Tale Of An Economic Loss Class Action

Lately we have been thinking that perhaps nothing stirs a plaintiffs’ lawyer more than a product liability mass tort except an economic loss class action. 

Why?  Money, for one.  Control, for another. 

We regularly complain that plaintiffs’ lawyers save money by doing little-to-nothing to investigate their clients’ personal injury claims in product liability MDLs.  It may not be much, but plaintiffs’ lawyers do have to do a little work in product liability mass torts.  They advertise for clients (misleadingly or otherwise), enter into attorney-client relationships, and pay some filing fees (even if the complaint mis-joins numerous unrelated plaintiffs).  Then as the litigation progresses, they should be consulting with their clients about key litigation developments and perhaps, at some point, they even develop their clients’ evidentiary cases. 

But in economic loss class actions, plaintiffs’ lawyers do even less.  They just need to find a few named class representatives—friends, relatives, and neighbors are readily-available candidates—to say they purchased a product that was purportedly misleading and allegedly “worthless” (or at least “worth less” than they paid).  Indeed, every one of the purported class representatives in this case were also plaintiffs in another class action, brought by the same lawyers, making the same claims about a different brand of the same type of product several years earlier.  Cf. Woodhams v. Pfizer Inc., No. 18-CV-3990 (JPO), 2019 U.S. Dist. LEXIS 54478, 2019 WL 1432769 (S.D.N.Y. Mar. 29, 2019).

By picking their clients, rather than the other way around, plaintiffs’ class action lawyers don’t need to bother with advertising for clients, and they can represent thousand or hundreds of thousands of putative class members without having to actually deal with all those folks as individuals.  That gives plaintiffs’ lawyers a lot more control over how they run these cases, requires a lot less file-keeping and financial outlay, while at the same time holding the promise of sizeable potential returns in the form of their attorneys’ fees taken out of the class recovery.  From a plaintiffs’ lawyers’ perspective, what’s not to love?

Woodhams v. GlaxoSmithKline Consumer Healthcare Holdings (US), LLC, No. 18-CV-3990, 2024 U.S. Dist. LEXIS 51550, 2024 WL 1216595 (S.D.N.Y. Mar. 31, 2024), fits the economic loss class action mold.  It is a story that started six years ago, in 2018, with some less-optimal summary judgment rulings along the way.  But the ultimate ending of the Woodhams story is good for the defense:  Class certification denied.

The Woodhams tale began with a putative nationwide class action brought by several class representatives on behalf of purchasers who allegedly were misled into paying a premium for “Maximum Strength” cough syrup between 2016 and 2018. 

The Maximum Strength cough syrup label clearly—and accurately—stated that a dose was 20 ml, and also that each such dose contained 20 mg per 20 ml of dextromethorphan and 400 mg per 20 ml of guaifenesin. 

The Regular Strength cough syrup label clearly—and accurately—stated that a dose was 10 ml, and each such dose contained 20 mg per 10 ml of dextromethorphan and 200 mg per 10 ml of guaifenesin. 

In other words, if you bought the Regular Strength product and took a single dose, you would get 20 mg of dextromethorphan and 200 mg of guaifenesin, whereas if you bought the Maximum Strength product and took a single dose, you would get 20 mg of dextromethorphan but more guaifenesin (400 mg).  As the Maximum Strength label clearly—and accurately—stated, this “maximum strength claim [was] based on [having] maximum levels of active ingredients per dose” pursuant to FDA regulations.

Even though the respective labels correctly told consumers how much to take and what active ingredient amounts they would get in each dose, and even though the Maximum Strength formula had the maximum strength allowed by the FDA per dose of dextromethorphan and guaifenesin, the class action lawyers said the Maximum Strength label was misleading because the dosage sizes were different between the products, meaning the Maximum Strength was less concentrated than the Regular Strength product.  Got that?  Good, because we don’t.

