9 CENTRAL DISTRICT OF CALIFORNIA 10 11 12 ORDER RE ...

[Pages:43]Case 2:12-cv-01150-DMG-MAN Document 291 Filed 08/01/14 Page 1 of 43 Page ID #:14356

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UNITED STATES DISTRICT COURT

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CENTRAL DISTRICT OF CALIFORNIA

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11 KIM ALLEN, et al.,

Plaintiff,

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v.

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HYLAND'S INC., et al., Defendants.

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) Case No. CV 12-01150 DMG (MANx) ) ) ORDER RE PLAINTIFFS' MOTION ) FOR CLASS CERTIFICATION ) ) ) )

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This matter is before the Court on Plaintiffs Kim Allen, Daniele Xenos, Melissa

19 Nigh, Sherrell Smith, Yuanke Xu, Diana Sisti, and Nancy Rodriguez's motion for class

20 certification, filed on May 14, 2012.1 [Doc. # 60.] On June 15, 2012, Defendants

21 Hyland's Inc. and Standard Homeopathic Company filed an opposition [Doc. # 74]. On

22 May 18, 2012, Plaintiffs filed a reply. [Doc # 98]. The Court held a hearing on the

23 motion on July 13, 2012. After the hearing, the parties filed substantial supplemental

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1 Plaintiffs are apparently willing to dismiss Plaintiff Roger Hutchinson's claims (see Opp'n at 4 n.2; Reply at 21 n.16 (Hutchinson did not purchase the product identified in the SAC and "has since

27 been withdrawn")), but they have not filed a stipulation to dismiss Hutchinson as a plaintiff. (See Opp'n

at 4 n.2.) Since Hutchinson is no longer named as a plaintiff in the TAC, the Court hereby dismisses his

28 claims without prejudice accordingly.

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Case 2:12-cv-01150-DMG-MAN Document 291 Filed 08/01/14 Page 2 of 43 Page ID #:14357

1 briefing and notices of supplemental authority. [Doc. ## 105, 125, 129, 161, 186, 224,

2 229, 231, 283, 284, 285, 288.]

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Having duly considered the respective positions of the parties, as presented in their

4 briefs and at oral argument, the Court now renders its decision. For the reasons set forth

5 below, Plaintiffs' motion is GRANTED in part and DENIED in part.

6 I.

7 FACTUAL BACKGROUND

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Defendants produce, market, and sell homeopathic products throughout the United

10 States. (Third Amended Complaint ("TAC") ? 15.) Hyland's Inc. maintains its principal

11 place of business in California. (Id. ? 12.) Defendants' homeopathic products are sold

12 over-the-counter in major retail stores and are often placed alongside non-homeopathic

13 over-the-counter drugs. (Id. ?? 22-23.) Defendants market their products as natural, safe,

14 and effective alternatives to prescription and non-homeopathic over-the-counter drugs.

15 (Id. ? 25.)

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Homeopathic remedies are predicated in part on the "principle of dilutions" under

17 which active ingredients are thought to be more effective when they are significantly

18 diluted. (See id. ? 18.) Homeopathic drugs and their packaging are not reviewed by the

19 Food and Drug Administration ("FDA"). (Id. ? 25.) The FDA has stated that it is not

20 aware of any scientific evidence that homeopathic drugs are effective. (Id. ? 27.)

21 The following twelve of Defendants' homeopathic products are at issue in this

22 litigation: Calms Fort?, Teething Tablets, Migraine Headache Relief, ClearAc, Poison

23 Ivy/Oak Tablets, Colic Tablets, Leg Cramps with Quinine2, Leg Cramps, Defend Cold &

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2 Plaintiffs allege that Allen purchased Leg Cramps with Quinine (TAC ?? 108, 112), rather than Leg Cramps with Quinine PM--the product they included in their proposed class definition. (See Mot.

