Third Circuit Endorses Standing for Putative Class of Eye Drop Consumers, Rejecting Seventh Circuit’s View

by Kilpatrick Townsend & Stockton LLP

Takeaway: Ever since the Supreme Court’s decision in Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016), federal courts have grappled with the threshold standing question of what constitutes concrete injury in consumer class action litigation. Earlier this year, the Seventh Circuit, in an amusing opinion by Judge Posner, likened a putative class of eye drop purchasers complaining about the size of their eye drops to a group of cat owners dissatisfied with the purchase of an expensive drinking fountain for their cats. Eike v. Allergan, Inc., 850 F.3d 315 (7th Cir. 2017). After the Seventh Circuit dismissed the action with prejudice, we suggested in a prior post [Spokeo Dismissals – With Prejudice, Without Prejudice or Something Else?] that the Seventh Circuit viewed the case as frivolous, since federal courts generally dismiss cases for lack of standing without prejudice. But faced with “materially identical allegations,” the Third Circuit rejected the Seventh Circuit’s view, holding that the eye drop purchasers sufficiently alleged concrete injury. Cottrell v. Alcon Labs., — F.3d —, 2017 WL 4657402, at *6 (3d Cir. Oct. 18, 2017). This divergent approach is another reminder that class action attorneys must stay current on the ever-evolving standing doctrine.

In Cottrell, the plaintiffs – purchasers of eye drops – filed suit against the manufacturers and distributors of the eye drops for violation of various states’ consumer protection statutes. Plaintiffs alleged the tip of the bottle of eye drops necessarily dispensed too large of an eye drop, around 50 microliters. Since a “plethora” of scientific research shows that an eye can only handle 7 to 10 microliters of fluid, plaintiffs alleged that any portion of the drop in excess of 7 to 10 microliters is “entirely wasted.” Id. at *1. As a result, plaintiffs claimed the defendants caused them to suffer “substantial” economic injury by manufacturing and selling eye drops in bottles that “emit such large drops.” Id. at *2.

These allegations are materially identical to the allegations made by the consumer-plaintiffs in Eike v. Allergan, Inc., 850 F.3d 315 (7th Cir. 2017).  Writing for the Seventh Circuit, Judge Posner suggested plaintiffs there were simply dissatisfied with a product and its price, likening them to cat owners who sued cat breeders for duping them into buying expensive drinking fountains for their cats: “[W]ould anyone think they could successfully sue the breeders? For what?” 850 F.3d at 317. Judge Posner observed “[y]ou cannot sue a company and argue only—‘it could do better by us’—which is all they are arguing.” Id. at 318. Citing Spokeo, Judge Posner concluded the consumers had no standing to sue: “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.’” Id.

The Third Circuit expressly rejected the Seventh Circuit’s reasoning. Writing for the majority, Judge Restrepo held the Seventh Circuit’s “logic flips the standing inquiry inside out, morphing it into a test of the legal validity of the plaintiffs’ claims of unlawful conduct.” Cottrell, 2017 WL 4657402, at *7. According to Judge Restrepo, “the Court in Eike blended standing and merits together” by determining the consumers had no cause of action; reasoning they had no injury because they had no cause of action; and concluding they had no standing to sue because they had no injury. Id. The Seventh Circuit erred by not focusing on whether plaintiffs alleged an invasion of a “legally protected interest.” Id. at *5. After noting that economic interests have traditionally been treated as legally protected interests for purposes of the standing doctrine, the Third Circuit held plaintiffs sufficiently alleged their “interests in the money they had to spend on medication that was impossible for them to use.” Id. at *6. And, by manufacturing and selling bottles of eye drops with tips that necessarily dispense too large of an eye drop, plaintiffs sufficiently alleged “Defendants’ conduct … caused harm to these interests.” Id.

Judge Roth dissented, holding the consumers “manufacture[d] a purely speculative injury.” Id. at *11 (Roth, J., dissenting). Judge Roth agreed plaintiffs’ injury boiled down to “the money spent on that portion of a single eye drop which exceeds the medically necessary volume.” Id. But Judge Roth noted plaintiffs did not argue they were charged more than market price for eye drops; instead, “they argue that the defendants could manufacture a hypothetical eye dropper that would dispense the exact amount of fluid needed to maximize efficacy without waste.” Id. (emphasis in original). Plaintiffs then assumed that once defendants’ conduct changed, no other aspects of the market would change—that is, “changing the eyedropper size would … change the price of the medicine.” Id. at *13. In Judge Roth’s view, this is an unreasonable assumption because the pharmaceutical market is shifting to pricing medicine based on effective doses, not volume. So even if defendants modified their eye dropper, plaintiffs might still pay the same price they’re paying now. Accordingly, Judge Roth could not accept such an “imaginative” economic theory and so rejected “the plaintiffs’ alleged economic injury as overly speculative and untenable under existing precedent.” Id.

In Eike, Judge Posner disregarded plaintiffs’ claims as mere “regret or disappointment” and dismissed the claims with prejudice, thereby foreclosing re-filing of the suit in any court. Judge Roth’s dissent in Cottrell did not go so far, but she did say the majority’s decision “flouts” the principle that “jurisdiction is a strict master” and that she is “troubled by both the legal and practical ramifications of the Majority’s decision.” 2017 WL 4657402, at *14. That distinguished jurists can disagree so strongly shows that the concept of “actionable injury” under Spokeo remains unclear, and the directly conflicting rulings on the identical claim might catch the eye of a Supreme Court looking to clarify its recent Spokeo ruling.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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