Eike v. Allergan, Inc.
William M. Janssen
Why It Made the List
Did you ever need just one “AA” battery? You can buy that size batteries in packages of four, or eight, or ten, or sixteen, or twenty, or twenty-four, or forty-eight, or eighty, or even a whopping box of one hundred and forty-four (presumably, for folks who own remote-control everything). But what if you just needed one? The best a leading manufacturer seems able to do for you is a pack of two “AA” batteries. Concededly, that’s better. But still, you just needed one. And it’s not just batteries. Why are Cuties mandarin oranges always sold in a netted sack in groups of twenty? What if you don’t want twenty? Why do those little plastic
creamer cups that restaurants serve you with your coffee never seem to have the just right amount of milk for your taste? Why do printer ink cartridges sell for $20 when they contain about a thimble’s volume of ink? Why should airplane tickets that cost $160 for a weekend flight soar to $698 if you fly on a Tuesday? Can’t someone fix all of this?
Charlene Eike thought she’d try. A resident of Illinois, she bought and used prescription eye drops sold by two manufacturers (Allergan and Alcon). She filed a
federal class action complaint in Illinois alleging that the dropper tips on those eye drop bottles were too large, causing a portion of the eye medicine to run down her cheek or drain into her nasal cavity. She contended that the manufacturers knew both that their drops were larger than necessary and that portions of every drop would be wasted. She reasoned that these too-large plastic dropper tips constituted an unlawful, unfair, and unethical practice because they caused her (and her fellow class members) to “use more medication than they should, run out of medicine before they should, and have to buy additional bottles at great expense, providing increased, but unfair, profits for” the manufacturers.1 Because of this waste, Ms. Eike concluded that she and her class were unfairly paying more than they would have had the eye medicine bottles been manufactured with smaller dropper tips. As a remedy, she sought, on behalf of her class, financial compensation for the economic value of the wasted portion of each eye drop, along with an award of punitive damages. The Illinois federal district court granted Ms. Eike’s motion to certify a class of fellow eye drop purchasers. The United States Court of Appeals for the Seventh Circuit vacated that order (a mere 27 days after hearing oral argument), and did so in nine short paragraphs.
The Seventh Circuit’s opinion in Eike v. Allergan, Inc.2 ranks as one of the top food and drug law cases of 2017 for several reasons. First, it rebuffed an audacious contention that consumers, who are otherwise uninjured, can sue medicine manufacturers for failing to supply medicine in a manner those consumers consider most optimally economical. Second, it rejected that theory in a unanimous, withering opinion from Judge Richard Posner3 that not just overturned the trial judge’s class certification order, but did so with the unusual further direction to the district judge to dismiss the lawsuit with prejudice. Third, its reasoning for turning away the class was grounded not in the underlying merits of the claim, but for an absence of the class’s Article III standing (the court ruling that the class’s claimed injury was irredeemably vacuous). Fourth, its logic was weighed by a sister Circuit just a few months later; in that appeal, a divided 2-1 panel of the Third Circuit ruled the opposite way, finding the Eike reasoning unpersuasive. Consequently, there is now a spirited Circuit clash on the issue of the standing of patients to posit a claim of economic injury grounded on a contention that a prescription medicine—otherwise safe, effective, not misrepresented, and not collusively priced—is priced and delivered to consumers in a way they consider not to be ideal. The ramifications of that theory are difficult to fully digest.
The complaint in Eike was crisp. It charged six leading ophthalmic pharmaceutical manufacturers with engaging separately in “an unfair and unscrupulous scheme” to compel patients to pay for medicine that “goes to waste.”4 This “scheme,” Eike contended, violated consumer protection laws in Illinois (because it amounted to an unfair and/or deceptive act or practice) and similar laws in Missouri (because it constituted a deception, fraud, false pretense or promise, misrepresentation, unfair practice, or a concealment, suppression, or omission of a material fact). Citing various medical literature, the complaint averred that the tolerable fluid volume in typical human eyes is quite small, and the insertion of over-large drops of medicine is soon expelled. Accordingly, the complaint continued, smaller eye drop sizes are “at least as bioavailable” as larger drops and, thus, should be preferred over larger drops.5 The eye drop bottles sold by the defendants generate drops that were noted to be two, three, or more times larger than the optimal, smaller drop size. Thus, the complaint alleged, if the defendants’ eye drop bottles had been reconfigured so as to dispense smaller-sized drops, the medication in each bottle would last the patients a longer time (because there would be more doses in each bottle) and would therefore save the patients money.6 Because the defendants had failed to bottle their medicines in this way, the complaint insisted that compensatory and punitive damages were appropriate.
