New Year's Fitness Resolution- Drop the Fitness Tracker Class Action

Surveys show that getting fit is one of the top 5 New Year's resolutions.  So perhaps timely that a federal court recently dismissed a proposed nationwide class concerning fitness-tracker wristbands. See Frenzel v. Aliphcom, No. 14-cv-03587-WHO (N.D. Cal., 12/29/14). While there also was discussion in the opinion of the motion to dismiss various counts of the complaint under California law, let's focus on the class allegations.

Defendant markets and sells a fitness-tracker wristband that contains an accelerometer designed to track the user's daily movements and sleep patterns. Users can connect, or "sync," their device to a mobile application that helps them set personal exercise and diet goals, monitor their progress, and collaborate with other users. The product box states: "Battery life up to 10 days."   It is available in major retail stores across the country and online. Defendant has distributed three generations of the device.

Frenzel alleged that each generation has been plagued with power problems, including significant delay in charging, syncing problems, flashing lights indicating low charge, extremely short battery life, and failure to charge at all. Even with later generations, plaintiff alleged, consumers continued to complain about the device's performance, and multiple articles appeared online describing the ongoing power problems. 

Frenzel resides in Kansas City, Missouri and is a Missouri citizen. In November 2012, Frenzel purchased a second generation device, and before purchasing the device, Frenzel  allegedly reviewed defendant's marketing materials and representations, including that the battery is expected to last for 10 days when fully charged.  Within a few months, Frenzel's device allegedly stopped maintaining its charge. Frenzel contacted defendant and was issued a replacement second generation version.  The replacement also allegedly experienced power problems as well. On the basis of these allegations, Frenzel sought to represent a national class defined as all persons who purchased any of the three generations for personal use, excluding those who purchased the product for resale.

Defendant moved to dismiss.  A motion to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6) tests the legal sufficiency of a complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). A complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). A claim is facially plausible when it allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. Id. In considering whether the complaint is sufficient to state a claim, the court need not accept as true allegations that contradict matters properly subject to judicial notice. In re Gilead Scis. Sec. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008). Nor is the court required to accept as true allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences. Id. It is within the district court's purview to reject, as implausible, allegations that are too speculative to warrant further factual development.  See Dahlia v. Rodriguez, 735 F.3d 1060, 1076 (9th Cir. 2013). 

A threshold issue was choice of law. Defendant contended that under Mazza v. Am. Honda Motor Co., 666 F.3d 581 (9th Cir. 2012), Frenzel's claims should be governed by the law of the state in which he purchased his device (which Frenzel conceded was not California). Defendant argued that plaintiff's claims under California law (the CLRA, UCL, and FAL) must therefore be dismissed. Also, defendant made the separate argument that under Mazza, Frenzel cannot maintain a national class action that would apply California law to nonresident class members who purchased their devices in other states. 

In Mazza, a putative class sued Honda for violations of the CLRA, UCL, and FAL. Honda was headquartered in California, and the alleged misrepresentations emanated from California, but the transaction that caused the alleged injury (i.e., the lease or purchase of a Honda automobile), had occurred in other states for the majority of class members. The Ninth Circuit reversed the district court's certification of a national class after concluding that, under California's choice of law rules, each class member's consumer protection claim should be governed by the consumer protection laws of the jurisdiction in which the transaction took place. The Ninth Circuit found that there were material differences between the consumer protection regimes of California and a number of other states, and that each state's interest in deciding for itself how to balance the range of products and prices offered to consumers with the legal protections afforded to them outweighed California's attenuated interest in applying its law to residents of foreign states. Id. at 590-94.

Importantly, since Mazza, a number of courts have dismissed CLRA, UCL, and/or FAL claims asserted by named plaintiffs (or on behalf of unnamed class members) who did not purchase the defendant's product in California. See, e.g., Frezza v. Google Inc., No. 12-cv-00237-RMW, 2013 WL 1736788, at *5-6 (N.D. Cal. Apr. 22, 2013); Granfield v. NVIDIA Corp., No. 11-cv-05403-JW, 2012 WL 2847575, at *3 (N.D. Cal. July 11, 2012); Littlehale v. Hain Celestial Grp., Inc., No. 11-cv-06342-PJH, 2012 WL 5458400, at *1-2 (N.D. Cal. July 2, 2012).

Notwithstanding the argument that discovery might be needed to make a choice of law decision, the court here found that in the circumstances of this case, it was not appropriate to delay until class certification to consider the choice of law issue. First, although Mazza was decided at class certification, the principle articulated in Mazza applies generally and is instructive even when addressing a motion to dismiss.  In factually analogous cases, Mazza  was not only relevant but controlling, even at the pleading phase.  Second, while choice of law analysis is often a fact-specific inquiry, this does not necessarily mean that it can never be conducted on a motion to dismiss. There are cases in which further development of the factual record is not reasonably likely to materially impact the choice of law determination. In such cases, there is no benefit to deferring the choice of law analysis until class certification.

The court pointed out  that in Werdebaugh v. Blue Diamond Growers, the court applied the governmental interest test to CLRA, UCL, and FAL claims asserted on behalf of a national class, 2013 WL 5487236, at *15-16, at the class certification but with only minimal fact-specific analysis. That court concluded that a national class could not be certified in light of Mazza. 2014 WL 2191901, at *18-21. Likewise, in Brazil v. Dole Food Co., Inc., the court deferred until class certification to consider whether California state-law claims could be asserted on behalf of nonresident class members, but then held that Mazza precluded certification of a national class. 2014 WL 2466559, at *12-14. As in Blue Diamond, the court was able to reach this conclusion with minimal fact-specific analysis. See id. The court concluded that here it was highly unlikely that discovery would uncover information relevant to whether Frenzel could maintain a national class action asserting claims under California law.

Thus, under California's choice of law rules, Frenzel's claims (both individual and class) had to be dismissed. Frenzel's individual claims were dismissed because he had not identified the state in which he purchased his device, but admitted it was not California. Defendant had the burden to demonstrate the material differences in the relevant law of California and the other state or states with regard to the particular claims and facts of the case, and a plaintiff may not preclude a defendant from making it by obfuscating the state in which he purchased his product. As to Frenzel's class claims, the court found that defendant adequately demonstrated that this was a case, like Mazza, where "each class member's consumer protection claim[s] should be governed by the consumer protection laws of the jurisdiction in which the transaction took place." 666 F.3d at 594. The CLRA, UCL, and FAL claims on behalf of the putative class were subject to dismissal for this reason as well.

