Defendant's survey too flawed to avoid class certification in "rapid release" case

Bailey v. Rite Aid Corp., 338 F.R.D. 390, 2021 WL 1668003, No.. 4:18-cv-06926 YGR (N.D. Cal. Apr. 28, 2021)

Bailey brought claims over Rite Aid’s marketing of its over-the-counter acetaminophen gelcaps as “rapid release.” Studies allegedly show that “traditional, non-rapid release acetaminophen products can be equally effective in the same, if not faster, time period than its Rite Aid rapid release products,” but Rite Aid still charged a premium. The court reasoned that Bailey’s theory of economic harm was predicated on consumers having been misled into thinking that the Rite Aid gelcaps are faster-acting than Rite Aid tablets “by virtue of having compared the labels and prices of both products,” so “only consumers who purchased Rite Aid gelcaps at brick-and-mortar Rite Aid stores could have suffered the economic injury alleged in the FAC.”

"rapid release" results

FWIW, my search for “rapid release acetaminophen” on Rite Aid’s website actually offered me non-rapid release versions to compare, so I have questions about this conclusion, but Bailey conceded the issue at the hearing and limited the proposed class to in-store purchasers.

The court certified a damages class, rejecting Rite Aid’s objections to Bailey’s expert Silverman, who testified based on advertising experience and not based on a specific survey of Rite Aid gelcaps consumers. “[A]n expert who offers testimony on the question of whether a reasonable consumer is likely to be deceived by an allegedly misleading statement, or whether a reasonable consumer would find such a statement to be material, is not required to conduct a consumer survey if his or her testimony is otherwise reliable.”

Rite Aid’s own survey purported to show lack of deception/materiality, but the survey “suffers from significant flaws that detract from its persuasiveness as evidence that the issue of likelihood of deception cannot be resolved with common proof.” One part of the survey asked past consumers of Rite Aid gelcaps to select from among twenty-three reasons for why they purchased the product, but none of the twenty-three options was “rapid release.” Nor did they describe attributes consistent with Bailey’s theory of liability, such as “faster-acting” or “works faster.” These closed-ended questions didn’t offer respondents the option to select a response that is consistent with Bailey’s theory of liability. Other closed-ended questions in the survey had the same flaw; even when they gave respondents the options of choosing that the product “is fast release,” they didn’t allow respondents to answer in ways indicating a comparison with other products. Nor did the images used allow a survey respondent to compare the prices and labels of the Rite Aid gelcaps with those of the Rite Aid tablets.

Rite Aid also argued that the statement wasn’t actually false, because it just meant the speed at which the gelcaps dissolved relative to the FDA’s standards for “immediate release” dissolution. But “Rite Aid points to no evidence showing that consumers of Rite Aid gelcaps were uniformly aware of the FDA’s standards for immediate dissolution and uniformly interpreted the ‘rapid release’ statement at issue in light of such standards.”

Likewise, given the survey flaws, the court wasn’t convinced that it showed that consumers didn’t have a common understanding of the term “rapid release.” Plus, the plaintiff wasn’t required to establish a uniform interpretation at the class certification stage.