Baldwin v. Star Scientific, Inc.

• Decision Date: 13 January 2015
• Docket Number: No. 14 C 588,14 C 588
• Citation: 78 F.Supp.3d 724
• Parties: Howard T. Baldwin, individually and on behalf of all others similarly situated, Plaintiff, v. Star Scientific, Inc., Rock Creek Pharmaceuticals, Inc., and GNC Holdings, Inc., Defendants.
• Court: U.S. District Court — Northern District of Illinois

78 F.Supp.3d 724

Howard T. Baldwin, individually and on behalf of all others similarly situated, Plaintiff

v.Star Scientific, Inc., Rock Creek Pharmaceuticals, Inc., and GNC Holdings, Inc., Defendants.

No. 14 C 588

United States District Court, N.D. Illinois, Eastern Division.

Signed January 13, 2015

Daniel J. Kurowski, Elizabeth A. Fegan, Hagens Berman Sobol Shapiro LLP, Oak Park, IL, Steve W. Berman, Hagens Berman Sobol Shapiro LLP, Seattle, WA, for Plaintiff.

Paul J. Walsen, John William Rotunno, Molly K. McGinley, K & L Gates LLP, Chicago, IL, for Defendants.

MEMORANDUM OPINION AND ORDER

REBECCA R. PALLMEYER, United States District Judge

Defendants Star Scientific, Inc. (“Star Scientific”), Rock Creek Pharmaceuticals, Inc. (“Rock Creek”), and GNC Holdings, Inc. (“GNC”) manufacture and sell Anatabloc, a pharmaceutical product allegedly marketed as a treatment for a wide range of maladies, including arthritis

, Alzheimer's disease, traumatic brain injury, diabetes, and multiple sclerosis. Plaintiff Howard T. Baldwin, an Illinois citizen, alleges he purchased Anatabloc after he “saw and was deceived by Defendants' advertisements” but quit buying the product because it “did not work.”¹ (Class Action Compl. [1], hereinafter “Compl.,” ¶ 9.) Baldwin filed this putative class action lawsuit against Defendants on behalf of himself and a proposed class that includes “all persons” who have purchased Anatabloc since it was first made available to consumers. (Id. ¶¶ 18, 57.) Plaintiff asserts claims for violations of consumer protection statutes in 36 states and the District of Columbia (Count I), breaches of express and implied warranties under the laws of all 50 states and the District of Columbia (Counts II and III), and claims of common law unjust enrichment. (Count IV). Plaintiff alleges that he and proposed class members suffered economic injuries by purchasing Anatabloc and asks for various forms of relief. (Id. ¶ 56, Prayer for Relief B–G.) Plaintiff invokes the Class Action Fairness Act of 2005 (“CAFA”) as the basis for this court's jurisdiction. (Id. ¶ 7.) He alleges that the total claims of more than 100 individual class members exceed $5,000,000 in the aggregate and that minimal diversity² exists between the parties. (Compl. ¶ 7); see 28 U.S.C. § 1332(d)(2)(A).

Defendants have moved to dismiss the complaint [25], arguing that Plaintiff lacks Article III standing to assert claims in states where he has not alleged he personally suffered an injury. Defendants also argue that Plaintiff's Illinois state law causes of action should be dismissed because Plaintiff has not pleaded his fraud claim with particularity and has otherwise failed to allege “plausible” claims for relief as required under Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). As explained below, the court has serious reservations about Mr. Baldwin's standing to assert claims on behalf of unnamed, proposed class members under the laws of jurisdictions where he has not suffered an injury. At this stage, however, the court concludes only that Plaintiff has not pleaded fraud with “particularity” as required by Federal Rule of Civil Procedure 9(b) and has failed to set forth particularized facts sufficient to satisfy federal pleading requirements for his remaining Illinois state-law claims. For these reasons, the court grants Defendants' motion and dismisses the complaint without prejudice.

BACKGROUND

For the purposes of this motion, the court presumes that the factual allegations in Plaintiff's complaint are true. Defendant Star Scientific develops, manufactures, and markets pharmaceutical products. (Compl. ¶ 10.) Defendant Rock Creek is a wholly-owned Star Scientific subsidiary that manufactures and sells two “nutraceutical” dietary supplements. (Id. ¶ 11.) Defendant GNC sells health and wellness products online and at its retail stores throughout the world. (Id. ¶ 12.) Plaintiff alleges he purchased Anatabloc at a GNC store located in Yorktown, Illinois, and from Rock Creek through an online subscription service. (Id. ¶ 9.)

