In re Recalled Abbott Infant Formula Prods. Liab. Litig.

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IN RE RECALLED ABBOTT INFANT FORMULA PRODUCTS LIABILITY LITIGATION This document relates to Willoughby v. Abbott Labs.,

Nos. 23 C 338, 22 C 1322

United States District Court, N.D. Illinois, Eastern Division

May 22, 2023

CASE MANAGEMENT ORDER NO. 1 (MEMORANDUM OPINION AND ORDER ON MOTIONS TO DISMISS WILLOUGHBY COMPLAINT)

MATTHEW F. KENNELLY, District Judge:

Eight plaintiffs-Charlotte Willoughby, Lakendrea Camille McNealy Shaylynn Doxie, Brittney Gray, Kataleena Helmick, Lani Holloway, Ashley Popa, and Deniege Revord-filed suit against Abbott Laboratories. Abbott manufactures and distributes Similac brand infant formula products. The plaintiffs (which the Court will collectively call Willoughby) allege that the products contain heavy metals and were manufactured in unsanitary conditions, both of which were not disclosed in the labeling. On January 23, 2023, the Executive Committee transferred this case to the Court under IOP 13(e) for pretrial coordination purposes due to its overlap with the consumer class action complaints in MDL 3037, In re Recalled Abbott Infant Formula Products Liability Litigation, Case No. 22 C 4148.

In her consolidated amended complaint, Willoughby asserts claims on behalf of a nationwide class and eight state classes for violations of state consumer fraud acts, common law fraud unjust enrichment, and breach of the implied warranty of merchantability. Abbott has moved to dismiss all the claims under Federal Rule of Civil Procedure 12(b)(1) for lack of standing and Rule 12(b)(6) for failure to state a claim. On May 1, 2023, the Court held a hearing on Abbott's motion. For the reasons stated below, the Court overrules Abbott's lack-of-standing argument, dismisses certain of Willoughby's claims for failure to state a claim, and otherwise denies Abbott's motion.

Background

Abbott is a leading supplier of infant formula in the United States. It sells its formula to consumers on its website and to major retailers who in turn sell it to consumers. Willoughby purchased Abbott's Similac brand powdered infant formula products. She has brought this putative class action on behalf of all purchasers from March 1, 2016 to the present.

Willoughby alleges that recent testing on five types of Similac infant formula products "confirmed the presence of Heavy Metals" in each product type tested, including 2.0 parts per billion (ppb) of lead, 11.4 ppb of cadmium, 10.1 ppb of mercury, and levels of arsenic ranging from 4.6 ppb to 9.7 ppb. Consol. Am. Compl. ¶¶ 19, 160. Independent testing reported the presence of arsenic and lead in another Similac formula product. The consolidated amended complaint also identifies several investigation reports and studies confirming the presence of heavy metals in baby foods.

Willoughby further alleges that "[t]here is no safe level of heavy metals" and that even low levels of heavy metals "cause serious and often irreversible damage to brain development." Id. ¶¶ 22, 87. Heavy metals "accumulate in the body, including in the kidneys and other internal organs," such that "the risk they pose grows over time and can remain in one's body for years." Id. ¶ 74. "[E]ven regular consumption of small amounts can increase the material risk of various health issues, including the material risk of bladder, lung, and skin cancer; cognitive and reproductive problems; and type 2 diabetes." Id. ¶ 78. The FDA has prioritized reducing exposure to arsenic, cadmium, lead, and mercury "in connection with its Toxic Elements Working Group." Id. ¶ 106.

Abbott does not disclose that its products "contained or had a material risk of containing" heavy metals. Id. ¶ 3. Willoughby alleges that consumer surveys show that reasonable consumers do not expect heavy metals to be present in Abbott's infant formula after seeing the products' labeling.

Willoughby also alleges that Abbott's infant formula was "manufactured in unsanitary conditions and with a lack of quality control." Id. ¶ 68. The consolidated amended complaint refers to the FDA's conclusion that its inspections of the Sturgis, Michigan facility "showed 'egregious unsanitary' conditions like cracks in key equipment that allowed bacteria to enter, a leaking roof and water collecting on the floor." Id. ¶ 66. Abbott also does not disclose that its products "lack . . . proper manufacturing controls" or have a "material risk of contamination." Id. ¶ 69.

Willoughby alleges that she "would not have purchased" or "would not have paid the price premium" for Abbott's infant formula had she known that the products were "manufactured in 'egregiously unsanitary' conditions without proper quality control procedures and contained (or had a material risk of containing) Heavy Metals." Id. ¶ 427.

Discussion

Willoughby asserts claims for violations of state consumer fraud acts common law fraud, unjust enrichment, and breach of the implied warranty of merchantability.

