Price et al v. L'Oreal USA, Inc. et al
Filing
159
OPINION AND ORDER re: 146 MOTION to Certify Class . filed by Christine Chadwick, Brandi Price, 141 MOTION to Certify Class . filed by Christine Chadwick, Brandi Price. For the reasons set forth above, Plaintiffs 9; motion for class certification pursuant to Federal Rule of Civil Procedure 23(b)(3) and appointment of class counsel is GRANTED in part and DENIED in part. It is hereby ORDERED that: 1. The motion to certify the Nationwide Class is DENIED. 2. The motion to certify the New York Class is GRANTED in part and DENIED in part as follows: a. The New York Class is defined as All persons who reside in the state of New York and purchased Matrix Biolage Advanced Keratindose Pro-Keratin + Silk Shampoo, Pro-Keratin + Silk Conditioner, and/or Pro-Keratin + Silk Renewal Spray between January 26, 2013 and the present. b. The New York Class is certified only as to Count IX (New York GBL § 349) and the Breach of Contract claim under Count II (not t he alternative claim for Breach of Common Law Warranty). c. Plaintiff Price is appointed as class representative for the New York Class. 3. The motion to certify the California Class is GRANTED in part and DENIED in part as follows: a. The Californ ia Class is defined as All persons who reside in the state of California and purchased Matrix Biolage Advanced Keratindose Pro-Keratin + Silk Shampoo, Pro-Keratin + Silk Conditioner, and/or Pro-Keratin + Silk Renewal Spray between January 26, 2013 a nd the present. b. The California Class is certified only as to Counts III (Express Warranty), VI (California UCL, Unfair Business Acts and Practices Prong), VII (California UCL Fraudulent Business Acts and Practices Prong), VIII (California UCL, U nlawful Prong), and X (California FAL). c. Plaintiff Chadwick is appointed as class representative for the California Class. 4. Morgan & Morgan; Barbat, Mansour & Suciu PLLC; Greg Coleman Law; Sommers Schwartz P.C.; and JTB Law Group, LLC are appoint ed as co-class counsel. 5. By September 5, 2018, Plaintiffs shall, after conferring with Defendants, provide the Court with a joint proposed notice as required by Federal Rule of Civil Procedure 23(c)(2), and explain how they propose that notice will be made. The Clerk of Court is respectfully directed to close the motion and Docket No. 146. (Signed by Judge Lorna G. Schofield on 8/15/2018) (kgo)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
-------------------------------------------------------------X
:
BRANDI PRICE, et al.,
:
:
Plaintiffs, :
:
-against:
:
L’OREAL USA, INC., et al.,
:
:
Defendants. :
-------------------------------------------------------------X
8/15/18
17 Civ. 614 (LGS)
OPINION AND ORDER
LORNA G. SCHOFIELD, District Judge:
Plaintiffs Brandi Price and Christine Chadwick (collectively, “Plaintiffs”) bring this
putative consumer class action against defendants L’Oréal USA, Inc. and Matrix Essentials, LLC
(collectively, “Defendants”). Plaintiffs seek to bring fraud and unjust enrichment claims on
behalf of a nationwide class; and breach of contract and warranty, and consumer protection
claims on behalf of New York and California classes under the laws of those states. Plaintiffs
now move for class certification under Federal Rule of Civil Procedure 23(b)(3). For the
following reasons, the motion is GRANTED in part and DENIED in part.
I.
BACKGROUND
In February 2013, Defendants launched a haircare product line called Matrix Biolage
Advanced Keratindose Pro-Keratin + Silk. This product line comprises three products: Matrix
Biolage Advanced Keratin + Silk Shampoo, Pro-Keratin + Silk Conditioner and Pro-Keratin +
Silk Renewal Spray (collectively, the “Products” or “Challenged Products”). The names of the
Products (the “Challenged Claims”) are featured prominently on the Product labels, and have not
changed since the launch of the Products. The only material change to the Products or their
packaging since their inception was an alteration of the shape and size of the shampoo and
conditioner bottles in late 2014 or early 2015. Plaintiffs are purchasers of the Products who assert
that the Challenged Claims would lead reasonable consumers to believe that they contain keratin,
when in fact they do not.
Each Product is typically priced at just over $20. Although Defendants set a wholesale
price and a manufacturer’s suggested retail price, they have no control over the prices that
retailers charge consumers for the Products. Plaintiffs assert that all consumers who purchased
the Products paid a price premium due to Defendants’ purported misrepresentations on the
Product labels.
Defendants deny that the Challenged Claims are misleading and that they had any effect
on the pricing of the Products.
Plaintiffs move to certify the following classes1 under Federal Rule of Civil Procedure
23(b)(3):
Nationwide Class: All persons in the United States and its territories who
purchased Matrix Biolage Advanced Keratindose Pro-Keratin + Silk Shampoo,
Pro-Keratin + Silk Conditioner, and/or Pro-Keratin + Silk Renewal Spray
between January 26, 2013 and the present (“Nationwide Class”);
New York Class: All persons who reside in the state of New York and
purchased Matrix Biolage Advanced Keratindose Pro-Keratin + Silk Shampoo,
Pro-Keratin + Silk Conditioner, and/or Pro-Keratin + Silk Renewal Spray
between January 26, 2013 and the present (“New York Class”); and
California Class: All persons who reside in the state of California and purchased
Matrix Biolage Advanced Keratindose Pro-Keratin + Silk Shampoo, Pro-Keratin
+ Silk Conditioner, and/or Pro-Keratin + Silk Renewal Spray between January 26,
2013 and the present (“California Class”).
