McCrary v.
Elations Co., LLC, 2014 WL 1779243, No. EDCV 13–00242 (C.D. Cal. Jan. 13, 2014)
The court
certified a class alleging the usual California statutory claims against a
supplement called Elations, whose label claimed a “clinically-proven
combination” and/or “clinically-proven formula.”
The court
rejected a challenge to ascertainability on the ground that self-identification
was insufficient to satisfy due process and it didn’t have any records
identifying the consumers of its OTC product.
Defendant’s argument would destroy the consumer class action. The class definition was enough to make it
administratively feasible to determine membership; because the alleged
misrepresentations were on the label, there was no concern about defining the
class to include people who weren’t exposed to the misrepresentation (though
see below). Elations’ concern for its
due process rights to challenge a putative member’s membership was
misguided.
Carrera v.
Bayer Corp., 727 F.3d 300 (3d Cir. 2013), is not the law of the Ninth Circuit.
It was enough that the class definition describes “a set of common
characteristics sufficient to allow” a prospective plaintiff to “identify
himself or herself as having a right to recover based on the description.” To the extent Elations had individualized
defenses, it was free to try them against individual claimants.
The
potential for false claims didn’t invalidate the objective criteria used to
determine inclusion. Elations pointed to one former plaintiff who testified
that he purchased Elations, but after further questioning at deposition, it was
revealed he purchased another product. Elations argued that class members may not
remember whether they purchased Elations, and that the joint supplement market was
crowded, a further source of confusion for potential class members. But sufficient
notice could cure confusion, and Elations’ records could identify the retailers
who sold its product, so that could help.
Plus, Elations’ marketing director explained that many of the competing
supplements were sold in pill form, unlike Elations, or in flavored versions
Elations didn’t have. Thus, “proper
notice regarding the form of the product and its characteristics may help
reduce consumer confusion regarding class membership.”
Elations
also argued that there was no precise time period when all class members would’ve
bought the product with the “clinically-proven” labels. The challenged language
was on the Elations label from January 28, 2009 through August 26, 2010, but
Elations did not recall or re-label existing products once the label change was
made. This justified limiting the class
period according to the two-year shelf life listed on the label, but not
rejecting the class entirely.
Numerosity
(like adequacy) was unchallenged.
Commonality
is satisfied by “the existence of shared legal issues with divergent factual
predicates” or a “common core of salient facts coupled with disparate legal
remedies within the class.” Here, the
common legal issues were whether the claims on Elations’ packaging that it
contains a “clinically-proven combination” and/or a “clinically-proven formula”
were material and false. By definition,
class members were exposed to these labeling claims, creating a “common core of
salient facts.”
Elations
contested typicality, which requires a representative plaintiff’s claims to be “reasonably
co-extensive with those of absent class members.” Elations argued that plaintiff’s medical
history of taking Vicodin created a unique defense because it may have
interfered with Elations’ effectiveness in improving his joints. Not so, since his theory was false advertising—he
bought the product/paid more than he would have because of the allegedly false
claims. Also, typicality focuses on the
defendant’s conduct and the plaintiff’s legal theory, not the plaintiff’s
injury. In addition, Elations’ defense
was not atypical of defenses available against other class members, “as it is
likely many other Elations’ users took other medications and/or suffer from
other illnesses.”
The court
did agree that customers who bought Elations online had to be excluded from the
proposed class, because they might not have seen the label/shrinkwrap on which
the clinically proven claim was made. “Even
if the websites offering Elations presented similar clinical proof claims in
their marketing or description of the product, this would be insufficient
because Plaintiff did not view any claims made on the website, nor did he
purchase the product online.” (This
seems to contradict the general statement about typicality—his claim need not
be identical.)
Turning to
Rule 23(b)(3), Elations argued that unnamed class members might lack standing,
and that the court would have to make individual determinations of which
consumers actually viewed the clinically proven claim; of materiality; and of
whether consumers actually believed the product was ineffective and caused them
damage. However, the class definition
presupposed exposure to the clinical proof claims. And “a presumption of
exposure is inferred where, as here, the alleged misrepresentations were on the
outside of the packaging of every unit for an extended period.” Mazza was distinguishable, given the
limited scope of the advertising at issue there and given that Mazza concerned an allegedly misleading
omission instead of an explicit statement about effectiveness. “Defendant does not argue, nor could it, that
its clinical proof claims were of limited scope, since it placed them on the
packaging of every unit of Elations sold over an 18–month period.”
As for
standing, it exists if at least one named plaintiff meets the requirements of
the law, which was the case here. Moreover, “at the class certification stage
Plaintiff need not prove that the clinical proof claims were material to all
consumers of Elations or that they relied on those claims.” Materiality raises
at least an inference of reliance where material misrepresentations were made
to the entire class. Materiality is an
objective test of likely deception; thus, reliance didn’t require
individualized determination.
Elations
argued that the court couldn’t infer reliance because “many consumers purchase
Elations based on the recommendation of a doctor or friend or for reasons other
than the information printed on the label.” But Elations’ own consumer survey showed that
over 75 percent of Elations purchasers believed that “proven levels” of the
active ingredients were worth paying for. Plus, the falsity here went to the
product’s efficacy, “the heart of a customer’s purchasing decision. Defendant
cannot reasonably argue that a putative class member would purchase a product
that does not work, regardless of who recommended it.” This was enough to infer
reliance at this stage.
In addition,
the claim that some putative class members were happy with Elations and thus
were uninjured failed. Consumer protection claims don’t depend on class members’
subjective state of mind, but whether they bought a product bearing the alleged
material misrepresentations. Likewise, the court rejected Elations’ argument
that consumers might interpret “clinically proven” in various ways. Whether this was deceptive was a jury
question, and “clinically proven formula” had a “clearly ascertainable
meaning,” “namely that identifiable sources substantiate the claims of
effectiveness, and thus [was] not subject to boundless interpretations.” As a result, common questions predominated.
The court
also found that plaintiffs might be able to provide a workable damages model,
even though they weren’t entitled to a full refund because they might have
obtained some benefit from the product. At this stage, they didn’t have to
identify a comparable “clinically proven” product by which to measure
damages. (Shouldn’t they instead have to
identify a comparable non-clinically proven product to show the price
difference?) The amount of damages, even if it required
individual calculation, didn’t defeat certification since none of the
sought-after remedies would require an award of damages unique to any
particular class member.
The class
action mechanism was superior because there weren’t alternatives, given the low
value of individual claims. Thus, the class was certified as limited.
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