Wednesday, June 15, 2022

should consumer experts get to use the word "material" in testimony?

This court says no, but I wonder what evidence experts think. I guess I wouldn't be surprised if courts didn't allow experts on the standard of care in a field to use the word "negligent" even while allowing them to say "in my opinion X didn't meet the standard of care," but it seems a little weird.

Mier v. CVS Pharmacy, Inc., 2022 WL 1599633, No. 8:20-cv-01979-DOC-ADS (C.D. Cal. May 9, 2022)

Mier alleged that CVS’s Advanced Formula Hand Sanitizer misleads consumers by representing that it kills 99.99% of all germs in violation of the FAL, UCL and related common law claims. Next to the 99% claim is an asterisk leading to the back label where additional language on the product states: “*Effective at eliminating 99.99% of many common harmful germs and bacteria in as little as 15 seconds.” The court denied certification.

Whether plaintiff’s surveys would be admitted was relevant to certification.

Expert Krosnick’s first survey asked telephone respondents about the primary purpose of hand sanitizer, the importance of a hand sanitizer’s germ-killing ability, and if they would purchase a hand sanitizer that kills 99.99% of germs rather than one that kills fewer germs. 88% of respondents said that they would purchase a hand sanitizer that kills 99.99% of germs rather than one that kills fewer germs. This was inadmissible under Daubert because it didn’t “show consumers the product front label, the back label, or any other information that a consumer purchasing CVS hand sanitizer would have access to.” It was too “abstract” and “attenuated” from the issue of whether the label statement was material. [This seems wrong to me—it may not be dispositive, but it is certainly relevant; general principles are often sensibly invoked in materiality determinations.]

Survey #2 showed respondents front labels of one CVS product and one comparable non-CVS product; some displayed the 99% claim. “The competitor product was always offered at the same price, and the CVS product was offered at one of five different prices.” Respondents picked and the expert used the answers to estimate the impact of removing the 99% claim on consumers.

CVS had a number of objections. The court rejected some, such as that the survey didn’t show consumers the back labels, which went to weight and not admissibility. But since he didn’t calculate a supply curve, which the court accepted was necessary to calculate a price premium, the survey could be admitted only “to calculate the impact the 99% claim had on consumer demand, consumer willingness-to-pay, and the value consumers attached to the 99% claim,” and not to calculate a price premium.

Survey #3 showed respondents an image of CVS hand sanitizer and instructed to read the text on the label of the CVS hand sanitizer, including the claim “kills 99% of germs.” Half of the respondents then read additional corrective statements about the product that cast doubt on the 99% claim. Respondents were then asked if they would purchase the hand sanitizer at various prices. Respondents who read the additional statements were less likely to do so, and the results were statistically significant.

CVS objected that it wasn’t relevant to test clarifying statements. But that was relevant to potential injunctive relief.

Plaintiff’s expert Silverman’s testimony on materiality based on his over 50 years of advertising experience, though he would not be able to use the word “material”—that was a legal conclusion. [If materiality means “likely to make a difference in buying decisions” and he is allowed to use those words, what good has this done? I’m prepared to accept the answer that juries should be able to connect the dots themselves, but I wonder about the psychological realities here.]

Plaintiff’s expert Calder was offered to testify “that a reasonable consumer will have no basis to question the 99% claim, and based on consumer psychology, will not read the back label or fine print of the CVS product.” His report was based entirely on experience, consumer research, and literature review. This too was admissible. He was “doing precisely what experts in the advertising field do: making a prediction based on experience as to how a claim will impact the consumer’s choice in purchasing a product.” Likewise, he wouldn’t be allowed to use the word “material.”

CVS argued that Calder and Silverman’s testimony should be excluded as contradicting the Krosnick study, which CVS interpreted as finding that over 80% of consumers did not consider the 99% claim to be material. But this was neither duplicative nor contradictory. The study quantitatively valued the claim, while Calder “qualitatively examines the impact of the 99% claim on a consumer’s purchasing decision, and “Silverman’s testimony is based on his practical experience advertising products to consumers and is not psychological or statistical.”

Nonetheless, the plaintiff still failed to provide a sufficient damages model, since the survey was only capable of calculating restitution, not fraud or misrepresentation damages. And he failed to show classwide damages for the FAL and UCL claims. “Survey #2 showed that when the 99% claim was removed, purchases of CVS hand sanitizer decreased by roughly 20%.” This showed 80% remaining willingness to purchase. This suggests “that the vast majority of Plaintiff’s proposed class members did not suffer any damages,” meaning that damages would require individualized inquiries. Predominance failed.

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