Case 1:15-cv-13556-LTS Document 48 Filed 06/09/16 Page 1 of 15 UNITED STATES DISTRICT COURT DISTRICT OF MASSACHUSETTS ) JOSEPH DEMMLER, Individually and ) On Behalf of All Others Similarly Situated, ) ) Plaintiff, ) ) v. ) Civil No. 15-13556-LTS ) ACH FOOD COMPANIES, INC., ) ) Defendant. ) ) MEMORANDUM AND ORDER ON MOTION TO DISMISS, OR ALTERNATIVELY FOR SUMMARY JUDGMENT (DOC. NO. 14) June 9, 2016 SOROKIN, J. Plaintiff Joseph Demmler (“Demmler”) brings this action, individually and on behalf of all others similarly situated, against Defendant ACH Food Companies, Inc. (“ACH”), stemming from allegedly false labeling ACH placed on bottles of barbecue sauce. ACH filed this Motion to Dismiss, or Alternatively for Summary Judgment, Doc. No. 14, which Demmler opposed. Doc. No. 22. ACH filed a Reply Brief, Doc. No. 25, the parties filed supplemental briefings reflecting developments in relevant case law, Doc. Nos. 32, 34, 38, 41, 44, and the Court held a hearing on the motion. Doc. No. 47. After careful consideration of the parties’ briefs and arguments, the motion is ALLOWED. I. LEGAL BACKGROUND ACH features both jurisdictional and merits-based arguments in support of its motion. See Doc. 15. Regarding jurisdiction, ACH argues that its “unconditionally tendered payment of $75” to Demmler mootedthis case. Id.at 12-13. Because the Court must satisfy itself that Case 1:15-cv-13556-LTS Document 48 Filed 06/09/16 Page 2 of 15 Article III jurisdiction exists before examining the merits, Redfern v. Napolitano, 727 F.3d 77, 82 (1st Cir. 2013), the Court addresses the jurisdictional dispute first. As Federal Rule of Civil Procedure 12(b)(1) provides “[t]he proper vehicle for challenging a court’s subject-matter jurisdiction,” including on mootness grounds, Valentin v. Hosp. Bella Vista, 254 F.3d 358, 362-63 (1st Cir. 2001), the Court analyzes ACH’s motion under the 12(b)(1) standard. And because ACH’s motion “involves factual questions, the court engaged in a two-part inquiry.” Torres-Negron v. J & N Records, 504 F.3d 151, 162 (1st Cir. 2007). “First, the court must determine whether the relevant facts, which would determine the court’s jurisdiction, also implicate elements of the plaintiff’s cause of action.” Id. at 163. Here, they do not. Whether Demmler’s claims are moot depends on factual issues irrelevant to Demmler’s ability to provehis underlying claims. Because “the facts relevant to the jurisdictional inquiry are not intertwined with the merits of the plaintiff’s claim,” the Court proceeds to the second step of the 12(b)(1) inquiry. See id. These inquiries “permit[] (indeed, demand[]) differential factfinding,” and “the court must address the merits of the jurisdictional claim by resolving the factual disputes between the parties.” Valentin, 254 F.3d at 363. And “[i]n conducting this inquiry, the court enjoys broad authority to order discovery, consider extrinsic evidence, and hold evidentiary hearings in order to determine its own jurisdiction.” Id.; see alsoTorres-Negron, 504 F.3d at 163 (noting that “the trial court may proceed as it never could under [Federal Rule of Procedure] 12(b)(6) . . . . Because at issue in a factual 12(b)(1) motion is the trial court’s jurisdiction—it’s very power to hear the case—there is substantial authority that the trial court is free to weigh the evidence and satisfy itself as to the existence of its power to hear the case.” (quoting Lawrence v. 2 Case 1:15-cv-13556-LTS Document 48 Filed 06/09/16 Page 3 of 15 Dunbar, 919 F.2d 1525, 1529 (11th Cir. 1990))). Having describedthe relevant legal framework, the Court now turns to the relevant facts. II. FACTUAL BACKGROUND The parties do not dispute the facts pertinent to the mootness inquiry. ACH has manufactured, marketed, and sold Weber BBQ Sauces in five different flavors: Original BBQ Sauce, Buzz’N Honey BBQ Sauce, Hickory Smoke BBQ Sauce, Real Molasses BBQ Sauce, and Kick’N Spicy BBQ Sauce (the “Products”). Doc. No. 1 ¶ 2. The bottles “prominently display[] the words ‘All Natural’ in large font on the front bottle of every Product sold in Massachusetts and throughout the United States.” Id. ¶ 4. ACH