Court Opinion

ID: 3154152
Source: CourtListenerOpinion
Date Created: 2015-11-12 17:08:42.359646+00
Date Added: 2024-06-11T12:01:51.936559
License: Public Domain

88	                       October 22, 2015	                     No. 42

             IN THE SUPREME COURT OF THE
                   STATE OF OREGON

                    Marilyn C. PEARSON
                      and Laura Grandin,
                 individually and on behalf of
                all similarly situated persons,
                    Respondents on Review,
                                v.
                   PHILIP MORRIS, INC.,
                aka Philip Morris USA, Inc.,
                     a foreign corporation,
                      Petitioner on Review,
                               and
            PHILIP MORRIS COMPANIES, INC.,
         aka Altria Group, Inc., a foreign corporation,
                            Defendant.
          (CC 0211-11819; CA A137297; SC S061745)

   On review from the Court of Appeals.*
   Argued and submitted June 23, 2014.
   William F. Gary, Harrang Long Gary Rudnick, P.C.,
Eugene, argued the cause and filed the briefs for petitioner
on review. With him on the briefs was Sharon A. Rudnick.
   Scott A. Shorr, Stoll Stoll Berne Lokting & Shlachter PC,
Portland, argued the cause and filed the brief for respondent
on review. With him on the brief was Charles S. Tauman,
Charles S. Tauman PC, Portland.
  Phil Goldsmith, Portland, filed the brief for amicus curiae
Oregon Trial Lawyers Association.
   Before Balmer, Chief Justice, Kistler, Walters, Linder,
Brewer, and Baldwin, Justices, and DeVore, Justice pro
tempore.**
______________
	**  Appeal from Multnomah County Circuit Court, Janice R. Wilson, Judge.
257 Or App 106, 306 P3d 665 (2013).
	   **  Landau, J., not participating.
Cite as 358 Or 88 (2015)	89

    LINDER, J.
    The decision of the Court of Appeals on class certifica-
tion and issue class certification is reversed. The trial court
order denying class certification and issue class certification
is affirmed. The case is remanded for further proceedings on
the named plaintiffs’ individual claims.
    Walters, J., concurred and filed an opinion.
     Case Summary: In an Unlawful Trade Practices Act action against the com-
pany that manufactures and sells Marlboro Light cigarettes, plaintiffs alleged
that they had suffered economic losses as a result of defendant’s representation
that Marlboro Lights had “lowered tar and nicotine” than regular cigarettes.
Plaintiffs moved to certify the action as a class action, based on a class consisting
of all persons who had ever purchased a package of Marlboro Lights in Oregon.
After a hearing on the motion, the trial court denied class certification, holding
that individual inquiries so predominated over those that were common to the
class that a class action was not superior to other methods for adjudicating the
putative class members’ claims. ORCP 32 B. The trial court also denied plaintiffs’
alternative motion for issue class certification under ORCP 32 G. After holding
that the essential elements of the UTPA claims could be proved through evidence
common to the class, the Court of Appeals reversed the denial of the class cer-
tification motion and remanded to the trial court to reconsider whether a class
action would be the superior method for adjudicating the claims. Held: The trial
court correctly concluded that issues central to plaintiffs’ UTPA claims and to
defendant’s defense required individual inquiries, that individual issues there-
fore predominated over common issues, and that a class action therefore was not
superior to other methods for adjudicating class members’ claims; the trial court
did not abuse its discretion in denying issue class certification.
     The decision of the Court of Appeals on class certification and issue class cer-
tification is reversed. The trial court order denying class certification and issue
class certification is affirmed. The case is remanded for further proceedings on
the named plaintiffs’ individual claims.
90	                                       Pearson v. Philip Morris, Inc.

	          LINDER, J.
	        Plaintiffs are two individuals who purchased
Marlboro Light cigarettes in Oregon. Defendant Philip
Morris is the company that manufactures, markets, and
sells Marlboro Lights. Plaintiffs brought this action under
Oregon’s Unlawful Trade Practices Act (UTPA),1 alleging
that defendant misrepresented that Marlboro Lights would
deliver less tar and nicotine than regular Marlboros and
that, as a result of that misrepresentation, plaintiffs suf-
fered economic losses. Plaintiffs did not bring the action
to remedy only their own claimed losses, however. Rather,
they moved to certify a class consisting of approximately
100,000 individuals who had purchased at least one pack
of Marlboro Lights in Oregon over a 30-year period—from
1971 to 2001. The trial court denied plaintiffs’ motion after
concluding that individual inquiries so predominated over
common ones that a class action was not a superior means
to adjudicate the putative class’s UTPA claim.
	        On appeal, in a divided en banc decision, a majority
of the Court of Appeals disagreed with the trial court’s pre-
dominance assessment, concluding that the essential ele-
ments of the UTPA claim could be proved through evidence
common to the class. Pearson v. Philip Morris, Inc., 257 Or
App 106, 172, 306 P3d 665 (2013). The majority remanded
to the trial court to reconsider whether, without the trial
court’s predominance assessment, a class action was a supe-
rior means of litigating the class claims. Id. We allowed
defendant’s petition for review. On review, the parties’ argu-
ments frame several issues for our resolution, including the
appropriate standards for determining whether common
issues predominate for purposes of the class action certifi-
cation decision, and what a private plaintiff in a UTPA case
of this nature must prove.2 As we will explain, we conclude
	1
       The UTPA is codified at ORS 646.605 to 646.656. The specific provisions
under which plaintiffs brought this action are cited and discussed later.
	2
       As we later discuss, as an alternative to class certification, plaintiffs also
sought certification of an “issue class”—that is, a class for purposes of resolving
one or more elements of, but not the entire, UTPA claim. The trial court denied
issue class certification, and the Court of Appeals remanded for reconsideration
of that ruling as well. On review, both parties renew their arguments in that
regard. We consider whether the trial court correctly declined to certify an issue
class after first determining if it correctly denied full class certification.
Cite as 358 Or 88 (2015)	91

that the trial court properly denied class certification, and
accordingly, we reverse the contrary decision of the Court of
Appeals and remand to the trial court for further proceed-
ings on the individual plaintiffs’ claims.3
                           I. BACKGROUND
A.  Development and Labeling of Marlboro Lights
	        In the 1950s, governmental and health organiza-
tions began to publicize information about the link between
lung disease and tar and nicotine in cigarette smoke, which
in turn gave rise to increasing concerns among the public
about the dangers of smoking cigarettes.4 In an effort to
capitalize on those growing health concerns, cigarette man-
ufacturers introduced new varieties of cigarettes that they
advertised as delivering lower levels of tar and nicotine.
Although the public health community generally supported
the idea of offering smokers low tar and nicotine alterna-
tives, no accepted or approved method for measuring the tar
and nicotine yields of cigarettes existed. Thus, “low” and
“lower” tar and nicotine claims by cigarette manufacturers
could not be substantiated. The Federal Trade Commission
(FTC), which regulates the cigarette manufacturing industry,

	3
        Plaintiffs unsuccessfully applied to the Court of Appeals for an interlocu-
tory appeal of the order denying class certification under ORS 19.225. After the
interlocutory appeal was denied, the trial court proceeded with the UTPA claims
of the two named plaintiffs and granted summary judgment for defendant on the
ground that plaintiffs’ UTPA claims were preempted by federal law. Plaintiffs
appealed that judgment, challenging both the denial of the motion for class certi-
fication and the grant of summary judgment. While that appeal was pending, the
United States Supreme Court decided Altria Group, Inc. v. Good, 555 US 70, 129
S Ct 538, 172 L Ed 2d 398 (2008), which held that federal law does not preempt
state claims based on the false advertising of cigarettes. On appeal, defendant
conceded that the grant of summary judgment on federal preemption grounds
was error in light of Altria. The case therefore must be remanded to the trial
court for further proceedings on the individual plaintiffs’ claims.
	4
       Because this case arises on a motion for class certification, the facts in
the record have been developed for that specific purpose, and do not necessarily
reflect the factual record that would be made at trial on either the class claims
or the claims of the individual plaintiffs. The parties do not dispute many of the
facts that we recite by way of general background. The parties do, however, dis-
agree on certain other facts—and the inferences to be drawn from those facts—
that the trial court considered in deciding the extent to which plaintiffs’ claims
would entail common or individualized inquiries. We take up those disputes, and
the respective roles of the trial and appellate courts in resolving contested facts
of that kind, in our later analysis of class certification issues.
92	                            Pearson v. Philip Morris, Inc.

therefore initially prohibited cigarette manufacturers from
marketing their cigarettes based on low tar and nicotine
claims.
	        Eventually, however, the FTC devised a standard-
ized method for measuring tar and nicotine yields of ciga-
rettes. The “FTC method” used a machine that captured and
analyzed substances that were drawn into the machine as it
“smoked” a cigarette. The machine regulated variables such
as the placement of the cigarette in the machine, the vol-
ume of each “puff,” the frequency of puffs, and the portion of
the cigarette smoked. In 1967, the FTC instructed cigarette
manufacturers that they could represent their cigarettes as
having lower tar than regulars if, and only if, the cigarette
had a tar yield of 15 milligrams or less as measured by the
FTC method.
	        The lowered tar and nicotine levels measured
by the FTC method did not necessarily reflect reality for
human smokers, however. The FTC was aware of that fact.
Indeed, in hearings that the FTC held before adopting its
testing method, the tobacco industry expressed concerns
that, due to considerable variations in individual smoker
behavior, the FTC’s method did not, and could not, mea-
sure the amount of tar and nicotine that smokers actually
inhale. When the FTC adopted its mechanical test method,
it issued a press release acknowledging the limitations of
that testing method and in particular acknowledging that
its test could not accurately gauge the amount of tar and
nicotine that even an “average” smoker will draw from a
cigarette. The FTC explained that it nevertheless was
adopting its mechanical test, because it provided a “reason-
able standardized method” of measuring tar and nicotine
yields that was “capable of being presented to the public” in
a “readily understandable” manner.
	        In 1971, after the FTC adopted its method of
measuring tar and nicotine yields, defendant introduced
Marlboro Lights to the market. At the time, Marlboro Lights
tested below the 15 milligram tar-yield limit using the FTC
method. Defendant therefore permissibly could—and did—
label and advertise Marlboro Lights as “lowered tar and nic-
otine” cigarettes.
Cite as 358 Or 88 (2015)	93

	        To accomplish the lowered yields as measured by the
FTC method, defendant did not decrease or alter the tobacco
content of Marlboro Lights. Instead, defendant perforated
the cigarette filter with microscopic holes that allowed extra
air to be drawn into the smoke passing through it, which
diluted the smoke, thereby delivering less tar and nicotine.
As already noted, the way that the FTC’s machine smoked
a cigarette carefully controlled such variables as the place-
ment of the cigarette in the machine, the number and vol-
ume of puffs taken, and the portion of the cigarette smoked.
Under those controlled mechanical conditions, Marlboro
Lights achieved the yields that permitted defendant, con-
sistently with federal regulations, to claim that Marlboro
Lights had lowered tar and nicotine levels. In actual prac-
tice, however, smokers could easily defeat the design. In par-
ticular, smokers could cover the air holes in the cigarette’s
filter, which would produce a more concentrated smoke
stream with greater amounts of tar and nicotine than with
the holes uncovered. Smokers also could take more frequent
puffs, hold the smoke in their lungs for a longer period of
time, and smoke more of the cigarette itself.5 And smokers
could smoke more cigarettes.
	       A principal reason why smokers might—either
consciously or unconsciously—smoke Marlboro Lights in a
way that defeats their design is to achieve a higher level of
nicotine in their blood than the cigarettes would otherwise

	5
       The trial court aptly captured the difference between more typical con-
sumer products, where their contents dictate what a consumer ingests, and a
product such as a cigarette, where consumer behavior significantly affects what
is ingested:
     	 “With a product such as milk or bread, one is concerned mainly with
     what the item contains. With regard to tar and nicotine from a cigarette,
     one’s main concern is not so much with what the unlit cigarette contains as
     what it yields when smoked. A cup of milk contains a certain amount of fat
     regardless of whether it is sipped or gulped. The fat content does not vary
     depending on whether the consumer uses a straw or drinks straight from the
     carton. The tar and nicotine yield of a cigarette, however, depends not only
     upon what is contained in the unlit tobacco in the column, but upon the way
     the cigarette is smoked. The yield can vary with the depth of puff taken, fre-
     quency of puffs and how far down the column the cigarette is smoked. If the
     cigarette has a filter with holes that allow air in to dilute the smoke as it is
     drawn into the smoker’s mouth, the yield will also be changed if the smoker
     covers some or all of the holes with his or her mouth or fingers.”
(Emphasis in original.)
94	                            Pearson v. Philip Morris, Inc.

deliver. Nicotine is a stimulant, one to which smokers
become addicted or habituated. The nature of nicotine sig-
nificantly increases the probability that smokers will alter
their behavior (i.e., by blocking air holes, taking deeper and
more frequent puffs, smoking farther down the cigarette, or
smoking more cigarettes) for either of two reasons. One is
that smokers—even ones who have never smoked any other
brand or variety of cigarette—will desire a higher stimulant
effect than the “light” cigarettes would otherwise deliver (the
phenomenon of altering smoking behavior for that reason
is termed “titration”). The other reason arises for smokers
who switch from regular-strength cigarettes to so-called
“light” ones. Those individuals often have become habitu-
ated to a particular level of nicotine and, to satisfy their
craving for that level, they alter how they smoke a lowered
tar and nicotine cigarette (a phenomenon termed “compen-
sation”). In either of those circumstances, the amount of tar
and nicotine delivered to a smoker will be higher than the
amount measured by the FTC method and potentially will
be the same as the amount that a smoker would obtain by
smoking a regular cigarette.
B.  Plaintiffs’ UTPA Claims
	        That brings us to plaintiffs’ UTPA claims. Plaintiffs
alleged, and maintained that they would prove, that from
the time that defendant introduced Marlboro Lights to the
market, defendant was well aware of the compensation and
titration phenomena. According to plaintiffs, defendant
understood the likelihood that many human smokers of
Marlboro Lights would not obtain the benefit of “lowered tar
and nicotine” that the labeling appeared to offer. In fact,
plaintiffs intended to prove that defendant purposefully
chose an “elastic” tar and nicotine delivery design—that is,
one subject to manipulation by the smoker—to give Marlboro
Lights smokers the illusion of lowered tar and nicotine while
allowing them to obtain the higher levels of nicotine that
they potentially craved. Defendant, for its part, was pre-
pared to dispute many of plaintiffs’ assertions, including
that defendant deliberately designed Marlboro Lights to
pass the FTC’s method, while permitting smokers to readily
defeat that design. What defendant did not dispute, how-
ever, is that it did not, until 1990, qualify its “lowered tar
Cite as 358 Or 88 (2015)	95

and nicotine” representation by explaining or warning that
the amounts of tar and nicotine that Marlboro Lights deliver
to a smoker could vary depending on how the cigarette is
smoked. And when defendant began to give that disclaimer
in 1990, it did so in its print advertising of Marlboro Lights;
defendant did not provide that added information on the cig-
arette packages themselves.6
	        Based on the design and marketing of Marlboro
Lights, the two named plaintiffs in this case brought this
action seeking economic damages for themselves and an esti-
mated class of 100,000 individuals who purchased Marlboro
Lights in Oregon over a 30-year period. In their complaint,
plaintiffs set forth two UTPA claims. Both claims alleged that
defendant represented Marlboro Lights as having character-
istics that they do not have, in violation of ORS 646.608(1)(e)
(making such representations unlawful). The two claims,
however, were premised on different factual theories.
	        Plaintiffs’ first claim asserted that, contrary to
defendant’s “lowered tar and nicotine” representation,
Marlboro Lights did not deliver lowered tar and nicotine to
smokers, but instead delivered the same levels as regular
cigarettes.7 In that claim, plaintiffs asserted that they and
the class suffered economic losses because they paid for low-
ered tar and nicotine cigarettes that did not in fact deliver
lower levels of tar and nicotine than regular cigarettes.
	       Plaintiffs’ second claim was not premised on the
amount of tar and nicotine that Marlboro Lights were rep-
resented to and would deliver. Instead, it was based on what
	6
       To explain more fully: Starting in 1990, defendant added a statement to its
Marlboro Lights print advertisements to the effect that tar and nicotine delivery
might vary depending on how the cigarette was smoked. After this action and
others elsewhere in the country were filed, defendant placed “onserts” on some
Marlboro Lights packages that also provided that information. Defendant did so
only briefly. Soon after that, defendant removed the “lowered tar and nicotine”
statement from Marlboro Lights packages entirely.
	7
       In particular, plaintiffs alleged:
    	    “Defendant engaged in an unlawful trade practice within the meaning
    of ORS 646.608(1)(e) by representing that its cigarettes * * * would deliver to
    plaintiff and other Marlboro Light smokers less tar and nicotine than defen-
    dant’s regular * * * cigarettes. In fact, as defendant well knew, plaintiff and
    other class members would actually receive the same tar and nicotine from
    Marlboro Light cigarettes as from defendant’s [regular] cigarettes.”
96	                                    Pearson v. Philip Morris, Inc.

defendant allegedly represented about Marlboro Lights’
“inherent” design:
   	 “Defendant * * * represent[ed] that its * * * ‘light’ ciga-
   rettes were inherently lower in tar and nicotine than defen-
   dant’s regular cigarettes, no matter how they were smoked.
   In fact, as defendant well knew, whether a smoker actually
   received lower tar and nicotine depended on several factors,
   such as whether the smoker covered ventilation holes in the
   cigarette, the number of puffs taken on each cigarette, and
   the amount of each cigarette smoked, none of which defen-
   dant disclosed to any plaintiff or class member. Defendant
   both affirmatively misrepresented that its ‘light’ cigarettes
   would inherently deliver low tar and nicotine, and failed
   to disclose that, in order to receive lower tar and nicotine,
   the smoker would have to smoke the ‘light’ cigarettes in a
   particular way.”
In their second claim, plaintiffs further alleged that they
and the class members suffered ascertainable losses because
they paid for cigarettes that they believed were inherently
lower in tar and nicotine than defendant’s regular ciga-
rettes—that is, lower in tar and nicotine no matter how they
were smoked—but received cigarettes that would deliver
lowered tar and nicotine only if smoked in a particular way.
For both claims, plaintiffs requested “[e]conomic damages
for purchase price refund or diminished value, in an amount
to be proved at trial.”
	        In answer to the complaint, defendant denied most
of plaintiffs’ allegations. Defendant also asserted numerous
affirmative defenses, including that the claims of the named
plaintiffs and putative class members were barred by the
one-year statute of limitations for private UTPA claims. See
ORS 646.638(6) (claim must be brought one year from dis-
covery of unlawful conduct).
	        Shortly after defendant filed its answer, plaintiffs
moved under ORCP 32 C(1) for class certification of the entire
action.8 In the alternative, plaintiffs sought certification of
	8
      ORCP 32 C(1) provides, in relevant part:
   “As soon as practicable after the commencement of an action brought as a
   class action, the court shall determine by order whether and with respect to
   what claims or issues it is to be so maintained and shall find the facts spe-
   cially and state separately its conclusions thereon.”
Cite as 358 Or 88 (2015)	97

“common issues” under ORCP 32 G—so-called, “issue class”
certification.9 Defendant opposed both the class and issue
class certification requests. Among other arguments that it
advanced in opposition, defendant urged that several of the
issues central to defendant’s liability on plaintiffs’ claims
could not be tried based on evidence common to the class
members as a whole, but instead would require individual
inquiries. Relevant to plaintiffs’ first UTPA claim, defendant
produced studies, expert opinion, and other evidence to show
that smoking behavior—and the phenomena of titration and
compensation—vary widely from one smoker to another,
with the result that, for many smokers, Marlboro Lights in
fact do deliver lower levels of tar and nicotine than regu-
lar cigarettes. Relevant to plaintiffs’ second UTPA claim,
defendant likewise submitted studies, expert opinion, and
even deposition testimony from one of the named plaintiffs
to demonstrate that many consumers do not believe that
lowered tar and nicotine cigarettes are healthier to smoke
and purchase Marlboro Lights for reasons unrelated to their
possible health benefits. Defendant argued that it was enti-
tled to probe individual class members’ perceptions of the
product and reasons for buying it to determine whether, as
alleged, those individuals paid for Marlboro Lights based on
a representation that they had a characteristic or quality
that they in fact did not have.
	        Finally, as relevant to defendant’s statute of limita-
tions defense, defendant pointed out that the plaintiff in a
UTPA action has only one year from discovery of the unlaw-
ful practice to file a claim. ORS 646.638(6). As relevant both
to that affirmative defense and to plaintiffs’ second UTPA
claim, defendant produced evidence that, beginning in the
1970s and at times throughout the 30-year class period,
health organizations and the lay press publicized the health
risks of lowered tar and nicotine cigarettes. Those articles
challenged the notion that “light” cigarettes were healthier
to smoke than regular cigarettes, principally on the basis
that smoker behavior often readily defeated the lower tar
	9
     ORCP 32 G provides: “When appropriate an action may be brought or
ordered maintained as a class action with respect to particular claims or issues.
Each subclass must separately satisfy all the requirements of this rule except for
subsection A(1).”
98	                                      Pearson v. Philip Morris, Inc.

and nicotine designs of the cigarettes. Defendant also relied
on defendant’s print advertising from 1990 forward, which
contained express disclaimers to the effect that tar and nic-
otine delivery might vary depending on how the cigarette
was smoked. Defendant argued that many of the 100,000
estimated class members who purchased Marlboro Lights
in Oregon could have had actual knowledge of the express
advertising disclaimers and public media reports well before
July 2001 (one year before this action was filed), which
would bar their claims. Defendant urged that litigation of
its affirmative statute of limitations defense would therefore
also require highly individualized inquiries and could not be
litigated based on evidence common to the class as a whole.
	        At the hearing on plaintiffs’ motion for certifica-
tion, in the face of defendant’s evidentiary submissions,
plaintiffs pressed only their second claim—that defendant,
by labeling Marlboro Lights as “lowered tar and nicotine”
cigarettes, had represented that they were “inherently”
lower in tar and nicotine than regular cigarettes (i.e., lower
regardless of how they are smoked).10 Plaintiffs maintained
that, to prove their UTPA claim, they did not have to show
that they and the class members bought Marlboro Lights
because defendant represented them to have “lowered tar
and nicotine”—that is, plaintiffs did not have to show that
purchasers relied on the representation. Rather, plaintiffs’
position was that it was enough that defendant represented
Marlboro Lights to be inherently lower in tar and nicotine,
that plaintiffs and the class members bought them (regard-
less of why they bought them), and that what plaintiffs and
	10
        Plaintiffs appeared to abandon their first claim for purposes of class cer-
tification in light of defendant’s evidence that the amount of tar and nicotine
delivered to individual smokers varied significantly, and was frequently less than
the amount that a smoker would obtain by smoking regular cigarettes. The same
and similar evidence produced by defendant in this case has caused the over-
whelming majority of courts throughout the country to reject class certification
where the claim is that most or all smokers received the same amount of tar
and nicotine as they would have by smoking regular cigarettes. See, e.g., Phillips
v. Philip Morris Companies, Inc., 298 FRD 355, 362 (2014) (citing cases); In re
Light Cigarettes Marketing Sales Practices Litigation, 271 FRD 402, 413 (2010)
(same). Those courts have reasoned that the evidence of individual variations in
the amount of tar and nicotine that “lights” smokers ingest is sufficient to demon-
strate that the issue is not a common one, but instead requires individual inqui-
ries. See, e.g., Phillips, 298 FRD at 364-65 (discussing evidence and concluding
individual inquiries predominate).
Cite as 358 Or 88 (2015)	99

the class members bought lacked the characteristic of being
inherently light. Alternatively, plaintiffs argued that defen-
dant’s evidentiary submissions were flawed in various ways,
and that the trial court should conclude that the represen-
tation of Marlboro Lights as inherently lower in tar and
nicotine was a substantial factor in every class member’s
decision to purchase them. Under that alternative theory,
plaintiffs’ theory was that every class member had suffered
an economic loss because they did not get what they believed
they were buying.
C.  The Trial Court and Court of Appeals Decisions
	        At the conclusion of the hearing on the class certifi-
cation motion, the trial court took the matter under advise-
ment, later issuing a written opinion to explain its denial of
the motion. The trial court ultimately determined that “indi-
vidual issues vastly predominate over the common issues
of law and fact” and, because of that, a class action was not
a superior means for resolving the putative class members’
individual claims. As earlier noted, the Court of Appeals dis-
agreed with the trial court’s assessment that individual issues
predominate over common ones, and reversed and remanded
on that basis. Although we discuss more detailed aspects of
the trial court’s and the Court of Appeals’ rationales in our
analysis of the issues, an overview of their respective opin-
ions provides context for the issues before us on review.
    1.  Trial Court’s Decision
	        In declining to certify the class, the trial court first
examined the elements of plaintiffs’ UTPA claim. To recover
damages in a private action based on an alleged unlawful
trade practice, a plaintiff must suffer “an ascertainable loss
of money or property * * * as a result of” the alleged unlawful
trade practice. ORS 646.638(1). The trial court determined
that plaintiffs’ class claim depended on proof that, first,
plaintiffs and the class members suffered an ascertainable
loss of money or property, and second, their loss was caused
by—that is, was “as a result of”—the alleged unlawful trade
practice, which in this case was the “lower tar and nicotine”
representation. Both elements of plaintiffs’ claim, the trial
court concluded, would require individualized inquiries of
the class members.
100	                           Pearson v. Philip Morris, Inc.

	        With respect to ascertainable loss, the trial court
rejected the plaintiffs’ argument that the mere fact that
a product differs from how it is represented per se makes
it less valuable. The court observed that some products,
if not as represented, could in fact be more valuable than
they would otherwise be (such as a stone represented to be
cubic zirconia that is in fact a real diamond). With respect to
Marlboro Lights, the evidence before the trial court was that
they had always been priced the same as Marlboro regulars.
Thus, Marlboro cigarettes cost the same with or without the
feature of being lower in tar and nicotine. Given that evi-
dence, the trial court concluded that it could not be inferred
that purchasers overpaid for Marlboro Lights on the basis
that they were not inherently lower in tar and nicotine.
Although plaintiffs represented that they would be able to
present expert testimony at trial that an “inherently” light
cigarette had special economic value, thus making Marlboro
Lights worth less because they did not in fact have that
inherent characteristic, plaintiffs did not come forward
with that expert evidence to support their motion for class
certification. Left with only ordinary market inferences to
draw and the lack of any price difference between Marlboro
Lights and regulars, the trial court found no basis to infer
that purchasers of Marlboro Lights, as a group, suffered an
ascertainable loss of money based on the fact of their pur-
chase, without more.
	        Without a viable theory of that kind, the trial court
concluded that the issue of ascertainable loss would require
extensive individualized inquiries. The court emphasized,
and quoted from, defendant’s expert evidence that “the vast
majority” of “light” cigarette smokers titrate or compensate
“only partially” on a per-cigarette basis. On the basis of that
evidence, defendant had urged, many putative class mem-
bers got exactly what defendant represented—lower tar and
nicotine. The trial court specifically noted that plaintiffs
had not presented evidence of their own to refute defen-
dant’s evidence on that point. On the record before it, the
trial court found that the amount of tar and nicotine that
Marlboro Lights delivered varied significantly based on
smoker behavior. The trial court therefore concluded that,
to establish an ascertainable loss from having purchased
Cite as 358 Or 88 (2015)	101

Marlboro Lights, “each plaintiff and each member of the
proposed class must prove that the Marlboro Lights he or
she purchased did not deliver lowered tar and nicotine to the
person who smoked them.”
	        The trial court likewise concluded that individual
inquiries would predominate in litigating whether any ascer-
tainable loss was “as a result of” defendant’s alleged mis-
representation. The trial court reasoned that, in this case,
to establish that plaintiffs had suffered an ascertainable
economic loss that was caused by (i.e., “as a result of”)
defendant’s unlawful practice, plaintiffs had to show that
the class members purchased Marlboro Lights in reliance
on the perceived health benefits of a lowered tar and nico-
tine cigarette. Said another way, plaintiffs had to show that
defendant’s marketing of Marlboro Lights as “lowered tar
and nicotine” cigarettes was a substantial factor in each
class member’s purchase decision. In the trial court’s view,
defendants had produced extensive evidence that many
individuals bought Marlboro Lights for reasons other than
their perceived health benefits. Plaintiffs, in response, had
not demonstrated to the trial court that they could prove,
through evidence common to the class, that the alleged rep-
resentation that Marlboro Lights were inherently lower in
tar and nicotine was a substantial or motivating factor in
every class member’s purchase decision. Consequently, the
trial court concluded, plaintiffs had not demonstrated that
causation/reliance could be litigated without the need for
individualized inquiries into the class members’ individual
reasons for their purchase.
	         The trial court further concluded that there were
other “indisputably substantial issues unique to each class
member”; the court pointed particularly to the individual
inquiries required of the class members to litigate defen-
dant’s statute of limitations defense. The trial court consid-
ered those other “unique to each class member” issues in its
decision, but did not independently rest its ruling on them.
Rather, the trial court specifically stated that its class cer-
tification decision was principally driven by its conclusion
that the individual inquiries required to litigate the issues of
ascertainable loss and causation/reliance “overwhelmingly”
predominated over common issues. The trial court further
102	                            Pearson v. Philip Morris, Inc.

