Askin v. Quaker Oats Company, The
Filing
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MEMORANDUM Opinion and Order. Signed by the Honorable Young B. Kim on 10/12/2011. (aac, )
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
DANIEL ASKIN, on behalf of himself
and all others similarly situated,
Plaintiff,
v.
THE QUAKER OATS COMPANY,
Defendant.
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11 CV 111
Magistrate Judge Young B. Kim
October 12, 2011
MEMORANDUM OPINION and ORDER
In this diversity suit brought under the Illinois Consumer Fraud and Deceptive
Business Practices Act (“ICFA”), 815 ILCS § 505/1, et seq., and Illinois common law,
Daniel Askin claims that The Quaker Oats Company (“Quaker”) lures consumers into buying
its oatmeal and granola products by touting them as being (among other things) “wholesome”
and “heart healthy,” when in reality the products contain unhealthy trans fats. Askin hopes
to represent a nationwide class of consumers who purchased products bearing allegedly
deceptive labels. Currently before the court is Quaker’s motion to dismiss the complaint
pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). (R. 38.) For the reasons
set forth below, the motion to dismiss pursuant to Rule 12(b)(1) is denied and the motion to
dismiss under 12(b)(6) is denied without prejudice to refiling following this court’s
resolution of Quaker’s separate motion to dismiss under the first-to-file rule.
Procedural History
Askin filed the current suit in January 2011 and amended the complaint six months
later, alleging that certain Quaker labeling and marketing practices violate ICFA and that he
is entitled to recover based on Quaker’s alleged unjust enrichment and breaches of
warranties. (R. 1, 22.) According to Quaker, the allegations in the amended complaint
describing the dangers of trans fats and the labels used in the accused products are largely
copied from complaints filed by purported class-action representatives pursuing earlier-filed,
similar claims against Quaker in the Northern District of California. After the parties
consented to the jurisdiction of this court, see 28 U.S.C. § 636(c); (R. 25), on July 7, 2011,
Quaker moved to dismiss the amended complaint under the first-to-file rule, arguing that the
case before this court is duplicative of the preexisting California actions, (R. 32 ¶ 4). That
same day Quaker filed the current motion to dismiss, arguing that Askin lacks standing to
pursue his claims and that the suit should be dismissed for failure to state a claim. (R. 38.)
Three days after Quaker moved to dismiss the amended complaint, four named
plaintiffs from the California actions moved to intervene in this case for purposes of filing
their own motion to dismiss under the first-to-file rule. (R. 46.) This court allowed the
parties to brief the motion to intervene, but once it became clear that the arguments proposed
by the California plaintiffs are not jurisdictional in nature, the court entered an order noting
that the jurisdictional questions raised by the current motion to dismiss must be resolved
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before the court can address the non-jurisdictional arguments raised in the motion to
intervene and in Quaker’s first-to-file motion. (R. 56.)
Facts
This court accepts as true the allegations in the amended complaint for purposes of
reviewing the motion to dismiss under Rule 12(b)(1). See Long v. Shorebank Devp’t Corp.,
182 F.3d 548, 554 (7th Cir. 1999). The relevant aspects of those allegations are as follows.
Since January 7, 2006, Quaker has “engaged in a wide-spread marketing campaign to
mislead consumers about the nutritional and health qualities of its Products.” (R. 22, Am.
Compl. ¶ 2.) Specifically, Quaker states on its packages and in its marketing campaigns that
its products contain “0 grams trans fat,” are “wholesome” and “heart healthy,” and constitute
nutritious “smart choices made easy.” (Id. ¶ 3.) These descriptions are misleading, says
Askin, because in reality the products “contain highly unhealthy, unwholesome artificial trans
fat.” (Id. ¶ 4 (emphasis omitted).) Askin cites studies finding that dietary trans fats
contribute to heart disease, Type 2 diabetes, and cancer. (Id. ¶¶ 5-6.)
Askin alleges that he has been injured by Quaker’s misleading campaign because he
purchased its Chewy Granola Bars and Instant Quaker Oatmeal for himself and for his son
relying on the allegedly deceptive statements found on the labels. (Id. ¶ 10.) According to
Askin, he paid a premium for the Quaker products because he believed that they contained
zero grams of trans fat. (Id.) He alleges that he would not have paid that premium had he
known that the products contain trans fats in the amount of less than .5 grams per serving but
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up to 5 grams per box. (Id. ¶¶ 10, 64.) Because the products contain trans fats, Askin alleges
that the health-related statements on the packaging are misleading. (Id. ¶ 10.)
Analysis
In the current Rule 12(b)(1) motion, Quaker argues that the amended complaint
should be dismissed for lack of jurisdiction because Askin lacks standing to pursue his
claims. The jurisdictional standing requirement is part of the Article III limitation of judicial
power to situations in which the plaintiff can demonstrate a “case” or “controversy” between
himself and the defendant. Pollack v. United States Dep’t of Justice, 577 F.3d 736, 739 (7th
Cir. 2009). To satisfy this requirement, a plaintiff must show that he has standing, meaning
he has suffered an injury that is “concrete, particularized, and actual or imminent; fairly
traceable to the challenged action; and redressable by a favorable ruling.” Monsanto Co. v.
Geertson Seed Farms, 130 S.Ct. 2743, 2752 (2010). The standing requirements “are rather
undemanding.” Family & Children’s Center, Inc. v. School City of Mishawaka, 13 F.3d
1052, 1058 (7th Cir. 1994) (internal quotation omitted). As long as the plaintiff has shown
that he has “an actual stake in the outcome that goes beyond intellectual or academic
curiosity . . . even a minor or non-economic injury will satisfy the strictures of Article III.”
Id.
Quaker argues that Askin’s premise for establishing standing—that he paid a premium
for Quaker’s products based on the alleged misrepresentations regarding the products’
ingredients—does not describe the kind of injury-in-fact required to create a case or
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controversy between the parties. Because the economic injury Askin cites is tied to what
Quaker describes as a “‘health concern’ that is hypothetical at best given the ‘insignificant’
amounts of trans fat” in its products, Quaker argues that the alleged premium does not
represent a real injury. (R. 39, Def.’s Mem. at 4.) The Seventh Circuit recently rejected a
similar argument in a products-liability class action involving a toy called Aqua Dots—a
product made up of beads that can be fused into shapes when wet. In re: Aqua Dots
Products Liability Litigation, __ F.3d __, 2011 WL 3629723, at *1 (7th Cir. Aug. 17, 2011).
In Aqua Dots, the defendant manufacturer instituted a recall after several children ate parts
of the toy (which resembled candy) and became seriously ill. Id. The plaintiffs—all Aqua
Dots purchasers—challenged the recall program even though their children were not harmed
by the toy. Id. In their class complaint, the plaintiffs alleged, among other things, that the
defendant made false and misleading representations about Aqua Dots. In re: Aqua Dots
Products Liability Litigation, MDL No. 1940, 1:08-CV-2364 (N.D. Ill.) (R. 15 at 31-33).
The defendant argued that because none of the plaintiffs or their children were physically
harmed by Aqua Dots, they lacked standing to sue. 2011 WL 3629723, at *1. The Seventh
Circuit rejected this argument, stating that the lack of physical harm:
means that members of the class did not suffer physical injury, but it does not
mean that they were uninjured. 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.
Id. Similarly, here Askin alleges that although he has not been physically harmed by
Quaker’s products, he paid more for those products than he would have had he known they
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contain an ingredient he was determined to avoid because of its known health risks. That
price differential represents a concrete injury-in-fact. See id.; Bridenbaugh v. FreemanWilson, 227 F.3d 848, 849-50 (7th Cir. 2000) (noting that the price increase resulting from
a challenged liquor-distribution law constitutes a source of injury); Central Laborers’
Pension Fund v. Sirva, Inc., 04 CV 7644, 2006 WL 2787520, at *3 (N.D. Ill. Sept. 22, 2006)
(holding that the plaintiff sufficiently alleged standing where it purchased stock at inflated
price based on the defendants’ alleged misstatements).
