Midwestern Midget Football Club Inc. v. Riddell, Inc.

Filing 29

MEMORANDUM OPINION AND ORDER denying defendant Riddell, Inc.'s 20 MOTION to Dismiss. Signed by Judge John T. Copenhaver, Jr. on 6/18/2015. (cc: counsel of record; any unrepresented parties) (taq)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF WEST VIRGINIA
AT CHARLESTON
MIDWESTERN MIDGET FOOTBALL
CLUB INC.,
Plaintiff,
v.

Civil Action No. 2:15-00244

RIDDELL, INC.,
Defendant.
MEMORANDUM OPINION AND ORDER
Pending is a motion to dismiss by defendant Riddell,
Inc. (“Riddell”), filed April 27, 2015.

I.

Plaintiff Midwestern Midget Football Club, Inc.
(“Midwestern”), is a West Virginia citizen.

It is a non-profit

youth football organization operating in Kanawha County, West
Virginia.

Defendant Riddell, Inc. (“Riddell”), is an Illinois

citizen that designs, manufactures, markets, and sells a cranial
protection device for football players known as the Revolution
Helmet.

Riddell sells Revolution Helmets at a market price
reflective of its claim that they reduce the incidence of
concussion in comparison with its own, earlier helmet designs and
competitor helmets.

Specifically, the Revolution Helmets were

marketed as containing reduction technology that putatively
reduced the incidence of concussions by up to 31%.
Approximately 150 youth participate in Midwestern’s
program every year.
participants.

It supplies the helmets for these

Every year Midwestern purchases between 12 and 24

new Revolution Helmets for its participants who are aged 14 years
or younger.
Midwestern asserts that Riddell’s marketing claims were
knowingly false.

Among other things, Midwestern contends that

Riddell's assertions were based upon a statistically unsound study
paid for by Riddell and co-authored by a Riddell employee.

The

study was publically criticized by third-party scientists.
Indeed, Midwestern alleges that scientific studies and other data
of which Riddell was aware indicated that the Revolution Helmets
made no material difference to concussion risk as compared to
traditional helmets.
On December 2, 2014, Midwestern instituted this action
against Riddell on its own behalf, and that of a class of
similarly situated consumers, via a single-count claim under the
2

West Virginia Consumer Credit and Protection Act ("WVCCPA").

The

putative class, as set forth in the amended class action complaint
(“operative pleading”) filed April 10, 2015, is defined as
follows:
All West Virginia residents who purchased a Riddell
Revolution football helmet in the State of West Virginia
during the period beginning four years prior to the date
of filing of this Class Action Complaint through the
present . . . .
(Op. Pldg. ¶ 25).
Midwestern asserts that as a result of Riddell's alleged
deceptive marketing, West Virginia consumers were exposed to
Riddell's misleading representations.

As a result, Midwestern

asserts that those same West Virginia customers who purchased
Revolution Helmets at certain higher market prices reflecting
their alleged concussion-reducing benefits would have, without the
false representations, purchased alternative helmets at a lower
market price.1

1

In its memorandum in support of the motion to dismiss,
Riddell offers a number of factual assertions beyond the four
corners of the operative pleading. For example, it asserts that
(1) a February 2006 article in the Journal of Neurosurgery
supports the view that the Revolution Helmet decreased relative
concussion risk by 31%, (2) a federal district court in a similar
case found, as urged by Riddell, that no genuine issue of fact
existed on the question of whether the 31% reduction claim was
false or untruthful, (3) the Federal Trade Commission chose not to
recommend enforcement action against Riddell surrounding the
Revolution Helmet claims, and (4) an April 2014 study by Virginia
Tech showed that Revolution Helmets reduced concussion risk. The
court must, at this juncture, treat as true the allegations in the
operative pleading.
3

The operative pleading alleges a single count under the
West Virginia Consumer Credit and Protection Act (“WVCCPA”).
Specifically, it contends that Riddell’s marketing efforts were
composed of false statements which it intended customers to rely
upon when making helmet-purchase decisions.

