Opinion
Case No. 8:18-cv-2463-MSS-AAS
2020-06-15
Kim YACHERA and Julie Shafer, on behalf of themselves and all others similarly situated, Plaintiffs, v. WESTMINSTER PHARMACEUTICALS, LLC, Defendant.
Andrew Obergfell, Pro Hac Vice, Bursor & Fisher, PA, New York, NY, Neal J. Deckant, Pro Hac Vice, Bursor & Fisher, PA, Walnut Creek, CA, Scott A. Bursor, Bursor & Fisher, PA, Miami, FL, for Plaintiffs. David D. Yeagley, Pro Hac Vice, Ulmer & Berne LLP, Cleveland, OH, Megan B. Collins, Paul M. Weekley, Weekley Schulte Valdes LLC, Tampa, FL, for Defendant.
Andrew Obergfell, Pro Hac Vice, Bursor & Fisher, PA, New York, NY, Neal J. Deckant, Pro Hac Vice, Bursor & Fisher, PA, Walnut Creek, CA, Scott A. Bursor, Bursor & Fisher, PA, Miami, FL, for Plaintiffs.
David D. Yeagley, Pro Hac Vice, Ulmer & Berne LLP, Cleveland, OH, Megan B. Collins, Paul M. Weekley, Weekley Schulte Valdes LLC, Tampa, FL, for Defendant.
ORDER
MARY S. SCRIVEN, UNITED STATES DISTRICT JUDGE
THIS CAUSE comes before the Court for consideration of Defendant's Motion to Dismiss Plaintiffs’ First Amended Complaint, (Dkt. 41), Plaintiffs’ response in opposition thereto, (Dkt. 49), Defendant's reply in support of the Motion, (Dkt. 54), and the Parties’ supplemental briefs regarding Debernardis v. IQ Formulations, LLC, 942 F.3d 1076 (11th Cir. 2019). (Dkts. 58, 59) Upon consideration of all relevant filings, case law, and being otherwise fully advised, the Court GRANTS IN PART and DENIES IN PART Defendant's Motion to Dismiss Plaintiffs’ First Amended Complaint.
I. BACKGROUND
A. Allegations of the Amended Complaint
This putative class action arises from Westminster Pharmaceuticals, LLC's production and distribution of generic prescription thyroid tablets. (Dkt. 31 at ¶ 3) Plaintiffs allege that the tablets—designed for the treatment of hypothyroidism—contained active pharmaceutical ingredients ("API") sourced from Sichuan Friendly Pharmaceutical Co., a China-based supplier. (Id. at ¶¶ 3-4 7-8) As a result of Sichuan's deviations from "current good manufacturing practice," the thyroid tablets Plaintiffs purchased and consumed were adulterated, meaning that they "did not contain the amount of active ingredients stated on the label." (Id. at ¶¶ 3-5) Plaintiffs claim that the inconsistency between the dosages stated on the labels and the actual amount of API in the thyroid tablets (i) "exposed [them] to an immediate risk of harm" and (ii) rendered the tablets "worthless and unfit for their intended purpose." (Id. at ¶¶ 29, 32-33)
i. The FDA Inspects Sichuan's Facilities and Issues an Import Alert on Sichuan's Products
In October 2017, the U.S. Food and Drug Administration ("FDA") inspected Sichuan's facilities in China. (Id. at ¶ 9) The inspection revealed "significant deviations from current good manufacturing practice." (Id. at ¶ 17) Among other things, the FDA found that Sichuan failed to (i) "conduct residual solvent testing of its [API]," (ii) "adequately validate written procedures for the cleaning and maintenance of equipment," and (iii) "exercise sufficient controls over computerized systems to prevent unauthorized access or changes to data, and to have adequate controls to prevent omission of data." (Id. at ¶¶ 18-21) These findings led the FDA in March 2018 to place an Import Alert on all of Sichuan's drug-related products. (Id. at ¶ 10) The Import Alert meant that the FDA could seize Sichuan's products at ports of entry without physically examining them. (Id. at ¶ 12)
Even though Westminster incorporated Sichuan-produced API into its thyroid tablets, it did not immediately recall the tablets after the March 2018 Import Alert. (Id. at ¶ 13) Nor did it issue an immediate recall after the FDA sent Sichuan a warning letter in June 2018, summarizing the poor manufacturing practices that led to the Import Alert. (Id. at ¶¶ 14-15)
ii. Westminster Voluntarily Recalls the Thyroid Tablets, and the FDA Tests Sichuan-Manufactured API
In August 2018—over four months after the Import Alert—Westminster voluntarily recalled its thyroid tablets. (Id. at ¶ 16) The recall notice explained that the tablets "were manufactured using [API] that were sourced prior to the FDA's Import Alert of Sichuan Friendly Pharmaceutical Co., Ltd., which as a result of a 2017 inspection were found to have deficiencies with Current Good Manufacturing Practices." (Id. ) According to the recall notice, these deficiencies "could represent the possibility of risk being introduced into the manufacturing process." (Id. )
Approximately one week after the recall, the FDA announced that laboratory testing had confirmed that Sichuan's "porcine thyroid API" contained "inconsistent levels of the active ingredients" and "should not be used to manufacture or compound drugs for patient use." (Id. at ¶ 25) The FDA specifically "recommend[ed] patients not use porcine thyroid drug products made by Westminster" because "[t]hese products were made using API from Sichuan." FDA Alerts Drug Makers of a Recall of Porcine Thyroid API from Sichuan Friendly Pharmaceutical Co., Limited, China , U.S. FOOD & DRUG ADMINISTRATION , https://www.fda.gov/drugs/drug-safety-and-availability/fda-alerts-drug-makers-recall-porcine-thyroid-api-sichuan-friendly-pharmaceutical-co-limited-china (last visited June 15, 2020). The FDA also explained that "over or under treatment of hypothyroidism could result in permanent or life-threatening adverse health consequences." (Dkt. 31 at ¶ 25)
iii. The Named Plaintiffs
Plaintiff Kim Yachera is a Pennsylvania citizen who purchased Westminster-produced thyroid tablets from CVS. (Id. at ¶ 32) Although she was prescribed a 15 mg dosage, she alleges that "the dosage stated on the label was false, as the medications did not contain the amount of API stated." (Id. ) Yachera learned about the recall when she received an August 2018 letter from CVS informing her that Westminster was recalling the thyroid tablets "because of potential quality concerns during the manufacturing of the [API]." (Id. ) The letter also instructed Yachera to stop using the tablets, which "may represent a potential health hazard or safety risk." (Id. )
Plaintiff Julie Shafer is a Michigan citizen who purchased Westminster-produced thyroid tablets from Walgreens. (Id. at ¶ 33) Like Yachera, she alleges that the tablets she purchased did not contain her prescribed dosage of 120 mg. (Id. ) Shafer learned about the recall from an August 2018 letter stating that her medication was "being recalled due to risk of impurity from substandard manufacturing practices." (Id. ) The letter instructed her to "contact her pharmacy for a replacement medication." (Id. )
Plaintiffs allege that their consumption of the adulterated tablets "exposed [them] to an immediate risk of harm." (Id. at ¶¶ 32-33) Plaintiffs also allege that, when they purchased the tablets, they "reviewed the accompanying labels and disclosures, including the dosage listed on the label, and understood them as representations and warranties by the manufacturer ... that the medications were properly manufactured and free from adulteration and defects." (Id. ) Plaintiffs claim that they would not have purchased the thyroid tablets if they had known that these representations were false—that "the dosage was inconsistent with what was stated on the label, and that [they] [were] being exposed to imminent harm." (Id. )
B. Procedural History
Yachera filed this putative class action on October 3, 2018, asserting a variety of state-law claims against Westminster and CVS Pharmacy, Inc. (Dkt. 1) Defendants moved to dismiss, and Yachera elected to amend her Complaint, adding Shafer as a Plaintiff and Walgreen Co. as a Defendant. (Dkts. 17, 18, 31) The Amended Complaint asserts the following state-law claims based on Plaintiffs’ purchase and consumption of Westminster's adulterated thyroid tablets: (i) breach of express warranty, (ii) breach of the implied warranty of merchantability, (iii) deceptive trade practices in violation of the Pennsylvania Unfair Trade Practices and Consumer Protection Law and the Michigan Consumer Protection Act, (iv) unjust enrichment, (v) fraudulent concealment, (vi) fraud, (vii) conversion, (viii) strict liability based on a manufacturing defect, (ix) gross negligence, (x) negligence, and (xi) battery. (Dkt. 31 at ¶¶ 47-155) Plaintiffs also seek to represent a class of "all persons in the United States who purchased or paid for [t]hyroid [t]ablets that are subject to Westminster's recall or manufactured with adulterated components from Sichuan." (Id. ¶ 37)
