In Lytle v. Nutramax Laboratories, Inc., 114 F.4th 1011 (9th Cir.), the Ninth Circuit Court of Appeals addressed two key issues arising in motions for class certification: (1) whether plaintiffs' proposed unexecuted damages model is sufficient at the class certification stage; and (2) whether plaintiffs adequately demonstrated reliance was provable by common evidence.
Plaintiffs Justin Lytle and Christine Musthaler ("Plaintiffs") alleged Nutramax Laboratories of violating the California Consumers Legal Remedies Act ("CLRA") by marketing Cosequin, a pet health product, with misleading claims about its benefits for dogs' joint health. The district court certified a class of California purchasers exposed to the following four statements that appeared on Cosequin's packaging: Lytle, 114 F.4th 1011, 1020.
- "Joint Health Supplement";
- "Use Cosequin to help your pet Climb stairs, Rise and Jump!";
- "Supports Mobility for a Healthy Lifestyle"; and
- "Mobility, Cartilage and Joint Health Support."
Nutramax first challenged this certification arguing that the Plaintiffs' proposed damages model did not satisfy Plaintiffs' burden of showing injury was provable by common evidence. The Court examined the damages model, which involved a conjoint survey to assess the economic value consumers placed on the product's features. Although the expert had not actually surveyed any class members or calculated what class members' damages might be at the time of certification, the Court found that an unexecuted damages model could suffice if it could "reliably calculate damages in a manner common to the class at trial." Id. at 1024. Nutramax's concerns about the possibility that the damages model may show no injury were dismissed by the Court, which noted that: (1) any lack of damages would apply uniformly across the class, thus not affecting predominance; and (2) if the damages model reveals damages with respect to some, but not all, the results of the conjoint survey allows for easy calculations for how much each consumer should get back, based on which product they bought.
As for Nutramax's second challenge, it argued that the element of reliance was not met, as some class members considered sources of information other than the packaging, such as veterinarian recommendations, in making their purchasing decisions. The Court, however, found that to establish reliance under the CLRA, "a misrepresentation need not be the sole or even the decisive cause of the injury-producing conduct." Id. at 1036. Plaintiffs provided sufficient evidence, including testimony of named Plaintiffs, their advertising expert, and survey results of Nutramax's own expert, to demonstrate that the statements on Cosequin's packaging were materially misleading to a reasonable consumer. The Court also found Nutramax's reliance on previous cases1 inapplicable, as their own expert's survey indicated that the near-universal reason class members purchased Cosequin was because it would "improve/help/maintain mobility, flexibility, joint health/ support." Id. at 1035. Consequently, the Court held that the district court did not abuse its discretion in concluding reliance may be proven on a class-wide basis.
Accordingly, the Court affirmed the district court's decision to grant class certification.
Footnote
1. Stearns v. Ticketmaster Corp., (2011) 655 F.3d at 1013; In re Vioxx Class Cases, (2009) 180 Cal. App. 4th 116; and Fairbanks v. Farmers New World Life Ins. Co., (2011) 197 Cal. App. 4th 544.
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