Patrick Jane is the fictional lead character of the TV series “The Mentalist.”  Ably played by Simon Baker, the character used his skills of reading people, knowledge of people’s reactions, keen powers of observation and deduction, and prodigious memory to assist the police — all the while sipping his cup of tea.  Prior to being a consultant, he used those same skills to pretend to be a psychic, defrauding customers with his scam.

Reactions, observation, tea, fraud…that brings us to today’s case.  A New York federal court has dismissed a proposed class action alleging Oregon Chai Inc. misled its consumers into thinking its tea mixes contain real vanilla. Cosgrove v. Oregon Chai Inc.,No. 1:19-cv-10686, 2021 WL 706227 (S.D.N.Y. 2/21/21). Plaintiffs sued, claiming that Defendant’s use of the term “vanilla” and other statements on the packaging of its chai tea latte powdered mix were misleading to consumers. The Court agreed with the vast majority of district courts to have considered similar “vanilla” claims, and dismissed the complaint for failure to state a claim.

The Complaint focused on the Oregon Chai products’ packaging, and in particular the alleged representations “Oregon Chai,” “Vanilla,” Vanilla and honey combine with premium black tea and chai spices,” and “Made with Natural Ingredients.”  According to Plaintiffs, the last three of these representations, individually and in tandem, misled consumers concerning the amount, the percentage, and the types of ingredients in the Oregon Chai products. Plaintiffs argued that Defendant’s use of the term “Vanilla,” along with the identifying description of “Vanilla and honey combine with premium black tea and chai spices,” foster the misimpression that the vanilla flavor is present in an amount greater than the honey and the chai spices, when in fact there is more honey and cinnamon in the products. Plaintiffs reasoned that the prominent use of the term “Vanilla” also fosters the misimpression that the vanilla flavor is derived from vanilla beans, rather than artificial vanillin.  Finally, Plaintiffs argued that the products’ reference to “Made with Natural Ingredients”  reinforces the impression that the vanilla flavor is derived from vanilla beans and not artificial vanillin.

The Court concluded that Plaintiffs’ allegations concerning the Oregon Chai products’ packaging did not suffice to state an actionable claim under the NY consumer statutes, GBL §§ 349 or 350. On the front of the packaging, the word “Vanilla” appears just below the words “Chai Tea Latte” in a slightly larger font. As such, the term appears to describe a flavor more than an ingredient — more particularly, to distinguish the vanilla flavor from Defendant’s other chai tea latte flavors, including “Salted Caramel,” and “Spiced.” Second, while the statement, “Vanilla and honey combine with premium black tea and chai spices,” appear to be ingredients (as distinguished from flavors), there is nothing to suggest the exclusive, or even predominant, use of vanilla beans as opposed to other sources. There is no reference to “vanilla bean” or “vanilla extract” anywhere on the packaging; nor is there any reference to the product being “made with” or “made from” any part of the vanilla plant.

Third, the Court didn’t have to be a mentalist to reject as a matter of law Plaintiffs’ broader argument that consumers were or could be deceived for GBL purposes about the relevant quantities of vanilla, honey, and cinnamon in the Oregon Chai products. On this point, it bears noting that consumers would be selecting among chai tea lattes. Plaintiffs themselves adopted a definition of chai that includes tea and spices in no particular proportions.  So long as the products contained vanilla, honey, and chai spices (which can include cinnamon), any consumer could not be deceived by the packaging in this case. For similar reasons, the Court rejected Plaintiffs’ argument that references to “natural ingredients” or “natural flavors” lead inexorably to the conclusion that the vanilla flavor in the Oregon Chai products is derived from vanilla beans and not artificial vanillin. The statements in the Oregon Chai products’ packaging, in context, cannot fairly be read to claim that the vanilla flavor derives exclusively, or even predominantly, from vanilla beans or vanilla extract. Defendant’s use of the terms “natural ingredients” and “natural flavors” only confirms that analysis, said the Court.

