Juan Huertas v. Bayer US LLC

                                      PRECEDENTIAL

      UNITED STATES COURT OF APPEALS
           FOR THE THIRD CIRCUIT
                ____________

                     No. 23-2178
                    ____________

JUAN HUERTAS, On behalf of themselves and all others
   similarly situated; EVA MISTRETTA, On behalf of
    themselves and all others similarly situated; JOSE
VILLARREAL; DON PENALES, JR.; MIKE POOVEY;
  JEREMY WYANT; CHRISTOPHER CADORETTE;
     JONATHAN MARTIN; SEAN STEINWEDEL,
                                      Appellants

                          v.

                  BAYER US LLC
                   ____________

    On Appeal from the United States District Court
              for the District of New Jersey
           (District Court No. 2-21-cv-20021)
     District Judge: Honorable Susan D. Wigenton
                      ____________

                 Argued May 1, 2024
                   ____________

Before: KRAUSE, CHUNG, and AMBRO, Circuit Judges.
                 (Filed November 7, 2024)

Steven L. Bloch
Silver Golub & Teitell
1 Landmark Square
15th Floor
Stamford, CT 06901

Timothy J. Peter
Faruqi & Faruqi
1617 John F. Kennedy Boulevard
Suite 1550
Philadelphia, PA 19103

Max S. Roberts [ARGUED]
Bursor & Fisher
1330 Avenue of the Americas
32nd Floor
New York, NY 10019

      Counsel for Appellants

Andrew Soukup
Marianne E. Spencer
David M. Zionts [ARGUED]
Covington & Burling
850 10th Street NW
One City Center
Washington, DC 20001

      Counsel for Appellee




                                 2
                       ____________

                OPINION OF THE COURT
                     ____________

CHUNG, Circuit Judge.

        Bayer U.S. LLC (“Bayer”) is a pharmaceutical
company that sells a variety of healthcare products, including
the antifungal Lotrimin and Tinactin spray products at issue in
this litigation. Lotrimin and Tinactin are used to treat skin
infections, such as athlete’s foot and ringworm.1 In October
2021, Bayer recalled millions of dollars’ worth of Lotrimin and
Tinactin spray products after discovering that products dating
back to 2018 were contaminated with benzene. Plaintiffs
here—nine individuals who purchased Lotrimin and Tinactin
products during the recall period—do not allege that they have
suffered any physical injuries from using contaminated
products. Instead, they seek compensation for economic losses
they allegedly suffered from purchasing products that they
claim are worth less than the uncontaminated products for
which they bargained. Because we conclude that the District
Court erred in applying a heightened legal standard for
standing, we will partially reverse the District Court’s order
dismissing the complaint for lack of standing as to some
Plaintiffs and remand for proceedings consistent with this
opinion.




1
      Both products are regulated by the Food and Drug
Administration (“FDA”) under the United States Food, Drug,
and Cosmetics Act (“FDCA”).




                                  3
I.     BACKGROUND2

        Benzene is a chemical that has been labeled a human
carcinogen and linked to cancers, such as leukemia and non-
Hodgkin lymphoma, by various governmental agencies and
cancer research institutions. In 2018, the Food and Drug
Administration (“FDA”) released guidance concerning the
levels at which certain solvents are considered safe in
pharmaceuticals. The FDA rated benzene among the few
substances at issue that “should not be employed in the
manufacture of drug substances … and drug products because
of their unacceptable toxicity.”              Food and Drug
Administration, Q3C – Tables and List Rev. 4: Guidance for
Industry               5               (Aug.              2018),
https://www.fda.gov/media/133650/download. However, if
the “use [of benzene] is unavoidable in order to produce a drug
product with a significant therapeutic advance, then [its] levels
should be restricted” to 2 parts per million (the “FDA guideline
limit”).3 Id. Benzene exposure can occur through inhalation,
orally, or through skin absorption.

      In October 2021, Bayer voluntarily recalled certain
Lotrimin and Tinactin spray products after it discovered

2
       We rely on the facts as stated in Plaintiffs’ complaint
and take them as true for purposes of this motion to dismiss
under Rule 12(b)(1).
3
       This guidance is for products that cannot be produced
without the use of benzene. Both parties acknowledge that
benzene is not an ingredient of Lotrimin and Tinactin products,
and neither asserts that the FDA guidance contemplates the
inclusion of benzene in these products.