also “showcased the Products’ ‘All Natural’ labeling, [and] has also emphasized the ‘All Natural’ claim in its descriptions” on its website. Id. Notwithstanding these “All Natural” labels, the Products contain caramel color. Id. ¶ 3. Demmler “purchased the Products in December 2014 based on [ACH]’s representations that the Product was ‘All Natural.’” Id. ¶ 34. He believed that the “All Natural” label “mean[t] that the Products did not contain any ingredients or additives that would render the Product ‘unnatural,’” and the “All Natural” designation was material to Demmler’s purchase decision. Id. ¶ 35. Demmler alleges that the presence of caramel color rendered the Products “not ‘All Natural.’” Id. ¶ 37. On June 4, 2015, Demmler’s attorney sent ACH a Demand for Relief Pursuant to M.G.L., Chapter 93A, § 9(3). Doc. No. 17-1 at 1. The letter was from both Demmler individually and “as a representative of a class of all persons similarly situated.” Id. The letter alleged that the Product’s “All Natural” labeling violated Massachusetts law, specifically various provisions under Mass. Gen. Laws ch. 93A. Id. at 2-3. The letter then provided an itemized “Demand for Relief.” Id. at 4. These demands included compensation to Demmler and Class members for 3 Case 1:15-cv-13556-LTS Document 48 Filed 06/09/16 Page 4 of 15 actual damages (of the greater of money spent on Product purchases or statutory damages of $25.00), modification of the Products’ labeling, and reimbursement for costs and attorneys’ fees. Id. On June 19, 2015, ACH’s attorney responded to the letter by tendering a $75 check. Doc. No. 17-2. The letter stated that “ACH is willing to offer” a refund, andcharacterized the check as “the extent of [ACH’s] willingness to compromise in the circumstances.” Id. However, the letter imposed no conditions or restrictions on the check it enclosed, either in the letter or on the face of the check. Id.1 Demmler’s attorney then replied on July 2, 2015. Doc. No. 17-3 at 1. He rejected the check on the grounds that ACH offered relief only to Demmler, and not to the class as well. Id. The parties continued to exchange letters, see Doc. Nos. 17-4, 17-5, until November 3, 2015, when ACH’s attorney again wrote to Demmler’s attorney to say that Demmler’s rejection of the $75 check mooted his case, and that ACH would move for dismissal of Demmler’s lawsuit (which he filed on October 13, 2015, see Doc. No. 1). Doc. No. 17-6 at 1. This letter included a second, new, $75 certified check. Id.; see id. at 2 (a copy of the certified check). ACH sent this check, like the first, without condition or restriction. See id. Finally, Demmler’s attorney responded to that letter—and the check that came with it—on November 9, 2015. Doc. No. 17-7 at 1. Just like he did four months prior, Demmler’s attorney rejected the $75 check on the grounds that it provided relief only to Demmler individually, and not on behalf of the class. The next day, November 10, 2015, ACH filed the instant motion to dismiss. See Doc. No. 14. III. DISCUSSION 1 While some of the letter’s language may have suggested a conditional offer to resolve the parties’ dispute, the Court finds that ACH’s unrestricted delivery of the check to Demmler was in fact an unconditional payment. 4 Case 1:15-cv-13556-LTS Document 48 Filed 06/09/16 Page 5 of 15 Demmler brings two claims for relief-a ch. 93A claim, Doc. No. 1 at 11, and an unjust enrichment claim. Id. at 14. He itemizes his prayer for relief as follows: a. Certification of the Class under Federal Rule of Civil Procedure 23 and appointment of Plaintiff as representative of the Class and his counsel as Class counsel; b. Actual or statutory damages, whichever results in a greater recovery, and multiple damages; c. Restitution and disgorgement of Defendant’s revenues or profits to Plaintiff and the members of the proposed Class as permitted by applicable law; d. Statutory pre-judgment and post-judgment interest on any amounts; e. Payment of reasonable attorneys’ fees and recoverable litigation expenses as may be allowable under applicable law; and f. Such other relief as the Court may deem just and