FREDA L. WOLFSON, District Judge.
In this putative consumer class action, which has been transferred to this Court as part of the In re Johnson & Johnson MultiDistrict Litigation ("MDL"), Plaintiff Mona Estrada ("Plaintiff") accuses Defendants Johnson & Johnson ("J&J") and Johnson & Johnson Consumer Companies ("J&J Consumer") (collectively, "Defendants") of engaging in unfair and illegal business practices by manufacturing, marketing, and distributing baby powder products without informing consumers that use of baby powder by women in the genital area leads to an increased risk of developing ovarian cancer. Plaintiff asserts various California state law consumer-fraud related claims against Defendants.
Presently before the Court is Defendants' Motion to Dismiss Plaintiff's First Amended Class Action Complaint (the "FAC" or "Complaint") for lack of standing and failure to state a claim on which relief can be granted. For the reasons set forth below, the Court grants Defendants' Motion on the basis that Plaintiff lacks standing to bring suit, and therefore, all of Plaintiff's claims are dismissed. However, Plaintiff is given leave to amend her Complaint, consistent with this Opinion, within thirty-days (30) from the date of the Order accompanying this decision.
For the purposes of the instant Motion, the Court will recount only relevant facts from the Complaint, taking them as true. Plaintiff is a resident of Stockton, California. FAC ¶ 11. Defendant J&J is a New Jersey corporation with its principal place of business in New Brunswick, New Jersey. Id. at ¶ 12. Defendant J&J Consumer is a New Jersey corporation that operates as a subsidiary to J&J. Id. at ¶ 13.
Defendants research, develop, market, and sell consumer products, including Johnson's® Baby Powder ("Baby Powder"), throughout the United States, including California. Id. at ¶ 13. Baby Powder is comprised almost entirely of talc,
Plaintiff's allegations center on Defendants' marketing of Baby Powder to women. In that regard, Plaintiff alleges that Defendants market Baby Powder to women specifically — encouraging women to dust themselves with Baby Powder to maintain freshness and cleanliness, and to mask odors — despite the fact that the use of Baby Powder by women in the genital area results in an increased risk of developing ovarian cancer. Id. at ¶¶ 1, 15. Plaintiff avers that Defendants failed to disclose the risks associated with the use of Baby Powder by women, and continued to market the product as safe despite knowledge of those risks. Id. at ¶ 1. In support of her allegations regarding the increased cancer risk associated with Baby Powder, Plaintiff cites numerous clinical studies that have been conducted since 1961. See id. at ¶¶ 24-60. Plaintiff alleges that since at least 1982, Defendants have been aware of the studies associating talcum powder with an elevated risk of ovarian cancer. See id. at ¶¶ 67-72.
On April 28, 2014, Plaintiff filed her original complaint in this matter in the United States District Court for the Eastern District of California. ECF No. 1. On March 27, 2015, the Honorable Troy L. Nunley, U.S.D.J., dismissed Plaintiff's original complaint for lack of Article III standing, finding that Plaintiff failed to allege an injury-in-fact. Estrada v. Johnson & Johnson, No. 14-01051, 2015 WL 1440466, at *5 (E.D. Cal. Mar. 27, 2015). Specifically, Judge Nunley found that Plaintiff failed to allege an "economic injury to meet Article III standing because Plaintiff did not allege specific misrepresentations by Defendants, received the benefitof-the-bargain, and did not allege any alternative product that she would have purchased." Id. at *5.
On April 24, 2015, Plaintiff filed the FAC, asserting four causes of action against Defendants. ECF No. 27. Plaintiff brings these claims individually and on behalf of putative classes of consumers who have purchased Baby Powder manufactured and sold by Defendants. FAC ¶ 7. Count I of the FAC seeks injunctive and equitable relief, on the grounds that Defendants violated the Consumers Legal Remedies Act ("CLRA"), California Civil Code § 1750, et seq., by failing to disclose the increased risk of ovarian cancer associated with consumption of Baby Powder on its product labels and packages, and by representing that Baby Powder is clinically proven to be safe, gentle, and mild. Id. at ¶ 90. Count II of the FAC asserts claims pursuant to California's Unfair Competition Law ("UCL"), California Business and Professions Code § 17200, et seq., alleging that Defendants committed unlawful business practices by making misrepresentations and omitting material facts regarding the safety of Baby Powder. Id. at ¶¶ 96-97. Count III of the FAC asserts a related claim for negligent misrepresentation. Id. at ¶¶ 107-108. Finally, Count IV of the FAC asserts a claim for breach of the implied warranty of merchantability, alleging that Defendants impliedly warranted Baby Powder to be safe, despite the fact that it is unsafe and not merchantable. Id. at ¶¶ 114-117.
The FAC alleges that as a result of Defendants' misrepresentations and omissions, Plaintiff suffered economic injury in the form of the purchase price of Baby Powder. Alternatively, the FAC alleges that had Plaintiff known of the increased cancer risk associated with Baby Powder, she would have purchased an alternative cornstarch-based product rather than Baby Powder. Plaintiff does not allege that she suffered any physical harm as a result of consuming Baby Powder.
