THIEL v. RIDDELL, INC. et al.
Filing
65
OPINION. Signed by Chief Judge Jerome B. Simandle on 8/3/2015. (dmr)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
HONORABLE JEROME B. SIMANDLE
IN RE RIDDELL CONCUSSION
REDUCTION LITIGATION
Civil Action
No. 13-7585 (JBS/JS)
OPINION
APPEARANCES:
James E. Cecchi, Esq.
Caroline F. Bartlett, Esq.
CARELLA BYRNE CECCHI OLSTEIN BRODY & AGNELLO, P.C.
5 Becker Farm Road
Roseland, NJ 07068
-andStephen A. Corr, Esq.
STARK & STARK
777 Township Line Road
Suite 120
Yardley, PA 19067
Attorneys for Plaintiffs Norma D. Thiel, Nicholas W.
Farrell, Cahokia School District, Gustavo Galvan, Kenny
King, Alliance Youth Sports Association, Douglas Aronson,
and Denise Aronson
Joseph A. Boyle, Esq.
Michael Andrew Innes, Esq.
KELLEY DRYE & WARREN LLP
One Jefferson Road, 2nd Floor
Parsippany, NJ 07054
Attorneys for Defendants Riddell, Inc., Riddell Sports
Group, Easton-Bell Sports, LLC, EB Sports Corporation, RBG
Holdings Corporation, and All American Sports Corporation
SIMANDLE, Chief Judge:
INTRODUCTION
In these consolidated actions,1 Plaintiffs maintain that
Defendants Riddell, Inc., Riddell Sports Group, Easton-Bell
Sports, LLC, EB Sports Corporation, RBG Holdings Corporation,
and All American Sports Corporation (collectively, “Defendants”
or “Riddell”) marketed their football helmets based on allegedly
false or misleading claims that the helmets were equipped with
unique concussion reduction technology, and in some instances,
that the helmets could reduce concussions by as much as 31%.
According to Plaintiffs, Defendants’ helmets are incapable of
reducing the incidence of concussions compared to other football
helmets on the market. Plaintiffs in this action thus contend
that they were harmed by paying a $50 price premium for
Riddell’s helmets which offer no greater protection against
concussions than other helmets.
The Court having dismissed their consolidated amended
complaint, Plaintiffs filed a Second Amended Complaint (“SAC”)
to clarify the nature of their claims and to satisfy the
heightened pleading standard applicable to their fraud-based
claims. This action is before the Court upon Defendants’ motion
1
On April 10, 2014, the Court consolidated two related cases for
pretrial purposes only: Thiel v. Riddell, Inc., et al., Civil
No. 13-7585 (JBS/JS), and Aronson v. Riddell Inc., et al., Civil
No. 14-126 (JBS/JS). [Docket Item 16.]
2
to dismiss the SAC. [Docket Item 50.] Defendants argue that the
SAC further obfuscates Plaintiffs’ claims, ignores the
specificity requirements of Rule 9(b), Fed. R. Civ. P., and
fundamentally fails to state plausible claims of consumer fraud.
For the reasons discussed below, the Court will grant in
part and deny in part Defendants’ motion to dismiss. The Court
finds that Plaintiffs’ amended pleading largely cures the
deficiencies previously identified in their initial consolidated
pleading. As detailed below, the Court will permit Plaintiffs’
consumer fraud claims to proceed based on allegedly false or
misleading marketing statements regarding “concussion reduction
technology” and a 31% reduction in concussions for helmets not
included in the UPMC study, including youth helmets. However,
the Court will dismiss Plaintiffs’ consumer fraud claims to the
extent they are based on marketing statements which accurately
reflect the results of the UPMC study or based on an alleged
omission. The Court will also dismiss Plaintiffs’ unjust
enrichment and assumpsit claims with the exception of the
Cahokia School District’s claim for unjust enrichment.
BACKGROUND
A. Facts
The Court accepts as true the following facts from
Plaintiffs’ Second Amended Complaint. [Docket Item 45.] Although
Plaintiffs have added significant detail to their amended
3
pleading and narrowed their theory of liability, the essential
allegations supporting their claims remain unchanged.
1.
Background
Defendants design, manufacture, and market football helmets
which they claim possess concussion reduction technology. (SAC ¶
5.) These helmets include the Revolution, Revolution Speed, and
Riddell 360.2 (Id. ¶ 5.) Plaintiffs contend that Defendants’
repeated reference to concussion reduction technology in
advertising and marketing materials was intended to “convey to
consumers that these football helmets can reduce the incidence
of concussion when compared to other modern football helmets
available for sale from other manufacturers.”3 (Id. ¶ 6.)
According to Plaintiffs, however, “objective and reliable
research” shows that Defendants’ claims are deceptive marketing
gambits because the helmets “do not provide the promised
‘Concussion Reduction Technology’ or result in decreasing the
incidence of concussions.” (Id. ¶ 7.)
2
In their initial consolidated pleading, Plaintiffs specifically
defined these three Riddell helmet models as the helmets at
issue. The SAC identifies these helmets as among those at issue,
but not exclusively so.
3 For comparative purposes, Plaintiffs specifically identify the
following adult helmet models on the market: Riddell VSR-4;
Xenith X2, X1, and Epic; Schutt ION 4D, Schutt DCT, and VTD, Air
XP, Air XP Pro VTD, and DNA Pro; Rawlings Quantum Plus, Impulse,
and Tachyon. Plaintiffs also identify the following youth
models: Xenith X2E; Schutt Recruit, XP, XP Hybrid, and
Vengeance.
4
Plaintiffs allege that Defendants began an effort, as early
as 2002, to capitalize on increased public awareness of and
concern about concussions. (Id. ¶¶ 45-48.) To this end,
Defendants allegedly solicited a scientific study regarding the
protective benefits of their Revolution helmet. (Id. ¶ 49.)
Beginning in 2002, the University of Pittsburgh Medical Center
(“UPMC”) compared concussion rates among high school athletes
who wore the Riddell Revolution helmet with those who wore
“traditional helmets.” (Id. ¶ 50.) The UPMC study, published in
a peer-reviewed neurology journal, found that the Revolution
helmet reduced concussions by 31% as compared to traditional
helmets. (Innes Decl., Ex. A [Docket Item 50-3.])
Plaintiffs recount in great detail the many reasons they
contend the UPMC study was flawed in design and implementation,
“infected with potential bias and conflicts of interest,” and
“fundamentally unreliable.” (Id. ¶ 49.) As in the Amended
Complaint, Plaintiffs emphasize that Riddell provided a grant to
pay the salaries of the two primary authors of the study. (Id. ¶
51.) A third author, Thad Ide, is a Riddell employee. (Id.)
Moreover, Plaintiffs allege that the study was designed to reach
the pre-determined conclusion that the Revolution helmet could
reduce concussions as compared to other helmets; that it was a
“prospective cohort study” as opposed to a random study; that
the traditional helmets were not new, but refurbished; that the
5
participants were not randomly assigned helmets; that the
authors disregarded 15% of the collected data without sufficient
explanation and manipulated other data to reach a pre-determined
conclusion; and that initial data failed to show a statistically
significant difference between the helmets. (Id. ¶¶ 54-64.)
According to Plaintiffs, the above flaws are consistent with and
corroborated by the criticisms of several peer-reviewers. (Id.
¶¶ 70-72.)
Plaintiffs further contend that UPMC warned Defendants
regarding their reliance on the study’s results. UPMC allegedly
instructed Defendants “that this data should not be use[d] as a
marketing ploy or marketing tactic from a scientific paper that
was not for those purposes.” (Id. ¶ 66.) UPMC also told
Defendants not to say that the Revolution helmet provides better
protection, but Defendants disregarded this admonition. (Id. ¶
67.) Plaintiffs allege that UPMC also cautioned Defendants in
other ways regarding the appropriate use of the study’s results,
namely that Defendants should refer to the 2.3% reduction in
absolute risk as found by the study, as opposed to the 31%
reduction in relative risk.4 (Id. ¶ 68.) Defendants allegedly
4
Plaintiffs explain that absolute risk is the risk of developing
a condition over time, whereas relative risk is used to compare
risk as between two different groups. (Id. ¶ 68.)
6
ignored UPMC’s warnings and failed to disclose these warnings to
consumers. (Id. ¶ 69.)
2.
Riddell’s marketing statements
Plaintiffs contend that, based solely on the results of the
UPMC study, Defendants began to market their helmets as
possessing concussion reduction technology. Some advertisements
contained explicit references to a 31% reduction in concussions
for players wearing the Revolution helmet. (Id. ¶ 74.) For
example, “Research shows a 31% reductions in concussions in
players wearing Riddell Revolution Helmets.”5 (Id.) Defendants,
however, allegedly made this same 31% reduction claim when
advertising other helmets in the Revolution “family” like the
IQ, IQ HITS, Youth, Speed, and Speed Youth, even though the UPMC
study only included the Revolution helmet. (Id.; Id. ¶ 78.)
Plaintiffs note similar statements in a March 16, 2009 press
release referring to research which showed that the Revolution
helmet reduces “the risk of concussion by nearly a third.” (Id.
¶ 77.)
