A Law360 Expert Analysis Authored By Douglas J. McNamara
Since 2006, plaintiffs seeking to demonstrate classwide damages in consumer fraud actions have often used conjoint analysis. But recently some conjoint-based damage models have faced judicial rejection.
According to these decisions, while conjoint surveys can provide a reliable average as to the impact on demand from a corrected disclosure, they cannot alone provide the fair market value of a good or service. While conjoint surveys can support damage models, proponents should take additional steps or include alternative models with class certification.
The Value of Conjoint Surveys
Conjoint analysis involves a multifactorial survey that displays to participants a series of choice sets — matrices with changing attributes. After the participant makes their selections, the survey expert converts the choices to part-worths. If price is an attribute, the conjoint analysis can be used to value the differing attributes and allow the surveyor to quantify a feature’s demand. This can help answer a key causation question: How much less would consumers have paid if the seller had accurately represented or disclosed the truth about an attribute?
A conjoint survey identifying a reduced consumer demand can accomplish three things. First, it can support Article III standing by demonstrating that the misrepresentation impacted price harming all purchasers. Second, if the degree of impact on price would matter to the reasonable consumer, it can support materiality. Third, the survey can serve as part of a damage model that measures the refund owed to consumers related to the misrepresentation’s price impact.
Conjoint Analysis and Damage Models
The limits of a conjoint-based damage model are often explored in the motion to exclude under Federal Rule of Evidence 702 and Daubert v. Merrell Dow Pharmaceuticals Inc., and the motion for class certification under Federal Rule of Civil Procedure 23 and Comcast Corp. v. Behrend.
Daubert requires that the expert be qualified, the method reliable and the opinion aid the trier of fact. Comcast requires that if a model is being used to support class-wide damages, that it fit with plaintiff’s liability theory. For consumer class actions, that may be a subset of the benefit-of-the-bargain theory — that the consumer paid a price premium due to a misrepresented feature or an undisclosed defect.
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