Class Action Complaint on 100% Natural Oil Dismissed

A federal court recently dismissed a proposed class action accusing a food company of misleadingly labeling cooking oils as 100% natural when they allegedly were made from genetically modified plants. Robert Briseno, et al. v. ConAgra Foods Inc., No. 2:11-cv-05379 (C.D. Calif.).

Quick research reveals that 88-94% of the nation’s crops of corn, soy and canola are grown from seeds that are the product of bioengineering.  There is no credible science that there are serious health issues with these products, and multiple peer reviewed studies on "GM" crops worldwide show farmers in underdeveloped countries have seen an increase in yield of about 29% from using them, along with decreased use of insecticide applications.

Plaintiff alleged that he regularly purchased Wesson Canola Oil, bearing labels that state the product is “100% Natural.” Plaintiff contended that contrary to these representations, ConAgra used plants grown from genetically modified organism seeds that have been engineered to allow for greater yield, and to be pest-resistant, to make Wesson-branded oils. He asserted that the genetically modified organisms are somehow not “100% natural,” and thus the labels and advertising are deceptive. Plaintiff filed a complaint seeking to represent a class of all persons in the United States who have purchased Wesson Oils from 2007 on. As is typical, he alleged
violation of California’s false advertising law (“FAL”), California’s unfair competition law (“UCL”), and California’s Consumer Legal Remedies Act (“CLRA”).

Defendant moved to dismiss. The first issue was preemption of the state law causes of action, based on FDA guidance regarding food labels. Federal preemption occurs, generally, when: (1) Congress enacts a statute that explicitly pre-empts state law; (2) state law actually conflicts with federal law; or (3) federal law occupies a legislative field to such an extent that it is reasonable to conclude that Congress left no room for state regulation in that field. Specifically, ConAgra argued that Briseno’s claims were preempted because the FDA has repeatedly concluded that bioengineered foods are not meaningfully different from foods developed by traditional plant breeding, and thus that the fact that a food product is derived from bioengineered plants need not be reflected on a product’s label. Plaintiff responded that he was not arguing that ConAgra was required to state whether its products were made from genetically modified plants. Rather, he contended that the decision to label its products “100% Natural” was misleading.

Courts have split on food preemption issues. Compare Dvora v. General Mills, Inc., 2011 WL 1897349 (C.D. Cal. May 16, 2011)(cereal-yes); Turek v. General Mills, Inc., 754 F.Supp.2d 956 (N.D. Ill. 2010)(snack bars-yes); Yumul v. Smart Balance, Inc., 2011 WL 1045555 (C.D. Cal. Mar. 14, 2011)(yes), with Lockwood v. Conagra Foods, Inc., 597 F.Supp.2d 1028 (N.D. Cal. Feb. 3, 2009)(pasta-no); Wright v. General Mills, Inc., 2009 WL 3247148 (S.D. Cal. Sept. 30, 2009)(granola bars-no).

Here, the court found no preemption on most of the complaint. The bulk of the complaint, said the court, alleged that use of the phrase “100% Natural” is misleading, and did not contend that additional information must be added to Wesson Oil labels. Regulations requiring that each product list its ingredients by their “common or usual name,” together with the regulations requiring that vegetable oils be denominated “ oil,” were inapplicable since plaintiff’s central argument was not that ConAgra cannot use the common or usual names of canola oil, vegetable oil or corn oil.

The FDA has expressed that it has no basis for concluding that bioengineered foods differ from other foods in any meaningful or uniform way, or that, as a class, foods developed by the new techniques present any different or greater safety concern than foods developed by traditional plant breeding. So, plaintiff, in essence, sought to create a distinction – between “natural” oils and those made from bioengineered plants when the FDA has determined that no such distinction exists. The court rejected this argument, refusing to read the FDA guidance as formal enough or clear enough on the issue.

Plaintiff did also seek an order requiring defendant to adopt and enforce a policy that requires appropriate disclosure of GM ingredients. Entering an order of this type would impose a
requirement that is not identical to federal law, and thus this particular prayer for such relief was preempted.

Rule 9(b) requires that in all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity. The pleading must identify the circumstances constituting fraud so that a defendant can prepare an adequate answer to the allegations. While statements of the time, place and nature of the alleged fraudulent activities are often sufficient, mere conclusory allegations of fraud are insufficient. Even if fraud is not a necessary element of a claim under the CLRA and UCL, when a plaintiff alleges fraudulent conduct then the claim can be said to be grounded in fraud or to sound in fraud.

Plaintiff alleged that he regularly purchased Wesson Canola Oil for his own and his family’s consumption. But his complaint contained no allegations as to whether he became aware of the
representation through advertising, or labeling, or otherwise. He provided no information about how often he was exposed to the allegedly misleading statement. He did not allege how
frequently he purchased the product and over what period of time, whether he relied on
statements on canola oil labels, on a website, in advertisements, or all of the above,
whether the statements remained the same throughout the class period, or, if they did not, on
which label(s), advertisement(s) or statement(s) he relied.

Thus, this complaint did not afford ConAgra adequate opportunity to respond. Consequently, defendant's motion to dismiss was granted (without prejudice).


