Consumer Protection Litigation: Filing Claims and Defending Businesses

State UDAP statutes prohibit unfair or deceptive acts or practices in the conduct of trade or commerce and provide consumers with a private right of action to recover actual damages, statutory damages, and attorney fees without proving the common law fraud elements of intent and individual reliance, and unfair trade practices litigation counsel pursuing consumer protection litigation claims based on deceptive advertising or pricing should confirm whether the applicable state statute provides for treble or multiplied damages.

Consumer protection litigation also encompasses product liability claims arising from defective design, defective manufacturing, and failure to warn, which can be brought under both strict liability tort theories and consumer protection statutes when the product's defect constitutes an unfair or deceptive practice under the applicable state law, and product liability defense counsel handling consumer protection litigation involving defective products should analyze whether the plaintiff is pursuing the claim under a strict liability theory that does not require proof of negligence or under a consumer protection statute that provides additional statutory remedies beyond the compensatory damages available in pure tort.

Consumer protection class actions under FRCP Rule 23(b)(3) allow plaintiffs to certify a class when common questions of law or fact predominate over individual questions, and when a deceptive practice was applied uniformly to a large consumer population, certification can convert a case with minimal individual damages into litigation that threatens the company's financial viability, and class actions and multi-district litigation counsel advising companies on consumer protection litigation class action exposure should assess whether the challenged practice is capable of generating a common damages methodology.

The FTC and CFPB possess enforcement authority that operates independently of any private plaintiff action, and when either agency opens a consumer protection investigation, the investigation's public announcement and any subsequent consent order create a public record that plaintiff's attorneys use to support class action complaints filed immediately following the regulatory announcement, and consumer protection investigations counsel coordinating the response to a government consumer protection investigation and parallel civil litigation should establish immediately whether any voluntary self-disclosure or proactive remediation is likely to produce more favorable regulatory treatment than contesting the government's characterization of the challenged practice.

A consumer protection litigation complaint must satisfy the plausibility pleading standard of Twombly and Iqbal with respect to each element of the statutory claim, and when the complaint sounds in fraud, Rule 9(b)'s heightened pleading standard requires the plaintiff to allege the who, what, when, where, and how of the specific deceptive practice at the time of filing, and consumer protection law litigation counsel drafting a consumer protection litigation complaint should identify at the complaint stage the specific deceptive statements that form the basis of each claim and the named plaintiff's documented purchase and harm.

Consumer protection litigation discovery imposes substantial obligations on defendants, including preservation and production of advertising materials, consumer complaint databases, internal communications about the challenged practice, and testing data for products whose safety or efficacy claims are at issue, and settlement negotiation counsel managing a consumer protection litigation matter through discovery and into settlement should build a litigation budget that accounts for the disproportionate discovery burden that consumer class actions impose on defendants and should identify the key expert witnesses whose testimony on damages methodology and consumer behavior will be critical at any class certification hearing.

Consumer protection litigation plaintiffs who successfully certify a class are entitled to class-wide recovery of actual damages, statutory damages under the applicable UDAP statute, and injunctive relief that requires the defendant to change the challenged practice, and compensatory damages litigation counsel pursuing consumer protection litigation claims on behalf of a class should develop a damages methodology that can calculate price premium or out-of-pocket losses on a class-wide basis without individualized inquiry.

A consumer protection litigation defendant's most cost-effective investments are a Rule 12(b)(6) motion to dismiss that challenges the legal adequacy of the complaint before discovery begins and a class certification opposition that demonstrates the predominance of individual issues over common questions, and consumer defense litigation counsel developing the defendant's consumer protection litigation strategy should analyze whether the challenged practice falls within a statutory safe harbor and whether the applicable state statute provides a cure period that allows the defendant to correct the deceptive practice before the plaintiff can recover statutory damages.