A federal judge from the Southern District of West Virginia has denied Riddell, Inc.’s motion to dismiss the second amended complaint filed by a non-profit youth football organization, which claimed that the helmet maker violated the West Virginia Consumer Credit and Protection Act (WVCCPA) when it promised that its Revolution Helmets could protect football players from concussions.
In so ruling, the court found that the “operative complaint sets forth the plaintiff’s claim with the particularity required by Federal Rule of Civil Procedure 9(b).”
The plaintiff in the litigation is Midwestern Midget Football Club, Inc. (Midwestern), a non-profit youth football organization operating in Kanawha County, West Virginia.
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 initially alleged that Riddell’s marketing claims about its Revolution Helmets 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.”
Midwestern sued in December of 2014 and Riddell moved to dismiss. Last fall, the court granted Riddell’s motion to dismiss, without prejudice, concluding that the first amended complaint failed to state a claim because “marketing statements that accurately describe the findings of duly qualified and reasonable scientific experts are not literally false . . . .” In re GNC Corp., 789 F.3d 505, 509 (4th Cir. 2015).
The court granted Midwestern leave to file an amended pleading stating an alternative theory, asserted only in its briefing, that Riddell’s marketing statements, while literally true, were misleading to consumers in violation of the WVCCPA.
Riddell again moved to dismiss, offering five arguments in support of its motion. First, it argued that the operative complaint fails to plead a plausible claim under WVCCPA § 46A-6-106(a), because Midwestern continues to allege that Riddell’s advertisements were false rather than that those advertisements were literally true, but misleading. Second, it claimed that the facts pleaded by Midwestern fail to demonstrate causation or reliance. Third, it argued Midwestern alleges no cognizable injury. Fourth, it claimed that plaintiffs have failed to satisfy the heightened pleading requirements for fraud claims under Rule 9(b). Fifth, it argued that the operative complaint fails to adequately state a claim for unjust enrichment.
To prove a claim pursuant to WVCCPA section 46A-6-106(a) a plaintiff must demonstrate: “(1) unlawful conduct by a seller; (2) an ascertainable loss on the part of the consumer; and (3) proof of a causal connection between the alleged unlawful conduct and the consumer’s ascertainable loss.” White v. Wyeth, 227 W. Va. 131, 140, 705 S.E.2d 828, 837 (2010). Additionally, “where the deceptive conduct or practice alleged involves affirmative misrepresentations, reliance on such misrepresentations must be proven in order to satisfy the requisite causal connection.” Id.
The court continued: “Midwestern’s first amended complaint was dismissed by the court because its allegations, resting on a theory that Riddell’s marketing claims citing the Pittsburgh study were literally false, were insufficient in light of the Fourth Circuit’s holding that ‘marketing statements that accurately describe the findings of duly qualified and reasonable scientific experts are not literally false . . . .’ Id. at 509. Consequently, Midwestern has abandoned its claim of literal falsity, electing instead in the operative complaint to allege that advertising and public statements made by Riddell were misleading to consumers. In particular, the operative complaint alleges that advertisements which cited the Pittsburgh study and suggested that Riddell’s youth helmets provided concussion reduction benefits were misleading because the youth helmets were not examined in the study.
Riddell objected, first, “to the plaintiff’s newly-asserted theory that the marketing statements at issue were misleading rather than literally false. According to Riddell, this theory is factually inconsistent with the plaintiff’s prior complaints and should be rejected on that basis. Second, Riddell asserts that Midwestern fails to identify a statement as ‘literally true,’ but nevertheless misleading, as described by In re GNC. Finally, Riddell argues that the operative complaint contains only bare allegations that the marketing statements based on the Pittsburgh study were misleading, without any explanation of how those statements may have misled Midwestern.”
The court quickly dispensed with the first argument, noting that “even assuming that the allegations in the first amended complaint and the operative complaint are factually inconsistent, allegations made in a superseded complaint are not treated as judicial admissions.” See 188 LLC v. Trinity Industries, Inc., 300 F.3d 730, 736 (7th Cir. 2002).
The judge also found that Riddell “reads too much into the In re GNC court’s observation that a false advertising claim must allege either that a statement made by the defendant was false or ‘literally true but misleading.’” Elaborating on this, the court noted that the “central allegation, that Riddell used the Pittsburgh study to suggest a safety benefit for youth Revolution Helmets even though it was a different class of helmets that was subject to testing, provides enough basis to plausibly support a claim for false advertising.”
The judge also sided with the plaintiff on the last argument, concluding that the operative complaint sets forth the plaintiff’s claim with the particularity required by Rule 9(b). The operative complaint alleges Midwestern purchased Revolution Helmets on an annual basis. It asserts that the Revolution Helmets were first offered for sale in 2002, with concussive reduction technology claims made through a number of advertising channels at that time and up to the present day. … The court concludes that the operative complaint adequately states a claim under the WVCCPA. Midwestern has plausibly alleged that it suffered a loss due to Riddell’s misleading statements respecting the youth helmets it purchased. These allegations include facts sufficient to establish causation, reliance, and cognizable injury and to satisfy the particularity requirements of Rule 9(b).”
Midwestern Midget Football Club Inc. v. Riddell, INC.; S.D.W.V.; Civil Action No. 2:15-00244, 2016 U.S. Dist. LEXIS 79005; 6/17/16
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