 

"Infected" Tissue Claim Not A Consumer Fraud Claim

Readers have seen my warnings about plaintiff attorneys trying to turn every marketing statement of opinion or puffing into a consumer fraud claim. Now comes a decision about a non-consumer product consumer fraud claim. A federal court recently decided that a plaintiff failed to plead a proper consumer fraud claim against a human tissue product supplier for allegedly providing infected material that was implanted into his body. See Wamsley v. Lifenet Transplant Services Inc., No. 10-00990 (S.D.W. Va., 11/10/11).

Plaintiff sued non-profit corporations who were suppliers and distributors of human tissue products, such as human tendons. Plaintiff alleged that he underwent surgery to repair a rupture to the Achilles tendon in his left ankle, a procedure that involved the implantation of a human tendon obtained from defendants. Plaintiff alleged the product was defective because it was “infected.”  Consequently, plaintiff alleged he had to undergo additional surgeries “to correct the damage caused by the defective tendon.

Plaintiff claimed that supplying an infected tendon constitutes an unfair method of competition and unfair or deceptive act or practice as defined by the West Virginia Consumer Credit Protection Act.  Defendants moved to dismiss the complaint on the grounds that plaintiff had failed to allege any action or inaction on the part of the defendants which would constitute unfair competition, unfair acts or practices, deceptive acts or practices, or fraudulent acts or practices. Plaintiff only formulaically recited the elements of a cause of action under the WVCCPA.   the court agreed and had plaintiff file an amended complaint which alleged defendants concealed from plaintiff, his doctors, and his hospital, that the tendon was infected.  He claimed the alleged concealment
that a tendon provided for human implantation is infected constitutes an unfair method of competition and unfair or deceptive act or practice.
 

Defendants then filed a motion to dismiss the amended complaint arguing that plaintiff’s
amended complaint fails to meet the pleading standards articulated in Ashcroft v. Iqbal, 556 U.S. 662 (2009), and Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). Defendants further contended that plaintiff did not have a private cause of action under the WVCCPA because no causal connection exists between the alleged unlawful conduct and the alleged ascertainable loss: because a physician (a “learned intermediary”) made the decision as to what product to use to repair the ruptured Achilles tendon, plaintiff could not establish the necessary causal connection between the alleged unlawful practice by defendants and the alleged injury.

The court began by outlining the relevant legal standard, familiar to our readers. The
plausibility standard requires a plaintiff to demonstrate more than a sheer possibility that a
defendant has acted unlawfully;  it requires the plaintiff to articulate facts, when accepted as
true, to state a claim to relief that is plausible on its face. While a court must accept the material facts alleged in the complaint as true, bare legal conclusions are not entitled to the assumption of truth and are insufficient to state a claim.  Facts pled that are merely consistent with liability are not sufficient.

Moreover, the court noted in an elegant way, "fraud is a generous tort, encompassing affirmative misrepresentations and omissions alike, its boundaries limited only by the imaginations of crafty and unprincipled minds."  A claim that “sounds in fraud” must satisfy Rule 9(b)’s more rigorous pleading standards. Rule 9(b)’s heightened pleading standards advance several interests, including protecting defendants’ reputations from baseless accusations, eliminating unmeritorious suits that are brought only for their nuisance value, discouraging fishing expeditions brought in the dim hope of discovering a fraud, and providing defendants with detailed information in order to enable them to effectively defend against a claim.

Plaintiff’s sole relevant factual allegation concerning defendants’ alleged unlawful conduct was that the defendants concealed from plaintiff, his doctors, and his hospital, that the tendon was infected. But he offered not a single fact in support of his theory that defendants concealed from surgeons the fact that the human tissue they provided was “infected” or knew that the surgeons would implant the diseased tendon into a human body.  (Indeed, the serious nature of this allegation made it more at home in a criminal court than a consumer fraud action.) Such an unadorned, conclusory averment leashed to not a single supporting fact failed to meet the pleading standard. Moreover, Plaintiff’s allegation that defendants concealed a material fact sounds in fraud
and, thus, triggered rigorous pleading requirements under Fed.R.Civ.P. 9(b).  However, the court called this a  "shoot-and-ask-questions-later lawsuit"  because it offered no facts to support a good faith belief that defendants knowingly distributed diseased or “infected” human body parts to plaintiff’s health care providers. No names, places, dates, or times, and no concrete facts to support the alleged conduct. No narrative on what was medically deficient about the tendon implant except to state that it was “infected.” In sum, plaintiff’s theory of liability failed to cross the line between possibility and plausibility of entitlement to relief. 

Even if the amended complaint had been "the model of perfect pleading," it would still fail because it does not state a cognizable claim under the WVCCPA. Plaintiff cannot shoulder his burden of stating a claim upon which relief can be granted because, within the meaning of the WVCCPA, the provisioning of blood and human tissue by the non-profit defendants to the health care providers was not “trade or commerce”; the service provided by the defendants was not performed “in connection with the sale or advertisement of any goods or services”; plaintiff was not a “consumer”; and the parities had not entered into a “consumer transaction.”

