Joshua Kipnees, Partner

As coronavirus (COVID-19) spreads across the country, some companies are advertising their products’ usefulness in preventing or treating the disease.  But federal agencies—including the Food and Drug Administration (FDA) and the Federal Trade Commission (FTC)—are close behind.  Over the past few weeks, they have together sent more than a dozen warning letters to COVID-19 advertisers, insisting that they cease making coronavirus claims.

It was only a matter of time.  As we anticipated last summer, the plaintiffs’ bar recently filed a slew of false advertising suits against manufacturers of products infused or made with cannabidiol, a/k/a CBD.  This development was a fait accompli, given the combination of a booming CBD market, a murky federal regulatory landscape, and a patchwork of state regulatory efforts at varying degrees of development.  This confluence of factors has paved the way for at least ten consumer lawsuits in the last six months against producers of CBD products.  We expect more suits to follow in the near future as copycat suits are filed, CBD products become increasingly mainstream, and more deep-pocketed players enter the CBD market.

A few weeks ago, the U.S. Court of Appeals for the D.C. Circuit weighed in on a recurring question in class action litigation: can a court certify a class where some class members—even if only a small fraction of the class—are uninjured? Joining a string of recent decisions on this subject, the circuit court held in In re Rail Freight Fuel Surcharge Antitrust Litig., 934 F.3d 619 (Aug. 30, 2019), that class certification was properly denied for lack of predominance because twelve percent of the proposed class—constituting thousands of proposed class members—were uninjured by the defendants’ alleged misconduct. This ruling follows a similar determination from the First Circuit last October, covered here. Although both cases involved antitrust allegations, their holdings are readily applicable to consumer product class actions, where there is often evidence—either from the defendants’ files or the plaintiffs’ own experts’ analysis—that a considerable number of proposed class members were uninjured by defendant’s alleged mislabeling.

We have written previously about application of the “reasonable consumer” standard when labeling statements are claimed to be false or misleading, despite the presence of clarifying information elsewhere on the product label.  We’ve observed the inconsistent standards courts apply in ruling on a motion to dismiss, particularly as to whether a “reasonable consumer” views the alleged misstatement in the context of the entire product packaging and ingredient list.

A frequent target of consumer class actions are “structure/function” claims made in connection with dietary supplements.  These claims describe a nutrient or dietary ingredient and its role in the body’s structure or function: for example, “glucosamine promotes healthy joints.”  Plaintiffs may allege that a product’s labeling is misleading because the typical consumer already receives enough of the nutrient or ingredient from her diet.  At the same time, those plaintiffs will seek a refund on behalf of everyone who bought the product—even if many in the class have received a benefit.  A recent decision out of the Southern District of California, Alvarez v. NBTY, Inc., 2019 U.S. Dist. LEXIS 87420 (May 22, 2019), suggests that this disconnect between the proposed class and the plaintiffs’ theory of liability and damages may no longer be tolerated at the class-certification stage.

“Contains detectable levels of the weed-killer chemical glyphosate.”

“Contains limonene, which causes kidney toxicity and tumors, and linalool, a cockroach insecticide.”

“Contains a potent biocide and endocrine disruptor, with detrimental health effects that are still becoming known.”

These are the sorts of headline-grabbing allegations the plaintiffs’ bar has recently relied upon in claiming that products advertised or positioned as “natural” are deceptively marketed.  At first blush, the presence of allegedly dangerous ingredients in foods, cosmetics, and other consumer products might seem like the basis of a strong false advertising case—especially when those substances are undisclosed.  How could a company so deceive the public by promising a “good-for-you” product that contains such “bad” ingredients?

In Comcast v. Behrend, 569 U.S. 27 (2013), the Supreme Court held that a plaintiff cannot obtain class certification with an inadequate damages model.  In the years since, courts have diverged over how much a plaintiff must do to satisfy this requirement.  Often, plaintiffs seek class certification with nothing more than a skeletal proposal to develop and perform an analysis at some future point, using information they do not—and might never—possess.  While some courts have found such adumbrative “models” sufficient at the class certification stage, the better decisions require more.  As Comcast recognizes, Rule 23 “does not set forth a mere pleading standard.”  Rather, a plaintiff “must affirmatively demonstrate” through “evidentiary proof” that damages are measurable on a class-wide basis through a common methodology.  Faithful application of that principle obligates plaintiffs and their experts to offer a detailed methodology that is tailored to the facts of the case, and to show that any data that the model requires in fact exists and can be obtained.