Class Action Settlements Feed

Ninth Circuit Rejects Challenges to Conjoint Analysis in Consumer Class Action

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By: Alexander M. Smith

In recent years, conjoint analysis has proliferated as a methodology for calculating class-wide damages in consumer class actions. While conjoint analysis first emerged as a marketing tool for measuring consumers’ relative preferences for various product attributes, many plaintiffs (and their experts) have attempted to employ conjoint analysis as a tool for measuring the “price premium” attributable to a labeling statement or the effect that the disclosure of a product defect would have had on the product’s price. Defendants, in turn, have taken the position that conjoint analysis is only capable of measuring consumer preferences, cannot account for the array of competitive and supply-side factors that affect the price of a product, and that it is therefore incapable of measuring the price effect attributable to a labeling statement or a disclosure. Consistent with that position, defendants in consumer class actions frequently argue not only that conjoint analysis is unsuited to measuring class-wide damages consistent with Comcast Corp. v. Behrend, 569 U.S. 27 (2013), but also that it is inadmissible under Federal Rule of Evidence 702 and Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993). But a recent Ninth Circuit decision, MacDougall v. American Honda Motor Co., --- F. App’x ---- (9th Cir. 2021) may threaten defendants’ ability to challenge conjoint analysis on Daubert grounds.

In MacDougall, the plaintiffs brought a consumer class action against Honda premised on Honda’s alleged failure to disclose the presence of a transmission defect in its vehicles. The plaintiffs attempted to quantify the damages attributable to this omission through a conjoint analysis, which purported to “measure the difference in economic value—and thus the damages owed—between Defendants’ vehicles with and without the alleged transmission defect giving rise to this action.” MacDougall v. Am. Honda Motor Co., No. 17-1079, 2020 WL 5583534, at *4 (C.D. Cal. Sept. 11, 2020). Honda argued that this conjoint analysis was flawed and inadmissible, both “because it only accounts for demand-side and not supply-side considerations” and “because it utilizes an invalid design that obtains mostly irrational results.” Id. at *5. The district court agreed with Honda, excluded the expert’s conjoint analysis, and entered summary judgment in Honda’s favor based on the plaintiffs’ failure to offer admissible evidence of class-wide damages. In so holding, the court concluded that the expert’s conjoint analysis “calculates an inflated measure of damages because it does not adequately account for supply-side considerations” and only measures a consumer’s willingness to pay for certain product features—not the market price that the product would command in the absence of the purported defect. Id. “[W]ithout the integration of accurate supply-side considerations,” the district court explained, “a choice-based conjoint analysis transforms into a formula missing half of the equation.” Id. And separate and apart from this central economic defect, the district court found that other errors in the expert’s methodology—including his failure to conduct a pretest survey and the limited number of product attributes tested in the conjoint survey—rendered his conjoint analysis unreliable and inadmissible. See id. at *7-9.

The Ninth Circuit reversed. Beginning from the premise that expert testimony is admissible so long as it is “relevant” and “conducted according to accepted principles,” the Ninth Circuit found that the admissibility of expert testimony was a “case-specific inquiry” and therefore rejected Honda’s argument that “conjoint analysis categorically fails as a matter of economic damages.” Slip Op. at 2-3. The Ninth Circuit then concluded that Honda’s methodological challenges based on “the absence of market considerations, specific attribute selection, and the use of averages to evaluate the survey data go to the weight given the survey, not its admissibility.” Id. at 3 (citations and internal quotation marks omitted). And while the Ninth Circuit acknowledged that the district court relied on numerous decisions that had rejected the use of conjoint analysis in consumer class actions, it held that these decisions did not concern the “admissibility of conjoint analysis under Rule 702 or Daubert” but instead its “substantive probity in the context of either class-wide damages under Comcast . . . or substantive state law.” Id. at 2.

In distinguishing between the question of whether conjoint analysis is admissible under Daubert and whether it is capable of measuring damages on a class-wide basis consistent with Comcast, the Ninth Circuit preserved an opening for defendants to challenge the use of conjoint analysis to measure class-wide damages at the class certification stage. Nonetheless, MacDougall undoubtedly weakens defendants’ ability to challenge the admissibility of conjoint analysis on methodological grounds, and it is possible that some district courts may read the Ninth Circuit’s opinion to stand for the broad proposition that juries, rather than judges, should decide whether conjoint analysis can properly measure economic damages.


A Benefytt or a Curse: Ninth Circuit Holds That Bristol-Myers Does Not Apply Before Class Certification

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By: Alexander M. Smith

In 2017, the Supreme Court held in Bristol-Myers Squibb Co. v. Superior Court, 137 S. Ct. 1773 (2017), that a defendant in a mass tort action is not subject to specific personal jurisdiction as to the claims of non-resident plaintiffs whose injuries lack a sufficient connection to the forum state. The Court did not decide, however, whether its holding applied to nationwide class actions. And in the four years following Bristol-Myers, district courts in the Ninth Circuit have reached highly divergent results:

  • Some district courts have “agree[d] . . . that Bristol-Myers Squibb applies in the nationwide class action context” and have dismissed claims brought on behalf of putative nationwide classes, reasoning that “a state cannot assert specific personal jurisdiction for the claims of unnamed class members that would not be subject to specific personal jurisdiction if asserted as individual claims.” Carpenter v. PetSmart, Inc., 441 F. Supp. 3d 1028, 1035 (S.D. Cal. 2020); see also, e.g., Wenokur v. AXA Equitable Life Ins. Co., No. 17-165, 2017 WL 4357916, at *4 (D. Ariz. Oct. 2, 2017) (“The Court notes that it lacks personal jurisdiction over the claims of putative class members with no connection to Arizona and therefore would not be able to certify a nationwide class.”).