Plaintiffs allege that Defendants used promotional videos
to tout the safety of their helmets, including specific design
5
Plaintiffs note that some advertisements contained a more
complete statement: “[R]esearch has shown that players wearing
the Riddell Revolution football helmet are 31% less likely to
suffer a concussion than players wearing traditional football
helmets.” (Id. ¶ 76.) Other advertisements referenced up to a
41% reduced risk of concussions. (Id.)
7
and technological features that Defendants presented as making
the helmets safer. (Id. ¶ 79.) According to Plaintiffs, one such
video, which is still available on Defendants’ websites, states
that “on-file reconstructive studies on concussive events showed
that many of the players were being struck to the side of the
head and the face so we developed our patented side impact
protection . . . to better handle those blows to the side of the
head and the face.” (Id.) Plaintiffs assert that Defendants also
promote the safety of their helmets at marketing events called
“Protection Tour[s]” intended to “deliver[] expert-driven health
and safety education to youth football players, parents and
coaches nationwide.” (Id. ¶ 80.) Similarly, Defendants
advertised at youth-focused events such as NFL Play 60 Youth
Football Clinics. (Id. ¶ 84.) Defendants also allegedly
advertise extensively on social media and the internet and make
“the same concussion reduction claims.” (Id. ¶ 83.) For example,
Plaintiffs provide a screenshot of a Facebook page stating that
“the Riddell 360 Youth Helmet is the next evolution of Riddell
CRT (Concussion Reduction Technology).” (Id.)
In summary, Plaintiffs contend that “Defendants, through
their website, direct sales force, product packaging,
promotional advertisements and marketing, and retailers” made
the following types of claims regarding the concussion reduction
capabilities of their helmets:
8
“Riddell’s exclusive Concussion Reduction Technology
protects young athletes against concussions and impact.”
“The most advanced piece of modern concussion prevention
in the game today!”
“Safer, more protective, and advanced frontal helmet
protection designed to reduce concussions.”
“Riddell
Revolution
CRT
(Concussion
Reduction
Technology) to keep young players safe on the field.”
“Riddell’s Concussion Reduction Technology provides
increased protection against concussions and impact.”
“The helmet’s Revolution Concussion Reduction Technology
uses three principal design elements – an offset shell,
mandible extensions and energy managing S-Pads – to
provide superior protection for players on the field.”
(Id. ¶ 85.)
Plaintiffs allege that, despite Defendants’ claims, there
is no material difference in terms of concussion prevention
between Riddell’s helmets and other football helmets. (Id. ¶
86.) Nevertheless, based on claims regarding increased safety
and reduced concussions, Defendants charge price premiums of $50
per helmet as compared to other comparable helmets available on
the market. (Id. ¶ 81.)
3.
Alleged falsity of Riddell’s marketing claims
Plaintiffs allege that several studies show, and the
majority of independent experts agree, that Defendants’ claims
regarding “concussion reduction technology” are false or
misleading. (Id. ¶ 92.) For example, as Plaintiffs previously
noted in their initial consolidated pleading, a University of
Wisconsin study considered whether a particular brand of
football helmet or mouth guard was more effective at reducing
9
concussions and found no statistically significant difference in
the rate of concussions regardless of the helmet used.6 (Id. ¶
60.) The researchers stated, “Despite what manufacturers might
claim, newer and more expensive equipment may not reduce
concussion risk . . . [s]o is it worth the significant extra
cost to families and schools?” (Id. ¶ 61.) Plaintiffs contend
that the University of Wisconsin study is the largest
prospective study of the brand of helmets worn by high school
football players in the United States. (Id. ¶¶ 93, 95.)
6
The Court has examined the studies and reports cited in the SAC
and upon which Plaintiffs’ claims are based. See Miller v.
Clinton Cnty., 544 F.3d 542, 550 (3d Cir. 2008) (“A court may
consider an undisputedly authentic document that a defendant
attaches as an exhibit to a motion to dismiss if the
plaintiffs[’] claims are based on the document.”) (internal
quotation and citation omitted); Gaul v. Bayer Healthcare LLC,
2013 U.S. Dist. LEXIS 188951, at *4 (D.N.J. June 19, 2013). As
noted in this Court’s earlier opinion,
The University of Wisconsin study compared the relative
effectiveness of a particular brand of football helmet to
reduce the incidence of concussions. 51% of the players in
the study wore helmets by Riddell, compared with 30% by Schutt
and 19% by Xenith. “The most commonly worn helmet models by
brand were the Riddell Revolution Speed (n=617), Schutt DNA
Pro+ (n=420), and Xenith X1 (n=272).” The study concluded
that “helmet brand, age, and recondition status were not
associated with a lower risk of SRC in high school football
players.” Notably, the University of Wisconsin study
recognized its results in contrast to the UPMC study in 2006
which concluded that new Riddell Revolution helmets reduced
the risk of concussions by 31% compared with traditional
helmets. The University of Wisconsin study noted limitations
in the UPMC study due to insufficient information regarding
the age of the helmets in the control group and the exposure
data for each player.
In re Riddell Concussion Reduction Litig., 2015 WL 224429, at *3
n.4 (internal citations omitted).
10
Plaintiffs emphasize that the Wisconsin study was not funded by
Defendants and was “more robust” than the UPMC study. (Id. ¶¶
94-95.)
Plaintiffs further allege that Defendants knew their
helmets cannot actually reduce the incidence of concussions.
(Id. ¶ 97.) For example, according to Plaintiffs, court
documents related to a Colorado lawsuit indicate that Defendants
received a report in 2000 from Biokinetics, a biomechanics firm
hired by the NFL, showing that “no football helmet, no matter
how revolutionary, could prevent concussions.”7 (Id.) Plaintiffs
also recount in detail an investigation by the Federal Trade
Commission (“FTC”) regarding Defendants’ 31% concussion
reduction claim.8 (Id. ¶ 87.)
7
The Court previously examined the Biokenetics report to Riddell
dated November 15, 2000 and noted that it begins by stating,
“Football helmets have proven to be exceptionally effective in
the prevention of severe head injury.” In re Riddell Concussion
Reduction Litig., 2015 WL 224429, at *4 n.6.
8 The Court also discussed the FTC investigation in its prior
opinion:
After investigating whether “Riddell falsely represented from
at least 2008 until early 2011 that research proves that
Revolution varsity and youth football helmets reduce
concussions and the risk of concussions by 31% as compared to
other varsity and youth football helmets,” the FTC concluded
that the UPMC study did not prove that Riddell Revolution
varsity football helmets reduced the risk of concussion by
31% compared with other varsity helmets. Moreover, the FTC
noted that the UPMC study did not test the effectiveness of
Riddell youth football helmets in reducing concussions as
compared to other youth helmets. The FTC emphasized two
significant limitations in the UPMC study: (1) “Revolution
helmets were not randomly distributed across all of the
11
The SAC alleges in far greater detail than the Amended
Complaint that each of the named plaintiffs was exposed to
Defendants’ claims that their helmets offer more protection
against concussions than other helmets, Plaintiffs purchased at
least one of Defendants’ helmets for a price premium, and they
suffered economic harm because the helmets do not provide the
promised protection. (Id. ¶¶ 104-116.) For example, Plaintiffs
allege that Douglas and Denise Aronson purchased a Revolution
Speed football helmet for their son in or around August, 2011.
(Id. ¶ 104.) Before entering high school, “a representative
offering Riddell Football Helmets for sale” appeared at a club
football practice and indicated that Defendants helmets were
“the best . . . for preventing concussions because [they] had
concussion reduction technology.” (Id. ¶ 105.) Subsequently,
after learning that the high school would not provide Riddell
helmets to the players, at their son’s urging, Denise Aronson
visited Defendants’ website. (Id. ¶ 106.) While on the website,
participants in the study” and (2) “[p]layers in the control
group who suffered concussions were younger than test group
players who suffered concussions.” Nevertheless, the FTC
decided in April, 2013 not to recommend enforcement action at
that time because Riddell had abandoned its 31% reduction
claim and a Virginia Tech study appeared to show that
“Revolution varsity helmets perform much better than
Riddell’s ‘traditional’ VSR-4 helmet in reducing concussion
risks attributable to linear acceleration, one of the primary
forces to which helmets are subject.”
In re Riddell Concussion Reduction Litig., 2015 WL 224429, at *4
n.7.
12
Denise Aronson allegedly observed Defendants’ claim that their
helmets have concussion reduction technology, and based on this
claim, purchased the Revolution Speed helmet directly from
Defendants. (Id.) The SAC provides similar detail as to how the
other plaintiffs were exposed to Defendants’ allegedly false or
misleading marketing claims.
B.
Procedural background
As previously noted in the Court’s Opinion dated January
15, 2015, this action began as two separate cases filed in the
District of New Jersey. See In re Riddell Concussion Reduction
Litig., Civ. 13-7585 (JBS/JS), 2015 WL 224429, at *4 (D.N.J.
