Faegre Drinker on Products, Author at Faegre Drinker on Products

Faegre Drinker on Products

View the full bio for Faegre Drinker on Products at the Faegre Drinker website.

Articles by Faegre Drinker on Products:

No Damages? No Tort, Says the Supreme Court of Canada

Consider this: What if plaintiffs could assert a cause of action for negligence without proving, or even pleading, any actual damages? And what if the remedy for this damage-free tort claim were disgorgement of profits allegedly acquired by a breach?

This may seem foreign to American tort lawyers, but for Canadian litigants this cause of action has a name, albeit a confusing one: waiver of tort. It is often pled as an independent, gain-based cause of action, and it is a source of frustration and controversy for our friends in the True North. Indeed, class certification grounded in waiver of tort forces defendants to face the prospect of disgorgement without proof that any class member actually suffered damage, even though these commonly advanced claims have never fully been tried in Canada. Canadian scholars have suggested that this uncertainty has the potential to drive settlement negotiations unfairly in the class context.

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Strange Bedfellows – How a Recent Security Fraud Opinion May Impact Consumer Fraud Class Actions

The U.S. Supreme Court’s recent decision in Liu v. SEC, No. 18-1501 (June 22, 2020), limiting the SEC’s ability to obtain monetary equitable relief in securities fraud litigation, may seem an odd topic for this blog. But Liu is worth some attention because it may foreshadow an impact on calculation and distribution of monetary awards in consumer fraud class actions. The decision may influence the calculation of disgorgement or restitutionary remedies, and it may signal another hurdle for the controversial judge-made distribution mechanism, cy pres.

Liu v. SEC

In Liu, the SEC won summary judgment in an enforcement action for securities fraud, obtaining an award for “disgorgement” of the funds acquired by defendants from their fraudulent scheme. The district court declined to deduct any of defendant’s business expenses to offset the “ill-gotten gains,” awarding all sums fraudulently raised from investors. The Ninth Circuit affirmed, rejecting challenges to both the SEC’s authority to obtain disgorgement and its gross method of calculating the disgorgement award.

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Certain Express Misrepresentation Consumer Fraud Act Claims and Product Liability Claims May Coexist According to NJ Supreme Court

In the case on certification from the Third Circuit, the New Jersey Supreme Court ruled that claims for express or affirmative misrepresentations under New Jersey’s Consumer Fraud Act (NJCFA) may be brought simultaneously with claims under the New Jersey Product Liability Act (NJPLA).

In Sun Chemical Corp. v. Fike Corp., plaintiff Sun Chemical Corporation purchased an explosion suppression system from defendant Fike Corporation. The system was to prevent and contain potential explosions in a new dust collection system. On the system’s first day of operation, a fire occurred, and the system’s alarm was activated but inaudible, resulting in an explosion that injured Sun Chemical employees and damaged its facility.

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California [Again] Confronts the High Cost of Litigation Uncertainty

The first appellate shoe has dropped in the litigation involving the herbicide Roundup, Johnson v. Monsanto Co., decided July 20, 2020, by California’s 1st District Court of Appeal, Division One. We discussed the verdict and the trial court’s post-trial rulings here, and we now follow through with an update.

Initially, the price tag for allowing questionable science into the courtroom, as measured by this verdict, has been reduced. The court of appeal lowered the compensatory damages award from $39 million to about $10.25 million, concluding the jury had improperly awarded noneconomic damages that plaintiff would likely never suffer. Because plaintiff’s counsel had argued to the jury that plaintiff’s Non-Hodgkins Lymphoma had reduced his future life expectancy to two years, the jury could not award pain and suffering damages beyond that two-year span. And, agreeing with the trial court that constitutional limits required a 1:1 ratio between compensatory and punitive damages, the court slashed the $78 million punitive award to about $10.5 million.

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Deceptive Labeling Claims Based on Trace Amounts Sent to the Dog House

In dismissing a plaintiff’s claims regarding dog food ingredients, the U.S. District Court for the Eastern District of Wisconsin confirmed the common-sense principle that manufacturers need not list anything and everything that could have possibly made it into a product as an “ingredient.”

In Weaver v. Champion Petfoods USA Inc., et al., case no. 18-cv-1996-JPS, a Wisconsin resident claimed that Champion Petfoods USA Inc. and Champion Petfoods LP deceptively marketed their dog food products. The plaintiff took issue with multiple characteristics of defendants’ products, including that the product packaging stated the dog foods adhered to a “biologically appropriate nutritional philosophy,” were made with “fresh” and “regional” ingredients, and were “never outsourced.” The plaintiff asserted claims for fraud by omission, negligence and violation of the Wisconsin Deceptive Trade Practices Act. The defendants moved for summary judgment.

“Biologically Appropriate”

The plaintiff contended that defendants deceptively marketed their products by stating their dog foods were made with a “biologically appropriate nutritional philosophy.” According to the plaintiff, this phrase indicated to consumers that the products did not contain Bisphenol-A (BPA), which the plaintiff argued was in the products.

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California Consumers Can’t Escape Federal Jury Trial by Abandoning Available Damages Claims

The Ninth Circuit affirmed dismissal of a consumer fraud class action pursuing restitution under California’s Unfair Competition Law (UCL) because the plaintiff failed to show she lacked an adequate legal remedy. Sonner v. Premier Nutrition, No. 18-15890 (9th Cir. June 18, 2020). In doing so, the Ninth Circuit resolved a split in the California federal courts regarding whether plaintiffs may pursue solely equitable relief under the UCL, Consumer Legal Remedies Act (CLRA), or False Advertising Law (FAL) when legal damages under the CLRA are available in the same amount for the same alleged harm. This decision has important implications for consumer class actions in California federal courts.

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