Debbie Krommenhock, et al., v Post Foods, LLC, Case No. 3:16-cv-04958-WHO, Class Certification Ruling March 9, 2020
Judge William H. Orrick, United States District Judge in Northern California US District Court, granted class certification in a California class action brought by consumers against Post Foods, LLC, manufacturer of consumer breakfast cereals. Conjoint surveys designed by expert Steven P. Gaskin, supported by Applied Marketing Science (AMS), played a key role in that decision.
Plaintiffs allege that 31 varieties of Post cereals, including Raisin Bran and Honey Bunches of Oats, had boxes which contained a mix of statements that are false and misleading. Specifically, plaintiffs allege that numerous statements on the products violate three California consumer protection statutes—the Unfair Competition Law (UCL), False Advertising Law (FAL), and Consumers Legal Remedies Act (CLRA)—in that it is false or misleading for Post to make health and wellness claims on the cereals given the high level of added sugar in each of those products. Notably, the added sugar comprises calorie levels that “fall well above the … daily limits endorsed by authoritative sources and supported in the scientific literature.”
In support of their allegations, plaintiffs put forth a “Consumer Impact/Price Premia” conjoint survey-based model to assess classwide impact and damages. As the basis of that model, Mr. Gaskin “conducted nine conjoint surveys to estimate ‘the price premia … caused by the presence of the affirmative misrepresentations on boxes of Post Great Grains, Honey Bunches of Oats Regular, Whole Grain, and Granola, Raisin Bran, Bran Flakes, Honeycomb, Alpha-Bits, and Waffle Crisp, meaning the difference in the value of these cereals or granola with the affirmative misrepresentations [of health and wellness claims] compared to the value of these cereals or granola without the affirmative misrepresentations.’” “The resulting price premia, for each alleged misrepresentation, on each of the Products tested by Gaskin, ranged from $0.00 to $0.51.”
Judge Orrick noted that “a significant argument in support of Post’s opposition to class certification as well as its motion for summary judgment is that [plaintiffs’ model is] … inherently faulty, do[es] not ‘fit’ plaintiffs’ theory of the case, and do[es] not capture on a classwide basis plaintiffs’ potentially recoverable damages….” Further, Post sought to exclude the Gaskin conjoint study and price premia determinations because “the surveys make no attempt to prove classwide impact” and “the surveys measure consumers’ willingness to pay, not market price which are distinct concepts,” among other reasons.
In granting class certification, however, Judge Orrick ruled that “plaintiffs’ Consumer Impact/Price Premia Model ’fits’ plaintiffs’ theory of liability and is reliable and admissible for purposes of proving classwide damages.” He concluded that “plaintiffs have met the requirements of Rule 23(a) and (b)” and “The Consumer Impact Model and damages calculations … are sufficient to support class certification and oppose the motion for summary judgment.”