Our interest is piqued by a pair of recentCalifornia class action wins – well, mostly wins, on the class action parts,anyway. The first of the decisions, Arroyov. Chattem, Inc., 2012 WL 5412295 (N.D. Cal. Nov. 6, 2012), was a completewin. The plaintiff complained that thedefendant’s dietary supplement (but it could have been just about anything) wascontaminated with undisclosed dihydrogen monoxide – actually hexavalentchromium – but again it could have been just about any chemical that soundsscary. Apparently, the supplement (at least according tothe complaint) works because of the chromium. Id. at *1.
Plaintiff wasn’t harmed in any way (no surprisethere, this is California class action litigation). Indeed, the complaint does not allege thatthe plaintiff ever used the stuff – only that she bought it. She claimed that by not disclosing thesupposed contamination, the defendant rendered its product overpriced. However, the claimed contamination had beendiscussed in website content that had existed well before the purchase. Id. at *2 & n. 5 (test postedalmost a year earlier). This suggests alawyer trolling for a client.
Other attributes of the Arroyo action werelazy pleading and dizzily inconsistent arguments. Plaintiff asserted (successfully) that shehad standing because she asserted “financial loss from purchasing a product inreliance on false or misleading information.” Id. at *3. However, shethen turned around and argued that she didn’t have to meet the stricterpleading standards of Fed. R. Civ. P. 9(b) because the California consumerprotection statutes “do not sound in fraud.” 2012 WL 5412295, at *5. The courthad none of it. Not only was thatargument inconsistent with the previous standing argument, but also with theallegations of the complaint, which:
alleges that Defendant marketed its . . .products as “safe, healthy, and appropriate for consumption,” despite knowingthat they were tainted with hexavalent chromium. It further alleges that Defendant activelyconcealed this information with the intent to induce consumer sales. And it alleges that Plaintiff and otherconsumers in the class reasonably relied on the misrepresentations of productsafety and suffered economic harm from the purchase(s) that resulted. These allegations touch upon all elements ofcommon law fraud.
Id.
Having ascertained the proper standard, the courtfound the allegations pitifully inadequate. The discussion of what is “safe” is particularly useful. The complaint asserted that contamination withsome unspecified amount of an allegedly toxic substance was “unsafe” withoutany indication of how much of the stuff was involved.
No way.
There’s no such thing as safety in the air – andthe court’s language should be widely quoted by defense counsel in similar,meritless actions.
[Plaintiff] does not plead with the requiredparticularity what level of hexavalent chromium makes [the product] unsafe. Manyfoods and drugs on the market are not one hundred percent safe, and generalallegations that a product’s safety is less than one hundred percent do notgive rise to a lawsuit for fraud. If it did, then every consumer would be ableto bring a suit for economic injury anytime the consumer became aware of anadditional, unlabeled product risk after his or her purchase.
Id. at *6 (emphasis added) (footnote about the“perils” of tofu omitted). For “unsafe”to have any meaning/materiality/plausibility under TwIqbal, both theminimum safe level and the actual amount of the allegedly dangerous substancemust be stated. Id. at *6-7.
The Arroyo complaint also came up far short on pleadingreliance. It would be good for aplaintiff, when claiming reliance on a defendant’s label, to at least plead thats/he read it. The complaint “does notallege that [plaintiff] read the packaging prior to purchasing the product.” Id. at *7. Not only that, but while alleging that shewouldn’t have bought the product had she known it contained the purportedcontaminant, plaintiff failed to allege that, at the time, she knew anythingabout it – and, indeed, admitted that she didn’t:
[A]t oral argument, Plaintiff’s attorney conceded thatPlaintiff did not know anything about hexavalent chromium's dangers prior topurchasing the product. Thus, Plaintiffcannot show that − even had she read it − she relied on the absence ofhexavalent chromium on the label in making her decision to purchase.
Id. at *7. Go away – action dismissed with prejudice. Id. at *8.
The second flawed California class action, Federmanv. Qualitest, BC471059, slip op. (Cal. Super. L.A. Co. ??? 2012). In Federman, the court denied classcertification to an oral contraceptive maker in the wake of a product recall that (asin Arroyo) was not about anything that ever hurt anyone. As stated in the opinion:
The contraceptives did not cause physical injuries orunwanted pregnancies, but some packaging was flawed. Once [defendant] discovered the flaws, itinvestigated the cause and took corrective actions. It also recalled all the . . .products packaged with the flawed process.
Federman, slip op. at 1. The packaging flaw was something attachedupside down, which changed the order in which the pills might be taken. Id. at 4. The error thus affected neither thecomposition of the pills nor the risk information about them.
Amazingly, the plaintiff sued.
Not so amazingly, the plaintiff decided to bring aclass action against the manufacturer.