In sum, viewing each of the challenged statements in context, the Court concluded as a matter of law that Plaintiffs have failed to plausibly allege a violation of GBL §§ 349 and 350. To the extent the reasonable consumer would view the “vanilla” reference as an ingredient rather than a flavor of chai tea latte, there is nothing in the packaging to suggest that the vanilla is sourced exclusively or predominantly to vanilla beans or vanilla extract. Nor would the reasonable consumer be misled by the packaging’s references to natural ingredients or natural flavors, as Plaintiffs have failed plausibly to allege that the challenged flavoring substances were artificially derived. 2021 WL 706227, at *15.

The Sixth Circuit recently affirmed a trial court’s decision to dismiss a proposed multi-state class action alleging that a car maker sold vehicles with cracked dashboards.  James Smith et al. v. General Motors LLC, No. 19-1614, 2021 WL 631475 (6th Cir. 2/18/21).  According to Plaintiffs, that defect produces dashboard cracking that could cause severe injuries because malfunctioning airbags could turn the plastic dashboards into deadly projectiles during a crash. But no class member, or any other customer, experienced that dangerous, hypothetical, scenario. At worst, Plaintiffs suffered only cosmetic damage and a potential reduced resale value from owning cars with cracked dashboards. Even still, Plaintiffs contend that defendant knew about the defect and its dangers and should be liable for that scary implication.

The case turned on what, exactly, Plaintiffs must plead to survive a motion to dismiss. They asserted that routine testing, customer complaints, and increased warranty claims alerted defendant to the defective dashboards. But that is not enough, said the panel, to move forward, absent some more specifics about how and when defendant supposedly (1) learned about the defect and its hazards, and (2) concealed the allegedly dangerous defect from consumers when selling cars. The general rule is that Plaintiffs must show that a defendant had sufficient knowledge of the harmful defect to render its sales fraudulent. And Plaintiffs simply did not allege particular facts showing that the defendant fraudulently unloaded such dangerous vehicles onto an unwitting public.

The court said this is much like Sir Arthur Conan Doyle’s Sherlock Holmes and his case of the dog that did not bark: the dispute centers on what a court can properly infer from shrapnel that did not spray. And, absent more detailed pleading, there was not enough showing that defendant learned about, and ignored, the allegedly dangerous defect.  You have to love the reference to the famous private detective character known for his proficiency with observation, deduction, and logic. He first appeared in 1887 in A Study in Scarlet, and was featured eventually in 4 novels and 56 short stories by Doyle. Since then, the famous resident of 221B Baker Street in London has been in more than 26,000 stage shows, films, television shows, and other books — making him the most portrayed literary human character in film and television history. As long as the character has been around, new adaptations still find wonderful perspectives or contexts for the consulting detective (e.g.,  Benedict Cumberbatch in Sherlock).  Loyal readers know we are always keen for a Philadelphia connection: In August of 1889, the managing editor of Lippincott’s Monthly Magazine in Philadelphia, came to London to organize a British edition of his magazine. He invited Conan Doyle for dinner in London at the elegant Langham Hotel which was to be mentioned later in a number of Holmesian adventures, and this led to commissioning Doyle to write The Sign of the Four, published in England and the US in February of 1890. 

Plaintiffs alleged that when the defendant changed the dashboard from a multi-piece design to a single-piece design, this change made the dashboard prone to cracking in two places. Fixing dashboard cracks can cost up to $1,800. they alleged. They emphasized that the design change allegedly created a safety hazard— a crack near the steering column that could lead to shrapnel spray during a crash. Plaintiffs’ complaint contained no allegation that any of them have been hurt by the allegedly defective dashboards. It only speculated that “[t]he [dashboard] cracks can interfere with the planned deployment of the passenger side airbag, thus creating a safety risk.” Plaintiffs confirmed that they did not have evidence showing that the dashboard’s alleged safety defect ever caused an injury to anyone driving or riding in an affected car.

Of particular interest to our readers is the analysis of the claim under Rule 9(b). To satisfy Rule 9(b), “the plaintiff must allege (1) ‘the time, place, and content of the alleged misrepresentation,’ (2) ‘the fraudulent scheme,’ (3) the defendant’s fraudulent intent, and (4) the resulting injury.” Wall v. Mich. Rental, 852 F.3d 492, 496 (6th Cir. 2017). Although the Plaintiffs pled that a defect existed, Plaintiffs did not meet their burden of showing defendant’s knowledge about the alleged safety risk. For example, their complaint did not explain how Plaintiffs determined a cracked dashboard posed a safety risk—a fact that would have helped show how either party would have gained knowledge about the risk, not whether that risk existed.

