Bezdek v. Vibram USA Inc. et al
Filing
38
Judge Douglas P. Woodlock: MEMORANDUM AND ORDER entered finding as moot 10 Motion to Dismiss for Failure to State a Claim; granting in part and denying in part 15 Motion to Dismiss for Failure to State a Claim. The parties shall file a revised joint scheduling proposal on or before February 28, 2013. (Woodlock, Douglas)
UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
VALERIE BEZDEK, individually
and on behalf of all others
similarly situated,
Plaintiff,
v.
VIBRAM USA INC. and VIBRAM
FIVEFINGERS LLC,
Defendants.
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CIVIL ACTION NO.
12-10513-DPW
MEMORANDUM AND ORDER
February 19, 2013
Plaintiff Valerie Bezdek, on behalf of herself and others
similarly situated, alleges that defendants Vibram USA Inc. and
Vibram FiveFingers LLC (“Vibram”) have engaged in deceptive
marketing of their FiveFingers product, a flexible, thin-soled
shoe contoured to the feet and toes.
Before me is defendants’
motion to dismiss, Dkt. No. 15.
I. BACKGROUND
A.
Factual Background
Vibram seeks to exploit the wave of popularity in running
barefoot.
Running in defendants’ FiveFingers shoes is meant to
mimic barefoot running, while also affording some protection
against the elements.
FiveFingers sell at $80 to $125 per pair,
and sales have grown an average of 300% per year for the past 5
years.
-1-
Since defendants began selling FiveFingers in the United
States in April 2006, they have repeatedly advertised the “health
benefits” attributable to wearing FiveFingers as opposed to other
running shoes.
For example, through their website, Facebook
page, and in-store displays, defendants advertised that wearing
FiveFingers would (1) strengthen muscles in the feet and lower
legs, (2) improve range of motion in the ankles, feet, and toes,
(3) stimulate neural function important to balance and agility,
(4) eliminate heel lift to align the spine and improve posture,
and (5) allow the foot and body to move naturally.
At various
times, defendants’ website added that wearing FiveFingers would
improve proprioception and body awareness, reduce lower back pain
and injury, and generally improve foot health.
The purported
health benefits are well-summarized by Vibram’s advertisement
that “[w]earing FiveFingers for fitness training, running, or
just for fun will make your feet stronger and
healthier--naturally.”
A brochure included with FiveFingers specifically
represented that “[t]he benefits of running barefoot have long
been supported by scientific research” and that “[r]unning in
FiveFingers enables you to reap the rewards of running barefoot
while reducing . . . risks.”
Defendants’ website included
similar representations, and also featured endorsements from
doctors as to the health benefits of wearing FiveFingers.
In a
news article, Vibram CEO Tony Post commented on the company’s
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“strong commitment to research and innovation,” which was
reflected in the “educational section” of the Vibram website.
In reliance on the purported health benefits of wearing
FiveFingers, on April 13, 2011, Bezdek purchased the “Vibram
Bikilas” model of FiveFingers through defendants’ website for
$104.90.
Bezdek now claims, however, that defendants’
advertising campaign was false and misleading because it
misrepresented not only the health benefits of FiveFingers, but
also the extent to which such health benefits have been
scientifically corroborated.
According to Bezdek, there is no reliable scientific support
for defendants’ claims as to the health benefits of wearing
FiveFingers or barefoot running generally.
The complaint, for
example, references a website presenting research, funded in part
by Vibram, that states:
“While there are anecdotal reports of
barefoot runners being injured less, there is very little
scientific evidence to support this hypothesis at this time.”
The American Podiatric Medical Association (“APMA”) took the
position in March 2012 that, although “anecdotal evidence and
testimonials proliferate on the internet and in the media about
the possible health benefits of barefoot running, research has
not yet adequately shed light on the immediate and long term
effects of this practice.”
An April 2012 article in Foot & Ankle
International and a May/June 2011 article from the Journal of the
APMA similarly report that there is no evidence of decreased
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incidence of injuries in barefoot runners, a fact echoed by a
variety of other researchers.
The APMA article also called into
doubt the ability of barefoot running to improve muscle strength,
and indicated that the authors were unaware of any study that
evaluated the proprioceptive ability of barefoot runners.
Bezdek says that if she had known there was no scientific
evidence supporting the advertised health benefits of wearing
FiveFingers, she would not have purchased FiveFingers.
The
complaint also alleges that “[r]easonable consumers would not
have paid the amounts charged for FiveFingers, or would not have
purchased FiveFingers at all, had they known the truth about
FiveFingers.”
B.
Compl. ¶ 56.
Procedural History
Bezdek filed her initial complaint in this action on March
21, 2012.
Defendants moved to dismiss the complaint, and on June
25, 2012, Bezdek responded by filing the Amended Complaint now
challenged by defendants’ renewed motion to dismiss.1
Bezdek seeks to represent a nationwide class of persons “who
purchased FiveFingers running shoes during the period from March
21, 2009 until notice is disseminated to the Class,” Compl. ¶ 57,
or in the alternative, a similar class of those who purchased
FiveFingers running shoes in the State of Florida, Compl. ¶ 58.