However, the basis of the suit was individualized screwup by the plaintiff’s pharmacist. Plaintiff had been using the oral contraceptive, and she received arecall notice from the pharmacist. Thethen called the pharmacist, who made the recall sound as if the error renderedthe contraceptives ineffective, when that was not true. As a result she bought a pregnancy test kit,which produced negative results. Id.at 1. She sued for the cost of the pillsand the test. In short, “the record doesnot show the recall affected any California consumer besides Plaintiff SamanthaFederman in any way.” Id.
Class certification was thus denied. The most interesting ground was that recalls did notordinarily deserve to be punished by class-wide liability:
[The] manufacturer[] voluntarily worked to fix thepotential problems, and these efforts alone do not justify classtreatment. . . . [R]emedial efforts alone do not justify class certification. If a recall alone dictated class action treatment,then a class action would follow every recall. That would make manufacturers more reluctant to recall products: adisincentive that would disserve future consumers, who want manufacturersswiftly to cure defects.
Federman, slip op. at 4 (citationomitted). We agree with that as far asit goes. We’d apply the same logic,however, to individual claims.
Another ground sounds like numerosity – or utterlack of same
[T]he product error rate was small − in this case,vanishingly small. The product defectrarely, if ever, caused any real problem. . . . Here, the evidence is that Californiaconsumers received zero defects. [plaintiff] did not receive a defective product. There is no evidence any California consumerreceived a Qualitest defect.
Federman, slip op. at 4. Federman thus recognized (as did thecourt in Arroyo) the contrived nature of the suit. “[T]he record is that this consumer classaction is about a nonexistent consumer problem.” Id. at 5.
Finally, there was either a typicality ora predominance of common issues problem. The plaintiff’s circumstances – a non-defective product, and getting abum steer over the phone – were unique:
The true cause of her injury . . . was theincorrect [pharmacist] statement. . . . [Plaintiff’s] experience thus seemsunusual. Her packaging was notdefective. She bought a pregnancy testonly because of the unprofessional mistake by the unnamed [pharmacist]. Noevidence shows this unprofessional experience was typical. Apparently no other consumer got bad pharmacyadvice.
Federman, slip op. at 6. Again, go away, at least to the class action.
The only downside of Federman is itsinexplicable denial of summary judgment against the plaintiff’s individual strictliability claims. That’s hard to believewhen there was no evidence of a product defect, as the opinion states inseveral places, such as “[t]he uncontradicted evidence does show [defendant]packaged [plaintiff’s] pills correctly.” Federman, slip op. at 2. What, then, supposedly supported strict liability? The opinion states that “two factors” – “the[pharmacist’s] statement and the money [plaintiff] spent on the pregnancy test”– “create strict liability.” Id.
Huh? Howcould “unprofessional” conduct by a pharmacist create strict liability for amanufacturer?
Here’s the decision’s reasoning:
[Defendant] announced a recall when it discovered itsadmitted glitch. The defect was real,although the probability of any one package containing the error was extremelylow. Nevertheless . . . [it]was high enough to prompt [defendant] to direct pharmacies to contactcustomers. [The pharmacist] in turnmailed [plaintiff], who then phoned [the pharmacist]. The [pharmacist’s] person told [plaintiff]that “it’s as if I [plaintiff] hadn’t been on birth control for threemonths.” This [pharmacist] statement waserroneous.
Id.
Something else is “erroneous” – let us count theways:
- This is not a product defect, it is an “unprofessional” statement by a third person conducting a recall. It can’t be strict liability, since for fifty years that has required a product defect in California. If there’s anything at all, it would have to be a negligence claim, since the gravamen is conduct – the erroneous answer to the plaintiff’s question.
- There’s no California precedent (or anywhere else) for strict liability failure to recall.
- There is no evidence (at least none cited) to support the court’s bald conclusion that the pharmacist, in giving erroneous information over the phone (as opposed to sending a letter that the plaintiff did not rely upon), was acting as the manufacturer’s “agent.” Indeed, agency would seem inherently inconsistent with the conclusion that the pharmacist was acting in a “professional” capacity.
- There is no evidence (at least none cited) that the manufacturer provided the false information that the plaintiff ultimately heard. Thus there’s no causation, since the screw up was by somebody else.
- The damages sought were purely economic loss for being “at risk” of injury that never happened. That’s only recoverable in an medical monitoring action (something California recognizes), a claim the plaintiff didn’t bring.
But, in any event, the suit is now only about thecost of some pills and a pregnancy test. Let the plaintiff take that to trial.
These cases are emblematic of the widespread abuseof class actions to facilitate litigation that has no business existing. As we’ve said before (although we can’tquickly put our finger on it), we believe that generalized (“transubstantive”)class action rules should be abolished altogether. If Congress or a state legislature wishes toauthorize a class action for a particular type of harm, it should specifyexactly what the parameters are, as Congress did in the Magnuson-Moss Act. What might make sense in a civil rights action makes no sense in product liability litigation. The effect that class actions have onlitigation (as these two cases demonstrate) is so large that it’s inherentlysubstantive, and thus should not be created through procedural rule.
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