Ninth Circuit Gives Plaintiffs Second Chance at $91 Million in Statutory Damages

In Montera v. Premier Nutrition Corp., - F.4th -, 2024 WL 3659589 (9th Cir. Aug. 6, 2024), the Ninth Circuit vacated and remanded a district court's statutory damages award, holding that an aggregate award of statutory damages is not subject to the Supreme Court's State Farm due process standard for punitive damages, but should instead be assessed in light of the proportionality and reasonableness of the aggregate award considering the legal violation committed.

After a rare class-action trial, the district court had denied the plaintiffs' request for $91 million in statutory damages (plus prejudgment interest), finding that $8.3 million was the appropriate amount under State Farm Mutual Automobile Insurance Co. v. Campbell, 538 U.S. 408 (2003). The Ninth Circuit instructed the district court to re-consider whether plaintiffs' statutory damages request violates due process in light of Wakefield v. ViSalus, Inc., 51 F.4th 1109 (2023), which was decided after the district court issued its decision.

As we previously reported, the district court's decision followed a trial in which a jury found Joint Juice liable under New York's General Business Law (GBL) for deceptively marketing its beverage products. The jury awarded $1.49 million in actual damages. The GBL permits recovery of actual damages or statutory damages for each violation of the statute. The plaintiffs argued that they were entitled to $550 in statutory damages for each sale of Joint Juice, for a total of $91 million, plus prejudgment interest. The district court agreed that each sale of Joint Juice was a violation. But it only awarded $50 per violation, for a total award of $8.3 million plus prejudgment interest. Relying on State Farm, the court concluded that awarding $550 per violation would be "so severe and oppressive as to be wholly disproportionate to the offense and obviously unreasonable."

The Ninth Circuit vacated and remanded this portion of the district court's decision in light of Wakefield. In Wakefield, the court considered whether to reduce a nearly billion-dollar statutory damages award and "decline[d] to apply" the Supreme Court line of cases that included State Farm "outside the context of a jury's award of punitive damages." 51 F.4th at 1122. Instead, it looked to Six (6) Mexican Workers v. Arizona Citrus Growers, 904 F.2d 1301 (9th Cir. 1990), which set forth "guidance for determining whether a particular statutory damages award is disproportionately punitive in the aggregate." 51 F.4th at 1123. Wakefield instructed that statutory damages awards will typically be permissible unless the "per-violation amount results in an aggregate that is gravely disproportionate to and unreasonably related to the legal violation committed." Id. at 1124.

In Montera, the Ninth Circuit "express[ed] no opinion on whether the award in this case was substantively unreasonable." For that reason, the district court may ultimately conclude that its original $8.3 statutory damages award is warranted under Six Mexican Workers. But the plaintiffs will have another opportunity to argue that $91 million in statutory damages does not violate due process.