stated that its conclusions on those two elements of plain-
tiffs’ claim (causation/reliance and ascertainable loss) were
“separate and independent grounds for finding that individ-
ual questions predominate.” As the trial court explained: “I
would reach the conclusion that individual questions pre-
dominate over common questions (to a degree that requires
denial of class certification) even if my finding on one of
those issues were found on appeal to be wrong.”
	        The trial court concluded its written opinion and
order by denying plaintiffs’ request to certify an issue class.
The trial court emphasized in that regard that plaintiffs
had not specified what the “issue classes” might be, but
instead merely had asserted that “[a]ll common issues iden-
tified by plaintiffs in this motion are appropriate for class
certification.” The trial court noted that plaintiffs had listed
17 issues of fact arising out of their own factual statement
and 39 issues of law arising out of defendant’s affirmative
defenses, all of which plaintiffs had asserted were issues
“common” to the class. The trial court declined to certify
one or more “issue classes,” concluding that plaintiffs’ non-
specific proposal had not demonstrated how issue certifica-
tion would “eliminate the main obstacle” to resolution of the
class claim, which was the “overwhelming predominance of
individual issues.”
       2.  Court of Appeals’ Decision
	        Plaintiffs appealed to the Court of Appeals, chal-
lenging the trial court’s order denying their motion for
class certification and issue class certification. For purposes
of a UTPA claim, the majority held, a plaintiff suffers an
ascertainable loss if he or she purchases a product that was
represented to have a “feature of value” that it in fact does
not have, which in turn renders the product less valuable.
Pearson, 257 Or App at 136. The loss is, in that instance,
“the value of that feature.” Id. at 137. The fact that Marlboro
Lights and regulars were always priced the same did not
defeat plaintiffs’ claim of ascertainable loss, according to the
majority, because that was the wrong comparison. Id. at 138-
39. The correct comparison was the value of the represented
product versus the value of the received product. Id. at 139.
The majority acknowledged that plaintiffs had produced
Cite as 358 Or 88 (2015)	103

no evidence of the value of an “inherently” light cigarette
(i.e., one that delivered lower tar and nicotine than a regu-
lar cigarette, no matter how it was smoked). Id. at 138. The
majority concluded, however, that “a jury could infer” that
an inherently light cigarette would be more valuable than a
“potentially light cigarette” (i.e., one that could deliver lower
tar and nicotine than a regular cigarette if smoked in the
same way as a regular). Id. The majority therefore deter-
mined that, contrary to the trial court’s ruling, ascertain-
able loss could be “litigated on a class-wide” basis, which
weighed in favor of class certification. Id. at 139.
	        The Court of Appeals majority then turned to
whether individual inquiries would be required to estab-
lish that the class members’ ascertainable losses were “as a
result of” the alleged unlawful representation. The majority
agreed with the trial court that, to prove causation given
the nature of their UTPA class claim, plaintiffs had to prove
that the class members relied on defendant’s lowered tar
and nicotine representation in purchasing Marlboro Lights.
Id. at 143-46. Where the Court of Appeals majority parted
company with the trial court was on whether plaintiffs had
established that they could prove reliance through evidence
common to the class as a whole. The majority reasoned that
an inference of classwide reliance could be drawn from the
uniform nature of defendant’s representations, defendant’s
design and marketing of Marlboro Lights, and the fact that,
in the studies and surveys that defendant had submitted,
“many” persons who smoked light cigarettes believed that
they were safer than regular cigarettes. That evidence “con-
vince[d]” the majority that defendant’s representations were
a substantial factor “in the vast majority” of the putative
class members’ purchase decisions, and that plaintiffs there-
fore could prove reliance on the basis of evidence common to
the class. Id. at 160.
	        Finally, although the Court of Appeals majority
acknowledged that other issues—and, in particular, the
affirmative statute of limitations defense—will require
individual inquiries of class members, it concluded that
those issues would arise “only after a jury has determined
the central question of defendant’s liability to the class.” Id.
at 167.
104	                            Pearson v. Philip Morris, Inc.

	         On balance, then, the Court of Appeals determined
that common issues predominated. Id. at 166. Recognizing
that whether a class action is a superior means for trial of
the class claims is a decision ultimately committed to the
trial court’s sound discretion, the court remanded the case
to the trial court to reevaluate the superiority question in
light of the majority’s decision on the predominance of com-
mon issues. Id. at 168-69. The majority directed the trial
court on remand to also “revisit” its denial of issue class cer-
tification, given that the trial court’s predominance conclu-
sion had been central to how it had exercised its discretion
in that regard. Id. at 171-72.

	        Judge Duncan wrote a separate opinion concurring
in part and dissenting in part, in which three other judges
joined. Judge Duncan agreed with several aspects of the
majority’s decision, including that ascertainable loss could
be litigated through evidence common to the class and that
causation in this context required proof of reliance. Id. at
173 (Duncan, J., concurring in part; dissenting in part).
She disagreed, however, that reliance could be litigated on
a classwide basis. Significantly, her reasoning differed from
that of the trial court.

	        In particular, in Judge Duncan’s view, defendant’s
representation that Marlboro Lights were “lowered tar and
nicotine” was open to multiple interpretations on the pur-
chasers’ part. Id. at 175. Judge Duncan observed that some
purchasers may have understood from the “lowered tar and
nicotine” representation that the cigarettes were “inher-
ently” light—that is, “that either the contents or the design
of the cigarettes made it impossible” to deliver the same
amount of tar and nicotine as regular cigarettes. Id. On the
other hand, she reasoned, other purchasers may have under-
stood the representation to mean only that Marlboro Lights
would deliver less tar and nicotine if smoked in the same
way as regulars. Id. Because defendant’s representation was
open to multiple interpretations, Judge Duncan believed
that there were likely variations in whether defendant’s rep-
resentations played a substantial role in the class members’
decisions to purchase Marlboro Lights. Id. She also observed
that the class members’ individual understandings were
Cite as 358 Or 88 (2015)	105

likely to vary given the 30-year class period involved,
during which the lay press publicized information that the
amount of tar and nicotine that light cigarettes delivered
depended on how they were smoked. Id. at 176. Given those
likely variations in purchasers’ understanding, Judge
Duncan disagreed with the majority that plaintiffs could
prove that the class members, through common evidence,
could establish that they made their purchases based on
the same understanding of and uniform reliance on the
alleged misrepresentation; rather, that issue, in Judge
Duncan’s assessment, would have to be litigated “based on
evidence specific to each class member.” Id. at 177. Judge
Duncan, and the three other members of the court who
joined her, therefore concluded that the trial court cor-
rectly denied class certification. Id. at 177-78.11
                             II. DISCUSSION
	        On review to this court, the parties renew many,
if not most, of the arguments that they presented to the
trial court and to the Court of Appeals. The overarching
issue that we must resolve is whether, on the record before
us, plaintiffs failed to demonstrate that issues common to
their class UTPA claim predominate over individual issues.
Resolution of that issue requires us to consider several sub-
sidiary questions, some of which turn on the standards for
class certification and others of which turn on the substan-
tive law that governs plaintiffs’ UTPA claim. We begin our
analysis by examining the standards that govern class cer-
tification in Oregon, as well as the respective roles of the
trial court in making and an appellate court in reviewing
the class certification determination. We then turn to plain-
tiffs’ UTPA class claim to resolve what issues would be piv-
otal in litigation of that claim and whether plaintiffs have
demonstrated that, given those issues, their UTPA claim
could be litigated on the basis of evidence common to the
class.

	11
        Because the trial court, in denying issue class certification, had appeared
to rely at least in part on its conclusion that ascertainable loss could not be tried
on the basis of common evidence, the four members of the court who separately
concurred and dissented agreed that the case should be remanded to the trial
court to reevaluate that aspect of its decision. Id. at 178-79.
106	                                     Pearson v. Philip Morris, Inc.

A.  Class Certification Generally
	        The standards that govern class certification are
set out in ORCP 32. Under that rule, a class certification
determination divides into two basic inquiries. First, the
trial court must determine if the action meets five prereq-
uisites: The class must be so numerous that simple joinder
is impracticable (“numerosity”); there must be questions of
law or fact common to the class (“commonality”); the named
representatives’ claims must be typical of those of the class
(“typicality”); the named representatives must be individ-
uals who will adequately protect the interests of the class
(“adequacy”); and prelitigation notice requirements must
have been complied with (“notice”). ORCP 32 A (1)-(5). If
any one of the five requirements is not satisfied, the case
cannot go forward as a class action. ORCP 32 B.
	         If, however, all five requirements are met, the sec-
ond basic inquiry comes into play: whether “a class action is
superior to other available methods for the fair and efficient
adjudication of the controversy.” ORCP 32 B. Again, the
plaintiff must prevail on the superiority question before the
action may be maintained as a class action. Id. The rule iden-
tifies eight factors “pertinent” to assessing superiority. The
third factor is one that frequently drives class certification
decisions, and did in this case: “[t]he extent to which ques-
tions of law or fact common to the members of the class pre-
dominate over any questions affecting only individual mem-
bers.” ORCP 32 (B)(3).12 Neither the “predominance” factor
nor any of the other seven, however, is controlling. Rather,
the trial court has considerable discretion in weighing all of
the factors that apply in a given case and determining if a
class action will be a superior means of litigating the class

	12
        Other factors include whether a separate action on the class members’
claims will risk inconsistent adjudications or impair the ability of class members
to protect their interests; whether individual members of the class have an inter-
est in individually controlling the action on their claim; whether a class action
will be unmanageable; and whether the class members’ claims are too small to
justify the expense of litigating them on an individual basis. ORCP 32 (B)(1), (4),
(7), (8). The trial court in this case found that some of the factors listed in the
rule weighed in favor of class certification, especially the generally low value of
the individual members’ claims and the high expense of litigation. But in the trial
court’s judgment, the factors favoring class certification were vastly outweighed
by the predominance factor, which favored denying certification.
Cite as 358 Or 88 (2015)	107

claims.13 See generally Newman v. Tualatin Development Co.
Inc., 287 Or 47, 51, 597 P2d 800 (1979) (trial court’s determi-
nation that action may proceed as a class action “is largely
a decision of judicial administration * * * [and, i]n making
such decisions the trial court is customarily granted wide
latitude”).

	        Establishing that the standards for class certifica-
tion are satisfied under both ORCP 32 A and 32 B is not a
mere exercise in pleading. Rather, a plaintiff seeking class
certification has the affirmative burden to demonstrate that
the requirements of ORCP 32 are satisfied. Bernard v. First
Nat’l Bank, 275 Or 145, 153, 550 P2d 1203 (1976).14 Thus,
before a trial court may certify a class under ORCP 32, it
must make an affirmative determination that the rule’s
requirements for certification are satisfied. Although a class
certification decision is not a trial of the merits, Newman,

	13
       Oregon’s original class action statute was modeled after Rule 23 of the
Federal Rules of Civil Procedure, although some of its provisions differed. See
generally Bernard v. First Nat’l Bank, 275 Or 145, 150-51, 550 P2d 1203 (1976)
(describing history of Oregon class action statute). Under the original class
action statute, which was later codified as ORCP 32 (1991), the predominance
requirement was one of the threshold prerequisites for class certification; if it
was not satisfied, the class action could not be maintained. Id. at 149-50 (quot-
ing statute); see also ORCP 32 B (1991) (same provision as original statute). In
1992, the Council on Court Procedures substantially modified the rule. See gen-
erally Council on Court Procedures, Staff Comment, 1992, reprinted in Lisa A.
Kloppenberg, Oregon Rules of Civil Procedure 1994 Handbook 88 (1993) (comment
on 1992 amendments). The Council made predominance a factor in the superi-
ority decision, rather than one that, as before, had precluded certification. Id.
The Council specifically endorsed commentary accompanying proposed changes
to the federal rule (which were not adopted), which emphasized that the predom-
inance question remained “unquestionably important,” but should be weighed
with other factors in the superiority assessment. Report and Recommendation of
the Special Committee on Class Action Improvements, 110 FRD 195, 204 (1986).
Thus, the Council in 1992 did not change the standard by which predominance is
tested, but did turn it into a factor for the trial court’s discretionary assessment
of superiority, rather than a prerequisite for class certification.
	14
        Although ORCP 32 does not expressly place the burden on the plaintiff,
it does so implicitly. See ORCP 32 B (prerequisites for class certification must
be “satisfied” and trial court must “find” that a class action is superior to other
adjudication methods before action may be maintained as class action); ORCP
32 C(1) (trial court must decide class certification by order in which trial court
“shall find the facts specially and state separately its conclusions thereon”). The
same is true of the federal class action rule. Wal-Mart Stores, Inc. v. Dukes, 564
US ___, 131 S Ct 2541, 2551, 180 L Ed 2d 374 (2011) (party seeking to maintain
a class action likewise “must affirmatively demonstrate his compliance” with the
requirements of Rule 23).
108	                           Pearson v. Philip Morris, Inc.

287 Or at 51, the issues that must be resolved for the class
certification determination frequently overlap with the mer-
its of a plaintiffs’ class claim, Coopers & Lybrand v. Livesay,
437 US 463, 469, 98 S Ct 2454, 57 L Ed 2d 351 (1978) (“the
class determination generally involves considerations that
are enmeshed in the factual and legal issues comprising the
plaintiff’s cause of action”).
	        As federal courts have observed of the parallel
requirements of the federal class action rule, the essential
objective of the class determination is to “formulate some
prediction as to how specific issues will play out” at trial.
Waste Mgmt. Holdings, Inc. v. Mowbray, 208 F3d 288, 298
(1st Cir 2000). To that end, a trial court must “probe behind
the pleadings” to the extent necessary to resolve the class
claims. General Telephone Co. v. Falcon, 457 US 147, 160,
102 S Ct 2364, 72 L Ed 2d 740 (1982). If a class certifica-
tion decision could come out different ways, depending on
how factual disputes are resolved, the answer is not—as it
would be for summary judgment—that the class should be
certified and the dispute be resolved at trial. Instead, the
trial court must resolve the dispute for the limited purpose
of the class certification decision. See generally Richard A.
Nagareda, Class Certification in the Age of Aggregate Proof,
84 NYU L Rev 97, 100, 114 (2009) (trial court must resolve
factual disputes, even if they go to merits of dispute, with
no issue preclusive effect, if disputes bear on whether class
certification standards are satisfied). Likewise, if the par-
ties have competing views of the law that governs the class
claim, a court must “stand ready to say what the law is”
to the extent that class determination will come out differ-
ently depending on which view is correct. Id. at 164 (internal
quotation marks omitted); see also Tardiff v. Knox County,
365 F3d 1, 4-5 (1st Cir 2004) (court must test disputed legal
premises of claim at class certification stage if class action
would be proper on one premise but not another).
	        For the superiority determination under ORCP 32 B,
in particular, the factors to be weighed by the court are
legal in nature; however, their application can require, and
even pivot on, the resolution of disputed facts. For exam-
ple, in Bernard, this court described one of those factors—
predominance, i.e., whether common legal or factual questions
Cite as 358 Or 88 (2015)	109

predominate over individual ones—as ultimately a legal
conclusion. 275 Or at 153. The court explained, however,
that arriving at that conclusion may require factfinding by
the trial court. By way of illustration, Bernard noted that if
statistical evidence were put before a trial court bearing on
the knowledge or state of mind of class members in entering
a particular transaction, the conclusion to be drawn from
that evidence would be factual in nature, and thus for the
trial court to determine. Id. at 153-54. By analogizing the
applicable scope of review to the one announced in Ball v.
Gladden, 250 Or 485, 487-88, 443 P2d 621 (1968), Bernard
conveyed that an appellate court must defer to the trial
court’s resolution of any disputed facts, reviewing the record
only to determine if no evidence supports the trial court’s
express and implicit factual findings. The appellate court
then determines if, on the basis of that resolution of any
disputed factual issues, the trial court’s ultimate predomi-
nance determination was legally correct. Id. at 154. That is
the task that this case presents for us.
B.  The Predominance Standard
	         Against that general backdrop, we turn more spe-
cifically to the predominance factor set out in ORCP 32 B(3).
For purposes of our review, plaintiffs in this case have met
the five threshold prerequisites of ORCP 32 A (numerosity;
commonality; typicality; adequacy; and notice). The trial
court determined that those prerequisites were satisfied, and
defendant does not challenge that determination. Because
the trial court’s superiority assessment was driven by its
predominance conclusion, 358 Or at 106, the question at
this juncture is only whether, based on this record, plaintiffs
established that common issues predominate over individ-
ual ones, contrary to the trial court’s conclusion. We there-
fore examine the predominance criterion in greater depth.
	        Although plaintiffs have established, as the “com-
monality” prerequisite of ORCP 32 A requires, that their
claim entails issues of fact or law common to the class, sat-
isfying that requirement is not the same as satisfying the
predominance factor for purposes of assessing superiority.
As federal courts have recognized of the parallel federal
rule, “the predominance criterion is far more demanding’’
110	                              Pearson v. Philip Morris, Inc.

