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Cottrell v. Alcon Laboratories

United States Court of Appeals, Third Circuit

October 18, 2017


          Argued: January 24, 2017

         On Appeal from the United States District Court for the District of New Jersey (D.C. Civil Action No. 3-14-cv-05859) District Judge: Honorable Freda L. Wolfson

          LEAH M. NICHOLLS, ESQ. [ARGUED] Public Justice, P.C. RICHARD S. CORNFELD, ESQ. Law Office of Richard S. Cornfeld JOHN G. SIMON, ESQ. KEVIN M. CARNIE, JR., ESQ. The Simon Law Firm, P.C. JEFFREY W. HERRMANN, ESQ. Cohn Lifland Pearlman Herrmann & Knopf LLP Park BRIAN S. WOLFMAN, ESQ. Counsel for Appellants

          ROBYN E. BLADOW, ESQ. [ARGUED] AUSTIN C. NORRIS, ESQ. Kirkland & Ellis LLP Counsel for Appellee Pfizer, Inc.

          LIZA M. WALSH, ESQ. ELEONORE OFOSU-ANTWI, ESQ. Walsh Pizzi O'Reilly & Falanga LLP Counsel for Appellees Pfizer, Inc., Valeant Pharmaceuticals International, Inc., Bausch & Lomb Incorporated, and Aton Pharma, Inc.

          ROGER B. KAPLAN, ESQ. Greenberg Traurig, LLP GREGORY E. OSTFELD, ESQ. Greenberg Traurig, LLP LORI G. COHEN, ESQ. Greenberg Traurig, LLP Counsel for Appellees Alcon Laboratories, Inc., Alcon Research Ltd., Sandoz Inc. and Falcon Pharmaceuticals, Ltd.

          CHARLES B. CASPER, ESQ. Montgomery McCracken Walker & Rhoads, LLP LibertyView, STEPHEN G. STRAUSS, ESQ. TIMOTHY J. HASKEN, ESQ. Bryan Cave LLP Counsel for Appellees Merck & Co., Inc., Merck Sharp & Dohme Corp., and Prasco, LLC.

          ROBERT J. MCGUIRL, ESQ. Law Offices Of Robert J. McGuirl, LLC Counsel for Appellees Allergan, Inc., Allergan USA, Inc., and Allergan Sales, LLC

          JAMES P. MUEHLBERGER, ESQ. LORI A. MCGRODER, ESQ. Shook Hardy & Bacon LLP Counsel for Appellees Allergan, Inc., Allergan USA, Inc., Allergan Sales, LLC, Valeant Pharmaceuticals International, Inc., Bausch & Lomb Incorporated, and Aton Pharma, Inc.

          WALTER H. SWAYZE, III, ESQ. MEGAN E. GROSSMAN, ESQ. KYLE G. EVERLY, ESQ. Segal Mccambridge Singer & Mahoney, Ltd. JOHN M. KILROY, JR., ESQ. Polsinelli PC J. STANTON HILL, ESQ. Polsinelli PC Counsel for Appellee Akorn, Inc.

          JULIE NEPVEU, ESQ. AARP Foundation Litigation Counsel for Amicus AARP & AARP Foundation, in support of Appellants

          RICHARD A. DEAN, ESQ. Tucker Ellis Daniel J. Kelly, ESQ. Tucker Ellis LLP Counsel for Amicus Generic Pharmaceutical Association, in support of Appellees

          JEFFREY S. BUCHOLTZ, ESQ. PAUL A. MEZZINA, ESQ. King & Spalding Counsel for Amicus Chamber of Commerce of the United States of America, American Tort Reform Association, Pharmaceutical Research and Manufacturers of America, and National Association of Manufacturers in support of Appellees

          ANITA HOTCHKISS, ESQ. Goldberg Segalla Counsel for Amicus Product Liability Advisory Council, in support of Appellees

          Michael J. Quirk, ESQ. Williams Cuker Berezofsky, LLC National Association of Consumer Advocates

          Before: CHAGARES, RESTREPO, and [*] ROTH, Circuit Judges



         In this putative class action, consumers of prescription eye medication allege that manufacturers and distributors of the medication packaged it in such a way that forced them to waste it, violating the consumer protection statutes of their home states. The District Court dismissed the entire action for lack of jurisdiction, finding the consumers' allegations of injury in fact insufficient to confer standing. For the reasons that follow, we will reverse the dismissal, and remand the case for further consideration.


