Defense counsel retained Cornerstone Research and an academic expert to evaluate the economic effect of the alleged misrepresentation and whether common impact could be assessed.
In a nationwide class action against a large manufacturer of household appliances, plaintiffs alleged that the manufacturer misrepresented its product’s power ratings. Plaintiffs sought damages for the full purchase price or for the amount consumers allegedly overpaid.
Professor Hitt demonstrated that the number of consumers who could have been potentially harmed, if any, was very small.
Defense counsel retained Cornerstone Research and Professor Lorin Hitt of the University of Pennsylvania, to evaluate the economic effect of the defendant’s alleged misrepresentation and whether common impact could be assessed across all proposed class members.
Professor Hitt opined that, contrary to the plaintiffs’ proposed damages theories, most class members were likely not harmed. He noted that the manufacturer’s power ratings had been standard for decades and comparable across manufacturers, allowing consumers to make reasonable inferences across competing products and against their own expectations. Moreover, consumers could consult other information sources about the product’s performance, many of which correlate highly with the power ratings.
Professor Hitt also presented evidence on the low rate of product returns, high customer satisfaction ratings, and substantial rate of repeat product purchases, demonstrating that the number of consumers who could have been potentially harmed, if any, was very small.
He further opined that the alleged misrepresentation’s impact could not be assessed without individual inquiry. Consumers consider a variety of product features and information sources when making their purchase decisions. Therefore, a common method could not be used to determine whether and to what extent a class member was harmed. The case settled.