Wal-Mart Avoids Pet Food Class Action; Still Hates Dogs

A federal judge in Nevada has halted a class action against Wal-Mart and dog food manufacturer Menu Foods before it even had a chance to begin. His ruling held that the need for individual factual inquiries made a class action untenable. This isn’t completely surprising - the lawsuit was filed based on deceptive trade practices and claimed Wal-Mart’s Ol’ Roy pet food products were misleading in their labeling in that they claimed to be made in the USA, when in fact many ingredients came from China. The Judge argued that this meant everyone in the class would have had to purchase the food based on the misleading labeling, something that would have to be determined on a case-by-case basis. You can read the entire court order here.

While the decision wasn’t surprising, the timing might have been:

The judge’s decision was unusual in that he denied class certification before any substantial discovery had been performed. Indeed, the court noted that so-called preemptive motions are generally disfavored, since “the shape and form of a class action evolves only through the process of discovery.” However, the court determined that the class was untenable as a matter of law, and “it would be a waste of the parties’ resources and judicial resources to conduct discovery on class certification.”

So, not only will the class action not move forward, but no discovery will be done unless individual cases are filed - which means many of the facts as to how we ended up with such a far-reaching pet food scare will remain a mystery until then.

The Ol’ Roy suit was originally filed in 2007 and eventually consolidated with a class action in New Jersey which alleged that tainted food distributed by Menu Foods and others led to the death of hundreds of pets. That action consisted of over 100 suits that grew out of the largest pet food recall in U.S. history, and settled in April of last year for $24 million. The Ol’ Roy suit, however, was severed from the Menu Foods action prior to the settlement.

Wal-Mart Cuts Class Off at the Pass in Pet Food Case [Law.com]

San Francisco lawyers rescued Wal-Mart and a group of pet food manufacturers on Monday from a class action that could have led to millions of dollars in damages.

A federal judge in Nevada granted a motion by the defense to pre-emptively deny certification to a class of plaintiffs that would have spanned eight states (pdf), including California.

Squire, Sanders & Dempsey of counsel Evan Nadel, who with partner Mark Goodman represented Wal-Mart, said a pre-emptive motion is “particularly potent,” because it can eliminate exposure early on.

“My first impression was I really thought that was a huge stretch for them to get class treatment of a fraud claim,” said Nadel.

Typically, plaintiffs try to certify a class only after getting a chance to discover more facts about a case. But courts allow defendants to deny certification early on if the law simply wouldn’t support it.

Margaret Picus, a Nevada woman, filed a class action in state court against Wal-Mart and a group of food manufacturers in April 2007, alleging that they illegally labeled their pet food “Made inUSA,” though some ingredients were imported from China.

The previous month, the Food and Drug Administration had announced that certain pet food ingredients imported from China were sickening and killing cats and dogs.

The defense removed Picus’ class action to federal court, where she narrowed her claim to a violation of the Nevada Deceptive Trade Practices Act and similar laws in seven other states.

On Monday, U.S. District Judge Philip Pro of Nevada denied Picus class certification in Picus v. Wal-Mart Stores, 07-00682, ruling that subjective, individual issues made a class action the wrong way to handle the case.

Specifically, Pro wrote in his decision, the law requires the plaintiffs to prove that each person who bought the tainted pet food did so because it was labeled “Made in USA.”

Picus’ attorney, Norman Blumenthal, said Tuesday that Pro was acting as a “soldier for corporate America” and that his ruling makes it “open season on consumers.”

“We think the court is insensitive to the history of the law and the need for consumer protection,” said Blumenthal, of La Jolla, Calif.’s Blumenthal, Nordrehaug & Bhowmik. He said he is considering his options for appeal.

He said Pro had gone against California law by requiring that each potential class member show they relied on the “Made in USA” labeling to buy the product. “The issue is whether or not consumers as a group are likely to be deceived,” Blumenthal said.

Pro’s ruling discussed a California federal case that addressed the reliance issue, but drew a distinction between the yogurt purchases there and the pet food purchases.

When it comes to California’s Consumers Legal Remedies Act, the local statute mirroring the Nevada law, the issue of reliance is an open question, said Scott Pearson, a Los Angeles-based partner at Stroock & Stroock & Lavan who specializes in complex commercial litigation.

Pearson, who represents defendants in such cases, said most of the decisions on the issue have so far come from federal district courts or California appellate courts.

“I think that that’s something that is going to be the subject of a lot of litigation over the next couple of years,” he said.

Posted by Corey Himrod on Thursday, March 19, 2009

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