          Defendants are manufacturers and distributors of generic and brand-name prescription eye drop medications that are approved by the Food and Drug Administration ("FDA") to treat serious medical conditions such as glaucoma, a leading cause of blindness.[2] Defendants sell these prescription medications in fluid form and package the fluid in plastic bottles. Bottles are pre-packaged with a fixed volume of medication (e.g., 5.0 mL) sold at set prices. Labeling on the bottles does not indicate how many doses or days of treatment a patient will be able to extract from the bottle.

         Medication is dispensed from the plastic bottles into patients' eyes in drop form. The dimensions of the bottle's dropper tip dictate the size of the drop dispensed from that bottle. In effect, the larger the bottle dropper tip, the larger the drop dispensed. There is no reasonable way for a patient to instill less than one full drop into his or her eye.

         A plethora of scientific research conducted over the last four decades has examined the drop size of Defendants' medications; some of the studies conducted were, in fact, sponsored and published by Defendants. According to these studies, a normal adult's inferior fornix - the area between the eye and the lower eyelid - has a capacity of approximately 7 to 10 microliters ("µLs") of fluid.[3] If a drop of medication exceeding that capacity is placed into an adult patient's eye, excess medication is expelled. Expelled medication may run down a patient's cheek, providing no pharmaceutical benefit to the patient whatsoever. This medication is "entirely wasted" by the patient. App. 182. Expelled medication also may flow into a patient's tear ducts and move into his or her bloodstream. Medication entering a patient's bloodstream may increase a patient's risk of experiencing certain harmful systemic side effects.

         These studies conclude that eye drops should be 5 to 15 µLs in order to maximize the amount of the medication entering the inner eye - the site of action for the medication. Drop sizes within this range minimize overflow "waste" and also minimize the risk of side effects.

         Despite the scientific consensus on drop size, all of Defendants' products at issue emit drops that are considerably larger than 15 µLs. In fact, a 2008 study showed that each Defendant's drop size was more than two to three times the 15 µL maximum recommended size. Several Defendants sold products with drop sizes of 50 µL. To put these data in perspective, at least half of every drop of medication dispensed from any one of Defendants' product bottles goes to waste on a patient, and may put the patient at risk of side effects.

          Plaintiffs in this litigation are individuals who paid for Defendants' eye drop medication. They allege that Defendants have control over the design and dimensions of the bottle dropper tip, and thus could reduce the size of drops emitted from their product bottles, but have chosen not to do so. Plaintiffs do not purport to have personal knowledge as to why no defendant has reduced their products' drop sizes. However, Plaintiffs include in the Amended Complaint allegations that senior executives at Defendant Alcon explained to a consultant working with them that they were unwilling to reduce drop sizes because if they did, the company "would sell less product and make less money." App. 244.

         Plaintiffs aver that Defendants' practices of selling medication in bottles that emit such large drops caused them "substantial" economic injury. App. 214. Specifically, Plaintiffs allege, "If the sizes of Defendants' prescription eye drops were limited to the maximum effective size of 15 µL . . . the medication in the bottles would last longer and [Plaintiffs] would spend substantially less on their therapy than they do with larger, substantially wasted, eye drops." App. 214. Plaintiffs illustrated this point in their Amended Complaint with an example provided in a 2008 scientific study:

[T]he average drop size for Allergan's glaucoma drug Alphagan P . . . in a 5 mL bottle was 43 μL . . . . At the recommended dose of one drop in each affected eye three times daily, a 5 mL bottle would last a patient with bilateral glaucoma 20 days. That patient would go through 18.25 bottles in a year. In July 2013, a 5 mL bottle of Alphagan P . . . cost $104.99. A year's course of treatment would therefore cost approximately $1, 915. However, approximately 65% of the medication, the amount over 15 μL, would be wasted. If the drops had been only 15 μL, the patient would have needed only 6.46 bottles a year, or 7.0 bottles if the drops had been 16 μL .... The unneeded medication would cost the patient more than $1, 100 a year.

