Tracks of My Tears – Narrowing of Economic Loss Class Claims in Kentucky

Released in 1965 by the Miracles, “The Tracks of My Tears” is ranked by Rolling Stone as the “Greatest Motown Song of All Time.” Smokey Robinson’s lead vocals are pure silk, the harmonies ooze soul, and  the guitar licks and strings tie it all together.  The song and the Miracles helped spread Motown around the globe.  Today’s decision about an artificial tears product won’t stack up against Smokey and the Miracles, but it hits a few chords worth sharing.

Mosley v. EzriCare, 2024 WL 1342615 (E.D. Ky. Mar. 29, 2024) is a putative economic loss class action arising from the purchase of allegedly contaminated artificial tears products.  The complaint named two plaintiffs—one from Kentucky and one from South Carolina—who allegedly purchased the products from three different defendant distributors, each of whom obtained the product from the same overseas manufacturer (who had not been served).  The decision addresses the distributors’ motions to dismiss for lack of personal jurisdiction, lack of subject matter jurisdiction, and failures to state certain claims under Rule 12(b).

Plaintiffs didn’t pursue a general jurisdiction theory, so the decision focused first on personal jurisdiction over two of the distributors.  The first distributor, Delsam, was a New York LLC headquartered in New York.  The plaintiff from South Carolina alleged to have purchased one of Delsam’s products in South Carolina, but the plaintiff from Kentucky did not. The Kentucky plaintiff purchased a different distributor’s product, and the lawsuit was filed in Kentucky.  How could the court have jurisdiction over an out-of-state defendant with an out-of-state plaintiff alleging the only connection to the product in another state?  Plaintiffs tried to answer this question by arguing that representative plaintiffs in class actions can bring “representative claims” on behalf of residents of states other than their own. The court recognized this for what it was—a plain misstatement of the law.  In class actions the court “must at least have personal jurisdiction over the defendant vis-à-vis each named plaintiff.” Id. at *4. Since the only plaintiff who purchased Delsam’s product resided in South Carolina and any injury would have occurred in South Carolina, there was no personal jurisdiction over Delsam in Kentucky.

The second distributor, EzriRx, was a Delaware company headquartered in New Jersey. EzriRx contended that it was an “online marketplace platform that assists pharmacies in purchasing prescription medications and over-the-counter drugs.” Id. at *8.  The Kentucky plaintiff purchased EzriRx’s artificial tears product from a Wal-Mart in Kentucky. Since EzriRx did not sell directly to consumers, it claimed that plaintiff’s claims did not arise from any actions that EzriRx took in Kentucky—particularly since a consumer could not purchase products directly from EzriRx.  The Kentucky plaintiff claimed that the EzriCare artificial tears he purchased bore a trademark licensed from EzriRx to EzriCare, and that through its business dealings EzriRx had contracted to supply goods in Kentucky. The court found these allegations enough for the plaintiff to meet his “relatively slight” prima facie showing of specific, personal jurisdiction.

The burden then shifted to EzriRx to defeat plaintiff’s prima facie case of specific jurisdiction.  The court noted that EzriRx presented “scant evidence” in its affidavit opposing jurisdiction and found it insufficient to rebut plaintiffs’ claims.  Plaintiff alleged that EzriRx labeled, marketed and distributed the product in Kentucky, and the court was not able to determine the exact relationship between EzriRx, EzriCare and the distribution chain for the EzriCare Artificial Tears product.  Since it was EzriRx’s burden to rebut plaintiff’s claim of jurisdiction and the court found the affidavit evidence sparse, it declined to dismiss EzriRx at the pleadings stage.

The third distributor, EzriCare, did not challenge jurisdiction in Kentucky.  Instead it claimed (1) that the South Carolina plaintiff lacked standing, (2) most of the plaintiffs’ claims were inappropriate for resolution by a multi-state class action, and (3) plaintiffs’ request for injunctive relief (prohibiting further sale of the allegedly contaminated product and requiring affirmative notice to purchasers) did not allege sufficient risk of future harm.

As to standing, the South Carolina plaintiff purchased the Delsam artificial tears product in South Carolina. The plaintiff did not purchase any artificial tears product from EzriCare. As a result the plaintiff could not show any injury in fact caused by EzriCare, so the South Carolina plaintiff lacked standing to sue EzriCare.  Easy decision on that issue.

The court then turned to EzriCare’s assertion that the remaining Kentucky plaintiff lacked standing to bring a multi-state class action claims for unjust enrichment, fraud, warranty and products liability because of wide differences in state law on these claims.  Although the court noted that some courts have resolved this question at the motion to dismiss stage, it declined to dismiss absent additional briefing on class certification. The court, however, cited a number of decisions identifying the hurdles plaintiff would face at certification of a multi-state class. See, e.g., Forsher v. J.M. Smucker Co., 612 F. Supp. 3d 714, 726 (N.D. Ohio 2020) (holding certification of lawsuit for breach of express warranty in 44 states was “unmanageable and fatal even at the pleading stage because breach of express warranty varies widely from state to state”); Chesner v. Stewart Title Guar. Co., 2008 WL 553773, at *14 (N.D. Ohio Jan. 23, 2008) (finding certification of unjust enrichment claims “untenable”); Rosen v. Chrysler Corp., 2000 WL 34609135, at *12 (E.D. Mich. July 18, 2000) (declining to certify class of fraud claims because “the court would need to instruct a jury on the consumer protection laws of 50 jurisdictions,” which is an “unacceptable scenario”).

Finally, the court addressed EzriCare’s contention that injunctive relief by the Kentucky plaintiff was inappropriate since “he did not allege any intention to buy [EzriCare Artificial Tears] in the future.”  Id. at *11. The product had been recalled, EzriCare had ceased operations, and plaintiff was well aware of statements issued by the FDA and CDC regarding potential contamination in the product. As part of his claim for injunctive relief, plaintiff sought an order requiring EzriCare to engage in a corrective advertising campaign.  Plaintiff also sought to enjoin EzriCare from making any statements suggesting the product was “safe and effective” and to require EzriCare to stop selling the product. Since the product was already off the market and the complaint did not allege any continued selling, the court found any injunctive relief inappropriate and dismissed the claim.

The court also addressed two specific counts worth noting. EzriCare moved to dismiss plaintiff’s claim for violation of the Kentucky Consumer Protection Act because there was no privity of contract (a requirement under the Kentucky statute). Plaintiff purchased the artificial tears product from Wal-Mart, so there was no direct buyer-seller relationship, and no privity. The court agreed and dismissed the claim. EzriCare also moved to dismiss plaintiff’s strict product liability claim since plaintiff did not suffer any physical harm.  The court agreed. Kentucky’s strict liability law requires a claim of physical harm—not economic loss. Lacking the required showing of physical harm, the court dismissed this count.

Although it’s disappointing to see yet another OTC economic loss class action claim proceed, at least this one was subject to significant narrowing at the pleading stage. And of course Smokey and the Miracles will put a smile on your face if any part of this decision leaves you feeling blue.