Jan. 15, 2015). The Court consolidated the actions for pretrial
purposes only as In Re Riddell Concussion Reduction Litigation,
Civ. 13-7585 (JBS/JS). On May 12, 2014, Plaintiffs, four
individuals and one school district, filed an Amended Complaint
against seven defendants: Riddell, Inc.; Riddell Sports Group;
Easton-Bell Sports, Inc.; Easton-Bell Sports, LLC; EB Sports
Corporation; RBG Holdings Corporation; All American Sports
Corporation. [Docket Item 17.] By Opinion and Order dated
January 15, 2015, the Court granted in part and denied in part
Defendants’ motion to dismiss the Amended Complaint. In re
Riddell Concussion Reduction Litig., 2015 WL 224429, at *14. The
Court denied Defendants’ motion to the extent it was based on
Plaintiffs’ alleged failure to comply with Rule 8. Id. The Court
13
granted Defendants’ motion to the extent it was based on
Plaintiffs' failure to comply with Rule 9(b) and Rule 12(b)(6).
Id. The Court dismissed Plaintiffs’ claims without prejudice,
except for those under the Illinois Consumer Fraud Act which the
Court dismissed for lack of standing. Id.
On March 5, 2015, Plaintiffs filed their Second Amended
Complaint.9 [Docket Item 45.] The twelve-count SAC names the same
defendants and asserts the same claims as the Amended Complaint
except for Plaintiffs’ claim under the Illinois consumer fraud
law.10 Plaintiffs assert these claims on behalf of themselves and
all others similarly situated in four discrete subclasses: New
Jersey, Florida, California, and Arizona.11
9
Plaintiffs in the SAC are the same as those in the Amended
Complaint with the addition of the Alliance Youth Sport
Association, an entity that runs a youth football league. (SAC ¶
114.)
10 Plaintiffs’ claims consist of the following: (1) violation of
the New Jersey Consumer Fraud Act; (2) violation of the Florida
Deceptive and Unfair Trade Practices Act; (3) violation of the
“Unfair” Business Acts and Practices provision of the California
Business and Professional Code; (4) violation of the “Deceptive”
Acts and Practices provision of the California Business and
Professional Code; (5) violation of the “Unlawful” Business
Practices provision of the California Business and Professional
Code; (6) violation of the Misleading Advertising provision of
the California Business and Professional Code; (7) violation of
the California Consumers Legal Remedies Act; (8) violation of
the Arizona Consumer Fraud Act through misrepresentation; (9)
violation of the Arizona Consumer Fraud Act through omission;
(10) unjust enrichment; (11) assumpsit and quasi-contract; and
(12) declaratory judgment.
11 Like the Amended Complaint, Plaintiffs’ proposed class
definition in the SAC suggests a nationwide class: “All
purchasers of Riddell Football Helmets promoted as containing
14
The instant motion to dismiss soon followed. [Docket Item
50.] Plaintiffs filed opposition [Docket Item 55] and Defendants
filed a reply [Docket Item 58].12
C.
Parties’ arguments
Defendants contend in the instant motion to dismiss that
Plaintiffs have failed to cure the deficiencies in their initial
pleading as identified by the Court and seek dismissal of
Plaintiffs’ claims pursuant to Rule 9(b) and Rule 12(b)(6), Fed.
R. Civ. P. Defendants maintain that the SAC is even less clear
than Plaintiffs’ Amended Complaint. Defendants principally argue
that Plaintiffs have not plausibly alleged that Defendants’
marketing claims are false. Additionally, Defendants argue that
concussion reduction technology within the United States from
the beginning of the applicable statutes of limitation period
through the present.” (Am. Compl. ¶ 117.) Plaintiffs, however,
direct certain counts in the SAC to specific state subclasses.
12 The parties also filed supplemental submissions regarding
litigation in the Southern District of West Virginia, Midwestern
Midget Football Club Inc. v. Riddell, Inc., Civ. 15-00244, 2015
WL 3797107, at *1 (S.D.W. Va. June 18, 2015), in which Riddell
Inc. is alleged to have violated the West Virginia Consumer
Credit and Protection Act based on the same or similar marketing
statements at issue in the present action. Id. at *3-5. The
court issued an opinion on June 18, 2015 denying Riddell’s
motion to dismiss which raised many of the same arguments this
Court now confronts. Id. at *5. However, the court subsequently
vacated its opinion and requested supplemental briefing in light
of the Fourth Circuit’s decision in In re GNC Corp., 789 F.3d
505 (4th Cir. 2015). As such, this Court does not rely on the
reasoning in Midwestern Midget. Nor is the GNC case, which
considered the “two different theories of recovery in a false
advertising claim” under the Lanham Act, binding in the instant
action, in which Plaintiffs assert claims under various state
consumer protection laws. Id. at 514.
15
Plaintiffs fail to distinguish between various marketing
statements; that Plaintiffs have not adequately alleged
ascertainable loss and causation; that Plaintiffs’ allegations
fail to satisfy Rule 9(b); that Plaintiffs’ claims under the
Arizona Consumer Fraud Act are time-barred; that Plaintiffs have
not adequately alleged “unfair” and “unlawful” business
practices claims under California law; and that Plaintiffs’
equitable claims must be dismissed.
In response, Plaintiffs assert that they have cured the
deficiencies previously identified by the Court by providing,
among other things, additional details regarding each
plaintiff’s purchase(s) and the specific statements to which
each plaintiff was exposed. Plaintiffs argue that, contrary to
Defendants’ arguments, literal falsity is not required to state
a claim under the various consumer protection laws and that the
SAC contains the necessary allegations to state a claim under
these laws. Moreover, Plaintiffs argue that they have adequately
alleged ascertainable loss and causation and stated facially
plausible claims upon which relief may be granted. Plaintiffs
also defend the viability of their equitable claims.
Alternatively, Plaintiffs request leave to file a third amended
complaint.
16
STANDARD OF REVIEW
A motion to dismiss under Rule 12(b)(6), Fed. R. Civ. P.,
may be granted only if, accepting all well-pleaded allegations
in the complaint as true and viewing them in the light most
favorable to the plaintiff, a court concludes that the plaintiff
failed to set forth fair notice of what the claim is and the
grounds upon which it rests. Id. A complaint will survive a
motion to dismiss if it contains sufficient factual matter to
“state a claim to relief that is plausible on its face.”
Ashcroft v. Iqbal, 556 U.S. 662, 663 (2009). Although a court
must accept as true all factual allegations in a complaint, that
tenet is “inapplicable to legal conclusions,” and “[a] pleading
that offers labels and conclusions or a formulaic recitation of
the elements of a cause of action will not do.” Id. at 678.
Rule 9(b), Fed. R. Civ. P., imposes heightened pleading
standards for a complaint alleging fraud, requiring a party to
“state with particularity the circumstances constituting fraud
or mistake.” This requirement is intended “to place the
defendants on notice of the precise misconduct with which they
are charged, and to safeguard defendants against spurious
charges of immoral and fraudulent behavior.” Seville Indus.
Mach. Ciro. V. Southmost Mach. Corp., 742 F.2d 786, 791 (3d Cir.
1984).
17
DISCUSSION
A.
Rule 9(b)
Because the Court previously dismissed Plaintiffs’ claims
in part due to a failure to satisfy the heightened pleading
standard of Rule 9(b), the Court will begin by considering
whether Plaintiffs have cured the Rule 9(b) deficiencies
previously identified. The Court finds that they have.
Plaintiffs’ claims, to the extent they sound in fraud or
misrepresentation, “must state with particularity the
circumstances constituting fraud.” Rule 9(b), Fed. R. Civ. P.
The level of particularity required is sufficient details to put
Defendants on notice of the “precise misconduct with which they
are charged.” Seville, 742 F.2d at 791; Frederico v. Home Depot,
507 F.3d 188, 200 (3d Cir. 2007). “This requires a plaintiff to
plead the date, time, and place of the alleged fraud, or
otherwise inject precision into the allegations by some
alternative means.” Grant v. Turner, 505 F. App’x 107, 111 (3d
Cir. 2012), cert. denied, 133 S. Ct. 2770 (U.S. 2013) (citing
Frederico, 507 F.3d at 200).
In its earlier opinion, the Court found Plaintiffs’ Amended
Complaint lacking because it merely provided “examples of
Defendants’ marketing statements without identifying which
specific statement(s), if any, Plaintiffs were exposed to.” In
re Riddell Concussion Reduction Litig., 2015 WL 224429, at *9.
18
The Court was particularly troubled by Plaintiffs’ attempt to
rely on a variety of disparate marketing statements some of
which referred to a 31% reduction in concussions, others of
which did not. Id. The Court also observed that some of the
purportedly false and deceptive marketing statements concerned
youth helmets, while others did not. Id. Importantly, the Court
rejected Plaintiffs’ assertion that all of the named plaintiffs
were exposed to variants of a core message of concussion
reduction and concussion reduction technology. Id. at n.12. The
Court found Plaintiffs’ “belated attempt to distill a common
theme from the marketing statements reproduced in the Amended
Complaint” insufficient to provide Defendants notice as to the
nature of Plaintiffs’ claims. Id.
The SAC provides greater clarity as to the nature of
Plaintiffs’ claims. Plaintiffs specify the types of marketing
statements which they allege are false or misleading. The SAC
contains specific statements which clearly fall into three
distinct categories: 1) statements that reference a 31%
reduction in the incidence of concussions; 2) statements that
reference “concussion reduction technology;” and 3) statements
that reference youth helmets. Although there is some variation
in the exact language allegedly used by Defendants within these
broader categories, Plaintiffs are correct that a common theme
can be readily distilled. The SAC is far clearer than the
19
Amended Complaint in identifying the nature and substance of
these allegedly false or misleading marketing claims upon which
Plaintiffs’ claims are based. Moreover, Plaintiffs have pleaded
with requisite particularity the types of statements to which
each plaintiff was exposed, as well as the timeframe and
circumstances of such exposure. See In re L'Oreal Wrinkle Cream
Mktg. & Sales Practices Litig., Civ. 12-03571 (WJM), 2013 WL
6450701, at *6 (D.N.J. Dec. 9, 2013) (finding general
allegations that plaintiffs relied on allegedly false and
misleading statements quoted in the complaint sufficient to
satisfy Rule 9(b)).
For example, it is apparent from the pleadings that the
Aronson’s son was exposed to claims of the helmets’ purported
concussion reduction technology at a club football practice, and
his mother, Denise Aronson, observed similar claims when she
visited Defendants’ website prior to purchasing a Riddell
Revolution Speed helmet directly from Riddell. (SAC ¶¶ 104-106.)
Plaintiff Norma D. Thiel allegedly watched Riddell Youtube
videos advertising the Riddell 360 which hyped technology that
could better protect the head from concussions compared to other
helmets on the market. (Id. ¶ 109.) Plaintiff Nicholas W.
Farrell was exposed “to Concussion Reduction Technology claims,
as well as the 31% reduction claim” in ads appearing on the
internet and in magazines. (Id. ¶ 110.) Plaintiff Gustavo Galvan
20
was similarly exposed to both types of claims on Riddell’s
website and on product packaging. (Id. ¶ 111.) Plaintiff Kenny
King, individually and as Executive President of the Alliance
Youth Sports Association, was exposed to concussion reduction
technology claims through a Riddell sales representative and the
2010 Riddell sales catalog. (Id. ¶ 114.) The Court finds the
above details sufficient to satisfy Rule 9(b) because there is
no longer any question as to what statements each plaintiff saw
or heard and where such statements appeared.13
The Court similarly finds that Plaintiffs have adequately
clarified “the precise substance of the alleged
misrepresentations which gives rise to [Plaintiffs’] claims,” as
well as the “essential theory” of the case.” In re Riddell
Concussion Reduction Litig., 2015 WL 224429, at *10.
Fundamentally, Plaintiffs allege that Defendants’ helmets “are
no more effective at reducing concussions than any other helmets
on the market.” (SAC ¶ 11.) According to Plaintiffs, “objective
13
Although Plaintiffs do not quote verbatim the marketing
language which they allegedly saw or heard prior to purchasing
Defendants’ helmets, Plaintiffs have adequately described and
provided examples of this language. The Court is similarly
unpersuaded by Defendants’ argument that Plaintiffs have failed
to identify the helmets to which Defendants’ helmets are
comparatively ineffective at reducing concussions. The Court is
satisfied with the list of these comparator helmets provided in
the SAC regardless of the fact that Plaintiffs do not precisely
state when these helmets first came on the market. (SAC ¶ 11
n.1.) The SAC is clear that Plaintiffs’ list consists of other
helmets available on the market at the relevant times.
21
and reliable research, which was not funded by Defendants, has
shown that claims of concussion reduction related to football
helmets are not valid and are instead simply a marketing tool.”
(Id. ¶ 7.) Having narrowed the marketing statements about which
Plaintiffs complain and having omitted, among other things, any
reference to the Cleveland Clinic study, Plaintiffs have more
precisely articulated the basis of their claims. Indeed, the
Court previously observed that
Specifying the type of misrepresentation to which Plaintiffs
were exposed – either that the Football Helmets decrease the
incidence of concussions compared with competitors’ helmets,
or that the Football Helmets decrease concussions at all, and
the precise contours of misrepresentations as to youth
helmets – will advance this case and provide due notice for
purposes of both Rule 9(b) and Rule 12(b)(6), as discussed
below. It appears that such theory or theories will be
actionable if the present ambiguity and unclarity is cured.
In re Riddell Concussion Reduction Litig., 2015 WL 224429, at
*10 n.15. Because Plaintiffs have specified the type of
misrepresentations to which they were exposed, the Court finds
the previously identified ambiguity adequately cured to satisfy
Rule 9(b) and to place Defendants on notice as to the “precise
misconduct with which [they are] charged.” Frederico, 507 F.3d
at 200 (citation omitted).
Plaintiffs in the SAC have also pleaded causation or injury
with requisite specificity and particularity. Unlike the Amended
Complaint, the SAC indicates where Plaintiffs purchased the
product at issue, as well as the manner and timeframe in which
22
they were exposed to Defendants’ alleged misrepresentations. The
SAC alleges the exact or approximate price that each nonorganizational plaintiff paid for the helmets they purchased.
Additionally, Plaintiffs quantify the “price premium” each
plaintiff paid for the helmets as $50. Contrary to Defendants’
assertion, Plaintiffs need not identify, at the pleadings stage,
the exact price of every helmet they could have purchased but
did not. Consequently, the SAC is distinguishable from the
complaint in In re Toshiba Am. HD DVD Mktg. & Sales Practices
Litig., Civ. 08-939 (DRD), 2009 WL 2940081 (D.N.J. Sept. 11,
2009), which omitted details regarding where plaintiffs
purchased the product at issue, how much they paid, how much of
a premium they claimed to have paid, and when, if ever,
plaintiffs were exposed to defendant’s alleged
misrepresentations. Id. at *13. Further unlike Toshiba,
Plaintiffs in the present action more than conclusorily allege
that they would not have purchased the helmets if they knew they
did not possess the ability to reduce the incidence of
concussions.14 Therefore, Plaintiffs’ allegations are sufficient
to satisfy Rule 9(b).
14
For these same reasons, the Court finds that Plaintiffs’ have
adequately pleaded causation and reliance to satisfy Rule
12(b)(6). The Court does not presume Plaintiffs’ knowledge of
the Schutt Sports litigation which appears to have predated the
purchases at issue here. Nor will the Court be overly
mechanistic in assessing Plaintiffs’ allegations regarding
23
B.
Rule 12(b)(6)
1.
Facial plausibility
The Court now turns to the more difficult question of
whether the SAC satisfies Rule 12(b)(6), Fed. R. Civ. P.
Defendants again argue that Plaintiffs’ claims fail under Rule
12(b)(6) because Plaintiffs have not pleaded a plausible theory
of consumer fraud. Specifically, Defendants contend that
Plaintiffs have not alleged facts demonstrating that the 31%
concussion reduction claim is false. Likewise, Defendants argue
that Plaintiffs have not plausibly alleged that their claim
regarding concussion reduction technology is false.
As this Court previously explained, “[a] claim has facial
plausibility when the plaintiff pleads factual content that
causation and reliance. Defendants argue that Plaintiffs failed
to specifically allege that “they would not have purchased”
helmets if not for the alleged misrepresentations. (Def. Br. at
30.) Plaintiffs’ allegations are clear enough that they relied
on the alleged misrepresentations in making the purchases at
issue and they would not have done so had they not been exposed
to Defendants’ allegedly false or misleading statements prior to
purchase. The Court’s approach is consistent with many of the
cases cited by Defendants. See Mickens v. Ford Motor Co., 900 F.
Supp. 2d 427, 447 (D.N.J. 2012); Beaver v. Inkmart, LLC, Civ.
12-60028, 2012 WL 3822264, at *4 (S.D. Fla. Sept. 4, 2012);
Lorenzo v. Qualcomm Inc., 603 F. Supp. 2d 1291, 1304 (S.D. Cal.
2009). Additionally, Plaintiffs need not identify the exact
helmet they would have purchased had they not purchased a
Riddell helmet. The brunt of Plaintiffs’ allegations is that
they paid a $50 price premium for Defendants’ helmets based on
representations that the helmets could reduce the incidence of
concussions and therefore chose not to purchase less expensive
helmets which were available at the time. Plaintiffs have
provided a list of such helmets.
24
allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.” Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009) (citation omitted). “Where a
complaint pleads facts that are merely consistent with a
defendant’s liability, it stops short of the line between
possibility and plausibility of entitlement to relief.” Id.
(quotations and citation omitted). Additionally, to state a
plausible claim for relief under the state consumer protection
laws at issue here, Plaintiffs must allege that Defendants’
marketing statements were false, deceptive, or misleading.15 See
In re GNC Corp., 789 F.3d 505, 514 (4th Cir. 2015).
15
Smajlaj v. Campbell Soup Co., 782 F. Supp. 2d 84, 98 (D.N.J.
2011) (“[T]he gravamen of the claim in this case is that the
consumer was improperly led to purchase a product because of a
false or misleading claim on the part of the seller.”); Engel v.
Novex Biotech LLC, Civ. 14-03457, 2014 WL 5794608, at *2 (N.D.
Cal. Nov. 6, 2014) (“In an action for false advertising under
the UCL and CLRA, the plaintiff bears the burden of proving the
defendant's advertising claim is false or misleading.”)
(quotation omitted); Kuehn v. Stanley, 91 P.3d 346, 351 (Ariz.