than the commonality requirement. Amchem Prods., Inc. v.
Windsor, 521 US 591, 623-24, 117 S Ct 2231, 138 L Ed 2d
689 (1997); see also Benedict v. Altria Group, Inc., 241 FRD
668, 672 (D Kan 2007) (commonality requirement is gen-
erally subsumed within and superseded by the “far more
demanding” predominance requirement for class certifica-
tion). Commonality asks only if there are questions of law or
fact common to the class. ORCP 32 A(2). It does not test how
central the common questions are to the resolution of the
action. Nor does it take into account the nature of the proof
required to litigate those common issues.
	         The predominance inquiry, on the other hand, asks
exactly those things—how central are the common ques-
tions, and will common proof resolve them? To test whether
common issues of fact or law predominate over individual
ones, the trial court must assess whether it is “likely” that
the final determination of the action will require separate
adjudications to resolve factual or legal questions regarding
the individual class members and, if so, how many individ-
ual adjudications would be required. See Bernard, 275 Or
at 157-62 (stating standard in the context of the issue of
individual class member knowledge); accord Newman, 287
Or at 53-54 (relying on standard from Bernard). The pre-
dominance criterion requires the trial court to predict how
the issues will play out at trial by considering whether the
adjudication can be resolved with evidence common to the
class (i.e., proof for one class member will be the same for
all), or whether it will entail separate inquiries for the indi-
vidual class members. As one foremost authority on class
actions has observed of the predominance inquiry:
   “What matters to class certification * * * is not the raising
   of common ‘questions’—even in droves—but, rather, the
   capacity of a class-wide proceeding to generate common
   answers apt to drive the resolution of the litigation. Dissim-
   ilarities within the proposed class are what have the poten-
   tial to impede the generation of common answers.”
Nagareda, 84 NYU L Rev at 132.
	       In effect, predominance asks: What do the indi-
vidual class members have in common, what don’t they
have in common, and how much will those similarities and
Cite as 358 Or 88 (2015)	111

dissimilarities matter in litigating the case? In practical
terms, the inquiry is designed to determine if proof as to one
class member will be proof as to all, or whether dissimilar-
ities among the class members will require individualized
inquiries. How the predominance inquiry is answered, then,
is a key factor in the trial court’s discretionary assessment
of whether a class action will be a fair and efficient means
of litigating the case, and thus superior over other available
means to resolve the controversy. See ORCP 32 B (certifi-
cation requires court to find that class action is superior
method for fair and efficient adjudication of controversy).
	        Our cases illustrate that understanding of and
approach to the predominance inquiry. The lead case is
Bernard, which involved a putative class action brought
against a bank for damages based on the bank’s method of
computing interest on loans. The plaintiffs’ breach of con-
tract and assumpsit claims alleged that the bank failed
to disclose to class members its method of computing loan
interest, and the class members did not otherwise know
of that computation method. Given that legal and factual
context, the predominance inquiry depended on whether it
was “ ‘likely’ that final determination of the action [would]
require separate adjudications concerning the knowledge of
‘numerous’ plaintiffs’ ” as to how the bank computed interest
on the loans. Bernard, 275 Or at 149. The written contract
for the loans had stated that interest would be calculated
at a rate-of-percent “per annum,” without explaining which
of three different common methods of calculating annual
interest the bank would use. Id. at 147-48. The plaintiffs’
theory was that, because the bank had failed to disclose its
method of calculation, it could be inferred that borrowers—
uniformly, throughout the class—did not know what that
method was. See id. at 162 (describing plaintiffs’ evidence
and theory).
	        This court in Bernard concluded, however, that the
inference that the plaintiffs relied on was insufficient to
show that their knowledge (or lack thereof) could be resolved
on the basis of evidence common to the class. The court rea-
soned that resolving what the class members knew required,
in part, determining “the meaning attached by the parties
to the words ‘per annum,’ ” which in turn was a “matter of
112	                            Pearson v. Philip Morris, Inc.

interpretation” by individual borrowers. Id. at 154-55. The
court pointed to the general difficulty of establishing indi-
vidual class members’ “state of mind” on a classwide basis.
Id. at 156. Ultimately, the court declined to certify the class,
concluding from the record that it appeared “probable that
many claimants’ knowledge will legitimately be in issue and
that separate adjudications of the claims of numerous mem-
bers of the class will be required to dispose of the question
of defendants’ liability.” Id. at 162.
	Since Bernard, our cases have approached the pre-
dominance inquiry in that same way—viz., by asking what
legal and factual issues must be resolved, and what the
plaintiff and the defendant are entitled to prove and contest,
to fairly and fully litigate the issues. The outcomes of the
cases have depended on the particular claims involved and
the record made on the class certification motion.
	In Newman, for example, the question was whether
the individual class members in purchasing townhomes had
relied on a representation in a warranty brochure that the
pipes were copper. The plaintiffs produced no direct evi-
dence on the point, but instead relied on an inference that
most or all class members had relied on the representation,
which was one among many construction features described
in the brochure. Analogizing to Bernard, the court deter-
mined that the inference on which the plaintiffs relied was
too weak to establish that “every member of the class read,
was aware of, and relied upon each of the representations in
the brochure.” Newman, 287 Or at 54.
	        In contrast, in Derenco v. Benj. Franklin Fed. Sav.
and Loan, 281 Or 533, 577 P2d 477 (1978), the record estab-
lished that individual variations among the class mem-
bers were unlikely. Derenco was similar to Bernard in that
it involved how a bank invested certain funds that it held
for borrowers; a significant issue for resolution was, again,
whether borrowers knew of the bank’s practice. The class
certification decision came out differently than in Bernard,
however, because of Derenco’s different factual record. In
Derenco, the class consisted of persons unfamiliar with
banking practices who had not been informed, either by the
terms of their contract or otherwise, how the bank invested
Cite as 358 Or 88 (2015)	113

the funds, and the banking industry had no uniform prac-
tice in that regard. Id. at 556-57. The court contrasted that
record in Derenco with the record in Bernard and concluded,
opposite of the conclusion in Bernard, that it was unlikely
that any significant number of class members knew of the
bank’s investment practice or, for that matter, that it even
occurred to them to consider whether and how the bank
invested the funds. Id. at 572.15
	Finally, Hurt v. Midrex Division, 276 Or 925, 556
P2d 1337 (1976), like Derenco, resulted in class certifica-
tion based on the predominance of common issues. There,
a putative class of employees of an iron ore reducer brought
an action for monetary damages, alleging that the defen-
dant’s ore reduction plant emitted paint particulates that
damaged the employees’ cars parked outside the plant. By
way of defense, the defendant alleged that the employees
were aware of the damage being done to their cars but had
parked there anyway, and therefore had assumed the risk
of where they chose to park or, alternatively, had contrib-
uted to and aggravated their own damages. Hurt, 276 Or at
927-28. The defendant urged that the class members’ aware-
ness of the paint particulates would require individualized
inquiries, but the court disagreed on the particular record
before it. It was “implausible,” the court concluded, that the
employees who parked on the defendant’s premises “would
not have been equally aware of the problem at the time or
shortly after” they first parked there. Id. at 928. In fact,
the record showed that the problem of the paint damage to
employee cars had been “of sufficient notoriety to be the sub-
ject of negotiation between the employees’ union and [the]
defendants.” Id. The court viewed the potential for individ-
ual variances in the class members’ subjective awareness to
	15
      In Derenco, the court more or less blatantly engaged in de novo review
of the factual record, without saying so and without acknowledging the stan-
dard of review announced in Bernard. See Derenco, 281 Or at 572 (“We conclude
from the evidence in this case * * *” and “It is our conclusion that the proof here
indicates * * *[.]”). One explanation may be that Derenco involved an action for
an accounting, which at common law was an equitable proceeding. See Carey v.
Hays, 243 Or 73, 77, 409 P2d 899 (1966) (action for accounting at common law
equitable in nature); see former ORS 19.125(3) (1975) (equity cases subject to
de novo review on appeal). In all events, Derenco did not purport to change the
standard of review announced in Bernard, and we would not adhere to it now if it
had.
114	                                      Pearson v. Philip Morris, Inc.

be “theoretical” only. Id. at 929. A defendant could not, the
court declared, defeat the predominance of common issues
by “dreaming up a theoretical defense requiring individual
inquiries for which there is little basis in fact.” Id. (quoting
Bernard, 275 Or at 158).
	         Collectively, our cases demonstrate that whether
common issues predominate in a particular case for pur-
poses of class certification depends on a pragmatic assess-
ment of how a case, if fairly and fully tried, is likely to be
litigated. The point of asking whether common issues pre-
dominate is to predict the degree to which litigation of the
controversy will require delving into individualized proof or,
conversely, the degree to which the issues lend themselves
to resolution through common proof—that is, proof for one
individual class member will be proof for all. The inquiry
looks not only to how a plaintiff can prove its prima facie
case; it considers, as well, the nature of the plaintiff’s claim
more generally, the defenses to the claim, the legal and fac-
tual issues framed by the parties’ positions, and the record
made on the disputed issues of fact. See Bernard, 275 Or at
159 (class action procedures not designed to deprive defen-
dants of valuable procedural and substantive rights by pre-
venting them from asserting what appear to be bona fide
defenses; predominance inquiry requires consideration of
likelihood that individual inquiries are necessary to per-
mit defendant to litigate legitimate issues in defense). If
the record suggests legitimate and legally material factual
differences among the class members that a defendant is
entitled to expose through individualized inquiries—what
Professor Nagareda terms “fatal dissimilarities” among the
class16 —the predominance inquiry must take those individ-
ualized inquiries into account.
	16
        See, e.g., Nagareda, 84 NYU L Rev at 107, 131 (using term). Professor
Nagareda also describes what he terms “fatal similarities”—characteristics com-
mon to the class that may defeat their substantive claims. See, e.g., id. (using
term). Fatal similarities may defeat the class claim at the summary judgment
stage or at some other procedural juncture, but they do not defeat class certifica-
tion. Id. at 107. Hurt, 276 Or at 928-29, provides an example of a potentially fatal
similarity—the common knowledge of all employees that, by parking in their
employer’s parking lot, they would incur damage to their cars. That similarity
aided the plaintiffs in achieving class certification; on the merits, however, that
similarity stood to significantly advance the defense claims that the employees
had assumed the risk of parking there and had contributed to their own damages.
Cite as 358 Or 88 (2015)	115

C.  The UTPA and Plaintiffs’ Specific Class Claim
	        With that discussion of the class certification stan-
dards in place as a foundation, we turn to an analysis of
plaintiffs’ UTPA class claim. We first consider the nature of
UTPA claims more generally. We then examine the specific
claim that plaintiffs seek to pursue on behalf of the puta-
tive class. As we will discuss, with respect to the specific
claim that plaintiffs seek to pursue, the parties’ positions
frame both legal and factual disputes that bear directly on
the class certification question of whether common issues
predominate over individual issues. We work through those
disputes, consistently with our role in resolving legal issues
and the trial court’s role in resolving factual issues. We then
resolve the ultimate issue before us—whether, given what
plaintiffs must prove to establish their UTPA claim, plain-
tiffs carried their burden to show that, on issues apt to drive
the resolution of the litigation, evidence common to the class
will generate common answers for the individual members;
or in contrast, whether a full and fair resolution of the con-
troversy has a substantial—and not just theoretical—likeli-
hood of requiring individual inquiries.
     1.  UTPA Claims Generally
	        Oregon’s UTPA, like those of many other jurisdic-
tions, was enacted as a comprehensive statute for the protec-
tion of consumers from unlawful trade practices. See State
ex rel Redden v. Discount Fabrics, 289 Or 375, 382, 615 P2d
1034 (1980) (discussing UTPA generally). The trade prac-
tices declared unlawful under the UTPA are extensive, too
much so for description. See generally ORS 646.607 (setting
forth unlawful trade practices involving unconscionable tac-
tics and failure to deliver as promised or failure to refund for
undelivered goods and services); ORS 646.608 (enumerating
approximately 76 additional unlawful trade practices). But
as relevant here, under ORS 646.608(1)(e), a person engages
in an unlawful trade practice if, in the course of that person’s
business, vocation, or occupation, the person “[r]epresents
that goods * * * have sponsorship, approval, characteristics,
ingredients, uses, benefits, quantities or qualities that [they]
do not have.” For purposes of the UTPA, a “representation”
includes “any assertion by words or conduct” and also “a fail-
ure to disclose a fact.” ORS 646.608(2).
116	                                     Pearson v. Philip Morris, Inc.