On May 18, 2015, Defendants filed a motion to dismiss the FAC in the Eastern District of California. ECF No. 29. That motion was fully briefed before Judge Nunley. ECF No. 29-31. However, on October 5, 2016, the case was transferred to this Court by the Multi-District Litigation Panel as part of the In re Johnson & Johnson MDL assigned to me. ECF No. 39. Thereafter, Defendants filed the instant Motion to Dismiss on December 22, 2016. ECF No. 47.
Defendants move to dismiss the FAC on several grounds, including that Plaintiff lacks Article III standing to bring the present action, and fails to state a claim on which relief can be granted. Because the Court finds that Plaintiff lacks Article III standing to bring the present action, it need not reach Defendants' other theories.
Standing under Article III of the United States Constitution is an element of subject matter jurisdiction. See Hartig Drug Co. Inc. v. Senju Pharm. Co., 836 F.3d 261, 269 (3d Cir. 2016). Under Rule 12(b)(1), "a court must grant a motion to dismiss if it lacks subject-matter jurisdiction to hear a claim." In re Schering Plough Corp. Intron/Temodar Consumer Class Action, 678 F.3d 235, 243 (3d Cir. 2012). "A motion to dismiss for want of standing is . . . properly brought pursuant to Rule 12(b)(1), because standing is a jurisdictional matter." Ballentine v. United States, 486 F.3d 806, 810 (3d Cir. 2007). In evaluating whether a complaint adequately pleads the elements of standing, courts apply the standard of reviewing a complaint pursuant to a Rule 12(b)(6) motion to dismiss for failure to state a claim. In re Schering Plough Corp., 678 F.3d at 243.
In reviewing a motion to dismiss brought pursuant to Federal Rule of Civil Procedure 12(b)(6), the court "accept[s] all factual allegations as true, construe[s] the complaint in the light most favorable to the plaintiff, and determine[s] whether, under any reasonable reading of the complaint, the plaintiff may be entitled to relief." Phillips v. Cnty. of Allegheny, 515 F.3d 224, 233 (3d Cir. 2008) (citation and quotations omitted). As such, a motion to dismiss for failure to state a claim upon which relief can be granted does not attack the merits of the action, but merely tests the legal sufficiency of the complaint. Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009); see also FED. R. CIV. P. 8(a)(2) ("A pleading that states a claim for relief must contain . . . a short and plain statement of the claim showing that the pleader is entitled to relief."). In other words, to survive a motion to dismiss for failure to state a claim, "a complaint must contain sufficient factual matter, accepted as true, to `state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)).
However, "the tenet that a court must accept as true all the allegations contained in the complaint is inapplicable to legal conclusions. Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id. (citing Twombly, 550 U.S. at 555). A plaintiff must show that there is "more than a sheer possibility that the defendant has acted unlawfully." Id. (citing Twombly, 550 U.S. at 556). This plausibility determination is a "context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. at 679. In other words, for the plaintiff to prevail, the "complaint must do more than allege the plaintiff's entitlement to relief"; it must "`show' such an entitlement with its facts." Fowler, 578 F.3d at 211 (quoting Phillips, 515 F.3d at 234-35).
The Third Circuit has cautioned, however, that Twombly and Iqbal "do not provide a panacea for defendants"; rather, "they merely require that plaintiff raise a `plausible claim for relief.'" Covington v. Int'l Ass'n of Approved Basketball Officials, 710 F.3d 114, 118 (3d Cir. 2013) (quoting Iqbal, 556 U.S. at 679). Thus, factual allegations must be more than speculative, but the pleading standard "is not akin to a `probability requirement.'" Id. (quoting Iqbal, 556 U.S. at 678).
Article III of the United States Constitution confines the scope of federal judicial power to the adjudication of "cases" or "controversies." U.S. CONST. art. III, § 2. This "bedrock requirement," Valley Forge Christian Coll. v. Ams. United for Separation of Church & State, Inc., 454 U.S. 464, 471 (1982), protects the system of separation of powers and respect for the coequal branches by restricting the province of the judiciary to "decid[ing] on the rights of individuals." Marbury v. Madison, 1 Cranch 137, 5 U.S. 137, 2 S.Ct. 60 (1803). Indeed, "`[n]o principle is more fundamental to the judiciary's proper role in our system of government than the constitutional limitation of federal-court jurisdiction to actual cases or controversies.'" Raines v. Byrd, 521 U.S. 811, 818 (1997) (quoting Simon v. E. Ky. Welfare Rights Org., 426 U.S. 26, 37 (1976)); see Spokeo, Inc. v. Robins, 136 S.Ct. 1540, 1547 (2016) ("In order to remain faithful to this tripartite structure, the power of the Federal Judiciary may not be permitted to intrude upon the powers given to the other branches.").
The courts have developed several justiciability doctrines to enforce the "case" or "controversy" requirement. See Warth v. Seldin, 422 U.S. 490, 498 (1975). Among those doctrines, "[t]he Art[icle] III doctrine that requires a litigant to have `standing' to invoke the power of a federal court is perhaps the most important. . . ." Allen v. Wright, 468 U.S. 737, 750 (1984). The seminal standing question is "whether the plaintiff has `alleged such a personal stake in the outcome of the controversy' as to warrant his invocation of federal-court jurisdiction and to justify exercise of the court's remedial powers on his behalf." Seldin, 422 U.S. at 498-99 (quoting Baker v. Carr, 369 U.S. 186, 204 (1962)).
To satisfy the "irreducible constitutional minimum" of Article III standing, the plaintiff must establish three well-settled elements:
Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992) (internal quotations, alterations, and citations omitted); see Spokeo, 136 S. Ct. at 1547 ("The plaintiff must have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision."). Although the plaintiff bears the burden of establishing each of these three elements, the Third Circuit has stressed that the "injury-in-fact element is often determinative." Toll Bros. v. Twp. of Readington, 555 F.3d 131, 138 (3d Cir. 2009); see also Spokeo, 136 S. Ct. at 1547 ("This case primarily concerns injury in fact, the `[f]irst and foremost' of standing's three elements.") (quoting Steel Co. v. Citizens for Better Environment, 523 U.S. 83, 103 (1998)). To satisfy the injury-in-fact requirement, the injury must be "particularized," such that it affects the plaintiff in a "personal and individual way." Lujan, 504 U.S. at 560 n. 1. The Supreme Court has emphasized that the injury must also be "concrete in both a qualitative and temporal sense"; i.e., the "complainant must allege an injury to himself that is `distinct and palpable,' as opposed to merely `[a]bstract,' and the alleged harm must be actual or imminent, not `conjectural' or `hypothetical.'" Whitmore v. Arkansas, 495 U.S. 149, 155 (1990) (internal quotations and citations omitted). To that end, allegations of a potential future injury, or the mere possibility of a future injury, will not establish standing. See id. at 158; Reilly v. Ceridian Corp., 664 F.3d 38, 42 (3d Cir. 2011) ("Allegations of `possible future injury' are not sufficient to satisfy Article III.").
Additionally, the injury-in-fact test "requires more than an injury to a cognizable interest. It requires that the party seeking review be himself among the injured." Sierra Club v. Morton, 405 U.S. 727, 734-35 (1972); see In re Horizon Healthcare Servs. Inc. Data Breach Litig., 846 F.3d 625, 633 (3d Cir. 2017). Put differently, "[w]hile it does not matter how many persons have been injured by the challenged action, the party bringing suit must show that the action injures him in a concrete and personal way." Lujan, 504 U.S. at 581. The requirement that that the injury affect the plaintiff in a personal and individual way "preserves the vitality of the adversarial process by assuring both that the parties before the court have an actual, as opposed to professed, stake in the outcome, and that `the legal questions presented . . . will be resolved, not in the rarified atmosphere of a debating society, but in a concrete factual context conducive to a realistic appreciation of the consequences of judicial action.'" Id. (quoting Valley Forge, 454 U.S. at 472).
The standing inquiry "requires careful judicial examination of a complaint's allegations to ascertain whether the particular plaintiff is entitled to an adjudication of the particular claims asserted." Allen, 468 U.S. at 752. To that end, at the pleading stage, "[a]lthough general factual allegations of injury resulting from the defendant's conduct may suffice, the complaint must still `clearly and specifically set forth facts sufficient to satisfy' Article III." Reilly, 664 F.3d at 41 (quoting Whitmore, 495 U.S. at 155); see Finkelman v. Nat'l Football League, 810 F.3d 187, 193 (3d Cir. 2016) ("Plaintiffs do not allege an injury-in-fact when they rely on a `chain of contingencies' or `mere speculation.'") (citation omitted).
In addition to satisfying the federal standing requirements under Article III, Plaintiff must also demonstrate statutory standing under the UCL and the CLRA. The UCL broadly prohibits "any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising. . . ." Cal. Bus. & Prof. Code § 17200. The CLRA prohibits unfair and deceptive business practices, including various forms of misrepresentation. See Cal. Civ. Code § 1770.
To establish standing to bring a claim under either the UCL or the CLRA, a plaintiff must "meet an economic injury-in-fact requirement, which demands no more than the corresponding requirement under Article III of the U.S. Constitution." Reid v. Johnson & Johnson, 780 F.3d 952, 958 (9th Cir. 2015). "To adequately plead a CLRA claim, a plaintiff must allege that she relied on the defendant's alleged misrepresentation and that she suffered economic injury as a result." Doe v. SuccessfulMatch.com, 70 F.Supp.3d 1066, 1075 (N.D. Cal. 2014); see Cal. Civ. Code § 1780(a) ("Any consumer who suffers any damage as a result of the use or employment by any person of a method, act, or practice declared to be unlawful by Section 1770 may bring an action against that person. . . ."). Similarly, under the UCL, a plaintiff must demonstrate that she "suffered injury in fact and has lost money or property as a result of the unfair competition." Cal. Bus. & Prof. Code § 17204.
