Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Baldwin v. Star Scientific, Inc.

United States District Court, N.D. Illinois, Eastern Division

January 13, 2015

HOWARD T. BALDWIN, individually and on behalf of all others similarly situated, Plaintiff,
v.
STAR SCIENTIFIC, INC., ROCK CREEK PHARMACEUTICALS, INC., and GNC HOLDINGS, INC., Defendants

Page 725

[Copyrighted Material Omitted]

Page 726

For Howard T. Baldwin, individually and on behalf of all others similarly situated, Plaintiff: Daniel J. Kurowski, Elizabeth A. Fegan, Hagens Berman Sobol Shapiro LLP, Oak Park, IL; Steve W. Berman, Hagens Berman Sobol Shapiro LLP, Seattle, WA.

For Star Scientific Inc., Rock Creek Pharmaceuticals, Inc., GNC Holdings, Inc., Defendants: Paul J. Walsen, LEAD ATTORNEY, John William Rotunno, Molly K. McGinley, K& L Gates LLP, Chicago, IL.

Page 727

MEMORANDUM OPINION AND ORDER

REBECCA R. PALLMEYER, United States District Judge.

Defendants Star Scientific, Inc. (" Star Scientific" ), Rock Creek Pharmaceuticals, Inc. (" Rock Creek" ), and GNC Holdings, Inc. (" GNC" ) manufacture and sell Anatabloc, a pharmaceutical product allegedly marketed as a treatment for a wide range of maladies, including arthritis, Alzheimer's disease, traumatic brain injury, diabetes, and multiple sclerosis. Plaintiff Howard T. Baldwin, an Illinois citizen, alleges he purchased Anatabloc after he " saw and was deceived by Defendants' advertisements" but quit buying the product because it " did not work." [1] (Class Action Compl. [1], hereinafter " Compl.," ¶ 9.) Baldwin filed this putative class action lawsuit against Defendants on behalf of himself and a proposed class that includes " all persons" who have purchased Anatabloc since it was first made available to consumers. ( Id. ¶ ¶ 18, 57.) Plaintiff asserts claims for violations of consumer protection statutes in 36 states and the District of Columbia (Count I), breaches of express and implied warranties under the laws of all 50 states and the District of Columbia (Counts II and III), and claims of common law unjust enrichment. (Count IV). Plaintiff alleges that he and proposed class members suffered economic injuries by purchasing Anatabloc and asks for various forms of relief. ( Id. ¶ 56, Prayer for Relief B-G.) Plaintiff invokes the Class Action Fairness Act of 2005 (" CAFA" ) as the basis for this court's jurisdiction. ( Id. ¶ 7.) He alleges that the total claims of more than 100 individual class members exceed

Page 728

$5,000,000 in the aggregate and that minimal diversity[2] exists between the parties. (Compl. ¶ 7); see 28 U.S.C. § 1332(d)(2)(A).

Defendants have moved to dismiss the complaint [25], arguing that Plaintiff lacks Article III standing to assert claims in states where he has not alleged he personally suffered an injury. Defendants also argue that Plaintiff's Illinois state law causes of action should be dismissed because Plaintiff has not pleaded his fraud claim with particularity and has otherwise failed to allege " plausible" claims for relief as required under Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). As explained below, the court has serious reservations about Mr. Baldwin's standing to assert claims on behalf of unnamed, proposed class members under the laws of jurisdictions where he has not suffered an injury. At this stage, however, the court concludes only that Plaintiff has not pleaded fraud with " particularity" as required by Federal Rule of Civil Procedure 9(b) and has failed to set forth particularized facts sufficient to satisfy federal pleading requirements for his remaining Illinois state-law claims. For these reasons, the court grants Defendants' motion and dismisses the complaint without prejudice.

BACKGROUND

For the purposes of this motion, the court presumes that the factual allegations in Plaintiff's complaint are true. Defendant Star Scientific develops, manufactures, and markets pharmaceutical products. (Compl. ¶ 10.) Defendant Rock Creek is a wholly-owned Star Scientific subsidiary that manufactures and sells two " nutraceutical" dietary supplements. ( Id. ¶ 11.) Defendant GNC sells health and wellness products online and at its retail stores throughout the world. ( Id. ¶ 12.) Plaintiff alleges he purchased Anatabloc at a GNC store located in Yorktown, Illinois, and from Rock Creek through an online subscription service. ( Id.

