Midwestern Midget Football Club Inc. v. Riddell, Inc.
Filing
41
MEMORANDUM OPINION AND ORDER granting without prejudice defendant Riddell, Inc.'s 20 Motion to dismiss 19 Amended Class Action Complaint; and with leave to Plaintiff Midwestern Midget Football Club, Inc. to file an amended pleading by 8/20/ 2015; in the event that Riddell chooses to move pursuant to Rule 12(b)(6), any such motion to be filed by 9/3/2015; directing the Clerk to administratively terminate 8 , 12 , 25 and 32 Motions. Signed by Judge John T. Copenhaver, Jr. on 8/10/2015. (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
in the Circuit Court of Kanawha County against Riddell on its own
behalf, and that of a class of similarly situated consumers, via a
2
single-count claim under the West Virginia Consumer Credit and
Protection Act ("WVCCPA").
On January 6, 2015, Riddell removed.
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 false 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
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.
court must, at this juncture, treat as true the allegations in the
operative pleading.
4
On June 18, 2015, the court denied the instant motion to
dismiss.
The next day, the court of appeals handed down In re GNC
Corp., 789 F.3d 505 (4th Cir. 2015).
In response, this court on
June 22, 2015, vacated the June 18, 2015, memorandum opinion and
order.
The parties were directed to “brief the extent to which,
if at all, the decision in In re GNC” impacted disposition of the
motion to dismiss.
Id. at 1.
The briefing has concluded.
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
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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).
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
6
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).
B.
Standing
Riddell 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
7
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
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
8
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
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 weeks 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.”
9
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
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 . . .
.”).
10
Inasmuch as Midwestern plainly qualifies as a “person”
for purposes of section 46A-6-106(a), it satisfies the standing
requirement.
C.
In re GNC
In In re GNC, consumers who purchased joint health
supplements instituted class actions in multiple states, alleging
various supplement manufacturers violated certain state consumer
protection laws by falsely touting the effectiveness of the
supplements.
The court of appeals concluded that “marketing
statements that accurately describe the findings of duly qualified
and reasonable scientific experts are not literally false . . . .”
Id. at 509.
Consequently, Midwestern has abandoned its claim of
literal falsity in light of In re GNC.
It asserts, however, that its putative “claim for
misleading advertising in respect to youth football helmets is
untouched by In re GNC.”
(Resp. at 1).
Indeed, the plaintiffs in
In re GNC had never alleged nor argued “that any of the
[manufacturer] representations . . . [were] literally true but
misleading.”
Id. at 514.
And so, the court of appeals did not
reach the question of “whether any of the representations made on
the Companies’ products are misleading” and thus perhaps
11
actionable under other consumer protection statute provisions.
Id. at 516.
The difficulty with Midwestern’s assertion of a
misleading advertising claim, as pointed out at length in
Riddell’s briefing, is that the central allegations of the
operative pleading are focused on a claim of literal falsity and
not misleading advertising.
To the extent Midwestern desires to
pursue a claim of misleading advertising, it is incumbent upon it
to plead allegations in satisfaction of the plausibility standard
attached to Rule 12(b)(6).
It is, accordingly, ORDERED that Riddell’s motion to
dismiss be, and hereby is, granted, without prejudice, and with
leave to Midwestern to file an amended pleading on or before
August 20, 2015.2
In the event that Riddell chooses to move
pursuant to Rule 12(b)(6), any such motion shall be filed on or
before September 3, 2015.
2
The Clerk is directed to administratively terminate those
motions found at docket entries 8, 12, 25 and 32.
12
The Clerk is directed to transmit copies of this written
opinion and order to all counsel of record and any unrepresented
parties.
ENTER: August 10, 2015
John T. Copenhaver, Jr.
United States District Judge
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