27 at 2.). As Allen has standing only with respect to the products she purchased, the Court construes

Plaintiffs' proposed class definition to include Leg Cramps with Quinine, rather than Leg Cramps with

28 Quinine PM.

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Case 2:12-cv-01150-DMG-MAN Document 291 Filed 08/01/14 Page 3 of 43 Page ID #:14358

1 Cough, Defend Cold & Cough Night, Hyland's Cough, and Seasonal Allergy Relief. (Id.

2 ?? 39-185.) Each product's packaging describes the product's medical uses and makes 3 claims about its effectiveness.3 (Id. ?? 44, 62, 73-74, 84-85, 93-94, 102-03, 109-10, 128-

4 29, 146-47, 157-58, 168-69, 179-80.) Most products' packaging asserts that the

5 respective product is "100% Natural." (Id. ?? 44, 62, 73, 93, 102, 109, 128, 146, 157,

6 179.) Other products' packaging asserts that the product is "All Natural" or "Natural."

7 (Id. ?? 84, 168.)

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Most of the plaintiffs purchased one or more of Defendants' twelve products in

9 2008 or thereafter.4 (Id. ?? 40-43, 58, 69-72, 108, 124-25, 144-45, 156, 167, 178.) They

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3 For example, with respect to the Calms Fort? product, Plaintiffs identify the following

13 representations about the product's uses and effectiveness on the product packaging: "Sleep Aid," "For

Restless or Wakeful Sleep from Exhaustion," "For Stress, Nervousness or Nervous Headache," "For

14 Drowsiness with Incomplete Sleep," "For Nervous Irritability," "Biochemic Phosphates for Enhancing

Cellular Function," "Wake up Rested & Refreshed," and "Relieves Stress to Help you Sleep." (TAC ?

15 44.) Similarly, the packaging on the other products contain representations regarding uses and

16 effectiveness, too numerous to mention here, which are germane to each respective product.

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4 Xenos purchased Teething Tablets, ClearAc, and Poison Ivy/Oak Tablets outside the proposed class period. (Id. ?? 57, 81, 90.) Allen purchased Teething Tablets and Colic Tablets outside the

18 proposed class period. (Id. ?? 59, 99.)

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Defendants contend that Xenos lacks standing to bring claims as to Leg Cramps with Quinine

PM and Colic Tablets, and Xu lacks standing to bring claims as to Defend Cold & Cough because they

20 testified during their depositions that they did not buy these products. (Opp'n at 3.) Plaintiffs filed the

operative Third Amended Complaint after Defendants filed their opposition, and the TAC alleges that

21 Allen, rather than Xenos, purchased Colic Tablets and Leg Cramps with Quinine, and Sisti, rather than

22 Xu, purchased Defend Cold & Cough. (TAC ?? 99, 108, 156.) Thus, Defendants' standing arguments

as to these products are moot.

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Defendants also contend that Xenos lacks standing to bring claims as to ClearAc and Poison

24 Ivy/Oak because she bought the products outside the relevant limitations period. (Opp'n at 3.) Plaintiffs

assert that the delayed discovery rule applies to Xenos' claims that would otherwise be barred by the

25 statute of limitations. (See TAC ?? 60-61, 82-83, 91-92.) Under the rule, the statute of limitations runs

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"from the time a reasonable person would have discovered the basis for a claim." Mass. Mut. Life Ins. Co. v. Superior Court, 97 Cal. App. 4th 1282, 1295, 119 Cal. Rptr. 2d 190 (2002). The Court notes that

27 there appears to be some dispute among California courts as to whether the delayed discovery rule

applies to some of Plaintiffs' claims. See Schramm v. JPMorgan Chase Bank, N.A., No. CV 09-9442,

28 2011 WL 5034663, at *10 n.5 (C.D. Cal. Oct. 19, 2011) (collecting cases).

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Case 2:12-cv-01150-DMG-MAN Document 291 Filed 08/01/14 Page 4 of 43 Page ID #:14359

1 purchased the products because they wanted "a more natural alternative to traditional

2 over-the-counter remedies" and they relied, at least in part, on Defendants'

3 representations on the product packaging. (Id. ?? 47, 64, 74, 85, 94, 103, 110, 129, 147,

4 158, 169, 180.)

