Bailey v. Rite Aid Corporation: Deception Is in the Eye of the Beholder

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In Bailey v. Rite Aid Corporation, Defendant Rite Aid recently petitioned the Ninth Circuit for permission to appeal an order certifying a class of California consumers who purchased Rite Aid gelcaps (an acetaminophen product) labeled as “rapid release.” See Petition for Permission to Appeal Under Federal Rule of Civil Procedure 23(f), Bailey v. Rite Aid Corporation, No. 21-80061 (9th Cir. June 9, 2021) Dkt. No. 1-3 (“Petition”) (petition available here).

According to the plaintiff, Rite Aid gelcaps labeled as “rapid release” are sold in Rite Aid stores within “eye-view” of less expensive Rite Aid acetaminophen tablets that are not labeled “rapid release.” The plaintiff’s theory of liability is that because both products are within “eye-view,” and only one product is labeled “rapid release,” reasonable consumers would conclude that the gelcaps are faster-acting than the tablets, when in fact they are not. See Bailey v. Rite Aid Corporation, No. 4:18-cv-06926-YGR, N.D. Cal. April 28, 2021 (order granting in part and denying in part motion for class certification; order re: motions to seal, slip op. available here) (“Bailey”). The district court accepted the plaintiff’s theory and concluded that whether a reasonable consumer is likely to be deceived by Rite Aid gelcaps’ “rapid release” claim can be resolved by common evidence on a class-wide basis. Id. at 7-8.

Rite Aid states in its petition, “[t]his is not a typical product mislabeling case where the challenged product label is false or misleading on its face.” Petition at 1 (emphasis in original). That is true. “[The plaintiff]’s theory of liability requires a comparison by consumers of the label and price of the Rite Aid gelcaps against the labels and prices of cheaper Rite Aid acetaminophen tablets placed near the gelcaps.” Slip op. at 5 (emphasis added).    

That is no bar to liability. It is indisputable that consumers compare labels when shopping for products. The plaintiff’s “eye-view” theory simply applies the merchandising principle that in comparing products, in-store product placement and layout strategy has a powerful influence on consumers’ purchasing decisions. Therefore, as Bailey demonstrates, consumer deception in labeling cases need not be limited to the four corners of a product’s label. Rather, the context of how products are presented in stores—what consumers see—can also deceive.

Authored by:
Robert Friedl, Senior Counsel