The West Virginia Legislature, in accord with many other jurisdictions, expressed its intent
that suppliers of human blood and tissue products be held to different legal standards than those
businesses that manufacture, distribute, and sell conventional goods and services. Blood and tissue distributors are rendering a service— and not making a sale—when they provide human blood and tissue products according to the West Virginia Legislature, which intended to limit the liability of such distributors in contract warranty and strict liability tort claims, plainly distinguishing human body products from ordinary goods. The court thus applied the West Virginia high court's decision in White v. Wyeth, 705 S.E.2d 828, 837 (W. Va. 2010), which held prescription drugs aren't proper subjects of consumer protection claims; the court refused to allow a plaintiff to morph what is most naturally a product liability or breach of warranty action into a purported statutory consumer protection claim would permit an end-run around the state's blood shield statute.

Finally, the court noted that plaintiff was correct in observing that if his WVCCPA complaint was dismissed, plaintiff would be left with no adequate legal remedy. Defendants had explained that the WVCCPA claim was a products liability claim in disguise, brought only because the statute of limitations had run on plaintiff’s traditional tort remedies. Thus, any difficulty plaintiff might having pursuing more traditional causes of action was likely his own fault.  The legislature did not intend that WVCCPA serve as "a Plan B litigation backstop" for claims when a plaintiff had—but did not pursue—appropriate traditional causes of action.


 

Defect Allegations Insufficient in Drug Case

We may be accustomed to talking about whether a product was "defective" and, as counsel for defendant sellers, working hard to show that the product contained no "defect."  Earlier this month came a decision reminding us that, in some contexts, a defect, even one that caused the injury, may not be all plaintiffs need to allege and prove. Mills v. Bristol-Myers Squibb Co., No. 11-00968 (D. Ariz., 10/7/11).

Plaintiff was prescribed Clopidogrel (branded as "Plavix") for the treatment of peripheral vascular disease.  Two years later, plaintiff initiated this action alleging that the drug caused excessive rectal bleeding. The court dismissed, and plaintiff eventually sought leave to file a Second Amended Complaint. Defendants argued that leave to amend should be denied as futile.  And the court agreed.

The interesting part of the opinion for our readers is the discussion of strict products  liability, premised on two theories: design defect and failure to warn. (Plaintiff also premised her negligence claim on these theories.)  For plaintiff to prevail under both theories she had to show that the product left the defendants' hands in a defective condition, the defect rendered the product unreasonably dangerous, and the defect was a proximate cause of plaintiff's injuries. Sw Pet Prods., Inc. v. Koch Indus., Inc., 273 F. Supp. 2d. 1041, 1051 (D. Ariz. 2003).

Plaintiff alleged that Plavix was allegedly defective when ingested along with aspirin by people who have peripheral vascular disease, and that the defect caused her injury.  So there you have it.   But wait... simply pleading a defect is not enough. To prevail on a design defect claim in Arizona, a plaintiff must also show that the defective product is unreasonably dangerous.  Although plaintiff's design defect claim was apparently pled pursuant to the Restatement (Second) of Torts § 402(a), the federal court concluded that Arizona would now use the Restatement (Third) of Torts, particularly its definition of an unreasonably safe prescription drug or medical device in a design defect claim.  Section 6(c) of the Third Restatement, noted the court, declares that a prescription drug or medical device is unreasonably unsafe due to defective design only if the foreseeable risks of harm posed by the drug or medical device are sufficiently great in relation to its foreseeable therapeutic benefits that reasonable health-care providers, knowing of such foreseeable risks and therapeutic benefits, would not prescribe the drug or medical device for any class of patients.

Here, although plaintiff alleged that no reasonable health-care provider would prescribe Plavix
for plaintiff knowing of the alleged risks to Caucasian patients who genetically are poor metabolizers of Plavix, and who are diagnosed with peripheral vascular disease and concomitantly ingest aspirin, nowhere did the plaintiff allege that Plavix would not be prescribed for any class of patients. (We leave for a later post the interesting and scary theory that the drug was defective because it had greater adverse effects among a narrow group with a genetic pre-disposition.)

And arguably even under a traditional risk/benefit analysis used to determine whether a product is unreasonably dangerous based on the Restatement (Second) of Torts, plaintiff's pleading did not state a plausible claim.  Although detailed factual allegations are not necessary in pleadings, "labels and conclusions" are insufficient. Bell Atlantic Corp v. Twombly, 550 U.S. 544, 555 (2007).  And that's what she offered on risk benefit elements.

As to the warning claim, plaintiff needed to allege, then show, that had a proper warning been given, the injury would not have happened. See Gosewisch v. Am. Honda Motor Co., Inc., 153 Ariz. 400, 403, 737 P.2d 376, 379 (1987) (superseded by statute on other grounds).  Here, plaintiff averred only on information and belief that her doctor would not have prescribed Plavix had he known of its true risks for patients like plaintiff.   But the court noted that plaintiff could simply have contacted her physician to determine the facts, which were not solely in the control of defendants. She did not do so, and her allegations thus fell short. This may be an important use of the clarified pleading standard, particularly in those jurisdictions in which defendants are precluded from informally contacting the plaintiff’s prescriber.  


 

A Picture Worth a Thousand Words Under Twombly?