1
Excluded from the Classes are (a) any person who purchased the Products for resale and not for
personal or household use, (b) any person who signed a release of any Defendants in exchange
for consideration, (c) any officers, directors or employees, or immediate family members of the
officers, directors or employees, of any Defendants or any entity in which Defendants have a
controlling interest, (d) any legal counsel or employee of legal counsel for any Defendants, and
(e) the presiding Judge in this lawsuit, as well as the Judge’s staff and their immediate family
members.
2
II.
LEGAL STANDARD
Federal Rule of Civil Procedure 23(a) provides that plaintiffs may sue on behalf of a class
where:
(1) the class is so numerous that joinder of all members is impracticable; (2) there
are questions of law or fact common to the class; (3) the claims or defenses of the
representative parties are typical of the claims or defenses of the class; and (4) the
representative parties will fairly and adequately protect the interests of the class.
The Second Circuit “has also ‘recognized an implied requirement of ascertainability in
Rule 23,’ which demands that a class be ‘sufficiently definite so that it is administratively feasible
for the court to determine whether a particular individual is a member.’” In re Petrobras Secs.,
862 F.3d 250, 260 (2d Cir. 2017) (quoting Brecher v. Republic of Argentina, 806 F.3d 22, 24 (2d
Cir. 2015)).
Where, as here, Plaintiff seeks to certify a class under Rule 23(b)(3), Plaintiff also must
show “that the questions of law or fact common to class members predominate over any
questions affecting only individual members, and that a class action is superior to other available
methods for fairly and efficiently adjudicating the controversy.” Fed. R. Civ. P. 23(b)(3).
The Second Circuit gives Rule 23 a “liberal rather than restrictive construction, and courts
are to adopt a standard of flexibility.” Marisol A. v. Giuliani, 126 F.3d 372, 377 (2d Cir. 1997);
accord In re J.P. Morgan Stable Value Fund ERISA Litig., No. 12 Civ. 2548, 2017 WL 1273963,
at *5 (S.D.N.Y. Mar. 31, 2017). But “Rule 23 does not set forth a mere pleading standard.” WalMart Stores, Inc. v. Dukes, 564 U.S. 338, 350 (2011). Plaintiff must establish by a preponderance
of the evidence that each of Rule 23’s requirements is met. In re Vivendi, S.A. Secs. Litig., 838
F.3d 223, 264 (2d Cir. 2016). A certifying court “must receive enough evidence, by affidavits,
documents, or testimony, to be satisfied that each Rule 23 requirement has been met.” Shahriar
3
v. Smith & Wollensky Rest. Grp., Inc., 659 F.3d 234, 251 (2d Cir. 2011) (citing In re IPO Secs.
Litig., 471 F.3d 24, 41 (2d Cir. 2006)). Although “a court’s class-certification analysis must be
‘rigorous’ and may ‘entail some overlap with the merits of the plaintiff's underlying claim,’ Rule
23 grants courts no license to engage in free-ranging merits inquiries at the certification stage.”
Amgen Inc. v. Connecticut Ret. Plans & Tr. Funds, 568 U.S. 455, 465-66 (2013) (citing WalMart, 564 U.S. at 351). Any factual disputes relevant to satisfying each Rule 23 requirement
should be resolved, but a court “should not assess any aspect of the merits unrelated to a Rule 23
requirement.” In re IPO Secs. Litig., 471 F.3d at 41. A district court may later decertify a
previously certified class if it becomes apparent that the requirements of Rule 23 are, in fact, not
met. See Fed. R. Civ. P. 23(c)(1)(C).
III.
DISCUSSION
The Court has subject matter jurisdiction pursuant to 28 U.S.C. § 1332(d). The motion to
certify the Nationwide Class is denied. The motion to certify the New York Class is granted as to
the consumer protection and breach of contract claims, and denied as to the breach of warranty,
fraud and unjust enrichment claims. The motion to certify the California Class is granted as to
the consumer protection and breach of warranty claims, and denied as to the fraud and unjust
enrichment claims.
As explained below, the Challenged Claims on the Product labels were uniform. Thus,
questions as to their objective materiality to a reasonable consumer are common to all purchasers
of the Products. However, questions as to whether consumers actually relied on the Challenged
Claims in deciding to purchase the Products can only be answered on an individual basis.
Common questions thus predominate over individual questions for claims that do not include
actual reliance as an element. Plaintiffs’ proposed model for computing class-wide damages, Dr.
4
Dubé’s Conjoint Analysis, is reliable and consistent with their price premium theory of damages.
See Comcast Corp. v. Behrend, 569 U.S. 27, 35 (2013).
a. Rule 23(a) Factors
i. Numerosity
Rule 23(a)(1) requires a finding that “the class is so numerous that joinder of all members
is impracticable.” In the Second Circuit, “numerosity is presumed where a putative class has
forty or more members.” Shahriar, 659 F.3d at 252. Defendants do not contest the numerosity
requirement. During the class period, millions of units of the Products were sold nationwide to
salons for resale to consumers. A substantial portion of those sales came from New York and
California.2 As the numbers in the record establish that each class consists of far more than 40
individuals, the numerosity requirement is met.
ii. Commonality
Rule 23(a)(2) requires a showing of “questions of law or fact common to the class.”
“Commonality is satisfied where a single issue of law or fact is common to the class.” In re
IndyMac Mortg.-Backed Secs. Litig., 286 F.R.D. 226, 233 (S.D.N.Y.2012) (citing Wal-Mart, 564
U.S. at 359) (“[E]ven a single common question will do.”) (internal quotation marks omitted)).
However, class certification requires not only “common questions,” but also “the capacity of a
classwide proceeding to generate common answers apt to drive the resolution of the litigation.”