In 2007, Star Scientific created Rock Creek " to focus on the development, manufacture, sale, and marketing of so-called 'nutraceutical' dietary supplements and cosmetic products[.]" (Compl. ¶ 13.) " Nutraceuticals" are foods or products derived from foods that are intended to provide health benefits; Anatabloc is one such product. ( Id. ¶ 15.) Plaintiff's complaint includes a photo of an Anatabloc package label touting the product as providing " Anti-Inflammatory Support" and as a " Dietary Supplement." ( Id. ¶ 18.) In fact, Plaintiff alleges, Defendants represented that the product could do much more than what the label suggested, and that " Defendants billed Anatabloc as a miracle supplement, with a variety of medical benefits and uses, ranging from inhibiting inflammation to treating a number of ailments, including Alzheimer's disease, traumatic brain injury, ulcers, diabetes, and multiple sclerosis," despite the fact that " Anatabloc cannot, in fact, treat those diseases." (Compl. ¶ ¶ 15, 19; see also id. ¶ ¶ 1, 6, 52.) Star Scientific " launched" Anatabloc in August 2011, initially selling it online through " Star Scientific-sponsored sites." ( Id. ¶ ¶ 16, 18.) GNC began selling the product online and in " select stores" in February 2012, eventually expanding to distribute Anatabloc at all of its retail and corporate stores throughout the country, as well as in Puerto Rico. ( Id. ¶ 20.) Anatabloc is

Page 729

sold in bottles of 300 tablets for $99.99. (Compl. ¶ 55.)

Plaintiff alleges that Defendants engaged in a variety of improper strategies to sell Anatabloc. For example, Plaintiff asserts, Star Scientific gave cash and gifts to Virginia's former governor and his spouse in exchange for their support of Anatabloc. ( Id. ¶ ¶ 30-33.) Star Scientific also allegedly claimed that Johns Hopkins University was " officially and independently involved in clinical testing of Anatabloc" when the University in fact had no such involvement. ( Id. ¶ 38.) In reality, Plaintiff alleges, the University's only connection to the product was an arrangement in which Star Scientific hired two Johns Hopkins doctors " to moonlight as paid consultants in connection with the clinical development and testing of Anatabloc." ( Id. ¶ 34.) These two doctors, Plaintiff maintains, " whole-heartedly endorsed" Anatabloc prior to its release, even though they did not know how the product worked or its effects on humans. (Compl. ¶ 39; see also id. ¶ ¶ 38, 47.) In various press releases, Plaintiff asserts, Star Scientific referred to the paid doctors as " the independently funded research team at Johns Hopkins." ( Id. ¶ 41.) Plaintiff further alleges that Rock Creek " teamed up" with a research institute to study Anatabloc's effects; that the institute received royalty payments from Anatabloc and other forms of remuneration; and that the institute's founder became a " significant investor" in Star Scientific. ( Id. ¶ ¶ 28-29.)

According to Plaintiff, GNC " pushed Anatabloc by naming Anatabloc its 'Wellness Winner' in the category of 'Best Product Innovation' for 2012," which GNC announced in various press releases and at a sports festival in February 2013. (Compl. ¶ 23.) Included in Plaintiff's complaint is a photograph of a poster that GNC allegedly created to market the drug. ( Id. ¶ 21.) The poster depicts Fred Couples, a well-known professional golfer, and quotes him endorsing Anatabloc. ( Id. ¶ 21.) Star Scientific's relationship with GNC was itself a source of pride: Plaintiff alleges that Star Scientific cited its partnership with GNC as a reason for increased sales of Anatabloc. ( Id. ¶ ¶ 23-25.) In its " Code of Business Ethics," GNC " demand[s] truth in labeling and ingredient safety and potency," and assures the public that GNC conducts " scientific research and new product discovery . . . with rigorous quality." (Compl. ¶ 26.) Plaintiff alleges that contrary to these standards, GNC promoted Anatabloc " without any evidence that Anatabloc could in fact provide a benefit to consumers," and that the product does not in fact provide any of the benefits of which Star Scientific and GNC boasted. ( Id. ¶ 27.)

Plaintiff alleges that the Federal Drug Administration (" FDA" ) sent Star Scientific a warning letter on December 20, 2013. ( Id. ¶ 53.) The letter observed that Star Scientific " promotes the product Anatabloc for conditions that cause the product to be a drug under . . . the Federal Food, Drug, and Cosmetic Act" because Star Scientific's claims about the drug establish that " it is intended for use in the cure, mitigation, treatment, or prevention of disease." ( Id.) The FDA further instructed that the agency considered Anatabloc a " new drug," effectively prohibiting its sale in interstate commerce without FDA approval. (Compl. ¶ 54.)

