allegedly useless supplement supports certification (if not weight control)

Capaci v. Sports Research Corp., 2022 WL 1133818, No. CV 19-3440 FMO (FFMx) (C.D. Cal. Apr. 14, 2022)

Plaintiff sued SR for violating the UCL/FAL/CLRA, breach of express and implied warranties, and negligent misrepresentation based on SR’s marketing of “ ‘Sports Research Cambogia’ (‘Garcinia Cambogia’ or the ‘Product’), a dietary supplement that Defendant falsely claims is an effective aid in ‘weight management’ and ‘appetite control,’ despite the fact that the Product’s only purportedly active ingredients, Hydroxycitric Acid (‘HCA’) and extra virgin organic coconut oil, are scientifically proven to be incapable of providing such weight loss benefits.”

Defendant argued that consumers were not uniformly exposed to the claims at issue because the product labels varied during the class period, and thus, an individualized inquiry would be required to determine which labels consumers were exposed to, but the evidence showed that the product labels contained one or both of the claims during the class period, and, under the circumstances, a consumer wouldn’t have needed to be exposed to both at once to be misled. Although defendant argued that it didn’t control how retailers sold the product, it provided no evidence that they made any changes to the label, and plaintiff offers evidence that they sold the product with the claims. Thus, commonality was established.

Defendant argued that materiality required individualized inquiries. Its expert’s survey found that most consumers of the subject product were influenced by third-party recommendations, not the claims. However, “[h]ow consumers first learned about [defendant’s product] ... does not matter if they nonetheless decided to purchase the product only for its purported health benefits.” Here, questions of materiality were “amenable to common proof: reviewing the advertisements, labels, and then asking the jury how they understand the message.”

Defendant argued that studies couldn’t provide common answers to the question of whether the product could actually work, because the studies “all focus on specific population subsets consisting of overweight or obese individuals” rather than “people looking to maintain their current healthy weight.” But, “while the scientific evidence cited by plaintiff’s expert may not have tested persons in every conceivable consumer population, the studies, according to plaintiff’s expert, uniformly show that ‘the claim that Garcinia Cambogia and HCA produce weight loss in humans ... [is] false and misleading.’” Thus, this criticism went at most to weight, not admissibility, of the efficacy evidence. Nor were plaintiff’s studies required to specifically test defendant’s product to be probative of its efficacy. And plaintiff’s “claims do not rise or fall on whether individual consumers experienced health benefits, due to the placebo effect or otherwise.”

Similar considerations established predominance. Defendant argued that plaintiff “provides no evidence to support [ ] a presumption [of reliance], such as consumer surveys or other market research showing classwide reliance based upon the materiality of the [claims].” And defendant argued that its expert’s survey established a “lack of homogeneity as to what was material to SR purchasers.” No dice.

California courts have “expressly rejected the ‘view that a plaintiff must produce a consumer survey or similar extrinsic evidence to prevail on a claim that the public is likely to be misled by a representation.’ ” Plaintiff’s claims went to the core of the product: whether it was, as advertised, “an effective aid in ‘weight management’ and ‘appetite control’, despite the fact that the Product’s only purportedly active ingredients ... are scientifically proven to be incapable of providing such weight-loss benefits.” Even if consumers were influenced by factors other than the claims on the label, “[d]efendant cannot reasonably argue that a putative class member would purchase a product that does not work, regardless of who recommended it [or other influencing factors].” Also, the court was persuaded that a consumer’s understanding of the phrases “weight management” and “appetite control” is susceptible to common proof.

The court also certified negligent misrepresentation claims and breach of express warranty claims, but for implied warranty there was no privity if a third party sold the product to the consumer, so common questions didn’t predominate.

Damages: An uncertain damages calculation should not defeat certification. A plaintiff may seek restitution for UCL, FAL, and CLRA violations based on a full refund model “when a product is shown to be worthless,” in which case “damages may be calculated by multiplying the average retail price by the number of units sold.” Plaintiff’s expert opined, based on defendant’s sales data, that damages could be calculated based on an estimated average retail price. The full refund damages theory was consistent with plaintiff’s theory of liability and could proceed.

Defendant responded that its product had value outside of the benefits touted on its label, such as the value of coconut oil in defendant’s product, which, according to defendant’s damages expert, “is demonstrated by stand-alone supplements that are sold separately without any of the contested labeling claims of this case.” But defendant pointed to no evidence that coconut oil was capable of achieving the weight management claims on the product; the only evidence was that it “decided to use coconut oil ... because it is fat soluble and thus makes [garciania cambogia] easier to absorb once ingested.” It wasn’t necessary for plaintiff’s damages model to account for an ingredient unrelated to the label’s claims, “especially where, as here, defendant added the coconut oil simply to improve absorption of the main ingredient that plaintiff contends is worthless.” The types of cases rejecting a full refund model “involve products that could provide some value to their purchasers even if they did not perform as advertised and for which it strains credulity to argue that no consumers would have purchased them if not for the allegedly false statement. This is the case with many food products, because if nothing else, they provide calories, hydration or good taste to the consumer.”

Defendant argued that plaintiff’s method of calculating damages was impermissible “nonrestitutionary disgorgement” because it is based on “revenues Retailers received from consumers, not what SR received from Retailers[.]” Defendant argued that these amounts are “unknown as Retailers short-pay invoices for product return, often times without identifying which specific product is being short-paid.” But that’s not consumers’ problem. “Class wide damages calculations under the UCL, FAL, and CLRA are particularly forgiving. California law requires only that some reasonable basis of computation of damages be used, and the damages may be computed even if the result reached is an approximation.”

Ascertainability: The Ninth Circuit has declined to “impose a freestanding administrative feasibility prerequisite to class certification.” “There is no requirement that the identity of class members ... be known at the time of certification.” Any concern about including consumers “who received a benefit from the Product” was similarly unavailing because “consumer satisfaction is irrelevant” where a plaintiff’s theory is that defendant’s product provided no benefit to any consumer despite its advertised messages. And the court would modify the proposed class to exclude any consumer who may have received a refund or returned the product.