This is alleged to be

an unfair and deceptive act or practice in violation of West
Virginia Code section 46A-6-102(7)(E).

Midwestern additionally

alleges as follows:
Plaintiff is a "person" as defined by WVCCPA § 46A-1l02(31).
Because Plaintiff is a "person," and suffered a loss of
money as a result of purchasing Revolution Helmets at
market pricing reflecting the unfair and deceptive
marketing of an illusory concussion-reducing benefit,
Plaintiff has standing to bring an action against
Riddell challenging Riddell's unlawful conduct. Id. at §
46A-6-106(a).
The referenced provision of the West Virginia Code,
section 46A-6-106(a), provides pertinently as follows:
Any person who purchases . . . goods . . . and thereby
suffers any ascertainable loss of money . . . as a
result of the use or employment by another person of a
method, act or practice prohibited or declared to be
unlawful by the provisions of this article may bring an
action in the circuit court . . . .
W. Va. Code § 46A-6-106(a).
Midwestern seeks, inter alia, class certification,
declaratory and injunctive relief, and actual damages or a
statutory penalty, whichever is greater.
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II.

A.

Governing Standard

Federal Rule of Civil Procedure 8(a)(2) requires that a
pleader provide “a short and plain statement of the claim showing
. . . entitle[ment] to relief.”

Fed. R. Civ. P. 8(a)(2); Erickson

v. Pardus, 127 S. Ct. 2197, 2200 (2007).

Rule 12(b)(6)

correspondingly permits a defendant to challenge a complaint when
it “fail[s] to state a claim upon which relief can be granted . .
. .”

Fed. R. Civ. P. 12(b)(6).
The required “short and plain statement” must provide

“‘fair notice of what the . . . claim is and the grounds upon
which it rests.’”

Bell Atlantic Corp. v. Twombly, 550 U.S. 544,

545 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957),
overruled on other grounds, Twombly, 550 U.S. at 563); see also
Anderson v. Sara Lee Corp., 508 F.3d 181, 188 (4th Cir. 2007).

In

order to survive a motion to dismiss, “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) (quoting Twombly, 550 U.S. at 570); see also
Monroe v. City of Charlottesville, 579 F.3d 380, 386 (4th Cir.
2009).

5

Application of the Rule 12(b)(6) standard requires that
the court “‘accept as true all of the factual allegations
contained in the complaint . . . .’”

Erickson, 127 S. Ct. at 2200

(quoting Twombly, 127 S. Ct. at 1965); see also South Carolina
Dept. Of Health And Environmental Control v. Commerce and Industry
Ins. Co., 372 F.3d 245, 255 (4th Cir. 2004) (quoting Franks v.
Ross, 313 F.3d 184, 192 (4th Cir. 2002)).

The court must also

“draw[] all reasonable . . . inferences from th[e] facts in the
plaintiff's favor . . . .”

Edwards v. City of Goldsboro, 178 F.3d

231, 244 (4th Cir. 1999).
When making an allegation of fraud, more particularity
is required.

A plaintiff must meet the heightened pleading

requirements set forth in Rule 9.

Rule 9 requires a party to

“state with particularity the circumstances constituting [the]
fraud.” F.R. Civ. P. 9(b).

To satisfy Rule 9(b), a plaintiff

“must, at a minimum, describe the time, place, and contents of the
false representations, as well as the identity of the person
making the misrepresentation and what he obtained thereby.” United
States ex rel. Wilson v. Kellogg Brown & Root, Inc., 525 F.3d 370,
379 (4th Cir. 2008), see also

U.S. ex rel. Nathan v. Takeda

Pharm. N. Am., Inc., 707 F.3d 451, 456 (4th Cir. 2013)(noting that
the Rule 9 standard set forth in Wilson is “as applicable in cases
brought under [the statute at issue in Wilson] as [it is] in other
fraud cases”)(emphasis added).
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B.

Analysis

Riddell offers five arguments in support of dismissal.
First, it contends that the allegations in the operative pleading
fail to show alleged marketing statements that were false or
untruthful.

Second, it asserts that Midwestern has failed to

demonstrate causation or reliance.
alleges no cognizable injury.

