Pulp Fiction: The "Food Court" Squeezes Statutory Damages Request By Class Of Defrauded "Joint Juice" Health Supplement Buyers

• Published date: 02 September 2022
• Subject Matter: Litigation, Mediation & Arbitration, Class Actions, Trials & Appeals & Compensation
• Law Firm: Foley & Lardner
• Author: Mr John Zabriskie and Samuel J. Fishman

Joint Juice, according to its labelling and advertising, promoted 'healthy and happy,' if not pain free, joints. A jury apparently thought it was closer to snake oil, finding the product's marketing false, misleading, and fraudulent. But the recent decision on post-trial motions in that federal class action'Montera v. Premier Nutrition Corp.'will provide at least partial pain relief to the defendant manufacturer'and to all manufacturers of consumer goods facing the staggering aggregated statutory damages possible under New York's frequently invoked consumer protection statutes. Those statutes, New York General Business Law ' 349 and 350 (collectively, 'NYGBL'), are a darling of the plaintiffs' bar because, despite the New York Legislature's clear intent that NYGBL's statutory damages of $50 and $500 not be available in class actions, the United States Supreme Court has said aggregation is permitted if the class action is filed in federal court. In Montera, the statutory damages arising from that procedural loophole were $91 million (nearly 60 times actual damages for a product that often sold for less than $10). Finding that multiple unconstitutionally punitive, the Montera court reduced the award to $8.3 million.

But Montera is hardly a silver bullet for defendants. Despite the significant reduction, the court still levied significant statutory damages and weighed in on two unsettled issues in ways that will partially re-inflate reduced statutory damages.

Constitutional limits on statutory damages, including under NYGBL

Almost twenty years ago, the Second Circuit in Parker v. Time Warner Entertainment Co., 331 F.3d 13, 22 (2d Cir. 2003), observed that the 'potential for a devastatingly large [statutory] damages award, out of all reasonable proportion to the actual harm suffered by members of the plaintiff class, may raise due process issues.' These Due Process Clause concerns are similar to those raised in the context of punitive damages. But where the U.S. Supreme Court has set out a modern framework for assessing whether an award of punitive damages is unconstitutionally large, the last U.S. Supreme Court decision considering a reduction of statutory damages was handed down more than a century ago, well before the advent of class actions. See St. Louis, I.M. & S. Ry. Co. v. Williams, 251 U.S. 63, 66-67 (1919) (finding statutory damages award was not 'wholly disproportioned to the offense and obviously unreasonable,' and therefore did not violate the...