Nixing Nationwide Class Action Claims: Federal Court Ruling Provides Blueprint For Businesses

Seyfarth Synopsis: In a nationwide consumer fraud class action involving false labeling claims under various state laws, a federal district court in Illinois granted the company's motion to dismiss claims relative to a putative national class of plaintiffs, holding it did not have jurisdiction over the claims of the non-resident class of plaintiffs based on the recent U.S. Supreme Court opinion in Bristol-Myers Squibb Co. v. Superior Court of California, 137 S.Ct. 1773 (2017). For businesses and employers facing nationwide class action lawsuits, this ruling is instructive in regards to strategies to fracture and minimize the class size, and limit potential liability.

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In DeBernardis v. NBTY, Inc., Case No. 17-CV-6125, 2018 U.S. Dist. LEXIS 7947 (N.D. Ill. Jan. 18, 2018), Plaintiff alleged that Defendants made false and misleading claims concerning the beneficial effects of a dietary supplement. The four-count complaint alleged violations of state consumer fraud acts on behalf of a multi-state class, as well as a class of Illinois-based purchasers. Defendants moved to dismiss on a variety of grounds, including their assertion that the Court did not have jurisdiction to hear the case involving the non-resident class of plaintiffs based on the recent U.S. Supreme Court opinion in Bristol-Myers Squibb. Judge Harry D. Leinenweber of the U.S. District Court for the Northern District of Illinois granted Defendants' motion to dismiss Counts I, III, and IV as to the putative national class of Plaintiffs.

Businesses and employers can use this ruling to attack and limit nationwide class actions involving the state law claims of non-resident plaintiffs, following the Bristol-Myers Squibb decision.

Case Background

Plaintiff brought a nationwide class action seeking monetary damages and injunctive relief against the distributor of a dietary supplements. The four-count complaint alleged that Defendants made false and misleading claims concerning the beneficial effects of the product. Id. at *1. Count I alleged violations of state consumer fraud acts on behalf of a multi-state class; Count II alleged violation of the Illinois Consumer Fraud Act on behalf of Illinois purchasers; Count III alleged violations of express warranty on behalf of the nationwide class, and Count IV alleged unjust enrichment on behalf of the nationwide class.

Defendants moved to dismiss, arguing: (i) that as to Counts I, III, and IV, the Court did not have jurisdiction to hear...