Defendants again moved to dismiss, arguing that the Amended Complaint fails to establish Article III standing or adequately plead any claims for relief. (Dkts. 40, 41, 48) Defendants also sought to strike or dismiss the class allegations in the Amended Complaint. (Dkt. 41 at 30-35) On the same day they filed their response, Plaintiffs voluntarily dismissed CVS Pharmacy, Inc. and Walgreen Co. from this action, leaving Westminster as the sole remaining Defendant. (Dkts. 50, 51)
Following the completion of the motion-to-dismiss briefing, the Court stayed this matter pending the Eleventh Circuit's decision in Debernardis, a case both Parties had discussed in their briefs. (Dkt. 55 at 1) The Court explained that the Eleventh Circuit's decision would "at least be substantially instructive, and at most be dispositive, as to the issue of standing in this matter, a threshold question the Court must determine before deciding whether Plaintiffs have adequately stated their claims under Federal Rule of Civil Procedure 12(b)(6)." (Id. at 2) In November 2019, the Eleventh Circuit decided Debernardis, and the Parties subsequently submitted supplemental briefs addressing "the applicability and effect of the Eleventh Circuit's decision on the Article III standing arguments in this case." (Dkts. 57, 58, 59)
II. LEGAL STANDARDS
A. Rule 12(b)(1)
Federal courts are courts of limited jurisdiction. "[B]ecause a federal court is powerless to act beyond its statutory grant of subject matter jurisdiction, a court must zealously insure that jurisdiction exists over a case, and should itself raise the question of subject matter jurisdiction at any point in the litigation where a doubt about jurisdiction arises." Smith v. GTE Corp., 236 F.3d 1292, 1299 (11th Cir. 2001).
Motions to dismiss for lack of subject matter jurisdiction pursuant to Rule 12(b)(1) may attack jurisdiction facially or factually. Morrison v. Amway Corp., 323 F.3d 920, 924 n.5 (11th Cir. 2003). "Facial attacks" on the complaint require the Court to examine the four corners of the complaint to determine if the plaintiff has sufficiently alleged a basis for subject matter jurisdiction, and the allegations in the complaint are taken as true for the purposes of the motion. Lawrence v. Dunbar, 919 F.2d 1525, 1528-29 (11th Cir. 1990). "Factual attacks," on the other hand, permit the Court to look outside the four corners of the complaint to determine if jurisdiction exists. Eaton v. Dorchester Dev., Inc., 692 F.2d 727, 732 (11th Cir. 1982). In a factual attack, the presumption of truthfulness afforded to a plaintiff under Rule 12(b)(6) does not attach. Scarfo v. Ginsberg, 175 F.3d 957, 960 (11th Cir. 1999) (citing Lawrence, 919 F.2d at 1529 ). Because the Court's authority to hear the case is at issue in a Rule 12(b)(1) motion, the Court is free to weigh evidence outside the complaint. Eaton, 692 F.2d at 732.
B. Rule 12(b)(6)
The threshold for surviving a motion to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6) is a low one. Quality Foods de Centro Am., S.A. v. Latin Am. Agribusiness Dev. Corp., S.A., et al., 711 F.2d 989, 995 (11th Cir. 1983). A plaintiff must plead only enough facts to state a claim to relief that is plausible on its face. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S. Ct. 1955, 1968-69, 167 L.Ed.2d 929 (2007) (abrogating the "no set of facts" standard for evaluating a motion to dismiss established in Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957) ). Although a complaint challenged by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff is still obligated to provide the "grounds" for his entitlement to relief, and "a formulaic recitation of the elements of a cause of action will not do." Berry v. Budget Rent A Car Sys., Inc., 497 F. Supp. 2d 1361, 1364 (S.D. Fla. 2007) (quoting Twombly, 127 S. Ct. at 1964-65 ). In evaluating the sufficiency of a complaint in light of a motion to dismiss, the well pleaded facts must be accepted as true and construed in the light most favorable to the plaintiff. Quality Foods, 711 F.2d at 994-95. However, the court should not assume that the plaintiff can prove facts that were not alleged. Id. Thus, dismissal is warranted if, assuming the truth of the factual allegations of the plaintiff's complaint, there is a dispositive legal issue which precludes relief. Neitzke v. Williams, 490 U.S. 319, 326, 109 S.Ct. 1827, 104 L.Ed.2d 338 (1989).
III. DISCUSSION
A. Standing
Because "a court must first determine whether it has proper subject matter jurisdiction before addressing ... substantive issues," the Court begins with Westminster's argument that Plaintiffs lack Article III standing. Taylor v. Appleton, 30 F.3d 1365, 1366 (11th Cir. 1994). Westminster contends that Plaintiffs fail to allege injury in fact because "they paid for a medication, they used the medication, they cannot allege that they did not receive the therapeutic benefit of the medication, and they did not suffer any ill effects from taking the medicine." (Dkt. 54 at 3) Westminster also argues that Plaintiffs cannot establish standing based on a "benefit of the bargain" theory—namely, that the thyroid tablets they purchased were worth less than they would have been if the amount of API listed on the labels had matched the actual amount of API in the tablets. (Id. at 5-6) The Court concludes that Plaintiffs adequately allege injury in fact and thus have standing to pursue this action.
The "irreducible constitutional minimum of standing consists of three elements": "[t]he plaintiff must have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision." Spokeo, Inc. v. Robins, ––– U.S. ––––, 136 S. Ct. 1540, 1547, 194 L.Ed.2d 635 (2016). "The plaintiff, as the party invoking federal jurisdiction, bears the burden of establishing these elements." Id. "Where, as here, a case is at the pleading stage, the plaintiff must clearly ... allege facts demonstrating each element." Id.
"To establish injury in fact, a plaintiff must show that he or she suffered an invasion of a legally protected interest that is concrete and particularized and actual or imminent, not conjectural or hypothetical." Id. at 1548. "For an injury to be ‘particularized,’ it must affect the plaintiff in a personal and individual way." Id. For an injury to be "concrete," it "must be ‘de facto ’; that is, it must actually exist." Id. "[A]n economic injury qualifies as a concrete injury," and "[t]here is no requirement that a plaintiff have experienced physical harm to have an economic injury." Debernardis, 942 F.3d at 1084, 1086 n.7. "A person experiences an economic injury when, as a result of a deceptive act or an unfair practice, he is deprived of the benefit of his bargain." Id. at 1086. Damages for economic injury "are calculated based on 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." Id.
Plaintiffs advance two theories of injury in fact. First, they contend that they suffered monetary harm when they purchased thyroid tablets that did not contain the amount of API listed on the label. (Dkt. 49 at 4-6) Plaintiffs allege that, had they known the actual dosages did not match the listed dosages, they would not have bought the tablets. ( Id. ) Second, Plaintiffs claim that consumption of the adulterated tablets exposed them to an imminent risk of physical harm, albeit one that did not materialize. ( Id. ) Because the first theory establishes injury in fact, the Court does not address the second.