We have posted about plaintiffs attorneys seeking to exploit the valuable and significant economic boon that is hydraulic fracturing. Today's post comes from that litigation, but the focus is not on fracking, but on a civil procedure issue that one infrequently sees in mass torts.  Plaintiffs in a case complaining about hydraulic fracturing operations in the Fayetteville Shale deposit in Arkansas recently survived a motion to dismiss, in large part because of the photographs they attached to the complaint.  Ginardi v. Frontier Gas Services LLC, No. 4:11-cv-00420 (E.D. Ark.,  8/10/11).

Plaintiffs alleged that the defendant's compressor stations caused harmful levels of noise pollution, and emitted large amounts of methane and hydrogen sulfide, among other flammable and toxic gasses. Plaintiffs offered multiple theories of liability including: strict liability, nuisance, trespass and negligence. Plaintiffs are seeking to represent similarly situated persons in
a class action. 

Defendant moved to dismiss, arguing that the complaint was insufficient because it failed to connect Kinder Morgan to the noise and gas emissions that are the central alleged injury of the case. Defendant’s argument relied on the heightened pleading standards of Twombly and Iqbal.

The district court downplayed the clear significance of those two decisions, continuing to emphasize the supposed "relatively low hurdle of presenting plausible facts to create a reasonable inference" that Kinder Morgan is involved in activities that may have harmed plaintiffs.

But of more interest is the treatment of the argument that plaintiffs made suggesting that the photographs attached to the amended complaint were sufficient to create a reasonable inference that Kinder Morgan was connected to the alleged misconduct. One supposedly showed the proximity of plaintiffs’ property and residences to the compressor station. The second was a photograph of warning signs at the compressor station, allegedly showing that Kinder Morgan was involved in its operation, and that the facility created noise and emitted toxic material.

Certainly, exhibits properly attached to the complaint may be considered in analyzing a motion to dismiss.  Lum v. Bank of America, 361 F.3d 217, 221 n. 3 (3d Cir.2004).  And it may be more common for a plaintiff to attach photographs to the complaint in certain kinds of claims, such as intellectual property claims. E.g., Magna Mirrors of America, Inc. v. Dura Global Technologies, LLC, 2011 WL 1120265 (E.D.Mich.).  But it is not true that a picture is always worth a thousand words.  If a plaintiff has to write a brief explaining what the picture supposedly shows, or the photograph is susceptible to a variety of interpretations, the photograph cannot substitute for the well-pleaded allegations of a complaint. Dock v. Rush, 2010 WL 4386470 (M.D.Pa.).  A famous photographer once noted, "I always thought good photos were like good jokes. If you have to explain it, it just isn’t that good."

The proximity allegedly shown in the first clearly did not apply to the putative class members; the proposed class was of all those who live or own property within a one-mile radius of defendants' stations in Arkansas -- not what was shown in the photograph. The signs in the second had no context but apparently were merely to warn workers about potential hazards on the site. Nevertheless, the court, with no real analysis, concluded that the complaint with photographs attached as exhibits contained sufficient factual content. If, in words, plaintiffs had alleged merely that the defendant posted signs on its property, warning workers on the site of certain hazards, no reasonable court would have concluded that the pleading requirement was met.

 

Federal Court Dismisses Soda Misrepresentation Claim

A New Jersey federal recently dismissed a putative class action accusing The Coca-Cola Co. of misleading consumers about the health value of the carbonated beverage Diet Coke Plus.  Mason et al. v. The Coca-Cola Co., No. 09-cv-00220 (D.N.J. 3/31/11).

This is another in the series of cases we have warned readers about: plaintiffs are not injured, are not at risk of injury, have gotten the benefit of their bargain, but claim they were somehow duped by marketing. Here, plaintiffs alleged that they “were persuaded to purchase the product because the term ‘Plus’ and the language ‘Diet Coke with Vitamins and Minerals’ suggested to consumers that the product was healthy and contained nutritional value,” when it allegedly did not.

Defendants moved to dismiss under the Twombly/Iqbal doctrine.  Of course, claims alleging fraud or mistake must also meet the heightened pleading requirements of Fed. R. Civ. P. 9(b), which requires such claims to be pled with “particularity.”

To state a claim under the New Jersey Consumer Fraud Act., a plaintiff must allege: “(1) unlawful conduct by the defendants; (2) an ascertainable loss on the part of the plaintiff; and (3) a causal relationship between the defendants’ unlawful conduct and the plaintiff’s ascertainable loss.” Frederico v. Home Depot, 507 F.3d 188, 202 (3d Cir. 2007). Plaintiffs claimed that defendant committed affirmative acts of fraud and deception, and that they were persuaded to purchase the product because the term ‘Plus’ and the language ‘Diet Coke with Vitamins and Minerals’ somehow suggested to consumers that the product was healthy and contained extra nutritional value.

However, the FDA's warning letter about the product attached by plaintiffs to their own complaint shows that it is not false that Diet Coke Plus contains vitamins and minerals.  Plaintiffs failed to allege with particularity what further expectations beyond these ingredients they had for the product or how it fell short of those expectations. Plaintiffs simply made a broad assumption that defendant somehow intended for Diet Coke Plus’s vitamin and mineral content to deceive plaintiffs into thinking that the beverage was really “healthy.”  Without more specificity as to how defendant made false or deceptive statements to plaintiffs regarding the healthiness or nutritional value of the soda, the court found that plaintiffs failed to plead the “affirmative act” element with sufficient particularity to state a viable NJCFA claim.

