In re Wellnx Marketing and Sales Practices Litig., MDL No. 07-md-1861.
| Decision Date | 11 December 2009 |
| Docket Number | MDL No. 07-md-1861. |
| Citation | 673 F.Supp.2d 43 |
| Parties | In re WELLNX MARKETING AND SALES PRACTICES LITIGATION. |
| Court | U.S. District Court — District of Massachusetts |
Leah A. Ayala, John R. Bailey, Bailey & Merrill, Las Vegas, NV, David A. Barry Samuel M. Furgang, Andrew R. Levin, Sugarman, Rogers, Barshak & Cohen, PC, Boston, MA, Douglas S. Lyons, Marsha Lyons, Lyons & Farrar, PA, Tallahassee, FL, Dennis L. Kennedy, Kimberly R. McGhee, Bailey Kennedy, Las Vegas, NV, H. Christian Bode, Natalie D. Collins, Bode & Collins, PLC, Scottsdale, AZ, Rodney E. Loomer, Michael J. Patton, Wallace S. Squibb, Wallace S. Squibb, Turner, Reid, Duncan, Loomer & Patton, Springfield, PC, MO, Amelia G. Helmick, Wade H. Tomlinson, Wade H. Tomlinson, Pope, McGlamry, Kilpatrick, Morrison & Norwood LLP, Alan G. Snipes, Columbus, GA, R. Timothy Morrison, Pope, McGlamry, Kilpatrick, Morrison & Norwood LLP, Corey M. Stern, Atlanta, GA, Craig S. Bloomgarden, Robert A. Zeavin, Manatt, Phelps & Phillips LLP, Los Angeles, CA, Gerald L. Greene, F. Allen Lewis, Greene & Lewis, Pineville, KY, Gary J. Rickner, Gary J. Rickner, Ward & Smith, P.A., New Bern, NC, Steven B. Tannenbaum, Steven B. Tannenbaum, Horowitz, Tannenbaum & Silver, P.C., Lake Success, NY, Amy B. Briggs, Steefel, Levitt & Weiss, San Francisco, CA, Clark H. Cole, Armstrong Teasdale LLP, St. Louis, MO, Michael C. Costello, Ferriter & Costello, Cambridge, MA, Bruce D. Fox, Fox and Farley, Clinton, TN, Craig Hilliard, Stark & Stark, Lawrenceville, NJ, Theresa L.F. Levings, Elizabeth D. Badger, Badger & Levings, Kansas City, MO, John E. Macdonald, Stark & Stark, PC, Princeton, NJ, William J. Murphy, Murphy & Shaffer, LLC, Baltimore, MD, for Consolidated Plaintiffs.
J. Douglas Baldridge, Collier, Shannon, Rill & Scott, Washington, DC, Robert J. Behling, Dapper Baldasare Benson Behling & Kane, Pittsburgh, PA, Edward P. Boyle, Michael C. Hartmere, Venable LLP, New York, NY, Robert C. Brand, Jr., William L. Tucker, Columbus, GA, Spencer H. Gunrierson, Mark M. Jones, Harrison, Kemp, Jones & Coulthard, LLP, Las Vegas, NV, Charles W. Hatfield, Stinson, Morrison & Hecker, Jefferson City, MO, Melinda Meador, Bass, Berry & Sims, Knoxville, TN, Shane C. Mecham, Stinson, Morrison & Hecker, LLP, Kansas City, MO, Eric Neyman, McCarter & English, LLP, Boston, MA, M. Elizabeth Nillen, Stinson, Morrsison & Hecker, LLP, Phoenix, AZ, Jon A. Santangelo, Stinson & Morrison, St. Louis, MO, Jeffrey M. Tanzer, Los Angeles, CA, for Consolidated Defendants.
Jennifer L. Barnett, Marcus, Errico, Emmer & Brooks, P.C., Braintree, MA, for ThirdParty Plaintiffs.
Christopher A. Bauer, Paul F. Rafferty, Jones Day, Irvine, CA, Darrell Mook, Donovan Hatem, LLP, Amy M. McCallen, Alan K. Posner, Rubin & Rudman, LLP, Boston, MA, Nhan T. Vu, Robinson Pharma, Inc., Santa Ana, CA, for Defendants.
Jessica Block, Block & Roos LLP, Boston, MA, Benjamin G. Chew, Edward G. Gehres, III, Patton & Boggs, LLP, Washington, DC, for ThirdParty Defendants.
Karen S. Crawford, Riker, Danzig, Scherer, Hyland, & Perretti, LLP, Morristown, NJ, for ThirdParty Plaintiffs/Defendants.
Kelly S. Crawford, Anne M. Patterson, Riker, Danzig, Scherer, Hyland & Perretti, LLP, Morristown, NJ, Douglas A. Troyer, Marcus, Errico, Emmer & Brooks, Braintree, MA, for Defendants/ThirdParty Plaintiffs/Consolidated Defendants.
Thomas B.K. Ringe, III, Duane Morris LLP, Philadelphia, PA, for Plaintiffs/Consolidated Plaintiffs.
