In re Juul Labs, Inc., Mktg. Sales Practices & Prods. Liab. Litig.

• Citation: 609 F.Supp.3d 942
• Decision Date: 28 June 2022
• Docket Number: Case No. 19-md-02913-WHO
• Parties: IN RE JUUL LABS, INC., MARKETING SALES PRACTICES AND PRODUCTS LIABILITY LITIGATION
• Court: U.S. District Court — Northern District of California

609 F.Supp.3d 942

IN RE JUUL LABS, INC., MARKETING SALES PRACTICES AND PRODUCTS LIABILITY LITIGATION

Case No. 19-md-02913-WHO

United States District Court, N.D. California.

Signed June 28, 2022

ORDER ON MOTION FOR CLASS CERTIFICATION AND RELATED DAUBERT MOTIONS

Re: Dkt. Nos. 1772, 2303, 2308, 2309, 2381, 2438, 2439, 2497, 2503, 2534, 2536, 2550, 2589, 2601.

William H. Orrick, United States District Judge

Plaintiffs seek to certify four classes of purchasers of JUUL products on theories that defendants’ marketing of JUUL was unlawfully deceptive, JUUL was unlawfully marketed to youth, and JUUL products are not fit for ordinary use. Each of the four sets of defendants – JLI, the Altria entities,¹ the Founder Defendants,² and the Other Director Defendants (ODDs)³ – opposes. The overarching theme of their opposition is that no class can be certified given the "heterogeneity" of the class members: each named plaintiff and each proposed class member were exposed to different advertisements over different periods of time; each had different impressions of the impact (or materiality) of the misrepresented or information omitted by JLI; each experienced different levels of alleged economic injury; and each had their own "nicotine journey" given their unique use of JUUL products (as well as other nicotine delivery products like cigarettes or other e-cigarette products) and unique experiences with possible addiction.

The individual differences defendants identify or attempt to create do not preclude class certification. Some of the identified differences – for example, differences in advertisements that the named plaintiffs or class members may have seen over time or differences in the amount of JUUL product purchased – are simply not material. Given the legal standards applied to plaintiffs’ claims, other identified differences – what an advertisement meant or portrayed to a specific named plaintiff or class member – are not material for purposes of class certification. Still more purported differences hinge on classic "battles of the experts" that must be resolved by the trier of fact. For example, will the trier of fact believe plaintiffs’ experts that JLI's marketing campaigns conveyed a Unique Selling Proposition ("USP") that made JLI's alleged failures to disclose material? Or will the trier of fact believe JLI's experts that no such USP can be inferred from JLI's marketing, especially given changes in JLI's marketing materials over the whole class period? At base, defendants’ attacks on plaintiffs’ experts present common questions that cannot be resolved at this juncture and do not preclude certification. For the reasons set out in detail below, plaintiffs’ motion for class certification is GRANTED. Each of the Daubert motions made by the parties is DENIED.

BACKGROUND

The classes plaintiffs seek to certify, and the laws underlying each class's claims, are:

1. Nationwide Purchaser Class (All Plaintiffs): All persons who purchased, in the United States, a JUUL product – based on the Racketeer Influenced and Corrupt Organizations Act ( 18 U.S.C. § 1962 ) ("RICO").

2. Nationwide Youth Class (C.D., Krauel, and L.B.): All persons who purchased, in the United States, a JUUL product and were under the age of eighteen at the time of purchase – based on RICO.

3. California Purchaser Class (Colgate, C.D., and L.B.): All persons who purchased, in California, a JUUL product – based on California Unfair Competition Law ( Cal. Bus. & Prof. Code § 17200 ) ("UCL"), California Consumers Legal Remedies Act ( Cal. Civ. Code § 1750 ) ("CLRA"), California False Advertising Law ( Cal. Bus. & Prof. Code § 17500 ) ("FAL"), Common Law Fraud, Unjust Enrichment, Implied Warranty of Merchantability, and Magnuson-Moss Warranty Act ( 15 U.S.C. § 2301 ) ("Mag-Moss").

4. California Youth Class (C.D. and L.B.): All persons who purchased, in California, a JUUL product and were under the age of eighteen at the time of purchase – based on California UCL and Unjust Enrichment.

The classes are limited to individuals who purchased JUUL products from brick and mortar or online retailers. The damages, restitution, and/or disgorgement sought are based on retailer purchases and prices. The proposed classes do not include any individuals who purchased JUUL products only secondarily from non-retailers. In addition, excluded from the proposed classes are defendants, their employees, co-conspirators, officers, directors, legal representatives, heirs, successors, and wholly or partly owned subsidiaries or affiliated companies; class counsel and their employees; and the judicial officers and their immediate family members and associated court staff assigned to this case.⁴

DISCUSSION

I. PLAINTIFFS’ MOTION FOR CLASS CERTIFICATION

A. Legal Standard

"Before certifying a class, the trial court must conduct a rigorous analysis to determine whether the party seeking certification has met the prerequisites of Rule 23." Mazza v. Am. Honda Motor Co., Inc. , 666 F.3d 581, 588 (9th Cir. 2012) (internal quotations omitted). The party seeking certification has the burden to show, by a preponderance of the evidence, that certain prerequisites have been met. See Wal-Mart Stores, Inc. v. Dukes , 564 U.S. 338, 348-50, 131 S.Ct. 2541, 180 L.Ed.2d 374 (2011) ; Conn. Ret. Plans & Trust Funds v. Amgen Inc. , 660 F.3d 1170, 1175 (9th Cir. 2011).

