The Massachusetts Consumer Protection Act (Chapter 93A, Section 9) prohibits a business from engaging in unfair or deceptive acts or practices. Chapter 93A litigation usually is time consuming, expensive, and exposes a company to mandatory multiple damages (if the act or practice was a knowing and willful violation of Chapter 93A) and attorneys’ fees. These provisions provide a consumer’s counsel significant leverage when litigating and attempting to settle Chapter 93A claims – particularly when brought in a class-action setting. Chapter 93A, however, affords a business an opportunity to gain that leverage back and limit exposure to the statute’s mandatory multiple damages and fee shifting provisions as well as foster more meaningful settlement discussions, if appropriate. Taking advantage of this opportunity, which occurs usually only once and before the litigation begins, can be beneficial for a company.
The Massachusetts Consumer Protection Act (Chapter 93A) protects consumers against unfair or deceptive business practices and allows consumers, under certain circumstances, to bring class actions against businesses to stop such practices and seek damages. Generally, unless a business responds to a presuit demand letter with a reasonable settlement tender, violation of Chapter 93A requires payment of actual or statutory ($25.00) damages, whichever is greater, and attorneys’ fees as well as exposes a business to double or treble damages. In a class action setting, the aggregation of such damages produces significant risk and potential exposure.
The question of whether, and under what circumstances, a plaintiff can represent a class as to products he or she did not purchase, remains a vexing one for courts. Judge St. Eve of the Northern District of Illinois recently weighed in on this issue. In Wagner v. General Nutrition Corp., (No. 16-cv-10961, July 19, 2017), Judge St. Eve concluded that Plaintiff had adequately alleged standing for claims based on products that he had not purchased given that he alleged the products were materially the same.
Some courts have held that a plaintiff lacks standing to assert claims as to products that he or she did not purchase. See, e.g., Allen v. Hylands, Inc., 2012 WL 1656750, at *5 (C.D. Cal. 2012) (plaintiffs lacked standing to assert claims about homeopathic products that plaintiffs have not purchased). Other courts employ a “substantially similar” test, under which standing exists if the products and alleged misrepresentations are substantially similar. Courts applying the “substantially similar” test have mostly done so in cases asserting food-misbranding or mislabeling claims. See, e.g., Miller v. Ghirardelli Chocolate Co., 912 F. Supp. 2d 861 (N.D. Cal 2012) (compiling cases and finding products not substantially similar).
In Mednick v. Precor, Inc., 2014 WL 6474915 (N.D. Ill. Nov. 13, 2014), for example, the court explained that the majority of courts that have considered the issue “hold that a plaintiff may have standing to assert claims for unnamed class members based on products he or she did not purchase so long as the products and alleged misrepresentations are substantially similar.” Id. at *3 (citing Quinn. v. Walgreen Co., 958 F. Supp. 2d 533, 541 (S.D.N.Y. 2013)).
In Wagner, Plaintiff claimed that he purchased and consumed a glutamine supplement “because [he] believed, based upon the misleading labels, that they enhanced muscle growth, provided faster recovery, and had anti-catabolic properties.” The Defendant, a retailer of dietary supplements, markets at least four glutamine supplements. The Defendant argued that, because the Plaintiff purchased only one of these four supplements, he lacked standing to assert claims on behalf of putative class members who purchased the remaining three supplements. In denying the Defendant’s motion to dismiss, the Court noted that the products have the same key ingredient of glutamine and Plaintiff alleged that all of the products contain misrepresentations for the same reason: “glutamine supplements do not have the benefits indicated on the products’ labels.” According to the Court: “nothing in the complaint or the parties’ briefs suggest that any differences in the product are material.” Accordingly, the Court concluded that the case was similar to Mednick in that Plaintiff’s claims target a siyengle aspect present in an array of different products.
Global law firm Greenberg Traurig, LLP’s Anthony J. Cortez will participate on the American Herbal Products Association’s (AHPA) webinar panel, “CA Prop 65: Regulatory, Compliance and Litigation Developments,” July 25.
The webinar will discuss the recent developments related to Prop. 65 and the current litigation and regulatory environment. With his fellow panelists, Cortez will explain the finalized changes and status of new chemical listings, as well as steps companies should take to ensure compliance prior to the Aug. 30, 2018 implementation date. Additional information on the 2-hour live panel – including details on how to listen – can be found here.
