Defendant’s survey too flawed to avoid class certification in “rapid release” case

Bailey
v. Rite Aid Corp., 
338 F.R.D. 390, 2021 WL 1668003, No.. 4:18-cv-06926 YGR (N.D. Cal. Apr.
28, 2021)

Bailey
brought claims over Rite Aid’s marketing of its over-the-counter acetaminophen
gelcaps as “rapid release.” Studies allegedly show that “traditional, non-rapid
release acetaminophen products can be equally effective in the same, if not
faster, time period than its Rite Aid rapid release products,” but Rite Aid still
charged a premium. The court reasoned that Bailey’s theory of economic harm was
predicated on consumers having been misled into thinking that the Rite Aid
gelcaps are faster-acting than Rite Aid tablets “by virtue of having compared
the labels and prices of both products,” so “only consumers who purchased Rite
Aid gelcaps at brick-and-mortar Rite Aid stores could have suffered the
economic injury alleged in the FAC.”

“rapid release” results

FWIW,
my search for “rapid release acetaminophen” on Rite Aid’s website actually
offered me non-rapid release versions to compare, so I have questions about
this conclusion, but Bailey conceded the issue at the hearing and limited the
proposed class to in-store purchasers.

The
court certified a damages class, rejecting Rite Aid’s objections to Bailey’s
expert Silverman, who testified based on advertising experience and not based
on a specific survey of Rite Aid gelcaps consumers. “[A]n expert who offers
testimony on the question of whether a reasonable consumer is likely to be
deceived by an allegedly misleading statement, or whether a reasonable consumer
would find such a statement to be material, is not required to conduct a
consumer survey if his or her testimony is otherwise reliable.”

Rite
Aid’s own survey purported to show lack of deception/materiality, but the
survey “suffers from significant flaws that detract from its persuasiveness as
evidence that the issue of likelihood of deception cannot be resolved with
common proof.” One part of the survey asked past consumers of Rite Aid gelcaps
to select from among twenty-three reasons for why they purchased the product,
but none of the twenty-three options was “rapid release.” Nor did they describe
attributes consistent with Bailey’s theory of liability, such as “faster-acting”
or “works faster.” These closed-ended questions didn’t offer respondents the
option to select a response that is consistent with Bailey’s theory of
liability. Other closed-ended questions in the survey had the same flaw; even
when they gave respondents the options of choosing that the product “is fast
release,” they didn’t allow respondents to answer in ways indicating a
comparison with other products. Nor did the images used allow a survey
respondent to compare the prices and labels of the Rite Aid gelcaps with those
of the Rite Aid tablets.

Rite
Aid also argued that the statement wasn’t actually false, because it just meant
the speed at which the gelcaps dissolved relative to the FDA’s standards for
“immediate release” dissolution. But “Rite Aid points to no evidence showing
that consumers of Rite Aid gelcaps were uniformly aware of the FDA’s standards
for immediate dissolution and uniformly interpreted the ‘rapid release’
statement at issue in light of such standards.”

Likewise,
given the survey flaws, the court wasn’t convinced that it showed that
consumers didn’t have a common understanding of the term “rapid release.” Plus,
the plaintiff wasn’t required to establish a uniform interpretation at the
class certification stage.  

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