proper. Id. at 15.2 Nowhere in the Complaint does Demmler seek a declaratory judgment or injunctive relief, perhaps because ACH has represented—from its initial response to the first 93A demand letter through its papers on the motion to dismiss—that it discontinued the products at issue prior to receiving the initial 93A demand letter. See, e.g., Doc. No. 17-2 at 1 (noting, in response to Demmler’s June 4, 2015 letter that ACH has “discontinued use of the challenged ‘all natural’ statement effective October 2014”); Doc. No. 17-5 at 1 (elaborating on ACH’s discontinuance of the challenged labeling in a June 19, 2015 letter to Demmler); Doc. No. 16 ¶ 4 (same, in an affidavit filed in conjunction with ACH’s motion); Doc. No. 15 at 14 (arguing that “ACH decided to remove the ‘all natural’ labeling from the Sauces nearly a year beforesuit was filed and eight months prior toreceipt of plaintiff’s demand letter”) (emphasis in original). ACH argues that its $75 check to Demmler afforded him triple the “statutory damages requested (and allowed) under Chapter 93A § 9(3); a sum greater than any monetary relief theoretically available on the facts alleged; and an amount equal to the purchase price of at least 2 Because Demmler does not seek punitive damages, the Court need not here resolve what impact such a request would have on the mootness issue. 5 Case 1:15-cv-13556-LTS Document 48 Filed 06/09/16 Page 6 of 15 20 bottles (or roughly 3 cases, and then some) of the Sauces in question.” Doc. No. 15 at 12. Consequently, ACH posits that its “tender of payment mooted Demmler’s individual and class restitution claims.” Id. at 13. Demmler does not assert that he, individually, is entitled to more money than this. See Doc. No. 22. Rather, he both characterizes the tender as an offerof settlement which he did not accept, and contends that the tender failed to provide relief for the class. See id. at 11-14. Accordingly, Demmler argues, the case is not moot. Id. “A case becomes moot . . . only when it is impossible for a court to grant any effectual relief whatever to the prevailing party. As long as the parties have a concrete interest, however small, in the outcome of the litigation, the case is not moot.” Campbell-Ewald Co. v. Gomez, 136 S. Ct. 663, 669 (2016) (internal citations and quotations omitted).3 In looking at whether such concrete interests exist even after ACH tendered the $75 check, the Court first addresses Demmler’s individual claims, before proceeding to the class claims. A. Individual Claims Notwithstanding Demmler’s assertions otherwise, the $75 check did not represent a settlement offer—ACH sent the check unprompted, and did not impose any preconditions on Demmler for doing so. This distinction makes all the difference. The Supreme Court’s latest foray into the mootness doctrine was Campbell-Ewald. That case involved a class action against a government contractor, Campbell-Ewald, who allegedly sent Navy recruitment text messages in violation of the Telephone Consumer Protection Act 3 At oral argument, ACH, drawing a distinction between standing and mootness, assertedthat its first check redressed Demmler’s alleged injury, thereby precluding any standing on his part to bring this case, while the second check, delivered after Demmler filed suit, rendered Demmler’s then-live claim (if the first check somehow failed) moot. For purposes of resolving the present motion, the Court need not resolve any potential differences. Both checks unconditionally provided Demmler $75 and therefore, in the text, the Court refers, unless expressly noted otherwise, only to ACH’s payment of $75 without distinguishing between the two checks. 