United States: Recall Litigation Report: END OF YEAR RECAP (2023)

A steady stream of class action lawsuits involving recalled products continued throughout the year.

Lack of Standing and Prudential Mootness Lead to More Early Dismissals

In 2023, voluntary recalls led to early dismissals in a series of putative class action cases involving alleged defects, ranging from batteries to automobiles. In each of these cases, the court reasoned that the defendant's recall warranted dismissal for lack of standing and/or prudential mootness, confirming that quick and comprehensive recalls of alleged defective products remain a useful tool for companies faced with litigation.

For example, on July 19, 2023, the U.S. District Court for the Eastern District of Michigan dismissed Solak v. Ford Motor Company, No. 23-cv-10064 (E.D. Mich.), a putative class action involving allegedly defective air bags, concluding that a National Highway Traffic Safety Administration (NHTSA)-monitored recall (i) replacing the alleged defective air bags and (ii) reimbursing those who had already paid for repairs, rendered plaintiff's claims prudentially moot. The court rejected plaintiff's arguments that recall did not moot claims asserting overpayment damages, or that the recall was ineffective without an identified root cause. The court reasoned that plaintiff had not shown any cognizable danger or evidence that the voluntary recall would fail leaving him without a complete remedy. Plaintiff, a New York resident, had filed the suit six months earlier, asserting claims for breach of express and implied warranty, consumer protection, and unjust enrichment on behalf of the nationwide and New York classes.

In September 2023, a different judge presiding on the U.S. District Court for the Eastern District of Michigan dismissed another putative class action against Ford, Diaz, et al. v. Ford Motor Co., No. 23-10029 (E.D. Mich.), this time asserting claims for breach of warranty and fraud based on allegedly defective shift cable bushings. More specifically, the court in Diaz held that the plaintiffs lacked Article III standing because the alleged defect had not yet manifested in their vehicles and Ford had offered to replace the allegedly defective part through a voluntary recall. The court also determined that plaintiffs' request for injunctive and declaratory relief, including their demand that Ford repair their vehicles and extend applicable warranties, was prudentially moot as a result of the recall. Just as in Solak, the court in Diaz concluded that plaintiffs had failed to show a cognizable danger that the voluntary recall would leave them without complete relief.

Also in September, the U.S. District Court for the Northern District of Georgia dismissed Ward-Richardson, et al. v. FCA US LLC, 2:21-cv-235 (N.D. Ga.), a putative class action involving certain vehicles with allegedly defective electrical systems. In that case, plaintiffs' claims of fraudulent concealment and consumer protection claims against FCA, seeking equitable and legal relief under Georgia and Virginia law, survived the first motion to dismiss. After FCA filed a second motion to dismiss, the court in Ward-Riuchardson concluded that plaintiffs' claims were prudentially moot following FCA's voluntary recall of the allegedly defective electrical systems. In opposing the motion to dismiss, plaintiffs insisted that the prudential mootness doctrine did not apply to claims for monetary relief. The court was unconvinced. It concluded that the prudential mootness doctrine warranted dismissal because the voluntary recall would eliminate the alleged defect giving rise to any monetary damages. The court refused to take judicial notice of online complaints, and it found that plaintiffs had provided no other evidence of a cognizable danger the recall would be ineffective.

CPAP and BiPAP Economic Loss Claims Settle And Magistrate Recommends Rejecting Preemption and Primary Jurisdiction Defense for Personal Injury Claims

Also in 2023, Philips Respironics continued to navigate an onslaught of cases stemming from its June 2021 recall of CPAP and BiPAP breathing machines, including a consolidatedconsumer class action multi-district litigation (MDL) and medical device supplier suits. Consumer-facing lawsuits have continued to emerge, and as of December 27, 2023, 297 pending actions against Philips Respironics have been transferred to the Western District of Pennsylvania and consolidated before Judge Joy Flowers Conti, who also presides overIn re: SoClean, Inc., Marketing, Sales Practices & Products Liability Litigation, No. 2:22-mc-00152 (W.D. Pa.), MDL No. 3021—the MDL involvingSoClean (a manufacturer of sanitation machines designed to work with Philips Respironics' CPAP and BiPAP devices).

PhilipsRespironics announcedin September 2023 that the parties had reached an agreement in the MDL to resolve all economic loss claims brought by private plaintiffs in the United States. And on October 10, 2023, the court preliminarily approved the proposed class settlement subject to approval at a "Final Fairness Hearing" on April 11, 2024. If the settlement is approved, the plaintiffs would release economic loss claims, and Philips Respironics would pay (1) $95,000,000 in attorneys' fees and reimbursement of costs and expenses, and (2) $5,000 to each of the five Settlement Class Representatives. According to the Economic Loss Class Settlement Notice, Philips Respironics will also provide:

• a Device Payment Award for each Recalled Device consumers purchased, leased, or rented;
• a Device Return Award of $100 for each Recalled Device consumers purchased, leased, rented, or were prescribed that they have already returned or that they return to Philips Respironics by August 9, 2024; and/or
• a Device Replacement Award if consumers spent their own money to purchase a comparable CPAP, BiPAP, or ventilator on or after June 14, 2021 and before September 7, 2023 to replace a Recalled Device.

