Theranos Wins Dismissal of Most Claims in Class Action Suit

  • Judge Holland throws out more than a dozen claims in case
  • Holland also is allowing consumers to revise some claims

Theranos Inc. won a ruling throwing out most of the claims by consumers in a class action alleging the startup lied in marketing about the performance of its blood-testing capabilities.

A federal judge in Arizona on Tuesday dismissed more than a dozen claims in the case, including racketeering and breach of contract. He also is allowing the consumers to revise some of their fraud and racketeering claims. Theranos, based in Palo Alto, California, has closed its blood-testing labs and fired more than 300 workers.

Much of U.S. District Judge Russel Holland’s decision to throw out so many of the claims is rooted in flawed representations by consumers who said they used Theranos products. In at least three cases, consumers acknowledged that multiple vials of blood were drawn from patients. Vials are not part of the “finger-stick technology” at the center of many of the complaints, according to filings.

“No plaintiff could plausibly allege that he or she relied on misrepresentations about finger-stick blood tests, given that he or she must have known that the blood test actually being performed was not a finger-stick blood test,” Holland wrote in his order. That made those claims implausible, the judge said.

‘Medical Battery’

Holland also rejected claims of “medical battery” -- that the companies harmed patients with their treatment when drawing blood for research and testing purposes of Theranos’ Edison device, not for treatment. The judge ruled that medical battery claims cannot be invoked if Theranos or Walgreens Boots Alliance Inc. -- the drugstore chain where some of the tests were conducted -- misguided consumers regarding the purpose of the withdrawal, rather than taking the samples without consent.

While consumers have argued that they were not informed of the “true character of the contact” with the needle used to withdraw, Holland ruled that there’s no way they weren’t fully aware of the purpose since they received test results immediately.

“Although these results may not have been accurate, it is implausible for plaintiffs to contend that there was no therapeutic purpose for their blood tests,” he ruled.

Attorneys for consumers, Theranos and Deerfield, Illinois-based Walgreens weren’t immediately available for comment.

In April, Theranos announced a $4.46 million settlement with the Arizona attorney general to cover costs of consumers who bought the faulty tests, and in May said it settled suits with two of its early investors. The company still faces a class action brought on behalf of indirect investors pending in a California federal court and a breach of contract suit filed by Walgreens.

The case is In re: Arizona Theranos Incorporated Litigation, 16-cv-02138, U.S. District Court, District of Arizona (Phoenix).

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