Ct. App. 2004) (“To succeed on a claim of consumer fraud, a
plaintiff must show a false promise or misrepresentation made in
connection with the sale or advertisement of merchandise and
consequent and proximate injury resulting from the promise. An
injury occurs when a consumer relies, even unreasonably, on
false or misrepresented information.”) (citations omitted); In
re Horizon Organic Milk Plus DHA Omega-3 Mktg. & Sales Practice
Litig., 955 F. Supp. 2d 1311, 1331-32 (S.D. Fla. 2013)
(“Although not specifically identified in the statute, there are
three elements that are required to be alleged to establish a
claim pursuant to the FDUTPA: (1) a deceptive act or unfair
practice; (2) causation; and (3) actual damages. [D]eception
occurs if there is a representation, omission, or practice that
is likely to mislead the consumer acting reasonably in the
25
As discussed above, it is no longer the case that
Plaintiffs’ pleading “fails to articulate a consistent theory of
liability against Defendants.” In re Riddell Concussion
Reduction Litig., 2015 WL 224429, at *11. It is now clear that
Plaintiffs assert that Defendants claimed in marketing and
advertising that their helmets possessed concussion reduction
technology and could reduce the incidence of concussions, but
their helmets are no more capable of reducing concussions than
any other helmet available on the market. Plaintiffs allege that
Defendants repeatedly made marketing claims of the following
three types: 1) claims that reference a 31% reduction in the
incidence of concussions; 2) claims that reference “concussion
reduction technology;” and 3) claims that reference youth
helmets. Because “[f]alsity here depends on the precise nature
of the alleged misrepresentations,” id. at *12, the Court will
address whether each type of marketing statement or claim
supports a plausible claim of consumer fraud.
a.
31% reduction claims
Defendants argue that the supposed shortcomings in the UPMC
study do not establish that their claims of a 31% reduction in
concussions were false or misleading. Indeed, this Court
previously observed that “Plaintiffs must affirmatively allege
circumstances, to the consumer's detriment.”) (citations and
quotations omitted).
26
the falsity of Defendants’ claims, and merely identifying
certain flaws in the UPMC study is insufficient.” Id. (citing
Hodges v. Vitamin Shoppe, Inc., Civ. 13-3381 (SRC), 2014 WL
200270, at *4 (D.N.J. Jan. 15, 2014); Fraker v. Bayer Corp.,
Civ. 08-1564, 2009 WL 5865687, at *8 (E.D. Cal. Oct. 6, 2009)).
Plaintiffs allege that numerous advertisements included the
following phrase or some slight variation thereof, “Research
shows a 31% reductions in concussions in players wearing Riddell
Revolution Helmets.” (SAC ¶ 74.) Defendants allegedly made this
same 31% reduction claim when advertising other helmets in the
Revolution “family” like the IQ, IQ HITS, Youth, Speed, and
Speed Youth, even though the UPMC study only included the
Revolution helmet. (Id.) Plaintiffs note that some
advertisements contained a more complete statement: “[R]esearch
has shown that players wearing the Riddell Revolution football
helmet are 31% less likely to suffer a concussion than players
wearing traditional football helmets.” (Id. ¶ 76.) Other
advertisements referenced up to a 41% reduced risk of
concussions. (Id.) Plaintiffs also acknowledge in the SAC that
“[m]ost of the advertisements also included a reference to the
Neurosurgery article.” (Id.)
Plaintiffs do not assert that Defendants mischaracterized
the findings of the UPMC study (i.e., that the UPMC study did
not in fact conclude that Riddell Revolution helmets reduced the
27
incidence of concussions by 31% as compared to traditional
helmets). Instead, Plaintiffs contend that the UMPC study “was
flawed both in its design and implementation” and “infected with
potential bias and conflicts of interest,” all of which render
it “fundamentally unreliable.” (Id. ¶ 49.) However, as this
Court and others have recognized, identifying flaws in a
scientific study does not necessarily make marketing statements
based on such a study false or misleading. See Gaul v. Bayer
Healthcare LLC, 2013 U.S. Dist. LEXIS 188951, at *4 (D.N.J. June
19, 2013) (finding that marketing statements based on an
allegedly unreliable study tended to prove that such statements
were unsupported, “but not that they are false”); Scheuerman v.
Nestle Healthcare Nutrition, Inc., Civ. 10-3684 (FSH), 2012 WL
2916827, at *7 (D.N.J. July 17, 2012) (“At best, Plaintiffs can
prove that Nestle’s studies were not sufficiently strong; while
this may be enough to make out an ordinary claim not premised on
a theory of fraud, it is insufficient to demonstrate entitlement
to relief under” the consumer protection laws of New Jersey,
Pennsylvania, and California). See also Adamson v. Ortho-McNeil
Pharm., Inc., 463 F. Supp. 2d 496, 503 (D.N.J. 2006) (finding
that marketing statements were accurate and therefore not
misleading or deceptive).
In Riddell, Inc. v. Schutt Sports, Inc., 724 F. Supp. 2d
963 (W.D. Wis. 2010), the court addressed these identical
28
marketing statements in the context of claims for false
advertising under § 43(a) of the Lanham Act. Id. at 969. The
court found that many of the same purported flaws in the UPMC
study as identified by Plaintiffs here “give reasons to doubt
the results of the study, but they do not show that the study
was unreliable.” Id. at 974. Moreover, the court observed that
publication of the study’s results in a respected, peer-reviewed
journal provides some evidence that the study is in fact
reliable. Id. The court noted that statements that “research
shows a 31-41% reduction in concussions in players wearing
Riddell Revolution helmets” reported “exactly what the study
shows, so it cannot be literally false.” Id. at 975-76. Notably,
the court found that, at most, such a statement, when made in
reference to helmets in the Revolution “family” that were not
subject of UPMC study, could be misleading or deceptive. Id. at
976.
The Court finds this reasoning persuasive and concludes
that Plaintiffs may not base their consumer fraud claims on
marketing statements which accurately reflected the results of
the UPMC study, regardless of the study’s purported flaws.
Furthermore, Plaintiffs have not identified any scientific study
that supports their claim that Defendants’ 31% reduction claims
were false or misleading. See Kardovich v. Pfizer, Inc., Civ.
13-7378 (RRM), 2015 WL 1506996, at *6 (E.D.N.Y. Mar. 31, 2015)
29
(finding that plaintiffs’ reliance on scientific studies and
materials that did not correspond to defendant’s marketing
statements prevented plaintiffs from plausibly alleging that
defendant’s representations were false, deceptive, or
misleading). The University of Wisconsin study, the only other
scientific study mentioned in the SAC, compared different brands
of football helmets, unlike the UPMC study which compared a
specific helmet model with “traditional” helmets. The Wisconsin
study found no correlation between helmet brand, age, and
recondition status and a reduced risk of concussions. Although
the Wisconsin study concluded differently from the UPMC study
and noted certain limitations in the UPMC study, nothing in the
Wisconsin study suggests that Riddell misrepresented the results
of the UPMC study. Accordingly, Plaintiffs have not plausibly
alleged that accurate characterizations of the UPMC findings in
advertising were false or misleading. However, as discussed
further below in regards to Defendants’ statements about youth
helmets, Plaintiffs have stated a plausible consumer fraud claim
based on marketing statements that reference a 31% reduction in
concussions when advertising helmets that were not involved in
the UPMC study.16
16
The FTC investigation, like the NAD report in Gaul, only
questions the reliability of the UPMC study. It does not
establish that Defendants’ 31% reduction claims are false or
misleading. After examining the methodology of the UPMC study,
30
b.
Concussion reduction technology claims
Defendants similarly contend that Plaintiffs have not
plausibly alleged that their marketing statements regarding
concussion reduction technology are false or misleading. In
addition to marketing claims that referred to a 31% reduction in
concussions, Plaintiffs allege that Defendants advertised the
ability of their helmets to reduce concussions by promoting
certain design features with which the helmets were allegedly
equipped, as well as more general references to “concussion
reduction technology.”
As for specific design features, Plaintiffs allege that
Defendants used promotional videos, “Protections Tours,” and
appearances at youth-focused events like NFL Play 60 Youth
Football Clinics to promote the safety of their helmets,
including specific design and technological features. (Id. ¶¶
79, 80, 84.) By way of example, a video on Defendants’ website
allegedly touts “patented side impact protection . . . to better
handle those blows to the side of the head and the face.” (Id.
the FTC concluded that the UPMC study did not prove that Riddell
Revolution varsity football helmets reduced the risk of
concussion by 31% compared with other varsity helmets and noted
that the UPMC study did not test the effectiveness of Riddell
youth football helmets in reducing concussions as compared to
other youth helmets. Accordingly, the Court’s decision to
distinguish between claims that accurately reported the results
of the UPMC study from claims that applied those results to
helmets not involved in the study is consistent with the FTC’s
investigation and findings.
31
at 79.) Plaintiffs also quote the following marketing claim,
“The helmet’s Revolution Concussion Reduction Technology uses
three principal design elements – an offset shell, mandible
extensions and energy managing S-Pads – to provide superior
protection for players on the field.” (Id. ¶ 85.) Plaintiffs do
not allege that the helmets lack these specific design features.
