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Litigation Alert >> A Strategy for an Early Challenge to the Class Action Complaint: The “Motion to Strike”

February 4, 2014

Consumer class action lawsuits pose a significant threat to businesses, regardless of the ultimate merits of the plaintiff’s case.  A recent federal court decision – and the plaintiffs’ voluntary dismissal of the case thereafter – demonstrates that, in proper circumstances, an early motion to strike class action allegations can be an effective tool to avoid a protracted and extremely expensive lawsuit.

Class action litigation can be extraordinarily expensive.  Class action counsel possess a growing arsenal of laws they can use to seek substantial recoveries on behalf of thousands, and even millions, of class members.  Even when a defendant believes the claims in the class action complaint are without merit, the risk of liability and the prospect of significant litigation costs often lead to expensive settlements.  

A recent decision from the United States District Court for the Southern District of Ohio demonstrates that under the right circumstances, a defendant might be able to move early in the case to challenge whether the case may properly proceed as a class action.  For a case to proceed as a class action, the plaintiff must allege and prove that, among other things, common issues of law or fact among the putative class members predominate over individualized issues, and the named plaintiffs’ claims are typical of all class members’ claims.  The early challenge to these (and other) class action-related factors is pursued through a “motion to strike class allegations.”  

While federal courts have not uniformly accepted early motions to strike class allegations – and some, including federal courts in New York, have noted that they “disfavor” these motions – if a motion is successful, the case is then limited to individual claims by the named plaintiffs only.  Depending on the substantive nature of the claims, this could reduce potential exposure from millions of dollars to a nominal amount.  

A motion to strike class allegations can succeed where the complaint itself reveals a flaw inherent in the proposed class, such as where each class member’s claim would require an individualized factual inquiry into a central issue.  Further, as the recent decision demonstrates, a motion to strike can occasionally succeed where the defendant can offer incontrovertible evidence undercutting the elements required for class certification.

Background
In late 2009 and early 2010, plaintiffs Richard Loreto and Larry Buffa brought class action suits against Procter & Gamble Co. (P&G), alleging that P&G’s advertising for its Vicks NyQuil and DayQuil products violated consumer protection statutes throughout the United States.  The plaintiffs claimed that P&G falsely and misleadingly promoted certain formulations of NyQuil and DayQuil by making various statements suggesting that the addition of Vitamin C to the products made them effective in preventing, treating or relieving the symptoms of the common cold.  P&G moved in June 2010 to dismiss the lawsuit, and the Ohio district court granted P&G’s motion.  On appeal, the United States Court of Appeals for the Sixth Circuit affirmed the dismissal of all but one of the plaintiffs’ claims, reinstating a single cause of action under the New Jersey Consumer Fraud Act based on the allegedly false or misleading statement, “Vitamin C: It won’t cure a cold, but Vitamin C can help blunt its effects.”

In September 2013, P&G moved to strike the class allegations from the plaintiffs’ complaint.  Along with its motion to strike, P&G submitted all packaging and advertising for the products, demonstrating that the allegedly misleading “blunt its effects” statement did not appear in any of them.  In fact, P&G argued, the allegedly misleading statement appeared for only a few months in one section of the Vicks.com website, and P&G’s evidence demonstrated that the site received only about 2,000 page views during that entire period.

Decision
In November 2013, the Ohio federal district court granted P&G’s motion to strike the plaintiffs’ class allegations. Addressing the plaintiffs’ assertion that the class determination was premature, the court noted that the Federal Rules of Civil Procedure require courts to determine whether to certify a class “at an early practicable time.”  The court found that additional discovery would serve no purpose but to postpone the inevitable conclusion it had reached: that the putative class could not be certified.

The court then explained that the putative class of all New Jersey consumers who purchased the products was overly broad, in that it included significant numbers of consumers who could not have been induced to purchase the products based on the lone remaining allegedly deceptive statement, which appeared only on the products’ website for a limited time.  

Finding that: 

  • the class members’ individual claims lacked the requisite commonality; 
  • the named plaintiffs’ claims were not typical of the class members at large; and
  • the case would involve individual inquiries into causation of each class member’s damages,

the court held that the case could not properly proceed as a class action, and granted P&G’s motion to strike.

In January 2014, the parties to the case filed a stipulation of voluntary dismissal, ending the lawsuit.  

 

Bottom Line

Under the right circumstances, the early motion to strike class allegations from a putative class action complaint can be an effective tool in limiting costs in otherwise expensive – indeed, sometimes crippling – class action litigation.  A successful motion could even result in the plaintiffs’ abandonment of the case altogether.  Companies that have been named in class actions are well advised to explore with counsel the prospects for an early motion to strike, potentially averting costly discovery and other litigation costs.

Author(s)

NEAL H. KLAUSNER
Partner/Co-Chair
212.468.4992
nklausner@dglaw.com
Intellectual Property

DAVID S. GREENBERG
Senior Attorney
212.468.4895
dgreenberg@dglaw.com
Litigation