App. 215-216 (emphasis added). Plaintiffs also quantified their individual economic injuries in charts attached to the Amended Complaint.

         Plaintiffs claim they could not have avoided these economic injuries; they were "compelled] [by Defendants' practices] to spend more money on their therapy than if the drops were 15 µL." App. 214. They had no non-pharmaceutical alternative treatments for their conditions. And there were no alternative products to Defendants'; "all prescription eye drops are substantially larger than 15 µL and therefore lead to wastage." App. 217. Their only alternative was to forgo treatment and risk blindness or worsening eyesight.


         In September 2014, Plaintiffs filed a putative class action complaint, on behalf of themselves and other similarly situated parties, in the United States District Court for the District of New Jersey. Plaintiffs asserted violations of the consumer protection laws of their respective home states: the New Jersey Consumer Fraud Act ("NJCFA"), N.J.S.A. § 56:8-1, et seq.; the California Unfair Competition Law ("UCL"), Cal. Bus. Prof. Code § 17200, et seq.; the Florida Deceptive and Unfair Trade Practices Act ("FDUTPA"), Fla. Stat. § 501.201, et seq.; the Illinois Consumer Fraud Act ("ICFA"), 815 ILCS 505/1, et seq.; the North Carolina Unfair and Deceptive Trade Practices Act ("NCUTDPA"), N.C. G.S. § 75-1.1, et seq.; and the Texas Deceptive Trade Practices Act ("DTPA"), Tex. Bus. & Com. Code § 17.41, et seq. Plaintiffs claimed Defendants' practices in manufacturing and selling prescription eye drop medication violated the statutes' prohibitions on unfair or unconscionable trade practices. The District Court dismissed Plaintiffs' original complaint for lack of standing, without prejudice to Plaintiffs' ability to amend the complaint and cure the standing deficiencies.

         In June 2015, Plaintiffs filed an Amended Complaint, asserting claims of unfair or unconscionable practices under the same six state consumer protection statutes.[4] Plaintiffs supported their allegations of unfair or unconscionable practices with: (a) scientific literature opining on costs savings occasioned by utilizing smaller drop sizes; and (b) charts showing each Plaintiff's expenses. The charts detailed

         Plaintiffs' medication purchases and the out-of-pocket expenses they incurred for their purchases. Using these charts and information about each product's drop size, Plaintiffs calculated their total out-of-pocket payments on "wasted" medication. These totals ranged from a few dollars to a few hundred dollars.

         In August 2015, Defendants moved to dismiss Plaintiffs' Amended Complaint for lack of standing, federal preemption, and failure to state a claim. The District Court granted Defendants' motions, finding that Plaintiffs had not pleaded an injury in fact necessary to confer standing. As a result, the court did not reach Defendants' arguments on preemption and the sufficiency of Plaintiffs' claims under Federal Rule of Civil Procedure 12(b)(6). Plaintiffs then filed this timely appeal.


         The District Court had jurisdiction pursuant to the Class Action Fairness Act ("CAFA"), 28 U.S.C. § 1332(d), because at least one member of the Plaintiff class is diverse from at least one of the Defendants, the putative class is composed of at least 100 people, and the amount in controversy exceeds five million dollars. We have jurisdiction over the District Court's dismissal of the case pursuant to 28 U.S.C. § 1291.

         We exercise plenary review over a dismissal for lack of standing. In re Schering Plough Corp. Intron/Temodar Consumer Class Action, 678 F.3d 235, 243 (3d Cir. 2012).


         Article III of the United States Constitution limits the power of the federal judiciary to "cases" and "controversies." U.S. Const. art. III. For a federal court to exercise jurisdiction under Article III, plaintiffs must allege - and eventually prove - that they having "standing" to pursue their claims. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992). The doctrine of standing emerged from "the traditional understanding of a case or controversy" in order "to ensure that federal courts do not exceed their [constitutional] authority" by "unsurp[ing] the powers of the political branches." Spokeo, Inc. v. Robins, 136 S.Ct. 1540, 1547 (2016) (quoting Clapper v. Amnesty Int'l USA, 133 S.Ct. 1138, 1146 (2013)). "The doctrine limits the category of litigants empowered to maintain a lawsuit in federal court to seek redress for a legal wrong." Id.