Plaintiffs do not even allege, as did Schutt in Schutt Sports,
that different Riddell helmets contain different design features
from those in the Revolution helmet which were subject to
testing in the UPMC study. Even if Plaintiffs had made such an
allegation, the Court would agree with the court in Schutt
Sports that it is Plaintiffs’ burden to allege and establish
that “the technology in place in these other helmets is not the
same as the technology ‘shown’ to reduce concussions.” Riddell,
Inc. v. Schutt Sports, Inc., 724 F. Supp. 2d 963, 976 (W.D. Wis.
2010). Therefore, the Court finds that Plaintiffs have not
plausibly alleged a consumer fraud claim based on statements
regarding specific design features of their helmets.
The Court finds differently as to Defendants’ more general
references to “concussion reduction technology.” Plaintiffs
offer, among others, the following examples of such statements:
“Riddell’s exclusive Concussion Reduction Technology protects
young athletes against concussions and impact;” “Riddell
Revolution CRT (Concussion Reduction Technology) to keep young
32
players safe on the field;” and “Riddell’s Concussion Reduction
Technology provides increased protection against concussions and
impact.” (Id. ¶ 85.) Plaintiffs maintain that these references
to concussion reduction technology are false or misleading
because “there is no material difference in the Riddell Football
Helmets and other football helmets available to consumers in
regard to concussion reduction.” (SAC ¶ 86.) Essentially,
Plaintiffs allege that Defendants’ helmets are unable to reduce
concussions compared to other available helmets, and any
reference to concussion reduction technology is thus inherently
false, misleading, or deceptive.17 The University of Wisconsin
study, which concluded that no brand of football helmet was
comparatively better at reducing the incidence of concussions,
lends plausibility to Plaintiffs’ allegation that Riddell’s
helmets are no more capable of reducing the incidence of
concussions than other football helmets on the market. The
Wisconsin study directly contradicts claims of concussion
reduction technology which purportedly provides increased
protection against concussions. Beyond a reference to specific
17
Unlike the Amended Complaint, the SAC is clear that
Plaintiffs’ claims are not based on the helmets’ alleged
inability to prevent concussions. Plaintiffs, instead, assert a
claim based on the relative ability (or inability) of
Defendants’ helmets to reduce concussions compared to other
helmets on the market. For this reason, the Court questions the
relevance of the Biokinetics report which Plaintiffs contend
warns that no helmet can prevent concussions.
33
design and technological features, the phrase “concussion
reduction technology” necessarily implies the ability to reduce
concussions. At the very least, based on the allegations in the
SAC, such a phrase may have misled or deceived consumers
regarding the ability of Defendants’ helmets to reduce the
incidence of concussions. Consequently, to the extent
Defendants’ helmets cannot in fact reduce concussions,
Plaintiffs have provided a plausible basis that these marketing
statements are false, misleading, or deceptive.
c.
Youth helmets claims
Defendants also argue that Plaintiffs have not identified
any statements related to youth helmets which are false or
misleading. Plaintiffs allege that Defendants made marketing
statements about youth helmets that referenced both a 31%
reduction in concussions and concussion reduction technology. As
discussed above, the Court must distinguish between Defendants’
statements invoking a 31% reduction in concussions which were
made in relation to the Riddell Revolution helmet on which the
UPMC study was based and those which were made in relation to
helmets not involved in the UPMC study. Plaintiffs allege that
Defendants advertised certain youth helmets with reference to a
31% reduction in concussions, including the “Youth” and “Speed
Youth” helmets. (SAC ¶ 74.) Plaintiffs have plausibly alleged
that Defendants’ reference to a statistic from a study which did
34
not include any youth helmet models is at least misleading or
deceptive. The Court further finds that the reasoning above
regarding references to concussion reduction technology applies
with equal, if not greater, force to Defendants’ alleged
marketing of youth helmets.18
d.
Omission-based claims
Although the Court finds that Plaintiffs’ consumer fraud
claims may proceed based on allegedly false or misleading
marketing statements, Plaintiffs have not plausibly alleged a
consumer fraud claim based on an omission which Defendants
failed to disclose. Based on the alleged flaws in the UPMC
study, the 2000 Biokinetics report, and the FTC investigation,
Plaintiffs allege that Defendants were aware that their helmets
could not reduce the incidence of concussions. The SAC states:
Defendants failed to disclose what they knew for certain –
that significant evidence establishes that their Riddell
Football Helmets provide no material difference in concussion
reduction. Coupled with their affirmative statements to the
contrary, Defendants’ failure to disclose to consumers that
there is no material difference in concussion reduction of
their helmets would, and did, mislead reasonable purchasers
of such helmets into paying a premium price for such helmets.
18
The Court finds no need to address a letter stating that
“[g]round-breaking research shows that athletes who wear Riddell
Revolution Youth helmets were 31% less likely to suffer a
concussion than athletes who wore traditional football helmets.”
(SAC ¶ 78.) As Defendants correctly note, Plaintiffs do not
allege that any of the plaintiffs received this letter.
35
(Id. ¶ 98.) The SAC thus offers nothing more than the vague and
conclusory allegations which the Court previously found
insufficient to plead an omission-based consumer fraud claim. In
re Riddell Concussion Reduction Litig., 2015 WL 224429, at *10.
Beyond Plaintiffs’ inability to identify a discrete omission
which Defendants allegedly failed to disclose to consumers, the
SAC does not plausibly allege that Defendants knew their helmets
could not reduce the incidence of concussions prior to the
purchases at issue here. First, the SAC states that “[m]ost of
the advertisements also included a reference to the Neurosurgery
article,” (SAC ¶ 76), so it is questionable whether the supposed
flaws in the UPMC study were actually concealed. Second, the
Court credits Defendants’ argument that any reliance on the
University of Wisconsin study to support an omission-based claim
would be inappropriate because the study was published in 2014
well after Plaintiffs made the purchases at issue. Third, the
Biokinetics report, far from making clear that “no football
helmet, no matter how revolutionary, could prevent concussions”
as Plaintiffs allege, begins with the opposite assertion:
“Football helmets have proven to be exceptionally effective in
the prevention of severe head injury.” In re Riddell Concussion
Reduction Litig., 2015 WL 224429, at *14 n.6. Moreover, as
explained above, this case is not about the ability of
Defendants’ helmets to prevent concussions, but their relative
36
ability to reduce the incidence of concussions as compared to
competitors’ helmets. Therefore, the Court finds that
Plaintiffs’ consumer fraud claims cannot proceed based on an
omission or failure to disclose. Such claims may only proceed
based on affirmative misrepresentations which Plaintiffs
plausibly allege were false, misleading, or deceptive as
discussed above.
2.
Ascertainable loss
Defendants argue that Plaintiffs’ pleading fails to allege
ascertainable loss or injury as required by the consumer
protection laws of New Jersey, Florida, Arizona, and California.
The Court previously dismissed Plaintiffs’ claims under the New
Jersey Consumer Fraud Act (“NJCFA”) and the Florida Deceptive
and Unfair Trade Practices Act (“FDUTPA”) for failure to
adequately plead ascertainable loss or injury because the
“Amended Complaint merely state[d] that each plaintiff paid a
‘price premium’ for Defendants’ product and fails to identify
the specific price paid or allege any other facts necessary to
plead injury or ascertainable loss.” In re Riddell Concussion
Reduction Litig., 2015 WL 224429, at *13. This is no longer the
case. The SAC includes substantially more detail regarding the
price each plaintiff paid for the helmets at issue and specifies
the approximate “price premium” Plaintiffs paid as $50.
Plaintiffs’ pleading therefore sufficiently pleads ascertainable
37
loss and injury under the NJCFA and FDUPTA. See Lieberson v.
Johnson & Johnson Consumer Companies, Inc., 865 F. Supp. 2d 529,
541-42 (D.N.J. 2011) (“The Court finds that absent any specific
information concerning the price of the Products or the price of
any comparable products, Plaintiff’s allegations concerning the
ascertainable loss are nothing more than unsupported conclusory
statements that are insufficient to withstand a motion to
dismiss.”); Rollins, Inc. v. Butland, 951 So. 2d 860, 869 (Fla.
Dist. Ct. App. 2006) (“[T]he 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 according to
the contract of the parties.”) (quoting Rollins, Inc. v. Heller,
454 So. 2d 580, 585 (Fla. Dist. Ct. App. 1984)). To the extent
Defendants dispute Plaintiffs’ calculation of the premium they
paid for the helmets at issue, they are free do so as this
litigation progresses. Consequently, the Court will deny
Defendants’ motion to dismiss to the extent it is based on
Plaintiffs’ purported failure to plead ascertainable loss or
injury.19
19
The Court also rejects Defendants’ argument regarding
ascertainable loss and injury under Arizona and California law.
Defendants’ argument in this regard is essentially a repeat of
their argument regarding reliance and causation. They contend
that Plaintiff Galvan does not allege that he would have
purchased an alternative product and that the Arizona Plaintiffs
38
3.
Arizona Consumer Fraud Act
Defendants argue that Plaintiffs’ claims under the Arizona
Consumer Fraud Act must be dismissed because Plaintiff Alliance
Youth Sports’ claim is barred by the one-year statute of
limitations. Such an argument is an affirmative defense and “the
burden of establishing its applicability to a particular claim
rests with the defendant.” Pension Trust Fund for Operating
Engineers v. Mortgage Asset Securitization Transactions, Inc.,
730 F.3d 263, 271 (3d Cir. 2013). A statute of limitations
defense may be raised by motion under Rule 12(b)(6) if the
limitations bar is apparent on the face of the complaint.
