Monday, January 12, 2026
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Ninth Circuit: Class Certification Stands in Case Over Nestlé’s ‘Sustainability’ Labels
Majority Says Plaintiff Accusing Nestlé of Falsely Implying That Cocoa Products Were Made Without Child Labor Properly Asserted Full Refund Damages Model
By a MetNews Staff Writer
A divided panel of the Ninth U.S. Circuit Court of Appeals held Friday that a District Court judge did not err in granting a motion for class certification in an action asserting that Nestlé USA Inc. used deceptive practices, in violation of California law, by labeling its chocolate products as “sustainably” or “responsibly” sourced when they were purportedly produced using child labor and deforestation practices.
In addition to finding that the proposed classes satisfied the other requirements of Federal Rule of Civil Procedure, rule 23, the court declared, in a memorandum decision signed by Circuit Judge Ana de Alba and Senior Circuit Judge Jay S. Bybee, that the plaintiff’s proposed full-refund model was a reasonable computation of damages under the court’s 2017 opinion in Lambert v. Nutraceutical Corp.
That case involved an energy drink purportedly labeled with promises that it would enhance sexual performance. The plaintiff sought to use a full refund of damages model for purposes of class certification based on a theory that the product has no value when considered without the allegedly deceptive marketing.
The Lambert court concluded that the class “should not have been decertified” because the plaintiff’s “damages model matched his theory of liability” and “was supportable on evidence that could be introduced at trial.”
Based on Lambert, which was reversed on other grounds by the U.S. Supreme Court in 2018, Bybee and De Alba opined that the plaintiff’s “full refund theory of liability stems from her theory of deception” and that “the calculation of the refund is possible on a class-wide basis.”
Dissenting, Senior Circuit Judge Richard R. Clifton said:
“[The plaintiff’s] proposed damages model relies on two premises: (1) the discovery of the alleged misrepresentations regarding sustainability would render the purchased Nestlé chocolate products to become entirely valueless to (2) every purchaser of the chocolates. Both of these are highly implausible and not supported by any evidence….”
Class Certification
Plaintiff Marie Falcone, a San Diego resident, sought class certification as to an injunctive relief class, under Rule 23(b)(2), and a damages class, under Rule 23(b)(3), relating to purchasers of certain Nestlé chocolate products bearing labels indicating that the items were “sustainably” or “responsibly” sourced or that the company “improve[s] the lives of cocoa farmers” from April 19, 2015 “to the present.”
Rule 23(b)(3) requires that “questions of law or fact common to class members predominate over [those] affecting only individual members,” and that a class action be “superior to other methods…for…adjudicating the controversy.”
On the other hand, Rule 23(b)(2) requires that “the party opposing the class has acted or refused to act on grounds that apply generally to the class, so that final injunctive relief...is appropriate respecting the class as a whole.”
In her operative complaint, filed in September 2022, Falcone asserted causes of action under the California Consumer Legal Remedies Act (“CLRA”), found at Civil Code §1750 et seq., and the Unfair Competition Law (“UCL”), codified at Business & Prof. Code §17200et seq. She alleges that the Delaware company “slaps bogus ‘seals’ on its products” and claims:
“Nestlé’s deceptive labeling misleads consumers into believing their products are procured in accordance with environmentally and socially responsible standards, when it knows they are not. Ms. Falcone was misled by the affirmative misrepresentations on Nestlé’s product packaging concerning the use of fair labor and environmental standards and practices. Had she been aware of the misrepresentations described herein, she would not have purchased Nestlé’s products.”
After she moved for class certification, Senior District Court Judge M. James Lorenz of the Southern District of California granted the request in September 2024, finding that she had met her burden under Rule 23.
Majority’s View
As to the damages class, Bybee and De Alba remarked:
“The district court did not abuse its discretion in finding that common questions of law and fact predominate over individual inquiries for the damages class. Nestlé argues that exposure was not met because whether a class member saw the misrepresentation is an individual question that predominates….[A]ll the class members were exposed to the misrepresentation because it was on the products’ packaging and, by definition, class members must have bought the products at issue to be part of the class; in labeling fraud cases, this is all that is required.”
Saying that the “variations” in the 59 different labels at issue “are slight,” they also rejected the defendant’s contention that the distinctions defeated the ability of the plaintiff to seek class-wide relief.
Turning to the damages model, they acknowledged that Nestlé asserted that Falcone’s full-refund theory ran afoul of the 2013 U.S. Supreme Court decision in Comcast Corp. v. Behrend, declaring:
“We have not construed Comcast as requiring plaintiffs to provide a class-wide method for calculating damages at the class certification stage, but rather as requiring only that plaintiffs demonstrate a logical connection between their damages model and their theory of liability.”
They added:
“Falcone alleges that Nestlé misled consumers, in violation of the UCL and CLRA, by labeling the products at issue with sustainability representations that deceived them into buying the products, and this caused damage common to the class members. Her theory is that once class members learn about the misrepresentation, the value of the products they bought will be worthless or de minimis….Thus, as the district court correctly found, Falcone’s theory of restitution stems from Nestlé’s liability-creating actions and whether the products are worthless is a merits issue not decided at class certification.”
Nestlé challenged the certification of the injunctive relief class based on standing. Rejecting the defendant’s contentions, the panel said she had satisfied the requirements under Article III by “repeatedly testif[ying] that she loves Nestlé products and that she would like to purchase these products in the future but that she stopped purchasing them when she learned about child labor and environmental damage.”
Clifton’s Dissent
Clifton wrote:
“Falcone must offer a damages model that is ‘consistent with [her] liability case’ and demonstrates ‘that damages are susceptible of measurement across the entire class.’…She must also propose a ‘valid method’ and a ‘workable method’ for calculating damages….She has not done so.”
Saying that “[r]estitution based on a full refund is only warranted if not a single class member derived any benefit from the chocolate products,” he concluded that her assertions that the Nestlé products are valueless absent the allegedly deceptive labels are “contradicted by Falcone’s personal acknowledgement that Nestlé products are superior in taste and by her own inability to resist purchasing a Butterfinger bar even after she became aware of the allegations.”
He continued:
“Rather than deal with the recognized flaws in the damages model upon which the class certification order was based, the majority concludes ‘whether the products are worthless is a merits issue not decided at class certification.’…But Lambert does not authorize punting the issue down the road. It is true that in Lambert we held that whether [the plaintiff] ‘could prove damages to a reasonable certainty on the basis of his full refund model is a question of fact that should be decided at trial.’…But that was because ‘Lambert [had] presented evidence that the product at issue was valueless and therefore amenable to full refund treatment’ at the class certification stage….Falcone has not presented evidence that the products were valueless to all purchasers….”
Alternative Model
The jurist noted:
“Falcone further admitted the shortcomings of the full refund model in offering an alternative ‘price premium’ damages model. That model was offered to the district court for the first time in her reply memorandum in support of class certification. Because it was introduced on reply, the district court did not consider [it]….”
Arguing that “[t]he majority recognizes the problem,” he pointed out that Bybee and De Alba, in a footnote, “encourage[d] the district court to consider Falcone’s ‘proposal for a price premium…model as a more appropriate way to measure Falcone’s damages.’ ”
The judge asserted that if “Falcone wants to propose the alternative…model, with evidence to support it as a valid and workable measure of damages, that should be done in a renewed motion for class certification” and “[t]he current class certification order should not stand.”
The case is Falcone v. Nestle USA Inc., 24-7707.
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