Mass Tort Defense : Mass Tort Defense Lawyer & Attorney : Sean P. Wajert : Dechert Law Firm : Products Liability, Class Actions, Pharmaceutical Litigation

The Ninth Circuit late last month upheld the dismissal of a proposed class action concerning alleged off-label marketing of the drug Actimmune.  In re: Actimmune Marketing Litigation, Nos. 10-17237 and 10-17239 (9th Cir. 12/30/11).

The panel, in an unpublished opinion, affirmed the judgment of the district court “for the reasons set forth in the district court's orders.”  See In re Actimmune Marketing Litig., 614 F.Supp.2d 1037
(N.D. Cal. 2009) (Actimmune I); In re Actimmune Marketing Litig., 2009 WL 3740648 (N.D. Cal. Nov. 6, 2009)(Actimmune II ); In re Actimmune Marketing Litig., 2010 WL 3463491 (N.D. Cal. Sept. 1, 2010) (Actimmune III).

In September 2010, the trial court had issued a ruling dismissing the amended complaints filed by consumers and an insurer, who alleged that defendants had improperly marketed Actimmune as a treatment for idiopathic pulmonary fibrosis.  Despite the additional allegations included in plaintiffs' latest amended pleadings, plaintiffs still failed to properly allege that defendants' conduct caused plaintiffs' injuries. Therefore, plaintiffs lacked standing to pursue their off-label marketing claims under the asserted consumer fraud claims.  Establishing that a defendant violated a law only accomplishes part of a plaintiff's burden; plaintiffs were also required to prove that they were injured “as a result of” defendants' alleged law-violating conduct.

In the context of the instant case, the “as a result of” language placed the burden on plaintiffs to establish that they actually relied upon the representations delivered through defendants' off-label marketing. Plaintiffs failed to allege a plausible causal chain of injury as required by Iqbal/Twombly.

The shortcoming in the consumer plaintiffs' pleadings was simple: all of the consumer plaintiffs failed to allege that their doctors believed that Actimmune was an effective treatment for IPF “as a result of” defendants' off-label promotion of Actimmune. With respect to each plaintiff, the complaint alleged only that their doctors were “exposed to at least some of InterMune's unfair and unlawful off-label marketing.”  That was not enough;  claims dismissed.

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A Missouri federal court last week denied the class certification motion of consumers suing defendants in the multi-district litigation over the use of bisphenol-A in baby bottles and sippy cups. In re: Bisphenol-A Polycarbonate Plastic Products Liability Litigation, No. 4:08-md-01967 (W.D. Mo.).

As we have posted before, the federal judge in the MDL involving BPA in baby bottles refused last Summer to certify three proposed multistate classes in this multidistrict litigation. In re: Bisphenol-A Polycarbonate Plastic Products Liability Litigation, No. 08-1967 (W. D. Mo. July 7, 2011).   That decision offered an interesting discussion of choice of law, and of the notion of commonality after Dukes v. Walmart, and included an important reminder that while individual issues relating to damages do not automatically bar certification, they also are not to be ignored. E.g., In re St. Jude Medical, Inc., 522 F.3d 836, 840-41 (8th Cir. 2008) (individual issues related to appropriate remedy considered in evaluating predominance); Owner-Operator Independent Drivers Ass’n, Inc. v. New Prime, Inc., 339 F.3d 1001, 1012 (8th Cir. 2003), cert. denied, 541 U.S. 973 (2004) (individual issues related to damages predominated over common issues); see also In re Wilborn, 609 F.3d 748, 755 (5th Cir. 2010).

The court gave plaintiffs an opportunity to show that a class of Missouri-only consumers should be certified, and plaintiffs then moved for certification of three classes of Missouri consumers. Plaintiffs alleged three causes of action: violation of the Missouri Merchandising Practices Act (MMPA), breach of the implied warranty of merchantability, and unjust enrichment.

The court focused first on standing. A court may not certify a class if it contains members who lack
standing. In re Zurn Pex Plumbing Products Liability Litigation, 644 F.3d 604, 616 (8th Cir. 2011). Plaintiffs’ proposed classes here could not be certified because they included individuals who had not suffered an injury-in-fact.  Individuals who knew about BPA’s existence and the surrounding controversy before purchasing defendants’ products had no injury. There was a potential for the proposed classes to include a large number of such uninjured consumers. Plaintiffs admitted that parents often carefully research baby care product purchases, and defendants submitted proof that information regarding BPA was in the media (including popular press such as "20/20") as early as 1999.

The opinion also offers an instructive discussion of reliance. Plaintiffs argued the issue of knowledge goes only to consumers’ reliance on defendants’ alleged nondisclosure, and plaintiffs always contend reliance is not an element of their consumer fraud claims. The court explained that the hypothetical posed by the question of reliance – whether the plaintiff would have purchased the product if she/he had known – presupposes the consumer did not know the relevant information. Thus, the question of knowledge logically precedes the question of reliance.

Even consumers who were unaware of BPA when they purchased defendants’ products may not have suffered an injury. Consumers who fully used defendants’ baby bottles and other products without physical harm before learning about BPA suffered no injury, and could not assert a claim under consumer protection statutes or for breach of warranty. Plaintiffs asserted that none of the proposed class members received what they intended to obtain, because plaintiffs were not provided material information before making their purchases. But plaintiffs were bargaining for baby products at the time of transaction, not for a certain type of information. Those who fully used the products before learning about BPA would have received 100% use (and benefit) from the products.

In the Rule 23 analysis proper, the court also noted that plaintiffs’ proof of what defendants failed to disclose would not be common for all class members, at least with respect to the scientific debate concerning BPA. Class-wide evidence cannot be used to show what defendants knew or should have known because their knowledge and the available information about BPA changed during the
class period. Plaintiffs' proposed trial plan stated they intended to show defendants' alleged awareness and nondisclosure of various scientific studies from 1997 to at least 2006.

The court's observation on materiality is also worth noting. A material fact for state consumer fraud liability includes a fact which a reasonable consumer would likely consider to be important in making a purchasing decision.  Even if this is an objective inquiry, that does not mean it can always be proven with class-wide evidence. A 2006 study allegedly showing BPA's effect on the endocrine systems of snails, even if material, would not be probative of defendants' liability in 2002. Similarly, a reasonable consumer may be less likely to consider a scientific study from 1997 significant if that consumer learned that federal agencies over the years – the FDA in particular – considered that study, and nevertheless still concluded BPA could be safely used to make baby products.

Finally, the court considered superiority and manageability, with a key issue of concern how to determine who was in the class (some courts do this analysis under the ascertainability rubric). Identifying himself or herself as a purchaser would not prove a person is in the class. A plaintiff in a typical case is not allowed to establish an element of a defendant’s liability merely by completing an affidavit swearing the element is satisfied, and this should be no different for a class action.  Defendants would be entitled to cross-examine each and every alleged class member regarding his or her memory and story.

For all these reasons, class certification denied.

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A federal court last week dismissed the claims in a case accusing Green Mountain Coffee Roasters of misrepresenting the performance quality of its single-cup brewing systems. See Green v. Green Mountain Coffee Roasters Inc., et al., 2011 WL 6372617 (12/20/12 D.N.J.).

Your humble blogger is in the minority, not being a coffee drinker. Nearly 60% of adults drink coffee daily. The average American drinks 3.1 cups of coffee each day. This contributes to an $18 billion U.S. coffee market. One of the tremendous innovations (speaking from experience, having given these as holiday gifts) in the market is the single cup brewing machine for the home, allowing coffee lovers to make less than a full pot, and to choose from among hundreds of flavors and brands of coffee-related beverages.

Defendants are in the specialty coffee and coffee maker businesses. They manufacture single-cup brewers, accessories and coffee, tea, cocoa and other beverages in "K–Cup portion packs.” Plaintiff Green maintained that his machine failed to brew the programmed amounts of K–Cup coffee within a few weeks of use. Plaintiff asserted that the machines had defective components, including defective pumps. As a result, the machines allegedly failed and brewed less than the specified amount. Furthemore, this defect allegedly caused consumers to use additional K–Cups to brew a single beverage. 

Plaintiff maintained that defendants' actions were in violation of the New Jersey Consumer Fraud Act (“CFA”), N.J. Stat. Ann. § 56:8–1, et seq., and constituted a breach of implied warranty. 

Defendants moved to dismiss.  The court noted that threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice under Ashcroft v. Iqbal, 556 U.S. 662 (2009), and Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007).  If the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint should be dismissed for failing to show that the pleader is entitled to relief. A plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do. 

