Our best college era summer job was working as a staffer for the New Jersey State Senate. The Abscam investigation was ongoing, and it seemed that every week there’d be another empty seat in the Senate chamber courtesy of the FBI. Good times. We doubt we personally performed any services that were useful for Garden State taxpayers. It was mostly an eye-opening experience for us. Every week was a journey down some policy worm-hole. One day was spent with a representative of the state consumer affairs agency. We were fiddling with proposed legislation. We don’t remember what the legislation was about, but we do remember the consumer affairs guy regaling us with stories about how easy it was for state investigators to find all sorts of violations of consumer fraud regulations. Weigh any packaged meat at a grocery store, and there’s a decent chance the weight will be wrong. That isn’t necessarily the result of anything nefarious. Evaporation is a fact of life. Or show up at a stereo store (do they still exist?) and wait for the haggling – which was contrary to rules requiring accurate listed prices. Haggling is a form of price discrimination. Why should timid souls pay more?
Fast forward to our current career as a tort defense attorney/hack, and it’s still true that anyone can gin up an alleged consumer fraud. They can even file a class action lawsuit. The recipe is easy-squeezy. Stir in semantic stuffiness (what really is “organic” or “natural” or “vanilla”?) with speculative goo, then baste with paranoia. Bon appetit. But the cases are mostly nonsensical and are sheer money plays by plaintiff lawyers who look for back-end fees while the ostensible clients get “settlements” roughly equal to a diner breakfast or, if one really strikes the mother lode, a one-month cable payment. Sadly, we have become as cynical as that consumer agency official from decades ago.
But every once in a while, a court will see through the consumer fraud case as itself being phony, and will throw the case out as if it was a package of spoiled meat.
Wilson v. Colourpop Cosmetics, LLC, 2023 U.S. Dist. LEXIS 185688 (N.D. Cal. Sept. 7, 2023), is a defense-favorable cosmetic opinion with good implications for drug/device consumer fraud cases. The plaintiff brought a class action suit against the manufacturer of eye cosmetic products (eyeshadow, eyelid primer, eyebrow pencils, etc.) because there were color additives in those products that allegedly made them unsafe for use around the eyes. Granted, that sounds a tad problematic. The plaintiff said that she would not have purchased the cosmetics or would have paid less if she knew they were unsafe. At issue in the Wilson opinion was the second amended complaint, which included seven causes of action: (1) common law breach of implied warranty, (3) breach of implied warranty under California Civil Code section 1790, (3) unjust enrichment, (4) false advertising under notorious California Business & Prof. Code section 17500, (5) the California Consumers Legal Remedies Act, (6) California Unfair Competition Law, and (7) fraud.
So many claims, so little merit. The defendant moved to dismiss for lack of jurisdiction/standing, failure to state a claim because of federal implied preemption, and lack of specificity under Federal. R. Civ. P. 9(b). The defendant’s arguments prevailed. The plaintiff – or, really, the plaintiff’s lawyers – ended up with black eyes.
To begin with, the Wilson court undertook a careful and useful standing analysis concluding that the plaintiff could not claim any actual or imminent injury. The plaintiff could not assert that additives that the FDA has not banned could make a product unreasonably dangerous. The Wilson court found “that Plaintiff’s amended claims ultimately depend on the existence of violations of federal law — the Court can’t make a decision the FDA itself did not make” The Wilson court saw its hands as being “tied,” and held that the plaintiff’s claims “—that the purchased makeup is unsafe for use in the eye area – falls squarely out of this Court’s jurisdiction.” The plaintiff “lacks Article III standing because she cannot establish an injury that plausibly corroborates her assertion that the Products she purchased are ‘unreasonably dangerous.’ And without reasonably affirming the products are unsafe, the Court cannot say an actual misrepresentation occurred.” That lack of standing applies to both the request for compensation and the request for injunctive relief. It is hard to support an injunction “when the threat of injury was speculative to begin with.”
That reasoning pretty much kills the entire case, right? Aye. You’ll probably notice that the court’s discussion of why standing is lacking also clobbers the plaintiff on substantive fraud theories and preemption, as well. For example, the Wilson court rejected the plaintiff’s benefit of the bargain theory. The plaintiff’s claims rest upon certain assumptions about what should and should not be in the eye cosmetics, but those assumptions “were not included in the bargain.” Moreover, “without a showing of actual harm related to the Products use, the apparent need for disclosure is a moot proposition. Although Plaintiff’s personal expectations of the makeup she purchased are unmet, the Court finds she was not denied the benefit of the bargain.”
Then we get to implied preemption. It turns out that this is the second go-around in this case on preemption. The Wilson court had dismissed the first amended complaint because the plaintiff’s claims were impliedly preempted by the Food, Drug and Cosmetic Act (FDCA). Wilson applied Nexus Pharmaceuticals, Inc. v. Central Admixture Pharmacy Services, Inc., 48 F.4th 1040 (9th Cir. 2022), which we identified as our third best case of last year, precisely because it enforced preemption against CA claims of this sort that sought to usurp FDA authority. What did the plaintiff do to fix the preemption problem? The plaintiff had carefully scrubbed out of the second amended complaint any reference to the FDCA. But a “plaintiff cannot plead around FDCA preemption if the existence of the claim arises from violation of the FDCA.” The plaintiff’s claims that certain ingredients are harmful and should not be used in eye cosmetics are the same whether she mentions the FDA or not, since the FDA undisputedly regulates cosmetic ingredients. The claims ultimately depend on safety of the additive, which is a decision for the FDA. Thus, the plaintiff’s crafty omission of the FDA or FDCA from the second amended complaint could not make preemption principles vanish.
Normally, courts are quick – all too quick – to permit plaintiffs to amend their complaints to fix any deficiencies identified by the court. But there was no fixing the problems with the complaint in Wilson, plus there had already been two prior attempts to fix the standing, injury, harm, and preemption problems, and the fixes did not work. It was plain to see: enough is enough.