1
The prior motion to dismiss, Dkt. No. 10, will be denied as
moot.
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On behalf of the nationwide class, Bezdek seeks to assert
claims for untrue and misleading advertising under Mass. Gen.
Laws ch. 266, § 91, for unfair and deceptive practices under
Mass. Gen. Laws ch. 93A, §§ 2, 9, and for unjust enrichment.
On
behalf of the alternative Florida-based class, Bezdek adds a
claim for unfair and deceptive practices under the Florida
Deceptive and Unfair Trade Practices Act (“FDUTPA”), Fla. Stat.
§§ 501.201 et seq.2
On July 18, 2012, Defendants moved to dismiss the Amended
Complaint for failure to state a claim.
Dkt. No. 15.
II. STANDARD OF REVIEW
In order to survive a motion to dismiss pursuant to Fed. R.
Civ. P. 12(b)(6), “a complaint must contain sufficient factual
matter, accepted as true, to state a claim to relief that is
plausible on its face.”
Ashcroft v. Iqbal, 129 S. Ct. 1937,
1949, (2009) (citation and internal quotation marks omitted).
Dismissal for failure to state a claim is appropriate when the
pleadings fail to set forth “factual allegations, either direct
or inferential, respecting each material element necessary to
sustain recovery under some actionable legal theory.”
2
Berner v.
Bezdek is not alone in bringing suit against defendants for
their allegedly misleading advertising campaign. See DeFalco v.
Vibram USA, LLC, No. 12-7238 (N.D. Ill. filed Sept. 11, 2012);
Safavi v. Vibram USA Inc., No. 12-5900 (C.D. Cal. filed July 9,
2012). Neither is Vibram the only purveyor of barefoot running
shoes coming under fire. See, e.g., Rocco v. Adidas America,
Inc., No. 12-3015 (E.D.N.Y. filed June 15, 2012).
-5-
Delahanty, 129 F.3d 20, 25 (1st Cir. 1997) (quoting Gooley v.
Mobil Oil Corp., 851 F.2d 513, 515 (1st Cir.1988) (internal
quotation marks omitted).
“[W]here the well-pleaded facts do not
permit the court to infer more than the mere possibility of
misconduct, the complaint has alleged--but it has not
‘show[n]’--‘that the pleader is entitled to relief.’”
Maldonado
v. Fontanes, 568 F.3d 263, 269 (1st Cir. 2009) (quoting Iqbal,
129 S. Ct. at 1949).
I “must accept all well-pleaded facts alleged in the
Complaint as true and draw all reasonable inferences in favor of
the plaintiff.”
1993).
Watterson v. Page, 987 F.2d 1, 3 (1st Cir.
While I am “generally limited to considering facts and
documents that are part of or incorporated into the complaint,” I
“may also consider documents incorporated by reference in the
[complaint], matters of public record, and other matters
susceptible to judicial notice.”
Giragosian v. Ryan, 547 F.3d
59, 65 (1st Cir. 2008) (alteration in original; citation and
internal quotation marks omitted).
III. ANALYSIS
Defendants argue on various grounds that the complaint fails
to state claim, and also contend that the allegations are
insufficient to maintain a class action.
A.
Statutory Claims
1.
Background
Chapter 93A and the FDUTPA employ similar standards of
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liability.
To prevail on these claims, Bezdek must show that a
deceptive act or practice by the defendants caused an injury or
loss suffered by her.
See Casavant v. Norwegian Cruise Line,
Ltd., 919 N.E.2d 165, 169 (Mass. App. Ct. 2009) (93A, § 9 claim
required showing “(1) a deceptive act or practice on the part of
the [defendant]; (2) an injury or loss suffered by the consumer;
and (3) a causal connection between the [defendant’s] deceptive
act or practice and the consumer’s injury”); Smith v. Wm. Wrigley
Jr. Co., 663 F. Supp. 2d 1336, 1339 (S.D. Fla. 2009) (FDUTPA
requires showing “(1) a deceptive act or unfair practice; (2)
causation; and (3) actual damages”).
Mass. Gen. Laws ch. 266, § 91, imposes liability for
advertising that contains “any assertion, representation or
statement of fact which is untrue, deceptive or misleading, and
which such person knew, or might on reasonable investigation have
ascertained to be untrue, deceptive or misleading.”
The statute
does not provide a private right of action, Thornton v. Harvard
Univ., 2 F. Supp. 2d 89, 95 (D. Mass. 1998), but allows an
“aggrieved party” to bring an equitable petition for injunctive
relief, as Bezdek does here.
2.
Compl. ¶ 71.
Allegations of Falsity/Deception
All of Bezdek’s statutory claims require a showing of
falsity or deception.