Rule 9(b) imposes a heightened pleading requirement for claims alleging fraud. That means that parties bringing a fraudulent concealment claim “must specify ‘the who, what, when, where, and how’ of the alleged omission.” Republic Bank & Tr. Co. v. Bear Stearns & Co., 683 F.3d 239, 256 (6th Cir. 2012). And they must do so with particularity. Fed. R. Civ. P. 9(b). In the context of this case, that meant that Plaintiffs needed to “state with particularity” factual allegations supporting the assertion that defendant knew about the safety implications of the dashboard defect. But Plaintiffs’ allegations merely identify the dashboard defect and say the manufacturer could have theoretically known about the flaw. And that’s not enough.

Plaintiffs argued that their allegations about testing, customer complaints made to the NHTSA and car dealers, and increased warranty claims involving the vehicles support their assertion that defendant knew about the alleged safety defect. But taken as a whole with inferences made in Plaintiffs’ favor, these factual allegations did not rise above mere speculation and recitation of legal claims. And so they were not enough to withstand a 12(b)(6) motion to dismiss.  Plaintiffs didn’t plead the results of the testing; Indeed, Plaintiffs admitted below that they never presented any “allegation that specifically says” that pre-production testing alerted GM to the defect. The customer complaints largely related to cars driven for many years and many miles.  All of the named Plaintiffs complained about defects in vehicles driven between 23,000 and 156,000 miles over multiple years. And the warranty claims did not show knowledge of any safety risks associated with the crack. So even if the warranty claim alleged spike supported that defendant knew about increased dashboard repairs, that does not mean the warranty claims led them to know about the hazardous airbag deployment that allegedly would accompany the cracked dashboard. In short, Plaintiffs offered no facts showing why the warranty claims informed of the safety hazard rather than a mere cosmetic issue.

The court made one more logical point about the latency period for the alleged defect: it seems odd to say the manufacturer knew, at the time of sale, about a dashboard crack that developed only after a vehicle traveled many thousands of miles over many years. Rephrased, Plaintiffs’ argument implies that defendant knew about the safety ramifications of that defect when it sold the cars even though the defect took that much time to manifest. “That makes little sense.”

As an important aside, we also see here the common error in multi-state and national class actions: plaintiffs’ assumption that one law governs all the claims.  While this means that all claims would rise or fall on a single substantive law principle, the reality is that one law almost ever governs every class member’s claims. But Plaintiffs presented their case without providing citations to support this underlying assumption. And that is troubling, said the court, because it highlights that Plaintiffs have failed to specify which jurisdiction’s laws, federal or otherwise, govern their suit. And that failure implicates Erie and the Rules of Decision Act.  Product liability cases often turn on specific state law requirements. See, e.g., In re Darvocet, Darvon & Propoxyphene Prods. Liab. Litig., 756 F.3d 917, 938 (6th Cir. 2014) (performing a “state-by-state Erie analysis” for a misrepresentation-based product liability claim). And parties usually specify which jurisdictions cover their diversity dispute, and then this court applies the “substantive law of the states” by either (1) following a ruling from the state supreme court, (2) following the applicable state statute, or (3) predicting how the state supreme court would rule “by looking to all available data, including decisions of the states’ appellate courts.” In re Darvocet,  756 F.3d at 937. And Plaintiffs’ assumption that general tort principles govern each claim also toed a dangerous line with the Rules of Decision Act and the Erie doctrine, said the panel. By asserting that a generalized framework governs, they ventured close to asking us to apply the general common law or federal common law, see Swift v. Tyson, 41 U.S. 1, 1 (1842), overruled by Erie R.R. Co. v. Tompkins, 304 U.S. 64 (1938), rather than “[t]he laws of the several states,” Rules of Decision Act, 28 U.S.C. 1652. Under the Erie doctrine, parties typically cannot escape the general rule that “[i]n diversity cases we apply the choice-of-law rules and substantive law of the forum state.” CenTra, Inc. v. Estrin, 538 F.3d 402, 409 (6th Cir. 2008).

