court once again reduces false advertising statutory damages award to 10% of request on constitutional grounds

Montera v. Premier Nutrition Corp., 2025 WL 751542, No. 16-cv-06980-RS (N.D. Cal. Mar. 10, 2025)

I just taught this case!—The court once again, after remand, reduces a statutory damages award based on NY consumer protection law from $83 million to $8.3 million on substantive due process grounds (funny how that never works in copyright). (At least plaintiffs got their fees for the appeal.)

A jury found Premier liable to a class of New York purchasers for deceptive advertisement of Joint Juice under GBL Sections 349 and 350, which impose statutory damages of $50 and $500, respectively, or actual damages, whichever is greater. Wakefield v. ViSalus, Inc., 51 F.4th 1109 (9th Cir. 2022), subsequently held that statutory damages awards could be unconstutionally excessive as a matter of substantive due process (gone for women! Here for corporations!). The 9^th Circuit told the district court to apply Wakefield on remand.

Montera asked this time for $83,124,500, or $500 per violation under GBL § 350, based on sales of 166,249 units of Joint Juice in New York during the class period; the court determined instead that the award should be reduced to $50 per unit sold—the amount available under GBL § 349 only.

Possibly a key factor here is that New York law provides that statutory damages are not an available remedy in class actions under §§349-350, but that rule doesn’t apply in federal court because the Supreme Court said that the New York rule was procedural, not substantive. Actual damages for the class—all that would be available in state court—would be $1.4 million.

Wakefield instructed courts to consider whether “aggregation [of statutory damages] has resulted in extraordinarily large awards wholly disproportionate to the goals of the statute” and whether the award “greatly outmatch[es] any statutory compensation and deterrence goals.” The case also pointed to the factors articulated in Six (6) Mexican Workers v Ariz. Citrus Growers, 904 F.2d 1301 (9th Cir. 1990), for “further guidance” in determining whether statutory damages are disproportionately punitive in the aggregate: “1) the amount of award to each plaintiff, 2) the total award, 3) the nature and persistence of the violations, 4) the extent of the defendant’s culpability, 5) damage awards in similar cases, 6) the substantive or technical nature of the violations, and 7) the circumstances of each case.”  The “public importance and deterrence goals” to be considered are: “(i) the public interest; (ii) the opportunities for committing the offense; and (iii) the need for securing uniform adherence to the statute.” But, the court noted, “there is a dearth of appellate authority on how to reduce aggregated statutory damages awards once a constitutional issue is identified.”

Premier sought to get the court to reject any award of statutory damages at all.

Wakefield began with the proposition that “[o]nly very rarely will an aggregated statutory damages award … exceed constitutional limitations where the per-violation amount does not.”

Although the statute’s language was clear, this was the uncommon case where the constitution must limit damages “so severe and oppressive’ as to no longer bear any reasonable or proportioned relationship to the ‘offense.’ ”

Montera argued that the NY state provision that didn’t allow statutory damages in class actions was irrelevant because it was merely procedural and thus inapplicable in federal cases.  But the Ninth Circuit, in remanding, said that “the relevant statutory goals for the district court to consider on remand include the Legislature’s compensation and deterrence goals in enacting GBL §§ 349 and 350—the statutes that authorized the statutory damages at issue.” “Therefore, the New York legislature’s explicit concern about the punitive nature of aggregated statutory damages does some work to differentiate this case” from others. On the other hand, rejecting statutory damages entirely because of the NY state rules would be an “end run” around the Supreme Court determination that the rule was procedural.

So what are the relevant goals? The private right of action was added when the legislature recognized “the limited ability of the New York State Attorney General adequately to police false advertising and deceptive trade practices.” The legislature authorized statutory damages to “encourage private enforcement” and to “add a strong deterrent against deceptive business practices,” and increased those amounts in 2007, because “[c]urrent limits [were] too low to be effective.”

Thus, the statute’s legislative history and text indicated that the goals were “to compensate injured consumers and deter future wrongdoing.” The legislature also didn’t reject punitiveness, because there was no damages range.  “Even a predominantly punitive award is not necessarily constitutionally unsound.”

Nonetheless, “Premier persuasively argues Montera’s requested award is disproportionate to the goals of the statute, particularly in light of the conduct at issue. The $83 million requested by Montera is so large as to become entirely untethered from the statutory goals.” It was far in excess of compensation; what about deterrence and punitiveness? Premier argued that actual damages and attorneys’ fees (nearly $7 million, plus $1 million in costs) sufficed for deterrence.

And, on deterrence grounds, “while there are important public interest concerns in protecting New York consumers, the opportunities for committing this offense are not unlimited. In this matter, Premier has ceased to sell Joint Juice.” Thus, “an $83 million award would be largely punitive”—so punitive as to raise constitutional concerns.

In terms of the Six Mexican Workers factors, it was hard to evaluate whether the award to each individual class member (over $1100) was really out of bounds because there aren’t many comparable cases. Premier’s culpability was “mixed”: it made the choice to continue marketing its product as containing joint health benefits. “Despite the arrival of numerous studies pointing to a lack of benefits from glucosamine and chondroitin in the dosage at issue, Premier Nutrition continued to market its product not just to people seeking joint health benefits, but more specifically to people seeking joint pain and arthritis relief.” And Montera offered evidence that Premier “was aware of the changing tide in the science yet continued its marketing.” The violations here were “substantive, not merely technical.”

On the other hand, the harm to consumers was economic and not physical. On the other other hand: “Class members based reasonable hopes on Joint Juice’s promises. And while Premier may not have targeted people with financial vulnerability, it did target people suffering from joint issues seeking relief. Taken with Premier’s culpability, these economic and intangible harms again lead to a mixed result on Premier’s overall reprehensibility.”

As noted above, there weren’t really comparable cases. So, on balance, the Six Mexican Workers factors “support the conclusion there is a due process issue with Montera’s $83 million requested award.” (Which factors favored Premier?)

So, how to go about reducing the award? Measuring by actual damages had no real justification:

Wakefield’s warning against overstepping the role of the judiciary looms large at this stage. When a legislature codifies minimum damages in statutory text, courts “are constrained by a statute’s language and interpret statutes with awareness that [the legislature] could have enacted limits as to damages, including in large class action litigation, provided discretion to courts to award damages within a given range, or limited liability in any number of ways.”

So, the court chose the clear minimum set by § 349 alone, or $50 per violation. That “more closely hews to the compensatory, deterrence, and punitive goals of the statutes.” It was compensatory, and enough to deter.