Plaintiffs assert that, because the thyroid tablets they purchased did not contain the amount of API stated on the label, they were "deprived of the benefit of [their] bargain" and thus suffered a tangible economic injury. Debernardis, 942 F.3d at 1084. Plaintiffs’ theory of injury rests on the plausible, common-sense allegation that they would not have purchased the thyroid tablets had they known the dosages listed on the labels did not reflect the actual dosages. (Dkt. 31 at ¶¶ 32-33) Significantly, Plaintiffs’ doctors prescribed them specific dosages of thyroid medication—15 mg for Yachera, 120 mg for Shafer. ( Id. ) Taking the wrong amount of medication could have harmed Plaintiffs because, as the FDA explained, "over or under treatment of hypothyroidism could result in permanent or life-threatening adverse health consequences." (Dkt. 31 at ¶ 25) These potential consequences support Plaintiffs’ assertion that the dosages listed on the label were "part of the basis of the bargain" they struck in buying the thyroid tablets. (Id. at ¶¶ 32-33) Accordingly, Plaintiffs suffered a concrete monetary injury when they paid for thyroid medication that they plausibly allege they would not have purchased had they known it did not contain the amount of API they thought they were receiving. See Reynolds v. Wal-Mart Stores, Inc., No. 4:14CV381-MW/CAS, 2015 WL 1879615, at *2 (N.D. Fla. Apr. 23, 2015) ("A plaintiff can meet the injury-in-fact requirement with a showing that by relying on a misrepresentation on a product label, they paid more for a product than they otherwise would have paid, or bought it when they otherwise would not have done so.").
Westminster resists this conclusion, contending that a plaintiff cannot establish "physical or economic injury-in-fact where [she] fail[s] to plead facts indicating that a product caused [her] harm or that [her] particular product failed to deliver the warranted benefits and thus failed to perform as intended." (Dkt. 41 at 8) Westminster argues that Plaintiffs in this action lack standing because they allege no facts "indicating that the [thyroid medication] failed to work for its intended purpose" or "that it caused any adverse effects." (Id. ) Debernardis forecloses this argument. There, the Eleventh Circuit rejected the district court's conclusion that the plaintiffs—purchasers of adulterated dietary supplements that were banned from sale—failed to allege injury in fact because "there was no allegation that the supplements failed to perform as advertised" or "caused any adverse health effects." 942 F.3d at 1083. Such allegations may be "sufficient to establish standing," but they are not "necessary to establish standing." Id. at 1086. Instead, the Eleventh Circuit held that the plaintiffs suffered an injury in fact simply because they "purchased adulterated dietary supplements that they would not have purchased had they known that sale of the supplements was banned." Id. at 1088. Thus, the absence of allegations that a medication made a plaintiff sick or failed to work as intended is not fatal to establishing injury in fact where, as here, each plaintiff plausibly pleads that she would not have purchased the medication had she known it was defective.
B. Failure to State a Claim
Westminster argues that Plaintiffs’ claims under Michigan and Pennsylvania law are due to be dismissed for failure to state claims for relief. (Dkt. 41 at 3-4) The Court considers each of Westminster's arguments in turn.
i. Breach of Express Warranty
a. Pennsylvania Law
Plaintiffs claim that, by producing and distributing adulterated thyroid tablets, Westminster breached express warranties that "the medication would in fact contain the dosages listed on the label, and ... the product would be ‘superior’ and ‘safe.’ " (Dkt. 31 at ¶¶ 47-64) The latter set of alleged warranties appeared on Westminster's website, which stated that (i) "Westminster Pharmaceuticals is committed to delivering the highest standard of product quality, enabling us to continuously provide superior pharmaceutical products," and (ii) Westminster aims to "ensur[e] greater longevity over every aspect of our product portfolio's lifecycle—so we can continue providing our customers with a greater variety of safe , affordable and reliable generic medications." (Id. at ¶ 23 (emphasis added))
"To prevail on a breach of express warranty claim, a plaintiff must establish that a breach of warranty occurred and that the breach was the proximate cause of the specific damages sustained." Ebert v. C.R. Bard, Inc., 459 F.Supp.3d 637, 648 (E.D. Pa. 2020) (citing Samuel-Bassett v. Kia Motors Am. Inc., 613 Pa. 371, 34 A.3d 1, 35 (2011) ). Under Pennsylvania law, an express warranty is created by "[a]ny affirmation of fact or promise made by the seller to the buyer which relates to the goods and becomes part of the basis of the bargain." 13 Pa. Con. Stat. § 2313(a)(1).
Westminster contends that the breach-of-express-warranty claim cannot survive under Pennsylvania law because the Amended Complaint does not allege that the warranties "were directed at [Yachera] as a consumer." (Dkt. 41 at 15-16) The argument fails. Westminster is correct in asserting that Pennsylvania courts have held that an express warranty is not actionable unless it is "directed at consumers in order to induce purchases of the products." Esposito v. I-Flow Corp., No. 10-CV-3883, 2011 WL 5041374, at *6 (E.D. Pa. Oct. 24, 2011). Plaintiffs here satisfy this requirement, however, by plausibly alleging that Westminster's "representations and express warranties regarding the dosage of the medication, listed on the label, w[ere] directed at consumers" and "made to induce Plaintiff[s] to purchase [Westminster-manufactured]" thyroid tablets. (Dkt. 31 at ¶¶ 53, 56)
These warranties bear no resemblance to the warranties found unactionable in McLaughlin v. Bayer Corp., No. CV 14-7315, 2017 WL 697047, at *10 (E.D. Pa. Feb. 21, 2017), on which Westminster relies. (Dkt. 41 at 16) The warranties challenged in McLaughlin were "plainly directed only at physicians," stating (among other things) that "[t]he Essure Training program is a comprehensive course designed to provide information and skills necessary to select appropriate patients, perform competent procedures and manage technical issues related to the placement of Essure," a "female birth control device." 2017 WL 697047, at *1, *10. Here, by contrast, the Amended Complaint supports a reasonable inference that Westminster's warranties regarding the dosage levels of the thyroid tablets were at least partly directed at consumers who might purchase and consume the medication.
Next, Westminster argues that the breach-of-express-warranty claim is barred by the Pennsylvania Supreme Court's decision in Hahn v. Richter, 543 Pa. 558, 673 A.2d 888 (1996). (Dkt. 41 at 29) Hahn rejected strict liability for drug manufacturers in failure-to-warn cases, holding that "where the adequacy of warnings associated with prescription drugs is at issue, the failure of the manufacturer to exercise reasonable care to warn of dangers, i.e., the manufacturer's negligence, is the only recognized basis of liability." 673 A.2d at 891. Hahn did not, however, address the viability of claims for breach of express warranty against drug manufacturers. Such claims are "based on express representations or promises made by the seller" and thus "sound[ ] more in contract than in tort." Doughtery v. C.R. Bard, Inc., No. CIV.A. 11-6048, 2012 WL 2940727, at *8 (E.D. Pa. July 18, 2012). Accordingly, because "[t]he [ Hahn ] court did not consider other theories of liability such as breach of express warranty," and in light of "the contractual nature of an express-warranty claim, ... nothing in [ Hahn ] precludes such a claim." Id. at *9 ; see also Crockett v. Luitpold Pharm., Inc., No. CV 19-276, 2020 WL 433367, at *5 (E.D. Pa. Jan. 28, 2020) ("Plaintiff's claims for breach of express warranty ... are not reached by Hahn’s rationale.").
Finally, Westminster contends that the breach-of-express-warranty claim fails to the extent it rests on statements that the thyroid tablets were "safe" or "superior." (Dkt. 41 at 16-17) According to Westminster, these statements amount to nonactionable puffery. (Id. ) On this point, Westminster is correct. "[P]uffery does not create a cause of action for breach of warranty in Pennsylvania." Burke v. Honeywell Int'l, Inc., No. CV 15-1921, 2016 WL 1639820, at *4 (E.D. Pa. Apr. 26, 2016) Puffery consists of "exaggeration or overstatement expressed in broad, vague, and commendatory language." Castrol, Inc. v. Pennzoil Co., 987 F.2d 939, 945 (3d Cir. 1993). Although an assertion of "absolute safety" may be actionable, "a claim that a product is ‘safe’ generally ... is puffery because it conveys only the seller's judgment that the risk is low enough to be called ‘safe.’ " Fusco v. Uber Techs., Inc., No. CV 17-00036, 2018 WL 3618232, at *6 (E.D. Pa. July 27, 2018). Likewise, "bald assertions of superior quality are puffery if they lack detailed claims that could be measured or tested." Id. Applying these principles, the Pennsylvania Supreme Court rejected as "mere puffing" statements in an advertising brochure that "you are assured of a safe, dependable helicopter" and that "the helicopter was ‘easy to operate.’ " Berkebile v. Brantly Helicopter Corp., 462 Pa. 83, 337 A.2d 893, 903 (1975), abrogated on other grounds by Reott v. Asia Trend, Inc., 618 Pa. 228, 55 A.3d 1088 (2012).
