Jamba Juice Must Relabel Smoothies

SAN FRANCISCO (CN) - Jamba Juice will stop labeling its home smoothie kits "all natural" under a federal class action settlement a judge approved Wednesday.

The settlement of Aleta Lilly et al. v. Jamba Juice Co. will end claims that the packaging was misleading because the products contain non-natural ingredients, including ascorbic acid, xanthan gum, steviol glycosides, modified cornstarch and gelatin.

In September 2014, U.S. District Judge Jon Tigar certified a class of people in California who bought Mango-a-go-go, Strawberries Wild, Caribbean Passion, Orange Dream Machine and Razzmatazz smoothie kits.

The class was not certified for purposes of seeking damages, because the consumer plaintiffs did not produce evidence on feasibility of their methods for calculating damages or submit a detailed explanation of how damages could be fairly determined or estimated.

Nor did Tigar resolve the question whether Lilly and co-plaintiff David Cox had standing to seek injunctive relief.

The parties informed the court they had resolved the action by stipulating to injunctive relief. But before approving the settlement, Tigar had to determine whether the consumers had standing for such relief.

"Courts in this district have grappled with the question of when a consumer class may be certified for the purposes of obtaining injunctive relief against deceptive product labeling under Rule 23(b)(2)," Tigar wrote in his March 18 order. "Some courts have held that once a consumer is aware that a label is misleading, she can never have standing to seek injunctive relief, because there is no danger that she will be misled in the future."

Tigar disagreed, finding that such a stance would preclude consumers from ever obtaining relief against mislabeling.

"When a consumer discovers that a representation about a product is false, she doesn't know that another, later representation by the same manufacturer is also false. She just doesn't know whether or not it's true. A material representation injures the consumer not only when it is untrue, but also when it is unclear whether or not it is true."

The manufacturer could change its product to conform to the representations on the label, leaving the consumer unaware of whether the label is accurate and unsure whether she should spend money on the product due to past misrepresentations, Tigar said.

"In fact, knowing about the previous misrepresentation, she probably won't buy it - even though it is now precisely the product she wants above all others. So, while other consumers may purchase the (now correctly labeled) product, our consumer - the person most likely to suffer future injury from the misrepresentation - will be deprived of it," Tigar wrote, finding that these plaintiffs have standing to obtain injunctive relief.

Under the settlement, Jamba Juice will have until March 31 to relabel all of the challenged smoothie kits so they are no longer described as "all natural" on packaging or other advertising.

Jamba Juice is not required to remove or recall the products, nor to discontinue the use of any packaging inventory that existed before final approval of the agreement. It can use all of its existing packaging to distribute and sell the products before the final approval date.

Tigar found the settlement reasonable, though the class will not receive any money.

"In light of the difficulty plaintiffs would face establishing damages on a classwide basis and the relatively small amount of money individual class members would be entitled to, the risk, expense, complexity, and likely duration of further litigation also support the conclusion that the settlement is substantively fair," Tigar wrote.

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