Nationwide class certified under California law

Bruno v. Quten Research Institute, LLC, --- F.R.D. ----, 2011 WL 5592880 (C.D. Cal.)

The court partially granted plaintiff’s motion for class certification of her California UCL, FAL, CLRA, and breach of express warranty claims. Bruno alleged that she purchased a liquid product labeled with the material misrepresentation that its active ingredient had "6X BETTER ABSORPTION" and was "6 Times More Effective" than the equivalent active ingredient in competing brands. The active ingredient at issue is the CoQ 10 enzyme, used as a dietary supplement. The product was also available as a gelcap.

From January 2009 to April 2010, defendants made the 6x claims. They stopped doing so at Costco’s request and after the NAD concluded that they lacked substantiation for the claims. Since 2007, they’ve also marketed a gelcap with 3x better claims such as "3X Better Absorption" and "300% Better Absorption."

Defendants, of course, contested constitutional standing on the grounds that plaintiff and the unnamed class members lacked a concrete injury. The court disagreed: Rule 23, not standing, was the appropriate basis for decision. Plaintiff had standing for the 6x liquid product, because she bought it. Defendants argued that she lacked standing to bring claims based on the 6x gelcap product because that was a different product, and that the 6x liquid product was more costly than competing gelcaps because of the liquid form and not because of the alleged misrepresentation. The court found that the dispute over how to measure the premium for defendants’ products was a dispute on the merits, not over standing. The “vast majority of persuasive authority” rejected defendants’ argument that she couldn’t bring claims based on the gelcap product: whether class representatives can bring claims on behalf of others with similar, though not identical, interests depends not on standing but on typicality and adequacy of representation.

Nor was the class uncertifiable because unnamed class members lacked standing. Defendants argued that establishing injury for each one would require a fact-intensive, individualized inquiry. Again, the “vast majority of persuasive authority” was to the contrary. The California UCL (and the CLRA and FAL) doesn’t require individualized proof of reliance and causation. Article III is satisfied if the plaintiff and class members suffer economic loss caused by the defendant, here caused by purchase of a misrepresented product. The Ninth Circuit has repeatedly held that there’s standing if at least one named plaintiff meets the requirements.

So, how about that Rule 23 analysis? Numerosity: during part of the class period, defendants shipped approximately 220,000 units of the liquid product, so no problem there. Typicality: plaintiff was typical of consumers exposed to the 6x claims, but not to consumers exposed to the claim that the product is "3X better absorbent." It might be true that the same evidence could show the falsity of both claims, but it could also be true that 6x is false and 3x is true, so the misrepresentation is not necessarily the same as to all potential class members. Defendants argued that plaintiff was atypical because she had reasons other than the 6x representation for purchasing. But a plaintiff’s individual experience with a product is irrelevant “where, as here, the injury under the UCL, FAL, and CLRA is established by an objective test,” here whether the product was marketed with material representations that were likely to mislead. Defendants also argued that plaintiff misread the claim, which was actually “up to 6X BETTER ABSORPTION." The “up to” was in fine print and didn’t work as a disclaimer.

Commonality: questions of law or fact were common to the 6x class. Defendants argued that some class members might lack any injury, but that’s not responsive to the issue. Again, California presumes deception from material misrepresentations that are likely to deceive. Adequacy: despite attacks on the plaintiff’s credibility, the court found her adequate as a class representation.

Rule 23(a) was satisfied, so the court turned to Rule 23(b)(3). Defendants again argued standing; the court didn’t consider this a useful argument. They also argued that the alleged misrepresentations weren’t material because sales increased after the statements were removed. This didn’t help because it went to the merits, not to predominance and superiority. The court found that the central question of whether the 6x claims were materially misleading predominated over any individual questions, since California law analyzes this question using a single, objective reasonable consumer standard, not a subjective test inquiring into each class member’s experience. A class action was also superior because it was the only practical way of litigating these otherwise small claims.

In its last rebuff to defendants, the court concluded that California law applied to the nationwide class. Application of the laws of a single state to a nationwide class requires consideration of due process. Due process is satisfied where a state has a "significant contact or significant aggregation of contacts to the claims asserted by each member of the plaintiff class, contacts creating state interests, in order to ensure that choice of [substantive state] law is not arbitrary or unfair." Phillips Petroleum Co. v.. Shutts, 472 U.S. 797, 818 (1985). This is a modest requirement designed to screen out state law only casually or slightly related to the litigation.

Defendants, the court found, had significant contact or at least a significant aggregation of contacts with California related to the claims in this case. They maintained corporate headquarters in California during the class period and sold approximately 30% of the allegedly misrepresented products in-state. Defendants argued that the products and marketing materials were produced outside of California, but they couldn’t “immunize themselves from California law simply by locating production of the allegedly offending materials outside the state, but continuing to sell those offending materials to large numbers of Californians.” Indeed, “courts in California routinely hold that applying California law to nationwide classes comports with the Due Process Clause.”

Given that due process was satisfied, defendants didn’t meet their burden to show that the law of another forum should apply. California choice of law analysis requires identification of true conflicts, which means that courts must ask whether there are material differences between different states’ laws on the facts of the case. Defendants, however, didn’t provide their own analysis of state laws, instead citing another court’s conclusion that there were material conflicts between California’s consumer protection laws and the laws of the other states. The court found that unpersuasive: in that case, the plaintiffs bore the burden of showing no conflict of law, but the burden was on the other side here. Defendants didn’t identify any specific state’s law as conflicting with California law, just cited other cases.