Defendants contend that plaintiff has
failed to plead such deception, particularly under the rigorous
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standards for pleading fraud under Fed. R. Civ. P. 9(b).
Rule
9(b) provides: “In alleging fraud or mistake, a party must state
with particularity the circumstances constituting fraud or
mistake.
Malice, intent, knowledge, and other conditions of a
person’s mind may be alleged generally.”3
I find the allegations of falsity or deception sufficient.
The complaint specifically identifies several allegedly
misleading statements as to the health benefits of wearing
FiveFingers.
In many instances the complaint provides a specific
date on which these statements were made--for example, when those
statements appeared on defendants’ website.
In any event, the
complaint alleges that defendants made similar representations
3
Bezdek cursorily argues that Rule 9(b) should not apply to
her claims under 93A and the FDUTPA. I need not resolve the
dispute given that I find the allegations sufficient even under
the strictures of Rule 9(b).
I note, however, that the statutory protections against
unfair and deceptive practices extend beyond a common law action
for fraud, which do not - at least under certain state law
standards - necessarily require special pleading specificity.
See U.S. Funding, Inc. of Am. v. Bank of Boston Corp., 551 N.E.2d
922, 925 (Mass. App. Ct. 1990). That said, the allegations may
nevertheless “sound in fraud” so as to trigger the requirements
of 9(b) when fraud lies at the “core of the action.” Shaw v.
Digital Equip. Corp., 82 F.3d 1194, 1223 (1st Cir. 1996)
(superseded by statute on other grounds).
As to Bezdek’s false advertising and chapter 93A claims, she
alleges the “hallmarks of fraud”--namely, willful
misrepresentation or deceit. Compl. ¶¶ 69, 75; Ed Peters Jewelry
Co., Inc. v. C & J Jewelry Co., 215 F.3d 182, 191 (1st Cir.
2000). Accordingly, the requirements of Rule 9(b) apply. By
contrast, because the claim under the FDTUPA does not allege
scienter or reliance, the usual pleading standards under Rule
8(a) apply. Cf. Shaw, 82, F.3d at 1223.
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about FiveFingers’ health benefits since they started selling the
product in the United States in April 2006.
Compl. ¶ 11.
That
allegation is borne out by the similarity of statements made in
March 2007, Compl. ¶ 36, August 2010, Compl. ¶ 30, and March
2012, Compl. ¶ 28.
Bezdek also points to a specific statement on defendants’
website as of March 2012 in which defendants represent that the
benefits of barefoot running “have long been supported by
scientific research,” and then advertise that FiveFingers provide
“all the health benefits of barefoot running” plus the additional
protection of the shoe.
Compl. ¶ 33.
One can also reasonably
infer from the complaint that similar claims made in a brochure
included with FiveFingers were made throughout the class period.
Compl. ¶ 26.
Cf. Martin v. Mead Johnson Nutrition Co., No.
09-11609, 2010 WL 3928707, at *4 (D. Mass. Sept. 30, 2010)
(accepting inference that otherwise undated advertisements were
published during class period).
Bezdek then goes on to allege that there is, as yet, no
scientific support for the various representations of health
benefits made by defendants, a conclusion shared by various
members of the scientific community and trade publications.
The
complaint thus identifies the statements at issue with adequate
specificity, and plausibly alleges that those statements are
untrue--or, at least, had a “tendency to deceive.”
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See Aspinall
v. Philip Morris Companies, Inc., 813 N.E.2d 476, 487 (Mass.
2004); accord Fitzpatrick v. Gen. Mills, Inc., 635 F.3d 1279,
1283 (11th Cir. 2011).4
Defendants have no serious argument as to why these
allegations are insufficient.
They say that Bezdek truly takes
issue with the alleged benefits of barefoot running, not with
FiveFingers.
Maybe so.
But, as alleged, defendants chose to
incorporate the purported benefits of barefoot running into its
advertising campaign.
E.g., Compl. ¶ 33.
Claiming that wearing
FiveFingers provides the scientifically-corroborated health
benefits of barefoot running is no less deceptive than claiming
that the shoes provide some sort of intrinsic health benefit if
the claimed benefits do not exist or lack scientific support.
Defendants also argue that the allegations reflect merely a
difference in opinion in the scientific community as to barefoot
running, and that Vibram has scientific support for its
advertising.
Again, this may be so, but resolution of that fact-
based argument has no place at the motion to dismiss stage.
Defendants also provided warnings about the transition to running
4
Similar allegations regarding unsubstantiated health
benefits claims have been deemed sufficient to state a claim
under chapter 93A, cf. Martin v. Mead Johnson Nutrition Co., No.
09-11609, 2010 WL 3928707 (D. Mass. Sept. 30, 2010), the FDUTPA,
cf. Smith v. Wm. Wrigley Jr. Co., 663 F. Supp. 2d 1336 (S.D. Fla.
2009), and consumer protection laws in other states, cf. Laughlin
v. Target Corp., No. 12-489-JNE/JSM, 2012 WL 3065551 (D. Minn.
