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 certification.

In Haley v. Teachers Insurance and Annuity Association of America, 2022 WL 17347244 (2d Cir. Dec. 1, 2022), the plaintiff—a participant in a Washington University in St. Louis defined contribution savings plan governed by ERISA—brought suit against defendant TIAA alleging that the loans facilitated by TIAA violated ERISA’s “prohibited transactions” rules, which protect benefit plan participants and their beneficiaries from certain transactions involving retirement plan assets, which are believed to pose a high risk of self-dealing.

Plaintiff moved to certify a nationwide class of 8,000 ERISA-governed plans whose members received loans offered by plan administrators and facilitated by TIAA.  The district court certified the multi-plan class under Rule 23(b)(3) despite TIAA’s objections that the putative class lacked commonality and predominance because the loans it provided varied across the thousands of plans, and the loans were subject to statutory exemptions to ERISA’s prohibited transactions rules, which were not subject to common proof.

The Second Circuit reversed.  Though it found that the district court did not abuse its discretion in finding that common issues existed bearing on TIAA’s liability to the putative class, it held that the district court failed to adequately analyze predominance. 

The Second Circuit’s decision helps distinguish the predominance and commonality requirements, and makes clear that courts must engage rigorously with factual and legal issues that could undermine the ability to try cases as class actions. The Second Circuit explained that predominance “demands that a district court consider all factual or legal issues and classify them as subject either to common or individual proof.”  The Court emphasized that this analysis requires district courts to consider all relevant evidence submitted at class certification, an obligation that is not altered or reduced because a defendant ultimately bears the burden of proof on a relevant issue at the merits stage.  Embracing this standard, the Second Circuit vacated the district court’s class certification decision for failure to conduct the required predominance analysis because the district court did not consider whether the statutory exemptions asserted by TIAA were subject to individual or common proof, and did not engage with the evidence submitted by TIAA about alleged variations among the plans.  It instructed the district court to scrutinize these issues on remand.   

Earlier this year, the European Commission decided to ban titanium dioxide as a food additive in the European Union, with a six-month phasing-out period that culminated in a full ban as of August 7, 2022.  The decision was based on a recent assessment by the European Food Safety Authority, which had raised concerns over the potential bioaccumulation of titanium dioxide particles and associated risks of possible genotoxicity and carcinogenicity.

Despite the recent scrutiny, scientific evidence has not established that ordinary use of titanium dioxide – a ubiquitous substance that has been widely deployed in consumer products for the better part of a century – at currently permitted levels in fact poses any significant risk to human health or safety.  Accordingly, the European Commission’s decision has been met with skepticism.  For example, the United Kingdom’s Food Standards Agency, Food Standards Scotland, and Health Canada’s Food Directorate all have disagreed with the Commission and declined to follow its lead in banning titanium dioxide as a food additive.  And an official of the United States Food and Drug Administration, which has permitted the use of titanium dioxide as a food additive since 1966, reportedly told The New York Times “that the agency has reviewed the findings of the European Union’s ban and concluded that the available studies ‘do not demonstrate safety concerns connected to the use of titanium dioxide as a color additive.’”  This is consistent with current FDA regulations, which specify that, in general, titanium dioxide may be safely used as an additive for coloring foods as long as the quantity used does not exceed 1% by weight of the food.

Despite this, the recent attention on titanium dioxide has triggered a handful of class action lawsuits targeting companies that use the additive in consumer products.  The common theory underlying these lawsuits is essentially the allegation that companies failed to inform consumers of risks associated with titanium dioxide, thereby allegedly deceiving consumers into thinking that the products they purchased were safe and free of concerning ingredients when that was not in fact true.  To date, such class actions have been filed relating to the use of titanium dioxide in candies, an over-the-counter medicine, and tampons.

It will be difficult for plaintiffs in these cases to overcome the FDA’s science-based conclusion that there is no safety risk associated with titanium dioxide, as well as the fact that FDA regulations expressly permit companies to use titanium dioxide.  Nonetheless, it will likely take several more months before the earliest of these cases can begin to produce judicial rulings on the merits of plaintiffs’ theories (especially since several of the cases have already been voluntarily dismissed).  Meanwhile, this litigation is worth paying attention to, particularly by companies that use the additive in consumer products.

