Long ago, a senior partner told us that clear writing flows from clear thinking. That might be so, but clear thinking and clear writing do not necessarily produce the correct result. For example, you'd have a tough time finding a legal opinion written more clearly than Calchi v. Topco Assocs., LLC, 2024 U.S. Dist. LEXIS 177189 (N.D. Illinois Sept. 30, 2024). Indeed, the prose is delightful. But the outcome, at least for any card-carrying defense hack, is regrettable.
Judge Seeger is a much better writer than we are, so we'll liberally borrow his words to describe what happened in the Calchi case. The plaintiff bought a bottle of over the counter (OTC) cold medicine. "She wanted to feel better, but she didn't want to feel drowsy. So she picked up a bottle" of cold medicine that claimed to be "non-drowsy." She took the medicine and became "unexpectedly drowsy." She concluded that the medicine "was to blame for her sudden urge to nap. She felt lousy, and then drowsy. And now, she feels duped." She filed a class action complaint alleging violations of consumer fraud statutes in 43 states plus the District of Columbia. She also alleged breach of warranty under both state law and the Magnuson-Moss Warranty Act. Finally, there is a claim for intentional misrepresentation.
The defendant filed a motion to dismiss, arguing that the claims were preempted by federal law and that the plaintiff lacked standing. There were other grounds as well, which we will get to soon enough.
Interestingly, the same plaintiff filed a virtually identical lawsuit in S.D.N.Y. against another non-drowsy cold medicine. That double-header prompted the Calchi court to entertain some skepticism, but not enough to affect the result. The Calchi court also took note of the extraordinary proliferation of cases involving non-drowsy medicine. "A lot of judicial energy is getting devoted to non-drowsy medication."
The same plaintiff counsel authored many of the complaints. The complaints "read like fungible widgets" and it appears that plaintiff counsel "has fired up the litigation factory, and the machine spat out another complaint, courtesy of a few clicks and a well-oiled use of copy-and-paste." Moreover, the complaint is hardly specific to the plaintiff at all. "Most of the paragraphs could apply to any run-of-the-mill sick, drowsy plaintiff."
How can such splendid phrase-making be in service of an opinion that is mostly pro-plaintiff? Wait and see.
CAFA Jurisdiction
The Class Action Fairness Act (CAFA) applies to this case. That is important in Calchi, because the defendant was an LLC, which is treated as an unincorporated association under the statute. Most of the time, the citizenship of an unincorporated association, as with a partnership, is the citizenship of all its members. That rule would make diversity of citizenship difficult to establish. But CAFA provides that an unincorporated association, as with a corporation, is determined by principal place of business and place of organization. "The jurisdictional yardstick is different, depending on the type of case. It might seem funny for a limited liability company to swap passports and have a different citizenship, depending on the nature of the case. But Congress gets to set the rules."
Therefore, CAFA supports federal diversity jurisdiction over the Calchi case.
Preemption
This is the part of the Calchi opinion that stings the most. The label for the OTC medicine fully complied with the FDA monograph. Federal law prohibits states from establishing any requirement for an OTC medicine that is "different from or in addition to, or that is otherwise not identical with," the FDA requirements. There is an out for personal injury cases, but that is not what we have in the Calchi case. The plaintiff merely wanted her money (and the money spent by all those class members) back.
Why isn't this case preempted? Even under the rotten Seventh Circuit Bausch case (the Calchi case – or perhaps we should say, this Calchi case – is in the N.D.Illinois, so it is controlled by Seventh Circuit law), this case seems to be a poster child for express preemption.
Sadly, there is another awful Seventh Circuit express preemption case: Bell v. Publix Super Markets, Inc., 982 F.3d 468 (7th Cir. 2020). Bell was about grated cheese. The package bragged that it contained "100% Grated Parmesan Cheese." According to the plaintiff, that "100%" was a lie, because there was also cellulose powder and potassium sorbate in the product. The Bell court rejected the defendant's preemption argument, drawing a distinction between requiring a defendant to make additional affirmative disclosures (preempted) versus stopping the defendant from voluntarily adding deceptive language to the federally permitted labels (not preempted).