Plaintiff sought to rely on a choice of law provision allegedly in the terms and conditions of sale of the product, although he never pleaded such terms in his complaint.  Moreover, the plain language of the terms limited their application to on-line purchases, and plaintiff alleged he purchased his in a store. Also, the allegations of defect did not claim that the product violated the terms and conditions. See Nikolin v. Samsung Electronics Am., Inc., No. 10-cv-01456, 2010 WL 4116997, at *4 (D.N.J. Oct. 18, 2010); see also, In re Sony Gaming Networks & Customer Data Sec. Breach Litig., 903 F. Supp. 2d 942, 964-65 (S.D. Cal. 2012) (rejecting argument that plaintiffs' CLRA, UCL, and FAL claims were governed by the choice of law provision in defendants' terms of service contract, where "[b]y its own terms, . . . the provision dictates only that California law applies to the construction and interpretation of the contract, and thus the provision does not apply to plaintiffs' non-contractual claims asserted under California's consumer protection statutes").

Complaint dismissed with leave to try to amend. 

Class Action on Smoke Detectors Dismissed: All Smoke No Fire

A California federal court recently rejected rejected a proposed class action in which plaintiffs alleged smoke alarms were defective in that the product’s packaging allegedly omitted safety information.  See Bird v. First Alert Inc. et al., No. 4:14-cv-03585 (N.D. Cal. ).

The defendant sells two types of smoke detectors — ionization, which the opinion said are better at catching fast-flaming fires, and photoelectric, which are reportedly more sensitive to smoldering fires. The basis of plaintiff's complaint is that the defendant failed to adequately disclose the
dangers of using ionization smoke alarms – specifically, that ionization smoke alarms do
not alert occupants of smoldering-type fires as effectively as photoelectric smoke alarms.  However, the ionization alarm, which Bird purchased, explains these differences clearly on its packaging and recommended the use of both types of alarms for “maximum protection." 

Defendant moved to dismiss. The allegations in the complaint "must be enough to raise a right to relief above the speculative level." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007).  A motion to dismiss should be granted if the complaint does not proffer enough facts to state a claim for relief that is plausible on its face. See id. at 558-59. W]here the well-pleaded facts do not
permit the court to infer more than the mere possibility of misconduct, the complaint has alleged – but it has not shown – that the pleader is entitled to relief.  Although the court generally may not consider material outside the pleadings when resolving a motion to dismiss for failure to state a claim, the court may consider matters that are properly the subject of judicial notice. Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005); Lee v. City of Los Angeles, 250 F.3d 668, 688-89 (9th Cir. 2001). Additionally, the court may consider exhibits attached to the complaint, see Hal Roach Studios, Inc. v. Richard Feiner & Co., Inc., 896 F.2d 1542, 1555 n.19 (9th Cir. 1989),

Plaintiff obviously had a high hurdle to overcome to state a claim here, given that the product packaging explains that the two types of smoke alarms respond differently to different types of fires, and recommends that consumers utilize both types. Nevertheless, plaintiff contended that the disclosures on the packaging did not constitute a "warning" and did not amount to a "sufficient disclosure" of the extent of the "safety defect" inherent in the ionization smoke detectors, because they allegedly failed to state that the ionization smoke detectors might not safely alert consumers in time to escape the deadly effects of smoldering fires.

The court recognized that even a nondisclosure claim sounding in fraud must still be pled with particularity. Kearns, 567 F.3d at 1126-27; see also Marolda v. Symantec Corp., 672 F.Supp. 2d 992, 1002 (N.D. Cal. 2009). Specifically, the plaintiff must set forth an explanation as to why the omission complained of  made the warning or label false and misleading in order to state a claim under Rule 9(b). Bias v. Wells Fargo & Co., 942 F.Supp. 2d 915, 935 (N.D. Cal. 2013). Thus, plaintiff must describe the content of the omission and where the omitted information should or could have been revealed, as well as provide representative samples of advertisements, offers, or other representations that plaintiff relied on to make her purchase and that failed to include the allegedly omitted information. See Eisen v. Porsche Cars North Am., Inc.,, 2012 WL 841019 at *3 (citing
Marolda, 672 F.Supp. 2d at 1002). While the complaint alleged that the "packaging" on plaintiff's ionization smoke detector did not contain any warning, instructions, or other information disclosing,
describing, or warning about the smoke detector's inability to adequately, effectively, and
safely detect, warn, alert, and protect occupants from smoldering-type fires,  in fact the packaging did disclose information regarding the performance of ionization alarms in smoldering fires.

Yet, the complaint alleged no facts regarding these disclosures – in particular, when plaintiff looked
at the packaging (if ever), whether she reviewed the disclosures on the packaging (if at all),
or why she disregarded the clear recommendation that she use both ionization and photoelectric alarms. Nor did the complaint allege any facts showing that the disclosures were inadequate.

Motion to dismiss granted without prejudice.

Consumer Fraud Class Claim Dismissed in Beverage Case

Readers have seen our warning about the trend in food and beverage claims attacking virtually every aspect of the product's label as a supposed consumer fraud act violation. A federal court earlier this month dismissed just such a proposed class action challenging the labeling on VitaRain Tropical Mango Vitamin Enhanced Water Beverage.  See Maple v. Costco Wholesale Corp., No. 12-5166 (E.D. Wash., 8/1/13).

Plaintiffs alleged in their amended complaint that one defendant manufactured and bottled a product known as VitaRain Vitamin Enhanced Water Beverage. VitaRain came in four flavors: Tropical Mango, Raspberry Green Tea, Kiwi Strawberry, and Dragonfruit. The product was marketed and distributed by another defendant and sold at Costco warehouses throughout the
country. Plaintiffs alleged that the VitaRain Tropical Mango drink in particular was marketed as a natural product but in fact contained “unnatural” ingredients, including large amounts of “synthetic caffeine.” Specifically, plaintiffs alleged that the VitaRain Tropical Mango drink (1) lacked a front-facing disclosure that the beverage contained caffeine; (2) failed to disclose the relative amount of caffeine in the beverage; and (3) falsely claimed that the beverage is a “natural tonic” and
contains “natural caffeine.” Plaintiffs further alleged they “reasonably believed that they [had] purchased a Drink similar to vitamin water.” 

On behalf of a putative class consisting of all Washington residents who purchased the product over the four years preceding the filing of the lawsuit, the named plaintiff asserted claims for (1) violations of the Washington Consumer Protection Act; (2) misrepresentation; and (3) negligence.

Defendant Costco moved to dismiss the amended complaint, contending, inter alia, that some
of plaintiff’s claims were preempted by federal law; and that parts of the amended complaint failed to meet the pleading standards of Rules 8 and 9(b) of the Federal Rules of Civil Procedure.