6 Case 1:15-cv-13556-LTS Document 48 Filed 06/09/16 Page 7 of 15 (“TCPA”). See id. at 666-67. Before the plaintiff, Jose Gomez (“Gomez”) had filed a motion for class certification, the defendant contractor “proposed to settle Gomez’s individual claim and filed an offer of judgment pursuant to Federal Rule of Civil Procedure 68.” Id. at 667. The offer both provided Gomez with all the damages he was entitled to and included “a stipulated injunction in which [Campbell-Ewald] agreed to be barred from sending text messages in violation of the TCPA.” See id. at 667-68. Gomez did not accept the offer, and it lapsed after fourteen days, as Rule 68 provided. Id. at 668. Campbell-Ewald then filed a 12(b)(1) motion, arguing that “[n]o Article III case or controversy remained . . . because its offer mooted Gomez’s individual claim by providing him with complete relief.” Id. The Court disagreed, and held that “an unaccepted settlement offer or offer of judgment does not moot a plaintiff’s case.” Id. at 672. The Court relied heavily on both the law of contracts and the specifics of Rule 68, nothing that Campbell-Ewald’s offer, “once rejected, had no continuing efficacy,” and that “[a]bsent Gomez’s acceptance, [Campbell-Ewald’s] settlement offer remained only a proposal, binding neither Campbell nor Gomez.” Id. at 670. “In short,” the Court concluded, “with no settlement offer still operative, the parties remained adverse; both retained the same stake in the litigation they had at the outset.” Id. at 670-71. While the Court held unambiguously that an unaccepted Rule 68 offer of judgment does not moot a case, it went no further, reciting that this “ruling suffices to decide this case.” Id. at 672. The dissenting judges, to that extent, agreed, noting “[t]he good news . . . that this case is limited to its facts.” Id. at 683 (Roberts, C.J., dissenting). Indeed, the Court specifically did not “decide whether the result would be different if a defendant deposits the full amount of the plaintiff’s individual claim in an account payable to the plaintiff, and the court then enters judgment for the plaintiff in that amount.” Id. at 672. Accordingly, Campbell-Ewald does not 7 Case 1:15-cv-13556-LTS Document 48 Filed 06/09/16 Page 8 of 15 defeat ACH’s motion. And because ACH did actually tender full relief to Demmler, this Court cannot offer Demmler individually any more relief on his underlying claim than ACH provided when it tendered the $75 check. This dynamic served to moot the case. SeeBais Yaakov of Spring Valley v. ACT, Inc., 798 F.3d 46, 54 (1st Cir. 2015) (“In many cases involving damages in a certain amount as the only remedy, delivery of a bank check might get around the infirmities in using a Rule 68 offer.”); see also South Orange Chiropractic Ctr., LLC v. Cayan LLC, No. 15- 13069-PBS, 2016 WL 1441791, at *5 (concluding that “th[e] named plaintiff no longer ha[d] the requisite ‘live claim’ because Defendant ha[d] offered to deposit a check with the court, to satisfy all of Plaintiff’s individual claims (and more), and to have the district court enter judgment in Plaintiff’s favor.”).4 Several other points bear consideration. First, Demmler’s refusal to accept the $75 is immaterial. The question under Article III is whether a live case or controversy exists, and the mere fact that Demmler did not accept unconditionally-provided remediation does not extend the life of the dispute. SeeCampbell-Ewald, 136 S. Ct. at 671 (citing California v. San Pablo & Tulare R. Co., 149 U.S. 308 (1893), Little v. Bowers, 134 U.S. 547 (1890), and San Mateo Cty. v. S. Pac. R. Co., 116 U.S. 138 (1885) for the proposition that “actual payment of the taxes for which suit was brought . . . had fully satisfied the asserted tax claims, and so extinguished them.”).5 4 While ACH did not go as far as to actually deposit the $75 check in an account payable to Demmler, this is a distinction without a difference. ACH delivered the check to Demmler (or, more precisely, his attorney), entitling him to full possession of the $75. That sufficed to fully redress him for any claim he had to that money. 5 This in part explains the differing treatment of a settlement offer and an unconditional remedy for the injuries a Plaintiff suffers. A defendant might condition, for example, satisfaction on the Plaintiff’s agreement to avoid litigation over whether the claim has become moot. In such a circumstance, the offer, like a Rule 68 offer, does not render the case moot, because that Plaintiff’s harm is remedied only if it agrees to the mootness determination. 