Certification under Rule 23 is a two-step process. The party seeking certification must first satisfy the four threshold requirements of Rule 23(a). Specifically, Rule 23(a) requires a showing that: (1) the class is so numerous that joinder of all members is impracticable; (2) there are questions of law or fact common to the class; (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and (4) the representative parties will fairly and adequately protect the interests of the class. Fed. R. Civ. P. 23(a).

Next, the party seeking certification must establish that one of the three grounds for certification applies. See Fed. R. Civ. P. 23(b). Plaintiffs seek certification under Rule 23(b)(3), which requires them to establish that "the questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy." Fed. R. Civ. P. 23(b)(3). In the alternative to the (b)(3) class, plaintiffs seek certification under Rule 23(c)(4) for any issues that I determine are fit for class treatment.

The process of class-certification analysis "may entail some overlap with the merits of the plaintiff's underlying claim." Amgen Inc. v. Connecticut Ret. Plans & Trust Funds , 568 U.S. 455, 465–66, 133 S.Ct. 1184, 185 L.Ed.2d 308 (2013) (internal quotations omitted). However, " Rule 23 grants courts no license to engage in free-ranging merits inquiries at the certification stage." Id. at 466, 133 S.Ct. 1184. "Merits questions may be considered to the extent—but only to the extent—that they are relevant to determining whether the Rule 23 prerequisites for class certification are satisfied." Id.

B. Rule 23(a)

1. Numerosity

Rule 23(a)(1) requires that "the class is so numerous that joinder of all members is impracticable." Fed. R. Civ. P. 23(a)(1). The party seeking certification "do[es] not need to state the exact number of potential class members, nor is a specific number of members required for numerosity." In re Rubber Chems. Antitrust Litig. , 232 F.R.D. 346, 350 (N.D. Cal. 2005). However, courts within the Ninth Circuit generally agree that numerosity is satisfied if the class includes forty or more members. Villalpando v. Exel Direct Inc. , 303 F.R.D. 588, 605-06 (N.D. Cal. 2014) ; In re Facebook, Inc., PPC Adver. Litig. , 282 F.R.D. 446, 452 (N.D. Cal. 2012).

Defendants do not dispute that numerosity is satisfied for each of the four proposed classes. As noted by plaintiffs’ expert, Hal J. Singer, unit sales of JUUL products in 2019 alone exceeded $2.8 billion, and in conducting his surveys of JUUL users Singer was able to identify several thousand individuals, including many hundreds of residents of California and many hundreds of individuals who used JUUL products as youths. See generally Class Certification Report of Hal J. Singer ("Singer Report," Dkt. No. 1772-19).

2. Commonality

FRCP 23(a) requires that "there are questions of law or fact common to the class." Fed. R. Civ. P. (a)(2). "A common contention need not be one that ‘will be answered, on the merits, in favor of the class.’ It only ‘must be of such nature that it is capable of class-wide resolution.’ " Alcantar v. Hobart Servs. , 800 F.3d 1047, 1053 (9th Cir. 2015) (quoting Amgen Inc. v. Conn. Ret. Plans & Tr. Funds , 568 U.S. 455, 459, 133 S.Ct. 1184, 185 L.Ed.2d 308 (2013) and Wal-Mart Stores , 564 U.S. at 350, 131 S.Ct. 2541 ). Commonality, however, "only requires a single significant question of law or fact." Mazza v. Am. Honda Motor Co. , 666 F.3d 581, 589 (9th Cir. 2012).

Plaintiffs identify several questions of law and fact that will be determined on a common basis based on classwide evidence and proof:

• RICO Claim : common questions of fact include the existence of a RICO Enterprise and whether each defendant engaged in a scheme to defraud;

• Statutory Fraud (UCL, FAL, & CLRA) Claims : common questions include whether a significant number of reasonable consumers would likely have been deceived by defendants’ misrepresentations or omissions about JUUL and would have found the misrepresented or omitted information material, as well as whether plaintiffs are entitled to a presumption of reliance;

• Common Law Fraud Claim : common questions include whether defendants’ statements and omissions were deceptive and whether a presumption of reliance exists given their materiality;

• Unfair Conduct Claims : common questions include whether defendants’ conduct qualifies as "unfair" under the UCL, i.e. ,

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