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< | Peter, thank you for your comments. They've been very helpful. As you'll see I decided to take this paper in a related although different direction. I decided to focus on one particular litigation that illustrates some of the problems with one particular area of products liability class actions. This focus hopefully makes it easier for me to work things through in 1,000 words. I also think working with one particular case helps to provide evidence. I worked on a few products liability cases as a paralegal and purposefully chose to avoid mentioning any of them. I'm attaching (at some point today) several of the key case documents to this paper. |
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> | Peter, thank you for your comments. They've been very helpful. As you'll see I decided to take this paper in a related although different direction. I decided to focus on one particular litigation that illustrates some of the problems with one particular area of products liability class actions. This focus hopefully makes it easier for me to work things through in 1,000 words. I also think working with one particular case helps to provide evidence. I worked on a few products liability cases as a paralegal and purposefully chose to avoid mentioning any of them. I'm attaching several of the key case documents to this paper. |
| | I still think I need to work through some of the material that surrounds the case description and perhaps devote less words to the case. I'm hoping to return to this in a few weeks. I understand the semester is over so don't feel obligated, but obviously your continued input is always appreciated.
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| | The Product |
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< | Airborne is a vitamin supplement that contains 1,000 mg of vitamin C along with smaller levels of other vitamins and herbs. At a Duane Reader on the Upper West Side it retails for a price of $0.80 per tablet, while a mere one aisle over a 1,000 mg vitamin C pill is sold for $0.13 per tablet. In short, Airborne is a rip-off. Airborne gets consumers to spend more than 6 times the retail price for the same product through a false advertising campaign in which they claimed to be a remedy for the common cold and jazzed up their packaging with some funky cartoons and a snazzy fizzing in water effect. By convincing consumers that they offered some unique and valuable product they were able to gross sales of over $300 million between the middle of 2005 and 2007 alone. |
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> | Airborne is a vitamin supplement that contains 1,000 mg of vitamin C along with smaller levels of other vitamins and herbs. At a Duane Reader on the Upper West Side it retails for a price of $0.80 per tablet, while a mere one aisle over a 1,000 mg vitamin C pill is sold for $0.13 per tablet. In short, Airborne is a rip-off. Airborne gets consumers to spend more than 6 times the retail price for the same product through a false advertising campaign in which they claimed to be a remedy for the common cold and jazzed up their packaging with some funky cartoons and a snazzy fizzing in water effect. By convincing consumers that they offered some unique and valuable product they were able to gross sales of over $300 million between the middle of 2005 and 2007 alone. |
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The Settlements |
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< | When sales got large enough the public started to take notice and lawsuits were filed against Airborne and its creators. Airborne’s response was to settle and settle with everyone. First the class of plaintiffs who settled for $23.5 million, then the FTC for $0 (monetary provisions never came to fruition) and finally 33 state Attorney Generals for $7 million. All three settlements involved some form of injunctive relief, restricting future advertising. The restrictions have little impact as Airborne has already become well-known as a cold remedy. |
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> | When sales got large enough the public started to take notice and lawsuits were filed against Airborne and its creators. Airborne’s response was to settle and settle with everyone. First the class of plaintiffs who settled for $23.5 million, then the FTC for $0(monetary provisions never came to fruition) and finally 33 state Attorney Generals for $7 million. All three settlements involved some form of injunctive relief, restricting future advertising. The restrictions have little impact as Airborne has already become well-known as a cold remedy. |