The motion challenged plaintiffs' standing. To have standing, the plaintiff must have suffered an injury in fact—an invasion of a legally protected interest which is (a) concrete and particularized, and (b) actual or imminent, not conjectural or hypothetical. Second, there must be a causal connection between the injury and the conduct complained of—the injury has to be fairly traceable to the challenged action of the defendant, and not the result of the independent action of some third party not before the court. Third, it must be likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision.  The injury-in-fact element is often determinative.

The injury must affect the plaintiff in a personal and individual way.  Here, Green alleged that he purchased and used the Keurig Platinum Brewing System (model series B70).  Nevertheless, he sought to represent all individuals in New Jersey who “purchased or received”  a variety of Keurig Brewing Systems. Plaintiff did not have standing to pursue a claim that products he neither purchased nor used did not work as advertised.

Regarding that model series B70, plaintiff contended in his complaint that, because of defective components, the coffee machines at issue brew a lesser amount of coffee than the companies represented, compromising the quality of the beverage. Consumers are then forced to use additional K-Cups, which are a portion pack for the systems, according to the complaint. Defendants maintained that even if their alleged conduct was unlawful, plaintiff had not sufficiently pled ascertainable loss.  In a misrepresentation case, a plaintiff generally may show ascertainable loss by either out-of-pocket loss or a demonstration of loss in value.  In this case, Green did not allege that he made a claim for warranty repair or replacement of his machine.  The warranty provided as part of the contract of sale is part of the benefit of the bargain between the parties. Any defects that arise and are addressed by warranty, at no cost to the consumer, do not provide the predicate loss that the CFA expressly requires for a private claim.  Because plaintiff had not availed himself of defendants' warranty, he could not allege that the warranty does not address the defect in his machine.

Furthermore, the court found unpersuasive plaintiff's argument that the warranty did not address the defects in the brewers because other consumers allegedly reported that their replaced or repaired brewers were equally defective.  Allegations regarding the experience of absent members of the putative class, in general, cannot fulfill the requirement of pleading injury with adequate specificity.

Similarly, plaintiff did not sufficiently plead loss in value.   Plaintiff broadly asserted that he suffered a loss because each brewer failed to perform its advertised purpose and caused purchasers to suffer a loss of value of the product. But Green failed to allege how much he paid for his brewer and how much other comparable brewers manufactured by competitors cost at the time of purchase. Furthermore, Green had not suffered a diminution in value because the defective brewer could have been repaired or replaced with a new brewer which would have had its own one-year warranty.

Regarding the implied warranty claim, the general purpose of the brewers is to brew beverages. Even if defendants may have advertised that the machines would brew a specific amount of beverage, that alone did not transform the “general” purpose.  Green did not allege that his machine would not brew coffee or that it was inoperable.  The complaint was also devoid of any allegation that plaintiff can no longer use his brewer. Therefore, Green had not sufficiently alleged that his brewer was unfit for its ordinary purpose of brewing beverages at the time of purchase.

Defendants also contended that the class allegations should be dismissed. Plaintiff argued that the Court should deny the motion because it was premature. Nevertheless, a court may strike class action allegations in those cases where the complaint itself demonstrates that the requirements for maintaining a class action cannot be met.  Here, the court concluded that the plaintiff could not  meet the predominance requirement set forth in Fed.R.Civ.P. 23(b).

The complaint did not allege that all individuals in New Jersey who purchased the Keurig Brewing Systems had experienced the defect. Plaintiff acknowledged that there were members in the putative class who had not yet suffered the alleged pump failure. Consequently, the putative class included individuals who do not presently have a claim against defendants. Proving that defendants breached the implied warranty of merchantability would also require an individualized inquiry. Not every member of the putative class experienced a defect with the model series B70. Even if the purported defect had manifested in all of the brewers purchased within the class period, the court would have to make individual inquiries as to the cause and extent of the defect.  Motion granted. 

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A federal court recently denied class certification in a case brought on behalf of consumers accusing Epson America Inc. of misrepresenting how its NX series of printers functioned with ink cartridges. Christopher O’Shea et al. v. Epson America Inc. et al., No. 09-cv-08063 C.D. Cal.). Readers may recall our post that the court earlier dismissed many of the plaintiffs' claims on the basis that a manufacturer is not required under consumer protection laws to denigrate its own product and broadcast that its product may not perform as well as its competition.

In May 2009, plaintiff Rogers purchased a “Stylus NX 200” inkjet printer manufactured by defendants. Her decision to purchase this printer was allegedly based, in part, on a statement on the printer box that read: “Replace only the color you need with individual ink cartridges.”  Plaintiff allegedly understood this statement to mean that the printer would only require a black cartridge to print black text. In actuality, plaintiff alleged, the Epson NX 200 printer requires all cartridges to function. She subsequently filed suit against Epson claiming that Epson failed to disclose and affirmatively misrepresented the features of the printer.

Plaintiff  moved for class certification.  The interesting part of the court's analysis relates to the predominance issue under Rule 23(b)(3). Even though individualized questions of reliance and materiality were diminished under some of the plaintiff's theories because the consumer fraud claims are governed by the “reasonable consumer” test, which requires plaintiff to show that members of the public are likely to be deceived, Williams v. Gerber Products Co., 523 F.3d 934, 938 (9th Cir. 2008), the notions of reliance and injury still impacted class certification. Specifically, the court was not convinced that members of the putative class had standing to pursue their claims in federal court. To have standing under Article III, a plaintiff must present an injury that is concrete, particularized, and actual or imminent; fairly traceable to the defendant’s challenged action; and redressable by a favorable ruling.

In the context of Rule 23(b)(3), questions of Article III standing amount to an inquiry as to whether individual issues of injury-in-fact and causation predominate over common issues. While case law suggested that absent class members need not establish standing under the requirements of California’s consumer laws, there is a distinct requirement of Article III standing in federal court.  Statutory interpretations cannot permit a federal class action to proceed where class members lack Article III standing.  The requirement that all members of the class have Article III standing makes sense. If that were not the rule, a class could include members who could not themselves bring suit to recover, thus permitting a windfall to those class members and allowing Rule 23 to enlarge substantive rights.  The court therefore held that absent class members must satisfy the requirements of Article III.

Satisfaction of Article III’s requirements in turn raised individualized issues that defeated certification under Rule 23(b)(3) in this case. Article III requires some showing of injury and causation for a plaintiff to recover. Even if the alleged failure to disseminate truthful information about the product  would be subject to common proof, whether each class member was entitled to recover was not susceptible to proof on a class-wide basis because, to establish standing under Article III, each class member was required to show that they suffered some injury as a result of using or buying the product. Plaintiff therefore must show that all persons in the United States who purchased an Epson NX series printer during the class period suffered an injury which was caused by Epson’s alleged misrepresentation, and which was likely to be redressed by a decision in plaintiff’s favor. The record contained evidence indicating that the injury purportedly suffered by some members of the putative class could not fairly be traced to Epson’s allegedly deceptive representation.  Those individuals who purchased printers from certain third-party on-line sources, such as Amazon.com, were not exposed to the allegedly deceptive representation before they purchased their printers. Not all consumers who purchased an NX200 printer bought it at a retail store. Nor could standing be established by plaintiff’s (unsupported) assertion that the misrepresentation was on every box of the subclass, since some individuals purchased class printers without ever having been exposed to the allegedly deceptive representation. The fact that these individuals may have subsequently seen the misrepresentation when the package arrived in the mail was beside the point. There cannot be a causal connection between the consumer’s injury (the money spent on the printer) and Epson’s alleged misconduct (the purportedly deceptive advertising) because these consumers purchased the printers without ever seeing the purported misrepresentation.

Based on the foregoing, the court found that individualized issues of injury and causation permeated the class claims.The proposed class failed to satisfy Rule 23(b)(3)’s requirement that common issues predominate.

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A proposed class representative who voluntarily dismisses his individual claims lacks standing to appeal the denial of certification of the class claims, according to the Fourth Circuit.  Rhodes v. E.I. du Pont de Nemours & Co., No. 10-1166 (4th Cir.,  4/8/11).

The plaintiffs were residents of the City of Parkersburg in Wood County, West Virginia, and  customers of the Parkersburg City Water Department  which supplied water to homes located in Wood County.  DuPont operated a manufacturing facility in Wood County. For an extended period of time, DuPont’s plant  allegedly discharged perfluorooctanoic acid (PFOA) into the environment
surrounding the plant. Measurable quantities of PFOA were allegedly detected in the water that is pumped by the Water Department into the plaintiffs’ residences.

In 2006, the plaintiffs filed a complaint against DuPont in the Circuit Court of Wood County, West Virginia. Defendant removed. The plaintiffs asserted six common law claims, individually and on behalf of a class of customers of the Water Department, addressing the contamination of their municipal water supply and the alleged resulting presence of PFOA in their blood. The plaintiffs sought damages and injunctive relief to obtain medical monitoring for latent diseases on behalf of a class of Water Department customers allegedly exposed to PFOA beginning in 2005.

