Baldwin v. Star Scientific, Inc.
| Decision Date | 02 February 2016 |
| Docket Number | No. 14 C 588,14 C 588 |
| Parties | HOWARD T. BALDWIN and JERRY VAN NORMAN, individually and on behalf of all others similarly situated, Plaintiffs, v. STAR SCIENTIFIC, INC., ROCK CREEK PHARMACEUTICALS, INC., and GNC HOLDINGS, INC., Defendants. |
| Court | U.S. District Court — Northern District of Illinois |
MEMORANDUM OPINION AND ORDER
Plaintiffs Howard Baldwin and Jerry Van Norman bring this putative class action against Defendants Star Scientific, Inc. ("Star Scientific"), Rock Creek Pharmaceuticals, Inc. ("Rock Creek"), and GNC Holdings, Inc. ("GNC"). The crux of Plaintiffs' Amended Class Action Complaint is that Anatabloc, a pharmaceutical product manufactured by Star Scientific's subsidiary Rock Creek and sold at GNC stores, is not the "wonder drug" Defendants have advertised it to be. Specifically, Plaintiffs allege the advertising and marketing of Anatabloc was deceptive in that it claimed the product would provide "anti-inflammatory support" and other medical benefits, even though Defendants knew it could not provide those benefits. Plaintiffs bring this suit under the Illinois Consumer Fraud and Deceptive Business Practices Act ("ICFA"), 815 ILCS § 505/1, et seq. and the Missouri Merchandising Practices Act ("MMPA"), MO. REV. STAT. § 407.10, et. seq. They also bring claims for breach of express and implied warranty of merchantability under Illinois and Missouri law, and a common law claim of unjust enrichment. Plaintiffs seek to represent a class composed of all individuals who purchased Anatabloc in Illinois and Missouri between August 1, 2011 and the present. Defendants now move to dismiss for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6). For the following reasons, Defendants' motion is granted, but the dismissal is without prejudice for Counts I, II and VI.
The court has jurisdiction pursuant to 28 U.S.C. § 1331 and the Class Action Fairness Act ("CAFA"), 28 U.S.C. § 1332(d).1
Plaintiff Howard Baldwin initially filed this lawsuit on January 27, 2014, against Defendants Star Scientific, Rock Creek, and GNC on behalf of himself and a nationwide class of all individuals who purchased Anatabloc since it was first made available to consumers. In his Complaint, Baldwin alleged that he had purchased Anatabloc at a GNC store in Yorktown, Illinois, and from Rock Creek through an online subscription service, which he subsequently cancelled because the product "did not work." (Id. ¶ 9.) According to Baldwin, he purchased Anatabloc because of Defendants' representations that the product was a "wonder drug" 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." (Id ¶ 15.) Baldwin did not identify which of these conditions, if any, he suffers from, but he alleges that Anatabloc could not "in fact, treat those diseases." (Id. ¶ 19.) In addition, Baldwin alleged thatStar Scientific engaged in deceptive tactics to promote Anatabloc, including falsely claiming that Johns Hopkins University was involved in clinical testing of the product and bestowing gifts upon Virginia's former governor and his spouse in exchange for their endorsement of Anatabloc. (Id. ¶¶ 30-34, 38.) Rock Creek, meanwhile, allegedly paid a research institute to study Anatabloc's effects, and GNC "pushed Anatabloc . . . without any evidence that Anatabloc could in fact provide" the benefits of which Star Scientific and GNC boasted. (Id. ¶¶ 23, 27.) Baldwin claimed that Defendants' fraudulent activities violated the Illinois Consumer Fraud and Deceptive Business Practices Act ("ICFA"), breached express and implied warranties of merchantability, and resulted in unjust enrichment. (Id. ¶ 60.)
On January 13, 2015, this court dismissed Baldwin's Complaint without prejudice in a written Memorandum Opinion and Order. (See Mem. Opinion and Order, January 13, 2015 [44] at 2.) Regarding Baldwin's claims under the ICFA,2 the court found that Baldwin had not pleaded fraud with particularity as required by Federal Rule of Civil Procedure 9(b) because he had not identified the content of the misrepresentations communicated to him by Defendants, nor had he specified when or where he saw Defendants' alleged misrepresentations or that the misrepresentations induced him to buy the product. (See id. at 17 ().) Baldwin's Complaint, moreover, did not plead with particularity how Defendants' alleged misrepresentations were false; while Baldwin alleged that Anatabloc was ineffective because it could not treat or cure particular illnesses, he "fail[ed] to produce a single allegation that attribute[d] to a particular Defendant a statement about Anatabloc's alleged effectiveness." (Id. at 18-19.)
