More Than an Eyedropper’s Worth of Analysis of Standing

Cottrell v. Alcon Laboratories, 874 F.3d 154 (3d Cir. 2017).  Eye drops can be helpful to many people, but putting drops in one’s eyes is unpleasant at many levels.  One of those levels– that prescription eye drop medication is delivered in drop sizes that are too large, resulting in large portions of each drop being wasted by patients–  was the subject of this case.

Consumers brought a class action against manufacturers and distributors of prescription eye drops, alleging that they deliberately marketed eye drops with droppers that produce excessively large drops, in order to maximize the sellers’ profits.  Plaintiffs asserted that this was an unfair or unconscionable commercial practice, in violation of the consumer protection statutes of a number of states, including New Jersey’s Consumer Fraud Act, N.J.S.A. 56:8-1 et seq.  They alleged economic injury because “[i]f the sizes of Defendants’ prescription eye drops were limited to the maximum effective size … the medication in the bottles would last longer and [Plaintiffs] would spend substantially less on their therapy than they do with larger, substantially wasted, eye drops.”

The District Court dismissed the case for lack of standing, due to lack of injury in fact.  Plaintiffs appealed, and the Third Circuit, by a 2-1 vote, reversed in an opinion by Judge Restrepo.  Judge Chagares joined in that opinion, while Judge Roth dissented.

The panel “exercise[d] plenary review over [the] dismissal for lack of standing.”  Proceeding from the definition of “injury in fact” laid out in Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016), Judge Restrepo stated that a plaintiff must allege”that he or she suffered an invasion of a legally protected interest that is concrete and particularized and actual or imminent, not conjectural or hypothetical.”  The term “legally protected interest,” which Judge Restrepo noted “has not appeared with regularity in Supreme Court opinions addressing standing…. and has rarely been applied,” warranted the most discussion.

“[F]inancial or economic interests are ‘legally protected interests’ for purposes of the standing doctrine.”  Since plaintiffs alleged monetary harm, under statutes that provided monetary relief, their claims “fit comfortably in categories of ‘legally protected interests’ readily recognized by federal courts.”

The majority declined to follow Eike v. Allergan, Inc., 850 F.3d 315 (7th Cir. 2017), which concerned “materially identical allegations against many of the same defendants.”  Judge Restrepo questioned the reasoning of Eike in at least two respects:  (1) the Seventh Circuit focused on the absence of fraud allegations, overlooking that the case was about “unfair” trade practices that are banned by many consumer protection statutes, and (2) the Seventh Circuit “flip[ped] the standing inquiry inside out,” seeming to find first that the plaintiffs had no cause of action and then reasoning that, as a result of that, they had no injury and therefore no standing.

The majority went on to find that the injury alleged was concrete, particularized, and actual rather than speculative.  Plaintiffs alleged “tangible, economic harm” that affected each of them specifically, and their damage theories were far from speculative.  Accordingly, plaintiffs had injury in fact.  But defendants had asserted other grounds for dismissal that the District Court had not reached.  The panel remanded for further proceedings regarding those arguments and anything else.

In her dissent, Judge Roth contended that plaintiffs’ case was too speculative, and that it rested on “an unreasonable set of assumptions to reach its desired outcome.”  The majority dispatched that objection in compelling fashion.  Nonetheless, given the apparent split between this case and Eike, the panel’s opinion may not be the last word on these issues.