July 27, 2012); Rosales v. FitFlop USA, LLC, No. 11-00973, 2012
WL 3224311 (S.D. Cal. Feb. 8, 2012).
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in FiveFingers; but such warnings have little bearing on the
alleged deception, given that they do not qualify the notion that
FiveFingers will provide the purported health benefits if used
properly.
Finally, defendants say that more detail is required as to
the particular statements that influenced Bezdek’s decision to
purchase FiveFingers, beyond the allegation that she relied on
“the misleading health benefit claims about FiveFingers on
Defendants’ website.”
Compl. ¶ 11.
I disagree.
As already
discussed, the complaint is replete with the sort of
representations defendants made on their website throughout the
relevant period.
Precisely which statement or particular benefit
influenced Bezdek’s decision is irrelevant, given that she is not
required to prove actual reliance.
See Iannacchino v. Ford
Motor Co., 888 N.E.2d 879, 887 n.12 (Mass. 2008);
Moss v.
Walgreen Co., 765 F. Supp. 2d 1363, 1367 & n.1 (S.D. Fla. 2011).
3.
Injury
Defendants next argue that Bezdek has failed to allege an
injury cognizable under chapter 93A and the FDTUPA.
See Mass.
Gen. Laws ch. 93A, § 9(1) (plaintiff must show she was “injured”
by unfair or deceptive act); Fla. Stat. § 501.211 (plaintiff must
have “suffered a loss”).5
Bezdek does not allege any sort of
5
The parties pay little attention to the injury required
under the false advertising statute. See Mass. Gen. Laws ch.
266, § 91 (creating equitable remedy for “aggrieved party”). I
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physical injury from wearing or running in FiveFingers.6
Rather,
Bezdek alleges injury in the form of economic loss, resulting
from the fact that she would not have purchased FiveFingers if
she had known the advertised health benefits were untrue, Compl.
¶ 11, or at least that she paid more for the shoes than they were
worth, Compl. ¶ 74.7
That Bezdek only bought FiveFingers because of advertised
health benefits, however, explains the way in which defendants’
deceptions may have changed a reasonable consumer’s behavior.
This may support causation, cf. Hershenow v. Enter. Rent-A-Car
Co. of Boston, Inc., 840 N.E.2d 526, 535 (Mass. 2006) (causation
may be established by showing that “the deceptive advertising
will assume that an injury cognizable under chapter 93A is also
cognizable under the false advertising statute. Cf. Chenlen v.
Philips Electronics N. Am., 050525, 2006 WL 696568, at *5 (Mass.
Super. Mar. 1, 2006) (same injury recognized for purposes of both
statutes).
6
Neither, for that matter, does Bezdek discuss whether she
even used the shoes or received any health benefits from them.
7
Bezdek also implies that statutory damages might somehow
substitute for an injury in her 93A claim. Statutory damages
serve no such function. Rather, chapter 93A’s statutory damages
provision “merely eliminates the need to quantify an amount of
actual damages if the plaintiff can establish a cognizable loss
caused by a deceptive act.” Hershenow, 840 N.E.2d 526, 533 n.18.
In short, Bezdek confuses the need to prove an injury--even if
the injury is economic loss--with the ability to quantify that
loss. Here, for example, Bezdek must first prove that
defendants’ deceptive acts resulted in some sort of “price
premium” for FiveFingers; statutory damages then become relevant
only if she succeeds in doing so, but the premium cannot be
quantified.
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‘could reasonably be found to have caused a person to act
differently from the way he [or she] otherwise would have acted’”
(modification in original)), but does not tell us whether Bezdek
suffered any injury.
True, Bezdek alleges she spent money on
shoes she otherwise might not have purchased; but she also
received something of value.
If there is injury in the form of
economic loss, it is in the difference between the value of
FiveFingers either having or not having the represented health
benefits.8
This so-called “price premium” theory of injury has been the
subject of much dispute.
I consider the viability of such a
theory under Massachusetts and Florida law.
In doing so, I am
keenly aware of my duty, as a federal judge applying state law,
to anticipate the manner in which the issue ultimately would be
resolved by the respective state supreme courts.
Moores v.
Greenberg, 834 F.2d 1105, 1107 n.3 (1st Cir. 1987).
I.
Massachusetts Law
The First Circuit and I have recently had the opportunity to
examine theories of injury under chapter 93A.
See Rule v. Fort
Dodge Animal Hosp., Inc., 604 F. Supp. 2d 288, 298-306 (D. Mass.
8
Such injury corresponds to the standard measure of damages
in cases of deceit--namely, the “benefit of the bargain” rule,
whereby “plaintiff is entitled to recover the difference between
the value of what he has received and the actual value of what he
would have received if the representations had been true.” Rice
v. Price, 164 N.E.2d 891, 894 (Mass. 1960); accord Kind v.
