Wednesday, May 16, 2012

My keen fashion sense: L'Oreal class action certified

Guido v. L'Oreal, USA, Inc., 2012 WL 1616912 (C.D. Cal.)

Plaintiffs sued on behalf of putative classes of California and New York residents who purchased  Garnier Fructis Sleek & Shine Anti-Frizz Serum, alleging that L’Oreal failed to properly label the product as being flammable or combustible near high heat producing styling appliances, and made affirmative misrepresentations that suggested it was safe to use the product in proximity to such appliances.  The court granted class certification for the California class (UCL, CLRA, and Song-Beverly warranty claims) and the NY class (GBL §§ 349-350).

At its initial launch in 2004, the product had a flammability warning: “Avoid Fire, Flame, Smoking and Heat (Except For Styling Appliances) During Application and Until Hair is Completely Dry.”  In 2006, L’Oreal removed denatured alcohol as an ingredient to comply with California’s Volatile Organic Compound regulations, and soon thereafter removed the flammability warning.  Plaintiffs argued that two other ingredients rendered the product flammable, while L’Oreal disputed that claim.  Before and after the warning was removed, the directions were identical: “Dispense 1 pump of serum, or as much as needed for your hair type, into the palms of your hands. Apply uniformly to towel-dried or dry hair. Do not rinse. For sleekest look, style using brush and blowdryer.”

L’Oreal first argued that plaintiffs were bringing product liability claims that weren’t amenable to class treatment.  Plaintiffs responded that their consumer protection claims were ideal candidates for certification; the classes excluded anyone who’d suffered physical injury from using the product, and sought redress for people who paid more for the Serum than they otherwise would have.  L’Oreal rejoined that, if so, they lacked Article III standing because they suffered no economic injury, and that each member of the class needed to demonstrate such standing.

The court found that plaintiffs adequately alleged economic injury (lost money or property) to satisfy Article III, and that they could represent the putative class since all that’s required is for a named plaintiff to have standing.  Both named plaintiffs testified that, had they known the product was flammable, they would have paid less than its retail price or would not have purchased it at all.  They also testified that they suffered a loss in value and usefulness of Serum—one specifically stopped using it after she discovered the problem.   Nor must each class member demonstrate reliance under the UCL; restitution is available to absent class members without individualized proof of deception, reliance, or injury.  As long as omissions or misrepresentations are material, a presumption or at least an inference of reliance arises on behalf of the class.

L’Oreal submitted a declaration from Dominique M. Hanssens, a marketing professor, opining that it was “speculative to conclude that the lack of a warning or the presence of a misleading warning on product packaging has the same impact on all consumers” and might “le [a]d to a buying decision.”  He also said that “one cannot conclude that the omission of a flammability warning has enabled L'Oreal to charge a premium for Serum.”  The court found this declaration not relevant to certification.  Materiality is an objective standard, so whether it might not have had the same impact on all consumers doesn’t matter.  The named plaintiffs testified that they would not have purchased, or would not have paid as much for, Serum had they known it was flammable. That was enough to raise a classwide inference of causation between the alleged wrongful conduct and alleged economic harm.

Turning to certification factors: numerosity was easy, as was adequacy.  Plaintiffs argued that there was commonality because the bottles had the same message across the nation, so the claims stemmed from the same source.  L’Oreal argued that the UCL required plaintiffs to show a connection between the alleged improper conduct and the unnamed class members, destroying commonality because the class included people who bought the product for reasons other than L’Oreal’s failure to disclose its flammability.  For example, one named plaintiff bought the product after reading ads promising sleekness, detangling, and low price, while another bought based on prior experience with the product and price. Thus, even the named plaintiffs weren’t concerned with flammability.

The court agreed with the plaintiffs.  There were numerous common factual and legal issues, including whether the packaging/ads were deceptive; whether a reasonable consumer would expect a warning given that the FDCA requires hazardous cosmetics to be appropriately labeled; whether L’Oreal had a duty to disclose the alleged flammability; whether the product is in fact flammable; and what the true market value of the product was.  Because the packaging was uniform nationwide, these central issues could be resolved on a classwide basis. 

L’Oreal’s arguments to the contrary were unpersuasive; both named plaintiffs testified that they would have behaved differently if they’d known about the flammability, which demonstrated materiality.  (It’s true that danger might not be the first thing on a consumer’s mind for many common purchasers; that doesn’t mean that an undisclosed danger is irrelevant, just that she doesn’t know it exists!)  In any event, UCL claims focus on the defendant’s conduct, and not on each class member’s reason for purchase.  Unlike in Mazza, where it was likely that many class members were never exposed to the allegedly misleading ads, the alleged misrepresentations weren’t in a limited set of ads but were on the bottle itself, necessarily exposing purchasers to them.

Typicality requires named plaintiffs’ claims to be reasonably coextensive with those of class members.  Plaintiffs argued that such was the case here; the claims all arose from the same alleged mislabeling.  L’Oreal responded that the named plaintiffs weren’t concerned with flammability didn’t pay a premium for the product, so they couldn’t represent others who did.  The court disagreed, given each plaintiff’s testimony on materiality; they suffered the same type of economic injury and sought the same redress as the putative class members.  Even if the amount of a price premium varied among class members, differences in damage amounts don’t preclude class certification.

Rule 23(b)(3)’s more stringent requirements were also satisfied.  On predominance, L’Oreal argued that no presumption of reliance was warranted for the class, making individual questions predominate; because L’Oreal made numerous representations about the product rather than just one, and because the issue here was an omission instead of an affirmative misrepresentation, reliance wouldn’t be uniform.  The court disagreed, since the UCL claims could be resolved by determining whether the alleged omissions and misrepresentations deceived the average reasonable consumer, without individualized proof of deception, reliance and injury, so long as the named plaintiffs demonstrated injury and causation.  The CLRA treats material omissions similarly.  And whether it was false to represent that the product was safe to leave in the hair while using heated appliances, in violation of the Song-Beverly Act ,was also a common question.  As for the NY claims, the standard for misleadingness was also an objective one.  A §349 claim doesn’t require reliance, though a § 350 claim does; but in the latter case there’s a presumption of reliance when the defendant controls the relevant information and a consumer of ordinary intelligence could not discover the true state of affairs.  Further, allegations that consumers paid a premium for the product based on marketing representations adequately alleged an injury under § 350.  Thus, there was also predominance for the NY claims.

With that out of the way, superiority was also readily established.  Consumer class actions are good ways of enforcing consumer protection laws, especially for products like this one selling at under $10 a bottle where there is no realistic alternative to a class action.

No comments: