Midwestern Midget Football Club Inc. v. Riddell, Inc., Civil Action No. 2:15-00244
| Decision Date | 10 August 2015 |
| Docket Number | Civil Action No. 2:15-00244 |
| Court | U.S. District Court — Southern District of West Virginia |
| Parties | MIDWESTERN MIDGET FOOTBALL CLUB INC., Plaintiff, v. RIDDELL, INC., Defendant. |
Pending is a motion to dismiss by defendant Riddell, Inc. ("Riddell"), filed April 27, 2015.
Plaintiff Midwestern Midget Football Club, Inc. ("Midwestern"), is a West Virginia citizen. It is a non-profit youth football organization operating in Kanawha County, West Virginia. Defendant Riddell, Inc. ("Riddell"), is an Illinois citizen that designs, manufactures, markets, and sells a cranial protection device for football players known as the Revolution Helmet.
Riddell sells Revolution Helmets at a market price reflective of its claim that they reduce the incidence of concussion in comparison with its own, earlier helmet designs and competitor helmets. Specifically, the Revolution Helmets were marketed as containing reduction technology that putatively reduced the incidence of concussions by up to 31%.
Approximately 150 youth participate in Midwestern's program every year. It supplies the helmets for these participants. Every year Midwestern purchases between 12 and 24 new Revolution Helmets for its participants who are aged 14 years or younger.
Midwestern asserts that Riddell's marketing claims were knowingly false. Among other things, Midwestern contends that Riddell's assertions were based upon a statistically unsound study paid for by Riddell and co-authored by a Riddell employee. The study was publically criticized by third-party scientists. Indeed, Midwestern alleges that scientific studies and other data of which Riddell was aware indicated that the Revolution Helmets made no material difference to concussion risk as compared to traditional helmets.
On December 2, 2014, Midwestern instituted this action in the Circuit Court of Kanawha County against Riddell on its own behalf, and that of a class of similarly situated consumers, via asingle-count claim under the West Virginia Consumer Credit and Protection Act ("WVCCPA"). On January 6, 2015, Riddell removed. The putative class, as set forth in the amended class action complaint ("operative pleading") filed April 10, 2015, is defined as follows:
All West Virginia residents who purchased a Riddell Revolution football helmet in the State of West Virginia during the period beginning four years prior to the date of filing of this Class Action Complaint through the present . . . .
Midwestern asserts that as a result of Riddell's alleged deceptive marketing, West Virginia consumers were exposed to Riddell's false representations. As a result, Midwestern asserts that those same West Virginia customers who purchased Revolution Helmets at certain higher market prices reflecting their alleged concussion-reducing benefits would have, without the false representations, purchased alternative helmets at a lower market price.1
The operative pleading alleges a single count under the West Virginia Consumer Credit and Protection Act ("WVCCPA"). Specifically, it contends that Riddell's marketing efforts were composed of false statements which it intended customers to rely upon when making helmet-purchase decisions. This is alleged to be an unfair and deceptive act or practice in violation of West Virginia Code section 46A-6-102(7)(E). Midwestern additionally alleges as follows:
The referenced provision of the West Virginia Code, section 46A-6-106(a), provides pertinently as follows:
Any person who purchases . . . goods . . . and thereby suffers any ascertainable loss of money . . . as a result of the use or employment by another person of a method, act or practice prohibited or declared to be unlawful by the provisions of this article may bring an action in the circuit court . . . .
W. Va. Code § 46A-6-106(a). Midwestern seeks, inter alia, class certification, declaratory and injunctive relief, and actual damages or a statutory penalty, whichever is greater.
On June 18, 2015, the court denied the instant motion to dismiss. The next day, the court of appeals handed down In re GNC Corp., 789 F.3d 505 (4th Cir. 2015). In response, this court on June 22, 2015, vacated the June 18, 2015, memorandum opinion and order. The parties were directed to "brief the extent to which, if at all, the decision in In re GNC" impacted disposition of the motion to dismiss. Id. at 1. The briefing has concluded.
Federal Rule of Civil Procedure 8(a)(2) requires that a pleader provide "a short and plain statement of the claim showing . . . entitle[ment] to relief." Fed. R. Civ. P. 8(a)(2); Erickson v. Pardus, 127 S. Ct. 2197, 2200 (2007). Rule 12(b)(6) correspondingly permits a defendant to challenge a complaint when it "fail[s] to state a claim upon which relief can be granted . . . ." Fed. R. Civ. P. 12(b)(6).
