Second Circuit Holds Plaintiff With No Future Harm From Defendant’s Advertising Lacks Standing to Seek Injunctive Relief
Nicosia v. Amazon.com, Inc., 834 F.3d 220 (2d Cir. 2016)
The Second Circuit affirmed an order denying plaintiff’s motion for a preliminary injunction enjoining Amazon from selling weight loss products containing sibutramine, finding that “[a]lthough past injuries may provide a basis for standing to seek money damages, they do not confer standing to seek injunctive relief unless the plaintiff can demonstrate that she is likely to be harmed again in the future in a similar way.” Plaintiff lacked standing to pursue a preliminary injunction because Amazon had stopped selling the particular product she purchased and because Nicosia has failed to allege that she intends to use Amazon in the future to buy any products, let alone food or drug products generally or weight loss products in particular. View the decision.
Third Circuit Affirms Denial of Class Certification Based on Price Inflation Theory of Harm
Harnish v. Widener Univ. Sch. of Law, 833 F.3d 298 (3d Cir. 2016)
In this putative class action involving law school graduates, plaintiffs claimed that Widener published misleading statistics about its graduates’ employment, which caused the students to pay “inflated” tuition. Plaintiffs attempted to prove classwide injury by proffering an expert who concluded that tuition responds to public information, including employment statistics. Plaintiffs argued that the existence of an efficient market would permit them to prove that all class members’ positions were worsened by the publication of misleading employment statistics because Widener, as an efficient-market actor responding to those statistics, charged everyone higher tuition, regardless of whether the statistics impacted each individual class member’s decision-making as a consumer. The Third Circuit rejected this theory of harm, reasoning that “recognizing ‘price inflation’ as a ‘cause’ of ‘ascertainable loss’ is essentially the same as extending the fraud-on-the-market presumption to all consumer-fraud cases.” Plaintiffs’ failure to propose a cognizable theory of damages supported by classwide evidence caused individual questions to predominate over common ones, precluding class certification. View the decision.
Class Certification Denied Where Damages Model Failed to Isolate Value of ‘Amorphous’ Claim
Hughes v. Ester C. Co., No. 12-CV-0041 (PKC), 2016 WL 6092487 (E.D.N.Y. Sept. 30, 2016)
Plaintiffs alleged that vitamin C supplements were falsely advertised as “The Better Vitamin C,” and offered several potential methods to calculate the value of that alleged misrepresentation with common proof. The court denied class certification, holding that none of plaintiffs’ several methods offered to prove classwide injury was capable of isolating the value of the phrase “The Better Vitamin C,” because they “fail to account for the fact that ‘The Better Vitamin C’ conceivably encapsulates” the value of surrounding label claims, “such that any damages methodology failing to isolate ‘The Better Vitamin C’ from these other representations results in an overvaluing of the price premium attributable to the alleged misrepresentation.” View the decision.
Slack-Fill in Accurately Labeled Package Was Not Misleading
Bush v. Mondelez Int’l., Inc., No. 16-cv-02460-RS, 2016 WL 5886886 (N.D. Cal. Oct. 7, 2016)
Relying on the Ninth Circuit’s 2016 decision in Ebner v. Fresh, Inc., the district court granted the defendant food manufacturer’s motion to dismiss plaintiff’s claim that it underfilled its packages. “Here, as in Ebner, it is undisputed that the Go-Pak product labels disclose the net weight of included product, as well as the number of cookies or crackers per container. Opaque containers with slack-fill at the top are common in the snack market. . . . No reasonable consumer expects the overall size of the packaging to reflect precisely the quantity of product contained therein.” The court was persuaded by the act that “there is no deceptive act to be dispelled. The Go-Pak product’s weight label and nutrition facts panel do not contradict other representations on or inferences from Mondelez’s packaging.” View the decision.