After conducting a hearing on the plaintiffs’ motion for class certification under Federal Rule of Civil Procedure 23(b), the district court concluded that the elements of a medical monitoring claim could not be proved on a class-wide basis using the type of evidence presented by the plaintiffs. The district court therefore denied the plaintiffs’ motion for class certification of their stand alone medical monitoring claims. The district court further held that the plaintiffs had not met their burden under Rule 23 for certification of a class to pursue medical monitoring relief based on the plaintiffs’ claims of negligence, gross negligence, battery, trespass, and private nuisance, the common law torts. The district court then denied the plaintiffs’ motion for class certification of the traditional common law tort claims for damages also.

DuPont filed motions seeking summary judgment on all the plaintiffs’ claims. The district court granted in part and denied in part DuPont’s motions. The district court granted DuPont’s
motions with respect to all the plaintiffs’ traditional common law tort claims, Rhodes v. E.I. Du Pont De Nemours and Co., 657 F. Supp. 2d 751, 762-73 (S.D.W. Va. 2009), but denied summary judgment with respect to the plaintiffs’ individual claims of medical monitoring.

Rather than proceed to trial on those remaining individual claims, in order to appeal immediately the adverse summary judgment and certification rulings, the plaintiffs filed a stipulation of voluntary dismissal under Federal Rule of Civil Procedure 41(a)(1) of their individual claims for medical monitoring.

The court of appeals affirmed the summary judgments, but what will be of more interest to our readers is DuPont’s argument that the 4th Circuit lacked appellate jurisdiction to address the merits of plaintiff’s appeal of the denial of class certification of their medical monitoring claims. DuPont asserted that the plaintiffs no longer had standing to advance this argument on appeal because, by voluntarily dismissing their individual claims for medical monitoring, the plaintiffs abandoned their interest in litigating the certification question. As a result, DuPont contended, the plaintiffs had no personal stake in this issue and did not satisfy the requirements for Article
III standing.

In response, the plaintiffs maintained that litigants routinely are permitted to dismiss various claims in order to appeal other claims and, that under federal precedent, this court could review the denial of class certification for a particular claim even though no plaintiff presently was advancing individual claims asserting that cause of action. The plaintiffs further argued that by its plain terms, their stipulated dismissal applied only to their individual medical monitoring claims. Thus, the plaintiffs contended that they did not abandon their stake in the certification question.

As a general matter, circumstances may change while a case is pending, thereby leaving a plaintiff
without the personal stake necessary to maintain Article III standing. For example, claims can expire, or parties can settle or dismiss their claims entirely. In such situations, the district court or appellate court must dismiss the case for lack of subject-matter jurisdiction. On the other hand, generally, a class representative not only has a "personal stake" in the substantive claim he or she asserts, but also a distinct procedural right to represent the interests of similarly situated individuals. This second, representative interest sometimes gives a putative class representative a sufficient "stake" in the class certification question to appeal an adverse certification ruling even after the putative class representative’s claim is mooted by intervening events.

Two conditions must be met, however, to retain Article III jurisdiction, according to the 4th Circuit. The imperatives of a dispute capable of judicial resolution must be sharply present, and there must be self-interested parties vigorously advocating opposing positions.

Other federal circuit courts addressing this issue have reached different conclusions on the question whether a plaintiff may voluntarily settle or dismiss his or her individual claims and still
appeal a certification denial. Some courts have held that standing is maintained when a named plaintiff expressly reserves the right to appeal a certification denial. See Richards v. Delta Air Lines, Inc., 453 F.3d 525 (D.C. Cir. 2006) (express reservation of class claim preserves standing of class
representative to appeal certification denial); Dugas v. Trans Union Corp., 99 F.3d 724 (5th Cir. 1996) (reservation of right sufficient to give putative class representative who settles individual claims standing to appeal denial of class certification). Cf. Narouz v. Charter Commc’ns, LLC, 591 F.3d 1261 (9th Cir. 2010) (putative representative retains standing to appeal unless releases interest in class claims in settlement agreement). Other courts have held that even an express reservation of right is not sufficient to satisfy Article III standing requirements. See Muro v. Target Corp., 580 F.3d 485 (7th Cir. 2009) (recitation in settlement agreement that plaintiff reserves right to appeal denial of class certification not sufficient to create concrete interest in class certification issue); Anderson v. CNH U.S. Pension Plan, 515 F.3d 823 (8th Cir. 2008) (same).

Although several of these cases held that the language of a plaintiff’s settlement agreement is determinative of that plaintiff’s "stake" in an appeal, the 4th Circuit seemed less concerned about the language of the dismissal than the fact of dismissal. It concluded that when a putative
class plaintiff voluntarily dismisses the individual claims underlying a request for class certification, as happened in this case, there is no longer a "self-interested party advocating" for class treatment in the manner necessary to satisfy Article III standing requirements.

The court held that it thus did lack jurisdiction to decide the issue whether the district court abused its discretion in denying the plaintiffs’ request for class certification of their medical monitoring
claims.

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California's Supreme Court ruled late last month that consumers who purchase a product allegedly as a result of misleading advertising can sue the manufacturer even in the absence of traditional injury, despite enactment of a recent ballot proposition that was designed to stiffen injury requirements and limit standing under the state's unfair competition and false advertising laws. Kwikset Corp. v. Superior Court, No. S171845, 2011 WL 240278 (Cal. Jan. 27, 2011).

Readers have seen our posts about the danger of plaintiffs' misuse of state consumer fraud acts and unfair and deceptive practices acts.  Partially in response to such abuse, a few years back the voters of California passed Proposition 64, which substantially revised the state's unfair competition and false advertising laws by beefing up standing and injury requirements for suits by private individuals.  The initiative declared: “It is the intent of the California voters in enacting this act to prohibit private attorneys from filing lawsuits for unfair competition where they have no client who has been injured in fact under the standing requirements of the United States Constitution.”  Specifically, Proposition 64 also restricted standing to consumers who can allege they have suffered “injury in fact” and have “lost money or property” as a result of the defendant's improper business practice.  The plain import of this is that a plaintiff now must demonstrate some form of economic injury -- the issue is what form. 
 
Plaintiff James Benson brought suit against Kwikset Corp. challenging the company's “Made in U.S.A.” labeling of lock sets that allegedly contain foreign-made parts or involved foreign manufacture.  Specifically, plaintiff alleged that Kwikset falsely marketed as “Made in USA” locksets that contained screws or pins made in Taiwan or that were assembled in Mexico. Plaintiff prevailed in the trial court, on injunctive relief, but lost on the restitution claim. While cross-appeals were pending, Proposition 64 took effect. The lower courts gave plaintiff an opportunity to plead standing based on injury under the new Prop standing requirements of injury in fact and loss of money or property. The amended complaint then alleged that plaintiff relied on Kwikset’s representations in deciding to purchase the locks, and that he supposedly would not have purchased the locksets if they were not labeled “Made in the USA.”  On appeal, the court of appeals vacated the decision in light of the standing issues in the wake of the new law. The court found that the plaintiffs (new plaintiffs had been added) had alleged “injury in fact,” but they had not alleged “loss of money or property” because they got perfectly functioning locksets in return for their money, and they were not overpriced or defective. Plaintiffs therefore received the benefit of the bargain. 

The state Supreme Court agreed to hear the appeal, specifically to address the new standing requirements and what constitutes “loss of money or property” under California’s unfair competition law (Business and Professions Code section 17200 et seq. (the UCL)) and the false advertising law (Business and Professions Code section 17500 et seq.).

The state high court held that plaintiffs who allege they are deceived by a product’s label and thus purchase a product that they would not have purchased otherwise have “lost money or property” as required by Proposition 64 and have standing.  The court somehow concluded that such an individual does not receive the “benefit of the bargain” even if the product is not overpriced or defective, and works just fine. The Supreme Court concluded that “labels matter.” For each consumer who relies on the truth and accuracy of a label and is deceived by misrepresentations into making a purchase, the economic harm is the same: the consumer has purchased a product that he or she paid more for than he or she otherwise might have been willing to pay if the product had been labeled accurately, said the court. This economic harm -the "loss of real dollars from a consumer's pocket" -is the same whether or not a court might objectively view the products as functionally equivalent.  If a party has alleged or proven a personal, individualized loss of money or property in any non-trivial amount, he or she has also alleged or proven injury in fact.

The majority worried that to deny such consumers standing would bring an end to private consumer enforcement regarding label misrepresentations.  Instead, this unfortunate decision may well encourage frivolous and contrived class action litigation by plaintiffs who have not suffered any type of quantifiable economic loss -- exactly what the voters voted to curtail.