Plaintiffs also failed to plead an ascertainable loss. When plaintiffs purchased Diet Coke Plus, they received a beverage that contained the exact ingredients listed on its label. Plaintiffs could not explain how they experienced any out-of-pocket loss because of their purchases, or that the soda they bought was worth an amount of money less than the soda they consumed. Mere subjective  dissatisfaction with a product is not a quantifiable loss that can be remedied under the NJCFA.  The same defects doomed the common law misrepresentation claims.

Although the FDA had issued the warning letter (on a somewhat arcane and technical issue), the court noted that not every regulatory violation amounts to an act of consumer fraud. The court also noted that it is simply not plausible that consumers would be aware of FDA regulations regarding “nutrient content” and restrictions on the enhancement of snack foods. The complaint actually did not allege that consumers bought the product because they knew of and attributed something meaningful to the regulatory term “Plus” and therefore relied on it. Rather, plaintiffs alleged merely that they subjectively thought they were buying a “healthy” product that happened to also apparently run afoul of a technical FDA regulation.

Twombly and Iqbal Webinar

Since the U.S. Supreme Court’s rulings in Twombly and Iqbal —which updated the Conley “any set of facts” standard for motions to dismiss, and confirmed that the new plausibility standard applies to all civil cases— federal courts and some state courts have wrestled with how to apply the clarified pleading standards to all sorts of complaints.

BNA is holding a webinar on Wednesday, November 17, and my partner Stephen J. McConnell and I will be on a panel to discuss the impact of the rulings on plaintiffs and the courts.

The seminar will be November 17, 2010; 1:00 PM – 2:30 PM EST.

Topics to be discussed will include:

■ Have courts granted significantly more motions to dismiss in the wake of these cases?


■ Have plaintiffs’ attorneys risen to the challenge of meeting the plausibility standard laid out in the cases?


■ What types of claims have been most affected since the rulings came down?


■ Will Congress respond to these decisions?



To register for this webinar or for more information, please click here.

 

Proposed CFA Class Action on Bath Products Is Dismissed

A federal court has dismissed a putative class action accusing Johnson & Johnson Consumer Co. Inc., L'Oreal USA Inc., Kimberly-Clark Corp., and other defendants, of selling children's bath products that contain toxic and carcinogenic substances. See Herrington v. Johnson & Johnson Consumer Co. Inc., et al., No. 09-cv-01597 (N.D. Calif. 9/1/10).

Specifically, plaintiffs alleged that the defendants failed to disclose that their products contain probable carcinogens, other unsafe contaminants, and/or ingredients that have not been shown to be safe. Plaintiffs further contended that defendants deceived consumers by affirmatively misrepresenting the safety of their products.  Plaintiffs averred that they purchased the products for use on their young children, and contended that, had defendants disclosed the contaminants in their children’s products and the fact that all ingredients were not "proven safe," they would not
have purchased the products at all.

To evidence the alleged hazards, plaintiffs cited a press release and a report entitled “No More Toxic Tub,” both of which were published by an extremist anti-business group, the Campaign for Safe Cosmetics. In the report, the Campaign points to trace amounts of chemicals such as formaldehyde allegedly in defendants’ products.

They sued for alleged violations of California’s false advertising statute, Cal. Bus. & Prof. Code §§ 17500, et seq.; California’s Unfair Competition Law (UCL), Cal. Bus. & Prof. Code §§ 17200, et seq.; and California’s Consumer Legal Remedies Act (CLRA), Cal. Civ. Code §§ 1750, et seq.; and
various other state unfair and deceptive trade practices acts, as well as making common law claims for misrepresentation; fraud; and breach of warranties.  Plaintiffs noted they intended to move for certification of a nationwide class and various subclasses.

Defendants filed a motion to dismiss.  They first argued that plaintiffs did not have standing to sue
because they cannot show that they have suffered a concrete, actual injury-in-fact. Plaintiffs responded that they pleaded two injuries sufficient to confer standing: “(1) risk of harm to their children resulting from their exposure to carcinogenic baby bath products; and (2) economic harm resulting from the purchase of these contaminated, defective bath products.”

The court rejected this plaintiff argument, noting that plaintiffs did not cite controlling authority that the “risk of harm” injury employed to establish standing in traditional environmental cases in some states applies equally to what is, at base, a product liability action. To the extent that an increased risk of harm could constitute an injury-in-fact in a product liability case such as this one, in any event, plaintiffs would have to at lease plead a credible or substantial threat to their health or that of their children to establish their standing to bring suit.  But plaintiffs did not allege such a threat. They made general statements about the alleged toxicity of various chemicals, but did not allege that the amounts of the substances allegedly in defendants’ products have caused harm or create a credible or substantial risk of harm.  {Fundamental principle of toxicology - dose matters.}  Plaintiffs did not plead facts sufficient to show that a palpable risk exists. In fact, plaintiffs' own pleading noted that the Consumer Product Safety Commission (CPSC) has stated that, although the presence of certain chemicals “is cause for concern,” the CPSC is merely continuing “to monitor its use in consumer products.”  Seemed a far cry from substantial risk.

