Rule v. Fort Dodge Animal Health, Inc.

United States Court of Appeals
For the First Circuit

No. 09-1364

JESSICA C. RULE, individually and on behalf of
all others similarly situated,

Plaintiff, Appellant,

v.

FORT DODGE ANIMAL HEALTH, INC.,
and WYETH CORPORATION,

Defendants, Appellees.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Douglas P. Woodlock, U.S. District Judge]

Before
Torruella, Boudin and Howard,
Circuit Judges.

John Peter Zavez with whom Noah Rosmarin and Adkins, Kelston
& Zavez, P.C. were on brief for appellant.
John J. Butts with whom Felicia H. Ellsworth and Wilmer Cutler
Pickering Hale and Dorr LLP were on brief for appellees.

June 2, 2010
 BOUDIN, Circuit Judge. This appeal presents an issue of

Massachusetts law on which state-court precedent is still evolving.

The suit at issue was dismissed on the complaint so we take the

allegations as true. In re Colonial Mortgage Bankers Corp., 324

F.3d 12, 15 (1st Cir. 2003). Although harm to the named plaintiff

is arguably non-existent--this depends on legal definition--the

complaint is framed as a class action and alleges potential total

liability of over $5 million.

In 2002 and 2003, Jessica Rule, a Massachusetts resident,

purchased two doses of ProHeart 6, a medicine for preventing

heartworm in dogs, and had them administered to her dog Luke.

ProHeart 6 differed in two ways from ProHeart (an older drug): it

remained effective for a longer period--six months instead of one--

and it had to be injected by a veterinarian rather than

administered orally by the owner. Both ProHeart 6 and ProHeart

were manufactured by Wyeth Corporation and its subsidiary Fort

Dodge Animal Health, Inc. (collectively "Wyeth").

Rule filed a putative class action suit in federal

district court against Wyeth in 2006, alleging that Wyeth had sold

ProHeart 6 without disclosing safety concerns revealed in initial

testing and in subsequent use--concerns that ultimately led Wyeth

to recall the product at the FDA's request on or around September

3, 2004. According to Rule, adverse reactions, including deaths,

were suffered by dogs after receiving ProHeart 6 during trials and

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in general use after the product was released--information

possessed by Wyeth but not disclosed to purchasers. Rule conceded,

however, that Luke had not suffered any harm from the drug, and

that Luke had not developed heartworm while using the drug.

According to the complaint, ProHeart is "safe,

inexpensive and easily administered"; ProHeart 6 is alleged to be

"potentially more profitable" because it is administered through

veterinarians and cannot easily be discounted. No suggestion is

made that ProHeart 6 fails to protect against heartworm; in fact,

the complaint says that ProHeart 6 provides a guarantee that

protects against costs incurred by the owner if the dog does suffer

heartworm while using the product.

Rule's complaint set forth five different claims under

Massachusetts law,1 but on appeal she pursues only two: one based

on breach of the implied warranty of merchantability and one based

on Mass. Gen. Laws ch. 93A. For damages on these two counts, Rule

asserted that she and others similarly situated are entitled to the

difference between the price they actually paid for ProHeart 6 and

what it would have been worth had safety risks been adequately

1
The claims were product defect and a failure to warn of the
defect; breach of the implied warranty of fitness for a particular
purpose; breach of the implied warranty of merchantability; breach
of contract; and violation of Mass. Gen. Laws ch. 93A.

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disclosed; for the chapter 93A count, she sought statutory damages

if greater than actual damages and also trebling of damages.2

The district court granted Wyeth's motion to dismiss the

complaint for failure to state a claim, discussing pertinent law as

to each claim separately. Rule v. Fort Dodge Animal Health, Inc.,

604 F. Supp. 2d 288 (D. Mass. 2009). Rule appeals from the

dismissal as to two of the counts. On the grant of such a motion,

our review is de novo. Colonial Mortgage Bankers Corp., 324 F.3d

at 15. Although judges have some room to dispatch at this stage

claims that are highly implausible or pled only in conclusory

terms, Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949-50 (2009), that

wrinkle is not of importance in this case.

