United States: Winning The War: Strategies For Prevailing In Consumer Fraud And False Advertising Class-Action Certification Battles

Originally appeared in Kaye Scholer's Consumer Products: Adapting to Innovation Report.

As Judge Richard Posner of the Seventh Circuit once said, class-action lawsuits "are the brainchildren of the lawyers who specialize in prosecuting such actions." Eubank v. Pella Corp., 753 F.3d 718, 719 (7th Cir. 2014). In recent years, those class-action lawyers have kept busy filing consumer fraud and false advertising putative class actions covering a broad array of claims, products and industries. These include, for example, suits attacking advertising claims regarding food and beverage products (e.g., "natural," "organic," "GMO-free," "freshly baked," "hand crafted"), to suits alleging misleading packaging of consumer products (e.g., so-called "slack-fill"), to suits based on alleged product defects or inefficacy.

Despite the filing of so many class actions, it is rare for a class action to go to trial. These cases generally rise and fall on the decision of the trial court to grant or deny class-certification under Rule 23 of the Federal Rules of Civil Procedure (or a comparable state rule); the denial of certification is the beginning of the inexorable end of plaintiff's case, and the certification of a class substantially increases the defendant's risk of losing the case, often leading to settlement. Thus, the class-certification motion is very often the key battle.

To increase the chances of prevailing, defendants should consider some of the following strategies discussed in Kaye Scholer's CLASS ACTION DESKBOOK (3D ED. 2012), which are based on decades of experience in litigating consumer fraud and false advertising class actions:

Removal. One of the first decisions many defendants face is whether to remove a putative class action from state court to federal court. The Class Action Fairness Act of 2005 made most nationwide class actions and many statewide class actions removable to federal court. Because of the biases of many state courts in favor of certification of consumer classes, many defendants choose to remove to federal court whenever possible. In some cases, however, there may be reasons to avoid removal. For example, some states, such as Texas, have case law that is considered to be more pro-defendant than some courts apply under Rule 23 of the Federal Rules of Civil Procedure. A defendant may also prefer to litigate a class action in a state court, such as New York, where most interlocutory orders, including orders certifying a class action, are immediately appealable.

Moving to Dismiss—Standing. Another early decision is whether to file a motion to dismiss the complaint. One potential ground to consider is the plaintiff's standing. As the Supreme Court recently reaffirmed in Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016), the named plaintiff in a class action must have suffered an injury in fact that is both concrete and particularized. A motion to dismiss for lack of standing could seek to dismiss the entire case (e.g., because the plaintiff was not harmed by an alleged product defect that did not manifest) or to narrow a case (e.g., if the plaintiff purports to assert claims with respect to products that the plaintiff did not purchase).

Moving to Dismiss—Merits. A defendant may also move to dismiss on the merits of the underlying claims. Common grounds for a motion to dismiss on the merits are:

  • failure to satisfy the plausibility pleading requirements of Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), Ashcroft v. Iqbal, 556 U.S. 662 (2009), and their progeny;
  • failure to satisfy Fed. R. Civ. P. 9(b) with respect to claims sounding in fraud;
  • preemption of the plaintiff's state-law claims by federal law;
  • failure to give a required pre-suit notice;
  • lack of privity;
  • statutory safe-harbor provisions;
  • the economic loss doctrine; and
  • the doctrine of primary jurisdiction.

If it is likely that a motion to dismiss will not result in dismissal of all claims in the complaint, filing such a motion may educate the plaintiff's counsel to the complaint's weaknesses, leading to an amended complaint with more refined or stronger claims. Class-action defendants should therefore consider whether to wait until the plaintiff's deposition or class-certification briefing to expose substantive weaknesses in the plaintiff's case.

Bifurcation of Discovery. Discovery in class actions is asymmetrical; the plaintiff will have few if any documents and the defendants may have substantial documents and potential witnesses and the burden of e-discovery. To lessen these burdens, the defendant should push for discovery to be bifurcated into two phases: class-certification discovery and merits discovery. Defendants should look to the recent amendments to the Federal Rules of Civil Procedure, which emphasize proportionality of discovery, to help make these arguments.

Deposing the Plaintiff. In opposing a motion for class certification, the most important evidence will often be the plaintiff's deposition testimony, which can highlight the individuality of the inquiries necessary to adjudicate the case, making class certification unsuitable. Counsel should inquire into the plaintiff's purchase history, his or her reasons for buying the particular product at issue, and his or her knowledge of or exposure to the particular advertisements at issue. The plaintiff may be forced to admit facts that are helpful to the defendant's predominance argument—e.g., that the only way to tell if other class members were deceived, which products they purchased, or how much they paid, etc., is to ask them.

Summary Judgment. The defendant should also consider making, if possible, an early motion for summary judgment addressed to an individual aspect of the named plaintiff's claim. Even if unsuccessful, the motion may force the plaintiff to argue that there are disputed issues of fact precluding summary judgment, which will bolster the defendant's argument on the class-certification motion that individual issues predominate.

Consumer Surveys. The defendant should consider whether the use of a consumer survey may be helpful in opposing class certification. Surveys may help prove, for example, that consumers buy the defendant's product for a variety of reasons, some of which are unrelated to the alleged defect or misrepresentation, but care is warranted because surveys may show that a significant percentage of consumers were deceived, albeit not all class members. In many cases, there is no need to conduct a litigation survey because the defendant will already have market research surveys in its files.

Expert Testimony. Expert testimony may be helpful in opposing class certification. Defendants should consider retaining an expert who can substantiate the challenged advertising claims by showing, for example, that the product works as advertised for many, if not all, class members. While such testimony goes to the merits rather than the Rule 23 factors, a judge who believes in the merits of the plaintiff's case may be more likely to grant class certification than a judge who has been educated to the weaknesses of the plaintiff's case, and showing that the product does not work the same way for all class members all the time will help show that common issues of fact do not predominate. The defendant might also consider whether it makes sense to retain a damages expert to opine, for example, that the plaintiff's damages model is incapable of measuring damages on a classwide basis, as the Supreme Court found in Comcast Corp. v. Behrend, 133 S. Ct. 1426 (2013).

The Plaintiff's Evidence. Is the plaintiff attempting to use classwide or statistical evidence to show that common issues will predominate? In Tyson Foods, Inc. v. Bouaphakeo, 136 S. Ct. 1036 (2016), the Supreme Court held that it is permissible to use statistical (or representative) evidence in a class action only if it would be permissible to use such evidence to establish liability in an individual plaintiff's claim.


Originally appeared in Kaye Scholer's Consumer Products: Adapting to Innovation Report.


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