Court Certifies Class Action Over Gerber “Good Start Gentle” Baby Formula, Citing Consumers’ General Exposure to Ad Campaign
A recent decision from the Eastern District of New York, Hoth v. Gerber Prods. Co., 15-cv-2995 (E.D.N.Y.), granted class certification to purchasers of Gerber baby formula in Florida and New York who claimed to have been misled by representations that the formula reduced infants’ risk of developing allergies. The certified class is unusual, however, in that not all of its members actually purchased the product labeled with the alleged misrepresentation. Many courts have concluded that this lack of uniform exposure defeats certification by precluding a showing of classwide injury, but the Hoth court credited evidence that the general “advertising and labeling practice [regarding allergy prevention] allowed a price premium to be charged across the entire line of [challenged] products.” Op. at 41 (emphasis in original).
As astronomer Carl Sagan famously said, “absence of evidence is not evidence of absence.” Plaintiffs have not gotten the message. They often allege that a defendant’s marketing or labeling statements are false and misleading on the sole basis that there is purportedly no evidence (or insufficient evidence) proving their truth. These so-called “lack of substantiation” claims are easy to plead because a plaintiff does not need to conduct an investigation to identify evidence that the challenged statement is false. Rather, she alleges only an absence of supporting evidence for the statement—and generally, in a conclusory manner.
Unless you were born yesterday, you know that packaged goods usually contain some empty space in the box, bottle, or bag. This has been true for as long as there have been packaged goods. What is relatively new is that consumers—or, rather, a small cadre of specialized plaintiff’s lawyers—are suing over it. But as Newton said, for every action, there is an equal and opposite reaction. And the more that lawyers have inundated courts with these suits, the more aggressively courts have responded to shut the silliness down. This post examines the regulatory underpinnings of these so-called “slack-fill” suits and the many bases that courts have found for letting the air out of them.
Last Friday, the Third Circuit held that a J. Crew customer lacked standing to sue the company for printing ten digits of his credit card on a receipt, in violation of the Fair and Accurate Credit Transaction Act (which provides that companies should print only the last four digits). Relying on the Supreme Court’s decision in Spokeo v. Robins, the court held that the plaintiff’s alleged injuries—a violation of the statute and the “risk of identity theft”—were merely “procedural,” and thus insufficiently “concrete” to confer standing under Article III. The Third Circuit’s rigorous application of Article III standing requirements is good news for defendants in mislabeling cases, some of which are “gotcha”-type suits arising from highly technical labeling violations.
All’s Not Well(er) in Pennsylvania: Court Sanctions Defendant For Contact With Putative Class Members
There is nothing inherently wrong with outreach to putative members of an uncertified class—whether by the named plaintiff’s counsel or by the defendant’s counsel. As the ABA has recognized, “[b]oth plaintiffs’ counsel and defense counsel have legitimate need to reach out to potential class members regarding … information that may be relevant to whether or not a class should be certified.” ABA Formal Op. 07-445 (2007); see also Austen v. Catterton Partners V, LP, 831 F. Supp. 2d 559, 567 (D. Conn. 2011) (“Both parties need to be able to communicate with putative class members … from the earliest stages of class litigation.”). Thus, as the Supreme Court has unanimously held, restrictions on pre-certification communication with putative class members must be justified by a “clear record and specific findings” of actual “abuses.” Gulf Oil v. Bernard, 452 U.S. 89, 101-04 (1981). And even then, any limitations must be “carefully drawn … [to] limit speech as little as possible.” Id.
The rise of social media has redefined advertising, giving businesses exciting new ways to reach consumers and deliver their messages. To no one’s surprise, it has also provided new fodder for advertising class actions. However, as one plaintiff recently learned the hard way, these social-media class actions can founder on the same shoals as their traditional-media counterparts.
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.
Over the last few years, “conjoint analysis” has become the methodology du jour for false advertising plaintiffs seeking to demonstrate they can calculate class-wide damages. Conjoint analysis is so named because it is used to study the joint effects of multiple product attributes on consumers’ choices. At bottom, conjoint analysis uses survey data to measure the strength of consumers’ preferences for particular product features. Or, put differently, it tries to isolate how much people care about an individual product attribute in a multi-feature product (in a more scientific manner than just asking them directly).
Many recent consumer class actions against food and beverage manufacturers have related to label claims that a particular category of ingredient is not used in the product—e.g., “No Preservatives,” “No Artificial Flavors.” These lawsuits follow a predictable formula: the plaintiff, relying on the product’s ingredient list, alleges that a particular ingredient in the product functions as an artificial flavor and/or chemical preservative, and that the “no preservatives” or “no artificial flavors” claim is therefore false.
This is an exciting time for manufacturers on guard against compelled disclosures in their product labeling or advertising. Late last June, the Supreme Court decided National Institute of Family & Life Advocates v. Becerra, 138 S. Ct. 2361 (2018) (“NIFLA”), an abortion case with potentially far-reaching effects on the law of compelled commercial speech more generally. However, as lower courts begin to interpret and apply NIFLA in the context of product disclosures, major uncertainties remain.
In consumer cases alleging product mislabeling, one frequently litigated question is whether the plaintiff has standing to seek an injunction of the labeling practice that he or she claims is misleading. Over the past decade, consumer protection defendants have often won on this issue by demonstrating that the plaintiff is at no risk of future injury. But last year, in Davidson v. Kimberly-Clark Corp., 889 F.3d 956 (9th Cir. 2018), the Ninth Circuit made this issue tougher for defendants, adopting an exceptionally broad view of plaintiffs’ standing to seek injunctive relief in mislabeling cases. Below, we discuss the aberrant holding in Davidson, and how Ninth Circuit defendants may still be able to distinguish its facts to defeat a claim for injunctive relief.
By law, packaged foods and beverages must bear an accurate list of their ingredients “in descending order of predominance by weight.” 21 C.F.R. § 101.4. Consumers routinely sue food and beverage companies alleging that they were misled about the presence or absence of particular ingredients—even though a mere glance at the ingredient list would have averted any confusion. Do such plaintiffs have a plausible claim for relief under false advertising laws, or should these claims be dismissed at the threshold?
Many statutes, including the Lanham Act, impose strict liability for false advertising. Business may therefore incur liability even if a third party was partially or wholly at fault for the challenged inaccuracy. For example, a cosmetics company that advertises its products as “all natural” may be held liable to a competitor through no fault of its own if an unscrupulous supplier substitutes synthetic pigments for the more expensive natural pigments that the company ordered and paid for. Similarly, a food company that labels a product as containing “50 grams of protein per serving” may incur liability to consumers if the laboratory it retained to assay its products’ nutritional content botched those tests.
In the olden days, the law was content to leave whichever tortfeasor the plaintiff chose to sue on the hook for the whole tab—even if the chosen defendant was not the truly blameworthy party. However, “[i]t is now widely recognized that fundamental fairness demands a sharing of the liability” in these situations.