Gittman, 889 So. 2d 87, 90 (Fla. Dist. Ct. App. 2004).
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2009), aff’d, 607 F.3d 250, 254-55 (1st Cir. 2010).
I rely on
those opinions to provide more extensive background regarding the
issues.
For purposes here, it suffices to say that in Hershenow v.
Enter. Rent-A-Car Co. Of Boston, Inc., 840 N.E.2d 526, 535 (Mass.
2006), the Massachusetts Supreme Judicial Court disavowed the
notion that deceptive advertising constitutes per se injury on
consumers who purchase the product, as earlier cases might have
implied, e.g., Aspinall v. Philip Morris Companies, Inc., 442
Mass. 381, 402, 813 N.E.2d 476, 492 (2004).
Hershenow concluded
that car renters, who had purchased collision damage waivers with
unlawfully onerous restrictions, could not claim an injury under
93A after their cars were returned without damage and there was
no occasion for the restrictions to be enforced against them.
Hershenow, 840 N.E.2d at 535.
Rule v. Fort Dodge Animal Health, Inc., 607 F.3d 250, 253
(1st Cir. 2010), relied primarily upon Hershenow in concluding
that a buyer of veterinary heartworm-prevention medication with
undisclosed health risks could not claim injury after the
medication had been administered, the pet remained heartworm-free
for the expected period, and the pet emerged unharmed.
Although
the plaintiff had purported to rely upon a “price premium” theory
of injury, the First Circuit reasoned that plaintiff “neither now
could show nor could suffer in the future any adverse economic
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impact,” following successful administration of the medication.
Id. at 253.
As I observed in the decision below, plaintiff
“received the full benefit of the bargain she anticipated” when
she purchased the medication.
Rule, 604 F. Supp. 2d at 304.
The First Circuit noted, however, that Massachusetts might
have recognized “price premium” injury if plaintiff had sued
prior to administering the drug; in that case, she would have
held a product worth less than what she paid.
253, 254-55.
Rule, 607 F.3d at
The court took its cues from Iannacchino v. Ford
Motor Co., 888 N.E.2d 879, 882 (Mass. 2008).
In Iannachino, plaintiffs alleged that a vehicle
manufacturer engaged in an unfair and deceptive practice by
selling vehicles it knew did not comply with federal safety
regulations.
Although the court ultimately found that plaintiffs
failed to allege noncompliance with safety regulations, it first
recognized that plaintiffs asserted cognizable “price premium”
injury:
plaintiffs’ “overpayment” for a noncompliant vehicle
constituted an “economic loss” redressable under 93A.
Iannacchino, 888 N.E.2d at 886-87.
The court distinguished
Hershenow on the ground that plaintiffs “continue[d] to own the
allegedly noncompliant vehicles.”
Id. at 886; see also Rule, 607
F.3d at 255 (price premium injury “follows where the owners still
possess their cars, whose value was now reduced because of the
[undisclosed risk]”); Liu v. Amerco, 677 F.3d 489, 495 (1st Cir.
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2012) (“plaintiff has alleged that the defendants’ attempted
price fixing scheme directly raised the price charged by
[defendant] and paid by [plaintiff]--economic damage by any
test”).
It appears that the Supreme Judicial Court is willing to
recognize “price premium” injury by current owners of a product
whose value was artificially inflated by a deceptive act or
practice at the time of purchase.
Although Bezdek does not
specifically allege that she still possesses her pair of
FiveFingers, her proposed class specifically excludes those “who
purchased FiveFingers for the purpose of resale.”
Compl. ¶ 57.
I will thus draw the reasonable inference that Bezdek, like the
class she seeks to represent, is a current owner of FiveFingers
shoes.
She has thus asserted cognizable injury under
Massachusetts law.9
9
I note that one of my colleagues has taken the position
that current ownership may be unnecessary. Martin v. Mead
Johnson Nutrition Co., No. 09-11609-NMG, 2010 WL 3928707 (D.
Mass. Sept. 30, 2010). Martin held that a conscious choice to
pay more for a product because of a specifically advertised
feature constitutes an injury. This scenario does seem to
present a legitimate distinction from Rule, where the consumer
only bargained for heartworm-prevention and received that
benefit. In Martin, as here, the consumer bargained for an
additional benefit ex ante. And Hershenow did not necessarily
rule out that purchase of a deceptively advertised product could
constitute injury, but only rejected the idea that it constitutes
a per se injury. That said, if this is the governing theory, it
is not clear why Iannachino relied upon current ownership, given
that the buyers undoubtedly meant to bargain for--and indeed were
entitled to--a safety-compliant vehicle.
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I pause to note, however, that the consumers in Iannachino
were in a very different position from Bezdek.
As Iannachino
noted, compliance with federal safety regulations was required
for the vehicles at issue to get to market, meaning there was no
question that “the alleged representation would be causally
related to plaintiffs’ purchase of the vehicles and therefore to
their loss.”