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First Circuit Affirms Barefoot Running Shoes Class Settlement

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By Alexander M. Smith

On December 31, 2015, the First Circuit upheld a class action settlement between Vibram USA, Inc. and purchasers of Vibram FiveFingers footwear. The plaintiffs brought claims on behalf of a putative nationwide class under the consumer protection laws of Massachusetts, including Mass. Gen. Law. ch. 93A and 266, as well as claims on behalf of a putative Florida subclass under the Florida Deceptive and Unfair Trade Practices Act, F.S.A. §§ 501.201 et seq. The lawsuit alleged that Vibram represented that its FiveFingers shoes (which were advertised to facilitate “barefoot running”) would improve body awareness, reduce lower back pain and injury, and improve foot health, allegedly without sufficient scientific studies to substantiate these claims. The parties then settled, and the District of Massachusetts (Woodlock, J.) approved the settlement after a hearing. Pursuant to the settlement, class members received a settlement notice stating that the estimated recovery would be approximately $20 to $50 per pair. Due to a “higher-than-expected” number of claims, class members received only approximately $8.44 per pair of shoes, prompting a group of objectors to appeal. Although the court acknowledged the disparity between the estimated and the actual payment, it nonetheless held that this discrepancy did not void the settlement and that a refund of $8.44 was a fair settlement amount given the uncertainty plaintiffs would face at trial. It likewise dismissed the objectors’ other concerns, including the imposition of a proof-of-purchase requirement on objectors (but not on class members), the form of injunctive relief, the inclusion of a clear-sailing provision, and the total amount of attorney’s fees.

Bezdek v. Vibram USA, Inc., 809 F.3d 78 (1st Cir. 2015). 


US Supreme Court Predicting the Future For Class Actions

By Jeremy M. Creelan

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During its next term, the Supreme Court will consider whether class action defendants can end the cases against them simply by offering complete relief to individually named plaintiffs and offering nothing to the classes those plaintiffs purport to represent.[1]

The legal issue involves the intersection of two Federal Rules of Civil Procedure, namely the effect that Rule 68—which allows defendants to serve offers of judgment on specified terms and requires plaintiffs to respond to them—has on Rule 23, which governs class actions.  Some circuit courts have held that when a Rule 68 offer of judgment offers a plaintiff all the relief available to him, he can have no further interest in litigation and his legal claims are moot.  In the class action context, at least one circuit has further held that when a defendant makes a complete offer of judgment under Rule 68 before the plaintiff has moved for class certification, the plaintiff can have no interest in representing the class.  Under this analysis, the plaintiff’s class claims are moot in addition to his or her individual claims. 

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CAFA PRIMER

By Kate T. SpelmanCafa

This post is intended to give readers a basic understanding of the Class Action Fairness Act of 2005 (“CAFA”).  This post is not intended to be a comprehensive review or recitation of the law.

Many litigators perceive state courts as more plaintiff-friendly than their federal counterparts.  As such, plaintiffs often prefer litigating class action lawsuits in state court, while defendants prefer removing these suits to federal court.

However, federal courts have limited subject matter jurisdiction, as they can generally hear only two types of cases: (1) cases involving federal law (“federal question jurisdiction”), and (2) cases involving parties from different states where the amount in controversy exceeds

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Class (De-)Certification

By Alexander M. Smith

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Class certification is often the pivotal moment in a class action. In many cases, the prospect of ruinous liability – to say nothing of the difficulty of trying a class action – induces defendants to settle shortly after the class is certified.  But class certification does not necessarily guarantee that plaintiffs will win: because class certification orders are “inherently tentative,” a court may revisit its decision to certify a class if it no longer appears that the class satisfies the requirements of Rule 23.[1]  And as a recent case from the Southern District of New York demonstrates, a defendant may successfully obtain decertification even after a jury renders its verdict.[2]

That case, Mazzei v. Money Store, arose out of allegations that a pair of mortgage servicers (and former lenders) unlawfully assessed late fees and accelerated the balance due on loans that fell into default.  The plaintiff, who took out a second mortgage from the defendants, brought a class action on behalf of a putative class of mortgage borrowers.  The court certified a class of plaintiffs who were charged late fees after their loans were accelerated, and the jury ultimately found in the plaintiffs’ favor.  The defendants then moved to decertify the class on the basis, among others, that the plaintiffs had failed to demonstrate the existence of a contractual relationship between the plaintiff borrowers and the defendant servicers on a classwide basis.  

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Delay In Seeking Arbitration Waived Right To Arbitrate

GavelBy Howard S. Suskin

A defendant in a class action antitrust suit that did not move to compel arbitration until shortly before trial was set to begin was held to have waived its right to arbitrate.  In re: Cox Enterprises, Inc. Set-Top Cable Television Box Antitrust Litigation, No. 14-6158 (10th  Cir., June 24, 2015).  Defendant’s motion to compel arbitration followed extensive discovery, class certification, and potentially dispositive motions.  The court found that the defendant’s assertion of its right to arbitrate was overly late and inconsistent with its conduct in litigating the case.  Here

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