The dissent correctly noted that the majority's ruling directly contravened the both the intent of Prop 64 and the express language of the amendment.  Indeed Proposition 64 was an effort to curb suits just like this one (which was mentions in the campaign), in which plaintiff got the benefit of their bargain. In direct contravention of the electorate's intent, the majority disregarded the express language of the amendment and arguably made it easier for a plaintiff to achieve standing under the UCL.  Lost money cannot refer to every time a consumer pays for something, because then every consumer would always have standing to challenge every transaction, and how could Proposition 64 be seen as a new restriction on standing?  Loss of money is not the same as any economic injury. Lost money or property is a subset, one form of, economic injury.  Not all economic injuries include lost money as the statute uses the term;  the majority effectively rendered one of the two statutory requirements redundant and a nullity. 

By delving into the subjective motivation of the plaintiff ("labels matter"), the court ignored the focus of the statute not on subjective intent of the buyer, but objective proof of actual loss of property versus no such loss.

In focusing on the fact that the plaintiffs paid for the items, the majority ignored the fact that plaintiffs received the locksets in return, which were not alleged to be overpriced or otherwise defective. Aside from paying the purchase price of the locksets, plaintiffs have not alleged they actually “lost” any money or property.  The majority simply concluded there was a loss of real dollars, but there was no such allegation of such a loss here, where plaintiffs simply paid the purchase price for the mislabeled but otherwise fully functional locksets. Plaintiffs did not allege that the locksets were worth less or were of lesser quality or were defective, and the majority's holding apparently does not require that plaintiffs allege any price differential.

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A quick update to one of the key climate change cases pending in the federal courts. Readers may recall that the U.S. Supreme Court announced late last year that it will indeed hear the challenge to a court of appeals decision allowing several states to pursue a public nuisance suit against various utilities for their greenhouse gas emissions. See American Electric Power Co. v. Connecticut, No. 10-174 (U.S. certiorari petition granted 12/6/10).

Last week the federal government weighed in and asked the Court to overturn the court of appeals' decision in this public nuisance suit against American Electric Power Co. and other utilities for their greenhouse gas emissions, but on relatively narrow grounds. The brief filed by the Acting Solicitor General argues that the plaintiffs lacked “prudential standing” and that their suit should therefore be dismissed.  We have noted here before that a central issue is whether the EPA will be the primary regulator of greenhouse gas emissions or whether private parties will be permitted to go directly to court. Should a single judge set emissions standards for regulated utilities across the country—or, as here, for just that subset of utilities that the plaintiffs have arbitrarily chosen to sue? Judges in subsequent cases could set standards for other utilities or industries, or conflicting standards for these same utilities.  A second issue is whether controlling power plant emissions' alleged effects on the climate is a political question beyond the reach of the courts. Recall that the Southern District of New York dismissed the suit in 2005, holding that the claims represented a political question. Connecticut v. American Electric Power Co., 406 F. Supp. 2d 265.

The government position is that plaintiffs bring claims under the federal common law of public nuisance against six defendants alleged to emit greenhouse gases contributing to climate change. But if plaintiffs' theory is correct, virtually every person, organization, company, or government across the globe also emits greenhouse gases, and virtually everyone will also sustain climate-change-related injuries. Principles of prudential standing do not permit courts to adjudicate such generalized grievances absent statutory authorization, particularly because EPA, which is better-suited to addressing this global problem, has begun regulating greenhouse gases under the CAA. As a result, plaintiffs’ suits must be dismissed.  EPA began regulating greenhouse gas emissions from certain sources in January, although members of Congress are moving to delay or block EPA's authority to do so, which we will post on later this week.

The federal government brief concedes that plaintiffs have Article III standing based on their interest in preventing the loss of sovereign territory for which they are also the landowners.  It asks that the Court not decide whether plaintiffs’ suits are barred by the political question doctrine, although noting that this case does indeed raise separation-of powers concerns highlighted by the second and third factors used in Baker v. Carr, 369 U.S. 186 (1962), to describe the political question doctrine: a lack of judicially discoverable and manageable standards for resolving it; or the impossibility of deciding without an initial policy determination of a kind clearly for nonjudicial discretion.

The AEP brief is available for interested readers.

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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.

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A federal court has denied class certification in a proposed consumer fraud class action arising from the sale of microwave popcorn with artificial butter flavoring. See Courtney Fine v. Conagra Foods, Inc., No. CV 10-01848 SJO (C.D. Calif., Aug. 27, 2010).

The facts: Diacetyl is a naturally occurring chemical in butter, and was also used in artificial butter flavors for decades. In 2007 defendant Conagra, maker of microwave popcorn, issued a press release to the public stating it was no longer adding the compound diacetyl, which has been associated with lung injury in factory workers exposed to high doses, to its butter-flavored microwave popcorn products. Since the announcement, defendant "reformulated" all butter-flavored varieties of Orville Redenbacher's and Act II microwave popcorn in response, it said, to consumer uncertainty regarding the ingredients of the microwave popcorn. Conagra also redesigned the packaging for these products to display the words "No Added Diacetyl."

Plaintiff alleged that she understood the advertising claim to be there was no diacetyl in the new popcorn, as opposed to no added diacetyl, and alleged she relied on defendant's claims that there was "no diacetyl" in the popcorn products when making the purchases. Plaintiff asserted, however, that diacetyl is still present in the products (as part of natural butter). Plaintiff further asserted that had she known the representation regarding the diacetyl was false, she would not have made the purchases.

Plaintiff alleged causes of action for: (1) false and misleading representation of material facts, constituting unfair competition within the meaning of California Business & Professions Code §§ 17200, et seq. ("UCL"); and (2) false advertising in violation of Business & Professions Code §§ 17500, et seq. ("FAL"). She further alleged that she suffered a monetary loss as a result of defendant's alleged actions, which were in violation of the Consumer Legal Remedies Act ("CLRA"), Cal. Civ. Code §§ 1750, et seq.

Last March, Conagra removed the case from state court to federal (Judge Otero). Then they filed a Motion to Dismiss based on various grounds, including that: (1) Plaintiff does not allege a cognizable injury resulting from defendant's products and therefore lacks standing; (2) Plaintiff fails to state a claim under the UCL, FAL, and CLRA as a matter of law under Rule 12(b)(6). The gist of the final argument was that plaintiff "received exactly what she paid for."  But, the court was persuaded that plaintiff adequately asserted that she did not get what she paid for, as she was under the impression that defendant's popcorn products were free of diacetyl. That is, she asserted that Conagra’s placement of "No Diacetyl Added" on the packaging is a material misrepresentation, and that reasonable consumers could (somehow) have taken the label to mean that diacetyl did not exist in the product at all.

Plaintiffs then moved for certification of a class consisting of all persons residing in the state of California who purchased Orville Redenbacher's brand Light Butter, Movie Theater Butter Light microwave popcorn, and/or ACT II brand 94% Fat Free Butter, Light Butter, and Butter Lover's microwave popcorn for personal use and not for resale since September 1, 2007. Plaintiff sought certification under Rule 23(b)(3) and 23(b)(2), but argued her "primary goal is to obtain injunctive relief by way of an order enjoining Defendant from its continued practice of making misleading advertising and label claims about its butter flavored microwave popcorn products."

The court denied the motion for class certification on three related grounds. The first problem was that in the court's prior Order Denying Defendant's Motion to Dismiss (6/29/10), the court had ruled that plaintiff established standing for herself because she alleged that she incurred injury as a result of defendant's allegedly improper conduct. That is, plaintiff's spending money on defendant's popcorn in reliance of defendant's placing "No Added Diacetyl" on the packaging.

In the class Motion, plaintiff sought to certify a class that includes "all persons residing in the State of California who purchased [Defendant's] popcorn for personal use and not for resale since September 1, 2007."  Named plaintiff made no mention of the proposed class being comprised only of members who made the purchase as a result of defendant's allegedly false statements, which would be necessary in order to establish standing for the rest of the class.  The court noted that other courts have held that class definitions should be tailored to exclude putative class members who lack standing; each class member need not submit evidence of personal standing but, nonetheless, a class must be defined in such a way that anyone within it would have standing. Burdick v. Union Sec. Ins. Co., 2009 WL 4798873, at *4 (C.D. Cal. 2009).

Accordingly, class certification was improper here, given that plaintiff's proposed class included many people who may not have relied on defendant's alleged misrepresentations when making their purchasing decisions.

