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Lee v. Carter-Reed Co.

August 14, 2009

MELISSA LEE, ON BEHALF OF HERSELF AND ALL OTHERS SIMILARLY SITUATED, PLAINTIFF-APPELLANT,
v.
CARTER-REED COMPANY, L.L.C., A/K/A THE CARTER REED COMPANY, BASIC RESEARCH, L.L.C., DG ENTERPRISES, INC., ALPHAGENBO TECH, L.L.C., BODY FORUM, L.L.C., BODY INNOVENTIONS, L.L.C., COVARIX, L.L.C., COVAXIL LABORATORIES, L.L.C., BYDEX MANAGEMENT, L.L.C., WESTERN HOLDINGS, L.L.C., DENNIS W. GAY, AND NATHALIE CHEVREAU, DEFENDANTS-RESPONDENTS.



On appeal from the Superior Court of New Jersey, Law Division, Union County, Docket No. L-3969-04.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued: January 14, 2009

Before Judges Cuff, Fisher and Baxter.

We granted leave to appeal an order denying class certification in this matter, which may be categorized as a mass media false advertising case. We affirm.

Plaintiff Melissa Lee is a purchaser of a dietary supplement, known as Relacore, formulated, manufactured, marketed, and distributed by defendant Carter-Reed Company, L.L.C. (Carter-Reed). She alleges that she first purchased Relacore in April 2004 at a CVS drugstore and took the product for approximately three months. She paid $39.99 for each bottle or thirty-day supply of the supplement.

Carter-Reed commenced marketing Relacore in 2002 through magazines, television, radio stations, Internet websites, and promotional materials sent to retailers. The advertising campaign varied over the years. Some advertisements emphasized that Relacore helps reduce stress-induced belly fat. Others emphasize that Relacore is a "non-sedating, mild anti-anxiety mood enhancer that reduces stress-induced cortisol production by helping to minimize stress." Some advertisements emphasize its capacity to elevate mood; others contain statements from defendant Dr. Nathalie Chevreau promising a reduction in belly fat and "an overall feeling of well-being." Product packaging and labeling emphasize a variety of product attributes, including stress reducer, mood elevator, and belly fat retardant. The product carries a money-back guarantee which is featured prominently in its advertising campaign.*fn1

On November 10, 2004, plaintiff filed a complaint, on behalf of herself and all similarly situated persons who bought Relacore, in which she alleged that defendants Carter-Reed, Basic Research, L.L.C., DG Enterprises, Inc., Alphagenbo Tech, L.L.C., Body Forum, L.L.C., Body Innoventions, L.L.C., Covarix, L.L.C., Covaxil Laboratories, L.L.C., Bydex Management, L.L.C., Western Holdings, L.L.C., Dennis W. Gay, and Nathalie Chevreau (collectively referred to as defendants) devised and utilized a fraudulent, deceptive and improper advertising campaign for Relacore. Plaintiff sought relief pursuant to the Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to -166, and the common law of this State for herself and all class members since the product was introduced to the market by defendants in 2002.*fn2 Individual members of the class have monetary claims ranging from $40 to $120.

Plaintiff alleged that she purchased the product based on its advertised claims to reduce belly fat. She further alleges that she used the product as directed for ninety days, did not lose belly fat and her waist actually grew larger.

Following discovery limited to class suitability, plaintiff moved for class certification and appointment of class counsel on November 20, 2007. Defendants opposed the motion. Following oral argument, Judge Dupuis denied the application for class certification. We granted leave to appeal from this April 18, 2008 order.*fn3

In her written opinion, Judge Dupuis found that the putative class met the requirements of Rule 4:32-1(a)(1) to (4), but did not meet the requirements of Rule 4:32-1(b)(3). That is, the judge held that questions of law or fact common to the class did not predominate over the questions affecting only its individual members and that a class action was not superior to other methods of adjudication. In her analysis the judge held that "[t]he common questions of law or fact in this litigation are whether the advertising claims that Relacore could 'shrink stubborn belly fat' or enhance mood were misleading under the [CFA], whether the defendants have been unjustly enriched at the class members' expense, and whether certain warranties have been breached." On the other hand, the judge found that the difficulties of managing the class were "insurmountable." She identified individual factors that would require evidentiary hearings as to each member on fourteen different issues. The individual factors identified by the judge are (a) whether they bought the product to reduce belly fat, reduce stress or fight metabolic syndrome; (b) whether they read the magazine advertisements, and if so which ones; (c) whether they viewed any television commercials and if so, which ones; (d) the extent to which the advertisements were relied upon in making the purchase; (e) whether the purchaser bought the product at the recommendation of a friend, relative, or store employee; (f) whether some of the alleged benefits of Relacore were experienced by the class member in question, and if so, which benefits; (g) whether the health condition of the class member affected the efficacy of [the] product; (h) whether the class member followed directions, and which direction the member followed; (i) whether any of the plaintiffs took medication, and if so, which medication they were taking; (j) whether there was a causal nexus between the alleged wrongful acts of the defendants and an ascertainable loss; (k) the amount of money paid by the consumer; (l) price or any other factor upon which the purchase was based; and (m) whether they suffered an ascertainable loss as necessary under the CFA; (n) whether a refund was requested and received.

The judge also noted that plaintiff had not suggested any method to handle the numerous individual questions confronting the class.

As to plaintiff's unjust enrichment claim, Judge Dupuis also held that the court was confronted with individual issues of whether each class member received the benefit of the bargain. The breach of express warranty claims also required individual showings of which of several possible warranties were breached and whether there was timely notice to the seller of the express warranty breach. Similarly, the implied warranty of merchantability required an examination of individual issues of fitness for the ordinary purpose for which the product was used and conformation to the promises or affirmations of fact made on the container or label.

On appeal, plaintiff argues that the trial judge abused her discretion when she denied class certification due to remainder issues and defenses requiring some individualized examination and abdicated her case management responsibilities by declining to certify a class on manageability and superiority grounds. Defendants argue that the trial judge properly found that individual issues predominated plaintiff's claims and properly held that class certification of plaintiff's ...


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