Montera v. Premier Nutrition Corporation: A Case Study In Aggregate Statutory Damages

New York's two principal consumer fraud statutes, N.Y. G.B.L. §§ 349 and 350, authorize statutory damages of $50 or $500 per violation respectively. In false advertising cases involving low-cost consumer products, these statutes pose the risk that defendants may face hundreds of millions-if not billions-of dollars in exposure if found liable at trial. And while N.Y. C.P.L.R. § 901(b) seeks to avert this result by prohibiting courts from awarding statutory damages in class actions, the Supreme Court has held that this is a "procedural" rule that does not preclude federal courts sitting in diversity from awarding statutory damages in class actions. See generally Shady Grove Orthopedic Assocs., P.A. v. Allstate Ins. Co., 559 U.S. 393 (2009). Since Shady Grove, plaintiffs have routinely used the threat of statutory damages under Sections 349 and 350 to bludgeon defendants into settling false advertising class actions before trial.