[00:00:00] Speaker 05:
good morning your honors may it please the court this is a new york case that was tried in california and new york law was not correctly applied at issue are glucosamine and chondroitin which are two naturally occurring compounds that the body uses to synthesize the proteins that are in cartilage and the essence of plaintiff's claim is that ingesting these orally doesn't do anything at all

[00:00:30] Speaker 05:
and that to say otherwise is deceptive.

[00:00:33] Speaker 05:
Now, under New York law, that alone is not enough to show an injury that New York recognizes.

[00:00:40] Speaker 05:
And for that reason, because that's case dispositive, I'm going to start there.

[00:00:45] Speaker 05:
I'll then address causation and some of the new trials.

[00:00:51] Speaker 05:
But I want to start with injury, because New York law on this is different from California law that you just heard in the previous

[00:01:00] Speaker 05:
These are GBL 349 and 350 cases.

[00:01:07] Speaker 05:
And subsequent cases have held that it recognizes two injuries, and maybe others, but it's said two so far.

[00:01:15] Speaker 05:
One is a price premium, which is... It doesn't recognize the theory here.

[00:01:26] Speaker 05:
So the theory here, the allegation was that

[00:01:29] Speaker 05:
The product didn't do what you represented.

[00:01:32] Speaker 05:
Therefore, it was false, and it's worth less.

[00:01:36] Speaker 05:
That's the theory.

[00:01:38] Speaker 05:
That theory is the one that New York has specifically rejected.

[00:01:42] Speaker 05:
That was the small decision with cigarettes, where they had said, you didn't tell us it was addictive.

[00:01:47] Speaker 05:
If you had told us, it would be worth less.

[00:01:49] Speaker 05:
The New York Court of Appeals affirmed the dismissal of that claim for lack of injury.

[00:01:54] Speaker 02:
The New York Court of Appeals said, counsel, is that without addiction as part of the injury claim, there's

[00:02:02] Speaker 05:
And that's right, Your Honor.

[00:02:03] Speaker 05:
And so the analog here would be if there were some physical harm that they had alleged, like addiction.

[00:02:09] Speaker 02:
It doesn't require harm.

[00:02:10] Speaker 02:
The Second Circuit's been clear on that.

[00:02:11] Speaker 02:
And I can't see where it requires harm, a harmful product.

[00:02:16] Speaker 05:
So it can be a physical injury, of course, which was addiction.

[00:02:19] Speaker 05:
And that wasn't there.

[00:02:21] Speaker 05:
They didn't allege it, right?

[00:02:22] Speaker 02:
They didn't plead it correctly.

[00:02:23] Speaker 05:
And they didn't allege a price premium.

[00:02:25] Speaker 05:
And here, they haven't alleged an injury.

[00:02:28] Speaker 05:
and they haven't alleged a price premium.

[00:02:31] Speaker 05:
This is all square, Your Honor, with Donahue, which is the appellate division case with the herbal supplement.

[00:02:38] Speaker 05:
It's the tea they said would give memory benefits, and the plaintiffs alleged there, well, you said it would give memory benefits, and it didn't, so therefore we've been harmed, and the appellate division dismissed that claim.

[00:02:49] Speaker 05:
I'm just gonna read it.

[00:02:50] Speaker 05:
The plaintiffs contend the deceptive elatables, which purportedly promised that consumption of the product would improve memory,

[00:02:56] Speaker 05:
reduce stress and improve overall health caused them to spend money but receive no health benefits in return.

[00:03:02] Speaker 05:
They never alleged, however, that the cost of the beverage was inflated by these misrepresentations or that their health was adversely affected by drinking the beverages.

[00:03:11] Speaker 05:
They have impermissibly set up the deception as both act and injury, a theory specifically rejected by our courts.

[00:03:19] Speaker 02:
How does that map?

[00:03:20] Speaker 02:
I mean, in both of those cases, they received a product.

[00:03:23] Speaker 02:
One entity got tea, one plaintiff got a tea, and the other got cigarettes.

[00:03:28] Speaker 02:
They got what they paid for, in other words.

[00:03:30] Speaker 02:
And I see there's a pleading difference.

[00:03:33] Speaker 02:
But that's not what our jury found here.

[00:03:36] Speaker 02:
Our jury found here that this product was valueless for its advertised purpose.

[00:03:41] Speaker 05:
Your Honor, that's, that's, it is the same here.

[00:03:44] Speaker 05:
So this would be, like the Second Circuit case is the Staples case.

[00:03:49] Speaker 05:
It was a warranty case.

[00:03:50] Speaker 05:
You're represented two years warranty and it turns out you only got one year.

[00:03:54] Speaker 05:
That would be as if in this case you're represented to get 1,500 milligrams of glucosamine and you only got 750.

[00:04:00] Speaker 06:
Okay, let's take, let's follow that.

[00:04:04] Speaker 06:
Okay, you're told on the package you're gonna get 10 working widgets in the box, right?

[00:04:12] Speaker 06:
And you only get eight.

[00:04:14] Speaker 06:
That would be actionable, right?

[00:04:16] Speaker 05:
Yeah, in other words, Your Honor, there's something physically defective.

[00:04:20] Speaker 05:
It isn't the product you just want.

[00:04:21] Speaker 06:
It's not what you were promised.

[00:04:24] Speaker 05:
Well, and here's where I... Let me just... Oh, go ahead, Your Honor.

[00:04:27] Speaker 06:
Keep going.

[00:04:30] Speaker 06:
You only have eight widgets in the box, that's actionable, correct?

[00:04:35] Speaker 05:
Yes, if there are 10 and you only get eight.

[00:04:37] Speaker 06:
Promise 10.

[00:04:38] Speaker 06:
How about your promise, there are promise 10 and there are four?

[00:04:43] Speaker 05:
It's the same thing, Your Honor.

[00:04:44] Speaker 06:
Okay, how about 10 and there are none?

[00:04:46] Speaker 05:
Correct.

[00:04:47] Speaker 06:
That's actionable.

[00:04:48] Speaker 06:
Yes.