                                   4
benzene in samples of the products. The recall covered
unexpired “spray products with lot numbers beginning with
TN, CV, or NAA” that were “distributed between September
2018 to September 2021.” App. 135. The recall notice
acknowledged that “[b]enzene is classified as a human
carcinogen” and that “[e]xposure to benzene can occur …
through the skin.” App. 136. Despite the notice’s admission
that “[b]enzene is not an ingredient in any of Bayer[’]s
Consumer Health products,” it clarified that its “decision to
voluntarily recall these products is a precautionary measure
and that the levels detected are not expected to cause adverse
health consequences in consumers.” App. 135–36. Shortly
after the recall, pharmaceutical testing company Valisure, LLC
(“Valisure”) tested thirteen samples of recalled Lotrimin and
Tinactin products. Twelve of the thirteen samples, all with lot
numbers beginning with TN, contained detectable levels of
benzene, and eleven of the samples’ levels exceeded the FDA
guideline limit.4

       Plaintiffs Juan Huertas and Eva Mistretta filed a
putative class action on November 16, 2021, alleging that they
purchased Lotrimin and Tinactin products during the recall
period and seeking damages for various state law causes of
action. The District Court dismissed the original complaint
without prejudice, and Plaintiffs filed their First Amended
Complaint (“FAC”) in September 2022, which added seven
additional named plaintiffs.

       According to the FAC, “[t]he notable consistency with

4
       Plaintiffs do not provide details about the product
sample that did not contain detectable levels of benzene, so it
is unclear to which lot this product belonged.




                                  5
which unacceptable levels of benzene were detected by
Valisure in the Products they tested indicates that the Products
[that] Plaintiffs and members of the Classes purchased
contained impermissible levels of benzene.” App. 250.
Plaintiffs argued that this manufacturing flaw (1) deprived
them of the benefit of their bargain because they contracted for
safe products that did not contain benzene, but they got
benzene-contaminated products that were unusable and
worthless, and (2) they “were forced to waste portions of the
Products or to spend additional money to purchase replacement
medications that they would not have spent but for the Products
being contaminated.” App. 256. Plaintiffs also argued that
their exposure to benzene increased their risk of developing
cancer in the future, requiring them “to undertake significant
monitoring they otherwise would not have to detect the
possible development of cancers and other ailments.”5 App.
256.

       All of the Plaintiffs alleged that they purchased
Lotrimin or Tinactin spray products during the recall period
from September 2018 to September 2021. Each Plaintiff also
alleged that his or her product(s) contained benzene, but only
four of the nine Plaintiffs—Juan Huertas, Eva Mistretta,
Jeremy Wyant, and Mike Poovey—provided lot numbers
specified in the recall. 6

5
       Plaintiffs do not claim they contracted cancer or
suffered any other physical ailments as a result of using the
contaminated products in this litigation.
6
       Huertas alleged that he purchased a Lotrimin product
with the lot number TN009K7 in approximately August 2021.




                                  6
       The District Court dismissed the FAC with prejudice in
May 2023 for lack of standing. It concluded that the FAC’s
“addition of multiple Plaintiffs and a plethora of conclusory
statements, copied and pasted vague assertions, and facts
requiring inferential leaps” failed to “remed[y] the factual
deficiencies that existed in the original Complaint.” App. 14.
As a result, the District Court held that “the FAC does not
sufficiently allege facts to support the conclusion that Plaintiffs
suffered economic loss,” App. 16, or harm stemming from the
increased risk of developing a physical injury in the future as a
result of using a benzene-contaminated product. Plaintiffs
timely appealed.

II.    JURISDICTION AND STANDARD OF REVIEW

        The District Court had jurisdiction over Plaintiffs’
claims pursuant to 

. We have jurisdiction
over Plaintiffs’ appeal under 

. “[O]ur review
of the grant of a motion to dismiss is plenary.” Morse v. Lower
Merion Sch. Dist., 

, 906 (3d Cir. 1997). “A
motion to dismiss for want of standing is ... properly brought


Mistretta alleged that she purchased a Tinactin product with
the lot number CV01E2X in approximately July 2021. Wyant
alleged that he purchased several canisters of Lotrimin and
Tinactin products between September 2018 and September
2021, but provided the lot number for only one Tinactin
product. The lot number for that product was TN00273.
Poovey alleged that he purchased a Lotrimin product with the
lot number TN001NK sometime between September 2018 and
September 2021. No one alleged purchasing a product with a
lot number beginning in “NAA.”