The court found this case analogous to Koronthaly v. L’Oreal USA, Inc., 2008 WL 2938045 (D.N.J.), aff’d, 2010 WL 1169958 (3d Cir. 2010), which we posted on before, and which was dismissed on standing grounds. There, the plaintiff was a regular user of the defendants’ lipstick, which, according to another report by the same Campaign group, contained lead.  The plaintiff alleged that she had been injured “by mere exposure to lead-containing lipstick and by her increased risk of being poisoned by lead.”  However, she did not complain of any current injuries. The district court concluded, and the Third Circuit affirmed, that the plaintiff’s allegations of future injury
were “too remote and abstract to qualify as a concrete and particularized injury.” Id. at *5.

The court here also held that the various counts failed to state a claim. For example the fraud-related claims failed to plead, as required by Federal Rule of Civil Procedure 9(b), “the who, what, when, where, and how of the alleged fraud.” See Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003).  While plaintiffs tried to argue that their consumer fraud act claims are different from common law fraud, the Ninth Circuit has held that Rule 9(b) applied to a plaintiff’s claims under the CLRA and UCL when they were grounded in fraud.  Also, plaintiffs did not not plead the circumstances in which they were exposed to the alleged false statements. Nor did they plead which of these alleged misrepresentations they relied on in making their purchase of products.  Again, plaintiffs cited In re Tobacco II Cases, 46 Cal. 4th 298 (2009), to argue that they were not required to allege which representations they specifically saw. That case was factually distinguishable on many grounds.  And, in any event, to the extent In re Tobacco II provides that to establish UCL standing, reliance need not be proved through exposure to particular advertisements under some unique factual circumstance, the case does not stand for, nor could it stand for, a general relaxation of the pleading requirements under Federal Rule 9(b).

Similarly, plaintiffs made the general allegation that defendants engaged in unfair business acts or practices but did not allege facts suggesting that consumers have suffered an injury based on the defendants’ alleged conduct. Thus, for the same reasons they lacked Article III standing, they failed to state a claim for those types of claims as well. 

The court gave plaintiffs leave to try to file an amended complaint.

 

Rule 15 Amendments May Impact Removal Prospects

Readers of MassTortDefense know how important the choice of forum can be for significant product liability and mass tort matters.  The differences between federal and state court -- perhaps right down the street from each other -- can be huge, with differing juror pools, differing procedural rules, differing views on class actions, different methods of selecting the judiciary, etc.

Thus, it is worth making sure a subtle amendment to Rule 15 of the Federal Rules of Civil Procedure, which took effect Dec. 1, 2009, does not miss your attention, because of the potential impact it has on removal to federal court.

Prior to the amendments to Rule 15 — which governs amended and supplemental pleadings —  a plaintiff could amend the complaint once as a matter of course before any responsive pleading was filed.  Responsive pleading came to mean the defendant’s answer, and not a motion to dismiss.  E.g., Foster v. DeLuca, 545 F.3d 582 (7th Cir. 2008).  Thus, a defendant could eliminate the plaintiff’s right to amend as a matter of course by serving an answer.  That is, under the old version of Rule 15, a defendant could prevent amendments designed to eliminate the basis for removal by serving an answer just prior to or along with the filing of the notice of removal. When a plaintiff wanted to amend after the defendant had removed and answered, the plaintiff had to obtain consent or leave of court. So what about the removal, then? Any proposed amendment to the complaint affecting the court’s jurisdiction would trigger a heightened scrutiny of the amendment.  E.g., Hensgens v. Deere & Co., 833 F.2d 1179 (5th Cir. 1987). Defendants could argue that the  proposed amendment should be rejected on this basis. 

The new Rule 15 permits a plaintiff to amend “as a matter of course” even after the defendant has served “a responsive pleading.”  A party may file an amended pleading without leave of court within 21 days after service of a responsive pleading or 21 days after service of a Rule 12 motion, whichever is earlier. After that, a party may file an amended pleading only with leave of court. 

That raises the issue for your consideration whether the new ability of the plaintiff to amend “as a matter of course,” even after the defendant has served an answer, permits the plaintiff to make one of those jurisdiction-destroying amendments.  One possibility is that courts will look at "matter of course" amendments under the new rule the same way they were analyzed by many courts under the old rule.  That is, courts were guided by 28 U.S.C. § 1447(e), which states that if after removal the plaintiff seeks to join additional defendants whose joinder would destroy subject matter jurisdiction, the court may deny joinder, or permit joinder and remand the action to the state court. Schur v. L.A. Weight Loss Centers, Inc., 577 F.3d 752, 759 (7th Cir. 2009); Whitworth v. TNT Bestway Transp. Inc., 914 F.Supp. 1434 (E.D.Tex.,1996).  Courts, in the motion for leave context and sometimes in the "as of course" context as well, to decide between those two choices, would scrutinize the amendments closely, and due consideration is given to the original defendant’s interest in the choice of forum. Courts examine whether the purpose of the amendment is to defeat federal jurisdiction; how timely/prompt the plaintiff has been in seeking the amendment; whether the plaintiff will be prejudiced if amendment is not allowed; and any other equities. Bailey v. Bayer CropScience L.P., 563 F.3d 302 (8th Cir. 2009).

If this heightened scrutiny is applied to "matter of course" amendments made under the new version of Rule 15, removals may be in less jeopardy when when a plaintiff attempts to amend the complaint post-removal, post-answer  “as a matter of course.”