[00:04:48] Speaker 06:
How is this different?

[00:04:49] Speaker 06:
There's no value.

[00:04:51] Speaker 05:
No, your honor is going to value or performance or what it does, not to what's actually in the box.

[00:04:57] Speaker 05:
But it's worth.

[00:04:58] Speaker 05:
Well, what it's worth is different because... Okay, so working widgets.

[00:05:03] Speaker 05:
So on that, I mean, you could say if they actually function or not, right?

[00:05:08] Speaker 05:
And here's the difference New York has drawn.

[00:05:10] Speaker 05:
And the Second Circuit did this in the Orlando case.

[00:05:13] Speaker 05:
It's the Staples case.

[00:05:14] Speaker 05:
That case expressly distinguished consumable products.

[00:05:18] Speaker 05:
in there and said, that's different.

[00:05:20] Speaker 05:
That's how the Second Circuit distinguished Small and Donahue on that.

[00:05:25] Speaker 05:
And Your Honor, this gets to the difference between efficacy and like physical characteristics and why the courts distinguish and the law usually distinguishes between substantiation and truth and falsity.

[00:05:39] Speaker 05:
So when you get to a situation where it's a claim of what a substance will do,

[00:05:44] Speaker 05:
on that, or it's a future prediction.

[00:05:46] Speaker 05:
It's what it will, the function it will have rather than what it actually is, like how much there is in the box, to your point.

[00:05:54] Speaker 06:
How many working widgets there are?

[00:05:56] Speaker 05:
Courts usually in that situation, they don't talk about whether it's true or false.

[00:06:00] Speaker 05:
They ask whether there's reliable, competent evidence, because in a lot of situations right now, humans are learning a lot, but we don't know everything yet.

[00:06:09] Speaker 05:
And the measure in a substantiation case is, is there sufficient evidence there to make a claim?

[00:06:14] Speaker 05:
The question is not whether it's ultimately true or false in some cosmic sense, because, of course, don't presume to know that yet.

[00:06:22] Speaker 05:
So that's why substantiation claims are treated differently, typically, than objective fact claims.

[00:06:28] Speaker 05:
And that shows up in the FTC.

[00:06:30] Speaker 05:
That shows up here.

[00:06:31] Speaker 05:
One of our certified questions, of course, is whether New York would apply a substantiation standard here.

[00:06:37] Speaker 05:
as some of the lower courts have done, but the Court of Appeals hadn't.

[00:06:41] Speaker 05:
But, Your Honor, to go back to the injury point, New York has a special statute here that the Attorney General can get restitution, and what Your Honors are talking about are sort of, you know, inducement and refund situations.

[00:06:55] Speaker 05:
The Attorney General can get restitution under 349B, but the only thing consumers can get is actual damages.

[00:07:02] Speaker 05:
And that's what Small holds there, and that's what Donahue holds.

[00:07:05] Speaker 05:
Your honor, to your honor's hypothetical, is it a working T?

[00:07:10] Speaker 05:
You were promised a T that worked on your memory and it didn't work.

[00:07:14] Speaker 05:
That was the allegation.

[00:07:15] Speaker 05:
They said it didn't work at all.

[00:07:17] Speaker 05:
And the appellate division affirmed the dismissal of that.

[00:07:20] Speaker 06:
What do you make of, I mean, if Donahue is your best case, you've got a lot of others that you're going to need to deal with, but what do you do with footnote five in small itself?

[00:07:30] Speaker 06:
Which does talk about a consumable product.

[00:07:35] Speaker 06:
Selling bottled water is coming from a pure and pristine mountain stream, while in reality it was only tap water.

[00:07:43] Speaker 05:
Yeah, that's exactly right, Your Honor, because in that footnote they assumed, they said in that case you couldn't get a full refund.

[00:07:50] Speaker 05:
you would have to prove a partial refund, and it opened up proving a price premium.

[00:07:55] Speaker 05:
And here, plaintiffs expressly said, we are not doing a price premium.

[00:08:00] Speaker 06:
Why isn't the plaintiff's theory here, in essence, the limiting case of the price premium?

[00:08:07] Speaker 06:
That the entire price is a fraudulent premium.

[00:08:10] Speaker 05:
Yeah, it would be if they tried to prove it, but that's never what they've tried to prove, Your Honor, and here's the reason why.

[00:08:16] Speaker 02:
That's what the jury was instructed, and that's what the jury found, valueless for its advertised purpose.

[00:08:20] Speaker 05:
No, that's a different standard, Your Honor, than a price premium.

[00:08:24] Speaker 05:
And let me explain why.

[00:08:26] Speaker 05:
So if I can take just a second.

[00:08:28] Speaker 05:
I see you're skeptical on that.

[00:08:31] Speaker 05:
Yes.

[00:08:31] Speaker 05:
And let me say it.

[00:08:32] Speaker 02:
Because this isn't a price premium case.

[00:08:35] Speaker 02:
And you've conceded that New York isn't limited to just these two theories.

[00:08:39] Speaker 02:
So I'm concerned that we're not.

[00:08:42] Speaker 05:
Plaintiffs are asking the wrong question, and therefore they're getting the wrong answer.

[00:08:46] Speaker 05:
They're asking how much value this had in some abstract sense.

[00:08:49] Speaker 05:
The right test for damages here is, what would the price have been had the deceptive statements not been made?

[00:08:57] Speaker 01:
And there's a price for glucosamine.

[00:08:59] Speaker 01:
Let me go back to Staples in Orlando.

[00:09:02] Speaker 01:
What do you make of the statement that the plaintiff must allege on account of a materially misleading practice, she purchased a product and did not receive the full value for her purchase?

[00:09:17] Speaker 01:
That would seem to leave the door open for this theory.

[00:09:22] Speaker 05:
I agree that that sentence leaves the door open for the theory.

[00:09:25] Speaker 05:
In context, I think what it's referring to is two things.

[00:09:29] Speaker 05:
Number one, the plaintiff didn't get part of what she was represented.

[00:09:33] Speaker 05:
It was the one-year warranty instead of two, so it'd be here half the glucosamine instead of all of it.

