53 Cal.App.5th 938
Cal. Ct. App.2020Background:
- Ken’s Foods labeled three salad dressings with prominent olive‑oil references on the front panel (e.g., “Made with Extra Virgin Olive Oil”); the products actually contained much larger proportions of other oils.
- In June 2017 respondents Skinner and Kenney sent a pre‑suit demand to Ken’s seeking removal of the olive‑oil claims and other relief; a neutral evaluator later concluded the CLRA/FAL/UCL claims likely had merit.
- After the evaluator and during settlement discussions Ken’s created an internal “Label Update Scope” presentation and then removed the olive‑oil claims from the three labels between January–March 2018.
- Respondents filed a class action in April 2018 under the CLRA, FAL, and UCL; they later dismissed the suit after Ken’s represented the label changes were permanent and moved for catalyst attorney fees under Code Civ. Proc. §1021.5.
- The trial court found (applying Tipton‑Whittingham) that respondents’ lawsuit was a catalyst for Ken’s label changes, had merit, and that respondents made reasonable settlement efforts, and awarded $387,593 in fees and $15,771 in costs.
- Ken’s appealed arguing respondents were not a “successful party” and the fee award violated public policy; the Court of Appeal affirmed.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| 1) Were respondents a “successful party” eligible for catalyst fees under §1021.5? | Respondents: lawsuit was a substantial catalyst for the label changes and sought injunctive relief (the primary objective). | Ken’s: label changes were motivated by industry trends/avoidance of litigation, not respondents’ suit; respondents mainly sought money. | Court: affirmed — respondents were a successful party; suit was a substantial factor motivating the change. |
| 2) Did the lawsuit have merit (not frivolous)? | Respondents: front‑label olive‑oil claims were likely to deceive a reasonable consumer. | Ken’s: labels were literally true; consumers should read ingredient list on back. | Court: affirmed — questions of deceit were grave/difficult; reasonable‑consumer standard supports merit. |
| 3) Did respondents reasonably attempt to settle pre‑litigation? | Respondents: June demand letter, case evaluation, multiple mediation offers — all rejected by Ken’s. | Ken’s: initial $250,000 fee demand showed a shakedown and unreasonable settlement posture. | Court: affirmed — respondents made adequate pre‑suit demands and settlement attempts. |
| 4) Is a catalyst fee award inconsistent with public policy? | Respondents: enforcement of consumer‑protection laws conferred public benefit; fee award furthers that policy. | Ken’s: awards encourage frivolous suits and chill defendants. | Court: affirmed — award consistent with public policy given public benefit and litigation history. |
Key Cases Cited
- Tipton‑Whittingham v. City of Los Angeles, 34 Cal.4th 604 (defines catalyst fee test under §1021.5)
- Graham v. DaimlerChrysler Corp., 34 Cal.4th 553 (broad view of “successful party” and catalyst analysis)
- Folsom v. Butte County Assn. of Governments, 32 Cal.3d 668 (focus on impact of action over form of resolution)
- Williams v. Gerber Prods. Co., 552 F.3d 934 (reasonable consumer not required to check fine‑print ingredient lists)
- Colgan v. Leatherman Tool Group, Inc., 135 Cal.App.4th 663 (reasonable‑consumer standard applied to labeling claims)
- Brady v. Bayer Corp., 26 Cal.App.5th 1156 (front‑panel claims cannot be negated by back‑panel fine print)
- Kasky v. Nike, Inc., 27 Cal.4th 939 (reasonable‑consumer standard for FAL/UCL claims)