When Conjoint Analysis Is Not Enough for a Damage Model


December 11, 2019

Since 2006, plaintiffs seeking to demonstrate class-wide damages in consumer fraud actions have often used conjoint analysis.[1] 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.[2] 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.[3] Second, if the degree of impact on price would matter to the reasonable consumer, it can support materiality.[4] 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.[5]

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.,[6] and the motion for class certification under Federal Rule of Civil Procedure 23 and Comcast Corp. v. Behrend.[7]

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.[8]

Read When Conjoint Analysis Is Not Enough for a Damage Model.