To withstand dismissal, a complaint must contain “enough facts to state a claim to relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). “Naked assertion[s],” “labels and conclusions,” or “formulaic recitation[s] of the elements of a cause of action will not do.” Id. at 555, 557.  A claim has facial plausibility only "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

First an interesting civil procedure issue. Ordinarily, when the district court considers matters outside the pleadings it must convert a motion to dismiss brought under Civil Rule 12(b)(6) into a Civil Rule 56 motion for summary judgment. Fed. R. Civ. P. 12(d). However, a court may consider certain materials without converting the motion to dismiss into a motion for summary judgment. See, e.g., United States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003). Such materials include documents attached to the complaint, documents incorporated by reference in the complaint, or matters of judicial notice.  A document may be incorporated by reference into a complaint where the
plaintiff refers extensively to the document or the document forms the basis of plaintiff’s claim. In such cases, the defendant may offer that document and the district court may treat the document as part of the complaint for the purposes of a motion to dismiss. Here, the court concluded that judicial notice of the product label was appropriate and that it could consider the labeling without converting Costco’s motion to dismiss into one for summary judgment.

Defendants argued that plaintiff’s claims were expressly preempted by the Federal Food Drug and Cosmetics Act (“FDCA”), as amended by the National Labeling and Education Act (“NLEA”), 21 U.S.C. § 301 et seq. The FDCA “comprehensively regulates food and beverage labeling.” Pom Wonderful LLC v. Coca-Cola Co., 679 F.3d 1170, 1175 (9th Cir. 2012).  And specifically, they govern whether and how a label must disclose the presence of caffeine.  Here, the Amended Complaint sought "to create and impose”  two new requirements which would directly conflict with federal law: (1) a requirement that caffeinated beverages disclose the fact that they contain caffeine on the front label; and (2) a requirement that labels state the “relative amount” of caffeine by providing a “daily value” amount.  By virtue of imposing these new and conflicting requirements, defendants contended, plaintiff’s claims were preempted.  The court agreed; defendants showed that these food labeling requirements are expressly covered by the regulations. Federal law preempts any state law that would impose additional requirements on how food labels present nutrition information.  See Turek v. Gen. Mills, Inc., 662 F.3d 423, 426 (7th Cir. 2011).  Specifically, the court held that federal law preempts plaintiff’s claims that (1) defendants were required to disclose that the drink contained caffeine on the front label of the drink and (2) that defendants were required to state the “relative amount” of caffeine in the drink. Therefore Costco’s motion to dismiss was granted as to these claims.

Next, defendants contended that plaintiff had also failed to adequately plead causation, an element of the remaining consumer fraud-based allegations. Specifically, defendants argued that plaintiff had not alleged that he even read the complained-of labels before purchasing the VitaRain drink. The court noted that while the amended complaint contained detailed allegations about what was, and what was not, on the label of the VitaRain Tropical Mango drink he allegedly purchased, nowhere did he state that he actually read the label, or that his purchasing decision was driven by the alleged deceptive statements on the label.  Broad conclusory statements on causation. such as that class members have suffered "as a result of" purchasing the energy Drink, were insufficient, especially in light of Plaintiff’s failure to allege that he even read the allegedly deceptive labels prior to purchasing the drink.

Finally, on the misrepresentation claims, defendants suggested that plaintiff could not prove the reliance elements of his fraudulent misrepresentation and negligent misrepresentation claims because he had not alleged that he saw the alleged misrepresentations prior to purchasing
the drink. The court dismissed plaintiff’s misrepresentation claim for the same reason that the CPA claim was dismissed: Plaintiff failed to adequately plead reliance because he had not alleged that he based his purchasing decision on the complained-of labels or that he even read the labels
prior to purchasing the drink.  The court refused to credit the naked assertion that he would not have purchased the drink had the label not contained such statements in light of the missing averments.

Claims dismissed (with leave to amend).

 

Medical Monitoring Complaint Held Insufficient

A federal trial court last week dismissed a medical monitoring claim by an employee of a pipe cleaning company pursuant to Twombly. Royal v. Exxon Mobil Corp., No. 12-00081 (E.D. La.,  2/6/12).

Junius Royal sued several oil companies for damages in connection with oil pipe cleaning services that he allegedly performed. Plaintiff asserted that the oil pipes he cleaned contained carcinogenic radioactive materials commonly referred to as naturally occurring radioactive material, or "NORMS.'" Plaintiff claimed that the defendants knew about the radioactive material in
the pipes, but failed to warn.  He thus became exposed to dangerously high levels of radiation during his work, and he now has a substantially increased risk of developing cancer. He sought medical monitoring. Defendants moved to dismiss plaintiff's medical monitoring claim for failure to state a claim on which relief could be granted.

To survive a Rule 12(b)(6) motion to dismiss, the plaintiff must plead enough facts to state a claim to relief that is plausible on its face. In re Katrina Canal Breaches Litig., 495 F.3d 191, 205 (5th Cir. 2007) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 569 (2007)). Factual allegations must be
enough to raise a right to relief above the speculative level.  In deciding whether dismissal is warranted, the court will not accept conclusory allegations in the complaint as true. Kaiser Aluminum & Chem. Sales, Inc. v. Avondale Shipyards, Inc., 677 F.2d 1045, 1050 (5th Cir. 1982).

To prove common law medical monitoring claim under Louisiana law (there is a separate statutory claim), a plaintiff must show: (1) Significant exposure to a proven hazardous substance, (2) As a
proximate result of this exposure, plaintiff suffers a significantly increased risk of contracting a serious latent disease, (3) Plaintiff's risk of contracting a serious latent disease is greater than (a) the risk of contracting the same disease had he or she not been exposed and (b) the chances of
members of the public at large of developing the disease, (4) A monitoring procedure exists that makes the early detection of the disease possible, (5) The monitoring procedure has been
prescribed by a qualified physician and is reasonably necessary according to contemporary scientific principles, (6) The prescribed monitoring regime is different from that normally
recommended in the absence of exposure, and (7) There is some demonstrated clinical value in the early detection and diagnosis of the disease. Bourgeois v. A.P. Green Indus., 716 So. 2d 355,
360-61 (La. 1998).

Here, plaintiff failed to allege or urge that he had a manifest physical injury or mental injury or disease, as required by the statute. The fact that he may have been exposed to radiation was not, in and of itself, sufficient. Further, the plaintiff failed to plead facts which bear directly on several of the common law factors. For example, plaintiff made no mention of what type of monitoring he was
looking for, who prescribed him the monitoring, or what the efficacy of the monitoring might be.

