First Circuit Affirms Dismissal of a Dog of an Implied Warranty and Consumer Fraud Class Action
Today's post is about dogs and drugs. Mr. Ted E. Bear was kind enough to illustrate by channeling his inner "fat Elvis," complete with bejewelled white jumpsuit, prescription medicines, and alcohol.
Regular readers of this blog know that, over time, we have discussed many cases holding that if a plaintiff has not experienced a product malfunction, he has no injury and cannot assert a claim for breach of warranty or consumer fraud. Last Wednesday the First Circuit Court of Appeals issued a decision that strongly reaffirms these principles and challenges the underpinnings of so-called "diminished value" class actions.
In Rule v. Fort Dodge Animal Health, Inc., No. 09-1364, Slip op. (1st Cir. June 2, 2010), plaintiff had twice bought ProHeart 6 and had it administered to her dog, Luke, to protect him from heartworm. Fortunately, it worked. Luke never developed heartworm, and he never developed any adverse reactions to the medicine.
But the manufacturer ultimately issued a recall on ProHeart 6 because there had been incidents in testing and actual use of dogs developing adverse reactions. Some even died.
Plaintiff brought a putative nationwide class action against the defendants, alleging a number of causes of action. She claimed that if she had known the truth about the adverse reactions at the time she bought the medicine, the medicine would have been worth less than what she actually paid for it, and thus she (and the class) should recover the diminished value of the medicine. The trial court dismissed her claims for lack of standing. She appealed the dismissal of only 2 counts: breach of the implied warranty of merchantability and consumer fraud under Massachusetts' statute, Chapter 93A of the Massachusetts General Laws.
The First Circuit said that the implied warranty claim was easily disposed of:
But the unfitness of ProHeart 6 lay in its potential for causing harm to the dog. [Plaintiff] concedes that neither of the two doses injured Luke. So, while the sale to [plaintiff] may have been of an unfit drug, its unfitness did not give rise to any injury to [plaintiff] against which the warranty was designed to guard. Nor does she suggest that Luke is now more susceptible to injury, as might be the case where one bought and installed a defective tire that has not run its life or smoked cigarettes whose potential for harm lasts into the future.
Recovery generally is not available under the warranty of merchantability where the defect that made the product unfit caused no injury to the claimant, the threat is now gone, and nothing now possessed by the claimant has been lessened in value. . . . True, purchasers whose dogs were injured might have such claims; but one who has no claim is not normally a suitable plaintiff to represent a class of those who do.
Slip op. at 5-6 (citations omitted).
In analyzing the consumer fraud claim under Chapter 97A, the First Circuit recognized that it was a closer call. Some earlier opinions of the Massachusetts Supreme Judicial Court had suggested that a claim for deception might lie even where it did not result in a direct economic loss. But the statute itself requires injury "caused by" the deceptive acts, and the later opinions interpreting the statute seem to clearly require injury suffered as a result of the alleged deceptive conduct. The First Circuit ultimately held that "the notion of injury under Chapter 93A means economic injury in the traditional sense," and if Massachusetts wants to identify exceptions to that rule, it remains free to do so. Slip op. at 12.
The court continued:
Conduct like that attributed to [the defendant] needs to be deterred, but not necessarily by those who bought the drug but were not injured. The state has authority to seek heavy sanctions on those who engage in deceptive advertising even without injury, Mass. Gen. Laws Ch. 93, Sec. 4; and anyone whose dog was injured, or a class of those persons, may (assuming [plaintiff's] allegations are correct) likely sue and collect damages. [Plaintiff], having suffered no economic injury, may not.
Id.
The First Circuit's opinion raises the important question of who should vindicate society's interest in deterring alleged deceptive conduct. Seldom, if ever, should it be individuals who are uninjured by the conduct, as they lack the appropriate incentives. Warranty law -- and the consumer fraud statutes of most states -- require that a plaintiff have actually suffered an injury caused by the alleged misconduct in order to maintain a claim. Efforts to water down the standing requirements for individual plaintiffs must be resisted.