For our readers interested in issues surrounding expert testimony, Daubert challenges, and potential reform of Federal Rule of Evidence 702, let us point out a recent piece by ILR, entitled Fact or Fiction: Ensuring The Integrity Of Expert Testimony. The paper outlines the state of expert evidence standards around the country, explores key issues and concerns supporting a more universal adoption of Daubert and further amendment of Rule 702, and offers recommendations for promoting changes.

It is authored by my colleague Cary Silverman at Shook, Hardy, & Bacon.

A number of interested groups have weighed in as amici in the Supreme Court’s consideration of TransUnion LLC, Petitioner v. Sergio L. Ramirez, No. 20-297 (U.S.), on review from the Ninth Circuit.  See 951 F.3d 1008 (9th Cir. 2020) .  The issue is the lower court’s attempt, in the face of Article III case law and Federal Rule of Civil Procedure 23, to certify and maintain a damages class action when the vast majority of the proposed class suffered no actual injury, let alone an injury like that alleged by the class representative. Here, the plaintiff suffered injury due to a credit alert that impacted an attempted purchase.

One brief on behalf of the National Association of Manufacturers, American Tort Reform Association, and others, was filed by a group of talented lawyers led by my colleagues Philip S. Goldberg and Andrew J. Trask at Shook Hardy & Bacon LLP.  They noted that plaintiff stipulated that more than 75 percent of the class had no third-party inquiries that could have resulted in anyone beside the class members themselves seeing the potential match alert. Further, he offered no evidence that any absent class member suffered any injury at all, let alone one like his. After a trial focused entirely on Ramirez’s idiosyncratic injury, the jury awarded significant damages to the entire class.  Under Article III of the U.S. Constitution, a person who has not sustained a compensable injury cannot receive a payment as part of a class action in federal court—nor can such a class action
be certified—regardless of whether others have experienced injury. The court’s role is limited to providing relief to claimants, individual or class actions, who have suffered, or will imminently suffer, actual harm.

In addition, it is clear, again, that this lower court could not have made the appropriate “rigorous analysis” of Rule 23’s typicality requirement, particularly with respect to the injury element of a claim. See Wal-Mart, 564 U.S. at 350–51. Rule 23(a)(3)’s typicality requirement often is under-examined and under-enforced. If the lower courts had properly examined at the certification stage whether Ramirez’s injury was typical of the class he sought to represent, it would have been obvious that his experience was, at best, atypical. Another way to think of this is that the outcome of this case would have been materially different had any of the other class members been the named plaintiff.

Accordingly, this case provides the Court an important opportunity to reinforce the proper scope and conduct of a rigorous examination of typicality during class certification. Such a ruling would have an impact beyond no-injury class actions, as here, to the many other class actions where inattention to Rule 23’s typicality requirement generates distorted legal doctrines and blackmail-ish settlements.

One to watch.

Massachusetts’ highest court issued an  interesting decision regarding pleading requirements and the causation element in a device case  See Dunn v. Genzyme Corp., No. SJC-12904 (Sup. Jud. Ct. Mass. 1/29/21). Plaintiff Dunn received two injections of Synvisc-One, one in each knee. Synvisc-One is a Class III medical device subject to premarket approval under the MDA.  Synvisc-One was approved by the FDA in 2009 for the treatment of pain associated with osteoarthritis of the knee in patients who have failed to respond to other treatments.  When she experienced alleged side effects, she sued, focusing on an alleged failure to warn.

We won’t spend any time in this post on the first issue for the court: whether Federal law preempted the plaintiff’s State law claims because the device is regulated under the Medical Device Amendments (MDA), 21 U.S.C. §§ 360c et.  The court found the State law claims survived preemption under the MDA as these claims parallel, rather than supplement, federal requirements. See Riegel v. Medtronic, Inc., 552 U.S. 312, 330 (2008). More  interesting is the conclusion that, although parallel, none of the claims were sufficiently pleaded to survive the manufacturer’s motion to dismiss. Accordingly, the lower court’s decision denying the manufacturer’s motion to dismiss was reversed.

There is some disparity in views among the few courts that have examined the level of specificity necessary to plead State law claims in order to survive preemption under the MDA. Compare Wolicki-Gables v. Arrow Int’l, Inc., 634 F.3d 1296, 1301 (11th Cir. 2011) (“A plaintiff must allege that the defendant violated a particular federal specification referring to the device at issue” ), with Bausch v. Stryker Corp., 630 F.3d 546, 560-561 (7th Cir. 2010), cert. denied 565 U.S. 976 (2011) (declining to require that plaintiffs “specify the precise defect or specific  federal regulatory requirements that were allegedly violated”).

Here, of course, we are talking about pleading under state rules, and the court declined to require that plaintiffs asserting State common-law claims regarding MDA-regulated medical devices plead these parallel claims in greater specificity than otherwise would be required under the plausibility standard set forth under state law. See Iannacchino v. Ford Motor Co., 451 Mass. 623, 636 (2008). Cf. Bass v. Stryker Corp., 669 F.3d 501, 509 (5th Cir. 2012).

But none of Dunn’s claims met this traditional standard. Dunn asserted that the “reasonably foreseeable use of Synvisc-One involved significant dangers not readily obvious to the ordinary user of the product”; Synvisc-One had “dangerous propensities that were known or reasonably knowable to [Genzyme] at the time of its manufacture and distribution of Synvisc-One”; Synvisc-One posed “known or reasonably knowable dangers”; or, alternatively, that the “Synvisc-One that was ultimately injected into [Dunn] was adulterated and defectively manufactured, distributed, marketed, and sold” by Genzyme. These were labels and conclusions however, and no factual allegations were provided upon which to ground these “labels and conclusions.” Iannacchino, 451 Mass. at 636, quoting Twombly, 550 U.S. at 555.

Thus, there were insufficient facts in the complaint plausibly to suggest an entitlement to relief. Fundamentally, the complaint did not proffer sufficient factual assertions that plausibly established causality between the purportedly tortious activities and Dunn’s injuries. Rather, the complaint sought to imply that the temporal proximity between the injections of Synvisc-One and Dunn’s injuries alone was sufficient to establish the necessary element of causality. The court contrasted cases cited by plaintiff, as her complaint invoked no such facts – regulatory, medical, or otherwise — that connected Genzyme’s actions with the purported harm.  While the lower court had emphasized the purported disparity between the information available to Dunn and to Genzyme, a lack of access to information at the pleading stage does not nullify a plaintiff’s pleading obligations.

A California federal court dismissed a complaint alleging that a company misled  consumers concerning the properties of its Splash-Less bleach cleaner.  See Gudgel v. The Clorox Co., No.  4:20-cv-05712 (N.D. Calif. 1/21/21 ). Plaintiff filed this suit on behalf of herself and a putative class, asserting five causes of action against Clorox: (1) violation of the California Consumers Legal Remedies Act (“CLRA”) § 1750; (2) violation of California Unfair Competition Law (“UCL”), Cal. Bus. & Prof. Code § 17500; (3) violation of California False Adverting Law (“FAL”), Cal. Bus. & Prof. Code § 17500; (4) negligent misrepresentation; and (5) unjust enrichment.

Plaintiff’s central allegation was that the product’s packaging and marketing would lead a reasonable consumer to believe that the product is suitable for disinfecting, and because the product was allegedly not suitable for that purpose, its packaging and marketing were misleading.  Specifically, plaintiff alleged that she was misled by Clorox’s labeling and advertising into believing that the splash-less product would be effective for disinfecting. Plaintiff alleged that, “only on the back of the label, in small print, does the company disclose” that the product is not to be used for disinfecting.

The Ninth Circuit has explained that “these [three] California statutes are governed by the ‘reasonable consumer’ test.” Williams, 552 F.3d at 938 (quoting Freeman v. Time, Inc., 68 F.3d 285, 289 (9th Cir. 1995)); accord Consumer Advocates v. Echostar Satellite Corp., 113 Cal. App. 4th 1351, 1360 (2003). “Under the reasonable consumer standard, [plaintiffs] must show that members of the public are likely to be deceived.” Williams, 552
F.3d at 938.  The reasonable consumer test requires more than a mere possibility that defendant’s product “might conceivably be misunderstood by some few consumers viewing it in an unreasonable manner.” Lavie v. Procter & Gamble Co., 105 Cal. App. 4th 496, 508 (2003). Rather, the test requires a probability “that a significant portion of the general consuming public or of targeted consumers, acting reasonably in the circumstances, could be misled.” Id.