MEMORANDUM AND ORDER ON DEFENDANTS' MOTIONS TO DISMISS
In these sixteen civil cases, plaintiffs assert fraud-based claims against the moving defendants WellNx Life Sciences, Inc. (WellNx), Swiss Caps USA, Inc. (Swiss Caps), and Robinson Pharma, Inc. (RPI), the inventors, retailers, and manufacturers of the "weight loss" products "Slimquick— the Female Fat Burner" (Slimquick), "NV—Rapid Weight—Loss Beauty Pill" (NV). and Liquid Hoodia.1 Defendants move to dismiss the bulk of plaintiffs' claims as insufficiently pled. The court heard oral argument on the motions on June 11, 2009.
The cases at the core of the litigation were filed in federal courts in Maryland, Massachusetts, Nevada, and New Jersey.2 The lead plaintiffs are disappointed consumers who spent an average of $25 for the purchase of five-day supplies of WellNx products "guaranteed" to induce weight loss and enhance beauty.3 None of the plaintiffs who used the products lost weight or believed themselves to be more beautiful as a result.
Plaintiffs' claims, for the most part, are directed to the allegedly fraudulent marketing of Slimquick and NV, although the New Jersey Amended Complaint makes similar allegations about Liquid Hoodia.4 WellNx, the Canadian company that claims to have "invented" SlimQuick, NV, and Liquid Hoodia, styles itself as a "developer" of dietary supplements for "sports nutrition, weight loss, and `general wellness.' " Plaintiffs maintain that brothers Derek and Brad Woodgate, the Co-Chief Executive Officers of WellNx, falsely represented the ingredients of WellNx products and fabricated consumer "testimonials" touting Slimquick.
Plaintiffs rely on a sworn statement from Craig Stevenson, Well-Nx's former Director of Marketing, alleging that the Woodgates knew that the products did not contain the advertised ingredients. They also offer the affidavit of Dr. Lawrence Walker, the Director of the National Center for Natural Products Research, whose tests of samples of Slimquick, NV, and Liquid Hoodia, found that they "frequently did not contain green tea and/or Hoodia at all, or, if present, the amount of the ingredients was frequently less than claimed on the labeling of these products."
With respect to the testimonials, plaintiffs rely on the affidavit of Scott Welch, a former WellNx officer (who was a codefendant until his voluntary dismissal by plaintiffs on November 2, 2009).5 Welch states that it was no secret that the Slimquick testimonials had been made up from whole cloth by Derek Woodgate. For example, Nadine Wall, one of Slimquick's "before-and-after" successes, never used Slimquick, while another, Kerrie Lee Brown, a "successful" dieter, never lost weight as a result.6
In the Amended Complaints, plaintiffs allege that the defendants—the Woodgates, Global Health Technologies, Inc. (Global Health),7 NxCare, Inc., and NxLabs, Inc., made "statements or omissions of material fact [that] ... were false, were known by the defendants to be false (or were made on an insufficient basis of information), were made with the intent to induce the members of the plaintiff class to rely upon them, and were justifiably relied upon by the members of the plaintiff class to their detriment." Amended Complaints ¶ 98. The Amended Complaints also, allege that "[t]he Manufacturing Defendants had knowledge that certain ingredients were to be included in [the Products] and negligently and/or intentionally failed to include certain ingredients in [the Products] prior to ultimate sale of said products to the plaintiff class." Md. Amended Complaint ¶ 118; Mass. Amended Complaint ¶ 119; Nev. Amended Complaint ¶ 145; N.J. Amended Complaint ¶ 154.
WellNx seeks dismissal of certain claims against it; Swiss Caps and RPI seek dismissal of all claims. Swiss Caps is a Florida corporation that manufactured Liquid Hoodia for WellNx between January 1, 2007, and August 31, 2007 ("but perhaps to the present"). RPI is a California corporation that manufactured NV for WellNx from sometime in 2006 through August 31, 2007, and Liquid Hoodia from at least March 1, 2007, through at least August 31, 2007 ("but likely to the present time."). Amended Complaints ¶ 11(a).8 The "manufacturing defendants" base their motions to dismiss on the assertion that plaintiffs have failed to allege that any of the named plaintiffs relied on the product labels in deciding to make a WellNx purchase. Similarly, WellNx contends that the Amended Complaints do not allege reliance or causation, which are essential elements of both the common-law fraud and the statutory consumer fraud claims. Further, defendants note that none of the named plaintiffs is alleged to have purchased NV, while only Tisha Cathcart, the New Jersey plaintiff, is alleged to have purchased Liquid Hoodia. Finally, WellNx argues that as plaintiffs allege only out-of-pocket damages, the tort claims are barred by the "economic loss doctrine."9
To survive a motion to dismiss, a complaint must allege "a plausible entitlement to relief." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 559, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). "While a complaint attacked by a Rule 12(b)(6) motion does not need detailed factual allegations, a plaintiffs obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Id. at 550 U.S. at 555, 127 S.Ct. 1955 (internal citations omitted). See also Rodriguez-Ortiz v. Margo Caribe, Inc., 490 F.3d 92, 95-96 (1st Cir.2007).
Determining whether a complaint states a plausible claim for relief will, as the Court of Appeals observed, be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense. But where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged— but it has not "show[n]"—"that the pleader is entitled to relief."
Ashcroft v. Iqbal, ___ U.S. ___, 129 S.Ct. 1937, 1950, 173 L.Ed.2d 868 (2009) (internal citations omitted). See also Berner v. Delahanty, 129 F.3d 20, 25 (1st Cir.1997) ().
Swiss Caps is named as a defendant in only the New Jersey...
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