Fifth Circuit: Highly Individualized Damages Issues Preclude Class Certification
Ibe v. Jones, --- F.3d ---, No. 15-10242, 2016 WL 4729446 (5th Cir. Sept. 9, 2016)
The Fifth Circuit affirmed the lower court order declining to certify classes of purchasers of Super Bowl XLV tickets who were relocated or had an obstructed view of the field, holding that the common issue of contract interpretation – whether the NFL breached the ticket terms by relocating any ticket holder – was overwhelmed by two individual issues: a front-end inquiry to determine membership in the class (those who received inferior seats, because there was no record of what replacement seat was received by each ticket holder) and a back-end inquiry to determine individual damages. Noting that the U.S. Supreme Court recently stated in Tyson Foods v. Bouaphakeo that individualized damages calculations ordinarily will not preclude a finding of predominance, the court held that nothing in Tyson Foods “alters this court’s holdings that class treatment ‘may not be suitable where the calculation of damages is not susceptible to a mathematical or formulaic calculation, or where the formula by which the parties propose to calculate individual damages is clearly inadequate. . . . Where the plaintiffs’ damage claims focus almost entirely on facts and issues specific to individuals rather than the class as a whole, the potential exists that the class action may degenerate in practice into multiple lawsuits separately tried. In such cases, class certification is inappropriate.’” The Fifth Circuit concluded that individualized damages issues predominated because individuals “incurred vastly different expenses, which would essentially necessitate mini-trials to adjudicate damages for each ticket holder.” View the decision.
State Law Claims Challenging ‘Organic’ Labels Are Preempted by Federal Law
Marentette v. Abbott Labs., Inc., --- F. Supp. 3d ---, No. 15-CV-2837 (PKC) (RLM), 2016 WL 4444787 (E.D.N.Y. Aug. 23, 2016)
Plaintiffs asserted state law claims alleging that although Abbott’s Similac Advance Organic Infant Formulas bore the word “Organic” in their titles and the USDA Organic seal on their labels, the products are not actually organic under federal law because they contain ingredients that are prohibited in organic products. The district court dismissed plaintiffs’ claims on conflict preemption grounds, agreeing with Abbott’s assertion that the Organic Foods Production Act of 1990 (OFPA) and its implementing regulations, the National Organic Program, preempted the state law claims. “Plaintiffs’ challenge to this labeling cannot be described in any way other than a direct challenge to the USDA-accredited certifying agent’s decision itself . . . [t]o the extent state law permits outside parties, including consumers, to interfere with or second guess the certification process, the state law is an obstacle to the accomplishment of congressional objectives of the OFPA.” View the decision.
Fraudulent Omission Claims Unsuccessful Where Plaintiff Failed to Adequately Plead Defendant’s Knowledge of Alleged Defect
Coleman-Anacleto v. Samsung Elecs. Am., Inc., No. 16-CV-02941-LHK, 2016 WL 4729302 (N.D. Cal. Sept. 12, 2016); and Andren v. Alere, Inc., --- F. Supp. 3d ---, No. 16-CV-1255-GPC (NLS), 2016 WL 4761806 (S.D. Cal. Sept. 13, 2016)
In Coleman-Anacleto, plaintiff alleged that defendant’s “Ultra Slim” television wall mounts broke when holding a Samsung television of the appropriate weight stated on the package. The court held that because plaintiff did not adequately plead that defendant knew about the defect at the time of sale, her claim was not actionable. “Plaintiff’s allegations of knowledge consist solely of consumer complaints that post-date Plaintiff’s purchase of an Ultra Slim wall mount by two years. Moreover, the consumer complaints were not sent directly to Defendant, and Plaintiff does not allege that Defendant monitored or was otherwise aware of complaints posted to Amazon.com. Accordingly, under Ninth Circuit precedent, Plaintiff fails to allege that Defendant was aware of any defect in Ultra Slim wall mounts at the time of the sale to Plaintiff.” View the decision.
In Andren, plaintiffs alleged that defendant’s blood clotting monitor, InRatio, was ineffective and inaccurate. The court dismissed plaintiffs’ omission-based claims. The complaint alleged a duty to disclose based on defendants’ exclusive knowledge of material facts – that InRatio products produced false and erroneous results – and based on defendants’ active concealment of material facts from plaintiffs, as evidenced by a 2007 publication concluding that InRatio products performed poorly, a public FDA warning letter from 2005 noting the discrepancies in the product’s results, and recall letters from 2014. The court found that plaintiffs failed to assert a duty to disclose based on exclusive knowledge of a material fact because their own allegations demonstrated that the material facts were available to the public. Plaintiffs’ conclusory allegations failed to adequately plead that a duty to disclose existed because defendants actively concealed material facts. View the decision.
Claims Permitted by Regulations Were Preempted
Savalli v. Gerber Prods. Co., No. 15-61554-CIV-ZLOCH, 2016 WL 5390223 (S.D. Fla. Sept. 20, 2016)
Plaintiff alleged that despite the prominent indication that defendant’s “Puffs” baby food product – which comes in flavors like sweet potato, banana and peach – is made with “whole grains,” the label’s depiction of star-shaped cereal pieces, and the absence of the words “fruit” and “vegetable” on the label, she was deceived into believing that the product contained significant amounts of real fruit or vegetables. Noting that it “harbors serious doubts about the plausibility of plaintiff’s claims,” the district court declined to reach the issue, finding that the claims were either preempted by federal law or failed as a matter of state law. Because FDA regulations allow a manufacturer to use the name and image of a fruit on a product’s packaging to describe the product’s “characterizing flavor,” even if the product does not actually contain any of the depicted fruit (or any fruit at all), plaintiff’s allegations were “expressly permitted by the FDCA.” The court rejected plaintiff’s argument that her claims were merely parallel to the FDCA’s general prohibition against false labeling and are therefore not preempted. “Put differently, plaintiff contends that labeling expressly permitted by the FDCA and FDA regulation may nonetheless be misleading. The argument is self-defeating. Conduct cannot be simultaneously permitted by the FDCA and prohibited by it.” View the decision.
Third Circuit Announces Numerosity Standard
In re Modafinil Antitrust Litig., --- F.3d ---, No. 15-3475, 2016 WL 4757793 (3d Cir. Sept. 13, 2016)
Noting that it had not previously done so, the Third Circuit set forth its standard for the “numerosity” requirement of Rule 23(a), providing a non-exhaustive list of relevant factors that are appropriate for district court judges to consider when determining whether joinder would be impracticable, including “[i] judicial economy; [ii] the claimants’ ability and motivation to litigate as joined plaintiffs; [iii] the financial resources of class members; [iv] the geographic dispersion of class members; [v] the ability to identify future claimants; and [vi] whether the claims are for injunctive relief or for damages.” The appeals court also observed that “[w]hile all factors are relevant, we note at the outset that not all are created equal. Instead, both judicial economy and the ability to litigate as joined parties are of primary importance.” In the antitrust litigation, the Third Circuit concluded that the district court had erred in finding that plaintiffs established numerosity of a class comprising 22 large corporations, most of which had multimillion-dollar individual claims, finding the district court’s judicial economy analysis was incorrect, as it “did not fully explore the ability of class members to join as plaintiffs.” Additionally, the district court “improperly placed great weight on the late stage of the proceeding,” including the sunk costs of the litigation. View the decision.
“Natural” Food Claims Stayed on Primary Jurisdiction Grounds
In re Kind LLC “Healthy & All Natural” Litig., No. 15-MD-2645 (WHP), 2016 WL 4991471 (S.D.N.Y. Sept. 15, 2016)
The district court stayed plaintiff’s claims challenging “all natural” labeling on defendant’s snack foods on primary jurisdiction grounds, holding that the claims are particularly in the FDA’s discretion and noting that “the FDA seems to be prepared to address core issues in this case, including what types of processed foods may be labeled ‘natural’ and whether genetically engineered foods may be labeled ‘natural.’” The court also noted that staying this action until the FDA offers guidance at the federal level “would almost certainly help harmonize court rulings.” View the decision.