In 2007, Star Scientific created Rock Creek “to focus on the development, manufacture, sale, and marketing of so-called ‘nutraceutical’ dietary supplements and cosmetic products[.]” (Compl. ¶ 13.) “Nutraceuticals” are foods or products derived from foods that are intended to provide health benefits; Anatabloc is one such product. (Id. ¶ 15.) Plaintiff's complaint includes a photo of an Anatabloc package label touting the product as providing “Anti–Inflammatory Support” and as a “Dietary Supplement.” (Id. ¶ 18.) In fact, Plaintiff alleges, Defendants represented that the product could do much more than what the label suggested, and that “Defendants billed Anatabloc as a miracle supplement, with a variety of medical benefits and uses, ranging from inhibiting inflammation to treating a number of ailments, including Alzheimer's disease

, traumatic brain injury, ulcers, diabetes, and multiple sclerosis,” despite the fact that “Anatabloc cannot, in fact, treat those diseases.” (Compl. ¶¶ 15, 19; see also id. ¶¶ 1, 6, 52.) Star Scientific “launched” Anatabloc in August 2011, initially selling it online through “Star Scientific-sponsored sites.” (Id. ¶¶ 16, 18.) GNC began selling the product online and in “select stores” in February 2012, eventually expanding to distribute Anatabloc at all of its retail and corporate stores throughout the country, as well as in Puerto Rico. (Id. ¶ 20.) Anatabloc is sold in bottles of 300 tablets for $99.99. (Compl. ¶ 55.)

Plaintiff alleges that Defendants engaged in a variety of improper strategies to sell Anatabloc. For example, Plaintiff asserts, Star Scientific gave cash and gifts to Virginia's former governor and his spouse in exchange for their support of Anatabloc. (Id. ¶¶ 30–33.) Star Scientific also allegedly claimed that Johns Hopkins University was “officially and independently involved in clinical testing of Anatabloc” when the University in fact had no such involvement. (Id. ¶ 38.) In reality, Plaintiff alleges, the University's only connection to the product was an arrangement in which Star Scientific hired two Johns Hopkins doctors “to moonlight as paid consultants in connection with the clinical development and testing of Anatabloc.” (Id. ¶ 34.) These two doctors, Plaintiff maintains, “whole-heartedly endorsed” Anatabloc prior to its release, even though they did not know how the product worked or its effects on humans. (Compl. ¶ 39; see also id. ¶¶ 38, 47.) In various press releases, Plaintiff asserts, Star Scientific referred to the paid doctors as “the independently funded research team at Johns Hopkins.” (Id. ¶ 41.) Plaintiff further alleges that Rock Creek “teamed up” with a research institute to study Anatabloc's effects; that the institute received royalty payments from Anatabloc and other forms of remuneration; and that the institute's founder became a “significant investor” in Star Scientific. (Id. ¶¶ 28–29.)

According to Plaintiff, GNC “pushed Anatabloc by naming Anatabloc its ‘Wellness Winner’ in the category of ‘Best Product Innovation’ for 2012,” which GNC announced in various press releases and at a sports festival in February 2013. (Compl. ¶ 23.) Included in Plaintiff's complaint is a photograph of a poster that GNC allegedly created to market the drug. (Id. ¶ 21.) The poster depicts Fred Couples, a well-known professional golfer, and quotes him endorsing Anatabloc. (Id. ¶ 21.) Star Scientific's relationship with GNC was itself a source of pride: Plaintiff alleges that Star Scientific cited its partnership with GNC as a reason for increased sales of Anatabloc. (Id. ¶¶ 23–25.) In its “Code of Business Ethics,” GNC “demand[s] truth in labeling and ingredient safety and potency,” and assures the public that GNC conducts “scientific research and new product discovery ... with rigorous quality.” (Compl. ¶ 26.) Plaintiff alleges that contrary to these standards, GNC promoted Anatabloc “without any evidence that Anatabloc could in fact provide a benefit to consumers,” and that the product does not in fact provide any of the benefits of which Star Scientific and GNC boasted. (Id. ¶ 27.)

Plaintiff alleges that the Federal Drug Administration (“FDA”) sent Star Scientific a warning letter on December 20, 2013. (Id. ¶ 53.) The letter observed that Star Scientific “promotes the product Anatabloc for conditions that cause the product to be a drug under ... the Federal Food, Drug, and Cosmetic Act” because Star Scientific's claims about the drug establish that “it is intended for use in the cure, mitigation, treatment, or prevention of disease.” (Id. ) The FDA further instructed that the agency considered Anatabloc a “new drug,” effectively prohibiting its sale in interstate commerce without FDA approval. (Compl. ¶ 54.)

Plaintiff alleges that he and putative class members purchased Anatabloc “based on Defendants' misrepresentations that Anatabloc would provide a benefit.” (Id. ¶ 56.) Plaintiff defines the class as “[a]ll persons who paid, in whole or in part, for Anatabloc dietary supplement [sic] between August 1, 2011 and the present for personal, family or household uses” and excludes from the class Defendants, as well as “any entity in which Defendant has a controlling interest, and Defendants' legal representatives, predecessors, successors, assigns, and employees.” (Id. ¶ 57.) Plaintiff also asserts a subclass defined as “[a]ll persons who paid, in whole or in part, for Anatabloc dietary supplement [sic] purchased from GNC between August 1, 2011 and the present for personal, family or household uses.” (Id. ) Plaintiff alleges that the definition of the class is “unambiguous” and that he is a member of the Class he seeks to represent. (Id. ¶ 58.) He further alleges that his complaint satisfies class requirements and that the suit should proceed as a class action. (See Compl. ¶¶ 59–66.)

Plaintiff asserts four causes of action. In Count I, on behalf of...