[00:09:38] Speaker 05:
I think that's what the judge said in context, because right next to that is where they're distinguishing the consumable products.

[00:09:46] Speaker 05:
If that's not what it means, then it's inconsistent with small, Your Honor.

[00:09:49] Speaker 01:
Well, then they cite small and requiring a connection between the misrepresentation and some harm from or failure of the product.

[00:10:00] Speaker 01:
I understand your argument, but we're trying to figure out what New York law says, and I don't think it's as, it doesn't appear to me as clear as you're portraying it.

[00:10:12] Speaker 05:
Well, and this goes to our certification motion.

[00:10:15] Speaker 05:
We thought

[00:10:17] Speaker 05:
and continue to think this is clear.

[00:10:18] Speaker 05:
And Your Honor, just to go back one more time on this, before I use all my time on one point.

[00:10:23] Speaker 05:
But the right measurement of damages in New York is how much would this be priced if the fraudulent statements weren't made.

[00:10:31] Speaker 05:
Because the only thing that will change in the but for world is what is said, not what is sold.

[00:10:36] Speaker 05:
Glucosamine can be sold.

[00:10:38] Speaker 05:
There's a market for glucosamine because many doctors say it works.

[00:10:43] Speaker 05:
And even if we couldn't say it, newspapers say it works and articles say it works.

[00:10:47] Speaker 05:
And for all those reasons, there's a market value.

[00:10:49] Speaker 05:
The only thing that would change here is what we could say.

[00:10:52] Speaker 05:
That's the proper measure.

[00:10:53] Speaker 05:
That's what New York says is damages.

[00:10:55] Speaker 05:
Other states don't, but that's New York.

[00:10:58] Speaker 02:
And you're relying on small?

[00:11:01] Speaker 05:
And Donahue are our two best cases.

[00:11:03] Speaker 06:
Why do you think New York would draw that line?

[00:11:07] Speaker 05:
I think New York drew that line, Your Honor, because it's allowing some enforcement, but not all of it.

[00:11:13] Speaker 05:
And this gets to Shady Grove.

[00:11:15] Speaker 06:
But this is the most egregious situation, where there's no value.

[00:11:18] Speaker 05:
No, this is, and I disagree with that, your honor, because- That's what the jury found.

[00:11:22] Speaker 05:
The jury wasn't instructed that it had no value.

[00:11:25] Speaker 05:
The jury was instructed that it was valueless for its advertised purpose.

[00:11:30] Speaker 05:
We objected to that as incorrect, even if you accept the broader theory of injury.

[00:11:35] Speaker 05:
And that's another reason for a new trial here.

[00:11:38] Speaker 05:
The safe harbor, but to go to this point, and this is the statutory damages point, and Justice Ginsburg wrote about this in Shady Grove,

[00:11:48] Speaker 05:
New York, unlike California, has a balanced scheme where they don't want an annihilating judgment for something as close.

[00:11:55] Speaker 05:
And under our first certified question in an efficacy case, where you have a large number of studies on both sides on this, we don't think New York would call that false at all.

[00:12:06] Speaker 02:
But New York permits claims for misleading.

[00:12:08] Speaker 02:
Does that be false?

[00:12:09] Speaker 05:
You're right, but there's still, that begs the question of efficacy claims, Your Honor, and whether in this situation they would apply a substantiation standard.

[00:12:18] Speaker 05:
So, for example, if plaintiffs are right in this, someone who sold glucosamine could be held to have deceptive statements for claiming that it has an effect.

[00:12:27] Speaker 05:
And a manufacturer of Celecoxib, the pharmaceutical drug, could be held deceptive for making statements that it doesn't work.

[00:12:35] Speaker 05:
because the science is mixed and there's reputable scientists on both sides.

[00:12:38] Speaker 05:
So plaintiff's standard would lead to a situation where neither side can make claims despite having science.

[00:12:45] Speaker 05:
There's a real question whether New York chooses to follow that approach or whether it instead follows the approach saying in situations like this where there's no physical injury, like physical injury cases are different.

[00:12:55] Speaker 05:
If you get hurt, jury's gotta figure out whether you were hurt by this or not.

[00:12:59] Speaker 05:
This is just about what you can say.

[00:13:02] Speaker 05:
And there's a real question in New York whether they would bar this at all.

[00:13:06] Speaker 05:
That's our first certified question.

[00:13:09] Speaker 06:
So, yeah.

[00:13:11] Speaker 06:
You're familiar probably with the rhinestones and the wine cases, right?

[00:13:15] Speaker 06:
Yes.

[00:13:16] Speaker 05:
I am.

[00:13:16] Speaker 06:
Are they wrong?

[00:13:17] Speaker 05:
The rhinestone case is not a New York case.

[00:13:20] Speaker 05:
It's an FTC case.

[00:13:21] Speaker 05:
In the FTC Act, it would be like if the AG were here, so that was a restitution case, not a damages case.

[00:13:27] Speaker 05:
The wine case was a Coke case and they didn't dive into that because the jury found actual fraud too there and it was $10,000 bottles of wine and it wasn't a market price premium theory, it was an actual market theory.

[00:13:40] Speaker 05:
So that case doesn't address this issue at all, Your Honor.

[00:13:45] Speaker 05:
I wanna briefly say, the other new trial argument we have is the safe harbor argument, Your Honor.

[00:13:51] Speaker 05:
The only reason the judge gave for not giving New York safe harbor instruction is clearly wrong

[00:13:57] Speaker 05:
It's that the initial notice to the FDA wasn't done within 30 days.

[00:14:01] Speaker 02:
How is that clearly wrong?

[00:14:03] Speaker 05:
Because it was given before this class period ever started.

[00:14:06] Speaker 05:
It was given in 2012.

[00:14:08] Speaker 05:
This period started in 2013.

[00:14:11] Speaker 05:
So the entire time here, it was in compliance.

[00:14:14] Speaker 05:
The only way it rules it out is if a failure to give notice is incurable.

[00:14:18] Speaker 05:
And no one has ever held that.

