The Second Circuit recently revived a plaintiff’s false advertising claims under New York’s General Business Law (“GBL”), concluding that whether the particular statements at issue were non-actionable puffery requires a fact-intensive inquiry not suitable for resolution on a motion to dismiss. MacNaughton v. Young Living Essential Oils, LC, No. 22-0344, 2023 WL 3185045 (2d Cir. May 2, 2023).
Second Circuit
New York Court Permits “Maximum Strength” False Advertising Case to Proceed
By Andrew Leff & Cort Lannin on
Posted in Consumer Products, Second Circuit
False advertising lawsuits challenging lidocaine products that are represented to be “maximum strength” have now survived motions to dismiss in several instances. Most recently, in Gonzalez Rodriguez v. Walmart, Inc., the plaintiffs brought a putative class action alleging that Walmart’s private label Equate-brand lidocaine patches and creams are falsely labeled as “maximum strength” or “max strength.” The three challenged products are labeled as 4% lidocaine, and allegedly contain 360 milligrams of lidocaine. The plaintiffs allege that certain prescription-strength patches deliver up to a 5% dose of lidocaine, and other over-the-counter patches deliver 560 milligrams of lidocaine—200 milligrams more than Walmart’s products. The Southern District of New York concluded that plaintiffs had adequately pled claims under New York’s consumer protection statutes (GBL §§ 349 and 350), reasoning that “it is plausible that a reasonable consumer would understand ‘maximum strength’ to mean that the patch product contains the maximum amount of lidocaine available on the market for that type of product.” Gonzalez Rodriguez v. Walmart, Inc., 2023 WL 2664134, at *4 (S.D.N.Y. Mar. 28, 2023). Though Walmart argued that (1) prescription-strength patches are not proper comparators and (2) the plaintiffs used erroneous calculations regarding the amount of lidocaine in comparator products, the court rejected these arguments as “fact-intensive disputes [] not appropriate for resolution at the motion-to-dismiss stage.”…
Continue Reading New York Court Permits “Maximum Strength” False Advertising Case to Proceed
Court Dismisses Class Action Seeking to Hold Cryptocurrency Exchange Coinbase Liable for Sale of Unregistered Securities
By Sam Greeley, Andrew Soukup & Ashley Simonsen on
A federal district court recently dismissed with prejudice a putative class action against the cryptocurrency exchange Coinbase, where the plaintiffs sought to hold the exchange liable for the sale of unregistered securities on behalf a nationwide class. The court held that Coinbase neither directly sold the accused tokens to plaintiffs nor actively solicited their sale, and thus plaintiffs’ federal claims must be dismissed. This decision has important implications for digital asset exchanges, which have faced a significant increase in class actions alleging the exchanges are themselves liable for the sale of unregistered securities.…
New York Court Denies Class Certification in Copyright Infringement Action
By Kathryn Cahoy & Kanu Song on
A group of musicians has lost its bid in Waite v. UMG Recordings, No. 1:19-cv-01091-LAK (S.D.N.Y. 2019), to assert copyright infringement claims on a classwide basis against the record labels holding copyrights in the musicians’ sound recordings.
Seeking to reclaim the copyrights, the plaintiffs had issued notices of termination pursuant to Section 203 of…
Second Circuit Clarifies Predominance Analysis in Decision Overturning Class Certification of 8,000 Retirement Plans
By Nick Pastan on
The Second Circuit recently vacated a district court ruling certifying a class of thousands of employee benefit plans whose fiduciaries contracted with the Teachers Insurance and Annuity Association of America (TIAA) to provide collateralized loans to plan participants, in a case that clarifies how courts must analyze challenges to Rule 23’s “predominance” requirement for class…
A Closer Look: Does Purchasing a Defective or Contaminated Product Always Cause an Article III Injury?
If a tree falls in the forest but no one is around to hear it, did it make a sound? Philosophers disagree. If a product contains a contaminant but no one gets sick, did it cause an injury? Judges disagree.
In the 2000s, enterprising plaintiffs’ attorneys attempted to push the boundaries of existing tort law by arguing that plaintiffs are entitled to damages for defects even when they cause no physical injury. These so-called “no-injury” theories of liability were largely rejected by courts. E.g., Rivera v. Wyeth-Ayerst Lab’ys, 283 F.3d 315, 320–21 (5th Cir. 2002) (dismissing “no-injury products liability law suit”); Johnson v. Bankers Life & Cas. Co., 2014 WL 4494284, at *7 (W.D. Wis. Sept. 12, 2014) (recognizing that in the “consumer product context, courts routinely find lack of standing where—while a product may have been defective in the hands of others—the individual plaintiffs did not suffer the defect and, therefore, suffered no injury”).
While these cases closed the door on “no-injury” product liability claims, they left open the possibility of other “no-injury” claims, such as claims that a manufacturing defect breached a warranty or constituted fraud. E.g., Cole v. Gen. Motors Corp., 484 F.3d 717, 723 (5th Cir. 2007) (“Notably in this case, plaintiffs may bring claims under a contract theory based on the express and implied warranties they allege.”).
Whether and when “no-injury” claims are viable is a hotly debated question. As more fully discussed below, courts disagree on whether a plaintiff who has purchased a contaminated or defective product—but who has successfully used the product for its intended purpose while suffering no physical injury—can maintain a claim.…
No Harm, No Foul: New York Federal Court Recommends Dismissing Sensitive Data Breach Class Action for Lack of Standing
By Kathryn Cahoy on
A magistrate judge in the Western District of New York recently recommended dismissing the putative class action Tassmer et al v. Professional Business Systems, concluding that any risk of identity theft or other injury was too “speculative” to show standing. The recommendation is in line with numerous other federal circuit and district courts similarly requiring plaintiffs in data breach cases to show concrete harm, not merely a risk of future harm. This recommendation, if adopted, will be another helpful precedent for companies facing class action lawsuits as a result of a data breach or cyber hack.…
Second Circuit Reconsiders Mortgagor Standing Decision in Light of Ramirez
By Class Actions Team on
Posted in Class Action Procedure, Second Circuit
The ripples from the Supreme Court’s Article III standing decision in TransUnion LLC v. Ramirez, 141 S. Ct. 2190 (2021) are already being felt in the Second Circuit, which issued an opinion superseding a standing decision made prior to Ramirez. In Maddox v. Bank of New York Mellon Tr. Co., N.A., 19…
Second Circuit Reaffirms Usefulness of Early Merits Arguments to Defeat Class Actions
By Class Actions Team on
Posted in Class Action Procedure, Second Circuit
The Second Circuit recently reaffirmed the potential benefits of front-loading merits arguments as a strategy to defeat class actions. Kaye v. Merck & Co., 852 F. App’x 569 (2d Cir. 2021), affirmed a district court’s order granting summary judgment for the defendant in an action under the Telephone Consumer Protection Act where the fax…