 

Proposed TV Class Action Dismissed Again

A California federal  court has again dismissed a proposed class action brought against Sony Corp. of America regarding allegedly defective televisions. Marchante, et al. v. Sony Corp. of America Inc., et al., No. 3:10-cv-00795 (S.D. Calif.).

Plaintiffs alleged that overheating caused the chassis and internal parts of nine different Sony rear-projection televisions to melt or burn during normal use. Plaintiffs, on behalf of  a proposed class of purchasers, claimed that Sony violated several consumer protection statutes (such as, typically the California Consumer Legal Remedies Act) and breached express and implied warranties by selling them the defective televisions. Earlier this year, the court dismissed without prejudice all of the claims, and plaintiffs filed an amended pleading.  Defendants again moved to dismiss.

The court reviewed the Twombly/Iqbal standards, and ruled that the plaintiffs had not fixed the pleading problems. Plaintiffs again alleged that Sony engaged in unfair business acts or practices by selling, promoting, and recalling the television models at issue. The court had previously dismissed plaintiffs’ unfair business act claim because plaintiffs failed to allege a substantial consumer injury; in the new complaint plaintiffs again failed to allege that the televisions exhibited any problems during the one-year limited warranty period. Every alleged problem surfaced several years after purchase. Any alleged failure to disclose thus related to a defect that arose years after the express warranty expired. And any failure to disclose therefore could not constitute substantial injury.  Although plaintiffs did amend their complaint to include allegations that the televisions failed to operate properly from the outset, plaintiffs’ amendments did not cure the deficiencies of the prior complaint.  The fact remained that the defects did not become apparent to the plaintiff-consumers until after the warranty expired. Thus, the complaint still fell short of alleging that the defects caused the televisions to malfunction within the warranty period, as is required to allege a substantial consumer injury under California's consumer statutes. 

As a general rule, manufacturers cannot be liable under the CLRA for failures to disclose a
defect that manifests itself after the warranty period has expired.  A possible exception exists, however, if the manufacturer fails to disclose information and the omission is contrary to a representation actually made by the defendant, or the omission pertains to a fact the defendant was otherwise obligated to disclose. Here, all of plaintiffs alleged CLRA violations pertained to Sony’s alleged failures to disclose; the question therefore was whether Sony carried any obligation to disclose the alleged defect. The court noted that under the CLRA, a manufacturer’s duty to disclose information related to a defect that manifests itself after the expiration of an express warranty is limited to issues related to product safety.  Moreover, in order to have a duty to disclose, the manufacturer must be aware of the defect at the time that plaintiffs purchased, since a manufacturer has no duty to disclose facts of which it was unaware. In dismissing the prior complaint, the court held that plaintiffs failed to invoke the safety exception because the complaint was devoid of allegations that anyone or any property —other than the television itself— was damaged by the allegedly defective televisions.  

Even assuming plaintiffs’ allegations that the televisions pose a safety risk were sufficient to invoke the safety exception (fire hazard?), plaintiffs failed to allege that Sony was aware of this safety hazard at the time plaintiffs purchased the televisions.  First, plaintiffs alleged that Sony had known about it since 2008 and "possibly even earlier.”   Plaintiffs bought their televisions in 2004, 2005, and 2006. So under plaintiffs’ own allegations, Sony may not have been aware of the alleged defect at the time plaintiffs made their purchases, or even within the respective one-year post-purchase warranty periods.  Second, all of plaintiffs' allegations regarding Sony’s knowledge of the alleged defect pertained to Sony’s knowledge that the defect caused excess heat that resulted in the deterioration of the television display, not that the defect posed any safety hazard. 

 The court thus dismissed the CLRA claims without prejudice. 

The court previously dismissed plaintiffs’ claim for breach of the express (limited warranty) because the alleged defects did not manifest until after the one-year warranty period expired. The general rule is that an express warranty does not cover repairs made after the applicable warranty period—here, one year after purchase—has elapsed.  None of the plaintiffs here sought repair or replacement of their televisions within the warranty period. None of the four named plaintiffs alleged that Sony either refused to repair any covered defects or refused to replace any televisions suffering from covered defects.

Plaintiffs’ implied warranty claims again failed because they were untimely. Subject to a sixty-day minimum and one-year maximum, implied warranties are equal in duration to corresponding express warranties under California law, said the court.  The implied warranty here was deemed to have a one-year duration to match that of the express warranty. And because Plaintiffs purchased the televisions in 2004, 2005, and 2006, the implied warranties would have expired by 2007, at the latest. But the amended complaint did not contain allegations that the televisions failed to function as warranted or that plaintiffs sought warranty coverage during the one-year period following their respective purchases. Thus, these claims were dismissed with prejudice.

Plaintiffs continue to try to shoe horn claims into the consumer fraud matrix, thinking they will have an easier road to class certification.  That makes the court's scrutiny of the pleadings even more crucial.

 

"Infected" Tissue Claim Not A Consumer Fraud Claim

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

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

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

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

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

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

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

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

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

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


 

Defect Allegations Insufficient in Drug Case

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

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

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

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

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

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

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


 

A Picture Worth a Thousand Words Under Twombly?

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

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

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

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

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

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

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

 

Federal Court Dismisses Proposed Television Consumer Fraud Class Action

Here's a case of a venerable rule (puffery) and an important new doctrine (Twiqbal) being applied in the context of a troubling trend -- the spate of consumer fraud class actions challenging everything a defendant says about its products.  A New Jersey federal court recently rejected a putative class action alleging that Panasonic Corp. falsely advertised its Viera plasma televisions made in 2008 and 2009. Shane Robert Hughes et al. v. Panasonic Consumer Electronics Co., No. 2:10-cv-00846 (D.N.J. July 21, 2011). A useful and detailed analysis of commonly found flaws in consumer fraud class action complaints.

Plaintiffs putatively represented a class defined as individuals and entities who own or purchased any 2008/2009 model Panasonic Viera Plasma Television. Plaintiffs alleged that the televisions suffered from increased “voltage adjustments” causing a rapid deterioration in picture quality. The  class members allegedly relied on Panasonic’s representations concerning the "industry leading" black levels and contrast ratios, and/or personally observed the televisions’ excellent picture quality on models displayed in retail stores. Plaintiffs sought damages and/or refunds from Panasonic for violations of the New Jersey Consumer Fraud Act (“NJCFA”), N.J. STAT. ANN. § 56:8-1 et seq.; other states’ consumer protection acts; and under various express and implied warranty claims.