[00:14:19] Speaker 05:
The FDA doesn't say that, and it makes no sense.

[00:14:22] Speaker 05:
I'll reserve the remainder of my time for rebuttal, Your Honor.

[00:14:24] Speaker 02:
Thank you, Counsel.

[00:14:34] Speaker 02:
And so you can bend the microphone down as well, and that'll be more comfortable.

[00:14:42] Speaker 00:
Good morning.

[00:14:43] Speaker 00:
Leslie Hurst, counsel for Marybeth Monterra.

[00:14:47] Speaker 00:
The jury, after a nine-day trial, found that Premier engaged in deceptive and misleading advertising.

[00:14:54] Speaker 00:
The jury found that Premier's deception injured Monterra and the class.

[00:14:59] Speaker 00:
The jury found that joint use is valueless for its advertised purpose, no value.

[00:15:04] Speaker 00:
Premier does not attack the sufficiency of the evidence to support the jury's finding.

[00:15:09] Speaker 00:
Instead, in a kitchen sink approach, it asks the court to order a new trial

[00:15:14] Speaker 00:
claiming the experienced trial judge, Judge Seaborg, made legal errors from start to finish, abused his discretion in evidence and jury instructions, and countenance attorney misconduct.

[00:15:26] Speaker 00:
None of that is true.

[00:15:29] Speaker 00:
I'm gonna address some of the issues that the counsel raised.

[00:15:32] Speaker 00:
If you'd like to direct me to something else, please do.

[00:15:36] Speaker 02:
Can I go to the instruction, the first instruction?

[00:15:39] Speaker 02:
I think plaintiff's request was that the instruction should say that the jury could find liability only if joint choice did not provide its full value, and the judge didn't give that instruction.

[00:15:53] Speaker 02:
I think Premier wanted the instruction to read that the jury was permitted to find

[00:16:03] Speaker 02:
liability of Joint Juice was valueless and the instruction given, right,

[00:16:09] Speaker 02:
is that the jury could find, could award damages only if Joint Juice was valueless for its advertised purpose.

[00:16:16] Speaker 02:
Is that right?

[00:16:17] Speaker 00:
Yes, I believe so.

[00:16:18] Speaker 02:
So this is not your requested instruction?

[00:16:20] Speaker 00:
No, it is not.

[00:16:21] Speaker 00:
It's a compromise of what we wanted, what they wanted, and what the judge felt was accordance with the law.

[00:16:28] Speaker 00:
Why we thought it didn't have to be valueless to any harm, because under New York law,

[00:16:34] Speaker 00:
as soon as plaintiff shows that there's some harm, some economic harm, in this case, we were entitled to statutory damages.

[00:16:43] Speaker 00:
So really, it's an odd situation where the jury found that there's no value for the advertised purpose.

[00:16:51] Speaker 00:
Premier's arguing, no, there was some value.

[00:16:54] Speaker 00:
They had no evidence of value, which I could get to, but they said, no, there's some value because of vitamin C and hydration.

[00:17:01] Speaker 00:
So it would be a difference of $17 a carton versus $16 a carton.

[00:17:07] Speaker 00:
We don't know.

[00:17:07] Speaker 02:
The jury heard the evidence, did it not?

[00:17:10] Speaker 02:
The jury received the letter to the California agency with Joint Juice had, well, the Premier had argued that

[00:17:16] Speaker 02:
The only reason to purchase this is for joint health.

[00:17:19] Speaker 02:
It's not a beverage, it's not a soft drink, it's not a fruit drink, it's not a sports drink.

[00:17:24] Speaker 00:
So they had no evidence of value, but my point for the jury instruction was we were saying as soon as there's some economic harm, we get statutory damages because they're greater than actual harm.

[00:17:36] Speaker 00:
The court required us to actually have to prove more to have the jury find it was valueless for its advertised purpose, and that's what the jury found.

[00:17:45] Speaker 00:
Valueless for its advertised purpose.

[00:17:47] Speaker 02:
Opposing counsel argues that there's mixed science, and he points to the Parker case.

[00:17:52] Speaker 02:
Right away, we've just been talking about, I don't know that I need your, I'm happy to hear your response to the Small and Donahue case, but what's your response to the Parker case?

[00:18:01] Speaker 02:
Well, the Parker case.

[00:18:02] Speaker 00:
The bug spray case.

[00:18:03] Speaker 00:
proves our point.

[00:18:05] Speaker 00:
What they're arguing is that if the evidence is mixed, if Premier has any evidence that joint use is effective for joint health, we can't win.

[00:18:15] Speaker 00:
It can't be false under New York law.

[00:18:18] Speaker 00:
Parker doesn't hold that.

[00:18:19] Speaker 00:
What Parker says very clearly is if the evidence is mixed, if both parties have evidence that claim the product is effective, you take that to the jury.

[00:18:31] Speaker 00:
We went to the jury, the jury weighed the evidence and found the label was false.

[00:18:37] Speaker 02:
Well, the plaintiff and Parker didn't get to the jury.

[00:18:40] Speaker 02:
I think there's a summary judgment decision there, but the claim there was that the bug spray was ineffective for all individuals.

[00:18:47] Speaker 02:
Yes.

[00:18:48] Speaker 02:
And at summary judgment, the court said there wasn't a question, a legitimate dispute about that claim.

[00:18:52] Speaker 00:
Correct, because the evidence that plaintiffs had

[00:18:57] Speaker 00:
did not go to prove that that claim was false.

[00:19:02] Speaker 00:
So it was a situation where plaintiff had evidence, but the judge said, you've got evidence.

[00:19:07] Speaker 00:
But it's not relevant to prove that the label message that you say is out there is false.

[00:19:14] Speaker 00:
So Parker was a case where plaintiff had no relevant evidence.

[00:19:18] Speaker 00:
Defendant had some evidence, some re-judgment granted.

[00:19:22] Speaker 00:
In this case, there's no dispute.

[00:19:24] Speaker 00:
We had evidence.

[00:19:25] Speaker 00:
We had the majority of the evidence.

[00:19:27] Speaker 00:
They had some.