In arguing that Askin’s injury is too speculative to support a false advertising claim,
Quaker relies on decisions which are largely distinguishable based on what the plaintiffs in
those cases knew at the time they purchased the accused products and the nature of their
allegations. For example, Koronthaly v. L’Oreal USA, Inc., 374 Fed. App’x 257, 258 (3d
Cir. 2010), involved a plaintiff who sued a cosmetics manufacturer after discovering that the
lipstick she purchased contained trace amounts of lead. The Third Circuit concluded that the
plaintiff lacked standing because she had “asserted only a subjective allegation that the trace
amounts of lead in the lipsticks are unacceptable to her.” Id. at 259. But there, “[n]either the
packaging nor the products themselves contained any indication that the lipstick contained
any lead,” id. at 258, so unlike Askin, Koronthaly could not argue that she paid a premium
for the purchased product based on an affirmative misrepresentation that it was lead-free.
Similarly, in Rivera v. Wyeth-Ayerst Laboratories, 283 F.3d 315, 316-17 (5th Cir. 2002), the
court held that the plaintiffs who purchased and used a pain medication without suffering any
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side effects lacked standing to sue the medication’s manufacturer after learning that other
patients who took the drug suffered liver failure. But again, there the plaintiffs were alleging
liability based on a failure to warn of an injury they did not sustain, whereas here, Askin
alleges an economic injury based on his decision to purchase Quaker products at a premium
after being enticed by misleading health claims. The Rivera plaintiffs simply did not have
the same kind of “I paid a premium” argument that Askin relies on to support standing here.
Other cases on which Quaker relies similarly lack a claim that the plaintiffs were lured into
buying the accused product based on a representation that an ingredient was not present in
the product, when in fact it was. See Herrington v. Johnson & Johnson Consumer Cos., Inc.,
C 09-1597 CW, 2010 WL 3448531, at *4 (N.D. Cal. Sept. 1, 2010) (no standing where
plaintiffs purchased products later found to contain potential carcinogens); Levinson v.
Johnson & Johnson Consumer Cos., Inc., 09 CV 3317, 2010 WL 421091, at *4 (D. N.J. Feb.
1, 2010) (same).
Perhaps the closest case that Quaker cites in support of its argument is the recently
issued decision in Hughes v. Astrue, 1:10-1407-SEB-DML, 2011 WL 3877120, at **3-4
(S.D. Ind. Aug. 31, 2011). The plaintiffs in Hughes sued the manufacturer of a diet aide
called Dexatrim, alleging that they purchased the product based on the defendant’s
representation that Dexatrim did not contain a dangerous substance called hexavalent
chromium, when in fact it did. Id. at *1. Like Askin, the plaintiffs in Hughes were not
harmed physically, but alleged standing based on the economic injury stemming from their
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decision to purchase Dexatrim in reliance on the defendant’s alleged misrepresentations. Id.
at *3. The court rejected the plaintiffs’ standing assertion, stating that the cost of their
Dexatrim purchases did not cause “any real ‘drain’ on their personal financial resources.”
Id. at *4. But as the Seventh Circuit made clear in Aqua Dots, even a minor out-of-pocket
loss can provide the requisite injury for standing. 2011 WL 3629723, at *1; see also Family
& Children’s Ctr., 13 F.3d at 1058 (noting that even a minor injury satisfies Article III
requirements). Nor does the Hughes decision’s reasoning that the plaintiffs had nothing but
an unfounded fear of physical injury translate well here. See 2011 WL 3877120, at *6.
