Antitrust Law Daily Wrap Up, ADVERTISING—S.D.N.Y.: Certification precedes standing inquiry in homeopathic baby products class action, (Jul 7, 2016)

By Edward L. Puzzo, J.D.

A challenge by a homeopathic baby products company to the standing of plaintiffs to act on behalf of a putative nationwide class was denied because class certification issues were "logically antecedent" to Article III standing concerns, the federal district court in White Plains, New York, has ruled (Kaatz v. Hyland’s Inc., July 6, 2016, Briccetti, V.).

Defendants Hyland’s Inc. and its parent corporation Standard Homeopathic Company manufactured, sold, and distributed homeopathic baby products, including teething gel, cough syrup and earache drops.

New York residents Marie Kaatz and Abigail Gagliardi brought a putative class action against defendants on behalf of a nationwide class, alleging, among other claims, violations of all 50 states' consumer protection and warranty laws, and violations of the federal Magnuson-Moss Warranty Act (MMWA). Specifically, the plaintiffs alleged that the defendants' homeopathic baby products were falsely advertised as natural and effective at relieving symptoms of pain or discomfort in babies. Instead, it was alleged, the products contained synthetic additives and were ineffective in relieving symptoms of pain or discomfort.

The defendants moved to dismiss these claims based on a lack of standing. They argued that the plaintiffs, as New York citizens, lacked standing to assert claims on behalf of unnamed plaintiffs in 49 other states.

Standing. Although standing is generally a threshold issue for an Article III court to determine at the outset of the case, the court explained, the Supreme Court created an exception for courts to address class certification prior to standing when certification issues are "logically antecedent" to Article III concerns. The growing consensus among district courts, the court continued, is that class certification is logically antecedent when the certification is the source of the potential standing problems. Under such circumstances, the class certification inquiry should precede the standing inquiry. Further, the court continued, the named plaintiffs in a putative consumer protection class action may assert claims under the laws of states where they do not reside in order to preserve those claims in anticipation of eventually being joined by class members who do reside in the other states.

Here, there was no question that the plaintiffs had standing to bring claims against the defendants under the consumer protection and warranty laws of New York, the court stated. A class certification inquiry will address whether the named plaintiffs’ injuries were sufficiently similar to the injuries of the putative nationwide class such that a nationwide class action was justified, and would inform whether there are plaintiffs with standing to bring claims under the laws of states other than New York. The court ruled that here, class certification was logically antecedent to standing because class certification was the source of the potential standing problems. The court further ruled that it would reserve the determination of the plaintiffs’ standing until class certification. Consequently, the court denied the defendants' motion to dismiss the claims on behalf of a nationwide class due to lack of standing.

The case is Civil Action No. 7:16-cv-00237-VB.

Attorneys: Jean Sedlak (Sullivan & Brill, LLP) for Marie Kaatz. Jeffrey Margulies (Norton Rose Fulbright LLP) for Hyland's Inc. and Standard Homeopathic Co.

Companies: Hyland’s Inc.; Standard Homeopathic Co.

Cases: Advertising ConsumerProtection NewYorkNews