We could fill this blog post with not-so-subtle references to Goofy, Mickey Mouse, or, for you old-timers, Oswald the Lucky Rabbit, but frankly, we’re still a little alarmed at what the Southern District of Florida did the other day in Nelson v. Mead Johnson Nutrition Co., __ F.R.D. __, 2010 WL 4282106 (S.D. Fla. Nov. 1, 2010). The case involved a putative class action alleging that Mead Johnson violated the Florida Deceptive and Unfair Trade Practices Act (FDUTPA) by misrepresenting that its baby formula, Enfamil, contained two ingredients that a competitor’s formula didn’t. Id. at *1. The plaintiff alleged that this misrepresentation ultimately led her and the class to buy Enfamil, and that the class suffered damage by paying more for Enfamil, or buying Enfamil instead of lower-priced brands. Id. To borrow the political meme of the moment, the class complained the price of Mead Johnson’s formula was “2 damn high.”
Now, defense-minded class action lawyers are probably chomping at the bit already. Sounds like there are a host of individual causation issues lurking here – for example, why each class member chose Enfamil vs. another formula, or whether class members “knew the truth” but bought Enfamil anyway. If the plaintiffs’ causation theory is that the misrepresentation caused the class to choose a more expensive product rather than a cheaper product, that theory requires an individual inquiry into what each class member knew, what he or she saw/heard/read, and why he or she made a particular purchasing decision. And the “causation workaround” – the defendant’s misrepresentations inflated the price of the product, and thus the “fraud on the market” excuses any need to prove a causal nexus between the deception and the harm – has been rejected in the consumer fraud context in a number of cases across the country.
The Nelson court just blew off these concerns, in a decision that was, well, goofy (we couldn’t resist). The court started with the “reliance” strawman: FDUTPA does not require plaintiffs to prove individual reliance. Id. at *6-7. OK. But what about causation? The statute requires plaintiffs to prove a loss “as a result of” the deception. The Nelson court concluded that causation wasn’t a hurdle to certification either; “[t]he class members…need not submit individualized proof to establish causation.” Id. at *7. The court’s decision on this point relied heavily on a 2000 decision of an intermediate appellate Florida state court – Davis v. Powertel, 776 So.2d 971 (Fla. App. 2000) – that the court found “particularly persuasive.” Id. at *2 n.2. So what did Davis say that the Nelson court found so persuasive? “Because proof of reliance is unnecessary, the plaintiffs’ inability to show reliance in every case cannot be used to justify a finding that individual issues will predominate over the class claims.” Id. at *7 (quoting Davis, with our emphasis).
Reliance, not causation.
In fact, subsequent decisions have criticized whether Davis gave “fair consideration” to the causation element of FDUTPA (including a case we worked on, Philip Morris USA, Inc. v. Hines, 883 So.2d 292, 294 (Fla. App. 2003)). But the Nelson court wasn’t phased by that concern. It was also just fine brushing off another state court decision where certification was denied because some putative class members “knew the truth,” thereby severing the causal nexus between fraud and loss – because in that case, some of the putative class members learned the “truth” from the defendant. Nelson, 2010 WL 4282106, at *7 n.6. Talk about misdirection – isn’t an important (and individual) question what each class member knew, in addition to the source of that information?
But here’s the kicker, and the part that is alarming: after this cursory, stacked-deck review of FDUTPA’s causation requirement, the Nelson court went on to say:
In other words, individual class members may establish a FDUTPA claim by submitting identical proof that Defendant’s representations…would deceive an objective reasonable consumer. Likewise, individual class members should be able to submit identical proof to establish that Defendant’s representations…are not true. Stated differently, the predominate issues in this case are (1) whether it is true that Enfamil LIPIL contains something that other brands of infant formula do not; and (2) whether Defendant’s representations about Enfamil LIPIL would deceive an objective reasonable consumer.
Id. at *7.
Objective? Wait a minute: where’s causation? Heck, where’s any right of a defendant to show non-causation? See In re St. Jude Medical, Inc., 522 F.3d 836, 840 (8th Cir. 2008) (discussed on this point, here).
Causation just disappeared – the rabbit’s back in the hat, and the hat itself has been thrown down a rabbit hole. It’s easy to see the distortion the class action fun-house mirror has caused here; simply imagine an individual plaintiff who sues under FDUTPA, says the defendant lied, and the lie would mislead the average guy on the street. Now, says the defendant, hold on, friend-o. You knew the truth, but you bought my product anyway. Maybe it was more convenient. Maybe it had some brand equity that appealed to you. Who knows why you bought it? But you did, knowing the “truth,” so how did you suffer any loss “as a result of” anything I said? The answer is pretty obvious – that plaintiff didn’t suffer a compensable loss. Causal nexus severed.
But the Nelson court treated a class action differently. This is sleight of hand; it’s rewriting the law to make a class action feasible by ignoring causation, in a way that no individual plaintiff bringing a single claim could hope to achieve. That is not the law in Florida. In fact, that’s not sensible consumer fraud law anywhere. That’s called government enforcement – the territory of state AGs and the FTC, who can use consumer protection statutes in a more prophylactic manner. In fact, guess where the “objective reasonable consumer” standard originally comes from? Yup, the FTC. Nelson’s more liberal application of FDUTPA in the class action context – in effect turning private class action plaintiffs into a mini-AG or mini-FTC – seems to be a decision as fraught with peril as sending the cast of Jersey Shore to Miami Vice.