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Consumer Protection & False Advertising Disputes

Consumer protection-related litigation appears to be on the rise, in a broad range of areas that include allegations of product liability, consumer fraud, false advertising and deception, privacy and data breaches, and violations of the False Claims Act. 

This topic is also receiving increasing attention from enforcement authorities at the federal and state level. For example, the FTC recently identified protecting consumers from unfair and deceptive practices as among its top goals in its strategic plan for 2018–2022. Similarly, Maryland recently amended its related statute to expand the scope of consumer protections and increase the penalty for violations of consumer protection laws.

The Brattle Group has decades of experience in consumer protection matters. Our work spans a wide array of industries, including food, beverages, and other consumer products; consumer and commercial vehicles; insurance; pharmaceuticals; manufacturing; hospitality; and retail. The issues our clients face are complex and often require expertise in a variety of disciplines, such as economics, marketing, finance, and statistics. Our consulting expertise is further enhanced by our global network of top academic and industry experts in these areas, who can be critically important in providing insights into how companies operate in different industries. We are proficient in deploying this multidisciplinary expertise in a thoughtful and cost-effective manner.

Our expertise includes:

  • Statistical and Econometric Analysis
  • Survey and Sampling Design
  • Content Analysis
  • Large Database Analysis
  • Class Actions
  • Individual Actions
NEWS

Nobel Prize-winning economist, Brattle Principal, and University of Southern California Professor Daniel McFadden provided multiple expert reports and testimony in two recent consumer class action suits involving motor vehicle manufacturers.

Engagements
REPRESENTATIVE ENGAGEMENTS

Below is a list of representative engagements for our Consumer Protection & False Advertising Disputes practice.

Ignition switch consumer class action

Working on behalf of General Motors (GM), a Brattle team rebutted the plaintiffs’ claims that GM’s alleged failure to provide earlier notice of recalls related to ignitions, side airbags, and power steering systems caused consumers to overpay for new GM cars incorporating these components. Our analysis showed that the plaintiffs’ experts had failed to calculate the amount of this overpayment, which would have required them to estimate the market price for the vehicles with and without earlier disclosure. Instead of estimating these market prices, which are determined by the intersection of supply and demand, the plaintiffs’ experts provided a survey-based analysis that could – at best – capture the demand side of the market. Consistent with our findings, the court concluded that the plaintiffs’ analysis of conjoint survey data did not meet the requirements of the plaintiffs’ “benefit of the bargain” damages theory. The final settlement was less than 1% of the plaintiffs’ original $17 billion damages claim.

Consumer class action involving ATVs

Brattle assisted Polaris, a US manufacturer of motorcycles, snowmobiles, and all-terrain vehicles (ATVs), in obtaining a victory at the class certification stage of a closely watched product liability case. The plaintiffs alleged that Polaris had failed to disclose information on alleged exhaust heat issues in thousands of its ATVs, causing consumers to overpay for these ATV models. The plaintiffs’ experts claimed to have taken into account both supply and demand when establishing the amount of the alleged overpayment. However, Brattle expert testimony explained that both the survey-based analysis of demand and the equilibrium model used to determine the amount of the alleged overcharge were unreliable. The judge denied certification of the class, ruling that the plaintiffs’ expert-driven overcharge theory was insufficient to meet class certification requirements.

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 a separate estimation of the price premium.

Analysis of damages arising from misleading claims

On behalf of a major Canadian automobile manufacturer faced with a class action lawsuit regarding misleading fuel efficiency reporting, Brattle filed an affidavit scrutinizing the plaintiff’s expert’s demonstration of likely damages to the proposed class of auto buyers. The critique demonstrated that the class’s expert made several assumptions at odds with economic theory regarding buyer behavior.

Assessment of damages arising from a data breach

Working on behalf of plaintiffs in a matter related to a high-profile data breach, a Brattle team prepared reports explaining how to quantify the damage inflicted on individuals whose personal data was stolen. Our analyses in this matter included a novel approach that explained how data on the dark web sale of personal information could be used to objectively measure consumer losses due to the breach.

