Thursday, February 09, 2012

Neither Dukes nor Honda bar certification where ad claims were on all packages

Johns v. Bayer Corp., 2012 WL 368032 (S.D. Cal.) 
The court granted plaintiffs’ motion for certification, indicating that the recent Honda case isn’t the death knell for consumer class actions in California. Plaintiffs, alleging reliance, challenged statements Bayer made for its OAD Men's Health Formula and OAD Men's 50+ Advantage vitamins.  “On the front, back, and sides of the Men's Vitamins' packages and in its advertising, Bayer stated that taking Men's Vitamins daily would ‘support prostate health’” because the vitamins contained lycopene and later, selenium.  Plaintiffs alleged that Bayer charged a price premium over other multivitamins, even though the claimed benefits were absent and, in fact, recent clinical studies have shown that for some men, increased selenium consumption may increase their prostate cancer risk.
Plaintiffs alleged that Bayer focused on prostate health to make money rather than because it possessed competent and reliable scientific support.  They sought certification of UCL and CLRA claims.
Numerosity was easy: between 2005 and 2009, Bayer's national net sales of Men's Health were over $189 million, and between 2007 and 2009, its national net sales of Men's 50+ were over $39 million. It was reasonable to assume a sufficiently big California class.
Commonality: plaintiffs argued that common issues included whether Bayer's advertising of the Men's Vitamins was deceptive and likely to deceive the public. Bayer basically argued lack of predominance, of which more below.
Typicality/adequacy: Bayer argued that, since plaintiffs didn’t allege physical harm, they couldn’t be typical of class members who did.  But the class didn’t include claims for personal injury.  Bayer also argued that the named plaintiffs were subject to unique defenses on lack of reliance, credibility, proof of injury, or damages. “They also failed to read the FDA disclaimer, lack retail receipts for their purchases, and testified that reasons in addition to Bayer's advertising caused them to buy the Men's Vitamins. But as Plaintiffs note, if anything, these factors may make them more typical (not less) of other class members.”  (Heh.)  Moreover, the packages that they, and all class members, bought “prominently and repeatedly featured the identical ‘supports prostate health’ claim.”  They were all exposed to the same alleged misrepresentations; typicality and adequacy were satisfied.
The court agreed that common questions predominated, specifically whether there were misrepresentations likely to deceive a reasonable consumer.  These were binary issues capable of classwide resolution.  “Importantly, California consumer protection laws take an objective approach of the reasonable consumer, not the particular consumer.”  In addition, class reliance could be presumed under both the UCL and CLRA, the latter when a material misrepresentation was made to the class.
Bayer argued that reliance, materiality, timing, and damages were all individual issues.
Reliance: Bayer argued that reasons for purchasing the products were individual, and exposure to ads would vary by consumer in terms of the mix of TV, radio, and print ads each one saw. “But at a minimum, everyone who purchased the Men's Vitamins would have been exposed to the prostate claim that appeared on every package from 2002 to 2009. This is the predominant issue, not whether or not consumers also saw television or print advertisements.”  More generally, “when plaintiffs are exposed to a common advertising campaign, common issues predominate.”  Reliance could therefore be presumed.
Materiality: the same thing.  California evaluates materiality using a reasonable person standard, not individually.  The court also noted that the prostate health claim appeared on four panels of each package and could very well have been material, but that’s a question of fact.  In a footnote, the court characterized the claim as “very prominent[]” on the packaging: “the prostate claim was frequently listed first among purported benefits, and in more than one instance, the packaging stated prominently that the product contained ‘five times the amount of Selenium in Centrum® or Centrum® Silver®.’”  This supported plaintiffs’ argument that prostate health “was the ‘reason to believe’ the product offered something its competitors did not,” undercutting Bayer’s argument that prostate health was just one of many different claims on the packaging.
Timing: Bayer argued that the relevant science was in flux during the class period, but that went to the merits and not certification.
Damages: Bayer argued that individual issues predominated on damages. But damages are often an individual question that doesn’t defeat certification.  Here, one could calculate the damages by subtracting the value of the product without the claimed health benefit, which could be calculated using market information, from the price the class member paid.
The class action form was also superior in terms of judicial economy and the inability of class members to pursue individual claims for small amounts.
Bayer then argued that the named plaintiffs lacked standing because there were two distinct types of health claims, a qualified health claim using language proposed by the FDA that appeared on some of the packages, noting that the FDA had determined the correlation between selenium and reduced cancer risk was not conclusive; and the more general “supports prostate health” claim.  Because plaintiffs never saw the qualified health claim before purchase, Bayer argued, it couldn’t have hurt them.  The court didn’t see the relevance.  “Plaintiffs assert that they can demonstrate on a class-wide basis that Bayer conveyed a deceptive advertising message on its labeling and in its other advertisements. It is this overall message conveyed that matters.”
Not done, Bayer also argued that some class members’ claims were time-barred, but the legal and factual questions surrounding tolling were appropriate merits-based, classwide issues.
Finally, Bayer argued that Dukes barred certification because Bayer had a right to prove defenses to individual claims, such as that particular class members didn’t rely on the prostate health claim, “perhaps because they were aware of conflicting scientific studies.”  To the contrary, the court reasoned, Bayer was free to raise those defenses against individual claimants, then quoted another court for the point that “Bayer gives itself too little credit; the overwhelming majority of consumers probably trusted Bayer—a well-known company—and believed that there was some prostate-health benefit from taking the vitamins.”
Certification granted.

No comments: