On June 17, 2010, the California Supreme Court denied the petition for review and request for depublication in Pfizer, Inc. v. Superior Court, 182 Cal. App. 4th 622 (2d Dist., 2010). Accordingly, this important post-Tobacco II appellate opinion remains good authority. Pfizer provides a cautionary tale of attempting to certify too broad a class. The lesson here is to tailor your proposed class definition to the scope and manner in which the alleged misrepresentations were made.
In Pfizer, a consumer sued a mouthwash manufacturer pursuant to the unfair competition law (UCL) (Bus. & Prof. Code, § 17200 et seq.) and the false advertising law (Bus. & Prof. Code, § 17500 et seq.). The consumer alleged the manufacturer marketed its mouthwash in a misleading manner by representing the use of mouthwash could replace the use of dental floss in reducing plaque and gingivitis.
The trial court certified a class of "all persons who purchased Listerine, in California, from June 2004 through January 7, 2005." The Court of Appeal granted Pfizer's petition for writ of mandate, concluding the trial court's class definition was overbroad. The Supreme Court granted review. On August 19, 2009, the Supreme Court transferred the matter back to the Court of Appeal with directions to vacate the decision and reconsider the matter in light of In re Tobacco II Cases (2009) 46 Cal.4th 298 [93 Cal.Rptr.3d 559, 207 P.3d 20] (Tobacco II). Having done so, The Court of Appeal again concluded the class definition is overbroad and granted Pfizer's petition.
In reaching its decision, the Court of Appeal noted that with respect to the remedy of restitutionary disgorgement, Tobacco II holds:
"[T]he language of section 17203 with respect to those entitled to restitution--'to restore to any person in interest any money or property, real or personal, which may have been acquired' (italics added) by means of the unfair practice--is patently less stringent than the standing requirement for the class representative--'a person who has suffered injury in fact and has lost money or property as a result of the unfair competition.' (§ 17204, italics added.) This language, construed in light of the 'concern that wrongdoers not retain the benefits of their misconduct' [citation] has led courts repeatedly and consistently to hold that relief under the UCL is available without individualized proof of deception, reliance and injury. [***16] [Citations.]" (Tobacco II, supra, 46 Cal.4th at p. 320.)”
Nevertheless, the Court of Appeal found the class definition too broad because it included persons who were not entitled to restitution because they were never exposed to the “effective as floss’ representation. The appellate court wrote:
“Be that as it may, one who was not exposed to the alleged misrepresentations and therefore could not possibly have lost money or property as a result of the unfair competition is not entitled to restitution. Here, the class certified by the trial court, i.e., all purchasers of Listerine in California during a six-month period, is grossly overbroad because many class members, if not most, clearly are not entitled to restitutionary disgorgement. The record reflects that of 34 different Listerine mouthwash bottles, 19 never included any label that made any statement [*632] comparing Listerine mouthwash to floss. Further, even as to those flavors and sizes of Listerine mouthwash bottles to which Pfizer did affix the labels which are at issue herein, not every bottle shipped between June 2004 and January 2005 bore such a label. Also, although Pfizer ran four different television commercials with the "as effective as floss" campaign, the commercials did not run continuously and there is no evidence that a majority of Listerine consumers viewed any of those commercials. Thus, perhaps the majority of class members who purchased Listerine during [***17] the pertinent six-month period did so not because of any exposure to Pfizer's allegedly deceptive conduct, but rather, because they were brand-loyal customers or for other reasons.”
The Court contrasted the limited six-month Listerine marketing scheme with the extensive and lengthy campaign used by the tobacco industry to sell cigarettes.
“The circumstances herein stand in stark contrast to those in Tobacco II, where the tobacco industry defendants allegedly violated the UCL "by conducting a decades-long campaign of deceptive advertising and misleading statements about the addictive nature of nicotine and the relationship between tobacco use and disease." (Tobacco II, supra, 46 Cal.4th at p. 306.) Tobacco II allows a class representative who actually relied on the defendants' misleading advertising campaign to represent other class members who may have lost money by means of the unfair practice. Tobacco II does not stand for the proposition that a consumer who was never exposed to an alleged false or misleading advertising or promotional campaign is entitled to restitution.”
“As Pfizer argues, it is one thing to say that restitution can be awarded to purchasers of cigarettes where the cigarettes were marketed as part of a massive, sustained, decades-long fraudulent advertising campaign on the grounds the tobacco industry defendants "may have ... acquired" [***18] (§ 17203) the purchase price as a [**804] result of such a pervasive fraudulent campaign. It is entirely another to say that restitution can be awarded to all purchasers of Listerine in California over a six-month period where the undisputed evidence shows many, if not most, class members were not exposed to the "as effective as floss" campaign and therefore did not purchase Listerine because of it.”
In other words, large numbers of persons in the class defined by the trial court were never exposed to the “effective as floss” representations and, accordingly, there is zero likelihood they were deceived by the claimed misrepresentation or that Pfizer obtained money from them by the alleged UCL violation. Had the class definition been limited to persons exposed to the “effective as floss” representation (as opposed to all purchasers) the definition might have withstood appellate scrutiny
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