New Jersey Supreme Court Allows Mass-Marketing Fraud Class Action, Decision Adopts Public Citizen's Analysis
Last week, the New Jersey Supreme Court handed down a unanimous opinion allowing a mass-marketing consumer fraud case to go forward as a class action. The court's opinion expressly adopts the analysis presented in a friend-of-the-court brief filed by Public Citizen.
The case involved a dietary supplement known as Relacore, which was advertised as a pill to combat the body's "stress-to-belly-fat cycle." The lawsuit alleges that the claimed benefit has no basis. Earlier, the lower courts had held that class certification was inappropriate because Relacore's marketing took a variety of forms - sometimes the product was advertised as a weight-loss product and sometimes as a stress-reduction product. Because there was no way of knowing which consumer relied on which claims, the lower courts found that individual issues would outweigh common issues, making class treatment inappropriate.
The New Jersey Supreme Court reversed. Taking a page from Public Citizen's brief, the court explained that pills like Relacore are what economists call "credence goods" - products that, unlike hammers or cameras, consumers do not know anything about until an advertiser tells them. "A rational consumer does not randomly take a bottle of pills off a shelf and then purchase it without reading the packaging and labeling or without knowing something about the product. If Relacore offered none of the benefits claimed in Carter Reed's multi-media advertising campaign," the court reasoned, "then it would make little difference whether a class member purchased the product because of one false promise, e.g., belly-fat reduction, or another, e.g., anxiety reduction," or how the false claims were communicated. Moreover, "a corporate defendant engaged in a marketing scheme founded on a multiplicity of deceptions should not be in a better position in fending off a motion for class certification than a defendant engaged in a sole marketing deception."
New Jersey Supreme Court Opinion
Public Citizen Amicus Brief