Consumer Law

fraud on the consumer market rejected

By Rebecca Tushnet

Kwaak v. Pfizer, Inc., --- N.E.2d ----, 2008 WL 522878 (Mass. App. Ct.)

Plaintiffs Kwaak and Natale sued Pfizer, alleging that an ad campaign touting Listerine as ?as effective as floss? was deceptive under Massachusetts state law. The trial court allowed class certification, and Pfizer appealed. (Previously: New York and California class actions failed.)

Background: the ad campaign targeted people who didn?t use mouthwash and who knew they should floss but don?t always do it or do it right (in other words, lots of us), and secondarily current occasional mouthwash users. The claim was based on clinical studies conducted by Pfizer which showed that twice-daily rinsing with Listerine was at least as good as standard, unsupervised (thus, badly-done) daily flossing in controlling gingivitis between the teeth. Many people don?t floss correctly, and about 87% of consumers floss infrequently or don?t floss. An estimated 68 million Americans saw Pfizer?s TV ads in their first month. The ads at first contained an unmodified ?as effective as floss? message, which was later modified to add ?against plaque and gingivitis between teeth,? and ?there?s no replacement for floss? was also added. (I am reminded of infant formula ads and their now-reflexive nods towards the superiority of breastmilk, when it?s obvious they don?t really want you to breastfeed.)

After a floss manufacturer successfully got the ads enjoined, Pfizer stopped the campaign. Sales of Listerine increased 10% during the campaign.

The putative class representatives had both used Listerine for at least ten years before the ad campaign to freshen breath and to fight plaque and gingivitis, and Natale has bought Listerine since the suit began. Both plaintiffs remembered seeing TV ads, but not the specifics; they didn?t remember the print ads, bottle labels, or neck tags that were also part of the campaign. ?Essentially all they remember from the commercials is that Listerine was described as being as effective as floss. Neither testified that the commercials expressly stated that they should stop flossing. In fact, both continued to floss after seeing the commercials, although Natale testified that he did so less frequently. Kwaak testified to buying more Listerine than before she saw the commercials because she thought it could replace flossing, while Natale did not increase his usage.?

The court of appeals rejected class status because Massachusetts consumer class action law requires that an unfair or deceptive act have caused similar injury to class members. Past cases allowed class certification where the damages were economic ? when class members paid more than the true market value of a product had its attributes been truthfully disclosed. Plaintiffs here argued that their damages were the difference between the advertised value and the actual value of Listerine.

However, the court reasoned, in prior cases the court could conclude that class members had each been ?directly presented with the same, significant deceptive information,? for example when a statement was on every pack of cigarettes sold. By contrast, the class here was everyone who bought Listerine during the ad campaign, regardless of whether they were exposed to it. Moreover, the ads changed over time, from more blatant floss-replacement ads to less objectionable versions. Some of the ads might have been permissible puffery. And the relation between ads and purchases is unclear, since people might buy Listerine just to freshen breath or aid with flossing. Thus, causation can be expected to vary widely among consumers.

These variations could not be avoided by arguing fraud on the market. ?This is a consumer and not a securities fraud case, so we do not assume ?a nearly perfect market in information.??

As a result, the certification was reversed, though the district court could consider whether a more limited class could be certified on remand.

Full post as published by 43(B)log on March 06, 2008 (boomark / email).