Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—NDIll: Vibram May Be Liable For Falsely Representing Health Benefits of FiveFinger Shoes, (Mar 19, 2013)

By Jody Coultas, J.D.

Vibram USA, Inc. may be liable for violating the Illinois Consumer Fraud and Deceptive Business Practices Act (CPA) by marketing its FiveFinger running shoes as having health benefits it did not have, according to the federal district court in Chicago (De Falco v. Vibram USA, Inc., March 18, 2013, Kendall, V.). The court, however, transferred the claim to the federal district court in Boston where another case—Bezdek v. Vibram USA Inc.—was pending.

FiveFinger shoes were marketed as “minimalist” shoes that mimicked barefoot running. Vibram advertised that the shoes would improve posture and foot health, reduce the risk of injury, and strengthen muscles. Upon learning that the representations were false, a purchaser filed CPA class action claims, alleging that he would not have bought the shoes or paid the premium price had he known the truth about the benefits of the shoes. The purchaser pointed to a lack of scientific studies on whether barefoot running produced the marketed health benefits and to articles concerning the risks of barefoot running.

The purchaser’s motion to remand the case to state court was denied based on the court’s finding that the class consisted of at least 100 members, there was diversity, and the amount in controversy exceeded $5 million. The class period covered at least six years of sales, making it plausible that potential compensatory damages would exceed $5 million. The class was also likely to seek punitive damages, as the purchaser alleged that Vibram knowingly and intentionally violated the CPA. The CPA provides for punitive damages.

In order to state a CPA claim, the purchaser needed to show that Vibram engaged in deceptive acts or practices, the purchaser relied on the deceptive acts, the deception occurred in the course of conduct involving trade or commerce, and the purchaser suffered an actual injury caused by the deception.

The purchaser’s CPA claim met the heightened pleading standard of Federal Rule of Civil Procedure 9(b), according to the court. Vibram argued that the purchaser failed to sufficiently allege a deceptive act or that the alleged acts caused the purchaser’s injury. However, the purchaser adequately stated that Vibram’s marketing statements regarding the health benefits of the FiveFinger shoes were false and caused the purchaser an injury. The purchaser noted that he viewed in-store displays advertising FiveFingers that included the allegedly false statements and relied on those statements when making the decision to purchaser shoes.

At this stage, the court could not rule on whether the statements were actually false. The court assumed the veracity of the allegations at the pleading state.

Although the purchaser stated a CPA claim, the court found that it was not the best venue for the action and transferred the case to the federal district court in Boston. A court may transfer a civil action to any other district where it might have been brought. Although the claims in this case concerned the CPA, while the claims in the case pending before the Boston court were based on Massachusetts and Florida law, the facts were substantially similar. The underlying laws were similar as well, since the sections of the consumer protection statutes at issue prohibited the same conduct.

The case is No. 12 C 7238.

Attorneys: William M. Sweetnam (Sweetnam LLC) for Brian De Falco. James R. Daly (Jones Day) for Vibram USA, Inc.

Company: Vibram USA, Inc.

Cases: StateUnfairTradePractices IllinoisNews