Thomas Bailey v Rite Aid Corporation, Case No. 4:18-cv-06926 YGR, Class Certification Ruling April 28, 2021
Judge Yvonne Gonzalez Rogers, United States District Judge in Northern California US District Court, granted class certification in a California class action brought by consumers against Rite Aid Corporation, manufacturer and distributor of Rite Aid-branded over-the-counter drugs. A proposed conjoint survey and analysis, designed by expert Steven P. Gaskin and assisted by Applied Marketing Science (AMS), to support a damages model, played a key role in that decision.
Plaintiffs allege that Rite Aid “misled and continues to mislead consumers about the nature, quality, and effectiveness” of Rite Aid gelcaps through its labeling of the term “rapid release” and charges a premium for this product with “false, misleading, unfair, deceptive labeling and marketing in an effort to dupe consumers into purchasing these gelcaps for prices that exceed their true value.” Specifically, Plaintiffs allege that Rite Aid’s actions violate three California consumer protection statutes—the Unfair Competition Law (UCL), False Advertising Law (FAL), and Consumers Legal Remedies Act (CLRA)—in that it is false or misleading to claim ”rapid release” when the drug does not actually work faster for consumers than non-rapid release drugs. Notably, according to plaintiffs, studies 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.”
In support of their allegations, plaintiffs proposed a conjoint survey-based model to assess class-wide damages. As the basis of that model, Mr. Gaskin designed a choice-based conjoint survey that seeks to measure “the difference in market value of the Class Products with the misrepresentation compared to the market value of the Class Products without the misrepresentation.” Under Comcast, plaintiffs must show that their proposed damages model is consistent with their theory of liability in the case. Judge Gonzalez noted that “in mislabeling cases where the injury suffered by consumers was in the form of an overpayment resulting from the alleged misrepresentation at issue, such as here, courts routinely hold that choice-based conjoint models that are designed to measure the amount of overpayment satisfy Comcast’s requirements.”
Rite Aid argued that Mr. Gaskin’s proposed damages model is not capable of reliably determining the premium that proposed class members paid as it does not consider supply side factors. However, the court found that “the proposed damages model employs actual prices and quantities of past sales (based on actual sales data), which inherently reflect both demand and supply factors…Courts routinely hold that conjoint analyses that employ actual sales data reflecting prices and quantities of items actually sold in the past adequately account for supply-side factors.”
Accordingly, the Court concluded that Plaintiffs met the burden to show the proposed damages model comports with Comcast and is capable of measurement on a class-wide basis and granted Plaintiff’s motion for class certification under Rule 23(b)(3) with respect to claims under the UCL, FAL, and CLRA.
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