Lanham Act claims against a producer of food additives

Brattle economists were retained by a trade association representing a common food additive producer that had alleged that the trade association for a competing additive had misled consumers regarding its negative health effects. We advised the client’s academic damages expert and provided a rebuttal report and testimony regarding the opposing damages expert’s calculations. We relied on several econometric techniques to demonstrate the unreliable nature of the opposing expert’s approach.

Likelihood of confusion in the fashion industry and associated damages

We were retained by a British manufacturer of distinctive footwear claiming that a U.S. shoe company had infringed on the trademark stitching on some of its shoe products. A Brattle economist estimated damages based in part on surveys conducted at shopping malls. Using the survey data, we were able to evaluate the extent to which consumers were confused by the allegedly infringing shoes, measure lost sales, and establish the value of the trademarked stitching, a distinguishing feature of the British company’s shoes. The 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.

False Claims Act (FCA) cases

In FCA matters, Brattle plays several complementary roles: forensic analysts, to identify and trace patterns in activity or financial metrics; big data analysts, to extract and summarize the relevant information from unstructured information sources; and financial and economic experts, to determine the effects of alleged misconduct and provide expert testimony. We have been involved in numerous FCA cases, from the investigation stage through litigation. We work extensively with proprietary, government, and publicly available datasets, and with economic, actuarial, and industry experts to cover the full range of issues in a given case.

Allegations of pyramid scheme business models

Brattle has extensive experience analyzing multilevel marketing (MLM) compensation models, with a focus on nutrition, supplement, and cosmetic firms using the direct selling model. Our team has been involved in many litigations and investigations that have required analyses of customer-level data. Based on these analyses, we have assessed whether a company’s compensation model has characteristics of a pyramid scheme (as opposed to a legitimate MLM model) and whether participants were misled about their earning prospects. In addition, we have assisted companies conducting internal investigations of their MLM compensation models, and have provided support to academics who have presented their findings to regulators.

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.
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.

Experts
Principals
Academic Advisor & Other Outside Experts
Greg Allenby
Academic Advisor
The Ohio State University, Fisher College of Business
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Peter E. Rossi
Academic Advisor
University of California, Los Angeles
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Kenneth Train
Academic Advisor
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Publications
Article
A Look Into FTC's Thinking on Pyramid Scheme Potential
March 23, 2020
Branko Jovanovic, Pablo Robles, and Jeremy Smith
Published in Law360
Article
Computing Damages in Product Mislabeling Cases: Plaintiffs' Mistaken Approach in Briseno v. ConAgra
February 27, 2017
Published in Bloomberg Bureau of National Affairs (BNA)

An article about fundamental economic errors in approaches to damages in recent product mislabeling cases.

News & Knowledge
July 30, 2020
Brattle Testimony Supports General Motors and Polaris in Obtaining Successful Consumer Class Action Case Outcomes

Nobel Prize-winning economist, Brattle Principal, and University of Southern California Professor Daniel McFadden provided multiple expert reports and testimony in two recent consumer class action suits involving motor vehicle manufacturers.

March 23, 2020
Brattle Economists Publish Law360 Article Addressing Recent Working Paper That Overstates an MLM's Potential to Become a Pyramid Scheme

Brattle Principal Branko Jovanovic, Associate Pablo Robles, and Senior Research Analyst Jeremy Smith recently authored a Law360 article titled “A Look Into FTC’s Thinking on Pyramid Scheme Potential.”

February 27, 2017
Computing Damages in Product Mislabeling Cases: Plaintiffs' Mistaken Approach in Briseno v. ConAgra

Brattle Principal Lisa Cameron, Academic Advisors Professor Greg Allenby and Professor Peter E. Rossi, and Brattle Senior Research Analyst Yikang Li recently co-authored an article for BNA about fundamental economic errors in approaches to damages in recent product mislabeling cases.