Defendant pointed out that plaintiff did not identify a valid theory of deception, because plaintiff alleged no facts showing an affirmative misrepresentation or fraudulent omission. The label made no statement or suggestion that the product at issue is suitable for sanitization or disinfection. And Clorox further pointed out that the product’s back label specifically states: “Not for sanitization or disinfection.”  Thus, Clorox contended that a reasonable consumer would not be misled, and as a result, plaintiff’s statutory claims should be dismissed.  The court agreed.

The court rejected plaintiff’s arguments based on cases finding that a misrepresentation on the front of the package could not be cured by a disclaimer on the back of the package.  This case involved no actual misrepresentation or deception that conflicted with the language of the product’s disclaimer that it is “not for sanitization or disinfection.” In other words, the Clorox label at issue contained no misleading words or images that  would lead a reasonable consumer to  believe that the product was capable of sanitizing or disinfecting. So the adequacy of, or even need for, a disclaimer was not an issue.

Moreover, plaintiff had not adequately explained how a reasonable consumer would be deceived by the lack of ingredient percentages, especially in light of the disclaimer stating that the product is “not for sanitization or disinfection.” Similarly, the  “10x Deep Cleaning Benefits” clearly referred to the fact that the product is in concentrated form and must be diluted before use. The court concluded that the phrase “10x Deep Cleaning Benefits” did not constitute a representation that the product may be used for sanitizing or disinfecting purposes.

Plaintiff further argued that Clorox did not disclose that the product does not comply with CDC guidelines for disinfecting. However, as discussed above, the product’s label contained no representation that the product is capable of disinfecting, nor any representation that it complied with such CDC guidelines. Accordingly, in the absence of any specific misrepresentation regarding compliance with CDC guidelines, plaintiff cannot state a claim under the reasonable consumer test based on the product’s alleged lack of compliance with CDC guidelines.

The court concluded that there was no affirmative misrepresentation or deception on the product’s label. Where “there is no deceptive act to be dispelled”, then there is no basis to conclude that a reasonable consumer would be deceived.

 

A New York federal court has rejected yet another “vanilla” complaint.  In Cosgrove v. Blue Diamond Growers, No. 1:19-cv-08993 (S.D. N.Y. 12/17/20), the court dismissed a proposed class action alleging that the defendant improperly labelled its vanilla almond milk product finding that the company did not mislead consumers with the product’s vanilla flavor label.

Plaintiffs contend the almond milk labeling was misleading because “it has less vanilla than the label represents, contains non-vanilla flavors which provide its vanilla taste and contains artificial flavors, not disclosed to consumers on the front label as required by law and consumer expectations.” Plaintiffs contended the product was tested and showed that only trace amounts of authentic vanilla are contained within the product and comparably larger amounts of vanillin (flavor) are used. The ingredient list on the back of the product’s packaging did not list either vanilla or vanillin as an ingredient.

It is well settled NY law that a court may determine as a matter of law that an allegedly deceptive advertisement would not have misled a reasonable consumer. Fink v. Time Warner Cable, 714 F.3d 739, 741 (2d Cir. 2013). Courts view each allegedly misleading statement in light of its context on the product label or advertisement as a whole.  Determining whether a product label or advertisement is misleading is an objective test, and thus liability is limited to those representations likely to mislead a reasonable consumer acting reasonably under the circumstances.

Here, the court found the product was not misleading because a reasonable consumer would associate the representation of “Vanilla” — with no additional language modifiers — to refer to a flavor and not to vanilla beans or vanilla extract as an ingredient. See Pichardo v. Only What You Need, Inc., No. 20 Civ. 493, 2020 WL 6323775, at *5 (S.D.N.Y. Oct. 27, 2020). That association, of “Vanilla” as a flavor and not an ingredient, is borne out by consumers’ practical use of the representation. For example, said the court,  here, the consumer in the grocery store is looking, first and foremost, for almond milk – not vanilla. The large font “Vanilla” on the front of this product allowed the consumer to quickly understand the flavor of the almond milk and differentiate between products.

