Court Opinion

ID: 9956611
Source: CourtListenerOpinion
Date Created: 2024-04-02 17:01:00.744996+00
Date Added: 2024-06-11T08:17:39.439284
License: Public Domain

In the

    United States Court of Appeals
                 For the Seventh Circuit
                     ____________________
No. 23-2525
IN RE: RECALLED ABBOTT INFANT
FORMULA PRODUCTS LIABILITY LITIGATION

APPEAL OF: ECONOMIC LOSS PLAINTIFFS.
                     ____________________

         Appeal from the United States District Court for the
           Northern District of Illinois, Eastern Division.
          No. 1:22-cv-04148 — Matthew F. Kennelly, Judge.
                     ____________________

     ARGUED FEBRUARY 5, 2024 — DECIDED APRIL 2, 2024
                 ____________________

   Before ROVNER, BRENNAN, and KIRSCH, Circuit Judges.
    BRENNAN, Circuit Judge. Plaintiffs here are a potential class
of consumers who purchased infant formula manufactured
by Abbott Laboratories at a facility later deemed unsanitary.
As a result of a Food and Drug Administration investigation,
Abbott initiated a voluntary recall of all infant formula pro-
duced at that plant. After the recall, these plaintiffs sued,
claiming economic harm based on a potential risk of injury
due to the unclean conditions. Because the injury claimed
does not support Article III standing, we affirm the district
court’s dismissal.
2                                                   No. 23-2525

                                 I
     Abbott Laboratories produces powdered infant formula at
multiple facilities, including one in Sturgis, Michigan. Plain-
tiffs assert that the Sturgis plant has a long history of quality
control problems. The FDA conducted multiple inspections of
that facility and issued an Establishment Inspection Report in
September 2021. That report contained at least sixteen com-
plaints about harmful bacteria in formula manufactured at
the Sturgis facility between 2019 and 2021. The report also
identified harmful bacteria in two batches of formula and in
several environmental samples. On September 21, 2021, after
issuing the report, the FDA learned of the first illness in in-
fants. The agency notified Abbott the next day. Between Sep-
tember and December 2021, the FDA received two additional
reports of illness in infants purportedly caused by the harmful
bacteria.
   On February 17, 2022, the FDA and the Center for Disease
Control announced an investigation into consumer com-
plaints of bacterial illness potentially related to Abbott for-
mula products manufactured at the Sturgis plant. That same
day, the FDA and CDC issued a warning to consumers not to
use Abbott products if they bore certain codes indicating they
were produced at Sturgis between October 2020 and January
2022. The FDA did not mandate a recall. Abbott announced a
voluntary recall of certain products manufactured at Sturgis
and offered a full refund to consumers who possessed such
formula.
    In the aftermath of the agencies’ actions and Abbott’s
recall, numerous plaintiffs sued Abbott. All cases were con-
solidated for pretrial proceedings. The cases include two cat-
egories of claims: (i) personal injury plaintiffs—complaints
No. 23-2525                                                     3

seeking recovery for personal (i.e., medical) injuries to chil-
dren purportedly caused by consumption of Abbott’s for-
mula; and (ii) economic harm plaintiffs—putative class claims
asserting purely economic losses on account of Abbott’s con-
duct. This appeal concerns only the second category. The per-
sonal injury cases remain pending in the district court.
   In February 2023, the economic loss plaintiffs filed an
Amended Consolidated Class Action Complaint. They allege
violations of various state consumer fraud acts, and claims for
unjust enrichment, breach of the implied warranty of mer-
chantability, and negligent misrepresentation on behalf of a
nationwide class and twenty state sub-classes of consumers
who purchased later-recalled Abbott products dating back to
April 1, 2018.
    Plaintiffs allege “there was a risk the products were con-
taminated with [harmful] bacteria,” and the products “may
[have] be[en] adulterated” and were “potentially” contami-
nated. See Complaint ¶ 116, In re Recalled Abbott Infant
Formula, No. 22 C 4148 (N.D. Ill. Sept. 2, 2022), ECF No. 16
[hereinafter “Compl.”]. Those allegations are styled as both a
“benefit of the bargain” and a “premium price” theory of in-
jury. For the benefit of the bargain theory, plaintiffs argue that
because the formula had a risk of contamination, they did not
get what they bargained for, safe and nutritious infant for-
mula. For the premium price theory, plaintiffs seek economic
loss stemming from a premium paid for Abbott’s infant for-
mula they would not have otherwise paid if they had known
of the risk of contamination.
   Abbott moved to dismiss the complaint. The district court
granted the motion, and this appeal followed.
4                                                   No. 23-2525