Third, it claims Midwestern

Fourth, it asserts the operative

pleading does not satisfy the rigors of Rule 9(b).

Fifth, it

asserts that Midwestern lacks standing to pursue its WVCCPA claim.
The first four contentions are addressed together immediately
below in subsection II.B.1 inasmuch as they all relate to
satisfactory pleading of a section 46A-6-101 claim.

The standing

argument is addressed thereafter.

1. Pleading Under Section 46A-6-106(a)

The necessary elements of proof for the claim pled by
Midwestern under WVCCPA section 46A-6-106(a) have been found to
be:

“(1) unlawful conduct by a seller; (2) an ascertainable loss

on the part of the consumer; and (3) proof of a causal connection
between the alleged unlawful conduct and the consumer's
ascertainable loss.”

White v. Wyeth, 227 W. Va. 131, 140, 705

S.E.2d 828, 837 (2010).

Additionally, “[w]here the deceptive
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conduct or practice alleged involves affirmative
misrepresentations, reliance on such misrepresentations must be
proven in order to satisfy the requisite causal connection.”

Id.

Riddell recognizes that one species of “unlawful
conduct” under the WVCCPA consists of “[u]nfair methods of
competition and unfair or deceptive acts or practices in the
conduct of any trade or commerce . . . .”
104.

W. Va. Code § 46A-6-

It also concedes the following qualify as “[u]nfair methods

of competition and unfair or deceptive acts or practices[:]”
“Representing that goods or services have . . . benefits
. . . that they do not have . . . .” W. Va. Code § 46A6-102(7)(E); and
The act, use or employment . . . of any deception,
fraud, false pretense, false promise or
misrepresentation, or the concealment, suppression or
omission of any material fact with intent that others
rely upon such concealment, suppression or omission . .
. .” W. Va. Code, § 46A-6-102(7)(M).
Riddell contends, however, that the operative pleading
fails to allege marketing statements that were false or
untruthful.

The necessary allegations are apparent.

Midwestern

asserts in the operative pleading that in 2002 Riddell marketed
the Revolution Helmet with the claim that the device was designed
to reduce the risk of concussion.

Midwestern additionally alleges

that the claim was “knowingly false,” elaborating as follows:
The marketing “assertions were based upon a
statistically unsound study [apparently conducted by the
University of Pittsburgh Medical Center (“UPMC”) and]
8

paid for by Riddell and co-authored by a Riddell
employee, and publically criticized by third-party
scientists.” (Op. Pldg. ¶ 2).
“Scientific studies and other data of which Riddell was
aware indicate that the Revolution Helmets make no
material difference to a player's risk for concussion as
compared to other traditional football helmets.” (Id. ¶
2).
“In the Journal of Neurosurgery, leaders in the
concussion field explained that the study by UPMC was
flawed in that, among other issues, it discounted low
impact hits, did not account for the relatively older
population wearing the Revolution Helmets, and did not
account for the age-related deterioration of nonRevolution Helmets in the study many of which were older
reconditioned helmets. The study included no youth
football participants whatsoever, as it involved only
high-school football players. Because of these failings,
the study did not demonstrate that Revolution Helmets
reduced the risk of concussions.” (Id. ¶ 11).
“Particularly troubling is the fact that Riddell touted
the Revolution Helmet as safer for youth players, when
in fact Riddell never tested the helmet on youth
players.” (Id. ¶ 13).
“Riddell marketed the Revolution Helmets as reducing the
risk of concussion in comparison with other helmets, and
by up to 31 %, when the Revolution Helmet did not in
fact provide this benefit. Riddell knew these statements
were false because, among other reasons, it was told so
by impartial scientists and the flawed study upon which
the concussion reduction statement was based was written
in part by one of Riddell's own employees.” (Id. ¶ 35).
In addition to these statements, Midwestern also quotes
Riddell advertisements touting the concussion-reduction claims.
These allegations combine to allege a plausible basis for
concluding that Riddell produced false advertising of the benefits
of the Revolution Helmet in order to entice customers into
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purchasing the devices.

