United States: Nixing Nationwide Class Action Claims: Federal Court Ruling Provides Blueprint For Businesses

Last Updated: January 25 2018
Article by Gerald L. Maatman Jr. and Alex W. Karasik

Seyfarth Synopsis: In a nationwide consumer fraud class action involving false labeling claims under various state laws, a federal district court in Illinois granted the company's motion to dismiss claims relative to a putative national class of plaintiffs, holding it did not have jurisdiction over the claims of the non-resident class of plaintiffs based on the recent U.S. Supreme Court opinion in Bristol-Myers Squibb Co. v. Superior Court of California, 137 S.Ct. 1773 (2017). For businesses and employers facing nationwide class action lawsuits, this ruling is instructive in regards to strategies to fracture and minimize the class size, and limit potential liability.

***

In DeBernardis v. NBTY, Inc., Case No. 17-CV-6125, 2018 U.S. Dist. LEXIS 7947 (N.D. Ill. Jan. 18, 2018), Plaintiff alleged that Defendants made false and misleading claims concerning the beneficial effects of a dietary supplement. The four-count complaint alleged violations of state consumer fraud acts on behalf of a multi-state class, as well as a class of Illinois-based purchasers. Defendants moved to dismiss on a variety of grounds, including their assertion that the Court did not have jurisdiction to hear the case involving the non-resident class of plaintiffs based on the recent U.S. Supreme Court opinion in Bristol-Myers Squibb. Judge Harry D. Leinenweber of the U.S. District Court for the Northern District of Illinois granted Defendants' motion to dismiss Counts I, III, and IV as to the putative national class of Plaintiffs.

Businesses and employers can use this ruling to attack and limit nationwide class actions involving the state law claims of non-resident plaintiffs, following the Bristol-Myers Squibb decision.

Case Background

Plaintiff brought a nationwide class action seeking monetary damages and injunctive relief against the distributor of a dietary supplements. The four-count complaint alleged that Defendants made false and misleading claims concerning the beneficial effects of the product. Id. at *1. Count I alleged violations of state consumer fraud acts on behalf of a multi-state class; Count II alleged violation of the Illinois Consumer Fraud Act on behalf of Illinois purchasers; Count III alleged violations of express warranty on behalf of the nationwide class, and Count IV alleged unjust enrichment on behalf of the nationwide class.

Defendants moved to dismiss, arguing: (i) that as to Counts I, III, and IV, the Court did not have jurisdiction to hear the case involving non-resident classes of plaintiffs based on Bristol-Myers Squibb; (ii) that as to Count III, Plaintiff lacked Article III standing to claim injunctive relief; (iii) Plaintiff failed to allege that he gave pre-suit notice to Defendants of his breach of warranty claim; and (iv) Plaintiff's claim for unjust enrichment failed for the national class for the same reason as his nationwide consumer fraud claim as alleged in Count I failed. Id. at *2.

The District Court's Decision

The Court granted the Defendants' motion to dismiss Counts I, III, and IV relative to the allegations concerning the putative national class of Plaintiffs. The Court explained that the main issue to be decided was the applicability of Bristol-Myers Squibb to the putative nationwide class action. In analyzing Bristol-Myers Squibb, the Court explained how the U.S. Supreme Court pointed out that a variety of interests must be considered in determining whether personal jurisdiction is present, including those of the forum state, the defendant, and the plaintiff. Id. at *3-4. However, the primary concern is the burden on the defendant. Id. at *4. Further, the Court opined that in addition to the practical problems of litigating in the out-of-state forum, it must consider "the more abstract matter of submitting to the coercive power of a State that may have little legitimate interest in the claims in question." Id. (internal quotation marks and citation omitted).

In response to Defendants' citation of Bristol-Myers Squibb, Plaintiff argued that his case was distinguishable since Bristol-Myers Squibb involved mass tort actions and not putative class actions, a point that was raised by U.S. Supreme Court Justice Sonia Sotomayor in her dissenting opinion in Bristol-Myers Squibb. Id. Acknowledging that the applicability of Bristol-Myers Squibb to this case was a "close question," the Court rejected Plaintiff's argument and held that "it is more likely than not based on the Supreme Court's comments about federalism that the courts will apply Bristol-Myers Squibb to outlaw nationwide class actions in a form, such as in this case, where there is no general jurisdiction over the Defendants." Id. at *5. Further, the Court cautioned that the issue of forum shopping is just as present in multi-state class actions as it is in mass torts actions. Id. Accordingly, to the extent that Counts I, III and IV sought to recover on behalf of out-of-state Plaintiff classes, the Court granted Defendants' motion to dismiss.

Implications For Employers

Although this case is outside of the workplace class action arena, its implications are highly relevant for employers facing nationwide workplace class action lawsuits that include state law claims. As one of the early cases to interpret the U.S. Supreme Court's Bristol-Myers Squibb decision from June 2017, the opinion in DeBernardis is instructive for businesses in terms of how they can argue that courts do not have jurisdiction to hear class actions involving state law claims of non-resident classes of plaintiffs. The fracturing of nationwide class actions minimizes the impact of these bet-the-company cases for employers, and allows them to attack and defend against such claims in a more manageable fashion.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Gerald L. Maatman Jr.
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions