Labor & Employment Law Daily Wrap Up, PRIVACY—W.D. Wash.: Military nurse suing Thesis, Nutraceuticals over alleged amphetamine adulteration survives dismissal on most claims, (Feb 27, 2025)

By Justin Marcus Smith, J.D.

The court did not find it fatal that the nurse’s complaint did not allege that the supplements were the definitive cause of her amphetamine-positive drug test.

A nurse who complained that a nootropic cognitive supplement caused her discharge from the military could proceed on most of her claims against entities and corporate officers she accused of being involved in the manufacture and sale of the supplements, held the federal district court in Tacoma, Washington. Thesis and associated corporate officers (the Thesis parties) moved to compel arbitration on the basis that the nurse agreed to arbitrate any claims when she bought the supplements. The court denied their motion to compel arbitration, without prejudice, on the basis that Thesis did not meet their burden of showing that a valid agreement to arbitrate existed. Nutraceuticals and Brand Packaging Group (the Brand Nutra parties), meanwhile, moved to dismiss the nurse’s complaint for failure to state a claim under Fed. R. Civ. P. 12(b)(6). They argued the complaint lacked sufficient detail to place them on notice about their potential liability. This required the court to consider, at multiple junctures, whether collective allegations were adequate or fatal to a specific claim. The court dismissed the nurse’s second claim for unfair trade practices and her sixth claim for fraud and misrepresentation, without prejudice, and with explicit leave to amend. The court otherwise denied dismissal of the nurse’s negligence and other claims sounding in Washington state products liability (Ledoux v. Outliers, Inc., No. 3:24-cv-05808-TMC (W.D. Wash. Feb. 18, 2025)).

Background. A military nurse complained that Outliers, Inc. (Thesis), Brand Nutraceuticals, Inc., Brand Packaging Group, Inc., and certain natural persons associated with Thesis management, promoted nootropic cognitive supplements that likely caused her to lose her demanding job at Joint Base Lewis-McChord after she tested positive for amphetamines in routine military drug testing. The nurse alleged the supplements, marketed as a natural alternative to stimulant-based medications like Adderall, actually contained amphetamines.

She said she endured a military criminal trial because she did not have a prescription for amphetamines. She alleged that, during her court martial, the supply-chain chief for Thesis declined to answer questions about what was in the supplements.

She said her mental and physical health deteriorated after her discharge from the military, the loss of her security clearance, and the loss of her access to military benefits and pension. She said she also fears revocation of her state nursing license. She asserted claims for negligence; unfair trade practices; failure to warn; design and manufacturing defect; breach of warranty; and, misrepresentation and fraud.

Thesis motion. Deficiencies in the Thesis motion to compel arbitration meant Thesis did not carry its burden of proving the existence of an agreement to arbitrate stemming from the nurse’s purchase of the supplements. Whether under New York or Washington law, mutual assent in an online forum is not always readily apparent. The court noted that courts often enforce “clickwrap” because it involves “conspicuous” notice and clear assent to contractual terms. “Browsewrap” agreements, in contrast, are harder to enforce because they usually rely on passive assent, for example, through continued use of a website.

The court said the Ninth Circuit has devised rules to determine whether a user has given meaningful online assent. Courts in the circuit will only find inquiry notice of a disputed agreement if the website 1) displays reasonably conspicuous notice of the terms; and, 2) the consumer takes some action, like clicking a button or checking a box, that unambiguously manifests assent.

The nurse said she never assented to the Thesis terms and conditions inasmuch as there was no pop-up, click box, or checkbox. She said there was only a link at the bottom of the Outlier site page. She offered an affidavit stating that she never saw the terms, screenshots, and a video attachment obtained from the Internet Archive (i.e., the WayBack Machine). The court found the video confirmed terms and conditions were at the bottom of the page and were not underscored to show a hyperlink, but the video did not show what the checkout page looked like.

There was nothing else to go on because the defendants did not, apart from their own declaration and a third-party affidavit about use of the CartHook app, provide any screenshots or other evidence to support their counter-assertion that the nurse necessarily checked a box to complete her purchase on the checkout page. The affidavit acknowledged that a brand using CartHook on its website could optionally remove the checkbox.

The court gave the Thesis affidavit little weight. The court also questioned the reliability of other Thesis evidence because, according to the court, a certain exhibit showed claims about Thesis company records were “not true.” Without much to go on to determine whether the nurse assented, the agreement might have been mere browsewrap, and hence no contract would have been formed. In any event, Thesis had the burden of proof by a preponderance of the evidence, and the court concluded it did not carry that burden. The court accordingly denied the Thesis motion to compel arbitration, without prejudice.

Brand Nutra motion. The court, applying only Washington law to the Nutraceuticals motion to dismiss for failure to state a claim, denied dismissal of the negligence claim. The nurse alleged sufficient facts for the court to infer in her favor despite the fact that her complaint did not allege that the supplements were the definitive cause of her amphetamine-positive drug test.

