Bohr v. Tillamook County Creamery Assn.

Rule of Law:

Individual reliance on a defendant's misrepresentations is not a universal prerequisite for establishing causation under the Oregon Unlawful Trade Practices Act (UTPA), particularly for claims alleging ascertainable loss through market-wide price inflation or the purchase of products deemed illegal due to misbranding or false advertising.

Facts:

• Tillamook County Creamery Association (Tillamook) is an Oregon cooperative corporation that produces and sells dairy products across the country.
• Tillamook's marketing campaigns represent its products as sourced from small, family-owned farms in Tillamook County that prioritize animal welfare, using imagery of idyllic farms with cows on open, green pastures receiving personalized attention.
• In reality, Tillamook sources a large majority of its milk from a massive 70,000-cow 'factory farm' in Boardman, eastern Oregon, where cows are confined on feedlots and subject to round-the-clock robotic milking.
• Sonja Bohr, Tamara Barnes, Karen Foglesong, and Mary Wood (plaintiffs) are Oregon residents who purchased Tillamook dairy products, regularly seeking and willing to pay more for products perceived as humane and from small, pasture-based dairies.
• Plaintiffs believed Tillamook's products met this description based on the company’s marketing representations.
• Plaintiffs allege that Tillamook's misrepresentations caused them and other consumers to suffer economic harm by purchasing products they otherwise would not have, or by paying artificially inflated 'premium' prices.
• Plaintiffs further allege that Tillamook's products were 'misbranded' under federal law (21 CFR §101.18 and 21 USC § 331) and 'falsely advertised' under state law (ORS 616.215(5), ORS 616.265, and ORS 616.270), making them 'illegal products' that should not have been sold.

Procedural Posture:

• Sonja Bohr, Tamara Barnes, Karen Foglesong, and Mary Wood (plaintiffs) filed a putative class action in Multnomah County Circuit Court (trial court) against Tillamook County Creamery Association, alleging violations of the Oregon Unlawful Trade Practices Act (UTPA).
• Tillamook filed an ORCP 21 motion to dismiss the plaintiffs' second amended complaint for failure to state a claim, arguing, among other things, that plaintiffs failed to sufficiently plead ascertainable loss, causation, and reliance, and that a 'fraud-on-the-market' theory was inapplicable to consumer protection cases.
• The trial court granted Tillamook’s motion to dismiss in part, ruling that individual plaintiffs had sufficiently pleaded reliance, but the class allegations were defective because the class included consumers who purchased Tillamook products 'without ever having observed any Tillamook marketing.'
• The trial court dismissed plaintiffs’ claims based on a 'price inflation or fraud on the market theory' and dismissed 'with prejudice' plaintiffs' claims based on a 'prohibited transaction theory,' without providing reasoning for the latter dismissal.
• Following the trial court’s decision, plaintiffs requested the trial court certify several controlling questions of law for interlocutory appeal pursuant to ORS 19.225.
• The trial court agreed and, based on the parties’ submissions, certified seven questions for interlocutory appeal to the Oregon Court of Appeals.
• The Court of Appeals (intermediate appellate court) granted both plaintiffs' and Tillamook's applications for interlocutory appeal.
• The Court of Appeals addressed only questions 1, 2, 3, and 5, all concerning the issue of reliance, answering 'yes' to each question (meaning reliance was required) and accordingly affirmed the trial court’s ruling dismissing the claims of the putative class.
• Plaintiffs (petitioners on review) then petitioned the Oregon Supreme Court for review, which was allowed.