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Plaintiffs allege that the active ingredients in these twelve products are so diluted

6 that the ingredients are "effectively non-existent" and the products are therefore not

7 effective for their intended uses.5 (Id. ?? 45, 52-53, 63, 75, 86, 95, 104, 111, 131, 148,

8 160, 171, 182.) The products did not work as advertised. (Id. ?? 49, 66, 78, 87, 96, 105,

9 121, 140.) Products that Defendants represent to be "100% Natural" or "All Natural"

10 contain ingredients that are not "natural," such as synthetic chemicals, synthetically

11 derived or chemically reduced elements, and artificially produced elements. (Id. ?? 48,

12 54, 65, 77, 119, 138, 150-51, 162-63, 173-74, 183.) Some of the products contain

13 dangerous or potentially dangerous ingredients. (Id. ?? 115, 118, 120, 135, 137, 139,

14 152, 164, 175.)

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Assuming arguendo that the delayed discovery rules applies here, Defendants have not

demonstrated that Xenos had actual notice of her claims outside the statutory period, and thus, they have

18 not demonstrated that Xenos' claims are barred by the relevant statute of limitations. The Court notes

19 that "[c]ourts have been nearly unanimous . . . in holding that possible differences in the application of a

statute of limitations to individual class members, including the named plaintiffs, does not preclude

20 certification of a class action so long as the necessary commonality and . . . predominance are otherwise

present." In re Energy Sys. Equip. Leasing Sec. Litig., 642 F. Supp. 718, 752-53 (E.D.N.Y. 1986).

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5 It is not clear, based on Plaintiffs' briefing, whether Plaintiffs move for class certification based

22 on the theory of liability asserted in their TAC and throughout this litigation--i.e., that the active

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ingredients in Defendants' products are so diluted as to render the products entirely ineffective, and thus the statements on the product packaging about the products' uses and effectiveness, taken as a whole,

24 are misleading--or on the theory that individual statements or omissions on the product packaging are

misleading, such as the failure to explain the dilution descriptions and failure to inform consumers that

25 no regulatory body confirms the efficacy statements on the product packaging (see, e.g., Reply at 1)--or

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both. As Plaintiffs have not identified sufficient evidence that any single omission or misrepresentation on the packaging is "material" or "likely to deceive" and have not demonstrated that liability predicated

27 on any single omission or misrepresentation is tethered to a damages model, see infra, the Court

construes Plaintiffs' briefing to rely only on the theory of liability asserted in their TAC, and certifies the

28 class only on that basis.

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Case 2:12-cv-01150-DMG-MAN Document 291 Filed 08/01/14 Page 5 of 43 Page ID #:14360

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Plaintiffs allege that they would not have purchased Hyland's products absent

2 Defendants' alleged misrepresentations on the product packaging. (Id. ?? 50, 67, 79, 88,

3 97, 106, 122, 141, 153, 165, 176, 184.)

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Plaintiffs assert the following claims against Defendants: (1) violation of

5 California's Consumer Legal Remedies Act ("CLRA"), Cal. Civ. Code ? 1750 et seq.; (2)

6 violation of California's Unfair Competition Law ("UCL"), Cal. Bus. & Prof. Code ?

7 17200 et seq.; (3) violation of California's False Advertising Law ("FAL"), Cal. Bus. &

8 Prof. Code ? 17500 et seq.; (4) breach of express warranty; (5) breach of implied

9 warranty of merchantability; (6) violation of the Magnusson-Moss Act, 15 U.S.C. ? 2301

10 et seq.; (7) violation of Florida's Deceptive and Unfair Trade Practices Act, Fla. Stat.

