Plaintiff David Swartz brought this case against Defendants Dave’s Killer Bread, Inc. and Flowers Foods, Inc. under the California Unfair Competition Law, alleging that Defendants violated Food and Drug Administration (“FDA”) regulations, and therefore California’s Unfair Competition Law (“UCL”), by including unlawful labels on their bread products.
Plaintiff moved to certify a class on a single UCL claim. In response, Defendants filed a motion to strike the declaration of Plaintiff’s expert, Colin B. Weir.
Defendants filed objections against the conjoint analysis and damages model provided by Weir and contended that his proposed methodology is not scientifically valid.
Economics Expert Witness
Colin B. Weir is Vice President at Economics and Technology, Inc. Weir conducts economic, statistical, and regulatory research and analysis, and testifies as an expert witness. Weir’s experience includes work on a variety of issues, including: economic harm and damage calculation; liquidated damages provisions; lost profits; false claims; diminution in value; merger/antitrust analysis; Early Termination Fees (ETFs); Late Fees; determination of Federal Excise Tax burden; and development of macroeconomic analyses quantifying the economic impact of corporate actions upon the US economy and job markets. Weir holds an MBA with honors from Northeastern University. He also holds a Bachelor of Arts degree cum laude in Business Economics from The College of Wooster.
Discussion by the Court
The Court held that Weir’s damages model satisfies the requirements articulated in Comcast Corp. v. Behrend. To the extent there are any flaws in the methodology, they go to weight, and not admissibility, and do not support striking the declaration. Also, Weir’s methodology sufficiently tests the liability theory upon which the Court allowed Plaintiff to proceed. It measures any premium associated with Defendants’ violation of the regulations at issue, and is therefore permissible.
Scientific Validity of Weir’s Methodology
1. The Model’s Pricing Assumptions
Weir stated that his data set included “through the register transaction data” for California during the class period, sourced from Information Resources, in addition to other methods. The Court held that such real-world sales data is sufficient for admissibility.
2. Conjoint Survey Scientific Validity
Defendants provided seven methodological arguments regarding Weir’s survey methodology.
First, Defendants argues that Weir’s survey will artificially focus participants on the protein statements, but this argument did not persuade the Court because “district courts have found that alleged focalism bias goes to the weight of the expert’s opinion, not its admissibility.”
Defendants’ second and third arguments urge that Weir’s surveys design relies on undocumented interviews. The Court held that the survey design interviews at issue are merely a tool used in a survey design, and failure to take notes does not warrant exclusion. Defendants may still “cross-examine” Weir “about the questions in his survey,” regarding its questions, methodology, and the lack of development drafts.
Defendants’ fourth and fifth arguments posit that Weir’s survey will cause confusion because some label statements do not perfectly replicate labels as they would be seen in a store. However, the Court held that criticisms about a survey’s failure to replicate real world conditions . . . go to the weight of the survey rather than its admissibility.
Defendants’ sixth and seventh arguments criticized Weir’s methodology for not accounting for whether some consumers were or were not misled, or for different geographies, retailers, or time periods. Whether consumers were misled is not relevant to Plaintiff’s theory, however, and Weir’s analysis does account for different geographies, retailers, and time periods. The Court held that Weir has provided enough specificity, and any methodological issues with addressing changes over time can be addressed after the study is carried out.
3. Market Simulation Scientific Validity
After conducting a consumer survey, Weir will use a market simulation tool to provide an estimate of any price premium that purchasers paid solely as a result of front-of-package protein claims. Defendants argued that this step fails to account for competition because it does not include competitive offerings. Competitive offerings are accounted for in the data, however, because Weir includes questions about their labels in the survey. The simulator then holds competition constant to compare real world pricing and but-for world pricing. The Court held this method to be sufficiently scientific.
4. Supply Side Equilibrium Analysis
Defendants argued that Weir’s analysis should include a supply-side equilibrium analysis, rather than a method that considers supply-side factors through real-world pricing data. Moreover, this method did not account for the effect of a seller’s willingness to sell the products on the price of the products. Conjoint analyses “can adequately account for supply-side factors . . . when (1) the prices used in the surveys underlying the analyses reflect the actual market prices that prevailed during the class period; and (2) the quantities used (or assumed) in the statistical calculations reflect the actual quantities of products sold during the class period.” The Court held that Plaintiff satisfied both prongs.
Held
I. The Court granted Plaintiff’s motion for class certification under Rule 23(b)(3) for a class defined as:
“All persons in the State of California who purchased the Products between December 29, 2017 and September 5, 2023.”
II. The Court denied Defendants’ motion to strike the declaration of Colin Weir.
Key Takeaways:
- Weir has provided enough specificity because his analysis accounts for different geographies, retailers, and time periods.
- Weir’s analysis adequately accounts for supply-side factors.
- Defendants argued that Weir’s use of a market simulation tool fails to account for competition because it does not include competitive offerings. The Court held that competitive offerings are accounted for in the data, however, because Weir includes questions about their labels in the survey.
Case Details:
| Case Caption: | Swartz V. Daves Killer Bread, Inc. Et Al |
| Docket Number: | 4:21cv10053 |
| Court: | United States District Court, California Northern |
| Order Date: | September 20, 2024 |
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