Here, Plaintiffs challenge Westminster's statements that it (i) "is committed to delivering the highest standard of product quality, enabling us to continuously provide superior pharmaceutical products," and (ii) aims to "provid[e] our customers with a greater variety of safe , affordable and reliable generic medications." (Dkt. 31 at ¶ 23 (emphasis added)) Such vague, abstract statements concerning safety, dependability, and superiority are nonactionable because they are not "specific enough to be falsifiable." Fusco, 2018 WL 3618232, at *6. They do not promise "absolute safety," nor do they "include[ ] a comparison to competing [products]"—features that might have made the statements falsifiable and hence actionable. Id. at *8. Instead, the statements "convey only the seller's opinion that its product is superior." Id. at *6.
Accordingly, to the extent the Pennsylvania breach-of-express-warranty claim rests on the statements concerning safety and superiority, it is dismissed. The claim survives, however, to the extent it is premised on the warranty that "the medication would in fact contain the dosages listed on the label." (Dkt. 31 at ¶¶ 47-64)
b. Michigan Law
Unlike Pennsylvania law, which does not require "privity of contract ... between the party issuing a warranty and the party seeking to enforce the warranty," Goodman v. PPG Indus., Inc., 849 A.2d 1239, 1246 n.6 (Pa. Super. Ct. 2004), aff'd, 584 Pa. 537, 885 A.2d 982 (2005), Michigan law requires a plaintiff to "allege that she was in privity with [the] [d]efendant[ ]" in order to "properly plead a breach-of-express-warranty claim." Montgomery v. Kraft Foods Glob., Inc., 822 F.3d 304, 309 (6th Cir. 2016). Accordingly, Westminster contends that, because Shafer does not claim to have directly contracted with Westminster to purchase her thyroid tablets (she bought them at Walgreens), the claim for breach of express warranty fails under Michigan law. (Dkt. 41 at 17) Plaintiffs respond by asserting that Shafer "is a third-party beneficiary of the contract between Westminster and the retail pharmacy, Walgreens, and [ ] is entitled to enforce the representations and express warranties made by Westminster—regardless of privity." (Dkt. 49 at 13) Plaintiffs’ effort to salvage this claim fails.
"Under Michigan law, no privity of contract exists between a consumer, who buys from a retailer, and the manufacturer who has not sold a product directly to the consumer." Montgomery v. Kraft Foods Glob., Inc., No. 1:12-CV-00149, 2012 WL 6084167, at *13 (W.D. Mich. Dec. 6, 2012), aff'd, 822 F.3d 304 (6th Cir. 2016). Nevertheless, "an intended third-party beneficiary is in privity of contact with the original parties for purposes of an express warranty." Id. To plead third-party beneficiary status, a plaintiff must allege "that the contracting parties intended the plaintiff to benefit from their agreement." Brosius v. Wells Fargo Bank, N.A., No. 13-10109, 2014 WL 2199627, at *8 (E.D. Mich. May 27, 2014). "[N]ot every person incidentally benefitted by a contractual promise has a right to sue for breach of that promise, but rather only if the promisor has undertaken to give or to do or refrain from doing something directly to or for said person." Brunsell v. City of Zeeland, 467 Mich. 293, 651 N.W.2d 388, 390 (2002).
Plaintiffs allege no facts suggesting that Walgreens and Westminster intended end-users such as Shafer to benefit from any agreement they entered regarding the sale of thyroid tablets. Plaintiffs do not, as they must, "identify the specific contract [between Walgreens and Westminster] to which [Shafer] claim[s] privity." Schechner v. Whirlpool Corp., 237 F. Supp. 3d 601, 608 (E.D. Mich. 2017). Nor do Plaintiffs point to "authority to support the proposition that an end-user consumer is an intended beneficiary to a contract between a remote manufacturer and a retailer." Id. The Amended Complaint does not even contain the conclusory assertion that Shafer is an intended beneficiary of any contract between Westminster and Walgreens. See Price v. Caruso, No. 1:09-CV-102, 2009 WL 4823865, at *1 (W.D. Mich. Dec. 9, 2009) (rejecting plaintiff's "wholly conclusory" "assertion that he was the third-party beneficiary of a contract between the MDOC and Prisoner Health Services"). Because Plaintiffs fail to allege third-party beneficiary status, the lack of privity between Shafer and Westminster mandates dismissal of the claim for breach of express warranty under Michigan law.
ii. Breach of the Implied Warranty of Merchantability
a. Pennsylvania Law
Plaintiffs allege that, by selling adulterated thyroid tablets, Westminster breached implied warranties that the tablets "(i) contained no adulterations; (ii) contained the dosages prescribed; and (iii) are generally recognized as safe for human consumption." (Dkt. 31 at ¶ 67) Westminster contends that this claim fails under Pennsylvania law because (i) Yachera does not allege any injury caused by a defect in the thyroid tablets, and (ii) Hahn and its progeny bar claims for breach of the implied warranty of merchantability against drug manufacturers. (Dkt. 41 at 18, 29-30) The first argument fails. The second argument is partly correct: Hahn bars the implied warranty claim to the extent it rests on a design defect or a failure to warn, but not to the extent it is premised on a manufacturing defect.
The implied warranty of merchantability "arise[s] by operation of law and serve[s] to protect buyers from loss where the goods purchased are below commercial standards or are unfit for the buyer's purpose." Altronics of Bethlehem, Inc. v. Repco, Inc., 957 F.2d 1102, 1105 (3d Cir. 1992). "[T]o be merchantable, goods must be ‘fit for the ordinary purposes for which such goods are used.’ " Id. (quoting 13 Pa. Con. Stat. § 2314(b)(3) ). "A plaintiff establishes a breach of implied warranty by showing ... that the [product] purchased was defective." Zollars v. Troy-Built, LLC, No. CIV.A. 10-924, 2011 WL 7102573, at *5 (W.D. Pa. Dec. 21, 2011), adopted by 2012 WL 253176 (W.D. Pa. Jan. 26, 2012). "A product's defectiveness can be proven by pointing to some specific dereliction by the manufacturer in constructing or designing the product, or by demonstrating that the product functioned improperly in the absence of abnormal use and reasonable secondary causes." Id.
Plaintiffs plausibly allege that the thyroid medication they purchased was defective because it was "adulterated" and "contained inconsistent amounts of API." (Dkt. 31 at ¶ 68) Plaintiffs also adequately allege that this defect caused them economic injury because "they would not have purchased the [t]hyroid [t]ablets on the same terms if they knew that the products contained adulterations." (Id. at ¶ 77) Although Plaintiffs do not allege that they suffered physical injuries as a result of taking the thyroid pills, such harm is not required to state a claim for breach of the implied warranty of merchantability under Pennsylvania law. The implied warranty is designed to "protect[ ] the purchaser by allowing it to obtain the benefit of the bargain, thereby placing it in the same position it would have been in if the product had functioned properly." Step-Saver Data Sys., Inc. v. Wyse Tech., No. CIV. A. 89-7203, 1990 WL 87334, at *4 (E.D. Pa. June 21, 1990). As a result, "economic harms"—including Plaintiffs’ loss of the benefit of the bargain in this action—"are properly recoverable under contract theories of breach of implied warranty." Lupinski v. Heritage Homes, Ltd., 369 Pa.Super. 488, 535 A.2d 656, 658 (1988).
