A recent Eleventh Circuit decision took a broad view of what type of economic injury is sufficient to confer Article III standing, concluding that two dietary supplement companies’ alleged violations of a federal statute could constitute an injury in fact, even absent allegations that the products failed to work as intended or that the plaintiffs paid a price premium.

• In Debernardis v. IQ Formulations, LLC, two plaintiffs brought a putative class action asserting claims for violations of consumer protection statutes, fraud, and unjust enrichment against the manufacturer and distributor of dietary supplements marketed to consumers as energy stimulants.
• The plaintiffs alleged that the defendant failed to disclose that the supplements were “adulterated” because they contained a “new dietary ingredient.” Specifically, the plaintiffs claimed the defendants failed to provide the FDA with premarket information showing that the ingredient had a history of harmless use or other evidence of its safety. The sale of “adulterated” supplements is prohibited by the Food, Drug, and Cosmetic Act (“FDCA”).
• Plaintiffs pursued a benefit-of-the-bargain damages theory: because the supplements they purchased could not be legally sold, plaintiffs argued, the supplements were “worthless” and plaintiffs incurred damages in the full amount of the price they paid to purchase the supplements.
• The district court granted the defendants’ motion to dismiss for lack of standing, finding that the plaintiffs received the benefit of their bargains because they had not alleged that the supplements failed to perform as advertised, that the supplements caused any adverse health effects, or that plaintiffs paid a premium due to an alleged misrepresentation.
• On appeal, a panel of the Eleventh Circuit reversed. The court held that the plaintiffs’ allegations that the supplements they purchased were “adulterated”—and thus worthless because they could not be legally sold—were sufficiently plausible to survive the defendants’ motion to dismiss.
  • The court cautioned that its decision was “limited to the specific facts alleged in this case” and that it did not decide “whether a consumer who alleges he purchased a product that could not legally be sold under a different statutory scheme acquired a worthless product."
  • The court’s reasoning appeared animated in part by Congress’s determination, under the FDCA, that adulterated products are presumptively unsafe for human consumption.
• Judge Jeffrey Sutton of the Sixth Circuit, sitting by designation, issued a concurring opinion to discuss “the razor’s edge of Article III jurisdiction.”
  • He noted that “just as there is not ‘an anything-hurts-so-long-as-Congress says-it-hurts theory of Article III injury,’ there is not an anything-hurts-so-long-as-the-plaintiff-says-it-hurts theory of Article III injury.” Therefore, “[w]hat makes today’s case difficult is that the plaintiffs rest a seemingly concrete injury (dollars-and-cents economic harm) on a purely procedural violation (the defendant’s failure to file a notice with the federal Food and Drug Administration).”
  • Although Judge Sutton concluded that “it is plausible for a consumer to allege that he relies on strict compliance with Food and Drug regulations when making choices about what products to buy,” he stressed that each claimant would need to provide evidence backing up these contentions as the case progressed.
• Read the Eleventh Circuit’s opinion here.