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Conrad v. Boiron, Inc.

United States Court of Appeals, Seventh Circuit

August 24, 2017

Chad Conrad, Plaintiff-Appellant,
BOIRON, INC., and BOIRON USA, INC., Defendants-Appellees.

          Argued April 4, 2017

         Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 13 C 7903 - William T. Hart, Judge.

          Before WOOD, Chief Judge, and Kanne and ROVNER, Circuit Judges.

          WOOD, CHIEF JUDGE.

         Chad Conrad filed a class action against Boiron for deceptive marketing, but he was left with only his individual claim after the district court refused to certify his proposed class. About a year later Boiron offered Conrad $5, 025, more than he could hope to win at trial. Conrad does not want to accept the money because it will moot his claim; Boiron wants to force him to take it for the same reason. The district court refused to certify Conrad's proposed class and found his individual claim moot. We conclude, in keeping with our decision in Fulton Dental, LLC v. Bisco, Inc., 860 F.3d 541 (7th Cir. 2017), that the latter decision was in error, because an unaccepted offer cannot moot a case. There are other measures available to address the problem (if it exists here) of "unreasonably and vexatiously" persisting in litigation, see, e.g., 28 U.S.C. § 1927, but the district court has yet to decide whether they should be used. We therefore remand this case to the district court for further proceedings.


         Boiron makes homeopathic products, including an over-the-counter remedy called Oscillococcinum ("Oscillo") that retails for between $12 and $20, depending on whether one buys a six, twelve, or thirty-dose package. Bohn v. Boiron, Inc., 2013 WL 3975126, at *1 (N.D. Ill. Aug. 1, 2013). Oscillo is made by mixing one percent Anas Barbariae Hepatis et Cordis Extractum-that is, duck hearts and livers-with 99 percent water, repeating the dilution process 200 times, and then selling the result in pill form. The repeated dilutions render the finished product nothing more than a placebo. Boiron's claim that Oscillo has a therapeutic effect on flu symptoms is thus highly doubtful. Aggrieved customers caught on at some point, and in 2011 they filed a class action against the company in the Southern District of California over its deceptive marketing. In October 2012, Boiron and the class agreed to a broad settlement that covered over 200 of the company's products (including Oscillo) purchased between January 1, 2000 and July 27, 2012. Gallucci v. Boiron, Inc., 2012 WL 5359485 (S.D. Cal. Oct. 31, 2012), aff'd sub nom. Gallucci v. Gonzales, 603 F.App'x 533 (9th Cir. 2015). In relevant part, the settlement required Boiron to (1) pay refunds to past buyers, (2) revise its labels to make them accurate, and (3) let future unhappy customers request refunds within 14 days of purchase (the company calls this the "Boiron Promise"). Boiron went one step further; it now informs customers that they have 30 days from purchase to request a refund. See Boiron Promise, BOIRON, (last visited Aug. 22, 2017) ("Boiron Promise Webpage").

         Some of the class members were not satisfied with this outcome, and so they opted out of the Gallucci settlement. Attorneys representing the opt-outs filed new class actions, raising essentially the same claims against Boiron, in California and Illinois. When the district courts found the class representatives inadequate, counsel tried to swap in replacements. In the Illinois case, the prospective representative was the current plaintiff, Chad Conrad. (Boiron eventually prevailed in the California case, and so it does not concern us further.) Yet before the Illinois substitution could occur, the then-lead plaintiff accepted Boiron's offer of judgment, prompting the district court to terminate the case. Boiron also offered Conrad $25 (more than he had paid for the Oscillo) plus attorney's fees and costs to settle his claim, but he rejected the offer and filed the complaint that kicked off the current suit on November 4, 2013. Eight months of preliminary proceedings followed, at which point the district court stayed the case pending the Ninth Circuit's resolution of the appeal of the October 2012 settlement. That court ultimately upheld the settlement, and the district court lifted its stay on August 13, 2015.

         Two weeks later, Boiron filed a motion to dismiss, which for the most part the district court granted. The court found that Conrad was an inadequate class representative because his suit would provide little benefit beyond Boiron's existing refund guarantee; it also found that Conrad lacked standing to pursue injunctive relief (a ban on marketing Oscillo as a flu remedy) under the Illinois Consumer Fraud Act since Conrad himself would not be duped by Boiron's misleading claims again. We denied Conrad's request to appeal the denial of class certification in February 2016, leaving him with only his individual damages claim. After still more proceedings, the district judge granted Boiron's motion under Federal Rule of Civil Procedure 67 to deposit $5, 025 with the court-above the maximum Conrad could recover-in order to moot his claim. Boiron deposited the funds, and the district court dismissed the case as moot on September 20, 2016. This appeal followed.


         Conrad's main arguments are straightforward: he attacks both the court's refusal to certify the class and its rejection of his individual claim based on Boiron's use of Rule 67 to try to moot the case. We review the denial of class certification for abuse of discretion, and we consider the mootness ruling de novo. Messner v. Northshore Univ. HealthSystem, 669 F.3d 802, 811 (7th Cir. 2012); Stevens v. Hous. Auth. of S. Bend, Ind., 663 F.3d 300, 306 (7th Cir. 2011).


         We begin with Conrad's effort to represent what remains of the class of Oscillo purchasers after the Gallucci settlement. Federal Rule of Civil Procedure 23(a) conditions class certification on "four requirements-numerosity, commonality, typicality, and adequate representation." Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 349 (2011). This case turns on adequacy, for an aspiring lead plaintiff such as Conrad is entitled to represent a class only if he "will fairly and adequately protect the interests of the class." Fed.R.Civ.P. 23(a)(4). In order to be an adequate representative, the named plaintiff must "be part of the class and possess the same interest and suffer the same injury as the class members." Amchem Prod., Inc. v. Windsor, 521 U.S. 591, 625-26 (1997) (internal quotation marks and citation omitted). In addition, the court must be satisfied that the plaintiff will keep the interests of the entire class at the forefront. Conrad's case brings to mind our comment in In re Aqua Dots Products Liability Litigation, 654 F.3d 748, 752 (7th Cir. 2011) ("Aqua Dots"), that "[a] representative who proposes that high transaction costs (notice and attorneys' fees) be incurred at the class members' expense to obtain a refund that already is on offer is not adequately protecting the class members' interests."

         In Aqua Dots, the manufacturer of the eponymous toys recalled them because they were potentially toxic. The recall notice told buyers that they could exchange the Aqua Dots for a non-defective replacement or a different, comparably priced toy. Notably, it did not mention any refunds, though they were provided upon request. A group of buyers challenged the recall program through a class action, alleging that the relief the company offered was inadequate. The district court refused to ...

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