Plaintiff alleges that he and putative class members purchased Anatabloc " based on Defendants' misrepresentations that Anatabloc would provide a benefit." ( Id. ¶ 56.) Plaintiff defines the class as " [a]ll persons who paid, in whole or in part, for Anatabloc dietary supplement [sic] between August 1, 2011 and the present for personal, family or household uses" and

Page 730

excludes from the class Defendants, as well as " any entity in which Defendant has a controlling interest, and Defendants' legal representatives, predecessors, successors, assigns, and employees." ( Id. ¶ 57.) Plaintiff also asserts a subclass defined as " [a]ll persons who paid, in whole or in part, for Anatabloc dietary supplement [sic] purchased from GNC between August 1, 2011 and the present for personal, family or household uses." ( Id.) Plaintiff alleges that the definition of the class is " unambiguous" and that he is a member of the Class he seeks to represent. ( Id. ¶ 58.) He further alleges that his complaint satisfies class requirements and that the suit should proceed as a class action. ( See Compl. ¶ ¶ 59-66.)

Plaintiff asserts four causes of action. In Count I, on behalf of unnamed, proposed class members, Plaintiff alleges that Defendants violated the consumer protection laws of 36 different states and the District of Columbia. ( Id. ¶ ¶ 67-78.) In Counts II and III, Plaintiff alleges breaches of express and implied warranties under the laws of all 50 states and the District of Columbia, again on behalf of unnamed, proposed class members. ( Id. ¶ ¶ 79-87.) In Count IV, Plaintiff alleges unjust enrichment on behalf of himself and unnamed, proposed class members without identifying the common law or statutory provisions underlying this claim. ( See id. ¶ ¶ 104-110.) Plaintiff asserts that he and the proposed class suffered " economic injuries" because of Defendants' actions and are entitled to full refunds for their purchases of Anatabloc as well as various other forms of relief. (Compl. ¶ ¶ 56, Prayer for Relief B-G.) Plaintiff does not say how many bottles he purchased individually (at the $99.99 for 300 tablet price), nor does he otherwise document the extent of the economic injuries he or other members of the class suffered. Plaintiff also does not say whether he suffers from any of the ailments Anatabloc is allegedly marketed to treat, nor does he allege that he or any proposed class member suffered a physical injury as a result of taking the product.

DISCUSSION

Defendants' motion to dismiss challenges Plaintiff's complaint on two grounds: First, Defendants contend that Plaintiff lacks standing to assert claims under the laws of any state other than Illinois. Second, Defendants argue that Plaintiff's allegations underlying his Illinois state-law claims are insufficient. The court addresses these arguments in turn.

I. Standing

" Standing is an essential component of Article III's case-or-controversy requirement." Apex Digital, Inc. v. Sears, Roebuck & Co., 572 F.3d 440, 443 (7th Cir. 2009) (citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 560, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992)). To establish Article III standing, a plaintiff must show (1) an injury in fact; (2) a causal connection between the injury and the conduct complained of; and (3) a likelihood that the injury will be redressed by a favorable decision. Lujan, 504 U.S. at 560-61; Rawoof v. Texor Petroleum Co., 521 F.3d 750, 756 (7th Cir. 2008). Plaintiff bears the burden to establish standing. See Apex, 572 F.3d at 443 (citing Perry v. Village of Arlington Heights, 186 F.3d 826, 829 (7th Cir. 1999)). When ruling on a Rule 12(b)(1) motion to dismiss for lack of standing, the court " accept[s] as true all material allegations of the complaint, drawing all reasonable inferences therefrom in the plaintiff's favor." Lee v. City of Chicago, 330 F.3d 456, 468 (7th Cir. 2003) (citing Retired Chicago Police Assoc. v. City of Chicago, 76 F.3d 856, 862 (7th Cir. 1996)).

Page 731

Defendants argue that Plaintiff " does not allege that he has suffered any injury in any jurisdiction other than Illinois, or that he has otherwise suffered an injury-in-fact in any state other than Illinois," and so he " lacks Article III standing to assert claims under the laws of any jurisdiction other than Illinois." [3] (Def.'s Mem. in Supp. of Mot. to Dismiss Compl., herein " Def.'s Mot." [29], 3.) Plaintiff responds that this is a misstatement of the standard; because he has Article III standing to assert his own claims, Plaintiff contends, the court should reject Defendants' standing arguments, or alternatively, defer consideration of them until Rule 23 class certification proceedings. (Pl.'s Resp. to Def. Mot. to Dismiss, herein " Pl.'s Resp." [35], 7.)

At first blush, it seems apparent that Mr. Baldwin himself has no claims under the consumer protections laws of states where he did not purchase or use Anatabloc. Other class members do have such claims, he contends, so he asks the court to put the issue of his standing to one side and consider the matter down the road as part of its analysis of his adequacy as class representative and the typicality of his claims. He urges that such an approach is authorized by two Supreme Court cases in which the Court reviewed proposed settlement classes of persons exposed to asbestos. Although neither of these cases ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.