Consumer Fraud Class Action Rejected – Proposed Class Representative Inappropriate
Being close buddies with your lawyer does not always pay off – for the lawyer or the buddy. In a case against Pharmavite alleging that the labeling of its Vitamin E products is false and misleading, a California federal judge rejected a proposed plaintiff’s class action representative based on a close personal relationship between the plaintiff and plaintiff’s counsel.
The court analyzed three issues:
1.) whether there is a conflict-of-interest between the class, and the plaintiff and her lawyer-friend,
2.) whether plaintiff and her lawyer-friend would vigorously prosecute the action on behalf of the class, and
3.) whether the plaintiff had standing to be the class representative.
The standing issue was analyzed in terms of whether the proposed plaintiff would adequately represent the interests of the class, given certain dubious testimony about the claimed circumstances of her purchase of the product, as well as her relationship with plaintiff’s counsel. The court reasoned that in the absence of standing, as a matter of law, the proposed plaintiff could not adequately represent the class.
At her deposition, plaintiff testified to circumstances of the alleged purchase of the product that turned out to be demonstrably false, and she subsequently issued a declaration saying that she ‘misremembered’. In consumer fraud claims like she was asserting, reliance on the allegedly mislabeled product is an important element of the case. Though what she bought when, with what and with whom was misremembered, the proposed plaintiff representative claimed that she did not misremember her reliance on the labeling. The court was clearly very skeptical of her recovered memory, and seemed ready to reject her standing based on it. However, it also reasoned that the representative could not adequately represent the class because she would be subject to cross examination as to the suspicious circumstances of her alleged purchase of the product, and her alleged reliance on the labeling. The court said it best,
That Plaintiff recalled the events in a way that fits the narrative of this lawsuit and failed to conduct basic due diligence, when viewed in light of Plaintiff and [her counsel’s] eight-year friendship involving weekly gatherings, became strong indicia of an on-going conflict.
The court even raised the specter of ‘champterty’, a not-oft-used word for illegal sharing of lawsuit proceeds.
Lessons? It is not surprising given the stakes of class action litigation that the plaintiff’s class action bar might seek out friends and family for class representatives. Lawyers for companies sued should vigorously conduct discovery on the issue of conflict and standing for proposed plaintiff representatives. On the other side of the lawsuit, this particular plaintiff’s counsel would have been better served not selecting one of his pals to be the plaintiff. It raised an unnecessary issue that even had the court talking the concept of illegal payment arrangements. As for the plaintiff, while the class action disappeared, she is free to pursue her lawsuit, alone with her lawyer-friend. Of course without a class-action-fueled settlement possibility, this lawyer friend may no longer be so interested in the case.