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Muir v. NBTY, Inc.

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

September 22, 2016

MICHAEL MUIR, individually and on behalf of all others similarly situated, Plaintiff,
v.
NBTY, INC., REXALL SUNDOWN, INC., NATURE'S ORIGIN, LLC, NATURE'S BOUNTY, INC., VITAMIN WORLD, INC., and PURITAN'S PRIDE, INC., Defendants.

          MEMORANDUM OPINION AND ORDER

          REBECCA R. PALLMEYER United States District Judge.

         Plaintiff Michael Muir purchased a bottle of the dietary supplement St. John's Wort from a Walgreens store in Illinois in 2015. The label states that the product is “[s]tandardized to contain 0.3% Hypericin, 0.9 mg.” Muir claims the product actually contains a far lower amount of hypericin, purportedly the active ingredient in St. John's Wort. Muir filed this action on behalf of a nationwide class of persons who purchased St. John's Wort Standardized Extract from any of five different manufacturers. Defendants move to dismiss the complaint for lack of standing and failure to state a claim. For the reasons explained here, the motion is granted in part and denied in part. Muir has leave to file an amended complaint against the manufacturer of the supplement he himself purchased.

         BACKGROUND

         On November 3, 2014, Muir filed this class action on behalf of all persons in the United States “who purchased the dietary supplements St. John's Wort Standardized Extract” from Defendants, five manufacturers of nutritional supplements, and their joint corporate parent. (Compl. [1] ¶¶ 1, 46.) Plaintiff alleges that the dietary supplements sold by Defendants “did not contain consistent amounts of the sole active ingredient Standardized Extract Hypericin listed on their labels” and that Defendants' advertising and distribution of the products was false, misleading, and deceptive. (Id. ¶¶ 5, 6.) Muir himself, a resident of Lake Zurich, Illinois, purchased the product from a retailer, Walgreens, in July 2015. (Id. ¶ 13.) Defendants are allegedly “licensed” in Delaware and have their principal places of business in New York. (Id. ¶¶ 14-20.) Defendant NBTY, Inc. is the parent company of the other five Defendants. (Id. ¶ 14.)

         Plaintiff alleges that there is no legal or regulatory definition of the term “standardized, ” but that a standardized extract is understood to have “one or more components present in a specific, guaranteed amount, usually expressed as a percentage, ” and that the “intention behind standardization of herbs is to guarantee that the consumer is getting a product in which the chemistry is consistent from batch to batch.” (Id. ¶¶ 23, 24.) He asserts that when purchasers shop for a St. John's Wort Product, they expect to receive the “guaranteed” amount on the label. (Id. ¶ 26.) Included in the complaint are images of the labels of the products distributed by Defendants, each of them bearing the figure “300 mg., ” and stating that the product is “[standardized to contain 0.3% Hypericin, 0.9 mg.” (Id. ¶¶ 27-28.) In fact, however, the products actually contain different amounts of hypericin, all far less than the amount listed on the label. (Id. ¶ 29.) Attached to the complaint as Exhibits A through E are test results of the products distributed by the Defendant manufacturers. For the five products tested, the total amount of hypericin per serving ranged from as little as 0.166 milligrams to 0.615 milligrams. None contained an amount close to 0.9 milligrams. (Test Results, Exs. A-E to Compl.).

         St. John's Wort is “promoted as an anti-depressant herb” that has “shown benefits” in the dosage amount of 0.9 milligrams per day-the “exact amount” that the packaging touts as present in Defendants' products. (Id. ¶¶ 31, 32.) In fact, as Defendants knew, the products “contain less of the standardized extract than claimed.” (Id. ¶ 32.) Plaintiff alleges that he and other class members purchased and consumed the products in reliance on the misleading labeling, and would not have done so had they realized that the products contained less of the standardized extract than the labels stated. (Id. ¶ 36.) The difference between what the labels stated and what was actually delivered in the products is “significant, ” Plaintiff alleges, and has “real impacts on the benefits provided to consumers.” (Id. ¶ 38.) He contends that the false statements in Defendants' labeling violate federal and state laws which prohibit “misbranding” of food and nutritional supplement with labels that contain a statement “false or misleading in any particular.” (Id. ¶¶ 39-42 (citing 21 U.S.C. § 343(a)(1); 410 ILCS 620/11, 620/21).)[1]