Iannachino, 888 N.E.2d at 886 n.12.
Moreover, the
injury suffered by the consumers in Iannachino was easily
quantified by the cost of bringing the vehicles into compliance
with federal regulations.
Id. at 886-87.
Bezdek has no such
ready proxies either for the causal connection between
defendants’ alleged deceptions and the purchase of FiveFingers,
or for the influence defendants’ representations might have had
on the market value of FiveFingers.
ii.
Florida Law
Indications as to the Florida Supreme Court’s view of injury
cognizable under the FDTUPA are limited, if only barely visible
to the human eye.
Other courts, however, have interpreted the
FDTUPA “to allow victims of deceptive acts to recover the
diminished value of their purchases.”
Coghlan v. Wellcraft
Marine Corp., 240 F.3d 449, 453 (5th Cir. 2001) (citing Fort
Lauderdale Lincoln Mercury, Inc. v. Corgnati, 715 So. 2d 311, 313
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(Fla. Dist. Ct. App. 1998))10; Urling v. Helms Exterminators,
Inc., 468 So. 2d 451, 453 (Fla. Dist. Ct. App. 1985).
And in a
consumer class action against a yogurt company for its misleading
health benefits claims, the Eleventh Circuit, applying Florida
law, stated:
“should the class prevail [in showing the yogurt
company engaged in conduct capable of deceiving a reasonable
consumer], each putative class member would only need to show
that he or she paid a premium for [the yogurt] to be entitled to
damages under the FDUTPA.”
Fitzpatrick v. Gen. Mills, Inc., 635
F.3d 1279, 1283 (11th Cir. 2011).
Defendants rely primarily on Prohias v. Pfizer, Inc., 485 F.
Supp. 2d 1329 (S.D. Fla. 2007), where the court rejected
plaintiffs’ claim of “price premium” injury based on Pfizer’s
allegedly deceptive advertising that Lipitor lowered the risk of
coronary disease.
The theory would require determining the
hypothetical price at which Lipitor would sell without the value
suggested by misleading advertisements.
According to the court,
such a price was too speculative to constitute an injury-in-fact
for purposes of Article III.
1336-37.
Prohias, 485 F. Supp. 2d at
The court left room, however, for “price premium”
10
The Florida Supreme Court distinguished Corgnati for
purposes of an insurance dispute, wherein recovery for diminished
value depended on the terms of the policy at issue. Siegle v.
Progressive Consumers Ins. Co., 819 So. 2d 732, 738 (Fla. 2002).
However, the court mentioned in dictum that the Corgnati court
“was construing the language of [the FDUTPA], the damages
provisions of which contemplated compensation for diminished
value.” Id. at 738.
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injury when the consumers alleged they would have chosen a
substitute product, such that the “premium” could be measured by
the difference in price between the chosen product and the
substitute.
Id. at 1338.
A “substitute goods” theory was
unavailable to the plaintiffs in Prohias, however, because they
had continued to purchase Lipitor even after becoming aware of
the alleged deception.
Id.
At this stage in the proceedings I cannot execute the
reasoning in Prohias that a “price premium” theory of injury is
too speculative to be sustained.
Estimations of market value are
common in loss calculations, particularly in cases of deceit,
including in Florida:
Generally, the measure of actual damages is the difference
in the market value of the product or service in the
condition in which it was delivered and its market value in
the condition in which it should have been delivered . . . .
Corgnati, 715 So. 2d at 314.
It may be difficult to determine
what market value FiveFingers shoes have without their purported
health benefits, or at some stage of consumer doubt regarding
their purported health benefits--so difficult, even, that
plaintiff may fail to quantify damages.
But this difficulty does
not render the controversy nonjusticiable, although it may prove
dispositive as a matter of evidentiary sufficiency.
Prohias, in my opinion, is best understood as a case in
which plaintiffs had received the benefit of the bargain in their
purchase of the drug.
Plaintiffs’ continued use of Lipitor
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required the court to conclude that “plaintiffs purchase Lipitor
for its cholesterol-reduction benefits or other health benefits,
which they have received and continue to receive,” rather than
for the additional guarantees of coronary health advertised by
Pfizer.
Id. at 1335.
As in Rule, plaintiffs got what they
bargained for; neither held a product of diminished value.
Another federal district court in Florida, distinguishing
Prohias, found cognizable injury where a consumer explicitly pled
that the Wrigley chewing gum company had been able to charge a
premium for its “Eclipse” gum product over other gum products
because it deceptively advertised certain benefits of the
“Eclipse” product.
Smith v. Wm. Wrigley Jr. Co., 663 F. Supp. 2d
1336, 1340 (S.D. Fla. 2009).
While this may be a useful
distinction, I find it unnecessary for Bezdek to have stated a
claim.
These considerations go toward quantifying the amount of
damages, rather than whether “price premium” is a cognizable
injury in the first instance.
Perhaps there is other footwear that might provide a point
of price comparison, and that might allow an expert to determine
the premium the market would allow for a pair of shoes with
exceptional health benefits.