                                    7
pursuant to Rule 12(b)(1), because standing is a jurisdictional
matter.” Ballentine v. United States, 

 (3d
Cir. 2007). “In evaluating whether a complaint adequately
pleads the elements of standing, courts apply the standard of
reviewing a complaint pursuant to a Rule 12(b)(6) motion to
dismiss for failure to state a claim: Court[s] must accept as true
all material allegations set forth in the complaint, and must
construe those facts in favor of the nonmoving party.”7 In re
Schering Plough Corp. Intron/Temodar Consumer Class
Action, 

 (3d Cir. 2012) (alteration in
original) (quotations omitted). “To survive a motion to
dismiss, a complaint must contain sufficient factual matter,
accepted as true, to ‘state a claim to relief that is plausible on
its face.’” Ashcroft v. Iqbal, 

 (2009) (quoting
Bell Atl. Corp. v. Twombly, 

 (2007)).
“While the plausibility standard does not impose a ‘probability
requirement,’ it does demand ‘more than a sheer possibility
that a defendant has acted unlawfully.’” In re Schering, 

 (quoting Iqbal, 

).


7
       A 12(b)(1) challenge can be either facial or factual. “A
facial 12(b)(1) challenge, which attacks the complaint on its
face without contesting its alleged facts, is like a 12(b)(6)
motion in requiring the court to consider the allegations of the
complaint as true.” Hartig Drug Co. Inc. v. Senju Pharm. Co.,

 (3d Cir. 2016) (quotations omitted). A
factual challenge, on the other hand, “attacks allegations
underlying the assertion of jurisdiction in the complaint, and it
allows the defendant to present competing facts.” 

 Bayer’s
motion to dismiss is a facial challenge because it contests the
sufficiency of Plaintiffs’ allegations without challenging their
truth.




                                    8
III.   DISCUSSION

        “To establish standing, a plaintiff must have (1) suffered
an injury[-]in[-]fact, (2) that is fairly traceable to the
challenged conduct of the defendant, and (3) that is likely to be
redressed by a favorable judicial decision.” In re Johnson &
Johnson Talcum Powder Prod. Mktg., Sales Pracs. & Liab.
Litig., 

 (3d Cir. 2018) [hereinafter J&J]
(quotations omitted). This appeal turns on the first prong of
the standing inquiry—whether Plaintiffs’ complaint plausibly
alleged injury-in-fact. Injury-in-fact is comprised of three sub-
elements: (1) “an invasion of a legally protected interest;”
(2) “injury [that] is both concrete and particularized;” and (3)
“injury [that] is actual or imminent, not conjectural or
hypothetical.” 

 (quotations omitted).

       “While it is difficult to reduce injury-in-fact to a simple
formula, economic injury is one of its paradigmatic forms.”
Danvers Motor Co. v. Ford Motor Co., 

 (3d
Cir. 2005). One way “a plaintiff might successfully plead an
economic injury [is] by alleging that she bargained for a
product worth a given value but received a product worth less
than that value.” J&J, 

. This is known as the
benefit-of-the-bargain theory of injury. Under this theory,
“[t]he economic injury is calculated as the difference in value
between what was bargained for and what was received.” 

Plaintiffs here rely on the benefit-of-the-bargain theory to
establish injury-in-fact, arguing that they paid full purchase
price for products “free of contaminants and dangerous
substances,” App. 255, but received products that were
defectively manufactured with “harmful levels of benzene,”
causing them to be “adulterated” and therefore “worthless,”
App. 254. We conclude that Plaintiffs can rely on this theory




                                    9
of economic injury.8

    A.    Plaintiffs Have Plausibly Alleged that Benzene-
          Contaminated Products Are Worth Less than
          Uncontaminated Products.

       Plaintiffs’ theory of economic standing is
straightforward: benzene-contaminated products are worth less
than a properly manufactured product, thereby depriving
Plaintiffs of the benefit of their bargain. Plaintiffs’ argument
to that effect is straightforward: they “bargained for an
antifungal product free of contaminants and dangerous
substances,” App. 255, but instead received products that were
“unmerchantable and unfit for use,” 

 “as they [were]
adulterated and contain[ed] harmful levels of benzene,” App.
254. This defect, Plaintiffs allege, rendered their products
worthless.