The count alleging breach of the implied warranty of

merchantability is the claim most easily put to rest. Generalizing

about warranty law should be done only with care; there are

variations in state law, changes over time, modification by

statutes like the Uniform Commercial Code, a mingling of tort and

contract concepts, and variations relating to fault, type of

interest protected and damage rules. See Lord, Williston on

Contracts, §§ 52:67-52:71 (4th ed. 2001). But it does not take

much effort to conclude that the interests protected by the

2
Mass. Gen. Laws ch. 93A, § 9(3) provides for the recovery of
"the amount of actual damages or twenty-five dollars, whichever is
greater"; double to treble damages are available if the violation
was "willful or knowing" and the defendant has not made a
reasonable settlement offer.

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warranty of merchantability were not impaired so far as concerns

Rule.

A merchant warrants, even in the absence of a formal

guarantee, that the item sold is fit for its ordinary purpose.

Mass. Gen. Laws ch. 106, § 2-314; Haglund v. Philip Morris, Inc.,

847 N.E.2d 315, 321-22 (Mass. 2006); Lord, supra, at § 52:67. On

Rule's allegations, ProHeart 6 was not fit for use as a heartworm

medicine because the adverse reactions were sufficiently numerous

and serious so as to outweigh the benefits over those provided by

prior and perhaps less expensive drugs. Cf. 1 O'Reilly, Food and

Drug Administration § 13:75 (3d ed. 2007). Lack of fitness is

arguably evidenced by the withdrawal of ProHeart 6. See 21 C.F.R.

§ 7.40 (2009).

But the unfitness of ProHeart 6 lay in its potential for

causing harm to the dog. Rule concedes that neither of the two

doses injured Luke. So, while the sale to Rule may have been of an

unfit drug, its unfitness did not give rise to any injury to Rule

against which the warranty was designed to guard. Nor does she

suggest that Luke is now more susceptible to injury, as might be

the case where one bought and installed a defective tire that has

not yet run its life or smoked cigarettes whose potential for harm

lasts into the future.

Recovery generally is not available under the warranty of

merchantability where the defect that made the product unfit caused

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no injury to the claimant, the threat is now gone and nothing now

possessed by the claimant has been lessened in value.3 Nor does

Rule cite any case from Massachusetts (or elsewhere) allowing

recovery under this warranty in a case like hers. True, purchasers

whose dogs were injured might have such claims; but one who has no

claim is not normally a suitable plaintiff to represent the class

of those who do. Spear v. H.V. Greene Co., 140 N.E. 795, 797–799

(Mass. 1923).

The claim under chapter 93A is a more difficult matter.

Chapter 93A provides a cause of action for a plaintiff who "has

been injured," Mass. Gen. Laws ch. 93A, § 9(1), by "unfair or

deceptive acts or practices," id. ch. 93A, § 2(a). Although the

statutory injury requirement has existed in its current form for

more than twenty years, Rule, 604 F.2d at 298-304 (describing

history), the pertinent decisions by the Massachusetts Supreme

Judicial Court ("SJC") leave it uncertain whether and when

something less than conventional economic injury will suffice under

the statute.

In Rule's view, she purchased Proheart 6 because of a

deception (failure to disclose the risk), the product was "in

reality" worth less than she paid for it (because of that

3
See, e.g., Carlson v. General Motors Corp., 883 F.2d 287,
297-98 (4th Cir. 1989); Jarman v. United Indus. Corp., 98 F. Supp.
2d 757, 767-68 (S.D. Miss. 2000); Feinstein v. Firestone Tire &
Rubber Co., 535 F. Supp. 595, 602 (S.D.N.Y. 1982).

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undisclosed risk), and so she suffered damage measured by the

difference between what she paid and what she would have paid if

the risk had been disclosed. This is likely a counterfactual

scenario--she alleges that had the risks been known, ProHeart 6

could not be sold at all given FDA requirements--but even assuming

otherwise, it was clear at the time of Rule's law suit that she

neither now could show or could suffer in the future any adverse

economic impact.

Not knowing of the risk, Rule obviously thought that

ProHeart 6 was worth the charged price--probably in part because of

the added convenience; and let us suppose that, had the risk been

disclosed to her, she would have been willing to buy ProHeart 6 but

only at a lower price, the reduction representing the discount

required because of the risk that her dog might become ill or even

die, entailing for her further cost and other suffering. So if she

or some other hypothetical buyer had sued at this point, before her

dog had consumed ProHeart 6, perhaps she could have claimed injury

and thus damages on the theory and calculation she now urges.4

But Rule's law suit was brought after her purchases and

use of the drug and she now knows that she got both the protection

and convenience she sought and that the risk did not manifest

4
See Iannacchino v. Ford Motor Co., 888 N.E.2d 879, 886
(Mass. 2009) (finding injury requirement satisfied based on reduced
value due to a risk that had not yet caused harm and distinguishing
prior case on the basis that "[h]ere, . . . the plaintiffs continue
to own the allegedly noncompliant vehicles").

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itself in injury to her or her dog. Nor is she still holding a

product that is worth less than she paid; she used the product and

in fact suffered no economic injury at all. Indeed, her theory

would not be adopted by deceived buyers whose dogs were injured or

killed; they could seek not some modest reduction in price but the

full cost of added veterinary bills and, if the dog died, its

value.

So if chapter 93A injury requires that a plaintiff who

seeks to recover show "real" economic damages, Rule does not

qualify. If instead a different notion of injury sufficed--injury

as a violation of some abstract "right" like the right not to be

subject to a deceptive act that happened to cause no economic harm-

-then she would arguably have a claim under chapter 93A and perhaps

could obtain statutory damages. But this is so only if chapter 93A

embodies this permissible but less common notion of injury as the

impairment of an abstract right without economic loss.

Alternatively, for policy or other reasons, a court might choose to

look at injury at some earlier point and ignore later realities.

Two early SJC decisions suggested that merely proving an

unfair or deceptive act by the defendant directed at the consumer

was sufficient to establish injury to that consumer. In Leardi v.

Brown, 474 N.E.2d 1094, 1098 (Mass. 1985), tenants filed suit

against their landlord over allegedly illegal and deceptive

provisions in their leases, even though the landlord had never

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attempted to enforce them and the tenants concededly had not read

them. The SJC held that the tenants had sufficiently alleged an

injury, explaining that "injury" meant "the invasion of any legally

protected interest of another," and that injury could exist even in

the absence of actual harm. Id. at 1101 (Mass. 1985) (quoting

Restatement (Second) of Torts § 7 (1965)).

The SJC later used similar language in Aspinall v. Philip

Morris Companies, Inc., 813 N.E.2d 476 (Mass. 2004). In Aspinall,

purchasers of light cigarettes filed suit against a tobacco company

for deceptive advertising under chapter 93A, even though they

claimed no actual harm from smoking the cigarettes. Id. The court

found chapter 93A's injury requirement satisfied, reasoning that

the tobacco company's deceptive advertising "effected a per se

injury on consumers who purchased the cigarettes." Id. at 492.

The court moved away from such a "per se" concept in

Hershenow v. Enterprise Rent-A-Car Co., 840 N.E.2d 526 (2006),

where two car renters purchased collision damage waivers from a car

rental company--exemptions from paying for repairs if the car is

damaged; the renters then sued under chapter 93A, alleging that

onerous restrictions in the waivers violated state law. Id. at

529. However, the plaintiffs had returned their cars without

damage, and the rental company thus had no occasion to seek to

enforce the allegedly unlawful restrictions in the waiver against

them. Id. at 530.

