On June 17, 2020, the Ninth Circuit Court of Appeals issued a published opinion affirming the dismissal of a consumer class action seeking $32,000,000 against Venable client Premier Nutrition Corporation. The Court held that federal equitable principles must apply to class actions pending in federal court, even where state law rules the underlying causes of action. See Sonner v. Premier Nutrition Corp., No. 18-15890, 2020 WL 3263043 (9th Cir. June 17, 2020).
Plaintiff-Appellant Kathleen Sonner sued Premier on behalf of a class of California consumers claiming that Premier’s product, Joint Juice, did not provide its advertised joint health benefits. Sonner sought damages, restitution, and injunctive relief under the Consumer Legal Remedies Act (CLRA), as well as restitution and injunctive relief under California’s Unfair Competition Law (UCL).
On the brink of trial after more than four years of litigation, Plaintiff-Appellant Kathleen Sonner voluntarily dismissed her sole damages claim under the CLRA and chose to proceed with only her equitable claims for restitution and injunctive relief. As the Circuit noted, “a singular and strategic purpose drove this maneuver: to try the class action as a bench trial rather than to a jury. Indeed, Sonner continued to seek $32,000,000 on behalf of the consumers she represented, but as equitable restitution rather than as damages.” Id. at *1.
After Sonner amended her complaint, dropping her CLRA damages claim and vacating the jury trial, Premier moved to dismiss the restitution claims on the ground that Sonner could not establish that she lacked an adequate remedy at law as required by fundamental equitable principles under both federal and California law. The district court agreed, finding that equitable restitution claims brought under the UCL were subject to the traditional inadequate-remedy-at-law requirement. Because Sonner had an adequate remedy at law in the form of damages, she could not proceed with her UCL claim for restitution.
Sonner appealed, arguing that the California legislature abrogated the inadequate-remedy-at-law doctrine for equitable restitution claims under the UCL. However, the Ninth Circuit affirmed the dismissal and held that, under Erie Railroad Co. v. Tompkins, 304 U.S. 64 (1938) and Guaranty Trust Co. of New York v. York, 326 U.S. 99 (1945), federal courts must apply equitable principles (such as the inadequate remedy at law requirement) derived from federal common law to claims for equitable restitution under the UCL and CLRA, even if the state statutes might not require it. The Ninth Circuit explained that “[e]ven assuming California decided as a matter of policy to streamline UCL and CLRA claims by abrogating the state’s inadequate-remedy-at-law doctrine, the strong federal policy protecting the constitutional right to a trial by jury outweighs that procedural interest.” Sonner, at *5.
The appeal attracted significant attention, including a request by Plaintiff for certification to the California Supreme Court, which was denied, and an amicus curiae brief from the California Attorney General joining Plaintiff’s unsuccessful argument.
The published decision will have far-reaching impacts for virtually every consumer class action asserting claims for equitable restitution under state consumer protection statutes but pending in federal courts within the Ninth Circuit.