Gaston v. Schering-Plough Corp., 2011 WL 3452398 (Cal.App. 2 Dist.)
Gaston appealed the denial of class certification in his UCL/CLRA/fraud claims over the labeling of Coppertone Sport SPF 30 Sunblock; the claims centered on the idea that “sunblock” promised total protection but failed to deliver. The court of appeals reversed.
After rejecting a FDA preemption argument, the trial court turned to substance, first rejecting the argument that restitution would equal the purchase price of the sunscreen, and instead plaintiffs would need evidence of the dollar value of the impact of the challenged claims.
Gaston submitted the declaration of a marketing expert, Eli Seggev, who conducted a survey finding that over 90% believed that the term “sunblock” meant protection from UVA, not just UVB, and that 90% of those believed that the product “blocked” UVA rays. Likewise, over 87% believed that “waterproof” included UVA protection, and over 85% thought the same about “ultra sweatproof.” More than 80% would choose a product with UVA protection over one without and would pay 15% more for it. Out of a list of 8 factors, including protection from sunburn, the most important factor influencing purchase was protection from the sun's harmful rays. Defendant submitted a declaration from another marketing expert criticizing the survey; this expert’s work has been excluded by a court.
Gaston testified that he read the labels and was misled by the sun protection, waterproof, and sweatproof claims.
The FDA didn’t have any specific UVA labeling requirements, but recognized the importance of UVA information to consumers. In 1999, the FDA determined not to put “sunblock” in its sunscreen monograph because it was concerned that the term “will be viewed as an absolute term which may mislead or confuse consumers into thinking that the product blocks all light from the sun.” It had similar concerns about “waterproof,” proposing “water resistant” instead. In 2001, the FDA issued a stay of its final rule (though it recently announced new OTC requirements).
The trial court denied the motion for class certification based on the predominance of individual questions of fact on reliance, causation, deception and injury. Prop. 64 doesn’t require absent class members to prove actual reliance and damages, since no class would ever be certified under that standard. But the presumption of reliance didn’t apply to Gaston’s CLRA and fraud claims. (The court did find that numerosity, ascertainability, typicality, and adequacy of representation were present.)
UCL class certification requires common questions on (1) whether a defendant's act or practice is unlawful, unfair or fraudulent, and (2) the amount of money a defendant may have acquired by means of those acts that must be restored to the class. There must be a well-defined community of interest among plaintiffs. The trial court found that restitution would require a highly individual assessment of causation given the UCL's standing requirement subsequent to Proposition 64.
But, given Tobacco II, it was error to say that a plaintiff must ultimately prove that all class members relied on, were deceived by, and suffered damages as a result of the alleged misrepresentations. UCL relief is available without individualized proof of deception, reliance, and injury. The trial court found that reliance was highly individual because the depositions of the class plaintiffs showed various reasons for buying the product, and because survey respondents intepreted the terms differently. But a fraudulent business practice under the UCL is one that is likely to deceive; Gaston argued that the survey and the FDA’s conclusions demonstrated that likelihood.
The court of appeals ruled that the question of how much money was unlawfully acquired from the class was subject to common proof about the difference between what the class paid and the value of what it received (which the survey suggested was a 15% premium).
The analysis under the CLRA is similar, though relief is specifically limited to those who suffer damage, making causation a necessary element of proof. Classwide causation may be established by materiality: “If the trial court finds that material misrepresentations have been made to the entire class, an inference of reliance arises as to the class.” Though the misrepresentations here were uniform, the trial court found they weren’t material because the five named plaintiffs relied on the misrepresentations to varying degrees, different segments of the survey placed different premiums on the various misrepresentations on the bottle, and the survey respondents interpreted the terms on the bottle differently and attributed different meanings to those terms.
Gaston argued that the question was whether the claims were material to a reasonable person as a matter of law and constituted a significant factor in purchases. He further contended that the evidence had shown this, even if there was variation in the degree of influence and the precise meaning given to different claims. The survey respondents consistently ranked UVA protection as the most important factor. “The fact a defendant may be able to defeat the showing of causation as to a few individual class members does not transform the common question into a multitude of individual ones; plaintiffs satisfy their burden of showing causation as to each by showing materiality as to all” (citation and quotation marks omitted). This was true even if some plaintiffs didn’t read the label and considered other factors in making their decisions.
The court of appeals concluded that “[t]he same labeling misrepresentations were made to all class members who purchased the Product, and the Survey indicates that the labels were a significant factor in their purchasing decisions. Thus, the labeling claims were material to a reasonable person, and the court should have applied the presumption of reliance as a matter of law.”
Proof of damages: the trial court thought it would have to be different for each consumer, who might not have read the label. “Each member need not prove he or she relied on the label as such reliance is presumed because the same misrepresentations were uniformly communicated.” If the appropriate measure of damages is the difference between what the class paid and the actual value, restitution will require only a simple calculation.
“Accordingly, plaintiff alleged common questions of law and fact under the CLRA and fraud claims.” Given the district court’s other findings, the class action would be superior as a matter of law. This isn’t like Wal-Mart Stores, Inc. v. Dukes, because here “uniform misrepresentations were made and injury depends on the reasonable person standard and not on the reasons for particular purchasing decisions.” Remand for an order certifying the class.