This case is about coffee. Not just any coffee — it is about the individual coffee pods that are used in the popular Keurig eoffeeraakers. The Keurig system solved a problem with which coffee drinkers had struggled for years: how to make individual portions of fresh-brewed coffee in a tidy, flavorful, easy, and relatively inexpensive way. The defendants, Sturm Foods, Inc., and Treehouse Foods, Inc., wanted to enter the market for Keurig-eompatible pods once patent protection expired, but they jumped the gun in a way that the plaintiffs who hope to represent a class, believe was deceptive and in violation of the consumer protection laws of a number of states. The district court refused to certify the class, and then ruled against each of the named plaintiffs’ individual claims. We conclude that the court erred in its class certification decision; if its approach were correct, it would never be possible to certify a consumer class action because some individual proof is always needed. We also conclude that the court overlooked genuine issues of fact when it granted summary judgment against the individual plaintiffs We therefore reverse and remand for further proceedings.
I
Keurig coffee machines are one of the most popular single-serve coffeemakers on the market. To prepare a cup of freshly brewed coffee, the Keurig user need only drop a small pod (known as a K-Cup) filled with ground coffee into the machine, push a button, and wait a few moments. The machines are not only quick and easy to use; surveys show that its users appreciate the quality of the coffee they produce. According to the defendants’ marketing studies, Keurig machines are “premium branded products and consumers have the perception that they brew premium coffee in their machines.” For this union of convenience and quality, consumers shell out hefty sums for both the machine it-self and the K-Cups.
K-Cups, which are sold separately from the machines, are small plastic cartridges designed to be used exclusively with Keu-rig machines. The K-Cups are typically filled with an individual serving of ground coffee beans, although other hot beverages like cider, tea, and hot chocolate are also available. Until 2012 when its patent expired, only Keurig itself could make K-Cups with filters because Keurig held a patent over the K-Cup’s filter technology. Sturm Foods and its parent company Treehouse (collectively Sturm) badly wanted a piece of the Keurig market. Blocked from direct competition by the patent, Sturm turned to the substitute that is at the heart of this case. In 2010, it introduced a product that used the external K-Cup design but whose innards were entirely different. For starters, the Sturm cup did not contain any type of filter. In internal emails, Sturm’s executives discussed their plan to gain a first-mover advantage in the post-patent Keurig coffee market by selling the filter-less product before the patent’s expiration. One employee commented that by the time the Keurig patent expired, “Sturm will have been packaging and processing for 2 years.... During this time, we [will] have gained experience and improved packaging and production processes in areas where others will have yet to start.” Sturm marketed its product under the name Grove Square Coffee (GSC).
The lack of a filter created a quandary for Sturm: it made the use of fresh coffee grounds impossible. Sturm decided to put
The rest of the GSC packaging was mute about the true nature of the product, except insofar as it implied that these were genuine K-Cups like those Keurig users had come to expect. We have included some images of the GSC product packaging in an Appendix to this opinion. Those images show that like many of the premium Keurig coffee products shelved nearby, the front of the GSC paсkage contained an image of K-Cups with fresh roasted coffee beans and the admonition that the GSC product was intended “[f]or use by owners of Keurig© coffee makers.” As one Sturm executive admitted, the company “rearrange[d] the packaging operation to put [GSC] into a display like Keurig had on the shelf.” Its objective was to package the product “to look like the Keurig product in box style.”
The back of the package featured a number of representations about the product. A “quality promise” indicated that the coffee was “made with some of the world’s highest quality Arabica beans, roasted and ground to ensure peak flavor, then packaged to lock in optimum freshness.” It failed to add that, except for the trivial amount of “miсroground” coffee dusting the instant chunks, the coffee was no longer in the form of ground beans. One version of the package set forth a “Coffee Lover’s Bill of Rights,” which included the right to a “fresh, delicious cup.” Another version stated that its contents were “simply fresh, hot and delicious” and “recaptured [the] rich, traditional cup” that is “savored ... in neighborhood coffee shops.” At some point, Sturm added the word “instant” to the packaging, but the record is unclear whether this new package was ever distributed and, if so, how widely. Interestingly, the package also included this warning: “DO NOT REMOVE the foil seal as the cup will not work properly in the coffee maker and could result in hot water burns.” Except as a measure designed to ensure that the user did not view the true contents of the pod, this makes no sense: the presence or absence of a foil seal on top would have no effect on the risk of burns or the use of the cup.