Where a UCL claim is premised on the basis of a misrepresentation, a plaintiff "must have actually relied on the misrepresentation, and suffered economic injury as a result of that reliance. . . ." Doe, 70 F. Supp. 3d at 1075 (citing In re Tobacco II Cases, 46 Cal.4th 298, 326 (2009)). To demonstrate actual reliance, a plaintiff must allege that "the defendant's misrepresentation or nondisclosure was `an immediate cause' of the plaintiff's injury-producing conduct[,] . . . by showing that in its absence the plaintiff `in all reasonable probability' would not have engaged in the injury-producing conduct." In re Tobacco II Cases, 46 Cal. 4th at 326 (citation omitted). "While a plaintiff need not demonstrate that the defendant's misrepresentations were `the sole or even the predominant or decisive factor influencing his conduct,' the misrepresentations must have `played a substantial part' in the plaintiff's decisionmaking." Doe, 70 F. Supp. 3d at 1076 (quoting In re Tobacco II Cases, 46 Cal. 4th at 326).
"Both the UCL and the CLRA prohibit not only affirmative misrepresentations, but also material omissions that deceive reasonable consumers." Doe, 70 F. Supp. 3d at 1075 (citing Donohue v. Apple, Inc., 871 F.Supp.2d 913, 925 (N.D. Cal. 2012)). To bring a claim under either the UCL or the CLRA on the basis of an omission, the "omission must be `contrary to a representation actually made by the defendant, or an omission of a fact the defendant was obliged to disclose.'" Donohue, 871 F. Supp. 2d at 925 (quoting Baltazar v. Apple, Inc., No. 10-3231, 2011 WL 588209, at *4 (N.D. Cal. Feb. 10, 2011)). There are four circumstances in which a duty to disclose may arise: "(1) when the defendant is in a fiduciary relationship with the plaintiff; (2) when the defendant had exclusive knowledge of material facts not known to the plaintiff; (3) when the defendant actively conceals a material fact from the plaintiff; or (4) when the defendant makes partial representations but also suppresses some material fact." Donohue, 871 F. Supp. 2d at 925. Additionally, "[t]o establish the causal nexus between the omission and a plaintiff's harm, a plaintiff must plead that she would not have purchased the product or service at issue if she had known the material fact that Defendant allegedly omitted." Doe, 70 F. Supp. 3d at 1076.
In the instant case, Plaintiff contends that Defendants have violated the UCL and CLRA through both affirmative misrepresentations regarding the safety of Baby Powder, and through the omission of material facts concerning the alleged risks associated with that product. Because Plaintiff's claims under the UCL and CLRA require her to demonstrate that she suffered an economic injury-in-fact, and Plaintiff's sole theory of harm for Article III purposes is economic injury, the Court will analyze standing under Article III and the California statutes concurrently. See Birdsong v. Apple, Inc., 590 F.3d 955, 960 (9th Cir. 2009).
Economic injury is one of the paradigmatic forms of injury-in-fact. Danvers Motor Co. v. Ford Motor Co., 432 F.3d 286, 291 (3d Cir. 2005). The FAC sets forth three potential bases from which this Court could find that Plaintiff suffered an economic injury: (1) that Plaintiff did not receive the benefit of her bargain in purchasing Baby Powder, and thus, her damages are the purchase price of that product; (2) that Plaintiff would have purchased an alternative product, had she known of the increased cancer risk associated with the use of Baby Powder; and (3) because Defendants failed to disclose the risks associated with the use of Baby Powder, Baby Powder was marketed and sold at a premium price. The Court will address those three theories in turn.
Plaintiff alleges that she has suffered an economic injury-in-fact, because she did not receive the benefit of her bargain when she purchased Baby Powder. Specifically, Plaintiff avers that she purchased Baby Powder under the belief that it was safe, and, had she known that using Baby Powder in the genital area led to an increased risk of developing ovarian cancer, she would not have purchased the product. FAC ¶ 11. Thus, Plaintiff's theory of harm is purely economic.
Defendants posit that Plaintiff lacks standing, because Plaintiff received the full benefit of her bargain; that is, Plaintiff was able to use the product as intended — for the elimination of friction on the skin, the absorption of unwanted excess moisture, and the maintenance of freshness — without suffering any adverse consequences. Stated another way, Defendants argue that because Plaintiff received the benefit of her bargain, she cannot claim that she spent money she otherwise would not have for Baby Powder.
At the outset, with respect to Plaintiff's theory of harm based on Defendants' alleged omissions, Plaintiff has not cited, and the the Court has not been able to locate, a case recognizing injury-in-fact under the benefit-of-the-bargain theory premised on an alleged omission, except in circumstances where the plaintiff has pled that the defendant was under an affirmative obligation to disclose the omitted fact. Compare Koronthaly v. L'Oreal USA, Inc., 374 F. App'x 257, 259 (3d Cir. 2010) (finding no standing where the plaintiff alleged that defendant failed to disclose the presence of lead in the product at issue, where FDA guidelines stated that the level of lead in the product did not require a warning), and Boysen v. Walgreen Co., No. 11-06262, 2012 WL 2953069, at *7 (N.D. Cal. July 19, 2012) (finding the plaintiff's allegations that he suffered economic injury as a result of the defendant's failure to disclose the presence of arsenic and lead in its products were insufficient to constitute Article III standing, where the plaintiff did not allege that defendant violated FDA guidelines), with Brod v. Sioux Honey Ass'n, Co-op., 927 F.Supp.2d 811, 820 (N.D. Cal. 2013), aff'd, 609 F. App'x 415 (9th Cir. 2015) (finding standing where the plaintiff alleged that the defendant violated its state law "duty to label Sue Bee Honey in a way that discloses the removal of pollen to potential consumers."). Here, Plaintiff has not alleged that Defendants were under any legal obligation to disclose the risks associated with Baby Powder on the product's label or advertisements.