Wal-Mart, 564 U.S. at 350 (emphasis in original). Plaintiffs must “demonstrate that the class
members have suffered the same injury.” Id. (internal quotation marks omitted).
2
Defendants’ actual sales figures are in the record but are not disclosed here because Defendants
consider them to be trade secrets, and they are not material to the Court’s consideration of this
motion.
5
As discussed further in the section on predominance, one common question that applies to
each class is whether the Challenged Claims are deceptive, unfair, unlawful or misleading to the
reasonable consumer. Another common question is whether a reasonable consumer would expect
the Products to contain keratin. The commonality requirement is satisfied, and Defendants do not
argue otherwise.
iii. Typicality
Rule 23(a)(3) requires that the class representatives’ claims be “typical” of the class. The
requirement is satisfied when “each class member’s claim arises from the same course of events
and each class member makes similar legal arguments to prove the defendant’s liability.” In re
Flag Telecom Holdings, Ltd. Secs. Litig., 574 F.3d 29, 35 (2d Cir. 2009). “When it is alleged that
the same unlawful conduct was directed at or affected both the named plaintiff and the class
sought to be represented, the typicality requirement is usually met irrespective of minor variations
in the fact patterns underlying individual claims.” Robidoux v. Celani, 987 F.2d 931, 936-37 (2d
Cir. 1993); accord Balderramo v. Go N.Y. Tours, Inc., 15 Civ. 2326, 2017 WL 2819863, at *3
(S.D.N.Y. June 28, 2017). “Instead, Rule 23(a)(3) requires ‘only that the disputed issues of law
or fact occupy essentially the same degree of centrality to the named plaintiff's claim as to that of
other members of the proposed class.’” In re Scotts EZ Seed Litig., 304 F.R.D. 397, 406
(S.D.N.Y. 2015) (quoting Fort Worth Emps.’ Ret. Fund v. J.P. Morgan Chase & Co., 301 F.R.D.
116, 132 (S.D.N.Y. 2014)).
“Consumers of the same product, exposed to the same marketing and packaging, will
have almost entirely the same claims with at most ‘minor variations’ in the facts surrounding their
purchase of the products.” Goldemberg v. Johnson & Johnson Consumer Cos., Inc., 317 F.R.D.
374, 400 (S.D.N.Y. 2016); see also Ebin v. Kangadis Food Inc., 297 F.R.D. 561, 566-67
6
(S.D.N.Y. 2014) (plaintiff purchasers of mislabeled olive oil products were typical of other
potential class members despite any differences relating to their individual purchasing decisions).
Because Plaintiffs were exposed to the same marketing and packaging as every other consumer
who purchased the Products, Plaintiffs are typical of the classes they seek to represent.
Defendants argue that Plaintiffs do not satisfy the typicality requirement because portions
of their deposition testimony suggest that they might not have relied on the Challenged Claims in
making their purchasing decisions. This argument is unavailing because, as discussed below in
the section on predominance, class certification is granted only as to claims that do not include
actual reliance as an element.
iv. Adequacy
Rule 23(a)(4) requires that class representatives “fairly and adequately protect the
interests of the class.” Where the “class representatives are prepared to prosecute fully the action
and have no known conflicts with any class member,” the adequacy requirements are met.
Shahriar, 659 F.3d at 253; Sykes v. Mel S. Harris & Assocs. LLC, 780 F.3d 70, 90 (2d Cir. 2015)
(the class representatives interests should not be “antagonistic to the interest of other members of
the class”). “Plaintiffs must also have attorneys who are ‘qualified, experienced, and generally
able to conduct the litigation.’” In re Scotts EZ Seed Litig., 304 F.R.D. at 406 (quoting In re
Drexel Burnham Lambert Grp., Inc., 960 F.2d 285, 291 (2d Cir. 1992)).
Plaintiffs have shown their commitment to prosecuting this action by reviewing and
approving the complaints, responding to written discovery requests, producing documents
relating to their claims, and preparing and sitting for depositions. Each Plaintiff also has
demonstrated an adequate understanding of the basis of the claims and the roles of a class
7
representative. Nothing in the record suggests that Plaintiffs’ interests are antagonistic to those of
absent class members.
Plaintiffs’ counsel, Morgan & Morgan; Barbat, Mansour & Suciu PLLC; Greg Coleman
Law; Sommers Schwartz P.C.; and JTB Law Group, LLC, collectively are experienced in
litigating class actions and other complex cases. The partners at these firms are counsel of record
in numerous class actions nationwide. Plaintiffs’ counsel have also demonstrated their
commitment to prosecute this action vigorously by devoting significant resources to investigating
the claims, drafting the initial and amended complaints, opposing Defendants’ motion to dismiss,
conducting significant discovery, working extensively with a qualified expert, preparing and
filing this class certification motion, and engaging in merits discovery. The adequacy
requirement is satisfied.
v.
Ascertainability
As for the implied ascertainability requirement, “a class is ascertainable if it is defined
using objective criteria that establish a membership with definite boundaries.” Petrobras, 862
F.3d at 257. Satisfying this requirement does not “require[] a showing of administrative
feasibility at the class certification stage.” Id. at 265. The classes are ascertainable because they
can be determined with reference to one objective criterion with definite boundaries: whether an
individual purchased a Product during the class period.
