Petersen v. Costco Wholesale Co., Inc.

Consumers in nine western states (consumers) (plaintiffs) sued Costco Wholesale Co., Inc. (Costco), Townsend Farms, Inc. (Townsend), and others (defendants) to recover damages for exposure to a hepatitis A outbreak that originated from a frozen-fruit product manufactured by Townsend and sold at Costco stores. Townsend traced the outbreak to a single ingredient used in one product that was sold at Costco until Costco was informed of the outbreak and rapidly removed the product from shelves. Townsend also issued a product-recall. The lawsuit was filed in California and removed to federal district court, where the consumers moved for certification of a liability-class. The motion for certification initially proposed the creation of two sub-classes to account for state-law differences regarding strict liability, but after the district court expressed concern that two subclasses could not sufficiently account for state-law variations, the consumers proposed the formation of three subclass groupings, or, alternatively, nine single-state subclasses. The consumers argued that only two of the state-law variations were material to the outcome of the case, and the differences could be easily managed by forming subclasses. Costco and Townsend objected to class-certification on the grounds that several variations in state law existed, and the differences overwhelmed the common questions. The district court considered the motion for class certification.