Skinner v. Ken's Foods, Inc.

53 Cal.App.5th 938

267 Cal.Rptr.3d 869

Erikka SKINNER et al., Plaintiffs and Respondents,

v.KEN'S FOODS, INC., Defendant and Appellant.

2d Civil No. B299907

Court of Appeal, Second District, Division 6, California.

Filed August 21, 2020

Sheppard, Mullin, Richter & Hampton, Andre J. Cronthall and Angela Reid, Los Angeles, for Defendant and Appellant.

Robins Kaplan, Glenn A. Danas, Los Angeles, Syliva R. Ewald; Clarkson Law Firm, Ryan J. Clarkson, Shireen M. Clarkson and Bahar Sodaify, Los Angeles, for Plaintiffs and Respondents.

TANGEMAN, J.

Code of Civil Procedure ¹ section 1021.5 permits a trial court to award attorney fees to a "successful party ... in any action [that] has resulted in the enforcement of an important right affecting the public interest." This includes an action in which there has been no " ‘judicially recognized change in the legal relationship between the parties.’ " ( Tipton-Whittingham v. City of Los Angeles (2004) 34 Cal.4th 604, 608, 21 Cal.Rptr.3d 371, 101 P.3d 174 ( Tipton-Whittingham ).) So long as the plaintiff's lawsuit was a catalyst motivating the defendant to change its behavior, an attorney fee award may be permitted.

Ken's Foods, Inc., appeals from the trial court's order granting a motion for attorney fees. Ken's contends: (1) the court mischaracterized Erikka Skinner and Ann Kenney (collectively, Respondents) as "successful parties" entitled to a catalyst fee award, and (2) the fee award is inconsistent with public policy. We affirm.

FACTUAL AND PROCEDURAL HISTORY

In 2017, Ken's sold over 200 different salad dressings, including two varieties of Greek dressing, 10 varieties of Italian dressing, and six varieties of vinaigrette. One each of the Greek, Italian, and vinaigrette varieties contained olive oil as an ingredient. To distinguish these dressings from the others, Ken's highlighted the ingredient on the front label of the bottle: the Greek dressing was made with "imported olive oil," the Italian with "extra virgin olive oil," and the vinaigrette with "olive oil" and "extra virgin olive oil."² The Greek dressing contained 28 percent vegetable oil and seven percent olive oil; the Italian contained 23 percent vegetable oil and three percent extra virgin olive oil; and the vinaigrette contained 24 percent canola oil, 17 percent olive oil, and 11 percent extra virgin olive oil.

Skinner purchased a bottle of Ken's vinaigrette in 2017. She noted that the label on the neck of the bottle said, "Made with Extra Virgin Olive Oil." She understood this to mean that the dressing was made primarily or exclusively with extra virgin olive oil. She bought the dressing because she likes the taste and health benefits of olive oil.

Kenney bought bottles of Ken's Greek and Italian dressings in 2017. She noted that the front labels on the bottles of these dressings mentioned olive oil and no other oil. She understood this to mean that the dressings contained only, or at least mostly, olive oil. She purchased the dressings in reliance on the front labels’ references.

In June 2017, Respondents served a prelawsuit notice and demand on Ken's, claiming that its salad dressing labels were deceptive. Respondents demanded that Ken's "[r]emove all false and misleading claims from the labels and packaging of the [dressings ]" and "[r]emove all references in the advertising to any and all false and misleading claims." They also demanded that Ken's establish a fund to refund its ill-gotten gains and pay $250,000 in attorney fees, $2,000 to each Respondent, and costs.³ Ken's rejected these demands.

The following month, the parties submitted the matter to a retired judge for neutral case evaluation. In October, the judge concluded that Respondents could likely show that Ken's conduct was deceptive, as required for a successful claim under the Consumers Legal Remedies Act (CLRA; see Civ. Code, § 1750 et seq. ). He also concluded that Respondents would likely be able to establish liability pursuant to the False Advertising Law (FAL; see Bus. & Prof. Code, § 17500 et seq. ) and Unfair Competition Law (UCL; see Bus. & Prof. Code, § 17200 et seq. ) because Ken's "cherry-picked olive oil as an ingredient to display on the front label," which was "likely to deceive" consumers. The FAL and UCL claims could likely be certified as class actions, but class certification of the CLRA claim would prove difficult since damage assessments pursuant to that theory required individualized inquiries.

