The Ninth Circuit recently rejected a plaintiff’s request for attorneys’ fees under the so-called catalyst theory where the changes the defendant made in an effort to effectively moot the case were different from the changes the plaintiff had demanded in the litigation. The decision illustrates that a creative fix to an alleged issue may deter a plaintiff’s counsel from pursuing the case without entitling them to a fee award under the catalyst theory.
In Gordon v. Tootsie Roll Industries, Inc., No. 18-56315, 2020 WL 1846920 (9th Cir. Apr. 13, 2020), the plaintiff alleged that Tootsie Roll was deceiving consumers by including too much empty space, or “slack fill,” in its boxes of Junior Mints and Sugar Babies. According to the plaintiff, Tootsie Roll either should have increased the fill or reduced the size of the boxes.
Tootsie Roll tried a third option: while the litigation was pending, it modified the boxes to (1) include an “ACTUAL SIZE” label under the candy illustrations, (2) disclose the piece count on the front of the box, and (3) move the disclaimer “PRODUCTS SOLD BY NET WEIGHT NOT VOLUME. CONTENTS TEND TO SETTLE AFTER PACKAGING” from the back of the box to the front. In response, the plaintiff abandoned its half-briefed motion for class certification, declared the case moot and moved for attorneys’ fees on the ground that her case was the catalyst for Tootsie Roll’s changes.
The Catalyst Theory
Under the catalyst theory, attorneys’ fees may be awarded even when the litigation does not result in a judicial resolution if the defendant changes its behavior substantially because of the litigation. Although the United States Supreme Court has rejected the theory as applied to federal statutes, Buckhannon Bd. & Care Home, Inc. v. W. Virginia Dep’t of Health & Human Res., 532 U.S. 598 (2001), the California Supreme Court has endorsed the theory where three elements are met: (1) the lawsuit was a catalyst motivating the defendants to provide the primary relief sought, (2) the lawsuit had merit and (3) the plaintiff attempted to settle the claim prior to filing the lawsuit. Tipton-Whittingham v. City of Los Angeles, 101 P.3d 174, 177 (Cal. 2004).
In Gordon, the Ninth Circuit held that the first element was not satisfied because Tootsie Roll’s changes were not “the primary relief sought” by the plaintiff. The plaintiff’s theory was that the size of the box was misleading, and she claimed that the fix was to change the ratio of candy to box. The changes Tootsie Roll made, however, were to the labeling — not the quantity of candy or the size of the box. Moreover, the plaintiff had previously stated that such label disclosures are “irrelevant” to the slack-fill issue and do not meaningfully help consumers understand the quantity of product in the box. It is therefore not surprising that the Ninth Circuit rejected her argument that she was the catalyst for a change she not only did not request but had disavowed.
The takeaway from Gordon is that defendants faced with a claim for injunctive relief should explore practice changes that are not precisely what the plaintiff is seeking but would still render the injunctive relief claim effectively moot. This strategy is especially useful in “injunctive relief only” cases, which are increasingly common as a tactic for avoiding removal to federal court (because the cost of complying with an injunction typically will not satisfy the amount-in-controversy requirement for the Class Action Fairness Act or diversity jurisdiction).
Thanks to the catalyst theory, those cases are relatively low risk for plaintiffs’ attorneys because even if they do not win or settle, they may recover their fees if the defendant makes the requested changes. Gordon shows, however, that it is possible in some cases to undercut the plaintiffs’ claim without triggering a catalyst fees award.