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March 7th, 2017

Seventh Circuit Vacates Certification, Orders ‘Empty Suit’ Class Action Dismissed with Prejudice

The U.S. Court of Appeals for the Seventh Circuit yesterday vacated certification and directed the trial court to dismiss with prejudice the latest “empty suit” class action wherein class members suffered no real injury and wasted precious court resources merely to register their dissatisfaction with a product.

Writing for a unanimous three-judge panel, Judge Richard Posner showed little patience for the consumer fraud claims made by eight certified classes of eye drop users in Missouri and Illinois.  They unconvincingly alleged that the defendants — six pharmaceutical companies that make the drops for treatment of glaucoma —  sell the drops in bottles that dispense drops that are too large and thus wasteful and too costly.

Given the lack of any suggestion of collusion by the defendants either with each other or with other producers (if there are other producers) of eye drops for treatment of glaucoma, or of any claim that the defendants misrepresent the quality of their product, we are asked to decide a case based simply on dissatisfaction with a product . . . or with its price.

. . . Even supposing it were demonstrable 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. You cannot sue a company and argue only—”it could do better by us”—which is all they are arguing. In fact, such a suit fails at the threshold, because there is no standing to sue. 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. The 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.” Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1548 (2016); Lujan v. De-fenders of Wildlife, 504 U.S. 555, 560 (1992).

ATRA filed an amicus brief in the case that apparently resonated with the Seventh Circuit panel.  In part, it read:

First, plaintiffs lack standing because they received what they were promised: effective, FDA-approved prescription glaucoma medications. Their speculative claim that they might have paid less for those medications if defendants had packaged them more efficiently—a claim that is not supported by concrete factual allegations and that runs contrary to basic economic logic—does not describe a cognizable injury, let alone one that is fairly traceable to the conduct plaintiffs challenge as unlawful.

. . . Second, even assuming plaintiffs sufficiently pleaded the elements of Article III standing, they did not satisfy the requirements for class certification. The district court abused its discretion in certifying classes containing tens of thousands of individual consumers without meaningful analysis of whether class treatment was warranted. The court certified those classes because it accepted plaintiffs’ lawyers’ implausibly broad framing of a supposed “common issue”—whether 33 different FDA-approved glaucoma medications release eye drops that are too large for all consumers under all circumstances—while improperly refusing to consider defendants’ evidence that the class members had not suffered any common injury.

Affirming the decision below would trigger a new wave of abusive, no-injury class-action litigation, with potentially devastating effects on businesses and consumers. If plaintiffs’ novel standing theory were accepted, it would encourage lawyers to bring class-action suits over any business practice that could be portrayed as inefficient, based on conjecture that greater efficiency might have translated into savings for customers. And if the district court’s cursory class-certification analysis were upheld, it would encourage those same lawyers to frame supposedly common issues at an unrealistically high level of generality in order to win certification of large classes and thereby coerce defendants into paying huge settlements. Those consequences of affirmance would benefit no one but the lawyers—not the businesses that would pay millions in litigation and nuisance settlement costs; not the employees, investors, and consumers who would ultimately bear those costs; and certainly not the glaucoma patients who take the medications at issue in this case and who could be denied those critical medications if this case were allowed to proceed.