Anyway, the Woodhams court began by recognizing that the named plaintiffs haled from different states (California, Colorado, Michigan, Missouri, New York), and that it thus had to apply the consumer protection and unjust enrichment laws of each state where each plaintiff allegedly bought the Maximum Strength cough syrup.  Despite that, the court viewed the states as using effectively the same “reasonable consumer” standard to evaluate whether the Maximum Strength label was misleading.  See, e.g., Ebner v. Fresh, Inc., 838 F.3d 958, 965 (9th Cir. 2016) (“Claims under the [California Consumer Legal Remedies Act and California Unfair Competition Law] are governed by the ‘reasonable consumer’ test. Under this standard, Plaintiff must show that members of the public are likely to be deceived. This requires more than a mere possibility that [the] label might conceivably be misunderstood by some few consumers viewing it in an unreasonable manner. Rather, the reasonable consumer standard requires a probability that a significant portion of the general consuming public or of targeted consumers, acting reasonably in the circumstances, could be misled.”).

So were the named plaintiffs deceived by “Maximum Strength” and did the deception cause them to make their purchase? 

When asked in deposition whether they would consider a dose of the Maximum Strength cough syrup to be “maximum strength” if it contained the maximum quantity of active ingredients per dose permitted by the FDA, the plaintiffs responded affirmatively.

Despite this, the Woodhams court denied summary judgment on the ground that “Maximum Strength” still might be deceptive because, in the judge’s view, “Maximum Strength” potentially signaled both the maximum quantity of active ingredients per dosage, and the maximum concentration of active ingredients per bottle.  That is perhaps an example of a court substituting its judgment for that of the purported actual purchasers, and we think incorrect.

The Woodhams court also evaluated whether the named plaintiffs had sufficient evidence that they purchased the Maximum Strength cough syrup given that they did not have receipts, and given that none of their drug store loyalty/rewards accounts reflected purchases of the cough syrup.  Here, the court said that testimony about purchases was sufficient to get to the jury for all but one of the named plaintiffs.

This is another ruling we take issue with, because we think all the named plaintiffs had enough contradictions and problems with their testimony to tank all of their claims.  The plaintiffs who survived summary judgment testified in deposition to purchases omitted, or different, from the complaint or their interrogatory responses, or to purchases that did not show in their loyalty/rewards accounts (because every single one of them supposedly was in a hurry or forgot to use their card when the cough syrup was purchased).  The testimony excerpts are far from convincing, even on the cold, hard page, but the court though there was enough to let the proof of purchase (or product ID) issue go to the jury.  (The plaintiff who was dismissed on summary judgment gave testimony that the court viewed as hypothetical:  although she was “certain” she purchased the Maximum Strength cough syrup, that certainty was because if it was on the shelf, she would have “gone for it,” and she admitted she did not know if Maximum Strength was on the shelf when she made her purchase in “October or November of 2016.”) 

Fortunately, these same inconsistencies came back to haunt the named plaintiffs on class certification. 

Turning to the Rule 23(a) factors, the court recognized that the named plaintiffs’ typicality, and adequacy to represent the class, would be hurt by the unique defenses applicable to them—namely, that the credibility issues raised in the defendant’s summary judgment motion would “unacceptably detract from the focus of the litigation to the detriment of absent class members.”  The court denied class certification because it concluded

[T]hat Plaintiffs would have to devote substantial attention to overcoming their damaging deposition testimony and addressing concerns regarding their credibility on material facts, including whether they even purchased [the Maximum Strength cough syrup] during the relevant time period. Taken together, these issues render Plaintiffs inadequate class representatives. The Court thus concludes that the Rule 23(a) prerequisites are not met, and therefore that Plaintiffs’ motion for class certification must be denied. Accordingly, the Court does not reach the question of whether Plaintiffs have met the Rule 23(b) requirements.

So, is it all’s well that ends well with our tale?  The denial of class certification is effectively the end of the lawsuit.  But it took six years, and came long after certification was denied in a nearly identical lawsuit, Al Haj v. Pfizer Inc., No. 17 C 6730, 2020 U.S. Dist. LEXIS 51658, 2020 WL 1330367 (N.D. Ill. Mar. 23, 2020).  So, probably not.  Good result in the end, but all’s not quite well, even if it ended well.