Gerber Good Start off to a bad start in false advertising/allergy case

Hasemann v. Gerber Products Co., 2019 WL 1434263, Nos. 15-CV-2995
(MKB) (RER), 16-CV-1153 (MKB) (RER), 17-CV-93 (MKB) (RER) (E.D.N.Y. Mar. 31,
2019)
Hasemenn  alleged that
Gerber misrepresented that its “Good Start Gentle” infant formula was the first
and only formula that reduces the risk that infants will develop allergies, and
that GSG was the first and only infant formula that the FDA endorsed to reduce
the risk of infants developing allergies.  Here, the court certified Florida and New York
subclasses and denied certification of the North Carolina and multistate subclasses.
Brief background: in 2005, Gerber petitioned the FDA for
approval of a qualified health claim for GSG. The FDA rejected this in 2006
concluding that there was “no credible evidence to support the qualified health
claim relating consumption of 100 percent partially hydrolyzed whey protein in
infant formula to a reduced risk of food allergy.” Gerber tried again in 2009
with “emerging clinical research shows that, in healthy infants with family
history of allergy, feeding a 100% Whey-Protein Partially Hydrolyzed infant formula
instead of a formula containing intact cow’s milk proteins may reduce the risk
of developing the most common allergic disease of infancy — atopic dermatitis —
throughout the [first] year of life and up to [three] years of age.”  The FDA “determined that this claim
mischaracterized the scientific evidence and was therefore misleading.” It proposed
four alternative qualified health claims (of varying wishy-washiness and
dubious intelligibility to consumers), over which it would consider exercising
its enforcement discretion not to challenge the qualified health claim as long
as Gerber also included a statement about the risks of partially hydrolyzed
formulas to infants who are allergic to milk who have milk allergy symptoms.
Regardless, GSG went ahead with claims that, e.g., GSG is
the “1st & Only Routine Formula to REDUCE THE RISK OF DEVELOPING
ALLERGIES.” (Used on larger containers 2013-2016.)
 

1st and Only Routine Formula to Reduce Risk of Developing Allergies sticker

A manufacturer’s coupon bore a gold badge that reads: “MEETS
FDA QUALIFIED HEALTH CLAIM” around the outer perimeter of the badge and read in
large font “1st AND ONLY” in the center of the gold badge. A statement on the coupon
attachment stated that Good Start “is the first and only formula brand made
from 100% whey protein hydrolyzed, and that meets the criteria for a FDA
Qualified Health Claim for atopic dermatitis.” [I don’t admire the chutzpah here, but it does remind me of xkcd’s “contains a clinically studied ingredient.”] Gerber used the label “on
exterior product packaging” for some larger containers and the gold badge “on
supermarket displays advertising [GSG].” (Hasemann Compl. ¶ 47.) Specifically,
the coupon was attached to certain “containers of Good Start that contained 22
ounces or more of powder formula.”
 

GSG coupon

Gerber ran a 2012/2013 TV ad stating, “You want
your Gerber baby to have your imagination … your smile … your eyes … not
your allergies …. [I]f you introduce formula, choose the Gerber Good Start
Comfort Proteins Advantage.” A magazine ad likewise claimed, “If you have
allergies in your family, … research shows the formula you first provide your
baby may make a difference. In the case of Gerber® Good Start® Gentle Formula,
it’s the Comfort Proteins® Advantage that is easy to digest and may also
deliver protective benefits.” An ad that ran in People and Parents magazines in
2013 used a badge on the advertisement, “1st FORMULA WITH FDA QUALIFIED HEALTH
CLAIM,” and listed its website as gerber.com/allergy.
 