11 Ann ? 501.201 et seq.; and (8) violation of Georgia's Uniform Deceptive Trade Practices

12 Act, Ga. Code Ann. ? 10-1-370 et seq. (TAC ?? 216-87.)

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Plaintiffs seek to certify the following nationwide class:

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All purchasers of Hyland's, Inc. and Standard Homeopathic Company's

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homeopathic Products entitled Calms Forte, Teething Tablets, Migraine

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Headache Relief, ClearAc, Poison Ivy/Oak Tablets, Colic Tablets, Leg

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Cramps with Quinine PM, Leg Cramps, Defend Cold & Cough, Defend

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Cold & Cough Night, Hyland's Cough, and Seasonal Allergy Relief, for

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personal or household use and not for resale, in the United States from

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period February 9, 2008 to present (hereinafter referred to as the "Class").

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Excluded from the Class are governmental entities, Defendants, any entity in

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which Defendants have a controlling interest, and Defendants' officers,

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directors, affiliates, legal representatives, employees, co-conspirators,

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successors, subsidiaries, and assigns. Also excluded from the Class is the

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Court, its staff and officers, and member[s] of their immediate families.

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Case 2:12-cv-01150-DMG-MAN Document 291 Filed 08/01/14 Page 6 of 43 Page ID #:14361

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In the alternative, Plaintiffs move to certify the following three subclasses6 (the

2 "California Subclass," "Florida Subclass," and "Georgia Subclass," respectively):

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All persons who purchased Hyland's, Inc.'s and Standard Homeopathic

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Company's homeopathic products entitled Calms Forte, Teething Tablets,

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Migraine Headache Relief, ClearAc, Poison Ivy/Oak Tablets, Colic Tablets,

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Leg Cramps with Quinine PM, Leg Cramps, Defend Cold & Cough, Defend

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Cold & Cough Night, Hyland's Cough, and Seasonal Allergy Relief within

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the states of California, Florida,[and] Georgia, . . . for personal or household

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use and not for resale, at any time on or after February 9, 2008.

10 (Mot. at 5.)

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Plaintiffs Kim Allen, Daniele Xenos, Sherrell Smith, Nancy Rodriguez, Yuanke

12 Xu, Diana Sisti, and Melissa Nigh ask that they be appointed as the representatives of the

13 Class. Plaintiffs request the appointment of the Law Offices of Ronald A. Marron, APLC

14 and Kreindler & Kreindler, LLP as class counsel.

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III.

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LEGAL STANDARD

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Federal Rule of Civil Procedure 23 provides the standard for certification of a class

18 action. Rule 23 has two sets of requirements. Plaintiffs must meet all of the

19 requirements under Rule 23(a) and must also satisfy at least one of the Rule 23(b) prongs.

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Courts refer to these requirements by the following shorthand: "numerosity,

21 commonality, typicality and adequacy or representation." See Mazza v. American Honda

22 Motor Co., Inc., 666 F.3d 581, 588 (9th Cir. 2012). Courts have also implied a threshold

23 requirement that plaintiffs seeking class certification must demonstrate that the class is

24 adequately defined and clearly ascertainable. Wolph v. Acer Am. Corp., 272 F.R.D. 477,

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6 Plaintiffs allege subclasses according to state citizenship (TAC ? 215), with Smith, Xu, Sisti,

and Nigh representing the California subclass, Allen and Rodriguez representing the Florida subclass,

28 and Xenos representing the Georgia subclass. (See id. ?? 5-11.)

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Case 2:12-cv-01150-DMG-MAN Document 291 Filed 08/01/14 Page 7 of 43 Page ID #:14362

1 482 (N.D. Cal. 2011); see also Berger v. Home Depot USA, Inc., 741 F.3d 1061, 1071 n.3

2 (9th Cir. 2014).

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If the four prerequisites of Rule 23(a) are satisfied, a court must also find that

4 Plaintiffs "satisfy through evidentiary proof" at least one of the three subsections of Rule

5 23(b). Comcast Corp. v. Behrend, ---- U.S. ----, 133 S. Ct. 1426, 1432, 185 L. Ed. 2d

6 515 (2013). At issue here is Fed. R. Civ. P. 23(b)(3): "questions of law or fact common

7 to class members predominate over any questions affecting only individual members, and

8 that a class action is superior to other available methods for fairly and efficiently

9 adjudicating the controversy."