Second, a related problem was the Rule 23(a) requirement that plaintiff’s claims be typical of the class claims. The court agreed with Conagra that plaintiff failed to adduce facts suggesting that other class members have been injured by the same course of conduct that she asserts injured her. There could be no serious question, said the court, that the vast majority of putative class members here never read (let alone considered) the defendant's statement at issue, do not know what diacetyl is, and did not base their popcorn purchases on diacetyl-related issues. Plaintiff purchased popcorn, she said, because of defendant's allegedly misleading statements regarding diacetyl. Plaintiff's injury was established due to her alleged reliance on defendant's statements. But plaintiff sought to certify a class that would likely include people with varying rationales behind their purchases – many who purchased popcorn based on factors like flavor or brand. Plaintiff thus failed to establish that she could be a typical representative of the class, whose members were buying for all sorts of reasons unrelated to diacetyl.

Third, because the court found that plaintiff was not a typical representative, the court also held that plaintiff was not an adequate representative under Rule 23(a)(4).

What is refreshing about this short opinion is the recognition that Rule 23(a) matters too.  Often we see courts giver very cursory analysis of the (a) elements and/or emphasize that regardless of the initial prerequisites the issues of predominance, manageability and superiority dictate the certification result.  While the fact that class members undoubtedly bought microwave popcorn for many reasons would impact predominance of individual issues, it also does in fact suggest that the class representative's claims were not typical of the the class, as defined.

(NB. Your humble blogger is involved in the diacetyl litigation, but not this case.)

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The federal government (Acting Solicitor General Neal Katyal on behalf of the Tennessee Valley Authority, a government-owned company), last week urged the Supreme Court to overturn a court of appeals decision that allowed Connecticut and several other states to move forward in their suit seeking greenhouse gas emissions reductions under a federal common law nuisance theory. American Electric Power Co. v. Connecticut, No. 10-174 (U.S., brief filed 8/24/10).

Readers may recall from earlier posts that in Connecticut v. American Electric Power Co., 2009 WL 2996729 (2nd Cir. 9/21/09),  two groups of plaintiffs, one consisting of eight states and New York City, and the other consisting of three land trusts, sued several electric power corporations that own and operate fossil-fuel-fired power plants, seeking abatement of defendants' alleged ongoing contributions to the "public nuisance of global warming." Plaintiffs claimed that global warming, to which the defendants allegedly contributed as large emitters of carbon dioxide, is causing and will continue to cause serious harm affecting human health and natural resources. The plaintiffs' theory is that carbon dioxide acts as a greenhouse gas that traps heat in the earth's atmosphere, and that as a result of this trapped heat, the earth's temperature has risen over the years and will continue to rise in the future. Pointing to an alleged “clear scientific consensus” that global warming has already begun to alter the natural world, plaintiffs predicted that it “will accelerate over the coming decades unless action is taken to reduce emissions of carbon dioxide.”

When thinking about "global climate" changes, MassTortDefense has always been sobered by the fact that humans have been trying to measure temperature consistently only since the1880s, during which time advocates think the world may have warmed by about +0.6 °C -- which is less than the margin of error on our ability to measure the Earth's temperature!

Anyway, plaintiffs brought these actions under the federal common law of nuisance or, in the alternative, state nuisance law, to force defendants to cap and then reduce their carbon dioxide emissions. The district court held that plaintiffs' claims presented a non-justiciable political question and dismissed the complaints. 406 F. Supp. 2d 265.

On appeal to the Second Circuit, plaintiffs argued that the political question doctrine does not bar adjudication of their claims; that they had standing to assert their claims; that they had properly stated claims under the federal common law of nuisance; and that their claims were not displaced by any federal statutes.

In a lengthy opinion, the two judges (Justice, then-Judge Sotomayor had to drop out) held that the district court erred in dismissing the complaints on political question grounds; that all of plaintiffs had standing; that the federal common law of nuisance governs their claims; that plaintiffs had stated claims under the federal common law of nuisance; that their claims were not displaced by other federal law.

In a very minimalist interpretation of what is needed for standing, the Second Circuit distinguished multiple precedents of the Supreme Court which held that to have standing a plaintiff must allege an injury that is concrete, direct, real, and palpable -- not abstract.  Injury must be particularized, personal, individual, distinct, and differentiated -- not generalized or undifferentiated. The Supreme Court has further stated that the asserted injury must be actual or imminent, certainly impending and immediate --not remote, speculative, conjectural, or hypothetical. The court rejected defendants challenge that the contentions of future injury at some unspecified future date are not the kind of “imminent” injury required. The court also gave short shrift to the argument that plaintiffs could neither isolate which alleged harms will be caused by defendants' emissions, nor allege that such emissions would alone cause any future harms.

As we noted here, several defendants have filed a cert petition that raises the important, recurring question whether states and private plaintiffs have standing to seek, and whether federal common law provides authority for courts to impose, a non-statutory, judicially created regime for setting caps on greenhouse gas emissions based on vague and indeterminate nuisance concepts. It also asks the Court to decide whether judges, in addition to Congress and the EPA, may regulate greenhouse gas emissions at the behest of states and/or private parties and, if so, under what standards. Under the Second Circuit's ruling, a single judge could set emissions standards for regulated utilities across the country—or, as here, for just that subset of utilities that the plaintiffs have arbitrarily chosen to sue. Judges in subsequent cases could set different standards for other utilities or industries, or conflicting standards for these same utilities.

While the Second Circuit called this an ordinary tort suit, this litigation seeks to transfer to the judiciary nearly standard-less authority for some of the most important and sensitive economic, energy, and social policy issues presently before the country. Federal nuisance law is neither sufficiently developed nor sufficiently detailed to substitute for actual regulation. Thus, at stake is the financial health and security of numerous sectors of the economy. Indeed, virtually every entity and industry in the world is responsible for some emissions of carbon dioxide and is thus a potential defendant in climate change nuisance actions under the theory of this case. The threat of litigation, and the indeterminate exposure to monetary and injunctive relief that it entails, could substantially impede and alter the future investment decisions and employment levels of all affected industries, and ultimately every sector of the economy.

Now the government brief takes a different approach, asking the Court not to accept the case for full review, but rather to simply vacate the decision and direct the Second Circuit to reconsider two issues: whether the plaintiffs have standing to bring the lawsuit, and whether recent actions by the EPA  to regulate greenhouse gas emissions supplant the reason given by the Second Circuit for allowing the lawsuit to go forward.  Since the initial decision below, EPA has issued final rules establishing reporting requirements for major emitters of greenhouse gases; issued a finding that greenhouse gas emissions from cars and light trucks endanger public health and welfare; and established new greenhouse gas emissions limits for cars and light trucks. In addition, EPA has signed off on a final rule requiring that additional categories of sources begin to track and report greenhouse gas emissions under EPA's earlier GHG reporting rule.  The Second Circuit decision was seemingly predicated on the "now-obsolete conclusion" that EPA had not taken action to regulate carbon-dioxide emissions from stationary sources. 

The TVA brief also argues that  that the lower court should dismiss the case based on “prudential standing,” a narrower ground than the case or controversy argument of the other defendants.

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Readers may recall my post about the Fifth Circuit granting the petition for rehearing en banc in Comer v. Murphy Oil.  The case involves a lawsuit by property owners against some three dozen oil, coal, and chemical companies, alleging that the defendants' activities contributed to climate change and magnified the effects of Hurricane Katrina, and thus exacerbated the damage from the storm. The trial court dismissed the suit on political question and standing grounds.  On appeal, a panel of the 5th Circuit reversed last Fall, finding that the plaintiffs did have standing and that the political question doctrine did not apply.

The defendants filed a petition for rehearing en banc, which was granted, and set the case for oral argument next week.  But, the clerk recently sent a letter noting the cancellation of en banc oral arguments.  Apparently, since the en banc court was constituted, new circumstances have arisen that make it necessary for another judge to recuse, leaving only eight members of the court able to participate in the case. Consequently, said the clerk, the en banc court has lost its quorum. Seven members of the court had previously recused themselves from the case.

Several defendants have filed a motion arguing for a different reading of the rule regarding a quorum, and/or raising the argument that the district court's opinion ought to remain the controlling law of the case, rather than the panel's decision which was vacated by the en banc decision. The court has responded by asking for supplemental briefing on these issues. Specifically, the order invited the parties to address the matter “as they think appropriate” but specifically directed them to analyze the interplay between the following rules and statute in resolving the disposition of the appeal: Fed. R. App. P. 35(a), 28 U.S.C. §46 (c) and (d), Fed. R. App. P. 41 (a) and (d) (1), 5th Cir. Local Rule 41.3, and Fed. R. App. P. 2. The court also instructed the parties that they may consider the rulings of Chrysler Corp. v. United States, 314 U.S. 583 (1941) and North American Co. v. Securities & Exchange Comm’n, 320 U.S. 708 (1943) and the Rule of Necessity.

