This post is from the non-Reed Smith side of the blog.

We posted last week about In re Valsartan, Losartan, & Irbesartan Products Liability Litigation, 2020 WL 7418006 (D.N.J. Dec. 18, 2020), a decision that came in just time to take a sport on our Worst of 2020 post.  Just as we were expressing our displeasure with that decision, the court entered another ruling.  This time on standing and this time far from all bad.

Last week's decision - In re Valsartan, Losartan, & Irbesartan Products Liability Litigation, 2021 U.S. Dist. LEXIS 5908 (D.N.J. Jan. 12, 2021) ("VLI 2") - focused on 2 putative class actions:  one for economic loss and one for medical monitoring.  Defendants moved to dismiss on the grounds that plaintiffs lack standing.  Specifically, that plaintiffs failed to allege an injury in fact and/or an injury that was traceable to each defendant and that plaintiffs improperly assert claims under the laws of states in which they do not reside or were injured.

On the first point, the court concluded that plaintiffs had met their burden of alleging an injury fact.  The crux of plaintiffs' claims are allegations that the generic drug at issue was contaminated with potential carcinogens.  Id. at *16.  On that basis, plaintiff asserted three theories of economic loss - receipt of a worthless product because they failed to receive the benefit of their bargain, receipt of a less valuable product for the same reason, and the cost of purchase replacement medication.  Id. at *41.  The opinion walks through the key Third Circuit decisions on the issue and finds support for plaintiffs' first and third theories.  Plaintiffs bargained for a "pure, unadulterated, properly branded, and cGMP compliant generic drug," id., which they alleged they did not receive.  On that ground they allege the product was worthless and therefore seek recovery of their full out-of-pocket expenditures.  As that is a concrete method for a factfinder to value their claims, plaintiffs have alleged an injury in fact.  Id. at *45.    Likewise, the difference in the cost of the product at issue and a replacement drug is calculable and also sufficient to confer standing.  Id. at *46.  Plaintiff's second theory, that the drug was "less valuable," was not sufficient because plaintiffs did not provide a method to value it other than "mere conjecture."  Id.

On the medical monitoring claim, the court found that exposure to toxic substances was sufficient for conferring standing.  Id.  at *49-50.  While defendants were able to point out certain speculative parts of plaintiffs' complaint, the court found that the specific allegations of exposure were enough to satisfy the requirements of standing, leaving for another day the "legal sufficiency" of the causes of action.  Id. at *51.

Having found injury in fact, the court next examined whether plaintiffs' allegations demonstrated that the claimed injuries were fairly traceable to all of the defendants.  This is where plaintiffs ran into a problem.  Both the economic loss and medical monitoring class action complaints named several defendants against whom no named class representative alleged a traceable injury.  The traceability requirement is to ensure that the plaintiff is challenging the actions of the defendant, not some third-party.  Id. at *52.  It does not rise to the level of proximate cause needed to succeed on the merits, but some causal relationship is needed.  Id. Moreover, the requirement is not relaxed in a class action.  In other words, the class cannot rely on injuries suffered by unidentified class members.  Id. at *53.

Thus, in order to establish standing in the class action context, for each named defendant, at least one named plaintiff must be able to allege an injury traceable to that defendant.

Id.  In VLI 2, for many defendants the only allegations against them are "conclusory allegations that lump Defendants together."  Id. at *55.  Allegations that "defendants" sold or distributed the product generally do not show that a named plaintiff has alleged injury traceable to a specific defendant.  The court also rejects plaintiffs' de facto market share liability allegations.  Injury cannot be traced to distributor "simply because of its dominant position in the market."  Id. at *56.  Plaintiffs cannot assert claims against defendant without specific facts tying their purchases to the defendant's sales, nor can they rely on unidentified purchases by unidentified class members.  Therefore, plaintiffs did not have standing against numerous of the defendants.

Finally, the named class representatives asserted claims under the laws of all fifty states, the District of Colombia, and Puerto Rico, but they represent only twenty-one states.  Id. at *59.  Plaintiffs argued that unnamed class members need not establish standing.  That is correct but is not the issue raised by defendants.  The question before the court was whether the named plaintiffs had standing to assert claims under the laws of states in which they do not reside and/or were not injured.  The answer is: no.  Id. at *58.  As noted in relation to traceability, the fact that the suit is a class action does not relax the requirements of standing.  "Standing is not dispensed in gross."  Id. For each alleged claim, plaintiffs must have a named plaintiff with standing.  Because they do not, claims based on the law of states without a class representative were dismissed.

The court is taking defendants' motions to dismiss one issue at a time and plans to author a series of opinions.  Number 2 was certainly an improvement over Number 1.  Let's hope the trend continues.

This article is presented for informational purposes only and is not intended to constitute legal advice.