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The “price inflation” theory of causation is a relatively new trend in consumer class actions.  Under this theory, the plaintiff asserts that misleading advertising had the effect of artificially inflating the market for a product or service, causing every purchaser to pay more than they would have but for the misrepresentations.  This allows the plaintiff to get around a common problem in consumer fraud class actions arising out of misrepresentations made in the advertising and sale of products and services.  That is, the inability to prove by common, classwide evidence that each purchaser relied upon and was damaged by the fraudulent statements.  Various courts have refused to allow proof of fraud liability based on the so-called “price inflation” theory, but others most notably the United States District Court for the Western District of Washington, have at least preliminarily accepted the theory.”Price inflation” theory appears to be a variation of the “fraud on the market” doctrine sometimes applied in Securities class actions and at issue in the consumer class action context in the case of Farmers Insurance Exchange v. Benzing (see http://classactionblawg.com/2008/02/21/colorado-supreme-court-accepts-cert-in-farmers-insurance-exchange-v-benzing.aspx).  Resort to these theories seems to be a growing trend as an alternative to justify class certificaiton where, as is often the case in consumer fraud lawsuits, the direct impact of an alleged fraud in sales or advertising practices is inherently individualized.  It will be interesting to see how these issues are ultimately decided.