	        The UTPA has both public and private enforce-
ment provisions. ORS 646.632 (authorizing officials to bring
action in name of state); ORS 646.638 (authorizing action
by private person). A public official bringing an enforcement
action may seek, among other possible relief, injunctions,
imposition of statutory penalties, and loss of licenses and
franchises. See Weigel v. Ron Tonkin Chevrolet Co., 298 Or
127, 134, 690 P2d 488 (1984) (citing provisions). A public
action does not require proof that any consumer has suf-
fered economic loss or other injury as a result of the unlaw-
ful practice. Discount Fabrics, 289 Or at 384.17 Nor does a
statute of limitations apply to a public action.
	        A private action, in contrast, must be brought
within one year after discovery of the unlawful conduct.
ORS 646.638(6). And, unlike in an action a UTPA claim
pursued by a public official, a plaintiff in a private action
must prove injury in the form of an “ascertainable loss of
money or property.” ORS 646.638(1). By way of relief, the
injured consumer can recover actual damages or a statu-
torily set minimum damage amount of $200, “whichever
is greater.” ORS 646.638(1). And although a private action
may be brought as a class action, at the time of this action,
class members were limited to actual damages; they could
not recover the statutory minimum of $200 each. See ORCP

	17
       That is not to imply that the public official cannot seek to make whole
any consumers who may have been injured economically by a practice. Under
ORS 646.636, a court’s remedial powers in a public enforcement action include
“restor[ing] to any person in interest any moneys or property, real or personal,
of which the person was deprived by means of any” unlawful trade practice. But
a private loss of money or property is not an element of the public action. That
makes sense because many of the trade practices made unlawful by the statute,
although contrary to public policy because of their potential for economic injury,
deception, and frustration of consumer expectations, would not necessarily or
even likely result in actual or measurable loss of money or property. Examples
include vague or false representations about where a product was made, ORS
646.608(1)(b); disparaging comments about a competitor’s product that are false
or misleading, ORS 646.608(1)(h); selling goods door to door without making cer-
tain required disclosures, ORS 646.608(1)(n); making a false or misleading state-
ment about a prize or contest, ORS 646.608(1)(p); or attempting to induce mem-
bership in a pyramid club, ORS 646.608(1)(r). For those and many other unlawful
practices listed in the statute, enforcement through a public action, which within
10 days of filing can result in cessation of the unlawful practice through a defen-
dant’s voluntary compliance agreement (ORS 646.632(2)), is often the most effec-
tive means of protecting consumers from the practices that the statute makes
unlawful.
Cite as 358 Or 88 (2015)	117

32 K (2007) (class action cannot be maintained for mini-
mum damages under ORS 646.638).
	         The nature of the “ascertainable loss” that the
private plaintiff must prove distinguishes a UTPA claim
from any other claims or remedies that a plaintiff might
pursue through other actions. The requirement that the
loss be “ascertainable” connotes generally that it is one
“capable of being discovered, observed, or established.”
Scott v. Western Int. Sales, Inc., 267 Or 512, 515, 517 P2d
661 (1973). Thus, the loss must be objectively verifiable,
much as economic damages in civil actions must be. See
ORS 31.710(2)(a) defining “economic damages” as “objec-
tively verifiable monetary losses”). But unlike general eco-
nomic damages in a civil action, the loss required for a
UTPA claim must be specifically of “money or property,
real or personal.” ORS 646.638(1). An ascertainable loss
of some other kind—such as loss of physical ability due
to a personal injury—is not cognizable in a UTPA claim.
Likewise, noneconomic losses cognizable in a civil action—
such as physical pain, emotional distress, or humiliation
(ORS 31.710(2)(b))—will not satisfy a private UTPA plain-
tiff’s burden. Finally, the ascertainable loss must be “a
result of” the unlawful trade practice. That is, the unlaw-
ful trade practice must have caused the ascertainable loss
that the plaintiff suffered.
      2.  Plaintiff’s Specific Class Claim
	         As earlier described, plaintiffs brought two UTPA
claims, both of which alleged that defendant represented
Marlboro Lights as having characteristics that they do not
have, in violation of ORS 646.608(1)(e). The two claims dif-
fered, however, in the nature of the characteristic involved.
The first claim asserted that Marlboro Lights prom-
ised lower tar and nicotine amounts and failed to deliver
those lower amounts. The second claim was premised on
a different promised characteristic: that defendant repre-
sented Marlboro Lights to be “inherently” lower in tar and
nicotine—that is, lower no matter how they were smoked—
when in fact the amount of tar and nicotine varied based
on smoker behavior. As to the class, plaintiffs pursued
only their second claim—the claim based on “inherent”
lightness.
118	                              Pearson v. Philip Morris, Inc.

	       In pleading that claim, plaintiffs asserted that
defendant made the misrepresentation both affirmatively
and by omission:
   “Defendant both affirmatively misrepresented that its
   ‘light’ cigarettes would inherently deliver low tar and nico-
   tine and failed to disclose that, in order to receive lower tar
   and nicotine, the smoker would have to smoke the ‘light’
   cigarettes in a particular way.”
As required for their private UTPA action, plaintiffs also
asserted that they and the class members suffered ascer-
tainable losses “as a direct result” of defendant’s misrep-
resentation “because they paid for cigarettes they believed
were inherently lower in tar and nicotine than defendants’
regular cigarettes but received cigarettes that would deliver
lowered tar and nicotine only if smoked in particular ways.”
By way of relief, plaintiffs asked for “[e]conomic damages for
purchase price refund or diminished value, in an amount to
be proved at trial.”
	        In the trial court and in the Court of Appeals, as
we earlier described, the dispute between the parties on the
predominance factor centered on the elements of “ascertain-
able loss” and “causation” of that loss. The Court of Appeals
(both the majority and the dissent) concluded that ascer-
tainable loss could be resolved based on evidence common
to the class, contrary to the trial court’s conclusion. Both
the Court of Appeals majority and the dissent also agreed
with the trial court that proof of causation would require
proof of “reliance.” But the majority concluded, contrary to
the trial court, that causation/reliance could be proved by
proof common to the class, while the dissent agreed with
the trial court (albeit for different reasons) that litigation of
that issue would require numerous individualized inquiries
of the class members.
	        To address those issues, it is helpful to distinguish
expressly between two different and analytically distinct
theories of ascertainable loss on which plaintiffs predicated
their class claim. One theory was a loss based on “dimin-
ished value.” Specifically, plaintiffs’ claim was that they and
the class members bought a product that was worth less
than they paid for it, and their damages were the difference
Cite as 358 Or 88 (2015)	119

in the value of the product as represented versus the value of
the product they actually received. Plaintiffs’ other theory of
loss was that they and the class members bought Marlboro
Lights believing defendant’s representation of inherent
lightness, they did not get what they believed they were get-
ting, and they therefore were entitled to a refund of their
purchase price. Those distinctive theories present different
concerns in terms of their legal viability and the nature of
the proof required to adjudicate them. We therefore ana-
lyze them separately, beginning with plaintiffs’ diminished
value theory of ascertainable loss.
        a.  Diminished Value
	        The premise of plaintiffs’ diminished value theory
was that the characteristic of “inherent lightness” has eco-
nomic value, so that plaintiffs and the class members suf-
fered an economic loss at the moment of purchase because
they bought a product that lacked that characteristic. In
effect, they bought a product that was the equivalent of
Marlboro regulars, rather than the Marlboro Lights that the
product purported to be. At the hearing on their motion to
certify the class, plaintiffs explained to the trial court that
they were prepared to produce expert testimony at trial that
an inherently lighter cigarette (i.e., one that delivered less
tar and nicotine than a regular cigarette, no matter how it
was smoked) had greater economic value than a regular one.
As a result, their theory went, by purchasing cigarettes that
were not inherently light, plaintiffs and the class members
did not get full value for their purchase. In colloquy at the
hearing on the motion for class certification, the trial court
clarified the gravamen of plaintiffs’ diminished value theory
by stating that “the heart” of that theory was that the class
members suffered an economic loss without having “to ever
open the pack” because the product they bought was not
what it was labeled to be. Plaintiffs’ counsel replied, “That’s
correct.” The trial court further clarified that the loss was
not because, “when smoked, [Marlboro Lights] deliver less
tar and nicotine” than regulars, to which plaintiffs’ counsel
replied, “You are there.”
	       Defendant responded to that theory by producing
evidence that Marlboro Lights had always been priced the
120	                           Pearson v. Philip Morris, Inc.

same as its regular cigarettes. Defendant emphasized that
the essence of plaintiffs’ class claim was that the Marlboro
Lights were not substantially different from Marlboro regu-
lars. Plaintiffs’ diminished value theory hinged on the idea
that they and the class members therefore suffered out of
pocket losses as measured by the difference in value between
the product they were supposed to have gotten—Marlboro
Lights—and the product they in fact got—the equivalent of
Marlboro regulars. Defendant maintained that plaintiffs’
diminished value theory of loss was not viable given the evi-
dence that the two products—Marlboro Lights and Marlboro
regulars—had always been priced the same.
	       Plaintiffs’ position, however, was that such proof
was beside the point. Plaintiffs, continuing to point to the
expert evidence that they said they would produce at trial,
maintained that the characteristic of “inherent” lightness
had economic value in the market. In their view, regardless
of what purchasers paid for Marlboro Lights, the product
was worth less than it would have been if Marlboro Lights
had been inherently light, as allegedly represented. Thus,
under plaintiffs’ theory, they and the class members suf-
fered an economic loss in the form of the diminished value of
the product they bought as compared to the value the prod-
uct would have had if it were as represented.
	         Plaintiffs did not, however, produce that expert tes-
timony for the trial court. To the extent plaintiffs’ position
was that, any time a product is not as represented, there
is automatically an “ascertainable loss,” the trial court
rejected its logical viability. “A simple example,” the trial
court explained, “shows the fallacy of that proposition as a
blanket assertion. If a consumer buys a stone advertised as
a cubic zirconi[a], he or she has suffered no ascertainable
loss if the stone turns out to be a diamond.” On the record
before it—where there was no difference in price between
the Marlboro Lights and regular Marlboro cigarettes—the
trial court found the inference of diminished value that
plaintiffs said could be drawn for the class as a whole to be
untenable. Given plaintiffs’ failure to come forward with
the expert evidence they said they could produce at trial,
the trial court had no other evidence of plaintiffs’ theory of
Cite as 358 Or 88 (2015)	121

diminished value—other than plaintiffs’ flawed logic—to
establish the legal viability of that claim.
	        The Court of Appeals disagreed, not on the basis
that plaintiffs had promised to produce an expert at trial
who would support their theory, but instead because it con-
cluded that plaintiffs’ theory rationally supported their claim
of diminished value. No expert testimony was required, in
the Court of Appeals’ view. Rather, “a jury could infer that
an inherently light cigarette would be more valuable than
a potentially light cigarette.” Pearson, 257 Or App at 138
(emphasis added). Plaintiffs’ claim, the Court of Appeals
explained, was that they had purchased a product that was
represented to have a feature “of value” that it did not have.
Id. at 137-38. The court thus distinguished the trial court’s
cubic zirconia example, saying simply that it was “inapt,”
because here “plaintiffs’ theory is that they received a prod-
uct that was less valuable than it was represented to be.” Id.
137 (emphasis in original).
	        In reasoning that an inference of diminished value
was permissible on this record, the Court of Appeals relied
on our decision in Scott v. Western International Surplus
Sales, Inc., 267 Or 512, 517 P2d 661 (1973). There, the
plaintiff had purchased a backpacking tent that came in
packaging that pictured a tent with eaves and a window,
and that expressly stated “Nylon Net Rear Window with
ZIPPERED flap.” Id. at 514. The tent inside, however, did
not have those features. Id. The evidence established only
that the plaintiff had paid $38.86 for the tent; no evidence
established the price of the same tent without eaves and a
window. Id. at 516. On that state of the record, this court
concluded that a jury could permissibly infer, first, that a
tent with the features pictured on the packaging (eaves and
a window) was worth $38.86 and, second, that a tent without
those features was worth less than $38.86. 267 Or at 515-
16.18 Analogizing to Scott, the Court of Appeals held that a

	18
       The plaintiff might have had a problem in Scott had the plaintiff sought
damages in the amount of the actual diminished value of the tent that he received,
given that state of the record. But this court pointed out in Scott that the plaintiff
sought to recover the minimum statutory damages of $200. Id. at 515. Thus, the
plaintiff could prevail on the basis of a showing of “some loss,” without showing
the amount of the tent’s actual diminished value. Id. at 516.
122	                                      Pearson v. Philip Morris, Inc.

reasonable inference could likewise be drawn in this case
that the value of being “inherently light” made Marlboro
Lights worth more than regular cigarettes. Pearson, 257 Or
App at 135-37.
	        Although such an inference may be logically per-
missible based on common consumer experience or nor-
mal market assumptions for many goods and products, it
does not hold up in this context. Here, unlike in Scott, the
undisputed evidence affirmatively establishes that there
is not—and never has been—a price difference between
Marlboro Lights and regulars. When the price of goods
is not different based on some represented quality (say,
for example, color or flavor), it simply does not logically
follow that the quality has greater economic worth.19 In
terms of economic loss—which is the kind of loss required
here—when there is no price difference for a good with a
particular feature and the same good without it, a plaintiff
has not paid any extra for the represented quality that the
plaintiff did not receive. In other words, the plaintiff is not
out of pocket any additional money based on the purchase;
the plaintiff got the represented feature for no charge. To
be sure, the purchaser may be disappointed in the prod-
uct because it is not what the purchaser believed he or
she was buying, and the purchaser may have suffered a
loss in the form of buying something he or she would not
have otherwise bought. But a loss in the form of the pur-
chase price is a different theory, one we discuss separately.
For a diminished value theory, the fact that the product
costs the same with or without a represented characteris-
tic defeats a logical inference that the product without the
feature is worth less.
	        Two other factual aspects of this case compound the
difficulty of the inference that the Court of Appeals said was
permissible. First, even if we could accept plaintiffs’ unsup-
ported premise—that light cigarettes are economically worth
more than regulars—the fact that Marlboro Lights and
	19
       For example, if cherry cola and regular cola have always cost the same,
and through a bottling error, thousands of bottles labeled cherry cola are filled
with regular cola and vice versa, it is difficult to see how the purchasers suffered
a diminished value loss, although, to be sure, for purchasers who bought the cola
based on flavor, they did not receive what they believed they were buying.
Cite as 358 Or 88 (2015)	123

regulars cost the same still defeats a reasonable inference
that plaintiffs and the class members paid too much (which
a diminished value theory requires). It is just as likely that
purchasers of Marlboro regulars, whose product should have
been worth less under plaintiffs’ theory, overpaid. Given the
price parity between the two products, it is impossible to
know which product (if either) is overpriced relative to the
other.
	        The other factor complicating the inference that the
Court of Appeals said could be drawn is that this product
is one that is consumed, rather than sold on a secondary
market. For promotional or other reasons, some goods with
a represented quality or characteristic of value may initially
be sold at a price that is the same as the good without that
quality (such as a car represented to be a new model year,
where the price set is the same as for the current model
year). For purposes of resale, however, the good may be
worth more if it has that quality, even though the purchase
price was the same. If, then, the good was misrepresented
and does not have that characteristic (for example, the car
turns out to be the current year’s model, contrary to the rep-
resentation), the purchaser suffers an economic loss, if not at
the moment of purchase, at least when the purchaser later
resells the good.20 But a good that is consumed or otherwise
extinguished or depleted in its use is not subject to the same
analysis. For goods of those kinds, under a diminished value
theory, a purchaser can suffer an economic loss only in the
form of having paid too much at the time of purchase. And

	20
        The car example is similar to the facts in Weigel, where the plaintiff pur-
chased what was represented to be a new car that was in fact used. The plaintiff
pursued a UTPA claim on the theory that he suffered an ascertainable loss in
the form of the difference between the price paid and the actual market value
of the car, which this court held a jury could infer was less than the price paid.
Weigel, 298 Or at 134-37. In other words, as in Scott, the plaintiff suffered an out-
of-pocket loss at the moment of purchase based on the price paid and the actual
value of the item. Our example poses a harder problem, because the purchase
price of the new model year car was unchanged from last year’s model. Again, the
UTPA requires ascertainable loss in the form of money or property. It does not, at
least textually, include a loss of “property value.” Whether, to prove an ascertain-
able loss for purposes of the UTPA, a purchaser can rely on diminished property
value alone, without some out-of-pocket loss incurred through resale, is nothing
we decide in this case. We offer the example to demonstrate the significant differ-
ence, however, between goods that are consumed and those that are possessory
property with ongoing resale value.
124	                             Pearson v. Philip Morris, Inc.

when, as here, the good is the same price with or without
a represented feature, no logical inference of economic loss
arises.