Does the Twombly-Iqbal Pleading Standard Apply to Defenses Too?

A suit over an allegedly defective truck is the stage for the latest entry in the debate whether the claim pleading standards clarified in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), and Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009), apply to affirmative defenses as well.

In Hayne v. Green Ford Sales Inc., 2009 WL 5171779 (D. Kan. 12/22/09), defendants plead standard affirmative defenses to the breach of warranty claim, including statute of limitations, contributory fault, failure to mitigate damages, assumption of risk, superseding/intervening act, waiver, failure to use product in manner designed or intended, and estoppel. Plaintiffs moved to strike the defenses under Fed. R. Civ. P. 12(f).

The court, sua sponte, noted that the motion to strike raised the issue as to what pleading standard applies to affirmative defenses. Recognizing that the courts have split on the issue so far, the district court found that the Twombly/Iqbal standard for pleading a claim also applies to defenses.

Courts that have applied the heightened pleading standard  to affirmative defenses: CTF Dev., Inc. v. Penta Hospitality, LLC, 2009 WL 3517617, at *7-8 (N.D.Cal. Oct. 26, 2009) Tracy ex rel. v. NVR, Inc., 2009 WL 3153150, at *7-8 (W.D.N.Y. Sept. 30, 2009); FDIC v. Bristol Home Mortg. Lending, LLC, 2009 WL 2488302, at *2-4 (S.D.Fla. Aug. 13, 2009); Teirstein v. AGA Medical Corp., 2009 WL 704138, at *6 (E.D.Tex. Mar. 16, 2009); Greenheck Fan Corp. v. Loren Cook Co., 2008 WL 4443805, at *1-2 (W.D.Wis. Sept. 25, 2008); Stoffels ex rel. SBC Tel. Concession Plan v. SBC Commc'ns, Inc., 2008 WL 4391396, at *1 (W.D.Tex. Sept. 22, 2008); Safeco Ins. Co. of Am. v. O'Hara Corp., 2008 WL 2558015, at *1 (E.D. Mich. June 25, 2008); Holtzman v. B/E Aerospace, Inc., 2008 WL 2225668, at *2, (S.D.Fla. May 28, 2008); United States v. Quadrini, 2007 WL 4303213, at *3-4 (E.D.Mich. Dec. 06, 2007).

The court observed that "parties do not always know all the facts relevant to their claims or defenses until discovery has occurred."  But to equate the plaintiff's knowledge, or lack  of knowledge, after months or perhaps years of possible preparation and investigation, and having full access to plaintiff, the product, and key fact witnesses in most cases, to the defendant's ability in a few short days after being served to know all the relevant facts, is a completely unfair comparison.  While the court said it did not mean to "suggest that heightened pleading requires the assertion of evidentiary facts. A minimal statement of only ultimate facts should suffice," the better reasoned decisions are cases like First Nat'l Ins. Co. of Am. v. Camps Servs., Ltd, 2009 WL 22861, at *2 (E.D.Mich. Jan. 5, 2009) (finding Twombly's analysis of the “short and plain statement” requirement inapplicable to affirmative defenses); and Romantine v. CH2M Hill Eng'rs, Inc., 2009 WL 3417469, at *1 (W.D.Pa. Oct. 23, 2009) (declining to apply Twombly to affirmative defenses).

The Supreme Court addressed in Twombly the requirements for a well-pled complaint under Fed.R.Civ.P. 8(a)'s “short and plain statement” requirement.  No such language, however, appears within Rule 8(c), the applicable rule for affirmative defenses. As such, Twombly 's analysis of the “short and plain statement” requirement of Rule 8(a) is inapplicable to a motion under Rule 8(c).

As posted about before, the plaintiffs' bar is seeking to get these Supreme Court cases overturned in Congress.  The possible application of the rule to affirmative defenses shouldn't make any defendants re-think opposition to the legislation.  But the handful of courts that have applied the standard to defenses raise a yellow flag for defendants.

Anti-Iqbal Legislation Update

A few months ago, we alerted readers to the bill that Sen. Arlen Specter (D-Pa.) had introduced that would undermine the clarified civil pleading standards for plaintiffs set forth by the U.S. Supreme Court in the Bell Atlantic Corp. v. Twombly, 127 S.Ct. 1955 (2007) decision, and reaffirmed in Ashcroft v. Iqbal, 129 S.Ct. 1937 (2009), decided in May.

The so-called "Notice Pleading Restoration Act of 2009’’ would turn back the clock to the ancient and unrealistic interpretation of Rule 8 of the Civil Rules announced in Conley v. Gibson more than 5 decades ago. The bill is clearly aimed at helping the plaintiffs' bar and making it more difficult for defendants to get courts to dismiss frivolous and ungrounded litigation before expensive discovery. Specter, the newly turned Democrat facing an uphill re-election battle, submitted the bill over the summer. In the Senate, a hearing on the bill is expected in the Judiciary Subcommittee on administrative oversight and the courts, chaired by Sen. Sheldon Whitehouse (D-R.I.).

