Consumer class actions predicated on state laws alleging deceptive claims are one of the scourges of modern marketing. In a recent decision, the Second Circuit laid out some important guidance on whether and how putative class actions based on laws of different states can move forward.
In Langan v. Johnson & Johnson Consumer Companies, Inc., Langan, a Connecticut resident, sued J&J for violating the Connecticut Unfair Trade Practices Act (CUTPA), alleging that two Aveeno Baby washes were deceptively marketed as containing “natural oat formula” when they allegedly only contained 1% natural ingredients. Langan sought class certification on behalf of Connecticut consumers and consumers in 17 other states who purchased the two baby washes under those states’ “mini-FTC Acts”.
A Connecticut federal district judge certified a class of consumers who had purchased the products in 18 states—rejecting J&J’s arguments that the Plaintiff lacked Article III standing to bring a class action under multiple state laws and that the state consumer protection laws were too varied to satisfy the predominance requirement of Rule 23.
On appeal, J&J argued that (1) Langan lacked Article III standing to bring a class action claim on behalf of consumers in states other than Connecticut, and (2) the various state laws at issue are not sufficiently similar to support certifying the class.
The Second Circuit agreed with the trial court’s conclusion that a plaintiff’s ability to bring a class action on behalf of out-of-state class members is not an issue of Article III standing, but rather a question of predominance under Rule 23(b)(3). However, the Second Circuit deemed insufficient the trial court’s analysis of whether the various state laws satisfy the predominance requirement. Agreeing with J&J, the court noted that “the district court’s analysis consisted of one paragraph” and that it summarily concluded that “the identified differences were minor.”
Of particular importance to advertising class actions, the Second Circuit found that the district court had failed to consider J&J’s argument that differences among the various state laws on the issues of reliance, intent to deceive, and causation were not adequately discussed. Similarly, the Second Circuit found the district’s passing mention of potential sub-classes was inadequate. The Second Circuit ruled that if a district court intends to use sub-classes to deal with predominance issues the district court must identify the sub-classes and why they are necessary. Because of these failures, the Second Circuit remanded the case for further proceedings at the district court.
The Second Circuit’s decision provides important guidance on how courts and litigants deal with multi-state consumer class actions. How the district court sorts through the facts given this guidance may provide further instruction especially for other actions predicated on “natural” claims. Stay tuned.