Court Declines to Certify Class in False Advertising Case Without Survey Evidence of a Common Consumer Definition

On June 7, 2017, a Central District Court of California declined to certify a class of consumers who alleged that 5-Hour Energy’s marketing of an energy drink was misleading, finding that individual factual questions regarding the effect of 5-Hour Energy’s advertising statements on consumers predominated over questions common to all plaintiffs.  In re 5-Hour Energy Marketing and Sales Practices Litigation, No. ML 13-2438 PSG (PLAx) (C.D. Cal., filed Aug. 4, 2011).

Background

 In August 2011, consumers filed a lawsuit against 5-Hour Energy, alleging that statements on the company’s energy drink product label were false and misleading.  Lawsuits across six states alleging false advertising against 5-Hour Energy were consolidated in the Central District of California in 2013.

Plaintiffs filed a motion for class certification under Federal Rule of Civil Procedure 23(b)(3).  This provision requires “questions of law or fact common to class members predominate over any questions affecting only individual class members” before a class can be certified.[1]

Plaintiffs argued that the statements “five hour energy” and “hours of energy” on the product’s label were false and misleading to all class members because the energy drink did not provide five hours of caloric energy.  Id. at 2.  5-Hour Energy challenged plaintiffs’ definition of “energy,” arguing that the term also encompasses “subjective feelings of energy and an increased ability to perform tasks.”  Id. at 13.

District Court Judge Gutierrez declined to certify the class because plaintiffs failed to show that common issues predominated over individual questions of fact.

Insufficient Evidence That “Five Hour Energy” Statement Was Material to Consumers

The court found the evidence presented was insufficient to demonstrate that the product label statements “five hour energy” and “hours of energy” were material to consumers’ decisions to purchase the energy drink.

Plaintiffs’ motion relied on deposition testimony of  5-Hour Energy’s former marketing director that the product label was designed to “‘educate’ consumers in a ‘few words’ about ‘what the product was’ and ‘what they could expect from it’” to demonstrate that the statements were misleading.  Id. at 11.  Several named plaintiffs also stated that they purchased the energy drink because they believed it would provide them with five hours of caloric energy.  Id.

In contrast, 5-Hour Energy conducted an online survey of 5-Hour Energy consumers, which found that only 2.2 percent of consumers attributed their initial purchase decision to the company’s “marketing efforts.”  Id.

The court held that “[a]bsent a consumer survey or other market research to indicate how consumers reacted to the ‘five hour energy’ and ‘hours of energy’ statements, and how they valued these statements compared to other attributes of the product and the energy supplement market generally, Plaintiffs have not offered sufficient evidence of materiality across the class.”  Id. at 12.

No Common Consumer Understanding of “Energy”

Plaintiffs also failed to establish that consumers shared a common definition of the term “energy.”  Plaintiffs provided a declaration from a leading pharmacologist stating that “energy” means caloric energy, and pointed to the U.S. Food and Drug Administration’s definition of the word “energy” as caloric energy.  Id. at 13.

The court held that this evidence was insufficient to establish that consumers share a common definition of “energy” as caloric energy.  Id.  Without a common definition for the key term “energy,” plaintiffs could not demonstrate that the statements “five hour energy” and “hours of energy” were material to consumers and interpreted in the same manner.

Accordingly, the court declined to certify the class.

Takeaway

Expert declarations, definitions from federal agencies, and even the statements of named Plaintiffs may be insufficient to establish that a statement was material to consumers as a class in a false advertising case.  In this case, the court indicated that market research and consumer surveys were necessary to demonstrate that consumers materially relied upon product label statements and interpreted the statements in the same manner.

[1] Federal Rule of Civil Procedure 23(b)(3) provides, in relevant part, that a class may only be certified if “the court finds that the questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy.”