Plaintiff alleged that Chattem’s Dexatrim, a weight loss
supplement, contains hexavalent chromium, which is a dangerous chemical,
contrary to Dexatrim’s marketing as safe, healthy, and fit for consumption. The court dismissed the complaint.
Dexatrim’s website claims that the product is effective, in
part, because of the mineral chromium, which purportedly promotes "weight
loss," "kick [starts] metabolism," and "naturally [breaks]
down carbs and fat while helping you maintain a desire to stay active while
dieting." Arroyo alleged that
Chattem implied Dexatrim's safety through packaging that states that the
product (1) should be consumed; (2) is the "# 1 Pharmacist Recommended
Appetite Suppressant"; (3) is "Ephedra Free"; and (4) contains
only the listed ingredients. However, Chattem allegedly failed to disclose that
Dexatrim’s chromium comes in the form of dangerous hexavalent chromium, instead
of the trivalent chromium naturally found in many fruits and vegetables. Hexavalent chromium has been linked to lung
cancer, emphysema, and dermatitis when ingested by humans by, among others, the
CDC, OSHA, and California’s EPA. It’s
also on California’s list of "Chemicals Known to the State to Cause Cancer
or Reproductive Toxicity."
Hexavalent chromium is, allegedly, not recommended for human consumption
in any quantity.
Arroyo alleged that Chattem’s failure to disclose was
material, and that she wouldn’t have bought the product had she known that
Dexatrim contained dangerous hexavalent chromium. She brought the usual California claims.
Chattem argued that Arroyo lacked constitutional standing,
but the court disagreed. Under California law, the economic loss occasioned by
buying something you wouldn’t have bought or paying more than you would have
paid had you known the truth is sufficient economic injury and satisfies
Article III.
Arroyo still lost.
First, Rule 9(b) applied because all her claims were grounded in
accusations of fraudulent conduct, even though her California claims didn’t
have all the elements of common-law fraud.
Arroyo alleged that Chattem’s concealment was deliberate and done with
the intent to induce sales, causing reasonable reliance by consumers and
resulting harm—that’s like common-law fraud.
And the pleadings failed Rule 9(b)’s particularity
requirement. Though the complaint
specified the content of the affirmative misrepresentations, the content of the
omission, and why the combination was false or misleading, that wasn’t enough. It still failed to allege with particularity
why this was material or how Arroyo relied on the affirmative
misrepresentations and omissions.
On materiality, Arroyo alleged that the presence of
hexavalent chromium was material because it made Dexatrim unsafe, and because
she wouldn’t have bought it if she’d known that it contained any level of
hexavalent chromium. But most of the
allegations were of generalized safety misrepresentations, not
misrepresentations that the product didn’t contain hexavalent chromium. These arguably created the inference that the
product was safe. Arroyo didn’t allege
that hexavalent chromium at the level present in Dexatrim made safety
statements false or misleading. “Many foods and drugs on the market are not one
hundred percent safe, and general allegations that a product's safety is less
than one hundred percent do not give rise to a lawsuit for fraud. If it did,
then every consumer would be able to bring a suit for economic injury anytime
the consumer became aware of an additional, unlabeled product risk after his or
her purchase.”
The studies she cited did not show that any amount of
hexavalent chromium would impact safety enough to affect a purchasing decision;
they evaluated outcomes at various exposure levels. This was especially awkward because Arroyo
disclaimed increased risk of harm as an injury, even though her economic loss
stemmed from the alleged risk of injury she incurred. “The rationale underlying
financial loss cases, that a purchaser should receive what he paid for, seems
diminished where the purchaser claims no injury based on an increased risk of
harm while at the same time claiming that an increased risk of harm is the
reason why the purchaser did not receive the benefit of his bargain.”
The court didn’t consider Arroyo’s theory that the failure
to disclose was material because she wouldn’t have bought the product if
there’d been disclosure because she couldn’t show reliance. She didn’t specify the exact claims on which
she relied before purchase. She also
didn’t allege that she knew about the dangers of hexavalent chromium from any
source before purchase. Thus, she
couldn’t show that, even if she’d read the label, she relied on the absence of
hexavalent chromium. Further, there’s no
regulation requiring disclosure of the presence of hexavalent chromium.
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