         Plaintiff brings this case on behalf of himself and all persons in the United States who purchased the products. He also seeks to assert consumer fraud claims on behalf of all purchasers in the states of California, Florida, Illinois, Massachusetts, Michigan, Minnesota, Missouri, New Jersey, New York, and Washington, referred to as the “multi-state class.” (Id. ¶ 46.) The complaint alleges four counts: A claim of violation of state consumer fraud acts on behalf of the multi-state class (Count I); a claim of violation of the Illinois Consumer Fraud Act, 815 ILCS 505/1, et seq., on behalf of Illinois purchasers (Count II); a claim of unjust enrichment on behalf of the nationwide class (Count III); and a claim of breach of express warranty on behalf of the nationwide class (Count IV). He claims each member of the class has been damaged “in the amount of the purchase price of the products and any consequential damages resulting from the purchases.” (Id. ¶ 81.)

         Defendants have moved to dismiss the complaint in its entirety. They raise several arguments: First, they contend the court has no jurisdiction over this case because Plaintiff has not alleged any harm resulting from the hypericin level in any product he bought, and therefore lacks standing. Second, Defendants assert that none of them are subject to personal jurisdiction in this court. Defendants' third argument is that the complaint fails as a matter of law because federal law expressly preempts his claims and because the sampling method on which the complaint rests is inadequate. Moreover, Defendant urges, federal law allows for “natural variability” in the nutrient content of foods, and the allegations do not establish that the nutrient level of any of Defendants' products falls outside the range of natural variability. Plaintiff has misinterpreted the term “standardized, ” Defendants assert. They argue, further, that because Plaintiff did not purchase any product directly from any Defendant, and because he did not notify Defendants before suing them, as required by Illinois law, the court must dismiss the breach-of-warranty claim. The flaws in Plaintiff's consumer claim requires dismissal of his unjust-enrichment claim, as well, they assert. Finally, Defendants argue that Plaintiff has not pleaded fraud with particularity, as required by federal pleading standards, and has not established any right to injunctive relief. The court concludes that several of these arguments have merit. The complaint in its current form will be dismissed without prejudice, for the reasons explained here.

         I. Standing

         A. Plaintiff has standing to sue for the product he purchased

         Defendants' threshold argument is that Plaintiff lacks standing because he has not identified an “injury in fact” that is both concrete and particularized. In support, Defendants note that Plaintiff has not specified which of their products he purchased and cannot allege that the one he did purchase in July 2015 was in fact low in hypericin or that it was of no benefit to him.

         Defendants are correct that Plaintiff has not identified which of the products he took, but he did allege that he and other class members “purchased and consumed” the products in reliance on labels that assured them the products contained particular quantities of the desired ingredient. (Compl. ¶ 33.) Plaintiff's failure to identify any physical harm that he may have suffered, or even to allege that the product did not “work” is not fatal to his claim. He has alleged a financial loss-specifically, that he and the class members would not have purchased the products at issue, had they known that the quantity of hypericin in those products was “significantly lower” than what was stated on the label. The Seventh Circuit has recognized that one who has allegedly paid more for a product in reliance on misrepresentations about the product's quality has standing to sue for recovery of the financial loss. In Aqua Dots Prods. Liability Litig., 654 F.3d 748 (7th Cir. 2011), plaintiffs alleged that a children's toy consisted of beads that resembled candy but were harmful if swallowed. The Seventh Circuit concluded that parents of children who had not been physically injured nevertheless had standing because, having paid more for the toys than they would have, had they known of the hazard, the parents had suffered financial injury. “A financial injury creates standing, ” the court observed. 654 F.3d at 749. Judge Feinerman of this court followed Aqua Dots in Muir v. Playtex Prods., LLC, 983 F.Supp.2d 980, 983 (N.D. Ill. 2013), where plaintiff and a class he sought to represent had purchased defendant's “Diaper Genie” product at a premium price, in reliance on the defendant's claim-defeated by independent testing--that the product had been “Proven #1 in Odor Control.” And in Askin v. Quaker Oats Co., 818 F.Supp.2d 1081, 1084 (N.D. Ill. 2011), Judge Kim agreed with plaintiffs that they had standing to pursue a claim that defendant had falsely touted its oatmeal and granola products as being “wholesome” and “heart healthy” when those products in fact contained trans fats.