On June 1, 2017, the Mandatory Initial Discovery Pilot Project (MIDP) took effect in the Northern District of Illinois. With only limited exceptions, the MIDP applies to all cases filed after June 1 and significantly impacts how cases in the Northern District of Illinois will proceed. In particular, cases in which defendants are seeking to dismiss a complaint or which involve large amounts of discovery will be most affected by the changes. Only a few types of cases are exempt from the MIDP: (a) cases exempted from initial disclosures by Rule 26(a)(1)(B); (b) cases transferred for consolidated administration by the Judicial Panel on Multidistrict Litigation; (c) patent cases; and (d) actions under the Private Securities Litigation Reform Act.
As readers of this blog know, we have been closely following developments regarding claims for medical monitoring. (Medical Monitoring Claims in Illinois, Part 1; Medical Monitoring Claims in Illinois, Part 2.) A recent decision arising out of Hoosick Falls, New York, allowed Plaintiffs’ request for a medical monitoring fund to survive defendants’ motion to dismiss. On Feb. 24, 2016, Plaintiffs, on behalf of a putative class, brought suit against Saint-Gobain Performance Plastics Corp. and Honeywell International Inc., alleging that Defendants’ manufacturing facilities in the Village of Hoosick Falls, New York, caused groundwater contamination. Specifically, Plaintiffs alleged that Defendants’ manufacturing and disposal of products containing perfluorooctanoic acid (PFOA) caused PFOA to contaminate the municipal water system and private wells. PFOA is a chemical used to create water, oil, and grease repellency which can remain in soil and water for extended periods of time. Plaintiffs alleged that they experienced heightened blood levels of PFOA, which may cause cancer, as well as loss of property value due to the stigma of contaminated groundwater. The complaint asserted claims for negligence, private nuisance, trespass, and strict liability for abnormally dangerous activity. The complaint set forth two subclasses of plaintiffs based on their water source: (1) Municipal Water Property Damage – owners of real property in the village who receive drinking water from the municipal water supply; and (2) Private Well Water Property Damage – owners of real property in the village who receive drinking water from a privately-owned well.
Defendants brought a motion to dismiss for failure to state a claim. Significantly, Plaintiffs sought to establish a medical monitoring program designed to fund future testing and treatment for diseases related to PFOA exposure. Defendants argued that Plaintiffs asserted a separate medical monitoring claim without alleging the existence of present physical injuries, a requisite under New York law. The Court disagreed, finding that Plaintiffs properly alleged an injury to both person and property. In particular, the Court adopted the reasoning of the Second Circuit in In re World Trade Ctr. Lower Manhattan Disaster Site Litig., holding that the heightened accumulation of PFOA in Plaintiffs’ blood levels permits a claim for negligence seeking medical monitoring damages. See 758 F. 3d 202, 213 (2nd Cir. 2014). Even if the accumulation of toxins in blood were not a sufficient injury, the Court relied on Caronia v. Philip Morris USA, Inc. to find that plaintiffs may seek medical monitoring as consequential damages for a tort alleging injury to property. 2011 WL 338425 (E.D.N.Y. Jan. 13, 2011) aff’d in part, question certified, 715 F.3d 417 (2d Cir. 2013), certified question accepted, 21 N.Y.3d 937 (2013), and certified question answered, 22 N.Y.3d 439 (2013), and aff’d, 748 F.3d 454 (2d Cir. 2014). However, the Court cautioned that the decision did not determine what Plaintiffs must prove at trial to recover consequential medical monitoring damages. Noting that the Defendants’ motion to dismiss raised “several complex and novel issues of New York law” which is “significantly muddled,” the Court certified the question for interlocutory appeal. We will continue to follow this appeal closely.
Defendants also argued that the property damage claims based on injury to groundwater must be dismissed because the water is a public resource belonging to the state of New York, not individual residents. The Court agreed that Plaintiffs could not state a claim for relief if the only alleged injury was to the public groundwater; however, the Court found that Plaintiffs’ claims for negligence and strict liability based on property damage survived because they alleged the loss of their potable water, reduction in property value, and sought damages for remediation costs for property contamination and restoring their potable water supply. Defendants moved to dismiss the trespass claim brought by the Private Well Plaintiffs on the basis that the Plaintiffs’ property was not injured by PFOA contamination. The Court rejected this argument, finding that the groundwater provided the medium through which the contamination moved into Plaintiffs’ private wells, thus injuring Plaintiffs’ private property. Defendants also moved to dismiss the private nuisance claim for failure to state a claim. Defendants argued that a private nuisance claim must affect only a small number of people, but Plaintiffs alleged a widespread injury. The Court agreed in part and dismissed the Municipal Water Plaintiffs’ nuisance claim, finding that the allegations of harm suffered by “all renters and owners in Hoosick Falls” constituted a public nuisance, which only the state of its subdivision have standing to bring; however, the Private Well Plaintiffs suffered a “special loss” sufficient to maintain a private nuisance action where they had to install point of entry treatment systems on their property which requires ongoing maintenance. Because of this, the Court allowed the Private Well Plaintiffs’ nuisance claim to proceed.
