Category: Damages

As our readers know, we’ve kept a close eye on the “flushable wipes” litigation—known variously as Kurtz v. Costco and Belfiore v. Procter & Gamble—as it has bounced between Judge Weinstein’s courtroom in the Eastern District of New York and the Second Circuit.  The cases raise several issues important to class-action defendants, including the necessity of a rigorous damages model at the class-certification stage; the availability of injunctive relief to customers who are already wise to the alleged deception; and the appropriateness of massively multiplied “statutory damages” in the class context.  We (and others) had hoped that the Second Circuit would use the case to provide clear answers to these questions and to remedy the New York federal courts’ status as a hotbed for questionable class-action complaints.  But with that court’s latest ruling—fortunately, an unpublished and non-precedential one—those hopes may have gone down the tubes.

Grains of paradise (aframomum melegueta), are a peppery, citrusy spice indigenous to West Africa, related to ginger and cardamom.  The name purportedly derives from medieval merchants’ claims that the plant grew only in the Garden of Eden.  Common to West African cuisine, grains of paradise are also one of the botanicals sometimes used to give gin its characteristic flavor.

In Florida, however, an obscure 1868 law makes it a third-degree felony to “adulterate[] … any liquor” with certain specified substances, ranging from grains of paradise and capsicum (chili pepper) to potentially deadly opium and “sugar of lead.”  Fla. Stat. § 562.455.  Some have postulated that this law’s original intent was to prevent consumer deception, as the banned ingredients were once added to liquor to make it taste stronger (more alcoholic) than it actually was.  That same practice spurred an 1816 law of Parliament (56 Geo. III, ch. 58) making it illegal for brewers and dealers in beer to possess grains of paradise.  Unlike merrie olde England, however, the Sunshine State never got around to repealing its law.

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.

Back in May, we wrote about a package of “extreme pro-plaintiff changes” that legislators had proposed to New York’s main consumer-protection statute, Gen. Bus. Law § 349.  There have been some significant developments on this front, so we figured an update was in order.

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.

Last month, the Second Circuit heard oral argument in what had seemed like the most consequential consumer class-action appeal in that court in years: three consolidated cases involving “flushable” hygienic wipes.  Both sides of the class-action bar were at the edge of their seat waiting for the Second Circuit’s guidance on several controversial issues of class-action law, including the appropriate standard for reviewing damages models at the class-certification stage.  Earlier this week, however, the Second Circuit essentially punted, sending the cases back to the district court for “further factual development.”  This is a frustrating result, but reading between the lines, class-action defendants may have reasons for cautious optimism.

While the New England Patriots were besting the Rams in the 2019 Super Bowl, Anheuser-Busch tried to get the upper hand on MillerCoors in a series of ads highlighting the “use of” corn syrup in Miller Lite and Coors Light. 

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).

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).