Food Supplement Class Action Cannot Pivot to Equitable Claims, 9th Cir. Holds

A false advertising class action against the creators of Joint Juice ended Wednesday with a ruling against the class but a lengthy discussion of equitable remedies in the 9th Circuit. The class, led by plaintiff Kathleen Sonner, initially sought damages under California’s Unfair Competition Law (UCL), only to drop the damages claim in lieu of equitable restitution.

Sonner claimed that Joint Juice failed to provide the health benefits touted in its associated marketing materials. She asserted the materials stated that Joint Juice “nourishes cartilage, lubricates joints, and improves joint comfort.” For four years, Sonner followed the normal channels of litigation for the claimed false advertising: “took discovery, engaged in motion practice, and prepared for the looming jury trial.” Two months before the trial, Sonner dropped her class action for $32,000,000 in lieu of equitable restitution in the same amount. The sudden switch in legal remedies sought led Judge Bade, author of the opinion, to describe the behavior as clearly motivated with a “singular and strategic purpose” of trying “this class action as a bench trial rather than to a jury.”

The sudden change in legal strategy ended unsuccessfully for Sonner as the lower court not only granted the defendant a motion to dismiss as California state law allowed for damages, but subsequently denied Sonner a motion to amend the claim to refile the original sought-after damages. The lower court reasoned that “allowing Sonner to reassert the intentionally dropped claim under such circumstances would reflect ‘total prejudice to the court system,’ would be ‘unfair’ and ‘prejudicial’ to [the defendant], and would constitute an ‘abuse of the court system.’”

On appeal, Sonner argued that state (not federal) equity law governed, as the case based itself in federal diversity jurisdiction. As a result, Sonner proffered, the district court erred in not allowing the claim for equitable restitution to proceed as the “California Legislature abrogated the state’s inadequate-remedy-at-law doctrine for claims seeking equitable restitution under the UCL.” Judge Bade disagreed, holding that based on federal equity principles originating with the Erie Railroad and Guaranty Trust Supreme Court cases, “regardless of whether California authorizes its courts to award equitable restitution under the UCL…when a plain, adequate, and complete remedy exists at law, we hold that federal courts rely on federal equitable principles before allowing equitable restitution in such circumstances.” This, the court concluded, means that “because Sonner fails to demonstrate that she lacks an adequate legal remedy in this case, we affirm the district court’s order dismissing her claims for restitution.”