Sunday, April 2, 2017

FYI: 7th Cir Reverses Class Cert, Dismisses Lawsuit for Lack of Standing Under Spokeo

The U.S. Court of Appeals for the Seventh Circuit recently reversed a trial court's grant of class certification and remanded the case with instructions to dismiss the case with prejudice because the plaintiffs lacked standing to sue, having shown no injury in fact as required under Spokeo v. Robins.


A copy of the opinion is available at:  Link to Opinion


A consumer plaintiff filed a putative class action against six pharmaceutical companies that manufacture eye drops to treat glaucoma. The complaint alleged that they violated the Illinois Consumer Fraud and Deceptive Business Practices Act and the Missouri Merchandising Practices Act because the eye drops were supposedly too large.


Specifically, each drop allegedly exceeded 16 microliters (one tenth of one percent of a tablespoon) and anything more added no therapeutic value. The complaint sought damages measured by "[t]he difference between the price per drop of the eye drops at their present size, and the presumably lower price if the drops were smaller, multiplied by the number of drops that have been bought by the members of the class."


The trial court certified eight classes "consisting of persons in Illinois and Missouri who take eye drops manufactured by [the] six pharmaceutical companies".  The defendant pharmaceutical companies appealed.


On appeal, the Seventh Circuit first pointed out that the complaint did not allege that the price of the eye drops were the "result of collusion, whether tacit or express among the defendants; this is not an antitrust case. Nor is there any allegation of misrepresentation."


The Court also noted that the plaintiff's argument "assumes that profits would decline if the defendants switched to selling the smaller, cheaper-to-produce eye drops. But that's far from certain; lower prices might result in greater sales and as a result higher rather than lower profits."


In addition, the Seventh Circuit noted that the complaint alleged that the larger eye drops had "a higher risk of side effects[,]" but it did not allege that any class members experienced side effects or suffered harm because they ran out of the eye drops sooner because the larger the eye drop, the fewer in each bottle.


The defendants argued that "[t]he smaller the drop, … the weaker its likely therapeutic effect for patients whose eyes could have absorbed a larger drop" because the amount of fluid the eye can hold varies from person to person and only a tiny percentage of each drop contains the active ingredient. In addition, for some patients like the elderly and infirm, "the smaller the drop the likelier they are to miss [their eye]."


Next, the Seventh Circuit pointed out that the Food and Drug Administration had approved the size of the eye drops as safe and effective, and that although "[a] court can review a determination by the FDA, … it cannot bypass the agency and make its own evaluation of the safety and efficacy of an unconventionally sized eye drop or treatment of glaucoma." In any event, the Court noted that the plaintiffs were not seeking to undue the FDA's approval of the large drops and did not argue the drops were unsafe or ineffective. "They just want the defendant companies to start manufacturing smaller drops."


The Court reasoned, however, that the FDA "can't force a private company to manufacture a product the company doesn't want to make—all it can do is approve or disapprove drugs that a company does make."


The Seventh Circuit found that even if the plaintiffs could prove that a smaller eye drop "would be more effective and cheaper than the ones manufactured by the defendants, the class members would have no cause of action" because the plaintiffs lacked standing to sue.


The Court held that "[one] cannot bring a suit in federal court without pleading that one has been injured in some way (physically, financially—whatever) by the defendant. That's what's required for standing."


Citing Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1548 (2016), the Seventh Circuit held "[t]he fact that a seller does not sell the product that you want, or at the price you'd like to pay, is not an actionable injury; it is just a regret or disappointment — which is all we have here, the class having failed to allege 'an invasion of a legally protected interest.'"


Because the complaint failed to allege "an invasion of a legally protected interest", the Seventh Circuit vacated the grant of class certification and remanded with instructions to dismiss with prejudice.




Ralph T. Wutscher
Maurice Wutscher LLP
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