California’s Century City Bar Association (CCBA) recently selected GT Century City shareholder Robert J. Herrington, Co-Chair of the global law firm’s Products Liability and Mass Torts Practice, as the 2017 Class Action Litigation Lawyer of the Year. Herrington was honored at the Association’s 49th Annual Installation Banquet and Awards Ceremony at the Intercontinental Hotel, Century City on March 30, 2017.
The CCBA notes that its mission is to provide top-quality legal education; enhance and promote the sense of community among Century City lawyers; honor Century City lawyers who have achieved extraordinary accomplishments; and to provide leadership opportunities to lawyers who participate in the CCBA.
Herrington serves as Co-Chair of the firm’s Products Liability & Mass Torts Practice. A first-chair trial litigator, he has broad experience defending major corporations in class actions and product liability law suits. This includes in the areas of false advertising, unfair competition, product defect, and privacy. Committed to raising awareness of class action litigation risk, Herrington is the author of the best-selling book, Verdict for the Defense (Sutton Hart Press 2011), and a co-author of The Class Action Fairness Act: Law and Strategy (ABA Publishing 2013). Herrington was previously on Law360‘s list of “Top Attorneys Under 40” for Class Actions and is ranked for his work in Product Liability, Mass Tort and Class Action: Consumer Products by The Legal 500. He is a member of the American Bar Association’s Litigation Section’s Appellate Practice Committee, as well as its Class Action and Derivative Suits Committee and serves as Co-Editor of the associated newsletter.
In honoring Rob, the CCBA prepared this video which provides excellent insight into his practice and motivations for the top tier service he provides GT’s clients.
For more details, please click here.
The environmental parameters associated with textiles continue to attract both regulatory and value chain attention. In an interesting development, Vietnam just relaxed its chemical testing rules for exported textiles (e.g., textiles and apparel exported to the U.S. and EU markets), specifically for formaldehyde and aromatic amines. Formaldehyde is frequently used in treating textiles, including popular “no-iron” and “permanent press” textiles. Aromatic amines are present in some common dyes used in textiles and include chemicals that are either known or suspected to be carcinogens.
The presence of these chemicals in textiles is relatively unregulated at the federal level in the United States, though there has been some attention at the state level. For example, formaldehyde is subject to California’s Proposition 65, and some crafts/textile stores in California post Proposition 65 warnings for their imported textiles. Washington, Maine, and Minnesota have statutes with reporting requirements for what are typically described as “high priority” chemicals, including formaldehyde, intentionally added to children’s products (though not all of these encompass apparel). There has been occasional litigation based on claims of skin irritation allegedly caused by the presence of formaldehyde in apparel.
Perhaps more importantly than formal regulation, the chemical content of apparel, including formaldehyde, receives a certain amount of attention in social media. This reverberates into market impacts, with some companies trying to leverage this into a competitive advantage by advertising “chemical-free” clothing. This leverage could increase if major buyers begin to drive chemical content requirements through their value chains. Some of the most prominent retailers, including Walmart, have already launched initiatives to decrease or remove certain chemicals, including formaldehyde, from a range of products, including personal care, cosmetics and cleaning products. Some major buyers and brands, including Walmart, Levi Strauss, and VF have signed on to policies and standards associated with sustainable forestry and agriculture that affect the value chain for a variety of raw materials for textiles, including rayon and cotton.
Decisions by Vietnam to impose more stringent chemical content standards for apparel on its own market than it does for its strong apparel export market might increase public and retailer attention to this issue. The most likely ongoing pressure points will probably be from social media, consumers, and companies seeking to leverage this issue for competitive advantage. And even if increased federal regulation is viewed by some as less likely under the current administration, that will not restrict state regulators from taking action (the preemption provisions of the newly amended Toxic Substances Control Act will operate, roughly speaking, in inverse proportion to the degree of EPA regulation of specific chemicals: the less active EPA is, the more freedom of movement at the state level).