Plaintiff's benefit-of-the-bargain theory of economic harm was also previously rejected by Judge Nunley, albeit without indicating whether that dismissal was due to deficiencies in Plaintiff's allegations of omissions or misrepresentations. See Estrada, 2015 WL 1440466 at *5. On claims nearly identical to those asserted in this case,
Id. at *4.
The Court finds Judge Nunley's analysis consistent with the law of Third Circuit, as well as with other jurisdictions that have considered similar complaints alleging that a plaintiff did not receive the benefit of his or her bargain, based on both omissions and misrepresentations. For example, in Koronthaly, a purchaser of lipstick products filed a class action complaint against the manufacturer for allegedly selling lipstick products that contained lead. 374 F. App'x at 258. While the purchaser did not suffer any physical harm from consuming the products, she attempted to establish standing by alleging that she did not receive the benefit of her bargain. Id. at 259. The Third Circuit affirmed the order of the district court granting the manufacturer's motion to dismiss, noting that the "purchases were not made pursuant to a contract, and therefore [the purchaser] could not have been denied the benefit of any bargain." Id. More importantly, the Third Circuit held that "[a]bsent any allegation that she received a product that failed to work for its intended purpose or was worth objectively less than what one could reasonably expect, [the purchaser] has not demonstrated a concrete injury-in-fact." Id.
Similarly, in James v. Johnson & Johnson Consumer Companies, Inc., 10-03049, 2011 WL 198026 (D.N.J. Jan. 20, 2011), purchasers of baby shampoo filed an action against the product's manufacturer, alleging that the manufacturer included a toxic ingredient in the shampoo. 2011 WL 198026 at *2. The purchasers did not allege that their children suffered any physical harm after using the shampoo; rather, the purchasers attempted to establish Article III standing by alleging that they suffered economic harm, because they would not have purchased the shampoo had they known of its alleged toxicity. Id. The court rejected the purchasers' theory of standing, holding that the purchasers failed to establish an injury-in-fact. Id. The court explained that "[o]nce the product had been consumed . . . there was no economic injury for Plaintiffs to complain of, and the fear of future injury is legally insufficient to confer standing. Plaintiffs received the benefit of their bargain so long as there were no adverse health consequences, and the product worked as intended, meaning that the hair of Plaintiff's children was cleansed, and their eyes and skin were not irritated." Id.
Additionally, in Rivera v. Wyeth-Ayerst Labs., 283 F.3d 315 (5th Cir. 2002), the Fifth Circuit held that the purchaser of a prescription painkiller, which had been withdrawn from the market due to a potential increased risk of liver damage associated with its consumption, lacked Article III standing to pursue her class action complaint. Id. at 321. The Fifth Circuit noted that, as in the present case, the purchaser's theory of harm was economic rather than physical:
Id. at 319.
In holding that the purchaser failed to demonstrate an injury-in-fact, the Rivera court found that she received the benefit of her bargain, because she "paid for an effective pain killer, and she received just that. . . ." Id. at 320. Additionally, the Fifth Circuit noted that in attempting to assert economic harm on a benefit-of-the-bargain theory, the purchaser conflated her tort claims in the context of contract law damages:
Id. at 320-21.
In this case, Plaintiff cannot establish economic injury based on her allegation that she did not receive the benefit of her bargain based upon Defendants' alleged omissions. Plaintiff's claims are similar to those alleged by the consumers in Koronthaly, James, Medley, and Rivera: Plaintiff alleges that she consumed Baby Powder; it was effective for its intended uses of eliminating friction, absorbing unwanted excess moisture, and maintaining freshness; she was not physically injured; Defendants failed to list enough warnings about the alleged increased risk of ovarian cancer associated with consumption of Baby Powder; and that Plaintiff would like her money back. Absent an allegation of adverse health consequences from using Baby Powder, or that Baby Powder failed to perform satisfactorily for its intended use, Plaintiff cannot claim that she was denied the benefit of her bargain. See Koronthaly, 374 F. App'x at 259; James, 2011 WL 198026 at *2. In sum, Plaintiff's benefit-of-the-bargain theory of economic harm, based on Defendants' alleged omissions, is an insufficient basis for this Court to find that Plaintiff suffered an injury-in-fact, and, should Plaintiff seek to amend her Complaint to reassert such a theory, she must point to an affirmative legal duty on the part of Defendants to disclose the allegedly omitted facts.
While Plaintiff places reliance on several cases recognizing standing on a benefit-of-thebargain theory of economic harm, see Kwikset Corp. v. Superior Court, 51 Cal.4th 310 (2011); In re Mercedes-benz Emissions Litig., No. 16-881, 2016 WL 7106020 (D.N.J. Dec. 6, 2016); Hodges v. Vitamin Shoppe, Inc., No. 13-3381, 2014 WL 200270 (D.N.J. Jan. 15, 2014); In re Gerber Probiotic Sales Practices Litig., No. 12-835, 2013 WL 4517994 (D.N.J. Aug. 23, 2013), those cases are distinguishable from the present matter. Importantly, in each of those cases, the courts found that the plaintiffs did not receive the benefit of their bargain because either: (i) the plaintiffs received a defective product; or (ii) the plaintiffs pled facts sufficient for the court to conclude that they would not have purchased the product at issue but for a specific misrepresentation made by the defendants; i.e., that the plaintiff was induced into purchasing the product by a specific misrepresentation.