Defendants argue that the classes are not ascertainable because “there are neither records
of who purchased the Products nor other means [apart from self-identification] of ascertaining the
class members’ identities].” This argument is rejected because it takes issue with “administrative
feasibility” as opposed to the presence of “objective criteria” as required by Petrobras. Id. at
257, 265. If a class could be certified only where the parties had access to definitive records
8
showing class membership, then consumer class actions against manufacturers would be virtually
impossible. “Yet the class action device, at its very core, is designed for cases like this where a
large number of consumers have been [harmed] but no one consumer has suffered an injury
sufficiently large as to justify bringing an individual lawsuit.” Ebin, 297 F.R.D. at 567. In sum,
Plaintiffs have satisfied all four requirements of Rule 23(a) as well as the additional implied
requirement of ascertainability.
b. Rule 23(b)(3) Factors
If Rule 23(a) is satisfied, a class may be certified under Rule 23(b)(3) if the court finds
“the questions of law or fact common to the class predominate over any questions affecting only
individual members, and that a class action is superior to other available methods for fairly and
efficiently adjudicating the controversy.” Fed. R. Civ. P. 23(b)(3).
i. Predominance
“Predominance is satisfied if resolution of some of the legal or factual questions that
qualify each class member’s case as a genuine controversy can be achieved through generalized
proof, and if these particular issues are more substantial than the issues subject only to
individualized proof.” Waggoner v. Barclays PLC, 875 F.3d 79, 93 (2d Cir. 2017) (quoting
Roach v. T.L. Cannon Corp., 778 F.3d 401, 405 (2d Cir. 2015)). Plaintiffs need not prove,
however, that the legal or factual issues that predominate will be answered in their favor. Amgen,
568 U.S. at 468. “Individualized damages determinations alone cannot preclude certification
under Rule 23(b)(3),” but it is a factor to “consider in deciding whether issues susceptible to
generalized proof ‘outweigh’ individual issues.” Roach, 778 F.3d at 408–09 (quoting
McLaughlin v. Am. Tobacco Co., 522 F.3d 215, 231 (2d Cir. 2008)). “[A]t the class-certification
stage (as at trial), any model supporting a plaintiff’s damages case must be consistent with its
9
liability case,” and “courts must conduct a rigorous analysis to determine whether that is so.”
Comcast, 569 U.S. at 35. “A model purporting to serve as evidence of damages in [a] class
action must measure only those damages attributable to [the plaintiff’s] theory [of liability].” Id.
Plaintiffs assert that liability for their claims can be proven using common evidence
because “product specific labeling and packaging claims . . . do not require proof as to individual
understanding and can be judged based on the objective standard of proof.” Goldemberg, 317
F.R.D. at 389. Plaintiffs assert that the claims “all arise from Defendants’ uniform course of
conduct” because “[t]he Products, which uniformly include and emphasize the Keratindose name
on the front and center of every Produce label, do not actually contain keratin.” Plaintiffs further
argue that damages in the form of a price premium can be measured and assessed at trial.
Defendants disagree, arguing that individual questions as to materiality, reliance and
injury will predominate in determining liability, that “differences among the fraud laws of the 50
states preclude certification of a nationwide class,” that “Plaintiffs have no valid damages
model,” and that “an analysis of market prices shows there is no price premium for keratin
claims.”
Questions as to Defendants’ course of conduct, materiality and injury are common
questions, but questions as to reliance are individualized. As explained below, class certification
is appropriate only as to claims that do not include actual reliance as an element.
1. Liability Under Each Claim
a. New York GBL § 349
To establish a prima facie case under GBL § 349, “a plaintiff must demonstrate that (1)
the defendant’s deceptive acts were directed at consumers, (2) the acts are misleading in a
material way, and (3) the plaintiff has been injured as a result.” Maurizio v. Goldsmith, 230 F.3d
10
518, 521 (2d Cir. 2000) (quoting Oswego Laborers’ Local 214 Pension Fund v. Marine Midland
Bank, 85 N.Y.2d 20, 25 (N.Y. 1995)) (applying New York law). Materiality under section 349 is
an objective inquiry; a deceptive act is defined as one “likely to mislead a reasonable consumer
acting reasonably under the circumstances.” Id. Section 349 requires neither proof of
reliance, see Koch v. Acker, Merrall & Condit Co., 18 N.Y.3d 940, 941 (N.Y. 2012), nor proof of
intent to mislead consumers, see Oswego, 85 N.Y.2d at 26.
Plaintiffs’ New York GBL claim thus depends on generalized evidence. Classwide
evidence will be used to establish whether Defendants’ labeling was deceptive, and if so, whether
it was likely to mislead a reasonable consumer acting reasonably under the circumstances. The
Supreme Court has held that materiality “is a question common to all members of the class”
when, as here, the materiality of an alleged misrepresentation is judged according to an objective
standard. See Amgen, 568 U.S. at 459 (“The alleged misrepresentations and omissions, whether
material or immaterial, would be so equally for all investors composing the class.”).
Likewise, as discussed below, classwide evidence will determine whether plaintiffs were
injured. Plaintiffs allege they suffered economic harm when they overpaid for products whose
labeling misleadingly suggested the Products contain keratin. See, e.g., Goldemberg, 317 F.R.D.
at 385 (certifying class action involving labels on certain Aveeno “Active Naturals” products); In
re Scotts EZ Seed Litig., 304 F.R.D. at 409 (finding a common injury was susceptible to
classwide proof where class members paid a premium for a product based on the false claim that
it could make grass grow 50% thicker); Ebin, 297 F.R.D. at 569 (finding a common injury
susceptible of classwide proof where plaintiffs received “an inferior product different from that
which the consumers purchased”); Guido v. L’Oreal, USA, Inc., 284 F.R.D. 468, 483 (C.D. Cal.
