Wednesday, March 29, 2017

internal studies on consumer preference support class action treatment for weed killer claims

Martin v. Monsanto Co., No. 16–2168, 2017 WL 1115167 (C.D. Cal. Mar. 24, 2017)

This case grants class certification, illustrating the use of internal consumer research in class action practice.  The probabilistic nature of consumer reaction is not necessarily a great fit with class actions, but the use of presumptions can deal with that, as here.

Monsanto makes Roundup Weed & Grass Killer Concentrate Plus and Roundup Weed & Grass Killer Super Concentrate. Unlike “Ready-to-Use” Roundup, these concentrates must be diluted with water before use. A prominent sticker on the front neck of the bottle states that the product “Makes Up to __ Gallons”:  
bottle with "makes up to 42 gallons" prominent on neck
On the back label of the bottle, the instructions advise users to “Add 6 fl oz Per Gallon of Water” for Concentrate Plus, or “2 1/2 fl oz Per Gallon of Water” for Super Concentrate. Martin alleged that, when users follow the instructions on the back label, the concentrates only produce about half of the amount that Monsanto claims on the front neck sticker.  Additional instructions are in a pamphlet sealed under the back label, which can be opened before purchase, but it’s not clear how many consumers do that. The instructions state that, for best results, consumers should use the amounts provided on the back label, but that, for “easy to kill weeds such as seedlings,” the purchaser may add less concentrate per gallon of water. Only in that case will the concentrates make the amount claimed on the neck sticker.

Martin brought the usual California advertising/warranty claims.

Analysis of note: Monsanto argued that Martin wasn’t typical because she “did not read the instructions prior to purchase,” but failed to present any evidence that any significant portion of the class read the pamphlet or fold-out prior to purchase, or, specifically, the alternative mixing instructions for “easy to kill weeds such as seedlings.” Martin had evidence that she acted like thousands of other purchasers. And “a plaintiff’s individual experience with the product is irrelevant where, as here, the injury under the UCL, FAL, and CLRA is established by an objective test…. [I]njury is shown where the consumer has purchased a product that is marketed with a material misrepresentation, that is, in a manner such that members of the public are likely to be deceived.”

Monsanto argued that Martin was an inadequate class representative because she “seeks less in damages than the purported class members could receive outside of a class litigation through a full refund.” Monsanto’s consumer guarantee states: “If for any reason you are not satisfied after using this product, simply send us original proof of purchase and we will replace the product or refund the purchase price.” But people who sought refunds weren’t adequate class representatives, because they aren’t class representatives at all, and members who want a refund were free to opt out.

Predominance: Monsanto argued that class members had varying reasons for purchasing the concentrates, making materiality and reliance predominating individual issues. But for breach of express warranty, and for violations of the UCL and FAL, Martin didn’t need to prove individualized reliance. And, while reliance is an element of the CLRA, “an inference of common reliance arises if representations are material, and materiality is judged by an objective standard rather than any understandings specific to the individual consumer.”

At this stage of the litigation, Martin provided sufficient evidence of materiality to the reasonable consumer to make class certification appropriate. Monsanto’s own documents and consumer studies did the work. Monsanto itself considered its Gallons statement to be a “key claim[ ].”  A 3,000 person consumer research study found that “[w]hen asked what helps them make a purchase decision about what concentrate product to buy at [the] shelf,” 42% of respondents selected “How many gallons of product you can make,” which was the third-highest of 13 factors. Two-thirds of those who purchased concentrated herbicide did so because of “Value (price per oz. is cheaper than ready-to-use).” When researchers presented focus group subjects with a mock shelf of herbicide products, they observed that “Price to gallon ‘best value’” claims caught consumers’ eyes with “some frequency,” with “some consumers actually d[oing] the math on their notepads for various brands.”

A presumption of reliance is inappropriate when class members “were exposed to quite disparate information,” but here, there was no evidence that class members could buy the products without being exposed to the representations at issue. In “cases involving product labels,” courts “reasonabl[y] ... infer that the class members were exposed to the allegedly misleading statement at the point of sale.”

Similarly, Martin’s damages models were tied to her theory of liability and could be measured on a classwide basis. The “underfill” percentage could be calculated by comparing the number of gallons made when following the instructions on the back label with the number of gallons promised on the neck label. This number could then be multiplied by the retail price to obtain a standard damage amount for each bottle. This benefit-of-the-bargain model was adequately tied to Martin’s theory of liability on her express warranty claim and appeared to be capable of measuring damages on a classwide basis, since the methodology was identical for every purchaser and for any given bottle size.  Likewise, her restitution damages model was adequately tied to her theory of liability on the UCL, FAL, and CLRA claims and appeared to be able to measure damages on a classwide basis.  Class members bargained for a certain price-per-gallon: the average retail price divided by the number of gallons promised. This number could serve as a proxy for the actual value-per-gallon of spray solution and multiplied by the number of gallons the products actually supplied to determine the actual value of the products. Monsanto could challenge these models through cross-examination at trial.

Finally, Monsanto’s refund policy didn’t make class treatment inferior.  Under the plain language of Fed. R. Civ. P. 23(b)(3), “[t]he analysis is whether the class action format is superior to other methods of adjudication, not whether a class action is superior to an out-of-court, private settlement program.” 

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