The U.S. District Court for the Central District of California recently issued an interesting decision (pdf) denying class certification in 15 consolidated consumer class actions against the maker of 5-hour ENERGY drinks.
In the consolidated cases, captioned In re 5-Hour Energy Marketing and Sales Practices Litigation, the plaintiffs allege that 5-hour Energy drinks were falsely advertised as providing hours of energy. The plaintiffs asserted claims under California, Missouri, New Mexico, New Jersey, New York, and Pennsylvania law, and sought certification of state-specific classes. On June 6, 2017, the court denied class certification because the plaintiffs had failed to show that their alleged state-law deception theory was commonly experienced by consumers. In class action vernacular, individual, not common, issues predominated in violation of Federal Rule of Civil Procedure 23(b)(3).
To follow the certification analysis, it is important first to understand that to prevail on their false advertising claims under the relevant state laws, the plaintiffs were required to show that the alleged false advertising – the label statements ‘five hour energy’ and ‘hours of energy’ – were materially important to the plaintiffs’ decisions to purchase 5-hour Energy.
To demonstrate that class treatment of their claims was appropriate, the plaintiffs needed to show – via class-wide common proof, not from individual inquiry of each consumer – that class members “possess the same interest and suffer the same injury” as the plaintiffs themselves. Here, that meant showing that the alleged false advertising materially impacted the purchasing decisions of reasonable consumers in the same manner as it allegedly had impacted the plaintiffs. As the court underscored, “[i]f the misrepresentation or omission is not material” to the purchasing decisions of “all class members, the issue of reliance [and causation] ‘would vary from consumer to consumer’ and the class should not be certified.”
To try to meet that burden, however, plaintiffs pretty much avoided what reasonable consumers thought, relying instead on the plaintiffs’ own impressions, on defendant’s impressions, on an expert’s opinion what ‘energy’ meant, and on FDA’s definition of ‘energy.’ The court rejected all that because none of it shed light on the objective reasonable consumers’ take-away of the word ‘energy’ or how the challenged statements impacted their purchasing decisions.
Defendants, on the other hand, submitted a survey of 5-Hour Energy purchasers. It showed that a meager 2.2% of them relied on the challenged statements in the manner that the plaintiffs had alleged and, even then, only during their initial purchase. Subsequent purchases were primarily driven by the consumers’ actual experiences with the product. The survey also confirmed that consumers made their initial purchases based on many different factors having nothing to do with the challenged label statements, such as a recommendation or the product’s location at the checkout stand.
On this record, the court concluded that individual issues surrounding whether the challenged label statements deceived consumers or were material to the purchasing decisions swamped any common issues. “The element of predominance is not satisfied because Plaintiffs have not shown that they are entitled to a class-wide presumption of materiality, and thus, cannot establish reliance or causation with common proof. Without a market survey documenting consumer preferences, Plaintiffs have not shown that the ‘five hour energy’ representation is material to consumers as compared to other factors . . . Plaintiffs also have not shown that there is a prevalent definition of ‘energy’ in the market. Without such evidence, Plaintiffs cannot show an entitlement to a class-wide presumption of materiality.”
The court’s decision is a helpful reminder to businesses targeted by false-advertising litigation – it’s not enough for the plaintiffs to have evidence that they themselves were deceived by the challenged statements or omissions. Rather, the plaintiffs must be able to show – using common proof – that class members also were deceived in the same manner. Otherwise, the class trial will inevitably break down into a series of mini-trials of individualized evidence regarding particular consumers’ purchasing decisions and whether they each relied on the challenged statements or omissions.