While recognizing that Baldwin's express warranty claim did not need to meet Rule 9(b)'s heighted pleading standard, the court nonetheless found that this, too, failed to state a claim, noting that an allegation could "be so sketchy or implausible" that it fails to provide defendants with notice of a plaintiff's claim. (Id. at 21 (quoting Brooks v. Ross, 578 F.3d 574, 581 (7th Cir. 2009).) With regards to the express warranty claims against Star Scientific, Baldwin's Complaint failed to allege that he had entered into a contract with Star Scientific, or that an exception to the privity requirement applied to his case. (Id. at 22.) Baldwin's implied warranty claims also failed for several reasons, including that Baldwin did not say how Anatabloc "did not work" and "did not adequately plead that [Baldwin] gave any Defendant notice that the product did not work as intended, a necessary element of a breach of the implied warranty of merchantability claim." (Id. at 23.) Finally, because Baldwin had not alleged that he suffered an injury outside of Illinois, the court advised him that "[s]hould he attempt to file an amended complaint . . . named representatives [should] include persons who have allegedly suffered injury under the laws of at least some, if not all, of the other states whose laws Plaintiff invokes." (Id. at 13.)
On February 10, 2015, Baldwin, along with Missouri citizen Jerry Van Norman, filed an Amended Complaint "to respond directly to the Court's January 13, 2015 opinion." Plaintiffs allege violations of the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILCS § 505/1, et seq. (Count I), and the Missouri Merchandising Practices Act, MO. REV. STAT. § 407.010, et. seq. (Count II); breach of express warranties under 810 ILCS § 5/2-313 and MO. REV. STAT. § 400.2-313 (Counts III and IV); breach of the implied warranty of merchantability under 810 ILCS § 5/2-314 and MO. REV. STAT. § 400.2-314 (Counts V and VI); and unjust enrichment (Count VII). The Amended Complaint re-alleges many facts from Baldwin's initial Complaint, which were summarized by the court in its previous order. (See Mem. Op. and Order at 2-6.) The Amended Complaint contains additional allegations set forthbelow. The court also restates facts in its previous order to the extent they are central to Plaintiffs' claims.
Defendant Star Scientific launched Anatabloc in August 2011, billing it 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." (Id. ¶ 28.) Anatabloc contains vitamins A and D3 and anatabine, an alkaloid found in the tobacco plant. (Id.) According to its label, Anatabloc provides "Anti-Inflammatory Support." (Id. ¶ 30.)
Prior to launching Anatabloc, Rock Creek entered into a research and royalty agreement with an affiliate of the Roskamp Institute to conduct preclinical and clinical trials on the product. (Id. ¶ 45.) Although Star Scientific did not disclose data supporting the results of these trials, the company reported that the results were "positive." (Id.) In one study, Roskamp tested the effects of Anatabloc on individuals with inflammation. (Id. ¶ 46.) Roskamp first reported that 26% of the subjects experienced a positive effect, and two days later claimed that the number was 61%. (Id.) Defendants Star Scientific and Rock Creek also hired two Johns Hopkins University doctors—Drs. Ladenson and Caturegli—as consultants to study Anatabloc and its active ingredient anatabine. (Id. ¶ 57.) In a 2011 study, the doctors looked at the effect of anatabine on mice with thyroiditis, a disease involving inflammation of the thyroid gland, and claimed to find that anatabine lowered the incidence and severity of the disease. (Id. ¶¶ 58, 61.) In 2012, the doctors conducted a similar study on humans with thyroiditis, which reportedly showed that Anatabloc lessened inflammation in these patients. (Id. ¶ 70.) According to Plaintiffs, Star Scientific and Drs. Ladenson and Caturegli used their affiliation with John Hopkins to give the false impression that the university was officially involved in the testing of Anatabloc. (Id. ¶ 63.) A January 2013 article published by The Street, however, revealed thatJohns Hopkins had no official involvement in Anatabloc, and that Drs. Ladenson and Caturegli were doing their research on their own time. (Id. ¶ 71.)
In addition to paying for clinical studies, Star Scientific and Rock Creek entered into an endorsement agreement with Fred Couples, a famous professional golfer who suffers from arthritis, to promote Anatabloc. (Id. ¶ 36.) As part of this agreement, Fred Couples appeared in posters advertising Anatabloc, which...
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