Consumers who return their Recalled Devices to Philips Respironics by August 9, 2024 (as part of a recall program or by enrolling in the settlement) would be entitled to a $100 Device Return Award and a Device Payment Award without the need to submit a claim form.

The proposed settlement does not affect or release claims for personal injuries or medical monitoring relief, which Philips Respironics moved to dismiss on January 6, 2023 for failure to state a justiciable claim for relief. Among other things, Philips Respironics argued that federal preemption and the primary jurisdiction doctrine warranted preemption. More specifically, the company maintained that plaintiffs' state law claims for negligence, warranty, fraud, consumer protection, and unjust enrichment were impliedly preempted by federal law because those claims arise out of alleged fraud and noncompliance with the Food Drug & Cosmetic Act ("FDCA") and the Medical Device Amendments ("MDA"). Philips Respironics also argued that the plaintiffs' negligent recall claim should be dismissed under the primary jurisdiction doctrine because the FDA has enforcement mechanisms most appropriate to handle the matter.

On September 28, 2023, the Special Master published his Report and Recommendations, denying both of Philips Respironics arguments, concluding (1) plaintiffs' negligence claims were not preempted because they did not rely on alleged violations of federal law; (2) plaintiffs' remaining claims were not preempted because the substance of the allegations concerned Philips Respironics' actions—not federal law violations—regardless of their reference to the Food and Drug Administration (FDA) reports and investigations; and (3) nearly all primary jurisdiction factors weighed against application of the doctrine. According to the Special Master, the key issues to be determined by the Court were not solely within agency expertise or discretion: FDA had already determined that a recall was warranted, but the issues remaining (e.g., whether Philips Respironics acted with reasonable care, whether Philips Respironics had a duty to disclose, whether Philips Respironics violated a duty to disclose) were all well within the domain of the court.

The Duty to Disclose Potential Contaminants in Food Products is a Hot Topic in 2023

What a company knew or should have known and whether the company had a duty to disclose that information are very often the focus of lawsuits over recalled products. In the latter half of 2023, a number of companies came under fire after recalling products for bacterial contamination–begging the question: what can a company be charged with knowing and what is the scope of a company's duty to disclose?

For example, in November 2023, two consumers filed Andersen et al., v. Mid-America Pet Food, L.L.C., No. 23-cv-00140 (E.D. Tex., Nov. 28, 2023), a putative class action involving Mid-America dog food products recalled for potential salmonella contamination. Unlike in Gurkov, plaintiffs allege that Mid-America knew of the contamination but failed to disclose this information to consumers, and plaintiffs point to Mid-America's multiple, expanded recalls in support of this allegation. Plaintiffs also claim that Mid-America failed to adequately test its pet food products for contamination prior to sale, and to fulfill its duty to promptly recall all potentially affected products. Mid-America has until February 5, 2024 to answer, move to dismiss, or otherwise respond to plaintiffs' complaint.

Additionally, in December 2023, a New York resident filed a putative nationwide class action against WanaBana USA after the company recalled its Apple Cinnamon Fruit Purée pouches for elevated lead levels and the FDA issued an announcement advising parents and caregivers not to buy or feed the products to children because of the potential for elevated levels of lead. The plaintiff is asserting claims against WanaBana for violation of New York General Business Law Sections 349 and 350 and breach of express warranty, alleging that WanaBana knew or should have known of the risk of lead contamination and owed consumers a duty to disclose that information based on the company's superior knowledge of ingredients and manufacturing processes and the ability to test for potential contaminants. WanaBana has yet to respond to the complaint, but on January 9, 2024, the FDA announced that it received 87 confirmed reports of adverse events linked to the recalled Purée pouches and had confirmed the presence of chromium in the products.

Also inDecember 2023, a South Carolina resident filed Herendeen v. The Quaker Oats Co., No. 1:23-cv-17103 (N.D. Ill. Dec. 27, 2023), after Quaker Oats announced a recall of certain granola bars and cereals due to potential Salmonella contamination. The plaintiff asserts claims for negligence, breach of warranty, fraud, and unjust enrichment, and alleges that Quaker Oats (1) knew or should have known that the recalled products had a risk of Salmonella contamination, and (2) had a duty of care to minimize the presence of bacteria and adequately test and minimize the presence of harmful bacteria in the products. Quaker Oats has yet to respond to the complaint.

The success of plaintiffs' allegations remains to be seen, but given the implications on the duty to disclose, these contamination cases will be interesting to watch in 2024.

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