Contrary to Westminster's assertion, (Dkt. 41 at 13), Plaintiffs’ allegation that the thyroid tablets they purchased did not contain the listed amounts of API is plausible under Iqbal and Twombly. Far from being conclusory, the allegation rests on FDA testing that revealed "inconsistent levels of the active ingredients" in Sichuan-manufactured API that was later incorporated into Westminster's thyroid tablets. (Dkt. 31 at ¶ 25)
Westminster also seeks dismissal of the breach-of-implied-warranty claim on the grounds that Pennsylvania law bars "implied warranty claims asserted against a prescription drug manufacturer." (Dkt. 41 at 29) "[T]he theories of strict liability and breach of the implied warranty of merchantability are parallel theories of recovery, one in contract and the other in tort." Doughtery, 2012 WL 2940727, at *7. As noted above, the Pennsylvania Supreme Court in Hahn held that drug manufacturers are not subject to strict liability in cases challenging "the adequacy of warnings." 673 A.2d at 891. Subsequently, Pennsylvania courts extended Hahn to bar "design defect claim[s] for strict liability ... when [they are] asserted against a manufacturer of prescription drugs." Bergstresser v. Bristol-Myers Squibb Co., No. CIV.A. 3:12-1464, 2013 WL 1760525, at *2 (M.D. Pa. Apr. 24, 2013). These courts recognized that, because "prescription drugs are by their very nature ‘unavoidably unsafe products,’ " "there can be no strict liability for a design defect," Rosenberg v. C.R. Bard, Inc., 387 F. Supp. 3d 572, 578 (E.D. Pa. 2019), which requires proof of a design that "results in an unreasonably dangerous product." Barton v. Lowe's Home Centers, Inc., 124 A.3d 349, 355 (Pa. Super. Ct. 2015).
Pennsylvania law does not, however, forbid a plaintiff from "bring[ing] a strict liability cause of action against a drug manufacturer for a manufacturing defect claim." Bergstresser, 2013 WL 1760525, at *2 ; accord Tatum v. Takeda Pharm. N. Am., Inc., No. CIV.A. 12-1114, 2012 WL 5182895, at *2 (E.D. Pa. Oct. 19, 2012) (holding, in case involving allegedly defective drug, that "strict liability claims for manufacturing defects are not prohibited"). The reason is that, "in order for a product to be deemed ‘unavoidably’ unsafe" and thus exempt from strict liability, "it must have been prepared properly." Wagner v. Kimberly-Clark Corp., 225 F. Supp. 3d 311, 318 (E.D. Pa. 2016) "If this were not the case, manufacturers could exercise no care at all in the preparation of their products, but then be able to enjoy the argument that their product was ‘unavoidably’ dangerous." Id. Because "Pennsylvania law does not preclude a strict-liability claim based on a manufacturing defect," there is "no basis for declining to recognize a claim for breach of the implied warranty of merchantability where it is based on a manufacturing defect." Doughtery, 2012 WL 2940727, at *7.
Accordingly, Plaintiffs’ implied warranty claim fails under Pennsylvania law to the extent it rests on an alleged design defect or a failure to warn. See id. (dismissing "implied-warranty claim ... based on a design defect or a failure to warn" because "[i]t would ... be inconsistent to exempt a manufacturer of prescription medical devices from strict liability ... and apply a negligence standard to determine liability for a design defect or a failure to warn, but allow a plaintiff to recover for the same alleged defect under a theory of breach of the implied warranty of merchantability"). The claim survives, however, to the extent it is premised on a manufacturing defect, defined as a "product[’s] depart[ure] from its intended design." Thomas v. Staples, Inc., 2 F. Supp. 3d 647, 653 (E.D. Pa. 2014) (quoting Restatement (Third) of Torts § 2 (1998)). Plaintiffs plausibly allege that the thyroid tablets "depart[ed] from [their] intended design" as a result of "a mishap in the manufacturing process ... [that] resulted in inconsistent levels of API from the amount stated on the label, rendering the [tablets] inherently unsafe and unfit for human use." (Dkt. 31 at ¶ 127) These allegations are sufficient to state a claim under Pennsylvania law for breach of the implied warranty of merchantability premised on a manufacturing defect.
b. Michigan Law
Westminster argues that the breach-of-implied-warranty claim fails under Michigan law because Shafer does not allege that she suffered any injury as a result of a defect in the thyroid tablets. (Dkt. 41 at 18) Westminster's argument fails.
"To establish breach of implied warranty [under Michigan law,] the plaintiff must show that a defect in the product, attributable to the manufacturer, caused [the harm]." Severstal N. Am., Inc. v. N. Am. Refractories, Co., No. 06-CV-10202, 2009 WL 1620115, at *13 (E.D. Mich. June 9, 2009) (quoting Hartford Fire Ins. Co. v. Walter Kidde & Co. Inc., 120 Mich.App. 283, 328 N.W.2d 29, 33 (1982) ). "In a claim of breach of implied warranty, the product's lack of fitness for its intended use amounts to an actionable defect." Kenkel v. Stanley Works, 256 Mich.App. 548, 665 N.W.2d 490, 497 (2003). The implied warranty of merchantability allows "the purchaser of defective goods [to] recover the benefit of the bargain (the difference between the value of the goods as delivered and the value the goods would have had they complied with the warranty)." Neibarger v. Universal Cooperatives, Inc., 439 Mich. 512, 486 N.W.2d 612, 615 (1992).
Plaintiffs allege that they were denied the benefit of the bargain—and thus suffered economic injury—when they purchased thyroid tablets that did not contain "the therapeutic dose of the medication in the amount specified on the label." (Dkt. 31 at ¶ 70) It is reasonable to infer that medication that does not contain the listed amount of API is not fit "for its intended use" and thus contains "an actionable defect." Kenkel, 665 N.W.2d at 497. Plaintiffs’ allegations are sufficient to plead "a defect attributable to the manufacturer and [a] causal connection between the defect and the injury or damage of which [Plaintiffs] complain[ ]." Severstal N. Am., Inc., 2009 WL 1620115, at *13 (quoting Gregory v. Cincinnati, Inc., 450 Mich. 1, 538 N.W.2d 325, 329 (1995) ). Accordingly, Plaintiffs have stated a claim for breach of the implied warranty of merchantability under Michigan law.
Under Michigan law, plaintiffs "are not required to allege privity to successfully state a claim" for breach of the implied warranty of merchantability. Travelers Indem. Co. v. Air King Am., Inc., No. 08-12263, 2009 WL 10680607, at *4 (E.D. Mich. Mar. 26, 2009).
iii. Unjust Enrichment
a. Pennsylvania Law
Plaintiffs allege that Westminster was unjustly enriched "by selling and accepting compensation for adulterated medications unfit for human use." (Dkt. 31 at ¶ 102) Westminster incorrectly contends that this claim fails under Pennsylvania law because Yachera does not plead "a concrete injury." (Dkt. 41 at 19)
Under Pennsylvania law, "[t]he elements of unjust enrichment are [i] benefits conferred on defendant by plaintiff, [ii] appreciation of such benefits by defendant, and [iii] acceptance and retention of such benefits under such circumstances that it would be inequitable for defendant to retain the benefit without payment of value." AmeriPro Search, Inc. v. Fleming Steel Co., 787 A.2d 988, 991 (Pa. Super. Ct. 2001). "The application of the doctrine depends on the particular factual circumstances of the case at issue. In determining if the doctrine applies, our focus is not on the intention of the parties, but rather on whether the defendant has been unjustly enriched." Durst v. Milroy Gen. Contracting, Inc., 52 A.3d 357, 360 (Pa. Super. Ct. 2012).