The court analyzed that the nurse’s claims amounted to a products liability claim under the Washington Products Liability Act (WPLA). Under the WPLA, there is no need to commit to a specific theory of liability before discovery. A complaint must allege factual matter to fit into a prescribed category of manufacturer liability.

The nurse alleged that Brand Nutra owed her a duty of reasonable care and breached that duty through careless formulation of the supplements; failing to test them before sale; and, failing to disclose the risk of possible adulteration. The nurse pleaded these failures were a direct and proximate cause of amphetamine poisoning that caused her positive drug test. The court concluded the nurse sufficiently pleaded a negligence theory of liability.

Brand Nutra objected that the complaint did not differentiate between alleged duties owed by Thesis or else Brand Nutra or allege any specific breach of duty apart from reference to overbroad statutory violations. Brand Nutra also took issue with how the nurse drafted her complaint. They said it was ambiguous about the scope of intended negligence claims. The nurse replied that she provided a detailed context of the joint collaboration between Thesis and Brand Nutra in the manufacture of an allegedly adulterated product “amidst regulatory and product safety violations that were already the subject of intervention by regulators.”

The court found the nurse satisfactorily alleged a partnership and joint responsibility between Thesis and Brand Nutra that included failure to test the products. The nurse offered a purported FDA warning letter about alleged past adulteration at Brand Packaging Group. The court saw that the WPLA, in turn, permits evidence of non-compliance with relevant standards to be put to a trier of fact. The court said the nurse’s allegations pointed to this type of evidence. The court accordingly denied Brand Nutra’s motion to dismiss the negligence claim.

Turning to the unfair trade practices claim, the court found Brand Nutra tended to ignore the nurse’s incorporation of facts pleaded elsewhere in her complaint that were sufficient to conclude Brand Nutra facially misrepresented or failed to disclose information about the supplements. However, in this sub-context, Brand Nutra rightly pointed out that the claim failed to distinguish between Brand Nutra and Thesis conduct. Generalized allegations would not cut it for unfair trade practices. The court ruled that the nurse must “parse out” the alleged Brand Nutra conduct, if any, on this claim. The court accordingly granted the Brand Nutra motion to dismiss the unfair and deceptive practices claim, with respect to Brand Nutra, without prejudice.

Turning to the failure to warn claim, the court found it was sufficiently clear that it referred to Brand Nutra and Thesis, but lack of differentiation was not a problem for this claim. Additional specificity was optional. Inasmuch as Brand Nutra raised no other issue with this claim, the court denied dismissal. The court reached the same conclusion and denied dismissal with respect to the design and manufacturing defect claim.

As for breach of warranty, contractual privity was not necessary under the WPLA. The court explained that the Washington Supreme Court has also held that a product liability claim against a manufacturer or seller does not require contractual privity. Still, Brand Nutra urged that it was crucial to determine who served as a manufacturer or product seller and whether the product conformed to an express warranty. Brand Nutra again pursued that the nurse failed to properly differentiate the claims between Brand Nutra and Thesis. The nurse explained that they both acted as sellers and manufacturers, and the WPLA defined a seller to include a manufacturer.

The court agreed the statute covered Brand Nutra. The statute imposes liability on manufacturers for the implied warranty of merchantability. The court found the nurse alleged throughout her complaint that the product she ingested was adulterated and did not conform with advertised purpose. The court held the nurse sufficiently pleaded her claim for breach of warranty and denied dismissal of that claim accordingly.

Last, Brand Nutra argued the claim for misrepresentation and fraud failed for insufficient particularity. The nurse did not dispute this. Instead, she maintained that she satisfied heightened pleading by re-alleging and incorporating facts pleaded elsewhere in her complaint, but the court said it was not persuaded. Here, Fed. R. Civ. P. 9(b) required a pleading that would separately place each respondent on notice of their own alleged participation in the fraud, unless, perhaps, collective allegations involved precisely the same conduct. The court found the nurse pleaded a claim of fraud or misrepresentation against Thesis, but she did not tie it to Brand Nutra. There were no details linking Brand Nutra, and she did not allege identical conduct, so the allegations did not pass R. 9(b) muster as applied to Brand Nutra. The court accordingly granted Brand Nutra’s motion to dismiss the misrepresentation and fraud claim as to Brand Nutra, only, and without prejudice.

The case is No. 3:24-cv-05808-TMC.

Judge: Cartwright, T.

Attorneys: Jocelyn Christine Stewart (Law Offices of Jocelyn C. Stewart Corp) for Joann LeDoux. Stuart N. Kaplan (Law Office of Stuart N. Kaplan PA) for Outliers Inc. d/b/a Thesis d/b/a Thesis Nootrpics d/b/a Find my Formula d/b/a Formula.

Companies: Outliers Inc. d/b/a Thesis d/b/a Thesis Nootrpics d/b/a Find my Formula d/b/a Formula

Cases: Privacy Arbitration Procedure Retaliation TortClaims StateLawClaims WashingtonNews