The Seventh Circuit was unimpressed. The court began by canvassing a number of(seemingly) undisputed litigation facts:
- The complaint’s ideal eye drop size (16 microliters) is a really, really
small volume—about one-tenth of one-percent of a tablespoon.
- The complaint raised no antitrust accusation, nor collusion of any type
(tacit or express).
- The complaint pressed no allegation of misrepresentation.
- The complaint made no claim that any members of the putative class
personally experienced any untoward side effects from the larger eye
drop tip size (beyond their financial claim).
- The complaint never contended that larger-drops were unsafe or
ineffective within the meaning of the federal drug laws.
- To the contrary, the bottles that produce these larger-drops had been
approved by FDA as safe and effective for the treatment of glaucoma.
- Nowhere, among the relief sought, did the complaint ever demand that
the current, larger-drop sized bottles be withdrawn.
- Rather, the complaint sought only to have the defendants also start
manufacturing bottles that produce smaller eye drops.7
This canvas left the court troubled at a number of points. Preliminarily, because the only injury the class posited was a “pocketbook” one, the accusation of defendants’ profit-over-patient motivations hinged on the assumption “that profits would decline if the defendants switched to selling the smaller, cheaper-to-produce eye drops.”8 But that assumption, reasoned the court, was “far from certain.”9 Next, the court catalogued some of the manufacturers’ justifications for larger-sized eye drops: the small portion of each drop that contains the active pharmaceutical ingredient; the small portion of the ingredient that crosses the eye’s cornea into the eye itself; the varying size of human eyes; and the drop-administration challenges posed by the medicine’s cohort of “elderly patients, patients with unsteady hands, and patients who already have serious eye problems” where “the smaller the drop the likelier they are to miss.”10 Finally, the court mused that the complaint, at its core, seemed more akin to a pitch that FDA should be regulatorily mandating smaller dropper bottle tip sizes, but that
pitch, admonished the court, was reserved for administrative audiences, not judicial ones.
In the end, Judge Posner’s pithy eloquence closed out the Seventh Circuit’s opinion: “You cannot sue a company and argue only—‘it could do better by us’—which is all they are arguing.”11 Such an argument, Judge Posner concluded, failed for want of Article III standing:
One cannot bring a suit in federal court without pleading that one has been injured in some way (physically, financially—whatever) by the defendant. That’s what’s required for standing. The fact that a seller does not sell the product that you want, or at the price you’d like to pay, is not an actionable injury; it is just a regret or disappointment—which is all we have here, the class having failed to allege “an invasion of a legally protected interest.”12
Lacking constitutional standing to sue, Ms. Eike and her putative class not only could not press their federal claim in a class action, they lacked the ability to press a federal claim at all. Accordingly, ruling that the federal courts lacked constitutionally adequate jurisdiction to proceed any further in the matter, the Seventh Circuit directed the dismissal with prejudice. The Eike appeal had been argued on February 7, 2017. Two weeks earlier, a similar too-large-eye-drop claim was heard by the Third Circuit. The putative class members there, in Cottrell v. Alcon Laboratories,13 pressed claims under the consumer protection laws of the States of California, Florida, Illinois, New Jersey, North Carolina, and Texas. The parallels are fascinating; the two cases are procedural mirror images of one another. In Eike, the patient class had obtained class certification, and the defendant manufacturers were the parties seeking relief on appeal. Those
manufacturers, as appellants, won; the Seventh Circuit ended the lawsuit for lack of constitutional standing. In Cottrell, the patient class had lost on a motion to dismiss, and they were the ones seeking relief on appeal. The patients, as appellants in their case, also won; the Third Circuit reversed the dismissal, found constitutional standing, and remanded for further proceedings. The Third Circuit case was orally argued before Eike, but its opinion was handed down after Eike. Only in unanimity was there missing mirror-symmetry: the Seventh Circuit’s decision was 3-0, the Third Circuit’s ruling was split, 2-1.
The allegations in Cottrell were (in the language of the court) “materially identical” to those in Eike,14 with a few enhancements. The Cottrell patients had added that the defendants’ true motivations for the larger-sized bottle tips were unintentionallyrevealed: their complaint quoted a consultant (working for one of the defendants) who had evidently been told that the company was “unwilling to reduce drop sizes because if they did, the company ‘would sell less product and make less money.’”15 As had the Eike class, the patients in Cottrell contended that the defendants’ knowing decisions to manufacture eye drop bottles with larger tip sizes, in contravention of various medical literature advocating otherwise, constituted unfair or unconscionable trade practices in violation of their States’ consumer protection laws. The Cottrell class then offered a calculation of how much their patients would have saved had their eye drop bottles lasted longer by dispensing the same medicine at a slower rate.