Plaintiffs adequately allege each element of unjust enrichment under Pennsylvania law. They plead that (i) they "conferred a benefit on [Westminster] in the form of monies paid to purchase [Westminster's] adulterated [t]hyroid [t]ablets," (ii) Westminster "voluntarily accepted and retained this benefit," and (iii) "it would be unjust and inequitable" for Westminster to retain this benefit because it "was obtained ... by selling and accepting compensation for adulterated medications unfit for human use." (Dkt. 31 at ¶¶ 100-02) Pennsylvania courts have found similar allegations sufficient to plead a claim for unjust enrichment. See, e.g., Am. Fed'n of State Cty. & Mun. Emp.’s v. Ortho-McNeil-Janssen Pharm., Inc., No. 08-CV-5904, 2010 WL 891150, at *8 (E.D. Pa. Mar. 11, 2010) (holding that plaintiffs "sufficiently plead[ed] a claim of unjust enrichment" based on "sale of defective fentanyl patches" where "[p]laintiffs pled that they conferred a monetary benefit to [d]efendants, that [d]efendants appreciated the benefit, and that the [d]efendants retained the benefit under inequitable circumstances"). Thus, the unjust enrichment claim under Pennsylvania law survives.
b. Michigan Law
Westminster correctly contends that Plaintiffs fail to state a claim for unjust enrichment under Michigan law because Shafer purchased the thyroid tablets from Walgreens, not Westminster, and thus did not confer a "direct benefit" on Westminster. (Dkt. 41 at 19)
Michigan courts only recognize "unjust enrichment in cases where the defendant directly receives a benefit from the plaintiff." Smith v. Glenmark Generics, Inc., USA, No. 315898, 2014 WL 4087968, at *1 (Mich. Ct. App. Aug. 19, 2014) ; see also Schechner, 237 F. Supp. 3d at 618 ("[T]o state a claim for unjust enrichment, Michigan law requires a direct benefit or some sort of direct interaction between Plaintiffs and [the defendant,] Whirlpool."). In Smith, for example, the plaintiff brought an unjust enrichment claim against a distributor of oral contraceptives following a recall related to "mismarked" packs. 2014 WL 4087968, at *1. The Michigan Court of Appeals affirmed the dismissal of the unjust enrichment claim, reasoning that the defendant "did not receive a direct benefit from [the] plaintiff" because the "plaintiff admitted that she did not purchase the contraceptives from [the] defendant, but rather from a pharmacy." Id.
Unlike Michigan law, Pennsylvania law does not require a plaintiff to "have purchased the [product] at issue directly from Defendants to have ‘conferred benefits on the defendant.’ " Incubadora Mexicana, SA de CV v. Zoetis, Inc., 310 F.R.D. 166, 176-77 (E.D. Pa. 2015).
The same conclusion follows here. Plaintiffs affirmatively allege that Shafer "purchased her thyroid medication at a Walgreens location in Michigan." (Dkt. 31 at ¶ 36) Because this is "a case involving consumer plaintiffs and a remote manufacturer," "[w]hatever benefit [Shafer] conferred on [Westminster] [she] conferred indirectly." Storey v. Attends Healthcare Prod., Inc., No. 15-CV-13577, 2016 WL 3125210, at *13 (E.D. Mich. June 3, 2016). The claim for unjust enrichment fails under Michigan law.
iv. Battery
Plaintiffs allege that Westminster committed battery by producing and selling adulterated thyroid tablets with the knowledge that consumers, including Shafer and Yachera, would ingest them. (Dkt. 31 at ¶¶ 151-55) Plaintiffs claim that "the intended contact"—Plaintiffs’ ingestion of the medication—"was harmful in nature because the medication was adulterated, contained inconsistent levels of API, and presented imminent harm to Plaintiffs." (Id. at ¶ 154) This claim fails under both Pennsylvania and Michigan law because Plaintiffs allege no facts showing Westminster knew that "harmful contact [was] substantially certain to follow from [its] acts." (Dkt. 41 at 20)
"Under Pennsylvania law, the elements of the tort of battery are a harmful or offensive contact with a person, resulting from an act intended to cause the plaintiff or a third person to suffer such a contact, or apprehension that such a contact is imminent." Johnson v. Sunoco, Inc. (R&M), No. CV 05512, 2018 WL 925009, at *4 (E.D. Pa. Feb. 15, 2018). Likewise, Michigan law defines battery as "the wilful and harmful or offensive touching of another person which results from an act intended to cause such a contact." Espinoza v. Thomas, 189 Mich.App. 110, 472 N.W.2d 16, 21 (1991). In both states, "[t]he intent necessary to make out a battery is the intent to cause a harmful or offensive contact with another person, or knowing, with substantial certainty, that such contact would result." Rose v. Braciszewski, No. 285316, 2009 WL 3276431, at *4 (Mich. Ct. App. Oct. 13, 2009) ; accord Johnson, 2018 WL 925009, at *4 ("[I]ntent extends both to the desired consequences and to the consequences substantially certain to follow from the act." (quoting Field v. Phila. Elec. Co., 388 Pa.Super. 400, 565 A.2d 1170, 1178 (1989) )).
Plaintiffs’ battery claim fails as a matter of law because the factual allegations do not support a reasonable inference that Westminster knew with substantial certainty that harmful contact would result from the production and sale of its thyroid tablets. Plaintiffs argue that the March 2018 Import Alert put Westminster on notice that the tablets did not contain the stated amounts of API and thus posed a risk of harm to consumers who ingested them. (Dkt. 49 at 20) But the Import Alert did not rest on a finding that the tablets contained inconsistent amounts of API. Instead, the FDA issued the Import Alert after an investigation revealed "significant deviations from current good manufacturing practice" at Sichuan's facilities in China. (Dkt. 31 at ¶ 17) The FDA did not announce its finding that the thyroid tablets contained inconsistent amounts of API until approximately one week after Westminster voluntarily recalled the tablets. (Id. at ¶¶ 16, 25) Thus, the pleaded facts suggest that, before the recall, Westminster was aware of the possibility that its thyroid tablets did not contain the stated amounts of API. The factual allegations do not suggest that, prior to the recall, Westminster knew with substantial certainty that its thyroid tablets were defective. This is fatal to Plaintiffs’ battery claim. See Boumelhem v. Bic Corp., 211 Mich.App. 175, 535 N.W.2d 574, 579 (1995) (affirming dismissal of battery claim where "plaintiffs presented no factual support for their claim that defendant marketed its lighter with the intent or substantial certainty that a harmful contact to these minor plaintiffs would result").
v. The Economic Loss Doctrine
a. Pennsylvania Law
Westminster contends that the economic loss doctrine bars Plaintiffs’ claims under Pennsylvania law for negligence, gross negligence, strict liability, fraud, fraudulent concealment, and deceptive trade practices in violation of the Pennsylvania Unfair Trade Practices and Consumer Protection Law ("UTPCPL"). (Dkt. 41 at 23-26) Although Pennsylvania's economic loss doctrine bars the claims for fraud and fraudulent concealment, it does not preclude the other claims Westminster challenges.
With respect to the claims for negligence, gross negligence, and strict liability, Westminster relies on Pennsylvania cases holding that "[w]hen [a] product fails to conform and only economic losses result, the parties’ recovery one against the other for economic losses should be limited to an action on that contract." N.Y. State Elec. & Gas Corp. v. Westinghouse Elec. Corp., 387 Pa.Super. 537, 564 A.2d 919, 926 (1989). These decisions bar plaintiffs from bringing tort claims "where the only injury was economic loss—that is, loss that is neither physical injury nor damage to tangible property." 2-J Corp. v. Tice, 126 F.3d 539, 541 (3d Cir. 1997). Applying this line of cases, Westminster contends that the claims for negligence, gross negligence, and strict liability fail under Pennsylvania law because they seek to recover only "economic losses." (Dkt. 41 at 24)
"Recently, however, in Dittman v. UPMC, 649 Pa. 496, 196 A.3d 1036 (2018), the Pennsylvania Supreme Court limited the [economic loss] doctrine's application and moved away from an analysis of whether plaintiff alleges solely economic harms." Amig v. County of Juniata, 432 F. Supp. 3d 481, 488 (M.D. Pa. Jan. 8, 2020). Dittman made clear that "a plaintiff is not barred from recovering economic losses simply because the action sounds in tort rather than contract law." 196 A.3d at 1054. Instead, a plaintiff may pursue purely economic damages under a theory of negligence or strict liability so long as the defendant breached a duty that "arises independently of any contractual duties between the parties." Id.; see also Dalgic v. Misericordia Univ., No. 3:16-CV-0443, 2019 WL 2867236, at *26 (M.D. Pa. July 3, 2019) (noting that Dittman held that "recovery for purely pecuniary damages is permissible under a negligence theory provided that the plaintiff can establish the defendant's breach of a legal duty arising under common law that is independent of any duty assumed pursuant to contract" (quoting Dittman, 196 A.3d at 1038 )).