Presumably, three outcomes are possible:the court decides it actually does have a quorum and thus oral argument is rescheduled; the panel decision is reinstated by default (with an ensuing cert petition to the Supreme Court); or, the district court is affirmed without opinion.

Many observers had predicted that the en banc decision by the 5th Circuit would create a circuit split  with the 2d Circuit decision in Connecticut v. American Electric Power. There, a two-judge panel reversed the lower court dismissing the case on political question grounds, and finding the plaintiffs had standing to assert nuisance claims (with a similar attenuated causation theory).  This presumably would have paved the way for Supreme Court cert review.  Of course, Justice Alito has recused himself in cases involving ExxonMobil due to his ownership of its stock, and  Justice Breyer has recused himself from cases involving BP.  Perhaps Justice Sotomayor would also recuse herself due to her participation in the Connecticut v. American Electric Power case when she was on the Second Circuit.  So any possible Supreme Court review may be complicated also by the recusal and quorum issues.

Stay tuned.  This one is getting even more interesting, if thatis possible.

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We previously posted about a case in which a federal judge threw out  a purported class action against L’Oreal USA Inc. and Procter & Gamble Distributing LLC that accused the companies of selling Cover Girl and Maybelline lipsticks containing lead. Koronthaly v. L’Oreal USA, Inc., et al., No. 07-5588 (D.N.J. July 29, 2008).

The U.S. Court of Appeals for the Third Circuit has affirmed the decision. Koronthaly v. L'Oreal USA,  No. 08-4625 (3d Cir. 3/26/10).

Koronthaly purchased lipstick products manufactured, marketed, and distributed by appellees L’Oreal. and P&G. She alleged these lipstick products contained lead. The FDA does not regulate the presence of lead in lipstick, but Koronthaly asserted that the lipstick contained lead in greater amounts than permitted in candy by the FDA. Koronthaly alleged that she did not know when she purchased the products that they contained any lead, and when she learned of the lead content she immediately stopped using them. Moreover, had she known of the lead she claims she would not have purchased the products.

To prove constitutional standing, said the court of appeals, a plaintiff must demonstrate (1) an injury-in fact that is actual or imminent and concrete and particularized, not conjectural or hypothetical, (2) that is fairly traceable to the defendant’s challenged conduct, and (3) is likely to be redressed by a favorable judicial decision. Summers v. Earth Island Inst., 129 S. Ct. 1142, 1149 (2009). In this case, standing foundered on the first requirement, injury-in-fact, said the court.

Koronthaly’s argument that she was misled into purchasing unsafe lipstick products was belied by an FDA report finding that the lead levels in the defendants’ lipsticks were not dangerous and therefore did not require warnings. Moreover, Koronthaly conceded that she has suffered no adverse health effects from using the lipsticks. Koronthaly therefore had to fall back on only a subjective allegation -- that the trace amounts of lead in the lipsticks were unacceptable to her, not an injury-in-fact sufficient to confer Article III standing. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 564 (1992)(injury-in-fact must be accompanied by “continuing, present adverse effects”); Georgine v. Amchem Prods., Inc., 83 F.3d 610, 636 (3d Cir. 1996) (Wellford, J., concurring) (“Fear and apprehension about a possible future physical or medical consequence . . . is not enough to establish an injury in fact.”).

Furthermore, to the extent that Koronthaly contended that the injury-in-fact was the loss of her “benefit of the bargain,” she mistakenly relied on contract law, said the court. See Rivera v. Wyeth-Ayerst Labs., 283 F.3d 315, 319-21 (5th Cir. 2002) (plaintiff, whose only claim was that she “would like her money back” for having purchased a product that failed to make certain disclosures and allegedly was defective, did not have an injury-in-fact sufficient to create standing). Her lipstick purchases were not made pursuant to a contract involving lead levels, and therefore she could not have been denied the benefit of any bargain. Absent any allegation that she received a product that failed to work for its intended purpose or was worth objectively less than what one could reasonably expect, Koronthaly had not demonstrated a concrete injury-in-fact.

The dismissal was affirmed. In the lipstick wars, attention now will focus on Stella v. LVMH Perfumes and Cosmetics USA Inc., N.D. Ill., No. 1:07-cv-06509, dismissed 4/3/09; which is currently on appeal before the Seventh Circuit.
 

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An up and down class action proceeding involving Listerine has taken a new turn. Pfizer Inc. v. Superior Court of Los Angeles County, No.B188106 (Cal. App. 3/2/10).

Plaintiffs brought a proposed class action on behalf of California consumers who allegedly purchased Listerine on the claim that the mouthwash prevented plaque and gingivitis as effectively as dental floss, relying on the state's Unfair Competition Law (UCL) (Bus. & Prof. Code, § 17200 et seq.) and the False Advertising Law (FAL) (§ 17500 et seq.).  The trial court certified a California class consisting of all individuals who purchased Listerine between June, 2004 and January, 2005.  The appeals court initially ruled in 2006 that the trial court’s certification was overbroad, relying on Proposition 64 which amended standing requirements in such actions and requires proof that the proposed class suffered injury.  Following the decertification order, however, the California Supreme Court ordered the appeals court to revisit the issue in light of its intervening decision in In re: Tobacco II, 46 Cal.4th 298 (2009). 

Upon remand, the court of appeals vacated the prior opinion, received supplemental briefs from the
parties and amici curiae, and reconsidered. Upon reflection, the appeals court concluded that the circumstances of the case still did not warrant class certification.

The court noted that the causation requirement for purposes of establishing standing under the UCL, and in particular the meaning of the phrase "as a result of" in section 17204, holds that a class representative proceeding on a claim of misrepresentation as the basis of his or her UCL action must demonstrate actual reliance on the allegedly deceptive or misleading statements, in accordance with well-settled principles regarding the element of reliance in ordinary fraud actions. Those same principles, the state supreme court had said Tobacco II in an amazingly result-driven fashion, do not require the class representative to plead or prove with an "unrealistic degree of specificity" that the plaintiff relied on particular advertisements or statements when the unfair practice is a fraudulent advertising campaign. But Tobacco II does not stand for the proposition that a consumer who was never exposed to an alleged false or misleading advertising or promotional campaign is entitled to restitution.

The certified class, consisting of all purchasers of Listerine in California, was overbroad because it presumed there was a class-wide injury. However, the record reflected that of 34 different Listerine mouthwash bottles on sale, 19 never included any label that made any statement comparing Listerine mouthwash to floss. Further, even as to those flavors and sizes of Listerine mouthwash bottles to which defendant did affix the labels which were at issue, not every bottle shipped between in the class period bore such a label. Also, although Pfizer allegedly ran four different television commercials with the “as effective as floss” campaign, the commercials did not run continuously and there is no evidence that a majority of Listerine consumers viewed any of those commercials. Thus, many, perhaps the majority of, class members who purchased Listerine during the pertinent period did so not because of any exposure to any allegedly deceptive conduct, but rather, because they were brand-loyal customers or for other reasons. As to such consumers, there is absolutely no likelihood they were deceived by the alleged false or misleading advertising or promotional campaign. Such persons cannot meet the standard of having money restored to them because it “may have been acquired by means of” the unfair practice.

Finally, plaintiff testified he did not make his purchase based on any of the four television commercials or other ads, and that he bought Listerine due to the bottle’s red label (which differed from the other labels), which he recalled said “as effective as floss.”  Because the various commercials and labels contained different language, with some even expressly advising consumers to continue flossing, his testimony as to his reaction to the Listerine label is not probative of his, or absent class members’, reaction to different language contained in television commercials and other labels. Therefore, named plaintiff lacked standing to assert a UCL claim based on those television commercials or other labels.

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A federal court has dismissed a class action that accused Bayer Corp. of misrepresenting the cancer-preventing nature of its men's vitamin products. Johns v. Bayer Corp. et al., (S.D. Cal. Feb. 9, 2010).

Readers of MassTortDefense know how a government investigation or advocacy group's criticism of a product can spawn products liability and other class action litigation.  But can plaintiffs walk too closely in the footsteps of the government?

Plaintiff David Johns filed a putative class action alleging that defendants misrepresented on product packaging, commercial advertisements, their website, and in other marketing materials, that one of the product line's key ingredients, selenium, has the ability to reduce the risk of prostate cancer in men. Plaintiff alleges that, despite emerging evidence, selenium does not in fact prevent or reduce the risk of prostate cancer. Plaintiff alleged he purchased one bottle of Men’s Health in July 2009 for approximately $8.  He alleges he read the information regarding selenium on the product packaging and relied on those statements in making his purchasing decision.