2012) (finding common issues predominate as to injury on plaintiffs’ GBL claims because “the
11
issue of whether plaintiffs and class members would have purchased [the product] had
they known” advertising was false “can be established with common proof”).
b. California UCL and FAL
Claims brought under the UCL and FAL “are governed by the ‘reasonable consumer’
test.” Williams v. Gerber Prods. Co., 552 F.3d 934, 938 (9th Cir. 2008). “Under the reasonable
consumer standard, [plaintiffs] must show that members of the public are likely to be
deceived.” Id. (internal quotation marks omitted). As discussed above, materiality “is a question
common to all members of the class” when, as here, the materiality of an alleged
misrepresentation is judged according to an objective standard. Amgen, 568 U.S. at 459.
Relief under the UCL and FAL is available without individualized proof of “‘reliance and
injury,’ so long as the named plaintiffs demonstrate injury and causation.” Guido, 284 F.R.D. at
482 (quoting Mass. Mut. Life Ins. Co. v. Super. Ct., 97 Cal. App. 4th 1282, 1289 (Ct. App.
2002)). “A presumption, or at least an inference, of reliance arises under the UCL and FAL
whenever there is a showing that a misrepresentation was material.” McCrary v. Elations Co.,
LLC, No. 13 Civ. 00242, 2014 WL 1779243, at *14 (C.D. Cal. Jan. 13, 2014) (internal quotations
omitted); see also In re Tobacco II Cases, 46 Cal. 4th 298, 327 (2009) (A class action plaintiff
need not “demonstrate individualized reliance on specific misrepresentations to satisfy the
reliance requirement” of the UCL). The objective test for materiality and thus reliance “renders
claims under the UCL [and] FAL . . . ideal for class certification because they will not require the
court to investigate class members’ individual interaction with the product.” Tait v. BSH Home
Appliances Corp., 289 F.R.D. 466, 480 (C.D. Cal. 2012) (internal quotation marks omitted).
12
c. New York Warranty Claims
Plaintiffs bring claims under New York law for breach of express warranty under the
UCC and, in the alternative, common law breach of warranty. “New York breach of express
warranty claims require (i) a material statement amounting to a warranty; (ii) the
buyer’s reliance on this warranty as a basis for the contract with his immediate seller; (iii)
the breach of this warranty; and (iv) injury to the buyer caused by the breach.” Avola v.
Louisiana-Pac. Corp., 991 F. Supp. 2d 381, 391 (E.D.N.Y. 2013) (emphasis in original) (citing
CBS Inc. v. Ziff–Davis Publ’g Co., 75 N.Y.2d 496, 502–504 (N.Y. 1990)). To state a claim for
common law breach of warranty, a plaintiff must show that “(1) plaintiff and defendant entered
into a contract; (2) containing an express warranty by the defendant with respect to a material
fact; (3) which warranty was part of the basis of the bargain; and (4) the express warranty was
breached by defendant.” Promuto v. Waste Mgmt., Inc., 44 F. Supp. 2d 628, 642 (S.D.N.Y.
1999) (citing CBS, 75 N.Y. 2d at 501-06). Thus, New York warranty claims require proof of
reliance.
“New York uses a basis of the bargain conception of reliance for express and common
law warranty claims.” In re Scotts EZ Seed Litig., 304 F.R.D. at 410–11. “In contrast to the
reliance required to make out a claim for fraud, the general rule is that a buyer may enforce an
express warranty even if it had reason to know that the warranted facts were untrue.” Merrill
Lynch & Co. Inc. v. Allegheny Energy, Inc., 500 F.3d 171, 186 (2d Cir. 2007); see also CBS, 75
N.Y.2d at 503–04. However, when “a buyer closes on a contract in the full knowledge and
acceptance of facts disclosed by the seller which would constitute a breach of warranty under the
terms of the contract, the buyer should be foreclosed from later asserting the breach.” Galli v.
Metz, 973 F.2d 145, 151 (2d Cir. 1992).
13
When, as here, the “basis of the bargain” conception of reliance applies, individual
questions predominate because the validity of each buyer’s claim would depend on her
knowledge of whether or not the Products contain keratin. Class certification is therefore
inappropriate for these claims. See, e.g., In re Scotts EZ Seed Litig., 304 F.R.D. at 411 (declining
to certify a class claiming breach of express warranty and common law warranty under New York
law because “each buyer’s knowledge of the truth or falsity of [the product’s] advertising claims
require evaluation”); Weiner v. Snapple Beverage Corp., No. 07 Civ. 8742, 2010 WL 3119452, at
*11 (S.D.N.Y. Aug. 5, 2010) (declining to certify a class as to New York express warranty claim
because “reliance on Snapple’s ‘All-Natural’ label cannot be the subject of generalized
proof”); Klein v. Robert’s Am. Gourmet Food, Inc., 28 A.D.3d 63, 72 (2d Dep’t 2006) (reversing
lower court’s decision that common questions predominated with respect to reliance in a New
York express warranty claim).
d. New York Breach of Contract Claim
In the event the statements on the Product labels are deemed not to be a warranty under
the New York UCC or common law, Plaintiffs bring a claim for breach of contract under New
York Law.3 In New York, a claim for breach of contract requires proof of: “(1) a valid contract;
(2) plaintiff’s performance; (3) defendant’s failure to perform; and (4) damages resulting from the
breach.” Macaluso v. U.S. Life. Ins. Co., 2004 WL 1497606, at *3 (S.D.N.Y. July 2, 2004)
(citing Furia v. Furia, 116 A.D.2d 694, 695 (2d Dep’t 1986)).
3
Defendants argue that Plaintiffs cannot succeed on this claim because they lack privity of
contract. The argument appears valid as to the merits of this case, but is not relevant for the
purposes of this motion.