Here, Plaintiffs plausibly allege that Westminster "owed a duty of care to Plaintiffs to manufacture, distribute, and sell the subject [t]hyroid [t]ablets free from adulterations, specifically, ... inconsistent levels of API." (Dkt. 31 at ¶ 138) Westminster's duty rests on "the general duty of every manufacturer to use due care to avoid foreseeable dangers in its products." Medtronic, Inc. v. Lohr, 518 U.S. 470, 501, 116 S.Ct. 2240, 135 L.Ed.2d 700 (1996) ; see also Silver v. Medtronic, Inc., 236 F. Supp. 3d 889, 898-99 (M.D. Pa. 2017) (holding that plaintiff "pled a plausible claim of manufacturing defect" based on allegations that defendant "breached [its] Pennsylvania common law duty to exercise reasonable care in manufacturing [a medical device] in failing to ensure that the [d]evice conformed to its own ... specifications and complied with [current good manufacturing practices]"). Plaintiffs allege that Westminster breached this duty by producing and selling thyroid tablets that did not contain the listed amounts of API. (Dkt. 31 at ¶ 139) Thus, Plaintiffs’ claims under Pennsylvania law for negligence, gross negligence, and strict liability are not barred by the economic loss doctrine because they arise at least in part from a duty "independent[ ] of any contract duties." Amig, 432 F. Supp. 3d at 488-49 (declining to apply economic loss doctrine to strict liability claim).
"The gist of the action doctrine and the economic loss doctrine [are] effectively coextensive under Pennsylvania law." Sheridan v. Roberts Law Firm, No. 2:19-CV-00467-JDW, 2019 WL 6726469, at *3 (E.D. Pa. Dec. 11, 2019). As a result, the Court need not address Westminster's arguments concerning the gist-of-the-action doctrine, except to note that, for the reasons discussed above in connection with the economic loss doctrine, the claim for conversion under Pennsylvania law is not barred by the gist-of-the-action doctrine.
The economic loss doctrine also does not bar Plaintiffs’ claim for violations of the UTPCPL. Although the Pennsylvania Supreme Court has not decided the issue, "the Pennsylvania Superior Court has twice concluded that UTPCPL claims are not barred by the economic loss doctrine." Silva v. Rite Aid Corp., 416 F. Supp. 3d 394, 402 (M.D. Pa. 2019) (citing Dixon v. Nw. Mut., 146 A.3d 780, 790 (Pa. Super. Ct. 2016) ; Knight v. Springfield Hyundai, 81 A.3d 940, 951-52 (Pa. Super. Ct. 2013) ). "Absent a decision by the highest state court or persuasive indication that it would decide the issue differently, federal courts follow decisions of intermediate appellate courts in applying state law." Galindo v. ARI Mut. Ins. Co., 203 F.3d 771, 775 (11th Cir. 2000). Accordingly, the Court declines to dismiss the UTPCPL claim.
Plaintiffs’ claims under Pennsylvania law for fraud and fraudulent concealment are, however, barred by the economic loss doctrine. Even after Dittman, Pennsylvania "courts continue to foreclose fraudulent misrepresentation claims under the economic loss doctrine" where those claims seek purely economic damages. Silva, 416 F. Supp. 3d at 403 (noting that, following Dittman, "Pennsylvania law has not changed with regard to fraudulent misrepresentation"). Specifically, "the economic loss doctrine bars fraudulent misrepresentation claim[s] intrinsic to the contract or warranty claim." Cesare v. Champion Petfoods USA Inc., 429 F. Supp. 3d 55, 64 (W.D. Pa. 2019). "A fraudulent misrepresentation claim is intrinsic to the contract or warranty claim if the representations concern the specific subject matter of the contract or warranty, such as the quality of the goods sold." Id. This rule applies with equal force to fraud claims premised on omissions. See id. at 65 ("The Court finds that the fraudulent omission claim is barred by the economic loss doctrine.").
Plaintiffs in this action base their fraud and fraudulent concealment claims on the allegations that Westminster (i) failed to disclose that its thyroid tablets did not contain the listed amounts of API, and (ii) made false statements about the tablets, including that they "contained the dosages stated on the label, and were ‘superior’ and ‘safe.’ " (Dkt. 31 at ¶¶ 105, 115) All of the alleged misrepresentations and omissions are "intrinsic to the contract and warranty claim because [they] relate[ ] to the quality and characteristics of the [thyroid tablets] purchased from [Westminster]." Whitaker v. Herr Foods, Inc., 198 F. Supp. 3d 476, 491 (E.D. Pa. 2016). Moreover, Plaintiffs’ only alleged injury is economic loss—they do not claim to have suffered adverse health effects from taking the thyroid tablets. As a result, the economic loss doctrine precludes Plaintiffs’ claims under Pennsylvania law for fraud and fraudulent concealment. See id. (holding that economic loss doctrine barred fraudulent misrepresentation claim premised on alleged falsity of "Defendant's representation that its products were ‘All Natural’ ").
In sum, the economic loss doctrine does not bar Plaintiffs’ claims under Pennsylvania law for negligence, gross negligence, strict liability, and violations of the UTPCPL. The doctrine does, however, preclude Plaintiffs’ claims under Pennsylvania law for fraud and fraudulent concealment.
b. Michigan Law
Westminster correctly contends that the economic loss doctrine bars Plaintiffs’ claims under Michigan law for negligence, gross negligence, strict liability, fraud, fraudulent concealment, conversion, and deceptive trade practices in violation of the Michigan Consumer Protection Act ("MCPA"). (Dkt. 41 at 23-27)
Under Michigan law, "the economic loss doctrine bars tort recovery and limits remedies to those available under the Uniform Commercial Code where a claim for damages arises out of the commercial sale of goods and losses incurred are purely economic." Neibarger, 486 N.W.2d at 613. "The phrase ‘economic loss’ generally refers to non-physical commercial losses (like the money spent on a faulty product or the lost sales caused by its poor performance) in contrast to the injuries that have long been the central domain of tort law: physical injuries to the plaintiff's person or property (property other than the product itself)." Crossing at Eagle Pond Apartments, LLC v. Lubrizol Corp., 790 F. App'x 775, 777 (6th Cir. 2019). Michigan's economic loss doctrine applies to claims for negligence, strict liability, fraud, conversion, and violations of the MCPA. See Citizens Ins. Co. of Am. v. Kic Chems., Inc., No. 1:04-CV-385, 2007 WL 1238893, at *5 (W.D. Mich. Apr. 27, 2007) (negligence and fraud); In re Porsche Cars N. Am., Inc., 880 F. Supp. 2d 801, 852 (S.D. Ohio 2012) (strict liability; applying Michigan law) ; TSFR Burger, LLC v. Starboard Grp. of Great Lake, LLC, No. 19-12060, 2019 WL 5597139, at *7 (E.D. Mich. Oct. 30, 2019) (conversion); Murphy v. Proctor & Gamble Co., 695 F. Supp. 2d 600, 606 n.3 (E.D. Mich. 2010) (MCPA).
