State Consumer Protection Laws
The Connecticut Supreme Court, in a case of first impression, finds that following approval of a medical device, a manufacturer’s alleged failure to report adverse events to a regulator such as the Food and Drug Administration (“FDA”), or generally comply with a regulator’s post-approval requirements, provides a cause of action under the Connecticut Product Liability Act (“CPLA”).
The court also found that the CPLA’s exclusivity provision bars claims under the Connecticut Unfair Trade Practices Act (“CUTPA”) when such claims are based on deceptive and misleading marketing. Plaintiff filed her complaint in the U.S. District Court for the District of Connecticut, alleging injury by defective artificial lenses manufactured by the defendants, Baush & Lomb, Inc. et al., and that a failure to warn of the inherent dangers of the artificial lenses was a violation of the CPLA, CUTPA, and caused injuries to her eyes. After appealing a ruling, which originally found preemption by federal law, the Second Circuit determined that federal courts are split on the issue of whether federal law preempts such failure to warn claims, and the Supreme Court of Connecticut was left to interpret Connecticut law to consider the respective questions under the CPLA and CUTPA. In reviewing the first question, the state Supreme Court found that the “duty to warn” provision of the CPLA did not clearly and unambiguously indicate whether a manufacturer’s alleged failure to report adverse effects of a product to a regulator created a cause of action. To determine the scope of that duty, the court considered “(1) the normal expectations of the participants in the activity under review; (2) the public policy of encouraging participation in the activity, while weighing the safety of the participants; (3) the avoidance of increased litigation; and (4) the decisions of other jurisdictions.” Here, the court noted that the regulators of medical devices are in the best position to recommend precautions against potential harm, and doctors commonly rely on such regulators for product updates and safety information. Defendants argued that the “learned intermediary doctrine” creates a duty to warn of known medical device dangers only to physicians and healthcare providers, and not to regulators, but the court ultimately determined that the FDA was in the best position, for purposes of this medical device, to receive and provide recommendations regarding potential harms that the device may cause. The court also noted that the purpose of the federal laws and regulations that require reports of adverse product or device effects to the FDA is to prevent injury’s had the defendant complied with this obligation, the plaintiff and her doctor would not have elected to use the defendants’ product. Furthermore, the court held that factual allegations and truthfulness are considerations for a jury in determining the foreseeability of harm and resulting damages, and the plaintiff would be able to prevail at trial if she could properly show a failure of the necessary duty of care. Second, in considering the issue of whether the exclusivity provision within the CPLA barred claims under the CUPTA based on deceptive and misleading marketing of products where the manufacturer knew the product presented a substantial risk of injury, the court turned to an analysis of the statute. The court found that, unlike in previous cases where claims did not seek a remedy for personal injury caused by a defective product, or where the injury was caused by a non-defective product, here the plaintiff’s claims clearly fell within the intended purpose of the statute, and the CPLA was meant to provide a remedy for the kind of claim she had brought against the defendants. However, one justice did indicate in a concurring opinion that an earlier-decided case may have incorrectly interpreted the exclusivity provision of the statute, and that, perhaps, a future argument could be made that a CUPTA claim is not barred completely, but must instead be asserted through CPLA directly. Ultimately, the court found that the defendants, in fact, did have a duty to report adverse effects of their product to the FDA, and that the exclusivity provision of the CPLA barred a separate CUTPA claim for unscrupulous marketing of the injury-inducing defective product. (Glover v. Bausch & Lomb, Inc., -- A.3d --, 343 Conn. 513 (2022)).
The U.S. Court of Appeals for the Second Circuit affirms, reverses, and vacates in part the district court’s award of summary judgment to defendants Sun Products Corp. and Costco Wholesale Corp. Plaintiff brought claims against the defendants under New York’s General Business Law §§ 349 and 350 in relation to all “Free Clear Plus” detergents, the success of which depended in part on showing a price premium paid for the product. The court found that the lower court erred in rejecting a competing product, “Arm & Hammer Plus Oxi Free & Clear,” as a comparator simply because that product was not sold in the store that the plaintiff had visited when making the purchase of the product in question. The court noted that relying on a price premium is not itself an element of a Section 349 claim. The court further considered whether the increased price for the product in question could be attributed to an allegedly misleading advertising statement regarding the product. Plaintiff previously presented evidence of the defendants’ internal communications, from which the court felt a jury could reasonably conclude that the increased price premium was attributable to the deceptive advertising statement upon which the plaintiff relied, therefore creating an injury within the purview of Sections 349 and 350. Finally, the court concluded that the plaintiff’s motion for summary judgment regarding the element of injury was properly denied, as the defendants themselves had provided sufficient evidence to offer a jury, which might reasonably show that the increase in price was attributable to different, justifiable elements of the product, and that, in some instances, comparable products were even sold at higher prices than the defendants’ product. Additionally, the court found that a genuine dispute as to material facts had been properly shown by the plaintiff, thus, the summary judgment in favor of the defendants on the plaintiff’s unjust enrichment claim was reversed. The outstanding questions were left for a jury to decide. (Eidelman v. Sun Prods. Corp., 2022 WL 1929250 (2d Cir. June 6, 2022)).
The U.S District Court for the Northern District of Illinois grants in part and denies in part defendant Kroger Co.’s motion to dismiss. Plaintiff alleged that she purchased one of the defendant’s private label cheese products. The front of the product was labeled “SMOKED GOUDA” over the words “SLICED CHEESE” and “distinctive, smoky flavor.” Plaintiff claimed that, when she purchased the sliced cheese, she expected that the product was “smoked over hardwood.” She asserted further that the front label “does not disclose that all of the Product’s smoked flavor is from liquid smoke, prepared by pyrolysis of hardwood sawdust, instead of being smoked over hardwoods.” Plaintiff alleged that “‘SMOKE FLAVOR’ is ‘smoke condensed into a liquid form.’” The complaint asserted that the label gave consumers “the false impression” that the cheese was “smoked over hardwood, when it was not.” Plaintiff alleged that she would not have purchased the cheese had she known that the representations on the label were false and misleading. As a result, the plaintiff asserted claims for, among other things, violation of the Illinois Consumer Fraud and Deceptive Trade Practices Act (“ICFA”), negligent misrepresentation, and common law fraud. The court denied the defendant’s motion to dismiss the ICFA claim, reasoning that, although the ingredient list on the back of the package accurately listed “SMOKE FLAVOR” as an ingredient, that in and of itself did not negate the plaintiff’s claim. The court, then, explained that it “is well settled that a label is not deceptive as a matter of law when the plaintiff's interpretation is so facially illogical, implausible, or fanciful that no reasonable consumer would think it—and that dismissal is warranted in those circumstances.” The court found that the word “smoked” has at least two plausible meanings, one of which is the meaning to which the plaintiff ascribed. The court also relied on another recent decision regarding smoked almonds, where the court held that the term “smoked” plausibly meant that the almond products were smoked over an open fire. It found that the phrase here was ambiguous, so it was not unreasonable as a matter of law for the plaintiff to interpret “SMOKED GOUDA” as meaning smoked over hardwood. The court dismissed the negligent misrepresentation claim as barred by the economic loss doctrine. And it dismissed the fraud claim on grounds that the allegations of fraudulent intent were conclusory. (Kinman v. Kroger Co., 2022 WL 1720589 (N.D. Ill. May 27, 2022)).
Consumer Class Actions
The U.S. Court of Appeals for the Ninth Circuit affirms dismissal of a consumer class action complaint alleging that defendant Cali Bamboo LLC falsely advertised its flooring as durable, long lasting, and guaranteed to last 50 years, and failed to disclose that it was aware of defects in the flooring. The Ninth Circuit ruled that the plaintiffs failed to challenge certain of the district court’s determinations (e.g., no reliance pled as to the California Consumers Legal Remedies Act (“CLRA”) affirmative misrepresentation claims) and, therefore, they waived any claim of error as to such claims. The appellate court agreed with the district court that many of the alleged affirmative misrepresentations were non-actionable puffery. It further held that the plaintiffs’ omission theories did not satisfy the Ninth Circuit’s Hodsdon v. Mars Inc. standard (there was no omission contrary to a representation already made and the defendant was not aware of a defect at the time of the plaintiffs’ purchase that it was obliged to disclose). Plaintiffs’ California Unfair Competition Law claims were based on the same insufficient allegations as the CLRA claims and, therefore, were likewise properly dismissed. (Klaehn v. Cali Bamboo LLC, 2022 WL 1830685 (9th Cir. June 3, 2022)).