14
Defendants’ representations to each class member were identical, and the class members
all performed by purchasing the Products. Plaintiffs’ claims for breach of contract thus depend
on whether valid contracts were formed and whether Defendants breached those contracts. These
questions predominate over any individual questions, and class certification is therefore
appropriate. See, e.g., In re Scotts EZ Seed Litig., 304 F.R.D. at 411 (certifying a class of New
York breach of contract claimants for allegedly deceptive advertising); Taylor v. Am. Bankers
Ins. Grp., Inc., 267 A.D.2d 178, 178 (1st Dep’t 1999) (affirming certification of a breach of
contract claim when “the predominant focus of this litigation is defendants’ general practice of
offering, in prominent print, ostensibly easily available credit insurance coverage . . . and then
rejecting insurance claims”).
e. California Express Warranty Claim
To prevail on a breach of express warranty claim under California law, plaintiffs must
prove “(1) the seller’s statements constitute an affirmation of fact or promise . . .; (2) the
statement was part of the basis of the bargain; and (3) the warranty was breached.” Weinstat v.
Dentsply Int’l, Inc., 103 Cal. Rptr. 3d 614, 626 (Ct. App. 2010) (internal quotation marks
omitted). However, plaintiffs “need not establish reliance as an element of [an] express warranty
claim, and thus, need not establish reliance on a classwide basis.” Karim v. Hewlett-Packard Co.,
No. 12 Civ. 5240, 2014 WL 555934, at *6 (N.D. Cal. Feb. 10, 2014); see also Weinstat, 103 Cal.
Rptr. 3d at 626 (holding that “the concept of reliance has been purposefully abandoned” for
express warranty claims under the California UCC).
Because reliance is not an element of express warranty claims under California law,
common questions predominate and class action treatment is appropriate. See, e.g., Brown v.
Hain Celestial Grp., No. 11 Civ.3082, 2014 WL 6483216, at *17-18 (N.D. Cal. Nov. 18, 2014)
15
(certifying class claiming violation of California's express warranty law when products were
allegedly falsely labeled organic); Wiener v. Dannon Co., 255 F.R.D. 658, 669 (C.D. Cal. 2009)
(citing Vasquez v. Super. Ct., 94 Cal. Rptr. 796, 805 (1971)) (holding that a class action is
appropriate for California express warranty claims where “material misrepresentations were made
to all class members”).
f. Fraud Claim
Plaintiffs seek to bring a claim for fraud on behalf of the Nationwide Class as well as their
New York and California Classes. Justifiable reliance is an element of fraud under both New
York and California law, see, e.g., Centro Empresarial Cempresa S.A. v. Am. Movil, S.A.B. de
C.V., 17 N.Y.3d 269, 276 (N.Y. 2011); Whiteley v. Philip Morris Inc., 117 Cal. App. 4th 635, 681
(Ct. App. 2004), as modified on denial of reh’g (Apr. 29, 2004), and some form of reliance is
required under all states’ laws for a fraud claim, see Warder Decl. Ex. 6 at 8-10. The viability of
each class member’s fraud claim turns on whether or not he or she relied on alleged
representations that the Products contain keratin. Individual customers’ reliance is not subject to
general proof in this case. Thus, certification of any class based on a fraud claim is inappropriate.
See, e.g., McLaughlin, 522 F.3d at 223 (class certification is inappropriate where reliance “cannot
be the subject of general proof.”).
Plaintiffs argue that the misrepresentations in this case are “so fundamental that it is
reasonable to infer . . . that plaintiffs in fact relied on those representations in becoming
customers.” (quoting Rodriguez v. It’s Just Lunch, Int’l, 300 F.R.D. 125, 139 (S.D.N.Y. 2014))
(alterations and internal quotation marks omitted). See, e.g., Ebin, 297 F.R.D. at 564 (certifying a
class as to fraud claims based on labeling falsely stating that a product was “100% Pure Olive
Oil”). Such an inference is not warranted here. Customers may have had many reasons for
16
purchasing the Products apart from their purported keratin content. For instance, customers may
have been drawn to the Products’ smell, color, consistency, the aesthetics of their packaging, or
their ability to clean and condition hair.4
2. Defendants’ Expert Testimony Regarding Materiality
As discussed, where materiality is determined based on an objective standard, it is subject
to classwide proof. See Amgen, 568 U.S. at 459. Defendants nonetheless argue that no class
should be certified because the Challenged Claims are not material to reasonable consumers.
Defendants proffer the expert report of Dr. Eli Seggev, which purports to show through an
experimental study that “consumers’ purchase interest is unchanged by the presence or absence of
the terms ‘Keratindose’ or ‘Pro-Keratin’ on the Products’ labels.” Plaintiffs’ expert Dr. Dubé
criticizes Dr. Seggev’s study for a flawed design that “creates a mechanical bias against a finding
of a positive benefit from the Challenged Claims on consumers’ purchases,” and for
misinterpreting his study’s failure to find evidence of materiality as affirmative proof of
immateriality. The Court need not assess the merits of Dr. Seggev’s report because the report
does not purport to show that materiality cannot be proven or disproven through common
evidence. On the contrary, the study purports to show the opposite -- that common evidence such
as an experimental study can shed light on the question of materiality. Defendants’ argument
against class certification based on Dr. Seggev’s finding of no materiality is thus rejected.
4
The complaint also asserts a claim of unjust enrichment on behalf of the Nationwide Class and
the New York and California subclasses (Count V). Count V was dismissed to the extent
asserted under New York and California law, and the parties do not address this claim in their
briefing. Thus, the Court declines to certify any class as to this claim.