Numerous expert surveys in the record concluded that few consumers understood the true nature of the GSC product. One of them, conducted by plaintiffs expert Robert L. Klein, attempted to recreate conditions of in-store buying by presenting participants first with a photograph of the GSC product on shelves near other Keu-rig-related products, and then presenting participants with images of the GSC box to look over for 30 seconds. Only 14% of participants in Klein’s study identified GSC’s product as containing instant coffee. Sturm’s own expert, George Mantis, employing a different methodology, found that only one in 151 test participants equated the term “soluble and microground” with the term “instant and microground.” Another expert, Bobby J. Calder, using
Sturm put a lot of money and thought into mаrketing GSC. In addition to following its consultants’ warning against using the term “instant coffee,” Sturm conducted focus-group testing to determine whether participants would notice anything amiss about GSC. One test comparing reactions to GSC and licensed Keurig K-Cups containing ground coffee and filters concluded that the participants did not “notice[ ] any difference between the single serve cups [ie., between the GSC product and licensed K-Cups] with respect to weight and none noticed [that] the [GSC] cup emitted a distinct rattle when shaken.” (Emphasis added.) Even when these differences were pointed out, participants “did not equate [those differences] with quality.” Sturm also priced GSC at near-premium levels, about 10% less than Keu-rig products. This had the dual benefit of reaping a high profit and forestalling consumer suspicions. As one executive admitted candidly, “If you actually got the price too low, people would perceive it as poor quality.” The plaintiffs’ expert Klein opined that the GSC product was “three to four times more expensive than the typical instant coffee that may be spooned into a cup of hot water” and that “only a very ‘price insensitive’ consumer, or one who was misled, would use a $100 brewer [ie., the Keurig machine] to heat water to make instant coffee.”
The public response after the release of GSC was awful. The day after the product started selling in Wal-Mart stores, Sturm emailed its employees to request that the legal department, not the quality control or sales department, be immediately informed about any complaints regarding GSC. One retailer, Discount Coffee, informed Sturm that “[GSC] has been the poorest performing introductory product that we have had in our 12 year history.” Several purchasers brought their complaints to the Better Business Bureau. Although a few comments were favorable, the vast majority were negative and many “extremely negative,” according to Tree-house’s general counsel. Customers who complained, including named plaintiff Deborah DiBenedetto, were told that GSC was “not instant coffee” but rather “a high quality coffee bean pulverized into a powder so fine that [it] will dissolve,” which was false except for the “microground” coffee that constituted less than 5% of GSC. (It also wrongly implied that coffee is made by dissolving ground beans in water; it is actually produced when hot water extracts oils and other solids from the ground coffee bean.) To mitigate the negative reviews, Sturm encouraged employees to write fictitious favorable reviews online; the marketing department even offered to supply the language.
II
Four separate consumer protection lawsuits, involving plaintiffs from four states who purchased GSC, were consolidated into the present action. Later the plaintiffs amended their complaint to add consumers from an additional four states. The plaintiffs sought to certify a class rep
We bеgin with the district court’s decision to deny class certification, as this will determine the proper scope of the ease, and then turn to the individual cases. We conclude that the court based its class determination on a misunderstanding of the correct legal approach and thus further proceedings are necessary. We also conclude that the court overlooked genuine issues of material fact on each of the individual claims.
A
The plaintiffs sought to certify the following class:
All persons or consumers that during the Class Period — from September of 2010, until and in eluding the present — purchased in Alabama, California, Illinois, New Jersey, New York, North Carolina, South Carolina, and Tennessee, Defendants’ [GSC] products. Excluded from the class are: (a) Defendants’ Board members of [sic] executive-level officers, including its attorneys; (b) persons or entities who purchased the [GSC] primarily for resale; (c) retailers or re-sellers of the [GSC]; (d) governmental entities; and (e) any consumer that already received a refund from Defendants.
In response to the district court’s concern that online purchasers of GSC may not be similarly situated to in-store purchasers, the plaintiffs later offered to exclude online purchasers. Our analysis presumes that these online purchasers have been excluded from the class.
We discern two errors in the district court’s decision to deny class certification. First, the court failed to recognize the question common to the claims of all putative class members: whether the GSC packaging was likely to mislead a reasonable consumer. See Fed.R.Civ.P. 23(a)(2); see also
Wal-Mart Stores, Inc. v. Dukes,
— U.S. -,
Rule 23(a)(2).