Plaintiff then brought a proposed class action on behalf of all persons in the United States or, alternatively, all California residents, who since 2005 purchased the men's health vitamin products. Plaintiff alleged claims for: (1) violation of California’s Unfair Competition Law, California Business & Professions Code § 17200 (“UCL”), (2) violation of the Consumers Legal Remedies Act, California Civil Code § 1750 (“CLRA”), and (3) unjust enrichment.

Defendants moved to strike key aspects of the complaint because the allegations seemingly were simply borrowed from the language of an FTC investigation of the vitamin product line. Defendants argued that these allegations violated plaintiff’s duty under Rule 11 to conduct a reasonable factual investigation into the allegations to be made in a complaint. Attorneys have a duty to make a reasonable inquiry into whether the factual contentions made in a complaint have evidentiary support. Fed. R. Civ. Pro. 11(b).

That FTC lawsuit resulted in a settlement and consent decree; there was no adjudication on the merits and no admission of wrongdoing or fault on the part of Bayer.  Thus, quotes from the government pleadings were, at best, a repetition of mere allegations, including of a special interest advocacy group that had complained to the government.  The federal court thus struck these allegations. See also In re Connectics, 542 F. Supp. 2d 996, 1005-06 (N.D. Cal. 2008).  Because the court granted defendants’ motion to strike the various paragraphs of the complaint, there were no factual allegations remaining to support the claim that defendants’ advertising was deceptive. Accordingly, the motion to dismiss was granted without prejudice.

The court went on to address several issues "as guidance if Plaintiff chooses to file an amended
complaint."  The court noted that in two recent opinions, the Supreme Court had clarified the  standard of review for Rule 12(b)(6) motions. See Ashcroft v. Iqbal, 129 S.Ct. 1937 (2009); Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007). To survive a motion to dismiss under this standard, “a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim for relief that is plausible on its face.’” Iqbal, 129 S.Ct. at 1949 (citing Twombly, 550 U.S. at 570).  For example, the court pointed out a standing issue: plaintiff did not allege that he saw any advertisements for one of the products in the line, Men’s 50+, nor that he read the packaging on the product, nor that he even considered purchasing the product. Plaintiff cannot expand the scope of his claims to include a product he did not purchase or advertisements relating to a product that he did not rely upon. The statutory standing requirements of the UCL and CLRA are narrowly prescribed and do not permit such generalized allegations.

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A federal judge has granted defendant's summary judgment motion in a putative consumer class action over contact lens solution. Degelmann, et al. v. Advanced Medical Optics Inc., No.07-0317 (N.D. Calif. 1/4/10).

Defendant, in 2007, issued a recall notice for their contact lens solution product, following an announcement by the U.S. Centers for Disease Control and Prevention that a small number of users of the contact lens solution might have developed a rare, but potentially serious, corneal infection, due to contamination.  The CDC report indicated that the epidemiological evidence showed that the product may be less effective than other solutions in disinfecting against the particular contamination. [Epidemiology, sometimes termed the "science of long division" or the "science of making the obvious obscure" is crucial to most toxic tort claims.]

Plaintiff brought a proposed nationwide class action under California Business & Professions Code § 17200 (Unfair Competition Law) and  § 17500 (False Advertising Law), and alleged that defendant AMO made false statements concerning its contact lens solution, and concealed certain known risks of using the solution. Plaintiffs did not allege that they suffered any physical injury from their use of the product.  Rather, the focus of the complaint was on AMO’s allegedly false representation that the product was a “disinfecting solution” or was a solution that “disinfects.”

AMO argued that the name plaintiffs had suffered no legally cognizable injury, and therefore lack both Article III standing and statutory standing under the UCL/FAL, among other summary judgment theories.  The court found that plaintiffs lack Article III standing, and granted the motion (without reaching the other issues).

The Constitution limits the federal judicial power to designated “cases” and “controversies.” U.S. Const., Art. III, § 2. Standing is an “essential and unchanging part of the case-or-controversy requirement of Article III.”  Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992). Article III standing requires a plaintiff to show an “injury in fact,” a causal connection between the injury and the conduct complained of, and a likelihood that the injury will be redressed by a favorable decision. Id. at 560-61; see also Sprint Communications Co., L.P. v. APCC Services, Inc., 128 S.Ct. 2531, 2535 (2008). In order to establish standing, plaintiffs must show that they have suffered actual loss, damage, or injury, or are threatened with impairment of their own interests. The “injury in fact” requirement must involve an invasion of a legally protected interest which is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical.  Lujan, 504 U.S. at 559-60

The court found that named plaintiffs could not show injury in fact because they  never contracted the infection at issue, and were never harmed by their use of the product. Because they stopped using the solution long before the recall, they could not allege that the recall caused them to discard unused solution, which is a typical "economic" harm argument plaintiffs try to make.  Moreover, they could not claim to have lost the money they spent purchasing the product in the first place, as they would have bought another, comparably priced, contact lens solution if they had not bought this one.  As plaintiffs sustained no damage and no injury, and made no showing of any sufficient  threatened injury that was likely to occur, they did not have standing under Article III.  Motion granted.

Defendants will want to not overlook the standing argument , especially when confronted with the concocted class claims of plaintiffs who were never really injured, and seek to recover for alleged bad conduct without showing any causal link between the conduct and an injury suffered.
 

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Part two of our update on recent climate change litigation.  In our last post, we discussed the well reasoned decision in Native Village of Kivalina v. ExxonMobil Corp., 2009 WL 3326113 (N.D.Cal. 9/30/09).  We contrasted it with the somewhat startling (2-judge) Second Circuit panel decision in Connecticut v. American Electric Power Co., allowing a group of states and land trusts to proceed with a so-called global warming tort suit.

In another noteworthy recent case, the Fifth Circuit recently held that a group of property owners in Mississippi can proceed with global warming-related claims. See Comer v. Murphy Oil Co., 2009 WL 3321493 (5th Cir. 10/16/09).  A proposed class of thousands of property owners alleged that damage to their Mississippi coastal properties from Hurricane Katrina would not have been as serious had not defendants' climate change conduct intensified the storm. Along with the Second Circuit decision, this opinion represents a clear and dangerous trend within the court of appeals to usurp Congress, warp the traditional nuisance doctrine, and plunge the federal courts into what are essentially political questions.

In Comer, the district court correctly held that tort suits against electric power companies and other alleged large greenhouse gas emitters should not proceed in federal court because climate change, and tort claims based on alleged climate change, is fraught with national political and policy considerations.  The Fifth Circuit reversed, asserting that until Congress, the executive branch, or a federal agency acts more directly on global warming, Mississippi common law tort rules questions posed by the case are justiciable because there is no commitment of those issues exclusively to the political branches of the federal government.  Thus, plaintiffs had demonstrated standing for public and private nuisance, trespass, and negligence claims; the claims were justiciable and did not present a political question. 

The Fifth Circuit in some ways went  further than the Second Circuit, ruling in essence that climate change-related claims are not limited to injunctions being brought by governmental entities or even quasi-public groups like nonprofit land trusts. The Fifth Circuit ruled that private property owners under Mississippi law also may have standing to bring climate change-related nuisance and trespass claims for both property and punitive damages. That holding may propel additional climate change litigation -- if the ruling stands following likely rehearing motions.

The causation allegation here was arguably even more attenuated than the long, convoluted causation chain in other global warming cases; plaintiffs asserted that defendants' greenhouse gases didn't cause but contributed to global warming, which made the waters in the Gulf of Mexico warmer, which didn't create but then made Hurricane Katrina more intense, which then caused their alleged property damage to be worse.  That stands as perhaps the most attenuated, least supportable, causal link in tort history -- the absence of proximate cause as a matter of law.  The concurrence noted this issue, and would have affirmed a dismissal on this basis.  With class certification, expert discovery, Daubert, and summary judgment hurdles to be crossed, it is clear that this causation issue will not soon disappear.

Ironically, the rash of global warming opinions in cases that had been argued long ago may reflect a recognition of the new administration and a changing emissions policy... in turn, reflecting the political nature of the issues. All readers ought to have profound reservations about the notion, inherent in all private climate change litigation, that the tort system is capable of adjudicating rights and responsibilities on the subject of global warming.

The decisions potentially present business interests with difficult choices: proposed regulations from the administration may be onerous and not grounded in good science; but absent federal action, defendants may risk public nuisance liability in the courts on issues that juries cannot begin to handle well.  

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We posted here recently about proposed "climate change" legislation and how it may affect litigation. Now comes a  federal appeals court ruling allowing certain nuisance claims against major greenhouse gas emitters, a decision that may provide an impetus to more so-called climate change litigation.   See Connecticut v. American Electric Power Co., 2009 WL 2996729 (2nd Cir. Sept. 21, 2009). Interestingly, this is a two-judge decision as original panel member Judge is now Justice Sotomayor.

