A putative class of workers employed by Benihana Inc. in its New York City-based Haru Restaurants has filed an unopposed motion for preliminary approval of an agreement that would resolve claims that the company did not pay employees all the pay to which they were entitled and did not provide certain employees with valid tip credits. Lin v. Benihana Nat’l Corp., No. 10-1335 (S.D.N.Y., motion filed January 14, 2014). Under the agreement, the company would create a $600,000 settlement fund that would reimburse certain class members the full amount of their spread-of-hours premium and other members 80 percent of purported back pay due to an invalid tip credit. Under New York law, employees who work more than 10 hours during a work day are entitled to an extra hour of pay, referred to as spread-of-hours wages. Attorney’s fees and expenses would also be paid from the fund. Issue 510
Category Archives U.S. Circuit Courts
The Sixth Circuit Court of Appeals has determined that Kentucky has a rational basis for restricting the types of retailers that may be issued licenses to sell liquor and wine, thus ruling that the law does not violate grocers’ equal protection rights. Maxwell’s Pic-Pac, Inc. v. Dehner, Nos. 12-6056, -6057, -6182 (6th Cir., decided January 15, 2014). A state law adopted in 1939 that today prohibits the issuance of a retail drink license to “any business in which a substantial part of the commercial transaction consists of selling at retail staple groceries or gasoline and lubricating oil,” was interpreted in 1982 by the Alcohol Beverage Control Board in a regulation that defines “substantial part” (10% or greater of the monthly gross sales) and “staple groceries” (foods intended for human consumption other than soft drinks, candy, hot foods, and foods prepared for immediate consumption). Grocers challenged the restrictions on equal-protection, separation-of-powers…
Oregon Attorney General (AG) Ellen Rosenblum has reportedly filed an action in state court against the companies that make and promote 5-hour ENERGY®, a drink purportedly linked to adverse incidents including fatalities, seeking to enforce her demand for information about the product. The lawsuit against Innovation Ventures, Living Essentials and Microdose Sales, filed in Multnomah County Court, apparently seeks enforcement of the AG’s Civil Investigative Demand for information under the state’s Unlawful Trade Practices Act (UTPA). According to a news source, the AG says she has “reason to believe that respondents have made misleading statements regarding 5-hour Energy in three issue areas: (1) whether users experience ‘no crash’ when using the product; (2) a ‘Doctors Recommend’ advertising campaign; and (3) the product’s suitability for children, all potentially in violation of . . . the UTPA.” She seeks an order requiring the respondents to respond to her demand with unredacted documents,…
The U.S. Securities and Exchange Commission (SEC) has filed a complaint against Diamond Foods, Inc. and two former executives alleging that the company “materially misstated its financial results in multiple SEC Forms 10-Q, 10-K, and 8-K from at least February 2010 and ending in September 2011. In this timeframe, Diamond reported artificially inflated earnings per share that beat Wall Street earnings estimates on a quarterly and yearly basis.” SEC v. Diamond Foods, Inc., No. 14-0123 (N.D. Cal., filed January 9, 2014). Information about shareholder litigation involving the alleged price manipulation and financial misstatements at the root of the SEC’s complaint appear in Issue 464 of this Update. According to the SEC, Diamond Foods has agreed to pay $5 million to settle the charges, and former CEO Michael Mendes has agreed to a settlement. The claims against former CFO Steven Neil continue. SEC claims that increasing walnut prices and pressure to meet…
A federal court in California has granted in part the motion for summary judgment filed by Twinings North America in a putative class action alleging that the company misbrands its tea products by stating that they are a “Natural Source of Antioxidants” and “a natural source of protective antioxidants." Lanovaz v. Twinings N. Am., Inc., No. 12-2646 (N.D. Cal., order entered January 6, 2014). Regarding the plaintiff’s claims that the company’s labels imply protection from disease, the court found the product representations “too general to relate to a ‘health-related condition’” and thus dismissed these claims. As to causation, the issue was whether the plaintiff admitted in her deposition that she did not rely on the green tea and Earl Grey tea labels or the company’s website when making her purchasing decisions. The court refused to read her deposition transcript as narrowly as the company urged and found that the label…
