362 P.3d 1197
Or. Ct. App.2015Background
- Defendants (Johnson & Johnson and McNeil subsidiaries) manufactured and sold Motrin nationwide, including in Oregon; in Nov–Dec 2008 they discovered dissolution defects in two batches produced in Puerto Rico.
- Defendants notified the FDA months after discovery but did not publicly recall or notify retailers/consumers in Oregon that product might be defective; they instead conducted covert "secret shopper" buy-backs to remove product without disclosure.
- Defendants later learned FDA expected a public nationwide recall; they eventually announced a recall months later and faced FDA enforcement and a Consent Decree.
- Oregon (the State) sued under the Oregon Unlawful Trade Practices Act (UTPA), alleging defendants failed to disclose a known material risk that Motrin sold in Oregon might be defective, asserting violations of ORS 646.607 and 646.608.
- The trial court dismissed the state’s amended complaint under ORCP 21 A(8), concluding nondisclosure of a risk (absent proof that defective product actually reached Oregon) was not an actionable UTPA misrepresentation.
- The Oregon Court of Appeals reversed, holding nondisclosure of a known material risk that affects a product’s characteristics/quality is actionable under the UTPA.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether nondisclosure of a known material risk that goods sold in Oregon may be defective is actionable under the UTPA | The State: such a risk is a "characteristic/quality" of the product; nondisclosure is a misrepresentation actionable under ORS 646.607/646.608 | Defendants: UTPA protects only misrepresentations of actual, certain facts linking to Oregon; a mere risk is not an "actual fact" and no UTPA nexus unless defective product was actually distributed in Oregon | Reversed dismissal: a known material risk is a fact for UTPA purposes; failure to disclose it can be actionable and establishes the necessary nexus with Oregon |
Key Cases Cited
- State v. Gaines, 346 Or. 160 (2009) (framework for statutory construction applied to remedial statutes)
- Caldwell v. Pop’s Homes, Inc., 54 Or. App. 104 (1981) (seller’s failure to disclose a known risk affecting a good’s value is actionable under UTPA)
- Paul v. Providence Health System—Oregon, 351 Or. 587 (2012) (private UTPA plaintiffs must plead ascertainable loss; court clarifies limits of speculative risks in private suits)
- Rathgeber v. James Hemenway, Inc., 335 Or. 404 (2003) (state enforcement of UTPA is not subject to private plaintiff’s ascertainable-loss requirement)
- Pearson v. Philip Morris, Inc., 358 Or. 88 (2015) (describing broad remedial purpose and scope of UTPA misrepresentation provisions)