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The plaintiffs in a class action against a software company alleged that its marketing campaign misled consumers into purchasing certain products.

The plaintiffs in a class action against a software company alleged that its marketing campaign misled consumers into purchasing certain products. The plaintiffs further alleged that the challenged conduct improperly increased potential purchasers’ demand for these products and thereby inflated the prices of these products. Defense counsel retained Cornerstone Research and academic experts after a class had been certified to assess the plaintiffs’ “price inflation” claims.

The court decertified the class.

Moreover, we showed that the plaintiffs’ experts had failed to demonstrate that the challenged conduct caused price inflation.

Our analysis showed that a mix of information was available to customers, that not all customers could have been misled, and that the fraction of customers in the class that could have been misled and induced to buy the products was very small. We further showed that an analysis of allegations of price inflation could not be conducted on a class-wide basis. Given information available in the market, consumers’ preferences concerning characteristics of the products at issue, and the economic characteristics of the manufacturing and retailing industries, common evidence could not be used to determine whether the challenged conduct caused the price of any given product to be higher. Moreover, we showed that the plaintiffs’ experts had failed to demonstrate that the challenged conduct caused price inflation. The court decertified the class.

Case Expert

Lorin M. Hitt

Zhang Jindong Professor of Operations, Information, and Decisions,
The Wharton School, University of Pennsylvania;
Senior Advisor, Cornerstone Research