Defendant moved to dismiss. The adequacy of pleadings is governed by Fed. R. Civ. P. 8(a)(2), which requires that a complaint allege “a short and plain statement of the claim showing that the pleader is entitled to relief,” but also requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do. Factual allegations must be enough to raise a right to relief above the speculative level. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007).

Although class members were from around the country, the court determined it need not decide whether it was appropriate to engage in a choice of law analysis at the pleadings stage because, as detailed below, each of the plaintiffs’ claims failed as a matter of law under any of the possibly applicable laws.

Claims under the NJCFA and most state consumer fraud acts require a plaintiff to allege (1) unlawful conduct by the defendants; (2) an ascertainable loss on the part of the plaintiff; and (3) a causal relationship between the defendants’ unlawful conduct and the plaintiff’s ascertainable loss.  Panasonic argued, among other things, that even if the allegations are true, plaintiffs’ CFA claim failed because plaintiffs had not pointed to any actionable unlawful conduct by Panasonic. According to Panasonic, plaintiffs did not set forth any specific advertisements, marketing materials, warranties, or product guides that plaintiffs viewed; where and from whom at Panasonic did plaintiffs received any such information; or how precisely, plaintiffs were injured by any such representations.

The Court found that Panasonic’s alleged misrepresentations about the Televisions’
“industry  leading” technology and features, which create superior image and color quality, were not “statements of fact,” but rather subjective expressions of opinion. Indeed, such statements of
product superiority are routinely made by companies in advertising to gain a competitive advantage
in the industry. The NJCFA distinguishes between actionable misrepresentations of fact and
"puffery.” Rodio v. Smith, 123 N.J. 345, 352 (1991) (the slogan “You’re in good hands with Allstate” was “nothing more than puffery” and as such was not “a deception, false promise, misrepresentation, or any other unlawful practice within the ambit of the Consumer Fraud Act”); see New Jersey Citizen Action v. Schering-Plough Corp., 367 N.J. Super. 8, 13-14 (N.J. Super. App. Div. 2003) (finding that defendant’s advertisements which employed phrases as “you . . . can lead a normal nearly symptom-free life again” were “not statements of fact, but are merely expressions in the nature of puffery and thus were not actionable” under the NJCFA).  The same is true in many states.

The remaining misrepresentations may have been statements of fact rather than mere puffery. However, plaintiffs did not assert sufficient allegations of fact to satisfy the requisite level of adequate pleading under Rule 9(b) or by Twombly/Iqbal.  For example, regarding the alleged misrepresentation about half-brightness, the Amended Complaint did not allege the date, place or time of this misrepresentation or otherwise inject some precision and some measure of substantiation into plaintiffs’ allegations of fraud. While plaintiffs could not be expected to plead facts solely within Panasonic’s knowledge or control, plaintiffs should be able to allege the specific advertisements, marketing materials, warranties or product guides that they each reviewed, which included this misrepresentation and when it was so advertised.

Plaintiffs also alleged various omissions, but fraudulent omissions require a showing of intent. Here, even accepting the allegations of omissions in the Amended Complaint as true, the court found that plaintiffs failed to allege sufficient facts to raise any plausible inference that Panasonic knowingly concealed the alleged defect with the intent that consumers and industry experts would rely upon the concealment. Indeed, throughout the Amended Complaint, it was alleged that Panasonic knew “or should have known” of the defect, but provides no additional facts explaining how or why Panasonic had knowledge of the defect to satisfy Twombly/Iqbal. Such allegations of intentionally failing to disclose the alleged defect were merely conclusory assertions.

Even assuming plaintiffs sufficiently alleged the “unlawful conduct” element under the consumer fraud acts, the court also concluded that the Amended Complaint did not satisfy the pleading requirements of Twombly/Iqbal or Rule 9(b) as to the “ascertainable loss” element.  A plaintiff must suffer a definite, certain and measurable loss, rather than one that is merely theoretical. The certainty implicit in the concept of an ascertainable loss is that it is quantifiable or measurable. The allegations did not sufficiently plead either an out-of pocket loss by plaintiffs or a showing of loss in value. For example. plaintiffs failed to allege how much they paid for their Televisions and how much other comparable Televisions manufactured by Panasonic’s competitors cost at the time.  Plaintiffs failed to allege how much of a premium they claim to have paid for their Panasonic Televisions.  Furthermore, in the Amended Complaint, plaintiffs affirmatively stated that most continue to use the Televisions, thus obscuring any possible measurable loss.  Typically, plaintiffs try not to allege details in this area for fear of undermining their class certification arguments.

Plaintiffs' warranty claim suffered from several defects. While the claim at times was presented as an alleged manufacturing problem, a review of the Amended Complaint revealed that plaintiffs alleged only that the Televisions suffered from an inherent design defect and/or improper programming. Plaintiffs one vague, conclusory allegation that the defect was caused, in part, due to “manufacturing errors” was insufficient to satisfy the requisite pleading standards under Twombly/Iqbal.  Moreover, the express warranty claims were impacted by what the court already concluded in connection with plaintiffs’ consumer fraud claims, that Panasonic’s statements about the Televisions’ “industry leading” technology and features, which create superior image and color quality, were mere expressions of puffery. As such, these marketing statements were not sufficient enough to create an express warranty. 

On the implied warranty claim, while plaintiffs alleged that the Televisions were defective, plaintiffs did not allege that the Televisions were inoperable or otherwise not in working condition. Indeed, the Amended Complaint did not contain any explicit allegation that plaintiffs could no longer use their Televisions - in other words, that they were no longer generally fit for their ordinary purpose.  Although the Televisions may not have fulfilled plaintiffs’ subjective expectations, plaintiffs did not adequately allege that the Televisions failed to provide a minimum level of quality, which is all that the law of implied warranty requires. See also In re Ford Motor Co. Ignition Switch Prods. Liab. Litig., 2001 WL 1266317, at *22 (D.N.J. Sept. 30, 1997) (merchantability “does not entail a promise by the merchant that the goods are exactly as the buyer expected, but rather that the goods satisfy a minimum level of quality”).

Thus, the court concluded, each of plaintiffs’ claims failed to state a claim under Rule 12(b)(6), to satisfy Rule 9(b) heightened pleading requirements, and/or pleading standards under
Twombly/Iqbal. The court granted Panasonic’s motion to dismiss the Amended Complaint without prejudice.

Federal Court Dismisses Soda Misrepresentation Claim

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

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

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

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

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

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

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

Twombly and Iqbal Webinar

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

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

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

Topics to be discussed will include:

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


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


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


■ Will Congress respond to these decisions?