— One of the requirements for a class action in federal court is the existence of “questions of law or fact common to the class.” See Fed.R.Civ.P. 23(a)(2). The Supreme Court has explained that “for purposes of Rule 23(a)(2) even a single common question will do.”
Wal-Mart,
“What matters to class certification ... [is] the capacity of a classwide proceeding to generate commоn answers apt to drive the resolution of the litigation.”
Wal-Mart,
Where the same conduct or practice by the same defendant gives rise to the same kind of claims from all class members, there is a common questiоn. See
Pella Corp. v. Saltzman,
In this case, the plaintiffs’ claims and those of the class they would like to represent all derive from a single course of conduct by Sturm: the marketing and packaging of GSC. The same legal standards govern every class member’s claim; Sturm admits in its brief that “[a]ll of the applicable state consumer protection laws require proof that a statement is either (1) literally false, or (2) likely to mislead (either through a statement or material omission) a reasonable consumer.” See
Freeman v. Time, Inc.,
The district court agreed that “each state law consumer prоtection statute cited by Plaintiffs requires an objective showing that [Sturm] engaged in an unfair or deceptive act or practice.” It nevertheless found that there were no questions common to the class. In so doing, the court overlooked the fact that the question whether the GSC packaging was likely to deceive a reasonable consumer is common. The claims of every class member will rise or fall on the resolution of that question.
Cf. Amgen Inc. v. Conn. Ret. Plans & Trust Funds,
— U.S. -,
It may be helpful to pinpoint some of the ways in which the district court’s analysis of commonality veered off course. The court concluded, for example, that the class could not be certified because some class members may have purchased a later version of the GSC packaging that included the descriptive term “instant” and therefore were not subjected to the same Sturm conduct as other class members. But the fact that some people may have bought the new package does not diminish the fact that many others purchased and allegedly were deceived by the old package. Tens (perhaps hundreds) of thousands of the original packaging units already had been distributed by the time the packaging was altered. Moreover, the record is unclear how widely the new packaging was distributed; the plaintiffs cоntend its in-store distribution was minimal. As we have cautioned before, “[i]n circumstances such as these, involving minor overbreadth problems that do not call into question the validity of the class as a whole, the better course is not to deny class certification entirely but to amend the class definition as needed to- correct for the overbreadth.”
Messner v. Northshore Univ. HealthSys.,
The court was also mistaken to think that the proposed class could not be certified because it includes a “great number of members who for some reason could not have been harmed by the defendant’s allegedly unlawful conduct.” It did not cite any evidence in the record to support this assumption, which was squarely contradicted by the named plaintiffs’ affidavits. If the court thought .that no class can be certified until prоof exists that every member has been harmed, it was wrong. See
Parko v. Shell Oil Co.,
The cases on which the district court relied stand for a subtly different proposition that is not implicated here. If “a class is defined so broadly as to include a great number of members who for some reason could not have been harmed by the defendant’s allegedly unlawful conduct, the class is defined too broadly to permit certification.”
Messner,
From the record amassed for the class certification decision, it is apparent that this is not a case where few, if any, of the putative class members share the named representative’s grievance against the defendant. If it wеre, things would be different. A person whose claim is idiosyncratic or possibly unique is an unsuitable class representative. See
Falcon,
The question whether the GSC packaging was likely to mislead a reasonable consumer is common to the claims of every class member. (Note that this is an objective question, not one that depends on each purchaser’s subjective understanding of the package.) The district court abused its discretion in failing to recognize that this question satisfied the commonality requirement of Rule 23(a)(2). There may be other common questions, such as those related to Sturm’s scienter, but we leave determination of those issues under the proper standard to the district court on remand.
The district court concluded that individual issues overshadow whatever сommonality might exist because each class member’s claim may require individualized inquiries on causation. In support of ¡this conclusion, the court relied on a supposed rule that individual issues necessarily predominate “in eases requiring individual subjective inquiries into causality.” Or as the court put it elsewhere, “[t]he problem with the proposed class here is that showing reliance or causation — as required to establish liability — requires an investigation of each purchaser.” This was an error of law. See
Pella Corp. v. Saltzman,
Rule 23(b)(3) class actions are designed to “cover cases in which a class action would- achieve economies of time, effort, and expense, and promote uniformity of decision as to persons similarly situated, without sacrificing procedural fairness or bringing about other undesirable results.”
