In one of the early decisions to address the Supreme Court’s recent ruling in Spokeo v. Robins, 136 S. Ct. 1540 (2016), the Southern District of California denied certification of a proposed nationwide class of consumers who purchased IntenseX, an herbal supplement that plaintiffs alleged failed to deliver on its promised benefits of enhanced sexual power and performance. Kanfer v. Pharmacare US, Inc., No. 15-cv-0738-H-JLB (S.D. Cal. June 10, 2016).
Plaintiffs filed suit in January 2015, alleging that the defendant’s claims on the IntenseX label and website violated federal and California law on the theories that IntenseX was an unapproved aphrodisiac drug and that the claims were false or misleading. The defendant opposed class certification on the grounds that there were no common issues of fact or law and individual issues predominated, arguing, among other things, failure to establish materiality, reliance, or damages on a classwide basis. The court agreed, holding that the plaintiffs could not establish multiple requirements of Rule 23 or overcome deficiencies in Article III standing under Spokeo.
In examining the commonality and predominance requirements, the court acknowledged that for all three of the consumer protection laws under which the plaintiffs asserted claims, the reasonable consumer test would apply to determine whether the defendant’s conduct was misleading. To meet that standard, however, a claim must be such that “it is probable that a significant portion of the general consuming public or of targeted consumers, acting reasonably in the circumstances, could be misled.” Order at 7 (quoting Lavie v. Procter & Gamble Co., 105 Cal. App. 4th 496, 508 (2003)). Plaintiffs asserted that they were entitled to a classwide presumption of deception, reliance and injury based on the materiality of the representations at issue. While the court agreed that a presumption of reliance may arise where the plaintiff shows the misrepresentation was material, it disagreed that the plaintiffs were entitled to such a presumption here, citing precedent for the proposition that “an inference of reliance is not appropriate where…it is likely that many class members were never exposed to the allegedly misleading advertisements.” Id. at 8 (citations and quotation marks omitted). Moreover, the plaintiffs had not submitted sufficient evidence that the alleged misrepresentations were material to consumers or that a significant portion of consumers had similar expectations as to what the product would do and found the product lacking. Id. Plaintiffs’ argument that the product label and the website uniformly and falsely represented that IntenseX was an aphrodisiac, so that selling the product was per se illegal under 21 C.F. R. § 310.528, was also rejected, because the plaintiffs failed to establish that IntenseX was incapable of producing the promised effects or that the regulation they relied upon applied to supplements as well as drugs. Id. at 9.
The court likewise held that the typicality requirement was not met because 1) the plaintiffs testified at their depositions that they did not suffer from the sexual-health problems they claimed IntenseX falsely claimed to improve, 2) plaintiffs also testified that they relied on the product label, not the alleged claims on the IntenseX website, and 3) both plaintiffs made their purchases recently, while the claims of a substantial portion of the proposed class were likely time-barred. Id. at 10. Relying on Mazza v. American Honda Motor Co., 666 F.3d 581 (9th Cir. 2012), the court also agreed with the defendant’s argument that a nationwide class under California law was not proper. Id. As in Mazza, the court found that the plaintiffs’ claims involved application of consumer protection laws with material differences from California’s laws and that California’s interest in having its law applied did not outweigh that of the other states implicated. Id. at 10-12.
On the issue of standing, the court noted that the Article III requirements were recently reemphasized by the Supreme Court in Spokeo, where it was held that an injury in fact must be both concrete and particularized, even in the context of a statutory violation. 136 S. Ct. at 1549. Complicating the court’s analysis was the fact that the Ninth Circuit “has been inconsistent about whether absent class members, as opposed to only the named plaintiff, must have standing.” Order at 13. Nonetheless, in light of the Supreme Court’s recent pronouncements, it was clear that class certification, whether or not based entirely on lack of Article III standing, was improper under the circumstances:
“The correct approach in this case is unclear, especially after Spokeo. Whether characterized as problems with overbreadth, commonality, typicality, or Article III standing, however, there is a substantial mismatch between Plaintiffs and the classes they propose to represent.” Id. at 14.
Among the issues contributing to the “substantial mismatch” were the fact that the proposed class included consumers who bought similarly named products not distributed by the defendant, whose claims were time-barred, who bought IntenseX because of the express label claims, received the benefits claimed, and were satisfied, who bought IntenseX for reasons other than its advertising or labeling, and who received a refund. Id. at 13. In light of these deficiencies, the court determined class certification was “not proper to the extent that Plaintiffs raise claims and theories they do not have standing to raise, and to the extent that the class includes consumers who have no cognizable injury, including those who obtained full refunds.” Id. at 14.
Finally, the court held that Rule 23(b)(2), which requires the primary relief sought be declaratory or injunctive, was not satisfied because plaintiffs proposed that each class member should receive a full refund of the purchase price, and given that they could no longer be deceived by the alleged false labeling, monetary relief, as opposed to injunctive relief, was “necessarily their primary concern.” Id. at 15.
This opinion highlights the intersection between the Rule 23 requirements and Article III standing after Spokeo. Spokeo reinvigorated the injury-in-fact requirement and made clear that it is not automatically satisfied whenever a statute grants a statutory right and the authority to vindicate that right. The facts in Kanfer strongly supported the conclusion that the proposed class contained many members who lacked standing to raise the claims and theories advanced by the named plaintiffs. Therefore, the real question was whether the absent class members, in addition to the named plaintiffs, were required to have standing based on divided Ninth Circuit precedent. Ultimately, the court determined it could sidestep that question because many of the same facts giving rise to standing deficiencies led the court to conclude that multiple Rule 23 requirements were not satisfied. We will continue to monitor for post-Spokeo decisions and developments.