Monday, July 08, 2013

Fire watch: court certifies NY but not CA class in hair product case

Guido v. L'Oreal, USA, Inc., 2013 WL 3353857 (C.D. Cal.)

Plaintiffs sued L’Oreal for falsely advertising Garnier Fructis Sleek & Shine Anti-Frizz Serum by failing to disclose its flammability after 2007, when L’Oreal removed a flammability warning; they contended that the Serum was flammable even with denatured alcohol removed, as it had been in late 2006. The court granted a motion for class certification, but then found that the existing class representatives weren’t typical.  Plaintiffs were then added for putative NY and California classes.  The court certified the former but not the latter.

Numerosity was easily satisfied, with 9.9 million units sold nationwide, implying about 1.1 million units in California and 800,000 in NY.

Common questions centered around the factual and legal questions relating to the omission of the flammability warning, consumers’ reasonable expectations, etc.  “Because Serum was packaged and sold uniformly across the nation, these questions can be resolved ‘in one stroke.’ Moreover, answers to these questions are ‘central to the validity’ of each class member's claims because … each class member's claim hinges on (1) whether a reasonable consumer would have been deceived by Serum's packaging, (2) what information L'Oreal knew or had access to regarding Serum's flammability, and (3) what the true market value of Serum was given its alleged flammability.”  Thus commonality was also satisfied; putative class members’ individual reasons for purchasing a product don’t bear on commonality under the UCL under Tobacco II, which allows presumptions of reliance.

Typicality requires plaintiffs’ claims to be reasonably coextensive with those of absent class members, not substantially identical.  Each putative class representative bought Serum during the class period in a relevant state, and said that she wouldn’t have bought it at its market price if she’d known it was flammable.  L’Oreal argued that each was subject to unique defenses, but the court only agreed with respect to one.  One NY plaintiff, Germann, bought at least one pre-2007 bottle containing a flammability warning and didn’t notice the warning at that time; thus, L’Oreal could argue that she would’ve bought the product after 2007 anyway.  Thus, she’d been exposed to a warning label, while many class members who only bought after 2007 wouldn’t have been, and an individual defense of nonreliance might well succeed under NY law, rendering her atypical.

L’Oreal argued that another plaintiff, Baisley, was uniquely subject to a laches defense because she didn’t know that the Serum was flammable before she spoke to plaintiffs’ counsel and generally knew little about the facts.  But that didn’t mean that laches applied, or that L’Oreal suffered any prejudice; Baisley’s claims hadn’t been shown to be atypical of the class.  L’Oreal argued that another plaintiff was atypical because she said she might’ve bought Serum even with the warning, but that was a misreading of her deposition testimony, which was that flammability was a relevant consideration to her.  She might have been somewhat tentative in deposition, but she never said she would’ve bought a flammable product.  And though she wasn’t primarily motivated by seeking a refund of the purchase price—what she said she sought was a warning to others—that was understandable in light of the low price.  That wasn’t atypical, just the practical reality that only a zealot would sue just for $30.

Adequacy of representation was also satisfied.  Though counsel found the substitute plaintiffs, “[a] representative plaintiff's lack of detailed, comprehensive knowledge about the legal technicalities of the claims asserted in class litigation … provides no basis on which to deny a motion for class certification.”  Rudimentary knowledge of the claims asserted was enough, provided typicality was present. Here, there was no indication that the proposed class representatives were ignorant of the basic facts or of their duties as class representatives.  “While they may have first learned about Serum's alleged flammability from plaintiffs' counsel, this is not disqualifying, especially in light of counsel's explanation that the key facts underlying this case were only uncovered after costly testing.”

The court turned to Rule 23(b)(3)’s requirements of predominance and superiority and also found them satisfied for liability and damages for the NY class, but not for damages for the California class. Whether the omission of a warning violated the UCL, CLRA, FAL, Song–Beverly Act, and NY GBL presented common factual and legal issues, since the consumer protection laws protected “reasonable consumers,” defined objectively, and didn’t require each and every class member to be deceived in actuality as long as the omission here was material.  

The court rejected L’Oreal’s arguments based on Mazza, whose facts were distinguishable.  In Mazza, it was likely that many class members were never exposed to the allegedly misleading ads, but here the challenged advertising wasn’t a limited campaign that only affected some class members.  Rather, the claims here were based on the packaging, which hadn’t changed materially over the course of the class period, and thus class members were necessarily exposed to the advertising at issue. 

But without expert testimony on plaintiffs’ theory of classwide relief, certification was improper for the California class.  Under NY law, each injured consumer may recover $50 upon proof of injury; thus common issues predominated regarding proof of damages.  But under California law, L’Oreal argued that inquiry was required into whether each individual class member would’ve purchased the product if properly labeled, and how much they would’ve been willing to pay.  Plaintiffs argued that they’d use expert testimony to determine actual market value for a flammable product not labeled as such.  Each class member could then be awarded the difference between historical market price and true market price.  This was a legally justifiable theory of restitutionary relief that didn’t depend on individualized inquiries and that could be used under California consumer protection law as well as to compute relief for breach of the implied warranty of merchantability. 

But the Supreme Court’s recent Comcast decision held that it was improper to accept a method of computing damages that didn’t differentiate between harm caused by different forms of antitrust injury when the court had accepted only one theory of antitrust injury.  At the class certification stage, a model supporting damages must be consistent with the plaintiff’s liability case.  Certification therefore requires “evidence demonstrating the existence of a classwide method of awarding relief that is consistent with the plaintiffs' theory of liability.”  Without actual expert testimony, plaintiffs didn’t meet their burden of showing that common questions predominated over individual issues regarding classwide relief.  If the false advertising had a measurable impact on the Serum’s market price, then there’s a classwide method of awarding relief. But without a quantifiable impact on the market price, certification would be inappropriate, because plaintiffs didn’t show any other method of awarding relief based on common proof. Plaintiffs could renew their motion when the expert report was in hand.

NY, with its statutory damages, posed no such barrier.  Under NY’s procedural rules, a class action for statutory damages under §349 can’t be maintained.  But controlling precedent makes clear that this rule doesn’t apply to class actions in federal court, even though that produces forum-shopping.

With that out of the way, superiority was also easily shown.

L’Oreal argued that the class wasn’t ascertainable.  Some courts have found that classes aren’t ascertainable when some members might have known the truth about the falsely advertised product. L’Oreal argued that the class here could contain people who didn’t care about flammability.  But that’s not really about ascertainability, which is satisfied when the class can be defined through objective criteria, here whether they bought the product within a certain period.  L’Oreal’s argument was about similarity, already analyzed.  Anyway, there was no suggestion that class members knew that the Serum was flammable, and no evidence that consumers don’t care about flammability. Under California law, “[n]ondisclosures about safety considerations of consumer products are material,” suggesting that a broad class definition was appropriate in cases involving omissions about consumer safety. 

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