                               II
   We review a decision to dismiss for lack of standing de
novo. Dinerstein v. Google, LLC, 73 F.4th 502, 511 (7th Cir.
2023).
    There are “two forms of standing challenges.” Flynn v.
FCA U.S. LLC, 39 F.4th 946, 952 (7th Cir. 2022). “A facial chal-
lenge 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 con-
trast, asserts that there is in fact no standing.” Id. (citation
omitted). Abbott purports to raise facial and factual chal-
lenges to standing. But, as the district court correctly noted,
Abbott’s contention that plaintiffs did not adequately plead
standing is a facial challenge.
                               A
    “As the party invoking federal jurisdiction, [the] plaintiff
bears the burden of establishing the elements of Article III
standing.” Silha v. ACT, Inc., 807 F.3d 169, 173 (7th Cir. 2015).
This means that to survive dismissal for lack of standing, the
plaintiff must meet a pleading burden paralleling the
“Twombly-Iqbal facial plausibility requirement,” and allege
sufficient factual matter to support the inference that standing
exists. Id. at 173–74. “Where, as here, a case is at the pleading
stage, the plaintiff must clearly … allege facts demonstrating
each element” of the standing inquiry. Spokeo, Inc. v. Robins,
578 U.S. 330, 338 (2016). “Courts must accept as true all mate-
rial allegations of the complaint, and must construe the com-
plaint in favor of the complaining party.” Silha, 807 F.3d at 173
(cleaned up).
No. 23-2525                                                       5

    “Article III of the Constitution limits federal judicial
power to certain ‘cases’ and ‘controversies,’ and the ‘irreduc-
ible constitutional minimum’ of standing contains three ele-
ments.” Silha, 807 F.3d at 172–73 (quoting Lujan v. Defenders of
Wildlife, 504 U.S. 555, 559–60 (1992)). Those three elements are
(1) an injury in fact that is (2) fairly traceable to the challenged
action of the defendant and (3) is likely, not merely specula-
tive, that the injury will be redressed by a favorable decision.
Friends of the Earth, Inc. v. Laidlaw Env’t Servs. (TOC), Inc., 528
U.S. 167, 180–81 (2000) (citing Lujan, 504 U.S. at 560–61). This
case concerns only the first element, “injury in fact.”
    An “injury in fact” is “concrete and particularized” and
“actual or imminent, not conjectural or hypothetical.” Spokeo,
578 U.S. at 339. “For an injury to be ‘particularized,’ it must
affect the plaintiff in a personal and individual way.” Id.
(cleaned up); see Lujan, 504 U.S. at 560 n.1. “Requiring a plain-
tiff to demonstrate a concrete and particularized injury
caused by the defendant and redressable by the court ensures
that federal courts decide only ‘the rights of individuals[.]’”
TransUnion LLC v. Ramirez, 594 U.S. 413, 423 (2021) (citing
Marbury v. Madison, 5 U.S. 137, 170 (1803)). And the injury-in-
fact requirement ensures “that federal courts exercise ‘their
proper function in a limited and separated government,’ Rob-
erts, Article III Limits on Statutory Standing, 42 DUKE L. J. 1219,
1224 (1993).” Id.
    Economic harm can be a concrete injury sufficient to con-
fer standing. In re Aqua Dots Prods. Liab. Litig., 654 F.3d 748,
751 (7th Cir. 2011). That includes when, “as a result of a de-
ceptive act or an unfair practice,” a plaintiff is “deprived of
the benefit of his bargain.” Debernardis v. IQ Formulations, LLC,
942 F.3d 1076, 1084 (11th Cir. 2019); see McGee v. S-L Snacks
6                                                    No. 23-2525

Nat’l, 982 F.3d 700, 706–07 (9th Cir. 2020); In re Johnson & John-
son Talcum Powder Prods. Mktg., Sales Pracs. & Liab. Litig., 903
F.3d 278, 283 (3d. Cir. 2018).
                                B
     The gravamen of plaintiffs’ alleged injury is a past poten-
tial risk of harm resulting in economic losses. Plaintiffs say
they “would not have paid the purchase price for the prod-
ucts had they known the products were at substantial risk of
being contaminated with … harmful bacteria at the time of
purchase.” Compl. ¶ 15. They describe this theory as both a
benefit of the bargain and premium price theory. But plain-
tiffs’ risk-of-harm theory of injury does not support Article III
standing.
   Plaintiffs’ alleged injury is hypothetical or conjectural.
When purchasing the infant formula, plaintiffs received what
they asked for. At that point, there was no known risk of con-
tamination and no loss of the benefit of the bargain or pre-
mium price paid. Once plaintiffs learned of the unsanitary
conditions at the Sturgis facility and potential risk of contam-
ination, then they were told not to use the formula, and Ab-
bott offered a refund. So, there was not a time when plaintiffs
were at a risk of harm.
   Plaintiffs’ claimed injury is also not particularized because
they do not allege that any of the products they purchased
were contaminated. Nor do plaintiffs plead facts suggesting
that contamination of Abbott’s products was sufficiently
widespread to plausibly affect any given unit of infant for-
mula, including the ones they purchased. Plaintiffs claim only
that there was a “potential risk” the products may have been
No. 23-2525                                                         7

contaminated, but they do not say they were subject to that
risk in a personal and individual way.
    For this reason, this case differs from In re Aqua Dots, in
which this court held that a universal defect in a toy that ren-
dered the toy valueless was an economic harm that conferred
standing. See 654 F.3d at 751. In that case, a toy manufacturer
substituted a nontoxic adhesive with an adhesive, which, if
ingested, could induce serious illness and had already done
so for some children. See id. at 749. Every unit of the toy con-
tained the toxic adhesive, and it was undisputed that the
products were defective. See id. This court ruled that “[t]he
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.” Id. at 751. The
toys were essentially valueless for each plaintiff because they
were toxic and could not be used as intended. See id.; see also
In re Evenflo Co., Inc., Mktg., Sales Pracs. & Prods. Liab. Litig., 54
F.4th 28, 35–36 (1st Cir. 2022) (holding that defendant’s car
seats contained a universal defect as not tested and safe as ad-
vertised, so plaintiffs overpaid for all products based on de-
fendant’s false or misleading statements); Debernardis, 942
F.3d at 1084–85 (holding that defendant’s dietary supple-
ments all contained “DMBA … a new dietary ingredient” so
all products with that illegal ingredient were “worthless.”).
    A universal defect inherent in a product—such as a design
defect or a fundamental flaw—renders each product value-
less to each plaintiff, as in Aqua Dots and similar cases. Here,
though, there is only a potential risk of harm or defect, not a
universal defect, and no way to tell how widespread the de-
fect was in Abbott’s formula. Plaintiffs do not claim that the
specific product they bought was contaminated. They plead
8                                                     No. 23-2525

some facts about a persistent problem at Abbott’s Sturgis
facility which could have affected many batches of the pow-
dered infant formula. But plaintiffs did not allege facts
suggesting that contamination of Abbott’s products was suf-
ficiently widespread so as to plausibly affect any given prod-
uct, including the ones they purchased. The potential risk of
contamination is not enough to confer standing.
    Plaintiffs’ claims are more like those in Wallace v. ConAgra
Foods, Inc., 747 F.3d 1025 (8th Cir. 2014). That case concerned
a risk of a defect, not a universal defect, and the Eighth Circuit
held that the plaintiffs’ alleged risk was speculation that could
not confer standing. Id. at 1030. In Wallace, the plaintiffs
claimed that the defendant mislabeled its hot dogs as 100%
kosher when, in fact, some of the defendant’s beef products
were not kosher. Id. at 1028. The Eighth Circuit ruled that this
claim was insufficient under Article III to allege standing. Id.
at 1030. Acknowledging the plaintiffs’ assertion that they
would not have paid as much for the defendant’s products if
they “were not kosher,” plaintiffs’ problem, the court ruled,
was that they “fail[ed] to show that any of the particular pack-
ages of [defendant’s products] they personally purchased con-
tained non-kosher beef.” Id. at 1030 (emphasis added).
    The Wallace plaintiffs alleged that “some” units of the de-
fendant’s products contained the defect. But those allegations
were insufficient to satisfy Article III’s “particularized” injury
requirement. The court ruled, “[i]n the context of defective
products, it is not enough for a plaintiff to allege that a
product line contains a defect or that a product is at risk for
manifesting this defect; … the plaintiffs must allege that their
product actually exhibited the alleged defect.” Id.; see also In
re Polaris Mktg., Sales Pracs., & Prods. Liab. Litig., 9 F.4th 793,
No. 23-2525                                                     9

797 (8th Cir. 2021). Because it was “pure speculation to say the
particular packages sold to the consumers were
tainted … while it [wa]s quite plausible [the defendant] sold
the consumers exactly what was promised: a higher quality, ko-
sher meat product,” the court ordered dismissal of their
claims for lack of standing. Wallace, 747 F.3d at 1031.
    The Eleventh Circuit concluded much the same in Doss v.
General Mills Inc., 816 F. App’x 312 (11th Cir. 2020). Although
an unpublished per curiam opinion, there, the Eleventh Cir-
cuit affirmed a thorough district court order dismissing
claims premised on purported glyphosate contamination in
Cheerios. See id. at 314 (affirming Doss v. Gen. Mills, Inc., 2019
WL 7946028 (S.D. Fla. June 14, 2019)). The Eleventh Circuit
accepted the district court’s recognition that the plaintiffs
“d[id] not ... even allege that the Cheerios she herself bought
actually contain any glyphosate—just that some Cheerios that
have been tested do.” Doss, 2019 WL 7946028, at *2. On that
ground, the Eleventh Circuit affirmed the dismissal, holding
that the plaintiff failed to “allege[] that she purchased any
boxes of Cheerios that contained any glyphosate, much less a
level of glyphosate that is so harmful the Cheerios are ‘pre-
sumptively unsafe’ and therefore worthless.” Doss, 816 F.
App’x at 314. Plaintiff’s injury was thus only conjectural or
hypothetical, at least as to the cereal plaintiff bought. Id.
   Like in Wallace, where the plaintiffs could not claim they
had non-kosher beef in their hot dogs, and in Doss, where the
plaintiffs could not allege they had a harmful chemical in their
cereal, plaintiffs here cannot and do not maintain that the in-
fant formula they purchased was contaminated. Plaintiffs
have no economic injury because the products they
10                                                   No. 23-2525

