Troy Lambert v. Nutraceutical Corp.

870 F.3d 1170, 2017 U.S. App. LEXIS 17923
CourtCourt of Appeals for the Ninth Circuit
DecidedSeptember 15, 2017
Docket15-56423
StatusPublished
Cited by26 cases

This text of 870 F.3d 1170 (Troy Lambert v. Nutraceutical Corp.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Ninth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Troy Lambert v. Nutraceutical Corp., 870 F.3d 1170, 2017 U.S. App. LEXIS 17923 (9th Cir. 2017).

Opinion

OPINION

PAEZ, Circuit Judge:

Federal Rule of Civil Procedure 23(f) allows a litigant to seek an interlocutory appeal of a district court’s order granting or denying class certification. This case is about whether and when the fourteen-day Rule 23(f) deadline may be tolled. In a matter of first impression for this court, we hold that the Rule 23(f) deadline is not jurisdictional, thus equitable exceptions apply. We therefore hold that a motion for reconsideration filed within the Rule 23(f) deadline will toll the deadline. Parting ways with some of our sister circuits, we further hold that additional equitable circumstances may also warrant tolling. As a result, we hold that the Rule 23(f) deadline was tolled here, when counsel for the lead plaintiff, within fourteen days of the district court’s decertification order, informed the court of his intention to seek reconsideration, explained his reasons for doing so, and the court set a date for filing the motion with which counsel complied. As for the merits of the Rule 23(f) petition, we hold that the district court abused its discretion in decertifying the class, and therefore reverse and remand.

I.

Lambert purchased “Cobra Sexual Energy,” an alleged aphrodisiac dietary supplement manufactured and marketed by Nutraceutical, which the Food and Drug Administration (“FDA”) had not approved. Labels on Cobra Sexual Energy boasted that it contained performance-enhancing herbs that would provide users with “animal magnetism” and “potency wood.” On the basis of these labels, Lambert believed that the product would enhance his sexual performance and increase the frequency with which he could engage in sexual activity. Had he known that the labels’ claims were false, he would not have purchased the product.

According to Lambert, Cobra Sexual Energy violated the FDA’s aphrodisiac drug rule because it claimed to increase sexual desire but had not been through clinical testing, as required by 21 C.F.R. § 310.528(c); nor had it received FDA approval, as required by 21 C.F.R. § 310.528(b). The product also failed to display prominently a disclaimer that it had not been evaluated by the FDA, in alleged violation of 21 U.S.C. § 343(r)(6)(C). Moreover, Lambert alleges that the supplement contained an ingredient, yohimbe, which is dangerous for certain persons in certain doses, yet the product label contained no warning of that risk.

Lambert brought a consumer class action for violations of California’s Unfair Competition Law (“UCL”) (Cal. Bus. & Prof. Code § 17200 et seq.), False Advertising Law (“FAL”) (Cal. Bus. & Prof. Code § 17500 et seq.), and Consumer Legal Remedies Act (“CLRA”) (Cal. Civ. Code § 1750 et seq.). Lambert brought his class action under Federal Rule of Civil Procedure 23(b)(3), which provides that a class may be certified if “questions of law or fact common to class members predominate over any questions affecting only individual members.”

The district court initially granted class certification on the basis of the full refund damages model. That model applies when a product is shown to be worthless, and damages may be calculated by multiplying the average retail price by the number of units sold. In granting class certification, the district court concluded that Lambert put forth a “tenable theory that monetary relief can be ascertained on a classwide basis ,.. [that] can be readily calculated using Defendant’s sales numbers and an average retail price.” The case was subsequently reassigned to a different district judge because the original judge retired. Discovery proceeded and closed. Nutra-ceutical then filed a motion for decertification of the class, upon which the newly assigned district judge held a hearing.

On February 20, 2015, the district court granted the motion to decertify. The district court found that Lambert’s full refund damages model was “consistent with his theories of liability.” The court proceeded to find, however, that Lambert “failed to provide the key evidence necessary to apply his classwide model for damages,” so common issues did not predominate. The district court required Lambert to provide the actual average retail price, and Lambert had provided only the suggested retail price.

During a March 2, 2015 status conference, ten days after the order decertifying the class, Lambert informed the court of his intention to file a motion for reconsideration. Counsel explained that he had a damages model and evidentiary support for it. The district court instructed Lambert to file the motion for reconsideration within ten days—i.e., within twenty days in total from the order decertifying the class.

As directed by the district court, ten days later, on March 12, 2015, Lambert moved for reconsideration and asked for recertification. In his motion for reconsideration, Lambert pointed to evidence he had presented in his class certification motion showing that the suggested retail price could be used in conjunction with other evidence to establish the full refund damages model. Lambert also argued for the first time that, as an alternative, he could prove damages through non-restitu-tionary disgorgement.

The district court denied Lambert’s motion for reconsideration three months later. The court rejected Lambert’s contention that the average retail price could be calculated from the suggested retail price. The district court also rejected Lambert’s non-restitutionary disgorgement argument, reasoning that he waived it by presenting it for the first time in his motion for reconsideration. The court proceeded to hold that even if Lambert had not waived the non-restitutionary disgorgement argument, it was improper under California law, as restitution should be measured by what the plaintiffs lost, not by what the defendants gained; in other words, the district court held, non-restitu-tionary disgorgement is not available under California law. 1 In addition to declining to recertify the class, the order set forth a plan for notifying the class regarding de-certification.

Within fourteen days of the order denying his motion for reconsideration, Lambert filed in this court a Rule 23(f) petition for permission to appeal the district court’s orders granting the motion for class decer-tification and denying the motion for reconsideration. Upon the filing of that petition, the district court stayed proceedings pending appeal. A motions panel of this court conditionally granted Lambert’s Rule 23(f) petition, instructing the parties “[i]n addition to all other issues thefy] wish to raise in their briefs in the appeal, [to] ... address the timeliness of this petition.”

II.

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Bluebook (online)
870 F.3d 1170, 2017 U.S. App. LEXIS 17923, Counsel Stack Legal Research, https://law.counselstack.com/opinion/troy-lambert-v-nutraceutical-corp-ca9-2017.