In re Target Corporation BPO Sales and Marketing Litigation

Background

Four individuals sued Target Corporation and Target Brands, Inc. over-the-counter Up&Up acne-treatment products containing benzoyl peroxide. They alleged that the products contained benzene or degraded to form benzene, a known human carcinogen, and that Target failed to disclose this information. They sought economic losses and other relief, but not damages for personal injuries. The plaintiffs asserted nine counts under California, Illinois, Minnesota, and Nebraska law, including consumer-protection, warranty, negligent-misrepresentation, negligent-omission, and unjust-enrichment claims.

The plaintiffs relied in part on testing by Valisure, an independent laboratory. Valisure tested three Target Up&Up benzoyl-peroxide products and reported benzene in those products, including amounts that exceeded 2 parts per million after high-temperature incubation. The plaintiffs alleged that Target’s products were manufactured in the same manner, allowing an inference that the products they purchased also contained benzene.

Target moved to dismiss for lack of subject-matter jurisdiction or, alternatively, on several merits-related grounds.

Jurisdiction

The court held that the plaintiffs plausibly alleged Article III standing to pursue economic-loss claims. Although the specific products purchased by the plaintiffs were not tested, Valisure found benzene in the tested Up&Up products, and the alleged common manufacturing process supported a plausible inference that the purchased products manifested the claimed defect.

The court separately held that the plaintiffs lacked standing to seek forward-looking injunctive or declaratory relief. All purchases occurred in the past, and the complaint did not plausibly allege a future interaction between the plaintiffs and Target.

The court also independently considered jurisdiction under the Class Action Fairness Act. It found plausible allegations of minimal diversity, more than 100 potential class members, and an amount in controversy exceeding $5 million, based on the alleged hundreds of thousands of consumers, potential punitive damages, and attorneys’ fees.

Merits rulings

The court rejected Target’s argument that federal food-and-drug law preempted the plaintiffs’ misbranding theory. The court reasoned that the theory—that the labels were misleading because they failed to disclose benzene—paralleled federal requirements prohibiting false or misleading labeling and requiring disclosure of material health consequences.

The plaintiffs’ adulteration theory based on benzene contamination survived because the complaint plausibly alleged that the products contained benzene. By contrast, the current-good-manufacturing-practices theory failed because the complaint identified regulations but alleged no concrete facts showing how Target violated those practices.

The court declined to dismiss or stay the case under the primary-jurisdiction doctrine. It found that the FDA’s consideration of Valisure’s citizen petition would not resolve the issues in the lawsuit and that the factual and legal questions were not beyond a court’s conventional experience.

The court held that the economic-loss rules of California, Illinois, and Nebraska barred the negligent-misrepresentation and negligent-omission claims because the plaintiffs alleged only economic losses from purchasing the products and did not seek recovery for personal injuries. The court also rejected the unjust-enrichment claim because the complaint did not plausibly allege that the plaintiffs lacked an adequate legal remedy or that unjust enrichment was a proper alternative theory.

Finally, the court held that the complaint satisfied Federal Rule of Civil Procedure 9(b), which requires fraud-based allegations to state the relevant circumstances with particularity. The complaint identified Target, the alleged failure to disclose benzene, the product labels and stores involved, the relevant period, and the testing information explaining how benzene allegedly occurred.

Disposition

The court ordered that Target’s motion to dismiss was granted in part and denied in part. The motion was granted without prejudice as to the negligent-misrepresentation and negligent-omission claims in Count VIII, the unjust-enrichment claim in Count IX, the requests for declaratory and injunctive relief, and all claims to the extent based on the current-good-manufacturing-practices theory. The motion was denied in all other respects. The court did not grant the plaintiffs leave to amend at that time, while noting that they could request an opportunity to amend during case management and scheduling.