      We conclude that Plaintiffs have plausibly alleged that
Lotrimin and Tinactin products that are unusable due to the

8
       Plaintiffs also contend that they suffered economic
harm because they were forced to waste unused product as a
result of the contamination, and Huertas alleges that he
purchased a replacement product he would not have had to
purchase but for the recall. Because we conclude that Plaintiffs
can rely on a benefit-of-the-bargain theory, we do not reach
these alternative bases for establishing injury-in-fact.
       The FAC submits that Plaintiffs can establish injury-in-
fact based on their increased risk of developing disease from
using the recalled products and consequent need for medical
monitoring. Plaintiffs do not raise this issue on appeal,
however.




                                  10
contamination are necessarily worth less than the product when
properly manufactured.9 The logic requires little elaboration:
if a product contains a manufacturing flaw so severe that it
cannot be used,10 it is not worth the full price purchasers paid
with the understanding they would be able to use all of the
product.    Here, Bayer’s recall notice recognized that
“[b]enzene is classified as a human carcinogen” and that it “is
not an ingredient in any of Bayer Consumer Health products,”
including Lotrimin and Tinactin. App. 135, 136. In other

9
       We do not decide whether contaminated products are
necessarily “worthless,” as Plaintiffs allege. Having concluded
that Plaintiffs’ theory is viable, we need not determine
precisely how much less contaminated products are worth.
10
        Bayer points out that the FDA’s guideline limit is
nonbinding guidance, implying that Plaintiffs could only rely
on this guideline if it established a strict legal limit for benzene.
To the contrary, companies are frequently subject to legal
liability for manufacturing defects that are not specifically
regulated by law. Though lack of federal laws or regulations
may, in some cases, impact a party’s liability, their absence is
not dispositive in determining whether a plaintiff has plausibly
alleged an injury for standing purposes. Moreover, this
argument conflicts with Bayer’s own reliance on the FDA
guidance in its complaint against Aeropres Corporation,
including that Bayer issued the recall after discovering that
samples of “Lotrimin and Tinactin products were above the
FDA’s acceptable limit of 2 parts per million.” Compl. &
Demand for Jury Trial, Bayer HealthCare LLC v. Aeropres
Corporation, No. 1:23-cv-04391 ¶ 40 (N.D. Il. July 7, 2023)
[hereinafter “Aeropres Complaint”]; see infra, discussion of
Aeropres Complaint.




                                    11
words, the contaminated products contained a manufacturing
defect because they contained a carcinogenic component that
is not an ingredient of the products. The recall notice went on
to instruct that consumers “should stop using” the recalled
products, meaning that, as a result of the defect, the products
were no longer fit for use. App. 137. Since the contaminated
products contained a defect that rendered them unusable, the
products were worth less than their full purchase price.11 To
hold otherwise would be to conclude that an unusable product
is worth the same as a usable one—a conclusion that resists
logic.

        Bayer argues that our decision in J&J forecloses
Plaintiffs’ theory of economic injury. There, the plaintiff sued
Johnson & Johnson under the benefit-of-the-bargain theory,
arguing that she suffered economic injury by purchasing baby
powder that allegedly increased the risk of developing ovarian
cancer. 903 F.3d at 281–82. She contended that baby powder
had been marketed as a safe product, and had she known of its
risks, she would not have purchased the product. 

.

11
        Contrary to Bayer’s claim that “Plaintiffs here do not
allege that they stopped taking Lotrimin or Tinactin because
they learned of the possibility that their products contained
benzene,” Resp. Br. 27, each Plaintiff alleges that he or she
“still had a portion” of their Lotrimin or Tinactin products and
that they “did not use and [were] unable to use the remaining
portion[s]” of those products “as a result of [the]
contamination.” App. 263–277. (emphasis added). Construing
these allegations in the light most favorable to Plaintiffs, they
can plausibly allege they intended to use their products but
were unable to do so “as a result” of the benzene
contamination.




                                  12
We explained that the plaintiff failed to allege standing because
she “entirely consumed a product that … functioned for her as
expected,” 

, and her “theory of recovery [wa]s simply
that she suffered an economic injury by purchasing improperly
marketed Baby Powder,” 

 (emphasis omitted). We
rejected the theory because it amounted to no more than an
allegation that she purchased a product at a given price and
“later wished [she] had not done so.” 

. Instead, we
explained that a plaintiff must “allege facts that would permit
a factfinder to determine that the economic benefit she received
in purchasing the powder was worth less than the economic
benefit for which she bargained.” 

. More simply, she
was required to “allege that she purchased Baby Powder that
was worth less than what she paid for.” 

