Antitrust Law Daily Wrap Up, ADVERTISING—D.N.J.: Helmet marketers unable to bench concussion misrepresentation claims, (Aug 5, 2015)

By Greg Hammond, J.D.

Consumers of helmets that were advertised to reduce concussions by as much as 31 percent stated sufficient consumer fraud claims against helmet makers for alleged false representations. Noting that the consumers’ second amended complaint largely cured the deficiencies identified in their previous pleading, the federal district court in Camden, New Jersey, partially denied the marketers’ motion to dismiss (In re Riddell Concussion Reduction Litigation, August 3, 2015, Simandle, J.).

A group four individuals, one school district, and a youth sports association filed suit against Riddell, Inc., Riddell Sports Group, Easton-Bell Sports, LLC, EB Sports Corp., RBG Holdings Corp., and All American Sports Corp. (Riddell), alleging that the companies marketed their football helmets based on allegedly false or misleading claims that the helmets were equipped with unique concussion reduction technology, and in some instances, that the helmets could reduce concussions by as much as 31 percent. The plaintiffs contend, however, that Riddell’s helmets are incapable of reducing the incidence of concussions compared to other football helmets on the market. The consumers claim that they were harmed by paying a $50 price premium for Riddell’s helmets which offer no greater protection against concussions than other helmets. After initially dismissing the consumers’ consolidated amended complaint, the plaintiffs filed a second amended complaint, which the defendants have now moved to dismiss.

Particularity. The court first determined that the second amended complaint (SAC) has met the particularity requirements of Federal Rule of Civil Procedure 9(b). Specifically, the plaintiffs identified three types of marketing statements that are allegedly false or misleading: (1) statements that reference a 31 percent reduction in the incidence of concussions; (2) statements that reference “concussion reduction technology”; and (3) statements that reference youth helmets. The court concluded that because there is no longer any question as to what statements each plaintiff saw or heard and where such statements appeared, and because the plaintiffs pleaded causation or injury with requisite specificity and particularity—a “price premium” of $50—the allegations were mostly sufficient to survive Riddell’s motion to dismiss.

Facial plausibility. The court next considered the plausibility of the false advertising claims in reference to each of the three categories of marketing statements. The 31 percent reduction in concussions claim was partially dismissed by the court, which concluded that the consumers could not base their consumer fraud claims on marketing statements that accurately reflect the results of Riddell’s study, regardless of the study’s purported flaws. Further, the plaintiffs failed to identify any scientific study that supported their claim that the 31 percent reduction representations were false or misleading. Nevertheless, the plaintiffs could move forward with their consumer fraud claims based on the 31 percent reduction statements used in advertising helmets that were not actually involved in Riddell’s study.

The plaintiffs additionally failed to plausibly allege a consumer fraud claim based on statements concerning specific design features of their helmets, because they never alleged that the helmets lacked specific design features. They did, however, sufficiently allege false advertising claims based on Riddell’s references to “concussion reduction technology,” which the plaintiffs claimed were false or misleading because there is no material difference between Riddell’s helmets and other football helmets available to consumers in regard to concussion reduction. The court consequently found that, to the extent Riddell’s helmets cannot in fact reduce concussions, the consumers have provided a plausible basis that these marketing statements are false, misleading, or deceptive.

Consumer fraud claims concerning youth helmets were also sufficiently alleged, the court determined, because the 31 percent reduction in concussions study did not include any youth model helmets. Conversely, the plaintiffs’ omission-based consumer fraud claims were dismissed because they offered nothing more than vague and conclusory allegations that the court previously found insufficient.

The court additionally found that: (1) the plaintiffs sufficiently alleged ascertainable loss or injury through allegations that the consumers paid for helmets at an approximate “price premium” of $50; (2) it was not apparent on the face of the SAC that one of the plaintiff’s claims are time barred under the Arizona Consumer Fraud Act; (3) because the plaintiffs stated a claim under California’s Consumers Legal Remedies Act, their claim under the “unlawful” prong of California’s Unfair Competition Law (UCL) survived the motion to dismiss; and (4) the plaintiffs have sufficiently alleged a claim under the “unfair” prong of the UCL.

The case number is 13-7585 (JBS/JS).

Attorneys: James E. Cecchi (Carella Byrne Cecchi Olstein Brody & Agnello, P.C.) and Stephen A. Corr (Stark & Stark) for plaintiffs. Joseph A. Boyle (Kelley Drye & Warren LLP) for defendants.

Companies: Riddell, Inc.; Riddell Sports Group; Easton-Bell Sports, LLC; EB Sports Corp.; RBG Holdings Corp.; All American Sports Corp.; Cahokia School District; Alliance Youth Sports Association

Cases: Advertising ConsumerProtection NewJerseyNews