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False Advertising Litigation

In false advertising cases, a crucial part of the analysis involves identifying the effects of misinformation on consumer choice, whether that misinformation arises from one firm mimicking the products of another, or from a firm making false statements about their competitor. We have conducted this type of analysis in a variety of cases. We are experienced in collecting primary customer data in order to elicit the value that consumers place on particular product features, as well as in performing conjoint analysis, or the statistical and econometric evaluation of data with respect to customer purchases and sales. Brattle principal and Nobel Prize winner Daniel McFadden pioneered many of the methods used in these analyses and several of our consultants either studied under him or have worked with him in designing data collection methods and analysis.

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REPRESENTATIVE ENGAGEMENTS

Below is a list of representative engagements for our False Advertising Litigation practice.

Damages in alleged deceptive marketing case
Our clients, plaintiffs in a class action, alleged a manufacturer of liquor engaged in deceptive marketing and charged premium prices for its product by stating the product was “small batch” and made in a particular state even though it was actually distilled in another state. Brattle’s expert obtained data on the prices and characteristics of numerous brands of liquor, such as size of container, proof, age, whether it was labeled or advertised as “small batch,” and state listed on the label. He used econometric techniques to conduct a hedonic analysis of these data to test whether, and by how much, consumers were willing to pay more for products labeled or advertised as “small batch” or for those with a certain state listed on the label. The litigation was settled. As part of the settlement, the manufacturer agreed to provided cash payments to certain purchasers, remove the phrase “small batch” from its website and product label, and modify the product label to disclose that the product is distilled in another state than the one that was listed on the label.
Class certification in alleged false advertising case
Our client, a producer of branded nutritional supplements, had been accused of collecting a market price premium on its products due to alleged false claims appearing on the product label. Brattle’s expert testified that the plaintiff’s expert had failed to describe a workable approach for determining the damages associated with this price premium on a class-wide basis. In particular, Brattle’s expert explained that the plaintiff’s proposed use of a conjoint analysis to assess the price premium was unworkable because conjoint survey data only take into account demand side factors whereas a price premium would be the product of both supply and demand factors. Brattle’s expert also explained that the plaintiff’s proposed use of a hedonic analysis was unworkable because the available data would not allow for separate estimation of the price premium.

Liability and damages assessment due to retail underpricing
Our client, a major retailer known for its wine selection, sued a chain of retail liquor stores for falsely claiming that it consistently underpriced our client on the sale of the same or similar wines. We addressed both liability and damages issues, collecting and performing statistical analysis on wine pricing data gathered from both parties. This exercise clearly demonstrated that there was no consistent underpricing as claimed by the defendant. We also performed an event study to determine the lost sales that could be attributed to the advertising campaign. This case settled on favorable terms for our client.

Alleged disparagement and false advertising in pharmaceuticals
Brattle worked for a large pharmaceutical manufacturer that alleged disparagement and false advertising by a competing manufacturer of an over-the-counter pain reliever in its communications with physicians. Our team analyzed survey data on consumer and physician choices, applied economic theory to assess the effect of misinformation on new product sales, and created a damages model to project the likely trend in sales of the plaintiff’s drug but for the alleged violations and to quantify the plaintiff’s losses.

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