Troy Lambert, on Behalf of Themselves and All Others Similarly Situated, Plaintiff-Appellant,
Nutraceutical Corp., Defendant-Appellee.
and Submitted March 9, 2017 Pasadena, California
from the United States District Court No. 2:13-cv-05942-AB-E
for the Central District of California André Birotte,
Jr., District Judge, Presiding
Gregory Weston (argued) and David Elliott, The Weston Firm,
San Diego, California; Ronald A. Marron, The Law Offices of
Ronald A. Marron APLC, San Diego, California; for
N. Feldman (argued) and John C. Hueston, Hueston Hennigan
LLP, Los Angeles, California; Jon F. Monroy, Monroy Averbuck
& Gysler, West Lake Village, California; for
Before: Richard A. Paez, Marsha S. Berzon, and Morgan
Christen, Circuit Judges.
Civ. P. 23(f) & 23(b)(3) / Class Certification
panel concluded that plaintiff's Fed.R.Civ.P. 23(f)
petition for class certification was timely filed with this
court; reversed the district court's order decertifying
the class; and remanded for further proceedings.
23(f) governs interlocutory appeals of "order[s]
granting or denying class-action certification, " and
requires that a petition for permission to appeal be filed
"within 14 days after the order is entered."
Fed.R.Civ.P. 23(f). The plaintiff filed his motion for
reconsideration twenty days after the district court
decertified the class.
panel held that the fourteen-day Rule 23(f) deadline was not
jurisdictional. Specifically, the panel that under Bowles
v. Russell, 551 U.S. 205 (2007), and Eberhart v.
United States, 546 U.S. 12 (2005), the Rule 23(f)
deadline was not jurisdictional because it was procedural,
did not remove a court's authority over subject matters
or persons, and was in the Federal Rules of Civil Procedure,
rather than in a statute.
panel held that because the Rule 23(f) deadline was not
jurisdictional, equitable exceptions, such as tolling, might
apply. The panel also held that a motion for reconsideration
filed within the Rule 23(f) deadline would toll the deadline.
panel held that the Rule 23(f) deadline could be tolled as a
result of additional equitable circumstances. The panel
further held that a number of equitable factors supported
tolling the Rule 23(f) deadline. The panel held that because
plaintiff informed the court orally of his intention to seek
reconsideration of the decertification order and the basis
for his intended filing within fourteen days of the
decertification order and otherwise acted diligently, and
because the district court set the deadline for filing a
motion for reconsideration with which plaintiff complied, the
Rule 23(f) deadline should be tolled. The panel noted that
other circuits would likely not toll the Rule 23(f) deadline
in this case, and would only allow tolling when the motion
for reconsideration was filed within the fourteen-day period.
The panel concluded that plaintiff's Rule 23(f) petition
was timely filed in this court.
to the merits of the certification petition, the panel held
that the district court abused its discretion in decertifying
the class on the basis of plaintiff's inability to prove
restitution damages through the full refund model. Plaintiff
brought his consumer class action under Fed.R.Civ.P.
23(b)(3), which requires that a plaintiff show a class wide
method for damages calculations as a part of the assessment
of whether common questions predominate over individual
questions. The full refund model measures damages by
presuming a full refund for each customer, on the basis that
the product has no, or only a de minimis, value. The panel
held that because plaintiff's damages model matched his
theory of liability, and because plaintiff had shown that his
damages model was supportable on evidence that could be
introduced at trial, the class should not have been
decertified. The panel further held that whether plaintiff
could prove damages to a reasonable certainty on the basis of
his full refund model was a question of fact that should be
decided at trial on remand.
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
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.
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.
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
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. Nutraceutical then filed a
motion for decertification of the class, upon which the newly
assigned district judge held a hearing.
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.
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.
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-restitutionary disgorgement.
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-restitutionary disgorgement is not
available under California law. In addition to declining to
recertify the class, the order set forth a plan for notifying
the class regarding decertification.
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 decertification 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 ...