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

 

Duke Hosts Conference on Civil Rules

At the request of the Standing Committee on Rules of Practice and Procedure, the Advisory Committee on Civil Rules sponsored a conference last week at Duke University School of Law. The purpose of the conference was to explore the current costs and burdens of civil litigation, particularly discovery, and to discuss possible solutions. The Conference was designed in part to highlight some new empirical research done by the Federal Judicial Center, and others, to assess the degree of satisfaction with the performance of the present system and the suggestions of lawyers as to how the system might be improved.  The Conference included insights and perspectives from lawyers, judges and academics, on the discovery process (particularly e-discovery), pleadings, and dispositive motions. Other topics considered included judicial management and the tools available to judges to expedite the litigation process, the process of settlement, and the experience of the state courts on these issues.

Specifically, the empirical data from the FJC was discussed by Judge Rothstein, and Emery Lee and Tom Willging of the FJC; the ABA Litigation Section research data was to be reported by Lorna Schofield; the NELA Data was next.  Prof. Marc Galanter commented on vanishing jury trial data. Litigation cost data from the Searle Institute, and RAND data were circulated. The next section of the agenda focused on pleadings and dispositive motions, fact based pleading, Twombly, Iqbal. Participants included several judges and academics. The following panel asked about excessive discovery, and included practitioners, judges, and academics. The judicial management issue, and the level of early judicial involvement, was next.

Day Two focused on e-discovery and the degree to which the new rules are working or not.  The U.S. Chamber Institute for Legal Reform weighed in with a white paper.  The conference turned next to whether the process was structured sufficiently for trial and settlements as they really occur, i.e., should the endgame be viewed as settlement rather than trial. Corporate counsel, outside lawyers, public and governmental lawyers weighed in next. The following panel offered perspectives from the state courts. Finally, the Bar Association and lawyer group proposals were on the table. The Lawyers for Civil Justice, DRI, Federation of Defense & Corporate Counsel, and International Association of Defense Counsel submitted a white paper.

One speaker summed up the two-day discussion, suggesting that consensus had formed around the proposition that federal judges should provide strong, early, consistent case management, although plaintiff lawyers felt there was no need to give the judges any more formal authority.  But there was great disagreement on critical questions of the scope of discovery, the breadth of possible voluntary disclosures, and pleading requirements. Readers have read my posts about  Twombly and Iqbal, which clarified the requirements of what must be included in a complaint.

A survey of the Oregon system, a fact-based pleading approach, was presented by the Institute for the Advancement of the American Legal System. It has not led to more dismissals, and most observers agreed that fact-based pleading was revealing the key issues and narrowing the contentions earlier. 

The notion that the cost of the process is so large that it may be making litigation beyond the reach of many potential litigants is something a number of participant expressed concern about. One judge noted that he now requires lawyers to estimate the costs of discovery, and report that to their client. One participant raised the issue of cutting off discovery for defendants who move to
dismiss, although it is unclear how that would be an effective remedy for any current unsatisfactory case management methods.

 

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

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

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

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

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

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

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

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

Anti-Iqbal Legislation Update

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

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

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

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

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

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

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

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

Federal Court Dimisses Consumer Fraud Allegations in Washer Litigation

A federal court has dismissed (with prejudice) a variety of consumer fraud and unjust enrichment claims in litigation alleging issues with front-loading washers. Butler, et al. v. Sears, Roebuck and Co., No. 06 C 7023 (N.D. Ill. Nov. 4, 2009).

In their Consolidated Complaint, plaintiffs alleged that the washing machines they bought
from Sears suffered from electronic control board failure and an alleged design defect that prevented adequate water drainage and proper self-cleaning. The water drainage and
cleaning defect allegedly resulted in odors on clothes. Plaintiffs contended that the electronic control board failure is manifested by the washing machines prematurely and repeatedly failing mechanically. 

Defendant was alleged to have known about the defects because of allegedly similar problems with other washing machines, and customer complaints of mold problems. As a result, plaintiffs contended that Sears violated their respective home states’ consumer fraud statutes.

The case has a bit of a history, as prior versions of these allegations had been the subject of three motions to dismiss. Although the court did allow plaintiffs to file this consolidated amended complaint (these cases were consolidated for purposes of discovery and pretrial proceedings on January 6, 2009), plaintiffs did not request leave to re-allege the claims that were dismissed with prejudice in the prior rulings, including consumer fraud claims under the laws of California, Illinois, Indiana, Kentucky, Michigan, Minnesota, New Jersey, New York, and Washington. See 2008 WL 4450307, at *8. Plaintiffs. however, re-alleged these claims in substantially the same form in their Consolidated Complaint.  Without leave to do so, and new details, these claims could not survive.

In order to survive a Rule 12(b)(6) motion, the complaint must not only provide the defendant with fair notice of the claim’s basis, but must also establish that the requested relief is plausible on its
face. Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949, (2009); see also Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). Allegations of fraud are subject to the heightened pleading standard of Rule 9(b), which requires a plaintiff to state with particularity the circumstances constituting fraud. Fed. R. Civ. P. 9(b). This means that the plaintiff must plead the “who, what, when, where, and how" of the alleged fraud.

The court found that the new allegations  were insufficient to meet Rule 9(b)’s pleading requirements. Plaintiffs adequately averred defendant's knowledge, but they did not adequately allege the other required elements. For example, plaintiffs had not indicated how the alleged reported failure rate compares with the failure rates of comparable machines produced by comparable manufacturers. Plaintiffs also failed to specify how often design or manufacturing defects related to self-cleaning features of washers occur. No meaningful engineering explanation had been alleged. The language reproduced in the Consolidated Complaint offered far from a meaningful engineering explanation for the defects; the allegations were vague and indeterminate.

The alleged violation of California’s Song-Beverly Consumer Warranty Act, Cal. Civil Code § 1790 et seq., survived the motion to dismiss.  But, overall, product manufacturers can appreciate the court's application of the Twombly doctrine, the fraud pleading requirements, and its reluctance to give plaintiffs many, many bites of the apple.  Federal court litigation should not be "if at first you do not succeed, try, try again," with the trial court offering plaintiff's counsel a road map how to construct a proper pleading.

Motion To Dismiss Filed in Combination Aspirin MDL

Bayer Healthcare LLC moved last week to dismiss the master complaint in the federal MDL involving combination aspirin products. In Re: Bayer Corp. Combination Aspirin Products Marketing and Sales Practices Litigation, No. 1:09-md-02023 (E.D. N.Y.). Aspirin has been sold in the United States for more than a hundred years; a daily regimen of low-dose aspirin is widely recognized as useful in preventing heart attacks and strokes.

