (holding that the plaintiff could not seek injunctive relief for sales of candy boxes with allegedly deceptive ll, under the U.S. Supreme Court’s ruling that a threat of possible future injury is insuf cient to provide standing for injunc- tive relief). That court also found that the plaintiffs lacked standing to bring a claim for damages under New York’s consumer protection laws, where the plaintiff alleged only that he would not have purchased the product if he had known how much product the package actually contained. Id. at *7. The Izquierdo court held that New York courts have rejected this “deception as injury” theory, stating that the plaintiff must show that he paid a higher price than he otherwise would have absent the alleged deception. Id.
Slack fill claims have largely survived beyond the motion to dismiss stage only when plaintiffs allege additional wrongdo- ing over and above the nonfunctional slack ll. For example, a California federal court denied a motion to dismiss for failure to state a claim against StarKist, where the plaintiff not only alleged that its tuna cans contained nonfunctional slack ll, but also alleged that the tuna cans were not lled in the method
different times? Would settlement discussions be appropriate before any discovery or after limited and focused discovery? Who should preside over settlement discussions? The judge, assuming he can t such discussions into his calendar? A mediator agreed to by the parties or selected by the judge? Agree- ment on the timing and scope of settlement discussions would allow the judge to balance the need to resolve the litigation with the practicality of allowing discussions—with or without stays of certain discovery to facilitate the discussions.
(12) When should dispositive motions be led? Might parties reach agreement on facts relevant to such motion practice? If discov- ery has been bifurcated and the judge is will- ing, should discovery of damages be stayed pending the outcome of the motions? Such agreements would facilitate the scheduling of motions by the judge and reduce brie ng
required by FDA regulations related to tuna. See Hendricks v. StarKist, 30 F. Supp. 3d 917 (N.D. Cal. 2014). The court found the allega- tions plausible where the plaintiff alleged in a veri ed complaint that he had sent cans for evaluation to an independent laboratory that corroborated his allegations of noncompli- ance with the FDA required method.
What Is Next?
Even as plaintiffs attempt to overcome these initial pleading hurdles, the incidence of slack ll litigation continues to rise. Ques- tions of the viability of these claims remain even if plaintiffs are able to move past the motion to dismiss stage. Most state consumer protection laws require a plaintiff to prove not only that he or she was deceived by a particular practice, but also that a reasonable consumer would nd the practice materially misleading. Though the FDA has said that a statement of net weight is insuf cient, on its own, to overcome a determination under the regulations that a package is misleading due to nonfunctional slack ll, the question remains whether courts will nd the same to be true when analyzing whether a reason- able consumer would be deceived by the package as required to assert a claim under many states’ consumer protection and false advertising laws. Courts may seek to apply a totality of the circumstances-type inquiry in this context, focusing on various data points available to the consumer at the time of pur- chase, including the statement of the net weight on a product package, in evaluating the viability of such claims. Both the plaintiffs’ and defense bars can expect to see greater clarity in coming years as slack ll litigation continues to either evolve, or merely be left behind in favor of the next big trend. For now, it’s still up in the air.
on issues as to which there is no genuine dispute of material fact.
This list of topics is not dispositive or exhaustive. Rather, it is intended to suggest approaches to topics that attorneys should think about when they engage in a Rule 26(f) conference among themselves and present agreements—or disagreements to the judge who will preside over an initial case manage- ment conference. Rule 26(f) should be seen as a means by which the judge, the attor- neys, and the parties can further the goal of Rule 1—“the just, speedy, and inexpen- sive determination” of a complex action. Of course, “just,” “speedy” and “inexpensive” are relative terms especially in the context of complex litigation. Nonetheless, there is no reason why attorneys cannot cooperate among themselves and assist the judge in scheduling and managing an action with multiple attorneys and parties.
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