Class Complaint Dismissed WITH Prejudice

The Second Circuit recently affirmed a trial court decision dismissing a proposed class action challenging the marketing of certain cosmetic products.  See DiMuro v. Clinique Labs, LLC, No. 13-4551 (2d Cir. 7/10/14) (unpublished).

Plaintiffs filed a putative class action complaint asserting claims under the Connecticut, New Jersey, and Illinois consumer fraud statutes, along with claims for breach of express warranty, breach of implied warranty, and unjust enrichment, arising from defendants’ marketing of seven different cosmetic products sold under the “Repairwear” product line. But while plaintiffs’ consolidated class action complaint asserted claims arising out of the marketing of seven different products, the named plaintiffs only alleged to have purchased and used three of the seven products.

Plaintiffs argued that they nevertheless had class standing to bring claims for Repairwear products that they did not buy-- a commonly attempted but seldom successful tactic.  Here, each of the seven different products have different ingredients, and defendant allegedly made different advertising claims for each product. Unique evidence would therefore be required to prove that the 35-some advertising statements for each of the seven different products were false and misleading. As a result, the court could not conclude that claims brought by a purchaser of one product would raise a set of concerns nearly identical to that of a purchaser of another Repairwear product. Accordingly, plaintiffs lacked standing to bring claims for the four products that they did not purchase.

The court also affirmed the dismissal of plaintiffs’ consumer fraud claims because plaintiffs failed to plead them with the requisite particularity under Fed. R. Civ. P. 9(b).  Rule 9(b) requires that a complaint specify the statements that the plaintiff contends were fraudulent, identify the speaker, state where and when the statements were made, and explain why the statements were fraudulent.  E.g., Mills v. Polar Molecular Corp., 12 F.3d 1170, 1175 (2d Cir. 1993). One of the cardinal purposes of Rule 9(b) is to “provid[e] a defendant fair notice of plaintiff’s claim, to enable preparation of [a] defense.” See DiVittorio v. Equidyne Extractive Indus., Inc., 822 F.2d 1242, 1247 (2d Cir. 1987). Plaintiffs’ consolidated complaint was wholly conclusory and lacked the particularity required to ensure that defendant received fair notice of the claims.

Specifically, plaintiffs’ "group-pleading" as to the products and the advertisements at issue was
inconsistent with Rule 9(b)’s particularity requirement in that the complaint failed to specify which
of the alleged statements were fraudulent and with regard to what product.  It simply alleged that the products, collectively, cannot work. Given that the seven different products have different ingredients, different intended uses, and that defendant made different advertising claims for each one, this was wholly insufficient to satisfy Rule 9(b). Plaintiffs failed to address the different product ingredients, different intended uses, and different claims.

The complaint also failed to allege that any of the named plaintiffs even used the product, let alone used the product as directed. Similarly, the named plaintiffs did not allege what results they received from their use of the product. They only alleged that they received “no value,” “did not receive what they bargained for,” or “did not get what they paid for.” Since they did not allege which particular advertising claims each of the named plaintiffs relied on when purchasing the product, the conclusion that they did not receive what they bargained for had no ascertainable meaning. 

Plaintiffs’ claims for breach of express warranty and breach of implied warranty also relied on
allegations that the products did not perform as advertised. These allegations were wholly conclusory, and did not provide a sufficient factual basis to establish a plausible breach of any specifically identified express or implied warranty.

Pretty standard stuff, really, but let's turn to the most useful aspect of the analysis.  The complaint was dismissed with prejudice.  Leave to amend is given when justice so requires.  But what too often happens is that plaintiffs file a conclusory, fishing expedition of a complaint; the defendant expends considerable cost to point out the many deficiencies of the pleading; the court dismisses appropriately dismisses the complaint, and plaintiffs use the opinion as their model to draft an amended pleading-- often repeating the process several times, until they finally get a minimally acceptable pleading that bears little resemblance to their original complaint.  Here, the court recognized that plaintiffs are “not entitled to an advisory opinion from the Court informing them of the deficiencies in the complaint and then an opportunity to cure those deficiencies.” Bellikoff v. Eaton Vance Corp., 481 F.3d 110, 118 (2d Cir. 2007). Moreover, a plaintiff need not be given leave to amend if the plaintiff fails to specify either to the district court or to the court of appeals how amendment would cure the pleading deficiencies in its complaint. The district court’s decision to deny plaintiffs leave to amend their complaint was not an abuse of discretion. First, the plaintiffs failed to provide any detail as to what facts they would or could) plead to cure their pleading deficiencies. Second -- and this is very commonly the case --  much if not all of the information necessary for a properly pled complaint was and had always been in the possession of the plaintiffs. For example, which particular representations they relied upon, if and how they had used the products, what the results were.   Useful discussion of why leave should NOT be granted in these consumer fraud cases.

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