.

       According to Bayer, however, J&J did something more.
Bayer reads J&J to mean that “the mere presence of an
unwanted attribute does not render a product defective and
‘worth less’ than what it otherwise would be worth.” Resp. Br.
at 23. In other words, Bayer argues that J&J forecloses
Plaintiffs’ position that a “contaminated product is inherently
worth less than the risk-free, properly manufactured product.”
Resp. Br. 23. J&J applies here, Bayer contends, because
“Plaintiffs here have not alleged that the products they
purchased failed to cure their fungal infections as expected.”
Resp. Br. 23.

       As an initial matter, J&J is distinguishable because the
Court explicitly recognized that it did “not involve allegations
of a defective product.” 

. Here, however,
Bayer’s products were not supposed to contain benzene, and




                                  13
Plaintiffs plausibly alleged that the benzene contamination12—
the product’s defect—rendered it unusable, making it
inherently worth less than if it had been manufactured
properly.13

        Moreover, J&J did not hold that the only way to prove
that an unsafe product is worth less is by alleging that the
product did not perform therapeutically as expected. This is
evident from J&J’s reliance on our earlier case, Cottrell v.
Alcon, Lab’ys, 

 (3d Cir. 2017). In Cottrell,
plaintiffs demonstrated an injury-in-fact when they purchased
an eye medication because the medication’s dropper dispensed
excessive product. 

. Thus, the source of their
economic injury was a design defect resulting in waste. J&J

12
        Bayer uses the term “contamination” imprecisely to
refer to any product that contains an undesirable component,
even when properly manufactured. However, Plaintiffs here
use the term specifically to describe products that “were
contaminated” by a component that is not an ingredient of the
properly manufactured product, resulting in “a manufacturing
defect.” Opening Br. 37.
13
        Our decision in J&J also confronted unique facts not
present here. Specifically, in J&J, we could not “presume that
[the plaintiff] would spend more for safe powder than she
would for unsafe powder” because she “desire[d] to continue
purchasing Baby Powder in the future despite being aware of
its alleged health risks,” regardless of whether “the powder
[was] sold at a discounted price.” 

. “In the
absence of that condition, we [could not] presume that
[plaintiff] wishe[d] to continue to buy Baby Powder at
anything other than its … market price.” 

.




                                 14
explained that key to Cottrell’s outcome was that “plaintiffs’
economic theory of harm was based on more than mere
conjecture.” J&J, 

; see also 

 at 286–87. By
contrast, the J&J plaintiff “fail[ed] to allege … that the Baby
Powder provided her with an economic benefit worth one
penny less than what she paid.” 

. Instead, she only
“offer[ed] conclusory assertions of economic injury.” 

.

       As in Cottrell, Plaintiffs’ theory of economic injury here
is more than mere conjecture. Similar to the allegation in
Cottrell that plaintiffs’ products contained a design defect
leading to product waste, Plaintiffs here allege that a
manufacturing defect rendered contaminated products
unusable. These unusable products were worth less than the
products when properly manufactured and fit for human use.

        Our conclusion that contaminated products are worth
less than uncontaminated products is consistent with decisions
from other Courts of Appeals. For example, in In re Aqua Dots
Products Liab. Litig., several parents sued a manufacturer that
produced a toy with defective components that, when ingested,
metabolized into a chemical substance that can cause a variety
of side effects and could even lead to death. 

(7th Cir. 2011). The parents’ children were not harmed by the
toy, but the Seventh Circuit nonetheless concluded that the
parents had standing to sue under a benefit-of-the-bargain
theory because “they paid more for the toys than they would
have, had they known of the risks the beads posed to children.”

. Similarly, in Debernardis v. IQ Formulations, LLC,

 (11th Cir. 2019), the Eleventh Circuit held that
plaintiffs who purchased adulterated dietary supplements
under the FDCA “received … defective product[s] that had no




                                  15
value.” 

. The Eleventh Circuit explained that its
“conclusion [was] consistent with the well-established benefit-
of-the-bargain theory of contract damages, which recognizes
that some defects so fundamentally affect the intended use of a
product as to render it valueless.”14 

       In sum, Plaintiffs alleged that they purchased recalled
Lotrimin and Tinactin products based on the understanding
that those products would be fit for topical use in treating
fungal infections. Instead, they received products that they
were instructed to “stop using” and to “discard …
appropriately.” App. 137, 136. Given that contaminated
products are unfit for their intended use, they are inherently
worth less than the uncontaminated products Plaintiffs thought
they were purchasing.




