NJOY E-Cigarette Class Action Loses Class Certification Bid

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A California federal judge says that she rejected class certification of a proposed class action lawsuit filed against NJOY Inc., which was charged with false advertising its e-cigarettes, because it failed to meet requirements by the Supreme Court explained in its Comcast ruling.

The proposed e-cigarette class action lawsuit filed by lead plaintiff Kathryn Thomas and others, who alleged that NJOY misled customers by advertising its e-cigarettes as safer than traditional cigarettes. Thomas charged NJOY with violating Florida’s unfair trade law and California’s state consumer protection and unfair competition laws through the alleged false advertising.

Thomas, who wanted to represent a Florida class, had asked U.S. District Judge Margaret M. Morrow to certify the NJOY class action lawsuit in May, but Judge Morrow explained in her ruling she submitted Friday that the motion for certification didn’t work because of the methodology the plaintiffs had used for their damages.

“A consumer’s subjective valuation of the purported safety message, measured by their relative willingness to pay for products with or without the message, is not an accurate indicator of restitutionary damages, because it does not permit the court to calculate the true market price of NJOY e-cigarettes absent the purported misrepresentations,” she said. “Plaintiffs’ damages methodology is therefore deficient under Comcast.”

In the Supreme Court’s 2013 Comcast v. Behrend ruling, the high court explained that the damages model used by plaintiffs can’t work if they have not successfully linked it to their theory of liability, which Judge Morrow says is what has happened with the NJOY e-cigarette class action lawsuit.

However, Judge Morrow said that the plaintiffs may resubmit a motion for class certification if they are able to change their damages model.

The first NJOY e-cigarette class action lawsuit was filed by plaintiff Ben Halberstam in January 2015. He was joined by plaintiff Eric McGovern in an amended class action lawsuit in April 2014. Halberstam and McGovern then joined Thomas and plaintiff Paula Kolano in their NJOY class action filed in July 2014. Kolano has since been dropped as a plaintiff, and McGovern voluntarily dismissed his own individual claims in May.

NJOY argued in May that the proposed e-cigarette class action lawsuit should not be certified because Thomas “revealed that she did not see any advertising” for the e-cigarettes.

“As a result, Thomas bases her claim solely on product packaging that makes no representations, but instead contains an extensive warning disclosing the potential health risks of nicotine,” NJOY explained in its motion to reject class certification of the false advertising class action lawsuit.

The other plaintiffs reportedly said in depositions that they didn’t make the decision to buy NJOY e-cigarettes based on the advertisements they saw. NJOY also alleged that the plaintiffs were coached by their lawyers and were therefore not the best class representatives.

NJOY made similar arguments when it tried to have the e-cigarette class action lawsuit dismissed in December 2014.

However, the plaintiffs said when they asked Judge Morrow to certify the class that a study showed that consumers were misled by NJOY’s ads into believing that e-cigarettes were safer than regular cigarettes.

NJOY says that it did its own study and found that a very small percentage came to the same conclusion.

The plaintiffs are represented by Stephanie Bartone and Shannon Hopkins of Levi & Korsinsky LLP, Demet Basar and Francis Gregorek of Wolf Haldenstein Adler Freeman & Herz LLP and Jerusalem F. Beligan of Bisnar & Chase LLP, among others.

NJOY is represented by Paul L. Gale, Edward S. Kim, Siavash Daniel Rashtian and John R. Gerstein of Troutman Sanders LLP.

The NJOY E-Cigarette Class Action Lawsuit is In Re: NJOY INC Consumer Class Action Litigation, Case No. 2:14-cv-00428 consolidated with 2:14-cv-00427, in the U.S. District Court for the Central District of California.

UPDATE: On Feb. 3, 2016, the plaintiffs in this NJOY e-cigarette class action lawsuit lost their second bid for certification of a Class.