At the trial level, the defendant manufacturers in Cottrell argued that the putative prescription eye medicine patients’ class should be dismissed for several reasons, including lack of standing, preemption, and failure to state a claim upon which relief could be granted. The district judge relied only on the first of these grounds, dismissing the complaint for lack of standing. Standing, then, was the only issue squarely addressed on appeal (just as in Eike).
At the Third Circuit, the parties had the benefit of Judge Posner’s unanimous opinion in Eike that had rejected constitutional standing for this sort of claimed injury. The 2-1 Third Circuit majority found that standing existed, reasoning that the patient class had pleaded an economic injury (spending money on medication “that was impossible for them to use”), had sought remuneration from the entities they contended caused that harm, and had alleged that their harm flowed from a violation of various States’ unfair trade practice laws which constituted an invasion of their legally protected interests.16 These claims, ruled the court, also possessed the requisite concreteness (actual, tangible, monetary harm) and the necessary imminence (nonconjectural and non-speculative, linked to cost-savings from using the same volume of medicine at a less-wasteful, slower rate) to qualify for Article III standing. Where Judge Posner had erred in his logic, ruled the 2-1 Third Circuit majority, was in premising plaintiff standing on a prior showing that the plaintiff claim was meritorious. Whether the plaintiff class could win or not on the merits was a separate legal inquiry than whether they possessed standing to try, reasoned the Cottrell majority. Instead, all the claimants needed was a plausible allegation of standing.
A sharp dissent framed the class’s position as imposing liability on defendants because they “could have manufactured a more efficient product, which in turn could have lowered plaintiffs’ overall treatment costs.”17 This contention, the dissent insisted, “ignores both clear precedent . . . and the complexities of pricing in the pharmaceutical industry.”18 To the dissent’s eye, the class’s theory contravened settled precedent that standing cannot exist by “rely[ing] on a chain of contingencies and speculation.”19 The dissent concluded that courts “cannot do precisely what the plaintiffs here ask of us: isolate and change one variable [dose size] while assuming that no downstream changes would also occur [to, say, price].”20 If the manufacturers priced their eye drops on a dose basis, rather than a unit (or volume) basis, the price of the medicine bottle with the reconfigured tip could very well increase. Thus, the class’s claimed injury was “overly speculative and untenable” because it asked the court “to assume certain facts about other actors’ behavior—exactly the sort of assumption that
cannot be proven at trial.”21 A subsequent petition for rehearing and rehearing en banc was denied, but not without another animated dissent, this time written by the Third Circuit’s chief judge. Allowing the class to legally speculate about a hypothetical pharmaceutical marketplace was unwise, that dissent announced, because “everyday business decisions may be subject to litigation by creative plaintiffs capable of theorizing a way that those business decisions could have been made to serve plaintiffs more efficiently.”22 In late March 2018, the defendant manufacturers petitioned for a writ of certiorari, with no decision from the U.S. Supreme Court as of the date this text went to press.23
Should the law allow a commercial remedy to consumers who claim that a productmaker could have made that product in a way that would cost them less?
In thinking critically through whether that sort of contention poses a creditable theory of injury, consider what was not alleged by these classes: (a) that the product claimants purchased was unsafe or ineffective in the manner it was sold; (b) that the product caused them a physical (noneconomic) injury of any sort; (c) that the product was sold with deceptive labeling of some sort; (d) that the product otherwise violated the federal pharmaceutical laws; or (e) that the manner in which the product is sold should be stopped. These patient classes evidently did not want smaller eye drop bottle tips for everyone (apparently acknowledging, at least implicitly, that some meaningful cohort of product users benefit from larger drops—the elderly, those with unsteady hands, those with impaired eyesight). Instead, they proposed that civil liability could be used to coerce manufacturers into bottling eye drops in an additional way that would, they argued, save them money. (And that they should receive both compensatory and punitive damages for their troubles.)