	         It may be, as plaintiffs represented to the trial court,
that through expert testimony, they had some specialized
economic theory to present to establish on a classwide basis
that each of the class members suffered a diminished value
loss. In other cases involving light cigarettes and similar
allegations of loss, the plaintiffs have attempted to rely on
expert testimony to establish that the tobacco industry mar-
keting drove up demand, thus inflating the purchase price
of light cigarettes, so that the plaintiffs paid more than they
otherwise would have if the truth about light cigarettes
had been known. See, e.g., McLaughlin v. Am. Tobacco Co.,
522 F3d 215, 226-27 (2d Cir 2008) (rejecting theory of eco-
nomic loss akin to “fraud on the market theory”). So far,
no court presented with a specialized economic theory of
loss has found the theory viable. But in all events, plaintiffs
in this case did not come forward with the evidence that
they said they would produce at trial. We are therefore left
with whatever logical inferences, based on ordinary market
assumptions, that a jury could draw. Contrary to the Court
of Appeals’ reasoning, where, as here, there is no difference
in the price between a product with the represented feature
and one without, plaintiffs’ theory of diminished value pro-
vides no logically viable theory on which classwide economic
losses can be established.

         b.  Refund of Purchase Price

	        Plaintiffs’ alternative theory of economic loss was,
as we have described, based on their and the class mem-
bers’ alleged failure to receive what defendant’s represen-
tation led them to believe they were buying. Specifically,
plaintiffs alleged that they suffered ascertainable loss “as a
direct result” of defendant’s misrepresentation because they
paid for cigarettes that “they believed were inherently lower
in tar and nicotine than defendant’s regular cigarettes but
received cigarettes that would deliver lowered tar and nic-
otine only if smoked in particular ways.” They sought a
refund of their purchase price as a remedy.
Cite as 358 Or 88 (2015)	125

	        After plaintiffs moved for certification of the class,
and once the parties squared off in their written memo-
randa and evidentiary submissions, both legal and factual
issues pertinent to the certification decision emerged. One
of their key legal disagreements was whether plaintiffs,
to prevail on their class claim, would have to prove “reli-
ance.” Specifically, the dispute was whether plaintiffs’ claim
required proof that a substantial factor in each class mem-
ber’s decision to purchase Marlboro Lights was the “low-
ered tar and nicotine” representation on their packaging.
Resolution of that legal question was important to the class
certification decision, because it would affect the likelihood
that individual inquiries of the class members would be
required to determine whether they had, in fact, relied on
defendant’s representations. See, e.g., Newman, 287 Or at
54 (reliance of class members on information in sales bro-
chure called for individual inquiries); Bernard, 275 Or at
154, 162 (individual issues predominated where class claim
depended on determining individual meaning that class
members attached to bank’s representation, as well as what
class members knew about bank’s practices). As we earlier
recounted, the trial court and Court of Appeals agreed
that reliance on defendant’s alleged misrepresentation was
required. The parties, before this court, again wage that
battle. Although neither the parties nor the trial court or
Court of Appeals explicitly analyzed reliance as an aspect
of plaintiffs’ purchase price theory of loss, that theory is the
appropriate context for the issue. We therefore discuss it at
this juncture.21
	       The starting point is the statute. ORS 646.638(1)
does not—at least by its terms—require reliance. It does,
however, provide that a person pursuing a private action
under the UTPA must suffer “an ascertainable loss of money
or property, real or personal, as a result of” an unlawful
trade practice. Id. The key phrase is “as a result of.” That
	21
        The nature of the causal link required for plaintiffs’ diminished value the-
ory of loss—that is, what would be required to show that the loss was “as a result”
of the alleged misrepresentation—would likewise bear on whether common or
individual issues predominate for purposes of that theory. But because plaintiffs’
diminished value theory is not viable on the record before us, we do not decide
whether that alternative theory of loss would or would not require reliance to
establish the requisite causal connection for plaintiffs’ UTPA claim.
126	                           Pearson v. Philip Morris, Inc.

phrase effectively requires that the unlawful trade prac-
tice cause the ascertainable loss on which a UTPA plain-
tiff relies. In several previous cases, we have examined
whether the causation element of the statute equates with a
requirement that a plaintiff prove reliance. Our answer has
been: “It depends.” Whether reliance is required to establish
causation turns on the nature of the unlawful trade practice
and the ascertainable loss alleged. Discount Fabrics, 289
Or at 384; Sanders v. Francis, 277 Or 593, 598-99, 561 P2d
1003 (1977).
	         Although reliance is not, in and of itself, an ele-
ment of a UTPA claim, it is a natural theory to establish the
causation of the loss (i.e., the “injury” in a UTPA claim) for
a purchaser seeking a refund based on having purchased a
product believing it had a represented characteristic that
it did not have. Causation is logically established if a pur-
chaser shows that, without the misrepresentation, the pur-
chaser would not have bought the product and thus should
be entitled to a refund. But if the purchaser did not care
whether the product had a character or quality as repre-
sented (or was not aware of the representation) and bought
it for other reasons, then the purchaser’s expectations have
not been frustrated. In that circumstance, the misrepre-
sentation cannot be said to have “caused” the purchaser to
suffer a loss in the form of the purchase price. As a func-
tion of logic, not statutory text, when the claimed loss is the
purchase price, and when that loss must be “as a result” of
a misrepresentation, reliance is what “connects the dots”
to provide the key causal link between the misrepresen-
tation and the loss. See Poulos v. Caesars World, Inc., 379
F3d 654, 664-65 (2004) (so observing in civil RICO context,
where action requires proof of injury as result of unlawful
conduct).
	        Plaintiffs nevertheless argue that the class does
not have to establish reliance because theirs was a “fail-
ure to disclose” theory, rather than one predicated only on
an affirmative misrepresentation. They expressly pleaded,
they point out, that defendant “both affirmatively misrep-
resented that its ‘light’ cigarettes would inherently deliver
low tar and nicotine and failed to disclose that, in order to
receive lower tar and nicotine, the smoker would have to
Cite as 358 Or 88 (2015)	127

smoke the ‘light’ cigarettes in a particular way.” Relying on
Sanders, they urge that a UTPA action based on failure to
disclose does not require reliance because it would be “arti-
ficial” to require a plaintiff to prove that it relied on undis-
closed information. 277 Or at 598-99. In response, defendant
characterizes this as a “half-truth” case, one that involves
an alleged affirmative misrepresentation coupled with the
alleged failure to disclose, and therefore one that requires
proof of reliance.
	        Those arguments miss the mark. It is not the
nature of the misrepresentation in this case that requires
proof of reliance. It is the misrepresentation coupled with
plaintiffs’ theory for having suffered a loss in the form
of the purchase price because they did not get what they
believed they were buying. In this case, reliance inheres
in the combination. We decline the parties’ mutual invi-
tations to reduce the analysis to an exercise in attaching
labels. What a plaintiff must prove is that (1) the defen-
dant committed an unlawful trade practice; (2) plaintiff
suffered an ascertainable loss of money or property; and
(3) plaintiff’s injury (ascertainable loss) was the result of
the unlawful trade practice. In other words, plaintiff must
suffer a loss of money or property that was caused by the
unlawful trade practice. Whether, to prove the requisite
causation, a plaintiff must show reliance on the alleged
unlawful trade practice depends on the conduct involved
and the loss allegedly caused by it. Sanders, 277 Or at
598-99; see also Discount Fabrics, 289 Or at 384 (so char-
acterizing the holding in Sanders). The answer requires
reasoned analysis of the claim, not labeling. Here, in their
complaint, although plaintiffs described defendant’s repre-
sentation in hybrid terms—that is, part affirmative mis-
representation and part failure-to-disclose—that descrip-
tion did not change the causative link that their refund
theory depended on. Under that theory, proof of reliance
on the alleged misrepresentation was integral to plaintiffs’
class claim. See Benedict, 241 FRD at 679 (for light ciga-
rette purchasers seeking to recover money on claim that
they did not get what they thought they were paying for,
reliance is required to show loss was caused by alleged
misrepresentation).
128	                           Pearson v. Philip Morris, Inc.

D.  Whether Common Issues Predominate
	        With our conclusion as to what plaintiffs were
required to prove to establish their class claim, we turn to
whether they carried their burden to show that the claim
could be litigated through common proof and would not,
instead, require a significant number of individual inqui-
ries. As both the trial court and Court of Appeals concluded,
the pivotal issue was whether plaintiffs could prove reliance
through common evidence.
	        Plaintiffs argued to the trial court—and continue
to argue on review—that they can prove classwide reliance
circumstantially, by inference. Specifically, they urged that
a factfinder could find that the representation made through
the labeling of Marlboro Lights to all purchasers (i.e., “low-
ered tar and nicotine”) was made uniformly to all purchas-
ers; that all purchasers would have had a common under-
standing of the representation (i.e., that the cigarettes were
“inherently” lighter no matter how they were smoked); and
that the representation went to the product’s “defining fea-
ture,” so that all purchasers would have naturally relied on
it. From those circumstantial facts, plaintiffs argued, a fact-
finder reasonably could infer that the class as a whole relied
on defendant’s alleged misrepresentation.
	        Defendant responded to plaintiffs’ circumstantial
basis for establishing classwide reliance by presenting
opinion surveys, statistical data, expert opinion, and mar-
ket analyses. Much of defendant’s evidence was based on
actual smoker responses; all was offered to show that smok-
ers have varying beliefs about whether lowered tar and nic-
otine cigarettes are healthier than regular cigarettes and
often choose light cigarettes over regulars for reasons other
than perceived health benefits, such as taste. Defendant
also produced articles published by the lay press describing
how smoker behavior can and often does defeat the lower
yields of tar and nicotine that light cigarettes might other-
wise deliver. Although plaintiffs took issue with what con-
clusions should be drawn from defendant’s evidence and
what weight the trial court should give it, plaintiffs came
forward with no similar direct evidence of their own of why
people purchase or smoke light cigarettes; instead, they
Cite as 358 Or 88 (2015)	129

rested on the inference of reliance that they asserted could
be drawn.
	        So framed by the parties’ respective positions, the
disputed and central factual question was: Why do people
buy light cigarettes? More fundamentally for purposes of the
predominance inquiry, the disputed factual issue was: Do all
(or nearly all) people buy them for the same reason and can
that factual question be determined based on common evi-
dence, or does deciding it require individual inquiries? The
trial court expressly found that “it is not as self-evident as
plaintiffs contend that every purchaser of Marlboro Lights
was motivated substantially by health concerns and acted
because he or she was misle[d] by [the] name Marlboro
‘Lights’ or the statement ‘lowered tar and nicotine.’ ”22 The
trial court bolstered that finding by observing that evidence
in the record showed “the irrationality of smoking and cig-
arette purchasing.” In the trial court’s view, plaintiffs had
urged that reliance was “susceptible” to proof on a classwide
basis, but had failed to present adequate common proof to
establish that the 100,000 individuals who had purchased
one or more packs of Marlboro Lights over a 30-year period
had all done so for the same reason—i.e., because they
read, understood, and believed that “lowered tar and nic-
otine” meant the cigarettes were “inherently” lighter and
would deliver less tar and nicotine no matter how they were
smoked.
	        In reaching the opposite conclusion, the Court of
Appeals majority went through the record at some length—
a record that consists principally of defendant’s evidence,
given that plaintiffs effectively presented no evidence of
their own beyond the circumstantial evidence of the rep-
resentation made. See Pearson, 257 Or 161-65. The major-
ity identified problems in defendant’s surveys, such as the
fact that some did not “necessarily” capture information
relevant to reliance, at least to the majority’s satisfaction.
Id. at 163. With others, the majority declined to give them
the “weight” that defendant urged they could bear. See, e.g.,
	22
        Plaintiffs resist any characterization of that statement by the trial court
as a “factual finding,” insisting instead it is at most an observation about the
force of plaintiffs’ contention. Suffice it to say, we disagree.
130	                                    Pearson v. Philip Morris, Inc.

id. (citing example). For survey evidence where consumers
answered that they selected light cigarettes for their taste,
the majority found that the consumers’ own explanations
for purchasing light cigarettes were impeached by tobacco
industry research concluding that smokers are “remarkably
insensitive to taste nuances in cigarettes.” Id. at 164-65.
The majority, after considering the circumstantial inference
that plaintiffs relied on, as against the surveys, data, and
expert opinions produced by defendant, concluded:
   “The uniform nature of defendant’s representations, defen-
   dant’s design and extensive marketing of the cigarettes,
   and studies and surveys that indicate that many[23] persons
   who smoked light cigarettes believed that they were safer
   than regular cigarettes convince us that defendant’s repre-
   sentations were a substantial factor in the vast majority of
   the putative class members’ purchases of at least one pack
   of Marlboro Lights.”
Id. at 160 (emphasis added).
	        In approaching the predominance inquiry as it did,
the majority stepped out of its institutional role by substi-
tuting its judgment for that of the trial court in terms of
the weight to be given to the competing evidence that the
parties presented. In effect, the Court of Appeals majority
took over for, and displaced, the trial court as factfinder. The
majority did not conclude that, as a matter of law, the trial
court could not find on this record, as the trial court did,
that people have varying and often irrational reasons for
purchasing the brand and type of cigarettes they do. Had
the majority so reasoned, however correctly or incorrectly,
that reasoning would at least have been consistent with its
role as a reviewing court. Instead, the majority simply dis-
agreed with the trial court on what factual conclusion to
draw from the record.
	        The majority, having overstepped its role in review-
ing the facts, then asked the wrong legal question. Looking
to Strawn v. Farmers Ins. Co., 350 Or 336, 258 P3d 1199
	23
       Note that the court said “many,” without attempting to quantify, and left
undiscussed how many others held a contrary belief. Nor did the court purport
to conclude that the number was sufficiently large as to render the number of
consumers with a different belief de minimis.
Cite as 358 Or 88 (2015)	131

(2011), the majority asked, as we had in Strawn, whether
plaintiffs had produced evidence that, even though circum-
stantial, would permit an inference of classwide reliance.
Pearson, 257 Or App at 158-60. The majority pointed out—
correctly—that this court in Strawn declined to hold that, in
a class action, reliance always must be established by sep-
arate evidence specific to each class member. The majority
also noted—again correctly—that we concluded in Strawn
that the evidence that the plaintiffs had produced in that
case permitted a factual inference of classwide reliance. Id.
at 159-60. The majority then compared the plaintiffs’ cir-
cumstantial evidence of reliance in Strawn to plaintiffs’ cir-
cumstantial evidence of reliance in this case, and concluded
that an inference of reliance was as permissible in this case
as it was in Strawn. Id. at 160.