The U.S. District Court for the Central District of Illinois grants defendant Kellogg Sales Company’s motion to dismiss in a putative class action filed on behalf of Illinois, Iowa, and Arkansas consumers who purchased Kellogg’s “Frosted Chocolate Fudge Pop-Tarts.” Plaintiff alleged that, despite the name and the chunk of fudge pictured on the label, Fudge Pop-Tarts did not contain milk and butter, collectively “milkfat,” ingredients, which she claimed are integral to fudge. Plaintiff further alleged that she would not have purchased the Fudge Pop-Tarts, or would not have paid a premium price for them, had she known the truth about the products. Based on these allegations, Plaintiff asserted claims under the Illinois Consumer Fraud Act, and Iowa and Arkansas consumer fraud acts, as well as common law negligent misrepresentation and fraud, among other claims. The court granted the motion to dismiss in its entirety. First, the court determined that, while the plaintiff cited some evidence to support her allegations that milkfat is a central component of fudge, she failed to sufficiently support her view that the average consumer would believe a fudge product must, of necessity, contain milkfat. Accordingly, the court ruled that the complaint failed to establish “a probability that a significant portion of the general consuming public . . . could be misled.” As a result, the court dismissed the state consumer fraud claims. The court further rejected the plaintiff’s fraud claim, both because there were no false statements and because she failed to allege scienter. The court granted leave to amend, but the plaintiff voluntarily dismissed the case. (Reinitz v. Kellogg Sales Co., 2022 WL 1813891 (C.D. Ill. June 2, 2022)).
The Appellate Division of the Superior Court of New Jersey affirms the award of summary judgment to defendant Pure Radiance, Inc., dismissing the plaintiff’s putative class action, which alleged that Pure Radiance defrauded consumers by falsely marketing a hair growth product. Pure Radiance advertised and sold a topical hair-restoration product, claiming that it would regrow “a thick, full head of hair, even after years of balding,” and that the product was “the world’s first and only hair loss solution that revives dead hair follicles” and regrows hair “in just 30 days.” The advertisements also displayed before-and-after images showing a balding head before using the product and a full head of hair after using the product. Plaintiff, an attorney representing himself pro se, saw an advertisement for the product, placed an order and paid $108.90 for the product, and, then, proceeded to research the product and its efficacy after placing the order. Plaintiff concluded that the advertisements were “misrepresentations of material fact” and filed a proposed class action against Pure Radiance. Plaintiff did not receive or use the product before filing his lawsuit. Pure Radiance answered the complaint and asserted as an affirmative defense that the plaintiff received a full refund, which the plaintiff did not dispute. Pure Radiance then moved for judgment on the pleadings and the trial court granted its motion, concluding that the plaintiff (1) lacked standing to bring a claim under New Jersey’s Consumer Fraud Act (“NJCFA”), (2) had not established an ascertainable loss, (3) could not bring a claim under based on a pure prior substantiation theory, (4) failed to plead facts establishing any “wrongful acts” by the defendant, and (5) failed to plead specific facts establishing fraud. Plaintiff ultimately appealed the trial court’s decision, arguing on appeal that he properly pled that (1) Pure Radiance engaged in fraud, (2) the product purchase price constituted his ascertainable loss, and (3) he properly showed causation between the defendant’s fraud and his ascertainable loss. The Appellate Division affirmed the dismissal of the complaint, holding that the plaintiff did not suffer an ascertainable loss, which is an essential element of his NJCFA claim. The court explained that an ascertainable loss “is a loss that is quantifiable or measurable; it is not hypothetical or illusory.” Further, the court held that “to establish ascertainable loss under the Act, plaintiff must be able to demonstrate that he used the Product and it did not produce hair growth as advertised.” The court reasoned that the plaintiff did not allege that the product is harmful, nor did he even use the product or state that he ever intended to use the product, and, therefore, the plaintiff could not demonstrate that the product did not perform as advertised. The proof for such demonstration, according to the court, “must come from either plaintiff’s use of the Product or from other evidence demonstrating that the Product does not perform as advertised.” Because the plaintiff did not use the product and otherwise had no evidence of its efficacy, the court held that his “claim of loss is purely hypothetical.” Accordingly, the court held that dismissal was appropriate. (Hoffman v. Pure Radiance, Inc., 2022 WL 1739706 (N.J. Super. Ct. App. Div. May 31, 2022)).
