A federal judge, who ruled against Riddell, Inc. earlier this summer in a case involving its alleged claims that some of its helmets mitigate the risk of concussion, has ruled for Riddell after reconsidering that decision.
The court vacated its original decision, filed on June 18, 2015, because the 4th U.S. Circuit Court of Appeals issued the opinion In re GNC Corp., 789 F.3d 505 (4th Cir. 2015), which the court believed might have some bearing on its original decision.
The plaintiff in the litigation is Midwestern Midget Football Club, Inc. (Midwestern), a non-profit youth football organization operating in Kanawha County, West Virginia.
Riddell sells Revolution Helmets “at a market price reflective of its claim that they reduce the incidence of concussion in comparison with its own, earlier helmet designs and competitor helmets,” wrote the court. “Specifically, the Revolution Helmets were marketed as containing reduction technology that putatively reduced the incidence of concussions by up to 31 percent.”
Approximately 150 youth participate in Midwestern’s program every year. It supplies the helmets for these participants. Every year Midwestern purchases between 12 and 24 new Revolution Helmets for its participants, who are aged 14 years or younger.
Midwestern alleged that Riddell’s marketing claims were knowingly false. “Among other things, Midwestern contends that Riddell’s assertions were based upon a statistically unsound study paid for by Riddell and co-authored by a Riddell employee,” according to the court. “The study was publicly criticized by third-party scientists. Indeed, Midwestern alleges that scientific studies and other data of which Riddell was aware indicated that the Revolution Helmets made no material difference to concussion risk as compared to traditional helmets.”
On December 2, 2014, Midwestern sued Riddell on its own behalf, and that of a class of similarly situated consumers, via a single-count claim under the West Virginia Consumer Credit and Protection Act (WVCCPA). The putative class, as set forth in the amended class action complaint filed April 10, 2015, is defined as follows:
“All West Virginia residents who purchased a Riddell Revolution football helmet in the State of West Virginia during the period beginning four years prior to the date of filing of this Class Action Complaint through the present.”
Midwestern asserted that as a result of Riddell’s alleged “deceptive marketing, West Virginia consumers were exposed to Riddell’s misleading representations. As a result, Midwestern asserts that those same West Virginia customers who purchased Revolution Helmets at certain higher market prices reflecting their alleged concussion-reducing benefits would have, without the false representations, purchased alternative helmets at a lower market price.”
Riddell made five arguments in support of dismissal. First, it contends that the allegations in the operative pleading fail to show alleged marketing statements that were false or untruthful. Second, it asserts that Midwestern failed to demonstrate causation or reliance. Third, it claims Midwestern alleges no cognizable injury. Fourth, it asserts the operative pleading does not satisfy the rigors of Rule 9(b). Fifth, it asserts that Midwestern lacks standing to pursue its WVCCPA claim.
The court addressed the first four contentions together.
Midwestern pointed to numerous positions that Riddell allegedly took, which exaggerated the protections offered by its product. For example, “Riddell marketed the Revolution Helmets as reducing the risk of concussion in comparison with other helmets, and by up to 31 percent, when the Revolution Helmet did not in fact provide this benefit. Riddell knew these statements were false because, among other reasons, it was told so by impartial scientists and the flawed study upon which the concussion reduction statement was based was written in part by one of Riddell’s own employees.”
The court added that in addition to these statements, Midwestern quoted Riddell advertisements touting the concussion-reduction claims. “These allegations combine to allege a plausible basis for concluding that Riddell produced false advertising of the benefits of the Revolution Helmet in order to entice customers into purchasing the devices,” wrote the court. “This ground for dismissal thus lacks merit.”
Next, the court examined Riddell’s claims that Midwestern failed to allege causation or reliance. It reviewed the operative pleading:
“Riddell sells Revolution Helmets at a market price reflecting marketing claims that the helmets reduce the incidence of concussion in comparison with its own, earlier helmet designs and helmets of competitors.
“Unfortunately, this marketing was successful. Plaintiff and others purchased Revolution Helmets at market prices reflecting this illusory benefit of a reduced risk of concussion in comparison with other helmets.”
The pleading continued:
“As a result of Riddell’s deceptive marketing, consumers in West Virginia were exposed, and continue to be exposed, to Riddell’s misleading representations and purchased Revolution Helmets at market prices reflecting these helmets’ alleged concussion reducing benefits rather than at the lower market price that would have existed with truthful information about the Revolution Helmet product. All of these West Virginia consumers who purchased a Revolution Helmet have been injured by Riddell’s wrongful conduct through the inflated market price.
“Because Plaintiff is a person, and suffered a loss of money as a result of purchasing Revolution Helmets at market pricing reflecting the unfair and deceptive marketing of an illusory concussion-reducing benefit, Plaintiff has standing to bring an action against Riddell challenging Riddell’s unlawful conduct.”
Midwestern went on to suggest that Riddell “was able to demand a higher market price for the Revolution Helmets by falsely claiming the devices reduced the rate of concussive injuries experienced with traditional helmets,” according to the court. “Midwestern lost money by purchasing Revolution Helmets at the inflated price — believing Riddell’s claims of effectiveness — instead of purchasing the lower-priced traditional helmets that were not represented as having the enhanced concussion protection. Midwestern concedes expert testimony will be required to establish the but-for market price. It need not, however, offer such proof in its pleading.”
The court, in denying Riddell’s motion for summary judgment, concluded that the allegations “cross the plausibility threshold for causation, reliance, and cognizable injury. Consequently, these grounds for dismissal lack merit.”
In re GNC
In In re GNC, consumers who purchased joint health supplements instituted class actions in multiple states, alleging various supplement manufacturers violated certain state consumer protection laws by falsely touting the effectiveness of the supplements. The court of appeals concluded that “marketing statements that accurately describe the findings of duly qualified and reasonable scientific experts are not literally false . . . .” Id. at 509.
Consequently, Midwestern abandoned its claim of literal falsity in light of In re GNC. Instead, it maintained that its “claim for misleading advertising in respect to youth football helmets is untouched by In re GNC.”
The court continued: “The difficulty with Midwestern’s assertion of a misleading advertising claim, as pointed out at length in Riddell’s briefing, is that the central allegations of the operative pleading are focused on a claim of literal falsity and not misleading advertising. To the extent Midwestern desires to pursue a claim of misleading advertising, it is incumbent upon it to plead allegations in satisfaction of the plausibility standard attached to Federal Rule of Civil Procedure 12(b)(6).”
Thus, the court granted Riddell’s motion to dismiss, while granting leave to Midwestern to file an amended pleading.
Midwestern Midget Football Club, Inc. v. Riddell, Inc., S.D.W.V.; Civil Action No. 2:15-00244, 2015 U.S. Dist. LEXIS 104426; 8/10/15
Attorneys of Record: (for plaintiff) Marc R. Weintraub, Ryan McCune Donovan, Lead Attorneys, Bailey & Glasser, Charleston, WV; Michael L. Murphy, Lead Attorney, Bailey & Glasser, Washington, DC. (for defendant) John H. Tinney, Jr., Lead Attorney, The Tinney Law FirM, Charleston, WV; Michael C. Lynch, Sung W. Kim, Lead Attorney, Pro Hac Vice, Kelley Drye & Warren, New York, NY.