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< | The sales records were not released as part of the class settlement. Although the records were supplied they were ordered sealed by the court. Evaluating the adequacy of the $23.5 million settlement is difficult for the public when they don’t know how much could have been won at trail, but class counsel knew and that was enough for the court. Class counsel was paid nearly $3.5 million for their work on the case, with many attorneys billing out at more than $1,000/hour and up to $1,400/hour. |
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> | The sales records were not released as part of the class settlement. Although the records were supplied they were ordered sealed by the court. Evaluating the adequacy of the $23.5 million settlement is difficult for the public when they don’t know how much could have been won at trail, but class counsel knew and that was enough for the court. Class counsel was paid nearly $3.5 million for their work on the case with many attorneys billing out at more than $1,000/hour and up to $1,400/hour. |
| | The settlement ended up paying out $14.9 million to supposed class members. In addition to those $14.9 million, the claims administrator also received $6.8 million in claims that were deemed physically impossible based on the claimed date of sale and/or claimed location of purchase. That raises a huge red flag that perhaps those submitting claims were in large part not actually class members (if $6.8 million in claims were obviously false, how many of the $14.9 million were also false but involved better guessers), but the court approved the settlement nonetheless. Currently counsel in the case are still debating proposals for giving the unpaid funds to various nonprofit organizations with some faint connection to vitamin supplements. |
| | The system we have now seems to be caught in the middle. We aren’t completely telling buyers to beware by allowing false advertising, but at the same time aren’t providing serious remedies or doing anything to significantly impair companies. The Airborne litigation is an example of blatant false advertising that resulted in an insignificant punishment. If we’re going to regulate advertising of products we need to have a real impact.
The Government needs to take more of a role in both preventing false advertising from the start and litigating once it has reached significant levels. Where the fault often occurs is that class action firms and government entities are afraid to take the case to trial. Unwilling to put the litigation expenses into the case and perhaps afraid they will actually win and bankrupt the company. While these excuses make sense for a private company, the government should be less hesitant to invest in litigation. Non-profit law firms that also involve themselves in the cases also need to have a mindset of actually preventing the false advertising instead of merely obtaining enough money to keep their nonprofit running.
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| META FILEATTACHMENT | attachment="Class_Action_-_Order_re_Final_Approval,_Attorneys_Fees.pdf" attr="" comment="" date="1274067886" name="Class_Action_-_Order_re_Final_Approval,_Attorneys_Fees.pdf" path="Class Action - Order re Final Approval, Attorney's Fees.pdf" size="91752" stream="Class Action - Order re Final Approval, Attorney's Fees.pdf" user="Main.JoshLerner" version="1" |
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| META FILEATTACHMENT | attachment="Class_Action_-_Preliminary_Approval_Order.pdf" attr="" comment="" date="1274068003" name="Class_Action_-_Preliminary_Approval_Order.pdf" path="Class Action - Preliminary Approval Order.pdf" size="575930" stream="Class Action - Preliminary Approval Order.pdf" user="Main.JoshLerner" version="1" |
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| META FILEATTACHMENT | attachment="Class_Action_-_Second_Amended_Complaint.pdf" attr="" comment="" date="1274068033" name="Class_Action_-_Second_Amended_Complaint.pdf" path="Class Action - Second Amended Complaint.pdf" size="346192" stream="Class Action - Second Amended Complaint.pdf" user="Main.JoshLerner" version="1" |
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| META FILEATTACHMENT | attachment="Attorney_General_-_Settlement.pdf" attr="" comment="" date="1274068105" name="Attorney_General_-_Settlement.pdf" path="Attorney General - Settlement.pdf" size="2916141" stream="Attorney General - Settlement.pdf" user="Main.JoshLerner" version="1" |
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| META FILEATTACHMENT | attachment="FTC_-_Complaint.pdf" attr="" comment="" date="1274068184" name="FTC_-_Complaint.pdf" path="FTC - Complaint.pdf" size="2891435" stream="FTC - Complaint.pdf" user="Main.JoshLerner" version="1" |
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| META FILEATTACHMENT | attachment="FTC_-_Order_re_Settlement.pdf" attr="" comment="" date="1274068229" name="FTC_-_Order_re_Settlement.pdf" path="FTC - Order re Settlement.pdf" size="1392112" stream="FTC - Order re Settlement.pdf" user="Main.JoshLerner" version="1" |
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