Reliability of "Price Premium" Calculations in Class Actions

The outcome of numerous recent class actions involving claims of false advertising and mislabeling have depended on the ability of plaintiffs to set forth a reliable model of damages. The evaluation of these models will be key in determining the success of current and future consumer class actions. In this article published by Law360, Navigant Managing Director Jon Tomlin explains the economic shortcomings of two of the commonly proposed damages models:

  • Surveys proposed by plaintiff experts to calculate the “willingness to pay” of consumers 
  • The “Hedonic Regression” model used by plaintiff experts as a tool to explain changes in the value of a dependent variable based on the values of independent variables

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