In Calchi, the FDA did not require a drowsiness warning, so the plaintiff could not sue the defendant for not including a drowsiness warning. But the defendant went off on its own and added the "non-drowsy" claim. The Calchi court "takes its marching orders from the Seventh Circuit. And the Seventh Circuit has ruled that 'while states may not require sellers to add further labeling that is not required by federal law, they may prevent sellers from voluntarily adding deceptive content that is not required by federal law."
That is bad enough. But the Calchi court also construed "misbranding" to be parallel to anything plaintiffs say is false. That reasoning makes express preemption more challenging than it should be.
The defendant's dream of preemption might have died a hard death in Calchi, but die it most certainly did.
Standing
The defendant argued that the plaintiff had no standing to assert claims on behalf of class members under the laws of other states. She bought the cold medicine in New York, not the other 43 jurisdictions.
The Calchi court held that the plaintiff had asserted an economic injury: "[s]he parted with money in her back pocket, and the money would still be there but for the misrepresentation." The court believed that the price-premium theory was "a bit shakier" but the plaintiff had enough "standing to get her foot in the door."
But the court kicked the class representation issue down the road. Whether the plaintiff can "represent drowsy people in other states is a question for another day."
New York Consumer Protection Claim
The defendant argued that the plaintiff had inadequately alleged that the medicine induced drowsiness. The court deemed this argument as "a tough hill to climb at the motion-to-dismiss stage." The plaintiff alluded to adverse events and a scientific study conducted by a company that competed with the defendant. The court held that such support, at least for now, was good enough.
The defendant also argued that no reasonable consumer would be hoodwinked by the non-drowsiness claim. The court saw this argument as "a big ask. Too big. Not everyone wants to feel sleepy after taking cold medicine. Drivers don't. Neither do people who want to feel better while pushing through the workday."
The defendant sought to avail itself of New York's safe harbor provision for products that comply with federal regulations. But the Calchi court held that the safe harbor provision was neutered by the same broad construction of "misbranded" that held off preemption.
Breach of Warranty
The defendant fared considerably better on the New York and Magnuson-Moss warranty claims. Both statutes require plaintiffs to furnish reasonable pre-complaint notice to the defendant. Here, the plaintiff waited six months to raise a beef with the defendant. The court held that waiting six months is not "reasonable" and that the plaintiff "overslept on her rights." (At last the drowsy/sleep jokes cut in favor of the defendant on an issue.)
Intentional Misrepresentation and Rule 9(b)
Despite taking the plaintiff to task early in the opinion about the minimal factual content in this cookie-cutter complaint, when it gets to the fraud claim the Calchi court held that the particularity requirement of Fed. R. Civ. P. 9(b) was nonetheless satisfied. That is not clever or funny; it is bizarre.
Injunctive Relief
The plaintiff in Calchi asked for "a slew of backward-looking remedies." She also asked for injunctive relief going forward to halt the "deceptive conduct." But the plaintiff did not allege that she will be purchasing the cold medicine again. Her whole point was that once the veil had been lifted from her eyes, she would not purchase the medicine. The non-drowsy label "can't trick her now." There is no danger of "fool me twice, so there is no basis for an injunction."
But what of the other class members, you ask? Standing is "not dispensed in gross." The named plaintiff has no standing to seek an injunction, so that relief is excised from the complaint.
That being said, the court gave the plaintiff the opportunity to amend the complaint and try to "plead facts sufficient to show standing for injunctive relief."
Perhaps there will be another opinion in this case. We fervently hope that the court's admirable literary skills will be used to escort this zombie, sleepwalking case off the docket.
This article is presented for informational purposes only and is not intended to constitute legal advice.