Copley v. Bactolac Pharmaceutical, Inc.
2:18-cv-00575
E.D.N.YMar 10, 2021Background
- Plaintiffs from multiple states allege they were harmed by consuming "All Day Energy Greens" (ADEG), a dietary supplement marketed by NaturMed and manufactured/packaged by Bactolac under contract.
- Plaintiffs contend Bactolac substituted cheaper/inferior ingredients, causing illness and death; NaturMed voluntarily recalled ADEG in 2016.
- Plaintiffs sued NaturMed, alleged successor Independent Vital Life, LLC, and Bactolac under multiple state consumer-protection, warranty, tort, and unjust enrichment theories and the federal Magnuson–Moss Warranty Act.
- Bactolac moved to dismiss certain claims (Rule 12(b)(6)), to strike punitive damages, and moved for judgment on the pleadings as to NaturMed’s cross-claims (Rule 12(c)).
- The parties narrowed issues by plaintiffs’ withdrawal of several claims; the Court focused on eight contested plaintiff claims and NaturMed’s cross-claims.
- There was related Arizona litigation: Bactolac sued NaturMed in 2016; NaturMed voluntarily dismissed some counterclaims without prejudice and did not oppose Bactolac’s later summary-judgment motion, which the Arizona court granted.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Magnuson–Moss Warranty Act (Claim I) | Federal warranty claim based on state warranty violations. | Federal claim depends on survival of state warranty claims. | Survives because Bactolac did not move to dismiss all underlying state warranty claims. |
| N.Y. GBL § 349 (Claim III) | § 349 applies because Bactolac is headquartered in New York. | Deception/transaction did not occur in NY; § 349 targets consumer-oriented conduct. | Dismissed: plaintiffs had no NY consumer transaction or deception. |
| Ala. Deceptive Trade Practices Act (Claim V) | Pressley discovered injury 2014 and recall 2016; claim timely under discovery rule. | One-year statute of limitations bars claim. | Not barred as a matter of law; discovery/notice is for the jury. |
| Cal. Bus. & Prof. Code § 17500 (Claim IX) | Label affixed by Bactolac is an advertising device. | Bactolac merely affixed labels produced/marketed by NaturMed; not advertising by Bactolac. | Dismissed: affixing another party’s label does not reasonably constitute advertising. |
| Mo. implied warranty (Claim XIX) | Remote purchaser may sue manufacturer for implied warranty. | Plaintiff failed to give required notice to seller. | Dismissed for failure to plead notice. |
| Va. Consumer Protection Act (Claim XXIX) | VCPA covers supplier liability even without direct sale to consumer. | Bactolac is not a "supplier" under statute—it manufactured under contract and did not sell to consumers. | Dismissed: Bactolac not within statutory definition of supplier here. |
| Wis. Deceptive Trade Practices Act (Claim XXXII) | ADEG representations were deceptive to the public. | No allegation Bactolac advertised or made public representations. | Dismissed: complaint lacks public-facing advertising by Bactolac. |
| Unjust Enrichment (Claim XXXVI) | Plaintiffs conferred benefit by purchasing ADEG; Bactolac unjustly benefited. | Payments were made to NaturMed; any indirect benefit to Bactolac insufficient. | Dismissed: benefit was not specific and direct to Bactolac. |
| Punitive damages (motion to strike) | Allegations of substitution, continued use after reports, and concealment support punitive damages. | Punitive damages standard under NY law not met. | Denied: complaint sufficiently pleads facts that could support punitive damages. |
| NaturMed cross-claims preclusion (fraud, negligence, contract/warranty) | NaturMed: earlier Arizona dismissals were without prejudice or premature; some claims had not yet accrued. | Bactolac: Arizona summary judgment and compulsory-counterclaim principles preclude NaturMed’s cross-claims. | Judgment on pleadings granted as to fraud and negligence (barred); denied as to breach of contract, express and implied warranty, and indemnity (these proceed). |
Key Cases Cited
- Clemens v. DaimlerChrysler Corp., 534 F.3d 1017 (9th Cir. 2008) (Magnuson–Moss claims rise or fall with underlying state warranty claims)
- Goshen v. Mutual Life Ins. Co. of N.Y., 98 N.Y.2d 314 (2002) (§ 349 requires deception/transaction occurring in New York)
- Cruz v. FXDirectDealer, LLC, 720 F.3d 115 (2d Cir. 2013) (interpreting two lines of § 349 decisions regarding where deception/transaction must occur)
- Oswego Laborers’ Local 214 Pension Fund v. Marine Midland Bank, N.A., 85 N.Y.2d 20 (1995) (§ 349 targets consumer-oriented, public-facing wrongs)
- Ross v. Louise Wise Servs., Inc., 8 N.Y.3d 478 (2007) (standards for punitive damages under New York law)
- Prozeralik v. Capital Cities Commc’ns, Inc., 82 N.Y.2d 466 (1993) (punitive damages require aggravating or outrageous conduct)
- Kaye v. Grossman, 202 F.3d 611 (2d Cir. 2000) (unjust enrichment requires a specific and direct benefit)
- Lansford v. Harris, 850 P.2d 126 (Ariz. 1992) (compulsory counterclaim rule and claim preclusion)
- Airfreight Exp. Ltd. v. Evergreen Air Ctr., Inc., 158 P.3d 232 (Ariz. Ct. App. 2007) (dismissal without prejudice is not an adjudication on the merits)
- Chaney Bldg. Co. v. City of Tucson, 716 P.2d 28 (1986) (issue preclusion requires the issue to have been actually litigated)