Wednesday, December 12, 2018
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Ninth Circuit Resuscitates Action Against Maker of Nivea Under State’s UCL
Panel Finds Pleading Adequate in Case Where Plaintiff Claims Lotion Contains Only a Trace of CoQ10 and Doesn’t Work
By a MetNews Staff Writer
The Ninth U.S. Circuit Court of Appeals yesterday reversed a district court judge’s sua sponte dismissal of a putative class action, with prejudice, against the makers of the Nivea brand of cosmetics, holding that the plaintiff has standing and adequately pled the $5 million damages necessary to establish jurisdiction under the Class Action Fairness Act.
The plaintiff, Ashley Franz, sued two American entities related to German skin-care company Beiersdorf, alleging that the companies’ NIVEA Skin Firming Hydration Body Lotion—which represents on the bottle that it “Improves Skin’s Firmness in as little as 2 weeks” and contains a substance called coenzyme Q10 (“CoQ10”)—does not, in fact improve skin firmness. The lotion, she maintains, contains only negligible levels of CoQ10.
Franz brought her claim in the Southern District of California under the state’s unfair competition law (“UCL”), on behalf of similarly-situated California consumers. U.S. district courts have jurisdiction over class actions, pursuant to 28 U.S.C. §1332(d), when the amount in controversy exceeds $5,000,000, the putative class has at least 100 members, and there is a diversity of citizenship between any class member and any defendant.
District Court Judge Larry A. Burns, who dismiss the plaintiff’s second amended complaint without leave to amend, declared:
“Franz is no longer asking for an injunction or certification of a nationwide class. Instead, she’s only asking for restitution of the ‘full purchase price’ of the Lotion–$10. She believes the class of California consumers may contain ‘thousands of purchasers,’ but Franz needs to allege that roughly 500,000 purchasers each suffered $10 injuries to get to $5 million. Even including attorney fees (which, it seems this case is really about), Franz hasn’t provided the Court plausible facts from which it could infer that this sum of money is on the table.”
Yesterday’s memorandum opinion responds:
“Nivea CoQ10 retails for approximately $10. During the applicable class period, Defendant-Appellee Beiersdorf, Inc. allegedly sold Nivea CoQ10 ‘online and in virtually every major food, drug, and mass retail outlet.’ It is easily conceivable that Defendant sold the product 500,000 times in a state the size of California over a multi-year period. Defendant does not dispute that the amount in controversy exceeds $5,000,000.…The district court erred by sua sponte dismissing Plaintiff’s claim on the ground that Plaintiff did not adequately allege that the amount in controversy exceeds the jurisdictional minimum.”
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Depicted above is a bottle of Nivea Skin Firming Hydration Body Lotion. The Ninth U.S. Circuit Court of Appeals yesterday reinstated a putative class action, under California’s Unfair Competition Law, against the product’s maker, alleging that it is not as represented. |
Federal Violation Alleged
Franz claims that CoQ10 is a drug, and that, under the federal Food, Drug, and Cosmetic Act, it requires a new drug approval before being sold. Because Beiersdorf did not obtain such approval, she argues, the sale of the cream is violative of the UCL’s “unlawful” prong.
Burns saw no connection between the alleged violation and Franz’s decision to buy the product. He said:
“If Franz was a Nivea competitor selling a similar skin-firming lotion, but had spent extra time and money obtaining FDA approval for her rival lotion so that she could make skin-firming claims, then the Court would have no problem implying a causal connection.…But here, Franz hasn’t shown there’s a plausible ‘causal connection’ between her decision to buy and the ‘conduct complained of’—namely, Nivea’s decision to sell the Lotion as a cosmetic, rather than obtaining approval to sell it as a drug.”
Yesterday’s opinion states:
“Plaintiff alleges that Defendant sold a ‘drug’—Nivea CoQ10—without FDA approval. Plaintiff contends that doing so violates the Food, Drug, and Cosmetic Act.…Plaintiff alleges that, as a result, she spent money on a product that should not have been on the market. Those allegations are sufficient to establish standing under the UCL.”
Plaintiff Has Standing
Burns also dismissed the action, without leave to amend, based on Franz’s supposed lack of standing. The memorandum opinion says:
“Constitution. Plaintiff alleged injury in fact—she spent money on Nivea CoQ10. Defendant’s allegedly illegal conduct caused that injury, insofar as Defendant allegedly sold a product in commerce that it should not have sold. And the injury is redressable—in restitution—by a favorable court decision….The district court erred by dismissing Plaintiff’s claim on the ground that she lacked standing.”
The case is Franz v. Beiersdorf, Inc., No. 17-55646.
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