14
       We recognize, as Bayer points out, that Debernardis is
distinguishable to the extent that it concluded that adulterated
supplements were worthless based on the FDCA’s explicit
prohibition on “the sale of adulterated dietary supplements,”
which was in turn based on Congress’s judgment that “such
substances could not safely be ingested.” 

.
Bayer, however, cites no authority suggesting that a legal
prohibition is the sole basis upon which our conclusion here
can be reached. Indeed, whether through a legal prohibition or
a product recall, the end result is the same: if their products are
contaminated, they are unusable. Although Bayer’s recall
notice explained “the levels detected are not expected to cause
adverse health consequences,” App. 136, the economic injury
addressed here is not for costs associated with adverse health
consequences.




                                   16
       B.     Whether Plaintiffs Plausibly Alleged They
              Purchased Defective Products

        Having determined that Plaintiffs have plausibly
alleged economic injury, we must still determine whether they
sufficiently alleged that their products were defectively
manufactured and contained benzene. See J&J, 

 (explaining that allegations that a product is “unsafe as to
others are not relevant to determining whether [named
plaintiffs] ha[ve] standing [themselves]”). Otherwise, their
claim that they purchased a product worth less than the product
for which they bargained necessarily fails, and they are not
entitled to relief under the benefit-of-the-bargain theory.

        Plaintiffs need only demonstrate standing “with the
manner and degree of evidence required at the successive
stages of the litigation.” Lujan v. Defs. of Wildlife, 

 (1992). At the motion-to-dismiss stage, “courts
cannot inject evidentiary issues into the plausibility
determination,” Schuchardt v. President of the United States,

 (3d Cir. 2016), because “the [subsequent]
discovery process is designed to enable [plaintiffs] … to
un[ ]cover evidence that may support the allegations set forth
in a complaint,” Evancho v. Fisher, 

 (3d Cir.
2005). Thus, as a general matter, Plaintiffs need not assert with
specificity the extent of the contamination across all products,
so long as they provide sufficient details to plausibly allege that
their products were contaminated. In evaluating such an
allegation, we must “accept as true all allegations in the
complaint and all reasonable inferences that can be drawn
therefrom[ ] and view them in the light most favorable to the
plaintiff.” 

. The key, though, is that we only draw
“reasonable” inferences in a plaintiff’s favor. See id.




                                   17
(emphasis added).

       Plaintiffs urge us to infer from Bayer’s recall itself that
Plaintiffs’ products were contaminated. We agree with the
District Court that this was insufficient to establish that they
purchased contaminated products. The mere fact that a product
was recalled would “not nudge[ ] [Plaintiffs’] claims across the
line from conceivable to plausible.” Twombly, 

.15

       In addition to the recall itself, Plaintiffs offer Valisure’s
testing results to establish that they purchased contaminated
products. In finding that Plaintiffs had not plausibly alleged
that their products contained benzene, the District Court
rejected Plaintiffs’ reliance on the Valisure testing and
explained that “[b]ecause Plaintiffs … cannot allege that all of
the representative products contained benzene and contained
excessive levels of benzene, Plaintiffs are unable to establish a
plausible inference that every Product at issue, including those
purchased by Plaintiffs, also contained benzene and excessive
levels of such.” App. 20. While we understand the challenge
the District Court faced in assessing the limited testing results
presented by Plaintiffs,16 we conclude that the District Court’s

15
      That is particularly true here, where Valisure’s testing
is consistent with Bayer’s claim in the recall notice that
benzene was discovered in “some samples” of the product.
App. 135.
16
      Valisure did not test Plaintiffs’ products. Instead,
Valisure tested thirteen Lotrimin and Tinactin samples.
Twelve of these samples, all with lot numbers beginning TN,




                                    18
reasoning was flawed.