         The plaintiff, "as the party invoking federal jurisdiction, " bears the burden of establishing the minimal requirements of Article III standing: "(1) . . . an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision."[5] Id. In assessing whether a plaintiff has carried this burden, we separate our standing inquiry from any assessment of the merits of the plaintiff's claim. To maintain this fundamental separation between standing and merits at the dismissal stage, we assume for the purposes of our standing inquiry that a plaintiff has stated valid legal claims. Info. Handling Servs., Inc. v. Defense Automated Printing Servs., 338 F.3d 1024, 1029 (D.C. Cir. 2003) (citing Warth v. Seldin, 422 U.S. 490, 500 (1975)). While our standing inquiry may necessarily reference the "nature and source of the claim[s] asserted, " Warth, 422 U.S. at 500, our focus remains on whether the plaintiff is the proper party to bring those claims, The Pitt News v. Fisher, 215 F.3d 354, 360 (3d Cir. 2000); White Tail Park, Inc. v. Stroube, 413 F.3d 451, 460-61 (4th Cir. 2005).


         This case centers on the "[f]irst and foremost" of the three standing elements, injury in fact. Spokeo, 136 S.Ct. at 1547 (quoting Steel Co. v. Citizens for Better Env't, 523 U.S. 83, 103 (1998)). The purpose of the injury-in-fact requirement, the Supreme Court has explained, is "to distinguish a person with a direct stake in the outcome of a litigation - even though small - from a person with a mere interest in the problem." United States v. Students Challenging Regulatory Agency Procedures (SCRAP), 412 U.S. 669, 689 n.14 (1973). Put differently, the requirement serves to filter out those "with merely generalized grievances" who are "bringing suit to vindicate an interest common to the entire public." Friends of the Earth, Inc. v. Gaston Copper Recycling Corp., 204 F.3d 149, 156 (4th Cir. 2000). The injury-in-fact requirement is "very generous" to claimants, demanding only that the claimant "allege[ ] some specific, 'identifiable trifle' of injury." Bowman v. Wilson, 672 F.2d 1145, 1151 (3d Cir. 1982) (quoting SCRAP, 412 U.S. at 686-90 & 689 n.14). It "is not Mount Everest." Danvers, 432 F.3d at 294.

         To allege injury in fact sufficiently, a plaintiff must claim "that he or she suffered 'an invasion of a legally protected interest' that is 'concrete and particularized' and 'actual or imminent, not conjectural or hypothetical.'" Spokeo, 136 S.Ct. at 1548 (quoting Lujan, 504 U.S. at 560). Typically, a plaintiff's allegations of financial harm will easily satisfy each of these components, as financial harm is a "classic" and "paradigmatic form[]" of injury in fact. Danvers, 432 F.3d at 291, 293. Indeed, we have explained that where a plaintiff alleges financial harm, standing "is often assumed without discussion." Id. at 293; see also Carter v. HealthPort Techs., LLC, 822 F.3d 47, 55 (2d Cir. 2016) ("Any monetary loss suffered by the plaintiff satisfies [the injury-in-fact] element; '[e]ven a small financial loss' suffices." (quoting Nat. Res. Def. Council, Inc. v. U.S. Food & Drug Admin., 710 F.3d 71, 85 (2d Cir. 2013))); Cent. Ariz. Water Conservation Dist. v. U.S. E.P.A., 990 F.2d 1531, 1537 (3d Cir. 1993) ("Pecuniary injury is clearly a sufficient basis for standing." (internal quotation marks and citation omitted)).

         Although the District Court provided a detailed recitation of standing law in its opinion, including the components of injury in fact, it did not apply those individual components to Plaintiffs' allegations. Rather, it framed its injury-in-fact analysis around broader principles and theories of standing, as did the parties in their briefing to this Court. This approach has some persuasive appeal. But where the court or litigants cast aside the essential components of injury in fact in favor of more generalized, abstract discussion, they risk improperly, if ...

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