The required "short and plain statement" must provide "'fair notice of what the . . . claim is and the grounds upon which it rests.'" Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 545 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957), overruled on other grounds, Twombly, 550 U.S. at 563); see alsoAnderson v. Sara Lee Corp., 508 F.3d 181, 188 (4th Cir. 2007). In order to survive a motion to dismiss, "a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (quoting Twombly, 550 U.S. at 570); see also Monroe v. City of Charlottesville, 579 F.3d 380, 386 (4th Cir. 2009).
Application of the Rule 12(b)(6) standard requires that the court "'accept as true all of the factual allegations contained in the complaint . . . .'" Erickson, 127 S. Ct. at 2200 (quoting Twombly, 127 S. Ct. at 1965); see also South Carolina Dept. Of Health And Environmental Control v. Commerce and Industry Ins. Co., 372 F.3d 245, 255 (4th Cir. 2004) (quoting Franks v. Ross, 313 F.3d 184, 192 (4th Cir. 2002)). The court must also "draw[] all reasonable . . . inferences from th[e] facts in the plaintiff's favor . . . ." Edwards v. City of Goldsboro, 178 F.3d 231, 244 (4th Cir. 1999).
When making an allegation of fraud, more particularity is required. A plaintiff must meet the heightened pleading requirements set forth in Rule 9. Rule 9 requires a party to "state with particularity the circumstances constituting [the] fraud." F.R. Civ. P. 9(b). To satisfy Rule 9(b), a plaintiff "must, at a minimum, describe the time, place, and contents of thefalse representations, as well as the identity of the person making the misrepresentation and what he obtained thereby." United States ex rel. Wilson v. Kellogg Brown & Root, Inc., 525 F.3d 370, 379 (4th Cir. 2008), see also U.S. ex rel. Nathan v. Takeda Pharm. N. Am., Inc., 707 F.3d 451, 456 (4th Cir. 2013)( that the Rule 9 standard set forth in Wilson is "as applicable in cases brought under [the statute at issue in Wilson] as [it is] in other fraud cases")(emphasis added).
Riddell asserts dismissal is warranted due to Midwestern's status as an incorporated non-profit youth organization. Specifically, Riddell contends that Midwestern does not qualify as a "consumer" and is thus not entitled to avail itself of the claim it pleads. As noted, Midwestern alleges a claim under WVCCPA section 46A-6-106(a), which provides pertinently as follows:
Any person who purchases . . . goods . . . and thereby suffers any ascertainable loss of money . . . as a result of the use or employment by another person of a method, act or practice prohibited or declared to be unlawful by the provisions of this article may bring an action in the circuit court . . . .
W. Va. Code § 46A-6-106(a). As Midwestern emphasizes, standing is dependent upon one satisfying the definition of a "person" as opposed to a "consumer." The definition of "person" is found insection 46A-1-102(31): "'Person' . . . includes a natural person or an individual, and an organization." W. Va. Code, § 46A-1-102(31).
It is true, as Riddell asserts, that section 46A-6-106 is entitled "Actions by consumers." That matters little. See W. Va. Code § 2-2-12 ().
It is also true that the Supreme Court of Appeals of West Virginia has spoken on occasion in terms of the statute applying to "consumers," as it so obviously does. See, e.g., Quicken Loans, Inc. v. Brown, 230 W. Va. 306, 328, 737 S.E.2d 640, 662 (2012); White v. Wyeth, 227 W. Va. 131, 138, 140, 705 S.E.2d 828, 835, 837 (2010) (); Syl. Pt. 16, In re West Virginia Rezulin Litigation, 214 W. Va. 52, 57, 585 S.E.2d 52, 57 (2003)("For a consumer to make out a prima facie case to recover damages for 'any ascertainable loss' under W. Va. Code, 46A-6-106 . . . , the consumer is not required to allege a specific amount of actual damages."). It is further the case that sections 46A-6-106(b) and (e) which, as noted below, were added by the Legislature in 2005, use the word "consumer" in multiple locations without like reference to the word "person," but withoutchanging the word "person" in section 46A-6-106(a). These considerations are influential from a statutory construction perspective.
The court concludes that the legislative history supports Midwestern's position. From the time of its enactment in 1974 until its amendment in 2005, section 46A-6-106 consisted of only two...
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