Askin has alleged that whether or not the amount of trans fats present in Quaker’s products
are harmful, had he known that trans fats were present in the products he purchased, he
would not have bought them. Suppose Askin were a vegan, refusing to eat meat because of
his objections to the conditions involved in American factory farming. Suppose further that
he purchased food products that were labeled as containing “0 grams of animal products,”
only to find out later that the food contained trace amounts of animal fat. Askin could not
argue in that situation that he had been harmed physically, but it would be obvious that he
would not have purchased the products absent the labeling message, and that once he
discovered the food’s actual content, he could not consume it. The economic harm in that
hypothetical situation mimics the injury at play in Aqua Dots, and extends to Askin’s
decision to avoid trans fats as well.
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Moreover, the Northern District of California considered and rejected Quaker’s
standing argument in the similar lawsuit unfolding there. See Chacanaca v. Quaker Oats
Co., 752 F.Supp.2d 1111, 1124-25 (N.D. Cal. 2010). In Chacanaca, Quaker argued that the
plaintiffs lacked standing to challenge their labeling practices under California consumer
fraud statutes because they had not suffered any health problems from consuming the
allegedly mislabeled products. Id. The court zeroed in on the “premium” aspect of the
plaintiffs’ standing argument:
The injury alleged here is the purchase of food products that contain an
ingredient the plaintiffs find objectionable. Had they known about the trans
fat content, they insist, they would not have purchased the product.
Defendant’s health-based harm argument misses the mark, as plaintiff have
adequately alleged an injury directly related to the redress they seek.
Id. at 1125. Here too, Quaker’s attempt to tie the injury in question to its substantive
arguments regarding the merits of Askin’s claims misses the target. Regardless of whether
Askin was physically harmed by the products he consumed, he alleges that he would not have
purchased them absent the allegedly misleading statements. That allegation states the kind
of economic injury that is redressable through this suit. See Aqua Dots, __ F.3d __, 2011 WL
3629723, at *1. Accordingly, the motion to dismiss for lack of standing is denied.
The court notes for purposes of clarification that Quaker frames one of its arguments
regarding the merits of Askin’s ICFA claim as a “standing” problem. Specifically, it argues
that Askin has no “standing” to sue under ICFA because he purchased the accused products
in New York, the state where he resides. (R. 39, Def.’s Mem. at 14.) But whether a resident
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of a state other than Illinois can sue under ICFA is a merits question, not a jurisdictional
standing question. See Morrison v. YTB Int’l, Inc., 649 F.3d 533, 535-36 (7th Cir. 2011).
The question will turn on choice-of-law principles, and “has nothing to do with standing . . .
[t]hat a plaintiff’s claim under his preferred legal theory fails has nothing to do with subjectmatter jurisdiction.” Id. at 536 (emphasis in original). And because that question goes to the
merits of Askin’s ICFA claim, rather than this court’s jurisdiction, the court concludes that
as a practical matter it makes sense to reserve ruling on this and Quaker’s other Rule 12(b)(6)
arguments until after Quaker’s motion to dismiss under the first-to-file rule is resolved. One
of the core arguments underlying the first-to-file motion is that it would waste judicial
economy for this court to decide the same substantive issues being determined in the earlier
filed California cases. (R. 33, Def.’s Mem. at 6.) Accordingly, and without expressing any
opinion as to the merits of the first-to-file motion, this court concludes that it should reserve
ruling on the Rule 12(b)(6) arguments—which raise issues that are being litigated in
California—until after it decides whether this case survives Quaker’s attack under the firstto-file rule.
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Conclusion
For the foregoing reasons, the motion to dismiss pursuant to Rule 12(b)(1) is denied.
Askin has adequately alleged that he has standing to pursue his claims. Quaker’s motion to
dismiss under 12(b)(6) is denied without prejudice to refiling following this court’s
resolution of Quaker’s separate motion to dismiss under the first-to-file rule.
ENTER:
_________________________________
Young B. Kim
United States Magistrate Judge
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