Two recent court orders in motions to dismiss consumer fraud class actions illustrate the fine lines that exist in the analytical process courts engage in when determining whether or not a claim may continue forward.
In Zeisel v. Diamond Foods, Inc., the U.S. District Court for the Northern District of California denied Diamond Foods' motion for dismissal of the plaintiff’s claims. The complaint alleged that the plaintiff and other consumers in the class purchased the company’s shelled walnut products based on false claims of health benefits that consumption of the omega-3 fatty acids in walnuts provides. The complaint alleged (1) unfair competition, (2) false advertising, (3) violation of California’s Consumers Legal Remedies Act and (4) unjust enrichment.
Diamond Foods moved for dismissal on the basis that the plaintiff’s claims were preempted by the Federal Food, Drug and Cosmetic Act (the “FDCA”), as amended by the Nutrition Labeling and Education Act (the “NLEA”). The court found that the plaintiff’s claims were not expressly preempted on the plain language of the NLEA’s preemption clause, and further that the plaintiff’s unfair competition claims were based on California’s Sherman Food, Drug and Cosmetic Law, not the FDCA. The court also held that the plaintiff’s claims were not impliedly preempted, as Congress expressly stated its intent that the NLEA was not to be construed to preempt any provision of state law, unless such provision is expressly preempted under section 403A of the FDCA. As such, the plaintiff’s claims were allowed to move forward.
However, in Loreto v. Procter & Gamble, the background and core issues of which we blogged about here and here, the U.S. District Court for the Southern District of Ohio granted Procter & Gamble’s motion for dismissal, and dismissed the plaintiffs’ claims with prejudice. The plaintiffs alleged that Procter & Gamble violated consumer fraud statutes in New Jersey and all other states and the District of Columbia through false and misleading advertising practices involving Vick’s DayQuil Cold and Flu Symptom Relief Plus Vitamin C and Vick’s NyQuil Cold and Flu Symptom Relief Plus Vitamin C.
The court initially held that the plaintiffs, residents of New Jersey, lacked standing to pursue any claims under any state consumer protection statute other than that of New Jersey. Next, the court agreed with Procter & Gamble’s contention that despite presenting their cause of action in the form of a claim under the consumer protection statutes of New Jersey and other states, the plaintiffs’ cause of action was in actuality an improper attempt to assert a private right of action under the FDCA. Finally, the court held that even if it were to assume the plaintiff’s claims were not an improper attempt to assert a private right of action under the FDCA, the plaintiff’s claims merited dismissal as the alleged no actual injury, failed to allege causation, and otherwise failed to assert other essential elements of the individual state consumer law causes of action. The court, holding that the plaintiffs had ample opportunity to amend their complaint on notice of Procter & Gamble’s positions and failed to address the pleading deficiencies in their amended complaint, ultimately found that dismissal with prejudice was warranted.