Abbott has moved to dismiss the claims for lack of standing under Rule 12(b)(1) and failure to state a claim under Rule 12(b)(6).

In deciding a motion to dismiss for failure to state a claim, a court must accept as true all well-pleaded factual allegations in the complaint and draw all reasonable inferences in the plaintiff's favor. See NewSpin Sports, LLC v. Arrow Elecs., Inc., 910 F.3d 293, 299 (7th Cir. 2019). To survive a motion to dismiss, a plaintiff must allege "factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Bissessur v. Ind. Univ. Bd. of Trs., 581 F.3d 599, 602 (7th Cir. 2009) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)).

Because Article III standing is a necessary component of federal jurisdiction, the Court addresses it first. See Kithongo v. Garland, 33 F.4th 451, 454 (7th Cir. 2022) ("The 'first and fundamental question' [the] court must answer 'is that of jurisdiction.'" (quoting Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 94 (1998))).

A. Standing

"Article III of the Constitution limits federal judicial power to certain 'cases' and 'controversies,' and the 'irreducible constitutional minimum' of standing contains three elements." Silha v. ACT, Inc., 807 F.3d 169, 172-73 (7th Cir. 2015) (quoting Lujan v. Defs. of Wildlife, 504 U.S. 555, 559-60 (1992)). Only the first element is relevant here, which is that the plaintiff must have suffered an "'injury in fact' that is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical." Friends of the Earth, Inc. v. Laidlaw Env't Servs. (TOC), Inc., 528 U.S. 167, 180 (2000). "As the party invoking federal jurisdiction, a plaintiff bears the burden of establishing the elements of Article III standing." Silha, 807 F.3d at 173.

"In evaluating a challenge to subject matter jurisdiction, the court must first determine whether a factual or facial challenge has been raised." Id. There are "two forms of standing challenges." Flynn v. FCA U.S. LLC, 39 F.4th 946, 952 (7th Cir. 2022). "A facial challenge attacks standing on the pleadings, arguing that the plaintiff lacks standing even if the well-pleaded allegations in the complaint are taken as true. A factual challenge, by contrast, asserts that there is in fact no standing." Id. (citation omitted). In this case, Abbott brings a facial challenge to standing, asserting that Willoughby failed to plead any economic injury.

"[I]n evaluating whether a complaint adequately pleads the elements of standing, courts apply the same analysis used to review whether a complaint adequately states a claim: 'Courts must accept as true all material allegations of the complaint, and must construe the complaint in favor of the complaining party.'" Silha, 807 F.3d at 173 (alterations accepted) (quoting Warth v. Seldin, 422 U.S. 490, 501 (1975)). "[W]hen evaluating a facial challenge to subject matter jurisdiction under Rule 12(b)(1), a court should use Twombly-Iqbal s 'plausibility' requirement, which is the same standard used to evaluate facial challenges to claims under Rule 12(b)(6)." Id. at 174; see also Reinoehl v. Centers for Disease Control & Prevention, No. 22-1401, 2022 WL 14461946, at *3 (7th Cir. Oct. 25, 2022) ("At the pleading stage, standing is evaluated under the same analysis used to review whether a complaint adequately states a claim.") (internal quotation marks omitted).

For both the unsanitary conditions and heavy metals claims, Willoughby contends that she suffered an economic injury from a loss of the benefit of the bargain. The Court addresses each theory in turn.

1. Unsanitary conditions

Willoughby cites Vanzant v. Hill's Pet Nutrition, Inc., 934 F.3d 730, 739 (7th Cir. 2019), for the proposition that "economic loss resulting from a price premium paid by a consumer is a well-recognized actual injury that satisfies Article III standing." Pls.' Resp. Br. at 7. But Abbott does not contest that a loss of the benefit of the bargain can be a cognizable injury. See In re Aqua Dots Prod. Liab. Litig., 654 F.3d 748, 751 (7th Cir. 2011) ("The plaintiffs' loss is financial: they paid more for the toys than they would have, had they known of the risks the beads posed to children. A financial injury creates standing."); In re Evenflo Co., Inc., Mktg., Sales Pracs. & Prod. Liab. Litig., 54 F.4th 28, 35 (1st Cir. 2022) ("This court has repeatedly recognized overpayment as a cognizable form of Article III injury."); In re Johnson & Johnson Talcum Powder Prod. Mktg., Sales Pracs. & Liab. Litig., 903 F.3d 278, 283 (3d Cir. 2018) ("Under the benefit of the bargain theory, a plaintiff might successfully plead an economic injury by alleging that she bargained for a product worth a given value but received a product worth less than that value.").

Rather,...