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 The SJC held that where "the plaintiff cannot demonstrate

that the illegal contract (the invasion of a legally protected

interest) causes any loss," the violation does not constitute an

"injury per se." Id. at 535. Because the waiver "made neither

rental customer worse off during the rental period" than if the

waiver had fully complied with statutory requirements, the court

held that neither customer had suffered an injury. Id. That this

was a change in course from the prior cases seems evident.5 It

also dooms a claim that an undisclosed risk that is never realized

and can never be realized in the future constitutes damages merely

because it existed at an earlier stage.6

Next in 2008 in Iannacchino, owners of Ford vehicles with

allegedly defective door latches filed a class action lawsuit

alleging violations of chapter 93A and the implied warranty of

merchantability. 888 N.E.2d at 882. The plaintiffs' own doors had

not malfunctioned; but the SJC--although it rejected the claims on

another ground--said that "[i]f Ford knowingly sold noncompliant

(and therefore potentially unsafe) vehicles . . . the plaintiffs

5
See, e.g., id. at 536 (Cowin, J., concurring, but urging that
Leardi be explicitly rather than implicitly overruled); id. at 539-
41 (Greaney, J., author of Aspinall, dissenting and arguing that
the court had "effectively set aside" Leardi and Aspinall).
6
Iannacchino, see note 4, explained that no injury existed in
Hershenow because "the unlawful contract terms 'did not and could
not' cause any harm to the plaintiffs after they had returned their
vehicles undamaged at the end of their rental periods."
Iannacchino, 888 N.E.2d at 886.

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would have paid for more . . . than they received," and that

overpayment "would represent an economic loss" redressable under

chapter 93A. Id. at 886.

This certainly follows where the owners still possess

their cars, whose value was now reduced because of the risk that

the doors might malfunction. The owner of a product with a newly

revealed defect is like the ProHeart 6 buyer who has not used the

drug yet; he certainly does own a product whose newly revealed

defect reduces its value below what was expected, possibly even to

zero in the case of ProHeart 6, and so economic injury would exist

and be recoverable in many jurisdictions.7 But Rule, as already

explained, used up her purchases, neither holds nor sold anything

of reduced value, faced no continuing risk and suffered no harm.

Finally, in Donovan v. Philip Morris USA, Inc., 914

N.E.2d 891 (Mass. 2009), which postdates the district court's

opinion, smokers who had not manifested any smoking-related disease

sued Philip Morris, seeking expenses for a program of "medical

monitoring" to detect early signs of lung cancer. Id. at 895. The

7
See, e.g., Lloyd v. Gen. Motors Corp., 916 A.2d 257, 281 (Md.
2007) (owners of cars with undisclosed defect in seats could
recover under Maryland Consumer Protection Act); Microsoft Corp. v.
Manning, 914 S.W.2d 602, 609 (Tex. App. 1995) (purchasers of
software with undisclosed defect causing potential data loss could
recover under Washington Consumer Protection Act). But see Coker
v. DaimlerChrysler Corp., 617 S.E.2d 306, 313-14 (N.C. App. 2005)
(consumers who purchased minivans lacking safety device did not
state claim under North Carolina Unfair and Deceptive Trade
Practices Act absent sale or repair expenses).

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court upheld their claims including ones under chapter 93A, id. at

900-03, but this is completely consistent with compensating for

economic injury. The risk was ongoing and, unlike Rule, the former

smokers needed to incur economic costs (e.g., monitoring) to cope

with the consequences of the risk.

Absent explicit overruling, some tension remains in the

language used as between the earlier and the later SJC decisions,

see note 7, above, and universal rules are hard to come by where

deception and risk are involved. See, e.g., 2 Dobbs, The Law of

Torts §§ 481-83 (2001); 2 Dobbs, The Law of Remedies §§ 9.2-9.4 (2d

ed. 1993). However, the most recent SJC cases in point appear to

have returned to the notion that injury under chapter 93A means

economic injury in the traditional sense; and, if cases like Leardi

survive as exceptions, it is for the SJC to identify and define

them.

Conduct like that attributed to Wyeth needs to be

deterred, but not necessarily by those who bought the drug but were

not injured. The state has authority to seek heavy sanctions on

those who engage in deceptive advertising even without injury,

Mass. Gen. Laws ch. 93A, § 4; and anyone whose dog was injured, or

a class of those persons, may (assuming Rule's allegations are

correct) likely sue and collect damages. Rule, having suffered no

economic injury, may not.

Affirmed.

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