A court in the Northern District of California recently dismissed a complaint brought against several beverage companies, including Coca-Cola, on behalf of a putative class of consumers and the Sierra Club.  Swartz v. Coca-Cola Co., No. 21-cv-04643-JD, 2022 U.S. Dist. LEXIS 209641 (N.D. Cal. Nov. 18, 2022).  Asserting claims under California and common law, plaintiffs alleged that the “100% recyclable” representation on single-use plastic bottles supplied by defendants is false and misleading because not all plastic bottles discarded into recycling bins are processed into reusable material.  Plaintiffs’ complaint cited to studies showing that recycling facilities in the U.S. lack the capacity to process most of the plastic waste generated, and not all plastic processed turns into material for reuse.  Resolving defendants’ motion to dismiss, the court acknowledged that “the question of consumer deception may be a factual matter unsuitable for resolution in a motion to dismiss,” but concluded that plaintiffs here failed to meet “the initial burden of pleading factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged as informed by judicial experience and common sense.” 

Continue Reading “100% Recyclable” Labels Are Not False Just Because Not All Plastic Bottles Are Recycled

The Northern District of California recently dismissed with prejudice a putative class action lawsuit against Google, which alleged that the company used a secret program called “Android Lockbox” to spy on Android smartphone users.  See Order Granting Motion to Dismiss, Hammerling v. Google LLC, No. 21-cv-09004-CRB (N.D. Cal. December 1, 2022).  The Court previously dismissed the case in July and gave plaintiffs leave to amend, but signaled that the complaint’s deficiencies would be “difficult to cure.”  Finding that plaintiffs had failed to cure the previous deficiencies, the court dismissed with prejudice on all ten claims.

Continue Reading Google Wins Final Dismissal In “Android Lockbox” Putative Class Action

The First Circuit recently revived consumer deception claims challenging the safety and testing of a car booster seat manufactured by Evenflo, in a case that potentially makes it easier for class-action plaintiffs to satisfy Article III’s standing requirements in the First Circuit when they only allege an economic injury. 

Continue Reading First Circuit Holds Alleged Overpayment Enough for Article III Standing

An Alabama district court recently granted dismissal of a class action asserting Illinois Biometric Information Privacy Act (“BIPA”) claims brought by Illinois residents against ProctorU, Inc. in Thakkar v. ProctorU Inc., No. 2:21-cv-01565 (N.D. Ala.).  The district court concluded that a choice-of-law provision contained in the terms of service and which required the application of Alabama law precluded the application of BIPA to the conduct alleged.

Continue Reading Alabama Federal Court Finds Choice-of-Law Provision Bars BIPA Privacy Lawsuit Against Online Examination Company

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.

Continue Reading A Closer Look: Does Purchasing a Defective or Contaminated Product Always Cause an Article III Injury?

As plaintiffs continue to rely on the District of Columbia Consumer Protection Procedures Act (“CPPA”) to bring greenwashing suits, a recent D.C. Superior Court decision imposes limits on their ability to allege that a company’s general commitments to “sustainability” can constitute actionable misrepresentations.

Continue Reading Aspirational Statements of “Sustainability” Not Actionable Under D.C. Consumer Protection Statute

In a recent decision, a federal judge granted summary judgment for the Securities and Exchange Commission (SEC) finding that the LBC cryptocurrency token qualifies as a security.  While the ruling is confined to this specific token, it represents a victory for the SEC’s assertions that many cryptocurrencies, including so called “utility tokens,” represent securities that need to be registered with the agency.  The Court also held that the makers of the LBC token, LBRY, Inc., had fair notice that the token was subject to the securities laws.  Considering the ongoing class actions and enforcement proceedings litigating this issue across several cases, companies operating in the cryptocurrency space, including cryptocurrency exchanges, should follow this development to assess any possible impact on their businesses.

Continue Reading S.E.C. Wins Summary Judgment Determination That Cryptocurrency Token Qualifies as a Security

The District Court for the District of New Jersey recently dismissed a putative class action alleging that defendants sold baby foods with high levels of heavy metals, holding that plaintiffs failed to plead an injury sufficient to support standing.  In re Plum Baby Food Litigation, No. 1:21-cv-02417-NLH-SAK, 2022 WL 16552786 (D.N.J. Oct. 31, 2022).  This decision adds to the list of cases in the Third Circuit holding that merely alleging exposure to toxic substances in consumer products, without more, is insufficient to establish Article III standing.  See Covington’s prior blog post on the trend in the Third Circuit here.

Continue Reading District of New Jersey Continues Third Circuit Trend of Finding Mere Exposure to Toxic Substances in Consumer Products Insufficient for Standing