The Revolt of the Cs: Class Action Filed Against 23and Me
The “Cs” in DTC have revolted, in the form of a consumer class action filed November 27, 2013, in a California federal court (Case 3:13-cv-02847-H-JMA). The suit, called Casey v. 23andMe, alleges that 23andMe falsely and misleadingly advertises its Personal Genome Service (PGS) test kit. The suit charges that these advertising practices violated numerous California statutes as well as other laws pertaining to misrepresention, breach of warranty, and unjust enrichment.
A class action is a suit brought by a limited number of “named plaintiffs” or “class representatives” (here just one, 23andMe customer, Linda Casey) on behalf of a large number of other, similarly situated people (the class members) who don’t actually participate in the litigation but would share in any recovery. The class here consists of all of 23andMe’s customers. The case seeks unspecified monetary damages, including at a minimum a refund of whatever the class members paid for the PGS, as well as an order (an injunction) prohibiting 23and Me from engaging in false advertising in the future. If there have been, as estimated, almost half a million PGS purchasers who paid the list price of $99, then the damages are potentially big. The complaint in this case also asks that 23andMe be ordered to pay the fees of the class lawyers. Attorneys’ fees can be huge in class actions, sometimes—and very controversially—running into the millions of dollars.
The complaint makes extensive reference to the November 22, 2013, FDA warning letter as evidence of 23andMe’s false advertising, so it is reasonable to ask whether that letter prompted this suit. That is, did the lawyers see an opportunity to free-ride on the FDA’s work and the negative publicity attendant on the letter? Hard to say: On the one hand, the complaint is long, detailed, and carefully prepared, evidence that’s in been in preparation for a while. On the other, the timing coincidence and the symbiosis of the allegations are suggestive. Across the legal spectrum, class action filings have a tendency to follow bad news for the defendant.
What can we say about the likelihood of success, or at least a valuable settlement, for the plaintiff class and their lawyers? It’s too early to do much more than speculate. Nonetheless, there are a few factors to keep in mind. First, the proposed class has to be initially approved, or “certified,” by the court before the case can continue as a class action. That’s a long (often a year or much more) and complex process involving difficult legal standards. As classes go, this one seems pretty coherent, so at first glance it would seem to have decent prospects for certification. As far as an ultimate winner and loser, the FDA has significantly helped the plaintiff class by setting out in its warning letter several specific advertising claims that it says are unsubstantiated. The class would have to prove at trial that the FDA’s charges are true, but those charges give the class a considerable head start. It is certainly a case with significant potential.