Price v. L'Oreal USA, Inc.

Background

Brandi Price and Christine Chadwick brought consumer class-action claims against L’Oréal USA, Inc., and Matrix Essentials, LLC. The certified classes included purchasers in New York and California of three Matrix Biolage Advanced Keratindose products: Pro-Keratin + Silk Shampoo, Pro-Keratin + Silk Conditioner, and Pro-Keratin + Silk Renewal Spray.

The products’ labels used the terms “Keratindose” and “Pro-Keratin,” but the products did not contain keratin, and keratin was not listed among their ingredients. Plaintiffs claimed that reasonable consumers would understand the terms to mean that the products contained keratin and would not have bought the products, or would not have paid as much for them, if they had known otherwise.

The remaining claims included California express-warranty and unfair-competition claims, a California false-advertising claim, a New York consumer-protection claim under General Business Law Section 349, and a New York breach-of-contract claim. The defendants moved for summary judgment on all remaining claims and sought to exclude portions of the plaintiffs’ expert testimony. The plaintiffs sought partial summary judgment on the deceptiveness elements of several consumer-protection claims and on the unlawful-prong claim under California’s Unfair Competition Law.

Expert testimony

The court applied Federal Rule of Evidence 702, which requires expert testimony to be relevant and based on sufficient facts, reliable methods, and a reliable application of those methods.

Bruce Silverman offered opinions about how reasonable consumers would understand the challenged terms. The court allowed his opinions that consumers generally would expect a product named for a well-known ingredient to contain that ingredient, and that consumers would view the challenged terms as branded ingredients distinguishing the products from competitors. Those opinions were based on his extensive advertising experience and review of the product labels.

The court excluded other Silverman opinions about consumers’ awareness of keratin and their resulting perception of the product names. Those opinions relied on inadequately documented internet searches, an Amazon search conducted after the class period, later-published materials, and other materials that did not reliably show consumer knowledge during the relevant period. The court therefore granted the defendants’ motion to exclude Silverman’s testimony in part.

Jean-Pierre Dubé offered a conjoint survey measuring consumer preferences and proposed an aggregate class-wide damages formula. The court did not exclude his underlying opinion that the challenged terms affected consumers’ willingness to pay, but excluded his proposed methods for determining the price and number-of-bottles inputs in the formula. The court found unreliable his use of manufacturer suggested retail prices as a substitute for actual prices paid, his assumptions about product shrinkage and resale, and his method of estimating sales in New York and California from a small group of survey respondents. The court granted the defendants’ motion to exclude that testimony.

Summary judgment for the defendants

The defendants argued that the plaintiffs lacked sufficient evidence that the challenged terms were deceptive to a reasonable consumer. The court rejected that argument. The court found that Silverman’s permitted opinions, together with the named plaintiffs’ testimony that they believed the products contained keratin, were enough to create a factual dispute. The court also stated that consumer surveys were not legally required on this record.

The defendants argued alternatively that the plaintiffs could not prove damages. The court rejected that argument as well. Although Dubé’s proposed methods for determining the price and number of bottles were excluded, his aggregate-damages formula itself was not excluded, and the court did not decide whether non-expert evidence could later be used with that formula. The record also contained evidence of a price premium and a percentage of the price actually charged, and statutory damages were available under New York law.

The defendants also sought summary judgment on the California express-warranty claim, arguing that it should fail for the same reasons as the consumer-protection claims. Because the court denied summary judgment on the deception issue, it rejected that argument.

The court granted summary judgment on the New York breach-of-contract claim. Under New York law, a breach-of-contract claim generally requires a contractual relationship between the parties. The court found that the plaintiffs had not shown contractual privity with the manufacturers and noted that New York law generally does not recognize privity between a manufacturer and an indirect purchaser.

Plaintiffs’ motion for summary judgment

The plaintiffs argued that the challenged terms were deceptive as a matter of law. The court denied that motion because the terms were ambiguous. “Pro-Keratin” had no clear meaning, and “Keratindose” could refer to a daily dose of keratin, treatment for hair that had undergone a keratin treatment, or something else. The court held that a fact-finder would need to consider outside evidence to determine whether reasonable consumers were misled.

The court also denied the plaintiffs’ motion concerning the unlawful prong of California’s Unfair Competition Law. Because the plaintiffs had not established deception as a matter of law, the court rejected their argument that the challenged terms necessarily violated the federal Food, Drug, and Cosmetic Act, California’s parallel law, or the cited New York statute.

Disposition

Judge Schofield’s order granted the defendants’ motion to exclude Bruce Silverman’s testimony in part; granted the motion to exclude Jean-Pierre Dubé’s testimony about the proposed price and number-of-bottles inputs; granted the defendants’ motion for summary judgment as to the New York breach-of-contract claim and otherwise denied it; and denied the plaintiffs’ motion for summary judgment.