A different class

State-passed consumer protection acts have changed the legal landscape for product liability cases, say Allison Alcasabas and Joaquina Lazaro

Recent decades have witnessed the emergence of creative litigation strategies in the context of product liability litigation in the US. Straightforward claims seeking money damages for an injured consumer, based on a defective design and a manufacturer’s alleged failure to warn, now share court time with product-based actions for injunctions, medical monitoring of potential diseases linked to the product, and even third-party recoupment of healthcare and other expenses paid for injuries allegedly caused by the product.

In more recent years, plaintiffs have increasingly turned to consumer protection acts (CPAs), which have roots in common law fraud and misrepresentation, in pursuing compensation from product manufacturers. All 50 states have passed CPAs, authorising the state or private parties to prosecute consumer fraud or deceptive trade practices. While the scope and remedies of CPAs vary considerably, all but a handful allow class actions to some degree, with the most restrictive setting limits on the types of claims that may be certified, the damages available, or which consumers are eligible for class member status.

CPAs in practice
Actions brought under state CPAs may permit recovery, and even class certification, where such remedies otherwise would not be available under more traditional legal principles. For example, in Aspinall v Philip Morris (2004) plaintiffs sought economic damages under the state CPA on behalf of a purported class of ‘light’ cigarette purchasers in Massachusetts. Asserting claims sounding strikingly similar to common law theories of failure to warn and fraudulent misrepresentation, plaintiffs alleged that the cigarette manufacturer misled consumers into believing that its ‘light’ cigarettes would deliver lower levels of tar and nicotine, and failed to warn consumers of the risks of ingesting increased levels of these substances if they changed their smoking patterns. In certifying the class, the trial court limited the theories of damages to those that “do not rely upon individual proof” so that the defendants’ conduct – not that of the plaintiff smokers – was the focus of the case.

On appeal, the Massachusetts Supreme Court affirmed class certification, noting in its thorough analysis the more relaxed burden of proof under a CPA claim as compared with its common law counterpart. Among other things, the court acknowledged that a CPA action dispenses with traditional elements of a fraud claim that often defeat commonality of issues among a class, including a plaintiff’s reliance on the alleged misrepresentation and proof of individual physical harm. The court expressly found that: “The plaintiffs do not seek damages for personal injuries. Were it otherwise, unique and different experiences of each individual member of the class would require litigation of substantially separate issues, and would defeat the commonality of interests in the certified class.” The court further noted that the CPA claim did not require evidence of a defendant’s intent to deceive, nor even a defendant’s knowledge that the representation was false.

State conflicts

CPA actions also may permit for the simplified and uniform application of one state’s law, despite significant conflicts with the applicable laws of other states with legitimate interests in the litigation. Recently, a federal court certified nationwide classes against the manufacturer of a mechanical heart valve. In Re: St Jude Medical (2003), recipients of the heart valve sued, alleging strict liability, breach of warranty, negligence, medical monitoring, and violation of Minnesota’s CPA, and moved for class certification. The court certified one class under the common law theories of liability, and a second class under the state CPA. In certifying the former, the court held that the laws of the different states where the heart valve was implanted should apply. In contrast, the court held that Minnesota law applied to the CPA plaintiffs’ claims, based on the language of the statute permitting “any person” to bring action for allegedly deceptive acts.

The Court of Appeals for the Eighth Circuit reversed the district court’s certification of the class, asserting common law claims due to the diverse factual and legal issues at stake. Although the appellate court did not disturb the lower court’s ruling on certification under the CPA, it remanded the case for further analysis on the application of Minnesota law to all class members’ claims, recognising that the lower court failed to engage in the required in-depth constitutional due process analysis for choice of law issues. Despite express acknowledgment of the legitimate interests other states may have in continued #+ continuedapplying their laws to the allegedly tortious acts at issue, on remand the lower court adhered to the application of Minnesota law to all CPA claims at the cost of substantive conflicts with 18 other states’ laws on such key aspects as scienter, reliance, availability of a private cause of action, and whether material omissions (as opposed to affirmative misrepresentations) were prohibited acts.

Going further
State CPA claims also may assist to advance claims that might otherwise be dismissed for lack of specificity in the complaint. In August 2002, for example, a minor and her mother sued a popular fast food chain, alleging multiple causes of action as members of a putative class of New York minors who purchased and consumed the food, and who now suffered from obesity, diabetes, heart disease and other illnesses.

On a motion to dismiss the amended complaint in Pelman et al v McDonald’s Corp (2003), the trial court acknowledged that New York’s CPA was drafted to extend “far beyond the reach of common law fraud”, noting that by dispensing with the reliance requirement, the statute “allows the plaintiff to forego the heightened pleading burden that is necessary for common law fraud claims”. However, the court concluded that plaintiffs had failed to allege an adequate causal connection between the consumption of the food and their injuries, as they had not ruled out in their pleading various alternative risk factors for the myriad illnesses they suffered. Reversing the dismissal of plaintiffs’ claims, the Court of Appeals for the Second Circuit held that because an action under New York’s CPA is not subject to the ‘pleading with particularity’ requirements of the federal rules of procedure, the causation allegations were pleaded adequately, and the specificity requested by the defendant in its motion was more appropriately the subject of discovery.

The development of these and other similar product-liability cases seeking relief pursuant to CPA clearly bear watching going forward. As many CPAs allow statutory recoveries far beyond actual damages, and most permit awards of attorneys’ fees, the ability to bring class actions, with the concurrent elimination of proof of reliance and intent, may be a powerful incentive to recast traditional product liability claims as alleged CPA violations. nAllison Alcasabas is a partner and Joaquina Lazaro is an associate at Chadbourne & Parke.