Plaintiffs are consumers who claim to have purchased Bayer combination aspirin and dietary supplement products. They do not claim that they were injured by these products or that the products were ineffective. Instead, plaintiffs seek damages because they say they would not have purchased these products if they had known that Bayer, instead of submitting a New Drug Application (“NDA”) for each of these combination products, relied on the preexisting separate regulatory review of aspirin and the supplements. Plaintiffs allege that Bayer misled and deceived
consumers into believing that the products had been proven to be safe and effective for their marketed purposes.
 

The Motion argues that plaintiffs’ claims fail, first, because they are, in essence, private attempts to enforce the FDCA, 21 U.S.C. §301 et seq.  MassTortDefense notes that courts have repeatedly refused to construe such private attempts to enforce the FDCA as valid state law causes of action like the plaintiffs have brought in this litigation. Under the FDCA, the United States government has the exclusive power to enforce the FDA’s regulatory requirements (which include provisions relating to the approval of new prescription and over-the-counter drugs, as well as regulation of dietary supplements and food additives). The FDCA provides that “[a]ll such proceedings for the enforcement, or to restrain violations, of this Act, shall be by and in the name of the United States.” 21 U.S.C. § 337(a) (2009).

Even if a state were to recognize it, a cause of action based on a failure to obtain FDA approval would be preempted as interfering with the FDA’s approval processes. Courts have repeatedly held that private plaintiffs fail to state a claim where they, in essence, seek redress for a violation of the FDCA. Courts have applied this doctrine to dismiss a variety of causes of action, from RICO and the Lanham Act, to state law unfair competition and consumer fraud act claims. See, e.g., Mylan Labs. v. Matkari, 7 F.3d 1130, 1139 (4th Cir. 1993) (dismissing Lanham Act claim); In re Epogen & Aranesp Off-Label Mktg. & Sales Practices Litig., 590 F. Supp. 2d 1282, 1290 (C.D. Cal. 2008) (dismissing state consumer fraud and false advertising and RICO claims); Ethex v. First
Horizon Pharm. Corp
., 228 F. Supp. 2d 1048, 1055 (E.D. Mo. 2002) (dismissing deceptive trade practices claims and Lanham Act claim).

Additionally, defendant argues that plaintiffs, who do not claim harm or that their products did not work, have not alleged a cognizable injury. Accordingly, plaintiffs have not stated a claim for any of the causes of action they have brought. Under Fed. R. Civ. P. 12(b)(6), a complaint must be dismissed if it fails to articulate grounds upon which relief can be granted. Under Rule 8(a), 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. Bell Atlantic Corp. v. Twombly, 550 US 544, 555 (2007).   The Supreme Court recently reaffirmed these principles in Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009).

These standards apply to injury and loss requirements as well as to other elements of a claim. As the Second Circuit recently explained, to state a claim for relief, a plaintiff must do more than simply allege an injury or loss – that theory must be “plausible.” McLaughlin v. American Tobacco Co., 522 F.3d 215, 227 (2d Cir. 2008). Legally cognizable theories of injury must also not require a court to “engage in a series of speculative calculations to ascertain whether, or in what amount, plaintiffs suffered a loss.” Id. at 230.  Like many convoluted consumer fraud actions, plaintiffs' claims here fail to allege a plausible theory that is open to private plaintiffs.
 

 


 

 

Court Dismisses Counts Of Trileptal Complaint Pursuant to Twombly

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

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

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

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

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

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

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




 

Federal Court Dismisses Trasylol Class Action Complaint

A federal judge in Florida has dismissed the class action claims of plaintiffs asserting economic loss from Bayer's drug Trasylol, ruling that they have failed to adequately plead that their alleged damages flowed directly from the company's alleged conduct in marketing the drug. See Southeast Laborers Health and Welfare Fund, et al. v. Bayer Corporation, et al., 2009 WL 2355747 (S.D. Fla.).

Trasylol was approved by the U.S. Food and Drug Administration to prevent excessive bleeding during coronary artery bypass graft (CABG) surgery. The plaintiffs, including a health and welfare fund responsible for paying for members' prescription drugs, allege that cheaper and safer alternatives were available but that Bayer somehow "over-promoted" the drug for CABG use.  They also allege the company promoted it for unapproved off-label uses, such as orthopedic surgery. They say, bottom line, that they would not have paid for Trasylol had they known the true story.

Such claims are typical of the consumer fraud act claims of plaintiffs in drug litigation, and equally typical is the fact that calculation of plaintiff's alleged losses would be extremely difficult, fact intensive, and absent such facts, purely speculative. Plaintiff must allege the causation element of the claim, and even the requisite short and plain statement of the claim requires more than labels and conclusions, and more than a formulaic recitation of the elements of a cause of action. (citing Twombly, 550 U.S. at 555 ).

In a causation analysis that applies to both the consumer fraud act and RICO allegations, the court noted that there are many factors that a doctor may consider in determining what medication to administer to a given patient. Doctors are presumed to, and actually do, go beyond advertising and marketing and also use their independent knowledge in making medical decisions. Loss calculation, therefore, necessarily would require an analysis of whether or not a particular physician ever received or relied on Bayer's allegedly fraudulent statements, and whether or not a physician, knowing the risks vs. benefit of Trasylol, would still have used it during an operation.

It would require a determination as to how many doses a patient received, and whether or not the number of doses was tied into any fraudulent marketing. It would also require speculation as to what alternative medications a particular physician would have ordered in a particular surgery, and how much that medication would have cost. Such a cost calculation would be problematic, as costs clearly would have fluctuated over the ten year period. Lastly, it would entail determining those patients who received Trasylol who did not suffer any adverse reactions, and who might have been helped by the use of the drug. Plaintiffs plead none of those facts.

The plaintiffs here attempted to rely on a "fraud on the market" theory to avoid this analysis, citing In re Zyprexa Prod Liab. Litig., 493 F.Supp.2d 571 (E.D. N.Y. 2007), but the court called this "simply misplaced." The fraud-on-the-market doctrine in both the Eleventh and Third Circuits has been held to be limited strictly to securities cases and is inappropriate in claims alleging deceptive advertising such as the ones presented by drug litigation.   

Further, on the RICO count, the court said that the plaintiffs' factual allegations were not sufficient to constitute a representative sample of the defendants' allegedly fraudulent acts, when they occurred and who engaged in them.

Judge Middlebrooks granted the plaintiffs leave to amend but said it was "unlikely" they would be able to cure the proximate causation deficiency in their claims.