17
3. Classwide Damages
To satisfy the predominance requirement, plaintiffs must propose a damages model
consistent with their theory of liability. See Comcast, 569 U.S. at 33-35. “If the model does not
even attempt to do that, it cannot possibly establish that damages are susceptible of measurement
across the entire class for purposes of 23(b)(3).” Id. at 35. The damages model proffered by
Plaintiffs’ expert Dr. Dubé meets this requirement by calculating the economic value to
consumers of the Challenged Claims.
The Complaint’s theory of liability is that the Challenged Products falsely represented that
they contained keratin when they did not, and that “Plaintiffs and putative Class Members have
been harmed, as they would not have purchased the Products or would have paid less for them
had they known the Products did not contain keratin.” Plaintiffs must therefore propose a
damages model that determines the value attributable to the Challenged Claims.
Plaintiffs assert that damages can be measured classwide, offering the proposed
methodology of their damages expert, Dr. Dubé. Dr. Dubé’s proposed method, “Conjoint
Analysis” is a “well-established damages model.” Briseno v ConAgra Foods, Inc., 674 Fed
App’x 654, 657 (9th Cir. 2017) (summary order). The methodology is intended to determine any
price premium charged for the Challenged Products on account of the Challenged Claims, and the
incremental consumer willingness to pay for the Challenged Products without the Challenged
Claims.5
5
Payment of a price premium qualifies as a measure of damages consistent with the theory of
liability for each claim certified. Under the New York GBL, “[i]njury is adequately alleged under
GBL §§ 349 . . . by a claim that a plaintiff paid a premium for a product based on defendants’
inaccurate representations.” Ackerman v. Coca–Cola Co., No. 09 Civ. 0395, 2010 WL 2925955,
at *23 (E.D.N.Y. July 21, 2010). For breach of contract under New York law, “the measure of
18
The proposed analysis would determine the value consumers place on individual attributes
of a given product by looking at consumers’ hypothetical purchasing decisions in a survey
involving different combinations of product attributes such as brand, price, and the presence or
absence of the Challenged Claims. As explained in Dr. Dubé’s report:
[A choice-based conjoint survey] proceeds by asking the consumers in the survey sample
to respond to a sequence of choice tasks. In each task, the consumer is presented with a
choice between a finite number of product alternatives. Each alternative is described by a
set of features chosen by the analyst, including the price. Typically, a no-purchase
alternative is included in the choice set. For each task, the consumers must make a single
choice. Across each task, the analyst changes the set of products, the levels of the features
and the prices in the choice set. Therefore, it is possible for the analyst to include branded
products or products that include or exclude the Challenged Claims, consistent with the
allegations in this case. This procedure allows the analyst to observe how the consumer
trades-off features and prices. The data consists of the choices and the corresponding
features of the product alternatives from each task.
This method is designed to determine not only the price premium, but also the
“willingness-to-pay” -- which accounts for the possibility that prices across competitor products
could change if products with the Challenged Claims were not offered on the market, or “that
Class Members may have paid less for the Challenged Products but-for the Challenged Claims
the damage is the amount necessary to put the injured party in exact position as he would have
been if the contract had not been breached[,]” Perma Research & Dev. v. Singer Co., 542 F.2d
111, 116 (2d Cir. 1976); accord 4B N.Y. Prac., Com. Litig. in New York State Courts § 72:61
(4th ed.), or in this case, the difference between the value of the Products to consumers with and
without keratin. Similarly, because the California “UCL and false advertising law are both
intended to preserve fair competition and protect consumers from market distortions,” harm
occurs for the purposes of the California statutes “at the moment of purchase” once a buyer is
“forced to pay more than he or she would have” absent the deceptive conduct. Kwikset Corp. v.
Super. Ct., 246 P.3d 877, 893 (Cal. 2011). For breach of express warranty under California law,
under California’s Uniform Commercial Code, “[t]he measure of damages for breach of warranty
is the difference at the time and place of acceptance between the value of the goods accepted and
the value they would have had if they had been as warranted, unless special circumstances show
proximate damages of a different amount.” Cal. Com. Code § 2714.
19
(the “price premium”) but may also have chosen not to purchase the Challenged Products at all
without the Challenged Claims.” This approach satisfies the requirement of Comcast -- that
Plaintiffs match their damages model to their liability theory. See, e.g., Kurtz v. Kimberly-Clark
Corp., 321 F.R.D. 482, 551 (E.D.N.Y. 2017); In re ConAgra Foods, Inc., 90 F.Supp.3d 919, 1026
(C.D. Cal. 2015) (citing cases where conjoint analysis was used to calculate price premium
damages at the class certification stage).
Defendants assert that Dr. Dubé’s model fails to satisfy Comcast because it does not
calculate a price premium. This argument is rejected because the model does calculate a price
premium and more to ascertain the economic value to consumers of the Challenged Claims. In
other words, the model calculates as damages the difference between what Plaintiffs thought they
were getting and what they actually got when they purchased the Challenged Products.
Defendants assert that Dr. Dubé lacks data on the actual prices consumers paid for these
products, which may have deviated from the manufacturer’s suggested retail prices; and that Dr.
Dubé fails to “identify an alternate product on the market that can be used as a yardstick for
calculation of the alleged price premium.” Both of these arguments are rejected because they
misconstrue the data required to conduct the proposed Conjoint Analysis. Conjoint Analysis
relies on data produced by surveys with hypothetical product-feature and price variations,
conducted specifically for the purposes of evaluating a specific product to tease out the value to
consumers of a particular product feature. These surveys have not required extensive data on
actual sale prices or competing products in the market to produce valid results. See, e.g., Guido,
2014 WL 6603730, at *12 (approving of Conjoint Analysis as a method for computing damages
that satisfies Comcast where sales data is unavailable); see also Kurtz, 321 F.R.D. at 551
(“Properly developed survey evidence is admissible subject to arguments regarding its weight and
20
probative value.”) (quoting Schwab v. Philip Morris USA, Inc., 449 F. Supp. 2d 992, 1245
(E.D.N.Y. 2006)).
