Kramer Levin Defeats Motion for Class Certification in a False Advertising Case Brought Against Client Procter & Gamble

On September 14, 2011, Kramer Levin secured a major victory for client Procter & Gamble in a false advertising case brought under the Lanham Act by a group of professional salons who sought to certify a class of salons and stylists who claim that Procter & Gamble and other defendant-manufacturers falsely advertise their hair products as exclusively available in salons, when their products are in fact available in the mass market through a phenomenon called “diversion.” Plaintiffs claimed that the defendants’ “salon only” advertising injures their reputations with consumers who purchase defendants’ products at their salons, but later discover that the products are available in the mass market. Judge Denise L. Cote of the United States District Court for the Southern District of New York denied plaintiffs’ motion for class certification, agreeing with defendants’ argument that “[w]hile the claims emanate from a theory of false advertising, the plaintiffs’ evidence of damage arises from the phenomenon of diversion and not from any false advertising. As a consequence, the plaintiffs have failed to satisfy the requirements for pursuing their claims as representatives of a class.” Judge Cote held that plaintiffs had failed to establish that common issues of law or fact predominated over the “inherently [] individualized question” of how salon customers would react to learning that a product which was advertised as exclusively sold in salons was also available in mass market retailers. Because plaintiffs failed to demonstrate that the alleged injury to the salons’ reputations was susceptible of class-wide proof, their motion to certify a class under Rule 23(b)(3) was denied. The Court also rejected plaintiffs’ alternative basis for class certification under Rule 23(b)(2), because it was clear to the Court that plaintiffs’ claim for injunctive relief was incidental to their pursuit for monetary recovery. The Kramer Levin team consisted of Litigation partners Harold P. Weinberger and Norman C. Simon, and associate Eileen M. Patt.