conjoint analysis has to isolate challenged representations

Moore v. GlaxoSmithKline Consumer Healthcare Holdings (US) LLC, --- F.Supp.3d ----, 2024 WL 348821, No: 4:20-cv-09077-JSW (N.D. Cal. Jan. 30, 2024)

The court grants partial class certification and allows/excludes some expert testimony in this case alleging that ChapStick products were misleadingly labeled “100% Natural,” “Natural,” “Naturally Sourced Ingredients,” and “100% Naturally Sourced Ingredients” when they actually contain non-natural, synthetic, artificial, and/or highly processed ingredients.

The court allowed the expert testimony of a survey researcher for a proposed consumer perception survey and proposed conjoint analysis. Objections to the proposed survey went to weight, rather than admissibility. Likewise, testimony from an economic consultant was admissible because it provided additional information about conjoint analysis, including how it would adequately account for supply-side factors from an economics standpoint.

However, testimony of chemists about their view of what constituted an “artificial” ingredient wasn’t relevant: “Here, the only relevant understanding of the Challenged Statements is that of the reasonable consumer.” Both parties’ chemists were excluded.

Skipping over a lot, could materiality be proved on a classwide basis? As previous cases indicate, “[m]ateriality can be shown by a third party’s, or defendant’s own, market research showing the importance of such representations to purchasers.” Defendants’ documents and testimony acknowledge that there is a “strong consumer desire for ‘natural’ products and ingredients” in the lip balm market generally. Internal marketing research concluded that the “100% Naturals” ChapStick products “[t]ap[ ] into consumer desire for [a] natural option,” finding “79% of lip balm users 18-34 [are] interested in [the] natural option.” The same percentage of consumers identified ingredients as an “important” product-attribute; 59% of consumers also identified how ingredients are sourced; and 57% identified that where ingredients are sourced is “important.” Defendants’ other surveys rendered similar results: one found “ ‘Natural’ is important in a product that promises more than color and another found 65% of consumers place “importance” on “[a]ll-natural ingredients.” This was enough to create common evidence of materiality to a reasonable consumer.

However, a proposed consumer perception survey didn’t separately establish common proof of materiality. It failed to sufficiently isolate the challenged statements, combining the “natural” terms with extraneous words such as “Lip Butter,” “Natural with Argan Oil,” “Natural Age Defying,” etc. But the proposed survey was not impermissibly leading merely because it asked “whether or not they understand the specified statements on the product packaging to be communicating certain meanings.”

Failure to isolate the challenged statements in the proposed conjoint survey also made it incapable of calculating a reliable price premium; the court suggested that it could grant damages class certification on a renewed motion if there were a method that isolated the challenged statements.

There was standing to seek injunctive relief because the plaintiff still desires to buy natural lip-care products and would like to buy them again, but doesn’t know whether they are, in fact, natural, and she does not have the expertise to discern from their ingredient disclosures whether the Challenged Statements are true.