After receiving the case evaluation, Respondents proposed submitting the case to the evaluator for mediation. Ken's declined. Respondents then invited Ken's to engage a different mediator. Ken's requested two weeks to consider this, and asked Respondents to refrain from filing their lawsuit in the interim. Respondents agreed. On November 15, Ken's told Respondents that it was "not prepared to make any offer of settlement" and would "vigorously defend [itself] against any and all claims."

That same day, Ken's executives drafted a Microsoft PowerPoint presentation entitled "Label Update Scope," which discussed several issues with its salad dressing labels. One slide read: " ‘Made with’ claim litigation[:] Highlighting an ingredient on the main panel when it is not the predominant ingredient in comparison to other similar classifications of ingredients used in that product (Oils, Cheese, Sweeteners). " (Original italics.) Another noted that imported olive oil was not the predominant oil in Ken's Greek dressing.

Another said that extra virgin olive oil was not the "first oil" in the Italian dressing. Another noted that canola oil was the predominant oil in the vinaigrette. Respondents’ then-anticipated lawsuit was referenced several times throughout the presentation, as were similar lawsuits that had been brought against other salad dressing manufacturers.

Ken's executives met in December to discuss possible label changes. They decided to remove the "Made with Extra Virgin Olive Oil" claim from the vinaigrette and remove mention of "Imported Olive Oil" from the Greek dressing. These changes went into effect in January and March 2018, respectively.

Respondents were unaware of these decisions when they filed a class action complaint against Ken's in April 2018, alleging violations of the CLRA, FAL, and UCL. For the CLRA claim, Respondents asserted that Ken's "false and misleading labeling and advertising should be enjoined due to its false, misleading, and/or deceptive nature." For the FAL claim, they sought an order "enjoining [Ken's] from continuing to engage, use, or employ their practice of falsely advertising that the [dressings ] are olive oil dressings." For the UCL claim, they sought an order "enjoining [Ken's] from continuing to engage, use, or employ their practice of advertising the sale and use of the [dressings ] in the manner alleged herein." They also sought class certification, punitive damages, and attorney fees.

Ken's demurred to the complaint. The trial court overruled the demurrer, finding it "entirely reasonable" that a front label stating that a dressing was made with olive oil—without mentioning any other oil—could lead a reasonable consumer to believe that olive oil makes up a significant portion of the oil in the dressing. The court rejected Ken's argument that the consumer should be " ‘expected to look beyond a misleading representation on the front of the [bottle] to discover the truth from the ingredient list in small print on the [back].’ " (Quoting Williams v. Gerber Prods. Co. (9th Cir. 2008) 552 F.3d 934, 939-940 ( Williams ).)

In August, Respondents received responses to their discovery requests and learned that Ken's had removed the reference to extra virgin olive oil from the vinaigrette label and the reference to imported olive oil from the Greek dressing label. Upon learning of these changes, Respondents offered to discuss settlement with Ken's. Ken's rejected the offer. Respondents proposed settlement discussions again in November, but Ken's again refused.

At a December deposition, a Ken's vice president said that the company began to discuss relabeling its dressings a year earlier. He admitted that Respondents’ lawsuit was a factor in the decision: "Certainly was a discussion point. It wasn't the only factor ... [b]ut it was part of the conversation."

He also admitted that Respondents’ lawsuit led, in part, to the PowerPoint presentation, and that the suit was referenced in the presentation. He maintained, however, that Ken's decided to relabel its salad dressings because of the "time and energy" that litigation requires and a "concern about frivolous lawsuits."

At another December deposition, a Ken's employee said that the company was in the process of removing references to olive oil from its salad dressing labels, including the "made with extra virgin olive oil" claim from its Italian dressing. He confirmed that Ken's began to discuss the label changes in late 2017. He said that the company "was aware of the nature of claims being made against other manufacturers," and that it wanted to "avoid[ ] potential litigation." Respondents’ lawsuit helped prompt the company to implement the label changes.

After the depositions, Respondents sought to determine whether the label changes to the three dressings would be permanent. At a February 2019 hearing, Ken's told the trial court that they would be. Five days later, Respondents emailed Ken's, noting that their "primary litigation objective ... [was Ken's] cessation of the ‘made with olive oil’ claims from the labels of the three [dressings ] at issue." In light of the representation that the label changes were permanent, Respondents’ claims for injunctive relief appeared to be moot. They stated their willingness to either settle the case or file a motion for catalyst fees.

When Ken's rejected the offer to discuss settlement, Respondents moved for a catalyst fee award. The trial court denied Respondents’ motion without prejudice because the case had not yet...