Wednesday, July 12, 2006

Listerine effective against class action

Pfizer Inc. v. Superior Court, --- Cal.Rptr.3d ----, 2006 WL 1892581 (Cal.App. 2 Dist.)

This was a follow-on class action based on Pfizer’s ads for Listerine indicating that it could take the place of dental floss for indifferent flossers. (See previous discussion here.) The trial court certified a California class, but the appellate court reversed, based on Prop. 64’s changes to the injury requirement of California unfair competition law.

After Prop. 64, each member of the putative class must have suffered injury in fact and lost money or property; the fact that the class representatives suffered injury in fact is insufficient – otherwise their claims would be atypical and not representative. Unless an UCL action is brought by the Attorney General or local public prosecutors, the likelihood of harm to the public is not sufficient standing to sue. Only actual harm will do.

Moreover, inherent in the “injury in fact” requirement is actual reliance on the false or misleading representation at issue. A federal case, Anunziato v. eMachines, Inc., 402 F. Supp. 2d 1133 (C.D. Cal. 2005) (discussed here), held that Prop. 64 had not added a reliance requirement to California law, because that would foreclose resort to the UCL in too many cases. The Pfizer court agreed that the Anunziato concern was reasonable, but substituted its policy judgment for that of California’s citizens. Rather, the federal court in Laster v. T-Mobile USA Inc., 407 F.Supp.2d 1181 (S.D. Cal. 2005) (discussed here), got it right by requiring plaintiffs to plead individual reliance.

Thus, the trial court’s certification of a class of all people who purchased Listerine in California over a 6-month period was overbroad. The Attorney General intervened on the side of the putative class plaintiff, to no avail.

The court added that Prop. 64 does “dramatically restrict[]” the UCL and False Advertising Law, precluding actions based on claims for “short weight” (when the consumer doesn’t specifically look at the listed package weight, about which the maker lied) and the like. But the court had to take the statutory language as it was. “Given the new restrictions on private enforcement under the UCL and the FAL, enforcement of these statutes in legitimate cases is increasingly the responsibility of a vigilant state Attorney General and/or local public prosecutors.” The court also pointed out that under California law, unfortunately, the changes wrought by Prop. 64 could not be amended by the legislature, but only by further initiative.

Comment on the underlying merits: It seems to me that the real problem here is the original Lanham Act case finding Pfizer's ads false and misleading. Most people, like me, are bad flossers; Listerine is at least as good as bad flossing at removing plaque, and may be better. So most people got a lot of truthful information from the ads. That's why detrimental reliance is so unlikely: Only people who were good flossers and abandoned floss for Listerine would have been harmed.

1 comment:

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