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In re Steroid Hormone Product Case

January 21, 2010

STEROID HORMONE PRODUCT CASE


APPEAL from an order of the Superior Court for Los Angeles County, Victoria G. Chaney, Judge. Reversed. (Los Angeles County Super. Ct. No. JCCP4363, Contra Costa Super. Ct. No. MCO400283).

The opinion of the court was delivered by: Willhite, J.

CERTIFIED FOR PUBLICATION

This class action case is one of several coordinated cases involving over-the-counter sales of products containing anabolic steroids. The named plaintiff in this case, Diego Martinez, alleged causes of action against defendant General Nutrition Companies, Inc. (GNC) for violation of the Unfair Competition Law (Bus. & Prof. Code, § 17200 et seq.) (UCL) and the Consumer Legal Remedies Act (Civ. Code, § 1750 et seq.) (CLRA), based upon GNC's sale of products that contained androstenediol, a substance defined as a Schedule III controlled substance under California law.*fn1 (Health & Saf. Code, § 11056, subd. (f)(2).) It is unlawful in California to sell or possess a Schedule III controlled substance without a prescription. (Health & Saf. Code, §§ 11377, 11379.)

Martinez sought to certify a class of all persons who purchased products containing androstenediol in California between February 17, 2000 and April 1, 2004. The trial court denied his motion to certify, finding that common issues did not predominate because class members would be required to individually litigate issues of causation and injury. Martinez appeals, arguing that the trial court's denial was based upon improper criteria or incorrect legal assumptions. We agree, and reverse the order denying certification.

BACKGROUND

The original complaint in this case was filed in Contra Costa Superior Court in February 2004 by Santiago Guzman. In June 2004, the action was coordinated with five other class actions in Los Angeles Superior Court, as Judicial Council Coordination Proceeding No. 4363. Guzman subsequently amended his complaint to add Martinez and William Thomas as additional named plaintiffs.*fn2 Guzman and Thomas eventually were dismissed from the action (for reasons unrelated to the present appeal), leaving only Martinez as the named plaintiff.

The operative complaint, the third amended complaint, alleged that GNC sold products containing androstenediol without requiring a prescription and without notifying customers that the products contained a controlled substance. The complaint alleged that, by selling the androstenediol products as over-the-counter nutritional supplements, GNC violated the CLRA, specifically Civil Code section 1770, subdivisions (a)(2), (a)(5), and (a)(7).*fn3 The complaint also alleged that GNC's conduct violated the UCL because its sale of androstenediol products violated state statutes, including Health and Safety Code section 11056,*fn4 and because that same conduct violated the CLRA. Finally, the complaint alleged that plaintiffs were damaged (under the CLRA claim), and suffered injury and lost money (under the UCL claim), as a result of GNC's unlawful sale of a controlled substance. Martinez, on his own behalf and on behalf of all consumers who purchased androstenediol products from GNC in California, sought restitution and injunctive relief.*fn5

Martinez moved for class certification in February 2008. He supported his motion with, among other things, (1) his declaration that he had spent over $2,500 on androstenediol products between 1999 and 2004, and that he would not have purchased those products had he known they were illegal to possess without a prescription; (2) a letter sent by California's Attorney General to GNC on September 12, 2003, to "assure that [GNC is] aware" that androstenediol is identified under the California Uniform Controlled Substances Act as an anabolic steroid, and that the possession, import, or sale of it is a criminal offense; and (3) portions of the deposition transcript of GNC's designee, William J. Dunn, in which Mr. Dunn stated that GNC continued to sell androstenediol products until the end of March 2004. Martinez argued that all of the requirements for a class action were met: (1) the class is ascertainable because class membership is based upon objective criteria; (2) joinder of all class members would be impracticable because there are tens of thousands of class members; (3) common issues predominate because the claims are based upon a uniform practice by GNC and each class member suffered the same economic injury; (4) Martinez's claims are typical of the class because he purchased androstenediol products from GNC; (5) Martinez will adequately represent the class because he does not have a conflict of interest and his counsel is experienced in class action litigation; and (6) a class action is superior to other methods of adjudication because individual claims would be impracticable.

GNC opposed the motion for class certification on the grounds that (1) common issues do not predominate over individual issues because each class member will need to establish what information he or she relied upon in deciding to purchase androstenediol products and how he or she was injured by such purchases (which GNC argued would depend upon each class member's subjective belief as to the value of the product); and (2) Martinez's claims are not typical of the class and he is not an adequate representative because he sought to assert personal injury and efficacy claims rather than claims based upon the illegality of the products. GNC supported its opposition with, among other things, portions of Martinez's depositions from his original lawsuit (in which he challenged the efficacy and safety of androstenediol products sold by GNC and others) and the instant lawsuit. In those depositions, Martinez testified about the factors that went into his purchase of androstenediol products, and his concerns about those products, which appeared to be focused (in the deposition portions provided)*fn6 more on health risk issues rather than illegality issues.

The trial court denied the certification motion in September 2008. The court incorporated by reference its February 2008 ruling denying a class certification motion in one of the other coordinated cases (Ayala v. Met-Rx USA, Inc., Case No. BC289455 (Ayala)), in which the court found that common questions did not predominate as to causation and injury with regard to both the CLRA and UCL claims, because plaintiffs did not satisfy their "burden to produce substantial evidence that a majority of class members would find the alleged injury -- illegality of a sale -- to be material." The court noted that, although plaintiffs declared that "they would not have bought the products had they known they were illegal... recent events in the sporting world demonstrate [that] plaintiffs' views are not universal." The court concluded, "there is little if any evidence that consumers care whether andro[stenediol] products are restricted. Therefore, the issue of causation (i.e., whether defendant's implicit representation of legality induced consumers to purchase the products) `would vary from consumer to consumer.' [Citation.] Because materiality of the representation is not uniform, reliance on it cannot be inferred classwide."

In its ruling on Martinez's motion, the court reiterated that "the central issue" under both the CLRA and the UCL was "whether the illicit nature of defendant's products was material to those who purchased them," and that "[t]o recover,... each class member must demonstrate, or it must be inferable classwide, that the alleged injury was material." The court concluded that materiality could not be inferred classwide, observing that it "requires no imaginative leap" to conclude that there exist "person[s] to whom legality is immaterial," because "andro[stenediol] products are classified only as Schedule III substances; the proscriptions asserted by plaintiffs apply only against distributors, not buyers;*fn7 and at any rate, a substantial black market exists in disregard of any proscription." Therefore, as in Ayala, the court found that establishing causation and injury under both the CLRA and the UCL required an individualized inquiry into whether the illegality of the androstenediol products was material to each class member, and thus individual issues predominated over common issues.

Martinez timely filed a notice of appeal from the order denying class certification.

DISCUSSION

A. Standards for Class ...


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