[00:19:28] Speaker 00:
In a mixed situation, this court has held, and I'd like to remind the court of that, it's the Sona V. Schwab case.

[00:19:36] Speaker 00:
That was whether Ginkgo Baloba was effective for its advertised purpose.

[00:19:42] Speaker 00:
The defendant in that case came in to this court and said, that claim can't be false, we have to win because we have some evidence the claim is true.

[00:19:53] Speaker 00:
And this court said no, plaintiff has some evidence, you have some evidence, it's a mixed question of fact, it goes to the jury.

[00:20:01] Speaker 00:
And that's California law.

[00:20:03] Speaker 00:
That is the law in the Fifth Circuit under the Eastman chemical case.

[00:20:08] Speaker 00:
That's the way the FDA determines an efficacy claim is true or false.

[00:20:13] Speaker 00:
And we have the request for judicial notice.

[00:20:16] Speaker 00:
We put in front of the court the FDA guidelines.

[00:20:20] Speaker 00:
How does the FDA determine that a supplement efficacy claim like glucosamine is true or false?

[00:20:26] Speaker 00:
It looks at the totality of the scientific evidence.

[00:20:29] Speaker 00:
It weighs it, and you come up with an answer.

[00:20:31] Speaker 00:
The claim is true.

[00:20:33] Speaker 00:
You can make it.

[00:20:33] Speaker 00:
The claim is false, or you can't.

[00:20:35] Speaker 02:
You're using true and false.

[00:20:37] Speaker 02:
Was it enough for the jury to find it was misleading?

[00:20:41] Speaker 00:
It would.

[00:20:41] Speaker 00:
I think here we proved false, and I'm not trying to use them in a separate way.

[00:20:45] Speaker 00:
And it would be the same test for deception.

[00:20:49] Speaker 02:
What's your best response to the opposing counsel's arguments regarding Small and Donahue?

[00:20:57] Speaker 02:
Yes, Small.

[00:20:58] Speaker 02:
We're trying to figure out, as Judge Thomas said, what kind of claim does New York allow here?

[00:21:04] Speaker 00:
New York allows, as Judge Thomas noted in the Orlander case,

[00:21:08] Speaker 00:
You have to have injury.

[00:21:10] Speaker 00:
The test, you have to prove injury as a result of a deceptive practice.

[00:21:13] Speaker 00:
The injury can be physical.

[00:21:15] Speaker 00:
The injury can be you buy a product and you don't get the full value of your purchase.

[00:21:21] Speaker 00:
That's what happened in Orlando.

[00:21:22] Speaker 00:
That is what happened here.

[00:21:24] Speaker 00:
That is what happened in the applied cards case.

[00:21:27] Speaker 00:
That's a New York case under 349, 350.

[00:21:30] Speaker 00:
That's what happened in the Koch case.

[00:21:33] Speaker 00:
That's a New York 349-350 case.

[00:21:37] Speaker 00:
You bought rare French wine.

[00:21:39] Speaker 00:
You didn't get rare French wine.

[00:21:41] Speaker 00:
Yeah, you got something you could drink.

[00:21:42] Speaker 00:
You got something like Gallo.

[00:21:44] Speaker 00:
But you didn't get the rare French wine.

[00:21:46] Speaker 00:
That's an injury and that's cognizable in New York law.

[00:21:50] Speaker 00:
There's a make-off case.

[00:21:51] Speaker 00:
That's the make-offy Trump Towers case.

[00:21:53] Speaker 00:
a 349-350 case, they advertise certain education services, you didn't get them, you got something different than you wanted, the minimum value, that's cognizable, and I think the Parker case shows that too.

[00:22:14] Speaker 02:
Did you want to respond to his Safe Harbor argument?

[00:22:19] Speaker 00:
I've got a lot of tabs here.

[00:22:20] Speaker 00:
Let me get to safe harbor.

[00:22:23] Speaker 00:
There's three reasons that they're not entitled to a safe harbor jury instruction.

[00:22:28] Speaker 00:
The first is, as the district court noticed, they didn't comply with the law.

[00:22:32] Speaker 00:
They didn't do the 30-day notice.

[00:22:34] Speaker 00:
The second is, under the FDCA, that's the safe harbor that they're going under.

[00:22:40] Speaker 00:
It prohibits claims that are false or misleading.

[00:22:44] Speaker 00:
You can't make a label claim that's false or misleading.

[00:22:47] Speaker 00:
The jury here found the label claim is false or misleading, no safe harbor instruction.

[00:22:53] Speaker 00:
The third is you don't get a safe harbor instruction if you're

[00:22:57] Speaker 00:
label claim makes an implied disease claim.

[00:23:01] Speaker 00:
If it implies that it helps joint pain or osteoarthritis.

[00:23:07] Speaker 00:
The jury also found that that was the implied message on the joint juice label.

[00:23:13] Speaker 06:
Those arguments sound like, though, the jury verdict means that they should not have received that instruction.

[00:23:21] Speaker 06:
There's a sort of circular, circularity there.

[00:23:24] Speaker 00:
A little bit.

[00:23:24] Speaker 00:
I think there where you're going is

[00:23:27] Speaker 00:
Now it's not prejudicial error because why go back to the jury or even to the court and say you need a safe harbor jury instruction where the jury findings now show you don't get one because it's misleading and because they made an implied disease claim that the FDCA prohibits.

[00:23:47] Speaker 02:
What the district court relied on is that they were too late.

[00:23:49] Speaker 00:
Yes, and I think that's also true.

[00:23:50] Speaker 00:
That's correct also.

[00:23:52] Speaker 00:
There's three reasons why you don't get the safe harbor instruction.

[00:23:59] Speaker 00:
Anything else?

[00:24:03] Speaker 00:
Thank you.

[00:24:03] Speaker 00:
I'll be back.

[00:24:04] Speaker 00:
Thank you, Councillor.

[00:24:12] Speaker 05:
Yes.

[00:24:12] Speaker 05:
Your Honours, on the safe harbour, you're right about the circularity, and it's wrong under Ninth Circuit law.