First, in Kwikset, the Supreme Court of California was tasked with determining whether purchasers of locksets labeled as "Made in U.S.A." had statutory standing under California's UCL and False Advertising Law ("FAL"). 51 Cal. 4th at 316. The state statutes at issue required the plaintiffs to demonstrate that they suffered an economic injury-in-fact. See id. at 323. The court found that the plaintiffs had sustained their burden of demonstrating economic injury-in-fact, holding that "plaintiffs who can truthfully allege they were deceived by a product's label into spending money to purchase the product, and would not have purchased it otherwise, . . . have standing to sue." Id. at 317. The court reasoned as follows:
Id. at 329-30.
In so holding, however, the Kwikset court did not reach the issue of whether an individual who actually receives the full benefit of his or her bargain has standing to raise a claim. See id. at 332 ("Whether or not a party who actually received the benefit of his or her bargain may lack standing, in this case, under the allegations of the complaint, plaintiffs did not."). Rather, the court explained that the plaintiffs had set forth allegations sufficient to conclude that they purchased the locksets "because they were `Made in U.S.A.'; they would not have purchased them otherwise; and, it may be inferred, they value what they actually received less than either the money they parted with or working locksets that actually were made in the United States." Id. In other words, the court found that the plaintiffs did not receive the benefit of their bargain because they purchased lockets that the defendant had represented were manufactured in the United States, but were not. Id.
Second, in In re Mercedes-benz Emissions Litig., a class of consumers alleged that the defendants misled them into "purchasing certain `BlueTec Clean Diesel' vehicles . . . by misrepresenting the environmental impact of these vehicles during on-road driving." 2016 WL 7106020 at *1. The consumers attempted to establish standing on a benefit-of-the-bargain theory, arguing that "they would not have purchased their BlueTEC vehicles or would have paid less had they known about [the defendants'] misrepresentations and omissions." Id. at *4. In finding that the consumers had pled an injury-in-fact sufficient to withstand a motion to dismiss, the court emphasized that the consumers' complaint identified "precise representations" made by the defendants, which the consumers relied on in purchasing their vehicles. Id. Indeed, the court listed the following misrepresentations alleged in the consumers' complaint:
Id. at *5. The court found that, taking those allegations as true on a motion to dismiss, the consumers had "plausibly pled that the products received did not live up to the claims made by Defendants," and thus, that they suffered an injury-in-fact. Id. at *4.
Third, in Hodges, a consumer alleged that the defendant mislabeled and falsely advertised a dietary supplement "as a bodybuilding, fitness training and endurance developing formula," when, "contrary to statements made by [the defendant] about the Product's efficacy, the Product cannot deliver the promised results because the Product's ingredients are ineffective and/or because the instructed dosage is insufficient to achieve the results." 2014 WL 200270 at *1. Although the consumer did not suffer physical harm, the court held that he had satisfied the injury-in-fact requirement by alleging that he was induced into purchasing the product after reading and relying on the defendant's misrepresentations, and as a result "bought merchandise that was `useless.'" Id. at *2.
Finally, in In re Gerber Probiotic Sales Practices Litig., a class of consumers asserted that the defendant engaged in deceptive, false, and misleading marketing and labeling of its products, because, "despite representations to the contrary, the Products (1) do not provide immune system benefits; and (2) are not are not near equal to breast milk." 2013 WL 4517994 at *1. The consumers' complaint identified specific representations made by the defendant in the labeling, packaging, and advertisement of the products, which the consumers alleged were "likely to mislead consumers, acting reasonably under the circumstances, into believing that the Products are superior to other products because they are the near-equivalent of breast milk and that they provide immune system benefits." Id. at *2. In arguing that the consumers did not suffer an injury-in-fact, the defendant sought to rely on "a number of consumer protection cases where the products at issue contained potentially dangerous substances, but the plaintiffs suffered no ill effects." Id. at *5. The court rejected that argument and held that the consumers suffered an injury-in-fact. Id. Specifically, the court found that, unlike in the consumer protection cases cited by the defendant, the consumers sufficiently alleged an injury-in-fact by claiming "that they paid a premium for the Products at issue based on false, deceptive, and misleading representations." Id.
Unlike the consumers in Kwikset, In re Mercedes-benz Emissions Litig., Hodges, and In re Gerber Probiotic Sales Practices Litig., Plaintiff fails to allege facts sufficient for this Court to find that Plaintiff suffered an economic injury-in-fact. Not only does Plaintiff fail to allege that Baby Powder was ineffective for its intended use; to the contrary, she continued purchasing Baby Powder for a substantial period, and consumed the product in its entirety each time. Moreover, as discussed below, Plaintiff has not sufficiently alleged that she was induced into purchasing Baby Powder based on specific misrepresentations made by Defendants on the product's label or advertisements, or on Defendants' website.