Schmidt v. Skolas, 770 F.3d 241, 249 (3d Cir. 2014). It is not
clear from the SAC whether Alliance Youth’s claims are time-
continued to purchase Defendants’ helmets from July, 2010
through March, 2013. (Def. Br. at 29.) However, the SAC does in
fact allege that Galvan researched helmets from a variety of
manufacturers and decided to purchase a Riddell Revolution
helmet based on claims of superior concussion reduction
technology. (SAC ¶ 111.) The Court sees no reason to require
Plaintiffs to restate what is already clear: Galvan would have
purchased a helmet from another manufacturer had he not relied
on Defendants’ marketing statements regarding concussion
reduction technology. As for the Arizona Plaintiffs, the Court
rejects Defendants’ contention that continued purchases of
Defendants’ helmets prevents as a matter of law a showing of
injury-in-fact. Under the Arizona Consumer Fraud Act, “An injury
occurs when a consumer relies, even unreasonably, on false or
misrepresented information.” Kuehn v. Stanley, 91 P.3d 346, 351
(Ariz. Ct. App. 2004). That the Arizona Plaintiffs continued
purchases may merely show that they relied on Defendants’
alleged misrepresentations. It does not, on the face of the
pleading, invalidate their alleged monetary injuries.
39
barred. The SAC alleges that “Mr. King . . . relied upon
Riddell’s statements and began purchasing Riddell Revolution
Youth helmets for the Alliance Youth Sport[s] Association in
July of 2010, which purchases continues [sic] at least through
March of 2013, because he thought they offered better concussion
protection than less expensive Schutt models.” (SAC ¶ 114.) This
statement suggests that Alliance Youth may have continued to
purchase Defendants’ helmets beyond March 2013. Therefore, it is
not apparent on the face of the pleading that Alliance Youth’s
claims are time-barred.20
20
Defendants also challenge Plaintiff Kenny King’s standing to
assert a claim under the Arizona Consumer Fraud Act because the
SAC alleges only that he made purchases on behalf of Alliance
Youth. Plaintiffs do not allege that Mr. King purchased helmets
in his individual capacity, that is, for his own use. “[A]
person who can violate the Act or be a victim under the Act
includes ‘any natural person or his legal representative,
partnership, domestic or foreign corporation, any company,
trust, business entity, or association, any agent, employee,
salesman, partner, officer, director, member, stockholder,
associate, or trustee.’ Waste Mfg. & Leasing Corp. v. Hambicki,
900 P.2d 1220, 1223 (Ariz. Ct. App. 1995) (quoting
A.R.S. § 44–1521.6). As such, Alliance Youth has standing to
assert a claim under the Arizona Consumer Fraud Act. Kenny King
has not alleged personal injury or any injury distinct from
those suffered by Alliance Youth. See Allen v. Wright, 468 U.S.
737, 751 (1984) (“A plaintiff must allege personal injury fairly
traceable to the defendant’s allegedly unlawful conduct and
likely to be redressed by the requested relief.”). Therefore,
the Court will dismiss Kenny King from this action for lack of
standing.
40
4.
California “unfair” and “unlawful” business
practices claims
The Court is unpersuaded by Defendants’ argument that
Plaintiffs have failed to adequately allege claims under the
“unfair” and “unlawful” prongs of the California Unfair
Competition Law.21 The UCL prohibits “unlawful, unfair or
fraudulent business act[s] or practice[s]” and “unfair,
deceptive, untrue or misleading advertising.” Cal. Bus. & Prof.
Code § 17200; see also Kearns v. Ford Motor Co., 567 F.3d 1120,
1125 (9th Cir. 2009). The unlawful prong of the UCL prohibits
“anything that can properly be called a business practice and
that at the same time is forbidden by law.” Cel-Tech Commc’ns,
Inc. v. Los Angeles Cellular Tel. Co., 973 P.2d 527, 539 (Cal.
1999) (quotations and citation omitted). “By proscribing ‘any
unlawful’ business practice, [the UCL] ‘borrows’ violations of
other laws and treats them as unlawful practices that the unfair
competition law makes independently actionable.” Id. at 539-40
(quotations and citation omitted). “[Consumer Legal Remedies Act
(“CLRA”)] violations may serve as the predicate for ‘unlawful’
business practice actions under the UCL.” Herron v. Best Buy Co.
21
Plaintiffs assert claims under the “unfair,” “unlawful,” and
“deceptive” prongs of the California Unfair Competition Law
(“UCL”), Cal. Bus. & Prof. Code § 17200, et seq., as well as
claims under the False and Misleading Advertising Law (“FAL”),
Cal. Bus. & Prof. Code § 17500, et seq. and the Consumer Legal
Remedies Act (“CLRA”), Cal. Civ. Code § 1750, et seq.
41
Inc., 924 F. Supp. 2d 1161, 1177 (E.D. Cal. 2013). Defendants do
not persuasively argue, nor does the Court find that the SAC
fails to state a claim under the CLRA. Therefore, the Court will
not dismiss Plaintiffs’ claim based on the “unlawful” prong of
the UCL.
The Court similarly rejects Defendants’ critique of
Plaintiffs’ claim under the “unfair” prong of the UCL. The UCL
does not define the term “unfair,” and the definition of
“unfair” conduct against consumers remains “in flux” among
California courts. Davis v. HSBC Bank Nevada, N.A., 691 F.3d
1152, 1169 (9th Cir. 2012); see also Graham v. Bank of Am.,
N.A., 172 Cal. Rptr. 3d 218, 232 (Cal. Ct. App. 2014) (“The
standard for determining what business acts or practices are
‘unfair’ under the UCL for consumer actions remains
unsettled.”). Before Cel-Tech, courts held that “an ‘unfair’
business practice occurs when it offends an established public
policy or when the practice is immoral, unethical, oppressive,
unscrupulous or substantially injurious to consumers.” S. Bay
Chevrolet v. Gen. Motors Acceptance Corp., 85 Cal. Rptr. 2d 301,
316 (Cal. Ct. App. 1999) (citation omitted). Courts applied a
balancing test weighing “the utility of the defendant’s conduct
against the gravity of the harm to the alleged victim . . . .”
Id. (citation omitted).
42
The Cel–Tech court found that the balancing test was “too
amorphous” and it “provide[d] too little guidance to courts and
businesses.” Cel-Tech, 973 P.2d at 543. The court held that
“unfair” means “conduct that threatens an incipient violation of
an antitrust law, or violates the policy or spirit of one of
those laws because its effects are comparable to or the same as
a violation of the law, or otherwise significantly threatens or
harms competition.” Id. at 544. However, the court restricted
this new test to allegations of anti-competitive practices by
competitors and emphasized that it does not “relate[] to actions
by consumers or by competitors alleging other kinds of
violations of the unfair competition law.” Id. at n.12.
Like the Ninth Circuit in Lozano v. AT & T Wireless Servs.,
Inc., 504 F.3d 718 (9th Cir. 2007), this Court will not apply
the Cel-Tech standard in the absence of a clear holding from the
California Supreme Court. Id. at 736. The Court finds that
Plaintiffs have adequately pleaded harm from Defendants’ alleged
conduct and Defendants have not articulated any “reasons,
justifications, or motives, or utility of [its] conduct to weigh
against the alleged harm.” Pirozzi v. Apple, Inc., 966 F. Supp.
2d 909, 922 (N.D. Cal. 2013) (quotations and citation omitted).
Moreover, “[w]hether a practice is deceptive, fraudulent, or
unfair is generally a question of fact which requires
consideration and weighing of evidence from both sides.” Paduano
43
v. Am. Honda Motor Co., 88 Cal. Rptr. 3d 90, 104 (Cal. Ct. App.
2009) (quotations and citation omitted). Defendants also provide
no support for their contention that economic injury is
insufficient to plead harm under the UCL. See Kwikset Corp. v.
Superior Court, 246 P.3d 877, 884 (Cal. 2011) (“[P]rivate
standing [under the UCL] is limited to any person who has
suffered injury in fact and has lost money or property as a
result of unfair competition.”) (quotations and citation
omitted). Therefore, the Court will deny Defendants’ motion to
dismiss to the extent it is based on an alleged failure to
properly plead a claim under the “unlawful” prong of the UCL.
5.
Equitable relief
Defendants also argue that Plaintiffs’ claims for equitable
relief must be dismissed. Plaintiffs maintain in opposition that
these claims are pleaded in the alternative to their consumer
fraud claims and may proceed irrespective of the viability of
their consumer fraud claims. The Court previously dismissed
Plaintiffs’ claims for equitable relief, namely their claims for
unjust enrichment, assumpsit and quasi-contract, and declaratory
relief, without prejudice “because each [was] premised on the
underlying allegation of false advertising which the Court ha[d]
found insufficiently pleaded.” In re Riddell Concussion
Reduction Litig., 2015 WL 224429, at *14. Because the Court will
now permit Plaintiffs’ consumer fraud claims to proceed, the
44
Court must address Defendants’ renewed arguments regarding
Plaintiffs’ equitable claims.