The product made no additional representations about how that flavor is achieved. Thus, without more, the “Vanilla” representation would be misleading only if the product did not actually taste like vanilla, but Plaintiffs, as they had to, conceded it does. Accordingly, use of the “Vanilla” representation on the product was not misleading.

The court distinguished those cases in which the label of the product at issue either (1) made representations about an ingredient and not a flavor; (2) contained a representation about a flavor with additional modifiers; or (3) made representations about products for which consumers have a demonstrated reasonable belief regarding the inclusion of a particular ingredient.

Complaint dismissed.

 

 

Ever since the In Re NuvaRing Prods. Liab. Litig. MDL, more than a decade ago, we have had concerns about the use of master pleadings in MDLs.  On one hand, the requirement to file a master complaint, and answer, seems to offer some efficiency gains and ease the administrative burden on transferee courts.  On the other hand, if not handled properly, such procedures risk depriving defendants of their due process rights and rendering Federal Rules 8, 9, and 12 a nullity. Plaintiffs want to adopt portions of a master complaint, but do not want their individual claim to be subject to the normal and proper scrutiny required under Twombly and Iqbal.  At the least, the master pleading must be subject to close scrutiny.  E.g., Bader Farms, Inc. v. Monsanto Co. et al., No. 1:18-md-2820-SNLJ, 2019 WL 3017425 (E.D. Mo. July 10, 2019) (granting in part defendants’ motion to dismiss amended complaint). Even that scrutiny may be insufficient if motion issues may turn on factual allegations not common to every plaintiff (such as date of use of a product), and/or issues of state law that may not apply to all plaintiffs. And when plaintiff lawyers need only check boxes on “short form” complaints, they don’t need to know, often don’t know, and thus don’t assert, facts about their clients regarding the claims they are selecting. Even worse are MDLs in which the court views a master complaint as purely an administrative device that should not be given the status of an ordinary complaint, yet not allowing individual complaints as subject to a motion to dismiss or other motion practice.

This issue has generated some interest among reform-focused groups.  For those interested in this topic, we note the recent decision, Bell v. Publix Super Markets, Inc., 982 F.3d 468 (7th Cir. Dec. 7, 2020).  It’s not our usual MDL context, arising from claims about Grated Parmesan Cheese.  But there is a discussion of the dismissal of “consolidated” MDL complaints that merits some attention.

The court of appeals  confirmed that the pleadings were not a mere administrative convenience, but treated by the parties and court below as the operative pleadings. Coordinated or consolidated pretrial proceedings can be used, observed the court, to streamline litigation, to manage discovery to avoid duplication and waste, and to narrow issues by agreement or by motions to dismiss or for summary judgment, and especially by settlement. 982 F.3d at 489. The default rule is that separate actions transferred for those pretrial proceedings retain their separate identities, especially for purposes of entering final judgments and pursuing appeals. Yet transferee courts and parties may choose to manage those cases in ways that can change that default rule and give up the separate identities of the original suits transferred to the MDL litigation. See, e.g., In re Refrigerant Compressors Antitrust Litig., 731 F.3d 586, 588 (6th Cir. 2013) (one category of antitrust plaintiffs—indirect purchasers—filed a single “consolidated amended complaint” that combined all of their allegations; dismissal of some indirect purchasers’ claims were not final judgments while other claims asserted in the consolidated amended complaint remained pending).

Citing Gelboim v. Bank of America Corp., 574 U.S. 405, 413 n.3  (2015), the circuit court said parties may elect to file a “master complaint” and a corresponding “consolidated answer,” which supersede prior individual pleadings. In such a case, the transferee court may treat the master pleadings as merging the discrete actions for the duration of the MDL pretrial proceedings. In re Refrigerant Compressors Antitrust Litigation, 731 F.3d at 590–92. No  merger occurs, however, when the master complaint is not meant to be a pleading with legal effect but only an administrative summary of the claims brought by all the plaintiffs.