But exactly which alternative
footwear Bezdek might have purchased is irrelevant to whether she
suffered an injury.
Another Florida federal court put the matter
rather simply:
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Ostensibly, a deceptive practice allows a manufacturer or
vendor to charge a premium for a product that the
manufacturer would not be able to command absent the
deceptive practice. Thus, even if an individual consumer
does not rely on a deceptive practice when deciding to
purchase that product, the consumer will have paid more for
the product than she otherwise would have. Consequently, the
consumer suffers damages.
Moss v. Walgreen Co., 765 F. Supp. 2d 1363, 1367 n.1 (S.D. Fla.
2011).
iii.
Conclusion
I conclude that “price premium” injury is cognizable under
the consumer protection laws in both Massachusetts and Florida,
and that Bezdek has adequately pled such injury.
4.
Scienter
Mass. Gen. Laws ch. 266, § 91, requires that defendants
“knew, or might on reasonable investigation have ascertained”
that the advertising at issue was untrue, deceptive, or
misleading.
Defendants argue that Bezdek has failed to plead
this element of scienter by making only conclusory allegations
and parroting the language of the statute.
Even under the strictures of Rule 9(b), however, “[m]alice,
intent, knowledge, and other conditions of a person’s mind may be
alleged generally.”
Fed. R. Civ. P. 9(b).
The allegations must
allow nothing more than a “reasonable inference” of scienter.
Cf. Greebel v. FTP Software, Inc., 194 F.3d 185, 193 (1st Cir.
1999) (describing pleading standard for scienter under Rule 9(b)
in securities fraud context prior to enactment of “strong
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inference of scienter” standard in PSLRA, 15 U.S.C.A. § 78u-4);
In re NAHC, Inc. Sec. Litig., 306 F.3d 1314, 1328 (3d Cir. 2002).
Defendants argue in passing that a higher pleading standard
applies because Mass. Gen. Laws ch. 266, § 91, is a criminal
statute.
The case cited by defendants, however, provides no
support for that proposition, Martin v. Mead Johnson Nutrition
Co., No. 09-11609, 2010 WL 3928710, *15 (D. Mass. Sept. 13, 2010)
(report and recommendation rejected in part on other grounds,
2010 WL 3928707 (D. Mass. Sept. 30, 2010)), and I see no reason
to apply a heightened standard when the statute contemplates a
private equitable remedy sounding in fraud.
Martin, in fact, provides a helpful contrast to this case.
The plaintiffs in Martin failed to allege the dates of the
advertisements at issue, and included no allegation of complaints
as to the advertising at issue, let alone scientific evidence
that defendants might have known made their advertising
misleading.
Martin, 2010 WL 3928707, at *15.
Bezdek’s complaint does not suffer such pleading defects.
As already discussed, the timing of the advertisements at issue
is alleged with relative precision.
Moreover, Bezdek points to
research that, if true, renders at least some of Vibram’s
advertising deceptive.
Given that some of the research was
funded in part by Vibram, e.g., Compl. ¶ 48, it is reasonable to
infer that Vibram knew or easily could have learned of that
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research.
Statements from the APMA, e.g., Compl. ¶ 4, were also
readily available.
As to the timing of Vibram’s knowledge, the
articles cited in the complaint date back as far as June 2009.
Compl. ¶ 49.
But reports that the health benefits of barefoot
running have never been scientifically proven could support the
argument that, even as to advertising pre-dating those reports,
Vibram knew the health benefits of FiveFingers were not
scientifically corroborated.
In short, as alleged in the complaint, doubts about the
health benefits of barefoot running--and whether those benefits
have any grounding in science--are no secret.
Vibram, in fact,
actively involved itself in research, making it unlikely the
company was ignorant of the status of scientific knowledge.
To
the extent Vibram nevertheless made misleading statements about
the health benefits of FiveFingers or the scientific support for
those benefits, the complaint allows for the reasonable inference
that Vibram did so knowingly.
Scienter for purposes of Mass.
Gen. Laws ch. 266, § 91, is thus adequately alleged.
D.
Unjust Enrichment
Unjust enrichment is a theory of equitable recovery, whereby
a plaintiff seeks “restitution of a benefit conferred on another
whose retention of the benefit at plaintiff’s expense would be
unconscionable.”
Mass. 2009).
Smith v. Jenkins, 626 F. Supp. 2d 155, 170 (D.
Recovery under a theory of unjust enrichment is
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unavailable, however, if plaintiff has an adequate remedy at law.
I conclude Bezdek has such a remedy in this case if she can prove
she was damaged by defendants’ deceptive practices.
Cf. Hager v.
Vertrue, Inc., No. 09-11245, 2011 WL 4501046, at *7 (D. Mass.