	        Strawn, however, arose in a significantly different
procedural posture; because of that different posture, it
provides no particular guidance for this dispute. The issue
in Strawn was whether the defendants were entitled to a
directed verdict on the theory that plaintiffs, for their evi-
dence to be legally sufficient, had to produce direct, rather
than circumstantial, evidence of reliance. The issue was, in
other words, whether the plaintiffs’ proof at trial was legally
sufficient to create a jury question on whether the class
as a whole had relied; we held that it was. 350 Or at 362.
This court was not asked to review—and did not review—
whether the class in Strawn had been properly certified; the
trial court’s pretrial certification decision was not challenged
before this court. 350 Or at 356 n 13 (on review, defendant’s
challenges to class certification had dropped from the case).
Thus, as the case came to this court, Strawn did not involve
the predominance inquiry that this case involves—a pre-
trial prediction of whether, given the plaintiffs’ claims, the
defendant’s defenses, and the record, it was likely that indi-
vidual issues would predominate over common ones in the
adjudication of the reliance element of the plaintiffs’ claim.24
	24
        Significantly, defendant asserted in Strawn that the trial court precluded
it from presenting individualized evidence to refute the inference of classwide
reliance on which the plaintiffs relied. In rejecting that argument, we specif-
ically noted that the defendant was entitled to contest the plaintiffs’ proof of
reliance, and had the opportunity to offer individualized evidence to that end;
132	                                      Pearson v. Philip Morris, Inc.

The guidance it gave for assessing whether a class plaintiff’s
circumstantial evidence created a jury question on the issue
of classwide reliance is inapposite to the class certification
issue that this case presents.
	        The controlling question for the majority in this
case, then, should not have been whether reliance was “sus-
ceptible” to classwide proof on the basis of the inference
that plaintiffs relied on. See Pearson, 257 Or App at 158 (so
framing the question). That framing of the question asks,
at most, whether plaintiffs potentially could prove a prima
facie case. As we have already discussed, the nature of the
evidence required to prove a plaintiff’s case is a consider-
ation in the predominance inquiry, but it is only part of the
equation. The trial court must consider what it will take to
fully and fairly adjudicate the factual disputes between the
parties, which requires the court also to consider the nature
of the proof that the defendant is entitled to present to raise
legitimate defenses and to otherwise challenge the factual
premises of the plaintiffs’ theory.
	        In this case, we decline, for purposes of our analy-
sis, to describe the extensive record in detail, as the Court
of Appeals majority did. It was the trial court’s function to

the defendant, however, had failed to take advantage of that opportunity. Id. at
349-50, 356 n 13. Because the defendant in Strawn ultimately did not make indi-
vidualized inquiries of the class members, we do not know what evidence the
defendant would have offered or the extent to which individualized issues would
have revealed fatal dissimilarities in the class or undermined the efficiency of the
class action that the court had certified.
	    Nor do we know whether the defendant in Strawn at the class certification
stage, in the face of the inference of classwide reliance on which the plaintiffs
relied, created legitimate doubt as to whether the class members had uniformly
understood and relied on the representation at issue. In the face of such evi-
dence, the fact that the plaintiffs’ evidence could support a rational inference of
classwide reliance would not have been enough to carry the plaintiffs’ burden on
the predominance inquiry. See Bernard, 275 Or at 159-60 (class certification not
appropriate where a legitimate defense will require individual inquiries; class
action is procedural device and does not erode the substantive rights of parties or
deprive defendant of presenting factual and legal defenses). Rather, if the defen-
dant in Strawn at the class certification stage legitimately drew the uniformity
of the class members’ states of mind into doubt, the trial court should have con-
sidered that fact in assessing whether individual inquiries predominated over
common ones. The important point is not what the answer should have been in
Strawn if the defendant had challenged class certification pretrial on that basis;
the important point is that the answer would not have been based on the suffi-
ciency of the evidence analysis that our decision in Strawn procedurally involved.
Cite as 358 Or 88 (2015)	133

determine from that record whether, factually, the class
members could have had different subjective reasons for their
purchase decisions, some of which had nothing to do with
whether they did or did not believe that Marlboro Lights were
“inherently” lighter. It was likewise the trial court’s function
to determine from the record whether, factually, the individ-
ual class members were likely to all have had the same or
differing beliefs as to whether a cigarette represented to be
lower in tar and nicotine was inherently healthier, no matter
how it was smoked, than a regular cigarette.
	         As we have previously observed, sustaining a class
action where the claim requires a large number of individual
members to have the same subjective states of mind is diffi-
cult. Bernard, 275 Or at 156-57. For at least some commod-
ities, the only logical explanation for a consumer’s purchase
may be that the product has—or is represented to have—an
essential quality, without which it would be worthless. See,
e.g., Garner v. Healy, 184 FRD 598 (ND Ill 1999) (consumers
purchased “car wax” and allegedly received worthless “non-
wax” product). For products that are worthless without a
particular represented characteristic or quality, a defendant
who asserts that individual inquiries are needed to estab-
lish that the product was purchased for other reasons may
be “dreaming up a theoretical defense requiring individual
inquiries for which there is little basis in fact.” Bernard, 275
Or at 158. This is not that kind of case. Rather, this is a more
typical consumer transaction, one that involves consumer
choices that implicate states of mind, perceptions, beliefs,
and conscious and subconscious motivations.25 Indeed, as
	25
        The trial court was not alone in its conclusion that individuals who pur-
chase and smoke Marlboro Lights do so for various reasons, and with a range of
beliefs about whether lower tar and nicotine cigarettes are in fact healthier than
regular cigarettes. Related putative class litigation has been brought in courts
throughout the country over the past decade or so. The overwhelming major-
ity of courts have similarly declined class certification. As did the trial court in
this case, those courts have concluded that, to resolve why individuals purchase
light cigarettes and what they know and believe about whether and under what
circumstances those cigarettes will deliver less tar and nicotine, would require
numerous individual inquiries of the putative class members. See Phillips, 298
FRD at 365-66 (so holding; citing representative cases); Lawrence v. Philip Morris
USA, Inc., 164 NH 93, 99-101, 53 A3d 525 (2012) (reversing trial court certifica-
tion of class; extensively discussing factual showing by defendant; concluding
as a matter of law that knowledge and mental state of class members required
individualized inquiries that predominate over common ones).
134	                            Pearson v. Philip Morris, Inc.

the trial court expressly found, smoking is in many ways
an irrational choice. When a consumer’s choice to engage in
activity or buy a product involves irrational motivations, it
is all but patent that individual inquiries will be required
to determine why the individual members of a large class
make the choices they make. See, e.g., Poulos, 379 F3d at 668
(no single, logical explanation for gambling exists; for differ-
ent gamblers, activity may be an addiction, a form of escape,
a casual endeavor, a hobby, a risk-taking money venture, or
scores of other things).
	       Judge Duncan, writing for four members of the
Court of Appeals, identified a further reason why the issue
of reliance would entail individualized inquiries of the
class members. As she explained, the very representation
that plaintiffs relied on injected individualized issues as to
whether the 100,000 estimated class members likely had a
common understanding of the alleged misrepresentation on
which plaintiffs relied:
   “The representations at issue were that Marlboro Lights
   were ‘Lights’ and had ‘Lowered Tar and Nicotine.’ In my
   view, reliance on the part of all putative class members
   cannot be inferred from circumstantial evidence in this
   case because of the likely variations in both how putative
   class members understood defendant’s representations and,
   relatedly, whether the representations played a substantial
   role in their decisions to purchase Marlboro Lights.”
257 Or App at 175 (Duncan, J. concurring in part, dissent-
ing in part).
	        As Judge Duncan intimated, the words “inherently
light” do not appear in the representation that defendant
made. Likewise, nothing in defendant’s representation said
anything to the effect of “lower in tar and nicotine no mat-
ter how you smoke them.” Some purchasers, Judge Duncan
explained, might infer that Marlboro Lights would deliver
less tar and nicotine no matter how they were smoked.
Id. Others might infer that, all other things being equal,
Marlboro Lights would deliver less tar and nicotine than reg-
ular cigarettes only if smoked in the same way as regulars.
Id. Compounding the problem, Judge Duncan observed, was
that “the class period is long. It runs from 1971 to 2001. In
Cite as 358 Or 88 (2015)	135

that 30-year period, information about dilution filters and
the phenomena of titration and compensation was increas-
ingly available.” Id. at 176. The fact that plaintiffs’ claim
of reliance depended on a purchaser’s subjective interpre-
tation of the representation, coupled with the long class
period over which information that Marlboro Lights were
not inherently light was increasingly available to the public,
led Judge Duncan to conclude that there was a “legitimate
question” whether a considerable number of the class mem-
bers knew, or were on notice, that Marlboro Lights were not
inherently light and did not rely on that representation. Id.
at 177. Judge Duncan’s conclusion that individual issues
would predominate over common ones in litigating the reli-
ance element of plaintiffs’ claim, although different from the
trial court’s reasoning, is correct as well.26

	        Thus, we agree with both the trial court and Judge
Duncan that plaintiffs failed to show that the reliance
required to prove their refund theory of economic loss could
be litigated through common evidence, rather than requir-
ing individual inquiries of the class members. As the trial
court found, and as the record supports, there was ample
evidence that, among the putative class of 100,000 who pur-
chased Marlboro Lights in Oregon over a 30-year period,
the purchasers had varying beliefs as to whether lowered
tar and nicotine cigarettes were “healthier” to smoke. The
record also contains ample evidence that the putative class

	26
        Worth emphasizing is that the problem that Judge Duncan identified is one
of common reliance and causation among the class members, not whether there
was a misrepresentation common to the class. Defendant does not argue—and
the trial court did not conclude—that individual differences were likely to plague
the question of whether defendant’s lower tar and nicotine labeling was a misrep-
resentation. Presumably, whether that was a misrepresentation is determined
based on an objective standard of what a reasonable consumer would understand
the representation to be; no party argues otherwise in this case, and that is not
an issue. As an objective inquiry, it would be common to the class. Reliance, how-
ever, is necessarily subjective—it turns on what individual purchasers in fact
believed and whether their beliefs motivated their purchases of Marlboro Lights.
The fact that the misrepresentation on which plaintiffs rely was not express, but
depended on inference and subjective interpretation, has bearing on the reliance
issue, but not on whether defendant made a misrepresentation. Although defen-
dant does not concede that it misrepresented its product, it does not dispute on
review that whether it in fact there was a misrepresentation as alleged is an issue
that can be and likely would be resolved for or against defendant based on proof
common to the class.
136	                           Pearson v. Philip Morris, Inc.

members were motivated to buy Marlboro Lights for a variety
of reasons, some irrational, and others unrelated to whether
Lights were “inherently” lower in tar and nicotine than reg-
ular cigarettes. And, as Judge Duncan reasoned, the rep-
resentation of “inherent” lightness on which plaintiffs rely
depends significantly on interpretation and what purchas-
ers understood the “lowered tar and nicotine” label to imply,
which added to the potential for the class members to have
varying motivations for buying Marlboro Lights. For those
reasons, the potential for fatal dissimilarities (to borrow
again from Professor Nagareda) in terms of the class mem-
bers’ reliance on the alleged misrepresentation was great.

	        As we have emphasized, a trial court’s role in decid-
ing whether to certify a class is to make a preliminary fore-
cast of how the adjudication of the issues at trial likely will
play out. Unlike in Strawn, where the issue was the suf-
ficiency of the plaintiffs’ evidence to survive a motion for
directed verdict, the trial court does not decide class certi-
fication by assessing only whether an inference of classwide
reliance permissibly can be drawn from evidence common to
the class. The class certification decision also must account
for how the defendant legitimately may seek to dispute the
plaintiff’s evidence. Here, the trial court found that, factu-
ally, there were likely to be material differences among the
individual class members as to whether they subjectively
believed that Marlboro Lights were inherently lower in tar
and nicotine and purchased them in reliance on defendant’s
lower tar and nicotine representation. On the basis of that
showing by defendant, the trial court correctly determined
that plaintiffs did not carry their burden to show that, on
the element of reliance, common issues prevailed over indi-
vidual ones. See Bernard, 275 Or at 162 (predominance
standard not satisfied where record establishes that state
of mind of individual class members will legitimately be in
issue and will require separate adjudications of claims of
numerous members of class).

