Antitrust Law Daily Wrap Up, ADVERTISING—N.D. Ill.: State false labeling claims surrounding ‘non-drowsy’ labeling on cough medicine survive dismissal, (Oct 21, 2024)

By Patricia K. Ruiz, J.D.

In finding no preemption, the court found federal labeling requirements are identical to the state law requirements alleged, which also prohibit deceptive mislabeling.

The federal district court in Chicago granted a motion to strike class certification in a putative class action suit alleging Albertsons Companies, Inc., sold cough medicine falsely labeled as “non-drowsy,” finding the consumer’s class allegations did not approach the “facially and inherently deficient” standard needed for a successful motion to strike. The court also granted in part and denied in part Albertsons’ motion to dismiss for lack of standing and failure to state a claim (Gibson v. Albertsons Companies, Inc., No. 1:22-cv-00642 (N.D. Ill. Oct. 17, 2024)).

Albertsons makes, markets, and sells cough medicine labeled as “non-drowsy” and for “daytime” use. A consumer who purchased the product alleged that the active ingredient in the medication, dextromethorphan (DXM) is known to cause drowsiness and claims she became drowsy when she took the medicine. She claimed she and other putative class members never would have purchased the medicine had they known drowsiness was a side effect and that, because they believed they were purchasing medicine that did not cause drowsiness, she and other consumers did not receive the benefit of their bargain. The consumer filed a class action complaint alleging (1) violations of various state consumer protection laws; (2) breach of the Illinois Consumer Fraud and Deceptive Business Practices Act (ICFA); (3) breach of express warranty; (4) breach of the Magnuson-Moss Warranty Act (MMWA); and (5) intentional misrepresentation. Albertsons moved to strike the class allegations and dismiss the complaint for lack of standing and failure to state a claim.

Class certification. Albertsons argued that striking the class action allegations is proper because the consumer alleged that only 10.4% of people experience any drowsiness after taking a medication containing DXM; however, she proposed a class that includes all persons who purchased the drugs in question, making the proposed class facially overbroad. It is not obvious that an individual can experience the economic injury alleged only if they become drowsy, the court found, and there is no need to provide a definitive answer at this early stage of the proceedings. Further, the occurrence of drowsiness among people who ingest DXM is a fact-based inquiry that would benefit form discovery. Thus, the court found it premature to resolve this argument at the pleading stage. Albertsons further argued the consumer cannot meet the commonality or predominance requirements because the case presents individual questions of law and fact; however, the court found such that such fact-based questions are premature at the pleading stage. Because the consumer’s class allegations did not approach the “facially and inherently deficient” standard needed for a successful motion to strike, the court denied Albertson’ motion to strike.

Standing. The court addressed Albertsons’ two arguments related to Article III standing: that the consumer lacks standing to bring claims related to products she did not buy; and that the consumer lacks standing to seek prospective injunctive relief. To establish standing, the consumer must allege that (1) she suffered an injury in fact; (2) there is a causal connection between the injury and the conduct complained of; and (3) it must be likely that the injury will be redressed by a favorable decision. First, the court found the consumer brought claims related to three products in Albertsons’ “non-drowsy” line but alleged she only purchased one of the products. The court held the consumer did not have standing to pursue claims against the products she did not purchase. Though other consumers who purchased those products may not have received the benefit of their bargain, the consumer’s alleged economic injury only relates to the product she bought. The court dismissed the consumer’s claims relating to products she did not purchase for lack of standing.

Albertson’s argued the consumer lacks Article III standing to seek injunctive relief, reasoning that injunctive relief is unavailable to the consumer because she is now aware that DXM makes her drowsy and is unlikely to buy the product and face any future harm. Given precedent finding that the threat of future harm may be the consumer’s plausible allegations that she will be unable to rely on the product’s advertising or labeling in the future and will not purchase the product although she would like to, the court concluded the consumer has standing to seek prospective injunction relief.

Preemption. Albertsons argued that the consumer’s state law claims are preempted by federal law. The Food, Drug, and Cosmetic Act regulates the sale of over-the-counter (OTC) drugs, and the monograph for OTC cough medicines requires drowsiness warnings for certain antitussive drugs but does not require a drowsiness warning for drugs containing DXM. Albertsons argued that the consumer’s state law claims are expressly preempted because she seeks to impose requirements that are different from those imposed by the monograph governing DXM. The court found that the consumer seeks to stop Albertsons from adding deceptive language to federally permitted labels—a requirement distinct from a state law requirement that sellers must add a drowsiness warning. Moreover, the federal prohibition against false and misleading labels is identical to the state law issues in this case, which similarly prohibit deceptive mislabeling. Thus, the court held the consumer’s claims are not preempted by federal law.

Plausibility of allegations. Albertsons argued that all five of the consumer’s counts should be dismissed because she fails to allege facts sufficient to plausibly allege that the non-drowsy label claim is false. The court found that the consumer’s allegations, taken as true, do more than enough to establish that DXM causes drowsiness. The court declined to address the reliability or weigh of each piece of evidence the consumer put forth and denied the motion to dismiss as to the plausibility of the consumer’s false labeling claim. Albertsons also moved to dismiss the consumer’s ICFA, breach of warranty, and intentional misrepresentation claims on the grounds that she failed to plead actual damages, which are required elements of those claims. The court explained that, at the pleading stage, it must take as true the consumer’s allegation that she would not have purchased the product had she known it causes drowsiness. The court denied Albertson’s motion to dismiss as to actual damages.

Albertsons sought dismissal of the consumer’s ICFA claims, arguing the consumer failed to identify any alleged deception other than in connection with the purported express warranty. However, the court disagreed, finding the consumer’s allegations went beyond the mere fact that the non-drowsy warranty turned out to be false. She alleged that: (1) Albertsons researched the known and common side effects of DXM and therefore knew DXM causes drowsiness; (2) the company knew that the “non-drowsy” and “daytime” labels would be misleading to consumers; (3) it knew consumers would rely on the misleading labels; and (4) as a result of the misleading labels, consumers would purchase more of the “non-drowsy” products at a premium price. The court denied the motion to dismiss as to the consumer’s ICFA claim.

Albertsons argued the consumer’s breach of warranty claim should be dismissed for failure to provide proper notice, as the consumer filed suit only four days after notifying it of the alleged breach, leaving no time for settlement discussions. The court agreed and dismissed the breach of express warranty claim with prejudice. For the same reason, the court dismissed the consumer’s MMWA claim with prejudice.

The Case is No. 1:22-cv-00642.

Judge: Alexakis, G.

Attorneys: Brittany Scott (Bursor & Fisher, P.A.) for Patricia Gibson. Gregory Edward Ostfeld (Greenberg Traurig, LLP) for Albertsons Companies, Inc. d/b/a Tasty Cake.

Companies: Albertsons Companies, Inc. d/b/a Tasty Cake

Cases: Advertising StateUnfairTradePractices IllinoisNews GCNNews