Friday, March 23, 2012

Class plaintiff need not attach copies of actual ads to complaint

Overton v. Bird Brain, Inc., 2012 WL 909295 (C.D.Cal.)
Bird Brain makes Firepot Fuel Gel, a pourable gel fuel used with firepots and other decorative lighting devices.  Overton alleged that the gel burns with an almost invisible flame, so if a user pours more into a seemingly empty firepot, the gel in the bottle can suddenly ignite, causing a “vapor flash fire” that can cause serious bodily injury.  Overton further alleged that Bird Brain knew this but failed to provide appropriate warnings: the product’s safety data sheet explicitly notes that the flame is almost invisible, and Bird Brain is a defendant in two personal injury lawsuits from resulting fires.  The complaint also alleged injuries caused by similar gel products, consumer complaints on, an Illinois AG investigation, and a NY law banning such gels, all contributing to Bird Brain’s knowledge.  Bird Brain allegedly misrepresented the gel’s safety in a recent “Message to Customers” that stated, “Fuel Gel products are safe, with an exemplary track record built over years of consumer experience nationwide.”  Though Bird Brain issued a limited recall, Overton alleged that it was limited to certain class members, offered illusory benefits, didn’t provide appropriate disclosure, and didn’t get the product off the market.
Overton further alleged that, had she known of the dangerous explosiveness of the product, she never would have purchased the gel, and brought claims on behalf of a putative class for violation of California’s UCL, FAL, and CLRA.
The court rejected Bird Brain’s stock standing objection because economic injury counts as injury in fact.  Overton “is stuck with Fuel Gel she cannot use … for fear of third degree burns…. Plaintiff would like her money back for a product deemed unsafe and unusable.”  This was injury in fact.
Bird Brain also argued that the claims were moot because of a voluntary recall and refund program allowing consumers to return unused bottles, and because retailers have been told to stop selling the product and remove it from their shelves. The court declined to rule on this argument at this point in the case, because, taking plaintiff’s allegations as true, it wasn’t clear as a matter of law that the recall was satisfactory.
Next came reliance.  The court found that “[u]nfortunately, the standard for pleading reliance in a fraud case alleging omissions is far from uniform in this Circuit.”  Overton cited cases holding that a presumption of reliance is appropriate in omission cases.  Bird Brain cited cases requiring pleading omissions with specificity, including where the omitted information should or could have been revealed, along with representative samples of ads.  But other cases have found those requirements too specific.  The court chose flexibility.  The allegations here were specific enough to give Bird Brain notice of the alleged fraud.

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