Update: Walgreens, former Theranos COO lose most appeals in blood test class action lawsuit

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Theranos class action lawsuit overview: 

• Who: Walgreens and ex-Theranos COO Ramesh Balwani unsuccessfully appealed to get a class action lawsuit filed against them decertified. 
• Why: Plaintiffs alleged Walgreens and Balwani deceived them about the effectiveness of Theranos blood tests.
• Where: The class action lawsuit appeal was heard by the United States Court of Appeals for the 9th Circuit.

The United States Court of Appeals for the 9th Circuit finalized certification for most parts of a long-standing class action lawsuit accusing Walgreens and former Theranos chief operating officer Ramesh “Sunny” Balwani of deceiving consumers about how effective the Theranos blood test was.

Seven lead plaintiffs filed a class action lawsuit against Walgreens and Balwani in 2016, asserting more than a dozen claims on behalf of a class of consumers who had their blood drawn for testing at Theranos Wellness Centers inside Arizona and California Walgreens locations. A district court granted class certification last year. 

The plaintiffs claimed the defendants violated the Arizona Consumer Fraud Act, California’s Unfair Competition Law and California’s False Advertising Law, and allegedly are guilty of racketeering, battery and medical battery. 

The three-judge panel agreed with a California district court’s decision to certify most parts of the class action lawsuit; however, they did reverse and remand certification for plaintiffs claims of battery and medical battery, ruling the class must be limited to those who had their blood personally drawn by Walgreens employees. 

Walgreens argued the class should be decertified because of an alleged conflict of interest between named and unnamed plaintiffs, after the former dropped emotional distress and medical treatment related claims. The panel disagreed that there was a conflict of interest.

“The district court did not err by concluding that plaintiffs dropped their emotional distress and subsequent medical treatment claims for the strategic benefit of the entire class, and there is no conflict of interest,” states a memorandum filed Sept. 8. 

Walgreens also argued unsuccessfully that claims related to racketeering and violations of the Arizona Consumer Fraud Act should not be certified since Arizona plaintiffs had already received compensation from a separate settlement in 2017. The panel ruled that plaintiffs could still be entitled to punitive damages.

U.S. Court of Appeals rules plaintiffs may have ‘suffered a compensable injury’

“Plaintiffs in this case may have suffered a compensable injury that entitled them to damages according to the Arizona Consent Decree, even though those compensatory damages have already been paid,” the memorandum states.  

Balwani, meanwhile, argued that certain plaintiffs did not suffer injury since they received accurate test results and ended up with improved health. The 9th Circuit agreed with the district court’s prior determination that this was overshadowed by issues of overall test reliability.

“Balwani’s defense does not address this central issue of liability because whether individual tests were in fact accurate is not relevant to representations that were made concerning the reliability of the testing,” the memorandum states. 

Theranos, which at its peak was valued at more than $9 billion, started to fall from grace after an explosive report from the Wall Street Journal began exposing the company in the fall of 2015. 

The Wall Street Journal claimed Theranos was overstating the effectiveness of its blood test technology. Elizabeth Holmes, Theranos founder and Balwani’s ex-girlfriend, steadfastly denied the claims, at the time. 

Theranos was ultimately forced to shut down in 2018 after years of public back and forth, which included fraud charges being filed by the U.S. Securities and Exchange Commission. 

Holmes, meanwhile, is currently facing criminal fraud charges in a California federal court. Her trial was recently delayed slightly after a juror told the judge presiding over the case that they may have been exposed to COVID-19. 

Do you believe Theranos misled consumers about the effectiveness of its blood tests? Let us know in the comments.

The plaintiffs are represented by Melissa Gardner of Lieff Cabraser Heimann & Bernstein LLP. 

The Theranos blood test class action lawsuit is B.P., et al. v. Balwani, et al., Case Nos. 20-15974 and 20-15976, in the United States Court of Appeals for the 9th Circuit. 

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