This ground for dismissal thus lacks

merit.
Next, Riddell claims Midwestern has failed to allege
causation or reliance.

The operative pleading includes the

following:
“Riddell sells Revolution Helmets at a market price
reflecting marketing claims that the helmets reduce the
incidence of concussion in comparison with its own,
earlier helmet designs and helmets of competitors.”
(Id. at 1).
“Unfortunately, this marketing was successful. Plaintiff
and others purchased Revolution Helmets at market prices
reflecting this illusory benefit of a reduced risk of
concussion in comparison with other helmets.” (Id. ¶ 3).
Midwestern Football purchases Revolution Helmets and the
refurbishment of Revolution Helmets through contacts
with a Riddell representative in West Virginia.” (Id. ¶
5).
“As a result of Riddell's deceptive marketing, consumers
in West Virginia were exposed, and continue to be
exposed, to Riddell's misleading representations and
purchased Revolution Helmets at market prices reflecting
these helmets' alleged concussion reducing benefits
rather than at the lower market price that would have
existed with truthful information about the Revolution
Helmet product. All of these West Virginia consumers who
purchased a Revolution Helmet have been injured by
Riddell's wrongful conduct through the inflated market
price.” (Id. ¶ 24).
“Because Plaintiff is a ‘person,’ and suffered a loss of
money as a result of purchasing Revolution Helmets at
market pricing reflecting the unfair and deceptive
marketing of an illusory concussion-reducing benefit,
Plaintiff has standing to bring an action against
Riddell challenging Riddell's unlawful conduct.” (Id. ¶
40).

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These allegations serve to frame up the remaining two
elements required for a section 46A-6-106(a) claim.

The

allegations give rise to the theory that Riddell was able to
demand a higher market price for the Revolution Helmets by falsely
claiming the devices reduced the rate of concussive injuries
experienced with traditional helmets.

Midwestern lost money by

purchasing Revolution Helmets at the inflated price -- believing
Riddell’s claims of effectiveness -- instead of purchasing the
lower-priced traditional helmets that were not represented as
having the enhanced concussion protection.

Midwestern concedes

expert testimony will be required to establish the but-for market
price.

It need not, however, offer such proof in its pleading.
The court concludes that these allegations cross the

plausibility threshold for causation, reliance, and cognizable
injury.

2

Consequently, these grounds for dismissal lack merit.2

The same is true for the Rule 9(b) contention. The
operative pleading alleges Midwestern purchased Revolution Helmets
on an annual basis. It asserts that the Revolution Helmets were
first offered for sale in 2002, with concussive reduction
technology claims made at that time and up to the present day.
(Op. Pldg. ¶¶ 9, 18(a)). The time, place, and contents of the
false representations are thus adequately set forth. The
allegations quoted supra supply the remaining Rule 9(b)
information required by our court of appeals in Wilson and Takeda.
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2. Standing

Riddell next asserts dismissal is warranted due to
Midwestern’s status as an incorporated non-profit youth
organization.

Specifically, Riddell contends that Midwestern does

not qualify as a “consumer” and is thus not entitled to avail
itself of the claim it pleads.

As noted, Midwestern alleges a

claim under WVCCPA section 46A-6-106(a), which provides
pertinently as follows:
Any person who purchases . . . goods . . . and thereby
suffers any ascertainable loss of money . . . as a
result of the use or employment by another person of a
method, act or practice prohibited or declared to be
unlawful by the provisions of this article may bring an
action in the circuit court . . . .
W. Va. Code § 46A-6-106(a).

As Midwestern emphasizes, standing is

dependent upon one satisfying the definition of a “person” as
opposed to a “consumer.”

The definition of “person” is found in

section 46A-1-102(31): “‘Person’ . . . includes a natural person
or an individual, and an organization.”

W. Va. Code, § 46A-1-

102(31).
It is true, as Riddell asserts, that section 46A-6-106
is entitled “Actions by consumers.”

That matters little.

See W.

Va. Code § 2-2-12 (“[S]ection headings . . . of any act of the
Legislature . . . are hereby declared to be mere catchwords and

12

shall not be deemed or construed . . . as indicating or expressing
legislative intent or purpose.”).
It is also true that the Supreme Court of Appeals of
West Virginia has spoken on occasion in terms of the statute
applying to “consumers,” as it so obviously does.

See, e.g.,

Quicken Loans, Inc. v. Brown, 230 W. Va. 306, 328, 737 S.E.2d 640,
662 (2012); White v. Wyeth, 227 W. Va. 131, 138, 140, 705 S.E.2d
828, 835, 837 (2010) (consumer fraud class action case); Syl. Pt.
16, In re West Virginia Rezulin Litigation, 214 W. Va. 52, 57, 585
S.E.2d 52, 57 (2003)(“For a consumer to make out a prima facie
case to recover damages for ‘any ascertainable loss’ under W. Va.
Code, 46A–6–106 . . . , the consumer is not required to allege a
specific amount of actual damages.”).

It is further the case that

sections 46A-6-106(b) and (e) which, as noted below, were added by
the Legislature in 2005, use the word “consumer” in multiple
locations without like reference to the word “person,” but without
changing the word “person” in section 46A-6-106(a).

These

considerations are influential from a statutory construction
perspective.
The court concludes that the legislative history
supports Midwestern’s position.

From the time of its enactment in

1974 until its amendment in 2005, section 46A-6-106 consisted of
only two numbered sections.

The first of those two sections is
13

identical to the version of section 46A-6-106(a) that is
applicable here.

The second section, regarding a proof component

for a section 46A-6-106 violation, did not use the word
“consumer.”
It is also to be noted that a further amendment to
section 46A-6-106 became effective just days ago on June 12, 2015.
While inapplicable to this case, the newly minted provision
strikes all references to the word “consumer.”

The Legislature

additionally (1) retitled the provision to read “Private causes of
action,” and (2) left intact the use of the term “person” in
section 46A-6-106(a), also adding that same term in multiple
locations throughout section 46A-6-106.

One such addition appears

in the section 46A-6-106(b) notice provision, which has now been
moved to subdivision (c).

The word “consumer” that appeared twice

in that notice provision as a result of the 2005 amendment has now
been replaced in those two locations with the word “person.”
Yet, no constructive, interpretive or historical
exercise is warranted in light of the unambiguous language found
in the 2005 version of section 46A-6-106(a) applicable here.

See

State ex rel. West Virginia Secondary School Activities Com'n v.
Hummel, --- W. Va. ---, ---, 769 S.E.2d 881, 887-88 (2015); Syl.
Pt. 2, Crockett v. Andrews, 153 W. Va. 714, 172 S.E.2d 384 (1970)
(“Where the language of a statute is free from ambiguity, its
14

plain meaning is to be accepted and applied without resort to
interpretation.”); Syl. Pt. 5, State v. Gen. Daniel Morgan Post
No. 548, Veterans of Foreign Wars, 144 W. Va. 137, 107 S.E.2d 353
(1959) (“When a statute is clear and unambiguous and the
legislative intent is plain, the statute should not be interpreted
by the courts, and in such case it is the duty of the courts not
to construe but to apply the statute.”).
Narrowing the statute to cover only those qualifying as
a “consumer” would plainly constitute a judicial amendment of the
provision.

That would tread impermissibly upon the Legislature’s

constitutional role, especially when the Legislature exercised
that role in recent months in a manner inconsistent with the
position urged by Riddell.

Syl. Pt. 4, Bennett v. Warner, 179 W.

Va. 742, 743, 372 S.E.2d 920, 921 (1988) (“It is the prerogative
of the Legislature to change its mind and alter statutes . . .
.”).
Inasmuch as Midwestern plainly qualifies as a “person”
for purposes of section 46A-6-106(a), it satisfies the standing
requirement.

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III.

It is, accordingly, ORDERED that Riddell’s motion to
dismiss be, and hereby is, denied.
The Clerk is directed to transmit copies of this written
opinion and order to all counsel of record and any unrepresented
parties.
ENTER: June 18, 2015

John T. Copenhaver, Jr.
United States District Judge

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