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Rule 23 is more than a pleading standard, and it requires the party seeking class

11 certification to "affirmatively demonstrate his compliance with the Rule." Wal-Mart

12 Stores, Inc. v. Dukes, ----U.S. ----, 131 S. Ct. 2541, 2551, 180 L. Ed. 2d 374 (2011)

13 (internal quotation omitted). Thus, a court must conduct a "rigorous" class certification

14 analysis. Id. (quoting Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 160, 102 S. Ct. 2364,

15 72 L. Ed. 2d 740 (1982)). Frequently the analysis "will entail some overlap with the

16 merits of the plaintiff's underlying claim," and "sometimes it may be necessary for the

17 court to probe behind the pleadings . . . ." Id. (internal quotation omitted). The Supreme

18 Court has recently cautioned courts, however, that "Rule 23 grants courts no license to

19 engage in free-ranging merits inquiries at the certification stage," and "[m]erits questions

20 may be considered to the extent--but only to the extent--that they are relevant to

21 determining whether the Rule 23 prerequisites for class certification are satisfied."

22 Amgen Inc. v. Connecticut Ret. Plans & Trust Funds, ---- U.S. ----, 133 S. Ct. 1184,

23 1195, 185 L. Ed. 2d 308 (2013).

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IV.

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DISCUSSION

26 A. Evidentiary Objections

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The parties have raised voluminous objections to the opposing side's evidence.

28 [Doc. ## 76, 81-2, 88, 89, 90, 91, 92, 93, 94, 95, 96, 106, 108, 230.]

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Case 2:12-cv-01150-DMG-MAN Document 291 Filed 08/01/14 Page 8 of 43 Page ID #:14363

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The Court addresses the parties' objections infra only to the extent it deems

2 necessary. The Court does not address objections pertaining to facts it deems immaterial

3 to the resolution of the motion.

4 B. Admissibility of Expert Testimony

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Both parties seek to admit expert testimony on the issue of whether class

6 certification is appropriate. Federal Rule of Evidence 702 allows expert testimony if the

7 expert's "scientific, technical, or other specialized knowledge will help the trier of fact to

8 understand the evidence or to determine a fact in issue." Fed. R. Evid. 702(a). Rule 702

9 "require[s] that the judge apply [her] gatekeeping role . . . to all forms of expert

10 testimony, not just scientific testimony," and "judges are entitled to broad discretion

11 when discharging their gatekeeping function." Hangarter v. Provident Life & Acc. Ins.

12 Co., 373 F.3d 998, 1017 (9th Cir. 2004) (internal quotation marks omitted). The trial

13 court has a "special obligation to determine the relevance and reliability of an expert's

14 testimony." Elsayed Mukhtar v. California State Univ., Hayward, 299 F.3d 1053, 1063

15 (9th Cir. 2002), overruled on other grounds, Estate of Barabin v. AstenJohnson, Inc., 740

16 F.3d 457 (9th Cir. 2014).

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The Ninth Circuit has noted that under the Supreme Court's decision in Daubert v.

18 Merrell Dow Pharmaceuticals, 509 U.S. 579, 113 S. Ct. 2786, 125 L. Ed. 2d 469 (1993),

19 and its progeny, a court must

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assess [an expert's] reasoning or methodology, using as appropriate such

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criteria as testability, publication in peer reviewed literature, and general

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acceptance, but the inquiry is a flexible one. Shaky but admissible evidence

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is to be attacked by cross examination, contrary evidence, and attention to

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the burden of proof, not exclusion. In sum, the trial court must assume that

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the expert testimony both rests on a reliable foundation and is relevant to the

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task at hand. [?] Expert opinion testimony is relevant if the knowledge

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underlying it has a valid connection to the pertinent inquiry. And it is

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