        Plaintiffs need only plausibly allege that they purchased
contaminated products. This does not require a showing that
all products in the recall were contaminated, as this would
impose a heightened standard requiring that it be more likely
than not—or probable—that Plaintiffs purchased a defective
product. See Twombly, 

 (“Asking for plausible
grounds to infer [contamination] does not impose a probability
requirement at the pleading stage; it simply calls for enough
fact to raise a reasonable expectation that discovery will reveal
evidence of [an injury].”); see also In re Recalled Abbott Infant
Formula Prod. Liab. Litig., 

, 529-30 (7th Cir.
2024) (suggesting that injury is adequately particularized when
facts allege that “contamination of [ ] products was sufficiently
widespread to plausibly affect any given [product], including
the ones [Plaintiffs] purchased”); John v. Whole Foods Mkt.
Grp., Inc., 

 (2d Cir. 2017) (holding injury
was plausibly alleged when third-party testing conducted
during the relevant period determined that the challenged



contained detectable levels of benzene and levels in eleven of
those samples exceeded the FDA guideline limit. The FAC
provides no context for this testing, however, and Plaintiffs’
arguments on appeal do not fully address this weakness. For
example, Plaintiffs do not explain why positive tests of twelve
“TN” samples out of the hundreds of thousands of products
recalled is sufficient to extrapolate that their products were
plausibly contaminated, nor whether Valisure’s testing of TN
samples is representative of products bearing CV and NAA lot
numbers.




                                  19
mislabeling practices were “systematic” and “routine”).17

       Even applying this standard, we might still have
reservations about the reasonable inferences that could be
drawn from Plaintiffs’ allegations, but on appeal, Plaintiffs
have offered additional support. Specifically, Plaintiffs
notified us of a complaint in a separate, later action filed by
Bayer against Aeropres Corporation, the manufacturer of the
component in Lotrimin and Tinactin that was contaminated
with benzene, for costs associated with the recall. SeeAeropres
Complaint. Plaintiffs requested that we take judicial notice of
the Aeropres Complaint, and we granted the motion. Because
Bayer filed the Aeropres Complaint after the District Court
dismissed Plaintiffs’ FAC with prejudice, Plaintiffs raise this

17
         Requiring Plaintiffs to show that all tested products
were contaminated is flawed for another reason – such results
would not necessarily reflect that Plaintiffs’ products were
contaminated. For example, if 1,100 products were recalled, a
result reflecting that one hundred percent of samples were
contaminated based on a sample size of two products would
tell us less about the plausibility of contamination than a ninety
percent positive rate based upon a sample size of 1,000
products. This example is not to suggest that there is a specific
level of sampling we deem to be representative, nor a specific
percentage of defective products that must ultimately be
established from that sampling. Quite the contrary. We
recognize the inherent challenges in obtaining contamination
data at the dismissal stage, as well as the relatively low burden
set by notice pleading. The example is simply meant to
demonstrate the importance of assessing what testing results
plausibly suggest, rather than applying arbitrary metrics to
determine their significance.




                                   20
argument, necessarily, for the first time on appeal.

       According to the Aeropres Complaint, “Bayer
commissioned … testing of Lotrimin and Tinactin samples[,]
which revealed that Lotrimin and Tinactin samples
manufactured beginning in September 2018, the date of
manufacture of the oldest unexpired lots, were contaminated
with benzene.” Id. ¶ 41. The Aeropres Complaint refers to
“data [Bayer] relied upon in deciding to proceed with the
recall” as well as “communications with [the] FDA regarding
the recall.” Id. ¶ 47. That data led to a recall that has “caused
Bayer to incur millions of dollars in losses.” Id. ¶ 45.
According to Bayer, “[t]hese damages include approximately
$9 million to refund stores in the U.S. for on-shelf and in-store
inventory, $1 million to refund U.S. consumers who purchased
product from stores, $1.2 million in fees to a refund service
provider, and $800,000 to recall products in Mexico and
Canada.” Id. ¶ 52. Additionally, “Bayer had to destroy and
write-off millions of dollars’ worth of damaged Lotrimin and
Tinactin product that was unsaleable due to Aeropres’
contamination.” Id. ¶ 53. By signing the complaint, Bayer’s
counsel certified that “to the best of [their] knowledge,
information, and belief, … the factual contentions have
evidentiary support or, if specifically so identified, will likely
have evidentiary support after a reasonable opportunity for
further investigation or discovery.” Fed. R. Civ. P. 11(b)(3).

