Nutrisystem Defeats Class Certification16 Apr, 2013 By: Linda A. Goldstein
The direct response marketing industry has long been a huge target of consumer class action litigation, particularly in California. A recent federal district court ruling in that state, denying class certification in a putative class action filed against Nutrisystem, may give renewed hope to marketers that such actions can in fact be defeated.
In the case at issue – Torres vs. Nutrisystem Inc. – the plaintiff, Raquel Torres, claimed that Nutrisystem violated California’s Invasion of Privacy Act because Nutrisystem recorded calls received from its customers without disclosing to the consumer that the call would be recorded. California’s Invasion of Privacy Act prohibits recording confidential communications without the consent of all parties. Although Nutrisystem did disclose on all calls that the calls may be monitored and recorded, Nutrisystem also afforded consumers an opportunity to bypass the disclosure.
When marketers are hit with a class action lawsuit, there is often a tendency to think immediately about the merits of the case, and marketers will often feel pressure to settle when they believe their case has some weaknesses on the merits. This case is an important reminder, however, that before the plaintiff can even get to the merits of the case, he or she must demonstrate to a court that the case is appropriate for class certification.
In order to obtain certification of a class, the plaintiff must satisfy four requirements:
- Numerosity: the plaintiff must demonstrate that the class is so numerous that separate suits by all parties are not practical.
- Commonality: the plaintiff must demonstrate that there are common questions of law and fact and that those common issues predominate.
- Typicality: the plaintiff must demonstrate that the claims or defenses of the representative parties are typical of the class claims and defenses.
- Adequacy of Defense: the plaintiff must demonstrate that the representative parties will fairly and adequately protect the interests of the class.
In this particular case, the district court declined to certify a class because the court determined that the plaintiff had not met this burden. In particular, the plaintiff did not adequately demonstrate that common issues of law and fact predominate.
In discussing the issue of commonality, the court observed that this requirement is not satisfied merely by demonstrating that the defendants engaged in a common course of conduct, but rather that in order to meet this requirement the plaintiff must demonstrate that consumers have in fact suffered the same injury.
The court determined that the commonality requirement had not been met because the law in question prohibits the recording of confidential information and the determination of whether consumers had an expectation that the information being shared on the call was “confidential” is ultimately a question of fact that will vary from consumer to consumer. Similarly the court determined that a determination of whether consumers “consented” to the recording is likewise a highly individualized inquiry that would need to be looked at on an individualized basis.
The court also determined that the alleged common issues did not predominate. Specifically, it noted that just because the plaintiff’s claims are based on uniform actions that the company takes is not sufficient to establish “predominance.” Rather, the court noted these are individualized factual inquiries that need to be looked at on a case-by-case basis.
This case represents a welcome relief to many marketers that have been hit by the barrage of consumer class action litigation. While defeating class certification requires the expenditure of cash and resources to litigate, marketers should not underestimate the power of opposing class actions on these procedural grounds alone.
Linda Goldstein is chair of the Advertising, Marketing and Media division of Manatt, Phelps & Phillips LLP, based in the firm’s New York office. She can be reached at [email protected].