Federal Trade Commission (FTC) Litigation Decisions
The U.S. District Court for the Middle District of Florida enters a permanent injunction relating to its prior grant of the FTC’s motion for summary judgment on its amended complaint, which alleged that the defendants violated Section 5 of the FTC Act when marketing architectural coating products by purportedly saying the products “were the equivalent of adding insulation with particular R-values and would save users up to 50% on heating and cooling costs.” As part of the permanent injunction, the court prohibited the defendants from making these misrepresentations and any other unsubstantiated claims, or providing the means and instrumentalities to others to do the same. The court also imposed standard acknowledgment, compliance reporting, recordkeeping, and compliance monitoring requirements. (FTC v. SPM Thermo-Shield, Inc., 2022 WL 1749515 (M.D. Fla. May 31, 2022)).
Recent Filings
Putative nationwide class action filed in the U.S. District Court for the Central District of California against Vitamin Shoppe Industries LLC, alleging violations of California’s False Advertising Law, Unfair Competition Law, and Consumers Legal Remedies Act. According to the complaint, the defendant’s labeling of its dietary supplement, the “Vitamin Shoppe Garcinia Cambogia Extract,” as an effective aid in “weight management” and “appetite control” is misleading. Plaintiff cites to scientific studies to support the contention that the product’s active ingredients, Hydroxycitric Acid (HCA) and Chromium Nicotinate Glycinate Chelate (Chromium), are incapable of providing such weight-loss benefits. Plaintiff further alleges that absent the misleading label, he would not have purchased the product. (Goodwin v. Vitamin Shoppe Indus. LLC, No. 22-cv-4039 (C.D. Cal. filed June 13, 2022)).
Putative nationwide class action filed in the U.S. District Court for the Northern District of California against Barilla America Inc., alleging violations of California’s False Advertising Law, Unfair Competition Law, and Consumers Legal Remedies Act. According to the complaint, the defendant’s labeling of its “Barilla” brand pasta products as “ITALY’S #1 BRAND OF PASTA” is misleading because consumers are led to believe that the products are made in Italy rather than in Iowa and New York. Plaintiff alleges that absent the misleading label, she would not have purchased the pasta or would not have paid a premium for it. (Sinatro v. Barilla Am. Inc., No. 22cv-3460 (N.D. Cal. filed June 11, 2022)).
Putative nationwide, multistate, and California class action filed in the U.S. District Court for the Southern District of California against Beyond Meat, Inc. claiming that the company violated California’s Unfair Competition Law and Consumers Legal Remedies Act. According to the complaint, the defendant falsely advertises that its products provide “equal or superior protein” as compared to real meat. (Yoon v. Beyond Meat, Inc., No. 3:22cv855 (S.D Cal. filed June 10, 2022)).
Putative nationwide, multistate, and California class action filed in the U.S. District Court for the Northern District of California against The Good Fat Co., claiming that the company violated California’s False Advertising Law, Unfair Competition Law, and Consumers Legal Remedies Act. According to the complaint, the defendant falsely advertises that its products are “healthy” despite them containing “high amounts of unsafe fats which increase the risk of severe health issues.” (Ryan v. Good Fat Co., No. 3:22cv3391 (N.D Cal. filed June 8, 2022)).