In the FAC, Plaintiff alleges that she was deceived into believing that Baby Powder was "safe," based on the following representations that were allegedly made by Defendants on the product's label:
With regard to the alleged misrepresentations on the Baby Powder label, the FAC alleges that "[p]rior to making her purchase, Plaintiff read the label for Baby Powder," and that, "[i]n reliance on the label," Plaintiff believed that Baby Powder was safe. FAC ¶ 11. However, the label does not expressly state that the product is "safe," and, unlike the cases cited above, Plaintiff has not alleged that but for those generalized representations, she would not have purchased Baby Powder. Indeed, as Judge Nunley recognized, "[t]hese statements lack sufficient specificity to substantiate an injury." Estrada, 2015 WL 1440466 at *4. The FAC fares no better. Plaintiff does not sufficiently allege that she was induced into purchasing Baby Powder by the statements on the product's label.
The FAC alleges further that Defendants deceived Plaintiff into believing that Baby Powder was safe based on the following misrepresentations in their advertisements and on their website:
To the extent Plaintiff's misrepresentation claims arise from Defendants' advertising and website, the Court finds that Plaintiff has not sufficiently alleged that she relied on those statements in purchasing Baby Powder. See Pirozzi v. Apple Inc., 913 F.Supp.2d 840, 846-47 (N.D. Cal. 2012) (finding that although "[o]verpaying for goods or purchasing goods a person otherwise would not have purchased based upon alleged misrepresentations by the manufacturer would satisfy the injury in fact requirement," there was no injury-in-fact where the plaintiff "fail[ed] to allege specifically which statements she found material to her decision to purchase an Apple Device or App."). With respect to those alleged misrepresentations, the FAC alleges only that "[r]elying on these statements and Defendants' marketing and branding efforts, consumers, including Plaintiff, reasonably believe Defendants are a company that can be trusted to provide safe products, and that their Baby Powder is in fact safe." FAC ¶ 19. However, Plaintiff has not pled any facts demonstrating that she read or was aware of those statements prior to purchasing Baby Powder, or that she would not have purchased Baby Powder but for the alleged misrepresentations. See Branca v. Nordstrom, Inc., No. 14-2062, 2015 WL 1841231, at *4 (S.D. Cal. Mar. 20, 2015) (finding the plaintiff failed to allege standing based on statements on the defendant's website, where the plaintiff did "not allege that he observed-or was even aware of Nordstrom Rack's website. Thus, Plaintiff alleges no facts to demonstrate, or even suggest, that he had would not have purchased the items absent the representations on the website."). Indeed, Plaintiff alleges that she purchased Baby Powder for general use from "about 1950 to sometime in 2013," FAC ¶ 3; a substantial number of these years predate any of the Internet advertisements on which she allegedly relied.
In short, the Court cannot find that Plaintiff has adequately alleged that she specifically relied upon Defendants' representations in purchasing Baby Powder, and was subsequently denied the benefit of that bargain upon learning that Baby Powder allegedly causes an increased risk of ovarian cancer. Rather, Plaintiff received a product that was effective for its intended uses, and Plaintiff has not alleged sufficiently that she was induced into purchasing that product by deceptive conduct. Accordingly, Plaintiff's benefit-of-the-bargain theory of economic harm, based on Defendants' alleged omissions and misrepresentations, is an insufficient basis for this Court to conclude that Plaintiff suffered an injury-in-fact.
Next, Plaintiff alleges that had she been properly warned by Defendants, she would have purchased an alternative cornstarch-based powder, that does not have the same increased cancer risk as talc-based powders. Defendants argue that although consumers who can allege that they would have purchased a cheaper alternative product are generally able to establish economic harm, here, Plaintiff fails to allege that a cornstarch-based product would have been cheaper than Baby Powder.
Courts have found that a legally cognizable Article III injury-in-fact exists where a consumer alleges that, absent the defendant's misrepresentations or omissions, the consumer would have purchased a cheaper alternative product.
For example, in Loreto, the plaintiffs brought a consumer-fraud action against the defendant for including allegedly misleading statements about the health benefits of Vitamin C in their multi-symptom flu and cold relief products. See 515 F. App'x at 576-77. The plaintiffs alleged that but for the defendant's false or misleading statements regarding the benefits of Vitamin C, they "would have purchased a lower-priced competing product instead." Id. at 578. The district court found that the plaintiffs had failed to demonstrate an ascertainable loss under New Jersey's Consumer Fraud Act, because the plaintiffs did not allege that the product failed to effectively treat their colds; i.e., "plaintiffs received precisely what they paid for—an effective cold remedy." Id. at 580.
On appeal, the Sixth Circuit reversed, finding that the plaintiffs had demonstrated an ascertainable loss, and thus could demonstrate an injury-in-fact for Article III purposes,
Similarly, in In re Bextra, the plaintiffs alleged that the defendants marketed their prescription pain relief medication by intentionally misrepresenting its effectiveness and safety over other less expensive drugs. 2007 WL 2028408 at *1. The defendants moved to dismiss, arguing that the plaintiffs had failed to demonstrate an injury-in-fact. Id. at *5. In holding that the plaintiffs had demonstrated that they sustained an injury-in-fact, based on their allegation that they would have purchased a cheaper alternative product but for the defendants' misleading advertisements, the court noted that the cheaper alternative product allegation distinguished that case from those cases holding that a plaintiff who receives the benefit of his or her bargain cannot claim economic damage:
Id. at *7 (emphasis added).