Last week, Rep. Nadler (D.N.Y.), along with Reps. John Conyers (D-Mich.) and Henry Johnson (D-Ga.), introduced a bill in the House (H.R. 4115) to overturn Iqbal and Twombly. Their version is called the “Open Access to Courts Act of 2009.”  Unlike the Specter bill, the House version incorporates specific language from the Supreme Court's ancient Conley decision. The bill states a court shall not dismiss a complaint “unless it appears beyond doubt that the plaintiff can prove no set of facts in support of the claim which would entitle the plaintiff to relief.”  The House bill also would expressly bar a federal court from using the Iqbal and Twombly analysis, stating a court shall not dismiss a complaint “on the basis of a determination by the judge that the factual contents of the complaint do not show the plaintiff's claim to be plausible or are insufficient to warrant a reasonable inference that the defendant is liable for the misconduct alleged.”  In other words, the claim need not even be plausible, and it is not a problem if no reasonable person could infer that the defendant might actually be liable.

The House bill follows directly from the efforts of the American Association for Justice, formerly the Association of Trial Lawyers of America, which convened a meeting of many of the pro-litigation, anti-business interest groups to map out a strategy to not just turn back the clock, but to replace the current common sense regime. They eventually sent a letter to the members of the House and Senate Judiciary committees, complaining that the current standards are hampering access to the courts and are denying their clients due process.  This coalition must have also thought that the Specter bill did not go far enough in simply trying to turn the clock back to the status quo ante.

In reality, it's hard to argue for overturning the two decisions without resort to hollow sloganeering or vague appeals to a warped definition of due process.  The decisions -- and think about whether you would want a case to proceed against you on this basis -- focus the trial courts' attention on mere “threadbare recitals” and vague and “conclusory statements,” to watch out for a mere re-stating of the hornbook legal elements of the case, and to look for a plaintiff to allege a “plausible” claim for relief that judges can evaluate based on their “judicial experience and common sense.”   In other words, say plaintiffs, please allow us to bring frivolous claims, alleging nothing of substance, and get into expensive protracted discovery so that we can force defendants to settle.  That's "due" process.

The legislation would likely create great confusion over the applicable legal standards for motions to dismiss, and eventually overwhelm the courts with frivolous lawsuits.  It seems the Democrats' goal to make it impossible for defendants to get cases dismissed early.

Not surprisingly, the House bill ignores the national security issues associated with overturning Iqbal, a case in which the plaintiff sought to sue a group of top government officials for allegedly violating his civil rights after he was arrested and detained in the immediate aftermath of the Sept. 11, 2001, attacks.  The Democrats appear to think it is a good idea to subject Justice Department and FBI and Homeland Security officials to suits that are not plausible, are conclusory, are mere recitals of the elements of a cause of action. 

At the very least, any legislative effort is premature, pending a study to measure the possible effects of the Iqbal and Twombly decisions that is being conducted by the Judicial Conference of the United States. A preliminary study, reviewing both district and appellate court cases, concluded there was little evidence to date that courts were dismissing meritorious claims under the Iqbal/Twombly standards.

Court Dismisses Counts Of Trileptal Complaint Pursuant to Twombly

Add to your list of recent cases applying the recent U.S. Supreme Court decisions that clarified pleading standards, the decision in Frey v. Novartis Pharmaceuticals Corp., 2009 WL 2230471 (S.D.Ohio). 

The federal trial court dismissed a plaintiff's manufacturing and design defect claims against the maker of an epilepsy drug that allegedly caused her to develop multi-organ sensitivity, citing Ashcroft v. Iqbal, 129 S.Ct. 1937 (2009), and Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007). Under Iqbal, a claim is facially plausible when the plaintiff  sufficiently “pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” 

Plaintiff  used Trileptal for a short time in 2005. A label change was made in Spring, 2005, adding a precaution regarding multi-organ sensitivity. Novartis sent a Dear Doctor letter, advising of the label change, in April.  Plaintiff contended that the drug caused her to develop multi-organ sensitivity and related complications. Plaintiff sued, alleging various claims, including defective design and manufacture. Novartis moved for a partial dismissal under Fed. R. Civ. P. 12(b)(6).

According to the court, plaintiff's first cause of action for strict liability for defect in the manufacture of Trileptal under Ohio law must be dismissed pursuant to Rule 12(b)(6) for failure to state a plausible claim for relief. Plaintiff did nothing more than provide a formulaic recitation of the elements of a claim under the statute.  She failed to allege any facts that would permit the court to conclude that a manufacturing defect occurred and that the defect was the proximate cause of Frey's alleged injuries. Plaintiff's allegations in this regard fall far short of the sufficiency standard set forth in Twombly.

Similarly, the court said, the design defect claim would be dismissed because plaintiff once again simply provided a formulaic recitation of the elements of a claim under the statute. She did not allege any facts that would permit the court to conclude that there was a defect in the design or formulation of Trileptal and that the defect was the proximate cause of Frey's alleged injuries. Because plaintiff's allegations fall far short of the sufficiency standard set forth in Twombly, the claim for design defect must be dismissed.

Importantly, the court rejected plaintiff's argument that plaintiffs cannot be expected to particularly allege that the scientific makeup of the drug is defective for a specific reason without conducting discovery.

Finally, the court denied the plaintiff's motion to amend the complaint, saying she had not shown that they were able to allege facts that would state plausible claims for relief to satisfy the pleading standard.