That approach focuses pragmatically on the behavior of the district court and the parties to determine whether they treated the consolidated complaint as the “operative pleading” or merely “an administrative summary.” This approach holds the court and the parties to their actions to prevent them from “springing traps” by treating a consolidated complaint as the real complaint in the district court but then denying its importance and effect once a party tries to appeal. The dangers of ambiguity can be avoided if the court and the parties decide explicitly, from the beginning, the legal status of the consolidated or master complaint. At the outset of a multidistrict litigation, all parties have an interest in knowing when and how appellate rights may be triggered or lost. And defendants need to assert their right to move, or clearly preserve their objection to not getting a fair chance.

Because another “trap” to be avoided is when the MDL court denies defendants the ability to fully exercise their rights under the federal rules to challenge plaintiffs’ compliance with the pleading requirements. As we repeat, efficiency is not a sufficient basis to ignore the rules that would apply if the cases were not coordinated in an MDL.

A Minnesota federal court has dismissed a proposed class action alleging household sealants turn yellow despite being advertised as “crystal clear.” Ehlis v. DAP Prod., Inc., No. 20-CV-1872 (PJS/ECW), 2021 WL 83269, at *1 (D. Minn. Jan. 11, 2021).

This putative nationwide class brought a host of fraud and warranty claims against DAP, some under Maryland law, and others under Minnesota law. Defendant then moved to dismiss the complaint.  To survive a motion to dismiss, a complaint must “state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007).  A claim has facial plausibility 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). Claims sounding in fraud are subject to the heightened pleading requirement of Fed. R. Civ. P. 9(b). To assert a fraud claim with the particularity required under Rule 9(b), a complaint must allege in detail “the who, what, when, where, and how” of the fraud. Parnes v. Gateway 2000, Inc., 122 F.3d 539, 550 (8th Cir. 1997).

Here, the complaint fell well short of these standards, as it was “woefully devoid of factual allegations.”  Specifically, plaintiff did not not identify where he bought the sealant; when he bought the sealant; the source or sources of the representation that he read or heard; whether he read or heard the allegedly fraudulent representation moments before he bought the sealant or instead some days, weeks, months, or years earlier; where he used the sealant nor when the sealant yellowed or when he discovered that the sealant had yellowed. Significantly, all of the missing information identified by the court was presumably within the knowledge of plaintiff, and all of it could have been provided in a brief paragraph or two in the complaint. 2021 WL 83269, at *2.

The Florida Supreme Court recently issued a decision in which it adopted the summary judgment standard applicable in the federal courts (and a majority of states). Wilsonart, LLC v. Lopez, No. SC19-1336, 2020 WL 7778226 (Fla. Dec. 31, 2020).

This case involves a fatal rear-end car crash. But on appeal the legal issue became:
Should Florida adopt the summary judgment standard articulated by the United States Supreme Court in Celotex Corp. v. Catrett, 477 U.S. 317 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986); and Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (1986)?

A key difference was whether Florida law should allow for the entry of final summary judgment in favor of the moving party when the movant’s evidence completely negates or refutes any conflicting evidence presented by the non-moving party in opposition to the summary judgment motion. The Florida Justice Reform Institute and the Florida Trucking Association submitted an amicus brief in support of WilsonArt.  The Court held that Florida should adopt the federal summary judgment standard, and decided to make that change through a prospective rule amendment taking effect on May 1, 2021.  See In re Amendments to Florida Rule of Civil Procedure 1.510, No. SC20-1490, 2020 WL 7778179 (Fla. Dec. 31, 2020).

In that order, the court noted that the new standard was more in line with the purpose of summary judgment. “We agree with the Supreme Court” that “[s]ummary judgment procedure is properly regarded not as a disfavored procedural shortcut, but rather as an integral part of [our rules] as a whole.” Celotex, 477 U.S. at 327. The Supreme Court’s reasoning underlying the federal summary judgment standard is compelling: “One of the principal purposes of the summary judgment rule is to isolate and dispose of factually unsupported claims or defenses, and we think it should be interpreted in a way that allows it to accomplish this purpose.” Id. at 323-24. See In re Amendments to Fla. Rule of Civil Procedure 1.510., , 2020 WL 7778179, at *2.

The new rule is likely to curb forum shopping by those who would file weaker claims in Florida state courts rather than federal courts.  And the new standard should improve judicial efficiency by disposing of claims lacking factual support. After May 1, in Florida, as under the federal summary judgment rule, the moving party need only prove the absence of evidence in support of an essential element of the nonmoving party’s claim.