A frequent target of consumer class actions are “structure/function” claims made in connection with dietary supplements.  These claims describe a nutrient or dietary ingredient and its role in the body’s structure or function: for example, “glucosamine promotes healthy joints.”  Plaintiffs may allege that a product’s labeling is misleading because the typical consumer already receives enough of the nutrient or ingredient from her diet.  At the same time, those plaintiffs will seek a refund on behalf of everyone who bought the product—even if many in the class have received a benefit.  A recent decision out of the Southern District of California, Alvarez v. NBTY, Inc., 2019 U.S. Dist. LEXIS 87420 (May 22, 2019), suggests that this disconnect between the proposed class and the plaintiffs’ theory of liability and damages may no longer be tolerated at the class-certification stage.[1]

Alvarez involved supplements for a B vitamin known as biotin.  Biotin deficiency is marked by skin rashes, hair loss, and brittle nails, so biotin supplements are often promoted as supporting hair, skin, and nail health.  Plaintiff purchased Defendants’ biotin supplement after hearing that it would help with her alopecia.  Despite experiencing positive results, she brought a putative class action on behalf of all other purchasers in California and several other states.  She alleged that the products were falsely labeled to “support healthy hair, skin, and nails” and provide “energy support” because biotin supplements are biologically unnecessary.  She offered expert testimony that the “Adequate Intake” (AI) of biotin for the average person is between 30 and 35 micrograms a day (mcg/day), and the average person receives more than enough—between 30 and 75 mcg/day—from the “Western” diet, namely, that of the typical American.

Plaintiff sought to certify damages classes under Rule 23(b)(3).  Defendants opposed on the grounds that she was not “typical” of the class—an argument that the court swiftly rejected— and that she had failed to show predominance, i.e., that individual issues would “predominate” over issues common to the class. 

On the issue of predominance, Defendants offered three arguments against certification.  The first was that individual issues about whether the representation was “material” to class members would predominate because there was no evidence, such as a consumer survey, that consumers interpreted the representation in the same way.  The court disagreed, finding that the products’ claim to “support” hair, skin, nails, and energy was material because, without it, no consumer would have reason to purchase the products; she would “otherwise be purchasing a random bottle of supplements without any knowledge of what benefit, if any, the supplements provided.”  Id. at *13.  Consequently, if the products did not provide any benefit in “support[ing]” skin, hair, and nails, the misrepresentation would be material, regardless of the particular benefit any individual class member may have understood the products to offer.

Defendants next argued that individual issues about “falsity” would overwhelm common issues because many class members were not receiving adequate biotin, and for them, the representation that the products provided “some benefit” to hair, skin, nails, and energy would be true.  This time the court agreed, citing Plaintiff’s own expert.  Plaintiff had taken the position that “no one in the general population benefits” from the products, yet her expert acknowledged that AI is an average, “so naturally there are people who need more or less than 30 mcg per day.”  Id. at *16.  Moreover, while Plaintiff’s expert opined that the Western diet provides between 35 to 70 mcg of biotin per day, this number too was an average, making it “logical that there are potential class members in the United States whose biotin intake is less than 35 mcg per day.”  Id. at *16-17.  And for those persons whose intake falls below the average, biotin supplements would presumably provide some benefit. 

Finally, Plaintiff’s expert agreed that someone not receiving adequate biotin through their diet could make up for the deficit with a supplement.  Although he claimed those persons still would not receive any “support” from such a supplement because the body engages in “biotin recycling,” he admitted that “scientists ‘don’t understand’ and are ‘still learning about’” that process.  Id. at *18.  Thus, the only scientific evidence cited by Plaintiff and her expert suggested that, for a potentially substantial portion of the class—which was defined as all purchasers of the products in the relevant states—the representation of “support” could well be true.  In other words, because some unquantified number of class members would have received the products’ claimed benefit, and the class would therefore contain uninjured consumers, predominance could not be satisfied; the disparities as to “how much, if any, support each class member received from the Products overwhelm[ed] the common issues.”  Id. at *19.

For similar reasons, the Court also agreed with Defendants’ last argument on predominance—that Plaintiff had not offered a valid class-wide damages model.  Plaintiff proposed multiplying the products’ sale price by the number of units sold, on the theory that the products were worthless and consumers were therefore entitled to a full refund.  Yet that theory, like the one underlying falsity, depended on a showing that the products provided no benefit to any class members—again, a premise that, according to Plaintiff’s own expert, was unsupportable.  Indeed, Plaintiff acknowledged in her model that the products would provide some benefits to some class members—namely, those with rare genetic disorders—and proposed to account for them by reducing damages based on the makeup of the population.  Yet Plaintiff did not address how many in the class without rare genetic disorders might benefit from the products due to biotin deficiencies; nor did she propose to account for them in calculating damages.  The court thus concluded that determining the value of the benefit received by uninjured consumers would likewise overwhelm issues common to the class.

Alvarez is a welcome sign that courts may be more closely scrutinizing claims that supplements are “worthless.”  A few courts have come out the other way by employing questionable reasoning—for example, by finding that it makes no difference whether some consumers will receive a benefit because the plaintiffs’ theory is that the products are worthless to the average consumer.  As Alvarez recognizes, that sort of analysis fails to acknowledge the overbreadth of the proposed class.  If the class consists of everyone who purchased the product, and the product provides a benefit to at least some, it is illogical—and unfair—to require defendants to pay out to many purchasers who were neither deceived nor injured.  For those in the class for whom the product does provide a benefit, the representation is not false and the product is not worthless.  Indeed, many courts have held that the full refund model is inappropriate where the product is not “valueless” and have denied certification because plaintiffs failed to come forward with an acceptable way to measure class-wide damages.  See, e.g., Khasin v. R.C. Bigelow, Inc., 2016 U.S. Dist. LEXIS 42735, *9-11 (N.D. Cal. Mar. 29, 2016) (denying class certification premised on full-refund damages model where defendants’ green tea products were not valueless); In re POM Wonderful, LLC, 2014 U.S. Dist. LEXIS 40415, *11-14 (C.D. Cal. Mar. 25, 2014) (decertifying class on same basis).  Alvarez simply extends this reasoning from the issue of class-wide damages to that of class-wide falsity. 

In some respects Alvarez was an easy case.  As the court observed, the plaintiff’s expert effectively admitted that, for a significant percentage of the population (and thus the class), biotin supplements could provide a benefit.  And the plaintiff’s damages model already acknowledged that some individuals who received a benefit should not receive a full refund.  Alvarez recognizes that plaintiffs who assert the broadest theory of liability—recovery of the full purchase price for everyone who purchased the product—cannot rely on equivocal data that, at best, shows that many in the class received precisely what they paid for.  If a plaintiff proceeds on a “no benefit, no value” theory, she needs to come forward with evidence to that effect at class certification—or else there is no basis to conclude that a class action is the appropriate vehicle for considering the claims.