       Plaintiffs ask us to consider the allegations in the
Aeropres Complaint as lending support for the plausibility of
Plaintiffs’ allegations of contamination. While before the
District Court, Plaintiffs were given the opportunity to amend
their original complaint, but at that time, the Aeropres
Complaint had not yet been filed. Therefore, Plaintiffs’ FAC




                                   21
was necessarily devoid of allegations regarding Bayer’s
contentions in the Aeropres Complaint, which may have
supported a potential finding of plausibility.18 Rather than

18
        Plaintiffs noted a number of inconsistencies between
Bayer’s position here and in the Aeropres Complaint. See,
e.g., Answering Br. 20 (“Bayer recalled certain lots ‘as a
precautionary measure,’ and the mere inclusion of a lot in the
recall does not support an inference that any product in that lot
... contained benzene.”), with Aeropres Compl. ¶ 44 (“Bayer
commissioned additional testing of Lotrimin and Tinactin
samples which revealed that Lotrimin and Tinactin samples
manufactured beginning in September 2018, the date of
manufacture of the oldest unexpired lots, were contaminated
with benzene.”), id. ¶ 47 (reflecting that Bayer “relied upon
[data] in deciding to proceed with the recall” as well as
“communications with [the] FDA regarding the recall”), id. ¶
42 (the recall was “a direct result of Aeropres’s supply of
benzene contaminated Propellant A-31”), id. ¶ 59 (“Aeropres
provided Bayer with Propellant A-31 containing benzene in
amounts exceeding acceptable limits established by FDA and
causing the products to be recalled.”), and id. ¶ 88 (“Bayer’s
Lotrimin and Tinactin products were damaged beyond use or
repair.”).
        We requested supplemental briefing to address whether
Bayer’s allegedly inconsistent positions implicated judicial
estoppel, a doctrine rooted in the principle that “[w]here a party
assumes a certain position in a legal proceeding, and succeeds
in maintaining that position, [it] may not thereafter, simply
because [its] interests have changed, assume a contrary
position.” New Hampshire v. Maine, 

 (2001)
(quotations omitted).




                                   22
consider the impact of the Aeropres Complaint in the first
instance, though, we think the better course is to remand for
the District Court to apply the plausibility standard articulated
above. Upon remand, the District Court is free to consider any
motion for leave to amend the FAC that may be filed. See
Finkelman v. Nat’l Football League, 

 (3d Cir.
2016); Fed. R. Civ. P. 15(a); cf. Max’s Seafood Café ex rel.
Lou-Ann, Inc. v. Quinteros, 

, 677 (3d Cir. 1999)
(noting that a motion for reconsideration may be granted where
the moving party demonstrates “the availability of new
evidence that was not available when the court granted the
motion[.]”).


         We decline to address judicial estoppel here because it
is still incumbent upon Plaintiffs to establish standing in the
FAC. See Grondal v. United States, 

 (9th Cir.
2021) (“Judicial estoppel is not a substitute for subject matter
jurisdiction.”) (quotations omitted); Hansen v. Harper
Excavating, Inc., 

 (10th Cir. 2011)
(“[W]e cannot simply ... allow judicial estoppel to substitute
for subject-matter jurisdiction.”); Gray v. City of Valley Park,
Mo., 

 (8th Cir. 2009) (“[W]e must have
Article III jurisdiction to entertain any claim even though the
change in tactics in this case does seem to result in the sort of
extreme perversion of the judicial process that normally
justifies the use of judicial estoppel.”); Wight v. BankAmerica
Corp., 

 (2d Cir. 2000) (“As an equitable
doctrine, judicial estoppel does not rest easily with the concept
of standing.”). Thus, even if we were to agree that Bayer’s
Aeropres position essentially asserts that its data raises a
plausible inference that recalled products contained benzene,
Plaintiffs still have an independent obligation to adequately
plead the elements of standing in the FAC.




                                  23
       Finally, because neither the recall itself, nor the
Valisure testing, nor the Aeropres Complaint, have any
relevance to Plaintiffs who have failed to allege a TN, CV, or
NAA lot number, we conclude that the District Court properly
dismissed their claims for lack of standing. To conclude
otherwise would require an inference that all products sold
during the recall window contained the specified prefixes, or
that those prefixes dominated Bayer’s Lotrimin and Tinactin
sales during that time frame. Neither the FAC nor the Aeropres
Complaint allege facts that would support this inference.
Without any information to tie these Plaintiffs’ products to the
recall other than the timeframe during which they made their
purchases, these Plaintiffs’ allegations “stop[ ] short of the line
between possibility and plausibility.” Twombly, 

; see also 

 (“Factual allegations must be enough
to [assure a court of jurisdiction] above the speculative level.”).

IV.    CONCLUSION

       For the foregoing reasons, we will reverse the District
Court’s dismissal of the complaint as to Plaintiffs Huertas,
Mistretta, Wyant, and Poovey and remand for further
proceedings consistent with this opinion.




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