Unlike the plaintiffs in Loreto and In re Bextra, here, the FAC does not allege that a cheaper alternative product was available, and that Plaintiff's damages are the difference in price between Baby Powder and that alternative product. In that regard, while the FAC does allege that Plaintiff would have purchased an alternative cornstarch-based product, had Plaintiff known of the alleged increased risk of ovarian cancer, the FAC does not allege that the cornstarch-based product would have been cheaper than Baby Powder. Indeed, in her Opposition to Defendants' Motion to Dismiss, Plaintiff notes specifically that she "does not premise her injury on allegations that the alternative cornstarch product was cheaper." Pl.'s Opp. to Defs.' Mot. to Dismiss 17. Accordingly, since Plaintiff does not allege that an alternative cornstarch-based product would have been cheaper than Baby Powder, and indeed, disavows that theory, I cannot find that Plaintiff has suffered an economic injury-in-fact on her alternative product theory of harm.
Finally, the FAC alleges that as a result of Defendants' misrepresentations and omissions, Defendants "have been able to sell the product for more than they otherwise would have had they properly informed consumers about the safety risks." FAC ¶¶ 6, 77. Plaintiff's argument essentially falls into the "price premium" line of cases. In price premium cases, a plaintiff alleges that the defendant's misrepresentations or omissions caused that plaintiff to overpay for a product. See In re Clorox Consumer Litig., No. 12-00280, 2013 WL 3967334, at *4 (N.D. Cal. July 31, 2013) (finding that the plaintiff adequately alleged an injury-in-fact, where the plaintiff alleged that he would not have purchased the defendant's product over competitors' products, but for the defendant's advertisements that its product was superior); Manchouck v. Mondelez Int'l Inc., No. 13-02148, 2013 WL 5400285, at *1-2 (N.D. Cal. Sept. 26, 2013), aff'd sub nom. Manchouck v. Mondelez Int'l, Inc., 603 F. App'x 632 (9th Cir. 2015) (finding injury-in-fact where the plaintiff alleged that she would not have paid a premium price for the defendant's products, but for the defendant's misrepresentations that those products were "made with real fruit.").
For example, in In re Clorox Consumer Litig., a putative class of plaintiffs brought an action against the manufacturer of Fresh Step cat litter, alleging that but for the manufacturer's advertisements regarding the alleged superiority of Fresh Step cat litter over competing products, they would not have paid a premium for that product. 2013 WL 3967334 at *1. Specifically, the plaintiffs pointed to the manufacturer's advertisements, which represented that "Fresh Step is the only cat litter that uses carbon, and that Fresh Step is better at eliminating cat waste odors than other brands of cat litter that use baking soda." Id. To support their argument that the manufacturer charged a premium for its carbon-based cat litter, the plaintiffs alleged that the manufacturer sold its carbon-based cat litter at a higher price than a competing brand's non-carbon-based litter. See id. The manufacturer moved for judgment on the pleadings, arguing that the plaintiffs lacked Article III standing. See id. at *2. The court found that the plaintiffs had sufficiently pled an injury by alleging that they paid a premium for the carbon-based cat litter as a result of the manufacturer's advertisements. See id. at *4.
Here, by contrast, Plaintiff's threadbare allegation that she purchased Baby Powder at a premium, without any factual allegations to support that claim, is insufficient to find an injuryin-fact. See Lassen v. Nissan N. Am., Inc., 211 F.Supp.3d 1267, 1280 (C.D. Cal. 2016) ("It is true that both overpayment and diminution in value are theoretically cognizable injuries-in-fact. . . . But, a plaintiff must still plead facts sufficient to establish these injuries-in-fact.") (internal citation omitted). Plaintiff has not alleged that she would not have paid a premium for Baby Powder, but for Defendants' advertisements of that product as superior to competing products. Indeed, Plaintiff does not allege that Defendants advertised Baby Powder as superior to other products. Nor does the FAC set forth any comparable, cheaper products to demonstrate that Baby Powder was in fact sold at a premium price. Accordingly, Plaintiff has not sufficiently alleged that she purchased Baby Powder at a premium.
In sum, while the Court is cognizant that "[i]njury-in-fact is not Mount Everest," Danvers Motor Co., 432 F.3d at 294, the Count cannot find, based on the allegations in the FAC, that Plaintiff has suffered an injury-in-fact. Because Plaintiff does not have standing to bring the present action, the the FAC must be dismissed for lack of subject matter jurisdiction. See Ballentine, 486 F.3d at 810. Moreover, it is well-settled that, absent subject matter jurisdiction, the Court is without authority to address the parties' remaining merit-based arguments. Adams v. Ford Motor Co., 653 F.3d 299, 304 (3d Cir. 2010). For the foregoing reasons, Defendants' Motion to Dismiss is
In re Clorox Consumer Litig., 2013 WL 3967334 at *4.
