Benefits Offered by Early Versions of a High-Technology Product

In a nationwide class action, defense counsel retained Cornerstone Research and two economic experts to determine whether common evidence could address misrepresentation allegations.

In a nationwide class action involving a high-technology manufacturer, the plaintiffs alleged that the defendant misrepresented the benefits offered by early versions of a new product. The plaintiffs further alleged that the claimed misrepresentation resulted in a market-wide shift in demand, which increased prices for all class members.

Defense counsel retained Cornerstone Research and two experts: Professor A. Mitchell Polinsky of Stanford University and Professor Steven Shavell of Harvard University to determine whether common evidence could address the plaintiffs’ allegations, or if individual inquiry would be required.

The court denied the plaintiffs’ motion for class certification, finding that individual issues predominated.

Professors Polinsky and Shavell described how product performance in this industry is evaluated differently by each individual consumer depending on their usage. They showed that the relative performance of the product compared to the previous technology differed depending on each of these potential individual uses.

The experts also identified several flaws in the plaintiffs’ expert’s opinion that both the demand and the price of the product at issue would have been inflated even if only a subset of class members were allegedly misled. Their analysis showed that prices may actually have been lower for some class members, in particular for early adopters.

They concluded that individual inquiry would be necessary to determine whether:

  • the challenged representations regarding product performance were in fact false for any individual purchasers
  • any given proposed class member was misled by the alleged misrepresentations

Even assuming that some proposed class members were misled, Professors Polinsky and Shavell showed that individual inquiry would be needed to determine whether a given purchaser was affected.

The trial court denied the plaintiffs’ motion for class certification, finding that individual issues predominated.