Defendants argue that Plaintiffs’ unjust enrichment and
assumpsit claims must be dismissed because they are premised on
a fraud or tort theory and they are not independently viable.22
Defendants correctly note, and Plaintiffs concede, that “New
Jersey does not recognize unjust enrichment as an independent
tort cause of action.” McGuire v. BMW of N. Am., LLC, Civ. 137356 (JLL), 2014 WL 2566132, at *3 (D.N.J. June 6, 2014).23 To
state a claim for unjust enrichment under New Jersey law,
22
The Court will not distinguish between Plaintiffs’ claims for
unjust enrichment and assumpsit. See Stone v. White, 301 U.S.
532, 534 (1937) (explaining that unjust enrichment “is the
lineal successor of the common count in indebitatus assumpsit
for money had and received”); New York Pipeline Mech.
Contractors, LLC v. Sabema Plumbing & Heating Co., Civ. 10-148
(SRC), 2012 WL 209349, at *2 (D.N.J. Jan. 24, 2012) (“One cause
of action for unjust enrichment at common law was the action in
assumpsit for money had and received, which is equitable in
spirit, although legal in form, and is maintainable when the
defendant has received money which in equity and good conscience
belongs to the plaintiff.”) (quotations omitted). Indeed, as
discussed herein, the Court finds Plaintiffs’ equitable claims
premised on the same alleged misconduct which provides the basis
for their consumer fraud claims. Fundamentally, Plaintiffs’
allegations sound in tort, not quasi-contract.
23 With the exception of Illinois, Plaintiffs do not argue that
applicable state law conflicts with or materially varies from
New Jersey law. Indeed, courts in this District have applied New
Jersey law to unjust enrichment claims in the class action
context. See Avram v. Samsung Electronics Am., Inc., Civ. 116973 (KM), 2013 WL 3654090, at *20 (D.N.J. July 11, 2013)
(“Unjust enrichment is a shared feature of many states' common
law. For unjust enrichment claims, many courts have found that
there is no actual conflict between different states' laws.”).
45
plaintiff must show that “it expected remuneration from the
defendant at the time it performed or conferred a benefit on
defendant and that the failure of remuneration enriched
defendant beyond its contractual rights.” VRG Corp. v. GKN
Realty Corp., 135 N.J. 539, 554 (1994). In the present action,
Plaintiffs allege that they paid a price premium to purchase
Defendants’ helmets based on representations that such helmets
could reduce the incidence of concussions. Because the helmets
allegedly failed to provide these concussion reduction benefits,
Plaintiffs contend that it would be unjust and inequitable for
Defendants to retain the revenues derived from the sales at
issue. (SAC ¶¶ 219-220.) Accordingly, Plaintiffs’ pleadings are
indistinguishable from those in McGuire where the court found
allegations that “Defendant concealed certain defects in and
misrepresented the qualities and functionality” of the product
at issue insufficient to state a claim for unjust enrichment.
McGuire, 2014 WL 2566132, at *3. As in McGuire, Plaintiffs here
do not allege that they “did not receive the product he
purchased or otherwise conferred a benefit on [Defendants] under
a quasi-contractual relationship with the expectation of
remuneration.” Id. at *3. See also Pappalardo v. Combat Sports,
Inc., Civ. 11-1320 (MLC), 2011 WL 6756949, at *11 (D.N.J. Dec.
23, 2011) (dismissing unjust enrichment claim premised on tort
theory where plaintiffs alleged that defendants made
46
misrepresentations about the product at issue). Therefore, the
Court will dismiss Plaintiffs’ unjust enrichment and assumpsit
claims except as provided below.24
Plaintiffs maintain that their unjust enrichment claim
under Illinois law is viable as an independent claim. The Court
agrees. “In Illinois, to state a cause of action based on a
theory of unjust enrichment, a plaintiff must allege that the
defendant has unjustly retained a benefit to the plaintiff's
detriment, and that defendant's retention of the benefit
violates the fundamental principles of justice, equity, and good
conscience.” Cleary v. Philip Morris Inc., 656 F.3d 511, 516
(7th Cir. 2011) (quotation and alteration omitted). “An unjust
enrichment claim may be predicated on either quasi-contract or
tort.” Reid v. Unilever U.S., Inc., 964 F. Supp. 2d 893, 922
(N.D. Ill. 2013). The Seventh Circuit has observed that “[t]he
Illinois Supreme Court appears to recognize unjust enrichment as
an independent cause of action.” Cleary, 656 F.3d at 516. As
24
Defendants also accurately note that courts in this District
have dismissed unjust enrichment claims where plaintiffs
purchased the products at issue from a third-party and not
directly from the manufacturer-defendant. See Avram v. Samsung
Electronics Am., Inc., Civ. 11-6973 (KM), 2013 WL 3654090, at
*21 (D.N.J. July 11, 2013) (“When consumers purchase a product
from a third party, they confer a benefit on that third party,
not on the manufacturer.”). This provides an additional reason
to dismiss claims for unjust enrichment asserted by Plaintiffs
who have not alleged that they purchased the helmets at issue
directly from Riddell.
47
such, this Court proceeds based on the understanding that
Illinois law does not require an underlying claim for breach of
contract or tort, and the Cahokia School District’s claim for
unjust enrichment may proceed at this time based on the
allegations of fraud and misconduct discussed throughout this
opinion, namely the alleged misrepresentations Defendants’ made
regarding their helmets. See Stevens v. Interactive Fin.
Advisors, Inc., Civ. 11-2223, 2015 WL 791384, at *16 (N.D. Ill.
Feb. 24, 2015).25 Therefore, the Court declines to dismiss the
Cahokia School District’s unjust enrichment claim at this time.
As for Plaintiffs’ claim for declaratory relief, Defendants
similarly argue that such a claim must be dismissed because it
is entirely derivative and dependent on Plaintiffs’
insufficiently pleaded consumer fraud claims. Because the Court
will permit Plaintiffs’ consumer fraud claims to proceed, such
an argument is inapposite and unpersuasive. The Court also
rejects Defendants’ argument that the pleadings do not support
entitlement to declaratory relief. Plaintiffs have adequately
25
As Plaintiffs properly note, this is no longer a case where
Plaintiffs allegations of consumer fraud are insufficient to
state a claim. The present action is thus distinct from Ass'n
Ben. Servs., Inc. v. Caremark RX, Inc., 493 F.3d 841 (7th Cir.
2007). See Id. at 855 (“[W]e merely conclude that, when the
plaintiff's particular theory of unjust enrichment is based on
alleged fraudulent dealings and we reject the plaintiff's claims
that those dealings, indeed, were fraudulent, the theory of
unjust enrichment that the plaintiff has pursued is no longer
viable.”).
48
alleged on-going misconduct by Defendants and that monetary
damages may not adequately compensate potential class members.
(SAC ¶¶ 227-28.) Accordingly, dismissal at this stage would be
premature. See Francis E. Parker Mem'l Home, Inc. v. GeorgiaPac. LLC, 945 F. Supp. 2d 543, 566 (D.N.J. 2013) (noting that
dismissal of claim for declaratory relief was premature at
motion to dismiss stage given the court’s “wide discretion to
provide declaratory relief”). The Court will consider
appropriate relief only when liability is established. See,
e.g., Lewis v. Bank of Am. NA, Civ. 13-7717, 2013 WL 7118066, at
*4 (C.D. Cal. Dec. 18, 2013) (“At this juncture, it would be
premature to find that injunctive relief may not be granted.”);
Lawn v. Enhanced Serv. Billing, Inc., Civ. 10-1196, 2010 WL
2773377, at *6 (E.D. Pa. July 13, 2010) (“This Court will
address the issue of remedies, including the possibility of
injunctive relief, if there is a finding of liability.”).
Consequently, the Court will deny Defendants’ motion to dismiss
to the extent it seeks dismissal of Plaintiffs’ claim for
declaratory relief.
CONCLUSION
For the reasons discussed above, the Court will grant in
part and deny in part Defendants’ motion to dismiss. The Court
will permit Plaintiffs’ consumer fraud claims to proceed based
on allegedly false or misleading marketing statements regarding
49
“concussion reduction technology” and a 31% reduction in
concussions for helmets not included in the UPMC study,
including youth helmets. As explained above, the Court rejects
Defendants’ arguments for dismissal under the Arizona Consumer
Fraud Act and the California Unfair Competition Law. The Court
will also permit the Cahokia School District’s claim for unjust
enrichment and Plaintiffs’ claim for declaratory relief to
proceed at this time. However, the Court will grant Defendants’
motion to dismiss to the extent Plaintiffs’ consumer fraud
claims are based on marketing statements which accurately
reflect the results of the UPMC study. Nor will Plaintiffs be
permitted to pursue consumer fraud claims based on an alleged
omission. The Court will also grant Defendants’ motion to the
extent it seeks dismissal of Plaintiffs’ unjust enrichment and
assumpsit claims. The Court will dismiss Plaintiff Kenny King
from this action for lack of standing. Because the Court
previously granted Plaintiffs an opportunity to amend and the
Court finds that further amendment would be futile, the claims
now dismissed will be dismissed with prejudice. An accompanying
Order will be entered.
August 3, 2015
Date
s/ Jerome B. Simandle
JEROME B. SIMANDLE
Chief U.S. District Judge
50
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