 

 

 

Medical Monitoring: Is Everyone A Proper Defendant?

The United States District Court for the Eastern District of Pennsylvania issued an interesting medical monitoring ruling last week, which dealt with who is a proper defendant for this type of claim. In Sheridan, et al. v. NGK Metals, No. 06-5510, 2008 WL 2156718 (E.D. Pa. May 22, 2008), the court addressed the potential liability for medical monitoring relief of a unique type of defendant, a consultant hired to sample and monitor air quality. 

The decision is noteworthy in the context of plaintiffs' attempts to expand this non-traditional remedy. (and for another good application of the Twombly pleading decision to a toxic tort context.)

The proposed plaintiff class sought medical monitoring for residents of the Reading, Pennsylvania area who were allegedly exposed to beryllium emitted into the air from one of the defendant’s manufacturing facilities. According to the plaintiffs, members of the proposed class resided and/or regularly worked in close proximity to the Reading Plant at some time during the period from 1950 to 2000.

Defendant Spotts, Stevens & McCoy (SSM) was an engineering firm that, according to the plaintiffs’ Amended Complaint, was involved with testing, sampling, analyzing, and monitoring the air quality and levels of beryllium at the Reading Plant.

The District Court considered SSM’s motion to dismiss, noting that while a complaint need not contain detailed factual allegations, the plaintiff must provide more than labels and conclusions, and more than a formulaic recitation of the elements of a cause of action will not do, under the new Supreme Court guidance in Bell Atlantic Corp. v. Twombly, 127 S.Ct. 1955, 1964-65 (2007).

Medical Monitoring

MassTortDefense has posted on this claim before. Medical monitoring is recognized under Pennsylvania law, and a plaintiff must prove:

1. exposure greater than normal background levels;

2. to a proven hazardous substance;

3. caused by the defendant's negligence;

4. as a proximate result of the exposure, plaintiff has a significantly increased risk of contracting a serious latent disease;

5. a monitoring procedure exists that makes the early detection of the disease possible;

6. the prescribed monitoring regime is different from that normally recommended in the absence of the exposure; and

7. the prescribed monitoring regime is reasonably necessary according to contemporary scientific principles.

Redland Soccer Club v. Dep't of the Army, 548 Pa. 178, 696 A.2d 137, 145-46 (Pa.1997).

Negligence Element

As the third element listed indicates, a medical monitoring plaintiff must prove the underlying tort of negligence in Pennsylvania.  And an action in negligence is premised upon the existence of a duty owed by one party to another. Here, plaintiffs alleged that the engineering firm owed them a duty under the notion expressed in Section 324A of the Restatement (Second) of Torts regarding Liability to Third Person for Negligent Performance of Undertaking (the so-called "Good Samaritan" rule).  It states:

One who undertakes, gratuitously or for consideration, to render services to another which he should recognize as necessary for the protection of a third person or his things, is subject to liability to the third person for physical harm resulting from his failure to exercise reasonable care to protect his undertaking, if

(a) his failure to exercise reasonable care increases the risk of such harm, or

(b) he has undertaken to perform a duty owed by the other to the third person, or

(c) the harm is suffered because of reliance of the other or the third person upon the undertaking.

Restatement (Second) of Torts § 324A (1977).

Pennsylvania is one of many jurisdictions that has adopted Section 324A. See Cantwell v. Allegheny County, 506 Pa. 35, 40, 483 A.2d 1350, 1353 (1984). It has been interpreted to mean that absent any evidence that a defendant assumed an affirmative duty, there can be no liability for negligently performing that duty. See Wenrick v. Schloemann-Siemag Aktiengesellschaft, 523 Pa. 1, 564 A.2d 1244, 1248 (Pa.1989). Section 324A cannot be invoked to create a duty where one does not exist.

Plaintiffs' Allegations/Response

Plaintiffs alleged that SSM was responsible for advising the other defendants with regard to the air quality and for informing and/or warning the other defendants (the plant owners) about the results of air sampling and testing. Thus, a duty allegedly existed for SSM to act with reasonable care and prevent any increased risk of harm to the plaintiffs. Defendants responded that because the plaintiffs failed to allege that SSM undertook the specific duty to warn the plaintiffs, or that they negligently performed its undertaken tasks, no claim existed. SSM never expressly undertook a duty to warn the plaintiffs of the harmful beryllium exposures at the Reading Plant.

The Ruling: No Claim

The Court noted that the Amended Complaint did not allege that SSM was negligent in performing the testing, sampling, analyzing or monitoring of the air quality in the Reading Plant, or that the engineers failed to report, or were negligent in reporting, the results of its research to the plant owners. The pleading did not allege any circumstances under which such a duty, as a matter of law, could arise “implicitly” or “derivatively.” And absent a duty owed to the plaintiffs here, the Court need not reach the question of whether plaintiffs' alleged injuries were foreseeable.

Plaintiffs also needed to properly allege one of the three subsections of Section 324A, (a) failure to exercise reasonable care that increases the risk of harm, or (b) an undertaking to perform a duty owed by the other to the third person, or (c) the harm is suffered because of reliance of the other or the third person upon the undertaking.

On part (a), plaintiffs confused sins of commission rather than omission when they alleged that SSM allowed beryllium levels at the Reading Plant to rise to unsafe levels. Plaintiffs (discovery was well along) could not allege that SSM assumed or had any control over what caused the beryllium concentrations to rise to excessive levels, or contracted to undertake any corrective action to prevent these excesses from occurring. SSM undertook to test the beryllium emission at the plant, and report those emissions to the plant owners. The Amended Complaint did not allege that Plaintiffs' injuries arose from any alleged negligent testing.

With respect to subsection (b), plaintiffs argue that the engineering firm undertook to perform a duty owed by the plant owners to the plaintiffs. However, SSM agreed to take the steps of merely testing, sampling, monitoring, etc. Mere knowledge of a dangerous situation does not suffice to impose liability under Section 324A(b). Finally, as to subsection (c), plaintiffs failed to allege that they suffered any harm because of their reliance upon SSM undertaking to perform certain tests for the plant owners.

The Court concluded that plaintiffs essentially were advancing the proposition that SSM owed a “social duty” to them, and to the public at large. However, the scope of a good Samaritan’s duty is measured by the scope of his or her undertaking. Section 324A does not impose any “social,” “implied” or “derivative” duty. Rather, Section 324A imposes liability, reaching to third persons, upon a party's breach of a specifically undertaken duty. If a defendant did not undertake to perform a specified task, it cannot be held liable under Section 324A for failing to perform that task.

The medical monitoring claim against the engineers was dismissed.