A federal court in California has granted in part the motion for summary judgment filed by Bumble Bee Foods in a putative class action alleging that certain labeling claims either deceived consumers or violate state and federal law. Ogden v. Bumble Bee Foods, LLC, No. 12 1828 (N.D. Cal., order entered January 2, 2014). Information about the complaint is included in Issue 436 of this Update. The court agreed with Bumble Bee that the plaintiff failed to raise a genuine issue of material fact regarding her standing to pursue consumer-fraud claims based on the company’s purported statements about vitamin A and iron, because those statements were made on the nutrition information panel, which the plaintiff “does not claim to have read in connection with purchasing the product.” Other similar statements appeared on the company’s Website, and “Ogden concedes that she did not visit this website prior to purchasing the Sardines Mediterranean…
A federal court in California has dismissed with prejudice the second amended complaint in a putative class action alleging that Wrigley Sales Co.’s chewing gum and candy products are misbranded because the labels state that they are “sugar free.” Gustavson v. Wrigley Sales Co., No. 12-1861 (N.D. Cal., decided January 7, 2014). The court determined that the product labels do not violate federal regulations, the plaintiff failed to adequately plead her alleged regulatory violations, and the plaintiff “is attempting to impose a labeling requirement that is ‘not identical to’ federal requirements.” Thus the court ruled that the “sugar free” component of the complaint was preempted and any further amendment of the complaint would be futile. The court dismissed the remainder the complaint relating to the defendant’s alleged failure to disclose that the products “are sweetened with nutritive and non-nutritive sweeteners or to detail the percentage of the product that nonnutritive…
A federal court in Oklahoma has dismissed, without leave to amend, claims filed against the company that audited Jensen Farms before a 2011 Listeria outbreak sickened dozens of consumers, including the plaintiff, who allegedly contracted listeriosis from the strain linked to the farm’s cantaloupe and was hospitalized for a month. Underwood v. Jensen Farms, No. 11-348 (E.D. Okla., decided December 31, 2013). Auditor Primus Group, Inc. allegedly gave the farm a “superior” rating and 96-percent score after a July 25, 2011, audit, and the plaintiff became ill on September 2. The court determined that the plaintiff could not show that the auditor owed him a duty under Oklahoma law because “the connection between the July 25, 2011, audit and the onset of Plaintiff’s illness [was] too remote in both time and circumstance. Significantly, Plaintiff has failed to plead facts sufficient to establish that the contaminated cantaloupe would not have been…
A federal court in California has denied the plaintiff’s motion for class certification in a suit alleging that Ben & Jerry’s Homemade deceives consumers by using “all natural” on labels for ice cream, frozen yogurt and popsicle products that contain alkalized cocoa. Astiana v. Ben & Jerry’s Homemade, Inc., No. 10-4387 (N.D. Cal., decided January 7, 2014). Additional details about the lawsuit appear in Issue 366 of this Update. The action followed the court’s September 2012 denial of final approval for a class-action settlement in the case on the basis of issues raised by Dennis v. Kellogg, 697 F.3d 858 (9th Cir. 2012). Among other matters, the court agreed with the defendant that the plaintiff failed to establish that the class was ascertainable and that common issues predominate over individual issues. While the case was initially brought on behalf of a nationwide class of consumers, in its current posture, a…
Addressing a question of first impression, a California appeals court has dismissed a putative class action alleging that Herb Thyme Farms mislabeled its certified organically grown herbs as “USDA Organic” because the contents included a mix of organically and conventionally grown herbs. Quesada v. Herb Thyme Farms, Inc., No. B239602 (Cal. Ct. App., 2d Dist., Div. 3, decided December 23, 2013). According to the court, on appeal, the plaintiff changed her theory of liability from alleged violations of state consumer protection laws to violation of the California Organic Products Act of 2003, a federally approved state organic program. She cited Farm Raised Salmon Cases, 42 Cal. 4th 1077 (2008), to counter the trial court’s conclusion that her claims were preempted under federal law. Distinguishing Farm Raised Salmon Cases, the court was guided instead by Aurora Dairy Corp. Organic Milk Marketing & Sales Practices Litigation v. Aurora Organic Dairy, 621 F.3d 781…