magazine ad

An ad in Drugstore News, a trade journal, also claimed that
GSG “is the first and only infant formula that meets the criteria for a FDA
Qualified Health Claim,” and in smaller font: “Breastfeeding helps reduce the
risk of developing atopic dermatitis – the most common allergy of infancy. Now
there is a formula that can help too, especially for those babies with a family
history of allergy. The 100% whey protein partially hydrolyzed used in our
Gerber Good Start formulas is easy to digest and may provide protective
benefits. This is out Comfort Proteins® Advantage and only Good Start has it.”
Another exhibit showed an in-store display sign from 2011
that contains a picture of a GSG container and the image of the gold badge
described above.
Plaintiffs argued that the ads made two deceptive claims:
(1) that GSG reduces the risk that infants will develop allergies (a claim
rejected by the FDA and also allegedly shown to be false by several studies),
and (2) that GSG meets the criteria for an FDA qualified health claim for
atopic dermatitis (not approved by the FDA, and Gerber didn’t use the FDA-required
qualifying statement).  In 2014, the FDA
sent a warning letter to Gerber over this conduct, stating that the health
claims were unauthorized and that the labeling was misleading.  The FTC also filed a still-pending lawsuit
over the labeling, and other consumer claims were filed/are pending.  Hobbs v. Gerber Prod. Co., No. 17-CV-3534,
2018 WL 3861571 (N.D. Ill. Aug. 14, 2018) (denying Defendant’s motion to
dismiss); Zakaria v. Gerber Prod. Co., No. 15-CV-00200, 2017 WL 9512587 (C.D.
Cal. Aug. 9, 2017) (decertifying after having initially certified a class),
aff’d, No. 17-CV-56509, 2018 WL 5977897 (9th Cir. Nov. 14, 2018); Slocum v.
Gerber Prod. Co., No. 16-CV-04120, 2016 WL 3983873 (W.D. Mo. July 25, 2016)
(remanding to state court); Nat’l Consumers League v. Gerber Prods. Co., No.
14-CA-8202 (D.C. Super. Ct. Aug. 8, 2015) (denying Defendant’s motion to
dismiss).
Gerber’s basic argument against the consumer protection
claims here was that “that the challenged claims did not consistently appear on
GSG’s labels and the advertising was extremely limited,” and that
“advertisements are often disseminated for short periods of time, and their
substance changes frequently.” Its marketing materials, it argued, emphasized
multiple benefits of GSG, and the majority had “nothing to do” with allergies
or the qualifying statement.  With
respect to each contested element of the certification standard, Gerber argued
that the variation in what consumers probably saw precluded a finding that
plaintiffs satisfied that element (e.g., typicality, predominance).
Although the case citations differ a bit (there are a lot of
them; future cases could easily look to this comprehensive opinion for a
review), the court’s ultimate conclusion for the Florida and NY subclasses was
the same for each element: Where, as with those states, the consumer protection
statute uses an objective standard for likely deception and doesn’t require
reliance, and where the plaintiff offers a price premium theory of damages, the
fact of some potential variation in exposure doesn’t preclude certification.
The challenged claims here (1) were widely advertised, including in store
displays even when they weren’t on the product packages and (2) had the same
core falsity problem even if they varied in terminology.  That was enough to go forward.  This result is consistent with the liberal
aims of the FDUTPA and NY GBL.  (Even in
California, which requires a more rigorous exposure/reliance showing, courts
should find exposure “[w]here the alleged misrepresentation appears on the
label or packaging of each item being sold,” but “[e]ven where each product is
not sold in a container on which the alleged misrepresentation appears,
class-wide exposure may be inferred where there is a sufficiently extensive
advertising campaign that includes the alleged misrepresentation.”) 
Causation and reliance, though related, should not be
conflated—a deceptive practice can cause actionable harm even without reliance,
for example through a price premium. Ultimately,
[t]he fact that the same label did
not appear on every single product of GSG that a consumer may have purchased,
does not mean that the deceptive act would not still have likely deceived a
consumer, given that the labels were both abundant, accompanied by advertising
campaigns, and appeared prominently on shelves where consumers shopped. To find
otherwise could encourage a defendant to avoid liability under the FDUTPA, a
broad statute, by for example, creating multiple labels for a product line.
At a mimimum, the court agreed with the magistrate judge
that, because “diminished risk of allergy was a consistent and prominent theme
among Gerber’s various marketing campaigns for GSG,” it was therefore a “ ‘near
