In Economic Loss Plaintiffs v. Abbott Laboratories, No. 23-2525 (7th Cir. Apr. 2, 2024), the Seventh Circuit holds that  “a potential class of consumers who purchased infant formula manufactured by Abbott Laboratories at a facility later deemed unsanitary” failed to establish Article III standing based on “potential risk of injury.”

“Abbott Laboratories produces powdered infant formula at multiple facilities, including one in Sturgis, Michigan. Plaintiffs assert that the Sturgis plant has a long history of quality control problems. The FDA [Food and Drug Administration] conducted multiple inspections of that facility and issued an Establishment Inspection Report in September 2021. That report contained at least sixteen complaints about harmful bacteria in formula manufactured at the Sturgis facility between 2019 and 2021.” While the federal government did not order a recall, Abbott voluntarily recalled the affected formula and paid full refunds.

In the aftermath of the agencies’ actions and Abbott’s recall, numerous plaintiffs sued Abbott. All cases were consolidated for pretrial proceedings. The cases include two categories of claims: (i) personal injury plaintiffs—complaints seeking recovery for personal (i.e., medical) injuries to children purportedly caused by consumption of Abbott’s formula; and (ii) economic harm plaintiffs—putative class claims asserting purely economic losses on account of Abbott’s conduct. This appeal concerns only the second category. The personal injury cases remain pending in the district court.”

The Seventh Circuit, affirming the district court, holds that the economic-harm class lacked standing. The court allows that “[e]conomic harm can be a concrete injury sufficient to confer standing,” such as when “as a result of a deceptive act or an unfair practice,” a plaintiff is “deprived of the benefit of his bargain.” But the panel holds that the present case did not within that classification.

“Plaintiffs’ alleged injury is hypothetical or conjectural. When purchasing the infant formula, plaintiffs received what they asked for. At that point, there was no known risk of contamination and no loss of the benefit of the bargain or premium price paid. Once plaintiffs learned of the unsanitary conditions at the Sturgis facility and potential risk of contamination, then they were told not to use the formula, and Abbott offered a refund. So, there was not a time when plaintiffs were at a risk of harm.”

“Plaintiffs’ claimed injury is also not particularized because they do not allege that any of the products they purchased were contaminated. Nor do plaintiffs plead facts suggesting that contamination of Abbott’s products was sufficiently widespread to plausibly affect any given unit of infant formula, including the ones they purchased. Plaintiffs claim only that there was a ‘potential risk’ the products may have been contaminated, but they do not say they were subject to that risk in a personal and individual way.”

The court distinguishes what it conceives as the speculative harm in the present case with cases where it was alleged that the entire run of a consumer product was defective. “A universal defect inherent in a product—such as a design defect or a fundamental flaw—renders each product valueless to each plaintiff . . . . Here, though, there is only a potential risk of harm or defect, not a universal defect, and no way to tell how widespread the defect was in Abbott’s formula . . . . [P]laintiffs did not allege facts suggesting that contamination of Abbott’s products was sufficiently widespread so as to plausibly affect any given product, including the ones they purchased. The potential risk of contamination is not enough to confer standing.”

“A hypothetical shows why plaintiffs’ theory of injury does not confer standing. Consider a popular restaurant at which a diner gets food poisoning. An investigation reveals the restaurant did not meet the sanitation code, so its food was at risk of contamination. The sick diner had a real, particularized injury. But any patron who has ever eaten at the restaurant does not have a real, particularized injury. The risk that other patrons’ food could have been contaminated because it was prepared and served at a restaurant that did not meet the sanitation code does not mean that the other patrons’ food was ever contaminated. Any injury to those other patrons is hypothetical or conjectural, and they have no particular or individual harm. So, the other patrons would not have standing to sue the restaurant under a risk-of-harm theory of injury, unlike the diner with food poisoning who suffered an actual harm.”