purchased were not rendered valueless; they received the in-
fant formula for which they bargained.
    Other circuits have agreed there is no economic injury suf-
ficient to confer standing where plaintiffs received what they
bargained for. In In re Johnson & Johnson, the Third Circuit af-
firmed dismissal of financial harm claims where the plaintiff
consumed a product that “functioned for her as expected.”
903 F.3d at 280–81 (noting that the case “concern[ed] a non-
durable product that has already been consumed in its en-
tirety”). There, the plaintiff purchased baby powder but
claimed that had she known the powder carried a “risk of de-
veloping ovarian cancer,” she would not have done so. Id. at
289. But the plaintiff “d[id] not allege that she ha[d] ovarian
cancer,” nor even that she had any “increased risk of devel-
oping cancer.” Id. at 281. Under those circumstances, the
plaintiff’s allegations required the court “to conclude that the
powder she received was, in fact, safe as to her.” Id. at 289.
Given that the plaintiff had “fail[ed] to allege even that the
Baby Powder provided her with an economic benefit worth
one penny less than what she paid,” the court held that she
“received the benefit of her bargain and [had] suffered no eco-
nomic injury.” Id. at 288. Plaintiffs’ “buyer’s remorse, without
more, [was] not a cognizable injury under Article III of the
United States Constitution.” Id. at 281.
    The Fifth Circuit has reached the same conclusion on sim-
ilar facts. In Rivera v. Wyeth-Ayerst Labs., that court vacated an
order certifying a class of drug purchasers and remanded
with instructions to dismiss their claims for lack of standing.
283 F.3d 315, 316 (5th Cir. 2002). The court succinctly de-
scribed the plaintiffs’ injury theory:
No. 23-2525                                                   11

       Wyeth sold Duract; Rivera purchased and used
       Duract; Wyeth did not list enough warnings on
       Duract, and/or Duract was defective; other pa-
       tients were injured by Duract; Rivera would like
       her money back. The plaintiffs do not claim Du-
       ract caused them physical or emotional injury,
       was ineffective as a pain killer, or has any future
       health consequences to users. Instead, they as-
       sert that their loss of cash is an “economic in-
       jury.”
Id. at 319. These facts were insufficient to allege Article III
standing, the Fifth Circuit reasoned, because the
“wrongs ... suffered by other, non-class member pa-
tients ... cannot constitute an injury in fact” as to plaintiffs
who had taken the drug yet did not suffer any ill-effects. Id. at
320. Instead, “[b]y plaintiffs’ own admission, Rivera paid for
an effective pain killer, and she received just that—the benefit
of her bargain.” Id. at 320.
    As in In re Johnson & Johnson and Rivera, plaintiffs here re-
ceived the benefit of their bargain and suffered no economic
loss. They purchased and received infant formula. Plaintiffs
do not claim the product they bought suffered from the defect
and thus was valueless. And they do not allege the economic
benefit they received from the formula was anything less than
the price paid.
    A hypothetical shows why plaintiffs’ theory of injury does
not confer standing. Consider a popular restaurant at which a
diner gets food poisoning. An investigation reveals the res-
taurant did not meet the sanitation code, so its food was at
risk of contamination. The sick diner had a real, particularized
injury. But any patron who has ever eaten at the restaurant
12                                                 No. 23-2525

does not have a real, particularized injury. The risk that other
patrons’ food could have been contaminated because it was
prepared and served at a restaurant that did not meet the san-
itation code does not mean that the other patrons’ food was
ever contaminated. Any injury to those other patrons is hypo-
thetical or conjectural, and they have no particular or individ-
ual harm. So, the other patrons would not have standing to
sue the restaurant under a risk-of-harm theory of injury, un-
like the diner with food poisoning who suffered an actual
harm.
                              III
    Plaintiffs’ risk-of-harm theory of injury does not support
Article III standing. So, we AFFIRM the district court’s dismis-
sal for lack of standing.