Friday, October 02, 2020

Georgia Supreme Court revives some false advertising claims against sperm bank

Norman v. Xytex Corp., --- S.E.2d ----, 2020 WL 5752325, S19G1486 (Ga. Sept. 28, 2020)

Reversing the court of appeals, the Georgia Supreme Court allows plaintiffs to bring false advertising claims against a sperm bank that supplied allegedly falsely advertised sperm. Even though Georgia rejects any damages in tort “that necessarily presume that life itself can ever be an injury,” that was not the plaintiffs’ sole claim. The Normans alleged that Xytex “sold them human sperm under false pretenses about the characteristics of its donor, and that the child conceived with that sperm now suffers from a variety of impairments inherited from the sperm donor.” Result: “claims arising from the very existence of the child are barred, but claims arising from specific impairments caused or exacerbated by defendants’ alleged wrongs may proceed, as may other claims that essentially amount to ordinary consumer fraud.”

Xytex allegedly misrepresented the donor’s educational, medical, and criminal history, while representing  that it carefully screened the personal health, criminal history, and family history of all donors; that donors were put through rigorous physical exams and interviews to confirm the accuracy of the information donors provided; and that because of its thorough screening process, fewer than five percent of candidates became donors. Xytex also represented that it required sperm donors to update their medical history every six months; that the company would update the donors’ profiles with any new information; and that, if the company received “medically significant” information about a donor, it would notify patients who used that donor’s sperm.  Xytex promoted the donor as one of its “best” sperm donors “on account of his profile in which he represented that he was a Ph.D. candidate with an IQ of 160 and had no history of mental health issues or criminal activity.”

Xytex’s employee allegedly told the donor on his initial visit that intelligent donors with high levels of education were more popular sperm donors and encouraged him to exaggerate his IQ and education. Before he began selling his sperm to Xytex, he had been hospitalized for mental health treatment and diagnosed with psychotic schizophrenia, narcissistic personality disorder, and significant grandiose delusions. The child conceived with his sperm has various medical conditions, including “suicidal and homicidal ideations, requiring multiple periods of extended hospitalizations.”

Under Georgia law, damages that “categorize life as the injury” are not cognizable. Claims for the expense of raising a child—even one with profound disabilities requiring expensive care—are not cognizable because such damages would have to be premised on the child’s life as the injury. However, claims for tortious injury sustained prenatally are cognizable, and sometimes that’s true even for pre-conception injuries.

Some of the damages claimed by plaintiffs were cognizable; others weren’t. The core theory that they wouldn’t have purchased sperm from the donor had Xytex revealed the true facts was “a classic wrongful birth claim because the necessary and direct result of not buying Donor #9623’s sperm is that A.A. would not exist”; this was barred. [This strikes me as inconsistent with allowing some claims for pre-conception injuries, but I guess genetic determinism might do the work here of distinguishing those if you handwave causation problems (that is: a person who didn’t have teratogenic chemical exposure before conceiving a child also might not have had sex at the same time or with the same person, or the specific gametes might have been different, but they can still make a claim under Georgia law for damage done by that chemical exposure).]

In addition, other claims deriving from the child’s life are also barred, such as the costs of pregnancy and raising the child. However, some damages would be available as long as there was sufficient proof of causation other than the child’s life. Some damages might stem from plaintiffs’ alleged reliance on Xytex’s representations that it screened the medical and mental health history of its donors and that it would notify patients who used donor sperm if the company received any “medically significant” information about the donor.  “[W]e must accept at this procedural stage that there may exist some evidence that the Normans relied on Xytex’s representations in failing to obtain a diagnosis or treatment sooner.” That could have “exacerbated pain and other symptoms suffered” by the child.

There could also be damages “for the difference in price between the cost of the sperm they received and the fair market value of the sperm that Xytex told them they were getting.”  Also, the consumer protection claim “does not depend on life as an injury.” Georgia’s Fair Business Practice Act prohibits unfair or deceptive trade practices that harm consumers. “An individual bringing suit under the FBPA may seek injunctive relief and general damages, as well as exemplary damages for intentional violations of the Act.” Given the alleged misrepresentations about the quality of Xytex’s product (sperm) and services (screening process) to the public, plaintiffs may have suffered cognizable injury—at a minimum, paying more for the sperm than it was worth. [Was it worth zero dollars? Could it have been worth negative $100,000?] And they might be able to enjoin Xytex, or get punitive damages based on the allegations that a Xytex employee’s “encouraged, if not aided,” the donor to falsify his background.  


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