Howrey Claims Appellate Victory for Client Carter-Reed in Closely Watched Economic Loss Products Liability Matter

Washington, DC, August 18, 2009….Howrey LLP prevailed on behalf of its client, Carter-Reed Company, L.L.C., in a closely watched economic loss products liability class action challenging the mass media advertising claims for Relacore, a popular over-the-counter nutraceutical dietary supplement.

In the case, which began in 2004, the plaintiff claimed that Carter-Reed’s product, Relacore, was falsely advertised in national media campaigns. The plaintiff alleged that the product did not deliver on its advertising claims that it could reduce stress-related abdominal fat and enhance mood. The complaint was initially filed on behalf of a nationwide class of Relacore purchasers, but following motion practice the plaintiff agreed to confine the class to New Jersey purchasers of Relacore. Plaintiff brought claims under the New Jersey Consumer Fraud Act, breach of warranty, and unjust enrichment.

Howrey lawyers Gary Bendinger, Co-Chair of the Global Litigation practice of the firm’s New York office, and Kenneth Kliebard, Co-Chair of the Consumer Litigation and Class Action practice and a partner in the firm’s Chicago office, argued the case against class certification of the mass media false advertising claim before the Superior Court of New Jersey’s Appellate Division. Class certification had earlier been denied by Judge Katherine R. Dupuis of the Superior Court of New Jersey. At that time, the judge had found that common issues in the case did not predominate over individual issues, and that a class action was not superior to other methods of adjudication, citing a number of highly individualized inquiries that would have to be made of each class member in order for the plaintiff to establish her false advertising claims on a class-wide basis.

On appeal, Howrey lawyers defended the Superior Court’s earlier decision, arguing the types of inquiries required of each member of the class as to why that person purchased Relacore would result in individualized determinations that would overwhelm any common issues in the case. In fact, Howrey showed that, although a single product was offered, the marketing efforts for that product were multifaceted and so individualized determinations would have to be made as to which, if any, advertisement for Relacore a member of the putative class considered when making his or her purchasing decision.

The trial court’s order denying class certification was unanimously affirmed in its decision, 2009 WL 2475314 (N.J.Super.A.D.)

In affirming, Judges Cuff, Fisher and Baxter wrote: “We hold that the trial judge properly denied class certification for this mass media false advertising claim. The multiple qualities attributed to the product, coupled with the multiple advertising campaigns focusing on one of several attributes, compel a finding that a common core of facts and law does not predominate to allow class treatment.” In reaching that holding, the New Jersey court clarified prior class action decisions and held that causation could not be presumed on a class-wide basis, as had been argued by the plaintiff in asking the court to certify the class. In reaching its holding, the court acknowledged that the relatively small losses suffered by putative class members, roughly $40 to $120, made it unlikely that consumers would sue individually, but the court rejected the plaintiff’s argument that the small amount of each class member’s claims justified class certification in light of other obstacles to class certification presented in the case. The court also noted in its opinion that it was not aware of any New Jersey court that had certified a class action in a mass media false advertising case.

The case had been closely watched both at the trial court and appellate court levels. On appeal, the four amicus curiae filed briefs on both sides. Consumer advocacy group Public Citizen urged the appellate court to a side with the plaintiff and certify a class. Amicus briefs supporting Carter-Reed and opposing class certification were filed by the Product Liability Advisory Counsel (PLAC), the New Jersey Business & Industry Association (NJBIA), and the New Jersey Lawsuit Reform Alliance (NJLRA).                                                       

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