Johnson & Johnson's baby powder. Photo Credit: Photo: Mike Mozart/Flickr

A federal appeals court has dismissed the only class action brought on behalf of consumers of Johnson & Johnson's baby powder, concluding that “buyer's remorse” was not enough to establish standing to sue.

In a 2-1 decision, the U.S. Court of Appeals for the Third Circuit found on Thursday that the plaintiff, Mona Estrada, got what she paid for, even though Johnson & Johnson failed to warn consumers that prolonged use of its talcum powder products could cause ovarian cancer.

“The question presented in this appeal from a dismissal of a class action is both narrow and novel: Has a plaintiff—who has entirely consumed a product that has functioned for her as expected—suffered an economic injury solely because she now sincerely wishes that she had not purchased the product?” wrote Chief Judge D. Brooks Smith. “We hold that such a plaintiff has not suffered an economic injury sufficient to bring a claim in federal court. More succinctly, buyer's remorse, without more, is not a cognizable injury under Article III of the United States Constitution.”

Smith, joined by Circuit Judge Michael Chagares, noted that Estrada never got ovarian cancer or alleged that Johnson & Johnson's products did not work. The two judges in the majority were appointees of President George W. Bush.

In a dissent, Circuit Judge Julio Fuentes, who was appointed by President Bill Clinton, said the majority failed to recognize that safety assurances in Johnson & Johnson's marketing of its baby powder were “key terms” in Estrada's bargain.

“Estrada alleges that she paid for a product based, in part, on Johnson & Johnson's representation of its safety,” he wrote. “That representation was part of the benefit of her bargain. Because that representation was false, Estrada did not receive the benefit of her bargain.”

A spokeswoman for Johnson & Johnson, which was represented by O'Melveny & Myers partner Matt Powers in San Francisco, said in an email: “We're pleased with the ruling.”

Plaintiff's lawyer Timothy Blood of San Diego's Blood, Hurst & O'Reardon said “there is now a clear split within the 3rd Circuit,” referencing the circuit's Oct. 18 ruling in Cottrell v. Alcon Labs. That ruling, which Blood relied on in his appeal, reversed a U.S. District Court judge on standing in a class action brought over the size of eye drops.

“We believe the dissent's reasoning is consistent with Cottrell, the other relevant Third Circuit authority and, as this case asserts only California state law claims on behalf of a California-only class, California law,” Blood wrote in an email. “We are evaluating whether to seek en banc review or litigate in state court, where the standing issue would not preclude litigation.”

Originally brought in California, the case involves a class of California consumers suing under California law. The U.S. Judicial Panel on Multidistrict Litigation transferred the case to New Jersey, where the multidistrict litigation is pending before U.S. District Judge Freda Wolfson. Unlike the thousands of cases that have landed verdicts of between $55 million and $4.7 billion, the class action alleged that consumers suffered from economic injuries when they relied on the company's marketing, which made no mention of known health risks.

Last year, Wolfson dismissed the class action for lack of standing. In her order, Wolfson looked at three different theories of economic damages: alternative product, premium price and benefit of the bargain. On appeal, plaintiff's lawyers argued those theories were inappropriate because the case was only at the dismissal stage. And while Estrada sought monetary relief and restitution, injunctive relief also was part of her complaint.

The Third Circuit's majority addressed all three theories. While Estrada did not allege that she would have purchased an alternative product had she known about the ovarian cancer link to Johnson & Johnson's baby powder, or that she paid a premium for it, she did claim that she had not gotten what she bargained for, which was a safe product. Although others might have gotten ovarian cancer, Estrada did not, Smith wrote.

“To be sure, had Estrada alleged that she was at risk of developing ovarian cancer, she may have established standing based on a theory of future physical injury,” Smith wrote. “But Estrada chose not to allege any risk of developing ovarian cancer in the future.”

As to Cottrell, the majority found that Estrada “overreads our opinion.”

Estrada's claims differed from that in Cottrell v. Alcon Laboratories, which focused on the money that consumers spent on the “wasted” portion of eye drops that were too big for the eye, Smith wrote. He instead relied on its 2016 decision in Finkelman v. National Football League, which found no standing as to a plaintiff who alleged the NFL's policies inflated the price of Super Bowl tickets.

“The two holdings can be harmonized, however, to provide a clear lesson: a plaintiff must do more than offer conclusory assertions of economic injury in order to establish standing,” Smith wrote. “It would not have been enough for the plaintiffs in Cottrell and Finkelman to simply allege that, although they purchased eye-drops and football tickets at a given price, they later wished they had not done so. But that is as far as Estrada's allegations of economic injury go.”

The dissent, however, called that analysis “misplaced.”

Fuentes also took issue with whether Estrada truly got a safe product or whether that mattered, since her claims were about Johnson & Johnson's marketing. He compared her case to that of a parent who buys organic food that turns out not to be organic, an observant Jew who purchases kosher meat that wasn't actually kosher, or consumers who paid for lock sets that were falsely marketed as “Made in the U.S.A.,” the last of which was the subject of a California Supreme Court decision in 2011.

“Estrada effectively alleges that she values 'safety' as a label, akin to 'organic' or 'Made in U.S.A.,'” Fuentes wrote. “When contrasted with the real danger allegedly posed by Johnson's baby powder, this misrepresentation might seem petty. However, that does not make it immaterial to Estrada's bargain as she alleges it.”