Motions to dismiss in consumer fraud cases often focus on the element of deception—whether a reasonable consumer would be deceived by the statement or practice at issue. But there is another element of statutory consumer fraud claims that deserves closer scrutiny at the pleading stage—injury. Where plaintiffs claim that they were injured because they paid a “price premium” but do not allege facts to support that claim, defendants should consider moving to dismiss for failure to adequately plead injury.
State consumer protection statutes typically include injury as a required element for a private cause of action. New York General Business Law Sections 349 and 350, for example, require a plaintiff to establish that she purchased a product because of the allegedly deceptive business practice and did not receive the full value of the purchase. Similarly, plaintiffs suing under California’s Unfair Competition Law, False Advertising Law, or Consumer Legal Remedies Act must establish that they suffered an “economic injury” caused by the practice or advertising at issue.
Lawsuit advertisements—specifically ones that target prescription drugs and medical devices—can be dangerous. Nationwide, dramatized and exaggerated legal ads have flooded both televisions and the internet, often masquerading as “medical alerts.” Some estimates have total spending on legal advertisements at around $1 billion annually. As a result, state legislatures are beginning to take action to combat deceptive advertising and come up with solutions, including in Indiana, which recently passed House Bill 1125. House Bill 1125 places several limitations on the practice of lead generation – the use of commercial communications to initiate consumer interest or inquiry into legal services intended to redress an alleged injury from a medical device or legend drug – and provides a private right of action for manufacturers and sellers of medical devices and legend drugs against deceptive lead generators.
Our language around settlements connotes war and peace – in settling we are “buying our peace” or “ceasing hostilities.” The old saw is that a good settlement leaves no one satisfied, but in truth, a good settlement leaves nothing significant left to do in the dispute. In abandoning claims or defenses, we seek a measure of closure. And in obtaining a durable settlement our client can live with, we necessarily rely, to some extent, on the regularity of the underlying proceedings, candor to the court, and some minimal level of good faith in the negotiations.
What happens when that reliance is upended and those expectations are dashed? A recent unpublished California decision provides a cautionary tale. It also stirred memories of a flawed settlement from three decades ago, inspiring this reverie.
The United States Supreme Court denied certiorari without comment in two cases seeking to resolve a Circuit split regarding the proof required to establish that a claim for payment was false or fraudulent under the False Claims Act.
Two Petitioners asked the Court to decide whether the False Claims Act, 31 U.S.C. §§ 3729-3733, requires proof of “objective falsity”, or whether a plaintiff expert’s opinion that differs from the judgment of the defendant is sufficient to show a claim for payment was false or fraudulent under the FCA. Both cases involved allegations that a physician’s certification of medical necessity for hospice services was false, and therefore sufficient to prove plaintiffs’ FCA claims.
As we discussed in a previous post, the Northern District of California recently dismissed a plaintiff’s claim that the term “vanilla” was misleading on the label of a soymilk product. The Southern District of New York has now similarly dismissed a putative class action complaint alleging that a “vanilla” almond milk product was labeled in a way that misled customers.
In Wynn v. Topco Associates, LLC, No. 19-cv-11104, Plaintiffs alleged that Defendant’s use of the word “vanilla” on the label of its almond milk product – “Vanilla Almost Milk” – falsely communicated to consumers that the beverage’s flavor was derived entirely from real vanilla, when in fact the product includes non-vanilla flavorings. Plaintiffs claimed, among other things, that this violated the New York General Business Law (NYGBL).
The Northern District of California recently dismissed a Plaintiff’s claim that the term “vanilla” was misleading on the label of a soymilk product, but left the proverbial door open for the filing of an amended pleading.
In Clark v. Westbrae Natural, Inc., Case No. 20-cv-03221, Plaintiff alleged that Defendant’s use of the word “vanilla” on the label of its organic unsweetened soymilk misrepresented to consumers that the product’s vanilla flavor was derived exclusively from the vanilla bean plant. Gas chromatography‒mass spectrometry analyses showed that the flavor came from a non-vanilla source. Plaintiff alleged he would not have purchased the product had he realized the flavor was not derived from the vanilla bean, and asserted claims under California’s Unfair Competition Law, False Advertising Law, and Consumers Legal Remedies Act. He argued that the product should be labeled “artificially flavored.”