Hrapoff v. Hisamitsu America, Inc.

Background

Cheri Hrapoff, Jody Hessel, and Laurie Petitti brought a proposed class action against Hisamitsu America, Inc. The complaint alleged that Hisamitsu marketed Salonpas Lidocaine Pain Relieving Gel-Patch as “Maximum Strength,” even though it contained 4% lidocaine while competing prescription patches contained 5%. The plaintiffs alleged that they would not have bought the patches, or would have paid less, if they had known the alleged truth.

The complaint asserted claims for breach of express warranty, breach of implied warranty of merchantability, violations of California, New York, and Illinois consumer-protection laws, common-law fraud, and unjust enrichment. Hisamitsu moved to dismiss under Rule 12(b)(6), which tests whether a complaint adequately states a legally plausible claim.

Rulings

The court declined to dismiss the plaintiffs’ claims based on alleged lack of standing to pursue laws of states where they did not reside or make purchases. It held that the issue was better addressed when deciding whether to certify a class.

The court denied the motion to dismiss the fraud-based statutory claims. It concluded that the allegations about the “Maximum Strength” label, the plaintiffs’ review of the labels, their alleged reliance, and their claimed payment of a premium were sufficient at the pleading stage. The court also rejected arguments that the plaintiffs needed to allege safety issues or that they needed to show they would have bought prescription patches instead. Whether reasonable consumers would understand “Maximum Strength” to include prescription products was treated as a factual question that could not be resolved on the motion to dismiss.

The court denied the motion to dismiss the common-law fraud claim. It found that the complaint adequately alleged a false representation, knowledge of falsity, intent to defraud, reliance, and damages. The court also held that the economic-loss rule did not bar the claim because the alleged fraud involved an affirmative misrepresentation on the product label.

The court granted the motion to dismiss the implied-warranty claims, with leave to amend to allege vertical contractual privity. The plaintiffs did not dispute that they lacked privity with Hisamitsu, and the court held that the exception concerning labels and advertising applied to express warranties, not implied warranties.

The court granted the motion to dismiss the plaintiffs’ claims for equitable relief. Although the court discussed a narrower reading of the rule requiring an adequate remedy at law, it held that the amended complaint did not allege that the plaintiffs lacked an adequate legal remedy. The plaintiffs had leave to amend those claims.

The court granted the motion to dismiss the unjust-enrichment claim because the plaintiffs had not identified which state’s law governed that claim.

The court denied the motion to dismiss Plaintiff Hessel’s claims under New York General Business Law §§ 349 and 350. The court found that the alleged misleading conduct and payment of a premium adequately pleaded injury under those statutes. The court also denied the motion to dismiss Plaintiff Petitti’s Illinois Consumer Fraud Act claim because the allegations that she would not have purchased the product or would have paid less, and that she paid a premium, were sufficient.

Disposition

The court granted the motion to dismiss in part and denied it in part. The plaintiffs could file an amended complaint within 21 days, solely to address the deficiencies identified in the order. The order states that failure to timely amend would result in dismissal of the relevant claims with prejudice.