E.  Statute of Limitations

	       On review, defendant renews its argument that,
in addition to the individual inquiries required to resolve
Cite as 358 Or 88 (2015)	137

the issues of ascertainable loss and causation of that loss
(reliance), the litigation of defendant’s statute of limitations
defense likewise would require highly individualized inqui-
ries and could not be resolved on the basis of common proof.
The trial court did not suggest that it would have denied class
certification on that basis alone. It did, however, agree with
defendant and considered the need for individual inquiries
to resolve defendant’s statute of limitations defense a factor
in its conclusion that individual issues predominated, which
in turn weighed in the trial court’s discretionary assessment
that a class action was not a superior means for litigating
the claim in this case. The Court of Appeals, on the other
hand, although it agreed that resolving defendant’s statute
of limitations defense would require individual inquiries,
concluded that it should not be a factor in assessing pre-
dominance. Pearson, 257 Or App 166-67. We therefore dis-
cuss, briefly, why the trial court was correct and the Court
of Appeals was not.
	        As we have already described, under ORS 646.638(6),
a private UTPA action must be brought within one year from
the discovery of the unlawful trade practice on which it is
based. Because the limitation period is tied to the plaintiff’s
“discovery” of the unlawful conduct, it runs in this case from
when the plaintiffs and the members of the plaintiff class
either actually knew or should have known that the repre-
sentation that Marlboro Lights were lower in tar and nico-
tine was not true. See generally FDIC v. Smith, 328 Or 420,
428, 980 P2d 141 (1999) (“In general terms, a cause of action
does not accrue under the discovery rule until the claim has
been discovered or, in the exercise of reasonable care, should
have been discovered.”); see also Sazenz v. Pittenger, 78 Or
App 207, 211-12, 715 P2d 1126 (1986) (UTPA statute of lim-
itations begins running when plaintiff knows or should have
known of the allegedly unlawful conduct).
	        In class actions, the extent to which a statute of
limitations defense is likely to entail highly individual-
ized inquiries of class members depends on the nature of
the claim and the specific facts involved. Here, no one dis-
putes that individualized inquiries would be required to
determine whether and when individual class members
138	                                     Pearson v. Philip Morris, Inc.

were aware, through publicized reports or otherwise, that
Marlboro Lights either were not lighter at all or were lighter
only if smoked in a particular way. Defendant asserts that
individual inquiries of class members would be required to
determine whether and when they became aware that the
alleged representation was false; plaintiffs, the trial court,
and the Court of Appeals agree. In effect, there is consen-
sus that, given the estimated 100,000 members in the puta-
tive class, coupled with the significant 30-year time period
involved and the publicized information during that period
that “light” cigarettes were not necessarily healthier, the
claims of many of the putative class members might be time
barred.27
	        The Court of Appeals recognized that the statute of
limitations issue would require individualized inquiries and
proof; in its view, however, that fact did not affect the pre-
dominance inquiry, because those individualized questions
would arise “only after a jury has determined the central
question of defendant’s liability to the class.” Pearson, 257 Or
App at 166-67. The Court of Appeals considered the statute
of limitations defense as analogous to resolving damages,
which it described as a part of a claim distinct from liability,

	27
         Although she did so to make a different point, Judge Duncan canvassed
briefly the information made public about the fact that the amount of tar and
nicotine delivered by light cigarettes to smokers depended on how the cigarette
was smoked. Pearson, 257 Or App at 176 (Duncan, J., concurring in part; dissent-
ing in part) (discussing that evidence to demonstrate degree to which individual
class members may not have understood lowered tar and nicotine representation
to mean that Marlboro Lights were inherently light, no matter how they were
smoked). Judge Duncan pointed out that information was publicized as early as
1976, five years after the beginning of the 30-year class period, and continued
with other reports and articles throughout the class period. Id. Relying on much
of the same evidence that defendant put into the record in this case, courts in
similar cases in other jurisdictions have likewise concluded that the amount of
publicity that occurred between the 1970s and 2001 (when defendant removed
the lower tar and nicotine label from Marlboro Lights) made it highly likely that
individual purchasers would vary significantly in their awareness of that pub-
licity. See, e.g., Lawrence, 164 NH at 100-01 (describing publicity, including 1982
American Cancer Society and 1993 National Cancer Institute publications dis-
tributed nationally, the latter of which specifically advised smokers, when smok-
ing light cigarettes, to not “smoke more cigarettes, inhale them more often or
more deeply, or place your fingertips over the holes on the filters”); In re Light
Cigarettes, 271 FRD at 412, 421(noting public information disseminated through
class period; concluding that statute of limitations defense would require individ-
ualized inquiries of putative class members because, as “a matter of law,” number
of potential class members aware of publicity was not de mimimis).
Cite as 358 Or 88 (2015)	139

and something to be resolved through individualized inqui-
ries after a determination of liability to the class as a whole.
Id. at 167 (so concluding; citing federal cases).

	        The Court of Appeals’ reasoning was flawed, how-
ever, and the court too quickly dismissed the problem. If the
statute of limitations has run on individual class members’
claims, those claims are barred. Defendant is not liable on
them. A statute of limitations defense is approached like other
issues that go to the merits on liability. If the facts are undis-
puted, the defense can appropriately be resolved on summary
judgment. See, e.g., Greene v. Legacy Emanuel Hospital, 335
Or 115, 129, 60 P3d 535 (2002) (no genuine issue of material
fact existed as to when plaintiff discovered harm; summary
judgment on statute of limitations correctly granted). But if
disputed facts must be resolved to determine if a claim is time
barred, those facts must be resolved by the finder of fact at
trial. See, e.g., Keller v. Armstrong World Industries, Inc., 342
Or 23, 33, 147 P3d 1154 (2006) (genuine issue of material fact
as to when plaintiff was aware that asbestos might be cause of
pulmonary problems precluded summary judgment on statute
of limitations ground).

	        For purposes of a class certification decision, when
a statute of limitations defense is not just a theoretical or
frivolous issue, but instead has a legitimate basis given the
nature of the claim and the facts, a trial court should con-
sider it along with other central issues in the case in the
predominance inquiry. In this case, given the large putative
class of an estimated 100,000 members, the lengthy 30-year
time period for plaintiffs’ UTPA claim, and the significant
opportunities throughout that time period for class mem-
bers to have read or otherwise become aware of publicized
information that light cigarettes were potentially no lower
in tar and nicotine than regular cigarettes, the individual-
ized inquiries required by defendant’s statute of limitations
defense were properly considered in the trial court’s predom-
inance determination.28
	28
       The Court of Appeals had another layer to its reasoning, one that com-
pounded the problem of the need for individual inquiries on the statute of lim-
itations defense. On the issue of classwide reliance, the court concluded that,
as long as class members relied “initially” on the alleged misrepresentation in
140	                                      Pearson v. Philip Morris, Inc.

F.  Issue Class Certification
	         The only remaining issue is plaintiffs’ argument that
the trial court erred in denying their alternative request for
certification of an issue class under ORCP 32 G. In denying
plaintiffs’ request for issue certification, the trial court rea-
soned that the most fundamental issues in the case—that is,
the issues most apt to drive the resolution of the class claim
at trial—were likely to require individualized inquiries of
the class members, so that individual issues still would pre-
dominate for any potential issue class. Because the Court of
Appeals disagreed with the trial court’s central determina-
tion that individual issues predominate over common ones,
it reversed the trial court’s denial of issue class certification,
and instructed the trial court to reconsider issue class cer-
tification based on what the Court of Appeals deemed to be
the correct predominance determination (assuming that
the trial court did not certify the class on reconsideration).
Pearson, 257 Or at 171-72.

purchasing Marlboro Lights, it would not matter if they later became aware
(through the publicity or otherwise) that Marlboro Lights delivered lower tar and
nicotine only if smoked in the same way as a regular cigarette. That information,
the court reasoned, would mean only that class members could not recover for
later purchases. Pearson, 257 Or App at 160. The court thus appears to have
concluded that an inference of classwide reliance was possible at least for the
class members’ initial purchases of Marlboro Lights. As we have explained, the
permissible nature of that or any other inference of classwide reliance is not the
correct test for class certification; the test requires consideration as well of what
defendant would be entitled to show to defeat that inference.
	    Equally important, though, the more narrow inference on which the Court
of Appeals relied would inject further individual inquiries into the case. The
class members were defined as individuals who had purchased Marlboro Lights
in Oregon during a 30-year period. They did not have to have been Oregon resi-
dents at any point during those 30 years or throughout the time they purchased
Marlboro Lights. Some members of the putative class may have lived for many
years in other states and later moved to Oregon. Others may have traveled or
visited Oregon frequently, without ever having lived here. Defendant would be
entitled to determine whether nonresident class members made their initial “reli-
ance” purchases in Oregon or elsewhere. Conversely, even lifelong Oregon resi-
dents may have made their initial purchases while out of state (attending school
or stationed elsewhere with the military, as only two examples). Narrowing the
inference, as the Court of Appeals did, thus invited an additional round of indi-
vidual inquiries as to where the class members made their initial purchases. And
it also placed added importance on when those initial “reliance” purchases were
made, because the farther back in the 30-year class period each class member
began purchasing Marlboro Lights, the more likely that their initial “reliance”
purchases would be barred by the one-year statute of limitations.
Cite as 358 Or 88 (2015)	141

	        We already have concluded that the trial court’s
predominance determination was correct. That effectively
moots the Court of Appeals’ dispositional rationale for
reversing the trial court on the issue class certification
issue. The question before us is whether the trial court erred
in denying the motion for issue certification.
	        Plaintiffs’ approach to issue certification was of little
aid to the trial court, and is of little aid to us. Plaintiffs did
not—and still do not—identify any particular issue or group
of issues as the objects of their motion. Instead, at trial and
on review, they asserted summarily that “all common issues
identified by plaintiff in this motion are appropriate for class
certification.” The motion listed 17 “common issues of fact”
and 39 “common questions of law,” many of which appear
to be duplicative or, at least, overlapping. Plaintiffs do not
attempt to demonstrate how those issues are adequate for
certification under the applicable rule. And they have not
explained how those more specific issues would avoid many
of the individualized issues that we have identified. At the
least, the need for individualized inquiries to resolve defen-
dant’s statute of limitations defense would appear as likely
to arise for the issue classes as for the class as a whole.
	         ORCP 32 G commits issue class certification, in sig-
nificant part, to the discretion of the trial court. The partic-
ular claim or issue to be certified for class treatment must
satisfy all prerequisites for class certification under ORCP
32 (A)(1) except numerosity—i.e., commonality, typicality,
adequacy, and notice. Beyond that, the rule merely provides
that, when “appropriate” under the general standards for
class certification, the trial court “may” order a class action
with respect to a particular claim or issue. See 358 Or at
97 n 9. In this case, given the broad discretion that the rule
confers on the trial court and given the limitations of plain-
tiffs’ argument in favor of issue class certification, we con-
clude that the trial court did not abuse its discretion, and
therefore did not err, in denying plaintiffs’ motion for issue
certification.
	         The decision of the Court of Appeals on class cer-
tification and issue class certification is reversed. The
trial court order denying class certification and issue class
142	                                     Pearson v. Philip Morris, Inc.

certification is affirmed. The case is remanded for further
proceedings on the named plaintiffs’ individual claims.
	         WALTERS, J., concurring.
	        I concur in the majority opinion and write only to
call attention to the important difference between two types
of ascertainable losses that a plaintiff may seek to recover
in a claim under the Unlawful Trade Practices Act—dimin-
ished value and a refund of the purchase price.1 I agree
with the majority that, in this case, we need not determine
whether subjective reliance is an element of a plaintiff’s
claim for diminished value and, if so, how that element may
be proved. However, that issue may arise in the future, and
a correct understanding of the law is important to those
whose business or trade practices are subject to the UTPA,
as well as to those who purchase real estate, goods, or ser-
vices that are subject to the act.
	        As the majority explains, Oregon’s UTPA was enacted
as a comprehensive statute to protect consumers from unlaw-
ful trade practices. 358 Or at 115. The act has both public
and private enforcement mechanisms and “is designed to
encourage private enforcement of the prescribed standards
of trade and commerce in aid of the act’s public policies as
much as to provide relief to the injured party.” Weigel v. Ron
Tonkin Chevrolet Co., 298 Or 127, 134, 690 P2d 488 (1984).
As a result, a party’s losses “should be viewed broadly,” id.
at 136, and private claims under the act are not limited to
those where a plaintiff shows “an economic loss in the sense
of a difference between the price paid and some objective
measure of market value,” id. at 133. The act also permits a
claim when a plaintiff can establish a loss based on the fact
he or she expended funds “for goods that are not as desired
by the customer and represented by the seller irrespective of
their market value to others.” Id. at 134.
	        A plaintiff who cannot show “an economic loss in
the sense of a difference between the price paid and some
objective measure of market value,” id. at 133, but who can
show that he or she would not have purchased a product but
for the seller’s misrepresentations about that product, may
	1
      I do not intend to imply that other theories of loss may not be actionable.
Cite as 358 Or 88 (2015)	143

seek return of the money paid for the product irrespective
of its market value, 358 Or at 126. Thus, to use an exam-
ple that the majority uses, a plaintiff who buys a product
represented to be cherry cola because the plaintiff wants to
experience the cherry taste, may, if the product is, instead,
regular cola, seek a return of the money paid, even if the
cost of cherry and regular cola is the same.
	         That does not mean, however, that a plaintiff who
can show a difference between the price paid for a misrepre-
sented product and the market value of that product must,
like a plaintiff seeking a refund of the purchase price, also
show that he or she made a subjective choice to purchase
the product because of the misrepresented characteristic. In
a diminished value claim, the plaintiff’s ascertainable loss
is not the full amount of the purchase price; rather, it is the
difference between the purchase price and the market value
of the item purchased. 358 Or at 118-19.
	        To illustrate the difference, consider the following
example. Assume that a seller advertises a tent as having
a dozen features, one of which is that the tent is water-
proof and another of which is that the tent weighs less than
three pounds. Assume that the plaintiff purchases the tent
for $100 and that the subjective reason that she does so is
that it is represented to be waterproof. The plaintiff plans
to go camping that weekend, and rain is forecast. Although
the plaintiff reads the description of the tent, including the
description of the tent as weighing less than three pounds,
weight is not the feature that motivates the plaintiff. She
plans to go car camping, not to carry the tent on her back.
Assume that, after making her purchase and completing
her trip, the plaintiff decides to sell the tent and learns that
it weighs six pounds, not the represented three. In addition,
the plaintiff learns that, all other features being equal, tents
that weigh more than three pounds have a market value of
no more than $80.
	         In that example, the seller engaged in an unlawful
trade practice by representing that the tent had a charac-
teristic that it did not have. ORS 646.608(1)(e). Also in that
example, the plaintiff suffered an “ascertainable loss” as a
“result of” the seller’s unlawful trade practice, as required
144	                                      Pearson v. Philip Morris, Inc.

by ORS 646.638(1), because the plaintiff paid the market
value of the tent as represented, but the tent was not as
represented. The plaintiff’s economic loss was the difference
between the purchase price of the tent as represented ($100)
and the objective market value of the tent that the plaintiff
received ($80)—a difference of $20. Because the tent was
not as represented, the plaintiff suffered economic loss when
she paid more for the tent than it was objectively worth.
	         That conclusion is correct even though the plaintiff’s
subjective reason for purchasing the tent was that it was
waterproof. The UTPA does not require that a consumer’s
purchase be the “result of” an unlawful trade practice; it
requires that a consumer’s ascertainable loss be the “result
of” an unlawful trade practice. ORS 646.638(1). When a
plaintiff can establish that she purchased an item and that,
as a result of a misrepresentation of the item’s character-
istics, the purchase price of that item was greater than its
objective market value, the necessary connection between
the unlawful trade practice and the ascertainable loss
exists.2 However, when a plaintiff cannot prove diminished
market value and relies, instead, on a contention that she
would not have purchased the item without a represented
characteristic of particular benefit to her, the plaintiff must
prove the subjective reason for her purchase. 358 Or at 126.
	        That understanding of the UTPA comports with
its purpose. People buy products after weighing numerous
characteristics, benefits, and qualities. They may make
their final decisions based on more than one of a product’s
features, or they may not be able to articulate why, in the
end, they laid their money down. But when people make
purchases, they nevertheless expect to receive products that
have all of the represented features, not only those features
that were subjectively determinative in the purchasing deci-
sion. When a plaintiff establishes that he or she purchased
a product that was not as represented and that he or she
suffered diminished value as a result, the purchaser demon-
strates ascertainable loss sufficient to permit a claim under
the UTPA.
	2
      As the majority recognizes, there are instances in which diminished value
may be inferred. See 358 Or at 121-22 (discussing Scott v. Western Int. Sales, Inc.,
267 Or 512, 517 P2d 661 (1973) as permitting such an inference).