A rare class action trial that resulted in a jury verdict against a defendant may set a precedent for the amount of statutory damages that can be recovered under New York’s General Business Law (GBL) when a class action proceeds to trial. After a jury found that Joint Juice deceptively labeled its beverages and awarded actual damages to the class, the plaintiffs moved for $140 million in statutory damages.
Last week in Montera v. Premier Nutrition Corp., Case No. 3:16-cv-6980 (N.D. Cal.), a jury awarded $1.49 million in actual damages to the class based on approximately 165,000 units sold during the relevant time period, or about $9 per beverage. Joint Juice’s beverages, which contain glucosamine and chondroitin, promised to improve joint health and relieve pain. The plaintiffs claimed that the beverages were deceptively labeled because none of their ingredients in fact provided the promised benefits. The jury unanimously sided with the plaintiffs.
Two days after the verdict, the plaintiffs moved for entry of final judgment and an award of about $140 million in statutory damages, including prejudgment interest. The plaintiffs brought claims under GBL §§ 349 and 350, which generally prohibit false or deceptive advertising. Plaintiffs can recover actual damages under the statute. Alternatively, plaintiffs can recover statutory damages under the GBL—$50 for violations of § 349, and $500 for violations of § 350. Those statutory damages generally do not require a finding of willful misconduct. The plaintiffs arrived at the $140 million figure by multiplying the number of units sold (166,249) by $550, and adding interest.
Before the trial, Judge Seeborg stated in an order on a motion in limine that “it is clear that statutory damages will be higher” in the case, but nevertheless required plaintiffs to prove actual damages at trial. See ECF No. 215. One reason he did so, he explained, was that “[a] determination on actual damages may also be necessary to assess the constitutionality of an award of statutory damages.” Id. He noted that some cases suggest that a significant difference between actual and statutory damages raises due process concerns. Id. In their motion for entry of final judgment, plaintiffs attempt to head off an argument that their requested award is unconstitutional. They contend that the GBL’s statutory damages provisions are designed to deter wrongdoing and compensate consumers for intangible harms, which are valid legislative purposes.
Given the stark difference between the actual damages per unit ($9) and requested statutory damages ($550), whether the plaintiffs are successful could have significant ramifications for GBL cases, including the amounts plaintiffs demand to settle cases. The defendant’s response to the motion is due later this month, and the court is scheduled to hold a hearing on the motion in July.