In creating the federal judicial branch, the Framers of the US Constitution did not intend that courts would right every possible wrong. Article III authorizes federal courts to resolve “Cases” and “Controversies.” The US Supreme Court has interpreted that power to mean that civil-litigation plaintiffs must prove they suffered an “injury in fact,” which is concrete and particularized, and not speculative. We’ve discussed Article III standing jurisprudence here in numerous contexts, most frequently in consumer class actions targeting food labels or data-security breaches, areas where the ever-amorphous concept of “economic harm” is often alleged. A March 6, 2017 Seventh Circuit decision, Eike v. Allergan, Inc. et al., shot down an especially outlandish attempt to expand standing based on an alleged economic injury.
Ms. Eike purportedly represents thousands of other users of eye drops that treat glaucoma. The plaintiffs argue that the size of each individual drop violates state consumer-protection laws.
The plaintiffs don’t claim physical injury; they don’t argue that the drops are ineffective; and they don’t assert the companies misled purchasers about the dose size. The complaint simply accuses the drops of being needlessly large, and argues that smaller-sized drops would be more effective and cost less. The plaintiffs seek monetary damages as well as injunctive relief—a court order requiring manufacturers to alter their FDA-approved packaging and drug-delivery method.
In an August 15, 2016 order, Judge Staci M. Yandle of the US District Court for the Southern District of Illinois certified the suit as a class action without bothering to scrutinize the plaintiffs’ concocted theory of harm. The nine drug-company defendants appealed to the Seventh Circuit.
Only one month after oral argument in the case, the Seventh Circuit reversed Judge Yandle in an opinion written by Judge Richard Posner. In five pages of meandering yet persuasive legal reasoning, Judge Posner deployed an unusual analogy and cited only two court decisions in holding that Eike lacked Article III standing to sue.
Judge Posner summarized the plaintiffs’ theory of harm as one “based simply on dissatisfaction with a product … or with its price.” From there, he analogized the case to cat breeders who suggest to purchasers of pedigreed cats that they “feed the cats kibble during the day and Fancy Feast at night and buy a fountain for each cat because cats prefer to drink out of a fountain” (see photo above). Cat buyers unhappy with the price of the food or the fountain, Judge Posner posited, could not sue the breeder if it “made no representation [or] concealed no information.”
In response to the plaintiffs’ assertion that smaller eye drops would be more effective, the court noted the drop contained a tiny amount of active pharmaceutical ingredient. A smaller drop would thus deliver less medicine, rendering it less effective. Judge Posner did not directly address the plaintiffs’ argument that a smaller drop would be less expensive.*
Judge Posner summed up the Eike opinion by stating because “[y]ou cannot sue a company and argue only—’it could do better by us’—which is all [the plaintiffs] are arguing,” the plaintiff lacked standing to sue. The opinion vacated the class certification and ordered the district court to dismiss Eike’s suit with prejudice.
In spite of the brevity and somewhat whimsical approach of the Seventh Circuit’s opinion, the outcome is an important blow against “no-injury” class actions. At least one federal judge—the trial judge assigned to Eike—found merit in the argument that mere dissatisfaction with a product suffices for Article III injury in fact. What if the defendants in Eike were small businesses and lacked the financial means to appeal the class certification? An unmeritorious settlement likely would have left in place a profoundly flawed precedent and inspired Eike’s lawyers and others in the class-action bar to invent even more marginal theories of harm.
A contrary Seventh Circuit outcome would have also encouraged more regulation-by-litigation. The federal judiciary is not the appropriate branch of government for unhappy eye-drop purchases to voice their grievances. Judge Posner conveyed that message in Eike, urging class members to “take [their complaint] up with the FDA.”
*A March 24, 2016 decision in a copycat class action filed in the District of New Jersey, Cottrell v. Alcon Laboratories, specifically rejected the cost argument. In dismissing the suit on standing grounds, Judge Freda L. Wilson found the plaintiffs’ statements about the lower price of a hypothetical smaller eye-drop bottle speculative, especially in the context of the “complex and multi-factored” pricing of pharmaceuticals. Cottrell’s appeal is currently pending in the Third Circuit.
Also published by Forbes.com on WLF’s contributor page.