Affirming the district court’s ruling, the Second Circuit has dismissed a purported class action accusing Clinique Laboratories and Estee Lauder Companies of falsely advertising Clinique’s Repairwear line on the grounds of failure to plead a fraud claim with particularity, failure to show plausibility and lack of standing. DiMuro v. Clinique Laboratories, No. 13-4551 (2d Cir., order entered July 10, 2014). The court also affirmed the district court’s denial of leave to amend the complaint.
In the initial complaint, plaintiffs argued that Clinique’s Repairwear line of seven products, as a whole, were falsely advertised to achieve impossible anti-aging results after application to the skin. The district court found that the plaintiffs had no standing to challenge four of the seven products because none of the named plaintiffs had purchased or used those four products. Before the Second Circuit, the plaintiffs argued that the court’s own decision in NECA-IBEW Health & Welfare Fund v. Goldman Sachs & Co., 693 F.3d 145 (2d Cir. 2012), applied to the plaintiffs’ claims as well. In NECA, the circuit court allowed plaintiffs to assert claims on behalf of purchasers of related—but not identical—securities because the defendants’ representation was misleading across all of the offering documents. The four Clinique products that they had not purchased or used, plaintiffs argued, were similar enough to the products they did purchase that they should be allowed to represent class members who purchased those four products as well. The court rejected this argument because each of the seven products had different ingredients and Clinique made different advertised claims about each. Thus, each would require its own set of evidence to prove the claims of fraud and false advertising.
Turning to the three products that plaintiffs did purchase, the circuit court dismissed the plaintiffs’ consumer fraud claims because they failed to plead with the particularity required of accusations of fraud. The court found that the complaint “fails to allege facts explaining how each product did not work as advertised and why any specific advertising claim for each product is false.” Plaintiffs provided no explanation for why the products would not work, the court held, and in addition, they failed to allege “that any of the named Plaintiffs even used the product, let alone used the product as directed.” Failing to find any particularity or plausibility in the complaint’s allegations, the circuit court also affirmed the dismissal of the plaintiff’s unjust enrichment and breach of warranty claims.