[00:24:18] Speaker 05:
If there is an instruction that should have been given and wasn't,

[00:24:21] Speaker 05:
The Ninth Circuit presumes that it was prejudicial.

[00:24:25] Speaker 05:
That's the Clem case.

[00:24:27] Speaker 06:
Right, but given the verdict here on other questions, why doesn't that cure it?

[00:24:31] Speaker 05:
The plaintiff is not entitled to say that the jury resolved it.

[00:24:34] Speaker 05:
That's a direct holding of the Kennedy case that we cite.

[00:24:38] Speaker 05:
And the reason there's a difference here, Your Honor, is that there was no instruction given on structure function claims, which are allowed.

[00:24:45] Speaker 05:
There was no instruction saying that the FDA specifically allows a claim that

[00:24:50] Speaker 05:
that it supports joint function.

[00:24:53] Speaker 05:
And there was no instruction on substantiation, which is different from this truth and falsity.

[00:24:59] Speaker 05:
Your Honor, the substantiation says, is there credible, legitimate evidence in support?

[00:25:04] Speaker 05:
Even if there's other evidence that doesn't find it, it can be substantiated.

[00:25:07] Speaker 05:
It does not.

[00:25:09] Speaker 05:
Substantiation is a different question than falsity.

[00:25:12] Speaker 05:
The jury never got that instruction.

[00:25:14] Speaker 05:
And the district court took it away in a particularly prejudicial way because in response to their motion in Lemonay, it denied it and said, Premier is entitled to get a safe harbor defense.

[00:25:25] Speaker 05:
And so counsel who argued opened by talking about how there's the FDA structure function in the safe harbor.

[00:25:32] Speaker 05:
And then at the end of the trial, the district judge changed his mind, took it away.

[00:25:36] Speaker 05:
So plaintiff's counsel said, look, they promised there's going to be structure function.

[00:25:39] Speaker 05:
You didn't hear anything about that.

[00:25:41] Speaker 05:
And the only reason they did it is because of this 30-day rule that they thought was uncurable.

[00:25:47] Speaker 02:
Thank you, counsel.

[00:25:48] Speaker 05:
Thank you.

[00:25:49] Speaker 02:
We'll take that case under advisement.

[00:25:50] Speaker 02:
We'll go on to the last case on the calendar.

[00:25:52] Speaker 02:
22-16375.

[00:25:57] Speaker 00:
The division were ruled on aggregate statutory damages without the benefit of this court's decision in Wakefield.

[00:26:09] Speaker 00:
In doing so, it failed to apply the right test.

[00:26:11] Speaker 00:
Wakefield held that constitutional limits on aggregate statutory damages are reserved for those rare cases where the aggregate amount, and this is in the court's words, is gravely disproportionate to and unreasonably related to the legal violation committed.

[00:26:32] Speaker 02:
Just in the interest of time, yes.

[00:26:35] Speaker 02:
Wakefield has come out more recently, the District Court Applied State Farm

[00:26:38] Speaker 02:
Is it your position that we can apply Wakefield if we get that far, or that we should remand for the application of six Mexican workers?

[00:26:45] Speaker 00:
Well, you know, I actually see the Wakefield doing two things.

[00:26:48] Speaker 00:
One is, is the aggregate amount unconstitutional?

[00:26:53] Speaker 00:
And there, I think the test is this gravely disproportionate and unreasonably related to.

[00:26:58] Speaker 02:
If you don't prevail on that, I'm just trying to get into it.

[00:27:00] Speaker 00:
If I don't prevail on that, then I think then it is a matter of the six Mexican workers test.

[00:27:06] Speaker 00:
And for that, I think remand.

[00:27:09] Speaker 00:
If the court doesn't say no, these are constitutional.

[00:27:13] Speaker 00:
So yes, two different, I think, tests, two different issues there.

[00:27:18] Speaker 00:
But we submit that this is just not that rare case, this exceptional case where the aggregate award is so extreme, given the circumstances, that it's unconstitutional.

[00:27:30] Speaker 00:
And here's why.

[00:27:32] Speaker 00:
We have a decade-long scheme

[00:27:34] Speaker 00:
to defraud people looking for joint pain relief.

[00:27:38] Speaker 00:
Premier sold its customers, and it called them joint pain sufferers, a product that does absolutely nothing for joints or osteoarthritis.

[00:27:47] Speaker 00:
It pushed repeat purchases, and it told people, you have to keep buying joint juice, and you gotta drink it every day.

[00:27:55] Speaker 00:
Premier's deception was intentional.

[00:27:57] Speaker 00:
The evidence showed Premier was aware of the science, and yet, and this is in Judge Seaborg's words,

[00:28:03] Speaker 00:
It continued without hesitation.

[00:28:06] Speaker 00:
And finally, under this Court's decision in Wakefield and also the Williams Court, the U.S.

[00:28:11] Speaker 00:
Supreme Court in Williams, you have to look to the statute's purposes broadly, 349 and 350 broadly.

[00:28:20] Speaker 00:
And it's a little hard for me to say this without sounding didactic, but those statutes are to protect honest commerce.

[00:28:28] Speaker 00:
Those statutes want to make sure that

[00:28:32] Speaker 00:
fraud, the deception doesn't become endemic in the marketplace because this country is about the marketplace and we need an honest marketplace.

[00:28:42] Speaker 00:
And so it's important to protect those, to protect an honest marketplace and if you don't, I don't know, the world is rife with examples of what happens if you don't protect free and fair and honest commerce.

[00:28:55] Speaker 00:
So I think for those reasons,

[00:28:58] Speaker 00:
that the aggregate award of $83 million is not unconstitutional, and we ask that you direct that the district court enter that amount, and in all other respects, affirm the judgment.

[00:29:11] Speaker 06:
Ms.

[00:29:11] Speaker 06:
Hurst, could I ask you on that aggregate amount?

[00:29:13] Speaker 06:
That's the aggregate amount for the New York slice of this case, right?

[00:29:18] Speaker 00:
There's only a New York slice.