8 Case 1:15-cv-13556-LTS Document 48 Filed 06/09/16 Page 9 of 15 Second, unlike the hypothetical on which Campbell-Ewald reserved (and which Chief Judge Saris reached in South Orange Chiropractor), Demmler does not seek the issuance of judgment for the plaintiff. However, another Supreme Court case, Already, LLC v. Nike, Inc., 133 S. Ct. 721 (2013), precludes the lack of a judgment from serving to keep alive an otherwise- moot claim. Already involved litigation over trademarks between Nike and Already, two athletic footwear companies. See 133 S. Ct. at 725. Nike sued Already for trademark infringement, Already counterclaimed that Nike’s trademark was invalid, and then, “four months after Already counterclaimed, Nike issued a ‘Covenant Not to Sue.’” Id. Nike subsequently voluntarily dismissed its claims with prejudice and moved to dismiss Already’s invalidity counterclaim on mootness grounds, which Already contested. Id. The Court noted that Nike’s Covenant was, by its terms, “unconditional and irrevocable,” id. at 728, and that “Already’s only legally cognizable injury—the fact that Nike took steps to enforce its trademark—[wa]s now gone and, given the breadth of the covenant, c[ould not] reasonablybe expected to recur.” Id. at 732. Accordingly, the Court held that “the case is clearly moot.” Id. This conclusion, notwithstanding the district court’s failure to enter a judgment enjoining Nike from suing Already for trademark infringement (or indeed any prospective judgment against Nike at all), underscores the non- dispositive nature of the absence of a judgment. If anything, Demmler’s claim to a judgment is weaker than Already’s since, unlike Demmler (who seeks no prospective or declaratory relief), Already specifically counterclaimed for a declaratory judgment. Compare Doc. No. 1 ¶¶ 61, 66 withAlready, 133 S. Ct. at 725.6 6 Justice Alito, dissenting in Campbell-Ewald, made a similar observation regarding Already and the necessity of a judgment. See 136 S. Ct. at 685 n.3 (Alito, J., dissenting). 9 Case 1:15-cv-13556-LTS Document 48 Filed 06/09/16 Page 10 of 15 Third, Demmler makes some reference to the potential receipt of attorneys’ fees as a prevailing party as an additional source of this case’s viability. See Doc. No. 22 at 5 n. 2. However,Demmler’s “interest in attorney’s fees is . . . insufficient to create an Article III case or controversy where none exists on the merits of the underlying claim.” Lewis v. Cont’l Bank Corp., 494 U.S. 472, 480 (1990). While Lewis considered an attorneys’ fee award under § 1988, its analysis controls here given the similar structure of ch. 93A’s attorney’s fees provision. Compare 42 U.S.C. § 1988 (“In any action or proceeding to enforce [certain legislative provisions], the court, in its discretion, may allow the prevailing party . . . a reasonable attorney’s fee as part of the costs . . . .”) with Mass. Gen. Laws ch. 93A, § 9(4) (“If the court finds in any action commenced hereunder that there has been a violation of section two, the petitioner shall . . . be awarded reasonable attorney’s fees and costs incurred in connection with said action . . . .”). Bais Yaakovhas recognized another individual interest related to litigation expenses, the “interest in sharing attorney’s fees with other class members.” 798 F.3d at 49; see also id. at 49 n.2 (characterizing Roper as addressing, at least in part, “an individual interest” a plaintiff may have “in class certification and litigation”) (emphasis in original). Bais Yaakov noted that in Deposit Guar. Nat’l Bank v. Roper, 445 U.S. 326, (1980), “the [Supreme] Court held that the entry of judgment, over the putative class plaintiffs’ objections, of full payment on their individual claims after a motion for class certification had been denied ‘did not moot their private case or controversy,’ and that they could still appeal the denial of the certification motion.” Bais Yaakov, 798 F.3d at 49 (quoting Roper, 445 U.S. at 340). While “[t]he Court gave several possible reasons for its holding,” Bais Yaakov, 798 F.3d at 49, a later case, Genesis Healthcare Corp. v. Symczyk, 133 S. Ct. 1523 (2013), “has instructed . . . that the actual holding 10