Although, traditionally, these sorts of expansive civil liability theories might be assailed for failing to state a claim upon which relief could be granted, here the
manufacturers took a more primary, threshold strategy. Constitutional standing is anchored in Article III’s command that federal judicial power extends only over “cases” and “controversies”; the standing doctrine is thus employed to foreclose a litigant’s invocation of judicial processes to “usurp the power of the political branches” and, thereby, to “confine the federal courts to a properly judicial role.”24 The core minimum for constitutional standing obligates claimants to show (1) that they have suffered an injury in fact, (2) that is fairly traceable to the defendant’s conduct, and (3) that is likely to be redressed by a victory in court.25
It is on the first standing element—injury in fact—that the unanimous Seventh Circuit and the dissenting Third Circuit judges believed the Eike and Cottrell classes foundered. Putting to the side the boldness of the contention that a product’s packaging could ever qualify as an “unfair trade practice” because it delivers more product than some consumers wish to have delivered to them, it is difficult to see how the classes’ claims hold together—even theoretically—without one key assumption: that the eye drop bottle price would remain the same. There is no savings to the patient class if the manufacturers, forced to sell prescription eye drops in bottles with smaller tips, raise the price of those bottles. As the Cottrell dissent makes plain, pricing a pharmaceutical product on the basis of doses-delivered, rather than volume-contained, is neither unexpected nor irrational. It is also the historic province of seller prerogative. It belabors the obvious to note that, in a free market economy, the price for goods is typically set by the supplier of those goods. Consequently, a bottle of eye drops that formerly contained 25 doses but now contains 50 might well be expected to double in price to meet the doubled dose-delivery volume. But the logic need not even reach so far to indict constitutional standing: so long as the Eike and Cottrell injury theories hinged on the defendants’ autonomous pricing of their eye-drop bottles, those theories were incontestably dependent on unprovable assumptions of other actors’ behavior (something Article III standing would traditionally not tolerate). It is, then, quite impossible for these eye drop classes to find a constitutionally concrete and nonspeculative rooting for their injury theories unless they also propose to pitch to a factfinder that any subsequent defendant price increase for the reconfigured bottles is also some sort of actionable unfair trade practice. For a free market economy, such a pitch is unmistakably, and ominously, across the Rubicon.
FDA, as gatekeeper for the Nation’s pharmaceutical marketplace, might one day consider eye drop bottle tip size as a topic for supplementary regulation. That is the agency’s prerogative. But the question of judicial intervention is a materially different matter entirely. If civil liability is triggered by what consumers (and only some of them) think to be a sub-optimal product feature, then a far-reaching new category of judicial intrusion opens against product makers. The consequences—intended and unintended—are incompatible with our commercial marketplace paradigm. It would be only a modest journey forward to force Duracell to launch single-battery “AA” packages (at exactly one-half the price of its two-battery packs), Cuties mandarin oranges to be sold individually (at exactly one-twentieth the price of the netted sack of twenty), and printer ink to be sold at a price that more rationally tracks actual manufacturer hard costs. Consumers may welcome these outcomes, but permitting them fundamentally rewrites tort law and the principle of free-market participant independence.
William M. Janssen is a professor of law at the Charleston School of Law in Charleston, South Carolina, where he teaches products liability, mass torts, civil procedure, and constitutional law.
- Eike v. Allergan, Inc., No. 3:12-civ-01141-DRH-DGW (S.D. Ill. Nov. 1, 2012) (Complaint) at ¶ 8
- 850 F.3d 315 (7th Cir. 2017).
- The colossally prolific Judge Richard Posner retired from the Seventh Circuit effective September 2, 2017. To say the Eike opinion was one of his last is true but unilluminating. In the span of less than six months that separated the release of the Eike decision and his retirement, Judge Posner wrote 43 more
opinions for his court, 10 dissents, and 2 concurrences.
- Eike v. Allergan, Inc., No. 3:12-civ-01141-DRH-DGW (S.D. Ill. Nov. 1, 2012) (Complaint) at ¶ 38.
- See id. at ¶¶ 45-60. The complaint defines “bioavailability” as “the extent and rate at which a drug accesses the desired site of action.” Id. at ¶ 50.
- See id. at ¶¶ 72-78. The complaint also defended the feasibility of generating smaller-sized drops. See id. at ¶¶ 78-88.
- Eike, 850 F.3d at 316-18.
- Id. at 317.
- Id. at 318.
- Id. (citation omitted).
- 874 F.3d 154 (3d Cir. 2017), reh’g denied, 709 F. Appx. 156 (3d Cir. 2017).
- Id. at 165.
- Id. at 165.
- Id. at 171 (Roth, J., dissenting).
- Id. at 172-73.
- Id. at 173.
- Id. at 174.
- Cottrell v. Alcon Laboratories, 709 F. Appx. 156, 160 (3d Cir. 2017) (Smith, C.J., dissenting sur
denial of rehearing).
- Alcon Laboratories, Inc. v. Cottrell, No. 17-1337 (U.S.) (petition filed Mar. 22, 2018).
- Spokeo, Inc. v. Robins, _ U.S. _, 136 S. Ct. 1540, 1547 (2016).