[00:29:19] Speaker 00:
Yes, yes.

[00:29:22] Speaker 06:
Judge Seaborg, as I understand it, is presiding over several related parallel class actions, correct?

[00:29:27] Speaker 00:
Correct.

[00:29:29] Speaker 06:
And that pursue relief under different states theories.

[00:29:34] Speaker 06:
How does, should we look at those other cases or should we confine our view here to just the New York?

[00:29:42] Speaker 00:
It has to be defined just to New York because we went to trial on the New York causes of action.

[00:29:47] Speaker 00:
The New York causes of action provide statutory damages and I can't say for sure, but certainly not all and probably most and maybe all of them of the other statutes don't provide statutory damages.

[00:29:59] Speaker 00:
So this is not an issue in the other cases.

[00:30:02] Speaker 00:
For instance, we're going to trial soon on California cases.

[00:30:05] Speaker 00:
UCL, CLRA, no statutory damages, only restitution.

[00:30:10] Speaker 00:
So it just won't be an issue in those cases.

[00:30:12] Speaker 02:
What's your best argument that it was correct to add prejudgment interest to statutory damages?

[00:30:19] Speaker 00:
Because I think prejudgment interest comes down to

[00:30:22] Speaker 00:
What is the plaintiff entitled to?

[00:30:24] Speaker 00:
And then you get prejudgment interest to account for the time period from when you were entitled to that amount and judgment.

[00:30:35] Speaker 02:
Well, if we're talking about actual damages, that would certainly be the case.

[00:30:39] Speaker 02:
But you're using a very vanilla statute, that's my word.

[00:30:42] Speaker 02:
But to compensate for the loss of use, the time value of money,

[00:30:47] Speaker 02:
And if the district court was right about obsessing this as per violation rather than per person, then what we're really talking about is a statutory penalty.

[00:30:59] Speaker 02:
And it's not a perfect fit.

[00:31:04] Speaker 00:
No, but I think it is.

[00:31:06] Speaker 00:
First, under New York law, New York awards prejudgment interest when a plaintiff is entitled to treble damages, and treble damages are a form of statutory damage, and we have three cases where New York has done that.

[00:31:19] Speaker 00:
But second, I think the way to look at it is not

[00:31:21] Speaker 00:
At the moment Monterra walked in that store and she bought the joint juice and it was falsely advertised, at that moment she was entitled to statutory damages.

[00:31:31] Speaker 02:
Well the problem, maybe, I think it's actually kind of a close call.

[00:31:34] Speaker 02:
And you know, we apply pre-judgmental interest pretty routinely, but that statutory penalty was intended to, the district court thought it was intended to sting.

[00:31:44] Speaker 02:
It's not punitive, but it's intended to sting and to deter.

[00:31:47] Speaker 02:
So it's somewhat different.

[00:31:49] Speaker 00:
It is.

[00:31:50] Speaker 00:
I still think that the minute Montero was falsely advertised, she was entitled to the amount.

[00:31:56] Speaker 00:
And I think also that the three New York cases we cite where New York awards under their prejudgment interest statute, they award prejudgment interest on trouble damages.

[00:32:11] Speaker 00:
Got it.

[00:32:11] Speaker 00:
Thank you.

[00:32:12] Speaker 02:
Let me just make sure.

[00:32:13] Speaker 02:
Are there other questions?

[00:32:15] Speaker 02:
No.

[00:32:15] Speaker 02:
Thank you.

[00:32:22] Speaker 05:
Good to be back, Your Honors.

[00:32:24] Speaker 02:
We've missed you.

[00:32:25] Speaker 05:
Welcome.

[00:32:28] Speaker 05:
As Your Honor is intimated, there's a threshold question about statutory damages before you get to the due process, which is that if statutory damages are awarded per person rather than per transaction, you won't reach the due process point because we don't know any people there were, and you'd have to go and start over on that.

[00:32:47] Speaker 05:
And on that point, as we pointed out there,

[00:32:50] Speaker 05:
There's a fair number of lower court cases that kind of go both ways.

[00:32:53] Speaker 05:
It's fair to say, I think, that nobody has paid much attention to it or discussed it.

[00:32:58] Speaker 05:
Our view on this is that it's really clear from the text and context and purpose that it's per person.

[00:33:04] Speaker 02:
There's the textual argument, and I appreciate that.

[00:33:06] Speaker 02:
Then the district court thought not.

[00:33:08] Speaker 02:
He looked and realized that there's authorities going both ways.

[00:33:11] Speaker 04:
Yes.

[00:33:12] Speaker 02:
And he thought that a per person award would be contrary to the purpose of the statute.

[00:33:18] Speaker 02:
So you've got to read in a lot there.

[00:33:21] Speaker 02:
But it seems that the purpose of the statute, the statutory award is to deter.

[00:33:27] Speaker 02:
And I think what he was saying is that he thought per person would not be a sufficient deterrent.

[00:33:33] Speaker 02:
So I'm going to get your response to that.

[00:33:35] Speaker 05:
Yes, Your Honor.

[00:33:37] Speaker 05:
I think New York goes for balance in this.

[00:33:39] Speaker 05:
They want enough deterrence, but not enough to be annihilating.

[00:33:42] Speaker 05:
And so there is a million and a half total sales here.

[00:33:46] Speaker 05:
Plaintiffs want 83 million statutory damages plus another 44 for prejudgment interest, which would be annihilating for this.

[00:33:54] Speaker 05:
New York, the context I think is most important here is New York for private parties allows up to treble actual damages.

[00:34:03] Speaker 05:
but only in the judge's discretion, only if it's willful.

[00:34:07] Speaker 05:
And here, under plaintiff's position, you would get far more than trouble automatically with no willfulness, because there it's capital.

[00:34:16] Speaker 02:
Well, this plaintiff's actual damages was more than $500.

[00:34:18] Speaker 05:
Yeah, you're right.

[00:34:21] Speaker 05:
But what I'm saying is that if you apply $500 or $50 per person, and then you balance that against, you could get actual damages times three, or you could get $500 or $50 one time.