Sept. 28, 2011); One Wheeler Rd. Associates v. Foxboro Co., 843
F. Supp. 792, 799 (D. Mass. 1994).
True, some courts have allowed claims for unjust enrichment
under similar circumstances as a form of pleading in the
alternative under Fed. R. Civ. P. 8(d).
Cf. Vieira v. First Am.
Title Ins. Co., 668 F. Supp. 2d 282, 295 (D. Mass. 2009); Smith
v. Jenkins, 626 F. Supp. 2d 155, 170 (D. Mass. 2009); Brueggemann
v. NCOA Select, Inc., No. 08-80606, 2009 WL 5218024, at *4 (S.D.
Fla. Dec. 31, 2009).
Bezdek, however, has not only failed to
plead that she lacks an adequate remedy at law, but also failed
to indicate that the claim for unjust enrichment was made in the
alternative, cf. Compl. ¶ 81 (specifically indicating that
Florida-based class pled in the alternative).
Given the availability of adequate remedies at law for the
injury Bezdek asserts, “there is no occasion to invoke equitable
remedies” here.
Popponesset Beach Ass’n, Inc. v. Marchillo, 658
N.E.2d 983, 988 (Mass. 1996).
E.
Class Allegations
Defendants finally argue that Bezdek’s class allegations
under Fed. R. Civ. P. 23 are insufficient.
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Defendants, for
example, take issue with Bezdek’s attempt to represent a class of
purchasers of FiveFingers “running shoes,” arguing that the
category of “running shoes” is vague, and styles of FiveFingers
may be used for a variety of purposes.
Similarly, defendants
argue that Bezdek cannot satisfy the “commonality” or
“typicality” requirements of Rule 23, given that members of the
proposed class might have purchased various styles of
FiveFingers, for any number of different purposes, by several
different means, based on any number of representations, and at a
variety of prices.
It may well be that variations in exposure to advertising,
the advertisements themselves, differences in FiveFingers styles,
or the reasons for purchasing FiveFingers will affect the ability
to certify a class.
Cf. Kwaak v. Pfizer, Inc., 881 N.E.2d 812,
818 (Mass. 2008); Philip Morris USA Inc. v. Hines, 883 So. 2d
292, 293 (Fla. Dist. Ct. App. 2003); Markarian v. Connecticut
Mut. Life Ins. Co., 202 F.R.D. 60, 68 (D. Mass. 2001).
But that
is an issue to be addressed on motions for class certification,
following discovery.
Hines, for example, turned in part on
evidence as to the “substantial number” of people who purchased
the product at issue for reasons unrelated to the deceptive
advertising.
Hines, 883 So.2d at 293.
Kwaak, meanwhile, turned
on evidence about the development of the advertising at issue
over time, and denied class certification only after plaintiffs
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were apparently unable to demonstrate common reasons for
purchasing the product at issue.
Kwaak, 881 N.E.2d at 818.
Here too, discovery will shed light on questions like which
shoes count as “running shoes,” and the characteristics and
motivations of buyers of FiveFingers.
Until then, dismissing the
class allegations would be premature.
Cf. Rosales v. FitFlop
USA, 2012 WL 3224311, at *8.
Whatever myriad complications may
arise, it is sufficient for present purposes that purchasers of
FiveFingers seek to determine whether defendants have caused them
“price premium” injury because of their deceptive advertising.
Defendants make a parting shot at Bezdek’s proposed
nationwide class, arguing that application of Massachusetts law
to transactions across the country would be “arbitrary or unfair”
to the point of being unconstitutional.
Phillips Petroleum Co.
v. Shutts, 472 U.S. 797, 821-22 (1985).
According to defendants,
this action actually implicates the laws of every state in the
nation, which would contravene the requirement that questions of
fact law and fact common to the class members predominate.
I
decline to dismiss the class allegations on this ground, however,
until more is known about the potential conflict with other laws,
an issue on which defendants will likely bear the burden.
Payne
v. Goodyear Tire & Rubber Co., 216 F.R.D. 21, 27 (D. Mass. 2003).
Choice of law issues may not preclude class certification if no
relevant conflicts exist or, to the extent conflicts do exist, if
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plaintiffs can be arranged into sub-classes.
Cf. In re M3 Power
Razor Sys. Mktg. & Sales Practice Litig., 270 F.R.D. 45, 51 (D.
Mass. 2010) (having found “no significant variations in other
state laws sufficient to defeat the commonality and
predominance,” certifying settlement class in multidistrict
litigation, where all plaintiffs brought claim under chapter 93A
based on deceptive communications originating from defendant’s
Massachusetts-based headquarters).
IV. CONCLUSION
For the reasons set forth more fully above, defendants’
motion to dismiss (Dkt. No. 15) is GRANTED IN PART and DENIED IN
PART.
As discussed at the hearing on this motion, the parties
shall file a revised joint scheduling proposal on or before
February 28, 2013 designed to govern the development of this
case.
/s/ Douglas P. Woodlock
DOUGLAS P. WOODLOCK
UNITED STATES DISTRICT JUDGE
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