Nestle urged the Ninth Circuit on Wednesday to reverse certification of a class of millions of consumers who purchased chocolate labeled "sustainably sourced," saying claims the chocolate is produced through child labor and deforestation are untrue and the question of whether consumers purchased due to the labeling is highly individualized.

The appeal challenges a federal judge's decision to certify a class of California consumers who purchased at least one of dozens of Nestlé products during a range of time periods, including Semisweet Morsels bought from November 2018 to the present.

At the start of Wednesday's hearing, a lawyer for Nestlé USA, Theodore Boutrous Jr. of Gibson Dunn & Crutcher LLP, told the three-judge appellate panel that the case is about responsible sourcing and preventing child labor — issues that the company has worked to address.

Nestlé, he said, has spent "hundreds of millions of dollars" supporting cocoa farmers, "combating the risk of child labor, and enabling access to quality education for children" in cocoa farming communities.

The class certification decision is based on the premise that all consumers saw the statements on the 59 different product labels, Boutrous said. Further, none of the product labels mentions child labor, he said.

"It rests on the assumption that all the consumers found those statements material and relied on them to buy the chocolate," Nestlé's lawyer said. "And that they would not have paid 1 cent for the chocolate absent the labels."

There's no evidence in the case, however, supporting those assumptions, Boutrous said.

Further, "the individualized issues engulf any potential common issues," the lawyer for Nestlé said.

U.S. Circuit Judge Jay S. Bybee asked how consumers could have missed the label if they bought the products. Boutrous said they were on the back of the package. Judge Bybee noted that's where the Toll House cookie recipe is, as well as the nutritional information.

The lawyer for Nestlé said consumers may look at the back of the package, but for different reasons, thus missing the note altogether.

Boutrous also argued that the wording of the labels — making such pledges as the cocoa in the chocolate was "sustainably" or "responsibly sourced" — would make it hard to show how consumers were deceived because the plaintiff would need to show consumers had the same understanding of the statements.

"And here, as I mentioned, none of the statements mention child labor risks [and] they differ in their content," the lawyer for Nestlé told the panel.

The lawsuit has also not shown that each purchaser was injured.

By lumping all consumers together, someone who didn't see the statements, didn't know what they meant and didn't rely on them — and "would have bought the chocolate anyway at the same price" — would be part of the class, the lawyer for Nestlé said.

A lawyer for the class, Paul Hoffman of Schonbrun Seplow Harris Hoffman & Zeldes LLP, told the panel that because the statements were on the package, all purchasers were exposed to them.

U.S. Circuit Judge Ana de Alba asked Hoffman to respond to the argument from Nestlé's lawyer that some consumers might not have paid attention to the statements on the packaging or cared about their message.

Hoffman said that didn't matter. It's also not important for all purchasers to have understood the statements.

"The test under California law is whether a reasonable consumer would understand it," he told the panel.

U.S. Circuit Judge Richard Clifton asked about the damages being sought and what evidence exists showing that an "appreciable" number of consumers would think the product had no value in light of the statements made by Nestlé.

Hoffman said that's in Nestlé's own documents.

Those documents, however, didn't show that a majority of consumers held the values to an extent that they found the Nestlé products without value, Judge Clifton said.

Hoffman said the plaintiff doesn't have to show that everybody feels that way at this stage of the case.

For class certification purposes, all the plaintiff has to show is that the theory of damages stems from the theory of liability, which this case does, Hoffman said.

"Our position is that their actual practices perpetuate child slave labor," the lawyer told the court. "When in fact, they're a major part of the problem for child slavery in the Ivory Coast and deforestation."

Judge Clifton said he had his doubts about the theory of liability, as well.

"Even on a factual basis, it strikes me as laughable," the judge said. "You have to have more than allegations."

Nestlé has crafted these representations and knows they are influential to consumers, Judge Clifton said.

Judge Clifton reminded the lawyer that the class will have to show that the statements were crucial in the purchasing decisions of a "substantial" number of buyers.

"Otherwise your damage model is kind of devoid of reality," the judge said.

Hoffman said he expects that proof will come with discovery in the case.

At the start of his rebuttal, Nestlé's lawyer told the panel that the assertions Hoffman made against his client are false and "outrageous."

He also repeated that some chocolate consumers did not concern themselves with the labels when making their purchase. As the answers to that question will be individualized, the case is not appropriate for class resolution, he said.

Judge Bybee asked for an example of a case involving an advertising misrepresentation in which every consumer cared. It seems, the judge said, "you could never certify any misrepresentation case and I don't think that accords."

The lawsuit, filed in April 2019, claims the Swiss company's 2009 Cocoa Plan — which the company says was created to improve African farmers' lives and make cocoa farming more sustainable — put a "band-aid" on a significant problem and doesn't actually improve farmers' lives.

In March 2021, the judge tossed the suit because the plaintiff had not specified which products she purchased. The suit was refiled, and in July 2023, U.S. District Judge M. James Lorenz said the third amended complaint sufficiently alleges the company made deceptive statements, in part by arguing that child labor has only worsened since Nestlé's Cocoa Plan was created in 2009 to address alleged labor violations on West African farms.

The court granted class certification in September 2024, noting that each of the products' labels referenced the Cocoa Plan and that the analysis under California law is based on the "reasonable consumer" standard.

U.S. Circuit Judges Richard R. Clifton, Ana de Alba and Jay S. Bybee and sat on the panel for the Ninth Circuit.

Lead plaintiff Marie Falcone is represented by Helen I. Zeldes and Paul L. Hoffman of Schonbrun Seplow Harris Hoffman & Zeldes LLP and Michael R. Reese and George V. Granade II of Reese LLP.

Nestlé is represented by Theodore J. Boutrous Jr., Christopher Chorba, Perlette M. Jura, Timothy W. Loose, Al Kelly, Bradley J. Hamburger and Matt Aidan Getz of Gibson Dunn & Crutcher LLP.

The case is Marie Falcone v. Nestlé USA Inc., case number 24-7707, in the U.S. Court of Appeals for the Ninth Circuit.