In 2004, two groups of plaintiffs, one consisting of eight states and New York City, and the other consisting of three land trusts, sued six electric power corporations that own and operate fossil-fuel-fired power plants, seeking abatement of defendants' alleged ongoing contributions to the "public nuisance of global warming." Plaintiffs claimed that global warming, to which the defendants allegedly contributed as large emitters of carbon dioxide,  is causing and will continue to cause serious harm affecting human health and natural resources. The plaintiffs' theory is that carbon dioxide acts as a greenhouse gas that traps heat in the earth's atmosphere, and that as a result of this trapped heat, the earth's temperature has risen over the years and will continue to rise in the future. Pointing to an alleged  “clear scientific consensus” that global warming has already begun to alter the natural world, plaintiffs predicted that it “will accelerate over the coming decades unless action is taken to reduce emissions of carbon dioxide.”

Because of the procedural posture (motion to dismiss), the court did not really describe the other side of the story, but readers of MassTortDefense know that change is what the climate is always doing as a result of the planet's orbital eccentricities, axial wobbles, solar brightness changes, cosmic ray flux, and multiple other factors. There are numerous plausible terrestrial drivers of climate changes too.  While global warming is a serious topic worthy of scientific study and political discussion, plaintiffs' "consensus" ignores that global mean temperature is only one part of climate, and may not be the best metric.  Moreover, the most important driver of the greenhouse effect are water vapor and clouds. Carbon dioxide is about 0.038% of the atmosphere, while water in its various forms ranges up to 4% of the atmosphere.  Scientists estimate that water accounts for about 90% of the Earth's greenhouse effect.  And humans are responsible for only about 3.4% of carbon dioxide emitted to the atmosphere annually, the rest of it being natural.  When plaintiffs talk about the consensus, another major issue is that the "warming" numbers come not from measurements but from computer models -- with a huge range of assumptions. One is the so-called multiplier effect which assumes that increasing atmospheric carbon dioxide causes a large increase in water vapor and thus a large rather than small temperature spike.

When thinking about "global climate" changes, we have also been sobered by the fact that humans have been trying to measure the temperature consistently only since the1880s, during which time advocates think the world may have warmed by about +0.6 °C -- which is less than the margin of error on our ability to measure the Earth's temperature!

Anyway, plaintiffs brought these actions under the federal common law of nuisance or, in the alternative, state nuisance law, to force defendants to cap and then reduce their carbon dioxide emissions. The district court held that plaintiffs' claims presented a non-justiciable political question and dismissed the complaints. 406 F. Supp. 2d 265.

On appeal, plaintiffs argued that the political question doctrine does not bar adjudication of their claims; that they had standing to assert their claims; that they had properly stated claims under the federal common law of nuisance; and that their claims were not displaced by any federal statutes.

In a lengthy opinion, the two judges held that the district court erred in dismissing the complaints on political question grounds; that all of plaintiffs had standing; that the federal common law of nuisance governs their claims; that plaintiffs had stated claims under the federal common law of nuisance; that their claims were not displaced.

An important aspect of the ruling was that the the activity in Congress and the administrative agencies was not yet far enough along to displace common law relief. Federal common law is a necessary expedient to which federal courts may turn when compelled to consider federal questions which cannot be answered from federal statutes alone. But when Congress addresses a question previously governed by a decision rested on federal common law the need for lawmaking by federal courts disappears. The question whether a previously available federal common-law action has been displaced by federal statutory law involves an assessment of the scope of the legislation and whether the scheme established by Congress addresses the problem formerly governed by federal common law.  The court did note that it may happen that new federal laws and new federal regulations may in time pre-empt the field of federal common law of nuisance.  (EPA appears to be on the road on the road toward regulating greenhouse gases.) But at least until EPA makes more findings, for the purposes of a displacement analysis the Clean Air Act does not sufficiently regulate greenhouse gas emissions.

In a very minimalist interpretation of what is needed for standing, the Second Circuit distinguished multiple precedents of the Supreme Court which held that to have standing a plaintiff must allege an injury that is concrete, direct, real, and palpable -- not abstract. Injury must be particularized, personal, individual, distinct, and differentiated -- not generalized or undifferentiated.  The Supreme Court has further stated that the asserted injury must be actual or imminent, certainly impending and immediate --not remote, speculative, conjectural, or hypothetical. The court rejected defendants challenge that the contentions of future injury at some unspecified future date are not the kind of “imminent” injury required.  The court also gave short shrift to the argument that plaintiffs could neither isolate which alleged harms will be caused by defendants' emissions, nor allege that such emissions would alone cause any future harms. 

The ruling may pave the way for more public nuisance suits, as it appears to enable private, nonprofit entities like the Sierra Club to pursue these cases. Allowing such a claim to proceed to discovery raises the potential stakes for every defendant currently or potentially facing public nuisance liability. And thus defendants may be faced with the difficult choice of working towards legislation or facing more of this kind of litigation.
 

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MassTortDefense has posted about the growing trend of plaintiffs to use consumer fraud act claims in place of traditional product theories. Plaintiffs continue to believe that claims based on unfair and deceptive trade practices acts are somehow easier to certify as class actions because of differing notions of reliance and causation. Score one for the defense in the effort to beat back this tide, with the lesson that if plaintiffs live by such statute they have to live by all the statute. Silverstein v. The Procter & Gamble Manufacturing Company,  2008 WL 4889677 (S.D.Ga. Nov. 12, 2008).

This action arose out of Procter & Gamble's manufacture and sale of Crest Pro-Health mouthwash, which allegedly stains its users'  teeth and impairs their sense of taste. Plaintiffs purchased Crest Pro-Health mouthwash as consumers. After using the mouthwash, each allegedly noticed that his teeth had acquired a brown stain and that his sense of taste allegedly was impaired. Since then, both plaintiffs stopped using Crest Pro-Health mouthwash. Plaintiffs alleged a violation of Georgia's Uniform Deceptive Trade Practices Act (“UDTPA”) and moved to certify a plaintiff class. Defendant opposed this motion and moved for summary judgment.

The court noted that an analysis of class certification must begin with the issue of standing. Specifically, the court must determine whether the named plaintiffs, as individuals, have standing to pursue the claims they intend to pursue on behalf of the class. There are multiple types of standing. Constitutional standing ensures that courts do not assume jurisdiction over disputes that are not cases or controversies within the meaning of Article III. Prudential standing encompasses a host of doctrines of judicial self-restraint, such as the rule that courts will not address political questions more appropriately resolved by the representative branches of government. Statutory standing asks whether a statute creating a cause of action permits the plaintiff before the court to prosecute that cause of action. Here, the court addressed constitutional and statutory standing.

Plaintiffs in this case sought injunctive relief, as injunctive relief is the only remedy permitted to consumers by Georgia's UDTPA. The function of an injunction is to afford preventative relief, not to redress alleged wrongs which have been committed already. Because injunctions can rectify ongoing or future harm but cannot redress past harm, a plaintiff who cannot show continuing, present adverse effects or a real and immediate threat of future harm lacks Article III standing to pursue an injunction. Plaintiffs alleged past harm --browned teeth and a loss of taste. An injunction could not right these wrongs. They stopped using the product, and they now obviously know of the alleged defects. In determining whether to certify the class that plaintiffs proposed, the court determined it must not focus on the standing of unnamed class members, some of whom might, in theory, have standing to seek an injunction because they do not yet know about Crest Pro-Health's alleged defects. Whether the unnamed class members have standing is irrelevant, found the court. The result of the rule, in most applications, acknowledged the court, is that once a plaintiff learns about a product's defect, he has lost his standing to enjoin the manufacturer from producing it. “Such is the state of the law.”

When a plaintiff asserts statutory authorization to sue, he must fall within the class of plaintiffs to whom the statute grants the authority to maintain suit. It has been said that statutory standing comprises the zone-of-interests test, which seeks to determine whether the plaintiff is within the class of persons sought to be benefited by the provision at issue. A plaintiff who demonstrates past harm, but does not allege ongoing or future harm, has not shown that he is “likely to be damaged” within the meaning of the statute. Instead, Plaintiffs' alleged harm is entirely past. Because plaintiffs cannot “raise a factual question about the likelihood of some future wrong,”  they lack statutory standing to maintain an action under the UDTPA.

While plaintiffs described this result as a “catch twenty-two of statutory construction,” the court found no Joseph Heller-like dilemma: this result is actually a vindication of the UDTPA drafters' intent. Although its text does not foreclose lawsuits by consumers, the UDTPA was drafted primarily to allow businesses to enjoin their competitors' unfair or deceptive trade practices.

Because it determined that plaintiffs lacked constitutional and statutory standing to maintain their UDTPA claim, the court granted defendant's motion for summary judgment as to plaintiffs' UDTPA claim.
 

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