In our last post, we discussed Illinois Appellate Court decisions concerning medical monitoring claims. Plaintiffs have been similarly unsuccessful at the trial court level. Judge Leroy Martin in the Circuit Court of Cook County (Chancery) dismissed a medical monitoring claim pursuant to defendants’ 735 ILCS 5/2-615 motion to dismiss. See Pierscionek v. Ill. High Sch. Ass’n, 2015 Ill. Cir. LEXIS 24 (Ill. Cir. Ct. October 27, 2015). The court likened plaintiff’s claim for medical monitoring to Lewis I and dismissed the complaint:
The court in Lewis was concerned with some of the same issues presented in the case at bar—a plaintiff who fails to allege the existence of a present injury and the fundamental difference between a claim seeking damages for an increased risk of future harm and one that seeks compensation for the cost of medical examinations. Ultimately, the Lewis decision determined that plaintiffs had failed to plead tort claims because they failed to establish a causative link between the tortious acts of a specific defendant and damages sought — the cost of screening for lead poisoning….The complaint before this court seeks ongoing medical monitoring as opposed to screening for a medical condition but the pleading fails to establish a causative link between IHSA and the damages sought.
The opinion further stated, unequivocally, “Illinois law does not recognize a medical-monitoring-only cause of action.” Pierscionek, 2015 Ill. Cir. LEXIS 24, *11 (Ill. Cir. Ct. Oct. 27, 2015).
In furtherance of the Jensen court’s admonishment that that Lewis I does not support the viability of medical monitoring only claims, the Illinois Appellate Court has also supported the rejection of such claims. See Campbell v. A.C. Equip. Serv. Corp., Inc., 242 Ill. App. 3d 707 (4th Dist. 1993) (where the court did not recognize a cause of action to recover expenses for medical monitoring absent present physical injury); Betts v. Manville Personal Injury Settlement Trust, 224 Ill. App. 3d 882 (4th Dist. 1992) (where the court rejected medical monitoring damages in an asbestos case absent proof of present injury).
While the Illinois Supreme Court has not yet recognized this type of claim, several federal district court opinions have concluded that Illinois would recognize independent claims for medical monitoring. Stella v. LVMH Perfumes & Cosmetics USA, Inc., 564 F. Supp.2d 833, 836 (N.D. Ill. 2008); Gates v. Rohm & Haas Co., 2007 WL 2155665, at *4-5 (E.D. Pa. July 26, 2007) (applying Illinois law); Muniz v. Rexnord Corp., 2006 WL 1519571, at *6-7 (N.D. Ill. 2006); Carey v. Kerr-McGee Chemical Corp., 999 F. Supp. 1109, 1119 (N.D. Ill. 1998)(predicting that the Illinois Supreme Court would uphold a claim for medical monitoring without requiring plaintiffs to plead and prove a present physical injury).
If the Illinois Supreme Court allows medical monitoring claims for plaintiffs without a present physical injury, the court should provide instructions for how a defendant can establish and manage a fund for medical monitoring. Such questions include whether a defendant must monitor for other medical issues, time limitations, administrative authority, size of fund, and adapting to increased costs of health care. Without guidance as to these fundamental issues, the courts may be faced with increased litigation over the proper way for a defendant to establish and manage a medical monitoring fund.
On March 31, 2017, the D.C. Circuit held that the Federal Communications Commission (FCC) lacked authority under the Telephone Consumer Protection Act, as amended by the Junk Fax Prevention Act (collectively, the TCPA), to issue a rule, known as the “Solicited Fax Rule,” requiring businesses to include opt-out notices on solicited fax advertisements. Bais Yaakov of Spring Valley, et. Al. v. Federal Communications Commission and United States of America, No. 14-1234 (D.C. Cir. Mar. 31, 2017). Following this ruling, FCC Chairman Ajit Pai issued a statement praising the ruling, reiterating his earlier criticism that the FCC’s approach to interpreting the law in the Solicited Fax Rule reflected “convoluted gymnastics.” The decision in Bais Yaakov and Chairman Pai’s statement may have implications beyond the Solicited Fax Rule, as other FCC interpretations of the TCPA arguably deviate from the statutory text in a manner similar to the Solicited Fax Rule. Accordingly, Bais Yaakov may signal an opportunity for TCPA defendants to pursue new challenges to the FCC’s rulemaking authority in opposition to questionable agency interpretations.