Amchern Prods., Inc. v. Windsor,
Every consumer fraud case involves individual elements of reliance or causation. As we commented in
IKO Roofing,
a rule requiring 100% commonality would eviscerate consumer-fraud class actions. And
In determining whether to certify a consumer fraud class, the court should begin with a “rigorous analysis” into whether the plaintiffs’ “damages are susceptible of measurement across the entire class.”
Comcast,
If damages can be estimated, the court next should examine the matters identified in Rule 23(b)(3). See
Amchem,
In this case, resolution of the merits may require costly survey evidence and expert testimony, along the lines plaintiffs have proffered for certification purposes, to prove the allegation that the GSC packaging was likely to misleаd a reasonable consumer. The district court might conclude on remand that the class device is superior, because no rational individual plaintiff would be willing to bear the costs of this lawsuit. See
Carnegie,
Finally, the court should assess whether the class allegations are “satisfied] through evidentiary prоof.”
Comcast Corp. v. Behrend,
— U.S. -, 133
Ultimately, the court -must decide whether classwide resolution would substantially advance the case. See
Butler,
All of that said, we are not holding that the district court must certify the class on remand. See
id. at
802;
IKO Roofing, supra,
at 603-04,
B
Finally, we turn to the district court’s grant of summary judgment against the eight putative class representatives. The court based its decision on the alternative grounds that the GSC packaging was not likely to mislead a reasonable consumer and, even if it were, none of the individual plaintiffs put forth evidence that he or she was deсeived. We review grants of summary judgment
de novo,
taking the facts in the light most favorable to the plaintiffs.
Thacker v. Menard, Inc.,
With respect to the misleading nature of the packaging, the district court had almost- nothing to say. This is it: “The Court has seen the packaging at issue— Plaintiffs bring it to each hearing — and finds that it is not designed to mislead consumers. It says what it is.” That is a conclusion, not a reason. 'It appears to assume that a package cannot be misleading if it does not contain literal falsehoods. But that is not the law. Moreover — ironically — it appears the district court itself was confused about the product: the court’s analysis reveals that it failed to understand that “soluble” coffee and “mi-croground” coffee are not the same thing.
All of the applicable state consumer protection laws at issue here may be satisfied
Our de novo review of the summary judgment record satisfies us that there are genuine questions of material fact in each of the individual casеs whether the GSC packaging was likely to mislead a reasonable consumer. Sturm consciously avoided use of the term “instant” and designed the package to resemble Keurig products; several of the plaintiffs testified that they were misled; the packaging contained numerous statements that implied the product was premium fresh (i.e. un-brewed) coffee; and the package did not explain that it was little more than instant coffee. At least three independent expert surveys, all employing different methodologies, found that consumers were confused about the product. A jury should have decided the question whether the packaging was likely to mislead reasonable consumers.
The district court’s analysis of each individual plaintiffs reliance on the alleged deception was also too hasty, and failed to take the facts in the light most favorable to the plaintiffs. In two short pages, the court zipped through all eight individual claims. Athough the court professed that the brevity of its order “[did] not reflect a mere surface analysis of the motion for summary judgment,” we cannot find more than that. A1 that is visible are some cherry-picked facts adverse to the plaintiffs, with no mention of the evidence favoring the plaintiffs’ claims.
Cf. Malin v. Hospira Inc.,
No. 13-2433,
The district court’s analysis of the other plaintiffs’ claims similarly “amounted to nothing more than selectively quoting deposition language it like[d] and ignoring deposition language it [did] not like.”
Id.
The court threw out McManus’s claim on the ground that he did not rely on the GSC package when he decided to purchase, but McManus testified to the contrary that he read the words on the package and purchased GSC in part based on the impressions he gathered from the packaging. The court dismissed Carr’s claims because
In short, the district court’s analysis failed to take the disputed facts in the light most favorable to the non-moving parties. The individual plaintiffs should not have had summary judgment entered against them.
Ill
In summary, we find that the district court abused its discretion when it denied class certification and granted summary judgment in the defendants’ favor on the individual claims. We VACATE the decision denying class certification, REVERSE the grants of summary judgment, and REMAND for further proceedings consistent with this opinion.
APPENDIX
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