The economic loss doctrine bars Plaintiffs’ claims under Michigan law for negligence, gross negligence, strict liability, fraud, fraudulent concealment, conversion, and violations of the MCPA. Through these claims, Plaintiffs seek to recover purely economic losses—the difference in value between the adulterated thyroid tablets they received and the tablets as they should have been delivered. Plaintiffs do not, as they must to avoid the economic loss rule, allege that consumption of the tablets caused "physical injuries to the[ir] ... person or property (property other than the product itself)." Lubrizol Corp., 790 F. App'x at 777. Moreover, Plaintiffs’ fraud and fraudulent concealment claims do not fall under "an exception to the economic loss rule" because, as discussed above, "the only misrepresentation[s] by [Westminster] concern[ ] the quality or character of the goods sold." Lenawee Cty. Drain Comm'r v. Env't One Corp., No. 07-CV-14290, 2008 WL 11356774, at *3 (E.D. Mich. Apr. 29, 2008). Accordingly, because "Plaintiffs’ ... damages do not arise from physical harm, but are based on mere disappointed economic expectations in the [tablets]," Michigan's economic loss doctrine applies. In re Takata Airbag Prod. Liab. Litig., No. 14-24009-CV, 2017 WL 2406711, at *4 (S.D. Fla. June 1, 2017) (applying Michigan law).
Plaintiffs attempt to avoid application of the economic loss doctrine by claiming that their losses "are not limited to disappointed economic expectations arising from a non-performing [pharmaceutical product], but instead rest upon allegations of a dangerous and unsafe consumer product that [can] cause unanticipated harm." (Dkt. 49 at 28) This argument is contrary to Michigan law. Again, Plaintiffs do not claim that they suffered physical harm as a result of ingesting the thyroid tablets. Instead, they assert that the tablets "exposed [them] to an immediate risk of harm." (Dkt. 31 at ¶¶ 32-33 (emphasis added)) Michigan law is clear that there is "no ‘possible personal injury’ exception to the economic loss rule." Melkus v. Visionary Accessories, Inc., No. 202773, 1999 WL 33451710, at *6 (Mich. Ct. App. Mar. 30, 1999). Thus, where, as here, "the defective product has not in fact caused injury to persons or other property, a plaintiff cannot recover economic losses under a [tort] theory." Consumers Power Co. v. Miss. Valley Structural Steel Co., 636 F. Supp. 1100, 1106 (E.D. Mich. 1986).
vi. Strict Liability
Westminster argues that, even if the economic loss doctrine does not apply, the claim for strict liability under Pennsylvania law fails because "negligence is the sole viable cause of action ... in prescription drug cases." (Dkt. 41 at 29) Westminster is correct that Pennsylvania law precludes the imposition of strict liability on drug manufacturers in cases (i) challenging "the adequacy of warnings," Hahn, 673 A.2d at 891, or (ii) asserting "design defect claim[s]." Bergstresser, 2013 WL 1760525, at *2. Westminster ignores, however, that Pennsylvania law permits plaintiffs to "bring a strict liability cause of action against a drug manufacturer for a manufacturing defect claim." Bergstresser, 2013 WL 1760525, at *2. Here, Plaintiffs expressly premise their strict liability claim on a purported "manufacturing defect," alleging that "[b]ecause the [t]hyroid [t]ablets manufactured, distributed, and sold by [Westminster] suffered from a manufacturing defect which caused Plaintiffs and Class members an immediate and concrete harm, [Westminster is] strictly liable to Plaintiffs." (Dkt. 31 at ¶ 135) Because the Amended Complaint makes clear that the strict liability claim rests solely on a manufacturing-defect theory, not a design-defect or failure-to-warn theory, Pennsylvania law does not dictate dismissal of the strict liability claim.
C. The Class Allegations
Plaintiffs seek to represent a class of "all persons in the United States who purchased or paid for [t]hyroid [t]ablets that are subject to Westminster's recall or manufactured with adulterated components from Sichuan." (Dkt. 31 at ¶ 37) In addition, Yachera and Shafer seek to represent Pennsylvania and Michigan subclasses, respectively. (Id. at ¶¶ 38-39) Westminster asks this Court to strike or dismiss Plaintiffs’ class allegations, contending that (i) Plaintiffs impermissibly seek to "certify a nationwide class involving a convoluted matrix of different states’ laws," and (ii) class certification is improper because "[p]roof of the claims would ... necessitate individualized evidence of any given individual's prescription history, the advice (if any) of medical professionals, and other highly sensitive and protected medical information." (Dkt. 41 at 30-35)
Westminster's request is premature. Striking or dismissing "class allegations at the pleading stage is the functional equivalent of denying class certification." Foster v. Green Tree Servicing, LLC, No. 8:15-CV-1878-T-27MAP, 2016 WL 11493319, at *2 (M.D. Fla. Nov. 8, 2016). The Eleventh Circuit has made clear that "the parties’ pleadings alone are often not sufficient to establish whether class certification is proper, and the district court will need to go beyond the pleadings and permit some discovery and/or an evidentiary hearing to determine whether a class may be certified." Mills v. Foremost Ins. Co., 511 F.3d 1300, 1309 (11th Cir. 2008). As a result, "[t]he question of class certification is generally not addressed on a motion to dismiss." Chaney v. Crystal Beach Capital, LLC, No. 8:10-cv-1056-T-30TGW, 2011 WL 17639, at *2 (M.D. Fla. Jan. 4, 2011) ; see also Burke v. Credit One Bank, N.A., No. 818CV00728EAKTGW, 2019 WL 1468536, at *3 (M.D. Fla. Feb. 5, 2019) ("[C]ourts faced with motions to dismiss or strike class allegations prior to class certification have declined to rule on class certification due to the prematurity of such motions." (collecting cases)).
Here, Plaintiffs contend that a class action is proper because (i) "[t]he members of the [putative class] are geographically dispersed throughout the United States and are so numerous that individual joinder is impracticable," (ii) common legal and factual questions—including whether the thyroid tablets were adulterated—predominate over individual questions, (iii) Plaintiffs’ claims are typical of the claims of other members of the putative class, (iv) Plaintiffs are adequate class representatives, and (v) a class action would be "superior to all other available means for the fair and efficient adjudication of this controversy." (Dkt. 31 at ¶¶ 41-45) These allegations "are not so facially defective [as] to allow this Court to deny certification without Plaintiff[s] being allowed to take discovery to try to satisfy the requirements of [R]ule 23." Fosbrink v. Area Wide Protective, Inc., No. 8:17-CV-1154-T-30TBM, 2017 WL 6947421, at *2 (M.D. Fla. Aug. 23, 2017). Thus, the Court declines to strike or dismiss the class allegations, although Westminster is free to raise the arguments again once Plaintiffs move for class certification. Id.
IV. CONCLUSION
Upon consideration of the foregoing, it is hereby ORDERED as follows:
1. Defendant's Motion to Dismiss Plaintiffs’ First Amended Complaint, (Dkt. 41), is GRANTED IN PART and DENIED IN PART .
a. The following claims under Pennsylvania law are DISMISSED :
i. The breach-of-express-warranty claim to the extent it rests on statements
that the thyroid tablets were "safe" or "superior";
ii. The breach-of-implied-warranty claim to the extent it rests on an alleged design defect or a failure to warn;
iii. The battery claim; and
iv. The fraud and fraudulent concealment claims.
b. The Court DECLINES TO DISMISS the following claims under Pennsylvania law:
i. The breach-of-express-warranty claim to the extent it rests on the statement that the thyroid tablets would contain the dosages listed on the labels;
ii. The breach-of-implied-warranty claim premised on an alleged manufacturing defect;
iii. The unjust enrichment claim;
iv. The negligence and gross negligence claims;
v. The strict liability claim;
vi. The conversion claim; and
vii. The claim for deceptive trade practices in violation of the UTPCPL.
c. The following claims under Michigan law are DISMISSED :
i. The breach-of-express-warranty claim;
ii. The unjust enrichment claim;
iii. The battery claim;
iv. The negligence and gross negligence claims;
v. The strict liability claim;
vi. The fraud and fraudulent concealment claims;
vii. The conversion claim; and
viii. The claim for deceptive trade practices in violation of the MCPA.
d. The Court DECLINES TO DISMISS the breach-of-implied-warranty claim under Michigan law.
e. Defendant's request to strike or dismiss Plaintiffs’ class allegations is DENIED .
2. Defendant shall answer the Amended Complaint within twenty-one (21) days of the date of this Order.
DONE and ORDERED in Tampa, Florida this 15th day of June, 2020.