certainty’ that every consumer was exposed to the alleged misrepresentations.”
Thus, plaintiffs could prove typicality despite the
variations in labels on the market. Without a reliance requirement, the court
declined to read any subjective inquiry into a plaintiff’s response into the
standard. “Plaintiffs are arguing that the same course of events — the unlawful
conduct of false labeling and marketing — resulted in price premiums for an
entire product line. … Plaintiffs will have the incentive to prove the elements
of the claims under the FDUTPA and GBL to the same degree that any individual
class member would.”
Ascertainability: Although some courts in the Second Circuit
have declined to permit the use of self-identifying affidavits as a way to
satisfy the issue of ascertainability, many recent false advertising cases have
allowed such affidavits, in part to protect the class action device as a key
mechanism for consumer protection law. The Second Circuit has specifically declined
to read an administrative feasibility requirement into the factor of
ascertainability, rejecting “heightened ascertainability test” found in other
circuits and confirming that ascertainability presents only a “modest
threshold” that “does not concern itself with the plaintiffs’ ability to offer
proof of membership under a given class definition.”
Further, consumers are more likely to remember their
purchases of baby formula—“a primary source of nutrition” and an “important”
purchase—and the time period during which they purchased than they are to
remember a random consumer product.  The
age/developmental stage of purchasers’ children will provide them with clear
referents.
Predominance:  “While
predominance may be difficult to demonstrate in mass tort cases, such as
Amchem, in which the ‘individual stakes are high and disparities among class
members great,’ it is a ‘test readily met in certain cases alleging consumer or
securities fraud or violations of the antitrust laws.’ ” “The objective
standards — including whether the representations would likely have misled a
reasonable customer — underlying the elements of the statutes render them
particularly well-suited to generating common questions.”
Finally, damages were subject to classwide proof under
damages models that could satisfy Comcast.  The plaintiffs’ burden at this stage isn’t to
prove injury but to show that it’s “capable of proof at trial through evidence
that is common to the class rather than individual to its members.” Plaintiffs
offered a number of class-wide methods to quantify the alleged price premium:
(1) using a generic as a benchmark and subtracting the price of the generic
from the price charged by Gerber; (2) calculating the value that Gerber
ascribed to its allergy claims; (3) looking at price increases and hikes made
during the class period; (4) running a “hedonic regression” analysis, which
“statistically analyze(s) fluctuations in price within a given group of products,
over a given time”; and (5) running “conjoint analyses,” which utilize surveys
in determining “the individual value consumers place on various product
attributes,” in order to “determine the hypothetical fair value of a product
absent any misrepresentations.” It offered two expert declarations saying this
could be done.  Gerber’s expert said it
couldn’t.
Comcast held that
a damages model must establish “that damages are capable of measurement on a
classwide basis,” and that “any model supporting a ‘plaintiff’s damages case
must be consistent with its liability case.’ ”  But in that case, the damages model assumed
the validity of four different theories of antitrust liability, only one of
which was legally valid by the time certification came around, so the model
wasn’t tied to the legal violation alleged.
Gerber argued that it was impossible to isolate the effect
of the challenged allergy claims because they were always promoted along with
multiple other product attributes and “there is no pricing variation between
those containers of GSG that displayed the challenged representation on the
label and those containers that do not.”
The court disagreed: several of the proffered damages models
were consistent with the theory of liability and injury in this case, and many
of Gerber’s specific arguments were premature.  The legal theory is that the
misrepresentations misled consumers into paying a price premium and all of that
theory is still in the case, unlike in Comcast.
And while conjoint analysis or other mechanisms for assessing the price premium
might ultimately fail, a conjoint analysis can lead to a proper damages
calculation if it takes relevant factors into account, such as the price of other
comparable products.

from Blogger https://ift.tt/2Uu3hMf

Advertisements
This entry was posted in Uncategorized and tagged , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s