         Defendants contend that the Seventh Circuit has walked back a bit from this thinking. They cite Remijas v. Neiman Marcus Group, LLC, 794 F.3d 688, 694 (7th Cir. 2015), where the court recognized that credit card holders had a claim only for amounts they paid to protect themselves from the consequences of a retailer's data breach. In reaching that conclusion, the court also considered plaintiffs' alternative argument that the data breach resulted in their overpaying for products; the court was “dubious” that the overpayment injury was one that would establish standing. Significantly, however, the Remijas court explicitly distinguished the data breach situation from the circumstances in Chicago Faucet Shoppe, Inc. v. Nestle Waters North America, Inc., 24 F.Supp.3d 750 (N.D. Ill. 2014). Plaintiff there had claimed it overpaid for bottled water it purchased from defendant in reliance on false statements on defendant's website that the water was “100% natural spring water.” Judge Tharp of this court dismissed that complaint on other grounds, but was satisfied that plaintiff's alleged overpayment was sufficient to establish “injury and causation for purposes of Article III standing.” Id. at 756. The Remijas court's effort to distinguish Chicago Faucet Shoppe suggests that overpayment for products is a viable theory of harm. Plaintiff here has standing to recover for the amounts he overpaid for the St. John's Wort product he purchased.

         B. Plaintiff lacks standing for products he did not purchase

         As Defendants observe, however, Plaintiff has not bothered to reveal what product that is. Thus, Defendants urge, even if Plaintiff has standing to sue one of the five distributors of St. John's Wort, he has no standing to sue the remaining four. Both parties cite Payton v. City of Kane, 308 F.3d 673, 682 (7th Cir. 2002), where six named plaintiffs filed a class action against 19 Illinois counties that had charged arrestees a “bond fee” as a condition of their being released, a practice permitted by Illinois statute. Despite the fact that the named plaintiffs resided in just two of the 19 counties, the Court of Appeals concluded that the district court erred in refusing to consider “whether these named plaintiffs may represent a class that includes people from the other 17 named counties.” Id. at 680. The court was willing to address the propriety of class certification first and then assess the standing issue “with reference to the class as a whole, not simply with reference to the individual named plaintiffs.” Id. Plaintiff believes this rationale supports the conclusion that he may proceed here against all Defendants who made what he believes to be the same misrepresentations. The court is less certain. In Payton, the named plaintiffs were challenging a bail fee practice authorized, in their home counties and several others, by a single state law: “These putative representatives were personally injured by the operation of the very same statute that caused the injuries to all other members of the proposed class.” Id. at 682 (emphasis added).

         This case differs. Plaintiff alleges that the various St. John's Wort distributors made identical representations about the hypericin concentration, but he has not alleged that their actual formulations are identical or that the discrepancy between the stated amounts and actual amounts of hypericin was the product of a single decision or policy. The fact that Plaintiff has named the distributors' joint corporate parent does not cure this defect.[2] In pursuing a claim on behalf of purchasers of products he never himself purchased, Plaintiff appears to be attempting to “acquire [standing] through the back door of a class action.” Payton, 308 F.3d at 682. In similar circumstances, other courts in this district have refused to recognize standing to assert a consumer fraud claim for a product that the plaintiff himself did not purchase. Gubala v. Allmax Nutrition, Inc., No. 14 C 9299, 2015 WL 6460086 (N.D. Ill. Oct. 26, 2015); Pearson v. Target Corp., No. 11 C 7972, 2012 WL 7761986 (N.D. Ill. Nov. 9, 2012); Padilla v. Costco Wholesale Corp., No. 11 C 7686, 2012 WL 2397012 (N.D. Ill. June 21, 2012); but see Quinn v. Walgreen Co., 958 F.Supp.2d 533, 541-42 (S.D.N.Y. 2013) (collecting and discussing cases, and citing, with approval Brown v. Hain Celestial Grp., Inc., 913 F.Supp.2d 881, 890 (N.D. Cal. 2012) for the proposition 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.”) Purchasers of St. John's Wart from other manufacturers may choose to become part of this case. Plaintiff Muir's claim is limited to the product he himself purchased.

         II. ...


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