Finally, Defendants assert that Dr. Dubé’s proposed model “lacks the requisite detail to
ensure its reliability.” Defendants claim that Dr. Dubé “has not yet identified all the features he
might test, has not decided how he will go about determining that set of features, and has not
identified how he will present any such features to consumers in his survey.” This argument fails
because, at this stage, “the Court need only decide if the proposal is capable of matching the
liability case to the damages case . . . .” Goldemberg, 317 F.R.D. at 394. “[N]othing in Comcast
requires an expert to perform his analyses at the class certification stage.” In re Scotts, 304
F.R.D. at 414. Plaintiffs have satisfied their burden of showing that an appropriately designed
Conjoint Analysis can reliably estimate the economic value to consumers of the Challenged
Claims.
Plaintiffs’ proposed damages model satisfies the predominance requirement.6
ii. Superiority
To proceed under Rule 23(b)(3), common questions must not only predominate, but a
class action must also be “superior to other available methods for fairly and efficiently
adjudicating the controversy.” Fed. R. Civ. P. 23(b)(3). The factors to be considered during this
6
Although New York GBL § 349(h) provides for statutory damages of $50 per violation, the
statute also requires “actual, although not necessarily pecuniary harm.” Oswego, 85 N.Y. 2d at
26. Plaintiffs’ damages model provides common proof of actual injury, which “is bound up in
proof of damages, or by how much plaintiffs have been harmed.” McLaughlin, 522 F.3d at 227.
“Only by showing that plaintiffs in fact paid more for [the product] as a result of [the Challenged
Claims] can plaintiffs establish [through class-wide evidence] the requisite element[] of . . . actual
injury under § 349.” Weiner, 2010 WL 3119452, at *6 (S.D.N.Y. Aug. 5, 2010) (emphasis in
original).
21
analysis that “implicate the superiority inquiry” include: the class members’ interests in joint
rather than individual actions, the extent of litigation concerning the controversy already begun
by class members, the desirability of the class forum, and any difficulties in managing the class
action. Fed. R. Civ. P. 23(b)(3)(A-D); Sykes, 780 F.3d at 82. Defendants do not raise any
arguments regarding superiority.
Consumer class actions of this variety, designed to recover relatively small price
premiums in comparison to the expense and burden of litigation, are clearly superior to the
alternative of forcing consumers to litigate on principle. See Amgen, 568 U.S. at 478 (“The
policy at the very core of the class action mechanism is to overcome the problem that small
recoveries do not provide the incentive for any individual to bring a solo action prosecuting his or
her rights.”) (quoting Amchem Products, Inc. v. Windsor, 521 U.S. 591, 617 (1997)).
These considerations weigh in favor of finding that class members’ interests would best
be served by a joint action. Now that the action does not involve the Nationwide Class, judicial
oversight of the class would be manageable. The Court is not aware of any other litigation
concerning this particular controversy, and can find no reason why this forum is less desirable
than any alternative. A class action is the superior method of resolving this case.
IV.
CONCLUSION
For the reasons set forth above, Plaintiffs’ motion for class certification pursuant to
Federal Rule of Civil Procedure 23(b)(3) and appointment of class counsel is GRANTED in part
and DENIED in part. It is hereby ORDERED that:
1. The motion to certify the Nationwide Class is DENIED.
2. The motion to certify the New York Class is GRANTED in part and DENIED in part
as follows:
22
a. The New York Class is defined as
All persons who reside in the state of New York and purchased Matrix Biolage
Advanced Keratindose Pro-Keratin + Silk Shampoo, Pro-Keratin + Silk
Conditioner, and/or Pro-Keratin + Silk Renewal Spray between January 26,
2013 and the present.
b. The New York Class is certified only as to Count IX (New York GBL § 349)
and the Breach of Contract claim under Count II (not the alternative claim for
Breach of Common Law Warranty).
c. Plaintiff Price is appointed as class representative for the New York Class.
3. The motion to certify the California Class is GRANTED in part and DENIED in part
as follows:
a.
The California Class is defined as
All persons who reside in the state of California and purchased Matrix Biolage
Advanced Keratindose Pro-Keratin + Silk Shampoo, Pro-Keratin + Silk
Conditioner, and/or Pro-Keratin + Silk Renewal Spray between January 26,
2013 and the present.
b. The California Class is certified only as to Counts III (Express Warranty), VI
(California UCL, Unfair Business Acts and Practices Prong), VII (California
UCL Fraudulent Business Acts and Practices Prong), VIII (California UCL,
Unlawful Prong), and X (California FAL).
c.
Plaintiff Chadwick is appointed as class representative for the California
Class.
4. Morgan & Morgan; Barbat, Mansour & Suciu PLLC; Greg Coleman Law; Sommers
Schwartz P.C.; and JTB Law Group, LLC are appointed as co-class counsel.
23
5. By September 5, 2018, Plaintiffs shall, after conferring with Defendants, provide the
Court with a joint proposed notice as required by Federal Rule of Civil Procedure
23(c)(2), and explain how they propose that notice will be made.
The Clerk of Court is respectfully directed to close the motion and Docket No. 146.
Dated: August 15, 2018
New York, New York
24
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?