[00:34:33] Speaker 05:
And that would be the balance here.

[00:34:34] Speaker 05:
For example, Ms.

[00:34:35] Speaker 05:
Montero made 120 purchases, she said, of a $7 product.

[00:34:40] Speaker 05:
So spend $840.

[00:34:42] Speaker 05:
That would be her actual damages.

[00:34:44] Speaker 05:
Trouble would be roughly $2,400 capped in the judge's discretion.

[00:34:49] Speaker 05:
And instead, she's getting $60,000 statutory damages automatically.

[00:34:54] Speaker 05:
with no willfulness requirement, nothing like that.

[00:34:56] Speaker 02:
Well, don't forget, he did get to the substantive due process argument, so yes.

[00:35:00] Speaker 02:
And I will, too.

[00:35:01] Speaker 02:
But if you could just, your best run at, you've got your textual argument, but how is the amount that you're describing a deterrent?

[00:35:10] Speaker 05:
It's a deterrent, Your Honor.

[00:35:12] Speaker 05:
If you have a class action with statutory damages per person, that's absolutely a deterrent.

[00:35:17] Speaker 05:
And also, in addition to this, under New York state law, there's attorney's fees.

[00:35:23] Speaker 05:
And they cite both of those.

[00:35:25] Speaker 05:
And when the legislature amended it to go from 50 to 500, they said, we don't think 50 is enough, but we think 500 would.

[00:35:32] Speaker 05:
If it were automatic per transaction, 50 would be more than enough because it could wipe you out.

[00:35:37] Speaker 05:
on this and so all of that context seems to suggest per person rather than per transaction.

[00:35:42] Speaker 06:
Could I ask you about your textual argument?

[00:35:44] Speaker 05:
Yes.

[00:35:45] Speaker 06:
In your brief, you quote section 349H, this is a 62 of your opening brief.

[00:35:51] Speaker 04:
Yes.

[00:35:52] Speaker 06:
Quote, any person who has been injured ellipsis may bring an action to recover his actual damages or $50.

[00:35:59] Speaker 04:
Yes.

[00:36:00] Speaker 06:
The ellipsis, without the ellipsis, any person who has been injured by any violation of this section may bring an action.

[00:36:10] Speaker 06:
You don't think that phrase needed to be included for completeness?

[00:36:15] Speaker 05:
Oh, when we were summarizing it shorthand, we cut it out.

[00:36:19] Speaker 06:
You cut out the reference to violation on the issue of whether it's per person or per violation.

[00:36:25] Speaker 06:
That's an extraordinary bit of editing.

[00:36:28] Speaker 05:
Your honor, I certainly didn't mean to mislead the court on that.

[00:36:31] Speaker 05:
I hope not.

[00:36:32] Speaker 05:
And on that.

[00:36:34] Speaker 05:
And so when I read it in context, when the statutory damages there, it comes in after the comma there.

[00:36:41] Speaker 05:
And it says, you can bring unaction to recover actual damages or $50, whichever is greater.

[00:36:46] Speaker 05:
The $50 does not say $50 per violation.

[00:36:51] Speaker 05:
The per violation is, it's only there, you have to have been injured by a violation, so there has to be causation that causes injury.

[00:36:59] Speaker 06:
I understand your argument.

[00:37:01] Speaker 06:
I don't understand your editing.

[00:37:02] Speaker 05:
Yeah.

[00:37:03] Speaker 05:
And I apologize for that, Your Honor.

[00:37:06] Speaker 05:
That was certainly not our purpose on that.

[00:37:08] Speaker 05:
And I think as we went through and in our reply brief, we directly addressed the per violation point and addressed the text on that, Your Honor.

[00:37:15] Speaker 02:
For what it's worth, as feedback, I noted the same ellipsis.

[00:37:20] Speaker 02:
Are there additional questions?

[00:37:22] Speaker 02:
No.

[00:37:22] Speaker 02:
Thank you, counsel, for your argument.

[00:37:24] Speaker 02:
We appreciate it.

[00:37:24] Speaker 02:
We'll hear rebuttal briefly.

[00:37:31] Speaker 00:
I think I will just briefly address the per violation issue.

[00:37:34] Speaker 00:
I think the textual argument is very clear, because Premier agrees that actual damages are per violation.

[00:37:43] Speaker 00:
But somehow, statutory damages are not.

[00:37:45] Speaker 00:
And there's just not a rational, reasonable reading of the text that gets you to that result unless you insert words into the text.

[00:37:55] Speaker 00:
The purpose we talked about.

[00:37:56] Speaker 00:
Well, there is one.

[00:37:56] Speaker 02:
There's another way to look at it, which is that the statute allowing the AG to go forward was on the books for quite some time.

[00:38:03] Speaker 02:
And it is more expressed in calculating damages that way than this provision.

[00:38:08] Speaker 02:
So should we consider that?

[00:38:11] Speaker 00:
You know, if you do, I only think that helps us.

[00:38:13] Speaker 00:
Because the only difference there is between the words each and any.

[00:38:18] Speaker 00:
And I don't really read those as much different.

[00:38:20] Speaker 00:
And the other thing to look at in the AG statute is there the AG for each violation.

[00:38:27] Speaker 00:
gets, it's $5,000 per violation.

[00:38:31] Speaker 00:
They then amended the statute to allow a private person to enforce it.

[00:38:36] Speaker 00:
And I think you read that as also you enforce it for each violation, but a private party only gets $500 for violation.

[00:38:44] Speaker 00:
The AG, no, no, wait.

[00:38:47] Speaker 00:
Yeah, 500 and the AG gets, it's 5,000.

[00:38:49] Speaker 00:
Yes.

[00:38:50] Speaker 00:
So I mean, I think they're consistent.

[00:38:52] Speaker 00:
The AG gets more, but they're both per violation.

[00:38:56] Speaker 02:
There's no further questions.

[00:38:58] Speaker 02:
Well, thank you both for your arguments then.

[00:39:00] Speaker 02:
And for your advocacy, we'll take these cases under advisement as well.

[00:39:04] Speaker 02:
We'll stand in recess.